1
EXECUTION COPY
PURCHASE AGREEMENT
between
NATIONAL DISCOUNT BROKERS GROUP, INC.
and
AMERITRADE HOLDING CORPORATION,
dated as of July 30, 2001
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TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS
Section 1.01. Defined Terms..................................................1
Section 1.02. General Interpretive Principles................................6
ARTICLE II
SALE AND PURCHASE OF THE COMPANY SHARES AND THE
COMPANY NOTES
Section 2.01. Sale and Purchase of the Company Shares and the Company
Notes..........................................................6
Section 2.02. Amount and Payment of Purchase Price...........................6
Section 2.03. Closing........................................................6
Section 2.04. Payment in Buyer Common Stock..................................7
ARTICLE III
REPRESENTATIONS AND WARRANTIES REGARDING SELLER AND
THE COMPANY
Section 3.01. Organization...................................................7
Section 3.02. Authority......................................................8
Section 3.03. No Impediments.................................................8
Section 3.04. Subsidiaries...................................................8
Section 3.05. Capitalization; Title to the Company Shares and the Company
Notes..........................................................8
Section 3.06. Financial Statements; No Undisclosed Liabilities...............9
Section 3.07. Absence of Material Adverse Change; Conduct of Business........9
Section 3.08. Permits; Compliance............................................9
Section 3.09. Taxes..........................................................9
Section 3.10. Absence of Litigation.........................................10
Section 3.11. Tangible Property.............................................10
Section 3.12. Material Contracts............................................10
Section 3.13. Employee Benefit Plans........................................11
Section 3.14. Labor Matters.................................................12
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Section 3.15. Intellectual Property.........................................12
Section 3.16. Environmental Matters.........................................14
Section 3.17. Broker-Dealer.................................................14
Section 3.18. Insurance.....................................................14
Section 3.19. Bank Accounts.................................................15
Section 3.20. Improper Payments.............................................15
Section 3.21. Brokers.......................................................15
Section 3.22. Securities Act................................................15
Section 3.23. Customer Lists................................................15
Section 3.24. Computer Systems..............................................15
ARTICLE IV
REPRESENTATIONS AND WARRANTIES REGARDING BUYER
Section 4.01. Organization of Buyer.........................................16
Section 4.02. Authority.....................................................16
Section 4.03. No Impediments................................................16
Section 4.04. Absence of Litigation.........................................16
Section 4.05. Securities Act................................................17
Section 4.06. Brokers.......................................................17
Section 4.07. Capitalization of Buyer.......................................17
Section 4.08. SEC Reports; Financial Statements; No Undisclosed Liabilities.18
Section 4.09. Absence of Material Adverse Change............................19
Section 4.10. Permits; Compliance...........................................19
ARTICLE V
COVENANTS AND OTHER AGREEMENTS OF THE PARTIES
Section 5.01. Conduct of Business by the Company............................19
Section 5.02. Access to Information.........................................20
Section 5.03. Confidentiality...............................................20
Section 5.04. Maintenance of Records........................................20
Section 5.05. Commercially Reasonable Efforts; Obtaining Consents;
Further Action................................................21
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Section 5.06. Parent Contracts.............................................22
Section 5.07. Corporate Name...............................................23
Section 5.08. Certain Insurance Matters....................................23
Section 5.09. Notifications................................................23
Section 5.10. Public Announcements; Customer Communications................23
Section 5.11. Consents Not Obtained by Closing.............................24
Section 5.12. Information..................................................24
Section 5.13. Intra-Group Agreements.......................................24
Section 5.14. Certain Employee Matters.....................................25
Section 5.15. 90 ▇▇▇▇▇▇ Real Estate Lease..................................26
Section 5.16. Intra-Group Payables and Receivables.........................27
Section 5.17. Registration Rights Agreement................................27
ARTICLE VI
CONDITIONS
Section 6.01. Conditions Precedent to Closing Obligation of Buyer..........27
Section 6.02. Conditions Precedent to Closing Obligation of Seller.........28
ARTICLE VII
TERMINATION; FAILURE TO CLOSE
Section 7.01. Termination..................................................29
Section 7.02. Effect of Termination........................................30
ARTICLE VIII
TAX MATTERS
Section 8.01. Tax Indemnification..........................................30
Section 8.02. Apportionment of Taxes.......................................30
Section 8.03. Refunds and Tax Benefits.....................................31
Section 8.04. Transfer Tax and Other Closing Expenses......................31
Section 8.05. Exclusive Remedy.............................................31
Section 8.06. Contests.....................................................31
Section 8.07. Tax Returns..................................................32
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Section 8.08. After Closing.................................................32
Section 8.09. Survival......................................................32
Section 8.10. Characterization as Purchase Price Adjustment.................32
Section 8.11. Absence of Withholding Tax Liability..........................33
Section 8.12. Section 338(h)(10) Election...................................33
ARTICLE IX
INDEMNIFICATION
Section 9.01. Survival of Representations and Warranties....................33
Section 9.02. Indemnification by Seller.....................................33
Section 9.03. Indemnification by Buyer......................................33
Section 9.04. Limitations on Indemnification................................34
Section 9.05. Claims........................................................34
Section 9.06. Notice of Third Party Claims; Assumption of Defense...........35
Section 9.07. Settlement....................................................35
Section 9.08. Failure of Indemnifying Person to Act.........................36
Section 9.09. Net Indemnity Payments........................................36
Section 9.10. Exclusive Remedy..............................................36
ARTICLE X
NON-SOLICITATION
Section 10.01. Non-Solicitation of Customers.................................36
Section 10.02. Non-Solicitation of Continued Employees.......................37
Section 10.03. Limitation on Use of NDB Names................................37
Section 10.04. Specific Performance..........................................37
Section 10.05. Severability..................................................38
ARTICLE XI
MISCELLANEOUS
Section 11.01. Headings......................................................38
Section 11.02. Notices.......................................................38
Section 11.03. Assignment....................................................39
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Section 11.04. Governing Law; Jurisdiction...................................39
Section 11.05. Severability..................................................40
Section 11.06. Entire Agreement; Amendment...................................40
Section 11.07. Counterparts..................................................40
Exhibit A Form of Registration Rights Agreement
Exhibit B Form of Legal Opinion of Cleary, Gottlieb, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
Exhibit C Form of Legal Opinion of ▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇
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▇
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT is dated as of this 30(th) day of July,
2001, between National Discount Brokers Group, Inc., a Delaware corporation
("Seller"), and Ameritrade Holding Corporation, a Delaware corporation
("Buyer").
RECITALS
WHEREAS, Seller is the record and beneficial owner of all of the
issued and outstanding shares of capital stock of National Discount Brokers
Corporation, a New York corporation (the "Company"); and
WHEREAS, upon the terms and subject to the conditions hereinafter
set forth, Seller desires to sell all of the shares of common stock of the
Company (the "Company Shares") and all of the promissory notes issued by the
Company to Seller outstanding as of June 30, 2001, as designated by Seller in
writing to Buyer prior to the date hereof (the "Company Notes"), to Buyer, and
Buyer desires to purchase and acquire all of the Company Shares and Company
Notes from Seller;
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements herein contained, and
intending to be legally bound hereby, the parties hereby covenant and agree as
follows:
ARTICLE I
DEFINITIONS
Section 1.01. Defined Terms. In this Agreement, except as
expressly provided herein or as the context otherwise requires:
"Affiliate" means, with respect to any Person, a Person that
controls, is controlled by, or is under common control with such Person (it
being understood that a Person shall be deemed to "control" another Person, for
purposes of this definition, if such Person directly or indirectly has the power
to direct or cause the direction of the management and policies of such other
Person, whether through holding beneficial ownership interests in such other
Person, by contract or otherwise).
"Agreement" means this Stock Purchase Agreement, including all
recitals, exhibits, schedules and the Disclosure Letter relating hereto.
"Business Day" means any day which is not a Saturday, a Sunday or
any other day on which banks in the State of New York are authorized or required
by law to close.
"Buyer" has the meaning set forth in the opening paragraph.
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"Buyer Benefit Plans" means any "employee benefit plan" as
defined in Section 3(3) of ERISA, or any employment, compensation, fringe
benefit or other employee benefit plan, program, arrangement, agreement or
commitment of Buyer.
"Buyer Common Stock" has the meaning set forth in Section
2.04(a).
"Buyer Disclosure Letter" means the disclosure letter relating to
this Agreement, delivered by Buyer to Seller concurrently with the execution of
this Agreement.
"Buyer Indemnified Parties" shall mean Buyer and each of its
Affiliates, and their respective officers, directors, employees, agents and
representatives; provided that in no event shall Seller be deemed to be a Buyer
Indemnified Party.
"Buyer Material Adverse Effect" means a Material Adverse Effect
on Buyer or an effect that is materially adverse on the ability of Buyer to
perform its obligations under or consummate the transactions contemplated by
this Agreement.
"Buyer Permits" has the meaning set forth in Section 4.10.
"Buyer Preferred Stock" has the meaning set forth in Section
4.07(a).
"Buyer SEC Reports" has the meaning set forth in Section 4.08(a).
"Buyer Shares" has the meaning set forth in Section 2.04(b).
"Class B Stock" has the meaning set forth in Section 4.07(a).
"Closing" has the meaning set forth in Section 2.03(a).
"Closing Date" means the date on which the Closing occurs.
"Closing Stock Price" has the meaning set forth in Section
2.04(b).
"Code" means the Internal Revenue Code of 1986, as amended.
"Commonly Controlled Entity" has the meaning set forth in Section
3.13(a).
"Company" has the meaning set forth in the recitals.
"Company Common Stock" means the common stock, without par value,
of the Company.
"Company Intellectual Property Rights" has the meaning set forth
in Section 3.15(c).
"Company Notes" has the meaning set forth in the recitals.
"Company Permits" has the meaning set forth in Section 3.08.
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"Company Shares" has the meaning set forth in the recitals.
"Confidentiality Agreement" means the Confidentiality Agreement
between Buyer and Seller dated April 24, 2001.
"Contest" has the meaning set forth in Section 8.06.
"Continued Employees" has the meaning set forth in Section
5.14(a).
"Debt" shall mean obligations in respect of (i) borrowed money,
(ii) capitalized lease obligations, (iii) obligations under interest rate
agreements and currency agreements, (iv) guarantees of any obligation of any
third Person, (v) letters of credit and (vi) indemnities or performance bonds.
"Disclosure Letter" means the disclosure letter relating to this
Agreement, delivered by Seller to Buyer concurrently with the execution of this
Agreement.
"Employee Benefit Plans" has the meaning set forth in Section
3.13(a).
"ERISA" has the meaning set forth in Section 3.13(a).
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Financial Statements" means the audited statements of financial
condition of the Company as of December 31, 2000, and the related statements of
operations and cash flows for the period then ended and the notes thereto
accompanied by the reports thereon of KPMG LLP and the unaudited balance sheet
and statement of shareholder's equity of the Company as of June 30, 2001, and
the related income statement for the period then ended, in each case in the form
attached as Schedule 3.06 of the Disclosure Letter.
"GAAP" shall mean United States generally accepted accounting
principles.
"Governmental Entity" has the meaning given such term in Section
3.03.
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act
of 1976, as amended.
"▇▇▇▇▇▇ Lease" has the meaning set forth in Section 5.15(a).
"Identified Employees" has the meaning set forth in Section
5.14(a).
"Indemnified Person" shall mean the Person or Persons entitled to
indemnification under Article IX.
"Indemnifying Person" shall mean the Person or Persons obligated
to provide indemnification under Article IX.
"Intellectual Property Rights" has the meaning set forth in
Section 3.15(b).
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"Interim Period" has the meaning set forth in Section 8.02(b).
"IRS" means the Internal Revenue Service.
"Intra-Group Payables" has the meaning set forth in Section 5.16.
"Intra-Group Receivables" has the meaning set forth in Section
5.16.
"Knowledge of Buyer", or words of similar import, means the
actual knowledge of the officers or employees of Buyer listed on Schedule 1.01
of the Buyer Disclosure Letter attached hereto and the knowledge such officers
should have reasonably obtained after due inquiry.
"Knowledge of Seller", or words of similar import, means the
actual knowledge of the officers of Seller or the Company listed on Schedule
1.01 of the Disclosure Letter and the knowledge such officers should have
reasonably obtained after due inquiry.
"Law" means any statute, law, constitutional provision, code,
regulation, ordinance, rule, ruling, judgment, decision, order, writ,
injunction, decree, permit, concession, grant, franchise, license, agreement,
directive, binding guideline or policy or rule of common law, requirement of, or
other governmental restriction of or determination by any Governmental Entity or
any interpretation of any of the foregoing by any Governmental Entity.
"Lien" means any encumbrance, mortgage, lien, claim, pledge,
charge or other security interest or similar limitation.
"Loss" or "Losses" shall mean any and all losses, liabilities,
costs, claims, damages, penalties, interest and expenses (including reasonable
attorneys' fees and expenses and reasonable costs of investigation and
litigation but excluding lost profits and consequential damages). In the event
any of the foregoing are indemnifiable hereunder, the terms "Loss" and "Losses"
shall include any and all reasonable attorneys' fees and expenses and reasonable
costs of investigation and litigation incurred by the Indemnified Person in
enforcing such indemnity.
"Management Employees" means the three individuals listed on
Schedule 5.14(a) of the Disclosure Letter.
"Material Adverse Effect" means a material adverse effect on the
financial condition, business, properties, assets, liabilities or results of
operations of the Company, or Buyer, as the case may be, taken as a whole, but
shall not include any effect arising out of or resulting from (a) a change in
general economic or financial conditions, (b) a change affecting the securities
markets or the brokerage industries in the United States generally or (c) this
Agreement or the transactions contemplated hereby or any announcement thereof.
"Material Contract" has the meaning set forth in Section 3.12.
"NASD" shall mean the National Association of Securities Dealers,
Inc.
"NDB Names" has the meaning set forth in Section 5.07.
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"Non-Solicitation Period" has the meaning set forth in Section
10.01.
"Parent Contracts" has the meaning set forth in Section 5.06(a).
"Permitted Liens" means (a) Liens for Taxes not yet due and
payable, (b) mechanics', materialmen's, carriers', workers', repairers',
landlords' and similar Liens arising or incurred in the ordinary course of
business, (c) zoning, entitlement, building and other land use regulations that
are not violated by current occupancy or use and (d) customary covenants,
conditions, restrictions, easements and similar restrictions of record affecting
title that do not impair current occupancy or use.
"Person" means an individual, corporation, partnership, trust,
limited liability company, a branch of any legal entity, unincorporated
organization, joint stock company, joint venture, association, other entity or
Governmental Entity.
"Purchase Price" has the meaning set forth in Section 2.02.
"Purchase Price Allocation" has the meaning set forth in Section
8.12.
"Registration Rights Agreement" has the meaning set forth in
Section 5.17.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Seller" has the meaning set forth in the opening paragraph.
"Seller Indemnified Parties" shall mean Seller and each of its
Affiliates, and their respective officers, directors, employees, agents and
representatives; provided that in no event shall the Company be deemed to be a
Seller Indemnified Party.
"Short Period" has the meaning set forth in Section 8.02(a).
"Software" has the meaning set forth in Section 3.15(b).
"Subsidiary" means, with respect to any Person, any other Person
of which such Person (either alone or through or together with any other
Subsidiary) owns or has rights to acquire, directly or indirectly, more than 50%
of the stock or other equity interests the holders of which are generally
entitled to vote for the election of the board of directors or other governing
body of such other Person.
"Tax" or "Taxes" means all taxes, however denominated, including
any interest or penalties that may become payable in respect thereof, imposed by
any federal, state, local or foreign government or any agency or political
subdivision of any such government, which taxes shall include, without limiting
the generality of the foregoing, all income taxes (including, but not limited
to, United States federal income taxes and state income taxes), payroll and
employee withholding taxes, unemployment insurance, social security, sales and
use taxes, excise taxes, environmental taxes, franchise taxes, gross receipts
taxes, occupation taxes, real and personal
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property taxes, stamp taxes, transfer taxes, withholding taxes, workers'
compensation taxes, and other obligations of the same or of a similar nature,
whether arising before, on or after the Closing Date.
"Tax Claim" has the meaning set forth in Section 8.09.
"Tax Indemnitee" has the meaning set forth in Section 8.01(a).
"Tax Indemnity Payment" has the meaning set forth in Section
8.01(a).
"Tax Return" means a report, return or other information
(including any amendments) required to be supplied to the United States
(federal, state or local) or a foreign government or agency or political
subdivision of any such government with respect to Taxes, including, where
permitted or required, combined or consolidated returns for any group of
entities that includes the Company.
"Trademark" has the meaning set forth in Section 3.15(b).
Section 1.02. General Interpretive Principles. Whenever used in
this Agreement, except as otherwise expressly provided or unless the context
otherwise requires, any noun or pronoun shall be deemed to include the plural as
well as the singular and to cover all genders. Whenever used in this Agreement,
unless otherwise specified, the terms "hereof," "herein," "hereunder" and
similar terms refer to this Agreement as a whole (including the schedule hereto
and the Disclosure Letter), and references herein to Sections refer to sections
of this Agreement. Whenever used in this Agreement, the term "including" shall
be deemed to mean "including, without limitation."
ARTICLE II
SALE AND PURCHASE OF THE COMPANY SHARES AND THE COMPANY NOTES
Section 2.01. Sale and Purchase of the Company Shares and the
Company Notes. On the terms and subject to the conditions of this Agreement, at
the Closing, Buyer shall purchase from Seller, and Seller shall sell and deliver
to Buyer, legal and beneficial ownership of all of the Company Shares and all of
the Company Notes, free and clear of all Liens.
Section 2.02. Amount and Payment of Purchase Price. At the
Closing, the aggregate consideration to be paid by Buyer for all of the Company
Shares and all of the Company Notes shall be US$154,000,000 (the "Purchase
Price"). The Purchase Price will be paid in the manner and at the time as set
forth in Sections 2.03 and 2.04.
Section 2.03. Closing. (a) The closing of the purchase and sale
of the Company Shares (the "Closing") shall take place at the offices of Cleary,
Gottlieb, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ on
September 6, 2001 or, if the conditions set forth in Article VI have not been
satisfied or waived on or prior to such date, on the third Business Day after
satisfaction or waiver of such conditions, or at such other time and place as is
agreed by the parties.
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(b) At the Closing, (i) Seller shall deliver to Buyer one or more
certificates evidencing all of the Company Shares, in each case duly endorsed in
blank or accompanied by duly executed stock powers in blank in proper form for
transfer, and all of the Company Notes, in each case accompanied by duly
executed assignments to Buyer thereof and (ii) Buyer shall pay the Purchase
Price by (A) paying by wire transfer US$20,000 in immediately available U.S.
Dollar funds to an account or accounts as specified by Seller to Buyer at least
two (2) Business Days prior to the Closing Date (the entire amount of which
shall be applied as partial consideration for the purchase of all of the Company
Shares) and (B) delivering to Seller one or more certificates evidencing all of
the Buyer Shares in the name of Seller (or, at the written request of Seller
received at least two Business Days prior to the Closing Date, any Affiliate of
Seller).
Section 2.04. Payment in Buyer Common Stock. (a) US$153,980,000
of the Purchase Price shall be paid in the form of Class A common stock of
Buyer, par value US$0.01 per share (the "Buyer Common Stock"), subject to the
terms and conditions of this Section 2.04.
(b) The number of shares of Buyer Common Stock payable to Seller
(the "Buyer Shares") shall be the quotient, rounded up to the next whole share,
obtained by dividing (i) US$153,980,000 by (ii) the Closing Stock Price. The
"Closing Stock Price" shall mean the average of the last sale price per share of
Buyer Common Stock on the Nasdaq National Market (as reported in the three star
New York City edition of the Wall Street Journal (for trading during regular
trading hours, not extended trading)) for the ten consecutive trading days
ending on the Business Day immediately prior to the Closing Date; provided that
(A) if the Closing Stock Price would otherwise be more than US$7.20, the Closing
Stock Price for purposes of calculating the number of Buyer Shares shall be
US$7.20, or (B) if the Closing Stock Price would otherwise be less than US$4.80,
the Closing Stock Price for purposes of calculating the number of Buyer Shares
shall be US$4.80.
ARTICLE III
REPRESENTATIONS AND WARRANTIES REGARDING SELLER AND THE COMPANY
Except as disclosed in this Agreement (including the Disclosure
Letter), Seller hereby represents and warrants to Buyer as follows:
Section 3.01. Organization. Each of Seller and the Company is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its organization and has all requisite corporate power
and authority to carry on its business as now being conducted. The Company is
duly qualified or licensed to do business in each jurisdiction in the United
States in which the property owned, leased or operated by it or the nature of
the business conducted by it makes such qualification or licensing necessary,
except where the failure to be so qualified would not reasonably be expected to
have a Material Adverse Effect on the Company. Seller has made available to
Buyer true and correct copies of the articles of incorporation and by-laws or
comparable organizational documents of the Company, as most recently amended.
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Section 3.02. Authority. Seller has all requisite power and
authority to execute, deliver and perform its obligations under this Agreement
and to consummate the transactions contemplated hereby. This Agreement has been
duly executed and delivered by Seller and constitutes a valid and binding
obligation of Seller, enforceable against Seller in accordance with its terms.
Section 3.03. No Impediments. None of the execution, delivery and
performance of this Agreement by Seller or the consummation by Seller of the
transactions contemplated hereby does or will, except as set forth on Schedule
3.03 of the Disclosure Letter, (a) conflict with or violate any organizational
document of Seller or the Company, (b) require any consent, approval,
authorization or permit of, or filing with or notification to, any foreign,
federal, state or local government or subdivision thereof, or governmental,
judicial, legislative, executive, administrative or regulatory authority,
agency, commission, tribunal or body, or non- governmental regulating body to
the extent that the rules, regulations or orders of such body are binding upon
Seller or the Company or otherwise have the effect of law (a "Governmental
Entity"), except as may be required under the HSR Act, (c) require any consent,
waiver or approval or, with or without the giving of notice or lapse of time or
both, result in a default or breach (or give rise to any right of termination,
cancellation, modification or acceleration) under any of the terms, conditions
or provisions of any note, license, agreement, contract, indenture or other
instrument or obligation to which Seller or the Company is a party or by which
Seller or the Company or any of the assets of Seller or the Company may be
bound, except for such consents, approvals and authorizations that have been
obtained, (d) result in the creation or imposition of any Lien on any asset of
the Company or (e) conflict with or violate any Law applicable to Seller or the
Company or by which any of the assets of Seller or the Company are bound, except
in the case of Sections 3.03(b) through 3.03(e), any such default, breach, right
or Lien that would not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect on the Company.
Section 3.04. Subsidiaries. Except as set forth on Schedule 3.04
of the Disclosure Letter, the Company does not have any Subsidiaries and does
not own, directly or indirectly, any debt, shares or other equity interest or
securities in any corporation, partnership, joint venture or other Person, and
has no agreement or commitment to purchase any such interest.
Section 3.05. Capitalization; Title to the Company Shares and the
Company Notes. The authorized capital stock of the Company consists of 200
shares of Company Common Stock of which 100 shares, constituting the Company
Shares, are issued and outstanding. Except for the Company Shares, there are no
shares of capital stock or other equity securities of the Company issued,
reserved for issuance or outstanding. All of the Company Shares have been duly
authorized, validly issued and are fully paid and nonassessable. Seller is the
legal and beneficial owner of all of the Company Shares and the Company Notes.
Except as contemplated by this Agreement, there is no security, option, warrant,
right, call, subscription agreement, commitment or understanding of any nature
whatsoever to which either Seller or the Company is a party, that directly or
indirectly (i) calls for the issuance, sale, pledge or other disposition of any
Company Common Stock or any securities convertible into, or other rights to
acquire, any Company Common Stock, (ii) obligates Seller or the Company to
grant, offer or enter into any of the foregoing or (iii) relates to the voting
or control of such capital stock,
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securities or rights. Seller has good and marketable title to the Company Shares
and the Company Notes, free and clear of any Liens.
Section 3.06. Financial Statements; No Undisclosed Liabilities.
The Financial Statements have been prepared in accordance with GAAP applied on a
consistent basis (except as may be set forth in the notes thereto), and fairly
present in all material respects the financial position of the Company as of the
dates indicated and the results of operations and cash flows of the Company for
the periods indicated (subject, in the case of the unaudited interim financial
statements, to the absence of notes and to normal year-end adjustments that will
not be material in amount). The Financial Statements are in accordance with the
books and records of the Company. Except as disclosed on Schedule 3.06 of the
Disclosure Letter, the Company has not incurred any liabilities since June 30,
2001 that would be required to be reflected on or reserved against on a balance
sheet prepared in accordance with GAAP, except for trade payables, accrued
expenses and other liabilities incurred in the ordinary course of business.
Section 3.07. Absence of Material Adverse Change; Conduct of
Business. Except as set forth on Schedule 3.07 of the Disclosure Letter, since
June 30, 2001, the business of the Company has been conducted in the ordinary
course of business and the Company has not: (i) experienced or suffered any
change, occurrence or event that has had, or would reasonably be expected to
have, a Material Adverse Effect on the Company; (ii) sold or otherwise disposed
of any assets or properties material to the Company; (iii) waived, released,
canceled or assigned any rights or indebtedness owing to the Company that are
material to the Company, or prepaid any principal or interest on any Debt; (iv)
made as of the date hereof any material changes in its accounting systems,
methods, policies, principles or practices; or (v) acquired or leased any assets
material to the Company. The Company is, and as of the Closing Date (after the
repayment of all Intra-Group Payables and Intra-Group Receivables) shall be, in
compliance with the minimum net capital requirements as set forth in Rule 15c3-1
promulgated under the Exchange Act.
Section 3.08. Permits; Compliance. The Company is in possession
of all material franchises, grants, authorizations, licenses, permits,
easements, variances, exceptions, consents, certificates, approvals and orders
of any Governmental Entity legally necessary for it to carry on its business as
it is now being conducted in the United States (the "Company Permits"), and no
suspension or cancellation of any of the Company Permits is pending or, to the
Knowledge of Seller, threatened. The Company is not in conflict with, or in
default or violation of, nor, with the giving of notice or lapse of time or
both, would the Company be in conflict with, or in default or violation of, (a)
any Law applicable to the Company or by which any property or asset of the
Company is bound except for any conflict, default or violation that would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on the Company, or (b) any of the Company Permits.
Section 3.09. Taxes. (a) Except as set forth on Schedule 3.09(a)
of the Disclosure Letter, the Company has timely filed all Tax Returns (or such
Tax Returns have been filed on behalf of the Company) to the extent required to
be filed by applicable Law (after taking into account applicable extensions) for
taxable periods ending on or before the Closing Date and has paid all amounts
due in respect of Taxes (whether or not actually shown on such Tax Returns);
such Tax Returns accurately set forth all material items relating to the
business
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activities of the Company to the extent required to be reflected or included in
such Tax Returns by applicable Tax Laws.
(b) Except as set forth on Schedule 3.09(b) of the Disclosure
Letter, no income or other Tax Return filed by the Company has been examined or
audited by the Internal Revenue Service or other appropriate authority during
the preceding three years, and no such examination or audit is in progress. All
deficiencies proposed as a result of such completed examinations or audits have
been paid or finally settled.
(c) No claim has ever been made by any authority in a
jurisdiction where the Company does not file Tax Returns that it is or may be
subject to taxation by that jurisdiction.
(d) No written agreements relating to allocating or sharing of
Taxes exist among Seller or the Company.
(e) Seller is not defined as a foreign person within the meaning
of Section 1445 of the Code and the Treasury Regulations thereunder.
Section 3.10. Absence of Litigation. Except as disclosed on
Schedule 3.10 of the Disclosure Letter, neither the Company nor any of its
officers, directors or employees in their capacities as such (i) is subject to
any outstanding injunctions, judgments, orders or decrees of any Governmental
Entity or (ii) is a party to or, to the Knowledge of Seller, threatened to be
made a party to, or the subject of, any actions, suits, arbitrations,
proceedings, hearings, or investigations of, in, or before any court or
quasi-judicial or administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator, where it is reasonably probable that the
Company will have a liability in excess of US$100,000 in any individual case
(other than any class action lawsuit or class action lawsuit that has not yet
been certified, which shall not be subject to such threshold).
Section 3.11. Tangible Property. The Company has good title to,
or a valid lease, license or right to use, the real and other tangible
properties and assets used by it in the conduct of its business. Those tangible
properties and assets owned by the Company are held free and clear of any Liens
other than Permitted Liens. All of the tangible assets owned or leased by, or
licensed to, the Company or that the Company has a right to use are in
satisfactory operating condition for the uses to which they are being put,
subject to ordinary wear and tear and ordinary maintenance requirements.
Schedule 3.11 of the Disclosure Letter includes a complete list of each of the
real properties leased by the Company or that the Company has a right to use.
Section 3.12. Material Contracts. Except for agreements and
arrangements with retail customers of the Company, including those made or
deemed made as a result of a customer's activities on the Company's website, set
forth on Schedule 3.12 of the Disclosure Letter is a complete list of all
contracts, agreements, commitments, arrangements, leases (including with respect
to personal property) and other instruments to which the Company is a party or
by which the Company or any of its assets is bound which (a) involves aggregate
payments of more than US$250,000 over any twelve-month period, (b) is with any
of the Company's officers, directors, employees, consultants performing
professional services related
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to the core business of the Company or Affiliates, (c) is or could reasonably be
expected to be material to the Company or (d) is a confidentiality or standstill
agreement, other than agreements entered into in the ordinary course of business
containing confidentiality or standstill provisions, which agreements do not
otherwise fall within clauses (a) though (c) above (each such agreement in
clauses (a) through (d) above, a "Material Contract"). Except as disclosed on
Schedule 3.12 of the Disclosure Letter, the Company is not, nor has the Company
or Seller received any notice that the Company is, nor to the Knowledge of
Seller is any other party, in material default or breach in any respect under
any Material Contract, and there has not occurred any event that with the lapse
of time or the giving of notice or both would constitute such a material default
or breach. The Company has made available to Buyer true, correct and complete
copies of all of the Material Contracts.
Section 3.13. Employee Benefit Plans. (a) Seller has made
available to Buyer true, correct and complete copies of each material, written
"employee benefit plan" (as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")), each stock option or other
equity-based plan, each material, written bonus, incentive, deferred
compensation or severance plan or arrangement, and each material, written
employee fringe benefit plan or arrangement and a true and accurate description
of each material, unwritten employee benefit plan, program policy or
arrangement, in each case, which is maintained, contributed to or required to be
contributed to by the Company or any other Person that, together with the
Company, is treated as a single employer under Section 414(b), (c) or (m) of the
Code (each, a "Commonly Controlled Entity") which is currently in effect for the
benefit of current or former employees of the Company or with respect to which
the Company currently has material liability (collectively, "Employee Benefit
Plans"). Seller has made available to Buyer, to the extent applicable, with
respect to each Employee Benefit Plan, copies of (i) the most recent annual
report on Form 5500 filed with the IRS, (ii) the most recent summary plan
description, (iii) each currently effective trust agreement, insurance or group
annuity contract and other funding arrangement forming part of any Employee
Benefit Plan and (iv) IRS determination letter.
(b) Each Employee Benefit Plan has been administered in form and
operation in compliance with its terms and the applicable provisions of ERISA,
the Code and other applicable laws, except for any failures to comply that,
individually or in the aggregate, have not had, or would not reasonably be
expected to have, a Material Adverse Effect on the Company. There are no
material investigations by any Governmental Entity or other claims, suits or
proceedings pending or, to the Knowledge of Seller, threatened against any
Employee Benefit Plan (except routine claims for benefits payable in accordance
with the terms of the Employee Benefit Plans).
(c) No Employee Benefit Plan is (i) subject to Section 412 of the
Code or Section 302 of ERISA or (ii) a "multiemployer plan" as defined in
Section 3(37) of ERISA.
(d) Each Employee Benefit Plan that is intended to be qualified
under Section 401(a) of the Code has received a determination letter from the
IRS to the effect that such plan is so qualified and all amendments to any such
plan for which the remedial amendment period (within the meaning of Section
401(b) of the Code and applicable regulations) has expired are covered by a
favorable IRS determination letter. To the Knowledge of Seller, no event has
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occurred that would be reasonably likely to result in the disqualification of
any such Employee Benefit Plan.
(e) The Company has not incurred and does not reasonably expect
to incur (either directly or indirectly as a result of any indemnification or
joint and several liability obligation) any liability under Title I or IV of
ERISA or the penalty or excise tax provisions of the Code relating to employee
benefit plans, except for (i) any such liability that, individually or in the
aggregate, has not had, or would not reasonably be expected to have, a Material
Adverse Effect on the Company and (ii) liability for contributions to any
Employee Benefit Plan that covers employees of the Company and that are not yet
due.
(f) None of the payments contemplated by the Employee Benefit
Plans would, in the aggregate, constitute excess parachute payments (as defined
in Section 280G of the Code).
(g) The Company has no liability or contingent liability for
providing under any Employee Benefit Plan or otherwise, any post-retirement
medical or life insurance benefits to any employee or former employee other than
statutory liability for providing group health plan continuation coverage under
Part 6 of Title I of ERISA and Section 4980B of the Code or applicable state
Law.
(h) None of the Employee Benefit Plans which are employee welfare
benefit plans (as defined in section 3(1) of ERISA) are sponsored by the
Company.
Section 3.14. Labor Matters. (a) The Company is not a party to
any collective bargaining agreement with any labor union. To the Knowledge of
Seller, as of the date hereof, there are no representation or certification
proceedings or petitions seeking a representation or certification proceeding
pending or threatened to be brought or filed with the National Labor Relations
Board or any other labor relations tribunal involving the employees of the
Company.
(b) Except as set forth on Schedule 3.14 of the Disclosure
Letter, there are no material grievances, unfair labor practices or employment
discrimination charges, complaints or claims against the Company pending before
any Governmental Entity or, to the Knowledge of Seller, threatened against the
Company.
Section 3.15. Intellectual Property. (a) Except as set forth on
Schedule 3.15 of the Disclosure Letter:
(i) With respect to each of the Company Intellectual
Property Rights, to the Knowledge of Seller, the Company either (x) is
the sole and exclusive owner of such Company Intellectual Property Right
free and clear of any royalty or other payment obligation or Lien or (y)
has sufficient rights to use such Company Intellectual Property Right in
the conduct of the business of the Company substantially as such business
is currently conducted, under a valid and enforceable license agreement.
(ii) (x) The Company Intellectual Property Rights are, to
the Knowledge of Seller, valid and enforceable, (y) the Company
Intellectual Property Rights and the products and services of the Company
do not, to the Knowledge of Seller, infringe on Intellectual Property
Rights of any third Person and (z) all material
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maintenance taxes, annuities and renewal fees have been paid with respect
to the Company Intellectual Property Rights owned by the Company, and all
other necessary actions to maintain the Company Intellectual Property
Rights have been taken through the date hereof.
(iii) The Company has taken reasonable steps to protect
the Company Intellectual Property Rights and, where applicable, to
preserve the confidentiality of the Company Intellectual Property Rights.
(iv) The Company has not received any written notice of
claim that any of the Company Intellectual Property Rights is expired or
is not valid or enforceable in any country or that it infringes upon or
conflicts with Intellectual Property Rights of any third Person, and no
litigation with respect to any such alleged infringement to which the
Company is a party currently exists.
(v) During the two-year period immediately preceding the
date of this Agreement, the Company has not given any written notice of
infringement to any third Person with respect to any of the Company
Intellectual Property Rights, nor does Seller have any Knowledge of the
infringement by any third Person of any of the Company Intellectual
Property Rights.
(vi) To the extent customary and appropriate, certificates
of registration and renewal, letter patents and copyright registration
certificates and all other instruments evidencing ownership of the
Company Intellectual Property Rights owned by the Company are, or as of
the Closing will be, in the possession or control of the Company.
(b) The term "Intellectual Property Rights" means all proprietary
and other rights, including rights granted under license, in and to the
following:
(i) trademarks, service marks, trademark registrations,
service ▇▇▇▇ registrations, trade names, trade dress, logos and other
designations of origin and applications to register any of the foregoing
("Trademarks");
(ii) copyrights, copyright registrations and applications
for registration of copyrights;
(iii) patents, design patents and utility patents, all
applications for grant of any such patents pending as of the date hereof
or as of the Closing Date or filed within five years prior to the date
hereof, and all reissues, divisions, continuations-in-part and extensions
thereof;
(iv) computer software, including source code, object
code, algorithms, databases, and all related documentation ("Software");
(v) technical documentation, trade secrets, designs,
inventions, processes, formulae, know-how, operating manuals and guides,
plans, new product development, technical and marketing surveys, material
specifications, product
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specifications, invention records, research records, labor routings,
inspection processes, equipment lists, engineering reports and drawing,
architectural or engineering plans, marketing and licensing records,
sales literature, customer lists, trade lists, sales forces and
distributor networks lists, advertising and promotional materials,
service and parts records, warranty records, maintenance records and
similar records; and
(vi) all rights and incidents of interest in and to all
non-competition or confidentiality agreements;
in each case including any all applications therefor or registrations, renewals,
modifications and extensions thereof.
(c) The term "Company Intellectual Property Rights" shall mean
all Intellectual Property Rights owned or held by the Company and used in the
business of the Company as such business is currently conducted.
Section 3.16. Environmental Matters. There are no material legal,
administrative, arbitral or other proceedings, claims, actions, causes of
action, private environmental investigations or remediation activities or
governmental investigations of any nature seeking to impose, or that could
reasonably result in the imposition, on the Company, of any liability or
obligation arising under common law or under any local, state or federal
environmental statute, regulation or ordinance, including the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended,
pending or, to the Knowledge of Seller, threatened against the Company. There is
no reasonable basis for any such proceeding, claim, action or governmental
investigation that could reasonably result in the imposition on the Company of
any such liability or obligation.
Section 3.17. Broker-Dealer. The Company is registered as a
broker-dealer with the SEC and is a duly qualified member of the NASD. Schedule
3.17 of the Disclosure Letter sets forth a complete list of each jurisdiction in
the United States in which the Company is duly qualified or registered as a
broker-dealer. Except as set forth on Schedule 3.17 of the Disclosure Letter,
the Company is not required to obtain any registration as a broker-dealer, an
investment adviser, a commodity trading advisor, a commodity pool operator, a
futures commission merchant, an insurance agent, a sales person or in any
similar capacity with the SEC, the NASD, the Commodity Futures Trading
Commission, any clearing agency, or any other securities commission or
self-regulatory organization in the United States that has not been obtained or
is not in full force and effect, nor has the Company received written notice
from the relevant Governmental Entity of any requirement to qualify or register
as any of the foregoing in any jurisdiction outside the United States.
Section 3.18. Insurance. Schedule 3.18 of the Disclosure Letter
is a complete list as of the date hereof of all policies of fire, general
liability, property and other forms of liability insurance owned, held by or
applicable to the Company or its assets or business, and Seller has made
available to Buyer accurate and complete copies of all such policies. All such
policies are in full force and effect, all premiums with respect to such
policies covering all periods up to and including the Closing Date have been
paid, and no notice of cancellation or termination has been received with
respect to any such policy. Schedule 3.18 of the Disclosure
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Letter includes an accurate list as of the date hereof of all claims involving a
potential loss in excess of US$100,000 that have been made by the Company since
December 31, 2000 under the policies listed on Schedule 3.18 of the Disclosure
Letter applicable to the Company or any of its assets or properties. Such claim
information includes the following information with respect to each accident,
loss or other event: (a) the identity of the claimant; (b) the date of the
occurrence; (c) the status as of the report date; and (d) the amounts paid or
expected to be paid or recovered.
Section 3.19. Bank Accounts . Schedule 3.19 of the Disclosure
Letter is a complete list of the names and locations of each bank or other
financial institution at which the Company has an account (giving the account
numbers) or safe deposit box.
Section 3.20. Improper Payments . To the Knowledge of Seller,
neither the Company nor any Person acting on its behalf has made, paid or
received any bribes, kickbacks or other similar payments to or from any Person,
whether lawful or unlawful. To the Knowledge of Seller, no contributions have
been made by the Company, directly or indirectly, to a domestic or foreign
political party or candidate.
Section 3.21. Brokers. Neither Seller nor the Company has
employed any financial advisor or finder or incurred any liability for any
financial advisory or finders' fees in connection with this Agreement or the
transactions contemplated by this Agreement, except for Deutsche Banc Alex.
▇▇▇▇▇, whose fees will be paid by Seller in accordance with Seller's
arrangements with such firm.
Section 3.22. Securities Act. Seller understands and acknowledges
that the Buyer Shares have not been registered under the Securities Act and will
be subject to certain restrictions and limitations as a result thereof. Seller
shall not offer to sell or otherwise dispose of the Buyer Shares so acquired by
it in violation of any of the registration requirements of the Securities Act.
Seller is an "accredited investor" as that term is defined in Rule 501(a) of
Regulation D promulgated under the Securities Act.
Section 3.23. Customer Lists. To the Knowledge of Seller, the
Company's customer lists and related data have not been integrated into any
database of Seller or any of its Affiliates (other than the Company), and
neither Seller nor any of its Affiliates (other than the Company) has solicited
any customers to become retail brokerage customers of Seller or any of its
Affiliates (other than the Company) using the Company's customer lists or
related data.
Section 3.24. Computer Systems. The computer hardware and
Software and related materials used by the Company are in satisfactory operating
condition for the Company's uses as the Company's business is currently
conducted. Except as set forth in Schedule 3.24 of the Disclosure Letter, to the
Knowledge of Seller, the use of such computer hardware and Software and related
materials by the Company has not resulted in the termination of any Material
Contract or any material reduction in the services provided to the Company,
warranties available to the Company or rights of the Company under any Material
Contracts.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES REGARDING BUYER
Buyer represents and warrants to Seller as follows:
Section 4.01. Organization of Buyer. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization and has all requisite corporate power and
authority to carry on its business as now being conducted. Buyer is duly
qualified or licensed to do business in each jurisdiction in the United States
in which the property owned, leased or operated by it or the nature of the
business conducted by it makes such qualification or licensing necessary, except
where the failure to be so qualified would not reasonably be expected to have a
Buyer Material Adverse Effect. Buyer has made available to Seller true and
correct copies of the articles of incorporation and by-laws or comparable
organizational documents of Buyer, as most recently amended.
Section 4.02. Authority. Buyer has all requisite power and
authority to execute, deliver and perform its obligations under this Agreement
and to consummate the transactions contemplated hereby. This Agreement has been
duly executed and delivered by Buyer and constitutes a valid and binding
obligation of Buyer, enforceable against Buyer in accordance with its terms.
Section 4.03. No Impediments. None of the execution, delivery and
performance of this Agreement by Buyer or the consummation by Buyer of the
transactions contemplated hereby does or will (a) conflict with or violate any
organizational document of Buyer, (b) require any consent, approval,
authorization or permit of, or filing with or notification to, any Governmental
Entity, except as may be required under the HSR Act, (c) require any consent,
waiver or approval or, with or without the giving of notice or lapse of time or
both, result in a default or breach (or give rise to any right of termination,
cancellation, modification or acceleration) under any of the terms, conditions
or provisions of any note, license, agreement, contract, indenture or other
instrument or obligation to which Buyer or any of its Subsidiaries is a party or
by which Buyer or any of its Subsidiaries or any of the assets of Buyer or any
of its Subsidiaries may be bound, except for such consents, approvals and
authorizations that have been obtained or (d) conflict with or violate any Law
applicable to Buyer or any of its Subsidiaries or by which any of the assets of
Buyer or any of its Subsidiaries are bound, except in the case of Sections
4.03(b) through 4.03(d) for any such default, breach or right that would not,
individually or in the aggregate, reasonably be expected to have a Buyer
Material Adverse Effect.
Section 4.04. Absence of Litigation. Except as disclosed in the
Buyer SEC Reports or as set forth in Schedule 4.04 of the Buyer Disclosure
Letter, neither Buyer nor any of its Subsidiaries nor any of their officers,
directors or employees in their capacities as such (i) is subject to any
outstanding injunctions, judgments, orders or decrees of any Governmental Entity
or (ii) is a party to or, to the Knowledge of Buyer, threatened to be made a
party to, or the subject of, any actions, suits, arbitrations, proceedings,
hearings, or investigations of, in, or before any court or quasi-judicial or
administrative agency of any federal, state, local, or foreign jurisdiction or
before any arbitrator, where it is reasonably probable that the Company will
have a liability in
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excess of US$5,000,000 in any individual case (other than any class action
lawsuit or class action lawsuit that has not been certified, which shall not be
subject to such threshold).
Section 4.05. Securities Act. Buyer understands and acknowledges
that neither the Company Shares nor the Company Notes have been registered under
the Securities Act and will be subject to certain restrictions and limitations
as a result thereof. The Company Shares purchased by Buyer pursuant to this
Agreement are being acquired for investment only and not with a view to any
public distribution thereof, and Buyer shall not offer to sell or otherwise
dispose of the Company Shares so acquired by it in violation of any of the
registration requirements of the Securities Act. Buyer is an "accredited
investor" as that term is defined in Rule 501(a) of Regulation D promulgated
under the Securities Act.
Section 4.06. Brokers. Neither Buyer nor any of its Subsidiaries
has employed any financial advisor or finder or incurred any liability for any
financial advisory or finders' fees in connection with this Agreement or the
transactions contemplated by this Agreement except for ▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney
Inc., whose fees will be paid by Buyer in accordance with Buyer's arrangements
with such firm.
Section 4.07. Capitalization of Buyer. (a) The authorized capital
stock of Buyer consists of (i) 270,000,000 shares of Buyer Common Stock, (ii)
18,000,000 shares of Class B common stock, par value US$.01 per share (the
"Class B Stock"), and (iii) 3,000,000 shares of preferred stock, par value
US$1.00 per share (the "Buyer Preferred Stock"). As of the date hereof, (i)
172,921,099 shares of Buyer Common Stock were issued and outstanding; (ii)
16,372,800 shares of Class B Stock were issued and outstanding; and (iii) no
shares of Buyer Preferred Stock were issued and outstanding. As of the date
hereof, 10,560,000 shares of Buyer Common Stock were reserved for issuance upon
exercise of outstanding options issued pursuant to Buyer's 1996 Long-Term
Incentive Plan and Buyer's Directors Incentive Plan and 32,772 shares of Buyer
Common Stock were issued and held in the treasury of Buyer.
(b) All of the issued and outstanding shares of capital stock of
Buyer are, and when issued in accordance with the terms hereof, the Buyer Shares
will be, duly authorized, validly issued, fully paid and non-assessable. Seller
will acquire valid and marketable title to the Buyer Shares, free and clear of
all Liens or transfer restrictions imposed by or through Buyer, except for
restrictions imposed by (i) federal or state securities or "blue sky" laws and
(ii) this Agreement. The designations, powers, preferences, rights,
qualifications, limitations and restrictions in respect of each class or series
of capital stock of Buyer are as set forth in the certificate of incorporation,
and all such designations, powers, preferences, rights, qualifications,
limitations and restrictions are valid, binding and enforceable in accordance
with their terms and in accordance with applicable Law.
(c) Except as set forth above, and except for the transactions
contemplated by this Agreement (i) no subscription, warrant, option, convertible
security or other right (contingent or otherwise) to purchase or acquire any
shares of capital stock of Buyer is authorized or outstanding; (ii) Buyer has no
obligation (contingent or otherwise) to issue any subscription, warrant, option,
convertible security or other such right or to issue or distribute to holders of
any shares of its capital stock any evidences of indebtedness or assets of
Buyer; (iii) Buyer has no obligation (contingent or otherwise) to purchase,
redeem or otherwise acquire any
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shares of its capital stock or any interest therein or to pay any dividend or
make any other distribution in respect thereof; and (iv) except as described in
Schedule 4.07(c)(iv) of the Buyer Disclosure Schedule, there are no agreements,
written or oral, between Buyer and any holder of its capital stock or, to the
Knowledge of Buyer, among any holders of its capital stock, relating to the
acquisition, disposition or voting of the capital stock of Buyer. No Person is
entitled to (i) any preemptive right, right of first refusal or similar right
granted by Buyer with respect to the issuance of any capital stock of Buyer.
Except as described in Schedule 4.07 of the Buyer Disclosure Letter and except
as provided in the Registration Rights Agreement, no Person has been granted
rights by Buyer with respect to the registration of any capital stock of Buyer
under the Securities Act. All of the issued and outstanding shares of Buyer's
capital stock have been offered, issued and sold by the Company in compliance
with applicable federal and state securities laws.
Section 4.08. SEC Reports; Financial Statements; No Undisclosed
Liabilities. (a) Except as described in Schedule 4.08(a) of the Buyer Disclosure
Letter. Buyer has timely filed all required forms, reports and documents with
the SEC since January 1, 1999, each of which has complied in all material
respects with all applicable requirements of the Securities Act and the Exchange
Act and the rules and regulations of the SEC thereunder, each as in effect on
the dates such forms, reports and documents were filed. No Subsidiary of Buyer
has filed, or is required to file, any form, report or other document with the
SEC. Buyer has heretofore made available to Parent, in the form filed with the
SEC, (i) its annual reports on Form 10-K for each of the fiscal years ended
September 30, 1998, 1999 and 2000; (ii) all definitive proxy statements relating
to Buyer's meetings of stockholders (whether annual or special) held since
January 1, 1999; and (iii) all other reports or registration statements filed by
Buyer with the SEC since January 1, 1999 and prior to the date hereof (the
"Buyer SEC Reports"). None of such forms, reports or documents, including any
financial statements or schedules included or incorporated by reference therein,
contained, when filed, any untrue statement of a material fact or omitted to
state a material fact required to be stated or incorporated by reference therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(b) The audited and unaudited consolidated financial statements
of Buyer included (or incorporated by reference) in the Buyer SEC Reports were
prepared in accordance with GAAP applied on a consistent basis (except as may be
set forth in the notes thereto), and fairly present in all material respects the
consolidated financial position of Buyer and its consolidated Subsidiaries as of
the dates indicated and their consolidated results of operations and cash flows
for the periods indicated (subject, in the case of the unaudited interim
financial statements, to the absence of notes and to normal year-end adjustments
that will not be material in amount). The financial statements are in accordance
with the books and records of Buyer and its consolidated Subsidiaries. Except as
disclosed in Schedule 4.08(b) of the Buyer Disclosure Letter, Buyer has not
incurred any material liabilities since June 30, 2001 that would be required to
be reflected on or reserved against on a balance sheet prepared in accordance
with GAAP, except for trade payables, accrued expenses and other liabilities
incurred in the ordinary course of business.
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Section 4.09. Absence of Material Adverse Change. Since June 30,
2001, Buyer has not experienced or suffered any change, occurrence or event that
has had, or would reasonably be expected to have, a Buyer Material Adverse
Effect.
Section 4.10. Permits; Compliance. Buyer and its Subsidiaries are
in possession of all material franchises, grants, authorizations, licenses,
permits, easements, variances, exceptions, consents, certificates, approvals and
orders of any Governmental Entity legally necessary for them to carry on their
business as it is now being conducted in the United States (the "Buyer
Permits"), and no suspension or cancellation of any of the Buyer Permits is
pending or, to the Knowledge of Buyer, threatened. Buyer and its Subsidiaries
are not in conflict with, or in default or violation of, nor, with the giving of
notice or lapse of time or both, would Buyer or any of its Subsidiaries be in
conflict with, or in default or violation of, (a) any Law applicable to Buyer or
any of its Subsidiaries or by which any property or asset of Buyer or any of its
Subsidiaries is bound, except, in each case, for any conflict, default or
violation that would not, individually or in the aggregate, have a Buyer
Material Adverse Effect or (b) any of the Buyer Permits.
ARTICLE V
COVENANTS AND OTHER AGREEMENTS OF THE PARTIES
Section 5.01. Conduct of Business by the Company. Until the
Closing, as consented to in writing by Buyer (such consent not to be
unreasonably withheld or delayed), as disclosed in the Disclosure Letter or as
required by applicable Law, Seller shall cause the business of the Company to be
conducted in the ordinary course, and Seller shall not permit the Company to:
(a) amend its certificate of incorporation, by-laws or other
comparable organizational documents;
(b) declare or pay any dividend or make any other distribution
to its stockholders whether or not upon or in respect of any shares of its
capital stock;
(c) redeem or otherwise acquire any shares of its capital stock
or issue any capital stock or any option, warrant or right relating thereto or
any securities convertible into or exchangeable for any shares of capital stock;
(d) acquire by merging or consolidating with, or by purchasing a
substantial portion of the assets of, or by any other manner, any business or
any corporation, limited liability company, partnership, joint venture,
association or other business organization or division thereof;
(e) acquire or lease any assets material to the Company;
(f) sell, lease, license, mortgage or otherwise subject to any
Lien or dispose of any of its properties or assets that are material to the
Company;
(g) incur or assume any Debt, other than indemnities and
performance bonds in the ordinary course and consistent with past practice;
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(h) enter into any contract which would be a Material Contract,
or modify, amend or terminate any Material Contract or waive, release, cancel or
assign any material rights or claims thereunder, including the waiver, release,
cancellation or assignment of any material Debt owing to the Company or the
prepayment of any principal or interest on any Debt;
(i) make any material change to its accounting systems, methods,
policies, principles or practices, except as may be required by GAAP;
(j) except as required by the terms and provisions of written
contracts between the Company, on the one hand, and an employee, on the other
hand, as in existence on the date of this Agreement or to comply with any
applicable Law, (i) adopt or amend any Employee Benefit Plan or (ii) materially
increase in any manner the aggregate compensation or benefits (including
commissions) of any officer, director, employee or independent contractor of the
Company other than, in the case of clause (ii), increases in compensation
granted to employees who are not officers or directors of the Company in the
ordinary course of business consistent with past practice;
(k) engage in any transactions with any of its Affiliates other
than on an arm's-length basis;
(l) fail to comply with the minimum net capital requirements as
set forth in Rule 15c3-1 promulgated under the Exchange Act; or
(m) authorize, or commit or agree to take, any of the foregoing
actions.
Section 5.02. Access to Information. Subject to any applicable
legal restrictions, Seller shall, and shall cause the Company to, upon
reasonable notice during normal business hours during the period prior to the
Closing, afford to Buyer and its accountants, counsel and other representatives
reasonable access to all of the personnel, properties, books, contracts,
commitments, Tax Returns and records of the Company, shall furnish promptly to
Buyer any information concerning the Company as Buyer may reasonably request and
shall assist Buyer in communicating with Persons having business relationships,
agreements and arrangements with the Company regarding the transaction
contemplated by this Agreement; provided that such access does not unreasonably
disrupt the normal operations of the Company.
Section 5.03. Confidentiality. Buyer acknowledges that the
information being provided to it in connection with this Agreement and the
consummation of the transactions contemplated hereby is subject to the
Confidentiality Agreement, the terms of which are incorporated herein by
reference. Effective upon, and only upon, the Closing, the Confidentiality
Agreement shall terminate with respect to information relating solely to the
Company, as the case may be; provided that Buyer acknowledges that any and all
other information provided to it by Seller or Seller's representatives
concerning Seller shall remain subject to the terms and conditions of the
Confidentiality Agreement after the date of the Closing and the terms of the
Confidentiality Agreement shall, insofar as is necessary, be modified
accordingly hereby.
Section 5.04. Maintenance of Records. From and after the Closing,
Buyer agrees (a) to hold all of the books and records of the Company existing on
the Closing Date and
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not to destroy or dispose of any thereof for a period of three years from the
Closing Date or such longer time as may be required by applicable Law, and
thereafter, if it desires to destroy or dispose of such books and records, to
offer first in writing at least 60 calendar days prior to such destruction or
disposition to surrender them to Seller, and (b) to afford Seller, its
accountants and legal counsel, during normal business hours, upon reasonable
request, at any time, full access to such books and records and to the employees
of the Company to the extent that such access may be requested for any
legitimate purpose related to the Company at no cost to Seller (other than for
reasonable out-of-pocket expenses of the Company). From and after the Closing,
Buyer shall have the same rights, and Seller the same obligations, as are set
forth above in this Section 5.04 with respect to any books, records and
employees of Seller pertaining to the business of the Company.
Section 5.05. Commercially Reasonable Efforts; Obtaining
Consents; Further Action. (a) Each of the parties hereto agrees to use its
commercially reasonable efforts to take, and to cause its officers, employees,
representatives, advisors and agents to take, all action and to do, or cause to
be done, all things necessary, proper or advisable to consummate and make
effective as promptly as practicable the transactions contemplated by this
Agreement and to cooperate with each other in connection with the foregoing,
including using commercially reasonable efforts (i) to obtain promptly all
necessary waivers, consents and approvals from other parties to material
agreements, leases and other contracts or agreements, (ii) to make promptly all
filings and obtain promptly all necessary consents, approvals and authorizations
as are required to be obtained under any Law, (iii) to defend all lawsuits or
other legal proceedings challenging this Agreement or the consummation of the
transactions contemplated hereby, (iv) to cause to be lifted or rescinded any
injunction or restraining order or other order adversely affecting the ability
of the parties to consummate the transactions contemplated by this Agreement,
(v) to effect promptly all necessary registrations and other filings and
submissions of information requested by Governmental Entities in connection with
this Agreement and the transactions contemplated hereby and (vi) to cause and
facilitate the prompt satisfaction of all conditions in Article VI.
(b) The parties shall keep each other apprised of the status of
matters relating to the completion of the transactions contemplated hereby and
work cooperatively in connection with obtaining the requisite approvals,
consents or orders of each applicable Governmental Entity, including:
(i) cooperating with each other in connection with
filings under the HSR Act or any other antitrust or competition Laws;
(ii) furnishing to the other party all information within
its possession that is required for any application or other filing to be
made by the other party pursuant to the HSR Act or any other antitrust or
competition Laws in connection with the transactions contemplated by this
Agreement;
(iii) promptly notifying each other of any communications
from or with any Governmental Entity with respect to the transactions
contemplated by this Agreement;
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(iv) not agreeing to participate in any meeting or
discussion with any Governmental Entity in connection with proceedings
under or relating to the HSR Act or any other antitrust or competition
Laws unless it consults with the other party in advance, and, to the
extent permitted by such Governmental Entity, gives the other party the
opportunity to attend and participate thereat; and
(v) consulting and cooperating with one another in
connection with all analyses, appearances, presentations, memoranda,
briefs, arguments, opinions and proposals made or submitted by or on
behalf of any party hereto in connection with proceedings under or
relating to the HSR Act or any other antitrust or competition Laws.
(c) If any party or any Affiliate thereof receives a request for
additional information or documentary material from any Governmental Entity with
respect to this Agreement or the transactions contemplated by this Agreement,
then such party will endeavor in good faith to make, or cause to be made, as
soon as practicable and after consultation with the other party, an appropriate
response in compliance with such request.
(d) At any time and from time to time, each party to this
Agreement agrees, subject to the terms and conditions of this Agreement, to take
such actions and to execute and deliver such documents as may be necessary to
effectuate the purposes of this Agreement at the earliest practicable time.
Section 5.06. Parent Contracts. (a) Until the Closing, Buyer
shall use its commercially reasonable efforts to cause the Company, Buyer or one
or more of Buyer's Subsidiaries to assume as of the Closing, or be substituted
as of the Closing in all respects for Seller or any of its Subsidiaries (other
than the Company) in respect of, all obligations of Seller or any such
Subsidiary (and to obtain a complete release of Seller or such Subsidiary from
all such obligations) under each of the agreements, guarantees, letters of
credit, letters of comfort and other arrangements obtained, provided or entered
into by Seller or any of such Subsidiaries for the benefit of the business of
the Company, which agreements, guarantees, letters of credit, letters of comfort
and arrangements are set forth on Schedule 5.06 of the Disclosure Letter and
which shall include amendments, additions, replacements, deletions and
substitutions thereof consistent with the current extent of such obligations
from the date hereof until the Closing Date (the "Parent Contracts").
(b) Until the Closing, Seller shall use its commercially
reasonable efforts to cause one or more of the Company, Buyer or one or more of
Buyer's Subsidiaries to be assigned as of the Closing the rights of Seller and
each of its Subsidiaries (other than the Company) in respect of the Parent
Contracts.
(c) If any Parent Contract is not assumed, replaced or assigned
in accordance with Sections 5.06(a) and (b) as of the Closing, then, to the
extent reasonably practicable, the parties shall use commercially reasonable
efforts to enter into an alternative, lawful arrangement under which Buyer, the
Company or one or more of Buyer's Subsidiaries shall have the benefit (and
assume the related obligations) of such Parent Contract from and after the
Closing as if such Parent Contract had been so assumed, replaced or assigned.
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Section 5.07. Corporate Name. From and after the Closing Date,
Seller and its Subsidiaries (other than the Company) shall own and retain the
sole, absolute and exclusive proprietary right, title and interest (including
Intellectual Property Rights) in and to (including the right to license or sell
to third-parties) all (i) Trademarks incorporating "National Discount Brokers,"
"NDB" or "▇▇▇.▇▇▇," whether alone or in combination with any other Trademark,
including any corporate design logos associated with "National Discount
Brokers," "NDB" or "▇▇▇.▇▇▇," and (ii) domain names incorporating "National
Discount Brokers," "NDB" or "▇▇▇.▇▇▇," whether alone or in combination with any
other words or characters (collectively, "NDB Names"), and no rights related
thereto or associated therewith or goodwill represented thereby or pertaining
thereto are being transferred hereby or in connection with the transactions
contemplated by this Agreement; provided that Seller hereby grants to Buyer and
its Subsidiaries a royalty-free license to use (i) the NDB Names for a period of
six months after the Closing Date and (ii) (A) Trademarks incorporating
"▇▇▇.▇▇▇," whether alone or in combination with any other Trademark, including
any corporate design logos associated with "▇▇▇.▇▇▇," and (B) domain names
incorporating "▇▇▇.▇▇▇," whether alone or in combination with any other words or
characters, in each of cases (A) and (B) for an additional period of six months
after the initial period of six months after the Closing Date, in each of cases
(i) and (ii) for the limited purpose of notifying customers or any third Person
of the consummation of the transactions contemplated hereby and facilitating the
transition of the business of the Company from Seller to Buyer. The parties
shall cause the Company to change its corporate name, effective on the Closing
Date, to the extent necessary to discontinue the inclusion of "National Discount
Brokers" in its corporate name.
Section 5.08. Certain Insurance Matters. (a) Buyer acknowledges
and agrees that the interest of the Company as insureds or beneficiaries or in
any other capacity under insurance policies and programs of Seller or any of its
Subsidiaries (other than the Company) shall terminate effective as of the
Closing Date.
(b) From and after the Closing Date, neither Buyer nor any of its
Affiliates shall have any liability for workers compensation claims with respect
to the Company either (i) in existence on the Closing Date or (ii) arising from
any event or circumstance taking place or existing prior to or on the Closing
Date. Seller shall fully indemnify Buyer and its Affiliates with respect to any
liability, claim, damage or expense of any kind whatsoever arising out of or
relating to any workers' compensation claim retained by Seller hereunder.
Section 5.09. Notifications. Until the Closing, each party shall
promptly notify the other parties in writing of any fact, change, condition,
circumstance or occurrence or nonoccurrence of any event of which it is aware
that will or is reasonably likely to result in any of the conditions set forth
in Article VI becoming incapable of being satisfied. Such notifications shall be
treated by Buyer in accordance with the confidentiality restrictions set forth
in the Confidentiality Agreement.
Section 5.10. Public Announcements; Customer Communications. (a)
Except as may otherwise be required by applicable Law, prior to the Closing, the
parties will consult with each other before issuing, or permitting any agent or
Affiliate to issue, any press releases or otherwise making, or permitting any
agent or Affiliate to make, any public statements with respect to this Agreement
or the transactions contemplated hereby.
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(b) Immediately after the date of this Agreement, Seller and
Buyer shall jointly prepare, and Seller shall deliver to all customers of the
Company, a communication regarding the acquisition of the Company by Buyer in
accordance with the terms of this Agreement and the consequences of such
transaction to such customers. Except as may otherwise be required by applicable
Law, prior to the Closing, Seller shall not, and shall not permit any agent or
Affiliate to, send any other communication to any customer of the Company
regarding this Agreement or the transactions contemplated hereby without the
prior written consent of Buyer.
Section 5.11. Consents Not Obtained by Closing. Without prejudice
to Section 5.05, if Seller has not obtained by Closing any consent, release or
waiver, or has not given any notice, required by any license, concession,
permit, contract or lease binding upon Seller or any of its Subsidiaries as a
condition precedent to the change of direct or indirect ownership of the
Company, then, to the extent reasonably practicable, the parties shall use
commercially reasonable efforts to enter into an alternative, lawful arrangement
under which Buyer shall have the benefit (and assume the related obligations)
from and after Closing of such change of ownership.
Section 5.12. Information. Each of Seller and Buyer acknowledges
and agrees that it (a) has made its own inquiry and investigation into, and
based thereon, has formed an independent judgment concerning the Company and the
Company Shares or Buyer and the Buyer Shares, as the case may be, and the
transactions contemplated by this Agreement, (b) has been furnished with or
given adequate access to information, as it has requested, about the Company and
the Company Shares or Buyer and the Buyer Shares, as the case may be, and the
transactions contemplated by this Agreement, (c) has had independent legal,
financial and technical advice relating to the Company and the Company Shares or
Buyer and the Buyer Shares, as the case may be, this Agreement and the
transactions contemplated by this Agreement and (d) waives and shall not assert,
and shall cause its Affiliates to waive and not assert, any and all claims
against Seller, or Buyer, as the case may be, any Affiliates of Seller or Buyer,
as the case may be, or any of the respective directors, officers, advisors,
agents or employees of Seller or Buyer, as the case may be, and its Affiliates
in connection with any inaccuracies, misstatements or omissions with respect to
information furnished by any such Persons in connection with this Agreement or
the transactions contemplated hereby, including claims with respect to all
projections, forecasts, plans and budgets furnished to Buyer or Seller, as the
case may be, but excluding claims asserted in accordance with Articles VIII.
Section 5.13. Intra-Group Agreements. Except for the agreements
listed on Schedule 5.13 of the Disclosure Letter or as otherwise provided in
this Agreement, all agreements between the Company, on the one side, and Seller
or any of its Affiliates, on the other side, shall be terminated effective as of
the Closing Date and no further rights or obligations of any party shall
continue thereunder (except, in the case of liabilities accrued prior to the
Closing, for the obligation to pay such amounts due). Except as may be expressly
set forth in any such agreement, all rights of the Company as a member of a
consolidated group with, or as a Subsidiary of, Seller or any of its other
Affiliates, or otherwise, under any contract between Seller or any of its
Affiliates (other than the Company) and any third party for goods, services or
otherwise shall terminate effective as of the Closing Date.
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Section 5.14. Certain Employee Matters. (a) Within 10 Business
Days following the date of this Agreement, Buyer shall deliver to Seller a list
of employees of the Company selected by Buyer (together with the Management
Employees, the "Identified Employees"). All other individuals who, as of the
Closing Date, are employed by the Company, whether or not actively at work on
the Closing Date, shall be referred to herein as the "Continued Employees."
(b) Prior to the Closing, Seller shall cause the employment of
the Identified Employees with the Company to terminate (including by
transferring the employment of any such Identified Employee selected by Seller
to employment with Seller or any Affiliate of Seller other than the Company)
effective no later than the Closing. Seller shall pay or reimburse the Company
or cause the Company to be reimbursed for any amounts paid or required to be
paid by the Company in satisfaction of any and all obligations to or with
respect to such Identified Employees as a result of their termination of
employment with the Company or transfer to other employment with Seller and its
Affiliates, including any severance compensation or benefits or retention
payments that are payable to the Identified Employees in connection with such
terminations or transfers pursuant to the Employee Benefit Plans or any
individual employment or retention bonus agreement between any Identified
Employee and the Company or Seller. From and after the Closing Date, Seller
shall be responsible for any and all liabilities and obligations (i) to the
Management Employees under the employment letter agreements, each dated October
16, 2000, between each such Management Employee and Seller and (ii) to the
Identified Employees, the Continued Employees and all other former employees of
the Company or its Subsidiaries under or pursuant to the Deutsche Bank Share
Scheme or any other equity-based program or arrangement relating to any Deutsche
Bank equity securities or any award granted to any such employee thereunder or
with respect to such Deutsche Bank equity securities.
(c) From and after the Closing Date, Buyer shall, or shall cause
the Company to, assume, honor, pay and perform all of the liabilities and
obligations of Seller and the Company in respect of the Continued Employees
under each of the retention agreements between any such Continued Employee and
the Company or Seller as in effect on the date hereof (other than obligations
described in Section 5.14(b)).
(d) Effective as of the Closing, Seller shall cause the Company
to withdraw from and cease to be a participating employer in each Employee
Benefit Plan and the Continued Employees shall cease to actively participate in
all of the Employee Benefit Plans as of the Closing Date.
(e) From and after the Closing, Buyer shall provide pension,
savings and welfare benefits to the Continued Employees on the same basis as it
provides such benefits to similarly situated employees of Buyer under the Buyer
Benefit Plans. From and after the Closing, Buyer shall cause all service of the
Continued Employees completed with the Company to be recognized for all purposes
under the Buyer Benefit Plans in which any Continued Employee is or will be
eligible to participate (with such eligibility determined taking into account
such service), other than for purposes of determining benefit accrual under any
Buyer Benefit Plan that is a defined benefit plan, provided that in no event
shall any such service be required to be recognized under a Buyer Benefit Plan
to the extent it will result in the duplication
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of benefits for the same period of service. From and after the Closing, Buyer
shall cause each Buyer Benefit Plan in which any Continued Employee is or
becomes eligible to participate that is a medical, dental, other health, life,
disability or other welfare plan to: (x) waive any exclusions for pre-existing
conditions under such Buyer Benefit Plan that would result in a lack of coverage
for any condition for which the applicable Continued Employee would have been
entitled to coverage under the corresponding Employee Benefit Plan in which such
Continued Employee was a participant immediately prior to his commencement of
participation in such Buyer Benefit Plan; (y) waive any waiting period or
medical examination requirement applicable to any Continued Employee under any
such Buyer Benefit Plan to the extent satisfied under a corresponding Employee
Benefit Plan in which such Continued Employee was a participant immediately
prior to the Closing; and (z) provide each Continued Employee with credit for
any co-payments, out-of-pocket expenses and deductibles paid by such Continued
Employee in the calendar year under an Employee Benefit Plan and prior to the
date such employee commences participation in a corresponding Buyer Benefit Plan
in satisfying any applicable co-payments, out-of-pocket expenses and deductible
requirements under such Buyer Benefit Plan for the applicable calendar year.
Section 5.15. 90 ▇▇▇▇▇▇ Real Estate Lease. (a) As of the Closing,
Seller shall assign, and Buyer shall assume the real estate lease agreement
between ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ L.L.C. and Seller (the "▇▇▇▇▇▇ Lease"). To this end,
Seller and Buyer shall enter into an assignment and assumption agreement in form
and substance reasonably satisfactory to Seller and Buyer relating to all
rights, claims, obligations and liabilities of Seller under the ▇▇▇▇▇▇ Lease.
The parties agree that no consideration is being paid for the assignment of the
▇▇▇▇▇▇ Lease.
(b) Seller and Buyer shall use their commercially reasonable
efforts to obtain the consent from ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ L.L.C to such assignment and
assumption agreement (and to obtain at the request of Seller, a complete release
of Seller from all obligations under the ▇▇▇▇▇▇ Lease), together with a
certificate of estoppel, in form and substance reasonably satisfactory to Seller
and Buyer.
(c) In the event that ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ L.L.C. refuses to consent
to the assignment and assumption agreement referred to in this Section 5.15,
Buyer shall, to the extent legally possible, as Seller's representative but for
its own account, complete, fulfill and discharge all of Seller's rights and
obligations under the ▇▇▇▇▇▇ Lease and, failing that, Seller shall administer
the ▇▇▇▇▇▇ Lease in its own name but for the account of Buyer. With respect to
all rights and obligations, and the performance under the ▇▇▇▇▇▇ Lease, that is
being administered by Buyer as Seller's agent, or by Seller for the account of
Buyer, Seller and Buyer shall treat each other as if the assignment and
assumption of the ▇▇▇▇▇▇ Lease had actually occurred effective as of the Closing
Date. Seller agrees that it shall pay and be responsible, and neither Buyer nor
any of its Affiliates shall have any liability, for any costs, expenses or
liabilities arising from or in connection with any default that may be alleged
by ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ L.L.C. under the ▇▇▇▇▇▇ Lease as a result of any arrangement
entered into pursuant to this Section 5.15(c); provided, however, that the
amount of rental payments and other ordinary payments owing under the ▇▇▇▇▇▇
Lease and any costs, liabilities and expenses resulting from Buyer's conduct
while occupying the premises shall be for the account of Buyer.
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Section 5.16. Intra-Group Payables and Receivables. Prior to or
as of the Closing, the Company shall pay, repay or prepay all amounts owing or
payable to Seller or any of its other Affiliates (the "Intra-Group Payables"),
excluding the Company Notes and accrued interest thereon, and Seller shall and
cause its other Affiliates to pay, repay or prepay all amounts owing or payable
to the Company (the "Intra-Group Receivables").
Section 5.17. Registration Rights Agreement. As of the Closing,
Seller and Buyer shall enter into a registration rights agreement (the
"Registration Rights Agreement") relating to the offer and sale of the Buyer
Shares in the form attached hereto as Exhibit A.
ARTICLE VI
CONDITIONS
Section 6.01. Conditions Precedent to Closing Obligation of
Buyer. The obligation of Buyer to consummate the transactions contemplated by
this Agreement at the Closing is subject to the satisfaction at or prior to the
Closing of each of the following conditions (unless satisfaction of any such
condition is expressly waived in a writing delivered by Buyer to Seller):
(a) (i) the representations and warranties of Seller contained in
Article III shall have been accurate in all material respects as of the date
hereof or, in the case of such representations and warranties that, by their
terms, are made as of a date specified therein, shall have been accurate in all
material respects as of such date, and (ii) except for any inaccuracy that has
not caused and is not reasonably likely to cause a Material Adverse Effect on
the Company, the representations and warranties of Seller contained in Article
III (without giving effect to any exception for "Material Adverse Effect" or
other qualifier using the term "material" or any variation thereof) either (A)
shall be accurate as of the Closing Date as though restated on and as of such
date or (B) in the case of such representations and warranties that, by their
terms, are made as of a date specified therein, shall be accurate as of such
date;
(b) Seller shall have performed and complied with, in all
material respects, all agreements, covenants and obligations required by this
Agreement to be performed or complied with by it prior to or at the Closing;
(c) Seller shall have delivered to Buyer a certificate dated as
of the Closing Date, signed by the Chief Executive Officer or Chief Financial
Officer of Seller on behalf of Seller, certifying as to compliance with Sections
6.01 (a) and (b);
(d) no action or proceeding by any Governmental Entity shall have
been instituted or threatened which enjoins or prohibits, or would be reasonably
expected to enjoin or prohibit, any provision of this Agreement or the
consummation of the transactions contemplated hereby, and no action or
proceeding by any other Person shall have been instituted that has resulted in
any order or injunction that prohibits or enjoins any provision of this
Agreement or the transactions contemplated hereby;
(e) no Law shall be in effect that prohibits or declares illegal
the transactions contemplated by this Agreement; and
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(f) all material consents, waivers, approvals, authorizations,
exemptions, registrations, licenses, declarations or filings from or with a
Governmental Entity, the receipt or making of which is required for the
consummation of the transactions contemplated by this Agreement, and each of the
consents from non-governmental third-parties listed on Schedule 3.03 of the
Disclosure Letter and designated with an asterisk shall have been obtained or
made, and all waiting periods specified under applicable Law and all extensions
thereof, the passing of which is necessary for such consummation, shall have
passed;
(g) all Intra-Group Receivables shall have been paid;
(h) Cleary, Gottlieb, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ shall have delivered to
Buyer a legal opinion substantially in the form attached hereto as Exhibit B.
Section 6.02. Conditions Precedent to Closing Obligation of
Seller. The obligation of Seller to consummate the transactions contemplated by
this Agreement at the Closing is subject to the satisfaction at or prior to the
Closing of each of the following conditions (unless satisfaction of any such
condition is expressly waived in a writing delivered by Seller to Buyer):
(a) (i) the representations and warranties of Buyer contained in
Article IV shall have been accurate in all material respects as of the date
hereof or, in the case of such representations and warranties that, by their
terms, are made as of a date specified therein, shall have been accurate in all
material respects as of such date, and (ii) except for any inaccuracy that has
not caused and is not reasonably likely to cause a Buyer Material Adverse
Effect, the representations and warranties of Buyer contained in Article IV
(without giving effect to any exception for "Material Adverse Effect" or other
qualifier using the term "material" or any variation thereof) either (A) shall
be accurate as of the Closing Date as though restated on and as of such date or
(B) in the case of such representations and warranties that, by their terms, are
made as of a date specified therein, shall be accurate as of such date;
(b) Buyer shall have performed and complied with, in all material
respects, all agreements, covenants and obligations required by this Agreement
to be performed or complied with by it prior to or at the Closing;
(c) Buyer shall have delivered to Seller a certificate dated as
of the Closing Date, signed by the Chief Executive Officer or Chief Financial
Officer of Buyer on behalf of Buyer, certifying as to compliance with Sections
6.02 (a) and (b);
(d) no action or proceeding by any Governmental Entity shall have
been instituted or threatened which enjoins or prohibits, or would be reasonably
expected to enjoin or prohibit, any provision of this Agreement or the
consummation of the transactions contemplated hereby, and no action or
proceeding by any other Person shall have been instituted that has resulted in
any order or injunction that prohibits or enjoins any provision of this
Agreement or the transactions contemplated hereby;
(e) no Law shall be in effect that prohibits or declares illegal
the transactions contemplated by this Agreement;
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(f) all material consents, waivers, approvals, authorizations,
exemptions, registrations, licenses, declarations or filings from or with a
Governmental Entity, the receipt or making of which is required for the
consummation of the transactions contemplated by this Agreement, and each of the
consents from non-governmental third-parties listed on Schedule 3.03 of the
Disclosure Letter and designated with an asterisk shall have been obtained or
made, and all waiting periods specified under applicable Law and all extensions
thereof, the passing of which is necessary for such consummation, shall have
passed;
(g) the consent of ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ L.L.C. to the assignment and
assumption agreement between Seller and Buyer pursuant to Section 5.15, together
with a certificate of estoppel executed by ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ L.L.C., shall have
been obtained or, in the absence thereof, Buyer and Seller shall have entered
into an arrangement pursuant to Section 5.15(c), in form and substance
reasonably satisfactory to Seller;
(h) all Intra-Group Payables shall have been paid;
(i) Buyer shall have executed and delivered to Seller the
Registration Rights Agreement;
(j) the Buyer Shares issuable to Seller pursuant to this
Agreement shall have been approved for listing on the Nasdaq National Market,
subject only to official notice of issuance; and
(k) ▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇ shall have delivered to Seller a legal
opinion substantially in the form attached hereto as Exhibit C.
ARTICLE VII
TERMINATION; FAILURE TO CLOSE
Section 7.01. Termination. This Agreement may be terminated
before the Closing:
(a) by mutual written consent of Seller and Buyer;
(b) by either party upon written notice of termination to the
other party, if Closing has not occurred by the close of business on the 90(th)
day after the date hereof; provided, however, that the right to terminate this
Agreement under this Section 7.01(b) shall not be available to a party whose
failure to fulfill any of its obligations contained in this Agreement has been
the cause of, or resulted in, the failure of the Closing to have occurred on or
prior to such date; or
(c) by Buyer or Seller, if any condition set forth in Section
6.01 or 6.02, as the case may be, to such party's Closing obligations shall
become incapable of being satisfied by the date set forth in Section 7.01(b) and
is not waived, provided that the right to terminate this Agreement pursuant to
this Section 7.01(c) shall not be available to any party that has not used the
efforts required by this Agreement to cause such condition to be satisfied.
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Section 7.02. Effect of Termination. If this Agreement is
terminated in accordance with Section 7.01, then this Agreement shall become
null and void and of no further force or effect except for Sections 5.03, 5.10,
5.12 and Articles VII and XI which shall survive such termination. In addition,
the Confidentiality Agreement and all claims arising thereunder shall survive
any termination of this Agreement. Nothing in this Section 7.02 shall be deemed
to release any party from any liability for any breach by such party of the
terms and provisions of this Agreement or to impair the right of any party to
compel specific performance by any other party of its obligations under this
Agreement.
ARTICLE VIII
TAX MATTERS
Section 8.01. Tax Indemnification. (a) Seller shall indemnify and
hold Buyer and the Company (each, a "Tax Indemnitee") harmless from and against
any and all Taxes imposed on the Company in respect of their income, business,
property or operations or for which the Company may otherwise be liable for any
period ending prior to or on the Closing Date, including any Short Period or
Interim Period; provided that no indemnity shall be provided under this Section
8.01(a) in connection with any Taxes resulting from any transaction involving
the Company that occurs after the Closing (including on the Closing Date) that
is not contemplated by this Agreement. Seller shall also indemnify and hold
Buyer harmless from any Taxes of any Person (other than the Company) under
Treasury Regulations ss. 1.1502-6 (or any similar provision under any Law), as
transferee or successor, by contract, or otherwise to the extent such Taxes are
attributable to the ownership of Buyer by Seller (a payment made by Seller
pursuant to this Section 8.01(a) is referred to herein as a "Tax Indemnity
Payment").
(b) Buyer shall indemnify and hold Seller harmless from and
against any and all Taxes resulting from any transaction involving the Company
that occurs after the Closing (including on the Closing Date) that is not
contemplated by this Agreement.
Section 8.02. Apportionment of Taxes. (a) In order to
appropriately apportion any Taxes relating to a period that includes the Closing
Date, the parties hereto will, to the extent permitted by applicable law, elect
with the relevant taxing authority to treat for all purposes the Closing Date as
the last day of a taxable period of the Company (a "Short Period"), and such
period shall be treated as a Short Period and a period ending prior to or on the
Closing Date for purposes of this Agreement.
(b) In any case where applicable law does not permit the Company
to treat the Closing Date as the last day of a Short Period, then, for purposes
of this Agreement, the portion of each Tax that is attributable to the
operations of the Company for the period that would have qualified as a Short
Period if such election had been permitted by applicable law (an "Interim
Period") shall be (i) in the case of a Tax that is not based on net income, the
total amount of such Tax for the period in question multiplied by a fraction,
the numerator of which is the number of days in the Interim Period, and the
denominator of which is the total number of days in such period, and (ii) in the
case of a Tax that is based on net income, the Tax that would be due with
respect to the Interim Period if such Interim Period were a Short Period
determined based upon an interim closing of the books.
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Section 8.03. Refunds and Tax Benefits. (a) Buyer shall promptly
pay to Seller an amount equal to any refund or credit (including any interest
paid or credited with respect thereto) received by a Tax Indemnitee (i) relating
to taxable periods ending on or before the Closing Date or (ii) attributable to
Taxes that gave rise to a Tax Indemnity Payment. Buyer shall, if requested by
Seller (and at Seller's expense), cause the relevant entity to file for and
obtain any refund or credit that would give rise to a payment under this Section
8.03(a). Buyer shall permit Seller to control the prosecution of any such refund
claim, and shall cause the relevant entity to authorize by appropriate power of
attorney such person as Seller shall designate to represent such entity with
respect to such refund claim; provided that Seller shall not be entitled to
prosecute any refund claim that would be materially adverse to Buyer without
Buyer's prior written consent.
(b) Any amount otherwise payable by Seller under this Article
VIII shall be reduced by any Tax benefit that a Tax Indemnitee would not have
otherwise been entitled to but for the Tax or circumstances that gave rise to
Seller making a Tax Indemnity Payment. If a Tax benefit is realized by a Tax
Indemnitee after the payment of a Tax Indemnity Payment then such Tax Indemnitee
shall pay an amount to Seller equal to the Tax benefit realized (including by
way of a reduction in any estimated Tax payments).
Section 8.04. Transfer Tax and Other Closing Expenses. Buyer
shall pay directly, or reimburse Seller promptly upon demand and delivery of
proof of payment for, all excise, sales, transfer, documentary, filing,
recordation and other similar taxes, levies, fees and charges, if any (including
all real estate transfer taxes and conveyance and recording fees, if any), that
may be imposed upon, or payable or collectible or incurred in connection with,
this Agreement and the transactions contemplated hereby. All other expenses of
Closing will be paid by the party incurring such expense.
Section 8.05. Exclusive Remedy. Notwithstanding anything to the
contrary in this Agreement, Tax Claims will be governed exclusively by this
Article VIII.
Section 8.06. Contests. If any claim for Tax is asserted in a
Contest against any Tax Indemnitee that would result in the indemnification of
any such Tax Indemnitee by Seller pursuant to this Article VIII, then the
following provisions of this Section 8.06 will apply to the handling of such
claim. For purposes of this Agreement, "Contest" means any audit, court
proceeding or other dispute with respect to any Tax matter that affects the
Company. Unless Buyer has previously received written notice from Seller of the
existence of such Contest, Buyer shall give written notice to Seller of the
existence of any Contest relating to a Tax matter that is or may be Seller's
responsibility under this Article VIII within 10 days after the receipt by Buyer
of any written notice of such Contest. Each party shall, at no cost to the other
party, cooperate with the other party hereto and the other party's
representatives in a prompt and timely manner in connection with any Contest.
Such cooperation shall include, but not be limited to, making available to the
other party, during normal business hours, all books, records, returns,
documents, files, other information (including, without limitation working
papers and schedules), officers or employees (without substantial interruption
of employment) or other relevant information necessary or useful in connection
with any Contest requiring any such books, records and files. Seller shall, at
its election, have the right to represent the interests of the Company in any
Contest relating to a Tax matter for which Seller may be required to make a Tax
Indemnity
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Payment, to employ counsel of Seller's choice at the expense of Seller and to
control the conduct of such Contest, including settlement or other disposition
thereof; provided that any settlement that would be materially adverse to Buyer
requires Buyer's prior written consent.
Section 8.07. Tax Returns. (a) Seller shall be responsible for
filing (taking into account any extensions received from the relevant Tax
authorities) of all Tax Returns required by Law (i) to be filed by (or on behalf
of) the Company on or prior to the Closing Date and (ii) which include the
Company in a consolidated Tax Return with Seller. Seller agrees that (i) such
Tax Returns will accurately set forth in all material respects, all items
relating to the business activities of the Company to the extent required to be
reflected or included in such Tax Returns by applicable federal, state, local or
foreign Tax Laws, regulations or rules and (ii) all Taxes shown to be payable on
such Tax Returns shall be paid or will be paid by Seller as and when required by
Law.
(b) Buyer shall be responsible for the timely filing (taking into
account any extensions received from the relevant Tax authorities) of all Tax
Returns required by Law to be filed by the Company after the Closing Date other
than consolidated Tax Returns which include both the Company and Seller, it
being understood that all Taxes indicated as due and payable on such returns
shall be the responsibility of Buyer except for such Taxes which are the
responsibility of Seller pursuant to this Article VIII which Seller shall pay
(as and when required by law). Such Tax Returns shall be prepared on a basis
consistent with those prepared for prior taxable periods unless a different
treatment of any item is required by an intervening change in Law.
Section 8.08. After Closing. After the Closing, the parties
shall, and shall cause their Subsidiaries to, make available to the other during
normal business hours, as reasonably requested, and to any Tax authority, all
information, records and documents relating to the liability or potential
liability of the Company for Taxes for all periods prior to or including the
Closing Date and will preserve such information, records and documents until the
expiration of any applicable statute of limitations or extensions thereof.
Section 8.09. Survival. All obligations under this Article VIII
shall survive the Closing hereunder and continue until 30 days following the
expiration of the applicable statute of limitations on assessment of the
relevant Tax. Notwithstanding the foregoing, Seller shall not be responsible for
any claim for indemnification unless Buyer shall have, prior to the expiration
of the relevant statute of limitations, advised Seller in writing of the facts
that constitute or may give rise to an alleged claim for indemnification under
this Article VIII (such claim, a "Tax Claim"), specifying in reasonable detail
the basis under this Agreement for such claim.
Section 8.10. Characterization as Purchase Price Adjustment. All
amounts paid pursuant to this Article VIII and Article IX by one party to
another party shall be treated by such parties as an adjustment of the Purchase
Price.
Section 8.11. Absence of Withholding Tax Liability. Seller shall
deliver to Buyer a certificate complying with the Code and Treasury Regulations,
in form and substance satisfactory to Buyer, certifying that the transactions
contemplated hereby are exempt from withholding under section 1445 of the Code.
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Section 8.12. Section 338(h)(10) Election. Seller and Buyer shall
effect the timely filing of a completed Form 8023 and shall take such other
steps, including those required by Form 8023 and Treasury Regulation Section
1.338(h)(10)-1, as may be necessary to make an effective election pursuant to
Section 338(h)(10) of the Code. Buyer and Seller shall mutually prepare Form
8594 pursuant to Temporary Treasury Regulation Section 1.1060-1T or shall take
such other action required pursuant to the Treasury Regulations under Section
338(h)(10) of the Code to report the allocation of the Purchase Price (the
"Purchase Price Allocation"). Neither Seller nor Buyer shall, nor shall permit
any of their Affiliates to, file any Tax Return, or take any position with a Tax
authority, that is inconsistent with the Purchase Price Allocation.
ARTICLE IX
INDEMNIFICATION
Section 9.01. Survival of Representations and Warranties. The
representations and warranties of the parties hereto contained herein shall
survive the Closing for a period of one year from the Closing Date.
Section 9.02. Indemnification by Seller. Subject to the
provisions of Section 9.04, Seller agrees to indemnify each of the Buyer
Indemnified Parties against, and agrees to hold each of them harmless from, any
and all Losses incurred or suffered by them relating to or arising out of or in
connection with any of the following:
(a) any breach of or any inaccuracy in any representation or
warranty of Seller contained in Article III made as of the date hereof or as
though restated on and as of the Closing Date (in each case without giving
effect to any exception for "Material Adverse Effect" or other qualifier using
the term "material" or any variation thereof in such representation or
warranty); provided that in the case of all representations and warranties a
notice of the Purchaser Indemnified Party's claim shall have been given to
Seller not later than the close of business within one year of the Closing Date;
or
(b) any breach of or failure by Seller to perform any agreement,
covenant or obligation of Seller contained in this Agreement or any document
delivered by Seller to Buyer at the Closing.
Section 9.03. Indemnification by Buyer. Subject to the provisions
of Section 9.04, Buyer agrees to indemnify each Seller Indemnified Party
against, and agrees to hold each of them harmless from, any and all Losses
incurred or suffered by them relating to or arising out of or in connection with
any of the following:
(a) any breach of or any inaccuracy in any representation or
warranty made by Purchaser contained in Article IV made as of the date hereof or
as though restated on and as of the Closing Date (in each case without giving
effect to any exception for "Material Adverse Effect" or other qualifier using
the term "material" or any variation thereof in such representation or
warranty); provided that in the case of all representations and warranties, a
notice of the Seller Indemnified Party's claim shall have been given to Buyer
not later than the close of business within one year of the Closing Date; or
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(b) any breach of or failure by Buyer to perform any agreement,
covenant or obligation of Buyer contained in this Agreement or in any document
delivered by Buyer to Seller at the Closing.
Section 9.04. Limitations on Indemnification. (a) Seller shall
have no liability pursuant to Section 9.02(a) for any Losses incurred or
suffered by the Buyer Indemnified Parties unless and until the aggregate amount
of all such Losses exceeds US$2,000,000, after which time the Buyer Indemnified
Parties shall be entitled to recover only those Losses that exceed US$2,000,000,
and in no event shall Seller have any liability pursuant to Section 9.02(a) for
any Losses incurred or suffered by the Buyer Indemnified Parties in excess of
US$46,200,000 in the aggregate; provided further that this Section 9.04(a) shall
not apply to any intentional or fraudulent breach of or inaccuracy in any
representation or warranty.
(b) Buyer shall have no liability pursuant to Section 9.03(a) for
any Losses incurred or suffered by the Seller Indemnified Parties unless and
until the aggregate amount of all such Losses exceeds US$2,000,000, after which
time the Seller Indemnified Parties shall be entitled to recover only those
Losses that exceed US$2,000,000, and in no event shall Buyer have any liability
pursuant to Section 9.03(a) for any Losses incurred or suffered by the Seller
Indemnified Parties in excess of US$46,200,000 in the aggregate; provided
further that this Section 9.04(b) shall not apply to any intentional or
fraudulent breach of or inaccuracy in any representation or warranty.
(c) The amount of any Losses incurred or suffered by any
Indemnified Person shall be calculated after giving effect to (i) any insurance
proceeds received by the Indemnified Person or any of its Affiliates with
respect to such Losses and (ii) any recoveries obtained by the Indemnified
Person or any of its Affiliates from any third Persons with respect to such
Losses; provided that the obligation of any Indemnifying Person to make any
payment to an Indemnified Person shall not be stayed or delayed pending any
determination as to whether an insurance carrier will make any payment with
respect to all or part of any Losses or whether the Indemnified Person or any of
its Affiliates will recover from any third Person with respect to all or part of
any Losses. If any such proceeds or recoveries are received by an Indemnified
Person or any of its Affiliates with respect to any Losses after an Indemnifying
Person has made a payment to the Indemnified Person with respect thereto, the
Indemnified Person or such Affiliate shall pay to the Indemnifying Person the
amount of such proceeds or recoveries (up to the amount of the Indemnifying
Person's payment).
Section 9.05. Claims. As soon as is reasonably practicable after
becoming aware of a claim for indemnification under this Agreement not involving
a claim, or the commencement of any suit, action or proceeding, of the type
described in Section 9.06, the Indemnified Person shall promptly give notice to
the Indemnifying Person of such claim and the amount (to the extent then
determinable) that, subject to Section 9.04, the Indemnified Person will be
entitled to receive hereunder from the Indemnifying Person; provided that the
failure of the Indemnified Person to give notice shall not relieve the
Indemnifying Person of its obligations under this Article IX except to the
extent (if any) that the Indemnifying Person shall have been prejudiced thereby.
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Section 9.06. Notice of Third Party Claims; Assumption of
Defense. The Indemnified Person shall give notice as promptly as is reasonably
practicable to the Indemnifying Person of the assertion of any claim, or the
commencement of any suit, action or proceeding, by any Person not a party hereto
in respect of which indemnity may be sought under this Agreement; provided that
the failure of the Indemnified Person to give notice shall not relieve the
Indemnifying Person of its obligations under this Article IX except to the
extent (if any) that the Indemnifying Person shall have been prejudiced thereby.
The Indemnifying Person may, at its own expense, (a) participate in the defense
of any such claim, suit, action or proceeding and (b) upon notice to the
Indemnified Person and the Indemnifying Person's delivering to the Indemnified
Person a written agreement that the Indemnified Person is entitled to
indemnification pursuant to Section 9.02 or 9.03 for all Losses arising out of
such claim, suit, action or proceeding and that the Indemnifying Person shall be
liable, subject to Section 9.04, for the entire amount of any Loss, at any time
during the course of any such claim, suit, action or proceeding, assume control
of the defense thereof; provided that (i) the Indemnifying Person's counsel is
reasonably satisfactory to the Indemnified Person and (ii) the Indemnifying
Person shall thereafter consult with the Indemnified Person upon the Indemnified
Person's reasonable request for such consultation from time to time with respect
to such claim, suit, action or proceeding. If the Indemnifying Person assumes
such defense, the Indemnified Person shall have the right (but not the duty) to
participate in the defense thereof and to employ counsel, at its own expense,
separate from the counsel employed by the Indemnifying Person. If, however, the
Indemnified Person reasonably determines in its judgment that representation by
the Indemnifying Person's counsel of both the Indemnifying Person and the
Indemnified Person would present such counsel with a conflict of interest, then
such Indemnified Person may employ separate counsel to represent or defend it in
any such claim, action, suit or proceeding and the Indemnifying Person shall pay
the reasonable fees and disbursements of such separate counsel. Whether or not
the Indemnifying Person chooses to defend or prosecute any such claim, suit,
action or proceeding, all of the parties hereto shall cooperate in the defense
or prosecution thereof.
Section 9.07. Settlement. (a) Any settlement or compromise made
or caused to be made by the Indemnified Person or the Indemnifying Person, as
the case may be, of any claim, suit, action or proceeding of the kind referred
to in Section 9.06 shall also be binding upon the Indemnifying Person or the
Indemnified Person, as the case may be, in the same manner as if a final
judgment or decree had been entered by a court of competent jurisdiction in the
amount of such settlement or compromise. If the defense of such claim, suit,
action or proceeding is not assumed by the Indemnifying Person, the Indemnifying
Person will not be subject to any liability for any settlement or compromise
made without its consent, but such consent may not be unreasonably withheld;
provided that it shall not be unreasonable for an Indemnifying Person to
withhold its consent to any settlement or compromise involving the imposition of
equitable remedies or involving the imposition of any material obligations on
the Indemnifying Person other than monetary obligations for which the
Indemnified Person will be indemnified hereunder. If the Indemnifying Person
assumes the defense of such claim, suit, action or proceeding, the Indemnifying
Person shall have the right to enter into a settlement or compromise of such
claim, suit, action or proceeding without the consent of the Indemnified Person;
provided that the Indemnifying Person shall be required to obtain such consent
if the settlement or compromise involves the imposition of equitable remedies or
involves the
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imposition of any material obligations on the Indemnified Person other than
monetary obligations for which the Indemnified Person will be indemnified
hereunder.
(b) The Indemnified Person shall give the Indemnifying Person at
least 30 days' notice of any proposed settlement or compromise of any claim,
suit, action or proceeding it is defending, during which time the Indemnifying
Person may reject such proposed settlement or compromise; provided that from and
after such rejection, the Indemnifying Person shall be obligated to assume the
defense of and full and complete liability and responsibility for such claim,
suit, action or proceeding. Any and all Losses suffered by the Indemnified Party
in connection with such claim, suit, action or proceeding for which the
Indemnified Person is not otherwise entitled to indemnification under this
Agreement shall be paid by the Indemnifying Party to the extent they exceed the
unindemnified Losses that would have been suffered by the Indemnified Person
under the proposed settlement that was so rejected.
Section 9.08. Failure of Indemnifying Person to Act. In the event
that the Indemnifying Person does not elect to assume the defense of any claim,
suit, action or proceeding, then any failure of the Indemnified Person to defend
or to participate in the defense of any such claim, suit, action or proceeding
or to cause the same to be done, shall not relieve the Indemnifying Person of
its obligations hereunder.
Section 9.09. Net Indemnity Payments. Any amounts payable under
Article VIII and Section 9.02 or Section 9.03 shall be treated by Buyer and
Seller as an adjustment to the Purchase Price.
Section 9.10. Exclusive Remedy. The provisions of this Article IX
shall be the sole and exclusive remedies of the Buyer Indemnified Parties and
the Seller Indemnified Parties for any breach of or inaccuracy in any
representation or warranty set forth in this Agreement or any document delivered
at Closing; provided that this Section 9.10 shall not cover Tax Claims to the
extent covered by Article VIII.
ARTICLE X
NON-SOLICITATION
Section 10.01. Non-Solicitation of Customers. Seller agrees that
from and after the date of this Agreement until one year after the Closing Date
(the "Non-Solicitation Period"), neither Seller nor any of its U.S. Affiliates
(other than the Company) will, directly or indirectly, solicit any Person that
is a customer of the Company at any time during the period from thirty days
prior to the date of this Agreement until the Closing Date to become a retail
brokerage customer of MaxBlue, Deutsche Banc Alex. ▇▇▇▇▇ "Connect" or any retail
brokerage service that is owned, operated or promoted by Seller or any of its
Affiliates; provided that the foregoing shall not prohibit Seller or any of its
Affiliates from (1) engaging in general advertising or mass marketing activities
(including through television, radio, print media, direct mail, telephone
contact, the internet and any other electronic media) that are not targeted
specifically to such Persons, (2) soliciting any Person that is, at any time
during the period from thirty days prior to the date of this Agreement until the
Closing Date, a customer of Seller or any of its Affiliate (other than the
Company), (3) soliciting any Person who initiates contact with Seller or any of
its
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Affiliates (other than in response to a solicitation otherwise prohibited by
this Section 10.01) or (4) soliciting any employee of Seller or any of its
Affiliates (other than the Company) or any immediate family member of any such
employee. Seller shall use its reasonable best efforts to cause its non-U.S.
Affiliates to comply with the restrictions, subject to corresponding
limitations, set forth in this Section 10.01.
Section 10.02. Non-Solicitation of Continued Employees. Seller
agrees that during the Non-Solicitation Period, neither Seller nor any of its
U.S. Affiliates (other than the Company) will, directly or indirectly, solicit
any Continued Employee for employment or encourage any Continued Employee to
leave his or her employment with the Company or Buyer or any of their respective
Affiliates; provided that the foregoing shall not prohibit Seller or any of its
Affiliates from (1) engaging in any general solicitation for employees, (2)
hiring any Continued Employee who responds to any such general solicitation who
was not so solicited or encouraged or (3) soliciting or hiring any Continued
Employee whose employment has previously been terminated by Buyer following the
Closing Date (other than a termination resulting from Seller's breach of this
Section 10.02). Seller shall use its reasonable best efforts to cause its
non-U.S. Affiliates to comply with the restrictions, subject to corresponding
limitations, set forth in this Section 10.02.
Section 10.03. Limitation on Use of NDB Names. Seller agrees that
during the Non-Solicitation Period, neither Seller nor any of its Affiliates
(other than the Company) will, directly or indirectly, use any NDB Name in
connection with the ownership, operation or promotion of MaxBlue, Deutsche Banc
Alex. ▇▇▇▇▇ "Connect" or any retail brokerage service that is owned, operated or
promoted by Seller or any of its Affiliates; provided that the foregoing shall
not prohibit Seller or any of its Affiliates from using any NDB Name in
connection with the ownership, operation or promotion of (1) the Company until
the Closing Date or, with the prior consent of Buyer, the Company for a period
of 90 days after the Closing as is necessary for the transition of the Company
to Buyer and (2) the market-making activities and other wholesale brokerage
services of NDB Capital Markets, L. P. prior to and after the Closing Date.
Section 10.04. Specific Performance. Seller recognizes and
affirms that in the event of breach by it of any of the provisions of this
Article X, money damages would be inadequate and Buyer would have no adequate
remedy at law. Accordingly, Seller agrees that Buyer shall have the right, in
addition to any other rights and remedies existing in its favor, to enforce its
rights and the Seller's obligations under this Article X not only by an action
or actions for damages, but also by an action or actions for specific
performance, injunction and/or other equitable relief in order to enforce or
prevent any violations (whether anticipatory, continuing or future) of the
provisions of this Article X. In the event of a breach or violation by Seller of
any of the provisions of this Article X, the running of any such applicable
restricted period (but not of Seller's obligations under this Article X) shall
be suspended with respect to Seller during the continuance of any actual breach
or violation. If a bond is required to be posted in order for Buyer to secure an
injunction, the parties agree that such bond need not exceed the sum of
US$1,000.
Section 10.05. Severability. If at any time any of the provisions
of this Article X shall be determined to be invalid or unenforceable by reason
of being vague or unreasonable as to duration, area, scope of activity or
otherwise, then this Article X shall be
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considered divisible (with the other provisions to remain in full force and
effect) and the invalid or unenforceable provisions shall become and be deemed
to be immediately amended to include only such time, area, scope of activity and
other restrictions as shall be determined to be reasonable and enforceable by
the court or other body having jurisdiction over the matter, and Seller
expressly agrees that this Agreement, as so amended, shall be valid and binding
as though any invalid or unenforceable provision had not been included herein.
ARTICLE XI
MISCELLANEOUS
Section 11.01. Headings. The section headings herein are for
convenience of reference only, do not constitute part of this Agreement and will
not be deemed to limit or otherwise affect any of the provisions hereof.
References to Sections, unless otherwise indicated, are references to Sections
of this Agreement.
Section 11.02. Notices. All notices to be given pursuant to this
Agreement to any party must be in writing and will be deemed to have been
validly given (as of the time of delivery or, in the case of a facsimile
transmission, of confirmation) if delivered personally, by facsimile
transmission (which is confirmed) or sent by overnight courier (providing proof
of delivery), to such party at its address given below.
The address of each party for the purposes of this Agreement is
as follows:
If to Seller:
National Discount Brokers Group, Inc.
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
Managing Director, General Counsel and Secretary
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
DB U.S. Financial Markets Holding Corporation
▇▇ ▇▇▇▇ ▇▇(▇▇) ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
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And to:
Cleary, Gottlieb, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
If to Buyer:
Ameritrade Holding Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Ameritrade Holding Corporation
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
And to:
▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
Either party may by notice to the other change its address for
notice and will so change its address for notice whenever its existing address
for notice ceases to be adequate for delivery both by hand and by facsimile.
Section 11.03. Assignment. (a) The rights and obligations under
this Agreement may be transferred only with the written consent of the other
party. Any transfer in violation of this Section 11.03(a) shall be null and
void.
(b) This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto, and their respective successors and permitted
assigns.
Section 11.04. Governing Law; Jurisdiction. (a) This Agreement
shall be governed by and construed in accordance with the laws of the State of
New York.
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(b) To the fullest extent permitted by applicable law, each party
hereto (i) agrees that any claim, action or proceeding by such party seeking any
relief whatsoever arising out of, or in connection with, this Agreement or the
transactions contemplated hereby shall be brought only in the United States
District Court for the Southern District of New York or any New York State
court, in each case, located in the Borough of Manhattan and not in any other
State or Federal court in the United States of America or any court in any other
country, (ii) agrees to submit to the exclusive jurisdiction of such courts
located in the Borough of Manhattan for purposes of all legal proceedings
arising out of, or in connection with, this Agreement or the transactions
contemplated hereby, (iii) waives and agrees not to assert any objection that it
may now or hereafter have to the laying of the venue of any such proceeding
brought in such a court or any claim that any such proceeding brought in such a
court has been brought in an inconvenient forum and (iv) agrees that a final
judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by applicable Law.
Section 11.05. Severability. In the event that any provision of
this Agreement shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby as long as the remaining provisions do not
fundamentally alter the relations among the parties.
Section 11.06. Entire Agreement; Amendment. (a) This Agreement,
together with the Confidentiality Agreement, sets forth the entire understanding
and agreement between the parties with respect to the transactions contemplated
hereby and supersedes and replaces any prior understanding, agreement or
statement of intent, in each case written or oral, of any kind and every nature
with respect hereto. Any provision of this Agreement may be amended, modified or
waived in whole or in part at any time by an agreement in writing between the
parties executed in the same manner as this Agreement.
(b) The waiver by any party hereto of a breach of any provision
of this Agreement shall not operate or be construed as a further or continuing
waiver of such breach or as a waiver of any other or subsequent breach. Except
as otherwise expressly provided herein, no failure on the part of any party to
exercise, and no delay in exercising, any right, power or remedy hereunder, or
otherwise available in respect hereof at law or in equity, shall operate as a
waiver thereof, nor shall any single or partial exercise of such right, power or
remedy by such party preclude any other or further exercise thereof or the
exercise of any other right, power or remedy.
Section 11.07. Counterparts. This Agreement may be executed in
any number of separate counterparts each of which when so executed shall be
deemed to be an original and all of which together shall constitute one and the
same agreement.
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IN WITNESS WHEREOF, each of the parties has caused this Agreement
to be executed on its behalf by its officers thereunto duly authorized, all as
of the day and year first above written.
AMERITRADE HOLDING CORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Chief Financial Officer
NATIONAL DISCOUNT BROKERS GROUP, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Managing Director and President
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: Managing Director
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EXHIBIT A
FORM OF REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT
dated as of [ ], 2001
among
AMERITRADE HOLDING CORPORATION
and
NATIONAL DISCOUNT BROKERS GROUP, INC.
49
TABLE OF CONTENTS
SECTION 1. DEFINITIONS.................................................... 1
1.1. Defined terms...................................................... 1
1.2. General interpretive principles.................................... 3
SECTION 2. REGISTRATION RIGHTS............................................ 3
2.1. Shelf registration................................................. 3
2.2. Demand registrations............................................... 4
2.3. Incidental registrations........................................... 7
2.4. Black-out periods.................................................. 8
2.5. Registration procedures............................................ 9
2.6. Underwritten offerings............................................. 13
2.7. No inconsistent agreements; additional rights...................... 14
2.8. Registration expenses.............................................. 14
2.9. Indemnification.................................................... 15
2.10. Rules 144 and 144a................................................. 18
SECTION 3. MISCELLANEOUS.................................................. 18
3.1. Term............................................................... 18
3.2. Injunctive relief.................................................. 19
3.3. Attorneys' fees.................................................... 19
3.4. Notices............................................................ 19
3.5. Successors, assigns and transferees................................ 20
3.6. Governing law; service of process; consent to jurisdiction......... 21
3.7. Headings........................................................... 21
3.8. Severability....................................................... 21
3.9. Amendment; waiver.................................................. 21
3.10. Counterparts....................................................... 22
50
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of [ ],
2001, by and between Ameritrade Holding Corporation, a Delaware corporation (the
"Issuer"), and National Discount Brokers Group, Inc., a Delaware corporation
(the "Investor").
RECITALS
A. WHEREAS, the Issuer and the Investor have entered into a purchase
agreement, dated July 30, 2001 (the "Purchase Agreement"), relating to the
transfer of certain businesses of the Investor to the Issuer, pursuant to which
the Investor will receive Class A common stock of the Issuer; and
B. WHEREAS, as an inducement to the Investor to enter into the Purchase
Agreement, the Issuer has agreed to provide the registration rights set forth in
this Agreement;
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and the mutual promises,
covenants and agreements of the parties hereto, and for other good and valuable
consideration the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
SECTION 1. DEFINITIONS
1.1. Defined Terms. As used in this Agreement, the following terms shall
have the following meanings:
"Adverse Disclosure" means public disclosure of material non-public
information, which disclosure in the good faith judgment of the Board of
Directors of the Issuer based upon the advice of counsel to the Issuer (i) would
be required to be made in any Registration Statement so that such Registration
Statement would not be materially misleading, (ii) would not be required to be
made at such time but for the filing of such Registration Statement and (iii)
would have a material adverse effect on the Company or its business or on the
Company's ability to effect a material proposed acquisition, disposition,
financing or similar transaction.
"Agreement" has the meaning set forth in the preamble hereto.
"Demand Registration" has the meaning set forth in Section 2.2(a).
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
any successor thereto, and any rules and regulations promulgated thereunder, all
as the same shall be in effect from time to time.
"holder" or "holders" means any holder or holders of Registrable Securities
who is a party hereto or who otherwise agrees in writing to be bound by the
provisions of this Agreement pursuant to Section 3.5.
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"Incidental Registration" has the meaning set forth in Section 2.3(a).
"Investor" has the meaning set forth in the preamble hereto.
"Issuer" has the meaning set forth in the preamble and shall include the
Issuer's successors by merger, acquisition, reorganization or otherwise.
"Loss" has the meaning set forth in Section 2.9(a).
"NASD" means the National Association of Securities Dealers, Inc.
"Person" means any individual, firm, limited liability company or
partnership, joint venture, corporation, joint stock company, trust or
unincorporated organization, incorporated or unincorporated association,
government (or any department, agency or political subdivision thereof) or other
entity of any kind.
"Prospectus" means the prospectus included in any Registration Statement,
all amendments and supplements to such prospectus all material incorporated by
reference in such prospectus.
"Purchase Agreement" has the meaning set forth in the recitals hereto.
"Registrable Securities" means the securities of the Issuer issued to the
Investor pursuant to the Purchase Agreement, and any securities that may be
issued or distributed or be issuable in respect thereof by way of stock
dividend, stock split or other distribution, merger, consolidation, exchange
offer, recapitalization or reclassification or similar transaction or exercise
or conversion of any of the foregoing; provided, however, that any of the
foregoing securities shall cease to be "Registrable Securities" to the extent
(i) a Registration Statement with respect to their sale has been declared
effective under the Securities Act and they have been disposed of pursuant to
such Registration Statement, (ii) they have been distributed pursuant to Rule
144 (or any similar provision then in force) under the Securities Act or (iii)
they shall have been otherwise transferred and (A) new certificates for them not
bearing a legend restricting transfer under the Securities Act shall have been
delivered by the Issuer and (B) may be publicly resold (without volume or method
of sale restrictions) without registration under the Securities Act. For
purposes of this Agreement, a "class" of Registrable Securities shall mean all
securities with the same terms, and a "percentage" (or a "majority") of the
Registrable Securities (or, where applicable, of any other securities) shall be
determined (x) based on the number of shares of such securities, in the case of
Registrable Securities which are equity securities, and (y) based on the
principal amount of such securities, in the case of Registrable Securities which
are debt securities.
"registration" means a registration of the Issuer's securities for sale to
the public under a Registration Statement.
"Registration Statement" means any registration statement of the Issuer
filed with, or to be filed with, the SEC under the rules and regulations
promulgated under the Securities Act, including the Prospectus, amendments and
supplements to such registration statement, including
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post-effective amendments, and all exhibits and all material incorporated by
reference in such registration statement.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and any
successor thereto, and any rules and regulations promulgated thereunder, all as
the same shall be in effect from time to time.
"Shelf Registration" means a registration effected pursuant to Section 2.1.
"Shelf Registration Statement" means a Registration Statement of the Issuer
filed with the SEC on Form S-3 (or any successor form or other appropriate form
under the Securities Act) for an offering to be made on a continuous or delayed
basis pursuant to Rule 415 under the Act (or any similar rule that may be
adopted by the SEC) covering the Registrable Securities.
"Underwritten Offering" means a registration in which securities of the
Issuer are sold to an underwriter or underwriters on a firm commitment basis for
reoffering to the public.
1.2. General Interpretive Principles. Whenever used in this Agreement,
except as otherwise expressly provided or unless the context otherwise requires,
any noun or pronoun shall be deemed to include the plural as well as the
singular and to cover all genders. The name assigned this Agreement and the
section captions used herein are for convenience of reference only and shall not
be construed to affect the meaning, construction or effect hereof. Unless
otherwise specified, the terms "hereof," "herein," "hereunder" and similar terms
refer to this Agreement as a whole (including the exhibits, schedules and
disclosure statements hereto), and references herein to Sections refer to
Sections of this Agreement. Unless otherwise specified, the term "days" shall
mean "calendar days".
SECTION 2. REGISTRATION RIGHTS
2.1. Shelf Registration.
(a) Filing. Subject to Section 2.1(c), the Issuer shall file with the SEC
within five (5) Business Days (as defined in the Purchase Agreement) after the
Closing (as defined in the Purchase Agreement) a Shelf Registration Statement
relating to the offer and sale of the Registrable Securities by the holders
thereof from time to time in accordance with the methods of distribution elected
by such holders and shall use its best efforts to cause such Shelf Registration
Statement to be declared effective under the Securities Act as soon as possible
thereafter.
(b) Continued Effectiveness. Subject to Section 2.1(c), the Issuer shall
use its best efforts to keep the Shelf Registration Statement continuously
effective in order to permit the Prospectus forming a part thereof to be usable
by the holders during the term of this Agreement. The Issuer shall not be deemed
to have used its best efforts to keep the Shelf Registration Statement effective
if the Issuer voluntarily takes any action or omits to take any action that
would result in the inability of any holder of Registrable Securities covered by
such Registration
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Statement to be able to offer and sell any such Registrable Securities during
the term of this Agreement, unless such action or omission is required by
applicable law.
(c) Suspension of Registration. If the filing, initial effectiveness or
continued use of the Shelf Registration Statement at any time would require the
Issuer to make an Adverse Disclosure, the Issuer may, upon giving prompt written
notice of such action to the holders, delay the filing or initial effectiveness
of, or suspend use of, the Shelf Registration Statement; provided, however, that
the Issuer shall not be permitted to do so (A) more than two times during any 12
(twelve) month period, (B) for a period exceeding thirty (30) days on any one
occasion or (C) for a period exceeding sixty (60) days in any 12 (twelve) month
period. In the event the Issuer exercises its rights under the preceding
sentence, the holders agree to suspend, immediately upon their receipt of the
notice referred to above, their use of the Prospectus relating to the Shelf
Registration in connection with any sale or offer to sell Registrable
Securities. The Issuer shall immediately notify the holders upon the expiration
of any period during which it exercised its rights under this Section 2.1(c).
The Issuer represents that it has no knowledge of any current or anticipated
circumstance that would reasonably be expected to cause the Issuer to exercise
its rights under this Section 2.1(c).
(d) Underwritten Offering. If the holders of not less than a majority of
any class of Registrable Securities included in any offering pursuant to the
Shelf Registration Statement so elect, such offering shall be in the form of an
Underwritten Offering and the Issuer, if necessary, shall amend or supplement
the Shelf Registration Statement for such purpose. The holders of a majority of
the class of Registrable Securities included in such Underwritten Offering
shall, after consulting with the Issuer, have the right to select the managing
underwriter or underwriters for the offering who shall be reasonably acceptable
to the Issuer, it being understood that Deutsche Banc Alex. ▇▇▇▇▇ or any
affiliate thereof is acceptable to the Issuer.
(e) Effect on Demand and Incidental Registration Obligation. The provisions
of Sections 2.2 and 2.3 shall not apply at any time the Issuer is eligible to
file and maintain the effectiveness of a Shelf Registration Statement and is
complying with its obligations under this Section 2.1 with respect to all
Registrable Securities.
2.2. Demand Registrations.
(a) Demand by Holders. (i) At any time the holders of not less than 25%
percent of any class of the Registrable Securities may make a written request to
the Issuer for registration of (A) all of the Registrable Securities held by
such holders or (B) any part of the Registrable Securities held by such
requesting holders, provided that the estimated market value of the Registrable
Securities to be registered pursuant to this clause (B) is at least $30 million
in the aggregate. Any such requested registration shall hereinafter be referred
to as a "Demand Registration." Each request for a Demand Registration shall
specify the aggregate amount of Registrable Securities to be registered and the
intended methods of disposition thereof.
(ii) Within ten (10) days following receipt of any request for a Demand
Registration, the Issuer shall deliver written notice of such request to all
other holders of Registrable Securities of the class or classes to be
registered. Thereafter, the Issuer shall include in such Demand Registration any
additional Registrable Securities of each such class which the
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holder or holders thereof have requested in writing be included in such Demand
Registration, provided that all requests therefor have been received by the
Issuer within ten (10) days of the Issuer's having sent the applicable notice to
such holder or holders. All such requests shall specify the aggregate amount and
class of Registrable Securities to be registered and the intended method of
distribution of the same. The Issuer may not include in such registration
additional securities of the class or classes of the Registrable Securities to
be registered hereunder, including securities to be sold for the Issuer's own
account or for the account of Persons who are not holders of Registrable
Securities, except for such additional securities of the class or classes of the
Registrable Securities held by other Persons that, at the date of the Purchase
Agreement, had an existing contractual right to participate in such registration
and that validly request participation in such registration pursuant to such
existing right.
(iii) As promptly as practicable (and, in any event, within thirty days)
following receipt of a request for a Demand Registration, the Issuer shall file
a Registration Statement relating to such Demand Registration and shall use its
best efforts to cause such Registration Statement to be declared effective under
the Securities Act.
(b) Limitation on Demand Registrations. In no event shall the Issuer be
required to effect more than four (4) Demand Registrations.
(c) Demand Withdrawal. A holder may withdraw its Registrable Securities
from a Demand Registration at any time. If all such holders do so, the Issuer
shall cease all efforts to secure registration and such registration nonetheless
shall be deemed a Demand Registration for purposes of Section 2.2(b) unless (i)
the withdrawal is based on the reasonable determination of the holders who
requested such registration that there has been, since the date of such request,
a material adverse change in the business or prospects of the Issuer or in
general market conditions or (ii) the holders who requested such registration
shall have paid or reimbursed the Issuer for all of the reasonable out-of-pocket
fees and expenses incurred by the Issuer in connection with the withdrawn
registration.
(d) Effective Registration. The Issuer shall be deemed to have effected a
Demand Registration if the applicable Registration Statement is declared
effective by the SEC and remains effective for not less than 180 days (or such
shorter period as will terminate when all Registrable Securities covered by such
Registration Statement have been sold or withdrawn), or, if such Registration
Statement relates to an Underwritten Offering, such longer period not to exceed
ninety (90) days after such 180(th) day as, in the opinion of counsel for the
underwriter or underwriters, is required by law for the delivery of a Prospectus
in connection with the sale of Registrable Securities by an underwriter or
dealer. No Demand Registration shall be deemed to have been effected if an
Underwritten Offering is contemplated by such Demand Registration and the
conditions to closing specified in the applicable underwriting agreement are not
satisfied by reason of a wrongful act, misrepresentation or breach of such
underwriting agreement or this Agreement by the Issuer.
(e) Suspension of Registration. If the filing, initial effectiveness or
continued use of a Registration Statement in respect of a Demand Registration at
any time would require the Issuer to make an Adverse Disclosure the Issuer may,
upon giving prompt written notice of such action to the holders, delay the
filing or initial effectiveness of, or suspend use of, the such
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Registration Statement; provided, however, that the Issuer shall not be
permitted to do so (A) more than two (2) times during any 12 (twelve) month
period, (B) for a period exceeding thirty (30) days on any one occasion or (C)
for a period exceeding sixty (60) days in any 12 (twelve) month period. In the
event the Issuer exercises its rights under the preceding sentence, the holders
agree to suspend, immediately upon their receipt of the notice referred to
above, their use of the Prospectus relating to the Demand Registration in
connection with any sale or offer to sell Registrable Securities. The Issuer
shall immediately notify the holders of the expiration of any period during
which it exercised its rights under this Section 2.2(e).
(f) Underwritten Offering. If the holders of not less than a majority of
the Registrable Securities of any class which are included in any offering
pursuant to a Demand Registration so elect, such offering shall be in the form
of an Underwritten Offering. The holders of a majority of the class of
Registrable Securities included in such Underwritten Offering shall have the
right to select the managing underwriter or underwriters for the offering, who
shall be reasonably acceptable to the Issuer, it being understood that Deutsche
Banc Alex. ▇▇▇▇▇ or any affiliate thereof is acceptable to the Issuer, and
subject to the right of the Issuer to select one co-managing underwriter
reasonably acceptable to such holders.
(g) Priority of Securities Registered Pursuant to Demand Registrations. If
the managing underwriter or underwriters of a proposed Underwritten Offering of
a class of Registrable Securities included in a Demand Registration (or, in the
case of a Demand Registration not being underwritten, the holders of a majority
of a class of Registrable Securities included in such Registration Statement),
inform the holders of such Registrable Securities in writing that, in its or
their opinion, the number of securities of such class requested to be included
in such Demand Registration exceeds the number which can be sold in such
offering without being likely to have a significant adverse effect on the price,
timing or distribution of the class of securities offered or the market for the
class of securities offered, the number of Registrable Securities of such class
that can be included without having such an adverse effect shall be allocated
pro rata among the holders which have requested participation in the Demand
Registration (based, for each such holder, on the percentage derived by dividing
(i) the number of Registrable Securities of such class which such holder has
requested to include in such Demand Registration by (ii) the aggregate number of
Registrable Securities of such class which all such holders have requested to
include). To the extent that 25% or more of the Registrable Securities requested
to be registered are so excluded, the holders shall have the right to one
additional Demand Registration under this Section 2.2.
(h) Registration Statement Form. Registrations under this Section 2.2 shall
be on such appropriate registration form of the SEC (i) as shall be selected by
the Issuer and as shall be reasonably acceptable to the holders of a majority of
each class of Registrable Securities requesting participation in the Demand
Registration and (ii) as shall permit the disposition of the Registrable
Securities in accordance with the intended method or methods of disposition
specified in the applicable holders' requests for such registration.
Notwithstanding the foregoing, if, pursuant to a Demand Registration, (x) the
Issuer proposes to effect registration by filing a Registration Statement on
Form S-3 (or any successor or similar short-form registration statement), (y)
such registration is in connection with an Underwritten Offering and (z) the
managing underwriter or underwriters shall advise the Issuer in writing that, in
its or their opinion, the use of another form of registration statement (or the
inclusion, rather than the
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incorporation by reference, of information in the Prospectus related to a
Registration Statement on Form S-3 (or other short-form registration statement))
is of material importance to the success of such proposed offering, then such
registration shall be effected on such other form (or such information shall be
so included in such Prospectus).
2.3. Incidental Registrations.
(a) Participation. (i) If the Issuer at any time proposes to file a
Registration Statement with respect to any offering of its securities for its
own account or for the account of any holders of its securities (other than (A)
a registration under Section 2.1 or 2.2 hereof, (B) a registration on Form S-4
or S-8 or any successor form to such forms, or (C) a registration of securities
solely relating to an offering and sale to employees or directors of the Issuer
pursuant to any employee stock plan or other employee benefit plan arrangement
then, as soon as practicable (but in no event less than ten (10) days prior to
the proposed date of filing such Registration Statement), the Issuer shall give
written notice of such proposed filing to all holders of Registrable Securities
that are equity securities (in the case that the Issuer registers equity
securities, including securities convertible into equity securities) or of
Registrable Securities that are debt securities (in the case that the Issuer
register s debt securities), and such notice shall offer the holders of such
Registrable Securities the opportunity to register such number of Registrable
Securities as each such holder may request in writing (an "Incidental
Registration"). Subject to Section 2.3(b), the Issuer shall include in such
Registration Statement all such Registrable Securities which are requested to be
included therein within ten (10) days after the receipt by such holder of any
such notice. If at any time after giving written notice of its intention to
register any securities and prior to the effective date of the Registration
Statement filed in connection with such registration, the Issuer shall determine
for any reason not to register or to delay registration of such securities, the
Issuer may, at its election, give written notice of such determination to each
holder of Registrable Securities and, (x) in the case of a determination not to
register, shall be relieved of its obligation to register any Registrable
Securities in connection with such registration, and (y) in the case of a
determination to delay registering, shall be permitted to delay registering any
Registrable Securities for the same period as the delay in registering such
other securities.
(ii) If the offering pursuant to an Incidental Registration is to be an
Underwritten Offering, then each holder making a request for its Registrable
Securities to be included therein must, and the Issuer shall make such
arrangements with the underwriters so that each such holder may, participate in
such Underwritten Offering on the same terms as the Issuer and other Persons
selling securities in such Underwritten Offering. If the offering pursuant to
such registration is to be on any other basis, then each holder making a request
for an Incidental Registration pursuant to this Section 2.3(a) must participate
in such offering on such basis.
(iii) Each holder of Registrable Securities shall be permitted to withdraw
all or part of such holder's Registrable Securities from an Incidental
Registration at any time; provided, that, except in the case of a withdrawal
pursuant to Section 2.6(b), the Issuer shall be entitled to reimbursement from
the holder of such withdrawn Registrable Securities for any SEC registration
fees incurred by the Issuer in connection with the registration of such
Registrable Securities.
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(b) Priority of Incidental Registration. If the managing underwriter or
underwriters of any proposed Underwritten Offering of a class of securities
included in an Incidental Registration (or in the case of an Incidental
Registration not being underwritten, the Issuer) informs the holders of
Registrable Securities of any class sought to be included in such registration
in writing that, in its or their opinion, the total amount or kind of securities
which such holders and any other Persons intend to include in such offering
exceeds the number which can be sold in such offering without being likely to
have a significant adverse effect on the price, timing or distribution of the
class or classes of the securities offered or the market for the class or
classes of securities offered or the Issuer's common stock, then the securities
of each class to be included in such registration shall be allocated as follows:
(i) first, 100% of the securities that the Issuer or (subject to Section
2.7) any Person (other than a holder of Registrable Securities)
exercising a contractual right to demand registration has proposed to
sell shall be included therein;
(ii) second, the number of securities of such class held by other Persons
that, at the date of the date of the Purchase Agreement, had an
existing contractual right to participate in such registration that
in the opinion of such underwriter or underwriters (or in the case of
an Incidental Registration not being underwritten, the Issuer), can
be sold without having such adverse effect shall be included therein,
(iii) third, the number of Registrable Securities of such class that in the
opinion of such underwriter or underwriters (or in the case of an
Incidental Registration not being underwritten, the Issuer), can be
sold without having such adverse effect shall be included therein,
with such number to be allocated pro rata among the holders that have
requested participation in the Incidental Registration (based, for
each such holder, on the percentage derived by dividing (x) the
number of Registrable Securities of such class that such holder has
requested to include in such Incidental Registration by (y) the
aggregate number of Registrable Securities of such class that all
such holders have requested to include); and
(iv) fourth, and only if all of the Registrable Securities referenced in
clauses (iii) have been included, any other securities eligible for
inclusion in such registration shall be included therein.
2.4. Black-out Periods
(a) Black-out Periods for Holders. In the event of a registration by the
Issuer (other than one during the effectiveness of a registration of Registrable
Securities pursuant to Section 2.1), the holders of Registrable Securities
agree, if requested by the Issuer (or, in the case of an Underwritten Offering,
by the managing underwriter or underwriters), not to effect any public sale or
distribution (excluding any sale pursuant to Rule 144 under the Securities Act)
of any securities (except, in each case, as part of the applicable registration,
if permitted) which securities are the same as or similar to those being
registered in connection with such
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registration, or which are convertible into or exchangeable or exercisable for
such securities, during the period beginning seven (7) days before, and ending
sixty (60) days (or such lesser period as may be permitted by the Issuer or such
managing underwriter or underwriters) after, the effective date of the
Registration Statement filed in connection with such registration, to the extent
such holders are timely notified in writing by the Issuer or the managing
underwriter or underwriters.
(b) Black-out Period for the Issuer and Others. (i) In the case of a
registration of a class of Registrable Securities pursuant to Section 2.2
involving the offering and sale of equity securities or securities convertible
into or exchangeable for equity securities, the Issuer agrees, if requested by
the holders of a majority of such class of Registrable Securities to be sold
pursuant to such registration (or, in the case of an Underwritten Offering, by
the managing underwriter or underwriters in such Underwritten Offering), not to
effect (or register for sale) any public sale or distribution of any securities
which are the same as or similar to those being registered, or which are
convertible into or exchangeable or exercisable for such securities, during the
period beginning seven (7) days before, and ending sixty (60) days (or such
lesser period as may be permitted by such holders or such underwriter or
underwriters) after, the effective date of the Registration Statement filed in
connection with such registration (or, in the case of an Underwritten Offering
under the Shelf Registration, the date of the closing under the underwriting
agreement in connection therewith), to the extent the Issuer is timely notified
in writing by a holder of Registrable Securities covered by such Registration
Statement or the managing underwriter or underwriters. The Issuer also agrees
not to effect (or register for sale) any public sale or distribution of any
securities prior to the effectiveness of the Registration Statement filed
pursuant to Section 2.1. Notwithstanding the foregoing, the Issuer may effect a
public sale or distribution of securities of the type described above and during
the periods described above if the same (A) is made pursuant to registrations on
Forms S-4 or S-8 or any successor form to such forms or (B) as part of any
registration of securities for offering and sale to employees or directors of
the Issuer pursuant to any employee stock plan or other employee benefit plan
arrangement.
(ii) The Issuer agrees to use all reasonable efforts to obtain from each
holder of restricted securities of the Issuer which are the same as or similar
to those being registered by the Issuer, or which are convertible into or
exchangeable or exercisable for any of its securities, and which holder is a
director or executive officer of the Issuer or holds at least 2% of any class of
such securities, an agreement not to effect any public sale or distribution of
such securities (other than securities purchased in a public offering) during
any period referred to in this Section 2.4(b), except as part of any such
registration if permitted. Without limiting the foregoing (but subject to
Section 2.7), if after the date hereof the Issuer grants any Person (other than
a holder of Registrable Securities) any rights to demand or participate in a
registration, the Issuer agrees that the agreement with respect thereto shall
include such Person's agreement as contemplated by the previous sentence.
2.5. Registration Procedures.
(a) In connection with the Issuer's registration obligations in this
Agreement, the Issuer will, subject to the limitations set forth herein, use its
best efforts to effect any such registration so as to permit the sale of the
applicable Registrable Securities in accordance with
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the intended method or methods of distribution thereof as expeditiously as
reasonably practicable, and in connection therewith the Issuer will:
(i) before filing a Registration Statement or Prospectus, or any amendments
or supplements thereto and in connection therewith, furnish to the underwriter
or underwriters, if any, and to one representative of the holders of each class
of the Registrable Securities covered by such Registration Statement, copies of
all documents prepared to be filed, which documents will be subject to the
review of such underwriters and such holders and their respective counsel and,
except in the case of a registration under Section 2.3, not file any
Registration Statement or Prospectus or amendments or supplements thereto to
which the holders of a majority of the class of Registrable Securities covered
by the same or the underwriter or underwriters, if any, shall reasonably object;
(ii) prepare and file with the SEC such amendments or supplements to the
applicable Registration Statement or Prospectus as may be (A) reasonably
requested by any participating holder (to the extent such request relates to
information relating to such holder), (B) necessary to keep such registration
effective for the period of time required by this Agreement or (C) reasonably
requested by the holders of a majority of any class of the participating
Registrable Securities;
(iii) notify the selling holders of Registrable Securities and the managing
underwriter or underwriters, if any, and (if requested) confirm such advice in
writing, as soon as reasonably practicable after notice thereof is received by
the Issuer (A) when the applicable Registration Statement or any amendment
thereto has been filed or becomes effective and when the applicable Prospectus
or any amendment or supplement thereto has been filed, (B) of any written
comments by the SEC or any request by the SEC or any other federal or state
governmental authority for amendments or supplements to such Registration
Statement or Prospectus or for additional information, (C) of the issuance by
the SEC of any stop order suspending the effectiveness of such Registration
Statement or any order preventing or suspending the use of any preliminary or
final Prospectus or the initiation or threat of any proceedings for such
purposes and (D) of the receipt by the Issuer of any notification with respect
to the suspension of the qualification of the Registrable Securities for
offering or sale in any jurisdiction or the initiation or threat of any
proceeding for such purpose;
(iv) promptly notify each selling holder of Registrable Securities and the
managing underwriter or underwriters, if any, when the Issuer becomes aware of
the happening of any event as a result of which the applicable Registration
Statement or Prospectus (as then in effect) contains any untrue statement of a
material fact or omits to state a material fact necessary to make the statements
therein (in the case of the Prospectus and any preliminary Prospectus, in light
of the circumstances under which they were made) not misleading or, if for any
other reason it shall be necessary to amend or supplement such Registration
Statement or Prospectus in order to comply with the Securities Act and, in
either case as promptly as reasonably practicable thereafter, prepare and file
with the SEC an amendment or supplement to such Registration Statement or
Prospectus which will correct such statement or omission or effect such
compliance;
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(v) use its best efforts to prevent or obtain at the earliest possible
moment the withdrawal of any stop order with respect to the applicable
Registration Statement or other order suspending the use of any preliminary or
final Prospectus;
(vi) promptly incorporate in a Prospectus supplement or post-effective
amendment to the applicable Registration Statement such information as the
managing underwriter or underwriters, if any, or the holders of a majority of
the Registrable Securities of the class being sold agree should be included
therein relating to the plan of distribution with respect to such Registrable
Securities; and make all required filings of such Prospectus supplement or
post-effective amendment as soon as reasonably practicable after being notified
of the matters to be incorporated in such Prospectus supplement or
post-effective amendment;
(vii) furnish to each selling holder of Registrable Securities and each
managing underwriter, if any, without charge, as many conformed copies as such
holder or managing underwriter may reasonably request of the applicable
Registration Statement;
(vii) deliver to each selling holder of Registrable Securities and each
managing underwriter, if any, without charge, as many copies of the applicable
Prospectus (including each preliminary Prospectus) as such holder or managing
underwriter may reasonably request (it being understood that the Issuer consents
to the use of the Prospectus by each of the selling holders of Registrable
Securities and the underwriter or underwriters, if any, in connection with the
offering and sale of the Registrable Securities covered by the Prospectus) and
such other documents as such selling holder or managing underwriter may
reasonably request in order to facilitate the disposition of the Registrable
Securities by such holder or underwriter;
(ix) on or prior to the date on which the applicable Registration Statement
is declared effective, use its reasonable best efforts to register or qualify
such Registrable Securities for offer and sale under the securities or "Blue
Sky" laws of each state and other jurisdiction of the United States, as any such
selling holder or underwriter, if any, or their respective counsel reasonably
requests in writing, and do any and all other acts or things reasonably
necessary or advisable to keep such registration or qualification in effect so
as to permit the commencement and continuance of sales and dealings in such
jurisdictions for as long as may be necessary to complete the distribution of
the Registrable Securities covered by the Registration Statement; provided that
the Issuer will not be required to qualify generally to do business in any
jurisdiction where it is not then so qualified or to take any action which would
subject it to taxation or general service of process in any such jurisdiction
where it is not then so subject;
(x) cooperate with the selling holders of Registrable Securities and the
managing underwriter, underwriters or agent, if any, to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to
be sold and not bearing any restrictive legends;
(xi) use its best efforts to cause the Registrable Securities covered by
the applicable Registration Statement to be registered with or approved by such
other governmental agencies or authorities as may be necessary to enable the
seller or sellers thereof or the underwriter or underwriters, if any, to
consummate the disposition of such Registrable Securities;
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(xii) not later than the effective date of the applicable Registration
Statement, provide a CUSIP number for all Registrable Securities and provide the
applicable transfer agent with printed certificates for the Registrable
Securities which certificates shall be in a form eligible for deposit with The
Depository Trust Company;
(xiii) obtain for delivery to the holders of each class of Registrable
Securities being registered and to the underwriter or underwriters, if any, an
opinion or opinions from counsel for the Issuer dated the effective date of the
Registration Statement or, in the event of an Underwritten Offering, the date of
the closing under the underwriting agreement, in customary form, scope and
substance, which counsel and opinions shall be reasonably satisfactory to a
majority of the holders of each such class and underwriter or underwriters, if
any, and their respective counsel;
(xiv) in the case of an Underwritten Offering, obtain for delivery to the
Issuer and the underwriter or underwriters, if any, with copies to the holders
of Registrable Securities included in such registration, a cold comfort letter
from the Issuer's independent certified public accountants in customary form and
covering such matters of the type customarily covered by cold comfort letters as
the managing underwriter or underwriters reasonably request, dated the date of
execution of the underwriting agreement and brought down to the closing under
the underwriting agreement;
(xv) cooperate with each seller of Registrable Securities and each
underwriter or agent, if any, participating in the disposition of such
Registrable Securities and their respective counsel in connection with any
filings required to be made with the NASD;
(xvi) use its best efforts to comply with all applicable rules and
regulations of the SEC and make generally available to its security holders, as
soon as reasonably practicable (but not more than 15 months) after the effective
date of the applicable Registration Statement, an earnings statement satisfying
the provisions of Section 11(a) of the Securities Act and the rules and
regulations promulgated thereunder;
(xvii) provide and cause to be maintained a transfer agent and registrar
for all Registrable Securities covered by the applicable Registration Statement
from and after a date not later than the effective date of such Registration
Statement;
(xviii) cause all Registrable Securities of a class covered by the
applicable Registration Statement to be listed on each securities exchange on
which any of the Issuer's securities of such class are then listed or quoted and
on each inter-dealer quotation system on which any of the Issuer's securities of
such class are then quoted;
(xix) make available upon reasonable notice at reasonable times and for
reasonable periods for inspection by a representative appointed by the holders
of a majority of the Registrable Securities of each class covered by the
applicable Registration Statement, by any managing underwriter or underwriters
participating in any disposition to be effected pursuant to such Registration
Statement and by any attorney, accountant or other agent retained by such
sellers or any such managing underwriter, all pertinent financial and other
records, pertinent corporate documents and properties of the Issuer, and cause
all of the Issuer's officers, directors
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and employees and the independent public accountants who have certified its
financial statements to make themselves available to discuss the business of the
Issuer and to supply all information reasonably requested by any such seller,
underwriter, attorney, accountant or agent in connection with such Registration
Statement as shall be necessary to enable them to exe rcise their due diligence
responsibility (subject to the entry by each party referred to in this clause
(xix) into customary confidentiality agreements in a form reasonably acceptable
to the Issuer); and
(xx) in the case of an Underwritten Offering, cause the senior executive
officers of the Issuer to participate in the customary "road show" presentations
that may be reasonably requested by the managing underwriter in any such
Underwritten Offering and otherwise to facilitate, cooperate with, and
participate in each proposed offering contemplated herein and customary selling
efforts related thereto.
(b) The Issuer may require each selling holder of Registrable Securities as
to which any registration is being effected to furnish to the Issuer such
information regarding the distribution of such Securities and such other
information relating to such holder and its ownership of the applicable
Registrable Securities as the Issuer may from time to time reasonably request.
Each holder of Registrable Securities agrees to furnish such information to the
Issuer and to cooperate with the Issuer as necessary to enable the Issuer to
comply with the provisions of this Agreement. The Issuer shall have the right to
exclude any holder that does not comply with the preceding sentence from the
applicable registration.
(c) Each holder of Registrable Securities agrees by acquisition of such
Registrable Securities that, upon receipt of any notice from the Issuer of the
happening of any event of the kind described in Section 2.5(a)(iv), such holder
will discontinue disposition of its Registrable Securities pursuant to such
Registration Statement until such holder's receipt of the copies of the
supplemented or amended Prospectus contemplated by Section 2.5(a)(iv), or until
such holder is advised in writing by the Issuer that the use of the Prospectus
may be resumed, and has received copies of any additional or supplemental
filings that are incorporated by reference in the Prospectus and, if so directed
by the Issuer, such holder will deliver to the Issuer (at the Issuer's expense)
all copies, other than permanent file copies then in such holder's possession,
of the Prospectus covering such Registrable Securities which are current at the
time of the receipt of such notice. In the event that the Issuer shall give any
such n otice in respect of a Demand Registration, the period during which the
applicable Registration Statement is required to be maintained effective shall
be extended by the number of days during the period from and including the date
of the giving of such notice to and including the date when each seller of
Registrable Securities covered by such Registration Statement either receives
the copies of the supplemented or amended Prospectus contemplated by Section
2.5(a)(iv) or is advised in writing by the Issuer that the use of the Prospectus
may be resumed.
2.6. Underwritten Offerings.
(a) Underwriting Agreements. If requested by the underwriters for any
Underwritten Offering requested by holders pursuant to Section 2.1 or 2.2, the
Issuer and the holders of Registrable Securities to be included therein shall
enter into an underwriting agreement with such underwriters, such agreement to
be reasonably satisfactory in substance and
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form to the Issuer, the holders of a majority of each class of the Registrable
Securities to be included in such Underwritten Offering and the underwriters,
and to contain such terms and conditions as are generally prevailing in
agreements of that type, including, without limitation, indemnities no less
favorable to the recipient thereof than those provided in Section 2.9. The
holders of any Registrable Securities to be included in any Underwritten
Offering pursuant to Section 2.3 shall enter into such an underwriting agreement
at the request of the Issuer. All of the representations and warranties by, and
the other agreements on the part of, the Issuer to and for the benefit of such
underwriters included in each such underwriting agreement shall also be made to
and for the benefit of such holders and that any or all of the conditions
precedent to the obligations of such underwriters under such underwriting
agreement be conditions precedent to the obligations of such holders. No holder
shall be required in any such underwriting agreement to make any representations
or warranties to or agreements with the Issuer or the underwriters other than
representations, warranties or agreements regarding such holder, such holders'
Registrable Securities, such holder's intended method of distribution and any
other representations required by law.
(b) Price and Underwriting Discounts. In the case of an Underwritten
Offering requested by holders pursuant to Section 2.1 or 2.2, the price,
underwriting discount and other financial terms for each class of Registrable
Securities of the related underwriting agreement shall be determined by the
holders of a majority of such class of Registrable Securities included in the
Underwritten Offering. In the case of any Underwritten Offering pursuant to
Section 2.3, such price, discount and other terms shall be determined by the
Issuer, subject to the right of the holders to withdraw their request to
participate in the registration pursuant to Section 2.3(a)(iii) after being
advised of such price, discount and other terms.
(c) Participation in Underwritten Offerings. No Person may participate in
an Underwritten Offering unless such Person (i) agrees to sell such Person's
securities on the basis provided in any underwriting arrangements approved by
the Persons entitled to approve such arrangements and (ii) completes and
executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents required under the terms of such underwriting
arrangements.
2.7. No Inconsistent Agreements; Additional Rights. The Issuer will not
enter into, and is not currently a party to, any agreement which is, or could
be, inconsistent with the rights granted to the holders of Registrable
Securities by this Agreement or to any agreement for the registration of
securities that is, or could be, in the aggregate more favorable to the holders
of rights to securities thereunder than to the holders of Registrable Securities
under this Agreement.
2.8. Registration Expenses. (a) The Issuer shall pay all of the expenses
set forth in this paragraph (a) in connection with a registration under this
Agreement of Registrable Securities. Such expenses are (i) all registration and
filing fees, and any other fees and expenses associated with filings required to
be made with the SEC or the NASD, (ii) all reasonable fees and expenses of
compliance with state securities or "Blue Sky" laws, including all fees and
disbursements of counsel in connection with any survey of state securities or
"Blue Sky" laws and the preparation of any memorandum thereon, (iii) all
printing, duplicating, word processing, messenger, telephone, facsimile and
delivery expenses (including expenses of printing certificates for the
Registrable Securities in a form eligible for deposit with The Depository Trust
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Company and of printing prospectuses), (iv) all fees and disbursements of
counsel for the Issuer and of all independent certified public accountants of
the Issuer, (v) Securities Act liability insurance or similar insurance if the
Issuer so desires, (vi) all fees and expenses incurred in connection with the
listing of the Registrable Securities on any securities exchange or the
quotation of the Registrable Securities on any inter-dealer quotation system and
(vii) all applicable rating agency fees with respect to any applicable
Registrable Securities. In addition, in all cases the Issuer shall pay its
internal expenses (including, without limitation, all salaries and expenses of
its officers and employees performing legal or accounting duties), the expense
of any audit and the fees and expenses of any Person, including special experts,
retained by the Issuer. In addition, the Issuer shall pay all reasonable fees
and disbursements of one law firm or other counsel selected by the holders of a
majority of the Registrable Securities being registered, provided, however,
that, to the extent such fees and disbursements exceed an amount of $50,000 with
respect to an individual registration, payment of the amount in excess of
$50,000 shall, in each such case, require the consent of the Issuer which
consent shall not be unreasonably withheld.
(b) The Issuer shall not be required to pay any other costs or expenses in
the course of the transactions contemplated hereby, including underwriting
discounts and commissions and transfer taxes attributable to the sale of
Registrable Securities and the fees and expenses of counsel to the underwriters
other than pursuant to clause (ii) of paragraph (a) above and the last sentence
of paragraph (a) above.
2.9. Indemnification.
(a) Indemnification by the Issuer. The Issuer agrees to indemnify and hold
harmless, to the full extent permitted by law, each selling holder of
Registrable Securities and their respective officers, directors, advisors and
agents and employees and each Person who controls (within the meaning of the
Securities Act or the Exchange Act) such Persons from and against any and all
losses, claims, damages, liabilities (or actions or proceedings in respect
thereof, whether or not such indemnified party is a party thereto) and expenses
(including reasonable costs of investigation and legal expenses), joint or
several (each, a "Loss" and collectively "Losses"), arising out of or based upon
(i) any untrue or alleged untrue statement of a material fact contained in any
Registration Statement under which such Registrable Securities were registered
under the Securities Act (including any final, preliminary or summary Prospectus
contained therein or any amendment thereof or supplement thereto or any
documents incorpor ated by reference therein) or (ii) any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein (in the case of a Prospectus or
preliminary Prospectus, in light of the circumstances under which they were
made) not misleading; provided, however, that the Issuer shall not be liable to
any indemnified party in any such case to the extent that any such Loss arises
out of or is based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in any such Registration Statement in reliance
upon and in conformity with written information furnished to the Issuer by such
holder expressly for use in the preparation thereof. This indemnity shall be in
addition to any liability Issuer may otherwise have. Such indemnity shall remain
in full force and effect regardless of any investigation made by or on behalf of
such holder or any indemnified party and shall survive the transfer of such
securities by such holder . The Issuer will also indemnify, if applicable and if
requested, underwriters, selling brokers, dealer managers
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and similar securities industry professionals participating in any distribution
pursuant hereto, their officers and directors and each Person who controls such
Persons (within the meaning of the Securities Act and the Exchange Act) to the
same extent as provided above with respect to the indemnification of the
Indemnified Persons.
(b) Indemnification by the Holders. Each selling holder of Registrable
Securities agrees (severally and not jointly) to indemnify and hold harmless, to
the full extent permitted by law, the Issuer, its directors and officers and
each Person who controls the Issuer (within the meaning of the Securities Act
and the Exchange Act) from and against any Losses resulting from any untrue
statement of a material fact or any omission of a material fact required to be
stated in the Registration Statement under which such Registrable Securities
were registered under the Securities Act (including any final, preliminary or
summary Prospectus contained therein or any amendment thereof or supplement
thereto or any documents incorporated by reference therein), or necessary to
make the statements therein (in the case of a Prospectus or preliminary
Prospectus, in light of the circumstances under which they were made) not
misleading, to the extent, but only to the extent, that such untrue statement or
omission had been con tained in any information furnished in writing by such
selling holder to the Issuer specifically for inclusion in such Registration
Statement. This indemnity shall be in addition to any liability such holder may
otherwise have. Such indemnity shall remain in full force and effect regardless
of any investigation made by or on behalf of the Issuer or any indemnified
party. In no event shall the liability of any selling holder of Registrable
Securities hereunder be greater in amount than the dollar amount of the proceeds
received by such holder under the sale of the Registrable Securities giving rise
to such indemnification obligation. The Issuer shall be entitled to receive
indemnities from, if applicable and if requested, underwriters, selling brokers,
dealer managers and similar securities industry professionals participating in
the distribution, to the same extent as provided above (with appropriate
modification) with respect to information so furnished in writing by such
Persons specifically for inclus ion in any Prospectus or Registration Statement.
Each holder also shall indemnify any underwriters of the Registrable Securities,
their officers and directors and each Person who controls such underwriters
(within the meaning of the Securities Act) to the same extent as provided above
with respect to the indemnification of the Issuer.
(c) Conduct of Indemnification Proceedings. Any Person entitled to
indemnification hereunder will (i) give prompt written notice to the
indemnifying party of any claim with respect to which it seeks indemnification
(provided, that any delay or failure to so notify the indemnifying party shall
relieve the indemnifying party of its obligations hereunder only to the extent,
if at all, that it is actually and materially prejudiced by reason of such delay
or failure) and (ii) permit such indemnifying party to assume the defense of
such claim with counsel reasonably satisfactory to the indemnified party;
provided, however, that any Person entitled to indemnification hereunder shall
have the right to select and employ separate counsel and to participate in the
defense of such claim, but the fees and expenses of such counsel shall be at the
expense of such Person unless (A) the indemnifying party has agreed in writing
to pay such fees or expenses, (B) the indemnifying party shall have failed to
assume the defen se of such claim within a reasonable time after having received
notice of such claim from the Person entitled to indemnification hereunder and
to employ counsel reasonably satisfactory to such Person, (C) in the reasonable
judgment of any such Person, based upon advice of its counsel, a conflict of
interest exists between such Person and the indemnifying party with respect to
such claims or
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(D) the indemnified party has reasonably concluded (based on advice of counsel)
that there may be legal defenses available to it or other indemnified parties
that are different from or in addition to those available to the indemnifying
party (in which case, if the Person notifies the indemnifying party in writing
that such Person elects to employ separate counsel at the expense of the
indemnifying party, the indemnifying party shall not have the right to assume
the defense of such claim on behalf of such Person). If such defense is not
assumed by the indemnifying party, the indemnifying party will not be subject to
any liability for any settlement made without its consent, but such consent may
not be unreasonably withheld; provided, that an indemnifying party may withhold
its consent to any settlement involving the imposition of equitable remedies or
involving the imposition of any material obligations on such indemnifying party
other than financial obligations for which such indemnified party will be indem
nified hereunder. If the indemnifying party assumes the defense, the
indemnifying party shall have the right to settle such action without the
consent of the indemnified party; provided, that the indemnifying party shall be
required to obtain such consent (which consent shall not be unreasonably
withheld) if the settlement includes any admission of wrongdoing on the part of
the indemnified party or any restriction on the indemnified party or its
officers or directors. No indemnifying party shall consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to each indemnified party
of an unconditional release from all liability in respect to such claim or
litigation. The indemnifying party or parties shall not, in connection with any
proceeding or related proceedings in the same jurisdiction, be liable for the
reasonable fees, disbursements and other charges of more than one separate firm
(together with one fir m of local counsel) at any one time from all such
indemnified party or parties unless (x) the employment of more than one counsel
has been authorized in writing by the indemnifying party or parties, (y) a
conflict or potential conflict exists or may exist (based on advice of counsel
to an indemnified party) between such indemnified party and the other
indemnified parties or (z) an indemnified party has reasonably concluded (based
on advice of counsel) that there may be legal defenses available to it that are
different from or in addition to those available to the other indemnified
parties, in each of which cases the indemnifying party shall be obligated to pay
the reasonable fees and expenses of such additional counsel or counsels.
(d) Contribution. If for any reason the indemnification provided for in the
paragraphs (a) and (b) of this Section 2.9 is unavailable to an indemnified
party or insufficient to hold it harmless as contemplated by paragraphs (a) and
(b) of this Section 2.9, then the indemnifying party shall contribute to the
amount paid or payable by the indemnified party as a result of such Loss in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party on the one hand and the indemnified party on the other. The relative fault
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the indemnifying
party or the indemnified party and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such untrue
statement or omission. Notwithstanding anything in this Section 2.9(d) to the
cont rary, no indemnifying party (other than the Issuer) shall be required
pursuant to this Section 2.9(d) to contribute any amount in excess of the amount
by which the net proceeds received by such indemnifying party from the sale of
Registrable Securities in the offering to which the Losses of the indemnified
parties relate exceeds the amount of any damages which such indemnifying party
has otherwise been required to pay by reason of such untrue statement or
omission. The
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parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 2.9(d) were determined by pro rata allocation or by any
other method of allocation that does not take account of the equitable
considerations referred to in the immediately preceding paragraph. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation. If indemnification is available
under this Section 2.9, the indemnifying parties shall indemnify each
indemnified party to the full extent provided in Sections 2.9(a) and 2.9(b)
hereof without regard to the relative fault of said indemnifying parties or
indemnified party.
2.10. Rules 144 and 144A. The Issuer covenants that it will file the
reports required to be filed by it under the Securities Act and the Exchange Act
and the rules and regulations adopted by the SEC thereunder (or, if the Issuer
is not required to file such reports, it will, upon the request of any holder of
Registrable Securities after the transfer date, make publicly available other
information so long as necessary to permit sales pursuant to Rule 144 or 144A
under the Securities Act), and it will take such further action as any holder of
Registrable Securities may reasonably request, all to the extent required from
time to time to enable such holder to sell Registrable Securities without
registration under the Securities Act within the limitation of the exemptions
provided by (i) Rule 144 or 144A or Regulation S under the Securities Act, as
such Rules may be amended from time to time, or (ii) any similar rule or
regulation hereafter adopted by the SEC. Upon the request of any holder of
Registrable Secu rities, the Issuer will deliver to such holder a written
statement as to whether it has complied with such requirements and, if not, the
specifics thereof.
SECTION 3. MISCELLANEOUS
3.1. Term. This Agreement shall terminate upon the earlier of (i) the third
anniversary of the date of this Agreement and (ii) the date as of which (A) all
of the Registrable Securities have been sold pursuant to a Registration
Statement (but in no event prior to the applicable period referred to in Section
4(3) of the Securities Act and Rule 174 thereunder) or (B) the holders are
permitted to sell their Registrable Securities under Rule 144(k) under the
Securities Act (or any similar provision then in force permitting the sale of
restricted securities without limitation on the amount of securities sold or the
manner of sale). The provisions of Section 2.9 and Section 2.10 shall survive
any termination after consummation of the transactions contemplated by the
Purchase Agreement.
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3.2. Injunctive Relief. It is hereby agreed and acknowledged that it will
be impossible to measure in money the damages that would be suffered if the
parties fail to comply with any of the obligations herein imposed on them and
that in the event of any such failure, an aggrieved Person will be irreparably
damaged and will not have an adequate remedy at law. Any such Person shall,
therefore, be entitled (in addition to any other remedy to which it may be
entitled in law or in equity) to injunctive relief, including, without
limitation, specific performance, to enforce such obligations, and if any action
should be brought in equity to enforce any of the provisions of this Agreement,
none of the parties hereto shall raise the defense that there is an adequate
remedy at law.
3.3. Attorneys' Fees. In any action or proceeding brought to enforce any
provision of this Agreement or where any provision hereof is validly asserted as
a defense, the successful party shall, to the extent permitted by applicable
law, be entitled to recover reasonable attorneys' fees in addition to any other
available remedy.
3.4. Notices. All notices, other communications or documents provided for
or permitted to be given hereunder, shall be made in writing and shall be given
either personally by hand-delivery, by facsimile transmission, by mailing the
same in a sealed envelope, registered first-class mail, postage prepaid, return
receipt requested, or by air courier guaranteeing overnight delivery:
(a) if to the Issuer to:
Ameritrade Holding Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Fax No. ( ▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Ameritrade Holding Corporation
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Fax No. ( ▇▇▇) ▇▇▇-▇▇▇▇
And to:
▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
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(b) if to the Investor to:
National Discount Brokers Group, Inc.
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
Managing Director, General Counsel and Secretary
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
DB U.S. Financial Markets Holding Corporation
▇▇ ▇▇▇▇ ▇▇(▇▇) ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
And to:
Cleary, Gottlieb, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
Each holder, by written notice given to the Issuer in accordance with this
Section 3.4 may change the address to which notices, other communications or
documents are to be sent to such holder. All notices, other communications or
documents shall be deemed to have been duly given: (i) at the time delivered by
hand, if personally delivered; (ii) when receipt is acknowledged in writing by
addressee, if by facsimile transmission; (iii) five business days after having
been deposited in the mail, postage prepaid, if mailed by first class mail; and
(iv) on the first business day with respect to which a reputable air courier
guarantees delivery; provided, however, that notices of a change of address
shall be effective only upon receipt.
3.5. Successors, Assigns and Transferees. (a) The registration rights of
any holder under this Agreement with respect to any Registrable Securities may
be transferred and assigned, provided that no such assignment shall be binding
upon or obligate the Issuer to any such assignee unless and until the Issuer
shall have received notice of such assignment as herein provided and a written
agreement of the assignee to be bound by the provisions of this Agreement. Any
transfer or assignment made other than as provided in the first sentence of this
Section 3.5 shall be null and void.
(b) This Agreement shall be binding upon and shall inure to the benefit of
the parties hereto, and their respective successors and permitted assigns.
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3.6. Governing Law; Service of Process; Consent to Jurisdiction. (a) THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED WITHIN THE
STATE.
(b) To the fullest extent permitted by applicable law, each party hereto
(i) agrees that any claim, action or proceeding by such party seeking any relief
whatsoever arising out of, or in connection with, this Agreement or the
transactions contemplated hereby shall be brought only in the United States
District Court for the Southern District of New York and in any New York State
court located in the Borough of Manhattan and not in any other State or Federal
court in the United States of America or any court in any other country, (ii)
agrees to submit to the exclusive jurisdiction of such courts located in the
State of New York for purposes of all legal proceedings arising out of, or in
connection with, this Agreement or the transactions contemplated hereby and
(iii) irrevocably waives any objection which it may now or hereafter have to the
laying of the venue of any such proceeding brought in such a court and any claim
that any such proceeding brought in such a court has been brought in an
inconvenient fo rum.
3.7. Headings. The section and paragraph headings contained in this
Agreement are for reference purposes only and shall not in any way affect the
meaning or interpretation of this Agreement.
3.8. Severability. Whenever possible, each provision or portion of any
provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law in any jurisdiction, such invalidity,
illegality or unenforceability will not affect any other provision or portion of
any provision in such jurisdiction, and this agreement will be reformed,
construed and enforced in such jurisdiction as if such invalid, illegal or
unenforceable provision or portion of any provision had never been contained
therein.
3.9. Amendment; Waiver.
(a) This Agreement may not be amended or modified and waivers and consents
to departures from the provisions hereof may not be given, except by an
instrument or instruments in writing making specific reference to this Agreement
and signed by the Issuer and the holders of a majority of Registrable Securities
of each class then outstanding. Each holder of any Registrable Securities at the
time or thereafter outstanding shall be bound by any amendment, modification,
waiver or consent authorized by this Section 3.9(a), whether or not such
Registrable Securities shall have been marked accordingly.
(b) The waiver by any party hereto of a breach of any provision of this
Agreement shall not operate or be construed as a further or continuing waiver of
such breach or as a waiver of any other or subsequent breach. Except as
otherwise expressly provided herein, no failure on the part of any party to
exercise, and no delay in exercising, any right, power or remedy hereunder, or
otherwise available in respect hereof at law or in equity, shall operate as a
waiver thereof, nor shall any single or partial exercise of such right, power or
remedy by such
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party preclude any other or further exercise thereof or the exercise of any
other right, power or remedy.
3.10. Counterparts. This Agreement may be executed in any number of
separate counterparts and by the parties hereto in separate counterparts each of
which when so executed shall be deemed to be an original and all of which
together shall constitute one and the same agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
duly executed as of the date first written above.
AMERITRADE HOLDING CORPORATION
By:
-----------------------------------
Name:
Title:
NATIONAL DISCOUNT BROKERS GROUP, INC.
By:
-----------------------------------
Name:
Title:
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EXHIBIT B
FORM OF LEGAL OPINION OF CLEARY, GOTTLIEB, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
[Letterhead of Cleary, Gottlieb, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇]
[ ], 2001
Ameritrade Holding Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇(▇▇) ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
We have acted as special counsel to National Discount Brokers Group,
Inc., a Delaware corporation ("Seller"), and National Discount Brokers
Corporation, a New York corporation (the "Company"), in connection with the
transactions contemplated by the Purchase Agreement, dated as of July 30, 2001
(the "Purchase Agreement"), between Seller and Ameritrade Holding Corporation, a
Delaware corporation ("Buyer"). This opinion letter is furnished pursuant to
Section 6.01(h) of the Purchase Agreement. Capitalized terms used but not
defined herein shall have the meanings ascribed to them in the Purchase
Agreement.
In arriving at the opinions expressed below, we have reviewed the
following documents:
(a) an executed copy of the Purchase Agreement;
(b) an executed copy of the Registration Rights Agreement, dated as of the
date hereof (the "Registration Rights Agreement"), between Seller and
Buyer; and
(c) the documents delivered by Seller and the Company at the Closing
pursuant to the Purchase Agreement.
In addition, we have reviewed the originals or copies certified or otherwise
identified to our satisfaction of all such records of Seller and the Company and
such other instruments and other certificates of public officials, officers and
representatives of Seller and the Company and such
B-1
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Ameritrade Holding Corporation, p.2
other persons, and we have made such investigations of law, as we have deemed
appropriate as a basis for the opinions expressed below.
In arriving at the opinions expressed below, we have assumed the legal
capacity of each individual signatory to a document, the genuineness of all
signatures, the authenticity of all documents submitted to us as originals and
the conformity to the originals of all documents submitted to us as copies. In
addition, we have assumed and have not verified the accuracy as to factual
matters of each document we have reviewed (including, without limitation, the
accuracy of the representations and warranties of each party contained in each
of the Purchase Agreement and the Registration Rights Agreement).
Based on the foregoing, and subject to the further assumptions and
qualifications set forth below, it is our opinion that:
1. Seller is validly existing as a corporation in good standing under
the laws of the State of Delaware, and the Company is validly existing as a
corporation in good standing under the laws of the State of New York.
2. The Company has the corporate power to own and lease its properties
and to conduct its business. Seller has the corporate power to enter into the
Purchase Agreement and the Registration Rights Agreement and to perform its
obligations thereunder.
3. The execution, delivery and performance of the Purchase Agreement
and the Registration Rights Agreement have been duly authorized by all necessary
corporate action of Seller, and each of the Purchase Agreement and the
Registration Rights Agreement has been duly executed and delivered by Seller and
is a valid, binding and enforceable agreement of Seller (except that we express
no opinion with respect to provisions of the Registration Rights Agreement
providing for indemnification and contribution).
4. The sale of the Company Shares and the Company Notes to Buyer
pursuant to the Purchase Agreement and the performance by Seller of its
obligations in the Purchase Agreement (a) do not require Seller or the Company
to obtain any consent, approval, authorization, registration or qualification
of, or filing with, any governmental authority of the United States or the State
of New York, except for such consents, approvals, authorizations, registrations,
qualifications and filings as have been obtained or made prior to the date
hereof, and except for filings that may be required after the date hereof under
the United States securities laws to report the resultant ownership by Seller of
the Buyer Shares (and we express no opinion as to any consent, approval,
authorization, registration, qualification or filing that may be required under
state securities or Blue Sky laws), (b) do not result in a breach or violation
of any of the terms and provisions of, or constitute a default under, the
Certificate of Incorporation or By-Laws of Seller or the Company, and (c) do
not violate any Law of the United States or the State of New York applicable to
Seller or the Company that is normally applicable to transactions of the type
contemplated by the Purchase Agreement (but we express no opinion as to any law,
rule or regulation under state securities or Blue Sky laws or the antifraud
provisions of United States securities laws).
B-2
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Ameritrade Holding Corporation, p.3
5. Assuming the accuracy of the representations and warranties, and
the compliance with the agreements, of Buyer contained in the Purchase
Agreement, no registration of the Company Shares and the Company Notes under the
Securities Act of 1933, as amended, is required for the sale of the Company
Shares and the Company Notes to Buyer pursuant to the Purchase Agreement.
Insofar as the foregoing opinions relate to the valid existence and
good standing of Seller or the Company, they are based solely on a certificate
of good standing received from the Secretary of State of the State of Delaware
or the Secretary of State of the State of New York, as applicable. Insofar as
the foregoing opinions relate to the validity, binding effect or enforceability
of any agreement or obligation of Seller, (a) we have assumed that each other
party to such agreement or obligation has satisfied those legal requirements
that are applicable to it to the extent necessary to make such agreement or
obligation enforceable against it, and (b) such opinions are subject to
applicable bankruptcy, insolvency and similar laws affecting creditors' rights
generally and to general principles of equity. We note that the designation in
Section 11.04 of the Purchase Agreement and Section 3.6 of the Registration
Rights Agreement of New York as the venue for certain actions or proceedings is
subject to the power of the federal and state courts in such State to transfer
actions or to dismiss such actions on the ground that such court is an
inconvenient forum for such action or proceeding.
In rendering the opinions expressed in numbered paragraph 4 above, we
express no opinion as to any consent, approval, authorization, registration,
qualification or filing required under, or any violation of, any Law which may
be or become applicable to the Company as a result of the consummation of the
transactions contemplated by the Purchase Agreement, Buyer's ownership of the
Company Shares or the Company Notes or its operation or intended operation of
the Company after the date hereof.
The foregoing opinions are limited to the federal law of the United
States of America, law of the State of New York and the General Corporation Law
of the State of Delaware.
We are furnishing this opinion letter to you solely for your benefit
in connection with the Purchase Agreement. This opinion letter is not to be
used, circulated, quoted or otherwise referred to for any other purpose.
Very truly yours,
CLEARY, GOTTLIEB, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
By
----------------------------------------
[ ], a Partner
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EXHIBIT C
FORM OF LEGAL OPINION OF ▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇
[letterhead of ▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇]
[ ], 2001
National Discount Brokers Group, Inc.
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
We have acted as counsel to Ameritrade Holding Corporation, a Delaware
corporation ("Buyer"), in connection with the acquisition by Buyer from National
Discount Brokers Group, Inc., a Delaware corporation ("Seller"), of the shares
of common stock of National Discount Brokers Corporation, a New York corporation
(the "Company"), and certain promissory notes issued by the Company to Seller
pursuant to a Purchase Agreement dated as of July 30, 2001 between Seller and
Buyer (the "Agreement"). In connection with the consummation of the transactions
contemplated by the Agreement, Buyer and Seller have also entered into the
Registration Rights Agreement dated as of the date hereof (the "Registration
Agreement"). Capitalized terms not otherwise defined herein shall have the
meanings ascribed to them in the Agreement.
In rendering the opinions expressed herein, we have examined and relied
upon such documents, corporate records, certificates of public officials and
certificates as to factual matters executed by officers of Buyer as we have
deemed necessary or appropriate. We have assumed the authenticity, accuracy and
completeness of all documents, records and certificates submitted to us as
originals, the conformity to the originals of all documents, records and
certificates submitted to us as copies and the authenticity, accuracy and
completeness of the originals of all documents, records and certificates
submitted to us as copies. We have also assumed the legal capacity and
genuineness of the signatures of persons signing all documents in connection
with which the opinions expressed herein are rendered and the due authorization,
execution and delivery of each of the documents covered by the opinions
expressed herein by each party thereto other than Buyer.
Based upon the foregoing and subject to the qualifications set forth below,
we are of the opinion that:
1. Buyer is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, with all requisite corporate
power and authority to own, lease and
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operate its properties and to carry on its business as they are now owned,
leased, operated and conducted.
2. Buyer has full corporate power and authority to execute, deliver and
perform the Agreement and the Registration Agreement and to consummate the
transactions contemplated thereby.
3. The execution, delivery and performance by Buyer of the Agreement and the
Registration Agreement and the consummation by Buyer of the transactions
contemplated thereby have been duly and validly approved by Buyer's board of
directors, and no other corporate actions or proceedings on the part of Buyer
are necessary to authorize the execution, delivery and performance by Buyer of
the Agreement, the Registration Agreement or the transactions contemplated
thereby. Buyer has duly and validly executed and delivered the Agreement and the
Registration Agreement. The Agreement and the Registration Agreement constitute
legal, valid and binding obligations of Buyer, enforceable against Buyer in
accordance with their respective terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, moratorium, reorganization or
similar laws in effect that affect the enforcement of creditors' rights
generally and by equitable limitations on the availability of specific remedies
(except we express no opinion with respect to provisions of the Registration
Agreement providing for indemnification and contribution).
4. No consent, authorization or approval of, or filing or registration with,
any Governmental Entity is necessary in connection with the execution, delivery
and performance by Buyer of the Agreement and the Registration Agreement and the
consummation by Buyer of the transactions contemplated thereby, except those
that have been obtained (and we express no opinion with respect to the states
securities laws or Blue Sky laws).
5. The execution, delivery and performance by Buyer of the Agreement and the
Registration Agreement and the consummation by Buyer of the transactions
contemplated thereby do not and will not (i), violate or conflict with any
provision of the certificate of incorporation or by-laws of Buyer or (ii)
assuming the accuracy of the representations and warranties of Seller set forth
in Section 3.22 of the Agreement, violate any Law applicable to or binding on
Buyer that is normally applicable to transactions of the type contemplated by
the Agreement and the Registration Agreement (except we express no opinion as to
any state securities or Blue Sky law or the antifraud provisions of the United
States securities laws).
6. The shares of Buyer Common Stock issued to Seller in connection with the
Agreement are validly issued, fully paid and non-assessable and are free of any
statutory preemptive rights.
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We are admitted to practice law in the States of Illinois and New York and
we express no opinions as to matters under or involving any laws other than the
laws of the States of Illinois and New York, the federal laws of the United
States of America and the General Corporation Law of the State of Delaware. With
respect to any opinions contained herein on matters governed by the General
Corporation Law of the State of Delaware, you are aware that we are not admitted
to the Bar of the State of Delaware and that such opinions are based solely upon
our familiarity with the General Corporation Law of the State of Delaware as a
result of our prior involvement in transactions of a nature similar to those
contemplated by the Agreement.
This opinion is furnished by us pursuant to Section 6.02(k) of the
Agreement, is solely for your benefit and is not to be used, quoted or otherwise
relied upon by any other Person, or filed or furnished to any other Person or
any Governmental Entity, without our prior written consent.
Very truly yours,
▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇
C-3