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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
F O R M 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
November 30, 1998
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Bankers Trust Corporation
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(Exact name of registrant as specified in
its charter)
New York
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(State or other jurisdiction of
incorporation)
1-5920 13-6180473
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(Commission file number) (IRS employer identification no.)
130 Liberty Street, New York, New York 10006
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(Address of principal executive (Zip code)
offices)
Registrant's telephone number, including area code (212) 250-2500
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<PAGE>
Item 5. Other Events
On November 30, 1998, Bankers Trust Corporation, a New York
corporation ("Bankers Trust"), and Deutsche Bank AG, an Aktiengesellschaft
organized and existing under the laws of the Federal Republic of Germany
("Deutsche Bank"), entered into a definitive agreement to merge ( the "Merger
Agreement") whereby Bankers Trust will merge with a wholly-owned subsidiary
of Deutsche Bank, with Bankers Trust as the surviving corporation (the
"Merger"). The description of the Merger Agreement set forth herein is qualified
in its entirety by reference to the full text of such agreement, which is
attached as Exhibit 2.1 hereto and is incorporated herein by reference.
In the Merger, each share of Bankers Trust common stock, par value
$1.00 per share ("BT Common Stock"), will be converted into the right to receive
$93.00. The Merger will be treated as a taxable purchase and sale of BT Common
Stock for U.S. income tax purposes and will be accounted for under the purchase
method. The Merger is subject to satisfaction of certain conditions, including
approval by the Board of Governors of the Federal Reserve System, the New York
State Banking Department and other regulators, and the affirmative vote by the
holders of at least two-thirds of the outstanding shares of BT Common Stock. The
description of the Merger Agreement set forth herein is qualified in its
entirety by reference to the full text of such agreement, which is attached as
Exhibit 2.1 hereto and is hereby incorporated herein by reference.
In connection with entering into the Merger Agreement, Bankers Trust
and Deutsche Bank also entered into a stock option agreement, dated November 30,
1998 (the "Stock Option Agreement"), pursuant to which Bankers Trust granted
Deutsche Bank an option to purchase, under certain circumstances, up to
18,965,678 shares of BT Common Stock at a price, subject to certain adjustments,
of $74.625 per share. The description of the Stock Option Agreement set forth
herein is qualified in its entirety by reference to the full text of such
agreement, which is attached as Exhibit 99.1 hereto and is hereby incorporated
herein by reference.
On November 30, 1998, Deutsche Bank issued a press release concerning
the proposed Merger. A copy of the press release is attached as Exhibit 99.2
hereto and is incorporated herein by reference.
In connection with entering into the Merger Agreement, Bankers Trust
has amended the Amended and Restated Rights Agreement, dated as of February 22,
1998, as amended as of November 26, 1997, by and between Bankers Trust and
Harris Trust and Savings Bank, N.A., as Rights Agent thereunder (the "Rights
Agreement Amendment"). A copy of the Rights Agreement Amendment is attached as
Exhibit 99.3 hereto and is incorporated herein by reference.
This Current Report on Form 8-K and the exhibits hereto contain
forward looking statements with respect to the consummation of the Merger;
management beliefs, estimates, projections, assumptions; and the financial
condition, results of operations and business of Deutsche Bank and Bankers Trust
(and their respective subsidiaries) and, assuming the
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consummation of the Merger, the combined company. These forward looking
statements include statements relating to, among other things, the post-merger
business plan, the cost savings and accretion to earnings that will be realized
from the Merger, the pro forma assets of the combined company and the
restructuring charges expected to be incurred in connection with the Merger.
These forward looking statements involve certain risks and uncertainties.
Factors that may cause results to differ materially from those contemplated by
such forward looking statements include, among others, the following
possibilities: (1) expected cost savings from the Merger cannot be fully
realized or realized within the expected time frame; (2) revenues following the
Merger are lower than expected; (3) costs or difficulties related to the
integration of the businesses of Bankers Trust and Deutsche Bank are greater
than expected; (4) interest rates and foreign exchange rates change unfavorably;
(5) general economic and financial markets conditions, either nationally or
globally, are less favorable than expected; (6) legislation or regulatory
changes adversely affect the businesses in which the combined company would be
engaged; or (7) required approvals and consents have not been obtained or the
conditions to the consummation of the Merger have not otherwise been satisfied.
For additional information concerning factors that could cause results to differ
materially, see "Description of Business- Important Factors Relating to Forward
Looking Statements" in the Bankers Trust Annual Report on Form 10-K for the year
ended December 31, 1997.
Item 7. Financial Statement and Exhibits
(c) Exhibits
2.1 Agreement and Plan of Merger, dated as of
November 30, 1998, by and among Deutsche Bank AG,
Circle Acquisition Corporation and Bankers Trust
Corporation
99.1 Stock Option Agreement, dated as of November
30, 1998, between Bankers Trust Corporation and
Deutsche Bank AG
99.2 Press Release issued by Deutsche Bank on
November 30, 1998
99.3 Amendment No. 1 to Amended and Restated Rights
Agreement, dated as of November 30, 1998, between
Bankers Trust Corporation and Harris Trust and
Savings Bank, N.A.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
Dated: December 3, 1998
BANKERS TRUST CORPORATION
By: /s/ James T. Byrne, Jr.
Name:James T. Byrne, Jr.
Title:Senior Vice President
AGREEMENT AND PLAN OF MERGER
by and among
DEUTSCHE BANK AG,
CIRCLE ACQUISITION CORPORATION
and
BANKERS TRUST CORPORATION
Dated as of November 30, 1998
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TABLE OF CONTENTS
AGREEMENT AND PLAN OF MERGER
Page
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ARTICLE I
THE MERGER
1.1 The Merger..........................................................1
1.2 Effective Time......................................................2
1.3 Effects of the Merger...............................................2
1.4 Effect on the Company Capital Stock.................................2
1.5 Exchange Procedures.................................................3
1.6 Options.............................................................4
1.7 Other Equity Based Awards...........................................5
1.8 Certificate of Incorporation........................................5
1.9 Bylaws..............................................................5
1.10 Directors and Officers of Surviving Corporation....................5
1.11 Integration of Legal Entities......................................6
1.12 Name of Surviving Corporation......................................6
ARTICLE II
CLOSING; DISCLOSURE; STANDARDS
2.1 Closing Date........................................................6
2.2 Deliveries at Closing...............................................6
2.3 Disclosure Schedules................................................6
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
3.1 Corporate Organization..............................................7
3.2 Capitalization......................................................8
3.3 Authority; No Violation............................................10
3.4 Consents and Approvals.............................................11
3.5 Reports............................................................11
3.6 Financial Statements...............................................12
3.7 Broker's Fees......................................................12
3.8 Absence of Certain Changes or Events...............................13
3.9 Legal Proceedings..................................................14
3.10 Tax Matters.......................................................14
3.11 Employee Benefits Plans; ERISA....................................15
3.12 SEC Reports.......................................................17
3.13 Licenses; Compliance with Applicable Law..........................17
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3.14 Certain Contracts.................................................17
3.15 Agreements with Regulatory Agencies...............................18
3.16 Investment Securities.............................................18
3.17 Derivative Instruments............................................19
3.18 Undisclosed Liabilities...........................................19
3.19 Environmental Liability...........................................19
3.20 Intellectual Property.............................................20
3.21 Labor Matters.....................................................21
3.22 Fairness Opinion..................................................21
3.23 Investment Company Act............................................21
3.24 Transactions with Affiliates......................................21
3.25 Insurance.........................................................21
3.26 State Takeover Laws...............................................21
3.27 Rights Plan.......................................................22
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
4.1 Corporate Organization.............................................22
4.2 Authority; No Violation............................................22
4.3 Consents and Approvals.............................................23
4.4 Broker's Fees......................................................24
4.5 Legal Proceedings..................................................24
4.6 Ownership of Company Common Stock..................................24
4.7 Financing..........................................................24
4.8 Reports............................................................24
4.9 Financial Statements...............................................24
4.10 Licenses; Compliance with Applicable Law..........................25
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 Conduct of Business Prior to the Effective Time....................25
5.2 Forbearances of the Company........................................25
5.3 Forbearances of Parent.............................................28
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Regulatory Matters.................................................28
6.2 Access to Information..............................................29
6.3 Board Recommendations..............................................30
6.4 Other Offers.......................................................31
6.5 Stockholder Approval...............................................31
6.6 Legal Conditions to Merger.........................................32
6.7 Indemnification; Directors' and Officers' Insurance................32
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6.8 Further Assurances.................................................33
6.9 Advice of Changes..................................................33
6.10 Employee Benefits.................................................34
6.11 Employment Agreements.............................................34
6.12 Employee Retention Plan and Benefit Continuation..................34
6.13 State Takeover Statutes...........................................34
6.14 Section 15 of the Investment Company Act..........................34
6.15 Consent Procedure.................................................35
6.16 Rights Plan.......................................................35
ARTICLE VII
CONDITIONS PRECEDENT
7.1 Conditions to Each Party's Obligation To Effect the Merger.........35
7.2 Conditions to Obligations of Parent and Merger Sub.................36
7.3 Conditions to Obligations of the Company...........................37
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 Termination........................................................37
8.2 Effect of Termination..............................................38
8.3 Amendment..........................................................38
8.4 Extension; Waiver..................................................39
ARTICLE IX
GENERAL PROVISIONS
9.1 Nonsurvival of Representations, Warranties and Agreements..........39
9.2 Expenses...........................................................39
9.3 Notices............................................................39
9.4 Interpretation.....................................................40
9.5 Counterparts.......................................................41
9.6 Entire Agreement...................................................41
9.7 Governing Law......................................................41
9.8 Severability.......................................................41
9.9 Publicity..........................................................41
9.10 Assignment; Third Party Beneficiaries.............................41
9.11 Waiver of Jury Trial..............................................42
9.12 Definitions and Usage.............................................42
Exhibit A - Option Agreement
Exhibit B - Forms of Agreements of Designated Key Employees
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of November 30, 1998, by and
among DEUTSCHE BANK AG, an Aktiengesellschaft organized and existing under the
laws of the Federal Republic of Germany ("Parent"), CIRCLE ACQUISITION
CORPORATION, a New York corporation and a newly formed wholly owned subsidiary
of Parent ("Merger Sub"), and BANKERS TRUST CORPORATION, a New York corporation
(the "Company").
WHEREAS, Parent has determined that it is in its best interests and
in the best interests of Parent's stockholders to consummate the business
combination transaction provided for herein in which Merger Sub will, subject to
the terms and conditions set forth herein, merge (the "Merger") with and into
the Company so that the Company is the surviving corporation (hereinafter
sometimes called the "Surviving Corporation") in the Merger;
WHEREAS, the Board of Directors of the Company has determined that
it is in the best interests of the Company and its stockholders to consummate
the Merger, subject to the terms and conditions set forth herein;
WHEREAS, as a condition to, and immediately after the execution of,
this Agreement, Parent and the Company will enter into a stock option agreement
(the "Option Agreement") in the form attached hereto as Exhibit A;
WHEREAS, prior to the date hereof the Board of Directors of the
Company has approved this Agreement, the Merger and the Option Agreement, upon
the terms and subject to the conditions set forth herein and therein;
WHEREAS, certain key employees of the Company shall enter into
agreements as described in Section 6.11, and the Company has agreed to establish
the retention bonus and pay guarantee agreements as described in Section 6.12;
and
WHEREAS, the parties desire to make certain representations,
warranties and agreements in connection with the Merger and also to prescribe
certain conditions to the Merger.
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements contained herein, and intending to be
legally bound hereby, the parties agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. Subject to the terms and conditions of this
Agreement, in accordance with the Business Corporation Law of the State of New
York (the "BCL"), at the Effective Time (as defined in Section 1.2), Merger Sub
shall merge with and into the Company. The Company shall be the Surviving
Corporation in the Merger, and shall continue its corporate existence under the
laws of the State of New York. Upon consummation of the Merger, the separate
corporate existence of Merger Sub shall terminate.
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1.2 Effective Time. On the Closing Date (as defined in Section 2.1),
the Merger shall become effective upon the filing of a certificate of merger
(the "Certificate of Merger") with the Secretary of State of the State of New
York (the "New York Secretary"), or at such later time as shall be specified in
the Certificate of Merger, in accordance with the BCL and by making all other
filings or recordings required by the BCL in connection with the Merger. The
term "Effective Time" shall be the date and time when the Merger becomes
effective, as set forth in the Certificate of Merger.
1.3 Effects of the Merger. At and after the Effective Time, the
Merger shall have the effects set forth in Section 906 of the BCL.
1.4 Effect on the Company Capital Stock. At the Effective Time, by
virtue of the Merger and without any action on the part of Parent, the Company
or the holder of any of the following securities:
(a) Each share of the common stock, par value $1.00 per share, of
the Company (the "Company Common Stock") issued and outstanding immediately
prior to the Effective Time (other than shares of the Company Common Stock held
(i) in the Company's treasury or (ii) directly or indirectly by Parent or the
Company or any of their respective wholly owned Subsidiaries (as defined in
Section 3.1) (except for Fiduciary and DPC Shares (as defined in Section 1.4(c))
shall become and be converted into the right to receive $93.00 in cash, without
interest (the "Merger Consideration").
(b) The shares of stock of any class or series of Merger Sub issued
and outstanding immediately prior to the Effective Time shall become shares of
stock of the Surviving Corporation at the Effective Time having the same terms,
rights and preferences, and shall thereafter constitute all of the issued and
outstanding stock of the Surviving Corporation, except as provided in Section
1.4(d); provided, that such terms, rights and preferences, and the issuance by
the Surviving Corporation of stock having such terms, rights and preferences,
shall not violate the terms, or require the approval of the holders of, the
Company Preferred Stock (as defined in Section in 3.2).
(c) At the Effective Time, all shares of the Company Common Stock
that are owned by the Company as treasury stock and all shares of the Company
Common Stock that are owned, directly or indirectly, by Parent or the Company or
any of their respective wholly owned Subsidiaries (other than shares of the
Company Common Stock held, directly or indirectly, in trust accounts, managed
accounts and the like or otherwise held in a fiduciary or custodial capacity
that are beneficially owned by third parties and other than any shares of the
Company Common Stock held by Parent or the Company or any of their respective
Subsidiaries in respect of a debt previously contracted (all such shares being
referred to herein as "Fiduciary and DPC Shares")) shall be canceled and shall
cease to exist and no Merger Consideration or other consideration shall be
delivered in exchange therefor.
(d) Each share of the Company Preferred Stock issued and outstanding
at the Effective Time shall remain outstanding thereafter as a share of the
preferred stock of the Surviving Corporation.
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(e) Each issued and outstanding 5-3/4% Convertible Subordinated
Debenture of the Company (the "Company Convertible Debentures") shall remain
outstanding, unchanged by reason of the Merger, except that, in accordance with
the applicable provisions of the indenture under which such Company Convertible
Debenture was issued, without any action on the part of the holder thereof, each
Company Convertible Debenture shall no longer be convertible into the Company
Common Stock but shall thereafter be convertible only into the right to receive
the Merger Consideration multiplied by the number of shares of the Company
Common Stock the holder thereof would have been entitled to receive had such
holder converted such Company Convertible Debenture into the Company Common
Stock immediately prior to the Effective Time.
1.5 Exchange Procedures. (a) At and after the Effective Time, each
certificate (each, a "Certificate") previously representing shares of the
Company Common Stock shall (except as specifically set forth in Section 1.4)
represent only the right to receive the Merger Consideration, without interest.
(b) At the Effective Time, Parent or Merger Sub shall deposit, or
shall cause to be deposited, with a bank or trust company (which may be an
affiliate of Parent or the Company) (the "Exchange Agent"), for the benefit of
the holders of the Certificates, an amount equal to the product of the Merger
Consideration and the number of shares of the Company Common Stock entitled to
receive the Merger Consideration.
(c) Immediately after the Effective Time, the Exchange Agent shall
mail or deliver to each holder of record of a Certificate or Certificates the
following: (i) a letter of transmittal specifying that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only upon
delivery of the Certificates to the Exchange Agent, which shall be in a
customary form; and (ii) instructions for use in effecting the surrender of the
Certificates in exchange for the Merger Consideration. Upon the proper surrender
of a Certificate or Certificates to the Exchange Agent, together with a properly
completed and duly executed letter of transmittal, the holder of such
Certificate or Certificates shall be entitled to receive in exchange therefor a
check in an amount equal to the product of the Merger Consideration and the
number of shares of the Company Common Stock represented by the Certificate or
Certificates surrendered pursuant to the provisions hereof, and the Certificate
or Certificates so surrendered shall forthwith be canceled. No interest shall be
paid or accrue on the Merger Consideration. In the event of a transfer of
ownership of any shares of the Company Common Stock not registered in the
transfer records of the Company, a check for the Merger Consideration may be
issued to the transferee if the Certificate representing such Company Common
Stock is presented to Parent, accompanied by documents sufficient, in the
discretion of Parent, (x) to evidence and effect such transfer, and (y) to
evidence that all applicable stock transfer taxes have been paid. Parent shall
be entitled to deduct and withhold from the Merger Consideration otherwise
payable to any holder of Certificates such amounts (if any) as Parent determines
are required under the Internal Revenue Code of 1986, as amended (the "Code"),
or any provision of state, local or foreign tax law. To the extent that amounts
are so withheld by Parent, such withheld amounts shall be treated for all
purposes of this Agreement as having been paid to the holder of such
Certificate.
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(d) From and after the Effective Time, there shall be no transfers
on the stock transfer records of the Company of any shares of the Company Common
Stock that were outstanding immediately prior to the Effective Time. If, after
the Effective Time, Certificates are presented to Parent or the Surviving
Corporation, they shall be canceled and exchanged for the Merger Consideration
deliverable in respect thereof pursuant to this Agreement in accordance with the
procedures set forth in this Section 1.5.
(e) If any Certificates shall not have been surrendered to Parent by
the date six months after the Effective Time (or by such earlier date on which
any payment in respect hereof would otherwise escheat or become the property of
any governmental unit or agency), the payment in respect of such Certificates
shall thereupon, to the extent permitted by applicable law, become the property
of the Surviving Corporation, free and clear of all claims or interest of any
Person previously entitled thereto. Any stockholders of the Company who have not
theretofore complied with this Section 1.5 shall thereafter look only to the
Surviving Corporation for payment of the Merger Consideration deliverable in
respect of each share of the Company Common Stock held by such stockholder, as
determined pursuant to this Agreement, without any interest thereon.
Notwithstanding the foregoing, none of Parent, the Surviving Corporation or any
other Person shall be liable to any former holder of the Company Common Stock
for any amount delivered to a public official pursuant to applicable abandoned
property, escheat or similar laws.
(f) In the event any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the Person claiming
such Certificate to be lost, stolen or destroyed and, if required by Parent, the
posting by such Person of a bond in such amount as Parent may direct as
indemnity against any claim that may be made against it with respect to such
Certificate, Parent shall issue in exchange for such lost, stolen or destroyed
Certificate the Merger Consideration deliverable in respect thereof pursuant to
this Agreement.
1.6 Options. At the Effective Time, each option to purchase shares
of the Company Common Stock outstanding and unexercised as of the Effective Time
(the "Options") granted pursuant to the Company's 1997 Stock Option and Stock
Award Plan, 1994 Stock Option and Stock Award Plan, 1991 Stock Option and Stock
Award Plan, 1985 Stock Option and Stock Award Plan, as amended, the Alex. Brown
Incorporated 1991 Equity Incentive Plan and 1991 Non-Employee Director Equity
Plan, and any other equity-based plans of the Company or a Subsidiary providing
for the granting of options with respect to Company Common Stock (collectively,
the "Company Stock Option Plans") shall become 100% vested and immediately
exercisable. Each holder of an Option outstanding as of the Effective Time shall
be entitled to receive, and shall be paid in full satisfaction of such Option, a
cash payment in an amount in respect thereof equal to the product of (a) the
excess of the Merger Consideration over the exercise price per share of the
Company Common Stock subject to such Option multiplied by (b) the number of
shares of the Company Common Stock subject to such Option immediately prior to
the Effective Time, less any income or employment tax withholding required under
the Code or any provision of state, local or foreign tax law. To the extent that
amounts are so withheld by the Surviving Corporation, such withheld amounts
shall be treated for all purposes of this Agreement as having been paid to the
holder of such Option. The Parent requires that prior to the Effective Time, the
Board of Directors of the Company shall determine that each Option shall be
exercisable following the Effective Time at its then existing option price for
the Merger
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Consideration, less any income or employment tax withholding required under the
Code or any provision of state, local or foreign tax law. Each Option, the
obligations under which have not been satisfied in accordance with the
provisions of this Section 1.6, shall be exercisable following the Effective
Time, in accordance with such determination.
1.7 Other Equity Based Awards. (a) Prior to the Closing Date the
Company shall take all necessary and appropriate actions to provide that, upon
the Effective Time, each restricted stock award or deferred stock award
(collectively, the "Stock Awards") or any other stock-based award (other than
the Options), the value of which is based upon the value of the Company Common
Stock (the "Units," and together with Stock Awards, the "Awards") which is
subject to any vesting requirement and which was issued pursuant to a Company
Stock Option Plan or any of the Company's Partnershare Plan, Dividend
Reinvestment and Common Stock Purchase Plan, Partnership for One-Hundred Plan,
Partnership for One-Hundred Plan II, the Partnership Equity Plan or the BT
Investments (Australia) Ltd. Group Notional Equity Participation Plan
(collectively, the "Company Equity Plans" and together with the Company Stock
Option Plans, the "Company Stock Plans") and which is disclosed in Section 3.2
of the Company Disclosure Schedule shall become 100% vested and payable or
distributable, as the case may be.
(b) Effective as of the Effective Time, each Award shall be canceled
and terminated in accordance with its terms. In consideration of such
cancellation and termination, as soon as practicable after the Effective Time,
the Surviving Corporation shall pay to the holder of each Award the amount in
respect thereof as is required under the terms of the Company Stock Plans and/or
agreements governing such Awards, subject to employment or income tax
withholding of such amounts (if any) as are required under the Code or any
provision of state, local or foreign tax law. To the extent that amounts are so
withheld by the Surviving Corporation, such withheld amounts shall be treated
for all purposes of this Agreement as having been paid to the holder of such
Award.
1.8 Certificate of Incorporation. Subject to the terms and
conditions of this Agreement (including, without limitation, Section 1.12), at
the Effective Time, the certificate of incorporation of Merger Sub (which
certificate shall provide for the terms of the Company Preferred Stock to remain
as provided for under the Company's certificate of incorporation as now in
effect) shall be the certificate of incorporation of the Surviving Corporation
until thereafter amended in accordance with applicable law.
1.9 Bylaws. Subject to the terms and conditions of this Agreement,
at the Effective Time, the bylaws of Merger Sub shall be the bylaws of the
Surviving Corporation until thereafter amended in accordance with applicable
law.
1.10 Directors and Officers of Surviving Corporation. From and after
the Effective Time, until successors are duly elected or appointed and qualified
in accordance with applicable law, (a) the directors of Merger Sub immediately
prior to the Effective Time shall be the directors of the Surviving Corporation
and (b) the officers of the Company immediately prior to the Effective Time
shall be the officers of the Surviving Corporation; such directors and
5
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officers shall hold office in accordance with the Surviving Corporation's
bylaws and applicable law.
1.11 Integration of Legal Entities. The parties agree to cooperate
and take all requisite action prior to or following the Effective Time to merge
or otherwise consolidate legal entities (effective at or after the Effective
Time) to the extent desirable in Parent's judgment for commercial, regulatory or
other reasons, and further agree that Parent may at any time change the method
of effecting the Merger, including, without limitation, by merging another
direct or indirect wholly owned subsidiary of Parent with and into the Company,
and the Company shall cooperate in such efforts, including by entering into an
appropriate amendment to this Agreement, provided, however, that any such
actions shall not (a) alter or change the amount or kind of Merger Consideration
to be paid to holders of the Company Common Stock as provided for in this
Agreement or (b) materially delay receipt of any approval referred to in Section
7.1(b) or the consummation of the transactions contemplated by this Agreement.
1.12 Name of Surviving Corporation. At and following the Effective
Time, the name of the Surviving Corporation shall be "Bankers Trust
Corporation," until thereafter changed in accordance with applicable law.
ARTICLE II
CLOSING; DISCLOSURE; STANDARDS
2.1 Closing Date. The closing of the transactions provided for in
this Agreement (the "Closing") shall be held at the offices of Cleary, Gottlieb,
Steen & Hamilton, One Liberty Plaza, New York, New York 10006, at 10:00 A.M. on
the third business day after the satisfaction or waiver (subject to applicable
law) of the latest to be satisfied or waived of the conditions set forth in
Sections 7.1, 7.2 and 7.3 hereof or at such other place and on such other date
as shall be agreed to by the parties hereto. The date on which the Closing
occurs is hereinafter referred to as the "Closing Date."
2.2 Deliveries at Closing. Subject to the provisions of Articles VII
and VIII, on the Closing Date there shall be delivered to Parent and the Company
the documents and instruments required to be delivered under Article VII.
2.3 Disclosure Schedules. (a) Prior to the execution and delivery of
this Agreement, the Company has delivered to Parent, and Parent has delivered to
the Company, a schedule (in the case of the Company, the "Company Disclosure
Schedule," and, in the case of Parent, the "Parent Disclosure Schedule") setting
forth, among other things, items the disclosure of which is necessary or
appropriate either in response to an express disclosure requirement contained in
a provision hereof or as an exception to one or more of such party's
representations or warranties contained in Article III, in the case of the
Company, or Article IV, in the case of Parent, or to one or more of such party's
covenants contained in Article V; provided, however, that notwithstanding
anything in this Agreement to the contrary, (i) no such item is required to be
set forth in a Disclosure Schedule as an exception to a representation or
warranty if its absence would not result in the related representation or
warranty being deemed untrue or incorrect under
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the standard established by Section 2.3(b), and (ii) the mere inclusion of an
item in a Disclosure Schedule as an exception to a representation or warranty
shall not be deemed an admission by a party that such item represents a material
exception or material fact, event or circumstance or that such item has had or
would have a Material Adverse Effect with respect to either the Company or
Parent, respectively.
(b) No representation of the Company contained in Article III (other
than Section 3.8(a)) or of Parent contained in Article IV shall be deemed untrue
or incorrect for any purpose under this Agreement, and no party hereto shall be
deemed to have breached a representation or warranty for any purpose under this
Agreement, in any case as a consequence of the existence or absence of any fact,
circumstance or event unless such fact, circumstance or event, individually or
when taken together with all other facts, circumstances or events inconsistent
with any representations or warranties contained in Article III, in the case of
the Company, or Article IV, in the case of Parent, has had or would be
reasonably likely to have a Material Adverse Effect with respect to the Company
or Parent, respectively. For all purposes of determining whether any facts or
events contravening a representation or warranty contained herein constitute,
individually or in the aggregate, a Material Adverse Effect, representations and
warranties contained in Article III (other than Section 3.8(a)) or IV shall be
read without regard to any reference to materiality or Material Adverse Effect
set forth therein.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as Previously Disclosed in the section of the Company
Disclosure Schedule corresponding to the relevant section below, the Company
hereby represents and warrants to each of Parent and Merger Sub as follows:
3.1 Corporate Organization. (a) The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
New York. The Company is duly registered as a bank holding company under the
Bank Holding Company Act of 1956, as amended (the "BHCA"). The Company has the
corporate power and authority to own or lease all of its properties and assets
and to carry on its business as it is now being conducted, and is duly licensed
or qualified to do business in each jurisdiction in which the nature of the
business conducted by it or the character or location of the properties and
assets owned or leased by it makes such licensing or qualification necessary.
Subject to the following sentence, as used in this Agreement, the word
"Subsidiary" when used with respect to any party means any bank, corporation,
partnership, limited liability company or other organization, whether an
incorporated or unincorporated organization (a "Corporate Entity"), which is
consolidated with such party for financial reporting purposes or which otherwise
would be deemed to be a subsidiary of such Person within the meaning of the
BHCA. For purposes of this Article III (except for Sections 3.5, 3.13 and 3.15,
as to which the preceding sentence shall apply) and Article IV hereof,
"Subsidiary" shall mean, with respect to any party, a Corporate Entity which is
consolidated with such party for financial reporting purposes. True and complete
copies of the certificate of incorporation and bylaws of the Company, as in
effect as of the date of this Agreement, have previously been made available by
the Company to Parent.
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(b) The Company has Previously Disclosed to Parent a complete and
correct list of all of the Company's Subsidiaries. Except for the capital stock
and securities referred to in the immediately following sentence, there are no
outstanding shares of capital stock or other equity securities of each such
Subsidiary, options, warrants, stock appreciation rights, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, shares of any capital stock or other
equity securities of such Subsidiary, or contracts, commitments, understandings
or arrangements by which such Subsidiary may become bound to issue additional
shares of its capital stock or other equity securities, or options, warrants,
scrip or rights to purchase, acquire, subscribe to, calls on or commitments for
any shares of its capital stock or other equity securities. All of the
outstanding shares of capital stock or other securities evidencing ownership of
the Company's Subsidiaries are validly issued, fully paid and (except as
otherwise required by law) non-assessable and, except as otherwise disclosed in
Section 3.1(b) of the Company Disclosure Schedule, such shares or other
securities are owned by the Company or its wholly owned Subsidiaries free and
clear of any lien, claim, charge, option, encumbrance, mortgage, pledge or
security interest (a "Lien") with respect thereto. Each of the Company's
Subsidiaries (i) is a duly organized and validly existing corporation,
partnership or limited liability company or other legal entity under the laws of
its jurisdiction of organization, (ii) is duly qualified to do business and in
good standing (to the extent the concepts of "qualification to do business" and
"good standing" exist) in all jurisdictions (whether supranational, federal,
state, local or foreign) where its ownership or leasing of property or the
conduct of its business requires it to be so qualified, and (iii) has all
requisite corporate power and authority to own or lease its properties and
assets and to carry on its business as now conducted. Section 3.1(b) of the
Company Disclosure Schedule sets forth a list of all Corporate Entities deemed
to be a subsidiary of the Company or any of its Subsidiaries within the meaning
of the BHCA. The Company has provided to Parent a true and complete description
of all principal, joint venture and similar investments held by the Company or
any of its Subsidiaries, including, without limitation, all such investments in
which any Company employee or affiliate serves as a director. The Company has
provided or made available to Parent a true and complete copy of all
partnership, joint venture or similar agreements to which the Company or any of
its Subsidiaries is a party. Except as set forth in Section 3.1(b) of the
Company Disclosure Schedule, the Company does not have outstanding any capital
commitments with respect to the principal, joint venture and similar investments
of the Company or any of its Subsidiaries which exceeds $1 million individually.
Section 3.1(b) of the Company Disclosure Schedule sets forth a true and complete
list of all outstanding capital commitments with respect to the principal, joint
venture and similar investments of the Company and any of its Subsidiaries.
(c) The minute books of the Company and of each of its Significant
Subsidiaries (as defined in Regulation S-X of the SEC (as defined in Section
3.4)) accurately reflect in all material respects all material corporate actions
held or taken since January 1, 1995 of its stockholders and Board of Directors
(including committees of its Board of Directors).
3.2 Capitalization. The authorized capital stock of the Company
consists of 300,000,000 shares of the Company Common Stock, of which as of
October 31, 1998, 95,304,919 shares are issued and outstanding, and 10,000,000
shares of Preferred Stock, no par value (the "Company Preferred Stock"), of
which 80,000 have been designated as Adjustable Rate Cumulative Preferred Stock,
Series Q ($2500 Liquidation Preference) ("Series Q"), 60,000
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have been designated as Adjustable Rate Cumulative Preferred Stock, Series R
("Series R"), and 50,000 have been designated as 7-3/4% Cumulative Preferred
Stock, Series S ($2500 Liquidation Preference) ("Series S"). As of October 31,
1998, 63,847 shares of Series Q Company Preferred Stock are issued and
outstanding (evidenced by 63,847,000 depositary shares, each of which represents
a one-hundredth interest in a share of Series Q Company Preferred Stock ($2500
Liquidation Preference)), 44,000 shares of Series R Company Preferred Stock are
issued and outstanding (evidenced by 44,000,000 depositary shares, each of which
represent a one-hundredth interest in a share of Series R Company Preferred
Stock ($2500 Liquidation Preference)), and 50,000 shares of Series S Company
Preferred Stock are issued and outstanding (evidenced by 50,000,000 depositary
shares, each of which represent a one-hundredth interest in a share of Series S
Company Preferred Stock ($2500 Liquidation Preference)). As of October 31, 1998,
10,075,256 shares of the Company Common Stock are held in the Company's
treasury. No shares of the Company Common Stock or the Company Preferred Stock
are reserved for issuance, except for 293,300 shares of the Company Common Stock
reserved for issuance in connection with the Company Stock Plans and the Company
Convertible Debentures and 1,000,000 shares of the Company Preferred Stock
reserved for issuance in connection with the Rights Plan. All of the issued and
outstanding shares of the Company Common Stock and the Company Preferred Stock
have been duly authorized and validly issued and are fully paid, non-assessable
and free of preemptive rights, with no personal liability attaching to the
ownership thereof. Except for the Option Agreement and except as provided below,
the Company does not have and is not bound by any outstanding subscriptions,
options, warrants, calls, stock appreciation rights, commitments or agreements
of any character calling for the purchase or issuance of any shares of the
Company Common Stock or the Company Preferred Stock or any other equity
securities of the Company or any securities representing the right to purchase
or otherwise receive any shares of the Company Common Stock or the Company
Preferred Stock or requiring any payment relating to the value or market price
of the Company Common Stock or the Company Preferred Stock. Section 3.2 of the
Company Disclosure Schedule sets forth the number of shares of the Company
Common Stock issuable on the conversion of the Company Convertible Debentures
and a list, as of October 31, 1998, of the Option holders, the date of each
Option to purchase the Company Common Stock granted, the number of shares
subject to each such Option, the expiration date of each such Option, the
vesting schedule of each such Option and the price at which each such Option may
be exercised under the applicable Company Stock Plan. Except as set forth in
Section 3.2 of the Company Disclosure Schedule (but without giving effect to
shares reserved but not then subject to outstanding Options as identified in
such Section of the Company Disclosure Schedule), since September 30, 1998, the
Company has not (i) issued any shares of its capital stock or any securities
convertible into or exercisable for any shares of its capital stock, other than
shares of the Company Common Stock issued upon the exercise or conversion of
Options outstanding as of September 30, 1998, as described in the immediately
preceding sentence or (ii) taken any actions which would cause an antidilution
adjustment under any outstanding Options of the Company. Except as set forth on
Section 3.2 of the Company Disclosure Schedule, there are no outstanding
contractual obligations of the Company or any of its Subsidiaries to repurchase,
redeem or otherwise acquire, or to register for sale, any shares of capital
stock of the Company or any of its Subsidiaries. Except as set forth in Section
3.2 of the Company Disclosure Schedule, there are no outstanding contractual
obligations of the Company or any of its Subsidiaries to vote or to dispose of
any shares of the capital stock of any of its
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Subsidiaries. The Company Common Stock and the Company Preferred Stock shall be
referred to collectively as the "Company Capital Stock."
3.3 Authority; No Violation. (a) The Company has full corporate
power and authority to execute and deliver this Agreement and the Option
Agreement and to consummate the transactions contemplated hereby and thereby.
The execution and delivery of this Agreement and the Option Agreement and the
consummation of the transactions contemplated hereby and thereby have been duly
and validly approved by the Board of Directors of the Company prior to the date
hereof (which approval satisfies in full the requirements of the BCL regarding
approval by a board of directors), and such approval is in full force and
effect. The Board of Directors of the Company has directed that this Agreement
and the transactions contemplated hereby be submitted to the Company's
stockholders for approval and adoption at a meeting of such stockholders and,
except for the approval and adoption of this Agreement by the affirmative vote
of the holders of two-thirds of the votes of the outstanding shares of the
Company Common Stock entitled to vote thereon, no other corporate proceedings on
the part of the Company and no other stockholder votes are necessary to approve
this Agreement and to consummate the transactions contemplated hereby. The Board
of Directors of the Company has resolved to recommend that the Company's
stockholders approve and adopt this Agreement and the transactions contemplated
hereby. This Agreement has been duly and validly executed and delivered by the
Company and (assuming due authorization, execution and delivery by Parent and
Merger Sub) constitutes a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms. In addition, the
Board of Directors has taken all requisite action such that (i) the Rights Plan
and (ii) the freezeout, special shareholder voting and other requirements
imposed by Section 912 of the BCL, and the provisions of any other state
"freezeout", "fair price", "moratorium", "control share acquisition" or other
similar anti-takeover statute or regulation, are not applicable to the Merger or
the transactions contemplated by this Agreement or the Option Agreement.
(b) Neither the execution and delivery of this Agreement or the
Option Agreement by the Company, nor the consummation by the Company of the
transactions contemplated hereby or thereby, nor compliance by the Company with
any of the terms or provisions hereof or thereof, will (i) violate any provision
of the certificate of incorporation or bylaws of the Company or any of its
Subsidiaries or (ii) assuming that the consents and approvals referred to in
Section 3.4 are duly obtained, violate any statute, code, ordinance, rule,
regulation, judgment, order, writ, decree or injunction applicable to the
Company or any of its Subsidiaries or any of their respective properties or
assets, or violate, conflict with, result in a breach of any provision of or the
loss of any benefit under, constitute a default (or an event which, with notice
or lapse of time, or both, would constitute a default) under, result in the
termination of or a right of termination or cancellation under, accelerate the
performance required by or rights or obligations under, or result in the
creation of any Lien upon any of the respective properties or assets of the
Company or any of its Subsidiaries under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement, contract, or other instrument or obligation to which the
Company or any of its Subsidiaries is a party, or by which they or any of their
respective properties, assets or business activities may be bound or affected.
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3.4 Consents and Approvals. Except for (a) the requisite filings
with, notices to and approval of the Board of Governors of the Federal Reserve
System (the "Federal Reserve Board") under the BHCA, (b) the filing of any
required applications or notices with the Federal Reserve Bank of New York, the
New York State Banking Department and other applicable supranational, federal,
state or foreign governmental agencies or authorities and approval of such
applications and notices, (c) the filing with the Securities and Exchange
Commission (the "SEC") of a proxy statement in definitive form relating to the
meeting of the Company's stockholders to be held in connection with this
Agreement and the transactions contemplated hereby (the "Proxy Statement"), (d)
the filing of the Certificate of Merger with the New York Secretary pursuant to
the BCL, (e) any consents, authorizations, approvals, filings or exemptions in
connection with compliance with the applicable provisions of supranational,
federal, state and foreign laws (including, without limitation, securities and
insurance laws) relating to the regulation of broker-dealers, investment
advisers and insurance agencies and any applicable domestic or foreign industry
self-regulatory organization ("SRO"), and the rules of the New York Stock
Exchange (the "NYSE"), (f) the consents, approvals and notices required under
the Investment Company Act of 1940, as amended (the "1940 Act") and the
Investment Advisers Act of 1940, as amended (the "Advisers Act"), (g) the
approval and adoption of this Agreement and the Merger by the requisite vote of
the stockholders of the Company, (h) the expiration of any applicable waiting
period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act") or any consents, authorizations, approvals, filings or
exemptions required by any other applicable antitrust law or merger regulation,
including Council Regulation No. 4064/89 of the European Community (the "EC
Merger Regulation"), (i) such additional consents and approvals set forth in
Section 3.4 of the Company Disclosure Schedule, and (j) consents,
authorizations, approvals, filings and registrations the failure of which to
obtain or make would not be reasonably likely to result in a Material Adverse
Effect on the Company or prevent or materially delay consummation of the
transactions contemplated by this Agreement, no consents, authorizations or
approvals of or filings or registrations with any court, administrative agency
or commission or other governmental or regulatory authority or instrumentality
(each a "Governmental Entity") or, of or with any other Person, are necessary in
connection with (x) the execution and delivery by the Company of this Agreement,
(y) the consummation by the Company of the Merger and the other transactions
contemplated hereby or (z) the conduct by the Surviving Corporation following
the Effective Time of the business of the Company and its Subsidiaries as
currently conducted. As of the date hereof, the Company has no reason to believe
that any Requisite Regulatory Approvals (as defined in Section 7.1(b)) will not
be obtained or satisfied, as the case may be.
3.5 Reports. The Company and each of its Subsidiaries have filed all
reports, registrations and statements, together with any amendments required to
be made with respect thereto, that they were required to file since January 1,
1995 with (a) the SEC, (b) any SRO and (c) any other federal, state or foreign
governmental or regulatory agency or authority (collectively with the SEC and
the SROs, "Regulatory Agencies"), and all other reports, registrations and
statements required to be filed by them since January 1, 1995, including,
without limitation, any report or statement required to be filed pursuant to the
laws, rules or regulations of the United States, any state, or any Regulatory
Agency, and have paid all fees and assessments due and payable in connection
therewith. Except for normal examinations conducted by a Regulatory Agency in
the regular course of the business of the Company and its Subsidiaries, no
Regulatory
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Agency has initiated any proceeding or, to the Knowledge of the Company,
investigation into the business or operations of the Company or any of its
Subsidiaries since January 1, 1995. Except as set forth in Section 3.5 of the
Company Disclosure Schedule, there is no unresolved violation, criticism, or
exception by any Regulatory Agency with respect to any report, registration or
statement relating to any examinations of the Company or any of its
Subsidiaries.
3.6 Financial Statements. The Company has previously made available
to Parent copies of (a) the consolidated balance sheets of the Company and its
Subsidiaries as of December 31, 1996 and December 31, 1997, (b) the related
consolidated statements of income, changes in stockholders' equity and cash
flows for the fiscal years 1995 through 1997, inclusive, as reported in the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1997, as amended by a Form 10-K/A dated May 8, 1998 (the "Company 1997 Form
10-K") filed with the SEC under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), in each case accompanied by the audit report of the
Company's independent public accountants, and (c) the unaudited consolidated
interim financial statements of the Company included in the Company's Quarterly
Reports on Form 10-Q for each of its first three fiscal quarters ended after
December 31, 1997. The December 31, 1997 consolidated balance sheet of the
Company and the other financial statements referred to in the preceding sentence
(including the related notes, where applicable) fairly present in all material
respects the consolidated financial position of the Company and its Subsidiaries
for the respective fiscal periods or as of the respective dates therein set
forth, and any financial statements filed by the Company with the SEC under the
Exchange Act after the date of this Agreement (including the related notes,
where applicable) will fairly present in all material respects (including the
related notes, where applicable) (subject, in the case of the unaudited
statements, to recurring audit adjustments normal in nature and amount) the
results of the consolidated operations and changes in stockholders' equity and
consolidated financial position of the Company and its Subsidiaries for the
respective fiscal periods or as of the respective dates therein set forth; each
of such statements (including the related notes, where applicable) comply (and,
in the case of the financial statements filed after the date of this Agreement,
will comply) in all material respects with applicable accounting requirements
and with the published rules and regulations of the SEC with respect thereto;
and each of such statements (including the related notes, where applicable) has
been prepared (and, in the case of the financial statements filed after the date
of this Agreement, will be prepared) in all material respects in accordance with
United States generally accepted accounting principles ("GAAP") or regulatory
accounting principles, as applicable, consistently applied during the periods
involved, except, in each case, as indicated in such statements or in the notes
thereto. The books and records of the Company and its Subsidiaries have been,
and are being, maintained in all material respects in accordance with GAAP or
regulatory accounting principles, as applicable, and any other applicable legal
and accounting requirements.
3.7 Broker's Fees. Neither the Company nor any of its Subsidiaries
nor any of their respective officers or directors has employed any broker or
finder or incurred any liability for any broker's fees, commissions or finder's
fees in connection with the Merger or related transactions contemplated by this
Agreement or the Option Agreement, except that the Company has retained Morgan
Stanley & Co. Incorporated as its financial advisor, pursuant to compensation
arrangements with which have been disclosed in writing to Parent prior to, and
will not be modified subsequent to, the date of this Agreement.
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3.8 Absence of Certain Changes or Events. (a) Except as publicly
disclosed in the Company Reports (as defined in Section 3.12) filed prior to the
date of this Agreement, since September 30, 1998, no event has occurred and no
fact or circumstance shall have come to exist which has had, or is reasonably
likely to result in, a Material Adverse Effect on the Company.
(b) As of the date of this Agreement, except as publicly disclosed
in the Company Reports filed prior to the date hereof, since December 31, 1997,
the Company and its Subsidiaries have carried on their respective businesses in
the ordinary and usual course consistent with their past practices and there has
not been:
(i) except as required by applicable law and except as specifically
provided for in this Agreement, any (A) increase in the wages, salaries,
compensation, pension, or other fringe benefits or perquisites payable to any
current or former executive officer, employee (other than normal wage increases
in the ordinary course consistent with past practices), or director from the
amount thereof in effect as of December 31, 1997, or (B) grant of any severance,
deferred compensation, termination or change in control pay, entry into any
employment contract or contract to make or grant any severance, deferred
compensation, termination or change in control pay, or payment of any bonus
other than customary year-end bonuses for fiscal 1997 or acceleration of the
payment of, or entitlement to, any compensation payment or benefit described
above, by the Company or any of its Subsidiaries;
(ii) any strike, work stoppage, slowdown, or other material labor
disturbance or employment related problem, or any activity or proceeding by a
labor union or other similar organization to represent or otherwise organize any
of the employees of the Company;
(iii) any declaration, setting aside or payment of any dividend or
other distribution (whether in cash, stock or property) with respect to any
Company Capital Stock, other than regular quarterly cash dividends on the
Company Common Stock and dividends payable on the Company Preferred Stock in
accordance with their terms as of the date of this Agreement;
(iv) any split, combination or reclassification of any Company
Capital Stock or any issuance or the authorization of any issuance of any other
securities in respect of, or in lieu of or in substitution for shares of the
Company Capital Stock, except for issuances of Company Common Stock upon the
exercise of Options awarded prior to the date hereof in accordance with the
terms of the Company Stock Plans;
(v) except insofar as required by a change in GAAP, any change in
accounting methods, principles or practices by the Company or any of its
Subsidiaries; or
(vi) any tax election or any settlement or compromise of any
material income tax liability.
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3.9 Legal Proceedings. (a) As of the date of this Agreement, neither
the Company nor any of its Subsidiaries is a party to any, and there are no
pending or, to the Knowledge of the Company, threatened, legal, administrative,
arbitral or other proceedings, claims, actions or governmental or regulatory
investigations of any nature (i) against the Company or any of its Subsidiaries,
(ii) against any person who is currently an executive officer of the Company or
any of its Subsidiaries with respect to any of their actions as such or (iii)
challenging the validity or propriety of the transactions contemplated by this
Agreement or the Option Agreement.
(b) There is no injunction, order, judgment or decree imposed upon
the Company, any of its Subsidiaries or the assets of the Company or any of its
Subsidiaries.
(c) The Company has Previously Disclosed to Parent information
concerning the reserves associated with any of the matters described in this
Section 3.9 as reflected in the books and records of the Company as of the date
hereof.
3.10 Tax Matters. (a) The Company and each of its Subsidiaries has
duly filed all Tax returns and reports required to be filed by it, or requests
for extensions to file such returns or reports have been timely filed and
granted and have not expired, and such returns and reports are true, correct and
complete in all material respects. The Company and each of its Subsidiaries has
paid (or the Company has paid on its behalf) or made provision (in accordance
with GAAP) for all Taxes shown as due on such Tax returns and reports for all
past and current periods for which the Company or any of its Subsidiaries is
liable.
(b) The most recent financial statements contained in the Company's
Quarterly Report on Form 10-Q for the fiscal period ending September 30, 1998
reflect reserves for all Taxes payable by the Company and its Subsidiaries for
all taxable periods and portions thereof accrued through the date of such
financial statements, and no deficiencies for any Taxes have been proposed,
asserted or assessed in writing against the Company or any of its Subsidiaries
that are not reserved for in accordance with GAAP.
(c) To the Knowledge of the Company, no requests for waivers of the
time to assess any Taxes against the Company or any of its Subsidiaries have
been granted or are pending, except for requests with respect to such Taxes that
have been reserved for in accordance with GAAP in the most recent financial
statements contained in the Company's Quarterly Report on Form 10-Q for the
fiscal period ending September 30, 1998.
(d) As used in this Agreement, the term "Taxes" includes all
supranational, federal, state, local and foreign income, franchise, property,
sales, use, excise and other taxes, including, without limitation, obligations
for withholding Taxes from payments due or made to any other Person and any
interest, penalties or additions to tax.
3.11 Employee Benefit Plans; ERISA. (a) Except as set forth in
Section 3.11(a) of the Company Disclosure Schedule, neither the Company nor any
of its Subsidiaries maintain or contribute to, or have any obligation to
contribute to, or have any liability (including, without limitation, a liability
arising out of an indemnification, guarantee, hold harmless or similar
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agreement) with respect to, any material employment, consulting, severance pay,
termination pay, retirement, deferred compensation, retention or change in
control plan, program, arrangement, agreement or commitment, or an executive
compensation, incentive bonus or other bonus, pension, stock option or other
equity based, profit sharing, savings, life, health, disability, accident,
medical, insurance, vacation, or other employee benefit plan, program,
arrangement, agreement, fund or commitment, including any "employee benefit
plan" as defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA") providing benefits to any current or former
employee, officer or director of the Company or any of its Subsidiaries or any
current or former employee, officer or director of any entity with respect to
which the Company or its Subsidiaries is a successor (collectively the "Company
Benefit Plans"). Except as disclosed in Section 3.11(a) of the Company
Disclosure Schedule (or as otherwise expressly provided under this Agreement):
(i) neither the Company nor any of its Subsidiaries has any plan or commitment,
whether legally binding or not, to create any additional Company Benefit Plan or
modify or change any existing Company Benefit Plan that would materially
increase the benefits provided to any employee or former employee of the Company
or any Subsidiary thereof; and (ii) since August 1, 1998, there has been no
material change, amendment, modification to, or adoption of, any Company Benefit
Plan;
(b) With respect to each Company Benefit Plan: (i) if intended to
qualify under Section 401(a), 401(k) or 403(a) of the Code or under any law or
regulation of any foreign jurisdiction or Regulatory Agency, such plan so
qualifies, its trust (if any) is exempt from taxation under Section 501(a) of
the Code and the consummation of the transaction contemplated hereby will not
adversely affect such qualification or exemption; (ii) it has been operated and
administered in compliance with its terms and all applicable laws and
regulations (including but not limited to ERISA, the Code and any relevant
foreign laws and regulations); (iii) there are no material pending or threatened
claims against, by or on behalf of any Company Benefit Plans (other than routine
claims for benefits); (iv) no breaches of fiduciary duty have occurred; (v) no
non-exempt prohibited transaction within the meaning of Section 406 of ERISA or
Section 4975 of the Code has occurred; (vi) no Lien imposed under the Code,
ERISA or any foreign law exists; and (vii) all contributions, premiums and
expenses to or in respect of such Company Benefit Plan have been timely paid in
full or, to the extent not yet due, have been adequately accrued on the
Company's consolidated financial statements;
(c) Neither the Company nor any of its Subsidiaries has incurred or
reasonably expects to incur, either directly or indirectly (including as a
result of an indemnification obligation), any material liability under Title I
or IV of ERISA or the penalty, excise tax or joint and several liability
provisions of the Code or any foreign law or regulation relating to employee
benefit plans, and, to the Knowledge of the Company, no event, transaction or
condition has occurred, exists or is expected to occur which could result in any
such material liability to the Company, any of its Subsidiaries or, after the
Closing, to Parent;
(d) Except as set forth in Section 3.11(d) of the Company Disclosure
Schedule, with respect to each Company Benefit Plan that is a "welfare plan" (as
defined in Section 3(1) of ERISA), no such plan provides medical or death
benefits with respect to current or former employees of the Company or any of
its Subsidiaries beyond their termination of
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employment, other than as required under Section 4980B of the Code or on an
employee-pay-all basis;
(e) Except as set forth in Section 3.11(e) of the Company Disclosure
Schedule or as specifically provided in this Agreement, the consummation of the
transactions contemplated by this Agreement will not (i) entitle any current or
former employee or director of the Company or any of its Subsidiaries to any
retention, change in control or severance benefits or compensation or any other
compensatory payments; or (ii) accelerate the time of the payment, vesting or
funding of, or increase the amount of, compensation or benefits paid or payable
to any such current or former employee or director. Except as specifically
identified in Section 3.11(e) of the Company Disclosure Schedule, no amount or
benefit paid or payable in connection with the transactions contemplated hereby,
individually or in the aggregate, (whether contingent or otherwise) by the
Company, any of its Subsidiaries or, following the Closing, Parent, will fail to
be deductible under Section 162(m), Section 280G or any other provision of the
Code or any similar foreign law or regulation;
(f) There is no Company Benefit Plan that is a "multiemployer plan",
as such term is defined in Section 3(37) of ERISA, nor is any Company Benefit
Plan a plan covered by Section 4063 or 4064 of ERISA;
(g) True and complete copies of each Company Benefit Plan (other
than foreign benefit plans or statutorily required benefit plans or schemes),
including, but not limited to, any trust instruments and/or insurance contracts,
if any, forming a part thereof, all amendments thereto and the most recent
determination letters issued by the Internal Revenue Service, all government and
regulatory approvals received from any foreign Regulatory Agency, the most
recent summary plan descriptions (including any material modifications) and the
most recent audited financial reports for any funded Company Benefit Plan have
been supplied or made available to Parent;
(h) No liability under Title IV of ERISA has been or is reasonably
expected to be incurred by the Company or any of its Subsidiaries with respect
to any Company Benefit Plan or the single-employer plan of any entity which is
considered one employer with the Company or any of its Subsidiaries under
Section 4001(a)(14) of ERISA or Section 414 of the Code (an "ERISA Affiliate").
No notice of a "reportable event," within the meaning of Section 4043 of ERISA
for which the 30-day reporting requirement has not been waived, or any similar
notice to any foreign Regulatory Agency, has been required to be filed for any
Company Benefit Plan within the past 12 months nor will any such notice be
required to be filed as a result of the transactions contemplated by this
Agreement;
(i) Neither any Company Benefit Plan nor any single-employer plan of
an ERISA Affiliate of the Company or any of its Subsidiaries has an "accumulated
funding deficiency" (whether or not waived) within the meaning of Section 412 of
the Code or Section 302 of ERISA. Neither the Company nor any of its
Subsidiaries has provided, or is required to provide, security to any Company
Benefit Plan or to any single-employer plan of an ERISA Affiliate pursuant to
Section 401(a)(29) of the Code; and
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(j) Under each Company Benefit Plan which is a single-employer plan
and any foreign plan that is a defined benefit plan, as of the last day of the
most recent plan year ended prior to the date hereof, the actuarially determined
present value of all "benefit liabilities", within the meaning of Section
4001(a)(16) of ERISA or, with respect to any foreign plan, as determined under
any equivalent law or practice (in each case as determined on the basis of the
actuarial assumptions contained in Company Benefit Plan's most recent actuarial
valuation) did not exceed the then current value of the assets of such Company
Benefit Plan, and there has been no material adverse change in the financial
condition of such Company Benefit Plan (with respect to either assets or
benefits) since the last day of the most recent plan year.
3.12 SEC Reports. The Company has made available to Parent an
accurate and complete copy of each (a) final registration statement, prospectus,
report, schedule and definitive proxy statement filed since January 1, 1996 by
the Company with the SEC pursuant to the Securities Act of 1933, as amended (the
"Securities Act"), or the Exchange Act (the "Company Reports"), and (b)
communication mailed by the Company to its stockholders since January 1, 1996.
As of the date of filing or mailing, as the case may be, no such registration
statement, prospectus, report, schedule, proxy statement or communication
contained (and no registration statement, prospectus, report, schedule, proxy
statement or communication filed or mailed after the date of this Agreement will
contain) any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances in which they were made, not
misleading, except that information as of a later date (but before the date
hereof) shall be deemed to modify information as of an earlier date. Since
January 1, 1996, the Company and each of its Significant Subsidiaries has timely
filed (and will timely file after the date of this Agreement) all reports and
other documents required to be filed by it under the Securities Act and the
Exchange Act, and, as of their respective dates, all such reports complied (and,
in the case of all reports and other documents filed after the date of this
Agreement, will comply) in all material respects with the published rules and
regulations of the SEC with respect thereto.
3.13 Licenses; Compliance with Applicable Law. The Company and each
of its Subsidiaries hold all licenses, franchises, permits and authorizations
necessary for the lawful conduct of their respective businesses under and
pursuant to all, and have complied with and are not in default under any,
applicable law, statute, order, rule, regulation, policy and/or guideline of any
Governmental Entity relating to the Company or any of its Subsidiaries, and
neither the Company nor any of its Subsidiaries knows of, or has received notice
of, any violations of any of the above.
3.14 Certain Contracts. Except as set forth in Section 3.14 of the
Company Disclosure Schedule, neither the Company nor any of its Subsidiaries is
a party to or bound by any contract, arrangement, commitment or understanding
(a) as of the date hereof, with respect to the employment of any directors,
executive officers, key employees or material consultants (other than oral
contracts of employment at will), (b) which is a "material contract" (as such
term is defined in Item 601(b)(10) of Regulation S-K of the SEC) that has not
been filed with or incorporated by reference in the Company Reports, (c) which
contains any material non-compete or exclusivity provisions with respect to any
business or geographic area in which business is conducted with respect to the
Company or any of its Subsidiaries or which restricts the conduct
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of any business by the Company or any of its Subsidiaries or any geographic
area in which the Company or any of its Subsidiaries may conduct business
or requires exclusive referrals of any business, (d) with or to a labor
union or guild (including any collective bargaining agreement), (e) except
as contemplated by Article I hereof or as set forth in Section 3.11(d) of
the Company Disclosure Schedule (including any stock option plan, stock
appreciation rights plan, restricted stock plan or stock purchase plan) any
of the benefits of which will be increased, or the vesting of the benefits
of which will be accelerated, by the occurrence of any of the transactions
contemplated by this Agreement, or the value of any of the benefits of
which will be calculated on the basis of any of the transactions
contemplated by this Agreement or (f) which would prohibit or materially
delay the consummation of the Merger or any of the transactions
contemplated by this Agreement. The Company has previously made available
to Parent true and correct copies of all employment and deferred
compensation agreements with executive officers, key employees or material
consultants which are in writing and to which the Company or any of its
Subsidiaries is a party. Each contract, arrangement, commitment or
understanding of the type described in this Section 3.14, whether or not
set forth in Section 3.14 of the Company Disclosure Schedule, is referred
to herein as a "Company Contract", and neither the Company nor any of its
Subsidiaries knows of, or has received notice of, any violation of the
above by any of the other parties thereto.
3.15 Agreements with Regulatory Agencies. Except as set forth in
Section 3.15 of the Company Disclosure Schedule, neither the Company nor any of
its Subsidiaries is subject to any cease-and-desist or other order issued by, or
is a party to any written agreement, consent agreement or memorandum of
understanding with, or is a party to any commitment letter or similar
undertaking to, or is subject to any order or directive by, or is a recipient of
any supervisory letter from or has adopted any board resolutions at the request
of any Regulatory Agency or other Governmental Entity, that restricts the
conduct of its business or has, or could reasonably be expected to, result in a
liability or that in any manner relates to its capital adequacy, its credit
policies, its management or its business (each, whether or not set forth in the
Company Disclosure Schedule, a "Company Regulatory Agreement"), nor has the
Company or any of its Subsidiaries (a) been advised since January 1, 1995 by any
Regulatory Agency or other Governmental Entity that it is considering issuing or
requesting any such Company Regulatory Agreement or (b) any Knowledge of any
pending or threatened regulatory investigation.
3.16 Investment Securities. Each of the Company and its Subsidiaries
has good and marketable title to all securities held by it (except securities
sold under repurchase agreements or held in any fiduciary or agency capacity),
free and clear of any Lien, except to the extent such securities are pledged in
the ordinary course of business consistent with prudent business practices to
secure obligations of the Company or any of its Subsidiaries. Such securities
are valued on the books of the Company in accordance with GAAP.
3.17 Derivative Instruments. Any swaps, caps, floors, futures,
forward contracts, option agreements, and any other derivative financial
instruments, contracts or arrangements (collectively, "Derivative Instruments"),
whether entered into for the account of the Company or for the account of a
customer of the Company or one of its Subsidiaries, were entered into in the
ordinary course of business and to the Knowledge of the Company, in accordance
with prudent business practice and applicable rules, regulations and policies of
any Regulatory Authority and with counterparties believed to be financially
responsible at the time and are legal, valid and
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binding obligations of the Company or one of its Subsidiaries enforceable in
accordance with their terms (except as may be limited by bankruptcy,
insolvency, moratorium, reorganization or similar laws affecting the rights
of creditors generally and the availability of equitable remedies), and are
in full force and effect. The Company and each of its Subsidiaries have duly
performed in all respects all of their obligations thereunder to the extent
that such obligations to perform have accrued, and, to the Company's
Knowledge, there are no breaches, violations or defaults or allegations or
assertions of such by any party thereunder. The Company has Previously
Disclosed to Parent information which is accurate and complete in all
material respects as of the date of this Agreement regarding: (a) the
composition and character of the trading, lending and dealing portfolios of
the Company and its Subsidiaries (including without limitation any such
information concerning the Derivative Instruments and related securities,
currencies, instruments, assets and contracts comprising the trading and
dealing portfolios of the Company and its Subsidiaries); (b) the current
credit exposures and credit concentrations arising from the trading, dealing
and lending operations of the Company and its Subsidiaries; (c) the potential
additional credit exposures and credit concentrations to which the Company
and its Subsidiaries may become exposed as a result of existing positions and
loans on its and their books; (d) the extent and credit quality of collateral
securing the current and potential credit exposures of the Company and its
Subsidiaries; (e) the statistically modeled market risk profile(s) of, or
other scenario or test results regarding, the trading and dealing portfolios
of the Company and its Subsidiaries; and (f) the methodologies, techniques,
empirical inputs and assumptions used by the Company and its Subsidiaries in
the pricing models that mark-to-market the trading and dealing positions of
the Company and its Subsidiaries and the statistical models that quantify the
measures and estimates of credit and market risk described in clauses (a)
through (e) above.
3.18 Undisclosed Liabilities. Except for those liabilities that are
fully reflected or reserved against on the consolidated balance sheet of the
Company included in the Company's Form 10-Q for the period ended September 30,
1998, liabilities identified in Section 3.18 of the Company Disclosure Schedule
and liabilities incurred in the ordinary course of business consistent with past
practice since September 30, 1998, neither the Company nor any of its
Subsidiaries has incurred any liability of any nature whatsoever (whether
absolute, accrued, contingent or otherwise and whether due or to become due).
3.19 Environmental Liability. There are no legal, administrative,
arbitral or other proceedings, claims, actions, causes of action, private
environmental investigations or remediation activities or governmental
investigations of any nature seeking to impose, or that could reasonably result
in the imposition, on the Company or any of its Subsidiaries, of any liability
or obligation arising under common law or under any local, state or federal
environmental statute, regulation or ordinance including, without limitation,
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended ("CERCLA"), pending or threatened against the Company or any of
its Subsidiaries. To the Knowledge of the Company, there is no reasonable basis
for any such proceeding, claim, action or governmental investigation that would
impose any liability or obligation.
3.20 Intellectual Property. (a) The Company and its Subsidiaries own
or have valid license to use all trade secrets, patents, copyrights, trademarks,
service marks, trade names or other intellectual property rights (including any
registrations or applications for registration of
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any of the foregoing) (collectively, the "Company Intellectual Property")
necessary to carry on its business substantially as currently conducted. Neither
the Company nor any of its Subsidiaries has received any notice of infringement
of or conflict with, and, to the Company's Knowledge, there are no infringements
of or conflicts with, the rights of others with respect to the use of any
Company Intellectual Property.
(b) The consummation of the Merger and the other transactions
contemplated by this Agreement will not result in the loss by the Company of any
rights to use computer and telecommunications equipment or software, including
source and object code and documentation and any other media (including, without
limitation, manuals, journals and reference books), or other technology
necessary to carry on its business substantially as currently conducted.
(c) Neither the Company nor any of its Subsidiaries has received,
nor to the Knowledge of the Company are there facts that would form the basis
for the issuance of, a "Year 2000 Deficiency Notification Letter" (as such term
is employed in the Federal Reserve's Supervision and Regulatory Letter No. SR
98-3 (SUP), dated March 4, 1998). The Company has disclosed to Parent a complete
and accurate copy of its plan, including its good faith estimate of the
anticipated associated costs, for addressing the issues set forth in the Year
2000 guidance papers issued by the Federal Financial Institutions Examination
Council, including the statement dated May 5, 1997, entitled "Year 2000 Project
Management Awareness," December 17, 1997, entitled "Safety and Soundness
Guidelines Concerning the Year 2000 Business Risk," and October 15, 1998,
entitled "Interagency Guidelines Establishing Year 2000 Standards for Safety and
Soundness," as such issues affect any of the Company or its Subsidiaries.
Between the date of this Agreement and the Effective Time, the Company shall use
its reasonable best efforts to implement such plan.
(d) The Company has disclosed to Parent a complete and accurate copy
of its plan, including its good faith estimate of the anticipated associated
costs, for addressing the issues set forth in the Federal Reserve's Supervision
and Regulatory Letter No. SR 98-16 (SUP), dated June 12, 1998, entitled "Banking
Organizations' Preparedness for Economic and Monetary Union in Europe" as such
issues affect any of the Company or its Subsidiaries. Between the date of this
Agreement and the Effective Time, the Company shall use its reasonable best
efforts to implement such plan.
3.21 Labor Matters. Neither the Company nor any of its Subsidiaries
is a party to or is bound by any collective bargaining agreement, contract or
other agreement or understanding with a labor union or labor organization, nor
is the Company or any of its Subsidiaries the subject of a proceeding asserting
that the Company or any such Subsidiaries has committed an unfair labor practice
(within the meaning of the National Labor Relations Act) or seeking to compel
the Company or such Subsidiaries to bargain with any labor organization as to
wages and conditions of employment, nor is there any strike or other labor
dispute involving the Company or any of its Subsidiaries pending or, to its
knowledge, threatened, nor is the Company aware of any activity involving it or
its Subsidiaries' employees seeking to certify a collective bargaining unit or
engaging in other organizational activity; and the Company and its Subsidiaries
are in compliance with all applicable laws and regulations in respect of
employment and employment practices,
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terms and conditions of employment, wages and hours relating to its employees
and has not engaged in any unfair labor practice.
3.22 Fairness Opinion. On or before the date hereof, Morgan Stanley
& Co. Incorporated has delivered its opinion to the Company's Board of Directors
that the Merger Consideration is fair, from a financial point of view, to the
holders of the Company Common Stock.
3.23 Investment Company Act. The Company and each of its
Subsidiaries are in compliance with the provisions of Section 15(f) of the 1940
Act applicable thereto (including with respect to any obligations arising out of
the Company's acquisition of Alex. Brown Incorporated). A complete list of the
registered investment company clients of the Company and each of its
Subsidiaries, and the names of the members of the boards of directors thereof,
has previously been made available by the Company to Parent.
3.24 Transactions with Affiliates. Except as disclosed in the
Company Reports filed prior to the date hereof, from January 1, 1998 through the
date hereof there have been no transactions, agreements, arrangements or
understandings between the Company or any of its Subsidiaries, on the one hand,
and the Company's affiliates (other than wholly owned Subsidiaries of the
Company) or other Persons, on the other hand, that would be required to be
disclosed under Item 404 of Regulation S-K under the Securities Act.
3.25 Insurance. The Company has in effect insurance coverage with
reputable insurers, summaries of which have previously been provided by the
Company to Parent.
3.26 State Takeover Laws. Neither Section 912 of the BCL nor, to the
best of the Company's Knowledge, any other "fair price", "moratorium", "control
share acquisition" or other similar anti-takeover statute or regulation enacted
under state or federal laws in the United States applicable to the Company or
any of its Subsidiaries, is or will be applicable to the Merger, the Option
Agreement or any of the transactions contemplated hereby or thereby.
3.27 Rights Plan. The Board of Directors of the Company has approved
an amendment (in the form previously provided to Parent) to the Rights Plan to
the effect that none of Parent, Merger Sub or any of their respective affiliates
shall become an "Acquiring Person", and that no "Shares Acquisition Date" or
"Distribution Date" (as such terms are defined in the Rights Plan) will occur as
a result of the approval, execution or delivery of this Agreement or the Option
Agreement or the consummation of the transactions contemplated hereby or thereby
(including any exercise of the Option (as defined therein)). The Rights Plan and
the Rights shall terminate and be of no further effect upon the Effective Time,
without any consideration being payable with respect to outstanding rights (the
"Rights") thereunder.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
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Except as Previously Disclosed in the section of the Parent
Disclosure Schedule corresponding to the relevant section below, Parent and,
with respect to Sections 4.1 and 4.2, Merger Sub hereby represent and warrant to
the Company as follows:
4.1 Corporate Organization. Parent is an Aktiengesellschaft duly
organized and validly existing under the laws of the Federal Republic of
Germany. Merger Sub is a corporation duly organized, validly existing and in
good standing under the laws of the State of New York, and all of its
outstanding capital stock is owned directly or indirectly by Parent. Merger Sub
was formed solely for the purpose of engaging in the transactions contemplated
hereby, has conducted its operations only as contemplated hereby and has engaged
in no other business activities other than as contemplated hereby; provided,
however, that Merger Sub may incur indebtedness that does not contravene any
other provision hereof. Parent has the corporate power and authority to own or
lease all of its properties and assets and to carry on its business as it is now
being conducted, and is duly licensed or qualified to do business (to the extent
the concept of "qualification to do business" exists) in each jurisdiction in
which the nature of the business conducted by it or the character or location of
the properties and assets owned or leased by it makes such licensing or
qualification necessary.
4.2 Authority; No Violation. (a) Each of Parent and Merger Sub has
full corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby.
(b) The consummation of the transactions contemplated hereby has
been duly and validly approved by the Supervisory Board (Aufsichtsrat) of
Parent, by the Board of Directors of Merger Sub, and by Parent as sole
stockholder of Merger Sub. No other corporate proceedings on the part of Parent
or Merger Sub and no vote of Parent's stockholders are necessary to consummate
the transactions contemplated hereby.
(c) The execution and delivery of this Agreement by the two members
of the Management Board (Vorstand) of Parent who are the signatories hereto has
been duly and validly authorized in accordance with applicable law. The
execution and delivery of this Agreement by Merger Sub has been duly and validly
approved by the Board of Directors of Merger Sub and no other corporate
proceedings on the part of Merger Sub are required. This Agreement has been duly
and validly executed and delivered by Parent and Merger Sub and (assuming due
authorization, execution and delivery by the Company) constitutes a valid and
binding obligation of Parent and Merger Sub, enforceable against each of Parent
and Merger Sub in accordance with its terms.
(d) Neither the execution and delivery of this Agreement by Parent
and Merger Sub, nor the consummation by Parent and Merger Sub of the
transactions contemplated hereby, nor compliance by Parent and Merger Sub with
any of the terms or provisions hereof, will (i) violate any applicable German
law or the certificate of incorporation, bylaws or other organizational
documents of Parent or Merger Sub, as applicable, or (ii) assuming that the
consents and approvals referred to in Section 4.3 are duly obtained, violate any
statute, code, ordinance, rule, regulation, judgment, order, writ, decree or
injunction applicable to Parent or any of its Subsidiaries or any of their
respective properties or assets, or violate, conflict with, result in
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a breach of any provision of or the loss of any benefit under, constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, result in the termination of or a right of
termination or cancellation under, accelerate the performance required by, or
result in the creation of any Lien upon any of the respective properties or
assets of Parent or any of its Subsidiaries under, any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement, contract or other instrument or obligation to which Parent or
any of its Subsidiaries is a party, or by which they or any of their respective
properties or assets may be bound or affected.
4.3 Consents and Approvals. Except for (a) the requisite filings
with, notices to and approval of the Federal Reserve Board under the BHCA, (b)
the filing of any required applications or notices with the Federal Reserve Bank
of New York, the New York State Banking Department and other applicable
supranational, federal, state or foreign governmental agencies or authorities as
set forth in Section 4.3 of the Parent Disclosure Schedule and approval of such
applications and notices or other formal or informal approvals as set forth in
Section 4.3 of the Parent Disclosure Schedule, (c) the filing of the Certificate
of Merger with the New York Secretary pursuant to the BCL, (d) any consents,
authorizations, approvals, filings or exemptions in connection with compliance
with the applicable provisions of supranational, federal, state and foreign laws
(including, without limitation, securities and insurance laws) relating to the
regulation of broker-dealers, investment advisers and insurance agencies and of
any applicable SRO, and the rules of the NYSE, (e) the consents, approvals and
notices required under the 1940 Act and the Advisers Act, (f) the expiration of
any applicable waiting period under the HSR Act or any consents, authorizations,
approvals, filings or exemptions required by any other applicable antitrust law
or merger regulation, including the EC Merger Regulation, (g) such additional
consents and approvals set forth in Schedule 4.3 of the Parent Disclosure
Schedule, and (h) consents, authorizations, approvals, filings and registrations
the failure of which to obtain or make would not be reasonably likely to result
in a Material Adverse Effect on Parent or prevent consummation of the
transactions contemplated by this Agreement, no consents, authorizations or
approvals of or filings or registrations with any Governmental Entity or with
any third party are necessary in connection with (x) the execution and delivery
by Parent of this Agreement or (y) the consummation by Parent of the Merger and
the other transactions contemplated hereby. Except as set forth in Section 4.3
of the Parent Disclosure Schedule, Parent has no reason to believe that any
Requisite Regulatory Approvals will not be obtained or satisfied, as the case
may be.
4.4 Broker's Fees. Other than Goldman, Sachs & Co., neither Parent
nor any Subsidiary of Parent nor any of their respective officers or directors
has employed any broker or finder or incurred any liability for any broker's
fees, commissions or finder's fees in connection with the Merger or related
transactions contemplated by this Agreement.
4.5 Legal Proceedings. As of the date of this Agreement, except as
set forth in Section 4.5 of the Parent Disclosure Schedule, neither Parent nor
any of its Subsidiaries is a party to any, and there are no pending or, to the
Knowledge of Parent, threatened, material legal, administrative, arbitral or
other proceedings, claims, actions or governmental or regulatory investigations
of any nature challenging the validity or propriety of the transactions
contemplated by this Agreement or that would impair the ability of Parent to
perform its obligations under this Agreement.
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4.6 Ownership of Company Common Stock. Other than as contemplated by
this Agreement or pursuant to the Option Agreement, neither Parent nor any of
its affiliates (a) beneficially owns or may be deemed to beneficially own,
directly or indirectly, or (b) is party to any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or disposing of, in
each case, shares of Company Common Stock, which in the aggregate represent 5%
or more of the outstanding shares of Company Common Stock (other than the
Fiduciary and DPC Shares).
4.7 Financing. Parent has no reason to believe that at the Effective
Time it will not have available all the funds necessary to perform its
obligations under this Agreement, including consummating the transactions
contemplated by this Agreement on the terms contemplated hereby and the payment
of all fees and expenses relating to such transactions.
4.8 Reports. Parent and each of its Subsidiaries have filed all
reports, registrations and statements, together with any amendments required to
be made with respect thereto, that they were required to file since January 1,
1995 with any U.S. or German Regulatory Agency and have paid all fees and
assessments due and payable in connection therewith. Except for normal
examinations conducted by a U.S. or German Regulatory Agency in the regular
course of business of Parent and its Subsidiaries, no U.S. or German Regulatory
Agency has initiated any proceeding or, to the Knowledge of Parent,
investigation into the business or operations of Parent or any of its
Subsidiaries since January 1, 1995; except for any such proceedings or
investigations that are not reasonably likely, individually or in the aggregate,
to materially impair the ability of Parent to perform its obligations under this
Agreement or to consummate the transactions contemplated hereby.
4.9 Financial Statements. Parent has previously made available to
the Company copies of (a) the consolidated balance sheet of Parent and its
Subsidiaries as of December 31, 1997, (b) the related consolidated income
statement and cash flow statement for fiscal year 1997, as reported in Parent's
Annual Report for 1997 (the "Parent Annual Report"), accompanied by the
auditor's report of KPMG Deutsche Truehand-Gesellschaft AG, independent public
auditors to Parent, and (c) the most recent unaudited consolidated interim
financial statements of Parent with respect to each of its first three fiscal
quarters ended after December 31, 1997. The financial statements referred to in
the preceding sentence (including the related notes, where applicable) fairly
present in all material respects the consolidated financial position of Parent
and its Subsidiaries for the respective fiscal periods or as of the respective
dates therein set forth (subject, in the case of unaudited statements, to
recurring audit adjustments normal in nature and amount); and each of such
statements (including the related notes, where applicable) has been prepared in
all material respects in accordance with the standards set by the International
Accounting Standards Committee.
4.10 Licenses; Compliance with Applicable Law. Parent and each of
its Subsidiaries hold all licenses, franchises, permits and authorizations
necessary for the lawful conduct of their respective businesses under and
pursuant to all, and have complied with and are not in default in any respect
under any, applicable law, statute, order, rule, regulation, policy and/or
guideline of any Governmental Entity relating to Parent or any of its
Subsidiaries, and
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neither Parent nor any of its Subsidiaries knows of, or has received notice of,
any violations of any of the above.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 Conduct of Business Prior to the Effective Time. During the
period from the date of this Agreement to the Effective Time, except as
expressly contemplated or permitted by this Agreement or the Option Agreement,
the Company shall, and shall cause its Subsidiaries to, (a) conduct its business
only in the usual, regular and ordinary course consistent with past practice,
(b) use reasonable best efforts to maintain and preserve intact its business
organization, employees and advantageous business relationships and retain the
services of its key officers and key employees, (c) take no action which would
adversely affect or delay in any material respect the ability of either Parent
or the Company to obtain any Requisite Regulatory Approvals and (d) use
reasonable best efforts to obtain any third party approvals that are necessary
or appropriate for the Surviving Corporation to conduct the business of the
Company and its Subsidiaries as currently conducted following the Effective
Time. Without limiting the foregoing, the Company agrees, and shall cause its
Subsidiaries to continue, to manage the Equity Derivatives Portfolio in
accordance with the highest reasonable industry standards, including with
respect to credit exposure, credit concentrations, collateral, market risk
profile, pricing models and statistical models (in each case, as determined in
consultation with Parent).
5.2 Forbearances of the Company. During the period from the date of
this Agreement to the Effective Time, except as set forth in Section 5.2 of the
Company Disclosure Schedule and, except as expressly contemplated or permitted
by this Agreement or the Option Agreement, the Company shall not, and shall not
permit any of its Subsidiaries to, without the prior written consent of Parent:
(a) other than in the ordinary course of business consistent with
past practice, incur (i) any indebtedness for borrowed money (other than
short-term indebtedness incurred to refinance existing short-term indebtedness,
and indebtedness of the Company or any of its Subsidiaries to the Company or any
of its Subsidiaries, and indebtedness under existing lines of credit), assume,
guarantee, endorse or otherwise as an accommodation become responsible for the
obligations of any other individual, corporation or other entity, or make any
loan or advance or (ii) any capital expenditures, obligations or liabilities;
(b) (i) adjust, split, combine or reclassify any capital stock; (ii)
make, declare or pay any dividend (except, (A) regular quarterly cash dividends
(with record and payment dates consistent with past practice) at a rate not in
excess of the rate heretofore in effect on the Company Common Stock and
dividends on the Company Preferred Stock pursuant to the terms thereof and (B)
dividends paid in the ordinary course of business by any Subsidiary (whether or
not wholly owned) of the Company) or make any other distribution on, or directly
or indirectly redeem, purchase or otherwise acquire, any shares of its capital
stock or any securities or obligations convertible into or exchangeable for any
shares of its capital stock; (iii) grant any additional Options or Units, or any
stock appreciation rights, or grant any individual, corporation
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or other entity any right to acquire any shares of its capital stock, (iv) issue
any additional shares of capital stock, other than with respect to the
conversion of convertible securities outstanding as of the date hereof pursuant
to their terms and the exercise of Options granted prior to the date hereof
pursuant to the Company Stock Plans; or (v) enter into any agreement,
understanding or arrangement with respect to the sale or voting of its capital
stock;
(c) sell, transfer, mortgage, encumber or otherwise dispose of any
of its properties or assets, including, without limitation, capital stock in any
Subsidiaries of the Company, to any individual, corporation or other entity
other than a direct or indirect wholly owned Subsidiary, or cancel, release or
assign any indebtedness to any such Person or any claims held by any such
Person, except in the ordinary course of business consistent with past practice
or pursuant to contracts or agreements in force at the date of this Agreement
and set forth in Section 5.2(c) of the Company Disclosure Schedule;
(d) except for transactions in the ordinary course of business
consistent with past practice, make any material investment either by purchase
of stock or securities, contributions to capital, property transfers, or
purchase of any property or assets of any other individual, corporation, limited
partnership or other entity other than a wholly owned Subsidiary of the Company;
(e) except for transactions in the ordinary course of business
consistent with past practice, enter into or terminate any material lease,
contract or agreement, or make any material change in any of its material
leases, contracts or agreements, other than renewals of leases, contracts or
agreements without material changes of terms;
(f) other than in the ordinary course of business consistent with
past practice, as required by law or contracts in effect as of the date hereof
or as contemplated by this Agreement, increase in any manner the compensation or
fringe benefits of any employees, former employees, directors or former
directors of the Company or any of its Subsidiaries, or pay any pension or
retirement allowance not required by any existing Company Benefit Plans to any
such employees or become a party to, amend or commit itself to any pension,
retirement, profit-sharing or welfare benefit plan or agreement or employment,
severance or incentive pay agreement with or for the benefit of any employee or
accelerate the vesting of any stock options or other stock based compensation
(except pursuant to the terms of existing plans or agreements);
(g) settle any material claim, action or proceeding involving money
damages or waive or release any material rights or claims, except in the
ordinary course of business consistent with past practice;
(h) change its methods of accounting in effect at December 31, 1997,
except as required by changes in GAAP, or change any of its methods of reporting
income and deductions for federal income tax purposes from those employed in the
preparation of the federal income tax returns of the Company for the taxable
years ending December 31, 1997 and 1996, except as required by changes in law or
regulation or as set forth in Section 5.2 of the Company Disclosure Schedule;
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(i) adopt or implement any amendment to its certificate of
incorporation or any plan of consolidation, merger or reorganization or any
changes to its bylaws;
(j) materially restructure or materially change its investment
securities portfolio or its gap position, through purchases, sales or otherwise,
or the manner in which the portfolio is classified or reported or materially
alter the credit or risk concentrations associated with its underwriting and
other investment banking businesses;
(k) take any action that is intended or may reasonably be expected
to result in any of its representations and warranties set forth in this
Agreement being or becoming untrue in any material respect at any time prior to
the Effective Time, or in any of the conditions to the Merger set forth in
Article VII not being satisfied or in a violation of any provision of this
Agreement, except, in every case, as may be required by applicable law;
(l) other than as may be required to effect "market risk" hedging
activities, (i) enter into any new agreement, understanding or arrangement in
respect of any Equity Derivatives Instruments, or amend, modify or terminate any
existing agreement, understanding or arrangement in respect of any Equity
Derivatives Instruments, or (ii) sell, transfer, encumber or otherwise dispose
of any Equity Derivatives Instruments, except, in each case, with the prior
consent of Parent; or decrease the aggregate amount of reserves attributable to
the Equity Derivatives Portfolio other than in connection with any disposition
or charge-off undertaken with Parent's consent or as required by GAAP; or
(m) agree to, or make any commitment to, take any of the actions
prohibited by this Section 5.2.
5.3 Forbearances of Parent. During the period from the date of this
Agreement to the Effective Time, except as expressly contemplated by this
Agreement, Parent shall cause its Subsidiaries to (a) not take or agree to, or
make any commitment to take any action, without the prior written consent of the
Company, that is intended or may reasonably be expected to result in any of its
representations and warranties set forth in this Agreement being or becoming
untrue in any material respect at any time prior to the Effective Time, or in
any of the conditions to the Merger set forth in Article VII not being satisfied
or in a violation of any provision of this Agreement, except, in every case, as
may be required by applicable law, (b) take no action which would adversely
affect or delay in any material respect, the ability of either Parent or Company
to obtain any Requisite Regulatory Approval and (c) use its reasonable best
efforts to obtain any third party approvals that are necessary or appropriate
for the Surviving Corporation to conduct the business of the Company and its
Subsidiaries as currently conducted following the Effective Time.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Regulatory Matters. (a) As soon as practicable after the date
hereof, the Company shall prepare and file with the SEC the Proxy Statement,
which shall be reasonably
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acceptable to Parent, respond to comments of the staff of the SEC and promptly
thereafter mail or deliver the Proxy Statement to its stockholders. Prior to
filing the Proxy Statement in preliminary form and in definitive form with the
SEC, the Company shall provide Parent with reasonable opportunity to review and
comment upon the contents of the Proxy Statement. Parent and the Company, as
appropriate, shall promptly prepare and file all requisite notices and
applications with respect to the Merger with the Federal Reserve Board, the New
York Banking Department, and any other applicable local, state, federal or
foreign Regulatory Agency and as required under the HSR Act, the EC Merger
Regulation or any other applicable antitrust laws or merger regulations, and
shall seek confirmation that no German or other Regulatory Agency objects to the
consummation of the transactions contemplated by this Agreement.
(b) Subject to Section 6.6, the parties hereto shall cooperate with
each other and use their reasonable best efforts to promptly prepare and file
all necessary documentation, to effect all applications, notices, petitions and
filings, to obtain as promptly as practicable all permits, consents, approvals
and authorizations of all third parties and Governmental Entities which are
necessary or advisable to consummate the transactions contemplated by this
Agreement (including, without limitation, the Merger), and to comply fully with
the terms and conditions of all such permits, consents, approvals and
authorizations of all such Governmental Entities. The Company shall use its
reasonable best efforts to obtain all necessary consents and approvals under the
1940 Act and the Advisers Act and to obtain any required approvals of the boards
of directors and stockholders of all of its Subsidiaries, and all investment
companies or investment advisory clients advised by any such Subsidiary,
regulated under the 1940 Act and the Advisers Act or as to which approvals are
otherwise required. Parent and the Company shall have the right to review in
advance, and, to the extent practicable, each will consult the other on, in each
case subject to applicable laws relating to the exchange of information, all the
information relating to the Company or Parent, as the case may be, and any of
their respective Subsidiaries, which appear in any filing made with, or written
materials submitted to, any third party or any Governmental Entity in connection
with the transactions contemplated by this Agreement. In exercising the
foregoing right, each of the parties hereto shall act reasonably and as promptly
as practicable. The parties hereto agree that they will consult with each other
with respect to the obtaining of all permits, consents, approvals and
authorizations of all third parties and Governmental Entities necessary or
advisable to consummate the transactions contemplated by this Agreement and each
party will keep the other apprised of the status of matters relating to
completion of the transactions contemplated herein. The Company agrees that
neither it nor any of its representatives will have any material contact with
any Governmental Entity regarding the Merger, the other transactions
contemplated hereby or Parent's regulatory filings or applications without prior
consultation with Parent.
(c) Parent and the Company shall, upon request, furnish each other
with all information concerning themselves, their Subsidiaries, directors,
officers and stockholders and such other matters as may be reasonably necessary
or advisable in connection with the Proxy Statement or any other statement,
filing, notice or application made by or on behalf of Parent, the Company or any
of their respective Subsidiaries to any Governmental Entity in connection with
the Merger and the other transactions contemplated by this Agreement.
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(d) Parent and the Company shall promptly advise each other upon
receiving any communication from any Governmental Entity whose consent or
approval is required for consummation of the transactions contemplated by this
Agreement.
6.2 Access to Information. (a) Upon reasonable notice and subject to
applicable laws relating to the exchange of information, the Company shall, and
shall cause its Subsidiaries to, afford to the officers, employees, accountants,
counsel and other representatives of Parent, access, during normal business
hours during the period prior to the Effective Time, to all its properties,
books, contracts, commitments and records and, during such period, the Company
shall, and shall cause its Subsidiaries to, make available to Parent (i) a copy
of each report, schedule, registration statement and other document filed or
received by it during such period pursuant to the requirements of the federal
securities laws or federal or state banking laws (other than reports or
documents which the Company is not permitted to disclose under applicable law)
and (ii) all other information concerning its business, properties and personnel
as such party may reasonably request. Neither the Company nor any of its
Subsidiaries shall be required to provide access to or to disclose information
where such access or disclosure would violate or prejudice the rights of the
Company's customers, jeopardize the attorney-client privilege of the institution
in possession or control of such information or contravene any law, rule,
regulation, order, judgment, decree, or binding agreement entered into prior to
the date of this Agreement. The parties hereto will make appropriate substitute
disclosure arrangements under circumstances in which the restrictions of the
preceding sentence apply. Upon reasonable notice and subject to applicable laws
relating to the exchange of information, Parent shall furnish the Company with
all information relevant to Parent's ability to consummate the Merger and the
other transactions contemplated hereby.
(b) To the extent permitted by law, the Company shall, and shall
cause its Subsidiaries to, afford to the officers, employees, accountants,
counsel and other representatives of Parent and its Subsidiaries, access, during
normal business hours during the period prior to the Effective Time, to all its
books, contracts, commitments and records, and all other information (including
any report or other document filed by the Company or its Subsidiaries with, or
received by any of them from, any Governmental Entity) concerning the Equity
Derivatives Portfolio as Parent or its Subsidiaries may request.
(c) Each of Parent and the Company shall hold all information
furnished by or on behalf of the other party or any of such party's Subsidiaries
or representatives pursuant to Section 6.2(a) or (b) or otherwise in confidence
to the extent required by, and in accordance with, the provisions of the
confidentiality agreement, dated November 6, 1998, between Parent and the
Company (the "Confidentiality Agreement").
(d) No investigation by either of the parties or their respective
representatives shall affect the representations and warranties of the other set
forth herein.
6.3 Board Recommendations. The Company's Board of Directors has
adopted a resolution recommending approval and adoption of this Agreement and
the Merger by the Company's stockholders, and except as provided in the next
sentence, the Board of Directors of the Company shall at all times recommend
approval and adoption of this Agreement and the
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Merger by the Company's stockholders. The Board of Directors of the Company
shall be permitted to withdraw or modify in a manner adverse to Parent (or not
to continue to make) its recommendation to its stockholders if, but only if, (a)
in the opinion of the Company's outside counsel, such action is required, in
response to an unsolicited bona fide written Superior Proposal, in order for the
Board of Directors of the Company to comply with its fiduciary duties under
applicable law, (b) the Company has given Parent five business days' prior
notice of the receipt of such Superior Proposal and the Company's Board of
Directors has considered any proposed changes to this Agreement (if any)
proposed by Parent and (c) the Company has fully and completely complied with
Section 6.4. For the purposes of this Agreement, "Superior Proposal" shall mean
any bona fide Acquisition Proposal for at least a majority of the outstanding
shares of Company Common Stock on terms the Board of Directors of the Company
determines in its good faith judgment (taking into account the advice of a
financial advisor of nationally recognized reputation, taking into account all
the terms and conditions of the Acquisition Proposal, including any break-up
fees, expense reimbursement provisions and conditions to consummation) are more
favorable and provide greater value to all the Company's stockholders than this
Agreement and the Merger taken as a whole. For purposes of this Agreement,
"Acquisition Proposal" means any offer or proposal for, or any indication of
interest in (w) a merger or consolidation, or any similar transaction, involving
the Company or any Significant Subsidiary (as defined in Regulation S-X of the
SEC) of the Company, (x) a purchase, lease or other acquisition or assumption of
all or a substantial portion of the assets or deposits of the Company or all or
substantially all of the assets or deposits of any Significant Subsidiary of the
Company, (y) a purchase or other acquisition (including by way of merger,
consolidation, share exchange or otherwise) of beneficial ownership (the term
"beneficial ownership" for purposes of this Agreement having the meaning
assigned thereto in Section 13(d) of the Exchange Act, and the rules and
regulations thereunder) of securities representing 10% or more of the voting
power of the Company or more than 25% of any Significant Subsidiary of the
Company, or (z) any substantially similar transaction.
6.4 Other Offers. The Company and its Subsidiaries, and the
officers, directors, financial or legal advisors of the Company and its
Subsidiaries, will not, directly or indirectly, (a) take any action to solicit,
initiate or encourage any Acquisition Proposal or (b) engage in negotiations
with, or disclose any nonpublic information relating to the Company or any of
its Subsidiaries or afford access to the properties, books or records of the
Company or any of its Subsidiaries to, any Person that may be considering
making, or has made, an Acquisition Proposal; provided that the Company may, in
response to an unsolicited written proposal from a third party regarding an
Acquisition Proposal engage in the activities specified in clause (b), if (i) in
the opinion of the Company's outside counsel, such action is required for the
Board of Directors of the Company to comply with its fiduciary duties under
applicable law and (ii) the Company has received from such third party an
executed confidentiality agreement with terms not materially less favorable to
the Company than those contained in the Confidentiality Agreement. The Company
will immediately notify Parent orally and will promptly (and in no event later
than 24 hours after having received the relevant Acquisition Proposal) notify
Parent in writing (which oral and written notices shall identify the Person
making the Acquisition Proposal and set forth the material terms thereof) after
having received any Acquisition Proposal, or request for nonpublic information
relating to the Company or any of its Subsidiaries or for access to the
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properties, books or records of the Company or any of its Subsidiaries by any
Person who is considering making or has made an Acquisition Proposal. The
Company will keep Parent fully informed of the status and details of any such
Acquisition Proposal or request and any related discussions or negotiations. The
Company shall, and shall cause its Subsidiaries, and shall instruct the
directors, officers and financial and legal advisors of the Company and its
Subsidiaries to, cease immediately and cause to be terminated all activities,
discussions or negotiations, if any, with any Persons conducted heretofore with
respect to any Acquisition Proposal. Nothing in this Section 6.4 shall prohibit
the Company or its Board of Directors from taking and disclosing to the
Company's stockholders a position with respect to an Acquisition Proposal by a
third party to the extent required under the Exchange Act or from making such
disclosure to the Company's stockholders which, in the judgment of the Company's
outside counsel, is required under applicable law; provided that nothing in this
sentence shall affect the obligations of the Company and its Board of Directors
under any other provision of this Agreement.
6.5 Stockholder Approval. The Company shall call a meeting of its
stockholders to be held as soon as reasonably practicable for the purpose of
obtaining the requisite stockholder approval required in connection with this
Agreement and the Merger. The Company shall recommend (subject to Section 6.3)
that its stockholders approve and adopt this Agreement and the Merger Agreement
and shall use its reasonable best efforts to obtain the requisite stockholder
approval of the Merger, this Agreement and the transactions contemplated hereby.
Without limiting the generality of the foregoing, the Company agrees that its
obligations pursuant to the first sentence of this Section 6.5 shall not be
altered by the commencement, public proposal, public disclosure or communication
to the Company of any Acquisition Proposal, including without limitation a
Superior Proposal, or a decision by the Board of Directors of the Company to
withdraw or modify in a manner adverse to Parent (or not to continue to make)
its recommendation to its stockholders to approve and adopt this Agreement and
the Merger.
6.6 Legal Conditions to Merger. Each of Parent and the Company
shall, and shall cause its Subsidiaries to, use their reasonable best efforts
(a) to take, or cause to be taken, all actions necessary, proper or advisable to
comply promptly with all legal requirements which may be imposed on such party
or its Subsidiaries with respect to the Merger and, subject to the conditions
set forth in Article VII hereof, to consummate the transactions contemplated by
this Agreement and (b) to obtain (and to cooperate with the other party to
obtain) any consent, authorization, order or approval of, or any exemption by,
any Governmental Entity and any other third party which is required to be
obtained by the Company or Parent or any of their respective Subsidiaries in
connection with the Merger and the other transactions contemplated by this
Agreement; provided that Parent shall not be obligated to agree to any unduly
burdensome condition sought to be imposed by any Governmental Entity.
Notwithstanding the foregoing, each of Parent and the Company shall promptly
take, or cause its affiliates to take, if required by or necessary to resolve
any objection of the Federal Reserve Board or its staff, the New York State
Banking Department or its staff, the German Banking Supervisory Authority or its
staff, or any other Governmental Entity of competent jurisdiction, in each case
in order to consummate the transactions contemplated hereby, all reasonable
steps as shall be reasonably necessary (including all reasonable actions
necessary to satisfy applicable regulatory capital requirements) to secure the
Requisite Regulatory Approvals or any applicable government clearance or notice
of non-objection. Each of Parent and the Company represents that such party's
affiliates have full power
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and authority to effect any transactions that may be required pursuant to
this Section 6.6 and have no reason to believe that such approvals will not
be obtained. Prior to making any filing with a Governmental Entity, and to
the extent permitted by law, Parent will provide the Company with a
reasonable opportunity to comment on such filing.
6.7 Indemnification; Directors' and Officers' Insurance. (a) The
certificate of incorporation and bylaws of the Surviving Corporation shall
contain, to the extent permitted by the BCL, the provisions with respect to
indemnification set forth in the certificate of incorporation and bylaws of the
Company on the date hereof, which provisions shall not be amended, repealed or
otherwise modified for a period of six years after the Effective Time in any
manner that would adversely affect the rights thereunder of the Indemnified
Parties and any other Persons who at any time prior to the Effective Time were
identified as prospective indemnitees under the certificate of incorporation or
bylaws of the Company in respect of actions or omissions occurring at or prior
to the Effective Time (including, without limitation, actions or omissions
relating to the transactions contemplated hereby); provided, that the
certificate of incorporation and bylaws of the Surviving Corporation shall not
be required to contain such provisions if Parent otherwise provides the same
level of indemnification rights to such individuals as contained in the
certificate of incorporation and bylaws of the Surviving Corporation without
giving effect to changes permitted by this proviso.
(b) From and after the Effective Time, Parent shall cause the
Surviving Corporation to indemnify, defend and hold harmless, to the fullest
extent permitted by the BCL, the present and former officers, directors,
employees and agents of the Company or any of its Subsidiaries in their
capacities as such (each an "Indemnified Party") against all losses, expenses,
claims, damages or liabilities arising out of actions or omissions occurring on
or prior to the Effective Time (including, without limitation, actions or
omissions relating to the transactions contemplated hereby).
(c) Parent shall use its reasonable best efforts to cause the
persons serving as officers and directors of the Company immediately prior to
the Effective Time to be covered for a period of six years from the Effective
Time by the directors' and officers' liability insurance policy maintained by
the Company (provided that Parent may substitute therefore policies of at least
the same coverage and amounts containing terms and conditions which are not less
advantageous than such policy) with respect to acts or omissions occurring prior
to the Effective Time (including, without limitation, actions or omissions
relating to the transactions contemplated hereby) which were committed by such
officers and directors in their capacity as such; provided, however, that in no
event shall Parent be required to expend more than 200% of the current amount
expended by the Company (the "Insurance Amount") to maintain or procure
insurance coverage pursuant hereto; and provided further, that if Parent is
unable to maintain or obtain the insurance called for by this Section 6.7(c),
Parent shall use its reasonable best efforts to obtain as much comparable
insurance as available for the Insurance Amount.
(d) In the event Parent or any of its successors or assigns (i)
consolidates with or merges into any other Person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger,
or (ii) transfers or conveys all or substantially all of its properties and
assets to any Person, then, and in each such case, to the extent necessary,
proper provision
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shall be made so that the successors and assigns of Parent assume the
obligations set forth in this Section 6.7.
(e) The provisions of this Section 6.7 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party and his or her
heirs and representatives.
6.8 Further Assurances. At and after the Effective Time, the
officers and directors of the Surviving Corporation will be authorized to
execute and deliver, in the name and on behalf of the Company or Merger Sub, any
deeds, bills of sale, assignments or assurances and to take and do, in the name
and on behalf of the Company or Merger Sub, any other actions and things to
vest, perfect or confirm of record or otherwise in the Surviving Corporation any
and all right, title and interest in, to and under any of the rights, properties
or assets of the Company acquired or to be acquired by the Surviving Corporation
as a result of, or in connection with, the Merger.
6.9 Advice of Changes. Parent and the Company shall promptly advise
the other party of any change or event having, or which could have, a Material
Adverse Effect on it or which it believes would or would be reasonably likely to
cause or constitute a material breach of any of its representations, warranties
or covenants contained herein or would be reasonably likely to cause any of the
conditions in Article VII not to be satisfied or to cause the satisfaction
thereof to be materially delayed.
6.10 Employee Benefits. (a) From and after the Effective Time,
Parent shall, or shall cause the Surviving Corporation to, recognize the prior
service with the Company or any of its Subsidiaries of each employee of the
Company or any of its Subsidiaries as of the Effective Time (the "Company
Employees") as service under the Parent employee benefit plans for purposes of
eligibility, vesting and levels of benefits (but not for purposes of benefit
accruals under any defined benefit pension plan) in which such Company Employee
is eligible to participate following the Effective Time. From and after the
Effective Time, Parent shall, or shall cause the Surviving Corporation to (i)
cause any pre-existing conditions or limitations and eligibility waiting periods
under any group health plans of Parent to be waived with respect to the Company
Employees and their eligible dependents to the extent that such Company
Employees and their eligible dependents were covered or would have been covered
under the group health plans of the Company immediately prior to the Effective
Time and (ii) give each Company Employee credit, for the plan year in which such
Company Employee commences participation in the plans of Parent, towards
applicable deductibles and annual out-of-pocket limits for expenses incurred
prior to the commencement of participation.
(b) Parent shall, or shall cause the Surviving Corporation to, honor
in accordance with their terms all vested benefits under the Company Benefit
Plans or under other contracts, arrangements, commitments or understandings set
forth in the Company's Disclosure Schedules.
6.11 Employment Agreements. Concurrently with the execution of this
Agreement, the Company is entering into agreements with each of the Company's
employees whose names are set forth in Section 6.11 of the Company Disclosure
Schedule (the "Designated
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Key Employees") in substantially the applicable form set forth in Exhibit B
attached hereto. Parent agrees to cause the Surviving Corporation to honor
all such agreements in accordance with their respective terms.
6.12 Employee Retention Plan and Benefit Continuation. As soon as
practicable following the date hereof, the Company will offer to enter into
retention bonus and pay guarantee agreements with key employees of the Company,
as determined and approved by Parent in consultation with the Company. In no
event shall any amount be payable under any such agreement prior to the
Effective Time. It is the intention of Parent that the aggregate amount of
retention bonuses subject to such agreements will be an amount between $400
million and $500 million.
6.13 State Takeover Statutes. The Company will take all steps
necessary to exempt (or continue the exemption of) the Merger, this Agreement
and the Option Agreement and the transactions contemplated hereby and thereby
(including, without limitation, exercise of the Option (as defined therein))
from, or if necessary challenge the validity or applicability of, any applicable
state takeover law, as now or hereafter in effect.
6.14 Section 15 of the Investment Company Act. The Company shall use
its reasonable best efforts to obtain as promptly as practicable the approval of
the stockholders of each fund with respect to which the Company or any of its
Subsidiaries is an investment adviser (collectively, the "Funds"), pursuant to
the provisions of Section 15 of the 1940 Act applicable thereto, of a new
investment advisory agreement for such Fund identical in all respects to that in
effect immediately prior to the Closing, except that such new investment
advisory agreement shall be effective immediately after the Closing and shall
have an initial term of two years.
6.15 Consent Procedure. In connection with obtaining consents from
investment advisory clients, if such consents are determined to be necessary,
the Company shall (i) use all commercially reasonable efforts to obtain such
consents, (ii) keep Parent informed of the status of obtaining consents
(including, to the extent permitted by applicable law, pursuant to "negative
consent" procedures), (iii) provide to Parent drafts of any proxy statement or
other written communication and (iv) to the extent applicable, deliver to Parent
prior to the Closing copies of all executed client consents and make available
for inspection the originals of such consents prior to the Closing, and Parent
shall facilitate the Company's communication with clients regarding such
consents.
6.16 Rights Plan. Prior to the earlier of the Effective Time or any
termination of this Agreement pursuant to Article VIII, the Company agrees that
it shall not without Parent's consent redeem the Rights, amend or modify its
Rights Plan or take any other action that could result in the Rights Plan being
deemed inapplicable to any Person other than Parent.
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ARTICLE VII
CONDITIONS PRECEDENT
7.1 Conditions to Each Party's Obligation To Effect the Merger. The
respective obligation of each party to effect the Merger shall be subject to the
satisfaction at or prior to the Effective Time of the following conditions:
(a) Stockholder Approval. This Agreement and the transactions
contemplated hereby shall have been approved and adopted by the affirmative vote
of holders of two-thirds of the outstanding shares of the Company Common Stock
entitled to vote thereon.
(b) Other Approvals. All regulatory approvals and non-objections
required to consummate the transactions contemplated hereby shall have been
obtained (consistent with the provisions of Section 6.6) and shall remain in
full force and effect, and all statutory waiting periods shall have expired
(including, if applicable, the expiration or termination of any waiting period
under the HSR Act, the EC Merger Regulation or any other applicable antitrust
laws or merger regulations) (all such approvals, non-objections and the
expiration of all such waiting periods being referred to herein as the
"Requisite Regulatory Approvals").
(c) No Injunctions or Restraints; Illegality. No order, injunction
or decree issued by any court or agency of competent jurisdiction or other legal
restraint or prohibition (an "Injunction") preventing the consummation of the
Merger or any of the other material transactions contemplated by this Agreement
shall be in effect. No statute, rule, regulation, order, injunction or decree
shall have been enacted, entered, promulgated or enforced by any Governmental
Entity which prohibits, materially restricts or makes illegal the consummation
of the Merger.
7.2 Conditions to Obligations of Parent and Merger Sub. The
obligation of each of Parent and Merger Sub to effect the Merger is also subject
to the satisfaction or waiver by Parent at or prior to the Effective Time of the
following conditions:
(a) Representations and Warranties. Subject to Section 2.3(b), the
representations and warranties of the Company set forth in this Agreement shall
be true and correct in all respects as of the Closing Date (except to the extent
such representations and warranties expressly speak as of a specified earlier
date, in which case such representations and warranties shall be true as of such
earlier date) as though made on and as of the Closing Date; and Parent shall
have received a certificate signed on behalf of the Company by its Chief
Executive Officer and Chief Financial Officer to such effect.
(b) Performance of Obligations of the Company. The Company shall
have performed in all respects all obligations required to be performed by it
under this Agreement on or prior to the Closing Date (except to the extent that
any failure to so comply (other than with respect to Sections 6.3, 6.4, 6.5 and
6.16) would not be reasonably likely, individually or in the aggregate, to have
a Material Adverse Effect with respect to the Company), and Parent shall have
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received a certificate signed on behalf of the Company by its Chief Executive
Officer and Chief Financial Officer to such effect.
(c) Approvals. All third party approvals (other than the Requisite
Regulatory Approvals) that are necessary for the conduct by the Surviving
Corporation of the business of the Company and its Subsidiaries as currently
conducted following the Effective Time (except for any such approval the failure
of which to obtain would not result in a Material Adverse Effect on the
Surviving Corporation) shall have been obtained and shall remain in full force
and effect.
(d) No Litigation. No Governmental Entity in the United States,
Germany, Australia or the European Union shall have commenced any litigation
seeking to restrain, prevent or unwind the Merger or impose material sanctions
or penalties as a result thereof or seeking to prevent Parent from having full
authority to control and manage the Surviving Corporation after the Effective
Time.
(e) Resignation of Directors. Except as otherwise requested by
Parent, the directors of each of the Company and the Company's Significant
Subsidiaries shall have executed letters of resignation effective at the
Effective Time, in the case of the Directors of the Company, and at such time as
their successors have been duly elected and qualified, in the case of the
Company's Significant Subsidiaries.
(f) Rights Agreement. None of the events described in Section
11(a)(ii) or 13 of the Rights Plan shall have occurred, and the Rights shall not
become exercisable for Company Common Stock upon consummation of the Merger.
7.3 Conditions to Obligations of the Company. The obligation of the
Company to effect the Merger is also subject to the satisfaction or waiver by
the Company at or prior to the Effective Time of the following conditions:
(a) Representations and Warranties. Subject to Section 2.3(b), the
representations and warranties of Parent and Merger Sub set forth in this
Agreement shall be true and correct in all respects, as of the Closing Date
(except to the extent such representations and warranties speak as of a
specified earlier date, in which case such representations and warranties shall
be true as of such earlier date) as though made on and as of the Closing Date;
and the Company shall have received a certificate signed on behalf of Parent and
Merger Sub by two members of Parent's Management Board (Vorstand) to such
effect.
(b) Performance of Obligations of Parent. Parent shall have
performed in all respects all obligations required to be performed by it under
this Agreement at or prior to the Closing Date (except to the extent that any
failure to so comply would not be reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect with respect to Parent), and the
Company shall have received a certificate signed on behalf of Parent and Merger
Sub by two members of Parent's Management Board (Vorstand) to such effect.
ARTICLE VIII
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TERMINATION AND AMENDMENT
8.1 Termination. This Agreement may be terminated at any time prior
to the Effective Time, whether before or after approval by the stockholders of
the Company of the matters presented in connection with the Merger:
(a) by mutual consent of Parent and the Company in a written
instrument executed and delivered in accordance with their respective applicable
laws;
(b) by either Parent or the Company if any Governmental Entity which
must grant or satisfy, as the case may be, a Requisite Regulatory Approval has
denied approval of the Merger and such denial has become final and
nonappealable, or any Governmental Entity of competent jurisdiction shall have
issued a final nonappealable injunction permanently enjoining or otherwise
prohibiting the consummation of the transactions contemplated by this Agreement;
(c) by either Parent or the Company if the Merger shall not have
been consummated on or before October 31, 1999, unless the failure of the
Closing to occur by such date shall be due to the failure of the party seeking
to terminate this Agreement to perform or observe the covenants and agreements
of such party set forth herein;
(d) by either Parent or the Company if there shall have been a
material breach of any of the covenants or agreements or any of the
representations or warranties set forth in this Agreement on the part of the
other party, which breach is not cured within 30 days following written notice
to the party committing such breach, or which breach, by its nature or timing,
cannot be cured prior to the date referred to in Section 8.1(c); provided that
such breach, if occurring or continuing on the Closing Date, would constitute,
individually or in the aggregate with other such breaches, the failure of the
conditions set forth in Sections 7.2(a), 7.2(b), 7.3(a) or 7.3(b), as
applicable;
(e) by either Parent or the Company if any approval of the
stockholders of the Company required for the consummation of the Merger and the
transactions contemplated hereby shall not have been obtained by reason of the
failure to obtain the required vote at a duly held meeting of stockholders or at
any adjournment or postponement thereof;
(f) by Parent if the Board of Directors of the Company shall have
withdrawn or modified in a manner adverse to Parent its favorable recommendation
of the Merger or if the Company determines to negotiate with, or disclose any
nonpublic information relating to the Company or any of its Subsidiaries or
afford access to their properties, books or records, to any Person in connection
with an Acquisition Proposal; and
(g) by Parent if any Governmental Entity which must grant or
satisfy, as the case may be, a Requisite Regulatory Approval has granted such
approval subject to a condition which in the good faith judgment of Parent would
be unduly burdensome (consistent with the provisions of Section 6.6), and such
grant and related condition have become final and nonappealable.
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8.2 Effect of Termination. In the event of termination of this
Agreement by either Parent or the Company as provided in Section 8.1, this
Agreement shall forthwith become void and have no effect, and none of Parent,
the Company, any of their respective Subsidiaries or any of the officers or
directors of any of them shall have any liability of any nature whatsoever
hereunder, or in connection with the transactions contemplated hereby, except
that (a) Sections 6.2(b), 8.2 and 9.2 through 9.12 shall survive any termination
of this Agreement, (b) such termination shall not affect the Option Agreement
(which shall remain in effect pursuant to its terms unless terminated in
accordance therewith) and (c) notwithstanding anything to the contrary contained
in this Agreement, neither Parent nor the Company shall be relieved or released
from any liabilities or damages arising out of its willful breach of any
provision of this Agreement; provided that in no event shall any party hereto be
liable for any remote or punitive damages.
8.3 Amendment. Subject to compliance with applicable law, this
Agreement may be amended by Parent and the Company at any time before or after
approval of the matters presented in connection with the Merger by the
stockholders of the Company; provided, however, that after any approval of the
transactions contemplated by this Agreement by the stockholders of the Company,
to the extent required by the BCL, there may not be, without further approval of
such stockholders, any amendment of this Agreement. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto.
8.4 Extension; Waiver. At any time prior to the Effective Time,
subject to compliance with applicable law, Parent and the Company may, to the
extent legally allowed, (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties of the other parties
contained herein or in any document delivered pursuant hereto and (c) waive
compliance with any of the agreements or conditions contained herein for the
waiving party's benefit. Any agreement on the part of a party hereto to any such
extension or waiver shall be valid only if set forth in a written instrument
signed on behalf of such party, but such extension or waiver or failure to
insist on strict compliance with an obligation, covenant, agreement or condition
shall not operate as a waiver of, or estoppel with respect to, any subsequent or
other failure.
ARTICLE IX
GENERAL PROVISIONS
9.1 Nonsurvival of Representations, Warranties and Agreements. None
of the representations, warranties, covenants and agreements in this Agreement
or in any instrument delivered pursuant to this Agreement shall survive the
Effective Time, except for those covenants and agreements contained herein which
by their terms apply in whole or in part after the Effective Time.
9.2 Expenses. Except as otherwise provided in this Section, all
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expense; provided, however, that the costs and expenses of printing and mailing
the Proxy Statement, and all filing and other fees paid to the SEC in connection
with the Merger, shall be borne equally by Parent and the Company.
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9.3 Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally, telecopied (with
confirmation), mailed by registered or certified mail (return receipt requested)
or delivered by an express courier (with confirmation) to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
(a) if to Parent, to:
Deutsche Bank AG
Taunusanlage 12
60325 Frankfurt am Main
Germany
Attn: Group General Counsel
Fax: 49 69 910 38572
with a copy to:
Cleary, Gottlieb, Steen & Hamilton
One Liberty Plaza
New York, NY 10006
Attention: Victor I. Lewkow, Esq.
Fax: (212) 225-3999
and
(b) if to the Company, to:
James T. Byrne, Jr.
Bankers Trust Corporation
130 Liberty Street
New York, NY 10006
Attn: Office of the Secretary
Fax: (212) 250-4713
with a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, NY 10019
Attention: Edward D. Herlihy, Esq.
Fax: (212) 403-2000
9.4 Interpretation. When a reference is made in this Agreement to
Sections, Exhibits or Schedules, such reference shall be to a Section of or
Exhibit or Schedule to this Agreement, unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include," "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation".
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No provision of this Agreement shall be construed to require the Company, Parent
or any of their respective Subsidiaries or affiliates to take any action which
would violate any applicable law, rule or regulation. Notwithstanding any other
provision of this Agreement, neither Parent, on the one hand, nor the Company,
on the other, shall be deemed to have failed to comply with any of its
obligations hereunder (other than the giving of notice contemplated by Section
8.1(d)) to the extent such failure is due to a breach (subject to the standard
set forth in Section 2.3(b)) by the other party of any of its representations,
warranties or covenants set forth herein.
9.5 Counterparts. This Agreement may be executed in counterparts,
all of which shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each of the parties and
delivered to the other parties, it being understood that all parties need not
sign the same counterpart.
9.6 Entire Agreement. This Agreement (including the Company
Disclosure Schedule, the Parent Disclosure Schedule, the exhibits attached
hereto and all other documents and instruments referred to herein) constitutes
the entire agreement and supersedes all prior agreements and understandings,
both written and oral, among the parties with respect to the subject matter
hereof other than the Option Agreement and the Confidentiality Agreement.
9.7 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York, without regard to any
applicable conflicts of law principles thereof.
9.8 Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
9.9 Publicity. Neither Parent nor the Company shall, nor shall
either permit any of its Subsidiaries to, issue or cause the publication of any
press release or other public announcement with respect to, or otherwise make
any public statement concerning, the transactions contemplated by this Agreement
without the consent of the other party, which consent shall not be unreasonably
withheld or delayed and, in any event, only after consultation with the other
party to the extent feasible.
9.10 Assignment; Third Party Beneficiaries. Neither this Agreement
nor any of the rights, interests or obligations hereunder shall be assigned by
either of the parties hereto (whether by operation of law or otherwise) without
the prior written consent of the other party. Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of and be enforceable
by the parties and their respective successors and assigns. Except as otherwise
specifically provided in Section 6.7, this Agreement (including the documents
and instruments referred to herein) is not intended to confer upon any Person
other than the parties hereto any rights or remedies hereunder.
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9.11 Court Proceedings.
(a) Waiver of Jury Trial. Each of the parties hereto irrevocably
waives any and all right to trial by jury in any legal proceeding arising out of
or related to this Agreement or the transactions contemplated hereby.
(b) Governmental Entity. Notwithstanding any provision herein, no
party shall be required to commence any action against any Governmental Entity
in order to perform its obligations hereunder.
9.12 Definitions and Usage. (a) For purposes of this Agreement:
"affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under common control with
such Person. The term "control" means possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise.
"Agreement" means this Agreement and Plan of Merger, the Parent
Disclosure Schedule, the Company Disclosure Schedule and all Exhibits hereto.
"Alex. Brown Incorporated 1991 Equity Plan" means the Alex. Brown
Incorporated 1991 Equity Incentive Plan which was assumed by the Company in
connection with its acquisition of Alex. Brown Incorporated on September 1,
1997.
"BT Investments (Australia) Ltd. Group Notional Equity Participation
Plan" means the BT Investments (Australia) Ltd. Group Notional Equity
Participation Plan, as amended to date.
"Dividend Reinvestment and Common Stock Purchase Plan" means the
Company's Dividend Reinvestment and Common Stock Purchase Plan, as amended to
date.
"Equity Derivatives Instruments" has the meaning assigned to such
term in Section 3.8 of the Company Disclosure Schedule.
"Equity Derivatives Portfolio" has the meaning assigned to such term
in Section 3.8 of the Company Disclosure Schedule.
"Material Adverse Effect" means, with respect to Parent or the
Company, as the case may be, any effect that (i) is or is reasonably likely to
be material and adverse to the condition (financial or otherwise), business,
liabilities, properties, assets or results of operations of such party and its
Subsidiaries taken as a whole other than any change, effect, event or occurrence
relating to (A) the United States or global economy or securities markets in
general, (B) this Agreement or the transactions contemplated hereby or the
announcement thereof, or (C) the financial services industry in general, and not
specifically relating to the Company or Parent or their respective Subsidiaries,
as the case may be, or (ii) would materially impair the ability of such
41
<PAGE>
party to perform its obligations under this Agreement or to consummate the
transactions contemplated hereby.
"1985 Stock Option and Stock Award Plan" means the Company's 1985
Stock Option and Stock Award Plan as amended to date.
"1991 Stock Option and Stock Award Plan" means the Company's 1991
Stock Option and Stock Award Plan as amended to date.
"1994 Stock Option and Stock Award Plan" means the Company's 1994
Stock Option and Stock Award Plan as amended to date.
"1997 Stock Option and Stock Award Plan" means the Company's 1997
Stock Option and Stock Award Plan as amended to date.
"Partnership for One-Hundred Plan" means the Company's Partnership
for One-Hundred Plan as amended to date.
"Partnership for One-Hundred Plan II" means the Company's
Partnership for One-Hundred Plan II as amended to date.
"Partnershare Plan" means the Company's Partnershare Plan as amended
to date.
"Person" means an individual, corporation, partnership, limited
liability company, association, trust or other entity or organization, including
a government or political subdivision or an agency or instrumentality thereof.
"Previously Disclosed" with respect to any party means information
set forth in such party's Disclosure Schedule.
"Rights Plan" means the Amended and Restated Rights Agreement, dated
February 22, 1988, as amended through the date hereof, between the Company and
Harris Trust and Savings Bank.
A reference in this Agreement to any statute shall be to such
statute as amended from time to time, and to the rules and regulations
promulgated thereunder.
(b) Each of the following terms is defined in the Section set forth
opposite such term:
Term Section
------------------------------------------------
Acquisition Proposal 6.3
Advisers Act 3.4
Agreement recitals
Awards 1.7(a)
BCL 1.1
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<PAGE>
Term Section
------------------------------------------------
beneficial ownership 6.3
BHCA 3.1(a)
CERCLA 3.19
Certificate of Merger 1.2
Certificate 1.5(a)
Closing 2.1
Closing Date 2.1
Code 1.5(c)
Company recitals
Company Benefit Plans 3.11(a)
Company Capital Stock 3.2
Company Common Stock 1.4(a)
Company Contract 3.14
Company Convertible Debentures 1.4(e)
Company Disclosure Schedule 2.3(a)
Company Employees 6.10(a)
Company Equity Plans 1.7(a)
Company Intellectual Property 3.20(a)
Company 1997 Form 10-K 3.6
Company Preferred Stock 3.2
Company Regulatory Agreement 3.15
Company Reports 3.12
Company Stock Option Plans 1.6
Company Stock Plans 1.7(a)
Confidentiality Agreement 6.2(c)
Corporate Entity 3.1(a)
Derivative Instruments 3.17
Designated Key Employees 6.11
EC Merger Regulation 3.4
Effective Time 1.2
ERISA 3.11(a)
ERISA Affiliate 3.11(h)
Exchange Act 3.6
Exchange Agent 1.5(b)
Fiduciary and DPC Shares 1.4(c)
Federal Reserve Board 3.4
Funds 6.14
GAAP 3.6
Governmental Entity 3.4
HSR Act 3.4
Indemnified Party 6.7(b)
Injunction 7.1(c)
Insurance Amount 6.7(c)
Lien 3.1(b)
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<PAGE>
Term Section
------------------------------------------------
Merger recitals
Merger Consideration 1.4(a)
Merger Sub recitals
New York Secretary 1.2
1940 Act 3.4
NYSE 3.4
Options 1.6
Option Agreement recitals
Parent recitals
Parent Annual Report 4.9
Parent Disclosure Schedule 2.3(a)
Proxy Statement 3.4
Regulatory Agencies 3.5
Requisite Regulatory Approvals 7.1(b)
Rights 3.27
SEC 3.4
Securities Act 3.12
Series Q 3.2
Series R 3.2
Series S 3.2
SRO 3.4
Stock Awards 1.7(a)
Subsidiary 3.1(a)
Superior Proposal 6.3(a)
Surviving Corporation recitals
Taxes 3.10(d)
Units 1.7(a)
Year 2000 Deficiency Notification 3.20(c)
Letter
(c) A fact, event, circumstance or occurrence shall be within a
Person's "Knowledge" if, with respect to the Company, such fact, event,
circumstance or occurrence is or was actually known by any of the Company's
executive officers or directors (or persons serving in a similar capacity), or,
with respect to the Parent, such fact, event or circumstance or occurrence is or
was actually known by any member of the Parent's Management Board (Vorstand).
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<PAGE>
IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused
this Agreement to be executed by their respective officers thereunto duly
authorized as of the date first above written.
DEUTSCHE BANK AG BANKERS TRUST CORPORATION
By:/s/ Rolf-E. Breuer By:/s/ Frank N. Newman
Name:Rolf-E. Breuer Name:Frank N. Newman
Title: Title:Chairman of the Board and
Chief Executive Officer
By:/s/ Josef Ackermann
Name:Josef Ackermann
Title:
CIRCLE ACQUISITION CORPORATION
By:/s/ Robert B. Allardice III
Name:Robert B. Allardice III
Title:
THE TRANSFER OF THIS AGREEMENT IS SUBJECT TO
CERTAIN PROVISIONS CONTAINED HEREIN AND TO
RESALE RESTRICTIONS UNDER THE
SECURITIES ACT OF 1933, AS AMENDED
STOCK OPTION AGREEMENT, dated November 30, 1998, between Bankers
Trust Corporation, a New York corporation ("Issuer"), and Deutsche Bank AG, an
Aktiengesellschaft organized under the laws of the Federal Republic of Germany
("Grantee").
W I T N E S S E T H:
WHEREAS, Grantee and Issuer have entered into an Agreement and Plan
of Merger of even date herewith (the "Merger Agreement"), which agreement has
been executed by the parties hereto immediately prior to this Stock Option
Agreement (the "Agreement"); and
WHEREAS, as a condition to Grantee's entering into the Merger
Agreement and in consideration therefor, Issuer has agreed to grant Grantee the
Option (as defined below);
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein and in the Merger Agreement, the
parties hereto agree as follows:
1. The Option. (a) Issuer hereby grants to Grantee an unconditional,
irrevocable option (the "Option") to purchase, subject to the terms hereof, up
to 18,965,678 fully paid and nonassessable shares of Issuer' common stock, par
value $1.00 per share (the "Common Stock"), at a price of $74.625 per share (the
"Option Price"); provided, however, that in the event Issuer issues or agrees to
issue any shares of Common Stock (other than as permitted under the Merger
Agreement) at a price less than the Option Price (as adjusted pursuant to
Section 5), the Option Price shall be equal to such lesser price; provided,
further, that in no event shall the number of shares of Common Stock for which
this Option is exercisable exceed 19.9% of the Issuer's issued and outstanding
shares of Common Stock at the time of exercise. The number of shares of Common
Stock that may be received upon the exercise of the Option and the Option Price
are subject to adjustment as herein set forth.
(b) In the event that any additional shares of Common Stock are
issued or otherwise become outstanding after the date of this Agreement (other
than pursuant to this Agreement), the number of shares of Common Stock subject
to the Option shall be increased so that, after such issuance, such number
equals 19.9% of the number of shares of Common Stock then issued and outstanding
without giving effect to any shares subject or issued pursuant to the Option.
Nothing contained in this Section 1(b) or elsewhere in this Agreement shall be
deemed to authorize Issuer to breach any provision of the Merger Agreement.
<PAGE>
2. Exercise; Closing. (a) The Holder (as defined below) may exercise
the Option, in whole or part, and from time to time, if, but only if, both an
Initial Triggering Event (as defined below) and a Subsequent Triggering Event
(as defined below) shall have occurred prior to the occurrence of an Exercise
Termination Event (as defined below), provided that the Holder shall have sent
written notice of such exercise (as provided in subsection (f) of this Section
2) within 90 days following such Subsequent Triggering Event (or such later
period as provided in Section 10).
(b) Each of the following shall be an "Exercise Termination Event":
(i) the Effective Time (as defined in the Merger Agreement) of the
Merger;
(ii) termination of the Merger Agreement in accordance with the
provisions thereof if such termination occurs prior to the occurrence of an
Initial Triggering Event, except a termination by Grantee pursuant to Section
8.1(d) of the Merger Agreement; or
(iii) the passage of 18 months after termination of the Merger
Agreement (or such later period as provided in Section 10) if such termination
(A) follows or is concurrent with the occurrence of an Initial Triggering Event
or (B) is a termination by Grantee pursuant to Section 8.1(d) of the Merger
Agreement; provided that if an Initial Triggering Event continues or occurs
beyond such termination and prior to the passage of such 18- month period, the
Exercise Termination Event shall be 12 months from the expiration of the Last
Triggering Event (as defined below) but in no event more than 18 months after
such termination.
The "Last Triggering Event" shall mean the last Initial Triggering Event to
expire. The term "Holder" shall mean Grantee and any other person that shall
become a holder of the Option in accordance with the terms of this Agreement.
(c) The term "Initial Triggering Event" shall mean any of the following
events or transactions occurring after the date hereof:
(i) Issuer or any of its Subsidiaries (each an "Issuer Subsidiary"),
without having received Grantee's prior written consent, shall have entered into
an agreement to engage in an Acquisition Transaction (as defined below) with any
person (the term "person" for purposes of this Agreement having the meaning
assigned thereto in Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act
of 1934, as amended (the "1934 Act"), and the rules and regulations thereunder)
other than Grantee or any of its Subsidiaries (each a "Grantee Subsidiary") or
the Board of Directors of Issuer shall have recommended that the stockholders of
Issuer approve or accept any Acquisition Transaction (other than the Merger
referred to in the Merger Agreement). For purposes of this Agreement,
"Acquisition Transaction" shall mean (w) a merger or consolidation, or any
similar transaction, involving Issuer or any Significant Subsidiary (as defined
in Rule 1-02 of Regulation S-X promulgated by the Securities and Exchange
Commission (the
2
<PAGE>
"SEC")) of Issuer, (x) a purchase, lease or other acquisition or
assumption of all or a substantial portion of the assets or deposits of Issuer
or all or substantially all of the assets or deposits of any Significant
Subsidiary of Issuer, (y) a purchase or other acquisition (including by way of
merger, consolidation, share exchange or otherwise) of beneficial ownership (the
term "beneficial ownership" for purposes of this Agreement having the meaning
assigned thereto in Section 13(d) of the Exchange Act, and the rules and
regulations thereunder) of securities representing 10% or more of the voting
power of Issuer or more than 25% of any Significant Subsidiary of Issuer, or (z)
any substantially similar transaction; provided, however, that in no event shall
any merger, consolidation, purchase or similar transaction involving only the
Issuer and one or more of its wholly-owned Subsidiaries or involving only any
two or more of such wholly-owned Subsidiaries, be deemed to be an Acquisition
Transaction, if such transaction is not entered into in violation of the terms
of the Merger Agreement;
(ii) Issuer or any Issuer Subsidiary, without having received
Grantee's prior written consent, shall have authorized, recommended, proposed or
publicly announced its intention to authorize, recommend or propose, to engage
in an Acquisition Transaction with any person other than Grantee or a Grantee
Subsidiary or shall have authorized or engaged in, or announced its intention to
authorize or engage in, any negotiations regarding an Acquisition Transaction
with any person other than the Grantee or a Grantee Subsidiary, or the Board of
Directors of Issuer shall have failed to recommend or shall have publicly
withdrawn or modified, or publicly announced its intention to withdraw or
modify, in any manner adverse to Grantee, its recommendation that the
stockholders of Issuer approve the transactions contemplated by the Merger
Agreement in anticipation of engaging in an Acquisition Transaction;
(iii) The shareholders of Issuer shall have voted and failed to
approve and adopt the Merger Agreement and the Merger at a meeting which has
been held for that purpose or any adjournment or postponement thereof, or such
meeting shall not have been held in violation of the Merger Agreement or shall
have been canceled prior to termination of the Merger Agreement if, prior to
such meeting (or if such meeting shall not have been held or shall have been
canceled, prior to such termination), any person (other than the Grantee or a
Grantee Subsidiary) shall have made a proposal to Issuer or its stockholders by
public announcement or written communication that is or becomes the subject of
public disclosure to engage in an Acquisition Transaction;
(iv) (a) Any person other than Grantee, any Grantee Subsidiary or
any Issuer Subsidiary acting in a fiduciary capacity in the ordinary course of
its business shall have acquired beneficial ownership or the right to acquire
beneficial ownership of 10% or more of the then outstanding shares of Common
Stock or (b) any group (the term "group" having the meaning assigned in Section
13(d)(3) of the Exchange Act), other than a group of which the Grantee or any
Grantee Subsidiary is a member, shall have been formed that beneficially owns
10% or more of the shares of Common Stock then outstanding;
(v) Any person other than Grantee or any Grantee Subsidiary shall
have made a proposal to Issuer or its stockholders by public announcement or
written
3
<PAGE>
communication that is or becomes the subject of public disclosure to engage in
an Acquisition Transaction;
(vi) After a proposal is made by a third party to Issuer or its
stockholders to engage in an Acquisition Transaction, Issuer shall have breached
any covenant or obligation contained in the Merger Agreement and such breach (x)
would entitle Grantee to terminate the Merger Agreement and (y) shall not have
been cured prior to the Notice Date (as defined below); or
(vii) Any person other than Grantee or any Grantee Subsidiary, other
than in connection with a transaction to which Grantee has given its prior
written consent, shall have filed with any federal or state regulatory or
governmental authority an application for approval or notice of intention to
engage in an Acquisition Transaction.
(d) The term "Subsequent Triggering Event" shall mean either of the
following events or transactions occurring after the date hereof:
(i) The acquisition by any person or by a group of beneficial
ownership of 25% or more of the then outstanding Common Stock; or
(ii) The occurrence of the Initial Triggering Event described in
paragraph (i) of subsection (c) of this Section 2, except that the percentage
referred to in clause (y) shall be 25% and that the percentage referred in the
definition of a Significant Subsidiary shall be changed from 10% to 25%; and
provided further, that in no event shall any merger, consolidation or similar
transaction involving Issuer or any Significant Subsidiary in which the voting
securities of Issuer or of such Significant Subsidiary outstanding immediately
prior thereto continue to represent (by either remaining outstanding or being
converted into the voting securities of the surviving entity of any such
transaction) at least 65% of the combined voting power of the voting securities
of the Issuer or the surviving entity (or any entity controlling the surviving
entity) outstanding immediately after the consummation of such merger,
consolidation or similar transaction be deemed to be an Acquisition Transaction
for the purposes of this clause (ii).
(e) Issuer shall notify Grantee promptly in writing of the occurrence of
any Initial Triggering Event or Subsequent Triggering Event of which it has
notice (together, a "Triggering Event"), it being understood that the giving of
such notice by Issuer shall not be a condition to the right of the Holder to
exercise the Option.
(f) In the event the Holder is entitled to and wishes to exercise the
Option (or any portion thereof), it shall send to Issuer a written notice (the
date of which being herein referred to as the "Notice Date") specifying (i) the
total number of shares it will purchase pursuant to such exercise and (ii) a
place and date not earlier than three business days nor later than 60 business
days from the Notice Date for the closing of such purchase (the "Closing Date");
provided that if prior notification to or approval of the Federal Reserve Board
or any other regulatory agency is required in connection with such purchase, the
Holder shall promptly file the required notice or application for approval and
shall expeditiously process the same and the period of time that
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otherwise would run pursuant to this sentence shall run instead from the date on
which any required notification periods have expired or been terminated or such
approvals have been obtained and any requisite waiting period or periods shall
have passed. Any exercise of the Option shall be deemed to occur on the Notice
Date relating thereto.
(g) At the closing referred to in subsection (f) of this Section 2, the
Holder shall pay to Issuer the aggregate purchase price for the shares of Common
Stock purchased pursuant to the exercise of the Option in immediately available
funds by wire transfer to a bank account designated by Issuer; provided that
failure or refusal of Issuer to designate such a bank account shall not preclude
the Holder from exercising the Option.
(h) At such closing, simultaneously with the delivery of immediately
available funds as provided in subsection (g) of this Section 2, Issuer shall
deliver to the Holder a certificate or certificates representing the number of
shares of Common Stock purchased by the Holder and, if the Option should be
exercised in part only, a new Option evidencing the rights of the Holder thereof
to purchase the balance of the shares of Common Stock purchasable hereunder, and
the Holder shall deliver to Issuer a copy of this Agreement and a letter
agreeing that the Holder will not offer to sell or otherwise dispose of such
shares in violation of applicable law or the provisions of this Agreement.
(i) Certificates for Common Stock delivered at a closing hereunder
may be endorsed with a restrictive legend that shall read substantially as
follows:
"The transfer of the shares represented by this
certificate is subject to certain provisions of an
agreement between the registered holder hereof and
Issuer and to resale restrictions arising under the
Securities Act of 1933, as amended. A copy of such
agreement is on file at the principal office of
Issuer and will be provided to the holder hereof
without charge upon receipt by Issuer of a written
request therefor."
It is understood and agreed that: (i) the reference to the resale
restrictions of the Securities Act of 1933, as amended (the "1933 Act"), in the
above legend shall be removed by delivery of substitute certificate(s) without
such reference if the Holder shall have delivered to Issuer a copy of a letter
from the staff of the SEC, or an opinion of counsel, in form and substance
reasonably satisfactory to Issuer, to the effect that such legend is not
required for purposes of the 1933 Act; (ii) the reference to the provisions of
this Agreement in the above legend shall be removed by delivery of substitute
certificate(s) without such reference if the shares of Common Stock delivered
pursuant hereto have been sold or transferred in compliance with the provisions
of this Agreement under circumstances that do not require the retention of such
reference; and (iii) the legend shall be removed in its entirety if the
conditions in the preceding clauses (i) and (ii) are both satisfied. In
addition, such certificates shall bear any other legend as may be required by
law.
(j) Upon the giving by the Holder to Issuer of the written notice of
exercise of the Option provided for under subsection (f) of this Section 2 and
the tender of the applicable
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purchase price in immediately available funds, the Holder shall be deemed
to be the holder of record of the shares of Common Stock issuable upon such
exercise, notwithstanding that the stock transfer books of Issuer shall then be
closed or that certificates representing such shares of Common Stock shall not
then be actually delivered to the Holder. Issuer shall pay all expenses, and any
and all United States federal, state and local taxes and other charges that may
be payable in connection with the preparation, issue and delivery of stock
certificates under this Section 2 in the name of the Holder or its assignee,
transferee or designee.
3. Covenants of Issuer. In addition to its other agreements and
covenants herein, Issuer agrees: (i) that it shall at all times maintain, free
from subscriptive or preemptive rights, sufficient authorized but unissued or
treasury shares of Common Stock so that the Option may be exercised without
additional authorization of Common Stock after giving effect to all other
options, warrants, convertible securities and other rights to purchase Common
Stock; (ii) that it will not, by charter amendment or through reorganization,
consolidation, merger, dissolution or sale of assets, or by any other voluntary
act, avoid or seek to avoid the observance or performance of any of the
covenants, stipulations or conditions to be observed or performed hereunder by
Issuer; (iii) promptly to take all action as may from time to time be required
(including (x) complying with all premerger notification, reporting and waiting
period requirements specified in 15 U.S.C. Section 18a and regulations
promulgated thereunder and (y) in the event, under the Bank Holding Company Act
of 1956, as amended (the "BHCA") or the Change in Bank Control Act of 1978, as
amended, or any state or other federal banking law, prior approval of or notice
to the Federal Reserve Board or to any state or other federal regulatory
authority is necessary before the Option may be exercised, cooperating fully
with the Holder in preparing such applications or notices and providing such
information to the Federal Reserve Board or such state or other federal
regulatory authority as they may require) in order to permit the Holder to
exercise the Option and Issuer to duly and effectively issue shares of Common
Stock pursuant hereto; (iv) promptly to take all action provided herein to
protect the rights of the Holder against dilution; and (v) not to enter or agree
to enter into any Acquisition Transaction unless the other party or parties
thereto agree to assume in writing all of Issuer's obligations hereunder;
provided that nothing in this Section 3 or elsewhere in this Agreement shall be
deemed to authorize Issuer to breach any provision of the Merger Agreement.
Notwithstanding any notice of revocation delivered pursuant to the proviso to
Section 7(c), a Holder may require such other party or parties to perform
Issuer's obligations under Section 7(a) unless such other party or parties are
prohibited by law or regulation from such performance.
4. Exchange; Replacement. This Agreement (and the Option granted
hereby) are exchangeable, without expense, at the option of the Holder, upon
presentation and surrender of this Agreement at the principal office of Issuer,
for other Agreements providing for Options of different denominations entitling
the holder thereof to purchase, on the same terms and subject to the same
conditions as are set forth herein, in the aggregate the same number of shares
of Common Stock purchasable hereunder. The terms "Agreement" and "Option" as
used herein include any Agreements and related Options for which this Agreement
(and the Option granted hereby) may be exchanged. Upon receipt by Issuer of
evidence reasonably satisfactory to it of the loss, theft, destruction or
mutilation of this Agreement, and (in the case of loss, theft or destruction) of
reasonably satisfactory indemnification, and upon surrender and cancellation of
this Agreement, if mutilated, Issuer will execute and deliver a new Agreement of
like tenor and
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date. Any such new Agreement executed and delivered shall constitute an
additional contractual obligation on the part of Issuer, whether or not the
Agreement so lost, stolen, destroyed or mutilated shall at any time be
enforceable by anyone.
5. Adjustments. In addition to the adjustment in the number of
shares of Common Stock that are purchasable upon exercise of the Option pursuant
to Section 1 of this Agreement, the number of shares of Common Stock purchasable
upon the exercise of the Option and the Option Price shall be subject to
adjustment from time to time as provided in this Section 5. In the event of any
change in, or distributions in respect of, the Common Stock by reason of stock
dividends, split-ups, mergers, recapitalizations, combinations, subdivisions,
conversions, exchanges of shares, distributions on or in respect of the Common
Stock that would be prohibited under the terms of the Merger Agreement, or the
like, the type and number of shares of Common Stock purchasable upon exercise
hereof and the Option Price shall be appropriately adjusted in such manner as
shall fully preserve the economic benefits provided hereunder and proper
provision shall be made in any agreement governing any such transaction to
provide for such proper adjustment and the full satisfaction of the Issuer's
obligations hereunder.
6. Registration. Upon the occurrence of a Subsequent Triggering
Event that occurs prior to an Exercise Termination Event, Issuer shall, at the
request of Grantee delivered within 12 months (or such later period as provided
in Section 10) of such Subsequent Triggering Event (whether on its own behalf or
on behalf of any subsequent holder of this Option (or part thereof) or any of
the shares of Common Stock issued pursuant hereto), promptly prepare, file and
keep current a shelf registration statement under the 1933 Act covering this
Option and any shares issued and issuable pursuant to this Option and shall use
its reasonable best efforts to cause such registration statement to become
effective and remain current in order to permit the sale or other disposition of
this Option and any shares of Common Stock issued upon total or partial exercise
of this Option ("Option Shares") in accordance with any plan of disposition
requested by Grantee. Issuer will use its reasonable best efforts to cause such
registration statement promptly to become effective and then to remain effective
for a period not in excess of 180 days from the day such registration statement
first becomes effective or such shorter time as may be reasonably necessary, in
the judgment of the Grantee or the Holder, to effect such sales or other
dispositions. Grantee shall have the right to demand two such registrations. The
Issuer shall bear the costs of such registrations (including, but not limited
to, Issuer's attorneys' fees, printing costs and filing fees, except for
underwriting discounts or commissions, brokers' fees and the fees and
disbursements of Grantee's counsel related thereto). The foregoing
notwithstanding, if, at the time of any request by Grantee for registration of
the Option or Option Shares as provided above, Issuer is in registration with
respect to an underwritten public offering of shares of Common Stock, and if in
the good faith judgment of the managing underwriter or managing underwriters,
or, if none, the sole underwriter or underwriters, of such offering the
inclusion of the Holder's Option or Option Shares would interfere with the
successful marketing of the shares of Common Stock offered by Issuer, the number
of Option Shares otherwise to be covered in the registration statement
contemplated hereby may be reduced; provided, however, that after any such
required reduction the number of Option Shares to be included in such offering
for the account of the Holder shall constitute at least 25% of the total number
of shares to be sold by the Holder and Issuer in the aggregate; and provided
further, however, that if such reduction occurs, then the Issuer shall file a
registration statement for the balance of such shares of Common Stock issuable
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pursuant to this Option as promptly as practical following such reduction
and no reduction in the number of shares of Common Stock to be sold by the
Holder shall thereafter occur. Each such Holder shall provide all information
reasonably requested by Issuer for inclusion in any registration statement to be
filed hereunder. If requested by any such Holder in connection with such
registration, Issuer shall become a party to any underwriting agreement relating
to the sale of such shares, but only to the extent of obligating itself in
respect of representations, warranties, indemnities and other agreements
customarily included in secondary offering underwriting agreements for the
Issuer. Upon receiving any request under this Section 6 from any Holder, Issuer
agrees to send a copy thereof to any other person known to Issuer to be entitled
to registration rights under this Section 6, in each case by promptly mailing
the same, postage prepaid, to the address of record of the persons entitled to
receive such copies. Notwithstanding anything to the contrary contained herein,
in no event shall Issuer be obligated to effect more than two registrations
pursuant to this Section 6 by reason of the fact that there shall be more than
one Holder as a result of any assignment or division of this Agreement.
7. Repurchase of Option and/or Option Shares. (a) At any time after
the occurrence of a Repurchase Event (as defined below), (i) following a request
of the Holder, given prior to an Exercise Termination Event (or such later
period as provided in Section 10), Issuer (or any successor thereto) shall
repurchase the Option from the Holder at a price (the "Option Repurchase Price")
equal to (x) the amount by which (A) the Market/Offer Price (as defined below)
exceeds (B) the Option Price, multiplied by the number of shares for which this
Option may then be exercised plus (y) Grantee's reasonable out-of-pocket
expenses (to the extent not previously reimbursed) and (ii) at the request of
the owner of Option Shares from time to time (the "Owner"), delivered prior to
an Exercise Termination Event (or such later period as provided in Section 10),
Issuer shall repurchase such number of the Option Shares from the Owner as the
Owner shall designate at a price (the "Option Share Repurchase Price") equal to
(x) the Market/Offer Price multiplied by the number of Option Shares so
designated plus (y) Grantee's reasonable out-of-pocket expenses (to the extent
not previously reimbursed). The term "Market/Offer Price" shall mean the
greatest of (i) the price per share of Common Stock at which a tender offer or
exchange offer therefor has been made, (ii) the price per share of Common Stock
to be paid by any third party pursuant to an agreement with Issuer, (iii) the
highest closing price per share of Common Stock within the six-month period
immediately preceding the date on which the Holder gives notice of the required
repurchase of this Option or the Owner gives notice of the required repurchase
of Option Shares, as the case may be, or (iv) in the event of a sale of all or a
substantial portion of Issuer's assets, the sum of the price paid in such sale
for such assets and the current market value of the remaining assets of Issuer
as determined by a nationally recognized investment banking firm mutually
selected by the Holder or the Owner, as the case may be, on the one hand, and
the Issuer, on the other, divided by the number of shares of Common Stock of
Issuer outstanding at the time of such sale. In determining the Market/Offer
Price, the value of consideration other than cash shall be determined by a
nationally recognized investment banking firm mutually selected by the Holder or
Owner, as the case may be, on the one hand, and the Issuer, on the other.
(b) Following a Repurchase Event, the Holder or the Owner, as the
case may be, may exercise its right to require Issuer to repurchase the Option
and any Option Shares pursuant to this Section 7 by surrendering for such
purpose to Issuer, at its principal office, a copy of this
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Agreement or certificates for Option Shares, as applicable, accompanied by
a written notice or notices stating that the Holder or the Owner, as the case
may be, elects to require Issuer to repurchase this Option and/or the Option
Shares, as the case may be, in accordance with the provisions of this Section 7.
Prior to the later of (x) the date that is five business days after the
surrender of the Option and/or certificates representing Option Shares and the
receipt of such notice or notices relating thereto and (y) the day on which a
Repurchase Event occurs, Issuer shall deliver or cause to be delivered to the
Holder the Option Repurchase Price and/or to the Owner the Option Share
Repurchase Price or the portion thereof that Issuer is not then prohibited under
applicable law and regulation from so delivering.
(c) To the extent that Issuer is prohibited under applicable law or
regulation from repurchasing the Option and/or the Option Shares in full, Issuer
shall immediately so notify the Holder and/or the Owner and thereafter shall
deliver or cause to be delivered, from time to time, to the Holder and/or the
Owner, as appropriate, that portion of the Option Repurchase Price and the
Option Share Repurchase Price, respectively, that it is no longer prohibited
from delivering, in each case within five business days after the date on which
Issuer is no longer so prohibited; provided, however, that if Issuer at any time
after delivery of a notice of repurchase delivered by the Holder or the Owner
pursuant to paragraph (b) of this Section 7 is prohibited under applicable law
or regulation from delivering to the Holder and/or the Owner, as the case may
be, the Option Repurchase Price or the Option Share Repurchase Price,
respectively, in full (and Issuer hereby undertakes to use its best efforts to
obtain all required regulatory and legal approvals and to file any required
notices as promptly as practicable in order to accomplish such repurchase), the
Holder or Owner may revoke its notice of repurchase of the Option or the Option
Shares either in whole or to the extent of the prohibition, whereupon, in the
latter case, Issuer shall promptly (i) deliver to the Holder and/or the Owner,
as appropriate, that portion of the Option Repurchase Price or the Option Share
Repurchase Price that Issuer is not prohibited from delivering; and (ii)
deliver, as appropriate, either (A) to the Holder, a new Stock Option Agreement
evidencing the right of the Holder to purchase that number of shares of Common
Stock obtained by multiplying the number of shares of Common Stock for which the
surrendered Stock Option Agreement was exercisable at the time of delivery of
the notice of repurchase by a fraction, the numerator of which is the Option
Repurchase Price less the portion thereof theretofore delivered to the Holder
and the denominator of which is the Option Repurchase Price, or (B) to the
Owner, a certificate for the Option Shares it is then so prohibited from
repurchasing.
(d) For purposes of this Section 7, a Repurchase Event shall be
deemed to have occurred (i) upon the consummation of any merger, consolidation
or similar transaction involving Issuer or any purchase, lease or other
acquisition of all or a substantial portion of the assets of Issuer, other than
any such transaction which would not constitute an Acquisition Transaction
pursuant to the provisos to Section 2(b)(i) hereof or (ii) upon the acquisition
by any person of beneficial ownership of 50% or more of the then outstanding
shares of Common Stock; provided that no such event shall constitute a
Repurchase Event unless a Subsequent Triggering Event shall have occurred prior
to an Exercise Termination Event. The parties hereto agree that Issuer's
obligations to repurchase the Option or Option Shares under this Section 7 shall
not terminate upon the occurrence of an Exercise Termination Event unless no
Subsequent Triggering Event shall have occurred prior to the occurrence of an
Exercise Termination Event.
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8. Substitute Option. (a) In the event that prior to an Exercise
Termination Event, Issuer shall enter into an agreement (i) to consolidate with
or merge into any person, other than Grantee or one of its Subsidiaries, and
shall not be the continuing or surviving corporation of such consolidation or
merger, (ii) to permit any person, other than Grantee or one of its
Subsidiaries, to merge into Issuer and Issuer shall be the continuing or
surviving corporation, but, in connection with such merger, the then outstanding
shares of Common Stock shall be changed into or exchanged for stock or other
securities of any other person or cash or any other property or the then
outstanding shares of Common Stock shall after such merger represent less than
50% of the outstanding voting shares and voting share equivalents of the merged
company, or (iii) to sell or otherwise transfer all or substantially all of its
assets to any person, other than Grantee or one of its Subsidiaries, then, and
in each such case, the agreement governing such transaction shall make proper
provision so that the Option shall, upon the consummation of any such
transaction and upon the terms and conditions set forth herein, be converted
into, or exchanged for, an option (the "Substitute Option"), at the election of
the Holder, of either (x) the Acquiring Corporation (as defined below) or (y)
any person that controls the Acquiring Corporation.
(b) The following terms have the meanings indicated:
(1) "Acquiring Corporation" shall mean (i) the continuing or
surviving corporation of a consolidation or merger with Issuer (if other than
Issuer), (ii) Issuer in a merger in which Issuer is the continuing, surviving or
acquiring person, and (iii) the transferee of all or substantially all of
Issuer's assets.
(2) "Substitute Common Stock" shall mean the common stock (or
similar equity interest) issued by the issuer of the Substitute Option upon
exercise of the Substitute Option.
(3) "Assigned Value" shall mean the Market/Offer Price, as
defined in Section 7.
(4) "Average Price" shall mean the average closing price of a share of
the Substitute Common Stock for the one year immediately preceding the
consolidation, merger or sale in question but in no event higher than the
closing price of the shares of Substitute Common Stock on the day preceding such
consolidation, merger or sale; provided that if Issuer is the issuer of the
Substitute Option, the Average Price shall be computed with respect to a share
of common stock issued by the person merging into Issuer or by any company which
controls or is controlled by such person, as the Holder may elect.
(c) The Substitute Option shall have the same terms as the Option;
provided, that if the terms of the Substitute Option may not, for legal reasons,
be the same as the Option, such terms shall be as similar as possible to the
terms of the Option and in no event less advantageous to the Holder. The issuer
of the Substitute Option shall also enter into an agreement with the then Holder
or Holders of the Substitute Option in substantially the same form as this
Agreement, which shall be applicable to the Substitute Option.
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(d) The Substitute Option shall be exercisable for such number of
shares of Substitute Common Stock as is equal to the Assigned Value multiplied
by the number of shares of Common Stock for which the Option is then
exercisable, divided by the Average Price. The exercise price of the Substitute
Option per share of Substitute Common Stock shall then be equal to the Option
Price multiplied by a fraction, the numerator of which shall be the number of
shares of Common Stock for which the Option is then exercisable and the
denominator of which shall be the number of shares of Substitute Common Stock
for which the Substitute Option is exercisable.
(e) In no event, pursuant to any of the foregoing paragraphs, shall
the Substitute Option be exercisable for more than 19.9% of the shares of
Substitute Common Stock outstanding prior to exercise of the Substitute Option.
In the event that the Substitute Option would be exercisable for more than 19.9%
of the shares of Substitute Common Stock outstanding prior to exercise but for
this clause (e), the issuer of the Substitute Option (the "Substitute Option
Issuer") shall make a cash payment to Holder equal to the excess of (i) the
value of the Substitute Option without giving effect to the limitation in this
clause (e) over (ii) the value of the Substitute Option after giving effect to
the limitation in this clause (e). This difference in value shall be determined
by a nationally recognized investment banking firm selected by the Holder or the
Owner, as the case may be.
(f) Issuer shall not enter into any transaction described in
subsection (a) of this Section 8 unless the Acquiring Corporation and any person
that controls the Acquiring Corporation assume in writing all the obligations of
Issuer hereunder.
9. Repurchase of Substitute Option. (a) At the request of the holder
of the Substitute Option (the "Substitute Option Holder"), the Substitute Option
Issuer shall repurchase the Substitute Option from the Substitute Option Holder
at a price (the "Substitute Option Repurchase Price") equal to the sum of (x)
the amount by which (i) the Highest Closing Price (as defined below) exceeds
(ii) the exercise price of the Substitute Option, multiplied by the number of
shares of Substitute Common Stock for which the Substitute Option may then be
exercised (y) Grantee's reasonable out-of-pocket expenses (to the extent not
previously reimbursed), and at the request of the owner (the "Substitute Share
Owner") of shares of Substitute Common Stock (the "Substitute Shares"), the
Substitute Option Issuer shall repurchase the Substitute Shares at a price (the
"Substitute Share Repurchase Price") equal to (x) the Highest Closing Price
multiplied by the number of Substitute Shares so designated plus (y) Grantee's
reasonable out-of-pocket expenses (to the extent not previously reimbursed). The
term "Highest Closing Price" shall mean the highest closing price for shares of
Substitute Common Stock within the six-month period immediately preceding the
date the Substitute Option Holder gives notice of the required repurchase of the
Substitute Option or the Substitute Share Owner gives notice of the required
repurchase of the Substitute Shares, as applicable.
(b) The Substitute Option Holder or the Substitute Share Owner, as
the case may be, may exercise its respective right to require the Substitute
Option Issuer to repurchase the Substitute Option or the Substitute Shares, as
the case may be, pursuant to this Section 9 by surrendering for such purpose to
the Substitute Option Issuer, at its principal executive office, the agreement
for such Substitute Option (or, in the absence of such an agreement, a copy of
this Agreement) and certificates for Substitute Shares accompanied by a written
notice or notices
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stating that the Substitute Option Holder or the Substitute Share Owner, as
case may be, elects to require the Substitute Option Issuer to repurchase the
Substitute Option and/or the Substitute Shares, as the case may be, in
accordance with the provisions of this Section 9. As promptly as practicable,
and in any event within five business days after the surrender of the Substitute
Option and/or certificates representing Substitute Shares and the receipt of
such notice or notices delivered pursuant to this subsection (b) of this Section
9 relating thereto, the Substitute Option Issuer shall deliver or cause to be
delivered to the Substitute Option Holder the Substitute Option Repurchase Price
and/or to the Substitute Share Owner the Substitute Share Repurchase Price or,
in either case, the portion thereof which the Substitute Option Issuer is not
then prohibited under applicable law and regulation from so delivering.
(c) To the extent that the Substitute Option Issuer is prohibited
under applicable law or regulation from repurchasing the Substitute Option
and/or the Substitute Shares in part or in full, the Substitute Option Issuer,
following a request for repurchase pursuant to this Section 9, shall immediately
so notify the Substitute Option Holder and/or the Substitute Share Owner and
shall thereafter deliver or cause to be delivered, from time to time, to the
Substitute Option Holder and/or the Substitute Share Owner, as appropriate, that
portion of the Substitute Share Repurchase Price, respectively, which it is no
longer prohibited from delivering, in each case, within five business days after
the date on which the Substitute Option Issuer is no longer so prohibited;
provided, however, that if the Substitute Option Issuer at any time after
delivery of a notice of repurchase delivered by the Substitute Share Owner or
Substitute Option Holder pursuant to subsection (b) of this Section 9 is
prohibited under applicable law or regulation from delivering to the Substitute
Option Holder and/or the Substitute Share Owner, as appropriate, the Substitute
Option Repurchase Price and the Substitute Share Repurchase Price, respectively,
in full (and the Substitute Option Issuer shall use its best efforts to receive
all required regulatory and legal approvals as promptly as practicable in order
to accomplish such repurchase), the Substitute Option Holder or Substitute Share
Owner may revoke its notice of repurchase of the Substitute Option or the
Substitute Shares either in whole or to the extent of the prohibition,
whereupon, in the latter case, the Substitute Option Issuer shall promptly (i)
deliver to the Substitute Option Holder or Substitute Share Owner, as
appropriate, that portion of the Substitute Option Repurchase Price or the
Substitute Share Repurchase Price that the Substitute Option Issuer is not
prohibited from delivering; and (ii) deliver, as appropriate, either (A) to the
Substitute Option Holder, a new Substitute Option evidencing the right of the
Substitute Option Holder to purchase that number of shares of the Substitute
Common Stock obtained by multiplying the number of shares of the Substitute
Common Stock for which the surrendered Substitute Option was exercisable at the
time of delivery of the notice of repurchase by a fraction, the numerator of
which is the Substitute Option Repurchase Price less the portion thereof
theretofore delivered to the Substitute Option Holder and the denominator of
which is the Substitute Option Repurchase Price, or (B) to the Substitute Share
Owner, a certificate for the Substitute Common Shares it is then so prohibited
from repurchasing.
10. Extension. The period for exercise of certain rights under
Sections 2, 6, 7 and 13 shall be extended: (i) to the extent necessary to obtain
all regulatory approvals for the exercise of such rights, and for the expiration
of all statutory waiting periods; and (ii) to the extent necessary to avoid
liability under Section 16(b) of the 1934 Act by reason of such exercise.
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11. Representations and Warranties of Issuer. Issuer hereby
represents and warrants to Grantee as follows:
(a) Issuer has full corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
Board of Directors of Issuer and no other corporate proceedings on the part of
Issuer are necessary to authorize this Agreement or to consummate the
transactions so contemplated. This Agreement has been duly and validly executed
and delivered by Issuer.
(b) Issuer has taken all necessary corporate action to authorize and
reserve and to permit it to issue, and at all times from the date hereof through
the termination of this Agreement in accordance with its terms will have
reserved for issuance upon the exercise of the Option, that number of shares of
Common Stock equal to the maximum number of shares of Common Stock at any time
and from time to time issuable hereunder, and all such shares, upon issuance
pursuant hereto, will be duly authorized, validly issued, fully paid,
nonassessable, and will be delivered free and clear of all claims, liens,
encumbrances and security interests and will not be subject to any preemptive
rights.
(c) The execution, delivery and performance of this Agreement does
not or will not, and the consummation by Issuer of any of the transactions
contemplated hereby will not, constitute or result in (i) a breach or violation
of or a default under, its articles or certificate of incorporation or by-laws,
or the comparable governing instruments of any of its subsidiaries, or (ii) a
breach or violation of or a default under, any agreement, lease, contract, note,
mortgage, indenture, arrangement or other obligation of it or any of its
subsidiaries (with or without the giving of notice, the lapse of time or both)
or under any law, rule, ordinance or regulation or judgment, decree, order,
award or governmental or non-governmental permit or license to which it or any
of its subsidiaries is subject.
(d) To the best of Issuer's knowledge neither Section 912 of the
Business Corporation Law of the State of New York nor any other "fair price",
"moratorium", "control share acquisition" or other similar anti-takeover statute
or regulation enacted under state or federal laws in the United States
applicable to the Issuer or any of its Subsidiaries is applicable to this
Agreement or any of the transactions contemplated hereby.
(e) The Board of Directors of the Issuer has approved an amendment
(substantially in the form provided to Grantee) to the Amended and Restated
Rights Agreement, dated February 22, 1988, and as amended November 26, 1997,
between the Company and Harris Trust and Savings Bank to the effect that none of
Grantee nor Merger Sub (as defined in the Merger Agreement) nor any of their
respective affiliates shall become an "Acquiring Person", and that no "Shares
Acquisition Date" or "Distribution Date" (as such terms are defined in the
Rights Plan) will occur as a result of the approval, execution or delivery of
this Agreement or the consummation of the transactions contemplated hereby.
12. Representations and Warranties of Grantee. Grantee hereby
represents and warrants to Issuer that:
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(a) Grantee has all requisite corporate power and authority to enter
into this Agreement and, subject to any approvals or consents referred to
herein, to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the part
of Grantee. This Agreement has been duly executed and delivered by Grantee.
(b) The Option is not being, and any shares of Common Stock or other
securities acquired by Grantee upon exercise of the Option will not be, acquired
with a view to the public distribution thereof and will not be transferred or
otherwise disposed of except in a transaction registered or exempt from
registration under the Securities Act.
13. Assignment. Neither of the parties hereto may assign any of its
rights or obligations under this Agreement or the Option created hereunder to
any other person, without the express written consent of the other party, except
that in the event a Subsequent Triggering Event shall have occurred prior to an
Exercise Termination Event, Grantee, subject to the express provisions hereof,
may assign in whole or in part its rights and obligations hereunder within 90
days following such Subsequent Triggering Event (or such later period as
provided in Section 10); provided, however, that until the date 15 days
following the date on which the Federal Reserve Board approves an application by
Grantee under the BHCA to acquire the shares of Common Stock subject to the
Option, Grantee may not assign its rights under the Option except in (i) a
widely dispersed public distribution, (ii) a private placement in which no one
party acquires the right to purchase in excess of 2% of the voting shares of
Issuer, (iii) an assignment to a single party (e.g., a broker or investment
banker) for the purpose of conducting a widely dispersed public distribution on
Grantee's behalf, or (iv) any other manner approved by the Federal Reserve
Board.
14. Notional Total Profit. (a) Notwithstanding any other provision
of this Agreement, this Option may not be exercised for a number of shares as
would, as of the date of exercise, result in a Notional Total Profit (as defined
below) of more than $500 million; provided that nothing in this sentence shall
restrict any exercise of the Option permitted hereby on any subsequent date.
(b) As used herein, the term "Notional Total Profit" with respect to
any number of shares as to which Grantee may propose to exercise this Option
shall be the Total Profit determined as of the date of such proposed exercise
assuming that this Option were exercised on such date for such number of shares
and assuming that such shares, together with all other Option Shares held by
Grantee and its affiliates as of such date, were sold for cash at the closing
market price for the Common Stock as of the close of business on the preceding
trading day (less customary brokerage commissions).
(c) As used herein, the term "Total Profit" shall mean the aggregate
amount (before taxes) of the following: (i) the amount received by Grantee
pursuant to Issuer's repurchase of the Option (or any portion thereof) pursuant
to Section 7, (ii) (x) the amount received by Grantee pursuant to Issuer's
repurchase of Option Shares pursuant to Section 7, less (y) the Grantee's
purchase price for such Option Shares, (iii) (x) the net cash amounts
14
<PAGE>
received by Grantee pursuant to the sale of Option Shares (or any other
securities into which such Option Shares are converted or exchanged) to any
unaffiliated party, less (y) the Grantee's purchase price of such Option Shares,
(iv) any amounts received by Grantee on the transfer of the Option (or any
portion thereof) to any unaffiliated party, and (v) any amount equivalent to the
foregoing with respect to the Substitute Option.
15. Surrender. (a) Grantee may, at any time following a Repurchase
Event and prior to the occurrence of an Exercise Termination Event (or such
later period as provided in Section 10), relinquish the Option (together with
any Option Shares issued to and then owned by Grantee) to Issuer in exchange for
a cash fee equal to the Surrender Price (as defined below); provided, however,
that Grantee may not exercise its rights pursuant to this Section 15 if Issuer
has repurchased the Option (or any portion thereof) or any Option Shares
pursuant to Section 7. The "Surrender Price" shall be equal to $350 million (i)
plus, if applicable, Grantee's purchase price with respect to any Option Shares
and (ii) minus, if applicable, the excess of (B) the net cash amounts, if any,
received by Grantee pursuant to the arms' length sale of Option Shares (or any
other securities into which such Option Shares were converted or exchanged) to
any unaffiliated party, over (B) Grantee's purchase price of such Option Shares.
(b) Grantee may exercise its right to relinquish the Option and any
Option Shares pursuant to this Section 15 by surrendering to Issuer, at its
principal office, a copy of this Agreement together with certificates for Option
Shares, if any, accompanied by a written notice stating (i) that Grantee elects
to relinquish the Option and Option Shares, if any, in accordance with the
provisions of this Section 15 and (ii) the Surrender Price. The Surrender Price
shall be payable in immediately available funds on or before the second business
day following receipt of such notice by Issuer.
(c) To the extent that Issuer is prohibited under applicable law or
regulation, or as a consequence of administrative policy, from paying the
Surrender Price to Grantee in full, Issuer shall immediately so notify Grantee
and thereafter deliver or cause to be delivered, from time to time, to Grantee,
the portion of the Surrender Price that it is no longer prohibited from paying,
within five business days after the date on which Issuer is no longer so
prohibited; provided, however, that if Issuer at any time after delivery of a
notice of surrender pursuant to paragraph (b) of this Section 15 is prohibited
under applicable law or regulation, or as a consequence of administrative
policy, from paying to Grantee the Surrender Price in full, (i) Issuer shall (A)
use its reasonable best efforts to obtain all required regulatory and legal
approvals and to file any required notices as promptly as practicable in order
to make such payments, (B) within five days of the submission or receipt of any
documents relating to any such regulatory and legal approvals, provide Grantee
with copies of the same, and (c) keep Grantee advised of both the status of any
such request for regulatory and legal approvals, as well as any discussions with
any relevant regulatory or other third party reasonably related to the same and
(ii) Grantee may revoke such notice of surrender by delivery of a notice of
revocation to Issuer and, upon deliver of such notice of revocation, the
Exercise Termination Date shall be extended to a date six months from the date
on which the Exercise Termination Date would have occurred if not for the
provisions of this Section 15(c)
15
<PAGE>
(during which period Grantee may exercise any of its rights hereunder,
including any and all rights pursuant to this Section 15).
16. Best Efforts. Each of Grantee and Issuer will use its best
efforts to make all filings with, and to obtain consents of, all third parties
and governmental authorities necessary for the consummation of the transactions
contemplated by this Agreement, including without limitation making application
to list the shares of Common Stock issuable hereunder on the New York Stock
Exchange upon official notice of issuance and applying to the Federal Reserve
Board under the BHCA for approval to acquire the shares issuable hereunder, but
Grantee shall not be obligated to apply to state banking authorities for
approval to acquire the shares of Common Stock issuable hereunder until such
time, if ever, as it deems appropriate to do so.
17. Specific Performance. The parties hereto acknowledge that
damages would be an inadequate remedy for a breach of this Agreement by either
party hereto and that the obligations of the parties hereto shall be enforceable
by either party hereto through injunctive or other equitable relief.
18. Severability. If any term, provision, covenant or restriction
contained in this Agreement is held by a court or a federal or state regulatory
agency of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the terms, provisions and covenants and restrictions contained in
this Agreement shall remain in full force and effect, and shall in no way be
affected, impaired or invalidated. If for any reason such court or regulatory
agency determines that the Holder is not permitted to acquire, or Issuer is not
permitted to repurchase pursuant to Section 7, the full number of shares of
Common Stock provided in Section 1(a) hereof (as adjusted pursuant to Section
1(b) or 5 hereof), it is the express intention of Issuer to allow the Holder to
acquire or to require Issuer to repurchase such lesser number of shares as may
be permissible, without any amendment or modification hereof.
19. Notices. All notices, requests, claims, demands and other
communications hereunder shall be deemed to have been duly given when delivered
in person, by cable, telegram, telecopy or telex, or by registered or certified
mail (postage prepaid, return receipt requested) at the respective addresses of
the parties set forth in the Merger Agreement or such other address as shall be
provided in writing.
20. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York, regardless of the laws
that might otherwise govern under applicable principles of conflicts of laws
thereof.
21. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
22. Expenses. Except as otherwise expressly provided herein, each of
the parties hereto shall bear and pay all costs and expenses incurred by it or
on its behalf in connection with the transactions contemplated hereunder,
including fees and expenses of its own financial consultants, investment
bankers, accountants and counsel.
16
<PAGE>
23. Entire Agreement. Except as otherwise expressly provided herein
or in the Merger Agreement, this Agreement contains the entire agreement between
the parties with respect to the transactions contemplated hereunder and
supersedes all prior arrangements or understandings with respect thereof,
written or oral. The terms and conditions of this Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns. Nothing in this Agreement, expressed or
implied, is intended to confer upon any party, other than the parties hereto,
and their respective successors and assigns, any rights, remedies, obligations
or liabilities under or by reason of this Agreement, except as expressly
provided herein.
24. Captions; Capitalized Terms. The section and paragraph captions
herein are for convenience of reference only, do not constitute part of this
Agreement and shall not be deemed to limit or otherwise affect any of the
provisions hereof. Capitalized terms used in this Agreement and not defined
herein shall have the meanings assigned thereto in the Merger Agreement.
17
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Agreement to
be executed on its behalf by its officers thereunto duly authorized, all as of
the date first above written.
DEUTSCHE BANK AG
By:/s/ Rolf-E. Breuer
Name:Rolf-E. Breuer
Title:
By:/s/ Josef Ackermann
Name:Josef Ackermann
Title:
BANKERS TRUST CORPORATION
By:Frank N. Newman
Name:Frank N. Newman
Title:Chairman of the Board and
Chief Executive Officer
Press Release Deutsche Bank
==============================================================================
Frankfurt am Main and New York, November 30, 1998
Deutsche Bank to Acquire Bankers Trust, Establishing Global Platform for
Profitable Growth
Deutsche Bank AG ("Deutsche Bank" or the "Bank") and Bankers Trust
Corporation ("Bankers Trust") today announced that the Supervisory Board of
Deutsche Bank and the Board of Directors of Bankers Trust have approved a
definitive agreement for a transaction under which Deutsche Bank will acquire
all outstanding shares of the common stock of Bankers Trust at a price of
US $93.00 per share in cash. Deutsche Bank intends to finance the purchase price
of US$10.1 billion (roughly DM 17 billion) partly by a capital increase for
DM 4 billion. The remaining part of the purchase price will be financed with
available liquid funds as well as by the issuance of various financing
instruments such as participatory capital, bonds and convertible bonds or
bonds with warrants on the Bank's own shares and third-party shares. The
acquisition, which the parties expect to complete by May 1999, is subject to
the approval of shareholders representing two-thirds of all Bankers Trust
shares and of various worldwide regulatory authorities.
Bankers Trust
Bankers Trust operates extremely successfully, above all in business areas
that form an ideal and broad supplement to Deutsche Bank's activities. There
are few overlaps. Bankers Trust is strong in equities and bond trading and
will further strengthen Deutsche Bank's position in the global market. In
equity research, Bankers Trust brings with it a large number of qualified
analysts, both in the United States and in Europe. Bankers
<PAGE>
Trust has an excellent position in high-yield debt financing, a business area
that Deutsche Bank wants to expand further, particularly in Europe. Bankers
Trust also has important expertise in corporate finance. In the last two years,
Bankers Trust acquired the investment bank Wolfensohn & Co., with its large base
of Fortune 200 scale clients, and Alex. Brown & Sons, Inc., with its strong
client base of emerging growth companies, and combined them to form a major
merger advisory and equity underwriting business.
Bankers Trust also has a particularly strong market position in two business
areas with very stable income flows: asset management and securities
custody. In the custody business, Deutsche Bank will be custodian for a
securities volume of roughly DM 7 trillion after the acquisition. In the
cross-border custody business, the Bank will thus become the world's
second-largest custodian. In the rapidly expanding asset management
business, Deutsche Bank will rise to fourth place with the acquisition of
Bankers Trust, and thus attain an extremely competitive position.
Strategy
The aim of this combination is to continue and clearly confirm Deutsche
Bank's corporate strategy. Deutsche Bank acts globally - from a position of
strength in Europe - in those areas where its customers expect it to do so
and where attractive growth opportunities are available worldwide, especially
in asset management and custody. The U.S. market plays an important role for
Deutsche Bank. Customers in Europe in particular expect Deutsche Bank to
have a transatlantic presence. Deutsche Bank's current business in the
United States will take on a new dimension immediately upon completion
because it will be supported by the professional and established platform of
Bankers Trust.
-2-
<PAGE>
At the forefront of the combination with Bankers Trust are additional growth
prospects in profitable business areas. In addition, Deutsche Bank expects
substantial savings from cost synergies, for example, in the joint
development and use of information technology systems. From 2001 onward,
these savings will amount to approximately DM 1.7 billion a year. Expected
earnings per share, adjusted for the issuance of additional shares, should be
10% to 15% higher in 2001 as a result of the Bankers Trust acquisition.
Dr. Rolf-E. Breuer, Spokesman of the Board of Managing Directors of Deutsche
Bank, said: "The business portfolio of Bankers Trust is an ideal complement
to Deutsche Bank's own business portfolio. The combination creates a
strategic presence and strengthens leadership positions in many business
areas where we compete globally. We are convinced it is a first-class
strategic match for both companies."
Frank Newman, Chairman of the Board of Bankers Trust, said: "This is truly
an exciting time for the people of Bankers Trust. We are pleased to become
part of what will be the world's leading financial services company in size
and, we believe over time, in client service and capabilities. Together, we
will have the ability to serve more clients, to serve them over their entire
growth cycle and range of needs, and to serve them with exceptional quality
and creativity."
Executive Assignments
To guarantee a rapid integration of the activities of Deutsche Bank and
Bankers Trust, it is planned that, after completion of the transaction, Frank
Newman will join Deutsche Bank's Group Board. He will assume operative
responsibility jointly with Dr. Josef Ackermann
-3-
<PAGE>
for Group Division Global Corporates and Institutions (GCI). Dr. Ronaldo Schmitz
will remain - until the General Meeting in 2000 - on the Group Board and on the
GCI Divisional Board.
-4-
Exhibit 99.3
AMENDMENT NO. 1 TO AMENDED AND RESTATED RIGHTS AGREEMENT
This AMENDMENT NO. 1, dated as of November 30, 1998, is between
Bankers Trust Corporation, a New York corporation (the "Corporation"), and
Harris Trust and Savings Bank, N.A., as Rights Agent (the "Rights Agent").
Recitals
WHEREAS, the Corporation and the Rights Agent are parties to
an Amended and Restated Rights Agreement, dated as of February 22, 1988,
as amended as of November 26, 1997 (the "Rights Agreement"); and
WHEREAS, Deutsche Bank AG, an Aktiengesellschaft organized
under the laws of the Federal Republic of Germany ("Parent") and the
Corporation propose to enter into an Agreement and Plan of Merger (as it
may be amended from time to time pursuant to the terms thereof, the
"Merger Agreement") pursuant to which the Corporation will merge with a
wholly-owned subsidiary of Parent (the "Merger"), and a related Stock
Option Agreement by and between the Corporation, as issuer, and Parent,
as grantee (the "Option Agreement"). The Board of Directors of the
Corporation has approved the Merger Agreement, the Merger and the Option
Agreement; and
WHEREAS, pursuant to Section 27 of the Rights Agreement, the
Board of Directors of the Corporation has determined that an amendment
to the Rights Agreement as set forth herein is necessary and desirable
in connection with the foregoing and the Corporation and the Rights
Agent desire to evidence such amendment in writing;
NOW, THEREFORE, in consideration of the foregoing and the
mutual agreements set forth herein, the parties hereto agree as follows:
(a) Amendment of Section 1(a). Section 1(a) of the
Rights Agreement is amended to add the following sentence at the end
thereof:
"Notwithstanding anything in this Rights Agreement to the
contrary, neither Parent nor any Affiliate thereof shall be deemed
to be an Acquiring Person by virtue of (i) the consummation of the
Merger, (ii) the execution of the Merger Agreement and the Option
Agreement, or (iii) the consummation of the other transactions
contemplated in the Merger Agreement and the Option Agreement, or
any or all of the foregoing in combination."
(b) Amendment of Section 1(h). Section 1(h) of the
Rights Agreement is amended and restated to read as follows:
(i) "Final Expiration Date" shall have the
meaning set forth in Section 7 hereof.
(ii) "Merger" shall have the meaning set forth
in the Merger Agreement.
(iii) "Merger Agreement" shall mean that certain
Agreement and Plan of Merger, dated as of
November 30,
<PAGE>
1998, by and among Parent, Circle
Acquisition Corporation and the Corporation, as
amended from time to time pursuant to the terms
thereof.
(iv) "Option Agreement" shall mean that certain
Stock Option Agreement, dated as of November 30,
1998, by and between Parent, as grantee, and the
Corporation, as issuer, as amended from time to
time pursuant to the terms thereof.
(v) "Parent" shall mean Deutsche Bank AG, an
Aktiengesellschaft organized under the laws of
the Federal Republic of Germany.
(c) Amendment of Section 3(a). Section 3(a) of the
Rights Agreement is amended to add the following sentence at the end
thereof:
"Notwithstanding anything in this Rights Agreement to the
contrary, a Distribution Date shall not be deemed to have
occurred as the result of (i) the consummation of the Merger, (ii)
the execution of the Merger Agreement and the Option Agreement or
(iii) the consummation of the other transactions contemplated in
the Merger Agreement and the Option Agreement, or any or all of
the foregoing in combination."
(d) Amendment of Section 7. Section 7(a) of the Rights
Agreement is amended by striking the phrase "or (iii) the time at which
such rights are exchanged as provided in Section 24 hereof" at the end
thereof and substituting therefor the phrase "(iii) the time at which
such rights are exchanged as provided in Section 24 hereof, or (iv) the
consummation of the Merger."
(e) Amendment of Section 13. Section 13 of the Rights
Agreement is amended to add the following sentence at the end thereof:
"Notwithstanding anything in this Rights Agreement to the
contrary, (i) the consummation of the Merger, (ii) the execution
of the Merger Agreement and the Option Agreement and (iii) the
consummation of the other transactions contemplated in the Merger
Agreement and the Option Agreement, separately or in combination,
shall not be deemed to be events of the type described in the
first sentence of this Section 13 and shall not cause the Rights
to be adjusted or exercisable in accordance with, or any other
action to be taken or right or obligation to arise pursuant to,
this Section 13."
(f) Effectiveness. This Amendment shall be deemed
effective as of the date first written above, as if executed on such
date. Except as amended hereby, the Rights Agreement shall remain in
full force and effect and shall be otherwise unaffected hereby.
(g) Miscellaneous. This Amendment shall be deemed to
be a contract made under the laws of the State of New York and for all
purposes shall be governed by and construed in accordance with the laws
of such state applicable to contracts to be made and performed entirely
within such state. This
<PAGE>
Amendment may be executed in any number of counterparts, each of such
counterparts shall for all purposes be deemed to be an original, and all such
counterparts shall together constitute but one and the same instrument. If any
provision, covenant or restriction of this Amendment is held by a court of
competent jurisdiction or other authority to be invalid, illegal or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Amendment shall remain in full force and effect and shall
in no way be effected, impaired or invalidated.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No.1 to be
fully executed, all as of the date and year first above written.
BANKERS TRUST CORPORATION
/s/ James T.Byrne
-----------------
Name: James T. Byrne
Title:Senior Vice President
HARRIS TRUST AND SAVING BANK,
as Rights Agent
/s/ Donald W. Koslow
--------------------
Name: Donald W. Koslow
Title:Vice President
