Exhibit 2.1
Execution Draft
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TRANSACTION AGREEMENT AND PLAN OF MERGER
by and among
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO., INC.,
BLACKROCK, INC.,
NEW BOISE, INC.
and
BOISE MERGER SUB, INC.
______________________________
Dated as of February 15, 2006
______________________________
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TABLE OF CONTENTS
Page
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ARTICLE I
PLAN OF MERGER; PURCHASE AND SALE OF
MLIM TRANSFERRED INTERESTS; CLOSING
Section 1.1 Plan of Merger.............................................2
Section 1.2 Contribution of MLIM Transferred Interests.................3
Section 1.3 Closing....................................................4
Section 1.4 Deliveries at Closing......................................5
ARTICLE II
[INTENTIONALLY OMITTED]
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF MLIM PARENT
Section 3.1 Organization...............................................6
Section 3.2 MLIM Capital Structure.....................................6
Section 3.3 MLIM Business Entities.....................................7
Section 3.4 Title to MLIM Transferred Interests........................7
Section 3.5 Authority; Validity of Agreements..........................7
Section 3.6 Consents and Approvals.....................................8
Section 3.7 No Conflicts...............................................8
Section 3.8 Financial Statements.......................................9
Section 3.9 Absence of Undisclosed Liabilities........................10
Section 3.10 Absence of Certain Changes................................10
Section 3.11 Assets....................................................10
Section 3.12 Real Property.............................................11
Section 3.13 Material Contracts........................................12
Section 3.14 Litigation................................................14
Section 3.15 Affiliate Arrangements....................................14
Section 3.16 Compliance with Law; Government Regulation; Etc...........15
Section 3.17 MLIM Public Funds.........................................18
Section 3.18 Private MLIM Funds........................................20
Section 3.19 Assets Under Management; Clients..........................21
Section 3.20 Taxes.....................................................22
Section 3.21 Benefit Plans; Employees..................................25
Section 3.22 Intellectual Property; Information Technology.............27
Section 3.23 Insurance.................................................27
Section 3.24 Compliance with Environmental Law.........................28
Section 3.25 Books and Records.........................................28
Section 3.26 Derivative Products.......................................28
Section 3.27 Brokers and Finders.......................................28
Section 3.28 No Vote Required..........................................28
Section 3.29 Investment Intention......................................29
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE BLACKROCK PARTIES
Section 4.1 Organization..............................................29
Section 4.2 Capital Structure.........................................30
Section 4.3 Title to Common Stock; Business of New BlackRock
and BlackRock Merger Sub................................30
Section 4.4 Controlled Affiliates.....................................31
Section 4.5 Authority; Validity of Agreements.........................31
Section 4.6 Consents and Approvals....................................31
Section 4.7 No Conflicts..............................................32
Section 4.8 SEC Matters...............................................32
Section 4.9 Absence of Undisclosed Liabilities........................33
Section 4.10 Absence of Certain Changes................................33
Section 4.11 Litigation................................................34
Section 4.12 Compliance with Law; Government Regulation; Etc...........34
Section 4.13 BlackRock Benefit Plans; Employees........................37
Section 4.14 Intellectual Property; Information Technology.............39
Section 4.15 Insurance.................................................39
Section 4.16 Affiliate Arrangements....................................40
Section 4.17 Real Properties...........................................40
Section 4.18 Material Contracts........................................41
Section 4.19 Brokers and Finders.......................................42
Section 4.20 [Intentionally Omitted]...................................42
Section 4.21 Taxes.....................................................42
Section 4.22 Board of Directors Approvals..............................43
ARTICLE V
COVENANTS
Section 5.1 Conduct of Business.......................................43
Section 5.2 Information Prior to Closing..............................47
Section 5.3 Notification of Certain Matters...........................48
Section 5.4 No Solicitation, Etc......................................50
Section 5.5 Use of Certain Marks......................................51
Section 5.6 Confidentiality and Announcements.........................51
Section 5.7 Regulatory Matters; Third-Party Consents..................51
Section 5.8 MLIM Client Consents......................................53
Section 5.9 Expenses..................................................56
Section 5.10 Further Assurances........................................56
Section 5.11 Public Fund Proxy Statements and Registration Statements..58
Section 5.12 Section 15(f) of the Investment Company Act...............59
Section 5.13 Ancillary Agreements......................................60
Section 5.14 Employees.................................................60
Section 5.15 BlackRock Registration Statement..........................62
Section 5.16 Certain Capital Contributions and Distributions...........64
Section 5.17 Nonrecognition Treatment..................................69
Section 5.18 Restructuring.............................................70
Section 5.19 BlackRock Client Consents.................................70
Section 5.20 Contingent Accounts.......................................73
Section 5.21 Certain Disclosure Obligations............................73
Section 5.22 Banking Matters...........................................73
Section 5.23 Separation and Segregation................................73
Section 5.24 Certain Obligations as to PNC Agreement...................74
ARTICLE VI
CONDITIONS TO CLOSING
Section 6.1 Mutual Conditions.........................................74
Section 6.2 Conditions to the Obligations of BlackRock................75
Section 6.3 Conditions to the Obligations of MLIM Parent..............76
Section 6.4 Frustration of Closing Conditions, Etc....................77
ARTICLE VII
INDEMNIFICATION
Section 7.1 Survival of Representations, Warranties and Covenants.....78
Section 7.2 Obligations of MLIM Parent................................78
Section 7.3 Minimum Losses............................................80
Section 7.4 Maximum Indemnification...................................80
Section 7.5 Obligations of BlackRock..................................80
Section 7.6 Minimum Losses............................................81
Section 7.7 Maximum Indemnification...................................81
Section 7.8 Obligation to Mitigate....................................81
Section 7.9 Exclusive Remedy..........................................81
Section 7.10 Notice; Procedure for Third-Party Claims..................82
Section 7.11 Survival of Indemnity.....................................84
Section 7.12 Subrogation...............................................85
Section 7.13 Interest on Indemnity Claim...............................85
ARTICLE VIII
TAX MATTERS
Section 8.1 Tax Indemnification.......................................85
Section 8.2 Tax Indemnification Procedures............................87
Section 8.3 Termination of Tax Sharing Agreements.....................89
Section 8.4 Conflicts; Survival.......................................89
Section 8.5 Tax Treatment.............................................89
Section 8.6 Assistance and Cooperation................................90
Section 8.7 Transfer Taxes............................................90
Section 8.8 Tax Returns...............................................90
Section 8.9 Tax Apportionment.........................................91
Section 8.10 Purchase Price Allocation.................................91
Section 8.11 UK VAT....................................................92
ARTICLE IX
TERMINATION/SURVIVAL
Section 9.1 Termination...............................................93
Section 9.2 Survival After Termination................................95
ARTICLE X
MISCELLANEOUS
Section 10.1 Amendments; Extension; Waiver.............................95
Section 10.2 Entire Agreement..........................................95
Section 10.3 Construction and Interpretation...........................95
Section 10.4 Severability..............................................96
Section 10.5 Notices...................................................96
Section 10.6 Binding Effect; Persons Benefiting; No Assignment.........98
Section 10.7 Counterparts..............................................98
Section 10.8 Specific Performance......................................98
Section 10.9 Waiver of Punitive Damages................................98
Section 10.10 Governing Law.............................................98
Section 10.11 Consent to Jurisdiction...................................99
Annex A Defined Terms
Annex B Form of Certificate of Designations for New BlackRock
Series A Preferred Stock
Exhibit 3.20 UK Tax Warranties
Exhibit 5.10(d) Form of MLIHL HMRC Deed
Exhibit 5.16(i) Closing Financial Information
Exhibit 5.18 MLIM Restructuring
Exhibit 5.21 Certain Disclosure Obligations
Exhibit 6.1(c) Certain Agreements and Investments
Exhibit 6.2(d) Certain Governmental Approvals (BlackRock)
Exhibit 10.3-A Knowledge of MLIM Parent
Exhibit 10.3-B Knowledge of BlackRock
Exhibit A-1 Form of BlackRock Distribution Agreement
Exhibit A-2 License Agreement Principles
Exhibit A-3 MLIM Parent Registration Rights Agreement Principles
Exhibit A-4 MLIM Financial Statement Principles
Exhibit A-5 Transition Services Agreement Principles
TRANSACTION AGREEMENT AND PLAN OF MERGER
This TRANSACTION AGREEMENT AND PLAN OF MERGER, dated as of February
15, 2006, is by and among ▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO., INC. a Delaware corporation
("MLIM Parent"), BLACKROCK, INC., a Delaware corporation ("BlackRock"), NEW
BOISE, INC., a Delaware corporation and wholly-owned subsidiary of BlackRock
("New BlackRock"), and BOISE MERGER SUB, INC., a Delaware corporation and
direct wholly-owned subsidiary of New BlackRock ("BlackRock Merger Sub" and,
together with BlackRock and New BlackRock, the "BlackRock Parties").
Capitalized terms used herein shall have the meanings given such terms in Annex
A of this Agreement.
W I T N E S S E T H:
WHEREAS, BlackRock has authorized capital stock consisting of
250,000,000 shares of Class A Common Stock, par value $0.01 per share (the
"BlackRock Class A Common Stock"), 100,000,000 shares of Class B Common Stock,
par value $0.01 per share (the "BlackRock Class B Common Stock" and, together
with the BlackRock Class A Common Stock, the "BlackRock Common Stock"), and
10,000,000 shares of Preferred Stock, par value $0.01 per share (the "BlackRock
Preferred Stock" and, together with the BlackRock Common Stock, the "BlackRock
Shares");
WHEREAS, New BlackRock has authorized capital stock consisting of 100
shares of common stock, par value $0.01 per share (the "New BlackRock Common
Stock");
WHEREAS, as of the date of this Agreement, MLIM Parent and New
BlackRock have entered into a Stockholder Agreement (the "Stockholder
Agreement") and The PNC Financial Services Group, Inc. ("PNC"), New BlackRock,
and BlackRock have entered into an Implementation and Stockholder Agreement
(the "Implementation and Stockholder Agreement");
WHEREAS, BlackRock Merger Sub has authorized capital stock consisting
of 100 shares of common stock, par value $0.01 per share (the "BlackRock Merger
Sub Common Stock");
WHEREAS, BlackRock owns all of the issued and outstanding shares of
New BlackRock Common Stock;
WHEREAS, New BlackRock owns all of the issued and outstanding shares
of BlackRock Merger Sub Common Stock;
WHEREAS, following the completion of the MLIM Restructuring pursuant
to this Agreement, the MLIM Transferors will own all of the equity interests in
the MLIM Transferred Entities (the "MLIM Transferred Interests");
WHEREAS, following the MLIM Restructuring, MLIM Parent wishes to cause
the MLIM Transferors, on the terms and subject to the conditions set forth in
this Agreement, to effect the MLIM Contribution;
WHEREAS, the Boards of Directors of BlackRock and BlackRock Merger Sub
each adopted resolutions approving and declaring the advisability of this
Agreement and, upon the terms and subject to the conditions set forth herein,
the Merger and the MLIM Contribution, and the Board of Directors of MLIM Parent
approved this Agreement;
WHEREAS, for U.S. federal income tax purposes, the Merger is intended
to qualify as a reorganization under Section 368(a)(2)(E) of the Code;
WHEREAS, the portion of this Agreement relating to the Merger is
intended to constitute a "plan of reorganization" within the meaning of
Treasury Regulation Section 1.368-(2)(g); and
WHEREAS, for U.S. federal income tax purposes, it is intended that the
MLIM Contribution and the Merger together will qualify as a transaction
governed by Section 351 of the Code;
NOW THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements contained herein, and of other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and intending to be bound hereby, the parties hereby agree as
follows:
ARTICLE I
PLAN OF MERGER; PURCHASE AND SALE OF
MLIM TRANSFERRED INTERESTS; CLOSING
Section 1.1. Plan of Merger.
(a) The Merger. At the Effective Time (as defined below), and subject
to the terms and conditions of this Agreement and the applicable provisions of
the General Corporation Law of the State of Delaware (the "DGCL"), BlackRock
Merger Sub shall be merged with and into BlackRock (the "Merger"), the separate
existence of BlackRock Merger Sub as a corporation shall cease and BlackRock
shall continue as the surviving corporation (the "Surviving Entity") and a
Subsidiary of New BlackRock.
(b) Effective Time. Subject to the terms and conditions of Article VI,
on the Closing Date the parties shall file a certificate of merger (the
"Certificate of Merger") with the Secretary of State of the State of Delaware
in accordance with the DGCL. The Merger shall become effective at the time
specified in the Certificate of Merger (the "Effective Time").
(c) Merger Consideration. Subject to the terms and conditions of this
Agreement, as of the Effective Time, by virtue of the Merger and without any
further action by any party:
(i) each share of BlackRock Class A Common Stock issued and
outstanding as of the Effective Time shall be converted into and exchanged
for the right to receive one share of New BlackRock Common Stock;
(ii) each share of BlackRock Class B Common Stock issued and
outstanding as of the Effective Time shall be converted into and exchanged
for the right to receive one share of New BlackRock Common Stock; and
(iii) each share of BlackRock Merger Sub Common Stock issued and
outstanding as of the Effective Time shall be converted and exchanged for
one share of Common Stock, par value $0.01 per share, of the Surviving
Entity.
(d) Certificate of Incorporation and Bylaws. At the Effective Time,
the Certificate of Incorporation and By-Laws of BlackRock Merger Sub in effect
immediately prior to the Effective Time shall continue to be the Certificate of
Incorporation and By-Laws of the Surviving Entity, until thereafter amended in
accordance with their respective terms and applicable law.
(e) Directors and Officers. From and after the Effective Time, the
directors and officers of BlackRock Merger Sub shall be the directors and
officers of the Surviving Entity, and such directors and officers shall serve
until their successors have been duly elected or appointed and qualified or
until their death, resignation or removal in accordance with the Certificate of
Incorporation and By-Laws of the Surviving Entity.
Section 1.2 Contribution of MLIM Transferred Interests.
(a) Immediately after the Effective Time, MLIM Parent shall cause the
MLIM Transferors to transfer, assign and deliver to New BlackRock all of the
right, title and interest in and to the MLIM Transferred Interests, free and
clear of any Liens, and with all rights attached thereto (the "MLIM
Contribution").
(b) At the Closing, in consideration for the MLIM Contribution
pursuant to Section 1.2(a), New BlackRock shall issue to the MLIM Transferors,
in such proportions as shall be determined pursuant to Section 8.10, free and
clear of any Liens, the MLIM Consideration. "MLIM Consideration" means
65,000,000 New BlackRock Shares. The MLIM Consideration shall consist of (i)
solely New BlackRock Common Stock unless the MLIM Consideration shall exceed
the Common Stock Cap and (ii) if the MLIM Consideration shall exceed the Common
Stock Cap, shares of New BlackRock Common Stock equal to the Common Stock Cap
plus shares of New BlackRock Preferred Stock, designated as Series A
Participating Preferred Stock and having the terms set forth in Annex B
(the "New BlackRock Series A Preferred Stock"), equal to the total number of
New BlackRock Shares included in the MLIM Consideration less the Common Stock
Cap. "Common Stock Cap" means 45 percent of the quotient determined by dividing
the number of BlackRock Shares issued and outstanding as of immediately prior
to the Effective Time by 0.55.
(c) The MLIM Consideration shall be adjusted to reflect appropriately
the effect of any forward or reverse stock split, stock dividend (including any
dividend or distribution of securities exercisable or exchangeable for or
convertible into the applicable BlackRock Shares), stock issuance or sale,
reorganization, recapitalization, reclassification, combination, exchange of
shares or other like change with respect to the applicable BlackRock Shares the
record date for which occurs prior to the Effective Time.
(d) Notwithstanding the foregoing provisions of this Section 1.2, if
the number of New BlackRock Shares included in the MLIM Consideration, as
specified in Section 1.2(b), and as adjusted pursuant to Section 1.2(c),
exceeds the Share Cap, the MLIM Consideration shall consist of a number of New
BlackRock Shares equal to the Share Cap (subject to clause (i) and clause (ii)
of Section 1.2(b)) and cash in an amount equal to the product of such excess
and the BlackRock Market Price as of the Closing Date. "Share Cap" means 49.8
percent of the quotient determined by dividing the number of BlackRock Shares
as of immediately prior to the Effective Time (on a Fully Diluted basis) by
0.502.
Section 1.3 Closing. Subject to the terms and conditions of this
Agreement, the closing of the Transactions (the "Closing") shall occur at 10:00
a.m. at the offices of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or at such other location as may be mutually
agreed by BlackRock and MLIM Parent, on the first practicable MLIM Parent
month-end date to occur after all of the conditions in Article VI have been
satisfied or waived (other than conditions that relate to actions to be taken,
or documents to be delivered, at the Closing) or on such other date as may be
mutually agreed by MLIM Parent and BlackRock (such date, the "Closing Date").
Section 1.4 Deliveries at Closing. At the Closing:
(a) MLIM Parent shall cause the MLIM Transferors to deliver to New
BlackRock the MLIM Transferred Interests, along with such instruments of
transfer and assignment and other documentation as may be reasonably required
to evidence that such MLIM Transferred Interests have been duly assigned and
transferred to New BlackRock;
(b) New BlackRock shall deliver to the MLIM Transferors designated by
MLIM Parent the MLIM Consideration, including a certificate or certificates
evidencing New BlackRock Common Stock included in the MLIM Consideration;
provided, however, that notwithstanding anything in this Agreement to the
contrary, subject to Section 8.10, New BlackRock may transfer all or a portion
of the MLIM Consideration first to a direct Subsidiary treated as a disregarded
entity for U.S. federal income tax purposes, then cause such Subsidiary to
deliver such consideration to the MLIM Transferors that transferred the UK
Entities; and
(c) each party hereto shall deliver, or shall cause to be delivered,
to each other party, as applicable, each Ancillary Agreement to which it is a
party, duly executed, and all other previously undelivered documents required
to be delivered by such party to another party pursuant to this Agreement or
the Ancillary Agreements.
ARTICLE II
[INTENTIONALLY OMITTED]
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF MLIM PARENT
Except as set forth in writing in a Schedule attached to the
Disclosure Letter delivered by MLIM Parent to BlackRock on the date hereof (the
"MLIM Parent Disclosure Letter") referencing the appropriate section of this
Article III (references in this Article III to any "Schedule" being deemed to
refer to Schedules to such Disclosure Letter) or otherwise readily apparently
pertaining to any section of this Article III, MLIM Parent represents and
warrants to BlackRock as follows, as of the date hereof and as of the Closing
Date:
Section 3.1 Organization. Each of MLIM Parent and each MLIM Business
Entity is a legal entity duly organized, validly existing and (where
applicable) in good standing under the laws of its jurisdiction of
organization. Each of MLIM Parent and each MLIM Business Entity has the
requisite power and authority to carry on its business and to own, lease and
operate all of its properties and assets, as currently conducted, owned, leased
or operated. Each of MLIM Parent and each MLIM Business Entity is duly
qualified to do business in each jurisdiction in which the nature of its
business or the character or location of the properties and assets owned,
leased or operated by it makes such qualification necessary other than any
failure to be so qualified that, individually and in the aggregate, has not
had, and would not reasonably be expected to have or result in, a MLIM Material
Adverse Effect. Each Organizational Document of each MLIM Business Entity is in
full force and effect and there has been no material violation thereof.
Section 3.2 MLIM Capital Structure.
(a) After giving effect to the MLIM Restructuring, all of the issued
and outstanding MLIM Transferred Interests will have been duly authorized and
validly issued, will be fully paid and non-assessable and will not have been
issued in violation of any Equity Rights.
(b) After giving effect to the MLIM Restructuring, there will be no
outstanding securities, options, warrants, calls, rights, conversion rights,
preemptive rights, rights of first refusal, redemption rights, repurchase
rights, plans, "tag along" or "drag along" rights, commitments, agreements,
arrangements or undertakings ("Equity Rights") (i) obligating any of the MLIM
Companies to issue, deliver, redeem, purchase or sell, or cause to be issued,
delivered, redeemed, purchased or sold, any MLIM Transferred Interests or any
equity interests in any Controlled Affiliate of any MLIM Transferred Entity or
any securities or obligation convertible or exchangeable into or exercisable
for, any MLIM Transferred Interests or any equity interests in any Controlled
Affiliate of any MLIM Transferred Entity, (ii) giving any Person a right to
subscribe for or acquire any MLIM Transferred Interests or any equity interests
in any Controlled Affiliate of any MLIM Transferred Entity or (iii) obligating
any of the MLIM Companies to issue, grant, adopt or enter into any such Equity
Right in respect of any MLIM Transferred Entity or any of its Controlled
Affiliates. After giving effect to the MLIM Restructuring, there will be no
outstanding or authorized stock appreciation, phantom stock, profit
participation or similar rights with respect to the MLIM Transferred Interests
or the equity interests of any MLIM Transferred Entity or any of its Controlled
Affiliates. After giving effect to the MLIM Restructuring, none of the MLIM
Companies has any (x) outstanding Indebtedness that could convey to any Person
the right to vote, or that is convertible into or exercisable for MLIM
Transferred Interests or equity of any MLIM Transferred Entity or any of its
Controlled Affiliates or (y) Equity Rights that entitle or convey to any Person
the right to vote with the holders of MLIM Transferred Interests or equity of
any MLIM Transferred Entity or any of its Controlled Affiliates on any matter.
After giving effect to the MLIM Restructuring, there will be no voting trusts
or other agreements or understandings outstanding with respect to the MLIM
Transferred Interests or any equity interests in any MLIM Transferred Entity or
any of its Controlled Affiliates.
Section 3.3 MLIM Business Entities.
(a) Schedule 3.3(a) sets forth a correct and complete list, as of the
date of this Agreement, of (i) each MLIM Business Entity and indicates the type
of entity and jurisdiction of organization of each MLIM Business Entity and
(ii) each equity investment or other investment of greater than $10,000,000 of
any MLIM Business Entity in any Person other than a MLIM Business Entity (each,
a "Non-Affiliate Interest"). MLIM Parent owns, directly or indirectly, all of
the issued and outstanding common stock or other equity interests in, and other
securities of, each MLIM Business Entity, and owns its interests in each MLIM
Business Entity free and clear of any Liens.
(b) All of the issued and outstanding shares of common stock or other
equity interests of each MLIM Business Entity and each MLIM Transferred Entity
have been, and after giving effect to the MLIM Restructuring, will have been,
duly authorized and validly issued and are, and after giving effect to the MLIM
Restructuring will have been, fully paid and non-assessable and have not been
and, after giving effect to the MLIM Restructuring, will not have been, issued
in violation of any Equity Rights.
(c) As of the date of this Agreement, the MLIM Business Entities are
the only Controlled Affiliates of MLIM Parent by or through which the MLIM
Business is operated or conducted, except to the extent that services of the
nature anticipated to be provided under the Transition Services Agreement are
provided to the MLIM Business as of the date of this Agreement by other MLIM
Companies.
Section 3.4 Title to MLIM Transferred Interests(a) . As of immediately
prior to the Closing, the MLIM Transferors will be the sole beneficial owners
of all of the MLIM Transferred Interests, free and clear of any Lien, except
for any Liens created by this Agreement.
Section 3.5 Authority; Validity of Agreements.
(a) MLIM Parent has full corporate power and authority to execute and
deliver this Agreement and each Ancillary Agreement to which it is or is
specified to be a party, to perform its obligations hereunder and thereunder
and to consummate the Transactions. The execution, delivery and performance by
MLIM Parent of this Agreement and each of the Ancillary Agreements and the
consummation by MLIM Parent of the Transactions have been duly and validly
authorized and approved by all necessary corporate action on the part of MLIM
Parent. This Agreement and any Ancillary Agreement to be executed and delivered
on or prior to the date hereof has been, and upon its execution prior to or at
the Closing each of the other Ancillary Agreements will have been, duly and
validly executed and delivered by MLIM Parent and each MLIM Controlled
Affiliate party thereto and (assuming due authorization, execution and delivery
by each BlackRock Party) this Agreement and each Ancillary Agreement executed
and delivered on or prior to the date hereof constitutes, and upon its
execution prior to or at the Closing each other Ancillary Agreement will
constitute, a valid and binding obligation of MLIM Parent and each MLIM
Controlled Affiliate party thereto, enforceable against it in accordance with
its terms, except as (a) the enforceability hereof and thereof may be limited
by bankruptcy, insolvency, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and (b) the availability of
equitable remedies may be limited by equitable principles of general
applicability.
Section 3.6 Consents and Approvals. Except (a) as set forth in
Schedule 3.6, (b) for the approvals of the MLIM Fund shareholders referred to
in Section 5.11 and any necessary Client consents and (c) for filings under the
HSR Act, none of MLIM Parent, any MLIM Controlled Affiliate or any MLIM Fund is
required to obtain the Consent of any Governmental Authority or other Person or
to obtain any Permit in connection with the execution and delivery by MLIM
Parent of this Agreement or the performance of this Agreement and each
Ancillary Agreement by MLIM Parent, except for Consents and Permits the failure
of which to obtain, individually or in the aggregate, would not reasonably be
expected to have or result in a MLIM Material Adverse Effect.
Section 3.7 No Conflicts. Assuming that any Consents referred to in
Section 3.6 and Schedule 3.6 are properly submitted and duly obtained and any
applicable waiting periods have expired or terminated, the execution, delivery
and performance of this Agreement and the Ancillary Agreements by MLIM Parent
will not, and the consummation of the Transactions will not, conflict with,
result in a termination of, contravene or constitute a default under, or be an
event that with the giving of notice or passage of time or both would become a
default under, or give to any other Person any right of termination, payment,
acceleration, vesting or cancellation of or under, or accelerate the
performance required by or maturity of, or result in the creation of any Lien
or loss of any rights of any MLIM Business Entity or any MLIM Fund pursuant to
any of the terms, conditions or provisions of or under (a) any Applicable Law,
(b) the Organizational Documents of MLIM Parent or any of its Controlled
Affiliates or (c) any Contract, Plan or other instrument binding upon any MLIM
Business Entity or to which the property of any MLIM Business Entity or any
portion of the MLIM Business is subject, except for, in the case of this clause
(c), any conflict, termination, contravention, default, payment, acceleration,
vesting, cancellation, Liens or loss of rights that, individually or in the
aggregate, would not reasonably be expected to have or result in a MLIM
Material Adverse Effect.
Section 3.8 Financial Statements.
(a) Schedule 3.8(a) contains complete and correct copies of the
following financial statements (collectively, the "MLIM Financial Statements"):
(i) an unaudited combined income statement for the MLIM Business for the 12
month period ending December 31, 2005, (ii) an unaudited combined balance sheet
for the MLIM Business as of December 31, 2005, and (iii) an unaudited combined
balance sheet for the MLIM Business as of December 31, 2005 giving pro forma
effect to the MLIM Restructuring (the "MLIM Balance Sheet"). The MLIM Financial
Statements have been derived from the accounting books and records of the MLIM
Business Entities and the MLIM Financial Statements (other than the MLIM
Balance Sheet) have been prepared in accordance with GAAP consistently applied,
subject only to normal recurring year-end adjustments and the absence of notes
and except as expressly provided in such MLIM Financial Statements. Each
balance sheet included in the MLIM Financial Statements presents fairly in all
material respects the financial position of the MLIM Business as of the date
thereof, and the income statement included in the MLIM Financial Statements
presents fairly in all material respects the results of operations of the MLIM
Business for the period indicated therein. The MLIM Balance Sheet was prepared
in accordance with the MLIM Financial Statement Principles.
(b) The books and records of the MLIM Business have been maintained in
accordance with good business practices. The MLIM Balance Sheet does not
reflect any material asset that is not intended to constitute a part of the
MLIM Business after giving effect to the Transactions (excluding routine
dispositions of assets in the ordinary course of business consistent with past
practice), and the income statement for the 12 month period ending December 31,
2005 included in the MLIM Financial Statements does not reflect the results of
any material operations of any Person that are not intended to constitute a
part of the MLIM Business after giving effect to the Transactions. Such income
statement reflects all material costs that historically have been incurred in
connection with the operation of the Business.
(c) The MLIM Companies maintain in all material respects internal
controls over financial reporting ("Internal Controls") to provide reasonable
assurance regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with GAAP,
including policies and procedures that (i) pertain to the maintenance of
records that in reasonable detail accurately and fairly reflect the
transactions and dispositions of the assets of the MLIM Companies, (ii) provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with GAAP, and that receipts
and expenditures of the MLIM Companies are being made only in accordance with
authorizations of management and directors of the MLIM Companies and (iii)
provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of the assets of the MLIM
Companies that could have a material effect on the financial statements.
Section 3.9 Absence of Undisclosed Liabilities. Neither any MLIM
Business Entity nor the MLIM Business is subject to any claims, liabilities or
obligations (whether known, unknown, absolute, accrued, contingent or
otherwise), and there are no existing conditions, situations or facts that
would or would reasonably be expected to result in any such claim, obligation
or liability, except (a) as and to the extent disclosed and reserved against on
the MLIM Balance Sheet and (b) claims, obligations and liabilities that are
contractual in nature and that (i) are incurred after the date of the MLIM
Balance Sheet, (ii) are consistent in nature, type and amount with any such
claims, obligations and liabilities regularly incurred in the ordinary course
of business consistent with past practice of each MLIM Business Entity and the
MLIM Business, (iii) individually or in the aggregate, have not had and would
not reasonably be expected to have or result in a MLIM Material Adverse Effect
and (iv) are not prohibited by this Agreement or any Ancillary Agreement.
Section 3.10 Absence of Certain Changes. From and including the date
of the MLIM Balance Sheet to and including the date of this Agreement, other
than (i) as set forth in Schedule 3.10 or (ii) as expressly contemplated by
this Agreement or an Ancillary Agreement, (x) each of the MLIM Companies has in
all material respects conducted the MLIM Business in the ordinary course of
business consistent with past practices of the MLIM Business, (y) there has not
occurred or come to exist any MLIM Material Adverse Effect and (z) the MLIM
Business Entities have not and, in connection with the ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇
Parent and its Controlled Affiliates other than the MLIM Business Entities have
not taken any action that would have been prohibited by Section 5.1(b) of this
Agreement, had such Section 5.1(b) been applicable during such period.
Section 3.11 Assets. MLIM Parent and the MLIM Business Entities own
and have and, after giving effect to the MLIM Restructuring and the
consummation of the Transactions and the execution and delivery of the
Transition Services Agreement and the License Agreement (and assuming the
consents set forth in Sections 3.6 and 3.7 have been obtained), BlackRock and
its Subsidiaries (including the MLIM Transferred Entities and their
Subsidiaries) will own and have good, valid and marketable title to or, in the
case of leased property, good and valid leasehold interests in, or otherwise
will have full or sufficient and legally enforceable rights to use without any
increase in payment therefor (except by reason of the Transition Services
Agreement), all of the properties and assets (real, personal or mixed, tangible
or intangible) used or held for use in connection with, necessary for the
conduct of, or otherwise material to the operations of, the MLIM Business,
including all such assets reflected in the MLIM Balance Sheet or acquired since
the date thereof or reflected in the Estimated Closing Balance Sheet (all of
the assets referred to in this sentence, the "Assets"), in each case free and
clear of any Lien other than Permitted Liens, except for any failure to have
such titles, interests or rights that, individually or in the aggregate, has
not had and would not reasonably be expected to have or result in a MLIM
Material Adverse Effect. MLIM Parent and the MLIM Business Entities have and,
after giving effect to the MLIM Restructuring and the consummation of the
Transactions, the MLIM Transferred Entities and their respective Subsidiaries
will have, maintained in all material respects all tangible Assets in good
repair, working order and operating condition, subject only to ordinary wear
and tear.
Section 3.12 Real Property. None of the MLIM Business Entities, or, in
connection with the MLIM Business, MLIM Parent and the Controlled Affiliates of
MLIM Parent owns any real property or any interest therein. Schedule 3.12
identifies (i) all material office locations in which any MLIM Business Entity
is occupying space that is leased by MLIM Parent or an Affiliate of MLIM
Parent, (ii) all of the material Leases to which any MLIM Business Entity is a
party. Except as set forth in Schedule 3.12, such leased real property
constitutes all material real property leased, subleased, licensed or otherwise
used in the operation of the MLIM Business as presently conducted. True and
correct copies of such real property Leases have been delivered or made
available to BlackRock, together with any amendments, modifications or
supplements thereto. There exists no material default or condition, or any
state of facts or event which with the passage of time or giving of notice or
both would constitute a material default, in the performance of its obligations
under any of such real property Leases by MLIM Parent or any of its Controlled
Affiliates or, to the knowledge of MLIM Parent, by any other party to any of
such Leases. Except as may be limited by bankruptcy, insolvency, reorganization
and similar applicable Laws affecting creditors generally and by the
availability of equitable remedies (a) each of the real property Leases are
legal, valid and binding obligations of MLIM Parent or a MLIM Controlled
Affiliate, as applicable, and, to the knowledge of MLIM Parent, each other
party to such Leases and (b) each of the Leases is enforceable against MLIM
Parent or its Controlled Affiliate, as applicable, and, to the knowledge of
MLIM Parent, each other party to such Lease, except in each case for failures
that, individually or in the aggregate, have not had and would not reasonably
be expected to have or result in a MLIM Material Adverse Effect. Neither MLIM
Parent nor any of its Controlled Affiliates has received any written or oral
communication from the landlord or lessor under any of such real property
Leases claiming that it is in breach of its obligations under such Leases,
except for written or oral communications claiming breaches that, individually
or in the aggregate, would not reasonably be expected to have or result in a
MLIM Material Adverse Effect.
Section 3.13 Material Contracts.
(a) Schedule 3.13(a) contains a correct and complete list of all
Material Contracts in existence on the date of this Agreement. MLIM Parent has
made available or delivered to BlackRock complete and correct copies of all
written Material Contracts and accurate and complete descriptions of all
material terms of all oral Material Contracts.
(b) Each Material Contract is valid, binding and in full force and
effect, and is enforceable against MLIM Parent or any of its Controlled
Affiliates that is a party thereto, as the case may be, and, to the knowledge
of MLIM Parent, each other party thereto, in accordance with its terms. Each of
the MLIM Companies has duly performed all of its material obligations under
each such Material Contract to the extent that such obligations have accrued.
Except as set forth on Schedule 3.13(b), the enforceability of any Material
Contract will not be affected by the execution, delivery or performance of this
Agreement or any Ancillary Agreement. There are no existing defaults (or
circumstances, occurrences, events or acts that, with the giving of notice or
lapse of time or both would become defaults) of MLIM Parent or any of its
Controlled Affiliates or, to the knowledge of MLIM Parent, any other party
thereto under any Material Contract, except in each case for any defaults that,
individually or in the aggregate, have not had and would not reasonably be
expected to have or result in a MLIM Material Adverse Effect. To the knowledge
of MLIM Parent, there are no circumstances, occurrences, events or acts that,
with the giving of notice or lapse of time or both, would permit any MLIM
Company or any other party thereto, to alter or amend any of the material terms
or conditions of any Material Contract or would permit or would result in any
increased liability or penalty, except for such circumstances, occurrences,
events or acts that, individually or in the aggregate, have not had or resulted
in and would not reasonably be expected to have or result in a MLIM Material
Adverse Effect.
(c) Except as set forth in Schedule 3.13(c), as of the date of this
Agreement, no MLIM Business Entity has entered into and is bound by or subject
to any of the following:
(i) any Contract (including any so-called take-or-pay or keep well
agreements) under which (A) any Person has directly or indirectly
guaranteed or assumed Indebtedness, liabilities or obligations of any MLIM
Business Entity in respect of the MLIM Business or (B) any MLIM Business
Entity has directly or indirectly guaranteed Indebtedness, liabilities or
obligations of any Person in each case in excess of $5,000,000 or in the
aggregate in excess of $15,000,000;
(ii) other than investment management and distribution Contracts
entered into in the ordinary course of business, any Contract providing
for the indemnification of any Person with respect to liabilities, whether
absolute, accrued, contingent or otherwise that would be material to MLIM
Parent and its Controlled Affiliates, taken as a whole;
(iii) other than in the ordinary course of business, any Contract
under which any MLIM Business Entity has made or is obligated to make,
directly or indirectly, any advance, loan, extension of credit or other
similar advances to any Person, in each case in excess of $5,000,000
individually or $15,000,000 in the aggregate;
(iv) any Contract prohibiting or materially restricting the
ability of any MLIM Business Entity to conduct its business, to engage in
any business or operate in any geographical area or to compete with any
Person;
(v) other than Contracts entered into in the ordinary course of
business, any Contract to cap fees, share fees or other payments, share
expenses, waive fees or to reimburse or assume any or all fees or expenses
thereunder that would be material to the MLIM Business, taken as a whole;
(vi) other than Contracts entered into in the ordinary course of
business, any Contract that provides for earn-outs or other similar
contingent obligations of any MLIM Business Entity or any of its
Controlled Affiliates where such earn-outs or contingent obligations would
be material to the MLIM Business, taken as a whole;
(vii) other than Contracts entered into in the ordinary course of
business, any Contract which contains (A) a "clawback" or similar
undertaking requiring the reimbursement or refund of any fees (whether
performance based or otherwise) paid to any MLIM Business Entity or any of
its Controlled Affiliates or (B) a "most favored nation" or similar
provision, in each case of (A) and (B) where the obligations of a MLIM
Business Entity and/or its Controlled Affiliate under each undertaking or
provision would be material to the MLIM Business, taken as a whole; or
(viii) other than Contracts entered into in the ordinary course of
business, any Contract requiring any MLIM Business Entity or any of its
Controlled Affiliates (A) to co-invest with any other Person, (B) to
provide seed capital or similar investment or (C) to invest in any
investment product, in each case in an amount in excess of $5,000,000
individually or $15,000,000 in the aggregate.
(d) For the purpose of this Section 3.13, the phrase "ordinary course
of business" shall be deemed to be limited to the ordinary course of business
of the applicable MLIM Company, consistent with past practice of such MLIM
Company.
Section 3.14 Litigation. Schedule 3.14 contains a complete and correct
list of all material pending and served and, to the knowledge of MLIM Parent,
material pending and not served or material threatened Litigation and
governmental investigations concerning the MLIM Business. Except as set forth
on Schedule 3.14, there is no Proceeding pending and served or, to the
knowledge of MLIM Parent, pending and not served or threatened against or
affecting any of the MLIM Business Entities, or any of their properties, assets
or rights or the MLIM Business, other than Proceedings that, individually or in
the aggregate, have not had or resulted in and would not reasonably be expected
to have or result in a MLIM Material Adverse Effect.
Section 3.15 Affiliate Arrangements.
(a) Except as set forth in Schedule 3.15(a), there is no material
Contract, arrangement, liability or obligation (whether or not evidenced by a
writing) concerning the MLIM Business between a MLIM Business Entity, on the
one hand, and MLIM Parent or any of its Affiliates (other than a MLIM Business
Entity), on the other hand (any such Contract, liability or obligation, a "MLIM
Affiliate Arrangement").
(b) To the knowledge of MLIM Parent, no director, officer or employee
of any MLIM Business Entity: (i) owns, directly or indirectly, any economic or
ownership interest in (x) any property or asset, real or personal, tangible or
intangible, used in or held for use in connection with or pertaining to the
MLIM Business, (y) any Client or (z) any supplier, lessor, lessee or competitor
of any MLIM Business Entity, in each case of (x), (y) and (z) where such
interest would be material to the MLIM Business, taken as a whole, (ii) serves
as a trustee, officer, director or employee of any Person that is a Client,
supplier, lessor, lessee or competitor of any MLIM Business Entity or (iii) has
received any loans from or is otherwise a debtor of, or made any loans to or is
otherwise a creditor of, any MLIM Business Entity, where the amount of any such
loans or obligations would be material to the MLIM Business Entities, taken as
a whole.
(c) No MLIM Business Entity has any loan outstanding, has extended or
maintained credit, or has arranged for the extension of credit, to any
director, officer or employee of any of them.
Section 3.16 Compliance with Law; Government Regulation; Etc.
(a) (i) Each MLIM Business Entity and each MLIM Fund is in compliance
in all material respects with all Applicable Laws; (ii) none of the MLIM
Companies or any MLIM Fund has received any written, or, to the knowledge of
MLIM Parent, oral, notice, from any Governmental Authority asserting any
violation by any MLIM Business Entity or the MLIM Business or any MLIM Fund of
any Applicable Law, and (iii) to the knowledge of MLIM Parent and its
Controlled Affiliates, there is no reasonable basis for any such assertion,
except in each case for such violations, notices or assertions that,
individually or in the aggregate, have not had or resulted in and would not
reasonably be expected to have or result in a MLIM Material Adverse Effect;
(b) The MLIM Business Entities hold and, after giving effect to the
MLIM Restructuring, the MLIM Transferred Entities and their Subsidiaries will
hold (subject to obtaining any Consents set forth on Schedule 3.6 or 3.7), all
licenses, registrations, franchises, permits, orders, approvals and
authorizations (collectively, "Permits") that are required in order to permit
the MLIM Business Entities and, after giving effect to the MLIM Restructuring,
the MLIM Transferred Entities and their Subsidiaries to own or lease their
properties and assets and to conduct the MLIM Business under and pursuant to
all Applicable Laws. All such Permits are in full force and effect and are not
subject to any suspension, cancellation, modification or revocation or any
Proceedings related thereto, and, to the knowledge of MLIM Parent, no such
suspension, cancellation, modification or revocation or Proceeding is
threatened in writing or orally, except, in each case, for such failures to be
in full force or effect, suspensions, cancellations, modifications, revocations
or Proceedings that, individually or in the aggregate, have not had or resulted
in and would not reasonably be expected to have or result in, a MLIM Material
Adverse Effect. Each employee of a MLIM Business Entity and, after giving
effect to the MLIM Restructuring, each employee of the MLIM Transferred
Entities and their Subsidiaries, who is required to be registered or licensed
as a registered representative, investment adviser representative, sales person
or an equivalent person with any Governmental Authority is duly registered as
such and such registration is in full force and effect, except for such
failures to be so registered or for such registration to remain in full force
and effective that, individually or in the aggregate, have not had or resulted
in and would not reasonably be expected to have or result in, a MLIM Material
Adverse Effect.
(c) Each MLIM Business Entity identified in Schedule 3.16(c) is, and
at all times required by the Advisers Act during its existence has been, duly
registered as an investment adviser under the Advisers Act. Each MLIM Business
Entity that is required to be is, and at all times required by Applicable Law
(other than the Advisers Act) has been, duly registered, licensed or qualified
as an investment adviser in each state or any other jurisdiction where the
conduct of its business required such registration, licensing or qualification.
No MLIM Business Entity not identified in Schedule 3.16(c) (i) is or has been
an "investment adviser" required to register under the Advisers Act or any
other Applicable Law, (ii) is required to be registered, licensed or qualified
as an investment adviser under the Advisers Act or any other Applicable Law or
(iii) is subject to any material liability or disability by reason of any
failure to be so registered, licensed or qualified. Each MLIM Business Entity
identified in Schedule 3.16 (c) is in compliance in all material respects with
Rule 206(4)-7 under the Advisers Act.
(d) Each MLIM Business Entity that is required to be is, and at all
times required by Applicable Law has been, duly registered, licensed or
qualified as a broker or dealer in each jurisdiction where the conduct of its
business required such registration, licensing or qualification. No MLIM
Business Entity not identified in Schedule 3.16(d) (i) is required to be
registered, licensed or qualified as a broker or dealer under any Applicable
Law or (ii) is subject to any material liability or disability by reason of any
failure to be so registered, licensed or qualified.
(e) Except as set forth in Schedule 3.16(e), no MLIM Business Entity
is (i) required to be registered, licensed or qualified as a commodity pool
operator, futures commission merchant, commodity trading advisor, bank, trust
company, real estate broker, insurance company, insurance broker or transfer
agent under any Applicable Law or (ii) subject to any liability or disability
by reason of any failure to be so registered, licensed or qualified. Except as
set forth in Schedule 3.16(e), none of the MLIM Companies has received notice
of any Proceeding concerning any failure to obtain any commodity pool operator,
futures commission merchant, commodity trading advisor, bank, trust company,
real estate broker, insurance company, insurance broker or transfer agent
registration, license or qualification.
(f) None of the MLIM Business Entities or any "affiliated person" (as
defined in the Investment Company Act) of any of them is (taking into account
any applicable exemption) ineligible pursuant to Section 9(a) or 9(b) of the
Investment Company Act to serve as an investment adviser (or in any other
capacity contemplated in the Investment Company Act) to a U.S. MLIM Public
Fund, and there is no Proceeding pending and served or, to the knowledge of
MLIM Parent, pending and not served or threatened by any Governmental
Authority, which would result in the ineligibility of any of the MLIM Business
Entities or any "affiliated persons" of any of them to serve in any such
capacities. None of the MLIM Business Entities and the "affiliated persons" (as
defined in the Advisers Act) of any of them is ineligible pursuant to Section
203 of the Advisers Act to serve as a registered investment adviser or
"associated person" (as defined in the Advisers Act) of a registered investment
adviser, and there is no Proceeding pending and served or, to the knowledge of
MLIM Parent, pending and not served or threatened by any Governmental
Authority, which would result in the ineligibility of any of the MLIM Business
Entities or any "affiliated person" to serve in any such capacities. None of
the MLIM Business Entities or their associated persons is ineligible pursuant
to Section 15(b) of the Exchange Act to serve as a broker-dealer or as an
"associated person" (as defined in the Exchange Act) of a registered
broker-dealer, as applicable, and there is no Proceeding pending and served or,
to the knowledge of MLIM Parent, pending and not served or threatened by any
Governmental Authority, which would result in the ineligibility of any of the
MLIM Business Entities or any "affiliated person" to serve in any such
capacities.
(g) No director, managing director or officer or, to the knowledge of
MLIM Parent, no trustee or employee of any MLIM Business Entity or any MLIM
Fund is, or at any time during the past three years has been, (i) subject to
any cease and desist, censure or other disciplinary or similar order issued by,
(ii) a party to any written agreement, consent agreement, memorandum of
understanding or disciplinary agreement with, (iii) a party to any commitment
letter or similar undertaking to, (iv) subject to any order or directive by or
(v) a recipient of any supervisory letter from, any Governmental Authority.
(h) Each of MLIM Parent, each of its Controlled Affiliates and each
MLIM Public Fund has filed all material registrations, reports, prospectuses,
proxy statements, statements of additional information, financial statements,
sales literature, statements, notices and other material filings required to be
filed by it with any Governmental Authority, including all material amendments
or supplements to any of the above for the past three years, in each case to
the extent related to the MLIM Business (the "Filings"). The Filings complied
in all material respects with the requirements of Applicable Law. The Filings
did not at the time they were filed contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were or are made, not misleading.
(i) Except for routine examinations conducted by any Governmental
Authority in the regular course of the MLIM Business and the MLIM Funds, as
applicable, (i) no Governmental Authority has initiated any Proceeding or, to
the knowledge of MLIM Parent, no such Proceeding, investigation, examination,
audit or review into the MLIM Business or any MLIM Fund is ongoing, unresolved
or threatened by any Governmental Authority and (ii) none of the MLIM Companies
or the MLIM Funds has received any notice or communication (A) of any
unresolved violation or exception by any Governmental Authority with respect to
any report or statement by any Governmental Authority relating to any
examination of any MLIM Business Entity, (B) threatening to revoke or condition
the continuation of any Permit or (C) restricting or disqualifying their
activities (except for restrictions generally imposed by rule, regulation or
administrative policy on similarly regulated Persons generally).
(j) Each of the MLIM Companies and each MLIM Fund has implemented one
or more formal codes of ethics, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ policies, personal trading
policies and other material policies as required by Applicable Law, a complete
and correct copy of each of which has been made available to BlackRock. Such
codes of ethics, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ polices, personal trading policies and other
material policies comply in all material respects with Applicable Law. The
policies of the MLIM Companies as of the date of this Agreement with respect to
avoiding conflicts of interest are as set forth in the most recent policy
manuals of the MLIM Companies, which have been made available to BlackRock.
Since January 1, 2001, there have been no material violations by any officer or
investment professional of any MLIM Business Entity of such code of ethics,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ polices and personal trading policies.
(k) Each MLIM Business Entity and each MLIM Fund has complied in all
material respects with all Applicable Laws regarding the privacy of Clients and
other Persons and have established and complied with policies and procedures in
this regard reasonably designed to ensure compliance with Applicable Law.
(l) Each MLIM Business Entity and each MLIM Fund, to the extent
required by Applicable Law, has a written anti-money laundering program and a
written customer identification program in compliance with Applicable Law and
have complied with the terms of such program in all material respects.
Section 3.17 MLIM Public Funds.
(a) Schedule 3.17(a) sets forth a complete and correct list, as of the
date of this Agreement, of each MLIM Public Fund that is registered with any
Governmental Authority. Each MLIM Public Fund is, and at all times required
under Applicable Law has been, duly registered with all applicable Governmental
Authorities as an investment company or a regulated fund or for the purpose of
marketing in the applicable jurisdiction.
(b) Each MLIM Public Fund that is a juridical entity is duly
organized, validly existing and, with respect to jurisdictions that recognize
the concept of "good standing," in good standing under the laws of the
jurisdiction of its organization and has the requisite corporate, trust,
company or partnership power and authority to own its properties and to carry
on its business as currently conducted, and is qualified to do business in each
jurisdiction where it is required to be so qualified under Applicable Law
(except where failure to do so is not material to its business).
(c) Each MLIM Business Entity that acts as investment adviser or
sub-adviser to a MLIM Public Fund has a written Investment Advisory Arrangement
pursuant to which such MLIM Business Entity serves as investment adviser or
sub-adviser to such MLIM Public Fund. None of the MLIM Business Entities and
the "interested persons" of them (as such term is defined in the Investment
Company Act) receives or is entitled to receive any compensation directly or
indirectly (i) from any Person in connection with the purchase or sale of
securities or other property to, from or on behalf of any MLIM Public Fund,
other than bona fide ordinary compensation as principal underwriter,
distributor or sponsor for such MLIM Public Fund or other compensation
permitted by Applicable Laws or (ii) from the MLIM Public Funds or their
respective security holders for other than bona fide investment advisory,
sub-advisory, accounting, shareholder servicing, securities lending, transfer
agency, administrative or similar services.
(d) Each MLIM Public Fund currently is, and has been since January 1,
2003, operated in compliance in all material respects with its respective
investment objectives, policies and restrictions, as set forth in the
applicable prospectus and registration statement for such MLIM Public Fund.
(e) The shares or units of each MLIM Public Fund (i) have been issued
and sold by the MLIM Companies in compliance with Applicable Law in all
material respects, (ii) are qualified for public offering and sale in each
jurisdiction where offers by the MLIM Companies are made by such MLIM Public
Fund to the extent required under Applicable Law and (iii) have been duly
authorized and validly issued and are fully paid and non-assessable, except in
each case for such failures that, individually or in the aggregate, have not
had, and would not reasonably be expected to have or result in, a MLIM Material
Adverse Effect.
(f) All payments by the MLIM Public Funds registered with the SEC
relating to the distribution of their shares (other than payments that are not
required by Applicable Law to be paid pursuant to a 12b-1 Plan) have been made
in compliance in all material respects with the related 12b-1 Plan, if
applicable, and each 12b-1 Plan adopted by the MLIM Public Funds, and the
operation of each such 12b-1 Plan currently complies in all material respects
with Rule 12b-1 of the Investment Company Act and other Applicable Laws. No
MLIM Public Fund that is subject to Rule 12b-1 of the Investment Company Act
has paid or is paying, directly or indirectly, any amount to any Person for the
purpose of financing the distribution of its shares except in accordance with a
12b-1 Plan, and no MLIM Public Fund has made or is making any other payments in
respect of the distribution of its shares that violated or violate Applicable
Law in any material respect.
(g) The financial statements for the MLIM Funds have been prepared and
presented in accordance with GAAP or the generally accepted accounting
principles of the applicable jurisdiction, as the case may be. The financial
statements for the MLIM Funds fairly present, in all material respects, the
results of operations and changes in net assets of each such MLIM Fund for the
respective periods indicated, subject, in the case of unaudited financial
statements for the MLIM Funds, to notes and normal year-end audit adjustments.
(h) The open-end U.S. MLIM Public Funds have maintained a "market
timing" policy in force at all times since the later of January 1, 2003 or its
adoption with respect to the purchase and sale of any open-end U.S. MLIM Public
Fund shares. Such policies, as they have been in effect at any applicable time,
have been enforced consistently by the MLIM Companies and are consistent with
the disclosure relating thereto contained in the applicable open-end U.S. MLIM
Public Fund prospectus or statement of additional information, and no
arrangements involving any of the MLIM Companies or any of their respective
directors, officers, employees, agents or representatives exist or have existed
to permit any party (including any officer, employee, agent or representative)
to trade shares of any open-end U.S. MLIM Public Fund in a manner that is
inconsistent with such policy.
(i) Since January 1, 2003, no MLIM Business Entity has taken any
action pursuant to any arrangements or accommodations whereby (A) a MLIM
Business Entity or any of its officers or employees has permitted any Person to
enter orders to purchase or redeem shares or to cancel previously entered
orders; or (B) a MLIM Business Entity or its officers or employees facilitated
the entering by any Person of orders to purchase or redeem shares or to cancel
previously entered orders of any open-end U.S. MLIM Public Fund at a time and
in a manner not consistent with the requirements of Rule 22c-1 under the
Investment Company Act.
(j) Each U.S. MLIM Public Fund is in material compliance with Rule
38a-1(a) under the Investment Company Act.
Section 3.18 Private MLIM Funds.
(a) Schedule 3.18(a) sets forth a correct and complete list of each
MLIM Private Fund having assets in excess of $25,000,000. Except with respect
to the MLIM Private Funds and the MLIM Public Funds, no MLIM Business Entity
acts as investment adviser, investment sub-adviser, general partner, managing
member, manager or sponsor to any other pooled investment vehicle. No MLIM
Private Fund is, or to the knowledge of MLIM Parent at any time since January
1, 2003 was, required to register as an investment company under the Investment
Company Act or the comparable regulatory regime of any other jurisdiction.
(b) Each MLIM Private Fund that is a juridical entity has been duly
organized and is validly existing and in good standing under the laws of the
jurisdiction of its organization and has all requisite corporate, partnership,
limited liability company, or similar power and authority. Each MLIM Private
Fund possesses all Permits necessary to entitle it to use its name, to own,
lease or otherwise hold its properties and assets and to carry on its business
as it is now conducted. Each MLIM Private Fund is duly qualified, licensed or
registered to do business in each jurisdiction where it is required to do so
under Applicable Law other than any failure to be so qualified that,
individually or in the aggregate, has not had and would not reasonably be
expected to have or result in a MLIM Material Adverse Effect. All outstanding
shares or units of each MLIM Private Fund have been issued and sold by such
MLIM Private Funds in compliance with Applicable Law in all material respects.
Section 3.19 Assets Under Management; Clients.
(a) Each Client to which a MLIM Business Entity provides investment
management, advisory or sub-advisory services that is (i) an employee benefit
plan, as defined in Section 3(3) of ERISA that is subject to Title I of ERISA,
(ii) a Person acting on behalf of such a plan or (iii) any entity whose assets
include the assets of such a plan, within the meaning of ERISA and applicable
regulations (hereinafter referred to as an "ERISA Client") has, since January
1, 2003, been managed by a MLIM Business Entity such that the exercise of such
management or provision of any services is in compliance in all material
respects with the applicable requirements of ERISA. Each such MLIM Business
Entity, to the extent it is regulated under the Advisers Act, satisfies the
requirements of Prohibited Transaction Class Exemption 84-14 for a "qualified
professional asset manager" (as such term is used in Prohibited Transaction
Class Exemption 84-14).
(b) (i) All performance information provided, presented or made
available by the MLIM Business Entities to any Client or potential Client has
complied in all material respects with Applicable Law; (ii) MLIM Parent and
each of its Controlled Affiliates, as applicable, maintains all documentation
necessary to form the basis for, demonstrate or recreate the calculation of the
performance or rate of return of all accounts that are included in a composite
(current and historical performance results) as required by Applicable Law; and
(iii) any investment performance earned by any Person at a firm other than the
MLIM Business Entities and presented by a MLIM Business Entity as its
investment performance has complied in all material respects with Applicable
Law.
(c) Since January 1, 2003, each Client account has been operated in
all material respects in compliance with the terms of the relevant Investment
Advisory Arrangement.
(d) Since January 1, 2003, there has existed no material unremedied
"out of balance" condition, pricing error or similar condition with respect to
any Client account maintained by a MLIM Business Entity or any MLIM Fund.
(e) The MLIM Business Entities that are registered investment advisers
have adopted and implemented procedures or practices for the allocation of
securities purchased for its Clients that comply in all material respects with
Applicable Laws, including procedures or practices relating to the allocation
between MLIM Public Funds and MLIM Private Funds or other accounts in which a
MLIM Business Entity has an interest.
Section 3.20 Taxes.
(a) All material Tax Returns required to be filed with respect to the
MLIM Business Entities or the Assets have been duly and timely filed with the
appropriate Governmental Authority, and all such Tax Returns, insofar as they
relate to the MLIM Business Entities or the Assets, are true, correct and
complete in all material respects (other than, in each case, the consolidated
U.S. federal income tax return of the consolidated group of which MLIM Parent
is the common parent, or the tax return of MLIHL filed on U.S. Internal Revenue
Service Form 8865). The MLIM Business Entities have timely paid all material
Taxes due or claimed to be due by any Governmental Authority or, with respect
to Taxes accrued but not yet due and payable, made an adequate provision on the
appropriate financial statements in accordance with GAAP or, if applicable,
accounting principles of any other jurisdiction.
(b) There are no Liens for Taxes upon any of the Assets other than
statutory Liens for Taxes not yet due and payable.
(c) No (A) waiver of any statute of limitations in respect of Taxes,
(B) agreement for any extension of time with respect to a Tax assessment or
deficiency or (C) power of attorney has been granted with respect to Taxes, in
each case, relating to the MLIM Business Entities or the Assets. None of the
MLIM Business Entities is a party to, bound by, or has any obligation under,
any tax allocation or sharing agreement or arrangement.
(d) There is no current audit, examination, deficiency, refund
litigation or proposed adjustment with respect to any Taxes relating to any of
the MLIM Business Entities or the Assets. There has not been any written notice
of any claim made by a Governmental Authority in a jurisdiction where a Tax
Return has not been filed with respect to the any of the MLIM Business Entities
or the Assets, that material taxation by that jurisdiction is due by the MLIM
Business Entities or any Affiliate, where such claim has not been resolved
favorably to MLIM Parent and its Affiliates.
(e) None of the MLIM Business Entities has agreed to make or is
required to make any adjustment for a taxable period ending after the MLIM
Contribution under Section 481(a) of the Code by reason of a change in
accounting method or otherwise, except to where such adjustments are not, and
would not reasonably be expected to be material individually or in the
aggregate to the MLIM Business Entities.
(f) Each MLIM Transferred Entity is, and has been since the date of
its formation, a disregarded entity for U.S. federal income tax purposes.
(g) None of the MLIM Business Entities is or was a member of any
consolidated, combined or affiliated group of corporations that filed or was
required to file consolidated, combined or unitary Tax Returns other than any
group for which MLIM Parent is or was the common parent.
(h) None of the MLIM Business Entities has constituted either a
"distributing corporation" or "controlled corporation" (within the meaning of
Section 355(e)(1)(A) of the Code) in a distribution of stock qualifying for
tax-free treatment under Section 355 of the Code (A) in the two (2) years prior
to the date of this Agreement or (B) in a distribution which could otherwise
constitute a "plan" or "series of related transactions" (within the meaning of
Section 355 of the Code) with the transactions contemplated by this Agreement.
(i) There has been made available to BlackRock correct and complete
copies of (i) the relevant portion of all federal and other material Tax
Returns of MLIM Parent and its Affiliates relating to the MLIM Business
Entities or Assets for the taxable periods ending after December 28, 2001,
which have been filed and (ii) the relevant portion of all audit reports within
the last five years relating solely to any material Taxes due from or with
respect to the MLIM Business Entities or any Assets.
(j) None of the owners of the MLIM Business Entities or the MLIM
Business Entities will be required to include any material item of income in,
or exclude any material item of deduction from, taxable income for any taxable
period (or portion thereof) ending after the MLIM Contribution as a result of
any "closing agreement" described in Section 7121 of the Code (or any
corresponding or similar provision of state, local or foreign income Tax law)
executed on or prior to the MLIM Contribution.
(k) The MLIM Business Entities are in material compliance with all
applicable information reporting and Tax withholding requirements under
applicable Tax laws.
(l) For all taxable years since its inception, each of the domestic
MLIM Public Funds has elected to be treated as, and has qualified to be
classified as, a regulated investment company taxable under Subchapter M of
Chapter 1 of the Code and under any similar provisions of state or local law in
any jurisdiction in which such MLIM Public Fund filed, or is required to file,
a Tax Return and each of the domestic MLIM Private Funds has elected to be
treated as, and has qualified to be treated as, a partnership for U.S. federal
income tax purposes and any similar provisions or state or local law in any
jurisdiction in which such MLIM Private Funds filed or was required to file, a
Tax Return. Each of the foreign MLIM Public Funds and foreign MLIM Private
Funds is organized as a pass through entity in the foreign country or countries
in which they are organized. Each of the MLIM Public Funds and Private Funds
has (i) duly and timely filed with the appropriate Governmental Authority all
material Tax Returns required to be filed and all such Tax Returns are true,
correct and complete in all material respects and (ii) has timely paid, or
withheld and paid over, all Taxes due or claimed to be due by any Governmental
Authority or with respect to Taxes not yet due and payable, made an adequate
provision on its financial statements in accordance with GAAP.
(m) Neither MLIM Parent nor any of its Affiliates has participated in
any "listed transaction" within the meaning of Treasury Regulation Section
1.6011-4(c)(3)(i)(A) involving the MLIM Business Entities. None of MLIM Parent
nor any of its Affiliates has promoted, marketed, offered to sell, sold or
advised in respect of any "listed" transactions involving the MLIM Business
Entities.
(n) Each of MLIM Parent and its Affiliates in compliance with all
applicable rules and regulations regarding the solicitation, collection and
maintenance of any forms, certifications and other information required in
connection with federal, state, local or foreign Tax withholding or reporting
in connection with the conduct of the Business through the MLIM Business
Entities.
(o) Schedule 3.20(o) lists all foreign, state and local jurisdictions
in which MLIM Parent and its Affiliates file Tax Returns including the
ownership or operation of the Business.
(p) MLIM Parent has no plan or intention to cause ML Invest, Inc., or
any MLIM Transferor treated as a corporation for US tax purposes as of the date
of this Agreement to liquidate after the MLIM Contribution and neither ML
Invest, Inc., nor any MLIM Transferor treated as a corporation for US tax
purposes as of the date of this Agreement will liquidate within two years after
the MLIM Contribution.
(q) The UK Tax Warranties in Exhibit 3.20 shall apply to the UK
Companies and in the event of conflict between the provisions of this Section
3.20(a) through (p) inclusive and Exhibit 3.20, the provisions of Exhibit 3.20
shall prevail in respect of the UK Companies.
Section 3.21 Benefit Plans; Employees.
(a) Each "employee pension benefit plan" (as defined in Section 3(2)
of ERISA), each "employee welfare benefit plan" (as defined in Section 3(1) of
ERISA), and each other plan, arrangement or policy (written or oral) relating
to stock options, stock purchases, deferred compensation, bonus, severance,
fringe benefits or other employee benefits, in each case maintained or
contributed to, or required to be maintained or contributed to, by any MLIM
Company for the benefit of any MLIM Employee or Former MLIM Employee, other
than any "multiemployer plan" (within the meaning of Section 3(37) of ERISA) or
any plans, arrangements or policies mandated by Applicable Law is herein
referred to as a "MLIM Parent Benefit Plan." Each MLIM Parent Benefit Plan or
portion thereof (i) sponsored by a MLIM Transferred Entity or one of its
Subsidiaries, after giving effect to the MLIM Restructuring, (ii) that
BlackRock or any of its Affiliates has explicitly agreed to assume pursuant to
this Agreement or (iii) that BlackRock or any of its Affiliates is required to
assume under Applicable Law is referred to herein as an "Assumed Benefit Plan."
Each individual employment, collective bargaining, consulting, severance and
change-in-control Contract under which any MLIM Transferred Entity or any
Controlled Affiliate thereof has any present or future liability is herein
referred to as a "MLIM Employment Agreement." Schedule 3.21(a) contains a true
and complete list, as of the date of this Agreement, of each Assumed Benefit
Plan, each other material MLIM Parent Benefit Plan and each material MLIM
Employment Agreement. MLIM Parent has delivered or made available to BlackRock
true, correct and complete copies of (A) each Assumed Benefit Plan, (B) each
MLIM Parent Benefit Plan that is subject to Title IV of ERISA or section 412 of
the Code, (C) each other material MLIM Parent Benefit Plan, (D) the two (2)
most recent annual reports on Form 5500 (including all schedules and
attachments thereto) filed with the Internal Revenue Service with respect to
each Assumed Benefit Plan (if any such report was required by Applicable Law),
(E) the most recent summary plan description (or similar document) for each
Assumed Benefit Plan and each other material MLIM Parent Benefit Plan for which
a summary plan description (or similar document) is required by Applicable Law
and (F) each MLIM Employment Agreement. No MLIM Company has any commitment to
establish any new Assumed Benefit Plan or to materially modify any Assumed
Benefit Plan.
(b) Each Assumed Benefit Plan has been administered in all material
respects in accordance with its terms and in compliance with the applicable
provisions of ERISA, the Code, all other Applicable Laws and the terms of all
applicable collective bargaining agreements. There are no material
investigations by any Governmental Authority, material termination proceedings
or other material claims or Proceedings against or involving any Assumed
Benefit Plan or asserting any rights to or claims for benefits under any
Assumed Benefit Plan.
(c) No Assumed Benefit Plan is subject to Title IV of ERISA or Section
412 of the Code. No MLIM Business Entity would reasonably be expected to incur
any liability under Title IV of ERISA as a result of being treated as a single
employer with a MLIM Company or any of its respective Affiliates for purposes
of Section 414(b), (c), (m) or (o) of the Code.
(d) Each Assumed Benefit Plan intended to be qualified under Section
401(a) of the Code, and the trust (if any) forming a part thereof, has received
a favorable determination letter from the Internal Revenue Service as to its
qualification under the Code and to the effect that each such trust is exempt
from taxation under Section 501(a) of the Code, and, to the knowledge of MLIM
Parent, there exist no circumstances likely to result in the loss of such
qualification or tax-exempt status.
(e) Neither a MLIM Company nor any of its respective Affiliates has,
within the preceding six years, withdrawn in a complete or partial withdrawal
from any multiemployer plan (as defined in section 3(37) of ERISA) or incurred
any liability under section 4204 of ERISA that has not been satisfied in full.
(f) No amounts payable under any of the MLIM Parent Benefit Plans or
Assumed Benefit Plans, MLIM Employment Agreement or any other Contract with
respect to which a MLIM Transferred Entity or any of its Controlled Affiliates
may have any liability could fail to be deductible for federal income tax
purposes by virtue of Section 280G of the Code as a result of the Transactions.
(g) The consummation of the Transactions will not result in an
increase in the amount of compensation or benefits or the acceleration of the
vesting or timing of payment of any compensation or benefits payable to or in
respect of or on behalf of any MLIM Employee, or entitle any such MLIM Employee
to any severance or similar compensation or benefits.
(h) No MLIM Company has any obligation to provide medical, dental or
life insurance benefits (whether or not insured) to any MLIM Employees or
Former MLIM Employees after retirement (other than (i) coverage mandated by
Applicable Law and (ii) benefits, the full direct cost of which is borne by the
MLIM Employee or Former MLIM Employee (or beneficiary thereof)).
(i) None of the Assumed Benefit Plans restricts the ability of a MLIM
Transferred Entity or any of its Controlled Affiliates to amend or terminate
such plan.
Section 3.22 Intellectual Property; Information Technology.
(a) Schedule 3.22(a) sets forth a complete and correct list of all of
the following, in each case owned by any MLIM Business Entity or MLIM Parent
and used or held for use in connection with the MLIM Business (i) patents and
patent applications; (ii) trademark applications and registrations; (iii)
copyright registrations and (iv) domain names.
(b) To the knowledge of MLIM Parent, the Business does not infringe on
or otherwise violate the Intellectual Property of any other Person. No MLIM
Business Entity has received any written notice alleging such infringement or
violation which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would reasonably be expected to have a MLIM
Material Adverse Effect. To the knowledge of MLIM Parent, no Person is
infringing on or otherwise violating the Intellectual Property owned by any
MLIM Business Entity and used or held for use in connection with the MLIM
Business, which infringement or violation would reasonably be expected to have
a MLIM Material Adverse Effect.
(c) The Intellectual Property set forth on Schedule 3.22(a) is valid
and to the knowledge of MLIM Parent, enforceable and in full force and effect.
The Business Entities have taken commercially reasonable steps to protect the
confidentiality of the material trade secrets owned by it. All Information
Technology used in connection with the Business performs substantially in
accordance with its documentation, except as has not had and would not
reasonably be expected to have or result in a MLIM Material Adverse Effect.
Section 3.23 Insurance. The MLIM Business Entities maintain, or MLIM
Parent maintains on their behalf, such worker's compensation, comprehensive
property and casualty, liability, errors and omissions, directors' and
officers', fidelity and other insurance as they may be required to maintain
under Applicable Laws. The MLIM Business Entities have complied in all material
respects with the terms and provisions of such policies and bonds.
Section 3.24 Compliance with Environmental Law. To the knowledge of
MLIM Parent, MLIM Parent and each of its Controlled Affiliates has complied and
is in compliance in all material respects with all applicable Environmental
Laws pertaining to any of the properties and assets of the MLIM Business
Entities (including any real property now or previously owned by a MLIM
Business Entity) and the use and ownership thereof, and to the operation of the
Business. There are no Proceedings by any Governmental Authority pending, or to
the knowledge of MLIM Parent, threatened against any MLIM Business Entity under
any Environmental Law. There are no facts, circumstances or conditions relating
to the past or present business or operations of the MLIM Business Entities
(including the disposal of any wastes, hazardous substances or other
materials), and no environmental conditions at any facilities or properties of
the MLIM Business Entities (including any previously owned or operated
properties) that, individually or in the aggregate, could reasonably be
expected to give rise to any Proceedings or to any material liability, under
any Environmental Law.
Section 3.25 Books and Records. The books and records of MLIM Parent
and its Controlled Affiliates are complete and correct in all material respects
and have been maintained in accordance with sound business practices.
Section 3.26 Derivative Products. All interest rate swaps, caps,
floors, option agreements, futures and forward Contracts and other similar risk
management arrangements and derivative financial instruments entered into for
the account of any MLIM Business Entity, or for the account of one or more of
the Clients, were entered into (i) in accordance with applicable Client
guidelines, prospectuses or offering memoranda to the extent entered into for
Clients and (ii) in accordance in all material respects with all Applicable
Laws and (iii) with counter-parties as directed by the applicable Client (where
the Client so directs). None of MLIM Parent, its Controlled Affiliates or, to
the knowledge of MLIM Parent, any other party thereto is in material breach of
any of its obligations under any such agreement or arrangement.
Section 3.27 Brokers and Finders. No broker, finder or similar
intermediary has acted for or on behalf of, or is entitled to any broker's,
finder's or similar fee or other commission from, any MLIM Business Entity in
connection with this Agreement or the Ancillary Agreements or the Transactions.
Section 3.28 No Vote Required. No vote of the holders of any capital
stock of MLIM Parent is required (under Applicable Law or otherwise) to adopt
this Agreement or any Ancillary Agreement or to consummate the Transactions,
including the Merger.
Section 3.29 Investment Intention. MLIM Parent is acquiring the New
BlackRock Common Stock and New BlackRock Preferred Stock to be issued as MLIM
Consideration for investment and not with a view toward or for sale in
connection with any distribution thereof in violation of any federal or state
securities or "blue sky" Law, or with any present intention of distributing or
selling such New BlackRock Common Stock or New BlackRock Preferred Stock in
violation of any such Law. MLIM Parent understands and agrees that the New
BlackRock Common Stock and New BlackRock Preferred Stock to be issued as MLIM
Consideration may not be Transferred or offered for Transfer or otherwise
disposed of without registration under the Securities Act, except pursuant to
an exemption from such registration, and without compliance with state, local
and foreign securities Laws, in each case to the extent applicable.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE BLACKROCK PARTIES
Except as set forth in writing in a Schedule attached to the
Disclosure Letter delivered by BlackRock to MLIM Parent on the date hereof (the
"BlackRock Disclosure Letter"), referencing the appropriate section of this
Article IV (references in this Article IV to any "Schedule" being deemed to
refer to Schedules to such Disclosure Letter) or otherwise readily apparently
pertaining to any section of this Article IV, or as described in any Form 10-K,
Form 10-Q or Form 8-K report filed with the SEC by BlackRock (collectively, the
"BlackRock SEC Reports") on or after March 10, 2005, but prior to the date of
this Agreement (and without regard to any amendment thereto filed after the
date of this Agreement) to the extent such description is readily apparent as
pertaining to any section of this Article IV, BlackRock represents and warrants
to MLIM Parent as follows, as of the date of this Agreement and as of the
Closing Date.
Section 4.1 Organization. Each BlackRock Party is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Each BlackRock Party has the requisite corporate power and authority
to carry on its business as currently conducted and to own, lease and operate
all of its properties and assets, as currently conducted, owned, leased or
operated. BlackRock is duly qualified to do business in each jurisdiction in
which the nature of its business or the character or location of the properties
and assets owned, leased or operated by it makes such qualification necessary
other than any failure to be so qualified that, individually or in the
aggregate, has not had or resulted in and would not reasonably be expected to
have or result in a BlackRock Material Adverse Effect. Each Organizational
Document of BlackRock and each of its Controlled Affiliates is in full force
and effect and there has been no material violation thereof.
Section 4.2 Capital Structure.
(a) The authorized capital stock of BlackRock, as of the date hereof,
is 250,000,000 shares of BlackRock Class A Common Stock, of which 19,799,640
shares are issued and outstanding, 100,000,000 shares of BlackRock Class B
Common Stock, of which 44,298,000 shares are issued and outstanding and
10,000,000 shares of Preferred Stock, of which zero shares are issued and
outstanding. All of the issued and outstanding shares of capital stock have
been duly authorized and validly issued, are fully paid and non-assessable and
have not been issued in violation of any Equity Rights.
(b) The authorized capital stock of BlackRock Merger Sub is 100 shares
of Merger Sub Common Stock, of which one share is issued and outstanding. All
of the issued and outstanding shares of Merger Sub Common Stock have been duly
authorized and validly issued, are fully paid and non-assessable and have not
been issued in violation of any Equity Rights.
(c) Except as set forth in Schedule 4.2(c), there are no outstanding
Equity Rights (i) obligating BlackRock or any Controlled Affiliate to issue,
deliver, redeem, purchase or sell, or cause to be issued, delivered, redeemed,
purchased or sold, any capital stock or related rights, (ii) giving any Person
a right to subscribe for any capital stock of BlackRock or any of its
Controlled Affiliates or (iii) obligating BlackRock or any Controlled Affiliate
to issue, grant, adopt or enter into any such Equity Right. There are no
outstanding or authorized stock appreciation, phantom stock, profit
participation or similar rights with respect to the capital stock or equity of
BlackRock or any of its Controlled Affiliates. Except as set forth in Schedule
4.2(c), one of BlackRock and its Controlled Affiliates has any (x) outstanding
indebtedness that could convey to any Person the right to vote, or that is
convertible into or exercisable for capital stock or equity of BlackRock or any
of its Controlled Affiliates or (y) Equity Rights that entitle or convey to any
Person the right to vote with the shareholders of BlackRock or any of its
Controlled Affiliates on any matter.
(d) 4,935,000 shares of BlackRock Class A Common Stock and 40,000,000
shares of BlackRock Class B Common Stock are owned by PNC as of the date
hereof.
Section 4.3 Title to Common Stock; Business of New BlackRock and
BlackRock Merger Sub.
(a) BlackRock is the sole record and beneficial owner of all of the
issued and outstanding New BlackRock Stock, free and clear of any Lien, except
for any Liens created by this Agreement.
(b) New BlackRock is the sole record and beneficial owner of all of
the issued and outstanding Merger Sub Common Stock, free and clear of any Lien,
except for any Liens created by this Agreement.
(c) No business has been conducted by New BlackRock or Merger Sub
prior to the date of this Agreement and none will be conducted, except as
expressly contemplated by this Agreement.
Section 4.4 Controlled Affiliates. Schedule 4.4 sets forth each
BlackRock Controlled Affiliate and each equity investment or other investment
of greater than $10,000,000 of BlackRock in any Person other than a Controlled
Affiliate, in each case as of the date of this Agreement. Except as set forth
in Schedule 4.4, BlackRock owns, directly or indirectly, all of the issued and
outstanding equity interests in each BlackRock Controlled Affiliate free and
clear of any Liens, other than Permitted Liens.
Section 4.5 Authority; Validity of Agreements. Each BlackRock Party
has full corporate power and authority to execute and deliver this Agreement
and each Ancillary Agreement to which it is or is specified to be a party, to
perform its obligations hereunder and thereunder and to consummate the
Transactions. Subject to obtaining the consents and approvals described in
Section 4.6, the execution, delivery and performance by each BlackRock Party of
this Agreement and each Ancillary Agreement and the consummation by each
BlackRock Party of the Transactions, has been duly and validly authorized and
approved by all necessary corporate action of each BlackRock Party. This
Agreement and any Ancillary Agreement executed and delivered on or prior to the
date hereof has been, and upon its execution prior to or at the Closing each of
the other Ancillary Agreements will have been duly and validly executed and
delivered by each BlackRock Party, and (assuming due authorization, execution
and delivery by MLIM Parent and any other party (other than any BlackRock
Party) hereto and thereto) this Agreement and each Ancillary Agreement executed
and delivered on or prior to the date hereof will constitute, and upon its
execution prior to or at the Closing each other Ancillary Agreement will
constitute a valid and binding obligation of each BlackRock Party enforceable
against it in accordance with its terms, except as (a) the enforceability
hereof or thereof may be limited by bankruptcy, insolvency, moratorium or other
similar laws affecting the enforcement of creditors' rights generally and (b)
the availability of equitable remedies may be limited by equitable principles
of general applicability.
Section 4.6 Consents and Approvals. Except (a) as set forth in
Schedule 4.6(a), (b) for any Consents that may be required to be obtained by
BlackRock as a result of the regulatory status of the MLIM Transferred Entities
or their Controlled Affiliates, (c) for filings under the HSR Act, and (d) for
the required vote of the holders of the outstanding shares of BlackRock Class A
common stock and Class B common stock of BlackRock, BlackRock is not required
to obtain the Consent of any Governmental Authority or other Person or to
obtain any Permit in connection with the execution and delivery by BlackRock of
this Agreement or the performance of this Agreement and each Ancillary
Agreement by BlackRock, except for Consents and Permits the failure of which to
obtain, individually or in the aggregate, would not reasonably be expected to
have or result in a BlackRock Material Adverse Effect.
Section 4.7 No Conflicts. Assuming that any Consents referred to in
Section 4.6 and Schedule 4.6 are properly submitted and duly obtained and any
applicable waiting periods have expired or terminated and except as set forth
in Schedule 4.7, the execution, delivery and performance of this Agreement and
the Ancillary Agreements by each BlackRock Party, will not, and the
consummation of the Transactions will not, conflict with, result in a
termination of, contravene or constitute a default under, or be an event that
with the giving of notice or passage of time or both will become a default or
potential default under, or give to any other Person any right of termination,
payment, acceleration, vesting or cancellation of or under, or accelerate the
performance required by or maturity of, or result in the creation of any Lien
or loss of any rights of BlackRock or any Controlled Affiliate thereof pursuant
to any of the terms, conditions or provisions of or under (a) any Applicable
Law, (b) the Organizational Documents of any BlackRock Party or (c) any
Contract, Plan or other instrument binding upon BlackRock or any of its
Controlled Affiliates, or to which the property of BlackRock or any of its
Controlled Affiliates is subject, except for, in the case of this clause (c),
any conflict, termination, contravention, default, payment, acceleration,
vesting, cancellation, Liens or loss of rights that, individually or in the
aggregate, would not reasonably be expected to have or result in a BlackRock
Material Adverse Effect.
Section 4.8 SEC Matters.
(a) BlackRock has filed or furnished, as applicable, on a timely basis
all forms, statements, certifications, reports and documents required to be
filed or furnished by it with the SEC under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), or the Securities Act of 1933, as
amended (the "Securities Act"), since December 1, 2003 (the "Applicable Date")
(the forms, statements, reports and documents filed or furnished since the
Applicable Date and those filed or furnished subsequent to the date hereof
including any amendments thereto, the "BlackRock SEC Reports"). Each of the
BlackRock SEC Reports, at the time of its filing or being furnished complied in
all material respects with the applicable requirements of the Securities Act,
the Exchange Act and the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 (the "▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act"),
and any rules and regulations promulgated thereunder applicable to the
BlackRock SEC Reports. As of their respective dates (or, if amended prior to
the date hereof, as of the date of such amendment) the BlackRock SEC Reports
did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
made therein, in light of the circumstances in which they were made, not
misleading.
(b) BlackRock is in compliance in all material respects with the
applicable listing and corporate governance rules and regulations of the New
York Stock Exchange, Inc.
(c) BlackRock has established and maintained disclosure controls and
procedures required by Exchange Act Rules 13a-14 and 15d-14. Such disclosure
controls and procedures are adequate and effective to ensure that information
required to be disclosed by BlackRock, including information relating to its
consolidated Controlled Affiliates, is recorded and reported on a timely basis
to its chief executive officer and chief financial officer by others within
those entities.
(d) Each of the consolidated financial statements of BlackRock and its
Subsidiaries contained in the BlackRock SEC Reports (the "BlackRock Financial
Statements"), together with related schedules and notes, presents fairly in all
material respects the financial position of BlackRock and its consolidated
Subsidiaries at the dates indicated and the statement of operations and
stockholders' equity and cash flows of BlackRock and its consolidated
Subsidiaries for the periods specified, and said financials have been prepared
in accordance with GAAP applied on a consistent basis throughout the periods
involved, except as disclosed therein.
Section 4.9 Absence of Undisclosed Liabilities. None of BlackRock or
any of its consolidated Subsidiaries is subject to any claims, liabilities or
obligations (whether known, unknown, absolute, accrued, contingent or
otherwise) and there are no existing conditions, situations or facts that would
or would reasonably be expected to result in any such claim, obligation or
liability, except (a) as and to the extent disclosed or reserved against on the
last balance sheet included in the BlackRock Financial Statements (the
"BlackRock Balance Sheet"), (b) claims, obligations and liabilities that (i)
are incurred after the date of the BlackRock Balance Sheet, (ii) consistent in
nature, type and amount with any such claims, obligations and liabilities
regularly incurred in the ordinary course of business consistent with past
practice of BlackRock or such Subsidiary, and (iii) individually or in the
aggregate, would not reasonably be expected to have or result in a BlackRock
Material Adverse Effect and (c) as set forth on Schedule 4.9.
Section 4.10 Absence of Certain Changes. Since the date of the
BlackRock Balance Sheet to and including the date of this Agreement, other than
as expressly contemplated by this Agreement or any Ancillary Agreement, (x)
BlackRock and each of its Controlled Affiliates has in all material respects
conducted its business in the ordinary course of business consistent with past
practices, (y) there has not occurred or come to exist any BlackRock Material
Adverse Effect or any fact, occurrence, condition, change, development, effect,
circumstance or event that, individually or in the aggregate, would reasonably
be expected to have or result in a BlackRock Material Adverse Effect, and (z)
BlackRock and its Controlled Affiliates have not taken any action that would be
prohibited by the terms of Section 5.1(b) of this Agreement, had such Section
been applicable during such period.
Section 4.11 Litigation. Schedule 4.11 contains a complete and correct
list of all material pending and served and, to the knowledge of the BlackRock
Parties, material pending and not served or material threatened Litigation and
governmental investigations concerning BlackRock or any of its Controlled
Affiliates. Except as set forth in Schedule 4.11, there is no Proceeding
pending and served or, to the knowledge of BlackRock, pending and not served or
threatened against or affecting BlackRock of any of its Controlled Affiliates,
or any of their properties, assets or rights other than Proceedings that,
individually or in the aggregate, have not had or resulted in or would not
reasonably be expected to have or result in a BlackRock Material Adverse
Effect.
Section 4.12 Compliance with Law; Government Regulation; Etc.
(a) (i) Each of BlackRock and its Controlled Affiliates is in
compliance in all material respects with all Applicable Laws, (ii) none of
BlackRock or any of its Controlled Affiliates has received any written or, to
the knowledge of the BlackRock Parties, oral, notice from any Governmental
Authority asserting any violation by BlackRock or any Controlled Affiliate of
any Applicable Law and (iii) to the knowledge of the BlackRock Parties, there
is no reasonable basis for such assertion, except in each case for such
violations, notices or assertions that, individually or in the aggregate, have
not had or resulted in and would not reasonably be expected to have or result
in a BlackRock Material Adverse Effect.
(b) BlackRock and its Controlled Affiliates hold all Permits that are
required in order to permit BlackRock and its Controlled Affiliates to own or
lease their properties and assets and to conduct their businesses under and
pursuant to all Applicable Laws, except in each case as would not reasonably be
expected to result in a BlackRock Material Adverse Effect.
(c) All such Permits are in full force and effect and are not subject
to any suspension, cancellation, modification or revocation or any Proceedings
related thereto, and, to the knowledge of BlackRock, no such suspension,
cancellation, modification or revocation or Proceeding is threatened.
(d) Each of BlackRock Advisors, Inc., BlackRock Institutional
Management Corporation, BlackRock Financial Management, Inc., BlackRock
(Japan), Inc., BlackRock Capital Management, Inc., BlackRock HPB Management,
LLC, SS Research & Management Company, BlackRock Realty Advisors, Inc. and
BlackRock International Ltd. (together, the "BlackRock Investment Adviser
Subsidiaries") is, and has been at all times since January 1, 2000 (except, as
to BlackRock HPB Management, LLC, since August 1, 2003), duly registered as an
investment adviser under the Advisers Act. None of the BlackRock Investment
Adviser Subsidiaries is prohibited by any provision of the Advisers Act or the
Investment Company Act, or the respective rules and regulations thereunder,
from acting as an investment adviser. The BlackRock Investment Adviser
Subsidiaries are the only direct or indirect Subsidiaries of BlackRock required
to be registered as investment advisers under the Advisers Act. Each of the
BlackRock Investment Adviser Subsidiaries is duly registered, licensed or
qualified as an investment adviser in each jurisdiction where the conduct of
its business requires such registration and is in compliance with all federal,
state and foreign laws requiring any such registration, licensing or
qualification or is subject to no material liability or disability by reason of
the failure to be so registered, licensed or qualified in any such jurisdiction
or to be in such compliance. None of BlackRock or its other direct or indirect
Subsidiaries (i) is or has been an "investment adviser" required to register
under the Advisers Act or any other Applicable Law, (ii) is required to be
registered, licensed or qualified as an investment adviser under the Advisers
Act or any other Applicable Law or (iii) is subject to any material liability
or disability by reason of the failure to be so registered, licensed or
qualified. Each BlackRock Investment Adviser is in compliance in all material
respects with Rule 206(4)-7 under the Advisers Act.
(e) Each of BlackRock Investments, Inc. and SS Research Investment
Services (the "BlackRock Broker Dealer Subsidiaries") is, and has been at all
times during the prior six years, duly registered, licensed or qualified as a
broker-dealer under the Exchange Act, and under the securities laws of each
jurisdiction where the conduct of its business requires such registration,
licensing or qualification, and is in compliance with federal, state and
foreign laws requiring such registration, licensing or qualification or is
subject to no material liability or disability by reason of the failure to be
so registered, licensed or qualified in any such jurisdiction or to be in such
compliance. Each of the BlackRock Broker Dealer Subsidiaries is a member in
good standing of NASD and each other self-regulatory organization where the
conduct of its business requires such membership. Neither BlackRock nor any of
BlackRock's other direct or indirect Subsidiaries is required to be registered,
licensed or qualified as a broker-dealer under the laws requiring any such
registration, licensing or qualification in any jurisdiction in which it or
such other Subsidiaries conduct business or is subject to any material
liability or disability by reason of the failure to be so registered, licensed
or qualified except where the failure to be so registered, licensed or
qualified would not reasonably be expected to have a BlackRock Material Adverse
Effect.
(f) Each of the BlackRock Investment Adviser Subsidiaries and the
BlackRock Broker Dealer Subsidiaries is, has been and upon consummation of the
Transactions will be, in compliance with, and each such entity has received no
notice of any kind of any violation of, (A) all Laws applicable to it or its
operations relating to investment advisory or broker-dealer activities, as the
case may be, and (B) all other Laws applicable to it and its operations,
except, in either case, where any failure to comply with any such Law would not
reasonably be expected to have, individually or in the aggregate, a BlackRock
Material Adverse Effect.
(g) Each Person for which the BlackRock Investment Adviser
Subsidiaries acts as investment adviser and, to the best knowledge of
BlackRock, each entity for which the BlackRock Investment Adviser Subsidiaries
acts as sub-adviser and, in each case, which is required to be registered with
the SEC or comparable regulatory or self-regulatory authority of any
jurisdiction as a pooled investment vehicle (each, a "BlackRock Public Fund")
is, at all times required under Applicable Laws has been, and upon consummation
of the transactions contemplated herein will be, duly registered with the SEC
or such other authority as an investment company under Applicable Law and, to
the best knowledge of BlackRock, each BlackRock Public Fund has been operated
in compliance in all material respects with the applicable provisions of
Applicable Law and, to the best knowledge of BlackRock, there are no facts with
respect to any BlackRock Public Fund that are likely to have a BlackRock
Material Adverse Effect. To the knowledge of BlackRock, the registration
statement of each BlackRock Public Fund complies (or, in the case of closed-end
BlackRock Public Funds, complied at the date thereof) in all material respects
with the provisions of Applicable Law and does not (or, in the case of the
closed-end BlackRock Public Funds, did not at the date thereof) contain any
untrue statement of material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading.
(h) Each entity for which a BlackRock Investment Adviser Subsidiary
acts as investment adviser and, to the best knowledge of BlackRock, each entity
for which the Investment Adviser Subsidiary acts as sub-adviser which entity is
not required to be registered with the SEC or comparable regulatory or
self-regulatory authority of any jurisdiction as a pooled investment vehicle (a
"BlackRock Private Fund") is not, and upon consummation of the Transactions
will not be, required to register with the SEC or such other authority as a
pooled investment vehicle and to the best knowledge of BlackRock there are no
facts with respect to any such BlackRock Private Fund that are likely to have a
BlackRock Material Adverse Effect. To the best knowledge of BlackRock, each
BlackRock Private Fund's offering documents comply in all material respects
with the provisions of the laws applicable to such offering and do not contain
any untrue statement of material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading.
(i) Each BlackRock Private Fund that is a juridical entity has been
duly organized and is validly existing and with respect to jurisdictions that
recognize the concept of "good standing," in good standing under the laws of
the jurisdiction of its organization and has all requisite corporate,
partnership, limited liability company, or similar power and authority. Each
BlackRock Private Fund possesses all Permits necessary to entitle it to use its
name, to own, lease or otherwise hold its properties and assets and to carry on
its business as it is now conducted. Each BlackRock Private Fund is duly
qualified, licensed or registered to do business in each jurisdiction where it
is required to do so under Applicable Law other than any failure to be so
qualified that, individually or in the aggregate, has not had and would not
reasonably be expected to have or result in a BlackRock Material Adverse
Effect. All outstanding shares or units of each BlackRock Private Fund have
been issued and sold by such BlackRock Private Funds in compliance with
Applicable Law in all material respects.
(j) Each agreement between BlackRock, any BlackRock Investment Adviser
Subsidiary, or any other Subsidiary of BlackRock on the one hand and any
BlackRock Public Fund, BlackRock Private Fund or private client on the other is
a legal and valid obligation of the parties thereto, and none of BlackRock, any
Investment Adviser Subsidiary or any other Subsidiary of BlackRock is in breach
or violation of or in default under any such agreement which would individually
or in the aggregate have a BlackRock Material Adverse Effect.
(k) Each employee of BlackRock or any Investment Adviser Subsidiary or
BlackRock Broker Dealer Subsidiary (if any) who is required to be registered or
licensed as a registered representative, investment adviser representative,
sales Person or equivalent Person with any Governmental Authority is duly
registered as such and such registration is in full force and effect.
Section 4.13 BlackRock Benefit Plans; Employees.
(a) Each "employee pension benefit plan" (as defined in Section 3(2)
of ERISA), each "employee welfare benefit plan" (as defined in Section 3(1) of
ERISA), and each other plan, arrangement or policy (written or oral) relating
to stock options, stock purchases, deferred compensation, bonus, severance,
fringe benefits or other employee benefits, in each case maintained or
contributed to, or required to be maintained or contributed to, by BlackRock,
or any of BlackRock's Controlled Affiliates for the benefit of any BlackRock
Employee or Former BlackRock Employee, other than any "multiemployer plan"
(within the meaning of Section 3(37) of ERISA) or any plans, arrangements or
policies mandated by Applicable Law is herein referred to as a "BlackRock
Benefit Plan." Each individual employment, collective bargaining, consulting,
severance and change-in-control Contract under which BlackRock or any of
BlackRock's Controlled Affiliates has any present or future liability is herein
referred to as a "BlackRock Employment Agreement." Schedule 4.13(a) contains a
true and complete list, as of the date of this Agreement, of each material
BlackRock Benefit Plan and each material BlackRock Employment Agreement.
BlackRock has delivered or made available to MLIM Parent true, correct and
complete copies of (A) each BlackRock Benefit Plan that is subject to Title IV
of ERISA or Section 412 of the Code, (B) each other material BlackRock Benefit
Plan, (C) the two (2) most recent annual reports on Form 5500 (including all
schedules and attachments thereto) filed with the Internal Revenue Service with
respect to each BlackRock Benefit Plan (if any such report was required by
Applicable Law), (D) the most recent summary plan description (or similar
document) for each BlackRock Benefit Plan for which a summary plan description
(or similar document) is required by Applicable Law and (E) each BlackRock
Employment Agreement. No BlackRock Company has any commitment to establish any
new BlackRock Benefit Plan or to materially modify any BlackRock Benefit Plan.
(b) Each BlackRock Benefit Plan has been administered in all material
respects in accordance with its terms and in compliance with the applicable
provisions of ERISA, the Code, all other Applicable Laws and the terms of all
applicable collective bargaining agreements. There are no material
investigations by any Governmental Authority, material termination proceedings
or other material claims or Proceedings against or involving any BlackRock
Benefit Plan or asserting any rights to or claims for benefits under any
BlackRock Benefit Plan.
(c) No BlackRock Benefit Plan is subject to Title IV of ERISA or
Section 412 of the Code. None of BlackRock or any BlackRock Controlled
Affiliate would reasonably be expected to incur any liability under Title IV of
ERISA as a result of being treated as a single employer with BlackRock or its
Affiliates for purposes of Section 414(b), (c), (m) or (o) of the Code.
(d) Each BlackRock Benefit Plan intended to be qualified under Section
401(a) of the Code, and the trust (if any) forming a part thereof, has received
a favorable determination letter from the Internal Revenue Service as to its
qualification under the Code and to the effect that each such trust is exempt
from taxation under Section 501(a) of the Code, and, to the knowledge of
BlackRock, there exist no circumstances likely to result in the loss of such
qualification or tax-exempt status.
(e) Neither BlackRock nor any BlackRock Controlled Affiliate has,
within the preceding six years, withdrawn in a complete or partial withdrawal
from any multiemployer plan (as defined in section 3(37) of ERISA) or incurred
any liability under Section 4204 of ERISA that has not been satisfied in full.
(f) With respect to each "employee pension benefit plan" (as defined
in Section 3(2) of ERISA), maintained or contributed to, or required to be
maintained or contributed to, by PNC or any of PNC's Controlled Affiliates,
other than any "multiemployer plan" (within the meaning of Section 3(37) of
ERISA), any plans, arrangements or policies mandated by Applicable Law or any
BlackRock Benefit Plan, there have been no events and no events are reasonably
likely to occur which would cause BlackRock or a BlackRock Controlled Affiliate
to incur any material liability under Title IV of ERISA or Section 412 of the
Code.
(g) No amounts payable under any of the BlackRock Benefit Plans, any
BlackRock Employment Agreement or any other Contract with respect to which
BlackRock or any BlackRock Controlled Affiliate may have any liability could
fail to be deductible for federal income tax purposes by virtue of Section 280G
of the Code as a result of the Transactions.
(h) The consummation of the Transactions will not result in an
increase in the amount of compensation or benefits or the acceleration of the
vesting or timing of payment of any compensation or benefits payable to or in
respect of on behalf of any BlackRock Employee, or entitle any such BlackRock
Employee to any severance or similar compensation or benefits.
(i) No BlackRock Company has any obligation to provide medical, dental
or life insurance benefits (whether or not insured) to any BlackRock Employees
or Former BlackRock Employees after retirement (other than (i) coverage
mandated by Applicable Law and (ii) benefits, the full direct cost of which is
borne by the BlackRock Employee or Former BlackRock Employee (or beneficiary
thereof)).
Section 4.14 Intellectual Property; Information Technology. Each of
BlackRock and its Controlled Affiliates own or possesses, or can acquire on
reasonable terms, all Intellectual Property and Information Technology
necessary to carry on the business now operated by them. Neither BlackRock nor
any of its Controlled Affiliates has received any notice of infringement of or
conflict with asserted rights of others with respect to any Intellectual
Property which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would reasonably be expected to have a BlackRock
Material Adverse Effect.
Section 4.15 Insurance. BlackRock and each of its Controlled
Affiliates are insured by insurers of recognized financial responsibility
against such losses and risks and in such amounts as are prudent and customary
in the businesses in which they are engaged, or as they may be required to
maintain under Applicable Law; neither BlackRock nor any of its Controlled
Affiliates has been refused any insurance coverage sought or applied for; and
neither BlackRock nor any of its Controlled Affiliates has any reason to
believe that it will not be able to renew its existing insurance coverage as
and when such coverage expires or to obtain similar coverage from similar
insurers as may be necessary to continue its business at a cost that would not
have a BlackRock Material Adverse Effect.
Section 4.16 Affiliate Arrangements.
(a) Except as set forth in Schedule 4.16(a), there is no material
Contract, arrangement, liability or obligation (whether or not evidenced by a
writing) between BlackRock, a current or former Controlled Affiliate of
BlackRock, on the one hand, and PNC or any of its Affiliates (other than
BlackRock and its Controlled Affiliates), on the other hand (any such Contract,
liability or obligation, a "BlackRock Affiliate Arrangement").
(b) To the knowledge of the BlackRock Parties, except as set forth on
Schedule 4.16(b), no director, officer or employee of BlackRock or any of its
Controlled Affiliates: (i) owns, directly or indirectly, any economic or
ownership interest in (x) any property or asset, real or personal, tangible or
intangible, used in or held for use in connection with or pertaining to
BlackRock's business, (y) any Client or (z) any supplier, lessor, lessee or
competitor of BlackRock or any of its Controlled Affiliates, where such
interest would be material to BlackRock and its Controlled Affiliates, taken as
a whole, (ii) serves as a trustee, officer, director or employee of any Person
that is a Client, supplier, lessor, lessee or competitor of BlackRock or any of
its Controlled Affiliates or (iii) has received any loans from or is otherwise
a debtor of, or made any loans to or is otherwise a creditor of, BlackRock or
any of its Controlled Affiliates, where the amount of any such loans or
obligations would be material to BlackRock and its Controlled Affiliates, taken
as a whole.
(c) Neither BlackRock nor any BlackRock Controlled Affiliate has any
loan outstanding, has extended or maintained credit, or has arranged for the
extension of credit, to any director, officer or employee of any of them.
Section 4.17 Real Properties. BlackRock and its Controlled Affiliates
have good and marketable title in fee simple to all real property, and good and
marketable title to all personal property owned by them which is material to
the business of BlackRock and its Controlled Affiliates, in each case free and
clear of all Liens except for Permitted Liens and such as are described in a
Schedule; and any real property and buildings held under lease by BlackRock and
its Controlled Affiliates are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material and do not
interfere with the use made and proposed to be made of such property and
buildings by BlackRock and its Controlled Affiliates, in each case except as
described in Schedule 4.17. There exists no material default or condition, or
any state of facts or event which with the passage of time or giving of notice
would constitute a material default, in the performance of its obligations
under any of the Real Property Leases to which BlackRock or any of its
Controlled Affiliates is a party (the "BlackRock Real Property Leases") or, to
the knowledge of BlackRock, by any other party to any of such BlackRock Real
Property Leases. Except as may be limited by bankruptcy, insolvency,
reorganization and similar applicable Laws affecting creditors generally and by
the availability of equitable remedies (a) each of the BlackRock Real Property
Leases are legal, valid and binding obligations of BlackRock or a BlackRock
Controlled Affiliate, as applicable, and, to the knowledge of BlackRock, each
other party to such Leases and (b) each of the BlackRock Real Property Leases
is enforceable against BlackRock or its Controlled Affiliate, as applicable,
and, to the knowledge of BlackRock, each other party to such Lease, except in
each case for failures that, individually or in the aggregate, have not had and
would not reasonably be expected to have or result in a BlackRock Material
Adverse Effect. Neither BlackRock nor any of its Controlled Affiliates has
received any written or oral communication from the landlord or lessor under
any of the BlackRock Real Property Leases claiming that it is in breach of its
obligations under such Leases, except for written or oral communications
claiming breaches that, individually or in the aggregate, would not reasonably
be expected to have or result in a BlackRock Material Adverse Effect.
Section 4.18 Material Contracts.
(a) Each BlackRock Material Contract is valid, binding and in full
force and effect, and is enforceable against BlackRock or any of its Controlled
Affiliates that is a party thereto, as the case may be, and, to the knowledge
of BlackRock, each other party thereto, in accordance with its terms. Each of
BlackRock and its Controlled Affiliates, as applicable, has duly performed all
of its material obligations under each such Material Contract to the extent
that such obligations have accrued. There are no existing defaults (or
circumstances, occurrences, events or acts that, with the giving of notice or
lapse of time or both would become defaults) of BlackRock or any of its
Controlled Affiliates or, to the knowledge of BlackRock, any other party
thereto under any material Contract, except in each case for any defaults that,
individually or in the aggregate, have not had and would not reasonably be
expected to have or result in a BlackRock Material Adverse Effect. To the
knowledge of BlackRock, there are no circumstances, occurrences, events or acts
that, with the giving of notice or lapse of time or both, would permit
BlackRock or any of its Controlled Affiliates or any other party thereto, to
alter or amend any of the material terms or conditions of any Material Contract
or would permit or would result in any increased liability or penalty, except
for such circumstances, occurrences, events or acts that, individually or in
the aggregate, have not had or resulted in and would not reasonably be expected
to have or result in a BlackRock Material Adverse Effect.
(b) Except as set forth in Schedule 4.18(b), none of BlackRock or any
of its Controlled Affiliates has entered into or is bound by or subject to any
of the following any Contract prohibiting or materially restricting the ability
of BlackRock or any of its Controlled Affiliates to conduct its business, to
engage in any business or operate in any geographical area or to compete with
any Person.
Section 4.19 Brokers and Finders. No broker, finder or similar
intermediary has acted for or on behalf of, or is entitled to any broker's,
finder's or similar fee or other commission from, any BlackRock Party in
connection with this Agreement or the Ancillary Agreements or the Transactions.
Section 4.20 [Intentionally Omitted].
Section 4.21 Taxes.
(a) Each of the BlackRock Parties has (i) duly and timely filed with
the appropriate Governmental Authority all material Tax Returns required to be
filed and all such Tax Returns are true, correct and complete in all material
respects, (ii) timely paid all material Taxes due or claimed to be due by any
Governmental Authority or, with respect to Taxes accrued but not yet due and
payable, made an adequate provision on the appropriate financial statements in
accordance with GAAP.
(b) There are no Liens for Taxes upon any property or assets of the
BlackRock Parties other than statutory Liens for Taxes not yet due and payable.
(c) None of the BlackRock Parties has in effect (A) a waiver of any
statute of limitations in respect of Taxes of the BlackRock Parties or (B) any
agreement for any extension of time with respect to a Tax assessment or
deficiency relating to the BlackRock Parties.
(d) There is no audit, examination, deficiency, refund litigation or
proposed adjustment with respect to any Taxes of any of the BlackRock Parties.
As of the date hereof, none of the BlackRock Parties has received written
notice of any claim made by a Governmental Authority in a jurisdiction where
such BlackRock Party does not file a Tax Return, that such entity is or may be
subject to material taxation by that jurisdiction, where such claim has not
been resolved favorably to such BlackRock Party.
(e) BlackRock has made available to MLIM Parent correct and complete
copies of (i) all federal and other material Tax Returns of the BlackRock
Parties relating to the taxable periods ending after January 1, 2002, which
have been filed and (ii) all audit reports within the last five (5) years
relating to any material Taxes due from or with respect to the BlackRock
Parties.
(f) None of the BlackRock Parties has participated in any "listed
transaction" within the meaning of Treasury Regulation Section
1.6011-4(c)(3)(i)(A).
(g) Each of the BlackRock Parties is in compliance with all applicable
rules and regulations regarding the solicitation, collection and maintenance of
any forms, certifications and other information required in connection with
federal, state, local or foreign tax withholding or reporting.
(h) None of the BlackRock Parties or any BlackRock Subsidiary has been
a member of an affiliated, combined, consolidated or unitary Tax group for
purposes of federal, state, local, foreign or other Tax law other than any
group of which BlackRock was the common parent.
(i) No BlackRock Party has any present plan or intention to cause
directly or indirectly any of the Assets or any of the interests in the UK
Entities to be transferred or treated for U.S. federal income tax purposes as
being transferred to any foreign corporation or any entity treated as a foreign
corporation for U.S. federal income tax purposes.
Section 4.22 Board of Directors Approvals. The Board of Directors of
BlackRock and BlackRock Merger Sub, at a meeting duly called and held, has
unanimously (i) determined that this Agreement and the Merger are advisable,
fair to, and in the best interests of BlackRock and its stockholders, (ii) duly
and validly approved and taken all corporate action required to be taken by the
Board of Directors to authorize the consummation of the Transactions and (iii)
recommended that the stockholders of BlackRock Merger Sub or BlackRock, as
applicable, approve and adopt this Agreement and the Merger, and none of the
aforesaid actions by such Board of Directors has been amended, rescinded or
modified. BlackRock, as sole stockholder of BlackRock Merger Sub, has adopted
this Agreement in accordance with the DGCL.
ARTICLE V
COVENANTS
Section 5.1 Conduct of Business. During the period from the date of
this Agreement and until the earlier of the Closing Date and the termination of
this Agreement in accordance with its terms, except as (x) expressly
contemplated by this Agreement (including the MLIM Restructuring), (y) set
forth in Schedule 5.1 to the MLIM Parent Disclosure Letter or the BlackRock
Disclosure Letter, as the case may be, or (z) consented to in writing by either
BlackRock or MLIM Parent, as the case may be (any request of such consent by
MLIM Parent or BlackRock to be considered in good faith and the grant of such
consent not to be unreasonably withheld, conditioned or delayed), each of MLIM
Parent and BlackRock shall, and, in the case of MLIM Parent, shall cause the
MLIM Companies to, and in the case of BlackRock, shall cause the BlackRock
Companies to:
(a) (i) use its commercially reasonable efforts to cause each MLIM
Business Entity, or each BlackRock Company, as applicable, (A) to carry on its
businesses in the ordinary course in all material respects consistent with past
practice and (B) to keep its business and operations intact, retain its present
officers and employees and preserve its material rights, franchises, goodwill
and relations with its clients, customers, lessors, suppliers and others with
whom it does business so that they will be preserved after the Closing and (ii)
not to take or fail to take any action that would cause any of the
representations and warranties set forth in Article III to be untrue or
incorrect in any material respect at any time on or after the date hereof and
through the Closing Date; and
(b) without limiting the generality of the foregoing,
(i) not amend the Organizational Documents of any MLIM Business
Entity or, except as contemplated by this Agreement or any Ancillary
Agreement, any BlackRock Company, as applicable;
(ii) other than any cash dividends in accordance with Section
5.16, as to the MLIM Business Entities, and other than any dividends in
the ordinary course of business consistent with past practice, not make
any distribution or declare, pay or set aside any dividend with respect
to, or split, combine, redeem, reclassify, purchase or otherwise acquire
directly, or indirectly, any equity interests or shares of capital stock
of, or other equity or voting interest in, any MLIM Transferred Entity or
any Controlled Affiliate of any MLIM Transferred Entity, or make any other
changes in the capital structure of any MLIM Business Entity or MLIM
Transferred Entity or any Controlled Affiliate of any MLIM Transferred
Entity;
(iii) not authorize for issuance, issue, sell, deliver or agree or
commit to issue, sell or deliver (i) any equity interests or capital stock
of or other equity or voting interest in, any MLIM Transferred Entity or
any Controlled Affiliate of any MLIM Transferred Entity or any BlackRock
Controlled Affiliate, as applicable, or (ii) any Equity Rights in respect
of, security convertible into, exchangeable for or evidencing the right to
subscribe for or acquire either (A) any equity interests or shares of
capital stock of, or other equity or voting interest in, any MLIM
Transferred Entity or any Controlled Affiliate of any MLIM Transferred
Entity or any BlackRock Controlled Affiliate, as applicable, or (B) any
securities convertible into, exchangeable for, or evidencing the right to
subscribe for or acquire, any shares of the capital stock of, or other
equity or voting interest in, any MLIM Transferred Entity or any
Controlled Affiliate of any MLIM Transferred Entity or any BlackRock
Controlled Affiliate, as applicable;
(iv) not form, organize or sponsor any Fund not (A) contemplated
by its current business plan or (B), as to BlackRock and its Controlled
Affiliates, in the ordinary course of business thereof;
(v) in the case of MLIM Parent, only with respect to the MLIM
Business, and, in the case of Blackrock, the Blackrock Companies, not
sell, transfer, assign, convey, lease, license mortgage, pledge or
otherwise subject to any Lien any of its material properties or assets,
tangible or intangible, except for Permitted Liens or in the ordinary
course of business consistent with past practices;
(vi) in the case of MLIM Parent, only with respect to the MLIM
Business, and other than with respect to indebtedness owed by any MLIM
Business Entity to another MLIM Business Entity or any BlackRock Company
to any other BlackRock Company, not incur, assume or guarantee (including
by way of any agreement to "keep well" or of any similar arrangement) or
cancel or waive any claims under any Indebtedness or other claims or
rights of substantial value or amend or modify the terms relating to any
such Indebtedness, claims or rights, except for any such incurrence,
assumption or guarantee of Indebtedness or amendment of the terms of such
Indebtedness in the ordinary course of business consistent with past
practices involving an aggregate amount not exceeding $10,000,000;
(vii) in the case of MLIM Parent, only with respect to the MLIM
Business, and, in the case of Blackrock, the Blackrock Companies, not
change any material financial accounting principle, method or practice
(including any principles, methods or practices relating to the estimation
of reserves or other liabilities), other than changes required by GAAP or
Applicable Law or required to be implemented during such period;
(viii) in the case of MLIM Parent, only with respect to the MLIM
Business, and, in the case of Blackrock, the Blackrock Companies, except
as required by Applicable Law or an existing Plan or Contract, not (A)
other than routine wage or salary increases in the ordinary course of
business consistent with the past practice of any MLIM Business Entity or
any BlackRock Company, as appropriate, make or agree to make any material
increase in compensation, pension, or other fringe benefits or perquisites
payable to any officer or investment professional or other Person, (B)
grant or agree to grant any severance or termination pay or enter into any
Contract to make or grant any severance or termination pay or pay any
bonus, other than in the ordinary course of business consistent with past
practice, (C) other than in the ordinary course of business consistent
with past practice or as required by Applicable Law grant or agree to
grant or accelerate the time of vesting or payment of any awards under a
Plan (including any Equity Rights to acquire any equity interests of any
MLIM Transferred Entity or any Controlled Affiliate of any MLIM
Transferred Entity or any BlackRock Company, as appropriate), or (D) other
than in the ordinary course of business, establish, adopt, amend, modify
or terminate any Plan;
(ix) not acquire any business or Person that would be included in
the MLIM Business and material to the MLIM Business or to the business of
the BlackRock Companies, taken as a whole, as applicable, by merger or
consolidation, purchase of substantial assets or equity interests, or by
any other manner, in a single transaction or a series of related
transactions, or enter into any Contract, letter of intent or similar
arrangement (whether or not enforceable) with respect to the foregoing;
(x) not enter into, amend in any material respect, breach,
terminate or allow to lapse any Material Contract, other than in the
ordinary course of business consistent with past practice;
(xi) not amend, breach, terminate or allow to lapse any material
Permit relating to the MLIM Business or the BlackRock Companies, as
applicable, other than (A) amendments required by Applicable Law or (B),
as to BlackRock and its Controlled Affiliates, any such action in the
ordinary course of business thereof;
(xii) in the case of MLIM Parent, only with respect to the MLIM
Business, and, in the case of Blackrock, the Blackrock Companies, not
enter into, materially amend or become subject to any limited liability
company agreement, joint venture, partnership, strategic alliance,
stockholders' agreement, co-marketing, co-promotion, joint development or
similar arrangement, except in the ordinary course of business consistent
with past practices;
(xiii) in the case of MLIM Parent, only with respect to the MLIM
Business, and, in the case of Blackrock, the Blackrock Companies, not make
or incur any capital expenditure or other financial commitment requiring
payments in each case in excess of $5,000,000 individually or $15,000,000
in the aggregate or, in the case of the MLIM Business Entities, any
unfunded commitment with respect to off balance sheet arrangements of the
type listed on Schedule 7.2(f) of the MLIM Parent Disclosure Letter;
(xiv) in the case of MLIM Parent, only with respect to the MLIM
Business and, in the case of BlackRock, as to the BlackRock Companies,
subject to entering into the HMRC Agreement, not make or change any
material Tax election, not settle and/or compromise any material Tax
liability, not change any material Tax accounting method or practice, not
prepare any Tax Return in a manner inconsistent with past practice, not
incur any material liability for Taxes other than in the ordinary course
of business consistent in nature and amount with past practice, and not
file a material amended Tax Return or any material claim for refund of
Taxes;
(xv) not take any action that (A) would prevent any Public Fund
from qualifying as a "regulated investment company" under Section 851 of
the Code or comparable pass-through regime in any other applicable
jurisdiction or (B) would be inconsistent with each Public Fund's
prospectuses and other offering, advertising and marketing materials, as
amended or supplemented;
(xvi) in the case of MLIM Parent, only with respect to the MLIM
Business, and, in the case of Blackrock, the Blackrock Companies, not pay,
discharge, settle or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise) in
each case in excess of $10,000,000 in the aggregate; and
(xvii) not enter into any Contract (whether or not binding) to
take any action prohibited by or not in compliance with any provision of
this Section 5.1, or otherwise commit or agree to take any such action.
Section 5.2 Information Prior to Closing.
(a) Subject to the provisions of Section 5.6 and Applicable Law and
the confidentiality obligations set forth in the Confidentiality Agreement,
between the date hereof and the earlier of the Closing Date and the termination
of this Agreement in accordance with its terms, MLIM Parent shall, and shall
cause the MLIM Controlled Affiliates to, and BlackRock shall, and shall cause
the BlackRock Controlled Affiliates to, instruct their respective management
personnel to reasonably cooperate with the other party and its representatives
during normal business hours and provide the other party and its accountants,
employees, attorneys and other representatives acting on behalf of the other
party with reasonable access during normal business hours to, and permit such
Persons to review, their respective properties, books, Contracts, accounts and
records, and shall provide such other information to the other party and its
representatives as they may reasonably request; provided that any such access
and review shall be granted and conducted in such manner as not to interfere
unreasonably with the conduct of the business of the MLIM Companies, or
BlackRock and the BlackRock Companies, as applicable.
(b) Between the date hereof and the earlier of the Closing Date and
the termination of this Agreement in accordance with its terms, each of MLIM
Parent and BlackRock shall provide the other party on a monthly basis promptly
as they become available copies of all regularly prepared monthly financial
statements and reports of the MLIM Business or BlackRock, as appropriate,
including statements of operations and balance sheets.
(c) Between the date hereof and until the earlier of the Closing Date
and the termination of this Agreement in accordance with its terms, MLIM Parent
shall, and shall use its commercially reasonable efforts to cause the MLIM
Controlled Affiliates to, cooperate with BlackRock in its efforts to comply
with the Laws affecting public companies in the United States, including the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act, to the extent that such compliance involves the MLIM
Companies. In furtherance (and not in limitation) of the foregoing, between the
date of this Agreement and the Closing Date, MLIM Parent shall, and shall use
its commercially reasonable efforts to cause the MLIM Controlled Affiliates to,
permit representatives of BlackRock acting on behalf of BlackRock to meet with
officers of the MLIM Companies responsible for the Financial Statements and the
Internal Controls to discuss such matters as reasonably necessary for BlackRock
to be able to satisfy applicable obligations under the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act
immediately following the Closing.
Section 5.3 Notification of Certain Matters.
(a) Between the date hereof and the earlier of the Closing Date and
the termination of this Agreement in accordance with its terms,
(i) MLIM Parent shall give reasonably prompt notice to BlackRock
of (A) the occurrence or existence of (1) the breach in any material
respect of a representation or warranty made by MLIM Parent in this
Agreement, (2) any fact, circumstance or event that would reasonably be
expected to prevent or materially delay any condition precedent to any
party's obligations from being satisfied, and/or (3) a MLIM Material
Adverse Effect, in each case of which MLIM Parent becomes aware; (B) any
notice or other written communication (other than routine notices or
communications in the ordinary course of business) from any Governmental
Authority with respect to the Transactions; or (C) any notice or other
written communication from any Person alleging that the Consent of such
Person is or may be required in connection with the Transactions; and
(ii) BlackRock shall give reasonably prompt notice to MLIM Parent
of (A) the occurrence or existence of (1) the breach in any material
respect of a representation or warranty made by BlackRock in this
Agreement, (2) any fact, circumstance or event that would reasonably be
expected to prevent or materially delay any condition precedent to any
party's obligations from being satisfied, and/or (3) a BlackRock Material
Adverse Effect, in each case of which BlackRock becomes aware; (B) any
notice or other written communication (other than routine notices or
communications) from any Governmental Authority with respect to the
Transactions; and (C) any notice or other written communication from any
Person alleging that the Consent of such Person is or may be required in
connection with the Transactions.
(b) Between the date hereof and the earlier of the Closing Date and
the termination of this Agreement in accordance with its terms,
(i) Unless prohibited by Applicable Law, MLIM Parent shall make
available to BlackRock, promptly after the same become available, complete
and correct copies of all inspection reports and correspondence and other
documents relating to any inquiry or investigation provided to any MLIM
Company or a MLIM Fund by any Governmental Authority. The foregoing
sentence shall not apply to Tax matters, which shall be governed
exclusively by Article VIII.
(ii) Unless prohibited by Applicable Law, BlackRock shall make
available to MLIM Parent, promptly after the same becomes available,
complete and correct copies of all inspection reports and correspondence
and other documents relating to any investigation provided to any
BlackRock Controlled Affiliate or a BlackRock Fund by any Governmental
Authority. The foregoing sentence shall not apply to Tax matters, which
shall be governed exclusively by Article VIII.
Section 5.4 No Solicitation, Etc.
(a) During the period from the date hereof continuing through the
Closing, MLIM Parent shall not, and shall use its reasonable best efforts to
cause its respective Affiliates and all of the officers, directors, employees,
agents, representatives, consultants, financial advisors, attorneys,
accountants or other agents of MLIM Parent or any Affiliate not to, directly or
indirectly, encourage, initiate, solicit or engage in discussions or
negotiations with, or provide any information to, any Person, other than
BlackRock (and its Affiliates and representatives), concerning any acquisition
by such Person of any Equity Rights, capital stock or other securities of the
MLIM Business Entities or any issuance of equity interests, capital stock or
other securities of the MLIM Business Entities or any merger, asset sale,
recapitalization or similar transaction involving the MLIM Business Entities or
the MLIM Business. MLIM Parent will notify BlackRock as soon as practicable if
any Person makes any proposal, offer, inquiry to, or contact with, MLIM Parent
or any MLIM Controlled Affiliate, as the case may be, with respect to the
foregoing and shall describe in reasonable detail the identity of any such
Person and the substance and material terms of any such contact and the
material terms of any such proposal.
(b) During the period from the date hereof continuing through the
Closing, BlackRock shall not, and shall use its reasonable best efforts to
cause its respective Affiliates and all of the officers, directors, employees,
agents, representatives, consultants, financial advisors, attorneys,
accountants or other agents of BlackRock or any Affiliate not to, directly or
indirectly, encourage, initiate, solicit or engage in discussions or
negotiations with, or provide any information to, any Person, other than MLIM
Parent (or its Affiliates and representatives), concerning any acquisition by
such Person of any Equity Rights, capital stock or other securities of
BlackRock or any BlackRock Controlled Affiliate or any issuance, other than as
provided in Section 5.1, of equity interests, capital stock or other securities
of BlackRock or any BlackRock Controlled Affiliate, or any merger, asset sale,
recapitalization or similar transaction involving BlackRock or any BlackRock
Controlled Affiliate. BlackRock will notify MLIM Parent as soon as practicable
if any Person makes any proposal, offer, inquiry to, or contact with, BlackRock
or any BlackRock Controlled Affiliate, as the case may be, with respect to the
foregoing and shall describe in reasonable detail the identity of any such
Person and the substance and material terms of any such contact and the
material terms of any such proposal. Notwithstanding any other provision
contained herein (i) BlackRock and its Board of Directors shall not be
prevented from complying with their disclosure obligations under Rules 14d-9
and 14e-2 under the Exchange Act and (ii) the members of the BlackRock Board of
Directors shall not be prevented from complying with their fiduciary duties
under Applicable Law including without limitation engaging in discussions or
negotiations or furnishing information (in each case (i) and (ii), only to the
extent necessary to comply with such disclosure obligations or fiduciary
duties), provided that BlackRock shall not be authorized to enter into any
agreement providing for an acquisition of BlackRock or any substantial part of
its Equity Rights, capital stock or other equity securities or assets.
Section 5.5 Use of Certain Marks. MLIM Parent and BlackRock shall use
their reasonable best efforts, and shall cause any applicable Controlled
Affiliates to use their reasonable best efforts, to enter into the License
Agreement as of the Closing Date.
Section 5.6 Confidentiality and Announcements.
(a) Following the Closing, each party shall keep confidential, and use
its reasonable best efforts to cause its Controlled Affiliates and their
officers, directors, employees and advisors to keep confidential, all
non-public information in its possession provided by the other party hereto
relating to MLIM Parent, its Controlled Affiliates, the Funds, the MLIM
Business and BlackRock and its Controlled Affiliates, and the business and
operations thereof, except (i) as required by Applicable Law or administrative
process, (ii) for information that is or becomes known or available to the
public at the time of disclosure, or thereafter becomes known to the public
other than as a result of a breach of this Section 5.6(a) or (iii) for
information that is or was received from a third party that, to the knowledge
of such party to this Agreement, is or was (at the relevant time) not in breach
of a confidentiality obligation with regard to such information.
(b) None of the parties to this Agreement shall, nor shall any of
their respective Controlled Affiliates or agents (including accountants,
lenders, counsel or investment bankers), without the approval of the other
parties, issue any press releases announcing the execution of this Agreement or
the Transactions, otherwise make any public statements regarding the
Transactions or otherwise disclose any of the contents of this Agreement or the
Ancillary Agreements, except as may be determined in good faith by a party to
be required by Applicable Law or regulation or by obligations pursuant to any
listing agreement with any national securities exchange (in which case such
party shall consult, to the extent reasonably practicable, the other parties
prior to issuing such press release or making such public disclosure).
Section 5.7 Regulatory Matters; Third-Party Consents.
(a) The parties to this Agreement shall cooperate with each other and
use all reasonable best efforts to prepare and file, as promptly as
practicable, all necessary documentation, to effect all applications, notices,
petitions and filings, and to obtain as promptly as practicable all Consents of
all third parties and Governmental Authorities set forth in Schedules 3.6 and
4.6 or that are necessary or advisable to consummate the Transactions;
provided, however, that (i) no party shall be required to make any payment to
obtain any Consent from a third party (or Governmental Authority), and (ii)
neither MLIM Parent nor any of its Controlled Affiliates shall agree orally or
in writing to any material amendments to any Material Contract, to any material
concessions in any commercial arrangements or to any material loss of rights
(whether to have effect prior to or after the Closing), in each case, in
connection with obtaining any Consents from any private third-party or
Governmental Authority without obtaining the prior written consent of
BlackRock.
(b) If any required Consent of any third party (excluding any
Governmental Authority) is not obtained prior to the Closing, the parties
hereto, each without cost, expense or liability to the other (except as
provided in Article VII hereof), shall cooperate in good faith to seek, if
possible, an alternative arrangement to achieve the economic results intended.
(c) Subject to Applicable Law and any applicable confidentiality
restrictions, BlackRock and its counsel, on the one hand, and MLIM Parent and
its counsel, on the other hand, shall have the right to review (in advance to
the extent practicable) any information relating to BlackRock or MLIM Parent,
as the case may be, that appear in any filing made with, or written materials
submitted to, any Governmental Authority in connection with the Transactions,
provided that nothing contained herein shall be deemed to provide any party to
this Agreement with a right to review any such information provided to any
Governmental Authority on a confidential basis in connection with the
Transactions. The parties may also, as each deems reasonably necessary,
designate any competitively sensitive material provided to the other under this
Section 5.7 as "outside counsel only." Such materials and the information
contained therein shall be given only to the outside legal counsel of the
recipient and will not be disclosed by such outside counsel to employees,
officers, or directors of the recipient unless express permission is obtained
in advance from the source of the materials or its legal counsel.
(d) Promptly after the completion of its due diligence regarding the
MLIM Business in connection with this Agreement and the Transactions, BlackRock
shall deliver to MLIM Parent a schedule of Governmental Approvals understood by
BlackRock to be required to be obtained by BlackRock as a result of the
regulatory status of the MLIM Transferred Entities and their Controlled
Affiliates, and the MLIM Funds except for Governmental Approvals the failure of
which to obtain, individually or in the aggregate, would not reasonably be
expected to have or result in a BlackRock Material Adverse Effect.
Section 5.8 MLIM Client Consents.
(a) Public Funds. Subject in each case to the requirements of
Applicable Law and the fiduciary duties of the MLIM Companies and the U.S. MLIM
Public Fund Boards,
(i) MLIM Parent shall use its reasonable best efforts to, or use
its reasonable best efforts to cause the MLIM Companies to, in accordance
with Applicable Law, (A) as promptly as practicable following the date
hereof, obtain the approval of each U.S. MLIM Public Fund Board of a new
Investment Advisory Arrangement, to be effective at the Closing,
containing terms, taken as a whole, that are no less favorable to the MLIM
Companies than the terms of the existing Investment Advisory Arrangement
between such U.S. MLIM Public Fund and the MLIM Companies, (B) as promptly
as practicable following receipt of the approval described in clause (A)
above, cause each U.S. MLIM Public Fund Board to call a special meeting of
the shareholders of each Public Fund to be held as promptly as reasonably
practicable for the purpose of obtaining the requisite approval of such
shareholders for such new Investment Advisory Arrangement, as applicable,
(C) as promptly as practicable following receipt of the approval described
in clause (A) above, prepare and file, or cause each U.S. MLIM Public Fund
to prepare and file, with the SEC and all other applicable Governmental
Authorities all registration statements and proxy solicitation materials
required to be distributed to the shareholders of each U.S. MLIM Public
Fund with respect to the actions recommended for shareholder approval by
the applicable U.S. MLIM Public Fund Board and mail, or cause to be
mailed, such proxy solicitation materials promptly as practicable after
clearance by the SEC (if applicable) and (D) as soon as practicable
following the mailing of the proxy materials, submit, or cause to be
submitted, to the shareholders of each U.S. MLIM Public Fund for a vote at
a shareholders meeting the proposals described in clause (B) above.
(ii) In the event that, prior to the Closing, a special
shareholder meeting for a U.S. MLIM Public Fund described in clause (i)(B)
above is duly convened but adjourned solely as a result of a failure of
the requisite quorum in any matter to be present at such meeting (a
"Quorum Failure"), MLIM Parent shall use its reasonable best efforts to,
or cause a MLIM Company to use reasonable best efforts to, (A) persuade
the Public Fund Board of each such U.S. Public Fund to approve, in
conformity with Section 15(a)(4) of the Investment Company Act and SEC
Rule 15a-4 thereunder, an interim Investment Advisory Arrangement, to be
effective at the Closing, for any such U.S. Public Fund with any MLIM
Company containing terms that, taken as a whole, subject to Applicable
Law, are no less favorable to such MLIM Company than the terms of the
existing Investment Advisory Arrangement with each such U.S. MLIM Public
Fund and (B) as promptly as practicable following the adjournment of such
meeting, persuade any such U.S. Public Fund Board to take such action as
may be necessary to re-convene a special meeting of the shareholders of
any such U.S. Public Fund to be held as promptly as reasonably practicable
following such adjournment for the purpose of obtaining the approval of
such shareholders of such new Investment Advisory Arrangement as
contemplated by clause (i) above.
(iii) BlackRock and MLIM Parent agree that Consent for any
Investment Advisory Arrangement with a Client that is a U.S. Public Fund
shall be deemed given for all purposes under this Agreement (but not for
purposes of the definition of Contingent Account) only if a new Investment
Advisory Arrangement has been approved by the shareholders of the
applicable Public Fund in accordance with clause (i) of this subsection
(a) and Applicable Law and is in full force and effect at the Closing,
unless any time prior to the Closing any Public Fund Board indicates,
either orally or in writing, that the applicable Public Fund has (A)
terminated or intends to terminate (in whole or in part) its existing or
new Investment Advisory Arrangement prior to or following the Closing or
(B) could reasonably be expected to terminate its Investment Advisory
Arrangement or withdraw assets thereunder unless the fees payable under
such Contract or the overall expense level for the applicable Public Fund
is reduced prior to or following the Closing.
(iv) MLIM Parent shall use its reasonable best efforts to, or use
its reasonable best efforts to cause the MLIM Companies to, in accordance
with Applicable Law, as promptly as practicable following the date hereof,
obtain such approvals, consents or other actions, if any, by the boards of
directors or comparable governing bodies, regulating or self-regulating
authorities or shareholders required by Applicable Law or the arrangements
governing such Public Fund of such MLIM Company's services therefore of
any Public Fund that is not a U.S. Public Fund so that after the Closing
the relevant MLIM Company may continue managing such Public Fund on terms,
taken as a whole, that are no less favorable to such Controlled Affiliate
than the terms of the existing Investment Advisory Arrangement between
such non-U.S. Public Fund and such MLIM Company.
(b) Non-Public Funds and Non-Fund Clients.
(i) If Consent or other action is required by Applicable Law or by
the Investment Advisory Arrangement of any Client other than a Public Fund
for the Investment Advisory Arrangement with such Client to continue after
Closing, as promptly as practicable following the date hereof, MLIM Parent
shall, or shall cause a MLIM Company to, send a notice complying with
Applicable Law and the terms of such Client's Investment Advisory
Arrangement in form and substance reasonably acceptable to BlackRock (the
"Notice") informing such Client of the Transactions and requesting such
Consent in writing or other required action.
(ii) BlackRock and MLIM Parent agree that any Consent required for
any Investment Advisory Arrangement with a Client (other than a Public
Fund) to continue after the Closing shall be deemed given for all purposes
under this Agreement (but not for purposes of the definition of Contingent
Accounts) (A) if written Consent is required under Applicable Law or the
respective Investment Advisory Arrangement, upon receipt of the written
Consent requested in the Notice prior to the Closing Date or (B) if
Consent other than written Consent is permitted under Applicable Law and
the respective Investment Advisory Arrangement, (x) upon receipt of a
written Consent requested in the Notice prior to the Closing Date or (y)
if no such written Consent is received, if 45 days shall have passed since
the sending of written notice ("Negative Consent Notice") to such Client
(which Negative Consent Notice may be included in the Notice) requesting
written Consent as aforesaid and informing such Client: (I) of the
intention to complete the Transactions, which will result in a deemed
assignment of such Client's Investment Advisory Arrangement; (II) of the
MLIM Transferred Entities' or one of their respective Controlled
Affiliates' intention to continue to provide the advisory services
pursuant to the existing Investment Advisory Arrangement with such Client
after the Closing if such Client does not terminate such agreement prior
to the Closing; and (III) that the Consent of such Client will be deemed
to have been granted if such Client continues to accept such advisory
services for a period of at least 45 days after the sending of the
Negative Consent Notice without termination; provided that, in any case
under clause (A) or (B), no Consent shall be deemed to have been given for
any purpose under this Agreement if (x) at any time prior to the Closing
such Client indicates, either orally or in writing, that such Client (1)
has not so consented or has terminated or intends to withdraw its Consent
or terminate, in whole or in part, its Investment Advisory Arrangement or
(2) intends to terminate its Investment Advisory Arrangement or withdraw
assets thereunder unless the fees payable under such Arrangement are
reduced or (y) such Client is set forth on the schedule referred to in
Exhibit 5.21(ix).
(iii) BlackRock shall be provided a reasonable opportunity to
review all Consent materials to be used by the MLIM Companies prior to
distribution. The MLIM Companies shall promptly upon their receipt make
available to BlackRock copies of any and all substantive correspondence
between it and Clients or representatives or counsel of such Clients
relating to the consent solicitation provided for in this Section 5.8.
(c) In connection with obtaining the Client Consents and other actions
required by subsections (a) and (b) of this Section 5.8, at all times prior to
the Closing, the MLIM Companies shall take reasonable steps to keep BlackRock
informed of the status of obtaining such Client Consents and, upon BlackRock's
request, make available to BlackRock copies of all such executed Client
Consents and make available for BlackRock's inspection the originals of such
Consents and any related materials, such as telephone logs and other records
relating to the Client Consent process.
Section 5.9 Expenses. Except as otherwise expressly provided in this
Agreement, each of BlackRock and MLIM Parent shall bear its own direct and
indirect Transaction Expenses, provided that all out-of-pocket expenses and
out-of-pocket costs incurred by the MLIM Companies and the BlackRock Companies
in connection with the procurement or attempted procurement of the Consents
required to be obtained pursuant to Section 5.7, Section 5.8 and, if required,
Section 5.19, and otherwise in connection with the solicitation and
effectuation of Consents of Clients in connection with the Transactions shall
be borne, satisfied and discharged by MLIM Parent.
Section 5.10 Further Assurances.
(a) Each party to this Agreement agrees to execute such documents and
other papers and use its reasonable best efforts to perform or cause to be
performed such further acts as may be reasonably required to carry out the
provisions contained in this Agreement and the Ancillary Agreements and the
Transactions. Following the Closing, upon the reasonable request of any party
or parties hereto, the other parties hereto, as the case may be, agree to
promptly execute and deliver such further instruments of assignment, transfer,
conveyance, endorsement, direction or authorization and other documents as may
be requested to effectuate the purposes of this Agreement, the Ancillary
Agreements and the Transactions. In no event, however, shall the BlackRock
Parties or any of their Affiliates be required to enter into any closing
agreement pursuant to Treasury Regulation Section 1.1503-2(g)(iv)(B)(3).
(b) MLIM Parent and its Affiliates shall comply with the DCL recapture
provisions set forth in Treasury Regulation Section 1.1503-2(g)(2)(vii) with
respect to the DCLs of the UK Entities.
(c) In the event that MLIM Parent or any of its Affiliates recaptures
any DCL with respect to the MLIM Business, then MLIM Parent and its Affiliates
shall promptly provide the BlackRock Parties with notice, copies of financial
statements, Tax Returns and other such information necessary for the BlackRock
Parties to calculate the reconstituted net operating loss, if any, pursuant to
Treasury Regulation Section 1.1503-2(g)(2)(vii)(E).
(d) (i) Each BlackRock Party will, and will procure that each
Subsidiary of each BlackRock Party (including any entity that is as of the MLIM
Contribution, or becomes after the MLIM Contribution, a Subsidiary of any
BlackRock Party) will (i) not take any action that would violate any agreement
regarding the DCLs of the UK Entities entered into with the UK HRMC
substantially in the form of Exhibit 5.10 (d) attached to this Agreement (the
"HRMC Agreement"), and (ii) not sell, transfer or otherwise dispose of any
interest in any UK Entity on terms that would violate the HRMC Agreement. For
so long as controlled by New BlackRock, each BlackRock Party will, and will
procure that each Subsidiary of each BlackRock Party (including any entity that
is as of the MLIM Contribution, or becomes after the MLIM Contribution, a
Subsidiary of any BlackRock Party) will, not voluntarily include, recognize, or
otherwise take any non-U.S. Tax benefit for any losses, deductions, reliefs,
set offs, allowances or credits of any of the UK Entities that arise on or
before the Closing or are attributable to any period ending on or before the
Closing or that part of any period ending after the Closing as occurs on or
before the Closing, and that are provided by MLIM Parent on a schedule to New
BlackRock within 60 days after the Closing. Each BlackRock Party will, and will
procure that each Subsidiary of each BlackRock Party (including any entity that
is as of the MLIM Contribution, or becomes after the MLIM Contribution, a
Subsidiary of any BlackRock Party) will cause any transferee of any sale,
transfer or other disposition of all or a direct or indirect controlling
interest of any UK Entity or UK Entities to assume the obligations under this
Section 5.10(d) with respect to any interests in, or any assets or business of,
such UK Entity or UK Entities transferred to it and consequently the BlackRock
Parties and each Subsidiary of each BlackRock Party shall cease to have any
obligation under this Section 5.10(d) with respect to utilization of non-U.S.
Tax benefits with respect to such transferred interests or assets after such
transfer.
(ii) If any non-U.S. Governmental Entity attempts to require that
any BlackRock Party or any Subsidiary of any BlackRock Party (including
any entity that is as of the MLIM Contribution, or becomes after the MLIM
Contribution, a Subsidiary of any BlackRock Party) include, recognize or
otherwise take any non-U.S. Tax benefit for any losses, deductions,
reliefs, set offs, allowances or credits of any of the UK Entities that
arise on or before the Closing or are attributable to any period ending on
or before the Closing or that part of any period ending after the Closing
as occurs on or before the Closing, and that are provided by MLIM Parent
on the schedule referred to in (i) above to New BlackRock within 60 days
after the Closing, then the respective BlackRock Party or Subsidiary of a
BlackRock Party shall, upon written request by MLIM Parent, grant a power
of attorney to MLIM Parent to contest such inclusion, recognition or
taking of a non-U.S. tax benefit. MLIM Parent shall indemnify and hold
harmless such BlackRock Party or such Subsidiary of a BlackRock Party for
Losses arising from such contest or the resolution of such contest.
(e) Each BlackRock Party will, and will procure that each Subsidiary
of each BlackRock Party (including any entity that is as of the Effective Time,
or becomes after the Effective Time, a Subsidiary of any BlackRock Party) will,
not cause directly or indirectly any of the assets or any of the interests in
the UK Entities to be transferred or treated for U.S. federal income tax
purposes as being transferred to any foreign corporation or any entity treated
as a foreign corporation for U.S. federal income tax purposes within two years
after the Effective Time.
(f) MLIM Parent shall not take, or cause to be taken, any action after
the date hereof and on or prior to the MLIM Contribution that will cause the
aggregate adjusted tax basis of the amortizable Section 197 intangible assets
as defined in Section 197 of the Code of the UK Entities (the "197
Intangibles"), which is estimated to be (pound)1,181,000,000 as of December 30,
2005, to be reduced, other than through ordinary amortization which annual
amortization is expected to be at the rate of (pound)158,000,000.
Section 5.11 Public Fund Proxy Statements and Registration Statements.
(a) BlackRock agrees that the information and data that is or will be
contained in the proxy materials/prospectus to be furnished to the shareholders
of any BlackRock Public Fund (other than information or data that is or will be
provided by or on behalf of MLIM Parent or its Affiliates specifically for
inclusion in such proxy materials/prospectus) to the extent shareholder
approval is required under Applicable Law or the applicable Investment Advisory
Arrangement for the purpose of providing Consent or approving any interim or
new Investment Advisory Arrangement will not contain, at the time (A) they are
presented to the board of directors of any Public Fund and (B) the proxy
materials/prospectus are first mailed to the shareholders of any BlackRock
Public Fund to the extent shareholder approval is required under Applicable Law
or the applicable Investment Advisory Arrangement or at the time of the meeting
thereof, any untrue statement of a material fact, or omit to state any material
fact required to make the statements therein, in light of the circumstances
under which they were made, not misleading. Each of BlackRock and MLIM Parent
shall have the right to review in advance and to approve (such approval not to
be unreasonably withheld) all the information relating to it and any of its
Affiliates proposed to appear in any registration statement or proxy statement
or any amendment or supplement thereto submitted to the SEC in connection with
the Transactions.
(b) MLIM Parent agrees that the information and data that is or will
be contained in the proxy materials/prospectus to be furnished to the
shareholders of any MLIM Public Fund (other than information or data that is or
will be provided by or on behalf of BlackRock or its Affiliates specifically
for inclusion in such proxy materials/prospectus) to the extent shareholder
approval is required under Applicable Law or the applicable Investment Advisory
Arrangement for the purpose of providing Consent or approving any interim or
new Investment Advisory Arrangement will not contain, at the time (A) they are
presented to the board of directors of any Public Fund and (B) the proxy
materials/prospectus are first mailed to the shareholders of any MLIM Public
Fund to the extent shareholder approval is required under Applicable Law or the
applicable Investment Advisory Arrangement or at the time of the meeting
thereof, any untrue statement of a material fact, or omit to state any material
fact required to make the statements therein, in light of the circumstances
under which they were made, not misleading. Each of MLIM Parent and BlackRock
shall have the right to review in advance and to approve (such approval not to
be unreasonably withheld) all the information relating to it and any of its
Affiliates proposed to appear in any registration statement or proxy statement
or any amendment or supplement thereto submitted to the SEC in connection with
the Transactions.
(c) As soon as possible following the date hereof, MLIM Parent or a
MLIM Controlled Affiliate and BlackRock or one of its Controlled Affiliates, as
applicable, shall, and shall use their respective reasonable best efforts to
cause each MLIM Public Fund and BlackRock Public Fund, respectively, to (i)
file supplements to each Public Fund's prospectus forming a part of its
registration statement, which supplements or amendments shall reflect changes
as necessary in each Public Fund's affairs as a consequence of the Transactions
and (ii) make any other filing necessary under Applicable Law to satisfy
disclosure requirements to enable the public distribution of the shares of that
Public Fund to continue.
Section 5.12 Section 15(f) of the Investment Company Act.
(a) BlackRock acknowledges that MLIM Parent has entered into this
Agreement in reliance upon the benefits and protections provided by Section
15(f) of the Investment Company Act. In furtherance (and not limitation) of the
foregoing, BlackRock shall conduct its business and shall use its reasonable
best efforts to cause each of its Controlled Affiliates to conduct its business
to enable the following to be true regarding Section 15(f) of the Investment
Company Act in relation to any MLIM Public Fund for which a MLIM Company
provides investment advisory or sub-advisory services: (a) for a period of not
less than three years after the Closing Date, no more than 25% of the members
of the board of directors or trustees of any such MLIM Public Fund shall be
"interested persons" (as defined in the Investment Company Act) of MLIM Parent
or BlackRock or any of their respective Controlled Affiliates and (b) for a
period of not less than two years after the Closing Date, neither BlackRock nor
any of its Controlled Affiliates shall impose an "unfair burden" (as defined in
the Investment Company Act) on any such Public Fund in connection with the
Transactions.
(b) MLIM Parent acknowledges that BlackRock, to the extent that the
actions specified in Section 5.19 are necessary to comply with Regulatory
Requirements, has entered into this Agreement in reliance upon the benefits and
protections provided by Section 15(f) of the Investment Company Act. In
furtherance (and not limitation) of the foregoing, MLIM Parent shall conduct
its business and shall use its reasonable best efforts to cause each of its
Controlled Affiliates to conduct its business to enable the following to be
true regarding Section 15(f) of the Investment Company Act in relation to any
BlackRock Public Fund for which BlackRock or any BlackRock Controlled Affiliate
provides investment advisory or sub-advisory services: (a) for a period of not
less than three years after the Closing Date, no more than 25% of the members
of the board of directors or trustees of any such BlackRock Public Fund shall
be "interested persons" (as defined in the Investment Company Act) of MLIM
Parent or BlackRock or any of their respective Controlled Affiliates and (b)
for a period of not less than two (2) years after the Closing Date, neither
MLIM Parent nor any of its Controlled Affiliates shall impose an "unfair
burden" (as defined in the Investment Company Act) on any such Public Fund in
connection with the Transactions.
(c) Notwithstanding anything to the contrary contained in this
Agreement, the covenants of the parties contained in this Section 5.12 are
intended only for the benefit of the parties and holders of their respective
equity interests immediately prior to the Closing and for no other Person.
Section 5.13 Ancillary Agreements. Each of BlackRock, New BlackRock
and MLIM Parent agree to negotiate in good faith and, on or prior to the
Closing Date, to enter into each Ancillary Agreement to which such Person is a
party, in each case in the form attached hereto or consistent with the summary
of the terms thereof attached hereto, with such changes as to which the parties
thereto shall agree.
Section 5.14 Employees.
(a) Generally. Effective as of the Closing Date BlackRock will adopt
compensation and employee benefits taking into account then current market and
competitive practices and compensation and benefits made available to BlackRock
Employees and MLIM Employees immediately prior to the Closing Date. Each MLIM
Employee providing services to the MLIM Business and employed on the Closing
Date (each such employee, a "Continuing Employee"), shall become a BlackRock
Employee effective as of the Closing Date. BlackRock shall provide each
Continuing Employee with compensation and employee benefits that are
substantially similar to the compensation and benefits provided to similarly
situated BlackRock Employees; provided, however, that this Section 5.14(a)
shall not be construed to limit the ability of BlackRock to terminate the
employment of any Continuing Employee at any time.
(b) Service Credit and Transition of Benefits Generally. For purposes
of eligibility and vesting under the employee benefit plans of the BlackRock
Companies, the MLIM Companies, and their respective Affiliates providing
benefits to any Continuing Employees after the Closing (the "New Plans"), and
for purposes of accrual of vacation and other paid time off and severance
benefits under New Plans, each Continuing Employee shall be credited with his
or her years of service with the MLIM Companies and their respective Affiliates
(and any additional service with any predecessor employer) before the Closing,
to the same extent as such Continuing Employee was entitled, before the
Closing, to credit for such service under any similar MLIM Parent Benefit Plan.
In addition, and without limiting the generality of the foregoing: (i) each
Continuing Employee shall be immediately eligible to participate, without any
waiting time, in any and all New Plans to the extent coverage under such New
Plan replaces coverage under a comparable MLIM Parent Benefit Plan in which
such Continuing Employee participated immediately before the replacement; and
(ii) for purposes of each New Plan providing medical, dental, pharmaceutical
and/or vision benefits to any Continuing Employee, BlackRock shall cause all
pre-existing condition exclusions and actively-at-work requirements of such New
Plan to be waived for such employee and his or her covered dependents, and
BlackRock shall cause any eligible expenses incurred by such employee and his
or her covered dependents under a MLIM Parent Benefit Plan during the portion
of the plan year of the New Plan ending on the date such employee's
participation in the corresponding New Plan begins to be taken into account
under such New Plan for purposes of satisfying all deductible, coinsurance and
maximum out-of-pocket requirements applicable to such employee and his or her
covered dependents for the applicable plan year as if such amounts had been
paid in accordance with such New Plan.
(c) Treatment of Certain Benefit Plans. As of the Closing, Continuing
Employees shall cease to be covered by the MLIM Parent Benefit Plans other than
Assumed Benefit Plans; provided that MLIM Parent shall retain responsibility
for all claims under any MLIM Parent Benefit Plans incurred by Continuing
Employees prior to the Effective Time. BlackRock shall be responsible for all
claims under any New Plan. For purposes of this paragraph, a claim shall be
deemed to have been incurred when the medical or other service giving rise to
the claim is performed, except that disability claims shall be deemed to have
been incurred on the date the Continuing Employee becomes disabled. As of the
Effective Time, Continuing Employees shall no longer actively participate in
the ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., Inc. 401(k) Savings & Investment Plan. MLIM Parent
shall cause the accounts of Continuing Employees under the ▇▇▇▇▇▇▇ ▇▇▇▇▇, &
Co., Inc. 401(k) Savings & Investment Plan to be fully vested as of the
Effective Time. BlackRock shall, and shall cause its Affiliates to, designate a
tax-qualified defined contribution plan of BlackRock or one of its Affiliates
(such plan(s), the "BlackRock Savings Plan") that either (i) currently provides
for the receipt from Continuing Employees of "eligible rollover distributions"
(as such term is defined under Section 402 of the Code) or (ii) shall be
amended as soon as practicable following the Effective Time to provide for the
receipt from the Continuing Employees of eligible rollover distributions. As
soon as practicable following the Effective Time, (x) BlackRock shall provide
MLIM Parent with such documents and other information as MLIM Parent shall
reasonably request to assure itself that the BlackRock Savings Plan provides
for the receipt of eligible rollover distributions and (y) MLIM Parent shall
provide BlackRock with such documents and other information as BlackRock shall
reasonably request to assure itself that the accounts of the Continuing
Employees would be eligible rollover distributions. Each Continuing Employee
who is a participant in the ▇▇▇▇▇▇▇ ▇▇▇▇▇, & Co., Inc. 401(k) Savings and
Investment Plan. shall be given the opportunity to receive a distribution of
his or her account balance and shall be given the opportunity to elect to "roll
over" such account balance to the BlackRock Savings Plan, subject to and in
accordance with the provisions of such plan(s) and Applicable Law.
(d) Severance Benefits. MLIM Parent shall be solely liable for all
severance or similar liabilities incurred or arising prior to the Closing under
any MLIM Parent Benefit Plans, Assumed Benefit Plans, any other arrangement or
obligations of the MLIM Companies or under the Applicable Laws of any country,
including without limitation any applicable works council agreements or
collective bargaining agreements.
(e) None of the provisions of this Section 5.14 shall be construed to
prevent the termination of employment of any Continuing Employee after the
Closing or the amendment or termination of any particular Assumed Benefit Plan
to the extent permitted by its terms as in effect immediately before the
Closing.
Section 5.15 BlackRock Registration Statement.
(a) BlackRock shall prepare and file with the SEC a proxy
statement/prospectus (the "BlackRock Registration Statement") in connection
with the required affirmative vote of the holders of a majority of the
BlackRock Common Stock (the "Required BlackRock Stockholder Vote") as to the
Merger, the issuance of New BlackRock Common Stock as Merger consideration, and
the issuance of the MLIM Consideration. BlackRock shall use its reasonable best
efforts to have the BlackRock Registration/Proxy Statement declared effective
by the SEC as soon as possible following the initial filing thereof with the
SEC. MLIM Parent shall furnish all information concerning it and its Affiliates
(including, without limitation, audited and unaudited financial statements and
other financial and business information regarding MLIM Business Entities and
the MLIM Business), as BlackRock may reasonably request in connection with the
preparation of the BlackRock Registration Statement.
(b) Each of MLIM Parent and BlackRock agrees, as to itself and its
Controlled Affiliates, that none of the information to be supplied by it or its
Controlled Affiliates for inclusion or incorporation by reference in the
BlackRock Registration Statement and any amendment or supplement thereto will,
at the date of mailing to stockholders and at the time or times of the
BlackRock Stockholders Meeting, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading. If at any time prior to the date of the
BlackRock Stockholders Meeting any information relating to MLIM Parent,
BlackRock or any of their Affiliates, officers or directors, should be
discovered by BlackRock or MLIM Parent that should be set forth in an amendment
or supplement to the BlackRock Registration Statement, so that such document
would not include any misstatement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, the party that discovers such information shall promptly notify the
other party and, to the extent required by Applicable Law, an appropriate
amendment or supplement describing such information shall be filed promptly by
BlackRock with the SEC and, to the extent required by law, disseminated by
BlackRock to stockholders of BlackRock.
(c) BlackRock will use its reasonable best efforts to cause the proxy
statement and prospectus included in the definitive BlackRock Registration
Statement to be mailed to its stockholders as promptly as practicable after the
date of this Agreement.
(d) BlackRock will take, in accordance with Applicable Law and its
Organizational Documents (but subject to the fiduciary obligations of the Board
of Directors of BlackRock), all action necessary to hold a meeting of the
holders of the BlackRock Class A Common Stock and BlackRock Class B Common
Stock at which the holders of such stock will consider the issuance of New
BlackRock Shares as MLIM Consideration and the Merger (including any
adjournments or postponements thereof, the "BlackRock Stockholders Meeting") as
promptly as practicable after the date of this Agreement. Subject to the terms
of this Agreement and subject to its fiduciary obligations under Applicable
Law, the Board of Directors of BlackRock shall recommend to BlackRock's
stockholders the approval of such matters and shall use reasonable best efforts
to solicit such approval.
Section 5.16 Certain Capital Contributions and Distributions.
(a) Preparation of Estimated Closing Financial Information. At least
five Business Days prior to the scheduled Closing Date, MLIM Parent shall, at
MLIM Parent's expense, prepare, or cause to be prepared, and deliver to
BlackRock:
(i) an estimated combined balance sheet of the MLIM Transferred
Entities and their Subsidiaries, giving pro forma effect to the MLIM
Restructuring as of immediately prior to the scheduled Closing (the
"Estimated Closing Balance Sheet"), prepared in accordance with the MLIM
Financial Statement Principles; and
(ii) a calculation in reasonable detail based upon such Estimated
Closing Balance Sheet and the books and records of MLIM Parent and its
Subsidiaries setting forth the Closing Financial Information and the
estimated Closing Adjustment Amounts, in each case as of immediately prior
to the scheduled Closing after giving effect to the MLIM Restructuring.
The MLIM Companies shall give, and shall cause their respective
advisers to give, BlackRock and its advisors reasonable access to such books,
records and personnel of the MLIM Companies (including materials related to the
preparation of any applicable income statements and the work papers of MLIM
Parent and its accountants relating to the preparation of the Estimated Closing
Balance Sheet, the Closing Financial Information delivered pursuant to this
Section 5.16(a), and such calculation of the Closing Adjustment Amounts) as may
be necessary to enable BlackRock and its advisors to assess the Estimated
Closing Balance Sheet, the Closing Financial Information and such calculation
of the Closing Adjustment Amounts prior to the Closing.
(b) Closing Date Capital Contribution. On the Closing Date, prior to
the Effective Time, MLIM Parent shall make a contribution (in addition to the
MLIM Contribution), in cash or in cash equivalents, to the MLIM Transferred
Entities, in an amount equal to:
(i) if each of the Estimated Adjustment Amounts is a negative
value, the greater of the absolute values of such Estimated Adjustment
Amounts; or
(ii) if either of the Estimated Adjustment Amounts is a negative
value and the other Estimated Adjustment Amount is a positive value, the
absolute value of such negative Estimated Adjustment Amount.
(c) Preparation of Final Closing Financial Information. As promptly as
practicable, but no later than 30 days after the Closing Date, BlackRock shall,
at its own expense, prepare, or cause to be prepared, and deliver to MLIM
Parent:
(i) a combined balance sheet of the MLIM Transferred Entities and
their Subsidiaries, on a consolidated basis, as of immediately prior to
the Effective Time after giving effect to the MLIM Restructuring and to
any capital contribution made pursuant to Section 5.16(b) (the "Final
Closing Balance Sheet"), prepared in accordance with the MLIM Financial
Statement Principles; and
(ii) a calculation in reasonable detail, based upon such Final
Closing Balance Sheet, the Closing Financial Information and the books and
records of MLIM Parent and its Subsidiaries and the MLIM Transferred
Entities and their Subsidiaries, setting forth the Closing Adjustment
Amounts, in each case as of immediately prior to the Closing after giving
effect to the MLIM Restructuring.
The MLIM Companies shall give, and shall cause their respective
advisers to give, BlackRock and its advisors reasonable access to such books,
records and personnel of the MLIM Companies (including materials related to the
preparation of any applicable income statements and the work papers of MLIM
Parent and its accountants) as may be necessary to enable BlackRock and its
advisors to confirm the Closing Financial Information and to prepare the Final
Closing Balance Sheet and the other information contemplated by this Section
5.16(c).
MLIM Parent shall have 45 days from the date on which such Final
Closing Balance Sheet and such calculations are delivered to it to assess such
Final Closing Balance Sheet (the "Review Period"). MLIM Parent and its
accountants and advisers shall be provided with reasonable access to the work
papers of BlackRock and its accountants relating to the Final Closing Balance
Sheet and the calculation of the Closing Adjustment Amounts in connection with
such review. If MLIM Parent believes that the Final Closing Balance Sheet or
the calculation of the Closing Adjustment Amounts were not prepared in
accordance with this Section 5.16, MLIM Parent may, on or prior to the last day
of the Review Period, deliver a notice to BlackRock setting forth, in
reasonable detail, each disputed item or amount and the basis for MLIM Parent's
disagreement therewith, together with supporting calculations (the "Dispute
Notice"). Following delivery of a Dispute Notice to BlackRock, BlackRock and
its accountants and advisers shall be provided with reasonable access to the
work papers of MLIM Parent and its accountants relating to the calculation of
the Closing Adjustment Amounts as set forth in such Dispute Notice. If no
Dispute Notice is received by BlackRock on or prior to the last day of the
Review Period or if MLIM Parent at any time during such 45-day period notifies
BlackRock in writing that MLIM Parent does not disagree with any amounts set
forth in the Estimated Closing Balance Sheet, the Final Closing Balance Sheet
and the Closing Adjustment Amounts as prepared and calculated by BlackRock as
set forth in BlackRock's certificate shall be deemed accepted by MLIM Parent
and shall be final and binding on BlackRock and MLIM Parent. If a Dispute
Notice is received by BlackRock on or prior to the last day of the Review
Period, MLIM Parent and BlackRock shall, during the 30-day period following the
date of such notice (the "Resolution Period"), attempt to resolve their
differences in good faith, and any resolution by them as to any disputed
amounts shall be final, binding and conclusive.
(d) Accountant's Review. If, at the conclusion of the Resolution
Period, there are amounts remaining in dispute with respect to the calculation
of the Closing Adjustment Amounts as to which a valid Dispute Notice has been
timely delivered to BlackRock, BlackRock and MLIM Parent shall jointly retain
such internationally-recognized independent accounting firm as BlackRock and
MLIM Parent may mutually agree (the "Accountant") to resolve any remaining
issues set forth in the Dispute Notice. The Accountant shall conduct its review
of such issues, any related work papers of the parties or their accountants and
any supporting documentation, and hear such presentations by the parties, as
the Accountant deems necessary.
(e) Adjustment Report. BlackRock and MLIM Parent shall use their
respective reasonable best efforts to agree upon and retain the Accountant as
promptly as practicable following the end of the Resolution Period and to
cooperate with one another and the Accountant to resolve the issues set forth
in the Dispute Notice no later than 45 days following the date of the
Accountant's retention so that the Accountant may deliver to MLIM Parent and
BlackRock a report (the "Adjustment Report") setting forth the adjustments, if
any, that should be made to the disputed Final Closing Balance Sheet or
BlackRock's proposed calculation of the final Closing Adjustment Amounts. The
fees, expenses and costs of the Accountant for the services described herein
shall be allocated between MLIM Parent and BlackRock in the same proportion
that the aggregate amount of the items unsuccessfully disputed by each (as
finally determined by the Accountant) bears to the total amount of the disputed
items. Each of BlackRock and MLIM Parent shall promptly reimburse the other to
the extent the other paid more than the amount so required pursuant to the
preceding sentence. The Adjustment Report shall be final and binding upon
BlackRock and MLIM Parent, and shall be deemed a final arbitration award that
is enforceable in any court having jurisdiction.
(f) Final Resolution. Effective upon (i) the end of the Review Period
(if a timely Dispute Notice is not delivered), (ii) the resolution of all
matters set forth in the Dispute Notice by agreement of the parties (if a
timely Dispute Notice is delivered) or (iii) the issuance of the Adjustment
Report (the "Resolution Date"), the Final Closing Balance Sheet and the Closing
Adjustment Amounts shall be adjusted if and to the extent necessary to reflect
the final resolution of any disputed items and shall be final and binding on
BlackRock and MLIM Parent.
(g) Distribution in Respect of Final Balance Sheet Adjustment.
Notwithstanding the provisions of Section 5.1(b)(ii), the MLIM Transferred
Entities may declare, as a distribution to each of the Persons who are holders
of record of the MLIM Transferred Interests immediately prior to the Effective
Time, an obligation, which shall be payable by Wire Transfer on the third
Business Day after the Resolution Date, in an amount equal to, if each of the
Final Adjustment Amounts is a positive value, the lesser of such Amounts, with
interest, from and including the Closing Date to but excluding the date of such
payment, at the Specified Rate. BlackRock shall cause each of such obligations
to be paid and satisfied in full in accordance with the terms and conditions of
this Section 5.16(g). (h) Contribution in Respect of Final Balance Sheet
Adjustment. MLIM Parent shall pay to BlackRock, by Wire Transfer, on the third
Business Day after the Resolution Date, an amount equal to:
(i) if each of the Final Adjustment Amounts is a negative value,
the greater of the absolute values of such Amounts; or
(ii) if either of the Final Adjustment Amounts is a negative value
and the other Final Adjustment Amount is a positive value, the absolute
value of such negative Final Adjustment Amount;
in each case with interest, from and including the Closing Date to but
excluding the date of such payment, at the Specified Rate.
(i) Defined Terms: For the purposes of this Section 5.16:
"Estimated Adjustment Amounts" means the Closing Tangible Equity
Balance and the Closing Cash Balance, in each case as determined pursuant to
Section 5.16(a).
"Final Adjustment Amounts" means the Closing Tangible Equity Balance
and the Closing Cash Balance, in each case as determined pursuant to Section
5.16(c) through (f).
"Closing Tangible Equity Balance" means the positive or negative value
equal to the Closing Tangible Equity less the Closing Tangible Equity Target.
"Closing Tangible Equity" means total stockholders' equity less total
goodwill (as adjusted for the impact of foreign currency translation in
accordance with historical practice of MLIM Parent and its Subsidiaries) and
other intangible assets.
"Closing Tangible Equity Target" means the sum of (a) $693 million,
and (b) if the Closing Cash Target is (i) positive, such Closing Cash Target or
(ii) negative, zero.
"Closing Cash Balance" means the positive or negative value equal to
total cash and cash equivalents less the Closing Cash Target.
"Closing Cash Target" means
(i) $125 million, plus
(ii) Net Non-VICP Expenses, less
(iii) available-for-sale liquid securities, plus
(iv) all accrued Cash VICP Expenses relating to employees
continuing after Closing, to the extent accrued in accordance with current
policy in respect of any portion of the 2006 fiscal year through the
Closing Date, plus
(v) 50% of all accrued Stock VICP Expenses relating to employees
continuing after Closing, to the extent accrued in accordance with current
policy in respect of any portion of the 2006 fiscal year through the
Closing Date, less
(vi) accounts receivable (which, for the avoidance of doubt, shall
be net of any bad debt reserve), plus
(vii) other payables, except accrued compensation and minority
interests.
"Net Non-VICP Expenses" means the excess, if any, of (i) expenses
incurred in the Final Quarter over (ii) the sum, for such Final Quarter, of (A)
VICP Expenses, (B) all non-cash amortization and depreciation, (C) all MLIM
Parent allocated corporate expenses and 25% of Indirect Expenses, (D) all
compensation expenses associated with employees terminated during the Final
Quarter, and (E) all non-recurring expenses properly allocated to the Final
Quarter, including expenses related to completion of the Transactions and,
subject to the consent of BlackRock (which consent shall not be unreasonably
withheld or delayed), items not transferred to the MLIM Transferred Entities in
the MLIM Restructuring.
"VICP Expenses" means expenses in respect of variable incentive
compensation plans.
"Stock VICP Expenses" means expenses in respect of stock and
equity-based variable incentive compensation plans.
"Cash VICP Expenses" means VICP Expenses other than Stock VICP
Expenses.
"Indirect Expenses" means indirect expenses as historically defined in
the books and records of MLIM Parent and its Subsidiaries.
"Closing Adjustment Amounts" means the Closing Tangible Equity
Balance, Closing Tangible Equity Target, Closing Tangible Equity, Closing Cash
Balance, Closing Cash Target, VICP Expenses, Cash VICP Expenses, Stock VICP
Expenses, and Net Non-VICP Expenses.
"Closing Financial Information" means the information set forth on
Exhibit 5.16(i).
"Final Quarter" means the fiscal quarter of the MLIM Transferred
Entities ending on (i) the Closing Date, if the Closing Date is the final day
of a fiscal quarter or (ii) the final day of the last full fiscal quarter prior
to the Closing Date, if the Closing Date is not the final day of a fiscal
quarter.
Section 5.17 Nonrecognition Treatment.
(a) None of the BlackRock Parties, MLIM Parent or any of their
respective Subsidiaries shall take or cause to be taken any action (including
agreeing to any transaction or entering into any agreement) that would result
in (i) the Merger failing to qualify as a reorganization under Section
368(a)(2)(E) of the Code or (ii) the MLIM Contribution together with the Merger
failing to qualify as a transaction governed by Section 351 of the Code. The
BlackRock Parties and MLIM Parent shall use all reasonable efforts, and shall
cause their respective Subsidiaries to use all reasonable efforts, to cause (i)
the Merger to qualify as a reorganization under Section 368(a)(2)(E) of the
Code and (ii) the MLIM Contribution together with the Merger to qualify as a
transaction governed by Section 351 of the Code.
(b) The BlackRock Parties, MLIM Parent and each of their respective
Subsidiaries shall not take any position on any Tax Return inconsistent with
the treatment of (i) the Merger as a reorganization under Section 368(a)(2)(E)
of the Code or (ii) the MLIM Contribution together with the Merger as a
transaction governed by Section 351 of the Code, unless otherwise required
pursuant to a "determination" within the meaning of Section 1313(a) of the
Code.
(c) Officers of BlackRock and MLIM Parent shall execute and deliver to
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, tax counsel to MLIM Parent, and ▇▇▇▇▇▇▇ ▇▇▇▇, tax
counsel to BlackRock, certificates (the "Tax Certificates") substantially in
the form agreed to by the parties and their tax counsel at such time or times
as may be reasonably requested by such tax counsel, including at the time the
BlackRock Registration Statement is distributed to the holders of BlackRock
Common Stock and at the Effective Time, in connection with each tax counsel's
delivery of its Tax Opinion. Each of BlackRock, MLIM Parent and each of their
respective Subsidiaries shall use its reasonable best efforts not to take or
cause to be taken any action which would cause to be untrue (or fail to take or
cause not to be taken any action which would cause to be untrue) any of the
statements included in the Tax Certificates.
Section 5.18 Restructuring(a) . Prior to the Closing, MLIM Parent
shall cause the consummation of the transactions and actions contemplated by
Exhibit 5.18 (such transactions and actions, the "MLIM Restructuring").
Section 5.19 BlackRock Client Consents.
(a) BlackRock Public Funds. If and to the extent that it is determined
by BlackRock, upon advice of counsel, that the actions specified in this
Section 5.19 are necessary to comply with Regulatory Requirements, and subject
in each case to the requirements of Applicable Law and the fiduciary duties of
the BlackRock Parties and the U.S. BlackRock Public Funds Boards,
(i) BlackRock shall use its reasonable best efforts to, or use its
reasonable best efforts to cause its Controlled Affiliates to, in
accordance with Applicable Law, (A) as promptly as practicable following
the date hereof, obtain the approval of each U.S. BlackRock Public Fund
Board of a new Investment Advisory Arrangement, to be effective at the
Closing, containing terms, taken as a whole, that are no less favorable to
BlackRock or its Controlled Affiliate than the terms of the existing
Investment Advisory Arrangement between such U.S. BlackRock Public Fund
and BlackRock or its Controlled Affiliate, (B) as promptly as practicable
following receipt of the approval described in clause (A) above, cause
each U.S. BlackRock Public Fund Board to call a special meeting of the
shareholders of each Public Fund to be held as promptly as reasonably
practicable for the purpose of obtaining the requisite approval of such
shareholders for such new Investment Advisory Arrangement, as applicable,
(C) as promptly as practicable following receipt of the approval described
in clause (A) above, prepare and file, or cause each U.S. BlackRock Public
Fund to prepare and file, with the SEC and all other applicable
Governmental Authorities all registration statements and proxy
solicitation materials required to be distributed to the shareholders of
each U.S. BlackRock Public Fund with respect to the actions recommended
for shareholder approval by the applicable U.S. BlackRock Public Fund
Board and mail, or cause to be mailed, such proxy solicitation materials
promptly after clearance by the SEC (if applicable) and (D) as soon as
practicable following the mailing of the proxy materials, submit, or cause
to be submitted, to the shareholders of each U.S. BlackRock Public Fund
for a vote at a shareholders meeting the proposals described in clause (B)
above.
(ii) In the event that prior to the Closing, a special shareholder
meeting for a U.S. BlackRock Public Fund described in clause (i)(B) above
is duly convened but adjourned solely as a result of a Quorum Failure,
BlackRock shall use its reasonable best efforts to, or cause one of its
Controlled Affiliates to, (A) persuade the Public Fund Board of each such
U.S. Public Fund to approve, in conformity with Section 15(a)(4) of the
Investment Company Act and SEC Rule 15a-4 thereunder, an interim
Investment Advisory Arrangement, to be effective at the Closing, for any
such U.S. Public Fund with BlackRock or any of its Controlled Affiliates
containing terms that, taken as a whole, subject to Applicable Law, are no
less favorable to BlackRock or such BlackRock Controlled Affiliate than
the terms of the existing Investment Advisory Arrangement with each such
U.S. BlackRock Public Fund and (B) as promptly as practicable following
the adjournment of such meeting, persuade any such U.S. Public Fund Board
to take such action as may be necessary to re-convene a special meeting of
the shareholders of any such U.S. Public Fund to be held as promptly as
reasonably practicable following such adjournment for the purpose of
obtaining the approval of such shareholders of such new Investment
Advisory Arrangement as contemplated by clause (i) above.
(iii) MLIM Parent and BlackRock agree that Consent for any
Investment Advisory Arrangement with a Client that is a U.S. Public Fund
shall be deemed given for all purposes under this Agreement only if a new
Investment Advisory Arrangement has been approved by the shareholders of
the applicable Public Fund in accordance with clause (i) of this
subsection (a) and Applicable Law and is in full force and effect at the
Closing, unless any time prior to the Closing any Public Fund Board
indicates, either orally or in writing, that the applicable Public Fund
has (A) terminated or intends to terminate (in whole or in part) its
existing or new Investment Advisory Arrangement prior to or following the
Closing or (B) could reasonably be expected to terminate its Investment
Advisory Arrangement or withdraw assets thereunder unless the fees payable
under such Contract or the overall expense level for the applicable Public
Fund is reduced prior to or following the Closing.
(iv) BlackRock shall use its reasonable best efforts to, or use
its reasonable best efforts to cause its Controlled Affiliates to, in
accordance with Applicable Law, as promptly as practicable following the
date hereof, obtain such approvals, consents or other actions, if any, by
the boards of directors or comparable governing bodies, regulating or
self-regulating authorities or shareholders required by Applicable Law or
the arrangements governing such Public Fund of such BlackRock Controlled
Affiliate's services therefore of any Public Fund that is not a U.S.
Public Fund so that after the Closing the relevant Controlled Affiliate of
BlackRock may continue managing such Public Fund on terms, taken as a
whole, that are no less favorable to such Controlled Affiliate than the
terms of the existing Investment Advisory Arrangement between such
non-U.S. Public Fund and such Controlled Affiliate.
(b) Non-Public Funds and Non-Fund Clients.
(i) If Consent or other action is required by Applicable Law or by
the Investment Advisory Arrangement of any Client other than a Public Fund
for the Investment Advisory Arrangement with such Client to continue after
Closing, as promptly as practicable following the date hereof, BlackRock
shall, or shall cause one of its Controlled Affiliates to, send a notice
complying with Applicable Law and the terms of such Client's Investment
Advisory Arrangement in form and substance reasonably acceptable to MLIM
Parent (the "BlackRock Notice") informing such Client of the Transactions
and requesting such Consent in writing or other required action.
(ii) MLIM Parent and BlackRock agree that any Consent required for
any Investment Advisory Arrangement with a Client of BlackRock (other than
a Public Fund) to continue after the Closing shall be deemed given for all
purposes under this Agreement (A) if written Consent is required under
Applicable Law or the respective Investment Advisory Arrangement, upon
receipt of the written Consent requested in the BlackRock Notice prior to
the Closing Date or (B) if Consent other than written Consent is permitted
under Applicable Law and the respective Investment Advisory Arrangement,
(x) upon receipt of a written Consent requested in the BlackRock Notice
prior to the Closing Date or (y) if no such written Consent is received,
if 45 days shall have passed since the sending of written notice
("BlackRock Negative Consent Notice") to such Client (which Negative
Consent Notice may be included in the BlackRock Notice) requesting written
Consent as aforesaid and informing such Client: (I) of the intention to
complete the Transactions, which will result in a deemed assignment of
such Client's Investment Advisory Arrangement; (II) of BlackRock's or a
BlackRock Controlled Affiliate's intention to continue to provide the
advisory services pursuant to the existing Investment Advisory Arrangement
with such Client after the Closing if such Client does not terminate such
agreement prior to the Closing; and (III) that the Consent of such Client
will be deemed to have been granted if such Client continues to accept
such advisory services for a period of at least 45 days after the sending
of the BlackRock Negative Consent Notice without termination; provided,
that, in any case under clause (A) or (B), no Consent shall be deemed to
have been given for any purpose under this Agreement if at any time prior
to the Closing such Client indicates, either orally or in writing, that
such Client (1) has not so consented or has terminated or intends to
withdraw its Consent or terminate, in whole or in part, its Investment
Advisory Arrangement or (2) intends to terminate its Investment Advisory
Arrangement or withdraw assets thereunder unless the fees payable under
such Arrangement are reduced.
(iii) MLIM Parent shall be provided a reasonable opportunity to
review all Consent materials to be used by BlackRock or a Controlled
Affiliate of BlackRock prior to distribution. BlackRock shall, and shall
cause each of its Controlled Affiliate to, promptly upon their receipt
make available to MLIM Parent copies of any and all substantive
correspondence between it and Clients or representatives or counsel of
such Clients relating to the consent solicitation provided for in this
Section 5.19.
(c) In connection with obtaining the Client Consents and other actions
required by subsections (a) and (b) of this Section 5.19, at all times prior to
the Closing, BlackRock shall take reasonable steps to keep MLIM Parent informed
of the status of obtaining such Client Consents and, upon MLIM Parent's
request, make available to MLIM Parent copies of all such executed Client
Consents and make available for MLIM Parent's inspection the originals of such
Consents and any related materials, such as telephone logs and other records
relating to the Client Consent process.
Section 5.20 Contingent Accounts. BlackRock and MLIM Parent shall on
or prior to the Closing Measurement Date agree on a list of all Contingent
Accounts, with any account (or portion thereof) as to which the status is
unclear or there is a disagreement being treated as a Contingent Account for
purposes of determining the Closing Revenue Run-Rate for the purposes of
Sections 6.1(f) and (g).
Section 5.21 Certain Disclosure Obligations. As promptly as
practicable, but in no event later than 20 Business Days after the date of this
Agreement, MLIM Parent shall deliver to BlackRock the information set forth on
Exhibit 5.21.
Section 5.22 Banking Matters. Between the date of this Agreement and
the Closing Date, MLIM Parent and BlackRock shall use their reasonable best
efforts to take such steps as may be necessary to cause New BlackRock, after
giving effect to the Transaction, not to have any ownership position in
securities that would be reasonably likely to cause or result in a violation of
the Bank Holding Company Act of 1956, the Change in Bank Control Act or Section
10 of the Home Owners Loan Act and shall take no action and shall cause its
Controlled Affiliates to take no action inconsistent with the foregoing.
Section 5.23 Separation and Segregation. From the date hereof through
the Closing, MLIM Parent shall use reasonable best efforts to, and shall cause
each of the MLIM Business Entities to use reasonable best efforts to, separate
in all material respects all data related to the MLIM Business from any other
data of MLIM Parent or the MLIM Business Entities, whether by physical or
logical separation of such data and/or by the use of contractual,
administrative, technical and/or physical oversights, mechanisms and processes.
Section 5.24 Certain Obligations as to PNC Agreement. From the date
hereof through the Closing, without the prior written consent of MLIM Parent,
New BlackRock and BlackRock shall not amend, modify or waive (as distinct from
giving any consent or approval provided for therein) any provision of the
Implementation and Stockholder Agreement or any restriction or prohibition on
New BlackRock or its Affiliates contained therein.
ARTICLE VI
CONDITIONS TO CLOSING
Section 6.1 Mutual Conditions. The obligations of each party to this
Agreement to effect the Closing shall be subject to the satisfaction at or
before the Closing of the following conditions, any of which may be waived in
writing by MLIM Parent and BlackRock, acting jointly:
(a) No Legal Prohibition, Etc. No order, injunction, judgment or
decree issued by any court of competent jurisdiction or other Governmental
Authority preventing the consummation of the transactions contemplated by this
Agreement or the execution, delivery or performance of the Ancillary Agreements
shall be in effect. No Law shall have been enacted, entered, promulgated or
enforced by any court or Governmental Authority that prohibits or makes illegal
the consummation of the transactions contemplated by this Agreement or the
execution, delivery or performance of the Ancillary Agreement.
(b) HSR Act Notification. The notifications of MLIM Parent and
BlackRock pursuant to the HSR Act shall have been made and the applicable
waiting period and any extensions thereof shall have expired or been
terminated.
(c) PNC Agreements and Amendment. PNC shall have executed and
delivered each of the agreements and instruments listed in Exhibit 6.1(c), and
each of the agreements and instruments listed in Exhibit 6.1(c) shall remain in
full force and effect.
(d) Stockholder Approval of the Merger. The Merger, the issuance of
the BlackRock Consideration and this Agreement shall have been approved and
adopted (as applicable) as required by the DGCL and/or the NYSE.
(e) Reorganization Treatment. BlackRock shall have received an opinion
of its tax counsel, dated as of the Effective Time, substantially to the effect
that, on the basis of facts, representations and assumptions set forth in such
opinion, the Merger will be treated as a reorganization under Section
368(a)(2)(E) of the Code and MLIM Parent shall have received an opinion of its
tax counsel, dated as of the Effective Time, substantially to the effect that,
on the basis of the facts, representations and assumptions set forth in such
opinion, the MLIM Contribution together with the Merger will qualify as a
transaction governed by Section 351 of the Code (each, a "Tax Opinion"). In
rendering such Tax Opinion, tax counsel may require and rely upon customary
representations and covenants, including those contained in Tax Certificates
and others, reasonably satisfactory in form and substance to such tax counsel.
(f) MLIM Revenue Run-Rate. The Closing Revenue Run-Rate of the MLIM
Business shall be equal to or greater than 75 percent of the Base Revenue
Run-Rate of the MLIM Business.
(g) BlackRock Revenue Run-Rate. The Closing Revenue Run-Rate of
BlackRock and its Subsidiaries shall be equal to or greater than 75 percent of
the Base Revenue Run-Rate of BlackRock and its Subsidiaries.
Section 6.2 Conditions to the Obligations of BlackRock. The
obligations of BlackRock to effect the Closing shall be subject to the
satisfaction at or before the Closing of the following conditions, any of which
may be waived in writing by BlackRock:
(a) Truth of Representations and Warranties. The representations and
warranties of MLIM Parent set forth in this Agreement shall be true and correct
in all material respects at and as of the date hereof and at and as of the
Closing Date with the same effect as though each such representation and
warranty had been made on and as of the Closing Date (except, in each case, to
the extent that any such representation and warranty speaks as of a specific
date, in which case such representation and warranty shall be true and correct
as of such specific date) without giving effect to any qualifiers or exceptions
relating to materiality or MLIM Material Adverse Effect; provided that such
representations and warranties shall be deemed to be true and correct in all
material respects if any change, effect, event, matter, occurrence or state of
facts giving rise to the failure or failures of such representations and
warranties to be so true and correct (without giving effect to any qualifiers
or exceptions relating to materiality or MLIM Material Adverse Effect) does not
have and would not reasonably be expected to have, individually or in the
aggregate, a MLIM Material Adverse Effect.
(b) Performance of Agreements. Each of the MLIM Companies shall have
performed and complied in all material respects with each agreement, covenant
and obligation required by this Agreement and the Ancillary Agreements to be
performed or complied with by it at or prior to the Closing.
(c) Officer's Certificates. MLIM Parent shall have delivered to
BlackRock a certificate as to the matters contained in paragraphs (a) and (b)
of this Section 6.2, dated as of the Closing Date, signed by an executive
officer of each such Person.
(d) Certain Consents. BlackRock or an Affiliate under its Control, as
the case may be, shall have obtained, in form and substance reasonably
acceptable to BlackRock, each of the Governmental Approvals set forth in
Exhibit 6.2(d).
(e) Ancillary Agreements. Each of the Ancillary Agreements to which
any MLIM Company is a party shall have been executed and delivered by such MLIM
Company and shall remain in full force and effect.
(f) FIRPTA Certificate. MLIM Parent shall have delivered to BlackRock
a non-foreign person affidavit that complies with the requirements of Section
1445 of the Code in form and substance reasonably satisfactory to BlackRock.
Section 6.3 Conditions to the Obligations of MLIM Parent. The
obligation of MLIM Parent to effect the Closing shall be subject to the
satisfaction at or before the Closing of the following conditions, any of which
may be waived in writing by the MLIM Parent:
(a) Truth of Representations and Warranties. The representations and
warranties of BlackRock set forth in this Agreement shall be true and correct
in all material respects at and as of the date hereof and at and as of the
Closing Date with the same effect as though each such representation and
warranty had been made on and as of the Closing Date (except, in each case, to
the extent that any such representation and warranty speaks as of a specific
date, in which case such representation and warranty shall be true and correct
as of such specific date) without giving effect to any qualifiers or exceptions
relating to materiality or BlackRock Material Adverse Effect; provided that
such representations and warranties shall be deemed to be true and correct in
all material respects if any change, effect, event, matter, occurrence or state
of facts giving rise to the failure or failures of such representations and
warranties to be so true and correct (without giving effect to any qualifiers
or exceptions relating to materiality or BlackRock Material Adverse Effect)
does not have and would not reasonably be expected to have, individually or in
the aggregate, a BlackRock Material Adverse Effect.
(b) Performance of Agreements. BlackRock shall have performed and
complied in all material respects with each agreement, covenant and obligation
required by this Agreement or any Ancillary Agreement to be performed or
complied with by it at or prior to the Closing Date.
(c) Officer's Certificate. BlackRock shall have delivered to MLIM
Parent a certificate, dated as of the Closing Date, signed by an executive
officer of BlackRock as to the matters contained in paragraphs (a) and (b) of
this Section 6.3.
(d) Certain Consents. MLIM Parent or an Affiliate under its Control,
as the case may be, shall have obtained, in form and substance reasonably
acceptable to MLIM Parent, each of the Governmental Approvals set forth in
Schedule 3.6.
(e) Ancillary Agreements. Each of the Ancillary Agreements to which
BlackRock is a party and the Implementation and Stockholders Agreement shall
have been executed and delivered by BlackRock and shall be in full force and
effect.
(f) Banking Matters. There shall not be any event, matter, occurrence
or state of facts (other than any event, matter, occurrence or state of facts
arising from any breach by any of the MLIM Companies of any of its obligations
under this Agreement) or any action inconsistent with the provisions of Section
5.22 which would be reasonably likely in the opinion of counsel to MLIM Parent
to require MLIM Parent to register with the Board of Governors of the Federal
Reserve System as a bank holding company or become subject to regulation,
supervision or restrictions under the Bank Holding Company Act of 1956, the
Change in Bank Control Act or Section 10 of the Home Owners Loan Act.
Section 6.4 Frustration of Closing Conditions, Etc. Neither BlackRock
nor MLIM Parent may rely on the failure of any condition set forth in this
Article VI to be satisfied if such failure was caused by the failure of such
party to act in good faith or comply with its obligations under Section 5.5.
ARTICLE VII
INDEMNIFICATION
Section 7.1 Survival of Representations, Warranties and Covenants.
(a) Subject to Section 8.4, all representations and warranties of MLIM
Parent contained in this Agreement, including any Schedules made a part hereof,
shall survive the Closing hereunder for a period of 18 months following the
Closing Date, other than representations and warranties contained in (i)
Sections 3.1, 3.2, 3.3, 3.4, 3.5, and 3.17(a), (b), (c), (e) and (f)
(collectively, the "Specified Provisions"), which shall survive forever, (ii)
Section 3.21, which shall survive until six months following the expiration of
the applicable statutory period of limitations (including any extensions
thereof), and (iii) Section 3.24, which shall survive until the third
anniversary of the Closing Date.
(b) All representations and warranties of BlackRock shall terminate
and be of no further force and effect at the Closing, provided that the
representations and warranties of BlackRock set forth in Sections 4.8, 4.9,
4.11 and 4.12 shall survive the Closing hereunder for a period of 18 months
following the Closing Date.
(c) Any covenant or other agreement of any party herein shall survive
the Closing hereunder indefinitely or for such lesser period of time as may be
specified therein.
Section 7.2 Obligations of MLIM Parent. Subject to the other
provisions of this Article VII, MLIM Parent shall indemnify, defend and hold
harmless BlackRock and its Affiliates (including the MLIM Transferred Entities
and their Controlled Affiliates after the Closing), their respective
predecessors and successors, and their respective stockholders, employees,
officers, partners, members, trustees (including trustees of Public Funds),
directors (including directors of Public Funds), agents and representatives
(each, a "BlackRock Indemnified Party") from and against, and pay or reimburse
BlackRock Indemnified Parties for, any and all Losses (excluding any Taxes or
Losses related to Taxes and, as to Section 7.2(a), excluding any Losses
attributable to any claim or set of related claims that does not exceed
$100,000 ("Minor Losses") (but including the entire amount of such claim or set
of related claims in the event that such claim or set of related claims exceeds
$100,000)) that any of them may suffer, incur or sustain, directly or
indirectly, arising out of, attributable to or resulting from:
(a) any inaccuracy in or breach of any of the representations and
warranties where such representations and warranties are read without giving
effect to any qualifiers or exceptions relating to materiality and MLIM
Material Adverse Effect made by MLIM Parent herein or under any of the
Ancillary Agreements in connection herewith or therewith;
(b) any breach or nonperformance of any of the covenants or other
agreements made and to be performed by MLIM Parent in or pursuant to this
Agreement or any Ancillary Agreement;
(c) any fees, expenses or other payments incurred or owed by MLIM
Parent or, prior to the Closing, by any MLIM Company to any brokers, financial
advisors or comparable other person retained or employed by it in connection
with the Transactions; or
(d) notwithstanding any other provision of this Agreement, any alleged
or actual breach, failure to comply, violation or other deficiency in any
respect of any Regulatory Requirement or Fiduciary Requirement or any
Proceeding related thereto or instituted thereunder by any Person to the extent
arising out of, attributable to, relating to or resulting from the ownership,
operation or conduct of the MLIM Business and the assets, business and
activities prior to the Closing of any MLIM Company, any MLIM Controlled
Affiliate, or any Fund in existence at or during any time prior to the Closing
or any other Person that is an Affiliate of the MLIM Companies at any time
prior to the Closing (including their respective employees, officers, members,
directors, agents and representatives). For the avoidance of doubt, the
indemnification provided for under this clause (d) is intended to be absolute,
to not be subject to the limitations set forth in Section 7.1, 7.3 or 7.4, and
to be unaffected by any disclosure (including, for the avoidance of doubt, in
the MLIM Parent Disclosure Letters), investigation, publicly available
information, notice or state of knowledge in respect of the matters covered
hereby whether in connection with the negotiation and execution of this
Agreement or otherwise.
(e) (i) any obligation (including any payment required to be made) in
connection with a defined benefit or final salary pension scheme by any MLIM
Company in respect of any funding shortfall in any such scheme as at Closing or
in respect of the termination of participation in any such scheme as a result
of the transactions contemplated by this Agreement, or (ii) any other liability
in relation to such a scheme as at Closing, in excess of any contributions to
such a scheme after Closing in respect of the ongoing employment after Closing
of any Person who is a beneficiary of such a scheme and in the employment of
any MLIM Transferred Entity or any of its Controlled Affiliates that would be
made to a scheme that was fully funded as at Closing and not subject to any
termination of participation as a result of the transaction contemplated by
this Agreement.
(f) Any unfunded commitment in respect of off balance sheet
arrangements listed on Schedule 7.2(f) of the MLIM Parent Disclosure Letter, to
the extent that there shall be a capital call in respect thereof prior to
January 1, 2007.
Section 7.3 Minimum Losses. Except with respect to breaches of
representations and warranties contained in the Specified Provisions and in
Sections 3.21 and 3.24, no BlackRock Indemnitee under Section 7.2 shall have
any right to indemnification under Section 7.2(a) except to the extent
aggregate Losses other than Minor Losses incurred by all BlackRock Indemnitees
under Section 7.2(a) would exceed $100,000,000 (the "Deductible"). In the event
that such Losses other than Minor Losses exceed the Deductible, only such
Losses other than Minor Losses in excess of $100,000,000 shall be recoverable
in accordance with the terms hereof. For the avoidance of doubt, the Deductible
shall not apply to any matters under Section 7.2(b) through (f).
Section 7.4 Maximum Indemnification. Notwithstanding anything in this
Agreement to the contrary (other than the proviso to section 7.9), in no event
shall MLIM Parent be obligated to provide indemnification payments pursuant to
Section 7.2(a) exceeding, in the aggregate, an amount (the "Cap") equal to
$1,600,000,000; provided, however, that such limitation on indemnification
shall not apply with respect to a breach of any representation or warranty
contained in the Specified Provisions and in Sections 3.21 and 3.24. For the
avoidance of doubt, the Cap shall not apply to any matters under Section 7.2(b)
through (f).
Section 7.5 Obligations of BlackRock. Subject to the other provisions
of this Article VII, BlackRock shall indemnify, defend and hold harmless MLIM
Parent and its Affiliates (excluding BlackRock and its Controlled Affiliates
and the MLIM Transferred Entities and their Controlled Affiliates after the
Closing), their respective predecessors and successors, and their respective
stockholders, employees, officers, partners, members, trustees (including
trustees of Public Funds), directors (including directors of Public Funds),
agents and representatives (each, a "MLIM Indemnified Party") from and against,
and pay or reimburse such MLIM Indemnified Parties for, any and all Losses
(excluding any Taxes or Losses related to Taxes and excluding any Minor Losses)
that any of them may suffer, incur or sustain, directly or indirectly, arising
out of, attributable to or resulting from:
(a) any inaccuracy in or breach of any of the representations and
warranties set forth in Section 4.8, 4.9, 4.11 and 4.12 where such
representations and warranties are read without giving effect to any qualifiers
or exceptions relating to materiality and BlackRock Material Adverse Effect
made by BlackRock herein;
(b) notwithstanding any other provision of this Agreement, any alleged
or actual breach, failure to comply, violation or other deficiency in any
respect of any Regulatory Requirement or Fiduciary Requirement or any
Proceeding related thereto or instituted thereunder by any Person to the extent
arising out of, attributable to, relating to or resulting from the ownership,
operation or conduct of the business of BlackRock and the BlackRock Controlled
Affiliates (including their respective employees, officers, members, directors,
agents and representatives) prior to the Closing. For the avoidance of doubt,
the indemnification provided for under this clause (b) is intended to be
absolute, to not be subject to the limitations set forth in Section 7.1, 7.6 or
7.7, and to be unaffected by any disclosure (including, for the avoidance of
doubt, in the disclosure schedules of the BlackRock Parties), investigation,
publicly available information, notice or state of knowledge in respect of the
matters covered hereby whether in connection with the negotiation and execution
of this Agreement or otherwise; or
(c) any fees, expenses or other payments incurred or owed by BlackRock
to any brokers, financial advisors or comparable other person retained or
employed by it in connection with the Transactions.
Section 7.6 Minimum Losses. No MLIM Indemnitee under Section 7.5 shall
have any right to indemnification under Section 7.5(a) except to the extent
aggregate Losses other than Minor Losses incurred by all MLIM Indemnitees under
Section 7.5(a) would exceed $100,000,000 (the "BlackRock Deductible"). In the
event that such Losses in excess of $100,000,000 exceed the BlackRock
Deductible, only such Losses other than Minor Losses in excess of $100,000,000
shall be recoverable in accordance with the terms hereof. For the avoidance of
doubt, the BlackRock Deductible shall not apply to any matters under Sections
7.5(b) and (c).
Section 7.7 Maximum Indemnification. Notwithstanding anything in this
Agreement to the contrary (other than the proviso to section 7.9), in no event
shall PNC be obligated to provide indemnification payments pursuant to (i)
Section 7.5(a) exceeding, in the aggregate, an amount (the "Cap") equal to
$1,600,000,000. For the avoidance of doubt, the Cap shall not apply to any
matters under Sections 7.2(b) and (c).
Section 7.8 Obligation to Mitigate. No claim may be asserted nor may
any Proceedings be commenced against any Indemnifying Party pursuant Section
7.2 or Section 7.5 to the extent that the Indemnification Parties establish
that (i) the Indemnified Party had a reasonable opportunity, but failed, in
good faith to mitigate the Loss or (ii) such Loss arises from or was caused by
actions taken or failed to be taken by the Indemnified Party after the Closing.
Section 7.9 Exclusive Remedy. After the Closing, the sole and
exclusive remedy of any party for any inaccuracy of any representation or
warranty or any breach of any covenant or agreement set forth in this Agreement
and required to be performed prior to or after the Closing shall be the
indemnification contained in this Article VII and in Article VIII; provided,
however, that, notwithstanding anything to the contrary in this Agreement, no
party waives any rights to pursue a claim for fraud or any remedy therefor or
to seek specific performance for a breach of a covenant or agreement to be
performed by it before or after the Closing.
Section 7.10 Notice; Procedure for Third-Party Claims. Except for
indemnification of Tax Claims which are governed by Article VIII:
(a) Any Person entitled to indemnification under this Agreement (an
"Indemnified Party") may seek indemnification for any Loss by giving written
notice to the applicable party or parties from whom indemnification is sought
(the "Indemnifying Party"), specifying in detail (i) the representation and
warranty or covenant or other agreement that is alleged to have been
inaccurate, to have been breached or to have given rise to indemnification,
(ii) if known, the facts constituting the basis for such allegation and (iii)
if known, the aggregate amount of the Losses for which a claim is being made
under this Article VII or, to the extent that such Losses are not known or have
not been incurred at the time such claim is made, an estimate, to be prepared
in good faith and accompanied by supporting documentation, of the aggregate
potential amount of such Losses. In the event that any claim for
indemnification hereunder results from or is in connection with a Third-Party
Claim, the Indemnified Party shall provide written notice of such Third-Party
Claim to the Indemnifying Party as soon as practicable after the Indemnified
Party first receives notice of the claim but in any event not later than 10
Business Days prior to the time any response to the asserted claim is required;
provided that the Indemnified Party shall not be limited in seeking
indemnification pursuant to this Article VII by any failure to provide such
notice of the existence of a claim to the applicable Indemnifying Party except
to the extent (and only to the extent) that (x) such failure results in a lack
of actual notice to the Indemnifying Party and (y) such Indemnifying Party
actually incurs an incremental expense or has otherwise been actually
prejudiced as a result of such failure.
(b) Third-Party Claims.
(i) Except as otherwise provided in clause (ii) of this subsection
(b), in the case of any claim asserted by a Person that is not a party to
this Agreement or an Affiliate Controlled by a party to this Agreement
against an Indemnified Party (a "Third-Party Claim"), the Indemnified
Party shall permit the Indemnifying Party (at the expense of such
Indemnifying Party) to assume and control the defense of such Third-Party
Claim and any Proceedings resulting therefrom; provided that (x) counsel
for the Indemnifying Party who shall conduct the defense of such claim or
litigation shall be reasonably satisfactory to the Indemnified Party and
(y) the Indemnified Party may participate in such defense at such
Indemnified Party's sole cost and expense (including the costs and
expenses of counsel). Except with the prior written consent of the
Indemnified Party, such consent not to be unreasonably withheld or
delayed, no Indemnifying Party shall consent to entry of any judgment or
enter into any settlement of any Third-Party Claim or related Proceedings,
unless such judgment or settlement relates solely to monetary damages and
provides for a full, unconditional and irrevocable release by such third
party of the Indemnified Party and its Affiliates and, in the reasonable
good faith judgment of the Indemnified Party, does not and would not
reasonably be expected to adversely impact or impair the business or
reputation of the Indemnified Party and its Affiliates.
(ii) Notwithstanding clause (i) above, in the event that the
Indemnified Parties shall in good faith determine that the Indemnified
Parties may have available to them one or more defenses or counterclaims
that are inconsistent with one or more of the defenses or counterclaims
that may be available to the Indemnifying Party in respect of a
Third-Party Claim or any Proceeding relating thereto, (A) the Indemnified
Parties shall have the right, at the sole cost of the Indemnifying Party
(including the costs and expenses of counsel for the Indemnified Parties
(provided that the Indemnifying Party will not be required to pay for more
than one counsel in any jurisdiction for all Indemnified Parties in
connection with any such Third-Party Claim and related Proceedings)), at
all times to take over and assume control over the defense and prosecution
of such portion of such Third-Party Claim and related Proceedings related
to such inconsistent defenses and counterclaims and (B) the Indemnifying
Party shall retain control over the defense and prosecution of the
remaining aspects of such Third-Party Claim and related Proceeding;
provided that, in the case where the Indemnified Parties have assumed
control of the defense and prosecution of such portion of such Third-Party
Claim and related Proceeding related to such inconsistent defenses and
counterclaims, neither the Indemnifying Party nor the Indemnified Party
may settle such claim or Proceeding without the written consent of the
other party, such consent not to be unreasonably withheld or delayed. In
the event that the Indemnified Party does not assume the defense of any
matter as provided above in clause (A), the Indemnifying Party shall have
the right to control the defense against any such Third-Party Claim or
related Proceeding, provided that (1) subject to the control of the
prosecution and defense of such Third-Party Claim by the Indemnifying
Party and its counsel, the Indemnified Parties and their counsel (which
shall be reasonably satisfactory to the Indemnifying Party) shall be kept
fully informed as to all material aspects of such Third-Party Claim and
related Proceedings and shall have the right to participate in the
prosecution and defense of such Third-Party Claim, (2) the Indemnifying
Party and its counsel shall promptly provide to the Indemnified Parties
and their counsel all material information related to such Third-Party
Claim and related Proceedings (including copies of written information),
(3) the Indemnified Parties and their counsel shall have their views
regarding such Third-Party Claim considered in good faith by the
Indemnifying Party and its counsel and (4) the Indemnified Parties and
their counsel shall have the right to consent, such consent not be
unreasonably withheld, to the settlement or compromise of such Third-Party
Claim and related Proceedings.
(iii) Subject to clause (ii) of this Section 7.10(b), in the event
that an Indemnified Party determines in good faith that any Third-Party
Claim or any Proceeding related thereto has had or could reasonably be
expected to materially adversely impact or impair the commercial interests
or business reputation of the Indemnified Party or its Affiliates, (1)
counsel to be utilized by the Indemnifying Party in respect of such
Third-Party Claim and related Proceeding shall be reasonably acceptable to
the Indemnified Parties, (2) subject to the control of the prosecution and
defense of such Third-Party Claim by the Indemnifying Party and its
counsel, the Indemnified Parties and their counsel (which shall be
reasonably satisfactory to the Indemnifying Party) shall be kept fully
informed as to all material aspects of such Third-Party Claim and related
Proceedings and shall have the right to participate fully in the
prosecution and defense of such Third-Party Claim, (3) the Indemnifying
Party and its counsel shall promptly provide to the Indemnified Parties
and their counsel all material information related to such Third-Party
Claim and related Proceedings (including copies of written information),
(4) the Indemnified Parties and their counsel shall have their views
regarding such Third-Party Claim considered in good faith by the
Indemnifying Party and its counsel, and (5) the Indemnified Parties and
their counsel shall have the right to consent, such consent not be
unreasonably withheld, to the settlement or compromise of such Third-Party
Claim and related Proceedings.
(iv) In any event, MLIM Parent and BlackRock shall reasonably
cooperate in the investigation, pre-trial activities, trial, compromise,
settlement, discharge and defense of any Third-Party Claim subject to this
Article VII and the records and employees of each shall be made reasonably
available to the other with respect to such defense.
Section 7.11 Survival of Indemnity. Notwithstanding anything to the
contrary in this Article VII, no Indemnified Party shall have any right to
indemnification pursuant to Section 7.2(a) or 7.5(a) with respect to any matter
as to which written notice satisfying the requirements of Section 7.10(a) shall
not have been provided by the Indemnified Party to the applicable Indemnifying
Party during the 18-month period following the Closing Date; provided that a
notice with respect to any right to indemnification pursuant to Section 7.2(b)
through (f) or Section 7.5(b) and (c) or with respect to breaches of
representations and warranties contained in the Specified Provisions may be
given at any time and a notice with respect to breaches of representations and
warranties contained in Sections 3.21 may be given at any time prior to the
date that is six (6) months following the expiration of the applicable
statutory period of limitations (including any extensions thereof); provided,
further, that obligations to indemnify pursuant to Section 7.2(b) and (c)
through (f) and Section 7.5(b) and (c) shall not terminate. Any matter as to
which a claim has been asserted by written notice satisfying the requirements
of Section 7.10(a) and within the time limitation applicable by reason of the
immediately preceding sentence that is pending or unresolved at the end of any
applicable limitation period under this Article VII or the statute of
limitations applicable to such claim shall continue to be covered by this
Article VII notwithstanding any applicable statute of limitations (which the
parties hereby waive solely with respect to such circumstances) or the
expiration date described in the immediately preceding sentence of this Section
7.11 until such matter is finally terminated or otherwise resolved by the
parties under this Agreement, by a court of competent jurisdiction and any
amounts payable hereunder are finally determined and paid.
Section 7.12 Subrogation. The rights of any Indemnifying Party shall
be subrogated to any right of action that the Indemnified Party may have
against any other person with respect to any matter giving rise to a claim for
indemnification hereunder.
Section 7.13 Interest on Indemnity Claim. To the extent that any party
(the "Payee Party") becomes entitled to recover all or a portion of any Loss
under this Article VII, such Payee Party shall be entitled to accrued interest
from the indemnifying party (the "Payor Party") in respect of such Loss
accruing from the date that such Payee Party incurred such Loss at an interest
rate equal to the Specified Rate until the date such Payor Party actually makes
payment to such Payee Party in respect of such Loss.
ARTICLE VIII
TAX MATTERS
Section 8.1 Tax Indemnification.
(a) MLIM Parent shall indemnify, defend, and hold harmless the
BlackRock Indemnified Parties from and against (without duplication), (v) any
and all Taxes and Losses related to Taxes of or relating to the ownership,
operation or conduct of MLIM Business Entities or the Assets for any Tax year
or portion thereof ending on or prior to the MLIM Contribution, (w) any and all
United Kingdom Taxes and Losses related to United Kingdom Taxes (i) for which a
UK Company is secondarily liable as a result of having been a member of a group
for any Tax purpose prior to Closing or (ii) arising as a result of the
provision of non-cash benefits prior to Closing to employees, (x) any and all
Taxes and Losses relating to Taxes arising out of (i) any breach of or any
inaccuracy in any representation or warranty (without giving effect to any
qualifiers or exceptions relating to knowledge, materiality or MLIM Material
Adverse Effect) including the representations and warranties contained in
Exhibit 3.20 or (ii) any breach of a covenant relating to Taxes made by MLIM
Parent or any of its Affiliates, (y) any and all Taxes and Losses relating to
Taxes of or relating to the MLIM Transferors, the MLIM Business Entities or the
Assets that directly arise as a result of entering into this Agreement or
Closing other than Transfer Taxes for which BlackRock is liable pursuant to
Section 8.7, or (z) any failure on the part of MLIM Parent or any of its
Affiliates to comply with the DCL recapture provisions set forth in Treasury
Regulation Section 1.1503-2(g)(2)(vii) with respect to the DCLs of the UK
Entities, provided that MLIM Parent shall have no liability under Section
8.1(a) in relation to any Taxes or Losses related to United Kingdom Taxes, in
either case of the UK Companies, to the extent that such Taxes or Losses (i)
were provided for in the Accounts of the UK Companies or were otherwise taken
into account in determining the consideration payable for the MLIM
Contribution, or (ii) arise as a result of post Closing changes in law
(excluding, for the avoidance of doubt, any judicial decision), generally
published concession or practice of any Governmental Authority having
retrospective effect, or (iii) are penalties or interest which arise as a
result of any unreasonable delay or default by a BlackRock Party or UK Company
post Closing, or (iv) arise as a result of an act by a BlackRock Party or UK
Company post Closing which the UK Company was not legally bound, as at Closing,
to take, is outside the ordinary course of its business, was not requested in
writing by MLIM Parent and which the BlackRock Party or the UK Company knew or
ought reasonably to have known would give rise to such Taxes or Losses and
provided, further, that notwithstanding anything in this Agreement to the
contrary, no payment shall be due with respect to any Taxes or Losses related
to Taxes relating to DCLs existing at or prior to the MLIM Contribution until
there has been a "determination" (within the meaning of Section 1313(a) of the
Code or any similar state, local or foreign Tax provision) with respect to the
relevant Taxes.
(b) In the event of a breach of the covenant in section 5.10(f), the
amount of indemnification payable to the BlackRock Indemnified Parties shall
not exceed the amount equal to the product of (i) the Tax loss or deduction
recognized by MLIM Parent and its Affiliates as a result of any transaction or
series of transactions occurring after the date hereof and on or prior to the
MLIM Contribution resulting in a reduction in the aggregate adjusted tax basis
of the 197 Intangibles and (ii) 40%.
(c) All amounts payable or to be paid under this Section 8.1 (the "Tax
Indemnity Payments") shall be paid in immediately available funds within five
(5) Business Days after the later of (i) receipt of a written request from the
party entitled to such Tax Indemnity Payment and (ii) the day of payment of the
amount that is the subject of the Tax Indemnity Payment by the party entitled
to receive the Tax Indemnity Payment. Any late payments shall accrue interest
at the Specified Rate. All indemnification payments pursuant to this Article
VIII shall be made on an After-Tax Basis. "After-Tax Basis" shall mean, for
purposes of this Agreement, the amount otherwise due under this Article VIII
increased by such additional amount as necessary so that the aggregate payment,
net of Tax liability to the party entitled to payment is equal to the amount
due under this Article VIII without taking into account Taxes incurred by the
party entitled to payment on the receipt of such payment. For purposes of
determining the Tax liability with respect to any indemnification payment
received under this Article VIII, the parties shall assume that the party
entitled to payment's combined effective Tax rate is 40%.
(d) For purposes of Article VIII, any transaction that takes place
after the Closing, including transactions taking place after the Closing but on
the Closing Date, shall be considered to be made after the Closing Date.
(e) New BlackRock shall indemnify, defend and hold harmless the MLIM
Indemnified Parties from and against (without duplication), any and all Taxes
and Losses related to Taxes arising out of BlackRock's breach of the covenants
contained in Sections 5.10(d) and 5.10(e), provided however, that
notwithstanding anything in this Agreement to the contrary, no payment shall be
due with respect to this Section 8.1(e) until there has been a "determination"
(within the meaning of Section 1313(a) of the Code or any similar state, local
or foreign Tax provision) with respect to the relevant Taxes.
Section 8.2 Tax Indemnification Procedures.
(a) If a notice of deficiency, proposed adjustment, adjustment,
assessment, audit, examination or other administrative or court proceeding,
suit, dispute or other claim (a "Tax Claim") shall be delivered or sent to or
commenced or initiated by any Governmental Authority with respect to Taxes for
which an Indemnified Party is entitled to indemnification, the receiving party
shall promptly notify the other party in writing of the Tax Claim along with a
copy of the relevant Tax Claim notice; provided that the failure by either
party to promptly notify the other of any such notice shall not release the
Indemnifying Parties from their obligations under this Article VIII except to
the extent that the Indemnified Parties are materially and adversely prejudiced
as a consequence of such failure.
(b) With respect to any Tax Claim for which any Indemnifying Party
would be liable to indemnify any Indemnified Party, the Indemnifying Parties
may, upon written notice to the Indemnified Parties (such written notice to be
provided by the earlier of (i) thirty (30) days after notice thereof has been
given to any of the Indemnifying Parties, and (ii) three (3) Business Days
prior to the date required to answer or respond to any such claim), assume and
control the defense of such Tax Claim at their own cost and expense and with
their own counsel and the Indemnified Parties and their Affiliates agree to
cooperate with the Indemnifying Parties in pursuing such contest. If the
Indemnifying Parties elect to assume the defense of any such Tax Claim, the
Indemnifying Parties shall (A) consult with the Indemnified Parties or their
Affiliate and shall not enter into any settlement with respect to any such Tax
Claim without the Indemnified Parties' prior written consent, which consent
shall not be unreasonably withheld or delayed, or, if such settlement could
adversely affect the Indemnified Parties or any of their Affiliates, without
the consent of the Indemnified Parties; (B) keep the Indemnified Parties
informed of all material developments and events relating to such Tax Claim
(including promptly forwarding copies to the Indemnified Parties of any related
correspondence and providing the Indemnified Parties with a reasonable
opportunity to review and comment on any related correspondence prior to being
sent by the Indemnifying Parties to any Governmental Authority); and (C) at its
own cost and expense, grant the Indemnified Parties (or their Affiliate) the
right to participate in (but not to control) the defense of such Tax Claim.
(c) In connection with the contest of any Tax Claim that the
Indemnifying Parties have the ability to control but do not timely elect to
control pursuant to Section 8.2(b), such contest shall be controlled by the
Indemnified Parties, and the Indemnifying Parties agree to cooperate fully with
the Indemnified Parties and their Affiliates in pursuing such contest. In
connection with any such contest the Indemnified Parties shall (A) consult with
the Indemnifying Parties or their Affiliate and shall not enter into any
settlement with respect to any such Tax Claim without the Indemnifying Parties'
prior written consent, which consent shall not be unreasonably withheld or
delayed; (B) keep the Indemnifying Parties informed of all material
developments and events relating to such Tax Claim (including promptly
forwarding copies to the Indemnifying Parties of any related correspondence and
providing the Indemnifying Parties with a reasonable opportunity to review and
comment on any related correspondence prior to being sent by the Indemnified
Parties to any Governmental Authority); and (C) at the Indemnifying Parties'
own cost and expense, grant the Indemnifying Parties (or their Affiliate) the
right to participate in (but not to control) the defense of such Tax Claim.
Nothing contained herein shall be construed as limiting any party's right to
indemnification under this Article VIII.
(d) If an Indemnifying Party makes a payment to an Indemnified Party
in respect of a Tax Claim, and the Indemnified Party is entitled to recover
from any person (other than an Affiliate) any sum in respect of the Tax Claim
(an "Unrelated Party"), the Indemnified Party shall (i) notify the Indemnifying
Party and keep them fully informed, (ii) co-operate fully to take all
reasonable steps to enforce recovery against the Unrelated Party, at the
written request and cost of the Indemnifying Party, and (iii) account to the
Indemnifying Party for any sums recovered from the Unrelated Party, net of Tax,
costs and expenses suffered.
(e) Notwithstanding anything to the contrary contained in this
Agreement, the procedure for indemnification claims with regard to Taxes shall
be governed exclusively by Article VIII.
Section 8.3 Termination of Tax Sharing Agreements. MLIM Parent hereby
agrees and covenants that any and all existing Tax allocation or sharing
agreements or arrangements, whether or not written, that may have been entered
into by MLIM Parent or its Affiliates (other than any MLIM Business Entity or
any Fund), on the one hand, and any MLIM Business Entity or any Fund, on the
other hand, shall be terminated on or before the Closing Date, and no payments
pursuant to such agreements or arrangements shall be made after such
termination. The BlackRock Parties hereby agree and covenant that any and all
existing Tax allocation or sharing agreements or arrangements, whether or not
written, that may have been entered into by any BlackRock Party or any
Subsidiary of any BlackRock Party, on the one hand, and any other person not a
BlackRock Party or any Subsidiary of any BlackRock Party, on the other hand,
shall be terminated on or before the Closing Date, and no payments pursuant to
such agreements or arrangements shall be made after such termination, provided
however that the Tax Disaffiliation Agreement among BlackRock, Inc., PNC Asset
Management, Inc. and PNC Bank Corp. shall not be terminated, as provided in
Section 5.2 of the Implementation and Stockholder Agreement.
Section 8.4 Conflicts; Survival. Notwithstanding any other provision
of this Agreement to the contrary, the obligations of the parties hereto set
forth in this Article VIII shall (a) be unconditional and absolute and (b)
remain in full force and effect indefinitely. The representations and
warranties contained in Section 3.20 and Exhibit 3.20 shall survive the Closing
until six (6) months following the expiration of the applicable statute of
limitations (taking into account all extensions thereof) and covenants relating
to Taxes shall survive indefinitely; provided that, in the event notice for
indemnification under Section 8.2 hereof shall have been given within the
applicable survival period, the representation or warranty that is the subject
of such indemnification claim shall survive until such time as such claim is
finally resolved. Indemnification for Taxes and Losses with respect to Taxes
shall be governed solely by Article VIII and in the event of a conflict between
this Article VIII and any other provision of this Agreement, this Article VIII
shall govern and control.
Section 8.5 Tax Treatment. The parties hereto agree to treat any
payment made by MLIM Parent pursuant to Article VII or Article VIII as a
contribution to the capital of New BlackRock for all Tax purposes, unless
otherwise required pursuant to a "determination" pursuant to Section 1313(a) of
the Code or other applicable Law.
Section 8.6 Assistance and Cooperation. After the Closing, MLIM Parent
and New BlackRock shall (a) assist (and cause their respective Affiliates to
assist) the other party in preparing any Tax Returns which such other party is
responsible for preparing and filing; (b) cooperate fully in preparing for any
audits of, or disputes with Governmental Authorities regarding, any Tax Returns
with respect to any of the MLIM Business Entities or any Fund; and (c) make
available to the other and to any Governmental Authority as reasonably
requested all information, records, and documents relating to Taxes of any of
the MLIM Business Entities or any Fund. MLIM Parent shall provide BlackRock
prior to the Closing, and New BlackRock after the Closing, with all reasonably
requested information, records and documents relating to the adjusted tax basis
of the MLIM Business Entities or any of the Assets, including any and all
adjustments to such adjusted tax basis arising as a result of any adjustment
made by a Governmental Authority, in connection with the recognition of gain or
recapture in connection with the MLIM Restructuring or the MLIM Contribution or
otherwise. Further, MLIM Parent shall provide BlackRock with reasonable notice
of its plans regarding the MLIM Restructuring.
Section 8.7 Transfer Taxes. Other than in respect of VAT, BlackRock
and MLIM Parent shall each pay one half (1/2) of any Transfer Taxes. All
consideration given for the purchase of any Assets under this Agreement shall
be inclusive of VAT. No additional amounts shall be required to be paid or
otherwise provided in respect of any VAT arising on the sale of such Assets.
The MLIM Parent and the BlackRock Parties intend that and shall use
all reasonable endeavours (including, for the avoidance of doubt, the making of
any election or application in respect of VAT to any Governmental Authority or
entering into a written agreement) to secure that the sale of any Assets of a
UK Company is treated as neither a supply of goods nor a supply of services for
the purposes of the laws governing VAT in any relevant European Union member
state.
Section 8.8 Tax Returns. MLIM Parent shall file or cause to be filed
when due all Tax Returns that are required to be filed by or with respect to
any MLIM Business Entity or Asset that will be wholly-owned directly or
indirectly by New BlackRock immediately after the MLIM Contribution for taxable
years or periods ending on or before the Closing Date. With respect to any Tax
Return with respect to any MLIM Business Entity or Asset that will be
wholly-owned directly or indirectly by New BlackRock immediately after the MLIM
Contribution that covers a taxable year or period beginning before and ending
after the Closing Date, MLIM Parent shall provide a copy of such Tax Return to
New BlackRock at least 30 days prior to the due date (including applicable
extensions) for the filing thereof, and New BlackRock shall have the right to
approve (which approval shall not be unreasonably withheld) such Tax Return to
the extent that it relates to the portion of the taxable year beginning the day
after the Closing Date. No BlackRock Party (or any Subsidiary of any BlackRock
Party) will file any amended Tax Return, unless otherwise required by Law or
with the consent of MLIM Parent, not to be unreasonably withheld, with respect
to any Tax Return for any taxable year or period ending on or before the
Closing Date, or with respect to any Tax Return for any taxable year or period
beginning before and ending after the Closing Date.
Section 8.9 Tax Apportionment. For purposes of this Agreement, to
apportion appropriately any Taxes relating to a Straddle Period, MLIM Parent
may, to the extent permitted under Law, elect with the relevant Governmental
Authority to treat for all Tax purposes the Closing Date as the last day of the
taxable year or period of a MLIM Business Entity transferred to New BlackRock
pursuant to the MLIM Contribution. In any case where the Closing Date is not
the last day of the taxable year or period, the portion of any Taxes that are
allocable to the portion of the Straddle Period ending on the Closing Date
shall be:
(a) in the case of Taxes that are imposed on a periodic basis (such as
real property taxes), deemed to be the amount of such Taxes for the entire
period multiplied by a fraction the numerator of which is the number of
calendar days in the Straddle Period ending on (and including) the Closing Date
and the denominator of which is the number of calendar days in the entire
relevant Straddle Period; and
(b) in the case of Taxes not described in (a) (such as Taxes that are
either (A) based upon or related to income or receipts, (B) imposed in
connection with any sale or other transfer or assignment of property (real or
personal, tangible or intangible) or (C) payroll and similar taxes), deemed
equal to the amount that would be payable if the taxable year or period ended
on the Closing Date; provided that, in determining such amount, exemptions,
allowances, or deductions that are calculated on a periodic basis, such as the
deduction for depreciation, shall be taken into account on a pro-rated basis in
the manner described in (a) above.
Section 8.10 Purchase Price Allocation.
(a) MLIM Parent, BlackRock and New BlackRock agree to allocate the
MLIM Consideration among the MLIM Transferors for all Tax purposes. None of
MLIM Parent, New BlackRock or BlackRock (nor any of their respective
Affiliates) shall file any Tax Return or take a position with a Governmental
Authority that is inconsistent with the allocation as determined below (the
"Allocation"), including any amendments, except as provided in "determination"
(within the meaning of Section 1313(a) of the Code or any similar state, local
or foreign Tax provision).
(b) MLIM Parent shall present a draft of the allocation (the "Proposed
Allocation") to BlackRock for review within 60 days after the date hereof.
Except as provided in subparagraphs (i) and (ii) below, at the close of
business on the Closing Date, the Proposed Allocation shall become binding upon
New BlackRock and MLIM Parent and shall be the Allocation.
(i) BlackRock shall raise any objection to the Proposed Allocation
in writing within 30 days of the delivery of the Proposed Allocation.
BlackRock and MLIM Parent shall negotiate in good faith to resolve any
differences for 30 days after delivery of any objection by BlackRock. If
BlackRock and MLIM Parent reach written agreement amending the Proposed
Allocation, the Proposed Allocation, as amended by such written agreement,
shall become binding upon BlackRock and MLIM Parent and their Affiliates
and shall be the Allocation.
(ii) If BlackRock and MLIM Parent cannot mutually agree on the
appropriate allocation within the 30-day time limit set forth in
subparagraph (i) above, BlackRock and MLIM Parent shall submit all
remaining disputes to an independent valuation expert (the "Valuation
Expert") agreed to by BlackRock and MLIM Parent for resolution. BlackRock
and MLIM Parent shall use reasonable efforts to cause the Valuation Expert
to resolve such disputes within 20 days of its appointment, and the
Valuation Expert's determination with respect to any such disputed item
shall be final and binding. The fees and expenses of the Valuation Expert
incurred under this section (ii) and shall be paid 50% by BlackRock and
50% by MLIM Parent.
(c) In the event that there is any adjustment to the MLIM
Consideration , MLIM Parent shall revise the Allocation to reflect any such
adjustment using the same methodology as used in the initial Allocation and
shall promptly present a draft of such revised Allocation to BlackRock for
review; provided that the principles contained in paragraphs (b)(i) and (ii)
above (including the right of BlackRock to raise any objection to the proposed
revised Allocation and to have such objection resolved by the Valuation Expert)
shall apply to such revised Allocation.
Section 8.11 UK VAT.
(a) As soon as reasonably practicable after the date of this
Agreement, MLIM Parent shall procure that (if one has not already been made) an
application shall be made to H.M. Revenue & Customs in the UK pursuant to
Section 43B of the VATA 1994 for the exclusion of each MLIM Business Entity
from the bodies treated as members of the same VAT group as MLIM Parent or any
retained Affiliate of MLIM Parent for the purposes of Section 43 VATA 1996 (the
"MLIM VAT Group") and for such exclusion to take effect on Closing or, if H.M.
Revenue & Customs do not permit this, at the earliest date following Closing
permitted by Section 43B.
(b) Pending the taking effect of such application and for so long
thereafter as may be necessary, MLIM Parent and each BlackRock Party shall
procure that such information is provided to the other as may be required to
enable the continuing representative member of the MLIM VAT Group to make all
the returns required of it in respect of the MLIM VAT Group.
(c) When the exclusion takes effect after Closing, MLIM Parent and
each BlackRock Party shall procure that such payments shall be made between
such representative member and the MLIM Business Entities as may be appropriate
to ensure that the resulting position of each of the companies concerned is as
close as possible to the position which would have been obtained if such
application or applications had taken effect on Closing.
ARTICLE IX
TERMINATION/SURVIVAL
Section 9.1 Termination.
(a) This Agreement may be terminated on or prior to the Closing as
follows:
(i) by written consent of MLIM Parent and BlackRock;
(ii) by MLIM Parent if (A) a condition to the obligation of MLIM
Parent to close set forth in Section 6.1 or 6.3 cannot be satisfied at or
prior to the date set forth in Section 9.1(a)(iv) below or (B) there has
been a material breach of any representation, warranty, covenant or
agreement contained in this Agreement on the part of BlackRock and such
breach has not been cured within 60 Business Days (or, in the case of a
BlackRock Material Adverse Effect, 30 Business Days) after written notice
to BlackRock (provided that no cure period shall be required for a breach
that by its nature cannot be cured) such that the conditions set forth in
Section 6.1 or 6.3 cannot be satisfied at or prior to the date set forth
in Section 9.1(a)(iv) below; provided that the right to terminate this
Agreement under this Section 9.1(a)(ii) shall not be available to MLIM
Parent if (x) the nonfulfillment of the conditions to the obligation of
MLIM Parent to close set forth in Section 6.1 or 6.3 results from the
breach by MLIM Parent of any of its representations, warranties, covenants
or agreements contained in this Agreement or (y) the violation or breach
by BlackRock referred to in clause (B) of this Section 9.1(a)(ii) results
solely from the breach by MLIM Parent of any of its representations,
warranties, covenants or agreements contained in this Agreement;
(iii) by BlackRock if (A) a condition to the obligation of
BlackRock to close set forth in Section 6.1 or 6.2 cannot be satisfied at
or prior to the date set forth in Section 9.1(a)(iv) below or (B) there
has been a material breach of any representation, warranty, covenant or
agreement contained in this Agreement on the part of MLIM Parent and such
breach has not been cured within 60 Business Days (or, in the case of the
occurrence of a MLIM Material Adverse Effect, 30 Business Days) after
written notice to MLIM Parent (provided that no cure period shall be
required for a breach that by its nature cannot be cured) such that the
conditions set forth in Section 6.1 or 6.2 cannot be satisfied at or prior
to the date set forth in Section 9.1(a)(iv) below; provided that the right
to terminate this Agreement under this Section 9.1(a)(iii) shall not be
available to BlackRock if (x) the nonfulfillment of the conditions to the
obligation of BlackRock to close set forth in Section 6.1 or 6.2 results
from the breach by BlackRock of any of its representations, warranties,
covenants or agreements contained in this Agreement or (y) the violation
or breach by MLIM Parent referred to in clause (B) of this Section
9.1(a)(iii) results solely from the breach by BlackRock of any of its
representations, warranties, covenants or agreements contained in this
Agreement;
(iv) by MLIM Parent or BlackRock if the Closing has not occurred
on or before January 31, 2007; provided that the right to terminate this
Agreement under this Section 9.1(a)(iv) shall not be available to any
party whose failure to perform any covenant or obligation hereunder or
other breach has caused or resulted in the failure of the Closing to occur
on or before such date; or
(v) by MLIM Parent if the Board of Directors of BlackRock,
pursuant to the exercise of its fiduciary obligations, (A) shall have
determined not to hold the BlackRock Stockholders Meeting, or (B) shall
have changed its recommendation to BlackRock's stockholders regarding
approval of the issuance of the MLIM Consideration and the Merger.
(b) The termination of this Agreement shall be effectuated by the
delivery by the party terminating this Agreement to each other party of at
least two (2) Business Days' prior written notice of such termination. If this
Agreement so terminates, it shall become null and void and have no further
force or effect, except as provided in Section 9.2.
Section 9.2 Survival After Termination. If this Agreement is
terminated in accordance with Section 9.1 hereof and the Transactions
contemplated hereby are not consummated, this Agreement shall become void and
of no further force and effect, except for the provisions of Section 5.6,
Section 5.9 and this Section 9.2 and Article X. None of the parties hereto
shall have any liability in the event of a termination of this Agreement,
except to the extent that such termination results from the willful violation
by such party of its obligations under this Agreement.
ARTICLE X
MISCELLANEOUS
Section 10.1 Amendments; Extension; Waiver. This Agreement may not be
amended, altered or modified except by written instrument executed by each of
the parties. The failure by any party hereto to enforce at any time any of the
provisions of this Agreement shall in no way be construed to be a waiver of any
such provision nor in any way to affect the validity of this Agreement or any
part hereof or the right of such party thereafter to enforce each and every
such provision. No waiver of any breach of or non-compliance with this
Agreement shall be held to be a waiver of any other or subsequent breach or
non-compliance. Any waiver made by any party hereto in connection with this
Agreement shall not be valid unless agreed to in writing by such party.
Section 10.2 Entire Agreement. This Agreement, together with the
Schedules, Exhibits, certificates and lists referred to herein, and any
documents executed by the parties simultaneously herewith or pursuant thereto,
the Confidentiality Agreement and the Ancillary Agreements constitute the
entire agreement of the parties hereto with respect to the subject matter
hereof and supersedes all prior agreements and understandings, written and
oral, among the parties with respect to the subject matter hereof.
Section 10.3 Construction and Interpretation. When a reference is made
in this Agreement to Sections, Annexes, Exhibits or Schedules, such reference
shall be to a Section of or Annex, 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." The term "knowledge" of MLIM
Parent shall be deemed to mean the actual knowledge of any of the individuals
set forth in Exhibit 10.3-A or actual knowledge that would have been obtained
by any of such individuals after due inquiry of those persons that such
individuals would reasonably expect to have knowledge of the relevant subject
matter. The term "knowledge" of BlackRock shall be deemed to mean the actual
knowledge of any of the individuals set forth in Exhibit 10.3-B or actual
knowledge that would have been obtained by any of such individuals after due
inquiry of those persons that such individuals would reasonably expect to have
knowledge of the relevant subject matter. The representations and warranties of
the parties, and the right of any Person to indemnification or payments
hereunder, shall not be affected or deemed waived by reason of any
investigation made by or on behalf of any other party (including by any of
their advisors or representatives) or by reason of the fact that any party or
any of such advisors or representatives knew, or should have known, that such
representation or warranty is or might be inaccurate or that any fact, event or
circumstance had or had not occurred. The parties hereto have participated
jointly in the negotiation and drafting of this Agreement. In the event any
ambiguity or question of intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by all parties hereto, and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provision of this Agreement.
Section 10.4 Severability. Any term or provision of this Agreement
that 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.
Section 10.5 Notices. All notices and other communications hereunder
shall be in writing in the English language and shall be addressed as follows
(or at such other address for a party as shall be specified by like notice):
If to BlackRock, New BlackRock or BlackRock Merger Sub:
BlackRock, Inc.
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Ms. ▇▇▇▇▇ ▇▇▇▇▇▇
With copies to:
BlackRock, Inc.
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
If to MLIM Parent:
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., Inc.
▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
With copies to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
All such notices or communications shall be deemed to have been delivered and
received: (a) if delivered in person, on the day of such delivery, (b) if by
fax, on the day on which such fax was sent, provided that receipt is personally
confirmed by telephone (c) if by certified or registered mail (return receipt
requested), on the seventh Business Day after the mailing thereof or (d) if by
reputable overnight delivery service, on the second Business Day after the
sending thereof. Each notice, written communication, certificate, instrument
and other document required to be delivered under this Agreement shall be in
the English language, except to the extent that such notice, written
communication, certificate, instrument and other document is required by
Applicable Law to be in a language other than English.
Section 10.6 Binding Effect; Persons Benefiting; No Assignment. This
Agreement shall inure to the benefit of and be binding upon the parties hereto
and their respective successors and permitted assigns. Except as otherwise
provided herein (including as to Indemnified Parties), nothing in this
Agreement is intended or shall be construed to confer upon any Person other
than the parties hereto and their respective successors and permitted assigns
any right, remedy or claim under or by reason of this Agreement or any part
hereof. This Agreement may not be assigned by any of the parties hereto without
the prior written consent of each of the other parties hereto and any purported
assignment or other transfer without such consent shall be void and
unenforceable.
Section 10.7 Counterparts. This Agreement may be executed in two (2)
or more counterparts, each of which shall be deemed an original, but all of
which taken together shall constitute one and the same agreement, it being
understood that all of the parties need not sign the same counterpart.
Section 10.8 Specific Performance. The parties to this Agreement each
acknowledge that, in view of the uniqueness of the Business and the
Transactions, each party would not have an adequate remedy at law for money
damages in the event that any of the covenants to be performed after the
Closing have not been performed in accordance with their terms, and therefore
agree that the other parties shall be entitled to specific enforcement of the
terms hereof and any other equitable remedy to which such parties may be
entitled.
Section 10.9 Waiver of Punitive Damages. EACH PARTY HERETO AGREES TO
WAIVE ANY RIGHT TO SEEK PUNITIVE DAMAGES AS RELATED TO THE ENFORCEMENT OF THIS
AGREEMENT OR THE TRANSACTIONS.
Section 10.10 Governing Law. THIS AGREEMENT, THE LEGAL RELATIONS
BETWEEN THE PARTIES AND THE ADJUDICATION AND THE ENFORCEMENT THEREOF, SHALL BE
GOVERNED BY AND INTERPRETED AND CONSTRUED IN ACCORDANCE WITH THE SUBSTANTIVE
LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED
WHOLLY WITHIN THAT JURISDICTION, EXCEPT TO THE EXTENT THAT THE LAWS OF THE
STATE OF DELAWARE SHALL GOVERN THE MERGER.
Section 10.11 Consent to Jurisdiction. Each party to this Agreement,
by its execution hereof, (a) hereby irrevocably submits to the non-exclusive
jurisdiction of the State Courts of the State of New York, New York County or
the United States District Court located in the State of New York, New York
County for the purpose of any and all actions, suits or proceedings arising in
whole or in part out of, related to, based upon or in connection with this
Agreement or the subject matter hereof, (b) hereby waives to the extent not
prohibited by Applicable Law, and agrees not to assert, by way of motion, as a
defense or otherwise, in any such action, any claim that it is not subject
personally to the jurisdiction of the above-named courts, that its property is
exempt or immune from attachment or execution, that any such action brought in
one of the above-named courts should be dismissed on grounds of forum non
conveniens, should be transferred to any court other than one of the
above-named courts, or should be stayed by reason of the pendency of some other
proceeding in any other court other than one of the above-named courts, or that
this Agreement or the subject matter hereof may not be enforced in or by such
court and (c) hereby agrees not to commence any such action other than before
one of the above-named courts nor to make any motion or take any other action
seeking or intending to cause the transfer or removal of any such action to any
court other than one of the above-named courts whether on the grounds of
inconvenient forum or otherwise. Each party hereby (i) consents to service of
process in any such action in any manner permitted by New York law; (ii) agrees
that service of process made in accordance with clause (i) or made by
registered or certified mail, return receipt requested, at its address
specified pursuant to Section 10.5, shall constitute good and valid service of
process in any such action and (iii) waives and agrees not to assert (by way of
motion, as a defense, or otherwise) in any such action any claim that service
of process made in accordance with clause (i) or (ii) does not constitute good
and valid service of process.
[Remainder of page intentionally left blank.]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date first above written.
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO., INC.
By: /s/ E. ▇▇▇▇▇▇▇ ▇'▇▇▇▇
------------------------------------
Name: E. ▇▇▇▇▇▇▇ ▇'▇▇▇▇
Title: Chairman and Chief Executive
Officer
BLACKROCK, INC.
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Chairman and Chief Executive
Officer
NEW BOISE, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
BOISE MERGER SUB, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
Annex A
Defined Terms
For all purposes of this Agreement (other than as otherwise
defined or specified in any Exhibit or Schedule), the following terms shall
have the respective meanings set forth below in this Annex A (such definitions
to apply to both the singular and plural forms of the terms herein defined):
"12b-1 Plan" means any distribution plan adopted by a U.S.
Public Fund in accordance with Rule 12b-1 under the Investment Company Act.
"197 Intangibles" has the meaning set forth in Section
5.10(f).
"Accountant" has the meaning set forth in Section 5.17(d).
"Accounts" means the audited accounts of the MLIM Business
Entities for the twelve-month period ended on the Account Date.
"Account Date" means December 30, 2005.
"Adjusted Assets Under Management" as of any date means the
sum, for all Client accounts in question as of such date, of the amount,
expressed in U.S. dollars, of assets under management by such Person in such
account as of such date valued (a) for purposes of calculating the Base Revenue
Run-Rate, as of the Base Date in the same manner as provided for the
calculation of base investment management fees payable to such Person or an
Affiliate in respect of such account by the terms of the Investment Advisory
Arrangement applicable to such account and (b) for purposes of calculating the
Closing Revenue Run-Rate as of the Closing Measurement Date, at the amount
calculated pursuant to subsection (a) above but excluding any Client accounts
that are Contingent Accounts as of such date, (i) increased by the positive and
decreased by the negative excess of (A) additions and contributions (other than
reinvestments of distributions) actually funded to such account after the Base
Date and on or prior to the Closing Measurement Date over (B) terminations,
withdrawals, redemptions and repurchases actually funded out of such account
after the Base Date and prior to the Closing Measurement Date and (ii)
increased, with respect to any new account of such Person opened prior to the
Closing Measurement Date, by the amount of additions and contributions (net of
terminations, withdrawals, redemptions and repurchases) actually funded to such
account after the Base Date and on or prior to the Closing Measurement Date;
provided in each case that:
(I) additions and contributions shall be taken into
account only when actually funded, and withdrawals,
redemptions and repurchases shall be taken into account when
they are actually funded out of such account or, if earlier,
the date on which the Person in question receives notice
communicating an intention to withdraw any assets from or
terminate an existing account (unless such notice has been
revoked prior to the applicable date);
(II) any assets under management for any account for
which the Person in question or an Affiliate acts as
investment adviser and sub-adviser shall be counted only
once;
(III) any assets under management for any set of
accounts one of which invests in the other shall be counted
only once if the Person in question or an Affiliate acts as
investment adviser to both; and
(IV) the amount of any adjustment made pursuant to
subsection (b)(i) above for any account included in the Base
Revenue Run-Rate that has not been terminated or become a
Contingent Account shall be further adjusted by multiplying
such adjustment by a fraction the numerator of which is the
value of such account as of the Base Date and the denominator
of which is the value such account would have had as of the
Base Date if the assets in the account as of the Base Date
had been valued at the values therefor as of the Closing
Measurement Date.
"Adjustment Report" has the meaning set forth in Section
5.16(e).
"Advisers Act" means the Investment Advisers Act of 1940, as
amended, and the rules and regulations promulgated thereunder by the SEC.
"Affiliate" means any Person that directly or indirectly
through one or more intermediaries, Controls, is Controlled by, or is under
common Control with, the first Person.
"Affiliate Arrangement" means any BlackRock Affiliate
Arrangement or any MLIM Affiliate Arrangement, as the case may be.
"Agreement" means this Transaction Agreement, including the
Schedules and any Annexes and Exhibits hereto, as such may hereunder be amended
or restated from time to time.
"Allocation" has the meaning set forth in Section 8.10(a).
"Ancillary Agreements" means the Stockholder Agreement, the
BlackRock Distribution Agreement, the Transition Services Agreement and the
MLIM Parent Registration Rights Agreement.
"Applicable Date" has the meaning set forth in Section
4.8(a).
"Applicable Law" means any Law applicable to any of the
parties to this Agreement or the Ancillary Agreements or any of their
respective Affiliates, directors, officers, employees, properties or assets or,
if applicable to a party, any of the Funds.
"Assets" has the meaning set forth in Section 3.11.
"Assumed Benefit Plan" has the meaning set forth in Section
3.21(a).
"Balance Sheet Adjustment Amounts" means the Stockholder's
Equity Adjustment Amount and the Working Capital Adjustment Amount.
"Base Date" means December 31, 2005.
"Base Revenue Run Rate" means, for any Person, the Revenue
Run-Rate as of the Base Date.
"BlackRock" has the meaning set forth in the introductory
paragraph to this Agreement and includes any permitted successor or assign.
"BlackRock Affiliate Arrangement" has the meaning set forth
in Section 4.16(a).
"BlackRock Balance Sheet" has the meaning set forth in
Section 4.9.
"BlackRock Benefit Plan" has the meaning set forth in Section
4.13.
"BlackRock Broker Dealer Subsidiaries" has the meaning set
forth in Section 4.12(e).
"BlackRock Class A Common Stock" has the meaning set forth in
the recitals to this Agreement.
"BlackRock Class B Common Stock" has the meaning set forth in
the recitals to this Agreement.
"BlackRock Common Stock" has the meaning set forth in the
recitals to this Agreement.
"BlackRock Companies" means BlackRock and the Controlled
Affiliates of BlackRock.
"BlackRock Deductible" has the meaning set forth in Section
7.6.
"BlackRock Disclosure Letter" means the Schedule attached to
the Disclosure Letter delivered preamble to Art IV.
"BlackRock Distribution Agreement" means the Global
Distribution Agreement between New BlackRock and MLIM Parent in the form
attached hereto as Exhibit A-1.
"BlackRock Employee" means any individual who is, on the date
of this Agreement, an employee of any BlackRock Company.
"BlackRock Employment Contract" has the meaning set forth in
Section 4.13(a).
"BlackRock Financial Statements" has the meaning set forth in
Section 4.8(d).
"BlackRock Indemnified Party" has the meaning set forth in
the Section 7.2.
"BlackRock Investment Adviser Subsidiaries" has the meaning
set forth in Section 4.12(d).
"BlackRock Market Price" means the average of the volume
weighted sales prices per share of BlackRock Class A Common Stock as reported
on the consolidated transaction reporting system for securities traded on the
NYSE (as reported in Bloomberg Financial Markets or, if not reported thereby,
an authoritative source as the parties shall agree in writing) for the 10
consecutive full trading days ending on the trading day prior to the Closing
Date.
"BlackRock Material Adverse Effect" means any change, effect,
event, matter, occurrence or state of facts that (a) has a material adverse
effect on the business, condition (financial or otherwise), or assets and
properties of BlackRock, or (b) materially impairs the ability of BlackRock to
consummate the Transactions, other than, in the case of clause (a) or (b), any
change, effect, event, matter, occurrence or state of facts to the extent
resulting from (i) any change or development in economic or business conditions
in general or in the investment management industry in particular (including
any such change or development resulting from armed hostilities or terrorist
actions), (ii) any change in Law or GAAP or the enforcement thereof, (iii) any
adverse change in the assets under management in the business of the BlackRock
Companies if and to the extent such change is reflected in a reduction in the
Revenue Run-Rate between the Base Date and the calculation date of the Closing
Revenue Run-Rate, and (iv) the public announcement in and of itself of this
Agreement and the Transactions, except, in case of clause (i) or (ii), to the
extent that such change, effect, event, matter, occurrence or state of facts
has a materially disproportionate effect on the BlackRock, taken as a whole,
relative to Persons engaged in the investment management industry generally.
"BlackRock Merger Sub Common Stock" has the meaning set forth
in the recitals to this Agreement.
"BlackRock Party" has the meaning set forth in the
introductory paragraph to this Agreement.
"BlackRock Preferred Stock" has the meaning set forth in the
recitals to this Agreement.
"BlackRock Private Fund" has the meaning set forth in Section
4.12(h).
"BlackRock Public Fund" has the meaning set forth in Section
4.12(g).
"BlackRock Real Property Leases" has the meaning set forth in
Section 4.17.
"BlackRock Registration Statement" has the meaning set forth
in Section 5.15(a).
"BlackRock Savings Plan" has the meaning set forth in Section
5.14(c).
"BlackRock SEC Reports" has the meaning set forth in the
introductory paragraph of Article IV.
"BlackRock Shares" has the meaning set forth in the recitals
to this Agreement.
"BlackRock Stockholders Meeting" has the meaning set forth in
Section 5.15(d).
"Business Day" means a day other than a Saturday, Sunday or
other day on which commercial banks in New York, New York are authorized or
required by law to close.
"Cap" has the meaning set forth in Section 7.4.
"Certificate of Merger" has the meaning set forth in Section
1.1(b).
"Client" of a Person means any other Person to which such
Person or any of its Controlled Affiliates provides investment management or
investment advisory services, including any sub-advisory services, relating to
securities or other financial instruments, commodities, real estate or any
other type of asset, pursuant to an Investment Advisory Arrangement.
"Closing" has the meaning set forth in Section 1.3.
"Closing Date" has the meaning set forth in Section 1.3.
"Closing Measurement Date" means such day as close as
practicable, but in any event not more than ten calendar days prior to, the
scheduled Closing Date as to which MLIM Parent and BlackRock shall agree.
"Closing Revenue Run-Rate" means, for any Person or any
Specified Client Accounts, the Revenue Run-Rate for such Person as of the
Closing Measurement Date.
"Code" means the United States Internal Revenue Code of 1986,
as amended. "Common Stock Cap" has the meaning set forth in
Section 1.2(b).
"Confidentiality Agreement" means the confidentiality
agreement, by and between MLIM Parent and BlackRock, executed and delivered
prior to the date of this Agreement.
"Consent" means any consent, approval, authorization, waiver,
permit, license, grant, agreement, exemption or order of, or registration,
declaration or filing with, any Person, including any Governmental Authority,
that is required in connection with (a) the execution and delivery by
BlackRock, PNC, MLIM Parent and the MLIM Companies of this Agreement or any
Ancillary Agreement or (b) the consummation by BlackRock, PNC, MLIM Parent and
the MLIM Companies of the Transactions.
"Contingent Account" means, in reference to the Client
account of any Person as of the Closing Measurement Date, (i) the portion
(which may be 100%) of any Client account of such Person as to which the Client
or any representative of the Client has indicated orally or in writing through
any statement, notice or other communication on or prior to the Closing
Measurement Date that such portion is or will be under review for possible
withdrawal, redemption or termination and as to which the Client or such
representative has not withdrawn such indication and (ii) any Client account of
such Person which is required by Applicable Law or the terms of the Investment
Advisory Arrangement applicable thereto, in order for such Person to continue
providing investment advisory services to such account after the Closing, to
provide consent to the Transaction, to enter into a new Investment Advisory
Arrangement or to obtain investor approval of a new Investment Advisory
Arrangement in order for such new Investment Advisory Arrangement to remain in
effect beyond a temporary period and which, as of the Closing Measurement Date,
has not granted such consent (which, in the case of a negative consent to the
extent expressly permitted by this Agreement or otherwise agreed by MLIM Parent
and BlackRock, will be deemed granted if the condition set forth in Section
5.8(b)(ii)(B) or Section 5.19(b) (ii)(B), as applicable, is met with respect to
the relevant Investment Advisory Arrangement), entered into a new Investment
Advisory Arrangement or obtained such investor approval, as the case may be.
"Continuing Employee" has the meaning set forth in Section
5.14(a).
"Contract" means, whether written or oral, any loan
agreement, indenture, letter of credit (including related letter of credit
application and reimbursement obligation), mortgage, security agreement, pledge
agreement, deed of trust, bond, note, guarantee, surety obligation, warrantee,
license, franchise, permit, power of attorney, purchase order, lease, and other
agreement, contract, instrument, obligation, offer, commitment, arrangement and
understanding, in each case as amended, supplemented, waived or otherwise
modified.
"Control" means the 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 (and "Controlled" shall have a correlative meaning). For purposes of
this definition, a general partner or managing member of a Person shall always
be considered to Control such Person; provided, however, that a Person shall
not be treated as having control over any Fund to which it provides services
unless it has a proprietary economic interest exceeding 25% of the equity
interest in such Fund.
"DCL" means dual consolidated loss as defined in Section
1503(d)(2) of the Code and Treasury Regulation Section 1.1503-2(c)(5).
"Deductible" has the meaning set forth in Section 7.3.
"DGCL" has the meaning set forth in Section 1.1(a).
"Dispute Notice" has the meaning set forth in Section
5.16(c).
"Distribution Agreement" means any Contract for the
distribution or sales of shares or units of a Fund.
"Effective Time" has the meaning set forth in Section 1.1(b).
"Environmental Law" means any Law, code, license, permit,
authorization, approval, consent, common law, legal doctrine, requirement or
agreement with any Governmental Authority, relating to (i) the protection,
preservation or restoration of the environment (including air, water, vapor,
surface water, groundwater, drinking water supply, surface land, subsurface
land, plant and animal life or any other natural resource), or to human health
or safety, or (ii) the exposure to, or the use, storage, recycling, treatment,
generation, transportation, processing, handling, labeling, production, release
or disposal of hazardous substances, in each case as amended and as now in
effect.
"Equity Right" has the meaning set forth in Section 3.2(b).
"ERISA" means the U.S. Employee Retirement Income Security
Act of 1974, as amended, and the rules, regulations and class exemptions of the
U.S. Department of Labor thereunder.
"ERISA Client" has the meaning set forth in Section 3.19(a).
"Estimated Closing Balance Sheet" has the meaning set forth
in Section 5.16(b).
"Estimated Stockholder's Equity Adjustment" means the excess,
if any, of (a) the Stockholder's Equity Target over (b) the amount of
Stockholder's Equity as set forth in the Estimated Closing Balance Sheet.
"Estimated Working Capital Adjustment" means the excess, if
any, of (a) the Working Capital Target over (b) the amount of Working Capital
as set forth in the Estimated Closing Balance Sheet.
"Exchange Act" means the United States Securities Exchange
Act of 1934, as amended, and the rules and regulations promulgated thereunder
by the SEC.
"Fiduciary Requirement" means any requirement imposed by
Applicable Law or an Investment Advisory Arrangement regarding the services
performed for a Client pursuant to such Investment Advisory Arrangement
including but not limited to compliance with investment guidelines.
"Filings" has the meaning set forth in Section 3.16(h).
"Final Closing Balance Sheet" has the meaning set forth in
Section 5.16(d).
"Former BlackRock Employee" means any individual who is, on
the date of this Agreement, a former employee, officer, director or consultant
of a BlackRock Company.
"Former MLIM Employee" means any individual who is, on the
date of this Agreement, a former employee, officer, director or consultant in
respect of the MLIM Business or any MLIM Business Entity that, after giving
effect to the MLIM Restructuring, will be a MLIM Transferred Entity or a
Controlled Affiliate of a MLIM Transferred Entity.
"Fully Diluted" has the meaning ascribed to the term
"Diluted" in Statement of Financial Accounting Standards No. 123.
"Fund" means any Public Fund or Private Fund. For the
purposes of Article III, the term Fund shall not include any MLIM Sub-Advised
Fund.
"Fund Board" means the board of directors or trustees (or
Persons performing similar functions) of a Fund.
"Fund Financial Statements" means (a) with respect to each
Public Fund, the audited financial statements of each such Public Fund for the
three most recently completed fiscal years (or, if a shorter period, since the
inception of such Public Fund), together with reports on such year-end
statements by each such Fund's independent public accountants, including, in
each case, for each investment portfolio thereof, a statement of net assets or
statement of assets and liabilities and schedule of investments, a statement of
operations and a statement of changes in net assets and (b) with respect to
each Private Fund, the financial statements of each such Private Fund for the
three most recently completed fiscal years (or, if a shorter period, since the
inception of such Private Fund).
"GAAP" shall mean U.S. generally accepted accounting
principles in effect at the time any applicable financial statements were
prepared or any act requiring the application of GAAP was performed.
"Governmental Approval" means any Consent of, with or to any
Governmental Authority.
"Governmental Authority" means any nation, state, territory,
province, county, city or other unit or subdivision thereof or any entity,
authority, agency, department, board, commission, instrumentality, court or
other judicial body authorized on behalf of any of the foregoing to exercise
legislative, judicial, regulatory or administrative functions of or pertaining
to government, and any Self-Regulatory Organization.
"Group" means a "group" as defined under Section 13(d) of the
Exchange Act.
"HRMC Agreement" has the meaning set forth in Section
5.10(d)(i).
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements
Act of 1976, as amended, and the rules and regulations thereunder.
"Indebtedness" means, without duplication, (a) all
indebtedness for borrowed money or for the deferred purchase price of property
or services (other than current trade liabilities incurred in the ordinary
course of business and payable in accordance with customary practices), whether
or not evidenced by a writing, (b) any other indebtedness that is evidenced by
a note, bond, debenture, draft or similar instrument, (c) all obligations under
financing or capital leases, (d) all obligations in respect of acceptances
issued or created, (e) notes payable and drafts accepted representing
extensions of credit, (f) all liabilities for purchase price, lease or similar
payments secured by any Lien on any property, (g) letters of credit and any
other agreements relating to the borrowing of money or extension of credit and
(h) any guarantee of any of the foregoing obligations.
"Indemnified Party" has the meaning set forth in Section
7.10(a).
"Indemnifying Party" has the meaning set forth in Section
7.10(a).
"Information Technology" means electronic business processes,
data processing, information, record keeping, communications,
telecommunications and computer systems (including all computer hardware and
equipment, programs, software, databases, and firmware).
"Intellectual Property" means all material (a) trademarks,
service marks, trade names, trade dress, domain names, web sites, copyrights,
proprietary models, processes, formulas, software (other than off-the-shelf
shrink wrapped software) and databases, client lists and similar rights,
including registrations and applications to register or renew the registration
of any of the foregoing with any Governmental Authority in any country and (b)
patent and patent applications, inventions, processes, designs, formulae, trade
secrets, know-how, computer software, data and documentation and any other
similar intellectual property rights, tangible embodiments of any of the
foregoing (in any medium including electronic media), and licenses of any of
the foregoing.
"Internal Controls" has the meaning set forth in Section
3.8(c).
"Investment Advisory Arrangement" means a Contract under
which a Person acts as an investment adviser or sub-adviser to, or manages any
investment or trading account of, any Client.
"Investment Company Act" means the Investment Company Act of
1940, as amended, and the rules and regulations promulgated thereunder by the
SEC.
"Law" means any domestic or foreign federal or state statute,
law, ordinance, rule, administrative code, administrative interpretation,
regulation, order, writ, injunction, directive, judgment, decree, policy,
ordinance, decision, guideline or other requirement (including those of the SEC
and any Self-Regulatory Organization).
"Lease" means any of the real estate leases, subleases,
licenses or similar agreements pursuant to which a Person occupies any real
property, together with all amendments, modifications, supplements and/or
extensions thereof.
"LIBOR" means, with respect to any date of determination, the
rate per annum (rounded upwards, if necessary, to the nearest one hundredth
(1/100) of one percent (1%)) appearing on Telerate Page 3750 (or any successor
page) as the London interbank offered rate for deposits in dollars at
approximately 11:00 a.m. (London time) two Business Days prior to such date for
a term of one month. If for any reason such rate is not available, the term
"LIBOR" shall mean, with respect to any date of determination, the rate per
annum (rounded upwards, if necessary, to the nearest one hundredth (1/100) of
one percent (1%)) appearing on Reuters Screen LIBO Page as the London interbank
offered rate for deposits in dollars at approximately 11:00 a.m. (London time)
two Business Days prior to such date for a term of one month; provided,
however, if more than one rate is specified on Reuters Screen LIBO Page, the
applicable rate shall be the arithmetic mean of all such rates.
"License Agreement" means a license for the benefit of
BlackRock and its Controlled Affiliates consistent with the principles set
forth in Exhibit A-2.
"Lien" means, whether arising under any Contract or
otherwise, any debts, claims, security interests, liens, encumbrances, pledges,
mortgages, retention agreements, hypothecations, rights of others, assessments,
restrictions, voting trust agreements, options, rights of first offer, proxies,
title defects, and charges or other restrictions or limitations of any nature
whatsoever other than restrictions on transfer imposed by Applicable Law and
any related agreements and other than the Stockholder Agreement.
"Litigation" means any action, cause of action, claim,
demand, suit, proceeding, citation, summons, subpoena, inquiry or investigation
of any nature, civil, criminal, regulatory or otherwise, in law or in equity,
pending or threatened, by or before any court, tribunal, arbitrator or other
Governmental Authority.
"Loss" means any liability, damage, claim, demand,
obligation, loss, fine, cost, expense, royalty, or deficiency (whether known,
unknown, disclosed, undisclosed, absolute, contingent, accrued or otherwise,
whether or not resulting from Third-Party Claims), including interest and
penalties with respect thereto and reasonable out-of-pocket expenses and
reasonable attorneys' and accountants' fees and expenses incurred in the
investigation or defense of any of the same or in asserting, preserving or
enforcing any of the respective rights in connection with or under this
Agreement or under any Ancillary Agreement.
"Material Contract" means any Contract to which any MLIM
Business Entity or any MLIM Transferor is a party or by which it or any of its
properties or assets or any properties or assets of the Business is bound of
the type listed below:
(a) any License Agreement material to the MLIM Business;
(b) any Lease material to the MLIM Business;
(c) any Contract relating to any Indebtedness in excess of
$10,000,000, other than (i) any mortgage or similar Indebtedness secured by
specific property owned by or on behalf of a Client and (ii) any intercompany
Indebtedness;
(d) other than Rule 12b-1 plans or service fees, any joint
venture, strategic alliance, exclusive distribution, partnership or similar
Contract involving a sharing of profits or expenses or payments based on
revenues, profits or assets under management of any MLIM Business Entity or any
MLIM Fund that accounts for revenue to the MLIM Business in excess of
$5,000,000 on an annual (or annualized) basis;
(e) other than in the case of a Contract relating to the
acquisition or sale of any real property by a Fund or other Person on behalf of
a Client, stock purchase agreements, asset purchase agreements and other
acquisition or divestiture agreements;
(f) any Affiliate Arrangement;
(g) any Contract providing for future payments by a MLIM
Business Entity or the acceleration or vesting of payments by a MLIM Business
Entity, in each case in an aggregate amount in excess of $10,000,000 that will
be triggered, in whole or in part, by the consummation of the Transactions;
(h) any Contract that cannot be terminated by a MLIM Business
Entity or an MLIM Fund without the incurrence of any payment or other economic
penalty or cost in excess of $5,000,000 within 60 days of the date of
termination; and
(i) any other Contract that is material to the MLIM Business.
"Merger" has the meaning set forth in Section 1.1(a).
"Minor Losses" has the meaning set forth in Section 7.2.
"MLIHL" means ML Invest Holdings Limited.
"MLIM Affiliate Arrangement" has the meaning set forth in
Section 3.15(a).
"MLIM Balance Sheet" has the meaning set forth in Section
3.8(g).
"MLIM Business" means the business that is conducted by the
MLIM Business Entities and their Subsidiaries and is described under the
caption "MLIM Investment Managers" on page 11 of MLIM Parent's Annual Report on
Form 10K for the fiscal year ended December 31, 2004 filed with the SEC, with
the results of operations and financial position of such businesses being
reflected in the MLIM Financial Statements.
"MLIM Business Entities" means each of the MLIM Companies
that conducts any non-de minimis portion of the MLIM Business, provided that
for the purposes of Section 3.20 and Article VIII, MLIM Business Entities means
each of the MLIM Companies that conducts any portion of the MLIM Business. For
the purposes of Article III (other than Section 3.20), the term "MLIM Business
Entities" includes each MLIM Transferor.
"MLIM Company" means MLIM Parent and each Controlled
Affiliate thereof.
"MLIM Consideration" has the meaning set forth in Section
1.2(b).
"MLIM Contribution" has the meaning set forth in Section
1.2(a).
"MLIM Controlled Affiliate" means a Controlled Affiliate of
MLIM Parent.
"MLIM Employee" means any individual who is, on the date of
this Agreement, an employee of MLIM Business.
"MLIM Employment Agreement" has the meaning set forth in
Section 3.21(a).
"MLIM Financial Statement Principles" means the principles
and policies set forth in Exhibit A-4.
"MLIM Financial Statements" has the meaning set forth in
Section 3.8.
"MLIM Fund" means any MLIM Public Fund or any MLIM Private
Fund.
"MLIM Material Adverse Effect" means any change, effect,
event, matter, occurrence or state of facts that (a) has a material adverse
effect on the business, condition (financial or otherwise), or assets and
properties of the MLIM Business, taken as a whole, or (b) materially impairs
the ability of MLIM Parent to consummate the Transactions, other than, in the
case of clause (a) or (b), any change, effect, event, matter, occurrence or
state of facts to the extent resulting from (i) any change or development in
economic or business conditions in general, or in the investment management
industry in particular (including any such change or development resulting from
armed hostilities or terrorist actions), (ii) any change in Law or GAAP or the
enforcement thereof, (iii) any adverse change in the assets under management in
the MLIM Business if and to the extent such change is fully reflected in a
reduction in the Revenue Run-Rate between the Base Date and the calculation
date of the Closing Revenue Run-Rate, (iv) the public announcement in and of
itself of this Agreement and the Transactions, and (v) any Proceeding or other
matter for which, after the Closing, the BlackRock Indemnified Parties would be
entitled to indemnification pursuant to Section 7.2(d), except, in case of
clause (i) or (ii), to the extent that such change, effect, event, matter,
occurrence or state of facts has a materially disproportionate effect on the
MLIM Business, taken as a whole, relative to Persons engaged in the investment
management industry generally.
"MLIM Parent" has the meaning set forth in the introductory
paragraph to this Agreement.
"MLIM Parent Benefit Plan" has the meaning set forth in
Section 3.21(a).
"MLIM Parent Disclosure Letter" has the meaning set forth in
the preamble to Article III.
"MLIM Parent Registration Rights Agreement" means the
Registration Rights Agreement, between MLIM Parent and BlackRock, which shall
contain terms and conditions consistent with the principles set forth in
Exhibit A-3.
"MLIM Private Fund" means any pooled investment vehicle for
which a MLIM Company acts as investment advisor, general partner, managing
member, manager or sponsor that is not registered as such with any Governmental
Authority.
"MLIM Public Fund" means any pooled investment vehicle
(including each portfolio or series thereof, if any) for which a MLIM Company
acts as investment adviser, investment sub-adviser, sponsor or manager and
which is registered as such with any Governmental Authority.
"MLIM Restructuring" has the meaning set forth in Section
5.18.
"MLIM Sub-Advised Fund" means any MLIM Private Fund or MLIM
Public Fund other than any Fund sponsored or managed by any MLIM Company.
"MLIM Transferred Entities" means the Subsidiaries of MLIM
Parent to which MLIM Parent assigns, conveys, transfers and delivers all of the
Assets in accordance with Exhibit 5.18 hereto.
"MLIM Transferred Interests" means all of the issued and
outstanding capital stock (or other equity interest) of the MLIM Transferred
Entities.
"MLIM Transferors" means each MLIM Company that is
contributing assets (including interests of certain MLIM Controlled Affiliates)
or liabilities to the MLIM Transferred Entities in connection with the MLIM
Restructuring.
"MLIM VAT Group" has the meaning set forth in Section
8.11(a).
"Negative Consent Notice" has the meaning set forth in
Section 5.8(b)(ii).
"New BlackRock Common Stock" has the meaning set forth in the
recitals to this Agreement.
"New BlackRock Preferred Stock" means Preferred Stock, par
value $0.01 per share of, New BlackRock.
"New BlackRock Series A Preferred Stock" has the meaning set
forth in Section 1.2(b).
"New BlackRock Shares" means the New BlackRock Common Stock
and the New BlackRock Preferred Stock.
"New Plan" has the meaning set forth in Section 5.14(b).
"Non-Affiliate Interest" has the meaning set forth in Section
3.3(a).
"Notice" has the meaning set forth in Section 5.8(b)(i).
"NYSE" means the New York Stock Exchange.
"Organizational Documents" means, with respect to any Person
that is a corporation, its articles or certificate of incorporation or
memorandum and articles of association, as the case may be, and bylaws; with
respect to any Person that is a partnership, its certificate of partnership and
partnership agreement; with respect to any Person that is a limited liability
company, its certificate of formation and limited liability company or
operating agreement; with respect to any Person that is a trust or other
entity, its declaration or agreement of trust or constituent document; and with
respect to any other Person, its comparable organizational documents, in each
case, as has been amended or restated.
"Payee Party" has the meaning set forth in Section 7.13.
"Payor Party" has the meaning set forth in Section 7.13.
"Permits" has the meaning set forth in Section 3.16(b).
"Permitted Liens" means all Liens that are:
(a) for Taxes or assessments that are not yet due and payable
or which are being contested in good faith and by appropriate proceedings and
for which adequate reserves have been established on BlackRock's and its
Subsidiaries' books and records in accordance with GAAP;
(b) Liens or pledges to secure payments of workmen's
compensation and other payments, unemployment and other insurance, old-age
pensions or other social security obligations, or the performance of bids,
tenders, leases, contracts, public or statutory obligations, surety, stay or
appeal bonds, or other similar obligations arising in the ordinary course of
business, and in each case for which adequate reserves have been established on
a Person's books and records in accordance with GAAP;
(c) workmen's, repairmen's, warehousemen's, vendors',
mechanics' or carriers' Liens or other similar Liens arising in the ordinary
course of business and securing sums that are not past due, or deposits or
pledges to obtain the release of any such Liens, and in each case for which
adequate reserves have been established on a Person's books and records in
accordance with GAAP;
(d) statutory landlords' Liens under Leases to which a Person
or a Controlled Affiliate of such Person is a party;
(e) zoning restrictions, easements, rights of way, licenses
and restrictions on the use of real property, minor irregularities or
imperfections in title thereto and other minor encumbrances in property that do
not materially impair the use of such property in the normal operation of the
business or the value of such property for the purpose of such business; and
(f) Liens created by or consented to in writing by, in the
case of a Lien to which BlackRock or a BlackRock Controlled Affiliate is
subject, MLIM Parent and, in the case of a Lien to which a MLIM Business Entity
is subject, BlackRock.
"Person" means any natural person or any firm, partnership,
limited liability partnership, association, corporation, limited liability
company, joint venture, trust, business trust, sole proprietorship,
Governmental Authority or other entity or any division thereof.
"Plan" means each material bonus, deferred compensation,
material incentive compensation, stock purchase, stock option, stock
appreciation right or other stock-based incentive, severance,
change-in-control, or termination pay, hospitalization or other medical,
disability, life or other insurance, supplemental unemployment benefits,
profit-sharing, pension, or retirement plan, program, agreement or arrangement
and each other material employee benefit plan, program, agreement or
arrangement, sponsored, maintained or contributed to or required to be
contributed to by MLIM Parent or BlackRock or any Controlled Affiliate for the
benefit of any MLIM Employee or BlackRock Employee or former employee with
respect to services to either company or any of the Subsidiaries of either
company.
"PNC" has the meaning set forth in the recitals to this
Agreement.
"Private Fund" means a MLIM Private Fund or a BlackRock
Private Fund, as the case may be.
"Proceeding" means any action, cause of action, arbitration,
claim, demand, suit, proceeding, citation, summons, subpoena, examination,
audit, review, inquiry or investigation of any nature, civil, criminal,
regulatory or otherwise, in law or in equity, pending or threatened, by or
before any court, tribunal, arbitrator or other Governmental Authority.
"Proposed Allocation" has the meaning set forth in Section
8.10(b).
"Public Fund" means a MLIM Public Fund or a BlackRock Public
Fund, as the case may be.
"Public Fund Board" means the board of directors or trustees
(or Persons performing similar functions) of a Public Fund.
"Quorum Failure" has the meaning set forth in Section
5.8(a)(ii).
"Regulatory Requirement" means any Law that is primarily
related to or primarily applicable to the business, products, services,
operation, financial condition, ownership, supervision or regulation of
brokers, dealers, commodity pool operators, commodity trading advisors, futures
commission merchants, insurance companies or agents, real estate brokers, real
estate property managers, variable annuities investment companies, investment
companies, banks, investment advisers, trust companies, transfer agents,
securities information processors, clearing agencies, clearing corporations or
securities depositories or any other financial services business or Persons
engaged therein, including, for the avoidance of doubt, any such Law to which
any financial services business included in the MLIM Business or the business
of BlackRock is or has at anytime in the past been subject.
"Required BlackRock Stockholder Vote" has the meaning set
forth in Section 5.15(a).
"Resolution Date" has the meaning set forth in Section
5.16(f).
"Resolution Period" has the meaning set forth in Section
5.16(c).
"Revenue Run-Rate" means, as of any date for any Person, the
aggregate annualized investment advisory, subadvisory, administration, sub- or
co-administration, shareholder servicing and 12b-1 Plan or similar fees
computed primarily by reference to assets under management that are payable to
such Person or an Affiliate (limited in respect of the MLIM Companies and their
Controlled Affiliates to the MLIM Companies and such Controlled Affiliates and
in respect of BlackRock and its Controlled Affiliates to BlackRock and such
Controlled Affiliates) in respect of all Client accounts as to which such
Person provides any of the foregoing services, determined by multiplying the
Adjusted Assets Under Management for each such account as of such date by the
applicable annual fee rate for such account as of such date and, in the case of
any Person that is not a wholly-owned Subsidiary of a MLIM Company or
BlackRock, as the case may be, by multiplying the foregoing product by the
direct and indirect percentage participation of a MLIM Company or BlackRock, as
the case may be, in the revenues or income, as applicable, of such Person. For
purposes of this definition, the "applicable annual fee rate" for each account
shall not include the effect of any performance-based fees or adjustments
thereto or any extraordinary revenue items, and shall be reduced to take
account of any then applicable fee waiver, expense reimbursement or rebate, or
any reallowance of administration or sub- or co-administration fees,
shareholder servicing, 12b-1 Plan or other such fees to any Person in
connection with such account. For the purposes of this definition, the term
Person shall be deemed to include the MLIM Business.
"Review Period" has the meaning set forth in Section 5.16(c).
"▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act" means the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002, as
amended, and any Law enacted or promulgated pursuant or relating thereto.
"SEC" means the United States Securities and Exchange
Commission.
"Securities Act" means the United States Securities Act of
1933, as amended, and the rules and regulations promulgated thereunder by the
SEC.
"Self-Regulatory Organization" means the National Association
of Securities Dealers, Inc., each national securities exchange in the United
States and each other board or body, whether United States or foreign, that is
charged with the supervision or regulation of brokers, dealers, commodity pool
operators, commodity trading advisors, futures commission merchants, securities
underwriting or trading, stock exchanges, commodities exchanges, insurance
companies or agents, investment companies or investment advisers, or to the
jurisdiction of which any MLIM Business Entity, any Controlled Affiliate of a
MLIM Parent, any of its Controlled Affiliates or any MLIM Fund is subject.
"Specified Provisions" has the meaning set forth in Section
7.1(a).
"Specified Rate" means LIBOR plus 1.0% per annum.
"Stockholder Agreement" has the meaning set forth in the
recitals to this Agreement.
"Straddle Period" shall mean any Tax period beginning before
and ending after the Closing Date.
"Subsidiary" of a Person means an Affiliate of such Person of
which 50% or more of the voting stock (or of any general partnership or other
voting or controlling equity interest in the case of a Person that is not a
corporation) is beneficially owned by the Person directly or indirectly through
one or more other Persons.
"Surviving Entity" has the meaning set forth in Section
1.1(a).
"Tax" means any and all federal, state, local or foreign
income, gross receipts, property, sales, use, license, franchise, employment,
payroll, premium, withholding, alternative or added minimum, ad valorem,
transfer, registration, social security, workers' compensation or net worth,
value added, consumption, windfall or other profits, capital stock,
unemployment excise tax, any combination or admixture of such Taxes or any
other tax, custom, duty, governmental fee or other like assessment or charge of
any kind whatsoever and however named (including all interest and penalties and
additions thereto), including any such amounts due as a result of being a
member of a consolidated, combined or unitary group, by contract or similar
arrangement or as a result of being related to another Person, whether as a
primary obligor or secondary obligor, jointly liable or not, or as a successor
or not.
"Tax Certificate" has the meaning set forth in Section
5.17(c).
"Tax Claim" has the meaning set forth in Section 8.2(a).
"Tax Indemnity Payment" has the meaning set forth in Section
8.1(c).
"Tax Opinion" has the meaning set forth in Section 6.1(e).
"Tax Return" means any return, report or similar statement
required to be filed with respect to any Tax (including any attached
schedules), including any information return, claim for refund, amended return
or declaration of estimated Tax.
"Third Party" has the meaning set forth in Section 8.2(d).
"Third-Party Claim" has the meaning set forth in Section
7.10(b)(i).
"Transaction Expenses" means all out-of-pocket expenses
(including all fees and expenses of counsel, accountants, investment bankers,
experts and consultants to a party hereto and its Affiliates) incurred by a
party or on its behalf in connection with or related to the authorization,
preparation, negotiation, execution and performance of this Agreement, the
Ancillary Agreements and the Transactions.
"Transactions" means the transactions contemplated by this
Agreement and the Ancillary Agreements.
"Transfer" means any direct or indirect sale, lease,
assignment, pledge, hypothecation, encumbrance, disposition, transfer, gift or
attempt to create or grant a security interest in any property or contract
right or any interest therein or portion thereof, whether voluntary or
involuntary, by operation of law or otherwise, and includes any sale or other
disposition in any one transaction or series of transactions (whether or not
related).
"Transfer Taxes" shall mean all sales, use, privilege,
transfer, documentary, gains, stamp, duties, recording and similar Taxes and
fees (including any penalties, interest or additions thereto) imposed upon any
party incurred in connection with the transactions contemplated by this
Agreement.
"Transition Services Agreement" means the Transition Services
Agreement among BlackRock, MLIM Parent and certain MLIM Controlled Affiliates,
containing the terms and conditions set forth on the Summary of Terms attached
hereto as Exhibit A-5.
"Treasury Regulation" shall mean the final and temporary
federal income tax regulations promulgated under the Code, as the same may be
amended hereafter from time to time.
"UK Company" mean MLIM Group Limited and each MLIM Business
Entity which is resident in the UK for tax purposes.
"UK Entity" means each MLIM Affiliate or any of its
Controlled Affiliates organized in the United Kingdom or any non-domestic
branch or representative office, wherever located, of any MLIM Affiliate
organized in the United Kingdom wherever located in existence on the Closing
Date and transferred to New BlackRock pursuant to the MLIM Contribution.
"U.S. BlackRock Public Fund Board" shall mean the board of
directors, trustees, managers or other similar governing board of a U.S.
BlackRock Public Fund.
"U.S. MLIM Public Fund Board" shall mean the board of
directors, trustees, managers or other similar governing board of a U.S. MLIM
Public Fund.
"Valuation Expert" has the meaning set forth in Section
8.10(b)(ii).
"VAT" means such Tax as may be levied in accordance with (but
subject to derogations from) the European Directive 77/338/EEC.
"Wire Transfer" means a payment in immediately available
funds by wire transfer in lawful money of the United States of America, to such
account or accounts as shall have been designated by notice to the paying
party.
FORM OF
CERTIFICATE OF THE DESIGNATIONS,
POWERS, PREFERENCES AND RIGHTS
OF
SERIES A CONVERTIBLE PARTICIPATING PREFERRED STOCK
OF
NEW BOISE, INC.
(Pursuant to Section 151 of the
Delaware General Corporation Law)
New Boise, Inc. a Delaware corporation (the "Corporation"), hereby
certifies that the following resolution was adopted by the Board of Directors
of the Corporation:
RESOLVED, that pursuant to the authority expressly granted to and
vested in the Board of Directors of the Corporation (the "Board of Directors")
by the provisions of the Amended and Restated Certificate of Incorporation of
the Corporation (the "Certificate of Incorporation"), there is hereby created,
out of the 500,000,000 shares of preferred stock, par value $0.01 per share, of
the Corporation authorized in Article Fourth of the Certificate of
Incorporation (the "Preferred Stock"), a series of the Preferred Stock
consisting of [ ] shares, which series shall have the following powers,
designations, preferences and relative, participating, optional or other
rights, and the following qualifications, limitations and restrictions (in
addition to any powers, designations, preferences and relative, participating,
optional or other rights, and any qualifications, limitations and restrictions,
set forth in the Certificate of Incorporation which are applicable to the
Preferred Stock):
Section 1. Designation of Amount.
The shares of Preferred Stock created hereby shall be designated the
"Series A Convertible Participating Preferred Stock" (the "Series A Preferred
Stock") and the authorized number of shares constituting such series shall be
[ ].
Section 2. Dividends, Etc.
(a) In the event any dividends are declared or paid or any other
distribution is made on or with respect to the Common Stock of the Corporation,
the holder of each share of Series A Preferred Stock as of the record date
established by the Board of Directors for such dividend or distribution on the
Common Stock shall be entitled to receive dividends in an amount equal to the
amount of the dividends or distribution that such holder would have received
had the holder held one share of Common Stock as of the date immediately prior
to the record date for such dividend or distribution on the Common Stock, such
dividends to be payable on the same payment date established by the Board of
Directors for the payment of such dividend or distribution on the Common Stock;
provided, however, that such dividend shall be payable, at the option of the
holder of each share of Series A Preferred Stock, (i) in a number of shares of
Common Stock having a Fair Market Value on the date of payment of such dividend
equal to the aggregate amount of such cash dividends otherwise payable to such
holder on such date, with cash being paid in lieu of fractional shares of
Common Stock or (ii) in an amount of cash equal to the Fair Market Value of
such shares of Common Stock or (iii) in any combination of the foregoing;
provided, further, that if the election by any holder of Series A Preferred
Stock to receive Common Stock in respect of any dividend or distribution would
result in such holder and its Affiliates Beneficially Owning in excess of 49.8
percent of the Total Voting Power, then such holder shall receive cash to the
extent of such excess. The record date for any such dividend shall be the
record date for the applicable dividend or distribution on the Common Stock,
and any such dividends shall be payable to the Persons in whose name the Series
A Preferred Stock is registered at the close of business on the applicable
record date.
(b) No dividend shall be paid or declared on any share of Common
Stock, unless a dividend, payable in the same consideration and manner, is
simultaneously paid or declared, as the case may be, on each share of Series A
Preferred Stock in an amount determined as set forth above. For purposes
hereof, the term "dividends" shall include any pro rata distribution by the
Corporation of cash, property, securities (including, but not limited to,
rights, warrants or options) or other property or assets to the holders of the
Common Stock, whether or not paid out of capital, surplus or earnings, other
than a distribution upon liquidation of the Corporation in accordance with
Section 3 hereof.
(c) No subdivision, combination, consolidation or reclassification
shall be effected with respect to the Common Stock unless a proportionate
subdivision, combination, consolidation or reclassification, effected in the
same manner, is simultaneously effected with respect to each share of Series A
Preferred Stock, and no subdivision, combination, consolidation or
reclassification shall be effected with respect to the Series A Preferred Stock
unless a proportionate subdivision, combination, consolidation or
reclassification, effected in the same manner, is simultaneously effected with
respect to each share of Common Stock.
(d) Prior to declaring any dividend or making any distribution on or
with respect to shares of Common Stock, the Corporation shall take all prior
corporate action necessary to authorize the issuance of any securities payable
as a dividend in respect of the Series A Preferred Stock.
Section 3. Liquidation Preference.
(a) In the event of a liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary (a "Liquidation"), the holders of
the Series A Preferred Stock then outstanding shall be entitled to receive out
of the available assets of the Corporation, whether such assets are stated
capital or surplus of any nature, an amount on such date equal to $0.01 per
share of Series A Preferred Stock, plus the amount of any declared but unpaid
dividends thereon as of such date, calculated pursuant to Section 2 (the
"Liquidation Preference"). Such payment shall be made before any payment shall
be made or any assets distributed to the holders of any class or series of the
Common Stock or any other class or series of the Corporation's capital stock
ranking junior as to liquidation rights to the Series A Preferred Stock.
(b) After the payment of the Liquidation Preference, the remaining
assets of the Corporation shall be distributed pro rata to the holders of
Common Stock and Series A Preferred Stock, and the holders of Common Stock and
Series A Preferred Stock will be entitled to receive the same amount per share
in respect thereof.
(c) Neither the consolidation nor merger of the Corporation into or
with any other entity, nor the sale or transfer by the Corporation of all or
any part of its assets, nor the reduction of the capital stock of the
Corporation, shall be deemed to be a Liquidation; provided, however, that in
any such transaction, to the extent that holders of Common Stock receive
consideration other than voting securities, the holders of Series A Preferred
Stock shall receive identical consideration per share, and to the extent that
holder of Common Stock receive voting securities, the holders of Series A
Preferred Stock shall receive non-voting securities that are otherwise
identical to the securities received by holders of Common Stock; provided,
further that if the aggregate consideration to be received by the holders of
the Series A Preferred Stock in any such transaction would be less than what
such holders would have received had such transaction been deemed to be a
Liquidation, then such transaction shall be deemed to be a Liquidation within
the meaning of this Section 3(a).
(d) Any securities to be delivered to the holders of the Series A
Preferred Stock pursuant to this Section 3 as a consequence of a Liquidation
shall be valued at their Fair Market Value.
Section 4. Voting Rights. Except as otherwise provided by applicable
law, the holders of outstanding shares of the Series A Preferred Stock shall
have no voting rights.
Section 5. Restrictions on Common Stock. The Corporation shall not at
any time effect a subdivision, combination, consolidation or reclassification
of the outstanding shares of Common Stock into a greater or lesser number of
shares of Common Stock, unless such subdivision, combination, consolidation or
reclassification shall also apply in a like manner to the outstanding Series A
Preferred Stock.
Section 6. Automatic Conversion . Each share of Series A Preferred
Stock shall be automatically converted into one fully paid and non-assessable
share of Common Stock upon the Transfer thereof by an initial holder thereof
(an "Initial Holder") or any Affiliate of the Initial Holder other than to an
Initial Holder or an Affiliate of an Initial Holder (except a broker-dealer
affiliate in connection with a capital markets transaction). Effective
immediately upon the occurrence of the conversion, certificates theretofore
evidencing shares of Series A Preferred Stock shall be deemed to evidence that
number of shares of Common Stock issuable upon the conversion of such shares of
Series A Preferred Stock. The Initial Holder shall give prompt notice to the
Corporation of (i) any transfer of any shares of Series A Preferred Stock, and
shall indicate in such notice if the transferee is an Affiliate of the Initial
Holder and (ii) any event or transaction pursuant to which any such transferee
Affiliate then holding Series A Preferred Stock ceases to be an Affiliate of
the Initial Holder.
Section 7. No Optional Conversion. At no time may any share of Series
A Preferred Stock be converted at the option of the holder thereof.
Section 8. Certain Definitions. Capitalized terms used herein and not
otherwise defined shall have the meanings given to them in the Certificate of
Incorporation. Solely for purposes of this Certificate of Designations, Powers,
Preferences and Rights of the Series A Preferred Stock, the following terms
shall have the following respective meanings herein:
"Board of Directors" has the meaning assigned to it in the
introductory paragraph.
"Certificate of Incorporation" has the meaning assigned to it in the
introductory paragraph.
"Corporation" has the meaning assigned to it in the introductory
paragraph.
"Fair Market Value" means, as to any securities or other property,
the cash price at which a willing seller would sell and a willing buyer would
buy such securities or property in an arm's length negotiated transaction
without time constraints. With respect to any securities that are traded on a
national securities exchange or quoted on the Nasdaq National Market or the
Nasdaq Small Cap Market, Fair Market Value shall mean the arithmetic average of
the closing prices of such securities on their principal market for the ten
consecutive trading days immediately preceding the applicable date of
determination and with respect to shares of Series A Participating Preferred
Stock shall be the same price per share as the Fair Market Value per share of
the Class A Common Stock.
"Independent Investment Banking Firm" means an investment banking firm
of nationally recognized standing that in the reasonable judgment of the Person
or Persons engaging such firm, taking into account any prior relationship with
any Significant Stockholder or the Corporation, is independent of such Person or
Persons.
"Initial Holder" has the meaning assigned to it in Section 6 hereof.
"Liquidation" has the meaning assigned to it in Section 3(a) hereof.
"Liquidation Preference" has the meaning assigned to it in Section 3(a)
hereof.
"Preferred Stock" has the meaning assigned to it in the introductory
paragraph.
"Series A Preferred Stock" has the meaning assigned to it in Section 1
hereof.
"Total Voting Power" means the total number of votes entitled to be
cast by the holders of the outstanding Capital Stock and any other securities
entitled, in the ordinary course, to vote on matters put before the holders of
the Capital Stock generally.
"Transfer" means, directly or indirectly, to sell, transfer, assign,
pledge, encumber, hypothecate or similarly dispose of (by operation of law or
otherwise), either voluntarily or involuntarily, or to enter into any contract,
option or other arrangement or understanding with respect to the sale,
transfer, assignment, pledge, encumbrance, hypothecation or similar disposition
of (by operation of law or otherwise), any Capital Stock or any interest in any
Capital Stock; provided, however, that a merger, amalgamation, plan of
arrangement or consolidation or similar business combination transaction in
which a Significant Stockholder is a constituent corporation (or otherwise a
party including, for the avoidance of doubt, a transaction pursuant to which a
Person acquires all or a portion of a Significant Stockholder's outstanding
Capital Stock, whether by tender or exchange offer, by share exchange, or
otherwise) shall not be deemed to be the Transfer of any Capital Stock
Beneficially Owned by such parent, provided that the primary purpose of any
such transaction is not to avoid the provisions hereof.
[Execution Page Follows]
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Designations to be signed by [Name of authorized officer], its [title of
authorized officer], this ____ day of [ ], 2006.
By:
---------------------------
Name:
Title: