EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
by and between
THE BEAR ▇▇▇▇▇▇▇ COMPANIES INC.
and
JPMORGAN CHASE & CO.
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DATED AS OF MARCH 16, 2008
TABLE OF CONTENTS
Page
Article I THE MERGER.........................................................1
1.1 The Merger.........................................................1
1.2 Effective Time.....................................................2
1.3 Effects of the Merger..............................................2
1.4 Conversion of Stock................................................2
1.5 Stock Options and Other Stock-Based Awards.........................3
1.6 Certificate of Incorporation and ByLaws of the
Surviving Company..................................................5
1.7 Directors and Officers.............................................5
Article II DELIVERY OF MERGER CONSIDERATION...................................5
2.1 Exchange Agent.....................................................5
2.2 Deposit of Merger Consideration....................................6
2.3 Delivery of Merger Consideration...................................6
Article III REPRESENTATIONS AND WARRANTIES OF COMPANY..........................8
3.1 Corporate Organization.............................................8
3.2 Capitalization.....................................................9
3.3 Authority; No Violation...........................................10
3.4 Consents and Approvals............................................11
3.5 Reports; Regulatory Matters.......................................12
3.6 Financial Statements..............................................13
3.7 Broker's Fees.....................................................13
3.8 Definition of Material Adverse Effect.............................13
3.9 Compliance with Applicable Law....................................14
3.10 State Takeover Laws...............................................14
3.11 Broker-Dealer and Investment Advisory Matters.....................14
3.12 Approvals.........................................................15
3.13 Opinion...........................................................15
3.14 Company Information...............................................15
Article IV REPRESENTATIONS AND WARRANTIES OF PARENT..........................15
4.1 Corporate Organization............................................15
4.2 Capitalization....................................................16
4.3 Authority; No Violation...........................................16
4.4 Consents and Approvals............................................17
4.5 Reports; Regulatory Matters.......................................17
4.6 Financial Statements..............................................18
4.7 Broker's Fees.....................................................18
4.8 Compliance with Applicable Law....................................18
4.9 Approvals.........................................................19
4.10 Parent Information................................................19
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TABLE OF CONTENTS
(continued)
Page
Article V COVENANTS RELATING TO CONDUCT OF BUSINESS.........................19
5.1 Conduct of Businesses Prior to the Effective Time.................19
5.2 Company Forbearances..............................................19
5.3 Parent Forbearances...............................................23
Article VI ADDITIONAL AGREEMENTS.............................................23
6.1 Regulatory Matters................................................23
6.2 Access to Information.............................................24
6.3 Stockholder Approval..............................................25
6.4 NYSE Listing......................................................25
6.5 Employee Matters..................................................25
6.6 Indemnification; Directors' and Officers'
Insurance.........................................................27
6.7 Additional Agreements.............................................28
6.8 Exemption from Liability Under Section 16(b)......................28
6.9 No Solicitation...................................................28
6.10 Restructuring Efforts.............................................31
6.11 Asset Option......................................................32
6.12 Guaranty..........................................................33
6.13 Tax Matters.......................................................33
Article VII CONDITIONS PRECEDENT..............................................33
7.1 Conditions to Each Party's Obligation To Effect
the Merger........................................................33
7.2 Conditions to Obligations of Parent...............................33
7.3 Conditions to Obligations of Company..............................34
Article VIII TERMINATION AND AMENDMENT........................................35
8.1 Termination.......................................................35
8.2 Effect of Termination.............................................36
8.3 Fees and Expenses.................................................36
8.4 Amendment.........................................................36
8.5 Extension; Waiver.................................................36
Article XI GENERAL PROVISIONS................................................37
9.1 Closing...........................................................37
9.2 Nonsurvival of Representations, Warranties and
Agreements........................................................37
9.3 Notices...........................................................37
9.4 Interpretation....................................................38
9.5 Counterparts......................................................39
9.6 Entire Agreement..................................................39
9.7 Governing Law; Jurisdiction.......................................39
9.8 Publicity.........................................................39
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TABLE OF CONTENTS
(continued)
Page
9.9 Assignment; Third Party Beneficiaries.............................39
9.10 Specific Performance..............................................40
Exhibit A - Option Agreement
Schedule 6.11 - Guaranty
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INDEX OF DEFINED TERMS
Section
Adjusted Option...........................................................1.5(a)
Agreement...............................................................Preamble
Alternative Proposal......................................................6.9(a)
Alternative Transaction...................................................6.9(a)
Bankruptcy and Equity Exception...........................................3.3(a)
Certificate...............................................................1.4(d)
Certificate of Merger........................................................1.2
CFTC.........................................................................3.4
Change of Recommendation..................................................6.9(d)
Change of Recommendation Notice.......................................6.9(d)(iv)
Claim.....................................................................6.6(a)
Closing......................................................................9.1
Closing Date.................................................................9.1
Company.................................................................Preamble
Company Benefit Plans.....................................................6.5(g)
Company Bylaws............................................................3.1(b)
Company Cap Plans.........................................................1.5(c)
Company Cap Unit..........................................................1.5(c)
Company Capitalization Date...............................................3.2(a)
Company Certificate.......................................................3.1(b)
Company Common Stock......................................................1.4(b)
Company Contract.............................................................5.2
Company Deferred Equity Units.............................................1.5(d)
Company Deferred Equity Unit Plans........................................1.5(d)
Company Options...........................................................1.5(a)
Company Preferred Stock...................................................3.2(a)
Company Requisite Regulatory Approvals....................................7.3(c)
Company RSUs..............................................................1.5(b)
Company Stock Plans.......................................................1.5(a)
Company SEC Reports.......................................................3.5(b)
Confidentiality Agreement.................................................6.2(b)
Covered Employees.........................................................6.5(a)
DGCL......................................................................1.1(a)
DPC Common Shares.........................................................1.4(b)
Effective Time...............................................................1.2
Employees.................................................................5.2(c)
ERISA.....................................................................6.5(g)
ESOP......................................................................6.5(f)
Exchange Act..............................................................3.5(b)
Exchange Agent...............................................................2.1
Exchange Agent Agreement.....................................................2.1
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Exchange Fund................................................................2.2
Exchange Ratio............................................................1.4(c)
Federal Reserve..............................................................3.4
FERC.........................................................................3.4
FINRA........................................................................3.4
Form S-4.....................................................................3.4
FSA..........................................................................3.4
GAAP......................................................................3.1(c)
Governmental Entity..........................................................3.4
HQ Lease....................................................................6.11
HQ Property.................................................................6.11
HSR Act......................................................................3.4
Indemnified Parties.......................................................6.6(a)
Insurance Amount..........................................................6.6(c)
Letter of Transmittal.....................................................2.3(a)
Liens.....................................................................3.2(c)
Material Adverse Effect......................................................3.8
Merger..................................................................Recitals
Merger Consideration......................................................1.4(c)
Merger Sub..............................................................Recitals
NYSE......................................................................2.3(f)
Option Agreement........................................................Recitals
Parent..................................................................Preamble
Parent Bylaws................................................................4.1
Parent Cap Unit...........................................................1.5(c)
Parent Capitalization Date...................................................4.2
Parent Certificate...........................................................4.1
Parent Common Stock.......................................................1.4(c)
Parent Deferred Equity Unit...............................................1.5(d)
Parent Preferred Stock.......................................................4.2
Parent Requisite Regulatory Approvals.....................................7.2(c)
Parent RSU................................................................1.5(b)
Parent SEC Reports........................................................4.5(b)
Proxy Statement..............................................................3.4
RE Consideration............................................................6.11
Regulatory Approvals.........................................................3.4
Regulatory Agencies.......................................................3.5(a)
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act........................................................3.5(b)
SBA..........................................................................3.4
SEC..........................................................................3.4
Securities Act............................................................3.2(a)
SRO..........................................................................3.4
Subsidiary................................................................3.1(c)
Superior Proposal.........................................................6.9(d)
Surviving Company.......................................................Recitals
Takeover Statutes...........................................................3.10
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Trust.....................................................................3.2(a)
Trust Account Common Shares...............................................1.4(b)
Voting Debt...............................................................3.2(a)
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of March 16, 2008 (this
"Agreement"), between The Bear ▇▇▇▇▇▇▇ Companies Inc., a Delaware corporation
("Company"), and JPMorgan Chase & Co., a Delaware corporation ("Parent").
W I T N E S S E T H:
WHEREAS, promptly following the execution of this Agreement, Parent
shall form a new wholly owned subsidiary ("Merger Sub") as a Delaware
corporation, and Parent shall cause Merger Sub to, and Merger Sub shall, sign a
joinder agreement to this Agreement and be bound hereunder;
WHEREAS, the Boards of Directors of Company and Parent have
determined that it is in the best interests of their respective companies and
their stockholders to consummate the strategic business combination transaction
provided for in this Agreement in which Merger Sub will, on the terms and
subject to the conditions set forth in this Agreement, merge with and into
Company (the "Merger"), with Company as the surviving company in the Merger
(sometimes referred to in such capacity as the "Surviving Company");
WHEREAS, as an inducement and condition to the entrance of Parent
into this Agreement, Company is granting to Parent an option pursuant to a stock
option agreement in the form set forth in Exhibit A (the "Option Agreement");
WHEREAS, the parties desire to make certain representations,
warranties and agreements in connection with the Merger and also to prescribe
certain conditions to the Merger.
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements contained in this Agreement, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and intending to be legally bound hereby, the parties agree
as follows:
ARTICLE I
THE MERGER
1.1 The Merger. (a) Subject to the terms and conditions of this
Agreement, in accordance with the Delaware General Corporation Law (the "DGCL"),
at the Effective Time, Merger Sub shall merge with and into Company. Company
shall be the Surviving Company in the Merger and shall continue its existence as
a corporation under the laws of the State of Delaware. As of the Effective Time,
the separate corporate existence of Merger Sub shall cease.
(b) Parent may at any time change the method of effecting the
combination (including by providing for the merger of Company with and into
Parent) if and to the extent requested by Parent; provided, however, that no
such change shall (i) alter or change the amount or kind of the Merger
Consideration provided for in this Agreement or (ii) materially impede or delay
consummation of the transactions contemplated by this Agreement.
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1.2 Effective Time. The Merger shall become effective as set forth
in the certificate of merger (the "Certificate of Merger") that shall be filed
with the Secretary of State of the State of Delaware on the Closing Date. The
term "Effective Time" shall be the date and time when the Merger becomes
effective as set forth in the Certificate of Merger.
1.3 Effects of the Merger. At and after the Effective Time, the
Merger shall have the effects set forth in the DGCL.
1.4 Conversion of Stock. At the Effective Time, by virtue of the
Merger and without any action on the part of Parent, Merger Sub, Company or the
holder of any of the following securities:
(a) At the Effective Time, each share of common stock, par value
$1.00 per share, of Merger Sub issued and outstanding immediately prior to the
Effective Time shall be converted into and become one validly issued, fully paid
and nonassessable share of common stock, par value $1.00, of the Surviving
Corporation. From and after the Effective Time, all certificates representing
the common stock of Merger Sub shall be deemed for all purposes to represent the
number of shares of common stock of the Surviving Corporation into which they
were converted in accordance with the immediately preceding sentence.
(b) All shares of common stock, par value $1.00 per share, of
Company issued and outstanding immediately prior to the Effective Time (the
"Company Common Stock") that are owned by Company or Parent (other than shares
of Company Common Stock held in trust accounts, managed accounts, mutual funds
and the like, or otherwise held in a fiduciary or agency capacity, that are
beneficially owned by third parties (any such shares, "Trust Account Common
Shares") and other than shares of Company Common Stock held, directly or
indirectly, by Company or Parent in respect of a debt previously contracted (any
such shares, "DPC Common Shares")) shall be cancelled and shall cease to exist
and no stock of Parent or other consideration shall be delivered in exchange
therefor. Shares of Company Common Stock held by any wholly-owned subsidiary of
Company or Parent (other than Trust Account Common Shares and DPC Common
Shares), shall be appropriately adjusted into shares of common stock of the
Surviving Corporation.
(c) Subject to Section 1.4(e), each share of the Company Common
Stock, except for shares of Company Common Stock owned by Company or Parent
(other than Trust Account Common Shares and DPC Common Shares), shall be
converted, in accordance with the procedures set forth in Article II, into the
right to receive 0.05473 (the "Exchange Ratio") of a share of common stock, par
value $1.00 per share, of Parent ("Parent Common Stock") (the "Merger
Consideration").
(d) All of the shares of Company Common Stock converted into the
right to receive the Merger Consideration pursuant to this Article I shall no
longer be outstanding and shall automatically be cancelled and shall cease to
exist as of the Effective Time, and each certificate previously representing any
such shares of Company Common Stock (each, a "Certificate") shall thereafter
represent only the right to receive the Merger Consideration and/or cash in lieu
of fractional shares into which the shares of Company Common Stock represented
by such Certificate have been converted pursuant to this Section 1.4 and Section
2.3(f), as well
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as any dividends to which holders of Company Common Stock become entitled in
accordance with Section 2.3(c).
(e) If, between the date of this Agreement and the Effective Time,
the outstanding shares of Parent Common Stock shall have been increased,
decreased, changed into or exchanged for a different number or kind of shares or
securities as a result of a reorganization, recapitalization, reclassification,
stock dividend, stock split, reverse stock split, or other similar change in
capitalization, an appropriate and proportionate adjustment shall be made to the
Merger Consideration.
1.5 Stock Options and Other Stock-Based Awards.
(a) As of the Effective Time, by virtue of the Merger and without
any action on the part of the holders thereof, each option to purchase shares of
Company Common Stock granted under the Stock Award Plan, as amended and restated
as of March 31, 2004, as subsequently amended, the Non-Employee Directors' Stock
Option and Stock Unit Plan, amended and restated as of January 8, 2002, as
subsequently amended, the Restricted Stock Unit Plan, as amended and restated as
of March 31, 2004, as subsequently amended or the Company Cap Plans (as defined
below) (collectively, the "Company Stock Plans") that is outstanding immediately
prior to the Effective Time (collectively, the "Company Options") shall be
converted into an option (an "Adjusted Option") to purchase, on the same terms
and conditions (including applicable vesting requirements) as applied to each
such Company Option immediately prior to the Effective Time, the number of whole
shares of Parent Common Stock that is equal to the number of shares of Company
Common Stock subject to such Company Option immediately prior to the Effective
Time multiplied by the Exchange Ratio (rounded down to the nearest whole share),
at an exercise price per share of Parent Common Stock (rounded up to the nearest
whole ▇▇▇▇▇) equal to the exercise price for each such share of Company Common
Stock subject to such Company Option immediately prior to the Effective Time
divided by the Exchange Ratio; provided, that, in the case of any Company Option
to which Section 421 of the Code applies as of the Effective Time by reason of
its qualification under Section 422 of the Code, the exercise price, the number
of shares of Parent Common Stock subject to such option and the terms and
conditions of exercise of such option shall be determined in a manner consistent
with the requirements of Section 424(a) of the Code.
(b) As of the Effective Time, each restricted share unit with
respect to shares of Company Common Stock granted under a Company Stock Plan
that is outstanding immediately prior to the Effective Time (collectively, the
"Company RSUs") shall, by virtue of the Merger and without any action on the
part of the holder thereof, be converted into a restricted share unit, on the
same terms and conditions (including applicable vesting requirements and
deferral provisions) as applied to each such Company RSU immediately prior to
the Effective Time, with respect to the number of shares of Parent Common Stock
that is equal to the number of shares of Company Common Stock subject to the
Company RSU immediately prior to the Effective Time multiplied by the Exchange
Ratio (rounded to the nearest whole share) (a "Parent RSU"). The obligations in
respect of the Parent RSUs shall be payable or distributable in accordance with
the terms of the agreement, plan or arrangement relating to such Parent RSUs.
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(c) Subject to the last sentence of this Section 1.5(c), as of the
Effective Time, each share unit with respect to shares of Company Common Stock
granted under the Capital Accumulation Plan for Senior Managing Directors
Amended and Restated November 29, 2000, as subsequently amended and the Capital
Accumulation Plan for Senior Managing Directors Amended and Restated as of
October 28, 1999, as subsequently amended (collectively, the "Company Cap
Plans") that is outstanding immediately prior to the Effective Time
(collectively, the "Company Cap Units") shall, by virtue of the Merger and
without any action on the part of the holder thereof, be converted into a share
unit, on the same terms and conditions (including applicable vesting
requirements and deferral provisions) as applied to each such Company Cap Unit
immediately prior to the Effective Time, with respect to the number of shares of
Parent Common Stock that is equal to the number of shares of Company Common
Stock subject to the Company Cap Unit immediately prior to the Effective Time
multiplied by the Exchange Ratio (rounded to the nearest whole share) (a "Parent
Cap Unit"). Subject to the last sentence of this Section 1.5(c), the obligations
in respect of the Parent Cap Units shall be payable or distributable in
accordance with the terms of the agreement, plan or arrangement relating to such
Parent Cap Units. Parent and the Company agree to cooperate in good faith to
adjust, effective upon the occurrence of the Merger, the features under the
Company Cap Plans and related award agreements that provide for awards of
additional Company Cap Units in respect of previously awarded Company Cap Units
to take into account the occurrence of the Merger.
(d) As of the Effective Time, all amounts denominated in Company
Common Stock and held in participant accounts (other than Company RSUs and
Company Cap Units) (collectively, the "Company Deferred Equity Units") either
pursuant to (i) the Company Stock Plans or (ii) any nonqualified deferred
compensation program or any individual deferred compensation agreements
(collectively, the "Company Deferred Equity Unit Plans") shall, by virtue of the
Merger and without any action on the part of the holder thereof, be converted
into deferred equity units, on the same terms and conditions (including
applicable vesting requirements and deferral provisions) as applied to such
Company Deferred Equity Units immediately prior to the Effective Time, with
respect to the number of shares of Parent Common Stock that is equal to the
number of shares of Company Common Stock in which such Company Deferred Equity
Units are denominated immediately prior to the Effective Time multiplied by the
Exchange Ratio (rounded to the nearest whole share) (a "Parent Deferred Equity
Unit"). The obligations in respect of the Parent Deferred Equity Units shall be
payable or distributable in accordance with the terms of the Company Deferred
Equity Unit Plan relating to such Parent Deferred Equity Units.
(e) As of the Effective Time, Parent shall assume the obligations
and succeed to the rights of Company under the Company Stock Plans, the Company
Cap Plans and the Company Deferred Equity Unit Plans with respect to the Company
Options (as converted into Adjusted Options), the Company RSUs (as converted
into Parent RSUs), the Company Cap Units (as converted into Parent Cap Units)
and Company Deferred Equity Units (as converted into Parent Deferred Equity
Units). Company and Parent agree that prior to the Effective Time each of the
Company Stock Plans shall be amended (i) to reflect the transactions
contemplated by this Agreement, including the conversion of the Company Options,
Company RSUs, Company Cap Units and Company Deferred Equity Units pursuant to
paragraphs (a), (b), (c) and (d) above and the substitution of Parent for
Company thereunder to the extent appropriate to effectuate the assumption of
such Company Stock Plans by Parent, (ii) to preclude any automatic
4
or formulaic grant of options, restricted shares or other awards thereunder on
or after the Effective Time, and (iii) to the extent requested by Parent in a
timely manner and subject to compliance with applicable law and the terms of the
plan, to terminate any or all Company Stock Plans effective immediately prior to
the Effective Time (other than with respect to outstanding awards thereunder).
(f) Notwithstanding anything to the contrary contained in this
Section 1.5, at Parent's request, the Company shall terminate, effective
immediately prior to the Effective Time, the Company Cap Plans in a manner (i)
directed by Parent and (ii) that complies with Section 409A of the Code, which
may include, without limitation, termination of any other plans that would be
aggregated with the Company Cap Plans for purposes of the plan aggregation rules
under Section 409A of the Code.
(g) Prior to the Effective Time, the Company, the Board of Directors
of the Company and the Compensation Committee of the Board of Directors of the
Company, as applicable, shall take all actions necessary to effectuate the
provisions of this Section 1.5.
(h) All of the conversions and adjustments made pursuant to this
Section 1.5, including without limitation, the determination of the number of
shares of Parent Common Stock subject to any award and the exercise price of the
Adjusted Options, shall be made in a manner consistent with the requirements of
Section 409A of the Code. As soon as practicable after the Effective Time,
Parent shall prepare and file with the SEC a post-effective amendment converting
the Form S-4 to a Form S-8 (or file such other appropriate form) registering a
number of shares of Parent Common Stock necessary to fulfill Parent's
obligations under this Section 1.5.
1.6 Certificate of Incorporation and ByLaws of the Surviving
Company. At the Effective Time, the certificate of incorporation of Merger Sub
in effect immediately prior to the Effective Time (which shall include
provisions mirroring the terms of each series of Company Preferred Stock) shall
be the certificate of incorporation of the Surviving Company until thereafter
amended in accordance with applicable law. The by-laws of Merger Sub, as in
effect immediately prior to the Effective Time, shall be the by-laws of the
Surviving Company until thereafter amended in accordance with applicable law and
the terms of such by-laws.
1.7 Directors and Officers. The directors of Company and its
Subsidiaries immediately prior to the Effective Time shall submit their
resignations to be effective as of the Effective Time. The directors, if any,
and officers of Merger Sub shall, from and after the Effective Time, become the
directors and officers, respectively, of the Surviving Company until their
successors shall have been duly elected, appointed or qualified or until their
earlier death, resignation or removal in accordance with the bylaws of the
Surviving Company.
ARTICLE II
DELIVERY OF MERGER CONSIDERATION
2.1 Exchange Agent. Prior to the Effective Time Parent shall appoint
a bank or trust company Subsidiary of Parent or another bank or trust company
reasonably acceptable to
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Company, or Parent's transfer agent, pursuant to an agreement (the "Exchange
Agent Agreement") to act as exchange agent (the "Exchange Agent") hereunder.
2.2 Deposit of Merger Consideration. At or prior to the Effective
Time, Parent shall (i) authorize the Exchange Agent to issue an aggregate number
of shares of Parent Common Stock equal to the aggregate Merger Consideration,
and (ii) deposit, or cause to be deposited with, the Exchange Agent, to the
extent then determinable, any cash payable in lieu of fractional shares pursuant
to Section 2.3(f) (the "Exchange Fund").
2.3 Delivery of Merger Consideration.
(a) As soon as reasonably practicable after the Effective Time, the
Exchange Agent shall mail to each holder of record of Certificate(s) which
immediately prior to the Effective Time represented outstanding shares of
Company Common Stock whose shares were converted into the right to receive the
Merger Consideration pursuant to Section 1.4 and any cash in lieu of fractional
shares of Parent Common Stock to be issued or paid in consideration therefor (i)
a letter of transmittal (which shall specify that delivery shall be effected,
and risk of loss and title to Certificate(s) shall pass, only upon delivery of
Certificate(s) (or affidavits of loss in lieu of such Certificates)) to the
Exchange Agent and shall be substantially in such form and have such other
provisions as shall be prescribed by the Exchange Agent Agreement (the "Letter
of Transmittal") and (ii) instructions for use in surrendering Certificate(s) in
exchange for the Merger Consideration, any cash in lieu of fractional shares of
Parent Common Stock to be issued or paid in consideration therefor and any
dividends or distributions to which such holder is entitled pursuant to Section
2.3(c).
(b) Upon surrender to the Exchange Agent of its Certificate or
Certificates, accompanied by a properly completed Letter of Transmittal, a
holder of Company Common Stock will be entitled to receive promptly after the
Effective Time the Merger Consideration and any cash in lieu of fractional
shares of Parent Common Stock to be issued or paid in consideration therefor in
respect of the shares of Company Common Stock represented by its Certificate or
Certificates. Until so surrendered, each such Certificate shall represent after
the Effective Time, for all purposes, only the right to receive, without
interest, the Merger Consideration and any cash in lieu of fractional shares of
Parent Common Stock to be issued or paid in consideration therefor upon
surrender of such Certificate in accordance with, and any dividends or
distributions to which such holder is entitled pursuant to, this Article II.
(c) No dividends or other distributions with respect to Parent
Common Stock shall be paid to the holder of any unsurrendered Certificate with
respect to the shares of Parent Common Stock represented thereby, in each case
unless and until the surrender of such Certificate in accordance with this
Article II. Subject to the effect of applicable abandoned property, escheat or
similar laws, following surrender of any such Certificate in accordance with
this Article II, the record holder thereof shall be entitled to receive, without
interest, (i) the amount of dividends or other distributions with a record date
after the Effective Time theretofore payable with respect to the whole shares of
Parent Common Stock represented by such Certificate and not paid and/or (ii) at
the appropriate payment date, the amount of dividends or other distributions
payable with respect to shares of Parent Common Stock represented by such
Certificate with a record date after the Effective Time (but before such
surrender date) and with a
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payment date subsequent to the issuance of the Parent Common Stock issuable with
respect to such Certificate.
(d) In the event of a transfer of ownership of a Certificate
representing Company Common Stock that is not registered in the stock transfer
records of Company, the shares of Parent Common Stock and cash in lieu of
fractional shares of Parent Common Stock comprising the Merger Consideration
shall be issued or paid in exchange therefor to a person other than the person
in whose name the Certificate so surrendered is registered if the Certificate
formerly representing such Company Common Stock shall be properly endorsed or
otherwise be in proper form for transfer and the person requesting such payment
or issuance shall pay any transfer or other similar Taxes required by reason of
the payment or issuance to a person other than the registered holder of the
Certificate or establish to the satisfaction of Parent that the Tax has been
paid or is not applicable. The Exchange Agent (or, subsequent to the earlier of
(x) the one-year anniversary of the Effective Time and (y) the expiration or
termination of the Exchange Agent Agreement, Parent) shall be entitled to deduct
and withhold from any cash in lieu of fractional shares of Parent Common Stock
otherwise payable pursuant to this Agreement to any holder of Company Common
Stock such amounts as the Exchange Agent or Parent, as the case may be, is
required to deduct and withhold under the Code, or any provision of state, local
or foreign Tax law, with respect to the making of such payment. To the extent
the amounts are so withheld by the Exchange Agent or Parent, as the case may be,
and timely paid over to the appropriate Governmental Entity, such withheld
amounts shall be treated for all purposes of this Agreement as having been paid
to the holder of shares of Company Common Stock in respect of whom such
deduction and withholding was made by the Exchange Agent or Parent, as the case
may be.
(e) After the Effective Time, there shall be no transfers on the
stock transfer books of Company of the shares of Company Common Stock that were
issued and outstanding immediately prior to the Effective Time other than to
settle transfers of Company Common Stock that occurred prior to the Effective
Time. If, after the Effective Time, Certificates representing such shares are
presented for transfer to the Exchange Agent, they shall be cancelled and
exchanged for the Merger Consideration and any cash in lieu of fractional shares
of Parent Common Stock to be issued or paid in consideration therefor in
accordance with the procedures set forth in this Article II.
(f) Notwithstanding anything to the contrary contained in this
Agreement, no fractional shares of Parent Common Stock shall be issued upon the
surrender of Certificates for exchange, no dividend or distribution with respect
to Parent Common Stock shall be payable on or with respect to any fractional
share, and such fractional share interests shall not entitle the owner thereof
to vote or to any other rights of a stockholder of Parent. In lieu of the
issuance of any such fractional share, Parent shall pay to each former
stockholder of Company who otherwise would be entitled to receive such
fractional share an amount in cash (rounded to the nearest cent) determined by
multiplying (i) the average, rounded to the nearest one ten thousandth, of the
closing sale prices of Parent Common Stock on the New York Stock Exchange (the
"NYSE") as reported by The Wall Street Journal for the five trading days
immediately preceding the date of the Effective Time by (ii) the fraction of a
share (after taking into account all shares of Company Common Stock held by such
holder at the Effective Time and rounded to the nearest thousandth when
expressed in decimal form) of Parent Common Stock to which such holder would
otherwise be entitled to receive pursuant to Section 1.4.
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(g) Any portion of the Exchange Fund that remains unclaimed by the
stockholders of Company as of the first anniversary of the Effective Time may be
paid to Parent. In such event, any former stockholders of Company who have not
theretofore complied with this Article II shall thereafter look only to Parent
with respect to the Merger Consideration, any cash in lieu of any fractional
shares and any unpaid dividends and distributions on the Parent Common Stock
deliverable in respect of each share of Company Common Stock such stockholder
holds as determined pursuant to this Agreement, in each case, without any
interest thereon. Notwithstanding the foregoing, none of Parent, the Surviving
Company, the Exchange Agent or any other person shall be liable to any former
holder of shares of Company Common Stock for any amount delivered in good faith
to a public official pursuant to applicable abandoned property, escheat or
similar laws.
(h) In the event 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 reasonably required by
Parent or the Exchange Agent, the posting by such person of a bond in such
amount as Parent may determine is reasonably necessary as indemnity against any
claim that may be made against it with respect to such Certificate, the Exchange
Agent will issue in exchange for such lost, stolen or destroyed Certificate the
Merger Consideration deliverable in respect thereof pursuant to this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF COMPANY
Except as disclosed in the Company's Annual Report on Form 10-K for
the year ended November 30, 2007, as filed on January 29, 2008, or the Company's
Current Reports on Form 8-K filed with the SEC and any other public
announcements by the Company after such 10-K filing was made but prior to the
date hereof (but excluding any risk factor disclosures contained under the
heading "Risk Factors," any disclosure of risks included in any "forward-looking
statements" disclaimer or any other statements that are similarly non-specific
or predictive or forward-looking in nature) to the extent that it is reasonably
apparent on the face of the disclosed information that such disclosure is of an
exception to one or more of the following representations and warranties
contained in this Article III, Company hereby represents and warrants to Parent
as follows (solely as of the date hereof except in the case of the
representations and warranties set forth in Sections 3.2(a), 3.2(b), 3.3(a),
3.3(b)(i), 3.7 and 3.13):
3.1 Corporate Organization.
(a) Company is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of Delaware. Company has the
requisite corporate power and authority to own or lease all of its properties
and assets and to carry on its business as it is now being conducted, and is
duly licensed or qualified to do business in each jurisdiction in which the
nature of the business conducted by it or the character or location of the
properties and assets owned or leased by it makes such licensing or
qualification necessary.
(b) True, complete and correct copies of the Restated Certificate of
Incorporation of Company (the "Company Certificate"), and the Amended and
Restated Bylaws of Company
8
(the "Company Bylaws"), as in effect as of the date of this Agreement, have
previously been publicly filed by Company and are available to Parent.
(c) Each Subsidiary of Company (i) is duly incorporated or duly
formed, as applicable to each such Subsidiary, and validly existing and in good
standing under the laws of its jurisdiction of organization, (ii) has the
requisite corporate power and authority or other power and authority to own or
lease all of its properties and assets and to carry on its business as it is now
being conducted and (iii) is duly licensed or qualified to do business in each
jurisdiction in which the nature of the business conducted by it or the
character or location of the properties and assets owned or leased by it makes
such licensing or qualification necessary. As used in this Agreement, the word
"Subsidiary", when used with respect to either party, means any bank,
corporation, partnership, limited liability company or other organization,
whether incorporated or unincorporated, that is consolidated with such party for
financial reporting purposes under U.S. generally accepted accounting principles
("GAAP").
3.2 Capitalization. (a) The authorized capital stock of Company
consists of 500,000,000 shares of Company Common Stock, par value $1.00 per
share, of which, as of February 20, 2008 (the "Company Capitalization Date"),
145,633,335 shares were issued and outstanding, and 10,000,000 shares of
preferred stock, par value $1.00 per share (the "Company Preferred Stock"), of
which, as of the Company Capitalization Date, (i) 818,113 shares were
designated, issued and outstanding as Cumulative Preferred Stock, Series E, and
(ii) 428,825 shares were designated, issued and outstanding as Cumulative
Preferred Stock Series F, and (iii) 511,169 shares were designated, issued and
outstanding as Cumulative Preferred Stock, Series G. As of the Company
Capitalization Date, 27,316,339 of such issued and outstanding shares of Company
Common Stock were held in The Bear ▇▇▇▇▇▇▇ Companies Inc. 2008 Trust (the
"Trust"). The Trust was established to hold shares of Company Common Stock
underlying awards under the Company Cap Plan and The Bear ▇▇▇▇▇▇▇ Companies Inc.
Restricted Stock Unit Plan. As of the Company Capitalization Date, no shares of
Company Common Stock or Company Preferred Stock were either reserved for
issuance or issued and outstanding and held in the Trust except for (i)
19,102,427 shares of Company Common Stock that are reserved for issuance in
connection with Company Options under the Company Stock Plans that were
outstanding as of the Company Capitalization Date, (ii) 7,603,576 shares of
Company Common Stock that are either reserved for issuance upon, or issued and
outstanding and held in the Trust pending, settlement of the Company RSUs that
were outstanding as of the Company Capitalization Date, (iii) 20,141,864 shares
of Company Common Stock that are either reserved for issuance upon, or issued
and outstanding and held in the Trust pending, settlement of Company Cap Units
that were outstanding as of the Company Capitalization Date and (iv) 255,408
shares of Company Common Stock that are reserved for issuance upon settlement of
Company Deferred Equity Units that were outstanding as of the Company
Capitalization Date. All of the issued and outstanding shares of Company Common
Stock have been duly authorized and validly issued and are fully paid,
nonassessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof. As of the date of this Agreement, no bonds,
debentures, notes or other indebtedness having the right to vote on any matters
on which stockholders of Company may vote ("Voting Debt") are issued or
outstanding. As of the date of this Agreement, except pursuant to this Agreement
as set forth in this Section 3.2, Company does not have and is not bound by any
outstanding subscriptions, options, warrants, calls, rights, commitments or
agreements of any character calling for the purchase or issuance of, or the
9
payment of any amount based on, any shares of Company Common Stock, Company
Preferred Stock, Voting Debt or any other equity securities of Company or any
securities representing the right to purchase or otherwise receive any shares of
Company Common Stock, Company Preferred Stock, Voting Debt or other equity
securities of Company. There are no contractual obligations of Company or any of
its Subsidiaries (x) to repurchase, redeem or otherwise acquire any shares of
capital stock of Company or any equity security of Company or its Subsidiaries
or any securities representing the right to purchase or otherwise receive any
shares of capital stock or any other equity security of Company or its
Subsidiaries or (y) pursuant to which Company or any of its Subsidiaries is or
could be required to register shares of Company capital stock or other
securities under the Securities Act of 1933, as amended (the "Securities Act").
(b) Other than the Company Options, Company RSUs, Company Cap Units
and Company Deferred Equity Units that are outstanding as of the Company
Capitalization Date, no other equity-based awards are outstanding as of the
Company Capitalization Date. Since the Company Capitalization Date through the
date hereof, Company has not (A) issued or repurchased any shares of Company
Common Stock, Company Preferred Stock, Voting Debt or other equity securities of
Company, other than the issuance of shares of Company Common Stock in connection
with the exercise of Company Options or settlement in accordance with their
terms of the Company RSUs, Company Cap Units or Company Deferred Equity Units
granted under the Company Stock Plans or Company Deferred Equity Unit Plans that
were outstanding on the Company Capitalization Date or (B) issued or awarded any
options, stock appreciation rights, restricted shares, restricted stock units,
deferred equity units, awards based on the value of Company capital stock or any
other equity-based awards. From February 15, 2008 through the date of this
Agreement, neither the Company nor any of its Subsidiaries has (i) accelerated
the vesting of or lapsing of restrictions with respect to any stock-based
compensation awards or long term incentive compensation awards, (ii) with
respect to senior managing directors of the Company or its Subsidiaries, entered
into or amended any employment, severance, change of control or similar
agreement (including any agreement providing for the reimbursement of excise
Taxes under Section 4999 of the Code) or (iii) adopted or amended any material
Company Benefit Plan (as defined in Section 6.5(g)).
(c) All of the issued and outstanding shares of capital stock or
other equity ownership interests of each Subsidiary of Company are owned by
Company, directly or indirectly, free and clear of any liens, pledges, charges,
claims and security interests and similar encumbrances ("Liens"), and all of
such shares or equity ownership interests are duly authorized and validly issued
and are fully paid, nonassessable and free of preemptive rights. No Subsidiary
of Company has or is bound by any outstanding subscriptions, options, warrants,
calls, commitments or agreements of any character calling for the purchase or
issuance of any shares of capital stock or any other equity security of such
Subsidiary or any securities representing the right to purchase or otherwise
receive any shares of capital stock or any other equity security of such
Subsidiary.
3.3 Authority; No Violation. (a) Company has full corporate power
and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly approved by the Board of Directors of Company. The Board of Directors of
Company has determined that this Agreement is advisable
10
and in the best interests of Company and its stockholders and has directed that
this Agreement be submitted to Company's stockholders for approval and adoption
at a duly held meeting of such stockholders and has adopted a resolution to the
foregoing effect. Except for the approval and adoption of this Agreement by the
affirmative vote of the holders of a majority of the outstanding shares of
Company Common Stock entitled to vote at such meeting, no other corporate
proceedings on the part of Company are necessary to approve this Agreement or to
consummate the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by Company and (assuming due authorization,
execution and delivery by Parent and Merger Sub) constitutes the valid and
binding obligation of Company, enforceable against Company in accordance with
its terms (except as may be limited by bankruptcy, insolvency, fraudulent
transfer, moratorium, reorganization or similar laws of general applicability
relating to or affecting the rights of creditors generally and subject to
general principles of equity (the "Bankruptcy and Equity Exception")).
(b) Neither the execution and delivery of this Agreement by Company
nor the consummation by Company of the transactions contemplated hereby, nor
compliance by Company with any of the terms or provisions of this Agreement,
will (i) violate any provision of the Company Certificate or Company Bylaws or
(ii) assuming that the consents, approvals and filings referred to in Section
3.4 are duly obtained and/or made, (A) violate any law, judgment, order,
injunction or decree applicable to Company, any of its Subsidiaries or any of
their respective properties or assets or (B) violate, conflict with, result in a
breach of any provision of or the loss of any benefit under, constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, result in the termination of or a right of
termination or cancellation under, accelerate the performance required by, or
result in the creation of any Lien upon any of the respective properties or
assets of Company or any of its Subsidiaries under, any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, deed of trust, license,
lease, franchise, permit, agreement, by-law or other instrument or obligation to
which Company or any of its Subsidiaries is a party or by which any of them or
any of their respective properties or assets is bound except, with respect to
clause (ii), any such violation, conflict, breach or default that would not
reasonably be expected to cause a Material Adverse Effect.
3.4 Consents and Approvals. Except for (i) filings of applications
and notices with, and receipt of consents, authorizations, approvals, exemptions
or nonobjections from, the Securities and Exchange Commission (the "SEC"), NYSE,
foreign and state securities authorities, the Financial Industry Regulatory
Authority ("FINRA"), the Commodities and Futures Trading Commission ("CFTC"),
the Federal Energy Regulatory Commission ("FERC"), applicable securities,
commodities and futures exchanges, the Financial Services Authority ("FSA") and
other industry self-regulatory organizations ("SRO"), (ii) the filing of any
other required applications, filings or notices with the Board of Governors of
the Federal Reserve System (the "Federal Reserve"), any foreign, federal or
state banking, other regulatory, self-regulatory or enforcement authorities or
any courts, administrative agencies or commissions or other governmental
authorities or instrumentalities (each a "Governmental Entity") and approval of
or non-objection to such applications, filings and notices (taken together with
the items listed in clause (i), the "Regulatory Approvals"), (iii) the filing
with the SEC of a Proxy Statement in definitive form relating to the meeting of
Company's stockholders to be held in connection with this Agreement and the
transactions contemplated by this Agreement (the "Proxy Statement")
11
and of a registration statement on Form S-4 (the "Form S-4") in which the Proxy
Statement will be included as a prospectus, and declaration of effectiveness of
the Form S-4 and the filing and effectiveness of the registration statement
contemplated by Section 6.1(a), (iv) the filing of the Certificate of Merger
with the Secretary of State of the State of Delaware pursuant to the DGCL, (v)
any notices to or filings with the Small Business Administration (the "SBA"),
(vi) any notices or filings under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements
Act of 1976, as amended (the "HSR Act") and (vii) such filings and approvals as
are required to be made or obtained under the securities or "Blue Sky" laws of
various states in connection with the issuance of the shares of Parent Common
Stock pursuant to this Agreement and approval of listing of such Parent Common
Stock on the NYSE, no consents or approvals of or filings or registrations with
any Governmental Entity are necessary in connection with the consummation by
Company of the Merger and the other transactions contemplated by this Agreement.
No consents or approvals of or filings or registrations with any Governmental
Entity are necessary in connection with the execution and delivery by Company of
this Agreement.
3.5 Reports; Regulatory Matters.
(a) Company and each of its Subsidiaries have timely filed all
reports, registrations, statements and certifications, together with any
amendments required to be made with respect thereto, that they were required to
file since January 1, 2005 and prior to the date hereof with (i) FINRA, (ii) the
SEC, (iii) the CFTC, (iv) the Federal Deposit Insurance Corporation, (v) the
NYSE, (vi) any state consumer finance or mortgage banking regulatory authority
or other Agency, (vii) any foreign regulatory authority and (viii) any SRO
(collectively, "Regulatory Agencies") and with each other applicable
Governmental Entity, and all other reports and statements required to be filed
by them since January 1, 2005 and prior to the date hereof, including any report
or statement required to be filed pursuant to the laws, rules or regulations of
the United States, any state, any foreign entity, or any Regulatory Agency or
other Governmental Entity, and have paid all fees and assessments due and
payable in connection therewith.
(b) An accurate and complete copy of each (i) final registration
statement, prospectus, report, schedule and definitive proxy statement filed
with or furnished to the SEC by Company or any of its Subsidiaries pursuant to
the Securities Act or the Securities Exchange Act of 1934, as amended (the
"Exchange Act") since January 1, 2005 and prior to the date of this Agreement
(the "Company SEC Reports") and (ii) communication mailed by Company to its
stockholders since January 1, 2005 and prior to the date of this Agreement is
publicly available. No such Company SEC Report or communication, at the time
filed, furnished or communicated (and, in the case of registration statements
and proxy statements, on the dates of effectiveness and the dates of the
relevant meetings, respectively), contained any untrue statement of a material
fact or omitted to state any material fact required to be stated therein or
necessary in order to make the statements made therein, in light of the
circumstances in which they were made, not misleading, except that information
as of a later date (but before the date of this Agreement) shall be deemed to
modify information as of an earlier date. As of their respective dates, all
Company SEC Reports complied as to form in all material respects with the
published rules and regulations of the SEC with respect thereto. As of the date
of this Agreement, no executive officer of Company has failed in any respect to
make the certifications required of him or her under Section 302 or 906 of the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 (the "▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act").
12
3.6 Financial Statements.
(a) The financial statements of Company and its Subsidiaries
included (or incorporated by reference) in the Company SEC Reports (including
the related notes, where applicable) (i) have been prepared from, and are in
accordance with, the books and records of Company and its Subsidiaries, (ii)
fairly present in all material respects the consolidated results of operations,
cash flows, changes in stockholders' equity and consolidated financial position
of Company and its Subsidiaries for the respective fiscal periods or as of the
respective dates therein set forth (subject in the case of unaudited statements
to recurring year-end audit adjustments normal in nature and amount), (iii)
complied as to form, as of their respective dates of filing with the SEC, in all
material respects with applicable accounting requirements and with the published
rules and regulations of the SEC with respect thereto, and (iv) have been
prepared in accordance with GAAP consistently applied during the periods
involved, except, in each case, as indicated in such statements or in the notes
thereto. As of the date hereof, the books and records of Company and its
Subsidiaries have been maintained in all material respects in accordance with
GAAP and any other applicable legal and accounting requirements and reflect only
actual transactions. As of the date hereof, Deloitte & Touche has not resigned
or been dismissed as independent public accountants of Company as a result of or
in connection with any disagreements with Company on a matter of accounting
principles or practices, financial statement disclosure or auditing scope or
procedure.
(b) The records, systems, controls, data and information of Company
and its Subsidiaries are recorded, stored, maintained and operated under means
(including any electronic, mechanical or photographic process, whether
computerized or not) that are under the exclusive ownership and direct control
of Company or its Subsidiaries or accountants (including all means of access
thereto and therefrom), except for any non-exclusive ownership and non-direct
control that would not reasonably be expected to have a material adverse effect
on Company's system of internal accounting controls.
3.7 Broker's Fees. Neither Company nor any of its Subsidiaries nor
any of their respective officers, directors, employees or agents has utilized
any broker, finder or financial advisor or incurred any liability for any
broker's fees, commissions or finder's fees in connection with the Merger or any
other transactions contemplated by this Agreement, other than to Lazard Freres
pursuant to letter agreements, true, complete and correct copies of which have
been previously delivered to Parent.
3.8 Definition of Material Adverse Effect. As used in this
Agreement, the term "Material Adverse Effect" means, with respect to Parent or
Company, as the case may be, a material adverse effect on (i) the financial
condition, results of operations or business of such party and its Subsidiaries
taken as a whole (provided, however, that, with respect to this clause (i), a
"Material Adverse Effect" shall not be deemed to include effects arising out of,
relating to or resulting from (A) changes in GAAP or regulatory accounting
requirements applicable generally to companies in the industries in which such
party and its Subsidiaries operate, (B) changes in laws, rules or regulations of
general applicability to companies in the industries in which such party and its
Subsidiaries operate, (C) changes in global or national political conditions or
general economic or market conditions affecting other companies in the
industries in which such party and its Subsidiaries operate (D) changes in the
credit markets, any
13
downgrades in the credit markets, or adverse credit events resulting in
deterioration in the credit markets generally and in respect of the customers of
the Company, (E) failure to meet earnings projections, including any underlying
causes thereof, (F) the impact of the Merger on relationships with customers or
employees, (G) the public disclosure of this Agreement or the transactions
contemplated hereby or the consummation of the transactions contemplated hereby
solely to the extent the Company demonstrates such effect to have so resulted
from such disclosure or consummation or (H) any outbreak or escalation of
hostilities, declared or undeclared acts of war or terrorism or (ii) the ability
of such party to timely consummate the transactions contemplated by this
Agreement.
3.9 Compliance with Applicable Law. Company and each of its
Subsidiaries hold all licenses, franchises, permits and authorizations necessary
for the lawful conduct of their respective businesses under and pursuant to
each, and have complied with and are not in default in any respect under any,
law applicable to Company or any of its Subsidiaries, except for the failure to
hold or to have complied with or to not be in default which would not reasonably
be expected, individually or in the aggregate, to have a Material Adverse
Effect.
3.10 State Takeover Laws. The Board of Directors of Company has
unanimously approved this Agreement and the transactions contemplated hereby as
required to render inapplicable to this Agreement and such transactions the
restrictions on "business combinations" set forth in Section 203 of the DGCL or
any other "moratorium," "control share," "fair price," "takeover" or "interested
stockholder" law (any such laws, "Takeover Statutes").
3.11 Broker-Dealer and Investment Advisory Matters.
(a) Each of the Company and its Subsidiaries and each of their
respective officers and employees who are required to be registered, licensed or
qualified as (A) a broker-dealer, investment adviser, futures commission
merchant or (B) a registered principal, registered representative, investment
adviser representative, insurance agent or salesperson with the SEC or any
securities or insurance commission or other Governmental Entity are duly
registered as such and such registrations are in full force and effect, or are
in the process of being registered as such within the time periods required by
applicable law, except in each case for any failures to be so registered,
licensed or qualified that would not reasonably be expected, individually or in
the aggregate, to have a Material Adverse Effect. Each of the Company and its
Subsidiaries and each of their respective officers and employees are in
compliance with all applicable federal, state and foreign laws requiring any
such registration, licensing or qualification, and are not subject to any
liability or disability by reason of the failure to be so registered, licensed
or qualified, except as would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect.
(b) Each of the Company and its Subsidiaries, and, to the knowledge
of the Company, its solicitors, third party administrators, managers, brokers
and distributors, have marketed, sold and issued investment products and
securities in compliance with all applicable laws governing sales processes and
practices, except in each case as would not reasonably be expected, individually
or in the aggregate, to have a Material Adverse Effect.
14
3.12 Approvals. As of the date of this Agreement, Company knows of
no reason why all regulatory approvals from any Governmental Entity required for
the consummation of the transactions contemplated by this Agreement should not
be obtained on a timely basis.
3.13 Opinion. The Board of Directors of Company has received the
opinion of Lazard Freres & Co. LLC, to the effect that, as of the date hereof,
and based upon and subject to the factors and assumptions set forth therein, the
Merger Consideration is fair from a financial point of view to the holders of
Company Common Stock.
3.14 Company Information. The information relating to Company and
its Subsidiaries that is provided by Company or its representatives for
inclusion in the Proxy Statement and Form S-4, or in any application,
notification or other document filed with any other Regulatory Agency or other
Governmental Entity in connection with the transactions contemplated by this
Agreement, will not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in light of the
circumstances in which they are made, not misleading. The portions of the Proxy
Statement relating to Company and its Subsidiaries and other portions within the
reasonable control of Company and its Subsidiaries will comply in all material
respects with the provisions of the Exchange Act and the rules and regulations
thereunder.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT
Except as disclosed in Parent's Annual Report on Form 10-K for the
year ended December 31, 2007, as filed on February 29, 2008, or the Company's
Current Reports on Form 8-K filed with the SEC after such 10-K filing was made
but prior to the date hereof (but excluding any risk factor disclosures
contained under the heading "Risk Factors," any disclosure of risks included in
any "forward-looking statements" disclaimer or any other statements that are
similarly non-specific or predictive or forward-looking in nature) to the extent
that it is reasonably apparent on the face of the disclosed information that
such disclosure is of an exception to one or more of the following
representations and warranties contained in this Article IV, Parent hereby
represents and warrants to Company as follows (solely as of the date hereof
except in the case of the representations and warranties set forth in Sections
4.2, 4.3(a), 4.3(b)(i) and 4.7):
4.1 Corporate Organization. Parent is, and Merger Sub will be, a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware. Parent has and Merger Sub will have the requisite
corporate power and authority to own or lease all of its properties and assets
and to carry on its business as it is now being conducted, and is and will be
duly licensed or qualified to do business in each jurisdiction in which the
nature of the business conducted by it or the character or location of the
properties and assets owned or leased by it makes such licensing or
qualification necessary. Parent is duly registered as a bank holding company
under the BHC Act and is a financial holding company pursuant to Section
15
4(1) of the BHC Act and meets the applicable requirements for qualification as
such. True, complete and correct copies of the Amended and Restated Certificate
of Incorporation, as amended (the "Parent Certificate"), and Bylaws of Parent
(the "Parent Bylaws"), as in effect as of the date of this Agreement, have
previously been filed by Parent and are publicly available to Company.
4.2 Capitalization. The authorized capital stock of Parent consists
of 9,000,000,000 shares of Parent Common Stock, of which, as of January 31, 2008
(the "Parent Capitalization Date"), 3,396,539,059 shares were issued and
outstanding, and 200,000,000 shares of preferred stock, $1.00 par value (the
"Parent Preferred Stock"), none of which were issued and outstanding. All of the
issued and outstanding shares of Parent Common Stock have been duly authorized
and validly issued and are fully paid, nonassessable and free of preemptive
rights, with no personal liability attaching to the ownership thereof. As of the
date of this Agreement, no Voting Debt of Parent is issued or outstanding. As of
the Parent Capitalization Date, except pursuant to this Agreement, Parent's
dividend reinvestment plan and stock repurchase plans entered into by Parent
from time to time, Parent does not have and is not bound by any outstanding
subscriptions, options, warrants, calls, rights, commitments or agreements of
any character calling for the purchase or issuance of any shares of Parent
Common Stock, Parent Preferred Stock, Voting Debt of Parent or any other equity
securities of Parent or any securities representing the right to purchase or
otherwise receive any shares of Parent Common Stock, Parent Preferred Stock,
Voting Debt of Parent or other equity securities of Parent. The shares of Parent
Common Stock to be issued pursuant to the Merger will be duly authorized and
validly issued and, at the Effective Time, all such shares will be fully paid,
nonassessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof.
4.3 Authority; No Violation. (a) Parent has and Merger Sub will have
full corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby have
been duly and validly approved by the Boards of Directors of Parent, and will be
so approved in the case of Merger Sub, and no other corporate proceedings on the
part of Parent or Merger Sub are necessary to approve this Agreement or to
consummate the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by Parent and (assuming due authorization,
execution and delivery by Company) constitutes the valid and binding obligation
of Parent, enforceable against Parent in accordance with its terms (subject to
the Bankruptcy and Equity Exception).
(b) Neither the execution and delivery of this Agreement by Parent,
nor the consummation by Parent of the transactions contemplated hereby, nor
compliance with any of the terms or provisions of this Agreement, will (i)
violate any provision of the Parent Certificate or the Parent Bylaws, or (ii)
assuming that the consents, approvals and filings referred to in Section 4.4 are
duly obtained and/or made, (A) violate any law, judgment, order, injunction or
decree applicable to Parent, any of its Subsidiaries or any of their respective
properties or assets or (B) violate, conflict with, result in a breach of any
provision of or the loss of any benefit under, constitute a default (or an event
which, with notice or lapse of time, or both, would constitute a default) under,
result in the termination of or a right of termination or cancellation under,
accelerate the performance required by, or result in the creation of any Lien
upon any of the respective properties or assets of Parent or any of its
Subsidiaries under, any of the terms,
16
conditions or provisions of any note, bond, mortgage, indenture, deed of trust,
license, lease, agreement or other instrument or obligation to which Parent or
any of its Subsidiaries is a party or by which any of them or any of their
respective properties or assets is bound except, with respect to clause (ii),
any such violation, conflict, breach or default that would not reasonably be
expected to cause a Material Adverse Effect.
4.4 Consents and Approvals. Except for (i) the Regulatory Approvals,
(ii) the filing with the SEC of the Proxy Statement and the filing and
declaration of effectiveness of the Form S-4 and the filing and effectiveness of
the registration statement contemplated by Section 6.1(a), (iii) the filing of
the Certificate of Merger with the Secretary of State of the State of Delaware
pursuant to the DGCL, (iv) any consents, authorizations, approvals, filings or
exemptions in connection with compliance with the rules and regulations of any
applicable SRO, and the rules of the NYSE, (v) any notices or filings under the
HSR Act, and (vi) such filings and approvals as are required to be made or
obtained under the securities or "Blue Sky" laws of various states in connection
with the issuance of the shares of Parent Common Stock pursuant to this
Agreement and approval of listing of such Parent Common Stock on the NYSE, no
consents or approvals of or filings or registrations with any Governmental
Entity are necessary in connection with the consummation by Parent or Merger Sub
of the Merger and the other transactions contemplated by this Agreement. No
consents or approvals of or filings or registrations with any Governmental
Entity are necessary in connection with the execution and delivery by Parent or
Merger Sub of this Agreement.
4.5 Reports; Regulatory Matters.
(a) Parent and each of its Subsidiaries have timely filed all
reports, registration statements, proxy statements and other materials, together
with any amendments required to be made with respect thereto, that they were
required to file since January 1, 2005 and prior to the date hereof with the
Regulatory Agencies and each other applicable Governmental Entity, and all other
reports and statements required to be filed by them since January 1, 2005 and
prior to the date of this Agreement, including any report or statement required
to be filed pursuant to the laws, rules or regulations of the United States, any
state, any foreign entity, or any Regulatory Agency or other Governmental
Entity, and have paid all fees and assessments due and payable in connection
therewith.
(b) An accurate and complete copy of each (i) final registration
statement, prospectus, report, schedule and definitive proxy statement filed
with or furnished to the SEC by Parent pursuant to the Securities Act or the
Exchange Act since January 1, 2005 and prior to the date of this Agreement (the
"Parent SEC Reports") and (ii) communication mailed by Parent to its
stockholders since January 1, 2005 and prior to the date of this Agreement is
publicly available. No such Parent SEC Report or communication, at the time
filed, furnished or communicated (and, in the case of registration statements
and proxy statements, on the dates of effectiveness and the dates of the
relevant meetings, respectively), contained any untrue statement of a material
fact or omitted to state any material fact required to be stated therein or
necessary in order to make the statements made therein, in light of the
circumstances in which they were made, not misleading, except that information
as of a later date (but before the date of this Agreement) shall be deemed to
modify information as of an earlier date. As of their respective dates, all
Parent SEC Reports complied as to form in all material respects with the
17
published rules and regulations of the SEC with respect thereto. As of the date
of this Agreement, no executive officer of Parent has failed in any respect to
make the certifications required of him or her under Section 302 or 906 of the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act.
4.6 Financial Statements.
(a) The financial statements of Parent and its Subsidiaries included
(or incorporated by reference) in the Parent SEC Reports (including the related
notes, where applicable) (i) have been prepared from, and are in accordance
with, the books and records of Parent and its Subsidiaries; (ii) fairly present
in all material respects the consolidated results of operations, cash flows,
changes in stockholders' equity and consolidated financial position of Parent
and its Subsidiaries for the respective fiscal periods or as of the respective
dates therein set forth (subject in the case of unaudited statements to
recurring year-end audit adjustments normal in nature and amount); (iii)
complied as to form, as of their respective dates of filing with the SEC, in all
material respects with applicable accounting requirements and with the published
rules and regulations of the SEC with respect thereto; and (iv) have been
prepared in accordance with GAAP consistently applied during the periods
involved, except, in each case, as indicated in such statements or in the notes
thereto. As of the date hereof, the books and records of Parent and its
Subsidiaries have been maintained in all material respects in accordance with
GAAP and any other applicable legal and accounting requirements and reflect only
actual transactions. As of the date hereof, PricewaterhouseCoopers LLP has not
resigned or been dismissed as independent public accountants of Parent as a
result of or in connection with any disagreements with Parent on a matter of
accounting principles or practices, financial statement disclosure or auditing
scope or procedure.
(b) The records, systems, controls, data and information of Parent
and its Subsidiaries are recorded, stored, maintained and operated under means
(including any electronic, mechanical or photographic process, whether
computerized or not) that are under the exclusive ownership and direct control
of Parent or its Subsidiaries or accountants (including all means of access
thereto and therefrom), except for any non-exclusive ownership and non-direct
control that would not reasonably be expected to have a material adverse effect
on Parent's system of internal accounting controls.
4.7 Broker's Fees. Neither Parent nor any of its Subsidiaries nor
any of their respective officers or directors has employed any broker or finder
or incurred any liability for any broker's fees, commissions or finder's fees in
connection with the Merger or related transactions contemplated by this
Agreement, other than as previously disclosed to Company.
4.8 Compliance with Applicable Law. Parent and each of its
Subsidiaries hold all licenses, franchises, permits and authorizations necessary
for the lawful conduct of their respective businesses under and pursuant to
each, and have complied with and are not in default in any respect under any,
law applicable to Parent or any of its Subsidiaries, except for the failure to
hold or to have complied with which would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect.
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4.9 Approvals. As of the date of this Agreement, Parent knows of no
reason why all regulatory approvals from any Governmental Entity required for
the consummation of the transactions contemplated by this Agreement should not
be obtained on a timely basis.
4.10 Parent Information. The information relating to Parent and its
Subsidiaries that is provided by Parent or its representatives for inclusion in
the Proxy Statement and the Form S-4, or in any application, notification or
other document filed with any other Regulatory Agency or other Governmental
Entity in connection with the transactions contemplated by this Agreement, will
not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in light of the circumstances in
which they are made, not misleading. The portions of the Proxy Statement
relating to Parent and its Subsidiaries and other portions within the reasonable
control of Parent and its Subsidiaries will comply in all material respects with
the provisions of the Exchange Act and the rules and regulations thereunder. The
Form S-4 will comply in all material respects with the provisions of the
Securities Act and the rules and regulations thereunder.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 Conduct of Businesses Prior to the Effective Time. Except as
expressly contemplated by or permitted by this Agreement or with the prior
written consent of the other party, during the period from the date of this
Agreement to the Effective Time, each of Company and Parent shall, and shall
cause each of its respective Subsidiaries to, (a) use commercially reasonable
efforts to maintain and preserve intact its business organization and
advantageous business relationships and (b) take no action that is intended to
or would reasonably be expected to adversely affect or materially delay the
ability of Company, Parent or Merger Sub to obtain any necessary approvals of
any Regulatory Agency or other Governmental Entity required for the transactions
contemplated hereby or to perform its covenants and agreements under this
Agreement or to consummate the transactions contemplated hereby or thereby. In
furtherance of the provisions of this Article V, the Company will, and will
cause its Subsidiaries to, operate within their existing credit, principal,
market and other risk limits and comply with existing risk-related policies and
procedures. Parent shall have the right to cause the Company and its
Subsidiaries to modify any of the foregoing policies, procedures and operating
limits in any and all respects.
5.2 Company Forbearances. Subject to the continued effectiveness of
the Guaranty (as hereinafter defined) and Parent's compliance with the terms
thereof, Parent shall be entitled to direct the business, operations and
management of the Company and its Subsidiaries in its reasonable discretion
(provided that to the extent Parent directs Company or its Subsidiaries to take
any action the consequence of which would be the breach of a covenant hereunder,
Company shall not be deemed to have breached such covenant solely as a result of
taking such action). In addition, during the period from the date of this
Agreement to the Effective Time, except as expressly contemplated or permitted
by this Agreement, Company shall not, and shall not permit any of its
Subsidiaries to, without the prior written consent of Parent:
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(a) other than in the ordinary course of business consistent with
past practice, incur any indebtedness for borrowed money, assume, guarantee,
endorse or otherwise as an accommodation become responsible for the obligations
of any other individual, corporation or other entity, or make any loan or
advance or capital contribution to, or investment in, any person;
(b) (i) adjust, split, combine or reclassify any of its capital
stock;
(ii) make, declare or pay any dividend, or make any other
distribution on, or directly or indirectly redeem, purchase or otherwise
acquire, any shares of its capital stock or any securities or obligations
convertible (whether currently convertible or convertible only after the
passage of time or the occurrence of certain events) into or exchangeable
for any shares of its capital stock (except (A) dividends on the Company
Preferred Stock, (B) dividends paid by any of the Subsidiaries of Company
to Company or to any of its wholly-owned Subsidiaries, and (C) the
acceptance of shares of Company Common Stock in payment of the exercise
price or withholding Taxes incurred by any employee or director in
connection with the exercise of stock options or the vesting of restricted
shares of (or settlement of other equity-based awards in respect of)
Company Common Stock granted under a Company Stock Plan, Company Cap Plan
or Company Deferred Equity Unit Plan, in each case in accordance with past
practice and the terms of the applicable Company Stock Plan and related
award agreements, Company Cap Plan and related award agreement or Company
Deferred Equity Unit Plan);
(iii) grant any stock options, stock appreciation rights,
restricted shares, restricted stock units, deferred equity units, awards
based on the value of Company's capital stock or other equity-based award
with respect to shares of Company Common Stock under any of the Company
Stock Plans, Company Cap Plans, Company Deferred Equity Unit Plans or
otherwise, or grant any individual, corporation or other entity any right
to acquire any shares of its capital stock; or
(iv) issue any additional shares of capital stock or other
securities, except pursuant to the exercise of stock options or the
settlement of other equity-based awards granted under a Company Stock Plan
or Company Cap Plan or Company Deferred Equity Unit Plan that are
outstanding as of the date of this Agreement;
(c) except as required under applicable law or the terms of any
Company Benefit Plan existing as of the date hereof, (i) increase in any manner
the compensation or benefits of any of the current or former directors,
officers, employees, consultants, independent contractors or other service
providers of Company or its Subsidiaries (collectively, "Employees"), (ii) pay
any amounts or increase any amounts payable to Employees not required by any
current plan or agreement (other than base salary in the ordinary course of
business) to any Employee, (iii) become a party to, establish, amend, commence
participation in, terminate or commit itself to the adoption of any stock option
plan or other stock-based compensation plan, compensation (including any
Employee co-investment fund), severance, pension, retirement, profit-sharing,
welfare benefit, or other employee benefit plan or agreement or employment
agreement with or for the benefit of any Employee (or newly hired employees),
(iv) accelerate the vesting of or lapsing of restrictions with respect to any
stock-based compensation or other long-term incentive compensation under any
Company Benefit Plans, (v) (x) hire or promote employees in the
20
position of Vice President or above or (y) terminate the employment of any
employee in the position of Vice President or above, (vi) cause the funding of
any rabbi trust or similar arrangement or take any action to fund or in any
other way secure the payment of compensation or benefits under any Company
Benefit Plan, or (vii) materially change any actuarial or other assumptions used
to calculate funding obligations with respect to any Company Benefit Plan or
change the manner in which contributions to such plans are made or the basis on
which such contributions are determined, except as may be required by GAAP or
applicable Law;
(d) sell, transfer, pledge, lease, license, mortgage, encumber or
otherwise dispose of any of its properties or assets (including pursuant to
securitizations) to any individual, corporation or other entity other than a
Subsidiary or cancel, release or assign any material amount of indebtedness to
any such person or any claims held by any such person, in each case other than
pursuant to contracts in force at the date of this Agreement, other than any
such transactions as are in the ordinary course of business consistent with past
practice;
(e) enter into any new line of business or change in any respect its
lending, investment, underwriting, risk and asset liability management
(including risk limits, position limits and the like) and other operating,
securitization and servicing policies, except as required by applicable law,
regulation or policies imposed by any Governmental Entity;
(f) transfer ownership, or grant any license or other rights, to any
person or entity of or in respect of any material intellectual property of the
Company, other than grants of non-exclusive licenses pursuant to license
agreements entered into in the ordinary course of business consistent with past
practice;
(g) other than in the ordinary course consistent with past practice,
make any investments either by purchase of stock or securities, contributions to
capital, property transfers, or purchase of any property or assets of any other
individual, corporation or other entity;
(h) amend its charter or bylaws, or otherwise take any action to
exempt any person or entity (other than Parent or its Subsidiaries) or any
action taken by any person or entity from any Takeover Statute or similarly
restrictive provisions of its organizational documents or terminate, amend or
waive any provisions of any confidentiality or standstill agreements in place
with any third parties;
(i) conduct its operations or take actions related to trading or
credit extension in any manner other than in the ordinary course consistent with
past practice and in consultation with Parent;
(j) change in any material respect the policies, practices and
procedures governing operations of Company and its Subsidiaries;
(k) (i) amend or otherwise modify, except in the ordinary course of
business, or knowingly violate in any material respect the terms of, any Company
Contract, or (ii) except as may be required by applicable law, create or renew
any agreement or contract or other binding obligation of Company or its
Subsidiaries containing (A) any material restriction on the ability of Company
or its Subsidiaries to conduct its business as it is presently being conducted
21
or (B) any material restriction on the ability of Company or its Subsidiaries to
engage in any type of activity or business;
(l) commence or settle any claim, action or proceeding, other than
settlements resulting solely in the payment of monetary damages in amounts not
in excess of $500,000 in the aggregate;
(m) take any action or willfully fail to take any action that is
intended or may reasonably be expected to result in any of the conditions to the
Merger set forth in Article VII not being satisfied;
(n) implement or adopt any change in its Tax accounting or financial
accounting principles, practices or methods, other than as may be required by
applicable law, GAAP or regulatory guidelines;
(o) file or amend any Tax Return other than in the ordinary course
of business, make or change any material Tax election, or settle or compromise
any material Tax liability; or
(p) agree to take, make any commitment to take, or adopt any
resolutions of its board of directors in support of, any of the actions
prohibited by this Section 5.2.
For purposes of Section 5.2(k), "Company Contract" means any contract,
arrangement, commitment or understanding (whether written or oral) to which
Company or any of its Subsidiaries is a party or by which Company or any of its
Subsidiaries is bound (i) with respect to the employment of any directors,
executive officers, employees or consultants, other than in the ordinary course
of business consistent with past practice, (ii) which, upon execution of this
Agreement or consummation or stockholder approval of the transactions
contemplated by this Agreement will (either alone or upon the occurrence of any
additional acts or events) result in any payment or benefits (whether of
severance pay or otherwise) becoming due from Parent, Company, the Surviving
Company, or any of their respective Subsidiaries to any executive officer or
employee of Company or any of its Subsidiaries, (iii) that is a "material
contract" (as such term is defined in Item 601(b)(10) of Regulation S-K of the
SEC) to be performed after the date of this Agreement that has not been filed or
incorporated by reference in the Company SEC Reports filed prior to the date
hereof, (iv) that materially restricts the conduct of any line of business by
Company or any of its Subsidiaries or, to the knowledge of Company, upon
consummation of the Merger will materially restrict the ability of Parent, the
Surviving Company or any of their respective Subsidiaries to engage in any line
of business, (v) that obligates Company or any of its Subsidiaries to conduct
business on an exclusive or preferential basis with any third party or upon
consummation of the Merger will obligate Parent, the Surviving Company or any of
their respective Subsidiaries to conduct business with any third party on an
exclusive or preferential basis, (vi) with or to a labor union or guild
(including any collective bargaining agreement) or (vii) including any stock
option plan, stock appreciation rights plan, restricted stock plan or stock
purchase plan, any of the benefits of which will be increased, or the vesting of
the benefits of which will be accelerated, by the execution of this Agreement,
the occurrence of any stockholder approval or the consummation of any of the
transactions contemplated by this Agreement, or the value of any of the benefits
of which will be calculated on the basis of or affected by any of the
transactions contemplated by this Agreement.
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5.3 Parent Forbearances. Except as expressly permitted by this
Agreement or with the prior written consent of Company, during the period from
the date of this Agreement to the Effective Time, Parent shall not, and shall
not permit any of its Subsidiaries to, (a) amend, repeal or otherwise modify any
provision of the Parent Certificate or the Parent Bylaws in a manner that would
adversely affect Company, the stockholders of Company or the transactions
contemplated by this Agreement; (b) take any action or willfully fail to take
any action that is intended or may reasonably be expected to result in any of
the conditions to the Merger set forth in Article VII not being satisfied; (c)
take any action that would be reasonably expected to prevent, materially impede
or materially delay the consummation of the transactions contemplated by this
Agreement; or (d) agree to take, make any commitment to take, or adopt any
resolutions of its board of directors in support of, any of the actions
prohibited by this Section 5.3.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Regulatory Matters. (a) Parent and Company shall promptly
prepare and file with the SEC the Form S-4, in which the Proxy Statement will be
included as a prospectus. Each of Parent and Company shall use its reasonable
best efforts to have the Form S-4 declared effective under the Securities Act as
promptly as practicable after such filing, and Company shall thereafter mail or
deliver the Proxy Statement to its stockholders. Parent shall also use its
reasonable best efforts to obtain all necessary state securities law or "Blue
Sky" permits and approvals required to carry out the transactions contemplated
by this Agreement, and Company shall furnish all information concerning Company
and the holders of Company Common Stock as may be reasonably requested in
connection with any such action.
(b) The parties shall cooperate with each other and use their
respective reasonable best efforts to promptly prepare and file all necessary
documentation, to effect all applications, notices, petitions and filings, to
obtain as promptly as practicable all permits, consents, approvals and
authorizations of all third parties (including any unions, works councils or
other labor organizations) and Governmental Entities that are necessary or
advisable to consummate the transactions contemplated by this Agreement
(including the Merger), and to comply with the terms and conditions of all such
permits, consents, approvals and authorizations of all such third parties or
Governmental Entities. Company and Parent shall have the right to review in
advance, and, to the extent practicable, each will consult the other on, in each
case subject to applicable laws relating to the confidentiality of information,
all the information relating to Company or Parent, as the case may be, and any
of their respective Subsidiaries, that appear in any filing made with, or
written materials submitted to, any third party or any Governmental Entity in
connection with the transactions contemplated by this Agreement. In exercising
the foregoing right, each of the parties shall act reasonably and as promptly as
practicable. The parties shall consult with each other with respect to the
obtaining of all permits, consents, approvals and authorizations of all third
parties and Governmental Entities necessary or advisable to consummate the
transactions contemplated by this Agreement and each party will keep the other
apprised of the status of matters relating to completion of the transactions
contemplated by this Agreement.
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(c) Each of Parent and Company shall, upon request, furnish to the
other all information concerning itself, its Subsidiaries, directors, officers
and stockholders and such other matters as may be reasonably necessary or
advisable in connection with the Proxy Statement, the Form S-4 or any other
statement, filing, notice or application made by or on behalf of Parent, Company
or any of their respective Subsidiaries to any Governmental Entity in connection
with the Merger and the other transactions contemplated by this Agreement.
(d) Each of Parent and Company shall promptly advise the other upon
receiving any communication from any Governmental Entity the consent or approval
of which is required for consummation of the transactions contemplated by this
Agreement that causes such party to believe that there is a reasonable
likelihood that any Parent Requisite Regulatory Approval or Company Requisite
Regulatory Approval, respectively, will not be obtained or that the receipt of
any such approval may be materially delayed.
(e) The Company shall cooperate fully with Parent and use reasonable
best efforts from and after the date hereof to promptly apply for and seek all
necessary approvals for Parent to exercise supervision and control, commencing
as promptly as possible following the date hereof, over the business and
operations of the Company and its Subsidiaries (including their prime brokerage
and clearing operations and investment advisory relationships).
6.2 Access to Information. (a) Upon reasonable notice and subject to
applicable laws relating to the confidentiality of information, each of Company
and Parent shall, and shall cause each of its Subsidiaries to, afford to the
officers, employees, accountants, counsel, advisors, agents and other
representatives of the other party, reasonable access, during normal business
hours during the period prior to the Effective Time, to all its properties,
books, contracts, commitments and records, and, during such period, such party
shall, and shall cause its Subsidiaries to, make available to the other party
(i) a copy of each report, schedule, registration statement and other document
filed or received by it during such period pursuant to the requirements of
federal securities laws or federal or state banking or insurance laws (other
than reports or documents that such party is not permitted to disclose under
applicable law) and (ii) all other information concerning its business,
properties and personnel as the other party may reasonably request (in the case
of a request by Company, information concerning Parent that is reasonably
related to the prospective value of Parent Common Stock or to Parent's ability
to consummate the transactions contemplated hereby). Neither Company nor Parent,
nor any of their Subsidiaries, shall be required to provide access to or to
disclose information where such access or disclosure would jeopardize the
attorney-client privilege of such party or its Subsidiaries or contravene any
law, rule, regulation, order, judgment, decree, fiduciary duty or binding
agreement entered into prior to the date of this Agreement. The parties shall
make appropriate substitute disclosure arrangements under circumstances in which
the restrictions of the preceding sentence apply.
(b) All information and materials provided pursuant to this
Agreement shall be subject to the provisions of the Confidentiality Agreement
entered into between the parties as of March 13, 2008 (the "Confidentiality
Agreement").
(c) No investigation by a party hereto or its representatives shall
affect the representations and warranties of the other party set forth in this
Agreement.
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6.3 Stockholder Approval. Company shall call a meeting of its
stockholders to be held as soon as reasonably practicable for the purpose of
obtaining the requisite stockholder approval required in connection with the
Merger, on substantially the terms and conditions set forth in this Agreement,
and shall use its reasonable best efforts to cause such meeting to occur as soon
as reasonably practicable. The Board of Directors of Company shall use its
reasonable best efforts to obtain from its stockholders the stockholder vote
approving the Merger, on substantially the terms and conditions set forth in
this Agreement, required to consummate the transactions contemplated by this
Agreement. Company shall submit this Agreement to its stockholders at the
stockholder meeting even if its Board of Directors shall have withdrawn,
modified or qualified its recommendation. As of the date of this Agreement, the
Board of Directors of Company has adopted resolutions approving the Merger, on
substantially the terms and conditions set forth in this Agreement, and
directing that the Merger, on such terms and conditions, be submitted to
Company's stockholders for their consideration.
6.4 NYSE Listing. Parent shall cause the shares of Parent Common
Stock to be issued in the Merger to be approved for listing on the NYSE, subject
to official notice of issuance, prior to the Effective Time.
6.5 Employee Matters. (a) Following the Closing Date, Parent shall
maintain or cause to be maintained employee benefit plans and compensation
opportunities for the benefit of employees (as a group) who are actively
employed by Company and its Subsidiaries on the Closing Date ("Covered
Employees") that provide employee benefits and compensation opportunities which,
in the aggregate, are substantially comparable to the employee benefits and
compensation opportunities that are generally made available to similarly
situated employees of Parent or its Subsidiaries (other than Company and its
Subsidiaries), as applicable; provided, that in no event shall any Covered
Employee be eligible to participate in any closed or frozen plan of Parent or
its Subsidiaries; provided, further, that until such time as Parent shall cause
Covered Employees to participate in the benefit plans and compensation
opportunities that are made available to similarly situated employees of Parent
or its Subsidiaries (other than Company and its Subsidiaries), a Covered
Employee's continued participation in employee benefit plans and compensation
opportunities of Company and its Subsidiaries shall be deemed to satisfy the
foregoing provisions of this sentence (it being understood that participation in
the Parent plans may commence at different times with respect to each Parent
plan).
(b) To the extent that a Covered Employee becomes eligible to
participate in an employee benefit plan maintained by Parent or any of its
Subsidiaries (other than Company or its Subsidiaries), Parent shall cause such
employee benefit plan to (i) recognize the service of such Covered Employee with
Company or its Subsidiaries (or their predecessor entities) for purposes of
eligibility, participation, vesting and benefit accrual under such employee
benefit plan of Parent or any of its Subsidiaries, to the same extent such
service was recognized immediately prior to the Effective Time under a
comparable Company Benefit Plan in which such Covered Employee was eligible to
participate immediately prior to the Effective Time; provided that such
recognition of service (A) shall not operate to duplicate any benefits of a
Covered Employee with respect to the same period of service and (B) shall not
apply for purposes of (1) any plan, program or arrangement under which
similarly-situated employees of Parent and its Subsidiaries do not receive
credit for prior service, (2) "retirement" eligibility under Parent's equity
compensation plans and arrangements, (3) eligibility for subsidized
post-retirement, medical or
25
life insurance and (4) grandfathering and/or the level of pay credits under
Parent's defined benefit retirement plan or subsidized retiree medical benefits,
and (ii) with respect to any health, dental, vision plan or other welfare of
Parent or any of its Subsidiaries (other than Company and its Subsidiaries) in
which any Covered Employee is eligible to participate for the plan year in which
such Covered Employee is first eligible to participate, use its reasonable best
efforts to (x) cause any pre-existing condition limitations or eligibility
waiting periods under such Parent or Subsidiary plan to be waived with respect
to such Covered Employee to the extent such limitation would have been waived or
satisfied under the Company Benefit Plan in which such Covered Employee
participated immediately prior to the Effective Time, and (y) recognize any
health, dental or vision expenses incurred by such Covered Employee in the year
that includes the Closing Date (or, if later, the year in which such Covered
Employee is first eligible to participate) for purposes of any applicable
deductible and annual out-of-pocket expense requirements under any such health,
dental or vision plan of Parent or any of its Subsidiaries.
(c) From and after the Effective Time, Parent shall, or shall cause
its Subsidiaries to, honor, in accordance with the terms thereof as in effect as
of the date hereof or as may be amended or terminated after the date hereof with
the prior written consent of Parent, each employment agreement and change in
control agreement to which Company or any of its Subsidiaries is a party and the
obligations of Company and its Subsidiaries as of the Effective Time under each
deferred compensation plan or agreement to which they are a party.
(d) Nothing in this Section 6.5 shall be construed to limit the
right of Parent or any of its Subsidiaries (including, following the Closing
Date, Company and its Subsidiaries) to amend or terminate any Company Benefit
Plan or other employee benefit plan, to the extent such amendment or termination
is permitted by the terms of the applicable plan, nor shall anything in this
Section 6.5 be construed to require the Parent or any of its Subsidiaries
(including, following the Closing Date, Company and its Subsidiaries) to retain
the employment of any particular Covered Employee for any fixed period of time
following the Closing Date.
(e) Without limiting the generality of Section 9.9, the provisions
of this Section 6.5 are solely for the benefit of the parties to this Agreement,
and no current or former employee, director or independent contractor or any
other individual associated therewith shall be regarded for any purpose as a
third-party beneficiary of the Agreement, and nothing herein shall be construed
as an amendment to any Company Benefit Plan or other employee benefit plan for
any purpose.
(f) Prior to the Effective Time, if requested by Parent in writing
reasonably in advance of the Effective Time, the Company shall cause the Company
employee stock ownership plan ("ESOP"), any or all Company 401(k) plans, any or
all Company profit sharing plans and any other qualified plans of the Company to
be terminated effective immediately prior to the Effective Time. At the request
of Parent, termination of the ESOP will include taking any such action as Parent
may reasonably determine to repay each loan thereunder.
(g) For purposes of this Agreement, "Company Benefit Plans" means
each "employee benefit plan" as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), whether or not
subject to ERISA, and each employment, consulting, bonus, incentive or deferred
compensation, vacation, stock option or other equity-
26
based, severance, termination, retention, change of control, profit-sharing,
fringe benefit or other similar plan, program, agreement or commitment, whether
written or unwritten, for the benefit of any employee, former employee, director
or former director of Company or any of its Subsidiaries entered into,
maintained or contributed to by Company or any of its Subsidiaries or to which
Company or any of its Subsidiaries is obligated to contribute, or with respect
to which Company or any of its Subsidiaries has any liability, direct or
indirect, contingent or otherwise (including any liability arising out of an
indemnification, guarantee, hold harmless or similar agreement) or otherwise
providing benefits to any current, former or future employee, officer or
director of Company or any of its Subsidiaries or to any beneficiary or
dependant thereof.
6.6 Indemnification; Directors' and Officers' Insurance.
(a) In the event of any threatened or actual claim, action, suit,
proceeding or investigation, whether civil, criminal or administrative (a
"Claim"), including any such Claim in which any individual who is now, or has
been at any time prior to the date of this Agreement, or who becomes prior to
the Effective Time, a director or officer of Company or any of its Subsidiaries
or who is or was serving at the request of Company or any of its Subsidiaries as
a director or officer of another person (the "Indemnified Parties"), is, or is
threatened to be, made a party based in whole or in part on, or arising in whole
or in part out of, or pertaining to (i) the fact that he or she is or was a
director or officer of Company or any of its Subsidiaries prior to the Effective
Time or (ii) this Agreement or any of the transactions contemplated by this
Agreement, whether asserted or arising before or after the Effective Time, the
parties shall cooperate and use their best efforts to defend against and respond
thereto. All rights to indemnification and exculpation from liabilities for acts
or omissions occurring or alleged to have occurred at or prior to the Effective
Time now existing in favor of any Indemnified Party as provided in their
respective certificates or articles of incorporation or by-laws (or comparable
organizational documents), and any existing indemnification agreements, shall
survive the Merger and shall continue in full force and effect in accordance
with their terms, and shall not be amended, repealed or otherwise modified for a
period of six years after the Effective Time in any manner that would adversely
affect the rights thereunder of such individuals for acts or omissions occurring
at or prior to the Effective Time or taken at the request of Parent pursuant to
Section 6.7 hereof, it being understood that nothing in this sentence shall
require any amendment to the certificate of incorporation or by-laws of the
Surviving Company.
(b) From and after the Effective Time, Parent shall and shall cause
the Surviving Company to, to the fullest extent permitted by applicable law,
indemnify, defend and hold harmless, and provide advancement of expenses to,
each Indemnified Party against all losses, claims, damages, costs, expenses,
liabilities or judgments or amounts that are paid in settlement of or in
connection with any Claim based in whole or in part on or arising in whole or in
part out of the fact that such person is or was a director or officer of Company
or any of its Subsidiaries, and pertaining to any matter existing or occurring
or alleged to have occurred, or any acts or omissions occurring or alleged to
have occurred, at or prior to the Effective Time, whether asserted or claimed
prior to, or at or after, the Effective Time (including matters, acts or
omissions occurring in connection with the approval of this Agreement and the
consummation of the transactions contemplated hereby) or taken at the request of
Parent pursuant to Section 6.7 hereof.
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(c) Parent shall cause the individuals serving as officers and
directors of Company or any of its Subsidiaries immediately prior to the
Effective Time to be covered for a period of six years from the Effective Time
by the directors' and officers' liability insurance policy maintained by Company
(provided that Parent may substitute therefor policies of at least the same
coverage and amounts containing terms and conditions that are not less
advantageous than such policy) with respect to acts or omissions occurring prior
to the Effective Time that were committed by such officers and directors in
their capacity as such; provided that in no event shall Parent be required to
expend annually in the aggregate an amount in excess of 250% of the annual
premiums currently paid by Company for such insurance (the "Insurance Amount"),
and provided, further, that if Parent is unable to maintain such policy (or such
substitute policy) as a result of the preceding proviso, Parent shall obtain as
much comparable insurance as is available for the Insurance Amount.
(d) The provisions of this Section 6.6 shall survive the Effective
Time and are intended to be for the benefit of, and shall be enforceable by,
each Indemnified Party and his or her heirs and representatives.
6.7 Additional Agreements. (a) In case at any time after the
Effective Time any further action is necessary or desirable to carry out the
purposes of this Agreement (including any merger between a Subsidiary of Parent,
on the one hand, and a Subsidiary of Company, on the other) or to vest the
Surviving Company with full title to all properties, assets, rights, approvals,
immunities and franchises of either party to the Merger, the proper officers and
directors of each party and their respective Subsidiaries shall, at Parent's
sole expense, take all such necessary action as may be reasonably requested by
Parent.
(b) Subject to the availability of funds, the Company shall and
shall cause its Subsidiaries to reimburse within 2 business days after payment
thereof all amounts paid by Parent pursuant to the Guaranty (as hereinafter
defined). Any such amounts paid by Parent shall accrue interest from the time of
such payment at a rate per annum equal to 3% over the "prime rate" (as announced
by JPMorgan Chase Bank, National Association) in effect on the date that such
amounts were originally required to be paid.
6.8 Exemption from Liability Under Section 16(b). Prior to the
Effective Time, Parent and Company shall each take all such steps as may be
necessary or appropriate to cause any disposition of shares of Company Common
Stock or conversion of any derivative securities in respect of such shares of
Company Common Stock in connection with the consummation of the transactions
contemplated by this Agreement to be exempt under Rule 16b-3 promulgated under
the Exchange Act, including any such actions specified in the No-Action Letter
dated January 12, 1999, issued by the SEC to Skadden, Arps, Slate, ▇▇▇▇▇▇▇ &
▇▇▇▇, LLP.
6.9 No Solicitation.
(a) None of Company, its Subsidiaries or any officer, director,
employee, agent or representative (including any investment banker, financial
advisor, attorney, accountant or other representative) of Company or any of its
Subsidiaries shall directly or indirectly (i) solicit, initiate, encourage,
facilitate (including by way of furnishing information) or take any other action
designed to facilitate any inquiries or proposals regarding any merger, share
exchange,
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consolidation, sale of assets, sale of shares of capital stock (including by way
of a tender offer) or similar transactions involving Company or any of its
Subsidiaries that, if consummated, would constitute an Alternative Transaction
(any of the foregoing inquiries or proposals, including the indication of any
intention to propose any of the foregoing, being referred to herein as an
"Alternative Proposal"), (ii) participate in any discussions or negotiations
regarding an Alternative Transaction or (iii) enter into any agreement regarding
any Alternative Transaction. Notwithstanding the foregoing, the Board of
Directors of Company shall be permitted, prior to the meeting of Company
stockholders to be held pursuant to Section 6.3, and subject to compliance with
the other terms of this Section 6.9 (including but not limited to the preceding
sentence) and to first entering into a confidentiality agreement with the person
proposing such Alternative Proposal on terms substantially similar to, and no
less favorable to Company than, those contained in the Confidentiality
Agreement, to consider and participate in discussions and negotiations and
provide information with respect to a bona fide Alternative Proposal received by
Company, if and only to the extent that and so long as the Board of Directors of
Company reasonably determines in good faith (after consultation with outside
legal counsel) that failure to do so would cause it to violate its fiduciary
duties to Company stockholders under applicable law.
As used in this Agreement, "Alternative Transaction" means any of
(i) a transaction pursuant to which any person (or group of persons) (other than
Parent or its affiliates), directly or indirectly, acquires or would acquire
more than 15% of the outstanding shares of Company or any of its Subsidiaries or
outstanding voting power or of any new series or new class of preferred stock
that would be entitled to a class or series vote with respect to a merger with
Company or any of its Subsidiaries, whether from Company or pursuant to a tender
offer or exchange offer or otherwise, (ii) a merger, share exchange,
consolidation or other business combination involving Company or any of its
Subsidiaries (other than the Merger), (iii) any transaction pursuant to which
any person (or group of persons) (other than Parent or its affiliates) acquires
or would acquire control of assets (including for this purpose the outstanding
equity securities of subsidiaries of Company and securities of the entity
surviving any merger or business combination including any of Company's
Subsidiaries) of Company or any of its Subsidiaries representing more than 15%
of the fair market value of all the assets, net revenues or net income of
Company and its Subsidiaries, taken as a whole, immediately prior to such
transaction, or (iv) any other consolidation, business combination,
recapitalization or similar transaction involving Company or any of its
Subsidiaries other than the transactions contemplated by this Agreement.
(b) Company shall notify Parent promptly (but in no event later than
48 hours) after receipt of any Alternative Proposal, or any material
modification of or material amendment to any Alternative Proposal, or any
request for nonpublic information relating to Company or any of its Subsidiaries
or for access to the properties, books or records of Company or any of its
Subsidiaries, other than any such request that does not relate to and would not
reasonably be expected to lead to, an Alternative Proposal. Such notice to
Parent shall be made orally and in writing, and shall indicate the identity of
the person making the Alternative Proposal or intending to make or considering
making an Alternative Proposal or requesting non-public information or access to
the books and records of Company or any of its Subsidiaries, and a copy (if in
writing) and summary of the material terms of any such Alternative Proposal or
modification or amendment to an Alternative Proposal. Company shall keep Parent
fully informed, on a current
29
basis, of any material changes in the status and any material changes or
modifications in the terms of any such Alternative Proposal, indication or
request. Company shall also provide Parent 24 hours written notice before it
enters into any discussions or negotiations concerning any Alternative Proposal
in accordance with Section 6.9(a).
(c) Company and its Subsidiaries shall immediately cease and cause
to be terminated any existing discussions or negotiations with any persons
(other than Parent) conducted heretofore with respect to any of the foregoing,
and shall use reasonable best efforts to cause all persons other than Parent who
have been furnished confidential information regarding Company in connection
with the solicitation of or discussions regarding an Alternative Proposal within
the 12 months prior to the date hereof promptly to return or destroy such
information. Company agrees not to, and to cause its Subsidiaries not to,
release any third party from the confidentiality and standstill provisions of
any agreement to which Company or its Subsidiaries is or may become a party, and
shall immediately take all steps necessary to terminate any approval that may
have been heretofore given under any such provisions authorizing any person to
make an Alternative Proposal. Neither Company nor the Board of Directors of
Company shall approve or take any action to render inapplicable to any
Alternative Proposal or Alternative Transaction Section 203 of the DGCL or any
similar Takeover Statutes.
(d) Except as expressly permitted by this Section 6.9(d), neither
the Board of Directors of Company nor any committee thereof shall (i) withdraw,
modify or qualify, or propose publicly to withdraw, modify or qualify, the
recommendation by the Board of Directors of Company of this Agreement and/or the
Merger to Company's stockholders, (ii) take any public action or make any public
statement in connection with the meeting of Company stockholders to be held
pursuant to Section 6.3 inconsistent with such recommendation or (iii) approve
or recommend, or publicly propose to approve or recommend, or fail to recommend
against, any Alternative Proposal (any of the actions described in clauses (i),
(ii) or (iii), a "Change of Recommendation"). Notwithstanding the foregoing, the
Board of Directors of Company may make a Change of Recommendation, if, and only
if, each of the following conditions is satisfied:
(i) it receives an unsolicited Alternative Proposal that
constitutes a Superior Proposal and such Superior Proposal has not been
withdrawn;
(ii) Company has not breached any of the provisions set forth
in Section 6.3 or this Section 6.9;
(iii) it reasonably determines in good faith (after
consultation with outside legal counsel), that in light of a Superior
Proposal the failure to effect such Change of Recommendation would cause
it to violate its fiduciary duties to Company stockholders under
applicable law;
(iv) Parent has received written notice from Company (a
"Change of Recommendation Notice") at least five business days prior to
such Change of Recommendation, which notice shall (1) state expressly that
Company has received a Alternative Proposal which the Board of Directors
of Company has determined is a Superior Proposal and that Company intends
to effect a Change of Recommendation and
30
the manner in which it intends or may intend to do so and (2) include the
identity of the person making such Alternative Proposal and a copy (if in
writing) and summary of material terms of such Alternative Proposal;
provided that any material amendment to the terms of such Alternative
Proposal shall require a Change of Recommendation Notice at least two
business days prior to such Change of Recommendation; and
(v) during any such notice period, Company and its advisors
have negotiated in good faith with Parent to make adjustments in the terms
and conditions of this Agreement such that such Alternative Proposal would
no longer constitute a Superior Proposal.
As used in this Agreement, "Superior Proposal" means any proposal
made by a third party (A) to acquire, directly or indirectly, for consideration
consisting of cash and/or securities, 100% of the outstanding shares of Company
Common Stock or 100% of the assets, net revenues or net income of Company and
its Subsidiaries, taken as a whole and (B) which is otherwise on terms which the
Board of Directors of Company determines in its reasonable good faith judgment
(after consultation with its financial advisor and outside legal counsel),
taking into account, among other things, all legal, financial, regulatory and
other aspects of the proposal and the person making the proposal, that the
proposal, (i) if consummated would result in a transaction that is more
favorable, from a financial point of view, to Company's stockholders than the
Merger and the other transactions contemplated hereby and (ii) is reasonably
capable of being completed, including to the extent required, financing which is
then committed or which, in the good faith judgment of the Board of Directors of
Company, is reasonably capable of being obtained by such third party.
(e) Company shall ensure that the officers, directors and all
employees, agents and representatives (including any investment bankers,
financial advisors, attorneys, accountants or other representatives) of Company
or its Subsidiaries are aware of the restrictions described in this Section 6.9
as reasonably necessary to avoid violations thereof. It is understood that any
violation of the restrictions set forth in this Section 6.9 by any officer,
director, employee, agent or representative (including any investment banker,
financial advisor, attorney, accountant or other representative) of Company or
its Subsidiaries shall be deemed to be a breach of this Section 6.9 by Company.
(f) Nothing contained in this Section 6.9 shall prohibit Company or
its Subsidiaries from taking and disclosing to its stockholders a position
required by Rule 14e-2(a) or Rule 14d-9 promulgated under the Exchange Act.
6.10 Restructuring Efforts. If Company shall have failed to obtain
the requisite vote or votes of its stockholders for the consummation of the
transactions contemplated by this Agreement at a duly held meeting of its
stockholders or at any adjournment or postponement thereof, then, unless this
Agreement shall have been terminated pursuant to its terms, each of the parties
shall in good faith use its reasonable best efforts to negotiate a restructuring
of the transaction provided for herein (it being understood that neither party
shall have any obligation to alter or change the amount or kind of the Merger
Consideration, or the tax treatment of the Merger, in a manner adverse to such
party or its stockholders) and to resubmit the transaction to
31
Company's stockholders for approval, with the timing of such resubmission to be
determined at the reasonable request of Parent.
6.11 Asset Option. In consideration of entering into this Agreement
and the Guaranty attached hereto as Schedule 6.12, the Company hereby grants, on
behalf of itself and its Affiliates, to Parent, subject to the terms and
conditions set forth in this Section 6.11, the irrevocable right and option to
acquire all of the Company's and its Affiliates' rights, title and interest
(free and clear of all encumbrances) in and to the Company's headquarters
building located at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ (the "HQ Property")
for an amount in cash equal to the RE Consideration (as defined below) (the
"Asset Option"). As used herein, "RE Consideration" shall mean $1.1 billion
minus (x) the amount of the indebtedness or other encumbrances or liabilities to
which the HQ Property is subject (provided that any such indebtedness,
encumbrances or liabilities described in this clause (x) shall only be deducted
to the extent Company has not paid and satisfied such indebtedness, encumbrances
or liabilities in full prior to the closing of Parent's or its designee's
acquisition of the HQ Property) and (y) any reasonable transaction costs
incurred by Parent or its Affiliates in completing the transaction. The Asset
Option shall only be exercisable if this Agreement is terminated either (x) by
Parent pursuant to Section 8.1(e) or 8.1(f), or (y) (i)(A) by Parent pursuant to
Section 8.1(d) or (B) by either Parent or the Company pursuant to Section
8.1(c), and (ii) prior to either such termination an Alternative Proposal shall
have been publicly announced or otherwise communicated or made known to Company
(or any person shall have publicly announced, communicated or made known an
intention to make an Alternative Proposal), and shall not have been irrevocably
withdrawn; in any such case the Asset Option shall be exercisable at Parent's
discretion from the time of such termination until the date that is six months
following the date of such termination. If the Asset Option is exercised, the
Company shall promptly take (and cause its applicable Affiliates to take) all
necessary actions to vest in Parent or its designee, subject to receipt of the
RE Consideration, all right and title, free and clear of all encumbrances, to
the HQ Property, including as applicable stock certificates, real property
transfer documents and any other documents reasonably requested by Parent. The
Company further agrees to cooperate (and cause its applicable Affiliates to
cooperate) with Parent, and to cause its Subsidiaries to cooperate with Parent,
in taking all actions necessary to facilitate any exercise or consummation of
the Asset Option, including with respect to obtaining any necessary government,
regulatory or third-party approvals. If Parent exercises the Asset Option, then,
if requested by Parent, the Company shall, and shall cause its Affiliates to,
exercise the option to purchase the HQ Property pursuant to Section 14 and the
other provisions of the Amended and Restated Lease, dated as of August 28, 2003,
between ABN AMRO Bank, N.V., as Lessor, and ▇▇▇▇▇▇▇/Madison Avenue LLC (a
subsidiary of the Company), as Lessee (the "HQ Lease"), and take all actions
required to acquire the HQ Property under the HQ Lease and simultaneously convey
the HQ Property to Parent or its designee in the manner requested by Parent. The
Company shall, and shall cause its Affiliates to, take all actions and enter
into all agreements directed by Parent that are necessary to consummate the
foregoing transactions and to convey to Parent or its designee good, marketable
and insurable fee simple title to the HQ Property (free and clear of all
encumbrances) by special warranty deed and otherwise as directed by Parent. The
Company and its Affiliates shall exercise their best efforts to obtain any
consents or waivers required to effectuate the foregoing transactions. All
transfer taxes and other costs of consummating the foregoing transactions shall
be borne by the Company. The closing of Parent's or its designee's acquisition
of the HQ
32
Property shall occur within 30 days of the exercise of the option or within such
other period as shall be directed by Parent.
6.12 Guaranty. Parent has entered into as of the date hereof the
Guaranty set forth on Schedule 6.12 and shall comply with the terms of such
Guaranty, subject to the conditions set forth therein.
6.13 Tax Matters. Company shall consult with Parent (including in
connection with the preparation of Company's 2007 federal income tax return)
regarding Company's utilization of tax losses and any issues that could
reasonably be expected to give rise to creation of or increase in "net operating
loss" carryforwards, and shall, in Company's reasonable discretion, take account
of Parent's views on such matters to the extent reasonably feasible.
ARTICLE VII
CONDITIONS PRECEDENT
7.1 Conditions to Each Party's Obligation To Effect the Merger. The
respective obligations of the parties to effect the Merger shall be subject to
the satisfaction at or prior to the Effective Time of the following conditions:
(a) Stockholder Approval. This Agreement, on substantially the terms
and conditions set forth in this Agreement, shall have been approved and adopted
by the requisite affirmative vote of the holders of Company Common Stock
entitled to vote thereon.
(b) NYSE Listing. The shares of Parent Common Stock to be issued to
the holders of Company Common Stock upon consummation of the Merger shall have
been authorized for listing on the NYSE, subject to official notice of issuance.
(c) Form S-4. The Form S-4 shall have become effective under the
Securities Act and no stop order suspending the effectiveness of the Form S-4
shall have been issued and no proceedings for that purpose shall have been
initiated or threatened by the SEC.
(d) No Injunctions or Restraints; Illegality. No order, injunction
or decree issued by any court or agency of competent jurisdiction or other law
preventing or making illegal the consummation of the Merger or any of the other
transactions contemplated by this Agreement shall be in effect.
7.2 Conditions to Obligations of Parent. The obligation of Parent
and Merger Sub to effect the Merger is also subject to the satisfaction, or
waiver by Parent, at or prior to the Effective Time, of the following
conditions:
(a) Representations and Warranties. The representations and
warranties of Company set forth in (i) Section 3.2(a) shall be true and correct
except to a de minimis extent (relative to Section 3.2(a) taken as a whole), and
(ii) Sections 3.2(b), 3.3(a), 3.3(b)(i), 3.7 and 3.13 shall be true and correct
in all material respects, in each case as of the date of this Agreement and as
of the Effective Time as though made on and as of the Effective Time (except
that representations and warranties that by their terms speak specifically as of
the date of this
33
Agreement or another date shall be true and correct as of such date); and Parent
shall have received a certificate signed on behalf of Company by the Chief
Executive Officer or the Chief Financial Officer of Company to the foregoing
effect.
(b) Performance of Obligations of Company. Company shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Effective Time; and Parent shall have
received a certificate signed on behalf of Company by the Chief Executive
Officer or the Chief Financial Officer of Company to such effect.
(c) Regulatory Approvals. All regulatory approvals from the Federal
Reserve, FINRA, the FSA, the Financial Services Agency of Japan, under the HSR
Act and any other regulatory approvals set forth in Section 4.4 the failure of
which to obtain would reasonably be expected to have a material adverse effect
on Parent or the Company, in each case required to consummate the transactions
contemplated by this Agreement, including the Merger, shall have been obtained
and shall remain in full force and effect and all statutory waiting periods in
respect thereof shall have expired (all such approvals and the expiration of all
such waiting periods being referred as the "Parent Requisite Regulatory
Approvals").
7.3 Conditions to Obligations of Company. The obligation of Company
to effect the Merger is also subject to the satisfaction or waiver by Company at
or prior to the Effective Time of the following conditions:
(a) Representations and Warranties. The representations and
warranties of Parent set forth in Sections 4.2, 4.3(a), 4.3(b)(i) and 4.7 shall
be true and correct in all material respects as of the date of this Agreement
and as of the Effective Time as though made on and as of the Effective Time
(except that representations and warranties that by their terms speak
specifically as of the date of this Agreement or another date shall be true and
correct as of such date); and Company shall have received a certificate signed
on behalf of Parent by the Chief Executive Officer or the Chief Financial
Officer of Parent to the foregoing effect.
(b) Performance of Obligations of Parent. Parent shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Effective Time, and Company shall
have received a certificate signed on behalf of Parent by the Chief Executive
Officer or the Chief Financial Officer of Parent to such effect.
(c) Regulatory Approvals. All regulatory approvals from the Federal
Reserve, FINRA, the FSA, the Financial Services Agency of Japan, under the HSR
Act and any other regulatory approvals set forth in Section 3.4 the failure of
which to obtain would reasonably be expected to have a material adverse effect
on Parent or the Company, in each case required to consummate the transactions
contemplated by this Agreement, including the Merger, shall have been obtained
and shall remain in full force and effect and all statutory waiting periods in
respect thereof shall have expired (all such approvals and the expiration of all
such waiting periods being referred as the "Company Requisite Regulatory
Approvals").
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ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 Termination. This Agreement may be terminated at any time prior
to the Effective Time, whether before or after approval of the matters presented
in connection with the Merger by the stockholders of Company:
(a) by mutual consent of Company and Parent in a written instrument
authorized by the Boards of Directors of Company and Parent;
(b) by either Company or Parent, if any Governmental Entity that
must grant a Parent Requisite Regulatory Approval or a Company Requisite
Regulatory Approval has denied approval of the Merger and such denial has become
final and nonappealable or any Governmental Entity of competent jurisdiction
shall have issued a final and nonappealable order, injunction or decree
permanently enjoining or otherwise prohibiting or making illegal the
consummation of the transactions contemplated by this Agreement;
(c) by either Company or Parent, if the Merger shall not have been
consummated on or before the first anniversary of the date of this Agreement
unless the failure of the Closing to occur by such date shall be due to the
failure of the party seeking to terminate this Agreement to perform or observe
the covenants and agreements of such party set forth in this Agreement;
(d) by either Company or Parent (provided that the terminating party
is not then in material breach of any representation, warranty, covenant or
other agreement contained herein), if there shall have been a breach of any of
the covenants or agreements or any of the representations or warranties set
forth in this Agreement on the part of Company, in the case of a termination by
Parent, or Parent or Merger Sub, in the case of a termination by Company, which
breach, either individually or in the aggregate, would result in, if occurring
or continuing on the Closing Date, the failure of the conditions set forth in
Section 7.2 or 7.3, as the case may be, and which is not cured within 30 days
following written notice to the party committing such breach or by its nature or
timing cannot be cured within such time period;
(e) by Parent, if (i) the Board of Directors of Company shall have
(A) failed to recommend in the Proxy Statement the approval and adoption of this
Agreement, (B) made any Change of Recommendation, (C) approved or recommended,
or publicly proposed to approve or recommend, any Alternative Proposal, whether
or not permitted by the terms hereof or (D) failed to recommend to Company's
stockholders that they reject any tender offer or exchange offer that
constitutes an Alternative Transaction within the ten business day period
specified in Rule 14e-2(a) of the Exchange Act, (ii) Company shall have breached
its obligations under Section 6.9 in any material respect adverse to Parent or
(iii) Company shall have breached its obligations under Section 6.3 in any
material respect by failing to call, convene and hold a meeting of its
stockholders in accordance with Section 6.3; or
(f) by either Company or Parent, if its Board of Directors
determines in good faith that the other party has substantially engaged in bad
faith in breach of its obligations under Section 6.10.
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The party desiring to terminate this Agreement pursuant to clause
(b), (c), (d), (e) or (f) of this Section 8.1 shall give written notice of such
termination to the other party in accordance with Section 9.3, specifying the
provision or provisions hereof pursuant to which such termination is effected.
8.2 Effect of Termination. In the event of termination of this
Agreement by either Company or Parent as provided in Section 8.1, this Agreement
shall forthwith become void and have no effect, and none of Company, Parent, any
of their respective Subsidiaries or any of the officers or directors of any of
them shall have any liability of any nature whatsoever under this Agreement, or
in connection with the transactions contemplated by this Agreement, except that
(i) Sections 6.2(b), 6.11, 8.2, 8.3, 9.3, 9.4, 9.5, 9.6, 9.7, 9.8, 9.9 and 9.10
shall survive any termination of this Agreement, and (ii) neither Company nor
Parent shall be relieved or released from any liabilities or damages arising out
of its knowing breach of any provision of this Agreement. Notwithstanding the
foregoing, in the event of any termination of this Agreement, the Option
Agreement shall remain in full force and effect to the extent provided therein.
8.3 Fees and Expenses. Except with respect to costs and expenses of
printing and mailing the Proxy Statement and all filing and other fees paid to
the SEC in connection with the Merger, which shall be borne equally by Company
and Parent, all fees and expenses incurred in connection with the Merger, this
Agreement, and the transactions contemplated by this Agreement shall be paid by
the party incurring such fees or expenses, whether or not the Merger is
consummated.
8.4 Amendment. This Agreement may be amended by the parties, by
action taken or authorized by their respective Boards of Directors, at any time
before or after approval of the matters presented in connection with Merger by
the stockholders of Company; provided, however, that after any approval of the
transactions contemplated by this Agreement by the stockholders of Company,
there may not be, without further approval of such stockholders, any amendment
of this Agreement that requires further approval under applicable law. This
Agreement may not be amended except by an instrument in writing signed on behalf
of each of the parties.
8.5 Extension; Waiver. At any time prior to the Effective Time, the
parties, by action taken or authorized by their respective Board of Directors,
may, to the extent legally allowed, (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 contained in this Agreement
or (c) waive compliance 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 a written instrument signed on behalf
of such party, but such extension or waiver or failure to insist on strict
compliance with an obligation, covenant, agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any subsequent or other
failure.
36
ARTICLE IX
GENERAL PROVISIONS
9.1 Closing. On the terms and subject to the conditions set forth in
this Agreement, the closing of the Merger (the "Closing") shall take place at
10:00 a.m. on a date and at a place to be specified by the parties, which date
shall be no later than five business days after the satisfaction or waiver
(subject to applicable law) of the latest to occur of the conditions set forth
in Article VII (other than those conditions that by their nature are to be
satisfied or waived at the Closing), unless extended by mutual agreement of the
parties (the "Closing Date"). If the conditions set forth in Article VII are
satisfied or waived during the two weeks immediately prior to the end of a
fiscal quarter of Parent, then Parent may postpone the Closing until the first
full week after the end of that fiscal quarter.
9.2 Nonsurvival of Representations, Warranties and Agreements. None
of the representations, warranties, covenants and agreements set forth in this
Agreement or in any instrument delivered pursuant to this Agreement shall
survive the Effective Time, except for Section 6.6 and for those other covenants
and agreements contained in this Agreement that by their terms apply or are to
be performed in whole or in part after the Effective Time.
9.3 Notices. All notices and other communications in connection with
this Agreement shall be in writing and shall be deemed given if delivered
personally, sent via facsimile (with confirmation), mailed by registered or
certified mail (return receipt requested) or delivered by an express courier
(with confirmation) 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 Company, to:
The Bear ▇▇▇▇▇▇▇ Companies Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
and
The Bear ▇▇▇▇▇▇▇ Companies Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Cadwalader, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. Block
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to Parent, to:
JPMorgan Chase & Co.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
9.4 Interpretation. When a reference is made in this Agreement to
Articles, Sections, Exhibits or Schedules, such reference shall be to a Article
or Section of or Exhibit or Schedule to this Agreement unless otherwise
indicated. The table of contents and headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include," "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation." All schedules and exhibits hereto, shall be
deemed part of this Agreement and included in any reference to this Agreement.
This Agreement shall not be interpreted or construed to require any person to
take any action, or fail to take any action, if to do so would violate any
applicable law. If any term, provision, covenant or restriction contained in
this Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to
38
be invalid, void or unenforceable, the remainder of the terms, provisions and
covenants and restrictions contained in this Agreement shall remain in full
force and effect, and shall in no way be affected, impaired or invalidated. If
for any reason such court or regulatory agency determines that any provision,
covenant or restriction is invalid, void or unenforceable, it is the express
intention of the parties that such provision, covenant or restriction be
enforced to the maximum extent permitted.
9.5 Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each of the parties
and delivered to the other party, it being understood that each party need not
sign the same counterpart.
9.6 Entire Agreement. This Agreement (including the documents and
the instruments referred to in this Agreement), together with the
Confidentiality Agreement, constitutes the entire agreement and supersedes all
prior agreements and understandings, both written and oral, between the parties
with respect to the subject matter of this Agreement, other than the
Confidentiality Agreement.
9.7 Governing Law; Jurisdiction. This Agreement shall be governed
and construed in accordance with the internal laws of the State of Delaware
applicable to contracts made and wholly-performed within such state, without
regard to any applicable conflicts of law principles. The parties hereto agree
that any suit, action or proceeding brought by either party to enforce any
provision of, or based on any matter arising out of or in connection with, this
Agreement or the transactions contemplated hereby shall be brought in any
federal or state court located in the State of Delaware. Each of the parties
hereto submits to the jurisdiction of any such court in any suit, action or
proceeding seeking to enforce any provision of, or based on any matter arising
out of, or in connection with, this Agreement or the transactions contemplated
hereby and hereby irrevocably waives the benefit of jurisdiction derived from
present or future domicile or otherwise in such action or proceeding. Each party
hereto irrevocably waives, to the fullest extent permitted by law, any objection
that it may now or hereafter have to the laying of the venue of any such suit,
action or proceeding in any such court or that any such suit, action or
proceeding brought in any such court has been brought in an inconvenient forum.
9.8 Publicity. Neither Company nor Parent shall, and neither Company
nor Parent shall permit any of its Subsidiaries to, issue or cause the
publication of any press release or other public announcement with respect to,
or otherwise make any public statement concerning, the transactions contemplated
by this Agreement without the prior consent (which consent shall not be
unreasonably withheld) of Parent, in the case of a proposed announcement or
statement by Company, or Company, in the case of a proposed announcement or
statement by Parent; provided, however, that either party may, without the prior
consent of the other party (but after prior consultation with the other party to
the extent practicable under the circumstances) issue or cause the publication
of any press release or other public announcement to the extent required by law
or by the rules and regulations of the NYSE.
9.9 Assignment; Third Party Beneficiaries. Neither this Agreement
nor any of the rights, interests or obligations under this Agreement shall be
assigned by either of the parties (whether by operation of law or otherwise)
without the prior written consent of the other party.
39
Subject to the preceding sentence, this Agreement shall be binding upon, inure
to the benefit of and be enforceable by each of the parties and their respective
successors and assigns. Except as otherwise specifically provided in Section
6.6, this Agreement (including the documents and instruments referred to in this
Agreement) is not intended to and does not confer upon any person other than the
parties hereto any rights or remedies under this Agreement. In no event shall
any obligations of Parent hereunder or under any other agreement entered into in
connection herewith (including but not limited to the Guaranty) be deemed to
relieve any insurer or other third party from any obligation with respect to the
Company or its Subsidiaries, or any of their respective directors, officers or
employees.
9.10 Specific Performance. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms. It is accordingly agreed that
the parties shall be entitled to seek specific performance of the terms hereof,
this being in addition to any other remedies to which they are entitled at law
or equity.
Remainder of Page Intentionally Left Blank
40
IN WITNESS WHEREOF, Company and Parent have caused this Agreement to
be executed by their respective officers thereunto duly authorized as of the
date first above written.
THE BEAR ▇▇▇▇▇▇▇ COMPANIES INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Chief Executive Officer
JPMORGAN CHASE & CO.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: Chairman and Chief Executive
Officer
Signature Page to Agreement and Plan of Merger
