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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________________
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
_______________________
Date of report (Date of earliest event
reported):
January 2, 2003
FAHNESTOCK VINER HOLDINGS INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Ontario, Canada (STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION) |
1-12043 (COMMISSION FILE NO.) |
98-0080034 (I.R.S. EMPLOYER IDENTIFICATION NUMBER) |
P.O. Box 2015, Suite 1110
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE) |
M4R 1K8 (ZIP CODE) |
(416) 322-1515
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
NONE
(FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR, IF APPLICABLE)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On January 3, 2003, Fahnestock Viner Holdings Inc., ("FVH") an Ontario corporation and its indirect subsidiary, Fahnestock & Co. Inc., ("Fahnestock"), completed the acquisition from Canadian Imperial Bank of Commerce ("CIBC"), a bank chartered under the laws of Canada, and its wholly-owned subsidiary, CIBC World Markets Corp. ("World Markets"), of certain assets of CIBC's U.S. Private Client Division (the "Private Client Division") pursuant to an Asset Purchase Agreement, dated as of December 9, 2002, as amended by Amendment No. 1 to the Asset Purchase Agreement, dated as of January 2, 2003 (the "Asset Purchase Agreement"), by and among FVH, Viner Finance Inc. ("Viner"), a Delaware corporation and an indirect wholly-owned subsidiary of FVH, CIBC, and World Markets. The closing of the acquisition of the U.S. Asset Management Division of CIBC (the "Asset Management Division" and, together with the Private Client Division, the "Purchased Divisions") will occur at a later date in accordance with the terms and conditions of the Asset Management Acquisition Agreement dated January 2, 2003 (the "Asset Management Agreement"), by and among FVH, Fahnestock, CIBC and World Markets. A copy of the Asset Purchase Agreement is attached hereto as Exhibit 2.1 and a copy of the Asset Management Agreement is attached hereto as Exhibit 2.2, each of which is incorporated herein by reference.
The Private Client Division operates a high net worth retail brokerage business, which consists of approximately 620 financial consultants in 18 branches in major financial centers across the United States, with client assets of approximately U.S. $35 billion, client debit balances of approximately U.S. $672 million and money fund balances of approximately U.S. $3.2 billion. Additionally, the Asset Management Division operates an asset management business with approximately U.S. $8.7 billion currently under management in a variety of products, including growth funds, value funds, sector funds and specialty funds.
Effective as of the close of business on January 3, 2003 the Private Client Division was transferred to Fahnestock, a wholly-owned subsidiary of Viner, with the transfer of profits and losses with respect to the Private Client Division being effective as of 12:01 AM on January 2, 2003. The Private Client Division will conduct business as the Oppenheimer Division of Fahnestock. The Asset Management Division will be combined with the Fahnestock organization in accordance with applicable regulatory requirements. It is currently anticipated that all segments of the Asset Management Division will be operating as part of the Oppenheimer Division of Fahnestock by April 30, 2003. The client accounts of the Purchased Divisions will continue to be cleared through World Markets until the spring of 2003.
The aggregate purchase price for the Purchased Divisions is approximately U.S. $241 million, of which (i) approximately U.S. $13 million was paid in cash at closing from cash on hand; (ii) approximately U.S. $2 million will be paid in cash upon the completion of the acquisition of the Asset Management Division; (iii) approximately U.S. $65 million was paid with the proceeds of the issuance by Viner to World Markets of a promissory note (the "Note"); and (iv) approximately U.S. $161 million was paid with the proceeds of the issuance of debentures by E.A. Viner International Co. ("Viner International"), a Delaware corporation and a wholly owned subsidiary of FVH, CIBC of the Exchangeable Debenture (as defined below) and the Interim Debenture (as defined below).The purchase price for the Purchased Divisions was determined by arms-length negotiations between FVH, CIBC and World Markets.
The first exchangeable debenture (the "Exchangeable Debenture"), in the principal amount of approximately U.S. $70 million, is exchangeable for approximately 3.1 million Class A shares of FVH at the rate of U.S. $23.20 per share, the closing price on the NYSE on Friday, December 6, 2002. The Exchangeable Debenture will mature in ten years, and will bear an annual rate of interest of 3% in the first year, 4% in years two through four, and 5% in year five to maturity. A copy of the Exchangeable Debenture is attached hereto as Exhibit 4.3 and is incorporated herein by reference.
The convertible debenture (the "Interim Debenture") in the principal amount of approximately U.S. $91 million is convertible into a second exchangeable debenture (the "Second Exchangeable Debenture"), which will be exchangeable for approximately 3.8 million Class A shares of FVH at the rate of U.S. $23.20 per share. The Second Exchangeable Debenture will mature in ten years and will bear an annual rate of interest of 3% in the first year, 4% in years two through four, and 5% in years five to maturity. The conversion of the Interim Debenture into the Second Exchangeable Debenture is subject to the approval of FVH's Class A and Class B shareholders. Such vote is expected to be held in May 2003 at FVH's annual meeting of shareholders. Holders representing approximately 20.5% of the combined Class A and Class B shares have agreed to vote in favor of the issuance of the Second Exchangeable Debenture. If shareholder approval is not obtained, the Interim Debenture would mature three years from closing and would bear interest at 9.75% per annum from the date of the shareholder meeting. A copy of the Interim Debenture is attached hereto as Exhibit 4.4 and is incorporated herein by reference.
The Note issued to World Markets by Viner relates to the approximately U.S. $65 million of employees loans that were assigned from World Markets to Viner. In accordance with the terms of the Note, Viner will repay an amount equal to the amount of employee loans assigned to Viner by World Markets at the rate that such employees' loans become due, such payments to be made notwithstanding whether any of the employees loans default. The Note was amended and restated on January 15, 2003 to, among other things, adjust the principal amount of the Note in accordance with the Asset Purchase Agreement. A copy of the promissory note, as amended and restated, is attached hereto as Exhibit 10.2 and is incorporated herein by reference.
FVH, CIBC, and shareholders representing approximately 94% of the Class B voting shares of FVH, including Albert G. Lowenthal, FVH's Chairman and Chief Executive Officer, entered into a Stakeholders Agreement dated as of December 9, 2002 (the "Stakeholders Agreement"), which includes, among other things, restrictions on transfer, the grant of rights of first offer, voting agreements, the grant of a right to CIBC to designate observers and directors to FVH's board of directors, the grant to CIBC of pre-emptive rights, the grant to CIBC of a right to offer to acquire, under certain circumstances, all of FVH's outstanding equity securities and the obligation of the other parties thereto to tender their shares in such circumstances. A copy of the Stakeholders Agreement is attached as Exhibit 4.1 hereto and is incorporated by reference herein. FVH, Viner and CIBC have entered into a Registration Rights Agreement dated January 2, 2003 providing CIBC with certain demand and piggy-back registration rights. A copy of the Registration Rights Agreement is attached as Exhibit 4.2 hereto and is incorporated by reference herein.
FVH and CIBC entered into a Credit Agreement dated January 2, 2003, under which CIBC commits to make loans to FVH in one or two drawdowns during the period commencing on the closing date and ending on July 31, 2003, in an aggregate principal amount of the lesser of (i) U.S.$50 million, and (ii) the aggregate amount of new employee loans made to employees of Fahnestock & Co. Inc. and evidenced by promissory notes of such employees. The interest on the funds borrowed under the Credit Agreement will be the greater of (i) the annual rate of interest announced by CIBC and in effect as its base rate at its principal office in Toronto, Ontario for determining interest rates on U.S. dollar-denominated commercial loans made in Canada, and (ii) the Federal Funds Effective Rate plus 0.50%. A copy of the Credit Agreement is attached hereto as Exhibit 10.1 and is incorporated herein by reference.
In connection with the transactions described above, the parties entered into certain ancillary agreements, including (i) Non-Competition Agreement dated January 2, 2003, by and among CIBC, World Markets, Fahnestock and Viner, a copy of which is attached hereto as Exhibit 10.3 and is incorporated herein by reference; (ii) Non-Solicitation Agreement dated January 2, 2003 by and among FVH, Fahnestock, CIBC and World Markets, a copy of which is attached hereto as Exhibit 10.4 and is incorporated herein by reference; (iii) Clearing Agreement dated January 2, 2002 by and among Fahnestock and World Markets, a copy of which is attached hereto as Exhibit 10.5 and is incorporated herein by reference; and (iv) Shareholders Agreement dated December 9, 2002, by and among FVH, Albert G. Lowenthal, Phase II Financial L.P., Phase II Financial Limited, The Albert G. Lowenthal Foundation, Olga Roberts and Elka Estates Limited, a copy of which is attached hereto as Exhibit 10.6 and is incorporated herein by reference.
ITEM 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements
The financial statements required by this item will be filed by amendment to this report as soon as practicable, but no later than 60 days after the date hereof.
(b) Pro Forma Financial Information
The pro forma financial information required by this item will be filed by amendment to this report as soon as practicable, but no later than 60 days after the date hereof.
(c) Exhibits
Exhibit No. | Description |
2.1 | Asset Purchase Agreement dated as of December 9, 2002 and Amendment No. 1 to the Asset Purchase Agreement dated as of January 2, 2003, by and among Fahnestock Viner Holdings Inc., Viner Finance Inc., Canadian Imperial Bank of Commerce and CIBC World Markets Corp. * |
2.2 | Asset Management Acquisition Agreement dated as of January 2, 2003, by and among Fahnestock Viner Holdings Inc., Fahnestock & Co. Inc., Canadian Imperial Bank of Commerce and CIBC World Markets Corp. * |
4.1 | Stakeholders Agreement dated December 9, 2002, by and among Fahnestock Viner Holdings Inc., Canadian Imperial Bank of Commerce, Albert G. Lowenthal, Phase II Financial L.P., Phase II Financial Limited, The Albert G. Lowenthal Foundation, Olga Roberts and Elka Estates Limited. |
4.2 | Registration Rights Agreement dated January 2, 2003, by and between Fahnestock Viner Holdings Inc. and Canadian Imperial Bank of Commerce. |
4.3 | Exchangeable Debenture dated January 6, 2003, by and between E. A. Viner International Co. and Canadian Imperial Bank of Commerce. |
4.4 | Interim Exchangeable Debenture dated January 6, 2003, by and between E. A. Viner International Co. and Canadian Imperial Bank of Commerce. |
10.1 | Credit Agreement dated January 2, 2003, by and between Fahnestock Viner Holdings Inc. and Canadian Imperial Bank of Commerce. |
10.2 | Amended and Restated Promissory Note dated January 15, 2003, made by Viner Finance Inc. for the benefit of CIBC World Markets Corp. |
10.3 | Non-Competition Agreement dated January 2, 2003, by and among Canadian Imperial Bank of Commerce and CIBC World Markets Corp., Fahnestock & Co. Inc. and Viner Finance Inc. |
10.4 | Non-Solicitation Agreement dated January 2, 2003 by and among Fahnestock Viner Holdings Inc., Fahnestock & Co. Inc., Canadian Imperial Bank of Commerce and CIBC World Markets Corp. |
10.5 | Clearing Agreement dated January 2, 2003 between Fahnestock & Co. Inc. and CIBC World Markets Corp. |
10.6 | Shareholders Agreement dated December 9, 2002, by and among Fahnestock Viner Holdings Inc., Albert G. Lowenthal, Phase II Financial L.P., Phase II Financial Limited, The Albert G. Lowenthal Foundation, Olga Roberts and Elka Estates Limited. |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
FAHNESTOCK VINER HOLDINGS INC.
By:"E.K. Roberts"
Name: E.K. Roberts
Title: President
January 17, 2003
FAHNESTOCK VINER HOLDINGS INC.
CURRENT REPORT ON FORM 8-K
REPORT DATED JANUARY 17, 2003
EXHIBIT INDEX
Exhibit No. | Description |
2.1 | Asset Purchase Agreement dated December 9, 2002 and Amendment No. 1 to the Asset Purchase Agreement dated January 2, 2003, by and among Fahnestock Viner Holdings Inc., Viner Finance Inc., Canadian Imperial Bank of Commerce and CIBC World Markets Corp. * |
2.2 | Asset Management Acquisition Agreement dated January 2, 2003, by and among Fahnestock Viner Holdings Inc., Fahnestock & Co. Inc., Canadian Imperial Bank of Commerce and CIBC World Markets Corp. * |
4.1 | Stakeholders Agreement dated December 9, 2002, by and among Fahnestock Viner Holdings Inc., Canadian Imperial Bank of Commerce, Albert G. Lowenthal, Phase II Financial L.P., Phase II Financial Limited, The Albert G. Lowenthal Foundation, Olga Roberts and Elka Estates Limited. |
4.2 | Registration Rights Agreement dated January 2, 2003, by and between Fahnestock Viner Holdings Inc. and Canadian Imperial Bank of Commerce. |
4.3 | Exchangeable Debenture dated January 2, 2003, by and between E. A. Viner International Co. and Canadian Imperial Bank of Commerce. |
4.4 | Interim Exchangeable Debenture dated January 2, 2003, by and between E. A. Viner International Co. and Canadian Imperial Bank of Commerce. |
10.1 | Credit Agreement dated January 2, 2003, by and between Fahnestock Viner Holdings Inc. and Canadian Imperial Bank of Commerce. |
10.2 | Amended and Restated Promissory Note dated January 15, 2003, made by Viner Finance Inc. for the benefit of CIBC World Markets Corp. |
10.3 | Non-Competition Agreement dated January 2, 2003, by and among Canadian Imperial Bank of Commerce and CIBC World Markets Corp., Fahnestock & Co. Inc. and Viner Finance Inc. |
10.4 | Non-Solicitation Agreement dated January 2, 2003 by and among Fahnestock Viner Holdings Inc., Fahnestock & Co. Inc., Canadian Imperial Bank of Commerce and CIBC World Markets Corp. |
10.5 | A Clearing Agreement dated January 2, 2003 between Fahnestock & Co. Inc. and CIBC World Markets Corp. |
10.6 | Shareholders Agreement dated December 9, 2002, by and among Fahnestock Viner Holdings Inc., Albert G. Lowenthal, Phase II Financial L.P., Phase II Financial Limited, The Albert G. Lowenthal Foundation, Olga Roberts and Elka Estates Limited. |
STAKEHOLDERS AGREEMENT
by and among
FAHNESTOCK VINER Holdings Inc.,
ALBERT G. LOWENTHAL,
PHASE II FINANCIAL L.P.,
PHASE II Financial Limited,
THe ALBERT G. LOWENTHAL Foundation,
OLGA ROBERTS,
ELKA ESTATES LIMITED,
and
CANADIAN IMPERIAL BANK OF COMMERCE
Dated as of December 9, 2002
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
1.1 Definitions *
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 Representations and Warranties of the Investor *
2.2 Representations and Warranties of the Significant Shareholders *
2.3 Representations and Warranties of the Company *
ARTICLE III
CERTAIN COVENANTS AND AGREEMENTS
3.1 Transfer Restrictions *
3.2 Agreement to be Bound; Effect on Transferees *
3.3 Right of First Offer on Investor's Securities. *
3.4 Right of First Offer on Significant Shareholders' Equity Shares *
3.5 Notice of a Significant Shareholder Ownership Change *
3.6 Notice of Significant Shareholder I Individual Death *
3.7 Notice of Regulatory Event *
3.8 Trading Restrictions *
3.9 Voting Agreement *
3.10 Significant Shareholders Obligation to Sell in Connection with an Investor Offer *
ARTICLE IV
CORPORATE GOVERNANCE MATTERS
4.1 Investor Observer Rights *
4.2 Investor's Board Representation *
4.3 Restrictive Covenants *
4.4 Information Rights *
4.5 Company Regulatory Covenants *
4.6 Regulatory Events *
4.7 Investor Regulatory Covenants *
ARTICLE V
PRE-EMPTIVE RIGHTS
5.1 Pre-emptive Rights *
ARTICLE VI
STANDSTILL PROVISIONS
6.1 Standstill *
6.2 Amendments to Standstill Provisions *
6.3 Applicability of Standstill Provisions on Transferees *
ARTICLE VII
LIQUIDITY EVENTS
7.1 Investor Offer *
ARTICLE VIII
MISCELLANEOUS
8.1 Entire Agreement *
8.2 Severability *
8.3 Notices *
8.4 Successors and Assigns *
8.5 Third-Party Beneficiaries *
8.6 Recapitalization, Etc. *
8.7 Amendments and Waivers *
8.8 Fees and Expenses *
8.9 Termination *
8.10 Headings *
8.11 Governing Law *
8.12 Waiver of Jury Trial *
8.13 Consent to Jurisdiction *
8.14 Specific Performance *
8.15 Subsidiaries *
8.16 Counterparts *
8.17 Construction *
8.18 Further Assurances *
8.19 Guarantee by Investor *
8.20 Effectiveness. *
Exhibits and Schedules
Exhibit A Form of Joinder (Permitted Transferee)
Exhibit B Form of Joinder (Non-Permitted Transferee)
Exhibit C Form of Regulatory Call Note
Schedule I Ownership of Securities
STAKEHOLDERS AGREEMENT
STAKEHOLDERS AGREEMENT, dated as of December 9, 2002 (this " Agreement "), by and among (i) Fahnestock Viner Holdings Inc., an Ontario corporation (the " Company "), (ii) Canadian Imperial Bank of Commerce, a bank under the laws of Canada (the " Investor "), (iii) Albert G. Lowenthal (" Significant Shareholder I Individual "), Phase II Financial L.P., a New York limited partnership (" Significant Shareholder I L.P. "), Phase II Financial Limited, an Ontario corporation (" Significant Shareholder I Limited "), The Albert G. Lowenthal Foundation (the " Foundation "), and (iv) solely with respect to Articles I, II, III and VIII, Olga Roberts (" Significant Shareholder II Individual ") and Elka Estates Limited, an Ontario corporation (" Significant Shareholder II Limited ").
RECITALS
WHEREAS, pursuant to the Asset Purchase Agreement (as defined below), the Company is causing E.A. Viner International Co., a Delaware corporation and wholly owned subsidiary of the Company ("Viner"), to issue to the Investor the First Viner Debenture (as defined below) and the Interim Debenture (as defined below) as, among other things, consideration for the transfer of the Aggregate Assets (as defined in the Asset Purchase Agreement);
WHEREAS, the execution and delivery of this Agreement is a condition to the willingness of the parties to the Asset Purchase Agreement to enter into the Asset Purchase Agreement contemporaneously herewith;
WHEREAS, the Significant Shareholder II Group (as defined below) is entering into this Agreement solely with respect to Articles I, II, III and VIII;
WHEREAS, the parties hereto desire that Articles I, II and VIII and Sections 3.1(b) and 3.8 of this Agreement shall be effective as of the date of this Agreement and all other provisions of this Agreement shall be effective as of the Closing Date; and
WHEREAS, the parties hereto desire to enter into this Agreement for the purpose of governing certain aspects of the relationships among them and fulfilling such condition.
NOW, THEREFORE, in consideration of the premises and the mutual agreements contained herein, and other consideration, the receipt and adequacy of which hereby is acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:
. As used in this Agreement, the following terms shall have the following meanings:
" Acquisition Transaction " means a tender offer, take-over bid, acquisition of stock, amalgamation, merger or any similar acquisition or business combination transaction that would result, if consummated, in Beneficial Ownership by a Person or Group of, except as otherwise provided herein, at least 90% of the outstanding Equity Shares.
" Affiliate " of any Person means any other Person which, directly or indirectly through one or more intermediaries, controls, is controlled by or is under common control with, such Person. For purposes of this definition, "control" when used with respect to any Person means possession, directly or indirectly, of the power to direct the management and policies of such Person (whether through the ownership of voting securities, by contract, or otherwise); and the terms "controlling" and "controlled" have meanings correlative to the foregoing. Notwithstanding the foregoing, for purposes of this Agreement, in no event shall the Investor and its Affiliates, on the one hand, be deemed to be Affiliates of the Company and its Affiliates, on the other hand.
" Agency " shall have the meaning as set forth in Section 4.5(b).
" Agreement " shall have the meaning set forth in the Preamble.
" Asset Purchase Agreement " means the Asset Purchase Agreement, dated as of the date hereof, by and among the Company, the Investor and certain of their Affiliates.
" Banking Regulations " means any and all banking, securities, commodities and other financial services laws, including without limitation anti-money laundering and similar laws, of the United States or Canada, or any state or province thereof, and any regulations, decrees, orders, agreements, commitments enforceable in writing, rulings, guidelines, interpretations and directives thereunder issued or entered into by any governmental authority or self-regulatory body, including the Federal Reserve Board, the SEC and the Department of the Treasury in the United States, and the Office of the Superintendent of Financial Institutions in Canada, that are applicable to the Company and its Affiliates.
" Beneficially Own " and " Beneficial Ownership " shall have the meanings ascribed to such terms in Rules 13d-3 and 13d-5 under the Exchange Act; provided that a Person shall be deemed to have beneficial ownership of all securities that such Person has the right to acquire, whether such right is exercisable immediately or only after the passage of time. Without limiting the generality of the foregoing, for purposes of this Agreement a Person shall be deemed to have beneficial ownership of all Equity Shares into which any Debentures, including the Interim Debenture, owned by such Person are, directly or indirectly, exchangeable.
" BHC Act " means the United States Bank Holding Company Act of 1956, as amended.
" BHC Subsidiary " means a subsidiary, as such term is defined in the BHC Act.
" Board " means the board of directors of the Company.
" Brokerage Business " means, with respect to a Brokerage Sale, the full service retail brokerage business being conducted by the Company in the United States immediately prior to such Brokerage Sale.
" Brokerage Sale " means a sale to a third party of assets of the Brokerage Business representing more than 50% of the aggregate revenues of the Brokerage Business; provided that in no event shall a transfer of any such assets for purposes of fully disclosed clearing be considered a sale of such assets.
" Business Day " means any day except a Saturday, Sunday or other day on which the NYSE is not open for the transaction of business.
" Class A Shares " means the Class A non-voting shares of the Company.
" Class B Shares " means the Class B voting shares of the Company.
" Closing Date " means the Brokerage Closing Date as such term is defined in the Asset Purchase Agreement.
" Company " shall have the meaning set forth in the Preamble.
" Company Decline Notice " shall have the meaning set forth in Section 3.3(b).
" Debentures " means the Exchangeable Debentures and the Interim Debenture, collectively.
" Director " means any member of the Board.
" Equity Shares " means (i) the Class A Shares and the Class B Shares, collectively, and (ii) any other class of shares or securities into which or for which Class A Shares, Class B Shares or any other class of shares or securities described in clauses (i) or (ii) may hereafter be changed, converted or exchanged or which are issued to holders of shares of Class A Shares, Class B Shares or any other class of shares or securities described in clauses (i) or (ii) upon any reorganization, recapitalization, reclassification, share combination, share subdivision, share dividend, merger, amalgamation, consolidation or similar transactions or events.
" Exchange Act " means the United States Securities Exchange Act of 1934, as amended.
" Exchangeable Debentures " means the First Viner Debenture and the Second Viner Debenture.
" Exchangeable Debentures Redemption Value " shall mean, with respect to any Exchangeable Debentures, the aggregate principal amount of such Exchangeable Debentures, plus accrued but unpaid interest thereon through the Regulatory Call Closing Date.
" Exclusivity Period " shall have the meaning set forth in Section 7.1(d).
" Financing Transaction " means the issuance or sale of New Securities or execution and delivery of any contract, commitment, agreement or arrangement relating to the issuance or sale of New Securities, in any such case the primary purpose of which is for the Company to raise capital. It is understood and agreed that whether a New Securities issuance or sale is a Financing Transaction shall be determined in good faith by the Board.
" First Offer Notice " shall have the meaning set forth in Section 3.4(a).
" First Offer Option Period " shall have the meaning set forth in Section 3.4(b).
" First Offer Securities " shall have the meaning set forth in Section 3.4(a).
" First Viner Debenture " means the debenture due 2013 issued by Viner, which is exchangeable into Class A Shares, substantially in the form attached as Exhibit C to the Asset Purchase Agreement.
" Governmental Entity " means any national, federal, state, provincial, municipal, local, territorial, foreign or other governmental entity or any department, commission, board, bureau, agency, regulatory authority or instrumentality thereof, or any court, judicial, administrative or arbitral body or public or private tribunal.
" Group " has the meaning set forth in Section 13(d) of the Exchange Act as in effect on the date of this Agreement.
" Independent Committee " shall have the meaning set forth in Section 7.1(a).
" Independent Directors " means Directors who satisfy the standards for "independent" directors under the rules of the NYSE and, if applicable to the Company, the standards for "unrelated" directors under the rules of the TSX.
" Interim Debenture " means the debenture issued by Viner, which is exchangeable into the Second Viner Debenture, substantially in the form attached as Exhibit D to the Asset Purchase Agreement.
" Interim Debenture Redemption Value " shall mean, with respect to the Interim Debenture, the aggregate principal amount of such Interim Debenture, plus accrued but unpaid interest thereon through the Regulatory Call Closing Date.
" Investor " shall have the meaning set forth in the Preamble.
" Investor Decline Notice " shall have the meaning set forth in Section 3.4(b).
" Investor Designated Officer " means the officer of the Investor whom the Investor designates as such in a written notice to the Company prior to the Closing Date; provided that at any time in which at least one of the Investor Designees is a Director, the "Investor Designated Officer" shall be one of such Investor Designees.
" Investor Designees " shall have the meaning set forth in Section 4.2(a).
" Investor Designee Notice " shall have the meaning set forth in Section 4.2(a).
" Investor First Offer Option Period " shall have the meaning set forth in Section 3.3(a).
" Investor First Offer Securities " shall have the meaning set forth in Section 3.3(a).
" Investor Offer " shall have the meaning set forth in Section 7.1(a).
" Investor Offer Expiration Date " shall have the meaning set forth in Section 3.3(a).
" Investor Offer Price " shall have the meaning set forth in Section 3.3(a).
" Investor Rights Expiration Date " shall mean the earlier of (i) the date as of which the Investor no longer Beneficially Owns the Minimum Amount of Class A Shares; (ii) the later to occur of (A) the tenth anniversary of the date of this Agreement and (B) if any Exchangeable Debentures or Interim Debenture are outstanding as of the tenth anniversary of the date of this Agreement, the date on which all such Debentures have reached maturity and been paid in full pursuant to their respective terms and (iii) the date on which the Investor, as a result of a purchase pursuant to an Investor Offer, Beneficially Owns at least 90% of the outstanding Equity Shares.
" Law " means any U.S., Canadian or other laws, statutes, ordinances, rules, regulations (including the rules applicable to self-regulatory organizations), judgments, orders, injunctions, decrees, arbitration awards, agency requirements, licenses or permits of any Governmental Entity of competent jurisdiction.
" Market Value " means, with respect to Class A Shares, the average of the last reported sale price for the Class A Shares on the NYSE for the 20 consecutive Business Days ending five Business Days prior to the date of delivery of the Regulatory Event Notice giving rise to an exercised Regulatory Call Right.
" Minimum Amount " means 3,000,000 Class A Shares (subject to customary adjustment from time to time for combinations, stock dividends, subdivisions, split-ups and the like).
" New Securities " means any Equity Shares or options, warrants or other securities or rights convertible or exchangeable into or exercisable for any Equity Shares or any other such equity securities; provided , however , that "New Securities" shall not include: (i) securities issued to management, directors or employees of the Company or its Subsidiaries in the ordinary course of business and equity securities issuable upon exercise thereof pursuant to any stock option plan, employee stock ownership plan, employee benefit plan, stock plan, or such other arrangement, agreement or plan intended as a means of providing compensation or incentive for employment or services; (ii) securities issued in consideration for, or in connection with, any acquisition of stock, acquisition of assets, merger or any similar acquisition or business combination transaction other acquisition of assets, intellectual property or other rights, product lines or businesses; (iii) any securities issuable upon the exercise, exchange or conversion of any outstanding securities, including the Debentures; (iv) securities issued in connection with any stock split, subdivision, stock dividend or recapitalization by the Company; or (v) securities issued pursuant to Section 5(b) of the Exchangeable Debentures.
" Non-Preemptive Rights Issuance " means an issuance or sale of any equity securities by the Company to which Pre-emptive Rights do not apply.
" NYSE " shall mean the New York Stock Exchange.
" Observers " shall have the meaning set forth in Section 4.1.
" Offer Date " means (i) the seven year anniversary of the date of this Agreement, (ii) the ten year anniversary of the date of this Agreement, (iii) the 120th day following the death of Significant Shareholder I Individual and (iv) the 30th day following any date on which the Investor receives a Significant Shareholder Ownership Change Notice.
" Offer Expiration Date " shall have the meaning set forth in Section 3.4(d).
" Offer Price " shall have the meaning set forth in Section 3.4(a).
" Ontario Securities Act " means the Securities Act (Ontario), as amended.
" Permitted Transferee " means the following:
with respect to the Investor, any Subsidiary in which the Investor owns, directly or indirectly, 80% or more of the voting rights entitled to vote for the election of the directors; and
with respect to the Significant Shareholders (whether an individual or not an individual),
if such Significant Shareholder is an individual, such Significant Shareholder's parent, spouse, brother or sister, natural or adopted lineal descendant or spouse of such descendant including pursuant to a will or under the laws of intestacy, descent and distribution;
a trust, whether inter vivos or testamentary, limited liability company, corporation, partnership or other entity, of which only such Significant Shareholder and/or any Person or Persons named in (b)(i) above is a beneficiary, member, partner, shareholder or owner (" related entity ");
the settlor or settlors or beneficiary or beneficiaries of a trust that is a related entity;
the shareholders, members, partners or owners of a corporation, limited liability company, partnership or other entity that is a related entity;
if such Significant Shareholder is a member of Significant Shareholder I Group, any other member of Significant Shareholder I Group or any Permitted Transferee thereof; provided that Significant Shareholder I Individual maintains the power to vote or direct the voting of such transferred Class B Shares; or
if such Significant Shareholder is a member of Significant Shareholder II Group, any other Significant Shareholder or any Permitted Transferee thereof.
" Person " means any individual, sole proprietorship, limited liability company, joint venture, corporation, partnership, association, trust, or any other entity or organization, including a government or political subdivision or an agency or instrumentality thereof.
" Pre-empting Shareholder " shall have the meaning set forth in Section 5.1(a).
" Pre-emptive Price Range " shall have the meaning set forth in Section 5.1(b).
" Pre-emptive Rights " shall have the meaning set forth in Section 5.1(a).
" Proportionate Percentage " shall have the meaning set forth in Section 5.1(a).
" Registration Rights Agreement " shall mean the Registration Rights Agreement, dated as of the date hereof, between the Company and the Investor.
" Regulatory Call Closing Date " shall have the meaning set forth in Section 4.6(c).
" Regulatory Call Note" shall have the meaning set forth in Section 4.6(d).
" Regulatory Call Notice" shall have the meaning set forth in Section 4(c).
" Regulatory Call Purchase Price " means the purchase price for the Regulatory Call Securities being purchased pursuant to a Regulatory Call Right, which purchase price shall be equal to the sum of the following amounts:
for that portion of such Regulatory Call Securities comprised of Exchangeable Debentures, the purchase price shall be equal to the Exchangeable Debentures Redemption Value;
for that portion of such Regulatory Call Securities comprised of the Interim Debenture, the purchase price shall be equal to the Interim Debenture Redemption Value; and
for that portion of such Regulatory Call Securities comprised of Class A Shares, the purchase price shall be equal to the Market Value of such Class A Shares.
" Regulatory Call Right" shall have the meaning set forth in Section 4(c).
" Regulatory Call Securities " means any Debentures and Class A Shares Beneficially Owned by the Investor at the time the Company delivers a Regulatory Call Notice to the Investor.
" Regulatory Event Notice " shall have the meaning set forth in Section 3.7.
" Regulatory Event " means, except for any event that is caused by the Company, that (i) a triggering event has occurred with respect to the Investor, as described at 12 C.F.R. 225.93(b)(2); (ii) the Investor has received notice with respect to performance under the Community Reinvestment Act, as described at 12 C.F.R. 225.84 and 225.94; or (iii) the Investor holds the Company under the authority of Section 4(c)(8) of the BHC Act or regulation promulgated under such authority.
" Restricted Period " means the 20 consecutive Business Days ending five Business Days prior to (i) the date on which a Regulatory Event Notice has been provided, (ii) the seventh anniversary of the Closing Date and (iii) the tenth anniversary of the Closing Date.
" Rule 144 " means Rule 144 under the U.S. Securities Act, as such rule may be amended from time to time.
" SEC " means the United States Securities and Exchange Commission.
" Second Offer Option Period " shall have the meaning set forth in Section 3.4(b).
" Second Viner Debenture " means the debenture due 2013 to be issued by Viner, which will be exchangeable into Class A Shares on terms identical to the terms of the First Viner Debenture, substantially in the form attached as Exhibit K to the Asset Purchase Agreement.
" Securities " means the Equity Shares and the Debentures.
" Significant Shareholder Group " means the Significant Shareholder I Group or the Significant Shareholder II Group, as the case may be.
" Significant Shareholder I Group " means, collectively, Significant Shareholder I Individual, Significant Shareholder I L.P., Significant Shareholder I Limited and the Foundation.
" Significant Shareholder II Group" means, collectively, Significant Shareholder II Individual and Significant Shareholder II Limited.
" Significant Shareholder Ownership Change " means, other than in connection with an Acquisition Transaction, (i) a Transfer resulting in the Significant Shareholder I Group, together with their Permitted Transferees, Beneficially Owning less than two million Equity Shares in the aggregate (subject to customary adjustment from time to time for combinations, stock dividends, subdivisions, split-ups and the like) or (ii) the Transfer by any Significant Shareholder to a Person other than a Permitted Transferee of such Significant Shareholder of any Class B Shares.
" Significant Shareholder Ownership Change Notice " shall have the meaning set forth in Section 3.5.
" Significant Shareholders " means, collectively, Significant Shareholder I Individual, Significant Shareholder I L.P., Significant Shareholder I Limited, the Foundation, Significant Shareholder II Individual, and Significant Shareholder II Limited.
" Standstill Period " means the period commencing on the date hereof and ending on the earliest of (i) the date on which the Investor consummates a purchase of Equity Shares pursuant to Section 7.1 hereof, resulting in Investor's Beneficial Ownership of at least 90% of the outstanding Equity Shares (ii) the later to occur of (A) the tenth anniversary of the date of this Agreement or, in the event that the Investor shall have made an Investor Offer on such tenth anniversary, the 120th day following such tenth anniversary and (B) if any of the Exchangeable Debentures or the Interim Debenture are outstanding as of the tenth anniversary of the date of this Agreement, the date on which such Debentures have reached maturity and are paid in full pursuant to their respective terms and (iii) the date on which the Investor no longer Beneficially Owns any Equity Shares.
" Subsidiary " means, with respect to any Person, any corporation, partnership, limited liability company, trust or other entity of which a majority of the capital stock, equity interests or other ownership interests having ordinary voting power to elect a majority of the board of directors or elect or appoint other persons performing similar functions are at the time, directly or indirectly, owned by such Person.
" Third Party Offer " means a bona fide offer to enter into an Acquisition Transaction by a Person other than (a) the Investor, the Company or their respective Affiliates, (b) any other Person acting on behalf of the Investor, the Company or any of their Affiliates or (c) any Person who is a member of a Group with the Investor, the Company or any of their respective Affiliates.
" Transfer " shall have the meaning set forth in Section 3.1(a).
" Transferring Shareholder " shall have the meaning set forth in Section 3.4(a).
" TSX " means the Toronto Stock Exchange.
" U.S. Securities Act " means the United States Securities Act of 1933, as amended.
" Viner " shall have the meaning set forth in the recitals.
REPRESENTATIONS AND WARRANTIES
Representations and Warranties of the Investor
. The Investor represents and warrants to each of the Significant Shareholders and the Company as of the date of this Agreement and as of the Closing Date as follows:
Organization; Authority . The Investor is a bank duly organized and validly existing under the laws of Canada, and has all requisite corporate power and authority to enter into this Agreement and to consummate the transactions contemplated hereby. The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of the Investor. This Agreement has been duly executed and delivered by the Investor and constitutes a valid and binding obligation of the Investor, enforceable against the Investor in accordance with its terms except that (i) such enforcement may be subject to bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to creditors' rights, and (ii) the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought.
No Violation; Consents and Approvals. The execution and delivery of this Agreement do not, and the consummation of the transactions contemplated hereby and compliance with the terms hereof will not, conflict with, or result in any violation of or default under, (a) any provision of the charter or by-laws of the Investor, (b) any judgment, order or decree, or material statute, law, ordinance, rule or regulation applicable to the Investor or the property or assets of the Investor or (c) any note, bond, mortgage, indenture, license, agreement, lease or other instrument or obligation to which the Investor is a party or by which the Investor may be bound or affected or to which any of its respective assets may be subject. No consent, approval, order or authorization of, or registration, declaration or filing with, any Governmental Entity or any third party is required to be obtained or made by or with respect to the Investor in connection with the execution and delivery of this Agreement or the consummation by the Investor of the transactions contemplated hereby.
Ownership . As of the Closing Date, the Investor will be the record owner and Beneficial Owner of the number and type of Securities set forth opposite the Investor's name on Schedule I hereto. The Investor does not own any other Securities, or other obligations of the Company or any Subsidiary of the Company.
Bank Holding Company . The Investor is a bank holding company registered with the Board of Governors of the Federal Reserve System that has elected to be a "financial holding company" under Part 225 of Title 12 of the Code of Federal Regulations.
Representations and Warranties of the Significant Shareholders
. Each member of the Significant Shareholder I Group and each member of the Significant Shareholder II Group, jointly and severally within each such Significant Shareholder Group and severally but not jointly between such Significant Shareholder Groups, represents and warrants to the Investor and the Company as of the date of this Agreement and as of the Closing Date as follows:
Organization; Authority . With respect to each member of such Significant Shareholder Group that is not a natural person, such Significant Shareholder is duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation or organization, and has all requisite power and authority to enter into this Agreement and to consummate the transactions contemplated hereby, and that the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary action on the part of such Significant Shareholder. This Agreement has been duly executed and delivered by each member of such Significant Shareholder Group, whether a natural person or otherwise, and constitutes a valid and binding obligation of each member of such Significant Shareholder Group, enforceable against it in accordance with its terms except that (i) such enforcement may be subject to bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to creditors' rights, and (ii) the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought.
No Violation; Consents and Approvals. The execution and delivery of this Agreement do not, and the consummation of the transactions contemplated hereby and compliance with the terms hereof will not, conflict with, or result in any violation of or default under, (a) any provision of the charter, by-laws or similar organizational documents of any member of such Significant Shareholder Group, where such Significant Shareholder is not a natural person, (b) any judgment, order or decree, or material statute, law, ordinance, rule or regulation applicable to any member of such Significant Shareholder Group or the property or assets of any member of such Significant Shareholder Group or (c) any note, bond, mortgage, indenture, license, agreement, lease or other instrument or obligation to which any member of such Significant Shareholder Group is a party or by which any member of such Significant Shareholder Group may be bound or affected or to which any of its respective assets may be subject. No consent, approval, order or authorization of, or registration, declaration or filing with, any Governmental Entity or any third party is required to be obtained or made by or with respect to any member of such Significant Shareholder Group in connection with the execution and delivery of this Agreement or the consummation by such Significant Shareholder Group of the transactions contemplated hereby.
Ownership . (i) Each member of Significant Shareholder I Group is the record owner and Beneficial Owner of the number and type of Securities set forth opposite such Significant Shareholder's name on Schedule I hereto. No member of the Significant Shareholder I Group owns any other Securities, or other obligations of the Company or any Subsidiary of the Company; and (ii) each member of Significant Shareholder II Group is the record owner and Beneficial Owner of the Class B Shares set forth opposite such Significant Shareholder's name on Schedule I hereto. No member of Significant Shareholder II Group owns any other Class B Shares.
Except for the Shareholders Agreement, dated as of the date hereof, among the Significant Shareholders and the Company and as set forth in this Agreement, there are no contracts, agreements, arrangements, understandings, proxies, or other commitments relating to the ownership, voting or transfer of Equity Shares Beneficially Owned by any member of such Significant Shareholder Group other than trust and organizational documents relating to the members of the Significant Shareholder Groups.
Representations and Warranties of the Company
. The Company represents and warrants to each of the Significant Shareholders and the Investor as of the date of this Agreement as follows:
Organization; Authority . The Company is a corporation duly organized and validly subsisting under the laws of Ontario, and has all requisite corporate power and authority to enter into this Agreement and to consummate the transactions contemplated hereby. The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of the Company. This Agreement has been duly executed and delivered by the Company and constitutes a valid and binding obligation of the Company, enforceable against the Company in accordance with its terms except that (i) such enforcement may be subject to bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to creditors' rights, and (ii) the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought.
No Violation; Consents and Approvals. The execution and delivery of this Agreement do not, and the consummation of the transactions contemplated hereby and compliance with the terms hereof will not, conflict with, or result in any violation of or default under, (i) any provision of the articles or by-laws of the Company, (ii) any judgment, order or decree, or material statute, law, ordinance, rule or regulation applicable to the Company or the property or assets of the Company or (iii) any note, bond, mortgage, indenture, license, agreement, lease or other instrument or obligation to which the Company is a party or by which the Company may be bound or affected or to which any of its respective assets may be subject. No consent, approval, order or authorization of, or registration, declaration or filing with, any Governmental Entity or any third party is required to be obtained or made by or with respect to the Company in connection with the execution and delivery of this Agreement or the consummation by the Company of the transactions contemplated hereby.
CERTAIN COVENANTS AND AGREEMENTS
.
The Investor may not (and any purported Transfer in violation of this Agreement shall be null and void and of no force and effect), directly or indirectly (including through the Transfer of a controlling interest in a controlled Affiliate), sell, transfer, assign, grant a participation in, option, pledge, hypothecate, encumber or otherwise dispose of by operation of law or otherwise (each, a " Transfer "), any or all of its Securities, except:
subject to Section 3.2(a), any Securities may be Transferred to a Permitted Transferee of the Investor; provided that such Transfer would not result in the Company or any of its Affiliates becoming subject to a material increase in regulatory obligations or a material restriction in its business operations;
following the 18 month anniversary of the date of this Agreement, any Securities may be Transferred, where applicable:
pursuant to Rule 144 under the U.S. Securities Act, or any successor to such rule, in the event all the conditions to such Transfer have been met;
subject to Sections 3.2(b) and 3.3 hereof, upon delivery to the Company of a written opinion of legal counsel (who shall be reasonably satisfactory to the Company) addressed to the Company and in form and substance reasonably satisfactory to the Company to the effect that the proposed Transfer may be effected without registration under the U.S. Securities Act;
subject to Sections 3.2(b) and 3.3 hereof, upon delivery of a "no action" letter from the SEC to the effect that the making of such a Transfer without registration under the U.S. Securities Act will not result in a recommendation by the staff of the SEC that action be taken with respect thereto; or
subject to Sections 3.2(b) and 3.3 hereof, upon delivery to the Company of a written opinion of legal counsel (who shall be reasonably satisfactory to the Company) addressed to the Company and in form and substance reasonably satisfactory to the Company to the effect that the manner in which the proposed Transfer is to be effected (x) does not require the Company or the Investor to file and obtain a receipt for a prospectus by virtue of compliance by the Investor with an exemption from the prospectus requirements of the Ontario Securities Act, and (y) is exempt from the take-over bid requirements of Sections 95 to 100 of the Ontario Securities Act; and
following the earlier of (A) the death of Significant Shareholder I Individual or (B) the third anniversary of the date of this Agreement, any Class A Shares may be Transferred pursuant to a registration statement in effect under the U.S. Securities Act including pursuant to the Registration Rights Agreement, subject to the terms and conditions thereof.
No Significant Shareholder may (and any purported Transfer in violation of this Agreement shall be null and void and of no force and effect), directly or indirectly Transfer (including through the Transfer of a controlling interest in a controlled Affiliate) any Class B Shares, except:
subject to Section 3.2(a), any member of the Significant Shareholder I Group may Transfer Class B Shares to a Permitted Transferee of such Significant Shareholder other than any member of the Significant Shareholder II Group or any Permitted Transferee thereof; and
subject to Section 3.2(a), any member of the Significant Shareholder II Group may Transfer Class B Shares to a Permitted Transferee of such Significant Shareholder.
Agreement to be Bound; Effect on Transferees
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No Securities shall be Transferred to any Permitted Transferee unless:
such Permitted Transferee shall have executed and delivered to the Company a joinder to this Agreement substantially in the form attached as Exhibit A hereto; and
the Company shall have received (A) a written opinion of legal counsel (who shall be reasonably satisfactory to the Company) addressed to the Company and in form and substance reasonably satisfactory to the Company to the effect that the proposed Transfer may be effected without registration under the U.S. Securities Act or (B) a "no action" letter from the SEC to the effect that the making of such a Transfer without registration under the U.S. Securities Act will not result in a recommendation by the staff of the SEC that action be taken with respect thereto or (C) a written opinion of legal counsel (who shall be reasonably satisfactory to the Company) addressed to the Company and in form and substance reasonably satisfactory to the Company to the effect that the manner in which the proposed Transfer is to be effected (x) does not require the Company or the transferor to file and obtain a receipt for a prospectus by virtue of compliance by the transferor with an exemption from the prospectus requirements of the Ontario Securities Act, and (y) is exempt from the take-over bid requirements of Sections 95 to 100 of the Ontario Securities Act.
No Securities shall be Transferred by the Investor pursuant to Section 3.1(a)(ii)(B), (C) or (D) unless such transferee shall have executed and delivered to the Company a joinder to this Agreement substantially in the form attached as Exhibit B hereto; provided that no such transferee shall be bound by the terms and conditions of Article VI, except as provided in Section 6.3.
Right of First Offer on Investor's Securities.
If the Investor (the " Transferring Investor ") desires to Transfer Securities (the " Investor First Offer Securities ") pursuant to Section 3.1(a)(ii)(B), (C) or (D) hereof in an amount that (on an as converted basis if the Investor First Offer Securities include Debentures), exceeds 5% of the outstanding Equity Shares on a fully diluted basis, the Transferring Investor shall give prompt written notice (" Investor First Offer Notice ") of such proposed Transfer to the Company and the Significant Shareholders and shall grant the Company (or its designee), first, and then the Significant Shareholders, second, the right to purchase all such Investor First Offer Securities on such terms as hereinafter set forth. Such notice shall set forth the terms and conditions of such proposed Transfer and the price for the Investor First Offer Securities or the method of determining such price (the " Investor Offer Price ").
The Company (or its designee) shall have the right, but not the obligation, to purchase all, but not less than all, of the Investor First Offer Securities. To exercise such right, the Company shall, within 30 days after receipt of the Investor First Offer Notice (the " Investor First Offer Option Period "), notify the Transferring Investor in writing that the Company (or its designee) desires to purchase, at the Offer Price and upon the other terms and conditions set forth in the Investor First Offer Notice, the Investor First Offer Securities; provided that the Company (or its designee) may substitute cash consideration for any non-cash consideration included in the Investor Offer Price valued in accordance with the last sentence of this Section 3.3(b). If the Company (or its designee) does not elect to purchase all of the Investor First Offer Securities, the Company shall promptly so notify the Investor and each of the Significant Shareholders (" Company Decline Notice "). Each of the Significant Shareholders shall then have the right, but not the obligation, to purchase all, but not less than all, of the Investor First Offer Securities. If one or more of the Significant Shareholders elect to purchase all of the Investor First Offer Securities, such purchase shall be made pro rata by the participating Significant Shareholders based on the relative amounts of Equity Shares Beneficially Owned by such Significant Shareholders or as they may otherwise agree. To exercise such right, a Significant Shareholder shall, within 30 days after the receipt of the Company Decline Notice (the " Investor Second Offer Option Period "), notify the Transferring Investor in writing that such Significant Shareholder desires to purchase, at the Investor Offer Price and upon the other terms and conditions set forth in the Investor First Offer Notice, the Investor First Offer Securities; provided that any exercising Significant Shareholder may substitute cash consideration for any non-cash consideration included in the Investor Offer Price valued in accordance with the last sentence of this Section 3.3(b). Delivery of such notice by the Company or one or more of the Significant Shareholders shall be deemed to create a binding obligation of the Company (or its designee) or such Significant Shareholders to purchase the Investor First Offer Securities, and of the Transferring Investor to Transfer the Investor First Offer Securities to the Company (or its designee) or such Significant Shareholders, subject to the terms of this Agreement. If the Investor Offer Price includes consideration other than cash, the cash equivalent value of any non-cash consideration (grossed up for any taxes payable due to the consideration being cash instead of the proffered non-cash consideration) will be determined by the Board in good faith, which determination will be binding upon the Investor, the Company (or its designee) and the Significant Shareholders.
If the Company (or its designee) or the Significant Shareholders commit to purchase the Investor First Offer Securities during the Investor First Offer Option Period or the Investor Second Offer Option Period, as the case may be, the Company (or its designee) or such Significant Shareholders, as the case may be, shall have 60 days after the end of the applicable offer option period to consummate such acquisition; provided that the relevant period shall be extended as necessary to comply with applicable securities laws. Such purchase shall occur at a single closing on a date within such period reasonably satisfactory to the Company, such Significant Shareholders and the Transferring Investor.
If the Company and the Significant Shareholders irrevocably waive their right to purchase, or otherwise do not commit to purchase on a timely basis, the Investor First Offer Securities during the Investor First Offer Option Period or Investor Second Offer Option Period, as the case may be, or if the Company (or its designee) or the Significant Shareholders do so commit but fail to purchase all of the Investor First Offer Securities within 60 days (or as extended pursuant to Section 3.3(c)) after the end of the Investor First Offer Option Period or Investor Second Offer Option Period, as the case may be (the date on which occurs any of the foregoing, the " Investor Offer Expiration Date "), then the Transferring Investor shall have the right, but not the obligation, to secure a bona fide offer for all, but not less than all, of the Investor First Offer Securities from a third party and Transfer such Investor First Offer Securities to such third party at a price equal to or greater than the Investor Offer Price and on terms and conditions no less favorable to the Transferring Investor than the terms and conditions described in the Investor First Offer Notice; provided that such Transfer to the bona fide third party is consummated within 90 days following the Investor Offer Expiration Date upon the same terms and conditions (other than the price which may be the Investor Offer Price or a greater amount) as are set forth in the Investor First Offer Notice (it being agreed that if such Transfer is not consummated within such 90 day period, the Transferring Investor must re-commence the applicable procedures provided in this Agreement if it wishes to Transfer any Securities).
Right of First Offer on Significant Shareholders' Equity Shares
. So long as the Investor Beneficially Owns the Minimum Amount of Class A Shares:
If any member of Significant Shareholder I Group (each, a " Transferring Shareholder ") desires to Transfer any of its Class A Shares (the " First Offer Securities ") that would result in a Significant Shareholder Ownership Change, the Transferring Shareholder shall give prompt written notice (" First Offer Notice ") of such proposed Transfer to the Company, Significant Shareholder II Group and the Investor and shall grant the Investor, first, and the Significant Shareholder II Group, second, the right to purchase all such First Offer Securities on such terms as hereinafter set forth. Such notice shall set forth the terms and conditions of such proposed Transfer and the price for the First Offer Securities or the method of determining such price (the " Offer Price ").
The Investor shall have the right, but not the obligation, to purchase all, but not less than all, of the First Offer Securities. To exercise such right, the Investor shall, within 30 days after receipt of the First Offer Notice (the " First Offer Option Period "), notify the Transferring Shareholder in writing that the Investor desires to purchase, at the Offer Price and upon the other terms and conditions set forth in the First Offer Notice, the First Offer Securities; provided that the Investor may substitute cash consideration for any non-cash consideration included in the Offer Price valued in accordance with the last sentence of this Section 3.4(b). If the Investor does not elect to purchase all of the First Offer Securities, it shall promptly so notify the Transferring Shareholder and the Significant Shareholder II Group (" Investor Decline Notice "). Upon receipt of an Investor Decline Notice, the members of Significant Shareholder II Group shall have the right, but not the obligation, to purchase all, but not less than all, of the First Offer Securities. If one or more of the members of Significant Shareholder II Group elect to purchase all of the First Offer Securities, such purchase shall be made pro rata by the participating members of Significant Shareholder II Group based on the relative amounts of Equity Shares Beneficially Owned by them or as they may otherwise agree. To exercise such right, a member of Significant Shareholder II Group shall, within 30 days after receipt of the Investor Decline Notice (the " Second Offer Option Period "), notify the Transferring Shareholder in writing that such Significant Shareholder desires to purchase, at the Offer Price and upon the other terms and conditions set forth in the First Offer Notice, the First Offer Securities; provided that such Significant Shareholder may substitute cash consideration for any non-cash consideration included in the Offer Price valued in accordance with the last sentence of this Section 3.4(b). Delivery of such notice by the Investor or one or more members of Significant Shareholder II Group shall be deemed to create a binding obligation of the Investor or such Significant Shareholders to purchase the First Offer Securities, and of the Transferring Shareholder to Transfer the First Offer Securities to the Investor or to such Significant Shareholders, subject to the terms of this Agreement. If the Offer Price includes consideration other than cash, the cash equivalent value of any non-cash consideration (grossed up for any taxes payable due to the consideration being cash instead of the proffered non-cash consideration) will be determined by the Board in good faith, which determination will be binding upon the Significant Shareholders, the Investor and the Transferring Shareholder.
If the Investor or the members of Significant Shareholder II Group commit to purchase the First Offer Securities during the First Offer Option Period or the Second Offer Option Period, as the case may be, the Investor or such Significant Shareholders, as the case may be, shall have 60 days after the end of the applicable offer option period to consummate such acquisition; provided that the relevant period shall be extended as necessary to comply with applicable securities laws. Such purchase shall occur at a single closing on a date within such period reasonably satisfactory to the Investor, such Significant Shareholders and the Transferring Shareholder.
If the Investor and the members of Significant Shareholder II Group irrevocably waive their right to purchase, or otherwise do not commit to purchase on a timely basis, the First Offer Securities during the First Offer Option Period or Second Offer Option Period, as the case may be, or if the Investor or the members of Significant Shareholder II Group do so commit but fail to purchase all of the First Offer Securities within 60 days (or as extended pursuant to Section 3.4(c)) after the end of the First Offer Option Period or Second Offer Option Period, as the case may be (the date on which occurs any of the foregoing, the " Offer Expiration Date "), then the Transferring Shareholder shall have the right, but not the obligation, to secure a bona fide offer for all, but not less than all, of the First Offer Securities from a third party and Transfer such First Offer Securities to such third party at a price equal to or greater than the Offer Price and on terms and conditions no less favorable to the Transferring Shareholder than the terms and conditions described in the First Offer Notice; provided that such Transfer to the bona fide third party is consummated within 90 days following the Offer Expiration Date upon the same terms and conditions (other than the price which may be the Offer Price or a greater amount) as are set forth in the First Offer Notice (it being agreed that if such Transfer is not consummated within such 90-day period, the Transferring Shareholder must re-commence the applicable procedures provided in this Agreement if it wishes to Transfer any Class A Shares).
Notice of a Significant Shareholder Ownership Change
. So long as the Investor has the right to make an Investor Offer pursuant to Section 7.1, promptly, but in any event within 10 Business Days following a Significant Shareholder Ownership Change, the Significant Shareholder which caused (or whose Permitted Transferees caused) such Significant Shareholder Ownership Change shall provide written notice (the " Significant Shareholder Ownership Change Notice ") to the Investor, the Company and the other Significant Shareholders stating that a Significant Shareholder Ownership Change has occurred.
Notice of Significant Shareholder I Individual Death
. So long as the Investor has the right to make an Investor Offer pursuant to Section 7.1, as soon as practicable following the Company's knowledge of the death of Significant Shareholder I Individual, the Company shall provide written notice to the Investor and each of the Significant Shareholders thereof.
. As soon as practicable following the Investor's knowledge of (a) an event that may become a Regulatory Event or (b) the occurrence of a Regulatory Event, the Investor shall provide written notice (any such notice provided with respect to clause (b), the " Regulatory Event Notice ") to the Company and each of the Significant Shareholders thereof, including the date on which such Regulatory Event first occurred.
. Each of the Investor, the Company and the Significant Shareholders agrees that he, she or it shall refrain from, and the Company agrees that it shall use reasonable efforts to prevent its officers and directors from, during any Restricted Period, (a) trading Equity Shares or (b) taking any action with the intent of, directly or indirectly, manipulating or otherwise influencing the market value of the Equity Shares. Notwithstanding anything herein to the contrary, no Restricted Period shall begin with respect to the Investor, a Significant Shareholder or the Company prior to the receipt by such party of a Regulatory Event Notice or, in the case of a party required to give a Regulatory Event Notice, the date such party has knowledge of the occurrence of a Regulatory Event.
. At any meeting of the shareholders of the Company called with respect to the transactions contemplated by the Asset Purchase Agreement or the matters set forth in this Agreement, and at any adjournment or adjournments thereof, and with respect to any consent or proxies solicited with respect to the transactions contemplated by the Asset Purchase Agreement or the matters set forth in this Agreement, each Significant Shareholder shall (a) vote (or cause to be voted) or deliver written consents with respect to (or cause such consents to be delivered) the Equity Shares held of record or Beneficially Owned by such Significant Shareholder in favor of the approval of such transactions and such matters, as the case may be, including (i) the approval and adoption of an amendment to the Company's By-Laws and Articles of Incorporation so that the Board shall consist of up to 10 members, (ii) for the election of the Investor Designees to the Board, as applicable, (iii) approval of the issuance of the Second Viner Debenture and (iv) any Investor Offer which is approved by the Independent Committee in accordance with Section 7.1, and (b) vote (or cause to be voted) the Equity Shares held of record or Beneficially Owned by such Significant Shareholder against, or withhold written consents (or cause such consents to be withheld) with respect to, any proposed action that would result in the approval or occurrence of any of the events specified in Section 4.3 unless the affirmative vote or written consent of the Investor has been obtained with respect to such event. Each Significant Shareholder further agrees not to commit or take any action inconsistent with any of the foregoing. Each Significant Shareholder, as the holder of Equity Shares, shall be present, in person or by proxy, at all such meetings, however such meeting is called and regardless of whether such meeting is a special or annual meeting, of the shareholders of the Company or at any adjournment or adjournments thereof so that all Equity Shares are counted for the purpose of determining the presence of a quorum at such meetings.
Significant Shareholders Obligation to Sell in Connection with an Investor Offer
. In the event that the Independent Committee approves an Investor Offer in accordance with Section 7.1 hereof, each of the Significant Shareholders agrees that it shall sell all the Equity Shares Beneficially Owned by it to the Investor pursuant to the terms and conditions of such approved Investor Offer.
.
So long as the Investor Beneficially Owns at least the Minimum Amount of Class A Shares, the Investor shall have the right to designate up to two observers reasonably acceptable to the Company and Significant Shareholder I Individual (the " Observers ") to attend meetings of the Board held prior to the date of the Company's 2003 Annual Meeting of Shareholders; provided that the Investor shall have given prior written notice to the Company and Significant Shareholder I Individual of its intention to exercise its right to designate Observers (an " Observer Notice "). Each Observer Notice shall include the name and age of each Observer to which such Observer Notice relates, as well as reasonable background information with respect to each such Observer including all positions and offices each such Observer holds or has held with the Investor and its Affiliates, other directorships that each such Observer holds or has held and the name of each such Observer's current employer together with a description of such current employment. In the event that within 10 Business Days following the timely receipt of an Observer Notice, the Company or Significant Shareholder I Individual provides written notice to the Investor reasonably objecting to the nomination of an Observer, the parties hereto shall use good faith efforts to agree on a different individual to serve as an Investor Designee.
The Company shall give each Observer written notice of each meeting of the Board at the same time and in the same manner as the Directors are given notice of such meetings, and the Company shall permit each Observer to attend as an observer all meetings of the Board, including participating by phone in telephonic meetings of the Board. Each Observer shall be entitled to receive all written materials and other information given to the Directors in connection with such meetings at the same time and in the same manner as such materials and information are given to the Directors, and the Investor undertakes to cause each Observer to keep such materials and information confidential. If the Company proposes to take any action by written consent in lieu of a meeting of the Board, the Company shall give written notice thereof to each Observer prior to the effective date of such consent. The Company shall provide to each Observer all written materials and other information given to the Directors in connection with such action by written consent at the same time and in the same manner as such materials and information are given to the Directors, and the Investor undertakes to cause each Observer to keep such materials and information confidential. Notwithstanding any of the foregoing provisions of this Section 4.1, in no event shall the Observers have the right to vote on or act by written consent in respect of any matter presented to the Board. The Investor shall pay the reasonable out-of-pocket expenses of each Observer incurred in connection with attending such meetings. The rights of the Investor contained in this Section 4.1 shall terminate on the date on which the Company's 2003 Annual Meeting of Shareholders is held.
Investor's Board Representation
. Commencing with the Company's 2003 Annual Meeting of Shareholders and until the earlier of clauses (ii) and (iii) of the definition of Investor Rights Expiration Date:
The Investor shall have the right to designate up to two persons who are resident Canadians within the meaning of the Business Corporation Act (Ontario) and reasonably acceptable to the Company and Significant Shareholder I Individual (the " Investor Designees ") for nomination as Directors at each Annual Meeting of Shareholders of the Company; provided that the Investor shall have notified the Company and Significant Shareholder I Individual in writing prior to February 15 of the year in which such meeting is to be held of its intention to exercise its right to designate Investor Designees (an " Investor Designee Notice "); provided further that in the event that the Investor Beneficially Owns (x) at least 10% but less than 15% of the Equity Shares, the Investor shall only have the right to appoint up to 1 Investor Designee and (y) less than 10% of the Equity Shares, the Investor shall not have the right to appoint any Investor Designees. Each Investor Designee Notice shall include the name and age of each Investor Designee to which such Investor Designee Notice relates, as well as reasonable background information with respect to each such Investor Designee including all positions and offices each such Investor Designee holds or has held with the Investor and its Affiliates, other directorships that each such Investor Designee holds or has held and the name of each such Investor Designee's current employer together with a description of such current employment. In the event that within 10 Business Days following the timely receipt of an Investor Designee Notice the Company or Significant Shareholder I Individual provides written notice to the Investor reasonably objecting to any Investor Designee's nomination as a Director, the parties hereto shall use good faith efforts to agree on a different individual to serve as an Investor Designee. In the event the Company timely receives an Investor Designee Notice, the Company shall use reasonable best efforts, (i) to cause the Company's By-Laws and Articles of Incorporation to be amended so that the Board shall consist of up to 10 members, (ii) to include the Investor Designees as part of the nominees to the Board on each slate of nominees for election to the Board (A) proposed by the Company's nominating committee, if any (or if there is no such nominating committee, the Board or any other duly authorized committee thereof) and (B) presented to and recommended by the Board to the Company's shareholders, (iii) to recommend the election of the Investor Designees to the shareholders of the Company, and (iv) without limiting the foregoing, to otherwise use reasonable best efforts to cause the Investor Designees to be elected to the Board.
In the event that either of the Investor Designees cease to serve as a member of the Board during their term of office for any reason, the Company shall use reasonable efforts to fill the resulting vacancy on the Board with a member designated by the Investor who is reasonably acceptable to the Company and Significant Shareholder I Individual.
With respect to each Investor Designee who resigns pursuant to Section 4.6(a), the Investor shall have the right to designate an Investor Designee for nomination to the Board pursuant to Section 4.2(a) at the first Annual Meeting of the Shareholders of the Company following such resignation; provided that such Investor Designee serving on the Board would not result in the Company being deemed a BHC Subsidiary of the Investor.
. Until the Investor Rights Expiration Date, the Company shall not, without first obtaining the affirmative vote or written consent of the Investor:
alter, repeal or amend the Articles of Incorporation or By-laws of the Company in a manner that would have the effect of prohibiting or materially restricting the Investor's ability to exercise its rights contained in this Agreement;
enter into, or permit any of its Affiliates to enter into, any non-competition agreements that would restrict the Investor and/or its Affiliates, either before or after any exercise by the Investor of any of its rights to make an Investor Offer, from competing in any commercial banking business in which such Person was engaged on the date of this Agreement; provided that the foregoing shall not restrict the Company from entering into any non-solicitation agreements in connection with any merger, consolidation or any similar acquisition or business combination transaction or any strategic alliances or similar transactions;
engage in a Brokerage Sale, other than in connection with an Acquisition Transaction approved by the Board in which the Investor receives the same consideration as the other holders of Class A Shares (on an as converted basis if the Investor still holds Debentures); or
adopt or recommend the adoption of a "poison pill" shareholder rights plan or similar anti-takeover measure.
. Subject to applicable Law, until the Investor Rights Expiration Date or for so long as the Company or any of its Affiliates is subject to any covenant set forth in Section 4.5, the Company shall provide to the Investor Designated Officer (a) all information provided to the Directors and (b) all material non-public regulatory filings with the SEC, NYSE or TSX which refer to the Investor; provided , however , that any information provided in accordance with this Section 4.4 shall be subject to the execution and delivery by each of the Investor and the Investor Designated Officer of a customary confidentiality agreement which agreement will, among other things, prohibit the disclosure of such information to representatives of investment banks, brokerage firms, or other financial institutions that are competitors of the Company.
.
At any time when the Company is a BHC Subsidiary of the Investor:
The Company shall, and shall cause each of its Affiliates to, (A) not engage in any activity prohibited by the BHC Act or other Banking Regulation, (B) comply with all Banking Regulations applicable to the Company and its Affiliates by reason of the Investor's investment in the Company and (C) not take any action that would result in it being impermissible under Canadian Banking Regulation for Investor to hold indefinitely a "substantial investment" (as defined in the Bank Act (Canada)) in the Company and its Subsidiaries.
The Company and its Affiliates shall permit any Agency examiner, at the Investor's or Agency's expense, to visit and inspect the properties and to examine the books of account and records of the Company and its Affiliates and to discuss the Company's and its Affiliate's affairs, finances and accounts with its officers, all at such reasonable times as may be requested by the Agency.
The Company shall promptly deliver to the Investor copies of all material correspondence and reports between the Company or any of its Affiliates with any Agency, and promptly disclose to the Investor all material oral requests, inquiries or complaints between any Agency and the Company or its Affiliates.
The Company shall, as reasonably requested by the Investor, disclose to and discuss with the Investor or its Subsidiaries and Affiliates the basis and determination of all financial, accounting, tax and regulatory positions, policies, procedures, reports and filings, including the Company's and its Affiliate's evaluation and compliance with accounting standards, tax standards, and reporting standards pursuant to any Banking Regulations, prior to the preparation, filing or distribution of such reports and filings.
The Company shall maintain the books, accounts and records of the Company, and prepare the financial statements of the Company in accordance with United States and Canadian GAAP, as in effect from time to time, consistently applied, and in accordance with the Company's past custom and practice.
The Company shall permit the Investor and any assignee of the Investor, at the Investor's expense, to visit and inspect the properties and to examine the books of account and records of the Company and its Affiliates and to discuss the Company's and its Affiliate's affairs, finances and accounts with its officers, all at such reasonable times as may be requested by the Investor or its assignee.
If (i) as a result of the Investors' investment in the Company, (A) the Investor or its Affiliates may be held accountable for the conduct of the Company or its Affiliates by any governmental or regulatory agency or self-regulatory organization that administers or enforces Banking Regulations (each, an " Agency ") or (B) an Agency will take into account the Company or any of its Affiliates in determining an examination rating for the Investor or any of its Affiliates, or (ii) Investor "controls" the Company and the Company or any of its Affiliates, "controls" a "depository institution" (as such terms are defined in the BHC Act), then the Company and its Affiliates will promptly institute, modify, observe and follow such related capital management, risk management, compliance and other procedures, policies, systems, controls, management structures and programs as are reasonably requested by the Investor or any of its Affiliates from time to time and reasonably agreed by the Company as appropriate measures in response to the foregoing.
The Company and its Affiliates shall cooperate with the Investor in respect of any examinations and regulatory filings of the Investor or its Affiliates that are required to include the Company or any of its Affiliates.
The Company shall, and shall cause each of its Subsidiaries and Affiliates to, comply with all Banking Regulations applicable to their businesses.
. Subject to the terms and conditions of this Agreement:
In the event that a Regulatory Event that subjects the business of the Company or any of its Affiliates to material restrictions occurs, the Investor and the Company shall promptly use reasonable best efforts to take actions necessary to ensure that the Company is not deemed a BHC Subsidiary of the Investor. Unless otherwise agreed by the Investor and the Company, such actions shall include the Investor promptly causing one or more Investor Designees to resign from the Board in the event that the Investor and the Company mutually agree that such resignations would ensure that the Investor is not deemed to control the Company.
In the event that a Regulatory Event that subjects the business of the Company or any of its Affiliates to material restrictions occurs and for so long as the Company is deemed a BHC Subsidiary of the Investor, the Investor shall have 90 days from the later of (i) the date such material restrictions commence or (ii) the irrevocable waiver of all rights of first offer under Section 3.3, if applicable, to Transfer to a third party only the number of Regulatory Call Securities required to ensure that the Company is not deemed a BHC Subsidiary of the Investor; provided that the Investor shall not have any obligation to Transfer any Regulatory Call Securities if the Regulatory Event is cured such that there is no material restriction on the business of the Company or its Affiliates.
In the event that the Company continues to be deemed a BHC Subsidiary of the Investor after the expiration of the 90 day period set forth in Section 4.6(b) above, the Company (or its designee) shall be entitled, in its sole discretion, by the Company giving written notice (the " Regulatory Call Notice ") to the Investor no later than 20 Business Days after such Regulatory Event first occurred, to require the Investor to sell at the Regulatory Call Purchase Price (the " Regulatory Call Right "), only the number of Regulatory Call Securities required to ensure that the Company is not deemed a BHC Subsidiary of the Investor. The Regulatory Call Notice shall specify the amount of each type of Regulatory Call Securities to be purchased, shall contain an irrevocable commitment to purchase such Regulatory Call Securities in the manner set forth in this Section 4.6(b) and shall specify the date such Regulatory Call Securities are to be sold (which date shall be no earlier than five Business Days after the date of the Regulatory Call Notice and no later than 20 Business Days after the date of the Regulatory Call Notice) (the " Regulatory Call Closing Date ").
The consummation of the transactions pursuant to an exercised Regulatory Call Right shall take place on the Regulatory Call Closing Date in accordance with this Section 4.6(c), except if the Regulatory Event is cured such that there is no material restriction on the business of the Company or its Affiliates on or prior to the Regulatory Call Closing Date, then no such transactions shall take place. On the Regulatory Call Closing Date, the Company (or its designee) shall pay the Regulatory Call Purchase Price to the Investor by executing and delivering to the Investor a subordinated promissory note of the Company (or its designee) in the form attached hereto as Exhibit C (the " Regulatory Call Note ") in exchange for the Regulatory Call Securities being purchased. The Investor shall cause the Regulatory Call Securities being purchased to be delivered to the Company (or its designee) at the closing free and clear of all liens, charges or encumbrances of any kind. The Investor shall take all such actions as the Company (or its designee) reasonably requests to vest in the Company (or its designee) title to the Regulatory Call Securities being purchased free of any lien, charge or encumbrance incurred by or through the Investor.
Notwithstanding anything in this Agreement to the contrary, the exercise of any Regulatory Call Right for Class A Shares shall be subject to the Company being exempt from, and there having been no regulatory proceeding commenced or threatened in respect of, any requirement or alleged requirement to make an offer to repurchase Equity Shares of any other shareholder of the Company arising by virtue of any exercise of such Regulatory Call Right, as the case may be, including any such requirement arising pursuant to the issuer bid provisions of Part XX of the Ontario Securities Act.
. The Investor shall take all actions required by applicable Law to be taken by the Investor with respect to the Investor's investment in the Company, including (a) filing with the SEC all reports and other filings required to be filed by the Investor pursuant to the Exchange Act and (b) complying with Section 101 of the Ontario Securities Act.
. Until the Investor Rights Expiration Date:
If the Company proposes a Financing Transaction, then the Company shall permit the Investor (the " Pre-empting Shareholder ") to participate in the offering of New Securities pursuant to such Financing Transaction (the " Pre-emptive Rights ") by granting the Pre-empting Shareholder the right to purchase up to that number of New Securities, at the same price and on the same terms as such New Securities are issued or sold by the Company in such Financing Transaction, so that the Pre-empting Shareholder would, after the issuance or sale of all such New Securities, Beneficially Own 35% of the Equity Shares (calculated on an as converted and fully diluted basis) (the " Proportionate Percentage ").
The Company shall give the Pre-empting Shareholder written notice of its intention to issue and sell New Securities in a Financing Transaction, describing the type of New Securities, the price range in which such New Securities are intended to be sold (the " Pre-emptive Price Range ") and the general terms and conditions upon which the Company proposes to issue the same. The Pre-empting Shareholder shall have 10 Business Days from the giving of such notice to agree to purchase up to that number of New Securities, for the price at which such New Securities are issued and sold (provided such price is within the Pre-emptive Price Range) and upon the terms and conditions specified in the notice by giving written notice to the Company and stating therein the quantity of New Securities to be purchased, so that the Pre-empting Shareholder would, after the issuance or sale of all such New Securities, Beneficially Own the Proportionate Percentage.
If the Pre-empting Shareholder fails to exercise in full its Pre-emptive Rights within such 10 Business Days, the Company shall have 90 days thereafter to enter into a binding agreement to sell the remainder of the New Securities in respect of which the Pre-empting Shareholder's Pre-emptive Rights were not exercised, at a price within the Pre-emptive Price Range and upon general terms and conditions no more favorable to the purchasers thereof than specified in the Company's notice to the Pre-empting Shareholder pursuant to Section 5.1(b). If the Company has not entered into a binding agreement to sell the New Securities within such 90 days, the Company shall not thereafter agree to issue or sell any New Securities in a Financing Transaction, without again offering the Pre-empting Shareholder the right to purchase New Securities so that the Pre-empting Shareholder would, after the issuance or sale of all such New Securities, Beneficially Own the Proportionate Percentage of the New Securities in the manner provided above.
. During the Standstill Period, the Investor shall not, and shall cause its Affiliates not to, directly or indirectly, alone or in concert with others:
acquire, offer or propose to acquire or agree or seek to acquire, whether by purchase, tender or exchange offer, take-over bid or otherwise (including through the acquisition of control of another Person), Beneficial Ownership of any Equity Shares, other than:
as a result of a stock split, stock dividend, or other pro rata stock distribution to holders of Equity Shares;
pursuant to any exchange or conversion of the Debentures in accordance with their terms, including Section 5.1(b) of the Exchangeable Debentures;
pursuant to the exercise of Pre-emptive Rights in accordance with the terms of Section 5.1 hereof;
following a Non-Preemptive Rights Issuance, pursuant to one or more open market purchases from time to time; provided that immediately following any such purchase, the Investor shall not Beneficially Own Equity Shares in excess of the Investor's proportionate interest of the issued and outstanding Equity Shares (on a fully diluted basis) immediately prior to such Non-Preemptive Rights Issuance, as reduced by the amount, if any, by which such proportionate interest was reduced following the time of such Non-Preemptive Rights Issuance due to any reason other than a Non-Preemptive Rights Issuance;
pursuant to a bona fide offer by the Investor to enter into an Acquisition Transaction for all of the outstanding Equity Shares in response to the Company's public announcement that it has received and not rejected a Third Party Offer;
pursuant to the purchase of First Offer Securities in accordance with the terms of Section 3.4 hereof;
in connection with a purchase pursuant to Section 7.1 hereof that would result in the Investor Beneficially Owning at least 90% of the outstanding Equity Shares;
through the acquisition of any Person that Beneficially Owns Equity Shares; provided that (A) a significant purpose of such transaction is not to avoid the provisions of this Article IV and (B) if following such transaction the Investor, together with its Affiliates, have Beneficial Ownership of Equity Shares in excess of the number of Equity Shares permitted to be acquired in accordance with Section 6.1(a)(iv), the Investor shall, as soon as is reasonably practicable, take all action necessary to reduce any such excess; and
in the event that the issuance of the Second Viner Debenture is not approved by the shareholders of the Company at the Company's 2003 Annual Meeting of Shareholders, pursuant to one or more open market purchases from time to time; provided that immediately following any such purchase, the Investor shall not Beneficially Own Equity Shares in excess of the sum of (x) the number of Equity Shares the Investor Beneficially Owned immediately prior to such purchase plus (y) the number of Equity Shares into which the Second Viner Debenture would have been exchangeable as of the date of such purchase (had such debenture been issued); or
propose to enter into, or announce or disclose any intention to propose to enter into any tender offer, take-over bid, amalgamation, merger, consolidation or any similar acquisition or business combination transaction involving the Company or its Affiliates, or to purchase, directly or indirectly, all or a material portion of the assets of the Company or any of its Affiliates, other than:
in connection with a bona fide offer by the Investor to enter into an Acquisition Transaction for all of the outstanding Equity Shares in response to the Company's public announcement that it has received and not rejected a Third Party Offer; or
in connection with a purchase pursuant to Section 7.1 hereof that would result in the Investor Beneficially Owning at least 90% of the outstanding Equity Shares;
make, or in any way participate in any "solicitation" of "proxies" (as such terms are defined or used in regulation 14A of the Exchange Act or the Ontario Securities Act) to vote, or seek to advise or influence any Person with respect to the voting of, any voting securities of the Company, or become a "participant" in any "election contest" (as such terms are defined or used in Regulation 14A of the Exchange Act) relating to the election of Directors, or initiate, propose or solicit holders of voting securities of the Company for the approval of any shareholder proposal; demand a copy of the Company's stock ledger or list of shareholders; call or attempt to call any meeting of the Company's shareholders; seek to elect, designate or have the right to designate any Director other than pursuant to Section 4.2 hereof; or otherwise attempt to influence control over the Company (other than pursuant to Section 4.2 or 3.3 hereof);
form, join or in any way participate in a Group or otherwise act in concert with any Person (i) for the purpose of circumventing the provisions of this Agreement or (ii) for the purpose of acquiring, holding, voting or disposing of any securities of the Company or any of its Subsidiaries;
deposit any Equity Shares in a voting trust or subject any Equity Shares to any voting arrangement, proxy or other or agreement with respect to the voting of such shares or other agreement or arrangement having a similar effect (other than any voting arrangement or agreement with respect to the voting of such shares with an Affiliate of the Investor);
arrange, assist, encourage or otherwise participate in the arranging of, financing for the purchase of any Equity Shares or options, warrants or other securities or rights convertible or exchangeable into or exercisable for any Equity Shares or any other such equity securities by any Person;
enter into any discussions, negotiations, arrangements or understandings with any other Person with respect to any of the foregoing activities or propose any such activities to any other Person; or
disclose or publicly announce any intention, plan or arrangement inconsistent with the foregoing.
Notwithstanding anything contained in this Article VI to the contrary, the provisions of this Article VI shall not prohibit the Investor or its Affiliates, to the extent such activities engaged in the ordinary course of its respective business operations, from engaging in (i) proprietary and third party portfolio and asset management and merchant banking and fund activities, (ii) securities trading and brokerage activities and (iii) advisory and other investment and commercial banking activities.
Amendments to Standstill Provisions
. The Investor agrees that, during the Standstill Period, neither it nor any of its Affiliates will request the Company or its advisors, directly or indirectly, to amend, terminate or waive any provision of this Article VI.
Applicability of Standstill Provisions on Transferees
. If the Investor Transfers Debentures or Class A Shares to a Person or Group which, following such Transfer, Beneficially Owns 10% or more of the outstanding Equity Shares (on an as converted and fully diluted basis), such Transfer shall be conditioned on such Person or Group, as the case may be, agreeing in writing in a manner reasonably acceptable in form and substance to the Company to be bound by the terms and conditions of this Article VI as if such Person or Group, as the case may be, were the Investor hereunder. Notwithstanding any such Transfer, the Investor shall remain bound by the terms and conditions of Article VI during the Standstill Period.
.
So long as the Investor Beneficially Owns at least the Minimum Amount of Class A Shares, on any Offer Date, the Investor shall have the right to make an offer (an " Investor Offer ") to acquire all of the outstanding Equity Shares (together with options, warrants and all other securities and rights convertible or exchangeable into or exercisable for any Equity Shares and securities convertible into Equity Shares); provided that (i) such Investor Offer shall include the same form and amount of per share consideration payable to the Class A Shares as is payable to the Class B Shares, and (ii) the consideration may be in the form of cash, stock or a combination of cash and stock. An Investor Offer shall be made in writing, setting forth in reasonable detail the material terms and conditions of such Investor Offer and shall be delivered to the Board. As soon as reasonably practicable following receipt of an Investor Offer, the Board shall establish a committee of Independent Directors (the " Independent Committee ") to consider in good faith such Investor Offer.
In the event that an Investor Offer is approved by the Independent Committee, the Company, subject to and in compliance with all applicable Laws, shall act expeditiously and cooperate with the Investor to complete the transaction contemplated by the Investor Offer.
At the written request of the Investor, the Company shall, during the 60-day period immediately prior to any Offer Date, provide the Investor and its authorized representatives reasonable access, during regular business hours and upon reasonable notice, to conduct due diligence on the Company as they may reasonably request; provided that the Investor and its authorized representatives shall not interfere with the operation of the Company's business; provided , further , that any information provided in accordance with this Section 7.1(c) shall be subject to a customary confidentiality agreement which agreement will, among other things, prohibit the disclosure of such information to representatives of investment banks, brokerage firms, or other financial institutions that are competitors of the Company. Notwithstanding anything in this Section 7.1(c) to the contrary, in no event shall this Section 7.1(c) require the Company to provide any broker specific information to the Investor or its authorized representatives.
In the event that the Investor submits an Investor Offer on an Offer Date, then for a period of 30 days from the receipt by the Company of such Investor Offer (" Exclusivity Period "), (i) neither the Company nor its representatives or agents shall solicit offers from, negotiate with or provide financial or operating information to, any party other than the Investor for the purpose of determining any interest in any Acquisition Transaction and, (ii) the Company shall negotiate exclusively with the Investor in connection with such a transaction.
If the Company and the Investor have not entered into a definitive agreement relating to the transaction contemplated by such Investor Offer by the end of the Exclusivity Period, then for a period of 90 days following the end of such Exclusivity Period the Company shall promptly notify the Investor in the event that it engages in discussions or negotiations with any third party concerning any Acquisition Transaction, which notice shall include a summary of the nature and amount of the consideration under discussion, but shall not be required to include the identity of such third party (each, a " Third Party Bidder "). In no event shall the Company (i) be required to update any information provided to the Investor pursuant to the immediately preceding sentence or (ii) provide to any Third Party Bidder any information regarding the Company or its Subsidiaries that is not subject to a customary confidentiality agreement.
. This Agreement and the exhibits, schedules and other documents referred to herein which form a part hereof, contain the entire understanding of the parties hereto with respect to their subject matter. This Agreement supersedes all prior agreements and understandings, oral and written, with respect to its subject matter.
. Should any provision of this Agreement for any reason be declared invalid or unenforceable, such decision shall not affect the validity or enforceability of any of the other provisions of this Agreement, which other provisions shall remain in full force and effect and the application of such invalid or unenforceable provision to persons or circumstances other than those as to which it is held invalid or unenforceable shall be valid and be enforced to the fullest extent permitted by law.
. All notices, requests, demands, waivers and other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given if delivered personally, by mail (certified or registered mail, return receipt requested), by recognized overnight courier or by facsimile transmission (receipt of which is confirmed):
(i) if to the Company, to:
Fahnestock Viner Holdings Inc.
20 Eglinton Avenue West
Suite 1110, Box 2015
Toronto Ontario M4R 1K8
CANADA
Fax: (416) 322-7007
Attention: E.K. Roberts
with a copy to:
Borden Ladner Gervais LLP
Scotia Plaza, Suite 4400
40 King Street West
Toronto, Ontario M5H 3Y4
CANADA
Attention: A. Winn Oughtred, Esq.
Telephone: (416) 367-6247
Facsimile: (416) 361-7076
Email: woughtred@blgcanada.com
(ii) if to Significant Shareholder I Individual, Significant Shareholder I L.P., Significant Shareholder I Limited or the Foundation:
Phase II Financial Ltd.
c/o Fahnestock & Co., Inc.
125 Broad Street
New York, NY 10004
Fax: (212) 943-8728
Attention: Albert G. Lowenthal
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, NY 10036-6522
Fax: (212) 735-2000
Attention: Patricia Moran, Esq.
(iii) if to Significant Shareholder II Individual or Significant Shareholder II Limited:
Elka Estates Limited
c/o Fahnestock Viner Holdings, Inc.
20 Eglinton Avenue West
Toronto, Ontario M4R 1K8
CANADA
Fax: (416) 322-7007
Attention: E.K. Roberts
with a copy to:
Borden Ladner Gervais LLP
Scotia Plaza, Suite 4400
40 King Street West
Toronto, Ontario M5H 3Y4
CANADA
Attention: A. Winn Oughtred, Esq.
Telephone: (416) 367-6247
Facsimile: (416) 361-7076
Email: woughtred@blgcanada.com(iv) if to the Investor, to:
Canadian Imperial Bank of Commerce
Commerce Court West
Toronto, Ontario M5L 1A2
Canada
Fax: (917) 332-4320
Attention: Gerry McCaugheywith a copy to:
Canadian Imperial Bank of Commerce
245 Park Avenue
42 nd Floor
New York, NY 10167
Fax: (917) 332-4320
Attention: General Counselwith a copy to:
Mayer, Brown, Rowe & Maw
1675 Broadway
New York, NY 10019-5820
Attention: James B. Carlson, Esq.
Telephone: (212) 506-2515
Facsimile: (212) 849-5515
Email: jcarlson@mayerbrownrowe.com
or to such other person or address as any party shall specify by notice in writing to the other party. All such notices, requests, demands, waivers and communications shall be deemed to have been received on the date on which so hand-delivered, on the third Business Day following the date on which so mailed, on the Business Day following the date on which delivered to the overnight courier service and on the date on which faxed and confirmed, except for a notice of change of address, which shall be effective only upon receipt thereof.
. This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, executors, successors and permitted assigns. Except for Transfers in accordance with Sections 3.2 or 6.3, neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned, directly or indirectly, by (i) the Investor without the consent of the Significant Shareholders and the Company, except to any Permitted Transferee of the Investor which is or becomes the holder of any of the Securities, (ii) any Significant Shareholder, without the prior written consent of the Investor, and (iii) the Company without the consent of the Investor.
. This Agreement is not intended and shall not be deemed to confer upon or give any person except the parties hereto and their respective successors and permitted assigns any remedy, claim, liability, reimbursement, cause of action or other right under or by reason of this Agreement.
In the event that any capital stock or other securities are issued in respect of, in exchange for, or in substitution of, any Equity Shares by reason of any reorganization, recapitalization, reclassification, merger, consolidation, spin-off, partial or complete liquidation, stock dividend, split-up, sale of assets, distribution to stockholders or combination of the Equity Shares or any other change in capital structure of the Company, appropriate adjustments shall be made with respect to the relevant provisions of this Agreement so as to fairly and equitably preserve, the original rights and obligations of the parties hereto under this Agreement.
. This Agreement may not be modified or amended except by an instrument or instruments in writing signed by an authorized officer of each party. Except as otherwise provided in this Agreement, any failure of any of the parties to comply with any obligation, covenant, agreement or condition herein may be waived by the party entitled to the benefits thereof only by a written instrument signed by an authorized officer of the party granting such waiver, but such waiver or failure to insist upon strict compliance with such obligation, covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure.
. Except as otherwise contemplated in this Agreement, whether or not this Agreement and the transactions contemplated hereby are consummated, all costs and expenses (including legal and financial advisory fees and expenses) incurred in connection with, in anticipation of, or in the enforcement of, this Agreement and the transactions contemplated hereby shall be paid by the party incurring such expenses.
. The covenants and agreements contained in this Agreement shall terminate only expressly in accordance with their respective terms. In addition to the termination provisions set forth in Section 8.20, this Agreement shall terminate and the rights and obligations of the parties hereto shall have no force or effect upon the date as of which the Investor no longer Beneficially Owns any Equity Shares.
. The article and section headings contained in this Agreement are solely for the purpose of reference, are not part of the agreement of the parties and shall not in any way affect the meaning or interpretation of this Agreement.
. THIS AGREEMENT, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE PROVINCE OF ONTARIO WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OR CHOICE OF LAWS OR ANY OTHER LAW THAT WOULD MAKE THE LAWS OF ANY OTHER JURISDICTION OTHER THAN THE PROVINCE OF ONTARIO APPLICABLE HERETO.
. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
. Each of the parties hereto expressly and irrevocably (a) consents to submit itself to the exclusive jurisdiction of the Ontario Superior Court of Justice in Toronto in the event any dispute arises out of or relates to this Agreement or any of the transactions contemplated by this Agreement, (b) agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other request or leave from such court, including, without limitation, a motion to dismiss on the grounds of forum non conveniens, (c) agrees that it will not bring any action arising out of or relating to this Agreement or any of the transactions contemplated by this Agreement in any court other than such court, and (d) waives any right to a trial by jury with respect to any claim, counterclaim or action arising out of or in connection with this Agreement or the transactions contemplated hereby.
. The parties hereto agree that if any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached, irreparable damage would occur, no adequate remedy at law would exist and damages would be difficult to determine, and that the parties shall be entitled to specific performance of the terms hereof and immediate injunctive relief, without the necessity of proving the inadequacy of money damages as a remedy, in addition to any other remedy at law or equity.
. The parties agree that obligations pursuant to this Agreement with respect to their respective Subsidiaries and Affiliates are limited to their rights and powers with respect to such Persons.
. This Agreement may be executed simultaneously in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
.
For the purposes hereof, (i) words in the singular shall be held to include the plural and vice versa and words of one gender shall be held to include the other genders as the context requires, (ii) the words "hereof," "herein," and "herewith" and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole and not to any particular provision of this Agreement, and article, section, paragraph, exhibit and schedule references are to the articles, sections, paragraphs, and exhibits and schedules of this Agreement unless otherwise specified, (iii) the words "including" and words of similar import when used in this Agreement shall mean "including, without limitation," unless otherwise specified, (iv) the word "or" shall not be exclusive and (v) the Company, the Significant Shareholders and the Investor (and any other Person who becomes party hereto as permitted hereby) will be referred to herein individually as a "party" and collectively as "parties."
The parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provisions of this Agreement.
Any reference to any federal, provincial, state, local statute or law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless the context otherwise requires.
. Each of the Significant Shareholders in its capacity as a shareholder hereby agrees that it shall use its reasonable best efforts to assure the Company's compliance with the provisions of this Agreement and the Registration Rights Agreement. From time to time after the date of this Agreement, at the request of any other party hereto and at the expense of the party so requesting, the Investor, the Significant Shareholders and the Company shall execute and deliver to such requesting party such documents and take such other action as such requesting party may reasonably request in order to consummate more effectively the transactions contemplated hereby.
. In the event Investor assigns this Agreement to any Permitted Transferee pursuant to Section 8.4, Investor hereby absolutely and unconditionally guarantees that such assignee will perform all of the obligations of the Investor under this Agreement. Investor shall also reimburse the Company and any of the Significant Shareholders, as the case maybe, for reasonable fees and expense (including reasonable fees of counsel) incurred in successfully enforcing the guarantee obligations set forth in this Section 8.19.
Notwithstanding anything contained in this Agreement to the contrary, the provisions of this Agreement shall be effective as follows: (a) Articles I, II and VIII and Sections 3.1(b) and 3.8 shall be effective as of the date of this Agreement; (b) all other provisions of this Agreement shall be effective as of the Closing Date; provided that, in the event that the Asset Purchase Agreement is terminated pursuant to its terms, this Agreement, other than Section 8.8 and this Section 8.20 which shall survive any termination of this Agreement, shall terminate and become void and of no further force and effect without further action by any party hereto as of the date of such termination.
[Signature Page Follows]
IN WITNESS WHEREOF, each of the parties hereto has duly executed this Agreement as of the date first above written.
FAHNESTOCK VINER HOLDINGS INC.
By:
/s/ Elaine Roberts________________
Name: Elaine Roberts
Title: President
CANADIAN IMPERIAL BANK OF COMMERCE
By:
/s/ Gerry McCaughey
Name: Gerry McCaughey
Title: Senior Executive Vice President
/s/ A.G. Lowenthal
Albert G. Lowenthal
PHASE II FINANCIAL L.P.
By:
/s/ A. G. Lowenthal
Its: General Partner
PHASE II FINANCIAL LIMITED
By:
/s/ A.G. Lowenthal
Name: A.G. Lowenthal
Title:
THE ALBERT G. LOWENTHAL FOUNDATION
By:
/s/ A.G. Lowenthal
Name: A.G. Lowenthal
Title:
THE FOLLOWING ARE PARTIES TO THIS AGREEMENT SOLELY WITH RESPECT TO ARTICLES I, II, III, AND VIII:
/s/ Olga Roberts
Olga Roberts
ELKA ESTATES LIMITED
By:
/s/ Olga Roberts
Name: Olga Roberts
Title:
CREDIT AGREEMENT
dated as of
January 2, 2003
between
Fahnestock Viner Holdings Inc.
as Borrower
and
Canadian Imperial Bank of Commerce
as Lender
CREDIT AGREEMENT
THIS CREDIT AGREEMENT is dated as of January 2, 2003 and is entered into between Fahnestock Viner Holdings Inc., as Borrower, and Canadian Imperial Bank of Commerce, as Lender.
The parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Defined Terms . As used in this Agreement, the following terms have the meanings specified below:
" Affiliate " means, with respect to any Person, another Person that directly, or indirectly through one or more intermediaries, controls or is controlled by or is under common control with, such Person.
" Asset Purchase Agreement " means the asset purchase agreement dated as of December 9, 2002 by and among the Borrower, Viner International, the Lender and CIBC World Markets Corp., as amended, supplemented or otherwise modified.
" Authorization " means, with respect to any Person, any authorization, order, permit, approval, grant, licence, consent, right, franchise, privilege, certificate, judgment, writ, injunction, award, determination, direction, decree, by-law, rule or regulation of any Governmental Authority having jurisdiction over such Person, whether or not having the force of Law.
" Borrower " means Fahnestock Viner Holdings Inc., a corporation incorporated under the Business Corporations Act (Ontario), and its successors and permitted assigns.
" Borrowing " means any availment of the Credit.
" Borrowing Request " means a request by the Borrower for a Borrowing pursuant to Section 2.2 in the form of Exhibit A.
" Business Day " means any day that is not a Saturday, Sunday or other day on which commercial banks in Toronto, Ontario or New York, New York are authorized or required by applicable law to remain closed.
" Canadian Dollars " and " Cdn.$ " refer to lawful money of Canada.
" Canadian $ Equivalent " means, at the date of determination, the amount of Canadian Dollars that the Lender could purchase, in accordance with its normal practice, with a specified amount of U.S. Dollars based on the Bank of Canada noon spot rate on such date.
" Capital Lease Obligations " of any Person means the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such Person under GAAP, and the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP.
" Change in Law " means (i) the adoption of any new Law after the date of this Agreement, (ii) any change in any existing Law or in the interpretation or application thereof by any Governmental Authority after the date of this Agreement, or (iii) compliance by the Lender or the Lender with any request, guideline or directive (whether or not having the force of law, but in the case of a request, guideline or directive not having the force of law, being a request, guideline or directive with which persons customarily comply) of any Governmental Authority made or issued after the date of this Agreement.
" Closing Date " means January 2, 2003 or as may otherwise be mutually agreed by the parties hereto.
" Collateral " means the property described in and subject to the Liens, privileges, priorities and security interests purported to be created by any Security Document.
" Commitment " is defined in Section 2.1.
" Companies " means, collectively, the Borrower and each of Fahnestock Canada, Viner International, Viner Finance and Fahnestock & Co.
" Credit " means the credit established pursuant to the Commitment of the Lender created hereunder.
" Default " means any event or condition which constitutes an Event of Default or which, upon notice, lapse of time or both, would, unless cured or waived, become an Event of Default.
" Disclosed Matters " means the actions, suits and proceedings disclosed in Schedule A.
" Employee Notes " means the notes made by employees of Fahnestock & Co. in favour of Fahnestock & Co. as contemplated by Section 2.1 and in form and substance satisfactory to the Lender.
" Equity Securities " means, with respect to any Person, any and all shares, interests, participations, rights in, or other equivalents (however designated and whether voting and non-voting) of, such Persons capital, whether outstanding on the date hereof or issued after the date hereof, including any interest in a partnership, limited partnership or other similar Person and any beneficial interest in a trust, and any and all rights, warrants, options or other rights exchangeable for or convertible into any of the foregoing.
" Event of Default " has the meaning specified in Section 7.1.
" Excess Net Capital " means, as at any date, the amount of Net Capital of Fahnestock & Co. as at such date that is in excess of the minimum amount of Net Capital that Fahnestock & Co. is required to have at such date under the Net Capital Rule.
" Excluded Taxes " means, with respect to the Lender or any other recipient of any payment to be made by or on account of any obligation of the Borrower hereunder, income or franchise Taxes imposed on (or measured by) its taxable income or capital Taxes imposed on (or measured by) its taxable capital, in each case by Canada, or by the jurisdiction under the Laws of which such recipient is organized or in which its principal office is located.
" Fahnestock Canada " means Fahnestock Canada Inc., a corporation incorporated under the Business Corporations Act (Ontario), and its successors and permitted assigns.
" Fahnestock & Co. " means Fahnestock & Co. Inc., a corporation incorporated under the laws of the State of New York.
" Financial Officer " means the chief financial officer, principal accounting officer, treasurer or controller of the Borrower.
" Financing Documents " means this Agreement, the Security Documents and the Borrowing Requests, together with any other document, instrument or agreement now or hereafter entered into in connection with this Agreement, as such documents, instruments or agreements may be amended, modified or supplemented from time to time.
" Fiscal Quarter " means any fiscal quarter of the Borrower.
" Fiscal Year " means any fiscal year of the Borrower.
" GAAP " means (i) in respect to the Borrower and Fahnestock Canada, generally accepted accounting principles in Canada as in effect from time to time, and (ii) in respect to any entity governed by the Laws of the United States of America, generally accepted accounting principles in the United States of America in effect from time to time.
" Governmental Authority " means the Government of Canada, the Government of the United States of America, or any political subdivision of either of the above, whether provincial, state, territorial or local, and any agency, authority, instrumentality, regulatory body, court, central bank, fiscal or monetary authority or other authority regulating financial institutions, and any other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government, including the Bank Committee on Banking Regulation and Supervisory Practices of the Bank of International Settlements.
" Guarantee " of or by any Person (in this definition, the " guarantor ") means any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation of any other Person (in this definition, the " primary credit party ") in any manner, whether directly or indirectly, and including any obligation of the guarantor, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation or to purchase (or to advance or supply funds for the purchase of) any security for the payment thereof (whether in the form of a loan, advance, stock purchase, capital contribution or otherwise), (b) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness or other obligation of the payment thereof, (c) to maintain working capital, equity capital solvency, or any other balance sheet, income statement or other financial statement condition or liquidity of the primary credit party so as to enable the primary credit party to pay such Indebtedness or other obligation, (d) as an account party in respect of any letter of credit or letter of guarantee issued to support such Indebtedness or other obligation, (e) to make take-or-pay or similar payments, if required, regardless of non-performance by any other party or parties to an agreement, or (f) to purchase, sell or lease (as lessor or lessee) property, or to purchase or sell services, primarily for the purpose of enabling the debtor to make payment of such Indebtedness or to assure the holder of such Indebtedness against loss. The amount of any Guarantee in respect of Indebtedness shall be deemed to be an amount equal to the stated or determinable amount of the related Indebtedness (unless the Guarantee is limited by its terms to a lesser amount, in which case to the extent of such amount) or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by the Person in good faith. The amount of any other Guarantee shall be deemed to be zero unless and until the amount thereof has been (or in accordance with GAAP should be) quantified and reflected or disclosed in the consolidated financial statements (or notes thereto)) of the Borrower.
" Hedging Agreement " means any hedging contract, forward contract, swap agreement, futures contract, option contract, cap or collar agreement with respect to any such transaction (or any combination of the foregoing, or any derivative thereof), designed to mitigate risks resulting from fluctuations in interests rates, currency valuations or otherwise.
" Indebtedness " of any Person includes, without duplication, (a) all obligations of such Person for borrowed money or with respect to deposits or advances of any kind, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such Person upon which interest charges are customarily paid, (d) all obligations of such Person under conditional sale or other title retention agreements relating to property acquired by such Person, (e) all obligations of such Person in respect of the deferred purchase price of property or services (excluding current accounts payable incurred in the ordinary course of business), (f) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such Person, whether or not the Indebtedness secured thereby has been assumed, (g) all Guarantees by such Person of Indebtedness of others, (h) all Capital Lease Obligations of such Person, (i) all obligations, contingent or otherwise, of such Person as an account party in respect of letters of credit and letters of guarantee, (j) all obligations, contingent or otherwise, of such Person in respect of bankers acceptances, (k) the net amount of obligations of such Person (determined on a marked-to-market basis) under Hedging Agreements, and (l) all obligations of such Person to purchase, redeem, retire, defease or otherwise acquire for value (other than for other Equity Securities) any Equity Securities of such Person valued, in the case of redeemable Equity Securities, at the greater of voluntary or involuntary liquidation preference, plus accrued and unpaid dividends. The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general or limited partner) to the extent such Person is liable therefor as a result of such Persons ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor .
" Indemnified Taxes " means all Taxes other than Excluded Taxes.
" Indemnitee " has the meaning specified in Section 8.3(b).
" Interest Payment Date " means the first Business Day of each month and the Maturity Date.
" Laws " means all federal, provincial, municipal, foreign and international statutes, acts, codes, ordinances, decrees, treaties, rules, regulations, municipal by-laws, judicial or arbitral or administrative or ministerial or departmental or regulatory judgments, orders, decisions, rulings or awards or any provisions of the foregoing, including general principles of common and civil law and equity, and all policies, practices and guidelines of any Governmental Authority binding on or affecting the Person referred to in the context in which such word is used (including, in the case of tax matters, any accepted practice or application or official interpretation of any relevant taxation authority); and " Law " means any one or more of the foregoing.
" Lender " means Canadian Imperial Bank of Commerce, a bank chartered under the Bank Act (Canada), and its successors and permitted assigns.
" Liabilities to Equity Ratio " means, with respect to any Person as at any date, the ratio of the following:
(a) all liabilities of such Person and its consolidated subsidiaries, except for Fahnestock & Co. for which liabilities means unsecured liabilities, at such date that should be classified as liabilities on a balance sheet prepared in accordance with GAAP, including (without limitation) all indebtedness and all reserves and all deferred taxes and other deferred items (determined on a consolidated basis without duplication in accordance with GAAP), to
(b) the amount of paid-up capital of such Person at such date, plus the amount of such Persons surplus and retained earnings (howsoever described) at such date (or, in the case of a surplus or retained earnings deficit, minus the amount of such deficit), all determined in accordance with GAAP on a consolidated basis.
" Lien " means, (a) with respect to any asset, any mortgage, deed of trust, lien, pledge, hypothecation, encumbrance, charge, security interest, royalty interest, adverse claim, defect of title or right of set off in, on or of such asset, (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease, title retention agreement or consignment agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to any asset, (c) in the case of securities, any purchase option, call or similar right of a third party with respect to such securities, (d) any netting arrangement, defeasance arrangement or reciprocal fee arrangement, and (e) any other arrangement having the effect of providing security.
" Loan " means any loan made by the Lender to the Borrower pursuant to this Agreement.
" Material Adverse Change " means any event, development or circumstance that has had or could in the opinion of the Lender have a Material Adverse Effect.
" Material Adverse Effect " means a material adverse effect on (a) the business, assets, operations, prospects or condition, financial or otherwise, of the Borrower and its Subsidiaries taken as a whole, or (b) the validity or enforceability of any of the Financing Documents or the rights and remedies of the Lender thereunder, or (c) the amount which the Lender would be likely to receive (after giving effect to delays in payment and costs of enforcement) upon the liquidation of the Collateral.
" Maturity Date " means the fifth anniversary of the Closing Date.
" Net Capital " means "net capital" as that term is defined in the Net Capital Rule.
" Net Capital Rule " means Rule 15c3-1 promulgated under the Securities Exchange Act of 1934 , as such rule may be in effect from time to time, including any successor rule under said Act relating to net capital requirements of registered broker-dealers.
" Permitted Distributions " means (i) dividends paid to holders of Equity Securities of the Borrower in the ordinary course and consistent with past practice, and (ii) payments made pursuant to a normal course issuer bid by the Borrower, and permitted by Toronto Stock Exchange rules governing such purchases: provided that, at all times, the amount of paid-up capital of the Borrower plus the amount of the Borrowers surplus and retained earnings (or in the case of a surplus or retained earnings deficit, minus the amount of such deficit) all determined in accordance with GAAP on a consolidated basis, is not less than U.S.$200,000,000.
" Permitted Liens " means, with respect to any Person, the following:
(a) Liens for taxes, assessments or governmental charges or levies which are not due or delinquent or, if so, the validity of which is being contested at the time by the Borrower diligently and in good faith by proper legal proceedings (and written notice thereof has been given to the Lender) if either (i) adequate provision has been made for the payment of the obligations secured or intended to be secured by the applicable Liens or (ii) the applicable Liens are not in the aggregate materially prejudicial to the value of the assets of the Borrower;
(b) undetermined or inchoate Liens, rights of distress and charges incidental to current operations which have not at such time been filed or exercised and of which the Lender has not been given notice, or which relate to obligations not due or payable;
(c) Liens disclosed to the Lender in Schedule C;
(d) other Liens and minor irregularities in title which do not materially interfere with the occupation, use and enjoyment by the Companies of any of their respective properties in the normal course of business as presently conducted or materially impair the value thereof of such business;
(e) Liens consented to in writing by the Lender; and
(f) Liens created by the Security Documents.
" Person " includes any natural person, corporation, company, limited liability company, trust, joint venture, association, incorporated organization, partnership, Governmental Authority or other entity.
" Related Parties " means, with respect to any Person, such Persons Affiliates and the respective directors, officers, employees, agents and advisors of such Person and of such Persons Affiliates.
" Responsible Officer " means, with respect to any corporation, the chairman, the president, any vice president, the chief executive officer or the chief operating officer, and, in respect of financial or accounting matters, any Financial Officer of such corporation; unless otherwise specified, all references herein to a Responsible Officer mean a Responsible Officer of the Borrower.
" Restricted Payment " shall mean, with respect to any Person, any payment by such Person (i) of any dividends on any of its Equity Securities, (ii) on account of, or for the purpose of setting apart any property for a sinking or other analogous fund for, the purchase, redemption, retirement or other acquisition of any of its Equity Securities or any warrants, options or rights to acquire any such shares, or the making by such Person of any other distribution in respect of any of its Equity Securities, (iii) of any principal of or of any amount in respect of a sinking or analogous fund or defeasance fund for any Indebtedness of such Person to a shareholder of such Person or to an Affiliate of a shareholder of such Person, and (iv) pursuant to a normal course issuer bid.
" Security Documents " means the agreements or instruments described or referred to in Section 4.1(g), and any and all other agreements or instruments now or hereafter executed and delivered by the Borrower, any Subsidiary or any other Person as security for the payment or performance of the obligations of the Borrower hereunder, as any of the foregoing may have been, or may hereafter be, amended, modified or supplemented.
" subsidiary " means, with respect to any Person (the " Parent ") at any date, any corporation, limited liability company, partnership, limited partnership, association or other entity the accounts of which would be consolidated with those of the Parent in the Parents consolidated financial statements if such financial statements were prepared in accordance with GAAP as of such date, as well as any other corporation, limited liability company, partnership, limited partnership, association or other entity (a) of which securities or other ownership interests representing more than 50% of the equity or more than 50% of the ordinary voting power or, in the case of a partnership, more than 50% of the general partnership interests are, as of such date, owned, controlled or held, or (b) that is, as of such date, otherwise controlled, by the Parent or one or more subsidiaries of the Parent or by the Parent and one or more subsidiaries of the Parent.
" Subsidiary " means any subsidiary of the Borrower.
" Taxes " means all taxes, charges, fees, levies, imposts and other assessments, including all income, sales, use, goods and services, value added, capital, capital gains, alternative, net worth, transfer, profits, withholding, payroll, employer health, excise, real property and personal property taxes, and any other taxes, customs duties, fees, assessments, or similar charges in the nature of a tax, including pension plan contributions, unemployment insurance payments and workers compensation premiums, together with any instalments with respect thereto, and any interest, fines and penalties with respect thereto, imposed by any Governmental Authority (including federal, state, provincial, municipal and foreign Governmental Authorities), and whether disputed or not.
" Transactions " means the execution, delivery and performance by the Borrower of this Agreement and the other Financing Documents, the borrowing of Loans and the use of the proceeds thereof.
" U.S. Base Rate " means, on any day, the annual rate of interest equal to the greater of (i) the annual rate of interest announced by the Lender and in effect as its base rate at its principal office in Toronto, Ontario on such day for determining interest rates on U.S. Dollar-denominated commercial loans made in Canada, and (ii) the Federal Funds Effective Rate plus 0.50%.
" U.S. Base Rate Loan " means a Loan denominated in U.S. Dollars which bears interest at a rate based upon the U.S. Base Rate.
" U.S. Dollars " and " U.S.$ " refer to lawful money of the United States of America.
" U.S.$ Equivalent " means, at the date of determination, the amount of U.S. Dollars that the Lender could purchase, in accordance with its normal practice, with a specified amount of Canadian Dollars based on the Bank of Canada noon spot rate on such date.
" Viner Finance " means Viner Finance Inc., a corporation incorporated under the laws of the State of Delaware, and its successor and permitted assigns.
" Viner International " means E.A. Viner International Co., a corporation incorporated under the laws of the State of Delaware, and its successor and permitted assigns.
" wholly-owned subsidiary " of a Person means any subsidiary of such Person of which securities or other ownership interests representing 100% of the equity and 100% of the ordinary voting power are, at the time any determination is being made, owned, controlled or held by such Person or one or more subsidiaries of such Person or by such Person and one or more subsidiaries of such Person.
1.2 Terms Generally . The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words "include", "includes" and "including" shall be deemed to be followed by the phrase "without limitation". The word "will" shall be construed to have the same meaning and effect as the word "shall". The word "or" is disjunctive; the word "and" is conjunctive. The word "shall" is mandatory; the word "may" is permissive. The words "to the knowledge of" means, when modifying a representation, warranty or other statement of any Person, that the fact or situation described therein is known by the Person (or, in the case or a Person other than a natural Person, known by the Responsible Officer of that Person) making the representation, warranty or other statement, or with the exercise of reasonable due diligence under the circumstances (in accordance with the standard of what a reasonable Person in similar circumstances would have done) would have been known by the Person (or, in the case of a Person other than a natural Person, would have been known by such Responsible Officer of that Person). Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (b) any reference herein to any statute or any section thereof shall, unless otherwise expressly stated, be deemed to be a reference to such statute or section as amended, restated or re-enacted from time to time, (c) any reference herein to any Person shall be construed to include such Persons successors and permitted assigns, (d) the words "herein", "hereof" and "hereunder", and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (e) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement, and (f) the words "asset" and "property" shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.
1.3 Accounting Terms; GAAP . Except as otherwise expressly provided herein, all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in effect from time to time. All calculations for the purposes of determining compliance with the financial ratios and financial covenants contained herein shall be made on a basis consistent with GAAP in existence as at the date of this Agreement and used in the preparation of the financial statements of the Borrower referred to in Section 5.1(a). In the event of a change in GAAP, the Borrower and the Lender shall negotiate in good faith to revise (if appropriate) such ratios and covenants to reflect GAAP as then in effect. In the event that such negotiation is successful, all calculations thereafter made for the purpose of determining compliance with the financial ratios and financial covenants contained herein shall be made on a basis consistent with GAAP in existence as at the date of such revision. Any financial ratios required to be maintained by the Borrower pursuant to this Agreement shall be calculated by dividing the appropriate component by the other component, carrying the result to one place more than the number of places by which such ratio is expressed in this Agreement and rounding the result up or down to the nearest number (with a round-up if there is no nearest number) to the number of places by which such ratio is expressed in this Agreement.
1.4 Time . All time references herein shall, unless otherwise specified, be references to local time in Toronto, Canada. Time is of the essence of this Agreement and the other Financing Documents.
1.5 This Agreement to Govern. In the event of any conflict or inconsistency between the terms of this Agreement and the terms of any other Financing Documents, the provisions of this Agreement shall govern to the extent necessary to remove the conflict or resolve the inconsistency.
ARTICLE 2
THE CREDIT
2.1 Commitment . Subject to the terms and conditions set forth herein, the Lender commits to make U.S. Base Rate Loans to the Borrower in one or two drawdowns during the period commencing on the Closing Date and ending on July 31, 2003, or as otherwise mutually agreed by the parties hereto (the " Commitment "), in an aggregate principal amount of the lesser of (i) U.S.$50,000,000, and (ii) the aggregate amount of new employee loans made to employees of Fahnestock & Co. and evidenced by Employee Notes.
2.2 Requests for Borrowings . To request a Borrowing, the Borrower shall notify the Lender of such request by telephone or by written Borrowing Request, not later than 11:00 a.m., Toronto time, one Business Day before the date of the proposed Borrowing. Each such telephone borrowing request shall be irrevocable and shall be confirmed promptly by hand delivery or telecopy to the Lender of a written Borrowing Request signed by the Borrower by 12:00 noon on the date of such telephone borrowing request. The Lender is entitled to rely upon and act upon any telephone borrowing request or written Borrowing Request given or purportedly given by the Borrower, and the Borrower hereby waives the right to dispute the authenticity and validity of any such transaction once the Lender has advanced funds based on such telephone borrowing request or written Borrowing Request. Each such telephone borrowing request and written Borrowing Request shall specify the following information:
(i) the aggregate amount of the requested Borrowing;
(ii) the date of such Borrowing, which shall be a Business Day; and
(iii) the location and number of the Borrowers account to which funds are to be disbursed.
2.3 Funding of Borrowings . The Lender shall make each Loan to be made to the Borrower by crediting, by 12:00 noon, Toronto time, the funds applicable to each Borrowing Request, to an account of the Borrower maintained with the Lender in Toronto and designated by the Borrower in such Borrowing Request.
2.4 Interest .
(a) The Loans comprising each Borrowing shall bear interest (computed on the basis of the actual number of days elapsed over a year of 365 days or 366 days, as the case may be) at a rate per annum equal to the U.S. Base Rate plus 2% per annum. Notwithstanding the foregoing, if any principal of or interest on any Loan or any fee or other amount payable by the Borrower hereunder is not paid when due, whether at stated maturity, upon acceleration or otherwise, such overdue amount shall bear interest, after as well as before judgment, at a rate per annum equal to 2% plus the rate otherwise applicable to such Loan.
(b) Accrued interest on each Loan shall be payable in arrears on each Interest Payment Date and, in the event of any repayment or prepayment of any Loan, accrued interest on the principal amount repaid or prepaid shall be payable on the date of such repayment or prepayment.
(c) All interest hereunder shall be payable for the actual number of days elapsed (including the first day but excluding the last day). The applicable U.S. Base Rate shall be determined by the Lender, and such determination shall be conclusive absent manifest error.
(d) For the purposes of the Interest Act (Canada) and disclosure thereunder, whenever any interest or any fee to be paid hereunder or in connection herewith is to be calculated on the basis of a year of less than 365 days, or 366 days, as applicable, the yearly rate of interest to which the rate used in such calculation is equivalent is the rate so used multiplied by the actual number of days in the calendar year in which the same is to be ascertained and divided by the number of days on which the rate is calculated. The rates of interest under this Agreement are nominal rates, and not effective rates or yields. The principle of deemed reinvestment of interest does not apply to any interest calculation under this Agreement.
(e) If any provision of this Agreement would oblige the Borrower to make any payment of interest or other amount payable to the Lender in an amount or calculated at a rate which would be prohibited by law or would result in a receipt by that Lender of "interest" at a "criminal rate" (as such terms are construed under the Criminal Code (Canada)), then, notwithstanding such provision, such amount or rate shall be deemed to have been adjusted with retroactive effect to the maximum amount or rate of interest, as the case may be, as would not be so prohibited by Law or so result in a receipt by that Lender of "interest" at a "criminal rate", such adjustment to be effected, to the extent necessary (but only to the extent necessary), by reducing any fees, commissions, premiums and other amounts required to be paid to the Lender which would constitute interest for purposes of Section 347 of the Criminal Code (Canada).
(f) If any payment of interest is required to be made on a day which is not a Business Day, such payment shall be payable on the immediately preceding Business Day.
2.5 Intentionally Deleted.
2.6 Repayment of Loans .
(a) The Borrower hereby unconditionally promises to pay to the Lender the then unpaid principal amount of each Loan on the Maturity Date together with all accrued interest, all fees and other amounts outstanding hereunder.
(b) The aggregate outstanding principal amount of the Loans shall be repaid (i) from the Closing Date until the second drawdown, in monthly instalments equal to one sixtieth of the amount of the first drawdown, payable on each Interest Payment Date commencing on February 1, 2003, and (ii) from the date of the second drawdown until the Maturity Date, in equal monthly instalments payable on each Interest Payment Date, equal to the total principal amount outstanding following the second drawdown, divided by the number of Interest Payment Dates remaining up to, and including, the Maturity Date.
(c) If any payment of principal is required to be made on a day which is not a Business Day, such payment shall be payable on the immediately preceding Business Day.
2.7 Evidence of Debt .
(a) The Lender shall maintain in accordance with its usual practice an account or accounts evidencing the Indebtedness of the Borrower to the Lender resulting from each Loan made by the Lender hereunder, including the amounts of principal and interest payable and paid to the Lender from time to time hereunder.
(b) The entries made in the accounts maintained pursuant to Section 2.7(a) shall be conclusive evidence (absent manifest error) of the existence and amounts of the obligations recorded therein; provided that the failure of the Lender to maintain such accounts or any error therein shall not in any manner affect the obligation of the Borrower to repay the Loans in accordance with the terms of this Agreement.
2.8 Prepayments .
(a) Mandatory Prepayments . If the aggregate amount of payments and forgiveness of Employee Notes for any month is in excess of the instalment payment due in such month, the Borrower shall immediately pay to the Lender the amount of such excess to be applied as a prepayment of the Loans outstanding to instalment payments required by Section 2.6(b) in inverse order of maturity.
(b) Voluntary Prepayments . The Borrower may, at its option, at any time and from time to time, prepay the Loans, in whole or in part, without notice to the Lender with such prepayment to be applied to instalment payments required by Section 2.6(b) in inverse order of maturity.
2.9 Increased Costs; Illegality .
(a) If any Change in Law shall impose, modify or deem applicable any reserve, special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by, the Lender and the result of any of the foregoing shall be to increase the cost to the Lender of making or maintaining any Loan (or of maintaining its obligation to make any such Loan) or to increase the cost to the Lender of issuing or maintaining any Loan or to reduce the amount of any sum received or receivable by the Lender hereunder (whether of principal, interest or otherwise), then the Borrower will pay to the Lender such additional amount or amounts as will compensate the Lender for such additional costs incurred or reduction suffered.
(b) A certificate of the Lender setting forth the amount or amounts necessary to compensate the Lender as specified in Section 2.9(a), together with a brief description of the Change of Law, shall be delivered to the Borrower, and shall be conclusive absent manifest error. The Borrower shall pay the Lender the amount shown as due on any such certificate within ten days after receipt thereof.
(c) Failure or delay on the part of the Lender to demand compensation pursuant to this Section 2.9 shall not constitute a waiver of the Lenders right to demand such compensation.
2.10 Break Funding Payments . In the event of the failure by the Borrower to borrow or prepay any Loan on the date specified in any notice delivered by the Borrower pursuant hereto, the Borrower shall compensate the Lender for the loss, cost and expense attributable to such event. A certificate of the Lender setting forth any amount or amounts that the Lender is entitled to receive pursuant to this Section 2.10 shall be delivered to the Borrower and shall be conclusive absent manifest error. The Borrower shall pay the Lender the amount shown as due on any such certificate within ten days after receipt thereof.
2.11 Taxes .
(a) Any and all payments by or on account of any obligation of the Borrower hereunder shall be made free and clear of and without deduction for any Indemnified Taxes; provided that if the Borrower shall be required to deduct any Indemnified Taxes from such payments, then (i) the sum payable shall be increased as necessary so that, after making all required deductions (including deductions applicable to additional sums payable under this Section 2.11), the Lender receives an amount equal to the sum it would have received had no such deduction been made, (ii) the Borrower shall make such deduction, and (iii) the Borrower shall pay the full amount deducted to the relevant Governmental Authority in accordance with applicable Law.
(b) In addition to the payments by the Borrower required by Section 2.11(a), the Borrower shall pay any and all present or future stamp or documentary Taxes or any other excise or property Taxes, charges or similar levies arising from any payment made hereunder or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement to the relevant Governmental Authority in accordance with applicable Law.
(c) The Borrower shall indemnify the Lender, within ten days after written demand therefor, for the full amount of any Indemnified Taxes paid by the Lender, on or with respect to any payment by or on account of any obligation of the Borrower hereunder (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section 2.11) and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to the Borrower by the Lender shall be conclusive absent manifest error.
(d) As soon as practicable after any payment of Indemnified Taxes by the Borrower to a Governmental Authority, the Borrower shall deliver to the Lender the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Lender.
2.12 Currency Indemnity . If, for the purposes of obtaining judgment in any court in any jurisdiction with respect to this Agreement or any other Financing Document, it becomes necessary to convert into the currency of such jurisdiction (the " Judgment Currency ") any amount due under this Agreement or under any other Financing Document in any currency other than the Judgment Currency (the " Currency Due "), then conversion shall be made at the rate of exchange prevailing on the Business Day before the day on which judgment is given. For this purpose "rate of exchange" means the rate at which the Lender is able, on the relevant date, to purchase the Currency Due with the Judgment Currency in accordance with its normal practice at its head office in Toronto, Ontario. In the event that there is a change in the rate of exchange prevailing between the Business Day before the day on which the judgment is given and the date of receipt by the Lender of the amount due, the Borrower will, on the date of receipt by the Lender, pay such additional amounts, if any, or be entitled to receive reimbursement of such amount, if any, as may be necessary to ensure that the amount received by the Lender on such date is the amount in the Judgment Currency which when converted at the rate of exchange prevailing on the date of receipt by the Lender is the amount then due under this Agreement or such other Financing Document in the Currency Due. If the amount of the Currency Due which the Lender is so able to purchase is less than the amount of the Currency Due originally due to it, the Borrower shall indemnify and save the Lender harmless from and against all loss or damage arising as a result of such deficiency. This indemnity shall constitute an obligation separate and independent from the other obligations contained in this Agreement and the other Financing Documents, shall give rise to a separate and independent cause of action, shall apply irrespective of any indulgence granted by the Lender from time to time and shall continue in full force and effect notwithstanding any judgment or order for a liquidated sum in respect of an amount due under this Agreement or any other Financing Document or under any judgment or order.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lender that:
3.1 Organization; Powers . Each of the Borrower and its Subsidiaries is duly organized and validly existing under the laws of the jurisdiction of its organization, has all requisite power and authority to carry on its business as now and formerly conducted and is qualified to do business in, and is in good standing in, every jurisdiction where such qualification is required.
3.2 Authorization; Enforceability . The Transactions are within the Companies corporate powers and have been duly authorized by all necessary corporate and, if required, shareholder action. This Agreement and the other Financing Documents have been duly executed and delivered by the Companies (as applicable) and constitute legal, valid and binding obligations of the Companies (as applicable), enforceable in accordance with their terms, subject to applicable bankruptcy, insolvency, reorganisation, moratorium or other Laws affecting creditors rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.
3.3 Governmental Approvals; No Conflicts . The Transactions (a) do not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority, except as disclosed in Schedule B, (b) will not violate any applicable Law or the charter, by-laws or other organizational documents of the Companies or any order of any Governmental Authority, (c) will not violate or result in a default under any indenture, agreement or other instrument binding upon the Companies or their respective assets, or give rise to a right thereunder to require any payment to be made by the Companies, and (d) will not result in the creation or imposition of any Lien on any asset of the Companies, except for any Lien arising in favour of the Lender under the Financing Documents.
3.4 Financial Condition; No Material Adverse Effect .
(a) The Borrower has furnished to the Lender its consolidated balance sheets and statements of income, retained earnings and changes in financial position (i) as of and for the Fiscal Year ended December 31, 2001, reported on by its auditors, and (ii) as of and for the Fiscal Quarter and the portion of the Fiscal Year ended September 30, 2002, certified by a Responsible Officer. Such financial statements present fairly, in all material respects, the consolidated financial position and results of operations and cash flows of the Borrower as of such dates and for such periods in accordance with GAAP, subject to year-end audit adjustments and the absence of footnotes in the case of the statements referred to in clause (ii) above.
(b) All information (including that disclosed in all financial statements) pertaining to the Borrower and its consolidated Subsidiaries (the " Information ") that has been or will be made available to the Lender by the Borrower or any representative of the Borrower, taken as a whole, is or will be, when furnished, complete and correct in all material respects and does not or will not, when furnished, contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained therein not materially misleading in light of the circumstances under which such statements are made. The projections that have been or will be made available to the Lender by the Borrower or any representative of the Borrower have been or will be prepared in good faith based upon reasonable assumptions.
3.5 Litigation .
(a) Except as disclosed in Schedule A, there are no actions, suits or proceedings (including any Tax-related matter) by or before any arbitrator or Governmental Authority pending against or, to the knowledge of the Borrower, threatened against or affecting the Borrower or any of the Subsidiaries (i) as to which there is a reasonable possibility of an adverse determination and that, if adversely determined, could reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect (other than the Disclosed Matters), or (ii) that involve this Agreement, any other Financing Document, or the Transactions.
(b) Since the date of this Agreement, there has been no change in the status of the Disclosed Matters that, individually or in the aggregate, has resulted in, or materially increased the likelihood of, a Material Adverse Effect.
3.6 Compliance with Laws and Agreements . Each of the Companies is in compliance with all Laws applicable to it or its property and all indentures, agreements and other instruments binding upon it or its property, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. None of the Companies has violated or failed to obtain any Authorization necessary to the ownership of any of its property or assets or the conduct of its business, which violation or failure could reasonably be expected to have (in the event that such a violation or failure were asserted by any Person through appropriate action) a Material Adverse Effect.
3.7 Taxes . The Companies have timely filed or caused to be filed all Tax returns and reports required to have been filed and have paid or caused to be paid, or have adequately reserved for, all Taxes required to have been paid by them (including all instalments with respect to the current period) and have made adequate provision for Taxes for the current period except for Taxes that are being contested in good faith by appropriate proceedings and for which the applicable Company has set aside on its books adequate reserves.
3.8 Titles to Personal Property . The Companies, other than Fahnestock & Co., have title to their respective owned personal properties, and with respect to leased personal properties, title to the leasehold estate with respect thereto, pursuant to valid and enforceable leases, free and clear of all Liens except Permitted Liens.
3.9 Disclosure . The Borrower has disclosed to the Lender all agreements, instruments and corporate or other restrictions to which it or any of the Subsidiaries is subject, and all other matters known to it, that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect. All liabilities of the Borrower have been disclosed to the Lender in writing.
3.10 Defaults . Neither the Borrower nor any Subsidiary is in default nor has any event or circumstance occurred which, but for the passage of time or the giving of notice, or both, would constitute a default (in any respect that would have a Material Adverse Effect) under any loan or credit agreement, indenture, mortgage, deed of trust, security agreement or other instrument or agreement evidencing or pertaining to any Indebtedness of the Borrower or any Subsidiary, or under any material agreement or instrument to which the Borrower or any Subsidiary is a party or by which the Borrower or any Subsidiary is bound, except as disclosed to the Lender in Schedule D. No Default has occurred and is continuing.
3.11 Subsidiaries . As of the date hereof, Schedule E correctly sets forth the (i) names, (ii) form of legal entity, (iii) the percentage ownership of each entity in which the Borrower or any Subsidiary has an ownership interest, and (iv) jurisdictions of organization of all Subsidiaries of the Borrower. Except as described in Schedule E, as of the date hereof, the Borrower does not own any Equity Securities or debt securities which are convertible into, or exchangeable for, Equity Securities of any Person.
3.12 Insurance . All policies of fire, liability, workers compensation, casualty, flood, business interruption and other forms of insurance owned or held by the Borrower and each of the Subsidiaries provide adequate insurance coverage in at least such amounts and against at least such risks (but including in any event public liability) as are usually insured against in the same general area by companies engaged in the same or a similar business for the assets and operations of the Borrower and each Subsidiary. All such material policies are in full force and effect, all premiums with respect thereto have been paid in accordance with their respective terms, and no notice of cancellation or termination has been received with respect to any such policy.
3.13 Solvency . Neither the Borrower nor any Subsidiary is an "insolvent person" within the meaning of the Bankruptcy and Insolvency Act (Canada), R.S.C. 1985, c.B-3 or within the meaning of any corresponding legislation in the United States of America.
3.14 Employee Matters . Each of the Borrower and its Subsidiaries has withheld from each payment to each of their respective officers, directors and employees the amount of all Taxes, including income tax, pension plan, unemployment insurance and other payments and deductions required to be withheld therefrom, and has paid the same to the proper taxation or other receiving authority in accordance with applicable Law. None of the Borrower nor any Subsidiary is subject to any claim by or liability to any of their respective officers, directors or employees for salary (including vacation pay) or benefits which would rank in whole or in part pari passu with or prior to the Liens created by the Security Documents.
3.15 Fiscal Year . The Fiscal Year of the Borrower ends on December 31 of each calendar year, and the Borrowers Fiscal Quarters end on the last day of each of March, June, September and December of each calendar year.
3.16 Intellectual Property Rights . The Borrower and each Subsidiary is the registered and beneficial owner of, with good and marketable title, free of all licenses, franchises and Liens to all patents, patent applications, trade marks, trade mark applications, trade names, service marks, copyrights, industrial designs, integrated circuit topographies, or other rights with respect to the foregoing and other similar property, used in or necessary for the present and planned future conduct of its business, without any conflict with the rights of any other Person, other than as listed on Schedule F, or other than for such conflicts as could not reasonably be expected to have a Material Adverse Effect. Except as set forth in Schedule F, no material claim has been asserted and is pending by any Person with respect to the use by the Borrower or any Subsidiary of any intellectual property or challenging or questioning the validity, enforceability or effectiveness of any intellectual property necessary for the conduct of the business of the Borrower or any Subsidiary. Except as disclosed in Schedule F or except as could not reasonably be expected to have a Material Adverse Effect, (i) the Borrower and each Subsidiary has the exclusive right to use the intellectual property which the Borrower (or each Subsidiary) owns, (ii) all applications and registrations for such intellectual property are current, and (iii) to the knowledge of the Borrower, the conduct of the Borrowers and each Subsidiarys business does not infringe the intellectual property rights of any other Person.
3.17 Indebtedness . None of the Borrower, Viner International or Viner Finance has any Indebtedness outstanding, other than Indebtedness in favour of the Lender and its Affiliates, and other than Indebtedness amongst themselves.
ARTICLE 4
CONDITIONS
4.1 Closing Conditions . The obligations of the Lender to make Loans hereunder shall not become effective until the date on which each of the following conditions is satisfied (or waived in accordance with Section 8.2):
(a) Credit Agreement . The Lender (or its counsel) shall have received from each party hereto either (i) a counterpart of this Agreement signed on behalf of each party hereto, or (ii) written evidence satisfactory to the Lender (which may include facsimile transmission of a signed signature page of this Agreement) that each such party has signed a counterpart of this Agreement.
(b) Legal Opinions . The Lender shall have received favourable written opinions (addressed to the Lender and dated the Closing Date) of Borden Ladner Gervais LLP and Skadden, Arps, Slate, Meagher & Flom LLP, counsel to the Borrower, covering such matters relating to the Borrower, this Agreement, the other Financing Documents, or the Transactions as the Lender shall reasonably request (together with copies of all factual certificates and legal opinions delivered to such counsel in connection with such opinions upon which counsel has relied).
(c) Corporate Certificates . The Lender shall have received:
(i) certified copies of the resolutions of the Board of Directors of the Borrower, and any Subsidiary which is a party to any Financing Document, dated as of the Closing Date, and approving, as appropriate, the Loans, this Agreement and the other Financing Documents, and all other documents, if any, to which the Borrower or such Subsidiary is a party and evidencing corporate authorization with respect to such documents; and
(ii) a certificate of the Secretary or an Assistant Secretary of the Borrower, and any Subsidiary which is a party to any Financing Document, dated as of the Closing Date, and certifying (A) the name, title and true signature of each officer of such Person authorized to execute this Agreement and the other Financing Documents to which it is a party, (B) the name, title and true signature of each officer of such Person authorized to provide the certifications required pursuant to this Agreement, and (C) that attached thereto is a true and complete copy of the articles of incorporation and bylaws of the Borrower, and any Subsidiary which is a party to any Financing Document, as amended to date, and a recent certificate of status, certificate of compliance, good standing certificate or analogous certificate.
(d) Closing Conditions Certificate. The Lender shall have received a certificate, dated the Closing Date and signed by a Responsible Officer of the Borrower, confirming compliance with the financial covenants set forth in Section 5.12 and with the conditions set forth in Section 4.2(a) and (b).
(e) Fees . The Lender shall have received all fees and other amounts due and payable on or prior to the Closing Date, including, to the extent invoiced, reimbursement or payment of all legal fees and other out-of-pocket expenses required to be reimbursed or paid by the Borrower hereunder or under any other Financing Document.
(f) Execution and Delivery of Documentation . The Borrower and any Subsidiary which is a party to any Financing Document shall have duly authorized, executed and delivered all documents required hereunder, all in form and substance satisfactory to the Lender, acting reasonably, and all of the Security Documents shall have been registered in all offices in which, in the opinion of the Lender or its counsel, registration is necessary or of advantage to preserve the priority of the Liens intended to be created thereby, and duplicate copies of such Security Documents bearing or accompanied by appropriate endorsements or certificates of registration shall have been delivered to the Lender. The Lender shall have received and be satisfied with the results of all personal property, pending litigation, judgment, bankruptcy, bulk sale, execution and other searches conducted by the Lender and its counsel with respect to the Borrower and any Subsidiary in all jurisdictions selected by the Lender and its counsel.
(g) Security Documents . The Lender shall have received:
(i) a guarantee executed by each of Viner International and Viner Finance in favour of the Lender dated as of the Closing Date;
(ii) a securities pledge agreement executed by the Borrower, in favour of the Lender dated as of the Closing Date, with respect to all shares in the capital of Viner International, together with all stock certificates, instruments and other documents required to be delivered to the Lender pursuant to such securities pledge agreement;
(iii) a securities pledge agreement executed by the Borrower, in favour of the Lender dated as of the Closing Date, with respect to all shares in the capital of Fahnestock Canada, together with all stock certificates, instruments and other documents required to be delivered to the Lender pursuant to such securities pledge agreement;
(iv) a securities pledge agreement executed by Viner International, in favour of the Lender dated as of the Closing Date, with respect to all shares in the capital of Viner Finance, together with all stock certificates, instruments and other documents required to be delivered to the Lender pursuant to such securities pledge agreement; and
(v) a securities pledge agreement executed by Viner Finance, in favour of the Lender dated as of the Closing Date, with respect to all shares in the capital of Fahnestock & Co., together with all stock certificates, instruments and other documents required to be delivered to the Lender pursuant to such securities pledge agreement.
All of the above Security Documents shall be in form and substance satisfactory to the Lender.
(h) Regulatory Approval; Consents; Waivers . The Lender shall be satisfied, acting reasonably, that all material Authorizations required in connection with the Transactions contemplated hereby have been obtained and are in full force and effect (including all approvals listed in Schedule B), and that all consents and waivers required to consummate the Transactions have been obtained.
(i) Delivery of Financial Statements . The Lender shall have received (i) the audited consolidated balance sheets, statements of income and retained earnings and statements of changes in financial position of the Borrower for the Fiscal Year ended December 31, 2001, and (ii) corresponding unaudited financial statements in respect of the Borrower and in respect of Fahnestock & Co. for the 9 month period ended September 30, 2002.
(j) Other Documentation . The Lender shall have received such other documents and instruments as are customary for transactions of this type or as they may reasonably request.
4.2 Each Credit Event . The obligation of the Lender to make a Loan on the occasion of any Borrowing is subject to the satisfaction of the following conditions:
(a) the representations and warranties of the Borrower set forth in this Agreement shall be true and correct on and as of the date of each such Borrowing (except where such representation or warranty refers to a different date);
(b) at the time of and immediately after giving effect to such Borrowing no Default shall have occurred and be continuing; and
(c) the Lender shall have received a Borrowing Request in the manner and within the time period required by Section 2.2.
Each Borrowing shall be deemed to constitute a representation and warranty by the Borrower on the date thereof as to the accuracy of the matters specified in paragraphs (a) and (b) above.
ARTICLE 5
AFFIRMATIVE COVENANTS
From (and including) the Closing Date until the Commitment has expired or been terminated and the principal of and interest on each Loan and all fees payable hereunder shall have been paid in full the Borrower covenants and agrees with the Lender that:
5.1 Financial Statements and Other Information . The Borrower will furnish to the Lender:
(a) as soon as available and in any event within 90 days after the end of each Fiscal Year of the Borrower, its audited consolidated balance sheet and related statements of income, retained earnings and changes in financial position as of the end of and for such Fiscal Year, setting forth in each case in comparative form the figures for the previous Fiscal Year, all reported on by PricewaterhouseCoopers or other independent auditors of recognized national standing (without a "going concern" or like qualification or exception and without any qualification or exception as to the scope of such audit) to the effect that such consolidated financial statements present fairly in all material respects the financial condition and results of operations of the Borrower and its Subsidiaries on a consolidated basis in accordance with GAAP consistently applied;
(b) as soon as available and in any event within 45 days after the end of each of the first three Fiscal Quarters of each Fiscal Year of the Borrower, its unaudited consolidated balance sheet and related statements of income, retained earnings and changes in financial position as of the end of and for such Fiscal Quarter and the then elapsed portion of the Fiscal Year which includes such Fiscal Quarter, setting forth in each case in comparative form the figures for the corresponding period or periods of (or, in the case of the balance sheet, as of the end of) the previous Fiscal Year, all certified by a Responsible Officer as presenting fairly in all material respects the financial condition and results of operations of the Borrower and its Subsidiaries on a consolidated basis in accordance with GAAP consistently applied, subject to normal year-end audit adjustments;
(c) as soon as available and in any event within 45 days after the end of each month, a certificate of the Borrower, signed by a Responsible Officer, detailing the status of Employee Notes, including the outstanding amount owed by each employee, and the change in such outstanding amounts relative to the prior month-end;
(d) concurrently with the financial statements required pursuant to Sections 5.1(a) and (b) above, a certificate of the Borrower with respect to the Companies, substantially in the form of Exhibit B, signed by a Responsible Officer (i) stating that a review of such financial statements during the period covered thereby and of the activities of the Borrower and the other Companies has been made under such Responsible Officers supervision with a view to determining whether the Borrower and the other Companies have fulfilled all of their obligations under this Agreement and the other Financing Documents, (ii) stating that the Borrower and the other Companies have fulfilled their obligations under this Agreement and the other Financing Documents and that all representations made in this Agreement continue to be true and correct as if made on the date of such certification (or specifying the nature of any change), except where such representation or warranty refers to a different date, or, if there shall be a Default or Event of Default, specifying the nature and status thereof and the Borrowers proposed response thereto, (iii) demonstrating in reasonable detail compliance (including showing all material calculations) as at the end of the most recently completed Fiscal Year or the most recently completed Fiscal Quarter, with the financial covenants in Section 5.12, and (iv) containing or accompanied by such financial or other details, information and material as the Lender may reasonably request to evidence such compliance;
(e) concurrently with any delivery of financial statements under Section 5.l(a) above, a certificate of the accounting firm that reported on such financial statements stating whether that firm obtained knowledge during the course of its examination of such financial statements of any Default (which certificate may be limited in form, scope and substance to the extent required by applicable accounting rules or guidelines in effect from time to time);
(f) promptly after the same become publicly available, copies of all periodic and other reports, proxy statements and other materials filed by the Borrower with any securities commission, stock exchange or similar entity, and all materials distributed out of the ordinary course by the Borrower to its shareholders and which relate to matters in which the Lender can reasonably be expected to have an interest, and copies, when filed, by Fahnestock & Co. of Focus Reports filed with the U.S. Securities Exchange Commission;
(g) promptly after the Borrower learns of the receipt or occurrence of any of the following, a certificate of the Borrower, signed by a Responsible Officer, specifying (i) any official notice of any violation, possible violation, non-compliance or possible non-compliance, or claim made by any Governmental Authority pertaining to all or any part of the properties of the Borrower or any of the Subsidiaries which could reasonably be expected to have a Material Adverse Effect, (ii) any event which constitutes a Default or Event of Default, together with a detailed statement specifying the nature thereof and the steps being taken to cure such Default or Event of Default, (iii) the receipt of any notice from, or the taking of any other action by, the holder of any promissory note, debenture or other evidence of Indebtedness of the Borrower or any of the Subsidiaries in an amount in excess of U.S.$1,000,000 with respect to an actual or alleged default, together with a detailed statement specifying the notice given or other action taken by such holder and the nature of the claimed default and what action the Borrower or the relevant Subsidiary is taking or proposes to take with respect thereto, (iv) any default or non-compliance of any party to any of the Financing Documents with any of the terms and conditions thereof or any notice of termination or other proceedings or actions which could reasonably be expected to adversely affect any of the Financing Documents, (v) the creation, dissolution, merger or acquisition of any Subsidiary, and (vi) any event, development or condition which may reasonably be expected to have a Material Adverse Effect;
(h) promptly after the occurrence thereof, notice of the institution of or any material adverse development in any action, suit or proceeding or any governmental investigation or any arbitration before any court or arbitrator or any Governmental Authority or official against the Borrower or any Subsidiary or any material property of any thereof which could reasonably be expected to have a Material Adverse Effect;
(i) upon request by the Lender, a summary of the insurance coverages of the Borrower and the Subsidiaries, in form and substance reasonably satisfactory to the Lender, and upon renewal of any insurance policy, a copy of an insurance certificate summarizing the terms of such policy, and upon request by the Lender, copies of the applicable policies;
(j) concurrently with any delivery of financial statements under Section 5.1(a) or (b) above, a certificate of a Responsible Officer of the Borrower stating whether any change in GAAP or in the application thereof has occurred since the date of the audited financial statements referred to in this Section 5.1 and, if any such change has occurred, specifying the effect of such change on the financial statements accompanying such certificate; and
(k) such other reports and information which the Lender may reasonably request from time to time.
5.2 Existence; Conduct of Business . The Borrower will, and will cause each of the other Companies to, do or cause to be done all things necessary to preserve, renew and keep in full force and effect their legal existence and, except to the extent that the failure to do so could not reasonably be expected to result in a Material Adverse Effect, obtain, preserve, renew and keep in full force and effect any and all rights, licenses, permits, privileges and franchises material to the conduct of their businesses.
5.3 Payment of Obligations . The Borrower will, and will cause each Subsidiary to, pay its obligations, including Tax liabilities, that, if not paid, could result in a Material Adverse Effect before the same shall become delinquent or in default, except where (a) the validity or amount thereof is being contested in good faith by appropriate proceedings, (b) the Borrower or such Subsidiary has set aside on its books adequate reserves with respect thereto in accordance with GAAP, and (c) the failure to make payment pending such contest could not reasonably be expected to result in a Material Adverse Effect.
5.4 Maintenance of Properties . The Borrower will, and will cause each of the Subsidiaries to, keep and maintain all property material to the conduct of its business in good working order and condition, ordinary wear and tear excepted, except to the extent that the failure to do so could not reasonably be expected to have a Material Adverse Effect.
5.5 Books and Records; Inspection Rights . The Borrower will, and will cause each of the Subsidiaries to, keep proper books of record and account in which full, true and correct entries are made of all dealings and transactions in relation to its business and activities. The Borrower will, and will cause each Subsidiary to, permit any representatives designated by the Lender, upon reasonable prior notice, to visit and inspect its properties, to examine and make extracts from its books and records, and to discuss its affairs, finances and condition with its officers and independent accountants, all at such reasonable times and as often as reasonably requested.
5.6 Compliance with Laws and Contracts . The Borrower will, and will cause each Subsidiary to, comply with all Laws and orders of any Governmental Authority applicable to it or its property and with all of its material contractual obligations, including all regulatory orders made by any Governmental Authority, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.
5.7 Use of Proceeds . The proceeds of the Loans will be used solely (i) to make Permitted Distributions by the Borrower, (ii) to be lent directly, or indirectly through Viner International and/or Viner Finance, to Fahnestock & Co., to finance loans to be made to employees of Fahnestock & Co. to be evidenced by Employee Notes, (iii) to make payments of interest, principal and other amounts required hereunder, and (iv) to make incidental payments for the normal ongoing operating costs of the Borrower.
5.8 Further Assurances . The Borrower will, and will cause the other Companies to, cure promptly any defects in the execution and delivery of the Financing Documents, including this Agreement. Upon request, the Borrower will, at its expense, as promptly as practical, execute and deliver to the Lender, all such other and further documents, agreements and instruments (and cause each Subsidiary to take such action) in compliance with or performance of the covenants and agreements of the Borrower or any Subsidiary in any of the Financing Documents, including this Agreement, or to further evidence and more fully describe the Collateral, or to correct any omissions in any of the Financing Documents, or more fully to state the security obligations set out herein or in any of the Financing Documents, or to perfect, protect or preserve any Liens created pursuant to any of the Financing Documents, or to make any recordings, to file any notices, or obtain any consents, all as may be necessary or appropriate in connection therewith.
5.9 Insurance . The Borrower will, and will cause each Subsidiary to, maintain or cause to be maintained, with financially sound and reputable insurers, insurance with respect to their respective properties and business against such liabilities, casualties, risks and contingencies and in such types (including business interruption insurance) and amounts as is customary in the case of Persons engaged in the same or similar businesses and similarly situated and in accordance with any requirement of any Governmental Authority.
5.10 Operation and Maintenance of Property . The Borrower will, and will cause each Subsidiary to, manage and operate its business or cause its business to be managed and operated (i) in accordance with prudent industry practice in all material respects and in compliance in all material respects with the terms and provisions of all applicable licenses, leases, contracts and agreements, and (ii) in compliance with all applicable laws of the jurisdiction in which such businesses are carried on, and all applicable Laws of every other Governmental Authority from time to time constituted to regulate the ownership, management and operation of such businesses, except where a failure to so manage and operate would not have a Material Adverse
5.11 Maintain Listings on NYSE and TSX. The Borrower will use reasonable efforts to maintain the listing of its Class A non-voting shares on the New York Stock Exchange and the Toronto Stock Exchange.
5.12 Financial Covenants .
(a) Borrowers Liabilities to Equity Ratio . The Borrower will at all times maintain a Liabilities to Equity Ratio at or below 4:1, and for the purposes of this calculation, the liabilities of Fahnestock & Co. excludes secured liabilities.
(b) Fahnestock & Co.s Liabilities to Equity Ratio . The Borrower will cause Fahnestock & Co. to at all times maintain a Liabilities to Equity Ratio at or below 3.5:1.
(c) Fahnestock & Co.s Minimum Excess Net Capital. The Borrower will cause Fahnestock & Co. to at all times maintain Excess Net Capital of not less than U.S.$100,000,000.
5.13 Distributions. The Borrower will cause:
(c) Viner Finance to pay to Viner International all amounts received by Viner Finance on account of the shares of Fahnestock & Co. held by Viner Finance upon receipt thereof other than (i) such amounts as are required by Viner Finance to pay administrative expenses incurred in the ordinary course of business, (ii) such amounts as are required for Viner Finance to make payments then due or to become due in the next 30 days in respect of the zero coupon promissory note to be issued by Viner Finance to the Lender (or an Affiliate of the Lender), as contemplated by the Asset Purchase Agreement, and (iii) such amounts as are required for Viner Finance to make payments on intercorporate debt owing by it to Viner International or to the Borrower from time to time; and
(b) Viner International to pay to the Borrower all amounts received by Viner International on account of the shares of Viner Finance held by Viner International upon receipt of such proceeds other than (i) such amounts as are required by Viner International to pay administrative expenses incurred in the ordinary course of business, (ii) such amounts as are required for Viner International to pay amounts due or accruing due on the Debentures (as such term is defined in the Asset Purchase Agreement) issued by Viner International to the Lender (or an Affiliate of the Lender), and (iii) such amounts as are required for Viner International to make payments on intercorporate debt owing by it to the Borrower from time to time.
ARTICLE 6
NEGATIVE COVENANTS
From (and including) the Closing Date until the Commitment has expired or been terminated and the principal of and interest on each Loan and all fees payable hereunder shall have been paid in full, the Borrower covenants and agrees with the Lender that:
6.1 Indebtedness . The Borrower will not, and will not permit Viner International or Viner Finance to, create, incur, assume or permit to exist any Indebtedness without the prior written consent of the Lender, except:
(a) any Indebtedness created hereunder;
(b) any Indebtedness existing on the date hereof and set forth in Schedule G, but not any extensions, renewals or replacements of any such Indebtedness; and
(c) any Indebtedness owing by Viner International to the Borrower or by Viner Finance to Viner International or the Borrower.
6.2 Liens .
(a) The Borrower will not, and will not permit Viner International or Viner Finance to create, incur, assume or permit to exist any Lien on any property or asset now owned or hereafter acquired by any of them except in Permitted Liens.
(b) The Borrower will not permit Fahnestock & Co. to create Liens, other than (i) in Permitted Liens, and (ii) Liens created in the ordinary course of its business, subject to Section 6.3.
6.3 Employee Notes . The Borrower will not permit Fahnestock & Co. to sell, assign or otherwise encumber the Employee Notes.
6.4 Fundamental Changes .
(a) Each of the Companies will not merge into or amalgamate or consolidate with any other Person, or permit any other Person to merge into or amalgamate or consolidate with it, or sell, transfer, lease or otherwise dispose of (in one transaction or in a series of transactions) all or substantially all of its assets.
(b) The Borrowers business shall be restricted to holding all of the issued and outstanding Equity Securities of Viner International and Fahnestock Canada, and the Borrower shall continue to hold all of the outstanding Equity Securities of Viner International and Fahnestock Canada.
(c) Viner Internationals business shall be restricted to holding all of the issued and outstanding Equity Securities of Viner Finance, and Viner International shall continue to hold all of the outstanding Equity Securities of Viner Finance.
(d) Viner Finances business shall be restricted to holding all of the issued and outstanding Equity Securities of Fahnestock & Co., and Viner Finance shall continue to hold all of the outstanding Equity Securities of Fahnestock & Co.
6.5 Restricted Payments . The Borrower will not declare, pay or make, or agree to pay or make, directly or indirectly, any Restricted Payment, provided that the Borrower may make Permitted Distributions.
6.6 Transactions with Affiliates . The Borrower will not, and will not permit any Subsidiary to, sell, lease or otherwise transfer any property or assets to, or purchase, lease or otherwise acquire any property or assets from, or otherwise engage in any other transactions (other than intercorporate loans permitted by Section 3.17) with, any of its Affiliates, except in the ordinary course of business at prices and on terms and conditions not less favourable to the Borrower or such Subsidiary than could be obtained on an arms-length basis from unrelated third parties.
6.7 Issuance of Shares . The Companies, other than the Borrower, will not authorize or issue any preferred shares or other Equity Securities unless such securities are pledged, directly or indirectly, to the Lender.
ARTICLE 7
EVENTS OF DEFAULT
7.1 Events of Default . If any of the following events (" Events of Default ") shall occur:
(a) the Borrower shall fail to pay any principal of any Loan when and as the same shall become due and payable, whether at the due date thereof or at a date fixed for prepayment thereof or otherwise and such failure shall continue unremedied for a period of two Business Days;
(b) the Borrower shall fail to pay any interest on any Loan or any fee or any other amount (other than an amount referred to in clause (a) above) payable under this Agreement, when and as the same shall become due and payable and such failure shall continue unremedied for a period of ten Business Days;
(c) any representation or warranty made or deemed made by or on behalf of the Borrower or any Subsidiary in or in connection with any Financing Document or any amendment or modification thereof or waiver thereunder, or in any report, certificate, financial statement or other document furnished pursuant to or in connection with any Financing Document or any amendment or modification thereof or waiver thereunder, shall prove to have been incorrect in any material respect when made or deemed to be made;
(d) the Borrower shall fail to observe or perform any covenant, condition or agreement contained in Section 5.1(i), Section 5.2 (with respect to the Borrowers existence) or Section 5.7, or in Article 6 (or in any comparable provision of any other Financing Document);
(e) the Borrower shall fail to observe or perform any covenant, condition or agreement contained in this Agreement (other than those specified in clauses (a), (b) or (d) above) or any other Financing Document, and such failure shall continue unremedied for a period of 30 days after notice thereof from the Lender to the Borrower;
(f) the Borrower or any Subsidiary:
(i) becomes insolvent, or generally does not or becomes unable to pay its debts or meet its liabilities as the same become due, or admits in writing its inability to pay its debts generally, or declares any general moratorium on its indebtedness, or proposes a compromise or arrangement between it and any class of its creditors;
(ii) commits an act of bankruptcy under the Bankruptcy and Insolvency Act (Canada), or makes an assignment of its property for the general benefit of its creditors under such Act, or makes a proposal (or files a notice of its intention to do so) under such Act;
(iii) institutes any proceeding seeking to adjudicate it an insolvent, or seeking liquidation, dissolution, winding-up, reorganization, compromise, arrangement, adjustment, protection, moratorium, relief, stay of proceedings of creditors generally (or any class of creditors), or composition of it or its debts or any other relief, under any federal, provincial or foreign Law now or hereafter in effect relating to bankruptcy, winding-up, insolvency, reorganization, receivership, plans of arrangement or relief or protection of debtors (including the Bankruptcy and Insolvency Act (Canada), the Companies Creditors Arrangement Act (Canada) and any applicable corporations legislation) or at common law or in equity, or files an answer admitting the material allegations of a petition filed against it in any such proceeding;
(iv) applies for the appointment of, or the taking of possession by, a receiver, interim receiver, receiver/manager, sequestrator, conservator, custodian, administrator, trustee, liquidator or other similar official for it or any substantial part of its property; or
(v) threatens to do any of the foregoing, or takes any action, corporate or otherwise, to approve, effect, consent to or authorize any of the actions described in this Section 7.1(f) or in Section 7.1(g) or otherwise acts in furtherance thereof or fails to act in a timely and appropriate manner in defense thereof,
(g) any petition is filed, application made or other proceeding instituted against or in respect of the Borrower or any Subsidiary:
(i) seeking to adjudicate it an insolvent;
(ii) seeking a receiving order against it under the Bankruptcy and Insolvency Act (Canada);
(iii) seeking liquidation, dissolution, winding-up, reorganization, compromise, arrangement, adjustment, protection, moratorium, relief, stay of proceedings of creditors generally (or any class of creditors), or composition of it or its debts or any other relief under any federal, provincial or foreign Law now or hereafter in effect relating to bankruptcy, winding-up, insolvency, reorganization, receivership, plans of arrangement or relief or protection of debtors (including the Bankruptcy and Insolvency Act (Canada), the Companies Creditors Arrangement Act (Canada) and any applicable corporations legislation) or at common law or in equity; or
(iv) seeking the entry of an order for relief or the appointment of, or the taking of possession by, a receiver, interim receiver, receiver/manager, sequestrator, conservator, custodian, administrator, trustee, liquidator or other similar official for it or any substantial part of its property;
and such petition, application or proceeding continues undismissed, or unstayed and in effect, for a period of 30 days after the institution thereof, provided that if an order, decree or judgment is granted or entered (whether or not entered or subject to appeal) against the Borrower or any Subsidiary thereunder in the interim, such grace period will cease to apply, and provided further that if the Borrower or any Subsidiary files an answer admitting the material allegations of a petition filed against it in any such proceeding, such grace period will cease to apply;
(h) any other event occurs which, under the Laws of any applicable jurisdiction, has an effect equivalent to any of the events referred to in either of Sections 7.1(f) or (g);
(i) one or more judgments for the payment of money in a cumulative amount in excess of U.S.$1,000,000 (or its then equivalent in any other currency) in the aggregate is rendered against the Borrower, any Subsidiary or any combination thereof and the Borrower or Subsidiary has not (i) provided for its discharge in accordance with its terms within 30 days from the date of entry thereof, or (ii) procured a stay of execution thereof within 30 days from the date of entry thereof and within such period, or such longer period during which execution of such judgment has not been stayed, appealed such judgment and caused the execution thereof to be stayed during such appeal, provided that if enforcement and/or realization proceedings are lawfully commenced in respect thereof in the interim, such grace period will cease to apply;
(j) any property of the Borrower or any Subsidiary having a fair market value in excess of U.S.$1,000,000 (or its then equivalent in any other currency) in the aggregate is seized (including by way of execution, attachment, garnishment, levy or distraint), or any Lien thereon securing Indebtedness in excess of U.S.$1,000,000 (or its then equivalent in any other currency) is enforced, or such property has become subject to any charging order or equitable execution of a Governmental Authority, or any writ of execution or distress warrant exists in respect of the Borrower, any Subsidiary or the property of any of them, or any sheriff or other Person becomes lawfully entitled by operation of law or otherwise to seize or distrain upon such property and in any case such seizure, enforcement, execution, attachment, garnishment, distraint, charging order or equitable execution, or other seizure or right, continues in effect and is not released or discharged for more than 30 days or such longer period during which entitlement to the use of such property continues with the Borrower or Subsidiary, and the Borrower or such Subsidiary is contesting the same in good faith and by appropriate proceedings, provided that if the property is removed from the use of the Borrower or Subsidiary, or is sold, in the interim, such grace period will cease to apply;
(k) one or more final judgments, not involving the payment of money and not otherwise specified in this Section 7.1(k), has been rendered against the Borrower or any Subsidiary, the result of which could reasonably be expected to result in a Material Adverse Effect, so long as the Borrower or Subsidiary has not (i) provided for its discharge in accordance with its terms within 30 days from the date of entry thereof, or (ii) procured a stay of execution thereof within 30 days from the date of entry thereof and within such period, or such longer period during which execution of such judgment has been stayed, appealed such judgment and caused the execution thereof to be stayed during such appeal, provided that if enforcement and/or realization proceedings are lawfully commenced in respect thereof in the interim, such grace period will cease to apply;
(l) this Agreement, any other Financing Document or any material obligation or other provision hereof or thereof at any time for any reason terminates or ceases to be in full force and effect and a legally valid, binding and enforceable obligation of the Borrower or any Subsidiary, is declared to be void or voidable or is repudiated, or the validity, binding effect, legality or enforceability hereof or thereof is at any time contested by the Borrower or any Subsidiary, or the Borrower or any Subsidiary denies that it has any or any further liability or obligation hereunder or thereunder or any action or proceeding is commenced to enjoin or restrain the performance or observance by the Borrower or any Subsidiary of any material terms hereof or thereof or to question the validity or enforceability hereof or thereof, or at any time it is unlawful or impossible for the Borrower or any Subsidiary to perform any of its material obligations hereunder or thereunder;
(m) any Lien purported to be created by any Security Document shall cease to be, or shall be asserted by the Borrower or any Subsidiary not to be, a valid, perfected, first priority, except to the extent that any such loss of perfection or priority results from the failure of the Lender to maintain possession of certificates representing securities pledged under the Financing Documents or otherwise take any action within its control (including the filing of financing change statements to renew any financing statement filed under applicable personal property security laws); and
(n) the Borrower shall fail to maintain the listing of its Class A non-voting shares on both the New York Stock Exchange and the Toronto Stock Exchange;
then, and in every such event (other than an event with respect to the Borrower described in clause (f), (g) or (h) above), and at any time thereafter during the continuance of such event or any other such event, the Lender may by notice to the Borrower, take either or both of the following actions, at the same or different times: (i) terminate the Commitment, and thereupon the Commitment shall terminate immediately, and (ii) declare the Loans then outstanding to be due and payable in whole (or in part, in which case any principal not so declared to be due and payable may thereafter be declared to be due and payable), and thereupon the principal of the Loans so declared to be due and payable, together with accrued interest thereon and all fees and other obligations of the Borrower accrued hereunder, shall become due and payable immediately, without presentment, demand, protest or other notice of any kind except as set forth earlier in this paragraph, all of which are hereby waived by the Borrower; and in the case of any event with respect to the Borrower described in clause (f), (g) or (h) above, the Commitment shall automatically terminate and the principal of the Loans then outstanding, together with accrued interest thereon and all fees and other obligations of the Borrower accrued hereunder, shall automatically become due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower.
7.2 Legal Proceedings . During the existence of an Event of Default, the Lender may commence such legal action or other proceedings as it, in its sole discretion, deems expedient to collect the Indebtedness of the Borrower under the Loan Documents and to exercise its rights under the Security Documents or any part thereof, all without any additional notice, presentation, demand, or protest, all of which the Borrower, to the extent permitted by law, hereby expressly waives.
ARTICLE 8
MISCELLANEOUS
8.1 Notices . Except in the case of notices and other communications expressly permitted to be given by telephone, all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by facsimile in each case to the addressee, as follows:
(a) if to the Borrower:
Fahnestock Viner Holdings Inc.
P.O. Box 2015
20 Eglinton Avenue West Suite 1100
Toronto, ON M4R 1K8
Attention: E.K. Roberts
Facsimile: 416.322.7007
with a copy to:
Borden Ladner Gervais LLP
Scotia Plaza Suite 4400
40 King Street West
Toronto, ON M5H 3Y4
Attention: A. Winn Oughtred
Facsimile: 416.361.7076
(b) if to the Lender:
Canadian Imperial Bank of Commerce
Head Office Commerce Court West 6 th Floor
Toronto, ON M5L 1A2
Attention: Thomas W. Desson
Senior-Vice President, Credit Risk Management
Facsimile: 416.980.8948
with a copy to each of:
Canadian Imperial Bank of Commerce
245 Park Avenue
New York, New York 10167
Attention: A. Molestina
U.S. Head of Legal, Legal and Compliance
Facsimile: 917.332.4320
and;
CIBC World Markets
BCE Place - 12 th Floor
Toronto, ON M5J 2S8
Attention: David Clifford
Managing Director
Facsimile: 416.956.6828
Any party hereto may change its address or facsimile number for notices and other communications hereunder by notice to the other parties hereto. All notices and other communications given to any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given on the date of receipt.
8.2 Waivers; Amendments .
(a) No failure or delay by the Lender in exercising any right or power hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Lender hereunder are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of this Agreement or consent to any departure by the Borrower therefrom shall in any event be effective unless the same shall be permitted by Section 8.2(b), and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. Without limiting the generality of the foregoing, the making of a Loan shall not be construed as a waiver of any Default, regardless of whether the Lender may have had notice or knowledge of such Default at the time.
(b) Neither this Agreement nor any other Financing Document (or any provision hereof or thereof) may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the Borrower and the Lender.
8.3 Expenses; Indemnity; Damage Waiver .
(a) The Borrower shall pay (i) all reasonable out-of-pocket expenses incurred by the Lender, including the reasonable fees, charges and disbursements of counsel for the Lender and all applicable Taxes, in connection with the preparation and administration of this Agreement and the other Financing Documents, (ii) all reasonable out-of-pocket expenses incurred by the Lender, including the reasonable fees, charges and disbursements of counsel for the Lender and applicable Taxes, in connection with any amendments, modifications or waivers of the provisions hereof or of any of the other Financing Documents, (whether or not the transactions contemplated hereby or thereby shall be consummated), and (iii) all out-of-pocket expenses incurred by the Lender, including the fees, charges and disbursements of any counsel for the Lender and all applicable Taxes, in connection with the enforcement or protection of its rights in connection with this Agreement, including its rights under this Section, or in connection with the Loans made hereunder, including all such out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans.
(b) The Borrower shall indemnify the Lender, as well as each Related Party of the Lender, (each such Person being called an " Indemnitee ") against, and hold each Indemnitee harmless from, any and all losses, claims, cost recovery actions, damages, expenses and liabilities of whatsoever nature or kind and all reasonable out-of-pocket expenses (including due diligence expenses, travel expenses and reasonable fees, charges and disbursements of counsel) and all applicable Taxes to which any Indemnitee may become subject arising out of or in connection with (i) the execution or delivery of the Financing Documents or any agreement or instrument contemplated thereby, the performance by the parties thereto of their respective obligations thereunder, and the consummation of the Transactions or any other transactions thereunder, (ii) any Loan or any actual or proposed use of the proceeds therefrom, or (iii) any other aspect of this Agreement and the other Financing Documents; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses are determined by a court of competent jurisdiction by final and non-appealable judgment to have resulted from the gross negligence (it being acknowledged that ordinary negligence does not necessarily constitute gross negligence) or wilful misconduct of or material breach of this Agreement by such Indemnitee.
(c) The Borrower shall not assert, and hereby waives (to the fullest extent permitted by applicable Law), any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, any Financing Document, or any agreement or instrument contemplated thereby, the Transactions, any Loan or the use of the proceeds thereof.
(d) Any inspection of any property of the Borrower or any of its Subsidiaries made by or through the Lender is for purposes of administration of the Credit only, and neither the Borrower nor any of its Subsidiaries is entitled to rely upon the same (whether or not such inspections are at the expense of the Borrower).
(e) By accepting or approving anything required to be observed, performed, fulfilled or given to the Lender pursuant to the Financing Documents, the Lender shall not be deemed to have warranted or represented the sufficiency, legality, effectiveness or legal effect of the same, or of any term, provision or condition thereof, and such acceptance or approval thereof shall not constitute a warranty or representation to anyone with respect thereto by the Lender.
(f) The relationship between the Borrower and the Lender is, and shall at all times remain, solely that of borrower and lender. The Lender shall not under any circumstance be construed to be a partner or joint venturer of the Borrower or its Affiliates. The Lender does not undertake or assume any responsibility or duty to the Borrower or its Affiliates to select, review, inspect, supervise, pass judgment upon or inform the Borrower or its Affiliates of any matter in connection with their property or the operations of the Borrower or its Affiliates. The Borrower and its Affiliates shall rely entirely upon their own judgment with respect to such matters, and any review, inspection, supervision, exercise of judgment or supply of information undertaken or assumed by the Lender in connection with such matters is solely for the protection of the Lender, and neither the Borrower nor any other Person is entitled to rely thereon.
(g) The Lender shall not be responsible or liable to any Person for any loss, damage, liability or claim of any kind relating to injury or death to Persons or damage to Property caused by the actions, inaction or negligence of the Borrower or any Subsidiary and/or their Affiliates and the Borrower hereby indemnifies and holds the Lender and the Lender harmless on the terms set forth in Section 8.3(b) from any such loss, damage, liability or claim.
(h) This Agreement is made for the purpose of defining and setting forth certain obligations, rights and duties of the Borrower and the Lender in connection with the Loans, and is made for the sole benefit of the Borrower and the Lender. Except as provided in Sections 8.3(b) and 8.4, no other Person shall have any rights of any nature hereunder or by reason hereof.
(i) All amounts due under this Section 8.3 shall be payable not later than ten Business Days after written demand therefor.
8.4 Successors and Assigns .
(a) The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that neither party may assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the other party (and any attempted assignment or transfer by either party without such consent shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby and, to the extent expressly contemplated hereby, the Related Parties of the Lender) any legal or equitable right, remedy or claim under or by reason of this Agreement.
8.5 Survival . All covenants, agreements, representations and warranties made by the Borrower herein and in the certificates or other instruments delivered in connection with or pursuant to this Agreement shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of this Agreement and the making of any Loans, regardless of any investigation made by any such other party or on its behalf and notwithstanding that the Lender may have had notice or knowledge of any Default or incorrect representation or warranty at the time any credit is extended hereunder, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan or any fee or any other amount payable under this Agreement is outstanding and unpaid and so long as the Commitment has not expired or terminated. Sections 2.9, 2.10, 2.11 and 8.3 shall survive and remain in full force and effect, regardless of the consummation of the Transactions, the repayment of the Loans, the expiration or termination of the Commitment or the termination of this Agreement or any provision hereof.
8.6 Counterparts; Integration; Effectiveness . This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement and the other Financing Documents constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. This Agreement shall become effective when it shall have been executed by the Lender and when the Lender shall have received counterparts hereof which, when taken together, bear the signatures of each of the other parties hereto, and thereafter shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. Delivery of an executed original counterpart of a signature page of this Agreement by facsimile shall be as effective as delivery of a manually executed original counterpart of this Agreement.
8.7 Severability . Any provision of this Agreement held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof, and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.
8.8 Right of Set Off . If an Event of Default shall have occurred and be continuing, the Lender and each of its Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by Law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other obligations at any time owing by the Lender or Affiliate to or for the credit or the account of the Borrower against any of and all of the obligations of the Borrower now or hereafter existing under this Agreement held by the Lender, irrespective of whether or not the Lender shall have made any demand under this Agreement and although such obligations may be unmatured. The rights of the Lender under this Section are in addition to other rights and remedies (including other rights of set off) which the Lender may have.
8.9 Governing Law; Jurisdiction; Consent to Service of Process .
(a) This Agreement shall be construed in accordance with and governed by the Laws of the Province of Ontario and the federal laws of Canada applicable therein.
(b) The Borrower hereby irrevocably and unconditionally submits, for itself and its property, to the non-exclusive jurisdiction of the Courts of the Province of Ontario, and any appellate court thereof, in any action or proceeding arising out of or relating to this Agreement, or any other Financing Document or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in Ontario. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Law. Nothing in this Agreement shall affect any right that the Lender may otherwise have to bring any action or proceeding relating to this Agreement or any other Financing Document against the Borrower or its properties in the courts of any other jurisdiction.
(c) The Borrower hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement in any court referred to in Section 8.9(b). Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by Law, any forum non conveniens defence to the maintenance of such action or proceeding in any such court.
(d) Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 8.1. Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by Law.
8.10 WAIVER OF JURY TRIAL . EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER FINANCING DOCUMENT, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
8.11 Headings . Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement.
8.12 Confidentiality . The Lender agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to each of its Affiliates, directors, officers, employees, agents and advisors, including accountants, legal counsel and other advisors (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any regulatory authority or other Governmental Authority, (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) to any other party to this Agreement, (e) in connection with the exercise of any remedies under any Financing Document or any suit, action or proceeding relating to any Financing Document or the enforcement of rights thereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section, to any actual or prospective assignee of any of its rights or obligations under this Agreement, (g) with the consent of the Borrower, or (h) to the extent such Information (i) becomes publicly available other than as a result of a breach of this Section, or (ii) becomes available to the Lender on a non-confidential basis from a source other than the Borrower. For the purposes of this Section, " Information " means all information received from the Borrower relating to the Borrower, any of its Subsidiaries, or their respective business, other than any such information that is available to the Lender on a non-confidential basis prior to disclosure by the Borrower; provided that, in the case of information received from the Borrower after the date hereof, such information is clearly identified as confidential in writing at the time of delivery. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.
[Balance of page intentionally left blank; signature page follows.]
IN WITNESS WHEREOF , the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.
FAHNESTOCK VINER HOLDINGS
INC.
By: "A.W.Oughtred" A. Winn Oughtred Secretary |
|
CANADIAN IMPERIAL BANK OF
COMMERCE
By: "T.W. Desson" Name: Thomas W. Desson Title: Senior Vice-President Credit Risk Management By: Name: Title: |
THIS EXCHANGEABLE DEBENTURE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE TRANSFERRED WITHOUT REGISTRATION UNDER THE SECURITIES ACT OR STATE SECURITIES LAWS OR AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED AND OTHERWISE SUBJECT TO THE RESTRICTIONS CONTAINED HEREIN.
THIS EXCHANGEABLE DEBENTURE IS SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AND RIGHTS OF REPURCHASE WHICH ARE SET FORTH IN A STAKEHOLDERS AGREEMENT. A COPY OF SUCH AGREEMENT WILL BE PROVIDED WITHOUT COST BY THE COMPANY UPON REQUEST TO THE HOLDER OF THIS EXCHANGEABLE DEBENTURE.
E. A. VINER INTERNATIONAL CO.
VARIABLE RATE EXCHANGEABLE DEBENTURE DUE 2013
$69,980,828 January 6, 2003
E. A. Viner International Co., a Delaware corporation (the "Company," which term includes any successor corporation or other business entity), for value received, hereby promises to pay to Canadian Imperial Bank of Commerce (including its permitted designees or assignees, "Holder"), the principal sum of SIXTY NINE MILLION, NINE HUNDRED EIGHTY THOUSAND, EIGHT HUNDRED TWENTY EIGHT U.S. DOLLARS ($69,980,828) on January 2, 2013 (the "Maturity Date"), together with interest on the unpaid balance of the principal amount of this Variable Rate Exchangeable Debenture (the "Exchangeable Debenture") at a variable rate calculated in accordance with the formula set forth in Section 1 below, interest to be payable in the manner and at times provided herein. Certain defined terms are set forth in Section 4 hereof and elsewhere herein.
Interest . The interest rate for the period (i) commencing on the date of original issuance of this Exchangeable Debenture (the "Issue Date") and ending on the one year anniversary of the Issue Date, shall be 3% per annum; (ii) commencing on the day immediately following the one year anniversary of the Issue Date and ending on the four year anniversary of the Issue Date, shall be 4% per annum; and (iii) commencing on the day immediately following the four year anniversary of the Issue Date until the Maturity Date, shall be 5% per annum. Accrued but unpaid interest on this Exchangeable Debenture will be payable on the last Business Day of June 2003 and on the last Business Day of each December and June thereafter (each an "Interest Payment Date"). Interest on this Exchangeable Debenture will accrue from the most recent date to which interest has been paid or accrued as provided in the preceding sentence or, if no interest has been paid, from the Issue Date. Interest will be computed on the basis of a 360-day year for the actual days elapsed. In the event that the Company fails to timely pay interest on an Interest Payment Date or otherwise during the occurrence and continuance of an Event of Default, such unpaid interest shall compound semi-annually until paid by the Company at a rate equal to 2% above the then applicable interest rate. Nothing herein shall preclude the Company from withholding any tax amounts imposed on or with respect to Holder from any payments made hereunder, which tax amounts are required to be withheld by any law or regulation.
Repayment . Unless earlier exchanged, the outstanding principal of this Exchangeable Debenture, together with accrued but unpaid interest thereon, shall be immediately due and payable and shall be repaid on the Put Date in whole, or in part, to the extent this Exchangeable Debenture is retracted pursuant to Section 8(b), or in whole on the Retraction Date, to the extent this Exchangeable Debenture is retracted pursuant to Section 8(c), or in whole on the Maturity Date.
Method of Cash Payment .
The Company will make cash payments of principal and interest in currency of the United States that at the time of payment is legal tender for payment of public and private debts. Cash payments shall be made to Holder by wire transfer of immediately available funds to an account designated in writing by Holder and provided to the Company at least ten (10) Business Days before any Payment Date.
Certain Defined Terms .
The following terms shall have the following meanings:
" Affiliate " means, with respect to a specified Person, a Person that directly or indirectly, through one or more intermediaries, controls, or is controlled by or is under common control with, the Person specified.
" Asset Purchase Agreement " means the Asset Purchase Agreement, dated as of December 9, 2002, as amended, by and among the Parent, Canadian Imperial Bank of Commerce and certain of their Affiliates.
" Average Market Value " means, with respect to Class A Shares, the average of the last reported sale price for the Class A Shares on the NYSE for the 20 consecutive Business Days ending five Business Days prior to the Put Date or Maturity Date, as applicable.
" Bankruptcy Law " means, with respect to the Company, Title 11, United States Bankruptcy Code, or with respect to the Parent, the Bankruptcy and Insolvency Act (Canada) and the Companies Creditors Arrangement Act (Canada), and in each case any similar law relating to reorganization or for the appointment of a receiver, liquidator or trustee in respect of all or a material portion of the Companys or Parents property or an assignment for the benefit of creditors, or any similar law for the relief of debtors.
" Board of Directors " means the Board of Directors of the Company or Parent, as the case may be, or any committee thereof duly authorized to act on behalf of such Board.
" Business Day " means any day other than a Saturday, Sunday or other day on which the NYSE is not open for trading.
" Class A Shares " means the Class A non-voting shares of the Parent and any capital stock or other securities that are issued in respect of, in exchange for, or in substitution of, any Class A Shares by reason of any reorganization, recapitalization, reclassification, merger, consolidation, spin-off, partial or complete liquidation, stock dividend, split-up, sale of assets, distribution to stockholders or combination of the Class A Shares or any other change in the capital structure of the Company.
" Current Market Price Per Share " has the meaning set forth in Section 5(h) hereof.
" Custodian " means any receiver, trustee, assignee, liquidator, custodian or similar official under any Bankruptcy Law.
" Determination Date " has the meaning set forth in Section 5(h) hereof.
" GAAP " means generally accepted accounting principles in the United States.
" Exchange Date " has the meaning set forth in Section 5(d) hereof.
" Exchange Effective Date " has the meaning set forth in Section 5(c) hereof.
" Exchange Price " has the meaning set forth in Section 5(h) hereof.
" Exchangeable Debenture " means this Variable Rate Exchangeable Debenture Due 2013 issued by the Company in the initial principal amount of $69,980,828 and any Exchangeable Debenture issued in replacement thereof, as such Exchangeable Debenture may be amended from time to time.
" Expiration Time " has the meaning set forth in Section 5(h) hereof.
" Governmental Entity " means any national, federal, state, provincial, municipal, local, territorial, foreign or other governmental entity or any department, commission, board, bureau, agency, regulatory authority or instrumentality thereof, or any court, judicial, administrative or arbitral body or public or private tribunal.
" Guarantee " means any obligation, contingent or otherwise, of any Person directly or indirectly guaranteeing any indebtedness of any other Person and any obligation, direct or indirect, contingent or otherwise, of such Person (1) to purchase or pay (or advance or supply funds for the purchase or payment of) such indebtedness or other obligation of such Person (whether arising by virtue of partnership arrangements, or by agreements to keepwell, to purchase assets, goods, securities or services, to take-or-pay or to maintain financial statement conditions or otherwise) or (2) entered into for the purpose of assuring in any other manner the obligee of such indebtedness of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part); provided, however, that the term "Guarantee" shall not include endorsements for collection or deposit in the ordinary course of business. The term "Guarantee" used as a verb has a corresponding meaning.
" HSR Act " means the United States Hart-Scott Rodino Antitrust Improvements Act of 1976, as amended.
" Indebtedness " means of any Person at any date, without duplication, (a) all obligations of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds (other than performance bonds), debentures, notes or other similar instruments, (c) all obligations of such Person to pay the deferred purchase price of property or services (other than trade payables incurred in the ordinary course of business), (d) all obligations of such Person under capital leases, (e) all contingent or non-contingent obligations of such Person to reimburse any Person in respect of amounts paid or payable (currently or in the future, on a contingent or non-contingent basis) under a letter of credit or similar instrument, (f) all Indebtedness of any other Person secured by a lien on any asset of such Person, and (g) all Indebtedness of others Guaranteed by such Person; provided that Indebtedness shall not include intercompany Indebtedness, which is expressly subordinate and junior in right of payment to the Exchangeable Debenture.
" Interest Payment Date " has the meaning set forth in Section 1 hereof.
" Issue Date " has the meaning set forth in Section 1 hereof.
" NYSE " The New York Stock Exchange, Inc.
" Parent " means Fahnestock Viner Holdings Inc., an Ontario corporation and its successors.
" Payment Date " means any Interest Payment Date or Maturity Date, provided that if any Payment Date is not a Business Day, such Payment Date shall, for all purposes hereunder, be deemed to be the next succeeding Business Day.
" Person " means any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity.
" Purchased Shares " has the meaning set forth in Section 5(h) hereof.
" Put Date " means any date from and after the seven year anniversary of the Issue Date (the "Seven Year Anniversary Date") to 120 days after the Seven Year Anniversary Date.
" Put Event " means the date of death of the Significant Shareholder I Individual (as defined in the Stakeholders Agreement).
" Responsible Officer " means any senior financial officer and any other officer of the Company with responsibility for the administration of this Exchangeable Debenture.
" Retraction Consideration " means the aggregate principal amount of the Exchangeable Debenture outstanding plus any accrued but unpaid interest through the Retraction Date, 25% of which shall be paid in cash, and 75% of which shall be paid through the issuance of the Retraction Debenture.
" Retraction Debenture " means the 9.75% Debenture of the Company which may become issuable upon payment of the Retraction Consideration, the form of which is set forth as Exhibit B hereto.
" Second Variable Rate Exchangeable Debentures " means the Second Variable Rate Exchangeable Debentures Due 2013 issued by the Company in the initial principal amount of $90,841,572 and any Second Exchangeable Debentures issued in replacement thereof, as such Second Exchangeable Debentures may be amended from time to time.
" Significant Subsidiary " means any Subsidiary that would be a "Significant Subsidiary" of the Company within the meaning of Rule 1-02 under Regulation S-X promulgated by the SEC.
" Stakeholders Agreement " means the agreement dated as of December 9, 2002, by and among Parent, Canadian Imperial Bank of Commerce and certain other parties named therein.
" Subsidiary " means, in respect of any Person, any corporation, association, partnership or other business entity of which more than 50% of the total voting power of shares of Capital Stock or other interests (including partnership interests) entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by (1) such Person, (2) such Person and one or more Subsidiaries of such Person or (3) one or more Subsidiaries of such Person.
" Variable Rate Convertible Debentures " means the Convertible Debentures Due 2006 issued by the Company in the initial principal amount of $90,841,572 and any Convertible Debentures issued in replacement thereof, as such Convertible Debentures may be amended from time to time.
" TSX " means The Toronto Stock Exchange.
" Triggering Distribution " has the meaning set forth in Section 5(h) hereof.
Exchange .
Conditions and Number of Class A Shares . At any time prior to (i) the close of business on July 2, 2012 (ii) the delivery to the Company of a Retraction Notice, or (iii) the delivery to the Holder of a Regulatory Call Notice (as defined in the Stakeholders Agreement), the Holder may, at the Holder's option, exchange the principal amount of this Exchangeable Debenture (or any portion thereof equal to $1,000 or any integral multiple of $1,000 in excess thereof) for Class A Shares at the Exchange Price then in effect. The number of Class A Shares issuable upon exchange of the Exchangeable Debenture shall be determined by dividing the principal amount of the Exchangeable Debenture or portion thereof, including any accrued but unpaid interest thereon, surrendered for exchange by the Exchange Price in effect on the Exchange Date. The initial Exchange Price is $23.20 per Class A Share subject to adjustment as provided in this Section 5.
Additional Class A Shares . If, on either the Put Date or the Maturity Date, the Holder has surrendered all or any portion of his Exchangeable Debenture for exchange and has sold the Class A Shares received upon exchange pursuant to an underwritten public offering within 120 days of such surrender ("Secondary Sale") and receives aggregate gross proceeds (after giving effect to underwriting discounts and commissions which shall be paid by the Company and shall not reduce the number of Class A Shares to be received by the Holder) less than the amount determined by multiplying the number of shares sold by the Average Market Value of the shares, then Parent shall, as soon as reasonably practicable following receipt of a notice (the "Additional Share Notice") stating the exercise of the Holder's rights pursuant to this Section 5(b), issue an additional number of Class A Shares to the Holder. The payment of the fees and expenses associated with such Secondary Sale (other than with respect to underwriting discounts and commissions) shall be as set forth in the Registration Rights Agreement. It shall be a condition of such issuance that the Additional Share Notice shall include a representation and warranty of the Holder that it is an accredited investor within the meaning of the Securities Act (Ontario) and is acquiring such additional Class A Shares as principal. The number of such shares to be issued shall equal the amount of such difference divided by the last reported sales price of the of the Class A Shares on the NYSE on the closing date of the Secondary Sale, provided, however, that the number of shares to be so issued pursuant to this Section 5(b) shall not exceed an amount equal to 3% of the number of Class A Shares issuable upon exchange of all Exchangeable Debentures and Second Exchangeable Debentures then outstanding times a fraction, the numerator of which is the number of Class A Shares sold in the underwritten offering and the denominator of which is the number of Class A Shares issuable upon exchange of the entire principal amount of all Exchangeable Debentures and Second Exchangeable Debentures. The Company acknowledges that the Holder may surrender the Exchangeable Debenture at the closing of the Secondary Sale and may withdraw its obligation to surrender the Exchangeable Debenture in the event that the Secondary Sale does not close. In the event that the Holder surrenders the Exchangeable Debenture, interest will no longer accrue on such Exchangeable Debenture from and after the date of surrender, unless the Holder subsequently withdraws such surrender if the Secondary Sale does not close, in which case interest will be reinstated for the period of such surrender. In no event will interest accrue after the Maturity Date.
45 Day Waiting Period . The Holder is not entitled to any rights of a holder of Class A Shares until 45 days after the Holder has exchanged its Exchangeable Debentures for Class A Shares (the "Exchange Effective Date"), and only to the extent the Exchangeable Debenture has been deemed to have been exchanged for Class A Shares pursuant to this Section 5. The person in whose name the Class A Share certificate is registered following exchange shall be deemed to be a stockholder of record on the Exchange Effective Date.
Exchange Procedure . To exchange the Exchangeable Debenture, the Holder must (i) complete and manually sign the exchange notice on the back of this Exchangeable Debenture and deliver such notice to the Company, with a copy to Parent, and (ii) surrender the Exchangeable Debenture to the Company. The date on which the Holder satisfies all those requirements is the "Exchange Date." As soon as practicable after the Exchange Effective Date, Parent shall deliver to the Holder, either directly or through the Company, a certificate for the number of whole Class A Shares issuable upon the exchange and cash in lieu of any fractional shares. Any cash paid in lieu of fractional shares shall be based upon the Closing Price of the Class A Shares on the Business Day immediately prior to the Exchange Date. If this Debenture is exchanged in part only, the Company shall execute and deliver to the Holder, a new Exchangeable Debenture equal in principal amount to the unconverted portion of the Exchangeable Debenture surrendered.
Taxes on Exchange . If the Holder exchanges this Exchangeable Debenture, the Company shall pay any documentary, stamp or similar issue or transfer tax due on the issue of Class A Shares upon such exchange. However, the Holder shall pay any such tax which is due because the Holder requests the shares to be issued in a name other than the Holder's name. Nothing herein shall preclude any tax withholding imposed on or with respect to Holder required by law or regulation.
Parent To Provide Stock . Parent shall, prior to issuance of any Class A Shares hereunder, and from time to time as may be necessary, reserve, out of its authorized but unissued Class A Shares, a sufficient number of Class A Shares to permit the exchange of the Exchangeable Debenture into Class A Shares. All Class A Shares delivered upon exchange of the Exchangeable Debenture shall be newly issued shares, shall be duly authorized, validly issued, fully paid and nonassessable and shall be free from preemptive rights and free of any lien or adverse claim.
Compliance With Securities Laws; Listing . Parent will endeavor promptly to comply with all applicable federal, state and provincial securities laws regulating the offer and delivery of Class A Shares upon exchange of Exchangeable Debenture, if any, and will list or cause to have quoted such Class A Shares on each national securities exchange, the TSX or on The Nasdaq National Market or other over-the-counter market or such other market on which the Class A Shares are then listed or quoted; provided, however, that if rules of such automated quotation system or exchange permit the Company to defer the listing of such Class A Shares until the first exchange of the Exchangeable Debenture into Class A Shares in accordance with the provisions hereof, Parent covenants to list such Class A Shares issuable upon exchange of the Exchangeable Debenture in accordance with the requirements of such automated quotation system or exchange on or prior to the first Exchange Effective Date.
Adjustment of Exchange Price . The initial exchange price as stated in Section 5(a) hereof shall be adjusted from time to time (as so adjusted, the "Exchange Price") as follows:
In case Parent shall (1) pay a dividend on its Class A Shares in Class A Shares, (2) make a distribution on its Class A Shares in Class A Shares, (3) subdivide its outstanding Class A Shares into a greater number of shares, or (4) combine its outstanding Class A Shares into a smaller number of shares, the Exchange Price in effect immediately prior thereto shall be adjusted so that the Holder upon exchange of the Exchangeable Debenture shall thereafter be entitled to receive that number of Class A Shares which it would have owned had the Exchangeable Debenture been exchanged immediately prior to the happening of such event. An adjustment made pursuant to this subsection (i) shall become effective immediately after the record date in the case of a dividend or distribution and shall become effective immediately after the effective date in the case of subdivision or combination.
In case Parent shall, by dividend or otherwise, at any time distribute (a "Triggering Distribution") to all or substantially all holders of its Class A Shares, cash in an aggregate amount that, together with the aggregate amount of (A) any cash and the fair market value (as reasonably determined in good faith by the Board of Directors of Parent, whose determination shall be conclusive evidence thereof) of any other consideration payable to holders of Class A Shares in respect of any offer by Parent or a Subsidiary of Parent to purchase Class A Shares from Parent's Class A stockholders on a pro rata basis and such offer is consummated within the 12 months preceding the date of payment of the Triggering Distribution and in respect of which no Exchange Price adjustment pursuant to this Section 5 has been made and (B) all other cash distributions to all or substantially all holders of its Class A Shares made within the 12 months preceding the date of payment of the Triggering Distribution and in respect of which no Exchange Price adjustment pursuant to this Section 5 has been made, exceeds an amount equal to 5% of the product of the Current Market Price Per Class A Share on the Business Day (the "Determination Date") immediately preceding the day on which such Triggering Distribution is declared by Parent multiplied by the number of Class A Shares outstanding on the Determination Date (excluding shares held in the treasury of Parent), the Exchange Price shall be reduced so that the same shall equal the price determined by multiplying such Exchange Price in effect immediately prior to the Determination Date by a fraction of which the numerator shall be the Current Market Price Per Class A Share on the Determination Date less the sum of the aggregate amount of cash and the aggregate fair market value (as reasonably determined in good faith by the Board of Directors of Parent, whose determination shall be conclusive evidence of such fair market value) of any such other consideration so distributed, paid or payable within such 12 months (including, without limitation, the Triggering Distribution) applicable to one Class A Share (determined on the basis of the number of Class A Shares outstanding on the Determination Date) and the denominator shall be such Current Market Price Per Class A Share on the Determination Date, such reduction to become effective immediately prior to the opening of business on the day following the date on which the Triggering Distribution is paid.
In case any offer, by Parent or any of its Subsidiaries to purchase Class A Shares from Parent's Class A stockholders on a pro rata basis shall expire and such offer (as amended upon the expiration thereof) shall involve the payment of aggregate consideration in an amount (determined as the sum of the aggregate amount of cash consideration and the aggregate fair market value (as reasonably determined in good faith by the Board of Directors of Parent), whose determination shall be conclusive evidence thereof of any other consideration) that, together with the aggregate amount of (A) any cash and the fair market value (as reasonably determined in good faith by the Board of Directors of Parent, whose determination shall be conclusive evidence thereof) of any other consideration payable in respect of any other offers by Parent or any Subsidiary of Parent to purchase Class A Shares from Parent's Class A stockholders on a pro rata basis consummated within the 12 months preceding the date of the Expiration Date (as defined below) and in respect of which no Exchange Price adjustment pursuant to this Section 5 has been made and (B) all cash distributions to all or substantially all holders of its Class A Shares made within the 12 months preceding the Expiration Date and in respect of which no Exchange Price adjustment pursuant to this Section 5 has been made, exceeds an amount equal to 5% of the product of the Current Market Price Per Class A Share as of the last date (the "Expiration Date") tenders, repurchases or redemptions could have been made pursuant to such offer (as it may be amended) (the last time at which such purchases could have been made on the Expiration Date is hereinafter sometimes called the "Expiration Time") multiplied by the number of Class A Shares outstanding (including tendered shares but excluding any shares held in the treasury of Parent) at the Expiration Time, then, immediately prior to the opening of business on the day after the Expiration Date, the Exchange Price shall be reduced so that the same shall equal the price determined by multiplying the Exchange Price in effect immediately prior to the close of business on the Expiration Date by a fraction of which the numerator shall be the product of the number of Class A Shares outstanding (including tendered, repurchased or redeemed shares but excluding any shares held in the treasury of Parent) at the Expiration Time multiplied by the Current Market Price Per Class A Share on the Trading Day next succeeding the Expiration Date and the denominator shall be the sum of (x) the aggregate consideration (determined as aforesaid) payable to Class A stockholders based on the acceptance (up to any maximum specified in the terms of the offer) of all shares validly tendered and not withdrawn as of the Expiration Time (the shares deemed so accepted, up to any such maximum, being referred to as the "Purchased Shares") and (y) the product of the number of Class A Shares outstanding (less any Purchased Shares and excluding any shares held in the treasury of Parent) at the Expiration Time and the Current Market Price Per Class A Share on the Trading Day next succeeding the Expiration Date, such reduction to become effective immediately prior to the opening of business on the day following the Expiration Date. In the event that Parent or its Subsidiary, as the case may be, is obligated to purchase shares pursuant to any offer to purchase Class A Shares from Parent's Class A stockholders on a pro rata basis, but Parent or its Subsidiary, as the case may be, is permanently prevented by applicable law from effecting any or all such purchases or any or all such purchases are rescinded, the Exchange Price shall again be adjusted to be the Exchange Price which would have been in effect based upon the number of shares actually purchased. If the application of this Section 5(h) would result in an increase in the Exchange Price, no adjustment shall be made under this Section 5(h).
For the purpose of any computation under subsections (i) and (ii) of this Section 5(h), the current market price per Class A Share (the "Current Market Price Per Share") on any date shall be deemed to be the average of the daily Closing Prices for the 30 consecutive Trading Days commencing 45 Business Days before (i) the Determination Date or the Expiration Date, as the case may be, with respect to distributions or offers under subsection (ii) of this Section 5(h) or (ii) the record date with respect to distributions, issuances or other events requiring such computation under subsection (i) of this Section 5(h). The Closing Price for each day (the "Closing Price") shall be the last reported sales price or, in case no such reported sale takes place on such date, the average of the reported closing bid and asked prices in case on the NYSE. If the Class A Shares are not then quoted or listed or admitted to trading on the NYSE, the last reported sale price referenced above shall be determined based on the last reported sale price on the TSX (and converted to U.S. dollars at the exchange rate quoted by the Bank of Canada at such time) or, if the Class A Shares are not then quoted or listed or admitted to trading on the NYSE or TSX, any national securities exchange or quotation system on which sales of Class A Shares takes place, or, in case no reported sale takes place, the Market Price shall be the fair value of a Class A Shares as reasonably determined in good faith by the Board of Directors of the Company.
In any case in which this Section 5(h) shall require that an adjustment be made following a record date or a Determination Date or Expiration Date, as the case may be, established for purposes of this Section 5(h), Parent may elect to defer issuing to the Holder until after such record date or Determination Date or Expiration Date the Class A Shares and other capital stock of Parent issuable upon such exchange over and above the Class A Shares and other capital stock of Parent issuable upon such exchange only on the basis of the Exchange Price prior to adjustment; and, in lieu of the shares the issuance of which is so deferred, Parent shall issue or cause its transfer agent to issue due bills or other appropriate evidence prepared by Parent of the right to receive such shares. If any distribution in respect of which an adjustment to the Exchange Price is required to be made as of the record date or Determination Date or Expiration Date therefor is not thereafter made or paid by the Company for any reason, the Exchange Price shall be readjusted to the Exchange Price which would then be in effect if such record date had not been fixed or such effective date or Determination Date or Expiration Date had not occurred.
If any event occurs as to which the foregoing provisions of this Section 5(h) are not strictly applicable or, if strictly applicable, would not, in the good faith judgment of the Company, fairly and adequately protect the rights of the Holder in accordance with the essential intent and principles of such provisions, then the Company shall make such adjustments in the application of such provisions, in accordance with such essential intent and principles, as shall be reasonably necessary, in the good faith opinion of the Company, to protect such rights as aforesaid, but in no event shall any such adjustment have the effect of increasing the Exchange Price or decreasing the number of Class A Shares issuable upon exchange of this Exchangeable Debenture.
Adjustment for Tax Purposes . Parent shall be entitled to make such reductions in the Exchange Price, in addition to those required by this Section 5(h), as it in its discretion shall determine to be advisable in order that any stock dividends, subdivisions of shares, distributions of rights to purchase stock or Exchangeable Debenture or distributions of Exchangeable Debenture convertible into or exchangeable for stock hereafter made by Parent to its stockholders shall not be taxable.
Notice of Adjustment . Whenever the Exchange Price or exchange privilege is adjusted, Parent or Company shall promptly mail to the Holder a notice of the adjustment.
Notice of Certain Transactions . In the event that:
Parent or the Company consolidates or merges with or into, or transfers all or substantially all of its property and assets to, another corporation or another corporation merges into Parent or the Company and;
a record date has been established by Parent for any distributions to holders of Class A Shares, other than a distribution comprised solely of ordinary dividends; or
there is a dissolution or liquidation of Parent or the Company,
Parent shall mail to Holders a notice stating the proposed record or effective date, as the case may be. Parent shall mail the notice at least twenty days in advance of the applicable record date for such action. Failure to mail such notice or any defect therein shall not affect the validity of any transaction referred to in clause (1), (2), or (3) of this Section 5(h)(vi).
In the event that a Put Event has occurred, the Company shall give notice to Holders as soon as practicable thereafter, but in any event, not more than 30 days after the occurrence thereof.
Representations and Warranties of the Company .
The Company represents and warrants to the Holder as follows:
Organization; Authority . The Company is a corporation duly organized and validly subsisting under the laws of the State of Delaware, and has all requisite corporate power and authority to enter into this Exchangeable Debenture and to consummate the transactions contemplated hereby. The execution, delivery and performance of this Exchangeable Debenture and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of the Company. This Exchangeable Debenture has been duly executed and delivered by the Company and constitutes a valid and binding obligation of the Company, enforceable against the Company in accordance with its terms except that (i) such enforcement may be subject to bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to creditors' rights, and (ii) the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought.
No Violation; Consents and Approvals . The execution and delivery of this Exchangeable Debenture do not, and the consummation of the transactions contemplated hereby and compliance with the terms hereof will not, conflict with, or result in any violation of or default under, (i) any provision of the articles or by-laws of the Company, (ii) any judgment, order or decree, or material statute, law, ordinance, rule or regulation applicable to the Company or the property or assets of the Company or (iii) any note, bond, mortgage, indenture, license, agreement, lease or other instrument or obligation to which the Company is a party or by which the Company may be bound or affected or to which any of its respective assets may be subject. Except for the requirements of the HSR Act, no consent, approval, order or authorization of, or registration, declaration or filing with, any Governmental Entity or any third party is required to be obtained or made by or with respect to the Company in connection with the execution and delivery of this Exchangeable Debenture or the consummation by the Company of the transactions contemplated hereby.
Capitalization . As of the date of this Exchangeable Debenture, Parents authorized capital stock consists of (i) an unlimited number of authorized Class A Non-Voting Shares, no par value, of which 12,377,857 shares are issued and outstanding, (ii) 99,680 authorized Class B Voting Shares, no par value, of which 99,680 shares are issued and outstanding and (iii) an unlimited number of First Preference Shares issuable in series, of which no shares are issued or outstanding. All such issued and outstanding shares are duly authorized and validly issued, fully paid and nonassessable. The Class A Shares initially issuable upon exchange of this Exchangeable Debenture and pursuant to Section 5(b) represent in aggregate 24.9% of the total issued and outstanding Class A and Class B Shares as of the date hereof.
Effect of Reclassification, Consolidation, Merger Amalgamation or Sale on Exchange Privilege .
If any of the following shall occur, namely: (a) any reclassification or change of Class A Shares issuable upon exchange of the Exchangeable Debenture (other than as a result of a subdivision or combination, or any other change for which an adjustment is provided in Section 5; (b) any consolidation or merger or amalgamation or combination to which Parent or the Company is a party other than a merger or amalgamation in which Parent or the Company is the continuing corporation and which does not result in any reclassification of, or change (other than as a result of a subdivision or combination) in, outstanding Class A Shares; or (c) any sale or conveyance as an entirety or substantially as an entirety of the property and assets of Parent or the Company, directly or indirectly, to any person, then Company and Parent shall take all actions necessary to ensure that, as a condition precedent to such reclassification, change, combination, consolidation, merger, sale or conveyance, the Holder shall have the right to either (i) convert the Exchangeable Debenture into the kind and amount of shares of stock and other securities and property (including cash) receivable upon such reclassification, change, combination, consolidation, merger, amalgamation, sale or conveyance by a holder of the number of Class A Shares deliverable upon exchange of the Exchangeable Debenture immediately prior to such reclassification, change, combination, consolidation, merger, sale or conveyance or (ii) continue to hold debentures of such successor purchasing or transferee corporation, as the case may be, which shall be as nearly equivalent as may be practicable to the Exchangeable Debentures. If, in the case of any such consolidation, merger, amalgamation, combination, sale or conveyance, the stock or other securities and property (including cash) receivable thereupon by a holder of Class A Shares include shares of stock or other securities and property of a person other than the successor, purchasing or transferee corporation, as the case may be, in such consolidation, merger, amalgamation, combination, sale or conveyance, then such replacement debentures shall also be executed by such other person and shall contain such additional provisions to protect the interests of the Holder as the Board of Directors of the Company shall reasonably consider necessary by reason of the foregoing. The provisions of this Section 7 shall similarly apply to successive reclassifications, changes, combinations, consolidations, mergers, amalgamation, sales or conveyances.
Regulatory Call; Retraction .
Regulatory Call . In the event of a Regulatory Event (as defined in the Stakeholders Agreement), but only to the extent necessary to cure such Regulatory Event, this Exchangeable Debenture may be purchased by Parent (or its designee, which may include the Company, in which case the Company shall be entitled to purchase this Exchangeable Debenture for cancellation) in the manner and subject to the terms and conditions set forth in Section 4.6 of the Stakeholders Agreement. The Company is hereby authorized by the Holder to take all actions reasonably necessary to ensure that Section 4.6 of the Stakeholders Agreement is complied with and, for purposes of a purchase for cancellation of this Exchangeable Debenture, the terms of Section 4.6 of the Stakeholders Agreement are hereby incorporated herein by reference.
Retraction at Year Seven . Not less than 30 nor more than 90 days prior to a Put Date, the Holder may, at its election, notify the Company and the Parent in writing (a "Retraction Notice") of its intention to require the Company to redeem the Exchangeable Debenture in whole or in part, on the Put Date set forth in the Retraction Notice, without premium or penalty at a retraction price (the "Retraction Payment") equal to the then outstanding principal amount, plus any accrued but unpaid interest up to, but not including the Put Date. On the Put Date, the Holder shall deliver the certificate evidencing this Exchangeable Debenture to the Company for redemption and upon payment of the Retraction Payment in cash by or on behalf of the Company, all rights of the Holder hereunder shall cease.
Retraction on Put Event . Not more than 120 days after a Put Event, the Holder may, at its election, notify the Company and the Parent in writing (a "Retraction Notice") of its irrevocable intention to require the Company to redeem the Exchangeable Debenture in whole on the retraction date set forth in the Retraction Notice (the "Retraction Date"), which may not be less than 180 days from the Put Event nor more than 210 days from the Put Event. Retraction will be effected without premium or penalty at a redemption price equal to the Retraction Consideration. On the Retraction Date, the Holder shall deliver the certificate evidencing this Exchangeable Debenture to the Company for redemption and a certificate containing a representation and warranty of the Holder that it is an accredited investor within the meaning of the Securities Act (Ontario) and is acquiring the Retraction Debenture as principal. Upon payment of the Retraction Consideration by or on behalf of the Company, all rights of the Holder hereunder shall cease. Notwithstanding the foregoing, no retraction hereunder shall be effective unless any outstanding Variable Rate Convertible Debentures and Second Variable Rate Exchangeable Debentures, if any, shall also be retracted concurrently.
Events of Default .
An "Event of Default" occurs if:
the Company defaults in the payment of a principal payment when the same becomes due and payable;
the Company fails to comply with any of its agreements under this Exchangeable Debenture (other than those referred to in clauses (1) and (2) above) and such failure continues for 30 days;
A default occurs under any mortgage, indenture or agreement or instrument under which there may be issued or by which there may be secured or evidenced any indebtedness for money borrowed by the Company or any of its Significant Subsidiaries (or payment of which is Guaranteed by the Company or any of its Significant Subsidiaries), whether such indebtedness for money borrowed or Guarantee now exists, or is created after the Issue Date (which default, (i) constitutes a failure to pay at final maturity (after giving effect to any applicable grace periods and any extensions thereof) the principal amount of such indebtedness for money borrowed or (ii) shall have resulted in such indebtedness for money borrowed being accelerated or otherwise become or being declared due and payable prior to its stated maturity), and the principal amount of all such indebtedness for money borrowed as to which a default described in this clause (4) has occurred aggregates $5,000,000 or more;
A final judgment or judgments for the payment of money aggregating in excess of $5,000,000 are rendered against one or more of the Company and its Significant Subsidiaries and which judgments are not, within 60 days after entry thereof, bonded, discharged or stayed pending appeal, or are not discharged within 60 days after the expiration of such stay;
the Company or any Significant Subsidiary pursuant to or within the meaning of any Bankruptcy Law:
commences a voluntary case;
consents to the entry of an order for relief against it in an involuntary case;
consents to the appointment of a Custodian of it or for any substantial part of its property; or
makes a general assignment for the benefit of its creditors; or
a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that:
is for relief against the Company or any Significant Subsidiary in an involuntary case;
appoints a Custodian of the Company or any Significant Subsidiary or for any substantial part of its property; or
orders the winding up or liquidation of the Company or any Significant Subsidiary; or any similar relief is granted under any foreign laws and the order or decree remains unstayed and in effect for 60 days.
The foregoing will constitute Events of Default whatever the reason for any such Event of Default and whether it is voluntary or involuntary or is effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body.
Acceleration . If an Event of Default (other than an Event of Default specified in clauses (a)(6) or (a)(7) of Section 9) occurs and is continuing, the Holder by written notice to the Company (an "Acceleration Notice"), may declare the unpaid principal of and accrued interest on this Exchangeable Debenture to be immediately due and payable. Upon such a declaration, the unpaid principal of and accrued interest on this Exchangeable Debenture shall be due and payable immediately without presentment, demand or notice of any kind, which are hereby expressly waived by the Company. If an Event of Default specified in clauses (a)(6) or (a) (7) of Section 9 occurs, all principal of and interest on the Exchangeable Debenture shall ipso facto become and be immediately due and payable without any declaration or other act on the part of the Holder. The Holder by written notice to the Company may rescind an acceleration and its consequences if (i) all existing Events of Default, other than the nonpayment of principal of or interest on this Exchangeable Debenture which has become due solely because of the acceleration, have been cured or waived and (ii) the rescission would not conflict with any judgment or decree of a court of competent jurisdiction.
Remedies Cumulative . A delay or omission by the Holder in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. No remedy is exclusive of any other remedy. All remedies are cumulative to the extent permitted by law.
Covenants .
Corporate Existence, Etc . The Company will at all times preserve and keep in full force and effect its corporate existence and that of its Significant Subsidiaries and all rights and franchises of the Company and its Significant Subsidiaries unless, in the good faith judgment of the Company, the termination of or failure to preserve and keep in full force and effect such corporate existence, right or franchise would not, individually or in the aggregate, have a materially adverse effect on the business, operations, affairs, financial condition, properties or assets of the Company and its Subsidiaries taken as a whole.
Payment of Taxes . The Company will file all income tax or similar tax returns required to be filed in any jurisdiction and to pay and discharge all taxes shown to be due and payable on such returns and all other taxes, assessments, governmental charges, or levies payable by any of them, to the extent such taxes and assessments have become due and payable and before they have become delinquent, provided that the Company need not pay any such tax or assessment if (i) the amount, applicability or validity thereof is contested by the Company on a timely basis in good faith and in appropriate proceedings, and the Company has established adequate reserves therefor in accordance with GAAP on the books of the Company or (ii) the nonpayment of all such taxes and assessments in the aggregate would not reasonably be expected to have a materially adverse effect on the business, operations, affairs, financial condition, properties or assets of the Company and its Subsidiaries taken as a whole.
Maintenance of Properties . The Company and its Significant Subsidiaries will maintain and keep, or cause to be maintained and kept, their respective properties in good repair, working order and condition (other than ordinary wear and tear), so that the business carried on in connection therewith may be properly conducted at all times, provided that this Section 10(c) shall not prevent the Company from discontinuing the operation and the maintenance of any of its properties if such discontinuance is desirable in the conduct of its business and the Company has concluded that such discontinuance would not, individually or in the aggregate, have a materially adverse effect on the business, operations, affairs, financial condition, properties or assets of the Company and its Subsidiaries taken as a whole.
Insurance . The Company and its Significant Subsidiaries will maintain, with financially sound and reputable insurers, insurance with respect their respective properties and businesses against such casualties and contingencies, of such types, on such terms and in such amounts (including deductibles, co-insurance and self-insurance, if adequate reserves are maintained with respect thereto) as is customary in the case of entities of established reputations engaged in the same or a similar business and similarly situated.
Compliance with Law . The Company and its Significant Subsidiaries will comply with all laws, ordinances or governmental rules or regulations to which each of them is subject, and will obtain and maintain in effect all licenses, certificates, permits, franchises and other governmental authorizations necessary to the ownership of their respective properties or to the conduct of its business, in each case to the extent necessary to ensure that non-compliance with such laws, ordinances or governmental rules or regulations or failures to obtain or maintain in effect such licenses, certificates, permits, franchises and other governmental authorizations would not reasonably be expected, individually or in the aggregate, to have a materially adverse effect on the business, operations, affairs, financial condition, properties or assets of the Company and its Subsidiaries taken as a whole.
Company Financial Statements . The Company shall deliver to the Holder:
Quarterly Statements -- within 45 days after the end of each quarterly fiscal period in each fiscal year of the Company (other than the last quarterly fiscal period of each such fiscal year), copies of,
a consolidated balance sheet of the Company and its Subsidiaries as at the end of such quarter, and
consolidated statements of income, changes in shareholders' equity and cash flows of the Company and its Subsidiaries, for such quarter and (in the case of the second and third quarters) for the portion of the fiscal year ending with such quarter, setting forth in each case in comparative form the figures for the corresponding periods in the previous fiscal year, all in reasonable detail, prepared in accordance with GAAP applicable to quarterly financial statements generally, and certified by a senior financial officer as fairly presenting, in all material respects, the financial position of the companies being reported on and their results of operations and cash flows, subject to changes resulting from year-end adjustments;
Annual Statements -- within 90 days after the end of each fiscal year of the Company, copies of,
an audited consolidated balance sheet of the Company and its Subsidiaries, as at the end of such year, and
an audited consolidated statements of income, changes in shareholders' equity and cash flows of the Company and its Subsidiaries, for such year,
setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail, prepared in accordance with GAAP.
Notice of Default or Event of Default . Promptly, and in any event within five days after a Responsible Officer becoming aware of the existence of any Default or Event of Default, a written notice specifying the nature and period of existence thereof and what action the Company is taking or proposes to take with respect thereto.
Further Instruments and Acts . Upon request of a Holder, the Company shall execute and deliver such further instruments and do such further acts as may be reasonably necessary or proper to carry out more effectively the purpose of this Exchangeable Debenture. In addition, the Company is expressly authorized to take such actions as are reasonably necessary to effectuate the respective rights and obligations of the parties under the Stakeholders Agreement, to the extent such rights and obligations relate to this Exchangeable Debenture.
Indebtedeness . The Company shall not create, incur, assume or permit to be outstanding any Indebtedness other than Indebtedness incurred pursuant to this Exchangeable Debenture and the transactions contemplated by the Asset Purchase Agreement, unless the proceeds of such Indebtedness are used to pay all or a portion of the Indebtedness represented by the Convertible Debenture.
Amendment and Waiver .
Consent Required . Any term, covenant, agreement or condition of this Exchangeable Debenture may, with the consent of the Company, be amended or compliance therewith may be waived (either generally or in a particular instance and either retroactively or prospectively), if the Company shall have obtained the consent in writing of the Holder, provided, however, that any term covenant agreement or condition which relates to the obligations of Parent pursuant to Sections 5, 6, 7 and 8(a) hereof will also require the consent of Parent.
Effect of Amendment or Waiver . Any amendment or waiver shall be binding upon each future holder of this Exchangeable Debenture and upon the Company (and Parent, as applicable), whether or not such Exchangeable Debenture shall have been marked to indicate such amendment or waiver. No such amendment or waiver shall extend to or affect any obligation not expressly amended or waived or impair any right consequent thereon.
Replacement Exchangeable Debenture .
If this Exchangeable Debenture becomes mutilated and is surrendered to the Company or if the Holder of this Exchangeable Debenture presents evidence to the reasonable satisfaction of the Company that this Exchangeable Debenture has been lost, destroyed or wrongfully taken, the Company shall issue a replacement Exchangeable Debenture of like tenor if the requirements of the Company for such transactions are met. An indemnity agreement may be required that is sufficient in the reasonable judgment of the Company to protect the Company from any loss which it may suffer. The Company may charge for its out-of-pocket expenses incurred in replacing this Exchangeable Debenture.
No Recourse Against Others .
No director, officer, employee or stockholder, as such, of the Company shall have any liability for any obligations of the Company under this Exchangeable Debenture or for any claim based on, in respect or by reason of, such obligations or their creation. The Holder by accepting this Exchangeable Debenture waives and releases all such liability. This waiver and release are part of the consideration for the issue of this Exchangeable Debenture.
Notices .
All notices, requests, demands, waivers and other communications required or permitted to be given under this Exchangeable Debenture shall be in writing and shall be deemed to have been duly given if delivered personally, by mail (certified or registered mail, return receipt requested), by recognized overnight courier or by facsimile transmission (receipt of which is confirmed):
if to the Company, to:
E.A. Viner International Co.
125 Broad Street
New York, NY 10004
Fax: (212) 943-8728
Attention: A.G. Lowenthal
with a copy to:
Borden Ladner Gervais LLP
Scotia Plaza, Suite 4400
40 King Street West
Toronto, Ontario M5H 3Y4
CANADA
Attention: A. Winn Oughtred, Esq.
Telephone: (416) 367-6247
Facsimile: (416) 361-7076
Email: woughtred@blgcanada.comand
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, NY 10036
Attention: Vincent J. Pisano, Esq.
Telephone: (212) 735-2718
Facsimile: (917) 777-2718
Email: vpisano@skadden.comif to the Holder, to:
Canadian Imperial Bank of Commerce
Commerce Court West
Toronto, Ontario M5L 1A2
CANADA
Attention: Gerry McCaughey
Telephone: (416) 980-2211
Facsimile: (416) 332-4316
Email: gerry.mccaughey@cibc.comwith a copy to:
Mayer, Brown, Rowe & Maw
1675 Broadway
New York, NY 10019-5820
Attention: James B. Carlson, Esq.
Telephone: (212) 506-2515
Facsimile: (212) 849-5515
Email: jcarlson@mayerbrownrowe.comand
Canadian Imperial Bank of Commerce
Legal and Compliance
245 Park Avenue
42nd Floor
New York, NY 10167
Attention: Michael Capatides, Esq.
Telephone: (917) 332-4108
Facsimile: (917) 332-4320
Email: michael.capatides@us.cibc.com
or to such other person or address as any party shall specify by notice in writing to the other party. All such notices, requests, demands, waivers and communications shall be deemed to have been received on the date on which so hand-delivered, on the third Business Day following the date on which so mailed, on the Business Day following the date on which delivered to the overnight courier service and on the date on which faxed and confirmed, except for a notice of change of address, which shall be effective only upon receipt thereof.
Waiver of Stay, Usury or Extension Laws .
The Company (to the extent it may lawfully do so) shall not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, usury or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Exchangeable Debenture; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law.
Governing Law; Jurisdiction .
This Exchangeable Debenture shall be construed, performed and enforced in accordance with, and governed by, the laws of the State of New York, without giving effect to the principles of conflicts of laws thereof. Each party irrevocably submits to the exclusive jurisdiction of (i) the Supreme Court of the State of New York, New York County, and (ii) the United States District Court for the Southern District of New York, for the purposes of any suit, action or other proceeding arising out of this Exchangeable Debenture. Each party agrees to commence any action, suit or proceeding relating hereto either in the United States District Court for the Southern District of New York or if such suit, action or other proceeding may not be brought in such court for reasons of subject matter jurisdiction, in the Supreme Court of the State of New York, New York County. Each party irrevocably and unconditionally waives any objection to the laying of venue of any action, suit or proceeding arising out of this Exchangeable Debenture in (A) the Supreme Court of the State of New York, New York County, or (B) the United Sates District Court for the Southern District of New York, and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum. Each party irrevocably and unconditionally waives the right to trial by jury in any legal or equitable action, suit or proceeding arising out of or relating to this Exchangeable Debenture, the notes or any other operative agreement or any transaction contemplated hereby or thereby or the subject matter of any of the foregoing.
Successors, etc.; Entire Agreement; Assignment .
This Exchangeable Debenture shall be binding upon and shall inure to the benefit of the Holder and the Company (and Parent with respect to its rights and obligations pursuant to Sections 5, 6, 7 and 8(a) hereof) and their respective successors and permitted assigns. This Exchangeable Debenture constitutes the entire agreement between the parties, superseding all prior understandings and writings, with respect to the indebtedness represented hereby. Provided, however, that in the event any provision of the Exchangeable Debenture is in conflict with any provision of the Stakeholders Agreement, the provisions of the Stakeholders Agreement shall control and take precedence over any provision herein. Holder may not assign or transfer this Exchangeable Debenture without complying with the terms and conditions of the Stakeholders Agreement applicable to the transfer of the Exchangeable Debenture, and such transfer shall be subject to regulatory approval, including but not limited to, the rules and regulations of NYSE. In the event that the Holder wishes to assign or transfer this Exchangeable Debenture, the Holder shall deliver written notice of such intention to the Company specifying the name and address for notices of the transferee and the proposed date of transfer (which date shall be not fewer than ten (10) Business Days following the Holders delivery to the Company of such notice). In the event that the Company objects to such proposed date of transfer, the Company and the Holder shall work together in good faith to determine a mutually agreeable date of transfer, provided, however, that such date shall not be later than 30 days following the Holders delivery to the Company of written notice of its intention to assign or transfer this Exchangeable Debenture. On the date of transfer, the Holder shall surrender this Exchangeable Debenture to the Company for cancellation, and the Company shall issue an Exchangeable Debenture to such transferee, which Exchangeable Debenture is identical in all respects to this Exchangeable Debenture except for the name of the Holder and the name and address of the Holder specified in Section 14. The Holder may not assign or transfer this Exchangeable Debenture except pursuant to the foregoing procedure.
Headings .
The section headings of this Exchangeable Debenture are for convenience only and shall not affect the meaning or interpretation of this Exchangeable Debenture or any provision hereof.
IN WITNESS WHEREOF, the Company has caused this Exchangeable Debenture to be executed by its duly authorized officer.
Dated: January 6, 2003
E.A. VINER INTERNATIONAL CO.
By: /s/ A.G. Lowenthal
Name: A.G. Lowenthal
Title: CEO & Chairman of the Board
IN WITNESS WHEREOF, solely with respect to the rights and obligations of Parent pursuant to Sections 5, 6, 7 and 8(a) hereof, Parent has caused this Exchangeable Debenture to be executed by its duly authorized officer.
Dated: January 6, 2003
FAHNESTOCK VINER HOLDINGS INC.
By: /s/ A.G. Lowenthal
Name: A.G. Lowenthal
Title: CEO & Chairman of the Board
THIS CONVERTIBLE DEBENTURE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE TRANSFERRED WITHOUT REGISTRATION UNDER THE SECURITIES ACT OR STATE SECURITIES LAWS OR AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED AND OTHERWISE SUBJECT TO THE RESTRICTIONS CONTAINED HEREIN.
THIS CONVERTIBLE DEBENTURE IS SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AND RIGHTS OF REPURCHASE WHICH ARE SET FORTH IN A STAKEHOLDERS AGREEMENT. A COPY OF SUCH AGREEMENT WILL BE PROVIDED WITHOUT COST BY THE COMPANY UPON REQUEST TO THE HOLDER OF THIS CONVERTIBLE DEBENTURE.
E. A. VINER INTERNATIONAL CO.
CONVERTIBLE DEBENTURE DUE 2006
$90,841,572 January 6, 2003
E. A. Viner International Co., a Delaware corporation (the "Company," which term includes any successor corporation or other business entity), for value received, hereby promises to pay to Canadian Imperial Bank of Commerce (including its permitted designees or assignees, "Holder"), the principal sum of NINETY MILLION, EIGHT HUNDRED FORTY ONE THOUSAND, FIVE HUNDRED SEVENTY TWO U.S. DOLLARS ($90,841,572) on January 2, 2006 (the "Maturity Date"), together with interest on the unpaid balance of the principal amount of this Convertible Debenture (the "Convertible Debenture") at an interest rate of 3% subject to adjustment pursuant to Section 1 below, interest to be payable in the manner and at times provided herein. Certain defined terms are set forth in Section 4 hereof and elsewhere herein
Interest . Accrued but unpaid interest on this Convertible Debenture will be payable on the last Business Day of June 2003 and on the last Business Day of each December and June thereafter (each an "Interest Payment Date"). Interest on this Convertible Debenture will accrue from the most recent date to which interest has been paid or accrued as provided in the preceding sentence or, if no interest has been paid, from the issuance date hereof (the "Issue Date"). Interest will be computed on the basis of a 360-day year for the actual days elapsed. In the event of a Conversion Default, the interest rate shall be 9.75% (the "Conversion Default Rate"). In addition to making the regularly scheduled interest payments, in the event of a Conversion Default, the Company shall make an additional interest payment to the Holder on the next scheduled Interest Payment Date following such Conversion Default which would cause the Holder to receive, in the aggregate, an amount equal to the interest that would have been payable to the Holder from the Issue Date had the Conversion Default Rate been in effect from the Issue Date. In the event that the Company fails to timely pay interest on an Interest Payment Date or otherwise during the occurrence and continuance of an Event of Default, such unpaid interest shall compound semi-annually until paid by the Company at a rate equal to 2% above the then applicable interest rate. Nothing herein shall preclude the Company from withholding any tax amounts imposed on or with respect to Holder from any payments made hereunder, which tax amounts are required to be withheld by any law or regulation.
Repayment . Unless earlier converted, the outstanding principal of this Convertible Debenture, together with accrued but unpaid interest thereon, shall be immediately due and payable and shall be repaid on the Retraction Date in whole to the extent this Convertible Debenture is retracted, or in whole on the Maturity Date.
Method of Cash Payment .
The Company will make cash payments of principal and interest in currency of the United States that at the time of payment is legal tender for payment of public and private debts. Cash payments shall be made to Holder by wire transfer of immediately available funds to an account designated in writing by Holder and provided to the Company at least ten (10) Business Days before any Payment Date.
Certain Defined Terms .
The following terms shall have the following meanings:
" Affiliate " means, with respect to a specified Person, a Person that directly or indirectly, through one or more intermediaries, controls, or is controlled by or is under common control with, the Person specified.
" Asset Purchase Agreement " means the Asset Purchase Agreement, dated as of December 9, 2002, as amended, by and among the Parent, Canadian Imperial Bank of Commerce and certain of their Affiliates.
" Approvals " shall mean any consents, waivers, approvals or lapses of applicable waiting periods, as the case may be, which, in the sole judgment of the Company or Parent, exercised in good faith, may be required to be obtained by either the Company or Parent pursuant to any rule or regulation of the NYSE, TSX or any governmental or quasi-governmental entity in connection with the conversion of all or a portion of the Convertible Debentures into Second Exchangeable Debentures or the subsequent exchange of Second Exchangeable Debentures for Class A Shares.
" Bankruptcy Law " means, with respect to the Company, Title 11, United States Bankruptcy Code, or with respect to the Parent, the Bankruptcy and Insolvency Act (Canada) and the Companies Creditors Arrangement Act (Canada), and in each case any similar law relating to reorganization or for the appointment of a receiver, liquidator or trustee in respect of all or a material portion of the Companys or Parents property or an assignment for the benefit of creditors, or any similar law for the relief of debtors.
" Board of Directors " means the Board of Directors of the Company or any committee thereof duly authorized to act on behalf of such Board.
" Business Day " means any day other than a Saturday, Sunday or other day on which the NYSE is not open for trading.
" Class A Shares " means the Class A non-voting shares of the Parent and any capital stock or other securities that are issued in respect of, in exchange for, or in substitution of, any Class A Shares by reason of any reorganization, recapitalization, reclassification, merger, consolidation, spin-off, partial or complete liquidation, stock dividend, split-up, sale of assets, distribution to stockholders or combination of the Class A Shares or any other change in the capital structure of the Parent.
" Conversion Default " means the earlier to occur of (i) the Company has not effected the conversion of this Convertible Debenture into Second Exchangeable Debentures pursuant to Section 5 hereof by January 2, 2004 for any reason (other than a reason attributable solely to acts of the Holder) or (ii) the stockholders of Parent have failed to approve the issuance of the Second Exchangeable Debenture at or before the 2003 Annual Meeting of the stockholders of Parent.
" Convertible Debenture " means this Convertible Debenture Due 2006 issued by the Company in the initial principal amount of $90,841,572 and any Convertible Debenture issued in replacement thereof, as such Convertible Debenture may be amended from time to time.
" Conversion Time " has the meaning set forth in Section 5 hereof.
" Governmental Entity " means any national, federal, state, provincial, municipal, local, territorial, foreign or other governmental entity or any department, commission, board, bureau, agency, regulatory authority or instrumentality thereof, or any court, judicial, administrative or arbitral body or public or private tribunal.
" Guarantee " means any obligation, contingent or otherwise, of any Person directly or indirectly guaranteeing any indebtedness of any other Person and any obligation, direct or indirect, contingent or otherwise, of such Person (1) to purchase or pay (or advance or supply funds for the purchase or payment of) such indebtedness or other obligation of such Person (whether arising by virtue of partnership arrangements, or by agreements to keepwell, to purchase assets, goods, securities or services, to take-or-pay or to maintain financial statement conditions or otherwise) or (2) entered into for the purpose of assuring in any other manner the obligee of such indebtedness of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part); provided, however, that the term "Guarantee" shall not include endorsements for collection or deposit in the ordinary course of business. The term "Guarantee" used as a verb has a corresponding meaning.
" HSR Act " means the United States Hart-Scott Rodino Antitrust Improvements Act of 1976, as amended
" Indebtedness " means of any Person at any date, without duplication, (a) all obligations of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds (other than performance bonds), debentures, notes or other similar instruments, (c) all obligations of such Person to pay the deferred purchase price of property or services (other than trade payables incurred in the ordinary course of business), (d) all obligations of such Person under capital leases, (e) all contingent or non-contingent obligations of such Person to reimburse any Person in respect of amounts paid or payable (currently or in the future, on a contingent or non-contingent basis) under a letter of credit or similar instrument, (f) all Indebtedness of any other Person secured by a lien on any asset of such Person, and (g) all Indebtedness of others Guaranteed by such Person; provided that Indebtedness shall not include intercompany Indebtedness, which is expressly subordinate and junior in right of payment to the Convertible Debenture.
" Interest Payment Date " has the meaning set forth in Section 1 hereof.
" Issue Date " has the meaning set forth in Section 1 hereof.
" NYSE " The New York Stock Exchange, Inc.
" Parent " means Fahnestock Viner Holdings Inc., an Ontario corporation and its successors.
" Payment Date " means any Interest Payment Date, Retraction Date or Maturity Date, provided that if any Payment Date is not a Business Day, such Payment Date shall, for all purposes hereunder, be deemed to be the next succeeding Business Day.
" Person " means any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity.
" Put Event " means the date of death of the Significant Shareholder I Individual (as defined in the Stakeholders Agreement).
" Responsible Officer " means any senior financial officer and any other officer of the Company with responsibility for the administration of this Convertible Debenture.
" Retraction Consideration " means the aggregate principal amount of this Convertible Debenture outstanding plus any accrued but unpaid interest through the Retraction Date, 25% of which shall be paid in cash, and 75% of which shall be paid through the issuance of the Second Retraction Debenture.
" Second Exchangeable Debenture " means the Company's Second Variable Rate Exchangeable Debentures Due 2013, a form of which is set forth as Exhibit A hereto.
" Second Retraction Debenture " means the 9.75% Debenture of the Company which may become issuable upon payment of the Retraction Consideration, a form of which is set forth as Exhibit B hereto.
" Significant Subsidiary " means any Subsidiary that would be a "Significant Subsidiary" of the Company within the meaning of Rule 1-02 under Regulation S-X promulgated by the SEC.
" Stakeholders Agreement " means the agreement dated as of December 9, 2002, by and among Parent, Canadian Imperial Bank of Commerce and certain other parties named therein.
" Subsidiary " means, in respect of any Person, any corporation, association, partnership or other business entity of which more than 50% of the total voting power of shares of Capital Stock or other interests (including partnership interests) entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by (1) such Person, (2) such Person and one or more Subsidiaries of such Person or (3) one or more Subsidiaries of such Person.
" TSX " means The Toronto Stock Exchange.
" Variable Rate Exchangeable Debentures " means the Exchangeable Debentures Due 2013 issued by the Company in the intial principal amount of $69,980,828 and any Exchangeable Debentures issued in replacement thereof, as such Exchangeable Debentures may be amended from time to time.
Conversion .
This Convertible Debenture will automatically convert into a like principal amount of Second Exchangeable Debenture at the close of business on the Business Day that the Company and Parent, as applicable, have obtained all Approvals (the "Conversion Time"). The Company shall promptly notify the Holder of the conversion following the Conversion Time, which notice shall state that this Convertible Debenture must be surrendered at the office of the Company (or its agent). The conversion shall occur automatically and without any further action by the Holder, provided, however, that the Company shall not be obligated to execute and deliver the Second Exchangeable Debenture unless and until the Holder has delivered this Convertible Debenture to the Company for cancellation. Upon such delivery, the Holder shall be deemed to have represented and warranted that it is an accredited investor within the meaning of the Securities Act (Ontario) and is acquiring the Second Exchangeable Debenture as principal, and the Company shall execute and deliver the Second Exchangeable Debenture. At the Conversion Time all rights of the Holder hereunder shall cease, except for the right to receive the executed Second Exchangeable Debenture, subject to the preceding sentence, and any accrued but unpaid interest from the most recent date on which interest was paid to and including the Conversion Time, which shall be paid on or within 10 Business Days of the Conversion Time.
Representations and Warranties of the Company .
The Company represents and warrants to the Holder as follows:
Organization; Authority . The Company is a corporation duly organized and validly subsisting under the laws of the State of Delaware, and has all requisite corporate power and authority to enter into this Convertible Debenture and to consummate the transactions contemplated hereby. The execution, delivery and performance of this Convertible Debenture and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of the Company. This Convertible Debenture has been duly executed and delivered by the Company and constitutes a valid and binding obligation of the Company, enforceable against the Company in accordance with its terms except that (i) such enforcement may be subject to bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to creditors' rights, and (ii) the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought.
No Violation; Consents and Approvals . The execution and delivery of this Convertible Debenture do not, and the consummation of the transactions contemplated hereby and compliance with the terms hereof will not, conflict with, or result in any violation of or default under, (i) any provision of the articles or by-laws of the Company, (ii) any judgment, order or decree, or material statute, law, ordinance, rule or regulation applicable to the Company or the property or assets of the Company or (iii) any note, bond, mortgage, indenture, license, agreement, lease or other instrument or obligation to which the Company is a party or by which the Company may be bound or affected or to which any of its respective assets may be subject. Except for the requirements of the HSR Act, no consent, approval, order or authorization of, or registration, declaration or filing with, any Governmental Entity or any third party is required to be obtained or made by or with respect to the Company in connection with the execution and delivery of this Convertible Debenture or the consummation by the Company of the transactions contemplated hereby.
Effect of Reclassification, Consolidation, Merger Amalgamation or Sale on Exchange Privilege .
If any of the following shall occur, namely: (a) any reclassification or change of Class A Shares issuable upon exchange of the Second Exchangeable Debenture (other than as a result of a subdivision or combination, or any other change for which an adjustment is provided in Section 5 thereof, (b) any consolidation or merger or amalgamation or combination to which Parent or the Company is a party other than a merger or amalgamation in which Parent or the Company is the continuing corporation and which does not result in any reclassification of, or change (other than as a result of a subdivision or combination) in, outstanding Class A Shares; or (c) any sale or conveyance as an entirety or substantially as an entirety of the property and assets of Parent or the Company, directly or indirectly, to any person, then Company and Parent shall take all actions necessary to ensure that, as a condition precedent to such reclassification, change, combination, consolidation, merger, sale or conveyance, the Holder shall have the right to either (i) convert the Convertible Debenture into Second Exchangeable Debentures or (ii) continue to hold debentures of such successor purchasing or transferee corporation, as the case may be, which shall be as nearly equivalent as may be practicable to the Convertible Debentures. If, in the case of any such consolidation, merger, amalgamation, combination, sale or conveyance, the stock or other securities and property (including cash) receivable thereupon by a holder of Class A Shares include shares of stock or other securities and property of a person other than the successor, purchasing or transferee corporation, as the case may be, in such consolidation, merger, amalgamation, combination, sale or conveyance, then such replacement debentures shall also be executed by such other person and shall contain such additional provisions to protect the interests of the Holder as the Board of Directors of the Company shall reasonably consider necessary by reason of the foregoing. The provisions of this Section 7 shall similarly apply to successive reclassifications, changes, combinations, consolidations, mergers, amalgamation, sales or conveyances.
Regulatory Call; Retraction .
Regulatory Call . In the event of a Regulatory Event (as defined in the Stakeholders Agreement), but only to the extent necessary to cure such Regulatory Event, this Convertible Debenture may be purchased by Parent (or its designee, which may include the Company, in which case the Company shall be entitled to purchase this Convertible Debenture for cancellation) in the manner and subject to the terms and conditions set forth in Section 4.6 of the Stakeholders Agreement. The Company is hereby authorized by the Holder to take all actions reasonably necessary to ensure that Section 4.6 of the Stakeholders Agreement is complied with and, for purposes of a purchase for cancellation of this Convertible Debenture, the terms of Section 4.6 of the Stakeholders Agreement are hereby incorporated herein by reference.
Retraction . Not more than 120 days after a Put Event, the Holder may, at its election, notify the Company and the Parent in writing (a "Retraction Notice") of its irrevocable intention to require the Company to redeem this Convertible Debenture in whole on the retraction date set forth in the Retraction Notice (the "Retraction Date"), which may not be less than 180 days from the Put Event nor more than 210 days from the Put Event. Retraction will be effected without premium or penalty at a retraction price equal to the Retraction Consideration. On the Retraction Date, the Holder shall deliver the certificate evidencing this Convertible Debenture to the Company for redemption and a certificate containing a representation and warranty of the Holder that it is an accredited investor within the meaning of the Securities Act (Ontario) and is acquiring the Second Retraction Debenture as principal. Upon payment of the Retraction Consideration by or on behalf of the Company, all rights of the Holder hereunder shall cease. Notwithstanding the foregoing, no retraction hereunder shall be effective unless any outstanding Variable Rate Exchangeable Debentures and Second Exchangeable Debentures, if any, shall be retracted concurrently.
Events of Default .
An "Event of Default" occurs if:
the Company defaults in the payment of principal when the same becomes due and payable;
the Company fails to comply with any of its agreements under this Convertible Debenture (other than those referred to in clauses (1) and (2) above) and such failure continues for 30 days;
A default occurs under any mortgage, indenture or agreement or instrument under which there may be issued or by which there may be secured or evidenced any indebtedness for money borrowed by the Company or any of its Significant Subsidiaries (or payment of which is Guaranteed by the Company or any of its Significant Subsidiaries), whether such indebtedness for money borrowed or Guarantee now exists, or is created after the Issue Date (which default, (i) constitutes a failure to pay at final maturity (after giving effect to any applicable grace periods and any extensions thereof) the principal amount of such indebtedness for money borrowed or (ii) shall have resulted in such indebtedness for money borrowed being accelerated or otherwise become or being declared due and payable prior to its stated maturity), and the principal amount of all such indebtedness for money borrowed as to which a default described in this clause (4) has occurred aggregates $5,000,000 or more;
A final judgment or judgments for the payment of money aggregating in excess of $5,000,000 are rendered against one or more of the Company and its Significant Subsidiaries and which judgments are not, within 60 days after entry thereof, bonded, discharged or stayed pending appeal, or are not discharged within 60 days after the expiration of such stay;
the Company or any Significant Subsidiary pursuant to or within the meaning of any Bankruptcy Law:
commences a voluntary case;
consents to the entry of an order for relief against it in an involuntary case;
consents to the appointment of a Custodian of it or for any substantial part of its property; or
makes a general assignment for the benefit of its creditors; or
a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that:
is for relief against the Company or any Significant Subsidiary in an involuntary case;
appoints a Custodian of the Company or any Significant Subsidiary or for any substantial part of its property; or
orders the winding up or liquidation of the Company or any Significant Subsidiary; or any similar relief is granted under any foreign laws and the order or decree remains unstayed and in effect for 60 days.
The foregoing will constitute Events of Default whatever the reason for any such Event of Default and whether it is voluntary or involuntary or is effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body.
Acceleration . If an Event of Default (other than an Event of Default specified in clauses (a)(6) or (a)(7) of Section 9) occurs and is continuing, the Holder by written notice to the Company (an "Acceleration Notice"), may declare the unpaid principal of and accrued interest on this Convertible Debenture to be immediately due and payable. Upon such a declaration, the unpaid principal of and accrued interest on this Convertible Debenture shall be due and payable immediately without presentment, demand or notice of any kind, which are hereby expressly waived by the Company. If an Event of Default specified in clauses (a)(6) or (a) (7) of Section 9 occurs, all principal of and interest on the Convertible Debenture shall ipso facto become and be immediately due and payable without any declaration or other act on the part of the Holder. The Holder by written notice to the Company may rescind an acceleration and its consequences if (i) all existing Events of Default, other than the nonpayment of principal of or interest on this Convertible Debenture which has become due solely because of the acceleration, have been cured or waived and (ii) the rescission would not conflict with any judgment or decree of a court of competent jurisdiction.
Remedies Cumulative . A delay or omission by the Holder in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. No remedy is exclusive of any other remedy. All remedies are cumulative to the extent permitted by law.
Covenants .
Corporate Existence, Etc . The Company will at all times preserve and keep in full force and effect its corporate existence and that of its Significant Subsidiaries and all rights and franchises of the Company and its Significant Subsidiaries unless, in the good faith judgment of the Company, the termination of or failure to preserve and keep in full force and effect such corporate existence, right or franchise would not, individually or in the aggregate, have a materially adverse effect on the business, operations, affairs, financial condition, properties or assets of the Company and its Subsidiaries taken as a whole.
Payment of Taxes . The Company will file all income tax or similar tax returns required to be filed in any jurisdiction and to pay and discharge all taxes shown to be due and payable on such returns and all other taxes, assessments, governmental charges, or levies payable by any of them, to the extent such taxes and assessments have become due and payable and before they have become delinquent, provided that the Company need not pay any such tax or assessment if (i) the amount, applicability or validity thereof is contested by the Company on a timely basis in good faith and in appropriate proceedings, and the Company has established adequate reserves therefor in accordance with GAAP on the books of the Company or (ii) the nonpayment of all such taxes and assessments in the aggregate would not reasonably be expected to have a materially adverse effect on the business, operations, affairs, financial condition, properties or assets of the Company and its Subsidiaries taken as a whole.
Maintenance of Properties . The Company and its Significant Subsidiaries will maintain and keep, or cause to be maintained and kept, their respective properties in good repair, working order and condition (other than ordinary wear and tear), so that the business carried on in connection therewith may be properly conducted at all times, provided that this Section 10(c) shall not prevent the Company from discontinuing the operation and the maintenance of any of its properties if such discontinuance is desirable in the conduct of its business and the Company has concluded that such discontinuance would not, individually or in the aggregate, have a materially adverse effect on the business, operations, affairs, financial condition, properties or assets of the Company and its Subsidiaries taken as a whole.
Insurance . The Company and its Significant Subsidiaries will maintain, with financially sound and reputable insurers, insurance with respect their respective properties and businesses against such casualties and contingencies, of such types, on such terms and in such amounts (including deductibles, co-insurance and self-insurance, if adequate reserves are maintained with respect thereto) as is customary in the case of entities of established reputations engaged in the same or a similar business and similarly situated.
Compliance with Law . The Company and its Significant Subsidiaries will comply with all laws, ordinances or governmental rules or regulations to which each of them is subject, and will obtain and maintain in effect all licenses, certificates, permits, franchises and other governmental authorizations necessary to the ownership of their respective properties or to the conduct of its business, in each case to the extent necessary to ensure that non-compliance with such laws, ordinances or governmental rules or regulations or failures to obtain or maintain in effect such licenses, certificates, permits, franchises and other governmental authorizations would not reasonably be expected, individually or in the aggregate, to have a materially adverse effect on the business, operations, affairs, financial condition, properties or assets of the Company and its Subsidiaries taken as a whole.
Company Financial Statements . The Company shall deliver to the Holder:
Quarterly Statements -- within 45 days after the end of each quarterly fiscal period in each fiscal year of the Company (other than the last quarterly fiscal period of each such fiscal year), copies of,
a consolidated balance sheet of the Company and its Subsidiaries as at the end of such quarter, and
consolidated statements of income, changes in shareholders' equity and cash flows of the Company and its Subsidiaries, for such quarter and (in the case of the second and third quarters) for the portion of the fiscal year ending with such quarter, setting forth in each case in comparative form the figures for the corresponding periods in the previous fiscal year, all in reasonable detail, prepared in accordance with GAAP applicable to quarterly financial statements generally, and certified by a senior financial officer as fairly presenting, in all material respects, the financial position of the companies being reported on and their results of operations and cash flows, subject to changes resulting from year-end adjustments;
Annual Statements -- within 90 days after the end of each fiscal year of the Company, copies of,
an audited consolidated balance sheet of the Company and its Subsidiaries, as at the end of such year, and
audited consolidated statements of income, changes in shareholders' equity and cash flows of the Company and its Subsidiaries, for such year,
setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail, prepared in accordance with GAAP.
Notice of Default or Event of Default . Promptly, and in any event within five days after a Responsible Officer becoming aware of the existence of any Default or Event of Default, a written notice specifying the nature and period of existence thereof and what action the Company is taking or proposes to take with respect thereto.
Further Instruments and Acts . Upon request of a Holder, the Company shall execute and deliver such further instruments and do such further acts as may be reasonably necessary or proper to carry out more effectively the purpose of this Convertible Debenture. In addition, the Company is expressly authorized to take such actions as are reasonably necessary to effectuate the respective rights and obligations of the parties under the Stakeholders Agreement, to the extent such rights and obligations relate to this Convertible Debenture.
Indebtedness . The Company shall not create, incur, assume or permit to be outstanding any Indebtedness other than Indebtedness incurred pursuant to this Convertible Debenture and the transactions contemplated by the Asset Purchase Agreement, unless the proceeds of such Indebtedness are used to pay all or a portion of the Indebtedness represented by the Convertible Debenture.
Amendment and Waiver .
Consent Required . Any term, covenant, agreement or condition of this Convertible Debenture may, with the consent of the Company, be amended or compliance therewith may be waived (either generally or in a particular instance and either retroactively or prospectively), if the Company shall have obtained the consent in writing of the Holder.
Effect of Amendment or Waiver . Any amendment or waiver shall be binding upon each future holder of this Convertible Debenture and upon the Company, whether or not such Convertible Debenture shall have been marked to indicate such amendment or waiver. No such amendment or waiver shall extend to or affect any obligation not expressly amended or waived or impair any right consequent thereon.
Replacement Convertible Debenture .
If this Convertible Debenture becomes mutilated and is surrendered to the Company or if the Holder of this Convertible Debenture presents evidence to the reasonable satisfaction of the Company that this Convertible Debenture has been lost, destroyed or wrongfully taken, the Company shall issue a replacement Convertible Debenture of like tenor if the requirements of the Company for such transactions are met. An indemnity agreement may be required that is sufficient in the reasonable judgment of the Company to protect the Company from any loss which it may suffer. The Company may charge for its out-of-pocket expenses incurred in replacing this Convertible Debenture.
No Recourse Against Others .
No director, officer, employee or stockholder, as such, of the Company shall have any liability for any obligations of the Company under this Convertible Debenture or for any claim based on, in respect or by reason of, such obligations or their creation. The Holder by accepting this Convertible Debenture waives and releases all such liability. This waiver and release are part of the consideration for the issue of this Convertible Debenture.
Notices .
All notices, requests, demands, waivers and other communications required or permitted to be given under this Convertible Debenture shall be in writing and shall be deemed to have been duly given if delivered personally, by mail (certified or registered mail, return receipt requested), by recognized overnight courier or by facsimile transmission (receipt of which is confirmed):
if to the Company, to:
E.A. Viner International Co.
125 Broad Street
New York, NY 10004
Fax: (212) 943-8728
Attention: A.G. Lowenthal
with a copy to:
Borden Ladner Gervais LLP
Scotia Plaza, Suite 4400
40 King Street West
Toronto, Ontario M5H 3Y4
CANADA
Attention: A. Winn Oughtred, Esq.
Telephone: (416) 367-6247
Facsimile: (416) 361-7076
Email: woughtred@blgcanada.comand
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, NY 10036
Attention: Vincent J. Pisano, Esq.
Telephone: (212) 735-2718
Facsimile: (917) 777-2718
Email: vpisano@skadden.comif to the Holder, to:
Canadian Imperial Bank of Commerce
Commerce Court West
Toronto, Ontario M5L 1A2
CANADA
Attention: Gerry McCaughey
Telephone: (416) 980-2211
Facsimile: (416) 332-4316
Email: gerry.mccaughey@cibc.comwith a copy to:
Mayer, Brown, Rowe & Maw
1675 Broadway
New York, NY 10019-5820
Attention: James B. Carlson, Esq.
Telephone: (212) 506-2515
Facsimile: (212) 849-5515
Email: jcarlson@mayerbrownrowe.comand
Canadian Imperial Bank of Commerce
Legal and Compliance
245 Park Avenue 42nd Floor
New York, NY 10167
Attention: Michael Capatides, Esq.
Telephone: (917) 332-4108
Facsimile: (917) 332-4320
Email: michael.capatides@us.cibc.com
or to such other person or address as any party shall specify by notice in writing to the other party. All such notices, requests, demands, waivers and communications shall be deemed to have been received on the date on which so hand-delivered, on the third Business Day following the date on which so mailed, on the Business Day following the date on which delivered to the overnight courier service and on the date on which faxed and confirmed, except for a notice of change of address, which shall be effective only upon receipt thereof.
Waiver of Stay, Usury or Extension Laws .
The Company (to the extent it may lawfully do so) shall not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, usury or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Convertible Debenture; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law.
Governing Law; Jurisdiction .
This Convertible Debenture shall be construed, performed and enforced in accordance with, and governed by, the laws of the State of New York, without giving effect to the principles of conflicts of laws thereof. Each party irrevocably submits to the exclusive jurisdiction of (i) the Supreme Court of the State of New York, New York County, and (ii) the United States District Court for the Southern District of New York, for the purposes of any suit, action or other proceeding arising out of this Convertible Debenture. Each party agrees to commence any action, suit or proceeding relating hereto either in the United States District Court for the Southern District of New York or if such suit, action or other proceeding may not be brought in such court for reasons of subject matter jurisdiction, in the Supreme Court of the State of New York, New York County. Each party irrevocably and unconditionally waives any objection to the laying of venue of any action, suit or proceeding arising out of this Convertible Debenture in (A) the Supreme Court of the State of New York, New York County, or (B) the United Sates District Court for the Southern District of New York, and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum. Each party irrevocably and unconditionally waives the right to trial by jury in any legal or equitable action, suit or proceeding arising out of or relating to this Convertible Debenture, the notes or any other operative agreement or any transaction contemplated hereby or thereby or the subject matter of any of the foregoing.
Successors, etc.; Entire Agreement; Assignment .
This Convertible Debenture shall be binding upon and shall inure to the benefit of the Holder and the Company and their respective successors and permitted assigns. This Convertible Debenture constitutes the entire agreement between the parties, superseding all prior understandings and writings, with respect to the indebtedness represented hereby. Provided, however, that in the event any provision of the Convertible Debenture is in conflict with any provision of the Stakeholders Agreement, the provisions of the Stakeholders Agreement shall control and take precedence over any provision herein. Holder may not assign or transfer this Convertible Debenture without complying with the terms and conditions of the Stakeholders Agreement applicable to the transfer of the Convertible Debenture, and such transfer shall be subject to regulatory approval, including but not limited to, the rules and regulations of NYSE.
In the event that the Holder wishes to assign or transfer this Convertible Debenture, the Holder shall deliver written notice of such intention to the Company specifying the name and address for notices of the transferee and the proposed date of transfer (which date shall be not fewer than ten (10) Business Days following the Holders delivery to the Company of such notice). In the event that the Company objects to such proposed date of transfer, the Company and the Holder shall work together in good faith to determine a mutually agreeable date of transfer, provided, however, that such date shall not be later than 30 days following the Holders delivery to the Company of written notice of its intention to assign or transfer this Convertible Debenture. On the date of transfer, the Holder shall surrender this Convertible Debenture to the Company for cancellation, and the Company shall issue a Convertible Debenture to such transferee, which Convertible Debenture is identical in all respects to this Convertible Debenture except for the name of the Holder and the name and address of the Holder specified in Section 14. The Holder may not assign or transfer this Convertible Debenture except pursuant to the foregoing procedure.
Headings .
The section headings of this Convertible Debenture are for convenience only and shall not affect the meaning or interpretation of this Convertible Debenture or any provision hereof.
IN WITNESS WHEREOF, the Company has caused this Convertible Debenture to be executed by its duly authorized officer.
Dated: January 6, 2003
E. A. VINER INTERNATIONAL CO.
By: /s/ A.G. Lowenthal
Name: A.G. Lowenthal
Title: CEO & Chairman of the Board
THIS NON-COMPETITION AGREEMENT is made as of the 9th day of December 2002.
BY: CIBC WORLD MARKETS CORP. , a Delaware Corporation ("CIBCWM")
and
CANADIAN IMPERIAL BANK OF COMMERCE , a bank under the laws of Canada
IN FAVOUR OF: VINER FINANCE INC. , a corporation incorporated under the laws of Delaware
and
FAHNESTOCK & CO. INC. , a corporation incorporated under the laws of New York
(collectively referred to herein as, the "Purchaser")
RECITALS:
A. Pursuant to the Asset Purchase Agreement, the Purchaser has agreed to purchase certain of the property and assets used primarily in the Brokerage Business, as currently conducted by CIBCWM in the U.S.;
B. The obligations of the Purchaser under the Asset Purchase Agreement are subject to the condition that CIBCWM execute and deliver this Non-Competition Agreement;
C. The Purchaser acknowledges that, in addition to the Brokerage Business, CIBCWM currently carries on in the U.S. (independently and in conjunction with other subsidiaries and affiliates of Canadian Imperial Bank of Commerce (Canadian Imperial Bank of Commerce and its subsidiaries and affiliates, including CIBCWM, are collectively referred to herein as, "CIBC") a merchant banking business, and a full service investment banking and securities business serving institutional and other non-retail market segments;
D. CIBC acknowledges that at the closing of the transaction, CIBC will cease to carry on in the U.S. the Brokerage Business and that the re-establishment of such a business by CIBC within a reasonable period of time following closing of the transaction contemplated in the Asset Purchase Agreement would diminish the value of the Brokerage Business to the Purchaser; and
E. This Agreement is intended to recognize the Purchasers interest in CIBC not re-establishing a Brokerage Business in the U.S. within a reasonable period of time, and the interest of CIBC in being free to continue to carry on its other existing businesses in U.S. and elsewhere.
NOW THEREFORE in consideration of the foregoing and other good and valuable consideration given by the Purchaser to CIBC, CIBC agrees with the Purchaser as follows:
1. Definitions
"Asset Management Business" has the meaning ascribed to it in the Asset Purchase Agreement.
"Asset Purchase Agreement" means an agreement dated as of December [9], 2002 among Fahnestock Viner Holdings Inc., Viner Finance Inc., CIBC and CIBCWM.
"Brokerage Account" means a Retail Account or a Coverage Account.
"Brokerage Business" has the meaning ascribed to it in the Asset Purchase Agreement.
"Brokerage Closing Date" has the meaning ascribed to it in the Asset Purchase Agreement.
"Brokerage Services" means the type of brokerage services provided as part of the Brokerage Business.
"CIBCWM" means CIBC World Markets Corp.
"Coverage Account" means an account listed on the coverage list attached hereto as Schedule A, which Schedule A forms a part of this agreement.
"New Issues" means the offer or sale of (i) newly issued securities or (ii) securities for which the offer and sale is registered with the U.S. Securities and Exchange Commission.
"Restricted City" means any city in the U.S. in which CIBCWM operated a retail branch that engaged in the Brokerage Business as of the Brokerage Closing Date and was transferred to Purchaser pursuant to the Asset Purchase Agreement.
"Retail Account" means an account of a Retail Client.
"Retail Branch" means a branch office as such term is defined in Rule 3010(g) of the Conduct Rules of the National Association of Securities Inc. and includes a branch office that is a satellite or independent office.
"Retail Clients" means (a) a natural person in his or her personal capacity, (b) a trust or other entity created for the benefit of a natural person in his personal capacity and/or his or her immediate family, or (c) a private company or other entity controlled by a natural person in his or her personal capacity and/or his immediate family, and for greater certainty does not include (i) a corporate, institutional or government client which is not covered by clauses (b) or (c) above, (ii) a client who is an employee of CIBCWM or any of its affiliates, or (iii) a client resident in the U.S. who established an account prior to the Brokerage Closing Date with one of CIBCWMs affiliates located outside of the U.S.
"Special Products" means one or more of derivative products, structured financial products, prime brokerage services (except Coverage Accounts) and other similar products and services.
"Subsidiary" has the meaning ascribed to it in the Asset Purchase Agreement.
"U.S." means the United States of America.
Capitalized terms not defined in this agreement have the meanings ascribed to them in the Asset Purchase Agreement.
2. Non-Competition
CIBCWM shall not (and will ensure that each of its Subsidiaries does not), for the period from the Brokerage Closing Date until March 31, 2003, directly or indirectly, in any manner whatsoever provide Brokerage Services to any Brokerage Account;
CIBCWM shall not (and will ensure that each of its Subsidiaries does not), from the Brokerage Closing Date until the earlier of (a) two years after the Brokerage Closing Date and (b) the date on which CIBCWM ceases to provide research to Purchaser pursuant to the Research Agreement (the "Termination Date"), assign sales coverage or provide research to any Coverage Account;
CIBCWM shall not (and will ensure that each of its Subsidiaries does not), for a period of three years after the Brokerage Closing Date, (i) open a Retail Branch in a Restricted City if such Retail Branch carries on a business which is the same as or substantially similar to or competes with or would compete with the Brokerage Business, nor (ii) provide Brokerage Services to any Retail Account.
3. Exceptions
Notwithstanding section 2, nothing shall prevent:
3.1 CIBC from providing Brokerage Services to any Coverage Account if such Brokerage Services constitute trading in response to an electronic bid or offer, or are Brokerage Services provided in connection with New Issues, or constitute the provision of Special Products;
3.2 CIBC from effecting a merger, amalgamation or other business combination transaction in which CIBC is a constituent corporation to such merger, amalgamation or other business combination transaction ("Parent Bank Merger") with a Person who has a business in the U.S. that is the same as or substantially similar to or which competes with or would compete with the Brokerage Business, provided that (i) CIBCWM does not own the Trademarks at the time of the Parent Bank Merger or, (ii) in the event that CIBCWM owns or has the contingent right to acquire the Trademarks at the time of the Parent Bank Merger, CIBCWM permanently transfers the Trademarks to Purchaser;
3.3 CIBC (or any of its subsidiaries) from effecting an acquisition, merger, business combination or similar transaction other than a Parent Bank Merger ("Merger") with a Person ("Target") whose business, directly or indirectly, derives 25% or less of its total revenues during the 12 month period prior to the time the Merger is announced from business in the U.S. that is the same as or substantially similar to or which competes with or would compete with the Brokerage Business; provided, however, that following the Merger, CIBCWM or the resulting Person from the Merger shall not open a new Retail Branch that carries on a business that is the same as or substantially similar to or which competes with or would compete with the Brokerage Business in a Restricted City until the expiration of three years from the Brokerage Closing Date, except: (i) in a Restricted City in which Target had a Retail Branch prior to the announcement of the Merger or (ii) in the event that CIBCWM owns or has the right to acquire the Trademarks at the time of the Merger, in Restricted City in which Target had a Retail Branch for a period of one year prior to the announcement of the Merger
3.4 CIBCWM and its affiliates from effecting or recommending transactions, either as principal or as agent on behalf of third parties, in the ordinary course of the business of CIBCWM and its affiliates, in, relating to or involving:
(a) (i) securities of companies engaged in businesses competitive with the Brokerage Business, including transactions in which CIBCWM or its affiliates are acting as an investment banking organization providing advisory services, or (ii) the provision of investment banking services to investment advisors, mutual funds, investment companies, or broker/dealers or services as an underwriter or placement agent of securities, or market maker, specialist, arbitrageur or block positioner in such securities, and
financial assets and liabilities and the related factoring and servicing operations of CIBCWM and its affiliates, including, without limitation, transactions involving deposit account, commercial and consumer loans, commercial and residential mortgages, government-backed or government-insured asset-related securities, accounts receivables and other evidences of indebtedness;
3.5. CIBCWM or any of its affiliates from engaging in a strategic transaction (other than a Parent Bank Merger or Merger, as defined in Section 3.2 and Section 3.3, respectively) with any Person, provided that CIBCWM and its affiliates: (i) do not provide or make available to such business any intellectual property or other CIBCWM proprietary information which is the subject matter of the Asset Purchase Agreement, (ii) do not engage in marketing or promotion in respect of any business in the U.S. that is the same as or substantially similar to or which competes with or would compete with the Brokerage Business and (iii) do not otherwise participate in the management or operation of any business in the U.S. that is the same as or substantially similar to or which competes with or would compete with the Brokerage Business;
3.6. CIBCWM or any of its affiliates from providing execution or Brokerage Services directly related to employee stock option plan service contracts through accounts, which may include accounts for this purpose only for corporate clients and employees within the U.S.;
3.7. CIBCWM or any of its affiliates from completing existing OTC derivative transactions; or
3.8 CIBCWM or any of its affiliates from providing Brokerage services to their employees, including, but not limited to, Retained Employee Customer Accounts (as defined in the Asset Purchase Agreement).
4. Non-Solicitation
CIBC agrees that for a period of three years from and after the Brokerage Closing Date, without the prior written consent of Purchaser, CIBC shall not, (A) directly or indirectly or through an intermediary, solicit, induce or encourage any broker, manager or executive of Purchaser or its Affiliates, to terminate such persons employment relationship with Purchaser or its Affiliates, as the case may be; provided , that the foregoing shall not apply to (i) general solicitations through general advertising, general internet postings or other similar non-targeted advertising of employees by CIBC and (ii) solicitations conducted by an entity that is acquired by or merged with CIBC or its Affiliates so long as such solicitations were conducted prior to the date of such acquisition or merger and (B) employ, directly or indirectly, any broker, manager or executive of Purchaser or its Affiliates if such broker, manager or executive is indebted to Purchaser or its Affiliates pursuant to Purchasers broker retention programs or pursuant to the Broker Loans (as defined in the Asset Purchase Agreement) assigned by CIBC to Purchaser pursuant to the Loan Assignment Agreement (as defined in the Asset Purchase Agreement).
5. Acknowledgements and Agreements
CIBCWM acknowledges and agrees that:
5.1. the covenants contained herein are intended to ensure that the Purchaser receives the full benefit of the goodwill of the Brokerage Business; and
5.2 Purchaser is relying on the acknowledgements and agreements contained herein in connection with its purchase of the Brokerage Business.
6. Invalidity of Provisions
Each of the provisions contained in this agreement is distinct and severable and a declaration of invalidity or unenforceability of any such provision or part thereof by a court of competent jurisdiction shall not affect the validity or enforceability of any other provisions hereof. To the extent permitted by applicable law, the parties waive any provision of law that renders any provision of this agreement invalid or unenforceable in any respect.
7. Remedies
CIBCWM acknowledges that a breach or threatened breach by CIBCWM or any of its affiliates of any provision of this agreement could result in the Purchaser suffering irreparable harm which cannot be calculated or fully or adequately compensated by recovery of damages alone. Accordingly, CIBCWM agrees that, in addition to any other relief to which the Purchaser may become entitled, the Purchaser shall be entitled to seek interim and permanent injunctive relief, specific performance and other equitable remedies.
CIBCWM expressly acknowledges that this agreement is reasonable and valid in all respects and irrevocably waives (and irrevocably agrees not to raise) as a defense any issue of reasonableness (including the reasonableness of the territory or the duration and scope of this agreement) in any proceeding to enforce any provision of this agreement.
CIBCWM shall, at its own expense, take all lawful actions, including legal proceedings, to prevent or stop any violation, contravention or breach of this agreement. In the absence of such action by CIBCWM, the Purchaser may take such action in its own name or otherwise.
CIBCWM shall immediately notify the Purchaser of any violation, contravention or breach of this agreement as soon as it becomes aware of any such event.
8. Amendment
No modifications, amendment or waiver of any of the provisions of this agreement shall be effective unless made with the prior written consent of the parties hereto.
9. Enurement
This agreement shall enure to the benefit of the Purchaser, its successors and assigns, and shall be binding upon CIBC and its respective successors, and assigns.
10. Waiver
No waiver of any of the provisions of this agreement shall be deemed to constitute a waiver of any other provision (whether or not similar); nor shall waiver be binding unless executed in writing by the party to be bound by the waiver.
No failure on the part of any party to exercise, and no delay in exercising any right under this agreement shall operate as a waiver of such right; nor shall any single or partial exercise of any such right preclude any other or further exercise of such right or the exercise of any other right.
11. Governing Law
This agreement shall be governed by and construed in accordance with the laws of the State of New York applicable to agreements made and to be performed therein.
IN WITNESS WHEREOF the parties have executed this agreement.
CIBC WORLD MARKETS CORP.
by: /s/ Michael Capatides
Name: Michael Capatides
Title: General Counsel
CANADIAN IMPERIAL BANK OF COMMERCE
by: /s/ Gerry McCaughey
Name: Gerry McCaughey
Title: Senior Executive Vice President
VINER FINANCE INC.
by: /s/ Elaine Roberts
Name: Elaine Roberts
Title: President
FAHNESTOCK & CO. INC.
by: /s/ A.G. Lowenthal
Name: A.G. Lowenthal
Title: CEO and Chairman of the Board
THIS NON-SOLICITATION AGREEMENT (this " Agreement ") is made as of the 2nd day of January, 2003. Capitalized terms used herein and not defined herein shall have the meanings ascribed to them in that certain Purchase Agreement of even date herewith (the " Purchase Agreement "), by and among Fahnestock Viner Holdings Inc., Fahnestock & Co. Inc., Canadian Imperial Bank of Commerce and CIBC World Markets Corp.
BY: CIBC WORLD MARKETS CORP. , a Delaware Corporation
(" CIBCWM ")
and
CANADIAN IMPERIAL BANK OF COMMERCE , a bank under the laws of Canada (together with its Affiliates, "CIBC")
IN FAVOUR OF: FAHNESTOCK VINER HOLDINGS INC. , an Ontario Corporation
and
FAHNESTOCK & CO. INC. , a corporation incorporated under the laws of New York (together with Fahnestock Viner Holdings Inc., the " Purchaser ")
RECITALS:
A. Pursuant to the Purchase Agreement, the Purchaser has agreed to purchase the Asset Management Business;
B. The obligations of the Purchaser under the Purchase Agreement are subject to the condition that CIBCWM execute and deliver this Non-Solicitation Agreement as of the date hereof;
C. The Purchaser acknowledges that, as of the date hereof, in addition to the Asset Management Business, CIBCWM currently carries on in the U.S. (independently and in conjunction with other subsidiaries and affiliates of Canadian Imperial Bank of Commerce (Canadian Imperial Bank of Commerce and its subsidiaries and affiliates, including CIBCWM, are collectively referred to herein as " CIBC ")) a merchant banking business, and a full service investment banking and securities business serving institutional and other non-retail market segments;
D. CIBC acknowledges that pursuant to the Purchase Agreement, CIBC will be prohibited from soliciting clients (other than in connection with the conduct of the Asset Management Business in the ordinary course prior to the Final Closing) and employees of the Asset Management Business other than in Canada (other than in connection with the conduct of the Asset Management Business in the ordinary course prior to the Final Closing) as described more fully herein for a reasonable period of time following the date hereof and that any such solicitation during such period would diminish the value of the Purchaser's business, including the goodwill associated with the Asset Management Business; and
E. This Agreement is intended to recognize the interest of CIBC in being able to carry on its existing businesses in the U.S. and elsewhere, other than the Asset Management Business and the Brokerage Business, and the interest of Purchaser in being able to carry on its business in the U.S. and elsewhere, including the Asset Management Business and Brokerage Business.
NOW THEREFORE in consideration of the foregoing and other good and valuable consideration given by the Purchaser to CIBC, CIBC agrees with the Purchaser as follows:
1. Non-Solicitation
CIBC agrees that without the prior written consent of Purchaser, CIBC shall not, directly or indirectly or through an intermediary:
(A) for a period of three years from and after the date hereof, except as expressly contemplated by the Purchase Agreement, hire or employ, or solicit, induce or encourage, any person who is, or has within the previous twelve months been, a non-clerical employee of Purchaser or its Affiliates or any Business Employee, to terminate such persons employment relationship with (or, in the case of any Business Employee prior to his or her Hire Date, to decline an offer of employment from) Purchaser or its Affiliates; provided that the foregoing shall not apply to ( i ) general solicitations through general advertising, general internet postings or other similar non-targeted advertising of employees by CIBC and ( ii ) solicitations conducted by an entity that is acquired by or merged with CIBC so long as such solicitations were conducted prior to the date of such acquisition or merger; or
(B) for a period of two years from and after the date hereof, except as expressly contemplated by the Purchase Agreement, ( i ) attempt to establish with or seek from any Client (other than in Canada) a business relationship in respect of any product or program of the Asset Management Business of the types advised, sub-advised, managed, offered, distributed or sponsored thereby (collectively, " Services ") or ( ii ) induce or encourage or seek to cause any Client (including for such purpose a Client within the previous twelve months, or a potential Client) to reduce or terminate its relationship (or not enter into a relationship) with the Asset Management Business or Purchaser or its Affiliates.
2. Acknowledgements and Agreements
CIBCWM acknowledges and agrees that:
2.1. the covenants contained herein are intended to ensure that the Purchaser receives the full benefit of the goodwill of the Asset Management Business; and
2.2 Purchaser is relying on the acknowledgements and agreements contained herein in connection with its purchase of the Asset Management Business.
3. Exceptions
Notwithstanding Section 1, nothing shall prevent:
3.1 CIBC from effecting a merger, amalgamation or other business combination transaction in which CIBC is a constituent corporation to such merger, amalgamation or other business combination transaction (a " Parent Bank Merger ") with a Person who has a business in the U.S. that is the same as or substantially similar to, or which competes with or would compete with, the Asset Management Business;
3.2 CIBC (or any of its Subsidiaries) from effecting an acquisition, merger, business combination or similar transaction other than a Parent Bank Merger (a " Merger ") with a Person (" Target ") whose business, directly or indirectly, derives 25% or less of its total revenues during the 12 month period prior to the time the Merger is announced from businesses in the U.S. that are the same as or substantially similar to or which compete with or would compete with businesses in which the Asset Management Business is engaged; provided , however , that following the Merger, the solicitation by the resulting Person from the transaction of Clients with which such Person had a preexisting relationship in respect of Services at the time of the announcement of the transaction shall not in and of itself constitute a breach of Section 1;
3.3 CIBCWM and its Affiliates from effecting or recommending transactions, either as principal or as agent on behalf of third parties, in the ordinary course of the business of CIBCWM and its Affiliates, in, relating to or involving:
(a) ( i ) securities of companies engaged in businesses competitive with the Asset Management Business, including transactions in which CIBCWM or its Affiliates are acting as an investment banking organization providing advisory services, or ( ii ) the provision of investment banking services to investment advisors, mutual funds, investment companies, or broker/dealers or services as an underwriter or placement agent of securities, or market maker, specialist, arbitrageur or block positioner in such securities, and
(b) financial assets and liabilities and the related factoring and servicing operations of CIBCWM and its Affiliates, including, without limitation, transactions involving deposit account, commercial and consumer loans, commercial and residential mortgages, government-backed or government-insured asset-related securities, accounts receivables and other evidences of indebtedness; and
3.4 CIBCWM or any of its Affiliates from engaging in a strategic transaction (other than a Parent Bank Merger or Merger) with any Person, provided that following such transaction, the solicitation by the resulting Person from the transaction of Clients with which such Person had a preexisting relationship in respect of Services at the time of the announcement of the transaction shall not in and of itself constitute a breach of Section 1.
3.5 CIBCWM or any of its Affiliates from providing asset management and private client services for any director, officer or other employee thereof.
3.6 CIBC from providing "Brokerage Services" or "Special Products," including to Clients, to the extent permitted by the Non-Competition Agreement dated December 9, 2002, and to the extent that such activities do not constitute Services.
3.7 CIBC from ( i ) soliciting Clients in Canada, ( ii ) soliciting Clients of Purchaser and its Affiliates that are users of proprietary products or funds, including mutual funds, of CIBC sponsored by Purchaser or its controlled affiliates and ( iii ) soliciting any Client of TAL Global Management Inc. (" TAL ") or any of its affiliates, that is a client of TAL on the Final Closing Date or was a client of TAL within the one year period prior to the Final Closing Date.
4. Invalidity of Provisions
Each of the provisions contained in this Agreement is distinct and severable and a declaration of invalidity or unenforceability of any such provision or part thereof by a court of competent jurisdiction shall not affect the validity or enforceability of any other provisions hereof. To the extent permitted by applicable law, the parties waive any provision of law that renders any provision of this Agreement invalid or unenforceable in any respect.
5. Remedies
CIBCWM acknowledges that a breach or threatened breach by CIBCWM or any of its Affiliates of any provision of this Agreement could result in the Purchaser suffering irreparable harm which cannot be calculated or fully or adequately compensated by recovery of damages alone. Accordingly, CIBCWM agrees that, in addition to any other relief to which the Purchaser may become entitled, the Purchaser shall be entitled to seek interim and permanent injunctive relief, specific performance and other equitable remedies.
CIBCWM expressly acknowledges that this Agreement is reasonable and valid in all respects and irrevocably waives (and irrevocably agrees not to raise) as a defense any issue of reasonableness (including the reasonableness of the territory or the duration and scope of this Agreement) in any proceeding to enforce any provision of this Agreement.
CIBCWM shall, at its own expense, take all lawful actions, including legal proceedings, to prevent or stop any violation, contravention or breach of this Agreement. In the absence of such action by CIBCWM, the Purchaser may take such action in its own name or otherwise.
CIBCWM shall immediately notify the Purchaser of any violation, contravention or breach of this Agreement as soon as it becomes aware of any such event.
6. Amendment
No modifications, amendment or waiver of any of the provisions of this Agreement shall be effective unless made with the prior written consent of the parties hereto.
7. Enurement
This Agreement shall enure to the benefit of the Purchaser, its successors and assigns, and shall be binding upon CIBC and its respective successors, and assigns.
8. Waiver
No waiver of any of the provisions of this Agreement shall be deemed to constitute a waiver of any other provision (whether or not similar); nor shall waiver be binding unless executed in writing by the party to be bound by the waiver.
No failure on the part of any party to exercise, and no delay in exercising any right under this Agreement shall operate as a waiver of such right; nor shall any single or partial exercise of any such right preclude any other or further exercise of such right or the exercise of any other right.
9. Governing Law
This Agreement shall be governed by and construed in accordance with the laws of the State of New York applicable to agreements made and to be performed therein.
10. Termination
This Agreement shall terminate automatically and be of no further force or effect in the event that, and at such time as, the Purchase Agreement is terminated in accordance with its terms.
11. Definitions
11.1 " U.S. " means the United States of America.
[Remainder of page intentionally left blank.]
IN WITNESS WHEREOF the parties have executed this agreement as of the date first written above.
CIBC WORLD MARKETS CORP.
/s/ Antonio Molestina
Name: Antonio Molestina
Title: Managing Director
CANADIAN IMPERIAL BANK OF COMMERCE
/s/ Antonio Molestina
Name: Antonio Molestina
Title: Senior Vice President
FAHNESTOCK VINER HOLDINGS INC.
/s/ A.G. Lowenthal
Name: A. G. Lowenthal
Title: Chief Executive Officer and Chairman of the Board
FAHNESTOCK & CO. INC.
/s/ A.G. Lowenthal
Name: A. G. Lowenthal
Title: Chief Executive Officer and Chairman of the Board
AMENDED AND RESTATED PROMISSORY NOTE
$65,051,153.03 January 15, 2003
(to be adjusted pursuant to Section 3.04 hereof) New York, New York
FOR VALUE RECEIVED, VINER FINANCE INC., a
corporation organized under the laws of the State of Delaware
(the "
Maker
"), hereby unconditionally promises
to pay to the order of CIBC WORLD MARKETS CORP. (the "
Payee
"),
at its principal office in New York City at 245 Park Avenue, New
York, New York 10017, the principal sum of SIXTY-FIVE MILLION
FIFTY-ONE THOUSAND ONE HUNDRED FIFTY-THREE DOLLARS AND THREE
CENTS (to be adjusted pursuant to Section 3.04 hereof) in lawful
money of the United States of America and in immediately
available funds, on the dates and in the principal amounts
hereinafter provided, and, to the extent hereinafter provided, to
pay interest on the unpaid principal amount hereof, at such
office, in like money and funds at the rate per annum and on the
dates hereinafter provided. This amended and restated promissory
note (this "
Promissory Note
"), hereby amends and
restates in its entirety that certain promissory note from the
Maker to the Payee dated as of January 2, 2003, for the principal
amount of sixty-five million nine hundred eighty thousand three
hundred sixty-nine dollars and no cents.
Section 1. Definitions . As used herein, the following terms shall have the following meanings (all terms defined in this Section 1 or in other provisions of this Promissory Note in the singular to have the same meanings when used in the plural and vice versa ):
" Acceleration Amount " shall mean, with respect to any Broker Event, any amount of the related Broker Note the maturity of which was accelerated that is not paid by the maker of such Broker Note.
" Asset Purchase Agreement " shall mean the Asset Purchase Agreement, dated as of December 9, 2002, among Fahnestock Viner Holdings Inc., the Maker, the Payee and Canadian Imperial Bank of Commerce (as such Asset Purchase Agreement shall be amended, modified and supplemented and in effect from time to time).
" Assignment Agreement " shall mean the Assignment and Assumption Agreement, dated as of January 2, 2003, between the Payee and the Maker, in the form of Exhibit B hereto (as said Assignment Agreement shall be amended, modified and supplemented and in effect from time to time).
" Broker Amount " shall mean, with respect to any Broker Event, the aggregate outstanding principal amount of all Broker Notes with respect to which such Broker Event shall have occurred, together with all accrued but unpaid interest thereon.
" Broker Event " shall mean, with respect to any Broker Note, the acceleration of the maturity of such Broker Note (whether by reason of the death of the maker of such Broker Note, the occurrence of an Insolvency Event with respect to the maker of such Broker Note, the maker of such Broker Note no longer being employed by the Maker or any of its affiliates, or otherwise).
" Broker Notes " shall have the meaning given to that term in the Assignment Agreement.
" Business Day " shall mean any day on which commercial banks are not authorized or required to close in New York City.
" Default " shall mean any Event of Default and any event which, with notice or lapse of time or both, would become an Event of Default.
" Dollars " and " $ " shall mean lawful money of the United States of America.
" Event of Default " shall have the meaning given to that term in Section 6 hereof.
" Forgiveness Event " shall mean, with respect to any Broker Note, any principal of such Broker Note being forgiven (the amount so forgiven, the " Forgiveness Amount " with respect to such Forgiveness Event).
" Insolvency Event " shall mean, with respect to the maker of any Broker Note, (a) such maker shall admit in writing his or her inability to, or be generally unable to, pay his or her debts as such debts become due, or (b) such maker shall (i) apply for or consent to the appointment of, or the taking of possession by, a receiver, custodian, trustee, examiner, liquidator of his or herself or of all or a substantial part of his or her property, (ii) make a general assignment for the benefit of his or her creditors, (iii) commence a voluntary case under the United States Bankruptcy Code, (iv) file a petition seeking to take advantage of any other law relating to bankruptcy, insolvency, reorganization, or composition or readjustment of debts, or (v) fail to controvert in a timely and appropriate manner, or acquiesce in writing to, any petition filed against him or her in an involuntary case under the United States Bankruptcy Code, or (c) a proceeding or case shall be commenced, without the application or consent of such maker in any court of competent jurisdiction, seeking (i) the composition or readjustment of his or her debts, (ii) the appointment of a receiver, custodian, trustee, examiner, liquidator or the like of such maker or of all or any substantial part of his or her property, or (iii) similar relief in respect of such maker under any law relating to bankruptcy, insolvency, or composition or adjustment of debts, and such proceeding or case shall continue undismissed, or an order, judgment or decree approving or ordering any of the foregoing shall be entered and continue unstayed and in effect, for a period of 60 or more days; or an order for relief against such maker shall be entered in an involuntary case under the United States Bankruptcy Code.
" Lien " shall mean, with respect to any Property, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such Property.
" Loan Agreement " shall mean the Credit Agreement dated as of December 9, 2002, between Canadian Imperial Bank of Commerce and Fahnestock Viner Holdings Inc., providing for loans to be made by Canadian Imperial Bank of Commerce to Fahnestock Viner Holdings Inc. in an aggregate principal amount not to exceed $50,000,000 (as said Loan Agreement shall be amended, modified and supplemented and in effect from time to time).
" Payment Event " shall mean, with respect to any Broker Note, any principal of or interest on such Broker Note being due and payable thereunder (the " Payment Amount " for such a Payment Event shall be the amount so due and payable, other than any Acceleration Amount with respect to such Broker Note), except to the extent that such principal of or interest became due and payable as a result of a Broker Event with respect to such Broker Note. A "Payment Event" shall occur on the first day that any such principal became due and payable (whether or not the maker of such Broker Note makes any such payment).
" Permitted Transfer " shall mean a transfer of the Broker Notes by the Maker to U.S. OpCo if such a transfer is required to be made by the Securities and Exchange Commission.
" Person " shall mean any individual, corporation, company, limited liability company, voluntary association, partnership, joint venture, trust, unincorporated organization or government (or any agency, instrumentality or political subdivision thereof).
" Principal Office " shall mean the principal office the Payee in New York City, located on the date hereof at 245 Park Avenue, New York, New York 10017.
" Property " shall mean any right or interest in or to property of any kind whatsoever, whether real, person or mixed, and whether tangible or intangible.
" Taxes " shall mean all present and future income, stamp, registration and other taxes and levies, imposts, deductions, charges, compulsory loans and withholdings whatsoever, and all interest, penalties or similar amounts with respect thereto, now or hereafter imposed, assessed, levied or collected by any jurisdiction or any political subdivision or taxing authority of or in or any jurisdiction on or in respect of this Promissory Note, the recording, registration, notarization or other formalization hereof, the enforcement hereof or the introduction hereof in any judicial proceedings, or on or in respect of any payments of principal, interest, premiums, charges, fees or other amounts made on, under or in respect hereof.
" Transaction Documents " shall mean this Promissory Note and the Assignment Agreement.
" Transaction Party " shall mean the Maker and each other affiliate of the Maker that is a party to any Transaction Document.
" U.S. OpCo " shall mean Fahnestock & Co. Inc., a New York corporation.
Section 2. Payments of Principal and Interest .
2.01 Repayment of Principal . The Maker hereby promises to pay to the Payee the principal amount and interest of this Promissory Note as follows:
(a) No later than the fifth Business Day following each day that a Forgiveness Event shall occur with respect to any Broker Note, the Maker shall make a principal or interest payment, as applicable, in an amount equal to the Forgiveness Amount with respect thereto.
(b) No later than the fifth Business Day following each day that a Payment Event shall occur (unless such Payment Event is also a Broker Event, in which case Section 2.01(c) hereof shall apply), the Maker shall make a principal or interest payment, as applicable, in an amount equal to the Payment Amount with respect thereto.
(c) No later than the fifth Business Day following each day that a Broker Event shall occur with respect to any Broker Note, the Maker shall make a principal or interest payment, as applicable, in an amount equal to the Broker Amount with respect thereto, provided that, if there is an Acceleration Amount with respect to such Broker Note, the Maker shall make a principal payment in an amount equal to the Acceleration Amount with respect thereto in monthly installments as follows:
(i) the final installment of such Acceleration Amount shall be due and payable on the last Business Day of the month in which occurs the date five years after the date on which such Broker Note was originally made (the " Maturity Date " for such Acceleration Amount),
(ii) there shall be an installment (the " Monthly Installments " for such Broker Event) payable on the last Business Day of each month, the first such installment being payable on the first such Business Day after the occurrence of such Broker Event and the last installment being payable on the Maturity Date for such Acceleration Amount, and
(iii) the amount of each Monthly Installment shall be equal to the Acceleration Amount divided by the number of Monthly Installments for such Broker Event.
2.02 Interest . The Maker hereby promises to pay to the Payee interest on any principal of or interest on this Promissory Note which shall not be paid in full when due (whether at stated maturity, by acceleration or otherwise), for the period from and including the due date thereof to but excluding the date the same is paid in full at a rate per annum equal to the sum of (a) the Broker Call Rate as announced from time to time in the Wall Street Journal and (b) 2%. Accrued interest on this Promissory Note shall be payable on demand.
2.03 Voluntary Prepayments . The Maker shall have the right to prepay the principal of this Promissory Note at any time or from time to time, provided that (a) the Maker shall give the Payee at least one Business Days notice thereof, and (b) any partial prepayment shall be in an amount at least equal to $1,000,000.
2.04 Obligations Unconditional . The obligations of the Maker under Section 2.01 hereof are absolute and unconditional, irrespective of the value, genuineness, validity, regularity or enforceability of the obligations of any maker under any Broker Note, and irrespective of any other circumstance whatsoever that might otherwise constitute a legal or equitable discharge or defense of any such maker. Without limiting the generality of the foregoing, the Maker agrees that the occurrence of any one or more of the following shall not alter the liability of the Maker hereunder: (a) the death of any maker of any Broker Note, (b) the occurrence of an Insolvency Event with respect to any maker of any Broker Note, and (c) any default by any maker of any Broker Note of his or her obligations under such Broker Note.
Section 3. Payments; Computations; Etc .
3.01 Payments . All payments of principal, interest and other amounts to be made by the Maker under this Promissory Note shall be made in Dollars, in immediately available funds, without deduction, set-off or counterclaim, to the Payee at the Principal Office, not later than 1:00 p.m. (New York City time) on the date on which such payment shall become due (each such payment made after such time on such due date to be deemed to have been made on the next succeeding Business Day).
3.02 Taxes . All payments on account of the principal of and interest on this Promissory Note, and all other amounts payable hereunder by the Maker to or for the account of the Payee shall be made free and clear of and without reduction or liability for Taxes unless otherwise required by applicable law.
3.03 Computations . Interest on this Promissory Note shall be computed on the basis of a year of 360 days and actual days elapsed (including the first day but excluding the last day) occurring in the period for which payable.
3.04 Adjustment of Principal Amount . If any Broker Loans shall be assigned to the Maker after the date hereof, the principal sum of this Promissory Note shall immediately and automatically, without any further action on the part of either of the Maker or the Payee, be increased in accordance with the terms of Section 6.21(b) of the Asset Purchase Agreement. The Maker shall promptly amend and restate this Promissory Note following any such Broker Loan assignment to reflect the adjusted principal amount. The Maker shall then exchange the amended and restated Promissory Note for this Promissory Note.
Section 4. Representations . The Maker represents and warrants to the Payee that:
4.01 Corporate Existence . The Maker is a corporation duly organized and validly existing under the laws of the State of Delaware.
4.02 No Breach . None of the execution and delivery of this Promissory Note and the other Transaction Documents, the consummation of the transactions herein and therein contemplated or compliance with the terms and provisions hereof and thereof will conflict with or result in a breach of, or require any consent under, the certificate of incorporation or by-laws of any Transaction Party, or any applicable law or regulation, or any order, writ, injunction or decree of any court or governmental authority or agency, or any agreement or instrument to which any Transaction Party is a party or by which it or any of its property is bound or to which it is subject, or result in the creation or imposition of any Lien upon any property of any Transaction Party pursuant to the terms of any such agreement or instrument.
4.03 Action . Each Transaction Party has all necessary corporate power, authority and legal right to execute, deliver and perform its obligations under such of this Promissory Note and the other Transaction Documents to which it is a party; the execution, delivery and performance by each Transaction Party of such of this Promissory Note and the other Transaction Documents to which it is a party have been duly authorized by all necessary action on its part (including, without limitation, any required shareholder approvals); and this Promissory Note and each other Transaction Document has been duly and validly executed and delivered by each Transaction Party that is a party thereto and constitutes its legal, valid and binding obligation, enforceable against the Maker in accordance with its terms, except as such enforceability may be limited by (a) bankruptcy, insolvency, reorganization, moratorium or similar laws of general applicability affecting the enforcement of creditors rights and (b) the application of general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).
4.04 Approvals . No authorizations, approvals or consents of, and no filings or registrations with, any governmental or regulatory authority or agency are necessary for the execution, delivery or performance by any Transaction Party of such of this Promissory Note and the other Transaction Documents to which it is a party or for the legality, validity or enforceability hereof or thereof.
4.05 Title to Broker Notes . The Maker owns all of the Assigned Interests (as that term is defined in the Assignment Agreement), and each of the Broker Notes is free and clear of all Liens.
Section 5. Covenants . The Maker covenants and agrees that, so long as any principal of this Promissory Note is outstanding and until payment in full of all amounts payable by the Maker hereunder:
5.01 Information . The Maker shall deliver to the Payee:
(a) promptly, and in no event later than three Business Days after the end of each month, a certificate of a senior financial officer of the Maker in substantially the form of Exhibit A hereto with respect to such month;
(b) promptly after the Maker knows that any Default has occurred, a notice of such Default describing the same in reasonable detail and, together with such notice or as soon thereafter as possible, a description of the action that the Maker has taken or proposes to take with respect thereto; and
(c) from time to time, such other information regarding the financial condition, operations or business of the Maker, as the Payee may reasonably request.
5.02 Litigation . The Maker will promptly give to the Payee notice of all legal or arbitral proceedings, and of all proceedings by or before any governmental or regulatory authority or agency, and any material development in respect of such legal or other proceedings, to the extent that the same is reasonably likely to affect the Makers ability to perform its obligations under this Promissory Note.
5.03 Inspection The Maker will (and, after any Permitted Transfer, will cause U.S. OpCo to):
(a) keep adequate records and books of account with respect to the Broker Notes, including records with respect to all Broker Events (and the related Broker Amounts and the related Acceleration Amounts), all Forgiveness Events (and the related Forgiveness Amounts), and all Payment Events (and the related Payment Amounts); and
(b) permit representatives of the Payee, during normal business hours (but subject to prior notice), to examine, copy and make extracts from its books and records relating to the Broker Notes.
5.04 Transfers of Broker Notes . The Maker will not (and, after any Permitted Transfer, will not permit U.S. OpCo to), either directly or indirectly, convey, sell, transfer, assign or otherwise dispose of any of the Broker Notes or any interest therein, except for a Permitted Transfer and for transfers to affiliates of the Maker so long as (a) the Payee is given at least 30 days notice thereof and (b) after giving effect to such transfer no Default would be continuing.
5.05 Liens on Broker Notes . The Maker will not (and, after any Permitted Transfer, will not permit U.S. OpCo to) create, incur, assume or suffer to exist any Lien upon any of the Broker Notes.
5.06 Holding Company . The Maker will not at any time incur any indebtedness (other than hereunder or under the Loan Agreement), own any property other than the shares of capital stock of U.S. OpCo and the Broker Notes or conduct any business other than the business of holding the shares of capital stock of U.S. OpCo and performing its obligations hereunder and under the Loan Agreement.
5.07 Amendments to Broker Notes . The Maker will not (and, after any Permitted Transfer, will not permit U.S. OpCo to) agree or consent to any material amendment or supplement to, or other modification of, any of the Broker Notes, if the same (a) modifies any of the payment terms thereof or (b) is reasonably likely to materially aversely affect the Makers rights and remedies thereunder.
Section 6. Events of Default . If one or more of the following events (herein called " Events of Default ") shall occur and be continuing:
(a) The Maker shall default in the payment when due of any principal of or interest on this Promissory Note; or
(b) Any representation, warranty or certification made or deemed made herein (or in any modification or supplement hereto), or in any other Transaction Document, by the Maker, or any certificate furnished to the Payee pursuant to the provisions hereof, shall prove to have been false or misleading as of the time made or furnished in any material respect; or
(c) The Maker shall default in the performance of any of its obligations under Section 5 hereof, or the Maker shall default in the performance of any of its obligations under any of the other Transaction Documents; or
(d) The Maker or U.S. OpCo shall admit in writing its inability to, or be generally unable to, pay its debts as such debts become due; or
(e) The Maker or U.S. OpCo shall (i) apply for or consent to the appointment of, or the taking of possession by, a receiver, custodian, trustee, examiner, liquidator of itself or of all or a substantial part of its property, (ii) make a general assignment for the benefit of its creditors, (iii) commence a voluntary case under the United States Bankruptcy Code, (iv) file a petition seeking to take advantage of any other law relating to bankruptcy, insolvency, reorganization, liquidation, dissolution, arrangement or winding-up, or composition or readjustment of debts, (v) fail to controvert in a timely and appropriate manner, or acquiesce in writing to, any petition filed against it in an involuntary case under the United States Bankruptcy Code or (vi) take any action for the purpose of effecting any of the foregoing; or
(f) A proceeding or case shall be commenced, without the application or consent of the Maker or U.S. OpCo in any court of competent jurisdiction, seeking (i) its reorganization, liquidation, dissolution, arrangement or winding-up, or the composition or readjustment of its debts, (ii) the appointment of a receiver, custodian, trustee, examiner, liquidator or the like of either of the Maker or U.S. OpCo or of all or any substantial part of its property, or (iii) similar relief in respect of the Maker or U.S. OpCo under any law relating to bankruptcy, insolvency, reorganization, winding-up, or composition or adjustment of debts, and such proceeding or case shall continue undismissed, or an order, judgment or decree approving or ordering any of the foregoing shall be entered and continue unstayed and in effect, for a period of 60 or more days; or an order for relief against the Maker or U.S. OpCo shall be entered in an involuntary case under the United States Bankruptcy Code; or
(g) The Maker shall default in the payment when due of any principal or interest on any of its indebtedness aggregating $1,000,000 or more; or any event specified in any note, agreement, indenture or other document evidencing or relating to any such indebtedness shall occur if the effect of such event is to cause, or (with the giving or any notice or the lapse of time or both) to permit the holder or holders of such indebtedness (or a trustee or agent on behalf of such holder or holders) to cause, such indebtedness to become due, or to be prepaid in full (whether by redemption, purchase, offer to purchase or otherwise), prior to its stated maturity; or
(h) A final judgment or judgments for the payment of money in an aggregate amount exceeding $1,000,000 shall be rendered by one or more courts, administrative tribunals or other bodies having jurisdiction against the Maker and the same shall not be discharged (or provision shall not be made for such discharge), or a stay of execution thereof shall not be procured, within 30 days from the date of entry thereof and the Maker (as the case may be) shall not, within said period of 30 days, or such longer period during which execution of the same shall have been stayed, appeal therefrom and cause the execution thereof to be stayed during such appeal; or
(i) Any "Event of Default" under the Loan Agreement;
THEREUPON, (x) if such Event of Default (other than an Event of Default of the type described in clause (e) or (f) above with respect to the Maker) shall have continued unremedied for at least 90 days (or such longer period as the Payee may agree to) the Payee may, by notice to the Maker, declare the principal amount then outstanding of, and the accrued interest on, this Promissory Note and all other amounts payable by the Maker hereunder to be forthwith due and payable, whereupon such amounts shall be immediately due and payable without presentment, demand, protest or other formalities of any kind, all of which are hereby expressly waived by the Maker; or (y) in the case of an Event of Default of the type described in clause (e) or (f) above with respect to the Maker, the principal amount then outstanding of, and the accrued interest on, this Promissory Note and all other amounts payable by the Maker hereunder shall automatically be and become immediately due and payable without presentment, demand, protest or other formalities of any kind, all of which are hereby expressly waived by the Maker.
Section 7. Miscellaneous .
7.01 Waiver . No failure on the part of the Payee to exercise and no delay in exercising, and no course of dealing with respect to, any right, power or privilege under this Promissory Note shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege under this Promissory Note preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The remedies provided herein are cumulative and not exclusive of any remedies provided by law.
7.02 Notices . All notices, requests and other communications provided for herein (including, without limitation, any modifications of, or waivers, requests or consents under, this Promissory Note) shall be given or made in writing (including, without limitation, by telex or telecopy). Except as otherwise provided in this Promissory Note, all such communications shall be deemed to have been duly given when transmitted by telex or telecopier (with confirmation received) or personally delivered or, in the case of a mailed notice, upon receipt.
7.03 Expenses, Etc. The Maker agrees to pay or reimburse the Payee for: (a) all reasonable out-of-pocket costs and expenses of the Payee in connection with the negotiation or preparation of any modification, supplement or waiver of any of the terms of this Promissory Note (whether or not consummated); (b) all reasonable out-of-pocket costs and expenses of the Payee (including, without limitation, the reasonable fees and expenses of legal counsel) in connection with (i) any Default and any enforcement or collection proceedings resulting therefrom, including, without limitation, all manner of participation in or other involvement with (x) bankruptcy, insolvency, receivership, foreclosure, winding up or liquidation proceedings and (y) judicial or regulatory proceedings and (ii) the enforcement of this Section 7.03; and (c) all transfer, stamp, documentary or other similar taxes, assessments or charges levied by any governmental or revenue authority in respect of this Promissory Note or any other document referred to herein.
7.04 Amendments, Etc. No provision of this Promissory Note may be modified or supplemented except by an instrument in writing signed by the Maker and the Payee.
7.05 Successors and Assigns . This Promissory Note shall be binding upon the Maker and its successors and assigns.
7.06 Assignments and Participations .
(a) The Maker may not assign any of its rights or obligations hereunder without the prior consent of the Payee (which consent shall not be unreasonably withheld provided such assignee assumes in writing all of the Makers obligations under this Promissory Note and no Default is continuing at the time of such assignment).
(b) The Payee may assign all or any portion of this Promissory Note without the prior consent of the Maker, but subject to any applicable regulatory approvals (including, without limitation, any required under the rules and regulations of the New York Stock Exchange, Inc.).
(c) In addition to the assignments permitted under the foregoing provisions of this Section 7.06, the Payee may (without notice to the Maker) assign all or any portion of its rights under this Promissory Note to an affiliate.
7.07 Survival . The obligations of the Maker under Section 7.03 hereof shall survive the repayment of this Promissory Note.
7.08 Captions . The captions and section headings appearing herein are included solely for convenience of reference and are not intended to affect the interpretation of any provision of this Promissory Note.
7.09 Governing Law . This Agreement and the Notes shall be governed by, and construed in accordance with, the law of the State of New York, without giving effect to the principles of conflicts of laws thereof.
7.10 Jurisdiction; Service of Process; Venue .
(a) The Maker hereby agrees that any suit, action or proceeding with respect to this Promissory Note or any judgment entered by any court in respect hereof may be brought in the Supreme Court of the State of New York, County of New York or in the United States District Court for the Southern District of New York, as the party commencing such suit, action or proceeding may elect in its sole discretion; and the Maker hereby irrevocably submits to the jurisdiction of such courts for the purpose of any suit, action, proceeding or judgment.
(b) Nothing herein shall in any way be deemed to limit the ability of the Payee to serve any such writs, process or summonses in any other manner permitted by applicable law, or to obtain jurisdiction over the Maker in such other jurisdictions, and in such manner, as may be permitted by applicable law.
(c) The Maker hereby irrevocably waives any objection that it may now or hereafter have to the laying of the venue of any suit, action or proceeding arising out of or relating to this Promissory Note brought in the Supreme Court of the State of New York, County of New York or in the United States District Court for the Southern District of New York, and hereby further irrevocably waives any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.
7.11 Waiver of Jury Trial . THE MAKER AND EACH HOLDER OF THIS PROMISSORY NOTE HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS PROMISSORY NOTE OR THE TRANSACTIONS CONTEMPLATED HEREBY.
IN WITNESS WHEREOF, the Maker has caused this Promissory Note to be duly executed and delivered on the day and year first above written.
VINER FINANCE INC.
By: _/s/ A.G. Lowenthal_______
Name: A.G. Lowenthal
Title: CEO & Chairman of the Board
Address for Notices:
125 Broad Street, 16
th
Floor
New York, NY 10004
Attention: Albert Lowenthal
Telecopier: 212-943-8728
ACKNOWLEDGED AND AGREED BY:
CIBC WORLD MARKETS CORP.
By: /s/ Antonio Molestino ____
Name: Antonio Molestino
Title: Managing Director
EXHIBIT A
[Form of Monthly Certificate]
BROKER NOTES CERTIFICATE
Monthly Period Ended _______ __, 20__
Reference is made to the Promissory Note dated January 15, 2003 (the " Promissory Note ") made by Viner Finance Inc. to the order of CIBC World Markets Corp. Terms defined in the Promissory Note are used herein as defined therein.
Pursuant to Section 5.01(a) of the Promissory
Note, the undersigned, the [title] of the Maker, hereby certifies
that, to the best of [his/her] knowledge:
Forgiveness Events
The aggregate Forgiveness Amount with respect to all Forgiveness Events that occurred during the monthly period covered by this Broker Notes Certificate is $__________.
Schedule I to this Broker Notes Certificate is a true and correct list of all Broker Notes with respect to which Forgiveness Events occurred during the monthly period covered by this Certificate (including the name of the maker of the respective Broker Notes, the Forgiveness Amount for the respective Broker Notes and the date on which the Forgiveness Event occurred).
Payment Events
The aggregate Payment Amount with respect to all Payment Events that occurred during the monthly period covered by this Broker Notes Certificate is $__________.
Schedule II to this Broker Notes Certificate is a true and correct list of all Broker Notes with respect to which Payment Events occurred during the monthly period covered by this Certificate (including the name of the maker of the respective Broker Notes, the Payment Amount for the respective Broker Notes, the event (termination, etc.) that gave rise to such Payment Event and the date on which the Payment Event occurred).
Broker Events
The aggregate Broker Amount with respect to all Broker Events that occurred during the monthly period covered by this Broker Notes Certificate is $__________.
Schedule III to this Broker Notes Certificate is a true and correct list of all Broker Notes with respect to which Broker Events occurred during the monthly period covered by this Certificate (including the name of the maker of the respective Broker Notes, the Broker Amount for the respective Broker Notes, the amount of any Acceleration Amount with respect to such Broker any such Broker Note, the event (death, Insolvency Event or termination) that gave rise to such Broker Event and the date on which the Broker Event occurred).
The aggregate Acceleration Amount with respect to all Broker Events that occurred during the monthly period covered by this Broker Notes Certificate is $__________.
Schedule IV to this Broker Notes Certificate sets forth, for each Acceleration Amount for each Broker Event that occurred during the monthly period covered by this Broker Notes Certificate, such Acceleration Amount, the Broker Note to which such Acceleration Amount relates, the date on which the first installment of such Acceleration Amount is payable and the amount of each Monthly Installment for such Acceleration Amount.
IN WITNESS WHEREOF, the undersigned has caused this Broker Notes Certificate to be duly executed as of the __ day of _____, 20__.
__________________________
[Insert Title]
REGISTRATION RIGHTS AGREEMENT
between
FAHNESTOCK VINER Holdings Inc.
and
CANADIAN IMPERIAL BANK OF COMMERCE
Dated as of January 2, 2003
TABLE OF CONTENTS
Page
Section 1. Definitions. *
Section 2. Demand Registration *
Section 2A. Special Demand Registration 7
Section 3. Piggyback Registration *
Section 4. "Market Stand-Off" Agreement *
Section 5. Expenses *
Section 6. Procedure *
Section 7. Indemnification *
Section 8. Underwriting Agreement *
Section 9. Information by Holders *
Section 10. Exchange Act Compliance *
Section 11. No Conflict of Rights *
Section 12. Termination *
Section 13. Transfer of Registration Rights *
Section 14. Miscellaneous *
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this " Agreement "), dated as of January 2, 2003, between Fahnestock Viner Holdings Inc., an Ontario corporation (the " Company "), and Canadian Imperial Bank of Commerce, a bank under the laws of Canada (the " Investor ").
RECITALS
WHEREAS, pursuant to the Asset Purchase Agreement, (as defined below) the Company has caused E.A. Viner International Co., a Delaware corporation and wholly owned subsidiary of the Company (" Viner "), to issue to the Investor the First Viner Debenture (as defined below) and the Interim Debenture (as defined below) as, among other things, consideration for the transfer of the Aggregate Assets (as defined in the Asset Purchase Agreement);
WHEREAS, the Debentures are exchangeable, in accordance with their terms, into Class A Shares (as defined below) or, in the case of the Interim Debenture (as defined below), into the Second Viner Debenture (as defined below); and
WHEREAS, the execution and delivery of this Agreement is a condition to the closing of the transactions contemplated by the Asset Purchase Agreement.
NOW, THEREFORE, in consideration of the foregoing and the covenants and agreements contained in this Agreement, the Company and the Investor, intending to be legally bound hereby, agree as follows:
As used in this Agreement, the following terms shall have the following meanings:
" Agreement " shall have the meaning ascribed to such term in the preamble hereto.
" Asset Purchase Agreement " means the Asset Purchase Agreement, dated as of December 9, 2002, by and among the Company, the Investor and certain of their Affiliates.
" Beneficially Own " shall have the meaning ascribed to such term in the Stakeholders Agreement.
" Business Day " means any day except a Saturday, Sunday or other day on which the NYSE is not open for the transaction of business.
" Class A Shares " shall mean the Class A non-voting shares of the Company.
" Commissions " means (i) the securities commissions or other securities authorities in each of the provinces and territories of Canada and (ii) the SEC.
" Company " shall have the meaning ascribed to such term in the preamble hereto.
" Debentures " shall mean the First Viner Debenture, the Second Viner Debenture and the Interim Debenture.
" Demand Registration " shall have the meaning ascribed to such term in Section 2(a) hereof.
" Demand Securities " shall have the meaning ascribed to such term in Section 2(a) hereof.
" Effective Date " means, (i) with respect to a Registration of securities in one or more provinces and territories of Canada, the date that the applicable Commissions issue a receipt for the final prospectus in respect thereof or, (ii) with respect to a Registration of securities in the United States, the date that the Registration Statement in respect thereof becomes effective.
" Exchange Act " means the United States Securities Exchange Act of 1934, as amended.
" Filing Date " means, (i) with respect to a Registration of securities in one or more provinces and territories of Canada, the date a preliminary prospectus is filed with the applicable Commissions or, (ii) with respect to a Registration of securities in the United States, the date a registration statement is filed with the SEC.
" First Viner Debenture " means the debenture due 2013 issued by Viner, which is exchangeable into Class A Shares, substantially in the form attached as Exhibit C to the Asset Purchase Agreement.
" Holder " shall mean any holder of record of Registrable Securities.
" Information " shall have the meaning ascribed to such term in Section 6(a)(viii) hereof.
" Inspectors " shall have the meaning ascribed to such term in Section 6(a)(viii) hereof.
" Interim Debenture " means the debenture issued by Viner, which is exchangeable into the Second Viner Debenture, substantially in the form attached as Exhibit D to the Asset Purchase Agreement.
" Investor " shall have the meaning ascribed to such term in the preamble hereto.
" Lock-Up Period " shall have the meaning ascribed to such term in Section 4 hereof.
" Losses " shall have the meaning ascribed to such term in Section 7(a) hereof.
" Minimum Amount " shall have the meaning ascribed to such term in the Stakeholders Agreement.
" NYSE " shall mean the New York Stock Exchange.
" Other Shares " shall mean the shares of capital stock of the Company that are not Registrable Securities.
" Permitted Transferee " shall mean any subsidiary of the Investor in which the Investor owns, directly or indirectly, 80% of the outstanding securities entitled to vote for the election of the directors.
" Person " means any individual, sole proprietorship, limited liability company, joint venture, corporation, partnership, association, trust, or any other entity or organization, including a government or political subdivision or an agency or instrumentality thereof.
" Piggyback Registration " shall have the meaning ascribed to such term in Section 3(a) hereof.
" Records " shall have the meaning ascribed to such term in Section 6(a)(viii) hereof.
" Register " and " Registration " shall mean the act of qualifying securities for distribution in the provinces and territories of Canada and the United States of America (or any of them) by filing with the applicable Commissions a Registration Statement relating to the proposed distribution and such other documents as may be necessary or appropriate in connection therewith.
" Registrable Securities " shall mean (i) the Class A Shares issued or issuable to the Investor or any Permitted Transferee thereof upon the exchange of the First Viner Debenture or the Second Viner Debenture, including any shares issued under Section 5(b) of either the First Viner Debenture or the Second Viner Debenture, (ii) the Class A Shares acquired by the Investor or any Permitted Transferee thereof pursuant to Sections 3.4 or 5.1 of the Stakeholders Agreement and (iii) any Class A Shares or other securities of the Company issued in connection with a stock split, stock dividend, recapitalization or similar event relating to clauses (i) and (ii) above; except, in each case, for Class A Shares (i) the sale of which is covered by a Registration Statement that has been declared effective under the Securities Acts or (ii) which shall have been transferred pursuant to Rule 144 or (iii) which are eligible to be resold pursuant to Rule 144(k).
" Registration Statement " means, (i) with respect to a Registration of securities in one or more provinces and territories of Canada, a preliminary prospectus, final prospectus or similar document, as appropriate, prepared in accordance with the applicable Securities Acts or, (ii) with respect to a Registration of securities in the United States, a registration statement prepared in accordance with the U.S. Securities Act.
" Registration Rights " shall mean the rights of an Investor to request a Registration pursuant to the terms of this Agreement.
" Requesting Holders " shall have the meaning ascribed to such term in Section 2(a) hereof.
" Rule 144 " shall mean Rule 144 promulgated under the U.S. Securities Act or any successor rule thereto or any complementary rule thereto.
" SEC " means the United States Securities and Exchange Commission.
" Second Viner Debenture " means the debenture due 2013 to be issued by Viner, which will be exchangeable into Class A Shares on terms identical to the terms of the First Viner Debenture, substantially in the form attached as Exhibit K to the Asset Purchase Agreement.
" Securities Acts " means the securities legislation of each of the provinces and territories of Canada, the U.S. Securities Act, the Exchange Act and all regulations, policy statements, orders, rulings, communiques and interpretation notes issued thereunder or in relation thereto or promulgated by the NYSE, TSX or other relevant securities exchange, as the same may hereafter be amended or replaced from time to time.
" Selling Holder " shall mean, with respect to any Registration Statement which Registers the offer and sale of Registrable Securities pursuant to this Agreement, each holder of Registrable Securities covered by such Registration Statement.
" Selling Holders' Counsel " shall mean counsel selected by Selling Holders that hold a majority of the Registrable Securities covered by a Registration Statement.
" Significant Shareholder I Individual " shall mean Albert G. Lowenthal.
" Significant Shareholder Ownership Change Notice " shall have the meaning ascribed to such term in the Stakeholders Agreement.
" Significant Shareholders " shall have the meaning ascribed to such term in the Stakeholders Agreement.
" Special Demand Registration " has the meaning ascribed to such term in Section 2A.
" Special Demand Securities " means any Registrable Securities issued pursuant to Section 5(b) of the First Viner Debenture or Second Viner Debenture.
" Special Requesting Holders " has the meaning ascribed to such term in Section 2A.
" Stakeholders Agreement " shall mean the stakeholders agreement dated as of December 9, 2002, by and among the Company, the Significant Shareholders and the Investor, as amended, restated or otherwise modified.
" TSX " shall mean the Toronto Stock Exchange.
" underwritten registration " or " underwritten offering " shall mean a Registration in which securities of the Company are sold to or through one or more underwriters for reoffering or sale to the public.
" U.S. Securities Act " shall mean the United State Securities Act of 1933, as amended.
" Viner " shall have the meaning ascribed to such term in the recitals.
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Subject to Section 4 and subparagraphs (i), (ii), (iii), (iv), (v) and (vi) of this Section 2(a) and at any time beginning at the earliest of (i) the death of Significant Shareholder I Individual, (ii) the date on which the Investor receives a Significant Shareholder Ownership Change Notice or (iii) the third anniversary of the Closing Date, holders of record of at least a majority of the total number of outstanding Registrable Securities (the " Requesting Holders ") shall have the right to request that the Company effect a Registration under the Securities Acts with respect to all or a portion of the Registrable Securities held by such Requesting Holders by delivering a written notice executed by each Requesting Holder to the principal business office of the Company in accordance with this Section 2 (a " Demand Registration "). The request shall identify each such Requesting Holder, specify the number of Registrable Securities each Requesting Holder proposes to be included in such Demand Registration, the intended method of distribution and the jurisdictions where Registration is to be effected, provided that the Company shall not be required to effect a Registration in any jurisdiction where it has not previously made a Registration of Class A Shares. The Company shall (x) promptly give notice of such request for a Demand Registration to each holder of record of Registrable Securities that is not a Requesting Holder and (y) use its commercially reasonable efforts to effect a Demand Registration on an appropriate form under the appropriate Securities Acts for the Registrable Securities which the Company has been so requested to Register by the Requesting Holders, and by each other holder of record of Registrable Securities that shall have made a written request to the Company for inclusion in the Demand Registration within 30 Business Days after the giving of such written notice by the Company, which request shall specify the number and intended method of disposition (including the relevant jurisdictions of sale) of Registrable Securities (collectively, the " Demand Securities "); provided , however , that the Company shall not be obligated to effect any Demand Registration except in accordance with the following provisions:
the Company shall not be obligated to file more than two Registration Statements in total pursuant to this Section 2, subject to paragraph (d) below;
the Company shall not be obligated to file any Registration Statement pursuant to this Section 2 unless the request from the applicable holder(s) for such Registration cover Registrable Securities whose aggregate net proceeds of the Registrable Securities proposed to be sold is not less than $10,000,000;
the Company shall (A) not be obligated to file any Registration Statement during any period in which any other Registration Statement (other than on Form S-4 or Form S-8 promulgated under the U.S. Securities Act or any successor forms thereto) pursuant to which Registrable Securities are to be or were sold has been filed and not withdrawn or has been declared effective within the prior 30 days and (B) promptly give written notice to the Requesting Holders of a delay in filing a Registration Statement to effect a Demand Registration pursuant to clause (A) of this Section 2(a)(iii);
the Company shall not be obligated to file any Registration Statement if the Company has determined in good faith that such filing of a Registration Statement would require the disclosure of material information that the Company has a reasonable justification for keeping confidential, such filing to be delayed until the date which is not more than 60 days after such request for Registration pursuant to this Section 2(a), provided , that the Company may only so delay the filing or effectiveness of a Registration Statement pursuant to this Section 2(a)(iv) on one occasion during any twelve-month period;
the Company shall not be required to file any Registration Statement if the written request therefor is not received by the Company prior to the tenth anniversary of the Closing Date; and
the Company may, on its own behalf and on the behalf of its security holders, include Other Shares in such Demand Registration. If such Demand Registration is an underwritten offering and the managing underwriter advises the Company that the inclusion of all Demand Securities and all Other Shares, if any, proposed to be included in such Demand Registration would interfere with the successful marketing (including pricing) of all such securities, then the Company shall include in such Demand Registration, to the extent of the number which the Company is so advised can be sold in such offering:
first, Demand Securities; and
second, all Other Shares the Company proposes to sell or other holders propose to sell pursuant to their contractual or incidental piggyback rights, subject to the priority structure set forth in the applicable agreements establishing such rights.
The Requesting Holders may, in the notice delivered pursuant to paragraph 2(a) above, elect that such Demand Registration be an underwritten offering. Upon such election by the Requesting Holders (or, in the event the Requesting Holders do not so elect, if the Company elects an underwritten offering), the Company shall have the right to select the managing underwriter(s) subject to the consent of the Requesting Holders (which consent shall not be unreasonably withheld) and, in such case, the Company shall not be required to include the Registrable Securities of a Selling Holder in the underwritten offering unless such Selling Holder (and, if requested by the Company, the applicable beneficial holder if different than the Selling Holder) accepts the terms of the underwriting as agreed upon between the Company and the underwriters selected by the Company.
A request for a Demand Registration may be withdrawn by written notice to the Company by the holders of a majority of the Registrable Securities to be included in such Registration with the following consequences:
if such request for a Demand Registration is withdrawn prior to the filing date of the Registration Statement, such withdrawn Registration shall count as a Demand Registration for purposes of Section 2(a) unless the participating holders have promptly reimbursed the Company for any and all reasonable and documented out-of-pocket fees and expenses incurred by the Company in connection with the preparation of such Registration Statement for filing; or
if such request for a Demand Registration is withdrawn after the Filing Date of the Registration Statement but prior to its Effective Date, subject to Section 2(d), such withdrawn Demand Registration shall count as a Demand Registration for purposes of Section 2(a).
Except as provided in Section 2(c), any Demand Registration pursuant to Section 2(a) shall not count as a Demand Registration for purposes of Section 2(a) unless it has become effective, provided that:
a Registration Statement which does not become effective after it has been filed by the Company solely by reason of the refusal to proceed by a Selling Holder shall be deemed to have been effected by the Company at the request of such Selling Holders; or
if after such Registration Statement has become effective it is interfered with by any stop order, injunction or other order or requirement of any of the Commissions for any reason other than a misrepresentation or an omission by a Selling Holder and, as a result thereof, the Demand Securities cannot be completely distributed in accordance with the plan of distribution set forth in the related Registration Statement, such Registration Statement shall not be deemed to have been effected and shall not count as a Demand Registration for purposes of Section 2(a).
Any Registration requested pursuant to Section 3 shall be deemed not to have been requested pursuant to Section 2(a).
Section 2A. Special Demand Registration .
Subject to Section 4 and subparagraphs (i), (ii), (iii), (iv), (v) and (vi) of this Section 2A(a) and at any time beginning at the date that Special Demand Securities are issued to the Investor, holders of record of at least a majority of the Special Demand Securities (the "Special Requesting Holders") shall have the right to request that the Company effect a Registration under the Securities Acts with respect to all or a portion of the Special Demand Securities held by such Special Requesting Holders by delivering a written notice executed by each Special Requesting Holder to the principal business office of the Company in accordance with this Section 2A (a " Special Demand Registration "). The request shall identify each such Special Requesting Holder, specify the number of Special Demand Securities each Special Requesting Holder proposes to be included in such Special Demand Registration, the intended method of distribution and the jurisdictions where Registration is to be effected, provided that the Company shall not be required to effect a Registration in any jurisdiction where it has not previously made a Registration of Class A Shares. The Company shall (x) promptly give notice of such request for a Special Demand Registration to each holder of record of Special Demand Securities that is not a Special Requesting Holder and (y) use its commercially reasonable efforts to effect a Special Demand Registration on an appropriate form under the appropriate Securities Acts for the Special Demand Securities which the Company has been so requested to Register by the Special Requesting Holders, and by each other holder of record of Special Demand Securities that shall have made a written request to the Company for inclusion in the Special Demand Registration within 30 Business Days after the giving of such written notice by the Company, which request shall specify the number and intended method of disposition (including the relevant jurisdictions of sale) of Special Demand Securities; provided, however, that the Company shall not be obligated to effect any Special Demand Registration except in accordance with the following provisions:
the Company shall not be obligated to file more than one Registration Statement in total pursuant to this Section 2A, subject to paragraph (d) below;
the Company shall not be obligated to file any Registration Statement pursuant to this Section 2A unless the request from the applicable holder(s) for such Registration covers at least 50% of the Special Demand Securities;
the Company shall (A) not be obligated to file any Registration Statement during any period in which any other Registration Statement (other than on Form S-4 or Form S-8 promulgated under the U.S. Securities Act or any successor forms thereto) pursuant to which Special Demand Securities are to be or were sold has been filed and not withdrawn or has been declared effective within the prior 30 days and (B) promptly give written notice to the Special Requesting Holders of a delay in filing a Registration Statement to effect a Special Demand Registration pursuant to clause (A) of this Section 2A(a)(iii);
the Company shall not be obligated to file any Registration Statement if the Company has determined in good faith that such filing of a Registration Statement would require the disclosure of material information that the Company has a reasonable justification for keeping confidential, such filing to be delayed until the date which is not more than 60 days after such request for Registration pursuant to this Section 2A(a), provided, that the Company may only so delay the filing or effectiveness of a Registration Statement pursuant to this Section 2A(a)(iv) on one occasion;
the Company shall not be required to file any Registration Statement if the written request therefor is not received by the Company prior to 60 days after the final issuance of the Special Demand Securities; and
the Company may, on its own behalf and on the behalf of its security holders, include Other Shares in such Special Demand Registration. If such Special Demand Registration is an underwritten offering and the managing underwriter advises the Company that the inclusion of all Special Demand Securities and all Other Shares, if any, proposed to be included in such Special Demand Registration would interfere with the successful marketing (including pricing) of all such securities, then the Company shall include in such Special Demand Registration, to the extent of the number which the Company is so advised can be sold in such offering:
first, Special Demand Securities; and
second, all Other Shares the Company proposes to sell or other holders propose to sell pursuant to their contractual or incidental piggyback rights, subject to the priority structure set forth in the applicable agreements establishing such rights.
The Special Requesting Holders may, in the notice delivered pursuant to paragraph 2A(a) above, elect that such Special Demand Registration be an underwritten offering. Upon such election by the Special Requesting Holders (or, in the event the Special Requesting Holders do not so elect, if the Company elects an underwritten offering), the Company shall have the right to select the managing underwriter(s) subject to the consent of the Special Requesting Holders (which consent shall not be unreasonably withheld) and, in such case, the Company shall not be required to include the Special Demand Securities of a Selling Holder in the underwritten offering unless such Selling Holder (and, if requested by the Company, the applicable beneficial holder if different than the Selling Holder) accepts the terms of the underwriting as agreed upon between the Company and the underwriters selected by the Company.
A request for a Special Demand Registration may be withdrawn by written notice to the Company by the holders of a majority of the Special Demand Securities to be included in such Registration with the following consequences:
if such request for a Special Demand Registration is withdrawn prior to the filing date of the Registration Statement, such withdrawn Registration shall count as a Special Demand Registration for purposes of Section 2A unless the participating holders have promptly reimbursed the Company for any and all reasonable and documented out-of-pocket fees and expenses incurred by the Company in connection with the preparation of such Registration Statement for filing; or
if such request for a Special Demand Registration is withdrawn after the Filing Date of the Registration Statement but prior to its Effective Date, subject to Section 2A(d), such withdrawn Special Demand Registration shall count as a Special Demand Registration for purposes of Section 2(a).
Except as provided in Section 2A(c), any Special Demand Registration pursuant to Section 2A(a) shall not count as a Special Demand Registration for purposes of Section 2A(a) unless it has become effective, provided that:
a Registration Statement which does not become effective after it has been filed by the Company solely by reason of the refusal to proceed by a Selling Holder shall be deemed to have been effected by the Company at the request of such Selling Holders; or
if after such Registration Statement has become effective it is interfered with by any stop order, injunction or other order or requirement of any of the Commissions for any reason other than a misrepresentation or an omission by a Selling Holder and, as a result thereof, the Demand Securities cannot be completely distributed in accordance with the plan of distribution set forth in the related Registration Statement, such Registration Statement shall not be deemed to have been effected and shall not count as a Special Demand Registration for purposes of Section 2A(a).
Any Registration requested pursuant to Section 3 shall not be deemed to have been requested pursuant to Section 2A(a), and any Registration requested pursuant to Section 2A(a) shall not be deemed to have been requested pursuant to Section 2(a).
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If at any time beginning at the earliest of (i) the death of Significant Shareholder I Individual, (ii) the date on which the Investor receives a Significant Shareholder Ownership Change Notice or (iii) the third anniversary of the Closing Date, the Company proposes for any reason to Register Other Shares under any of the Securities Acts (other than on Form S-4 or Form S-8 promulgated under the U.S. Securities Act or any successor forms thereto), it shall promptly give written notice to the record holders of Registrable Securities of its intention to do so and, upon the written request, given within 10 Business Days after delivery of any such notice by the Company, of any holders of Registrable Securities to include in such Registration Registrable Securities held by such holders (which request shall specify the number of Registrable Securities proposed to be included in such Registration) (a " Piggyback Registration "), the Company shall use its commercially reasonable efforts to cause all such Registrable Securities to be included in such Piggyback Registration on the same terms and conditions as the Other Shares (or similar type as the Registrable Securities) otherwise being sold in such Piggyback Registration; provided , however , that if the Company is advised by the managing underwriters in writing that the inclusion of all Registrable Securities and Other Shares proposed to be included in such Piggyback Registration would interfere with the successful marketing (including pricing) of the Other Shares proposed to be Registered by the Company, then the Company shall include in such Piggyback Registration, to the extent of the number which the Company is so advised can be sold in such offering:
first, the Other Shares to be sold or issued and sold by the Company;
second, Registrable Securities, pro rata among the respective holders of Registrable Securities sought to be included in the Registration on the basis of the number of such shares requested to be included in the offering by each Selling Holder; and
third, Other Shares (not included in clause (i) above) having contractual or incidental piggyback rights, subject to the priority structure among such shares set forth in the applicable agreements establishing such rights.
In connection with any offering under this Section 3 involving an underwriting, the Company shall not be required to include the Registrable Securities of a Selling Holder in any Registration Statement for any such Piggyback Registration unless such Selling Holder accepts the terms of the underwriting as agreed upon between the Company and the underwriters selected by the Company.
The Company shall have the absolute right to withdraw or abandon or cease to prepare or determine not to file any Registration Statement for any Piggyback Registration at any time prior to the effective date thereof without any obligation or liability.
. If requested by the Company and an underwriter of any capital stock or other securities of the Company, a Holder shall not sell or otherwise transfer or dispose of any Registrable Securities or any other shares of capital stock of the Company held by such Holder (other than those included in the Registration) during the 180-day period following the pricing of an underwritten offering of the Company, or for such shorter period as is requested by the Company and such underwriter (the " Lock-Up Period "); provided that each officer, director and holder of 5% or more of the equity securities of the Company also agrees to such restrictions and remains bound. The obligations described in this Section 4 shall not apply to a Registration relating solely to employee benefit plans on Form S-8 or similar forms that may be promulgated in the future. The Company may impose stop-transfer instructions with respect to the Class A Shares (or other securities) subject to the foregoing restriction until the end of such Lock-Up Period.
. The Company shall bear the expense of any Registrations effected pursuant to Sections 2, 2A and 3, including, all Registration and filing fees (including all expenses incident to filing with the NYSE, the TSX or any other securities exchange where the Registrable Securities are listed or accepted for trading), fees and expenses of complying with securities and blue sky laws, printing expenses, fees and expenses of the Company's counsel and accountants and the fees and expenses of the Selling Holders' Counsel, if there be one, of up to $70,000 for all such Registrations in the aggregate, but excluding any underwriters' or brokers' discounts or commissions, transfer taxes and the fees of any counsel, accountants or advisors to any Selling Holder , other than up to $70,000 of fees and expenses of the Selling Holders' Counsel in the aggregate for all such Registrations; provided that , with respect to any Registration effected in Canada, the Selling Holders shall bear their proportionate share of the costs of issue to the extent required by the applicable Commissions.
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If and whenever the Company is under an obligation pursuant to the provisions of this Agreement to effect the Registration of any Registrable Securities, the Company shall, in accordance with the intended method of distribution thereof and the requirements of the jurisdictions in which the Registration is to be effected, use its commercially reasonable efforts to:
with respect to a Registration under Sections 2 and 3, cause a Registration Statement that proposes to Register such Registrable Securities to become and remain effective for a period of 90 days or until all of such Registrable Securities have been disposed of in accordance with the intended method of distribution (if earlier);
furnish, as appropriate, a Registration Statement that proposes to Register such Registrable Securities, a prospectus relating thereto and any amendments or supplements relating to such Registration Statement or prospectus, to each Selling Holder and to the Selling Holders' Counsel, if there be one, copies of all such documents proposed to be filed;
prepare and file with the applicable Commissions such amendments and supplements to such Registration Statement and the prospectus related thereto, if any, as may be necessary to keep such Registration Statement effective for at least the period set forth in Section 6(a)(i) and to comply with the provisions of the Securities Acts with respect to the sale or other disposition of such Registrable Securities;
notify any counsel to any Selling Holder and the Selling Holders' Counsel, if there be one, promptly (w) of the receipt by Company of any notification with respect to any comments by any Commission with respect to such Registration Statement or prospectus or any amendment or supplement thereto or any request by any Commission for the amending or supplementing thereof or for additional information with respect thereto, (x) of the receipt by the Company of any notification with respect to the issuance by any Commission of any stop order suspending the effectiveness of such Registration Statement or prospectus or any amendment or supplement thereto or the initiation or threatening of any proceeding for that purpose, which the Company shall use its best efforts to prevent any such stop order or delay, (y) of the effective date of any such Registration Statement or post-effective amendment and (z) of the receipt by the Company of any notification with respect to the suspension of the qualification of such Registrable Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purposes;
register or qualify such Registrable Securities under such other securities or blue sky laws of such jurisdictions in the United States as any Selling Holder reasonably requests and do any and all other acts and things which may be reasonably necessary or advisable to enable such Selling Holder to consummate the disposition in such jurisdictions of the Registrable Securities owned by such Selling Holder; provided , however , that the Company shall not for any such purpose be required to qualify generally to do business as a foreign corporation in any jurisdiction, subject itself to taxation or take any action that would subject it to consent to general or unlimited service of process in any jurisdiction not then so subject;
furnish to each Selling Holder such number of copies of a summary prospectus or other prospectus, including a preliminary prospectus, in conformity with the requirements of the Securities Acts, in order to facilitate the public sale or other disposition of such Registrable Securities;
notify on a timely basis each Selling Holder at any time when a prospectus relating to such Registrable Securities is required to be delivered under the Securities Acts within the period set forth in Section 6(a)(i), of the happening of any event as a result of which the prospectus included in such Registration Statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing and, at the request of such Selling Holder, prepare and furnish to such Selling Holder a reasonable number of copies of a supplement to or an amendment of such prospectus as may be necessary so that, as thereafter delivered to the offerees of such shares, such prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing;
make available for inspection by any counsel to any Selling Holder and the Selling Holders' Counsel, if there be one, or any underwriter participating in any disposition pursuant to such Registration Statement and any attorney, accountant or other agent retained by any such underwriter (collectively, the " Inspectors "), all relevant financial records, corporate documents and properties of the Company (collectively, the " Records "), as shall be reasonably necessary to enable them to exercise their due diligence responsibility, and cause the Company's officers, directors and employees to supply all information reasonably requested by any such Inspector in connection with such Registration Statement (together with the Records, the " Information "). Any of the Information which the Company determines to be confidential, and of which determination the Inspectors are so notified, shall not be disclosed by the Inspectors to a third party unless (x) the release of such Information is ordered pursuant to a subpoena or other order from a court of competent jurisdiction or (y) such Information has been made generally available to the public. The Selling Holder agrees that it will, upon learning that disclosure of such Information is sought in a court of competent jurisdiction, give notice to the Company and allow the Company, at the Company's expense, to undertake appropriate action to prevent disclosure of the Information deemed confidential;
if the offering is to be underwritten, enter into any necessary agreement in connection therewith (including an underwriting agreement containing customary representations, warranties, agreements and indemnifications);
in the case of an underwritten offering, obtain from its auditors "comfort" letters in customary form and at customary times and covering matters of the type customarily covered by comfort letters;
in the case of an underwritten offering in the United States, obtain a certificate of counsel for the Company to the effect that the Registration Statement including Registrable Securities was declared effective under the U.S. Securities Act at a specific time and on a specific date and that such counsel has been orally advised by the SEC that no stop order suspending the effectiveness of such Registration has been issued and, to the knowledge of such counsel, no proceedings for that purpose have been instituted or are pending or threatened by the SEC;
provide a transfer agent and registrar (which may be the same entity and which may not be the Company) for such Registrable Securities;
issue to any underwriter to which any Selling Holder may sell shares in such offering certificates evidencing such Registrable Securities without restrictive legends;
list such Registrable Securities on the NYSE, the TSX, or any securities exchange on which any Class A Shares are listed if such Registrable Securities are not already so listed and if such listing is then permitted under the rules of such exchange, or qualify such Registrable Securities for inclusion in the National Association of Securities Dealers Automated Quotation System; and
provide a CUSIP number.
Each Selling Holder shall, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 6(a)(vii), forthwith discontinue disposition of the Registrable Securities pursuant to the Registration Statement covering such Registrable Securities until such Selling Holder's receipt of the copies of the supplemented or amended prospectus contemplated by Section 6(a)(vii), and, if so directed by the Company, such Selling Holder shall deliver to the Company (at the Company's expense) all copies, other than permanent file copies, then in such Selling Holder's possession, of the prospectus covering such Registrable Securities at the time of receipt of such notice.
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To the extent permitted by law, in connection with any Registration of any Registrable Securities under the Securities Acts pursuant to this Agreement, the Company shall indemnify and hold harmless each Selling Holder, its officers and directors, each underwriter and each other Person, if any, who controls, is controlled by or under common control with any of the foregoing within the meaning of the Securities Acts against any losses, claims, damages or liabilities, joint or several (or actions in respect thereof), to which any such indemnified party under this Section 7(a) may become subject under the Securities Acts or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) (" Losses ") arise out of or are based upon (i) an untrue statement or alleged untrue statement of a material fact contained in the Registration Statement under which such Registrable Securities were Registered under the Securities Acts, any preliminary prospectus or final prospectus contained therein or otherwise filed with the Commissions, any amendment or supplement thereto or any document incident to Registration or qualification of any Registrable Securities or (ii) the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and shall reimburse such indemnified party for any legal or other expenses reasonably incurred by any of them in connection with investigating or defending any Losses; provided , however , that the Company shall not be liable in any such case to the extent that any Losses arise out of or are based upon (i) a breach of Section 6(b) by a Selling Holder or (ii) an untrue statement or alleged untrue statement or omission or alleged omission made in such Registration Statement, preliminary prospectus, final prospectus, amendment, supplement or document incidental to Registration or qualification of any Registrable Securities in reliance upon and in conformity with written information furnished to the Company by such Selling Holder or underwriter specifically for use in connection with the preparation of such Registration Statement, preliminary prospectus, final prospectus, amendment, supplement or document; provided , further , that with respect to any preliminary prospectus, the foregoing indemnity shall not inure to the benefit of (i) any underwriter or, in the case of a Registration Statement filed with respect to an offering which is not an underwritten offering, any Selling Holder, from whom the Person asserting any Losses purchased Registrable Securities or (ii) any Person controlling such underwriter or Selling Holder, if (A) a copy of the prospectus (as then amended or supplemented if the Company shall have furnished any amendments or supplements thereto) was required by law to have been delivered by such underwriter or Selling Holder (as applicable), (B) the prospectus had not been sent or given by or on behalf of such underwriter or Selling Holder (as applicable) to such Person with or prior to a written confirmation of the sale of the Registrable Securities to such Person, (C) the prospectus (as so amended and supplemented) would have cured the defect giving rise to the Losses and (D) such failure to deliver the prospectus (as so amended and supplemented) was not the result of noncompliance by the Company with Section 6(a)(vi).
To the extent permitted by law, in connection with any Registration of Registrable Securities under the Securities Acts pursuant to this Agreement, each Selling Holder shall indemnify and hold harmless (in the same manner and to the same extent as set forth in Section 7(a)) the Company, its officers and directors, each underwriter, each other Selling Holder, and each other Person, if any, who controls, is controlled by or under common control with any of the foregoing within the meaning of the Securities Acts with respect to (i) any breach by such Selling Holder of Section 6(b) or (ii) any statement or omission from such Registration Statement, any preliminary prospectus or final prospectus contained therein or otherwise filed with the Commissions, any amendment or supplement thereto or any document incident to Registration of any Registrable Securities, if such statement or omission was made in reliance upon and in conformity with written information furnished to the Company or such underwriter by such Selling Holder specifically for use in connection with the preparation of such Registration Statement, preliminary prospectus, final prospectus, amendment, supplement or document; provided , however , that the obligation to indemnify will be several, not joint and several, among such Selling Holders. Notwithstanding the foregoing, in no event shall the amount contributed by a Selling Holder exceed the aggregate net offering proceeds received by such Selling Holder from the sale of its Registrable Securities.
Promptly after receipt by an indemnified party under this Section 7 of notice of the commencement of any action involving a claim referred to in the preceding paragraphs of this Section 7, such indemnified party will, if a claim in respect thereof is made against an indemnifying party, give written notice to the latter of the commencement of such action (it being understood that no delay in delivering or failure to deliver such notice shall relieve the indemnifying party from any liability or obligation hereunder unless (and then solely to the extent that) the indemnifying party is materially and adversely prejudiced by such delay and/or failure). In case any such action is brought against an indemnified party under this Section 7, the indemnifying party will be entitled to participate in and to assume the defense thereof, jointly with any other indemnifying party similarly notified to the extent that it may wish, with counsel reasonably satisfactory to such indemnified party, and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party shall not be responsible for any legal or other expenses subsequently incurred by the latter in connection with the defense thereof; provided , however , that if any indemnified party under this Section 7 shall have reasonably concluded that there may be one or more legal or equitable defenses available to such indemnified party which are additional to or conflict with those available to the indemnifying party, or that such claim or litigation involves or could have an effect upon matters beyond the scope of the indemnity agreement provided in this Section 7, the indemnifying party shall not have the right to assume the defense of such action on behalf of such indemnified party and such indemnifying party shall reimburse such indemnified party and any Person controlling such indemnified party for that portion of the fees and expenses of any counsel retained by the indemnified party which is reasonably related to the matters covered by the indemnity agreement provided in this Section 7.
The indemnification provided for under this Agreement will remain in full force and effect regardless of any investigation made by or on behalf of an indemnified party under this Section 7 or any officer, director or controlling Person of such indemnified party and will survive the transfer of securities.
If the indemnification provided for in this Section 7 is finally held by a court of competent jurisdiction to be unavailable to an indemnified party under this Section 7 with respect to any Losses then the indemnifying party, in lieu of indemnifying such indemnified party hereunder, shall contribute to the amounts paid or payable by such indemnified party as a result of such Losses in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of the indemnified party on the other in connection with the statements or omissions which resulted in such Losses as well as any other relevant equitable considerations. The relative fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company and the Selling Holders agree that it would not be just and equitable if contributions pursuant to this Section 7(e) were determined by pro rata allocation or by any other method of allocation which did not take into account the equitable considerations referred to herein. The amount paid or payable to an indemnified party under this Section 7 as a result of the Losses referred to above shall be deemed to include any legal or other expenses reasonably incurred in connection with investigating or defending the same. Notwithstanding the foregoing, in no event shall the amount contributed by a Selling Holder exceed the aggregate net offering proceeds received by such Selling Holder from the sale of its Registrable Securities.
. Notwithstanding the provisions of Sections 6 and 7, to the extent that the Company and the Selling Holders shall enter into an underwriting or similar agreement, which agreement contains provisions covering one or more issues addressed in such sections, the provisions contained in such sections addressing such issue or issues shall be superseded with respect to such Registration by such other agreement.
. The Selling Holders shall furnish promptly to the Company such written information regarding such Selling Holder and the distribution proposed by such Selling Holder as the Company may reasonably request in writing and as shall be reasonably required in connection with any Registration, qualification or compliance referred to in this Agreement.
. The Company shall comply with all of the reporting requirements of the Exchange Act and with all other public information reporting requirements of the SEC which are conditions to the availability of Rule 144 for the sale of the Registrable Securities. The Company shall cooperate with the Investor in supplying such information as may be necessary for the Investor to complete and file any information reporting forms presently or hereafter required by the SEC as a condition to the availability of Rule 144.
. The Company represents and warrants to the Investor that the Registration Rights granted to the Investor hereby do not conflict with any other Registration Rights granted by the Company and all such other rights are subordinate to the Registration Rights granted hereunder. The Company may grant, after the date hereof, Registration Rights to holders of capital stock of the Company to the extent that such Registration Rights do not conflict with the Registration Rights granted hereby.
. The Registration Rights granted pursuant to (i) Sections 2 and 3 will terminate and be of no further force or effect on the tenth anniversary of the Closing Date (or, in the event that any Debenture remains outstanding on the tenth anniversary of the Closing Date, such time when all of the Debentures have matured and been paid in full in accordance with their terms), or (ii) in the case of the Special Demand Registration Rights, 60 days following the issuance of the Special Demand Securities, except for any Demand Registration, Special Demand Registration or Piggy Back Registration which has already been requested prior to such date.
Transfer of Registration Rights
. The rights hereunder may be transferred or assigned in connection with any transfer of Registrable Securities by the Investor or any Permitted Transferee; provided , that such transfer has been made in compliance with the terms (including the transfer restrictions) of the Stakeholders Agreement. Notwithstanding the foregoing, such rights may only be transferred or assigned provided that all of the following additional conditions are satisfied: (a) such transfer or assignment is effected in accordance with applicable securities laws; (b) such transferee or assignee agrees in writing to become subject to the terms of this Agreement; and (c) the Company is given written notice of such transfer or assignment, stating the name and address of the transferee or assignee and identifying the Registrable Securities with respect to which such rights are being transferred or assigned.
Entire Agreement . This Agreement and the exhibits, schedules and other documents referred to herein which form a part hereof, contain the entire understanding of the parties hereto with respect to their subject matter. This Agreement supersedes all prior agreements and understandings, oral and written, with respect to its subject matter.
Severability . Should any provision of this Agreement for any reason be declared invalid or unenforceable, such decision shall not affect the validity or enforceability of any of the other provisions of this Agreement, which other provisions shall remain in full force and effect and the application of such invalid or unenforceable provision to persons or circumstances other than those as to which it is held invalid or unenforceable shall be valid and be enforced to the fullest extent permitted by law.
Notices . All notices, requests, demands, waivers and other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given if delivered personally, by mail (certified or registered mail, return receipt requested), by recognized overnight courier or by facsimile transmission (receipt of which is confirmed):
if to the Company, to:
Fahnestock Viner Holdings Inc.
20 Eglinton Avenue West
Suite 1110, Box 2015
Toronto Ontario M4R 1K8
CANADA
Fax: (416) 322-7007
Attention: E.K. Robertswith a copy to:
Borden Ladner Gervais LLP
Scotia Plaza, Suite 4400
40 King Street West
Toronto, Ontario M5H 3Y4
CANADA
Attention: A. Winn Oughtred, Esq.
Telephone: (416) 367-6247
Facsimile: (416) 361-7076
Email: woughtred@blgcanada.com
if to the Investor, to:
Canadian Imperial Bank of Commerce
Commerce Court West
Toronto, Ontario M5L 1A2
Canada
Fax: (917) 332-4320
Attention: Gerry McCaugheywith a copy to:
Canadian Imperial Bank of Commerce
245 Park Avenue
42 nd Floor
New York, NY 10167
Fax: (917) 332-4320
Attention: General Counselwith a copy to:
Mayer, Brown, Rowe & Maw
1675 Broadway
New York, NY 10019-5820
Attention: James B. Carlson, Esq.
Telephone: (212) 506-2515
Facsimile: (212) 849-5515
Email: jcarlson@mayerbrownrowe.com
or to such other person or address as any party shall specify by notice in writing to the other party. All such notices, requests, demands, waivers and communications shall be deemed to have been received on the date on which so hand-delivered, on the third Business Day following the date on which so mailed, on the Business Day following the date on which delivered to the overnight courier service and on the date on which faxed and confirmed, except for a notice of change of address, which shall be effective only upon receipt thereof.
Successors and Assigns . This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, executors, successors and permitted assigns. Except for a transfer of Registration Rights as contemplated in Section 13, neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned, directly or indirectly, by (i) the Investor without the consent of the Company, or (ii) the Company without the consent of the Investor.
Third-Party Beneficiaries . This Agreement shall be binding upon and inure solely to the benefit of the parties and their respective successors and permitted assigns. Except as contemplated by Section 7 with respect to Persons entitled to indemnification under Section 7, nothing in this Agreement, express or implied, is intended to or shall confer upon any other Person or Persons any rights, benefits or remedies of any nature whatsoever under or by reason of this Agreement.
Recapitalization, Etc . In the event that any capital stock or other securities are issued in respect of, in exchange for, or in substitution of, any Class A Shares by reason of any reorganization, recapitalization, reclassification, merger, consolidation, spin-off, partial or complete liquidation, stock dividend, split-up, sale of assets, distribution to stockholders or combination of the Class A Shares or any other change in capital structure of the Company, appropriate adjustments shall be made with respect to the relevant provisions of this Agreement so as to fairly and equitably preserve, the original rights and obligations of the parties hereto under this Agreement.
Amendments and Waivers. This Agreement may not be modified or amended except by an instrument or instruments in writing signed by an authorized officer of each party. Except as otherwise provided in this Agreement, any failure of any of the parties to comply with any obligation, covenant, agreement or condition herein may be waived by the party entitled to the benefits thereof only by a written instrument signed by an authorized officer of the party granting such waiver, but such waiver or failure to insist upon strict compliance with such obligation, covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure.
Fees and Expenses . Except as otherwise contemplated in this Agreement, whether or not this Agreement and the transactions contemplated hereby are consummated, all costs and expenses (including legal and financial advisory fees and expenses) incurred in connection with, or in anticipation of, or in enforcement of, this Agreement and the transactions contemplated hereby shall be paid by the party incurring such expenses.
Headings . The article and section headings contained in this Agreement are solely for the purpose of reference, are not part of the agreement of the parties and shall not in any way affect the meaning or interpretation of this Agreement.
Counterparts . This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same agreement.
Governing Law . THIS AGREEMENT, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE PROVINCE OF ONTARIO WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OR CHOICE OF LAWS OR ANY OTHER LAW THAT WOULD MAKE THE LAWS OF ANY OTHER JURISDICTION OTHER THAN THE PROVINCE OF ONTARIO APPLICABLE HERETO.
Waiver of Jury Trial . EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
Consent to Jurisdiction . Each of the parties hereto expressly and irrevocably (a) consents to submit itself to the exclusive jurisdiction of the Ontario Superior Court of Justice in Toronto in the event any dispute arises out of or relates to this Agreement or any of the transactions contemplated by this Agreement, (b) agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other request or leave from such court, including, without limitation, a motion to dismiss on the grounds of forum non conveniens, (c) agrees that it will not bring any action arising out of or relating to this Agreement or any of the transactions contemplated by this Agreement in any court other than such court, and (d) waives any right to a trial by jury with respect to any claim, counterclaim or action arising out of or in connection with this Agreement or the transactions contemplated hereby.
Specific Performance . The parties hereto agree that if any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached, irreparable damage would occur, no adequate remedy at law would exist and damages would be difficult to determine, and that the parties shall be entitled to specific performance of the terms hereof and immediate injunctive relief, without the necessity of proving the inadequacy of money damages as a remedy, in addition to any other remedy at law or equity.
Subsidiaries . The parties agree that obligations pursuant to this Agreement with respect to their respective Subsidiaries and Affiliates are limited to their rights and powers with respect to such Persons.
Counterparts . This Agreement may be executed simultaneously in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
Construction .
(i) (A) For the purposes hereof, (x) words in the singular shall be held to include the plural and vice versa and words of one gender shall be held to include the other genders as the context requires, (B) the words "hereof," "herein," and "herewith" and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole and not to any particular provision of this Agreement, and article, section, paragraph, exhibit and schedule references are to the articles, sections, paragraphs, and exhibits and schedules of this Agreement unless otherwise specified, (C) the words "including" and words of similar import when used in this Agreement shall mean "including, without limitation," unless otherwise specified, (D) the word "or" shall not be exclusive and (E) the Company and the Investor (and any other Person who becomes party hereto as permitted hereby) will be referred to herein individually as a "party" and collectively as "parties."
(ii) The parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties and no presumption or burden of proof shall arise favoring or disfavoring either party by virtue of the authorship of any provisions of this Agreement.
(iii) Any reference to any federal, provincial, state, local statute or law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless the context otherwise requires.
No Right of Setoff . No party may deduct from, set off, holdback or otherwise reduce in any manner whatsoever against any amounts such party may owe to another party any amounts owed by such other party to the first party.
Currency . All monetary amounts mentioned or referred to herein are in United States dollars unless otherwise indicated.
[Signature Page Follows]
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first above written.
FAHNESTOCK VINER HOLDINGS INC.
By: /s/ A.G. Lowenthal ___________
Name: A.G. Lowenthal
Title: CEO & Chairman of the BoardCANADIAN IMPERIAL BANK OF COMMERCE
By: /s/ Roy Sciani_______________ Name: Roy Sciani
Title: Senior Vice President
AMENDMENT NO. 1 TO THE ASSET PURCHASE AGREEMENT
BY AND AMONG
FAHNESTOCK VINER HOLDINGS INC.
AND
VINER FINANCE INC.
AND
CIBC WORLD MARKETS CORP.
AND
CANADIAN IMPERIAL BANK OF COMMERCE
DATED AS OF JANUARY 2, 2003
AMENDMENT No. 1 , dated as of January 2, 2003 (this " Amendment "), to the Asset Purchase Agreement, dated as of December 9, 2002 (the " Agreement "), in each case, by and among Fahnestock Viner Holdings Inc., an Ontario corporation (" Parent "), Viner Finance Inc., a Delaware corporation and an indirect wholly-owned subsidiary of Parent (" Buyer "), Canadian Imperial Bank of Commerce (the " Seller Parent ") and CIBC World Markets Corp. (the " Company " and, together with Seller Parent, the " Seller ").
WITNESSETH
WHEREAS , the parties hereto are parties to the Agreement; and
WHEREAS , the parties are desirous of amending and supplementing the Agreement as set forth herein.
NOW, THEREFORE , for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto do hereby agree as follows (all capitalized terms used but not otherwise defined herein have the meanings ascribed to them in the Agreement):
RECITALS
The words "as may be amended from time to time," are inserted after the words "dated as of December 9, 2002 (" in the Recitals.
ARTICLE I OF THE AGREEMENT
The following defined terms are added to Section 1.01 of the Agreement:
" Applicable Laws " means all Laws applicable to the Brokerage Business, including the insurance business conducted by the Insurance Agencies.
" Broker Backend Payments " means amounts not yet paid but due to brokers hired pursuant to an agreement providing for additional Broker Notes to be issued to such brokers upon the attainment of specific production goals by such brokers all as set forth in Section 1.01(c) of the Seller Disclosure Schedule .
" Broker Notes Letter " has the meaning set forth in Section 6.22.
" Broker Notes " has the meaning set forth in Section 6.21.
" Broker Restricted Accounts " means accounts as set forth on Section 1.01(a) to Seller Disclosure Schedule of brokers who have been paid pursuant to a Broker Note but the proceeds of which are held in the personal account of the broker subject to the right to recapture or reclamation of such amounts by Company under certain circumstances.
" Conversion Date " has the meaning set forth in Section 2.15(c).
" Fahnestock Canada " has the meaning set forth in Section 6.18.
" IDA " has the meaning set forth in Section 6.18.
" IDA Restrictions " has the meaning set forth in Section 6.18.
" Insurance Agencies " means OLA and OTA, collectively.
" Insurance Agencies' Financial Statements " has the meaning set forth in Section 4.03(d).
" Insurance Agencies' Shares " means the OLA Shares and the OTA Shares.
" Non-Converted Accounts " has the meaning set forth in Section 2.15(c).
" OLA " means Oppenheimer Life Agency, Ltd., a New York insurance agency and a direct, wholly-owned subsidiary of the Company.
" OLA Shares " means all of the issued and outstanding shares of common stock of OLA.
" OTA " means Oppenheimer Texas Agency, Ltd., a Texas insurance agency.
" OTA Shares " means all of the issued and outstanding shares of common stock of OTA.
" Purchase Price Adjustment " has the meaning set forth in Section 2.02(e).
" Retired Broker Contracts " has the meaning set forth in Section 2.07(a).
" Saperstein Letter " means the letter agreement dated as of December 31, 2002 among the parties hereto relating to Richard Saperstein and the cash management professionals identified therein.
" Tax Claim " has the meaning set forth in Section 3.05(d).
" Wealth Plus Letter " means the letter dated January 2, 2003 between Parent and Seller Parent relating to the Wealth Plus Plan.
" Wealth Plus Plan " means Seller's Amended and Restated WealthPlus Deferred Compensation Plan (as restated effective October 2002).
The defined term " Books and Records " is amended to add (i) the following words "including all employee books and records (both personal and business)" after the words "means all books and records" and (ii) the following words at the end of its definition "and of the Insurance Agencies".
The defined term " Conversion Employee " is deleted in its entirety.
The words "Section 4.18(d)" in the defined term " Customer Agreement " are deleted and the words "Section 4.19(d)" are inserted in place thereof.
The definition of " Excess Wealth Plus Payments " is deleted in its entirety.
Article (vi) in the definition of the term " Excluded Accounts " is deleted and replaced with the following:
"and (vi) has a customer "claim" or existing litigation at time of transfer; and (vii) belongs, as of the Brokerage Closing Date, to Richard Saperstein and the cash management professionals identified in the Saperstein Letter.
The definition of " Governmental Entity " is deleted in its entirety and replaced with the following: "means any national, federal, state, provincial, municipal, territorial agency, local or foreign judicial, legislative, executive, regulatory or administrative authority, commission, court, tribunal, any political or other subdivision, department or branch of any of the foregoing, and any SRO, tribunal or arbitrator."
The definition of the term " Interim Debenture " is amended to delete the word "Buyer" and to add the word "Issuer" in place thereof.
The definition of " Law " or " Laws " is deleted in its entirety and replaced with the following: "means any federal, state, foreign or local law or statute, ordinance, rule, regulation, writ, injunction, directive, order, judgment, administrative interpretation, decree, administrative or judicial decision and any other executive, legislative, regulatory or administrative proclamation, and includes Labor Laws and Environmental Laws."
The definition of " Permits " is deleted in its entirety and replaced with the following: "means, as to any Person, all licenses, permits, franchises, approvals, concessions, filings, declarations, registrations, authorizations and qualifications under any Laws with any and all Governmental Entities that are issued to such Person.
The defined term " Second Exchangeable Debenture " is amended to delete the word "Buyer" and to add the word "Issuer" in place thereof.
The definition of the term " Transfer Tax Returns " is deleted in its entirety and replaced by the following:
"" Transfer Tax Schedule " has the meaning set forth in Section 3.05(a)."
ARTICLE II OF THE AGREEMENT
Section 2.01(a)(ix) is deleted in its entirety and replaced with the following:
"all Permits received from or issued by any Governmental Entity to (A) the Company to own, or lease and operate the Brokerage Business and to conduct the Brokerage Business as it has been conducted by Company; and (B) each of the Insurance Agencies in connection with or related to the operation of each of the Insurance Agencies business."
Section 2.01(a)(xiii) is amended to delete the last word ("and").
Section 2.01(a)(xiv) is amended to delete the period (".") at the end of the sentence and the words "; and" are inserted in place thereof.
The following provision is added immediately after Section 2.01(a)(xiv):
"(xv) all the issued and outstanding shares of common stock of the Insurance Agencies."
Section 2.01(b) is amended to delete the word "and" appearing immediately before sub-clause (ii) and to add a semi-colon (";") in place thereof.
Section 2.01(b) is further amended to include at the end of such section, the language "; and (iii) duly executed certificates representing all of the Insurance Agencies' Shares."
Section 2.02(e) is amended to add the sentence "The consideration shall be adjusted (the " Purchase Price Adjustment ") as follows: (i) increased for any payments from Buyer to Seller pursuant to Section 2.09 of the Asset Management Acquisition Agreement and (ii) decreased for any payments from the Seller to the Buyer pursuant to Section 6.18 of the Asset Management Acquisition Agreement." after the words "recognized as liabilities for United States federal income tax purposes."
Section 2.02(e) is further amended to add the sentence "In preparing the Allocation Schedule, Company and Buyer are entitled to rely on a reasonable estimate of the Purchase Price Adjustment to the extent allowed for U.S. income tax purposes." after the sentence "Such allocation shall be set forth in a schedule (the " Allocation Schedule ")."
The last sentence in Section 2.03(a) is deleted in its entirety and the following is added at the end of such section:
"The parties agree that the Brokerage Closing shall be deemed to have occurred at 4:01 PM on January 3, 2003. With respect to the following, the parties agree that (i) all profits and losses with respect to the Brokerage Assets shall be calculated as of 12:01 AM January 2, 2003 and Buyer shall be entitled to all profits and losses of the Brokerage Assets as of 12:01 AM January 2, 2003 and (ii) the issuance date of the Debentures shall be deemed to be January 6, 2003. The parties agree that the " Brokerage Closing Date " for all the transactions contemplated in the Agreement shall be 4:01 PM January 3, 2003 except that with respect to transactions referred to in either clauses (i) or (ii) hereof, the Brokerage Closing Date shall be deemed to be the dates referred to in such clauses.
The words "(other than Marketable Securities)" are inserted after the words "the Acquired Property" in Section 2.02(b)(i).
The words (Conversion Date in the case of clause (iii) hereof) are inserted after the words "At the Brokerage Closing" in Section 2.02(d).
Section 2.05(b)(vi) is amended to delete the last word therein ("and").
The following provision is added immediately after Section 2.05(b)(vi):
"(vii) certificates representing all of the OLA Shares and OTA Shares duly endorsed or accompanied by stock powers duly executed in blank and otherwise in form satisfactory to the Buyer for transfer on the books of the Company (with any requisite tax stamps attached by the Seller)."
Section 2.05(b)(vii) will not change except that it will now read Section 2.05(b)(viii).
Section 2.07(a) is hereby amended to read as follows:
"(a) On the Brokerage Closing Date, Buyer shall assume, perform and discharge when due (i) Company's obligations under Contracts transferred to Buyer pursuant to Section 2.01(a) and set forth in the Undertaking (the " Assumed Contracts ") required under the terms of such Assumed Contracts to be performed after such date, (ii) obligations relating to the Transferred Plan as set forth in Section 3.04(f)(i) required under the terms of such Transferred Plan to be performed after such date, and (iii) obligations relating to the retired broker contracts set forth on Section 2.07(a) of the Disclosure Schedule (the " Retired Broker Contracts ")."
The words "or the Insurance Agencies" are inserted in Section 2.07(b)(ii) immediately after the words "or the Brokerage Business".
The words "of the Insurance Agencies and Taxes" are inserted in Section 2.07(b)(vi)(B) immediately prior to the words "attributable to the Brokerage Assets ."
Section 2.08(iii) is hereby amended to include the phrase ", other than the Insurance Agencies," immediately following the words "any insurance subsidiaries" and immediately prior to the words "and any insurance products or business written".
Section 2.08 (vii) is deleted in its entirety and is replaced by the following words "(vii) Excluded Accounts and all agreements related thereto (the items described in clauses (i) through (vii) above are collectively referred to herein as the " Excluded Assets ").
The words "(other than Marketable Securities)" are inserted after the words "the Acquired Property" in Section 2.11(a)(i).
The letter "(a)" is inserted in Section 2.15 immediately prior to the words "Attached hereto as .". The following sections are added at the end of Section 2.15:
"(b) Seller shall deposit as of the Brokerage Closing Date in an account established at Company to be named Fahnestock & Co. Inc. Good Faith Deposit Account, an amount equal to the total unsecured and partially secured debit balances as reflected on Section 1(d) (Unsecured Debit Balance Report) of Section 2.15 of the Seller Disclosure Schedule (as updated to reflect all activity up to and including December 31, 2002). Buyer shall, upon verification, pay to Seller any amounts received from clients specifically to reduce such unsecured or partially secured balances.
(c) Prior to the date on which the Conversion takes place (the " Conversion Date "), Buyer shall make a determination as to which of the accounts listed on Section 2.15 of the Seller Disclosure Schedule are acceptable to Buyer or its Affiliates to be converted to Buyer's or its Affiliates' books and records as of the Conversion Date. Any accounts not acceptable to Buyer or its Affiliates shall not be converted (the " Non-Converted Accounts "). Buyer may, in its discretion, convert such Non-Converted Accounts if Seller undertakes to extend its indemnification obligations arising from or relating to this Section 2.15 or deposits with Buyer or its Affiliates, amounts satisfactory to Buyer with respect to such accounts.
ARTICLE III OF THE AGREEMENT
The parenthetical "(other than those employed at the New York Headquarters)" that appears in the first sentence of Section 3.04(a) is hereby amended in its entirety to read "(other than those employed at the New York Headquarters and those identified in Section 3.04(a) of the Seller Disclosure Schedule as "Excluded Persons")".
Section 3.04(b)(i) is hereby amended in its entirety to read as follows:
"(i) The terms of each offer will specify that (except in the case of Inactive Employees) the offer shall be deemed accepted unless the Business Employee delivers a written rejection of the offer to Buyer no later than December 16, 2002, (the " Rejection Deadline "). As soon as reasonably possible after the Rejection Deadline, but in no event later than two (2) business days after the Rejection Deadline, Buyer shall provide Seller with a complete list of Business Employees who have rejected Buyers Offer of Employment. The terms of the offers shall further specify that the effective date of employment with Buyer or an Affiliate of Buyer pursuant to the offer shall be contingent upon whether the Business Employee is an Inactive Employee on the Brokerage Closing Date. Business Employees who fail to timely reject an offer of employment from Buyer and who are not Inactive Employees shall become employees of Buyer on the Brokerage Closing Date."
Section 3.04(c)is hereby amended by deleting the two references to "Conversion Employees" that appear therein (and also amended to make necessary conforming changes).
Section 3.04(f)(i) is hereby amended to read as follows:
"(i) Effective as of the Brokerage Closing Date, Buyer shall, or shall cause an Affiliate of Buyer to, assume and maintain as plan sponsor and administrator and perform all obligations with respect to, the Seller's Executive Voluntary Deferred Compensation Plan (the " Transferred Plan "), as it applies to Transferred Employees. Seller shall transfer to Fahnestock, within two business days following the Brokerage Closing Date, the securities attributable to Transferred Employees' accounts under the Transferred Plan and has provided a due bill to Fahnestock in respect of such securities. Buyer shall notify Seller of the termination date of each Transferred Employee covered by the Wealth Plus Plan. Seller shall terminate the Wealth Plus Plan in accordance with the terms of that certain letter agreement dated January 2, 2003 between Seller and Buyer."
Section 3.04(f)(iii) is hereby amended to read as follows:
"(iii) As of the Brokerage Closing Date, Buyer shall allow Transferred Employees to participate in its flexible spending account program. Each salary reduction election executed by a Transferred Employee for 2003 under Seller's Flexible Spending Account Program shall continue in effect for 2003 with respect to Buyer's flexible spending account program effective as of the Brokerage Closing Date until such salary reduction election is revoked or amended by such Transferred Employee. Section 3.04(f)(iii) of Seller Disclosure Schedule , which shall be provided to Buyer within 2 business days following the Brokerage Closing Date, lists each Transferred Employee's flexible spending account salary reduction election made with respect to 2003."
Section 3.04(i) is hereby amended in its entirety to read as follows:
" Accrued Obligations . Seller shall be solely responsible for all obligations and liabilities accrued prior to the Brokerage Closing Date relating to Business Employees, including, but not limited to, (i) payroll and fringe benefits, (ii) earned bonuses and incentive compensation, (iii) accrued vacation and holiday pay, (iv) workers' compensation and (v) claims incurred under health plans. Buyer shall be solely responsible for all obligations and liabilities accrued following the Brokerage Closing Date relating to Transferred Employees, including, but not limited to, (i) payroll and fringe benefits, (ii) earned bonuses and incentive compensation, (iii) accrued vacation and holiday pay, (iv) workers' compensation and (v) claims incurred under health plans; provided , however , that Seller shall remain liable and responsible for payments to Transferred Employees of any annual incentive compensation bonuses for fiscal year 2002 as determined in accordance with the applicable bonus plans maintained by Seller in which the Transferred Employees participate as of the Brokerage Closing Date; and provided , further , that with respect to any such bonuses earned for Sellers fiscal year 2003, Seller shall transfer to Fahnestock a cash amount equivalent to the sum of 2/12 ths of the actual fiscal year 2002 bonus payment awarded to each Transferred Employee and Inactive Employee (subject to a pro rata reduction for any period in which any Inactive Employee was not entitled to a bonus payment during Seller's fiscal year 2003), within ten (10) business days following confirmation of acceptance of the employment offer made to each such individual from Buyer or an Affiliate of Buyer. Subject to Fahnestock receiving the funds, if any, payable by Seller under this paragraph, Buyer shall assume all liability for bonus obligations payable to the Transferred Employees beginning November 1, 2002 through the Brokerage Closing Date, and Buyer shall pay each employee (less applicable withholdings specific to this payment) the 2/12 ths amount transferred by Seller in respect of such employee on or prior to the time Buyer makes bonus payments in respect of fiscal year 2003."
Section 3.04(j) is hereby amended to delete the reference to "Conversion Employees" that appears therein (and also amended to make necessary conforming changes).
Section 3.04(l) is hereby amended by substituting "Buyer" for "Seller" at the first place "Seller" appears.
Section 3.04(m) is hereby added to read as follows:
"(m) Retired Broker Contracts . Buyer shall assume, perform and discharge when due Sellers obligations relating to the Retired Broker Contracts. Seller shall use its reasonable best efforts to cause each broker who is a party to a Retired Broker Contract to assign his duties and obligations under the applicable Retired Broker Contract to Buyer."
Section 3.05(a) is deleted in its entirety and replaced with the following:
"(a) Transfer Taxes . Company and Buyer shall each be responsible for 50% of any and all Transfer Taxes which become payable in connection with the transactions contemplated by this Agreement. No later than five (5) days after the Brokerage Closing Date Company shall provide to Buyer a schedule (the " Transfer Tax Schedule ") setting forth in reasonable detail the calculations of the amounts of such Transfer Taxes for Buyer's review and consent (which shall not be unreasonably withheld). No later than five (5) days after receipt of such Transfer Tax Schedule, Buyer shall remit to Seller 50% of such Transfer Taxes shown as due thereon. Seller shall file all Tax Returns that must be filed in connection with payment of such Transfer Taxes and shall pay such Transfer Taxes in the ordinary course of its business. Company and Buyer agree to use reasonable best efforts to obtain a sale for resale or other Tax exemption where available and otherwise to minimize the amount of Transfer Taxes payable in connection with the transactions contemplated by this Agreement. Buyer shall provide a resale certification at Brokerage Closing or such other documents as may be reasonably requested by Company for the purpose of reducing any such Transfer Taxes."
Section 3.05(b) is deleted in its entirety and replaced with the following:
"(b) Preparation and Filing of Tax Returns; Payment of Taxes .
(i) The Company shall prepare and file or cause to be prepared and filed at its own cost and expense (in a manner consistent with past practice, except as required by Applicable Law), on a timely basis (including extensions) all Tax Returns of Company and all Tax Returns of the Insurance Agencies and all Tax Returns attributable to the Brokerage Assets for all Pre-Closing Periods (as defined in Section 3.05(c)(i) below). The Company shall pay all Taxes shown to be due and payable on such Tax Returns.
(ii) Buyer shall prepare and file or cause to be prepared and filed at its own cost and expense on a timely basis (including extensions) all Tax Returns of any of the Insurance Agencies and all Tax Returns attributable to the Brokerage Assets other than those provided for in Section 3.05(b)(i) of this Agreement. Subject to Section 3.05(c), Buyer shall pay all Taxes shown to be due and payable thereon.
(c) Tax Indemnification .
(i) The Seller shall indemnify, defend and hold harmless Buyer from and against any and all costs, expenses (including reasonable attorneys', accountants', consultants' and experts' fees and expenses), other liabilities (including costs and fines), monetary obligations to third parties, expenditures, monetary judgments or awards payable or due to any other party that are imposed upon or otherwise incurred or suffered by the relevant Person (" Losses ") asserted against, resulting to, imposed on, sustained, incurred or suffered by, or asserted against Buyer, directly or indirectly, by reason of or resulting from: ( i ) all Taxes imposed upon any of the Insurance Agencies with respect to any taxable period or portion thereof ending on or before the Closing Date (a " Pre-Closing Period "), other than with respect to items contemplated by Treasury Regulation Section 1.1502-76(b)(1)(ii)(B), and all Taxes incurred by any of the Insurance Agencies, other than with respect to items contemplated by Treasury Regulation Section 1.1502-76(b)(1)(ii)(B), for any taxable period beginning on or before the Closing Date and ending after the Closing Date (" Straddle Periods "), but only with respect to the portion of such Straddle Period ending on the close of the Closing Date, (ii) all Taxes, other than with respect to items contemplated by Treasury Regulation Section 1.1502-76(b)(1)(ii)(B), imposed upon Buyer attributable to the Brokerage Assets with respect to any Pre-Closing Period and any Straddle Period, but only with respect to the portion of such Straddle Period ending on the close of the Closing Date, ( iii ) any Taxes, other than with respect to items contemplated by Treasury Regulation Section 1.1502-76(b)(1)(ii)(B), imposed on any of the Insurance Agencies under Section 1.1502-6 of the Treasury Regulations attributable to any Pre-Closing Period and the portion of any Straddle Period ending on the Closing Date, ( iv ) the portion of any Transfer Taxes that are the responsibility of Seller pursuant to Section 3.05(a) of this Agreement, ( v ) any breach or inaccuracy in any representation contained in Section 4.15 or ( vi ) any breach or failure by the Seller to perform (or cause to be performed) any of the covenants or agreements set forth in this Section 3.05.
(ii) Buyer shall indemnify, defend and hold harmless the Seller from and against any and all Losses asserted against, resulting to, imposed on, sustained, incurred or suffered by, or asserted against the Seller, directly or indirectly, by reason of or resulting from ( i ) any and all Taxes imposed upon any of the Insurance Agencies and ( ii ) any and all Taxes attributable to the Brokerage Assets in each case with respect to (x) any taxable period beginning after the Closing Date (a " Post-Closing Period ") and, with respect to any item contemplated by Treasury Regulation Section 1.1502-76(b)(1)(ii)(B), a Pre-Closing Period, (y) the portion of any Straddle Period beginning after the Closing Date, (iii) the portion of any Transfer Taxes that are the responsibility of Buyer pursuant to 3.05(a) of this Agreement; and (iv) any breach or failure by Buyer to perform (or cause to be performed) any of the covenants or agreements set forth in this Section 3.05.
(iii) All amounts payable or to be paid under this Section 3.05 (the " Tax Indemnity Payments ") shall be paid in immediately available funds within fifteen (15) business days after the later of (i) receipt of a written request from the party entitled to such Tax Indemnity Payment and (ii) the day of payment of the amount that is the subject of the Tax Indemnity Payment by the party entitled to receive the Tax Indemnity Payment.
(iv) Notwithstanding any other provision in this Agreement, for purposes of determining liability under this Section 3.05 with respect to any Taxes arising out of, or attributable to, or resulting from any inaccuracy in or breach or nonperformance of any of the representations or warranties of any of the Insurance Agencies or Seller in Section 4.15 or any covenant or agreement of any of the Buyer, Seller Entities or Seller contained in this Section 3.05, no effect shall be given to any exception in such representations and warranties or any such covenant or agreement relating to materiality or Material Adverse Effect.
(d) Tax Indemnification Procedures .
(i) If a notice of deficiency, proposed adjustment, adjustment, assessment, audit, examination or other administrative or court proceeding, suit, dispute or other claim (a " Tax Claim ") shall be delivered or sent to or commenced or initiated against any of the Insurance Agencies, Seller or Buyer by any taxing authority with respect to Taxes for which one party to this Agreement is entitled to indemnification from another party, the receiving party shall promptly notify the other party in writing of the Tax Claim along with a copy of the relevant Tax Claim notice; provided, that the failure by any party to notify another party promptly of any such notice shall not release the other party from its obligations under this Section 3.05 in whole or in part except to the extent that the other party is materially and adversely prejudiced as a consequence of such failure.
(ii) Seller shall control all Tax Claims with respect to all Pre-Closing Periods, and Buyer agrees to cooperate reasonably with Seller in pursuing such contests. With respect to Tax Claims for which the Seller would be liable to indemnify Buyer, the Seller may, upon written notice to the Buyer (such written notice to be provided within the shorter of (i) forty-five (45) days after notice thereof has been given to the Seller and (ii) three (3) business days prior to the date required to answer or respond to any such claim), assume and control the defense of such Tax Claim at its own cost and expense and with its own counsel and Buyer agrees to cooperate reasonably with the Seller in pursuing such contest. If the Seller elects to assume the defense of any such Tax Claim, notwithstanding anything to the contrary contained herein, (a) the Seller shall consult with Buyer and shall not enter into any settlement with respect to any such Tax Claim without Buyer's prior written consent, which consent shall not be unreasonably withheld or delayed, provided , however , that if such settlement could increase the Tax liability of Buyer or of any of the Insurance Agencies for any other taxable period, without the consent of Buyer; (b) the Seller shall keep Buyer informed of all material developments and events relating to such Tax Claim (including promptly forwarding copies to Buyer of any related correspondence and providing Buyer with a reasonable opportunity to review and comment on any related correspondence prior to being sent by the Seller to any tax authority); and (c) at its own cost and expense, Buyer shall have the right to participate in (but not to control) the defense of such Tax Claim.
(iii) In connection with the contest of any Tax Claim that relates to (a) any Post-Closing Period, (b) any Straddle Period and (c) any Tax Claim that the Seller has the ability to control pursuant to Section 3.05(d)(ii) but does not timely elect to control pursuant to such section, such contest shall be controlled by Buyer, and the Seller agrees to cooperate reasonably with Buyer in pursuing such contest. In connection with any such contest that relates to (b) or (c) above, Buyer shall keep the Seller informed of all material developments and events relating to such Tax Claim and the Seller, at its own cost and expense, shall have the right to participate (including participation in any relevant meetings) in (but not control) the defense of such Tax Claim. In the case of a Tax Claim described in (b) or (c) above, the Buyer shall consult with the Seller and shall not enter into any settlement with respect to any such Tax Claim without the prior written consent of the Seller, which consent shall not be unreasonably withheld or delayed.
(iv) Notwithstanding anything to the contrary contained herein, the procedure for indemnification claims with regard to Taxes or otherwise brought pursuant to this Section 3.05 shall be governed exclusively by this Section 3.05.
(e) Conflicts; Survival . Notwithstanding any other provision of this Agreement to the contrary, the obligations of the parties hereto set forth in this Section 3.05 shall not be subject to any limitations contained in Article X; provided , however , that the representations and warranties contained in Section 4.15 shall survive the Brokerage Closing until (90) days following the expiration of the applicable statute or limitations (taking into account all extensions thereof); provided , further , in the event that notice for indemnification under Section 3.05(d) hereof shall have been given within the applicable survival period, the representation or warranty that is the subject of such indemnification claim shall survive until such time as such claim is finally resolved. In the event of a conflict between this Section 3.05 and any other provision of this Agreement, this Section 3.05 shall govern and control.
(f) Tax Treatment . The parties hereto agree, unless otherwise required by Applicable Law, to treat any payment made pursuant to Article X or Section 3.05 as an adjustment to the Purchase Price for all Tax purposes."
Sections 3.05(c) and (d) will not change except that they will now read Sections 3.05(g) and (h), respectively.
In Section 3.07 the words "(other than such Books and Records or any part thereof which are related to Seller's or Company's investment banking businesses, capital markets or any other business that is not included in the Brokerage Business)" will be added in two places after the words "originals of all Books and Records" and "copies of Books and Records", respectively. Also, the words "Notwithstanding the foregoing, Seller shall not be required to provide to Buyer copies of or access to any Tax Returns of Seller Parent or Company (including the consolidated U.S. federal income tax return of the affiliated group, of which CIBC Delaware Holdings Inc. is common parent), except for the portion of such Tax Returns as shall related to the Brokerage Assets or the Insurance Agencies, as the case may be and which does not reveal any material information about the Seller that is not related to the Insurance Agencies or Brokerage Business. Buyer shall keep such Books and Records confidential to the extent it is required to do so by any Applicable Law." will be added at the end of Section 3.07.
ARTICLE IV OF THE AGREEMENT
The heading of Section 4.01 (Organization of Seller; Authority) is amended to read "Organization of Seller and the Insurance Agencies; Authority; Capitalization".
Section 4.01(a) is deleted in its entirety and replaced with the following:
"Seller Parent and Company are a bank and a broker dealer, respectively, duly organized, validly existing and in good standing under the Bank Act of Canada and the laws of Delaware, respectively. OLA is a New York domiciled insurance agency that is licensed to conduct insurance agency and brokerage business in New York and in each of the following additional jurisdictions set forth in Section 4.01(a) of the Seller Disclosure Schedule . OTA is a Texas domiciled insurance agency that is licensed to conduct insurance agency and brokerage business in Texas. The Insurance Agencies have no direct or indirect Subsidiaries and the Insurance Agencies do not own, directly, or indirectly any equity or other ownership interest in any corporation, partnership, joint venture or other Person. Each of Seller Parent, Company and each of the Insurance Agencies has all requisite corporate power and authority to own, lease and operate its properties and assets and to conduct its business as it is now being conducted. Company and the Insurance Agencies are qualified or licensed to do business and are in good standing in every jurisdiction in which the character of the properties owned or leased by the Company and the Insurance Agencies , respectively , or nature of the business conducted by the Company and the Insurance Agencies , respectively , makes such qualification necessary, except where the failure by the Company or the Insurance Agencies , as applicable , to be so qualified or licensed or in good standing would not have a Material Adverse Effect."
Section 4.01(c) is added immediately after Section 4.01(b) and reads:
"The authorized capital stock of OLA consists of 20,000 shares of common stock, $1.00 par value, of which there are 1000 shares of common stock issued and outstanding. There are no shares of preferred stock of OLA authorized or outstanding. All of the OLA Shares are duly authorized, validly issued, fully paid and non-assessable and are owned by the Company.
There are no options, warrants, calls, rights, commitments or agreements of any kind to which the Seller or any of its Subsidiaries or any of their Affiliates are parties or by which any of them are bound or to which they are subject, relating to the sale, issuance or voting of, or the granting of rights to acquire, any shares of the capital stock of any class or series of, or other security interest in, OLA or any securities convertible or exchangeable into or evidencing the right to purchase any shares of capital stock of any class or series of, or other equity interest in, OLA or obligating OLA or any of its Affiliates to grant, extend or enter into any such option, warrant, call, right, commitment or agreement."
Section 4.01(d) is added immediately after Section 4.01(c) and reads:
"The authorized capital stock of OTA consists of 1000 shares of common stock, $1.00 par value, of which there are 1000 shares of common stock issued and outstanding. There are no shares of preferred stock of OTA authorized or outstanding. All of the OTA Shares are duly authorized, validly issued, fully paid and non-assessable and owned by Mr. Harold Perkins, an employee of the Company, and held on behalf of the Company.
There are no options, warrants, calls, rights, commitments or agreements of any kind to which the Seller or any of its Subsidiaries or any of their Affiliates are parties or by which any of them are bound or to which they are subject, relating to the sale, issuance or voting of, or the granting of rights to acquire, any shares of the capital stock of any class or series of, or other security interest in, OTA or any securities convertible or exchangeable into or evidencing the right to purchase any shares of capital stock of any class or series of, or other equity interest in, OTA or obligating OTA or any of its Affiliates to grant, extend or enter into any such option, warrant, call, right, commitment or agreement. The Buy-Sell Agreements dated June 15, 1978 and October 23, 1981 by and among OTA and its shareholders have been duly terminated and have no force and effect."
The words "or the Insurance Agencies" are inserted twice in Section 4.02(a)(i)(A), both times immediately after the word "Company" and the words "the Insurance Agencies," are inserted in Section 4.02(a)(i)(B) immediately after the phrase" any Law applicable to Seller Parent, Company,"
The words "or any of the Insurance Agencies" are inserted twice in Section 4.02(a)(ii) immediately after the phrases "any Contract or other instrument or obligation, commitment, undertaking arrangement or restriction of any kind or character to which Company" and "a party or by which the Company", respectively.
The words "or any of the Insurance Agencies" are inserted in Section 4.02(b) immediately after the phrase "any Governmental Entity or any third party is required to be obtained or made by or with respect to Seller or Company".
Section 4.03(d) is added immediately after Section 4.03(c) and reads:
"Set forth in Section 4.03(d) of the Seller Disclosure Schedule are true and correct statements of the (i) audited, balance sheets and statements of income of OLA and OTA prepared in accordance with GAAP for the fiscal year ending October 31, 2002 and September 30, 2002, respectively, (ii) preliminary unaudited income statement for the period from November 1, 2002 to December 31, 2002 for OLA prepared in accordance with GAAP, (iii) preliminary unaudited balance sheet as of December 31, 2002 for OLA prepared in accordance with GAAP, (iv) preliminary unaudited income statement for the period from October 1, 2002 to December 31, 2002 for OTA, prepared in accordance with GAAP and (v) preliminary unaudited balance sheet as of December 31, 2002 for OTA prepared in accordance with GAAP (collectively, the " Insurance Agencies' Financial Statements "). Except and to the extent reflected on the Insurance Agencies' Financial Statements, the Insurance Agencies have not incurred any liabilities or obligations of whatsoever nature, direct or indirect, whether accrued, fixed contingent or otherwise, except for such liabilities as are set forth in Section 4.03(d)(1) of the Seller Disclosure Schedule ."
Section 4.03(e) is added immediately after Section 4.03(d) and reads:
"Section 4.03(e) of the Seller Disclosure Schedule sets forth the names of all financial and other similar institutions at which each of the Insurance Agencies maintains accounts, deposits or safe deposit boxes of any nature, and the account numbers and the names of all persons authorized to draw thereon or make withdrawals therefrom. Each of the Insurance Agencies' bank balances of cash as of the date of this Agreement are set forth in Section 4.03(e) of the Seller Disclosure Schedule."
Section 4.03(f) is added immediately after Section 4.03(e) and reads:
"Section 4.03(f) of the Seller Disclosure Schedule sets forth the names and office of all officers and directors of each of the Insurance Agencies."
The heading to Section 4.06 (Title to Assets) is amended to read "Title to Assets; Shares".
Section 4.06(d) is added immediately after Section 4.06(c) and reads:
"Company owns beneficially and of record all of the OLA Shares, free and clear of all Liens, and the transfer and delivery of OLA Shares to Buyer by Seller as contemplated by this Agreement shall transfer good and valid title thereto to Buyer, free and clear of all Liens. After such transfer, no Person other than Buyer shall have any claim arising out of or related to the OLA Shares."
Section 4.06(e) is added immediately after Section 4.06(d) and reads:
"The OTA Shares are owned of record by Mr. Harold Perkins, an employee of Company. Mr. Harold Perkins holds the OTA Shares on behalf of Company. Mr. Harold Perkins owns the OTA Shares, free and clear of all Liens, and the Company has the power to direct the transfer of the OTA Shares to Buyer and the transfer and delivery of the OTA Shares to Buyer by Mr. Harold Perkins as contemplated by this Agreement shall transfer good and valid title thereto to Buyer, free and clear of all Liens. After such transfer, no Person other than Buyer shall have any claim arising out of or related to the OTA Shares."
The words "Company or any of its Affiliates" in Section 4.08 are replaced with the words "Company, the Insurance Agencies or any of their Affiliates."
Section 4.09 is hereby amended by substituting "Transferred Plan" for "Transferred Plans" at each place "Transferred Plans" appears.
The first sentence of Section 4.09(c) is hereby amended by substituting "Sections 4.09(c) and 4.09(e)" for "Section 4.09(c)".
Section 4.09(d) is hereby amended in its entirety to read as follows:
"(d) Seller represents that its financial obligations under the Retired Broker Contracts are payable out of commissions otherwise payable to the brokers who assume the accounts from the retired brokers (i.e., such obligations are fully satisfied by commission sharing among active and retired brokers in respect of the assumed accounts)."
Section 4.09(e) is hereby amended by deleting "Except as set forth on Schedule 4.09(e)", and replace it with "Except for the agreements listed on Schedule 4.09(e) of Seller Disclosure Schedule .
Section 4.11(c) is deleted in its entirety. Section 4.11(d) will not change except that it will read Section 4.11(c).
The heading to Section 4.12 (Compliance with Laws; Licenses) is amended to read "Compliance with Laws; Licenses; Permits".
The first sentence of Section 4.12(a) is amended to read:
"The Brokerage Business has been, and is being, operated by the Company in compliance in all material respects with Applicable Laws."
The words "(other than the Insurance Agencies")" are inserted in the first sentence of Section 4.12(c) immediately after the language "to the knowledge of Seller, none of their Affiliates."
Sections 4.12(d), (e), (f), (g) and (h) follow immediately after Section 4.12 (c) and provide that:
"(d). OLA is currently licensed to engage in insurance agency and brokerage activities in New York and those jurisdictions set forth in Section 4.01(a) of the Seller Disclosure Schedule . OLA transacts no insurance agency or brokerage business, directly or indirectly, in any jurisdiction other than in New York and those states listed on Section 4.01(a) of the Seller Disclosure Schedule , in which the transaction of such business requires the licensing or qualification of OLA to do such business, as conducted as of the Brokerage Closing Date. OLA's business consists solely and exclusively of holding insurance licenses, soliciting insurance through agents, managing cases with clients, processing insurance applications and handling interfaces with insurance carriers, and it is not involved, directly or indirectly, in any way in any insurance or other businesses or operations. OLA has never conducted insurance underwriting business."
"(e). OTA is currently licensed to engage in insurance agency and brokerage activities in Texas. OTA transacts no insurance agency or brokerage business, directly or indirectly, in any jurisdiction other than in Texas, in which the transaction of such business requires the licensing or qualification of OTA to do such business, as conducted as of the Brokerage Closing Date. OTA's business consists solely and exclusively of holding insurance licenses, soliciting insurance through agents, managing cases with clients, processing insurance applications and handling interfaces with insurance carriers, and it is not involved, directly or indirectly, in any way in any insurance or other businesses or operations. OTA has never conducted insurance underwriting business."
"(f). The Insurance Agencies have never been the subject of any actual or threatened administrative proceeding for termination, suspension, revocation, nonrenewal, limitation or any similar proceeding which would adversely affect the Insurance Agencies' applicable Permits, (ii) no such termination, suspension, revocation, nonrenewal or limitation has been threatened by any Governmental Entity and (iii) there is no basis for any termination, suspension, restriction, impairment or limitation on the ability of the Insurance Agencies to conduct insurance agency and brokerage business either in the present or as of the Brokerage Closing Date by any Governmental Entity. Each of the Insurance Agencies meets, and at all times has met, in all material respects all statutory and regulatory requirements of all Governmental Entities which have jurisdiction over it."
"(g). Each of the Insurance Agencies has all Permits necessary for the past or present conduct of, or material operation of, its insurance agency and brokerage business and required to conduct such business as now being conducted. All such Permits are valid and in full force and effect and are listed on Section 4.12(f) of the Seller Disclosure Schedule . Each of the Insurance Agencies is in compliance in all material respects with all such Permits. The Insurance Agencies have not received any notice to the effect that, or otherwise been advised that, it is not in compliance with, or that it is in violation of, any such Permits."
"(h). Each of the Insurance Agencies is, and at all times has been, in material compliance with each Applicable Law relating to all of its assets, properties or operations. The Insurance Agencies are not a party to nor subject to any agreement, judgment, order, writ, injunction or decree of any relevant Governmental Entity that could reasonably be expected to prevent in any material manner any of the Insurance Agencies from operating after the Brokerage Closing Date or the Insurance Agencies' full use of their respective insurance Permits to conduct business permitted under such insurance Permits."
Section 4.15 is deleted in its entirety and replaced with the followings:
"4.15 Taxes . (a) Except as set forth in Section 4.15 of the Seller Disclosure Schedule , all Tax Returns with respect to the Brokerage Business or the Brokerage Assets or income attributable therefrom that are required to be filed by the Company on or before the Closing Date have been or will be filed, the information provided on such Tax Returns is or will be complete and accurate in all material respects, and all Taxes shown to be due or as required to be withheld on such tax Returns have been paid or will be paid in full, to the extent that a failure to file such Tax returns or to withhold or to pay such Taxes, or an inaccuracy in such Tax returns, could result in Buyer being liable for such Taxes or could give rise to a Lien on the Brokerage Assets."
Sections 4.15(b) is added immediately after Section 4.15(a) and reads:
"(b) Except as set forth in Section 4.15(b) of the Seller Disclosure Schedule , each of the Insurance Agencies has (i) duly and timely filed (or has had duly and timely filed on its behalf) with the appropriate Governmental Entity all material Tax Returns required to be filed by it, and all such Tax Returns are true, correct and complete in all material respects and (ii) timely paid or withheld (or there has been timely paid or withheld on its behalf) all material Taxes due, claimed to be due or required to be withheld from or in respect of it by any Governmental Entity."
Sections 4.25, 4.26, 4.27, 4.28, 4.29 and 4.30 are inserted immediately after Section 4.24 and provide that:
"Section 4.25. Articles of Incorporation; By-Laws of the Insurance Agencies; Books and Records . Seller has delivered to Buyer a true, correct and complete copy of the articles of incorporation and by-laws of each of the Insurance Agencies, which have been approved by the applicable Governmental Entities and reflect all amendments thereto. The Board of Directors of each of the Insurance Agencies and the Seller will not take any action for the purpose of effecting any amendment or modification of such articles of incorporation or by-laws except as otherwise permitted or required by this Agreement. All the Books and Records of OLA and OTA are maintained in accordance with the applicable provisions of the New York Insurance Law and the Texas Insurance Code, respectively, including with the requirements as to their location."
"Section 4.26. Fiduciary Accounts . Neither OLA nor OTA has ever administered any accounts for which it acted as a fiduciary in any capacity. Neither OLA, OTA nor any of their respective directors, officers or employees has committed any breach of trust with respect to any fiduciary account."
"Section 4.27. Financial and Market-Conduct Examinations . There have not been any financial examinations of either OLA or OTA conducted by any Governmental Entity since their respective formation, and there have not been any market conduct examination of either OLA or OTA conducted by any Governmental Entity since their respective formation."
"Section 4.28. Affiliate Transactions; Employees . There are no contracts, agreements or arrangements to which either OLA or OTA, as the case maybe, on the one hand, and the Seller or any of its Subsidiaries or Affiliates (other than OLA or OTA, as the case maybe), on the other hand, are a party. Other than as set forth in Section 4.28 of the Seller Disclosure Schedule neither OLA nor OTA has any employees, and OLA and OTA have no liability, whether direct, indirect or contingent with respect to any employee benefit plan, agreement or arrangement."
"Section 4.29. Contracts . Except as set forth in Section 4.29 of the Seller Disclosure Schedules , the Insurance Agencies are not a party to any contract, agreement or other arrangement with any third party."
"Section 4.30. Broker Backend Payments . Other than the Broker Backend Payments to be transferred to Buyer by Seller as of the Brokerage Closing Date there are no monetary obligations related to the Broker Loans due from Seller to brokers, whose Broker Loans are being assigned to Buyer pursuant to the Loan Assignment Agreement."
"Section 4.31. Broker Backend Payments; Broker Restricted Accounts . The information set forth on Section 1.01(a) and 1.01(c) of the Seller Disclosure Schedule are true and correct as of the date hereof in all respects."
ARTICLE VI TO THE AGREEMENT
Section 6.13 is deleted in its entirety and substituted with the following:
"Section 6.13 Tax Matters . (a) Company shall, at least five (5) business days prior to the Brokerage Closing Date, inform Buyer whether there are any pending claims that have been asserted or proposed by any Tax authority of a jurisdiction where Company does not file Tax Returns with respect to the Brokerage Business to the effect that Company is or may have been subject to taxation by that jurisdiction based solely on the operation of the Brokerage Business.
(b) On the Brokerage Closing Date, the Company shall inform Buyer of (i) Tax sharing agreements, tax indemnification agreements or similar contracts or arrangements, written or unwritten, to which any of the Insurance Agencies are a party; and (ii) any membership by any of the Insurance Agencies in a United States federal, state, or local or foreign consolidated, combined, unitary or similar group for Tax purposes with respect to which any of the Insurance Agencies may have liability under Treasury Regulations Section 1.1502-6 or equivalent provisions of Applicable Laws for Taxes imposed on other members of such consolidated, combined, unitary or similar group with respect to taxable years for which the period for assessment of deficiencies has not closed.
(c) Effective as of the Brokerage Closing Date, Company shall have terminated or caused to be terminated with respect to any Post-Closing Period all of the Insurance Agencies' obligations and potential liabilities under any Tax sharing agreement, Tax indemnification agreement or similar contract or arrangement, written or unwritten."
Section 6.18 is deleted in its entirety and replaced with the following language:
"Section 6.18 IDA Capital and Withdrawal . Seller shall use its reasonable best efforts to obtain permanent relief from any requirement of the Canadian Investment Dealer Association (" IDA ") that requires Seller or any of its Affiliates to guaranty any obligations or liabilities of Buyer or its Affiliates, or which otherwise imposes any restrictions or burdens on Seller's business, finances or activities, in each case, in connection with the transactions, agreements and arrangements contemplated by the Agreement (" IDA Restrictions ") by February 1, 2003. In the event that (i) Seller is required to guarantee the obligations of Buyer or any of its Affiliates in an aggregate amount greater than C$2,000,000 or (ii) Seller is unable to obtain the relief identified in the first sentence of this Section 6.18 and it requests Parent prior to February 1, 2003 to have its nominees appointed to Parent's board of directors pursuant to the Stakeholders Agreement and such request is not withdrawn, Buyer will, as promptly as practicable, and, subject to regulatory requirements, withdraw and/or terminate Fahnestock Canada Inc's (" Fahnestock Canada ") membership and relationship with the IDA. In the event that such withdrawal and termination causes Buyer and/or its Affiliates to terminate any brokers or employees at Fahnestock Canada, or such brokers or employees resign as a result of such withdrawal or termination, in each case, within six (6) months of such withdrawal or termination, then Seller shall reimburse (a) Buyer's or Fahnestock Canada's costs for all severance payments and obligations, consistent with Buyer's or Fahnestock Canada's prior practices, as to such terminated brokers and employees, provided , that Seller shall not reimburse Buyer for severance relating to more than five employees, and within that five, relating to more than three brokers and (b) all remaining costs and expenses or other penalties under Fahnestock Canada's lease with respect to its offices relating to such terminated brokers and employees."
Section 6.19 is added after Section 6.18 and will read:
"Section 6.19 Consents; Indemnification; Lease Obligations . (a) Notwithstanding anything in Section 2.09 or in any other part of this Agreement to the contrary, Seller shall obtain and deliver as promptly as possible but in no event later than 60 days after the Brokerage Closing Date the consents and assignments substantially in the form attached as Exhibit O with respect to the real estate leases listed in Section 4.06(b) of Seller Disclosure Schedule for the assignment pursuant to the Agreement of the leases listed therein to Buyer;
(b) All other obligations in Section 2.09 (including the indemnification obligations set forth therein and without giving effect to the language in parentheticals set forth in such section) shall apply to Seller with respect to the consents related to the leases listed on Section 4.06(b) of the Seller Disclosure Schedule ;
(c) Notwithstanding anything in this Agreement to the contrary, prior to obtaining the consents or approvals with respect to each real estate lease listed on Section 4.06(b) of Seller Disclosure Schedule for the assignment pursuant to this Agreement of such lease to Buyer, Buyer's employees in the Brokerage Business and, to the extent applicable the Asset Management Business shall occupy space at such locations. Buyer shall occupy all of the space at each such location except as otherwise provided in Exhibit G of the Transition Services Agreement. Subject to Exhibit G of the Transition Services Agreement, with respect to leases governing the space that Buyer's employees occupy pursuant to this Section 6.19(c), Buyer shall pay to Seller within 15 days of receipt of invoice from Seller the rent due under such leases. Such amounts due shall be invoiced monthly in arrears.
(d) The obligations set forth in Section 2.09 (including the indemnification obligations set forth therein and without giving effect to the language in parentheticals set forth in such section) shall apply to all consents (other than real estate consents) where the failure to obtain such consents (the " Material Consents ") could have given Buyer the right not to close the transactions contemplated in the Agreement pursuant to Section 8.01(g) thereof without giving effect to the carve out set forth therein;
(e) Company shall enter into subleases with Buyer substantially in the form set forth in Exhibit N to the Agreement immediately after Seller obtains each real estate consent for the leases listed on Section 4.06(b) of the Seller Disclosure Schedule and such subleases will be co-terminous with the underlying lease and include any reasonable provisions required by the landlord; and
(f) With regard to the shared spaces subject to such subleases, Seller shall be responsible for the construction (including the cost thereof) of demising walls and/or reparations required by applicable regulatory requirements in order to permit Buyer and Seller to share such spaces and conduct their activities as pursued by them as of and immediately after the Broker Closing in accordance with such regulatory requirements."
Section 6.20 is added after Section 6.19 and will read:
"6.20 Schedules . Without modifying any of the Seller Disclosure Schedules hereunder or Buyer's rights hereunder, Seller has agreed to provide to Buyer, by January 8, 2003, a true and correct schedule of Broker Loans as of December 31, 2002, and by January 15, 2003, true and correct schedules of broker production and broker assets (as they relate to the Brokerage Business) and the vesting schedules all as of December 31, 2002 under the Wealth Plus Plan. For the purpose of the rights and obligations of the parties hereunder, any such additional or supplemental schedules shall not be deemed to have been disclosed as of the date of this Agreement or as of the Brokerage Closing Date and shall not in any way negatively affect the rights and remedies of Buyer in respect of the representations and warranties made by Seller on the date of the Agreement or this Amendment.
Section 6.21 is added after Section 6.20 and will read:
"6.21 Adjustment of Zero Coupon Note . (a) Seller shall prepare and deliver to Buyer a statement (the " December Broker Notes Statement "), setting forth in reasonable detail, as of December 31, 2002, the amortized amount outstanding for each Broker Loan. The December Broker Notes Statement shall be delivered to the Buyer no later than six (6) days after the Brokerage Closing Date. Immediately and automatically, without any further action on the part of either of Buyer or Seller, following the delivery of the December Broker Notes Statement, the principal sum of the Zero Coupon Note shall be either increased or decreased, as appropriate, to reflect the aggregate outstanding amount of Broker Loans as set forth on the December Broker Notes Statement. After such adjustment, for all intents and purposes, the principal sum of the Zero Coupon Note shall be equal to the aggregate amount of Broker Loans.
(b) If any of the notes evidencing the Broker Loans (the " Broker Notes ") shall be assigned to Buyer after the Brokerage Closing Date (each such Broker Note, a " Post-closing Broker Note "), Seller and Buyer shall promptly increase the amount outstanding on the Zero Coupon Note equal to the amortized outstanding amount of such Post-closing Broker Note."
Section 6.22 is added after Section 6.21 and will read:
"6.22 Broker Notes Letter . Buyer and Seller agree that they will abide by the terms of that certain letter dated December 30, 2002 (the " Broker Notes Letter "), from Buyer and Seller to the NYSE pursuant to which Buyer and Seller have agreed to revise documents, as may be necessary, relating to the Proposed Transaction (as defined in the Broker Notes Letter) by January 15, 2003 so that the Broker Loans will be contributed from Buyer to Fahnestock. In the event that such Broker Loans are contributed by Buyer to Fahnestock in accordance with the terms of the Broker Notes Letter, Seller shall (i) terminate the Broker Notes Pledge Agreement, dated as of January 2, 2003, between Buyer and Company, (ii) promptly deliver all Broker Notes to Buyer and (iii) execute and deliver, upon the reasonable request of Buyer and at Buyer's sole cost and expense, such further instruments and documents, including but not limited to termination statements under the Uniform Commercial Code, and to take such further actions as Buyer may reasonably request to fully effect the foregoing releases, terminations and discharges."
Section 6.24 is added after Section 6.23 and will read:
"From and after the Brokerage Closing Date, if Seller determines, due to regulatory requirements, that the accounts of Seller's directors, officers and employees must be moved to Seller (or its representatives or agents), Seller shall notify Buyer, and Buyer shall cooperate with Seller in connection with moving such accounts, and Buyer and Seller agree that Seller's administration and maintenance of such accounts shall be deemed to not violate the terms of the Non-Competition Agreement."
ARTICLE VIII OF THE AGREEMENT
Section 8.01 (g) is amended to include the words "(other than the consents set forth in Section 4.02(b) of Seller Disclosure Schedule )" after the words "All material licenses, Permits, consents, approvals, estoppels and authorizations of all third parties".
Sections 8.01 (i), (j), (k) and (l) are added immediately after Section 8.01(h):
"(i). Seller shall have caused Patricia Bourdon, Joyce Burns, Kathryn G. Casparian, Elliot Ganz, Bruce Renihan, Gregory Rodriguez and Paul Rubacky, directors and officers of OLA, to have tendered to OLA, effective as of the Brokerage Closing Date, their resignations as directors and officers of OLA."
"(j). Seller shall have delivered to Buyer the certificates evidencing ownership of the OLA Shares by Company, endorsed in blank or accompanied by separate stock powers duly executed in blank."
"(k). Seller shall have caused the certificates evidencing ownership of the OTA Shares owned by Mr. Harold Perkins, endorsed in blank or accompanied by separate stock powers duly executed in blank, to be delivered to Buyer."
ARTICLE X TO THE AGREEMENT
The references to Section 4.15 is deleted from Section 10.02.
The word "or" immediately before Section 10.03(g) and Section 10.03(g) itself are deleted and replaced with: "(g) any liabilities, obligations or claims of or against Buyer or any of its Affiliates, or any of their officers, directors or employees relating to actions taken by Buyer or any of its Affiliates pursuant to Section 2.10; (h) the failure to receive approval (or non-disapproval, as the case may be) for the Insurance Agencies, under Section 2(n) of Article 21.07 of the Texas Insurance Code for the acquisition of control; (i) the inability or impairment of OLA's and/or OTA's ability to conduct its/their business (as presently conducted) as a result of the consummation of this Agreement; (j) Sections 2.07(b)(ii) (as it relates to the Insurance Agencies), 4.01 (as it relates to the Insurance Agencies), 4.02 (as it relates to the Insurance Agencies), 4.03(d), 4.03(e), 4.03(f), 4.06(d), 4.06(e), 4.09(d), 4.12(d)-(h), 4.25, 4.26, 4.27, 4.28 and 4.29) on or after the Brokerage Closing Date; (k) the failure of Seller to obtain the consents and approvals set forth in Sections 2.09 or 6.19; (l) any of the accounts listed on Section 2.15 of the Seller Disclosure Schedule on or prior to Conversion; (m) the Insurance Agencies' inability (or impairment in their ability) to conduct insurance business in any state as a result of not having had any of their insurance Permits renewed in any state set forth in Section 4.01(a) of the Seller Disclosure Schedule or as a result of not having registered in any state set forth in Section 4.01(a) of the Seller Disclosure Schedule as a foreign corporation or as a result of anything disclosed on Section 4.01(a) of the Seller Disclosure Schedule ; or (n) the breach of any representation, warranty, or covenant of "Licensor" contained in the License Agreement dated July 22, 1997 by and between Oppenheimer Holdings, Inc. and Oppenheimer Capital, existing as of the Brokerage Closing Date or arising out of the facts, conditions or circumstances that existed or occurred prior to the Brokerage Closing Date or any other action or failure to act on or before the Brokerage Closing Date which gives rise to an obligation of "Licensor" to indemnify "Licensee" pursuant to such agreement; (the items referred to in clauses (a) through (n) being referred to herein as the " Seller Claims ")."
The words "(other than pursuant to Sections 2.07(b)(ii) (as it relates to the Insurance Agencies), 4.01 (as it relates to the Insurance Agencies), 4.02 (as it relates to the Insurance Agencies), 4.03(d), 4.03(e), 4.03(f), 4.06(d), 4.06(e), 4.09(d), 4.12(d)-(h), 4.25, 4.26, 4.27, 4.28, 4.29, 6.17 and Section 6.18)" are inserted after Section 10.03(m) immediately after the words "provided, however, that Seller Parent and Company shall have no obligations to indemnify the Buyer Indemnitees for any Seller Claims ".
The words "(other than pursuant to Section 6.17)" currently appearing after Section 10.03(g) and immediately following the words " that Seller Parent and Company shall have no obligation to indemnify the Buyer Indemnitees for any Seller Claims" are deleted.
The following paragraph is added in Section 10.04:
"Notwithstanding anything herein to the contrary, the limitation on Seller Parent's and Company's liability to indemnify Buyer Indemnitees as set forth in this Section 10.04 will not apply to any claims made by Buyer Indemnitees for breach of any representation or warranty made by Seller Parent or Company in Sections 4.01 (as it relates to the Insurance Agencies), 4.02 (as it relates to the Insurance Agencies), 4.03(d), 4.03(e), 4.03(f), 4.06(d), 4.06(e), 4.12(d)-(h), 4.25, 4.26, 4.27, 4.28, and 4.29 and any indemnification made pursuant to a breach of any such representation or warranty would not be computed for purpose of determining the limitation on indemnification set forth in Section 10.04(b)."
The words ", the Broker Notes Letter, the Saperstein Letter and the Wealth Plus Letter," are inserted after the words "the Ancillary Agreements" in Section 11.04.
Except as expressly amended hereby, the Agreement remains in full force and effect in accordance with its terms. From and after the date hereof, all references in the Agreement to the "Agreement," "hereunder," "hereof," "herein," or words of similar import shall mean the Agreement as amended by this Amendment.
IN WITNESS WHEREOF , the parties have executed or caused this Agreement as of the date first written above.
FAHNESTOCK VINER HOLDINGS INC.
/s/ A.G. Lowenthal
Name: A. G. Lowenthal
Title: Chief Executive Officer and Chairman of the Board
VINER FINANCE INC.
/s/ A.G. Lowenthal
Name: A. G. Lowenthal
Title: Chief Executive Officer and Chairman of the Board
CIBC WORLD MARKETS CORP.
/s/ Antonio Molestino
Name: Antonio Molestino
Title: Managing Director
CANADIAN IMPERIAL BANK OF COMMERCE
/s/ Roy Sciani
Name: Roy Sciani
Title: Senior Vice-President
SHAREHOLDERS AGREEMENT
SHAREHOLDERS AGREEMENT, dated as of December 9, 2002 (this " Agreement "), by and among (i) Fahnestock Viner Holdings Inc., an Ontario corporation (the " Company "), (ii) Albert G. Lowenthal (" Significant Shareholder I Individual "), Phase II Financial L.P., a New York limited partnership (" Significant Shareholder I L.P. "), Phase II Financial Limited, an Ontario corporation (" Significant Shareholder I Limited "), The Albert G. Lowenthal Foundation (the " Foundation " and together with Significant Shareholder I Individual, Significant Shareholder I L.P., and Significant Shareholder I Limited the " Significant Shareholder I Group "), and (iii) Olga Roberts (" Significant Shareholder II Individual ") and Elka Estates Limited, an Ontario corporation (" Significant Shareholder II Limited " and together with Significant Shareholder II Individual, the " Significant Shareholder II Group ").
WHEREAS, the parties hereto have entered into a Stakeholders Agreement, dated as of the date hereof (the " Stakeholders Agreement "), with Canadian Imperial Bank of Commerce, a bank under the laws of Canada, for the purpose of governing certain aspects of the relationships among them; and
WHEREAS, the parties hereto desire to enter into this Agreement, in addition to the Stakeholders Agreement, for the purpose of governing certain aspects of the relationships between the Significant Shareholder I Group and the Significant Shareholder II Group.
NOW, THEREFORE, in consideration of the premises and the mutual agreements contained herein, and other consideration, the receipt and adequacy of which hereby is acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:
DEFINITIONS
Certain Definitions . For purposes of this Agreement, the following terms have the following meanings:
" Affiliate " of any Person means any other Person which, directly or indirectly through one or more intermediaries, controls, is controlled by or is under common control with, such Person. For purposes of this definition, "control" when used with respect to any Person means possession, directly or indirectly, of the power to direct the management and policies of such Person (whether through the ownership of voting securities, by contract, or otherwise); and the terms "controlling" and "controlled" have meanings correlative to the foregoing.
" Beneficially Own " and " Beneficial Ownership " shall have the meanings ascribed to such terms in Rules 13d-3 and 13d-5 under the Exchange Act; provided that a Person shall be deemed to have beneficial ownership of all securities that such Person has the right to acquire, whether such right is exercisable immediately or only after the passage of time.
" Board " means the board of directors of the Company.
" Class A Shares " means the Class A non-voting shares of the Company.
" Class B Shares " means the Class B voting shares of the Company.
" Company " shall have the meaning set forth in the Preamble.
" Co-Sale Notice " shall have the meaning set forth in Section 3.1.
" Co-Sale Offered Shares " shall have the meaning set forth in Section 3.1.
" Co-Sale Option Period " shall have the meaning set forth in Section 3.2.
" Co-Sale Right Holders " shall have the meaning set forth in Section 3.3.
" Drag Along Notice " should have the meaning set forth in Section 4.2.
" Drag Along Right " shall have the meaning set forth in Section 4.1.
" Drag Along Sale " shall have the meaning set forth in Section 4.1.
" Market Value " means the average of the last reported sale price for the Class A Shares on the NYSE for the 5 consecutive Business Days ending three Business Days prior to the Put Closing Date.
" Offeror " shall have the meaning set forth in Section 3.1.
" Ontario Securities Act " means the Securities Act (Ontario), as amended.
" Participating Shareholder " shall have the meaning set forth in Section 3.2.
" Permitted Transferee " means, with respect to the Shareholders, the following:
if such Shareholder is an individual, such Shareholder's parent, spouse, brother or sister, natural or adopted lineal descendant or spouse of such descendant including pursuant to a will or under the laws of intestacy, descent and distribution;
a trust, whether inter vivos or testamentary, limited liability company, corporation, partnership or other entity, of which only such Shareholder and/or any Person or Persons named in clause (a) above is a beneficiary, member, partner, shareholder or owner (" related entity ");
the settlor or settlors or beneficiary or beneficiaries of a trust that is a related entity;
the shareholders, members, partners or owners of a corporation, limited liability company, partnership or other entity that is a related entity;
if such Shareholder is a member of Significant Shareholder I Group, any other member of Significant Shareholder I Group or any Permitted Transferee thereof; provided that Significant Shareholder I Individual maintains the power to vote or direct the voting of such transferred Class B Shares; or
if such Shareholder is a member of Significant Shareholder II Group, any other Shareholder or any Permitted Transferee thereof.
" Person " means any individual, sole proprietorship, limited liability company, joint venture, corporation, partnership, association, trust, or any other entity or organization, including a government or political subdivision or an agency or instrumentality thereof.
" Put Closing Date " shall have the meaning set forth in Section 5.1.
" Put Notice " shall have the meaning set forth in Section 5.1.
" Put Purchase Price " shall have the meaning set forth in Section 5.2.
" Put Right " shall have the meaning set forth in Section 5.1.
" Pro Rata Amount " means, as to a Right of Co-Sale, the number of Class B Shares obtained by multiplying the number of Class B Shares held by the Participating Shareholder immediately prior to such sale by a fraction, the numerator of which is the number of Class B Shares proposed to be sold to the Offeror by the Selling Holder, and the denominator of which is the number of Class B Shares held by the Significant Shareholder I Group immediately prior to such sale.
" Right of Co-Sale " means the right of co-sale provided to the members of Significant Shareholder II Group in Article III of this Agreement.
" Selling Holder " shall have the meaning set forth in Section 3.1.
" Shareholders " means, collectively, Significant Shareholder I Individual, Significant Shareholder I L.P., Significant Shareholder I Limited, the Foundation, Significant Shareholder II Individual, and Significant Shareholder II Limited.
" Significant Shareholder I Group " shall have the meaning set forth in the preamble hereto.
" Significant Shareholder II Group " shall have the meaning set forth in the preamble hereto.
" Stakeholders Agreement " shall have the meaning set forth in the Recitals hereto.
" Subsidiary " means, with respect to any Person, any corporation, partnership, limited liability company, trust or other entity of which a majority of the capital stock, equity interests or other ownership interests having ordinary voting power to elect a majority of the board of directors or elect or appoint other persons performing similar functions are at the time, directly or indirectly, owned by such Person.
" Transfer " shall have the meaning set forth in Section 2.1.
" U.S. Securities Act " means the United States Securities Act of 1933, as amended.
CERTAIN COVENANTS
Transfer Restrictions
. No Shareholder may (and any purported Transfer in violation of this Agreement shall be null and void and of no force and effect), directly or indirectly (including through the Transfer of a controlling interest in a controlled Affiliate), sell, transfer, assign, grant a participation in, option, pledge, hypothecate, encumber or otherwise dispose of by operation of law or otherwise (each, a " Transfer "), any or all of its Class B Shares, except:
subject to Section 2.2(a), any Class B Shares may be Transferred to a Permitted Transferee of such Shareholder;
subject to Section 2.2(b) and Article III hereof, as applicable, upon delivery to the Company of a written opinion of legal counsel (who shall be reasonably satisfactory to the Company) addressed to the Company and in form and substance reasonably satisfactory to the Company to the effect that the proposed Transfer may be effected without registration under the U.S. Securities Act;
subject to Section 2.2(b) and Article III hereof, as applicable, upon delivery of a "no action" letter from the SEC to the effect that the making of such a Transfer without registration under the U.S. Securities Act will not result in a recommendation by the staff of the SEC that action be taken with respect thereto; or
subject to Section 2.2(b) and Article III hereof, as applicable, upon delivery to the Company of a written opinion of legal counsel (who shall be reasonably satisfactory to the Company) addressed to the Company and in form and substance reasonably satisfactory to the Company to the effect that the manner in which the proposed Transfer is to be effected (x) does not require the Company or the transferring Shareholder to file and obtain a receipt for a prospectus by virtue of compliance by the transferring Shareholder with an exemption from the prospectus requirements of the Ontario Securities Act, and (y) is exempt from the prospectus requirements of Sections 95 to 100 of the Ontario Securities Act.
Agreement to be Bound
.
No Class B Shares shall be Transferred to any Permitted Transferees unless:
such Permitted Transferee shall have agreed in writing, in a manner reasonably acceptable in form and substance to the Company, (x) to accept the Class B Shares Transferred to it subject to the terms and conditions of this Agreement, and (y) to be bound by this Agreement in the same manner as was the transferor of the Class B Shares Transferred; and
the Company shall have received (i) a written opinion of legal counsel (who shall be reasonably satisfactory to the Company) addressed to the Company and in form and substance reasonably satisfactory to the Company to the effect that the proposed Transfer may be effected without registration under the U.S. Securities Act or (ii) a "no action" letter from the SEC to the effect that the making of such a Transfer without registration under the U.S. Securities Act will not result in a recommendation by the staff of the SEC that action be taken with respect thereto or (iii) a written opinion of legal counsel (who shall be reasonably satisfactory to the Company) addressed to the Company and in form and substance reasonably satisfactory to the Company to the effect that the manner in which the proposed Transfer is to be effected (x) does not require the Company or the transferor to file and obtain a receipt for a prospectus by virtue of compliance by the transferor with an exemption from the prospectus requirements of the Ontario Securities Act, and (y) is exempt from the take-over bid requirements of Sections 95 to 100 of the Ontario Securities Act.
No Class B Shares shall be Transferred pursuant to Section 2.1(b), (c) or (d) unless such transferee (other than a Permitted Transferee) shall have agreed in writing, in a manner reasonably acceptable in form and substance to the Company, (x) to accept the Class B Shares Transferred to it subject to the terms and conditions of this Agreement, and (y) to be bound by the restrictions and obligations in this Agreement in the same manner as was the transferor of the Class B Shares Transferred.
RIGHT OF CO-SALE
Co-Sale Right . At any time that any member of Significant Shareholder I Group (the " Selling Holder ") desires to Transfer any Class B Shares Beneficially Owned by it to other than a Permitted Transferee, the Selling Holder shall first deliver written notice of its desire to do so (the " Co-Sale Notice ") to each member of Significant Shareholder II Group (the " Co-Sale Shareholders "). The Co-Sale Notice shall specify: (i) the name and address of the Person or Persons to which the Selling Holder proposes to Transfer the Class B Shares (the " Offeror "), (ii) the number of Class B Shares the Selling Holder proposes to Transfer (the " Co-Sale Offered Shares "), (iii) the total consideration to be delivered to the Selling Holder for the proposed Transfer and the consideration for each Class B Share the Selling Holder proposes to Transfer, and (iv) all other material terms and conditions of the proposed transaction.
Election to Participate . Each member of the Significant Shareholder II Group may within the 30 day period after delivery of the Co-Sale Notice (the " Co-Sale Option Period ") notify the Selling Holder of such member's desire to participate in the sale of the Co-Sale Offered Shares and to sell, at the price per Class B Share and on the terms set forth in the Co-Sale Notice, a number of Class B Shares Beneficially Owned by such member up to such member's Pro Rata Amount. Each member of the Significant Shareholder II Group which has so notified the Selling Holder within the Co-Sale Option Period of its desire to sell Class B Shares in the transaction (a " Participating Shareholder ") shall be entitled to do so, subject to cut-back as set forth in Section 3.3.
Procedure . The Selling Holder shall use its best efforts to interest the Offeror in purchasing, in addition to the Co-Sale Offered Shares, the Class B Shares which the Participating Shareholders wish to sell. If the Offeror does not wish to purchase all of the Class B Shares made available by the Selling Holder and the Participating Shareholders (the Selling Holder and the Participating Shareholders being hereinafter referred to collectively as " Co-Sale Right Holders "), then each Co-Sale Right Holder shall be entitled to sell a portion of the Class B Shares being sold to the Offeror obtained by multiplying the number of Class B Shares that the Offeror is willing to purchase by a fraction, the numerator of which is the number of Class B Shares such Co-Sale Right Holder has proposed to sell to the Offeror, and the denominator of which is the number of Class B Shares that all of the Co-Sale Right Holders have proposed to sell to the Offeror. The transaction contemplated by the Co-Sale Notice shall be consummated not later than 90 days after the expiration of the Co-Sale Option Period.
Sale of Co-Sale Offered Shares After the Expiration of the Co-Sale Right . If the members of Significant Shareholder II Group irrevocably waive their Right of Co-Sale pursuant to this Article III with respect to a specific Transfer, or otherwise do not indicate their wish to participate in such Transfer during the Co-Sale Option Period, then the Selling Holder shall have the right, but not the obligation, to secure a bona fide sale of all, but not less than all, of the Co-Sale Offered Shares to a third party and Transfer such Co-Sale Offered Shares to such third party at a price equal to the price and on terms and conditions no less favorable to the Selling Holder than the terms and conditions described in the Co-Sale Option Period; provided that such Transfer to the bona fide third party is consummated within 90 days following the Co-Sale Option Period upon the same terms and conditions as are set forth in the Co-Sale Notice (it being agreed that if such Transfer is not consummated within such 90-day period, the Selling Holder must re-commence the applicable procedures provided in this Agreement if it wishes to Transfer any Class B Shares).
DRAG ALONG RIGHT
Drag Along Right . In the event that the Significant Shareholder I Group proposes to Transfer (other than a pledge of Class B Shares in connection with a financing) all the Class B Shares Beneficially Owned by it on the date of such Transfer to a Person other than a Permitted Transferee, whether by way of a merger, consolidation, sale or exchange of securities or otherwise and the proposed Transfer is at arms length and its terms are commercially reasonable, the Significant Shareholder I Group shall have the right (the " Drag Along Right ") to require the members of the Significant Shareholder II Group to Transfer all Class B Shares Beneficially Owned by them to such proposed transferee upon the same terms and conditions offered to the Significant Shareholder I Group (the " Drag Along Sale ").
Drag Along Notice . Before the Significant Shareholder I Group may exercise its Drag Along Right hereunder, the Significant Shareholder I Group must give to the members of the Significant Shareholder II Group, a written notice (the " Drag Along Notice ") stating (i) the Significant Shareholder I Group's bona fide intention to Transfer all of its Class B Shares and the name and address of the proposed transferee; and (ii) the bona fide cash price or, in reasonable detail, other consideration, per share for which the Significant Shareholder I Group proposes to Transfer such Class B Shares.
Procedures . The Significant Shareholder II Group shall take all actions reasonably requested by the Significant Shareholder I Group in connection with the consummation of such sale, and within 15 Business Days of the receipt of such Drag Along Notice (or such longer period of time as the Significant Shareholder I Group shall designate in such notice), shall cause all of its Class B Shares to be sold to the designated purchaser on the same terms and conditions and for the same type and amount of consideration as the Class B Shares being sold by the Significant Shareholder I Group. In furtherance of the foregoing, in connection with a Drag Along Sale, the Significant Shareholder II Group shall (i) raise no objections against the Drag Along Sale or the process pursuant to which it was arranged, except where such Significant Shareholder II Group has a reasonable suspicion of fraud, dishonesty or misconduct in connection therewith and (ii) execute all documents containing such terms and conditions as those executed by Significant Shareholder I Group as reasonably directed by the Significant Shareholder I Group, to the extent permitted by law.
Closing of the Drag Along Sale . The closing of the Drag Along Sale shall be held at such time and place as the Significant Shareholder I Group shall specify and at least five days' notice of the time and place of the closing shall be given to the Significant Shareholder II Group. At such closing, the Significant Shareholder II Group shall deliver certificates representing the Class B Shares to be Transferred and such Class B Shares shall be free and clear of any liens, claims or encumbrances (other than restrictions imposed pursuant to applicable federal and state securities laws or by the buyer thereof) and the Significant Shareholder II Group shall so represent and warrant.
Other Rights . If a Significant Shareholder I Group exercises its Drag Along Right, the Significant Shareholder II Group required to participate in such Transfer shall have no rights under Articles IV or VI of this Agreement with respect to such Transfer.
PUT RIGHT
Put Right . Subject to the terms and conditions hereof for so long as the Significant Shareholder II Group holds any Class B Shares, it shall be entitled, in its sole discretion, by giving written notice (the " Put Notice ") to the Significant Shareholder I Group, to require the Significant Shareholder I Group to purchase at the Put Purchase Price (the " Put Right "), any of the Class B Shares Beneficially Owned by it. The Put Notice shall specify such amount of Class B Shares to be sold, shall contain a commitment to sell such Class B Shares in the manner set forth in this Section 5.1 and shall specify the date (the " Put Closing Date ") such Class B Shares are to be sold (which date shall be 13 Business Days after the Put Notice is delivered or, if such date is not a Business Day, the following Business Day). Notwithstanding anything contained herein to the contrary, the Significant Shareholder II Group shall have the right to withdraw any Put Notice and to cancel the sale of the Class B Shares pursuant thereto by delivering a written notice of its desire to do so to the Significant Shareholder I Group no later than 2 Business Days prior to the Put Closing Date.
Put Purchase Price . The purchase price for any Class B Share being purchased pursuant to a Put Right (the " Put Purchase Price ") shall be equal to the Market Value multiplied by the number of Class B Shares being sold pursuant to such Put Right.
Put Right Closing . The consummation of the transactions pursuant to an exercised Put Right shall take place on the Put Closing Date in accordance with this Section 5.3. On the Put Closing Date, the Significant Shareholder I Group shall pay the Put Purchase Price to the Significant Shareholder II Group by cashier's check or wire transfer of immediately available funds to an account or accounts designated by the Significant Shareholder II Group in exchange for the Class B Shares being purchased. The consideration for the Class B Shares sold pursuant to the Put Right shall be divided pro rata between the members of the Significant Shareholder II Group based on the relative amounts of Class B Shares sold by each such member or as such members may otherwise agree. The purchase of the Class B Shares pursuant to the Put Right and the payment of the Put Purchase Price shall be made pro rata by the members of the Significant Shareholder I Group based on the relative amounts of Class B Shares Beneficially Owned by each such member of the Significant Shareholder I Group or as such members may otherwise agree. The Significant Shareholder II Group shall cause the Class B Shares being purchased to be delivered to the Significant Shareholder I Group at the closing free and clear of all liens, charges or encumbrances of any kind. The Significant Shareholder II Group shall take all such actions as the Significant Shareholder I Group reasonably requests to vest in the Significant Shareholder I Group title to the Put Securities being purchased free of any lien, charge or encumbrance incurred by or through the Significant Shareholder II Group.
Trading Restrictions . Each of the Shareholders agrees that he, she or it shall refrain from, during the period between the date on which the Put Notice is delivered and three Business Days prior to the Put Closing Date, (a) trading Class A Shares or (b) taking any action with the intent of, directly or indirectly, manipulating or otherwise influencing the market value of the Class A Shares.
MISCELLANEOUS PROVISIONS
Entire Agreement . This Agreement and the exhibits, schedules and other documents referred to herein which form a part hereof, contain the entire understanding of the parties hereto with respect to their subject matter. This Agreement supersedes all prior agreements (including the Shareholders' Agreement, dated the 16th day of October, 1985, among Significant Shareholder I Limited, Significant Shareholder II Limited and the Company, which shall terminate as of the date hereof and be of no further force or effect) and understandings, oral and written, with respect to its subject matter.
Severability . Should any provision of this Agreement for any reason be declared invalid or unenforceable, such decision shall not affect the validity or enforceability of any of the other provisions of this Agreement, which other provisions shall remain in full force and effect and the application of such invalid or unenforceable provision to persons or circumstances other than those as to which it is held invalid or unenforceable shall be valid and be enforced to the fullest extent permitted by law.
Notices . All notices, requests, demands, waivers and other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given if delivered personally, by mail (certified or registered mail, return receipt requested), by recognized overnight courier or by facsimile transmission (receipt of which is confirmed):
(i) if to the Company, to:
Fahnestock Viner Holdings Inc.
20 Eglinton Avenue West
Suite 1110, Box 2015
Toronto Ontario M4R 1K8
CANADA
Fax: (416) 322-7007
Attention: E.K. Robertswith a copy to:
Borden Ladner Gervais LLP
Scotia Plaza, Suite 4400
40 King Street West
Toronto, Ontario M5H 3Y4
CANADA
Attention: A. Winn Oughtred, Esq.
Telephone: (416) 367-6247
Facsimile: (416) 361-7076
Email: woughtred@blgcanada.co(ii) if to Significant Shareholder I Individual, Significant Shareholder I L.P., Significant Shareholder I Limited or the Foundation:
Phase II Financial Ltd.
c/o Fahnestock & Co., Inc.
125 Broad Street
New York, NY 10004
Fax: (212) 943-8728
Attention: Albert G. Lowenthalwith a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, NY 10036-6522
Fax: (212) 735-2000
Attention: Patricia Moran, Esq.(iii) if to Significant Shareholder II Individual or Significant Shareholder II Limited:
Elka Estates Limited
c/o Fahnestock Viner Holdings, Inc.
20 Eglinton Avenue West
Toronto, Ontario M4R 1K8 CANADA
Fax: (416) 322-7007
Attention: E.K. Robertswith a copy to:
Borden Ladner Gervais LLP
Scotia Plaza, Suite 4400
40 King Street West
Toronto, Ontario M5H 3Y4
CANADA
Attention: A. Winn Oughtred, Esq.
Telephone: (416) 367-6247
Facsimile: (416) 361-7076
Email: woughtred@blgcanada.co
or to such other person or address as any party shall specify by notice in writing to the other party. All such notices, requests, demands, waivers and communications shall be deemed to have been received on the date on which so hand-delivered, on the third Business Day following the date on which so mailed, on the Business Day following the date on which delivered to the overnight courier service and on the date on which faxed and confirmed, except for a notice of change of address, which shall be effective only upon receipt thereof.
Successors and Assigns . This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, executors, successors and permitted assigns. Except for Transfers in accordance with Article II, neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned, directly or indirectly, by (i) any member of Significant Shareholder I Group without the consent of the Significant Shareholder II Group and the Company, and (ii) any member of Significant Shareholder II Group, without the prior written consent of the Significant Shareholder I Group and the Company.
Third-Party Beneficiaries . This Agreement is not intended and shall not be deemed to confer upon or give any person except the parties hereto and their respective successors and permitted assigns any remedy, claim, liability, reimbursement, cause of action or other right under or by reason of this Agreement.
Recapitalization, Etc. In the event that any capital stock or other securities are issued in respect of, in exchange for, or in substitution of, any Class A Shares or Class B Shares by reason of any reorganization, recapitalization, reclassification, merger, consolidation, spin-off, partial or complete liquidation, stock dividend, split-up, sale of assets, distribution to Shareholders or combination of the Class A Shares or the Class B Shares or any other change in capital structure of the Company, appropriate adjustments shall be made with respect to the relevant provisions of this Agreement so as to fairly and equitably preserve, the original rights and obligations of the parties hereto under this Agreement.
Amendments and Waivers . This Agreement may not be modified or amended except by an instrument or instruments in writing signed by an authorized officer of each party. Except as otherwise provided in this Agreement, any failure of any of the parties to comply with any obligation, covenant, agreement or condition herein may be waived by the party entitled to the benefits thereof only by a written instrument signed by an authorized officer of the party granting such waiver, but such waiver or failure to insist upon strict compliance with such obligation, covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure.
Fees and Expenses . Except as otherwise contemplated in this Agreement, whether or not this Agreement and the transactions contemplated hereby are consummated, all costs and expenses (including legal and financial advisory fees and expenses) incurred in connection with, in anticipation of, or in the enforcement of, this Agreement and the transactions contemplated hereby shall be paid by the party incurring such expenses.
Termination . The covenants and agreements contained in this Agreement shall terminate only expressly in accordance with their respective terms. This Agreement shall terminate and the rights and obligations of the parties hereto shall have no force or effect upon the date as of which either the Significant Shareholder I Group or the Significant Shareholder II Group no longer Beneficially Owns any Class B Shares.
Headings . The article and section headings contained in this Agreement are solely for the purpose of reference, are not part of the agreement of the parties and shall not in any way affect the meaning or interpretation of this Agreement.
Governing Law . THIS AGREEMENT, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE PROVINCE OF ONTARIO WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OR CHOICE OF LAWS OR ANY OTHER LAW THAT WOULD MAKE THE LAWS OF ANY OTHER JURISDICTION OTHER THAN THE PROVINCE OF ONTARIO APPLICABLE HERETO.
Waiver of Jury Trial . EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
Consent to Jurisdiction . Each of the parties hereto expressly and irrevocably (a) consents to submit itself to the exclusive jurisdiction of the Ontario Superior Court of Justice in Toronto in the event any dispute arises out of or relates to this Agreement or any of the transactions contemplated by this Agreement, (b) agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other request or leave from such court, including, without limitation, a motion to dismiss on the grounds of forum non conveniens, (c) agrees that it will not bring any action arising out of or relating to this Agreement or any of the transactions contemplated by this Agreement in any court other than such court, and (d) waives any right to a trial by jury with respect to any claim, counterclaim or action arising out of or in connection with this Agreement or the transactions contemplated hereby.
Specific Performance . The parties hereto agree that if any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached, irreparable damage would occur, no adequate remedy at law would exist and damages would be difficult to determine, and that the parties shall be entitled to specific performance of the terms hereof and immediate injunctive relief, without the necessity of proving the inadequacy of money damages as a remedy, in addition to any other remedy at law or equity.
Counterparts . This Agreement may be executed simultaneously in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
Construction .
For the purposes hereof, (i) words in the singular shall be held to include the plural and vice versa and words of one gender shall be held to include the other genders as the context requires, (ii) the words "hereof," "herein," and "herewith" and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole and not to any particular provision of this Agreement, and article, section, paragraph, exhibit and schedule references are to the articles, sections, paragraphs, and exhibits and schedules of this Agreement unless otherwise specified, (iii) the words "including" and words of similar import when used in this Agreement shall mean "including, without limitation," unless otherwise specified, (iv) the word "or" shall not be exclusive and (v) the Company and the Significant Shareholders (and any other Person who becomes party hereto as permitted hereby) will be referred to herein individually as a "party" and collectively as "parties."
The parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provisions of this Agreement.
Any reference to any federal, provincial, state, local statute or law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless the context otherwise requires.
7.17 Conflicts with Stakeholders Agreement . In the event that any provision contained in this Agreement conflicts with any provision contained in the Stakeholders Agreement, the provisions contained in the Stakeholders Agreement shall control.
[Signature page follows]
IN WITNESS WHEREOF, each of the parties hereto has duly executed this Agreement as of the date first above written.
FAHNESTOCK VINER HOLDINGS INC.
By: /s/ A.G. Lowenthal
Name: A.G. Lowethal
Title:
/s/ A.G. Lowenthal
Albert G. Lowenthal
PHASE II FINANCIAL L.P.
By: /s/ A.G. Lowenthal
Its: General Partner
PHASE II FINANCIAL LIMITED
By: /s/ A.G. Lowenthal
Name: A.G. Lowenthal
Title:
THE ALBERT G. LOWENTHAL FOUNDATION
By: /s/ A.G. Lowenthal
Name: A.G. Lowenthal
Title:
/s/ Olga Roberts
Olga Roberts
ELKA ESTATES LIMITED
By: /s/ Olga Roberts
Name: Olga Roberts
Title:
EXHIBIT 10.5 FAHNESTOCK VINER HOLDINGS INC. FORM 8-K DATED JANUARY 17, 2003 CLEARING AGREEMENT
Date: January 2, 2003
Fahnestock & Co., Inc.
125 Broad Street
New York, NY 10004
Gentlemen:
This will confirm our agreement ("Agreement") under which we ("we", "us", "our" or "Clearing Firm") shall act as clearing broker for the accounts of customers introduced to us by you ("you", "your" or "Introducing Firm") on a fully disclosed basis as introducing broker. For the purpose of the Securities Investors Protection Act ("SIPA"), and the financial responsibility rules of the Securities and Exchange Commission ("SEC") and the Commodity Futures Trading Commission ("CFTC"), your customers shall be treated as customers of Clearing Firm and not of Introducing Firm. Capitalized terms not defined herein shall have the meanings given to them in the Asset Purchase Agreement dated December 9, 2002 ("Asset Purchase Agreement"), between the parties. You and we further agree:
1. Clearing Firm shall :
(a) execute and/or clear and/or settle (hereafter referred to as "clear", "clearing", or other forms of the word "clear" as the context requires) transactions in securities and exchange-traded futures on a fully disclosed basis for you and the accounts of Brokerage Business customers (hereafter collectively referred to as "Customers"), according to orders given to us by you;
(b) monitor and request of Customers (directly or through you as necessary) the following:
(i) timely payment of Customer obligations for purchases, interest and other charges,
(ii) timely delivery of securities sold, and
(iii) the maintenance of sufficient money and securities in Customer accounts required by Federal Reserve Board Regulation T and all other applicable laws, rules and regulations and additional requirements imposed by us, and buy-in or sell-out positions in accounts of Customers who fail to comply with the foregoing;
(c) extend credit for margin purchases in Customer accounts in accordance with applicable laws, rules and regulations and the Clearing Firms own credit policies and additional requirements;
transfer securities to and from Customers' accounts, provide for the custody, safeguarding and segregation of Customers' money and securities left with us, including, without limitation, receipt and payment of dividends on Customer securities, and arrange for the receipt and delivery of securities for exchange/tender offers, rights and warrants offerings, redemptions and other similar transactions according to your instructions;
provide custodial services for Individual Retirement Accounts owned by Customers at the same level of service as provided by us to Customers as of the effective date of the Asset Purchase Agreement;
(f) maintain and preserve books, records and reports required by applicable laws, rules and regulations regarding Customers' accounts for brokers having custody of Customers' money and securities, including reports required to be retained and preserved under NYSE Rule 382(e)(2);
(g) issue required confirmations, statements and notices ("Notices") directly to Customers:
(i) on Introducing Firm forms, as may be modified in consultation with you to meet our operational, formatting and production requirements, which contain an appropriate legend reflecting our agreement with Clearing Firm with duplicates thereof to you; or
(ii) at our option, we will prepare and send to Customers daily purchase and sale confirmations and monthly statements of accounts, which shall meet our requirements as to format and quality, and will send duplicates to you. Such confirmations and statements will indicate that the account was introduced by you. Furthermore, all statements shall state that all customer funds and securities are located at Clearing Firm and shall furnish the name of a contact person or department at Clearing Firm with whom the customer may address inquiries;
secure and maintain licenses, registrations, permits, approvals and agreements required under applicable laws, rules and regulations for us to clear securities transactions or engage in any other transaction or business which are to be performed hereunder;
provide Introducing Firm such forms and documents as are
necessary for Introducing Firm to open and maintain accounts in
such
quantities as necessary;
(j) remit to you on a weekly basis an amount equal to 75% of commissions and fees earned on Customer Accounts less all accrued compensation due to us under Section 4(a) of this Agreement, with the balance due on any earned commissions (including interest participation) earned remitted to you by the 15th of the following calendar month net of other adjustments and offsets provided hereunder;
(k) notify you and the NYSE promptly of any written customer complaint that we receive which relates to your responsibilities, or those of your associated persons, under this Agreement, and notify the complaining customer in writing of the receipt of such complaint and its transmittal to you and the NYSE; and
(l) promptly after the execution of this Agreement and annually thereafter (but only if this Agreement is still in effect), furnish you a list of all exception and other reports that we prepare to assist you in supervising and monitoring your Customer accounts in order to carry out your responsibilities under this Agreement.
2. Limitations on Clearing Firm Responsibilities.
Our obligations under this Agreement, including Section 1 hereof, shall be conditioned on our receipt of proper documentation necessary under applicable laws and regulations to support the opening of accounts, including Customer accounts, on our books. You agree that we are not required to clear any transaction or otherwise perform any services for (i) the accounts of persons other than Customers, (ii) with respect to instruments, products and services not offered to Customers by us as of the effective date of the Asset Purchase Agreement, or (iii) any transaction or class of transaction not specifically referred to in this Agreement, without our consent and unless and until the terms and compensation for such accounts or transactions have been agreed upon in writing between you and us.
3. Introducing Firm shall :
(a) at or before the opening of Customer accounts, at our request, provide us with your completed new account form and any other information or documentation that we may request related to the opening of such account, and inform us of any changes regarding such information;
secure from Customers all agreements, papers and documents reasonably required or requested by us to carry out any of our clearing functions, extend credit to Customers or engage in the borrowing or lending of Customers' securities or other transactions which we may effect, on forms provided by us. We may, without relieving you of your duties hereunder, secure such agreements and documents from Customers directly;
(c) pay then-applicable exchange fees and clearing charges for securities transactions we clear hereunder;
(d) be solely and exclusively responsible for compliance with all applicable Customer suitability, "know your customer" and similar requirements created or imposed under New York Stock Exchange ("NYSE") Rule 405 and other applicable laws, rules and regulations; establish, review, approve and maintain new account files of Customers; establish procedures to supervise your representatives, agents and employees to effect the foregoing; and maintain books and records reasonably reflecting your activities and required under applicable regulatory and self-regulatory laws, rules and regulations as they pertain to you and your activities;
(e) agree that additional rules and regulations that pertain to broker-dealers may apply to this Agreement, and upon our request to adhere to such applicable rules and regulations;
(f) notify Customers in writing of our respective Customer-related responsibilities as required by NYSE Rule 382 and other NYSE Rules;
(g) secure and maintain licenses, registrations, permits, approvals and agreements required under applicable laws, rules and regulations for you or your representatives, agents, and employees to effect any transactions for, or render services to, or for Customers;
(h) secure from your representatives, agents and employees their express written agreement to comply in all respects with "insider trading," anti-manipulation and employee securities transactions policies, procedures and rules that are established and maintained by us;
(i) obtain all necessary authorizations from Customers, including, without limitation, authorization to hypothecate Customer securities and authorizations pursuant to Department of Labor Prohibited Transaction Exemption 79-1 and SEC Rule 11a2-2(T) under the Securities Exchange Act, to permit you and us to act as brokers, exercise and perform our respective rights, duties and obligations hereunder and retain commissions for effecting brokerage transactions;
(j) be solely and exclusively responsible for any investment advice given by you to Customers, and securing all authorizations and agreements necessary to render investment advice or exercise discretionary authority;
(k) direct Customers to make payments of money and deliver securities to us and, if such payments or deliveries are made to you to promptly pay such money or deliver such securities to us within the meaning of SEC or CFTC (to the extent applicable) financial responsibility rules;
(l) accept or reject orders from Customers; provided, however, that we may in our sole and absolute discretion, refuse to execute and clear any transaction introduced by you to us;
(m) accurately transmit orders to us within a time period to be mutually determined by the parties;
(n) negotiate commission charges with Customers; provided, however, in no event shall we be entitled to less than amounts to be paid to us hereunder;
(o) respond to Customer inquiries or complaints and promptly notify us of inquiries or complaints directed to or made against you or us;
(p) be solely and exclusively responsible for payment and or delivery of "when issued" transactions in Customers accounts;
(q) obtain advance written approval from us as to an account for a Customer who comes under any prohibition contained in NYSE Rule 407;
(r) furnish us copies of FOCUS Reports, financial statements for the current fiscal year, the executed Forms X-17a5 (Parts I and IIA) filed with the SEC, any amendments to your SEC Form BD, and any other regulatory or financial reports Clearing Firm may from time to time require, such reports to be provided to us at the time you file such reports with your primary examining authority; and notify us at least ten (10) days in advance of withdrawals that will reduce your net capital below 150% of your regulatory requirement;
(s) prepare, submit, and maintain copies of all reports, records and regulatory filings required of you by any entity that regulates you including, but not limited to, copies of all account agreements and similar documentation obtained pursuant to paragraph 3(e) of this Agreement and any reports and records required to be made or kept under the Currency and Foreign Transactions Reporting Act of 1970, the Money Laundering Act of 1986, the USA PATRIOT Act, and any rules and regulations promulgated pursuant thereto; to the extent that we are required to prepare or submit any reports or records by any entity that regulates us, you shall cooperate in providing us with any information needed in order to prepare such reports or records;
(t) promptly advise us after discovery by you of any alleged errors contained in any Notice sent by us to Customers;
(u) be solely and exclusively responsible for assuring that cash and securities received by us from Customers are genuine and not lost, stolen, forged or counterfeit, and that securities ordered by you to be sold or transferred may be sold or transferred without restriction or that all restrictions on sale or transfer have been complied with;
(v) be solely and exclusively responsible for determining whether any securities held in your or your Customer accounts are restricted or control securities as defined by applicable laws, rules, or regulations, and assuring that orders executed for such securities comply with such laws, rules and regulations;
(w) maintain a Brokers Blanket Bond with the minimum coverage required by the National Association of Securities Dealers, Inc.("NASD");
(x) upon the receipt of the list of reports referenced in Section 1(l) of this Agreement, notify us promptly of those reports that you require to supervise and monitor your Customer accounts; and
(y) give required notice and obtain required approvals of employers in each case in which a customer is an employee of a broker-dealer, a self -regulatory organization, or a financial institution, including but not limited to any accounts that are subject to NYSE Rule 407A.
4. Compensation for Services .
For our services provided pursuant to this Agreement you shall pay us the amount of $7.00 per Customer transaction effected through our ADP system, paid in the manner provided in subparagraph (j) of section 1 of this Agreement.
We agree that you shall be entitled to retain any interest income, Rule 12b-1 fees, rebates, credits or other concessions ("compensation") that were earned by, or allocated or paid to, us with respect to any credit or debit balance in Customer accounts after the effective date of this Agreement. All other compensation earned by, or paid or allocated to, any third party with respect to any Customer account shall continue to be earned by, or paid or allocated to, such third parties. We shall retain all compensation with respect to any accounts that are not part of the Brokerage Business.
5. Representations and Warranties .
Each party represents and warrants to the other party that: (i) it, and each of its officers, directors, and employees engaged in the securities or investment business, is duly registered, qualified, licensed and/or a member in good standing with or of the SEC, NASD, NYSE and the National Futures Association ("NFA"), and each state and/or self-regulatory organization where or on which it conducts business; (ii) it is, and at all times during the term of this Agreement will be, in compliance with applicable net capital, financial responsibility and customer protections rules of the SEC, the CFTC, the NASD, the NYSE and the NFA; (iii) it has all the requisite authority in conformity with all applicable laws and regulations to enter into this Agreement and to engage in the activities and transactions contemplated hereby; and (iv) it shall keep confidential, except as may be required by law, any nonpublic information it may acquire as a result of this Agreement regarding the business, affairs and customers of the other party, which representation and warranty shall survive the life of this Agreement.
6. Termination; Events of Default .
(a) This Agreement shall terminate (i) upon the earlier of (yy) the completion of the Conversion as provided in the Conversion Agreement or (zz) May 31, 2003, or (ii) by mutual written consent of the parties. Notwithstanding the foregoing, this Agreement also shall terminate with respect to Customer accounts as such accounts are Converted as provided in the Conversion Agreement, and we thereafter shall no longer be required to provide any services hereunder with respect to such Converted accounts. We further agree that Customers whose accounts are cleared pursuant to this Agreement shall not be charged any "exit" or termination fees at the time of their Conversion.
(b) Notwithstanding any provision in this Agreement, the following events or occurrences shall constitute an Event of Default under this Agreement:
(i) either the Clearing Firm or the Introducing Firm shall fail to perform or observe any term, covenant or condition to be performed or observed by it hereunder and such failure shall continue to be unremedied for a period of 30 days (10 days in the case of a failure of the Introducing Firm to maintain net capital ratios as required by applicable rules and regulations) after written notice from the non-defaulting party to the defaulting party specifying the failure and demanding that the same be remedied; or
(ii) any representation or warranty made by either the Clearing Firm or the Introducing Firm herein shall prove to be incorrect at any time in any material respect; or
(iii) a receiver, liquidator or trustee of either the Clearing Firm or the Introducing Firm, or of its property, held by either party is appointed by court order and such order remains in effect for more than 30 days; or either the Clearing Firm or the Introducing Firm is adjudicated bankrupt or insolvent; or any of its property is sequestered by court order and such order remains in effect for more than 30 days; or a petition is filed against either the Clearing Firm or the Introducing Firm under any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution or liquidation law of any jurisdiction, whether now or hereafter in effect, and is not dismissed within 30 days after such filing; or
(iv) either the Clearing Firm or the Introducing Firm files a petition in voluntary bankruptcy or seeking relief under any provision of any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution or liquidation law of any jurisdiction, whether now or hereafter in effect, or consents to the filing of any petition against it under any such law; or
(v) either the Clearing Firm or the Introducing Firm makes an assignment for the benefit of its creditors, or admits in writing its inability to pay its debts generally as they become due, or consents to the appointment of a receiver, trustee or liquidator of either the Clearing Firm or the Introducing Firm, or of any property held by either party.
(c) Upon the occurrence of any such Event of Default, the non-defaulting party may, at its option, by notice to the defaulting party declare that this Agreement shall be thereby terminated and such termination shall be effective as of the date such notice has been sent or communicated to the defaulting party.
7. Indemnification; Other Terms .
(a) If any claim, action or proceeding ("action") is made by us or brought against us arising out of or related to any transaction we have cleared hereunder or any other action taken or not taken by us under this Agreement, then, except for our willful misconduct or fraud, or gross negligence, you shall indemnify and hold us fully harmless from any and all liabilities, loss, damage and expenses, including reasonable attorneys' fees (collectively "Costs"), incurred or sustained by us resulting from or arising out of any action. If you incur any Costs resulting from or arising out of any action, then, except for our willful misconduct or fraud, or gross negligence, you hereby waive any right to contribution or indemnification from us. Without limiting the foregoing, you agree that you shall hold us fully harmless for any Costs incurred by us arising out of: (i) your violation of any law, rule or regulation of any federal, state or foreign regulatory or self-regulatory authority, including but not limited to the SEC, CFTC, NASD, NYSE and NFA; (ii) your failure to comply with any suitability, "know your customer," identity verification or customer protection requirement to which you are subject, or your obligations as set forth in Section 3 of this Agreement; (iii) the failure of any introduced account to make timely payment for the securities purchased by it or timely and good delivery of securities sold for it, or timely compliance by it with margin or margin maintenance calls, whether or not any margin extensions have been granted by us Firm pursuant to your request; (iv) the nonpayment or return to us unpaid of any check or draft given to us by any introduced accounts; (v) the payment and delivery of all "when issued" or "when distributed" transactions which we may accept, forward or execute for introduced accounts; and (vi) any transaction or action taken or refrained from being taken by us based on instructions or Notices given to us that were fraudulent or not properly authorized.
(b) For extensions of credit by us to Customers in margin accounts or otherwise, we shall charge interest based upon the average broker's call money rate of a group of banks selected by us (our "broker's call rate" calculated with respect to Customer accounts in a manner substantially similar to that in effect as of December 31, 2002) increased pursuant to our normal rate chart.
(c) If a Customer fails to make full and timely payment or delivery for securities purchased or sold, respectively, you shall pay to us the amount of any charges sustained or incurred by us. If use of our funds is involved with respect to computing part of all of such Cost, such use of funds shall be calculated at our broker's call rate for each day or part thereof of such late payment or delivery.
(d) You shall complete, or cause to be completed with all required reviews and approvals, any "Option Compliance" copy of the "Option Approval Form and Agreement." Copies of the Option Approval Form shall be sent to the Customer for signature(s) on a timely basis. You agree that the Customer signed copy will be in the Clearing Firm main office prior to an initial transaction. If documentation is not timely filed with Clearing Firm, you understand and agree that in accordance with regulatory requirements, Clearing Firm shall be required to freeze said Customer account and only accept "liquidating" transactions in options thereafter. It also is understood that if your responsible employees or managers do not qualify for "Registered Options Principal" ("ROP") status under NYSE Rules, we agree, where necessary, to approve option applications on your behalf by an eligible ROP. You agree to indemnify us for any Costs arising out of such approval.
(e) We may, in our sole and absolute discretion, reject any proposed Customer or transaction and terminate any Customer account.
(f) ANY DISPUTE OR CLAIM ARISING OUT OF THIS AGREEMENT SHALL BE SUBMITTED TO ARBITRATION UNDER THE RULES OF THE ARBITRATION COMMITTEE OF THE NYSE, UNLESS THE TRANSACTION WHICH GAVE RISE TO SUCH DISPUTE OR CONTROVERSY WAS EFFECTED ON ANOTHER EXCHANGE OR MARKET WHICH PROVIDES ARBITRATION FACILITIES, IN WHICH CASE IT SHALL BE SETTLED BY ARBITRATION UNDER THE ARBITRATION RULES OF SUCH FACILITIES. THE DECISION OF THE ARBITRATORS SHALL BE BINDING ON THE PARTIES AND ANY JUDGMENT UPON ANY AWARD RENDERED MAY BE ENTERED, AND NEITHER PARTY SHALL OPPOSE SUCH ENTRY, IN A COURT HAVING JURISDICTION HEREOF THAT IS LOCATED IN THE STATE OF NEW YORK. For these purposes and all other purposes under this Agreement, you hereby consent to the jurisdiction of the courts of the State of New York, the federal courts sitting in the State of New York, and the NYSE .
(g) This Agreement shall be governed and construed in accordance with the laws of the State of New York.
(h) Upon your giving an order to us, you shall be deemed to warrant and represent that:
(i) such order is lawful, in compliance with all applicable laws, rules and regulations and within the scope of the authority given to you by your Customer,
(ii) no restrictions or impediments exist with respect to such order, and
(iii) sale orders are for fully registered securities that be sold without restriction. If the securities subject to an order are restricted under the SEC Rule 144 or any other restriction, you shall advise us in advance and be deemed to warrant, represent and agree when placing such order that all necessary agreements, documents and papers have been or will be duly secured and filed by you as required by applicable law to permit such transaction.
(i) Each of us shall make available to the other all appropriate data in its possession necessary for the performance of our respective duties hereunder. All such data shall be kept confidential and shall not be disclosed in any way to any person not employed by us or not an officer, director or member of either of us.
(j) Each of us respectively warrants and represents to the other that there is no contract, agreement or understanding which would prevent such party from entering into or performing and observing the terms of this Agreement and each party further warrants and represents that it is duly registered, licensed or otherwise permitted under the law to enter into and perform all the terms and conditions of this Agreement. Unless approved in writing by us, you warrant and agree that we are your sole clearing agent and that you will maintain no other clearing arrangements during the term of this Agreement. Each party agrees to immediately notify the other of any change in the foregoing.
(k) In the event of a conflict in regulatory requirements, the rules of the NYSE shall take precedence.
(l) In addition to SIPC coverage of $500,000 all introduced Customer accounts shall be covered by excess loss coverage provided to Clearing Firm by Radian Asset Assurance.
(m) The indemnification provisions in this Agreement shall remain operative and in full force and effect, regardless of the termination of this Agreement, and shall survive any such termination.
We shall not be liable for any loss caused, directly or indirectly, by government restrictions, exchange or market ruling, suspension of trading, war, acts of terrorism, strikes or other conditions beyond our control. In the event that any communications network or computer system used by us, whether or not owned by us, is rendered inoperable, we shall not be liable to you or your Customers for any loss, liability, claim, damage or expense resulting, either directly or indirectly, therefrom ; provided, however, that we shall use all commercially reasonable efforts to provide such services as reconstituted as quickly as reasonably possible thereafter.
(o) You and we agree that we will reasonably cooperate with each other to identify and resolve in a timely manner any operational, systems or regulatory issues or problems that we may encounter in the course of our providing the services specified in this Agreement, and as necessary agree to any changes or modifications in those services as may reasonably be required by us.
This Agreement sets forth the complete agreement between the parties and any modification or termination of any terms of this clearing agreement must be in writing signed by the parties hereto. If the foregoing correctly sets forth our agreement, kindly sign this letter where provided and return it to us. We will thereupon forward one original thereof to the NYSE for its approval.
This Agreement shall take effect upon approval by the New York Stock Exchange pursuant to its Rule 382.
CIBC WORLD MARKETS CORP.
425 Lexington Avenue
New York, NY 10017
By: "Kathryn A. Casparian
Name:Kathyrn A. Casparian
Title: Managing Director
AGREED AND ACCEPTED:
Fahnestock & Co., Inc.
By: "A.G. Lowenthal"
Name: A.G. Lowenthal
Title: Chairman
Date:
Exhibit 2.2
PURCHASE AGREEMENT
BY AND AMONG
FAHNESTOCK VINER HOLDINGS INC.,
FAHNESTOCK & CO. INC.,
CIBC WORLD MARKETS CORP.
AND
CANADIAN IMPERIAL BANK OF COMMERCE
DATED AS OF JANUARY 2, 2003
TABLE OF CONTENTS Page ARTICLE I DEFINITIONS 1.01 Certain Definitions.......................................................................1 1.02 Certain Terms............................................................................14 ARTICLE II PURCHASE AND SALE OF ASSETS AND EQUITY INTERESTS 2.01 Assets to Be Sold........................................................................14 2.02 Equity Interests to Be Sold..............................................................19 2.03 Closings.................................................................................20 2.04 Certain Invesments.......................................................................20 2.05 Deliveries by the Parties................................................................20 2.06 Assumed Liabilities; Excluded Liabilities................................................21 2.07 Excluded Assets..........................................................................22 2.08 Consent of Third Parties.................................................................22 2.09 Post-Closing Adjsument...................................................................21 ARTICLE III RELATED MATTERS 3.01 [Reserved]...............................................................................23 3.02 Employees; Employee Benefits.............................................................23 3.03 Tax Matters..............................................................................30 3.04 Mail Received After Closings.............................................................35 3.05 Books and Records........................................................................35 3.06 Accounts Receivable......................................................................36 3.07 Schedules................................................................................36 3.08 Certain Information......................................................................36 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLER 4.01 Organization of Seller Subsidiaries; Authority of Seller Entities........................36 4.02 Capital Structure........................................................................37 4.03 Title to Equity Interests................................................................38 4.04 No Violation; Consents and Approvals.....................................................38 4.05 Financial Statements.....................................................................39 4.06 Absence of Undisclosed Liabilities.......................................................40 4.07 Absence of Certain Changes or Events.....................................................40 4.08 Title to Assets..........................................................................40 4.09 Intellectual Property....................................................................41 4.10 Litigation...............................................................................43 4.11 Employees; Employee Benefits.............................................................44 4.12 Labor Matters............................................................................44 4.13 Certain Contracts and Arrangements.......................................................45 4.14 Compliance with Laws; Licenses...........................................................48 4.15 Brokers..................................................................................50 4.16 Assets Necessary to Business.............................................................50 4.17 Taxes....................................................................................50 4.18 Disclosure...............................................................................51 4.19 Transferred Accounts.....................................................................51 4.20 Transferred Account Information..........................................................52 4.21 Government Regulation....................................................................52 4.22 Registered Funds; Sub-Advised Registered Funds; Non-Registered Funds.....................55 4.23 Affiliate Transactions...................................................................58 4.24 Clients, Assets Under Management.........................................................58 4.25 Insurance................................................................................59 4.26 Investments..............................................................................59 4.27 No "Clawback" Provisions.................................................................60 4.28 No Co-Investments........................................................................60 4.29 Liquidated Affiliates....................................................................60 ARTICLE V REPRESENTATIONS AND WARRANTIES OF BUYER PARENT AND BUYER 5.01 Organization; Authority..................................................................60 5.02 No Violation; Consents and Approvals.....................................................61 5.03 Litigation...............................................................................61 5.04 Brokers..................................................................................61 5.05 Commission Filings.......................................................................61 5.06 Financial Statements.....................................................................62 5.07 Capitalization...........................................................................62 5.08 Absence of Undisclosed Liabilities.......................................................62 5.09 Non-Contravention........................................................................62 5.10 Disclosure...............................................................................62 ARTICLE VI COVENANTS OF THE PARTIES 6.01 Conduct of the Asset Management Business.................................................63 6.02 Access to Information; Confidentiality...................................................66 6.03 Reasonable Best Efforts..................................................................66 6.04 Consents.................................................................................67 6.05 Regulatory Matters.......................................................................67 6.06 Discharge of Liens; Payment of Certain Obligations.......................................69 6.07 Public Announcements.....................................................................69 6.08 Tax Information Reporting................................................................69 6.09 Pending Tax Claims.......................................................................69 6.10 Litigation Cooperation...................................................................70 6.11 Seller Officer's Certificate.............................................................70 6.12 Client Consents and Approvals............................................................71 6.13 Failure to Consummate....................................................................74 6.14 Investment Company Act Matters...........................................................74 6.15 Certain Expenses.........................................................................74 6.16 Certain Actions..........................................................................74 6.17 Transition Services......................................................................75 6.18 Payments to Brokers......................................................................75 6.19 Consents, Indemnification................................................................75 6.20 OMEGA Brokers............................................................................75 ARTICLE VII CONDITIONS TO OBLIGATIONS OF SELLER 7.01 Conditions...............................................................................76 ARTICLE VIII CONDITIONS TO OBLIGATIONS OF BUYER 8.01 Conditions...............................................................................77 ARTICLE IX TERMINATION, AMENDMENT AND WAIVER 9.01 Termination..............................................................................78 9.02 Procedure and Effect of Termination......................................................78 9.03 Other Remedies...........................................................................78 9.04 Amendment, Modification and Waiver.......................................................78 ARTICLE X FEES AND EXPENSES: SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION 10.01 Fees and Expenses........................................................................79 10.02 Survival of Representations..............................................................79 10.03 Seller's Agreement to Indemnify..........................................................79 10.04 Seller's Limitation of Liability.........................................................80 10.05 Buyer Parent's and Buyer's Agreement to Indemnify........................................80 10.06 Buyer Parent's and Buyer's Limitation of Liability.......................................81 10.07 Conditions of Indemnification............................................................81 10.08 Cooperation..............................................................................82 10.09 Other Indemnification Provisions.........................................................82 ARTICLE XI MISCELLANEOUS 11.01 Further Assurances.......................................................................82 11.02 Notices..................................................................................82 11.03 Bulk Sales Laws..........................................................................84 11.04 Entire Agreement.........................................................................84 11.05 Severability.............................................................................84 11.06 Binding Effect; Assignment...............................................................85 11.07 No Third-Party Beneficiaries.............................................................85 11.08 Counterparts.............................................................................85 11.09 Headings.................................................................................85 11.10 Governing Law; Jurisdiction..............................................................85 11.11 Waiver of Jury Trial.....................................................................86 11.12 Specific Performance.....................................................................86 SCHEDULES Schedule I ............................Assets and Property to be Acquired at the First Closing Schedule II ...........................Assets and Property to be Acquired at the Second Closing Schedule III ............................Assets and Property to be Acquired at the Third Closing Schedule IV ..............................................................Purchased Investments Schedule V .................................................................Seller Investments EXHIBITS Non-Solicitation Agreement..........................................................................A |
This PURCHASE AGREEMENT, dated as of January 2, 2003 (the "Agreement"), is by and among Fahnestock Viner Holdings Inc., an Ontario corporation ("Buyer Parent"), Fahnestock & Co. Inc., a New York corporation and a wholly-owned subsidiary of Buyer Parent ("Buyer"), Canadian Imperial Bank of Commerce (the "Seller Parent") and CIBC World Markets Corp. ("Company" and, together with Seller Parent, the "Seller"). Capitalized terms used herein but not defined shall have the meanings set forth in the Brokerage Asset Purchase Agreement.
WHEREAS, Buyer Parent, Buyer and Seller are parties to that certain Asset Purchase Agreement, dated as of December 9, 2002 (the "Brokerage Asset Purchase Agreement"), which agreement contemplates the Brokerage Acquisition;
WHEREAS, Schedule I to the Brokerage Asset Purchase Agreement
contemplates the Asset
Management Acquisition;
WHEREAS, Buyer desires to purchase from Seller, and Seller desires to sell to Buyer, the Asset Management Business pursuant to the terms of this Agreement (the "Asset Management Acquisition"); and
WHEREAS, contemporaneously with the execution and delivery of this Agreement, Buyer Parent, Buyer and Seller are entering into a Non-Solicitation Agreement.
NOW, THEREFORE, in consideration of the foregoing and of the representations, warranties, covenants, agreements and conditions contained herein, and intending to be legally bound hereby, the parties agree as follows:
1.01 Certain Definitions.
"AA Transfer Percentage" means the quotient of (a) such portion of
the assets under management (measured as of the Brokerage Closing) of the
Asia Tiger Fund and India Fund which are transferred to Buyer pursuant to
Section 6.12 on the Final Closing Date divided by (b) the aggregate assets
under management of such funds as of the Brokerage Closing.
"Accrued Fees" has the meaning set forth in Section 2.01(c).
"Acquired Property" has the meaning set forth in Section 2.01(c)(v).
"Advisers Act" means the Investment Advisers Act of 1940, as amended.
"Advisory Agreement" means, with respect to any Person, each Contract relating to its rendering of investment management or investment advisory services, including any sub-advisory services, or similar services.
"Affiliate Agreement" means any Contract (including, without limitation, any Advisory Agreement) or other commitment or transaction between any Seller Entity and (a) any other Seller Entity or Fund, (b) any Affiliate of any Seller Entity or any Fund or (c) any officer, director, supervisor, member, partner or employee of any Seller Entity, Fund, any Affiliate of any Seller Entity or any Fund or any immediate family member of any of them.
"Affiliate" means, with respect to a specified Person, a Person that directly or indirectly, through one or more intermediaries, controls, or is controlled by or is under common control with, the Person specified.
"Agreement" has the meaning set forth in the Preamble.
"Ancillary Agreements" means the Non-Solicitation Agreement.
"Applicable Closing" means the First Closing, Second Closing or Final Closing, as the case may be, pursuant to Section 2.03, and the related sales, conveyances, assignments and transfers and assumptions in connection therewith.
"Applicable Closing Date" means the First Closing Date, Second Closing Date or Final Closing Date, as the case may be, pursuant to Section 2.01.
"Applicable Laws" has the meaning set forth in Section 4.14(a).
"Asset Management Acquisition" has the meaning set forth in the recitals.
"Asset Management Assets" has the meaning set forth in Section 2.01(c).
"Asset Management Business" means the asset management, investment advisory, financial advisory, wrap, asset allocation and related businesses and activities of the Company and its Subsidiaries and Affiliates generally known as the "Asset Management Division" of the Company (including the five units set forth on Schedule I to the Brokerage Asset Purchase Agreement) as conducted from and after November 30, 2002, including, for the avoidance of doubt, the OMEGA Business and Wrap Business.
"Assumed Contracts" has the meaning set forth in Section 2.06(a).
"Assumed Liabilities" has the meaning set forth in Section 2.06(b).
"Authorization" means any approval, consent, declaration, license, order, permit, registration, waiver, or other authorization issued, granted, given, or otherwise made available by or under the authority of any Governmental Entity or pursuant to any Law of any Governmental Entity.
"Bill of Sale" has the meaning set forth in Section 2.01(d).
"Books and Records" means all books and records, all books of account, records, files and invoices, including all customer files, customer account records, production data, equipment records, inventory records, sales and promotional data, advertising materials, customer lists, cost and pricing information, supplies lists, business plans, reference catalogs, tax records, and tax returns and any other similar records and data (including all computerized records and other computerized storage media) relating to the Asset Management Business.
"Brokerage Asset Purchase Agreement" has the meaning set forth in the recitals.
"Brokerage Closing" means the date of the closing of the transactions contemplated by the Brokerage Asset Purchase Agreement.
"Business Employees" has the meaning set forth in Section 3.02(a).
"Buyer" has the meaning set forth in the Preamble.
"Buyer Claims" has the meaning set forth in Section 10.05.
"Buyer Disclosure Schedule" means the document delivered by Buyer to Seller simultaneously with the execution hereof containing the information required to be included therein pursuant to this Agreement.
"Buyer Indemnitees" has the meaning set forth in Section 10.03.
"Buyer Parent" has the meaning set forth in the Preamble.
"Buyer Parent Commission Documents" means, with respect to Buyer Parent, (i) its annual reports on Form 10-K for its fiscal years ended December 31, 1999, 2000 and 2001, (ii) its quarterly reports on Form 10-Q for its fiscal quarters ended after December 31, 2001, (iii) any Form 8-Ks filed in the past fiscal year and (iv) its proxy or information statements relating to meetings of, or actions taken without a meeting by, the shareholders of Buyer Parent held since December 31, 2001.
"Buyer Parent Financial Statements" has the meaning set forth in
Section 5.06.
"Buyer Related Instruments" has the meaning set forth in Section 5.01.
"CE Act" means the Commodity Exchange Act, as amended.
"Claims" has the meaning set forth in Section 10.07.
"Client" shall mean any Person to whom any of the Seller Entities provides investment advisory, investment management, financial advisory, wrap, asset allocation or administrative and related services in connection with the Asset Management Business, including, without limitation, any Fund.
"COBRA Requirements" has the meaning set forth in Section 3.02(g).
"Code" means the United States Internal Revenue Code of 1986, as amended, and the Treasury rules and regulations thereunder.
"Commission" means the United States Securities and Exchange Commission.
"Company" has the meaning set forth in the Preamble or, as the context may require, the Company and its Subsidiaries and Affiliates.
"Confidentiality Agreement" has the meaning set forth in Section 6.02(c).
"Consent" means any and all consents (including negative consents
to be obtained or made by any Person), approvals, authorizations, waivers,
permits, notices, licenses, grants, agreements, exemptions or orders of, or
registration, declaration or filing with, any Person, including without
limitation, any Governmental Entity, that are necessary in connection with
(i) the execution and delivery by the Seller Entities and Buyer of this
Agreement, the Instruments of Assignment and any other agreement
contemplated by this Agreement to which it is or is specified to be a party,
(ii) the consummation by the Seller Entities, the Funds and Buyer of the
transactions contemplated hereby or (iii) the conduct of the Asset
Management Business.
"Contracts" has the meaning set forth in Section 4.13(a).
"Control" (including the terms "controlled by" and "under common control with") means the possession, directly or indirectly, of the power to direct or cause the direction of the management policies of a Person, whether through the ownership of voting securities, by contract, as trustee or executor, or otherwise.
"Controlled Entities" means issuers of the Equity Interests that are Affiliates of Seller prior to the Final Closing.
"Customer Agreement" has the meaning set forth in Section 4.19(d).
"Damages" has the meaning set forth in Section 10.03.
"Deemed Assets" means an amount equal to the aggregate amount of assets under management of all Clients (and all accounts of all such Clients) of the Asset Management Business as of the Brokerage Closing; provided that, in determining the amount of assets under management of any account of any Client not transferred to Buyer by June 30, 2003, the amount of such assets under management shall equal the amount of assets under management of such account as of the Brokerage Closing and not on any later date.
"Deferred Compensation Plan" has the meaning set forth in Section 3.02(f)(i).
"Distribution Agreements" shall mean all agreements or arrangements for the sale or distribution of shares of any Registered Fund pursuant to Rule 12b-1 of the Investment Company Act.
"Eligible Client Account" means, as of a specified date, each account of any Client other than an Excluded Account, Eligible OMEGA Account or Eligible Wrap Account.
"Eligible OMEGA Account" means, as of a specified date, each account of any Client under the OMEGA wrap program other than the Excluded OMEGA Accounts.
"Eligible Wrap Accounts" means, as of a specified date, each Wrap Account or Separate Account other than an Excluded Wrap Account or Eligible OMEGA Account.
"Environmental Laws" means any applicable United States federal, state or local law or regulation relating to the pollution or protection of the environment.
"Equity Interests" means each of the equity interests set forth in
Section 4.02(a) of the Seller Disclosure Schedule.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended and the rules and regulations promulgated thereunder.
"ERISA Affiliate" is any trade or business, whether or not incorporated, that together with Seller would be deemed a "single employer" within the meaning of Section 4001(b) of ERISA.
"ERISA Client" has the meaning set forth in Section 4.14(e).
"Exchange Act" means the United States Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. "Excluded Account" means, as of a specified date, each account of any Client that (i) is an account with respect to which such Client has not affirmatively consented to the assignment (or transfer) of such account pursuant to Section 6.12 (or with respect to which Buyer and Seller have not otherwise mutually agreed that consent has been given by such Client in compliance with Applicable Law and any applicable agreement) or (ii) is subject to any claim or existing litigation at the time of transfer. "Excluded Assets" has the meaning set forth in Section 2.07.
"Excluded Liabilities" has the meaning set forth in Section 2.06(b).
"Excluded OMEGA Account" means, as of a specified date, each account of any Client under the OMEGA wrap programs that (i) is an account with respect to which such Client has not affirmatively consented to the assignment (or transfer) of such account pursuant to Section 6.12 (or with respect to which Buyer and Seller have not otherwise mutually agreed that consent has been given by such Client in compliance with Applicable Law and any applicable agreement) or (ii) is subject to any claim or existing litigation at the time of transfer.
"Excluded Wrap Account" means, as of a specified date, each Wrap Account or Separate Account of any Client (other than any account of such Client under the OMEGA wrap programs) that (i) is an account with respect to which such Client has not affirmatively consented to the assignment (or transfer) of such account pursuant to Section 6.12 (or with respect to which Buyer and Seller have not otherwise mutually agreed that consent has been given by such Client in compliance with Applicable Law and any applicable agreement) or (ii) is subject to any claim or existing litigation at the time of transfer. "Filings" has the meaning set forth in Section 4.21(a).
"Final Closing" has the meaning set forth in Section 2.03(c).
"Final Closing Assets" has the meaning set forth in Section 2.01(c).
"Final Closing Date" has the meaning set forth in Section 2.03(c).
"Financial Statements" has the meaning set forth in Section 4.05(a).
"First Closing" has the meaning set forth in Section 2.03(a).
"First Closing Date" has the meaning set forth in Section 2.03(a).
"Follow-Up Notice" has the meaning set forth in Section 6.12(b).
"Funds" means, collectively, Registered Funds, Sub-Advised Registered Funds and Non-Registered Funds.
"Fund Financial Statements" means the audited financial statements of each Fund for the two most recently completed fiscal years, together with reports on such year-end statements by each such Fund's independent public accountants, including, in each case, for each investment portfolio thereof, a statement of net assets or statement of assets and liabilities and schedule of investments, a statement of operations and a statement of changes in net assets.
"Fund Reports" has the meaning set forth in Section 4.22(i).
"GAAP" means generally accepted accounting principles in the United States.
"Governmental Entity" means any court, administrative agency or commission, government, SRO, federal, state, provincial, municipal, local or other governmental entity, authority or instrumentality, whether domestic or foreign, or any court, tribunal or arbitrator.
"Group Health Plan" has the meaning set forth in Section 3.02(9).
"Hire Date" means (a) March 31, 2003, with respect to the Business Employees who perform services primarily for the Wrap Business and (b) the Final Closing Date with respect to all other Business Employees, or in each case, such earlier date as Buyer and Seller may mutually agree with respect to one or more specified Business Employees.
"HSR Act" means the United States Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.
"Inactive Employee" has the meaning set forth in Section 3.02(a).
"Indebtedness" means any loan agreements, indentures, letters of credit (including related letter of credit applications and reimbursement obligations), mortgages, security agreements, pledge agreements, deeds of trust, debt securities, bonds, notes, guarantees, capital leases, payments in respect of the deferred purchase price of property, instruments and other contracts relating to the borrowing of money or obtaining of or extension of credit, whether short-term or long-term, including accrued and unpaid interest thereon, with or from any Person.
"Initial Notice" has the meaning set forth in Section 6.12(b).
"Instruments of Assignment" has the meaning set forth in Section 2.01(d).
"Intellectual Property" means, collectively, Internet domain names, mynetassets intranet site; patents and industrial designs (including any continuations, divisionals, continuations-in-part, renewals, reissues, and applications for any of the foregoing); Trademarks; Software; copyrights (including any registrations and applications for any of the foregoing); and Trade Secrets, in each case, used in or necessary for the conduct of the Asset Management Business.
"Investment Company Act" means the Investment Company Act of 1940, as amended.
"Investment Company Board" means the board of directors or trustees (or Persons performing similar functions) of a Fund.
"Investments" has the meaning set forth in Section 4.26.
"Labor Laws" means any applicable United States federal, state or local law or regulation relating to employment and employment practices.
"Law" or "Laws" means any and all laws, statutes, ordinances, rules, regulations, orders, judgments and decrees of any and all Governmental Entities.
"Legal Proceeding" means any action, claim, complaint, lawsuit, litigation, demand, suit, inquiry, hearing, investigation, indictment, information, notice of a violation, arbitration, appeal or other dispute or legal proceeding, whether civil, criminal, administrative or otherwise.
"License Agreements" has the meaning set forth in Section 4.09(b).
"Liens" means any and all liens, encumbrances, security interests, mortgages, pledges, claims, options, charges, easements, limitations, commitments, encroachments, option agreements, voting trusts or restrictions of any kind whatsoever.
"Liquidated Affiliate" has the meaning set forth in Section 4.29.
"Litigation" has the meaning set forth in Section 4.10.
"Material Adverse Effect" means any condition, event, circumstance, change or effect that, individually or in the aggregate, has had or could reasonably be expected to have a material adverse effect on the business, assets, properties, results of operation, condition (financial or otherwise) or prospects of the Asset Management Business or the Asset Management Assets.
"NASD" means the NASD Regulation, Inc.
"Net Profits or Net Loss" means the net profit or net loss, as the case may be, of the Asset Management Business (including all business units thereof, whether or not any such business units have been transferred to Buyer during the period in question) for the period from January 1, 2003 through and including the Final Closing Date, calculated in a manner consistent with the Financial Statements and past practices, provided that in determining such net profit or net loss (a) revenues shall include revenue shares payable by the Buyer consistent in nature and amount with past practice, (b) only costs, expenses and other charges incurred by the Asset Management Business consistent in nature and amount with past practice shall be taken into account (including accruals for employee bonuses in respect of 2003 for the period ending on the Final Closing Date), (c) any costs, expenses and other charges shall not include any costs, expenses or charges (i) relating to the negotiation or consummation of the transactions contemplated hereby or by the Brokerage Asset Purchase Agreement or any costs associated with obtaining any Consents in connection herewith or therewith or (ii) in respect of any intercompany charges or allocations by Seller or its Affiliates and (d) the costs, expenses and other charges shall include an amount equal to $100,000 per month for services provided to the Asset Management Business by Seller and its Affiliates.
"NFA" means the National Futures Association.
"Non-Registered Fund" means any pooled investment vehicle that is not required to be registered under the Investment Company Act for which any Seller Entity acts as investment adviser, investment sub-adviser, general partner, managing member, manager or sponsor.
"Non-Solicitation Agreement" means the non-solicitation agreement between Buyer and Seller in respect of the Asset Management Business, dated as of the date hereof, in the form attached as hereto as Exhibit A.
"NYSE" means the New York Stock Exchange, Inc.
"Off-Balance Sheet Transaction" has the meaning set forth in Section 4.05(d).
"Offering Materials" means all the placement memoranda, prospectuses, offering memoranda and disclosure documents, all supplements thereto, and the other written selling materials, brochures and other information used or distributed in connection with the offer or sale of equity interests in any of the Funds.
"OMEGA Assets" has the meaning set forth in Section 2.01(a).
"OMEGA Business" means the financial advisory, wrap, asset allocation and related businesses and activities of the Company and its Subsidiaries and Affiliates in connection with the OMEGA wrap programs as conducted from and after November 30, 2002.
"Order" means any order, writ, judgment, arbitration award, injunction, decree or ruling of or by a Governmental Entity.
"Organizational Documents" means, with respect to a limited partnership, the certificate of limited partnership, limited partnership agreement and subscription agreements with such partnership's partners then in effect; with respect to a limited liability company, the certificate of formation, limited liability company agreement and subscription agreements with such company's members then in effect; and, with respect to a corporation, the articles of incorporation and by-laws of such corporation, in each case, as in effect from time to time, then in effect.
"Permits" means any approval, authorization, certificate, Consent, easement, filing, franchise, license, notice, permit, exchange seats, registration or right of any Governmental Entity or any other Person to which any Person is a party or that is or may be binding upon or inure to the benefit of any Person or its securities, assets or business.
"Permitted Liens" has the meaning set forth in Section 4.08(a).
"Person" means an individual, corporation, partnership, association, trust, limited liability company or other entity or organization, including a government or political subdivision or an agency or instrumentality thereof.
"Post-Final-Closing Period" means, with respect to the Final Closing Assets, any taxable period beginning after the Final Closing Date.
"Post-First-Closing Period" means, with respect to the OMEGA Assets, any taxable period beginning after the First Closing Date.
"Post-Second-Closing Period" means, with respect to the Wrap Assets, any taxable period beginning after the Second Closing Date.
"Pre-Final-Closing Period" means, with respect to the Final Closing Assets, any taxable period or portion thereof ending on or before the Final Closing Date.
"Pre-First-Closing Period" means, with respect to the OMEGA Assets, any taxable period or portion thereof ending on or before the First Closing Date.
"Pre-Second-Closing Period" means, with respect to the Wrap Assets, any taxable period or portion thereof ending on or before the Second Closing Date.
"Purchased Investment" has the meaning set forth in Section 2.04.
"Registered Fund" means any open-end investment company, closed-end investment company, unit investment trust or business development company required to be registered under the relevant provisions of the Investment Company Act.
"Registered Representatives" has the meaning set forth in Section 4.14(b).
"Retained Employee" has the meaning set forth in Section 3.02(i).
"Retained Employee Liabilities" has the meaning set forth in Section 3.02(j).
"Second Closing" has the meaning set forth in Section 2.03(b).
"Second Closing Date" has the meaning set forth in Section 2.03(b).
"Securities Act" means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
"Seller" has the meaning set forth in the Preamble.
"Seller 401(k) Plans" has the meaning set forth in Section 3.02(e).
"Seller Claims" has the meaning set forth in Section 10.03.
"Seller Disclosure Schedule" means the document delivered by Seller to Buyer and Buyer Parent pursuant to Section 3.07 containing the information required to be included therein pursuant to this Agreement.
"Seller Entity" means each of the entities other than the Funds constituting a part of, or transferring any portion of the Asset Management Assets in accordance with Section 2.01 in respect of, the Asset Management Business including Seller and each Seller Subsidiary.
"Seller Equity Plans" has the meaning set forth in Section 3.02(f)(ii).
"Seller Indemnitees" has the meaning set forth in Section 10.05.
"Seller Investments" as the meaning set forth in Section 6.01.
"Seller Parent" has the meaning set forth in the Preamble.
"Seller Related Instruments" has the meaning set forth in Section 4.01(b).
"Seller Subsidiary" means each Person constituting a part of the Asset Management Business so that Buyer and its Affiliates may conduct the Asset Management Business from and after the Final Closing.
"Seller Subsidiary Employee" has the meaning set forth in Section 4.11(c).
"Separate Accounts" means the any accounts of a Client other than the Funds and Wrap Accounts.
"Services Agreements" shall mean all agreements and arrangements for the performance of administrative services, custodial services, transfer agency services, portfolio accounting services, distribution or other shareholder services and other services relating to a Fund or the Asset Management Business.
"Software" means any and all (a) computer programs, including any and all software implementation of algorithms, models and methodologies, whether in source code or object code form, (b) databases and compilations, including any and all data and collections of data, (c) all documentation, including user manuals and training materials, relating to any of the foregoing, and (d) copyrights (including any registrations and applications for any of the foregoing) related to any or all of (a) through (c).
"SRO" means a Self Regulatory Organization registered under the Exchange Act, including the NYSE and NASD.
"Straddle Period" means, with respect to the OMEGA Assets, any taxable period beginning on or before and ending after the First Closing Date, with respect to the Wrap Assets, any taxable period beginning on or before and ending after the Second Closing Date, and, with respect to the Final Closing Assets, any taxable period beginning on or before and ending after the Final Closing Date.
"Sub-Advised Registered Fund" means any Registered Fund for which the Company or any Subsidiary thereof acts as investment sub-adviser as of the date of this Agreement other than a Registered Fund sponsored by any Seller Entity.
"Subsidiary" means any corporation, limited liability company, partnership, association, joint venture or other entity of which any person (either alone or through or together with any other person pursuant to any agreement, arrangement, contract or other commitment) owns, directly or indirectly, 50% or more of the capital stock or other equity interests the holders of which generally are entitled to vote for the election of the board of directors or other governing body of such entity.
"Tax" or "Taxes" means (x) any and all taxes, fees, levies, assessments, deficiencies, duties, tariffs, imposts and other charges or impositions of any kind (together with any and all interest, penalties, additions to tax and additional amounts imposed with respect thereto) imposed by any government or taxing authority, including taxes or other charges on or with respect to income, gross receipts, property, sales, transfer, recordation, bulk transfer, real property transfer and gains, use, license, excise, franchise, employment, social security, unemployment compensation, payroll, premium, withholding, alternative or added minimum, ad valorem or excise tax, or any other tax, custom, duty, governmental fee or other like assessment or charge of any kind whatsoever; (y) any liability for the payment of any amounts described in (x) as a result of being a member of an affiliated, consolidated, combined, unitary or similar group or as a result of transferor or successor liability; and (z) any liability for the payment of any amounts as a result of being a party to any tax sharing agreement or as a result of any express or implied obligation to indemnify any other Person with respect to the payment of any amounts of the type described in clause (x) or (y).
"Tax Claim" has the meaning set forth in Section 3.03(c).
"Tax Indemnity Payments" has the meaning set forth in Section 3.03(b)(iii).
"Tax Return" means any return, report or similar statement required to be filed with respect to any Tax (including any attached schedules), including, without limitation, any information return, claim for refund, amended return or declaration of estimated Tax.
"Trade Secrets" means, collectively, technology, trade secrets and other confidential information, know-how, proprietary processes, formulae, algorithms, models, and methodologies.
"Trademarks" means, collectively, all trademarks, service marks, trade names, Internet domain names, designs, logos, slogans, and general intangibles of like nature used in the Asset Management Business, together with all goodwill, registrations and applications related to the foregoing (including the Oppenheimer name) as set forth under "Trademarks" in Section 1.01(b) of the Seller Disclosure Schedule, other than the CIBC name or any variation thereof.
"Transfer Tax Schedule" has the meaning set forth in Section 3.03.
"Transfer Taxes" means all conveyance, sales, use, excise, value, value added, registration, stamp, franchise, property, transfer, real property transfer, gains, recording registration and similar Taxes, levies, charges, fees, together with any and all interest, penalties, additions to tax and additional amounts imposed with respect thereto.
"Transferred Accounts" means the Transferred OMEGA Accounts, Transferred Wrap Accounts and Transferred Final Accounts.
"Transferred Account Information" means the Transferred OMEGA Account Information, Transferred Wrap Account Information and Transferred Final Account Information.
"Transferred Final Accounts" has the meaning set forth in Section 2.01(c)(i).
"Transferred Final Account Information" has the meaning set forth in
Section 2.01(c)(iii).
"Transferred OMEGA Accounts" has the meaning set forth in Section 2.01(a)(i).
"Transferred OMEGA Account Information" has the meaning set forth in
Section 2.01(a)(iii).
"Transferred Employees" has the meaning set forth in Section 3.02(c).
"Transferred Wrap Accounts" has the meaning set forth in Section 2.01(b)(i).
"Transferred Wrap Account Information" has the meaning set forth in
Section 2.01(b)(iii).
"Undertaking" has the meaning set forth in Section 2.05(a)(i).
"Underwriting Agreements" means principal underwriting agreements with any Registered Fund pursuant to which any Seller Entity or its Affiliate is the principal underwriter.
"WARN Act" means the Worker Adjustment and Retraining Notification Act.
"WARN Obligations" has the meaning set forth in Section 3.02(h).
"Wrap Account" means, with respect to any Client, an account maintained by any Seller Entity on behalf of such Client pursuant to a Wrap Agreement.
"Wrap Agreement" means, with respect to any Person, each Contract relating to "wrap" or similar services which are required to be disclosed on Schedule H to Form ADV, including such Contracts under the "OMEGA", "Strategic Asset Review", "Oppenheimer Investment Advisers", "Portfolio Advisory Services" and "Investment Advisory Services" wrap programs.
"Wrap Assets" has the meaning set forth in Section 2.01(b).
"Wrap Business" means the financial advisory, wrap, separate account, asset allocation and related businesses and activities of the Company and its Subsidiaries and Affiliates as conducted from and after November 30, 2002, other than the OMEGA Business and businesses and activities related to the management of, and provision of advisory services to, Funds.
1.02 Certain Terms.
(a) As used in this Agreement, the terms "affiliate" and "associate" have the respective meanings set forth in Rule 12b-2 of the General Rules and Regulations promulgated under the Exchange Act.
(b) The term "business day" means any day other than a Saturday, Sunday or other day on which the NYSE is not open for trading.
(c) When used in this Agreement, the word "including" shall be deemed to mean "including, without limitation."
(d) As used in this Agreement, the word "person" means an individual, a partnership, a joint venture, a corporation, a trust, an unincorporated organization and a government or any department or agency thereof.
(e) Unless otherwise provided in this Agreement, all references to "dollars" or "$" shall be to U.S. dollars.
(f) Unless otherwise provided, all references to Sections, Articles, Schedules and Exhibits shall be deemed to mean such Sections, Articles, Schedules or Exhibits "of this Agreement."
(g) The terms defined in this Agreement have the meanings assigned to them and include the plural as well as the singular and the pronouns of either gender or neuter, shall include, as appropriate, the other pronoun forms.
2.01 Assets to Be Sold.
(a) First Closing. Upon the terms and subject to the conditions of this Agreement, at the First Closing provided for in Section 2.03 and for no separate consideration under this Agreement or the Brokerage Asset Purchase Agreement, subject to the allocation of the Purchase Price as provided for in the Brokerage Asset Purchase Agreement, Seller shall, and shall cause each other Seller Entity to, sell, convey, assign, transfer and deliver or cause to be sold, conveyed, assigned, transferred and delivered to Buyer (or to a Subsidiary of Buyer, as directed by Buyer), and Buyer (or such Subsidiary) shall purchase, acquire and assume from each Seller Entity, good and valid title in and to all of such Seller Entity's right, title and interest in and to all of the property and assets, real, personal or mixed, tangible or intangible (including goodwill), of every kind and description, wherever located (other than the Excluded Assets, the Wrap Assets and the Final Closing Assets) used primarily in or necessary to conduct the OMEGA Business (the "OMEGA Assets"), free and clear of any Liens other than Permitted Liens, including:
(i) each Seller Entity's rights with respect to the Eligible OMEGA Accounts as of the First Closing Date, other than the Excluded OMEGA Accounts (the "Transferred OMEGA Accounts");
(ii) each Seller Entity's rights under any Wrap Agreements or other agreements related to the Transferred OMEGA Accounts, including each Seller Entity's rights as to all guarantees, warranties and indemnities related thereto;
(iii) with respect to the Transferred OMEGA Accounts, but subject to applicable privacy laws:
(A) all material information relating to each Transferred OMEGA Account (all such information, the "Transferred OMEGA Account Information"); and
(B) all rights granted by Clients to use Transferred OMEGA Account Information, including all Client instructions and consents with respect to solicitation;
(iv) each such Seller Entity's rights with respect to the accrued and unpaid fees with respect to the Transferred OMEGA Accounts;
(v) except to the extent previously transferred to Buyer under the Brokerage Asset Purchase Agreement, all equipment, furniture, fixtures, improvements and all other tangible personal property used primarily in or necessary to conduct the OMEGA business as set forth on Schedule I, provided that any such property which is identified by Buyer and Seller as being used in more than one business unit shall be transferred to Buyer at the Final Closing;
(vi) each such Seller Entity's rights under all Assumed Contracts as set forth in the applicable Undertaking used primarily in or necessary to conduct the OMEGA Business;
(vii) all Permits received by or issued to any Seller Entity or any employee or officer thereof to own, or lease and operate the Transferred OMEGA Accounts or otherwise used primarily in or necessary to conduct the OMEGA Business;
(viii) Trademarks and Intellectual Property, together with all additions, modifications, updates and enhancements used primarily in or necessary to conduct the OMEGA Business;
(ix) except to the extent previously transferred to Buyer under the Brokerage Asset Purchase Agreement and subject to Section 3.05, the Books and Records applicable to the OMEGA Business, provided that any such Books and Records which are identified by Buyer and Seller as being used in more than one business unit shall be transferred to Buyer at the Final Closing; and
(x) such prepaid fees and expenses and other assets as Buyer and Seller shall mutually agree as necessary and appropriate for the operation by Buyer of the OMEGA Business.
(b) Second Closing. Upon the terms and subject to the conditions of this Agreement, at the Second Closing provided for in Section 2.03 and for no separate consideration under this Agreement or the Brokerage Asset Purchase Agreement, subject to the allocation of the Purchase Price as provided for in the Brokerage Asset Purchase Agreement, Seller shall, and shall cause each other Seller Entity to, sell, convey, assign, transfer and deliver or cause to be sold, conveyed, assigned, transferred and delivered to Buyer (or to a Subsidiary of Buyer, as directed by Buyer), and Buyer (or such Subsidiary) shall purchase, acquire and assume from each Seller Entity, good and valid title in and to all of such Seller Entity's right, title and interest in and to all of the property and assets, real, personal or mixed, tangible or intangible (including goodwill), of every kind and description, wherever located (other than the Excluded Assets, the OMEGA Assets and the Final Closing Assets) used primarily in or necessary to conduct the Wrap Business (the "Wrap Assets"), free and clear of any Liens other than Permitted Liens, including:
(i) each Seller Entity's rights with respect to the Eligible Wrap Accounts as of the Second Closing Date, other than the Excluded Wrap Accounts (the "Transferred Wrap Accounts");
(ii) each Seller Entity's rights under any agreements related to the Transferred Wrap Accounts, including each Seller Entity's rights as to all guarantees, warranties and indemnities related thereto;
(iii) with respect to the Transferred Wrap Accounts, but subject to applicable privacy laws:
(A) all material information relating to each Transferred Wrap Account (all such information, the "Transferred Wrap Account Information");
(B) all rights granted by Clients to use Transferred Wrap Account Information, including all Client instructions and consents with respect to solicitation;
(iv) each such Seller Entity's rights with respect to the accrued and unpaid fees with respect to the Transferred Wrap Accounts;
(v) except to the extent previously transferred to Buyer under the Brokerage Asset Purchase Agreement, all equipment, furniture, fixtures, improvements and all other tangible personal property used primarily in or necessary to conduct the Wrap Business as set forth on Schedule II, provided that any such property which is identified by Buyer and Seller as being used in more than one business unit shall be transferred to Buyer at the Final Closing;
(vi) each such Seller Entity's rights under all Assumed Contracts as set forth in the applicable Undertaking used primarily in or necessary to conduct the Wrap Business;
(vii) all Permits received by or issued to any Seller Entity or any employee or officer thereof to own, or lease and operate the Transferred Wrap Accounts or otherwise used primarily in or necessary to conduct the Wrap Business;
(viii) Trademarks and Intellectual Property, together with all additions, modifications, updates and enhancements used primarily in or necessary to conduct the Wrap Business;
(ix) except to the extent previously transferred to Buyer under the Brokerage Asset Purchase Agreement or the First Closing and subject to Section 3.05, the Books and Records applicable to the Wrap Business, provided that any such Books and Records which are identified by Buyer and Seller as being used in more than one business unit shall be transferred to Buyer at the Final Closing; and
(x) such prepaid fees and expenses and other assets as Buyer and Seller shall mutually agree as necessary and appropriate for the operation by Buyer of the Wrap Business.
(c) Final Closing. Upon the terms and subject to the conditions of this Agreement, at the Final Closing provided for in Section 2.03 and, except as provided below in this Section 2.01(c), for no separate consideration under this Agreement or the Brokerage Asset Purchase Agreement, subject to the allocation of the Purchase Price as provided for in the Brokerage Asset Purchase Agreement, Seller shall, and shall cause each other Seller Entity to, sell, convey, assign, transfer and deliver or cause to be sold, conveyed, assigned, transferred and delivered to Buyer (or to a Subsidiary of Buyer, as directed by Buyer), and Buyer (or such Subsidiary) shall purchase, acquire and assume from each Seller Entity, good and valid title in and to all of such Seller Entity's right, title and interest in and to all of the property and assets, real, personal or mixed, tangible or intangible (including goodwill), of every kind and description, wherever located (other than the Excluded Assets, the OMEGA Assets, and the Wrap Assets) used primarily in or necessary to conduct the Asset Management Business (the "Final Closing Assets", and collectively with the OMEGA Assets and the Wrap Assets, the "Asset Management Assets"), free and clear of any Liens other than Permitted Liens, including:
(i) each such Seller Entity's rights with respect to the Eligible Client Accounts as of the Final Closing Date, other than the Excluded Accounts, Eligible OMEGA Accounts and Eligible Wrap Accounts (the "Transferred Final Accounts");
(ii) each such Seller Entity's rights under the Advisory and Wrap Agreements and other agreements related to the Transferred Final Accounts, including such Seller Entity's rights as to all guarantees, warranties and indemnities related thereto;
(iii) with respect to the Transferred Final Accounts, but subject to applicable privacy laws:
(A) all material information relating to each Final Transferred Account (all such information, the "Transferred Final Account Information");
(B) all rights granted by Clients to use Transferred Final Account Information, including all Client instructions and consents with respect to solicitation;
(iv) each such Seller Entity's rights with respect to the accrued and unpaid fees (together with accrued and unpaid fees transferred pursuant to Section 2.01(a)(iv) or 2.01(b)(iv), the "Accrued Fees") with respect to the Transferred Final Accounts;
(v) except to the extent transferred at the First Closing or the Second Closing, all equipment, furniture, fixtures, improvements and all other tangible personal property used primarily in or necessary to conduct the Asset Management Business as set forth on Schedule III (together with such property set forth on Schedules I and II, the "Acquired Property");
(vi) except to the extent transferred at the First Closing or the Second Closing, each such Seller Entity's rights under all Assumed Contracts as set forth in the applicable Undertaking;
(vii) except to the extent transferred at the First Closing or the Second Closing, all Permits received by or issued to each such Seller Entity or any employee or officer thereof to own, or lease and operate the Asset Management Business and to conduct the Asset Management Business;
(viii) except to the extent transferred at the First Closing or the Second Closing, Trademarks and Intellectual Property, together with all additions, modifications, updates and enhancements;
(ix) except to the extent previously transferred to Buyer under the Brokerage Asset Purchase Agreement or at the First Closing or the Second Closing and subject to Section 3.05, the Books and Records;
(x) except to the extent transferred at the First Closing or the Second Closing, such prepaid fees and expenses and other assets as Buyer and Seller shall mutually agree as necessary and appropriate for the operation by Buyer of the Asset Management Business; and
(xi) all Purchased Investments, provided that the purchase price for such Purchased Investments shall be as provided in Section 2.04.
(d) Such sales, conveyances, assignments, transfers and deliveries under Section 2.01 and Section 2.02 shall be effected by delivery by or on behalf of each Seller Entity to Buyer or its designees of (i) a duly executed bill of sale and other appropriate documents of transfer in a form to be mutually agreed (the "Bill of Sale"); and (ii) a duly executed assignment of Trademarks and Intellectual Property, including patents, trademarks, trade names, copyrights and licenses and applications therefor, in recordable form and otherwise in a form to be mutually agreed and a duly executed assignment of each Investment otherwise in a form to be mutually agreed (such assignments and other documents of transfer, together with the Bill of Sale the "Instruments of Assignment") as shall be necessary to vest in Buyer good and valid title to the Asset Management Assets and the Equity Interests, in each case free and clear of any and all liabilities, obligations and Liens, except the Assumed Liabilities and Permitted Liens.
2.02 Equity Interests to Be Sold. Upon the terms and subject to the conditions of this Agreement and the Brokerage Asset Purchase Agreement, at the Final Closing, the applicable Seller Entities hereby agree to sell to Buyer, free and clear of all Liens, and Buyer hereby agrees to purchase from the applicable Seller Entities, all of the Equity Interests, including, for the avoidance of doubt, all rights of such Seller Entities in respect of Advisory Agreements.
2.03 Closings. (a) The First Closing (the "First Closing") shall take place at the offices of Skadden, Arps, Slate, Meagher & Flom LLP, 4 Times Square, New York, NY 10036, at 10:00 a.m., Eastern time, on January 20, 2003 or such earlier date or dates as Buyer may specify, or, if the conditions to the First Closing set forth in Articles VII and VIII shall not have been satisfied or waived by any such date or dates, as soon as practicable after such conditions shall have been satisfied, or such other date and time as shall be mutually agreed upon in writing by the parties hereto. The date on which the First Closing actually occurs is referred to herein as the "First Closing Date."
(b) The Second Closing (the "Second Closing") shall take place at the offices of Skadden, Arps, Slate, Meagher & Flom LLP, 4 Times Square, New York, NY 10036, at 10:00 a.m., Eastern time, on or about March 31, 2003 or, if the conditions to the Second Closing set forth in Articles VII and VIII shall not have been satisfied or waived by such date, as soon as practicable after such conditions shall have been satisfied, or such other date and time as shall be mutually agreed upon in writing by the parties hereto. The date on which the Second Closing actually occurs is referred to herein as the "Second Closing Date."
(c) The Final Closing (the "Final Closing") shall take place at the offices of Skadden, Arps, Slate, Meagher & Flom LLP, 4 Times Square, New York, NY 10036, at 10:00 a.m., Eastern time, on or about April 30, 2003 or on such later date which is three (3) business days after the date on which the scheduled meetings with respect to the Registered Funds shall have occurred or, if the conditions to the Final Closing set forth in Articles VII and VIII shall not have been satisfied or waived by such date, as soon as practicable after such conditions shall have been satisfied, or such other date and time as shall be mutually agreed upon in writing by the parties hereto. The date on which the Final Closing actually occurs is referred to herein as the "Final Closing Date."
2.04 Certain Investments. Upon the terms and subject to the conditions of this Agreement, at the Final Closing, Seller shall, and shall cause each other Seller Entity to, sell, convey, assign, transfer and deliver or cause to be sold, conveyed, assigned, transferred and delivered to Buyer (or to a Subsidiary of Buyer, as directed by Buyer), and Buyer (or such Subsidiary) shall purchase, acquire and assume from each such Seller Entity as applicable, good and valid title in and to all of such Seller Entity's right, title and interest in and to each of the Investments set forth on Schedule IV (the "Purchased Investments") for the purchase price specified therein, free and clear of any Liens other than Permitted Liens, provided that Seller shall not be obligated to sell, and Buyer shall not be obligated to purchase, any such Purchased Investment relating to any Fund as to which the requisite client Consents have not been obtained.
2.05 Deliveries by the Parties. At each of the Applicable Closings, the parties shall deliver or cause to be delivered (unless delivered previously) the following:
(a) Deliveries by Buyer:
(i) an undertaking by Buyer relating to the Assumed Liabilities in respect of the Applicable Closing in the form used in connection with the Brokerage Closing (each, an "Undertaking"); and
(ii) all other documents, certificates, instruments or writings required to be delivered by Buyer or its Subsidiaries at or prior to the Applicable Closing, pursuant to this Agreement or otherwise required in connection herewith.
(b) Deliveries by the Seller Entities:
(i) the Instruments of Assignment;
(ii) subject to Section 3.05, the Books and Records; and
(iii) the officer's certificate referred to in Section 6.11.
(c) all other documents, certificates, instruments or writings required to be delivered by any Seller Entity or any of such Seller Entity's Subsidiaries at or prior to the Applicable Closing, pursuant to this Agreement or otherwise required in connection herewith.
2.06 Assumed Liabilities; Excluded Liabilities.
(a) On the Applicable Closing Date, Buyer shall assume, perform and discharge when due each Seller Entity's obligations (i) under Contracts transferred to Buyer pursuant to Section 2.01(a), (b) or (c), as applicable, and set forth in the Undertaking in respect of the Applicable Closing (collectively, the "Assumed Contracts") required under the terms of such Assumed Contracts to be performed after the Applicable Closing Date, (ii) with respect to the Deferred Compensation Plan as set forth in Section 3.02(f) required under the terms of such Deferred Compensation Plan to be performed after such date and (iii) reserved against in the most recent balance sheet in the Financial Statements or otherwise constituting normal trade payables incurred in the ordinary course of the Asset Management Business after the date thereof consistent in nature and amount with past practices thereof to the extent related to the OMEGA Assets, Wrap Assets or Final Closing Assets, as the case may be, in each case as set forth in Section 2.06 of the Seller Disclosure Schedule in respect of each Applicable Closing, provided that the liabilities assumed hereunder shall in no event include any costs, expenses or other liabilities relating to the negotiation and consummation of the transactions contemplated by the Brokerage Asset Purchase Agreement or this Agreement and including any Consents relating thereto.
(b) Notwithstanding any other provision hereof, except as
expressly assumed pursuant to Section 2.06(a) (the "Assumed Liabilities"),
neither Buyer Parent nor Buyer has agreed to pay, and shall not be required to
assume, shall have no liability or obligation with respect to, and shall be
indemnified in accordance with Article X by Seller for, any liability or
obligation, direct or indirect, known or unknown, absolute, contingent or
accrued, with respect to the Asset Management Business, including liabilities
of any Seller Entity, any of their respective Subsidiaries or the Asset
Management Assets (the "Excluded Liabilities") including (i) any liability,
responsibility or obligation that is attributable to any Excluded Asset; (ii)
any liability, responsibility or obligation relating to the Asset Management
Assets or the Asset Management Business arising out of any event, circumstance
or condition occurring or existing prior to the Applicable Closing; (iii) any
liability, responsibility or obligation arising out of (A) any suit, action,
proceeding, arbitration, mediation, inquiry or investigation pending or
threatened as of, or arising out of any event, circumstance or condition
occurring or existing prior to, the Applicable Closing; or (B) any actual or
alleged violation of Law prior to the Applicable Closing; (iv) any Retained
Employee Liability; (v) except as expressly set forth in Section 3.02, any
liability, responsibility or obligation with respect to the operation or
maintenance of any employment or benefit plan, program or agreement or
arrangement provided by Seller or any related entity after the Applicable
Closing Date and (vi) any liability, responsibility or obligation for (A) Taxes
of Seller or any of its Affiliates or (B) Taxes attributable to the OMEGA
Assets, Wrap Assets or Final Closing Assets, as the case may be, relating to
any period or any portion of any period ending prior to the Applicable Closing
Date for such assets including any Taxes upon or arising out of the
distribution or other transfer by any Seller Entity to Seller or for the
account of any Affiliate of the Seller Investments as contemplated by Section
6.01. Subject to Section 2.09, Seller hereby agrees to pay, perform and
discharge when due, any and all of the Excluded Liabilities.
2.07 Excluded Assets. Notwithstanding any other provision hereof, no Seller Entity shall sell or deliver to Buyer, and Buyer shall not purchase or acquire from any Seller Entity and neither Buyer Parent nor Buyer shall have liability or obligation with respect to, (a) any Excluded Account, (b) except as provided in Section 2.01, any Company names, marks, (c) asset management services for Excluded Accounts, (d) asset management and private client business or services for any directors, officers and employees of any Seller Entity other than to the extent it is determined by Seller that such services may be provided by Buyer to such directors, officers or employees under Applicable Law or the relevant compliance manual and (e) any insurance policies owned by Seller, excluding such policies, if any, which provide coverage to any Fund (the "Excluded Assets"). Notwithstanding Section 2.01, Seller and Buyer agree to cooperate in good faith to determine the appropriate manner and timing of the transfer or assignment of the accounts of any Transferred Employees to Buyer.
2.08 Consent of Third Parties. To the extent that the sale,
conveyance, transfer or assignment of any Asset Management Asset or Equity
Interest requires the consent of a third party, this Agreement shall not
constitute an agreement to consummate such sale, conveyance, transfer or
assignment if such consummation would constitute a breach or violation thereof
or adversely affect Buyer's rights thereunder. Seller agrees to use its
reasonable best efforts (with no obligation to pay any fee to any third party
from whom any consent or approval is sought or any costs and expenses of such
third party in providing such consent or approval) to obtain such consents
prior to the Applicable Closing Date in accordance with Sections 6.04 and 6.12.
Except with respect to any Client consents contemplated by Section 6.12, to the
extent that any such consent is not obtained prior to the Applicable Closing
Date, (i) Seller shall use reasonable best efforts (with no obligation to pay
any fee to any third party from whom any consent or approval is sought or any
costs and expenses of such third party in providing such consent or approval)
to (A) obtain any such consent after the Applicable Closing Date, (B) to the
extent reasonably practicable, provide or cause to be provided to Buyer the
benefits of any such Asset Management Asset or Equity Interest for which such
consent or waiver has not been obtained, (C) cooperate in any arrangement,
reasonable and lawful as to Seller and Buyer, designed to provide such benefits
to Buyer, (D) enforce for the account of Buyer any rights of Seller arising
from such Asset Management Asset or Equity Interest for which such consent has
not been obtained against the other party, including, without limitation, the
right to elect to terminate in accordance with the terms thereof on the advice
of Buyer, and (E) Seller shall pay, defend, indemnify and hold Buyer harmless
from any liability suffered by Buyer as a result of any failure of Seller to
obtain such consent whether before or after the Applicable Closing Date; and
(ii) Buyer shall use reasonable best efforts to perform the obligations of
Seller arising under such Asset Management Asset or Equity Interest for which
such consent has not been obtained, to the extent that by reason of the
transactions consummated pursuant to this Agreement, Buyer has control over the
resources necessary to perform such obligations. Except with respect to any
Client consents contemplated by Section 6.12, nothing in this Section 2.08
shall be deemed (i) a waiver by Buyer of its rights to have received on or
before the Applicable Closing Date an effective assignment of all of the Asset
Management Assets and Equity Interests, (ii) a waiver by Buyer of its rights to
have each condition to each Applicable Closing set forth in Article VIII
satisfied on the Applicable Closing Date or (iii) to constitute an agreement to
exclude from the Asset Management Assets any properties, assets or rights
described under Section 2.01 or limit or affect the representations, warranties
and covenants of Seller Parent or any Seller Entity in this Agreement.
2.09 Post-Closing Adjustment. Seller, Buyer Parent and Buyer agree that (a) if there is a Net Profit, such Net Profit shall be for the benefit of Seller and a payment shall be made by Buyer to Seller as soon as practicable following (and subject to the occurrence of) the Final Closing Date solely to the extent that Seller has not already received such Net Profit and (b) if there is a Net Loss, Buyer shall make a payment to Seller as soon as practicable following (and subject to the occurrence of) the Final Closing Date equal to such Net Loss multiplied by the AA Transfer Percentage.
3.01 [Reserved.]
3.02 Employees; Employee Benefits.
(a) Business Employees. Section 3.02(a) of the Seller Disclosure Schedule sets forth a true and complete list of all employees of the Asset Management Business as of the date hereof other than any employees transferred to Buyer at the Brokerage Closing Date (the "Business Employees") indicating each such employee's title, employer and business unit. Effective as of the Hire Date applicable to each Business Employee, such Business Employee shall cease to be an employee of Seller or an Affiliate of Seller. Buyer or an Affiliate of Buyer has offered employment to all Business Employees, in accordance with Section 3.02(b), (i) in substantially the same position, (ii) in the same city, (iii) with the same base salary, and (iv) with the same vacation policy applicable to each such Business Employee as of the applicable Hire Date. Notwithstanding the foregoing or any other provision of this Agreement, Buyer's offer to any Business Employee who is on short-term or long-term disability or any approved leave of absence (each an "Inactive Employee") as of the applicable Hire Date is conditioned on such Inactive Employee's being ready and able to return to work within six months following the applicable Hire Date, and such an Inactive Employee shall not become an employee of Buyer or an Affiliate of Buyer unless and until they are ready and able to work as of a date within six months of the applicable Hire Date. Prior to the date Inactive Employees are hired by Buyer or an Affiliate of Buyer, such Inactive Employees shall be retained as employees of Seller, but only for such period as an individual on short-term or long-term disability or approved leave of absence, respectively, would normally remain an employee in the absence of this transaction, and Seller shall continue to provide such Inactive Employees for the period that they remain employees of the Seller with such benefits as Seller or an Affiliate of Seller was providing on the applicable Hire Date to employees on long-term disability leave, short-term disability leave or approved leave of absence, respectively. Seller shall remain and be solely responsible for any severance or other liability of any nature attributable to the cessation of employment of Business Employees with the Seller, regardless of the date such cessation occurs; provided, however, that Seller's retention of such responsibility and liability shall not preclude Seller from seeking recourse against the Buyer or an Affiliate of Buyer for any breach of Buyer's covenants in this Section 3.02, it being understood that Seller shall retain all such responsibility and liability to the extent that the business unit to which such Business Employee relates was not transferred as contemplated hereunder. Subject to the provisions of this Section 3.02, as of the applicable Hire Date, Buyer shall assume responsibility for all salary, bonus, commission costs, benefits and other employment related costs accrued on and after the applicable Hire Date with respect to each Transferred Employee. Seller shall not take, and shall cause each of its Affiliates not to take, any action that would impede, hinder, interfere or otherwise compete with Buyer's or an Affiliate of Buyer's effort to hire or retain any Business Employee.
(b) Offers of Employment from Buyer. Buyer or an Affiliate of Buyer has extended offers of employment to all Business Employees in accordance with the provisions of Section 3.02(a).
(i) The terms of each offer specified that (except in the case of Inactive Employees) the offer was deemed accepted unless the Business Employee delivered a written rejection of the offer to Buyer no later than December 16, 2002. Buyer has provided Seller with a complete list of Business Employees who have rejected Buyer's offer of employment. The terms of the offers further specified that the effective date of employment with Buyer or an Affiliate of Buyer pursuant to the offer is contingent upon whether the Business Employee is an Inactive Employee on the applicable Hire Date. Business Employees who fail to timely reject an offer of employment from Buyer, and who are not Inactive Employees, shall become employees of Buyer on the applicable Hire Date.
(ii) The terms of each offer specified that each Business Employee who is an Inactive Employee on the applicable Hire Date shall be deemed to accept Buyer's offer and shall become an employee of Buyer or an Affiliate of Buyer as soon as reasonably practicable after the date Seller notifies Buyer that such individual has notified Seller that he or she is ready and able to return to work, provided that (x) such notice to Buyer is given within six months of the otherwise applicable Hire Date and (y) on or prior to the time the Inactive Employee gives notice to the Seller that he or she is ready to return to work, he or she has not expressly rejected Buyer's offer. Inactive Employees who reject Buyer's offer shall be deemed to have resigned their employment with Seller.
(c) Transferred Employees. Effective as of the applicable Hire Date, except as expressly provided herein, Buyer shall cause each Business Employee who accepts and commences employment with Buyer or an Affiliate of Buyer as of the applicable Hire Date (the "Transferred Employees") to be provided with compensation and benefits that shall, in the aggregate, in Buyer's reasonable judgment be substantially equivalent to the compensation and benefits provided by Buyer to its similarly situated employees; provided, however, that for a period of one year following the applicable Hire Date, each Transferred Employee shall be entitled to remain in substantially the same position, with the same base salary and same vacation policy as maintained by Seller as of the applicable Hire Date as set forth on Section 3.02(c) of the Seller Disclosure Schedule (as updated by Seller after the date hereof), provided that such employee remains employed by Buyer or an Affiliate of Buyer; and provided, further, to the extent that substantially all the business unit to which a Business Employee relates was not transferred as contemplated in Article II, Seller shall remain and be solely responsible for all severance and other liability of any nature attributable to the cessation of employment of such Business Employee with the Seller regardless of the date such cessation occurs. Nothing herein shall be construed as guaranteeing employment for any specific period of time or altering the at-will employment status of any employee. For a transition period, if any, commencing on the applicable Hire Date and ending on the sixtieth (60th) day following the closing date of the transactions contemplated by the Brokerage Asset Purchase Agreement (subject to possible extension (or earlier termination) in accordance with the provisions of the Transition Services Agreement contemplated by the Brokerage Asset Purchase Agreement) (the "Transition Period"), subject to limitations in and requirements of Applicable Laws and applicable plans and contracts, Seller or an Affiliate of Seller shall use its reasonable best efforts to cause Transferred Employees, (and Inactive Employees who commence employment with the Buyer or an Affiliate of Buyer during the Transition Period) to continue to be provided with the health and welfare benefits specified in the Transition Services Agreement in accordance with the terms thereof, and Buyer shall pay Seller or an Affiliate of Seller in respect thereof as detailed in the Transition Services Agreement. If Seller or an Affiliate of Seller, using reasonable best efforts is unable to continue to provide such coverage, Buyer or an Affiliate of Buyer shall make available to such employees health and welfare plan coverage that is substantially equivalent to the coverage then provided by Buyer to its similarly situated employees, with no break in coverage. Buyer shall not assume responsibility for the provision of benefits to any Business Employee until such employee commences employment with Buyer or an Affiliate of Buyer. Buyer shall not be precluded from modifying its employment agreements, plans, policies and practices as to its employees generally on or after the applicable Hire Date, provided that such changes apply to all Buyer employees who are similarly situated to the Transferred Employees, and further provided that (A) for a period of one year after the applicable Hire Date Buyer shall continue to provide to each Transferred Employee the same base salary and the same vacation policy as provided by Seller as of immediately prior to the applicable Hire Date, provided that such employee remains employed by Buyer or an Affiliate of Buyer; and (B) the recognition of prior service, as described in Section 3.02(d), shall not be eliminated. Buyer shall be solely liable in accordance with Section 3.02(g) for the provision of COBRA benefits to any Transferred Employee who is terminated by Buyer (or otherwise incurs a qualifying event) during the Transition Period. Inactive Employees who commence employment with the Buyer or an Affiliate of Buyer shall be treated as if such employees were Transferred Employees and shall be subject to the terms and conditions of this Section 3.02, taking into account their later commencement of employment date with the Buyer or an Affiliate of Buyer.
(d) Credit for Service. Buyer shall permit Transferred Employees to participate in all Buyer plans in which participation is open to similarly situated employees of Buyer at comparable levels for such similarly situated employees, except where such participation in Buyer plans would result in a duplication of benefits for such Transferred Employee, and Buyer shall cause the Transferred Employees to be given full credit for all service with Seller or an Affiliate of Seller prior to the applicable Hire Date for purposes of eligibility, vesting and determination of the level of benefits under any employee benefit plans or arrangements of Buyer or an Affiliate of Buyer or any plans of Seller that are assumed by or maintained by Buyer in which such Transferred Employees participate after the applicable Hire Date, to the same extent such service was recognized by Seller or an Affiliate of Seller immediately prior to the applicable Hire Date; provided, however, that such service need not be recognized for purposes of benefit accruals under any defined benefit plan maintained by Buyer or an Affiliate of Buyer, nor shall such service be recognized to the extent it would result in duplication of benefits. Buyer or an Affiliate of Buyer shall (i) waive all limitations as to preexisting conditions, exclusions and waiting periods with respect to participation and coverage requirements applicable to Transferred Employees under any welfare plan in which such employees may be eligible to participate after the applicable Hire Date, other than limitations or waiting periods that are already in effect with respect to such employees and that have not been satisfied as of the applicable Hire Date under the corresponding welfare plan of Seller or an Affiliate of Seller in which such Transferred Employees participate immediately prior to the applicable Hire Date, and (ii) for the plan year in which the applicable Hire Date occurs, provide each Transferred Employee with credit for any co-payments and deductibles paid prior to the applicable Hire Date in satisfying any applicable deductible or out-of-pocket requirements under any welfare plans in which such employees are eligible to participate after the applicable Hire Date, as if those deductibles or co-payments had been paid under the welfare plans in which such employees are eligible to participate after the applicable Hire Date.
(e) 401(k) Plan. Seller shall take such actions as may be necessary to ensure that all Transferred Employees are, as of the applicable Hire Date, 100% vested in their account balances under the Seller 401(k) Savings Plan and the Oppenheimer Capital Accumulation 401(k) Plan (collectively the "Seller 401(k) Plans"), and shall contribute to the Seller 401(k) Savings Plan, within two weeks of the applicable Hire Date, such additional matching contributions, if any, required for each Transferred Employee in accordance with the terms and conditions of the Seller 401(k) Savings Plan for the portion of the Plan year in which the applicable Hire Date occurs during which such Transferred Employees were employed by Seller. Commencing with the applicable Hire Date, Transferred Employees shall be eligible to participate in Buyer's 401(k) plan, Buyer shall make any profit sharing contributions to such plan, on the same terms and conditions as for comparable employees of Buyer, recognizing their prior service to Seller and compensation from Seller, as service and compensation with Buyer.
(f) Certain Plans.
(i) Effective as of the applicable Hire Date, Buyer shall, or shall cause an Affiliate of Buyer to, assume and maintain as plan sponsor and administrator and perform all obligations with respect to, the Seller's Executive Voluntary Deferred Compensation Plan (the "Deferred Compensation Plan"), as it applies to Transferred Employees. Between the date hereof and the applicable Hire Date, at Buyer's request, Seller shall provide a full and accurate report to Buyer as to the amounts accrued to date attributable to the Transferred Employees under the Deferred Compensation Plan. Seller shall transfer to Buyer, as of the close of business on the applicable Hire Date, securities attributable to each affected Transferred Employee's accounts under the Deferred Compensation Plan.
(ii) Subject to the limitations and requirements of Seller's Stock Participation Plan and various stock option plans maintained by Seller (the "Seller Equity Plans"), Seller shall recognize service with Buyer for the purposes of vesting and dividend distributions under the Seller Equity Plans after the applicable Hire Date as if it were service with Seller; provided, however, that Transferred Employees shall not be entitled to any new award under any Seller Equity Plan after the applicable Hire Date and provided, further, that nothing in this Section 3.02(f)(ii) shall be construed to affect or in any way limit (A) the operation or application of any change in control provisions in any Seller Equity Plan; or (B) any right to a dividend distribution to which a Transferred Employee is otherwise entitled as a result of the transactions contemplated herein.
(iii) As of the applicable Hire Date, Buyer shall allow Transferred Employees to participate in its flexible spending account program. At Buyer's request, Seller shall take such action as may be necessary to transfer to Fahnestock, subject to applicable law and those requirements that must be complied with to maintain favorable tax treatment, the positive net aggregate balances (i.e., actual salary reductions, less expenses incurred), if any, under Seller's Flexible Spending Account Program for each of the Transferred Employees. Each salary reduction election executed by a Transferred Employee for 2003 under Seller's Flexible Spending Account Program shall continue in effect for 2003 with respect to Buyer's flexible spending account program until such salary reduction election is revoked or amended by such Transferred Employee. Section 3.02(f)(iii) of the Seller Disclosure Schedule lists each Business Employee's flexible spending account salary reduction election made with respect to 2003.
(g) COBRA. To the extent that any employee of Seller participates in a "group health plan" (within the meaning of Section 5000(b)(1) of the Code maintained by Seller ("Group Health Plan") and such employee incurs a qualifying event under Section 4980B of the Code on the applicable Hire Date on account of his or her termination of employment with Seller, as determined in accordance with applicable Treasury Regulations, Seller shall comply with all notice and continuation coverage requirements applicable to the Group Health Plans under Section 4980B of the Code known as COBRA ("COBRA Requirements") with respect to such employees and any "qualified beneficiaries" (as defined in Section 4980B of the Code)) under the group health plan in accordance with Section 4980B of the Code and the regulations thereunder, provided that if for any reason Buyer has not established a health plan that covers the Transferred Employees prior to the expiration of the Transition Period, and any such Transferred Employee elects COBRA coverage under Seller's health plans, Buyer shall pay the full COBRA premium on behalf of such Transferred Employee (except for the amount such Transferred Employee would have been required to pay as an active employee of Seller) and shall reimburse Seller to the extent that any claims paid for Transferred Employees electing COBRA exceed COBRA premiums and stop loss reimbursements. To the extent that a Covered Employee participates in a Group Health Plan on or after the applicable Hire Date, whether maintained by Seller during the Transition Period, or by Buyer at any time, and such employee incurs a qualifying event under Section 4980B of the Code after the applicable Hire Date, Buyer shall assume responsibility and shall comply with all COBRA Requirements with respect to such employees and any "qualified beneficiaries" (as defined in Section 4980B of the Code) under the Group Health Plan in accordance with Section 4980B of the Code and the regulations thereunder.
(h) WARN Act. To the extent that any obligations might arise under the WARN Act or under any similar provision of any federal, state, regional, foreign, or local law, rule, or regulation (hereinafter referred to collectively as "WARN Obligations") as a consequence of the transactions contemplated by this Agreement, Seller shall be responsible for any WARN Obligations arising as a result of any employment losses occurring on or prior to any Hire Date except to the extent such losses are attributable to Buyer's material failure to perform any of the covenants described herein.
(i) Accrued Obligations. Seller shall be solely responsible for
all obligations and liabilities accrued prior to the applicable Hire Date of
each Business Employee, including, (i) payroll and fringe benefits, (ii) earned
bonuses and incentive compensation, (iii) accrued vacation and holiday pay,
(iv) workers' compensation and (v) claims incurred under health plans. Buyer
shall be solely responsible for all obligations and liabilities accrued
following the applicable Hire Date of each Transferred Employee, including, (i)
payroll and fringe benefits, (ii) earned bonuses and incentive compensation,
(iii) accrued vacation and holiday pay, (iv) workers' compensation and (v)
claims incurred under health plans; provided, however, that Seller shall remain
liable and responsible for payments to Transferred Employees of any annual
incentive compensation bonuses for fiscal year 2002 as determined in accordance
with the applicable bonus plans maintained by Seller in which the Transferred
Employees participate as of the applicable Hire Date; and provided, further,
that with respect to any such bonuses earned for Seller's fiscal year 2003,
Seller shall transfer to Buyer a cash amount equivalent to the sum of 1/6ths of
the actual fiscal year 2002 bonus payment awarded to each Transferred Employee
and Inactive Employee (subject to a pro rata reduction for any period in which
any Inactive Employee was not entitled to a bonus payment during Seller's
fiscal year 2003), within ten (10) business days following confirmation of
acceptance of the employment offer made to each such individual from Buyer or
an Affiliate of Buyer; and provided, further, to the extent that substantially
all the business unit to which a Business Employee relates was not transferred
as contemplated in Article II, Seller shall remain and be solely responsible
for all severance and other liability of any nature attributable to the
cessation of employment of such Business Employee with the Seller regardless of
the date such cessation occurs. Subject to receiving the funds, if any, payable
by Seller under this paragraph, Buyer shall assume all liability for bonus
obligations payable to the Transferred Employees beginning November 1, 2002
through the applicable Hire Date, and Buyer shall pay each employee the 1/6ths
amount transferred by Seller in respect of such employee (less applicable
withholdings specific to this payment) on or prior to the time Buyer makes
bonus payments in respect of fiscal year 2003.
(j) Retained Liabilities. Seller shall retain and be solely responsible for (i) all employment-related obligations and liabilities (including all obligations and liabilities under the WARN Act and COBRA, if any) relating to each employee, officer, director or consultant of the Asset Management Business who is not a Business Employee and each Business Employee (and his dependents or beneficiaries) with respect to whom Buyer has fulfilled its obligations under this Section 3.02 to offer or transfer employment, but who does not become a Transferred Employee (including any Business Employee who declines employment with Buyer or an Affiliate of Buyer or who does not return to work from a disability or other leave of absence within six (6) months following the applicable Hire Date) (a "Retained Employee") and (ii) all compensation and benefit obligations and employment law claims of Transferred Employees and other Business Employees who commence employment with the Buyer or an Affiliate of the Buyer to the extent arising from events or conditions that existed prior to the time as of which such employee commenced employment with the Buyer or an Affiliate of Buyer ((i) and (ii) together, the "Retained Employee Liabilities") (provided, however, that Seller's retention of such responsibility and liability shall not preclude Seller from seeking recourse against the Buyer or an Affiliate of Buyer for any breach of Buyer's covenants in this Section 3.02). Buyer shall be solely liable for all compensation and benefit obligations and employment law claims of Transferred Employees and Inactive Employees who commence employment with Buyer or an Affiliate of Buyer arising from events or conditions that arise or occur on or after the time as of which they commence employment with the Buyer or an Affiliate of Buyer.
3.03 Tax Matters. Transfer Taxes. Company and Buyer shall each be responsible for 50% of any and all Transfer Taxes which become payable in connection with the transactions contemplated by this Agreement. No later than five (5) days after the Applicable Closing Date, Company shall provide to Buyer a schedule (the "Transfer Tax Schedule") setting forth in reasonable detail the calculations of the amounts of such Transfer Taxes for Buyer's review and consent (which shall not be unreasonably withheld). Seller shall file all Tax Returns that must be filed in connection with payment of such Transfer Taxes and shall pay such Transfer Taxes in the ordinary course of its business. Company and Buyer agree to use reasonable best efforts to obtain a sale for resale or other Tax exemption where available and otherwise to minimize the amount of Transfer Taxes payable in connection with the transactions contemplated by this Agreement. Buyer shall provide a resale certification at Brokerage Closing or such other documents as may be reasonably requested by Company for the purpose of reducing any such Transfer Taxes.
(a) Preparation and Filing of Tax Returns; Payment of Taxes.
(i) The Seller shall prepare and file or cause to be prepared and filed at its own cost and expense (in a manner consistent with past practice, except as required by Applicable Law), on a timely basis (including extensions) all Tax Returns of the Controlled Entities and all Tax Returns attributable to the OMEGA Assets, the Wrap Assets and the Final Closing Assets for all Pre-First-Closing Periods, Pre-Second-Closing Periods and Pre-Final-Closing Periods, as applicable. The Seller shall pay all Taxes shown to be due and payable on such Tax Returns.
(ii) Buyer shall prepare and file or cause to be prepared and filed on a timely basis (including extensions) all Tax Returns of the Controlled Entities and all Tax Returns attributable to the Asset Management Assets other than those provided for in Section 3.03(b)(i) of this Agreement. Subject to Section 3.03(c), Buyer shall pay all Taxes shown to be due and payable thereon.
(b) Tax Indemnification.
(i) The Seller shall indemnify, defend and hold harmless
Buyer from and against any and all costs, expenses (including reasonable
attorneys', accountants', consultants' and experts' fees and expenses),
other liabilities (including costs and fines), monetary obligations to
third parties, expenditures, monetary judgments or awards payable or due
to any other party that are imposed upon or otherwise incurred or suffered
by the relevant Person ("Losses") asserted against, resulting to, imposed
on, sustained, incurred or suffered by, or asserted against Buyer,
directly or indirectly, by reason of or resulting from: (i) all Taxes
imposed upon the Seller Entities or the Controlled Entities with respect
to any Pre-First-Closing Period, Pre-Second-Closing Period or
Pre-Final-Closing Period, as applicable, , including any such Loss
arising, directly or indirectly, by reason of or resulting from any
distribution or other transfer of the Seller Investments as contemplated
by Section 6.01, other than with respect to items contemplated by Treasury
Regulationss.1.1502-76(b)(1)(ii)(B), and all Taxes incurred by the Seller
Entities or the Controlled Entities, other than with respect to items
contemplated by Treasury Regulationss.1.1502-76(b)(1)(ii)(B), for any
Straddle Period, as applicable, but only with respect to the portion of
such Straddle Period ending on the close of the First Closing Date, Second
Closing Date or Final Closing Date, as applicable, (ii) all Taxes other
than with respect to items contemplated by Treasury
Regulationss.1.1502-76(b)(1)(ii)(B) imposed upon Buyer attributable to the
OMEGA Assets with respect to any Pre-First-Closing Period, attributable to
the Wrap Assets with respect to any Pre-Second-Closing Period and
attributable to the Final Closing Assets with respect to any
Pre-Final-Closing Period, as applicable, and any Straddle Period, but only
with respect to the portion of such Straddle Period ending on the close of
the Applicable Closing Date, (iii) any Taxes other than with respect to
items contemplated by Treasury Regulationss.1.1502-76(b)(1)(ii)(B) imposed
on any of the Controlled Entities underss.1.1502-6 of the Treasury
Regulations attributable to any Pre-First-Closing Period,
Pre-Second-Closing Period or Pre-Final-Closing Period, as applicable, and
the portion of any Straddle Period ending on the Applicable Closing Date,
(iv) the portion of any Transfer Taxes that are the responsibility of
Company pursuant to Section 3.03(a) of this Agreement, (v) any breach or
inaccuracy in any representation contained in Section 4.17 or (vi) any
breach or failure by the Seller to perform (or cause to be performed) any
of the covenants or agreements set forth in this Section 3.03.
(ii) Buyer shall indemnify, defend and hold harmless the Seller from and against any and all Losses asserted against, resulting to, imposed on, sustained, incurred or suffered by, or asserted against the Seller, directly or indirectly, by reason of or resulting from (i) any and all Taxes imposed upon any of the Seller Entities or the Controlled Entities, (ii) any and all Taxes attributable to the Asset Management Assets, in the case of clauses (i) and (ii) with respect to (x) any Post-First-Closing Period, Post-Second-Closing Period or Post-Final-Closing Period, as applicable, and, with respect to any item contemplated by Treasury Regulationss.1.1502-76(b)(1)(ii)(B), a Pre-First-Closing Period, Pre-Second-Closing Period or Pre-Final-Closing Period and (y) the portion of any Straddle Period beginning after the Applicable Closing Date; (iii) the portion of any Transfer Taxes that are the responsibility of Buyer pursuant to Section 3.03(a) of this Agreement; and (iv) any breach or failure by Buyer to perform (or cause to be performed) any of the covenants or agreements set forth in this Section 3.03.
(iii) All amounts payable or to be paid under this Section
3.03 (the "Tax Indemnity Payments") shall be paid in immediately available
funds within fifteen (15) business days after the later of (i) receipt of
a written request from the party entitled to such Tax Indemnity Payment
and (ii) the day of payment of the amount that is the subject of the Tax
Indemnity Payment by the party entitled to receive the Tax Indemnity
Payment.
(iv) Notwithstanding any other provision in this Agreement, for purposes of determining liability under this Section 3.03 with respect to any Taxes arising out of, or attributable to, or resulting from any inaccuracy in or breach or nonperformance of any of the representations or warranties of any of the Seller Entities or Seller in Section 4.17 or any covenant or agreement of any of the Buyer, Seller Entities or Seller contained in this Section 3.03, no effect shall be given to any exception in such representations and warranties or any such covenant or agreement relating to materiality or Material Adverse Effect.
(c) Tax Indemnification Procedures.
(i) If a notice of deficiency, proposed adjustment, adjustment, assessment, audit, examination or other administrative or court proceeding, suit, dispute or other claim (a "Tax Claim") shall be delivered or sent to or commenced or initiated against the Seller Entities, Seller or Buyer by any taxing authority with respect to Taxes for which one party to this Agreement is entitled to indemnification from another party, the receiving party shall promptly notify the other party in writing of the Tax Claim along with a copy of the relevant Tax Claim notice; provided, that the failure by any party to notify another party promptly of any such notice shall not release the other party from its obligations under this Section 3.03 in whole or in part except to the extent that the other party is materially and adversely prejudiced as a consequence of such failure.
(ii) Seller shall control all Tax Claims with respect to all Pre-First-Closing Periods, Pre-Second-Closing Periods or Pre-Final-Closing Periods, and Buyer agrees to cooperate reasonably with Seller in pursuing such contests. With respect to Tax Claims for which the Seller would be liable to indemnify Buyer, the Seller may, upon written notice to the Buyer (such written notice to be provided within the shorter of (i) forty-five (45) days after notice thereof has been given to the Seller and (ii) three (3) business days prior to the date required to answer or respond to any such claim), assume and control the defense of such Tax Claim at its own cost and expense and with its own counsel and Buyer agrees to cooperate reasonably with the Seller in pursuing such contest. If the Seller elects to assume the defense of any such Tax Claim, notwithstanding anything to the contrary contained herein, (a) the Seller shall consult with Buyer and shall not enter into any settlement with respect to any such Tax Claim without Buyer's prior written consent, which consent shall not be unreasonably withheld or delayed, provided, however, that if such settlement could increase the Tax liability of Buyer or of the Controlled Entities for any other taxable period, without the consent of Buyer; (b) the Seller shall keep Buyer informed of all material developments and events relating to such Tax Claim (including promptly forwarding copies to Buyer of any related correspondence and providing Buyer with a reasonable opportunity to review and comment on any related correspondence prior to being sent by the Seller to any tax authority); and (c) at its own cost and expense, Buyer shall have the right to participate in (but not to control) the defense of such Tax Claim. (iii) In connection with the contest of any Tax Claim that relates to (a) any Post-First-Closing Period, Post-Second-Closing Period or Post-Final-Closing Period, (b) any Straddle Period and (c) any Tax Claim that the Seller has the ability to control pursuant to Section 3.03(d)(ii) but does not timely elect to control pursuant to such section, such contest shall be controlled by Buyer, and the Seller agrees to cooperate reasonably with Buyer in pursuing such contest. In connection with any such contest that relates to (b) or (c) above, Buyer shall keep the Seller informed of all material developments and events relating to such Tax Claim and the Seller, at its own cost and expense, shall have the right to participate (including participation in any relevant meetings) in (but not control) the defense of such Tax Claim. In the case of a Tax Claim described in (b) or (c) above, the Buyer shall consult with the Seller and shall not enter into any settlement with respect to any such Tax Claim without the prior written consent of the Seller, which consent shall not be unreasonably withheld or delayed.
(iv) Notwithstanding anything to the contrary contained herein, the procedure for indemnification claims with regard to Taxes or otherwise brought pursuant to this Section 3.03 shall be governed exclusively by this Section 3.03.
(d) Conflicts; Survival. Notwithstanding any other provision of this Agreement to the contrary, the obligations of the parties hereto set forth in this Section 3.03 shall not be subject to any limitations contained in Article X; provided, however, that the representations and warranties contained in Section 4.17 shall survive the Closing until ninety (90) days following the expiration of the applicable statute of limitations (taking into account all extensions thereof); provided, further, in the event notice for indemnification under Section 3.03(d) hereof shall have been given within the applicable survival period, the representation or warranty that is the subject of such indemnification claim shall survive until such time as such claim is finally resolved. In the event of a conflict between this Section 3.03 and any other provision of this Agreement, this Section 3.03 shall govern and control.
(e) Tax Treatment. The parties hereto agree, unless otherwise
required by Applicable Law, to treat any payment made pursuant to Article X or
Section 3.03 as an adjustment to the Purchase Price for all Tax purposes.
(f) Tax Records. Buyer shall, at its own expense, preserve and
keep the records in its possession or the possession of any affiliate of Buyer
relating to the preparation of any Tax Return including the Seller Entities or
the Funds for any Pre-First-Closing Period, Pre-Second-Closing Period or
Pre-Final-Closing Period, as applicable, and such records as Seller may
reasonably require for the defense of any audit, examination, administrative
appeal or litigation of any such Tax Return for a period of ten years from the
Applicable Closing Date and shall make such records available to Seller as may
be reasonably required by Seller. In the event Buyer wishes to destroy such
records after that time, Buyer shall first give ninety (90) days prior written
notice to Seller and Seller shall have the right at its option and expense,
upon prior written notice given to Buyer within that ninety (90) day period, to
take possession of the records within one hundred and eighty (180) days after
the date of such notice. Seller shall, at its own expense, preserve and keep
the records in its possession or the possession of an affiliate of the Seller
relating to the preparation of any Tax Return including the Seller Entities or
the Funds for any Post-First-Closing Period, Post-Second-Closing Period or
Post-Final-Closing Period, as applicable, and such records as Buyer may
reasonably require for the defense of any audit, examination, administrative
appeal or litigation of any such Tax Return for a period of ten years from the
Applicable Closing Date and shall make such records available to Buyer as may
be reasonably required by Buyer. In the event the Seller wishes to destroy such
records after that time, the Seller shall first give ninety (90) days prior
written notice to Buyer and Buyer shall have the right at its option and
expense, upon prior written notice given to the Seller within that ninety (90)
day period, to take possession of the records within one hundred and eighty
(180) days after the date of such notice.
(g) Assistance and Cooperation. Subject to Section 3.05, after the Applicable Closing, the Seller and Buyer shall:
(i) provide (and cause their respective Affiliates to provide) information reasonably requested by the other party for the purpose of preparing any Tax Returns which such other party is responsible for preparing and filing in accordance with this Section 3.03;
(ii) cooperate reasonably in providing information reasonably requested for the preparation of any audits of, or disputes with taxing authorities regarding, any Tax Returns with respect to the Seller Entities or the Funds or the Asset Management Assets;
(iii) make available to the other and to any taxing authority as reasonably requested all information, records, and documents relating to Taxes of the Seller Entities or the Funds or the Asset Management Assets; and
(iv) furnish the other with copies of all correspondence received from any taxing authority in connection with any tax audit or information request with respect to any taxable period for which the other may have a liability under this Section 3.03.
3.04 Mail Received After Closings. On and after the Applicable Closing Date, Buyer may receive and open all mail addressed to any Seller Entity and deal with the contents thereof in its discretion to the extent that such mail and the contents thereof relate to the Asset Management Business, the Asset Management Assets or any of the Assumed Liabilities.
3.05 Books and Records. Except to the extent previously transferred to Buyer under the Brokerage Asset Purchase Agreement, Seller shall transfer to Buyer, as specified in Section 2.01 at the Applicable Closing, originals of all Books and Records (other than such Books and Records or any part thereof which are related solely to the Seller's or the Company's investment banking businesses) to the extent it is legally permitted to do so and copies of Books and Records (other than such Books and Records or any part thereof which are related solely to the Seller's or the Company's investment banking businesses) that it is prohibited by law from transferring to Buyer (including, without limitation, such Books and Records as may be required or necessary under Applicable Law). Buyer shall, after the Applicable Closing, (i) provide to Seller copies of and access to all Books and Records, including originals to the extent required, as reasonably requested by Seller and (ii) maintain or return to Seller all Books and Records for the periods that Seller or its Affiliates may be required (as specified in writing by Seller by June 30, 2003) to maintain same under Applicable Law. Seller shall, after the Applicable Closing, provide to Buyer copies of and access to all Books and Records as specified in Section 2.01, including originals to the extent required, as reasonably requested by Buyer to Buyer (including, without limitation, such Books and Records as may be required or necessary under Applicable Law). Notwithstanding the foregoing, Seller shall not be required to provide to Buyer copies of or access to any Tax Returns of Seller Parent or Company (including the consolidated U.S. federal income tax return of the affiliated group of which CIBC Delaware Holdings, Inc. is the common parent), except for the portion of such Tax Returns as shall relate to the Controlled Entities, the Asset Management Business or the Funds, as the case may be and which does not reveal any material information about the Seller Entities that is not related to the Asset Management Business or the Asset Management Assets.
3.06 Accounts Receivable. Accounts receivable of Seller which are Excluded Assets which are received by the Buyer shall be promptly turned over to Seller. Seller acknowledges that Buyer shall have no duty to make efforts to collect any such accounts receivable.
3.07 Schedules. The parties have agreed to execute and deliver this Agreement prior to the preparation, review and acceptance by Buyer Parent and Buyer of the Seller Disclosure Schedules. Promptly after such execution and delivery of this Agreement and in no case later than the January 15, 2003, Seller agrees to prepare (and update as necessary) such true and complete schedules and to deliver them to Buyer for its review. Buyer and Seller shall cooperate fully in connection with preparing such schedules. Such schedules shall be deemed part of this Agreement and incorporated herein only upon their written acceptance by Buyer. For the purpose of the rights and obligations of the parties hereunder, such Seller Disclosure Schedules shall not be deemed to have been disclosed as of the date of this Agreement and shall not in any way affect the rights and remedies of Buyer Parent or Buyer in respect of the representations and warranties made by Seller on the date hereof.
3.08 Certain Information. Promptly after the execution and delivery of this Agreement and in no case later than January 15, 2003, Seller will make available to Buyer Parent and Buyer and their counsel complete copies of any contracts, financial statements or other information relating to the Asset Management Business as has been requested in the due diligence request list, dated November 22, 2002, previously furnished to Seller and its counsel.
Each of Seller Parent and Company represents and warrants to Buyer and Buyer Parent as follows:
4.01 Organization of Seller Subsidiaries; Authority of Seller Entities.
(a) Section 4.01 of the Seller Disclosure Schedule sets forth a complete and accurate list of each Seller Subsidiary including each Seller Subsidiary's name, jurisdiction of organization or formation and the jurisdictions in which each of them is licensed or qualified or, if applicable, in good standing to do business. Seller Parent is a bank duly organized, validly existing and in good standing under the Bank Act of Canada. Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. Each Seller Subsidiary is duly organized or formed, validly existing and, if applicable, in good standing under the Applicable Laws of the jurisdiction of its organization or formation. Each Seller Subsidiary has all requisite corporate power and authority to own, lease and operate its properties and assets and to conduct its business as it is now being conducted. Each Seller Subsidiary is qualified or licensed to do business as a foreign corporation and is in good standing in every jurisdiction in which the character of the properties owned or leased by it or the nature of the business conducted by it makes such qualification necessary, except where the failure to be so qualified or licensed or in good standing would not have a Material Adverse Effect. Seller has made available to the Buyer complete and correct copies of the Organizational Documents, as in effect on the date hereof, of each Seller Subsidiary. The shareholder or unitholder corporate minutes of each Seller Subsidiary, the shareholder or unitholder minutes of each Fund and the stock transfer books of each Seller Subsidiary accurately and completely reflect all actions, whether formal or informal, taken by the Board of Directors (or other governing body) of each such Seller Subsidiary and the shareholders or unitholders of the Funds and reflect all transfers of any Equity Interests.
(b) Seller has all requisite corporate power and authority to enter into this Agreement, the Ancillary Agreements and any instruments and agreements contemplated herein required to be executed and delivered by it pursuant to this Agreement (including the Ancillary Agreements, collectively referred to herein as the "Seller Related Instruments") and to consummate the transactions contemplated hereby and thereby. The execution, delivery and performance of this Agreement and the Seller Related Instruments to which it is a party and the consummation of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of each Seller Entity and no other corporate proceedings on its part are necessary to authorize such execution, delivery and performance. This Agreement has been, and each of the Seller Related Instruments to which it is a party shall be, duly executed and delivered by Seller and constitute a valid and binding obligation of Seller, enforceable against such party in accordance with its terms, except that (i) such enforcement may be subject to bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to creditors' rights, and (ii) the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought.
4.02 Capital Structure.
(a) The authorized, issued and outstanding Equity Interests of each Seller Subsidiary are set forth in Section 4.02(a) of the Seller Disclosure Schedule. All of the outstanding Equity Interests have been duly authorized and validly issued and are fully paid and nonassessable and are owned beneficially and of record by the Person in the respective amounts specified in Section 4.02(a) of the Seller Disclosure Schedule, and none of such Equity Interests were issued in violation of any preemptive rights, applicable Organizational Documents or Applicable Laws.
(b) There are no preemptive or similar rights on the part of any holder of any class of equity interest in any of the Seller Subsidiaries. Except for this Agreement, no subscriptions, options, warrants, conversion or other rights, agreements, commitments, arrangements or understandings of any kind obligating any Seller Subsidiary, contingently or otherwise, to issue or sell, or cause to be issued or sold, any equity interests of them, or any interests or rights convertible into or exchangeable for any equity interests of them, are outstanding, and no authorization therefor has been given. There are no (i) outstanding contractual or other rights or obligations to or of any Seller Subsidiary or any other Person to repurchase, redeem or otherwise acquire any outstanding shares or other equity interests of any Seller Subsidiary, (ii) voting trusts or other agreements or understandings to which any Seller Subsidiary is a party with respect to voting of or the exercise of any other rights pertaining to, any Equity Interests of any Seller Subsidiary, or (iii) outstanding Indebtedness, the holders of which could have the right to vote, or which are convertible into or exercisable for Equity Interests of any Seller Subsidiary or the right to vote on any matters with respect to the Equity Interests.
(c) Section 4.02(c) of the Seller Disclosure Schedule sets forth a true and complete list of each general partner or managing member, investment adviser or sub-adviser, administrator, distributor or placement agent of, or other service provider to, any Client. Except as set forth in Section 4.02(c) of the Seller Disclosure Schedule, Seller is the sole beneficial owner and holder of record of the equity interests in each such general partner, managing member and investment adviser or sub-adviser.
4.03 Title to Equity Interests. Seller owns, directly or indirectly, and will own at the time of the Final Closing, beneficially and of record, the Equity Interests, free and clear of any Liens other than Liens created by or attributable to Buyer. Upon the delivery of the executed Instruments of Assignment at the Final Closing, Buyer will acquire good and valid title to the Equity Interests, free and clear of any Lien other than any Lien created by or attributable to Buyer, and each Equity Interest will entitle the holder thereof to all the rights and privileges pertaining to each such Equity Interest.
4.04 No Violation; Consents and Approvals.
(a) The execution and delivery of this Agreement and the Seller
Related Instruments does not, and the consummation of the transactions
contemplated hereby or thereby and compliance with the terms hereof or thereof
will not (i) violate or be in conflict with (A) any provision of the
Organizational Documents of any Seller Entity or (B) any Law applicable to any
Seller Entity, the Asset Management Business or the Asset Management Assets or
(ii) conflict in any material respect with, or result in any material violation
of or constitute a material default (or an event or condition which, with
notice or lapse of time or both, would constitute a material default) under, or
result in the termination of or loss of rights and benefits under, or
accelerate the performance required by, or cause the acceleration of the
maturity of any liability or obligation pursuant to, or result in the creation
or imposition of any Lien under, any Contract or other instrument or
obligation, commitment, undertaking, arrangement or restriction of any kind or
character to which any Seller Entity is a party or by which any Seller Entity
may be bound or affected or to which any of the Asset Management Assets or the
Asset Management Business may be subject.
(b) Except as set forth in Section 4.04(b) of the Seller Disclosure Schedule, and except for compliance with the HSR Act, no consent, approval, order or authorization of, or notice to, or registration, declaration or filing with, any Governmental Entity or any third party is required to be obtained or made by or with respect to any Seller Entity in connection with the execution and delivery of this Agreement or the Seller Related Instruments or the consummation by any Seller Entity of the transactions contemplated hereby or thereby or to enable Buyer after each of the Applicable Closing to (i) conduct the Asset Management Business, (ii) transfer the Transferred Accounts to Buyer or (iii) continue to service the Transferred Accounts in the geographic areas and in a manner consistent with that in which the Transferred Accounts currently are serviced by Company.
4.05 Financial Statements.
(a) Section 4.05(a) of the Seller Disclosure Schedule sets forth an unaudited profit and loss statement of each of the Seller Subsidiaries and the Asset Management Business for the November 30, 2002 fiscal year then ended, and an unaudited income statement of each of the Seller Subsidiaries and the Asset Management Business for the November 30, 2002 fiscal year then ended (the "Financial Statements").
(b) The Books and Records other than the Financial Statements of
each Seller Subsidiary and the Asset Management Business have been maintained
in accordance with GAAP and with all Applicable Laws. Except as set forth on
Section 4.05(b) of the Seller Disclosure Schedule, each of the Financial
Statements are based on the accounting books and records of each of the Seller
Subsidiaries and the Asset Management Business and, except as set forth in
Section 4.05(b) of the Seller Disclosure Schedule, have been prepared in
conformity with GAAP (subject to normal year end adjustments) applied on a
consistent basis throughout the periods indicated, and fairly and accurately
presents the financial condition of each of the Seller Subsidiaries and the
Asset Management Business as of the dates thereof and the results of operations
and cash flows of each of the Seller Subsidiaries and the Asset Management
Business for the periods then ended.
(c) Except as set forth in the Financial Statements or in
Section 4.05(c) of the Seller Disclosure Schedule, there are no material
special or nonrecurring items of income or expense during the periods covered
by the Financial Statements, and the balance sheets included in the Financial
Statements do not reflect any write-up or revaluation increasing the book value
of any assets. The balance sheets included in the Financial Statements do not
include any assets or liabilities that do not constitute a part of the Asset
Management Business after giving effect to the transactions contemplated by
this Agreement, and the income statements included in the Financial Statements
do not reflect the results of operations of any Person, business, property or
assets that do not constitute a part of the Asset Management Business after
giving effect to the transactions contemplated by this Agreement. Such income
statements reflect all costs, expenses and other charges that historically have
been incurred in connection with the operation of the Asset Management
Business.
(d) Except for transactions, Contracts, Indebtedness or other relationships otherwise specifically identified on the balance sheet included in the Financial Statements (including, without limitation, the identification of the information set forth in the following sentence) or in Section 4.05(d) of the Seller Disclosure Schedule, there are no transactions, Contracts, Indebtedness or other relationships between and/or among any Seller Entity and/or any their respective Affiliates and any unconsolidated entity or other Person in respect of the Asset Management Business, including without limitation, any structured finance, special purpose or limited purpose entity (each, an "Off-Balance Sheet Transaction"). Section 4.05(d) of the Seller Disclosure Schedule also sets forth (i) the business purpose and activities of each Off-Balance Sheet Transaction, (ii) the economic substance of each Off-Balance Sheet Transaction, (iii) the key terms and conditions of each Off-Balance Sheet Transaction, (iv) each such Seller Subsidiary's or such Affiliate's potential risk associated with each such Off-Balance Sheet Transaction, (v) the amounts of any Indebtedness that could require such Seller Subsidiary or such Affiliate to provide funding of any obligations under any such Off-Balance Sheet Transaction and (vi) any other information with respect to each such Off-Balance Sheet Transaction that, individually or in the aggregate, has had or could reasonable be expected to have a Material Adverse Effect.
(e) Aggregate revenues from advisory and other fees for the Asset Management Business for the month of November 2002 were $3,618,400.
4.06 Absence of Undisclosed Liabilities. Except for liabilities and obligations (i) reflected on the Financial Statements or (ii) incurred in the ordinary course of business consistent with past practice since the date of the Financial Statements, neither any Seller Subsidiary nor the Asset Management Business has incurred any liabilities or obligations of whatsoever nature or amount, direct or indirect, whether accrued, fixed, contingent or otherwise.
4.07 Absence of Certain Changes or Events.
Since December 1, 2002, (i) the Asset Management Business has been operated only in the ordinary course consistent with past practice, (ii) through the date of this Agreement, there has been no event, change or development (including but not limited to any change in the Asset Management Assets or the business, working capital, financial condition, results of operation or liabilities of the Asset Management Business, or any loss of any members, employees or Clients) which, individually or in the aggregate, has had or is reasonably likely to have a Material Adverse Effect, (iii) no Client has canceled or terminated, or threatened to cancel or terminate, its relationship with any Seller Entity and, to the knowledge of Seller, no Client intends to adversely modify such relationships in any material respect, either as a result of the transactions contemplated by this Agreement or otherwise and (iv) Seller has not taken and has not caused any Seller Entity to take any action which, if taken without the consent of Buyer after the execution and delivery of this Agreement, would constitute a breach or violation of Section 6.01.
4.08 Title to Assets.
(a) Each Seller Entity has good and valid title to all of the
Asset Management Assets owned by it and valid leasehold interests in, or other
rights to use, all of the Asset Management Assets. Except as set forth on
Section 4.08(a) of the Seller Disclosure Schedule, the Asset Management Assets
are owned by each Seller Entity, as the case may be, free and clear of all
Liens, other than (i) mechanics', carriers', workmen's, repairmen's or other
like liens arising or incurred in the ordinary course of business, (ii) liens
for Taxes, assessments and other governmental charges which are not due and
payable or which may hereafter be paid without penalty or which are being
contested in good faith by appropriate proceedings (for which adequate reserves
have been made in the Financial Statements in accordance with GAAP) and (iii)
other imperfections of title or encumbrances arising in the ordinary course of
business, if any, which do not materially impair the use of the Asset
Management Assets or the operation of the Asset Management Business (the
mortgages, liens, security interests and encumbrances described in clauses (i),
(ii) and (iii) above are collectively referred to herein as "Permitted Liens").
(b) Section 4.08(b) of the Seller Disclosure Schedule sets forth a true and complete list of real property owned, leased or otherwise used in the Asset Management Business.
(c) The Instruments of Assignment, when duly executed and delivered by Seller to Buyer, and the delivery of the Asset Management Assets and Equity Interests at the Applicable Closing, shall effectively vest in Buyer good and valid title to all of the Asset Management Assets and Equity Interests comprising the Asset Management Business, subject only to Permitted Liens and Assumed Liabilities.
4.09 Intellectual Property.
(a) Section 4.09(a) of the Seller Disclosure Schedule sets forth a true and complete list of all of the Intellectual Property used in the Asset Management Business, including a complete and accurate list of all U.S. and foreign (i) patents and patent applications; (ii) Internet domain registrations; and (iii) Software (other than readily available commercial software programs having an acquisition price of less than $5,000) which are owned, licensed, leased, by any Seller Entity or any Subsidiary of any of them, and any copyright registrations, copyright applications, and material unregistered copyrights, in each case describing which Software is owned, licensed, or leased, as the case may be; and (iv) all of Seller Entities' U.S. Trademarks and, to Seller's knowledge, the foreign marks used with the Asset Management Business.
(b) Section 4.09(b) of the Seller Disclosure Schedule sets forth a complete and accurate list of all agreements (whether oral or written, and whether between any Seller Entity and third parties or inter-corporate) with respect to the Asset Management Business, (i) granting or obtaining any right to use or practice any rights under any Intellectual Property (other than licenses for readily available commercial software programs having an acquisition price of less than $5,000), or (ii) to the knowledge of Seller, restricting any Seller Entity's or any such Subsidiary's rights to use any Intellectual Property, including license agreements, development agreements, distribution agreements, settlement agreements, consent to use agreements, and covenants not to sue (collectively, the "License Agreements"). The License Agreements are valid and binding obligations of all parties thereto, enforceable in accordance with their terms, and there exists no event or condition which will result in a violation or breach of, or constitute (with or without due notice of lapse of time or both) a default by any party under any such License Agreement. No Seller Entity has licensed or sublicensed its rights in any Intellectual Property other than pursuant to the License Agreements. No royalties, honoraria or other fees are payable by any Seller Entity to any third parties for the use of or right to use any Intellectual Property except pursuant to the License Agreements.
(c) Except as set forth on Section 4.09(c) of the Seller Disclosure Schedule:
(i) The applicable Seller Entity owns, or has a valid right to use, free and clear of all Liens, all of the Intellectual Property.
(ii) The Intellectual Property owned by the applicable Seller Entity and, to the best of Seller's knowledge, any Intellectual Property used by any Seller Entity, is subsisting, in full force and effect, and has not been cancelled, expired, or abandoned, and, to the best of Seller's knowledge is valid and enforceable.
(iii) There is no pending or, to the best of Seller's knowledge, threatened claim, suit, arbitration or other adversarial proceeding before any court, agency, arbitral tribunal, or registration authority in any jurisdiction involving the Intellectual Property owned by any Seller Entity, or, to the best of Seller's knowledge, the Intellectual Property licensed to any Seller Entity, alleging that the activities or the conduct of any Seller Entity's businesses infringe upon, violate or constitute the unauthorized use of the intellectual property rights of any third party or challenging the ownership, use, validity, enforceability or registrability of any Intellectual Property by any Seller Entity. There are no settlements, forbearances to sue, consents, judgments, or orders or similar obligations other than the License Agreements which (1) restrict the right of any Seller Entity to use any Intellectual Property, (2) restrict the businesses of any Seller Entity in order to accommodate a third party's intellectual property rights or (3) permit third parties to use any Intellectual Property owned or controlled by any Seller Entity.
(iv) The conduct of the business of any Seller Entity as currently conducted or planned to be conducted does not infringe upon (either directly or indirectly such as through contributory infringement or inducement to infringe) any intellectual property rights owned or controlled by any third party. To the best of Seller's knowledge, no third party is misappropriating, infringing, diluting or violating any Intellectual Property owned or used by any Seller Entity and no such claims, suits, arbitrations or other adversarial proceedings have been brought or threatened against any third party by any Seller Entity.
(v) Seller Parent or the applicable Seller Entity has taken reasonable measures to protect the confidentiality of Trade Secrets. To the best of Seller's knowledge, no Trade Secret has been disclosed or authorized to be disclosed to any third party other than pursuant to a non-disclosure agreement. To the best of Seller's knowledge, no party to any non-disclosure agreement relating to its Trade Secrets is in breach or default thereof.
(vi) No current or former partner, director, officer, or employee of any Seller Entity (or any of their respective predecessors in interest) shall, after giving effect to the transactions contemplated herein, own or retain any rights to use any of the Intellectual Property owned or used by any Seller Entity or any Subsidiary of any of them.
(d) The consummation of the transaction contemplated hereby shall not result in the loss or impairment of the right of any Seller Entity own or use any of the Intellectual Property, nor shall it require the consent of any governmental authority or third party in respect of any such Intellectual Property. No consents are required in order for Buyer to assume the rights and obligations of the Seller Entities or the Subsidiaries of any of them under each License Agreement.
(e) To the knowledge of Seller, the Oppenheimer Name as used in the Asset Management Business does not infringe upon, violate or constitute the unauthorized use of the intellectual property rights of any third party and except as set forth in Section 4.09(e) of the Seller Disclosure Schedule, Seller has not licensed the Oppenheimer Name to any other party for the use provided for in, or in any manner in conflict with, the Name Assignment Agreement.
4.10 Litigation. Section 4.10 of the Seller Disclosure Schedule sets forth a complete and accurate list of any and all material claims, actions, suits, proceedings, investigations and inquiries ("Litigation") pending, asserted or, to Seller's knowledge, threatened during the one year period prior to the date hereof, against any Seller Entity or any Affiliates of such Seller Entity with respect to the Asset Management Business or any of the Asset Management Assets or any Registered Representative or other employee of the Asset Management Business by or before any Governmental Entity, or by or on behalf of any third party. None of the Litigation set forth on such Schedule is reasonably likely to (i) result in material liability to any Seller Entity, materially interfere with or inhibit the operation of the Asset Management Business or materially impair the value of the Asset Management Assets, (ii) have the effect of delaying, preventing, or making illegal the consummation of the transactions contemplated hereby or (iii) materially interfering with the ability of Buyer to operate the Asset Management Business after the Applicable Closing.
4.11 Employees; Employee Benefits.
(a) Except as set forth on Section 4.11(a) of the Seller Disclosure Schedule, the consummation of the transactions contemplated by this Agreement will not, either alone or in combination with another event, (i) entitle any current or former employee, officer or director of Seller or any ERISA Affiliate to severance pay, unemployment compensation or any other similar payment or (ii) accelerate the time of payment or vesting, or increase the amount of or otherwise enhance any benefit due any such employee, officer or director.
(b) The Deferred Compensation Plan has been operated and administered in all material respects in accordance with its terms and with the requirements prescribed by any and all Applicable Law, including ERISA and the Code, as applicable.
(c) Except as set forth in the employment agreements and the
form agreements listed Section 4.11(c) of the Seller Disclosure Schedule, no
Seller Entity has entered into or currently maintains any employment agreements
or other employment arrangements whether written, oral or otherwise with any
Business Employee or any employee of any Seller Subsidiary (a "Seller
Subsidiary Employee"), and all of the Business Employees and Seller Subsidiary
Employees are "employees-at-will." No Seller Entity has received notice or
indication from, or has reason to believe that, any of the Business Employees
set forth in Section 3.02(a) of the Seller Disclosure Schedule shall (i) cease
to be Business Employees at any point prior to the applicable Hire Date; or
(ii) be unwilling or unable to become or otherwise restricted or prohibited
from becoming a Transferred Employee as of the applicable Hire Date.
(d) Employees of Seller Subsidiaries. Except for the employment agreements and severance policies disclosed in Section 4.11(d) of the Seller Disclosure Schedule, there is no employee benefit plan, arrangement or agreement that is maintained, sponsored, contributed to or required to be contributed to by any Seller Subsidiary.
4.12 Labor Matters.
(a) (i) No labor strike, dispute, slowdown, stoppage or lockout is pending, or to the knowledge of Seller, threatened against or affecting any Seller Entity and during the past five years there has not been any such action, (ii) no Seller Entity is party to or bound by any collective bargaining or similar agreement with any labor organization, or work rules or practices agreed to with any labor organization or employee association applicable to employees of such Seller Entity, (iii) no employees of any Seller Entity are represented by any labor organization and Seller has no knowledge of any union organizing activities among the employees of any Seller Entity within the past five years, (iv) no material written personnel policies, rules or procedures are applicable to employees of the Asset Management Business other than those listed on Section 4.12(a) of the Seller Disclosure Schedule, true and correct copies of which have been previously made available to Buyer, (v) each Seller Entity is in compliance, in all material respects, with all requirements of Law respecting employment and employment practices, terms and conditions of employment, wages, hours of work and occupational safety and health, and, to the knowledge of Seller, no Seller Entity is engaged in any unfair labor practices as defined in the National Labor Relations Act or other Applicable Laws, (vi) no unfair labor practice charge or complaint against any Seller Entity is pending or, to the knowledge of Seller, threatened before the National Labor Relations Board or any similar agency, (vii) no charge or complaint with respect to or relating to any Seller Entity is pending before, and no Seller Entity has received any notice of intent to conduct an investigation from, the Equal Employment Opportunity Commission or any other agency responsible for the prevention of unlawful employment practices, (viii) no Seller Entity has received notice of the intent of any federal, state, local or foreign agency responsible for the enforcement of labor or employment laws to conduct an investigation with respect to or relating to any Seller Entity and no such investigation is in progress and Seller has no knowledge of any other person investigating any such allegation that could reasonably be anticipated to result in significant liability, and (ix) no complaints, lawsuits or other proceedings are pending or, to the knowledge of Seller, threatened in any forum by or on behalf of any present or former employee of any Seller Entity, any applicant for employment or classes of the foregoing alleging breach of any express or implied contract or employment, any laws governing employment or the termination thereof or other discriminatory, wrongful or tortuous conduct in connection with the employment relationship.
(b) Except as set forth in Section 4.12(b) of the Seller Disclosure Schedule, which shall be provided to Buyer on the Final Closing Date, none of the Seller Entities' employees employed in the Asset Management Business or at sites constituting "a single site of employment" (as defined in the WARN Act or interpretive regulations) with the Asset Management Business, suffered an "employment loss" (as defined in the WARN Act) during the six-month period preceding the Final Closing Date.
4.13 Certain Contracts and Arrangements.
(a) Section 4.13(a) of the Seller Disclosure Schedule sets forth a complete and accurate list of all material agreements, contracts and commitments (and all amendments thereto) to which any Seller Entity or any Affiliate of such Seller Entity is a party relating primarily to, or necessary for the conduct of, the Asset Management Business or the Asset Management Assets or by which the Asset Management Business or the Asset Management Assets are bound or materially affected (the "Contracts"), including all of the following:
(i) employment, consulting, severance, agency, bonus, compensation, or other trusts, funds or other Contracts relating to or for the benefit of current, future or former employees, officers, directors, sales representatives, distributors, dealers, agents, independent contractors or consultants; agreements relating to brokers, managers and employees of the Asset Management Business, including, all compensation related plans, programs and arrangements;
(ii) joint venture, strategic alliance, exclusive distribution, partnership and similar Contracts involving a sharing of profits or expenses or payments based on revenues, profits or assets under management of any Seller Entity, any Client or any Affiliate of any of them;
(iii) Contracts evidencing any Indebtedness;
(iv) Advisory Agreements;
(v) Distribution Agreements, Underwriting Agreements and Services Agreements;
(vi) Wrap Agreements;
(vii) introducing broker agreements, marketing agreements or similar agreements calling for the making of payments for the servicing of accounts;
(viii) all real estate leases and related sub-leases and service agreements;
(ix) sales, marketing and account solicitation agreements and arrangements;
(x) finder's Contracts;
(xi) Affiliate Agreements;
(xii) Contracts or series of related Contracts with respect to which the aggregate amount that could reasonably expected to be paid or received thereunder in the future exceeds $[25,000] per annum or an aggregate of $[75,000] under the terms of the contract;
(xiii) Contracts requiring any Seller Entity (i) to co-invest with any Client or any other Person, (ii) to provide seed capital or similar investment or (iii) to invest in any investment product (including, without limitation, any such Contract requiring additional or "follow-on" capital contributions to any Non-Registered Fund);
(xiv) Contracts containing "most favored nation" provisions;
(xv) Contracts containing any undertaking to cap fees or to return or reimburse fees payable to any Seller Entity thereunder, or any "clawback" or similar provisions;
(xvi) Contracts having the purpose or effect of conferring upon any of the Seller Entities liability as a general partner of any Person;
(xvii) Organizational Documents of any Fund or any general partner, managing member, investment advisory or sub-advisor thereof;
(xviii) Contracts providing for the indemnification of any Person with respect to material liabilities, whether absolute, accrued, contingent or otherwise;
(xix) Confidentiality agreements;
(xx) Contracts prohibiting or materially restricting the ability of any Seller Entity to conduct the Asset Management Business, to engage in any business or to operate in any geographical area or to compete with any Person;
(xxi) any Contract not in the ordinary course of business consistent with past practice;
(xxii) License Agreements or other Contracts in respect of any Intellectual Property or data processing Contracts;
(xxiii) Contracts pursuant to which any Seller Entity receives any compensation based on investment performance;
(xxiv) Contracts providing for future payments that are conditioned, in whole or in part, on a change in control of any Seller Entity;
(xxv) stock purchase agreements, asset purchase agreements and other acquisition or divestiture agreements, including but not limited to any agreements relating to the acquisition, lease or disposition of any Seller Affiliate, any material assets or properties, any business, or any capital stock of or other interest in any Person by any Seller Entity or any Affiliate of any Seller Entity, within the last six years, or involving continuing indemnity or other obligations; and
(xxvi) other material Contracts, leases, licenses, commitments or instruments to which any Seller Entity or any Affiliate of a Seller Entity is a party, relating primarily to, or necessary for the conduct of the Asset Management Business.
(b) Each Contract is a legal, valid and binding obligation of the applicable Seller Entity and, to the knowledge of Seller, the other parties thereto, in full force and effect, enforceable against such Seller Entity and, to the knowledge of Seller, such other parties, except that (i) such enforcement may be subject to bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to creditors' rights, and (ii) the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought, and are validly assignable to Buyer without the consent of any other party, except as stated in Section 4.13(b) of the Seller Disclosure Schedule. No Seller Entity or any Affiliate of a Seller Entity is, and to Seller's knowledge, no other party thereto is, in breach of or default under any Contract, nor does there exist, to Seller's knowledge, any basis for the assertion of any such breach or default by or against any Seller Entity or any of their respective Affiliates. There have been no written threatened cancellations of, and there is no material pending dispute under, any Contract. The terms and enforceability of the Contracts shall not be affected in any manner by the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby.
(c) Except as set forth on Section 4.13(a) of the Seller Disclosure Schedule, there are no Contracts necessary for Buyer to operate the Asset Management Business after the Applicable Closing.
(d) No Seller Entity nor any Affiliate of a Seller Entity is either (i) subject to any obligations, agreements, contracts, arrangements or covenants that would, in any material respect, impede, restrict or prevent Buyer from operating the Asset Management Business after each of the Applicable Closing or (ii) required to obtain any consent, authorization, permit or waiver from any Governmental Entity or third party, the absence of which would, in any material respect, impede, restrict or prevent Buyer from operating the Asset Management Business after the Applicable Closing.
(e) Seller has informed Buyer of any notification received by any Seller Entity prior to the date of this Agreement with respect to the withdrawal of any material funds managed by any Seller Entity on behalf of any current Client or former Client who has terminated its relationship with such Seller Entity within one year prior to the date hereof.
4.14 Compliance with Laws; Licenses.
(a) The Asset Management Business has been, and is being, operated by the Seller Entities in compliance in all material respects with all applicable Laws, including Environmental Laws and Labor Laws ("Applicable Laws"). Section 4.14(a) of the Seller Disclosure Schedule sets forth a complete list of all Permits required in connection with the operation of the Asset Management Business and ownership of the Asset Management Assets under Applicable Laws. Each Seller Entity, as applicable, possesses all such Permits, and is in compliance in all material respects with, all such Permits.
(b) Each officer and employee of a Seller Entity who is required to have any Permits for the activities conducted by such officer or employee has and at all times has had such Permits in each state or jurisdiction in which and with each Governmental Entity with whom each such Permit is so required (such officers and employees are collectively, the "Registered Representatives"). Section 4.14(b) of the Seller Disclosure Schedule sets forth a true and complete list of all such Permits. To the knowledge of Seller, none of the Registered Representatives is or has been subject to any disciplinary or other regulatory compliance action or complaint by a regulator or customer.
(c) No Seller Entity, and to the knowledge of Seller, no Affiliate of any Seller Entity or their respective officers and employees has received any notification or communication from any Governmental Entity relating to, involving or applying to the Asset Management Business or the Asset Management Assets (i) asserting that any of them is not in compliance with any of the statutes, rules, regulations, or ordinances which such Governmental Entity enforces, or has otherwise engaged in any unlawful business practice, (ii) threatening to revoke any license, franchise, Permit, seat on any stock or commodities exchange or Authorization, (iii) requiring any of them (including any of any Seller Entity's directors or controlling persons) to enter into a cease and desist order, agreement, or memorandum of understanding (or requiring the board of directors of any Seller Entity to adopt any resolution or policy), or (iv) restricting or disqualifying the activities of any Seller Entity (except for restrictions generally imposed by rule, regulation or administrative policy on brokers or dealers generally).
(d) During the three (3) years prior to the date hereof, except as set forth in Section 4.14(d) of the Seller Disclosure Schedule and except for normal examinations or inspections conducted by any Governmental Entity in the regular course of the Asset Management Business of the Seller Entities, (i) to the Seller's knowledge, no Governmental Entity has initiated any administrative proceeding or investigation into any Seller Entity, Registered Representative or the Asset Management Business and (ii) no Seller Entity has received any notice of any material violation or exception by any Governmental Entity with respect to any report or statement by any Governmental Entity relating to any examination or inspection of such Seller Entity. Copies of all reports or letters with respect to any such examinations or investigations during the past 3 years will be been made available to Buyer.
(e) ERISA Clients. Except as set forth in Section 4.14(e) of the Seller Disclosure Schedule, each Client to which any Seller Entity provides investment management, advisory or sub-advisory services that is (i) an employee benefit plan, as defined in Section 3(3) of ERISA that is subject to Title I of ERISA, (ii) a Person acting on behalf of such a plan or (iii) any entity whose assets include the assets of such a plan, within the meaning of ERISA and applicable regulations (hereinafter referred to as an "ERISA Client") have been managed by any Seller Entity such that the exercise of such management or provision of any services is in compliance with the applicable requirements of ERISA at all times required by Applicable Law.
(f) Certain Employee or Director Disciplinary Matters. Except as
set forth in Section 4.14(f) of the Seller Disclosure Schedule, no director,
managing director, member, officer or employee of any Seller Entity who renders
services to or as part of the Asset Management Business is (i) subject to any
cease and desist, censure or other disciplinary or similar order issued by,
(ii) a party to any written agreement, consent agreement, memorandum of
understanding or disciplinary agreement with, (iii) a party to any commitment
letter or similar undertaking to, (iv) subject to any order or directive by or
(v) a recipient of any supervisory letter from, any Governmental Entity.
4.15 Brokers.
Except as set forth on Section 4.15 of the Seller Disclosure Schedule, no broker, finder or financial advisor or other person is entitled to any brokerage fees, commissions, finders' fees or financial advisory fees in connection with the transactions contemplated hereby by reason of any action taken by any Seller Entity or any of their respective directors, officers, employees, representatives or agents.
4.16 Assets Necessary to Business.
The Asset Management Assets and Equity Interests constitute all of the assets, properties, licenses and agreements which are being used on the date hereof in the Asset Management Business and include all assets, properties, licenses and agreements necessary for Buyer to operate the Asset Management Business after the Final Closing, except for the Excluded Assets and Brokerage Assets.
4.17 Taxes.
(a) Except as set forth in Section 4.17(a) of the Seller Disclosure Schedule, all Tax Returns with respect to the Asset Management Business or the Asset Management Assets or income attributable therefrom that are required to be filed by the Company or any Controlled Affiliate of the Company on or before the Applicable Closing Date have been or will be filed, the information provided on such Tax Returns is or will be complete and accurate in all material respects, and all Taxes shown to be due or as required to be withheld on such Tax Returns have been or will be paid in full, to the extent that a failure to file such Tax Returns or to withhold or to pay such Taxes, or an inaccuracy in such Tax Returns, could result in Buyer being liable for such Taxes or could give rise to a Lien on the Asset Management Assets.
(b) Except as set forth in Section 4.17(b) of the Seller Disclosure Schedule, each of the Controlled Entities has (i) duly and timely filed (or has had duly and timely filed on its behalf) with the appropriate Governmental Authority all material Tax Returns required to be filed by it, and all such Tax Returns are true, correct and complete in all material respects and (ii) timely paid or withheld (or there has been timely paid or withheld on its behalf) all material Taxes due, claimed to be due or required to be withheld from or in respect of it by any Governmental Authority.
(c) No jurisdiction in which the Seller Entities do not file a Tax Return has made a claim in writing that any of the Seller Entities is required to file a Tax Return for such jurisdiction.
(d) The fair market value on the Brokerage Closing Date of the assets of the Seller Entities and the Controlled Entities that are members of the affiliated group (as defined in section 1504 of the Internal Revenue Code of 1986, as amended, without regard to section 1504(b) thereof) of which Seller Parent is the common parent was less than one-third of the total fair market value on the Brokerage Closing Date of the assets of all corporations that were members of such affiliated group immediately prior to the Brokerage Closing Date. For purposes of the immediately preceding sentence, stock in a member of such affiliated group shall not be treated as an asset of any member of such affiliated group.
(e) Except as set forth in Section 4.17(e) of the Seller Disclosure Schedule, each of the Controlled Entities that is a partnership or limited liability company has been treated as a partnership or a disregarded entity for United States federal income tax purposes since its formation.
(f) Each of the Controlled Entities that is a regulated investment company for United States federal income tax purposes has been treated as a regulated investment company for United States federal income tax purposes since its formation. Each such Fund currently satisfies and at all times since formation has satisfied the requirements of Sections 851 through 855 of the Code and the Treasury Regulations promulgated thereunder.
(g) The Company is not a foreign person within the meaning of
Section 1445 of the Code.
4.18 Disclosure.
No representation or warranty by Seller Parent or Company contained in this Agreement, and no statement contained in this Agreement, the Seller Related Instruments, the Financial Statements or the Seller Disclosure Schedule, contains or will contain any untrue statement of a material fact, or omits or will omit to state any material fact necessary, in light of the circumstances under which it was or will be made, in order to make the statements herein or therein not misleading, or necessary in order to fully and fairly provide the information required to be provided in any such document.
4.19 Transferred Accounts.
(a) The Transferred Accounts have been created, maintained and serviced by the applicable Seller Entity in compliance in all material respects with all Applicable Laws of any applicable Governmental Entity.
(b) The transfer to Buyer of the Transferred Account Information pursuant to the terms of this Agreement will not violate, in any material respect any privacy right or other personal rights of any customer, prospective customer or other person.
(c) There are no pending complaints or, to the best of Seller's knowledge, threatened or other controversies regarding any Transferred Account, that could reasonably be expected to result in a complaint, from or relating to any Transferred Account, except those set forth in Section 4.19(c) of the Seller Disclosure Schedule.
(d) Attached to Section 4.19(d) of the Seller Disclosure Schedule is (i) a true and correct copy of the current form (and to the extent any material term of a predecessor form is different from any material term of the current form, such other predecessor form) of Advisory Agreement or Wrap Agreement that any Seller Entity has entered into with any Client with respect to a Transferred Account (each such agreement being referred to herein as a "Customer Agreement") and (ii) a copy of each Advisory Agreement or Wrap Agreement set forth as an "exception" pursuant to the immediately following sentence of this Section 4.19(d). Except as set forth on Section 4.19(d) of the Seller Disclosure Schedule, in respect of the Transferred Accounts, no Seller Entity has entered into any contract or agreement with any Client, nor is it rendering services to any Client, other than pursuant to a Customer Agreement. Each Customer Agreement is a legal, valid and binding obligation of the applicable Seller Entity and, to the knowledge of Seller, the other parties thereto, in full force and effect, enforceable against the applicable Seller Entity and, to the knowledge of Seller, such other parties, except that (i) such enforcement may be subject to bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to creditors' rights, and (ii) the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought.
4.20 Transferred Account Information. The Transferred Account Information, all of which has been or shall be made available to Buyer prior to or at the Applicable Closing is current, complete and correct in all material respects (other than with respect to financial information, which is complete and correct in all respects) and has been maintained on a consistent basis. At the Applicable Closing, subject to applicable privacy laws, all of such Transferred Account Information will be in the possession of Buyer. The transfer to Buyer of the Transferred Account Information pursuant to the terms of this Agreement does not violate any privacy right or other personal rights of any customer, prospective customer or other person.
4.21 Government Regulation.
(a) Filings. Each Seller Entity is duly registered or licensed
in the capacities shown in Section 4.21(a) of the Seller Disclosure Schedule,
and has filed all material registrations, reports, statements, notices and
other material filings required under Applicable Law to be filed with the
Commission and any other Governmental Entity by such entity, to the extent
applicable, including all material amendments or supplements to any of the
above (the "Filings") for the past five (5) years. The Filings complied in all
respects, where applicable, with the requirements of the Exchange Act, the
Advisers Act, the Investment Company Act and all other Applicable Laws and did
not contain any untrue statement of material fact or omit to state a material
fact required to be stated therein, or necessary to make the statements
contained therein, in light of the circumstances under which they were made,
not misleading. Seller has made or will make available to Buyer complete and
correct copies of (i) all Filings made within the past five (5) years
(including, but not limited to all filings on Form ADV), (ii) all audit or
inspection reports received by any Seller Entity or any Fund from the
Commission or any other Governmental Entity and all written responses thereto
during the past five (5) years, (iii) copies of all inspection reports provided
to any Seller Entity by the Commission or any other Governmental Entity during
the past five (5) years, and (iv) all correspondence relating to any
investigation provided to any Seller Entity by the Commission or any other
Governmental Entity during the past two (2) years. Except as set forth in
Section 4.21(a) of the Seller Disclosure Schedule, as of the date of this
Agreement, there is no unresolved violation, criticism, or exception by any
Governmental Entity with respect to any report or statement relating to any
examinations or inspections of any Seller Entity that arose or was initiated
within the past two (2) years.
(b) Advisers Act.
(i) Except as set forth in Section 4.21(b)(i) of the Seller
Disclosure Schedule, each Seller Entity is, and at all times required by
the Advisers Act during the past five (5) years has been, duly registered
as an investment adviser under the Advisers Act. Except as set forth in
Section 4.21(b)(i) of the Seller Disclosure Schedule, each Seller Entity
is, and at all times required by Applicable Law (other than the Advisers
Act) during the past five (5) years has been, duly registered, licensed or
qualified as an investment adviser in each state or any other domestic or
foreign jurisdiction where the conduct of its business required such
registration, licensing or qualification. Each such United States federal
and state registration, license or qualification, as of the date hereof,
is listed in Section 4.21(b)(i) of the Seller Disclosure Schedule and is
in full force and effect. Except as set forth on Section 4.21(b)(i) of the
Seller Disclosure Schedule, no Affiliate of any Seller Entity has been
during the past five (5) years required to be registered, licensed or
qualified as an investment adviser under the Advisers Act or other
Applicable Law or subject to any material liability or disability by
reason of any failure to be so registered, licensed or qualified.
(ii) Ineligible Persons. None of the Seller Entities nor
any "affiliated person" (as defined in the Investment Company Act) of any
of them is ineligible pursuant to Section 9(a) or 9(b) of the Investment
Company Act to serve as an investment adviser (or in any other capacity
referred to in Section 9(a) of the Investment Company Act) to a registered
investment company. None of the Seller Entities is ineligible pursuant to
Section 203 of the Investment Advisers Act or Section 15(b) of the
Exchange Act to serve as a registered investment adviser or broker-dealer
and no "associated person" (as defined in the Investment Advisers Act or
the Exchange Act) of any Seller Entity is ineligible pursuant to Section
203 of the Investment Advisers Act or Section 15(b) of the Exchange Act to
serve as an associated person of a registered investment adviser or
broker-dealer.
(iii) Each Form ADV filed (or any Part II thereof deemed to be filed) by each Seller Entity, in its most recent form filed (or any Part II thereof deemed to be filed) with the Commission, including any amendments thereto filed (or any amendment to Part II thereof deemed to be filed) with the Commission complies in all material respects with Applicable Law.
(iv) Each Seller Entity's advertising and solicitation of business has complied and will comply in all material respects with all Applicable Laws, including Section 206 of the Advisers Act, SEC Rules 204-2(a)(16) and 206(4)-1 under the Advisers Act.
(c) Other Matters
(i) Each Seller Entity, as applicable, has implemented one or more formal codes of ethics and written policies regarding insider trading, each of which comply with Applicable Law and a complete and accurate copy of each of which have been made available to Buyer. Section 4.21(c)(i) of the Seller Disclosure Schedule sets forth a true and complete list of all such codes of ethics and written policies. Such codes of ethics comply in all material respects with any Applicable Laws. Such insider trading policies comply in all material respects with Section 204A of the Advisers Act and Section 15(f) of the Exchange Act. The policies of each of the Seller Entities as of the date hereof with respect to avoiding conflicts of interest are as set forth in the most recent Form ADV or policy manual of such Seller Entity, as applicable, as amended, which have been made available to Buyer. To the knowledge of Seller, there have been no violations during the past five years of such codes of ethics or such policies that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.
(ii) No Seller Entity is or has been during the past five
(5) years (i) a broker-dealer (other than the Company), bank, trust
company, insurance company, insurance broker or transfer agent within the
meaning of any Applicable Law, (ii) required to be registered, licensed or
qualified as a broker-dealer (other than the Company), bank, trust
company, insurance company, insurance broker or transfer agent under any
Applicable Law or (iii) subject to any material liability or disability by
reason of any failure to be so registered, licensed or qualified. No
Seller Entity has received notice of any pending suit, proceeding or
investigation concerning any failure to obtain any broker-dealer, bank,
trust company, insurance company, insurance broker or transfer agent
license.(iii) Each officer, director, principal or employee of any Seller
Entity who is, or during the past five (5) years has been, required to be
registered as a registered representative, an investment adviser
representative, sales person, principal or associated person or other
capacity with any Governmental Entity is duly registered as such and such
registration is in full force and effect. There has been no violation,
cancellation, suspension, revocation, non-renewal of or default under any
Governmental Approval or receipt by any Seller Entity of any notice of
violation, cancellation, suspension, revocation, non-renewal, default or
dispute affecting such Governmental Approval, and no basis exists for any
such action, including, without limitation, as a result of the
consummation of the transactions contemplated by this Agreement.(iv) All
services are offered and sold in compliance with all Applicable Laws,
including the requirements for delivery of the Seller Entity's Form ADV,
Part II, as applicable and are exempt from registration or qualification
under Applicable Laws.
4.22 Registered Funds; Sub-Advised Registered Funds; Non-Registered Funds.
(a) Section 4.22(a) of the Seller Disclosure Schedule sets forth a true and complete list of each Registered Fund and Sub-Advised Registered Fund. Each of the Registered Funds and the Sub-Advised Registered Funds that is or during the past five (5) years has been required by the Investment Company Act to be registered with the Commission as an investment company under the Investment Company Act is, and at all times required by the Investment Company Act during the past five (5) years has been, so registered.
(b) Each Registered Fund and each Sub-Advised Registered Fund that is a juridical entity is duly organized, validly existing and, with respect to jurisdictions that recognize the concept of "good standing," in good standing under the laws of the jurisdiction of its organization and has the requisite corporate, trust, company or partnership power and authority to own its properties and to carry on its business as it is now conducted, and is qualified to do business in each jurisdiction where it is required to be so qualified under Applicable Law. There has been no violation, cancellation, suspension, revocation, non-renewal of or default under any Governmental Approval or receipt by any Registered Fund or Sub-Advised Registered Fund of any notice of violation, cancellation, suspension, revocation, non-renewal, default or dispute affecting such Governmental Approval, and no basis exists for any such action, including, without limitation, as a result of the consummation of the transactions contemplated by this Agreement.
(c) The boards of directors or trustees of each Registered Fund and Sub-Advised Registered Fund have at all times been constituted and have operated in conformity with the requirements and restrictions of Sections 10, 15(f) and 16 of the Investment Company Act.
(d) Each Seller Entity that acts as investment adviser or sub-adviser to a Registered Fund or Sub-Advised Registered Fund has a written Advisory Agreement pursuant to which such Seller Entity serves as investment adviser or sub-adviser to such Registered Fund or Sub-Advised Registered Fund. As of the date hereof, no Seller Entity nor any "interested person" of any of them, as such term is defined in the Investment Company Act, receives or is entitled to receive any compensation directly or indirectly (i) from any Person in connection with the purchase or sale of securities or other property to, from or on behalf of any of the Registered Funds or Sub-Advised Registered Funds, other than bona fide ordinary compensation as principal underwriter, distributor or sponsor for the Registered Funds or Sub-Advised Registered Funds, or (ii) from the Registered Funds or Sub-Advised Registered Funds or their respective security holders for other than bona fide investment advisory, sub-advisory, accounting, shareholder servicing, transfer agency or similar services.
(e) Each Advisory Agreement, Distribution Agreement, Underwriting Agreement and Services Agreement with respect to any Registered Fund and any Sub-Advised Registered Fund during the past five (5) years (or such shorter period as to which such entity was a Registered Fund) has been duly adopted and maintained in compliance in all material respects with Section 15 of the Investment Company Act, if applicable to such Registered Fund or such Sub-Advised Registered Fund or such agreement.
(f) During the past five (5) years (or such shorter period as to which such entity was a Registered Fund) each Registered Fund has been operated in compliance with its respective investment objectives, policies and restrictions, including without limitation those set forth in the applicable prospectus and registration statement for such Registered Fund.
(g) (i) The shares or units of each Registered Fund and each
Sub-Advised Registered Fund have been issued and sold in substantial compliance
with Applicable Law, (ii) the shares or units of each Registered Fund and each
Sub-Advised Registered Fund are qualified for public offering and sale in each
jurisdiction where offers are made to the extent required under Applicable Law,
(iii) the shares or units of each Registered Fund and each Sub-Advised
Registered Fund have been duly authorized and validly issued and are fully paid
and nonassessable and (iv) each Registered Fund and each Sub-Advised Registered
Fund, has been operated for the past five (5) years (or such shorter period as
to which such entity was a Registered Fund or Sub-Advised Registered Fund) and
is currently operating in substantial compliance with Applicable Law.
(h) No Registered Fund or Sub-Advised Registered Funds has at any time adopted or is otherwise party to or bound by any 12b-1 Plan. No Registered Fund or Sub-Advised Registered Fund has paid or is paying, directly or indirectly, any amount to any Person for the purpose of financing the distribution of its shares or has made or is making any other payments in violation of Applicable Law.
(i) Each Registered Fund and each Sub-Advised Registered Fund has timely filed all prospectuses, annual information forms, registration statements, proxy statements, financial statements, other forms, reports, sales literature and advertising materials and any other documents required to be filed with applicable regulatory or other Governmental Authorities, and any amendments thereto (the "Fund Reports"), and has timely paid all fees and interest required to be paid in connection therewith. The Fund Reports for the Registered Funds and the Sub-Advised Registered Funds (i) have been prepared in all material respects in accordance with the requirements of Applicable Law, and (ii) did not at the time they were filed, and with respect to any prospectus, proxy statement, sales literature or advertising material, did not during the period of its authorized use, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were or are made, not misleading.
(j) The statements of net assets or statements of assets and liabilities and schedule of investments included in the Fund Financial Statements for each of the Registered Funds and for each of the Sub-Advised Registered Funds present fairly in all material respects the financial position of each such Registered Fund and each such Sub-Advised Registered Fund as at the respective dates thereof, and the statements of operations and statements of changes in net assets included in the Fund Financial Statements for each of the Registered Funds and for each of the Sub-Advised Registered Funds present fairly in all material respects the results of operations and changes in net assets of each such Registered Fund and each such Sub-Advised Registered Fund for the respective periods indicated. The Fund Financial Statements comply with applicable accounting requirements with respect thereto, and each of such statements (including any related notes) has been prepared in accordance with GAAP consistently applied during the periods involved (except for the absence of footnotes and, in the case of the interim unaudited Fund Financial Statements, recurring year-end adjustments normal in nature and amount) and on that basis (subject to, in the case of the interim unaudited Fund Financial Statements, recurring year-end adjustments normal in nature and amount) fairly present in all material respects the financial results of operations and cash flows of each Registered Fund and Sub-Advised Registered Fund as of the respective periods indicated.
(k) Section 4.22(k) of the Seller Disclosure Schedule sets forth a true and complete list of each Non-Registered Fund. Except with respect to the Registered Funds and the Sub-Advised Registered Funds set forth in Section 4.22(a) of the Seller Disclosure Schedule and the Non-Registered Funds set forth in Section 4.22(k) of the Seller Disclosure Schedule, none of the Seller Entities acts as investment adviser, investment sub-adviser, general partner, managing member, manager or sponsor to any other pooled investment vehicle. No Non-Registered Fund is, or at any time since its inception was, required to be registered under the relevant provisions of the Investment Company Act.
(l) (i) Each Non-Registered Fund that is a juridical entity has been duly organized and is validly existing and in good standing under the laws of the jurisdiction of its organization and has all requisite corporate partnership, limited liability company, or similar power and authority, and possesses all rights, licenses, authorizations and approvals necessary to entitle it to use its name, to own, lease or otherwise hold its properties and assets and to carry on its business as it is now conducted, and is duly qualified, licensed or registered to do business in each jurisdiction where it is required to do so under Applicable Law, (ii) all outstanding shares or units of each Non-Registered Fund have been issued and sold in compliance with Applicable Law and (iii) each Non-Registered Fund, during the past five (5) years (or since inception of operations if shorter), has been operated and is currently operating in substantial compliance with its investment objectives and policies and Applicable Law. There has been no violation, cancellation, suspension, revocation, non-renewal of or default under any Governmental Approval or receipt by any Non-Registered Fund of any notice of violation, cancellation, suspension, revocation, non-renewal, default or dispute affecting such Governmental Approval, and no basis exists for any such action, including, without limitation, as a result of the consummation of the transactions contemplated by this Agreement.
(m) The statements of net assets or statements of assets and liabilities and schedule of investments included in the Fund Financial Statements for each of the Non-Registered Funds present fairly in all material respects the financial position of each such Non-Registered Fund as at the respective dates thereof, and the statements of operations and statements of changes in net assets included in the Fund Financial Statements for each of the Non-Registered Funds present fairly in all material respects the results of operations and changes in net assets of each such Non-Registered Fund for the respective periods indicated. The Financial Statements comply with applicable accounting requirements with respect thereto, and each of such statements (including any related notes) has been prepared in accordance with GAAP consistently applied during the periods involved (except for the absence of footnotes and, in the case of the interim unaudited Fund Financial Statements, recurring year-end adjustments normal in nature and amount) and on that basis (subject to, in the case of the interim unaudited Fund Financial Statements, recurring year-end adjustments normal in nature and amount) fairly present in all material respects the financial results of operations and cash flows of each Non-Registered Fund as of the respective periods indicated.
(n) Each board of directors or trustees (or Persons performing similar functions) of any Non-Registered Fund operates in substantial conformity with all requirements and restrictions applicable to such Non-Registered Fund under all Applicable Laws to which such Non-Registered Fund is subject.
(o) The offer and sale of equity interests in each of the Funds, and the use and distribution of Offering Materials in connection therewith, has complied in all material respects with applicable requirements of the Securities Act, the Exchange Act, the Investment Company Act, the CE Act (including, without limitation, Rule 4.7 promulgated thereunder), all applicable state securities and blue sky laws, and all applicable rules, regulations, interpretive notices and guidelines promulgated by the NFA and the NASD. The Offering Materials of each of the Funds have contained and currently contain all statements which are required to be made and contained therein, and have conformed and currently conform with, the requirements of U.S. federal securities and commodities laws, including the Securities Act, the CE Act and the rules and regulations thereunder.
4.23 Affiliate Transactions.
Except as set forth in Section 4.13(a)(xi) of the Seller Disclosure Schedule, no Seller Entity nor any Fund has entered into any Affiliate Agreement or similar transaction or arrangement in connection with the Asset Management Business.
4.24 Clients, Assets Under Management.
(a) Section 4.24(a)(i) of the Seller Disclosure Schedule sets
forth a true and complete schedule, as of the close of business on November 30,
2002, of the aggregate amount of assets under management for (i) the Registered
Funds, (ii) the Sub-Advised Registered Funds, (iii) the Non-Registered Funds,
(iv) the Separate Accounts and (v) the Wrap Accounts. Section 4.24(a)(ii) of
the Seller Disclosure Schedule sets forth a true and complete schedule, as of
the close of business on November 30, 2002, of the amount of assets under
management for each Registered Fund, Sub-Advised Registered Fund and
Non-Registered Fund.
(b) Set forth in Section 4.24(b) of the Seller Disclosure
Schedule is a list of each Advisory Agreement and wrap program, as the case may
be, setting forth as of the close of business on November 30, 2002 (i) with
respect to each Advisory Agreement, the name of the Client, and with respect to
each wrap program, the number of Clients thereunder, indicating whether any
such Client is an Affiliate of Seller; (ii) the amount of assets under
management pursuant to such Advisory Agreement or wrap program; (iii) the fee
schedule in effect with respect to such Advisory Agreement or wrap program;
(iv) the manner of consent required for the "assignment" of such Advisory
Agreement or wrap program under the terms of such Advisory Agreement and under
Applicable Law in connection with the transactions contemplated hereby; (v) the
identity of which Seller Entities are parties to such Advisory Agreement and
provide services to such wrap program; and (vi) solely with respect to the wrap
programs, the selling or sponsoring broker-dealer organizations and a schedule
of fees for such sponsoring broker-dealer organization.
4.25 Insurance.
Section 4.25 of the Seller Disclosure Schedule sets forth a complete and correct list, as of the date hereof, of the policies of insurance currently in effect which provide coverage in respect of the Asset Management Business (including fidelity bonds), which indicates the nature of the coverage under each of such policies and sets forth the respective expiration dates thereof. Such policies are in full force and effect and all premiums due with respect to all periods to and including the Applicable Closing Date, have either been paid or adequate provisions for the payment thereof have been made. Such policies provide customary insurance coverage for a business such as the Asset Management Business. No Seller Entity has received any notice of any material increase of premiums with respect to, or cancellation or non-renewal of, any of such policies. There are no claims by the insured under any of such policies as to which any insurance company is denying liabilities or defending under a reservation of rights or similar clause.
4.26 Investments.
Section 4.26 of the Seller Disclosure Schedule sets forth a true and complete list of any capital stock or other equity interests or securities owed, directly or indirectly, by any Seller Entity in any Person (other than a Seller Entity but including any Fund) constituting part of the Asset Management Business (together, the "Investments"), together with the cost and fair market value of any such Investments as of November 30, 2002. Except to the extent set forth in Sections 4.02(a) or 4.26 of the Seller Disclosure Schedule, no Seller Entity owns, directly or indirectly, any capital stock or other equity interests or securities in any Person or otherwise Controls any Person.
4.27 No "Clawback" Provisions. Except as set forth in Section 4.13(a)(xv) of the Seller Disclosure Schedule, no Seller Entity is subject or may potentially be subject to any obligation of any kind requiring such Seller Entity to cap or reimburse fees or expenses or which provides for a "clawback" or similar undertaking requiring such Seller Entity to reimburse or refund of any fees, gains, allocations or other amounts to any Person constituting part of the Asset Management Business.
4.28 No Co-Investments. Except as set forth in Sections 4.13(a)(xiii) or 4.26 of the Seller Disclosure Schedule, no Seller Entity has any co-investment, seed capital or similar obligation or arrangement to make any investment in, or capital contribution to, any Person constituting part of the Asset Management Business.
4.29 Liquidated Affiliates. Section 4.29 of the Seller Disclosure Schedule sets forth the name of each Affiliate of Seller or any Seller Entity which has been liquidated or dissolved during the three (3) years prior to the date of this Agreement (each, a "Liquidated Affiliate"). No Seller Entity nor any of its Affiliates has any liabilities or financial obligations to any Person with respect to any Liquidated Affiliate, or upon consummation of the transactions contemplated by this Agreement, will have any liabilities or financial obligations with respect to any Liquidated Affiliate.
Each of Buyer Parent and Buyer hereby represents and warrants to Seller Parent and Company as follows:
5.01 Organization; Authority.
Buyer is a corporation duly organized, validly existing and in good
standing under the laws of Delaware, and has all requisite corporate power
and authority to enter into this Agreement and any instruments and
agreements contemplated herein required to be executed and delivered
pursuant to this Agreement to which it is a party (including the Ancillary
Agreements, which are collectively referred to herein as the "Buyer Related
Instruments") and to consummate the transactions contemplated hereby and
thereby. Buyer Parent is a corporation duly organized and valid by
subsisting under the laws of the province of Ontario, and has all requisite
power and authority to enter into this Agreement, the Buyer Related
Instruments, as applicable, and to consummate the transactions contemplated
hereby and thereby, except where the failure to be so qualified or licensed
or in good standing would not have a Material Adverse Effect on Buyer and
Buyer Parent, taken as a whole. The execution, delivery and performance of
this Agreement and Buyer Related Instruments and the consummation of the
transactions contemplated hereby and thereby have been duly authorized by
all necessary corporate action on the part of each of Buyer Parent and
Buyer. This Agreement has been, and each of Buyer Related Instruments shall
be, duly executed and delivered by each of Buyer Parent and Buyer, as
applicable, and constitutes a valid and binding obligation of each of Buyer
Parent and Buyer, enforceable against Buyer Parent and Buyer, as the case
may be, in accordance with its terms, except that (i) such enforcement may
be subject to bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights, and
(ii) the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the discretion
of the court before which any proceeding therefor may be brought.
5.02 No Violation; Consents and Approvals.
The execution and delivery of this Agreement and Buyer Related Instruments do not, and the consummation of the transactions contemplated hereby or thereby and compliance with the terms hereof or thereof will not violate or be in conflict with, (a) any provision of the Organizational Documents of Buyer Parent or Buyer, (b) any material Law applicable to Buyer Parent or Buyer or the property or assets of Buyer Parent or Buyer or (c) in any material respect, any note, bond, mortgage, indenture, license, agreement, lease or other instrument or obligation to which Buyer Parent or Buyer is a party or by which Buyer Parent or Buyer may be bound or affected or to which any of their respective assets may be subject. Except for the requirements of the HSR Act and as set forth in Section 5.02 of the Buyer Disclosure Schedule, no consent, approval, order or authorization of, or notice to, or registration, declaration or filing with, any Governmental Entity or any third party is required to be obtained or made by Buyer Parent or Buyer in connection with the execution and delivery of this Agreement or Buyer Related Instruments or the consummation by Buyer Parent or Buyer, as the case may be, of the transactions contemplated hereby or thereby.
5.03 Litigation. Except as set forth in Section 5.03 of the Buyer Disclosure Schedule, there is no material claim, action, suit, proceeding, investigation or inquiry pending, asserted or, to Buyer's knowledge, threatened during the one year period prior to the date hereof, against Buyer or Buyer Parent by or before any Governmental Entity, or by or on behalf of any third party, which challenges the validity of this Agreement or any Buyer Related Instrument or which, if adversely determined, would adversely affect the ability of Buyer Parent or Buyer to consummate the transactions contemplated by this Agreement or any Buyer Related Instrument.
5.04 Brokers. No broker, finder or financial advisor or other person is entitled to any brokerage fees, commissions, finders' fees or financial advisory fees in connection with the transactions contemplated hereby by reason of any action taken by Buyer Parent or Buyer or any of their respective directors, officers, employees, representatives or agents.
5.05 Commission Filings. As of its filing date, each Buyer Parent Commission Document complied as to form in all material respects with the applicable requirements of the Exchange Act. As of its filing date, each Buyer Parent Commission Document filed pursuant to the Exchange Act did not contain any untrue statement of a material fact or omit any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not false or misleading.
5.06 Financial Statements. The audited consolidated financial
statements and unaudited consolidated interim financial statements of Buyer
Parent (including any related notes and schedules) included in its annual
reports on Form 10-K and the quarterly reports on Form 10-Q referred to in this
Section 5.06 (collectively, the "Buyer Parent Financial Statements") present
fairly the financial position of Buyer Parent and its subsidiaries as of the
dates thereof and their results of operations and cash flows for the periods
then ended (subject to normal year-end adjustments and the absence of notes in
the case of any unaudited interim financial statements), in each case in
conformity with GAAP applied on a consistent basis (except as may be indicated
in the notes thereto).
5.07 Capitalization. As of the date of this Agreement but without
giving effect to the Brokerage Closing, Buyer Parent's authorized capital stock
consists of (i) an unlimited number of authorized Class A Non-Voting Shares, of
which 12,377,857 shares are issued and outstanding, (ii) 99,680 authorized
Class B Voting Shares, of which 99,680 shares are issued and outstanding and
(iii) an unlimited number of First Preference Shares issuable in series, of
which no shares are issued or outstanding. All such issued and outstanding
shares are duly authorized and validly issued, fully paid and nonassessable.
5.08 Absence of Undisclosed Liabilities. Except for liabilities and obligations (i) reflected on the Buyer Parent Financial Statements or (ii) incurred in the ordinary course of business consistent with past practice since the date of the Buyer Parent Financial Statements, neither Buyer nor Buyer Parent has incurred any liabilities or obligations of whatever nature, direct or indirect, whether accrued, fixed, contingent or otherwise that would be required to be reflected or reserved against on a consolidated balance sheet of Buyer Parent prepared in accordance with GAAP.
5.09 Non-Contravention. The execution, delivery and performance by Buyer and Buyer Parent of this Agreement will not contravene, result in any breach of, or constitute a default under, or result in the creation of any Lien in respect of any property of Buyer or Buyer Parent under any indenture, mortgage, deed of trust, loan, purchase or credit agreement, lease, corporate charter or by-laws, or any other material agreement or instrument to which Buyer or Buyer Parent is bound or by which any of their prospective properties may be bound or affected, which would affect the legal authority of Buyer and Buyer Parent to materially comply with the terms of this Agreement.
5.10 Disclosure. No representation or warranty by Buyer or Buyer Parent contained in this Agreement, and no statement contained in this Agreement (the Buyer Related Instruments and the Buyer Parent Financial Statements), list, certificate or other writing furnished or to be furnished by or on behalf of Buyer or Buyer Parent to Seller or any of its representatives in connection with the transactions contemplated hereby, contains or will contain any untrue statement of a material fact, or omits or will omit to state any material fact necessary, in light of the circumstances under which it was or will be made, in order to make the statements herein or therein not misleading, or necessary in order to fully and fairly provide the information required to be provided in any such document.
5.11 Ineligible Persons. Neither Parent, Buyer nor any "affiliated
person" (as defined in the Investment Company Act) of either of them is
ineligible pursuant to Section 9(a) or 9(b) of the Investment Company Act to
serve as an investment adviser (or in any other capacity referred to in Section
9(a) of the Investment Company Act) to a Registered Fund. Neither Parent nor
Buyer is ineligible pursuant to Section 203 of the Investment Advisers Act or
Section 15(b) of the Exchange Act to serve as a registered investment adviser
or broker-dealer and no "associated person" (as defined in the Investment
Advisers Act or the Exchange Act) of Parent or Buyer is ineligible pursuant to
Section 203 of the Investment Advisers Act or Section 15(b) of the Exchange Act
to serve as an associated person of a registered investment adviser or
broker-dealer.
5.12 Investment Purpose. Buyer (or its designee as the case may be) is acquiring, as principal for its own account, the Equity Interests for its own account and for the purpose of investment and not with a view to or for sale in connection with any distribution thereof.
6.01 Conduct of the Asset Management Business. Except as and to the extent expressly permitted by this Agreement or the Brokerage Asset Purchase Agreement, during the period from the date of this Agreement up to the Final Closing Date, Seller shall and shall cause the other Seller Entities to, (i) conduct the Asset Management Business in the ordinary course consistent with past practice, (ii) use its reasonable best efforts to preserve its current relationships with its brokers and other employees, Clients, customers, suppliers and others having business dealings with it and (iii) pay all Taxes related to the Asset Management Business as they become due and payable. Without limiting the generality of the foregoing, except as and to the extent set forth in Section 6.01 of the Seller Disclosure Schedule, during the period from the date of this Agreement through the Applicable Closing Date without the prior written consent of Buyer, with respect to the Asset Management Business or any of the Asset Management Assets, Seller shall not and shall cause Seller Entities other than Seller, as applicable, not to:
(a) other than bonuses earned and accrued in respect of the 2002 fiscal year which have been awarded (but not paid) prior to the date hereof, pay any bonus or increase, decrease or otherwise modify the rate of compensation of, or any fees or fee schedule with respect to, or pay or agree to pay, or withdraw or reduce, any benefit to, or terminate, any Person employed by, or providing services with respect to, the Asset Management Business or its Clients;
(b) enter into, adopt, amend or otherwise modify any plan that would apply to any Transferred Employee;
(c) enter into, adopt or amend, any employment, consulting, retention, change-in-control, collective bargaining, bonus or other incentive compensation, profit-sharing, health or other welfare, stock option or other equity, pension, retirement, vacation, severance, deferred compensation or other employment, compensation or benefit plan, policy, agreement, trust, fund or arrangement for the benefit of any officer, director, employee, sales representative (including any promoter), agent, consultant or Affiliate except for the employment, consulting, retention, bonus or incentive compensation agreement entered into in the ordinary course of business consistent with past practices;
(d) enter into any collective bargaining agreement or other labor agreement;
(e) sell, lease, transfer or otherwise dispose of any Asset Management Asset, other than in the ordinary course of business consistent with past practice;
(f) grant or permit the imposition of any Lien on the Asset Management Assets, except for Permitted Liens;
(g) create, renew, amend, terminate or cancel, or take any other action that may result in the creation, renewal, amendment, impairment, termination or cancellation of, any Contract except, other than any Affiliate Agreement, in the ordinary course of business consistent with past practice;
(h) fail to maintain the accounts of the Asset Management Business and Books and Records in the usual, regular and ordinary manner on a basis consistently applied;
(i) sell, transfer, license, encumber or otherwise dispose of, or compromise or permit the lapse of the right to use, any of the Trademarks or Intellectual Property;
(j) make any change in the pricing, fees, interest rates or service charges payable by any Client with respect to any Transferred Account or institute new pricing, fees, interest rates or service charges payable by any such Client or otherwise alter the terms of any Customer Agreement relating to any Transferred Account other than in the ordinary cause of business and consistent with past practices;
(k) except as required by applicable Law, with respect to any Transferred Account, (i) implement or adopt any change in its risk procedures or practices or (ii) make any change in the process of approving and opening new Customer Accounts;
(l) cancel any debt or waive any claim or right of substantial value;
(m) amend any Organizational Documents;
(n) conduct all affairs relating to Taxes other than in good faith and in a manner consistent with past practice;
(o) enter into any new line of business unrelated to the Asset Management Business;
(p) acquire or sell in any manner, including by way of merger, consolidation or purchase or sale of an equity interest or assets, any business or any corporation, partnership, association or other business organization or division thereof;
(q) change any of the accounting practices, policies or principles used by it, except as required by GAAP;
(r) except as required by Applicable Law or such actions as may be approved by the independent directors of any Registered Fund, make any material changes in policies or practices relating to terms of Client transactions or accounting therefor or in policies of employment;
(s) take any action or omit to take any action that, individually or in the aggregate, would reasonably be expected to result in a Material Adverse Effect;
(t) incur, assume, guarantee (including by way of any agreement to "keep well" or of any similar arrangement) or prepay any Indebtedness or amend the terms relating to any Indebtedness (including, without limitation, capital leases, payments in respect of the deferred purchase price of property, letters of credit, loan agreements and other agreements relating to the borrowing of money or extension of credit) or issue or sell any debt securities, except for any such incurrence, assumption, guarantee or prepayment of such Indebtedness or amendments of the terms of such Indebtedness in the ordinary course of business consistent with past practice;
(u) take any action that would, or could reasonably be expected to, cause Seller or its Subsidiaries to be in breach of any representation, warranty, covenant or agreement contained in this Agreement or in any of the Ancillary Agreements;
(v) make any Tax election or settle or compromise any Tax liability if such election settlement or compromise could result in a Lien on the Asset Management Assets or could have a material adverse Tax effect on the Asset Management Assets;
(w) enter into any co-investment obligation or arrangement;
(x) sell, lease, transfer or otherwise dispose of any Investment; or
(y) agree, whether in writing or otherwise, to do any of the foregoing.
Notwithstanding the foregoing provisions of this Section 6.01, Seller may, or may cause the applicable Seller Entity to, distribute or otherwise transfer to Seller or an Affiliate of Seller the Seller Investments specified on Schedule V (the "Seller Investments") prior to the Final Closing to the extent permitted by and in accordance with the Fund agreements to which the Investments relate, and otherwise in such manner as Seller may reasonably determine, after consultation with Buyer, to minimize the adverse impact on the Fund in question (including the prospects for obtaining any required Consents relating to such Fund), provided that any costs, expenses or other liabilities associated with such distribution or other transfer (including liabilities in respect of Taxes) shall be Excluded Liabilities for all purposes of this Agreement
6.02 Access to Information; Confidentiality.
(a) During the period from the date of this Agreement up to the Final Closing Date, Buyer shall give Seller and its authorized representatives, and Seller shall give and shall cause each of the Seller Entities other than Seller to give Buyer and its authorized representatives, reasonable access, during regular business hours and upon reasonable notice, to examine and make copies of, all books and records as they may reasonably request.
(b) Following the First Closing, Buyer shall permit Seller and its authorized representatives, and Seller shall permit and shall cause each of the Seller Entities other than Seller to permit Buyer and its authorized representatives, during regular business hours and upon reasonable notice, to have reasonable access to, and examine and make copies of, all books and records of the Asset Management Business, including as applicable, the Books and Records, the books of original entry of Seller and agreements that are necessary to support the account, which relate, (i) to transactions or events occurring prior to the First Closing, (ii) events occurring subsequent to the First Closing, which are related to or arise out of transactions or events occurring prior to the First Closing or (iii) the liability of Buyer, Buyer Parent or Seller to provide indemnification pursuant to Article X.
(c) Any information received by Buyer, Seller or any Seller Entity other than Seller pursuant to this Agreement shall be held in confidence in accordance with and subject to the terms of the Confidentiality Agreement dated as of July 16, 2002 (the "Confidentiality Agreement"); provided, that, not withstanding the foregoing Seller shall not share any such information with any of its financial advisors that are competitors to Buyer or its Affiliates.
6.03 Reasonable Best Efforts. Subject to the terms and conditions of this Agreement, each of the parties hereto shall use its reasonable best efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary, proper or advisable under Applicable Laws and regulations to consummate the transactions contemplated by this Agreement at the earliest practicable date.
6.04 Consents.
(a) Without limiting the generality of Section 6.03 and subject to Section 6.12, each of the parties hereto shall use its reasonable best efforts to obtain all licenses, permits, authorizations, consents and approvals of all third parties and Governmental Entities necessary in connection with the consummation of the transactions contemplated by this Agreement prior to the Applicable Closing. Notwithstanding the foregoing, Buyer shall have no obligation to pay any fee to any third party for the purpose of obtaining any consent or approval or any costs and expenses of any third party resulting from the process of obtaining such consent or approval. Each of the parties hereto shall make or cause to be made all filings and submissions under laws and regulations applicable to it (and pay any requisite filing fees in connection therewith) as may be required for the consummation of the transactions contemplated by this Agreement. Buyer and Seller shall coordinate and cooperate with each other, and Seller shall cause each Seller Entity other than Seller to coordinate and cooperate with Buyer, in exchanging such information and assistance as any of the parties hereto may reasonably request in connection with the foregoing.
(b) Without limiting the generality of Section 6.04(a), Seller shall use its reasonable best efforts to promptly undertake and make available, and to cause each Seller Entity other than Seller to promptly undertake and make available, the necessary personnel to obtain the written third party consent, approval or authorization required in connection with the transfer from any Seller Entity to Buyer of any Intellectual Property (including without limitation the Intellectual Property set forth in Section 4.09(b) of the Seller Disclosure Schedule). In the event that, after a reasonable period of time, any Seller Entity, as applicable, has failed to obtain any such consent, approval or authorization, Buyer may request that Seller or such Seller Entity explain to Buyer the steps it has taken to date, and Buyer may request that Seller or such Seller Entity undertake additional, specified, reasonable steps.
6.05 Regulatory Matters.
(a) Buyer and Seller shall use, and Seller shall cause each Seller Entity other than Seller to use, their reasonable best efforts to consummate the transactions contemplated hereby. Each of the parties hereto shall use its reasonable best efforts to take, or cause to be taken, all appropriate actions, and to do, or cause to be done, all things necessary, proper or advisable under Applicable Laws and regulations to consummate and make effective the transactions contemplated herein, including, without limitation, (i) cooperating with the other in the preparation and filing of all forms, notifications, reports and information, if any, required or reasonably deemed advisable pursuant to any law, statute, rule or regulation including the Commission (including, without limitation, the filing of any amendments to Form ADV), NASD, NYSE and other stock exchange rules, (ii) using its reasonable best efforts to obtain all licenses, permits, consents, approvals, authorizations, qualifications and orders of any Governmental Entity or other Persons (as are necessary for the consummation of the transactions contemplated hereby), (iii) making on a prompt and timely basis all governmental or regulatory notifications and filings required to be made by it for the consummation of the transactions contemplated hereby, (iv) defending all Legal Proceedings challenging this Agreement or the consummation of the transactions contemplated hereby and to lift or rescind any injunction or restraining Order or other Order adversely affecting the ability of the parties to consummate the transactions contemplated hereby, and (v) executing and delivering such additional instruments and other documents and shall take such further actions as may be necessary or appropriate to effectuate, carry out and comply with all of the terms of this Agreement and the transactions contemplated hereby. Each party shall promptly advise the other party of any developments with respect to the foregoing matters.
(b) Buyer Parent and Buyer agree that each of them shall, and
shall cause each of their Subsidiaries to, obtain such licenses, permits,
consents, approvals, authorizations, qualifications and orders of, and make
such filings with, any Governmental Entity as may required to be obtained or
made by them to conduct the Asset Management Business as it will be conducted
(i) with respect to the OMEGA Assets, on or prior to January 20, 2003 and (ii)
with respect to all other Asset Management Assets transferred under Section
2.01, on or prior to the earlier of (x) March 30, 2003 or (y) the date which is
60 days after the date on which Seller delivers complete and accurate Seller
Disclosure Schedules to Buyer Parent and Buyer.
(c) Each party to this Agreement shall, upon request, furnish each other with all information concerning themselves, directors, officers and shareholders and such other matters as may be reasonably necessary or advisable in connection with any statement, filing, notice or application made by or on behalf of Buyer or any Seller Entity to any Governmental Entity in connection with the transactions contemplated by this Agreement (except to the extent that such information would be, or relates to information that would be, filed under a claim of confidentiality).
(d) The parties to this Agreement shall promptly advise each other upon receiving any communication from any Governmental Entity whose consent or approval is required for consummation of the transactions contemplated by this Agreement which causes such party to believe that there is a reasonable likelihood that any requisite regulatory approval will not be obtained or that the receipt of any such approval will be materially delayed or that the transactions contemplated hereby will become subject to additional conditions imposed by such Governmental Entity.
(e) Each party to this Agreement shall provide to the other party, as promptly as practicable after the filing or receipt thereof (unless a different time period shall otherwise be specified herein), a copy of all applications, notices, petitions, filings documents and notices referred to in this Section 6.05.
6.06 Discharge of Liens; Payment of Certain Obligations. Seller shall cause all Liens (other than Permitted Liens) on any Asset Management Asset to be terminated or otherwise discharged prior to the Applicable Closing.
6.07 Public Announcements. Seller Entities and Buyer shall not
(i) issue any report, statement or press release or otherwise make any public
statement with respect to this Agreement and the transactions contemplated
hereby or (ii) issue any report, statement or otherwise inform any business or
managers of any Seller Entity, without prior consultation with and approval of
either Seller (in the case of Buyer performing the actions set forth in (i) or
(ii)) or Buyer (in the case of any Seller Entity performing the actions set
forth in (i) or (ii)), except as may be required by law or may be necessary in
order to discharge its disclosure obligations, in which case such party
nevertheless shall advise the other party and discuss the contents of the
disclosure before issuing any such report, statement or press release.
6.08 Tax Information Reporting. Company shall, for the period from January 1, 2002 through the Applicable Closing Date provide customers of the Asset Management Business with all applicable forms required for Tax information reporting purposes (such as Forms 1099, 945, 1042 and 1042-S) with respect to the accounts of such customers and Buyer shall, for the period on or after the Applicable Closing Date provide such customers with such forms.
6.09 Tax Matters.
(a) On the Applicable Closing Date the Company shall inform
Buyer of (i) with respect to any Seller Entity or Controlled Entity, any
changes in a method of accounting, rulings received from a taxing authority or
agreements signed with a taxing authority which would be binding on Buyer or
any of the Controlled Entities after the Applicable Closing Date; (ii) Tax
sharing agreements, tax indemnification agreements or similar contracts or
arrangements, written or unwritten, to which any Controlled Entity is a party;
(iii) any outstanding waivers or comparable consents regarding the application
of the statute of limitations with respect to any Taxes or Tax Returns of the
Seller Entities or Controlled Entities, which waivers or consents would be
binding on Buyer or any Controlled Entity after the Applicable Closing Date
(iv) any requests by the Controlled Entities for an extension of time within
which to file any Tax Return in respect of any taxable period, which Tax Return
has not since been filed; (v) any federal, state, local or foreign audits or
other administrative proceedings formally commenced or presently pending with
regard to any Taxes, Tax Returns, Taxes due or Tax returns filed of, from, or
by any Controlled Entities; (vi) any deficiencies for any Tax that have been
assessed with respect to any of the Controlled Entities which has not been paid
in full; (vii) with respect to any Controlled Entity, any membership in a
United States federal, state, or local or foreign consolidated, combined,
unitary or similar group for Tax purposes with respect to which such Controlled
Entity may have liability under Treasury Regulations ss.1.1502-6 or equivalent
provisions of Applicable Laws for Taxes imposed on other members of such
consolidated, combined, unitary or similar group with respect to taxable years
for which the period for assessment of deficiencies has not closed; (viii) any
action, suit, claim, assessment or audit pending or proposed in writing with
respect to Taxes relating to the Asset Management Business or Asset Management
Assets, the resolution of which would be binding on the Buyer or any Controlled
Entities; and (ix) any powers of attorney with respect to any matter relating
to Taxes that have been granted with respect to the Asset Management Business
or the Asset Management Assets and which would be binding on the Buyer or any
Controlled Entities.
(b) Effective as of the Applicable Closing Date Company shall have terminated or caused to be terminated, with respect to periods beginning after the Final Closing Date, all of the Controlled Entities' obligations and potential liabilities under any Tax sharing agreement, Tax indemnification agreement or similar contract or arrangement, written or unwritten, referred to in Section 6.09(a)(ii).
6.10 Litigation Cooperation. In connection with Seller's retention of all pre-closing Litigation pursuant to this Agreement, Buyer agrees to respond to all reasonable requests by Seller and reasonably cooperate with Seller in connection with the defense and resolution of the Litigation, including (a) providing Seller with reasonable access at reasonable hours to all Books and Records and personnel, including the Transferred Employees, (b) permitting employees and personnel, including the Transferred Employees, to respond to reasonable requests for interviews, depositions, testimony, interrogatories and other information in connection with such litigation and claims and any proceedings in connection therewith; in each case, provided access and such responses shall not disrupt Buyer's business activities or prevent Transferred Employees from performing their duties. Seller's defense of the Litigation and Buyer's cooperation therewith shall have no effect on the provisions of Section 10.07.
6.11 Seller Officer's Certificate.
(i) (i) At each Applicable Closing, Seller shall deliver an officer's certificate, signed by the chief executive officer or president of Seller, certifying, to the best of such officer's knowledge after due inquiry, that all representations and warranties of Seller in this Agreement are true, complete and correct in all respects, as of the date when made and at and as of each Applicable Closing Date, as though such representations and warranties were made at and as of each Applicable Date, except that representations and warranties that by their terms speak as of the date of this Agreement or as of another specified date shall be true, complete and correct only as of such date.
(b) If the officer's certificate called for in subsection (a) above discloses exceptions to the representations and warranties, Buyer and Buyer Parent shall be entitled to make a Seller Claim for indemnification under Article X and receive the expense reimbursement set forth in subsection (e) below.
(c) Notwithstanding anything to the contrary set forth in this Agreement, including Article X, the parties agree and acknowledge that, with respect to any Seller Claim arising out of this Section 6.11, Seller shall pay all of Buyer's and any other Buyer Indemnitees' aggregate legal fees, costs and other expenses arising as a result of, incurred in connection with or related to such Seller Claim, to the extent such Seller Claim is not finally adjudicated against Buyer.
6.12 Client Consents and Approvals.
(a) Registered Funds.
(i) Seller shall, and shall cause each of its Affiliates to, (A) use its reasonable best efforts to cause the Investment Company Board of each Registered Fund and Sub-Advised Registered Fund to call a special meeting of the shareholders of such Registered Fund to be held as promptly as reasonably practicable following the date hereof but in no event later than April 30, 2003 for the purpose of obtaining the approval of such shareholders of a new Advisory Agreement and, as necessary, a new Underwriting Agreement or Services Agreement containing the same terms in all material respects as the terms contained in the Advisory Agreement (or Underwriting Agreement or Services Agreement) with such Registered Fund and Sub-Advised Registered Fund existing on the date hereof, (B) use its reasonable best efforts to cause each Registered Fund and Sub-Advised Registered Fund to prepare, file with and cause to be cleared by the Commission and all other Governmental Authorities having jurisdiction there over, as promptly as practicable after the date hereof but in no event later than February 15, 2003, all proxy solicitation materials required to be distributed to shareholders of each such Registered Fund and Sub-Advised Registered Fund with respect to the actions recommended for shareholder approval by the Investment Company Boards, (C) use its reasonable best efforts to cause each Registered Fund and Sub-Advised Registered Fund to mail such proxy solicitation materials to such shareholders promptly after clearance by the Commission but in no event more than 5 days thereafter and cause to be submitted to a special meeting of shareholders of such Registered Fund and Sub-Advised Registered Fund by such date specified in (A) above, (D) use, and use its reasonable best efforts to cause each Registered Fund and Sub-Advised Registered Fund to use, its reasonable best efforts to obtain, or cause to be obtained, the approval of the Investment Company Boards and the shareholders of such Registered Fund and Sub-Advised Registered Fund, pursuant to the provisions of Section 15 of the Investment Company Act applicable thereto, of such Advisory Agreement and, as necessary, such Underwriting Agreement or Services Agreement for such Registered Fund with Buyer or its Affiliates.
(ii) In connection with the preparation and filing of the proxy solicitation materials referred to in the subsection (a) above, Seller and Buyer will cooperate with each other and with the Investment Company Board of each Registered Fund and Sub-Advised Registered Fund, including providing such information as may be reasonably requested for inclusion in such proxy statements. Each of Seller and Buyer agrees that none of such information provided by it for inclusion in such proxy solicitation materials will contain any untrue statement of a material fact, or omit to state any material fact required to make the statements therein, in light of the circumstances in which they were made, not misleading.
(iii) As soon as possible following the date hereof, Seller shall cause each Registered Fund and Sub-Advised Registered Fund to file supplements or post-effective amendments to that Registered Fund's registration statement on Form N-2, which supplements or amendments shall reflect changes as necessary in that Registered Fund's and Sub-Advised Registered Fund's affairs as a consequence of the transactions contemplated by this Agreement and to make any other filing necessary under Applicable Law to satisfy disclosure requirements to enable the public distribution of the shares of beneficial interest of that Registered Fund and Sub-Advised Registered Fund to continue.
(iv) Prior to the earlier of the Final Closing Date or the termination of this Agreement, Seller shall, and shall cause each of its Affiliates to, ensure that no Registered Fund or Sub-Advised Registered Fund takes any action that (a) would prevent any Registered Fund from qualifying as a "regulated investment company" under Section 851 of the Code, or (b) would be inconsistent with each Registered Fund's and Sub-Advised Registered Fund's prospectuses and other offering, advertising and marketing materials, as amended or supplemented.
(b) Client Consents (Other Than Funds). If Consent to the assignment or deemed assignment of an Advisory Agreement or a Wrap Agreement with Clients (other than Clients that are Registered Funds or Non-Registered Funds) as a result of the transactions contemplated by this Agreement is required by Applicable Law or by such Client's Advisory Agreement or Wrap Agreement, as the case may be, as promptly as is reasonably practicable following the date hereof but in no event later than January 10, 2003, Seller shall, and shall cause any Affiliate to, send a notice in form and substance acceptable to Buyer (an "Initial Notice") informing such Clients of the transactions contemplated by this Agreement and requesting written Consent to the assignment of such Client's Advisory Agreement or Wrap Agreement, as the case may be. Upon the request of Buyer, Seller shall, and shall cause any Affiliate to, send to Clients (other than a Clients that are Registered Funds or Non-Registered Funds) who were sent, but who have not by such date returned, an Initial Notice countersigned indicating such Client's consent to the assignment of such Client's Advisory Agreement or Wrap Agreement, as the case may be, resulting from the transactions contemplated hereby, a subsequent notice or notices in form and substance acceptable to Buyer (each, a "Follow-Up Notice") requesting such Clients' written consent to the assignment of such Clients' Advisory Agreement or Wrap Agreement, as the case may be, and informing such Clients that their Advisory Agreement or Wrap Agreement, as the case may be, may be terminated if such written consent is not received on or prior to the date which is specified herein.
(c) Non-Registered Funds.
(i) Seller, as soon as possible after the date hereof
but in no event later than April 30, 2003, shall, and shall cause each
of its Affiliates to, (i) as may be required pursuant to the governing
documents of any Non-Registered Fund, cause each such Non-Registered
Fund to enter into new Advisory Agreements and, as necessary, new
placement agreements and other services agreements with Buyer or one
of its Affiliates, (ii) as may be required pursuant to the governing
documents of any Non-Registered Fund, use its reasonable best efforts
to cause each such Non-Registered Fund to prepare and mail to all of
the investors of such Non-Registered Fund, all consent materials
necessary and appropriate to be distributed to such investors pursuant
to the governing documents of such Non-Registered Fund in order to
cause such investors to approve (A) the appointment or substitution of
Buyer or one of its Affiliates as managing member or general partner
of (and, if necessary, investment adviser, placement agent other
service provider to) such Non-Registered Fund effective as of the
Final Closing and (B) if necessary pursuant to such governing
documents, the transfer or assignment of the applicable equity
interest in each such Non-Registered Fund held by Seller or one its
Affiliates to Buyer or one of its Affiliates effective as of the Final
Closing, (iii) use its reasonable best efforts to cause each
Non-Registered Fund to obtain, or cause to be obtained, the approvals
referred to subsection (i) of this Section 6.12(c) and (iv) use its
reasonable best efforts to cause each Non-Registered Fund to enter
into an Advisory Agreement with Buyer or one of its Affiliates (A)
providing for Buyer or one of its Affiliates to serve as the
sub-adviser of such Non-Registered Fund with the same advisory fees as
are in effect under the existing Advisory Agreement for such
Non-Registered Fund with Seller or one of its Affiliates on the date
hereof and (B) becoming effective at the time of the Final Closing for
any Non-Registered Fund whose investors have not, prior to the Final
Closing, consented to the approvals referred to subsection (i) of this
Section 6.12(c). Seller agrees that for a period of two (2) years
following the Final Closing, it shall not, and shall not permit any of
its Affiliates to, terminate, modify, alter or otherwise amend the
terms of any Advisory Agreement entered into pursuant to this Section
6.12(c) without the prior written consent of Buyer.
(ii) Seller, as soon as possible after the date hereof but in no event later than required by Applicable Law or the governing documents of any Non-Registered Fund, shall, and shall cause each of its Affiliates to cause each Non-Registered Fund to file supplements or amendments to each such Non-Registered Fund's Offering Materials, which supplements or amendments shall reflect changes as necessary in that Non-Registered Fund's affairs as a consequence of the transactions contemplated by this Agreement and to make any other filing necessary under Applicable Law.
(d) Client Procedures. In connection with obtaining the Client Consents required by subsections (a) through (c), Seller shall, and shall cause each of its Affiliates to keep Buyer informed of the status of obtaining such Client Consents and, to the extent applicable, deliver to Buyer prior to the Applicable Closing copies of all such executed Client Consents and make available for inspection the originals of such Consents prior to the Applicable Closing.
(e) Non-Consenting Clients. With respect to any Client for which written consent to the transactions contemplated hereby has not been provided in accordance with this Section 6.12, upon the request of Buyer (given no earlier than the Applicable Closing Date), Seller shall, as soon as reasonably practicable following such request of Buyer, request from such Client instructions as to a Person, other than an Affiliate of Seller, to whom such Client's account(s) (including any brokerage accounts) shall be transferred. If not so instructed by such Client, upon the request of Buyer, Seller shall terminate each such account, including any brokerage or other accounts, of such Client as soon as reasonably practicable following such request of Buyer.
6.13 Failure to Consummate. In the event that the transactions contemplated by this Agreement are not consummated as a result of the failure of Seller, the Company or any Affiliate thereof to use its respective reasonable best efforts to obtain the consents of Clients pursuant to Section 6.12 by June 30, 2003, Seller Parent and the Company jointly and severally agree to pay to Buyer an amount for each of the four months following June 30, 2003 equal to the product of (a) $1 million and (b) a fraction, the numerator of which is the portion of the Deemed Assets which are not transferred to Buyer as contemplated by this Agreement on or prior to June 30, 2003, and the denominator of which is the total amount of Deemed Assets; provided, that the amount of such payments shall not equal more than $4 million in the aggregate; provided further that (i) Buyer may also not seek indemnity under Article X for claims based solely on the failure of Seller obtain such Client consents and (ii) subject to clause (i), nothing in this Section 6.13 shall reduce, restrict or modify Buyer's rights or Seller's obligations under Article X. Any payment required to be made to Buyer under this Section 6.13 shall be made to Buyer no later than the fifth (5th) business day of the month in which such payment is due, commencing with the first month following June 30, 2003.
6.14 Investment Company Act Matters. Seller and Buyer agree that neither they nor any of their Affiliates has any express or implied understanding or agreement that would impose an "unfair burden" (as defined in the Investment Company Act) on any Registered Fund or would otherwise interfere with any Registered Fund's reliance on Section 15(f) of the Investment Company Act as a result of the transactions contemplated by this Agreement. Seller and Buyer agree to comply and to use their respective commercially reasonable efforts to cause the respective boards of directors of each Registered Fund to comply with the provisions of Section 15(f) of the 1940 Act.
6.15 Certain Expenses. In addition to any amounts payable under
Section 6.13, Seller Parent and the Company agree to bear 100% of the costs
and expenses (including printing, mailing and professional fees and expenses)
incurred by either of them or Buyer or its Affiliates in connection with
obtaining new investment advisory agreements (or other agreements as required
by Applicable Law) or consents of Clients as may be necessary in connection
with the transfer of the Asset Management Business, provided that (i) such
costs and expenses shall not include any allocations of costs of Buyer
associated with its existing full-time employees or internal overhead and (ii)
Buyer shall be required to obtain the prior approval of Seller for any
contract or agreement with any third party that could involve the payment by
Buyer of in excess of $10,000 in connection with obtaining such new agreements
or consents, such approval not to be unreasonably withheld by Seller.
6.16 Certain Actions. Seller agrees to continue to provide Asset Management Services to the Transferred Accounts (as defined in the Brokerage Asset Purchase Agreement) or the brokers responsible for such accounts until the earlier of (i) Final Closing and (ii) receipt of written notice from Buyer that it no longer requires Seller to provide Asset Management Services to the Transferred Accounts (as defined in the Brokerage Asset Purchase Agreement) or the brokers responsible for such accounts as to any or all of such Asset Management Services.
6.17 Support Services. Seller shall, and shall cause its Affiliates to, provide such services to Buyer and its Affiliates comparable in nature and scope to the services that are currently being provided by Seller and its Affiliates to the Asset Management Business (including, for example, services relating to finance, head office functions, human resources, equity and debt trading, technology and software, shared spaces, accounting and legal and regulatory compliance as generally described in the Transition Services Agreement) from and after the First Closing through the Final Closing for a fee of $100,000 per month. For a period of thirty (30) days following the Final Closing Date, upon the request of Buyer, Seller shall, and shall cause its Affiliates to, provide such services to Buyer and its Affiliates as may be necessary for the continued operation of the Asset Management Business by Buyer during such thirty (30) day period at a cost to Buyer not to exceed the amount which is currently being charged to the Asset Management Business by Seller for such requested services.
6.18 Payments to Brokers. Seller shall, and shall cause its Affiliates, directly or indirectly, to continue to compensate brokers employed by Buyer after the Brokerage Closing on currently applicable terms with respect to their sales, servicing and other activities relating to the Asset Management Business and its products and services. To the extent that Seller pays any amounts to Buyer for the purpose of satisfying its obligations under this Section 6.18, Buyer agrees to pay such amounts to such brokers promptly upon receipt of such funds from Seller.
6.19 Consents, Indemnification.
(a) Notwithstanding anything in this Agreement to the contrary, Seller shall (i) obtain as soon as possible but in no event later than 30 days after the Applicable Closing Date the consents or approvals listed in Sections 4.04(b) and 4.13(b) of the Seller Disclosure Schedule for the assignment pursuant to this Agreement of the leases listed therein to Buyer, and (ii) pay any and all fees, costs and expenses arising out of or resulting from obtaining such consents or approvals; and
(b) Seller shall indemnify, defend and hold harmless Buyer Parent, Buyer and their respective directors, officers, employees, representatives and Affiliates for any and all Damages resulting from the failure of Seller to obtain the consents or approvals set forth in Sections 4.04(b) and 4.13(b) of the Seller Disclosure Schedule.
6.20 OMEGA Brokers. From the Brokerage Closing through January 20, 2003 or such later time as any OMEGA accounts are transferred to Buyer pursuant to this Agreement, (i) Buyer will not, and will instruct its brokers that they are not authorized by virtue of the Brokerage Closing to, provide investment advisory services (but may make investment recommendations) in respect of any Transferred OMEGA Accounts, (ii) will respect the independent investment discretion and judgment of the employees of Seller acting as supervisors with respect to such Transferred OMEGA Accounts, and (iii) none of the brokers of Buyer will receive any special compensation in respect of any Transferred OMEGA Accounts, but shall be entitled to receive such other advisor and wrap related fees and commissions in respect of such Transferred OMEGA Accounts.
7.01 Conditions. The obligation of Seller to consummate the transactions contemplated by this Agreement is subject to the fulfillment at or prior to each Applicable Closing of each of the following conditions (any or all of which may be waived in whole or in part by Seller):
(a) Performance. Buyer Parent and Buyer shall have performed and complied, in all material respects, with all agreements, obligations, covenants and conditions required by this Agreement to be so performed or complied with by Buyer Parent or Buyer, as the case may be, at or prior to each Applicable Closing.
(b) No Violation of Orders, Injunction or Regulatory Actions. No preliminary or permanent injunction or other order issued by any Governmental Entity, no statute, rule or regulation, promulgated or enacted by any Governmental Entity and no judgment, order, injunction or decree issued by a court of competent jurisdiction that prevents, restrains or prohibits the consummation of the transactions contemplated by this Agreement shall be in effect. No actions, suits, claims, proceedings, investigations or inquiries shall have been commenced (and not have been dismissed) by or on behalf of any Governmental Entity.
(c) HSR Act Waiting Periods. Any waiting period (or an extension thereof) applicable to this Agreement and the transactions contemplated hereby under the HSR Act shall have expired or shall have been terminated.
(d) Governmental Approvals. All consents and approvals of any Governmental Entity required to consummate the transactions contemplated hereby shall have been obtained, except where the failure to obtain any such consent or approval would not materially impair the ability of Seller to transfer the Asset Management Assets to Buyer.
(e) Documents. Seller shall have received the Buyer Related Instruments duly executed by each party thereto (other than Seller and its Affiliates).
8.01 Conditions. The obligations of Buyer and Buyer Parent to consummate the transactions contemplated by this Agreement are subject to the fulfillment at or prior to each Applicable Second Closing of each of the following conditions (any or all of which may be waived in whole or in part by Buyer or Buyer Parent):
(a) Performance. Seller, its Subsidiaries, the Seller Entities and the Funds, as applicable, shall have performed and complied, in all material respects, with all agreements, obligations, covenants and conditions required by this Agreement to be so performed or complied with by Seller, its Subsidiaries, the Seller Entities or the Funds, as the case may be, at or prior to each Applicable Closing.
(b) No Violation of Orders, Injunction or Governmental Entity. No preliminary or permanent injunction or other order issued by any Governmental Entity, no statute, rule or regulation, promulgated or enacted by any Governmental Entity and no judgment, order, injunction or decree issued by a court of competent jurisdiction that prevents, restrains or prohibits the consummation of the transactions contemplated by this Agreement shall be in effect. No actions, suits, claims, proceedings, investigations or inquiries shall have been commenced (and not have been dismissed) by or on behalf of any Governmental Entity.
(c) HSR Act Waiting Periods. Any waiting period (or an extension thereof) applicable to this Agreement and the transactions contemplated hereby under the HSR Act shall have expired or shall have been terminated.
(d) Governmental Approvals. All consents and approvals of any Governmental Entity required to consummate the transactions contemplated hereby shall have been obtained, except where the failure to obtain any such consent or approval would not materially impair the ability of Buyer Parent or Buyer to perform their obligations under the Agreement or to operate the Asset Management Business after each Applicable Closing.
(e) Documents. Buyer shall have received Seller Related Instruments, in each case, duly executed by each party thereto (other than Buyer or Buyer Parent).
(f) Consents and Approvals. All material licenses, Permits, consents, approvals, estoppels and authorizations of all third parties shall have been obtained which are necessary, in the reasonable opinion of Buyer, in connection with (a) the execution and delivery by Seller of the Agreement and Seller Related Instruments, (b) the consummation by Seller of the transactions contemplated hereby and thereby and the compliance by Seller with its obligations hereunder and thereunder, (c) the ownership or operation by Buyer of the Asset Management Business or the Asset Management Assets or (d) the conduct by Buyer of the Asset Management Business after each Applicable Closing.
(g) Brokerage Asset Purchase Agreement. The transactions contemplated by the Brokerage Asset Purchase Agreement shall have closed.
9.01 Termination. This Agreement may be terminated and the transactions contemplated hereby may be abandoned at any time prior to the Final Closing:
(a) by mutual written agreement of Buyer and Seller;
(b) at any time after June 30, 2003, by either Buyer or Seller, if the Final Closing shall not have occurred for any reason, other than a breach of this Agreement by the terminating party; and
(c) by either party if the Brokerage Asset Purchase Agreement is terminated.
9.02 Procedure and Effect of Termination. In the event of the termination of this Agreement and the abandonment of the transactions contemplated hereby pursuant to Section 9.01(b), written notice thereof shall forthwith be given by the party so terminating to the other parties, and this Agreement shall terminate, and the transactions contemplated hereby shall be abandoned, without further action by Seller or Buyer. The obligations provided for in this Section 9.02 and Section 10.01 and the confidentiality provision contained in Section 6.02 shall survive any termination of this Agreement.
9.03 Other Remedies. In no event shall termination of this Agreement limit or restrict the rights and remedies of any party hereto against any other party which has breached the terms of this Agreement prior to termination hereof.
9.04 Amendment, Modification and Waiver. This Agreement may be amended, modified or supplemented at any time by written agreement of the parties hereto. Any failure of a party to comply with any term or provision of this Agreement may be waived by the other parties at any time by an instrument in writing signed by or on behalf of such other parties, but such waiver or failure to insist upon strict compliance with such term or provision shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure to comply.
10.01 Fees and Expenses. Subject to the terms and conditions hereof, whether or not the transactions contemplated hereby are consummated pursuant hereto, Seller, on the one hand, and Buyer on the other hand, shall pay all fees and expenses incurred by such person or on such person's behalf in connection with or in anticipation of this Agreement and the consummation of the transactions contemplated hereby.
10.02 Survival of Representations. The representations and warranties in this Agreement and in any other document delivered in connection herewith shall survive the Final Closing for three years regardless of any investigation made by or on behalf of any party hereto; provided, that, the representations made in Sections 4.01, 4.02, 4.03, 4.04, 4.08, 4.16, 5.01 and 5.02 shall survive indefinitely.
10.03 Seller's Agreement to Indemnify. Upon the terms and subject to the conditions of this Article X, Seller Parent and Company agree, jointly and severally, to indemnify, defend and hold harmless Buyer Parent, Buyer and their respective directors, officers, employees, representatives and Affiliates (collectively, "Buyer Indemnitees"), at any time and from time to time after the Applicable Closing, from and against all demands, claims, actions or causes of action, assessments, losses, damages, liabilities, costs and expenses, including interest, penalties and reasonable attorneys' fees and expenses (collectively, "Damages"), asserted against, resulting to, imposed upon or incurred by Buyer Indemnitees, directly or indirectly, by reason of or resulting from: (a) liabilities, obligations or claims of or against Seller Parent, Company or any of their Affiliates or relating to the Asset Management Business or the Asset Management Assets (whether absolute, accrued, contingent or otherwise) existing as of the Applicable First Closing Date or arising out of facts, conditions or circumstances occurring prior to the Applicable Closing Date, whether or not such liabilities, obligations or claims were known or disclosed at the time of the Applicable Closing (other than the Assumed Liabilities); (b) breach of any representation or warranty of Seller Parent or Company contained in or made pursuant to this Agreement or any facts or circumstances constituting such a breach (disregarding for this purpose all qualifications therein with respect to knowledge, materiality or Material Adverse Effect); (c) breach of any covenant or agreement of Seller Parent or Company contained in or made pursuant to this Agreement or any facts or circumstances constituting such breach; (d) any of the Excluded Assets; (e) any of the Excluded Liabilities; or (f) any failure by Seller to comply with any "bulk sales" laws applicable to the transactions contemplated hereby (the items referred to in clauses (a) through (f) being collectively referred to herein as the "Seller Claims"); provided, however, that Seller Parent and Company shall have no obligation to indemnify the Buyer Indemnitees for any Seller Claims until the Buyer Indemnitees have suffered Damages pursuant to this Section 10.03 and Section 10.03 of the Brokerage Asset Purchase Agreement in excess of $1,000,000 in the aggregate with all other Seller Claims hereunder and thereunder at which point Seller Parent and Company shall be obligated to indemnify the Buyer Indemnitees for all Damages which exceed $1,000,000. In satisfaction of any indemnity obligations to Buyer Parent, Buyer or any of their direct or indirect subsidiaries, Seller may, in its discretion, (A) pay any amounts payable pursuant to this Section 10.03 in cash, or (B) reduce by such amounts the then outstanding principal amount of first, the First Exchangeable Debenture, second, the Interim Debenture, third, the Zero Coupon Note, and fourth, any other debt owed by Buyer Parent, Buyer or any of their Affiliates to Seller.
10.04 Seller's Limitation of Liability. Anything in this Agreement to the contrary notwithstanding, the liability of Seller Parent and Company to indemnify Buyer Indemnitees pursuant to Section 10.03(b) against any Damages sustained by reason of any Seller Claim thereunder for a breach of any representation or warranty of Seller Parent or Company shall:
(a) be limited to Seller Claims as to which any of Buyer Indemnitees has given Seller written notice thereof on or prior to the date, if any, on which survival of such representation or warranty terminates pursuant to Section 10.02, whether or not any Damages have then actually been sustained; and
(b) when taken together with any damages sustained by reason of any claim under Section 10.03(b) of the Brokerage Asset Purchase Agreement, of not exceed the sum of (i) the Purchase Price and (ii) the original principal amount of the Broker Loans.
10.05 Buyer Parent's and Buyer's Agreement to Indemnify. Upon the terms and subject to the conditions of this Article X, Buyer Parent and Buyer agree, jointly and severally, to indemnify, defend and hold harmless Seller, and its directors, officers, employees, representatives and Affiliates (collectively, the "Seller Indemnitees") at any time and from time to time after the Applicable Closing, from and against all Damages asserted against, resulting to, imposed upon or incurred by Seller Indemnitees, directly or indirectly, by reason of or resulting from: (a) liabilities, obligations or claims relating to the Asset Management Business or the Asset Management Assets (whether absolute, accrued, contingent or otherwise) arising out of facts, conditions or circumstances occurring on or after the Applicable Closing Date; (b) breach of any representation or warranty of Buyer or Buyer Parent contained in or made pursuant to this Agreement or any facts or circumstances constituting such a breach (disregarding for this purpose all qualifications therein with respect to knowledge, materiality or Material Adverse Effect); (c) breach of any covenant or agreement of Buyer or Buyer Parent contained in or made pursuant to this Agreement or any facts or circumstances constituting such a breach; (d) any of the Assumed Liabilities; and (e) actions of any of the OMEGA Brokers after the Brokerage Closing in the course of their duties for Buyer (other than actions related to the transfer of any Clients (or accounts thereof) to Buyer or obtaining any Consents thereof) (the items referred to in clauses (a) through (e) being collectively referred to herein as the "Buyer Claims"); provided, however, that Buyer and Buyer Parent shall have no obligation to indemnify the Seller Indemnitees for any Buyer Claims until the Seller Indemnitees have suffered Damages pursuant to this Section 10.05 and Section 10.05 of the Brokerage Asset Purchase Agreement in excess of $1,000,000 in the aggregate with all other Buyer Claims hereunder and thereunder at which point Buyer and Buyer Parent shall be obligated to indemnify the Seller Indemnitees for all Damages which exceed $1,000,000. In satisfaction of any indemnity obligations to Company, Seller Parent or any of their direct or indirect subsidiaries, Buyer Parent and Buyer may, in their discretion, (A) pay any amounts payable pursuant to this Section 10.05 in cash, or (B) reduce the then outstanding principal amount of any indebtedness or other payment obligation owed by Seller or any of its Affiliates to Buyer Parent or Buyer, by such amount.
10.06 Buyer Parent's and Buyer's Limitation of Liability. Anything in this Agreement to the contrary notwithstanding, the liability of Buyer Parent and Buyer to indemnify Seller Indemnitees pursuant to Section 10.05(b) against any Damages sustained by reason of any Buyer Claim thereunder for a breach of any representation or warranty of Buyer Parent or Buyer:
(a) shall be limited to Buyer Claims as to which any of Seller Indemnitees has given Buyer Parent or Buyer written notice thereof on or prior to the date, if any, on which survival of such representation or warranty terminates pursuant to Section 10.02, whether or not any Damages have then actually been sustained; and
(b) when taken together with any damages sustained by reason of any claim under Section 10.05(b) of the Brokerage Asset Purchase Agreement, of not exceed the sum of (i) the Purchase Price and (ii) the original principal amount of the Broker Loans.
10.07 Conditions of Indemnification. The obligations and liabilities of Seller Parent, Company, Buyer Parent and Buyer with respect to Buyer Claims or Seller Claims (collectively, "Claims") made by third parties shall be subject to the following terms and conditions:
(a) The indemnified party shall give the indemnifying party prompt notice of any such Claim, and the indemnifying party shall have the right to undertake the defense thereof by representatives chosen by it;
(b) If the indemnifying party, within a reasonable time after notice of any such Claim, fails to defend the indemnified party against which such Claim has been asserted, the indemnified party shall (upon further notice to the indemnifying party) have the right to undertake the defense, compromise or settlement of such Claim on behalf of and for the account and risk of the indemnifying party subject to the right of the indemnifying party to assume the defense of such Claim at any time prior to settlement, compromise or final determination thereof; and
(c) Anything in this Article X to the contrary notwithstanding,
(i) if there is a reasonable probability that a Claim may materially and
adversely affect the indemnified party other than as a result of money damages
or other money payments, the indemnified party shall have the right, at its
own cost and expense, to defend, compromise or settle such Claim, and (ii) the
indemnifying party shall not, without the written consent of the indemnified
party, settle or compromise any Claim or consent to the entry of any judgment
in any manner that admits wrongdoing or any violation of law or which does not
include as an unconditional term thereof the giving by the claimant or the
plaintiff to the indemnified party a release from all liability in respect to
such Claim.
10.08 Cooperation. If requested by the indemnifying party, the indemnified person shall cooperate with the indemnifying party and its counsel in contesting any Claim which the indemnifying party elects to contest or, if appropriate, in making any counterclaim against the person asserting the Claim or any cross-complaint against any person and further agrees to take such other action as reasonably may be requested by an indemnifying party to reduce or eliminate any loss or expense for which the indemnifying party would have responsibility, but the indemnifying party shall reimburse the indemnified person for any expenses incurred by it in so cooperating or acting at the request of the indemnifying party.
10.09 Other Indemnification Provisions.
(a) The amount of Damages incurred by any indemnified party shall be reduced by and to the extent that such indemnified party shall have received proceeds under insurance policies, risk sharing pools, or similar arrangements specifically as a result of, and in compensation for, the subject matter of the Claim in respect of such Damages, net of any increased premiums resulting from or similar costs arising out of the making of such claims against such insurance or other arrangements.
(b) The determination of the amount of Damages sustained by any indemnified party in respect of any Claim shall not be reduced by Tax benefits, if any, resulting from or relating to such Claim.
11.01 Further Assurances. From time to time after the Applicable Closing Date, at the request of the other party hereto and at the expense of the party so requesting, Seller and Buyer shall execute and deliver to such requesting party such documents and take such other action as such requesting party may reasonably request in order to consummate more effectively the transactions contemplated hereby.
11.02 Notices. All notices, requests, demands, waivers and other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given if delivered personally, by mail (certified or registered mail, return receipt requested) or by facsimile transmission (receipt of which is confirmed):
(a) If to Buyer Parent or Buyer, to:
Fahnestock Viner Holdings Inc.
P.O. Box 2015, Suite 1110
20 Eglinton Avenue West
Toronto, Ontario M4R 1K8
CANADA
Attention: A.G. Lowenthal
Telephone: (212) 668-5782
Facsimile: (212) 943-8728
Email: alowenthal@fahnestock.com
With a copy to:
Borden Ladner Gervais LLP
Scotia Plaza, Suite 4400
40 King Street West
Toronto, Ontario M5H 3Y4
CANADA
Attention: A. Winn Oughtred, Esq.
Telephone: (416) 367-6247
Facsimile: (416) 361-7076
Email: woughtred@blgcanada.com
and
Skadden, Arps, Slate, Meagher & Flom LLP Four Times Square New York, NY 10036 Attention: Ralph Arditi, Esq.
Telephone: (212) 735-3000
Facsimile: (212) 735-2000
Email: rarditi@skadden.com
(b) If to Seller Parent or Company, to:
Canadian Imperial Bank of Commerce
Commerce Court West
Toronto, Ontario M5L 1A2
CANADA
Attention: Gerry McCaughey
Telephone: (416) 980-2211
Facsimile: (416) 332-4316
Email: gerrry.mccaughey@cibc.com
With a copy to:
Mayer, Brown, Rowe & Maw
1675 Broadway
New York, NY 10019-5820
Attention: James B. Carlson, Esq.
Telephone: (212) 506-2515
Facsimile: (212) 849-5515
Email: jcarlson@mayerbrownrowe.com
and
CIBC Legal and Compliance
245 Park Avenue
42nd Floor
New York, NY 10167
Attention: Michael Capatides, Esq.
Telephone: (917) 332-4108
Facsimile: (917) 332-4316
Email: michael.capatides@us.cibc.com
or to such other person or address as any party shall specify by notice in writing to the other party. All such notices, requests, demands, waivers and communications shall be deemed to have been received on the date on which so hand-delivered, on the third business day following the date on which so mailed and on the date on which faxed and confirmed, except for a notice of change of address, which shall be effective only upon receipt thereof.
11.03 Bulk Sales Laws. Each party hereto hereby waives compliance by Buyer and Seller with the provisions of the "bulk sales," "bulk transfer" and similar laws of any state. Seller shall indemnify Buyer against all losses incurred by Buyer or any of its officers, directors or Affiliates as a result of such failure to comply.
11.04 Entire Agreement. This Agreement, the Buyer Disclosure Schedule, the Seller Disclosure Schedule, the Confidentiality Agreement, the Brokerage Asset Purchase Agreement, the Ancillary Agreements and the exhibits, schedules and other documents referred to herein which form a part hereof contain the entire understanding of the parties hereto with respect to their subject matter. This Agreement supersedes all prior agreements and understandings, oral and written, with respect to its subject matter.
11.05 Severability. Should any provision of this Agreement for any reason be declared invalid or unenforceable, such decision shall not affect the validity or enforceability of any of the other provisions of this Agreement, which other provisions shall remain in full force and effect and the application of such invalid or unenforceable provision to persons or circumstances other than those as to which it is held invalid or unenforceable shall be valid and be enforced to the fullest extent permitted by law.
11.06 Binding Effect; Assignment. This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, executors, successors and permitted assigns, neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned, directly or indirectly, by (i) Buyer or Buyer Parent without the consent of Seller and (ii) Seller, without the prior written consent of Buyer Parent, except that each party may assign its rights, interests and obligation, without the written consent of the other parties or to any wholly-owned subsidiary; provided, that no assignment shall limit or affect the assignor's obligations hereunder.
11.07 No Third-Party Beneficiaries. This Agreement is not intended and shall not be deemed to confer upon or give any person except the parties hereto and their respective successors and permitted assigns any remedy, claim, liability, reimbursement, cause of action or other right under or by reason of this Agreement.
11.08 Counterparts. This Agreement may be executed simultaneously in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
11.09 Headings. The article and section headings contained in this Agreement are solely for the purpose of reference, are not part of the agreement of the parties and shall not in any way affect the meaning or interpretation of this Agreement.
11.10 Governing Law; Jurisdiction.
(a) This Agreement shall be construed, performed and enforced in accordance with, and governed by, the laws of the State of New York, without giving effect to the principles of conflicts of laws thereof.
(b) Each party irrevocably submits to the exclusive jurisdiction of (i) the Supreme Court of the State of New York, New York County, and (ii) the United States District Court for the Southern District of New York, for the purposes of any suit, action or other proceeding arising out of this Agreement or any transaction contemplated hereby. Each party agrees to commence any action, suit or proceeding relating hereto either in the United States District Court for the Southern District of New York or if such suit, action or other proceeding may not be brought in such court for reasons of subject matter jurisdiction, in the Supreme Court of the State of New York, New York County. Each party irrevocably and unconditionally waives any objection to the laying of venue of any action, suit or proceeding arising out of this Agreement or the transactions contemplated hereby in (A) the Supreme Court of the State of New York, New York County, or (B) the United Sates District Court for the Southern District of New York, and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum.
11.11 Waiver of Jury Trial. Each party hereby waives its respective rights to a jury trial of any claim or cause of action based upon or arising out of this agreement or any dealings between them relating to the subject matter of this agreement and the relationship that is being established. The scope of this waiver is intended to be all-encompassing of any and all disputes that may be filed in any court and that relate to the subject matter of this agreement, including, without limitation, contract claims, tort claims, breach of duty claims, and all other common law and statutory claims. The parties acknowledge that this waiver is a material inducement to enter into a business relationship, that each party has already relied on the waiver in entering into this agreement and that each party will continue to rely on the waiver in their related future dealings. Each party further warrants and represents it has reviewed this waiver with its legal counsel, and that each knowingly and voluntarily waives its jury trial rights following consultation with legal counsel. This waiver is irrevocable, meaning that it may not be modified either orally or in writing, and the waiver shall apply to any subsequent amendments, renewals, supplements or modifications to this agreement or to any other documents or agreements relating to the transaction contemplated hereby. In the event of litigation, this agreement may be filed as a written consent to a trial by the court.
11.12 Specific Performance. Each of the parties hereto acknowledges and agrees that in the event of any breach of this Agreement, each non-breaching party would be irreparably and immediately harmed and could not be made whole by monetary damages. It is accordingly agreed that the parties hereto (a) will waive, in any action for specific performance, the defense of adequacy of a remedy at law and (b) shall be entitled, in addition to any other remedy to which they may be entitled at law or in equity, to compel specific performance of this Agreement in any action instituted hereunder.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.
FAHNESTOCK VINER HOLDINGS INC.
/s/ A. G. Lowenthal -------------------------------------------- Name: A. G. Lowenthal Title: Chief Executive Officer and Chairman of the Board |
FAHNESTOCK & CO. INC.
/s/ A. G. Lowenthal -------------------------------------------- Name: A. G. Lowenthal Title: Chief Executive Officer and Chairman of the Board |
CIBC WORLD MARKETS CORP.
/s/ Antonio Molestina -------------------------------------------- Name: Antonio Molestina Title: Managing Director |
CANADIAN IMPERIAL BANK OF COMMERCE
/s/ Antonio Molestina -------------------------------------------- Name: Antonio Molestina Title: Senior Vice President |
Schedule I
[To come.]
Schedule II
[To come.]
Schedule III
[To come.]
Schedule IV Purchased Investments --------------------- -------------------------------------------------------------- ---------------------------------------------- Fund Name Transfer to Fahnestock -------------------------------------------------------------- ---------------------------------------------- Catalyst $ 400,000 -------------------------------------------------------------- ---------------------------------------------- Emerging Markets $ 1,000,000 -------------------------------------------------------------- ---------------------------------------------- Contrarian -------------------------------------------------------------- ---------------------------------------------- Value -------------------------------------------------------------- ---------------------------------------------- Augusta, Troon, Sawgrass and Oppenheimer Advisers $ 1,500,000 -------------------------------------------------------------- ---------------------------------------------- COPEP $ 1,070,000 -------------------------------------------------------------- ---------------------------------------------- Tech Partners -------------------------------------------------------------- ---------------------------------------------- Whistler Fund -------------------------------------------------------------- ---------------------------------------------- Wynstone -------------------------------------------------------------- ---------------------------------------------- Xanthus -------------------------------------------------------------- ---------------------------------------------- Alyeska ------------------------------------------------------------- ---------------------------------------------- Balius -------------------------------------------------------------- ---------------------------------------------- Global Tech -------------------------------------------------------------- ---------------------------------------------- Deauville -------------------------------------------------------------- ---------------------------------------------- Sawgrass ___________ -------------------------------------------------------------- ---------------------------------------------- $ 3,970,000 =========== -------------------------------------------------------------- ---------------------------------------------- |
Schedule V Seller Investments ------------------ ------------------------------------------------------------ ------------------------------------------------ Fund Name Seed Capital Invested ------------------------------------------------------------ ------------------------------------------------ Catalyst $ 400,000 ------------------------------------------------------------ ------------------------------------------------ Emerging Markets $ 4,000,000 ------------------------------------------------------------ ------------------------------------------------ Contrarian $ 5,000,000 ------------------------------------------------------------ ------------------------------------------------ Value $ 450,000 ------------------------------------------------------------ ------------------------------------------------ Augusta, Troon, Sawgrass and Oppenheimer Advisers $ 1,500,000 ------------------------------------------------------------ ------------------------------------------------ COPEP $ 1,070,000 ------------------------------------------------------------ ------------------------------------------------ Tech Partners $ 1,200,000 ------------------------------------------------------------ ------------------------------------------------ Whistler Fund $ 5,600,000 ------------------------------------------------------------ ------------------------------------------------ Wynstone $ 3,000,000 ------------------------------------------------------------ ------------------------------------------------ Xanthus $ 1,000,000 ------------------------------------------------------------ ------------------------------------------------ Alyeska $ 5,800,000 ------------------------------------------------------------ ------------------------------------------------ Balius $ 700,000 ------------------------------------------------------------ ------------------------------------------------ Global Tech $ 1,000,000 ------------------------------------------------------------ ------------------------------------------------ Deauville $ 2,900,000 ------------------------------------------------------------ ------------------------------------------------ Sawgrass $ 1,200,000 ----------- ------------------------------------------------------------ ------------------------------------------------ $ 34,820,000 ============= ------------------------------------------------------------ ------------------------------------------------ |
Exhibit 2.1
[CONFORMED COPY]
ASSET PURCHASE AGREEMENT
BY AND AMONG
FAHNESTOCK VINER HOLDINGS INC.
AND
VINER FINANCE INC.
AND
CIBC WORLD MARKETS CORP.
AND
CANADIAN IMPERIAL BANK OF COMMERCE
DATED AS OF DECEMBER 9, 2002
TABLE OF CONTENTS Page ARTICLE I DEFINITIONS..............................................................................2 1.01 Certain Definitions......................................................................2 1.02 Certain Terms...........................................................................13 ARTICLE II PURCHASE AND SALE OF ASSETS............................................................14 2.01 Assets to Be Sold.......................................................................14 2.02 Consideration...........................................................................16 2.03 Closings................................................................................17 2.04 Agreements Entered into at Brokerage Closing............................................17 2.05 Deliveries by the Parties...............................................................18 2.06 Contemporaneous Transactions............................................................19 2.07 Assumed Liabilities; Excluded Liabilities...............................................19 2.08 Excluded Assets.........................................................................20 2.09 Consent of Third Parties................................................................20 2.10 Management of Accounts..................................................................21 2.11 Post-Closing Adjustment.................................................................21 2.12 Dispute Resolution Mechanism............................................................22 2.13 Accrued Fees............................................................................23 2.14 Prorations..............................................................................23 2.15 Account Reserve Statements..............................................................23 ARTICLE III RELATED MATTERS.......................................................................23 3.01 Asset Management Business...............................................................23 3.02 Transfer and Conversion.................................................................24 3.03 Ancillary Agreements....................................................................24 3.04 Employees; Employee Benefits............................................................25 3.05 Tax Matters.............................................................................31 3.06 Mail Received After Brokerage Closing...................................................33 3.07 Books and Records.......................................................................33 3.08 Accounts Receivable.....................................................................33 3.09 Schedules...............................................................................33 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLER...............................................34 4.01 Organization of Seller; Authority.......................................................34 4.02 No Violation; Consents and Approvals....................................................34 4.03 Financial Statements....................................................................35 4.04 Absence of Undisclosed Liabilities......................................................35 4.05 Absence of Certain Changes or Events....................................................36 4.06 Title to Assets.........................................................................36 4.07 Intellectual Property...................................................................36 4.08 Litigation..............................................................................39 4.09 Transferred Plans; Brokers; Client Assets...............................................39 4.10 Labor Matters...........................................................................40 4.11 Certain Contracts and Arrangements......................................................41 4.12 Compliance with Laws; Licenses..........................................................43 4.13 Brokers.................................................................................43 4.14 Assets Necessary to Business............................................................43 4.15 Taxes...................................................................................43 4.16 Disclosure..............................................................................44 4.17 No Restraints...........................................................................44 4.18 Broker-Dealer Matters...................................................................44 4.19 Transferred Accounts....................................................................44 4.20 Fees; Pricing; Service Charges..........................................................45 4.21 Transferred Account Information.........................................................45 4.22 Securities Ownership....................................................................45 4.23 Investment Purpose......................................................................46 4.24 Broker Loans............................................................................46 ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT AND BUYER......................................48 5.01 Organization; Authority.................................................................48 5.02 No Violation; Consents and Approvals....................................................49 5.03 Litigation..............................................................................49 5.04 Brokers.................................................................................49 5.05 Commission Filings......................................................................49 5.06 Financial Statements....................................................................49 5.07 Capitalization..........................................................................50 5.08 Absence of Undisclosed Liabilities......................................................50 5.09 Non-Contravention.......................................................................50 5.10 Disclosure..............................................................................50 5.11 Private Offering........................................................................51 5.12 Parent Shares...........................................................................51 ARTICLE VI COVENANTS OF THE PARTIES...............................................................51 6.01 Conduct of the Brokerage Business.......................................................51 6.02 Access to Information; Confidentiality..................................................52 6.03 Reasonable Best Efforts.................................................................53 6.04 Consents................................................................................53 6.05 HSR Act.................................................................................54 6.06 Regulatory Matters......................................................................54 6.07 Discharge of Liens; Payment of Certain Obligations......................................55 6.08 Proper Withholding......................................................................55 6.09 Public Announcements....................................................................55 6.10 Securities..............................................................................55 6.11 New York Headquarters Assets............................................................56 6.12 Tax Information Reporting...............................................................56 6.13 Pending Tax Claims......................................................................56 6.14 Reservation of Stock....................................................................56 6.15 Litigation Cooperation..................................................................56 6.16 Resolution of Excluded Accounts.........................................................56 6.17 Seller Officer's Certificate............................................................56 6.18 Excess Wealth Plus Payments.............................................................58 ARTICLE VII CONDITIONS TO OBLIGATIONS OF SELLER...................................................58 7.01 Conditions..............................................................................58 ARTICLE VIII CONDITIONS TO OBLIGATIONS OF BUYER...................................................59 8.01 Conditions..............................................................................59 ARTICLE IX TERMINATION, AMENDMENT AND WAIVER......................................................60 9.01 Termination.............................................................................60 9.02 Procedure and Effect of Termination.....................................................60 9.03 Other Remedies..........................................................................60 9.04 Amendment, Modification and Waiver......................................................60 ARTICLE X FEES AND EXPENSES: SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION.........................61 10.01 Fees and Expenses......................................................................61 10.02 Survival of Representations............................................................61 10.03 Seller's Agreement to Indemnify........................................................61 10.04 Seller's Limitation of Liability.......................................................62 10.05 Parent's and Buyer's Agreement to Indemnify............................................62 10.06 Parent's and Buyer's Limitation of Liability...........................................63 10.07 Conditions of Indemnification..........................................................63 10.08 Cooperation............................................................................63 10.09 Other Indemnification Provisions.......................................................64 ARTICLE XI MISCELLANEOUS..........................................................................64 11.01 Further Assurances.....................................................................64 11.02 Notices................................................................................64 11.03 Bulk Sales Laws........................................................................66 11.04 Entire Agreement.......................................................................66 11.05 Severability...........................................................................66 11.06 Binding Effect; Assignment.............................................................66 11.07 No Third-Party Beneficiaries...........................................................66 11.08 Counterparts...........................................................................67 11.09 Headings...............................................................................67 11.10 Governing Law; Jurisdiction............................................................67 11.11 Waiver of Jury Trial...................................................................67 11.12 Specific Performance...................................................................68 SCHEDULES Schedule I Term Sheet Governing Acquisition of the Asset Management Business Schedule II Acquired Property and Assets EXHIBITS Form of Clearing Agreement..........................................................................A Form of Conversion Memorandum of Understanding......................................................B Form of First Exchangeable Debenture................................................................C Form of Interim Debenture...........................................................................D Form of Loan Agreement..............................................................................E Form of Loan Assignment Agreement...................................................................F Form of Name Assignment Agreement...................................................................G Non Competition Agreement...........................................................................H Form of Registration Rights Agreement...............................................................I Form of Research Agreement..........................................................................J Form of Second Exchangeable Debenture...............................................................K Form of Stakeholders Agreement......................................................................L Term Sheet of Transition Services Agreement.........................................................M |
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated as of December 9, 2002 (the "Agreement"), by and among Fahnestock Viner Holdings Inc., an Ontario corporation ("Parent"), Viner Finance Inc., a Delaware corporation and an indirect wholly-owned subsidiary of Parent ("Buyer"), Canadian Imperial Bank of Commerce (the "Seller Parent") and CIBC World Markets Corp. ("Company" and, together with Seller Parent, the "Seller").
W I T N E S S E T H
WHEREAS, Buyer desires to purchase from Seller, and Seller desires to sell to Buyer, all of the property and assets (other than the Excluded Assets (as defined below)) of Company used primarily in the Brokerage Business (as defined below), as currently conducted by Company, pursuant to the terms of this Agreement, upon the terms and subject to the conditions hereinafter set forth (the "Brokerage Acquisition");
WHEREAS, Buyer desires to purchase from Seller, and Seller desires to sell to Buyer, the Asset Management Business (as defined below), as currently conducted by Company, pursuant to the terms of this Agreement, substantially upon the terms and subject to the conditions set forth in the term sheet attached as Schedule I (the "Asset Management Acquisition," and together with the Brokerage Acquisition, the "Acquisition");
WHEREAS, contemporaneously with the consummation of the Acquisition, E.A. Viner International Co., a Delaware corporation and a wholly-owned subsidiary of Parent ("Issuer"), will issue and sell to Seller Parent or any of its Subsidiaries, and Seller Parent or such Subsidiary will purchase from Issuer for cash, the First Exchangeable Debenture (as defined below) and the Interim Debenture (as defined below);
WHEREAS, contemporaneously with the consummation of the Acquisition, upon the receipt by Issuer of the cash proceeds of such issuance and sale of the First Exchangeable Debenture and Interim Debenture to Company, Issuer will contribute, or cause to be contributed, such proceeds to Buyer;
WHEREAS, contemporaneously with the execution and delivery of this Agreement, Parent, Company, Seller Parent and certain significant shareholders of Parent are entering into a Stakeholders Agreement (as defined below) and at the closing hereunder will enter into the Registration Rights Agreement (as defined below);
WHEREAS, contemporaneously with the execution and delivery of this Agreement, Fahnestock (as defined below), Buyer, Company and Seller Parent are entering into a Non-Competition Agreement (as defined below);
WHEREAS, contemporaneously with the consummation of the Brokerage Acquisition, Parent and Seller Parent are entering into the Loan Agreement and Seller Parent (or its designees) will make to Parent (or its designees) the Loan Payment (as each such term is defined below); and
WHEREAS, contemporaneously with the consummation of the Brokerage Acquisition, Parent, Buyer, Seller and Company, as applicable, are entering into certain other Ancillary Agreements (as defined below) to consummate and implement the transactions contemplated hereby.
NOW, THEREFORE, in consideration of the foregoing and of the representations, warranties, covenants, agreements and conditions contained herein, and intending to be legally bound hereby, the parties agree as follows:
ARTICLE I
DEFINITIONS
1.01 Certain Definitions.
"Account Reserves" means the reserves relating to each Customer Account that has an unsecured debit balance or is not adequately secured in accordance with applicable margin requirements or with Buyer's (or its Affiliates') usual standards for similar accounts (which may include giving no value to control or restricted stock or security certificates that are not legally transferable) or has an unsecured short security position.
"Accrued Fees" means all accrued and unpaid fees with respect to the Transferred Accounts.
"Acquired Property" has the meaning set forth in Section 2.01(a)(vii).
"Acquisition" has the meaning set forth in the recitals.
"Affiliate" means, with respect to a specified Person, a Person that directly or indirectly, through one or more intermediaries, controls, or is controlled by or is under common control with, the Person specified.
"Aggregate Assets" means the Brokerage Assets and the Asset Management Business.
"Agreement" has the meaning set forth in the Preamble.
"Allocation Schedule" has the meaning set forth in Section 2.02(e).
"Ancillary Agreements" has the meaning set forth in Section 3.03.
"Applicable Laws" has the meaning set forth in Section 4.12(a).
"Asset Management Acquisition" has the meaning set forth in the recitals.
"Asset Management Acquisition Agreement" means the purchase agreement governing the Asset Management Acquisition to be entered into pursuant to the Asset Management Acquisition Term Sheet.
"Asset Management Acquisition Term Sheet" has the meaning set forth in Section 3.01.
"Asset Management Business" means the asset management, investment advisory, financial advisory, wrap account, asset allocation and similar businesses and activities conducted by Company on the date hereof as to be more fully described in the Asset Management Acquisition Agreement to be entered into pursuant to the Asset Management Acquisition Term Sheet.
"Asset Management Services" means products and services of the Asset Management Business that are provided by Company as of the date of this Agreement.
"Assumed Contracts" has the meaning set forth in Section 2.07(a).
"Assumed Liabilities" has the meaning set forth in Section 2.07(b).
"Authorization" means any approval, consent, declaration, license, order, permit, registration, waiver, or other authorization issued, granted, given, or otherwise made available by or under the authority of any Governmental Entity or pursuant to any Law of any Governmental Entity.
"Bill of Sale" has the meaning set forth in Section 2.01(b).
"Books and Records" means all books and records, all books of account, records, files and invoices, including all customer files, customer account records, production data, equipment records, inventory records, sales and promotional data, advertising materials, customer lists, cost and pricing information, supplies lists, business plans, reference catalogs, tax records, and tax returns and any other similar records and data (including all computerized records and other computerized storage media) of Seller or its Subsidiaries relating to the Brokerage Business.
"Broker Loans" means all loans outstanding to brokers who are included in the Transferred Employees, which loans are being assigned to Buyer pursuant to the Loan Assignment Agreement.
"Brokerage Acquisition" has the meaning set forth in the recitals.
"Brokerage Assets" has the meaning set forth in Section 2.01(a).
"Brokerage Business" means the full service retail brokerage business and the "middle-market" institutional business as conducted by Company on the date hereof through its private client division (excluding the Excluded Functions), all as more fully described in Schedule II, which shall not include the Asset Management Business.
"Brokerage Closing" has the meaning set forth in Section 2.01(a).
"Brokerage Closing Date" has the meaning set forth in Section 2.03(a).
"Brokerage Closing Statement" has the meaning set forth in
Section 2.11(a).
"Business Employees" has the meaning set forth in Section 3.04(a).
"Buyer" has the meaning set forth in the Preamble.
"Buyer Claims" has the meaning set forth in Section 10.05.
"Buyer Disclosure Schedule" means the document delivered by Buyer to Seller simultaneously with the execution hereof containing the information required to be included therein pursuant to this Agreement.
"Buyer Indemnitees" has the meaning set forth in Section 10.03.
"Buyer Related Instruments" has the meaning set forth in
Section 5.01(a).
"Capital Markets Business" means the investment banking, proprietary trading and institutional business (other than "middle-market" institutional) of Company as conducted by Company on the date hereof.
"Cash Consideration" has the meaning set forth in Section 2.11(a).
"Claims" has the meaning set forth in Section 10.07.
"Class A Shares" means the Class A Non-Voting shares of Parent, as they exist on the date of this Agreement and any shares of any class or classes in the capital stock of Parent resulting from any reclassification or reclassifications thereof and which have no preference in respect of dividends or of amounts payable in the event of any voluntary or involuntary liquidation, dissolution or winding-up of Parent and which are not subject to redemption by Parent; provided, however, that if at any time there shall be more than one resulting class, the shares of each class then so issuable on exchange of securities shall be substantially in the proportion which the total number of shares of such class resulting from all such reclassifications bears to the total number of shares of all such classes resulting from such reclassification.
"Clearing Agreement" means the clearing agreement between Company and Fahnestock to be dated as of the Brokerage Closing Date relating to certain clearing services to be provided by Company to Fahnestock after the Brokerage Closing, substantially in the form attached as Exhibit A.
"Closing Account Reserve Statement" has the meaning set forth in Section 2.15.
"COBRA Requirements" has the meaning set forth in Section 3.04(g).
"Code" means the United States Internal Revenue Code of 1986, as amended, and the Treasury rules and regulations thereunder.
"Commission" means the United States Securities and Exchange Commission.
"Commitments" has the meaning set forth in Section 4.24(c).
"Company" has the meaning set forth in the Preamble.
"Company License Agreements" has the meaning set forth in
Section 4.07(b).
"Confidentiality Agreement" has the meaning set forth in
Section 6.02(c). "Contracts" has the meaning set forth in
Section 4.11(a).
"Conversion" has the meaning set forth in Section 3.02. "Conversion Employee" has the meaning set forth in Section 3.04(b)(i).
"Conversion Memorandum of Understanding" means the memorandum of understanding between Fahnestock and Seller governing the transfer of client assets from Seller to Fahnestock, substantially in accordance with the terms set forth in the memorandum of understanding attached as Exhibit B.
"Customer Account" means any retail brokerage account or "middle-market" institutional account or commodity account of the Brokerage Business established through a Customer Agreement.
"Customer Agreement" has the meaning set forth in Section 4.18(d).
"Damages" has the meaning set forth in Section 10.03.
"Debentures" means the First Exchangeable Debenture and the Interim Debenture.
"Eligible Customer Account" means any Customer Account, other than any Retained Employee Customer Account.
"Environmental Laws" means any applicable United States federal, state or local law or regulation relating to the pollution or protection of the environment.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended and the rules and regulations promulgated thereunder.
"ERISA Affiliate" is any trade or business, whether or not incorporated, that together with Seller would be deemed a "single employer" within the meaning of Section 4001(b) of ERISA.
"Estimated Cash Consideration" has the meaning set forth in
Section 2.02(b).
"Estimated Revenue Loss" has the meaning set forth in Section 6.17(b).
"Excess Percentage" has the meaning set forth in Section 6.17(b)(ii).
"Excess Wealth Plus Payments" means in the case of an amount transferred with respect to the "Initial Credit Amount" under the Wealth Plus Plan for a Transferred Employee (the "Initial Credit Transfer"), if such Transferred Employee terminates employment prior to October 31, 2003, with a vested interest in such Initial Credit Amount that has a dollar value that is less than the Initial Credit Transfer for such employee, the amount by which the Initial Credit Transfer exceeds such dollar amount, and (b) in the case of an amount transferred with respect to the "Second Credit Amount" under the Wealth Plus Plan for a Transferred Employee (the "Second Credit Transfer"), if such Transferred Employee terminates employment prior to October 31, 2004, with a vested interest in such Second Credit Amount that has a dollar value that is less than the Second Credit Transfer, the amount by which the Second Credit Transfer exceeds such dollar amount.
"Exchange Act" means the United States Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
"Exchangeable Debentures" means the First Exchangeable Debenture and the Second Exchangeable Debenture.
"Excluded Accounts" means any Eligible Customer Account that
(i) has an unsecured debit balance or is not adequately secured in accordance
with applicable margin requirements or with Buyer's (or its Affiliates') usual
standards for similar accounts (which may include giving no value to control or
restricted stock or security certificates that are not legally transferable) or
has an unsecured short security position; (ii) is an OFAC-listed account; (iii)
is listed on a suspicious activity report submitted to any Governmental Entity,
including, without limitation, any "fraud list" or similar watch list; (iv) is
the subject of a customer's rejection of a negative consent with respect to the
transfer of such account; (v) is an account with respect to which a customer has
not affirmatively consented to the transfer of such account where such
affirmative consent is required; (vi) any account with a customer "claim" or
existing litigation at time of transfer, provided, however, that with respect
the foregoing clause (i), such accounts shall not be deemed to be Excluded
Accounts if Seller transfers to Buyer, at the Brokerage Closing, the required
Account Reserves with respect thereto sufficient in amount to secure such
account and in the case of clause (vi) an indemnity with respect thereto in form
acceptable to Buyer.
"Excluded Assets" has the meaning set forth in Section 2.08.
"Excluded Functions" means the ministerial administrative functions (and related clearing and accounting functions) in the New York Headquarters, all relating to the Brokerage Business.
"Excluded Liabilities" has the meaning set forth in Section 2.07(b).
"Fahnestock" means Fahnestock & Co. Inc., a wholly-owned subsidiary of Buyer.
"Final Statement" has the meaning set forth in Sections 2.11(b).
"Financial Statements" has the meaning set forth in Section 4.03(a).
"FIRPTA Certificate" has the meaning set forth in Section 2.05(b)(v).
"First Exchangeable Debenture" means the Exchangeable Debenture due 2013 issued by Issuer, which is exchangeable into Class A Non-Voting Shares of Parent, substantially in the form attached as Exhibit C.
"Fixed Cash Consideration" has the meaning set forth in
Section 2.02(c)(ii).
"Fundamental Representation" means the representation and warranty set forth in Section 4.09(g).
"Fundamental Schedule" means the Seller Disclosure Schedule relating to the Fundamental Representation.
"GAAP" means generally accepted accounting principles in the United States.
"Governmental Entity" means any court, administrative agency or commission, government, SRO, federal, state, provincial, municipal, local or other governmental entity, authority or instrumentality, whether domestic or foreign, or any court, tribunal or arbitrator.
"Grid" has the meaning set forth in Section 4.09(f).
"Group Health Plan" has the meaning set forth in Section 3.04(g).
"HSR Act" means the United States Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.
"Inactive Employee" has the meaning set forth in Section 3.04(a).
"Independent Accounting Firm" has the meaning set forth in
Section 2.12(b).
"Insight" means software, intellectual property, hardware manuals and data files required to support the Insight services as provided to the sales force and clients of Company in relation to the Brokerage Business.
"Instruments of Assignment" has the meaning set forth in
Section 2.01(b).
"Intellectual Property" means, collectively, Internet domain names, mynetassets intranet site; patents and industrial designs (including any continuations, divisionals, continuations-in-part, renewals, reissues, and applications for any of the foregoing); Trademarks; Software; copyrights (including any registrations and applications for any of the foregoing); and Trade Secrets, in each case, used in or necessary for the conduct of the Brokerage Business as currently conducted or contemplated to be conducted.
"Intellectual Property Assignment" has the meaning set forth in Section 2.01(b).
"Interim Debenture" means the Interim Convertible Debenture
due 2006 issued by Buyer, which is convertible into the Second Exchangeable
Debenture, substantially in the form attached as Exhibit D.
"Issuer" has the meaning set forth in the recitals.
"IT Services Agreement" means the agreement to be dated as of
the Brokerage Closing Date between Company and Buyer to provide certain
information technology services to Buyer in a form to be mutually agreed by the
parties.
"IT Transfers Agreement" means the agreement to be dated as of the Brokerage Closing Date between Company and Buyer to transfer certain information technology services to Buyer in a form to be mutually agreed by the parties.
"Labor Laws" means any applicable United States federal, state or local law or regulation relating to employment and employment practices.
"Law" or "Laws" means any and all laws, statutes, ordinances, rules, regulations, orders, judgments and decrees of any and all Governmental Entities.
"Legal Proceeding" means any action, claim, complaint, lawsuit, litigation, demand, suit, inquiry, hearing, investigation, indictment, information, notice of a violation, arbitration, appeal or other dispute or legal proceeding, whether civil, criminal, administrative or otherwise.
"Liens" means any and all liens, encumbrances, security interests, mortgages, pledges, claims, options, charges, easements, limitations, commitments, encroachments, option agreements, voting trusts or restrictions of any kind whatsoever.
"Litigation" has the meaning set forth in Section 4.08.
"Loan Agreement" means the loan agreement to be dated as of the Brokerage Closing Date between Seller Parent and Parent relating to the Loan Payment, substantially in the form attached hereto as Exhibit E.
"Loan Assignment Agreement" means the agreement to be dated as of the Brokerage Closing Date between Buyer and Seller relating to the assignment of the Broker Loans to Buyer, substantially in the form attached as Exhibit F.
"Loan Documents" has the meaning set forth in Section 4.24(e).
"Loan Payment" means the loan, in the amount of up to $50,000,000 in the aggregate, to be made by Seller Parent in favor of Parent on the Brokerage Closing Date pursuant to the Loan Agreement.
"Margin Loans" has the meaning set forth in Section 2.01(a)(iii).
"Marketable Securities" has the meaning set forth in Section 2.01(a)(xiv).
"Material Adverse Effect" means any condition, event, circumstance, change or effect that, individually or in the aggregate, has had or could reasonably be expected to have a material adverse effect on the business, assets, properties, results of operation, condition (financial or otherwise) or prospects of the Brokerage Business or the Brokerage Assets.
"Middle Market Accounts" has the meaning set forth in Section 4.09(h).
"Name Assignment Agreement" means the assignment agreement between Buyer and Seller to be dated as of the Brokerage Closing Date, substantially in the form attached as Exhibit G.
"NASD" means the NASD Regulation, Inc.
"New York Headquarters" means the world headquarters of Company located at 622 Third Avenue, New York, New York.
"Non Competition Agreement" means the non-competition agreement between Fahnestock, Buyer, Seller and Seller Parent dated as of the date of this Agreement in the form attached as Exhibit H.
"NYSE" means the New York Stock Exchange, Inc.
"Obligor" means a broker or any other borrower under any Broker Loan.
"OFAC" means the Office of Foreign Assets Control of the United States Department of Treasury.
"Offices" has the meaning set forth in Section 4.06(b).
"Order" means any order, writ, judgment, arbitration award, injunction, decree or ruling of or by a Governmental Entity.
"Parent" has the meaning set forth in the Preamble.
"Parent Commission Documents" means (i) its annual reports on Form 10-K for its fiscal years ended December 31, 1999, 2000 and 2001, (ii) its quarterly reports on Form 10-Q for its fiscal quarters ended after December 31, 2001, (iii) any Form 8-Ks filed in the past fiscal year and (iv) its proxy or information statements relating to meetings of, or actions taken without a meeting by, the shareholders of Parent held since December 31, 2001.
"Parent Financial Statements" has the meaning set forth in
Section 5.06.
"Permits" has the meaning set forth in Section 2.01(a)(ix).
"Permitted Liens" has the meaning set forth in Section 4.06(a).
"Person" means an individual, corporation, partnership, association, trust, limited liability company or other entity or organization, including a government or political subdivision or an agency or instrumentality thereof.
"Purchase Price" has the meaning set forth in Section 2.02(c).
"Registered Representatives" has the meaning set forth in
Section 4.12(b).
"Registration Rights Agreement" means the registration rights agreement to be dated as of the Brokerage Closing Date between Parent and Company, substantially in the form attached as Exhibit I.
"Regulatory Documents" means all (a) Forms BD (and amendments thereto) and any similar state forms or registrations, (b) forms required to be filed under any foreign broker-dealer laws, (c) Forms ADV, ADV-T (and amendments thereto) and any similar state forms or registrations, (d) forms filed under the Exchange Act (other than Forms 3, 4, and 5 or Schedules 13D, 13F or 13G) and (e) Focus Reports.
"Rejection Deadline" has the meaning set forth in Section 3.04(b)(i).
"Research Agreement" means the research agreement to be dated as of the Brokerage Closing Date between Fahnestock and Company, substantially in the form attached as Exhibit J.
"Resolution Period" has the meaning set forth in Section 2.12(b).
"Retained Employee" has the meaning set forth in Section 3.04(j).
"Retained Employee Customer Account" means any Customer Account (i) registered in the name of a Retained Employee, (ii) registered in the name of any member of any Retained Employee's family or (iii) otherwise related to a Retained Employee and required under applicable Law or Seller's internal policies to be maintained by Seller.
"Retained Employee Liabilities" has the meaning set forth in
Section 3.04(j).
"Second Exchangeable Debenture" means the Exchangeable Debenture due 2006 to be issued by Buyer upon exchange of the Interim Debenture, which will be exchangeable into Class A Non-Voting Shares of Parent on terms identical to the terms of the First Exchangeable Debenture, substantially in the form attached as Exhibit K.
"Seller" has the meaning set forth in the Preamble.
"Seller 401(k) Plans" has the meaning set forth in Section 3.04(e).
"Seller Cash Payment" has the meaning set forth in Section 2.02(d).
"Seller Claims" has the meaning set forth in Section 10.03.
"Seller Disclosure Schedule" means the document delivered by Seller to Buyer and Parent simultaneously with the execution hereof containing the information required to be included therein pursuant to this Agreement.
"Seller Equity Plans" has the meaning set forth in Section 3.04(f)(ii).
"Seller Indemnitees" has the meaning set forth in Section 10.05.
"Seller Parent" has the meaning set forth in the Preamble.
"Seller Related Instruments" has the meaning set forth in
Section 4.01(b).
"Software" means any and all (a) computer programs, including any and all software implementation of algorithms, models and methodologies, whether in source code or object code form, including, without limitation, Insight, (b) databases and compilations, including any and all data and collections of data, (c) all documentation, including user manuals and training materials, relating to any of the foregoing, and (d) copyrights (including any registrations and applications for any of the foregoing) related to any or all of (a) through (c).
"SRO" means a Self Regulatory Organization registered under the Exchange Act, including the NYSE and NASD.
"Stakeholders Agreement" means the agreement dated as of the date hereof between Parent, Seller Parent, Company and certain significant shareholders of Parent, substantially in the form attached as Exhibit L.
"Sublease" means the sublease agreement to be dated the Brokerage Closing Date, in a form to be mutually agreed between Buyer and Company regarding the sublease by Company after the Brokerage Closing of space in certain of the Offices, in a form to be agreed upon by the parties.
"Subsidiary" means any corporation, limited liability company, partnership, association, joint venture or other entity of which any person (either alone or through or together with any other person pursuant to any agreement, arrangement, contract or other commitment) owns, directly or indirectly, 50% or more of the capital stock or other equity interests the holders of which generally are entitled to vote for the election of the board of directors or other governing body of such entity.
"Support Employees" has the meaning set forth in Section 3.04(l).
"Tax" means (x) any and all taxes, fees, levies, assessments, deficiencies, duties, tariffs, imposts and other charges or impositions of any kind (together with any and all interest, penalties, additions to tax and additional amounts imposed with respect thereto) imposed by any government or taxing authority, including taxes or other charges on or with respect to income, gross receipts, property, sales, transfer, recordation, bulk transfer, real property transfer and gains, use, license, excise, franchise, employment, social security, unemployment compensation, payroll, premium, withholding, alternative or added minimum, ad valorem or excise tax, or any other tax, custom, duty, governmental fee or other like assessment or charge of any kind whatsoever; (y) any liability for the payment of any amounts described in (x) as a result of being a member of an affiliated, consolidated, combined, unitary or similar group or as a result of transferor or successor liability; and (z) any liability for the payment of any amounts as a result of being a party to any tax sharing agreement or as a result of any express or implied obligation to indemnify any other Person with respect to the payment of any amounts of the type described in clause (x) or (y).
"Tax Return" means any return, report or similar statement required to be filed with respect to any Tax (including any attached schedules), including, without limitation, any information return, claim for refund, amended return or declaration of estimated Tax.
"Trade Secrets" means, collectively, technology, trade secrets and other confidential information, know-how, proprietary processes, formulae, algorithms, models, and methodologies.
"Trademarks" means, collectively, all trademarks, service marks, trade names, Internet domain names, designs, logos, slogans, and general intangibles of like nature used in the Brokerage Business, together with all goodwill, registrations and applications related to the foregoing as set forth under "Trademarks" in Section 1.01(b) of the Seller Disclosure Schedule.
"Transfer Tax Returns" has the meaning set forth in Section 3.05(a).
"Transfer Taxes" means all conveyance, sales, use, excise, value, value added, registration, stamp, franchise, property, transfer, real property transfer, gains, recording registration and similar Taxes, levies, charges, fees, together with any and all interest, penalties, additions to tax and additional amounts imposed with respect thereto.
"Transferred Account Information" has the meaning set forth in
Section 2.01(a)(iv)(A).
"Transferred Accounts" has the meaning set forth in Section 2.01(a)(i).
"Transferred Employees" has the meaning set forth in Section 3.04(c).
"Transferred Plans" has the meaning set forth in Section 3.04(f)(i).
"Transition Period" has the meaning set forth in Section 3.04(c).
"Transition Services Agreement" means the agreement between Buyer and Seller to be dated as of the Brokerage Closing Date relating to provision of certain services by Company to Buyer after the Brokerage Closing Date and the transfer of client assets from Seller to Buyer, substantially in accordance with the terms set forth in the term sheet attached as Exhibit M.
"TSX" means the Toronto Stock Exchange.
"Undertaking" has the meaning set forth in Section 2.05(a)(iv).
"Unsatisfactory Account" has the meaning set forth in Section 2.10.
"WARN Act" means the Worker Adjustment and Retraining Notification Act.
"WARN Obligations" has the meaning set forth in Section 3.04(h).
"Zero Coupon Note" means the zero coupon note, issued by Buyer pursuant to the Loan Assignment Agreement.
1.02 Certain Terms.
(a) As used in this Agreement, the terms "affiliate" and "associate" have the respective meanings set forth in Rule 12b-2 of the General Rules and Regulations promulgated under the Exchange Act.
(b) The term "business day" means any day other than a Saturday, Sunday or other day on which the NYSE is not open for trading.
(c) When used in this Agreement, the word "including" shall be deemed to mean "including, without limitation."
(d) As used in this Agreement, the word "person" means an individual, a partnership, a joint venture, a corporation, a trust, an unincorporated organization and a government or any department or agency thereof.
(e) Unless otherwise provided in this Agreement, all references to "dollars" or "$" shall be to U.S. dollars.
(f) Unless otherwise provided, all references to Sections, Articles, Schedules and Exhibits shall be deemed to mean such Sections, Articles, Schedules or Exhibits "of this Agreement."
(g) The terms defined in this Agreement have the meanings assigned to them and include the plural as well as the singular and the pronouns of either gender or neuter, shall include, as appropriate, the other pronoun forms.
ARTICLE II
PURCHASE AND SALE OF ASSETS
2.01 Assets to Be Sold.
(a) Upon the terms and subject to the conditions of this Agreement, at the closing provided for in Section 2.03 (the "Brokerage Closing"), Seller shall sell, convey, assign, transfer and deliver to Buyer (or to a Subsidiary of Buyer, as directed by Buyer), and Buyer (or such Subsidiary) shall purchase, acquire and assume from Seller, good and valid title in and to all of Seller's right, title and interest in and to all of the property and assets (other than the Excluded Assets) used primarily in or necessary to conduct the Brokerage Business (collectively, the "Brokerage Assets"), free and clear of any Liens other than Permitted Liens, including:
(i) all Company's rights under the Eligible Customer Accounts as of the Brokerage Closing Date, other than the Excluded Accounts (the "Transferred Accounts");
(ii) all Company's rights under the Customer Agreements related to the Transferred Accounts, including, Company's rights as to all guarantees, warranties and indemnities related thereto;
(iii) all Company's rights under the margin loans extended to customers with respect to the Transferred Accounts (the "Margin Loans"), including any liens, pledges and similar rights in favor of Company or any Affiliate with respect thereto;
(iv) with respect to the Transferred Accounts:
(A) all material information relating to each Transferred Account (all such information, the "Transferred Account Information"); and
(B) to the extent legally permissible under applicable privacy laws, all rights granted by customers to use Transferred Account Information, including all customer instructions and consents with respect to solicitation;
(v) all Broker Loans;
(vi) all Company's rights with respect to the accrued and unpaid fees (the "Accrued Fees") with respect to the Transferred Accounts;
(vii) all equipment, furniture, fixtures, improvements and all other tangible personal property used primarily in or necessary to conduct the Brokerage Business as presently conducted by Company (but excluding equipment, furniture, fixtures, improvements and tangible personal property used primarily in the Capital Markets Business and/or the Excluded Functions and not necessary to conduct the Brokerage Business) as set forth on Schedule II ("Acquired Property");
(viii) Company's rights under all Assumed Contracts, subject to any agreements relating to the sharing of leased facilities pursuant to the Transition Services Agreement and the Sublease;
(ix) all franchises, licenses, permits, certificates, approvals and other authorizations from any Governmental Entity (collectively, "Permits"), received by or issued to Company to own, or lease and operate the Brokerage Business and to conduct the Brokerage Business as it has been conducted by Company;
(x) Trademarks and Intellectual Property, together with all additions, modifications, updates and enhancements, subject to the terms and conditions of the Transition Services Agreement;
(xi) the Books and Records subject to Section 3.07;
(xii) as set forth in Section 3.4(f) of this Agreement, the assets of the Transferred Plans that represent liabilities attributable to the Transferred Employees;
(xiii) such prepaid fees and expenses as Buyer and Seller shall mutually agree as necessary and appropriate for the operation by Buyer of the Brokerage Business as currently conducted by Company; and
(xiv) all marketable securities held by Company as principal in respect of the Brokerage Business ("Marketable Securities"), as listed on Schedule II to be provided by Seller.
(b) Such sale, conveyance, assignment, transfer and
delivery shall be effected by delivery by Seller to Buyer or its designees of
(i) a duly executed bill of sale in a form to be mutually agreed (the "Bill of
Sale"); and (ii) a duly executed assignment of Trademarks and Intellectual
Property, including patents, trademarks, trade names, copyrights and licenses
and applications therefor, in recordable form and otherwise in a form to be
mutually agreed (the "Intellectual Property Assignment" and, together with the
Bill of Sale the "Instruments of Assignment") as shall be necessary to vest in
Buyer good and valid title to the Brokerage Assets, free and clear of any and
all liabilities, obligations and Liens, except the Assumed Liabilities and
Permitted Liens.
2.02 Consideration.
(a) Upon the terms and subject to the conditions of this Agreement, in reliance on Seller's representations, warranties and agreements contained herein, and in consideration of the sale, conveyance, assignment, transfer and delivery of the Aggregate Assets in accordance with the terms hereof, including, as to the Asset Management Business substantially upon the terms set forth in the Asset Management Acquisition Term Sheet, Buyer shall deliver or cause to be delivered, in full payment for the sale, conveyance, assignment, transfer and delivery of the Aggregate Assets, the Purchase Price (as defined below).
(b) At least five (5) business days prior to the Brokerage Closing Date, Seller shall deliver to Buyer a reasonably detailed statement setting forth its good faith estimate, computed in accordance with GAAP, consistently applied as applicable, of (i) the depreciated book value of the Acquired Property, (ii) the Accrued Fees, which in no event shall be greater than $2,000,000 and (iii) the current market value of all Marketable Securities (amounts in the foregoing clauses (i), (ii) and (iii), as set forth on such statement, being collectively referred to as the "Estimated Cash Consideration").
(c) At the Brokerage Closing, Buyer shall deliver or cause to be delivered to Seller (or its designee) in immediately available U.S. funds by wire transfer to such bank account or bank accounts as shall be specified in writing by Seller at least two (2) business days prior to the Brokerage Closing Date, an amount equal to:
(i) the Estimated Cash Consideration; and
(ii) $160,822,400 (the "Fixed Cash Consideration").
The sum of (A) the Estimated Cash Consideration (as adjusted pursuant to Section 2.11), (B) the value of the Assumed Liabilities, and (C) the Fixed Cash Consideration is referred to herein as the "Purchase Price."
(d) At the Brokerage Closing, Seller shall deliver to Buyer (or any Subsidiary of Buyer, as directed by Buyer) in immediately available U.S. funds by wire transfer to such bank account or bank accounts as shall be specified in writing by Buyer at least two (2) business days prior to the Brokerage Closing Date, an amount equal to the following (the "Seller Cash Payment"):
(i) the assets attributable to the Transferred
Employees under the Transferred Plans in accordance with
Section 3.04(f);
(ii) the bonus amounts accrued pursuant to Section 3.04(i); and
(iii) the Account Reserves as set forth on the Closing Account Reserve Statement.
(e) For purposes of this Section 2.02(e), "consideration" means the sum of (1) the Estimated Cash Consideration, after any adjustments effected in accordance with this Article II or elsewhere in this Agreement, (2) the Fixed Cash Consideration and (3) the value of the Assumed Liabilities recognized as liabilities for United States federal income tax purposes. The consideration shall be allocated in conformity with Section 1060 of the Code among the Aggregate Assets. Such allocation shall be set forth in a schedule (the "Allocation Schedule"). Buyer shall prepare a draft of the Allocation Schedule and deliver it, together with supporting schedules and information, to Company within 90 days after the Brokerage Closing Date. The Allocation Schedule shall be subject to the approval of Company (which approval shall not be unreasonably withheld or delayed) and, if Company does not approve of the Buyer's determination of the consideration or the allocation thereof, Company shall deliver a written statement of its differences with Buyer's proposed Allocation Schedule. If Company and Buyer cannot resolve such differences within 60 days following delivery of such Allocation Schedule, the dispute shall be resolved in accordance with the methodology set forth in Section 2.12(b). Each of Buyer and Company shall sign and timely submit all necessary forms (including IRS Form 8594) to report this transaction for Tax purposes in accordance with the Allocation Schedule, as agreed upon by Buyer and Company, and shall not take a position for Tax purposes inconsistent therewith.
2.03 Closings.
(a) The Brokerage Closing shall take place at the offices of Skadden, Arps, Slate, Meagher & Flom LLP, 4 Times Square, New York, NY 10036, at 10:00 a.m., Eastern time, on or about January 2, 2003 or, if the conditions to Brokerage Closing set forth in Articles VII and VIII shall not have been satisfied or waived by such date, as soon as practicable after such conditions shall have been satisfied, or such other date and time as shall be agreed upon in writing by the parties hereto. The date on which the Brokerage Closing actually occurs is referred to herein as the "Brokerage Closing Date."
(b) The closing (or closings) of the Asset Management Acquisition shall take place substantially in accordance with the terms set forth in the Asset Management Acquisition Term Sheet.
2.04 Agreements Entered into at Brokerage Closing. At the Brokerage Closing, the parties shall, as applicable, execute and deliver or cause to be executed and delivered (unless delivered previously) the following:
(a) duly executed counterparts of the Loan Assignment Agreement;
(b) duly executed counterparts of the Transition Services Agreement;
(c) duly executed counterparts of the Name Assignment Agreement;
(d) duly executed counterparts of the Registration Rights Agreement;
(e) duly executed counterparts of the Clearing Agreement;
(f) duly executed counterparts of the Research Agreement;
(g) duly executed counterparts of the IT Transfers Agreement;
(h) duly executed counterparts of the IT Services Agreement; and
(i) duly executed counterparts of the Sublease.
2.05 Deliveries by the Parties. At the Brokerage Closing, the parties shall deliver or cause to be delivered (unless delivered previously) the following:
(a) Deliveries by Buyer:
(i) the Estimated Cash Consideration;
(ii) the Fixed Cash Consideration;
(iii) the Zero Coupon Note;
(iv) an undertaking by Buyer relating to the Assumed Liabilities in form to be mutually agreed (the "Undertaking"); and
(v) all other documents, certificates, instruments or writings required to be delivered by Buyer or its Subsidiaries at or prior to the Brokerage Closing pursuant to this Agreement or otherwise required in connection herewith.
(b) Deliveries by Seller:
(i) the Instruments of Assignment;
(ii) the Seller Cash Payment;
(iii) subject to Section 3.07, the Books and Records;
(iv) the officer's certificate referred to in Section 6.17;
(v) a certification of non-foreign status from Company in the form and manner that complies with the requirements of Section 1445 of the Code and the regulations promulgated thereunder (a "FIRPTA Certificate");
(vi) completed and fully executed VeriSign Registrant Name Change Agreements for each of cibcpoc.com and cibcoppenheimer.com; and
(vii) all other documents, certificates, instruments or writings required to be delivered by Seller or its Subsidiaries at or prior to the Brokerage Closing pursuant to this Agreement or otherwise required in connection herewith.
2.06 Contemporaneous Transactions. Contemporaneous with the Closing hereunder, the following transactions shall occur:
(a) Seller Parent and Parent shall execute and deliver the Loan Agreement and Seller Parent (or its designee) shall make the Loan Payment to Parent (or its designee);
(b) Company and Buyer shall execute and deliver the Loan Assignment Agreement and the Broker Loans shall be assigned from Company to Buyer;
(c) Issuer shall execute and deliver the First Exchangeable Debenture to Seller Parent or a Subsidiary of Seller Parent upon receipt of $69,980,828; and
(d) Issuer shall execute and deliver the Interim Debenture to Seller Parent or a Subsidiary of Seller Parent upon receipt of $90,841,572.
2.07 Assumed Liabilities; Excluded Liabilities.
(a) On the Brokerage Closing Date, Buyer shall assume, perform and discharge when due (i) Company's obligations under Contracts transferred to Buyer pursuant to Section 2.01(a) and set forth in the Undertaking (the "Assumed Contracts") required under the terms of such Assumed Contracts to be performed after such date and (ii) obligations relating to the Transferred Plans as set forth in Section 3.04(f)(i) required under the terms of such Transferred Plans to be performed after such date.
(b) Notwithstanding any other provision hereof, except as expressly assumed pursuant to Section 2.07(a) (the "Assumed Liabilities"), neither Parent nor Buyer has agreed to pay, and shall not be required to assume, shall have no liability or obligation with respect to, and shall be indemnified in accordance with Article X by Seller for, any liability or obligation, direct or indirect, known or unknown, absolute, contingent or accrued, of Seller, any of its Subsidiaries, the Brokerage Business or the Brokerage Assets (the "Excluded Liabilities") including (i) any liability, responsibility or obligation that is attributable to any Excluded Asset or Excluded Function; (ii) any liability, responsibility or obligation relating to the Brokerage Assets or the Brokerage Business arising out of any event, circumstance or condition occurring or existing prior to the Brokerage Closing Date; (iii) any liability, responsibility or obligation arising out of (A) any suit, action, proceeding, arbitration, mediation, inquiry or investigation pending or threatened as of, or arising out of any event, circumstance or condition occurring or existing prior to, the Brokerage Closing Date or (B) any actual or alleged violation of Law prior to the Brokerage Closing Date; (iv) any Retained Employee Liability; (v) except as expressly set forth in Section 3.04 or the Transition Services Agreement, as applicable, any liability, responsibility or obligation with respect to the operation or maintenance of any employment or benefit plan, program or agreement or arrangement provided by Seller or any related entity after the Brokerage Closing Date and (vi) any liability, responsibility or obligation for (A) Taxes of Seller or any of its Affiliates or (B) Taxes attributable to the Brokerage Assets relating to any period or any portion of any period ending prior to the Brokerage Closing Date. Subject to Section 2.14, Seller hereby agrees to pay, perform and discharge when due, any and all of the Excluded Liabilities.
2.08 Excluded Assets. Notwithstanding any other provision
hereof, Seller shall not sell or deliver to Buyer, and Buyer shall not purchase
or acquire from Seller and neither Parent nor Buyer shall have liability or
obligation with respect to, (i) margin loans relating to customers whose
accounts are not transferred to Buyer pursuant to the terms of this Agreement,
(ii) any Company names, marks, other than pursuant to the Name Assignment
Agreement, (iii) any insurance subsidiaries and any insurance products or
business written, brokered or arranged (other than any earned trailer
commissions or any policies or licenses associated with brokers or clients in
the U.S. associated with the Brokerage Business), (iv) any receivables (other
than transferred Broker Loans, Margin Loans and Accrued Fees), (v) except as set
forth in Schedule II, any assets relating to the New York Headquarters, (vi)
brokerage services for Excluded Accounts or the executives of Seller, (vii)
brokerage and private client business for Seller's directors, officers and
employees and (viii) Excluded Accounts and all agreements related thereto, (the
items described in clauses (i) through (viii) above are collectively referred to
herein as the "Excluded Assets").
2.09 Consent of Third Parties. Anything to the contrary in
this Agreement notwithstanding, to the extent that the sale, conveyance,
transfer or assignment of any Brokerage Asset requires the consent of a third
party, this Agreement shall not constitute an agreement to effect such sale,
conveyance, transfer or assignment if such action would constitute a breach or
violation thereof or adversely affect Buyer's rights thereunder. Seller agrees
to use its reasonable best efforts (with no obligation to pay any fee to any
third party for the purpose of obtaining any consent or approval or any costs
and expenses of any third party resulting from the process of obtaining such
consent or approval) to obtain such consents prior to the Brokerage Closing Date
in accordance with Section 6.04. To the extent that any such consent is not
obtained prior to the Brokerage Closing Date (i) Seller shall use reasonable
best efforts (with no obligation to pay any fee to any third party for the
purpose of obtaining any consent or approval or any costs and expenses of any
third party resulting from the process of obtaining such consent or approval) to
(A) obtain any such consent after the Brokerage Closing Date, (B) to the extent
reasonably practicable, provide or cause to be provided to Buyer the benefits of
any such Brokerage Asset for which such consent or waiver has not been obtained,
(C) cooperate in any arrangement, reasonable and lawful as to Seller and Buyer,
designed to provide such benefits to Buyer, (D) enforce for the account of Buyer
any rights of Seller arising from such Brokerage Asset for which such consent
has not been obtained against the other party, including, without limitation,
the right to elect to terminate in accordance with the terms thereof on the
advice of Buyer, and (E) Seller shall pay, defend, indemnify and hold Buyer
harmless from any liability suffered by Buyer as a result of any failure of
Seller to obtain such consent whether before or after the Brokerage Closing
Date; and (ii) Buyer shall use reasonable best efforts to perform the
obligations of Seller arising under such Brokerage Asset for which such consent
has not been obtained, to the extent that by reason of the transactions
consummated pursuant to this Agreement, Buyer has control over the resources
necessary to perform such obligations. Nothing in this Section 2.9 shall be
deemed (i) a waiver by Buyer of its rights to have received on or before the
Brokerage Closing Date an effective assignment of all of the Brokerage Assets,
(ii) a waiver by Buyer of its rights to have each condition to Brokerage Closing
set forth in Article VIII satisfied on the Brokerage Closing Date or (iii) to
constitute an agreement to exclude from the Brokerage Assets any properties,
assets or rights described under Section 2.01 or limit or affect Seller's
representations, warranties and covenants in this Agreement.
2.10 Management of Accounts. Seller hereby acknowledges and agrees that, following the Brokerage Closing, Buyer shall have the right, at any time and in its sole discretion, to stop servicing, or to liquidate, to the extent practicable, all the security positions held in any Transferred Account that (or the broker responsible for such account), prior to the Brokerage Closing Date, had been the subject of (i) any pending or threatened arbitration, litigation or judicial or quasi-judicial proceeding or (ii) any unresolved customer complaint (the "Unsatisfactory Account"). Seller agrees to, pursuant to Article X, indemnify, defend and hold Buyer, its Affiliates and their officers, directors and employees harmless from and against all Damages suffered or incurred arising out of or related to any Unsatisfactory Account and any action taken, including, any action taken after the Brokerage Closing Date, pursuant to this Section 2.10 with respect to any account described in this Section 2.10.
2.11 Post-Closing Adjustment.
(a) Within sixty (60) days after the Brokerage Closing Date, Seller shall have prepared and deliver to Buyer a statement (the "Brokerage Closing Statement") setting forth in reasonable detail, as of the Brokerage Closing Date, computed in accordance with GAAP, consistently applied, as applicable, (i) the depreciated book value of the Acquired Property, (ii) the Accrued Fees, which in no event shall be greater than $2,000,000, and (iii) the market value as of the Brokerage Closing Date of all Marketable Securities (amounts in foregoing clauses (i), (ii) and (iii), as set forth on the Brokerage Closing Statement, being collectively referred to as the "Cash Consideration").
(b) The Brokerage Closing Statement, if not timely disputed pursuant to Section 2.12, or if timely disputed, as resolved pursuant to Section 2.12, shall be deemed to be the "Final Statement."
(c) If the Cash Consideration, as set forth on the Final Statement, exceeds the Estimated Cash Consideration, then Buyer shall, within ten (10) business days following the date on which the Brokerage Closing Statement becomes the Final Statement, pay to Seller the amount equal to such excess. If the Cash Consideration, as set forth on the Final Statement, is less than the Estimated Cash Consideration, then Seller shall, within ten (10) business days following the date on which the Brokerage Closing Statement becomes the Final Statement, reimburse Buyer the amount equal to such shortfall.
(d) The net amount, if any, payable by any party to any other pursuant to this Section 2.11, shall be paid by wire transfer in immediately available U.S. funds to an account designated by the receiving party.
2.12 Dispute Resolution Mechanism.
(a) Following the Brokerage Closing, Buyer and Seller shall give the other party and any independent auditors and authorized representatives of such other party reasonable access at reasonable times to the properties, books, records and personnel of the Brokerage Business relating to periods prior to the Brokerage Closing Date for purposes of preparing, reviewing and resolving any disputes concerning the Brokerage Closing Statement. The parties shall have ten (10) business days following receipt of the Brokerage Closing Statement during which to notify the other of any dispute of any item contained in the Brokerage Closing Statement, which notice shall set forth in reasonable detail the basis for such dispute. If a party fails to so notify the other of any such dispute within such ten (10) business day period, the Brokerage Closing Statement shall be deemed to be accepted by such party. In the event of any dispute, Buyer and Seller shall cooperate in good faith to resolve such dispute on the Brokerage Closing Statement as promptly as possible.
(b) If Buyer and Seller are unable to resolve any such
dispute within ten (10) business days of receipt of the relevant dispute notice
(the "Resolution Period"), then the dispute shall be submitted within ten (10)
business days thereafter to a "Big 4" or other nationally recognized accounting
firm (the "Independent Accounting Firm"), which shall not have had a material
relationship with Seller, Buyer or any of their respective Affiliates within the
preceding two years, as mutually agreed by the parties. However, if the parties
are unable to so agree upon an Independent Accounting Firm, then Buyer and
Seller shall each have the right to request the American Arbitration Association
to appoint the Independent Accounting Firm, which shall not have had a material
relationship with Seller, Buyer or any of their respective Affiliates within the
preceding two years. Each party agrees to execute, if requested by the
Independent Accounting Firm, a reasonable engagement letter. All fees and
expenses relating to the work, if any, to be performed by the Independent
Accounting Firm shall be shared equally by Seller and Buyer. Otherwise, Buyer
and Seller shall each pay their own costs incurred in connection with this
Section 2.12, including the fees and expenses of their respective accountants,
if any. The Independent Accounting Firm's determination shall be required to be
made within ten (10) business days of the submission to it of the dispute. Such
determination shall be set forth in a written statement delivered to Seller and
Buyer and shall be final, binding and conclusive.
2.13 Accrued Fees. In the event that, after the Brokerage Closing, Buyer collects Accrued Fees greater than $2,000,000 in the aggregate, Buyer shall pay to Seller such excess amount over $2,000,000 as promptly as practicable after receipt thereof by Buyer and provide Seller reports of such fees as reasonably requested.
2.14 Prorations. Seller and Buyer agree that all of the items listed below relating to the business and operation of the Brokerage Business and the Brokerage Assets will be prorated as of the Closing Date, with Seller liable to the extent such items relate to any time period up to and including the Closing Date, and Buyer liable to the extent such items relate to periods subsequent to the Closing Date: (a) all Taxes imposed on a periodic basis, if any, payable by the lessee under the leases for the Offices or payable in respect of the Brokerage Assets; (b) rents, fees and other items payable by Seller under any Assumed Contract; and (c) the amount of any license or registration fees with respect to any licenses or registrations which are being assigned or transferred hereunder. Seller agrees to furnish Buyer with such documents and other records as Buyer reasonably requests in order to confirm all adjustment and proration calculations made pursuant to this Section 2.14. Seller and Buyer further agree that if any information is not available as of the Closing Date to determine all adjustment and proration calculations, such calculations shall be made using the most recently available information and when such information becomes available, the proration amount shall be adjusted in connection with the Final Statement.
2.15 Account Reserve Statements. Attached hereto as Section 2.15 of the Seller Disclosure Schedule is a complete and accurate list of the Account Reserves as of the date set forth therein. At least two (2) business days prior to the Brokerage Closing Date, Seller shall deliver to Buyer the Schedule of Account Reserves updated as of such date together with a list of accounts that are proposed to be transferred to Buyer ("Closing Account Reserve Statement"). Buyer shall, within sixty (60) days following the Brokerage Closing Date, provide a notice to Seller, setting forth the accounts that are Excluded Accounts.
ARTICLE III
RELATED MATTERS
3.01 Asset Management Business. The purchase and sale of the Asset Management Business shall be governed by, and shall be consummated substantially in accordance with the terms and conditions set forth in the term sheet attached as Schedule I (the "Asset Management Acquisition Term Sheet"). Seller agrees to continue to provide Asset Management Services to the Transferred Accounts or the brokers responsible for such accounts until the earlier of (i) consummation of the acquisition of the Asset Management Business substantially in accordance with the terms and conditions set forth in the Asset Management Acquisition Term Sheet and (ii) receipt of written notice from Buyer that it no longer requires Seller to provide Asset Management Services to the Transferred Accounts or the brokers responsible for such accounts as to any or all of such Asset Management Services.
3.02 Transfer and Conversion. The parties agree to enter into the Conversion Memorandum of Understanding as promptly as practicable after the Brokerage Closing providing for conversion to occur no later than May 20, 2003. The Conversion Memorandum of Understanding provides, among other things, for the transfer and conversion of the Transferred Accounts. Each of Company and Buyer shall act in good faith to ensure that the conversion of the Transferred Accounts occurs pursuant to the terms set forth in the Conversion Memorandum of Understanding in a manner consistent with that agreement, subject to any modification of such procedures as may be mutually agreed from time to time by either party (the "Conversion").
3.03 Ancillary Agreements. At the Brokerage Closing, Parent, Buyer and Seller (as applicable) shall enter into the following:
(a) the Loan Assignment Agreement and the Zero Coupon Note relating to the assignment of the Broker Loans to Buyer;
(b) the Transition Services Agreement relating to the provision of certain technology, human resources and other services by Company to Buyer on the Brokerage Closing Date;
(c) the Name Assignment Agreement relating to the transfer of the Oppenheimer Name to Buyer;
(d) the Registration Rights Agreement relating to certain registration rights of Company with respect to the shares underlying the Exchangeable Debentures;
(e) the Clearing Agreement relating to certain clearing services to be provided by Company to Buyer after the Brokerage Closing;
(f) the Research Agreement relating to certain research services to be provided by Company to Buyer after the Brokerage Closing;
(g) the IT Services Agreement relating to the provision of certain IT services to be provided by Company to Buyer after the Brokerage Closing and the IT Transfers Agreement relating to the transfer to Buyer of certain intellectual property rights; and
(h) the Sublease relating to the sublease by Company to Buyer after the Brokerage Closing of space in certain of the Offices.
The agreements described in clauses (a) through (h) above are collectively referred to herein as the "Ancillary Agreements."
3.04 Employees; Employee Benefits.
(a) Business Employees. Effective as of the Brokerage Closing Date, each employee, including the in-branch operations employees, of Seller or an Affiliate of Seller (other than those employed at the New York Headquarters) employed primarily in the Brokerage Business as of the Brokerage Closing Date (the "Business Employees") and set forth in Section 3.04(a) of the Disclosure Schedule, shall cease to be an employee of Seller or an Affiliate of Seller, and Buyer or an Affiliate of Buyer shall offer employment to all such employees, in accordance with Section 3.04(b), (i) in substantially the same position, (ii) in the same city, (iii) with the same base salary, and (iv) with the same vacation policy applicable to each such Business Employee as of the Brokerage Closing Date. Notwithstanding the foregoing or any other provision of this Agreement, Buyer's offer to any Business Employee who is on short-term or long-term disability or any approved leave of absence (each an "Inactive Employee") as of the Brokerage Closing Date shall be conditioned on such Inactive Employee's being ready and able to return to work within six months following the Brokerage Closing Date, and such an Inactive Employee shall not become an employee of Buyer or an Affiliate of Buyer unless and until they are ready and able to work as of a date within six months of the Brokerage Closing Date. Prior to the date Inactive Employees are hired by Buyer or an Affiliate of Buyer, such Inactive Employees shall be retained as employees of Seller, but only for such period as an individual on short-term or long-term disability or approved leave of absence, respectively, would normally remain an employee in the absence of this transaction, and Seller shall continue to provide such Inactive Employees for the period that they remain employees of the Seller with such benefits as Seller or an Affiliate of Seller was providing on the Brokerage Closing Date to employees on long-term disability leave, short-term disability leave or approved leave of absence, respectively. Seller shall remain and be solely responsible for any severance or other liability of any nature attributable to the cessation of employment of Business Employees with the Seller, regardless of the date such cessation occurs; provided, however, that Seller's retention of such responsibility and liability shall not preclude Seller from seeking recourse against the Buyer or an Affiliate of Buyer for any breach of Buyer's covenants in this Section 3.04. Subject to the provisions of this Section 3.04, as of the Brokerage Closing Date, Buyer shall assume responsibility for all salary, bonus, commission costs, benefits and other employment related costs accrued on and after the Brokerage Closing Date with respect to all Transferred Employees (as hereinafter defined). Seller shall not take, and shall cause each of its Affiliates not to take, any action that would impede, hinder, interfere or otherwise compete with Buyer's or an Affiliate of Buyer's effort to hire or retain any Business Employee.
(b) Offers of Employment from Buyer. Buyer or an Affiliate of Buyer shall extend offers of employment to all Business Employees, in accordance with the provisions of Section 3.04(a), within five (5) business days from the date that the Agreement is announced to the public.
(i) The terms of each offer will specify that (except
in the case of Inactive Employees) the offer shall be deemed
accepted unless the Business Employee delivers a written
rejection of the offer to Buyer no later than December 16,
2002, (the "Rejection Deadline"). As soon as reasonably
possible after the Rejection Deadline, but in no event later
than two (2) business days after the Rejection Deadline, Buyer
shall provide Seller with a complete list of Business
Employees who have rejected Buyer's Offer of Employment. The
terms of the offers shall further specify that the effective
date of employment with Buyer or an Affiliate of Buyer
pursuant to the offer shall be contingent upon whether the
Business Employee (A) is designated a "Conversion Employee,"
i.e., an employee of Seller who has been identified by Seller
(in a list to be provided to Buyer as soon as practicable
after the Brokerage Closing Date) as critical to a successful
conversion, and therefore, not eligible for employment by
Buyer until released from conversion duties by Seller, or (B)
is an Inactive Employee on the Brokerage Closing Date. Seller
shall notify Buyer when Conversion Employees are to be
released from conversion duties at least five (5) business
days prior to the date of each such release. Business
Employees who fail to timely reject an offer of employment
from Buyer, who are not Inactive Employees, and have not been
designated Conversion Employees shall become employees of
Buyer on the Brokerage Closing Date. The terms of each offer
shall specify that Business Employees who fail to timely
reject an offer of employment from Buyer, who are not Inactive
Employees and who are designated as Conversion Employees shall
become employees of Buyer or an Affiliate of Buyer upon
release from conversion duties by Seller. Conversion Employees
who reject Buyer's offer shall be deemed to have resigned
their employment with Seller.
(ii) The terms of each offer shall specify that each Business Employee who is an Inactive Employee on the Brokerage Closing Date shall be deemed to accept Buyer's offer and shall become an employee of Buyer or an Affiliate of Buyer as soon as reasonably practicable after the date Seller notifies Buyer that such individual has notified Seller that he or she is ready and able to return to work, provided that (x) such notice to Buyer is given within six months of the Brokerage Closing Date and (y) on or prior to the time the Inactive Employee gives notice to the Seller that he or she is ready to return to work, he or she has not expressly rejected Buyer's offer. Inactive Employees who reject Buyer's offer shall be deemed to have resigned their employment with Seller.
(c) Transferred Employees. Effective as of the Brokerage Closing Date, except as expressly provided herein, Buyer shall cause each Business Employee who accepts and commences employment with Buyer or an Affiliate of Buyer as of the Brokerage Closing Date (the "Transferred Employees") to be provided with compensation and benefits that shall, in the aggregate, in Buyer's reasonable judgment be substantially equivalent to the compensation and benefits provided by Buyer to its similarly situated employees; provided, however, that for a period of one year following the Brokerage Closing Date, each Transferred Employee shall be entitled to remain in substantially the same position, with the same base salary and same vacation policy as maintained by Seller as of the Brokerage Closing Date as set forth on Section 3.04(c) of the Disclosure Schedule, provided that such employee remains employed by Buyer or an Affiliate of Buyer. Nothing herein shall be construed as guaranteeing employment for any specific period of time or altering the at-will employment status of any employee. For a transition period of sixty (60) days (subject to possible extension (or earlier termination) in accordance with the provisions of the Transition Services Agreement) commencing on the Brokerage Closing Date (the "Transition Period") subject to limitations in and requirements of Applicable Laws and applicable plans and contracts, Seller or an Affiliate of Seller shall use its reasonable best efforts to cause Transferred Employees, (and Conversion Employees and Inactive Employees who commence employment with the Buyer or an Affiliate of Buyer during the Transition Period) to continue to be provided with the health and welfare benefits specified in the Transition Services Agreement in accordance with the terms thereof, and Buyer shall pay Seller or an Affiliate of Seller in respect thereof as detailed in the Transition Services Agreement. If Seller or an Affiliate of Seller, using reasonable best efforts is unable to continue to provide such coverage, Buyer or an Affiliate of Buyer shall make available to such employees health and welfare plan coverage that is substantially equivalent to the coverage then provided by Buyer to its similarly situated employees, with no break in coverage. Buyer shall not assume responsibility for the provision of benefits to any Business Employee until such employee commences employment with Buyer or an Affiliate of Buyer. Buyer shall not be precluded from modifying its employment agreements, plans, policies and practices as to its employees generally on or after the Brokerage Closing Date, provided that such changes apply to all Buyer employees who are similarly situated to the Transferred Employees, and further provided that (A) for a period of one year after the Brokerage Closing Date Buyer shall continue to provide to each Transferred Employee the same base salary and the same vacation policy as provided by Seller as of the Brokerage Closing Date, provided that such employee remains employed by Buyer or an Affiliate of Buyer; and (B) the recognition of prior service, as described in Section 3.04(d), shall not be eliminated. Buyer shall be solely liable in accordance with Section 3.04(g) for the provision of COBRA benefits to any Transferred Employee who is terminated by Buyer (or otherwise incurs a qualifying event) during the Transition Period. Inactive Employees, Conversion Employees and Support Employees (as hereinafter defined) who commence employment with the Buyer or an Affiliate of Buyer shall be treated as if such employees were Transferred Employees and shall be subject to the terms and conditions of this Section 3.04, taking into account their later commencement of employment date with the Buyer or an Affiliate of Buyer.
(d) Credit for Service. Buyer shall permit Transferred Employees to participate in all Buyer plans in which participation is open to similarly situated employees of Buyer at comparable levels for such similarly situated employees, except where such participation in Buyer plans would result in a duplication of benefits for such Transferred Employee, and Buyer shall cause the Transferred Employees to be given full credit for all service with Seller or an Affiliate of Seller prior to the Brokerage Closing Date for purposes of eligibility, vesting and determination of the level of benefits under any employee benefit plans or arrangements of Buyer or an Affiliate of Buyer or any plans of Seller that are assumed by or maintained by Buyer in which such Transferred Employees participate after the Brokerage Closing Date, to the same extent such service was recognized by Seller or an Affiliate of Seller immediately prior to the Brokerage Closing Date; provided, however, that such service need not be recognized for purposes of benefit accruals under any defined benefit plan maintained by Buyer or an Affiliate of Buyer, nor shall such service be recognized to the extent it would result in duplication of benefits. Buyer or an Affiliate of Buyer shall (i) waive all limitations as to preexisting conditions, exclusions and waiting periods with respect to participation and coverage requirements applicable to Transferred Employees under any welfare plan in which such employees may be eligible to participate after the Brokerage Closing Date, other than limitations or waiting periods that are already in effect with respect to such employees and that have not been satisfied as of the Brokerage Closing Date under the corresponding welfare plan of Seller or an Affiliate of Seller in which such Transferred Employees participate immediately prior to the Brokerage Closing Date, and (ii) for the Plan year in which the Brokerage Closing Date occurs, provide each Transferred Employee with credit for any co-payments and deductibles paid prior to the Brokerage Closing Date in satisfying any applicable deductible or out-of-pocket requirements under any welfare plans in which such employees are eligible to participate after the Brokerage Closing Date, as if those deductibles or co-payments had been paid under the welfare plans in which such employees are eligible to participate after the Brokerage Closing Date.
(e) 401(k) Plan. Seller shall take such actions as may be necessary to ensure that all Transferred Employees are, as of the Brokerage Closing Date, 100% vested in their account balances under the Seller 401(k) Savings Plan and the Oppenheimer Capital Accumulation 401(k) Plan (collectively the "Seller 401(k) Plans"), and shall contribute to the Seller 401(k) Savings Plan, within two weeks of the Brokerage Closing Date, such additional matching contributions, if any, required for each Transferred Employee in accordance with the terms and conditions of the Seller 401(k) Savings Plan for the portion of the Plan year in which the Brokerage Closing Date occurs during which such Transferred Employees were employed by Seller. Commencing with the Brokerage Closing Date, Transferred Employees shall be eligible to participate in Buyer's 401(k) plan, Buyer shall make any profit sharing contributions to such plan, on the same terms and conditions as for comparable employees of Buyer, recognizing their prior service to Seller and compensation from Seller, as service and compensation with Buyer.
(f) Certain Plans.
(i) Effective as of the Brokerage Closing Date, Buyer shall, or shall cause an Affiliate of Buyer to, assume and maintain as plan sponsor and administrator and perform all obligations with respect to, the Seller's Wealth Plus Plan and Executive Voluntary Deferred Compensation Plan (the "Transferred Plans"), as they apply to Transferred Employees. Seller shall transfer to Buyer at the Brokerage Closing Date the cash amount necessary to support the liabilities under the Seller's Wealth Plus Plan attributable to the Transferred Employees accrued to date for accounting purposes using a straight-line expense accounting method. Between the date hereof and the Brokerage Closing Date, at Buyer's request, Seller shall provide a full and accurate report to Buyer as to the amounts accrued to date attributable to the Transferred Employees under the Transferred Plans. Buyer shall notify Seller of the termination date of each Transferred Employee covered by the Wealth Plus Plan. Seller shall transfer to Buyer, within two business days after the Brokerage Closing Date, an amount in cash equal to aggregate notional value, determined as of the Brokerage Closing Date, of Transferred Employees' accounts under the Seller's Executive Voluntary Deferred Compensation Plan.
(ii) Subject to the limitations and requirements of Seller's Stock Participation Plan and various stock option plans maintained by Seller (the "Seller Equity Plans"), Seller shall recognize service with Buyer for the purposes of vesting and dividend distributions under the Seller Equity Plans after the Brokerage Closing Date as if it were service with Seller; provided, however, that Transferred Employees shall not be entitled to any new award under any Seller Equity Plan after the Brokerage Closing Date and provided, further, that nothing in this Section 3.04(f)(ii) shall be construed to affect or in any way limit (A) the operation or application of any change in control provisions in any Seller Equity Plan; or (B) any right to a dividend distribution to which a Transferred Employee is otherwise entitled as a result of the transactions contemplated herein.
(iii) At Buyer's choice, effective as of the end of the Transition Period, Buyer shall (x) assume the Seller's Flexible Spending Account Program insofar as it applies to the Transferred Employees, or (y) allow Transferred Employees to participate in a similar or like flexible spending account program maintained by Buyer. In either case, Seller shall take such action as may be necessary to transfer to Buyer, subject to applicable law and those requirements that must be complied with to maintain favorable tax treatment, the net aggregate balances under Seller's Flexible Spending Account Program for each of the Transferred Employees.
(g) COBRA. To the extent that an Employee of Seller
participates in a "group health plan" (within the meaning of Section 5000(b)(1)
of the Code maintained by Seller ("Group Health Plan") and such employee incurs
a qualifying event under Section 4980B of the Code on the Brokerage Closing Date
on account of his or her termination of employment with Seller, as determined in
accordance with applicable Treasury Regulations, Seller shall comply with all
notice and continuation coverage requirements applicable to the Group Health
Plans under Section 4980B of the Code known as COBRA ("COBRA Requirements") with
respect to such Employees and any "qualified beneficiaries" (as defined in
Section 4980B of the Code)) under the group health plan in accordance with
Section 4980B of the Code and the regulations thereunder, provided that if for
any reason Buyer has not established a health plan that covers the Transferred
Employees prior to the expiration of the Transition Period, and any such
Transferred Employee elects COBRA coverage under Seller's health plans, Buyer
shall pay the full COBRA premium on behalf of such Transferred Employee (except
for the amount such Transferred Employee would have been required to pay as an
active employee of Seller) and shall reimburse Seller to the extent that any
claims paid for Transferred Employees electing COBRA exceed COBRA premiums and
stop loss reimbursements. To the extent that a Covered Employee participates in
a Group Health Plan on or after the Brokerage Closing Date, whether maintained
by Seller during the Transition Period, or by Buyer at any time, and such
employee incurs a qualifying event under Section 4980B of the Code after the
Brokerage Closing Date, Buyer shall assume responsibility and shall comply with
all COBRA Requirements with respect to such employees and any "qualified
beneficiaries" (as defined in Section 4980B of the Code) under the Group Health
Plan in accordance with Section 4980B of the Code and the regulations
thereunder.
(h) WARN Act. To the extent that any obligations might arise under the WARN Act or under any similar provision of any federal, state, regional, foreign, or local law, rule, or regulation (hereinafter referred to collectively as "WARN Obligations") as a consequence of the transactions contemplated by this Agreement, Seller shall be responsible for any WARN Obligations arising as a result of any employment losses occurring on or prior to the Brokerage Closing Date except to the extent such losses are attributable to Buyer's material failure to perform any of the covenants described herein.
(i) Accrued Obligations. Seller shall be solely
responsible for all obligations and liabilities accrued prior to the Brokerage
Closing Date relating to Business Employees, including, but not limited to, (i)
payroll and fringe benefits, (ii) earned bonuses and incentive compensation,
(iii) accrued vacation and holiday pay, (iv) workers' compensation and (v)
claims incurred under health plans. Buyer shall be solely responsible for all
obligations and liabilities accrued following the Brokerage Closing Date
relating to Transferred Employees, including, but not limited to, (i) payroll
and fringe benefits, (ii) earned bonuses and incentive compensation, (iii)
accrued vacation and holiday pay, (iv) workers' compensation and (v) claims
incurred under health plans; provided, however, that Seller shall remain liable
and responsible for payments to Transferred Employees of any annual incentive
compensation bonuses for fiscal year 2002 as determined in accordance with the
applicable bonus plans maintained by Seller in which the Transferred Employees
participate as of the Brokerage Closing Date; and provided, further, that with
respect to any such bonuses earned for Seller's fiscal year 2003, Seller shall
transfer to Buyer a cash amount equivalent to the sum of 2/12ths of the actual
fiscal year 2002 bonus payment awarded to each Transferred Employee, Conversion
Employee and Inactive Employee (subject to a pro rata reduction for any period
in which any Inactive Employee was not entitled to a bonus payment during
Seller's fiscal year 2003), within ten (10) business days following confirmation
of acceptance of the employment offer made to each such individual from Buyer or
an Affiliate of Buyer. Subject to receiving the funds, if any, payable by Seller
under this paragraph, Buyer shall assume all liability for bonus obligations
payable to the Transferred Employees beginning November 1, 2002 through the
Brokerage Closing Date, and Buyer shall pay each employee the 2/12ths amount
transferred by Seller in respect of such employee on or prior to the time Buyer
makes bonus payments in respect of fiscal year 2003.
(j) Retained Liabilities. Seller shall retain and be
solely responsible for (i) all employment-related obligations and liabilities
(including all obligations and liabilities under the WARN Act and COBRA, if any)
relating to each employee, officer, director or consultant of the Brokerage
Business who is not a Business Employee and each Business Employee (and his
dependents or beneficiaries) with respect to whom Buyer has fulfilled its
obligations under this Section 3.04 to offer or transfer employment, but who
does not become a Transferred Employee (including any Business Employee who
declines employment with Buyer or an Affiliate of Buyer or who does not return
to work from a disability or other leave of absence within six (6) months
following the Brokerage Closing Date) (a "Retained Employee") and (ii) all
compensation and benefit obligations and employment law claims of Transferred
Employees and other Business Employees who commence employment with the Buyer or
an Affiliate of the Buyer to the extent arising from events or conditions that
existed prior to the time as of which such employee commenced employment with
the Buyer or an Affiliate of Buyer ((i) and (ii) together, the "Retained
Employee Liabilities") (provided, however, that Seller's retention of such
responsibility and liability shall not preclude Seller from seeking recourse
against the Buyer or an Affiliate of Buyer for any breach of Buyer's covenants
in this Section 3.04). Buyer shall be solely liable for all compensation and
benefit obligations and employment law claims of Transferred Employees, Inactive
Employees and Conversion Employees who commence employment with Buyer or an
Affiliate of Buyer arising from events or conditions that arise or occur on or
after the time as of which they commence employment with the Buyer or an
Affiliate of Buyer.
(k) Pre-Closing Commissions. Prior to the Brokerage Closing Date, Seller and Buyer shall mutually develop and agree to a process by which commissions payable to Transferred Employees in respect of trades and other transactions executed prior to the Brokerage Closing Date shall be paid to the relevant Transferred Employee (or to Buyer on such Transferred Employee's behalf).
(l) Support Employees. For a period up to the Conversion, Seller shall not make an offer of employment to any employee of Seller who is not a Business Employee but whose duties involved support of the Brokerage Business ("Support Employees") unless Buyer has first obtained Seller's permission.
3.05 Tax Matters.
(a) Transfer Taxes. Company and Buyer shall each be responsible for 50% of any and all Transfer Taxes which become payable in connection with the transactions contemplated by this Agreement. No later than five (5) days prior to the Brokerage Closing, Company shall prepare any and all Tax Returns that must be filed in connection with such Transfer Taxes ("Transfer Tax Returns") and provide copies of such Transfer Tax Returns to Buyer for its review and consent. Buyer shall file such Transfer Tax Returns and pay such Transfer Taxes shown as due thereon. Notwithstanding anything to the contrary contained in this Agreement, if Company shall fail to pay its share of the Transfer Taxes as of the Brokerage Closing, Buyer shall be entitled to withhold from the Estimated Cash Consideration an amount equal to the Transfer Taxes shown as due on such Transfer Tax Returns. Any subsequent reconciliation shall be made in connection with the Final Statement. Company and Buyer agree to use reasonable best efforts to obtain a sale for resale or other Tax exemption where available and otherwise to minimize the amount of Transfer Taxes payable in connection with the transactions contemplated by this Agreement. Buyer shall provide a resale certificate at Brokerage Closing or such other documents as may be reasonably requested by Company for the purpose of reducing any such Transfer Taxes.
(b) Tax Returns and Filings; Payment of Taxes. Company shall prepare all Tax Returns of Company and all Tax Returns attributable to the Brokerage Assets relating to any period ending prior to the Brokerage Closing Date. Company shall be responsible for paying all Taxes of the Company, and all Taxes attributable to the Brokerage Assets relating to any period or portion of any period ending prior to the Brokerage Closing Date. Buyer shall prepare all Tax Returns attributable to the Brokerage Assets relating to any period beginning after the Brokerage Closing Date. Buyer shall be responsible for paying all Taxes attributable to the Brokerage Assets relating to any period or portion of any period beginning after the Brokerage Closing Date.
(c) Tax Records. Buyer shall, at its own expense,
preserve and keep the records in its possession or the possession of any
Affiliate of Buyer relating to the preparation of any Tax Return including the
Brokerage Assets for any Pre-Brokerage Closing Period and such records as
Company may reasonably require for the defense of any audit, examination,
administrative appeal or litigation of any such Tax Return for a period of six
years from the Brokerage Closing Date and shall make such records available to
Company as may be reasonably required by Company. In the event Buyer wishes to
destroy such records after that time, Buyer shall first give ninety (90) days
prior written notice to Company and Company shall have the right at its option
and expense, upon prior written notice given to Buyer within that ninety (90)
day period, to take possession of the records within one hundred and eighty
(180) days after the date of such notice. Company shall, at its own expense,
preserve and keep the records in its possession or the possession of an
Affiliate of Company relating to the preparation of any Tax Return including the
Brokerage Assets for any Post-Closing Period and such records as Buyer may
reasonably require for the defense of any audit, examination, administrative
appeal or litigation of any such Tax Return for a period of six years from the
Brokerage Closing Date and shall make such records available to Buyer as may be
reasonably required by Buyer. In the event Company wishes to destroy such
records after that time, Company shall first give ninety (90) days prior written
notice to Buyer and Buyer shall have the right at its option and expense, upon
prior written notice given to Company within that ninety (90) day period, to
take possession of the records within one hundred and eighty (180) days after
the date of such notice. Company and Buyer shall make available to each other
such records that are in their possession or in the possession of their
Affiliates as the other may require for the preparation of any Tax Returns or
other similar reports or forms required to be filed by such Person and such
records as such Person may require for the defense of any audit, examination,
administrative appeal or litigation of any such Tax Return or other similar
report or form.
(d) Notwithstanding anything to the contrary contained in this Agreement, if Company fails to provide Buyer with the FIRPTA Certificate and Buyer elects to proceed with the Brokerage Closing, Buyer shall be entitled to withhold from the amount realized by Seller the amount required to be withheld pursuant to Section 1445 of the Code.
3.06 Mail Received After Brokerage Closing. On and after the Brokerage Closing Date, Buyer may receive and open all mail addressed to Seller or its Subsidiaries and deal with the contents thereof in its discretion to the extent that such mail and the contents thereof relate to the Brokerage Business, the Brokerage Assets or any of the Assumed Liabilities.
3.07 Books and Records. Seller shall transfer to Buyer, at the Brokerage Closing, originals of all Books and Records to the extent it is legally permitted to do so and copies of Books and Records that it is prohibited by law from transferring to Buyer. Buyer shall, after the Brokerage Closing provide to Seller copies of and access to all Books and Records, including originals to the extent required, as reasonably requested by Seller. Seller shall, after the Brokerage Closing provide to Buyer copies of and access to all Books and Records, including originals to the extent required, as reasonably requested by Buyer to Buyer.
3.08 Accounts Receivable. Accounts receivable of Seller which are Excluded Assets which are received by the Buyer shall be promptly turned over to Seller. Seller acknowledges that Buyer shall have no duty to make efforts to collect any such accounts receivable.
3.09 Schedules. The parties have agreed to execute and deliver this Agreement prior to the preparation, review and acceptance by each of them of certain Seller Disclosure Schedules. Promptly after such execution and delivery of this Agreement and in no case later than the 19th of December, 2002, Seller agrees to prepare such schedules and to deliver them to Buyer for its review. Buyer and Seller shall cooperate fully in connection with preparing such schedules. Such schedules shall be deemed part of this Agreement and incorporated herein only upon their written acceptance by Buyer. For the purpose of the rights and obligations of the parties hereunder, any such additional, supplemental or amended Seller Disclosure Schedules shall not be deemed to have been disclosed as of the date of this Agreement and shall not in any way affect the rights and remedies of Buyer in respect of the representations and warranties made by Seller on the date hereof.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
Each of Seller Parent and Company represents and warrants to Buyer and Parent as follows:
4.01 Organization of Seller; Authority.
(a) Each of Seller Parent and Company is a bank duly organized, validly existing and in good standing under the Bank Act of Canada and Delaware, respectively, and has all requisite corporate power and authority to own, lease and operate its properties and assets and to conduct its business as it is now being conducted. Company is qualified or licensed to do business as a foreign corporation and is in good standing in every jurisdiction in which the character of the properties owned or leased by it or the nature of the business conducted by it makes such qualification necessary, except where the failure to be so qualified or licensed or in good standing would not have a Material Adverse Effect.
(b) Each of Seller Parent and Company has all requisite corporate power and authority to enter into this Agreement, the Ancillary Agreements and any instruments and agreements contemplated herein required to be executed and delivered by it pursuant to this Agreement (including the Ancillary Agreements, collectively referred to herein as the "Seller Related Instruments") and to consummate the transactions contemplated hereby and thereby. The execution, delivery and performance of this Agreement and the Seller Related Instruments to which it is a party and the consummation of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of each of Seller Parent and Company and no other corporate proceedings on its part are necessary to authorize such execution, delivery and performance. This Agreement has been, and each of the Seller Related Instruments to which it is a party shall be, duly executed and delivered by each of Seller Parent and Company and constitute a valid and binding obligation of each of Seller Parent and Company, enforceable against such party in accordance with its terms, except that (i) such enforcement may be subject to bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to creditors' rights, and (ii) the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought.
4.02 No Violation; Consents and Approvals.
(a) The execution and delivery of this Agreement and the Seller Related Instruments does not, and the consummation of the transactions contemplated hereby or thereby and compliance with the terms hereof or thereof will not (i) violate or be in conflict with (A) any provision of the certificate of incorporation of Seller Parent or Company or by-laws of Seller Parent or Company (or equivalent documents) or (B) any Law applicable to Seller Parent, Company, the Brokerage Business or the Brokerage Assets or (ii) conflict in any material respect with, or result in any material violation of or constitute a material default (or an event or condition which, with notice or lapse of time or both, would constitute a material default) under, or result in the termination of, or accelerate the performance required by, or cause the acceleration of the maturity of any liability or obligation pursuant to, or result in the creation or imposition of any Lien under, any Contract or other instrument or obligation, commitment, undertaking, arrangement or restriction of any kind or character to which Company is a party or by which Company may be bound or affected or to which any of the Brokerage Assets or the Brokerage Business may be subject.
(b) Except as set forth in Section 4.02(b) of the Seller
Disclosure Schedule, and except for compliance with the HSR Act, no consent,
approval, order or authorization of, or notice to, or registration, declaration
or filing with, any Governmental Entity or any third party is required to be
obtained or made by or with respect to Seller Parent or Company in connection
with the execution and delivery of this Agreement or the Seller Related
Instruments or the consummation by Seller Parent or Company of the transactions
contemplated hereby or thereby or to enable Buyer after the Brokerage Closing to
(i) conduct the Brokerage Business in substantially the same manner in which it
currently is operated by Company, (ii) transfer the Transferred Accounts to
Buyer or (iii) continue to service the Transferred Accounts in the geographic
areas and in a manner consistent with that in which the Transferred Accounts
currently are serviced by Company.
4.03 Financial Statements.
(a) Section 4.03(a) of the Seller Disclosure Schedule sets forth an unaudited profit and loss statement of the Brokerage Business as of October 31, 2002, and an unaudited income statement of the Brokerage Business for the October 31, 2002 fiscal year period then ended (the "Financial Statements").
(b) Except as set forth on Section 4.03(b) of the Seller Disclosure Schedule, each of the Financial Statements are based on the accounting books and records of the Brokerage Business and, except as set forth in Section 4.03(b) of the Seller Disclosure Schedule, have been prepared in conformity with GAAP (subject to normal year end adjustments) applied on a consistent basis throughout the periods indicated, and fairly and accurately presents the financial condition of the Brokerage Business as of the dates thereof and the results of operations and cash flows of the Brokerage Business for the periods then ended.
(c) Aggregate revenues for the Brokerage Business for the month of November 2002 were $24,900,000.
4.04 Absence of Undisclosed Liabilities. Except for liabilities and obligations (i) reflected on the Financial Statements or (ii) incurred in the ordinary course of business consistent with past practice since the date of the Financial Statements, the Brokerage Business has not incurred any liabilities or obligations of whatsoever nature, direct or indirect, whether accrued, fixed, contingent or otherwise that would be required to be reflected or reserved against on a balance sheet of the Brokerage Business prepared in accordance with GAAP.
4.05 Absence of Certain Changes or Events. Since November 1, 2001, (i) the Brokerage Business has been operated only in the ordinary course consistent with past practice, (ii) through the date of this Agreement, there has been no event, change or development which, individually or in the aggregate, has had or is reasonably likely to have a Material Adverse Effect, and (iii) Seller has not taken and has not caused its Subsidiaries to take any action which, if taken without the consent of Buyer after the execution and delivery of this Agreement, would constitute a breach or violation of Section 6.01.
4.06 Title to Assets.
(a) Company has good and valid title to all of the
Brokerage Assets owned by it and valid leasehold interests in, or other rights
to use, all of the Brokerage Assets not owned by Company. Except as set forth on
Section 4.06(a) of the Seller Disclosure Schedule, the Brokerage Assets are
owned by Company free and clear of all Liens, other than (i) mechanics',
carriers', workmen's, repairmen's or other like liens arising or incurred in the
ordinary course of business, (ii) liens for Taxes, assessments and other
governmental charges which are not due and payable or which may hereafter be
paid without penalty or which are being contested in good faith by appropriate
proceedings (for which adequate reserves have been made in the Financial
Statements in accordance with GAAP) and (iii) other imperfections of title or
encumbrances arising in the ordinary course of business, if any, which do not
materially impair the use of the Brokerage Assets or the operation of the
Brokerage Business as currently conducted (the mortgages, liens, security
interests and encumbrances described in clauses (i), (ii) and (iii) above are
collectively referred to herein as "Permitted Liens").
(b) Except for Company's lease of its branch offices (the "Offices") and New York Headquarters, or as set forth on Section 4.06(b) of the Seller Disclosure Schedule, Company does not own, have, lease or use any real property or interests in real property primarily in the Brokerage Business.
(c) The Instruments of Assignment, when duly executed and delivered by Seller to Buyer, and the delivery of the Brokerage Assets at the Brokerage Closing shall effectively vest in Buyer good and valid title to all of the Brokerage Assets owned by Company, subject only to Permitted Liens and Assumed Liabilities.
4.07 Intellectual Property.
(a) Section 4.07(a) of the Seller Disclosure Schedule sets forth with respect to the Brokerage Business, for the Intellectual Property owned by Seller or any Subsidiary, a complete and accurate list of all U.S. and foreign (i) patents and patent applications; (ii) Internet domain registrations; and (iii) Software (other than readily available commercial software programs having an acquisition price of less than $5,000) which are owned, licensed, leased, by Seller or any Subsidiary, and any copyright registrations, copyright applications, and material unregistered copyrights, in each case describing which Software is owned, licensed, or leased, as the case may be; and (iv) all of Seller's U.S. Trademarks used with the Business and, to Seller's knowledge, the foreign marks used with the Business.
(b) Section 4.07(b) of the Seller Disclosure Schedule sets forth with respect to the Brokerage Business a complete and accurate list of all agreements (whether oral or written, and whether between Seller, Subsidiaries and third parties or inter-corporate) to which Seller or a Subsidiary is a party or otherwise bound, (i) granting or obtaining any right to use or practice any rights under any Intellectual Property (other than licenses for readily available commercial software programs having an acquisition price of less than $5,000), or (ii) to the knowledge of Seller, restricting Seller's or any Subsidiaries' rights to use any Intellectual Property, including license agreements, development agreements, distribution agreements, settlement agreements, consent to use agreements, and covenants not to sue (collectively, the "Company License Agreements"). The Company License Agreements are valid and binding obligations of all parties thereto, enforceable in accordance with their terms, and there exists no event or condition which will result in a violation or breach of, or constitute (with or without due notice of lapse of time or both) a default by any party under any such Company License Agreement. Neither Seller nor any of its Subsidiaries have licensed or sublicensed its rights in any Intellectual Property other than pursuant to the Company License Agreements. No royalties, honoraria or other fees are payable by Seller or any Subsidiary to any third parties for the use of or right to use any Intellectual Property except pursuant to the Company License Agreements.
(c) Except as set forth on Section 4.07(c) of the Seller Disclosure Schedule:
(i) Seller or a Subsidiary owns, or has a valid right to use, free and clear of all Liens, all of the Intellectual Property.
(ii) The Intellectual Property owned by Seller or any Subsidiary and, to the best of Seller's knowledge, any Intellectual Property used by Seller or any Subsidiary, is subsisting, in full force and effect, and has not been cancelled, expired, or abandoned, and, to the best of Seller's knowledge is valid and enforceable.
(iii) There is no pending or, to the best of Seller's
knowledge, threatened claim, suit, arbitration or other
adversarial proceeding before any court, agency, arbitral
tribunal, or registration authority in any jurisdiction
involving the Intellectual Property owned by Seller or its
Subsidiaries, or, to the best of Seller's knowledge, the
Intellectual Property licensed to Seller or any Subsidiary,
alleging that the activities or the conduct of Seller's or any
Subsidiary's businesses infringe upon, violate or constitute
the unauthorized use of the intellectual property rights of
any third party or challenging Seller or any Subsidiary's
ownership, use, validity, enforceability or registrability of
any Intellectual Property. There are no settlements,
forbearances to sue, consents, judgments, or orders or similar
obligations other than the Company License Agreements which
(1) restrict Seller's or any Subsidiary's right to use any
Intellectual Property, (2) restrict Seller's or any
Subsidiary's businesses in order to accommodate a third
party's intellectual property rights or (3) permit third
parties to use any Intellectual Property owned or controlled
by Seller or any Subsidiary.
(iv) The conduct of Seller's and any Subsidiary's business as currently conducted or planned to be conducted does not infringe upon (either directly or indirectly such as through contributory infringement or inducement to infringe) any intellectual property rights owned or controlled by any third party. To the best of Seller's knowledge, no third party is misappropriating, infringing, diluting or violating any Intellectual Property owned or used by Seller or any Subsidiary and no such claims, suits, arbitrations or other adversarial proceedings have been brought or threatened against any third party by Seller or any Subsidiary.
(v) Seller and each Subsidiary has taken reasonable measures to protect the confidentiality of Trade Secrets. To the best of Seller's knowledge, no Trade Secret has been disclosed or authorized to be disclosed to any third party other than pursuant to a non-disclosure agreement. To the best of Seller's knowledge, no party to any non-disclosure agreement relating to its Trade Secrets is in breach or default thereof.
(vi) No current or former partner, director, officer, or employee of Seller or any Subsidiary (or any of their respective predecessors in interest) shall, after giving effect to the transactions contemplated herein, own or retain any rights to use any of the Intellectual Property owned or used by Seller or any Subsidiary.
(d) The consummation of the transaction contemplated hereby shall not result in the loss or impairment of Seller or any Subsidiary's right to own or use any of the Intellectual Property, nor shall it require the consent of any governmental authority or third party in respect of any such Intellectual Property. No consents are required in order for Buyer to assume the rights and obligations of Seller or the Subsidiaries under each Company License Agreement.
(e) To the knowledge of Seller, the Oppenheimer Name as used in the Business does not infringe upon, violate or constitute the unauthorized use of the intellectual property rights of any third party and except as set forth in Section 4.07(e) of the Seller Disclosure Schedule, Seller has not licensed the Oppenheimer Name to any other party for the use provided for in, or in any manner in conflict with, the Name Assignment Agreement.
4.08 Litigation. Section 4.08 of the Seller Disclosure Schedule sets forth a complete and accurate list of any and all material claims, actions, suits, proceedings, investigations and inquiries ("Litigation") pending, asserted or, to Seller's knowledge, threatened during the one year period prior to the date hereof, against Company or any of its Affiliates with respect to the Brokerage Business or any of the Brokerage Assets or any Registered Representative of the Brokerage Business by or before any Governmental Entity, or by or on behalf of any third party. None of the Litigation set forth on such Schedule is reasonably likely to (i) result in material liability to Company, materially interfere with or inhibit the operation of the Brokerage Business or materially impair the value of the Brokerage Assets, (ii) have the effect of delaying, preventing, or making illegal the consummation of the transactions contemplated hereby or (iii) materially interfering with the ability of Buyer to operate the Brokerage Business after the Brokerage Closing as it is currently operated by Company.
4.09 Transferred Plans; Brokers; Client Assets.
(a) With respect to the Transferred Plans, Seller has previously made available to Buyer true and complete copies of the Plan documents (including all amendments thereto). Within ten (10) business days after the date hereof, the Seller shall provide, if any, a copy of most recent Transferred Plan Summary Plan Description; and if the Transferred Plan is funded through a trust or any other funding vehicle, a copy of the trust or other funding agreement (including all amendments thereto) and the latest financial statements thereof, if any.
(b) Except as set forth on Section 4.09(b) of the Seller Disclosure Schedule, each of the Transferred Plans has been operated and administered in all material respects in accordance with its terms and with the requirements prescribed by any and all applicable Law, including ERISA and the Code, as applicable.
(c) Except as set forth on Section 4.09(c) of the Seller Disclosure Schedule, the consummation of the transactions contemplated by this Agreement will not, either alone or in combination with another event, (i) entitle any current or former employee, officer or director of Seller or any ERISA Affiliate to severance pay, unemployment compensation or any other similar payment or (ii) accelerate the time of payment or vesting, or increase the amount of or otherwise enhance any benefit due any such employee, officer or director.
(d) As of the date hereof, the liability under the Seller's Wealth Plus Plan accrued to date for accounting purposes using a straight-line expense accounting method is approximately $38,000,000 and such amount exceeds the liability attributable to the Transferred Employees calculated as if such Transferred Employees terminated employment with Seller on the date hereof.
(e) Except as set forth on Section 4.09(e) of the Seller Disclosure Schedule, Seller has not entered into and does not currently maintain any employment agreements or other employment arrangements whether written, oral or otherwise with any Business Employee, and all of the Business Employees are "employees-at-will." Seller has received no notice or indication from, and has no reason to believe that, any of the Business Employees set forth in Section 3.04(a) of the Seller Disclosure Schedule shall (i) cease to be Businesses Employees at any point prior to the Brokerage Closing Date; or (ii) be unwilling or unable to become or otherwise restricted or prohibited from becoming a Transferred Employee as of the Brokerage Closing Date.
(f) Attached as Section 4.09(f) of the Seller Disclosure Schedule is Company's commission payout schedule (the "Grid") and the algorithms and formulae used therein, that is used for the computation of compensation to brokers or other employees of Company both (i) as in effect since prior to November 30, 2002 and (ii) to be in effect during the period from January 2, 2003. Except as set forth in Section 4.09(f) of the Seller Disclosure Schedule, in the past fiscal year, all Business Employees who are brokers have been compensated in accordance with the Grid.
(g) Section 4.09(g) of the Seller Disclosure Schedule sets forth complete and accurate information regarding the number and locations of each of the Offices and the identity and 2002 annual production of brokers who are Business Employees in each Office.
(h) Section 4.09(h) of the Seller Disclosure Schedule
sets forth (i) each Business Employee and the position held by such employee,
(ii) the identity of each "middle-market" institutional account of the Brokerage
Business ("Middle Market Accounts") and the amount of assets under supervision
as to each such Middle Market Account, (iii) dollar amount of client assets
under supervision by Office, (iv) list of branch office designations that
include the accounts to be transferred except for Excluded Accounts list in (v)
below that are being assigned in the transfer to Buyer and (v) list of excluded
client account numbers. All such information set forth in Section 4.09(h) of the
Seller Disclosure Schedule is complete and accurate as of the relevant date.
None of the brokers listed on Section 4.09(g) of the Seller Disclosure Schedule
are prohibited, contractually or otherwise, from working for Buyer or its
Affiliates after the Brokerage Closing Date.
4.10 Labor Matters.
(a) (i) No labor strike, dispute, slowdown, stoppage or
lockout is pending, or to the knowledge of Seller, threatened against or
affecting Seller and during the past five years there has not been any such
action, (ii) Seller is not party to or bound by any collective bargaining or
similar agreement with any labor organization, or work rules or practices agreed
to with any labor organization or employee association applicable to employees
of Seller, (iii) no employees of Seller are represented by any labor
organization and Seller has no knowledge of any union organizing activities
among the employees of Seller within the past five years, (iv) no material
written personnel policies, rules or procedures are applicable to employees
other than those listed on Section 4.10(a) of the Seller Disclosure Schedule,
true and correct copies of which have been previously made available to Buyer,
(v) Seller is in compliance, in all material respects, with all requirements of
Law respecting employment and employment practices, terms and conditions of
employment, wages, hours of work and occupational safety and health, and, to the
knowledge of Seller, Seller is not engaged in any unfair labor practices as
defined in the National Labor Relations Act or other Applicable Laws, (vi) no
unfair labor practice charge or complaint against Seller is pending or, to the
knowledge of Seller, threatened before the National Labor Relations Board or any
similar agency, (vii) no charge or complaint with respect to or relating to
Seller is pending before, and Seller has not received any notice of intent to
conduct an investigation from, the Equal Employment Opportunity Commission or
any other agency responsible for the prevention of unlawful employment
practices, (viii) Seller has not received notice of the intent of any federal,
state, local or foreign agency responsible for the enforcement of labor or
employment laws to conduct an investigation with respect to or relating to
Seller and no such investigation is in progress and Seller has no knowledge of
any other person investigating any such allegation that could reasonably be
anticipated to result in significant liability, and (ix) no complaints, lawsuits
or other proceedings are pending or, to the knowledge of Seller, threatened in
any forum by or on behalf of any present or former employee of Seller, any
applicant for employment or classes of the foregoing alleging breach of any
express or implied contract or employment, any laws governing employment or the
termination thereof or other discriminatory, wrongful or tortuous conduct in
connection with the employment relationship.
(b) Except as set forth in Section 4.10(b) of the Seller Disclosure Schedule, which shall be provided to Buyer on the Brokerage Closing Date, none of Seller's employees employed in the Brokerage Business or at sites constituting "a single site of employment" (as defined in the WARN Act or interpretive regulations) with the Brokerage Business, suffered an "employment loss" (as defined in the WARN Act) during the six-month period preceding the Brokerage Closing Date.
4.11 Certain Contracts and Arrangements.
(a) Section 4.11(a) of the Seller Disclosure Schedule sets forth a complete and accurate list of all material agreements, contracts and commitments (and all amendments thereto) to which Company or any Affiliate of Company is a party relating primarily to, or necessary for the conduct of, the Brokerage Business or the Brokerage Assets or by which the Brokerage Business or the Brokerage Assets are bound or materially affected (the "Contracts"), including all of the following:
(i) employment agreements or severance agreements;
(ii) agreements relating to brokers, managers and employees who are transferred to Buyer pursuant to this Agreement and the transactions contemplated herein, including, all compensation related plans, programs and arrangements;
(iii) advisory agreements relating to the Brokerage Business (the standard form of which has been provided to Buyer);
(iv) Customer Agreements (the standard form of which has been provided to Buyer);
(v) introducing broker agreements, marketing agreements or similar agreements for the servicing of accounts;
(vi) Company License Agreements;
(vii) real estate leases and related sub-leases and service agreements (excluding the lease with respect to the New York Headquarters); and
(viii) other material agreements, contracts, leases, licenses, commitments or instruments to which Company or any of its Affiliates is a party, relating primarily to, or necessary for the conduct of the Brokerage Business.
(b) Each Contract is a legal, valid and binding obligation of Company and, to the knowledge of Seller, the other parties thereto, in full force and effect, enforceable against Company and, to the knowledge of Seller, such other parties, except that (i) such enforcement may be subject to bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to creditors' rights, and (ii) the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought, and are validly assignable to Buyer without the consent of any other party, except as stated in Section 4.11(b) of the Seller Disclosure Schedule. None of Company or any of its Affiliates is, and to Seller's knowledge, no other party thereto is, in breach of or default under any Contract, nor does there exist, to Seller's knowledge, any basis for the assertion of any such breach or default by or against Company or any of its Affiliates. There have been no written threatened cancellations of, and there is no material pending dispute under, any Contract. The terms and enforceability of the Contracts shall not be affected in any manner by the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby.
(c) Except as set forth on Section 4.11(a) of the Seller Disclosure Schedule, there are (i) no Contracts necessary for Buyer to operate the Brokerage Business after the Brokerage Closing as it is currently operated by Company.
(d) None of Seller or any of its Affiliates is subject to any obligations, agreements, contracts, arrangements or covenants, that would, or required to obtain any consent, authorization, permit or waiver from any Governmental Entity or third party, the absence of which would, in any material respect, impede, restrict or prevent Buyer from operating the Brokerage Business after the Brokerage Closing as it is currently operated by Company.
4.12 Compliance with Laws; Licenses.
(a) The Business has been, and is being, operated by Company in compliance in all material respects with all applicable Laws, including Environmental Laws and Labor Laws ("Applicable Laws"). Section 4.12(a) of the Seller Disclosure Schedule sets forth a complete list of all Permits required in connection with the operation of the Brokerage Business and ownership of the Brokerage Assets under Applicable Laws. Seller possesses all such Permits, and is in compliance in all material respects with, all such Permits.
(b) All of Company's officers and employees who are required to be licensed or registered for the activities conducted by them are and at all times have been duly licensed or registered in each state or jurisdiction in which and with each Governmental Entity with whom such licensing or regulation is so required (such officers and employees are collectively, the "Registered Representatives"). To the knowledge of Seller, none of the Registered Representatives is or has been subject to any disciplinary or other regulatory compliance action or complaint by a regulator or customer.
(c) None of Company, Seller Parent, and to the knowledge of Seller, none of their Affiliates or their respective officers and employees has received any notification or communication from any Governmental Entity relating to, involving or applying to the Brokerage Business or the Brokerage Assets (i) asserting that any of them is not in compliance with any of the statutes, rules, regulations, or ordinances which such Governmental Entity enforces, or has otherwise engaged in any unlawful business practice, (ii) threatening to revoke any license, franchise, permit, seat on any stock or commodities exchange or Authorization, (iii) requiring any of them (including any of Company's directors or controlling persons) to enter into a cease and desist order, agreement, or memorandum of understanding (or requiring the board of directors of Company to adopt any resolution or policy), or (iv) restricting or disqualifying the activities of Company (except for restrictions generally imposed by rule, regulation or administrative policy on brokers or dealers generally).
4.13 Brokers. Except as set forth on Schedule 4.13 of the Seller Disclosure Schedule, no broker, finder or financial advisor or other person is entitled to any brokerage fees, commissions, finders' fees or financial advisory fees in connection with the transactions contemplated hereby by reason of any action taken by Seller or any of its respective directors, officers, employees, representatives or agents.
4.14 Assets Necessary to Business. The Brokerage Assets constitute all of the assets, properties, licenses and agreements which are being used on the date hereof in the Brokerage Business as conducted on the date hereof and include all assets, properties, licenses and agreements necessary for Buyer to operate the Brokerage Business after the Brokerage Closing as it is currently operated by Company except for the Excluded Assets.
4.15 Taxes. Except as set forth in Section 4.15 of the Seller Disclosure Schedule, all Tax Returns with respect to the Brokerage Business or the Brokerage Assets or income attributable therefrom that are required to be filed by the Company on or before the Closing Date have been or will be filed, the information provided on such Tax Returns is or will be complete and accurate in all material respects, and all Taxes shown to be due on such Tax Returns have been or will be paid in full, to the extent that a failure to file such Tax Returns or pay such Taxes, or an inaccuracy in such Tax Returns, could result in Buyer being liable for such Taxes or could give rise to a Lien on the Brokerage Assets.
4.16 Disclosure. No representation or warranty by Seller Parent or Company contained in this Agreement, and no statement contained in this Agreement, the Seller Related Instruments, the Financial Statements or the Seller Disclosure Schedule, contains or will contain any untrue statement of a material fact, or omits or will omit to state any material fact necessary, in light of the circumstances under which it was or will be made, in order to make the statements herein or therein not misleading, or necessary in order to fully and fairly provide the information required to be provided in any such document.
4.17 No Restraints. To the knowledge of Seller, there is no event or circumstance which is reasonably likely to result in an order of the Commission, any authority of any state or territory of the United States, or of the District of Columbia, primarily responsible for the regulation or registration of persons engaged in the securities business, the NYSE, the NASD or any court prohibiting or limiting the ability of Buyer to hire at least 90% of the retail brokers employed by Company on the date hereof.
4.18 Broker-Dealer Matters. Company is duly registered with the Commission as a broker-dealer under the Exchange Act, is a member in good standing of any SRO of which it is a member of and is in compliance with all of the rules, regulations, orders and requirements thereof and of the Commission. Company has not received any written communication or any oral communication from any Governmental Entity (1) asserting any non-compliance with any of the statutes, regulations, rules or ordinances that such Governmental Entity enforces or (2) threatening to revoke any license, franchise, seat on any exchange, permit or governmental authorization. Neither Company nor any of its Registered Representatives is subject to a "statutory disqualification" as defined in Section 3(a)(39) of the Exchange Act or 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, Company as a broker-dealer, municipal securities dealer, government securities broker or government securities dealer under Section 15, Section 15B or Section 15C of the Exchange Act.
4.19 Transferred Accounts.
(a) The Transferred Accounts have been created, maintained and serviced by Company in compliance in all material respects with all Applicable Laws of any applicable Governmental Entity.
(b) The transfer to Buyer of the Transferred Account Information pursuant to the terms of this Agreement will not violate, in any material respect any privacy right or other personal rights of any customer, prospective customer or other person.
(c) There are no pending complaints or, to the best of Seller's knowledge, threatened or other controversies regarding any Transferred Account, that could reasonably be expected to result in a complaint, from or relating to any Transferred Account, except those set forth in Section 4.19(c) of the Seller Disclosure Schedule.
(d) Attached to Section 4.19(d) of the Seller Disclosure Schedule is (i) a true and correct copy of the form of customer agreement (except for cash accounts which have no customer agreements) that Company has entered into with each customer with respect to a Transferred Account (each such agreement being referred to herein as a "Customer Agreement") and (ii) a copy of each customer account contract or agreement set forth as an "exception" pursuant to the immediately following sentence of this Section 4.19(d). Except as set forth on Section 4.19(d) of the Seller Disclosure Schedule, in respect of the Transferred Accounts, Company has not entered into any contract or agreement with any customer, nor is it rendering services to any customer, other than pursuant to a Customer Agreement. Each Customer Agreement is a legal, valid and binding obligation of Company and, to the knowledge of Seller, the other parties thereto, in full force and effect, enforceable against Company and, to the knowledge of Seller, such other parties, except that (i) such enforcement may be subject to bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to creditors' rights, and (ii) the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought, and are validly assignable to Buyer without the consent of any other party, except as stated in Section 4.19(d) of the Seller Disclosure Schedule.
4.20 Fees; Pricing; Service Charges. Set forth in Section 4.20 of the Seller Disclosure Schedule, are the fees, interest rates and service charges that were implemented by Company as of July 2002.
4.21 Transferred Account Information. The Transferred Account Information, all of which has been or shall be made available to Buyer prior to or at the Brokerage Closing, is current, complete and correct in all material respects (other than with respect to financial information, which is complete and correct in all respects) and has been maintained on a consistent basis. At the Brokerage Closing, all of such Transferred Account Information will be in the possession of Buyer. The transfer to Buyer of the Transferred Account Information pursuant to the terms of this Agreement does not violate any privacy right or other personal rights of any customer, prospective customer or other person.
4.22 Securities Ownership. Seller does not, directly or indirectly, for its or any of its Affiliates' proprietary ownership, own or otherwise have control of or over any voting or non-voting security or direct or indirect rights or options to acquire any voting or non-voting security of Parent or Buyer.
4.23 Investment Purpose. Company (or its designee as the case may be) is acquiring, as principal for its own account, the First Exchangeable Debenture and the Interim Debenture for its own account for the purpose of investment and not with a view to or for sale in connection with any distribution thereof.
4.24 Broker Loans. With respect to the Broker Loans and the Assigned Interests (as defined in the Loan Assignment Agreement), Seller represents and warrants to Buyer as of the date hereof or such other date provided below that:
(a) Seller is the sole and legal and beneficial owner of and has good title to each Broker Loan free and clear of any Lien except as set forth on Section 4.24(a) of the Seller Disclosure Schedule. Each Broker Loan is not subject to any prior sale, transfer, assignment or participation by Seller or any agreement to assign, convey, transfer or participate, in whole or in part, by Seller as of the date hereof except as set forth on Section 4.24(a) of the Seller Disclosure Schedule. No effective financing statements or other similar instruments similar in effect covering any Broker Loan are on file in any recording office as of the date hereof except as set forth on Section 4.24(a) of the Seller Disclosure Schedule. Seller shall transfer its legal interest in and title to each Broker Loan to Buyer free and clear of any Lien as of the relevant assignment date except as set forth on Section 4.24(a) of the Seller Disclosure Schedule, and upon completion of such transfer and assignment, Buyer shall have good title to each Broker Loan, free and clear of any Lien.
(b) No proceedings are (A) pending against Seller or any predecessor-in-title that is an Affiliate of Seller or (B) to the best of Seller's knowledge, threatened against Seller or any predecessor-in-title that is an Affiliate of Seller before any relevant Governmental Entity that, in the aggregate, will materially and adversely affect any action taken or to be taken by Seller under this Agreement or the Loan Assignment Agreement.
(c) The principal amounts of the Broker Loans outstanding and any unfunded commitment to make further Broker Loans (the "Commitments") are accurately stated as set forth on Section 4.24(c) of the Seller Disclosure Schedule.
(d) Except for the Commitments, if any, there is no funding obligation of any kind (whether fixed, contingent, conditional, or otherwise) in respect of any Broker Loan that Buyer is or shall be required to pay or otherwise perform that Seller has not paid or otherwise performed in full. The Commitments if any, are accurately stated as set forth on Section 4.24(c) of the Seller Disclosure Schedule.
(e) Seller and each predecessor-in-title that is an Affiliate of Seller has performed, and has complied with, all obligations required to be performed or complied with by it under the loan documents relating to the Brokers Loans (collectively, the "Loan Documents"), which such Loan Documents are listed in their entirety as set forth on Section 4.24(e) of the Seller Disclosure Schedule and neither Seller nor any broker is in breach of any provisions of such Loan Documents.
(f) The sale of the Broker Loans by Seller to Buyer on the date hereof and the assignment of the Assigned Interest by Seller to Buyer will not conflict with, result in a breach of any of the terms and provisions of, or constitute (with or without notice or lapse of time or both) a default under, the related Loan Documents.
(g) Seller has provided to Buyer true, correct and complete copies of each Loan Document and any non-Affiliate predecessor-in-title documents.
(h) Seller has not given its consent to change, nor has it waived, any term or provision of any Loan Document including, without limitation, with respect to the amount or time of any payment of principal or the rate or time of any payment of interest.
(i) Except as set forth on Section 4.24(i) of the Seller Disclosure Schedule, Seller has not effected or received the benefit of any set-off against a broker or any Obligor on account of the related Assigned Interest.
(j) Except as set forth on Section 4.24(j) of the Seller Disclosure Schedule, neither Seller nor any predecessor-in-title that is an Affiliate of Seller has received any written notice that (A) any payment or other transfer made to or for the account of Seller from or on account of any Obligor under the Assigned Interests is or may be void or voidable as an actual or constructive fraudulent transfer or as a preferential transfer or (B) the Assigned Interests, or any portion of them, are void, voidable, unenforceable or subject to any impairment.
(k) Neither Seller nor any predecessor-in-title that is an Affiliate of Seller is a party to or bound by or has actual knowledge of any document, instrument or agreement (other than the Loan Documents) with respect to the Assigned Interests that could materially and adversely affect the Assigned Interests or Buyer's rights and remedies under this Agreement.
(l) Each Broker Loan (A) is denominated and payable only in United States dollars, (B) was not made principally for the purpose of financing the purchase of real property, (C) is not an operating lease, (D) has not been subordinated or rescinded and (E) was created in compliance with and does not contravene in any material respect any applicable law.
(m) Each Broker Loan, together with the related Loan Documents and any note or other document that evidences any Broker Loan, shall at all times be the legal, valid and binding payment obligation of the related Obligor, enforceable against the related Obligor in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, reorganization, insolvency, moratorium or other laws affecting creditors' rights generally, and except as such enforceability may be limited by general principals of equity (whether considered in a suit at law or in equity).
(n) In respect of any Broker Loan evidenced by a note or notes for which the related note or notes are missing, (A) none of the related Loan Documents require presentation of the note or notes as a condition to the collection of payment of the loan and (B) the right to payment of the Broker Loan is otherwise evidenced by the related Loan Documents (other than by the note or notes).
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND BUYER
Each of Parent and Buyer hereby represents and warrants to Seller Parent and Company as follows:
5.01 Organization; Authority.
(a) Buyer is a corporation duly organized, validly existing and in good standing under the laws of Delaware, and has all requisite corporate power and authority to enter into this Agreement and any instruments and agreements contemplated herein required to be executed and delivered pursuant to this Agreement to which it is a party (including the Ancillary Agreements, which are collectively referred to herein as the "Buyer Related Instruments") and to consummate the transactions contemplated hereby and thereby. Parent is a corporation duly organized and valid by subsisting under the laws of the province of Ontario, and has all requisite power and authority to enter into this Agreement, the Buyer Related Instruments, as applicable, and to consummate the transactions contemplated hereby and thereby, except where the failure to be so qualified or licensed or in good standing would not have a Material Adverse Effect on Buyer and Parent, taken as a whole. The execution, delivery and performance of this Agreement and Buyer Related Instruments and the consummation of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action on the part of each of Parent and Buyer. This Agreement has been, and each of Buyer Related Instruments shall be, duly executed and delivered by each of Parent and Buyer, as applicable, and constitutes a valid and binding obligation of each of Parent and Buyer, enforceable against Parent and Buyer, as the case may be, in accordance with its terms, except that (i) such enforcement may be subject to bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to creditors' rights, and (ii) the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought.
(b) In addition, the Debentures at the Brokerage Closing Date, will have been duly executed by Issuer and, when issued and delivered in respect of the consideration therefore as provided in this Agreement, will constitute valid and binding obligations of Issuer, enforceable against Issuer in accordance with their terms, except that (i) such enforcement may be subject to bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to creditors' rights, and (ii) the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought.
5.02 No Violation; Consents and Approvals. The execution and delivery of this Agreement and Buyer Related Instruments do not, and the consummation of the transactions contemplated hereby or thereby and compliance with the terms hereof or thereof will not violate or be in conflict with, (a) any provision of the charter or by-laws of Parent or Buyer (or equivalent documents), (b) any material Law applicable to Parent or Buyer or the property or assets of Parent or Buyer or (c) in any material respect, any note, bond, mortgage, indenture, license, agreement, lease or other instrument or obligation to which Parent or Buyer is a party or by which Parent or Buyer may be bound or affected or to which any of their respective assets may be subject. Except for the requirements of the HSR Act, the registration and filing requirements set forth in the Registration Rights Agreement, state or provincial securities or blue sky laws requirements in connection with the sale of the Debentures and as set forth in Section 5.02 of the Buyer Disclosure Schedule, no consent, approval, order or authorization of, or notice to, or registration, declaration or filing with, any Governmental Entity or any third party is required to be obtained or made by or with respect to Parent or Buyer in connection with the execution and delivery of this Agreement or Buyer Related Instruments or the consummation by Parent or Buyer, as the case may be, of the transactions contemplated hereby or thereby.
5.03 Litigation. Except as set forth in Section 5.03 of the Buyer Disclosure Schedule, there is no material claim, action, suit, proceeding, investigation or inquiry pending, asserted or, to Buyer's knowledge, threatened during the one year period prior to the date hereof, against Buyer or Parent by or before any Governmental Entity, or by or on behalf of any third party, which challenges the validity of this Agreement or any Buyer Related Instrument or which, if adversely determined, would adversely affect the ability of Parent or Buyer to consummate the transactions contemplated by this Agreement or any Buyer Related Instrument.
5.04 Brokers. No broker, finder or financial advisor or other person is entitled to any brokerage fees, commissions, finders' fees or financial advisory fees in connection with the transactions contemplated hereby by reason of any action taken by Parent or Buyer or any of their respective directors, officers, employees, representatives or agents.
5.05 Commission Filings. As of its filing date, each Parent Commission Document complied as to form in all material respects with the applicable requirements of the Exchange Act. As of its filing date, each Parent Commission Document filed pursuant to the Exchange Act did not contain any untrue statement of a material fact or omit any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not false or misleading.
5.06 Financial Statements. The audited consolidated financial
statements and unaudited consolidated interim financial statements of Parent
(including any related notes and schedules) included in its annual reports on
Form 10-K and the quarterly reports on Form 10-Q referred to in this Section
5.06 (collectively, the "Parent Financial Statements") present fairly the
financial position of Parent and its subsidiaries as of the dates thereof and
their results of operations and cash flows for the periods then ended (subject
to normal year-end adjustments and the absence of notes in the case of any
unaudited interim financial statements), in each case in conformity with GAAP
applied on a consistent basis (except as may be indicated in the notes thereto).
5.07 Capitalization. As of the date of this Agreement, Parent's authorized capital stock consists of (i) an unlimited number of authorized Class A Non-Voting Shares, of which 12,377,857 shares are issued and outstanding, (ii) 99,680 authorized Class B Voting Shares, of which 99,680 shares are issued and outstanding and (iii) an unlimited number of First Preference Shares issuable in series, of which no shares are issued or outstanding. All such issued and outstanding shares are duly authorized and validly issued, fully paid and nonassessable.
5.08 Absence of Undisclosed Liabilities. Except for
liabilities and obligations (i) reflected on the Parent Financial Statements or
(ii) incurred in the ordinary course of business consistent with past practice
since the date of the Parent Financial Statements, neither Buyer nor Parent has
incurred any liabilities or obligations of whatever nature, direct or indirect,
whether accrued, fixed, contingent or otherwise that would be required to be
reflected or reserved against on a consolidated balance sheet of Parent prepared
in accordance with GAAP.
5.09 Non-Contravention. The execution, delivery and performance by Buyer and Parent of this Agreement, and by Issuer of and the Debentures will not (i) contravene, result in any breach of, or constitute a default under, or result in the creation of any Lien in respect of any property of Buyer, Parent or Issuer under any indenture, mortgage, deed of trust, loan, purchase or credit agreement, lease, corporate charter or by-laws, or any other material agreement or instrument to which Buyer, Parent or Issuer are bound or by which any of its prospective properties may be bound or affected, which would affect the validity of the Debentures or the legal authority of the Issuer to materially comply with the terms of the Debentures or of Buyer and Parent to materially comply with the terms of this Agreement, or (ii) violate any provision of any statute or other rule or regulation of any Governmental Entity applicable to the Issuer which would affect the validity of the Debentures or the legal authority of the Issuer to materially comply with the terms of the Debentures.
5.10 Disclosure. No representation or warranty by Buyer, Parent or Issuer contained in this Agreement, and no statement contained in this Agreement (the Buyer Related Instruments and the Parent Financial Statements), list, certificate or other writing furnished or to be furnished by or on behalf of Buyer, Parent or Issuer to Seller or any of its representatives in connection with the transactions contemplated hereby, contains or will contain any untrue statement of a material fact, or omits or will omit to state any material fact necessary, in light of the circumstances under which it was or will be made, in order to make the statements herein or therein not misleading, or necessary in order to fully and fairly provide the information required to be provided in any such document.
5.11 Private Offering. Neither Issuer nor anyone acting on its behalf has offered the Debentures or any similar securities for sale to, or solicited any offer to buy any of the same from, or otherwise approached or negotiated in respect thereof with, any person other than Seller. Neither Issuer nor anyone acting on its behalf has taken, or will take, any action that would subject the issuance or sale of the Debentures to the registration requirements of Section 5 of the Securities Act of 1933, as amended.
5.12 Parent Shares. Upon execution and delivery of the Debentures at Closing, all Class A Shares that are deliverable upon exchange of the Exchangeable Debentures shall be duly authorized and reserved for issuance and such Class A Shares shall be validly issued, fully paid and non-assessable Class A Shares of Parent. As of the date of this Agreement, the Class A Shares issuable upon exchange of the Exchangeable Debentures represent 23.5% of the outstanding common shares of Parent on a fully diluted basis as calculated from the Parent's financial statements as at September 30, 2002.
ARTICLE VI
COVENANTS OF THE PARTIES
6.01 Conduct of the Brokerage Business. Except as and to the extent expressly permitted by this Agreement, during the period from the date of this Agreement up to the Brokerage Closing Date, Seller shall and shall cause its Subsidiaries, as applicable, to (i) conduct the Brokerage Business in the ordinary course consistent with past practice, (ii) use its reasonable best efforts to preserve its current relationships with its brokers, clients, customers, suppliers and others having business dealings with it and (iii) pay Taxes related to the Brokerage Business as they become due and payable. Without limiting the generality of the foregoing, except as and to the extent set forth in Section 6.01 of the Seller Disclosure Schedule, during the period from the date of this Agreement through the Brokerage Closing Date, without the prior written consent of Buyer, with respect to the Brokerage Business or any of the Brokerage Assets, Seller shall not and shall cause its Subsidiaries, as applicable, not to:
(a) pay any bonus or increase, decrease or otherwise modify the rate of compensation of, or pay or agree to pay, or withdrawal or reduce, any benefit to, any Transferred Employee;
(b) amend, change or modify the Grid or pay or agree to pay any Registered Representative on any basis not in accordance with the Grid;
(c) forgive any Broker Loans, except pursuant to the terms of such Broker Loans as in effect on the date of this Agreement;
(d) enter into, adopt, amend or otherwise modify any Plan that would apply to any Transferred Employee;
(e) enter into any collective bargaining agreement or other labor agreement;
(f) sell, lease, transfer or otherwise dispose of any Brokerage Asset, other than in the ordinary course of business consistent with past practice;
(g) grant or permit the imposition of any Lien on the Brokerage Assets, except for Permitted Liens;
(h) modify, amend, renew or terminate any of the Assumed Contracts, or enter into any other contract, agreement or commitment which would be required to be listed in Section 4.11(a) of the Seller Disclosure Schedule;
(i) fail to maintain the accounts of the Brokerage Business and Books and Records in the usual, regular and ordinary manner on a basis consistently applied;
(j) sell, transfer, license, encumber or otherwise dispose of, or compromise or permit the lapse of the right to use, any of the Trademarks or Intellectual Property;
(k) make any change in the pricing, fees, interest rates or service charges payable by any customer with respect to any Transferred Account or institute new pricing, fees, interest rates or service charges payable by any such customer or otherwise alter the terms of any Customer Agreement relating to any Transferred Account other than in the ordinary cause of business and consistent with past practices;
(l) except as required by applicable Law, with respect to any Transferred Account, (i) implement or adopt any change in its risk management or margin policies, procedures or practices or (ii) make any change in the process of approving and opening new Customer Accounts, including establishing credit parameters;
(m) cancel any debt or waive any claim or right of substantial value;
(n) take any action that would, or could reasonably be expected to, cause Seller or its Subsidiaries to be in breach of any representation, warranty, covenant or agreement contained in this Agreement or in any of the Ancillary Agreements; and (o) agree, whether in writing or otherwise, to do any of the foregoing.
6.02 Access to Information; Confidentiality.
(a) During the period from the date of this Agreement up to the Brokerage Closing Date, each of Seller and Buyer shall give the other and its authorized representatives reasonable access, during regular business hours and upon reasonable notice, to examine and make copies of, all books and records as they may reasonably request.
(b) Following the Brokerage Closing, Buyer shall permit Seller and its authorized representatives, and Seller shall permit Buyer and its authorized representatives, during regular business hours and upon reasonable notice, to have reasonable access to, and examine and make copies of, all books and records of the Brokerage Business, including as applicable, the Books and Records, the books of original entry of Seller and agreements that are necessary to support the account, which relate, (i) to transactions or events occurring prior to the Brokerage Closing, (ii) events occurring subsequent to the Brokerage Closing which are related to or arise out of transactions or events occurring prior to the Brokerage Closing or (iii) the liability of Buyer, Parent or Seller to provide indemnification pursuant to Article X.
(c) Any information received by either Buyer or Seller pursuant to this Agreement shall be held in confidence in accordance with and subject to the terms of the Confidentiality Agreement dated as of July 16, 2002 (the "Confidentiality Agreement"); provided, that, not withstanding the foregoing Seller shall not share any such information with any of its financial advisors that are competitors to Buyer or its Affiliates.
6.03 Reasonable Best Efforts.
(a) Subject to the terms and conditions of this Agreement, each of the parties hereto shall use its reasonable best efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary, proper or advisable under Applicable Laws and regulations to consummate the transactions contemplated by this Agreement at the earliest practicable date.
(b) Without limiting the generality of Section 6.03(a), each of the parties hereto shall in good faith, use its reasonable best efforts to promptly finalize and enter into, as of the Brokerage Closing Date, definitive agreements with respect to the Asset Management Acquisition, Conversion Memorandum of Understanding, Sublease, IT Services Agreement, IT Transfers Agreement and Transition Services Agreement, all such agreements substantially in accordance with the terms and conditions generally set forth in the respective term sheets attached as exhibits or schedules, if applicable, to this Agreement.
6.04 Consents.
(a) Without limiting the generality of Section 6.03, each of the parties hereto shall use its reasonable best efforts to obtain all licenses, permits, authorizations, consents and approvals of all third parties and Governmental Entities necessary in connection with the consummation of the transactions contemplated by this Agreement prior to the Brokerage Closing. Notwithstanding the foregoing, Buyer shall have no obligation to pay any fee to any third party for the purpose of obtaining any consent or approval or any costs and expenses of any third party resulting from the process of obtaining such consent or approval. Each of the parties hereto shall make or cause to be made all filings and submissions under laws and regulations applicable to it (and pay any requisite filing fees in connection therewith) as may be required for the consummation of the transactions contemplated by this Agreement. Buyer and Seller shall coordinate and cooperate with each other in exchanging such information and assistance as any of the parties hereto may reasonably request in connection with the foregoing.
(b) Without limiting the generality of Section 6.04(a), Seller shall use its reasonable best efforts to promptly undertake and make available the necessary personnel to obtain the written third party consent, approval or authorization required in connection with the transfer of Seller to Buyer of any Intellectual Property (including without limitation the Intellectual Property set forth in Section 4.02(b) of the Seller Disclosure Schedule). In the event that, after a reasonable period of time, Seller has failed to obtain any such consent, approval or authorization, Buyer may request that Seller explain to Buyer the steps it has taken to date, and Buyer may request that Seller undertake additional, specified, reasonable steps.
6.05 HSR Act. Seller and Buyer agree to use reasonable best efforts to effect all necessary registrations and filings including, but not limited to, submitting notifications required by the HSR Act, including therein a request for early termination of the waiting period under the HSR Act, and providing information requested by authorities. Seller and Buyer each agree to make, or to cause to be made, an appropriate filing of a notification and report form pursuant to the HSR Act with respect to the transfer by Seller to Buyer of the Brokerage Assets within two (2) business days after the date of this Agreement and to supply promptly any additional information and documentary material that may be requested pursuant to the HSR Act. Each party to this Agreement shall coordinate and cooperate fully with the other parties in exchanging such information and providing such assistance as such other party may reasonably request in connection with the foregoing and in seeking early termination of any applicable waiting periods under the HSR Act.
6.06 Regulatory Matters.
(a) Buyer and Seller shall use their reasonable best
efforts to consummate the transactions contemplated hereby. Each of the parties
hereto shall use its reasonable best efforts to take, or cause to be taken, all
appropriate actions, and to do, or cause to be done, all things necessary,
proper or advisable under Applicable Laws and regulations to consummate and make
effective the transactions contemplated herein, including, without limitation,
(i) cooperating with the other in the preparation and filing of all forms,
notifications, reports and information, if any, required or reasonably deemed
advisable pursuant to any law, statute, rule or regulation including the NASD,
NYSE and other stock exchange rules, (ii) using its reasonable best efforts to
obtain all licenses, permits, consents, approvals, authorizations,
qualifications and orders of any Governmental Entity or other Persons (as are
necessary for the consummation of the transactions contemplated hereby), (iii)
making on a prompt and timely basis all governmental or regulatory notifications
and filings required to be made by it for the consummation of the transactions
contemplated hereby, including but not limited to all Regulatory Documents, (iv)
defending all Legal Proceedings challenging this Agreement or the consummation
of the transactions contemplated hereby and to lift or rescind any injunction or
restraining Order or other Order adversely affecting the ability of the parties
to consummate the transactions contemplated hereby, and (v) executing and
delivering such additional instruments and other documents and shall take such
further actions as may be necessary or appropriate to effectuate, carry out and
comply with all of the terms of this Agreement and the transactions contemplated
hereby. Each party shall promptly advise the other party of any developments
with respect to the foregoing matters.
(b) Each party to this Agreement shall, upon request, furnish each other with all information concerning themselves, directors, officers and shareholders and such other matters as may be reasonably necessary or advisable in connection with any statement, filing, notice or application made by or on behalf of Buyer or Seller to any Governmental Entity in connection with the transactions contemplated by this Agreement (except to the extent that such information would be, or relates to information that would be, filed under a claim of confidentiality).
(c) The parties to this Agreement shall promptly advise each other upon receiving any communication from any Governmental Entity whose consent or approval is required for consummation of the transactions contemplated by this Agreement which causes such party to believe that there is a reasonable likelihood that any requisite regulatory approval will not be obtained or that the receipt of any such approval will be materially delayed or that the transactions contemplated hereby will become subject to additional conditions imposed by such Governmental Entity.
(d) Each party to this Agreement shall provide to the other party, as promptly as practicable after the filing or receipt thereof (unless a different time period shall otherwise be specified herein), a copy of all applications, notices, petitions, filings documents and notices referred to in this Section 6.06.
6.07 Discharge of Liens; Payment of Certain Obligations. Seller shall cause all Liens (other than Permitted Liens) on any Brokerage Asset to be terminated or otherwise discharged prior to the Brokerage Closing.
6.08 Proper Withholding. Company shall comply with all Applicable Laws relating to the payment and withholding of all Taxes, including Taxes imposed in respect of payments made pursuant to this Agreement.
6.09 Public Announcements. Seller and Buyer shall not (i) issue any report, statement or press release or otherwise make any public statement with respect to this Agreement and the transactions contemplated hereby and, (ii) issue any report, statement or otherwise inform any business or managers of Seller, without prior consultation with and approval of the other party, except as may be required by law or may be necessary in order to discharge its disclosure obligations, in which case such party nevertheless shall advise the other party and discuss the contents of the disclosure before issuing any such report, statement or press release.
6.10 Securities. From the date of this Agreement until the Brokerage Closing Date, Seller shall not, and shall cause each of its Affiliates not to, directly or indirectly, purchase or otherwise acquire, agree to acquire or offer to acquire any voting or non-voting security or direct or indirect rights or options to acquire any voting or non-voting security of Parent or Buyer.
6.11 New York Headquarters Assets. On or after the Brokerage Closing Date, Buyer shall be responsible for moving to a location of its choice those Brokerage Assets that are located in the New York Headquarters.
6.12 Tax Information Reporting. Company shall, for the period from January 1, 2002 through the Brokerage Closing Date, provide customers of the Brokerage Business with all applicable forms required for Tax information reporting purposes (such as Forms 1099, 945, 1042 and 1042-S) with respect to the accounts of such customers and Buyer shall, for the period on or after the Brokerage Closing Date, provide such customers with such forms.
6.13 Pending Tax Claims. Company shall, at least five (5) business days prior to the Brokerage Closing Date, inform Buyer whether there are any pending claims that have been asserted or proposed by any Tax authority of a jurisdiction where Company does not file Tax Returns with respect to the Brokerage Business to the effect that Company is or may have been subject to taxation by that jurisdiction based solely on the operation of the Brokerage Business.
6.14 Reservation of Stock. Parent shall at all times reserve and keep available, solely for issuance and delivery upon exchange of the Exchangeable Debentures, the number of Class A Shares from time to time issuable upon exchange of all Exchangeable Debentures at the time outstanding.
6.15 Litigation Cooperation. In connection with Seller's retention of all pre-closing Litigation pursuant to this Agreement, Buyer agrees to respond to all reasonable requests by Seller and reasonably cooperate with Seller in connection with the defense and resolution of the Litigation, including (a) providing Seller with reasonable access at reasonable hours to all Books and Records and personnel, including the Transferred Employees, (b) permitting employees and personnel, including the Transferred Employees, to respond to reasonable requests for interviews, depositions, testimony, interrogatories and other information in connection with such litigation and claims and any proceedings in connection therewith; in each case, provided access and such responses shall not disrupt Buyer's business activities or prevent Transferred Employees from performing their duties. Seller's defense of the Litigation and Buyer's cooperation therewith shall have no effect on the provisions of Section 10.07.
6.16 Resolution of Excluded Accounts. Seller agrees, if requested by Buyer to use its reasonable best efforts to resolve any impediments with respect to any Excluded Account so as to enable such account to become a Transferred Account.
6.17 Seller Officer's Certificate.
(a) (i) At the Brokerage Closing, Seller shall deliver an officer's certificate, signed by the chief executive officer or president of Seller, certifying, to the best of such officer's knowledge after due inquiry, that (i) the Fundamental Representation is true, complete and correct in all respects (subject to any exceptions contained therein) as of the date when made and at and as of the Brokerage Closing Date, as though such Fundamental Representation was made at and as of the Brokerage Closing Date, except that such representation shall be true, complete and correct only as of the date referred to therein and (ii) all representations and warranties of Seller in this Agreement other than the Fundamental Representation are true, complete and correct in all respects, as of the date when made and at and as of the Brokerage Closing Date, as though such representations and warranties were made at and as of the Brokerage Closing Date, except that representations and warranties that by their terms speak as of the date of this Agreement or as of another specified date shall be true, complete and correct only as of such date;
(b) if the officer's certificate called for in subsection
(a)(i) above discloses exceptions to the Fundamental Representation, and the
matters disclosed in such exceptions could reasonably be expected to result in a
reduction in aggregate revenues set forth on the Fundamental Schedule (the
"Estimated Revenue Loss") in an aggregate amount:
(i) less than 10% of the aggregate revenues set forth on the Fundamental Schedule, then Buyer and Parent shall be entitled to make a Seller Claim for indemnification under Article X for the full amount determined in accordance with this Section 6.17(b)(i) and receive the expense reimbursement set forth in subsection (e) below;
(ii) equal to or greater than 10% of the aggregate revenues set forth on the Fundamental Schedule (such percentage, to the extent in excess of 10%, being referred to as the "Excess Percentage"), then (A) the principal amount of the Zero Coupon Note to be issued at the Brokerage Closing shall be reduced by an amount equal to the product of (x) the original outstanding principal amount of the Zero Coupon Note and (y) the Excess Percentage and (B) Buyer and Parent shall be entitled to make a Seller Claim for indemnification under Article X for the full amount in accordance with this Section 6.17(b)(ii) including the amount not reimbursed pursuant to the offset in this paragraph and receive the expense reimbursement set forth in subsection (e) below.
(c) if the officer's certificate called for in subsection
(a) above discloses exceptions to the representations and warranties (other than
the Fundamental Representation), Buyer and Parent shall be entitled to make a
Seller Claim for indemnification under Article X and receive the expense
reimbursement set forth in subsection (e) below.
(d) Any dispute as to the Estimated Revenue Loss shall be resolved by the Independent Accounting Firm; the determination of the Independent Accounting Firm shall be made as promptly as practicable and shall be final. Seller shall be responsible for all expenses relating to the engagement of the Independent Accounting Firm.
(e) Notwithstanding anything to the contrary set forth in this Agreement, including Article X, the parties agree and acknowledge that, with respect to any Seller Claim arising out of this Section 6.17, Seller shall pay all of Buyer's and any other Buyer Indemnitees' aggregate legal fees, costs and other expenses arising as a result of, incurred in connection with or related to such Seller Claim, to the extent such Seller Claim is not finally adjudicated against Buyer.
6.18 Excess Wealth Plus Payments. Buyer shall apply all Excess Wealth Plus Payments to the payment of the Zero Coupon Notes immediately, and in any event, within five (5) business days, after receipt or realization thereof upon the departure of a Transferred Employee subject to the Wealth Plus Plan.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF SELLER
7.01 Conditions. The obligation of Seller to consummate the transactions contemplated by this Agreement is subject to the fulfillment at or prior to the Brokerage Closing of each of the following conditions (any or all of which may be waived in whole or in part by Seller):
(a) Performance. Parent and Buyer shall have performed and complied, in all material respects, with all agreements, obligations, covenants and conditions required by this Agreement to be so performed or complied with by Parent or Buyer, as the case may be, at or prior to the Brokerage Closing.
(b) No Violation of Orders, Injunction or Regulatory Actions. No preliminary or permanent injunction or other order issued by any Governmental Entity, no statute, rule or regulation, promulgated or enacted by any Governmental Entity and no judgment, order, injunction or decree issued by a court of competent jurisdiction that prevents, restrains or prohibits the consummation of the transactions contemplated by this Agreement shall be in effect. No actions, suits, claims, proceedings, investigations or inquiries shall have been commenced (and not have been dismissed) by or on behalf of any Governmental Entity.
(c) NYSE and TSX Approval. The NYSE and the TSX shall have approved the transactions contemplated by this Agreement.
(d) HSR Act Waiting Periods. Any waiting period (or an extension thereof) applicable to this Agreement and the transactions contemplated hereby under the HSR Act shall have expired or shall have been terminated.
(e) Governmental Approvals. All consents and approvals of any Governmental Entity required to consummate the transactions contemplated hereby shall have been obtained, except where the failure to obtain any such consent or approval would not materially impair the ability of Seller to transfer the Brokerage Assets to Buyer.
(f) Documents. Seller shall have received the Buyer Related Instruments duly executed by each party thereto (other than Seller and its Affiliates).
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF BUYER
8.01 Conditions. The obligations of Buyer and Parent to consummate the transactions contemplated by this Agreement are subject to the fulfillment at or prior to the Brokerage Closing of each of the following conditions (any or all of which may be waived in whole or in part by Buyer or Parent):
(a) Performance. Seller and its Subsidiaries, as applicable, shall have performed and complied, in all material respects, with all agreements, obligations, covenants and conditions required by this Agreement to be so performed or complied with by Seller or its Subsidiaries, as the case may be, at or prior to the Brokerage Closing.
(b) No Violation of Orders, Injunction or Governmental Entity. No preliminary or permanent injunction or other order issued by any Governmental Entity, no statute, rule or regulation, promulgated or enacted by any Governmental Entity and no judgment, order, injunction or decree issued by a court of competent jurisdiction that prevents, restrains or prohibits the consummation of the transactions contemplated by this Agreement shall be in effect. No actions, suits, claims, proceedings, investigations or inquiries shall have been commenced (and not have been dismissed) by or on behalf of any Governmental Entity.
(c) NYSE and TSX Approval. The NYSE and the TSX shall have approved the transactions contemplated by this Agreement.
(d) HSR Act Waiting Periods. Any waiting period (or an extension thereof) applicable to this Agreement and the transactions contemplated hereby under the HSR Act shall have expired or shall have been terminated.
(e) Governmental Approvals. All consents and approvals of any Governmental Entity required to consummate the transactions contemplated hereby shall have been obtained, except where the failure to obtain any such consent or approval would not materially impair the ability of Parent or Buyer to perform their obligations under the Agreement or to operate the Brokerage Business after the Brokerage Closing Date as currently conducted by Company.
(f) Documents. Buyer shall have received Seller Related Instruments, in each case, duly executed by each party thereto (other than Buyer or Parent).
(g) Consents and Approvals. All material licenses, Permits, consents, approvals, estoppels and authorizations of all third parties shall have been obtained which are necessary, in the reasonable opinion of Buyer, in connection with (a) the execution and delivery by Seller of the Agreement and Seller Related Instruments, (b) the consummation by Seller of the transactions contemplated hereby and thereby and the compliance by Seller with its obligations hereunder and thereunder, (c) the ownership or operation by Buyer of the Brokerage Business or the Brokerage Assets or (d) the conduct by Buyer of the Brokerage Business after the Brokerage Closing substantially as operated by the Company prior to the date hereof.
(h) Loan Agreement. The transactions contemplated by the Loan Agreement shall have closed.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
9.01 Termination. This Agreement may be terminated and the transactions contemplated hereby may be abandoned at any time prior to the Brokerage Closing:
(a) by mutual written agreement of Buyer and Seller; and
(b) at any time after March 31, 2003, by either Buyer or Seller, if the Brokerage Closing shall not have occurred for any reason, other than a breach of this Agreement by the terminating party.
9.02 Procedure and Effect of Termination. In the event of the termination of this Agreement and the abandonment of the transactions contemplated hereby pursuant to Section 9.01(b), written notice thereof shall forthwith be given by the party so terminating to the other parties, and this Agreement shall terminate, and the transactions contemplated hereby shall be abandoned, without further action by Seller or Buyer. The obligations provided for in this Section 9.02 and Section 10.01 and the confidentiality provision contained in Section 6.02 shall survive any termination of this Agreement.
9.03 Other Remedies. In no event shall termination of this Agreement limit or restrict the rights and remedies of any party hereto against any other party which has breached the terms of this Agreement prior to termination hereof.
9.04 Amendment, Modification and Waiver. This Agreement may be amended, modified or supplemented at any time by written agreement of the parties hereto. Any failure of a party to comply with any term or provision of this Agreement may be waived by the other parties at any time by an instrument in writing signed by or on behalf of such other parties, but such waiver or failure to insist upon strict compliance with such term or provision shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure to comply.
ARTICLE X
FEES AND EXPENSES: SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
10.01 Fees and Expenses. Whether or not the transactions contemplated hereby are consummated pursuant hereto, Seller, on the one hand, and Buyer on the other hand, shall pay all fees and expenses incurred by such person or on such person's behalf in connection with or in anticipation of this Agreement and the consummation of the transactions contemplated hereby.
10.02 Survival of Representations. The representations and warranties in this Agreement and in any other document delivered in connection herewith shall survive the Brokerage Closing for three years regardless of any investigation made by or on behalf of any party hereto; provided, that, the representations made in Sections 4.01, 4.02, 4.06, 4.09(g), 4.14, 4.15, 5.01 and 5.02 shall survive indefinitely.
10.03 Seller's Agreement to Indemnify. Upon the terms and subject to the conditions of this Article X, Seller Parent and Company agree, jointly and severally, to indemnify, defend and hold harmless Parent, Buyer and their respective directors, officers, employees, representatives and Affiliates (collectively, "Buyer Indemnitees"), at any time and from time to time after the Brokerage Closing, from and against all demands, claims, actions or causes of action, assessments, losses, damages, liabilities, costs and expenses, including interest, penalties and reasonable attorneys' fees and expenses (collectively, "Damages"), asserted against, resulting to, imposed upon or incurred by Buyer Indemnitees, directly or indirectly, by reason of or resulting from: (a) liabilities, obligations or claims of or against Seller Parent, Company or any of their Affiliates or relating to the Brokerage Business or the Brokerage Assets (whether absolute, accrued, contingent or otherwise) existing as of the Brokerage Closing Date or arising out of facts, conditions or circumstances occurring prior to the Brokerage Closing Date, whether or not such liabilities, obligations or claims were known or disclosed at the time of the Brokerage Closing (other than the Assumed Liabilities); (b) breach of any representation or warranty of Seller Parent or Company contained in or made pursuant to this Agreement or any facts or circumstances constituting such a breach (disregarding for this purpose all qualifications therein with respect to knowledge, materiality or Material Adverse Effect); (c) breach of any covenant or agreement of Seller Parent or Company contained in or made pursuant to this Agreement or any facts or circumstances constituting such breach; (d) any of the Excluded Assets; (e) any of the Excluded Liabilities; (f) any failure by Seller to comply with any "bulk sales" laws applicable to the transactions contemplated hereby; or (g) any liabilities, obligations or claims of against Buyer or any of its Affiliates, or any of their officers, directors or employees relating to actions taken by Buyer or any of its Affiliates pursuant to Section 2.10 (the items referred to in clauses (a) through (g) being collectively referred to herein as the "Seller Claims"); provided, however, that Seller Parent and Company shall have no obligation to indemnify the Buyer Indemnitees for any Seller Claims (other than pursuant to Section 6.17) until the Buyer Indemnitees have suffered Damages in excess of $1,000,000 in the aggregate with all other Seller Claims at which point Seller Parent and Company shall be obligated to indemnify the Buyer Indemnitees for all Damages which exceed $1,000,000. In satisfaction of any indemnity obligations to Parent, Buyer or any of their direct or indirect subsidiaries, Seller may, in its discretion, (A) pay any amounts payable pursuant to this Section 10.03 in cash, or (B) reduce by such amounts the then outstanding principal amount of first, the First Exchangeable Debenture, second, the Interim Debenture, third, the Zero Coupon Note, and fourth, any other debt owed by Parent, Buyer or any of their Affiliates to Seller.
10.04 Seller's Limitation of Liability. Anything in this Agreement to the contrary notwithstanding, the liability of Seller Parent and Company to indemnify Buyer Indemnitees pursuant to Section 10.03(b) against any Damages sustained by reason of any Seller Claim thereunder for a breach of any representation or warranty of Seller Parent or Company shall:
(a) be limited to Seller Claims as to which any of Buyer
Indemnitees has given Seller written notice thereof on or prior to the date, if
any, on which survival of such representation or warranty terminates pursuant to
Section 10.02, whether or not any Damages have then actually been sustained; and
(b) not exceed the sum of (i) the Purchase Price and (ii) the original principal amount of the Broker Loans.
10.05 Parent's and Buyer's Agreement to Indemnify. Upon the terms and subject to the conditions of this Article X, Parent and Buyer agree, jointly and severally, to indemnify, defend and hold harmless Seller, and its directors, officers, employees, representatives and Affiliates (collectively, the "Seller Indemnitees") at any time and from time to time after the Brokerage Closing, from and against all Damages asserted against, resulting to, imposed upon or incurred by Seller Indemnitees, directly or indirectly, by reason of or resulting from: (a) liabilities, obligations or claims relating to the Brokerage Business or the Brokerage Assets (whether absolute, accrued, contingent or otherwise) arising out of facts, conditions or circumstances occurring on or after the Brokerage Closing Date; (b) breach of any representation or warranty of Buyer or Parent contained in or made pursuant to this Agreement or any facts or circumstances constituting such a breach (disregarding for this purpose all qualifications therein with respect to knowledge, materiality or Material Adverse Effect); (c) breach of any covenant or agreement of Buyer or Parent contained in or made pursuant to this Agreement or any facts or circumstances constituting such a breach; or (d) any of the Assumed Liabilities (the items referred to in clauses (a) through (d) being collectively referred to herein as the "Buyer Claims"); provided, however, that Buyer and Parent shall have no obligation to indemnify the Seller Indemnitees for any Buyer Claims until the Seller Indemnitees have suffered Damages in excess of $1,000,000 in the aggregate with all other Buyer Claims at which point Buyer and Parent shall be obligated to indemnify the Seller Indemnitees for all Damages which exceed $1,000,000. In satisfaction of any indemnity obligations to Company, Seller Parent or any of their direct or indirect subsidiaries, Parent and Buyer may, in their discretion, (A) pay any amounts payable pursuant to this Section 10.05 in cash, or (B) reduce the then outstanding principal amount of any indebtedness or other payment obligation owed by Seller or any of its Affiliates to Parent or Buyer, by such amount.
10.06 Parent's and Buyer's Limitation of Liability. Anything in this Agreement to the contrary notwithstanding, the liability of Parent and Buyer to indemnify Seller Indemnitees pursuant to Section 10.05(b) against any Damages sustained by reason of any Buyer Claim thereunder for a breach of any representation or warranty of Parent or Buyer:
(a) shall be limited to Buyer Claims as to which any of Seller Indemnitees has given Parent or Buyer written notice thereof on or prior to the date, if any, on which survival of such representation or warranty terminates pursuant to Section 10.02, whether or not any Damages have then actually been sustained; and
(b) not exceed the sum of (i) the Purchase Price and (ii) the original principal amount of the Broker Loans.
10.07 Conditions of Indemnification. The obligations and liabilities of Seller Parent, Company, Parent and Buyer with respect to Buyer Claims or Seller Claims (collectively, "Claims") made by third parties shall be subject to the following terms and conditions:
(a) The indemnified party shall give the indemnifying party prompt notice of any such Claim, and the indemnifying party shall have the right to undertake the defense thereof by representatives chosen by it;
(b) If the indemnifying party, within a reasonable time after notice of any such Claim, fails to defend the indemnified party against which such Claim has been asserted, the indemnified party shall (upon further notice to the indemnifying party) have the right to undertake the defense, compromise or settlement of such Claim on behalf of and for the account and risk of the indemnifying party subject to the right of the indemnifying party to assume the defense of such Claim at any time prior to settlement, compromise or final determination thereof; and
(c) Anything in this Article X to the contrary notwithstanding, (i) if there is a reasonable probability that a Claim may materially and adversely affect the indemnified party other than as a result of money damages or other money payments, the indemnified party shall have the right, at its own cost and expense, to defend, compromise or settle such Claim, and (ii) the indemnifying party shall not, without the written consent of the indemnified party, settle or compromise any Claim or consent to the entry of any judgment in any manner that admits wrongdoing or any violation of law or which does not include as an unconditional term thereof the giving by the claimant or the plaintiff to the indemnified party a release from all liability in respect to such Claim.
10.08 Cooperation. If requested by the indemnifying party, the indemnified person shall cooperate with the indemnifying party and its counsel in contesting any Claim which the indemnifying party elects to contest or, if appropriate, in making any counterclaim against the person asserting the Claim or any cross-complaint against any person and further agrees to take such other action as reasonably may be requested by an indemnifying party to reduce or eliminate any loss or expense for which the indemnifying party would have responsibility, but the indemnifying party shall reimburse the indemnified person for any expenses incurred by it in so cooperating or acting at the request of the indemnifying party.
10.09 Other Indemnification Provisions.
(a) The amount of Damages incurred by any indemnified party shall be reduced by and to the extent that such indemnified party shall have received proceeds under insurance policies, risk sharing pools, or similar arrangements specifically as a result of, and in compensation for, the subject matter of the Claim in respect of such Damages, net of any increased premiums resulting from or similar costs arising out of the making of such claims against such insurance or other arrangements.
(b) The determination of the amount of Damages sustained by any indemnified party in respect of any Claim shall not be reduced by Tax benefits, if any, resulting from or relating to such Claim.
ARTICLE XI
MISCELLANEOUS
11.01 Further Assurances. From time to time after the Brokerage Closing Date, at the request of the other party hereto and at the expense of the party so requesting, Seller and Buyer shall execute and deliver to such requesting party such documents and take such other action as such requesting party may reasonably request in order to consummate more effectively the transactions contemplated hereby. 11.02 Notices. All notices, requests, demands, waivers and other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given if delivered personally, by mail (certified or registered mail, return receipt requested) or by facsimile transmission (receipt of which is confirmed):
(a) If to Parent or Buyer, to:
Fahnestock Viner Holdings Inc.
P.O. Box 2015, Suite 1110
20 Eglinton Avenue West
Toronto, Ontario M4R 1K8
CANADA
Attention: A.G. Lowenthal
Telephone: (212) 668-5782
Facsimile: (212) 943-8728
Email: alowenthal@fahnestock.com
With a copy to:
Borden Ladner Gervais LLP
Scotia Plaza, Suite 4400
40 King Street West
Toronto, Ontario M5H 3Y4
CANADA
Attention: A. Winn Oughtred, Esq.
Telephone: (416) 367-6247
Facsimile: (416) 361-7076
Email: woughtred@blgcanada.com
and
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, NY 10036
Attention: Patricia Moran, Esq.
Telephone: (212) 735-3130
Facsimile: (917) 777-3130
Email: pmoran@skadden.com
(b) If to Seller Parent or Company, to:
Canadian Imperial Bank of Commerce
Commerce Court West
Toronto, Ontario M5L 1A2
CANADA
Attention: Gerry McCaughey Telephone: (416) 980-2211 Facsimile: (416) 332-4316 Email: gerrry.mccaughey@cibc.com |
With a copy to:
Mayer, Brown, Rowe & Maw
1675 Broadway
New York, NY 10019-5820
Attention: James B. Carlson, Esq.
Telephone: (212) 506-2515
Facsimile: (212) 849-5515
Email: jcarlson@mayerbrownrowe.com
and
CIBC Legal and Compliance
245 Park Avenue
42nd Floor
New York, NY 10167
Attention: Michael Capatides, Esq.
Telephone: (917) 332-4108
Facsimile: (917) 332-4316
Email: michael.capatides@us.cibc.com
or to such other person or address as any party shall specify by notice in writing to the other party. All such notices, requests, demands, waivers and communications shall be deemed to have been received on the date on which so hand-delivered, on the third business day following the date on which so mailed and on the date on which faxed and confirmed, except for a notice of change of address, which shall be effective only upon receipt thereof.
11.03 Bulk Sales Laws. Each party hereto hereby waives compliance by Buyer and Seller with the provisions of the "bulk sales," "bulk transfer" and similar laws of any state. Seller shall indemnify Buyer against all losses incurred by Buyer or any of its officers, directors or Affiliates as a result of such failure to comply.
11.04 Entire Agreement. This Agreement, the Buyer Disclosure Schedule, the Seller Disclosure Schedule, the Confidentiality Agreement, the Ancillary Agreements and the exhibits, schedules and other documents referred to herein which form a part hereof contain the entire understanding of the parties hereto with respect to their subject matter. This Agreement supersedes all prior agreements and understandings, oral and written, with respect to its subject matter.
11.05 Severability. Should any provision of this Agreement for any reason be declared invalid or unenforceable, such decision shall not affect the validity or enforceability of any of the other provisions of this Agreement, which other provisions shall remain in full force and effect and the application of such invalid or unenforceable provision to persons or circumstances other than those as to which it is held invalid or unenforceable shall be valid and be enforced to the fullest extent permitted by law.
11.06 Binding Effect; Assignment. This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, executors, successors and permitted assigns, neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned, directly or indirectly, by (i) Buyer or Parent without the consent of Seller and (ii) Seller, without the prior written consent of Parent, except that each party may assign its rights, interests and obligation, without the written consent of the other parties or to any wholly-owned subsidiary; provided, that no assignment shall limit or affect the assignor's obligations hereunder.
11.07 No Third-Party Beneficiaries. This Agreement is not intended and shall not be deemed to confer upon or give any person except the parties hereto and their respective successors and permitted assigns any remedy, claim, liability, reimbursement, cause of action or other right under or by reason of this Agreement.
11.08 Counterparts. This Agreement may be executed simultaneously in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
11.09 Headings. The article and section headings contained in this Agreement are solely for the purpose of reference, are not part of the agreement of the parties and shall not in any way affect the meaning or interpretation of this Agreement.
11.10 Governing Law; Jurisdiction.
(a) This Agreement shall be construed, performed and enforced in accordance with, and governed by, the laws of the State of New York, without giving effect to the principles of conflicts of laws thereof.
(b) Each party irrevocably submits to the exclusive jurisdiction of (i) the Supreme Court of the State of New York, New York County, and (ii) the United States District Court for the Southern District of New York, for the purposes of any suit, action or other proceeding arising out of this Agreement or any transaction contemplated hereby. Each party agrees to commence any action, suit or proceeding relating hereto either in the United States District Court for the Southern District of New York or if such suit, action or other proceeding may not be brought in such court for reasons of subject matter jurisdiction, in the Supreme Court of the State of New York, New York County. Each party irrevocably and unconditionally waives any objection to the laying of venue of any action, suit or proceeding arising out of this Agreement or the transactions contemplated hereby in (A) the Supreme Court of the State of New York, New York County, or (B) the United Sates District Court for the Southern District of New York, and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum.
11.11 Waiver of Jury Trial. Each party hereby waives its respective rights to a jury trial of any claim or cause of action based upon or arising out of this agreement or any dealings between them relating to the subject matter of this agreement and the relationship that is being established. The scope of this waiver is intended to be all-encompassing of any and all disputes that may be filed in any court and that relate to the subject matter of this agreement, including, without limitation, contract claims, tort claims, breach of duty claims, and all other common law and statutory claims. The parties acknowledge that this waiver is a material inducement to enter into a business relationship, that each party has already relied on the waiver in entering into this agreement and that each party will continue to rely on the waiver in their related future dealings. Each party further warrants and represents it has reviewed this waiver with its legal counsel, and that each knowingly and voluntarily waives its jury trial rights following consultation with legal counsel. This waiver is irrevocable, meaning that it may not be modified either orally or in writing, and the waiver shall apply to any subsequent amendments, renewals, supplements or modifications to this agreement or to any other documents or agreements relating to the transaction contemplated hereby. In the event of litigation, this agreement may be filed as a written consent to a trial by the court.
11.12 Specific Performance. Each of the parties hereto
acknowledges and agrees that in the event of any breach of this Agreement, each
non-breaching party would be irreparably and immediately harmed and could not be
made whole by monetary damages. It is accordingly agreed that the parties hereto
(a) will waive, in any action for specific performance, the defense of adequacy
of a remedy at law and (b) shall be entitled, in addition to any other remedy to
which they may be entitled at law or in equity, to compel specific performance
of this Agreement in any action instituted hereunder.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.
FAHNESTOCK VINER HOLDINGS INC.
/s/ A. G. Lowenthal ______________________________ Name: A. G. Lowenthal Title: Chief Executive Officer and Chairman of the Board |
VINER FINANCE INC.
/s/ Elaine Roberts _______________________________ Name: Elaine Roberts Title: President |
CIBC WORLD MARKETS CORP.
/s/ Michael Capatides ______________________________ Name: Michael Capatides Title: General Counsel |
CANADIAN IMPERIAL BANK OF COMMERCE
/s/ Gerry McCaughey ______________________________ Name: Gerry McCaughey Title: Senior Executive Vice-President |
Schedule I Term Sheet Governing Acquisition of the Asset Management Business
Schedule II Acquired Assets
o the name "Oppenheimer" and any other trade name included in the Trademarks or Intellectual Property and all derivatives thereof.