ASSET PURCHASE AGREEMENT
dated as of May 8, 2000
by and among
FIRST UNION SECURITIES, INC.,
FIRST ALBANY COMPANIES INC.
and
FIRST ALBANY CORPORATION
with respect to the business of
FIRST ALBANY CORPORATION'S RETAIL BRANCH NETWORK
AND CORRESPONDENT CLEARING BUSINESS
TABLE OF CONTENTS
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This Table of Contents is not part of the Agreement to which it is
attached but is inserted for convenience only.
Page
No.
ARTICLE I SALE OF ASSETS AND CLOSING 1
1.01 Assets 1
1.02 Liabilities 4
1.03 Purchase Price; Allocation 6
1.04 Initial Payment; Final Payment 6
1.05 Purchase Price Adjustment 8
1.06 Closing 8
1.07 Prorations 8
1.08 Further Assurances; Post-Closing Cooperation 8
1.09 Asset Transfers Requiring Consent 10
1.10 Conversion 10
1.11 Transfer Annex 11
ARTICLE II REPRESENTATIONS AND WARRANTIES OF SELLERS 11
2.01 Corporate Existence of Sellers 11
2.02 Authority 11
2.03 No Conflicts 11
2.04 Governmental Approvals and Filings 12
2.05 Financial Statements, Undisclosed Liabilities
and Absence of Certain Changes 12
2.06 Legal Proceedings 13
2.07 Compliance With Laws and Orders 13
2.08 Benefit Plans; ERISA 15
2.09 Real Property 15
2.10 Tangible Personal Property 15
2.11 Contracts 15
2.12 Brokers 17
2.13 Assets 17
2.14 Labor Matters 17
2.15 Taxes 17
2.16 Accounting Controls 18
2.17 No Knowledge 18
2.18 Customer-Related Assets 18
2.19 Trading Commissions 18
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PURCHASER 18
3.01 Corporate Existence 18
3.02 Authority 19
3.03 No Conflicts 19
3.04 Governmental Approvals and Filings 19
3.05 Legal Proceedings 19
3.06 Brokers 20
3.07 Financing 20
ARTICLE IV COVENANTS OF SELLERS 20
4.01 Regulatory and Other Approvals 20
4.02 HSR Filings 21
4.03 Access by Purchaser 21
4.04 No Solicitations 21
4.05 Conduct of Business 21
4.06 Delivery of Assets 23
4.07 Noncompetition 23
4.08 Fulfillment of Conditions 24
4.09 Current Information 24
4.10 Annual Bonuses 24
4.11 Telecommunications Equipment 25
ARTICLE V COVENANTS OF PURCHASER 25
5.01 Regulatory and Other Approvals 25
5.02 HSR Filings 26
5.03 Fulfillment of Conditions 26
5.04 Additional Commitment 26
ARTICLE VI CONDITIONS TO OBLIGATIONS OF PURCHASER 27
6.01 Representations and Warranties 27
6.02 Performance 27
6.03 Officers' Certificates 27
6.04 Orders and Laws 27
6.05 Regulatory Consents and Approvals 27
6.06 Third Party Consents 28
6.07 Deliveries 28
ARTICLE VII CONDITIONS TO OBLIGATIONS OF SELLERS 28
7.01 Representations and Warranties 28
7.02 Performance 28
7.03 Officers' Certificates 28
7.04 Orders and Laws 28
7.05 Regulatory Consents and Approvals 28
7.06 Deliveries 29
ARTICLE VIIIA EMPLOYEE BENEFITS MATTERS 29
8.01A Offer of Employment; Employment Agreements 29
8.02A Welfare Plans -- Claims Incurred;
Pre-Existing Conditions 29
8.03A Vacation 29
8.04A Service Credit 29
8.05A (a) Retention Pool 29
ARTICLE VIIIB REAL PROPERTY 29
8.01B Assignment of Transferred Branch Offices 29
8.02B Subleases 29
8.03B Reimbursement for Reimbursed Expenses 29
ARTICLE IX SURVIVAL; NO OTHER REPRESENTATIONS 29
9.01 Survival of Representations, Warranties,
Covenants and Agreements 29
9.02 No Other Representations 29
ARTICLE X INDEMNIFICATION 29
10.01 Indemnification 29
10.02 Method of Asserting Claims 29
10.03 Exclusivity 29
ARTICLE XX XXXXXXXXXXX 00
11.01 Termination 29
11.02 Effect of Termination 29
ARTICLE XII DEFINITIONS 29
12.01 Definitions 29
ARTICLE XIII MISCELLANEOUS 29
13.01 Notices. 29
13.02 Entire Agreement 29
13.03 Expenses 29
13.04 Sales and Transfer Taxes 29
13.05 Public Announcements 29
13.06 Confidentiality 29
13.07 Waiver; Amendment 29
13.08 No Third Party Beneficiary 29
13.09 No Assignment; Binding Effect 29
13.10 Headings 29
13.11 Invalid Provisions 29
13.12 Governing Law 29
13.13 Counterparts 29
EXHIBITS
Exhibit B Officer's Certificate of Sellers
Exhibit C Secretary's Certificate of Sellers
Exhibit D Officer's Certificate of Purchaser
Exhibit E Secretary's Certificate of Purchaser
Exhibit F Gross Production Schedule
This ASSET PURCHASE AGREEMENT dated as of May 8, 2000 is made and
entered into by and between First Union Securities, Inc., a Delaware
corporation ("Purchaser"), First Albany Companies Inc., a New York
corporation ("FACT"), and First Albany Corporation, a New York corporation
and a wholly-owned subsidiary of FACT ("First Albany" and, together with
FACT, "Sellers"). Capitalized terms not otherwise defined herein have the
meanings set forth in Section 12.01.
WHEREAS, through the Branch Network operating group of its Private
Client Group, First Albany is engaged in the retail brokerage business of
providing investment products to individuals and corporate customers through
a network of financial consultants compensated on a commission basis (the
"Branch Network"); and
WHEREAS, First Albany also is engaged in the fully-disclosed
correspondent clearing business of processing, for a fee, the transactions
of other brokerage firms (the "FDC Business" and, together with the Branch
Network, the "Business"); and
WHEREAS, Sellers desire to sell, transfer and assign to Purchaser,
and Purchaser desires to purchase and acquire from Sellers, certain of the
assets of Sellers relating to the operation of the Business, and in
connection therewith, Purchaser has agreed to assume certain of the
liabilities of Sellers relating to the Business, all on the terms set forth
herein;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:
ARTICLE I
SALE OF ASSETS AND CLOSING
1.01 Assets. (a) Assets Transferred. On the terms and subject to
the conditions set forth in this Agreement, Sellers will sell, transfer,
convey, assign and deliver to Purchaser, and Purchaser will purchase and pay
for, at the Closing, free and clear of all Liens other than Permitted Liens,
all of Sellers' right, title and interest in, to and under the following
Assets and Properties of Sellers used in connection with the Business, except as
otherwise provided in Section 1.01(b), as the same shall exist on the Closing
Date (collectively, the "Assets");
(i) Real Property Leases. The leases and subleases of real
property for each of the Transferred Branch Offices, together with any
leasehold improvements thereon, and all other rights, subleases,
licenses, permits, deposits and profits appurtenant to or related to
such leases and subleases (the "Real Property Leases");
(ii) intentionally omitted;
(iii) Tangible Personal Property. All furniture, fixtures,
equipment (including data processing equipment), machinery and other
tangible personal property (collectively, "Tangible Personal Property")
owned by Sellers and located at the Branch Offices;
(iv) Personal Property Leases. The leases or subleases of
Tangible Personal Property located at the Branch Offices as to which
either Seller is the lessee or sublessee (the "Personal Property Leases");
(v) Business Contracts. All Contracts (other than the Real
Property Leases, Subleases and the Personal Property Leases) to which
either Seller is a party and which are utilized primarily in the conduct
of the Business, including Contracts relating to customer accounts,
Transferred Employees, purchase orders, marketing arrangements and
including all Customer Contracts, all confidentiality agreements entered
into with other bidders in connection with the sale of the Business, and
all Contracts which are listed in Section 2.11(a) of the Disclosure
Schedule (the "Business Contracts");
(vi) Security Deposits. All security deposits deposited by or on
behalf of either Seller as lessee or sublessee under the Real Property
Leases (the "Tenant Security Deposits");
(vii) Books and Records. All of the Books and Records used in the
conduct of the Business relating to any Customer accounts which are
contained in the database of Beta Systems Inc., all statements of
Customers, all employee files for Transferred Employees, all other Books
and Records historically located at the Branch Offices and such other
Book and Records as shall be reasonably sufficient to permit the
administration of the Assets and Assumed Liabilities after the Closing
(the "Business Books and Records");
(viii) Promissory Notes. The promissory notes evidencing loans made
by either Seller to certain financial consultants of the Business,
descriptions of which are listed in Section 1.01(a)(viii) of the
Disclosure Schedule;
(ix) Customer-Related Assets. All Customer-Related Assets (the
transfer of the Customer-Related Assets shall be effectuated in accordance
with the Transfer Annex);
(x) Margin and Other Debit Balances. All margin and other
Customer debit balances of the Sellers related to the Business to the
extent reflected on the Final Balance Sheet;
(xi) Bank Account Assets. All cash of Customers held in Customer
segregated bank accounts (which are being transferred to Purchaser
pursuant to the Transfer Annex);
(xii) Rights. All rights, claims, credits, causes of action, rights
of recovery and rights of set-off of any kind relating to the Assets,
including any unliquidated rights under manufacturers' and vendors'
warranties;
(xiii) Deferred Plan Assets. Cash and/or assets held by Sellers with
the intention of satisfying liabilities under the Financial Consultants
Deferred Compensation Plan ("Plan Assets") that are equal in value to
vested account balances of all participants in such plan and the
unvested account balances of the Transferred Employees that are
participants ("Account Balances") in the Financial Consultant Deferred
Compensation Plan on the Closing Date; provided, that, if the Account
Balances reflected on the Closing Balance Sheet were incorrectly
calculated and the correct Account Balances are less than the Account
Balances reflected on the Closing Balance Sheet, Purchaser will return
the difference in cash and if the correct Account Balances are greater
than the Account Balances reflected on the Closing Balance Sheet, Seller
will to the extent the liabilities in connection therewith are not
retained liabilities return the difference in cash.
(xiv) Certain Telecommunications Equipment. All right, title and
interest of the Sellers in the following located (A) in the Transferred
Branch Offices: (i) telephone instruments, (ii) North American Numbering
Plan numbers, (iii) electronic ingress and egress to the phone system,
including to trunks supplied by local exchange and inter-exchange
providers and (iv) inside wiring, switches, channel services units,
relays, instruments and related common equipment and (B) in the
Subleased Branch Offices: telephone instruments ((A) and (B),
collectively the "Telecommunications Equipment"); and
(xv) Certain Software. The software listed on Section 1.01(a)
(xv) of the Disclosure Schedule (the "Software");
provided that the Assets will include the rights of Purchaser under the
sublease for each of the Subleased Branch Offices (collectively the
"Subleases") but will not include the Excluded Assets.
To the extent that any Business Contract or Personal Property
Lease is utilized by or are for the benefit of any of Sellers' businesses
other than the Business, Purchaser and the Sellers shall use commercially
reasonable efforts to allocate in writing the rights and obligations under
such Contract or Personal Property Lease in a fair and equitable manner that
is reasonably satisfactory to the parties prior to the Closing Date.
(b) Excluded Assets. The Assets shall not include any assets
other than assets specifically contemplated in Section 1.01(a), and without
limiting the foregoing, shall expressly exclude the following (collectively,
the "Excluded Assets"):
(i) Cash. Cash other than the cash of Customers described in
Section 1.01(a)(x);
(ii) Insurance. Except for any policies included in Section 1.01(a)
(xiii), life insurance policies of officers and other employees of Sellers
and all other insurance policies relating to the operation of the Business;
(iii) Employee Benefit Plans. All assets owned or held by the
Benefit Plans, other than the assets described in Section 1.01(a)(xiii);
(iv) Tax Refunds. All refunds or credits, if any, of any Taxes
that are not Assumed Liabilities, other than refunds or credits imposed on
or with respect to the Assets for any taxable year or other period
beginning and ending after the Closing Date;
(v) Phone System. The phone system, switches, relays, trunks and
related equipment used in the Branch Offices of the Business other than
the Telecommunications Equipment described in Section 1.01(a)(xiv);
(vi) Corporate and Other Records. The minute books, stock transfer
books, corporate seal, supplemental data files and optical images of
Sellers and all of the Books and Records of the Business other than the
Books and Records described in Sections 1.01(a)(i), (iv), (v), (vii),
(viii), (xii), and (xv);
(vii) Tradename and Logo. All of Sellers' right, title and interest
in, to and under the name "First Albany" and the First Albany logo or any
derivative thereof;
(viii) Retained Customer Accounts. All accounts (individual or
trustee) of non-Offered Employees and members of their immediate families
(including spouse, parents, brothers, sisters and children) and any
Customer whose financial consultant is a non-Offered Employee
(collectively, "Retained Customer Accounts"); and
(ix) Sellers' rights under this Agreement.
1.02 Liabilities. (a) Assumed Liabilities. In connection with
the sale, transfer, conveyance, assignment and delivery of the Assets pursuant
to this Agreement, on the terms and subject to the conditions set forth in this
Agreement, at the Closing, Purchaser will assume and agree to pay, perform
and discharge when due the following obligations (the "Assumed Liabilities"),
and no others:
(i) Free credit and other balances. All free credit and other
Customer balances of the Sellers related to the Business (other than with
respect to Retained Customers Accounts) to the extent such free credit
and other balances are reflected on the Final Balance Sheet;
(ii) Real Property Lease Obligations. All obligations of Sellers
under the Real Property Leases to the extent not related to any Pre-
Closing Matter;
(iii) Sublease Obligations. All obligations of Purchaser under the
Subleases;
(iv) Personal Property Lease Obligations. All obligations of
Sellers under the Personal Property Leases to the extent not related to any
Pre-Closing Matter;
(v) Obligations under Contracts. All obligations of Sellers under
the Business Contracts to the extent not related to any Pre Closing Matter;
(vi) Taxes. All liabilities for any Taxes imposed on or with
respect to the Assets, other than Taxes for any taxable year or other
taxable period ending prior to the Closing Date and other than any Taxes
for any Pre-Closing Matter;
(vii) Financial Consultants Deferred Compensation Plan. All
obligations and liabilities of Sellers under First Albany's Financial
Consultants Deferred Compensation Plan and any award agreements thereunder
(including any length of service awards), other than liabilities retained
pursuant to Section 1.02(b)(vi);
(viii) Employee Obligations. All obligations that Purchaser has
agreed to assume pursuant to any provision of Article VIIIA; and
(ix) Deferred Bonus. All obligations and liabilities under the
First Albany Deferred Bonus Program relating to Transferred Employees (the
"Deferred Bonus").
(b) Retained Liabilities. Notwithstanding anything to the
contrary contained herein, Purchaser shall not assume any of the following
Liabilities (collectively, the "Retained Liabilities"):
(i) Pre-Closing Matters. Except as otherwise contemplated under
the Transfer Annex and other than the Assumed Liabilities, any liability,
duty or obligation of the Sellers related to any PreClosing Matter,
including (A) any liability to customers or third parties with respect to
services performed, engagements completed, and trading activities conducted
by the Sellers prior to the Closing Date (or the failure to do any of the
foregoing) and (B) any liability related to any pending, threatened or
unasserted Action or Proceeding, as well as any claim or liability arising
from or attributable to the Business prior to the Closing Date;
(ii) Taxes. Any liability, obligation or duty for Taxes (A)imposed
on any Seller for any Tax period and (B) imposed on the Assets for any Tax
period (or portion thereof) ending prior to the Closing Date and any
income taxes imposed on Seller as a result of the transactions contemplated
by this Agreement;
(iii) Employees. Other than the Assumed Liabilities, any liability,
obligation or duty arising out of the employment relationship between the
Sellers and any of their respective Employees or former Employees existing
at any time, whether before or after the Closing, including all
liabilities relating to any pension, retirement, stock option, stock
purchase, savings, profit sharing, deferred compensation, consulting,
bonus, group insurance or other employee benefit, incentive or welfare
contract, plan or arrangement, or any trust agreement (or similar
arrangement) related thereto, sponsored or maintained by the Sellers or to
which the Sellers have made contributions (to the extent not included in
Section 1.02(a)(v) or (viii));
(iv) Excluded Assets. Any liability, obligation or duty related
to any Excluded Asset, including any of the Sellers' obligations under
this Agreement or incurred in connection with the negotiation or
performance of it;
(v) Defective Account Condition. Any "out of balance", "out of
proof" or similar condition (in each case as adjusted for reconciliation)
with respect to any account maintained by the Sellers on behalf of any
Customer; and
(vi) Certain Deferred Plan Liabilities. Any liabilities under the
Financial Consultants Deferred Compensation Plan in excess of the value of
the Account Balances which liabilities result from the Sellers' failure to
operate such plan in substantial compliance with its terms and all
applicable laws prior to the Closing Date; provided, however, that any
liabilities resulting from the amendments described in Section 8.06A shall
not be retained hereunder; and
(vii) Non-Assumed Liabilities. Any liability, obligation or duty
that is not an Assumed Liability.
(It is understood that each of Section 1.02(b)(i)-(vii) are cumulative and do
not limit each other.)
The Sellers shall remain solely and exclusively liable for the
Retained Liabilities.
1.03 Purchase Price; Allocation. (a) Purchase Price. The
aggregate purchase price for the Assets and for the covenant of Sellers
contained in Section 4.07 is an amount equal to the Net Assets plus
$100,000,000, subject to adjustment, if any, under Section 1.05 (the "Purchase
Price").
(b) Allocation of Purchase Price. The parties to this Agreement
agree to allocate prior to the Closing Date, the Purchase Price paid in
respect of the Assets in accordance with the rules under Section 1060 of the
Code (as hereinafter defined), and the regulations promulgated thereunder.
The parties recognize that the Purchase Price does not include Purchaser's
acquisition expenses and that Purchaser shall allocate such expenses
appropriately. The allocation of the Purchase Price shall be first to
tangible assets at their fair market value (which shall be their book value)
and the balance of the Purchase Price shall be allocated to goodwill and any
other categories agreed to by the parties. The parties agree to file their
federal income tax returns and their other tax returns (including any forms
or reports required to be filed pursuant to Section 1060 of the Code, the
regulations promulgated thereunder or any provisions of state and local law
("1060 Forms")), reflecting such allocation and take no position contrary
thereto unless required to do so pursuant to a determination (as defined in
Section 1313(a) of the Code). The parties further agree to cooperate in the
preparation of any 1060 Forms and to file such 1060 Forms in the manner
required by applicable law.
1.04 Initial Payment; Final Payment. (a) Three days before the
Closing Date, the Sellers will deliver to Purchaser a statement (the "Initial
Balance Sheet") setting forth their good faith estimate of the Closing
Assets, the Closing Liabilities and the Net Assets (as reflected in the
accounting books and records of the Sellers and in accordance with Sellers'
customary accounting practices, but including all Plan Assets, Account
Balances and the Deferred Bonus in accordance with the Financial Consultants
Deferred Compensation Plan and the Deferred Bonus, respectively) (such
estimate of the Net Assets, the "Estimated Net Assets"). At the Closing,
Purchaser will pay to Seller an amount equal to the Estimated Net Assets plus
$100,000,000 (subject to adjustment, if any, under Section 1.05), in the
manner provided in Section 1.06.
(b) Within 30 days after the Closing Date, Sellers will deliver to
Purchaser a statement (the "Final Balance Sheet") setting forth the Closing
Assets, the Closing Liabilities and the Net Assets. The Final Balance Sheet
shall set forth the Closing Assets and Closing Liabilities as reflected in
the accounting books and records of Sellers and in accordance with Sellers'
customary accounting practices, but including all Plan Assets, Account
Balances and the Deferred Bonus in accordance with the Financial Consultants
Deferred Compensation Plan and the Deferred Bonus, respectively. Within 15
days after delivery of the Final Balance Sheet, Purchaser will either notify
Sellers in writing that the Final Balance Sheet is acceptable or will object
to the Final Balance Sheet in a writing setting forth a specific description
of Purchaser's objections and specifying Purchaser's calculation of the Net
Assets (it being agreed that the failure of Purchaser to deliver a written
notice to the Sellers within the 15 days will be acceptance by Purchaser of
the Final Balance Sheet). If Purchaser does not object in accordance with
this Section 1.04(b) or if any objections are resolved on a mutually
agreeable basis, the Final Balance Sheet (as it may be revised to reflect
such resolution) will be the "Final Net Assets". If Purchaser objects in
accordance with this Section 1.04(b) and the objections are not resolved on a
mutually agreeable basis within 30 days after delivery of the notice of
objection, the unresolved objections shall be promptly submitted to an
Unaffiliated Firm. The Unaffiliated Firm will resolve the objections within
30 days by determining which of Sellers' and the Purchaser's calculation is
closer to the Closing Assets and Closing Liabilities (as reflected in the
accounting books and records of the Sellers and in accordance with Sellers'
customary accounting practices, but including all Plan Assets, Account
Balances and the Deferred Bonus in accordance with the Financial Consultants
Deferred Compensation Plan and the Deferred Bonus, respectively) determined
by the Unaffiliated Firm and providing a written report setting out that
determination to the parties. In this case, the calculation of Sellers' or
Purchaser selected by the Unaffiliated Firm will be the Final Net Assets.
The decision of the Unaffiliated Firm will be final and binding upon the
parties, and no party will bring any action or proceeding in any forum
seeking to invalidate, challenge, modify or prevent the enforcement of the
decision. The fees, costs and expenses of the Unaffiliated Firm will be (1)
borne by Purchaser, if the Unaffiliated Firm selects Sellers' calculation and
(2) borne by Sellers, if the Unaffiliated Firm selects the Purchaser's
calculation.
(c) Within two Business Days following the determination of the
Final Net Assets pursuant to Section 1.04(b), (i) to the extent, if any, the
Final Net Assets exceeds the Estimated Net Assets, Purchaser shall remit to
Sellers such excess in immediately available United States funds to an account
designated by Sellers and (ii) to the extent, if any, the Estimated Net
Assets exceeds the Final Net Assets, Sellers shall remit to Purchaser such
excess in immediately available United States funds to an account designated
by Purchaser. Any cash payment made pursuant to this Section 1.04(c)
shall include an adjustment for, or be accompanied by the payment of,
interest at a rate per annum equal to the prime lending rate of First Union
National Bank from the Closing Date to and including the date such adjustment
or payment is made.
1.05 Purchase Price Adjustment. If as of the Closing, Financial
Consultants that were employed by the Business on March 31, 2000 responsible
(based on the schedule of gross production by Financial Consultants attached
as Exhibit F) for less than 90% of the gross production of the Business for
the twelve months ended March 31, 2000 (the "Trading Commissions") shall be
Transferred Employees (for purposes of this Section 1.05, Transferred
Employee shall include any Financial Consultant (a) that shall have
terminated his or her employment because of death or disability, or (b) shall
have accepted an offer of employment, but is not a Transferred Employee
because of a delay in any Regulatory Approval), the $100,000,000 portion of
the Purchase Price shall be multiplied by a fraction the numerator of which
shall be the Trading Commissions of the Financial Consultants that are
Transferred Employees and the denominator of which shall be the total Trading
Commissions, provided that (i) such adjustment shall not reduce the
$100,000,000 portion of the Purchase Price to less than $65,000,000 and (ii)
no such adjustment shall be made if the parties shall not be able to effect
the Conversion on or before August 15 (other than as a result of Sellers not
using commercially reasonable efforts to cooperate with Purchaser in
effecting the Conversion).
1.06 Closing. The Closing will take place at the offices of
Milbank, Tweed, Xxxxxx & XxXxxx LLP, 0 Xxxxx Xxxxxxxxx Xxxxx, Xxx Xxxx, Xxx
Xxxx 00000 or at such other place as Purchaser and Sellers mutually agree, at
10:00 A.M. local time, on (a) the second Business Day after the later of (i) the
day on which the last of the consents, approvals, actions, filings, notices or
waiting periods described in or related to the filings described in Sections
6.04, 6.05, 7.04 and 7.05 have been obtained, made or given or have expired, as
applicable, and (ii) the day on which the Conversion described in Section
1.08 becomes possible or (b) such other date as Purchaser and Sellers
mutually agree upon in writing. At the Closing, Purchaser will pay the
Purchase Price by wire transfer of immediately available funds to such
account as Sellers may reasonably direct by written notice delivered to
Purchaser by Sellers at least two (2) Business Days before the Closing Date.
Simultaneously, (a) Sellers will assign and transfer to Purchaser good and
valid title in and to the Assets (free and clear of all Liens, other than
Permitted Liens) by delivery of good and sufficient instruments of
conveyance, assignment and transfer, in form and substance reasonably
acceptable to Purchaser's counsel, as shall be effective to vest in Purchaser
good and valid title to the Assets (the "Assignment Instruments"), and (b)
Purchaser will assume from Sellers the due payment, performance and discharge
of the Assumed Liabilities by delivery of good and sufficient instruments of
assumption, in form and substance reasonably acceptable to Sellers' counsel,
as shall be effective to cause Purchaser to assume the Assumed Liabilities as
and to the extent provided in Section 1.02(a) (the "Assumption Instruments").
At the Closing, there shall also be delivered to Sellers and Purchaser the
certificates and other contracts, documents and instruments required to be
delivered under Articles VI and VII.
1.07 Prorations. To the extent the division of the Assets and the
Retained Assets or the Assumed Liabilities and the Retained Liabilities
require the proration of certain amounts previously paid or to be paid by
either the Sellers or Purchaser, except as otherwise agreed by the parties,
the net amount of all such prorations will be settled and paid on the Closing
Date.
1.08 Further Assurances; Post-Closing Cooperation. (a) At
Purchaser's sole discretion and request from time to time, First Albany Asset
Management Corp. ("FAAM") will
continue to act as an outsider manager for customers of the financial
consultants engaged in the Business and in any other business owned by
Purchaser. Purchaser agrees that it will use its commercially reasonable
efforts to have FAAM included on its "approved list" of prospective asset
managers for registered representatives and financial consultants.
(b) Subject to the terms and conditions of this Agreement, at any
time or from time to time after the Closing, at Purchaser's request and
without further consideration, Sellers shall execute and deliver to Purchaser
such other instruments of sale, transfer, conveyance, assignment and
confirmation, provide such materials and information and take such other
actions as Purchaser may reasonably deem necessary or desirable in order more
effectively to transfer, convey and assign to Purchaser, and to confirm
Purchaser's title to, all of the Assets, and, to the full extent permitted by
Law, to put Purchaser in actual possession and operating control of the
Business and the Assets and to assist Purchaser in exercising all rights with
respect thereto, and otherwise to cause Sellers to fulfill their obligations
under this Agreement.
(c) Following the Closing, each party will afford the other party,
its counsel and its accountants, during normal business hours, reasonable
access to the books, records and other data relating to the Business in its
possession with respect to periods prior to the Closing and the right to make
copies and extracts therefrom, to the extent that such access may be
reasonably required by the requesting party in connection with (i) the
preparation of Tax Returns, (ii) the determination or enforcement of rights
and obligations under this Agreement, (iii) compliance with the requirements
of any Governmental or Regulatory Authority, (iv) the determination or
enforcement of the rights and obligations of any Indemnified Party or (v) in
connection with any actual or threatened Action or Proceeding. Further each
party agrees for a period extending six (6) years after the Closing Date not
to destroy or otherwise dispose of any such books, records and other data
unless such party shall first offer in writing to surrender such books,
records and other data to the other party and such other party shall not
agree in writing to take possession thereof during the ten (10) day period
after such offer is made.
(d) If, in order properly to prepare its Tax Returns, other
documents or reports required to be filed with Governmental or Regulatory
Authorities or its financial statements or to fulfill its obligations hereunder,
it is necessary that a party be furnished with additional information,
documents or records relating to the Business not referred to in paragraph (c)
above, and such information, documents or records are in the possession or
control of the other party, such other party shall use its commercially
reasonable efforts to furnish or make available such information, documents or
records (or copies thereof) at the recipient's request, cost and expense. Any
information obtained by such party in accordance with this paragraph shall be
held confidential by such party in accordance with Section 13.06.
(e) Unless otherwise agreed by Purchaser and Sellers in writing,
(i) Sellers will report to the applicable Tax authorities, Customers and
applicable vendors all reportable payments made or received in connection
with the Business (including without limitation amounts reportable on
Internal Revenue Service Form 1099) from January 1 of the year of the Closing
Date through and including the day before the Closing Date and, in connection
with any such payments, shall withhold and pay over to the applicable Tax
authorities any amounts required to be so withheld and paid over and (ii)
Purchaser will report to the applicable Tax authorities and Customers all
reportable payments made or received in connection with the Business
(including without limitation amounts reportable on Internal Revenue Service
Form 1099) from and including the Closing Date through and including December
31 of the year of the Closing Date and, in connection with any such payments,
shall withhold and pay over to the applicable Tax authorities any amounts
required to be so withheld and paid over.
(f) Notwithstanding anything to the contrary contained in this
Section, if the parties are in an adversarial relationship in litigation or
arbitration, the furnishing of information, documents or records in
accordance with paragraph (c) and (d) of this Section shall be subject to
applicable rules relating to discovery.
1.09 Asset Transfers Requiring Consent. (a) The parties recognize
that the transfer of certain Assets to the Purchaser as contemplated hereby
cannot be effected without obtaining certain consents (each such consent, a
"Required Consent"). Sellers and Purchaser shall use commercially reasonable
efforts to obtain the Required Consents without any changes to the terms of
the Asset and/or Assumed Liability related thereto (other than, with respect
to the Real Property Leases, changes that will be included in the calculation
of Reimbursed Expenses). To the extent that any Required Consent with
respect to any Asset (other than Required Consents relating to the Real
Property Leases and Subleases) has not been obtained on or prior to the
Closing Date, such Asset (a "Delayed Asset") shall not be transferred as an
Asset hereunder, and any related liability that would, but for the absence of
such Required Consent, constitute an Assumed Liability (a "Delayed
Liability") shall not be assumed by the Purchaser as an Assumed Liability
hereunder, unless and until such Required Consent has been obtained.
Notwithstanding the foregoing, if any Required Consent is not obtained, the
Sellers shall, at the request of the Purchaser and at the expense of the
Sellers, implement any lawful arrangement designed to provide to the
Purchaser the benefits under or of the applicable Asset; provided, however,
that the Purchaser assumes and agrees to pay and perform all liabilities
relating to such Asset that would otherwise constitute Assumed Liabilities.
(b) At such time and on each occasion after the Closing Date that
a Required Consent shall be obtained with respect to any Delayed Asset, such
Delayed Asset shall forthwith be transferred and assigned to the Purchaser
hereunder, and all related Deferred Liabilities shall be simultaneously
assumed by the Purchaser hereunder, whereupon (i) such Delayed Asset shall
constitute an Asset for all purposes hereunder and (ii) such Deferred
Liabilities shall constitute Assumed Liabilities for all purposes hereunder.
(c) Purchaser agrees that the Sellers will not have any liability
to the Purchaser for failing to deliver any Real Property Lease, Personal
property Lease or Business Contract as a result of the failure to receive any
Required Consent; provided that this sentence will not relieve the Sellers
for liability for any breach of the remainder of this Section 1.09 and this
sentence will not limit Section 6.06 or Article VIIIB.
1.10 Conversion. From the date of this Agreement until the
Closing, the Sellers and the Purchaser will take all commercially reasonable
steps necessary or desirable, and proceed diligently and in good faith and use
all commercially reasonable efforts, as promptly as
practicable to enable the conversion of all customer accounts of the Business
(that are Assets) to the systems of First Clearing Corporation effective as
of the Closing (the "Conversion").
1.11 Transfer Annex. Before the Closing Date, the parties agree to
negotiate (in good faith) the terms and conditions of the transfer of the
Customer Related Assets and cash of Customers pursuant to Section 1.01(a),
which will be in accordance with customary industry terms and conditions but
subject to the terms and conditions contained in this Agreement regarding the
assumption of the Assumed Liabilities and the retention of the Retained
Liabilities. Such terms will be set forth in an annex, which will form a
part of this Agreement (the "Transfer Annex").
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers hereby represent and warrant to Purchaser jointly and
severally as follows:
2.01 Corporate Existence of Sellers. Each Seller is a corporation
duly incorporated, validly existing and in good standing under the Laws of
the State of New York, and has full corporate power and authority to conduct
the Business as and to the extent now conducted and to own, use and lease its
Assets and is duly qualified to do business and is in good standing in the
jurisdictions where its ownership or leasing of property or the conduct of
its business requires it to be so qualified, except where the failure to be
so qualified or to be in good standing would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on the
Condition of the Business.
2.02 Authority. Each Seller has full corporate power and authority
to execute and deliver this Agreement, to perform its obligations hereunder and
to consummate the transactions contemplated hereby, including without
limitation to sell and transfer (pursuant to this Agreement) its Assets. The
execution and delivery by each Seller of this Agreement, and the performance
by each Seller of its obligations hereunder, have been duly and validly
authorized by the Board of Directors of such Seller, no other corporate
action on the part of such Seller or its shareholders being necessary. This
Agreement has been duly and validly executed and delivered by each Seller and
constitutes the legal, valid and binding obligation of such Seller
enforceable against such Seller in accordance with its terms.
2.03 No Conflicts. The execution and delivery by each Seller of
this Agreement do not, and the performance by each Seller of its obligations
under this Agreement and the consummation of the transactions contemplated
hereby will not (with or without notice or lapse of time or both):
(a) conflict with or result in a violation or breach of any of the
terms, conditions or provisions of the articles of incorporation or bylaws
(or other comparable corporate charter documents) of such Seller;
(b) subject to obtaining the consents, approvals and actions,
making the filings and giving the notices disclosed in Section 2.04 of the
Disclosure Schedule, conflict with or result in a violation or breach of any
term or provision of any Law or Order applicable to or License of such Seller
or any of its Assets and Properties (other than such conflicts, violations or
breaches (i) which could not individually or in the aggregate reasonably be
expected to have a Material Adverse Effect on the Condition of the Business
or (ii) as would occur solely as a result of the legal or regulatory status
of Purchaser or any of its Affiliates); or
(c) except as disclosed in Section 2.03 of the Disclosure Schedule
or as could not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect on the Condition of the Business, (i) conflict
with or result in a violation or breach of, (ii) constitute a default under
or permit the acceleration of the performance required by, (iii) require such
Seller to obtain any consent, approval or action of, make any filing with or
give any notice to any Person as a result or under the terms of, or (iv)
result in the creation or imposition of any Lien upon such Seller or any of
its Assets or Properties under, any Contract or License to which such Seller
is a party or by which any of its Assets and Properties is bound.
2.04 Governmental Approvals and Filings. Except as disclosed in
Section 2.04 of the Disclosure Schedule, no consent, approval or action of,
filing with or notice to any Governmental or Regulatory Authority or
Securities Regulatory Body on the part of either Seller is required in
connection with the execution, delivery and performance of this Agreement or
the consummation of the transactions contemplated hereby, except (i) where
the failure to obtain any such consent, approval or action, to make any such
filing or to give any such notice could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on the
Condition of the Business, and (ii) those as would be required solely as a
result of the identity or the legal or regulatory status of Purchaser or any
of its Affiliates.
2.05 Financial Statements, Undisclosed Liabilities and Absence of
Certain Changes. (a) Prior to the execution of this Agreement, Sellers have
delivered to Purchaser a true and complete copy of the unaudited pro forma
profit and loss reports for the Branch Network and the FDC Business for the
fiscal year ended December 31, 1999 (the "Financial Statements"), a copy of
such report for the Branch Network is contained in that certain Confidential
Memorandum dated February 2000, prepared by Berkshire Capital Corporation
with respect to the Branch Network (the "Confidential Memorandum"). Except
as disclosed in Section 2.05(a) of the Disclosure Schedule, the Financial
Statements were prepared on a pro forma basis from the Books and Records of
Sellers and the Financial Statements fairly present in all material respects
the results of operations of the Branch Network and the FDC Business for the
periods covered thereby in accordance with GAAP (but without footnotes and
financial schedules), consistently applied.
(b) Except as disclosed in Section 2.05(b) of the Disclosure
Schedule, since December 31, 1999 there has not been any event, circumstance
or condition that, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect on the Condition of the Business.
(c) Since December 31, 1999, except as disclosed in Section 2.05
(c) of the Disclosure Schedule or any other Section of the Disclosure Schedule,
Sellers have not incurred any Liabilities which in the aggregate are material
to the Condition of the Business, other than Liabilities incurred in the
ordinary course of business.
(d) Since December 31, 1999, Sellers have conducted the Business
in the ordinary course, consistent with past practice, and there has not been
any event, circumstance or condition that could, individually or in the
aggregate, reasonably be expected to result in a violation of the covenants
set forth in Article IV of this Agreement had such events, circumstances or
conditions occurred after the date of this Agreement.
2.06 Legal Proceedings. Except as disclosed in Section 2.06 of the
Disclosure Schedule:
(a) there are no Actions or Proceedings pending or, to the
Knowledge of Sellers, threatened against, relating to or affecting either
Seller with respect to the Business or any of its Assets and Properties which
could reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect on the Condition of the Business;
(b) there are no Orders outstanding against either Seller which,
individually or in the aggregate, have had or could reasonably be expected to
have a Material Adverse Effect on the Condition of the Business; and
(c) None of Sellers, any Offered Employee or any of the Sellers'
Assets or Properties is a party to, or subject to, any Order of any
Securities Regulatory Body and relating to the Business (other than exemptive
Orders) and, to the Knowledge of Sellers as of the date hereof, no Securities
Regulatory Body has advised Sellers or any Offered Employee that it is
contemplating issuing or requesting (or considering the appropriateness of
issuing or requesting) any such Order.
2.07 Compliance With Laws and Orders. Except as disclosed in .
Section 2.07 of the Disclosure Schedule or as would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on the
Condition of the Business neither Seller nor, to the Knowledge of Sellers,
any Offered Employee:
(a) is in violation of or in default under any Law or Order;
(b) fails to have any License required to permit the conduct of
the Business or the ownership of the Assets in the ordinary course consistent
with past practice as presently conducted or owned; all such Licenses are in
full force and effect and current and, to Sellers' Knowledge, no suspension
or cancellation of any of them is threatened or reasonably likely;
(c) has received any notification or communication from any
Securities Regulatory Body (A) asserting that any of them is not in
compliance with any of the Laws which such Securities Regulatory Body
enforces, or has otherwise engaged in any unlawful business practice, (B)
threatening to revoke any License or (C) restricting or disqualifying the
activities of
the Sellers with respect to the Business (except for restrictions generally
imposed by rule, regulation or administrative policy on broker-dealers
generally);
(d) is not, nor to the Sellers' Knowledge, is any "affiliated
person" (as defined in the Investment Company Act of 1940) with it, ineligible
pursuant to Section 9(a) or 9(b) of the Investment Company Act of 1940 to
serve as an investment advisor (or in any other capacity contemplated by the
Investment Company Act of 1940) to an Investment Company. Neither the
Seller, nor any "associated person" (as defined in the Investment Advisers
Act of 1940) thereof, is ineligible pursuant to Section 203 of the Investment
Advisers Act of 1940 to serve as an investment advisor or as an associated
person to a registered investment advisor;
(e) is not required to be registered as a commodity trading
advisor, commodity pool operator, futures commission merchant, introducing
broker, insurance agent, or transfer agent under any Law or Order;
(f) is not subject to regulation under the Investment Advisers Act
of 1940 or the Investment Company Act of 1940 and does not provide investment
management, investment advisory, sub-advisory, administration, distribution
or certain other services to persons registered or, to the Sellers'
Knowledge, required to be registered under the Investment Company Act of
1940; each of the Employees which are or who are required to be registered,
licensed or qualified as a broker-dealer, an investment advisor, a
registered representative, an insurance agent or a sales person (or in
similar capacity) with the SEC, the securities commission of any st ate or
foreign jurisdiction or any Securities Regulatory Body are duly registered,
licensed or qualified as such and such registrations are in full force and
effect; all federal, state, local and foreign registration requirements have
been complied with in all material respects and such registrations as
currently filed, and all periodic reports required to be filed with respect
thereto, are accurate and complete in all material respects;
(g) is subject to a "statutory disqualification" as defined in
Section 3(a)(9) of the Securities Exchange Act of 1934 (as amended, the
"Exchange Act") or is subject to a disqualification that would be a basis for
censure, limitations on the activities, functions or operations of, or
suspension or revocation of the registration of any broker-dealer as broker-
dealer under Section 15, or municipal securities dealer, government
securities broker or government securities dealer under Section 15, Section
15B or Section 15C of the Exchange Act and, to the Sellers' Knowledge, there
is no current investigation, whether formal or informal, or whether
preliminary or otherwise, that could reasonably be expected to result in,
any such censure, limitations, suspension or revocation; and
(h) has for the five-year period to the date hereof, been
convicted of any crime or is or has been subject to disqualification that
would be a basis for denial, suspension or revocation of registration of an
investment adviser under Section 203(e) of the Investment Advisers Act or Rule
206(4) -4(b) thereunder or for disqualification as an investment adviser for
any Investment Company pursuant to Section 9(a) of the Investment Company Act
of 1940, and there is no reasonable basis for, or (to the Sellers' Knowledge)
proceeding or investigation, whether formal or informal, or whether
preliminary or otherwise, that could reasonably be expected to result in, any
such disqualification, denial, suspension or revocation.
2.08 Benefit Plans; ERISA. (a) Section 2.08(a) of the Disclosure
Schedule contains a true and complete list of each material Benefit Plan.
True and complete copies of each material Benefit Plan, including, but not
limited to, any trust instruments and/or insurance contracts, if any, forming
a part thereof, and all amendments thereto have been supplied or made
available to Purchaser
(b) No Liens have arisen on any of the Assets pursuant to Section
302 of ERISA, Section 412 of the Code, or Title IV of ERISA.
(c) Neither any Pension Plan nor any single-employer plan of an
ERISA Affiliate has an "accumulated funding deficiency" (whether or not waived)
within the meaning of Section 412 of the Code or Section 302 of ERISA.
Neither of the Sellers has provided, or is required to provide, security to
any Pension Plan or to any single-employer plan of an ERISA Affiliate
pursuant to Section 401(a)(29) of the Code.
(d) All of the participants in the Financial Consultants Deferred
Compensation Plan are, or would be if employed on the Closing Date, Offered
Employees (as defined in Section 8.01A).
2.09 Real Property. Section 2.09(a) of the Disclosure Schedule
contains a true and correct list of each Real Property Lease and each lease
to underlie a Sublease, true and complete copies of which have been provided
to the Purchaser prior to the date of this Agreement. Sellers have a valid
and subsisting leasehold estate in and the right to quiet enjoyment of the
real properties subject to such leases for the full term thereof. Each such
lease is a legal, valid and binding agreement, enforceable in accordance with
its terms, of Sellers and of each other Person that is a party thereto other
than where the failure to be so enforceable would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on the
Condition of the Business, and except as set forth in Section 2.09(b) of the
Disclosure Schedule, to the Knowledge of Sellers there is no material default
(or any condition or event which, after notice or lapse of time or both, would
constitute a default) thereunder.
2.10 Tangible Personal Property. First Albany or FACT, as
applicable, is in possession of and has good title to, or has valid leasehold
interests in or valid rights under Contracts to use, all the Tangible
Personal Property used in and individually or in the aggregate with other
such property material to the Condition of the Business. All the Tangible
Personal Property is free and clear of all Liens, other than Permitted Liens
and Liens disclosed in Section 2.10 of the Disclosure Schedule, and is in
all material respects in good working order and condition, ordinary wear and
tear excepted.
2.11 Contracts. (a) Section 2.11(a) of the Disclosure Schedule
(with paragraph references corresponding to those set forth below) contains a
true and complete list of each of the following Contracts to which either
Seller is a party or by which any of the Assets is bound:
(i) all Contracts (excluding Benefit Plans) providing for a
commitment of employment or consultation services for a specified or
unspecified term to, or otherwise relating to employment or the
termination of employment of, any Employee;
(ii) any Business Contract (excluding Real Property Leases and
Personal Property Leases) for the purchase of materials, supplies, services,
equipment or other assets, in each case relating primarily to the Business,
providing for annual or aggregate remaining payments by the Sellers under any
such Business Contract of $100,000 or more;
(iii) other than Customer Contracts entered into in the ordinary
course and other than the Contracts described in Section 2.11(a)(vi), any
Business Contract for the sale by Sellers of services, in each case
relating primarily to the Business, providing for annual or aggregate
payments to Sellers of $100,000 or more;
(iv) any Business Contract of any Seller as borrower relating to
indebtedness for borrowed money or the deferred purchase price of property
(in either case, whether incurred, assumed, guaranteed or secured by any
asset), in either case relating primarily to the Business, except any such
agreement with an aggregate outstanding principal amount not exceeding
$100,000 which may be prepaid on not more than ten days' notice without
the payment of any penalty;
(v) any Business Contract entered into primarily in connection
with the Business that limits the freedom of any Seller to compete in any
line of business or with any Person or in any area or to own, operate,
sell, transfer, pledge or otherwise dispose of or encumber any Asset and
which would so limit the freedom of Purchaser after the Closing Date; and
(vi) any Contract between Sellers and the fully disclosed clearing
brokers relating to the FDC Business.
(b) Each Contract required to be disclosed in Section 2.11(a) of
the Disclosure Schedule is in full force and effect and constitutes a legal,
valid and binding agreement, enforceable in accordance with its terms, of
the Seller and of each other party thereto; and except as disclosed in
Section 2.11(b) of the Disclosure Schedule neither Seller nor, to the
Knowledge of Sellers, any other party to such Contract is in violation or
breach of or default under any such Contract (or with notice or lapse of
time or both, would be in violation or breach of or default under any such
Contract) the effect of which, individually or in the aggregate, could
reasonably be expected to have a Materially Adverse Effect on the Condition
of the Business.
(c) Attached to Section 2.11(c) of the Disclosure Schedule is a
current form of customer agreement used in connection with the Business.
Except for instances of noncompliance which would not be reasonably expected,
individually or in the aggregate, to have a Material Adverse Effect on the
Condition of the Business:
(i) Each of the Sellers is in compliance with the terms of each
Customer Contract, and each such Customer Contract is in full force and
effect with respect to the applicable Customer;
(ii) Each extension of credit by Sellers to any Customer (i) is in
full compliance with Regulation T of the Federal Reserve Board or any
substantially similar
regulation of any Regulatory Authority and (ii) Sellers have first
priority perfected security interests in the collateral securing such
extension; and
(iii) As of the Closing, the Sellers will have supplied or made
available all identification and basic background information in their
possession with respect to Customers, including any information describing
the person's source of wealth and line of business or regarding
references, referrals or potential "red-flags" or suspicious transactions.
2.12 Brokers. Except for Berkshire Capital Corporation, whose fees,
commissions and expenses are the sole responsibility of Sellers, all
negotiations relative to this Agreement and the transactions contemplated
hereby have been carried out by Sellers directly with Purchaser without the
intervention of any Person on behalf of Sellers in such manner as to give
rise to any valid claim by any Person against Purchaser for a finder's fee,
brokerage commission or similar payment.
2.13 Assets. Except for instances which would not be reasonably
likely, individually or in the aggregate, to have a Material Adverse Effect on
the Condition of the Business, the Sellers have good and marketable title to the
Assets, free and clear of all Liens other than Permitted Liens, and following
the Closing, Purchaser shall have good title to the Assets, free and clear of
all Liens other than Permitted Liens.
2.14 Labor Matters. With respect to the Offered Employees, the
Sellers are not parties to or bound by any collective bargaining agreement,
contract or other Contract or understanding with a labor union or labor
organization, nor are they the subject of a proceeding asserting that it has
committed an unfair labor practice (within the meaning of the National Labor
Relations Act) or seeking to compel either of them to bargain with any labor
organization as to wages and conditions of employment, nor is there any
strike or other labor dispute involving the Offered Employees pending or, to
the Sellers' Knowledge, threatened, nor are either of them aware of any
activity involving the Offered Employees seeking to certify a collective
bargaining unit or engaging in any other organizational activity.
2.15 Taxes. (a) Tax Returns and Payments. Except as set forth in
Section 2.15 of the Disclosure Schedule or that could not be reasonably
expected, individually or in the aggregate, to have a Material Adverse Effect
on the Condition of the Business, (1) all reports and returns with respect to
Taxes and Tax related information reporting requirements that are required to be
filed by the Sellers with respect to the Business (collectively, the
"Sellers Tax Returns"), have been duly filed (or requests for extensions
have been timely filed and have not expired and, if such Sellers Tax Returns
have not been filed on or prior to the Closing Date, will be duly filed
after the Closing Date), (2) such Sellers Tax Returns were (or will be when
filed) true, complete and accurate in all material respects, (3) all Taxes
shown to be due on Sellers Tax Returns have been paid in full or payment is
not yet due, (4) no issues have been raised by the relevant taxing authority
in connection with the examination of any of the Sellers Tax Returns, and
(5) the Business in not a party to any tax sharing, allocation or similar
agreement or understanding with respect to Taxes, and is not liable for any
Taxes under any such agreements or understandings.
(b) Customer and Other Tax Information. Except for instances
which would not be reasonably likely, individually or in the aggregate, to have
a Material Adverse Effect on the Condition of the Business, each Seller has
complied with all applicable requirements regarding the collection of
taxpayer identification and other information from its Customers, creditors,
Employees and the like (including, without limitation, requirements with
respect to the collection of Internal Revenue Service Forms W-8 and W-9) in
relation to the Business.
2.16 Accounting Controls. The Sellers have devised and maintained
systems of internal accounting controls with respect to the Business
sufficient to provide reasonable assurances that (1) all transactions are
executed in accordance with management's general or specific authorization;
(2) all transactions are recorded as necessary to permit the preparation of
financial statements in conformity with the Code, and to maintain proper
accountability for items; (3) access to their property and assets is
permitted only in accordance with management's general or specific
authorization; and (4) the recorded accountability for items is compared with
the actual levels at reasonable intervals and appropriate action is taken
with respect to any differences, except, in the case of each of clauses (1)
through (4), where the failure to be so sufficient would not reasonably be
likely to have a Material Adverse Effect on the Condition of the Business.
2.17 No Knowledge. To the Knowledge of the Sellers, there are no
reasons why the regulatory approvals referred to in Section 2.04 should not
be obtained without the imposition of any Onerous Condition.
2.18 Customer-Related Assets. The Customer-Related Assets assigned
at the Closing shall include all assets or rights owed by the Sellers to
Customers, other than those owed to Customers pursuant to Customer Contracts
that are Delayed Assets.
2.19 Trading Commissions. Exhibit F sets forth the Trading
Commissions by Financial Consultant and is true and complete in all material
respects.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Sellers as follows:
3.01 Corporate Existence. Purchaser is a corporation duly
incorporated, validly existing and in good standing under the Laws of the
State of Delaware. Purchaser has full corporate power and authority to enter
into this Agreement, to perform its obligations hereunder and to consummate
the transactions contemplated hereby and is duly qualified to do business and
is in good standing in the jurisdictions where its ownership or leasing of
property or the conduct of its business requires it to be so qualified,
except where the failure to be so qualified or to be in good standing would
not have a material adverse effect upon the validity or enforceability of
this Agreement.
3.02 Authority. The execution and delivery by Purchaser of this
Agreement and the performance by Purchaser of its obligations hereunder have
been duly and validly authorized by the Board of Directors of Purchaser, no
other corporate action on the part of Purchaser or its stockholders being
necessary. This Agreement has been duly and validly executed and delivered
by Purchaser and constitutes a legal, valid and binding obligation of
Purchaser enforceable against Purchaser in accordance with its terms.
3.03 No Conflicts. The execution and delivery by Purchaser of this
Agreement do not, and the performance by Purchaser of its obligations under
this Agreement and the consummation of the transactions contemplated hereby
will not (with or without notice or lapse of time or both):
(a) conflict with or result in a violation or breach of any of the
terms, conditions or provisions of the certificate of incorporation or by-
laws (or other comparable corporate charter document) of Purchaser;
(b) subject to obtaining the consents, approvals and actions,
making the filings and giving the notices disclosed in Schedule 3.04 hereto,
conflict with or result in a violation or breach of any term or provision of
any Law or Order applicable to or License of Purchaser or any of its Assets
and Properties (other than such conflicts, violations or breaches which
could not individually or in the aggregate reasonably be expected to have a
material adverse effect upon the validity or enforceability of this
Agreement); or
(c) except as disclosed in Schedule 3.03 hereto, or as could not,
individually or in the aggregate, reasonably be expected to materially
adversely affect the ability of Purchaser to consummate the transactions
contemplated hereby or to perform its obligations hereunder (i) conflict
with or result in a violation or breach of, (ii) constitute a default under
or permit the acceleration of the performance required by, (iii) require
Purchaser to obtain any consent, approval or action of, make any filing with
or give any notice to any Person as a result or under the terms of, or (iv)
result in the creation or imposition of any Lien upon Purchaser or any of
its Assets or Properties under, any Contract or License to which Purchaser
is a party or by which any of its Assets and Properties is bound.
3.04 Governmental Approvals and Filings. Except as disclosed in
Schedule 3.04 hereto, no consent, approval or action of, filing with or
notice to any Governmental or Regulatory Authority on the part of Purchaser
is required in connection with the execution, delivery and performance of
this Agreement or the consummation of the transactions contemplated hereby,
except where the failure to obtain any such consent, approval or action, to
make any such filing or to give any such notice could not reasonably be
expected to adversely affect the ability of Purchaser to consummate the
transactions contemplated by this Agreement or to perform its obligations
hereunder.
3.05 Legal Proceedings. There are no Actions or Proceedings
pending or, to the knowledge of Purchaser, threatened against, relating to or
affecting Purchaser or any of its Assets and Properties which could
reasonably be expected to result in the issuance of an Order
restraining, enjoining or otherwise prohibiting or making illegal the
consummation of any of the transactions contemplated by this Agreement.
3.06 Brokers. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried out by Purchaser directly
with Sellers without the intervention of any Person on behalf of Purchaser in
such manner as to give rise to any valid claim by any Person against Sellers
for a finder's fee, brokerage commission or similar payment.
3.07 Financing. Purchaser has sufficient cash to pay the Purchase
Price and to make all other necessary payments of fees and expenses in
connection with the transactions contemplated by this Agreement.
ARTICLE IV
COVENANTS OF SELLERS
Each Seller jointly and severally covenants and agrees with Purchaser
that, at all times from and after the date hereof until the Closing and in
the case of Sections 4.07 and 4.11 for the period specified therein, such
Seller will comply with all covenants and provisions of this Article IV
applicable to it, except to the extent Purchaser may otherwise consent in
writing.
4.01 Regulatory and Other Approvals. Sellers will (a) take all
commercially reasonable steps necessary or desirable, and proceed diligently
and in good faith and use all commercially reasonable efforts, as promptly as
practicable to obtain all consents, approvals or actions of, to make all
filings with and to give all notices to Governmental or Regulatory
Authorities, Securities Regulatory Bodies or any other Person required of
Sellers to consummate the transactions contemplated hereby, including without
limitation those described in Sections 2.03 and 2.04 of the Disclosure
Schedule and the Real Estate Leases and Personal Property Leases, (b) provide
such other information and communications to such Governmental or Regulatory
Authorities, Securities Regulatory Bodies or other Persons as such
Governmental or Regulatory Authorities, Securities Regulatory Bodies or
other Persons may reasonably request in connection therewith and (c) provide
reasonable cooperation to Purchaser in obtaining all consents, approvals or
actions of, making all filings with and giving all notices to Governmental or
Regulatory Authorities, Securities Regulatory Bodies or other Persons
required of Purchaser to consummate the transactions contemplated hereby.
Sellers shall afford Purchaser the right to review in advance, subject to any
applicable laws relating to the exchange of information, all written
information submitted to any Governmental or Regulatory Authorities,
Securities Regulatory Bodies or other Persons in connection with the
transactions contemplated by this Agreement. Sellers will provide prompt
notification to Purchaser when any consent, approval, action, filing or
notice referred to in clause (a) above is obtained, taken, made or given, as
applicable, and will advise Purchaser of any communications (and, unless
precluded by Law, provide copies of any such communications that are in
writing) with any Governmental or Regulatory Authority, Securities Regulatory
Bodies or other Person regarding any of the transactions contemplated by this
Agreement.
4.02 HSR Filings. In addition to and not in limitation of Sellers'
covenants contained in Section 4.01, Sellers will (a) take promptly all
actions necessary to make the filings required of Sellers or their Affiliates
under the HSR Act, (b) comply at the earliest practicable date with any
request for additional information received by Sellers or their Affiliates
from the Federal Trade Commission or the Antitrust Division of the Department
of Justice pursuant to the HSR Act and (c) reasonably cooperate with
Purchaser in connection with Purchaser's filing under the HSR Act and in
connection with resolving any investigation or other inquiry concerning the
transactions contemplated by this Agreement commenced by either the Federal
Trade Commission or the Antitrust Division of the Department of Justice or
state attorneys general.
4.03 Access by Purchaser. Each Seller will (a) provide Purchaser
and its officers, employees, counsel, accountants, financial advisors,
consultants and other representatives (collectively, "Representatives") with
full access, upon reasonable prior notice and during normal business hours,
(i) to the Employees and such other officers, employees and agents of First
Albany who have any responsibility for the conduct of the Business, to First
Albany's accountants and to the Assets and Assumed Liabilities and (ii) in
order to install Purchaser's computer network and the InfoMax System and to
provide training to Offered Employees, but only to the extent that such
access does not unreasonably interfere with the Business and (b) furnish
Purchaser and such other Persons with all such information and data
(including without limitation copies of Business Contracts, Benefit Plans and
other Business Books and Records) concerning the Business, the Assets and the
Assumed Liabilities as Purchaser or any of such other Persons reasonably may
request in connection with such investigation, except to the extent that
furnishing any such information or data would violate any Law, Order,
Contract or License applicable to First Albany or by which any of its Assets
and Properties is bound.
4.04 No Solicitations. Subject to the duties imposed by applicable
Law, Sellers will not take, nor will they permit any Affiliate of such Seller
(or authorize or permit any investment banker, financial advisor, attorney,
accountant or other Person retained by or acting for or on behalf of Sellers
or any such Affiliate) to take, directly or indirectly, any action to solicit,
encourage, receive, negotiate, assist or otherwise facilitate any offer or
inquiry from any Person concerning the acquisition of the Business other
than (i) Purchaser or its Affiliates or (ii) any other Person who has
proposed any merger or other business combination or purchase of equity
interests or assets to which either Seller or any Affiliate of such Seller
is a party and which indirectly involves the Business, provided that the
Person making the proposal expressly recognizes and acknowledges the rights
of Purchaser hereunder in a written instrument reasonably satisfactory to
Purchaser.
4.05 Conduct of Business. (a) Except as disclosed in Section 4.05
of the Disclosure Schedule, First Albany will operate the Business only in the
ordinary course consistent with past practice. Without limiting the
generality of the foregoing, First Albany will use commercially reasonable
efforts to (i) preserve intact the present business organization and
reputation of the Business in all material respects, (ii) keep available
(subject to dismissals and retirements in the ordinary course of business)
the services of key Employees, (iii) maintain the Assets in good working
order and condition, ordinary wear and tear excepted and (iv) maintain
the good will of Customers and other Persons with whom First Albany otherwise
has business relationships in connection with the Business.
(b) Without limiting Section 4.05(a), the Sellers will not:
(1) in a single transaction or a series of related transactions,
sell (including any sale-leaseback), lease, pledge, transfer or otherwise
dispose of (including through a dividend or distribution to any Person
other than the other Seller) any Assets that are material to the Business,
other than Customer-Related Assets in the ordinary course of Business;
(2) terminate, amend, modify or waive any material right under any
Real Property Lease or material Business Contract or Personal Property
Lease or enter into any Real Property Lease or material Business Contract
or Personal Property Lease (other than renewals of existing Real Property
Leases or material Business Contracts or Personal Property Leases on
commercially reasonable terms) other than in the ordinary course of
business consistent with past practice;
(3) grant any increase in the compensation or benefits of any
Offered Employee (excluding any increase specifically provided for in the
terms of, or legally required by, any bonus, pension, profit sharing or
other plan or commitment) or any increase in the compensation or benefits
payable, or to become payable, to any Offered Employee, except for (A)
increases in the usual and ordinary course of business to Offered Employees
consistent with past practice in terms of proportion and timing, (B) other
changes that are required by applicable Law, (C) grants of awards to newly
hired officers and employees consistent with past practice and (D) the
payment of onetime special bonuses to Offered Employees in connection with
the transactions contemplated hereby with such terms and conditions as
Sellers deem appropriate (Sellers will inform Purchaser of any such
special bonuses);
(4) adopt, enter into or amend (except in accordance with Section
8.06A), or become obligated under, any employment, severance, bonus,
profit sharing, compensation, equity interest, option, pension,
retirement, deferred compensation, health care, employment or other
employee benefit plan, agreement, trust, fund or arrangement for the
benefit or welfare of any Offered Employee (including any new employee of
the Business) or retiree which was formerly an Offered Employee, except as
required to comply with changes in applicable Law or in the ordinary
course of business consistent with past practice;
(5) knowingly take any action that (or knowingly omit to take any
action not otherwise prohibited by the terms of this Agreement the
omission of which) would, or is or reasonably likely to, (A) result in any
of a Seller's representations and warranties set forth in this Agreement
or any certificate delivered in connection with the Closing being or
becoming untrue in any material respect at any time at or prior to the
Closing Date, (B) result in any of the conditions to the consummation of
the transactions contemplated
hereby set forth in Article VI or VII hereof not being satisfied on or
prior to August 1, 2000 or (C) breach any provision of this Agreement; and
(6) authorize, commit or enter into any Contract to take any of the
actions referred to in this Section 4.05(b).
(c) Notwithstanding the foregoing, Sellers may hire new employees
who will be Offered Employees on the Closing Date, and enter into employment
arrangements with such new employees, including extending loans evidenced by
Promissory Notes to be transferred in accordance with Section 1.01(a)(viii);
provided that all such hiring, entering and/or extending will be in the
ordinary course of business consistent with past practice and subject to the
prior approval of Purchaser (not to be unreasonably withheld or delayed).
4.06 Delivery of Assets. On the Closing Date, each Seller will
take all commercially reasonable steps to deliver or make available to
Purchaser at the locations at which the Business is conducted any Assets as
are in such Seller's possession at other locations, and if at any time after
the Closing such Seller discovers in its possession or under its control any
other Assets, it will forthwith deliver such other Assets to Purchaser.
4.07 Noncompetition. (a) Sellers and their subsidiaries will,
for a period of two (2) years from the Closing Date, refrain from and cause
each Affiliate of either Seller (that is not a subsidiary) currently engaged in
financial services to refrain from:
(i) employing, engaging or seeking to employ or engage any
Person who on the Closing Date is, or within the prior six months from
the Closing Date had been, an Offered Employee (other than with Purchaser's
written consent);
(ii) disclosing (unless compelled by judicial or administrative
process) or using any confidential or secret information relating to
the Business or any client, customer or supplier of the Business;
(iii) participating or engaging in (other than through the
ownership of 5% or less of any class of securities registered under the
Securities Exchange Act of 1934, as amended), the Branch Network and
the FDC Business (the "Restricted Business"); or
(iv) without limiting the generality of Section 4.07(a)(iii),
soliciting or accepting as a customer with respect to the Restricted
Business any Person that is on the Closing Date, or within the prior
six months from the Closing Date had been, a Customer.
(b) The parties hereto recognize that the Laws and public
policies of the various states of the United States may differ as to the
validity and enforceability of covenants similar to those set forth in this
Section. It is the intention of the parties that the provisions of this
Section be enforced to the fullest extent permissible under the Laws and
policies of each jurisdiction in which enforcement may be sought, and that
the unenforceability (or the modification to conform to such Laws or
policies) of any provisions of this Section shall not render unenforceable,
or impair, the remainder of the provisions of this Section. Accordingly, if
any provision of this Section shall be determined to be invalid or
unenforceable, such invalidity
or unenforceability shall be deemed to apply only with respect to the
operation of such provision in the particular jurisdiction in which such
determination is made and not with respect to any other provision or
jurisdiction.
(c) Notwithstanding the foregoing, nothing in Section 4.07(a)(iii)
shall be deemed to prohibit Sellers from (i) leasing, renting,
selling or otherwise disposing of any Excluded Assets; (ii) engaging in the
business conducted by Sellers' Corporate Services Group substantially
consistent with such conduct as of the date of this Agreement, including the
provision of retail brokerage services (including on-line trading) that are
incidental to its institutional brokerage business; (iii) engaging in the
business conducted by FAAM substantially consistent with such conduct as of
the date of this Agreement, including the provision of investment advisory
and asset management services; (iv) engaging in the investment banking
business; (v) engaging in the institutional trading business; or (vi)
acquiring an interest in, or entering into a merger or other business
combination with any Person, provided that not more than 25% of the
consolidated revenues of such Person (for the immediately preceding fiscal
year) shall be derived from the Restricted Business; provided further that
(x) in the case of the business to be conducted pursuant to Section
4.07(c)(ii) or (iii), such business is not being conducted by Sellers'
Corporate Service Group or FAAM for the purpose of avoiding the provisions
of Section 4.07(a)(iii), and (y) in the case of any acquisition, merger or
combination pursuant to Section 4.07(c)(vi), such acquisition, merger or
combination is bona fide. In addition, upon (A) any acquisition (for cash)
of either Seller by any other Person (that is not Affiliated with either
Seller), or (B) a merger or acquisition for stock involving either Seller
and any other Person (that is not Affiliated with either Seller) under which
the shareholders of the Sellers shall not own a majority of the equity
interests of the surviving corporation, the provisions of Section
4.07(a)(iii) shall terminate with respect to the Seller acquired or merged.
4.08 Fulfillment of Conditions. Sellers will take all commercially
reasonable steps necessary or desirable and proceed diligently and in good
faith to satisfy each other condition to the obligations of Purchaser
contained in this Agreement and will not take or fail to take any action that
could reasonably be expected to result in the nonfulfillment of any such
condition.
4.09 Current Information. The Sellers shall promptly notify the
Purchaser, of:
(1) any notice or other communication from any Person alleging
that the consent of such Person (other than any such consent which, if
not obtained, would not be materially adverse to Purchaser, and other
than any Person whose consent is required as set forth in a Disclosure
Schedule) is or may be required as a condition to the consummation of
the transactions contemplated by the Agreement; or
(2) any written notice or other material communication from any
Governmental or Regulatory Authorities or Securities Regulatory Body
in connection with the transactions contemplated by this Agreement.
4.10 Annual Bonuses. On the next regular payroll payment date of
First Albany after the Closing Date, Sellers shall pay each Transferred
Employee who is eligible for a
discretionary bonus a pro rata portion of the bonus as of the Closing Date
(as determined by Sellers) that such employee would have received if such
employee remained an employee of Sellers throughout the 2000 calendar year.
4.11 Telecommunications Equipment. (a) Sellers shall provide
Purchaser's personnel reasonable access to the Transferred Branch Offices'
telecommunications equipment for the purpose of making such changes as may be
necessary to transfer such equipment from Sellers to Purchaser, provided that
such access will be granted only upon reasonable notice by Purchaser to
Sellers and that Purchaser's personnel shall be accompanied by an employee of
either Seller during the period such access is granted.
(b) First Albany agrees that it will negotiate in good faith to
provide access to the telecommunications equipment in the Subleased Branch
Offices.
(c) First Albany agrees that during the period commencing on the
Closing Date and ending on the first anniversary thereof, it will not reuse
the numbers in its North American Number Plan and will (as requested by
Purchaser) either directly forward or answer and forward all calls to prior
numbers of financial consultants.
ARTICLE V
COVENANTS OF PURCHASER
Purchaser covenants and agrees with Sellers that, at all times
from and after the date hereof until the Closing, Purchaser will comply with
all covenants and provisions of this Article V, except to the extent Sellers
may otherwise consent in writing.
5.01 Regulatory and Other Approvals. Purchaser will (a) take all
commercially reasonable steps necessary or desirable, and proceed diligently
and in good faith and use all commercially reasonable efforts, as promptly as
practicable to obtain all consents, approvals or actions of, to make all
filings with and to give all notices to Governmental or Regulatory
Authorities, Securities Regulatory Bodies or any other Person required of
Purchaser to consummate the transactions contemplated hereby, including
without limitation those described in Schedules 3.03 and 3.04 hereto, (b)
provide such other information and communications to such Governmental or
Regulatory Authorities or other Persons as such Governmental or Regulatory
Authorities, Securities Regulatory Bodies or other Persons may reasonably
request in connection therewith and (c) provide reasonable cooperation to
Sellers in obtaining all consents, approvals or actions of, making all
filings with and giving all notices to Governmental or Regulatory
Authorities, Securities Regulatory Bodies or other Persons required of
Sellers to consummate the transactions contemplated hereby. Purchaser shall
afford Sellers the right to review in advance, subject to any applicable laws
relating to the exchange of information, all written information submitted to
any Governmental or Regulatory Authorities, Securities Regulatory Bodies or
other Persons in connection with the transactions contemplated by this
Agreement. Purchaser will provide prompt notification to Sellers when any
consent, approval, action, filing or notice referred to in clause (a) above
is obtained, taken, made or given, as
applicable, and will advise Sellers of any communications (and, unless
precluded by Law, provide copies of any such communications that are in
writing) with any Governmental or Regulatory Authority, Securities Regulatory
Bodies or other Person regarding any of the transactions contemplated by this
Agreement.
5.02 HSR Filings. In addition to and without limiting
Purchaser's covenants contained in Section 5.01, Purchaser will (i) take
promptly all actions necessary to make the filings required of Purchaser or
its Affiliates under the HSR Act, (ii) comply at the earliest practicable
date with any request for additional information received by Purchaser or its
Affiliates from the Federal Trade Commission or the Antitrust Division of the
Department of Justice pursuant to the HSR Act and (iii) reasonably cooperate
with Sellers in connection with Sellers' filing under the HSR Act and in
connection with resolving any investigation or other inquiry concerning the
transactions contemplated by this Agreement commenced by either the Federal
Trade Commission or the Antitrust Division of the Department of Justice or
state attorneys general.
5.03 Fulfillment of Conditions. Purchaser will take all
commercially reasonable steps necessary or desirable and proceed diligently
and in good faith to satisfy each other condition to the obligations of
Sellers contained in this Agreement and will not take or fail to take any
action that could reasonably be expected to result in the nonfulfillment of
any such condition.
5.04 Additional Commitment. (a) Purchaser agrees to undertake,
on behalf and for the account of the Sellers the defense of customer
arbitrations arising in connection with the operation of the Business that
are Retained Liabilities of the Sellers, subject to the following limitations
(the "Defended Arbitrations"): no more than 12 such arbitrations for each
calendar year 2001, calendar year 2002 and calendar year 2003.
(b) Sellers shall provide Purchaser with prompt notice of any
customer complaint or other suit that Sellers elect to be defended by the
Purchaser as a Defended Arbitration. The Purchaser undertakes to vigorously
and diligently prosecute the Defended Arbitrations to a final conclusion or
a settlement that will be at the discretion of Sellers. Sellers will be
obliged, and hereby agree, to reimburse the Purchaser for its reasonable out-
of-pocket expenses incurred in relation to the Defended Arbitration (but
specifically excluding such fees and expenses payable to any outside
counsel). Sellers will remain liable for any judgment, damages, award,
settlement or any other monetary or non-monetary obligation arising out of a
Defended Arbitration.
(c) In no event shall the Purchaser be obliged to defend any
customer arbitration under this Section 5.04 where the amount claimed is in
excess of $200,000.
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF PURCHASER
The obligations of Purchaser hereunder to purchase the Assets and
to assume and pay, perform and discharge the Assumed Liabilities are subject
to the fulfillment, at or before the Closing, of each of the following
conditions (all or any of which may be waived in whole or in part by
Purchaser in its sole discretion):
6.01 Representations and Warranties. The representations and
warranties made by Sellers in this Agreement shall be true and correct, in
all material respects as of the date of this Agreement and on and as of the
Closing Date as though made on and as of the Closing Date or, in the case of
representations and warranties expressly made as of a specified date earlier
than the Closing Date, on and as of such earlier date.
6.02 Performance. Each Seller shall have performed and complied
with, in all material respects, the agreements, covenants and obligations
(including those contained in Article VIIIB) required by this Agreement to be
so performed or complied with by Sellers at or before the Closing, it being
agreed that, with respect to Article VIIIB, Sellers shall be deemed to have
satisfied the condition set forth in this Section 6.02 if Sellers shall have
assigned to Purchaser (either directly or by sublease) leasehold interests
in Transferred Branch Offices (or Substantially Equivalent Spaces) and
entered into Subleases with Purchaser for Subleased Branch Offices (or
Substantially Equivalent Spaces), which in the aggregate provided 90% or
more of the Trading Commissions.
6.03 Officers' Certificates. Each Seller shall have delivered to
Purchaser a certificate, dated the Closing Date and executed by the Chairman
of the Board, the President or any Vice President of such Seller,
substantially in the form and to the effect of Exhibit B hereto, and a
certificate, dated the Closing Date and executed by the Secretary or any
Assistant Secretary of such Seller, substantially in the form and to the
effect of Exhibit C hereto.
6.04 Orders and Laws. There shall not be in effect on the
Closing Date any Order or Law restraining, enjoining or otherwise prohibiting
or making illegal the consummation of any of the transactions contemplated by
this Agreement.
6.05 Regulatory Consents and Approvals. All consents, approvals
and actions of, filings with and notices to any Governmental or Regulatory
Authority, or Securities Regulatory Body necessary to permit Purchaser and
Sellers to perform their respective obligations under this Agreement and to
consummate the transactions contemplated hereby shall have been duly
obtained, made or given and shall be in full force and effect, and all
terminations or expirations of waiting periods imposed by any Governmental or
Regulatory Authority, or Securities Regulatory Body necessary for the
consummation of the transactions contemplated by this Agreement, including
under the HSR Act, shall have occurred; provided, that no such consents,
approvals and actions shall be deemed received or obtained hereunder if they
shall be subject to an Onerous Condition.
6.06 Third Party Consents. All consents or approvals of all
Persons (other than consents or approvals (I) of Governmental or Regulatory
Authorities and Securities Regulatory Bodies or (ii) related to the clearing
Contracts, Personal Property Leases, Real Property Leases or any investment
advisory Contracts) required for or in connection with the execution,
delivery and performance of this Agreement (including the consummation of the
purchase and sale of the Assets) shall have been obtained and shall be in
full force and effect, unless the failure to obtain any such consent or
approval could not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Condition of the Business.
6.07 Deliveries. Sellers shall have delivered to Purchaser the
Assignment Instruments in a form reasonably acceptable to Purchaser.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF SELLERS
The obligations of Sellers hereunder to sell and transfer the
Assets are subject to the fulfillment, at or before the Closing, of each of
the following conditions (all or any of which may be waived in whole or in
part by Sellers in their sole discretion):
7.01 Representations and Warranties. The representations and
warranties made by Purchaser in this Agreement shall be true and correct in
all material respects as of the date of this Agreement and on and as of the
Closing Date as though made on and as of the Closing Date.
7.02 Performance. Purchaser shall have performed and complied
with, in all material respects, the agreements, covenants and obligations
required by this Agreement to be so performed or complied with by Purchaser
at or before the Closing.
7.03 Officers' Certificates. Purchaser shall have delivered to
Sellers a certificate, dated the Closing Date and executed by the Chairman of
the Board, the President or any Vice President of Purchaser, substantially in
the form and to the effect of Exhibit D hereto, and a certificate, dated the
Closing Date and executed by the Secretary or any Assistant Secretary of
Purchaser, substantially in the form and to the effect of Exhibit E hereto.
7.04 Orders and Laws. There shall not be in effect on the
Closing Date any Order or Law restraining, enjoining or otherwise prohibiting
or making illegal the consummation of any of the transactions contemplated by
this Agreement.
7.05 Regulatory Consents and Approvals. All consents, approvals
and actions of, filings with and notices to any Governmental or Regulatory
Authority, or Securities Regulatory Body necessary to permit Sellers and
Purchaser to perform their respective obligations under this Agreement and to
consummate the transactions contemplated hereby shall have been duly
obtained, made or given and shall be in full force and effect, and all
terminations or expirations of waiting periods imposed by any Governmental or
Regulatory Authority, or Securities Regulatory Body necessary for the
consummation of the transactions contemplated by this Agreement and the
Transition Services Agreement, including under the HSR Act, shall have
occurred; provided, that no such consents, approvals and actions shall be
deemed received or obtained hereunder if they shall be subject to an Onerous
Condition.
7.06 Deliveries. Purchaser shall have delivered to Sellers the
Assumption Instruments in a form reasonably acceptable to Seller.
ARTICLE VIIIA
EMPLOYEE BENEFITS MATTERS
8.01A Offer of Employment; Employment Agreements. The parties
hereto intend that there shall be continuity of employment with respect to
all of the Employees who are financial consultants (the "Financial
Consultants") and all other Employees who are employed at the Branch Offices
(the "Branch Employees", together with the Financial Consultants, being
hereinafter referred to as the "Offered Employees"); Section 8.01 of the
Disclosure Schedule lists the Offered Employees as of May 5, 2000 (the "List
Date"). Purchaser shall offer employment, commencing on the Closing Date, to
all Offered Employees, including those Offered Employees hired on or after
the List Date and those on vacation, leave of absence or disability, on
substantially equivalent terms (including the same salary, job responsibility
and location) as those provided to such employees by Sellers immediately
prior to the Closing. Those Offered Employees who accept Purchaser's offer
of employment and commence working with Purchaser on the Closing Date shall
hereinafter be referred to as "Transferred Employees."
8.02A Welfare Plans -- Claims Incurred; Pre-Existing Conditions.
(a) Sellers shall retain responsibility for and continue to pay all medical,
life insurance, disability and other welfare plan expenses and benefits for
each Transferred Employee with respect to claims incurred by such Transferred
Employees or their covered dependents prior to the Closing, subject to the
terms of Sellers' plans. Expenses and benefits with respect to such claims
incurred by Transferred Employees or their covered dependents on or after the
Closing shall be the responsibility of Purchaser, subject to the terms of
Purchaser's plans. For purposes of this paragraph, a claim is deemed
incurred when the services that are the subject of the claim are performed;
in the case of life insurance, when the death occurs, and, in the case of
long-term disability benefits, when the disability occurs. Notwithstanding
any provision herein, Transferred Employees coverage under Sellers' plans
shall terminate at the time of the Closing.
(b) With respect to any welfare benefit plans (as defined in
Section 3(1) of the Employee Retirement Income Security Act of 1974, as
amended) maintained by Purchaser for the benefit of Transferred Employees or
their covered dependents in the year in which the Closing Date occurs,
Purchaser shall give effect, in determining any deductible and maximum outof-
pocket limitations, to claims incurred and amounts paid by, and amounts
reimbursed to, such employees with respect to similar plans maintained by
Sellers for their benefit immediately prior to the Closing Date. In
addition, no Transferred Employee who elects coverage under a medical
insurance plan maintained by the Purchaser shall be excluded from coverage
under such plan (for such Transferred Employee or their covered dependents)
on the basis of a pre-existing condition that was not also excluded under
the Seller's medical insurance plans.
