1
ASSET ACQUISTION AGREEMENT
EXHIBIT 2.2
2
ASSET ACQUISITION AGREEMENT
Among
XXXXXXXX XXXXXXXXXXX, INC.,
UNITED STATES TRUST COMPANY OF NEW YORK
and
XXXXXXXX XXXXXXXXXXX
November 14, 1996
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TABLE OF CONTENTS
Page
ARTICLE I
THE ASSET ACQUISITION; CLOSING: DELIVERY................................... 1
1.1. Asset Acquisition................................................................. 1
1.2. Excluded Assets................................................................... 2
1.3. Assumption of Liabilities......................................................... 2
1.4. Acquisition Price................................................................. 3
1.5. Closing........................................................................... 5
1.6. Delivery.......................................................................... 5
(a) By the Buyer........................................................... 5
(b) By the Seller.......................................................... 5
1.7. Assignment of Contracts, Etc...................................................... 6
ARTICLE II
TRANSFER, STAMP AND OTHER TAXES....................................... 6
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER AND XXXXXXXXXXX......................... 7
3.1. Organization, Good Standing and Qualification..................................... 7
3.2. Authority......................................................................... 7
3.3. Financial Statements.............................................................. 7
3.4. Absence of Specified Changes...................................................... 8
3.5. Tax Returns and Audits............................................................ 9
3.6. Real Property..................................................................... 9
3.7. Other Tangible Personal Property.................................................. 9
3.8. Copyrights, Trademarks and Patents................................................ 10
3.9. Title to Assets................................................................... 10
3.10. Existing Employment Contracts..................................................... 10
3.11. Insurance Policies................................................................ 11
3.12. Other Contracts................................................................... 11
3.13. Compliance with Laws.............................................................. 11
3.14. Litigation........................................................................ 11
3.15. Assets Sufficient for Conduct of Business......................................... 12
3.16. Agreement Will Not Cause Breach or Violation...................................... 12
3.17. Authority and Consents............................................................ 12
3.18. Interest in Customers, Suppliers, and Competitors................................. 12
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3.19. Corporate Documents............................................................... 13
3.20. Personnel Identification and Compensation......................................... 13
3.21. Powers of Attorney and Bank Accounts.............................................. 13
3.22. Business Addresses................................................................ 13
3.23. Absence of Undisclosed Liabilities................................................ 13
3.24. Full Disclosure................................................................... 13
3.25. Specified Events.................................................................. 14
3.26. Tangible Book Value............................................................... 14
ARTICLE IV
BUYER'S REPRESENTATIONS AND WARRANTIES.................................... 15
4.1. Organization...................................................................... 15
4.2. Authorization..................................................................... 15
4.3. Consents and Approvals............................................................ 15
4.4. Consideration for the Transferred Assets.......................................... 16
4.5. Reports and Financial Statements.................................................. 16
4.6. Absence of Material Adverse Change................................................ 16
4.7. Employee Benefits................................................................. 16
4.8. Full Disclosure................................................................... 17
ARTICLE V
SELLER'S AND XXXXXXXXXXX'X OBLIGATIONS BEFORE THE CLOSING DATE....................... 17
5.1. Buyer's Access to Premises and Information........................................ 17
5.2. Conduct of Business in Normal Course.............................................. 17
5.3. Preservation of Business and Relationships........................................ 17
5.4. Maintenance of Insurance.......................................................... 17
5.5. Employees and Compensation........................................................ 18
5.6. Controlled Acts................................................................... 18
5.7. Payment of Liabilities and Waiver of Claims....................................... 19
5.8. Existing Agreements............................................................... 19
5.9. Statutory Filings................................................................. 19
5.10. Delivery of Tax Returns........................................................... 19
5.11. Client Consents................................................................... 19
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ARTICLE VI
BUYER'S OBLIGATIONS BEFORE THE CLOSING DATE................................. 20
6.1. Confidentiality................................................................... 20
6.2. Governmental Filings.............................................................. 20
6.3. Best Efforts; Agreement With U.S. Trust........................................... 20
6.4. Consents.......................................................................... 20
6.5. Contact with Clients.............................................................. 20
6.6. Tax-Free Reorganization........................................................... 20
ARTICLE VII
CONDITIONS PRECEDENT TO BUYER'S PERFORMANCE................................. 21
7.1. Delivery of Instruments of Transfer............................................... 21
7.2. Accuracy of Seller's and Xxxxxxxxxxx'x Representations
and Warranties.................................................................... 21
7.3. Absence of Liens.................................................................. 21
7.4. Seller's and Xxxxxxxxxxx'x Performance............................................ 21
7.5. Opinion of Seller's and Xxxxxxxxxxx'x Counsel..................................... 21
7.6. Consents.......................................................................... 21
7.7. Approval of Documentation......................................................... 22
7.8. Employment Agreements............................................................. 22
7.9. Condition of Assets............................................................... 22
7.10. Certificates of the Secretary of Seller........................................... 22
7.11. Delivery of Client Consents....................................................... 22
7.12. No Injunction..................................................................... 22
7.13. No Government Proceeding or Litigation............................................ 22
7.14. No Statute, Rule or Regulation.................................................... 22
7.15. Absence of Litigation............................................................. 23
7.16. Doctor's Letter................................................................... 23
7.17. Tangible Net Worth................................................................ 23
7.18. Escrow Agreement.................................................................. 23
7.19. Letter Agreement of Xxxxxxxxxxx'x Spouse.......................................... 23
7.20. Best Efforts to Obtain Certain Consents........................................... 23
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ARTICLE VIII
CONDITIONS PRECEDENT TO SELLER'S
AND XXXXXXXXXXX'X PERFORMANCE........................................ 24
8.1. Delivery of Acquisition Price and Instruments of
Assumption........................................................................ 24
8.2. Accuracy of Buyer's Representations and Warranties................................ 24
8.3. Buyer's Performance............................................................... 24
8.4. Agreement to Deliver and Register Shares.......................................... 24
8.5. Escrow Agreement.................................................................. 24
8.6. Opinion of Counsel Regarding Tax-Free Treatment................................... 24
8.7. Opinion of Buyer's Counsel........................................................ 24
8.8. Consents.......................................................................... 25
8.9. Employment Agreement.............................................................. 25
8.10. Benefit Plans..................................................................... 25
8.11. No Injunction..................................................................... 25
8.12. No Government Proceeding or Litigation............................................ 25
8.13. No Statute, Rule or Regulation.................................................... 25
8.14. Absence of Litigation............................................................. 25
8.15. Delivery of Client Consents....................................................... 26
ARTICLE IX
SELLER'S, XXXXXXXXXXX'X AND BUYER'S OBLIGATIONS AFTER THE CLOSING.................... 26
9.1. Preservation of Goodwill.......................................................... 26
9.2. Use of Name....................................................................... 27
9.3. Indemnification................................................................... 27
(a) Indemnification by Xxxxxxxxxxx......................................... 27
(b) Limitations on Indemnification by the Seller
and Xxxxxxxxxxx........................................................ 27
(c) Indemnification by Buyer............................................... 28
(d) Limitations on Indemnification by Buyer................................ 28
(e) Procedure for Establishment of Indemnifiable
Claim.................................................................. 29
(i) Matters Involving Third Parties. ................................ 29
(ii) Non-Third Party Claims........................................... 30
9.4. Right to Cure Defaults............................................................ 30
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9.5. Availability of Benefit Plans..................................................... 31
9.6. Preservation of Tax-Free Reorganization........................................... 31
9.7. Payment of Certain Indebtedness................................................... 31
9.8. Returns for Periods Prior to Closing.............................................. 31
9.9. Access to Books and Records....................................................... 32
9.10. Agreement to Deliver and Register Shares.......................................... 32
9.11. Adjustments to Closing Date Balance Sheet......................................... 32
ARTICLE X
COSTS.................................................... 33
10.1. Finder's or Broker's Fees......................................................... 33
10.2. Expenses.......................................................................... 33
ARTICLE XI
FORM OF AGREEMENT.............................................. 34
11.1. Headings.......................................................................... 34
11.2. Entire Agreement; Modification; Waiver............................................ 34
11.3. Counterparts...................................................................... 34
ARTICLE XII
PARTIES................................................... 34
12.1. Parties in Interest............................................................... 34
12.2. Assignment........................................................................ 34
ARTICLE XIII
TERMINATION................................................. 34
13.1. Conditions Permitting Termination................................................. 35
13.2. Defaults Permitting Termination................................................... 35
ARTICLE XIV
NOTICES................................................... 35
ARTICLE XV
GOVERNING LAW; VENUE............................................. 36
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ARTICLE XVI
MISCELLANEOUS................................................ 36
16.1. Announcements..................................................................... 36
16.2. References........................................................................ 36
16.3. Currency.......................................................................... 36
EXHIBITS
Exhibit 1.4(b) Escrow Agreement
Exhibit 1.6(a) Assignment and Assumption Agreement
Exhibit 1.6(b) Xxxx of Sale
Exhibit 7.5 Opinion of Xxxxxxxx & X'Xxxx, LLP
Exhibit 7.8 Employment Agreement
Exhibit 7.11 Form of Client Consent Letter
Exhibit 7.19 Letter Agreement of Xxxxxxxxxxx'x Spouse
Exhibit 8.4 Agreement to Deliver and Register Shares
Exhibit 8.7 Opinion of Managing Director and General Counsel of
Buyer
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ASSET ACQUISITION AGREEMENT
This Asset Acquisition Agreement ("Agreement"), dated November
14, 1996, among United States Trust Company of New York, a banking institution
possessing banking and trust powers chartered under the laws of New York (the
"Buyer"), Xxxxxxxx Xxxxxxxxxxx, Inc., a New York corporation (the "Seller") and
Xxxxxxxx Xxxxxxxxxxx ("Xxxxxxxxxxx"), being the only shareholder of the Seller.
W I T N E S S E T H :
WHEREAS, the Seller desires to transfer, sell, convey, assign
and deliver to the Buyer, and the Buyer desires to acquire from the Seller
substantially all of the assets, properties and business and substantially all
of the liabilities of the Seller, upon the terms hereinafter set forth (the
"Asset Acquisition");
WHEREAS, the parties intend the Asset Acquisition to qualify
as a tax-free reorganization within the meaning of Section 368 (a)(1)(C) of the
Internal Revenue Code of 1986, as amended, and Xxxxxxxxxxx and the Seller desire
to consummate the Asset Acquisition and the other transactions contemplated
hereby on such basis;
WHEREAS, all the issued and outstanding shares of the Buyer's
capital stock are currently held beneficially and of record by U.S. Trust
Corporation, a New York corporation ("U.S. Trust");
WHEREAS, all the issued and outstanding shares of the Seller's
capital stock are currently held beneficially and of record by Xxxxxxxxxxx.
NOW, THEREFORE, in consideration of the mutual covenants,
agreements, representations, and warranties contained in this Agreement, the
parties agree as follows:
ARTICLE I
THE ASSET ACQUISITION; CLOSING: DELIVERY
1.1. Asset Acquisition. Subject to the terms and conditions of
this Agreement, at the Closing (as hereinafter defined) the Seller shall sell,
assign, convey and deliver to the Buyer, and the Buyer shall acquire and accept
from the Seller, all of the Seller's right, title and interest in and to all of
the Transferred Assets (as hereinafter defined). "Transferred Assets" shall mean
all of the properties and rights of Seller, wherever located and whether or not
reflected on the books and records of Seller, other than Excluded Assets (as
hereinafter defined) including, without limitation or duplication, the
following:
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(a) cash or cash equivalents (including marketable securities)
of the Seller on hand or in bank accounts and all certificates of deposit of the
Seller on and as of the Closing Date (as hereinafter defined);
(b) the accounts receivable of the Seller;
(c) all of the Seller's right, title and interest in and to
the leaseholds and other real property, plant and equipment owned, held, leased
or otherwise used by the Seller;
(d) all of the Seller's right, title and interest in and to
all contracts and all other agreements, including investment advisory
agreements;
(e) all fixtures, equipment and other personal property;
(f) all books, records and any confidential information which
has been reduced to writing relating to the Seller's business;
(g) computer hardware, computer software, computer software
documentation, including source code, and systems documentation used by the
Seller in its business;
(h) all prepaid expenses, advances and deposits; and
(i) all goodwill associated with the Seller's business.
1.2. Excluded Assets. Notwithstanding anything to the contrary
contained herein, including Section 1.1 above, the Seller shall retain all of
its right, title and interest in and to, and shall not transfer to the Buyer,
any asset of the Seller set forth below (collectively, the "Excluded Assets"):
(a) any proceeds paid or payable in connection with this
Agreement, including the USTC Shares (as hereinafter defined);
(b) the Seller's minute books, general ledger and books of
original entry, stock transfer books and tax returns (together with books and
records pertaining to any tax returns heretofore or hereafter filed or required
to be filed by the Seller); and
(c) all of the Seller's federal and state registrations and
licenses under which the Seller is registered and authorized to act as an
investment advisor.
1.3. Assumption of Liabilities. Subject to the terms and
conditions of this Agreement, on and as of the Closing Date, the Buyer shall
assume and agree to pay, perform,
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discharge and satisfy when due all of the Seller's debts, liabilities,
commitments or obligations of any kind, character or nature whatsoever, whether
known or unknown, secured or unsecured, accrued, fixed, absolute, contingent or
otherwise, whether due or to become due and whether or not reflected on the
books, records or Financial Statements (as hereinafter defined) of the Seller
(collectively, the "Liabilities") including, without limitation or duplication,
the following (collectively, the "Assumed Liabilities"):
(a) all Liabilities of the Seller under all leases of real or
personal property and all Liabilities and obligations secured by, or liens with
respect to, all real property, personal property and other assets of the Seller;
(b) all Liabilities of any kind or nature with respect to the
employees of the Seller;
(c) all Liabilities of the Seller, whether for payment,
performance or otherwise, under all contracts and other agreements, including
investment advisory agreements;
(d) all Liabilities of the Seller, including reasonable
attorneys' fees and expenses, arising with respect to any suits, claims,
proceedings or actions on any account whatsoever, made or commenced prior to, on
or after the Closing Date (including those instituted by any federal, state or
local governmental agency or authority) relating to the conduct of Seller's
business prior to the Closing Date;
(e) all Liabilities of the Seller (but not of Xxxxxxxxxxx) for
unpaid federal, state or local income, franchise or other taxes (including any
interest, penalties, additions, assessments or deferred liability with respect
thereto, whether disputed or not) with respect to periods ending on or prior to
the Closing Date; and
(f) any liability, obligation, debt, expense or commitment of
the Seller arising out of or in connection with the negotiation and preparation
of this Agreement and the consummation and performance of the transactions
contemplated hereby, including, without limitation, any income, transfer, sales,
use, stamp or other tax liability.
1.4. Acquisition Price.
(a) The acquisition price for the Asset Acquisition shall be
that number of shares of common stock of U.S. Trust ("Common Shares") that is
the quotient of (i) 1.75 x Annualized Revenues (as hereinafter defined) (the
"Asset Acquisition Consideration"), divided by (ii) an amount equal to the
Average Closing Price (as hereinafter defined). The U.S. Trust Common Shares to
be so issued are sometimes referred to herein as "USTC Shares."
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For purposes of this Agreement, (x) "Annualized Revenues"
means, for all client accounts of the Seller, the product of (I) assets under
management for each such account on the Measurement Date (as hereinafter
defined) and (II) the annual advisory fee for such account (expressed as a
percentage of assets under management in such account) on the Measurement Date;
(y) "Measurement Date" means five days prior to the Closing Date or such other
date as the parties may agree; and (z) "Average Closing Price" means the average
of the closing sales price for U.S. Trust's Common Shares as quoted on the
Nasdaq National Market ("NMS") for the ten NMS trading days ending two trading
days prior to the Closing Date; provided, however, that solely for purposes of
this Section 1.4, if the Average Closing Price is less then $45, it shall be
deemed to be $45 and if the Average Closing Price is greater than $70, it shall
be deemed to be $70. (If on any of the ten NMS trading days ending two days
prior to the Closing Date there are no reported sales of U.S. Trust's Common
Shares, then such trading days shall be counted as one of the ten trading days
but the Average Closing Price shall be calculated without regard to any price
with respect to such trading day.) For purposes of this Section 1.4 both the
identity of clients and the Annualized Revenues attributable to their accounts
shall be determined by the parties based upon an examination of the Seller's
records. If the parties cannot agree on such determination, the identity of
clients and the Annualized Revenues attributable to their accounts shall be
determined (i) jointly by two accounting firms, one selected by the Seller and
one selected by the Buyer, or, (ii) if the two accounting firms cannot agree on
such determination, by a third accounting firm selected by the original two
accounting firms, whose determination shall be final and binding upon the
parties. The cost of such accounting firms shall be borne by the Buyer unless
the final determination made pursuant to clause (i) or (ii), as the case may be,
reveals that the Seller's determination of Annualized Revenues with which the
Buyer did not agree is more than one percent in error, in which event the cost
of the accounting firms shall be shared equally by the Buyer and the Seller.
(b) If on or prior to the Closing Date, clients of the Seller
whose advisory agreements provide for the payment of annual advisory fees
constituting all of Annualized Revenues shall have delivered a written consent
to the assignment of their advisory agreements to the Buyer (a "Consent"), then
all of the USTC Shares shall be delivered by the Buyer to the Seller (or if the
Seller so designates, to Xxxxxxxxxxx) on the Closing Date. If on or prior to the
Closing Date, clients of the Seller whose advisory agreements provide for the
payment of annual advisory fees constituting at least 75%, but less than all of
Annualized Revenues shall have delivered Consents, then on the Closing Date the
Buyer shall deliver to the Seller (or if the Seller so designates, to
Xxxxxxxxxxx) a percentage of the USTC Shares which equals to the percentage of
the dollar amount of Annualized Revenues represented by clients who have so
delivered Consents, and the remaining USTC Shares (the "Escrow Shares") shall be
delivered to U.S. Trust, as Escrow Agent (the "Escrow Agent") to be held in
accordance with the Escrow Agreement substantially in the form of Exhibit 1.4(b)
attached hereto.
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(c) On the 90th day after the Closing Date, the Escrow Shares
shall be delivered by the Escrow Agent as follows: (i) there shall be delivered
to the Seller a percentage of the Escrow Shares equal to the quotient, expressed
as a percentage, of (A) the Annualized Revenues represented by advisory
agreements of clients of the Seller who have given their Consents after the
Closing Date and on or prior to 2:00 p.m. on the 90th day after the Closing
Date, divided by (B) the Annualized Revenues represented by advisory agreements
of clients of the Seller who had not given their Consents on or prior to the
Closing Date; and (ii) the balance of the Escrow Shares shall be delivered to
U.S. Trust.
1.5. Closing. Subject to the provisions hereof, the closing of
the Asset Acquisition (the "Closing") shall take place (i) at the office of the
Buyer at 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx at 9:00 A.M., local time, on
the earlier of March 1, 1997, or on the fifth business day following the day on
which the last to be fulfilled or waived of the conditions to the Closing hereof
shall be fulfilled or waived, or (ii) at such other time and place and/or on
such later date as the parties may agree in writing. The date on which the
Closing occurs is hereinafter referred to as the "Closing Date." If all
conditions shall have been fulfilled or waived, the parties hereto shall take
any and all other lawful actions necessary to cause the Asset Acquisition to
become effective consistent with the terms of this Agreement.
1.6. Delivery.
(a) By the Buyer. At the Closing, the Buyer shall deliver (i)
to the Seller a stock certificate representing that number of USTC Shares
calculated in accordance with Section 1.4(b); (ii) to the Escrow Agent a stock
certificate representing the number of Escrow Shares (the USTC Shares, when
delivered to the Seller or Escrow Agent, as the case may be, pursuant to clause
(i) or (ii), shall be duly authorized, validly issued, fully paid and
non-assessable and at the time of issuance shall be free and clear of all liens,
claims, encumbrances, security interests and rights of redemption (collectively,
"Liens")); (iii) to the Seller such agreements, undertakings and other good and
sufficient instruments of assumption (including, without limitation, an
Assignment and Assumption Agreement, substantially in the form attached hereto
as Exhibit 1.6(a)) and other good and sufficient agreements, undertakings
instruments of assumption, in form and substance reasonably satisfactory to the
Seller, Xxxxxxxxxxx and its or her counsel, as shall be effective to cause the
Assumed Liabilities to be binding upon the Buyer; and (iv) such other documents,
instruments and certificates as may be reasonably requested by the Seller,
Xxxxxxxxxxx, or its or her counsel to effectuate the transactions contemplated
by this Agreement. The Buyer shall not be relieved of its obligations under this
Section 1.6 by reason of the failure or inability of U.S. Trust to issue or
deliver the USTC Shares to the Seller, the Buyer or the Escrow Agent.
(b) By the Seller. At the Closing, the Seller shall deliver to
the Buyer (i) such bills of sale, assignments (including, without limitation, a
Xxxx of Sale substantially in the
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form attached hereto as Exhibit 1.6(b) and an Assignment and Assumption
Agreement substantially in the form attached hereto as Exhibit 1.6(a)) and other
good and sufficient instruments of transfer, in form and substance reasonably
satisfactory to the Buyer and its counsel, as shall be effective to vest in the
Buyer all of the Seller's right, title and interest in, to and under the
Transferred Assets; and (ii) such other documents, instruments and certificates
as may be reasonably requested by the Buyer or its counsel to effectuate the
transactions contemplated by this Agreement.
1.7. Assignment of Contracts, Etc. Anything contained herein
to the contrary notwithstanding, this Agreement shall not constitute an
agreement to transfer or assign any claim, contract, lease, instrument, order or
any claim or right, or any benefit arising thereunder or resulting therefrom
(collectively, "Restricted Contracts"), if an attempted transfer or assignment
thereof, without the consent of a third party thereto, would constitute a breach
thereof. If such consent is not obtained, the Seller will cooperate with the
Buyer in any reasonable arrangement designed to provide for the Buyer the
benefits under any such Restricted Contract, including without limitation
enforcement for the benefit of the Buyer of any and all rights of the Seller
against a third party thereto arising out of the breach or cancellation by such
third party; provided, however, that no such arrangement shall obligate the
Seller to incur any material cost or liability in connection with the making of
any such arrangement or under any Restricted Contract with respect to which such
an arrangement is made. Any transfer or assignment to the Buyer of any property
or property rights or any contract or agreement which shall require the consent
or approval of any third party shall be made subject to such consent or approval
being obtained. Notwithstanding the failure of a third party to consent to the
transfer or assignment of any Restricted Contract to the Buyer, if the Buyer
receives any payment, use of property or other benefit under any Restricted
Contract, the Buyer shall assume and discharge any and all liabilities and
obligations of the Seller under such Restricted Contract.
ARTICLE II
TRANSFER, STAMP AND OTHER TAXES
The Buyer shall pay all transfer, stamp and other taxes, if
any, related to the transfer of the Transferred Assets hereunder and the
issuance and delivery of the USTC Shares. The amount of any such taxes shall not
be considered a liability of the Seller for purposes of the Closing Date Balance
Sheet (as defined in Section 7.17 hereof) and the Final Closing Date Balance
Sheet (as defined in Section 9.11 hereof).
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER AND XXXXXXXXXXX
Subject to that certain Disclosure Letter ("DL") dated the
date hereof executed by the Seller and Xxxxxxxxxxx, the Seller and Xxxxxxxxxxx
hereby, jointly and severally, represent and warrant to the Buyer (which
representations and warranties constitute the basis upon which the Buyer has
been induced to enter into and perform this Agreement) as follows:
3.1. Organization, Good Standing and Qualification. The Seller
is a corporation validly existing and in good standing under the laws of the
State of New York, has all necessary corporate powers, licenses and permits to
own its properties and to carry on its business as now owned and operated by it
and is not qualified as a foreign corporation in any other jurisdiction. Annexed
to the DL are true, correct and complete copies of the Seller's Certificate of
Incorporation and By-laws as in full force and effect on the date hereof.
3.2. Authority. The Seller has, and at the Closing will have,
full corporate power and authority to enter into this Agreement and to perform
all of its obligations hereunder. Xxxxxxxxxxx has, and at the Closing will have,
full legal capacity, to enter into this Agreement in the manner provided herein
and to perform all of her obligations hereunder. This Agreement has been duly
executed and delivered by Xxxxxxxxxxx and is a legal, valid and binding
agreement of Xxxxxxxxxxx enforceable against her in accordance with its terms
subject to bankruptcy, insolvency, reorganization, moratorium and similar laws
of general applicability relating to or affecting creditors' rights generally
and to general principles of equity, whether asserted in a proceeding in equity
or at law. This Agreement has been duly authorized, executed and delivered by
the Seller, and is a valid, legal and binding agreement of the Seller,
enforceable against it in accordance with its terms subject to bankruptcy,
insolvency, reorganization, moratorium and similar laws of relating to or
affecting creditors' rights generally and to general principles of equity,
whether asserted in a proceeding in equity or at law.
3.3. Financial Statements. Attached to the DL are the balance
sheets, statements of operations and retained earnings (deficit) and statements
of cash flows of the Seller as of March 31, 1996, (the "Last Fiscal Year End")
as well as the balance sheets, statements of operations and retained earnings
(deficit) and statements of cash flows of the Seller for the years ended March
31, 1995, 1994, 1993, and 1992 (the foregoing financial statements being
referred to herein as the "Financial Statements"). The Financial Statements have
been prepared in accordance with generally accepted accounting principles
consistently followed by the Seller throughout the periods indicated, and fairly
present the financial condition of the Seller as of the respective dates of the
balance sheets included in the Financial Statements and the results of its
operations for the respective periods indicated.
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3.4. Absence of Specified Changes. Except as expressly
contemplated by this Agreement, since the Last Fiscal Year End there has not
been any:
(a) Transaction by the Seller except in the ordinary course of
business as conducted on that date except for this Agreement and the
transactions contemplated hereby;
(b) Capital expenditure by the Seller exceeding $10,000;
(c) Material adverse change in the financial condition,
liabilities, assets or business of the Seller;
(d) Destruction, damage to, or loss of any assets of the
Seller (whether or not covered by insurance) that materially and adversely
affects the financial condition, liabilities, assets or business of the Seller;
(e) Any loss of accounts materially and adversely affecting
the financial condition, liabilities, assets or business of the Seller;
(f) Change in accounting methods or practices (including,
without limitation, any change in depreciation or amortization policies or
rates) by the Seller;
(g) Revaluation by the Seller of any of its assets;
(h) Increase of more than 5% in the aggregate salaries or
other compensation payable or to become payable by the Seller to all of the
employees of the Seller as a group, other than Xxxxxxxxxxx, or the declaration,
payment, or commitment or obligation of any kind for the payment by the Seller
of a bonus or other additional salary or compensation which would result in an
increase of more than 5% in the aggregate compensation payable or to become
payable by the Seller to all of the employees of the Seller, other than
Xxxxxxxxxxx, as a group;
(i) Sale or transfer of any asset of the Seller, except in the
ordinary course of business;
(j) Execution, creation, amendment or termination of any
material contract, agreement, or license to which the Seller is a party, except
in the ordinary course of business;
(k) Indebtedness incurred or guaranteed by the Seller that
would, if outstanding on the Closing Date, be recorded in accordance with
generally accepted accounting principles on its balance sheet;
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(l) Waiver or release of any material right or claim of the
Seller, except in the ordinary course of business;
(m) Mortgage, pledge, or other encumbrance of any material
asset of the Seller except for liens (i) of mechanics, materialmen and landlords
incurred in the ordinary course of business for sums not overdue and not in
excess of $5,000 in the aggregate; (ii) incurred in the ordinary course of
business in connection with workers' compensation, unemployment insurance, or
other forms of governmental insurance or benefits; (iii) for taxes, assessments
or other governmental charges or levies which are not at the time delinquent or
are subject to an effective extension for the filing of the related tax returns
or reports (if applicable) granted by the appropriate authorities;
(n) Other event or condition of any character that has a
material and adverse effect on the financial condition, business or assets of
the Seller; or
(o) Agreement by the Seller to do any of the things described
in the preceding clauses (a) through (n).
3.5. Tax Returns and Audits. The Seller has duly and timely
filed all federal, state and local tax returns and reports required by law to
have been filed on or prior to the date of this Agreement, and all taxes,
assessments, fees, penalties and other governmental charges in respect of the
Seller and upon its properties, assets, income and franchises which are due and
payable have been paid or are adequately provided for in the Financial
Statements or on the books and records of the Seller. There is no tax,
withholding deficiency, fee, assessment or governmental deficiency which has
been, or which the Seller or Xxxxxxxxxxx reasonably believes will be, asserted
against the Seller. There are no present disputes with, or audits by, any
governmental authority as to any taxes, assessments, fees, penalties or other
governmental charges of any nature payable by the Seller nor is the Seller
awaiting the outcome of any audit. There are no agreements or applications by
the Seller for any extension of time for the assessment or payment of any taxes
nor has it executed any document to extend the time in which a tax may be
assessed or collected.
3.6. Real Property. The Seller owns no real property. The DL
contains true, correct and complete copies of each lease covering any premises
leased by the Seller. All such leases are valid and in full force, and there
does not exist any default or event that with notice or lapse of time, or both,
would permit the landlord to terminate any such lease.
3.7. Other Tangible Personal Property. The furniture,
equipment, vehicles and other property described in the DL (collectively, the
"Equipment") constitute all the items of tangible personal property having a
book value of $700 or more, owned by, leased by or used by the Seller in
connection with its business.
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None of the Equipment used by the Seller in connection with
its business is held under any lease, security agreement, conditional sales
contract, or other title retention or security arrangement, is subject to any
lien (other than those described in Section 3.4(m)), or is located other than in
the possession of the Seller.
3.8. Copyrights, Trademarks and Patents. The Seller owns no
registered copyrights, trademarks or patents. To the best knowledge of
Xxxxxxxxxxx, (i) no copyrighted, trademarked or patented material, other than
such material that is sold at retail or is otherwise generally commercially
available, is necessary for the operation of the business of the Seller; and
(ii) the Seller is not infringing the copyrights, trademarks or patents of any
other person.
3.9. Title to Assets. The Seller has a good and marketable
title to all of the Transferred Assets (including, without limitation, all the
assets reflected in the Financial Statements). All of the Transferred Assets are
free and clear of mortgages, liens, pledges, charges, encumbrances, equities,
claims, easements, rights of way, covenants, conditions and restrictions
whatsoever, except for (i) those disclosed in the Financial Statements; (ii)
those disclosed in the DL; (iii) liens of mechanics, materialmen and landlords
incurred in the ordinary course of business for sums not overdue (which sums do
not exceed $5,000 in the aggregate), or incurred in the ordinary course of
business in connection with workers' compensation, unemployment insurance, or
other forms of governmental insurance or benefits, or for taxes, assessments or
other governmental charges or levies which are not at the time delinquent or are
subject to an effective extension for the filing of the related tax returns or
reports (if applicable) granted by the appropriate authorities and (iv) possible
minor matters that, in the aggregate, do not exceed $10,000 and do not
materially detract from or interfere with the present or intended use of any of
these assets, nor materially impair the Seller's business operations
(collectively, the "Permitted Liens"). All tangible personal property of the
Seller necessary for the operation of its business is in operating condition and
repair, ordinary wear and tear excepted. The Seller is in possession of all
premises leased to it from others. Neither any officer, director or employee of
the Seller, nor any spouse, child, parent or sibling of any of these persons, or
any other relative of any of these persons, owns, or has any interest, directly
or indirectly, in any of the real or personal property owned by or leased to the
Seller.
3.10. Existing Employment Contracts. The DL sets forth a list
of all written employment contracts and collective bargaining agreements, and
all pension, retirement, disability, bonus, profit-sharing, deferred
compensation, incentive stock option, medical, dental or other health insurance
plans, life insurance or other death benefit plans, severance plans or other
agreements or arrangements or plans providing for employee remuneration or
benefits to which the Seller is a party or by which the Seller is bound and
under which employees or former employees of the Seller are eligible to
participate or derive a benefit (collectively, "Employee Plans"), and copies of
any Employee Plans have been provided to the Buyer at least 7 days prior to the
execution of this Agreement. There is no pending or threatened labor
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dispute, strike, or work stoppage materially affecting the Seller's business.
The Seller is not indebted to Xxxxxxxxxxx or to any director, officer or
employee except for amounts due under the Employee Plans or as salaries,
expenses and bonuses for the Seller's current fiscal year. The Seller has no
Employee Plans other than those listed in the DL and each Employee Plan is in
full force and effect. All Employee Plans may be terminated upon 60 days prior
written notice to participants without any additional liability to any party
hereto. The Seller is in compliance in all material respects with all applicable
laws governing such Employee Plans. There are no actions, audits, suits or
claims pending (other than routine claims for benefits) arising out of the
Employee Plans.
3.11. Insurance Policies. The DL includes a summary
description of all insurance policies held by the Seller. All such policies are
in the respective principal amounts set forth in the DL.
3.12. Other Contracts. Set forth in the DL is a true and
correct list of every contract (other than contracts with current clients) to
which the Seller is a party which (i) is reasonably expected to result in annual
payments by or to the Seller in excess of $2,500 or cumulative payments in
excess of $5,000 and is not cancelable by the Seller upon notice of 30 days or
less; or (ii) could be reasonably expected to result in annual payments by or to
the Seller in excess of $25,000 or cumulative payments in excess of $50,000. The
Seller heretofore has delivered or made available to the Buyer true and correct
copies of all such contracts. There is no material default or event that with a
notice or lapse of time, or both, would constitute a default by the Seller or,
to the best knowledge of Xxxxxxxxxxx, by any other party to any of the contracts
listed in the DL. Neither Xxxxxxxxxxx nor the Seller has received notice that
any party to any of the agreements listed in the DL intends to cancel or
terminate any of such agreements or to exercise or not exercise any options
under any such agreements.
3.13. Compliance with Laws. The Seller has complied with all,
and is not in violation of any, applicable federal, state, or local statutes,
laws, and regulations affecting its properties, or the operation or conduct of
its business, or the qualification of any employee of the Seller to give
investment advice or otherwise to act on behalf of the Seller in accordance with
his or her present or past duties, the noncompliance or violation of which would
have a material adverse effect on the Seller.
3.14. Litigation. There is no suit, action, arbitration, or
legal, administrative, or other proceeding, or governmental investigation or
disciplinary investigation pending or, to the knowledge of Xxxxxxxxxxx,
threatened against or affecting the Seller, or the business, assets, liabilities
or financial condition of the Seller that would, individually or in the
aggregate, have a material adverse effect on the financial condition, operations
or business of the Seller. Xxxxxxxxxxx has furnished or made available to the
Buyer copies of all relevant court papers and other documents relating to the
matters set forth in the DL as pertains to this
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Section 3.14. Neither the Seller nor Xxxxxxxxxxx is in default with respect to
any order, writ, injunction, or decree of any federal, state, local, or foreign
court, department, agency, or instrumentality. The Seller is not presently
engaged in any legal action or arbitration proceeding to recover moneys due to
it or damages sustained by it or to obtain other relief. Since January 1, 1992,
no written charges of misconduct have been brought against the Seller or against
any of its employees in their capacity as employees of the Seller, and the
Seller has not been informed that it is the subject of any investigation or
audit by any state or federal authority. No current employee or, to the best
knowledge of Xxxxxxxxxxx, former employee of the Seller, in his or her capacity
as an employee of the Seller, has been the subject of any formal disciplinary
proceeding by any governmental agency.
3.15. Assets Sufficient for Conduct of Business. The assets
and property presently owned, leased or used by the Seller and to be transferred
to the Buyer hereunder constitute all of the assets and property necessary for
the Seller to conduct its business as presently conducted.
3.16. Agreement Will Not Cause Breach or Violation. Neither
the entry into this Agreement nor the consummation of the transactions
contemplated hereby will result in or constitute any of the following: (i) a
default or an event that, with notice or lapse of time or both, would be a
default, breach, or violation of the certificate of incorporation or bylaws of
the Seller or a material default, breach or violation of any shareholders'
agreement, lease, license, promissory note, conditional sales contract,
commitment, indenture, mortgage, deed of trust, or other agreement, instrument,
or arrangement to which Xxxxxxxxxxx, or the Seller is a party or by which
Xxxxxxxxxxx, the Seller, or her or its assets is or are bound; (ii) an event
that would permit any party to terminate any agreement or to accelerate the
maturity of any indebtedness or other obligation of the Seller or of Xxxxxxxxxxx
in an amount in excess of $5,000 individually or in excess of $10,000 in the
aggregate; (iii) the creation or imposition of any material lien, charge, or
encumbrance on any of the assets of the Seller; or (iv) the violation of any
law, regulation, ordinance, judgment, order, or decree applicable to or
affecting the Seller, or its assets which violation would have a material
adverse effect on the Seller.
3.17. Authority and Consents. Except for the consents of
clients contemplated by Section 7.11 hereof, no approvals or consents of or
notices to or filings with any persons, governmental agency or governmental body
are necessary on the part of the Seller or Xxxxxxxxxxx in connection with the
execution, delivery or performance of this Agreement.
3.18. Interest in Customers, Suppliers, and Competitors.
Neither the Seller, nor any of its officers or directors nor any spouse, parent,
child or sibling, or to the best knowledge of Xxxxxxxxxxx, any other relative,
of any of them, has more than 5% direct or
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indirect interest in any competitor, supplier, or customer of the Seller or in
any person with whom the Seller is doing business.
3.19. Corporate Documents. Xxxxxxxxxxx has made available to
the Buyer for its examination its minute books, stock books and stock records
for the Seller. The minute books, stock books and stock records of the Seller
are complete and accurate in all material respects, and the signatures therein
are the true signatures of the persons purporting to have signed them, and all
material corporate actions taken by the directors and stockholders of the Seller
since its organization have been duly authorized or subsequently ratified as
necessary.
3.20. Personnel Identification and Compensation. The DL sets
forth a list of the names and addresses of all current officers, directors,
employees and consultants of the Seller, stating the rates of compensation
payable to each. No other person, except accountants, auditors, attorneys and
investment managers, regularly performs compensable services for the Seller.
3.21. Powers of Attorney and Bank Accounts. The DL lists (i)
the names and addresses of all persons holding a power of attorney on behalf of
the Seller; and (ii) the names and addresses of all banks or other financial
institutions in which the Seller has an account, deposit, or safe-deposit box,
with the names of all persons authorized to draw on these accounts or deposits
or who have access to these boxes.
3.22. Business Addresses. The DL lists each current and former
address of the Seller for the past five years. During the past five years, the
Seller has not conducted business at or from any other address, and has not
engaged in or solicited business in any state other than those designated in the
DL.
3.23. Absence of Undisclosed Liabilities. Except as and to the
extent reflected or reserved against in the Financial Statements and except as
to those liabilities or obligations incurred in the ordinary course of business,
since the date of the most recent Seller's balance sheet attached to the DL, the
Seller has not incurred any liabilities or obligations, whether due or to become
due, absolute or contingent, accrued or unaccrued, including without limitation
liabilities for taxes or interest or penalties thereon, which would be required
to be reflected in a balance sheet of the Seller or the notes thereto prepared
in accordance with generally accepted accounting principles consistently
applied.
3.24. Full Disclosure. None of the representations and
warranties made by the Seller or Xxxxxxxxxxx or made in the DL or any
certificate furnished or to be furnished pursuant to the terms of this Agreement
by the Seller or Xxxxxxxxxxx, or on their or each of their behalf, contains or
will contain any untrue statement of a material fact, or omits to state any
material fact necessary to make the statements contained therein, in the light
of the circumstances under which they were made, not misleading.
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3.25. Specified Events.
(a) None of the current clients of the Seller has advised the
Seller or Xxxxxxxxxxx that it intends to cease doing business with the Seller,
or to materially reduce the amount of the business that such client is presently
doing with the Seller.
(b) To the best knowledge of Xxxxxxxxxxx, Xxxxxxxxxxx has no
health problems which would materially impair her abilities to fulfill her
duties under her Employment Agreement, or to complete the full three-year term
of such Agreement, and agrees to deliver at Closing a letter from her doctor to
such effect.
3.26. Tangible Book Value. The tangible net worth of the
Seller as of the Closing, based on generally accepted accounting principles
consistently applied, shall not be less than $50,000.
Notwithstanding anything contained in this Article III to the
contrary, from time to time prior to the Closing, the Seller and Xxxxxxxxxxx may
furnish the Buyer information supplementing or amending the representations,
warranties and/or disclosures in this Agreement (including, without limitation,
the DL) in order to make the information set forth therein timely, complete and
accurate ("Additional Information") by delivering such Additional Information to
Xx. Xxxxxxx X. Xxxxxxxxx, Senior Vice President and Comptroller of the Buyer,
and Xx. Xxxxxx X. Xxxxxxxx, Vice President of the Buyer. If the Seller and
Xxxxxxxxxxx deliver to the Buyer Additional Information and such Additional
Information indicates a material adverse change in the Seller's financial
condition, the Seller's business or prospects, the Buyer may terminate this
Agreement if the Seller and Xxxxxxxxxxx receive prior written notice from the
Buyer within ten (10) business days after the Buyer's receipt of the Additional
Information. If the Buyer does not so terminate this Agreement, the
representation or warranty of the Seller or Xxxxxxxxxxx which is affected by
such Additional Information shall be deemed to have been amended accordingly. If
a document or matter is disclosed in a representation or warranty made herein by
the Seller or Xxxxxxxxxxx or is listed in the DL delivered on behalf of the
Seller and Xxxxxxxxxxx, such disclosure or listing shall suffice, without
specific repetition and with or without cross reference, as a disclosure for
purposes of any other representations and warranties made herein by the Seller
and Xxxxxxxxxxx. If, as of the Closing, any disclosures listed in the DL have
been supplemented or amended by Additional Information, then the Seller or
Xxxxxxxxxxx shall deliver to the Buyer at the Closing a final version of the DL
incorporating all such Additional Information.
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ARTICLE IV
BUYER'S REPRESENTATIONS AND WARRANTIES
The Buyer hereby represents and warrants to the Seller and
Fearrington as follows:
4.1. Organization. U.S. Trust is a corporation duly organized,
validly existing, and in good standing under the laws of the State of New York.
The Buyer is a banking institution possessing banking and trust powers duly
organized, validly existing and in good standing under the laws of the State of
New York. Both U.S. Trust and the Buyer have all requisite corporate (or, in the
case of the Buyer, banking) power and authority to own, lease and operate their
properties and to carry on their respective business as it is now being
conducted. The Buyer has previously delivered true, correct and complete copies
of the Buyer's Certificate of Incorporation and By-Laws and U.S. Trust's charter
and By-Laws as in full force and effect on the date hereof. The Buyer and U.S.
Trust are duly qualified to do business and are in good standing in each
jurisdiction where the character of property owned or leased by it or the nature
of its activities makes such qualification necessary, except those jurisdictions
where failure to be so qualified would not individually or in the aggregate have
a material adverse effect on the Buyer's or U.S. Trust's business.
4.2. Authorization. The Buyer has, and at the Closing will
have, full legal right and power to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby have
been duly and validly authorized and approved by the Buyer's Board of Directors
and no other corporate proceedings on the part of the Buyer is necessary to
authorize this Agreement or the transactions contemplated hereby. This Agreement
has been duly and validly executed and delivered by the Buyer and constitutes a
valid, legal and binding agreement of the Buyer, enforceable against it in
accordance with its terms except that the enforceability of such agreement is
subject to bankruptcy, insolvency, reorganization, and similar laws of general
applicability relating to or affecting creditors' rights.
4.3. Consents and Approvals. The execution and delivery of
this Agreement by the Buyer and the consummation by the Buyer of the
transactions contemplated hereby will not: (i) violate any provision of the
Certificate of Incorporation or By-Laws of the Buyer; (ii) violate or conflict
with any statute, rule, regulation, ordinance, writ, injunction, order or decree
of any public body or authority by which the Buyer or any of its respective
properties or assets may be bound; (iii) require any declaration or filing with,
or permit, consent, authorization, order, license, certificate or other form of
approval of, any public body or authority or any other person or entity; or (iv)
result in a violation or breach of, or constitute (with or without due notice or
lapse of time or both) a default (or give rise to any right of termination,
cancellation or acceleration) under, any of the terms, conditions or provisions
of
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any mortgage, lease, note, bond, mortgage, indenture, guarantee, license,
franchise, permit, agreement or other instrument or obligation to which the
Buyer is a party, or by which it or any of its respective properties or assets
may be bound, excluding from the foregoing clauses (ii), (iii) and (iv)
violations, breaches and defaults which, and filings, permits, consents and
approvals the absence of which, either individually or in the aggregate, would
not have a material adverse effect on the business, operations, or financial
condition of the Buyer.
4.4. Consideration for the Transferred Assets. The USTC Shares
to be issued in connection with the Asset Acquisition will be duly authorized,
validly issued, fully paid and nonassessable and free and clear of all Liens and
preemptive rights. The certificates representing such shares will be in due and
proper form.
4.5. Reports and Financial Statements. The Buyer has
previously furnished to the Seller true and complete copies of U.S. Trust's (i)
Annual Reports on Form 10-K for each of the two fiscal years ended December 31,
1995 and 1994 as filed with the SEC, (ii) proxy statements relating to all
meetings of its shareholders (whether annual or special) since 1994 and (iii)
all other reports or registration statements filed by U.S. Trust with the SEC
since January 1, 1994. As of their respective dates, U.S. Trust's Annual Reports
on Form 10-K for the fiscal years referred to in clause (i) above, proxy
statements for U.S. Trust's meetings of shareholders (whether annual or special)
referred to in clause (ii) above, and all other reports filed with the SEC
referred to in clause (iii) above did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. The audited consolidated financial
statements and unaudited interim financial statements included in such reports
or other filings have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis (except as may be indicated
therein or in the notes thereto) and fairly present the consolidated financial
position of U.S. Trust and its subsidiaries as of the dates thereof and the
consolidated results of operations and changes in cash flow of U.S. Trust and
its subsidiaries for each of the periods then ended, subject, in the case of
unaudited interim financial statements, to normal year-end adjustments.
4.6. Absence of Material Adverse Change. Since December 31,
1995, there has not been (i) any material adverse change in the business,
operations, properties, assets, liabilities or condition (financial or
otherwise) of U.S. Trust and its subsidiaries taken as a whole; (ii) damages,
destruction or loss, whether covered by insurance or not, materially or
adversely affecting the business, properties or financial condition of U.S.
Trust and its subsidiaries taken as a whole; or (iii) agreement, whether in
writing or otherwise, to take any action which would result in a condition
described in this Section 4.6.
4.7. Employee Benefits. The 1996 UST Benefits Portfolio (the
"UST Benefits Portfolio"), which has been delivered to the Seller, sets forth
all of U.S. Trust's
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employee benefits, including, without limitation, pension, retirement,
disability, bonus, profit-sharing, deferred compensation, stock option, medical,
dental or other health insurance plans, life insurance or other death benefit
plans, severance plans or other agreements or arrangements or plans providing
for employee remuneration or benefits which will be available to employees of
the Seller who are hired by the Buyer immediately after the Closing, subject to
any limitations or waiting periods set forth in the UST Benefits Portfolio.
4.8. Full Disclosure. None of the representations and
warranties made by the Buyer or made in any schedule or certificate furnished or
to be furnished pursuant to the terms of this Agreement by the Buyer, or on its
behalf, contains or will contain any untrue statement of a material fact, or
omits to state any material fact necessary to make the statements contained
therein, in the light of the circumstances under which they were made, not
misleading.
ARTICLE V
SELLER'S AND XXXXXXXXXXX'X OBLIGATIONS BEFORE THE CLOSING DATE
The Seller and Xxxxxxxxxxx covenant that:
5.1. Buyer's Access to Premises and Information. Subject to
the confidentiality obligations set forth in Section 6.1, the Buyer and its
counsel, accountants, and other representatives shall be entitled to have
reasonable access during normal business hours and upon reasonable notice to all
the Seller's properties, books, accounts, records, contracts, and documents.
Subject to the confidentiality obligations set forth in Section 6.1, the Seller
shall furnish or cause to be furnished to the Buyer and its representatives all
data and information concerning the business, finances, and properties of the
Seller that may be reasonably requested, including but not limited to the
Financial Statements.
5.2. Conduct of Business in Normal Course. Xxxxxxxxxxx shall
cause the Seller to carry on its business and activities diligently and, except
as otherwise permitted herein, in substantially the same manner as they
previously have been carried on, and to not institute any new methods of
purchase, sale, lease, management, accounting or operation that will vary
materially from the methods used by the Seller as of the date of this Agreement.
5.3. Preservation of Business and Relationships. Xxxxxxxxxxx
shall use her diligent efforts to cause the Seller to preserve its business
organization intact and preserve its present relationships with suppliers,
regulating agencies, customers, and others having business relationships with
it.
5.4. Maintenance of Insurance. Xxxxxxxxxxx shall cause the
Seller to continue to carry its existing insurance through the Closing Date,
subject to variations in
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amounts required by the ordinary operation of its business. At the request of
the Buyer and at the Buyer's sole expense, the amount of insurance against fire
and other casualties or losses which, at the date of this Agreement, the Seller
carries on any of its properties or in respect of its operations shall, subject
to availability, be increased by such amount or amounts as the Buyer shall
specify.
5.5. Employees and Compensation. Subject to the limitations
set forth in the last paragraph of Section 5.6, Xxxxxxxxxxx shall not, without
the written consent of the Buyer, or except as otherwise permitted herein or as
required under existing written contractual arrangements, permit the Seller to
do, or agree to do, any of the following acts: (i) grant any increase in
salaries payable or to become payable to any officer, employee, sales agent, or
representative which would result in an increase of more than 5%, since December
31, 1995, in the aggregate salaries or other compensation payable or to become
payable by the Seller to all of the employees of the Seller as a group, other
than Xxxxxxxxxxx; (ii) increase benefits payable to any officer, employee, sales
agent, or representative under any bonus or pension plan or other contract or
commitment except pursuant to the provisions of such plan, contract or
commitment which would result in an increase of more than 5%, since December 31,
1995, in the aggregate salaries or other compensation payable or to become
payable by the Seller to all of the employees of the Seller as a group, other
than Xxxxxxxxxxx; or (iii) modify any collective bargaining agreement to which
it is a party or by which it may be bound.
5.6. Controlled Acts. Except as otherwise permitted by this
Agreement, Xxxxxxxxxxx shall not, without the prior written consent of the
Buyer, permit the Seller to do or agree to do any of the following acts:
(a) Enter into any contract, commitment, or transaction not in
the usual and ordinary course of its business;
(b) Except in the ordinary course of business, make any
capital expenditures in excess of $10,000 for any single item or $20,000 in the
aggregate, or enter into any leases of capital equipment or property under which
the annual lease charge is in excess of $10,000;
(c) Except in the ordinary course of business, sell or dispose
of any capital assets with a net book value in excess of $10,000 individually,
or $20,000 in the aggregate;
(d) Declare any dividend other than is necessary to pay legal
or accounting expenses of the Seller associated with the Asset Acquisition, or
estimated federal and state income taxes of the Seller;
(e) Change the name or any trade name of the Seller or change
the nature of the business of the Seller as currently conducted;
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(f) Adopt or modify any employment agreement;
(g) Authorize the sale or merger of the Seller or the sale of
substantially all of its or their assets;
(h) Issue any stock; or
(i) Amend its Certificate of Incorporation or By-Laws.
Notwithstanding anything contained in this Agreement to the
contrary, between the date hereof and the Closing Date, the Seller may borrow
funds, pay all obligations to shareholders, and pay or accrue dividends,
salaries, bonuses, severance payments, employee benefits, professional fees and
other expenses, so long as such actions do not cause the Seller to have a
tangible net worth of less than $50,000 on the Closing Date.
5.7. Payment of Liabilities and Waiver of Claims. Xxxxxxxxxxx
shall not permit the Seller to do, or agree to do, any of the following acts:
(i) pay, prior to the due date thereof, any material obligation or liability,
fixed or contingent, other than current liabilities; (ii) waive or compromise
any material right or claim other than in the ordinary course of business; or
(iii) cancel, without full payment, any note, loan, or other material obligation
owing to the Seller.
5.8. Existing Agreements. Xxxxxxxxxxx shall not permit the
Seller to modify, amend, cancel, or terminate any of its existing material
contracts or agreements, or agree to do any of those acts, except in the
ordinary course of business.
5.9. Statutory Filings. Xxxxxxxxxxx shall cooperate fully with
the Buyer in preparing and filing all information and documents deemed necessary
or desirable by the Buyer under any statutes or governmental rules or
regulations pertaining to the transactions contemplated by this Agreement.
5.10. Delivery of Tax Returns. As soon as practicable,
Xxxxxxxxxxx shall deliver to the Buyer copies of all open tax returns relating
or pertaining to the Seller.
5.11. Client Consents. As soon as practicable after the
execution of this Agreement, Xxxxxxxxxxx shall cause the Seller to, and the
Seller shall seek to obtain, consents of clients of the Seller to the transfer
contemplated by this Agreement, as is further set forth in Section 7.11.
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ARTICLE VI
BUYER'S OBLIGATIONS BEFORE THE CLOSING DATE
6.1. Confidentiality. Prior to the Closing Date, the Buyer
shall preserve the confidentiality of this Agreement, the Schedules, the DL and
any and all information and data of a proprietary or confidential nature with
respect to Xxxxxxxxxxx or the Seller in its possession or the possession of its
agents or representatives or which is received by any of them in connection with
this Agreement and the transactions contemplated hereby. To the extent
disclosure of any such information or data is required by applicable law, order,
rule or regulation (including, without limitation, applicable federal and state
securities laws), the Buyer or its agents or representatives, as the case may
be, shall give prior notice to Xxxxxxxxxxx and the Seller and shall use
reasonable efforts to obtain confidential treatment therefor. In the event of
the termination of this Agreement, each party shall return on demand all
documents (including copies thereof and all related notes) obtained by such
party in connection with this Agreement and the transactions contemplated
hereby.
6.2. Governmental Filings. The Buyer will make or use its best
efforts to make and process all governmental filings necessary to consummate
this transaction and shall cooperate fully with the Seller and Xxxxxxxxxxx in
preparing and filing all information and documents deemed necessary by the
Seller or Xxxxxxxxxxx under any statutes or governmental rules or regulations
pertaining to the transactions contemplated by this Agreement.
6.3. Best Efforts; Agreement With U.S. Trust. Except as set
forth in the DL, the Buyer will use its best efforts to take, or cause to be
taken, all action, and to do, or cause to be done, all things necessary, proper
or advisable to consummate and make effective the transactions contemplated by
this Agreement. The Buyer will cause U.S. Trust to execute and deliver to the
Seller on the Closing Date the Agreement to Deliver and Register Shares annexed
hereto as Exhibit 8.4.
6.4. Consents. Except as set forth in the DL, the Buyer shall
use its best efforts to obtain all permits, authorizations, consents and
approvals from third parties necessary to consummate the Agreement and the
transactions contemplated hereby.
6.5. Contact with Clients. Unless the prior consent of the
Seller has been obtained between the date hereof and the Closing Date, neither
the Buyer nor any of its officers, directors, employees, agents or
representatives shall contact, or communicate with, any of the clients of the
Seller.
6.6. Tax-Free Reorganization. The Buyer will not take any
action or omit to take any action, or permit U.S. Trust to take any action or
omit to take any action, which would prevent the Asset Acquisition from being
treated as a tax-free reorganization.
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ARTICLE VII
CONDITIONS PRECEDENT TO BUYER'S PERFORMANCE
The obligations of the Buyer to conclude the Asset Acquisition
under this Agreement are subject to the satisfaction, at or before the Closing,
of all the conditions set out below.
7.1. Delivery of Instruments of Transfer. The Seller shall
have delivered to the Buyer at or prior to the Closing the instruments of
transfer referred to in Section 1.6(b) hereof.
7.2. Accuracy of Seller's and Xxxxxxxxxxx'x Representations
and Warranties. All representations and warranties made by the Seller and
Xxxxxxxxxxx in this Agreement or in the DL shall be true in all material
respects on and as of the Closing Date as though made at that time, and the
Seller and Xxxxxxxxxxx, respectively, shall have delivered to the Buyer a
Certificate of the Seller or Xxxxxxxxxxx, as the case may be, so certifying to
this.
7.3. Absence of Liens. As of the Closing Date, except for such
liens, claims, charges or encumbrances disclosed in the Financial Statements or
in the DL, there shall be no liens, claims, charges or encumbrances on any
assets of the Seller other than liens (i) of mechanics, materialmen and landlord
incurred in the ordinary course of business for sums not overdue and not in
excess of $5,000 in the aggregate; (ii) incurred in the ordinary course of
business in connection with workers' compensation, unemployment insurance, or
other forms of governmental insurance or benefits; (iii) for taxes, assessments
or other governmental charges or levies which are not at the time delinquent or
are subject to an effective extension for the filing of the related tax returns
or reports (if applicable) granted by the appropriate authorities.
7.4. Seller's and Xxxxxxxxxxx'x Performance. The Seller and
Xxxxxxxxxxx shall have performed, satisfied, and complied in all material
respects with all covenants, agreements, and conditions required by this
Agreement to be performed or complied with by the Seller or Xxxxxxxxxxx, as the
case may be, on or before the Closing Date.
7.5. Opinion of Seller's and Xxxxxxxxxxx'x Counsel. The Buyer
shall have received from Xxxxxxxx & X'Xxxx, LLP, counsel for Xxxxxxxxxxx and the
Seller, an opinion dated the Closing Date, in the form attached hereto as
Exhibit 7.5.
7.6. Consents. All necessary notices to, and agreements,
approvals and consents of, any governmental body to the consummation of the
transactions contemplated by this Agreement, or otherwise pertaining to the
matters covered by it, shall have been obtained by Xxxxxxxxxxx or the Seller and
delivered to the Buyer.
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7.7. Approval of Documentation. The form and substance of all
certificates, instruments, opinions, and other documents delivered to the Buyer
under this Agreement shall be satisfactory in all reasonable respects to the
Buyer and its counsel.
7.8. Employment Agreements. Xxxxxxxxxxx shall deliver to the
Buyer an employment agreement substantially in the form attached hereto as
Exhibit 7.8 (the "Employment Agreement"), duly executed by Xxxxxxxxxxx and the
Buyer, and there shall be no default existing on the Closing Date under the
Employment Agreement, and the Employment Agreement shall be in full force and
effect on the Closing Date and each party shall be capable on the Closing Date
of performing her or its obligations under the Employment Agreement.
7.9. Condition of Assets. The property and assets of the
Seller shall not have been materially or adversely affected in any way as a
result of any fire, accident, storm or other casualty or labor or civil
disturbance or act of God or the public enemy.
7.10. Certificates of the Secretary of Seller. The Buyer shall
have received from the Secretary of the Seller a certificate stating that no
amendments or modifications have been made to the Certificate of Incorporation
or the By-laws of the Seller since the signing of this Agreement except as
consented to in writing by the Buyer or otherwise permitted hereunder.
7.11. Delivery of Client Consents. The Seller or Xxxxxxxxxxx
shall have delivered to the Buyer at or prior to the Closing written letters (in
substantially the form attached hereto as Exhibit 7.11) from clients of the
Seller whose accounts, in the aggregate, represent at least 75% of Annualized
Revenues (as defined in Section 1.4).
7.12. No Injunction. Neither Fearrington, the Buyer, U.S.
Trust nor the Seller shall be subject to any order, decree or injunction of a
court of competent jurisdiction within the United States which prevents or
materially delays the consummation of the Asset Acquisition.
7.13. No Government Proceeding or Litigation. No suit, action
or proceeding before any court or any governmental or regulatory authority shall
be pending or threatened by any state or federal governmental or regulatory
authority, against Fearrington, the Buyer, U.S. Trust, the Seller or any of
their respective affiliates, officers or directors seeking to restrain, prevent
or change in any material respect the transactions contemplated hereby
(including, without limitation, the Employment Agreement) or seeking damages in
connection with such transactions which are material to the Seller, taken as a
whole.
7.14. No Statute, Rule or Regulation. No statute, rule or
regulation shall have been enacted by the government (or any governmental
agency) of the United States or any
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state, municipality or other political subdivision thereof that makes the
consummation of the Asset Acquisition and any other transaction contemplated
hereby (including, without limitation, the Employment Agreement) illegal.
7.15. Absence of Litigation. No action, suit, or proceeding
before any court or any governmental body or authority, pertaining to this
Agreement, to the Employment Agreement or to any transaction contemplated hereby
or thereby, shall have been instituted and remain pending or threatened on or
before the Closing Date.
7.16. Doctor's Letter. The Buyer shall have received prior to
Closing the doctor's letter referred to in Section 3.25(b).
7.17. Tangible Net Worth. The Seller or Xxxxxxxxxxx shall have
delivered to the Buyer (i) at the Closing, the Seller's unaudited balance sheet
dated as of the Closing Date (the "Closing Date Balance Sheet") indicating a
tangible net worth of the Seller of at least $50,000 and (ii) at least ten days
prior to the Closing Date, a draft of the Closing Date Balance Sheet. The
Closing Date Balance Sheet shall be prepared in accordance with generally
accepted accounting principles consistently applied with prior periods, subject
to normal year-end adjustments and to adjustments arising from the Closing Date
occurring on a date other than the last day of a month.
7.18. Escrow Agreement. The Seller and Xxxxxxxxxxx shall have
delivered to the Buyer the Escrow Agreement annexed hereto as Exhibit 1.4(b),
duly executed by the Seller and Xxxxxxxxxxx.
7.19. Letter Agreement of Xxxxxxxxxxx'x Spouse. Xxxxxxxxxxx'x
spouse shall have delivered to the Buyer, at or prior to the Closing, the Letter
Agreement annexed hereto as Exhibit 7.19, duly executed by such spouse.
7.20. Best Efforts to Obtain Certain Consents. The Seller
shall have used its best efforts (which shall not require it to incur any
expense) to obtain the consent of Tishman Speyer 520 Venture, Credit Du Nord and
Xxxxxx Xxxxxxxxx XxXxxxx, Inc. to an assignment from the Seller to the Buyer of
the Sub-Sublease Agreement dated October 14, 1993, as amended, between Xxxxxx
Xxxxxxxxx XxXxxxx, Inc. and the Seller. The Seller shall keep the Buyer apprised
of its progress in obtaining such consents and, at the Buyer's direction, shall
incur expenses in order to obtain any such consents, provided that such expenses
shall be liabilities of, and payable by, the Buyer.
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ARTICLE VIII
CONDITIONS PRECEDENT TO SELLER'S AND XXXXXXXXXXX'X PERFORMANCE
The obligations of the Seller and Xxxxxxxxxxx to conclude the
Asset Acquisition under this Agreement and the other transactions contemplated
herein are subject to the satisfaction, at or before the Closing, of all the
following conditions:
8.1. Delivery of Acquisition Price and Instruments of
Assumption. The Buyer shall have delivered (i) to the Seller, at or prior to the
Closing, a stock certificate representing that number of USTC Shares calculated
in accordance with Sections 1.4(a) and (b) and the instruments effecting
assumption of the Assumed Liabilities referred to in Section 1.6(b), (ii) to the
Escrow Agent, at the Closing, a stock certificate representing the Escrowed
Shares calculated in accordance with Section 1.4(b), all delivered in accordance
with Sections 1.6(a).
8.2. Accuracy of Buyer's Representations and Warranties. All
representations and warranties made by the Buyer contained in this Agreement,
including any schedule hereto, shall be true in all material respects on and as
of the Closing as though such representations and warranties were made on and as
of that date, and the Buyer shall have delivered to the Seller and Xxxxxxxxxxx a
Certificate at Closing so certifying as to this and the matters set forth in
Section 8.3.
8.3. Buyer's Performance. The Buyer shall have performed and
complied with all covenants and agreements, and satisfied all conditions that it
is required by this Agreement to perform, comply with, or satisfy, before or at
the Closing.
8.4. Agreement to Deliver and Register Shares. The Buyer shall
have delivered to Fearrington and the Seller the Agreement to Deliver and
Register Shares annexed hereto as Exhibit 8.4, duly executed by U.S. Trust.
8.5. Escrow Agreement. The Buyer shall have delivered to
Fearrington and the Seller the Escrow Agreement attached as Exhibit 1.4(b)
hereto, duly executed by the Buyer.
8.6. Opinion of Counsel Regarding Tax-Free Treatment. Xxxxxxxx
& X'Xxxx, LLP. counsel for the Seller and Xxxxxxxxxxx, shall have rendered its
opinion to the Seller and Xxxxxxxxxxx, dated the Closing Date, that the Asset
Acquisition will be treated as a tax-free reorganization by reason of Section
368(a)(1)(C) of the Internal Revenue Code, as amended.
8.7. Opinion of Buyer's Counsel. The Buyer shall have
furnished the Seller and Xxxxxxxxxxx with an opinion, dated the Closing Date, of
Xxxxxxx Xxxxxxxx Xxxxxxx, Esq.,
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Managing Director and General Counsel for the Buyer, in the form attached hereto
as Exhibit 8.7.
8.8. Consents. All necessary notices to, and agreements,
approvals and consents of, any person, entity or governmental body, to the
consummation of the transactions contemplated by this Agreement, or otherwise
pertaining to the matters covered by it, shall have been obtained by the Buyer
and delivered to the Seller and Xxxxxxxxxxx.
8.9. Employment Agreement. The Buyer shall have delivered to
Xxxxxxxxxxx the Employment Agreement, duly executed by the Buyer, and there
shall be no default existing on the Closing Date under the Employment Agreement,
which shall be in full force and effect on the Closing Date and each party shall
be capable on the Closing Date of performing her or its obligations under the
Employment Agreement.
8.10. Benefit Plans. All of the employee benefit plans of the
Buyer described in the UST Benefits Portfolio previously delivered to the Seller
and selected by the Seller with respect to each employee of the Seller who
becomes an employee of the Buyer after the Closing in accordance with the terms
thereof, shall be implemented with respect to each such employee, subject to any
limitations or waiting periods set forth in the UST Benefits Portfolio.
8.11. No Injunction. Neither Fearrington, the Buyer, U.S.
Trust nor the Seller shall be subject to any order, decree or injunction of a
court of competent jurisdiction within the United States which prevents or
materially delays the consummation of the Asset Acquisition.
8.12. No Government Proceeding or Litigation. No suit, action
or proceeding before any court or any governmental or regulatory authority shall
be pending or threatened by any state or federal governmental or regulatory
authority, against Fearrington, the Buyer, U.S. Trust, the Seller or any of
their respective affiliates, officers or directors seeking to restrain, prevent
or change in any material respect the transactions contemplated hereby
(including, without limitation, the Employment Agreement) or seeking damages in
connection with such transactions.
8.13. No Statute, Rule or Regulation. No statute, rule or
regulation shall have been enacted by the government (or any governmental
agency) of the United States or any state, municipality or other political
subdivision thereof that makes the consummation of the Asset Acquisition and any
other transaction contemplated hereby (including, without limitation the
Employment Agreement) illegal.
8.14. Absence of Litigation. No action, suit, or proceeding
before any court or any government body or authority, pertaining to this
Agreement, to the Employment
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Agreement or to any transaction contemplated hereby or thereby, shall have been
instituted and remain pending or threatened on or before the Closing Date.
8.15. Delivery of Client Consents. The Seller or Xxxxxxxxxxx
shall have received prior to the Closing Date written letters (in the form
attached hereto as Exhibit 7.11) from clients of the Seller whose accounts, in
the aggregate, represent at least 75% of Annualized Revenues (as defined in
Section 1.4).
ARTICLE IX
SELLER'S, XXXXXXXXXXX'X AND
BUYER'S OBLIGATIONS AFTER THE CLOSING
9.1. Preservation of Goodwill. Xxxxxxxxxxx agrees that, unless
(i) Xxxxxxxxxxx'x employment under the Employment Agreement is terminated
without cause or by Xxxxxxxxxxx with good reason (as defined in the Employment
Agreement) either during the term of the Employment Agreement or after the
expiration thereof, (ii) the Buyer breaches any of its obligations under Section
3 or 4 of the Employment Agreement or (iii) Xxxxxxxxxxx'x employment is
terminated under Section 5.2 of the Employment Agreement due to a disability and
Xxxxxxxxxxx petitions the Buyer for reinstatement upon the same terms and
conditions as her earlier employment (which petition is accompanied by a
doctor's letter stating that Xxxxxxxxxxx is no longer permanently disabled
within the meaning of any permanent disability insurance policy which may be
maintained by the Buyer for the benefit of Xxxxxxxxxxx and under which
Xxxxxxxxxxx is entitled to benefits, delivered within three months of
Xxxxxxxxxxx becoming permanently disabled) and is refused such reinstatement by
the Buyer, for a period of two years following the Closing, Xxxxxxxxxxx will
not, individually or through an agent, for herself or on behalf of another, as
an employee, director, owner, partner, sole proprietor, consultant, agent,
representative, shareholder, or in any other manner or capacity whatsoever,
other than in her capacity as an employee of the Buyer:
(a) except to the extent required by law, disclose to any
person or use for Xxxxxxxxxxx'x own benefit any fee schedules, fee data,
customer lists or similar matters possessed by Xxxxxxxxxxx relating to the
Seller or the Buyer, or the business of either unless Xxxxxxxxxxx first obtains
written permission from the Buyer;
(b) solicit or induce any clients of the Seller immediately
prior to the Closing to terminate or reduce their respective relationships with
the Buyer; or
(c) solicit for hire any person then employed by the Buyer or
induce any such person to terminate such employment.
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For purposes of section 9.1(a), the term "Buyer" shall include
any firm or corporation directly or indirectly controlled by the Buyer or under
common control with the Buyer; provided, however, the restrictions set forth in
9.1(b) and (c) shall not apply, after termination of Xxxxxxxxxxx'x employment by
the Buyer, to the solicitation or inducement of any clients, or the solicitation
for hire of any person, with whom Xxxxxxxxxxx did not have dealings as clients
or employees of the Buyer during the term of her employment with the Buyer.
9.2. Use of Name. Seller and Xxxxxxxxxxx agree that for a
period of three years after the Closing Date neither of them shall use or
employ, directly or indirectly, the name Xxxxxxxx Xxxxxxxxxxx, Inc., or any
variant thereof, in the conduct of any investment advisory business.
9.3. Indemnification.
(a) Indemnification by Xxxxxxxxxxx. Subject to the limitations
set forth below, the Seller and Xxxxxxxxxxx, jointly and severally, shall
indemnify, hold harmless and defend the Buyer, at all times after the date of
this Agreement, against and in respect of any and all claims, demands,
liabilities, losses, costs, expenses and deficiencies (including interest,
penalties, reasonable attorneys' fees and litigation expenses) (such claims,
demands, liabilities, losses, costs, expenses and deficiencies being hereinafter
referred to singly as a "Buyer Loss" and collectively as the "Buyer Losses")
arising out of or in connection with or based upon the inaccuracy of any
representation or warranty made by the Seller or Xxxxxxxxxxx herein or in any
certificate or other document delivered pursuant hereto or the breach by
Xxxxxxxxxxx or the Seller of any agreement or covenant made herein or in any
document delivered pursuant hereto.
(b) Limitations on Indemnification by the Seller and
Xxxxxxxxxxx.
(i) Neither Xxxxxxxxxxx nor the Seller shall be
obligated to indemnify the Buyer for Buyer Losses arising from the inaccuracy of
any representation or warranty made by the Seller or Xxxxxxxxxxx herein or in
any certificate or other document delivered pursuant hereto unless and until the
aggregate amount of such Buyer Losses exceeds $25,000, in which case Xxxxxxxxxxx
and the Seller, jointly and severally, shall be obligated to indemnify the Buyer
for the amount of such Buyer Losses aggregating in excess of $25,000.
(ii) Xxxxxxxxxxx'x and the Seller's aggregate
liability for indemnification for all provisions under this Agreement shall
under no circumstances exceed the Asset Acquisition Consideration received by
Xxxxxxxxxxx under this Agreement, valued as of the Measurement Date. Any
liability of Xxxxxxxxxxx and Seller for any Buyer Loss shall be satisfied
through the delivery of Common Shares to the Buyer, such shares to be valued at
the Average Closing Price.
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(iii) A claim for breach of warranty, representation
or covenant may not be made under this Agreement and neither the Seller nor
Xxxxxxxxxxx shall be liable for indemnification under this section, unless
notice of the Buyer Loss on which such claim or right to indemnification is
based is given in writing or through telex or telecopier by the Buyer to
Xxxxxxxxxxx reasonably promptly after the Buyer shall become aware of the Buyer
Loss, but in any event with respect to a Buyer Loss, within one year after the
Closing Date; provided, however, that notwithstanding the foregoing, a claim for
indemnification made under Section 3.5 with respect to an open tax year may be
made without any time limitation.
(iv) Subject to the limitations on indemnification
set forth in Sections (i)-(iii) above, if any event shall occur which would
otherwise entitle the Buyer to assert a claim for indemnification hereunder, no
Buyer Losses shall be deemed to have been sustained by the Buyer to the extent
of (i) any tax savings realized by the Buyer with respect thereto (or any
affiliate with which the Buyer files a consolidated return for federal income
tax purposes or a combined return for state income tax purposes) or (ii) any net
proceeds received by the Buyer, its subsidiaries or affiliates from any
insurance policy with respect thereto, to which policies the Buyer shall resort
prior to asserting a claim for indemnification hereunder.
(c) Indemnification by Buyer. Subject to the limitations set
forth below, the Buyer shall indemnify, hold harmless and defend the Seller and
Xxxxxxxxxxx , at all times after the date of this Agreement, against and in
respect of any and all claims, demands, liabilities, losses, costs, expenses and
deficiencies (including interest, penalties, reasonable attorneys' fees and
litigation expenses) (such claims, demands, liabilities, losses, costs, expenses
and deficiencies being hereinafter referred to singly as a "Seller Loss" and
collectively as the "Seller Losses") arising out of or in connection with or
based upon (i) the inaccuracy of any representation or warranty made by the
Buyer herein or in any certificate or other document delivered pursuant hereto;
(ii) the breach by the Buyer of any agreement or covenant made herein or in any
document delivered pursuant hereto; or (iii) any of the Assumed Liabilities.
(d) Limitations on Indemnification by Buyer.
(i) The Buyer shall not be obligated to indemnify the
Seller and Xxxxxxxxxxx for Seller Losses arising from the inaccuracy of any
representation or warranty made by the Buyer herein or in any certificate or
other document delivered pursuant hereto unless and until the aggregate amount
of such Seller Losses exceeds $25,000, in which case the Buyer shall be
obligated to indemnify the Seller and Xxxxxxxxxxx for the amount of such Seller
Losses aggregating in excess of $25,000; provided, however, the limitations of
this clause (i) shall not apply to claims for indemnification arising out of or
in connection with or based upon the inaccuracy or breach of the Buyer's
representations set forth in Section 4.4.
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(ii) The Buyer's aggregate liability for
indemnification for all provisions under this Agreement shall under no
circumstances exceed the Asset Acquisition Consideration received by Xxxxxxxxxxx
under this Agreement, valued as of the Measurement Date.
(iii) A claim for breach of warranty, representation
or covenant may not be made under this Agreement and the Buyer shall not be
liable for indemnification under this section, unless notice of the Seller Loss
on which such claim or right to indemnification is based is given in writing or
through telex or telecopier by the Seller or Xxxxxxxxxxx to the Buyer reasonably
promptly after the Seller or Xxxxxxxxxxx, as the case may be, shall become aware
of the Seller Loss, but in any event, with respect to claims of Seller Loss
arising under Sections 9.3(c)(i) and (ii), within one year after the Closing
Date.
(iv) Subject to the limitations on indemnification
set forth in Sections (i)-(iii) above, if any event shall occur which would
otherwise entitle the Seller and Xxxxxxxxxxx to assert a claim for
indemnification hereunder, no Seller Losses shall be deemed to have been
sustained by the Seller or Xxxxxxxxxxx, as the case may be, to the extent of (i)
any tax savings realized by the Seller or Xxxxxxxxxxx with respect thereto or
(ii) any net proceeds received by the Seller or Xxxxxxxxxxx from any insurance
policy with respect thereto, to which policies the Seller and Xxxxxxxxxxx shall
resort prior to asserting a claim for indemnification hereunder.
(e) Procedure for Establishment of Indemnifiable Claim.
(i) Matters Involving Third Parties. In the event
that any claim shall be asserted or action commenced by any third party against
a party hereto entitled to indemnification hereunder (an "Indemnified Party"),
which, if sustained, would result in a claim for indemnification hereunder, (an
"Indemnifiable Claim"), Indemnified Party, within a reasonable time after
learning of such claim, but in no event more than twenty-five days thereafter,
shall give written notice to the other party (the "Indemnitor") of such claim
giving the particulars thereof, and shall extend to Indemnitor a reasonable
opportunity to defend against such claim, at Indemnitor's sole expense and
through legal counsel reasonably acceptable to Indemnified Party, provided that
Indemnitor proceeds in good faith, expeditiously and diligently; provided,
however, the right of Indemnified Party to indemnification shall be reduced in
the event of its failure to give timely notice hereunder only to the extent
Indemnitor is prejudiced thereby. No determination shall be made with respect to
an Indemnifiable Claim hereunder while such defense is still being made until
the earlier of (i) the resolution of said claim by Indemnitor with the third
party claimant, or (ii) the termination of the defense by Indemnitor against
such claim or the failure of Indemnitor to prosecute such defense in good faith
in an expeditious and diligent manner. Indemnified Party shall be entitled to
rely upon the opinion of its counsel as to the occurrence of either of said
events. Indemnified Party, at its option and expense, shall have the right to
participate in
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any defense undertaken by Indemnitor with legal counsel of its own selection;
provided, however, Indemnitor shall have the right to conduct the defense of
and, subject to this subparagraph (i), settle such third party claim. No
settlement or compromise of any claim which may result in an Indemnifiable
Claim, as the case may be, may be made by Indemnitor without the prior written
consent of Indemnified Party unless (A) prior to such settlement or compromise
Indemnitor acknowledges in writing its obligation to pay in full the amount of
the settlement or compromise and all associated expenses and Indemnified Party
is furnished with security reasonably satisfactory to Indemnified Party that
Indemnitor will in fact pay such amount and expenses or (B) such settlement
includes as a term thereof a general release of Indemnified Party from such
claim. Notwithstanding any other provision of this Section 9.3, if Indemnified
Party withholds its consent to a settlement or elects to continue the defense of
any claim, where but for such action the Indemnitor could have settled such
claim, the Indemnitor shall be required to indemnify Indemnified Party only up
to the amount of the bona fide settlement offer for which the Indemnitor could
have settled such claim.
(ii) Non-Third Party Claims. In the event that an
Indemnified Party asserts the existence of any Indemnifiable Claim, Indemnified
Party shall give written notice to Indemnitor of the nature and amount of the
Indemnifiable Claim asserted within a reasonable time after becoming aware of
such Indemnifiable Claim (but in any event no later than twenty-five days
thereafter), and shall provide to Indemnitor as soon as practicable thereafter
all information and documentation necessary to support and verify the existence
of, any Buyer Losses or Seller Losses, as the case may be, that Indemnified
Party shall have determined have given rise to, or could reasonably be expected
to give rise to, an Indemnifiable Claim. If Indemnitor, within a period of
twenty-five days after receipt of Indemnified Party's notice, shall not give
written notice to Indemnified Party announcing its intent to contest such
assertion of Indemnified Party (such notice by Indemnitor being hereinafter
called the "contest notice"), such assertion of Indemnified Party shall be
deemed accepted and the amount of the Indemnifiable Claim shall be deemed
established. In the event, however, that a contest notice is given to
Indemnified Party within said twenty-five day period, then at any time
thereafter a party may commence a legal proceeding in accordance with this
Article to resolve the contested assertion of an Indemnifiable Claim.
(iii) Indemnified Party and Indemnitor may agree in
writing, at any time, as to the existence and amount of an Indemnifiable Claim,
and, upon the execution of such agreement, such Indemnifiable Claim shall be
deemed established.
(iv) The sole remedy of the parties hereto for a
misrepresentation, breach of warranty, covenant or agreement contained in this
Agreement shall be a claim for indemnification under this Section 9.3.
9.4. Right to Cure Defaults. If a party becomes aware of any
breach of a representation or warranty or non-fulfillment of any covenant or
obligation of the other party
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hereunder, the party becoming so aware shall promptly notify the other party of
such breach or non-fulfillment and afford such other party a reasonable
opportunity to cure such breach or non-fulfillment.
9.5. Availability of Benefit Plans. Immediately after the
Closing, all persons who were employees of the Seller as of the Closing and who,
immediately after the Closing, are employees of the Buyer, shall participate in
all plans and benefits described in the UST Benefits Portfolio on the same terms
and conditions as similarly situated employees of the Buyer.
9.6. Preservation of Tax-Free Reorganization. The Buyer will
not take any action which would cause the Asset Acquisition to not be treated as
a tax-free reorganization.
9.7. Payment of Certain Indebtedness. On the Closing Date, the
Buyer shall pay all Assumed Liabilities consisting of amounts then owing to
Berkshire Capital Corporation. On the later of (i) the Closing Date and (ii)
January 2, 1997, the Buyer shall pay all Assumed Liabilities consisting of
amounts then owing to Xxxxxxxxxxx and Xxxxxxxx & X'Xxxx, LLP.
9.8. Returns for Periods Prior to Closing. Required Tax
Returns which are due after Closing with respect to Taxes for the Seller will be
prepared by Seller and timely filed, including extensions. The Buyer shall be
responsible for any Taxes for the period ending on the Closing Date and Seller
shall be responsible for Taxes for the period thereafter. For purposes of
determining the Taxes for a taxable period or periods that begin before and end
after the Closing Date, the determination shall be made by assuming that the
Seller has a taxable year which ended at the close of business on the Closing
Date. The Tax Returns prepared and filed or to be prepared and filed by or for
the Seller are or will be true and correct, and will be prepared on a basis
which is consistent with the basis upon which similar returns for prior periods
have been prepared and filed.
The Seller shall notify the Buyer promptly upon receipt of any
notice of any pending or threatened audit, litigation or other contest (a
"Contest") that could affect the amount of Taxes payable by the Buyer. The Buyer
shall have the sole right to control any Contest that could affect the amount of
Taxes payable by the Buyer and to employ counsel of its choice at its expense;
provided, however, that the Seller shall have the right to participate in any
such Contest at its own expense. The Seller (i) shall execute and deliver to the
Buyer or its designated counsel or other representatives such powers of attorney
and other documents as may be reasonably necessary to permit the Buyer to so
control any such Contest, (ii) shall provide such books and records and other
documents, certificates, information, testimony and assistance as may be
reasonably requested by the Buyer in connection with any such Contest and (iii)
except as authorized by the Buyer, shall not take any action (including the
execution of extensions of statutes of limitations) in relation to, or at the
request of, any taxing authority
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with respect to any such Contest. The Buyer shall not agree to the payment of
any Taxes if such agreement could affect any tax liability of the Seller without
the Seller's consent.
For purposes of this Section 9.8, "Taxes" shall mean any
domestic or foreign net income, gross income, gross receipts, sales, use,
excise, occupation, franchise, transfer, payroll, stamp, gains, capital,
premium, property or windfall profits tax, alternative, add-on or other minimum
tax, value added, or other tax, fee, levy, imposition, charge or assessment,
including taxes imposed on Xxxxxxxxxxx as a result of her ownership of all of
the common stock of the Seller, together with any interest and any penalty,
addition to tax or additional amount imposed by any taxing authority, whether
any such tax is imposed directly or through withholding. "Tax Returns" shall
mean all tax returns, reports and forms (including withholding tax returns) for
a taxable period required to be filed by applicable Federal, State, local or
foreign tax laws or government entities.
9.9. Access to Books and Records. The Seller and Xxxxxxxxxxx
will provide to the Buyer reasonable access, upon reasonable notice, to such
books and records of the Seller retained by them after the Closing regarding the
operation of the Seller's business prior to the Closing as the Buyer may
reasonably request.
9.10. Agreement to Deliver and Register Shares. The Buyer
shall cause U.S. Trust to perform all of its obligations under the Agreement to
Deliver and Register Shares annexed as Exhibit 8.4 hereto.
9.11. Adjustments to Closing Date Balance Sheet. The parties
acknowledge that the Closing Date Balance Sheet (as defined in Section 7.17) may
reflect reasonable estimates of certain assets and liabilities which may not be
entirely accurate. As soon as practicable and in any event within ten business
days after the Closing Date, the Buyer shall cause to be prepared and deliver to
Seller (or, at Seller's direction, Xxxxxxxxxxx) an updated Closing Date Balance
Sheet which shall correct the amounts of any estimates utilized in preparing the
Closing Date Balance Sheet and correct any bookkeeping errors or omissions
discovered after the Closing that affect the Closing Date Balance Sheet. The
Closing Date Balance Sheet, as so adjusted, shall be deemed the "Final Closing
Date Balance Sheet", subject to the dispute resolution mechanism described
below. The Buyer or Seller (or, at Seller's election, Xxxxxxxxxxx), as the case
may be, shall (except to the extent the dispute mechanism described below is
utilized), not later than the 30th day after the Closing Date, pay to the other
an amount equal to the net adjustment, if any, required to be made to reflect
the difference between the tangible net worth of the Seller as reflected on the
Closing Date Balance Sheet and the tangible net worth of the Seller as reflected
on the Final Closing Date Balance Sheet. Such payment shall be made through
delivery of Common Shares valued at the Average Closing Price. By delivery of
such Common Shares by (i) the Seller (or Xxxxxxxxxxx, as the case may be), the
Seller (or Xxxxxxxxxxx, as the case may be) represents to the Buyer that such
Common Shares are free and clear of all Liens and (ii) the Buyer, the
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41
Buyer represents to Xxxxxxxxxxx that such Common Shares are validly issued,
fully paid, non-assessable and free and clear of all Liens and covenants that
Buyer will cause such Common Shares to be treated as USTC Shares for purposes of
the Agreement to Deliver and Register Shares of even date among U.S. Trust, the
Seller and Xxxxxxxxxxx.
If, within ten business days after receipt of the Final
Closing Date Balance Sheet, the Seller or Xxxxxxxxxxx notifies the Buyer that it
or she disputes the Final Closing Date Balance Sheet or the amount of tangible
net worth derived therefrom, then the parties shall, in good faith, seek to
resolve their differences. If, despite such good faith efforts, the parties are
unable to resolve their differences within ten business days after delivery of
the notice of dispute by the Seller or Xxxxxxxxxxx to the Buyer, then the Final
Closing Balance Sheet, and the tangible net worth derived therefrom, shall be
determined (i) jointly by two accounting firms, one selected by Xxxxxxxxxxx or
the Seller and one selected by the Buyer, or (ii) if the two accounting firms
cannot agree on such determination, by a third accounting firm selected by the
original two accounting firms, whose determination shall be final and binding
upon the parties. The cost of such accounting firms shall be shared equally by
the Buyer and the Seller.
ARTICLE X
COSTS
10.1. Finder's or Broker's Fees. Each of the parties
represents and warrants that, except for the Seller's engagement of Berkshire
Capital Corporation, it or she has engaged or dealt with no broker or finder in
connection with any of the transactions contemplated by this Agreement, and,
insofar as it or she knows, no broker or other person is entitled to any
commission or finder's fee in connection with any of these transactions. Each of
the parties agrees to pay all reasonable fees and other amounts which may be or
become owing to any broker or finder engaged or dealt with by such party in
connection with this Agreement or the transactions contemplated hereby;
provided, however, if not paid by the Seller prior to the Closing, the fees of
Berkshire Capital Corporation accrued on the books of the Seller as of the
Closing will become an Assumed Liability.
10.2. Expenses. Each of the parties shall pay all costs and
expenses incurred or to be incurred by him, her or it in negotiating and
preparing this Agreement and in closing and carrying out the transactions
contemplated by this Agreement; provided, however, if not paid by the Seller
prior to the Closing, all fees and expenses of Xxxxxxxx & O'Neil, LLP and
Berkshire Capital Corporation accrued on the books of the Seller as of the
Closing will become Assumed Liabilities.
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42
ARTICLE XI
FORM OF AGREEMENT
11.1. Headings. The subject headings of the Articles and
Sections of this Agreement are included for purposes of convenience only, and
shall not affect the construction or interpretation of any of its provisions.
11.2. Entire Agreement; Modification; Waiver. This Agreement
constitutes the entire agreement between the parties pertaining to the subject
matter contained in it and supersedes all prior and contemporaneous agreements,
representations, and understandings of the parties. No supplement, modification,
or amendment of this Agreement shall be binding unless executed in writing by
all the parties to be bound hereby. No waiver of any of the provisions of this
Agreement shall be deemed, or shall constitute, a waiver of any other provision,
whether or not similar, nor shall any waiver constitute a continuing waiver. No
delay or failure of any party to exercise any of its, his or her rights
hereunder shall be construed as a waiver of such right. No waiver shall be
binding unless made expressly and executed in writing by the party making the
waiver.
11.3. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
ARTICLE XII
PARTIES
12.1. Parties in Interest. Nothing in this Agreement, whether
expressed or implied, is intended to confer any rights or remedies under or by
reason of this Agreement on any persons other than the parties to it and their
respective heirs, personal representatives, successors and assigns, nor is
anything in this Agreement intended to relieve or discharge the obligation or
liability of any third persons to any party to this Agreement, nor shall any
provision give any third persons any right of subrogation or action over or
against any party to this Agreement.
12.2. Assignment. This Agreement shall be binding on and shall
inure to the benefit of the parties to it and their respective heirs, legal
representatives, successors, and permitted assigns; provided, that neither the
Seller nor Xxxxxxxxxxx shall have the right to assign any or all of its or her
rights hereunder without the prior written consent of the Buyer.
ARTICLE XIII
TERMINATION
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43
13.1. Conditions Permitting Termination. Any party may
terminate this Agreement immediately by written notice to the others, without
liability to the other parties, if (i) any bona fide legal action or proceeding
shall be pending against any party that could result in an unfavorable judgment,
decree, or order that would prevent or make unlawful the carrying out of this
Agreement; or (ii) if Closing shall not have occurred by April 30, 1997.
13.2. Defaults Permitting Termination. In addition to the
parties' respective rights not to proceed with the Closing because of failure of
any of the conditions contained herein, if the Buyer, the Seller or Xxxxxxxxxxx
materially defaults in the due and timely performance of any of its, or her
respective warranties, covenants, or agreements under this Agreement, the
non-defaulting party or parties may give notice of termination of this
Agreement, in the manner provided in Article XIV. The notice shall specify with
particularity the default or defaults on which the notice is based. Subject to
Section 13.1, the termination shall be effective ten business days after
receipt, unless the specified default or defaults have been cured on or before
such effective date for termination. Notwithstanding any such termination, the
provisions of Sections 6.1 and 9.3 will continue to apply and a party shall not
be relieved from liability for breach of its representations, warranties,
covenants, or agreements contained in this Agreement.
ARTICLE XIV
NOTICES
All notices, requests, demands, and other communications under
this Agreement shall be in writing and shall be deemed to have been duly given
on the date of service if served personally on the party to whom such notice,
request, demand or other communication is to be given, or on the date of receipt
if mailed to the party to whom such communication is to be given, by first class
mail registered or certified, postage prepaid, and properly addressed as
follows:
To the Seller and Xxxxxxxxxxx as follows:
Xx. Xxxxxxxx Xxxxxxxxxxx
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
With a copy to:
Xxxxx X. Xxxxxxx, Esq.
Xxxxxxxx & O'Neil, LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
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44
To Buyer at:
United States Trust Company of New York
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attn: Xxxxxxx Xxxxxxxx Xxxxxxx
Managing Director and General Counsel
Any party may change its address for purposes of this Article by giving the
other party written notice of the new address in the manner set forth above.
ARTICLE XV
GOVERNING LAW; VENUE
This Agreement shall be construed in accordance with, and
governed in all respects by, the laws of the State of New York, excepting its
choice of law provisions. Any litigation arising out of or relating to this
Agreement shall be conducted solely and exclusively in any federal or state
court located in the City of New York having jurisdiction over the subject
matter hereof, and to the extent permitted by law all parties hereto consent to
such jurisdiction and venue.
ARTICLE XVI
MISCELLANEOUS
16.1. Announcements. The Seller and Xxxxxxxxxxx, on the one
hand, and the Buyer, on the other, will not make any announcements to the public
concerning this Agreement or the transactions contemplated hereby without the
prior approval of the other party (except as otherwise required under applicable
law).
16.2. References. Unless otherwise specified, references to
Sections or Articles are to Sections or Articles in this Agreement.
16.3. Currency. All dollar amounts set forth herein are
expressed in terms of United States dollars.
- 36 -
45
IN WITNESS WHEREOF, the parties to this Agreement have duly
executed it as of the day and year first above written.
UNITED STATES TRUST COMPANY
OF NEW YORK
By: /s/ XXXX X. XXXXX
-----------------------------------
Its: Executive Vice President
-----------------------------
XXXXXXXX XXXXXXXXXXX, INC.
By: /s/ Xxxxxxxx Xxxxxxxxxxx
-----------------------------------
Its: President
-----------------------------
/s/ Xxxxxxxx Xxxxxxxxxxx
---------------------------------------
Xxxxxxxx Xxxxxxxxxxx
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46
Exhibit 1.4(b)
ESCROW AGREEMENT
47
Exhibit 1.4(b)
ESCROW AGREEMENT
ESCROW AGREEMENT made and entered into this ___ day of
___________, 1996, by and among Xxxxxxxx Xxxxxxxxxxx, Inc., a New York
corporation (the "Seller"), Xxxxxxxx Xxxxxxxxxxx ("Xxxxxxxxxxx"), the sole
shareholder of the Seller, United States Trust Company of New York, a banking
institution possessing banking and trust powers chartered under the laws of New
York (the "Buyer") and U.S. Trust Corporation, a New York corporation, as escrow
agent (the "Escrow Agent").
W I T N E S S E T H:
WHEREAS, pursuant to Section 1.4(b) of the Asset Acquisition
Agreement dated November 14, 1996, among the Seller, Xxxxxxxxxxx and the Buyer,
the Buyer has agreed to deliver to the Escrow Agent a stock certificate
representing the number of common shares of U.S. Trust Corporation, a New York
corporation ("U.S. Trust"), that are Escrow Shares (as defined in the Asset
Acquisition Agreement) calculated in accordance with Section 1.4(b) of the Asset
Acquisition Agreement, to be held by the Escrow Agent in accordance with the
terms of this Agreement; and
WHEREAS, the parties desire to define the manner in which the
Escrow Agent is to perform its duties;
NOW, THEREFORE, in consideration of the premises and the
covenants herein contained, the parties do hereby agree as follows:
FIRST: Capitalized terms used but not defined herein shall
have the meanings set forth in the Asset Acquisition Agreement.
48
SECOND: Concurrently with the execution of this Agreement, the
Buyer is depositing certificates representing _______ Escrow Shares.
During the term of this Agreement, the Seller shall retain all
voting and similar rights with respect to the Escrow Shares, and the Escrow
Agent promptly shall forward to the Seller (or Xxxxxxxxxxx, if Seller so
designates) all notices of meetings, proxy statements and cards and other
materials which the Escrow Agent may receive in respect of the Escrow Shares.
THIRD: The Escrow Shares shall include the Escrow Shares
initially deposited by the Buyer, together with all property into, or for, which
the Escrow Shares are converted, exchanged, reclassified or subdivided.
FOURTH:
(a) In accordance with Section 1.4(c) of the Asset Acquisition
Agreement, on the 90th day after the Closing Date, the Escrow Shares shall be
delivered by the Escrow Agent as follows:
(i) There shall be delivered to the Seller (or
Xxxxxxxxxxx, if the Seller so designates) a
percentage of the Escrow Shares (together
with all dividends, distributions and rights
earned on such Escrow Shares; collectively,
the "Distributions") equal to the quotient,
expressed as a percentage, of (A) the
Annualized Revenues represented by advisory
agreements of clients of the Seller who have
given their Consents after the Closing Date
and on or prior to 2:00 p.m. on the 90th day
after the Closing Date, divided by (B) the
Annualized Revenues represented by the
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49
advisory agreements of clients of the Seller
who had not given their Consents on or prior
to the Closing Date; and
(ii) The balance of the Escrow Shares and the
Distributions shall be delivered to U.S.
Trust.
(b) Notwithstanding any provision to the contrary contained in
this Section FOURTH, the Escrow Shares and the Distributions shall be
distributed by the Escrow Agent prior to the 90th day after the Closing Date as
follows:
(i) Following receipt by the Escrow Agent of
joint written instructions of the Seller and
the Buyer, the Escrow Agent shall release
the Escrow Shares and the Distributions to
the Seller (or Xxxxxxxxxxx, if the Seller so
designates) and/or the Buyer at such time
and in such amounts as directed by such
instructions; or
(ii) Following receipt by the Escrow Agent of
joint written instructions of the Seller and
the Buyer, the Escrow Agent shall deliver
the Escrow Shares and the Distributions at
such time and to such successor Escrow Agent
named in such instructions.
FIFTH: The duties and responsibilities of the Escrow Agent
shall be limited to those expressly set forth in this Agreement and the Escrow
Agent shall not be subject to, nor obliged to recognize, any other agreement
(other than the Asset Acquisition Agreement) between, or direction or
instructions of, or notice from any or all of the parties hereto except as
contemplated by this Agreement; provided, however, that this Agreement may be
amended at any time or times by an instrument in writing as provided in Section
EIGHTEENTH.
- 3 -
50
Upon delivery by the Escrow Agent pursuant to the terms hereof
of all the Escrow Shares and the Distributions, this Agreement shall terminate
and the Escrow Agent shall be discharged from all further obligation or
responsibility hereunder.
SIXTH: If any property subject hereto is at any time attached,
garnished or levied upon under any court order, or in the case payment,
assignment, transfer, conveyance or delivery of any such property shall be
stayed or enjoined by any court order, or in case an order, judgment or decree
shall be made or entered by any court affecting such property, or any part
thereof, then and in any of such events, the Escrow Agent is authorized, in its
reasonable discretion, to rely upon and comply (and simultaneously give written
notice to all interested parties hereto) with any such order, writ, judgment or
decree, which it reasonably believes to be binding upon it, and if the Escrow
Agent complies with any such order, writ, judgment or decree it shall not be
liable to any of the parties hereto or to any other person, firm or corporation
by reason of such compliance even though such order, writ, judgment or decree
may be subsequently reversed, modified, annulled, set aside or vacated.
SEVENTH: The Escrow Agent shall not be responsible for the
sufficiency or accuracy of the form, execution, validity or genuineness of
documents or securities now or hereafter deposited hereunder, or any endorsement
thereof, or for any lack of endorsement thereof, or for any description therein,
nor shall it be responsible or liable in any respect on account of the identity,
authority, or rights of the persons executing or delivering or purporting to
execute or deliver any such document, security or endorsement under this
Agreement.
EIGHTH: The Escrow Agent may rely and shall be protected in
acting upon any paper or other document which may be submitted to it in
connection with its duties hereunder and which is reasonably believed by it to
be genuine and to have been signed or
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51
presented by the proper party or parties and shall have no liability or
responsibility with respect to the form, execution or validity thereof.
NINTH: The Seller hereby acknowledges that the Escrow Agent is
the parent of the Buyer, and waives any objection to such relationship.
TENTH: The Escrow Agent shall not be required to institute or
defend any action or legal process involving any matter referred to herein which
in any manner affects it or its duties or liabilities hereunder unless and until
it has received full indemnity in an amount, and of such character, as it shall
in its sole discretion require, against any and all claims, liabilities,
judgments, attorneys' fees and other costs and expenses of any and every kind in
relation thereto and for the payment thereof a first lien is hereby imposed in
the Escrow Agent's favor upon the property deposited or to be deposited
hereunder or the proceeds therefrom, in priority to the rights of any other
party thereto or of any other party interested therein.
ELEVENTH: The Buyer agrees to and hereby does indemnify and
save the Escrow Agent, its officers, agents and employees, harmless from any
claims, liabilities, judgments, attorneys' fees and other costs and expenses of
any and every kind and nature which may be incurred by any of them by reason of
the Escrow Agent's acceptance of, and its performance under, this Agreement,
except claims which are based on the Escrow Agent's bad faith or gross
negligence. Seller and Xxxxxxxxxxx, jointly and severally, agree to and hereby
do indemnify and save the Escrow Agent, its officers, agents and employees,
harmless from any attorneys' fees, costs and expenses of every kind and nature
which may be incurred by them by reason of any action, claim or proceeding
commenced by Seller and/or Xxxxxxxxxxx against the Escrow Agent, its officers,
agents or employees with respect to the performance by the Escrow Agent of its
duties under this Agreement unless a decision
- 5 -
52
is rendered by a court of competent jurisdiction finding that the Escrow Agent
acted (which shall be deemed to include a failure to act) in bad faith or
grossly negligent.
TWELFTH: The Escrow Agent shall not be responsible for any act
or failure to act on its part except in the case of its own bad faith or gross
negligence.
THIRTEENTH: The Escrow Agent shall have no responsibility
whatever with respect to the recitals contained in this Agreement and shall have
no right, obligation or responsibility to vote or take any other corporate
action with respect to any securities deposited hereunder.
FOURTEENTH: Notwithstanding anything contained in this
Agreement to the contrary, in the event that the Escrow Agent acts (which shall
be deemed to include a failure to act) under this Agreement in a manner that
deprives the Seller (or Xxxxxxxxxxx, if the Seller so designates) of its rights
to receive the Escrow Shares or the Distributions as contemplated by Section
FOURTH hereof, then the Buyer shall indemnify and hold harmless the Seller (or
Xxxxxxxxxxx, if the Seller so designates) from and against any and all losses,
claims, liabilities, judgments, attorneys' fees and other costs and expenses of
any and every kind and nature arising therefrom, regardless of whether the
Escrow Agent's conduct constitutes mistake, negligence, gross negligence or
willful misconduct.
FIFTEENTH: Any notice or other communication given pursuant to
the provisions of this Agreement shall be in writing and (except as otherwise
specifically provided in this Agreement) shall be delivered personally, or shall
be mailed, postage prepaid, by registered or certified mail, return receipt
requested, and addressed to the respective parties hereto at the addresses set
forth below, or to such other addresses as to which any party hereto may give
notice to the others in accordance with the provisions of this Section
FIFTEENTH. All such notices shall be deemed given when received. Copies
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53
of all notices from one party to another under this Agreement shall be sent to
all other parties.
To the Buyer: United States Trust Company of New York
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attn: Xxxxxxx Xxxxxxxx Xxxxxxx
Managing Director and General Counsel
To Escrow Agent: U.S. Trust Corporation
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attn: Xxxxxxx X. Xxxxxxx
Managing Director and General Counsel
To the Seller or Xx. Xxxxxxxx Xxxxxxxxxxx
Xxxxxxxxxxx: 000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
With a copy to: Xxxxx X. Xxxxxxx, Esq.
Xxxxxxxx & X'Xxxx, LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
SIXTEENTH: The Buyer and the Seller jointly may, at any time
and from time to time, in their sole and absolute discretion, upon notice in
writing to the Escrow Agent, and shall, upon thirty (30) days' written request
from the Escrow Agent, designate any other person or persons to act as the
Escrow Agent under this Agreement in the place of the Escrow Agent. Upon
acceptance of such designation, by signing a copy of this Agreement and mailing
copies thereof to all the interested parties, such other person or persons shall
acquire and assume all of the rights and obligations of the Escrow Agent with
the same force and effect as if he or they had been a party to this Agreement in
the place of the Escrow Agent. Upon receipt of such notice and a copy of such
agreement and acceptance, the Escrow Agent shall deliver to such other person or
persons the Escrow
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54
Shares and the Distributions, if any. In the event the Buyer and the Seller have
not, within thirty (30) days after the making of such request by the Escrow
Agent, designated a new Escrow Agent and the parties have not entered into an
escrow agreement with such new Escrow Agent, the Escrow Agent may, in its sole
discretion, deposit the property then held by it pursuant to this Agreement with
any bank or trust company reasonably selected by it, to be held by such bank or
trust company pursuant to the provisions of this Agreement, or with any court of
competent jurisdiction in which event the Escrow Agent shall be released from
all further obligations and responsibilities hereunder.
SEVENTEENTH: This Agreement and its validity, construction and
performance shall be governed by the laws of the State of New York.
EIGHTEENTH: This Agreement may be amended by an agreement in
writing between the Escrow Agent, the Buyer, the Seller and Xxxxxxxxxxx.
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55
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement the day and year first above written.
UNITED STATES TRUST COMPANY OF NEW YORK
By:____________________________________
XXXXXXXX XXXXXXXXXXX, INC.
By:____________________________________
U.S. TRUST CORPORATION
By:____________________________________
-------------------------------------
XXXXXXXX XXXXXXXXXXX
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56
Exhibit 1.6(a)
ASSIGNMENT AND ASSUMPTION AGREEMENT
57
Exhibit 1.6(a)
ASSIGNMENT AND ASSUMPTION AGREEMENT
ASSIGNMENT AND ASSUMPTION AGREEMENT made this ____ day of
__________, 1996 between United States Trust Company of New York, a banking
institution possessing banking and trust powers chartered under the laws of New
York (the "PURCHASER"), and Xxxxxxxx Xxxxxxxxxxx, Inc., a New York corporation
(the "SELLER").
W I T N E S S E T H:
WHEREAS, pursuant to the Asset Acquisition Agreement dated
November 14, 1996 (the "ASSET ACQUISITION AGREEMENT"), among the Purchaser, the
Seller and Xxxxxxxx Xxxxxxxxxxx, the sole shareholder of the Seller, the Seller
agreed to transfer, sell, convey, assign and deliver to the Purchaser, and the
Purchaser agreed to acquire and accept as of the Closing Date, the Transferred
Assets; and
WHEREAS, the Asset Acquisition Agreement provides for the
Seller's assignment of certain contracts, agreements and commitments to the
Purchaser; and
WHEREAS, the Asset Acquisition Agreement provides for the
Purchaser's assumption of the Assumed Liabilities.
NOW THEREFORE, in consideration of the premises and in
accordance with the provisions of the Asset Acquisition Agreement, and for good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto hereby agree as follows:
Section 1. Definitions
1.1. Unless otherwise herein defined all terms used herein
shall have the respective meanings ascribed to them in the Asset Acquisition
Agreement.
1.2. Words importing singular number shall include the plural
number and vice versa. The words "herein," "herewith," "hereby," "hereof" and
words of similar import shall refer to this Agreement.
Section 2. Assignment and Assumption of Contracts and
Commitments
2.1. The Seller hereby sells, assigns, transfers, conveys and
sets over to the Purchaser, all of the Seller's right, title and interest in and
to all contracts, agreements, commitments, grants, arrangements and
undertakings, whether oral or written, included in
58
the Transferred Assets (the "ASSIGNED CONTRACTS"). Such sale, assignment,
transfer, conveyance and set over shall be effective as of the date hereof.
2.2. The Purchaser hereby absolutely and irrevocably accepts
and hereby agrees to assume, be solely and exclusively liable with respect to,
and pay, perform, discharge and satisfy, when due, all Assumed Liabilities,
subject to the terms and conditions of the Asset Acquisition Agreement. Such
acceptance, assumption and covenant shall be effective as of the date hereof.
Section 3. Separate Agreement
Notwithstanding any other provisions of this agreement to the
contrary, nothing contained herein shall in any way supersede, modify, replace,
amend, change, rescind, waive, exceed, expand, enlarge or in any way affect the
provisions, including the warranties, covenants, agreements, conditions,
representations or, in general any of the rights and remedies, and any of the
obligations and indemnifications of the Seller or the Buyer set forth in the
Asset Acquisition Agreement nor shall this agreement expand or enlarge any
remedies under the Asset Acquisition Agreement including without limitation any
limits on indemnification specified therein. This agreement is intended only to
effect the assignment of certain contracts and commitments and the assumption of
certain liabilities pursuant to the Asset Acquisition Agreement and shall be
governed entirely in accordance with the terms and conditions of the Asset
Acquisition Agreement.
Section 4. Non-Merger; Miscellaneous
4.1. The agreements, obligations, assumptions and covenants of
the Purchaser under the Asset Acquisition Agreement are not merged into this
agreement and shall, to the extent provided in the Asset Acquisition Agreement,
survive the execution and delivery of this agreement, and the performance of the
consummation of all transactions provided for in the Asset Acquisition
Agreement.
4.2. This Assignment and Assumption Agreement shall be binding
upon and enforceable against the Purchaser, its assigns and successors.
4.3. This Assignment and Assumption Agreement shall be
construed in accordance with and governed under the laws of the State of New
York.
4.4. This Assignment and Assumption Agreement may be executed
in any number of counterparts, each of which shall be deemed to be an original
and all of which shall constitute one and the same document.
2
59
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on this ___ day of ____________, 1996.
UNITED STATES TRUST COMPANY
OF NEW YORK
By:
--------------------------------
Name:
Title:
XXXXXXXX XXXXXXXXXXX, INC.
By:
--------------------------------
Name:
Title:
3
60
Exhibit 1.6(b)
XXXX OF SALE
61
Exhibit 1.6(b)
XXXX OF SALE
KNOW ALL PEOPLE BY THESE PRESENTS that Xxxxxxxx Xxxxxxxxxxx,
Inc., a New York corporation ("SELLER"), in consideration of the acquisition
price set forth in Section 1.4(a) of the Asset Acquisition Agreement, dated
November 14, 0000 (xxx "XXXXX XXXXXXXXXXX XXXXXXXXX"), xxxxx Xxxxxx Xxxxxx Trust
Company of New York, a banking institution possessing banking and trust powers
chartered under the laws of New York ("PURCHASER"), the Seller and Xxxxxxxx
Xxxxxxxxxxx, the sole shareholder of the Seller, the receipt of which is hereby
acknowledged by Seller, does hereby, effective from and after the Closing (such
term and, except as defined herein, all other capitalized terms used herein
having the same meanings ascribed to them in the Asset Acquisition Agreement),
sell, transfer, assign, set over, convey and deliver to the Purchaser, its
successors and assigns in accordance with the terms and provisions of the Asset
Acquisition Agreement the following:
All of the right, title and interest of Seller in and to the
Transferred Assets;
TO HAVE AND TO HOLD unto the Purchaser, its successors and
assigns, FOREVER.
Notwithstanding any other provisions of this Xxxx of Sale to
the contrary, nothing contained in this Xxxx of Sale shall in any way supersede,
modify, replace, amend, change, rescind, waive, exceed, expand, enlarge or in
any way affect the provisions, including the warranties, covenants, agreements,
conditions, representations or, in general, any of the rights and remedies, and
any of the obligations and indemnifications of Seller or Purchaser set forth in
the Asset Acquisition Agreement nor shall this Xxxx of Sale expand or enlarge
any remedies under the Asset Acquisition Agreement including without limitation
any limits on indemnification specified therein. This Xxxx of Sale is intended
only to effect the transfer of certain property to be transferred pursuant to
the Asset Acquisition Agreement and shall be governed entirely in accordance
with the terms and conditions of the Asset Acquisition Agreement.
IN WITNESS WHEREOF, the Seller has executed this Xxxx of Sale
this _____ day of ____________, 1996.
XXXXXXXX XXXXXXXXXXX, INC.
By:
--------------------------------
Name: Xxxxxxxx Xxxxxxxxxxx
Title: President
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EXHIBIT 7.5
OPINION XXXXXXXX & X'XXXX, LLP
63
EXHIBIT 7.5
[LETTERHEAD OF XXXXXXXX & O'NEIL, LLP]
____________, 0000
Xxxxxx Xxxxxx Trust Company of New York
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000-0000
Gentlemen:
We have acted as special counsel to Xxxxxxxx Xxxxxxxxxxx,
Inc., a New York corporation (the "Seller"), and Xxxxxxxx Xxxxxxxxxxx
("Xxxxxxxxxxx"), the sole shareholder of the Seller, in connection with the
execution and delivery of the Asset Acquisition Agreement (the "Asset
Acquisition Agreement") dated November 14, 1996, among United States Trust
Company of New York, a banking institution possessing banking and trust powers
chartered under the laws of New York (the "Buyer"), the Seller and Xxxxxxxxxxx.
All capitalized terms used but not otherwise defined herein
shall have the respective meanings ascribed to them in the Asset Acquisition
Agreement. This opinion is delivered to you pursuant to Section 7.5 of the Asset
Acquisition Agreement.
In connection with this opinion, we have examined originals,
counterparts or copies of the following documents:
(a) the Asset Acquisition Agreement;
(b) the Xxxx of Sale;
(c) the Assignment and Assumption Agreement;
(d) the Escrow Agreement;
(e) the Employment Agreement dated the date hereof,
between the Buyer and Xxxxxxxxxxx (the "Employment
Agreement");
(f) the Agreement to Deliver and Register Shares dated
the date hereof, among U.S. Trust Corporation, a New
York corporation ("U.S. Trust"),
64
the Seller and Xxxxxxxxxxx (the "Agreement to Deliver
and Register Shares"); and
(g) the letter agreement dated November 14, 1996, between
the Buyer and Xxxxxxxxxxx with respect to additional
payments to Xxxxxxxxxxx from life and disability
policies in the event of her death or disability.
The documents enumerated in Paragraphs (a) through (g) above
are hereinafter referred to collectively as the "Acquisition Documents."
In connection with the opinions expressed herein, we also have
examined originals or copies, certified or otherwise identified to our
satisfaction, of such corporate records of the Seller, certificates of public
officials and officers and other representatives of the Seller and Xxxxxxxxxxx,
and such other documents, agreements and instruments, and have made such other
investigations, as we have deemed necessary or appropriate.
As to various questions of fact material to this opinion, we
have relied upon, without any independent investigation or verification of any
kind, the representations and warranties made by the Seller and Xxxxxxxxxxx in
the Acquisition Documents and the other documents executed and delivered in
connection therewith and upon certificates and other documents of officers or
representatives of the Seller and Xxxxxxxxxxx and of public officials and have
made such other inquiries and investigations as we have deemed necessary or
appropriate. In our examination of the documents referred to above, we have
assumed (i) the genuineness of all signatures of, and the incumbency, authority
and legal right and power under all applicable laws, statutes, rules and
regulations of, the officers and other persons signing the Acquisition Documents
and the other documents executed and delivered in connection therewith on behalf
of the parties thereto other than the Seller and Xxxxxxxxxxx, (ii) the
authenticity and completeness of all documents submitted to us as original or
certified documents, (iii) the conformity to authentic original documents of all
documents submitted to us as certified, conformed or photostatic copies and (iv)
that the certificates of public officials dated earlier than the date of this
opinion remain accurate from such earlier date through and including the date of
this opinion.
The opinions set forth below that are rendered "to the best of
our knowledge" or with similar qualification have been rendered based upon the
present, actual knowledge of the lawyers currently in our employ who have
devoted substantive attention to the legal affairs of the Seller and Xxxxxxxxxxx
within the past 12 months.
We have investigated such questions of law for the purpose of
rendering this opinion as we have deemed necessary. We do not purport to be
experts in, or to express any opinion herein concerning, the laws, statutes,
rules or regulations of any jurisdiction other than the State of New York and
the United States of America. We do not opine on, and we
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65
assume no responsibility as to, the applicability to or the effect on any of the
matters covered herein of, the laws of any other jurisdiction.
To the extent that the obligations of each of the Seller and
Xxxxxxxxxxx may be dependent upon such matters, we have assumed, for purposes of
this opinion: (i) that U.S. Trust is a corporation duly organized, validly
existing and in good standing under the laws of New York; (ii) that the Buyer is
a banking institution possessing banking and trust powers, duly organized,
validly existing and in good standing under the laws of New York; (iii) that the
Buyer has the requisite banking and trust power and authority, and U.S. Trust
has the requisite corporate power and authority, to execute, deliver and perform
their respective obligations under each Acquisition Document to which they are a
party and each of the other documents executed by them in connection therewith;
(iii) that each Acquisition Document has been duly authorized, executed and
delivered by the Buyer or U.S. Trust, as applicable; and (iv) that each
Acquisition Document constitutes the legal, valid and binding obligation of the
Buyer or U.S. Trust, as applicable, enforceable against it in accordance with
its terms.
The opinions set forth below are subject to the following
additional limitations, qualifications and exceptions:
A. the legality, validity, binding effect and enforceability
of the Acquisition Documents may be limited by applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium, marshalling or
other similar laws now or hereafter in effect affecting creditors' rights and
remedies generally;
B. the legality, validity, binding effect and enforceability
of the Acquisition Documents may be subject to (i) general principles of equity
(regardless of whether considered in a proceeding in equity or at law) and
(ii) the discretion of the court before which any proceeding may be brought;
C. no opinion is expressed with respect to the enforceability
of provisions which purport to establish consent to the jurisdiction of any
court;
D. no opinion is expressed with respect to the enforceability
of provisions regarding indemnification against liabilities where such
indemnification is contrary to public policy; and
E. no opinion is expressed with respect to any covenant not to
compete or solicit contained in the Asset Acquisition Agreement or the
Employment Agreement.
The opinions expressed below with respect to compliance with
certain laws, statutes, rules and regulations are based upon a review of those
statutes, laws, rules and
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66
regulations that, in our experience, are normally applicable to transactions of
the type contemplated by the Acquisition Documents.
Based upon and subject to the foregoing, we are of the opinion
that:
1. The Seller is a corporation validly existing under the laws
of the State of New York and has the corporate power and authority to own, lease
and operate its assets, properties and business and to carry on its business as
now conducted.
2. The Seller has all requisite corporate power and authority
to execute, deliver and perform each of the Acquisition Documents to which it is
a party, to consummate the transactions contemplated thereby and to perform
fully its obligations thereunder. The execution, delivery and performance by the
Seller of each of the Acquisition Documents to which it is a party have been
duly authorized by all necessary corporate action on the part of the Seller.
3. Each of the Acquisition Documents to which the Seller is a
party have been duly executed and delivered by the Seller and constitutes the
legal, valid and binding obligation of the Seller enforceable against it in
accordance with its terms.
4. Xxxxxxxxxxx has full legal capacity to execute, deliver and
perform each of the Acquisition Documents to which she is a party, to consummate
the transactions contemplated thereby and to perform fully her obligations
thereunder. Each of the Acquisition Documents to which Xxxxxxxxxxx is a party
has been duly executed and delivered by Xxxxxxxxxxx and is a legal, valid and
binding agreement of Xxxxxxxxxxx enforceable against her in accordance with its
terms.
5. Except as set forth in the DL, to the best of our
knowledge, no approval or consent of or any filing with or notice to, any
foreign, federal, state, county, local or other governmental or regulatory body,
and no approval or consent of, or any filing with or notice to any other person
(other than those contemplated by the Acquisition Documents, all of which have
been received or made, except as otherwise set forth in the DL) is required in
connection with the execution and delivery by each of the Seller and Xxxxxxxxxxx
of the Acquisition Documents to which it or she is a party, and the consummation
and performance by the Seller or Xxxxxxxxxxx, as applicable, of the transactions
contemplated thereby.
6. Neither the execution and delivery by each of the Seller
and Xxxxxxxxxxx of the Acquisition Documents to which it or she is a party, the
performance by each of the Seller or Xxxxxxxxxxx of its or her respective
obligations thereunder nor the consummation of the transactions contemplated
thereby will violate, conflict with or result in a breach of or require consent
(other than those that have been obtained or given) under or constitute (or with
notice or lapse of time or both would constitute) a default under (i) any
provision of the
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67
Seller's certificate of incorporation or by-laws, as amended; (ii) any provision
of any applicable law, as in effect and binding upon the Seller or Xxxxxxxxxxx;
(iii) to the best of our knowledge, any term of any material agreement or
instrument to which the Seller or Xxxxxxxxxxx is a party or by which it or her
properties or assets are bound, which violation or conflict would have a
material adverse effect on the business, results of operations, property or
financial condition of the Seller; or (iv) to the best of our knowledge, any
order, judgment, injunction, writ, award or decree of any court, arbitrator or
governmental or regulatory authority or agency binding upon either of the Seller
or Xxxxxxxxxxx or their respective properties or assets.
7. To the best of our knowledge, there is no pending or
threatened suit, action or litigation, or administrative, arbitration or other
proceeding or governmental inquiry or investigation, questioning the validity of
any of the Acquisition Documents or any of the transactions contemplated
thereby.
The opinions set forth herein are as of the date of this
letter and we do not render any opinion as to the effect of any matter which may
occur or be effective subsequent to the date hereof.
This opinion is rendered only to you, is solely for your
benefit in connection with the transactions contemplated by the Asset
Acquisition Agreement and is not to be quoted, circulated, referred or delivered
to, or relied upon or otherwise used by, any other person or entity whatsoever
for any purpose without our prior express written consent.
Very truly yours,
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EXHIBIT 7.8
EMPLOYMENT AGREEMENT
00
XXXXXXXXXX XXXXXXXXX
Xxxxxxx
XXXXXX XXXXXX TRUST COMPANY OF NEW YORK
and
XXXXXXXX XXXXXXXXXXX
Dated ________________, 1996
70
TABLE OF CONTENTS
Page
----
1. Employment and Term........................................................................... 1
1.1. Employment........................................................................... 1
1.2. Term................................................................................. 2
1.3. Key Man Insurance; Place of Employment............................................... 2
2. Salary........................................................................................ 2
3. Incentive Compensation........................................................................ 2
3.1. Incentive Compensation Definitions................................................... 2
3.2. Incentive Compensation; Calculation.................................................. 3
3.3. Limitation on Incentive Compensation................................................. 4
4. Other Benefits................................................................................ 4
4.1. Health Insurance and Other Benefits.................................................. 4
4.2. Incentive Compensation for New Business.............................................. 4
4.3. Reasonable Business Expenses......................................................... 6
4.4. Vacation............................................................................. 6
4.5. Payments to Representatives.......................................................... 6
4.6. Changes To Fees...................................................................... 6
5. Termination of Employment..................................................................... 7
5.1. Termination with Cause............................................................... 7
5.2. Death or Permanent Disability of Employee............................................ 7
5.3. Termination Without Cause Or Voluntary Resignation................................... 8
5.3A. Termination for Good Reason................................................. 8
5.4. Compensation Upon Termination for Cause.............................................. 8
5.5. Compensation Upon Death or Disability................................................ 8
5.6. Compensation Upon Voluntary Resignation.............................................. 9
5.7. Compensation for Termination without Cause........................................... 9
6. Confidential Information...................................................................... 9
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Page
----
7. Agreement Not to Solicit or Compete........................................................... 10
7.1. Nonsolicitation and Noncompetition................................................... 10
7.2. Exception to Nonsolicitation and Noncompetition...................................... 11
7.3. Severability......................................................................... 11
7.4. Injunctive Relief.................................................................... 11
8. Entire Agreement.............................................................................. 11
9. Notices....................................................................................... 11
10. Assignment.................................................................................... 12
11. Indemnification and Directors and Officers Liability Insurance................................ 12
12. Amendment; Waiver............................................................................. 12
13. Construction.................................................................................. 13
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EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into
as of ____________, 1996 by and between United States Trust Company of New York,
a banking institution possessing banking and trust powers chartered under the
laws of New York (the "Company") and Xxxxxxxx Xxxxxxxxxxx (the "Employee").
RECITALS
A. The Company acquired substantially all of the assets,
subject to substantially all of the liabilities of Xxxxxxxx Xxxxxxxxxxx, Inc.,
the former employer of the Employee, pursuant to a certain Asset Acquisition
Agreement dated November 14, 1996 among the Company, Xxxxxxxx Xxxxxxxxxxx, Inc.
and Employee (the "Asset Acquisition Agreement").
B. As part of the transaction referred to above (the "Asset
Acquisition"), Employee agrees to and is entering into this Employment Agreement
with the Company.
C. Capitalized terms used but not otherwise defined herein
shall have the same meaning as set forth in the Asset Acquisition Agreement.
Accordingly, the parties agree as follows:
1. Employment and Term.
1.1. Employment. Subject to the terms and conditions
of this Agreement, the Company hereby employs Employee during the term of
employment set forth in Section 1.2. Employee shall be responsible for
relationship management with Current Client Accounts and Extended Family Client
Accounts (both as defined below) and shall have such powers and perform such
additional duties as may be assigned or delegated to her from time to time by
the executive officers of the Company consistent with such responsibilities.
Employee hereby accepts such employment and agrees to perform all such services
faithfully and diligently, and to discharge the responsibilities thereof to the
best of her ability. Employee shall devote all of her business time and
attention and energies to the duties of her employment; provided, however, that
nothing contained in this Agreement shall prohibit Employee from (i) making
passive investments or attending board meetings of other entities of which
Employee is a director, provided such directorships were entered into prior to
the date of this Agreement or were entered into with the written approval of the
Company or (ii) managing assets of members of the immediate family of Employee
or Employee's husband for no fee or other compensation, provided in either
event, such activities do not impair Employee's ability to perform her duties
hereunder.
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1.2. Term. The term of employment of Employee under
this Agreement shall begin on the date of this Agreement and end on
_____________, 1999, unless otherwise terminated in accordance with the
provisions set forth in Section 5 below (the "Employment Period").
1.3. Key Man Insurance; Place of Employment. Employee
agrees to cooperate with the Company in applying for key man insurance with
respect to Employee, if the Company in its sole discretion determines that such
insurance is advisable. Except when engaged in travel on behalf of the Company,
Employee's place of employment shall be within a twenty-five mile radius of New
York, NY.
2. Salary. In consideration for the services to be rendered
hereunder, and subject to the terms and conditions of this Agreement, the
Company hereby agrees to pay Employee, in accordance with its normal practices,
an annual base salary of $150,000 for each year terminating on the anniversary
date hereof (the "Annual Base Salary").
3. Incentive Compensation.
3.1. Incentive Compensation Definitions.
(a) "Annual Advisory Fee" shall mean, with respect to
each advisory client account, the annual advisory fee for such account
(expressed as a percentage of assets under management in such account);
provided, however, that Annual Advisory Fee shall mean with respect to each
Current Client Account (as defined below) and Extended Family Client Account (as
defined below), the annual advisory fee in effect as of the Incentive
Compensation Calculation Date (as defined below);
(b) "Annualized Fee Revenues" shall mean the amount
equal to (i) the assets under management, valued as of the Incentive
Compensation Calculation Date, of each Current Client Account and each Extended
Family Client Account, multiplied by (ii) the Annual Advisory Fee applicable to
each such account.
(c) "Current Client Account" shall mean each advisory
client account of the Seller (as defined in the Asset Acquisition Agreement) as
of the Closing Date (as defined in the Asset Acquisition Agreement) that (i) on
or before the 90th day after the Closing Date has affirmatively consented in
writing to the assignment of its advisory contract(s) to the Company in
connection with the Asset Acquisition and (ii) is an advisory client account of
the Company as of the Incentive Compensation Calculation Date.
(d) "Extended Family Client Account" shall mean the
advisory client account of any (i) spouse, parent, child, cousin or sibling, by
blood or marriage, of a client who maintains a Current Client Account, (ii)
trust for the benefit of, or of which a trustee is,
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any person referred to in clause (i) or any client who maintains a Current
Client Account, or the estate of any person referred to in clause (i) or the
estate of any client who maintains a Current Client Account, (iii) XXX,
foundation, limited liability company, corporation, partnership or other entity
controlled by any client who maintains a Current Client Account or any person,
trust or estate listed in clause (i) or (ii), or (iv) any advisory client
account of the Company for which the decision to enter into an advisory
agreement with the Company is made by Xxxxxx Xxxxx, Xxxxxx Xxxxxxx, Xxxxx
Xxxxxxxxx or Xxxxxxx xxXxxxxxx that, in the case of clauses (i), (ii), (iii) and
(iv) becomes an advisory client account of the Company after the Closing Date
and is an advisory client account of the Company as of the Incentive
Compensation Calculation Date. As used in this definition of Extended Family
Client Account, the term Current Client Account shall exclude clause (ii) of the
definition thereof and "control" shall mean the ability to direct the management
and affairs of an entity or the ownership of 50% or more of an entity's equity
interests.
(e) "Incentive Compensation Calculation Date" shall
mean the earliest to occur of (i) the third anniversary of the Closing Date;
(ii) the last business day of the month preceding the date of termination of the
Employee's employment pursuant to Section 5.1; (iii) the last business day of
the month preceding the termination of the Employee's employment pursuant to
Section 5.2 if such employment is terminated by reason of the death of Employee;
(iv) the last business day of the 18th month after the Closing Date if the
Employee's employment is terminated pursuant to Section 5.2 by reason of the
Employee's permanent disability within the first 18 months after the Closing
Date; (v) the last business day of the month preceding the date of termination
of the Employee's employment pursuant to Section 5.2 if such employment is
terminated by reason of the permanent disability of the Employee more than 18
months after the Closing Date; (vi) the last business day of the month preceding
the date of termination of the Employee's employment pursuant to Section 5.3
without cause; and (vii) the last business day of the month preceding the date
of termination of the Employee's employment pursuant to Section 5.3A.
(f) "Incentive Compensation Payment Date" shall mean
a date which is 60 days after the Incentive Compensation Calculation Date.
3.2. Incentive Compensation; Calculation. In
consideration of the Employee's execution, delivery and performance of this
Agreement, on the Incentive Compensation Payment Date (a) if the Incentive
Compensation Calculation Date occurs on a date referred to in clause (i), (iv)
(v), (vi) or (vii) of Section 3.1(e), the Company shall pay to the Employee an
amount in cash equal to (i) the Annualized Fee Revenues multiplied by 2.75, less
(ii) the Asset Acquisition Consideration (as defined in the Asset Acquisition
Agreement) valued as of the Measurement Date (as defined in the Asset
Acquisition Agreement; such amount being hereinafter referred to as the "Full
Term Incentive Compensation"); and (b) if the Incentive Compensation Calculation
Date occurs on a date referred to in clause (ii) or (iii) of Section 3.1(e), the
Company shall pay to the Employee or the Employee's estate, as
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applicable, an amount in cash equal to (i) the Full Term Incentive Compensation,
multiplied by (ii) a fraction, the numerator of which is the number of days in
the period commencing on the Closing Date and ending on the date of termination
of the Employee's employment with the Company and the denominator of which is
1095.
3.3. Limitation on Incentive Compensation.
(a) There is no upward limitation on Incentive
Compensation.
(b) Notwithstanding any other section of this
Agreement, no Incentive Compensation shall be paid under this Section 3 in the
event that the Annualized Fee Revenues as of the Incentive Compensation
Calculation Date are not equal to 75% or more of the Annualized Revenues (as
defined in the Asset Acquisition Agreement).
4. Other Benefits.
4.1. Health Insurance and Other Benefits. During the
Employment Period, Employee shall be allowed to participate in any medical,
dental and life insurance plans or policies and any pension and retirement plans
and any disability plans that are available from time to time to other similarly
situated employees of the Company. A description of the benefits currently
available to similarly situated employees of the Company is set forth in the
1996 Benefits Portfolio of U.S. Trust Corporation, a New York corporation ("U.S.
Trust"), the beneficial and record owner of all of the Company's Common Stock,
which is incorporated herein by reference.
4.2. Incentive Compensation for New Business. The
Employee shall receive incentives for new business that is not either a Current
Client Account or an Extended Family Client Account in accordance with the
following schedule.
(a) For each new asset management account with assets
(after giving effect to the initial funding of such account) of between $250,000
and $2,000,000, an incentive equal to 25% of the first year's anticipated
annualized revenue, payable on or before the first "New Business Incentive
Payment Date" (as hereinafter defined) which occurs after the initial funding of
such account;
(b) For each new asset management account with assets
(after giving effect to the initial funding of such account) of between
$2,000,000 and $5,000,000, an incentive equal to 50% of the first year's
anticipated annualized revenue, payable on or before the first New Business
Incentive Payment Date which occurs after the initial funding of such account;
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(c) For new asset management accounts with assets of
over $5,000,000, an incentive equal to 100% of the first year's revenue, payable
50% of anticipated annualized revenue on or before the first New Business
Incentive Payment Date which occurs after the initial funding of the account and
the balance of actual first year's revenue payable on or before the first New
Business Incentive Payment Date which occurs after the first anniversary of the
initial funding of the account, provided that the account remains open until the
first anniversary of the opening of the account with assets greater than
$5,000,000 on the first anniversary.
(d) For each addition to an account for which an
incentive payment has been made or is payable under Section 4.2(a), (b) or (c),
the Employee shall receive an additional incentive payment equal to (i) for an
addition made to an account described in Section 4.2(a), 25% of the anticipated
annualized revenue attributable to such addition for the twelve months after
such addition is made (the "Additional Payment Calculation Period"), payable on
or before the first New Business Incentive Payment Date which occurs after the
addition is made; (ii) for an addition made to an account described in Section
4.2(b), 50% of the anticipated annualized revenue attributable to such addition
for the Additional Payment Calculation Period, payable on or before the first
New Business Incentive Payment Date which occurs after the addition is made; and
(iii) for an addition made to an account described in Section 4.2(c), 100% of
the revenue attributable to such addition for the Additional Payment Calculation
Period, payable 50% of the anticipated annualized revenue attributable to such
addition on or before the first New Business Incentive Payment Date which occurs
after such addition is made, and the balance of the actual revenue attributable
to such addition for the Additional Payment Calculation Period payable on or
before the first New Business Incentive Payment Date which occurs after the
first anniversary of such addition, provided that the account remains open
throughout the Additional Payment Calculation Period with assets greater than
$5,000,000 at the end of the Additional Payment Calculation Period.
Notwithstanding anything contained in this Section 4.2 to the contrary, the
Company shall not be obligated to make any incentive payment of less than
twenty-five ($25) dollars.
(e) In the event the Employee receives an incentive
payment under Section 4.2(a), (b) or (c) with respect to a new asset management
account which subsequently is closed within the first twelve months after it was
opened, then, upon notice thereof by the Company to the Employee, the Company
may charge against future incentive payments otherwise payable under this
Section 4 the full amount of the incentive payment previously paid to the
Employee with respect to such closed account.
(f) The Employee will receive an incentive for all
other new business she brings in, in accordance with the Company's annual sales
incentive plan.
(g) Except as set forth above, all payments will be
made in accordance with the Company's normal practices and document
requirements.
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For purposes of this Section 4.2: (i) new asset management
accounts initially funded within 60 days of one another with the same person or
persons either directing the decision to open such accounts or having a
beneficial interest in such accounts shall be considered a single new asset
management account with total assets at inception equal to the sum of the total
assets at inception of all such accounts, (ii) anticipated annualized revenue
shall equal the product of (A) assets under management for each new asset
management account and (B) the annual advisory fee for such account (expressed
as a percentage of assets under management in such account) at inception, or, in
the case of additions under Section 4.2(d), at the date of the applicable
addition, and (iii) "New Business Incentive Payment Date" shall mean a date
which is 45 days after the three month period ended March 31, June 30, September
30 and December 31, as the case may be, in which the initial funding of an
account (in the case of payments under Sections 4.2(a) and (b) and the first
payment under Section 4.2(c)), the addition to an account (in the case of
Section 4.2(d)) and the first anniversary of the initial funding or addition to
an account (in the case of the second payment under Section 4.2(c) or the
payment under Section 4.2(d)(iii)), as applicable, occurs; provided, however, if
the initial funding of an account, the addition to an account, the first
anniversary of the funding of an account or the addition to an account, as
applicable, occurs within the last five days of a three month period ended March
31, June 30, September 30 or December 31, as the case may be, then the New
Business Incentive Payment Date shall be deferred until 45 days after the end of
the next three month period. Employee shall promptly notify the Comptroller's
Office of the Company upon becoming aware of the opening of any new asset
management account with respect to which clause (i) of this Section 4.2 is
applicable.
4.3. Reasonable Business Expenses. During the
Employment Period, Employee shall be reimbursed for ordinary and reasonable
business and entertainment expenses in connection with the performance of her
duties hereunder; provided, that Employee shall be required to present receipts
in accordance with the Company's Travel and Entertainment policy as in force
from time to time in order to obtain reimbursement for such expense.
4.4. Vacation. Employee shall be entitled to annual
vacation (without deduction of salary or other compensation) in accordance with
the Company's vacation policy for executives similarly situated in effect from
time to time, but in no event less than four (4) weeks, such vacation to be
taken at such time or times during such year as may reasonably be mutually
agreed upon between the Employee and the Company.
4.5. Payments to Representatives. In the event of
Employee's death or other inability to receive payments under this Agreement,
payments shall be made to Employee's estate, heirs or other representative as
may be legally appropriate.
4.6. Changes To Fees. The Employee shall be consulted
before the fees of any Current Client are changed during the term of this
Agreement. The Employee's
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approval shall not be necessary prior to the Company's making any such change;
provided, however, that no change to the fees of any Current Client shall be
made without the consent of Employee unless (i) the client has initiated the
discussions with respect to changes in the fees to be charged to it and (ii) the
Company believes, in good faith, that without such change in the fees the
Current Client would withdraw all or substantially all of its assets under
management by the Company.
5. Termination of Employment.
5.1. Termination with Cause. This employment contract
may be terminated at any time by the Company with cause, by written notice to
the Employee specifying in reasonable detail the reasons therefor. The term
"cause" shall include any of the following events:
(a) misappropriation by Employee of funds or property
of the Company or any affiliate of the Company; intentional dishonesty;
disloyalty; intentional material breach of any provision of Section 6 or Section
7; any attempt by Employee to secure any personal profit related to the business
of the Company or any affiliate of the Company and not fairly disclosed to and
approved in writing by the Board of Directors of the Company ("Board of
Directors"); Employee's actions bringing public discredit on the Company; or a
felony conviction or plea of nolo contendere of Employee or conviction or plea
of nolo contendere of an offense involving moral turpitude. Termination for any
of the reasons listed above shall not be subject to any cure provisions, and
(b) Employee's extended absence from duty (other than
on account of illness, medical condition, or permitted vacation); refusal to
carry out any direction of the Company's officers with respect to the duties to
be performed by Employee hereunder, provided that such direction is consistent
with the description of the Employee's duties set forth in Section 1.1 hereof;
or any unintentional material breach by Employee of any of her duties or
obligations under any section of this Agreement other than Section 6 or Section
7 which material breach is not specified in Section 5.1(a); provided, however
that for the first instance of any act contained in this Section 5.1(b),
Employee shall be given written notice by the Company and a 15 day period to
cure, and if Employee cures the action to the reasonable satisfaction of the
Company within such time period, the action contained in the notice shall not
constitute "cause" hereunder. Notwithstanding the foregoing, nothing contained
herein shall require the Company to give more than one notice and opportunity to
cure under this Section 5.1(b).
5.2. Death or Permanent Disability of Employee.
Employee's employment hereunder shall terminate upon her death. In addition, the
Company shall have the right to terminate Employee's employment hereunder upon
15 days' written notice if and when Employee becomes permanently disabled within
the meaning of any permanent
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79
disability insurance policy which may be maintained by the Company for the
benefit of Employee and under which the Employee is entitled to benefits.
5.3. Termination Without Cause Or Voluntary
Resignation. The Company, by written notice to Employee, at any time after
authorization by an executive officer of the Company, shall also have the right
to terminate Employee's employment without cause for any reason, subject to
Section 5.7 hereof. The Company agrees that the Employee has the right to resign
voluntarily at any time and that such resignation shall not constitute a breach
of this Agreement.
5.3A. Termination for Good Reason. The Employee may
terminate her employment for "good reason" under this Agreement and such
termination shall not constitute a breach of this Agreement provided that (i)
the Employee has given the Company thirty (30) days' prior written notice of
termination, stating the action or actions constituting "good reason", and (ii)
the Company has not remedied all such actions within such thirty (30) day
period. For purposes of this Agreement "good reason" shall mean (i) a breach by
the Company of the last sentence of Section 1.3, Section 3 or Section 4.6 of
this Agreement or (ii) the assignment or delegation to Employee of duties which
are inconsistent with the responsibilities and duties of the Employee described
in Section 1.1 of this Agreement or (iii) the elimination of any of Employee's
duties or responsibilities, without her consent, which materially impair her
ability to maintain the relationship between the Company and any Current Client
Account or Extended Family Client Account.
5.4. Compensation Upon Termination for Cause. In the
event of termination of Employee's employment for cause as described in Section
5.1, the Company shall pay the Employee (i) within 15 days after such
termination, the unpaid salary and vacation earned by her before the date of
termination as provided for in this Agreement, computed pro rata up to and
including such date of termination; (ii) within 60 days after such termination,
amounts payable pursuant to Section 4.2; and (iii) 25% of the Employee's portion
of the Incentive Compensation calculated and paid in accordance with Section 3
above, in lieu of any and all other compensation, benefits and claims of any
kind, excepting only such additional amounts as may be provided for under the
express terms of any applicable benefit plans or as may be required by law to be
paid.
5.5. Compensation Upon Death or Disability. In the
event of termination of Employee's employment pursuant to Section 5.2,
Employee's salary set forth in Section 2 above shall cease as of the date of
termination, but the Company shall pay to Employee or Employee's estate, as
applicable (i) any Incentive Compensation calculated and paid in accordance with
Section 3 above, (ii) within 15 days after such death or disability, salary and
vacation earned by Employee up to and including the date of termination; (iii)
within 60 days of such death or disability, amounts payable under Section 4.2
and (iv) within 60 days of such death or disability, such additional amounts as
may be provided for under the
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80
express terms of any applicable benefit plans or as may be required by law to be
paid, such payments to be in lieu of any and all compensation benefits and
claims of any kind, excepting only such additional amounts as may be provided
for under any applicable benefit plans or may be required by law to be paid.
5.6. Compensation Upon Voluntary Resignation. In the
event Employee voluntarily resigns from employment with the Company, the Company
shall pay to Employee, (i) within 15 days of such resignation, all unpaid salary
and vacation earned by Employee up to and including the date of resignation,
(ii) within 60 days of such resignation, amounts payable under Section 4.2 and
(iii) within 60 days of such resignation, such additional amounts as may be
provided for under the express terms of any applicable benefit plans or as may
be required by law to be paid, such payments to be in lieu of any and all
compensation benefits and claims of any kind, excepting only such additional
amounts as may be provided for under any applicable benefit plans or may be
required by law to be paid. Notwithstanding any other section of this Agreement,
in the event of voluntary resignation, the Employee shall forfeit all the
Incentive Compensation under Section 3 hereof. The amounts set forth above shall
be in lieu of any and all other compensation, benefits and claims of any kind,
excepting only such additional amounts as may be provided for under any
applicable benefit plans or as may be required by law to be paid.
5.7. Compensation for Termination without Cause. In
the event that Employee's employment with the Company is terminated by the
Company without cause (as set forth in Section 5.3) or by the Employee for good
reason (as defined in Section 5.3A, the Company shall pay to Employee (i) within
15 days of such termination, all unpaid salary and vacation earned by her up to
and including the date of termination; (ii) the Incentive Compensation
calculated and paid in accordance with Section 3 above; (iii) within 60 days of
such termination, amounts payable under Section 4.2; and (iv) within 60 days of
such termination, such additional amounts as may be provided for under the
express terms of any applicable benefit plans. Such payments shall be in lieu of
any and all compensation, benefits and claims of any kind, excepting only such
additional amounts as may be required by law to be paid. Notwithstanding any
other provision of this Section 5.7, the termination of the Employee within six
months after a change in control (as defined in the 1993 Company Benefits
Portfolio) of the Company shall be deemed termination without cause and the
Employee shall be entitled to the payments described in this Section 5.7 in the
event of termination following such a change in control.
6. Confidential Information. During the term of employment
under this Agreement, Employee will have access to and become acquainted with
confidential proprietary information of the Company, including without
limitation, client or supplier identities and relationships, compilations of
information, records, and specifications owned by the Company (collectively,
"Confidential Information"). Employee shall not disclose any of the Company's
Confidential Information (including without limitation any client lists or other
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81
confidential information relating to the Company's business), directly or
indirectly, or use them in any way, either during the term of this Agreement or
at any time thereafter, except as required in the course of her employment by
the Company. All files, records, documents, drawings, specifications, equipment
and similar items relating to the business of the Company, whether prepared by
Employee or otherwise coming into her possession, shall remain the exclusive
property of the Company, and if removed from the premises of the Company shall
be immediately returned to the Company upon any termination of her employment.
In this Section 6, the term (a) "the Company" shall include any firm or
corporation directly or indirectly controlling or controlled by the Company or
under common control with the Company; and (b) "Confidential Information" shall
not include information which (i) is already in Employee's possession other than
through her employment with the Company; (ii) becomes or has been generally
available to the public other than as a result of Employee's disclosure; (iii)
was available to Employee on a non-confidential basis prior to its disclosure by
the Company; or (iv) is independently developed or becomes available to Employee
on a non-confidential basis from a source other than the Company.
Notwithstanding anything contained in this Section 6 to the contrary, Employee
may disclose Confidential Information to her current spouse or employees of
Xxxxxxxx Xxxxxxxxxxx, Inc. as of the Closing Date who did not become employees
of the Company if such spouse or employees, as the case may be, have agreed in
writing to be bound by the provisions of this Section 6 and such disclosure is
for the sole purpose of assisting Employee in performing her duties hereunder.
7. Agreement Not to Solicit or Compete.
7.1. Nonsolicitation and Noncompetition. Employee
will not, individually or through an agent, for herself or on behalf of another,
as an employee, director, owner, partner, sole proprietor, consultant, agent,
representative, shareholder, or in any other manner or capacity whatsoever,
either during the Employment Period or at any time during the two-year period
immediately thereafter, (a) solicit or induce any clients of the Company with
whom she has dealt during her term of employment hereunder, to terminate or
reduce their respective relationships with the Company, (b) accept any business
from any clients of the Company with whom she has dealt during her term of
employment hereunder, or enter into a business relationship with any such
clients, if any, unless (i) Employee continues to be employed by the Company
during such two-year period; and (ii) all compensation from such clients during
such two-year period shall accrue to the Company in accordance with the
Company's Business Ethics Policy; or (c) solicit or induce any person then
employed by the Company with whom she has dealt during her term of employment
hereunder to terminate such employment. Any written notice or oral presentation
made jointly by the Company and Employee during such two-year period shall not
be deemed to violate any provision of this Section 7.1. In this Section 7.1 the
term "the Company" shall include any firm or corporation directly or indirectly
controlling or controlled by the Company or under common control with the
Company.
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82
7.2. Exception to Nonsolicitation and Noncompetition.
The restrictions set forth in Section 7.1 shall not apply (a) if Employee's
employment hereunder is terminated by the Company without cause (as described in
Section 5.3) or by the Employee for good reason (as defined in Section 5.3A),
either during the term of this Agreement or after the expiration hereof; (b) if
the Company breaches any of its obligations under Sections 3 or 4; (c) if
Employee's employment is terminated under Section 5.2 due to a disability and
Employee petitions the Company for reinstatement upon the same terms and
conditions as her earlier employment (which petition is accompanied by a
doctor's letter stating that Employee is no longer permanently disabled within
the meaning of any permanent disability insurance policy maintained by the
Company for the benefit of Employee and under which Employee is entitled to
benefits, delivered within three months of Employee becoming so permanently
disabled) and is refused such reinstatement by the Company; or (d) to the
ownership of a less than 5% interest in any corporation or partnership whose
securities are publicly traded.
7.3. Severability. In the event that any of the
subsections of this Section 7 shall be deemed by any court of competent
jurisdiction to be in violation of applicable law for any reason whatsoever,
then any such subsection or subsections shall not be deemed to be void, but
shall be deemed to be automatically amended so as to comply with applicable law.
In the event that any of the subsections of this Section 7 shall be deemed by
any court of competent jurisdiction to be wholly or partially invalid, such
determination shall not affect the binding effect of the other subsections of
this Section 7 or of any of the other provisions of this Agreement.
7.4. Injunctive Relief. Employee acknowledges that
the damage to the Company resulting from a breach of the obligations of trust
and confidence set forth in Sections 6 and 7 hereof may cause irreparable injury
to the Company, and Employee hereby agrees and consents to the entry of an
injunction by any court of competent jurisdiction, enjoining her from violating
any term or terms of this Agreement, and such injunctive relief may be granted
without the necessity of proving actual damages. Such injunctive relief,
however, shall be in addition to any other remedies provided by law, in equity
or otherwise, to the Company.
8. Entire Agreement. This Agreement, and the employee benefit
plans referred to herein, contain the entire understanding of the Company and
Employee with respect to Employee's employment with the Company and her
compensation therefor. Specifically, Employee acknowledges that no commitment
has been made by the Company to her with respect to any employment beyond the
term of this Agreement (whether ending by lapse of time or earlier termination
pursuant to its terms) or with respect to any benefits not expressly set forth
in this Agreement or incorporated herein by reference.
9. Notices. All notices under this Agreement shall be in
writing and shall be deemed effective when delivered in person (in the Company's
case, to its respective
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83
Secretary) or upon receipt after deposit thereof in the U.S. mails, postage
prepaid, addressed to Employee or the Company as follows, or to such other
address as the party to be notified may specify by notice to the other party in
the manner provided in this Section :
If to Employee: Xxxxxxxx Xxxxxxxxxxx
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
With a copy to: Xxxxxxxx & X'Xxxx, LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attn: Xxxxx X. Xxxxxxx, Esq.
If to the Company: United States Trust Company of New York
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, X.X. 00000-0000
Attn: Xxxxxxx Xxxxxxxx Xxxxxxx
10. Assignment. Neither this Agreement nor any rights or
obligations hereunder may be assigned by one party without the consent of the
other, except that (i) this Agreement shall be binding upon and inure to the
benefit of any successor or successors of the Company, whether by merger,
consolidation, sale of assets or otherwise, and reference herein to the Company
shall be deemed to include any such successor or successors, and (ii) this
Agreement is freely assignable by the Company to any corporation or entity
controlling, controlled by, or under common control with, the Company.
11. Indemnification and Directors and Officers Liability
Insurance. The Company shall indemnify Employee and advance expenses with
respect to any indemnifiable matter to Employee to the fullest extent permitted
by applicable law. To the extent that the Company maintains an insurance policy
or policies providing liability insurance for directors, officers, employees,
agents or fiduciaries of the Company, Employee shall be covered by such policy
or policies in accordance with their terms to the maximum extent of the coverage
available for any such director, officer, employee, agent or fiduciary under any
such policy or policies.
12. Amendment; Waiver. This Agreement may be amended and any
right or claim hereunder waived, only by a written instrument signed by Employee
and the Company. Nothing in this Agreement, express or implied, is intended to
confer upon any third person any rights or remedies under or by reason of this
Agreement. No amendment or waiver of this Agreement requires the consent of any
individual, partnership, corporation or other entity not a party to this
Agreement.
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84
13. Construction. This Agreement shall be construed under and
governed by the laws of the State of New York. The section headings are for
convenience only and shall not be considered a part of the terms and provisions
of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the day and year first above written.
UNITED STATES TRUST COMPANY
OF NEW YORK
By:_________________________
Title:
____________________________
Xxxxxxxx Xxxxxxxxxxx
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85
EXHIBIT 7.11
FORM OF CLIENT CONSENT LETTER
86
November , 1996
[Name and Address of Client]
Dear [Name of Client Contact]:
I called this morning to tell you of my plans for Xxxxxxxx Xxxxxxxxxxx,
Inc. and as I promised I am following up with details.
First, you and each of our other clients have sustained us for many
years and Xxx and I feel a deep responsibility to you. We have talked at length
about the problem which will arise if either of us "turns up his toes". In
order to assure that our firm, Xxxxxxxx Xxxxxxxxxxx, Inc., will be able to
continue to meet your investment management needs, we have undertaken a
deliberate and thorough search for an established partner whose investment
policies, practice and management style and commitment to client service are
consistent with ours. We believe it would be irresponsible on our part not to
provide an arrangement in which our clients can have a high degree of
confidence that their interests will continue to be well served.
We have found such a partner, the United States Trust Company of New
York. This month I signed an agreement by which I and our key employees will be
joining forces with U.S. Trust.
87
There is no reason to expect disruption. The Xxxxxxxx Xxxxxxxxxxx, Inc.
practice will continue as it has, but under a new roof. In this new arrangement
I will continue to be the principal contact person on your investment account
(a), and its portfolio manager. I will have access to the same research sources
and advisors I have relied upon in the past augmented by U.S. Trust's greater
range of resources. I expect no change in investment policy, since the
principles Xxxxxxxx Xxxxxxxxxxx, Inc. has followed are compatible with those of
U.S. Trust.
While effective investment management is, of course, the primary
consideration, clients will also see other benefits from this combination.
Transaction commissions should be lower, because of U.S. Trust's much larger
trading volume, and we will have access to greater research resources.(b) In
addition, U.S. Trust provides free custody to investment clients.(c)
The combination with U.S. Trust will not result in any reduction in my
commitment to our clients. On the contrary, I have entered into an employment
contract with U.S. Trust which provides that I will continue to have principal
responsibility for the management of your account. My commitment to the firm's
clients is underscored by a provision in my employment agreement which makes a
major portion of my compensation dependent upon the continuation of current
account relationships.
Established in 1853, U.S. Trust is the oldest trust and asset
management company in the country. It was founded to serve the investment and
financial needs of affluent individuals and families, as well as charitable,
educational
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88
and other institutions. This continues to be U.S. Trust's primary focus. As a
result, U.S. Trust is well into its second century of providing highly
sophisticated, specifically tailored private banking, trust, estate, tax and
other financial planning services to its clients (d). It offers investment
expertise in a number of professionally managed investment disciplines. We
believe their well known fine capabilities in fixed income management might be
of particular value to you as a complement to the equity services we currently
provide (e).
U.S. Trust is distinguished not only by its longevity, but also by the
fact that it has long focused upon investment management, and is not engaged
in the myriad of other activities common to commercial banks. Indeed, its
commercial banking activities are largely limited to serving the needs of its
investment clients. It manages discretionary assets of $38 billion, of which
80% is for individuals and 20% for institutions, a breakdown similar to our own
business.
As is always the case in a regulated industry, there is paperwork to be
done. Under prevailing regulations, the transaction with the United States
Trust Company of New York will be deemed an assignment of your investment
advisory agreement to United States Trust Company of New York. Your investment
advisory agreement with us provides that such an assignment may only be
accomplished if you give your written consent. Accordingly, we request that you
indicate your consent to this assignment (f) by countersigning the enclosed
copy of this letter and returning it to us.
I should note also that your acceptance of our new affiliation requires
no long term commitment on your part.
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89
If you lose confidence in us or otherwise become dissatisfied with our
performance you can fire us on the spot by sending us written notice, which has
always been the case.
We are enthusiastic about our new relationship with U.S. Trust. By
affiliating with U.S. Trust, we believe that we have found a partner who
provides leadership and continuity that will extend our relationship with you
far beyond what it could be if we were to remain just the way we are. We look
forward to receiving your consent and moving ahead.
Sincerely,
Consent is given for the following account(s):
--------------------------------------
--------------------------------------
--------------------------------------
Signature
--------------------------------------
Date
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90
In attempting to be sensitive to each client's situation variations in the
letter will be used. I have tried to anticipate most variances and cover each
in the notes below which refer to the text:
Notes:
(a) accounts(s) or the Foundation's investment account, etc.
(b) For several clients the broker is rather a family retainer. In those
cases more favorable commissions will not be stated in the letter. The sentence
will be shortened to ..."Because of U.S. Trust's size, we will have access to
its research resources."
(c) Free custody will not be stated in the letter where the current bank
custodian is also a trustee or where there is a strong bank relationship. In
addition, three clients' portfolios (four accounts) are at Chase in custody and
because of the relationship between U.S. Trust and Chase, after the transaction
these clients will get their custody for free. The last sentence for these
clients will end..."investment clients, thus as you are using their custody
service your total expenses will be reduced".
(d) Will be omitted where client has a battery of financial experts (who
may be threatened) on board or will be tailored to the situation e.g.
non-individual client.
(e) Sentence to be used where appropriate.
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91
(f) Where the contract does not state a 1% fee (five accounts) or the
client is paying 1-1/2% fee (three accounts) which is not covered in the
contract, the following will be added here "...and your confirmation that your
annual investment management fee is and will continue to be %."
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92
EXHIBIT 7.19
LETTER AGREEMENT OF XXXXXXXXXXX'X SPOUSE
00
XXXXXX XXXXXX XXXXX XXXXXXX XX XXX XXXX
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
November 14, 1996
Xx. Xxxxx Xxxxxxx
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Xxx:
Reference is hereby made to the Asset Acquisition Agreement of
even date among the United States Trust Company of New York (the "Company"),
Xxxxxxxx Xxxxxxxxxxx, Inc. and Xxxxxxxx Xxxxxxxxxxx (the "Asset Acquisition
Agreement") and the Employment Agreement annexed as Exhibit 7.8 thereto between
the Company and Xxxxxxxx Xxxxxxxxxxx (the "Employment Agreement"). Capitalized
terms used but not defined herein shall have the same meanings as set forth in
the Employment Agreement.
Under Section 6 of the Employment Agreement, Xxxxxxxx will be
permitted to disclose Confidential Information to you (as her spouse) if you
agree in writing to be bound by the confidentiality provisions of Section 6 and
such disclosure is for the sole purpose of assisting Xxxxxxxx in performing her
duties under the Employment Agreement. The Company's agreement to permit
Xxxxxxxx to disclose Confidential Information to you also is conditioned upon
your agreement to be bound, to the same extent as Xxxxxxxx, by the
non-competition and non-solicitation provisions contained in Section 7 of the
Employment Agreement (other than Sections 7.1(a) and 7.1(b) and the
non-competition provisions set forth in Sections 9.1 and 9.2 of the Asset
Acquisition Agreement.
By signing this letter, you agree to be bound by, and subject
to (i) Section 6 of the Employment Agreement (Confidential Information); (ii)
Section 7 of the Employment Agreement (Agreement Not to Solicit or Compete),
other than Sections 7.1(a) and (b); (iii) Section 9.1 of the Asset Acquisition
Agreement (Preservation of Goodwill); and (iv) Section 9.2 of the Asset
Acquisition Agreement (Use of Name), as if you were entering into the Employment
Agreement and Asset Acquisition Agreement as "Employee" and "Xxxxxxxxxxx",
respectively. In addition to the foregoing, for so long as Xxxxxxxx is bound by
Section 7 of the Employment Agreement, you will not, individually or through an
agent, for yourself or
94
Xx. Xxxxx Xxxxxxx
November 14, 1996
Page 2
on behalf of another, as an employee, director, owner, partner, sole proprietor,
consultant, agent, representative, shareholder, or in any other manner or
capacity whatsoever, (a) solicit or induce any Current Client Account or
Extended Family Account to terminate or reduce their respective relationships
with the Company or (b) perform any investment advisory or investment management
services for any Current Client Account or Extended Family Client Account.
Nothing contained herein shall cause you to be considered an employee of the
Company or any entity controlling or controlled by the Company or under common
control with the Company.
If the foregoing correctly sets forth our understanding,
please so indicate by signing the enclosed duplicate copy of this letter on the
appropriate line below whereupon this letter agreement will become a binding
agreement between us.
UNITED STATES TRUST COMPANY
OF NEW YORK
By:________________________________
Title:
AGREED:
________________________________
Xxxxx Xxxxxxx
95
EXHIBIT 8.4
AGREEMENT TO DELIVER AND REGISTER SHARES
96
AGREEMENT TO DELIVER AND REGISTER SHARES
This AGREEMENT TO DELIVER AND REGISTER SHARES (the
"Agreement") is made and entered into as of November 14, 1996, by and among U.S.
Trust Corporation, a New York corporation ("U.S. Trust"), Xxxxxxxx Xxxxxxxxxxx,
Inc., a New York corporation (the "Seller"), and Xxxxxxxx Xxxxxxxxxxx
("Fearrington"), being the only shareholder of the Seller.
W I T N E S S E T H :
WHEREAS, pursuant to the Asset Acquisition Agreement dated as
of even date among United States Trust Company of New York, a banking
institution possessing banking and trust powers chartered under the laws of New
York (the "Buyer"), the Seller and Fearrington (the "Asset Acquisition
Agreement"), the Buyer will deliver shares of U.S. Trust Common Stock (the "USTC
Shares") to the Seller (or to Fearrington, if the Seller so designates) and the
Escrow Agent (as defined in the Asset Acquisition Agreement);
WHEREAS, all of the issued and outstanding shares of the
Buyer's capital stock are currently held beneficially and of record by U.S.
Trust; and
WHEREAS, the parties to the Asset Acquisition Agreement desire
that U.S. Trust register the USTC Shares under the Securities Act of 1933, as
amended (the "Securities Act"), and the Seller and Xxxxxxxxxxx have entered into
the Asset Acquisition Agreement on such basis.
NOW, THEREFORE, in consideration of the mutual covenants,
agreements, representations and warranties contained in this Agreement, the
parties agree as follows:
1. Defined Terms. All capitalized terms used but not defined
herein shall have the same meanings as set forth in the Asset Acquisition
Agreement.
2. Delivery of the USTC Shares. On or before the Closing Date,
U.S. Trust shall deliver to the Buyer certificates representing that number of
USTC Shares calculated in accordance with Sections 1.4(a) and (b) of the Asset
Acquisition Agreement so as to enable the Buyer to deliver such USTC Shares to
the Seller (or to Xxxxxxxxxxx, if the Seller so designates) and, if required,
the Escrow Agent pursuant to the Asset Acquisition Agreement.
97
3. Representation and Warranties of U.S. Trust. U.S. Trust
hereby represents and warrants to the Seller and Fearrington as follows:
(a) Authorization. U.S. Trust has, and at the Closing
will have, full legal right and power to execute and deliver this Agreement and
to consummate the transactions contemplated hereby. The execution and delivery
of this Agreement and the consummation of the transactions contemplated hereby
have been duly and validly authorized and approved by U.S. Trust's Board of
Directors and no other corporate proceedings on the part of U.S. Trust are
necessary to authorize this Agreement or the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by U.S. Trust
and constitutes a valid, legal and binding agreement of U.S. Trust, enforceable
against it in accordance with its terms except that the enforceability of such
agreement is subject to bankruptcy, insolvency, reorganization, and similar laws
of general applicability relating to or affecting creditors' rights.
(b) USTC Shares. The USTC Shares to be delivered by
U.S. Trust to the Buyer hereunder and by the Buyer to the Seller (or to
Fearrington, if the Seller so designates) and, if required, the Escrow Agent
pursuant to the Asset Acquisition Agreement will be duly authorized, validly
issued, fully paid and non-assessable and at the time of issuance, free and
clear of all liens, claims, encumbrances, security interests and rights of
redemption and preemptive rights. The certificates representing such shares will
be in due and proper form.
4. Registration of the USTC Shares.
(a) Subject in all respects to subsection (b) below,
Seller and Xxxxxxxxxxx hereby acknowledge and agree that: (i) the USTC Shares
(if ever issued) will not have been registered for sale by U.S. Trust to Seller
or Xxxxxxxxxxx, as the case may be, under the Securities Act in reliance on the
exemption contained in Section 4(2) of the Securities Act; and (ii) such shares
may not be transferred or sold by the Seller or Xxxxxxxxxxx unless registered
under the Securities Act (as contemplated by subsection (b) below) or
transferred or sold pursuant to an applicable exemption from registration under
the Securities Act.
(b) As soon as practicable after the Closing Date but
in any event within fifteen (15) days thereafter, U.S. Trust shall prepare and
file with the Securities and Exchange Commission (the "SEC") a registration
statement on Form S-3 pursuant to Rule 145 (or similar rule that may be adopted
by the SEC) under the Securities Act (the "Registration Statement"), to permit
the offer and sale of the USTC Shares (which term, for the purposes of this
section, shall include any securities into which or for which the USTC Shares
subsequently may be converted or exchanged) by the Seller or Xxxxxxxxxxx from
time to time hereof through the facilities of the NMS at market prices current
at the time of sale or in other transactions at negotiated prices. U.S. Trust
represents that as of the date hereof and the
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98
Closing Date, it meets the conditions set forth in Item I.A. of the General
Instructions to Form S-3 that are required to be met to use such Form in
connection with the filing of the Registration Statement as contemplated
hereunder. U.S. Trust shall use its best efforts to cause such Registration
Statement to become effective as promptly as possible and to remain continuously
effective as provided herein. U.S. Trust shall promptly prepare and file with
the SEC such amendments and supplements to the Registration Statement and the
related Prospectus (the "Prospectus") as may be necessary to permit the sale
thereunder of the USTC Shares in the manner contemplated above until the first
to occur of: (i) the earliest date on which all of such shares shall have been
sold or may be sold without regard to volume limitations under the provisions of
Rule 144 under the Securities Act or any successor or similar rule hereafter
adopted; and (ii) the sixth anniversary of the Closing Date, provided, however,
that if at any time prior to the sixth anniversary of the Closing Date, Rule 144
or any successor or similar rule hereafter adopted shall cease to be available
without regard to volume limitations for sales of the USTC Shares by Fearrington
other than by reason of her actions, the obligations of U.S. Trust to register
such shares as provided herein shall be reinstated and shall continue until the
first to occur thereafter of (i) and (ii) above. U.S. Trust shall furnish to
Fearrington such number of copies of the Prospectus, as amended from time to
time, and supplements thereto as Fearrington may reasonably request, but in no
event fewer than the number of copies as may be required to comply with the
provisions of the Securities Act applicable to the disposition of the USTC
Shares. U.S. Trust shall use its best efforts, to the extent required by the
securities or blue sky laws of the States of New York, to notify the appropriate
authority in such state, pay any requisite fees and do any and all other acts
and things which may be reasonably necessary or advisable to enable Fearrington
to consummate the disposition of the USTC Shares owned by Fearrington; provided,
however, that this obligation shall cease at the time that U.S. Trust's
obligation under this Section 4(b) with respect to the Securities Act shall
terminate. U.S. Trust shall cause the USTC Shares to be listed on such
securities exchange or quoted on such automated quotation system on which U.S.
Trust's common shares are then listed or quoted. U.S. Trust shall immediately
notify Fearrington of any stop order or similar proceeding pertaining to the
Registration Statement initiated by state or federal regulatory bodies, and use
its best efforts to take all necessary steps to remove such stop order or
similar proceeding.
(c) All expenses incident to the obligations of U.S.
Trust under subparagraph (b) of this Section 4 (including, without limitation,
all expenses in connection with the preparation and filing of any Registration
Statement under subparagraph (b) of this Section 4, any expenses under blue sky
laws in connection with an offering under such Registration Statement, any
filing fee of the National Association of Securities Dealers, Inc. relating to
such offering, printing or document reproduction expenses, messenger and
delivery expenses and fees and expenses of its counsel and accountants) shall be
borne by U.S. Trust and all other expenses incident to the disposition by
Fearrington of the USTC Shares held by her (including, without limitation, fees
and expenses of her counsel and all brokerage and similar fees) shall be borne
by Fearrington.
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(d) Fearrington shall: (i) furnish to U.S. Trust such
information as U.S. Trust may from time to time reasonably request in connection
with the Registration Statement and Prospectus and any amendment or supplement
thereto; (ii) from and after the Closing Date and for so long as the
Registration Statement remains effective, promptly after the sale or any other
disposition by her of USTC Shares, give U.S. Trust written notification of same;
(iii) promptly notify U.S. Trust of any event which comes to her attention which
would necessitate an amendment or supplement to the Registration Statement or
Prospectus; and (iv) suspend sales of USTC Shares under the Registration
Statement promptly upon receipt of notice from U.S. Trust that such sales may
not be made until the Registration Statement and Prospectus are amended or
supplemented as necessary.
(e) U.S. Trust covenants that none of the information
supplied by U.S. Trust for inclusion or incorporation by reference in the
Registration Statement at the time the Registration Statement is filed with the
SEC and the time such document becomes effective under the Securities Act, will
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading. The Registration Statement will comply as to form in all material
respects with the provisions of the Securities Act and the rules and regulations
thereunder.
(f) During the period for which U.S. Trust is
required to file and keep effective a Registration Statement pursuant to
subparagraph (b) of this Section 4, U.S. Trust shall:
(i) supplement or make amendments to the
Registration Statement if required by the rules, regulations or instructions
applicable to Form S-3 or by the rules and regulations under the Securities Act
and file all reports required to be filed by it under the Securities Exchange
Act of 1934, as amended, and the rules and regulations promulgated by the SEC
thereunder; and
(ii) notify Fearrington during the period
such Registration Statement is required to remain effective of the occurrence of
any event as a result of which the Registration Statement or the Prospectus
contained in such Registration Statement, as then in effect, includes an untrue
statement of a material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein not misleading. U.S.
Trust agrees to take all necessary steps as soon as practicable after the
occurrence of such event and delivery of such notice to amend or supplement the
Registration Statement or Prospectus and to take such other actions as may be
necessary or appropriate so that the Registration Statement and Prospectus shall
not include an 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
not misleading.
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(g) All of the obligations and covenants under this
Section 4 shall survive the Closing.
(h) The parties respective indemnification
obligations with respect to the registration of the USTC Shares are as follows:
(i) U.S. Trust shall indemnify and hold
harmless Fearrington against all losses, claims, damages or liabilities
including, without limitation, legal fees and expenses incurred by Fearrington
arising from the failure of U.S. Trust to perform its obligations under this
Section 4 on a timely basis. In connection with any registration of securities
pursuant to this Agreement, to the extent permitted by law, U.S. Trust shall
indemnify Fearrington against all losses, claims, damages or liabilities, joint
or several, to which Fearrington may become subject under the Securities Act
insofar as such losses, claims, damages or liabilities (or action in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in any Registration Statement or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading and U.S. Trust shall reimburse Fearrington for any legal
or other expenses in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that U.S. Trust shall not
be required to indemnify and hold harmless or reimburse Fearrington to the
extent that any such loss, claim, damage, liability or expense arises out of or
is based upon an untrue statement or alleged untrue statement or omission or
alleged omission in any document made in reliance upon and in conformity with
written information furnished to U.S. Trust by or on behalf of Fearrington with
respect to the USTC Shares for use in the preparation of such documents.
(ii) Fearrington shall indemnify and hold
harmless U.S. Trust, each of its directors and officers, and each person, if
any, who controls U.S. Trust within the meaning of the Securities Act, against
all losses, claims, damages or liabilities to which U.S. Trust or any such
director or officer or controlling person may become subject, under the
Securities Act insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained in any Registration
Statement or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or omission
was made in reliance upon and in conformity with written information furnished
to U.S. Trust by or on behalf of Fearrington with respect to Xxxxxxxxxxx'x USTC
Shares, for use in preparation thereof, and Fearrington shall reimburse U.S.
Trust for any legal or other expenses reasonably incurred by U.S. Trust or any
such director or officer or controlling person in any such loss, claim, damage,
liability or action.
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5. Form of Agreement.
(a) Headings. The subject headings of the sections of
this Agreement are included for purposes of convenience only, and shall not
affect the construction or interpretation of any of its provisions.
(b) Entire Agreement; Modification; Waiver. This
Agreement constitutes the entire agreement between the parties pertaining to the
subject matter contained in it and supersedes all prior and contemporaneous
agreements, representations, and understandings of the parties. No supplement,
modification, or amendment of this Agreement shall be binding unless executed in
writing by all the parties to be bound hereby. No waiver of any of the
provisions of this Agreement shall be deemed, or shall constitute, a waiver of
any other provision, whether or not similar, nor shall any waiver constitute a
continuing waiver. No delay or failure of any party to exercise any of its, his
or her rights hereunder shall be construed as a waiver of such right. No waiver
shall be binding unless made expressly and executed in writing by the party
making the waiver.
(c) Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
6. Parties.
(a) Parties in Interest. Nothing in this Agreement,
whether expressed or implied, is intended to confer any rights or remedies under
or by reason of this Agreement on any persons other than the parties to it and
their respective heirs, personal representatives, successors and assigns, nor is
anything in this Agreement intended to relieve or discharge the obligation or
liability of any third persons to any party to this Agreement, nor shall any
provision give any third persons any right of subrogation or action over or
against any party to this Agreement.
(b) Assignment. This Agreement shall be binding on
and shall inure to the benefit of the parties to it and their respective heirs,
legal representatives, successors, and permitted assigns.
7. Notices. All notices, requests, demands, and other
communications under this Agreement shall be in writing and shall be deemed to
have been duly given on the date of service if served personally on the party to
whom such notice, request, demand or other communication is to be given, or on
the date of receipt if mailed to the party to whom such communication is to be
given, by first class mail registered or certified, postage prepaid, and
properly addressed as follows:
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To the Seller and Fearrington as follows:
Xx. Xxxxxxxx Xxxxxxxxxxx
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
With a copy to:
Xxxxx X. Xxxxxxx, Esq.
Xxxxxxxx & O'Neil, LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
To U.S. Trust at:
U.S. Trust Corporation
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attn: Xxxxxxx Xxxxxxxx Xxxxxxx
Managing Director and General Counsel
Any party may change its address for purposes of this section by giving the
other party written notice of the new address in the manner set forth above.
8. Governing Law; Venue. This Agreement shall be construed in
accordance with, and governed in all respects by, the laws of the State of New
York, excepting its choice of law provisions. Any litigation arising out of or
relating to this Agreement shall be conducted solely and exclusively in any
federal or state court located in the City of New York having jurisdiction over
the subject matter hereof, and to the extent permitted by law all parties hereto
consent to such jurisdiction and venue.
IN WITNESS WHEREOF, the parties to this Agreement have duly
executed it as of the day and year first above written.
U.S. TRUST CORPORATION
By:_______________________________
Its:___________________________
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XXXXXXXX XXXXXXXXXXX, INC.
By:_______________________________
Its:___________________________
__________________________________
Xxxxxxxx Xxxxxxxxxxx
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104
EXHIBIT 8.7
OPINION OF MANAGING DIRECTOR
AND GENERAL COUNSEL OF BUYER
000
(Xxxxxxxxxx xx Xxxxxx Xxxxxx Trust Company of New York)
_______ , 1996
Xxxxxxxx Xxxxxxxxxxx, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Xxxxxxxx Xxxxxxxxxxx
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Ladies and Gentlemen:
I am Managing Director and General Counsel for United States
Trust Company of New York, a banking institution possessing banking and trust
powers chartered under the laws of New York (the "Buyer"), and counsel to U.S.
Trust Corporation, a New York corporation ("U.S. Trust"), and am acting in such
capacities in connection with the execution and delivery of the Asset
Acquisition Agreement (the "Asset Acquisition Agreement") dated November 14,
1996, among the Buyer, Xxxxxxxx Xxxxxxxxxxx, Inc., a New York corporation (the
"Seller") and Xxxxxxxx Xxxxxxxxxxx ("Fearrington"), the sole shareholder of the
Seller.
All capitalized terms used but not otherwise defined herein
shall have the respective meanings ascribed to them in the Asset Acquisition
Agreement. This opinion is delivered to you pursuant to Section 8.7 of the Asset
Acquisition Agreement.
I have examined and considered the original or copies,
certified or otherwise identified to my satisfaction, of the following
documents:
(a) the Asset Acquisition Agreement;
(b) the Xxxx of Sale;
(c) the Assignment and Assumption Agreement;
(d) the Escrow Agreement;
(e) the Employment Agreement dated the date hereof, between
the Buyer and Fearrington (the "Employment Agreement");
106
(f) the Agreement to Deliver and Register Shares dated the
date hereof among U.S. Trust, the Seller and Fearrington
(the "Agreement to Deliver and Register Shares"); and
(g) the letter agreement dated November 14, 1996, between
the Buyer and Fearrington with respect to additional
payments to Fearrington from life and disability
policies in the event of her death or disability.
The documents enumerated in Paragraphs (a) through (g) above
are hereinafter referred to collectively as the "Acquisition Documents."
In addition to the Acquisition Documents, I or an attorney
designated by me have examined such corporate records and other documents and
instruments, and Certificates of Incorporation or comparable documents of public
officials and of officers of the Buyer and U.S. Trust, as applicable, and have
made such inquiries of such officers, and considered such questions of law, as I
have deemed relevant and necessary for purposes of rendering the opinions
expressed below.
In all cases, I have assumed the genuineness of all signatures
on original and certified documents and of all copies submitted to me as
conformed, photostat or other copies, and I have assumed the legal capacity of
all natural persons executing such documents, instruments and other papers. I
have also assumed that each entity that has executed such documents, instruments
and other papers, other than the Buyer and U.S. Trust, has the power to enter
into and perform all of such entity's obligations thereunder, that such
documents, instruments and other papers have been duly authorized, executed and
delivered by each entity other than the Buyer and U.S. Trust, and that such
documents, instruments and other papers are binding on each party thereto other
than the Buyer and U.S. Trust.
As to certain questions of fact material to this opinion, I
have relied upon the accuracy of the representations and warranties made by U.S.
Trust and the Buyer in the Acquisition Documents and the other documents
executed and delivered in connection therewith and of the officers and
representatives of the Buyer or U.S. Trust, as applicable, delivered thereunder,
and upon statements made to me in discussions with the Buyer's and U.S. Trust's
management. Statements made herein "to the best of my knowledge" or with respect
to matters "known to me" are based solely on information actually known to me
and to those attorneys currently employed with the Buyer and U.S. Trust and
engaged in representing the Buyer and U.S. Trust in connection with the
transactions contemplated by the Acquisition Documents. Except as otherwise
expressly indicated, I have not undertaken any independent investigation of
factual matters.
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Based upon the foregoing, and subject to the qualifications
stated herein, it is my opinion that:
1. U.S. Trust is a corporation duly organized, validly
existing and in good standing under the laws of the State of New York.
2. The Buyer is a banking institution possessing banking and
trust powers duly organized, validly existing and in good standing under the
laws of the State of New York.
3. Each of the Buyer and U.S. Trust has all requisite
corporate power and authority to execute, deliver and perform all of the
Acquisition Documents to which it is a party, to consummate the transactions
contemplated thereby and to perform fully its obligations thereunder. The
execution and delivery by each of the Buyer and U.S. Trust of the Acquisition
Documents to which it is a party and the consummation of the transactions
contemplated thereby have been duly and validly authorized and approved by the
Buyer's and U.S. Trust's respective Boards of Directors and no other corporate
proceedings on the part of either the Buyer or U.S. Trust is necessary to
authorize the Acquisition Documents or the transactions contemplated thereby.
4. Each of the Acquisition Documents has been duly executed
and delivered by the Buyer or U.S. Trust, as applicable, and constitutes the
legal, valid and binding obligations of Buyer or U.S. Trust, as applicable, in
accordance with their respective terms.
5. No consent, approval or authorization of or filing with or
notice to any foreign, federal, state, county, city, local or other governmental
or regulatory authority or body, and no approval or consent of or any filing
with or notice to any other person (other than those contemplated by the
Acquisition Documents, all of which have been received or made) is required in
connection with the execution and delivery by each of the Buyer and U.S. Trust
of the Acquisition Documents to which it is a party and the consummation and
performance by the Buyer or U.S. Trust, as applicable, of the transactions
contemplated thereby.
6. Neither the execution and delivery by each of the Buyer and
U.S. Trust of the Acquisition Documents to which it is a party, the performance
by the Buyer and U.S. Trust of their respective obligations thereunder nor the
consummation of the transactions contemplated thereby will violate, conflict
with or result in a breach of or require consent (other than those that have
been obtained or given) under or constitute (or with notice or lapse of time or
both would constitute) a default under (i) any provision of their respective
certificates of incorporation (or charter) or by-laws, as amended; (ii) any
provision of any applicable law, as in effect and binding upon either of them;
(iii) to the best of my
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knowledge, any term of any material agreement or instrument to which either of
them is a party or by which either of them or their properties or assets are
bound, which violation or conflict would have a material adverse affect on the
business, results of operations, property or financial condition of the Buyer or
U.S. Trust; or (iv) to the best of our knowledge, any order, judgment,
injunction, writ, award or decree of any court, arbitrator or governmental or
regulatory authority or agency binding upon either of them or their respective
properties or assets.
7. To the best of my knowledge, there is no pending or
threatened suit, action or litigation, or administrative, arbitration or other
proceeding or governmental inquiry or investigation, questioning the validity of
any of the Acquisition Documents or any of the transactions contemplated
thereby.
8. The USTC Shares have been duly authorized and, upon
delivery to the Seller (or Fearrington, if the Seller so designates) in
accordance with the terms of the Asset Acquisition Agreement, will be duly
authorized, validly issued, fully paid and nonassessable by either the Buyer or
U.S. Trust, free and clear of all liens and preemptive rights and the
certificates representing such shares are in due and proper form.
The opinions set forth are subject to the following
qualifications and limitations:
(i) I express no opinion as to the effect of the
application of equitable principles (whether
considered in a proceeding at law or in equity) or of
bankruptcy, insolvency, reorganization, moratorium
and other laws now or hereafter in effect affecting
the enforcement of creditors' rights and remedies
including those relating to fraudulent conveyances
and transfer;
(ii) I express no opinion as to the enforceability of any
choice of law or non-competition provision in the
Asset Acquisition Agreement or in any agreement
required to be delivered thereunder;
(iii) Insofar as the opinions expressed above relate to, or
are based upon, the effectiveness of the Asset
Acquisition, they are subject to the power of the
courts to order rescission of the consummated
transactions in such cases as violations of federal
or state securities laws or for failure to satisfy
basic equitable requirements of good faith and fair
treatment; and
(iv) I express no opinion concerning the laws of any
jurisdiction other than the law of the State of New
York and the federal law of the United States of
America.
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This letter is furnished to you by counsel to the Buyer and
U.S. Trust, and is solely for your benefit, and may not be relied upon by any
other party, except to the extent that I may expressly and in writing authorize
reliance by other persons.
Very truly yours,
_____________________________
Xxxxxxx Xxxxxxxx Xxxxxxx
Managing Director
and General Counsel
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