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Exhibit 2.1
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PURCHASE AND SALE AGREEMENT
BY AND BETWEEN
THE CHASE MANHATTAN BANK
AND
INVESTORS BANK & TRUST COMPANY
DATED AS OF NOVEMBER 28, 2000
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TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
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1.1 Definitions..........................................................................2
ARTICLE II
PURCHASE AND SALE OF ACQUIRED ASSETS AND
ASSUMPTION OF ASSUMED LIABILITIES
2.1 Acquired Assets......................................................................9
2.2 Assumed Liabilities.................................................................10
2.3 Excluded Liabilities................................................................10
2.4 Assignment of Contracts and Rights..................................................10
ARTICLE III
CLOSING
3.1 Purchase and Assumption.............................................................12
3.2 The Closing.........................................................................12
3.3 Documents and Certificates..........................................................12
3.4 Closing Schedule....................................................................13
3.5 Payment of the Purchase Price.......................................................13
3.6 Purchase Price Adjustment...........................................................15
3.7 Allocation of the Purchase Price....................................................17
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties of Seller............................................18
(a) Organization.................................................................18
(b) Corporate Authorization......................................................18
(c) Governmental Authorization...................................................19
(d) Non-contravention............................................................19
(e) Required Consents............................................................20
(f) Properties...................................................................20
(g) Title to Acquired Assets.....................................................21
(h) Litigation...................................................................21
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(i) Compliance with Laws.........................................................22
(j) Proprietary Rights...........................................................22
(k) Licenses and Permits.........................................................23
(l) Client Agreements............................................................23
(m) Material Contracts...........................................................24
(n) Absence of Certain Changes...................................................27
(o) Finders' Fees................................................................28
(p) Standards....................................................................28
(q) Insurance....................................................................29
(r) Clients......................................................................29
(s) Fee Reductions...............................................................30
4.2 Representations and Warranties of Purchaser.........................................31
(a) Organization.................................................................31
(b) Corporate Authorization......................................................31
(c) Governmental Authorization...................................................31
(d) Non-contravention............................................................32
(e) Litigation...................................................................32
(f) Finders' Fees................................................................32
(g) Other Representations........................................................32
ARTICLE V
COVENANTS AND AGREEMENTS
5.1 Mutual Covenants and Agreements.....................................................33
(a) Reasonable Best Efforts......................................................33
(b) Public Announcements.........................................................33
(c) Mutual Cooperation...........................................................34
(d) Interim Services Agreement...................................................34
(e) WARN Act.....................................................................35
5.2 Certain Covenants and Agreements of Seller..........................................35
(a) Conduct of the Business......................................................35
(b) Access.......................................................................36
(c) Exclusivity..................................................................38
(d) Further Assurances...........................................................38
(e) Books and Records............................................................38
(f) Confidentiality..............................................................38
(g) Notice of Certain Events.....................................................39
(h) Conversion Efforts...........................................................40
(i) Certain Required Disclosures.................................................40
(j) Trademarks; Tradenames.......................................................40
(k) Tax Reporting................................................................41
(l) Required Consents............................................................41
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5.3 Certain Covenants and Agreements of Purchaser.......................................41
(a) Conversion Efforts...........................................................41
(b) Notice of Certain Events.....................................................42
(c) Further Assurances...........................................................42
5.4 Enforceability of Covenants.........................................................42
5.5 Covenant Not-to-Compete.............................................................43
ARTICLE VI
TAX MATTERS
6.1 Tax Definitions.....................................................................46
6.2 Tax Matters.........................................................................47
6.3 Tax Cooperation; Allocation of Taxes................................................48
ARTICLE VII
EMPLOYEE MATTERS
7.1 Agreements; Representations and Warranties..........................................50
7.2 Employment with Purchaser...........................................................51
7.3 Employee Benefit Plans..............................................................53
7.4 Vacation............................................................................55
7.5 Severance; Stay Bonuses.............................................................55
7.6 Tuition Assistance..................................................................56
7.7 Non-Solicitation Restrictions.......................................................56
ARTICLE VIII
CONDITIONS OF CLOSING
8.1 Conditions to Obligations of Purchaser and Seller...................................57
(a) HSR Act......................................................................57
(b) Legal Prohibition............................................................57
(c) Regulatory Approvals.........................................................57
(d) Board Resolutions............................................................57
8.2 Conditions to Obligations of Purchaser..............................................57
(a) Performance of this Agreement................................................58
(b) Accuracy of Representations and Warranties...................................58
(c) Litigation...................................................................58
(d) Regulations..................................................................59
(e) Documents to be Delivered by Seller..........................................59
(f) Related Agreements...........................................................60
(g) Required Consents............................................................60
(h) Revised Schedules............................................................60
(i) Other Documents..............................................................60
(j) Material Adverse Change......................................................60
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8.3 Conditions to Obligations of Seller.................................................60
(a) Performance of this Agreement................................................60
(b) Accuracy of Representations and Warranties...................................61
(c) Documents to be Delivered by Purchaser.......................................61
(d) Related Agreements...........................................................62
(e) Consents.....................................................................62
(f) Other Documents..............................................................62
ARTICLE IX
SURVIVAL; INDEMNIFICATION
9.1 Survival............................................................................63
9.2 Indemnification Obligations.........................................................63
(a) By Seller....................................................................63
(b) By Purchaser.................................................................64
9.3 Procedures..........................................................................65
(a) Notice of Claims.............................................................65
(b) Selection of Counsel.........................................................65
(c) Settlement of Claims.........................................................66
(d) Indemnification Payments.....................................................67
ARTICLE X
TERMINATION
10.1 Termination.........................................................................67
10.2 Effect of Termination...............................................................68
ARTICLE XI
MISCELLANEOUS
11.1 Notices.............................................................................69
11.2 Assignment..........................................................................70
11.3 Entire Agreement....................................................................70
11.4 Amendments and Waivers..............................................................70
11.5 Expenses............................................................................71
11.6 Captions; Execution; Counterparts; Third Party Beneficiaries........................71
11.7 Governing Law.......................................................................71
11.8 Consent to Jurisdiction.............................................................72
11.9 Severability........................................................................72
11.10 WAIVER OF JURY TRAIL................................................................72
11.11 Bulk Sales Laws.....................................................................72
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EXHIBITS
Exhibit A Assignment and Assumption Agreement
Exhibit B Bill of Sale
Exhibit C-1 Seller's Executive Officer's Certificate
Exhibit C-2 Seller's Secretary's Certificate
Exhibit C-3 Opinion of Seller's Counsel
Exhibit D-1 Purchaser's Executive Officer's Certificate
Exhibit D-2 Purchaser's Secretary's Certificate
Exhibit D-3 Opinion of Purchaser's Counsel
Exhibit E Closing Statement
Exhibit F Purchaser's Severance Policy
Exhibit G Illustrations for Purchase Price Balance Calculation
SCHEDULES
Schedule 2.1(a) Acquired Accounts
Schedule 2.1(d) Investment Lines of Credit
Schedule 2.1(f) Assumed Contracts
Schedule 4.1(c) Governmental Authorizations (Seller)
Schedule 4.1(e) Required Consents
Schedule 4.1(f) Permitted Liens
Schedule 4.1(j) Proprietary Rights
Schedule 4.1(k) Permits
Schedule 4.1(l) Client Agreements requiring Consent to Assign
Schedule 4.1(l)(3) Discretionary Accounts
Schedule 4.1(m) Material Contracts
Schedule 4.1(r)(2) Assets, Fees, Investment Lines of Credit and Sweep Accounts
Schedule 4.1(r)(4) Terminated Client Agreements or Future Business
Schedule 4.1(r)(5) New Clients
Schedule 4.1(r)(6) Terminated Clients
Schedule 4.1(r)(7) Historical Financial Information
Schedule 4.2(c) Governmental Authorizations (Purchaser)
Schedule 5.6(c)(iv) Restricted Investment Advisors
Schedule 7.1(a) Employees
Schedule 7.1(b) Compensation
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PURCHASE AND SALE AGREEMENT
This Purchase and Sale Agreement (the "Agreement") is made and entered
into as of the 28th day of November, 2000, by and between THE CHASE MANHATTAN
BANK, a bank organized under the laws of the State of New York ("Seller"), with
its principal offices at 270 Park Avenue, New York, New York 10017; and
INVESTORS BANK & TRUST COMPANY, a trust company organized under the laws of the
Commonwealth of Massachusetts ("Purchaser"), with its principal offices at 200
Clarendon Street, Boston, Massachusetts 02117.
WITNESSETH
WHEREAS, Seller and Purchaser are engaged in the business of serving as
custodian for securities and other assets owned by individual investors; and
WHEREAS, Seller desires to sell and Purchaser desires to purchase, on
the terms and conditions set forth herein, the properties, rights and privileges
of Seller in and to certain advisor custody accounts owned by Seller.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual agreements, representations and warranties hereinafter set forth, and for
other good and valuable consideration, both the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
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ARTICLE I
DEFINITIONS
1.1 Definitions.
(a) Except as otherwise specifically indicated, each of the
following terms shall have the following meanings:
"Account" shall mean a custody account maintained by a Client
with the Business.
"Affiliate" shall mean, with respect to any Person, any other
Person, directly or indirectly controlling, controlled by, or under direct or
indirect common control with, such other Person. For purposes of this
definition, "control" (including, with correlative meaning, the terms
"controlling", "controlled by" and "under common control with"), as applied to
any Person, shall mean the ownership directly or indirectly of fifty percent
(50%) or more of the outstanding voting securities of such Person or other
ownership interest having ordinary voting power to elect a majority of the board
of directors of such Person or other entity performing similar functions.
"Assignment Agreement" shall mean the Assignment and
Assumption Agreement, by and between Purchaser and Seller, dated as of the
Closing Date, a form of which is attached hereto as Exhibit A.
"Bill of Sale" shall mean that bill of sale attached hereto as
Exhibit B.
"Books and Records" shall mean all available Client Agreements
as well as all available Client authorization files and correspondence files
maintained by Client relationship managers, in any event only those relating
primarily to the Acquired Accounts, whether such records, files and agreements
are in documentary form or on microfilm, microfiche, magnetic tape, computer
disk, CD-ROM or in any other form.
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"Business" shall mean the advisor custody business relating
solely to the Acquired Accounts, as such business is currently conducted by the
National Consumer Services division of Seller.
"Business Day" shall mean each day other than a Saturday,
Sunday or bank holiday in the State of New York.
"Client" shall mean any Person that uses the custody services
of Seller in connection with the Business or that has agreed in writing to use
such services and whose Account is being acquired pursuant hereto.
"Client Agreement" shall mean each contract, agreement, trust,
indenture, instrument, arrangement, commitment or other understanding, either
written or oral, entered into by Seller with any Client in connection with an
Acquired Account in effect as of the date hereof or on the Closing Date (as the
context requires), including without limitation the Investment Lines of Credit.
"Closing Date" shall mean the date on which the Closing
occurs.
"Closing Time" shall mean the time on the Closing Date at
which the Closing occurs.
"Conversion Date" shall mean the date on which the Acquired
Accounts are Converted.
"Cut-Off Time" shall mean 11:59 p.m. (Eastern Time) on the day
immediately preceding the Closing Date.
"Employees" shall mean the individuals who are employed by
Seller and engaged in the Business (including Inactive Employees), whose names
are listed on Schedule 7.1(a) attached hereto.
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"Excluded Assets" shall mean any and all assets of Seller or
any of its Affiliates that are not being specifically acquired by Purchaser
hereunder.
"Excluded Liabilities" shall mean all of the liabilities,
obligations and duties of Seller and its Affiliates of any kind whatsoever,
whether or not accrued or fixed, absolute or contingent, determined or
determinable, other than those liabilities, obligations and duties that are
explicitly made Assumed Liabilities hereunder. The Excluded Liabilities shall
include, without limitation, the following liabilities and obligations:
(a) liabilities and obligations relating solely to the
Excluded Assets;
(b) liabilities and obligations arising from disputes,
litigation, arbitration or other similar proceedings
unrelated to the Acquired Assets;
(c) liabilities and obligations of Seller incurred or
arising from or out of this Agreement;
(d) liabilities and obligations not having anything to do
with the Business;
(e) liabilities relating to any custody or other account
other than any Account acquired by Purchaser
hereunder;
(f) any and all liabilities and obligations (i) for Taxes
that arise as a result of the transactions
contemplated by this Agreement, except as provided in
Section 6.3(c), and (ii) for Taxes arising from or
with respect to the Acquired Assets or the Business
which is incurred in or attributable to the operation
of the Business on or before the Cut-Off Time;
(g) except as provided in Article VII and Section 2.2(b)
hereof, any liabilities or obligations relating to
employee benefits or compensation arrangements of any
nature existing as of the Cut-Off Time, including any
liabilities or obligations for bonuses related to the
2000 calendar year or under any of Seller's employee
benefit agreements, plans or other arrangements;
(h) any liability or obligation of Seller or an Affiliate
of Seller for breach of contract, operational error,
personal injury or property damage (whether based on
negligence, breach of warranty, strict liability or
any other theory) caused by or arising out of or
resulting from, directly or indirectly, any alleged
or actual acts or omissions occurring on or before
the Cut-Off Time;
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(i) any liability or obligation of Seller or an Affiliate
of Seller for money borrowed, whether such
liabilities and obligations were incurred in the
operation of the Business or otherwise;
(j) any liability or obligation relating primarily to an
Excluded Asset; and
(k) any and all other liabilities and obligations of
every kind of Seller or an Affiliate of Seller
incurred by Seller or an Affiliate of Seller in
connection with, or arising by reason of, its
ownership of the Acquired Assets or its conduct of
the Business prior to the Cut-Off Time, other than
the Assumed Liabilities.
"Federal Funds Rate" shall mean the offered rate as reported
in The Wall Street Journal in the "Money Rates" section for reserves traded
among commercial banks for overnight use in amounts of one million dollars
($1,000,000.00) or more or, if no such rate is published for a day then the rate
published for the immediately preceding Business Day.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended.
"Inactive Employees" shall mean those Employees who, as of the
date hereof or the Closing Date, as the case may be, are not actively at work
due to short or long term disability, family leave, military leave or personal
leave (other than on vacation) under the policies of Seller, as designated in
Schedule 7.1(a) attached hereto.
"Interim Period" shall mean the period of time commencing on
the Closing Date and ending on the Conversion Date.
"Interim Services Agreement" shall mean the Interim Services
Agreement, dated as of the Closing Date, by and between Purchaser and Seller,
which agreement provides for the servicing of the Business by Seller and its
agents during the Interim Period.
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CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE DELETIONS.
"Knowledge" shall mean, as such term applies to Seller, the
knowledge of ****************************************************************
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*****************************************************************************.
"Lien" shall mean, with respect to any asset, any mortgage,
lien (including any tax lien), pledge, charge, claim, restriction, security
interest, license or encumbrance of any kind in respect of such asset, including
the interest of a vendor or lessor under any conditional sale agreement, capital
lease or other title retention agreement relating to such asset.
"Losses" shall mean any and all damage, loss, liability and
expense (including, without limitation, reasonable expense of investigation and
attorneys' fees and expenses in connection with any action, suit or proceeding).
"Material Adverse Effect" shall mean an effect that is
materially adverse to the business assets, liabilities, condition (financial or
otherwise) or results of operations of the Business; provided that a Material
Adverse Effect shall not be deemed to include (1) events, conditions or trends
in economic, business or financial conditions generally affecting the investment
advisory or custody services or banking industry, (2) effects resulting from
entry into this Agreement, (3) changes in laws, generally accepted accounting
principles or regulatory accounting principles or (4) actions taken or omitted
either as required by or as expressly contemplated in this Agreement or with the
prior consent of the other party.
"Person" shall mean an individual, corporation, partnership,
limited liability company, association, trust or other entity or organization,
including a government or political subdivision or any agency or instrumentality
thereof.
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"Premium" shall mean an amount equal to forty two million
dollars ($42,000,000.00).
"Proprietary Rights" shall mean all trademarks, service marks,
trade dress, logos, trade names, service names and corporate names and
registrations and applications for registration thereof relating solely to the
Acquired Assets and Assumed Liabilities including without limitation the
Permits.
"Purchase Price" shall mean an amount equal to the difference
between (a) the sum of (i) the Premium and (ii) the book value of the Acquired
Assets; and (b) the book value of the Assumed Liabilities.
"Regulatory Agreement" shall mean any cease and desist order,
written agreement, memorandum of understanding, consent agreement, commitment
letter or similar undertaking with any governmental agency or authority; any
order, directive or extraordinary supervisory letter issued or sent by any
governmental agency or authority; and any board resolution adopted upon the
direction of any governmental agency or authority.
"Related Agreements" shall mean the Assignment Agreement and
the Interim Services Agreement.
"Target Customer" shall mean any individual or institution
with investible assets valued at one hundred million dollars ($100,000,000.00)
or less.
"Tax Return" shall mean any return, declaration, report, claim
for refund, or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
"Transferred Employee(s)" shall mean those Employees who
become employed by Purchaser as of the Closing Date; PROVIDED that any Employee
that is an Inactive Employee as of the Closing Date shall become a Transferred
Employee if such individual begins employment with Purchaser within sixteen (16)
weeks of becoming an Inactive Employee.
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(b) Each of the following terms is defined in the Section
hereof set forth opposite such term:
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Term Section
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ACB 5.5(a)
Acquired Accounts 2.1(a)
Acquired Assets 2.1
Advisory Custody Account 5.5(a)
Agreement Introduction
Allocation Schedule 3.7
Apportioned Obligations 6.3(b)
Assumed Contracts 2.1(f)
Assumed Liabilities 2.2
Closing 3.2
Closing Date Payment 3.5(a)
Closing Schedule 3.4
Conversion 5.1(d)
Correct Closing Date Payment 3.6(a)
Correct Final Payment 3.6(a)
Correction Amount 3.6(a)
ERISA 7.3(a)
ERISA Affiliate 7.1(d)
Excluded Assets 2.3
Final Accounting Date 3.5(b)
Indemnified Party 9.3(a)
Indemnifying Party 9.3(a)
Investment Lines of Credit 2.1(d)
Objection Period 3.6(a)
Permits 4.1(k)
Permitted Liens 4.1(f)
Post-Closing Tax Period 6.3(b)
Pre-Closing Tax Period 6.1(a)
Principal 3.6(a)
Purchase Price Balance 3.5(b)
Purchaser Introduction
Remaining Acquired Accounts 3.5(b)
Required Consent(s) 4.1(e)
Scudder Accounts 3.5(b)
Seller Introduction
Seller Bonus 7.5(b)
Tax 6.1(b)
Taxing Authority 6.1(b)
Transfer Taxes 6.3(c)
WARN Act 5.1(e)
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ARTICLE II
PURCHASE AND SALE OF ACQUIRED ASSETS AND
ASSUMPTION OF ASSUMED LIABILITIES
2.1 Acquired Assets. Subject to the terms and conditions of this
Agreement, on the Closing Date, Purchaser shall purchase from Seller, and Seller
shall sell, convey, assign, transfer and deliver to Purchaser, all of its right,
title and interest in, to and under the following assets (collectively, the
"Acquired Assets"):
(a) the Accounts listed on Schedule 2.1(a) attached hereto
(the "Acquired Accounts");
(b) the Books and Records maintained by the Business;
(c) all accounts receivable and fees, charges and revenues
from the Acquired Accounts applicable to periods beginning after the Cut-Off
Time;
(d) the investment loans and lines of credit listed on
Schedule 2.1(d) attached hereto (the "Investment Lines of Credit");
(e) the Client Agreements;
(f) the other contracts listed on Schedule 2.1(f) attached
hereto (together with the Client Agreements and Investment Lines of Credit, the
"Assumed Contracts");
(g) the Proprietary Rights; and
(h) all interest and fees from the Installment Lines of Credit
that have accrued but have not been paid prior to the Cut-Off Time.
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2.2 Assumed Liabilities. Subject to the terms and conditions of this
Agreement, Purchaser, effective at the time of Closing, shall assume, pay and
perform the following liabilities and obligations of Seller (collectively, the
"Assumed Liabilities"):
(a) all liabilities and obligations under the Assumed
Contracts, including the Client Agreements (other than liabilities or
obligations attributable to any failure by Seller or Affiliates of Seller to
comply with the terms thereof);
(b) Seller's obligation to provide vacation time, vacation pay
and other benefits to the Transferred Employees to the extent set forth in
Article VII; and
(c) all liabilities arising out of the operation of the
Business from and after the Cut-Off Time.
2.3 Excluded Liabilities. Except as expressly provided in Sections 2.1
and 2.2 hereof, none of Purchaser and its Affiliates is (a) acquiring, and none
of them shall be deemed to have acquired, any right, title or interest in, to or
under any asset of Seller or its Affiliates other than those being specifically
acquired hereunder (the "Excluded Assets") or (b) assuming, and none of them
shall be deemed to have assumed, any Excluded Liabilities. All Excluded Assets
shall be retained by Seller or its Affiliates, including all interest and fees
from the Investment Lines of Credit that have accrued but have not been paid
prior to the Cut-Off Time; and all Excluded Liabilities shall be retained by and
remain the direct or indirect obligations and liabilities of Seller or its
Affiliates.
2.4 Assignment of Contracts and Rights. Anything in this Agreement to
the contrary notwithstanding, neither this Agreement nor the Bill of Sale shall
constitute an agreement to assign any (or any material portion of any) Acquired
Asset or any claim or right or any benefit arising thereunder or resulting
therefrom if such assignment, without the consent of a third party
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thereto, would constitute a breach or other contravention of such Acquired Asset
or in any way adversely affect the rights of Purchaser or Seller thereunder.
Each party hereto shall use its respective reasonable best efforts (but without
any payment of money by such party to any third party) to obtain the consent of
the other parties to any such Acquired Asset or any claim or right or any
benefit arising thereunder for the assignment thereof to Purchaser as Purchaser
may request. If such consent is not obtained, or if an attempted assignment
thereof would be ineffective or would adversely affect the rights of Seller
thereunder so that Purchaser would not in fact receive all such rights, Seller
and Purchaser shall enter a mutually agreeable arrangement pursuant to which
Purchaser would obtain the benefits and assume the obligations thereunder in
accordance with this Agreement, including sub-contracting, sub-licensing or
sub-leasing to Purchaser, or under which Seller would enforce for the benefit of
Purchaser, with Purchaser assuming Seller's obligations, any and all rights of
Seller against a third party thereto. Seller shall promptly pay to Purchaser
when received all moneys received by Seller under any Acquired Asset or any
claim or right or any benefit arising thereunder, except to the extent the same
represents an Excluded Asset. In such event, Seller and Purchaser shall, to the
extent the benefits therefrom and obligations thereunder have not been provided
by alternate arrangements satisfactory to Purchaser and Seller, negotiate in
good faith an adjustment in the consideration paid by Purchaser for the Acquired
Assets, to the extent not otherwise adjusted pursuant to Article III hereof.
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ARTICLE III
CLOSING
3.1 Purchase and Assumption. Upon the terms and subject to the
conditions of this Agreement, Seller agrees to sell to Purchaser the Acquired
Assets and Purchaser agrees to purchase the Acquired Assets and assume the
Assumed Liabilities from Seller at the Closing.
3.2 The Closing. Subject to the satisfaction or waiver of all
conditions set forth in Article VIII hereof, the closing of the transactions
contemplated hereby (the "Closing") shall be held at the offices of Seller as
soon as possible, but in no event later than five (5) Business Days after
satisfaction or waiver of the conditions set forth in Article VIII hereof, or at
such place or such other time as may be mutually agreed upon by the parties
hereto.
3.3 Documents and Certificates. At the Closing, Seller shall deliver to
Purchaser, and Purchaser shall deliver to Seller, an Assignment Agreement that
conveys to Purchaser all of Seller's right, title and interest in and to the
Acquired Assets, and under which Purchaser shall accept such Acquired Assets and
assume the Assumed Liabilities. Such Assignment Agreement shall be dated the
Closing Date, appropriately completed and duly executed by the party delivering
such agreement. Seller shall also provide at the Closing updated disclosure
schedules to this Agreement reflecting any changes to such schedules occurring
between the date hereof and the Cut-Off Time; provided that such updated
disclosure schedules shall not modify the representations, warranties and other
agreements made by Seller in this Agreement. Purchaser and Seller shall, at or
prior to the Closing Time, execute and deliver all such additional instruments,
documents or certificates as may be reasonably necessary to consummate the
transactions contemplated by this Agreement.
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3.4 Closing Schedule. Not less than ten (10) days prior to the Closing
Date, unless otherwise agreed by the parties hereto, Seller shall deliver to
Purchaser a schedule setting forth the Acquired Assets and the Assumed
Liabilities and their respective valuations (the "Closing Schedule"), and the
Closing Schedule shall be based upon valuations as of approximately the date
such Schedule is prepared. Purchaser shall have the right to review the Closing
Schedule, together with any supporting documents reasonably requested by
Purchaser to verify the accuracy and completeness of the valuations set forth
therein, and such statement shall be revised as appropriate to reflect any
corrections made by the parties.
3.5 Payment of the Purchase Price.
(a) At the Closing, Purchaser shall pay to Seller a portion of
the Purchase Price, which amount shall equal the sum of (I) the difference
between the book value of the Acquired Assets and the book value of the Assumed
Liabilities as set forth on the Closing Schedule and (II) the amount equal to
seventy five percent (75%) of the Premium (in aggregate, the "Closing Date
Payment"), against receipt of such documentation evidencing the transfer to
Purchaser of the Assumed Liabilities and good title in and to the Acquired
Assets. All payments due at the Closing shall be made by a wire transfer in
immediately available United States dollars not later than 11:00 a.m. (Eastern
Time) on the Closing Date to an account designated by the party receiving such
payment, which account shall be so designated no later than one (1) Business Day
prior to the Closing Date (or if not so designated, then by certified or
official bank check payable in immediately available funds to the order of party
receiving such payment in such appropriate amount).
(b) On the earlier to occur of the first anniversary of the
Conversion Date and the date that is eighteen (18) months after the Closing Date
(the "Final Accounting Date"),
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CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE DELETIONS.
Purchaser shall pay Seller the balance of the Purchase Price actually owed (the
"Purchase Price Balance"), plus an amount of interest on such balance for the
period from and including the Closing Date to but excluding the date of payment
of such balance at a rate per annum equal to the Federal Funds Rate on the date
of payment. The Purchase Price Balance shall be calculated by subtracting an
amount equal to seventy five percent (75%) of the Premium from an amount equal
to the product of (1) a fraction determined by dividing (i) ********************
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*********************************************************, by (ii)
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**************************************************; and (2) the Premium;
provided that if the************************************************************
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or (ii) the *********************************************************
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*************.(1) For purposes of this Section 3.5(b), the
--------
(1) Set forth on Exhibit G attached hereto are examples of Purchase Price
Balance calculations, which examples are intended for illustrative purposes
only.
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CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE DELETIONS.
********************************************************************************
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*************************. In no event shall the Purchase Price Balance exceed
ten million five hundred thousand dollars ($10,500,000.00).
(c) If the Purchase Price Balance plus applicable interest is
a positive number, then Purchaser shall pay Seller an amount equal to the
Purchase Price Balance plus applicable interest. If the Purchase Price Balance
equals zero dollars ($0.00) or is a negative number, then no additional payment
shall be made by Purchaser to Seller. Any payment due to Seller pursuant to this
Section 3.5(b) shall be made by Purchaser by a wire transfer in immediately
available United States dollars not later than 11:00 a.m. (Eastern Time) on the
date immediately succeeding the Final Accounting Date to an account designated
by Seller, which account shall be so designated no later than one (1) Business
Day prior to the Final Accounting Date (or if not so designated, then by
certified or official bank check payable in immediately available funds to the
order of Seller in such appropriate amount).
3.6 Purchase Price Adjustment.
(a) Each party hereto (each, a "Principal") shall within forty
five (45) days (the "Objection Period") after the Closing Date (in the case of
the Closing Date Payment) and
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after the Final Accounting Date (in the case of payment of the Purchase Price
Balance) (provided that if such period ends on any day other than a Business
Day, such forty five (45) day period shall be extended to end on the next
succeeding Business Day) determine and notify the other Principal as to whether
it believes that (1) there were any inaccuracies in the calculation of the
valuations of the Acquired Assets or Assumed Liabilities for the purpose of
determining the Closing Date Payment or the Purchase Price Balance, as the case
may be, or (2) any inaccuracies in the calculation of the Acquired Account
revenues as of the Closing Date or the Final Accounting Date, thereby requiring
an adjustment of the Closing Date Payment or the Purchase Price Balance, as the
case may be. Any notice with respect to any adjustment shall set forth such
Principal's calculation of the correct Closing Date Payment (the "Correct
Closing Date Payment") or the correct Purchase Price Balance (the "Correct Final
Payment"). Unless there is a dispute, promptly following receipt of all notices
of such adjustments, the Principal which had a net benefit from such
inaccuracies shall promptly pay to the other Principal in immediately available
funds an amount equal to the difference between (i) the Closing Date Payment as
originally calculated and the Correct Closing Date Payment, or (ii) the Purchase
Price Balance as originally calculated and the Correct Final Payment (such
difference, in either event, the "Correction Amount").
(b) Payment of a Correction Amount shall be accompanied by a
payment of interest on such Correction Amount for the period (i) in the case of
corrections to the Closing Date Payment, from and including the Closing Date to
but excluding the date of payment of such Correction Amount at a rate per annum
equal to the Federal Funds Rate on the date of payment, and (ii) in the case of
corrections to the Purchase Price Balance, from and including the Final
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Accounting Date to but excluding the date of payment of such Correction Amount
at a rate per annum equal to the Federal Funds Rate on the date of payment.
(c) Each party hereto recognizes that the Closing Date
Schedule shall be prepared using valuations for the Acquired Assets and Assumed
Liabilities as of approximately day such Schedule is prepared. Nevertheless,
notwithstanding anything stated in Section 3.3 hereof to the contrary, within
fifteen (15) days after the Closing Date, Seller shall provide Purchaser with
valuations for the Acquired Assets and Assumed Liabilities as of the Cut-Off
Time, which information shall be used to adjust the Closing Date Payment
pursuant to this Section 3.6.
(d) To account for any payment of the Purchase Price that is
made on the Final Accounting Date as provided in Section 3.5(b) hereof and/or if
a Purchase Price adjustment is required under this Section 3.6, the Allocation
Statement shall be appropriately adjusted, and the parties hereto agree to file
any additional information return required to be filed pursuant to the
regulations under Section 1060(b) of the Code and to treat the Allocation
Statement, as adjusted, in the manner described in Section 3.7 hereof.
(e) The procedures set forth in this Article III shall be the
sole and exclusive method of resolving any dispute or disagreement regarding the
calculation of the Closing Date Payment and the Purchase Price Balance or any
payments or amounts under this Section 3.6, and under no circumstance shall any
dispute or disagreement give rise to a claim for the breach of a representation,
warranty, covenant or agreement under this Agreement; provided that this Section
3.6(e) is not intended to restrict either party's rights not resolved under this
Article III.
3.7 Allocation of the Purchase Price. Prior to Closing, the parties
shall mutually agree on a schedule (the "Allocation Schedule") allocating the
Purchase Price (including, for
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purposes of this Section 3.7, any other consideration paid to Seller pursuant
hereto or as contemplated hereby) among the Acquired Assets. Each party hereto
agrees to file Internal Revenue Service Form 8594 and all federal, state and
local tax returns in accordance with such Allocation Schedule. Each party hereto
agrees to provide the other party hereto promptly with any other information
required to complete Form 8594. The parties shall mutually agree on any
post-Closing adjustments required to the Allocation Statement.
ARTICLE IV **
REPRESENTATIONS AND WARRANTIES **
4.1 Representations and Warranties of Seller. Seller hereby represents
and warrants to Purchaser as follows:
(a) Organization. Seller is a bank, duly organized, validly
existing and in good standing under the laws of the State of New York and has
all corporate powers and all material governmental licenses, authorizations,
permits, consents and approvals required to own and use the Acquired Assets and
to carry on the Business as now conducted. Seller is duly qualified to do
business as a foreign corporation and is in good standing in each jurisdiction
where such qualification is necessary, except for those jurisdictions where
failure to be so qualified would not, individually or in the aggregate, have a
Material Adverse Effect.
(b) Corporate Authorization. The execution, delivery and
performance by Seller of this Agreement, each Related Agreement and the Bill of
Sale, and the consummation of the transactions contemplated by this Agreement
and each Related Agreement, are within Seller's power and authority (corporate
or otherwise) and have been duly and validly authorized by all necessary
corporate action on the part of Seller. This Agreement constitutes, and at the
Closing
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Time each Related Agreement shall constitute, a valid and binding agreement of
Seller, enforceable against Seller in accordance with their respective terms,
except as enforcement may be limited by general principles of equity whether
applied in a court of law or a court of equity and by bankruptcy, receivership,
insolvency, moratorium and similar laws affecting creditors' rights and remedies
generally.
(c) Governmental Authorization. The execution, delivery and
performance by Seller of this Agreement, each Related Agreement and the Bill of
Sale and the consummation of the transactions contemplated by this Agreement and
each Related Agreement require no action by or in respect of, or filing,
registration or declaration with any governmental body, agency or official other
than those set forth on Schedule 4.1(c) attached hereto.
(d) Non-contravention. The execution, delivery and performance
by Seller of this Agreement, each Related Agreement and the Bill of Sale and the
consummation of the transactions contemplated by this Agreement and each Related
Agreement do not and shall not (1) contravene or conflict with the charter or
bylaws of Seller, (2) contravene or conflict with or constitute a violation of
any applicable law, rule or regulation, in each case in any material respect or
require any consent or approval under any judgment, injunction, order, writ,
decree, permit or license to which Seller is a party or by which Seller is
bound, (3) result in the creation of any Lien other than a Permitted Lien upon
any of the Acquired Assets or (4) assuming the obtaining of all Required and
other necessary consents, conflict with, result in the breach of, constitute a
default under or give rise to any right of termination, cancellation or
acceleration of any material right or obligation of Purchaser or to a loss of
any material benefit to which Seller is entitled under any provision of any
agreement, contract or other instrument binding upon Seller and relating to the
Business or by which any of the Acquired Assets is or may be bound.
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(e) Required Consents. At Closing, Schedule 4.1(e) shall be
attached hereto and shall set forth each agreement, contract or other instrument
binding upon Seller or any Permit requiring a consent as a result of the
execution, delivery and performance of this Agreement, any Related Agreement or
the Bill of Sale or the consummation of the transaction contemplated by this
Agreement and each Related Agreement (each such consent, a "Required Consent"
and together the "Required Consents").
(f) Properties.
(1) Seller has good and marketable,
indefeasible, fee simple title to, or in the case of leased personal property
has valid leasehold interests in, all Acquired Assets (whether tangible or
intangible), except for such Acquired Assets sold in the ordinary course of
business, as provided by Section 5.2(a) hereof. No Acquired Asset is subject to
any Lien, except Liens disclosed on Schedule 4.1(f) attached hereto (the
"Permitted Liens").
(2) All leases of personal property are in good
standing and are valid, binding and enforceable in accordance with their
respective terms, except as enforcement may be limited by general principles of
equity whether applied in a court of law or a court of equity and by bankruptcy,
receivership, insolvency, moratorium and similar laws affecting creditors'
rights and remedies generally, and there does not exist under any such lease any
default or any event which with notice or lapse of time or otherwise would
reasonably constitute a material default.
(3) The Acquired Assets and the Excluded
Assets together are, and on the Closing Date shall be, to the extent such
assets are tangible assets, in the physical location in which such assets
should be located in the ordinary course of business consistent with past
practices.
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(g) Title to Acquired Assets. Upon consummation of the
transactions contemplated hereby, including the execution and delivery to
Purchaser by the appropriate parties hereto of the Related Agreements and any
necessary instruments of assignment and bills of sale in accordance with the
terms hereof, (1) Purchaser shall have acquired good and marketable,
indefeasible, fee simple title in and to, or in the case of leased personal
property a valid leasehold interest in, the Acquired Assets, free and clear of
all Liens except Permitted Liens; and (2) the assignment, bill of sale and other
transfer documents to be delivered to Purchaser pursuant hereto shall be in
appropriate form and sufficient validly to convey, transfer and assign to
Purchaser all the right, title and interest of Seller in the Acquired Assets
purported to be assigned.
(h) Litigation
(1) There is no action, suit, claim, litigation,
proceeding, arbitration or material controversy (or, to Seller's knowledge, any
reasonable basis therefor) pending against or affecting, or to the Seller's
knowledge, contemplated or threatened against, Seller relating to the Business
or any Acquired Asset or Assumed Liability before any court or arbitrator or any
governmental body, agency or official which, individually or in the aggregate,
if determined or resolved adversely in accordance with the plaintiff's demands,
which in any manner challenges or seeks to prevent, enjoin, alter or materially
delay the transactions contemplated by this Agreement or by any Related
Agreement.
(2) To Seller's knowledge, there are no
outstanding judgments, orders, rules, regulations, official interpretations or
guidelines of any arbitrator or governmental authority with jurisdiction over
Seller or any of its Affiliates which specifically relate to the Business.
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(i) Compliance with Laws.
(1) Seller is not in material violation of, and
since January 1, 1998, has not materially violated, any law, rule, ordinance,
regulation, judgment, injunction, order or decree entered by any court,
arbitrator or governmental authority, domestic or foreign, applicable to the
Business or the Acquired Assets. (2) To its knowledge, Seller is not under
investigation with respect to and has not been threatened to be charged with or
given notice of any material violation of any law, rule, ordinance, regulation,
judgment, injunction, order or decree entered by any court, arbitrator or
governmental authority, domestic or foreign, applicable to the Business or the
Acquired Assets. (3) Seller is not party to or recipient of any Regulatory
Agreement nor has it been advised by any governmental entity or authority such
entity or authority is contemplating issuing or requesting any Regulatory
Agreement.
(j) Proprietary Rights.
(1) Schedule 4.1(j) attached hereto sets forth a
list of all of Seller's Proprietary Rights used primarily in connection with the
Business (specifying as to each, as applicable (i) the nature of such
Proprietary Right; (ii) the owner of such Proprietary Right; and (iii) the
jurisdictions by or in which such Proprietary Right has been issued or
registered or in which an application for such issuance or registration has been
filed, including the respective registration or application numbers).
(2) Seller (i) has not during the three (3)
years preceding the date of this Agreement been sued or charged in writing with
or been a defendant in any claim, suit, action or proceeding relating to the
Business that has not been finally terminated prior to the date
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hereof and that involves a claim of infringement of any Proprietary Rights and
(ii) has no knowledge of any other claim or infringement by Seller, and no
knowledge of any continuing infringement by any other Person of any of Seller's
Proprietary Rights listed on Schedule 4.1(j) attached hereto.
(k) Licenses and Permits. Schedule 4.1(k) attached hereto
lists each material license, franchise, permit, certificate, approval or other
similar authorization affecting, or relating in any way to, the Acquired Assets
(the "Permits"), together with the name of the government agency or entity
issuing such license or permit. Except as otherwise indicated on Schedule 4.1(k)
attached hereto, (i) the Permits are valid and in full force and effect; (ii)
such Seller is not in default, and no condition exists that with notice or lapse
of time or otherwise would reasonably constitute a default, under the Permits;
and (iii) assuming the related Required Consents and other consents have been
obtained prior to the Closing Date, the Permits are transferable by Seller and
shall not be terminated or impaired or become terminable, in whole or in part,
as a result of the transactions contemplated by this Agreement and by the
Related Agreements. Upon consummation of such transaction, Purchaser shall,
assuming the related Required Consents have been obtained prior to the Closing
Date, have all of Seller's right, title and interest in all of the Permits. The
Permits include all licenses, franchises, permits or other similar
authorizations necessary for the conduct of the Business as conducted on the
date of this Agreement.
(l) Client Agreements.
(1) Seller has performed all material
obligations heretofore required to be performed by it under the Client
Agreements, and neither Seller nor, to the knowledge of Seller, any other party
thereto is in default or breach in any material respect under, and no event
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CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE DELETIONS.
or circumstance has occurred which, with notice or lapse of time or otherwise
would reasonably result in a default or breach in any material respect under,
any such Client Agreements. All such Client Agreements (i) are legal, valid and
binding agreements of the respective parties thereto and are in full force and
effect; (ii) are enforceable by the respective parties thereto in accordance
with their respective terms, except as enforcement may be limited by general
principles of equity whether applied in a court of law or a court of equity and
by bankruptcy, receivership, insolvency, moratorium and similar laws affecting
creditors' rights and remedies generally; and (iii) except for such Client
Agreements that shall be set forth on Schedule 4.1(l) at Closing, are freely
assignable by Seller and do not require the approval or consent of any Client or
any other Person to effectuate the valid assignment. The terms of such Client
Agreements have not been waived, changed, altered or modified in any material
respect except by written instruments contained in the Books and Records. To
Seller's knowledge, no Client has disclosed any intention to terminate any such
Client Agreement.
(2) There are no accounts receivable or payable
with respect to any Client Agreement that have been outstanding for more than
one hundred eighty (180) days.
(3) Except as disclosed on Schedule 4.1(l)(3)
attached hereto, to Seller's knowledge there are no Client Agreements that grant
Seller investment discretion, which discretion has not otherwise been assigned
to a third party.
(m) Material Contracts.
(1) Except as disclosed in Schedule 4.1(m)
attached hereto, as relating solely to the Business Seller is not a party
to or bound by:
(i) any lease providing for annual rentals of
****************** dollars (**********) or more that cannot be terminated
on not
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CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE DELETIONS.
more than sixty (60) days notice without payment by Seller of any penalty
greater than ******************** dollars (**********);
(ii) any agreement for the purchase of materials,
supplies, goods, services, equipment or other assets providing for
aggregate payments by Seller of more than ******************** dollars
(**********) that cannot be terminated on not more than sixty (60) days
notice without payment by Seller of any penalty greater than
******************** dollars (**********).
(iii) any partnership, joint venture, joint
marketing or other similar agreement or arrangement;
(iv) any agreement relating to the acquisition or
disposition of any material assets;
(v) agreement relating to indebtedness for
borrowed money for deferred purchase price of property (in any case,
whether incurred, assumed, guaranteed or secured by any Acquired Asset),
except any such agreements with an aggregate outstanding principal amount
not exceeding ******************** dollars (**********);
(vi) any license agreement, franchise agreement or
agreement in respect of similar rights granted to or held by Seller;
(vii) any agreement, contract or commitment that
substantially limits the freedom of Seller to compete in any line of
business or with any Person or in any area to own, operate, sell, transfer,
pledge or otherwise dispose of or encumber any Acquired Asset or that would
so limit the freedom of the Purchaser after the Closing Date;
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(viii) any agreement, contract or commitment which
is or relates to an agreement with or for the benefit of any Affiliate of
Seller; or
(ix) any other material agreement, commitment,
arrangement or plan not in the ordinary course of business.
(2) Each contract or agreement listed on any Schedule
attached hereto or required to be disclosed or provided to Purchaser pursuant
hereto (i) is a legal, valid and binding agreement of Seller and is in full
force and effect and (ii) is enforceable by the respective parties thereto in
accordance with their respective terms, except as enforcement may be limited by
general principles of equity whether applied in a court of law or a court of
equity and by bankruptcy, receivership, insolvency, moratorium and similar laws
affecting creditors' rights and remedies generally. Neither Seller nor, to the
best of Seller's knowledge, any other party thereto is in default or breach in
any material respect under the terms of such contracts or agreements, nor, to
the best of Seller's knowledge, has any event or circumstance occurred that,
with notice or lapse of time or otherwise, would constitute an event of default
thereunder.
(3) There are no (i) material agreements, contracts
or other business arrangements or understandings relating solely to the Acquired
Assets, and (ii) material products, enhancements, programs benefits or services
offered in connection with any of the Acquired Accounts, other than such
products, enhancements, programs, benefits or services, agreements, contracts or
other business arrangements or understandings that Seller has expressly
disclosed to Purchaser.
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CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE DELETIONS.
(n) Absence of Certain Changes. Since April 30, 2000, the
Business has been conducted in the ordinary course consistent with past
practices and there has not been:
(1) any incurrence, assumption or guarantee by Seller
of any indebtedness for borrowed money in excess of ******************** dollars
(**********) with respect to or in any way relating to the Acquired Assets
except in the ordinary course of business;
(2) any creation or other incurrence of any Lien
other than Permitted Liens on any Acquired Asset other than in the ordinary
course of business consistent with past practices;
(3) any material damage, destruction or other
casualty loss (whether or not covered by insurance) affecting the Business or
the Acquired Assets;
(4) any transaction or commitment made, or any
contract or agreement entered into, by Seller relating to any Acquired Asset
(including the acquisition or disposition of any Acquired Assets) or the Assumed
Liabilities or any relinquishment by Seller of any contract or other right, in
either case, material to the Business, other than transactions and commitments
in the ordinary course of business and those contemplated by this Agreement or
any of the Related Agreements;
(5) any material change in any method of accounting
or accounting practice by Seller with respect to the Business except for any
such change after the date hereof required by reason of a concurrent change in
generally accepted accounting principles;
(6) any action taken to impair in any material
respect Seller's rights in any of the Acquired Assets;
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(7) any (i) grant of any severance or termination pay
to any employee of the Business, (ii) entering into of any employment, deferred
compensation or other similar agreement (or any amendment to any such existing
agreement) with any employee of the Business, (iii) increase in benefits payable
under an existing severance or termination pay policies or employment
agreements, or (iv) increase in compensation, bonus or other benefits payable to
employees of the Business, other than in the ordinary course of business
consistent with past practice; or
(8) any agreement by Seller to undertake any of the
foregoing items.
(o) Finders' Fees. Seller has not agreed to pay any fee
or commission to any agent, broker, finder or other person for or on account of
services rendered as a broker or finder in connection with this Agreement, any
Related Agreement or the Bill of Sale or the transactions contemplated by this
Agreement or any Related Agreement that would give rise to any valid claim
against Purchaser for any brokerage commission or finder's fee or like payment.
(p) Standards.
(1) Seller maintains policies and procedures for the
Business that comply in all material respects with applicable laws, rules and
regulations and has implemented compliance procedures with respect to those
policies and procedures. Seller has made copies of the policies and procedures
relating to the Business available to Purchaser. No material breach of any of
these policies and procedures has occurred, been discovered or noted since
January 1, 1998.
(2) Seller has made available to Purchaser a true
and complete copy of the SAS70 report prepared for fiscal years 1998 and 1999
relating to the Business, and of the responses of management of the Business
thereto. Seller has, to the extent and at or before the
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times set forth in such responses, materially complied with or substantially
addressed such recommendations and exception and deficiency items.
(3) Seller maintains with respect to each Client, all
of its respective (i) Client Agreements (or copies thereof) and (ii) material
records and documentation (or copies thereof) that it has agreed to maintain or
that it is required to maintain under applicable laws, rules or regulations.
(4) Since January 1, 1998, no internal audit reports
and no examination or inspection reports issued by any governmental entity or
regulator have been issued with respect to the Business.
(q) Insurance. Seller maintains insurance and indemnity
bonds providing coverage for all risks normally insured or bonded against by
companies in similar lines of business as the Business. As of the date hereof,
each such insurance policy or bond is in full force and effect, and, as of the
date hereof, Seller has not received written notice from any insurer or agent of
any intent to cancel any such insurance policy or indemnity bond.
(r) Clients.
(1) Schedule 2.1(a) attached hereto contains a
list of Client Agreements in effect as of October 31, 2000.
(2) Schedule 4.1(r)(2) attached hereto sets forth,
with respect to each Client (i) assets under custody as of October 31, 2000;
(ii) a schedule of annualized fees billed by Account based upon the last fee
rate used in relation to such account and the market value as of October 31,
2000; (iii) the amounts committed and outstanding under each of the Investment
Lines of Credit as of October 31, 2000, and (iv) interest bearing sweep balances
in Chase Vista
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accounts or other Chase Manhattan Bank interest-bearing money market accounts
associated with the Acquired Accounts with Seller as of October 31, 2000.
(3) No Client Agreement, except for the
Investment Line of Credit Agreements, requires Seller to provide any services
other than custody services or such other services specifically provided
therein, and no Client Agreement would subject Seller to any liability arising
out of the acts or omissions of Seller or their agents or sub-custodians except
to the extent caused by the negligence or willful misconduct of such Person.
(4) Except as set forth on Schedule 4.1(r)(4)
attached hereto, Seller has not received any notice from any Person or otherwise
has any knowledge that any Client Agreement has been or will be terminated or
that future business under any Client Agreement may be substantially reduced.
(5) Schedule 4.1(r)(5) attached hereto lists all
new Clients of the Business not otherwise listed on Schedule 4.1(r)(2) attached
hereto and sets forth, with respect to each new Client, assets under custody as
of a date five (5) Business Days prior to the date of this Agreement or prior to
the Cut-Off Time, as the case may be.
(6) At Closing, Schedule 4.1(r)(6) shall be
attached hereto and shall list each of the Client Agreements that have been
terminated subsequent to the date hereof and prior to the Cut-Off Time.
(7) Schedule 4.1(r)(7) attached hereto sets
forth the total revenue, total expenses and net income before taxes for the
calendar year ended December 31, 1999, for the Business.
(s) Fee Reductions. No Client has initiated negotiations
to amend or modify its respective Client Agreement to provide for a material
reduction of any fees thereunder.
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4.2 Representations and Warranties of Purchaser. Purchaser hereby
represents and warrants to Seller as follows:
(a) Organization. Purchaser is a trust company, duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Massachusetts and is authorized to conduct general banking
business under such laws. Purchaser has all corporate powers and all material
governmental licenses, authorizations, permits, consents and approvals to carry
on its business as now conducted.
(b) Corporate Authorization. The execution, delivery and
performance by Purchaser of this Agreement, each Related Agreement and the Bill
of Sale, and the consummation of the transactions contemplated by this Agreement
and each Related Agreement are within Purchaser's powers and authority
(corporate or otherwise) and have been duly authorized by all necessary
corporate action on the part of Purchaser. This Agreement constitutes, and at
the Closing Time each Related Agreement shall constitute, a valid and binding
agreement of Purchaser, enforceable against Purchaser in accordance with their
respective terms, except as enforcement may be limited by general principles of
equity whether applied in a court of law or a court of equity and by bankruptcy,
receivership, insolvency, moratorium and similar laws affecting creditors'
rights and remedies generally.
(c) Governmental Authorization. The execution, delivery and
performance by Purchaser of this Agreement, each Related Agreement and the Bill
of Sale and the consummation of the transactions contemplated by this Agreement
and each Related Agreement require no action by or in respect of, or filing
with, or registration with or declaration by any governmental body, agency or
official other than those set forth on Schedule 4.2(c) attached hereto.
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(d) Non-contravention. The execution, delivery and performance
by Purchaser of this Agreement, each Related Agreement and the Bill of Sale and
the consummation of the transactions contemplated by this Agreement and each
Related Agreement do not and shall not (i) contravene or conflict with the
articles of incorporation or bylaws of Purchaser or (ii) contravene or conflict
with or constitute a violation of any applicable law, rule or regulation, in
each case in any material respect or require any consent or approval under any
material judgment, injunction, order, writ, decree, permit or license to which
Purchaser is a party or by which Purchaser is bound.
(e) Litigation. There is no action, suit, claim, litigation,
proceeding, arbitration or material controversy (or to Seller's knowledge, any
reasonable basis therefor) pending against or affecting, or to the Purchaser's
knowledge, contemplated or threatened against Purchaser or any of its Affiliates
before any court or arbitrator or any governmental body, agency or official that
in any manner challenges or seeks to prevent, enjoin or materially alter or
delay the transactions contemplated by this Agreement or by any Related
Agreement.
(f) Finders' Fees. Purchaser has not agreed to pay any fee or
commission to any agent, broker, finder or other person for or on account of
services rendered as a broker or finder in connection with this Agreement or any
Related Agreement or the transactions contemplated hereby or thereby that would
give rise to any valid claim against Seller for any brokerage commission or
finder's fee or like payment.
(g) Other Representations. Purchaser is a sophisticated
purchaser and has engaged or has accessed expert advisors, experienced in the
evaluation and purchase of companies and businesses such as the Business, as
contemplated hereunder. Purchaser acknowledges and agrees that, except as
expressly set forth herein, Seller makes no representation or warranty, express
or implied or arising by operation of law, with respect to Seller, the Business
or any of the Acquired Assets.
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ARTICLE V
COVENANTS AND AGREEMENTS
5.1 Mutual Covenants and Agreements. Each of Purchaser and Seller
covenants and agrees that:
(a) Reasonable Best Efforts. Subject to the terms and
conditions of this Agreement, Purchaser and Seller shall use their respective
reasonable best efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things necessary or desirable under applicable laws, rules
and regulations to consummate the transactions contemplated by this Agreement
and by the Related Agreements. Each party hereto agrees to execute and deliver
such other documents, certificates, agreements and other writings and to take
such other actions as may be necessary or desirable in order to consummate or
implement expeditiously the transactions contemplated by this Agreement and by
the Related Agreements and to vest in Purchaser good and marketable title to the
Acquired Assets.
(b) Public Announcements. Except as previously agreed by both
parties, or as may be required by law, rule or regulation or judicial or
administrative order, demand or similar process or procedure, or as may be
necessary to disclose to lenders or rating agencies, neither Seller nor
Purchaser shall, and each party hereto shall cause its respective Affiliates,
representatives and agents not to, on or after the date hereof, issue a press
release or make any public announcement related to the transactions contemplated
by this Agreement or by the Related Agreements without the prior written consent
of the other parties hereto, which consent shall not be unreasonably withheld or
delayed.
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(c) Mutual Cooperation. Seller and Purchaser shall cooperate
with each other (1) in determining whether any action by or in respect of, or
filing with, any Person, is required in connection with the consummation of the
transactions contemplated by this Agreement or by any Related Agreement and in
taking such actions or making any such filings, furnishing information required
in connection therewith and seeking timely to obtain any such actions, approvals
or waivers; (2) in the event that any governmental regulator having jurisdiction
over either party initiates any audit or inquiry related to the Business or the
transactions contemplated hereunder; (3) in the event that any action or
proceeding is brought by any party (other than Seller against Purchaser or
Purchaser against Seller) in connection with the transactions contemplated
hereby or in connection with the Acquired Assets or Assumed Liabilities; and (4)
in the event that either internal or external auditors of any party hereto
require information in connection with any auditing activity required by such
party in connection with the preparation of financial statements or otherwise in
connection with the business of such party.
(d) Interim Services Agreement. At the Closing Time, Purchaser
and Seller shall enter into an Interim Services Agreement. Seller and Purchaser
agrees to use, and to cause their respective Affiliates to use, their reasonable
best efforts to cause, and to cooperate in good faith and in accordance with the
terms of the Interim Services Agreement in connection with, the conversion of
Acquired Assets of Seller to Purchaser's trust system (the "Conversion", with
the term "Converted" having the correlative meaning) for each Person who is a
Client as of the Closing Date and who has not given (or been given) a notice of
termination.
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(e) WARN Act. The parties hereto agree to cooperate in good
faith to determine whether any notification may be required under the Worker
Adjustment and Retraining Notification Act (the "WARN Act") as a result of the
transactions contemplated by this Agreement or any of the Related Agreements.
After the Cut-Off Time, Purchaser shall be responsible for providing any
notification that may be required under the WARN Act with respect to any
Transferred Employees. Seller shall be responsible for providing any
notification that may be required under the WARN Act with respect to any
employees of the Business that do not become Transferred Employees. If, after
the Cut-Off Time, Purchaser fails to provide sufficient notice to enable Seller
to provide such timely notification, then Purchaser shall be liable for any
additional expenditure resulting from the failure to provide notification
required under the WARN Act with respect to any employees of the Business.
5.2 Certain Covenants and Agreements of Seller. Seller hereby
agrees with Purchaser as follows:
(a) Conduct of the Business. From the date hereof until
the Closing Time, Seller shall conduct, or cause to be conducted, the Business
in the ordinary course consistent with past practice and use its reasonable best
efforts to preserve intact the business organizations and relationships with
third parties relating to the Business and to keep available the services of the
Transferred Employees, subject to Seller's policies and procedures. Without
limiting the foregoing, from the date hereof until the Closing Time, Seller
shall (1) maintain, service and process the Acquired Accounts and any
applications for Acquired Accounts in substantially the same manner as
previously maintained and serviced and in accordance in all material respects
with Seller's written policies and procedures relating to the Business as
currently in effect; (2) maintain, service and process the Acquired Accounts and
any applications for any Accounts to be
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acquired hereunder in compliance with applicable laws, rules and regulations;
(3) not make any change to Seller's policies and procedures relating to the
Acquired Accounts or take any other action that would have a Material Adverse
Effect, or a material adverse effect on the goodwill associated with the
Acquired Assets, except as required by law, safe or sound banking practices; or
(4) comply with the terms and conditions of the Client Agreements, as then in
effect; (5) not, with respect to the Business, acquire a material amount of
assets from any other Person, which assets would qualify as Acquired Assets; (6)
not sell, lease, license or otherwise dispose of any Acquired Assets except in
the ordinary course consistent with past practice; (7) not create, assume or
otherwise incur any Lien other than Permitted Liens on any Acquired Asset; (8)
not enter into any joint venture or similar arrangement that involves the
sharing of profits or future payments to other Persons, each with respect to the
Business; (9) not (A) grant any severance or termination pay to any Transferred
Employee, (B) enter into any employment, deferred compensation or other similar
agreement (or any amendment to any such existing agreement) with any employee of
the Business, (C) increase in benefits payable under an existing severance or
termination pay policies or employment agreements, or (D) increase in
compensation, bonus or other benefits payable to Transferred Employees, other
than in the ordinary course of business consistent with past practice; (10)
agree or commit to do anything listed in any of the foregoing clauses (3)
through (9); (11) use its reasonable best efforts to preserve the goodwill of
its suppliers, customers and others having business relations with Seller
relating to the Business.
(b) Access.
(1) From the date of this Agreement until the
Closing Date, Seller shall, upon one (1) Business Day's notice from Purchaser,
(i) give Purchaser, its counsel, financial advisors, auditors and other
authorized representatives reasonable access during normal
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business hours to the offices, properties, books and records of Seller or any of
its Affiliates, in any event only as relating to the Acquired Assets; (ii)
furnish Purchaser, its counsel, financial advisors, auditors and other
authorized representatives with copies of such information with respect to the
Acquired Assets and Assumed Liabilities; (iii) instruct the employees, counsel
and financial advisors of Seller to cooperate reasonably with Purchaser in its
investigation of the Acquired Assets and Assumed Liabilities and shall allow
Purchaser reasonable access to such employees, counsel and financial advisors
(provided that such access does not unreasonably interfere with the activities
of such employees, counsel and financial advisors); and (iv) cooperate with
Seller in providing reasonable access and introduction to Clients; provided that
(x) such access or investigation shall be supervised by Seller's representatives
and conducted in a manner that does not unreasonably interfere with Seller's
normal operations and (y) Seller shall not be required to divulge any records,
including certain Client information, to the extent prohibited by applicable
agreements, statutes, regulations or Seller employment policies; provided,
however, that if such access is prohibited by an agreement, then Seller shall
request the applicable party to such agreement for permission to disclose such
records to Purchaser and/or its representatives. No investigation by Purchaser
or other information received by Purchaser shall operate as a waiver or
otherwise affect any representation, warranty or agreement given or made by
Seller hereunder.
(2) On and after the Closing Date, Seller shall
afford promptly to Purchaser and its agents reasonable access to its books of
account, financial and other records (including, without limitation,
accountant's work papers, and information and records maintained on the AM Trust
System), information, employees and auditors relating solely to the Business to
the extent necessary or useful for Purchaser in connection with any audit,
investigation, dispute
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or litigation or any other reasonable business purpose relating to the Business;
provided that any such access by Purchaser shall (i) not unreasonably interfere
with the conduct of Seller's business and (ii) be responsible for any expenses
that, individually or in the aggregate, are non-deminimus.
(c) Exclusivity. Seller agrees that its shall not, and none of
its Affiliates, agents, representatives, directors, officers or employees shall,
either directly or indirectly (through brokers, agents, affiliates or otherwise)
sell, transfer or otherwise encumber or solicit, discuss, accept or take any
other action with respect to an offer from any other potential purchaser to
acquire any of the assets of the Business, whether by asset purchase, stock
purchase or otherwise.
(d) Further Assurances. On and after the Closing Date, Seller
shall give such further assurances to Purchaser, execute, acknowledge and
deliver all such acknowledgments and other instruments and take such further
action as may be reasonably necessary and appropriate to carry out fully and
effectively the transactions contemplated by this Agreement and by the Related
Agreements.
(e) Books and Records. Commencing on the Closing Date, the
Books and Records shall be the property of Purchaser and shall be delivered to
Purchaser prior to the Closing Time; provided that Seller may retain such copies
thereof as may be required to meet legal, regulatory, tax, accounting and
auditing requirements.
(f) Confidentiality. After Closing, Seller and its Affiliates
shall hold, and shall cause their respective officers, directors, employees,
accountants, counsel, consultants, advisors and agents to hold, in confidence,
unless compelled to disclose by judicial or administrative process or by other
requirements of applicable law, rule or regulation, all
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confidential documents and information concerning the Acquired Assets and
Assumed Liabilities, except to the extent that such information (i) was
previously known on a non-confidential basis by Seller, (ii) enters the public
domain through no fault of Seller or any of its Affiliates or (iii) is later
lawfully acquired by Seller from sources that are not, to Seller's knowledge,
subject to any confidentiality obligation with respect to such documents or
information and that are not related to its prior ownership of the Acquired
Assets.
(g) Notice of Certain Events. Seller shall promptly
notify Purchaser of:
(1) any notice or other communication from any
Person alleging that the consent of such Person is or may be required in
connection with the transactions contemplated by this Agreement or any Related
Agreement;
(2) any notice or other communication from any
governmental or regulatory agency or authority in connection with the
transactions contemplated by this Agreement or any Related Agreement;
(3) any actions, suits, claims, investigations
or proceedings commenced or, to its knowledge threatened against, relating to or
involving or otherwise affecting Seller or the Business that, if pending on the
date of this Agreement, would have been required to have been disclosed pursuant
to this Agreement or that related to the consummation of the transactions
contemplated by this Agreement or any Related Agreement; and
(4) the damage or destruction by fire or other
causality of any material Acquired Asset or part thereof or in the event that
any material Acquired Asset or part thereof becomes the subject of any
proceeding or, to the knowledge of Seller, threatened proceeding for the taking
thereof or any part thereof.
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(h) Conversion Efforts. As soon as practicable after Seller
announces to the Employees the transactions contemplated hereby, Seller shall
use its reasonable best efforts (but without any requirement to make payments to
third parties in connection therewith) to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary or desirable under
applicable laws, rules and regulations to assist Purchaser in effecting a
conversion of the Acquired Accounts, including, without limitation, providing
Purchaser with access and use of files and extracts created by Seller during
Seller's earlier preparation for conversion from the AM Trust System, and making
reasonably available at Seller's expense appropriate technology and operation
personnel of Seller to assist with the conversion.
(i) Certain Required Disclosures. Seller acknowledges that an
Affiliate of Purchaser (i) is subject to the reporting requirements of the
Securities Exchange Act of 1934 and may from time to time register its
securities for sale to the public under the Securities Act of 1933 and (ii) may
be required to file with the Securities and Exchange Commission registration
statements, proxy statements or other reports and documents that include
historical and pro forma financial statements and other information regarding
the Business and Seller required by applicable U.S. securities laws and by Rule
3-05 and Article 11 of Regulation S-X under the Securities Act of 1933 and the
Securities Exchange Act of 1934. Seller shall provide reasonable access to such
financial and other information necessary for Purchaser to comply with these and
other applicable laws.
(j) Trademarks; Tradenames. As soon as practicable after the
Closing Date, Seller shall eliminate the use of all of the trademarks,
tradenames, service marks and service names used primarily in the Business, in
any of their forms or spellings, on all advertising,
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stationery, business cards, checks, purchase orders and acknowledgments,
customer agreements and other contracts and business documents.
(k) Tax Reporting.
(i) For the period ending December 31, 2000, Seller
shall perform all reporting requirements under applicable tax laws and
that relate to the Client Agreements, including Forms 1099 and related
forms.
(ii) Seller shall provide to Purchaser position and
transaction extracts from the AM Trust System to allow Purchaser to map
tax information to Purchaser's tax reporting database, as such
information is reasonably necessary for purposes of satisfying the
reporting requirements under applicable tax laws for the period ending
December 31, 2001.
(l) Required Consents. Seller shall use all reasonable best
efforts to obtain consents in writing to the transactions contemplated by this
Agreement (including the Required Consents) and such amendment, assignments or
modifications of such documents or instruments that are required so that the
transactions contemplated by this Agreement shall not result in any violation
with respect to any law, rule, regulation, order, decree, license, agreement,
contract, commitment or instrument to which Seller or any of the Acquired Assets
is bound.
5.3 Certain Covenants and Agreements of Purchaser. Purchaser hereby
agrees with Seller as follows:
(a) Conversion Efforts. From and after the Closing Date, Purchaser
shall use its best efforts to take, or cause to be taken, all actions and to do,
or cause to be done, all things necessary or desirable under applicable laws,
rules and regulations to effect a Conversion of the Acquired Accounts.
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(b) Notice of Certain Events. Purchaser shall promptly notify
Seller of:
(1) any notice or other communication from any Person
alleging that the consent of such Person is or may be required in connection
with the transactions contemplated by this Agreement or any Related Agreement;
and
(2) any notice or other communication from any
governmental or regulatory agency or authority in connection with the
transactions contemplated by this Agreement or any Related Agreement.
(c) Further Assurances. On and after the Closing Date,
Purchaser shall give such further assurances to Seller, execute, acknowledge and
deliver all such acknowledgments and other instruments and take such further
action as may be reasonably necessary and appropriate to carry out fully and
effectively the transactions contemplated by this Agreement and by the Related
Agreements.
5.4 Enforceability of Covenants. Seller and Purchaser do hereby
additionally acknowledge and agree that none of the time span, scope or area
covered by the within covenants and agreements are unreasonable, and that it is
the specific and express intent of Seller and Purchaser that the covenants and
agreements set forth above shall be valid and enforceable as specifically set
forth. If it is judicially determined that any portion of the covenants or
agreements set forth above shall not be valid or enforceable as specifically set
forth, then the covenants or agreements shall not be declared invalid but rather
shall be modified in such a manner so as to result in the same being valid and
enforceable to the maximum extent permitted by law.
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CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE DELETIONS.
5.5 Covenant Not-to-Compete.
(a) For purposes of this Section, the term "Advisory Custody
Account" shall mean any securities safekeeping account pursuant to which
advisory custody services are performed (as such services are performed as of
the date hereof by the Advisory Custody Business of Seller's National Consumer
Services division ("ACB")) where (i) the advisory custody account is opened with
a Target Customer as a result of a referral from a third party investment
advisor in order to facilitate such investment advisor's provision of
discretionary or non-discretionary investment management services to the account
holder in connection with such account, (ii) each of the custodian and the
account holder's primary business relationship with respect to such account is
with the investment advisor and not with each other and (iii) the advisory
custody account is maintained in any of New York, New Jersey, Connecticut and
Massachusetts.
(b) For a period of ********* years from the Closing Date,
Seller and its Affiliates shall not establish de novo or maintain a business,
division or other operation to engage primarily in the promotion, solicitation,
offering and origination of Advisory Custody Accounts.
(c) Notwithstanding anything herein to the contrary,
(i) this Agreement shall not be construed to preclude
Seller and/or any of its Affiliates from continuing conduct of the Business
until the Conversion Date;
(ii) this Agreement shall not be construed to preclude
Seller and/or any of its Affiliates from the ownership or administration of
any Account(s) that is/are not an Acquired Account;
(iii) this Agreement shall not be construed to preclude
Seller and/or any of its Affiliates from acquiring and/or holding (solely
for investment purposes or pursuant
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to any bankruptcy or similar proceeding or through foreclosure of any stock
or other interest securing any obligation to Seller and/or any of its
Affiliates) any interest in any Person that maintains, manages, holds,
promotes, solicits, offers, originates or otherwise conducts Advisory
Custody Accounts;
(iv) this Agreement shall not be construed to preclude
Seller and/or any of its Affiliates from performing any custody or other
services (including advisory custody services where such services are
ancillary to other services being provided, and are not a primary source of
revenue, in connection with Seller's or such Affiliate's relationship with
the investment advisor associated with such custody account) in connection
with its brokerage, trust, collateral management, cash management, escrow,
foreign exchange, retirement services, investor services, investment
management, investment advisory, endowment and foundation, accounting,
asset management, warehouse lending, loan documentation custody, loan
securitization, tri-party repurchase, mortgage, private banking, mutual
funds or clearing businesses, or any businesses that are currently, or in
the future, conducted by or under Seller's Private Bank, Chase H&Q, Global
Investment Bank, Chase Securities Inc., Chase Securities of Texas, Global
Investor Services, Global Asset Management, Capital Markets Fiduciary
Services and Chase Treasury Solutions businesses and/or Brown & Co.
Securities Corp.; provided that Seller may not establish an Advisory
Custody Account (x) through the entities listed on Schedule 5.6(c)(iv)
attached hereto or (y) for any Target Customer in connection with such
Target Customer's investment advisory relationship with those entities if
such Target Customer's Advisory Custody Accounts are being purchased by
Purchaser hereunder;
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CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE DELETIONS.
(v) this Agreement shall not be construed to preclude
Seller and/or any of its Affiliates from providing any services to any
Person if such services would not have been provided through ACB as such
business is conducted as of the date hereof; and
(vi) this Agreement shall not be construed to preclude
Seller and/or any of its Affiliates from (A) directly or indirectly
acquiring (through the acquisition of stock or otherwise) any Person or
affiliated group of Persons engaged in an Advisory Custody Business or the
Advisory Custody Business assets of such Person or affiliated group of
Persons constituting such business where, for the most recently completed
fiscal year of such Person or affiliated group of Persons, the Advisory
Custody Business accounts for no more than thirty percent (30%) of the
consolidated revenues of such Person or affiliated group of Persons or (B)
being acquired by any Person or affiliated group of Persons that owns an
Advisory Custody Business.
(d) For a period of ********* years from the Closing Date, none of
Seller and/or its Affiliates shall be permitted to solicit or bid for (i) any
Person whose Account was sold to Purchaser under this Agreement or (ii) any
investment advisor, who at the Closing Date provided investment management
services to the Accounts referenced in clause (i) of this sentence, for the
establishment of any Advisory Custody Account (as such services are provided by
ACB and as ACB is conducted as of the date hereof) unless such advisory custody
services are provided in connection with any of its brokerage, trust, collateral
management, cash management, escrow, foreign exchange, retirement services,
investor services, investment management, investment advisory, endowment and
foundation, accounting, asset management, warehouse lending, loan documentation
custody, loan securitization, tri-party repurchase, mortgage, private banking,
mutual funds or clearing businesses, or any businesses that are
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currently or in the future conducted by Seller's Private Bank, Chase H&Q, Global
Investment Bank, Chase Securities Inc., Chase Securities of Texas, Global
Investor Services, Capital Markets Fiduciary Services and Chase Treasury
Solutions businesses and/or Brown & Co. Securities; provided that such advisory
custody services not prohibited under this paragraph are ancillary to other
services being provided by Seller or its Affiliate, and are not a primary source
of revenue, in connection with Seller's or such Affiliate's relationship with
the investment advisor associated with such custody account. Notwithstanding the
foregoing, for a period of three (3) years from the Closing Date, none of Seller
and its Affiliates shall solicit or bid for the provision of Advisory Custody
Accounts for (x) any of the entities listed on Schedule 5.6(c)(iv) attached
hereto or (y) with respect to such Target Customer's account with such entity,
any Target Customer whose Advisory Custody Account is managed by any such entity
and is acquired hereunder.
ARTICLE VI
TAX MATTERS
6.1 Tax Definitions. The following terms, as used herein, have the
following meanings:
(a) The term "Pre-Closing Tax Period" shall mean (i) any Tax
Period ending on or before the Closing Date and (ii) with respect to a Tax
Period that commences before but ends after the Closing Date, the portion of
such period up to and including the Closing Date.
(b) The term "Tax" shall mean (i) any net income, alternative
or add-on minimum tax, gross income, gross receipts, sales, use, ad valorem,
value added, transfer,
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franchise, profits, license, registration, recording, documentary, conveyancing,
gains, withholding on amounts paid to or by Seller, payroll, employment, excise,
severance, stamp, occupation, premium, property, environmental or windfall
profit tax, custom duty or other tax, governmental fee or other like assessment
or charge of any kind whatsoever, together with any interest, penalty, addition
to tax or additional amount imposed by any governmental authority (each, a
"Taxing Authority") responsible for the imposition of any such tax (domestic or
foreign), or (ii) liability for the payment of any amounts of the type described
in (i) as a result of being party to any agreement or any express or implied
obligation to indemnify any other Person.
6.2 Tax Matters. Seller hereby represents and warrants to
Purchaser that:
(a) Seller has timely paid all Taxes, and all interest and
penalties due thereon and payable by it for the Pre-Closing Tax Period which
will have been required to be paid on or prior to the Closing Date, the
non-payment of which would result in a Lien on any Acquired Asset, would
otherwise adversely affect the Business or would result in Purchaser becoming
liable or responsible therefor.
(b) Seller has established, in accordance with generally
accepted accounting principles applied on a basis consistent with that of
preceding periods, adequate reserves for the payment of, and shall timely pay
all Tax liabilities, assessments, interest and penalties which arise from or
with respect to the Acquired Assets or the operation of the Business and are
incurred in or attributable to the Pre-Closing Tax Period, the non-payment of
which would result in a Lien on any Acquired Asset, would otherwise adversely
affect the Business or would result in Purchaser becoming liable therefor.
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6.3 Tax Cooperation; Allocation of Taxes.
(a) Purchaser and Seller agree to furnish or cause to be
furnished to each other, upon request, as promptly as practicable, such
information and assistance relating to the Business and the Acquired Assets
(including, without limitation, access to books and records) as is reasonably
necessary for the filing of all Tax returns, the making of any election relating
to Taxes, the preparation for any audit by any taxing authority and the
prosecution or defense of any claim, suit or proceeding relating to any Tax.
Purchaser and Seller shall retain all books and records with respect to Taxes
pertaining to the Acquired Assets for a period of at least six (6) years
following the Closing Date. At the end of such period, each party shall provide
the other with at least ten (10) days prior written notice before destroying any
such books and records, during which period the party receiving such notice can
elect to take possession, at its own expense, of such books and records. Seller
and Purchaser shall cooperate with each other in the conduct of any audit or
other proceeding relating to Taxes involving the Acquired Assets or the
Business.
(b) All property taxes (personal or otherwise) and similar ad
valorem obligations levied with respect to either the Acquired Assets or Assumed
Liabilities for a taxable period that includes (but does not end on) the Closing
Date (collectively, the "Apportioned Obligations") shall be apportioned between
Seller and Purchaser based on the number of days of such taxable period included
in the Pre-Closing Tax Period and the number of days of such taxable period
after the Closing Date (any such taxable period, the "Post-Closing Tax Period").
Seller shall be liable for the proportionate amount of such taxes that is
attributable to the Pre-Closing Tax Period, and Purchaser shall be liable for
the proportionate amount of such taxes that is attributable to the Post-Closing
Tax Period. Upon receipt of any bill for property (whether personal or
otherwise) taxes relating to the Acquired Assets, each of Seller and Purchaser
shall
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present a statement to the other setting forth the amount of reimbursement to
which each is entitled under this Section 6.3(b) together with such supporting
evidence as is reasonably necessary to calculate the pro-ration amount, taking
into account any reserves established by Seller. The pro-ration amount shall be
paid by the party owing it to the other within ten (10) days after delivery of
such statement. In the event that either Seller or Purchaser shall make any
payment for which it is entitled to reimbursement under this Section 6.3(b), the
other party shall make such reimbursement promptly but in no event later than
ten (10) days after the presentation of a statement setting forth the amount of
reimbursement to which the presenting party is entitled along with such
supporting evidence as is reasonably necessary to calculate the amount of
reimbursement.
(c) All excise, sales, use, value added, registration stamp,
recording, documentary, conveyancing, franchise, property, transfer and similar
Taxes, levies, charges and fees (collectively, the "Transfer Taxes") incurred in
connection with the transactions contemplated by this Agreement shall be borne
by the party that is legally responsible therefor. Purchaser and Seller shall
cooperate in providing each other with any appropriate resale exemption
certifications and other similar documentation. The party that is required by
applicable law to make the filings, reports, or returns with respect to any
applicable Transfer Taxes shall do so, and the other party shall cooperate with
respect thereto as necessary. No portion of the Purchase Price is subject to any
Tax withholding provision of federal, state, local or foreign law.
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ARTICLE VII
EMPLOYEE MATTERS
7.1 Agreements; Representations and Warranties.
(a) Purchaser shall offer employment to all Employees listed
on Schedule 7.1(a) attached hereto who remain employed by Seller in the Business
as of the Closing Date.
(b) Schedule 7.1(b) attached hereto shall include the
following information for each Employee: name, job title, location of
employment, salary, salary grade, most recent performance rating, Fair Labor
Standards Act status, most recent salary increase and the date awarded,
anticipated 2000 and 2001 salary increases if applicable, special day(s)
entitlement, accrued but unused 1999 and 2000 vacation; scheduled hours of work,
shift differential (if any), special work arrangements (if any), service date if
different from date of hire, salary grade, date of hire, service date for
benefit purposes and 1999 and 2000 bonus and/or other incentive compensation,
including stock options. Schedule 7.1(b) shall be true and complete in all
material respects.
(c) Purchaser shall be responsible for any activity in
connection with advising Employees of the details of any employment with
Purchaser and answering any questions relating thereto.
(d) Each employee benefit plan, within the meaning of Section
3(3) of ERISA, which is sponsored, maintained or contributed to or has been
sponsored, maintained or contributed to within six years prior to the Closing
Date, by Seller or any entity that would be considered to be under common
control with Seller within the meaning of Section 414 of the Code (each as
"ERISA Affiliate"), complies or prior to its termination had compiled in all
respects with the requirements prescribed by any and all statutes, rules and
regulations, including but not limited ERISA and the Code, that are applicable
to such plan.
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(e) Neither Seller nor any ERISA Affiliate contributes to or
has an obligation to contribute to, and has not at any time within six years
prior to the Closing Date contributed to or had an obligation to contribute to,
a multi-employer plan within the meaning of Section 3(37) of ERISA or a plan
subject to Title IV of ERISA.
(f) Each employee benefit plan maintained or contributed to by
Seller or any ERISA Affiliate which is intended to qualified under Section
401(a) of the Code is so qualified and has been so qualified during the period
from its adoption to date, and each trust forming a part thereof is exempt from
tax pursuant to Section 501(a) of the Code.
(g) Purchaser's defined benefit pension plan has been closed
to new participants since January 1, 1997, and is not available to any employees
hired by Purchaser after such date. As such, Seller acknowledges that the
Transferred Employees shall not be entitled to participate in such defined
benefit pension plan of Purchaser.
7.2 Employment with Purchaser.
(a) Purchaser shall provide employment to all Employees who
accept Purchaser's offer of employment made pursuant to Section 7.1(a) hereof
and who become Transferred Employees, for a period of at least twelve (12)
months following the Closing Date; provided that (i) Purchaser's employment of
such Transferred Employees may be terminated for cause; (ii) Purchaser shall not
be required to provide such employment to any Transferred Employee who
voluntarily leaves the employment of Purchaser for any reason; and (iii) this
provision is not intended to confer upon any Transferred Employee any rights or
remedies thereunder. Such employment shall include positions that (i) are
located in The City of New
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York and within a fifteen (15) mile radius of the location here such Transferred
Employees are employed by Seller as of the Cut-Off Time; (ii) entail job titles,
duties and responsibilities that are substantially the same as such Transferred
Employees have in their positions with Seller as of the Cut-Off Time; (iii)
provide base wages or salaries no less than the base wages and salaries paid by
Seller to such Transferred Employees as of the Cut-Off Time; (iv) provide
incentive compensation opportunities substantially similar to the incentive
compensation opportunities provided by Seller to the Transferred Employees as of
the Cut-Off Time, as set forth in Schedule 7.1(b) hereto; (v) provide continuity
of any compensation increases planned by Seller for the year 2000, as set forth
in Schedule 7.1(b) hereto; (vi) entail working substantially the same hours and
work schedules as the Transferred Employees worked with Seller in the year prior
to the Cut-Off Time; and (vii) provide benefits that are comparable to and
consistent with the benefits provided by Purchaser as of the date hereof and the
Cut-Off Time. Seller shall not increase the base salary or incentive
compensation paid to any Transferred Employee prior to the Closing Date in
excess of Seller's regularly scheduled increase to such Transferred Employees.
(b) Purchaser shall be responsible for all employment and
benefit related liabilities or obligations of whatever nature with respect to
any Transferred Employee for claims incurred or based on events, acts,
omissions, conduct or courses of conduct occurring entirely on or after the
Cut-Off Time; provided that to the extent than an employee asserts both pre
Cut-Off Time and Post Cut-Off Time claims, Seller and Purchaser shall cooperate
and share pro-rata based upon pre Cut-Off Time versus post Cut-Off Time periods,
in the cost of the defense of such claims and be responsible for the claims to
the extent they concern pre-Cut-Off Time and post Cut-Off Time claims.
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7.3 Employee Benefit Plans.
(a) Purchaser shall have no liability or responsibility
relating to or arising under any employee benefit plan or policy of Seller as
that term is defined by Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA") in which any Transferred Employee
participates. Except as required by the terms of any of Seller's employee
benefits plans, active participation in any of Seller's employee benefits plans
will cease as of the Closing Date for Transferred Employees (or, if later, the
date of hire by Purchaser).
(b) The Transferred Employees shall be eligible, on the same
basis as similarly situated existing employees of Purchaser, for those employee
welfare benefit plans as defined by Section 3(1) of ERISA, compensation and
incentive compensation programs and other fringe benefits that Purchaser has in
effect. Purchaser shall make available to all Transferred Employees its welfare
benefit plans as defined by Section 3(1) of ERISA as of their respective dates
of hire. The Purchaser shall waive any pre-existing conditions for the
Transferred Employees under its medical and dental programs and shall give
credit under its medical and dental programs for any deductibles that the
Transferred Employees may have incurred under Seller's medical and dental plans;
provided that any such inactive Transferred Employee who has such a pre-existing
condition shall not be transferred to Purchaser until such time as such
Transferred Employee becomes active. With respect to any of Seller's plans that
are group health plans within the meaning of Section 5000(b)(1) of the Code,
Seller shall satisfy the notice requirements and perform all other actions
required by Sections 4980B and 9801 of the Code. Seller agrees that it is solely
responsible for providing continuation health coverage (within the meaning of
4980B(f)(2) of the Code) to any employees, former employees or qualified
beneficiaries of Seller that have had a "qualifying event" on or prior to the
Closing Date, regardless of whether the employee becomes a Transferred Employee.
Purchaser shall not
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apply any pre-existing condition clause under its long-term disability plan so
as to preclude payment of a benefit to a Transferred Employee; provided that (i)
such Transferred Employee participated in Seller's long-term disability plan as
of the Closing Date and (ii) the pre-existing condition precluding the payment
under Purchaser's plan would not have precluded payment of a benefit if the
Transferred Employee had made a claim under Seller's long-term disability plan;
provided further that any such inactive Transferred Employee who has such a
pre-existing condition shall not be transferred to Purchaser until such time as
such Transferred Employee becomes active.
(c) Purchaser shall treat all service of Transferred Employees
with Seller and its Affiliates, including service with predecessor employers if
recognized under Seller's programs as if it had been service with the Purchaser
for each Transferred Employee for all purposes under Purchaser's employee
welfare benefit plans as defined by Section 3(3) of ERISA (including but not
limited to severance programs or arrangements), compensation and incentive
compensation programs and fringe benefit programs and policies (in each of the
foregoing cases, including, but not limited, to participation, vesting and
benefits whose level is based on service).
(d) Effective as of the Closing Date (or, if later, the date
of hire by Purchaser), the Transferred Employees shall be able to participate in
the Purchaser's defined contribution plan in accordance with the terms of such
plan. As provided in Section 7.3(c) hereof, Purchaser's defined contribution
plan shall credit the Transferred Employees with all service with Seller and its
Affiliates, including service with predecessor employers if recognized under
Seller's programs, for purposes of eligibility and vesting of employer
contributions and the level of contributions if based on service. Purchaser
shall cause the trustee of its defined contribution plan to accept rollovers
(consisting of cash and outstanding loan balances) described in Section
401(a)(31) of the Code from Seller's 401(k) Plan with respect to the Transferred
Employees who make an election for a transfer.
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CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE DELETIONS.
7.4 Vacation. Purchaser shall give each Transferred Employee credit for
service with Seller, its Affiliates and predecessor employers if recognized
under Seller's program, for vacation entitlement purposes. On the Closing Date,
Seller shall provide Purchaser with a true and complete list of all unused and
available vacation days for each Transferred Employee during the years 2000 and
1999, if applicable. Purchaser agrees to follow Seller's or Purchaser's vacation
policy in effect as of the Closing Date for all Transferred Employees for a
period of twelve (12) months from the Closing Date, whichever policy provides
the greater benefits to the Transferred Employees. After such period ends, each
Transferred Employee shall accrue and utilize vacation pursuant to Purchaser's
vacation policy.
7.5 Severance; ************.
(a) Purchaser shall provide severance payments and benefits to
any Transferred Employee whose employment involuntarily terminates (other than
for death, disability or termination for cause) before the expiration of a
twelve (12) month period after the Closing Date. Purchaser shall provide such
severance payments and benefits pursuant to Purchaser's policy attached hereto
as Exhibit F.
(b) On ******************* Purchaser shall distribute to
********************************** an amount of *************************** as
a ***************, which amount shall be *******************************
******************* shall be in addition to such amounts, if any,
distributed and funded by Purchaser to certain or all Transferred Employees as
bonuses, which distributions, if any, shall be made in the sole discretion of
Purchaser.
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CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE DELETIONS.
7.6 Tuition Assistance. Seller agrees to reimburse each Transferred
Employee for courses that were approved and in process but not completed prior
to the Closing Date; provided that such Transferred Employee satisfies all
applicable conditions for reimbursement under Seller's tuition assistance
program. Seller shall reimburse each Transferred Employee for courses completed
prior to the Closing Date in accordance with Seller's tuition assistance
program.
7.7 Non-Solicitation Restrictions.
(a) From the date hereof until and including the ******
anniversary of the Closing Date, Purchaser shall not, directly or indirectly,
without the written consent of a duly authorized employee of Seller, solicit the
employment of any employee (or any individual who, as of the date hereof, is an
employee) of Seller (i) with whom Purchaser or any of its representatives has
had contact or (ii) of whom Purchaser or any of its representatives has become
aware, in any event in connection with the transactions contemplated hereby and
which individual does not become a Transferred Employee as provided in this
Article VII; provided that it shall not be a violation of this provision to
solicit (a) through general advertisements not directed at the Employees or (b)
any restricted individual through an executive search firm where such firm has
not been directed to solicit such individual.
(b) From the date hereof until and including the ******
anniversary of the Closing Date, Seller shall not, directly or indirectly,
without the written consent of a duly authorized employee of Purchaser,
solicit the employment of any employee of Purchaser (i) with whom Seller or
any of its representatives has had contact or (ii) of whom Seller or any of
its representatives has become aware, in any event in connection with the
transactions contemplated hereby; provided that it shall not be a violation
of this provision to solicit (a) through general
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advertisements not directed at the employees of Purchaser or (b) any restricted
individual through an executive search firm where such firm has not been
directed to solicit such individual.
ARTICLE VIII
CONDITIONS OF CLOSING
8.1 Conditions to Obligations of Purchaser and Seller. The obligations
of Purchaser and Seller to consummate the transactions contemplated by this
Agreement are subject to the satisfaction of the following conditions as of the
Closing Time:
(a) HSR Act. Any applicable waiting period under the HSR Act
relating to the transactions contemplated by this Agreement shall have expired
or been terminated.
(b) Legal Prohibition. No provision of any applicable law or
regulation and no judgment, injunction, order or decree shall prohibit the
consummation of the Closing.
(c) Regulatory Approvals. All actions by or in respect of or
filings with any governmental body, agency, official or authority required to
permit the consummation of the Closing shall have been taken, made or obtained,
including those set forth in Schedules 4.1(c) and 4.2(c) attached hereto.
(d) Board Resolutions. Purchaser shall have received from
Seller, and Seller shall have received from Purchaser, the certified resolutions
of such other party's Board of Directors (where applicable), authorizing the
execution and delivery of this Agreement, the Related Agreements and the Bill of
Sale and the consummation of the transactions this Agreement and the Related
Agreements.
8.2 Conditions to Obligations of Purchaser. The obligation of Purchaser
to consummate the transactions contemplated by this Agreement is, in addition to
the conditions contained in Section 8.1 hereof, subject to the satisfaction of
the following conditions prior to or at the Closing Time:
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(a) Performance of this Agreement. All of the terms,
covenants, agreements and conditions of this Agreement to be complied with and
performed by Seller at or prior to the Closing Time and which are not qualified
by a materiality standard shall have been complied with and performed in all
material respects. All of the terms, covenants, agreements and conditions of
this Agreement to be complied with and performed by Seller at or prior to the
Closing Time and which are qualified by a materiality standard of any type shall
have been complied with and performed in all respects.
(b) Accuracy of Representations and Warranties. The
representations and warranties of Seller set forth in this Agreement or in any
certificate or other writing delivered by Seller pursuant hereto or in
connection herewith (disregarding any qualification with respect to
"materiality" or "Material Adverse Effect") shall be true and correct at and as
of the Closing Date as if made at and as of such date, except where the failure
of such representations and warranties to be true shall not have a Material
Adverse Effect or a material adverse effect on the ability of Seller to
consummate the transactions contemplated by the Agreement or to perform its
material obligations thereunder.
(c) Litigation. No action, suit, litigation, proceeding or
investigation is threatened, instituted or pending before any court, arbitrator
or governmental body, agency or official that (1) in the opinion of Purchaser
(after consultation with its counsel) is reasonably likely to restrict, prohibit
or prevent or materially to alter or delay or otherwise have a material adverse
effect on the consummation of any of the transactions contemplated by this
Agreement or by any of the Related Agreements or (2) seeks to restrain, prohibit
or otherwise interfere with
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the ownership or use of the Acquired Assets or Assumed Liabilities by Purchaser
or to compel Purchaser to dispose of all or substantially all or any material
portion of the Acquired Assets or Assumed Liabilities or (3) seeks to require
divestiture by Purchaser or any of its Affiliates of any material Acquired Asset
or Assumed Liabilities.
(d) Regulations. No provision of any applicable law or
regulation and no judgment, injunction, order or decree shall restrain, prohibit
or otherwise interfere, in any event in any material respect, with the effective
operation or enjoyment by Purchaser of all or any portion of the Acquired
Assets. There shall not be any action taken, or any statute, rule, regulation,
injunction, order or decree proposed, enacted, enforced, promulgated, issued or
deemed applicable to the purchase of the Acquired Assets, by any court,
government or governmental authority or agency, domestic or foreign, other than
the application of the waiting period provisions of the HSR Act to the purchase
of the Acquired Assets, that, in the reasonable judgment of Purchaser would,
directly or indirectly, reasonably be expected to result in any of the
consequences referred to in clauses 8.2(c)(1), (2) and (3) above.
(e) Documents to be Delivered by Seller. Seller shall have
furnished to Purchaser (1) a certificate, in the form attached hereto as Exhibit
C-1, dated the Closing Date and signed by an authorized executive officer of
Seller, to the effect that the conditions set forth in Section 8.2(a) and (b)
hereof with respect to Seller have been satisfied, (2) a certificate, in the
form attached hereto as Exhibit C-2, dated the Closing Date and signed by the
Secretary or an Assistant Secretary of Seller, certifying the incumbency of the
officers or other representatives of Seller signing this Agreement and each
Related Agreement, (3) the Closing Statement in the form attached hereto as
Exhibit E and (4) an opinion of counsel for Seller, dated the Closing Date, in
the form attached hereto as Exhibit C-3.
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(f) Related Agreements. Each of the Related Agreements shall
have been executed and delivered by Seller and, assuming due execution and
delivery by Purchaser, shall be in full force and effect.
(g) Required Consents. Seller shall have received all material
Required Consents and all consents, authorizations or approvals from the
governmental agencies referred to in Section 4.1(c), in each case in form and
substance reasonably satisfactory to Purchaser, and no such consent,
authorization or approval shall have been withdrawn or revoked.
(h) Revised Schedules. Without prejudice to Purchaser's rights
under Sections 8.2(a), (b) and (e), Seller shall have delivered to Purchaser
revised schedules to this Agreement containing information updated to the
Closing Date.
(i) Other Documents. Purchaser shall have received all
documents it may reasonably request relating to the existence of Seller and the
authority of Seller for this Agreement and the Related Agreements, all in form
and substance reasonably satisfactory to Purchaser.
(j) Material Adverse Change. After the date hereof and prior
to the Closing Date, there shall not have occurred a material adverse change
relating solely to the Business.
8.3 Conditions to Obligations of Seller. The obligation of Seller under
this Agreement to consummate the transactions contemplated by this Agreement is,
in addition to the conditions contained in Section 8.1 hereof, subject to the
satisfaction of the following conditions as of the Closing Time:
(a) Performance of this Agreement. All of the terms,
covenants, conditions and agreements of this Agreement to be complied with and
performed by Purchaser at or prior to the Closing Time and which are not
qualified by a materiality standard in any respect shall have
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been complied with and performed in all material respects. All of the terms,
covenants, agreements and conditions of this Agreement to be complied with and
performed by Purchaser at or prior to the Closing Time and which are qualified
by a materiality standard of any type shall have been complied with and
performed in all respects.
(b) Accuracy of Representations and Warranties. The
representations and warranties of Purchaser set forth in this Agreement or in
any certificate or other writing delivered by Purchaser pursuant hereto or in
connection herewith (disregarding any qualification with respect to
"materiality" or "Material Adverse Effect") shall be true and correct at and as
of the Closing Date as if made at and as of such date, except where the failure
of such representations and warranties to be true shall not have a material
adverse effect on the ability of Purchaser to consummate the transactions
contemplated by the Agreement or to perform its material obligations thereunder.
(c) Documents to be Delivered by Purchaser. Purchaser shall
have delivered to Seller (1) a certificate, in the form attached hereto as
Exhibit D-1, dated the Closing Date and signed by an authorized executive
officer of Purchaser, to the effect that the conditions set forth in Sections
8.3(a) and (b) hereof have been satisfied, (2) a certificate, in the form
attached hereto as Exhibit D-2, dated as of the Closing Date, signed by the
Secretary or an Assistant Secretary of Purchaser, certifying the incumbency of
the officers or other representatives of Purchaser signing this Agreement and
the Related Agreements, (3) the Purchase Price, as provided in Section 3.4
hereof and (4) an opinion of counsel for Purchaser, dated the Closing Date, in
the form attached hereto as Exhibit D-3.
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(d) Related Agreements. Each of the Related Agreements shall
have been executed and delivered by Purchaser and, assuming due execution and
delivery by Purchaser, shall be in full force and effect.
(e) Consents. Purchaser shall have received all consents,
authorizations or approvals from governmental agencies referred to in Section
4.2(c), in each case in form and substance reasonably satisfactory to Seller,
and no such consent, authorization or approval shall have been withdrawn or
revoked.
(f) Other Documents. Seller shall have received all documents
it may reasonably request relating to the existence of Purchaser and the
authority of Purchaser for this Agreement and the Related Agreements, all in
form and substance reasonably satisfactory to Seller.
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CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE DELETIONS.
ARTICLE IX
SURVIVAL; INDEMNIFICATION
9.1 Survival. The representations, warranties, covenants and agreements
of the parties hereto contained in this Agreement or in any certificate or other
writing delivered pursuant hereto or in connection herewith shall survive the
Closing until the ****** anniversary of the Closing Date; provided that (a) the
representations and warranties of the parties hereto contained in Sections
4.1(g) and 5.2(g) hereof shall survive indefinitely; (b) the covenants of the
parties hereto contained in Section 5.5 hereof shall survive for the period set
forth therein; and (c) the covenants, agreements, representations and warranties
contained in Articles VI or VII shall survive until expiration of the applicable
statutory period of limitations (giving effect to any waiver, mitigation or
extension thereof), if later. Notwithstanding the foregoing, any covenant,
agreement, representation or warranty in respect of which indemnity may be
sought under Section 9.2 shall survive the time at which it would otherwise
terminate pursuant to the preceding sentence, if notice of the inaccuracy or
breach thereof giving rise to such right to indemnity shall have been given to
the party against whom such indemnity may be sought prior to such time. The
liability of any party hereunder with respect to the representations and
warranties of such party shall not be reduced by any investigation made at any
time by or on behalf of any other party hereto.
9.2 Indemnification Obligations.
(a) By Seller. Seller shall be liable to and shall indemnify
and hold Purchaser and its Affiliates and their respective officers, directors,
employees and permitted assigns harmless from and against any and all Losses
incurred by reason of (1) a misrepresentation or
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CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE DELETIONS.
breach by Seller of any warranty, agreement or covenant contained in this
Agreement or in any certificate or other writing delivered pursuant hereto or in
connection herewith (which Losses shall be determined without regard to any
materiality qualification contained in any representation, warranty or covenant
giving rise to the claim for indemnity hereunder and whether or not discovered
by Purchaser prior to Closing); or (2) the failure of Seller to assume full
responsibility for any Excluded Liability; provided that Seller shall not be
liable under Section 9.2(a)(1) unless the aggregate amount of Losses with
respect to all matters referred to in Section 9.2(a)(1) exceeds
******************************************* and then only to the extent of such
excess; provided further that under no circumstances shall Seller's liability
under Section 9.2(a)(1) exceed ***********, subject to any reductions thereof
pursuant to Article III hereof.
(b) By Purchaser. Purchaser shall be liable to and shall
indemnify and hold Seller and its Affiliates and their respective officers,
directors, employees and permitted assigns harmless from and against any and all
Losses incurred by reason of (1) a misrepresentation or breach by Purchaser of
any warranty, agreement or covenant contained in this Agreement or in any
certificate or other writing delivered pursuant hereto or in connection herewith
(which Losses shall be determined without regard to any materiality
qualification contained in any representation, warranty or covenant giving rise
to the claim for indemnity hereunder and whether or not discovered by Seller
prior to Closing); or (2) the failure of Purchaser to assume full responsibility
for any Assumed Liability; provided that Purchaser shall not be liable under
Section 9.2(b)(1) unless the aggregate amount of Losses with respect to all
matters referred to in Section 9.2(b)(1) exceeds
******************************************* and then only to the extent of such
excess; provided further that under no circumstances shall Purchaser's liability
under Section 9.2(b)(1) exceed ***********, subject to any reductions thereof
pursuant to Article III hereof.
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9.3 Procedures.
(a) Notice of Claims. Purchaser and Seller agree that in case
any claim is made, or any suit, action or proceeding is commenced, which may
give rise to a right of indemnification for such party hereunder (the
"Indemnified Party") from another party (the "Indemnifying Party"), the
Indemnified Party shall give notice to the Indemnifying Party as promptly as
practicable after the receipt by the Indemnified Party of such notice or
knowledge of such claim, suit, action or proceeding. Notice to the Indemnifying
Party under the preceding sentence shall be given no later than thirty (30) days
after receipt by the Indemnified Party in the event a suit, action or proceeding
has commenced or sixty (60) days after the Indemnified Party becomes aware of
such event under all other circumstances. The failure to give prompt notice
shall not relieve an Indemnifying Party of its obligation to indemnify except to
the extent the Indemnifying Party is prejudiced by such failure. The Indemnified
Party shall make available to the Indemnifying Party and its counsel and
accountants at reasonable times and for reasonable periods, during normal
business hours, all books and records of the Indemnified Party relating to any
such possible claim for indemnification, and each party hereunder shall render
to the other such assistance as it may reasonably be required by the other in
order to insure prompt and adequate defense of any suit, action, claim or
proceeding based upon a state of facts which may give rise to a right of
indemnification hereunder.
(b) Selection of Counsel. The Indemnifying Party shall have
the right to defend, compromise and settle any suit, claim, action or proceeding
in the name of the Indemnified Party to the extent that the Indemnifying Party
may be liable to the Indemnified
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Party under Section 9.2 in connection therewith; provided that the Indemnifying
Party shall not compromise or settle a suit, claim, action or proceeding unless
it assumes the obligation to indemnify for all Losses relating thereto. The
Indemnifying Party shall notify the Indemnified Party within ten (10) days of
having been notified pursuant to Section 9.3(a) hereof if the Indemnifying Party
elects to assume the defense of any such claim, suit, action or proceeding and
employ counsel; provided that the Indemnified Party does not object to such
counsel in the reasonable exercise of its discretion. The Indemnified Party
shall have the right to employ its own counsel if the Indemnifying Party so
elects to assume such defense, but the fees and expenses of such counsel shall
be at the Indemnified Party's expense, unless (1) the employment of such counsel
shall have been authorized in writing by the Indemnifying Party, (2) the
Indemnifying Party shall not have employed counsel promptly to take charge of
the defense of such action after electing to assume the defense thereof or (3)
such Indemnified Party shall have reasonably concluded that there may be
defenses available to it which are different from or additional to those
available to the Indemnifying Party (in which case the Indemnifying Party shall
not have the right to direct the defense of such action on behalf of the
Indemnified Party), in any of which events said reasonable fees and expenses
shall be borne by the Indemnifying Party.
(c) Settlement of Claims. The Indemnified Party may at any
time notify the Indemnifying Party of its intention to settle or compromise any
claim, suit or action against the Indemnified Party in respect of which
indemnification payments may be sought from the Indemnifying Party hereunder,
but shall not settle or compromise any matter for which indemnification may be
sought, notwithstanding Section 9.3(b) hereof, in excess of ten thousand dollars
($10,000.00) in the aggregate without the consent of the Indemnifying Party. Any
settlement or compromise of any claim, suit, action or proceeding in accordance
with the
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preceding sentence, or any final judgment or decree entered on or in any claim,
suit, action or proceeding that the Indemnifying Party did not assume the
defense of in accordance herewith, shall be deemed to have been consented to by,
and shall be binding upon, the Indemnifying Party as fully as if the
Indemnifying Party had assumed the defense thereof and a final judgment or
decree had been entered in such suit, action or proceeding, or with regard to
such claim, by a court of competent jurisdiction for the amount of such
settlement, compromise, judgment or decree. No party shall settle any claim
against any other party without the prior written consent of such other party
where such settlement would result, in the reasonable judgment of such other
party, in harm to the reputation of such other party or any of its Affiliates.
(d) Indemnification Payments. Amounts owing under this Article
IX shall be paid promptly upon written demand for indemnification containing in
reasonable detail the facts giving rise to such liability; provided that if the
Indemnifying Party notifies the Indemnified Party within thirty (30) days of
receipt of such demand that it disputes its obligation to indemnify and the
parties are not otherwise able to reach agreement, the controversy shall be
settled by judgment entered by a court of competent jurisdiction. Purchaser and
Seller agree to treat all payments made hereunder as adjustments to the total
consideration paid for the Acquired Assets.
ARTICLE X
TERMINATION
10.1 Termination. This Agreement may be terminated prior to the
Closing Date:
(a) by mutual written agreement of Seller and Purchaser;
(b) by either Seller or Purchaser if the Closing has not
occurred by June 30, 2001, unless the failure of the Closing to occur by such
date shall be due to the failure of the
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party seeking to terminate this Agreement hereunder to perform or observe in any
material respect the covenants and agreements of such party set forth in this
Agreement;
(c) by the Purchaser or the Seller in the event of a material
breach by the other party of any representation, warranty, covenant or other
agreement contained herein, which breach is not cured within sixty (60) days of
written notice thereof being given to the party committing such breach (provided
that the terminating party is not then in material breach of any representation,
warranty, covenant or other agreement contained herein); or
(d) by either Seller or Purchaser if there shall be any
applicable law or regulation that makes the consummation of the transactions
contemplated hereby illegal or otherwise prohibited or if the consummation of
the transactions contemplated by this Agreement or any Related Agreement would
violate any non-appealable final order, decree or judgment of any court or
governmental body having competent jurisdiction.
(e) The party desiring to terminate this Agreement pursuant to
clause 10.1(b), (c) or (d) hereof shall give notice of such termination to the
other parties as provided herein.
10.2 Effect of Termination. If this Agreement is terminated as
permitted by Section 10.1 hereof, such termination shall be without liability of
any party (or any stockholder, director, officer, employee, agent, consultant or
representative of such party) to the other parties to this Agreement; provided
that if such termination shall result from the (a) willful failure of any party
to fulfill a condition to the performance of the obligations of any other party,
(b) failure of any party to perform a covenant of this Agreement or (c) breach
by any party hereof of any representation or warranty or agreement contained
herein, then in any event such party shall be fully liable for any and all
Losses incurred or suffered by the other parties as a result of such
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failure or breach. The provisions of Sections 5.1(b), 10.2, 11.1, 11.5, 11.7,
11.8 and 11.10 hereof shall survive any termination pursuant to Section 10.1
hereof.
ARTICLE XI
MISCELLANEOUS
11.1 Notices. All notices and other communications to Purchaser or
Seller shall be in writing (and may be sent via telecopy transmission) to the
other party and shall be duly given:
if to Seller, then to: The Chase Manhattan Bank
1 Chase Manhattan Plaza
30th Floor
New York, NY 10081
Attention: Len Proscia
Facsimile Number: (212) 383-8876
and to: The Chase Manhattan Bank
1 Chase Manhattan Plaza
Legal Department, 25th Floor
New York, NY 10081
Attention: William A. Torres
Facsimile Number: (212) 383-6680
if to Purchaser, then to: Investors Bank & Trust Company
200 Clarendon Street
Boston, MA 02117-9130
Attention: John E. Henry, Esq.
Facsimile Number: (617) 351-4282
and to: Testa, Hurwitz & Thibeault, LLP
125 High Street
Boston, MA 02110
Attention: Kenneth J. Gordon, Esq.
Facsimile Number: (617) 248-7100
or to such other addresses as a party may from time to time designate by notice
as provided herein, except that notices of change of address shall be effective
only upon actual receipt. All such notices, requests and other communications
shall be deemed to be duly given if delivered in
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person or by United States mail, certified or registered, with return receipt
requested, or in case of telecopy transmission, when sent, confirmation
received, or otherwise actually delivered; provided that any such notice,
request or communication shall be deemed received on the date of receipt by the
recipient thereof if received prior to 5:00 p.m. in the place of receipt and
such day is a Business Day in the place of receipt. Otherwise, any such notice,
request or communication shall be deemed not to have been received until the
next succeeding business day in the place of receipt.
11.2 Assignment. The provisions of this Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns; provided that the rights and obligations under this Agreement shall
not be assigned or transferred by either party without the other party's prior
written approval, such consent not to be unreasonably withheld, conditioned or
delayed.
11.3 Entire Agreement. This Agreement, together with the Schedules and
Exhibits attached hereto, and the Related Agreements constitute the entire
agreement by the parties with respect to the subject matter hereof and supersede
any other agreement, whether written or oral, that may have been made or entered
into by Seller and Purchaser (or by any officer or officers of any such parties)
relating to the matters contemplated by this Agreement. None of this Agreement,
the Related Agreements and the Bill of Sale, and none of the provisions hereof
or thereof, is intended to confer upon any Person other than the parties hereto
any rights or remedies hereunder.
11.4 Amendments and Waivers. This Agreement may be amended, modified,
superseded, or canceled, and any of the terms, representations, warranties,
covenants or agreements hereof may be waived, only by written instrument
executed by each of the parties or,
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in the case of a waiver, by the party waiving compliance. The failure or delay
of any party at any time or times in exercising any right, power or privilege
hereunder shall not operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The rights and remedies herein provided
shall be cumulative and not exclusive of any rights or remedies provided by law.
No waiver by any party of any condition or of any breach of any term,
representation, warranty, covenant or agreement under this Agreement, whether by
conduct or otherwise, in any one or more instances, shall be deemed to be or
construed as a further or continuing waiver of any such condition or breach or
waiver of any other condition, term, agreement, representation, warranty or
covenant under this Agreement.
11.5 Expenses. Except as otherwise provided herein or in the Related
Agreements, each party shall each bear its own legal, accounting and other costs
in connection with the transactions herein which are incurred by that party
based on its activities hereunder.
11.6 Captions; Execution; Counterparts; Third Party Beneficiaries. The
captions in this Agreement are for convenience only and shall not be considered
a part of or affect the construction or interpretation of any provision of this
Agreement. This Agreement may be executed by facsimile transmission in two or
more counterparts, all of which together shall constitute one and the same
instrument. No provision of this Agreement is intended to confer upon any Person
other than the parties hereto any rights or remedies hereunder.
11.7 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York, without giving effect to
the principles of conflicts of laws thereof.
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11.8 Consent to Jurisdiction. Except as otherwise expressly provided
for in this Agreement, 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 or the transactions contemplated hereby, may be brought in the United
States District Court for the Southern District of New York or any other New
York State court sitting in The City of New York, and each of the parties hereby
consents to the 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 that 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 that is brought in
any such court has been brought in an inconvenient forum. Process in any such
suit, action or proceeding may be served on any party anywhere in the world,
whether within or without of the jurisdiction of any such court. Without
limiting the foregoing, each party agrees that service of process on such party
as provided in Section 11.1 hereof shall be deemed effective service of process
on such party.
11.9 Severability. If any provision of this Agreement or portion
thereof is held invalid, illegal, void or unenforceable by reason of any rule of
law, administrative or judicial provision or public policy, such provision shall
be ineffective only to the extent invalid, illegal, void or unenforceable, and
the remainder of such provision and all other provisions of this Agreement shall
nevertheless remain in full force and effect.
11.10 WAIVER OF JURY TRIAL. EACH PARTY HERETO IRREVOCABLY WAIVES ALL
RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF
OR RELATING TO THIS AGREEMENT, THE RELATED AGREEMENTS OR THE BILL OF SALE OR ANY
OF THE TRANSACTIONS CONTEMPLATED BH THIS AGREEMENT OR THE RELATED AGREEMENTS.
11.11 Bulk Sales Laws. Purchaser and Seller each hereby waive
compliance by Seller with the provisions of the "bulk sales", "bulk transfer" or
similar laws of any state.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of the
day and year first above written.
THE CHASE MANHATTAN BANK
By: /s/Melissa F. Spohn
-------------------------------------
Name: Melissa Spohn
Title: Vice President
INVESTORS BANK & TRUST COMPANY
By: /s/Karen C. Keenan
-------------------------------------
Name: Karen C. Keenan
Title: Senior Vice President and
Chief Financial Officer
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