Exhibit 99.1
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AGREEMENT AND PLAN OF MERGER
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dated August 1, 2001
between
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ SUTRO
and
ROYAL BANK OF CANADA
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TABLE OF CONTENTS
SECTION PAGE
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RECITALS.....................................................................1
ARTICLE I CERTAIN DEFINITIONS; INTERPRETATION...........................2
1.1 Certain Definitions...........................................2
1.2 Interpretation................................................7
ARTICLE II THE MERGER....................................................8
2.1 The Merger....................................................8
2.1 Effective Time................................................9
2.3 Closing.......................................................9
2.4 Reservation of Right to Revise Structure......................9
ARTICLE III CONSIDERATION; EXCHANGE.......................................9
3.1 Merger Consideration..........................................9
3.2 Rights as Stockholders; Stock Transfers......................10
3.3 Payment for Shares...........................................10
3.4 Dissenting Stockholders......................................11
3.5 Options; Restricted Stock....................................11
ARTICLE IV ACTIONS PENDING THE EFFECTIVE TIME...........................11
4.1 Forbearances of the Company..................................11
4.2 Forbearances of Parent.......................................14
ARTICLE V REPRESENTATIONS AND WARRANTIES...............................15
5.1 Disclosure Schedules.........................................15
5.2 Standard.....................................................15
5.3 Representations and Warranties of the Company................15
5.4 Representations and Warranties of Parent.....................31
ARTICLE VI COVENANTS....................................................33
6.1 Reasonable Best Efforts......................................33
6.2 Proxy Statement..............................................34
6.3 Company Stockholders Meeting.................................34
6.4 Press Releases...............................................35
6.5 Access; Information..........................................35
6.6 Acquisition Proposals........................................36
6.7 No Rights Triggered..........................................37
6.8 Regulatory Applications......................................37
6.9 Employee Matters.............................................38
6.10 Notification of Certain Matters..............................39
6.11 Indemnification; Directors' and Officers' Insurance..........39
6.12 Section 15 of the Investment Company Act.....................41
6.13 ERISA Clients................................................41
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SECTION PAGE
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6.14 Formation of Merger Subsidiary...............................42
6.15 Internal Reorganization......................................42
ARTICLE VII CONDITIONS TO CONSUMMATION OF THE MERGER.....................42
7.1 Conditions to Each Party's Obligation to Effect the Merger...42
7.2 Conditions to Obligation of the Company......................43
7.3 Conditions to Obligation of Parent and Merger Subsidiary.....43
ARTICLE VIII TERMINATION..................................................44
8.1 Termination..................................................44
8.2 Effect of Termination and Abandonment........................45
8.3 Termination Fee..............................................45
ARTICLE IX MISCELLANEOUS................................................46
9.1 Survival.....................................................46
9.2 Waiver; Amendment............................................46
9.3 Counterparts.................................................46
9.4 Governing Law and Venue......................................46
9.5 Expenses.....................................................46
9.6 Notices......................................................47
9.7 Entire Understanding; No Third-Party Beneficiaries...........47
9.8 Assignment...................................................48
9.9 Enforcement..................................................48
ANNEXES
Annex A Form of Stock Option Agreement
Annex B Form of Voting Agreement
Annex C List of Designated Executives to Execute Employment Agreements
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AGREEMENT AND PLAN OF MERGER, dated August 1, 2001, between ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Sutro (the "Company") and Royal Bank of Canada ("Parent").
RECITALS
A. THE COMPANY. The Company is a Delaware corporation, having its
principal place of business in Boston, Massachusetts.
B. PARENT. Parent is a Canadian chartered bank, having its principal
place of business in ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇.
C. MERGER SUBSIDIARY. Merger Subsidiary ("MERGER SUBSIDIARY") will be
a Delaware corporation and an indirect wholly owned subsidiary of Parent that
will have been organized as of the Closing Date (as defined herein) for the
purpose of effecting the Merger (as defined herein) in accordance with this
Agreement.
D. THE MERGER. Subject to the terms and conditions contained in this
Agreement, the parties to this Agreement intend to effect the merger of Merger
Subsidiary with and into the Company, with the Company being the corporation
surviving such merger.
E. STOCK OPTION AGREEMENT. As a condition and inducement to Parent's
willingness to enter into this Agreement, the Board of Directors of the Company
has approved the grant to Parent of an option to purchase shares of Company
Common Stock (as defined herein) pursuant to a Stock Option Agreement with
Parent (the "Stock Option Agreement"), and concurrently with the execution and
delivery of this Agreement, the Company has executed and delivered the Stock
Option Agreement with Parent, in the form of Annex A.
F. VOTING AGREEMENT. As a condition and inducement to Parent's
willingness to enter into this Agreement, TH ▇▇▇ Equity Fund III, L.P. and TH
▇▇▇ Foreign Fund III, L.P., stockholders of, in the aggregate, 18.85% of the
Company Common Stock, concurrently with the execution and delivery of this
Agreement, have executed a Voting and Support Agreement with Parent (the "Voting
Agreement"), in the form of Annex B, whereby such stockholders have agreed,
among other things, to vote to adopt this Agreement at the Company Stockholders
Meeting (as defined herein).
G. EMPLOYMENT AGREEMENTS. As further conditions and inducements to
Parent's willingness to enter into this Agreement, immediately prior to the
execution and delivery of this Agreement, each of the Designated Executives (as
defined herein) have executed and delivered an employment agreement with the
Company (each, an "Employment Agreement").
H. BOARD ACTION. The respective Boards of Directors of each of the
Company and Parent have adopted resolutions approving this Agreement, the Merger
and the Stock Option Agreement, and, in the case of the Board of Directors of
Parent, the Voting Agreement, and, in the case of the Board of Directors of the
Company, declaring the advisability of this Agreement in accordance with the
Delaware General Corporation Law as currently in effect (the "DGCL").
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NOW, THEREFORE, in consideration of the premises, and of the mutual
covenants, representations, warranties and agreements contained herein, the
parties agree as follows:
ARTICLE I
CERTAIN DEFINITIONS; INTERPRETATION
1.1 CERTAIN DEFINITIONS. The following terms are used in this
Agreement with the meanings set forth below:
"ACQUISITION PROPOSAL" has the meaning assigned in Section 6.06.
"AFFILIATE" means, with respect to any specified person, any other person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified person. For the purposes of this definition,
"control" when used with respect to any specified person means the power to
direct the management and policies of such person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"AGREEMENT" means this Agreement, as amended or modified from time to time
in accordance with Section 9.02.
"AMEX" means the American Stock Exchange.
"BANKRUPTCY AND EQUITY EXCEPTION" has the meaning assigned in Section
5.03(e)(i).
"BUSINESS DAY" means any day other than a Saturday, a Sunday or any day on
which banks in the State of New York are required or authorized by law or
regulation to be closed.
"BYLAWS" has the meaning assigned in Section 2.01(c).
"CERTIFICATE OF INCORPORATION" has the meaning assigned in Section 2.01(b).
"CFTC" means the Commodities Futures Trading Commission.
"CLIENT" means any person to whom the Company or any of its Subsidiaries
provides brokerage, investment advisory or other financial services under any
Contract.
"CLOSING" and "CLOSING DATE" have the meanings assigned in Section 2.03.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMPANY" has the meaning assigned in the Preamble.
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"COMPANY COMMON STOCK" means the common stock, par value $0.01 per share,
of the Company.
"COMPANY FINANCIAL STATEMENTS" has the meaning assigned in Section
5.03(h)(ii).
"COMPANY IP RIGHTS" has the meaning assigned in Section 5.03(y)(i).
"COMPANY OPTIONS" means, collectively, outstanding options to purchase
shares of Company Common Stock under the Company Stock Plans.
"COMPANY PROXY STATEMENT" has the meaning assigned in Section 6.02(a).
"COMPANY REQUISITE VOTE" has the meaning assigned in Section 5.03(e)(i).
"COMPANY RESTRICTED STOCK" has the meaning assigned in Section 3.05(b).
"COMPANY SEC DOCUMENTS" has the meaning assigned in Section 5.03(h).
"COMPANY STOCK PLANS" has the meaning assigned in Section 5.03(b).
"COMPANY STOCKHOLDERS MEETING" has the meaning assigned in Section 6.03.
"COMPENSATION AND BENEFIT PLANS" has, with respect to any person, the
meaning assigned in Section 5.03(r)(i).
"CONFIDENTIALITY AGREEMENT" means the Confidentiality Agreement, dated as
of December 5, 2000, between the Company and DR Corp.
"CONSTITUTIVE DOCUMENTS" means with respect to any juridical person, such
person's articles or certificate of incorporation and its bylaws, or similar
constitutive documents.
"CONTRACT" means, with respect to any person, any agreement, indenture,
undertaking, debt instrument, contract, lease, understanding, arrangement, or
commitment to which such person or any of its Subsidiaries is a party or by
which any of them may be bound or to which any of their properties may be
subject.
"COSTS" has the meaning assigned in Section 6.11(a).
"DERIVATIVES" has the meaning assigned in Section 5.03(w).
"DESIGNATED EXECUTIVES" means, collectively, the individuals identified in
Annex C.
"DGCL" has the meaning assigned in the Recitals.
"DISCLOSURE SCHEDULE" has the meaning assigned in Section 5.01.
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"DISSENTERS' SHARES" means shares of Company Common Stock the holders of
which shall have perfected and not withdrawn or lost their appraisal rights in
accordance with Section 262 of the DGCL.
"DR CORP." means ▇▇▇▇ ▇▇▇▇▇▇▇▇ Corporation, an indirect wholly owned
Subsidiary of Parent.
"EFFECTIVE TIME" means the date and time at which the Merger becomes
effective in accordance with Section 2.02.
"EMPLOYEES" has the meaning assigned in Section 5.03(r)(i).
"EMPLOYMENT AGREEMENT" means an employment agreement entered into between
the Company, on the one hand, and each of the Designated Executives, on the
other hand.
"ENVIRONMENTAL LAWS" means any federal, state or local law, regulation,
order, decree, permit, authorization, common law or agency requirement relating
to: (a) the protection or restoration of the environment, health or safety or
natural resources; or (b) the handling, use, presence, disposal, release or
threatened release of, or exposure to, any Hazardous Substance.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA AFFILIATE" has, with respect to any person, the meaning assigned in
Section 5.03(r)(iii).
"ESPPs" has the meaning assigned in Section 5.03(j).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations thereunder.
"FUND BOARD" has the meaning assigned in Section 5.03(z)(i).
"GAAP" means generally accepted accounting principles in the United States.
"GOVERNMENTAL AUTHORITY" means any United States or foreign government, any
state or other political subdivision thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, including, without limitation, the Minister of Finance (Canada),
the Office of the Superintendent of Financial Institutions (Canada), the SEC or
any other government authority, agency, department, board, commission or
instrumentality of the United States or any foreign government or any state or
other political subdivision thereof or any state insurance or banking authority,
the Board of Governors of the Federal Reserve System or the Federal Deposit
Insurance Corporation and any court, tribunal or arbitrator(s) of competent
jurisdiction.
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"HAZARDOUS SUBSTANCE" means any hazardous or toxic substance, material or
waste, including those substances, materials and wastes listed in the United
States Department of Transportation Hazardous Materials Table (49 CFR ss.
172.101), or designated by the United States Environmental Protection Agency as
hazardous substances (40 CFR pt 302 and amendments thereto), petroleum products
or other such substances, materials and wastes that are or become regulated
under any applicable local, state or federal law, including petroleum compounds,
lead, asbestos and polychlorinated biphenyls.
"HSR ACT" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976,
as amended, and the rules and regulations thereunder.
"INDEMNIFIED PARTIES" has the meaning assigned in Section 6.11(a).
"INSURANCE AMOUNT" has the meaning assigned in Section 6.11(c).
"INTELLECTUAL PROPERTY RIGHTS" has the meaning assigned in Section
5.03(y)(iii).
"INVESTMENT ADVISERS ACT" means the Investment Advisers Act of 1940, as
amended, and the rules and regulations thereunder.
"INVESTMENT COMPANY" means any investment company within the meaning of the
Investment Company Act, disregarding Section 3(c) thereof, that is sponsored,
organized, advised or managed by the Company or one of its Subsidiaries or with
respect to which the Company or one of its Subsidiaries acts as "principal
underwriter" as defined in the Investment Company Act (including the Registered
Funds).
"INVESTMENT COMPANY ACT" means the Investment Company Act of 1940, as
amended, and the rules and regulations thereunder.
"IRS" means the United States Internal Revenue Service.
"LIEN" means any charge, mortgage, pledge, security interest, restriction
(other than a restriction on transfer arising under Securities Laws), claim,
lien or encumbrance of any nature whatsoever.
"LITIGATION" has the meaning assigned in Section 5.03(l).
"MATERIAL ADVERSE EFFECT" means, with respect to Parent, the Company or the
Surviving Corporation, respectively, an effect or change that, individually or
in the aggregate with such other effects or changes, is both material and
adverse with respect to the respective financial condition, results of
operations, assets or business of Parent and its Subsidiaries, the Company and
its Subsidiaries or the Surviving Corporation and its Subsidiaries, in each case
taken as a whole; provided, that "Material Adverse Effect" shall not be deemed
to include any effect resulting from this Agreement or the announcement thereof
or the effects of (i) changes of general scope in the economy or capital markets
conditions of the United States or Canada or (ii) changes in GAAP; provided,
further, that any exception in the foregoing clauses (i) and (ii) shall not
apply to
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any change to the extent such change disproportionately affects the
applicable party and its Subsidiaries as compared to its peers.
"MERGER" has the meaning assigned in Section 2.01(a).
"MERGER CONSIDERATION" has the meaning assigned in Section 3.01(a).
"MERGER SUBSIDIARY" has the meaning assigned in the Recitals.
"MSRB" means the Municipal Securities Rulemaking Board.
"NASD" means the National Association of Securities Dealers, Inc.
"NEW PLANS" has the meaning assigned in Section 6.09(b).
"NYSE" means the New York Stock Exchange, Inc.
"PARENT" has the meaning assigned in the Preamble.
"PAYING AGENT" has the meaning assigned in Section 3.03.
"PENSION PLAN" has, with respect to any person, the meaning assigned in
Section 5.03(r)(ii).
"PERSON" means any individual, bank, corporation, limited liability
company, partnership, association, joint-stock company, business trust,
unincorporated organization or other entity.
"PREVIOUSLY DISCLOSED" has the meaning assigned in Section 5.01.
"REGISTERED FUNDS" has the meaning assigned in Section 5.03(z)(i).
"REPORTS" has the meaning assigned in Section 5.03(g).
"REPRESENTATIVES" means, with respect to any person, such person's
directors, officers, employees, legal, financial or other advisers or any
representatives of such legal, financial or other advisers.
"RIGHTS" means, with respect to any person, securities or obligations
convertible into or exercisable or exchangeable for, or giving any person any
preemptive or other right to subscribe for or acquire, or any options, calls or
commitments relating to, or any stock or equity appreciation right or other
instrument the value of which is determined in whole or in part by reference to
the market price or value of, shares of capital stock of such person.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations thereunder.
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"SECURITIES LAWS" means, collectively, the Securities Act, the Exchange
Act, the Investment Advisers Act, the Investment Company Act and all state
securities and "blue sky" laws and rules and regulations thereunder.
"SELF-REGULATORY ORGANIZATION" means the NASD, the NYSE, the AMEX, the
MSRB, the Chicago Stock Exchange, The Chicago Mercantile Exchange, the Chicago
Board of Trade, the Cincinnati Stock Exchange, the Minneapolis Grain Exchange,
the New York Futures Exchange, the Philadelphia Stock Exchange or any other
commission, board, agency or body that is not a Governmental Authority but is
charged with the supervision or regulation of brokers, dealers, securities
underwriting or trading, stock exchanges, commodities exchanges, insurance
companies or agents, investment companies or investment advisers, or to the
jurisdiction or supervision of which the Company or one of its Subsidiaries is
otherwise subject.
"STOCK OPTION AGREEMENT" has the meaning assigned in the Recitals.
"SUBSIDIARY" and "SIGNIFICANT SUBSIDIARY" have the meanings ascribed to
them in Rule 1-02 of Regulation S-X of the SEC.
"SUPERIOR PROPOSAL" has the meaning assigned in Section 6.06.
"SURVIVING CORPORATION" has the meaning assigned in Section 2.01(a).
"TAX RETURNS" means, collectively, all returns, declarations, reports,
estimates, information returns and statements required to be filed under
federal, state, local or any foreign tax laws.
"TAXES" means all taxes, levies or other similar assessments, however
denominated and whether imposed by a taxing authority within or without the
United States, including, without limitation, all net income, gross income,
gross receipts, sales, use, ad valorem, goods and services, capital, transfer,
franchise, profits, license, withholding, payroll, employment, unemployment,
social security, employer health, excise, estimated, severance, stamp,
occupation, property or other taxes, custom duties or other similar assessments
of any kind whatsoever, together with any interest and any penalties, additions
to tax or additional amounts imposed by any taxing authority whether arising
before, on or after the Effective Date.
"TREASURY SHARES" means shares of Company Common Stock, if any, owned by
the Company or any of its Subsidiaries other than shares (i) held by the Company
or any of its Subsidiaries in connection with any market-making or proprietary
trading activity or for the account of another person, (ii) as to which the
Company is or may be required to act in a fiduciary or similar capacity or (iii)
held in satisfaction of a debt previously contracted.
"VOTING AGREEMENT" has the meaning assigned in the Recitals.
1.2 INTERPRETATION. When a reference is made in this Agreement to
RECITALS, SECTIONS, ANNEXES SCHEDULES or the PREAMBLE, such reference shall be
to a Recital or Section of,
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or an Annex, Schedule or the Preamble to, this Agreement unless otherwise
indicated. The table of contents and headings contained in this Agreement
are for reference purposes only and are not part of this Agreement. Whenever
the words "include", "includes" or "including" are used in this Agreement,
they shall be deemed followed by the words "without limitation". No rule
of construction against the draftsperson shall be applied in connection with
the interpretation or enforcement of this Agreement. Whenever this Agreement
shall require a party to take an action, such requirement shall be deemed an
undertaking by such party to cause its Subsidiaries, and to use its reasonable
best efforts to cause its other Affiliates, to take appropriate action in
connection therewith.
ARTICLE II
THE MERGER
2.1 The Merger. At the Effective Time:
(a) Structure and Effects of the Merger. Subject to Section 2.04,
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Merger Subsidiary will merge with and into the Company in accordance with the
terms set forth in this Agreement (the "MERGER") and the separate corporate
existence of Merger Subsidiary will thereupon cease. The Company will be the
surviving corporation in the Merger (sometimes hereinafter referred to as the
"SURVIVING CORPORATION") and will continue to be governed by the laws of the
State of Delaware, and the separate corporate existence of the Company, with
all its rights, privileges, immunities, powers and franchises, will continue
unaffected by the Merger, except as set forth in Section 2.01(b). The Merger
will have the effects specified in the DGCL.
(b) Certificate of Incorporation. At the Effective Time, and without
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any further action on the part of Parent, Merger Subsidiary or any holder of
any shares of capital stock of the Company, the certificate of incorporation
of the Company as in effect at the Effective Time shall be amended and
restated to read in its entirety the same as the certificate of incorporation
of Merger Subsidiary as in effect immediately prior to the Effective Time
(the "CERTIFICATE OF INCORPORATION"), until duly amended in accordance with
the terms thereof and the DGCL.
(c) Bylaws. The bylaws of the Surviving Corporation (the "BYLAWS") will
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be the bylaws of Merger Subsidiary as in effect immediately prior to
the Effective Time, until duly amended in accordance with the terms thereof
and the Certificate of Incorporation.
(d) Directors. The directors of the Surviving Corporation will be the
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directors of Merger Subsidiary immediately prior to the Effective Time, and
such directors, together with any additional directors as may thereafter be
elected, shall hold such office until such time as their successors shall be
duly elected or appointed and qualified or until their earlier death,
resignation or removal in accordance with the Certificate of Incorporation
and the Bylaws.
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(e) Officers. The officers of the Surviving Corporation will be the
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officers of Merger Subsidiary immediately prior to the Effective Time, and
such officers, together with any additional officers as may thereafter be
elected or appointed, shall hold such office until such time as their
successors shall be duly elected or appointed and qualified or until their
earlier death, resignation or removal in accordance with the Certificate of
Incorporation and the Bylaws.
2.2 EFFECTIVE TIME. The Merger shall become effective upon the filing, in
the office of the Secretary of State of the State of Delaware, of a certificate
of merger in accordance with 251 of the DGCL, or at such later date and
time as may be set forth in such certificate. Subject to the satisfaction or
waiver of the conditions set forth in Article VII, the parties shall use their
reasonable best efforts to cause the Merger to become effective (a) on a date
that is not later than three Business Days after the last of the conditions set
forth in Article VII (other than conditions that by their terms cannot be
satisfied until the time of Closing) shall have been satisfied or waived in
accordance with the terms of this Agreement (or, at the election of Parent, on
the last business day of the month in which such day occurs) or (b) on such
other date as the parties may agree in writing.
2.3 CLOSING. The closing of the Merger (the "CLOSING") shall take place at
10:00 a.m., New York City time, on the date (the "CLOSING DATE") when the
Effective Time is intended to occur, at the offices of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, 125
Broad Street, New York, New York, or at such other time and place as the parties
shall agree.
2.4 RESERVATION OF RIGHT TO REVISE STRUCTURE. At Parent's election, the
Merger may alternatively be structured (a) so that the Company is merged with
and into Merger Subsidiary (with Merger Subsidiary surviving) or a directly or
indirectly wholly owned subsidiary of Parent other than Merger Subsidiary or (b)
so that a directly or indirectly wholly owned subsidiary of Parent other than
Merger Subsidiary is merged with and into the Company; provided, however, that
no such change shall (i) alter or change the amount or kind of the Merger
Consideration or alter or change adversely the treatment of the holders of
Company Options or (ii) materially impede or delay consummation of the
transactions contemplated by this Agreement. In the event Parent makes such an
election, the parties agree to execute an appropriate amendment to this
Agreement in order to reflect such election.
ARTICLE III
CONSIDERATION; EXCHANGE
3.1 Merger Consideration. Subject to the terms and conditions of this
Agreement, at the Effective Time, by virtue of the Merger and without any action
on the part of Parent, Merger Subsidiary or any holder of shares of capital
stock of the Company:
(a) Each share of Company Common Stock issued and outstanding immediately
prior to the Effective Time (other than Dissenters' Shares, Treasury Shares
and shares held directly or indirectly by Parent, except shares held by
Parent or any of its Subsidiaries in a fiduciary capacity or in satisfaction
of a debt previously contracted) will
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be converted into the right to receive U.S. $24 in cash, without interest
thereon (the "MERGER CONSIDERATION").
(b) Each share of Company Common Stock that, immediately prior to the
Effective Time, is a Treasury Share or is owned directly or indirectly by
Parent, except shares held by Parent or any of its Subsidiaries in a
fiduciary capacity or in satisfaction of a debt previously contracted, will
be canceled and retired and will cease to exist, and no exchange or payment
will be made therefor.
(c) At the Effective Time, each share of Common Stock, par value $0.01 per
share, of Merger Subsidiary issued and outstanding immediately prior to the
Effective Time shall be converted into one share of common stock of the
Surviving Corporation.
3.2 RIGHTS AS STOCKHOLDERS; STOCK TRANSFERS. At the Effective Time, holders
of Company Common Stock (other than Dissenters' Shares) will cease to be, and
will have no rights as, stockholders of the Company, other than to receive (a)
any dividend or other distribution with respect to such Company Common Stock
with a record date occurring prior to the Effective Time and (b) the Merger
Consideration provided for in this Article III. After the Effective Time, there
will be no transfers on the stock transfer books of the Company or the Surviving
Corporation of shares of Company Common Stock (other than Dissenters' Shares, if
applicable).
3.3 PAYMENT FOR SHARES. Parent shall make available or cause to be made
available to a bank appointed by Parent (which shall be reasonably acceptable to
the Company), as paying agent (the "PAYING AGENT"), amounts sufficient in the
aggregate to provide all funds necessary for the Paying Agent to make payments
of Merger Consideration to holders of shares of Company Common Stock that were
outstanding immediately prior to the Effective Time. Promptly after the
Effective Time, Parent shall cause the Paying Agent to mail to each person who
was, at the Effective Time, a holder of record of outstanding shares of Company
Common Stock a form of letter of transmittal and instructions (which shall be
mutually agreed to by Parent and the Company) for use in effecting the surrender
in exchange for payment of the certificates that, immediately prior to the
Effective Time, represented any of such shares. Upon surrender to the Paying
Agent of such certificates, together with such letter of transmittal, duly
executed and completed in accordance with the instructions thereto, Parent shall
promptly cause the Paying Agent to pay to each person entitled thereto a check
in the amount to which such person is entitled, after giving effect to any
required United States federal, state or local tax withholdings. No interest
will be paid or will accrue on the amount payable upon the surrender of any such
certificate. If payment is to be made to a person other than the registered
holder of the certificate surrendered, it shall be a condition of such payment
that the certificate so surrendered be properly endorsed or otherwise in proper
form for transfer and that the person requesting such payment pay any transfer
or other similar taxes required by reason of the payment to a person other than
the registered holder of the certificate surrendered or establish to the
satisfaction of Parent or the Paying Agent that such tax has been paid or is not
applicable. One hundred and eighty days following the Effective Time, Parent
shall be entitled to cause the Paying Agent to deliver to it any funds
(including any interest received with respect thereto) made available to the
Paying Agent that have not been disbursed to holders of certificates formerly
representing shares of Company Common Stock outstanding at the Effective Time,
and thereafter such holders shall
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be entitled to look to Parent only as general creditors thereof with
respect to the cash payable upon due surrender of their certificates.
Notwithstanding the foregoing, neither the Paying Agent nor any party hereto
shall be liable to any holder of certificates formerly representing shares of
Company Common Stock for any amount paid to a Governmental Authority or public
official pursuant to any applicable abandoned property, escheat or similar law.
3.4 DISSENTING STOCKHOLDERS. Dissenters' Shares shall be purchased and paid
for in accordance with Section 262 of the DGCL. The Company shall give Parent
(a) prompt notice of any written demands for fair value received by the Company,
withdrawals of such demands and any other related instruments served pursuant to
the DGCL and received by the Company and (b) the opportunity to direct all
negotiations and proceedings with respect to demands for fair value under the
DGCL. The Company shall not, except with the prior written consent of Parent,
voluntarily make any payment with respect to any demands for fair value for
Dissenters' Shares or offer to settle, or settle, any such demands.
3.5 OPTIONS; RESTRICTED STOCK. (a) Prior to the Effective Time, the Company
shall use reasonable best efforts to take such action as may be necessary,
including obtaining consents from option holders to the extent required by the
applicable Company Stock Plan or option award agreement, such that immediately
prior to the Effective Time, all Company Options shall be fully vested and each
holder of a Company Option shall be paid in full satisfaction of such Company
Option a cash payment in an amount in respect thereof equal to the product of
(i) the excess, if any, of the Merger Consideration over the exercise price of
such Company Option and (ii) the number of shares of Company Common Stock
subject to the Company Option, less any income or employment tax withholding
required under the Code or any provision of state or local law.
(b) Prior to the Effective Time, the Company shall use reasonable best
efforts to take such action as may be necessary such that immediately prior to
the Effective Time, each restricted stock award (other than Hill ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
L.P. restricted stock awards, which shall be converted into a right to receive
the Merger Consideration, and shall continue to vest and be payable following
the Effective Time in accordance with their terms) granted pursuant to the 1996
Stock Option Plan or 1998 Long-Term Incentive Plan or otherwise ("Company
Restricted Stock") shall become immediately and fully payable or distributable
and the restrictions thereon shall lapse and any performance targets shall be
deemed achieved in full.
ARTICLE IV
ACTIONS PENDING THE EFFECTIVE TIME
4.1 FORBEARANCES OF THE COMPANY. Except as expressly contemplated by this
Agreement and the Stock Option Agreement or as Previously Disclosed, without the
prior written consent of Parent, during the period from the date of this
Agreement to the Effective Time, the Company will not, and will cause each of
its Subsidiaries not to:
(a) Ordinary Course. Conduct the business of the Company and its
---------------
Subsidiaries other than in the ordinary and usual course consistent
with past practice, fail to use reasonable best efforts consistent with
the terms and provisions of this Agreement
-11-
to preserve intact its business organizations, operations and assets and
maintain its rights, franchises and existing relations with clients,
customers, suppliers, counterparties, employees and business associates;
subject to the further restriction in Section 4.01(m)(ii), engage in any
material new activities or lines of business or make any material changes
to its existing activities or lines of business; take any action which
would reasonably be expected to have a material adverse effect upon the
Company's ability to perform any of its material obligations under this
Agreement or the Stock Option Agreement; conduct any Derivatives
activities (except for hedging transactions) that would require an
exception from the Company's existing policy limits or a change in its
existing risk parameters; conduct any convertible preferred arbitrage
activities, enter into any additional transactions under the tender option
bond program or take any action in respect of any existing or new ▇▇▇▇▇▇
▇▇▇▇▇▇▇ Private Equity Fund (or similar funds), except as specified in
Schedule 4.01(a).
(b) Capital Stock. Other than pursuant to Rights Previously
-------------
Disclosed and outstanding on the date hereof or pursuant to the Stock
Option Agreement, (i) issue, sell or otherwise permit to become
outstanding, or authorize the creation of, any additional shares of
capital stock of the Company or any of its Subsidiaries or any Rights
in respect thereof, (ii) enter into any agreement with respect to the
foregoing or (iii) permit any additional shares of capital stock of the
Company or any of its Subsidiaries to become subject to new grants of
employee or director stock options, other Rights or similar stock-based
employee rights.
(c) Dividends, Etc. (i) Make, declare, pay or set aside for payment
--------------
any dividend (other than dividends from wholly owned Subsidiaries to
the Company or another wholly owned Subsidiary of the Company and
regular quarterly cash dividends on the Company Common Stock, at a rate
not exceeding U.S. $0.07 per share per calendar quarter, that are to be
paid to stockholders of record of the Company on the dates specified in
Schedule 4.01(c)) or other distribution (whether in stock, cash or
property) on or in respect of, or declare or make any distribution on,
any shares of capital stock of the Company or any of its Subsidiaries
or (ii) directly or indirectly adjust, split, combine, redeem,
reclassify, purchase or otherwise acquire any shares of its capital
stock.
(d) Compensation; Employment Agreements; Etc. Enter into, amend,
----------------------------------------
modify or renew any employment, consulting, severance or similar
contract, agreement or arrangement or any other agreement with any
director, officer or employee of the Company or any of its
Subsidiaries, or grant any salary or wage increase or increase any
employee benefit (including incentive or bonus payments), except (i)
for changes that are required by applicable law, (ii) to satisfy
Previously Disclosed contractual obligations existing as of the date
hereof, (iii) for merit-based or annual salary increases in the
ordinary course of business and in accordance with past practice or
(iv) for employment arrangements for, or grants of awards to, newly
hired employees in the ordinary and usual course of business consistent
with past practice, provided that total annual guaranteed compensation
for such newly-hired employee shall not exceed U.S. $500,000.
(e) Benefit Plans. Enter into, establish, adopt or amend or
-------------
communicate any intention to take such action (except (i) as may be
required by applicable law, (ii) to
-12-
satisfy Previously Disclosed contractual obligations existing as of the
date hereof or (iii) amendments that do not increase benefits or result in
increased administrative costs) any pension, retirement, stock option,
stock purchase, savings, profit sharing, deferred compensation,
consulting, bonus, group insurance or other employee benefit, incentive or
welfare contract, plan or arrangement, or any trust agreement (or similar
arrangement) related thereto, in respect of any director, officer or
employee of the Company or any of its Subsidiaries, or take any action to
accelerate the vesting or exercisability of stock options, restricted
stock or other compensation or benefits payable thereunder.
(f) Dispositions. Except (i) as Previously Disclosed or (ii) for sales of
------------
securities or other investments or assets in the ordinary and usual course
of business consistent with past practice, sell, transfer, mortgage,
encumber or otherwise dispose of or permit the creation of any Lien in
respect of or discontinue any material amount of the Company's or any of
its Subsidiaries' assets, businesses or properties.
(g) Acquisitions. (i) Except (A) as Previously Disclosed or (B) in
------------
the ordinary and usual course of business consistent with past
practice, acquire any assets, business or properties of any other
entity; or (ii) acquire beneficial ownership or control of 5% or more
of any class of voting securities of a person, 25% or more of any class
of securities of a person or 25% or more of the total equity of a
person; provided that the cost of any acquisition described in each of
(i) and (ii) shall not exceed $1 million and the aggregate cost of all
such acquisitions shall not exceed $3 million.
(h) Constitutive Documents. Amend the Constitutive Documents of the
----------------------
Company or any of its Subsidiaries.
(i) Accounting Methods. Implement or adopt any change in the
------------------
accounting principles, practices or methods of the Company or any of
its Subsidiaries, other than as may be required by GAAP.
(j) Tax Matters. Make or change any material Tax election, change
-----------
any method of Tax accounting, file any income Tax Return, settle any
audit, examination or deficiency Litigation with respect to a material
amount of Taxes, request any private letter or similar Tax ruling or
enter into any closing agreement with any taxing authority with respect
to a material amount of Taxes; provided, however, that the Company may
change a method of tax accounting if it obtains the prior written
consent of Parent (which consent shall not be unreasonably withheld and
shall be granted if such change is required by a change in applicable
law).
(k) Contracts. Enter into or terminate any Contract or amend or modify in
---------
any material respect any existing Contract of the Company or any of its
Subsidiaries where the amount payable by the Company or its Subsidiary
under such Contract, individually or in the aggregate for all amounts
payable under such Contract, exceeds $500,000.
(l) Claims. Settle any claim, action or proceeding, except for any claim,
------
action or proceeding involving solely money damages in an amount,
individually and in the aggregate for all such settlements, not more than
U.S. $250,000 and which would not
-13-
reasonably be expected to establish an adverse precedent or basis for
subsequent settlements or require material changes in business practices.
(m) Adverse Actions. (i) Knowingly take any action that would
---------------
reasonably be expected to (x) result in any of the Company's
representations or warranties set forth in this Agreement (subject to
the standard set forth in Section 5.02) or the Stock Option Agreement
being or becoming untrue at any time at or prior to the Effective Time
or (y) result in any of the conditions to the Merger set forth in
Article VII not being satisfied except, in each case, as may be
required by applicable law, or (ii) engage in any new line of business
or make any acquisition that would not be permissible for a United
States financial holding company (as defined in the Bank Holding
Company Act of 1956, as amended) or would subject Parent, the Company
or any Subsidiary of either to material regulation by a Governmental
Authority that does not presently regulate such company or to
regulation by a Governmental Authority that is materially different
from current regulation of such person by such Governmental Authority.
(n) Indebtedness. Incur any indebtedness for borrowed money other
------------
than in the ordinary and usual course of business consistent with past
practice.
(o) Fund Action. Except as and to the extent required, based upon the
-----------
written advice of outside counsel, in the exercise of the fiduciary
obligations of the Company or one of its Subsidiaries to any Investment
Company, request that any action be taken by any Fund Board, other than
(i) routine actions that could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on the Company
or any Investment Company or (ii) actions Previously Disclosed.
(p) Organizational Structure. Subject to Section 6.15, make any
------------------------
significant change in the organizational structure of the Company and
its Subsidiaries as of the date of this Agreement, including, but not
limited to, a merger or consolidation of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Incorporated
and Sutro & Co. Inc.
(q) Commitments. Agree, commit to or enter into any agreement to
-----------
take any of the actions referred to in Section 4.01 (a) through (p).
4.2 FORBEARANCES OF PARENT. Except as expressly contemplated by this
Agreement and the Stock Option Agreement, without the prior written consent of
the Company, Parent will not, and will cause each of its Subsidiaries not to,
knowingly take any action which could reasonably be expected to result in (a)
any of its representations and warranties set forth in this Agreement (subject
to the standard set forth in Section 5.02) or the Stock Option Agreement being
or becoming untrue in any material respect at any time at or prior to the
Effective Time or (b) any of the conditions to the Merger set forth in Article
VII not being satisfied, except, in each case, as may be expressly required by
applicable law.
-14-
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.1 DISCLOSURE SCHEDULES. On or prior to the date hereof, the Company has
delivered to Parent, and Parent has delivered to the Company, a schedule
(respectively, its "DISCLOSURE SCHEDULE") setting forth, among other things,
items the disclosure of which is necessary or appropriate (subject to the
standard set forth in Section 5.02) either (a) in response to an express
informational requirement contained in or requested by a provision hereof or (b)
as an exception to one or more representations or warranties contained in
Section 5.03 or 5.04, respectively, or to one or more of its covenants contained
in Article IV; PROVIDED that the mere inclusion of an item in a Disclosure
Schedule as an exception to a representation or warranty shall not be deemed an
admission by the disclosing party that such item (or any undisclosed item or
information of comparable or greater significance) represents a material
exception or fact, event or circumstance with respect to the Company or Parent,
respectively. Information set forth in a Disclosure Schedule, whether in
response to an express informational requirement or as an exception to one or
more representations or warranties or one or more covenants, in each case that
is contained in a correspondingly enumerated section of such Disclosure
Schedule, is described in this Agreement as "PREVIOUSLY DISCLOSED " and each of
Parent and the Company hereby represents and warrants that such information is
true and correct.
5.2 STANDARD. No disclosure contemplated by Section 5.01 or representation
or warranty of the Company or Parent contained in Section 5.03 (other than
Sections 5.03(b), 5.03(c)(i) (the first, third, fourth and fifth sentences
thereof), 5.03(e) and 5.03(i)) or 5.04 (other than Sections 5.04(b) and 5.04(e))
shall be deemed untrue or incorrect for any purpose under this Agreement, and no
party hereto shall be deemed to have breached a particular representation or
warranty or to have made any misrepresentation, as a consequence of the
existence of any fact, event, or circumstance that should have been disclosed as
an exception to a particular representation or warranty, unless such fact, event
or circumstance, whether individually or taken together with all other facts,
events or circumstances that should have been but were not so disclosed (whether
or not as exceptions) with respect to any such particular representation or
warranty contained in Section 5.03 or 5.04, results or would reasonably be
expected to result in a Material Adverse Effect with respect to the Company, in
the case of Section 5.03, or Parent, in the case of Section 5.04, or would
materially impair the ability of the parties hereto to consummate the Merger in
a timely manner.
5.3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Except as Previously
Disclosed in a section of its Disclosure Schedule corresponding to the relevant
paragraph below, the Company hereby represents and warrants to Parent and Merger
Subsidiary as follows:
(a) Organization, Standing and Authority. The Company has been duly
------------------------------------
incorporated and is an existing corporation in good standing under the
laws of the State of Delaware. The Company is duly qualified to do
business and is in good standing in the states of the United States and
each foreign jurisdiction where its ownership or leasing of property or
the conduct of its business requires it to be so qualified. Each of
the Company and its Subsidiaries has in effect all federal, state,
local and foreign
-15-
governmental authorizations necessary for it to own or lease its
properties and assets and to carry on its business as it is now conducted.
(b) Capital Stock. As of the date of this Agreement, the Company has
-------------
(i) 60,000,000 authorized shares of Company Common Stock, of which
25,058,212 shares were outstanding as of the close of business on
July 30, 2001 (which number includes shares of restricted stock
described in Section 5.03(b) of the Company's Disclosure Schedule),
provided that the only changes in the outstanding shares of Company
Common Stock from such date to the date hereof are as a result of the
exercise of options, and no shares are held as Treasury Shares as of
the date hereof and (ii) 1,000,000 authorized shares of Preferred
Stock, par value $.01 per share, no shares of which are issued or
outstanding. All of the outstanding shares of Company Common Stock
have been duly authorized and are validly issued, fully paid and
nonassessable, and have not been issued in violation of any preemptive
rights. Set forth on the Company's Disclosure Schedule is a list of
each Compensation and Benefit Plan under which any shares of capital
stock of the Company or any Rights with respect thereto have been or
may be awarded or issued ("Company Stock Plans"). As of the close of
business on July 30, 2001, the Company had outstanding Company Options
representing the right to acquire 2,577,067 shares of Company Common
Stock, provided that the only changes in outstanding Company Options
from such date to the date hereof are as a result of the exercise of
options. Except as described in the immediately preceding sentence,
the Company has no Company Common Stock authorized for issuance
pursuant to any Company Stock Plans. Except as described in this
Section 5.03(b) and except for a maximum of 130,000 shares of Common
Stock issuable under Rights described in the Company's Disclosure
Schedule, there are no outstanding Rights of any kind with respect to
the Company, and no securities or obligations evidencing such Rights
are authorized, issued or outstanding. The shares of Company Common
Stock issuable pursuant to the Stock Option Agreement have been duly
authorized for issuance by the Company and, upon any issuance of such
shares in accordance with the terms of the Stock Option Agreement, such
shares will be duly authorized, validly issued, fully paid and
nonassessable and free and clear of any Liens. The Company does not
have outstanding any bonds, debentures, notes or other obligations the
holders of which have the right to vote (or which are convertible into
or exercisable for securities having the right to vote) with the
stockholders of the Company on any matter.
(c) Subsidiaries. (i) Exhibit 21 to the Company's Annual Report on
------------
Form 10-K for the fiscal year ended December 31, 2000 includes all the
Subsidiaries of the Company which as of the date hereof are Significant
Subsidiaries. The Company has Previously Disclosed a list of all its
Subsidiaries, including the states in which such Subsidiaries are
organized, a brief description of such Subsidiaries' principal
activities and if any of such Subsidiaries is not wholly owned by the
Company or one of its Subsidiaries, the percentage owned by the Company
or any such Subsidiary and the names and percentage ownership by any
other person. No equity securities of any of the Company's
Subsidiaries are or may become required to be issued (other than to the
Company or a wholly owned Subsidiary of the Company) by reason of any
Rights with respect thereto. There are no Contracts by which any of
the Company's Subsidiaries is or
-16-
may be bound to sell or otherwise issue any shares of its capital stock,
and there are no Contracts relating to the rights of the Company to vote
or to dispose of such shares. All of the shares of capital stock of each
of the Company's Subsidiaries are fully paid and nonassessable and subject
to no Rights and, except as Previously Disclosed, are owned by the Company
or a Company Subsidiary free and clear of any Liens. Each of the Company's
Subsidiaries is in good standing under the laws of the jurisdiction in
which it is organized, and is duly qualified to do business and in good
standing in each jurisdiction where its ownership or leasing of property
or the conduct of its business requires it to be so qualified.
(ii) The Company has Previously Disclosed, as of the date hereof, a list
of all equity securities it or any of its Subsidiaries holds that amount
to, in the aggregate, beneficial ownership or control by the Company or
any such Subsidiary of 5% or more of any class of the issuer's voting
securities, 25% or more of any class of the issuer's securities or 25% or
more of the issuer's total equity, including a description of any such
issuer and the percentage of the issuer's voting and/or non-voting
securities and, as of the Effective Time, no additional persons would need
to be included on such a list. The Company has Previously Disclosed a
list, as of the date hereof, of all partnerships, limited liability
companies, joint ventures or similar entities in which it owns or controls
an equity, partnership or membership interest, directly or indirectly, and
the nature and amount of each such interest and as of the Effective Time
no additional persons would need to be included on such list; it being
understood and agreed that the foregoing shall not require the disclosure
prior to the date hereof of investment partnerships in which the Company
or any Subsidiary has a less than 5% equity interest, provided that any
such equity interest shall be disclosed to Parent in accordance with
Section 6.08.
(d) Corporate Power. The Company and each of its Subsidiaries has the
----------------
corporate power and authority to carry on its business as it is now being
conducted and to own or lease all its properties and assets. The Company
has made available to Parent a brief description of each line of business
in which the Company or any of its Subsidiaries is engaged.
(e) Corporate Authority and Action. (i) The Company has the
------------------------------
requisite corporate power and authority, and has taken all corporate
action necessary, in order to authorize the execution and delivery of,
and the performance of its obligations under, this Agreement and the
Stock Option Agreement and, subject only to obtaining the requisite
adoption of this Agreement by the holders of a majority of the shares
of Company Common Stock entitled to vote at the Company Stockholder
Meeting (the "Company Requisite Vote"), to adopt the plan of merger
contained in this Agreement and, in accordance therewith, to consummate
the Merger. Each of this Agreement, the Stock Option Agreement and
each Employment Agreement constitutes the valid and legally binding
agreement of the Company, enforceable against the Company in accordance
with its terms, subject to bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer and similar laws of general
applicability relating to or affecting creditors' rights and to general
equity principles (the "BANKRUPTCY AND EQUITY EXCEPTION").
(ii) The Company has taken all action necessary in order to exempt this
-17-
Agreement, the Stock Option Agreement, the Voting Agreement and the Merger
and the other transactions contemplated hereby and thereby from, and this
Agreement, the Stock Option Agreement, the Voting Agreement and the Merger
and the other transactions contemplated hereby and thereby are exempt
from, (x) the requirements of any "moratorium," "control share," "fair
price" or other antitakeover laws and regulations of the State of
Delaware, including Section 203 of the DGCL, and of any other state and
(y) any other applicable provisions of the Company's Constitutive
Documents.
(f) Governmental Filings; No Violations. Other than those (i)
-----------------------------------
referred to in Section 2.02, (ii) under the HSR Act, the Exchange Act
and the Securities Act, (iii) required to be made with Self-Regulatory
Organizations and Governmental Authorities regulating brokers, dealers,
investment advisers, investment companies, banks, trust companies and
insurance companies, (iv) required to be made pursuant to state
insurance or banking and trust company regulations, including Section
383:9-h of the New Hampshire Revised Statutes and (v) such other
filings and/or notices set forth in the Company's Disclosure Schedule,
no notices, reports, applications or other filings are required to be
made by the Company or any of its Subsidiaries with, nor are any
consents, registrations, approvals, permits or authorizations required
to be obtained by any of them from, any Governmental Authority in
connection with the execution and delivery of, and the performance of
its obligations under, this Agreement and the Stock Option Agreement by
the Company and the consummation by the Company of the Merger and the
other transactions contemplated hereby and thereby. Subject, in the
case of clause (A) below, to obtaining the Company Requisite Vote and
the making or obtaining of all filings, notices, applications,
consents, registrations, approvals, permits or authorizations with or
of any relevant Governmental Authority with respect to the Merger and
the other transactions contemplated hereby and by the Stock Option
Agreement, the execution, delivery and performance by the Company of
this Agreement and the Stock Option Agreement and the consummation by
the Company of the Merger and the other transactions contemplated
hereby and thereby do not and will not (A) constitute a breach or
violation of, or a default under, or cause or allow the acceleration or
creation of a Lien (with or without the giving of notice, passage of
time or both) pursuant to, any law, rule or regulation or any judgment,
decree, order, governmental or non-governmental permit or license, or
any Contract of it or of any of its Subsidiaries or to which the
Company or any of the Company's Subsidiaries or its or their properties
is subject or bound or (B) constitute a breach or violation of, or a
default under, the Constitutive Documents of the Company or any of its
Subsidiaries or (C) require any consent or approval under any such law,
rule, regulation, judgment, decree, order, governmental or
non-governmental permit or license or the consent or approval of any
other party to any such Contract.
(g) Reports. The Company and its Subsidiaries have timely filed all
-------
reports, registrations, statements and other filings, together with any
amendments required to be made with respect thereto, that were required
to be filed since December 31, 1997 with (i) the SEC or the CFTC, (ii)
any applicable federal, state, local or foreign Governmental
Authorities or (iii) any Self-Regulatory Organization (all such reports
and statements, including the financial statements, exhibits and
schedules thereto, being collectively referred to herein as the
"REPORTS"), including without limitation, all reports,
-18-
registrations, statements and filings required under the Securities Laws.
Each of the Reports complied with the statutes, rules, regulations and
orders enforced or promulgated by the Governmental Authority with which
they were filed and did not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(h) Company SEC Documents and Financial Statements. (i) The Company
----------------------------------------------
has made available to Parent copies of each registration statement,
offering circular, report, definitive proxy statement or information
statement under the federal Securities Laws filed, used or circulated
by it or any of its Subsidiaries with respect to periods from January
26, 1998 through the date of this Agreement and will promptly make
available each such registration statement, offering circular, report,
definitive proxy statement or information statement filed, used or
circulated after the date hereof (collectively, the "Company SEC
Documents"), each in the form (including exhibits and any amendments
thereto) filed with the SEC (or if not so filed, in the form used or
circulated). As of their respective dates (giving effect to any
amendments or modifications if filed on or prior to the date of this
Agreement), each of the Company SEC Documents, including the financial
statements, exhibits and schedules thereto, filed, used or circulated
prior to the date hereof complied (and each of the Company SEC
Documents filed after the date of this Agreement, will comply) as to
form with applicable Securities Laws and did not (or, in the case of
reports, statements or circulars filed after the date of this
Agreement, will not) as of its date of filing or mailing to
stockholders contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to
make the statements made therein, in the light of the circumstances
under which they were made, not misleading.
(ii) Each of the Company's consolidated statements of financial condition
or balance sheets included in or incorporated by reference into the
Company SEC Documents, including the related notes and schedules, fairly
presented (or, in the case of Company SEC Documents filed after the date
of this Agreement, will fairly present) in all material respects the
consolidated financial position of the Company and its Subsidiaries as of
the date of such statement of financial condition or balance sheet and
each of the consolidated statements of income, cash flows and
stockholders' equity included in or incorporated by reference into Company
SEC Documents, including any related notes and schedules (collectively,
the foregoing financial statements and related notes and schedules are
referred to as the "Company Financial Statements"), fairly presented (or,
in the case of those contained in Company SEC Documents filed after the
date of this Agreement, will fairly present) in all material respects the
consolidated results of operations, cash flows and stockholders' equity,
as the case may be, of the Company and its Subsidiaries for the periods
set forth therein (subject, in the case of unaudited statements, to normal
year-end audit adjustments), in each case in accordance with GAAP
consistently applied during the periods involved (except as may be noted
therein and except, in the case of unaudited statements, for the absence
of notes).
(i) Absence of Undisclosed Liabilities. Except as disclosed in the Company
----------------------------------
Financial Statements or the Company SEC Documents filed prior to the date
hereof, none
-19-
of the Company or its Subsidiaries has any obligation or
liability (contingent or otherwise) that, individually or in the
aggregate, would reasonably be expected to have a Material Adverse Effect
on the Company.
(j) Absence of Certain Changes. Except as expressly contemplated by
--------------------------
this Agreement or the Stock Option Agreement or the transactions
contemplated hereby or thereby and except as disclosed in the Company
SEC Documents filed prior to the date hereof, since December 31, 2000,
the Company and its Subsidiaries have conducted their business only in
the ordinary and usual course consistent with past practice, and there
has not been (i) any Material Adverse Effect on the Company or, to the
knowledge of the Company, any development or combination of
developments which would reasonably be expected to have a Material
Adverse Effect on the Company, (ii) any declaration, setting aside or
payment of any dividend or other distribution (whether in cash, stock
or property) with respect to any of the Company's capital stock, other
than regular quarterly cash dividends of from U.S. $0.05 per share to
U.S. $0.07 per share on the Company's Common Stock, (iii) any split,
dividend, combination, recapitalization or similar transaction with
respect to any of the Company's capital stock or any issuance or the
authorization of any issuance of any other securities in respect of, in
lieu of or in substitution for shares of the Company's capital stock,
except for issuances of Company Common Stock upon the exercise of
Company Options awarded prior to the date hereof in accordance with
their terms or issuances of Company Common Stock pursuant to payroll
deductions or employee contributions made on or prior to the date
hereof under the Company's Employee Stock Purchase Plan for the
Employees of Hill ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ L.P. and the Company's 1998 Employee
Stock Purchase Plan (together, the "ESPPs"), (iv) (A) any granting by
the Company or any of its Subsidiaries to any current or former
director, executive officer or other key employee of the Company or its
Subsidiaries of any increase in compensation, bonus or other benefits,
except for normal increases in the ordinary and usual course of
business and consistent with past practice or as was required under any
employment agreement in effect as of June 30, 2001, (B) any granting by
the Company or any of its Subsidiaries to any such current or former
director, executive officer or key employee of any increase in
severance or termination pay, except in the ordinary and usual course
of business and consistent with past practice, or (C) any entry by the
Company or any of its Subsidiaries into, or any amendments of, any
Compensation and Benefit Plan, other than in the ordinary and usual
course of business and consistent with past practice, (v) except as
required by a change in GAAP, any change in accounting methods,
principles or practices by the Company materially affecting its assets,
liabilities or business or (vi) any tax election that would be material
to the Company or any of its tax attributes or any settlement or
compromise of any material income tax liability.
(k) Properties; Securities. Except as specifically reserved against
----------------------
or otherwise disclosed in the Company Financial Statements and except
for those properties and assets that have been sold or otherwise
disposed of in the ordinary and usual course of business consistent
with past practice, the Company and its Subsidiaries have good and
marketable title, free and clear of all Liens, to all of the properties
and assets, tangible and intangible, reflected in the Company Financial
Statements as being owned by the Company or its
-20-
Subsidiaries as of the dates thereof. The Company and its Subsidiaries do
not, directly or indirectly, control any real property not used in the
ordinary and usual course of their respective businesses. All buildings
and all fixtures, equipment, and other property and assets which are held
under leases or subleases by any of the Company or its Subsidiaries are
held under valid leases or subleases enforceable in accordance with their
respective terms. Each of the Company and its Subsidiaries has good and
marketable title to all securities held by it (except securities sold
under repurchase agreements or held in any fiduciary or agency capacity),
free and clear of any Lien, except to the extent such securities are
pledged in the ordinary and usual course of business consistent with
prudent business practices to secure obligations of the Company or any of
its Subsidiaries. Such securities are properly valued on the books of the
Company or its Subsidiaries in accordance with GAAP.
(l) Litigation; Regulatory Action. Except as Previously Disclosed or
-----------------------------
disclosed in the Company SEC Documents filed before the date of this
Agreement, no litigation, proceeding, investigation or controversy
("Litigation") before any court, arbitrator, mediator or Governmental
Authority is pending against or involves the Company or any of its
Subsidiaries, and, to the Company's knowledge, no such Litigation has
been threatened; neither the Company nor any of its Subsidiaries or
properties is a party to or is subject to any order, decree, agreement,
memorandum of understanding or similar arrangement with, or a
commitment letter or similar submission to, any Governmental Authority
(including the SEC, the CFTC and the Federal Trade Commission) or
Self-Regulatory Organization charged with the supervision or regulation
of broker-dealers, securities underwriting or trading, stock exchanges,
commodities exchanges, investment companies, investment advisers or
insurance agents and brokers or the supervision or regulation of the
Company or any of its Subsidiaries or any of the other businesses they
conduct; and neither the Company nor any of its Subsidiaries has been
notified by or received another communication from any such
Governmental Authority or Self-Regulating Organization to the effect
that such Governmental Authority or Self-Regulatory Organization is
contemplating issuing or requesting (or is considering the
appropriateness of issuing or requesting) any such order, decree,
agreement, memorandum of understanding, commitment letter or similar
submission. Previously Disclosed is a true and complete list, as of
the date hereof, of all Litigation pending or, to the Company's
knowledge, threatened arising out of any state of facts relating to the
sale of investment, insurance or hedging products by the Company, its
Subsidiaries or, to the knowledge of the Company, its employees or any
employees of its Subsidiaries (including, without limitation, equity or
debt securities, mutual funds, insurance contracts, annuities,
partnership and limited partnership interests, interests in real
estate, investment banking services, securities underwritings in which
the Company or any of its Subsidiaries was a manager, co-manager,
syndicate member or distributor, derivatives contracts or structured
notes).
(m) Compliance with Laws. Each of the Company and its Subsidiaries,
--------------------
and, to the knowledge of the Company, their respective officers and
employees:
(i) in the conduct of business, including its sales and marketing
practices, is in compliance with all applicable federal, state, local
and foreign
-21-
statutes, laws, regulations, ordinances, rules, judgments,
suitability requirements, orders or decrees applicable thereto or to
the employees conducting such businesses, and with the applicable
rules of all Self-Regulatory Organizations to which it is subject;
(ii) has all permits, licenses, authorizations, orders and
approvals of, and has made or obtained all filings, notices,
applications, consents, registrations, approvals, permits or
authorizations with, to or of all Governmental Authorities and
Self-Regulatory Organizations that are required in order to permit it
to own and operate its businesses as presently conducted; all such
permits, licenses, authorizations, orders and approvals are in full
force and effect and, to the Company's knowledge, no suspension or
cancellation of any of them is threatened or reasonably likely; and
all such filings, applications and registrations are current;
(iii) has, since December 31, 1998, received no written
notification or, to the knowledge of the Company, other communication
from any Governmental Authority or Self-Regulatory Organization (A)
asserting that it is not in compliance with any of the statutes,
rules, regulations, or ordinances which such Governmental Authority or
Self-Regulatory Organization enforces, or has otherwise engaged in any
unlawful business practice, (B) threatening to revoke any license,
franchise, permit, seat on any stock or commodities exchange, or
governmental authorization, (C) requiring it (including any of its
directors or controlling persons) to enter into any order, decree,
agreement, memorandum of understanding or similar arrangement (or
requiring the board of directors thereof to adopt any resolution or
policy) or (D) restricting or disqualifying the activities of the
Company or any of its Subsidiaries (except for restrictions generally
imposed by rule, regulation or administrative policy on brokers,
dealers or investment advisers generally);
(iv) is not aware of any pending or threatened investigation,
review or disciplinary proceedings by any Governmental Authority or
Self-Regulatory Organization against the Company, any of its
Subsidiaries or any officer, director or employee thereof (including
any investigations, reviews or proceedings relating to sales or
marketing practices);
(v) is not, nor is any Affiliate of it, subject to a "statutory
disqualification" as defined in Section 3(a)(39) of the Exchange Act
and is not subject to a disqualification that would be a basis for
censure, limitations on the activities, functions or operations of, or
suspension or revocation of the registration of any broker-dealer
Subsidiary as a broker-dealer, municipal securities dealer, government
securities broker or government securities dealer under Section 15,
Section 15B or Section 15C of the Exchange Act, and there is no
reasonable basis for, nor has the Company been notified of, any
proceeding or investigation, whether preliminary or otherwise, that
would reasonably be expected to result in, any such censure,
limitations, suspension or revocation;
-22-
(vi) is not required to be registered as an investment company
under the Investment Company Act;
(vii) is not acting as the "sponsor" of a "broker-dealer trading
program", as such terms are defined in Rule 17a-23 under the Exchange
Act; and
(viii) in the conduct of its business with respect to employee
benefit plans subject to Title I of ERISA, it has not (A) breached any
applicable fiduciary duty under Part 4 of Title I of ERISA which,
individually or in the aggregate, would reasonably be expected to
subject it to material liability under Sections 405 or 409 of ERISA,
(B) engaged in a "prohibited transaction" within the meaning of
Section 406 of ERISA or Section 4975(c) of the Code which,
individually or in the aggregate, would reasonably be expected to
subject it to material liability or Taxes under Sections 409 or 502(i)
of ERISA or Section 4975(a) of the Code or (C) engaged in any conduct
that would constitute a crime or violation listed in Section 411 of
ERISA which would reasonably be expected to preclude the Company from
providing services to any such plan.
(n) Clients. (i) The Company and its Subsidiaries are in compliance with
-------
the terms of each Contract with each Client, and each such Contract is in
full force and effect with respect to the applicable Client. There are no
material disputes pending or threatened with any Client or with any former
Client. The Company has made available to Parent true and complete copies
of all material agreements with any Clients.
(ii) The Company has Previously Disclosed a list of each investment
advisory Client that is subject to regulation as an investment company
under the Investment Company Act.
(iii) Each extension of credit by the Company or any of its Subsidiaries
to any Client is in compliance with Federal Reserve Board Regulation T or
any substantially similar regulation of any Governmental Authority.
(o) Registrations. (i) The Company, each of its Subsidiaries and
-------------
each of its or their officers and employees who are required to be
registered as a broker-dealer, an investment adviser, a registered
representative, an insurance agent, a commodity trading adviser, a
commodity pool operator, a futures commission merchant, an introducing
broker, a transfer agent or a sales person (or in a similar capacity)
under any United States federal, state, local or foreign statutes,
laws, rules or regulations, including with the SEC, the CFTC, the
securities commission or similar authority or insurance authority of
any state or foreign jurisdiction or any Self-Regulatory Organization,
are duly registered as such and such registrations are in full force
and effect. All United States federal, state, local and foreign
registration requirements have been complied with by the Company and
each of its Subsidiaries and such registrations as currently filed, and
all periodic reports required to be filed with respect thereto, are
accurate and complete. The Company has Previously Disclosed a list of
all Governmental Authorities and/or Self-Regulatory Organizations to
which the Company and each of its Subsidiaries are subject, identifying
which entities are subject to which Governmental Authorities and
Self-Regulatory
-23-
Organizations, and a list of all material licenses granted to such entities
by each such Governmental Authority or Self-Regulatory Organization.
(ii) The Company has made available to Parent true and correct copies of
(A) each Form G-37/G-38 filed with the MSRB since January 1, 1999 and (B)
all records required to be kept by the Company under Rule G-8(a)(xvi) of
the MSRB. Except as set forth in the foregoing, since January 1, 1999,
there have been no contributions or payments, and there is no other
information, that would be required to be disclosed by the Company or any
of the Company's Subsidiaries on any such form or recorded by the Company
or any such Subsidiary pursuant to such rule.
(p) Environmental Matters. The Company and its Subsidiaries have
---------------------
complied at all times with applicable Environmental Laws and have not
owned or operated any property (including buildings and any other
structures) or been deemed to have owned or operated any such property
under any Environmental Law; and no property in which the Company or
any of its Subsidiaries has had a Lien (whether as fiduciary or
otherwise) has been contaminated with, or has had any release of, any
Hazardous Substance in such form or substance so as to create any
liability for the Company or its Subsidiaries; the Company is not
subject to liability for any Hazardous Substance disposal or
contamination on any other third-party property; the Company and its
Subsidiaries have not received any notice, demand letter, claim or
request for information alleging any violation of, or liability of the
Company under, any Environmental Law; the Company and its Subsidiaries
are not subject to any order, decree, injunction or other agreement
with any Governmental Authority or any third party relating to any
Environmental Law; the Company and its Subsidiaries are not aware of
any reasonably likely liability relating to environmental circumstances
or conditions (including the presence of asbestos, underground storage
tanks, lead products or polychlorinated biphenyls) involving the
Company or one of its Subsidiaries, any currently or formerly owned or
operated property (whether as fiduciary or otherwise) or any reasonably
likely liability related to any Lien held by the Company or one of its
Subsidiaries; and the Company has made available to Parent copies of
all environmental reports, studies, sampling data, correspondence,
filings and other environmental information in its possession relating
to the Company or its Subsidiaries, or any currently or formerly owned
or operated property or any property in which the Company or one of its
Subsidiaries (whether as fiduciary or otherwise) has held a Lien.
(q) No Brokers. None of the Company or its Subsidiaries, or any of
----------
their directors, officers or employees, has employed any broker or
finder, or incurred any broker's or finder's commissions or fees, in
connection with the Merger or the other transactions contemplated by
this Agreement or the Stock Option Agreement, except that the Company
has engaged ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. as its financial adviser, the
arrangements with which (including fees) have been previously discussed
with Parent.
(r) Compensation and Benefit Plans. (i) The Company has Previously
------------------------------
Disclosed a complete list of all benefit and compensation plans,
contracts, policies or arrangements covering current or former
employees of the Company or its Subsidiaries (the "EMPLOYEES") and
current or former directors of the Company or its Subsidiaries,
-24-
including, but not limited to, "employee benefit plans" within the
meaning of Section 3(3) of ERISA, and bonus, deferred compensation,
pension, retirement, profit-sharing, thrift, savings, severance,
employee stock ownership, stock bonus, stock purchase, restricted stock
and stock option plans, all employment or severance contracts (other
than offer letters to employees which individually provide for total
annual compensation to an employee of less than $250,000), all medical,
dental, health and life insurance plans and all other employee benefit
plans, contracts or arrangements (the "COMPENSATION AND BENEFIT
PLANS"). True and complete copies of all Compensation and Benefit
Plans, including, but not limited to, any trust instruments and/or
insurance contracts, if any, forming a part thereof, and all amendments
thereto have been made available to Parent.
(ii) All Compensation and Benefit Plans have been operated in accordance
with their terms and are in substantial compliance with all applicable
law. Each Compensation and Benefit Plan which is an "employee pension
benefit plan" within the meaning of Section 3(2) of ERISA ("PENSION PLAN")
and which is intended to be qualified, under Section 401(a) of the Code,
has received a favorable determination letter from the IRS, and the
Company is not aware of any circumstances which could reasonably be
expected to result in the revocation or denial of any such favorable
determination letter or the loss of the qualification of such Plan under
Section 401(a) of the Code. There is no pending or, to the knowledge of
the Company, threatened litigation relating to the Compensation and
Benefit Plans. Neither the Company nor any of its Subsidiaries has engaged
in a transaction with respect to any Compensation and Benefit Plan that,
assuming the taxable period of such transaction expired as of the date
hereof, could reasonably be expected to subject the Company or any of its
Subsidiaries to a tax or penalty imposed by either Section 4975 of the
Code or Section 502(i) of ERISA in an amount that would be material.
(iii) No liability under Subtitle C or D of Title IV of ERISA has been or
could reasonably be expected to be incurred by the Company or any of its
Subsidiaries with respect to any ongoing, frozen or terminated
"single-employer plan", within the meaning of Section 4001(a)(15) of
ERISA, currently or formerly maintained by any of them, or the
single-employer plan of any entity which is considered one employer with
the Company or any of its Subsidiaries under Section 4001 of ERISA or
Section 414 of the Code (an "ERISA AFFILIATE"). Neither the Company nor
any of its Subsidiaries presently contributes to a "multiemployer plan"
within the meaning of Section 3(37) of ERISA, nor have they contributed to
such a plan within the past six calendar years. No notice of a "reportable
event", within the meaning of Section 4043 of ERISA for which the 30-day
reporting requirement has not been waived, other than pursuant to PBGC
Reg. Section 4043.66, has been required to be filed for any Pension Plan
or by any ERISA Affiliate within the 12-month period ending on the date
hereof.
(iv) All contributions required to be made under the terms of any
Compensation and Benefit Plan have been timely made or have been reflected
on the Company Financial Statements. Neither any Pension Plan nor any
single-employer plan of an ERISA Affiliate has an "accumulated funding
deficiency" (whether or not waived) within the meaning of Section 412 of
the Code or Section 302 of ERISA and no ERISA Affiliate has an outstanding
funding waiver. Neither the Company nor any of its
-25-
Subsidiaries has provided, or is required to provide, security to any
Pension Plan or to any single-employer plan of an ERISA Affiliate pursuant
to Section 401(a)(29) of the Code.
(v) Neither the Company nor any of its Subsidiaries has any obligations for
post-termination health and life benefits other than as required by Part 6
of Subtitle B of Title I of ERISA. There are no restrictions on the rights
of the Company or any of its Subsidiaries to amend or terminate any such
post-termination health and life arrangement without incurring any
liability thereunder.
(vi) Neither the Company nor any entity which is considered one employer
with the Company under Section 4001 of ERISA or Section 414 of the Code
maintains any plan which is subject to Title IV of ERISA.
(vii) Except as Previously Disclosed, there has been no amendment to,
announcement by the Company or any of its Subsidiaries relating to, or
change in employee participation or coverage under, any Compensation and
Benefit Plan which would increase materially the expense of maintaining
such Plan above the level of the expense incurred therefor for the most
recent fiscal year. Neither the execution and delivery of this Agreement
or the Stock Option Agreement nor the consummation of the transactions
contemplated hereby or thereby will (A) result in any payment (including,
without limitation, severance, unemployment compensation, golden parachute
or otherwise) becoming due to any director of the Company or any of its
Subsidiaries or to any Employee under any Compensation and Benefit Plan or
otherwise from the Company or any of its Subsidiaries, (B) increase any
benefits otherwise payable under any Compensation and Benefit Plan, (C)
result in any acceleration of the time of payment or vesting or trigger
any payment on funding (through a grantor trust or otherwise) of any
Company Option, Right or any benefit payable under any Compensation and
Benefit Plan, (D) result in any payment that would not be deductible under
Section 162(m) or Section 280G of the Code, (E) cause the Company or any
of its Subsidiaries to record additional compensation expense on its
income statement with respect to any outstanding stock option or
equity-based award or (F) limit the right of the Company or any of its
Subsidiaries, in its sole discretion, to administer, amend or terminate
any Compensation and Benefit Plan or any related trust instrument.
(s) No Knowledge. The Company knows of no reason relating to the Company or
------------
its Subsidiaries why the regulatory approvals referred to in Section
7.01(b) should not be obtained without the imposition of any condition of
the type referred to in the proviso contained in such Section 7.01(b).
(t) Labor Relations. Each of the Company and its Subsidiaries is in
---------------
compliance with all applicable laws respecting employment and
employment practices, terms and conditions of employment and wages and
hours, including, without limitation, the Immigration Reform and
Control Act, the Worker Adjustment and Retraining Notification Act, any
such laws respecting employment discrimination, disability rights or
benefits, equal opportunity, plant closure issues, affirmative action,
workers' compensation, employee benefits, severance payments, labor
relations, employee leave
-26-
issues, wage and hour standards, occupational safety and health
requirements and unemployment insurance and related matters. None of the
Company or its Subsidiaries is engaged in any unfair labor practice and
there is no unfair labor practice complaint pending or, to the knowledge
of the Company, threatened against any of the Company or its Subsidiaries
before the National Labor Relations Board. Neither the Company nor any of
its Subsidiaries is a party to, is negotiating, or is bound by, any
collective bargaining agreement, contract or other agreement or
understanding with a labor union or labor organization, nor is the Company
or any of its Subsidiaries the subject of a proceeding asserting that the
Company or any such Subsidiary has committed an unfair labor practice
(within the meaning of the National Labor Relations Act) or seeking to
compel it or such Subsidiary to bargain with any labor organization as to
wages and conditions of employment, nor is there any strike or other labor
dispute involving the Company or any of its Subsidiaries, pending or, to
its knowledge, threatened, nor is it aware of any activity involving the
Company's or any of its Subsidiaries' employees seeking to certify a
collective bargaining unit or engaging in any other organization activity.
(u) Insurance. The Company and its Subsidiaries are insured with
---------
reputable insurers against such risks and in such amounts as the
management of the Company reasonably has determined to be prudent in
accordance with industry practices. All of the insurance policies,
binders or bonds maintained by the Company or its Subsidiaries are in
full force and effect, the Company and its Subsidiaries are not in
default thereunder and all claims thereunder have been filed in due and
timely fashion. The Company has made available to Parent a list of all
insurance policies maintained by or for the benefit of the Company or
its Subsidiaries or their directors, officers, employees or agents.
(v) Taxes. The Company and its Subsidiaries have filed completely
-----
and correctly in all material respects all material Tax Returns which
are required by all applicable laws to be filed by them, and have paid,
or made adequate provision for the payment of, all Taxes which have or
may become due and payable pursuant to said Tax Returns and all other
Taxes, governmental charges and assessments received to date other than
those Taxes being contested in good faith for which provision has been
made in accordance with GAAP on the most recent consolidated balance
sheet of the Company set forth in the Financial Statements. All Taxes
which the Company and its Subsidiaries are required by law to withhold
and collect have been duly withheld and collected, and have been paid
over, in a timely manner, to the proper taxing authorities to the
extent due and payable. Each of the Company and its Subsidiaries has
complied in all material respects with all requirements (including
record retention) applicable to information reporting. The Company and
its Subsidiaries have not executed any waiver to extend, or otherwise
taken or failed to take any action that would have the effect of
extending, the applicable statute of limitations in respect of any Tax
liabilities of the Company or any of its Subsidiaries for the taxable
years prior to and including the most recent taxable year. Neither the
Company nor any of its Subsidiaries (or any predecessor thereto) is a
"consenting corporation" within the meaning of Section 341(f) of the
Code. None of the Company or any of its Subsidiaries has been a member
of any consolidated group (other than with the Company and its
Subsidiaries) for Tax purposes. The Company and its
-27-
Subsidiaries are not a party to any tax sharing agreement or arrangement
(other than with the Company and its Subsidiaries). No material liens or
encumbrances for Taxes exist with respect to any of the assets or
properties of the Company or any of its Subsidiaries, except for statutory
liens for Taxes not yet due or payable or that are being contested in good
faith. All of the U.S. federal income Tax Returns filed by or on behalf of
each of the Company and its Subsidiaries have been examined by and settled
with the IRS, or the statute of limitations with respect to the relevant
Tax liability expired, for all taxable periods ending on or before the
date of this Agreement. All Taxes due with respect to any completed and
settled audit, examination or deficiency Litigation with any taxing
authority have been paid in full. There is no audit, examination,
deficiency, or refund Litigation pending with respect to any Taxes and no
taxing authority has given written notice of the commencement of any
audit, examination or deficiency Litigation with respect to any Taxes. No
closing agreements, private letter rulings, technical advice memoranda or
similar agreements or rulings have been entered into or issued by any
taxing authority with respect to the Company or any of its Subsidiaries.
There are no outstanding assessments, claims or deficiencies for any Taxes
of the Company or any of its Subsidiaries that have been proposed,
asserted or assessed in writing. There is no outstanding written claim by
a taxing authority that the Company or any of its Subsidiaries may be
subject to taxation or required to file a Tax Return in a jurisdiction
where it does not file Tax Returns and none of the Company or any of their
Subsidiaries is aware of any jurisdiction that could properly make such a
claim. Each of the Company and its Subsidiaries that is required to be
registered for the purposes of sales tax, transfer taxes, value added
taxes or any similar Tax has been so registered, and it has complied in
all material respects with all statutory requirements, orders, provisions,
directions or conditions relating to such Taxes. The Company has not been
requested to and has not agreed to include in a taxable period ending
after the Effective Time any taxable income attributable to income that
economically accrued in a prior taxable period as a result of Section 481
of the Code, the installment method of accounting or any comparable
provision of state or local Tax law. None of the Company or any of its
Subsidiaries has been a "distributing corporation" or a "controlled
corporation" in any distribution occurring during the last 3 years in
which the parties to such distribution treated the distribution as one to
which Section 355 of the Code applied. No Tax is required to be withheld
pursuant to Section 1445 of the Code as a result of the Merger. All Tax
Returns of the Company and each of its Subsidiaries and all closing
agreements, private letter rulings, technical advice memoranda or similar
agreements or rulings (if any) entered into with or issued by any taxing
authority, by or with respect to the Company or any of its Subsidiaries
that were delivered by the Company pursuant to Parent's due diligence
request are true copies of such documents.
(w) Derivatives. All exchange-traded or over-the-counter swap,
-----------
forward, future, option, cap, floor or collar financial contracts and
any other similar arrangements ("DERIVATIVES"), whether entered into
for the Company's account or for the account of one or more of the
Company's Subsidiaries or their customers, were entered into (i) in
accordance with prudent business practices and all applicable laws,
rules, regulations and regulatory policies and (ii) with counterparties
believed to be financially responsible at the time; and each of them
constitutes the valid and legally binding obligation of the
-28-
Company or its Subsidiaries, as applicable, enforceable in accordance with
its terms (except as enforceability may be limited by the Bankruptcy and
Equity Exception), and are in full force and effect. Neither the Company
nor any of its Subsidiaries, nor to the Company's knowledge any other
party thereto, is in breach of any of its obligations under any such
agreement or arrangement. The Company SEC Documents disclose the value of
such agreements and arrangements on a ▇▇▇▇-to-market basis in accordance
with GAAP, as modified to give effect to Statement of Financial Accounting
Standards No. 133, and, since December 31, 2000, there has not been a
material change in such value.
(x) Accounting Controls. Each of the Company and its Subsidiaries
-------------------
has devised and maintained systems of internal accounting controls
sufficient to provide reasonable assurances, in the judgment of the
Board of Directors of the Company, that: (i) all material transactions
are executed in accordance with management's general or specific
authorization; (ii) all material transactions are recorded as necessary
to permit the preparation of financial statements in conformity with
GAAP consistently applied with respect to broker-dealers or any other
criteria applicable to such statements; (iii) access to the material
property and assets of the Company and its Subsidiaries is permitted
only in accordance with management's general or specific authorization;
and (iv) the recorded accountability for items is compared with the
actual levels at reasonable intervals and appropriate action is taken
with respect to any differences.
(y) Intellectual Property. (i) The Company and its Subsidiaries own
---------------------
or have the right to use all material Intellectual Property Rights (as
defined below) necessary or required for the operation of their
business as currently conducted (collectively, "COMPANY IP RIGHTS"),
and have the right to use, license, sublicense or assign the same
without material liability to, or any requirement of consent from, any
other person or party. Such Company IP Rights constitute all
Intellectual Property Rights necessary for the conduct of their
businesses in the manner conducted immediately prior to the Effective
Time. All Company IP Rights are either owned by the Company or its
Subsidiaries free and clear of all Liens or are used pursuant to a
license agreement; each such license agreement is valid and enforceable
and in full force and effect; neither the Company nor any of its
Subsidiaries is in material default thereunder; and to the knowledge of
the Company, no corresponding licensor is in material default
thereunder. None of the Company IP Rights infringes or otherwise
conflicts with any Intellectual Property Rights or other right of any
person; there is no pending or, to the knowledge of the Company,
threatened litigation, adversarial proceeding, administrative action or
other challenge or claim relating to any Company IP Rights; there is no
outstanding order relating to any Company IP Rights; to the knowledge
of the Company, there is currently no infringement by any person of any
Company IP Rights; and the Company IP Rights owned, used or possessed
by the Company and its Subsidiaries are sufficient and adequate to
conduct the business of the Company and its Subsidiaries to the full
extent as such business is currently conducted.
(ii) To the knowledge of the Company, no employee of the Company or any of
its Subsidiaries is in violation of any term of any employment contract,
patent disclosure agreement or any other contract or agreement relating to
the relationship of
-29-
any such employee with the Company or such Subsidiary or any other party
because of the nature of the business conducted by the Company or its
Subsidiaries or proposed to be conducted by the Company or its
Subsidiaries.
(iii) As used herein, the term "INTELLECTUAL PROPERTY RIGHTS" shall mean
all worldwide industrial and intellectual property rights, including,
without limitation, patents, patent applications, patent rights,
trademarks, trademark applications, trade names, service marks, service
▇▇▇▇ applications, copyright, copyright applications, franchises,
licenses, inventories, know-how, trade secrets, customer lists,
proprietary processes and formulae, all source and object code,
algorithms, architecture, structure, display screens, layouts, inventions,
development tools, software, databases and all documentation and media
constituting, describing or relating to the above, including, without
limitation, manuals, memoranda and records.
(z) Investment Advisory Activities. (i) Certain of the Company's
------------------------------
Subsidiaries provide investment management, investment advisory,
sub-advisory, administration, distribution or certain other services to
the Investment Companies. Each of the Investment Companies (or the
trust or corporation of which it is a series) is duly organized and
existing in good standing under the laws of the jurisdiction under
which it is organized. Each of the Investment Companies (or the trust
or corporation of which it is a series) that is registered or required
to be registered under the Investment Company Act ("REGISTERED FUNDS")
is governed by a board of trustees or directors (each a "FUND BOARD"
and, collectively, the "FUND BOARDS") consisting of at least 50% of
trustees or directors who are not "interested persons" (as defined in
the Investment Company Act) of the Registered Funds or the Company.
The Fund Boards operate in all material respects in conformity with the
requirements and restrictions of Sections 10 and 16 of the Investment
Company Act, to the extent applicable.
(ii) Each of the Investment Companies is in compliance with all applicable
foreign, United States federal and state laws, rules and regulations of
the SEC, the CFTC, the IRS and any Self-Regulatory Organization having
jurisdiction over such Investment Company. The Company has made available
to Parent true and complete copies of all the Constitutive Documents and
related advisory agreements of all of the Investment Companies managed or
advised by the Company or any of its Subsidiaries.
(iii) Except for the entities identified as such in the Company's
Disclosure Schedule, none of the Company or its Subsidiaries is or has
been during the past five years an "investment adviser" within the meaning
of the Investment Advisers Act, required to be registered, licensed or
qualified as an investment advisor under the Investment Advisers Act or
subject to any liability or disability by reason of any failure to be so
registered, licensed or qualified.
(iv) Each Investment Company has been operated in compliance with its
respective objectives, policies, restrictions and guidelines, including
without limitation those set forth in the applicable prospectus and
registration statement for that Investment Company. The Company and its
Subsidiaries have operated the investment accounts with respect to which
they provide discretionary investment advisor services in
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accordance with the investment objectives, policies, restrictions and
guidelines in effect for such investment accounts.
(v) Each Registered Fund has duly adopted procedures pursuant to Rules
17a-7, 17e-1 and 10f-3 under the Investment Company Act, to the extent
applicable.
(vi) Neither the Company, nor any "affiliated person" (as defined in the
Investment Company Act) thereof, is ineligible pursuant to Section 9 of
the Investment Company Act to serve as an investment adviser (or in any
other capacity contemplated by the Investment Company Act) to an
Investment Company; neither the Company, nor any "associated person" (as
defined in the Investment Advisers Act) thereof, is ineligible pursuant to
Section 203 of the Investment Advisers Act to serve as an investment
adviser or as an associated person to a registered investment adviser.
(aa) Financial Opinion. The Board of Directors of the Company has
-----------------
received the opinion of ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co., dated the date of this
Agreement, to the effect that, as of such date, the Merger
Consideration is fair from a financial point of view to holders of
shares of Company Common Stock.
(bb) Certain Contracts. Except as set forth in the Company SEC Documents
------------------
filed prior to the date hereof, neither the Company nor any of its
Subsidiaries is a party to or bound by any non-competition agreement or
any other agreement or obligation (i) which limits or purports to limit in
any respect the manner in which, or the localities in which, any business
of the Company or its Subsidiaries is or could be conducted or the types
of business that the Company or its Subsidiaries conducts or may conduct
or (ii) which would reasonably be understood to limit or purport to limit
in any respect the manner in which, or the localities in which, any
business of the Parent or its Subsidiaries is or could be conducted or the
types of business that the Parent or its Subsidiaries conducts or may
conduct.
5.4 REPRESENTATIONS AND WARRANTIES OF PARENT. Except as Previously
Disclosed in a section of its Disclosure Schedule corresponding to the relevant
paragraph below, Parent hereby represents and warrants to the Company as
follows:
(a) Organization, Standing and Authority. Parent is duly organized,
------------------------------------
validly existing and in good standing under the laws of Canada.
Following its formation, Merger Subsidiary will be duly organized,
validly existing and in good standing under the laws of the State of
Delaware. Parent is, and Merger Subsidiary will be, following its
formation, duly qualified to do business and in good standing in the
states of the United States and foreign jurisdictions where their
ownership or leasing of property or the conduct of their business
requires such qualification. Each of Parent and its Subsidiaries has
in effect all United States federal, state, local and foreign
governmental authorizations necessary for it to own or lease its
properties and assets and to carry on its business as it is now
conducted.
(b) Corporate Authority. Parent has, and Merger Subsidiary will
-------------------
have, as of the Closing Date, the requisite corporate power and
authority, and Parent has, and Merger
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Subsidiary will have, as of the date it executes a supplement to this
Agreement, taken all corporate action necessary to authorize the execution
and delivery of, and the performance of their respective obligations
under, this Agreement and, in the case of Parent, the Stock Option
Agreement, and, in the case of Merger Subsidiary, to adopt the plan of
merger contained in this Agreement and, in accordance therewith, to
consummate the Merger. Each of this Agreement and the Stock Option
Agreement is the valid and binding agreement of Parent, enforceable
against it in accordance with its terms, subject to the Bankruptcy and
Equity Exception. Upon the execution of a supplement to this Agreement by
Merger Subsidiary, this Agreement will be the valid and binding agreement
of Merger Subsidiary, enforceable against it in accordance with its terms,
subject to the Bankruptcy and Equity Exception.
(c) Governmental Filings; No Violations. Other than the filings
-----------------------------------
and/or notices (i) referred to in Section 2.02, (ii) under the HSR Act,
the Exchange Act and the Securities Act, (iii) required to be made
pursuant to state insurance or banking regulations, (iv) required to be
made with the NYSE and other Self-Regulatory Organizations and (v) such
other filings and/or notices set forth in Parent's Disclosure Schedule,
no notices, reports, applications or other filings are required to be
made by Parent or any of its Subsidiaries with, nor are any consents,
registrations, approvals, permits or authorizations required to be
obtained by any of them from, any Governmental Authority in connection
with the execution and delivery of this Agreement and the Stock Option
Agreement by Parent, the execution and delivery of this Agreement by
Merger Subsidiary and the consummation by Parent and Merger Subsidiary
of the Merger and the other transactions contemplated hereby and
thereby. Subject to the making or obtaining of all filings, notices,
applications, consents, registrations, approvals, permits or
authorizations with or of any relevant Governmental Authority with
respect to the Merger and the other transactions contemplated hereby
and by the Stock Option Agreement, the execution, delivery and
performance of this Agreement and the Stock Option Agreement, and the
consummation of the Merger and other transactions contemplated hereby
and thereby, does not and will not (A) constitute a breach or violation
of, or a default under, or cause or allow the acceleration or creation
of a Lien (with or without the giving of notice, passage of time or
both) pursuant to, any law, rule or regulation or any judgment, decree,
order, governmental or non-governmental permit or license, or any
Contract of it or of any of its Subsidiaries or to which Parent or any
of Parent's Subsidiaries or its or their properties is subject or
bound, (B) constitute a breach or violation of, or a default under, the
Constitutive Documents of Parent or any of its Subsidiaries or
(C) require any consent or approval under any such law, rule,
regulation, judgment, decree, order, governmental permit or license, or
the consent or approval of any other party to any such Contract.
(d) No Knowledge. As of the date hereof, Parent knows of no reason relating
------------
to Parent or its Subsidiaries why the regulatory approvals referred to in
Section 7.01(b) should not be obtained without the imposition of any
condition of the type referred to in the proviso contained in such Section
7.01(b).
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(e) Funds. At the Effective Time, Parent will have the funds necessary to
-----
consummate the Merger and pay the Merger Consideration in accordance with
the terms of this Agreement.
(f) Interim Operations of Merger Subsidiary. Merger Subsidiary will be
-----------------------------------------
formed solely for the purpose of engaging in the transactions contemplated
hereby and, as of the Closing Date, will have engaged in no business other
than in connection with the transactions contemplated by this Agreement.
Merger Subsidiary will be an indirect wholly owned subsidiary of Parent.
(g) No Brokers. None of Parent or its Subsidiaries, or any of their
-----------
directors, officers or employees, has employed any broker or finder, or
incurred any broker's or finder's commissions or fees, in connection with
the Merger or the other transactions contemplated by this Agreement or the
Stock Option Agreement, except that Parent has engaged Lazard, Freres &
Co. LLC as its financial advisor.
(h) Legal Proceedings. As of the date hereof, none of the Parent or
-----------------
any of its Subsidiaries is a party to any, and there are not pending
or, to the knowledge of Parent, threatened, material legal,
administrative, arbitral or other proceedings, claims, actions or
governmental or regulatory investigations of any nature challenging the
validity or propriety of the transactions contemplated by this
Agreement or that would impair the ability of Parent to perform its
obligations hereunder.
ARTICLE VI
COVENANTS
6.1 REASONABLE BEST EFFORTS. (a) Subject to the terms and conditions of
this Agreement, each of the Company and Parent agrees to use its reasonable best
efforts in good faith to take, or cause to be taken (including causing any of
its Subsidiaries to take), all actions, and to do, or cause to be done, all
things necessary, proper or desirable, or advisable under applicable laws, so as
to permit consummation of the Merger as promptly as reasonably practicable and
otherwise to enable consummation of the transactions contemplated hereby and
shall cooperate fully with the other party hereto to that end. The parties agree
that they intend the consummation of the transactions contemplated hereby to
occur no later than October 30, 2001.
(b) Without limiting the generality of Section 6.01(a), the Company agrees
to use its reasonable best efforts to obtain (i) any consents of Clients
(including in the case of Registered Funds, the boards of directors or trustees
and the stockholders of such Registered Funds) necessary under any advisory
agreement or the Investment Company Act or the Investment Advisers Act in
connection with any deemed assignment of any such advisory agreement upon
consummation of the Merger and (ii) the consent or approval of all persons party
to a Contract with the Company or any of its Subsidiaries, to the extent such
consent or approval is required in order to consummate the Merger or for the
Surviving Corporation to receive the benefits of such Contract; PROVIDED that in
no event shall the Company be deemed to
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have failed to satisfy the condition set forth in 7.03(b) solely on the basis
that such consents on approvals have not been obtained as of the Closing Date.
6.2 PROXY STATEMENT. (a) The Company will as promptly as practicable
prepare and file with the SEC a Proxy Statement to be sent to the Company's
stockholders (the "COMPANY PROXY STATEMENT") and will use its reasonable best
efforts to have the Company Proxy Statement cleared by the SEC promptly. The
Company will cause the Company Proxy Statement to comply as to form in all
material respects with the applicable provisions of the Exchange Act and the
rules and regulations thereunder. The Company will advise Parent promptly of the
time when the Company Proxy Statement and any amendment or supplement to the
Company Proxy Statement has been filed, and of any request by the SEC for
amendment of the Company Proxy Statement or comments thereon and responses
thereto or requests by the SEC for additional information. Each of the Company
and Parent agrees to use its reasonable best efforts, after consultation with
the other, to respond promptly to all such comments of and requests by the SEC.
(b) Each of Parent and the Company agrees, as to itself and its
Subsidiaries, that none of the information to be supplied by it or its
Subsidiaries for inclusion or incorporation by reference in the Company Proxy
Statement and any amendment or supplement thereto will, at the date of mailing
to stockholders and at the time or times of the Company Stockholders Meeting,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. If at any time prior to the date of the Company Stockholders Meeting
any information relating to Parent, the Company or any of their Affiliates,
officers or directors, should be discovered by the Company or Parent that should
be set forth in an amendment or supplement to the Company Proxy Statement, so
that such document would not include any misstatement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading, the party that discovers such information shall promptly
notify the other party and, to the extent required by law, an appropriate
amendment or supplement describing such information shall be promptly filed by
the Company with the SEC and, to the extent required by law, disseminated by the
Company to the stockholders of the Company.
(c) The Company will use its reasonable best efforts to cause the
definitive Company Proxy Statement and all required amendments and supplements
thereto to be mailed to its stockholders as promptly as practicable after the
date hereof.
6.3 COMPANY STOCKHOLDERS MEETING. The Company will take, in accordance with
applicable law and its Constitutive Documents, all action necessary to convene a
special meeting of the holders of the Company Common Stock at which the holders
of the Company Common Stock will consider the adoption of this Agreement
(including any adjournments or postponements thereof, the "COMPANY STOCKHOLDERS
MEETING") as promptly as practicable after the date hereof. Subject to the terms
of this Agreement and subject to its fiduciary obligations under applicable law,
the Board of Directors of the Company shall recommend to its stockholders the
adoption of this Agreement and shall use best reasonable efforts to solicit such
adoption. In the event that subsequent to the date hereof the Board of Directors
of the Company
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determines that this Agreement is no longer advisable and either
makes no recommendation or recommends that its stockholders reject it, the
Company shall nevertheless as promptly as practicable after the date hereof
submit this Agreement to the holders of the Company Common Stock for adoption at
the Company Stockholders Meeting, unless this Agreement shall have been
terminated in accordance with its terms prior to the Company Stockholders
Meeting.
6.4 PRESS RELEASES. The initial press release concerning the Merger and the
other transactions contemplated by this Agreement and the Stock Option Agreement
shall be a joint press release in such form agreed to by the parties and
thereafter the Company and Parent each shall consult with the other and provide
each other the opportunity to review, comment upon and use reasonable best
efforts to agree upon, any press release or other public announcements with
respect to the Merger and the other transactions contemplated by this Agreement
and the Stock Option Agreement prior to issuing any press releases or otherwise
making public announcements with respect to the Merger and the other
transactions contemplated by this Agreement and the Stock Option Agreement, and
neither party shall issue any press release or otherwise make any public
announcements with respect thereto without the other's prior consent, except as
may be required by law or court process or by obligations pursuant to any
listing agreement with or rules of any applicable securities exchange.
6.5 ACCESS; INFORMATION. (a) The Company agrees that upon reasonable notice
and subject to applicable laws relating to the exchange of information, for the
purposes of consummating the Merger and the other transactions contemplated
hereby and of planning the subsequent integration of the businesses and
operations of the Company and its Subsidiaries with those of Parent and its
Subsidiaries, it shall afford Parent and its Representatives such access during
normal business hours throughout the period prior to the Effective Time to the
books, records (including, without limitation, tax returns and work papers of
independent auditors), properties, personnel and Representatives of the Company
and to such other information as Parent may reasonably request and, during such
period, it shall furnish promptly to Parent (i) a copy of each material report,
schedule and other document filed by it pursuant to the requirements of the
Securities Laws or banking or insurance laws and (ii) all other information
concerning the business, properties, technology, systems, products, operations
and personnel of it as Parent may reasonably request.
(b) Each of Parent and the Company agrees that, for three years after the
date hereof, it will not, and will cause its subsidiaries and its or their
Representatives not to, use any information obtained pursuant to this Section
6.05 for any purpose unrelated to the consummation of the Merger. Subject to
requirements of applicable law, each of Parent and the Company shall keep
confidential, and shall cause its Representatives to keep confidential, all
information and documents obtained pursuant to this Section 6.05, unless such
information (i) was already known to such party (other than from a source known
by such party to be bound by a confidentiality obligation), (ii) becomes
available to such party from other sources not known by such party to be bound
by a confidentiality obligation, (iii) is disclosed with the prior written
approval of the other party or (iv) is independently developed by such party. In
the event that this Agreement is terminated in accordance with its terms, each
of Parent and the Company shall promptly cause all copies of documents or
extracts thereof containing information and data as to the other party or its
business or operations, and all documents created based upon or reflecting such
information, to be destroyed or returned to such other party. No investigation
by Parent or
-35-
the Company of the business and affairs of the Company or Parent,
as applicable, and its respective Subsidiaries shall affect or be deemed to
modify or waive any representation, warranty, covenant or agreement in this
Agreement or the conditions to consummation of the Merger contained in Article
VII. The parties hereby agree that clause (ii) of the first sentence of the
third paragraph and the final sentence of such paragraph in the Confidentiality
Agreement shall be deemed incorporated herein and shall be a part of this
Agreement for all purposes, with the obligations provided for in such clause and
sentence to survive for the period set forth therein.
6.6 ACQUISITION PROPOSALS. The Company agrees that it shall not, and shall
use its reasonable best efforts to cause its officers, directors, agents,
advisers and Affiliates not to, solicit or encourage inquiries or proposals with
respect to, or engage in any negotiations concerning, or provide any
confidential information to, or have any discussions with, any person relating
to, any tender or exchange offer, proposal for a merger, consolidation or other
business combination involving the Company or any of its Subsidiaries or any
proposal or offer to acquire in any manner a substantial equity interest in, or
a substantial portion of the assets or operations of, the Company or any of its
Subsidiaries (any of the foregoing, an "ACQUISITION PROPOSAL"), other than the
transactions contemplated by this Agreement or the Stock Option Agreement;
provided, that nothing contained in this Agreement shall prevent the Company's
Board of Directors from (i) making any disclosure to its stockholders if, in the
good faith judgment of its Board of Directors, failure so to disclose would be
inconsistent with its obligations under applicable law; (ii) providing (or
authorizing the provision of) information to, or engaging in (or authorizing)
such discussions or negotiations with, any person who has made a bona fide
written Acquisition Proposal received after the date hereof which did not result
from a breach of this Section 6.06; (iii) recommending such an Acquisition
Proposal to its stockholders (and in connection therewith withdrawing its
favorable recommendation to stockholders of this Agreement), if and only to the
extent that, in the case of actions referred to in clause (ii) or (iii), (x)
such Acquisition Proposal is a Superior Proposal, (y) the Company's Board of
Directors, after having consulted with and considered the advice of outside
counsel to such Board, determines in good faith that providing such information
or engaging in such negotiations or discussions, or making such recommendation,
is required in order to discharge the directors' fiduciary duties in accordance
with the DGCL and (z) the Company receives from such person a confidentiality
agreement in a customary form; or (iv) take any actions expressly permitted in
writing by Parent. For purposes of this Agreement, a "SUPERIOR PROPOSAL" means
any Acquisition Proposal by a third party on terms which the Company's Board of
Directors determines in its good faith judgment, after consultation with its
financial advisers (whose advice shall be communicated to Parent), to be more
favorable from a financial point of view to its stockholders than the Merger and
the other transactions contemplated hereby, after taking into account the
likelihood of consummation of such transaction on the terms set forth therein,
taking into account all legal, financial (including the financing terms of any
such proposal), regulatory and other aspects of such proposal and any other
relevant factors permitted under applicable law, after giving Parent at least
five Business Days to respond to such third-party Acquisition Proposal once the
Board has notified Parent that in the absence of any further action by Parent it
would consider such Acquisition Proposal to be a Superior Proposal, and then
taking into account any amendment or modification to this Agreement proposed by
Parent. The Company also agrees immediately to cease and cause to be terminated
any activities, discussions or
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negotiations conducted prior to the date of this Agreement with any parties
other than Parent with respect to any of the foregoing. The Company shall
promptly (within 24 hours) advise Parent following the receipt by it of any
Acquisition Proposal and the material terms thereof (including the identity of
the person making such Acquisition Proposal), and advise Parent of any
developments (including any change in such terms) with respect to such
Acquisition Proposal promptly upon the occurrence thereof.
Nothing contained in this Section 6.06 or any other provision of this
Agreement will prohibit the Company or the Company's Board of Directors from
notifying any third party that contacts the Company on an unsolicited basis
after the date hereof concerning an Acquisition Proposal of the Company's
obligations under this Section 6.06.
6.7 NO RIGHTS TRIGGERED. The Company shall take all reasonable steps
necessary to ensure that the entering into of this Agreement and the Stock
Option Agreement and the consummation of the transactions contemplated hereby
and thereby and any other action or combination of actions, or any other
transactions contemplated hereby and thereby, do not and will not result in the
grant of any Rights to any person (a) under the Constitutive Documents of the
Company or any of its Subsidiaries or (b) under any Contract to which the
Company or any of its Subsidiaries is a party except, in each case, as expressly
contemplated by this Agreement and the Stock Option Agreement.
6.8 REGULATORY APPLICATIONS. (a) Parent, the Company and their respective
Subsidiaries shall cooperate and use their respective reasonable best efforts to
prepare all documentation, to effect all filings, notices, applications,
consents, registrations, approvals, permits and authorizations with, to or of
all third parties and Governmental Authorities necessary to consummate the
transactions contemplated by this Agreement as promptly as reasonably
practicable. Parent shall have the right to review in advance, and to the extent
practicable to consult with the Company, subject to applicable laws relating to
the exchange of information, with respect to, all material written information
submitted to any third party or any Governmental Authority in connection with
the transactions contemplated by this Agreement. In exercising the foregoing
right, Parent agrees to act reasonably and as promptly as practicable. Each of
Parent and the Company agrees that it will consult with the other party hereto
with respect to the obtaining of all material consents, registrations,
approvals, permits and authorizations of all third parties and Governmental
Authorities necessary or advisable to consummate the transactions contemplated
by this Agreement and each party will keep the other party apprised of the
status of material matters relating to completion of the transactions
contemplated hereby.
(b) Subject to applicable laws governing the exchange of information, each
of Parent and the Company will, upon request, furnish the other party with all
information concerning itself, its Subsidiaries, directors, officers and
stockholders and such other matters as may be reasonably necessary or advisable
in connection with any filing, notice or application made by or on behalf of
such other party or any of its Subsidiaries to any third party or Governmental
Authority.
(c) The Company will cooperate with Parent to ensure that, to the extent
reasonably practicable, on the Closing Date the activities and assets of the
Company and its
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Subsidiaries are permitted to be conducted or held by Parent (as a
foreign bank qualified as a financial holding company) and its Subsidiaries
under the Bank Holding Company Act of 1956, as amended or the Bank Act (Canada),
if applicable.
6.9 EMPLOYEE MATTERS. (a) Parent will cause the Surviving Corporation to
honor, in accordance with their terms, all benefit obligations to Employees
accrued as of the Effective Time and all employee severance obligations under
plans and policies in existence on the date of this Agreement.
(b) (i) From the Effective Time, Parent shall cause to be provided, to the
Employees, employee benefits and compensation plans that, in the aggregate, are
no less favorable than those provided from time to time to similarly situated
employees of DR Corp. Following the date hereof, the Company and Parent shall
cooperate in reviewing, evaluating and analyzing the defined contribution
retirement and welfare benefit plans of the Company and its Subsidiaries, with
the goal of developing a strategy for providing such benefits to the Employees
following the Effective Time in a manner that is reasonably acceptable to the
Company. For purposes hereof, the provision of defined contribution retirement
and welfare benefits in accordance with the strategy that is agreed upon
pursuant to the preceding sentence shall not constitute a violation of the first
sentence of this Section 6.09(b).
(ii) For all purposes under the employee benefit and compensation plans of
Parent and its Affiliates providing benefits to any Employees after the
Effective Time (the "NEW PLANS"), each Employee shall be credited with his or
her years of service with the Company and its Affiliates before the Effective
Time, other than for purposes of benefit accrual under any defined benefit
pension plan, and except to the extent such credit would result in a duplication
of benefits in respect of such period. In addition, and without limiting the
generality of the foregoing, for purposes of each New Plan providing medical,
dental, pharmaceutical, vision and/or disability benefits to any Employee,
Parent shall cause all pre-existing condition exclusions and actively-at-work
requirements of such New Plan to be waived for such Employee and his or her
covered dependents to the extent such exclusion or limitation was waived under
the comparable Compensation and Benefit Plan, and Parent shall cause any
eligible expenses incurred by such Employee and his or her covered dependents
during the portion of the plan year of the comparable Compensation and Benefit
Plan ending as of the date such Employee's participation in the corresponding
New Plan begins to be taken into account under such New Plan for purposes of
satisfying all deductible, coinsurance and maximum out-of-pocket requirements
applicable to such Employee and his or her covered dependents for the applicable
plan year as if such amounts had been paid in accordance with such New Plan.
(c) Parent shall or shall cause the Surviving Corporation to take all
actions necessary to effectuate the items set forth in Section 6.09(c) of the
Company Disclosure Schedule.
(d) During the first year following the Closing Date, the Company shall
provide severance benefits in accordance with the DR Corp. Severance Pay Plan in
effect on the date hereof (including the schedule of benefits previously
provided to the Company).
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(e) The Company shall take all necessary action to ensure that the previously
announced changes to the Compensation and Benefit Plans listed in Section
6.09(e) of the Company Disclosure Schedule do not take effect.
(f) The Company shall take such action as is necessary to terminate the
ESPPs immediately prior to the Closing and shall take action to ensure that all
offering periods under such plans shall end on September 30, 2001. Further, the
Company shall take such actions as are necessary, including any plan amendments,
so that there are no new participants and no increases in current participant
elections permitted by the ESPPs, unless required by law.
6.10 NOTIFICATION OF CERTAIN MATTERS. (a) Each of the Company and the
Parent shall give prompt notice to the other of any fact, event or circumstance
known to it that could reasonably be expected, individually or taken together
with all other facts, events and circumstances known to it, to result in a
material breach of any of its representations, warranties, covenants or
agreements contained herein.
(b) The Company shall promptly notify Parent of:
(i) any written notice or other bona fide communication from any person
alleging that the consent of such person is or may be required as a
condition to the Merger;
(ii) any notice or other written communications from any Client (A)
terminating or threatening to terminate any material Contract with the
Company or any Subsidiary of the Company relating to the rendering of
services to such client or (B) relating to any material dispute with such
Client; or
(iii) any written notice or other material communication from any
Governmental Authority or Self-Regulatory Organization in connection with
the transactions contemplated by this Agreement.
(c) Each of the Company and its Subsidiaries shall, prior to the Closing
Date, notify its insurers in writing of all known incidents, events and
circumstances which could reasonably be expected to give rise to a claim against
the Company or its Subsidiaries, as applicable.
6.11 INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE. (a) From and
after the Effective Time, Parent agrees to cause the Surviving Corporation to
indemnify and hold harmless each present and former director and officer of the
Company, determined as of the Effective Time (the "INDEMNIFIED PARTIES"),
against any costs or expenses (including reasonable attorneys' fees), judgments,
fines, losses, claims, damages or liabilities (collectively, "COSTS") incurred
in connection with any actual or threatened claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative, arising
out of matters existing or occurring at or prior to the Effective Time, whether
asserted or claimed prior to, at or after the Effective Time, to the fullest
extent that the Company would have been permitted under Delaware law and its
Constitutive Documents in effect on the date hereof to indemnify such person
(and Parent shall also cause the Surviving Corporation to advance expenses as
incurred to
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the fullest extent permitted under applicable law provided the person to whom
expenses are advanced provides an undertaking to repay such advances if it is
ultimately determined that such person is not entitled to indemnification);
PROVIDED that any determination required to be made with respect to whether such
an officer's or director's conduct complies with the standards set forth under
Delaware law and the Company's Constitutive Documents shall be made by
independent counsel reasonably acceptable to both the Indemnified Party and the
Surviving Corporation.
(b) Any Indemnified Party wishing to claim indemnification under Section
6.11(a), upon learning of any such claim, action, suit, proceeding or
investigation, shall promptly notify the Surviving Corporation thereof, but the
failure to so notify shall not relieve the Surviving Corporation of any
liability it may have to such Indemnified Party if such failure does not
materially prejudice the Surviving Corporation. In the event of any such claim,
action, suit, proceeding or investigation (whether arising before or after the
Effective Time), (i) the Surviving Corporation shall have the right to assume
the defense thereof and the Surviving Corporation shall not be liable to such
Indemnified Parties for any legal expenses of other counsel or any other
expenses subsequently incurred by such Indemnified Parties in connection with
the defense thereof, except that if the Surviving Corporation elects not to
assume such defense or independent counsel reasonably acceptable to both the
Indemnified Party and the Surviving Corporation advises that there are issues
which raise conflicts of interest between the Surviving Corporation and the
Indemnified Parties, the Indemnified Parties may retain counsel satisfactory to
them, and the Surviving Corporation shall pay all reasonable fees and expenses
of such counsel for the Indemnified Parties promptly as statements therefor are
received; PROVIDED, HOWEVER, that the Surviving Corporation shall be obligated
pursuant to this Section 6.11 to pay for only one firm of counsel for all
Indemnified Parties in any jurisdiction, (ii) the Indemnified Parties will
cooperate reasonably in the defense of any such matter and (iii) the Surviving
Corporation shall not be liable for any settlement effected without its prior
written consent; and PROVIDED FURTHER that the Surviving Corporation shall not
have any obligation hereunder to any Indemnified Party when and if a court of
competent jurisdiction shall ultimately determine, and such determination shall
have become final, that the indemnification of such Indemnified Party in the
manner contemplated hereby is prohibited by applicable law.
(c) For a period of six years from the Effective Time, Parent shall use its
reasonable best efforts to cause the Surviving Corporation to provide director's
and officer's liability insurance to the present and former officers and
directors of the Company or any of the Company's Subsidiaries (determined as of
the Effective Time) with respect to claims against such directors and officers
arising from facts or events which occurred before the Effective Time, which
insurance shall contain at least the same coverage and amounts, and contain
terms and conditions no less advantageous, as that coverage currently provided
by the Company; PROVIDED; HOWEVER, that in no event shall the Surviving
Corporation be required to expend more than 200 percent of the current amount
expended by the Surviving Corporation (such product, the "INSURANCE AMOUNT") to
maintain or procure such directors and officers insurance coverage; provided,
further, that if the Surviving Corporation is unable to maintain or obtain the
insurance called for by this Section 6.11(c), Parent shall use its reasonable
best efforts to cause the Surviving Corporation to obtain as much comparable
insurance as is available for the Insurance Amount; and PROVIDED, FURTHER, that
officers and directors of the Company or any Company
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Subsidiary may be required to make application and provide reasonable and
customary representations and warranties to the Surviving Corporation's
insurance carrier for the purpose of obtaining such insurance.
6.12 SECTION 15 OF THE INVESTMENT COMPANY ACT. If the Merger and the
transactions contemplated hereby constitute a deemed "assignment" (as defined in
the Investment Company Act and the Investment Advisers Act) of the advisory
agreement with any Registered Fund or any other Client:
(a) the Company will use its reasonable best efforts to obtain as
promptly as practicable, (i) if required by the Investment Company Act
or by the terms of the advisory agreement with any Registered Fund, the
approval of the Board of Directors and the stockholders of each such
Registered Fund, pursuant to the provisions of Section 15 of the
Investment Company Act applicable thereto, of a new investment company
advisory agreement for such Registered Fund with the applicable
Subsidiary of the Company no less favorable to the Company or its
Subsidiaries than that in effect immediately prior to the Effective
Time and (ii) a consent to assignment (which may be in the form of a
"negative consent") from each other Client to whom it or any of its
Subsidiaries is providing investment advisory services;
(b) Parent will use its reasonable best efforts to assure, prior to the
Closing, the satisfaction of the conditions set forth in Section 15(f) of
the Investment Company Act with respect to each Registered Fund; and
(c) Parent agrees to use its reasonable best efforts to assure compliance
with the conditions of Section 15(f) of the Investment Company Act with
respect to the Registered Funds;
PROVIDED that in no event shall the conditions set forth in Sections 7.01(c),
7.02(b) and 7.03(b) be deemed not to have been satisfied solely on the basis
that such consents or approvals have not been obtained, or the conditions
described in (b) or (c) above have not been satisfied or complied with, at the
Effective Time.
6.13 ERISA CLIENTS. As soon as reasonably practicable after the date Parent
delivers to the Company the schedule referred to below, the Company shall
deliver to Parent a schedule identifying each Client that is: (i) an employee
benefit plan, as defined in Section 3(3) of ERISA, that is subject to Title I of
ERISA; (ii) a person acting on behalf of such a plan; or (iii) an entity whose
assets include the assets of such a plan, within the meaning of ERISA and
applicable regulations (hereinafter referred to as an "ERISA CLIENT"); and
listing each contract or agreement, if any, and all amendments thereto, in
effect on the date hereof, entered into by the Company or any of its
Subsidiaries with respect to or on behalf of any ERISA Client, pursuant to which
any of the entities identified in a schedule to be delivered by Parent to the
Company as soon as reasonably practicable after the date hereof (including any
entity that, to the knowledge of the Company, is an affiliate of any of the
entities identified in such schedule) has agreed to (x) execute securities
transactions; (y) provide any other goods or services; or (z) purchase, sell,
exchange or swap securities or any other economic interest therein or derivative
thereof,
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including rights to receive or obligations to pay interest or principal
under any debt obligation, or rights to receive or obligations to pay interest
or principal denominated in a particular currency.
6.14 FORMATION OF MERGER SUBSIDIARY. As soon as practicable following the
date of this Agreement, Parent shall cause Merger Subsidiary to be duly
organized as a direct or indirect wholly owned Subsidiary of Parent and to
become a party to this Agreement by executing and delivering a supplement
hereto.
6.15 INTERNAL REORGANIZATION. At the written request of Parent to
accommodate its tax, regulatory or governance needs, the Company shall use its
commercially reasonable efforts to undertake such internal corporate
restructuring activities as Parent may reasonably request, including merging
inactive Subsidiaries with active Subsidiaries, liquidating such inactive
Subsidiaries or taking similar actions, to be effective immediately prior to the
Effective Time. The Company's representations, warranties and covenants
contained in this Agreement shall not be deemed to be untrue or breached in any
respect for any purpose as a consequence of any reorganization undertaken solely
on account of this Section 6.15.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
7.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligation of each of Parent, Merger Subsidiary and the Company to
consummate the Merger is subject to the fulfillment or written waiver by Parent
and the Company prior to the Closing of each of the following conditions:
(a) Stockholder Approval. This Agreement shall have been duly
--------------------
adopted by the stockholders of the Company by the Company Requisite
Vote.
(b) Governmental and Regulatory Consents. All approvals, consents
------------------------------------
and authorizations of, filings and registrations with, and applications
and notifications to all Governmental Authorities required for the
consummation of the Merger or for the prevention of any termination of
any right, privilege, license or agreement of either Parent and its
Subsidiaries or the Company and its Subsidiaries shall have been
obtained or made and shall be in full force and effect and all waiting
periods required by applicable law shall have expired; PROVIDED,
HOWEVER, that none of the preceding shall be deemed obtained or made if
it shall be subject to any condition or restriction the effect of
which, together with any other such conditions or restrictions, would
be reasonably expected to have a Material Adverse Effect on the
Surviving Corporation or Parent after the Effective Time.
(c) Third Party Consents. All consents or approvals of all persons, other
--------------------
than Governmental Authorities, required for or in connection with the
execution, delivery and performance of this Agreement and the consummation
of the Merger shall have been obtained and shall be in full force and
effect, unless the failure to obtain any such consent or approval would
not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on the Surviving Corporation.
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(d) No Injunction. No Governmental Authority of competent jurisdiction
-------------
shall have enacted, issued, promulgated, enforced or entered any statute,
rule, regulation, judgment, decree, injunction or other order (whether
temporary, preliminary or permanent) which is in effect and restrains,
enjoins or otherwise prohibits consummation of the Merger or the other
transactions contemplated by this Agreement.
7.2 CONDITIONS TO OBLIGATION OF THE COMPANY. The obligation of the Company
to consummate the Merger is also subject to the fulfillment or written waiver by
the Company prior to the Closing of each of the following conditions:
(a) Representations and Warranties. Subject to the standard set
------------------------------
forth in Section 5.02, the representations and warranties of Parent set
forth in this Agreement shall be true and correct (or, in the case of
any such representation and warranty of Parent set forth in Section
5.04(b), true and correct in all material respects) as of the date of
this Agreement and as of the Closing Date as though made on and as of
the Closing Date (except that representations and warranties that by
their terms speak as of the date of this Agreement or some other date
shall be true and correct only as of such date), and the Company shall
have received a certificate, dated the Closing Date, signed on behalf
of Parent by a senior executive officer to such effect.
(b) Performance of Obligations of Parent. Each of Parent and Merger
Subsidiary shall have performed in all material respects all obligations
required to be performed by it under this Agreement at or prior to the
Closing Date, and the Company shall have received a certificate, dated the
Closing Date, signed on behalf of Parent by a senior executive officer to
such effect.
7.3 CONDITIONS TO OBLIGATION OF PARENT AND MERGER SUBSIDIARY. The
obligation of each of Parent and Merger Subsidiary to consummate the Merger is
also subject to the fulfillment or written waiver by Parent prior to the Closing
of each of the following conditions:
(a) Representations and Warranties. Subject to the standard set
------------------------------
forth in Section 5.02, the representations and warranties of the
Company set forth in this Agreement shall be true and correct (or in
the case of any such representation and warranty of the Company
described in the first parenthetical of Section 5.02, true and correct
in all material respects) as of the date of this Agreement and as of
the Closing Date as though made on and as of the Closing Date (except
that representations and warranties that by their terms speak as of the
date of this Agreement or some other date shall be true and correct
only as of such date) and Parent shall have received a certificate,
dated the Closing Date, signed on behalf of the Company by the Chief
Executive Officer and the Chief Financial Officer of the Company to
such effect.
(b) Performance of Obligations of the Company. The Company shall have
-----------------------------------------
performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Closing Date, and
Parent shall have received a certificate, dated the Closing Date, signed
on behalf of the Company by the Chief Executive Officer and the Chief
Financial Officer of the Company to such effect.
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(c) Employment Agreements. The Employment Agreements of at least one
---------------------
individual comprising Group A as set forth on Annex C and at least one
individual comprising Group B as set forth on Annex C shall be in full
force and effect and, in each case, such individual shall still be
employed by the Company and shall not have committed an act or omission
that would permit their termination for "cause" thereunder.
ARTICLE VIII
TERMINATION
8.1 TERMINATION. This Agreement may be terminated, and the Merger may be
abandoned at any time prior to the Effective Time:
(a) Mutual Consent. By the mutual consent of Parent and the Company.
--------------
(b) Breach. By Parent or the Company, in the event of
------
either: (i) a breach by the other party of any representation or
warranty contained herein, which breach cannot be or has not been cured
within 30 days after the giving of written notice to the breaching
party of such breach; or (ii) a breach by the other party of any of the
covenants or agreements contained herein, which breach cannot be or has
not been cured within 30 days after the giving of written notice to the
breaching party of such breach and, in the case of each of (i) and
(ii), which breach, individually or in the aggregate with other such
breaches, would cause the conditions set forth in Section 7.03(a) or
(b), in the case of a breach by the Company, or Section 7.02(a) or (b),
in the case of a breach by Parent or Merger Subsidiary, not to be
satisfied or would reasonably be expected to prevent, materially delay
or materially impair the ability of the Company, Merger Subsidiary or
Parent to consummate the Merger and the other transactions contemplated
by this Agreement.
(c) Delay. By Parent or the Company, in the event that the Effective Time
-----
has failed to occur on or before April 30, 2002, except to the extent that
such failure arises out of or results from the knowing action or inaction
of the party seeking to terminate pursuant to this Section 8.01(c).
(d) No Regulatory Approval. By Parent or the Company, if the
----------------------
approval of any Governmental Authority required for consummation of the
Merger and the other transactions contemplated by this Agreement shall
have been denied by final nonappealable action of such Governmental
Authority, or such Governmental Authority shall have requested the
permanent withdrawal of any application therefor, or any such approval
shall have become final and unappealable and be made subject to any
condition or restriction described in the proviso to Section 7.01(b).
(e) No Stockholder Approval. By Parent or the Company, if the
-----------------------
Company Requisite Vote is not obtained at the Company Stockholders
Meeting called to obtain the Company Requisite Vote.
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(f) Failure to Recommend, Etc. By Parent, if at any time prior to the
--------------------------
Company Stockholders Meeting the Company's Board of Directors shall have
failed to make its recommendation referred to in Section 6.03, withdrawn
such recommendation or modified or changed such recommendation in a manner
adverse to the interests of Parent.
(g) Acquisition Proposal. By Parent, if (i) the Board of Directors
--------------------
of the Company or the Company determines to negotiate (it being
understood and agreed that "NEGOTIATE" shall not be deemed to include
the provision of information to, or the request and receipt of
information from, any Person that submits an Acquisition Proposal or
discussions with any such person for the purpose of ascertaining the
terms and/or conditions of such Acquisition Proposal and determining
whether the Board of Directors of the Company will in fact engage in,
or authorize, negotiations) with any Person other than Parent or its
Affiliates in connection with an Acquisition Proposal or (ii) the Board
of Directors of the Company shall take any of the actions described in
clause (iii) of the proviso to Section 6.06.
8.2 EFFECT OF TERMINATION AND ABANDONMENT. In the event of termination of
this Agreement and abandonment of the Merger pursuant to this Article VIII, no
party to this Agreement shall have any liability or further obligation to any
other party hereunder except (a) as set forth in Sections 8.03 and 9.01 hereof,
(b) that the Stock Option Agreement shall be governed by its own terms as to
termination and (c) that termination will not relieve a breaching party from
liability for any knowing or willful breach of this Agreement.
8.3 TERMINATION FEE. (a) In addition to any other rights that Parent has
under this Agreement, the Stock Option Agreement and/or otherwise, if this
Agreement is terminated by Parent pursuant to Section 8.01(f) or clause (ii) of
8.01(g), then the Company shall pay to Parent U.S. $6,250,000.
(b) Any payment required to be made under paragraph (a) above shall be
payable, without setoff, by wire transfer in immediately available funds, to an
account specified by Parent, within three Business Days following such
termination.
(c) The Company acknowledges that the agreements contained in this Section
8.03 are an integral part of the transactions contemplated by this Agreement and
that, without these agreements, Parent would not enter into this Agreement;
accordingly, if the Company fails promptly to pay any amount due pursuant to
this Section 8.03, and, in order to obtain such payment, Parent commences a suit
which results in a judgment against the Company for the payment set forth in
this Section 8.03, the Company shall reimburse Parent's costs and expenses
(including attorneys' fees) in connection with such suit, together with interest
on any amount due pursuant to this Section 8.03 from the date such amount
becomes payable until the date of such payment at the prime rate of Citibank
N.A. in effect on the date such payment was required to be made plus two (2)
percent.
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ARTICLE IX
MISCELLANEOUS
9.1 SURVIVAL. No representations, warranties, agreements or covenants
contained in this Agreement shall survive the Effective Time or termination of
this Agreement; PROVIDED, HOWEVER, that (a) the agreements of the parties
contained in Article III and 6.11 and in this Article IX shall survive the
Effective Time and (b) if this Agreement is terminated prior to the Effective
Time, the agreements of the parties contained in Sections 6.05(b), 8.02 and 8.03
and in this Article IX shall survive such termination.
9.2 WAIVER; AMENDMENT. Prior to the Effective Time, any provision of this
Agreement may be (a) waived by the party benefitted by the provision in a
writing signed by such person or (b) amended or modified at any time, by an
agreement in writing between the parties hereto and executed in the same manner
as this Agreement, except that, after adoption of the Agreement by the
stockholders of the Company, no amendment may be made which under applicable law
requires further approval of such stockholders without obtaining such required
further approval.
9.3 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to constitute an original.
9.4 GOVERNING LAW AND VENUE. This Agreement shall be governed by, and
interpreted in accordance with, the laws of the State of Delaware applicable to
contracts made and to be performed entirely within such State. The parties
hereby irrevocably submit to the jurisdiction of the federal courts of the
United States of America and the state courts of the State of Delaware, in each
case located in the State of Delaware, solely in respect of the interpretation
and enforcement of the provisions of this Agreement and the Stock Option
Agreement and of the documents referred to in this Agreement and the Stock
Option Agreement, and in respect of the transactions contemplated hereby and
thereby, and hereby waive, and agree not to assert, as a defense in any action,
suit or proceeding for the interpretation or enforcement hereof or thereof or of
any such document, that it is not subject thereto or that such action, suit or
proceeding may not be brought or is not maintainable in said courts or that the
venue thereof may not be appropriate or that this Agreement or the Stock Option
Agreement or any such document may not be enforced in or by such courts, and the
parties hereto irrevocably agree that all claims with respect to such action or
proceeding shall be heard and determined in such a Delaware, federal or state
court. The parties hereby consent to and grant any such court jurisdiction over
the person of such parties and over the subject matter of such dispute and agree
that mailing of process or other papers in connection with any such action or
proceeding in the manner provided in Section 9.06 or in such other manner as may
be permitted by law shall be valid and sufficient service thereof.
9.5 EXPENSES. Whether or not the Merger is consummated, each party hereto
will bear all expenses incurred by it in connection with this Agreement, the
Stock Option Agreement and the transactions contemplated hereby and thereby.
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9.6 NOTICES. All notices, requests and other communications hereunder to a
party shall be in writing and shall be deemed given (a) on the date of delivery,
if personally delivered or telecopied (with confirmation), (b) on the first
Business Day following the date of dispatch, if delivered by a recognized
next-day courier service, or (c) on the third Business Day following the date of
mailing, if mailed by registered or certified mail (return receipt requested),
in each case to such party at its address or telecopy number set forth below or
such other address or numbers as such party may specify by notice to the parties
hereto.
If to the Company, to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Sutro
World Financial Center
(In ▇▇▇▇▇▇▇▇▇▇▇ Tower)
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to Parent or Merger Subsidiary, to:
Royal Bank of Canada
▇▇▇ ▇▇▇ ▇▇▇▇▇▇
Royal Bank Plaza
Toronto, Ontario
Canada M5J 2J5
Attention: W. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
9.7 ENTIRE UNDERSTANDING; NO THIRD-PARTY BENEFICIARIES. This Agreement and
the Stock Option Agreement and the documents referred to herein and therein
represent the entire understanding of the parties hereto with reference to the
transactions contemplated hereby
-47-
and thereby and such agreements supersede any and all other oral or written
agreements heretofore made, including the Confidentiality Agreement. Except for
Section 6.11, which shall inure to the benefit of and be enforceable by the
Indemnified Parties named therein and their heirs and legal representatives,
nothing in this Agreement, expressed or implied, is intended to confer upon any
person, other than the parties hereto or their respective successors and
permitted assigns, any rights, remedies, obligations or liabilities under or by
reason of this Agreement.
9.8 ASSIGNMENT. Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned or delegated, in whole or in part
(except by operation of law), by any of the parties hereto without the prior
written consent of each other party hereto, except that Parent and Merger
Subsidiary may assign or delegate in their sole discretion any or all of their
rights, interests or obligations under this Agreement to any direct or indirect,
wholly owned subsidiary of Parent, but no such assignment shall relieve Parent
of any of its obligations hereunder. Subject to the preceding sentence, this
Agreement shall be binding upon, inure to the benefit of and be enforceable by,
the parties hereto and their respective successors and assigns.
9.9 ENFORCEMENT. The parties agree that irreparable damage would occur in
the event that any of the provisions of this Agreement were not performed in
accordance with their terms or were otherwise breached. It is accordingly agreed
that the parties hereto shall be entitled to an injunction or injunctions to
prevent breaches of this Agreement and to enforce specifically the terms and
provisions of this Agreement, this being in addition to any other remedy to
which they are entitled at law or in equity.
* * *
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed in counterparts by their duly authorized officers, all as of the day
and year first above written.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ SUTRO
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Chairman and Chief Executive
▇▇▇▇▇▇▇
-▇▇-
▇▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice-Chairman and Chief
Financial Officer
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President and Chief Executive
Officer, ▇▇▇▇ ▇▇▇▇▇▇▇▇ Corporation
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