EXHIBIT 2.01
AGREEMENT AND PLAN OF MERGER
by and between
TRAVELERS GROUP INC.
and
CITICORP
Dated as of April 5, 1998
TABLE OF CONTENTS
PAGE
ARTICLE I
THE MERGER..............................2
SECTION 1.01 The Merger............................................2
SECTION 1.02 Closing...............................................2
SECTION 1.03 Effective Time........................................2
SECTION 1.04 Effects of the Merger.................................3
SECTION 1.05 Certificate of Incorporation
and By-laws 3
SECTION 1.06 Boards, Committees and Officers.......................3
SECTION 1.07 Reservation of Right to Revise
Transaction.........................................3
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK
OF THE CONSTITUENT CORPORATIONS;
EXCHANGE OF CERTIFICATES......................4
SECTION 2.01 Effect on Capital Stock...............................4
SECTION 2.02 Exchange of Certificates..............................6
SECTION 2.03 Certain Adjustments..................................12
ARTICLE III
REPRESENTATIONS AND WARRANTIES..................12
SECTION 3.01 Representations and Warranties
of Citicorp........................................12
SECTION 3.02 Representations and Warranties
of Travelers.......................................31
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS ............49
SECTION 4.01 Conduct of Business..................................49
SECTION 4.02 No Solicitation by Citicorp..........................56
SECTION 4.03 No Solicitation by Travelers.........................59
ARTICLE V
ADDITIONAL AGREEMENTS......................62
SECTION 5.01 Preparation of the Form S-4 and
the Joint Proxy Statement;
Stockholders Meetings..............................62
SECTION 5.02 Letters of Citicorp's Accountants....................64
SECTION 5.03 Letters of Travelers' Accountants....................64
SECTION 5.04 Access to Information; Confidentiality...............65
SECTION 5.05 Best Efforts, Cooperation............................65
SECTION 5.06 Stock Options and Restricted Stock ..................68
SECTION 5.07 Indemnification, Exculpation and
Insurance..........................................70
SECTION 5.08 Fees and Expenses....................................71
SECTION 5.09 Public Announcements.................................71
SECTION 5.10 Affiliates...........................................72
SECTION 5.11 NYSE and PSE Listing.................................72
SECTION 5.12 Stockholder Litigation...............................73
SECTION 5.13 Tax Treatment........................................73
SECTION 5.14 Pooling of Interests.................................73
SECTION 5.15 Travelers Preferred Stock............................73
SECTION 5.16 Standstill Agreements;
Confidentiality Agreements.........................74
SECTION 5.17 Compliance with 1940 Act Section 15..................74
SECTION 5.18 Consent Procedure....................................75
SECTION 5.19 Employee Benefit Plans...............................75
ARTICLE VI
CONDITIONS PRECEDENT.......................76
SECTION 6.01 Conditions to Each Party's
Obligation to Effect the Merger....................76
SECTION 6.02 Conditions to Obligations of Travelers...............78
SECTION 6.03 Conditions to Obligations of Citicorp................78
SECTION 6.04 Frustration of Closing Conditions....................79
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER................79
SECTION 7.01 Termination..........................................79
SECTION 7.02 Effect of Termination................................81
SECTION 7.03 Amendment............................................81
SECTION 7.04 Extension; Waiver....................................81
SECTION 7.05 Procedure for Termination,
Amendment, Extension or Waiver.....................82
ARTICLE VIII
GENERAL PROVISIONS........................82
SECTION 8.01 Nonsurvival of Representations and
Warranties.........................................82
SECTION 8.02 Notices..............................................82
SECTION 8.03 Definitions..........................................83
SECTION 8.04 Interpretation.......................................85
SECTION 8.05 Counterparts.........................................85
SECTION 8.06 Entire Agreement; No Third-Party
Beneficiaries......................................86
SECTION 8.07 Governing Law........................................86
SECTION 8.08 Assignment...........................................86
SECTION 8.09 Consent to Jurisdiction..............................86
SECTION 8.10 Headings.............................................86
SECTION 8.11 Severability.........................................87
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this Agreement), dated as of
April 5, 1998, by and between TRAVELERS GROUP INC., a Delaware corporation
("Travelers"), and CITICORP, a Delaware corporation ("Citicorp").
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of Travelers and
Citicorp have approved the merger of Citicorp with and into Travelers (the
"Merger"), upon the terms and subject to the conditions set forth in this
Agreement, whereby (a) each issued and outstanding share of common stock,
par value $1.00 per share, of Citicorp ("Citicorp Common Stock"), other
than shares owned by Travelers or Citicorp, will be converted into the
right to receive the Merger Consideration (as defined in Section 2.01(b))
and (b) each issued and outstanding share of Citicorp Preferred Stock (as
defined in Section 3.01(c)), other than shares owned by Travelers or
Citicorp, will be converted into the right to receive one share of the
corresponding series of preferred stock, with a par value of $1.00 per
share, of Travelers pursuant to Article II (collectively, "Travelers
Preferred Stock");
WHEREAS, the respective Boards of Directors of Travelers and
Citicorp have each determined that the Merger and the other transactions
contemplated hereby are consistent with, and in furtherance of, their
respective business strategies and goals;
WHEREAS, Travelers and Citicorp desire to make certain
representations, warranties, covenants and agreements in connection with
the Merger and also to prescribe various conditions to the Merger;
WHEREAS, for federal income tax purposes, it is intended that
the Merger will qualify as a reorganization under the provisions of Section
368(a) of the Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, for financial accounting purposes, it is intended that
the Merger will be accounted for as a pooling of interests transaction.
NOW, THEREFORE, in consideration of the representations,
warranties, covenants and agreements contained in this Agreement, the
parties agree as follows:
ARTICLE I
THE MERGER
SECTION 1.01 The Merger. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with the Delaware
General Corporation Law (the "DGCL"), Citicorp shall be merged with and
into Travelers at the Effective Time (as defined in Section 1.03).
Following the Effective Time, Travelers shall be the surviving corporation
(the "Surviving Corporation") and shall succeed to and assume all the
rights and obligations of Citicorp in accordance with the DGCL.
SECTION 1.02 Closing. The closing of the Merger (the "Closing")
will take place at 10:00 a.m. on a date to be specified by the parties (the
"Closing Date"), which shall be no later than the second business day after
satisfaction or waiver of the conditions set forth in Article VI, unless
another time or date is agreed to by the parties hereto; provided, however,
that each of Travelers and Citicorp by notice to the other party shall have
the right to delay the Closing by up to 90 days following the date on which
the Closing would otherwise have occurred hereunder to the extent necessary
in order to obtain any material governmental, regulatory or other
third-party approvals, consents, orders or authorizations required in
connection with or as a result of the transactions contemplated hereby
(including the Board of Governors of the Federal Reserve System and
applicable state insurance authorities) that have not yet then been
obtained in connection with the Closing. The Closing will be held at the
offices of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, 000 Xxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000 or at such other location in the City of New York as
the parties hereto shall agree to in writing.
SECTION 1.03 Effective Time. Subject to the provisions of this
Agreement, as soon as practicable on or after the Closing Date, the parties
shall file a certificate of merger or other appropriate documents (in any
such case, the "Certificate of Merger") executed in accordance with the
relevant provisions of the DGCL and shall make all other filings or
recordings required under the DGCL. The Merger shall become effective at
such time as the Certificate of Merger is duly filed with the Secretary of
State of the State of Delaware, or at such subsequent date or time as
Travelers and Citicorp shall agree and specify in the Certificate of Merger
(the time the Merger becomes effective being hereinafter referred to as the
"Effective Time").
SECTION 1.04 Effects of the Merger. The Merger shall have the
effects set forth in Section 259 of the DGCL.
SECTION 1.05 Certificate of Incorporation and By-laws. The
Restated Certificate of Incorporation and By-laws of Travelers shall be the
certificate of incorporation and by-laws, respectively, of the Surviving
Corporation until thereafter changed or amended as provided therein or by
applicable law, except that as of the Effective Time (i) the By-laws shall
be amended as necessary to reflect the provisions of Section 1.06 and (ii)
the Restated Certificate of Incorporation shall be amended to change the
name of the Surviving Corporation to a name agreed to in writing by
Travelers and Citicorp.
SECTION 1.06 Boards, Committees and Officers. The Chairman and
Chief Executive Officer of Travelers and the Chairman of Citicorp shall
serve as the Co-Chairmen and Co-Chief Executive Officers of the Surviving
Corporation. Prior to the Effective Time, Travelers and Citicorp shall
mutually determine the other individuals who will serve as officers of the
Surviving Corporation. Such officers shall be appointed by the Board of
Directors of the Surviving Corporation in accordance with its by-laws. The
initial Board of Directors and committees of the Board of Directors of the
Surviving Corporation shall be constituted of an equal number of directors
designated by each of Travelers and Citicorp, with the total number of
directors comprising the initial Board of Directors of the Surviving
Corporation to equal twenty-four (all of whom, other than the Co-Chairmen,
shall be outside directors).
SECTION 1.07 Reservation of Right to Revise Transaction. If
each of Travelers and Citicorp agree in writing, they may change the method
of effecting the business combination between Travelers and Citicorp, and
each party shall cooperate in such efforts, including to provide for a
different form of merger; provided, however, that no such change shall (i)
alter or change the amount or kind of consideration to be received by
holders of Citicorp Common Stock or Citicorp Preferred Stock, (ii)
adversely affect the proposed accounting treatment for the Merger or the
tax treatment to Travelers, Citicorp or their respective stockholders as a
result of receiving the Merger Consideration, or (iii) materially delay
receipt of any approval referred to in this Agreement or the consummation
of the transactions contemplated hereby.
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK
OF THE CONSTITUENT CORPORATIONS;
EXCHANGE OF CERTIFICATES
SECTION 2.01 Effect on Capital Stock. As of the Effective Time,
by virtue of the Merger and without any action on the part of the holder of
any shares of Citicorp Common Stock, Citicorp Preferred Stock, Travelers
Common Stock or Travelers Preferred Stock:
(a) Cancellation of Treasury Stock and Travelers-Owned
Stock. Each share of Citicorp Common Stock and Citicorp Preferred Stock
that is owned by Citicorp or Travelers shall automatically be cancelled and
retired and shall cease to exist, and no consideration shall be delivered
in exchange therefor; provided, however, that any shares of Citicorp Common
Stock and Citicorp Preferred Stock (i) held by Citicorp or Travelers in
connection with any market making or proprietary trading activity or for
the account of another person, (ii) as to which Citicorp or Travelers is or
may be required to act as a fiduciary or in a similar capacity or (iii) the
cancellation of which would violate any legal duties or obligations of
Citicorp or Travelers, in each case shall not be cancelled but, instead,
shall be treated as set forth in Section 2.01(b) (in the case of Citicorp
Common Stock) or 2.01(c) (in the case of Citicorp Preferred Stock).
(b) Conversion of Citicorp Common Stock. Subject to
Section 2.02(e), each issued and outstanding share of Citicorp Common Stock
(other than shares to be cancelled in accordance with Section 2.01(a))
shall be converted into the right to receive 2.50 (the "Exchange Ratio")
fully paid and nonassessable shares of common stock, par value $.01 per
share (the "Travelers Common Stock"), of Travelers (the "Merger
Consideration"). As of the Effective Time, all such shares of Citicorp
Common Stock shall no longer be outstanding and shall automatically be
cancelled and retired and shall cease to exist, and each holder of a
certificate representing any such shares of Citicorp Common Stock shall
cease to have any rights with respect thereto, except the right to receive
the Merger Consideration and any cash in lieu of fractional shares of
Travelers Common Stock to be issued or paid in consideration therefor upon
surrender of such certificate in accordance with Section 2.02, without
interest.
(c) Conversion of Citicorp Preferred Stock. Each issued
and outstanding share of Citicorp Preferred Stock (other than shares to be
cancelled in accordance with Section 2.01(a)) shall be converted into the
right to receive one fully paid and nonassessable share of the
corresponding series of Travelers Preferred Stock, which Travelers
Preferred Stock (i) shall have terms that are substantially identical to
the Citicorp Preferred Stock (provided that, as a result of the Merger, the
issuer thereof shall be Travelers rather than Citicorp), (ii) shall all be
on a parity with each other and each series of Travelers Preferred Stock
then outstanding with respect to payment of dividends and the distribution
of assets upon liquidation, dissolution or winding up and (iii) shall be
issued pursuant to action taken by the Board of Directors of Travelers. As
of the Effective Time, all such shares of Citicorp Preferred Stock shall no
longer be outstanding and shall automatically be cancelled and retired and
shall cease to exist, and each holder of a certificate representing any
such shares of Citicorp Preferred Stock shall cease to have any rights with
respect thereto, except the right to receive one share of the corresponding
series of Travelers Preferred Stock to be issued in consideration therefor
upon surrender of such certificate in accordance with Section 2.02, without
interest.
SECTION 2.02 Exchange of Certificates.
(a) Exchange Agent. As of the Effective Time, Travelers
shall enter into an agreement with Citicorp as exchange agent for the
Merger (Citicorp solely in such capacity as exchange agent, the "Exchange
Agent"), which shall provide that Travelers shall deposit with the Exchange
Agent as of the Effective Time, for the benefit of the holders of shares of
Citicorp Common Stock and Citicorp Preferred Stock, for exchange in
accordance with this Article II, through the Exchange Agent, certificates
representing the shares of Travelers Common Stock and Travelers Preferred
Stock (such shares of Travelers Common Stock and Travelers Preferred Stock,
together with any dividends or distributions with respect thereto with a
record date after the Effective Time, any Excess Shares (as defined in
Section 2.02(e)) and any cash (including cash proceeds from the sale of the
Excess Shares) payable in lieu of any fractional shares of Travelers Common
Stock being hereinafter referred to as the "Exchange Fund") issuable
pursuant to Section 2.01 in exchange for outstanding shares of Citicorp
Common Stock and Citicorp Preferred Stock.
(b) Exchange Procedures. As soon as reasonably
practicable after the Effective Time, the Exchange Agent shall mail to each
holder of record of a certificate or certificates which immediately prior
to the Effective Time represented outstanding shares of Citicorp Common
Stock or Citicorp Preferred Stock (the "Certificates") whose shares were
converted into the right to receive the Merger Consideration or shares of
Travelers Preferred Stock, as applicable, pursuant to Section 2.01, (i) a
letter of transmittal (which shall specify that delivery shall be effected,
and risk of loss and title to the Certificates shall pass, only upon
delivery of the Certificates to the Exchange Agent and shall be in such
form and have such other provisions as Travelers and Citicorp may
reasonably specify) and (ii) instructions for use in surrendering the
Certificates in exchange for the Merger Consideration or shares of
Travelers Preferred Stock, as applicable. Upon surrender of a Certificate
for cancellation to the Exchange Agent, together with such letter of
transmittal, duly executed, and such other documents as may reasonably be
required by the Exchange Agent, the holder of such Certificate shall be
entitled to receive in exchange therefor a certificate representing that
number of whole shares of Travelers Common Stock or Travelers Preferred
Stock which such holder has the right to receive pursuant to the provisions
of this Article II, certain dividends or other distributions in accordance
with Section 2.02(c) and cash in lieu of any fractional share of Travelers
Common Stock in accordance with Section 2.02(e), and the Certificate so
surrendered shall forthwith be cancelled. In the event of a transfer of
ownership of Citicorp Common Stock or Citicorp Preferred Stock which is not
registered in the transfer records of Citicorp, a certificate representing
the proper number of shares of Travelers Common Stock or Travelers
Preferred Stock may be issued to a person other than the person in whose
name the Certificate so surrendered is registered if such Certificate is
properly endorsed or otherwise in proper form for transfer and the person
requesting such issuance pays any transfer or other taxes required by
reason of the issuance of shares of Travelers Common Stock or Travelers
Preferred Stock to a person other than the registered holder of such
Certificate or establishes to the satisfaction of Travelers that such tax
has been paid or is not applicable. Until surrendered as contemplated by
this Section 2.02, each Certificate shall be deemed at any time after the
Effective Time to represent only the right to receive upon such surrender
the Merger Consideration or shares of Travelers Preferred Stock, as
applicable, which the holder thereof has the right to receive in respect of
such Certificate pursuant to the provisions of this Article II, certain
dividends or other distributions in accordance with Section 2.02(c) and
cash in lieu of any fractional share of Travelers Common Stock in
accordance with Section 2.02(e). No interest shall be paid or will accrue
on any cash payable to holders of Certificates pursuant to the provisions
of this Article II.
(c) Distributions with Respect to Unexchanged Shares. No
dividends or other distributions with respect to Travelers Common Stock or
Travelers Preferred Stock with a record date after the Effective Time shall
be paid to the holder of any unsurrendered Certificate with respect to the
shares of Travelers Common Stock or Travelers Preferred Stock represented
thereby, and, in the case of Certificates representing Citicorp Common
Stock, no cash payment in lieu of fractional shares shall be paid to any
such holder pursuant to Section 2.02(e), and all such dividends, other
distributions and cash in lieu of fractional shares of Travelers Common
Stock shall be paid by Travelers to the Exchange Agent and shall be
included in the Exchange Fund, in each case until the surrender of such
Certificate in accordance with this Article II. Subject to the effect of
applicable escheat or similar laws, following surrender of any such
Certificate there shall be paid to the holder of the certificate
representing whole shares of Travelers Common Stock or Travelers Preferred
Stock issued in exchange therefor, without interest, (i) at the time of
such surrender, the amount of dividends or other distributions with a
record date after the Effective Time theretofore paid with respect to such
whole shares of Travelers Common Stock or Travelers Preferred Stock, and,
in the case of Certificates representing Citicorp Common Stock, the amount
of any cash payable in lieu of a fractional share of Travelers Common Stock
to which such holder is entitled pursuant to Section 2.02(e) and (ii) at
the appropriate payment date, the amount of dividends or other
distributions with a record date after the Effective Time but prior to such
surrender and with a payment date subsequent to such surrender payable with
respect to such whole shares of Travelers Common Stock or Travelers
Preferred Stock.
(d) No Further Ownership Rights in Citicorp Common Stock
or Citicorp Preferred Stock. All shares of Travelers Common Stock or
Travelers Preferred Stock issued upon the surrender for exchange of
Certificates in accordance with the terms of this Article II (including any
cash paid pursuant to this Article II) shall be deemed to have been issued
(and paid) in full satisfaction of all rights pertaining to the shares of
Citicorp Common Stock or Citicorp Preferred Stock, as applicable,
theretofore represented by such Certificates, subject, however, to the
Surviving Corporation's obligation to pay any dividends or make any other
distributions with a record date prior to the Effective Time which may have
been declared or made by Citicorp on such shares of Citicorp Common Stock
or Citicorp Preferred Stock which remain unpaid at the Effective Time, and
there shall be no further registration of transfers on the stock transfer
books of the Surviving Corporation of the shares of Citicorp Common Stock
or Citicorp Preferred Stock which were outstanding immediately prior to the
Effective Time. If, after the Effective Time, Certificates are presented to
the Surviving Corporation or the Exchange Agent for any reason, they shall
be cancelled and exchanged as provided in this Article II, except as
otherwise provided by law.
(e) No Fractional Shares.
(i) No certificates or scrip representing fractional
shares of Travelers Common Stock shall be issued upon the surrender
for exchange of Certificates, no dividend or distribution of
Travelers shall relate to such fractional share interests and such
fractional share interests will not entitle the owner thereof to vote
or to any rights of a stockholder of Travelers.
(ii) As promptly as practicable following the Effective
Time, the Exchange Agent shall determine the excess of (A) the number
of whole shares of Travelers Common Stock delivered to the Exchange
Agent by Travelers pursuant to Section 2.02(a) over (B) the aggregate
number of whole shares of Travelers Common Stock to be distributed to
former holders of Citicorp Common Stock pursuant to Section 2.02(b)
(such excess being herein called the "Excess Shares"). Following the
Effective Time, the Exchange Agent shall, on behalf of former holders
of Certificates representing Citicorp Common Stock, sell the Excess
Shares at then-prevailing prices on The New York Stock Exchange, Inc.
(the "NYSE"), all in the manner provided in Section 2.02(e)(iii).
(iii) The sale of the Excess Shares by the Exchange Agent
shall be executed on the NYSE through one or more member firms of the
NYSE and shall be executed in round lots to the extent practicable.
The Exchange Agent shall use reasonable efforts to complete the sale
of the Excess Shares as promptly following the Effective Time as, in
the Exchange Agent's sole judgment, is practicable consistent with
obtaining the best execution of such sales in light of prevailing
market conditions. Until the net proceeds of such sale or sales have
been distributed to the holders of Certificates formerly representing
Citicorp Common Stock, the Exchange Agent shall hold such proceeds in
trust for such holders (the "Common Shares Trust"). The Surviving
Corporation shall pay all commissions, transfer taxes and other
out-of-pocket transaction costs, including the expenses and
compensation of the Exchange Agent incurred in connection with such
sale of the Excess Shares. The Exchange Agent shall determine the
portion of the Common Shares Trust to which each former holder of
Citicorp Common Stock is entitled, if any, by multiplying the amount
of the aggregate net proceeds comprising the Common Shares Trust by a
fraction, the numerator of which is the amount of the fractional
share interest to which such former holder of Citicorp Common Stock
is entitled (after taking into account all shares of Citicorp Common
Stock held at the Effective Time by such holder) and the denominator
of which is the aggregate amount of fractional share interests to
which all former holders of Citicorp Common Stock are entitled.
(iv) Notwithstanding the provisions of Section
2.02(e)(ii) and (iii), the Surviving Corporation may elect at its
option, exercised prior to the Effective Time, in lieu of the
issuance and sale of Excess Shares and the making of the payments
hereinabove contemplated, to pay each former holder of Citicorp
Common Stock an amount in cash equal to the product obtained by
multiplying (A) the fractional share interest to which such former
holder (after taking into account all shares of Citicorp Common Stock
held at the Effective Time by such holder) would otherwise be
entitled by (B) the closing price for a share of Travelers Common
Stock as reported on the NYSE Composite Transaction Tape (as reported
in The Wall Street Journal, or, if not reported thereby, any other
authoritative source) on the Closing Date, and, in such case, all
references herein to the cash proceeds of the sale of the Excess
Shares and similar references shall be deemed to mean and refer to
the payments calculated as set forth in this Section 2.02(e)(iv).
(v) As soon as practicable after the determination of the
amount of cash, if any, to be paid to holders of Certificates
formerly representing Citicorp Common Stock with respect to any
fractional share interests, the Exchange Agent shall make available
such amounts to such holders of Certificates formerly representing
Citicorp Common Stock subject to and in accordance with the terms of
Section 2.02(c).
(f) Termination of Exchange Fund. Any portion of the
Exchange Fund which remains undistributed to the holders of the
Certificates for six months after the Effective Time shall be delivered to
Travelers, upon demand, and any holders of the Certificates who have not
theretofore complied with this Article II shall thereafter look only to
Travelers for payment of their claim for Merger Consideration or shares of
Travelers Preferred Stock, any dividends or distributions with respect to
Travelers Common Stock or Travelers Preferred Stock, as applicable, and any
cash in lieu of fractional shares of Travelers Common Stock.
(g) No Liability. None of Travelers, Citicorp or the
Exchange Agent shall be liable to any person in respect of any shares of
Travelers Common Stock or Travelers Preferred Stock, any dividends or
distributions with respect thereto, any cash in lieu of fractional shares
of Travelers Common Stock or any cash from the Exchange Fund, in each case,
delivered to a public official pursuant to any applicable abandoned
property, escheat or similar law. If any Certificate shall not have been
surrendered prior to two years after the Effective Time (or immediately
prior to such earlier date on which any Merger Consideration or shares of
Travelers Preferred Stock, any dividends or distributions payable to the
holder of such Certificate or any cash payable to the holder of such
Certificate formerly representing Citicorp Common Stock pursuant to this
Article II, would otherwise escheat to or become the property of any
Governmental Entity (as defined in Section 3.01(d)), any such Merger
Consideration or shares of Travelers Preferred Stock, dividends or
distributions in respect of such Certificate or such cash shall, to the
extent permitted by applicable law, become the property of the Surviving
Corporation, free and clear of all claims or interest of any person
previously entitled thereto.
(h) Investment of Exchange Fund. The Exchange Agent shall
invest any cash included in the Exchange Fund, as directed by Travelers, on
a daily basis. Any interest and other income resulting from such
investments shall be paid to Travelers.
(i) Lost Certificates. If any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by
the person claiming such Certificate to be lost, stolen or destroyed and,
if required by the Surviving Corporation, the posting by such person of a
bond in such reasonable amount as the Surviving Corporation may direct as
indemnity against any claim that may be made against it with respect to
such Certificate, the Exchange Agent shall issue in exchange for such lost,
stolen or destroyed Certificate the Merger Consideration or shares of
Travelers Preferred Stock and, if applicable, any unpaid dividends and
distributions on shares of Travelers Common Stock or Travelers Preferred
Stock deliverable in respect thereof and any cash in lieu of fractional
shares, in each case, due to such person pursuant to this Agreement.
SECTION 2.03 Certain Adjustments. If after the date hereof and
on or prior to the Effective Time the outstanding shares of Travelers
Common Stock or Citicorp Common Stock shall be changed into a different
number of shares by reason of any reclassification, recapitalization,
split-up, combination or exchange of shares, or any dividend payable in
stock or other securities shall be declared thereon with a record date
within such period, or any similar event shall occur (any such action, an
"Adjustment Event"), the Exchange Ratio shall be adjusted accordingly to
provide to the holders of Citicorp Common Stock the same economic effect
and percentage ownership of Travelers Common Stock as contemplated by this
Agreement prior to such reclassification, recapitalization, split-up,
combination, exchange or dividend or similar event.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01 Representations and Warranties of Citicorp. Except
as disclosed in the Citicorp Filed SEC Documents (as defined in Section
3.01(g)) or as set forth on the Disclosure Schedule delivered by Citicorp
to Travelers prior to the execution of this Agreement (the "Citicorp
Disclosure Schedule") and making reference to the particular subsection of
this Agreement to which exception is being taken, Citicorp represents and
warrants to Travelers as follows:
(a) Organization, Standing and Corporate Power. Each of
Citicorp and its subsidiaries (as defined in Section 8.03) is a corporation
or other legal entity duly organized, validly existing and in good standing
(with respect to jurisdictions which recognize such concept) under the laws
of the jurisdiction in which it is organized and has the requisite
corporate or other power, as the case may be, and authority to carry on its
business as now being conducted, except, as to subsidiaries, for those
jurisdictions where the failure to be so organized, existing or in good
standing individually or in the aggregate would not have a material adverse
effect (as defined in Section 8.03) on Citicorp. Each of Citicorp and its
subsidiaries is duly qualified or licensed to do business and is in good
standing (with respect to jurisdictions which recognize such concept) in
each jurisdiction in which the nature of its business or the ownership,
leasing or operation of its properties makes such qualification or
licensing necessary, except for those jurisdictions where the failure to be
so qualified or licensed or to be in good standing individually or in the
aggregate would not have a material adverse effect on Citicorp. Citicorp is
duly registered as a bank holding company under the Bank Holding Company
Act of 1956, as amended (the "BHC Act"). Citicorp has made available to
Travelers prior to the execution of this Agreement complete and correct
copies of its certificate of incorporation and by-laws, each as amended to
date.
(b) Subsidiaries. Section 3.01(b) of the Citicorp
Disclosure Schedule includes all the subsidiaries of Citicorp which as of
the date of this Agreement are Significant Subsidiaries (as defined in Rule
1-02 of Regulation S-X of the Securities and Exchange Commission (the
"SEC")). All the outstanding shares of capital stock of, or other equity
interests in, each Significant Subsidiary (i) have been validly issued and
are fully paid and nonassessable, (ii) are owned directly or indirectly by
Citicorp, free and clear of all pledges, claims, liens, charges,
encumbrances and security interests of any kind or nature whatsoever
(collectively, "Liens") and (iii) are free of any other restriction
(including any restriction on the right to vote, sell or otherwise dispose
of such capital stock or other ownership interests), except in the case of
clauses (ii) and (iii) for any Liens or restrictions that would not have a
material adverse effect on Citicorp.
(c) Capital Structure. The authorized capital stock of
Citicorp consists of (i) 800,000,000 shares of Citicorp Common Stock, (ii)
20,000,000 shares of Class B Common Stock, par value $1.00 per share, of
Citicorp ("Citicorp Class B Common Stock") and (iii) 20,000,000 shares of
preferred stock, without par value, of Citicorp ("Citicorp Authorized
Preferred Stock"), of which 4,000,000 shares have been designated as Second
Series Preferred Stock, 1,500,000 shares have been designated as Third
Series Preferred Stock, 1,000,000 shares have been designated as Fourth
Series Preferred Stock, 400,000 shares have been designated as Seventh
Series Preferred Stock, 625,000 shares have been designated as Series 8A
Preferred Stock, 625,000 shares have been designated as Series 8B Preferred
Stock, 5,000,000 shares have been designated as Series 9 Preferred Stock,
5,900 shares have been designated as Series 12 Preferred Stock, 6,600
shares have been designated as Series 13 Preferred Stock, 800,000 shares
have been designated as Series 14 Preferred Stock, 7,200,000 shares have
been designated as Series 15 Preferred Stock, 1,300,000 shares have been
designated as Series 16 Preferred Stock, 1,400,000 shares have been
designated as Series 17 Preferred Stock, 700,000 shares have been
designated as Series 18 Preferred Stock, 400,000 shares have been
designated as Series 19 Preferred Stock, 500,000 shares have been
designated as Series 20 Preferred Stock, 600,000 shares have been
designated as Series 21 Preferred Stock, 500,000 shares have been
designated as Series 22 Preferred Stock, and 250,000 shares have been
designated as Series 23 Preferred Stock (in each case, as defined in
Section 3.01(c) of the Citicorp Disclosure Schedule). "Citicorp Preferred
Stock" means Citicorp Authorized Preferred Stock that is issued and
outstanding from time to time. At the close of business on March 31, 1998:
(i) 506,298,235 shares of Citicorp Common Stock were issued and
outstanding; (ii) 54,773,606 shares of Citicorp Common Stock were held by
Citicorp in its treasury (such shares, "Citicorp Treasury Stock"); (iii) no
shares of Citicorp Class B Common Stock were issued or outstanding; (iv)
6,900,000 shares of Citicorp Preferred Stock were issued and outstanding as
follows: (1) 625,000 shares of Series 8A Preferred Stock were issued and
outstanding, (2) 625,000 shares of Series 8B Preferred Stock were issued
and outstanding, (3) 1,300,000 shares of Series 16 Preferred Stock were
issued and outstanding, (4) 1,400,000 shares of Series 17 Preferred Stock
were issued and outstanding, (5) 700,000 shares of Series 18 Preferred
Stock were issued and outstanding, (6) 400,000 shares of Series 19
Preferred Stock were issued and outstanding, (7) 500,000 shares of Series
20 Preferred Stock were issued and outstanding, (8) 600,000 shares of
Series 21 Preferred Stock were issued and outstanding, (9) 500,000 shares
of Series 22 Preferred Stock were issued and outstanding, (10) 250,000
shares of Series 23 Preferred Stock were issued and outstanding and (11)
163,945 Book Value Shares as described in Section 3.01(c) of the Citicorp
Disclosure Schedule were issued and outstanding; (v) no shares of Citicorp
Preferred Stock were held by Citicorp in its treasury, other than shares
held for purposes of market making, proprietary trading or otherwise on
behalf of customers; and (vi) 80,038,906 shares of Citicorp Common Stock
were reserved for issuance pursuant to the Savings Incentive Plan of
Citicorp, the 1997 Stock Purchase Plan of Citicorp, the 1997 Stock
Incentive Plan of Citicorp, the 1988 Stock Incentive Plan of Citicorp and
the Dividend Reinvestment and Common Stock Purchase Plan of Citicorp
(collectively, the "Citicorp Stock Plans"), of which 28,449,057 shares were
subject to outstanding employee stock options to purchase Citicorp Common
Stock granted under the Citicorp Stock Plans at December 31, 1997. Citicorp
covenants to provide in writing to Travelers no later than April 7, 1998
the number of shares of Citicorp Common Stock which at the close of
business on March 31, 1998 were subject to outstanding employee stock
options or other rights to purchase or receive Citicorp Common Stock
granted under the Citicorp Stock Plans (collectively, "Citicorp Employee
Stock Options"). All of the series of Citicorp Preferred Stock currently
outstanding rank on a parity with each other with respect to payment of
dividends and distribution of assets upon liquidation, dissolution or
winding up. None of the series of Citicorp Preferred Stock currently
outstanding has any voting rights, except for rights to elect directors in
the event of a default in the payment of dividends and except for the
rights set forth on Section 3.01(c) of the Citicorp Disclosure Schedule.
All outstanding shares of capital stock of Citicorp are, and all shares
which may be issued will be, when issued, duly authorized, validly issued,
fully paid and nonassessable and not subject to preemptive rights. Except
as set forth in this Section 3.01(c), except for changes since March 31,
1998 resulting from the issuance of shares of Citicorp Common Stock
pursuant to the Citicorp Employee Stock Options and other rights referred
to above in this Section 3.01(c) and except as permitted by Section
4.01(a)(ii), (x) there are not issued, reserved for issuance or outstanding
(A) any shares of capital stock or other voting securities of Citicorp, (B)
any securities of Citicorp convertible into or exchangeable or exercisable
for shares of capital stock or voting securities of Citicorp and (C) any
warrants, calls, options or other rights to acquire from Citicorp or any
Citicorp subsidiary, and no obligation of Citicorp or any Citicorp
subsidiary to issue, any capital stock, voting securities or securities
convertible into or exchangeable or exercisable for capital stock or voting
securities of Citicorp and (y) other than agreements entered into with
respect to the Citicorp Stock Plans in effect as of the close of business
on March 31, 1998, there are no outstanding obligations of Citicorp or any
Citicorp subsidiary to repurchase, redeem or otherwise acquire any such
securities or to issue, deliver or sell, or cause to be issued, delivered
or sold, any such securities. Neither Citicorp nor any Citicorp subsidiary
is a party to any voting agreement with respect to the voting of any such
securities. There are no outstanding (A) securities of Citicorp or any
Citicorp subsidiary convertible into or exchangeable or exercisable for
shares of capital stock or other voting securities or ownership interests
in any Citicorp subsidiary, (B) warrants, calls, options or other rights to
acquire from Citicorp or any Citicorp subsidiary, and no obligation of
Citicorp or any Citicorp subsidiary to issue, any capital stock, voting
securities or other ownership interests in, or any securities convertible
into or exchangeable or exercisable for any capital stock, voting
securities or ownership interests in, any Citicorp subsidiary or (C)
obligations of Citicorp or any Citicorp subsidiary to repurchase, redeem or
otherwise acquire any such outstanding securities of Citicorp subsidiaries
or to issue, deliver or sell, or cause to be issued, delivered or sold, any
such securities. Other than the Citicorp subsidiaries, Citicorp does not
directly or indirectly beneficially own any securities or other beneficial
ownership interests in any other entity other than (i) in the ordinary
course of trading, underwriting, asset management, merchant banking,
securitization, insurance portfolios or market making activities of
Citicorp or the Citicorp subsidiaries or the Citicorp Funds or ownership of
the Citicorp Funds or (ii) as are not material to Citicorp and its
subsidiaries, taken as a whole. "Citicorp Fund" means (i) any investment
account advised or managed by Citicorp on behalf of third parties and (ii)
any partnership, limited liability company, or other similar investment
vehicle or entity engaged in the business of making investments of which
Citicorp or a Citicorp subsidiary acts as the general partner, managing
member, manager, advisor or the equivalent or as the general partner of
another Citicorp Fund.
(d) Authority; Noncontravention. Citicorp has all
requisite corporate power and authority to enter into this Agreement and,
subject to the Citicorp Stockholder Approval (as defined in Section
3.01(l)), to consummate the transactions contemplated by this Agreement.
The execution and delivery of this Agreement by Citicorp and the
consummation by Citicorp of the transactions contemplated hereby have been
duly authorized by all necessary corporate action on the part of Citicorp,
subject, in the case of the Merger, to the Citicorp Stockholder Approval.
This Agreement has been duly executed and delivered by Citicorp and,
assuming the due authorization, execution and delivery by Travelers,
constitutes a legal, valid and binding obligation of Citicorp, enforceable
against Citicorp in accordance with its terms. The execution and delivery
of this Agreement does not, and the consummation of the transactions
contemplated by this Agreement and compliance with the provisions of this
Agreement will not, conflict with, or result in any violation of, or
default (with or without notice or lapse of time, or both) under, or give
rise to a right of termination, cancellation or acceleration of any
obligation or loss of a benefit under, or result in the creation of any
Lien upon any of the properties or assets of Citicorp or any of its
subsidiaries under, (i) the certificate of incorporation or by-laws of
Citicorp or the comparable organizational documents of any of its
subsidiaries, (ii) any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument, permit, concession,
franchise, license or similar authorization applicable to Citicorp or any
of its subsidiaries or their respective properties or assets or (iii)
subject to the governmental filings and other matters referred to in the
following sentence, any judgment, order, decree, statute, law, ordinance,
rule or regulation applicable to Citicorp or any of its subsidiaries or
their respective properties or assets, other than, in the case of clauses
(ii) and (iii), any such conflicts, violations, defaults, rights, losses or
Liens that individually or in the aggregate would not (x) have a material
adverse effect on Citicorp or (y) reasonably be expected to materially
impair or delay the ability of Citicorp to perform its obligations under
this Agreement. No consent, approval, order or authorization of, action by
or in respect of, or registration, declaration or filing with, any federal,
state, local or foreign government, any court, administrative, regulatory
or other governmental agency, commission or authority or any
non-governmental U.S. or foreign self-regulatory agency, commission or
authority or any arbitral tribunal (each, a "Governmental Entity") is
required by Citicorp or any of its subsidiaries in connection with the
execution and delivery of this Agreement by Citicorp or the consummation by
Citicorp of the transactions contemplated hereby, except for: (1) the
filing with the SEC of (A) a proxy statement relating to the Citicorp
Stockholders Meeting (as defined in Section 5.01(b)) (such proxy statement,
together with the proxy statement relating to the Travelers Stockholders
Meeting (as defined in Section 5.01(c)), in each case as amended or
supplemented from time to time, the "Joint Proxy Statement"), and (B) such
reports under Section 13(a), 13(d), 15(d) or 16(a) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), as may be required
in connection with this Agreement and the transactions contemplated hereby;
(2) the filing of the Certificate of Merger with the Secretary of State of
the State of Delaware and appropriate documents with the relevant
authorities of other states in which Citicorp is qualified to do business
and such filings with Governmental Entities to satisfy the applicable
requirements of state securities or "blue sky" laws; (3) the consents,
approvals and notices required under the Investment Company Act of 1940, as
amended (the "1940 Act"), and the Investment Advisors Act of 1940, as
amended (the "Advisors Act"); (4) filings in respect of, and approvals and
authorizations of, any Governmental Entity having jurisdiction over the
securities, commodities, banking, insurance or other financial services
businesses; and (5) such consents, approvals, orders or authorizations the
failure of which to be made or obtained individually or in the aggregate
would not (x) have a material adverse effect on Citicorp or (y) reasonably
be expected to materially impair or delay the ability of Citicorp to
perform its obligations under this Agreement.
(e) Reports; Undisclosed Liabilities.
(i) Citicorp has filed all required reports, schedules,
forms, statements and other documents (including exhibits and all
other information incorporated therein) with the SEC since January 1,
1995 (the "Citicorp SEC Documents"). As of their respective dates,
the Citicorp SEC Documents complied in all material respects with the
requirements of the Securities Act of 1933, as amended (the
"Securities Act"), or the Exchange Act, as the case may be, and the
rules and regulations of the SEC promulgated thereunder applicable to
such Citicorp SEC Documents, and none of the Citicorp SEC Documents
when filed contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. Except to
the extent that information contained in any Citicorp SEC Document
has been revised or superseded by a later filed Citicorp SEC
Document, none of the Citicorp SEC Documents contains any untrue
statement of a material fact or omits to state any material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they
were made, not misleading. The financial statements of Citicorp
included in the Citicorp SEC Documents comply as to form, as of their
respective dates of filing with the SEC, in all material respects
with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto, have been prepared in
accordance with generally accepted accounting principles (except, in
the case of unaudited statements, as permitted by Form 10-Q of the
SEC) applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto) and fairly present
in all material respects the consolidated financial position of
Citicorp and its consolidated subsidiaries as of the dates thereof
and the consolidated results of their operations and cash flows for
the periods then ended (subject, in the case of unaudited statements,
to normal recurring year-end audit adjustments). Except (A) as
reflected in such financial statements or in the notes thereto or (B)
for liabilities incurred in connection with this Agreement or the
transactions contemplated hereby, neither Citicorp nor any of its
subsidiaries has any liabilities or obligations of any nature which,
individually or in the aggregate, would have a material adverse
effect on Citicorp.
(ii) Except as would not have a material adverse effect
on Citicorp, Citicorp and each of its subsidiaries have timely filed
all reports, registrations and statements, together with any
amendments required to be made with respect thereto, that they were
required to file since January 1, 1995 with (1) the Board of
Governors of the Federal Reserve System (the "Federal Reserve
Board"), (2) the Federal Deposit Insurance Corporation, (3) the
Office of the Comptroller of the Currency, (4) any state banking or
insurance commission or any other state regulatory authority, (5) the
Office of Thrift Supervision and (6) any other self-regulatory
organization (clauses (1) through (6), collectively, the "Citicorp
Regulatory Agencies"), and have paid all fees and assessments due and
payable in connection therewith. Except for normal examinations
conducted by a Citicorp Regulatory Agency in the regular course of
the business of Citicorp and its subsidiaries, no Citicorp Regulatory
Agency has initiated any proceeding or, to the knowledge of Citicorp,
investigation into the business or operations of Citicorp or any of
its subsidiaries since January 1, 1995. Except as would not have a
material adverse effect on Citicorp, there is no unresolved
violation, criticism, or exception by any Citicorp Regulatory Agency
with respect to any report or statement relating to any examinations
of Citicorp or any of its subsidiaries.
(iii) Except in each case as would not have a material
adverse effect on Citicorp, the annual statements of each subsidiary
of Citicorp that is an insurer for the years ended December 31, 1996
and 1997 as filed with the respective Departments of Insurance of
each such subsidiary's domiciliary states have been prepared in
accordance with the accounting practices prescribed or permitted by
each such Department of Insurance (the "Citicorp State Statutory
Accounting Principles"), and such accounting practices have been
applied on a basis consistent with the Citicorp State Statutory
Accounting Principles applicable to each such annual statement
throughout the periods involved, except as set forth in the notes,
exhibits or schedules thereto, and such annual statements present
fairly in all material respects the financial position and results of
operations of each such subsidiary as of the dates and for the
periods covered thereby in accordance with the Citicorp State
Statutory Accounting Principles applicable to each such annual
statement.
(f) Information Supplied. None of the information
supplied or to be supplied by Citicorp specifically for inclusion or
incorporation by reference in (i) the registration statement on Form S-4 to
be filed with the SEC by Travelers in connection with the issuance of
Travelers Common Stock and Travelers Preferred Stock in the Merger (the
"Form S-4") will, at the time the Form S-4 becomes effective under the
Securities Act, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make
the statements therein not misleading or (ii) the Joint Proxy Statement
will, at the date it is first mailed to Citicorp's stockholders or at the
time of the Citicorp Stockholders Meeting, contain any untrue statement of
a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading. The Joint
Proxy Statement will comply as to form in all material respects with the
requirements of the Exchange Act and the rules and regulations thereunder,
except that no representation or warranty is made by Citicorp with respect
to statements made or incorporated by reference therein based on
information supplied by Travelers specifically for inclusion or
incorporation by reference in the Joint Proxy Statement.
(g) Absence of Certain Changes or Events. Except for
liabilities incurred in connection with this Agreement or the transactions
contemplated hereby, since December 31, 1997, Citicorp and its subsidiaries
have conducted their business only in the ordinary course or as disclosed
in any Citicorp Filed SEC Document, and there has not been (1) any material
adverse change in Citicorp, (2) any declaration, setting aside or payment
of any dividend or other distribution (whether in cash, stock or property)
with respect to any of Citicorp's capital stock, other than regular
quarterly cash dividends on the Citicorp Common Stock and dividends payable
on Citicorp Preferred Stock in accordance with their terms as of the date
of this Agreement (or as of their date of issue if subsequent to the date
of this Agreement), (3) any split, combination or reclassification of any
of Citicorp's capital stock or any issuance or the authorization of any
issuance of any other securities in respect of, in lieu of or in
substitution for shares of Citicorp's capital stock, except for issuances
of Citicorp Common Stock upon the exercise of Citicorp Employee Stock
Options awarded prior to the date hereof in accordance with their present
terms or issued pursuant to Section 4.01(a) or in accordance with the terms
of the Citicorp Stock Plans, (4) (A) any granting by Citicorp or any of its
subsidiaries to any current or former director, executive officer or other
key employee of Citicorp or its subsidiaries of any increase in
compensation, bonus or other benefits, except for normal increases in the
ordinary course of business or as was required under any employment
agreements in effect as of the date of the most recent audited financial
statements included in the Citicorp SEC Documents filed and publicly
available prior to the date of this Agreement (as amended to the date of
this Agreement, the "Citicorp Filed SEC Documents"), (B) any granting by
Citicorp or any of its subsidiaries to any such current or former director,
executive officer or key employee of any increase in severance or
termination pay, except in the ordinary course of business, or (C) any
entry by Citicorp or any of its subsidiaries into, or any amendment of, any
employment, deferred compensation, consulting, severance, termination or
indemnification agreement with any such current or former director,
executive officer or key employee, other than in the ordinary course of
business, (5) except insofar as may have been disclosed in the Citicorp
Filed SEC Documents or required by a change in generally accepted
accounting principles, any change in accounting methods, principles or
practices by Citicorp materially affecting its assets, liabilities or
business or (6) except insofar as may have been disclosed in the Citicorp
Filed SEC Documents, any tax election that individually or in the aggregate
would reasonably be expected to have a material adverse effect on Citicorp
or any of its tax attributes or any settlement or compromise of any
material income tax liability.
(h) Compliance with Applicable Laws; Litigation.
(i) Citicorp, its subsidiaries and employees hold all
permits, licenses, variances, exemptions, orders, registrations and
approvals of all Governmental Entities which are required for the
operation of the businesses of Citicorp and its subsidiaries
(collectively, the "Citicorp Permits"), except where the failure to
have any such Citicorp Permits individually or in the aggregate would
not have a material adverse effect on Citicorp. Citicorp and its
subsidiaries are in compliance with the terms of the Citicorp Permits
and all applicable statutes, laws, ordinances, rules and regulations,
except where the failure so to comply individually or in the
aggregate would not have a material adverse effect on Citicorp. As of
the date of this Agreement, except as disclosed in the Citicorp Filed
SEC Documents, no action, demand, requirement or investigation by any
Governmental Entity and no suit, action or proceeding by any person,
in each case with respect to Citicorp or any of its subsidiaries or
any of their respective properties is pending or, to the knowledge
(as defined in Section 8.03) of Citicorp, threatened, other than, in
each case, those the outcome of which individually or in the
aggregate would not (i) reasonably be expected to have a material
adverse effect on Citicorp or (ii) reasonably be expected to
materially impair or delay the ability of Citicorp to perform its
obligations under this Agreement.
(ii) Except as would not have a material adverse effect
on Citicorp, neither Citicorp nor any of its subsidiaries is subject
to any outstanding order, injunction or decree or is a party to any
written agreement, consent agreement or memorandum of understanding
with, or is a party to any commitment letter or similar undertaking
to, or is subject to any order or directive by, or is a recipient of
any supervisory letter from or has adopted any resolutions at the
request of any Governmental Entity that restricts in any material
respect the conduct of its business or that in any manner relates to
its capital adequacy, its credit policies, its management or its
business (each, a "Regulatory Agreement"), nor has Citicorp or any of
its subsidiaries or affiliates (as defined in Section 8.03) been
advised since January 1, 1995 by any Governmental Entity that it is
considering issuing or requesting any such Regulatory Agreement that
would have a material adverse effect on Citicorp. After the date of
this Agreement, no matters referred to in this Section 3.01(h)(ii)
shall have arisen.
(i) Absence of Changes in Benefit Plans. Since December
31, 1997, there has not been any adoption or amendment in any material
respect by Citicorp or any of its subsidiaries of any collective bargaining
agreement or any material bonus, pension, profit sharing, deferred
compensation, incentive compensation, stock ownership, stock purchase,
stock option, phantom stock, retirement, vacation, severance, disability,
death benefit, hospitalization, medical or other plan, arrangement or
understanding providing benefits to any current or former employee, officer
or director of Citicorp or any of its wholly owned subsidiaries
(collectively, the "Citicorp Benefit Plans"), or any material change in any
actuarial or other assumption used to calculate funding obligations with
respect to any Citicorp pension plans, or any change in the manner in which
contributions to any Citicorp pension plans are made or the basis on which
such contributions are determined.
(j) ERISA Compliance.
(i) Except as set forth on Section 3.1(j)(i) of the
Citicorp Disclosure Schedule, with respect to the Citicorp Benefit
Plans, no event has occurred and, to the knowledge of Citicorp, there
exists no condition or set of circumstances, in connection with which
Citicorp or any of its subsidiaries could be subject to any liability
that individually or in the aggregate would have a material adverse
effect on Citicorp under the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), the Code or any other applicable law.
(ii) Each Citicorp Benefit Plan has been administered in
accordance with its terms, except for any failures so to administer
any Citicorp Benefit Plan that individually or in the aggregate would
not reasonably be expected to have a material adverse effect on
Citicorp. Citicorp, its subsidiaries and all the Citicorp Benefit
Plans are in compliance with the applicable provisions of ERISA, the
Code and all other applicable laws and the terms of all applicable
collective bargaining agreements, except for any failures to be in
such compliance that individually or in the aggregate would not
reasonably be expected to have a material adverse effect on Citicorp.
Each Citicorp Benefit Plan that is intended to be qualified under
Section 401(a) or 401(k) of the Code has received a favorable
determination letter from the IRS that it is so qualified and each
trust established in connection with any Citicorp Benefit Plan that
is intended to be exempt from federal income taxation under Section
501(a) of the Code has received a determination letter from the IRS
that such trust is so exempt. To the knowledge of Citicorp, no fact
or event has occurred since that date of any determination letter
from the IRS which is reasonably likely to affect adversely the
qualified status of any such Citicorp Benefit Plan or the exempt
status of any such trust, except for any occurrence that individually
or in the aggregate would not reasonably be expected to have a
material adverse effect on Citicorp.
(iii) Except as any of the following either individually
or in the aggregate would not reasonably be expected to have a
material adverse effect on Citicorp, (x) neither Citicorp nor any
trade or business, whether or not incorporated (an "ERISA
Affiliate"), which together with Citicorp would be deemed to be a
"single employer" within the meaning of Section 4001(b) of ERISA, has
incurred any liability under Title IV of ERISA and no condition
exists that presents a risk to Citicorp or any ERISA Affiliate of
Citicorp of incurring any such liability (other than liability for
benefits or premiums to the Pension Benefit Guaranty Corporation
arising in the ordinary course, (y) no Citicorp Benefit Plan has
incurred an "accumulated funding deficiency" (within the meaning of
Section 302 of ERISA or Section 412 of the Code) whether or not
waived and (z) to the knowledge of Citicorp, there are not any facts
or circumstances that would materially change the funded status of
any Citicorp Benefit Plan that is a "defined benefit" plan (as
defined in Section 3(35) of ERISA) since the date of the most recent
actuarial report for such plan. No Citicorp Benefit Plan is a
"multiemployer plan" within the meaning of Section 3(37) of ERISA.
(iv) Neither Citicorp nor any of its subsidiaries is a
party to any collective bargaining or other labor union contract
applicable to persons employed by Citicorp or any of its subsidiaries
and no collective bargaining agreement is being negotiated by
Citicorp or any of its subsidiaries, in each case that is material to
Citicorp and its subsidiaries taken as a whole. As of the date of
this Agreement, there is no labor dispute, strike or work stoppage
against Citicorp or any of its subsidiaries pending or, to the
knowledge of Citicorp, threatened which may interfere with the
respective business activities of Citicorp or any of its
subsidiaries, except where such dispute, strike or work stoppage
individually or in the aggregate would not reasonably be expected to
have a material adverse effect on Citicorp. As of the date of this
Agreement, to the knowledge of Citicorp, none of Citicorp, any of its
subsidiaries or any of their respective representatives or employees
has committed any unfair labor practice in connection with the
operation of the respective businesses of Citicorp or any of its
subsidiaries, and there is no charge or complaint against Citicorp or
any of its subsidiaries by the National Labor Relations Board or any
comparable governmental agency pending or threatened in writing,
except for any occurrence that individually or in the aggregate would
not reasonably be expected to have a material adverse effect on
Citicorp.
(v) No Citicorp Benefit Plan provides medical benefits
(whether or not insured) with respect to current or former employees
after retirement or other termination of service the cost of which is
material to Citicorp and its subsidiaries taken as a whole.
(vi) No amounts payable under the Citicorp Benefit Plans
solely as a result of the consummation of the transactions
contemplated by this Agreement will fail to be deductible for federal
income tax purposes by virtue of section 280G of the Code. Except as
disclosed in Section 3.01(j)(vi) of the Citicorp Disclosure Schedule,
the consummation of the transactions contemplated by this Agreement
will not, either alone or in combination with another event, (A)
entitle any current or former employee, officer or director of
Citicorp or any ERISA Affiliate of Citicorp to severance pay,
unemployment compensation or any other payment, except as expressly
provided in this Agreement, (B) accelerate the time of payment or
vesting, or increase the amount of compensation due any such
employee, officer or director or (C) constitute a "change of control"
under any Citicorp Benefit Plan, and Citicorp and its board of
directors have taken all required actions to effect the foregoing.
(k) Taxes.
(i) Each of Citicorp and its subsidiaries has filed all
material tax returns and reports required to be filed by it and all
such returns and reports are complete and correct in all material
respects, or requests for extensions to file such returns or reports
have been timely filed, granted and have not expired, except to the
extent that such failures to file, to be complete or correct or to
have extensions granted that remain in effect individually or in the
aggregate would not have a material adverse effect on Citicorp.
Citicorp and each of its subsidiaries has paid (or Citicorp has paid
on its behalf) all taxes (as defined below) shown as due on such
returns, and the most recent financial statements contained in the
Citicorp Filed SEC Documents reflect an adequate reserve for all
taxes payable by Citicorp and its subsidiaries for all taxable
periods and portions thereof accrued through the date of such
financial statements.
(ii) No deficiencies for any taxes have been proposed,
asserted or assessed against Citicorp or any of its subsidiaries that
are not adequately reserved for, except for deficiencies that
individually or in the aggregate would not have a material adverse
effect on Citicorp.
(iii) Neither Citicorp nor any of its subsidiaries has
taken any action or knows of any fact, agreement, plan or other
circumstance that is reasonably likely to prevent the Merger from
qualifying as a reorganization within the meaning of Section 368(a)
of the Code.
(iv) As used in this Agreement, "taxes" shall include all
(x) federal, state, local or foreign income, property, sales, excise,
use, occupation, service, transfer, payroll, franchise, withholding
and other taxes or similar governmental charges, fees, levies or
other assessments including any interest, penalties or additions with
respect thereto, (y) liability for the payment of any amounts of the
type described in clause (x) as a result of being a member of an
affiliated, consolidated, combined or unitary group, and (z)
liability for the payment of any amounts as a result of being party
to any tax sharing agreement or as a result of any express or implied
obligation to indemnify any other person with respect to the payment
of any amounts of the type described in clause (x) or (y).
(l) Voting Requirements. The affirmative vote of the
holders of a majority of the outstanding shares of Citicorp Common Stock at
the Citicorp Stockholders Meeting to adopt this Agreement (the "Citicorp
Stockholder Approval") is the only vote of the holders of any class or
series of Citicorp's capital stock necessary to approve and adopt this
Agreement and the transactions contemplated hereby. The Board of Directors
of Citicorp has duly and validly approved and taken all corporate action
required to be taken by the Citicorp Board of Directors for the
consummation of the transactions contemplated by this Agreement.
(m) State Takeover Statutes. The Board of Directors of
Citicorp has approved this Agreement and the consummation of the Merger and
the other transactions contemplated hereby and, assuming the accuracy of
Travelers' representation and warranty contained in Section 3.02(p), such
approval constitutes approval of the Merger and the other transactions
contemplated by this Agreement by the Board of Directors of Citicorp under
the provisions of Section 203 of the DGCL such that Section 203 of the DGCL
does not apply to the Merger or the other transactions contemplated by this
Agreement. To the knowledge of Citicorp, no other state takeover statute is
applicable to the Merger or the other transactions contemplated by this
Agreement.
(n) Accounting Matters. Citicorp has disclosed to its
independent public accountants all actions taken by it or its subsidiaries
that would impact the accounting of the business combination to be effected
by the Merger as a pooling of interests. As of the date hereof, Citicorp,
based on advice from its independent public accountants, believes that the
Merger will qualify for "pooling of interests" accounting.
(o) Brokers. No broker, investment banker, financial
advisor or other person is entitled to any broker's, finder's, financial
advisor's or other similar fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by
or on behalf of Citicorp.
(p) Ownership of Travelers Capital Stock. Except as set
forth in Section 3.01(p) of the Citicorp Disclosure Schedule, except for
shares owned by Citicorp Benefit Plans or shares held or managed for the
account of another person or as to which Citicorp is required to act as a
fiduciary or in a similar capacity, as of the date hereof, neither Citicorp
nor, to its knowledge without independent investigation, any of its
affiliates, (i) beneficially owns (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, or (ii) is party to any agreement,
arrangement or understanding for the purpose of acquiring, holding, voting
or disposing of, in each case, shares of capital stock of Travelers.
(q) Intellectual Property.
(i) Citicorp and its subsidiaries own or have a valid
license to use all trademarks, service marks and trade names
(including any registrations or applications for registration of any
of the foregoing) (collectively, the "Citicorp Intellectual
Property") necessary to carry on its business substantially as
currently conducted except for such Citicorp Intellectual Property
the failure of which to own or validly license individually or in the
aggregate would not reasonably be expected to have a material adverse
effect on Citicorp. Neither Citicorp nor any such subsidiary has
received any notice of infringement of or conflict with, and, to
Citicorp's knowledge, there are no infringements of or conflicts
with, the rights of others with respect to the use of any Citicorp
Intellectual Property that individually or in the aggregate, in
either such case, would reasonably be expected to have a material
adverse effect on Citicorp.
(ii) The consummation of the Merger and the other
transactions contemplated by this Agreement will not result in the
loss by Citicorp of any rights to use computer and telecommunication
software including source and object code and documentation and any
other media (including, without limitation, manuals, journals and
reference books) necessary to carry on its business substantially as
currently conducted and the loss of which would have a material
adverse effect on Citicorp.
(iii) The computer software operated by Citicorp which is
material to the conduct of its business is capable of providing or is
being adapted to provide uninterrupted millennium functionality to
record, store, process and present calendar dates falling on or after
January 1, 2000 in substantially the same manner and with the same
functionality as such software records, stores, processes and
presents such calendar dates falling on or before December 31, 1999,
except as would not have a material adverse effect on Citicorp. The
costs of the adaptations referred to in this clause (iii) will not
have a material adverse effect on Citicorp.
(r) Certain Contracts. Except as set forth in the
Citicorp Filed SEC Documents or as permitted pursuant to Section 4.01(a),
neither Citicorp nor any of its subsidiaries is a party to or bound by (i)
any agreement relating to the incurring of indebtedness (including sale and
leaseback and capitalized lease transactions and other similar financing
transactions) providing for payment or repayment in excess of $1 billion,
other than such agreements relating to indebtedness incurred in the
ordinary course of business of Citicorp's subsidiaries to finance their
securities and commodity portfolio positions and consumer finance business,
(ii) any "material contract" (as such term is defined in Item 601(b)(10) of
Regulation S-K of the SEC) or (iii) any non-competition agreement or any
other agreement or obligation which purports to limit in any material
respect the manner in which, or the localities in which, all or any
substantial portion of the business of Citicorp and its subsidiaries, taken
as a whole, is or would be conducted.
SECTION 3.02 Representations and Warranties of Travelers.
Except as disclosed in the Travelers Filed SEC Documents (as defined in
Section 3.02(g)) or as set forth on the Disclosure Schedule delivered by
Travelers to Citicorp prior to the execution of this Agreement (the
"Travelers Disclosure Schedule") and making reference to the particular
subsection of this Agreement to which exception is being taken, Travelers
represents and warrants to Citicorp as follows:
(a) Organization, Standing and Corporate Power. Each of
Travelers and its subsidiaries is a corporation or other legal entity duly
organized, validly existing and in good standing (with respect to
jurisdictions which recognize such concept) under the laws of the
jurisdiction in which it is organized and has the requisite corporate or
other power, as the case may be, and authority to carry on its business as
now being conducted, except, as to subsidiaries, for those jurisdictions
where the failure to be so organized, existing or in good standing
individually or in the aggregate would not have a material adverse effect
on Travelers. Each of Travelers and its subsidiaries is duly qualified or
licensed to do business and is in good standing (with respect to
jurisdictions which recognize such concept) in each jurisdiction in which
the nature of its business or the ownership, leasing or operation of its
properties makes such qualification or licensing necessary, except for
those jurisdictions where the failure to be so qualified or licensed or to
be in good standing individually or in the aggregate would not have a
material adverse effect on Travelers. Travelers has made available to
Citicorp prior to the execution of this Agreement complete and correct
copies of its certificate of incorporation and by-laws, each as amended to
date.
(b) Subsidiaries. Exhibit 21 to Travelers' Annual Report
on Form 10-K for the fiscal year ended December 31, 1997 includes all the
subsidiaries of Travelers which as of the date of this Agreement are
Significant Subsidiaries. All the outstanding shares of capital stock of,
or other equity interests in, each Significant Subsidiary (i) have been
validly issued and are fully paid and nonassessable, (ii) are owned
directly or indirectly by Travelers, free and clear of all Liens and (iii)
are free of any other restriction (including any restriction on the right
to vote, sell or otherwise dispose of such capital stock or other ownership
interests), except in the case of clauses (ii) and (iii) for any Liens or
restrictions that would not have a material adverse effect on Travelers.
(c) Capital Structure. The authorized capital stock of
Travelers consists of shares of Travelers Common Stock (1,500,000,000
shares of which are authorized as of the date hereof and an additional
1,500,000,000 shares are proposed to be authorized by Travelers
stockholders at the 1998 Annual Meeting of Travelers stockholders) and
30,000,000 shares of preferred stock, par value $1.00 per share, of
Travelers ("Travelers Authorized Preferred Stock"), of which 1,200,000
shares have been designated as Series A Preferred Stock, 2,500,000 shares
have been designated as Series B Preferred Stock, 8,000,000 shares have
been designated as Series C Preferred Stock, 7,500,000 shares have been
designated as Series D Preferred Stock, 4,444 shares have been designated
as Series Z Preferred Stock, 1,600,000 shares have been designated as
Series F Preferred Stock, 800,000 shares have been designated as Series G
Preferred Stock, 800,000 shares have been designated as Series H Preferred
Stock, 280,000 shares have been designated as Series I Preferred Stock,
400,000 shares have been designated as Series J Preferred Stock, 500,000
shares have been designated as Series K Preferred Stock, 690,000 shares
have been designated as Series L Preferred Stock, 800,000 shares have been
designated as Series M Preferred Stock and 5,000 shares have been
designated as Series Y Preferred Stock (in each case, as defined in Section
3.01(c) of the Travelers Disclosure Schedule). "Travelers Preferred Stock"
means Travelers Authorized Preferred Stock that is issued and outstanding
from time to time. At the close of business on March 31, 1998: (i)
1,151,944,402 shares of Travelers Common Stock were issued and outstanding;
(ii) 104,069,490 shares of Travelers Common Stock in the aggregate were
held by Travelers and its subsidiaries in their treasuries; (iii) 5,182,262
shares of Travelers Preferred Stock were issued and outstanding as follows:
(1) 1,600,000 shares of Series F Preferred Stock were issued and
outstanding (evidenced by 10,000,000 depositary shares, each of which
represents a one-fifth interest in a share of Series F Preferred Stock),
(2) 800,000 shares of Series G Preferred Stock were issued and outstanding
(evidenced by 4,000,000 depositary shares, each of which represents a
one-fifth interest in a share of Series G Preferred Stock), (3) 800,000
shares of Series H Preferred Stock were issued and outstanding (evidenced
by 4,000,000 depositary shares, each of which represents a one-fifth
interest in a share of Series H Preferred Stock), (4) 280,000 shares of
Series I Preferred Stock were issued and outstanding, (5) 400,000 shares of
Series J Preferred Stock were issued and outstanding (evidenced by
8,000,000 depositary shares, each of which represents a one- twentieth
interest in a share of Series J Preferred Stock), (6) 500,000 shares of
Series K Preferred Stock were issued and outstanding (evidenced by
10,000,000 depositary shares, each of which represents a one- twentieth
interest in a share of Series K Preferred Stock), (7) 800,000 shares of
Series M Preferred Stock were issued and outstanding (evidenced by
4,000,000 depositary shares, each of which represents a one-fifth interest
in a share of Series M Preferred Stock) and (8) 2,262 shares of Series Y
Preferred Stock were issued and outstanding; (iv) 690,000 shares of Series
L Preferred Stock are reserved for issuance upon exercise of purchase
contracts comprising a part of the 9-1/2% Trust Preferred Stock (TruPs)
Units of SI Financing Trust I; (v) no shares of Travelers Preferred Stock
were held by Travelers in its treasury, other than shares held for purposes
of market making, proprietary trading or otherwise on behalf of customers;
(vi) 12,489,472 shares of Travelers Common Stock were reserved for issuance
upon conversion of the Series I Preferred Stock; (vii) 668,567 shares of
Travelers Common Stock were reserved for issuance upon conversion of
certain Amended and Restated Restricted Convertible Subordinated Notes (the
"Convertible Notes"); (viii) 7,993,463 shares of Travelers Common Stock
were reserved for issuance pursuant to outstanding warrants to purchase
shares of Travelers Common Stock (collectively with the Convertible Notes
and the Series I Preferred Stock, the "Travelers Convertible Securities");
and (ix) shares of Travelers Common Stock reserved for issuance pursuant to
the plans set forth in Section 3.02(c)(ix) of the Travelers Disclosure
Schedule (collectively, the "Travelers Stock Plans"), of which 62,254,352
shares are subject to outstanding employee stock options or other rights to
purchase or receive Travelers Common Stock granted under the Travelers
Stock Plans (collectively, "Travelers Employee Stock Options"). All of the
series of Travelers Preferred Stock currently outstanding rank on a parity
with each other with respect to payment of dividends and distribution of
assets upon liquidation, dissolution or winding up. None of the series of
Travelers Preferred Stock currently outstanding has any (i) right to vote
as a separate class with respect to the Merger or the authorization of
additional shares of Travelers Common Stock or (ii) any other voting
rights, except in the case of this clause (ii) for rights (x) to elect
directors in the event of a default in the payment of dividends and (y) as
set forth in Section 3.02(c) of the Travelers Disclosure Schedule. All
outstanding shares of capital stock of Travelers are, and all shares which
may be issued will be, when issued, duly authorized, validly issued, fully
paid and nonassessable and not subject to preemptive rights. Except as set
forth in this Section 3.02(c), except for changes since March 31, 1998
resulting from the issuance of shares of Travelers Common Stock pursuant to
the Travelers Employee Stock Options, the Travelers Convertible Securities
or other rights referred to above in this Section 3.02(c), and except as
permitted by Section 4.01(b)(ii), (x) there are not issued, reserved for
issuance or outstanding (A) any shares of capital stock or other voting
securities of Travelers, (B) any securities of Travelers convertible into
or exchangeable or exercisable for shares of capital stock or voting
securities of Travelers and (C) any warrants, calls, options or other
rights to acquire from Travelers or any Travelers subsidiary, and no
obligation of Travelers or any Travelers subsidiary to issue, any capital
stock, voting securities or securities convertible into or exchangeable or
exercisable for capital stock or voting securities of Travelers and (y)
other than agreements entered into with respect to the Travelers Stock
Plans in respect of reload options in effect as of the close of business on
March 31, 1998, there are no outstanding obligations of Travelers or any
Travelers subsidiary to repurchase, redeem or otherwise acquire any such
securities or to issue, deliver or sell, or cause to be issued, delivered
or sold, any such securities. Neither Travelers nor any Travelers
subsidiary is a party to any voting agreement with respect to the voting of
any such securities. Except with respect to Travelers Property Casualty
Corp., there are no outstanding (A) securities of Travelers or any
Travelers subsidiary convertible into or exchangeable or exercisable for
shares of capital stock or other voting securities or ownership interests
in any Travelers subsidiary, (B) warrants, calls, options or other rights
to acquire from Travelers or any Travelers subsidiary, and no obligation of
Travelers or any Travelers subsidiary to issue, any capital stock, voting
securities or other ownership interests in, or any securities convertible
into or exchangeable or exercisable for any capital stock, voting
securities or ownership interests in, any Travelers subsidiary or (C)
obligations of Travelers or any Travelers subsidiary to repurchase, redeem
or otherwise acquire any such outstanding securities of Travelers
subsidiaries or to issue, deliver or sell, or cause to be issued, delivered
or sold, any such securities. Other than the Travelers subsidiaries,
Travelers does not directly or indirectly beneficially own any securities
or other beneficial ownership interests in any other entity other than (i)
in the ordinary course of trading, underwriting, asset management, merchant
banking, securitization, insurance portfolios or market making activities
of Travelers or the Travelers subsidiaries or the Travelers Funds or
ownership of the Travelers Funds or (ii) as are not material to Travelers
and its subsidiaries, taken as a whole. "Travelers Fund" means (i) any
investment account advised or managed by Travelers on behalf of third
parties and (ii) any partnership, limited liability company, or other
similar investment vehicle or entity engaged in the business of making
investments of which Travelers or a Travelers subsidiary acts as the
general partner, managing member, manager, advisor or the equivalent or the
general partner of another Travelers Fund.
(d) Authority; Noncontravention. Travelers has all
requisite corporate power and authority to enter into this Agreement and,
subject to the Travelers Stockholder Approval (as defined in Section
3.02(l)), to consummate the transactions contemplated by this Agreement.
The execution and delivery of this Agreement by Travelers and the
consummation by Travelers of the transactions contemplated hereby have been
duly authorized by all necessary corporate action on the part of Travelers,
subject, in the case of the Merger and the issuance of Travelers Common
Stock and Travelers Preferred Stock in connection with the Merger, to the
Travelers Stockholder Approval. This Agreement has been duly executed and
delivered by Travelers and, assuming the due authorization, execution and
delivery by Citicorp, constitutes a legal, valid and binding obligation of
Travelers, enforceable against Travelers in accordance with its terms. The
execution and delivery of this Agreement does not, and the consummation of
the transactions contemplated by this Agreement and compliance with the
provisions of this Agreement will not, conflict with, or result in any
violation of, or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration
of any obligation or loss of a benefit under, or result in the creation of
any Lien upon any of the properties or assets of Travelers or any of its
subsidiaries under, (i) the certificate of incorporation or by-laws of
Travelers or the comparable organizational documents of any of its
subsidiaries, (ii) any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument, permit, concession,
franchise, license or similar authorization applicable to Travelers or any
of its subsidiaries or their respective properties or assets or (iii)
subject to the governmental filings and other matters referred to in the
following sentence, any judgment, order, decree, statute, law, ordinance,
rule or regulation applicable to Travelers or any of its subsidiaries or
their respective properties or assets, other than, in the case of clauses
(ii) and (iii), any such conflicts, violations, defaults, rights, losses or
Liens that individually or in the aggregate would not (x) have a material
adverse effect on Travelers or (y) reasonably be expected to materially
impair or delay the ability of Travelers to perform its obligations under
this Agreement. No consent, approval, order or authorization of, action by,
or in respect of, or registration, declaration or filing with, any
Governmental Entity is required by Travelers or any of its subsidiaries in
connection with the execution and delivery of this Agreement by Travelers
or the consummation by Travelers of the transactions contemplated hereby,
except for: (1) the filing with the SEC of (A) the Joint Proxy Statement
relating to the Travelers Stockholders Meeting, (B) the Form S-4 and (C)
such reports under Section 13(a), 13(d), 15(d) or 16(a) of the Exchange Act
as may be required in connection with this Agreement and the transactions
contemplated hereby; (2) the filing of the Certificate of Merger and the
Certificates of Designations with respect to the Travelers Preferred Stock
(the "Certificates of Designations") with the Secretary of State of the
State of Delaware and appropriate documents with the relevant authorities
of other states in which Travelers is qualified to do business and such
filings with Governmental Entities to satisfy the applicable requirements
of state securities or "blue sky" laws; (3) such filings with and approvals
of the NYSE to permit the shares of Travelers Common Stock that are to be
issued in the Merger and under the Citicorp Stock Plans and to permit the
shares of Travelers Preferred Stock that are to be issued in the Merger in
exchange for like securities representing Citicorp Preferred Stock that are
listed on the NYSE or the Pacific Stock Exchange (the "PSE") (collectively,
the "Travelers Listed Securities"), in each case to continue to be listed
on the NYSE or the PSE following the Merger, as the case may be; (4) the
consents, approvals and notices required under the 1940 Act and the
Advisors Act; (5) the filing of applications and notices, as applicable,
with the Federal Reserve Board under the BHC Act, and the receipt of
approvals of such applications and notices; (6) the filing of appropriate
documents with, and approvals of, the respective Commissioners of Insurance
or similar regulatory authorities of Arizona, New York, New Jersey and
Delaware; (7) filings in respect of, and approvals and authorizations of,
any other Governmental Entity having jurisdiction over the securities,
commodities, banking, insurance or other financial services businesses; and
(8) such consents, approvals, orders or authorizations the failure of which
to be made or obtained individually or in the aggregate would not (x) have
a material adverse effect on Travelers or (y) reasonably be expected to
materially impair or delay the ability of Travelers to perform its
obligations under this Agreement.
(e) Reports; Undisclosed Liabilities.
(i) Travelers has filed all required reports, schedules,
forms, statements and other documents (including exhibits and all
other information incorporated therein) with the SEC since January 1,
1995 (the "Travelers SEC Documents"). As of their respective dates,
the Travelers SEC Documents complied in all material respects with
the requirements of the Securities Act or the Exchange Act, as the
case may be, and the rules and regulations of the SEC promulgated
thereunder applicable to such Travelers SEC Documents, and none of
the Travelers SEC Documents when filed contained any untrue statement
of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein,
in light of the circumstances under which they were made, not
misleading. Except to the extent that information contained in any
Travelers SEC Document has been revised or superseded by a later
filed Travelers SEC Document, none of the Travelers SEC Documents
contains any untrue statement of a material fact or omits to state
any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under
which they were made, not misleading. The financial statements of
Travelers included in the Travelers SEC Documents comply as to form,
as of their respective dates of filing with the SEC, in all material
respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, have been
prepared in accordance with generally accepted accounting principles
(except, in the case of unaudited statements, as permitted by Form
10-Q of the SEC) applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto) and fairly
present in all material respects the consolidated financial position
of Travelers and its consolidated subsidiaries as of the dates
thereof and the consolidated results of their operations and cash
flows for the periods then ended (subject, in the case of unaudited
statements, to normal recurring year-end audit adjustments). Except
(A) as reflected in such financial statements or in the notes thereto
or (B) for liabilities incurred in connection with this Agreement or
the transactions contemplated hereby, neither Travelers nor any of
its subsidiaries has any liabilities or obligations of any nature
which, individually or in the aggregate, would have a material
adverse effect on Travelers.
(ii) Except as would not have a material adverse effect
on Travelers, Travelers and each of its subsidiaries have timely
filed all reports, registrations and statements, together with any
amendments required to be made with respect thereto, that they were
required to file since January 1, 1995 with (1) any state insurance
commission or any other state regulatory authority and (2) any other
self-regulatory organization (clauses (1) and (2), collectively, the
"Travelers Regulatory Agencies"), and have paid all fees and
assessments due and payable in connection therewith. Except for
normal examinations conducted by a Travelers Regulatory Agency in the
regular course of the business of Travelers and its subsidiaries, no
Travelers Regulatory Agency has initiated any proceeding or, to the
knowledge of Travelers, investigation into the business or operations
of Travelers or any of its subsidiaries since January 1, 1995. Except
as would not have a material adverse effect on Travelers, there is no
unresolved violation, criticism, or exception by any Travelers
Regulatory Agency with respect to any report or statement relating to
any examinations of Travelers or any of its subsidiaries.
(iii) Except in each case as would not have a material
adverse effect on Travelers, the annual statements of each subsidiary
of Travelers that is an insurer for the years ended December 31, 1996
and 1997 as filed with the respective Departments of Insurance of
each such subsidiary's domiciliary states have been prepared in
accordance with the accounting practices prescribed or permitted by
each such Department of Insurance (the "Travelers State Statutory
Accounting Principles"), and such accounting practices have been
applied on a basis consistent with the Travelers State Statutory
Accounting Principles applicable to each such annual statement
throughout the periods involved, except as set forth in the notes,
exhibits or schedules thereto, and such annual statements present
fairly in all material respects the financial position and results of
operations of such subsidiary as of the dates and for the periods
covered thereby in accordance with the Travelers State Statutory
Accounting Principles applicable to each such annual statement.
(f) Information Supplied. None of the information
supplied or to be supplied by Travelers specifically for inclusion or
incorporation by reference in (i) the Form S-4 will, at the time the Form
S-4 becomes effective under the Securities Act, contain any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein not
misleading or (ii) the Joint Proxy Statement will, at the date it is first
mailed to Travelers' stockholders or at the time of the Travelers
Stockholders Meeting, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances
under which they are made, not misleading. The Form S-4 and the Joint Proxy
Statement will comply as to form in all material respects with the
requirements of the Securities Act and the Exchange Act, respectively, and
the rules and regulations thereunder, except that no representation or
warranty is made by Travelers with respect to statements made or
incorporated by reference therein based on information supplied by Citicorp
specifically for inclusion or incorporation by reference in the Form S-4 or
the Joint Proxy Statement.
(g) Absence of Certain Changes or Events. Except for
liabilities incurred in connection with this Agreement or the transactions
contemplated hereby, since December 31, 1997, Travelers and its
subsidiaries have conducted their business only in the ordinary course or
as disclosed in any Travelers Filed SEC Document, and there has not been
(1) any material adverse change in Travelers, (2) any declaration, setting
aside or payment of any dividend or other distribution (whether in cash,
stock or property) with respect to any of Travelers' capital stock, other
than regular quarterly cash dividends on the Travelers Common Stock and
dividends payable on Travelers Preferred Stock in accordance with their
terms as of the date of this Agreement (or as of their date of issue if
subsequent to the date of this Agreement), (3) any split, combination or
reclassification of any of Travelers' capital stock or any issuance or the
authorization of any issuance of any other securities in respect of, in
lieu of or in substitution for shares of Travelers' capital stock, except
for issuances of Travelers Common Stock upon the exercise of Travelers
Employee Stock Options awarded prior to the date hereof in accordance with
their present terms or issued pursuant to Section 4.01(b), except upon
conversion of the Travelers Convertible Securities and except in accordance
with the terms of the Travelers Stock Plans, (4) (A) any granting by
Travelers or any of its subsidiaries to any current or former director,
executive officer or other key employee of Travelers or its subsidiaries of
any increase in compensation, bonus or other benefits, except for normal
increases in the ordinary course of business or as was required under any
employment agreements in effect as of the date of the most recent audited
financial statements included in the Travelers SEC Documents filed and
publicly available prior to the date of this Agreement (as amended to the
date of this Agreement, the "Travelers Filed SEC Documents"), (B) any
granting by Travelers or any of its subsidiaries to any such current or
former director, executive officer or key employee of any increase in
severance or termination pay, except in the ordinary course of business or
pursuant to the Travelers Stock Plans, or (C) any entry by Travelers or any
of its subsidiaries into, or any amendment of, any employment, deferred
compensation, consulting, severance, termination or indemnification
agreement with any such current or former director, executive officer or
key employee, other than in the ordinary course of business, (5) except
insofar as may have been disclosed in the Travelers Filed SEC Documents or
required by a change in generally accepted accounting principles, any
change in accounting methods, principles or practices by Travelers
materially affecting its assets, liabilities or business or (6) except
insofar as may have been disclosed in the Travelers Filed SEC Documents,
any tax election that individually or in the aggregate would reasonably be
expected to have a material adverse effect on Travelers or any of its tax
attributes or any settlement or compromise of any material income tax
liability.
(h) Compliance with Applicable Laws; Litigation.
(i) Travelers, its subsidiaries and employees hold all
permits, licenses, variances, exemptions, orders, registrations and
approvals of all Governmental Entities which are required for the
operation of the businesses of Travelers and its subsidiaries
(collectively, the "Travelers Permits") except where the failure to
have any such Travelers Permits individually or in the aggregate
would not have a material adverse effect on Travelers. Travelers and
its subsidiaries are in compliance with the terms of the Travelers
Permits and all applicable statutes, laws, ordinances, rules and
regulations, except where the failure so to comply individually or in
the aggregate would not have a material adverse effect on Travelers.
As of the date of this Agreement, except as disclosed in the
Travelers Filed SEC Documents, no action, demand, requirement or
investigation by any Governmental Entity and no suit, action or
proceeding by any person, in each case with respect to Travelers or
any of its subsidiaries or any of their respective properties is
pending or, to the knowledge of Travelers, threatened, other than, in
each case, those the outcome of which individually or in the
aggregate would not (i) reasonably be expected to have a material
adverse effect on Travelers or (ii) reasonably be expected to
materially impair or delay the ability of Travelers to perform its
obligations under this Agreement.
(ii) Except as would not have a material adverse effect
on Travelers, neither Travelers nor any of its subsidiaries is
subject to any Regulatory Agreement, nor has Travelers or any of its
subsidiaries or affiliates been advised since January 1, 1995 by any
Governmental Entity that it is considering issuing or requesting any
such Regulatory Agreement that would have a material adverse effect
on Travelers. After the date of this Agreement, no matters referred
to in this Section 3.02(h)(ii) shall have arisen.
(i) Absence of Changes in Benefit Plans. Since December
31, 1997, there has not been any adoption or amendment in any material
respect by Travelers or any of its subsidiaries of any collective
bargaining agreement or any material bonus, pension, profit sharing,
deferred compensation, incentive compensation, stock ownership, stock
purchase, stock option, phantom stock, retirement, vacation, severance,
disability, death benefit, hospitalization, medical or other plan,
arrangement or understanding providing benefits to any current or former
employee, officer or director of Travelers or any of its wholly owned
subsidiaries (collectively, the "Travelers Benefit Plans"), or any material
change in any actuarial or other assumption used to calculate funding
obligations with respect to any Travelers pension plans, or any change in
the manner in which contributions to any Travelers pension plans are made
or the basis on which such contributions are determined.
(j) ERISA Compliance.
(i) With respect to the Travelers Benefit Plans, no event
has occurred and, to the knowledge of Travelers, there exists no
condition or set of circumstances, in connection with which Travelers
or any of its subsidiaries could be subject to any liability that
individually or in the aggregate would have a material adverse effect
on Travelers under ERISA, the Code or any other applicable law.
(ii) Each Travelers Benefit Plan has been administered in
accordance with its terms, except for any failures so to administer
any Travelers Benefit Plan that individually or in the aggregate
would not reasonably be expected to have a material adverse effect on
Travelers. Travelers, its subsidiaries and all the Travelers Benefit
Plans are in compliance with the applicable provisions of ERISA, the
Code and all other applicable laws and the terms of all applicable
collective bargaining agreements, except for any failures to be in
such compliance that individually or in the aggregate would not
reasonably be expected to have a material adverse effect on
Travelers. Each Travelers Benefit Plan that is intended to be
qualified under Section 401(a) or 401(k) of the Code has received a
favorable determination letter from the IRS that it is so qualified
and each trust established in connection with any Travelers Benefit
Plan that is intended to be exempt from federal income taxation under
Section 501(a) of the Code has received a determination letter from
the IRS that such trust is so exempt. To the knowledge of Travelers,
no fact or event has occurred since that date of any determination
letter from the IRS which is reasonably likely to affect adversely
the qualified status of any such Travelers Benefit Plan or the exempt
status of any such trust, except for any occurrence that individually
or in the aggregate would not reasonably be expected to have a
material adverse effect on Travelers.
(iii) Except as any of the following either individually
or in the aggregate would not reasonably be expected to have a
material adverse effect on Travelers, (x) neither Travelers nor any
ERISA Affiliate of Travelers has incurred any liability under Title
IV of ERISA and no condition exists that presents a risk to Travelers
or any ERISA Affiliate of Travelers of incurring any such liability
(other than liability for benefits or premiums to the Pension Benefit
Guaranty Corporation arising in the ordinary course), (y) no
Travelers Benefit Plan has incurred an "accumulated funding
deficiency" (within the meaning of Section 302 of ERISA or Section
412 of the Code) whether or not waived and (z) to the knowledge of
Travelers, there are not any facts or circumstances that would
materially change the funded status of any Travelers Benefit Plan
that is a "defined benefit" plan (as defined in Section 3(35) of
ERISA) since the date of the most recent actuarial report for such
plan. No Travelers Benefit Plan is a "multiemployer plan" within the
meaning of Section 3(37) of ERISA.
(iv) Neither Travelers nor any of its subsidiaries is a
party to any collective bargaining or other labor union contract
applicable to persons employed by Travelers or any of its
subsidiaries and no collective bargaining agreement is being
negotiated by Travelers or any of its subsidiaries, in each case that
is material to Travelers and its subsidiaries taken as a whole. As of
the date of this Agreement, there is no labor dispute, strike or work
stoppage against Travelers or any of its subsidiaries pending or, to
the knowledge of Travelers, threatened which may interfere with the
respective business activities of Travelers or any of its
subsidiaries, except where such dispute, strike or work stoppage
individually or in the aggregate would not reasonably be expected to
have a material adverse effect on Travelers. As of the date of this
Agreement, to the knowledge of Travelers, none of Travelers, any of
its subsidiaries or any of their respective representatives or
employees has committed any unfair labor practice in connection with
the operation of the respective businesses of Travelers or any of its
subsidiaries, and there is no charge or complaint against Travelers
or any of its subsidiaries by the National Labor Relations Board or
any comparable governmental agency pending or threatened in writing,
except for any occurrence that individually or in the aggregate would
not reasonably be expected to have a material adverse effect on
Travelers.
(v) No Travelers Benefit Plan provides medical benefits
(whether or not insured) with respect to current or former employees
after retirement or other termination of service the cost of which is
material to Travelers and its subsidiaries taken as a whole.
(vi) No amounts payable under the Travelers Benefit Plans
solely as a result of the consummation of the transactions
contemplated by this Agreement will fail to be deductible for federal
income tax purposes by virtue of section 280G of the Code. The
consummation of the transactions contemplated by this Agreement will
not, either alone or in combination with another event, (A) entitle
any current or former employee, officer or director of Travelers or
any ERISA Affiliate of Travelers to severance pay, unemployment
compensation or any other payment, except as expressly provided in
this Agreement, (B) accelerate the time of payment or vesting, or
increase the amount of compensation due any such employee, officer or
director or (C) constitute a "change of control" under any Travelers
Benefit Plan, and Travelers and its board of directors have taken all
required actions to effect the foregoing.
(k) Taxes.
(i) Each of Travelers and its subsidiaries has filed all
material tax returns and reports required to be filed by it and all
such returns and reports are complete and correct in all material
respects, or requests for extensions to file such returns or reports
have been timely filed, granted and have not expired, except to the
extent that such failures to file, to be complete or correct or to
have extensions granted that remain in effect individually or in the
aggregate would not have a material adverse effect on Travelers.
Travelers and each of its subsidiaries has paid (or Travelers has
paid on its behalf) all taxes shown as due on such returns, and the
most recent financial statements contained in the Travelers Filed SEC
Documents reflect an adequate reserve for all taxes payable by
Travelers and its subsidiaries for all taxable periods and portions
thereof accrued through the date of such financial statements.
(ii) No deficiencies for any taxes have been proposed,
asserted or assessed against Travelers or any of its subsidiaries
that are not adequately reserved for, except for deficiencies that
individually or in the aggregate would not have a material adverse
effect on Travelers.
(iii) Neither Travelers nor any of its subsidiaries has
taken any action or knows of any fact, agreement, plan or other
circumstance that is reasonably likely to prevent the Merger from
qualifying as a reorganization within the meaning of Section 368(a)
of the Code.
(l) Voting Requirements. The affirmative vote at the
Travelers Stockholders Meeting (the "Travelers Stockholder Approval") of
the holders of a majority of the voting power of all outstanding shares of
Travelers Common Stock, Series I Preferred Stock, Series J Preferred Stock
and Series K Preferred Stock, voting as a single class, is the only vote of
the holders of any class or series of Travelers' capital stock necessary to
approve and adopt this Agreement and the transactions contemplated hereby.
The Board of Directors of Travelers has duly and validly approved and taken
all corporate action required to be taken by the Travelers Board of
Directors for the consummation of the transactions contemplated by this
Agreement.
(m) State Takeover Statutes; Certificate of
Incorporation. The Board of Directors of Travelers (including a majority of
the continuing directors thereof (as defined in Article Eighth of
Travelers' Restated Certificate of Incorporation)) has approved the terms
of this Agreement and the consummation of the Merger and the other
transactions contemplated hereby and, assuming the accuracy of Citicorp's
representation and warranty contained in Section 3.01(p), such approval
constitutes approval of the Merger and the other transactions contemplated
by this Agreement by the Travelers Board of Directors under the provisions
of Article Eighth of Travelers' Restated Certificate of Incorporation and
Section 203 of the DGCL and represents all the actions necessary to ensure
that the supermajority voting requirement of Article Eighth of Travelers'
Restated Certificate of Incorporation and Section 203 of the DGCL do not
apply to Citicorp in connection with the Merger and the other transactions
contemplated by this Agreement. To the knowledge of Travelers, no other
state takeover statute is applicable to the Merger or the other
transactions contemplated by this Agreement.
(n) Accounting Matters. Travelers has disclosed to its
independent public accountants all actions taken by it or its subsidiaries
that would impact the accounting of the business combination to be effected
by the Merger as a pooling of interests. As of the date hereof, Travelers,
based on advice from its independent public accountants, believes that the
Merger will qualify for "pooling of interests" accounting.
(o) Brokers. No broker, investment banker, financial
advisor or other person is entitled to any broker's, finder's, financial
advisor's or other similar fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by
or on behalf of Travelers.
(p) Ownership of Citicorp Capital Stock. Except for
shares owned by Travelers Benefit Plans or shares held or managed for the
account of another person or as to which Travelers is required to act as a
fiduciary or in a similar capacity, as of the date hereof, neither
Travelers nor, to its knowledge without independent investigation, any of
its affiliates, (i) beneficially owns (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, or (ii) is party to any agreement,
arrangement or understanding for the purpose of acquiring, holding, voting
or disposing of, in each case, shares of capital stock of Citicorp.
(q) Intellectual Property.
(i) Travelers and its subsidiaries own or have a valid
license to use all trademarks, service marks and trade names
(including any registrations or applications for registration of any
of the foregoing) (collectively, the "Travelers Intellectual
Property") necessary to carry on its business substantially as
currently conducted, except for such Travelers Intellectual Property
the failure of which to own or validly license individually or in the
aggregate would not reasonably be expected to have a material adverse
effect on Travelers. Neither Travelers nor any such subsidiary has
received any notice of infringement of or conflict with, and, to
Travelers' knowledge, there are no infringements of or conflicts
with, the rights of others with respect to the use of any Travelers
Intellectual Property that individually or in the aggregate, in
either such case, would reasonably be expected to have a material
adverse effect on Travelers.
(ii) The consummation of the Merger and the other
transactions contemplated by this Agreement will not result in the
loss by Travelers of any rights to use computer and telecommunication
software including source and object code and documentation and any
other media (including, without limitation, manuals, journals and
reference books) necessary to carry on its business substantially as
currently conducted and the loss of which would have a material
adverse effect on Travelers.
(iii) The computer software operated by Travelers which
is material to the conduct of its business is capable of providing or
is being adapted to provide uninterrupted millennium functionality to
record, store, process and present calendar dates falling on or after
January 1, 2000 in substantially the same manner and with the same
functionality as such software records, stores, processes and
presents such calendar dates falling on or before December 31, 1999,
except as would not have a material adverse effect on Travelers. The
costs of the adaptations referred to in this clause (iii) will not
have a material adverse effect on Travelers.
(r) Certain Contracts. Except as set forth in the
Travelers Filed SEC Documents or as permitted pursuant to Section 4.01(b),
neither Travelers nor any of its subsidiaries is a party to or bound by (i)
any agreement relating to the incurring of indebtedness (including sale and
leaseback and capitalized lease transactions and other similar financing
transactions) providing for payment or repayment in excess of $1 billion,
other than such agreements relating to indebtedness incurred in the
ordinary course of business of Travelers' subsidiaries to finance their
securities and commodity portfolio positions and consumer finance business,
(ii) any "material contract" (as such term is defined in Item 601(b)(10) of
Regulation S-K of the SEC) or (iii) any non-competition agreement or any
other agreement or obligation which purports to limit in any material
respect the manner in which, or the localities in which, all or any
substantial portion of the business of Travelers and its subsidiaries,
taken as a whole, is or would be conducted.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 4.01 Conduct of Business.
(a) Conduct of Business by Citicorp. Except as set forth
in Section 4.01(a) of the Citicorp Disclosure Schedule, except as otherwise
expressly contemplated by this Agreement or except as consented to by
Travelers, such consent not to be unreasonably withheld or delayed, during
the period from the date of this Agreement to the Effective Time, Citicorp
shall, and shall cause its subsidiaries to, carry on their respective
businesses in the ordinary course consistent with past practice and in
compliance in all material respects with all applicable laws and
regulations and, to the extent consistent therewith, use all reasonable
efforts to preserve intact their current business organizations (other than
internal organizational realignments), use all reasonable efforts to keep
available the services of their current officers and other key employees
and preserve their relationships with those persons having business
dealings with them to the end that their goodwill and ongoing businesses
shall be unimpaired at the Effective Time. Without limiting the generality
of the foregoing (but subject to the above exceptions), during the period
from the date of this Agreement to the Effective Time, Citicorp shall not,
and shall not permit any of its subsidiaries to:
(i) other than dividends and distributions (including
liquidating distributions) by a direct or indirect wholly owned
subsidiary of Citicorp to its parent, or by a subsidiary that is
partially owned by Citicorp or any of its subsidiaries, provided that
Citicorp or any such subsidiary receives or is to receive its
proportionate share thereof, and other than the regular quarterly
cash dividends with respect to the Citicorp Common Stock and
dividends payable on Citicorp Preferred Stock in accordance with
their terms as of the date of this Agreement (or as of their date of
issue if subsequent to the date of this Agreement), (x) declare, set
aside or pay any dividends on, or make any other distributions in
respect of, any of its capital stock, (y) split, combine or
reclassify any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock, except for issuances of
Citicorp Common Stock upon the exercise of Citicorp Employee Stock
Options under the Citicorp Stock Plans or in connection with other
awards under the Citicorp Stock Plans outstanding as of the date
hereof in accordance with their present terms or issued pursuant to
Section 4.01(a)(ii) or (z) except pursuant to agreements entered into
with respect to the Citicorp Stock Plans in effect as of the close of
business on March 31, 1998, purchase, redeem or otherwise acquire any
shares of capital stock of Citicorp or any of its subsidiaries or any
other securities thereof or any rights, warrants or options to
acquire any such shares or other securities;
(ii) issue, deliver, sell, pledge or otherwise encumber
or subject to any Lien any shares of its capital stock, any other
voting securities or any securities convertible into, or any rights,
warrants or options to acquire, any such shares, voting securities or
convertible securities (other than (x) the issuance of Citicorp
Common Stock upon the exercise of Citicorp Employee Stock Options or
in connection with other awards under the Citicorp Stock Plans (I)
outstanding as of the date hereof in accordance with their present
terms or granted after the date hereof in the ordinary course of
business consistent with past practice or (II) after consulting with
Travelers, otherwise granted after the date hereof (so long as such
additional amount of Citicorp Common Stock subject to Citicorp
Employee Stock Options and/or other awards under the Citicorp Stock
Plans granted under this clause (II) do not exceed 2,000,000 shares
of Citicorp Common Stock in the aggregate), (y) in connection with
the issuance of nonvoting Citicorp Preferred Stock in the ordinary
course of business consistent with past practice or (z) the sale of
Citicorp Treasury Stock as contemplated by Section 5.14);
(iii) amend its certificate of incorporation, by-laws or
other comparable organizational documents, other than in connection
with the issuance of nonvoting Citicorp Preferred Stock in the
ordinary course of business consistent with past practice;
(iv) acquire or agree to acquire by merging or
consolidating with, or by purchasing a substantial portion of the
assets of, or by any other manner, any business or any person, except
for such acquisitions made in the ordinary course of business
consistent with past practice;
(v) sell, lease, license, mortgage or otherwise encumber
or subject to any Lien or otherwise dispose of any of its properties
or assets (including securitizations), other than in the ordinary
course of business consistent with past practice;
(vi) take any action that would cause the representations
and warranties set forth in Section 3.01(g) (with each reference
therein to "ordinary course of business" being deemed for purposes of
this Section 4.01(a)(vi) to be immediately followed by "consistent
with past practice") to no longer be true and correct; or
(vii) authorize, or commit or agree to take, any of the
foregoing actions;
provided that the limitations set forth in this Section 4.01(a) (other than
clause (iii)) shall not apply to: (x) any transaction between Citicorp and
any wholly owned subsidiary or between any wholly owned subsidiaries of
Citicorp; or (y) The Student Loan Corporation or any of its subsidiaries to
the extent inconsistent with the fiduciary duties of its Board of
Directors, provided that Citicorp will not take any action as a stockholder
of The Student Loan Corporation that would reasonably be expected to
materially impair or delay the transactions provided for in this Agreement.
(b) Conduct of Business by Travelers. Except as set forth
in Section 4.01(b) of the Travelers Disclosure Schedule, except as
otherwise expressly contemplated by this Agreement or except as consented
to by Citicorp, such consent not to be unreasonably withheld or delayed,
during the period from the date of this Agreement to the Effective Time,
Travelers shall, and shall cause its subsidiaries to, carry on their
respective businesses in the ordinary course consistent with past practice
and in compliance in all material respects with all applicable laws and
regulations and, to the extent consistent therewith, use all reasonable
efforts to preserve intact their current business organizations (other than
internal organizational realignments), use all reasonable efforts to keep
available the services of their current officers and other key employees
and preserve their relationships with those persons having business
dealings with them to the end that their goodwill and ongoing businesses
shall be unimpaired at the Effective Time. Without limiting the generality
of the foregoing (but subject to the above exceptions), during the period
from the date of this Agreement to the Effective Time, Travelers shall not,
and shall not permit any of its subsidiaries to:
(i) other than dividends and distributions (including
liquidating distributions) by a direct or indirect wholly owned
subsidiary of Travelers to its parent, or by a subsidiary that is
partially owned by Travelers or any of its subsidiaries, provided
that Travelers or any such subsidiary receives or is to receive its
proportionate share thereof, and other than the regular quarterly
cash dividends with respect to the Travelers Common Stock (which,
subject to Section 5.14, may be increased) and dividends payable on
the Travelers Preferred Stock in accordance with their terms as of
the date of this Agreement (or as of their date of issue if
subsequent to the date of this Agreement), (x) declare, set aside or
pay any dividends on, or make any other distributions in respect of,
any of its capital stock, (y) split, combine or reclassify any of its
capital stock or issue or authorize the issuance of any other
securities in respect of, in lieu of or in substitution for shares of
its capital stock, except for issuances of Travelers Common Stock
upon conversion of Travelers Convertible Securities and except upon
the exercise of Travelers Employee Stock Options under the Travelers
Stock Plans or in connection with other awards under the Travelers
Stock Plans outstanding as of the date hereof in accordance with
their present terms or issued pursuant to Section 4.01(b)(ii) or (z)
except pursuant to agreements entered into with respect to the
Travelers Stock Plans in effect as of the close of business on March
31, 1998, purchase, redeem or otherwise acquire any shares of capital
stock of Travelers or any of its subsidiaries or any other securities
thereof or any rights, warrants or options to acquire any such shares
or other securities;
(ii) issue, deliver, sell, pledge or otherwise encumber
or subject to any Lien any shares of its capital stock, any other
voting securities or any securities convertible into, or any rights,
warrants or options to acquire, any such shares, voting securities or
convertible securities (other than (x) the issuance of Travelers
Common Stock or options to purchase shares of Travelers Common Stock
upon the exercise of Travelers Employee Stock Options or in
connection with other awards under the Travelers Stock Plans (I)
outstanding as of the date hereof in accordance with their present
terms or granted after the date hereof in the ordinary course of
business consistent with past practice or (II) after consulting with
Citicorp, otherwise granted after the date hereof (so long as such
additional amount of Travelers Common Stock subject to Travelers
Employee Stock Options and/or other awards under the Travelers Stock
Plans granted under this clause (II) do not exceed 2,000,000 shares
of Travelers Common Stock in the aggregate), (y) upon conversion of
Travelers Convertible Securities or (z) in connection with the
issuance of nonvoting Travelers Preferred Stock in the ordinary
course of business consistent with past practice);
(iii) except as contemplated by this Agreement or the
Proxy Statement for Travelers' 1998 Annual Meeting of Shareholders,
amend its certificate of incorporation, by-laws or other comparable
organizational documents, other than in connection with the issuance
of nonvoting Travelers Preferred Stock in the ordinary course of
business consistent with past practice;
(iv) acquire or agree to acquire by merging or
consolidating with, or by purchasing a substantial portion of the
assets of, or by any other manner, any business or any person, except
for such acquisitions made in the ordinary course of business
consistent with past practice;
(v) sell, lease, license, mortgage or otherwise encumber
or subject to any Lien or otherwise dispose of any of its properties
or assets (including securitizations), other than in the ordinary
course of business consistent with past practice;
(vi) take any action that would cause the representations
and warranties set forth in Section 3.02(g) (with each reference
therein to "ordinary course of business" being deemed for purposes of
this Section 4.01(b)(vi) to be immediately followed by "consistent
with past practice") to no longer be true and correct; or
(vii) authorize, or commit or agree to take, any of the
foregoing actions;
provided that the limitations set forth in this Section 4.01(b) (other than
clause (iii)) shall not apply to: (x) any transaction between Travelers and
any wholly owned subsidiary or between any wholly owned subsidiaries of
Travelers; or (y) Travelers Property Casualty Corp. or any of its
subsidiaries to the extent inconsistent with the fiduciary duties of its
Board of Directors, provided that Travelers will not take any action as a
stockholder of Travelers Property Casualty Corp. that would reasonably be
expected to materially impair or delay the transactions provided for in
this Agreement.
(c) Coordination of Dividends. Subject to Section 5.14,
each of Travelers and Citicorp shall coordinate with the other regarding
the declaration and payment of dividends in respect of the Travelers Common
Stock and the Citicorp Common Stock and the record dates and payment dates
relating thereto, it being the intention of Travelers and Citicorp that any
holder of Citicorp Common Stock or Travelers Common Stock shall not receive
two dividends, or fail to receive one dividend, for any single calendar
quarter with respect to its shares of Citicorp Common Stock and/or shares
of Travelers Common Stock, including shares of Travelers Common Stock that
a holder receives in exchange for shares of Citicorp Common Stock pursuant
to the Merger.
(d) Other Actions. Except as required by law, Citicorp
and Travelers shall not, and shall not permit any of their respective
subsidiaries to, voluntarily take any action that would reasonably be
expected to result in any of the conditions to the Merger set forth in
Article VI not being satisfied.
(e) Advice of Changes. Citicorp and Travelers shall
promptly advise the other party orally and in writing to the extent it has
knowledge of any change or event having, or which, insofar as can
reasonably be foreseen, would reasonably be expected to have a material
adverse effect on such party or on the truth of their respective
representations and warranties or the ability of the conditions set forth
in Article VI to be satisfied; provided, however, that no such notification
shall affect the representations, warranties, covenants or agreements of
the parties (or remedies with respect thereto) or the conditions to the
obligations of the parties under this Agreement.
SECTION 4.02 No Solicitation by Citicorp.
(a) Citicorp shall not, nor shall it permit any of its
subsidiaries to, nor shall it authorize or permit any of its directors,
officers or employees or any investment banker, financial advisor,
attorney, accountant or other representative retained by it or any of its
subsidiaries to, directly or indirectly through another person, (i)
solicit, initiate or encourage (including by way of furnishing
information), or take any other action designed to facilitate, any
inquiries or the making of any proposal which constitutes any Citicorp
Takeover Proposal (as defined below) or (ii) participate in any discussions
or negotiations regarding any Citicorp Takeover Proposal; provided,
however, that if, at any time, the Board of Directors of Citicorp
determines in good faith, after consultation with outside counsel, that it
is necessary to do so in order to comply with its fiduciary duties to
Citicorp's stockholders under applicable law, Citicorp may, in response to
a Citicorp Superior Proposal (as defined in Section 4.02(b)) and subject to
providing prior written notice of its decision to take such action to
Travelers (the "Citicorp Notice") and compliance with Section 4.02(c),
following delivery of the Citicorp Notice (x) furnish information with
respect to Citicorp and its subsidiaries to any person making a Citicorp
Superior Proposal pursuant to a customary confidentiality agreement (as
determined by Citicorp after consultation with its outside counsel) and (y)
participate in discussions or negotiations regarding such Citicorp Superior
Proposal. For purposes of this Agreement, "Citicorp Takeover Proposal"
means any inquiry, proposal or offer from any person relating to any (w)
direct or indirect acquisition or purchase of a business that constitutes
15% or more of the net revenues, net income or the assets of Citicorp and
its subsidiaries, taken as a whole, (x) direct or indirect acquisition or
purchase of 15% or more of any class of equity securities of Citicorp or
any of its subsidiaries whose business constitutes 15% or more of the net
revenues, net income or assets of Citicorp and its subsidiaries, taken as a
whole, (y) tender offer or exchange offer that if consummated would result
in any person beneficially owning 15% or more of any class of equity
securities of Citicorp or any of its subsidiaries whose business
constitutes 15% or more of the net revenues, net income or assets of
Citicorp and its subsidiaries, taken as a whole, or (z) merger,
consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction involving Citicorp or any of its
subsidiaries whose business constitutes 15% or more of the net revenues,
net income or assets of Citicorp and its subsidiaries, taken as a whole,
other than the transactions contemplated by this Agreement.
(b) Except as expressly permitted by this Section 4.02,
neither the Board of Directors of Citicorp nor any committee thereof shall
(i) withdraw or modify, or propose publicly to withdraw or modify, in a
manner adverse to Travelers, the approval or recommendation by such Board
of Directors or such committee of the Merger or this Agreement, (ii)
approve or recommend, or propose publicly to approve or recommend, any
Citicorp Takeover Proposal or (iii) cause Citicorp to enter into any letter
of intent, agreement in principle, acquisition agreement or other similar
agreement (each, a "Citicorp Acquisition Agreement") related to any
Citicorp Takeover Proposal. Notwithstanding the foregoing, in the event
that the Board of Directors of Citicorp determines in good faith, after
consultation with outside counsel, that in light of a Citicorp Superior
Proposal it is necessary to do so in order to act in a manner consistent
with its fiduciary duties to Citicorp's stockholders under applicable law,
the Board of Directors of Citicorp may (subject to this and the following
sentences) terminate this Agreement solely in order to concurrently enter
into a Citicorp Acquisition Agreement with respect to any Citicorp Superior
Proposal, but only after the fifth business day following Travelers'
receipt of written notice advising Travelers that the Board of Directors of
Citicorp is prepared to accept a Citicorp Superior Proposal and only if,
during such five-day period, Citicorp and its advisors shall have
negotiated in good faith with Travelers to make such adjustments in the
terms and conditions of this Agreement as would enable Travelers to proceed
with the transactions contemplated herein on such adjusted terms; it being
understood and agreed that should Travelers not seek to proceed with the
transactions contemplated herein on such adjusted terms, Citicorp may
solicit additional Citicorp Takeover Proposals, including by conducting an
auction. For purposes of this Agreement, a "Citicorp Superior Proposal"
means any proposal made by a third party to acquire, directly or
indirectly, including pursuant to a tender offer, exchange offer, merger,
consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction, for consideration consisting of cash
and/or securities, more than 50% of the combined voting power of the shares
of Citicorp Common Stock then outstanding or all or substantially all the
assets of Citicorp and otherwise on terms which the Board of Directors of
Citicorp determines in its good faith judgment to be more favorable to
Citicorp's stockholders than the Merger and for which financing, to the
extent required, is then committed or which, in the good faith judgment of
the Board of Directors of Citicorp, is reasonably capable of being obtained
by such third party.
(c) In addition to the obligations of Citicorp set forth
in paragraphs (a) and (b) of this Section 4.02, Citicorp shall immediately
advise Travelers orally and in writing of any request for information or of
any Citicorp Takeover Proposal. Citicorp will keep Travelers reasonably
informed of the status of any such request or Citicorp Takeover Proposal.
(d) Nothing contained in this Section 4.02 shall prohibit
Citicorp from taking and disclosing to its stockholders a position
contemplated by Rule 14e-2(a) promulgated under the Exchange Act or from
making any disclosure to Citicorp's stockholders if, in the good faith
judgment of the Board of Directors of Citicorp, after consultation with
outside counsel, failure so to disclose would be inconsistent with its
obligations under applicable law; provided, however, that, except in
connection with a Citicorp Superior Proposal, neither Citicorp nor its
Board of Directors nor any committee thereof shall withdraw or modify, or
propose publicly to withdraw or modify, its position with respect to this
Agreement or the Merger or approve or recommend, or propose publicly to
approve or recommend, a Citicorp Takeover Proposal.
SECTION 4.03 No Solicitation by Travelers.
(a) Travelers shall not, nor shall it permit any of its
subsidiaries to, nor shall it authorize or permit any of its directors,
officers or employees or any investment banker, financial advisor,
attorney, accountant or other representative retained by it or any of its
subsidiaries to, directly or indirectly through another person, (i)
solicit, initiate or encourage (including by way of furnishing
information), or take any other action designed to facilitate, any
inquiries or the making of any proposal which constitutes any Travelers
Takeover Proposal (as defined below) or (ii) participate in any discussions
or negotiations regarding any Travelers Takeover Proposal; provided,
however, that if, at any time, the Board of Directors of Travelers
determines in good faith, after consultation with outside counsel, that it
is necessary to do so in order to comply with its fiduciary duties to
Travelers' stockholders under applicable law, Travelers may, in response to
a Travelers Superior Proposal (as defined in Section 4.03(b)) and subject
to providing prior written notice of its decision to take such action to
Citicorp (the "Travelers Notice") and compliance with Section 4.03(c),
following delivery of the Travelers Notice (x) furnish information with
respect to Travelers and its subsidiaries to any person making a Travelers
Superior Proposal pursuant to a customary confidentiality agreement (as
determined by Travelers after consultation with its outside counsel) and
(y) participate in discussions or negotiations regarding such Travelers
Superior Proposal. For purposes of this Agreement, "Travelers Takeover
Proposal" means any inquiry, proposal or offer from any person relating to
any (w) direct or indirect acquisition or purchase of a business that
constitutes 15% or more of the net revenues, net income or the assets of
Travelers and its subsidiaries, taken as a whole, (x) direct or indirect
acquisition or purchase of 15% or more of any class of equity securities of
Travelers or any of its subsidiaries whose business constitutes 15% or more
of the net revenues, net income or assets of Travelers and its
subsidiaries, taken as a whole, (y) tender offer or exchange offer that if
consummated would result in any person beneficially owning 15% or more of
any class of equity securities of Travelers or any of its subsidiaries
whose business constitutes 15% or more of the net revenues, net income or
assets of Travelers and its subsidiaries, taken as a whole, or (z) merger,
consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction involving Travelers or any of its
subsidiaries whose business constitutes 15% or more of the net revenues,
net income or assets of Travelers and its subsidiaries, taken as a whole,
other than the transactions contemplated by this Agreement.
(b) Except as expressly permitted by this Section 4.03,
neither the Board of Directors of Travelers nor any committee thereof shall
(i) withdraw or modify, or propose publicly to withdraw or modify, in a
manner adverse to Citicorp, the approval or recommendation by such Board of
Directors or such committee of the Merger, this Agreement or the issuance
of Travelers Common Stock and Travelers Preferred Stock in connection with
the Merger, (ii) approve or recommend, or propose publicly to approve or
recommend, any Travelers Takeover Proposal or (iii) cause Travelers to
enter into any letter of intent, agreement in principle, acquisition
agreement or other similar agreement (each, a "Travelers Acquisition
Agreement") related to any Travelers Takeover Proposal. Notwithstanding the
foregoing, in the event that the Board of Directors of Travelers determines
in good faith, after consultation with outside counsel, that in light of a
Travelers Superior Proposal it is necessary to do so in order to act in a
manner consistent with its fiduciary duties to Travelers' stockholders
under applicable law, the Board of Directors of Travelers may (subject to
this and the following sentences) terminate this Agreement solely in order
to concurrently enter into a Travelers Acquisition Agreement with respect
to any Travelers Superior Proposal, but only after the fifth business day
following Citicorp's receipt of written notice advising Citicorp that the
Board of Directors of Travelers is prepared to accept a Travelers Superior
Proposal and only if, during such five-day period, Travelers and its
advisors shall have negotiated in good faith with Citicorp to make such
adjustments in the terms and conditions of this Agreement as would enable
Citicorp to proceed with the transactions contemplated herein on such
adjusted terms; it being understood and agreed that should Citicorp not
seek to proceed with the transactions contemplated herein on such adjusted
terms, Travelers may solicit additional Travelers Takeover Proposals,
including by conducting an auction. For purposes of this Agreement, a
"Travelers Superior Proposal" means any proposal made by a third party to
acquire, directly or indirectly, including pursuant to a tender offer,
exchange offer, merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction, for
consideration consisting of cash and/or securities, more than 50% of the
combined voting power of the shares of Travelers Common Stock then
outstanding or all or substantially all the assets of Travelers and
otherwise on terms which the Board of Directors of Travelers determines in
its good faith judgment to be more favorable to Travelers' stockholders
than the Merger and for which financing, to the extent required, is then
committed or which, in the good faith judgment of the Board of Directors of
Travelers, is reasonably capable of being obtained by such third party.
(c) In addition to the obligations of Travelers set forth
in paragraphs (a) and (b) of this Section 4.03, Travelers shall immediately
advise Citicorp orally and in writing of any request for information or of
any Travelers Takeover Proposal. Travelers will keep Citicorp reasonably
informed of the status and of any such request or Travelers Takeover
Proposal.
(d) Nothing contained in this Section 4.03 shall prohibit
Travelers from taking and disclosing to its stockholders a position
contemplated by Rule 14e-2(a) promulgated under the Exchange Act or from
making any disclosure to Travelers' stockholders if, in the good faith
judgment of the Board of Directors of Travelers, after consultation with
outside counsel, failure so to disclose would be inconsistent with its
obligations under applicable law; provided, however, that, except in
connection with a Travelers Superior Proposal, neither Travelers nor its
Board of Directors nor any committee thereof shall withdraw or modify, or
propose publicly to withdraw or modify, its position with respect to this
Agreement, the Merger, the issuance of Travelers Common Stock and Travelers
Preferred Stock in connection with the Merger, or approve or recommend, or
propose publicly to approve or recommend, a Travelers Takeover Proposal.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01 Preparation of the Form S-4 and the Joint Proxy
Statement; Stockholders Meetings.
(a) As soon as practicable following the date of this
Agreement, Citicorp and Travelers shall prepare and file with the SEC the
Joint Proxy Statement and Travelers shall prepare and file with the SEC the
Form S-4, in which the Joint Proxy Statement will be included as a
prospectus. Each of Citicorp and Travelers shall use best efforts to have
the Form S-4 declared effective under the Securities Act as promptly as
practicable after such filing. Citicorp will use all best efforts to cause
the Joint Proxy Statement to be mailed to Citicorp's stockholders, and
Travelers will use all best efforts to cause the Joint Proxy Statement to
be mailed to Travelers' stockholders, in each case as promptly as
practicable after the Form S-4 is declared effective under the Securities
Act. Travelers shall also take any action (other than qualifying to do
business in any jurisdiction in which it is not now so qualified or to file
a general consent to service of process) required to be taken under any
applicable state securities laws in connection with the issuance of
Travelers Common Stock and Travelers Preferred Stock in the Merger and
Citicorp shall furnish all information concerning Citicorp and the holders
of Citicorp Common Stock and Citicorp Preferred Stock as may be reasonably
requested in connection with any such action. No filing of, or amendment or
supplement to, the Form S-4 will be made by Travelers or to the Joint Proxy
Statement will be made by Travelers or Citicorp without providing the other
party the opportunity to review and comment thereon. Travelers will advise
Citicorp, promptly after it receives notice thereof, of the time when the
Form S-4 has become effective or any supplement or amendment has been
filed, the issuance of any stop order, the suspension of the qualification
of the Travelers Common Stock issuable in connection with the Merger for
offering or sale in any jurisdiction, or any request by the SEC for
amendment of the Joint Proxy Statement or the Form S-4 or comments thereon
and responses thereto or requests by the SEC for additional information. If
at any time prior to the Effective Time any information relating to
Citicorp or Travelers, or any of their respective affiliates, officers or
directors, should be discovered by Citicorp or Travelers which should be
set forth in an amendment or supplement to any of the Form S-4 or the Joint
Proxy Statement, so that any of such documents would not include any
misstatement of a material fact or omit to state any material fact
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, the party which discovers such
information shall promptly notify the other party hereto and an appropriate
amendment or supplement describing such information shall be promptly filed
with the SEC and, to the extent required by law, disseminated to the
stockholders of Citicorp and Travelers.
(b) Citicorp shall, as soon as practicable following the
date of this Agreement, duly call, give notice of, convene and hold a
meeting of its stockholders (the "Citicorp Stockholders Meeting") for the
purpose of obtaining the Citicorp Stockholder Approval and shall, through
its Board of Directors, recommend to its stockholders the approval and
adoption of this Agreement, the Merger and the other transactions
contemplated hereby. Without limiting the generality of the foregoing,
Citicorp agrees that its obligations pursuant to the first sentence of this
Section 5.01(b) shall not be affected by the commencement, public proposal,
public disclosure or communication to Citicorp of any Citicorp Takeover
Proposal.
(c) Travelers shall, as soon as practicable following the
date of this Agreement, duly call, give notice of, convene and hold a
meeting of its stockholders (the "Travelers Stockholders Meeting") for the
purpose of obtaining the Travelers Stockholder Approval and, if necessary,
increasing the number of shares of authorized Travelers Common Stock and
shall, through its Board of Directors, recommend to its stockholders the
approval and adoption of this Agreement, the Merger and the other
transactions contemplated hereby. Without limiting the generality of the
foregoing, Travelers agrees that its obligations pursuant to the first
sentence of this Section 5.01(c) shall not be affected by the commencement,
public proposal, public disclosure or communication to Travelers of any
Travelers Takeover Proposal.
(d) Travelers and Citicorp will use best efforts to hold
the Citicorp Stockholders Meeting and the Travelers Stockholders Meeting on
the same date and as soon as practicable after the date hereof.
SECTION 5.02 Letters of Citicorp's Accountants.
(a) Citicorp shall use best efforts to cause to be
delivered to Travelers two letters from Citicorp's independent accountants,
one dated a date within two business days before the date on which the Form
S-4 shall become effective and one dated a date within two business days
before the Closing Date, each addressed to Travelers, in form and substance
reasonably satisfactory to Travelers and customary in scope and substance
for comfort letters delivered by independent public accountants in
connection with registration statements similar to the Form S-4.
(b) Citicorp shall use best efforts to cause to be
delivered to Travelers and Travelers' independent accountants two letters
from Citicorp's independent accountants addressed to Travelers and
Citicorp, one dated as of the date the Form S-4 is effective and one dated
as of the Closing Date, in each case stating that accounting for the Merger
as a pooling of interests under Opinion 16 of the Accounting Principles
Board and applicable SEC rules and regulations is appropriate if the Merger
is closed and consummated in accordance with this Agreement.
SECTION 5.03 Letters of Travelers' Accountants.
(a) Travelers shall use best efforts to cause to be
delivered to Citicorp two letters from Travelers' independent accountants,
one dated a date within two business days before the date on which the Form
S-4 shall become effective and one dated a date within two business days
before the Closing Date, each addressed to Citicorp, in form and substance
reasonably satisfactory to Citicorp and customary in scope and substance
for comfort letters delivered by independent public accountants in
connection with registration statements similar to the Form S-4.
(b) Travelers shall use best efforts to cause to be
delivered to Citicorp and Citicorp's independent accountants two letters
from Travelers' independent accountants addressed to Citicorp and
Travelers, one dated as of the date the Form S-4 is effective and one dated
as of the Closing Date, stating that the accounting for the Merger as a
pooling of interests under Opinion 16 of the Accounting Principles Board
and applicable SEC rules and regulations is appropriate if the Merger is
closed and consummated in accordance with this Agreement.
SECTION 5.04 Access to Information; Confidentiality. To the
extent permitted by applicable law and subject to the Agreement dated March
30, 1998, between Travelers and Citicorp (the "Confidentiality Agreement"),
each of Citicorp and Travelers shall, and shall cause each of its
respective subsidiaries to, afford to the other party and to the officers,
employees, accountants, counsel, financial advisors and other
representatives of such other party, reasonable access during normal
business hours during the period prior to the Effective Time to all their
respective properties, books, contracts, commitments, personnel and records
and, during such period, each of Citicorp and Travelers shall, and shall
cause each of its respective subsidiaries to, furnish promptly to the other
party (a) a copy of each report, schedule, registration statement and other
document filed by it during such period pursuant to the requirements of
federal or state securities laws and (b) all other information concerning
its business, properties and personnel as such other party may reasonably
request. No review pursuant to this Section 5.04 shall have an effect for
the purpose of determining the accuracy of any representation or warranty
given by either party hereto to the other party hereto. Each of Citicorp
and Travelers will hold, and will cause its respective officers, employees,
accountants, counsel, financial advisors and other representatives and
affiliates to hold, any nonpublic information in accordance with the terms
of the Confidentiality Agreement.
SECTION 5.05 Best Efforts; Cooperation.
(a) Upon the terms and subject to the conditions set
forth in this Agreement, each of the parties agrees to use best efforts to
take, or cause to be taken, all actions, and to do, or cause to be done,
and to assist and cooperate with the other parties in doing, all things
necessary, proper or advisable to consummate and make effective, in the
most expeditious manner practicable, the Merger and the other transactions
contemplated by this Agreement, including (i) the obtaining of all
necessary actions or nonactions, waivers, consents and approvals from
Governmental Entities and the making of all necessary registrations and
filings and the taking of all steps as may be necessary to obtain an
approval or waiver from, or to avoid an action or proceeding by, any
Governmental Entity, (ii) the obtaining of all necessary consents,
approvals or waivers from third parties, (iii) the defending of any
lawsuits or other legal proceedings, whether judicial or administrative,
challenging this Agreement or the consummation of the transactions
contemplated hereby, including seeking to have any stay or temporary
restraining order entered by any court or other Governmental Entity vacated
or reversed, and (iv) the execution and delivery of any additional
instruments necessary to consummate the transactions contemplated by, and
to fully carry out the purposes of, this Agreement. Nothing set forth in
this Section 5.05(a) will limit or affect actions permitted to be taken
pursuant to Sections 4.02 and 4.03.
(b) In connection with and without limiting the
foregoing, Citicorp and Travelers shall (i) take all action necessary to
ensure that no state takeover statute or similar statute or regulation is
or becomes applicable to the Merger, this Agreement or any of the other
transactions contemplated hereby and (ii) if any state takeover statute or
similar statute or regulation becomes applicable to the Merger, this
Agreement or any of the other transactions contemplated hereby, take all
action necessary to ensure that the Merger and the other transactions
contemplated hereby may be consummated as promptly as practicable on the
terms contemplated by this Agreement and otherwise to minimize the effect
of such statute or regulation on the Merger and the other transactions
contemplated by this Agreement.
(c) Each of Travelers and Citicorp shall cooperate with
each other in obtaining opinions of Skadden, Arps, Slate, Xxxxxxx & Xxxx
LLP, counsel to Travelers, and Shearman & Sterling, counsel to Citicorp,
dated as of the Closing Date, to the effect that the Merger will constitute
a reorganization within the meaning of Section 368(a) of the Code. In
connection therewith, each of Travelers and Citicorp shall deliver to
Shearman & Sterling and Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP customary
representation letters in form and substance reasonably satisfactory to
such counsel and Citicorp shall obtain any representation letters from
appropriate stockholders and shall deliver any such letters obtained to
Shearman & Sterling and Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP (the
representation letters referred to in this sentence are collectively
referred to as the "Tax Certificates").
(d) Travelers shall use its best efforts to assist
Citicorp and certain of its subsidiaries that are subject to reporting
obligations under the BHC Act in the preparation and filing, on the
earliest practicable date after the date of this Agreement, of a Current
Report on Form 8-K for Citicorp containing the information required by Item
512(a)(1)(ii) of Regulation S-K of the SEC, including the historical
financial statements of Travelers required by Rule 3-05 of Regulation S-X
of the SEC and the pro forma financial information with respect to the
business combination contemplated by this Agreement required by Article 11
of Regulation S-X of the SEC and applicable reports to other Governmental
Entities.
(e) Citicorp shall use its best efforts to assist
Travelers and certain of its subsidiaries that are subject to the reporting
requirements of the Exchange Act (the "Reporting Subs") in the preparation
and filing, on the earliest practicable date after the date of this
Agreement, of Current Reports on Form 8-K for each of Travelers and the
Reporting Subs containing the information required by Item 512(a)(1)(ii) of
Regulation S-K of the SEC, including the historical financial statements of
Citicorp required by Rule 3-05 of Regulation S-X of the SEC and the pro
forma financial information with respect to the business combination
contemplated by this Agreement required by Article 11 of Regulation S-X of
the SEC, and Citicorp shall take all other action necessary to allow
Travelers and the Reporting Subs to issue and sell securities on a
continuous or delayed basis in one or more public offerings registered
under the Securities Act.
(f) Each of Travelers and Citicorp shall consult and
cooperate with the other with respect to significant developments in its
business and shall give reasonable consideration to the other's views with
respect thereto.
SECTION 5.06 Stock Options and Restricted Stock.
(a) As of the Effective Time, (i) each outstanding
Citicorp Employee Stock Option shall be converted into an option (an
"Adjusted Option") to purchase the number of shares of Travelers Common
Stock equal to the number of shares of Citicorp Common Stock subject to
such Citicorp Employee Stock Option immediately prior to the Effective Time
multiplied by the Exchange Ratio (rounded to the nearest whole number of
shares of Travelers Common Stock), at an exercise price per share equal to
the exercise price for each such share of Citicorp Common Stock subject to
such option divided by the Exchange Ratio (rounded down to the nearest
whole cent), and all references in each such option to Citicorp shall be
deemed to refer to Travelers, where appropriate; provided, however, that
the adjustments provided in this clause (i) with respect to any options
which are "incentive stock options" (as defined in Section 422 of the Code)
or which are described in Section 423 of the Code, shall be affected in a
manner consistent with the requirements of Section 424(a) of the Code, and
(ii) Travelers shall assume the obligations of Citicorp under the Citicorp
Stock Plans. The other terms of each Adjusted Option, and the plans or
agreements under which they were issued, shall continue to apply in
accordance with their terms. The date of grant of each Adjusted Option
shall be the date on which the corresponding Citicorp Employee Stock Option
was granted.
(b) As of the Effective Time, (i) each outstanding award
(including restricted stock, deferred stock, phantom stock, stock
equivalents and stock units) (each a "Citicorp Award") under any Citicorp
Stock Plan shall be converted into the same instrument of Travelers, in
each case with such adjustments (and no other adjustments) to the terms of
such Citicorp Awards as are necessary to preserve the value inherent in
such Citicorp Awards with no detrimental effects on the holder thereof and
(ii) Travelers shall assume the obligations of Citicorp under the Citicorp
Awards. The other terms of each Citicorp Award, and the plans or agreements
under which they were issued, shall continue to apply in accordance with
their terms.
(c) Citicorp and Travelers agree that each of the
Citicorp Stock Plans and Travelers Stock Plans shall be amended, to the
extent necessary, to reflect the transactions contemplated by this
Agreement, including, but not limited to the conversion of shares of
Citicorp Common Stock held or to be awarded or paid pursuant to such
benefit plans, programs or arrangements into shares of Travelers Common
Stock on a basis consistent with the transactions contemplated by this
Agreement. Citicorp and Travelers agree to submit the amendments to the
Travelers Stock Plans or the Citicorp Stock Plans to their respective
stockholders, if such submission is determined to be necessary by counsel
to Citicorp or Travelers after consultation with one another; provided,
however, that such approval shall not be a condition to the consummation of
the Merger.
(d) Travelers shall (i) reserve for issuance the number
of shares of Travelers Common Stock that will become subject to the benefit
plans, programs and arrangements referred to in this Section 5.06 and (ii)
issue or cause to be issued the appropriate number of shares of Travelers
Common Stock pursuant to applicable plans, programs and arrangements, upon
the exercise or maturation of rights existing thereunder on the Effective
Time or thereafter granted or awarded. No later than the Effective Time,
Travelers shall prepare and file with the SEC a registration statement on
Form S- 8 (or other appropriate form) registering a number of shares of
Travelers Common Stock necessary to fulfill Travelers' obligations under
this Section 5.06. Such registration statement shall be kept effective (and
the current status of the prospectus required thereby shall be maintained)
for at least as long as Adjusted Options or Citicorp Awards remain
outstanding.
(e) As soon as practicable after the Effective Time,
Travelers shall deliver to the holders of Citicorp Employee Stock Options
and Citicorp Awards appropriate notices setting forth such holders' rights
pursuant to the respective Citicorp Stock Plans and the agreements
evidencing the grants of such Citicorp Employee Stock Options and Citicorp
Awards and that such Citicorp Employee Stock Options and Citicorp Awards
and the related agreements shall be assumed by Travelers and shall continue
in effect on the same terms and conditions (subject to the adjustments
required by this Section after giving effect to the Merger).
(f) Citicorp will exchange each outstanding Book Value
Share prior to the Effective Time for such number of Citicorp Common Shares
having a fair market value as of the date of exchange equal to the book
value of such Book Value Share.
SECTION 5.07 Indemnification, Exculpation and Insurance.
(a) Travelers agrees to indemnify and hold harmless from
liabilities for acts or omissions occurring at or prior to the Effective
Time those classes of persons currently entitled to indemnification from
Citicorp and its subsidiaries as provided in their respective certificates
of incorporation or by-laws (or comparable organizational documents) and to
assume as the Surviving Corporation in the Merger, without further action,
as of the Effective Time any indemnification agreements of Citicorp in
effect as of the date hereof. In addition, from and after the Effective
Time, directors and officers of Citicorp who become directors or officers
of Travelers will be entitled to indemnification under Travelers' Restated
Certificate of Incorporation and By- laws, as the same may be amended from
time to time in accordance with their terms and applicable law, and to all
other indemnity rights and protections as are afforded to other directors
and officers of Travelers.
(b) In the event that Travelers or any of its successors
or assigns (i) consolidates with or merges into any other person and is not
the continuing or surviving corporation or entity of such consolidation or
merger or (ii) except for any disposition of assets by the Surviving
Corporation required by applicable law in connection with the Merger,
transfers or conveys all or substantially all of its properties and assets
to any person, then, and in each such case, proper provision will be made
so that the successors and assigns of Travelers assume the obligations set
forth in this Section 5.07.
(c) For six years after the Effective Time, Travelers
shall maintain in effect Citicorp's current directors' and officers'
liability insurance covering acts or omissions occurring prior to the
Effective Time with respect to those persons who are currently covered by
Citicorp's directors' and officers' liability insurance policy on terms
with respect to such coverage and amount no less favorable than those of
such policy in effect on the date hereof; provided that Travelers may
substitute therefor policies of Travelers or its subsidiaries containing
terms with respect to coverage and amount no less favorable to such
directors or officers; provided, further, that in no event shall Travelers
be required to pay aggregate premiums for insurance under this Section
5.07(c) in excess of 200% of the aggregate premiums paid by Citicorp in
1997 for such purpose.
(d) The provisions of this Section 5.07 (i) are intended
to be for the benefit of, and will be enforceable by, each indemnified
party, his or her heirs and his or her representatives and (ii) are in
addition to, and not in substitution for, any other rights to
indemnification or contribution that any such person may have by contract
or otherwise.
SECTION 5.08 Fees and Expenses. Except as provided in this
Section 5.08, all fees and expenses incurred in connection with the Merger,
this Agreement and the transactions contemplated hereby shall be paid by
the party incurring such fees or expenses, whether or not the Merger is
consummated, except that each of Travelers and Citicorp shall bear and pay
one-half of the costs and expenses incurred in connection with the filing,
printing and mailing of the Form S-4 and the Joint Proxy Statement
(including SEC filing fees).
SECTION 5.09 Public Announcements. Travelers and Citicorp will
consult with each other before issuing, and provide each other the
opportunity to review, comment upon and concur with, any press release or
other public statements with respect to the transactions contemplated by
this Agreement, including the Merger, and shall not issue any such press
release or make any such public statement prior to such consultation,
except as either party may determine is required by applicable law, court
process or by obligations pursuant to any listing agreement with any
national securities exchange. The parties agree that the initial press
release to be issued with respect to the transactions contemplated by this
Agreement shall be in the form heretofore agreed to by the parties.
SECTION 5.10 Affiliates.
(a) Not less than 45 days prior to the Effective Time,
Citicorp shall deliver to Travelers a list of names and addresses of each
person who, in Citicorp's reasonable judgment, is an affiliate within the
meaning of Rule 145 of the rules and regulations promulgated under the
Securities Act or otherwise applicable SEC accounting releases with respect
to pooling of interests accounting treatment (each such person, a "Pooling
Affiliate") of Citicorp. Citicorp shall provide Travelers such information
and documents as Travelers shall reasonably request for purposes of
reviewing such list. Citicorp shall deliver or cause to be delivered to
Travelers, not later than 30 days prior to the Effective Time, an affiliate
letter in the form attached hereto as Exhibit 5.10(a), executed by each of
the Pooling Affiliates of Citicorp identified in the foregoing list.
Travelers shall be entitled to place legends as specified in such affiliate
letters on the certificates evidencing any of the Travelers Common Stock to
be received by the Pooling Affiliates of Citicorp pursuant to the terms of
this Agreement, and to issue appropriate stop transfer instructions to the
transfer agent for the Travelers Common Stock, consistent with the terms of
such letters.
(b) Not less than 45 days prior to the Effective Time,
Travelers shall deliver to Citicorp a list of names and addresses of each
person who, in Travelers' reasonable judgment is a Pooling Affiliate of
Travelers. Travelers shall provide Citicorp such information and documents
as Citicorp shall reasonably request for purposes of reviewing such list.
Travelers shall deliver or cause to be delivered to Citicorp, not later
than 30 days prior to the Effective Time, an affiliate letter in the form
attached hereto as Exhibit 5.10(b), executed by each Pooling Affiliate of
Travelers identified in the foregoing list.
SECTION 5.11 NYSE and PSE Listing. Travelers shall use its best
efforts to cause the Travelers Listed Securities to be approved for listing
on the NYSE and Pacific Exchange, subject to official notice of issuance,
as promptly as practicable after the date hereof, and in any event prior to
the Closing Date.
SECTION 5.12 Stockholder Litigation. Each of Citicorp and
Travelers shall give the other the reasonable opportunity to participate in
the defense of any stockholder litigation against Citicorp or Travelers, as
applicable, and its directors relating to the transactions contemplated by
this Agreement.
SECTION 5.13 Tax Treatment. Each of Travelers and Citicorp
shall use best efforts to cause the Merger to qualify as a reorganization
under the provisions of Section 368(a) of the Code and to obtain the
opinions of counsel referred to in Sections 6.02(c) and 6.03(c), including,
without limitation, forebearing from taking any action that would cause the
Merger not to qualify as a reorganization under the provisions of Section
368(a) of the Code.
SECTION 5.14 Pooling of Interests. Each of Citicorp and
Travelers shall use their respective best efforts to cause the transactions
contemplated by this Agreement, including the Merger, to be accounted for
as a pooling of interests under Opinion 16 of the Accounting Principles
Board and applicable SEC rules and regulations, and such accounting
treatment to be accepted by each of Citicorp's and Travelers' independent
certified public accountants, respectively, and to be accepted by the SEC,
and each of Citicorp and Travelers agrees that it will not knowingly take
any action that would cause such accounting treatment not to be obtained.
SECTION 5.15 Travelers Preferred Stock. Prior to the Effective
Time, the Board of Directors of Travelers shall take all necessary action
to establish the terms of the Travelers Preferred Stock as contemplated by
this Agreement and file the Certificates of Designations with the Secretary
of State of the State of Delaware, all in accordance with the applicable
provisions of the DGCL. The Certificates of Designations shall in all
respects be substantially identical to the existing certificates of
designations for the Citicorp Preferred Stock, except that the issuer
thereof shall be Travelers instead of Citicorp and that the Certificates of
Designations shall state that Travelers' obligations to pay dividends
thereunder, if any, shall commence on the first dividend payment date that
occurs following the Effective Time.
SECTION 5.16 Standstill Agreements; Confidentiality Agreements.
During the period from the date of this Agreement through the Effective
Time, neither Citicorp nor Travelers shall terminate, amend, modify or
waive any provision of any confidentiality or standstill agreement to which
it or any of its respective subsidiaries is a party (other than the
Confidentiality Agreement pursuant to its terms or by written agreement of
the parties thereto). During such period, Citicorp or Travelers, as the
case may be, shall enforce, to the fullest extent permitted under
applicable law, the provisions of any such agreement, including by
obtaining injunctions to prevent any breaches of such agreements and to
enforce specifically the terms and provisions thereof in any court of the
United States of America or of any state having jurisdiction.
SECTION 5.17 Compliance with 1940 Act Section 15.
(a) Citicorp and Travelers acknowledge that each of
Citicorp and Travelers has entered into this Agreement in reliance upon the
benefits and protections provided by Section 15(f) of the 1940 Act. Each of
Citicorp and Travelers shall not take, and each of them shall cause its
affiliates not to take, any action not contemplated by this Agreement that
would have the effect, directly or indirectly, of causing the requirements
of any of the provisions of Section 15(f) of the 1940 Act not to be met in
respect of this Agreement and the transactions contemplated hereby, and
each of them shall not fail to take, and each of them shall cause its
affiliates not to fail to take, and after the Closing Date shall not cause
the Surviving Corporation to fail to take, any action if the failure to
take such action would have the effect, directly or indirectly, of causing
the requirements of any of the provisions of Section 15(f) of the 1940 Act
not to be met in respect of this Agreement and the transactions
contemplated hereby. In that regard, each of Citicorp and Travelers shall
conduct its business and shall, subject to applicable fiduciary duties, use
its reasonable best efforts to cause each of its affiliates to conduct its
business so as to assure that, insofar as within the control of Citicorp
and Travelers or their respective affiliates:
(i) for a period of three years after the Closing Date,
at least 75% of the members of the Board of Directors or trustees of
each fund that is registered under the 1940 Act, and that continues
after the Closing Date its existing or a replacement investment
advisory contract with the Surviving Corporation or any affiliate of
the Surviving Corporation, are not (A) "interested persons" of the
investment manager of such Fund after the Closing Date or (B)
"interested persons" of the present investment manager of such fund;
and
(ii) for a period of two years after the Closing Date,
there shall not be imposed on any of the funds or sub-advisory funds
that is registered under the 1940 Act an "unfair burden" as a result
of the transactions contemplated by this Agreement, or any terms,
conditions or understandings applicable thereto.
(b) The terms and quotations in this Section 5.17 shall
have the meanings set forth in Section 15(f) or Section 2(a)(19) of the
1940 Act.
SECTION 5.18 Consent Procedure. In connection with obtaining
consents from investment advisory clients, if such consents are determined
to be necessary, each of Citicorp and Travelers shall (i) keep the other
party informed of the status of obtaining consents, (ii) facilitate the
other party's communication with clients regarding such consents, (iii)
provide to the other party draft proxy statements and (iv) to the extent
applicable, deliver to the other party prior to the Closing copies of all
executed client consents and make available for inspection the originals of
such consents prior to the Closing.
SECTION 5.19 Employee Benefit Plans.
(a) From and after the Effective Time, the Citicorp
Benefit Plans and Travelers Benefit Plans in effect as of the Effective
Time shall, subject to applicable law, the terms of this Agreement and the
terms of such plans, remain in effect with respect to the employees of
Citicorp or Travelers (or their respective subsidiaries), as the case may
be, until such time as the Surviving Corporation shall adopt new employee
benefit plans and arrangements with respect to employees of the Surviving
Corporation and its subsidiaries. From and after the Effective Time, the
Surviving Corporation shall, and shall cause its subsidiaries to, honor in
accordance with their terms all Citicorp Benefit Plans and Travelers
Benefit Plans, respectively, as amended as permitted hereunder, and all
other contracts, arrangements and commitments which apply to current or
former employees or directors of Citicorp, Travelers or their respective
subsidiaries.
(b) Employees of Citicorp, Travelers and their respective
subsidiaries shall receive credit for purposes of eligibility to
participate, vesting, benefit accrual and eligibility to receive benefits
under any employee benefit plan, program or arrangement established or
maintained by the Surviving Corporation or any of its subsidiaries and made
available to such employees for service accrued or deemed accrued prior to
the Effective Time with Citicorp, Travelers or any of their respective
subsidiaries, as the case may be; provided, however, that such crediting of
service shall not operate to duplicate any benefit or the funding of any
such benefit.
ARTICLE VI
CONDITIONS PRECEDENT
SECTION 6.01 Conditions to Each Party's Obligation to Effect
the Merger. The respective obligation of each party to effect the Merger is
subject to the satisfaction or waiver on or prior to the Closing Date of
the following conditions:
(a) Stockholder Approvals. Each of the Citicorp
Stockholder Approval and the Travelers Stockholder Approval shall have been
obtained.
(b) Governmental and Regulatory Approvals. Other than the
filing provided for under Section 1.03 and other than the filing of
applications and notices under the BHC Act and the receipt of approvals in
respect thereof which shall have been obtained in form and substance
reasonably satisfactory to each of Travelers and Citicorp, all consents,
approvals and actions of, filings with and notices to any Governmental
Entity required of Citicorp, Travelers or any of their subsidiaries to
consummate the Merger and the other transactions contemplated hereby, the
failure of which to be obtained or taken is reasonably expected to have a
material adverse effect on the Surviving Corporation and its prospective
subsidiaries, taken as a whole, shall have been obtained in form and
substance reasonably satisfactory to each of Travelers and Citicorp.
(c) No Injunctions or Restraints. No judgment, order,
decree, statute, law, ordinance, rule or regulation, entered, enacted,
promulgated, enforced or issued by any court or other Governmental Entity
of competent jurisdiction or other legal restraint or prohibition
(collectively, "Restraints") shall be in effect (i) preventing the
consummation of the Merger, (ii) except as may be required under the BHC
Act, prohibiting or limiting the ownership or operation by Citicorp or
Travelers and their respective subsidiaries of any material portion of the
business or assets of Citicorp or Travelers and their respective
subsidiaries taken as a whole, or compelling Citicorp or Travelers and
their respective subsidiaries to dispose of or hold separate any material
portion of the business or assets of Citicorp or Travelers and their
respective subsidiaries, taken as a whole, as a result of the Merger or any
of the other transactions contemplated by this Agreement or (iii) which
otherwise is reasonably likely to have a material adverse effect on
Citicorp or Travelers, as applicable; provided, however, that each of the
parties shall have used its best efforts to prevent the entry of any such
Restraints and to appeal as promptly as possible any such Restraints that
may be entered.
(d) Form S-4. The Form S-4 shall have become effective
under the Securities Act and shall not be the subject of any stop order or
proceedings seeking a stop order.
(e) NYSE Listing. The shares of Travelers Listed
Securities issuable to Citicorp's stockholders as contemplated by this
Agreement shall have been approved for listing on the NYSE, subject to
official notice of issuance.
SECTION 6.02 Conditions to Obligations of Travelers. The
obligation of Travelers to effect the Merger is further subject to
satisfaction or waiver of the following conditions:
(a) Representations and Warranties. The representations
and warranties of Citicorp set forth herein shall be true and correct both
when made and at and as of the Closing Date, as if made at and as of such
time (except to the extent expressly made as of an earlier date, in which
case as of such date), except where the failure of such representations and
warranties to be so true and correct (without giving effect to any
limitation as to "materiality" or "material adverse effect" set forth
therein) would not have, individually or in the aggregate, a material
adverse effect on Citicorp.
(b) Performance of Obligations of Citicorp. Citicorp
shall have performed in all material respects all obligations required to
be performed by it under this Agreement at or prior to the Closing Date.
(c) Tax Opinion. Travelers shall have received from
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, counsel to Travelers, an opinion
dated as of the Closing Date, to the effect that the Merger will constitute
a "reorganization" within the meaning of Section 368(a) of the Code, and
Travelers and Citicorp will each be a party to such reorganization within
the meaning of Section 368(b) of the Code. In rendering such opinion,
counsel for Travelers may require delivery of, and rely upon, the Tax
Certificates.
(d) No Material Adverse Change. At any time after the
date of this Agreement there shall not have occurred any material adverse
change relating to Citicorp.
SECTION 6.03 Conditions to Obligations of Citicorp. The
obligation of Citicorp to effect the Merger is further subject to
satisfaction or waiver of the following conditions:
(a) Representations and Warranties. The representations
and warranties of Travelers set forth herein shall be true and correct both
when made and at and as of the Closing Date, as if made at and as of such
time (except to the extent expressly made as of an earlier date, in which
case as of such date), except where the failure of such representations and
warranties to be so true and correct (without giving effect to any
limitation as to "materiality" or "material adverse effect" set forth
therein) would not have, individually or in the aggregate, a material
adverse effect on Travelers.
(b) Performance of Obligations of Travelers. Travelers
shall have performed in all material respects all obligations required to
be performed by it under this Agreement at or prior to the Closing Date.
(c) Tax Opinion. Citicorp shall have received from
Shearman & Sterling, counsel to Citicorp, an opinion dated as of the
Closing Date, to the effect that the Merger will constitute a
"reorganization" within the meaning of Section 368(a) of the Code, and
Travelers and Citicorp will each be a party to such reorganization within
the meaning of Section 368(b) of the Code. In rendering such opinion,
counsel for Citicorp may require delivery of, and rely upon, the Tax
Certificates.
(d) No Material Adverse Change. At any time after the
date of this Agreement there shall not have occurred any material adverse
change relating to Travelers.
SECTION 6.04 Frustration of Closing Conditions. Neither
Travelers nor Citicorp may rely on the failure of any condition set forth
in Section 6.01, 6.02 or 6.03, as the case may be, to be satisfied if such
failure was caused by such party's failure to use best efforts to
consummate the Merger and the other transactions contemplated by this
Agreement, as required by and subject to Section 5.05.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
SECTION 7.01 Termination. This Agreement may be terminated at
any time prior to the Effective Time, whether before or after the Citicorp
Stockholder Approval or the Travelers Stockholder Approval:
(a) by mutual written consent of Travelers and Citicorp;
(b) by either Travelers or Citicorp:
(i) if the Merger shall not have been consummated by the
later of December 31, 1998 or such date as the Closing may have been
extended by either party pursuant to the proviso to Section 1.02;
provided, however, that the right to terminate this Agreement
pursuant to this Section 7.01(b)(i) shall not be available to any
party whose failure to perform any of its obligations under this
Agreement results in the failure of the Merger to be consummated by
such time;
(ii) if the Citicorp Stockholder Approval shall not have
been obtained at a Citicorp Stockholders Meeting duly convened
therefor or at any adjournment or postponement thereof;
(iii) if the Travelers Stockholder Approval shall not
have been obtained at a Travelers Stockholders Meeting duly convened
therefor or at any adjournment or postponement thereof; or
(iv) if any Restraint having any of the effects set forth
in Section 6.01(c) shall be in effect and shall have become final and
nonappealable; provided, that the party seeking to terminate this
Agreement pursuant to this Section 7.01(b)(iv) shall have used best
efforts to prevent the entry of and to remove such Restraint;
(c) by Travelers, if Citicorp shall have breached or
failed to perform in any material respect any of its representations,
warranties, covenants or other agreements contained in this Agreement,
which breach or failure to perform (A) would give rise to a material
adverse change relating to Citicorp and (B) is incapable of being cured by
Citicorp;
(d) by Travelers if the Board of Directors of Travelers
shall have exercised its rights set forth in Section 4.03(b); provided
that, in order for the termination of this Agreement pursuant to this
paragraph (d) to be deemed effective, Travelers shall have complied with
all provisions contained in Section 4.03, including the notice provisions
therein;
(e) by Citicorp, if Travelers shall have breached or
failed to perform in any material respect any of its representations,
warranties, covenants or other agreements contained in this Agreement,
which breach or failure to perform (A) would give rise to a material
adverse change relating to Travelers and (B) is incapable of being cured by
Travelers; or
(f) by Citicorp if the Board of Directors of Citicorp
shall have exercised its rights set forth in Section 4.02(b); provided
that, in order for the termination of this Agreement pursuant to this
paragraph (f) to be deemed effective, Citicorp shall have complied with all
provisions of Section 4.02, including the notice provisions therein.
SECTION 7.02 Effect of Termination. In the event of termination
of this Agreement by either Citicorp or Travelers as provided in Section
7.01, this Agreement shall forthwith become void and have no effect,
without any liability or obligation on the part of Travelers or Citicorp,
other than the provisions of Section 3.01(o), Section 3.02(o), the last
sentence of Section 5.04, Section 5.08, this Section 7.02 and Article VIII,
which provisions survive such termination, provided, however, that nothing
herein shall relieve any party from any liability for any willful and
material breach by such party of any of its representations, warranties,
covenants or agreements set forth in this Agreement.
SECTION 7.03 Amendment. This Agreement may be amended by the
parties at any time before or after the Citicorp Stockholder Approval or
the Travelers Stockholder Approval; provided, however, that after any such
approval, there shall not be made any amendment that by law requires
further approval by the stockholders of Citicorp or Travelers without the
further approval of such stockholders. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties.
SECTION 7.04 Extension; Waiver. At any time prior to the
Effective Time, a party may (a) extend the time for the performance of any
of the obligations or other acts of the other party, (b) waive any
inaccuracies in the representations and warranties of the other party
contained in this Agreement or in any document delivered pursuant to this
Agreement or (c) subject to the proviso of Section 7.03, waive compliance
by the other party with any of the agreements or conditions contained in
this Agreement. Any agreement on the part of a party to any such extension
or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party. The failure of any party to this Agreement
to assert any of its rights under this Agreement or otherwise shall not
constitute a waiver of such rights.
SECTION 7.05 Procedure for Termination, Amendment, Extension or
Waiver. A termination of this Agreement pursuant to Section 7.01 shall, in
order to be effective, require, in the case of Travelers or Citicorp,
action by its Board of Directors or, with respect to any amendment to this
Agreement, the duly authorized committee of its Board of Directors to the
extent permitted by law.
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.01 Nonsurvival of Representations and Warranties.
None of the representations and warranties in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the Effective
Time. This Section 8.01 shall not limit any covenant or agreement of the
parties which by its terms contemplates performance after the Effective
Time.
SECTION 8.02 Notices. All notices, requests, claims, demands
and other communications under this Agreement shall be in writing and shall
be deemed given if delivered personally, telecopied (which is confirmed) or
sent by overnight courier (providing proof of delivery) to the parties at
the following addresses (or at such other address for a party as shall be
specified by like notice):
(a) if to Travelers, to:
Travelers Group Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx, III
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxx
(b) if to Citicorp, to
Citicorp
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy No.: (000) 000-0000
Attention: Xxxx X. Xxxxx
with copies to:
Shearman & Sterling
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy No.: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxx
SECTION 8.03 Definitions. For purposes of this Agreement:
(a) an "affiliate" of any person means another person
that directly or indirectly, through one or more intermediaries, controls,
is controlled by, or is under common control with, such first person, where
"control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management policies of a person,
whether through the ownership of voting securities, by contract, as trustee
or executor, or otherwise; provided, however, that (x) any investment
account advised or managed by such person or one of its subsidiaries or
affiliates on behalf of third parties, or (y) any partnership, limited
liability company, or other similar investment vehicle or entity engaged in
the business of making investments of which such person acts as the general
partner, managing member, manager, investment advisor, principal
underwriter or the equivalent shall not be deemed an affiliate of such
person;
(b) "material adverse change" or "material adverse
effect" means, when used in connection with Citicorp or Travelers, any
change, effect, event, occurrence or state of facts that is, or would
reasonably be expected to be, materially adverse to the business, financial
condition or results of operations of such party and its subsidiaries taken
as a whole other than any change, effect, event or occurrence relating to
(i) the economy or securities markets of the United States or any other
region in general, (ii) this Agreement or the transactions contemplated
hereby or the announcement thereof, (iii) the failure to obtain applicable
regulatory or other third party consents that are required under this
Agreement or (iv) the financial services industry in general, and not
specifically relating to Citicorp or Travelers or their respective
subsidiaries, and the terms "material" and "materially" have correlative
meanings;
(c) "person" means an individual, corporation,
partnership, limited liability company, joint venture, association, trust,
unincorporated organization or other entity;
(d) a "subsidiary" of any person means another person, an
amount of the voting securities, other voting ownership or voting
partnership interests of which is sufficient to elect at least a majority
of its Board of Directors or other governing body (or, if there are no such
voting interests, 50% or more of the equity interests of which) is owned
directly or indirectly by such first person; provided that "subsidiary"
shall not include (x) with respect to Citicorp, any Citicorp Fund or any
person in which a Citicorp Fund holds an ownership interest, (y) with
respect to Travelers, any Travelers Fund or any person in which a Travelers
Fund holds an ownership interest; and (z) any entity in which a
"subsidiary" that is a Small Business Investment Company formed pursuant to
the Small Business Investment Act has an equity interest.
(e) "knowledge" of any person which is not an individual
means the knowledge of such person's executive officers.
SECTION 8.04 Interpretation. When a reference is made in this
Agreement to an Article, Section or Exhibit, such reference shall be to an
Article or Section of, or an Exhibit to, this Agreement unless otherwise
indicated. The table of contents and headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning
or interpretation of this Agreement. Whenever the words "include",
"includes" or "including" are used in this Agreement, they shall be deemed
to be followed by the words "without limitation". The words "hereof",
"herein" and "hereunder" and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement. All terms defined in this Agreement
shall have the defined meanings when used in any certificate or other
document made or delivered pursuant hereto unless otherwise defined
therein. The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as
well as to the feminine and neuter genders of such term. Any agreement,
instrument or statute defined or referred to herein or in any agreement or
instrument that is referred to herein means such agreement, instrument or
statute as from time to time amended, modified or supplemented, including
(in the case of agreements or instruments) by waiver or consent and (in the
case of statutes) by succession of comparable successor statutes and
references to all attachments thereto and instruments incorporated therein.
References to a person are also to its permitted successors and assigns.
SECTION 8.05 Counterparts. This Agreement may be executed in
one or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when one or more counterparts have
been signed by each of the parties and delivered to the other parties.
SECTION 8.06 Entire Agreement; No Third-Party Beneficiaries.
This Agreement (including the documents and instruments referred to
herein), and the Confidentiality Agreement (a) constitute the entire
agreement, and supersede all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter of
this Agreement and (b) except for the provisions of Article II, Section
5.06 and Section 5.07, are not intended to confer upon any person other
than the parties any rights or remedies.
SECTION 8.07 Governing Law. THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE,
REGARDLESS OF THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE
PRINCIPLES OF CONFLICT OF LAWS THEREOF.
SECTION 8.08 Assignment. Neither this Agreement nor any of the
rights, interests or obligations under this Agreement shall be assigned, in
whole or in part, by operation of law or otherwise by either of the parties
hereto without the prior written consent of the other party. Any assignment
in violation of the preceding sentence shall be void. Subject to the
preceding two sentences, this Agreement will be binding upon, inure to the
benefit of, and be enforceable by, the parties and their respective
successors and assigns.
SECTION 8.09 Consent to Jurisdiction. Each of the parties
hereto (a) consents to submit itself to the personal jurisdiction of any
federal court located in the State of Delaware or any Delaware state court
in the event any dispute arises out of this Agreement or any of the
transactions contemplated by this Agreement, (b) agrees that it will not
attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from any such court, and (c) agrees that it will not
bring any action relating to this Agreement or any of the transactions
contemplated by this Agreement in any court other than a federal court
sitting in the State of Delaware or a Delaware state court.
SECTION 8.10 Headings. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning
or interpretation of this Agreement.
SECTION 8.11 Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any
rule of law or public policy, all other conditions and provisions of this
Agreement shall nevertheless remain in full force and effect. Upon such
determination that any term or other provision is invalid, illegal or
incapable of being enforced, the parties hereto shall negotiate in good
faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible to the fullest extent permitted by
applicable law in an acceptable manner to the end that the transactions
contemplated hereby are fulfilled to the extent possible.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement and Plan of Merger to be signed by their respective officers
thereunto duly authorized, all as of the date first written above.
TRAVELERS GROUP INC.
By: /s/ Xxxxxxx X. Xxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Chairman of the Board
and Chief Executive Officer
CITICORP
By: /s/ Xxxx X. Xxxx
--------------------------------
Name: Xxxx X. Xxxx
Title: Chairman
EXHIBIT 5.10(a)
Travelers Group Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
The undersigned, a holder of shares of common stock, par value $1.00
per share ("Citicorp Common Stock"), of Citicorp, a Delaware corporation
("Citicorp"), is entitled to receive in connection with the merger (the
"Merger") of Citicorp with and into Travelers Group Inc., a Delaware
corporation ("Travelers"), shares of common stock, par value $.01 per share
(the "Travelers Common Stock"), of Travelers. The undersigned has been
advised that the undersigned may be deemed an "affiliate" of Citicorp
within the meaning of Rule 145 ("Rule 145") promulgated under the
Securities Act of 1933, as amended (the "Securities Act"), by the
Securities and Exchange Commission (the "SEC") and may be deemed an
"affiliate" of Citicorp for purposes of qualifying the Merger for pooling
of interests accounting treatment under Opinion 16 of the Accounting
Principles Board and applicable SEC rules and regulations. Nothing
contained herein should be construed as an admission that I am an
"affiliate" of Citicorp as described in the immediately preceding sentence.
If, in fact, the undersigned were an affiliate under the Securities
Act, the undersigned's ability to sell, assign or transfer the shares of
Travelers Common Stock received by the undersigned in exchange for any
shares of Citicorp Common Stock in connection with the Merger may be
restricted unless such transaction is registered under the Securities Act
or an exemption from such registration is available. The undersigned
understands that such exemptions are limited and the undersigned has
obtained or will obtain advice of counsel as to the nature and conditions
of such exemptions, including information with respect to the applicability
to the sale of such securities of Rules 144 and 145(d) promulgated under
the Securities Act. The undersigned understands that Travelers will not be
required to maintain the effectiveness of any registration statement under
the Securities Act for the purposes of sale, transfer or other disposition
of shares of Travelers Common Stock by the undersigned or take any action
(other than to comply with the reporting requirements of the Securities
Exchange Act of 1934, as amended, so long as it is subject to such
requirements) to make compliance with an exemption from registration
available to the undersigned.
The undersigned hereby represents to and covenants with Travelers
that the undersigned will not sell, assign or transfer any of the shares of
Travelers Common Stock received by the undersigned in exchange for shares
of Citicorp Common Stock in connection with the Merger except (i) pursuant
to an effective registration statement under the Securities Act, (ii) in
conformity with the volume and other limitations of Rule 145 or (iii) in a
transaction which, in the opinion of the general counsel of Travelers or
other counsel reasonably satisfactory to Travelers or as described in a
"no-action" or interpretive letter from the Staff of the SEC specifically
issued with respect to a transaction to be engaged in by the undersigned,
is not required to be registered under the Securities Act.
The undersigned hereby further represents to and covenants with
Travelers that from the date that is 30 days prior to the Effective Time
(as defined in the Agreement and Plan of Merger, dated as of April 5, 1998,
between Travelers and Citicorp), the undersigned will not sell, transfer or
otherwise dispose of any shares of Citicorp Common Stock held by the
undersigned and that the undersigned will not sell, transfer or otherwise
dispose of any shares of Travelers Common Stock received by the undersigned
in the Merger until after such time as results covering at least 30 days of
post-Merger combined operations of Citicorp and Travelers have been
published by Travelers, in the form of a quarterly earnings report, an
effective registration statement filed with the SEC, a report to the SEC on
Form 10-K, 10-Q or 8-K, or any other public filing or announcement which
includes such combined results of operations, except after prior written
notice to Travelers of the undersigned's intention to make such sale and
Travelers' determination that such sale would not reasonably be expected to
adversely affect the qualification of the Merger as a pooling-of-interests.
In the event of a sale or other disposition by the undersigned of
shares of Travelers Common Stock pursuant to Rule 145 or other exempt
transaction, the undersigned will supply Travelers with evidence of
compliance with such Rule, in the form of a letter in the form of Annex I
hereto or the opinion of counsel or no-action letter referred to above, as
the case may be. The undersigned understands that Travelers may instruct
its transfer agent to withhold the transfer of any shares of Travelers
Common Stock disposed of by the undersigned, but that (provided such
transfer is not prohibited by any other provision of this letter agreement)
upon receipt of such evidence of compliance, Travelers shall cause the
transfer agent to effectuate the transfer of the shares of Travelers Common
Stock sold as indicated in such letter.
The undersigned acknowledges and agrees that the legends set forth
below will be placed on certificates representing the Travelers Common
Stock received by the undersigned in connection with the Merger or held by
a transferee thereof, which legends will be removed by delivery of
substitute certificates upon receipt of an opinion in form and substance
reasonably satisfactory to Travelers from counsel reasonably satisfactory
to Travelers to the effect that such legends are no longer required for
purposes of the Securities Act.
There will be placed on the certificates for Travelers Common Stock
issued to the undersigned, or any substitutions therefor, a legend stating
in substance:
"The shares represented by this certificate were issued pursuant to a
business combination which is being accounted for as a pooling of
interests, in a transaction to which Rule 145 promulgated under the
Securities Act of 1933 applies. The shares have not been acquired by the
holder with a view to, or for resale in connection with, any distribution
thereof within the meaning of the Securities Act of 1933. The shares may
not be sold, pledged or otherwise transferred (i) until such time as
Travelers shall have published financial results covering at least 30 days
of combined operations after the Effective Time and (ii) except in
accordance with an exemption from the registration requirements of the
Securities Act of 1933."
The undersigned acknowledges that (i) the undersigned has carefully
read this letter and understands the requirements hereof and the
limitations imposed upon the distribution, sale, transfer or other
disposition of Travelers Common Stock and (ii) the receipt by Travelers of
this letter is an inducement to Travelers' obligations to consummate the
Merger.
Very truly yours,
ANNEX I TO EXHIBIT 5.10(a)
[Date]
[Name]
On ______, the undersigned sold ______ shares of common stock (the
"Travelers Common Stock") of Travelers Group Inc., a Delaware corporation
("Travelers"), which were received by the undersigned in connection with
the merger of Citicorp with and into Travelers.
Based upon the most recent report or statement filed by Travelers
with the Securities and Exchange Commission, the shares of Travelers Common
Stock sold by the undersigned were within the prescribed limitations set
forth in paragraph (e) of Rule 144 promulgated under the Securities Act of
1933, as amended (the "Securities Act").
The undersigned hereby represents that the shares of Travelers Common
Stock were sold in "brokers' transactions" within the meaning of Section
4(4) of the Securities Act or in transactions directly with a "market
maker" as that term is defined in Section 3(a)(38) of the Securities
Exchange Act of 1934, as amended. The undersigned further represents that
the undersigned has not solicited or arranged for the solicitation of
orders to buy the Travelers Common Stock, and that the undersigned has not
made any payment in connection with the offer or sale of the Travelers
Common Stock to any person other than to the broker who executed the order
in respect of such sale.
Very truly yours,
EXHIBIT 5.10(b)
Citicorp
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
The undersigned, a holder of shares of common stock, par value $.01
per share ("Travelers Common Stock"), of Travelers Group Inc., a Delaware
corporation ("Travelers"), has been advised that the undersigned may be
deemed an "affiliate" of Travelers for purposes of qualifying the merger
(the "Merger") of Citicorp, a Delaware corporation ("Citicorp"), with and
into Travelers for pooling of interests accounting treatment under Opinion
16 of the Accounting Principles Board and applicable Securities and
Exchange Commission ("SEC") rules and regulations. Nothing contained herein
should be construed as an admission that I am an "affiliate" of Travelers
as described in the immediately preceding sentence.
The undersigned hereby represents to and covenants with Travelers
that from the date that is 30 days prior to the Effective Time (as defined
in the Agreement and Plan of Merger, dated as of April 5, 1998, between
Travelers and Citicorp), the undersigned will not sell, transfer or
otherwise dispose of any shares of Travelers Common Stock held by the
undersigned until after such time as results covering at least 30 days of
post-Merger combined operations of Citicorp and Travelers have been
published by Travelers, in the form of a quarterly earnings report, an
effective registration statement filed with the SEC, a report to the SEC on
Form 10-K, 10-Q or 8-K, or any other public filing or announcement which
includes such combined results of operations, except after prior written
notice to Travelers of the undersigned's intention to make such sale and
Travelers' determination that such sale would not reasonably be expected to
adversely affect the qualification of the Merger as a pooling-of-interests.
The undersigned acknowledges that (i) the undersigned has carefully
read this letter and understands the requirements hereof and the
limitations imposed upon the distribution, sale, transfer or other
disposition of Travelers Common Stock and (ii) the receipt by Citicorp of
this letter is an inducement to Citicorp's obligations to consummate the
Merger.
Very truly yours,
