Exhibit 2.1
--------------------------------
PURCHASE AGREEMENT
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between
CREDIT SUISSE FIRST BOSTON (USA), INC.,
and
BANKMONT FINANCIAL CORP.
Dated as of November 28, 2001
TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms..........................................2
SECTION 1.02. Definitions....................................................7
ARTICLE II
PURCHASE AND SALE
SECTION 2.01. Purchase and Sale of the LLC Interests.........................8
SECTION 2.02. Purchase Price.................................................8
SECTION 2.03. Closing........................................................8
SECTION 2.04. Closing Deliveries by the Seller...............................9
SECTION 2.05. Closing Deliveries by the Purchaser............................9
SECTION 2.06. Adjustment of Purchase Price...................................9
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE SELLER
SECTION 3.01. Organization, Authority and Qualification of the Seller.......10
SECTION 3.02. Organization, Authority and Qualification of the Company......11
SECTION 3.03. Capital Stock of the Company; Ownership of the Shares
and the LLC Interests.........................................11
SECTION 3.04. No Interests..................................................12
SECTION 3.05. Corporate Books and Records...................................12
SECTION 3.06. No Conflict...................................................12
SECTION 3.07. Consents and Approvals........................................13
SECTION 3.08. Financial Information; Reports................................13
SECTION 3.09. No Undisclosed Liabilities....................................14
SECTION 3.10. Conduct in the Ordinary Course; Absence of Certain Changes,
Events and Conditions.........................................14
SECTION 3.11. Litigation....................................................16
SECTION 3.12. Customer Accounts.............................................16
SECTION 3.13. Registrations.................................................17
SECTION 3.14. Compliance with Legal Requirements............................17
SECTION 3.15. Material Contracts............................................18
SECTION 3.16. Real and Tangible Property....................................19
SECTION 3.17. Intellectual Property.........................................19
SECTION 3.18. Assets .......................................................21
SECTION 3.19. Employee Benefit Plans; Labor Matters.........................21
SECTION 3.20. Taxes ........................................................24
SECTION 3.21. Relationships with Related Persons............................25
SECTION 3.22. Certain Payments..............................................25
SECTION 3.23. Brokers.......................................................25
SECTION 3.24. No Other Representations......................................25
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF THE PURCHASER AND PARENT
SECTION 4.01. Organization and Authority of the Purchaser...................25
SECTION 4.02. No Conflict...................................................26
SECTION 4.03. Governmental Consents and Approvals...........................26
SECTION 4.04. Investment Purpose............................................26
SECTION 4.05. Financing.....................................................26
SECTION 4.06. Litigation....................................................26
SECTION 4.07. Brokers.......................................................27
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01. Conduct of Business Prior to the Closing......................27
SECTION 5.02. Access to Information.........................................27
SECTION 5.03. Confidentiality...............................................28
SECTION 5.04. Regulatory and Other Authorizations; Notices and Consents.....28
SECTION 5.05. Notice of Developments........................................29
SECTION 5.06. Investigation.................................................30
SECTION 5.07. Use of Names..................................................30
SECTION 5.08. Release of Indemnity Obligations; Assumption of Certain
Employee Obligations..........................................32
SECTION 5.09. Non-Competition...............................................33
SECTION 5.10. No Negotiation................................................35
SECTION 5.11. Ancillary Agreements..........................................35
SECTION 5.12. Leases .......................................................36
SECTION 5.13. LLC Conversion................................................36
SECTION 5.14. Customer Accounts.............................................36
SECTION 5.15. Further Action................................................37
SECTION 5.16. Intercompany Accounts.........................................37
SECTION 5.17. Employee Accounts.............................................37
SECTION 5.18. Transfer of Assets............................................37
SECTION 5.19. Certain Consents..............................................37
ARTICLE VI
EMPLOYEE MATTERS
SECTION 6.01. General.......................................................38
SECTION 6.02. Service Recognition...........................................38
SECTION 6.03. WARN .........................................................38
ARTICLE VII
TAX MATTERS
SECTION 7.01. Tax Indemnities...............................................38
SECTION 7.02. Refunds and Tax Benefits......................................40
SECTION 7.03. Contests......................................................40
SECTION 7.04. Cooperation and Exchange of Information.......................41
SECTION 7.05. Conveyance Taxes..............................................42
SECTION 7.06. Miscellaneous.................................................42
SECTION 7.07. Intended Characterization.....................................43
ARTICLE VIII
CONDITIONS TO CLOSING
SECTION 8.01. Conditions to Obligations of the Seller.......................43
SECTION 8.02. Conditions to Obligations of the Purchaser....................44
ARTICLE IX
INDEMNIFICATION
SECTION 9.01. Survival of Representations and Warranties....................45
SECTION 9.02. Indemnification...............................................46
SECTION 9.03. Third Party Claims............................................47
ARTICLE X
TERMINATION AND WAIVER
SECTION 10.01. Termination..................................................48
SECTION 10.02. Effect of Termination........................................49
SECTION 10.03. Waiver.......................................................49
ARTICLE XI
GENERAL PROVISIONS
SECTION 11.01. Expenses.....................................................49
SECTION 11.02. Notices......................................................49
SECTION 11.03. Public Announcements.........................................50
SECTION 11.04. Headings.....................................................50
SECTION 11.05. Severability.................................................50
SECTION 11.06. Entire Agreement.............................................51
SECTION 11.07. Assignment...................................................51
SECTION 11.08. No Third Party Beneficiaries.................................51
SECTION 11.09. Amendment....................................................51
SECTION 11.10. Governing Legal Requirement..................................51
SECTION 11.11. Counterparts.................................................51
SECTION 11.12. Specific Performance.........................................51
SCHEDULES AND EXHIBITS
Disclosure Schedule
Exhibit 2.06(a) Balance sheet of the Company dated as of September 30, 2001
Exhibit 5.07(a) Form of Temporary License Agreement
Exhibit 5.07(e) Form of Trademark and Service Xxxx License Agreement
Exhibit 5.11(a) Form of Clearing Agreement Amendment
Exhibit 5.11(b) Form of iNautix Agreement
Exhibit 5.11(c) Form of Research Products Agreement Amendment
Exhibit 5.11(d) Form of Transition Services Agreement
Exhibit 8.01(e) Form of Opinion of Counsel to the Purchaser
Exhibit 8.02(h)(i) Form of Opinion of Counsel to the Seller
PURCHASE AGREEMENT, dated as of November 28, 2001, between
CREDIT SUISSE FIRST BOSTON (USA), INC., a corporation organized under the laws
of the State of Delaware (the "SELLER"), and BANKMONT FINANCIAL CORP., a
corporation organized under the laws of the State of Delaware (the "PURCHASER").
WHEREAS, CSFBDIRECT Holdings LLC., a limited liability company
formed under the laws of the State of Delaware and wholly owned by an Affiliate
(as defined below) of the Seller ("HOLDINGS"), owns all the issued and
outstanding shares of common stock, par value $.10 per share (the "SHARES"), of
CSFBDIRECT, Inc.;
WHEREAS, on or prior to December 31, 2001 (and in any event
prior to the Closing Date), Holdings will implement a restructuring of its
ownership of CSFBDIRECT, Inc. pursuant to which, among other things, CSFBDIRECT,
Inc. will be converted (the "LLC CONVERSION") into a limited liability company
(the "LLC");
WHEREAS, at all times after the conversion of the Company into
a limited liability company through the Closing, all of the membership interests
of the Company (the "LLC INTERESTS") shall be owned by Holdings (the "COMPANY"
will refer to the LLC or CSFBDIRECT, Inc., as the context requires);
WHEREAS, the Seller wishes to exit the retail discount
brokerage business and, in connection therewith, will cause Holdings to sell to
the Purchaser, and the Purchaser will purchase from Holdings, the LLC Interests,
upon the terms and subject to the conditions set forth herein;
WHEREAS, certain Affiliates of the Seller have agreed to
provide certain services and other support to the Purchaser following the sale
of the retail discount brokerage business; and
WHEREAS, in connection with the sale to the Purchaser of the
LLC Interests and the provision of the services described above, the Seller and
certain of its Affiliates and the Purchaser shall enter into certain Ancillary
Agreements (as defined below) providing for an ongoing relationship between the
Seller or such Affiliates and the Company.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements and covenants hereinafter set forth, the Purchaser and the
Seller hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. CERTAIN DEFINED TERMS. As used in this
Agreement, the following terms shall have the following meanings:
"ACTION" means any claim, action, suit, arbitration, inquiry,
proceeding or investigation by or before any Governmental Authority.
"ACTIVE EMPLOYEES" means all employees of the Company as of
the Closing other than employees who are on lay-off, short-term disability,
long-term disability, workers' compensation, or absent from work by reason of a
family or medical leave covered under Section 102 of the Family and Medical
Leave Act of 1993 or an approved leave of absence, unless the employee returns
to work within ninety (90) calendar days (or one hundred twenty (120) calendar
days if so provided under applicable state family medical leave Legal
Requirements) of the first day the employee was absent from work under one of
the above classifications.
"AFFILIATE" means, with respect to any specified Person, any
other Person that directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, such specified
Person.
"AGREEMENT" or "THIS AGREEMENT" means this Purchase Agreement,
dated as of November 28, 2001, between the Seller and the Purchaser (including
the Exhibits hereto and the Disclosure Schedule) and all amendments hereto made
in accordance with the provisions of Section 11.09.
"ANCILLARY AGREEMENTS" means the Temporary License Agreement,
the Trademark and Service Xxxx License Agreement, the iNautix Agreement, the
Transitional Services Agreement, the Clearing Agreement, the Research Products
Agreement Amendment and the IPO Allocation Agreement.
"BUSINESS DAY" means any day that is not a Saturday, a Sunday
or other day on which banks are required or authorized by law to be closed in
The City of New York.
"CARIBBEAN" means the following: Anguilla, Antigua and
Barbuda, Bahamas, Barbados, Bermuda, British Virgin Islands, Cayman Islands,
Cuba, Dominica, Dominican Republic, Grenada, Guadeloupe, Haiti, Jamaica,
Martinique, Montserrat, Netherlands Antilles, St. Barthelemy, St. Kitts and
Nevis, St. Lucia, St. Maarten, St. Xxxxxx, St. Xxxxxxx and the Grenadines,
Surinam, Trinidad and Tobago, and Turks and Caicos Islands.
"CODE" means the Internal Revenue Code of 1986, as amended
through the date hereof.
"COMPANY INTELLECTUAL PROPERTY" means all Intellectual
Property that is owned by or licensed or sublicensed to the Company.
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"COMPANY IP LICENSES" means those (a) licenses of Intellectual
Property by the Company to Third Parties, (b) licenses of Intellectual Property
by Third Parties to the Company and (c) agreements between the Company and Third
Parties relating to the development or use of Intellectual Property, the
development or transmission of data, or the use, modification, framing, linking
advertisement, or other practices with respect to Internet web sites, but
excluding shrink wrap or click wrap licenses of commercial software having a
replacement value of less than $10,000 and the Excluded IP Licenses.
"CONFIDENTIALITY AGREEMENT" means the letter agreement dated
as of October 16, 2001 between Holdings and the Purchaser.
"CONTRACT" means, with respect to any Person, any agreement,
indenture, contract, obligation, lease or license to which such Person is a
party or by which it may be bound or to which any of its properties may be
subject.
"CONTROL" (including the terms "CONTROLLED BY" and "UNDER
COMMON CONTROL WITH"), with respect to the relationship between or among two or
more Persons, means the possession, directly or indirectly or as trustee or
executor, of the power to direct or cause the direction of the affairs or
management of a Person, whether through the ownership of voting securities, as
trustee or executor, by contract or otherwise, including the ownership, directly
or indirectly, of securities having the power to elect a majority of the board
of directors or similar body governing the affairs of such Person.
"DISCLOSURE SCHEDULE" means the Disclosure Schedule attached
hereto, dated as of the date hereof, and forming a part of this Agreement.
"ENCUMBRANCE" means any security interest, pledge, mortgage,
lien (including environmental and tax liens), charge, encumbrance, adverse
claim, preferential arrangement, licenses or restriction of any kind, including
any restriction on the use, voting, transfer, receipt of income or other
exercise of any attributes of ownership.
"EQUITY VALUE" means the total equity of the Company,
calculated on a basis consistent with the calculation of the total equity on the
Company's balance sheet dated September 30, 2001, as modified in accordance with
Section 2.06(a) of the Disclosure Schedule.
"ERISA AFFILIATE" means any trade or business (whether or not
incorporated) which is under common control, or which is treated as a single
employer, with the Company under Section 414(b), (c), (m) or (o) of the Code.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"EXCLUDED INTELLECTUAL PROPERTY" means all Intellectual
Property licensed or sublicensed to the Company pursuant to the Excluded IP
Licenses.
"EXCLUDED IP LICENSES" means (i) licenses or sublicenses of
Intellectual Property by the Seller or any of the Seller's Affiliates to the
Company and (ii) enterprise or group-wide licenses of Software or data licensed
to the Seller or any of the Seller's Affiliates for use by or on behalf of the
Company as an Affiliate of the Seller or its Affiliates.
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"GOVERNMENTAL AUTHORITY" means any United States federal,
state or local or any non-United States government, governmental, regulatory or
administrative authority, agency or commission, including any SRO, or any court,
tribunal, or judicial or arbitral body.
"GOVERNMENTAL 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 Authority or pursuant to any Legal Requirement.
"GOVERNMENTAL ORDER" means any order, writ, judgment,
injunction, decree, stipulation, determination or award entered by or with any
Governmental Authority.
"HSR ACT" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended, and the rules and regulations promulgated thereunder.
"INDEBTEDNESS" means, with respect to any Person, (a) all
indebtedness of such Person, whether or not contingent, for borrowed money, (b)
all obligations of such Person evidenced by notes, bonds, debentures or other
similar instruments, (c) all indebtedness created or arising under any
conditional sale or other title retention agreement with respect to property
acquired by such Person (even though the rights and remedies of the Sellers or
lender under such agreement in the event of default are limited to repossession
or sale of such property), (d) all obligations of such Person as lessee under
leases that have been or should be, in accordance with U.S. GAAP, recorded as
capital leases, (e) all obligations, contingent or otherwise, of such Person
under acceptance, letter of credit or similar facilities, (f) all obligations of
such Person to purchase, redeem, retire, defease or otherwise acquire for value
any capital stock of such Person or any warrants, rights or options to acquire
such capital stock, valued, in the case of redeemable preferred stock, at the
greater of its voluntary or involuntary liquidation preference plus accrued and
unpaid dividends, and (g) all Indebtedness of others referred to in clauses (a)
through (e) above guaranteed directly or indirectly in any manner by such
Person, or in effect guaranteed directly or indirectly by such Person.
"INTELLECTUAL PROPERTY" means (a) patents, patent applications
and invention registrations (including any continuations, reissues, divisionals
pertaining thereto), (b) Trademarks, (c) copyrighted works, copyrights, and
registrations and applications for registration thereof (including, but not
limited to, any of the foregoing as they pertain to Software), (d) internet
domain names, (e) "semi-conductor chip product works" as defined in 17 U.S.C.
Section 901, i.e., mask works and (f) confidential and proprietary information,
including trade secrets, business methods and know-how.
"IRS" means the Internal Revenue Service of the United States.
"KNOWLEDGE" means, with respect to the Seller, the actual
knowledge, after due inquiry, of the following executive officers of the
Company: Xxxxx Xxxxx, Xxxxx Xxxxxx, Xxxx Xxxxx and Xxxxx Xxxxxx.
"LEASED REAL PROPERTY" means the real property leased by the
Company or any Affiliate thereof, as tenant, and used in connection with the
business of the Company, together with, to the extent leased by the Company or
any Affiliate, all buildings and other structures,
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facilities or improvements currently or hereafter located thereon, all fixtures,
systems, equipment and items of personal property of the Company attached or
appurtenant thereto, and all easements, licenses, rights and appurtenances
relating to the foregoing.
"LEGAL REQUIREMENT" means any federal, state, local,
municipal, foreign, international, multinational or other administrative order,
constitution, law, ordinance, principle of common law, rule, regulation,
statute, treaty, guideline or other requirement (including those of any
securities or commodities exchange or SRO).
"LIABILITIES" means any and all debts, liabilities and
obligations, whether accrued or fixed, absolute or contingent, matured or
unmatured or determined or determinable, including those arising under any Legal
Requirement, Action or Governmental Order and those arising under any contract,
agreement, arrangement, commitment or undertaking.
"MATERIAL ADVERSE EFFECT" means any circumstance, change in or
effect on the Company that is or is reasonably likely to be materially adverse
to the business operations, results of operations, assets, liabilities or the
financial condition of the Company, except for any circumstance, change in or
effect on the Company directly or indirectly arising out of or attributable to
(i) changes or effects that generally affect the retail discount brokerage
business, (ii) any actions required to be taken or omitted to be taken pursuant
to the terms of this Agreement or in accordance with the Purchaser's
instructions or (iii) any effects that are reasonably demonstrated to arise out
of or be attributable to the execution of this Agreement with the Purchaser (as
opposed to another Person) or the announcement of the transactions contemplated
by this Agreement with the Purchaser (as opposed to another Person).
"NASD" means The National Association of Securities Dealers,
Inc. and its wholly owned subsidiary, NASD Regulation, Inc.
"NYSE" means The New York Stock Exchange, Inc.
"ORDER" means the entry in any judicial or administrative
proceeding brought under any Legal Requirement by any Governmental Authority or
any other Person of any permanent or preliminary injunction or other order.
"ORDINARY COURSE OF BUSINESS" means an action taken by a
Person that is consistent with the past practices of such Person and is taken in
the ordinary course of the normal day-to-day operations of such Person.
"PERMITTED ENCUMBRANCES" means such of the following as to
which no enforcement, collection, execution, levy or foreclosure proceeding
shall have been commenced: (a) liens for taxes, assessments and governmental
charges or levies that are not yet due and payable or that are being contested
in good faith in proper proceedings and with respect to which adequate reserves
or other appropriate provisions are being maintained to the extent required by
GAAP; (b) Encumbrances imposed by law, such as materialmen's, mechanics',
carriers', workmen's and repairmen's liens and other similar liens arising in
the Ordinary Course of Business securing obligations that (i) are not overdue
for a period of more than 30 days and (ii) are not in excess of $15,000 in the
case of a single property or $250,000 in the aggregate at any time; (c) pledges
or deposits made in the Ordinary Course of Business to secure obligations
5
under workers' compensation laws or similar legislation or to secure public or
statutory obligations; and (d) minor survey exceptions, reciprocal easement
agreements and other customary encumbrances on title to real property that (i)
were not incurred in connection with any Indebtedness and (ii) do not,
individually or in the aggregate, materially adversely affect the value or use
of such property , or interfere with the ordinary conduct of business at such
property, for its current and anticipated purposes.
"PERSON" means any individual, partnership, firm, corporation,
association, trust, unincorporated organization or other entity, as well as any
syndicate or group that would be deemed to be a person under Section 13(d)(3) of
the Exchange Act.
"PURCHASE PRICE BANK ACCOUNT" means a bank account in the
United States to be designated by the Seller in a written notice to the
Purchaser at least five Business Days before the Closing.
"REGULATIONS" means the Treasury Regulations (including
Temporary Regulations) promulgated by the United States Department of Treasury
with respect to the Code or other federal tax statutes.
"SEC" means the United States Securities and Exchange
Commission.
"SELLER'S ACCOUNTANTS" means KPMG, independent accountants of
the Seller.
"SOFTWARE" means (a) computer programs, including any and all
implementations of algorithms, models and methodologies, whether in source code
or object code form, (b) databases and data compilations, and (c) documentation,
including flow charts, specifications, comments, user manuals and training
materials, relating to any of the foregoing.
"SRO" means a Self Regulatory Organization registered under
the Exchange Act, including the NYSE and the NASD.
"TAX" or "TAXES" means any and all taxes, fees, levies or
other assessments, duties, tariffs, imposts, and other charges of any kind
(together with any and all interest, penalties, additions to tax and additional
amounts imposed with respect thereto) imposed by any law, contractual agreement
or otherwise, including: taxes or other charges on or with respect to income,
franchises, windfall or other profits, gross receipts, real or personal
property, sales, use, service use, capital stock, payroll, employment, social
security, workers' compensation, unemployment compensation, occupation,
severance, or net worth; taxes or other charges in the nature of excise,
withholding, estimated, ad valorem, stamp, transfer, recording, escheat, value
added, environmental, or gains taxes; license, registration and documentation
fees; and customs duties, tariffs, and similar charges, and any liability in
respect of such amounts arising as a result of being a member of any affiliated,
consolidated, combined, unitary or similar group, as a successor to another
person or by Contract.
"TAX RETURN" shall mean any report, return, document,
declaration, information, return or filing (including any related or supporting
information and any amendments to any of the foregoing) filed or required to be
filed with respect to Taxes.
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"TERRITORY" means the United States, Canada, Mexico, the
Caribbean and the United States possessions, protectorates and territories.
"THIRD PARTY" means any third Person other than an Affiliate.
"TRADEMARK" means trademarks, service marks, trade dress,
logos, trade names, corporate names and other source identifiers, registrations,
renewals and applications for registration thereof, and the goodwill of the
business symbolized thereby in the Territory.
"U.S. GAAP" means United States generally accepted accounting
principles and practices as in effect from time to time and applied consistently
throughout the periods involved.
SECTION 1.02. DEFINITIONS. The following terms have the
meanings set forth in the Sections set forth below:
Definition Location
---------- --------
"ACQUISITION PROPOSALS"......................... 5.10
"APPRAISER"..................................... 7.06(g)
"ASSETS"........................................ 3.18
"CLAIM"......................................... 9.03(a)
"CLEARING AGREEMENT AMENDMENT".................. 5.11
"CLOSING"....................................... 2.03
"CLOSING BALANCE SHEET"......................... 2.06(a)
"CLOSING DATE".................................. 2.03
"COMMUNICATIONS"................................ 7.03(b)
"COMPANY"....................................... Recitals
"COMPANY BENEFIT PLANS"......................... 3.19(a)
"COMPANY FINANCIAL STATEMENTS................... 3.08(b)
"CONTEST"....................................... 7.03(b)
"CUSTOMER"...................................... 5.09(c)
"DAMAGES"....................................... 9.02(a)
"DEDUCTIBLE AMOUNT"............................. 9.02(a)
"ERISA"......................................... 3.19(a)
"FINANCIAL STATEMENTS".......................... 3.08(a)
"HOLDINGS"...................................... Recitals
"INAUTIX AGREEMENT"............................. 5.11
"INDEMNIFICATION ITEM".......................... 7.03(a)
"INDEMNITEE".................................... 9.03(a)
"INDEMNITOR".................................... 9.03(a)
"INDEPENDENT ACCOUNTING FIRM"................... 2.06(b)
"INTENDED CHARACTERIZATION"..................... 7.07(a)
"IPO ALLOCATION AGREEMENT"...................... 5.11
"LEASE"......................................... 3.16(a)
"LLC"........................................... Recitals
"LLC CONVERSION"................................ Recitals
"LLC INTERESTS"................................. Recitals
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Definition Location
---------- --------
"LOGO DESIGN"................................... 5.07(c)
"MATERIAL CONTRACTS"............................ 3.15(a)
"OSFI".......................................... 4.03
"PROCEEDING" ................................... 7.03(b)
"PROPRIETARY NAMES AND MARKS"................... 5.07(e)
"PURCHASE PRICE"................................ 2.02
"PURCHASER"..................................... Preamble
"REGISTERED REPRESENTATIVES".................... 3.13(b)
"RELEVANT LIABILITIES".......................... 7.06(f)
"RESEARCH PRODUCTS AGREEMENT AMENDMENT"......... 5.11
"RESTRICTED BUSINESS"........................... 5.09(a)
"RESTRICTED PERIOD"............................. 5.09(a)
"RETAINED DOMAIN NAMES"......................... 5.07(f)
"RETAINED NAMES AND MARKS"...................... 5.07(a)
"SELLER"........................................ Preamble
"SELLER GROUP".................................. 3.20(d)
"SHARES"........................................ Recitals
"TEMPORARY LICENSE AGREEMENT"................... 5.07(a)
"TITLE IV PLAN"................................. 3.19(a)
"TRADEMARK AND SERVICE XXXX LICENSE AGREEMENT".. 5.07(e)
"TRANSITION SERVICES AGREEMENT"................. 5.11
"URLS".......................................... 5.07(f)
"WARN".......................................... 3.19(c)
ARTICLE II
PURCHASE AND SALE
SECTION 2.01. PURCHASE AND SALE OF THE LLC INTERESTS. Upon the
terms and subject to the conditions of this Agreement, at the Closing, the
Seller will cause Holdings (which is treated as a division of Xxxxxxxxx, Lufkin
& Xxxxxxxx Securities Corporation for tax purposes) to sell to the Purchaser,
and the Purchaser shall purchase from the Seller or its Affiliate, the LLC
Interests.
SECTION 2.02. PURCHASE PRICE. The purchase price for the LLC
Interests and the assets set forth in Section 2.02 of the Disclosure Schedule
shall be $520,000,000 (the "PURCHASE PRICE"), subject to the adjustment set
forth in Section 2.06.
SECTION 2.03. CLOSING. Upon the terms and subject to the
conditions of this Agreement, the sale and purchase of the LLC Interests
contemplated by this Agreement shall take place at a closing (the "CLOSING") to
be held at the offices of Shearman & Sterling, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx at 10:00 A.M. New York time on the first Business Day of the month that
is at least three Business Days following the satisfaction or waiver of all
conditions to the obligations of the parties set forth in Article VIII, or at
such other
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place or at such other time or on such other date as the Seller and
the Purchaser may mutually agree upon in writing (the day on which the Closing
takes place being the "CLOSING DATE").
SECTION 2.04. CLOSING DELIVERIES BY THE SELLER. At the
Closing, the Seller shall deliver or cause to be delivered to the Purchaser:
(a) evidence of the registration of the sale of the LLC
Interests;
(b) a receipt for the Purchase Price; and
(c) the certificates, opinion and other documents required to
be delivered pursuant to Section 8.02.
SECTION 2.05. CLOSING DELIVERIES BY THE PURCHASER. At the
Closing, the Purchaser shall deliver to the Seller:
(a) the Purchase Price by wire transfer in immediately
available funds to the Purchase Price Bank Account; and
(b) the certificates, opinion and other documents required to
be delivered pursuant to Section 8.01.
SECTION 2.06. ADJUSTMENT OF PURCHASE PRICE. The Purchase Price
shall be subject to adjustment after the Closing as specified in this Section
2.06:
(a) CLOSING BALANCE SHEET. As promptly as practicable, but in
any event within 30 days following the Closing, the Company shall deliver to the
Seller a balance sheet (the "CLOSING BALANCE SHEET") with respect to the Company
as of 11:59 p.m. on the day immediately preceding the Closing Date, together
with a certificate of the Company certifying that the Closing Balance Sheet has
been prepared in accordance with U.S. GAAP and in a manner consistent with the
preparation of the balance sheet of the Company dated as of September 30, 2001,
a copy of which is attached hereto as Exhibit 2.06(a), as modified in the manner
set forth on Section 2.06(a) of the Disclosure Schedule; PROVIDED that the
assets set forth in Section 2.02 of the Disclosure Schedule will not be
reflected on the Closing Balance Sheet.
(b) DISPUTES. The Seller may dispute any amounts reflected on
the Closing Balance Sheet; PROVIDED, HOWEVER, that the Seller shall have
notified the Purchaser in writing of each disputed item, specifying the amount
thereof in dispute and setting forth, in reasonable detail, the basis for such
dispute, within 20 Business Days of the Company's delivery of the Closing
Balance Sheet to the Seller. With respect to any portions of the Closing Balance
Sheet that are not in dispute, a purchase price adjustment shall be made in
accordance with Section 2.06(c). In the event of such a dispute, the Seller and
the Purchaser shall attempt to reconcile their differences, and any resolution
by them as to any disputed amounts shall be final, binding and conclusive on the
Seller and the Purchaser. If the Seller and the Purchaser are unable to reach a
resolution with such effect within 20 Business Days after receipt by the
Purchaser of the Seller's written notice of dispute, the Seller and the
Purchaser shall submit the items remaining in dispute for resolution to an
independent accounting firm of international reputation mutually acceptable to
the Purchaser and the Seller or, if no such firm is agreed upon, Ernst & Young
(the
9
"INDEPENDENT ACCOUNTING FIRM"), which shall, within thirty Business Days after
such submission, determine and report to the Purchaser and the Seller upon such
remaining disputed items, and such report shall be final, binding and conclusive
on the Seller and the Purchaser. The fees and disbursements of the Independent
Accounting Firm shall be allocated between the Seller and the Purchaser in the
same proportion that the aggregate amount of such remaining disputed items so
submitted to the Independent Accounting Firm that are unsuccessfully disputed by
each such party (as finally determined by the Independent Accounting Firm) bears
to the total amount of such remaining disputed items so submitted. In acting
under this Agreement, the Independent Accounting Firm shall be entitled to the
privileges and immunities of arbitrators.
(c) PURCHASE PRICE ADJUSTMENT. The Closing Balance Sheet shall
be deemed final for the purposes of this Section 2.06 upon the earliest of (i)
the failure of the Seller to notify the Purchaser of a dispute within 20
Business Days of the Company's delivery of the Closing Balance Sheet to the
Seller, (ii) the resolution of all disputes, pursuant to Section 2.06(b), by the
Purchaser and the Seller and (iii) the resolution of all disputes, pursuant to
Section 2.06(b), by the Independent Accounting Firm. Within three Business Days
of the Closing Balance Sheet being deemed final, a Purchase Price adjustment
shall be made as follows:
(i) in the event that the Equity Value as reflected on the
Closing Balance Sheet is less than $10,200,000, then the Purchase Price
shall be adjusted downward in an amount equal to such deficiency, and
the Seller shall, within three Business Days of such determination, pay
the amount of such deficiency to the Purchaser by wire transfer in
immediately available funds to an account designated by the Purchaser;
and
(ii) in the event that the Equity Value reflected on the
Closing Balance Sheet exceeds $10,200,000, then the Purchase Price
shall be adjusted upward in an amount equal to such excess, and the
Purchaser shall, within three Business Days of such determination, pay
the amount of such excess to the Seller by wire transfer in immediately
available funds to an account designated by the Seller.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE SELLER
As an inducement to the Purchaser to enter into this
Agreement, the Seller hereby represents and warrants to the Purchaser as
follows:
SECTION 3.01. ORGANIZATION, AUTHORITY AND QUALIFICATION OF THE
SELLER. The Seller is a corporation duly organized and validly existing under
the laws of the State of Delaware and has all necessary power and authority to
enter into this Agreement, to carry out its obligations hereunder and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by the Seller, the performance by the Seller of its obligations
hereunder and the consummation by the Seller of the transactions contemplated
hereby have been duly authorized by all requisite action on the part of the
Seller. This Agreement has been duly executed and delivered by the Seller, and
(assuming due authorization, execution and
10
delivery by the Purchaser) this Agreement constitutes, a legal, valid and
binding obligation of the Seller enforceable against the Seller in accordance
with its terms.
SECTION 3.02. ORGANIZATION, AUTHORITY AND QUALIFICATION OF THE
COMPANY. (a) As of the date hereof, the Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
The Company has all necessary power and authority to own, operate or lease the
properties and assets now owned, operated or leased by it and to carry on its
business as it has been and is currently conducted. Set forth in Section 3.02 of
the Disclosure Schedule is a true and complete list of all jurisdictions in
which the Company is duly licensed or qualified to do business. The Company is
duly licensed or qualified to do business and is in good standing in each
jurisdiction in which the properties owned or leased by it or the operation of
its business makes such licensing or qualification necessary other than in such
jurisdictions where the failure to be so qualified or licensed would not,
individually or in the aggregate, have a Material Adverse Effect. All corporate
actions taken by the Company have been duly authorized, and the Company has not
taken any action that in any respect conflicts with, constitutes a default under
or results in a violation of any provision of its certificate of incorporation
or by-laws. True and correct copies of the certificate of incorporation and
by-laws of the Company, each as in effect on the date hereof, have been
delivered by the Seller to the Purchaser.
(b) As of the Closing Date, (i) the Company shall be a limited
liability company duly formed, validly existing and in good standing under the
laws of the State of Delaware and shall have all necessary power and authority
to own, operate or lease the properties and assets owned, operated or leased by
it and to carry on its business as it has been and is then conducted, (ii) all
corporate actions taken by the Company shall have been duly authorized, and the
Company shall not have taken any action that in any respect conflicts with,
constitutes a default under or results in a violation of any provision of its
organizational documents, and (iii) true and correct copies of the
organizational documents of the Company, as in effect on the Closing Date, shall
have been delivered by the Seller to the Purchaser.
SECTION 3.03. CAPITAL STOCK OF THE COMPANY; OWNERSHIP OF THE
SHARES AND THE LLC INTERESTS. (a) As of the date hereof, the authorized capital
stock of the Company consists of 1,000 Shares. As of the date hereof, 1,000
Shares are issued and outstanding, all of which are validly issued, fully paid
and nonassessable. None of the Shares was issued in violation of any preemptive
rights or any Legal Requirement. There are no options, warrants, convertible
securities or other rights, agreements, arrangements or commitments of any
character relating to the capital stock of the Company or obligating the Seller
or the Company to issue or sell any shares of capital stock of, or any other
interest in, the Company. There are no outstanding contractual obligations of
the Company to repurchase, redeem or otherwise acquire any Shares or to provide
funds to, or make any investment (in the form of a loan, capital contribution or
otherwise) in, any other Person. As of the date hereof, the Shares constitute
all the issued and outstanding capital stock of the Company and are owned of
record and beneficially solely by Holdings free and clear of all Encumbrances.
There are no voting trusts, stockholder agreements, proxies or other agreements
or understandings in effect with respect to the voting or transfer of any of the
Shares.
11
(b) As of the Closing, (i) all of the LLC Interests will be
owned beneficially and of record by the Seller or one of its Affiliates, free
and clear of all Encumbrances, (ii) none of the LLC Interests will be issued in
violation of any Legal Requirement, (iii) there will be no options, warrants,
convertible securities or other rights, agreements, arrangements or commitments
of any character relating to the LLC Interests or obligating the Seller or any
of its Affiliates, including the Company to issue or sell any LLC Interests,
(iv) there will be no outstanding contractual obligations of the Company to
repurchase, redeem or otherwise acquire any LLC Interests or to provide funds
to, or make any investment (in the form of a loan, capital contribution or
otherwise) in, any other Person, and (v) there will be no voting trusts, proxies
or other agreements or understandings in effect with respect to the voting or
transfer of any of the LLC Interests. Upon consummation of the transactions
contemplated by this Agreement and registration of the LLC Interests in the name
of the Purchaser in the records of the Company, the Purchaser will own all of
the LLC Interests, representing 100% of the interests in the Company, free and
clear of all Encumbrances (other than those created by the Purchaser or any of
its Affiliates).
SECTION 3.04. NO INTERESTS. There are no corporations,
partnerships, joint ventures, associations or other entities in which the
Company owns, of record or beneficially, any direct or indirect equity or other
interest or any right (contingent or otherwise) to acquire the same. The Company
is not a member of (nor is any part of its business conducted through) any
partnership. The Company is not a participant in any joint venture or similar
arrangement.
SECTION 3.05. CORPORATE BOOKS AND RECORDS. (a) The books of
account, minute books, stock record books and tax records of the Company, all of
which have been made available to the Purchaser, are complete and correct and
have been maintained in accordance with sound business practices. The minute
books of the Company contain accurate records of all meetings and accurately
reflect all other actions taken by the stockholders or members, Board of
Directors of the Company (or equivalent body) and all committees of the Board of
Directors of the Company. At the Closing, all of such books and records will be
in the possession of the Company.
(b) The Company has devised and maintained systems of internal
accounting controls sufficient to provide reasonable assurances, that (i) all
material transactions are executed in accordance with management's general or
specific authorization; and (ii) all material transactions are recorded as
necessary to permit the preparation of financial statements in conformity with
U.S. GAAP consistently applied.
SECTION 3.06. NO CONFLICT. (a) Assuming that all consents,
approvals, authorizations and other actions described in Section 3.07 have been
obtained and all filings and notifications listed in Section 3.07 of the
Disclosure Schedule have been made, the execution, delivery and performance of
this Agreement by the Seller do not and will not:
(i) violate, conflict with or result in the breach of any
provision of the certificate of incorporation or by-laws (or similar
organizational documents) of the Seller or the Company;
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(ii) except as would not have a Material Adverse Effect,
conflict with, result in a violation of, or give any Governmental
Authority or other Person the right to exercise any remedy or obtain
any relief under, any Legal Requirement or Order to which the Seller,
the Company or any of the assets owned or used by the Company in
connection with its business, are subject;
(iii) except as would not have a Material Adverse Effect,
conflict with or result in a violation of any of the terms or
requirements of, or give any Governmental Authority the right to
revoke, withdraw, suspend, cancel, terminate, or modify, any
Governmental Authorization that is held by the Company or that
otherwise relates to the business of, or any of the assets owned or
used by, the Company;
(iv) except as would not have a Material Adverse Effect,
conflict with, result in any breach of, constitute a default (or event
which with the giving of notice or lapse of time, or both, would become
a default) under, require any consent under, or give to others any
rights of termination, amendment, acceleration, suspension, revocation
or cancellation of, or result in the creation of any Encumbrance on any
of the assets or properties of the Seller or the Company pursuant to,
any note, bond, mortgage or indenture, contract, agreement, lease,
sublease, license, permit, franchise or other instrument or arrangement
to which the Seller or the Company is a party or by which any of the
Shares or the LLC Interests or any of such assets or properties is
bound or affected; or
(v) result in the creation of any Encumbrance on any of the
Shares or the LLC Interests.
(b) Except as set forth in Section 3.06(b) of the Disclosure
Schedule, the LLC Conversion will not require any consents, approvals,
authorizations or notifications, or trigger any default or other rights or
obligations, under any Material Contract.
SECTION 3.07. CONSENTS AND APPROVALS. (a) The execution,
delivery and performance of this Agreement by the Seller do not and will not
require any consent, approval, authorization or other order of, action by,
filing with or notification to any Governmental Authority or any other Person,
except (i) as described in Section 3.07 of the Disclosure Schedule, (ii) the
notification requirements of the HSR Act, (iii) the notification requirement of
Rule 1017 of the NASD, (iv) compliance with the notification requirements of
NYSE Rule 312 and any further requests or directions received from the NYSE as a
result of such notification, (v) where failure to obtain such consent, approval,
authorization or action, or to make such filing or notification, would not have
a Material Adverse Effect or (vi) as may be necessary as a result of any facts
or circumstances relating solely to the Purchaser.
(b) Except as set forth in Section 3.07(b) of the Disclosure
Schedule, the LLC Conversion does not and will not require any consent,
approval, authorization or other Order of, action by, filing with or
notification of any Governmental Authority.
SECTION 3.08. FINANCIAL INFORMATION; REPORTS. (a) The Seller
has delivered to the Purchaser true and correct copies of its (i) audited
consolidated balance sheets as of
13
December 31, 1999 and 2000 and the related audited consolidated statement of
income and cash flows, accompanied by the reports thereon of the Seller's
Accountants and (ii) an unaudited consolidated balance sheet as of September 30,
2001, and the related consolidated statements of income and cash flows (all such
financial statements being the "FINANCIAL STATEMENTS"). The Financial Statements
present fairly in all material respects the Seller's consolidated financial
condition and results of operations as of such dates or for the periods covered
thereby and have been prepared in accordance with U.S. GAAP.
(b) The Seller has delivered to the Purchaser true and correct
copies of the balance sheet of the Company as of September 30, 2001 and the
related statement of income (such financial statements being the "COMPANY
FINANCIAL STATEMENTS"). The Company Financial Statements present fairly in all
material respects the Company's financial condition and results of operations as
of such date and for such period and have been prepared in accordance with U.S.
GAAP.
(c) The Seller has made available to Purchaser true and
complete copies of the following documents since January 1, 1999 to the date
hereof with respect to the Company: (i) Form BD and all amendments; (ii) all
material state filings not included as part of clause (i); (iii) all material
correspondence to or from the SEC, any SRO, and any state regulatory officials
or agencies; (iv) all Rule 17a-5 reports; (v) all Forms U-4 and U-5; (vi) the
results of any regulatory examinations; (vii) any operating restriction imposed
by any SRO; and (viii) all material internal and external risk assessment
reports.
SECTION 3.09. NO UNDISCLOSED LIABILITIES. There are no
Liabilities of the Company, other than Liabilities (a) reflected or reserved
against on the Company Financial Statements, (b) disclosed in Section 3.09 of
the Disclosure Schedule, (c) incurred since September 30, 2001 in the Ordinary
Course of Business of the Company or (d) which do not, individually or in the
aggregate, have a Material Adverse Effect.
SECTION 3.10. CONDUCT IN THE ORDINARY COURSE; ABSENCE OF
CERTAIN CHANGES, EVENTS AND CONDITIONS. Except as set forth in Section 3.10 of
the Disclosure Schedule, since September 30, 2001, the business of the Company
has been conducted in the Ordinary Course of Business. As amplification and not
limitation of the foregoing, except as contemplated by this Agreement or as set
forth in Section 3.10 of the Disclosure Schedule, since September 30, 2001 (or
such other date as set forth below), the Company has not:
(i) except in the Ordinary Course of Business, permitted or
allowed any of the assets or properties (whether tangible or
intangible) of the Company to be sold, leased, subleased, licensed or
subjected to any Encumbrance, other than Permitted Encumbrances and
Encumbrances that will be released at or prior to the Closing;
(ii) except in the Ordinary Course of Business, discharged or
otherwise obtained the release of any Encumbrance or paid or otherwise
discharged any Liability, other than current liabilities reflected on
the Company Financial Statements and current liabilities incurred in
the Ordinary Course of Business since September 30, 2001;
14
(iii) made any change in the Company's authorized and issued
capital stock, purchased, redeemed, retired or otherwise acquired any
of the capital stock or declared, made or paid any dividends or
distributions (whether in cash, securities or other property) to the
holders of capital stock of the Company or otherwise;
(iv) merged with, entered into a consolidation with or
acquired an interest in any Person or acquired a substantial portion of
the assets or business of any Person or any division or line of
business thereof, or otherwise acquired any assets other than in the
Ordinary Course of Business;
(v) issued or sold any capital stock, notes, bonds or other
securities, or any option, warrant or other right to acquire the same,
of, or any other interest in, the Company other than in the Ordinary
Course of Business;
(vi) since June 30, 2001, entered into, modified or terminated
any agreement, arrangement or transaction with any of its directors,
officers or employees (or with any relative, beneficiary or spouse
living with such Person or Affiliate of such Person) or, other than in
the Ordinary Course of Business, entered into, modified or terminated
any agreement, arrangement or transaction with any of its Affiliates;
(vii) made any material change in any method of accounting or
accounting practice or policy used by the Company, other than such
changes required by U.S. GAAP;
(viii) made any change in (A) any margin practice or policy,
(B) any sales commission practice or policy, (C) any pricing,
investment, inventory, credit or allowance, in each case other than in
the Ordinary Course of Business, (D) any method of calculating any bad
debt, contingency or other reserve of the Company for financial
reporting or tax purposes or (E) the process of approving and opening
new customer accounts, including establishing credit parameters;
(ix) allowed any material Company Intellectual Property to
lapse, fall into the public domain or become abandoned;
(x) other than intercompany Indebtedness that will be paid
prior to the Closing, incurred any Indebtedness, in excess of $500,000
individually or $2,500,000 in the aggregate or, from and after the date
of this Agreement, in excess of $500,000 individually or $2,500,000 in
the aggregate;
(xi) made any capital expenditure or commitment for any
capital expenditure in excess of $50,000 individually or $1,000,000 in
the aggregate or, from and after the date of this Agreement, in excess
of $50,000 individually or $1,000,000 in the aggregate;
(xii) (A) granted any increase, or announced any increase, in
the wages, salaries, compensation, bonuses, incentives, pension or
other benefits payable by the Company to any of its employees,
including any increase, acceleration or change pursuant to any Company
Benefit Plan or (B) established, increased, accelerated or promised to
increase any benefits under any Company Benefit Plan, in each case,
except
15
as required by any Legal Requirement or pursuant to any existing
employment contract or arrangement in the Ordinary Course of Business;
(xiii) amended, modified or consented to the termination of
any Material Contract or the Company's rights thereunder;
(xiv) suffered any damage to or destruction or loss of any
material asset or property of the Company, whether or not covered by
insurance;
(xv) cancelled or waived any claims or rights with a value to
the Company in excess of $100,000 individually or $500,000 in the
aggregate;
(xvi) opened an office or facility for the purpose of
conducting the business or operations of the Company or otherwise
binding upon the Company;
(xvii) vacated or abandoned any office or facility;
(xviii) suffered any Material Adverse Effect; or
(xix) agreed to take any of the actions specified in this
Section 3.10.
SECTION 3.11. LITIGATION. Except as set forth in Section 3.11
of the Disclosure Schedule, (i) as of the date of this Agreement, there are no
Actions (other than trademark oppositions or domain name disputes not material
to the Company) by or against the Company or affecting any of the Assets,
pending before any Governmental Authority or, to the knowledge of the Seller,
threatened to be brought by or before any Governmental Authority and (ii) as of
the Closing, there will not be any Actions by or against the Company or
affecting any of the Assets pending before any Governmental Authority or
threatened to be brought by or before any Governmental Authority that,
individually or in the aggregate, would have a Material Adverse Effect. None of
the matters disclosed in Section 3.11 of the Disclosure Schedule could
reasonably be expected to affect the legality, validity or enforceability of
this Agreement or the consummation of the transactions contemplated hereby.
Except as set forth in Section 3.11 of the Disclosure Schedule, none of the
Company nor any of the Assets is subject to any Governmental Order, nor, to the
knowledge of the Seller, are there any such Governmental Orders threatened to be
imposed by any Governmental Authority, that, individually or in the aggregate,
has a Material Adverse Effect.
SECTION 3.12. CUSTOMER ACCOUNTS. Each extension of credit by
the Company to a customer is in material compliance with Regulation T of the
Federal Reserve Board or any similar regulation of any SRO and is secured by an
equity amount no less than the amounts permitted by the rules and regulations of
any SRO. Substantially all customer margin accounts are evidenced by a customer
account agreement substantially in the form attached to Section 3.12(b) of the
Disclosure Schedule, subject to a system of customer credit and risk control
and, to the knowledge of the Company, present no unreasonable risk of loss. To
the knowledge of the Company, no employee of the Company has recommended trading
strategies to customers, including day trading techniques or individual
recommendations. As of the date of this Agreement, there are no pending material
complaints from customers except those of which Seller has furnished to
Purchaser a true and correct copy or, if oral, a written summary.
16
SECTION 3.13. REGISTRATIONS. (a) The Company is not subject to
registration under the Investment Company Act of 1940, as amended, the
Investment Advisors Act of 1940, as amended, or any similar Legal Requirement of
any Governmental Authority. Set forth in Section 3.13(a) of the Disclosure
Schedule is a complete and accurate list of all jurisdictions in which the
Company is registered as a broker-dealer, investment advisor, insurance agent or
exchange member. In those circumstances in which the Company is required to be
licensed or registered as a broker-dealer, investment adviser or insurance
agency with any Governmental Authority, it is and at all times has been duly
licensed or registered as such and such registrations are in full force and
effect. All such registrations as currently filed, and all periodic reports
required to be filed with respect thereto, are accurate and complete in all
material respects.
(b) Except with respect to employees in training or employees
who have been employed by the Company for fewer than 90 days, all of the
Company's officers and employees who are required to be licensed or registered
to conduct the business of the Company are and at all required times have been
duly licensed or registered in each state and with each Governmental Authority
in which or 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 proceeding that
would, or would be reasonably likely to, prevent, restrict, unduly delay or
otherwise limit the transfer from the Company to Purchaser, or the re-licensing
or re-registration by Purchaser, of the licenses or registrations of such
Registered Representatives in any state in which such Registered Representatives
are licensed or registered.
SECTION 3.14. COMPLIANCE WITH LEGAL REQUIREMENTS. (A) Each of
the Company and, to the Seller's knowledge, officers and employees of the
Company (i) in the conduct of business is in material compliance with all
material Legal Requirements (including the Xxxxx-Xxxxx-Xxxxxx Financial Services
Modernization Act of 1999) or Orders applicable to the Company or to the
employees conducting such business and with the applicable rules of all
Governmental Authorities and (ii) has and at all times has had all Governmental
Authorizations, and has made all filings, applications and registrations with,
all Governmental Authorities that are required in order to permit, in all
material respects, the Company to own and operate its business as presently
conducted. All such Governmental Authorizations are in full force and effect,
and, to the knowledge of the Company, no suspension or cancellation of any of
them is threatened or, as of the date of this Agreement, reasonably likely; and
all such filings, applications and registrations are current. The Company has
complied in all material respects with all privacy policies and standards
established by the Company for the use and disclosure of personal data provided
by its customers.
(b) Section 3.14(b) of the Disclosure Schedule sets forth all
Governmental Authorities with which the Company is required to be registered as
a broker-dealer as of the date hereof. The Company is not required to be
registered in or obtain a license or similar authorization from any other
jurisdiction. The Company has not exceeded in any material respect the business
activities enumerated in any membership agreements or other limitations imposed
in connection with its registrations, forms (including Form BDs) and reports
filed with any Governmental Authority. The Company has filed all reports,
registrations and statements, together with any amendments required to be made
with respect thereto, that it has been required to file since 1995 with any
Governmental Authority. All other reports and statements required to
17
be filed by the Company have been filed including any report or statement
required to be filed pursuant to the laws, rules or regulations of the United
States, any state or any Governmental Authority, and the Company has paid all
fees and assessments due and payable in connection therewith. The information
contained in such registrations, forms and reports was true and complete in all
material respects as of the date of the filing thereof. Each such registration
is in full force and effect on the date hereof. Except for normal examinations
conducted by a SRO in the regular course of the Company's business, no SRO has
initiated any proceeding or investigation into the business or operations of the
Company. There is no unresolved violation, criticism or exception by any SRO
with respect to any report or statement relating to any examinations of the
Company.
(c) The Company's activities do not require it to be
registered as an exchange or transfer agent, a clearing agency, a municipal
securities dealer, a governmental securities dealer, a futures commission
merchant, a commodity trading adviser or a commodity pool operator.
SECTION 3.15. MATERIAL CONTRACTS. (A) Except for Contracts
entered into between the Company and its customers in the Ordinary Course of
Business, Section 3.15(a) of the Disclosure Schedule contains a complete and
accurate list, and Seller has made available to Purchaser, prior to the date of
this Agreement, true and complete copies, or, in the event of oral Contracts,
complete and accurate summaries (such contracts and agreements being "MATERIAL
CONTRACTS"), of:
(i) All contracts and agreements that involve payment by or to
the Company of an amount or value in excess of $50,000;
(ii) all Contracts relating to indebtedness for borrowed money
of the Company to a third party;
(iii) all Contracts with any Governmental Authority to which
the Company is a party;
(iv) all Contracts that limit or purport to limit the ability
of the Company to compete in any line of business or with any Person or
in any geographic area or during any period of time;
(v) all Contracts between or among the Company and the Seller
or any Affiliate of the Seller contemplating an exchange of value in
excess of $50,000;
(vi) all material broker, distributor, dealer, agency, sales
promotion, market research, marketing consulting and advertising
Contracts to which the Company is a party;
(vii) all leases and subleases in respect of Leased Real
Property;
(viii) all Contracts entered into by the Company relating to
the acquisition or divestiture of a business that contain ongoing
indemnification liabilities;
18
(ix) all Contracts for capital expenditures by the Company in
excess of $50,000;
(x) all Contracts for clearing or sub-clearing services to
which the Company is a party;
(xi) all material Company IP Licenses;
(xii) all advertising Contracts providing for aggregate
payments exceeding $100,000 to which the Company is a party; and
(xiii) all material Contracts in respect of or with affinity
partnerships and registered investment advisors to which the Company is
a party.
(b) Each Material Contract: (i) is valid and binding on the
Company, and, to the knowledge of the Seller, the counterparties thereto, and is
in full force and effect and (ii) upon consummation of the transactions
contemplated by this Agreement, except to the extent that any consents set forth
in Section 3.07 of the Disclosure Schedule are not obtained, shall continue in
full force and effect without penalty or other adverse consequence. The Company
is not in breach of, or default under, any Material Contract nor, to the
knowledge of the Company, is any other party in breach of, or default under, any
Material Contract.
SECTION 3.16. REAL AND TANGIBLE PROPERTY. (a) Section 3.16(a)
of the Disclosure Schedule lists all of the Leased Real Property. The Seller has
delivered to the Purchaser true and complete copies of all leases and subleases
relating to the Leased Real Property (each, a "LEASE" and collectively, the
"LEASES") and any and all ancillary documents pertaining thereto. The Company
does not own any real property.
(b) Each material parcel of Leased Real Property is leased
free and clear of all Encumbrances other than Permitted Encumbrances and is
neither subject to any governmental decree or order to be sold nor is being
condemned, expropriated or otherwise taken by any public authority with or
without payment of compensation therefor, nor, to the knowledge of the Seller,
has any such condemnation, expropriation or taking been proposed.
(c) Each Lease grants to the tenant thereunder the exclusive
right to use and occupy the premises demised thereunder, and, except as set
forth in Section 3.16(c) of the Disclosure Schedule, the Seller has not entered
into any lease or sublease granting any Person the right to occupy or use (or
the option to exercise the right to occupy or use) all or any portion of the
Leased Real Property.
SECTION 3.17. INTELLECTUAL PROPERTY. (a) Section 3.17(a) of
the Disclosure Schedule sets forth a true and complete list of all of the
following items that are owned or used by the Company: (i) trademark
registrations and applications owned by the Company and trademark registrations
and applications in the Territory licensed to the Company by DLJ Long Term
Investment Corp.; (ii) material internet domain names; (iii) common law
trademarks material to the Company's business; and (iv) material Software. No
royalties, honoraria or other fees are payable to any Third Parties (other than
Governmental Authorities and Internet
19
registrars) or Affiliates of the Company for right to use any Company
Intellectual Property except pursuant to the Company IP Licenses.
(b) To the knowledge of the Seller, the conduct of the
Company's business as currently conducted and the Licensed Software (as defined
in the iNautix Agreement) do not infringe or misappropriate or otherwise violate
the Intellectual Property of any Third Party in the Territory. Except as
disclosed in Section 3.17(b) of the Disclosure Schedule, no claim has been
asserted to the Seller or the Company in writing in the two-year period
immediately preceding the date hereof that the conduct of the Company's business
infringes, misappropriates or otherwise violates the Intellectual Property of
any third party in the Territory. With respect to each item of Company
Intellectual Property owned by the Company, the Company is the owner of the
entire right, title and interest in and to such Intellectual Property, free and
clear of Encumbrances and is entitled to use such Intellectual Property in the
continued operation of its business. With respect to each item of Company
Intellectual Property licensed to the Company, the Company has the right to use
such Intellectual Property in the continued operation of its business, free and
clear of Encumbrances, in accordance with the terms of the Company IP License
governing such Intellectual Property. The Company Intellectual Property owned by
the Company and, to the knowledge of the Seller, the Company Intellectual
Property licensed to the Company, is valid and enforceable, and has not been
adjudged invalid or unenforceable in whole or part in the Territory. All
registrations and applications for Company Intellectual Property that are owned
by Company are recorded in the name of its current owner in the Territory.
Except as disclosed in Section 3.17(b) of the Disclosure Schedule, there is no
pending or threatened litigation, opposition, interference or cancellation or
similar proceeding before any Governmental Authority involving the Company
Intellectual Property owned by the Company, and, to the knowledge of the Seller,
the Company Intellectual Property licensed to the Company, challenging the
ownership, use, validity or enforceability of such Company Intellectual
Property. To the knowledge of the Seller, no person is engaging in any activity
that infringes, misappropriates or otherwise violates the Company Intellectual
Property and no claim has been asserted by the Company to such effect.
(c) The Company takes reasonable measures to protect the
confidentiality of trade secrets. To the Seller's knowledge, no trade secret of
the Company has been disclosed or authorized to be disclosed to any third party
other than pursuant to a non-disclosure agreement that requires the other party
to maintain the secrecy of such trade secrets. To the Seller's knowledge, no
party to any non-disclosure agreement relating to the Company's trade secrets is
in breach or default thereof.
(d) Subject to the consents set forth in Section 3.07 of the
Disclosure Schedule and except as provided herein and in the Ancillary
Agreements, the consummation of the transactions contemplated in this Agreement
will not result in the loss, restriction or impairment, in any material respect,
of the Company's right to own or use any of the material Company Intellectual
Property, individually or in the aggregate, other than the Excluded Intellectual
Property.
(e) Except as set forth in Section 3.17(e) of the Disclosure
Schedule and except as provided herein and in the Ancillary Agreements, there
are no settlements, forebearances to xxx, consents, judgments, governmental, or
similar obligations which, or claims
20
by third parties to, in any material respect (a) restrict Company's rights to
use any Company Intellectual Property, (b) restrict Company's business in order
to accommodate a third party's intellectual property rights or (c) permit third
parties to use any Company Intellectual Property owned or exclusively licensed
to the Company.
(f) Except as would not have a Material Adverse Effect, the
Company Intellectual Property, together with the rights to be granted under the
Ancillary Agreements, constitutes all the Intellectual Property owned by or
licensed to the Company and used by the Company in the business of Company as
currently conducted.
(g) Following the consummation of the transactions, none of
the Seller, its Affiliates, or their respective employees, agents, directors and
consultants shall retain any interest in the Company Intellectual Property owned
by the Company, except as provided hereunder and in the Ancillary Agreements.
(h) To the Seller's knowledge, the Software included in
the Company Intellectual Property was either: (i) created by employees of the
Company as a 'work for hire'; (ii) all rights therein have been assigned to
the Company by the creator or proprietor thereof; or (iii) duly licensed to
the Company. To the Seller's knowledge, the Software included in the Company
Intellectual Property is free of viruses, worms, material bugs and errors. To
the Seller's knowledge, the documentation included such Software is adequate
for the operation and maintenance of such Software in the Ordinary Course of
Business.
SECTION 3.18. ASSETS. The Company owns, leases or has the
legal right to use all the properties and tangible assets and, as of the
Closing, except with respect to Leased Real Property which is the subject of
Section 5.12, will own, lease or have the legal right to use all the properties
and tangible assets used or intended to be used by the Company or otherwise
owned, leased or used by the Company and, with respect to contract rights,
except for the Excluded IP Licenses or as set forth in Section 3.07 or 3.18 of
the Disclosure Schedule, is a party to or enjoys (and as of the Closing, will be
a party to or enjoy) the right to the benefits of all Contracts, including
Contracts with Affiliates of the Seller, used or intended to be used by the
Company (all such properties, assets and contract rights being the "ASSETS").
Except with respect to the Excluded IP Licenses or Contracts set forth in
Section 3.18 to the Disclosure Schedule, the Assets constitute all the
properties, assets and rights forming a part of, used, held or intended to be
used in, and all such properties, assets and rights as are necessary in the
conduct of, the business of the Company in the United States as currently
conducted. At all times since September 30, 2001, the Company has caused the
Assets to be maintained in accordance with good business practice, and all the
Assets are in good operating condition and repair and are suitable for the
purposes for which they are used and intended.
SECTION 3.19. EMPLOYEE BENEFIT PLANS; LABOR MATTERS. (A)
Section 3.19 of the Disclosure Schedule sets forth a true and complete list of
each employee benefit plan (as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) and each material
employee benefit, bonus, deferred compensation, incentive compensation, medical,
dental, health, life insurance, pension, retirement, profit-sharing, thrift,
savings, employee stock ownership, stock bonus, stock purchase, restricted
stock, stock option or other equity related plan, program, policy, arrangement
and contract and each golden parachute,
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change in control, employment, consulting, severance, retention or other similar
plan, program, policy, arrangement and agreement maintained, contributed to or
sponsored by the Company, to which the Company is a party or with respect to
which the Company could incur liability under applicable Legal Requirements,
including without limitation, Sections 4069, 4212(c) or 4204 of ERISA
(collectively, the "COMPANY BENEFIT PLANS"). Except with respect to arrangements
or agreements the full cost of which will be borne by the Seller or its
Affiliates (other than the Company), the Seller has made available to the
Purchaser a true and complete copy, including all applicable amendments, of (i)
the two most recent annual reports (Forms 5500), including all schedules
thereto, (ii) each such Company Benefit Plan, (iii) each trust agreement and
insurance contract relating to each Company Benefit Plan, (iv) the most recent
summary plan description and summary of material modifications for each Company
Benefit Plan for which a summary plan description or a summary of material
modifications is required, (v) the most recent actuarial report or valuation, if
any, relating to a Company Benefit Plan subject to Title IV of ERISA ("TITLE IV
PLAN") and (vi) the most recent determination letter, if any, issued by the IRS
with respect to any Company Benefit Plan qualified under Section 401(a) of the
Code.
(b) With respect to the Company Benefit Plans, no event has
occurred and, to the knowledge of the Seller, there exists no condition or set
of circumstances, in connection with which the Company could be subject to any
liability under the terms of such Company Benefit Plans, ERISA, the Code or any
other applicable Legal Requirement which would have a Material Adverse Effect.
The Company does not have any actual or contingent liability under Title IV of
ERISA, except as would not have a Material Adverse Effect. No action, claim or
proceeding is pending or, to the knowledge of the Company, threatened with
respect to any Company Benefit Plan (other than claims for benefits in the
ordinary course).
(c) The Company is not a party to any collective bargaining
agreement or other labor union contract applicable to persons employed by the
Company and no collective bargaining agreement is being negotiated by the
Company. As of the date hereof, there is no labor dispute, strike, slowdown or
work stoppage against the Company pending or, to the knowledge of the Seller,
threatened which may interfere with the respective business activities of the
Company. To the knowledge of the Seller, none of the Company or any of its
representatives or employees, has committed any unfair labor practices in
connection with the operation of the respective businesses of the Company, and
there is no charge or complaint against the Company pending before the National
Labor Relations Board or any comparable state agency, except as would not have a
Material Adverse Effect. The Company is in compliance with all applicable laws
respecting employment and employment practices, terms and conditions of
employment, health and safety, and wages and hours, except as would not have a
Material Adverse Effect. The Company has not received written notice of any
investigation, charge or complaint pending before the Equal Employment
Opportunity Commission or any other federal or state government agency or court
or other tribunal regarding an unlawful employment practice, except as would not
have a Material Adverse Effect. The Company is and has been in material
compliance with all notice and other requirements under the Worker Adjustment
and Retraining Notification Act ("WARN") or similar state statute.
(d) Except with respect to arrangements or agreements the full
cost of which will be borne by the Seller or its Affiliates (other than the
Company), the Seller has made available to the Purchaser (i) copies of all
employment, retention and consulting agreements with
22
officers, key employees or consultants of the Company (or copies of forms of
agreements setting forth representative employment terms and conditions); (ii)
copies of all severance and termination agreements, programs and policies of the
Company with or relating to its employees, consultants or directors; and (iii)
copies of all plans, programs, agreements and other arrangements of the Company
with or relating to its employees, consultants or directors which contain change
in control provisions; and (iv) copies of the forms of invention assignment (or
work for hire) and confidentiality agreements, if any, signed by employees,
consultants and contractors of the Company.
(e) Each Company Benefit Plan that is intended to be qualified
under Section 401(a) of the Code has received a favorable determination letter
from the IRS and has complied with its terms and all material legal
requirements, and to the knowledge of Seller no circumstance exists that is
reasonably likely to result in the revocation or denial of any such favorable
determination letter.
(f) The Company does not contribute to a "multiemployer
plan," as defined in Section 3(37) of ERISA, nor has it contributed to such a
plan within the past five calendar years.
(g) Neither the execution and delivery of this Agreement nor
the consummation of the contemplated transactions, either alone or upon the
occurrence of any additional or further acts or events, will (i) result in any
payment (including, without limitation, severance, unemployment compensation,
golden parachute or otherwise) becoming due under any Company Benefit Plan or
otherwise from the Company or to any "rabbi trust" or similar trust, (ii)
increase any benefits otherwise payable under any Company Benefit Plan or (iii)
result in any acceleration of the time of payment, exercisability or vesting of
any benefit. No amounts payable under any Company Benefit Plan as a result of
the consummation of the transactions contemplated by this Agreement, either
alone or upon the occurrence of any additional or further acts or events, will
fail to be deductible for federal income tax purposes by virtue of Section 280G
of the Code.
(h) Neither the Company nor any of its ERISA Affiliate has
used the services or workers provided by third party contract labor suppliers,
temporary employees, "leased employees" (as that term is defined in Section
414(n) of the Code), or individuals who have provided services as independent
contractors to an extent that would reasonably be expected to result in the
disqualification of any of the Company Benefit Plans or the imposition of
penalties or excise taxes with respect to the plans by the IRS, the Department
of Labor, or the PBGC.
(i) No Company Benefit Plan provides benefits, including
without limitation death or medical benefits (whether or not insured), with
respect to current or former employees after retirement or other termination of
service (other than (i) coverage mandated by the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended, (ii) death benefits or retirement
benefits under any "employee pension plan," as that term is defined in section
3(2) of ERISA, (iii) benefits the full cost of which is borne by the current or
former employee (or his or her beneficiary) or (iv) deferred compensation
benefits accrued as liabilities on the books of the Company).
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SECTION 3.20. TAXES. Except as set forth in Section 3.20 of
the Disclosure Schedule:
(a) The Company has duly and timely filed (or there have been
duly and timely filed on its behalf) with the appropriate governmental
authorities all income Tax and all other material Tax Returns required to be
filed by it, and all such Tax Returns are true, correct and complete in all
material respects; all material Taxes for which the Company is or may be liable
(whether disputed or not and whether or not shown on any Tax Return) in respect
of periods (or portions thereof) ending on or before the Closing Date have been
timely paid, or will be timely paid, or have been provided for on the Company
Financial Statements in accordance with U.S. GAAP;
(b) There are no liens for Taxes upon any property or assets
of the Company, except for liens for Taxes not yet due and payable, and for
which Taxes adequate reserves have been provided on the Company Financial
Statements in accordance with U.S. GAAP;
(c) No power of attorney that is currently in force has been
granted with respect to any matters relating to Taxes which power of attorney
would be binding on the LLC after the Closing Date;
(d) As of the date hereof, the Company is an includible
corporation within the meaning of Section 1504(b) of the Code with respect to
the affiliated group of corporations of which Credit Suisse First Boston, Inc.
is the parent (the "SELLER GROUP") and will continue to be such an includible
corporation at all times through the LLC Conversion. For federal income Tax
purposes, all of the LLC Interests will be owned by Xxxxxxxxx, Xxxxxx & Xxxxxxxx
Securities Corporation (a member of the Seller Group) and the LLC will be
treated as a disregarded entity for all applicable income Tax purposes at all
times from the time of the LLC Conversion through the Closing. None of Holdings,
Seller, Company (prior to the LLC Conversion) or LLC (following the LLC
Conversion), or any of their respective Affiliates, will take any action (or
fail to take any action) which action (or failure to act) would cause the LLC to
be treated as other than a disregarded entity for any income Tax purposes;
(e) Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation, the
seller for Tax purposes, is a United States person within the meaning of Section
7701(a)(30) of the Code. No withholding of Tax will be required under Section
1445 of the Code with respect to the purchase of the LLC Interests pursuant to
this Agreement;
(f) The Company has duly and timely withheld, collected,
deposited and paid to the proper governmental authority all Taxes required to
have been withheld, collected, deposited or paid by it;
(g) The Company has not waived or requested to waive any
statute of limitations in respect of Taxes, nor has requested or agreed to any
extension of time with respect to a Tax assessment or deficiency, which waiver,
request or agreement would be binding on the LLC after the Closing; and
(h) Since November 1, 1999, the Company has not been a
distributing or controlled corporation in a transaction to which Section 355 of
the Code applied.
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SECTION 3.21. RELATIONSHIPS WITH RELATED PERSONS. Except as
set forth on Section 3.21 of the Disclosure Schedule, no officer or director of
the Seller or any Affiliate thereof has, or since January 1, 1999 has had, (a)
any interest in any property (whether real, personal, or mixed and whether
tangible or intangible), used in or pertaining to the Company's business or (b)
any direct or indirect financial interest in any transaction with the Company or
any competitor of the Company; PROVIDED, HOWEVER, that the ownership of
securities representing no more than five percent of the outstanding voting
power of any competitor and which are also listed on any national securities
exchange shall not be deemed to be a "financial interest" so long as the Person
owning such securities has no other connection or relationship with such
competitor.
SECTION 3.22. CERTAIN PAYMENTS. Neither the Company nor, to
the knowledge of the Company, any director, officer, agent, or employee of the
Company has, directly or indirectly, (a) made any contribution, gift, bribe,
rebate, payoff, influence payment, kickback, or other payment to any Person,
private or public, regardless of form, whether in money, property, or services
(i) to obtain favorable treatment in securing business, (ii) to pay for
favorable treatment for business secured or (iii) to obtain special concessions
or for special concessions already obtained, for or in respect of the Company or
any Affiliate, officer or director of the Company or any Affiliate thereof, in
each case in violation of any applicable Legal Requirement or (b) established or
maintained any fund or asset that has not been recorded in the books and records
of the Company.
SECTION 3.23. BROKERS. Except for any fees or expenses for
which the Seller is solely responsible, no broker, finder or investment banker
is entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of the Seller.
SECTION 3.24. NO OTHER REPRESENTATIONS. Neither the Seller,
the Company nor any of their respective directors, officers, employees, agents
or representatives has made, or shall be deemed to have made, and neither the
Seller nor the Company is liable for or bound in any manner by, any express or
implied representations, warranties, guaranties, promises or statements
pertaining to the Company or any of its assets or businesses except as
specifically set forth in this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF THE PURCHASER AND PARENT
As an inducement to the Seller to enter into this Agreement,
the Purchaser hereby represents and warrants to the Seller as follows:
SECTION 4.01. ORGANIZATION AND AUTHORITY OF THE PURCHASER. The
Purchaser is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and has all necessary corporate power
and authority to enter into this Agreement, to carry out its obligations
hereunder and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement by the Purchaser, the performance by the
25
Purchaser of its obligations hereunder and the consummation by the Purchaser of
the transactions contemplated hereby have been duly authorized by all requisite
action on the part of the Purchaser. This Agreement has been duly executed and
delivered by the Purchaser and (assuming due authorization, execution and
delivery by the Seller) this Agreement constitutes a legal, valid and binding
obligation of the Purchaser enforceable against the Purchaser in accordance with
its terms.
SECTION 4.02. NO CONFLICT. Assuming compliance with the
notification requirements of the HSR Act and the making and obtaining of all
filings, notifications, consents, approvals, authorizations and other actions
referred to in Section 4.03, except as may result from any facts or
circumstances relating solely to the Seller, the execution, delivery and
performance of this Agreement by the Purchaser do not and will not (a) violate,
conflict with or result in the breach of any provision of the certificate of
incorporation, by-laws or equivalent organizational documents of the Purchaser,
(b) conflict with or violate any Legal Requirement or Governmental Order
applicable to the Purchaser or (c) conflict with, or result in any breach of,
constitute a default (or event which with the giving of notice or lapse or time,
or both, would become a default) under, require any consent under, or give to
others any rights of termination, amendment, acceleration, suspension,
revocation, or cancellation of, or result in the creation of any Encumbrance on
any of the assets or properties of the Purchaser pursuant to, any note, bond,
mortgage or indenture, contract, agreement, lease, sublease, license, permit,
franchise or other instrument or arrangement to which the Purchaser is a party
or by which any of such assets or properties are bound or affected which, the
the case of clauses (b) and (c) above, would have a material adverse effect on
the ability of such Person to perform its obligations under this Agreement or
consummate the transactions contemplated hereby.
SECTION 4.03. GOVERNMENTAL CONSENTS AND APPROVALS. The
execution, delivery and performance of this Agreement by the Purchaser do not
and will not require any consent, approval, authorization or other order of,
action by, filing with, or notification to, any Governmental Authority, except
(a) the approval of the Office of the Superintendent of Financial Institutions
of Canada ("OSFI"), (b) the notification requirements of the HSR Act, and (c) as
described in a writing given to the Seller by the Purchaser on the date of this
Agreement.
SECTION 4.04. INVESTMENT PURPOSE. The Purchaser is acquiring
the LLC Interests solely for the purpose of investment and not with a view to,
or for offer or sale in connection with, any distribution thereof.
SECTION 4.05. FINANCING. The Purchaser has available
sufficient funds to pay the Purchase Price.
SECTION 4.06. LITIGATION. Except as disclosed in a writing
given to the Seller by the Purchaser on or prior to the date of this Agreement,
as of the date of this Agreement, no claim, action, proceeding or investigation
is pending or, to the best knowledge of the Purchaser after due inquiry,
threatened, that seeks to delay or prevent the consummation of, or that would be
reasonably likely to materially adversely affect the Purchaser's ability to
consummate, the transactions contemplated by this Agreement.
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SECTION 4.07. BROKERS. Except for BMO Xxxxxxx Xxxxx, no
broker, finder or investment banker is entitled to any brokerage, finder's or
other fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of the Purchaser. The
Purchaser shall be solely responsible for payment of the fees and expenses of
BMO Xxxxxxx Xxxxx.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01. CONDUCT OF BUSINESS PRIOR TO THE CLOSING. (a)
The Seller covenants and agrees that, except as described in Section 5.01(a) of
the Disclosure Schedule, between the date hereof and the time of the Closing,
the Company shall not conduct its business other than in the Ordinary Course of
Business. Without limiting the generality of the foregoing, except as described
in Section 5.01(a) of the Disclosure Schedule, the Seller shall cause the
Company to (i) use its reasonable best efforts to (A) preserve intact its
business organization, (B) keep available to the Purchaser the services of its
employees, and (C) preserve its current relationships with its customers and
other persons with which it has significant business relationships; (ii)
exercise, but only after notice to the Purchaser and receipt of the Purchaser's
prior written approval, any rights of renewal pursuant to the terms of any
leases or subleases that by their terms would otherwise expire; (iii) not
shorten or lengthen the customary payment cycles for any of its payables or
receivables, except as required pursuant to Section 5.14; and (iv) not engage in
any practice, take any action, fail to take any action or enter into any
transaction which could cause any representation or warranty of the Seller to be
untrue or result in a breach of any covenant made by the Seller in this
Agreement; PROVIDED, HOWEVER, that prior to the Closing, subject to the
provisions of Section 2.06, the Seller may, in its sole discretion and without
the consent of the Purchaser, cause to be distributed to Seller any cash from
the accounts of the Company as it deems desirable.
(b) Except as described in Section 5.01(b) of the Disclosure
Schedule, the Seller covenants and agrees that, prior to the Closing, without
the prior written consent of the Purchaser, the Company will not do any of the
things enumerated in the second sentence of Section 3.10.
(c) Effective upon the Closing, the Seller will cause any and
all Intellectual Property agreements between the Company and its Affiliates that
are inconsistent with the rights to be granted to the Company under the
Ancillary Agreements to be terminated.
SECTION 5.02. ACCESS TO INFORMATION. (a) From the date hereof
until the Closing, upon reasonable notice, the Seller shall cause the Company
and each of its officers, directors, employees, agents, representatives,
accountants and counsel to: (i) afford the officers, employees and authorized
agents, accountants, counsel, financing sources and representatives of the
Purchaser reasonable access, during normal business hours, to the offices,
properties, plants, other facilities, books and records of the Company (other
than privileged materials) and to those officers, directors, employees, agents,
accountants and counsel of the Company who have any knowledge relating to the
Company and (ii) furnish to the officers, employees and authorized agents,
accountants, counsel, financing sources and representatives of the Purchaser
such
27
additional financial and operating data and other information regarding the
assets, properties, operations and goodwill of the Company (or legible copies
thereof) as the Purchaser may from time to time reasonably request.
(b) In order to facilitate the resolution of any claims made
against or incurred by the Seller prior to the Closing, for a period of seven
years after the Closing, the Purchaser shall (i) retain the books and records of
the Company relating to periods prior to the Closing in a manner reasonably
consistent with the prior practice of the Company and (ii) upon reasonable
notice, afford the officers, employees and authorized agents and representatives
of the Seller reasonable access (including the right to make, at the Seller's
expense, photocopies), during normal business hours, to such books and records.
(c) In order to facilitate the resolution of any claims made
by or against or incurred by the Purchaser or the Company after the Closing or
for any other reasonable purpose, for a period of seven years following the
Closing, the Seller shall (i) retain the books and records of the Seller that
relate to the Company and its operations for periods prior to the Closing and
that shall not otherwise have been delivered to the Purchaser or the Company and
(ii) upon reasonable notice, afford the officers, employees and authorized
agents and representatives of the Purchaser or the Company reasonable access
(including the right to make photocopies, at the expense of the Purchaser or the
Company), during normal business hours, to such books and records.
SECTION 5.03. CONFIDENTIALITY. (a) The terms of the
Confidentiality Agreement are hereby incorporated herein by reference and shall
continue in full force and effect until the Closing, at which time such
Confidentiality Agreement and the obligations of the Purchaser under this
Section 5.03 shall terminate; PROVIDED, HOWEVER, that the Confidentiality
Agreement shall terminate only in respect of that portion of the Evaluation
Material (as defined in the Confidentiality Agreement) exclusively relating to
the Company and the transactions contemplated by this Agreement. If this
Agreement is, for any reason, terminated prior to the Closing, the
Confidentiality Agreement shall continue in full force and effect.
(b) The Seller agrees to keep, and to cause its Affiliates to
keep, confidential all nonpublic information in its possession regarding the
Company (including any information made available to the Seller pursuant to
Section 5.02(c)); PROVIDED, HOWEVER, that the Seller will not be required to
maintain as confidential any information that (i) becomes generally available to
the public other than as a result of a disclosure by the Seller or (ii) is
required to be disclosed pursuant to the terms of a Legal Requirement or Order;
PROVIDED, HOWEVER, that the Seller shall provide the Company with prior notice
of any such disclosure and the opportunity to seek a protective order or other
confidential treatment.
SECTION 5.04. REGULATORY AND OTHER AUTHORIZATIONS; NOTICES AND
CONSENTS. (A) Subject to the terms and conditions herein provided, each of the
Seller and Purchaser agrees to 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 to consummate and make effective as promptly as practicable
the transactions contemplated by this Agreement and to cooperate with the other
in connection with the foregoing, including using all reasonable commercial
efforts (i) to refrain from taking any action that would inhibit or delay the
parties' ability to consummate and make
28
effective the transactions contemplated by this Agreement; (ii) to obtain all
consents, approvals and authorizations that are required to be obtained from
Governmental Authorities; (iii) to obtain, without cost to the Purchaser, all
necessary waivers, consents and approvals from other parties to material leases,
contracts, licenses, commitments, agreements and arrangements; (iv) to lift or
rescind any injunction, restraining order, decree or other order adversely
affecting the ability of the parties hereto to consummate the transactions
contemplated hereby; (v) 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 Governmental Authorities;
and (vi) to fulfill all conditions to this Agreement. The Seller and the
Purchaser each agree to make, or to cause to be made, an appropriate filing of a
notification and report form pursuant to the HSR Act or, in the case of the
Purchaser, use its reasonable best efforts to file an appropriate submission to
the OSFI, in each case with respect to the transactions contemplated by this
Agreement within 10 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 or by the OSFI, as applicable.
(b) Each party to this Agreement shall promptly notify the
other party of any communication it or any of its Affiliates receives from any
Governmental Authority relating to the matters that are the subject of this
Agreement and permit the other party to review in advance any proposed
communication by such party to any Governmental Authority. No party to this
Agreement shall agree to participate in any meeting with any Governmental
Authority in respect of any filings, investigation or other inquiry unless it
consults with the other party in advance and, to the extent permitted by such
Governmental Authority, gives the other party the opportunity to attend and
participate at such meeting. Subject to the Confidentiality Agreement, each
party to this Agreement will 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.
Subject to the Confidentiality Agreement and applicable Legal Requirements, each
party to this Agreement will provide the other party with copies of all
correspondence, filings or communications between it or any of its
representatives, on the one hand, and any Governmental Authority or members of
its staff, on the other hand, with respect to this Agreement and the
transactions contemplated by this Agreement. The preceding provisions of this
Section 5.04(b) apply only through the Closing Date or termination of this
Agreement.
SECTION 5.05. NOTICE OF DEVELOPMENTS. Prior to the Closing,
(a) the Seller shall promptly notify the Purchaser in writing of (i) all events,
circumstances, facts and occurrences arising subsequent to the date of this
Agreement which could result in any breach of a representation or warranty or
covenant of the Seller in this Agreement or which could have the effect of
making any representation or warranty of the Seller in this Agreement untrue or
incorrect in any respect and (ii) all other material developments affecting the
assets, Liabilities, business, financial condition, operations, results of
operations, customer or supplier relations, employee relations, projections or
prospects of the Business and (b) the Purchaser shall promptly notify the Seller
in writing of all events, circumstances, facts and occurrences arising
subsequent to the date of this Agreement which could result in any breach of a
representation or warranty or covenant of the Purchaser in this Agreement or
which could have the effect of making any representation or warranty of the
Purchaser in this Agreement untrue or incorrect in any respect.
29
The parties understand and agree that the delivery of a notice contemplated by
this Section 5.05 shall not in any manner be deemed to cure or constitute a
waiver of (or affect the right of either party with respect to) any breach of
any representation, warranty or covenant contained in this Agreement or have any
effect for purposes of determining satisfaction of the conditions precedent
hereto.
SECTION 5.06. INVESTIGATION. (a) The Purchaser acknowledges
and agrees that (i) it has made its own inquiry and investigation into, and,
based thereon, and its reliance upon clause (ii) of this Section 5.06 and this
Agreement and the Ancillary Agreements, has formed an independent judgment
concerning, the Company, (ii) to the Purchaser's knowledge, it has been
furnished with or given adequate access to such information about the Company as
it has requested and (iii) neither the Seller, the Company nor any of their
respective directors, officers, employees, agents or representatives has made,
or shall be deemed to have made, and none of such persons or the Seller or the
Company shall be liable for or bound in any manner by, any express or implied
representations, warranties, guaranties, promises or statements pertaining to
the Company or any of its assets or businesses except as specifically set forth
in Article III or in the certificate delivered pursuant to Section 8.02(a) of
this Agreement, except in the case of fraud.
(b) In connection with the Purchaser's investigation of the
Company, the Purchaser has received from the Seller certain estimates,
projections and other forecasts for the Company, and certain plan and budget
information. The Purchaser acknowledges that there are uncertainties inherent in
attempting to make such projections, forecasts, plans and budgets, that the
Purchaser is familiar with such uncertainties, that the Purchaser is taking full
responsibility for making its own evaluation of the adequacy and accuracy of all
estimates, projections, forecasts, plans and budgets so furnished to it, and
that the Purchaser will not assert any claim against the Seller or any of its
directors, officers, employees, agents, stockholders, Affiliates, consultants,
counsel, accountants, investment bankers or representatives, or hold the Seller
or any such persons liable, with respect thereto, except in the case of fraud.
Accordingly, the Seller makes no representation or warranty with respect to any
estimates, projections, forecasts, plans or budgets referred to in this Section
5.06(b).
SECTION 5.07. USE OF NAMES. (a) Notwithstanding any other
provision of this Agreement to the contrary, no interest in or right to use the
names "CSFB", "DLJ", "CSFBDIRECT" or "DLJDIRECT" or any confusingly similar
derivation or modification thereof or any trademark, service xxxx, trade dress,
logo, domain name, URL (uniform resource locator), trade name or corporate name,
including registrations and applications therefor, of the Seller or any of its
Affiliates (collectively, the "RETAINED NAMES AND MARKS") is being transferred
to the Purchaser pursuant to the transactions contemplated hereby, and, except
as expressly provided in the Temporary License Agreement and the Trademark and
Service Xxxx License Agreement to be executed pursuant to this Section 5.07(a)
and to Section 5.07(e), the use of any Retained Names and Marks in connection
with the Company's business by the Purchaser or the Company shall cease as of
the Closing Date. Subject to Section 5.07(f), at the Closing, the Seller's
Affiliates shall grant to the Company a temporary, exclusive trademark license
to use in the Territory the word "CSFBDIRECT" and, to the extent used by the
Company as of the Closing Date, "DLJDIRECT", in connection with the business of
the Company as of the date hereof pursuant to a license agreement substantially
in the form attached hereto as Exhibit 5.07(a) (the "TEMPORARY
30
LICENSE AGREEMENT"). In addition, the Temporary License Agreement shall provide
that the Company may, for a period of one year after Closing, use the word
"CSFBDIRECT" and, to the extent used by the Company as of the Closing Date,
"DLJDIRECT", in the Territory in advertising and marketing materials solely for
the purpose of announcing and promoting the Company's change of ownership and
name pursuant to the consummation of the transactions contemplated by this
Agreement. Except as expressly authorized in the Temporary License Agreement,
the Purchaser, promptly following the Closing Date and in any event within six
months thereafter, will, and will cause the Company and any of its Affiliates
to, remove or obliterate all the Retained Names and Marks from its signs, web
sites, labels, letterheads and other items and materials of the Company's
business and otherwise, and not put into use after the Closing Date any such
items and materials not in existence on the Closing Date that bear any Retained
Name or Xxxx or any name, xxxx or logo similar thereto. Notwithstanding the
foregoing, but subject to any rights of the Seller and its Affiliates under
applicable Legal Requirements, nothing shall preclude the Company from
exercising its legal rights of "fair use" for which no license would be legally
required with respect to the Retained Names and Marks, for example, used in
describing the corporate history of the Company.
(b) It is hereby understood and agreed that the Purchaser and
its Affiliates can use the name "_____DIRECT" in any name or xxxx adopted for
the business of the Company and its Affiliates. The Purchaser and its Affiliates
shall not use the names "CSFBDIRECT" and "DLJDIRECT" in any manner except as
permitted by the Temporary License Agreement. The Seller agrees that it and its
Affiliates will not adopt or use the name "_____DIRECT" as all or part of the
name of any online retail discount brokerage, online trading or direct investing
business or any product or service offered in connection therewith; PROVIDED,
HOWEVER, that the Seller and its Affiliates may use "CSFBDIRECT" and "DLJDIRECT"
outside the Territory without limitation. Except as expressly provided herein
and in any Ancillary Agreement, the Purchaser agrees that the Seller shall not
have any responsibility for claims by third parties arising out of, or relating
to, the use after the Closing Date by the Purchaser, the Company or any
Affiliate thereof of any Retained Name or Xxxx.
(c) Subject to the existing rights of its Affiliates and joint
ventures outside of the Territory, the Seller agrees to transfer to the Company,
on or prior to Closing, any and all trademark and copyright rights in the
Territory in and to solely the logo design incorporating the rectangular shape
and the triangle in the letter "d" which has heretofore been used in connection
with the marks "CSFBDIRECT" and "DLJDIRECT" (the "LOGO DESIGN"). At the
Company's request and expense, the Seller will cancel any registrations for
Trademarks in the Territory that incorporate such logo design. Nothing herein
shall be deemed to limit the right of the Seller and its Affiliates to use a
multiple-tone blue and red color scheme in connection with their businesses. In
order to distinguish the use by the Purchaser and its Affiliates of the Logo
Design, the Purchaser and its Affiliates shall not use the Logo Design with the
color red for the triangle and in a blue color scheme.
(d) The Purchaser shall cause the Company to file, no later
than two days after the Closing, amended articles of incorporation (or similar
organizational documents) with the appropriate authorities changing its
corporate name to a corporate name that does not contain any Retained Names and
Marks and eliminates any reference or affiliation to Seller and its Affiliates.
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(e) Notwithstanding anything herein to the contrary, no
ownership interest in the names "FundCenter", "FundScan", "MarketSpeed",
"StockScan", "TradeTalk" or "TradeUp" or any similar or related names, marks or
logos of the Seller or any of its Affiliates (collectively, the "PROPRIETARY
NAMES AND MARKS") is being transferred to the Purchaser pursuant to the
transactions contemplated hereby. At the Closing, subject to existing license
obligations of the Seller or any of its Affiliates, the Seller's Affiliates
shall grant to the Company a perpetual, royalty-free license to use in any and
all territories throughout the world the Proprietary Names and Marks pursuant to
a license agreement substantially in the form attached hereto as Exhibit 5.07(e)
(the "TRADEMARK AND SERVICE XXXX LICENSE AGREEMENT") in connection with its
Business (as defined in the Trademark and Service Xxxx License Agreement).
Except as provided in the Trademark and Service Xxxx License Agreement, to the
extent the Company had the exclusive or co-exclusive use of any of the
Proprietary Names and Marks prior to the Closing, the Company shall continue to
have the exclusive or co-exclusive, as applicable, use of such Proprietary Names
and Marks after the Closing, it being understood that the rights granted to the
Company with respect to the names "MarketSpeed," "Trade Up" and "Trade Talk" in
the Territory shall be exclusive, notwithstanding any pre-existing licenses in
the Territory. Except as expressly provided herein or in any Ancillary
Agreement, the Purchaser agrees that the Seller shall not have any
responsibility for claims by third parties arising out of, or relating to, the
use after the Closing Date by the Purchaser, the Company or any Affiliate
thereof of any Proprietary Name or Xxxx.
(f) For a period of two years after Closing, the Seller agrees
to use the website at the Internet address xxx.XXXXxxxxxx.xxx and any URLs that
are under the control of the Seller or any of its Affiliates that as of the date
of this Agreement points to CSFBDIRECT or DLJDIRECT (the "URLS") solely to
shuttle traffic to the Company's primary website at an Internet address to be
specified by Company. There shall be no content appearing on the URLs, other
than a mutually agreeable message explaining the transaction. After such two
year period, the URLs will be allowed to lapse or not contain any content. The
CSFBDIRECT business may be run solely out of websites at internet addresses with
Japan and United Kingdom Top Level Domains. After the expiration of such two
year period, Seller shall have no responsibility to maintain, keep active any of
the URLs, or to redirect any such users to the Purchaser or the Company's
Internet web sites. Notwithstanding anything herein to the contrary, no right,
title or interest in any domain name incorporating, in whole or in part, the
Retained Names and Marks (collectively, the "RETAINED DOMAIN NAMES") is being
transferred to the Purchaser pursuant to the transactions contemplated hereby,
and the Company shall cease all use of the Retained Domain Names as of the
Closing.
(g) At least three Business Days prior to the Closing Date,
the Seller agrees to deliver to the Purchaser true and complete schedules of (i)
Excluded IP Licenses and (ii) Pre-Existing Rights (as defined in the Trademark
and Service Xxxx License Agreement).
SECTION 5.08. RELEASE OF INDEMNITY OBLIGATIONS; ASSUMPTION OF
CERTAIN EMPLOYEE OBLIGATIONS (a) The Purchaser covenants and agrees, on or prior
to the Closing, to execute and deliver to the Seller, for the benefit of the
Seller, a general release and discharge, in form and substance reasonably
satisfactory to the Seller and the Purchaser, releasing and discharging the
Seller from any and all obligations (i) to guaranty the payment or performance
of the Company of any liability or obligation, or (ii) to indemnify the Company
or otherwise hold it
32
harmless, in each case, pursuant to those agreements and other arrangements set
forth in Section 5.08 of the Disclosure Schedule, except as otherwise provided
in this Agreement or the transactions contemplated hereby.
(b) The Seller covenants and agrees, on or prior to the
Closing, to execute and deliver to the Purchaser, for the benefit of the
Purchaser, the Company and their respective Affiliates, a general release and
discharge in form and substance reasonably satisfactory to the Purchaser and the
Seller, releasing and discharging, and holding harmless, the Purchaser, the
Company and their respective Affiliates from, and the Seller or its Affiliates
shall be responsible for the full cost of, any and all Liabilities under any and
all Company Benefit Plans (as if such defined term was not modified by the
"material" qualifier), including employment, retention and severance agreements,
including those agreements, arrangements, plans, programs and policies referred
to in Section 3.19(d), with respect to any and all current or former employees
and directors of the Company on or prior to the Closing Date. In connection with
the foregoing, the Purchaser and its Affiliates will cooperate with the Seller,
including advising the Seller of employment status and whether any termination
of employment was voluntary with respect to the Seller's obligations under any
such Company Benefit Plan.
SECTION 5.09. NON-COMPETITION. (a) For the periods after the
Closing described below, except to the extent permitted by paragraph (b) below,
without the prior written consent of the Purchaser, (i) for a period of three
years after the Closing, none of the Seller or any of its Affiliates other than
Affiliated individuals and minority stockholders shall, and the Seller shall use
all reasonable efforts to cause each such Affiliated individual and minority
stockholder not to, engage, directly or indirectly, in the discount retail
securities brokerage business (the "RESTRICTED BUSINESS") anywhere in the
Territory or, directly or indirectly, own an interest in, manage, operate,
control, or otherwise, directly or indirectly, engage in the ownership,
management, operation or control of, any Person engaged in the Restricted
Business in the Territory and (ii) for a period of five years after the Closing
(the "RESTRICTED PERIOD"), none of the Seller or any of its Affiliates other
than individuals and minority stockholders shall, and the Seller shall use all
reasonable efforts to cause each such individual and minority stockholder not
to, engage, directly or indirectly, in the Restricted Business through any
online distribution channel anywhere in the Territory or, directly or
indirectly, own an interest in, manage, operate, control or otherwise, directly
or indirectly, engage in the ownership, management, operation or control of any
Person engaged in the Restricted Business in the Territory through any online
distribution channel.
(b) The restrictions set forth in Section 5.09(a) shall not be
construed to prohibit or restrict any Person from acquiring the Seller or any of
its Affiliates, nor shall they be construed to prohibit or restrict the Seller
or any of its Affiliates from:
(i) offering asset management products, including through an
online component, but not on a basis that includes all of the following
characteristics: (A) a discounted commission (it being understood that
for this purpose transaction fees relating to purchases and sales of
no-load mutual funds and investment trust management products do not
constitute commissions), (B) an online component and (C) no general
involvement of a sales representative;
33
(ii) providing banking or back-office services in support of
another entity that is engaged in the Restricted Business so long as
such services are provided in a manner that does not give the
impression that the provider of such banking or back-office services is
itself engaged in the Restricted Business;
(iii) acquiring, during the Restricted Period, any diversified
business engaged in the Restricted Business with non-Affiliated
Persons, as long as (A) during the first three years of the Restricted
Period, the percentage of revenues of such business attributable to
such Restricted Business during the preceding fiscal year represents
less than 15% of such business' total revenues during such period
(based on such business' latest financial statements) and (B) during
the last two years of the Restricted Period, the percentage of revenues
of such business attributable to the distribution of such Restricted
Business through any online distribution channel during the preceding
fiscal year represents less than 30% of such business' total revenues
during such period (based on such business' latest financial
statements);
(iv) owning securities having no more than five percent of the
outstanding voting power of any Person engaged in the Restricted
Business which are listed on any national securities exchange or traded
actively in the national over-the-counter market or owning securities
of any Person in the ordinary course of its brokerage business so long
as the Seller or such Affiliate has no other involvement with such
Person other than in the ordinary course of its business; or
(v) operating its business (excluding the Company) as it is
being conducted as of the date hereof.
(c) During the Restricted Period, none of the Seller or any of
its Affiliates will, directly or indirectly, use any customer lists, customer
prospect information or information with respect to Customers developed by or
for the use of the Company or from information provided by the Company, for any
purpose, including to (i) induce any Person that is a customer of the Company as
of the date hereof or as of the Closing Date (a "CUSTOMER") to patronize any
business engaged in the Restricted Business; (ii) canvass, solicit or accept
from any Customer, any such business; or (iii) request or advise any Customer or
vendor of the Company to withdraw, curtail or cancel any such Customer's or
vendor's business with the Company; PROVIDED, HOWEVER, that the restrictions set
forth in this Section 5.09(c) shall not be construed to prohibit or restrict (x)
any general solicitation or advertisement originating outside of, and not
specifically targeted to or reasonably expected to target, the Territory, (y)
continuing to service, except with respect to the Restricted Business,
consistent with past practice, Customers of both the Company and the Seller or
its Affiliates or (z) offering services to any employee of the Seller or any of
its Affiliates generally available to employees.
(d) For a period of two (2) years after the Closing, the
Seller will not in any way, directly or indirectly, (i) solicit for employment,
or knowingly permit any Affiliate to solicit for employment, any officer or
employee who was employed by the Company as of the Closing Date, or in any
manner seek to induce any such person to leave the employ of the Purchaser or
the Company or (ii) hire for employment, or knowingly permit any Affiliate to
hire for employment, any officer or any management or sales employee or any
other employee who at
34
the Closing is compensated at a base salary of $70,000 or more and in each case
who was employed by the Company as of the Closing Date or at any time during the
six months prior to the Closing Date, except for employees terminated by the
Company following the Closing.
(e) The restrictions set forth in Section 5.09(d)(i) shall not
apply with respect to any Person who is no longer employed by the Purchaser or
any of its Affiliates (including the Company) at the time of such action or who
responds to a BONA FIDE advertisement which is placed in general circulation by
or on behalf of the Seller or any of its present or future Affiliates and which
is not targeted at Persons to whom Section 5.09(d)(i) would otherwise apply.
(f) The Seller and its Affiliates agree and acknowledge that
the restrictions contained in this Section 5.09 are reasonable in scope,
duration and geography and are necessary to protect the Purchaser after the
Closing. If any provision of this Section 5.09, as applied to any party or to
any circumstance, is adjudged by a court to be invalid or unenforceable, the
same will in no way affect any other circumstance or the validity or
enforceability of the remainder of this Section 5.09. If any such provision, or
any part thereof, is held to be unenforceable because of the duration of such
provision or the area covered thereby, the parties agree that the court making
such determination shall have the power to reduce the duration and/or area of
such provision, and/or to delete specific words or phrases, and in its reduced
form, such provision shall then be enforceable and shall be enforced.
SECTION 5.10. NO NEGOTIATION. The Seller, the Company and its
Affiliates will immediately terminate all discussions, and the Seller and its
Affiliates will not, and will cause the Company and its Representatives not to,
and the Company will not directly or indirectly solicit, explore, initiate, or
encourage any inquiries or proposals from, discuss or negotiate with, provide
any non-public information to, or consider the merits of any unsolicited
inquiries or proposals from, any Person (other than Purchaser) relating to any
transaction involving the sale of the business or assets of the Company, or any
of the capital stock of the Company, or any merger, consolidation, business
combination, recapitalization or similar transaction involving the Company
(collectively, "ACQUISITION PROPOSALS"). Additionally, the Company will not
cooperate with or provide information to any Person (other than the Purchaser)
in connection with an Acquisition Proposal. If the Seller or the Company
receives any Acquisition Proposal, the Seller and the Company will immediately
notify the Purchaser of its terms and the identity of the party making the
proposal. The Company will request the return or destruction of all information
provided to third parties pursuant to one or more confidentiality agreements
prior to the date of this Agreement in connection with the solicitation of an
Acquisition Proposal.
SECTION 5.11. ANCILLARY AGREEMENTS. At the Closing, the
Purchaser or the Company, on the one hand, and the Seller or its Affiliates (as
applicable), on the other hand, shall enter into (a) an amendment to the Fully
Disclosed Clearing Agreement between Pershing Division of Xxxxxxxxx, Xxxxxx &
Xxxxxxxx Securities Corporation and the Company in substantially the form
attached hereto as Exhibit 5.11(a) (the "CLEARING AGREEMENT AMENDMENT"), (b) an
agreement with iNautix Technologies, Inc. in substantially the form attached
hereto as Exhibit 5.11(b) (the "INAUTIX AGREEMENT"), (c) an amendment to the
Research Products Agreement between CSFBDIRECT, Inc. and Xxxxxxxxx, Lufkin &
Xxxxxxxx Securities Corporation dated April 28, 1997 in substantially the form
attached hereto as Exhibit 5.11(c) (the "RESEARCH PRODUCTS AGREEMENT
AMENDMENT"), (d) a transition services agreement in
35
substantially the form attached hereto as Exhibit 5.11(d) (the "TRANSITION
SERVICES AGREEMENT"), it being understood that the parties will negotiate in
good faith between the date hereof and the Closing Date the schedule to such
Transitional Services Agreement, (e) the Temporary License Agreement, (f) the
Trademark and Service Xxxx License Agreement and (g) the IPO Allocation
Agreement (as defined below), pursuant to which the Seller or one or more of its
Affiliates will provide to the Company or the Purchaser services reasonably
required by the Company to enable it to conduct its business substantially as
conducted prior to the Closing Date. Following the Closing Date, the Seller or
one of its Affiliates will continue to offer to allocate to the Company, on
commercially reasonable terms, shares in initial public offerings for which the
Seller or one of its Affiliates is the lead underwriter. The Seller and the
Purchaser will negotiate in good faith between the date hereof and the Closing
Date an agreement containing the specific parameters of such arrangements (the
"IPO ALLOCATION AGREEMENT").
SECTION 5.12. LEASES. With respect to the Leased Real
Property, the Seller will, and will cause its applicable Affiliate to, use its
commercially reasonable efforts to obtain such third party consents as are
necessary to assign the Leases to the Company for such portion of property
covered by such Leases as agreed by the Purchaser and the Seller prior to
Closing, it being understood that the Seller and the Purchaser will negotiate in
good faith the exact portions of the properties to be transferred to the Company
as promptly as practicable after the date hereof, taking into account the
general discussions to date between the parties with respect to the amount of
space required by the Company following the Closing. The parties hereto agree
that, in the event any such consent is not obtained prior to Closing, the Seller
will, prior to and subsequent to the Closing, cooperate with the Purchaser and
the Company in attempting to obtain such consent as promptly thereafter as
practicable. Until and unless such consent is obtained, the Seller shall either
(a) provide the Company or the Purchaser with the rights and benefits of the
affected lease and, if the Seller provides such rights and benefits, the Company
or the Purchaser shall assume the obligations and burdens thereunder or (b)
cause to be provided to the Company reasonably comparable space on terms and
conditions no less favorable to the Company than those contained in the affected
Lease. The Purchaser will cooperate with the Seller in obtaining any of the
foregoing consents from third parties and, if applicable, in obtaining any of
such rights and benefits.
SECTION 5.13. LLC CONVERSION. Prior to the Closing Date, the
Seller shall, and shall cause certain of its Affiliates to, take all actions as
are reasonably necessary (including compliance with all applicable notification
requirements of any SRO) to complete the LLC Conversion, in form and substance
reasonably satisfactory to the Purchaser. Upon completion of the LLC Conversion,
the Company shall be a limited liability company wholly owned by Holdings.
SECTION 5.14. CUSTOMER ACCOUNTS. At least two but no more than
five Business Days prior to the Closing, the Company shall have delivered
schedules (which information contained therein shall be as of a date no earlier
than five Business Days prior to the date of the Closing) in electronic format
setting forth (a) for each customer account, the (i) account number, (ii) name
and address of the account holder, (iii) number of trades in the last twelve
months, if any, (iv) net equity in the account, if any, and (iv) commissions and
email addresses and (b) the Company's marketing database, including the email
addresses contained therein, prospects and customers.
36
SECTION 5.15. FURTHER ACTION. Each of the parties hereto shall
from time to time, whether before or after the Closing, use all reasonable
efforts to take, or cause to be taken, all action, do or cause to be done all
things necessary, proper or advisable under applicable Legal Requirements, and
execute and deliver such documents and other papers, as may be reasonably
requested by the other party or required to carry out the purposes and intents
of this Agreement and the Ancillary Agreements and consummate and make effective
the transactions contemplated by this Agreement and the Ancillary Agreements.
SECTION 5.16. INTERCOMPANY ACCOUNTS. All intercompany accounts
between the Company, on the one hand, and its Affiliates, on the other hand,
shall be settled at or prior to the Closing.
SECTION 5.17. EMPLOYEE ACCOUNTS. If and to the extent that
employees of Credit Suisse First Boston Corporation or its Affiliates retain or
open brokerage accounts or other accounts at the Company after the Closing, the
Purchaser shall cooperate, at no cost to Purchaser that is not promptly
reimbursed, with Credit Suisse First Boston Corporation or any such Affiliates
to ensure that trading in such accounts complies with the employee trading
restrictions (including Credit Suisse First Boston Corporation's watch list)
instituted by Credit Suisse First Boston Corporation or its Affiliates, to the
extent such restrictions are consistent with normal regulatory compliance and
disclosure practices, from time to time prior to the Closing. At or prior to
Closing, Seller shall provide to Purchaser a list of all such employee accounts
as of a date not earlier than five Business Days prior to Closing.
SECTION 5.18. TRANSFER OF ASSETS. At or prior to the Closing,
the Seller shall cause all right, title and interest to the assets described in
Section 2.02 and 5.07(b) of the Disclosure Schedule to be transferred to the
Company pursuant to an assignment agreement in form and substance (not including
purchase price, which shall be determined pursuant to Section 7.06(f))
reasonably satisfactory to the Purchaser.
SECTION 5.19. CERTAIN CONSENTS. With respect to any Contracts
to which any of the Seller or any of its Affiliates is a party that (a) cannot
be assigned without the consent of the other party thereto, and (b) are integral
to the conduct of the business of the Company as conducted on the date of this
Agreement, the Seller will, and will cause its applicable Affiliates to, use its
commercially reasonable efforts to obtain such third party consents as are
necessary to assign such Contracts to the Company. The Seller and the Purchaser
agree that, in the event any such assignment cannot be obtained prior to the
Closing, the Seller and its applicable Affiliate (including, prior to the
Closing, the Company), on the one hand, and the Purchaser and, following the
Closing, the Company, on the other hand, will cooperate with each other in
attempting to obtain such consent as promptly as practical following the
Closing. Unless and until such consent is obtained, the Seller shall, or shall
cause its applicable Affiliate to, either (i) provide the Company with the
rights and benefits of the affected Contract, in which case, the Company shall
assume the obligations and burdens thereunder, or (ii) reimburse the Company for
50% of any incremental additional costs reasonably incurred by the Company
during the period beginning on the Closing Date and ending on the date that is
eighteen months from the Closing Date in obtaining comparable rights and
benefits to those provided under the affected Contract.
37
ARTICLE VI
EMPLOYEE MATTERS
SECTION 6.01. GENERAL. The Purchaser hereby agrees that,
effective as of the Closing, it shall, or shall cause the Company to, provide to
Active Employees employee benefits and compensation comparable in the aggregate
to the employee benefits and compensation provided to similarly situated
employees of Xxxxxx Investorline Inc. as of the Closing.
SECTION 6.02. SERVICE RECOGNITION. Employees of the Company
shall receive credit for purposes of eligibility to participate, vesting and,
for vacation and severance plans only, determination of the levels of benefits,
but not for purposes of any benefit accruals under any plan, under any employee
benefit plan, program or arrangement established or maintained for such
employees by the Purchaser or the Company for service accrued or deemed accrued
prior to and on the Closing Date, to the extent such service was recognized for
such employees for similar purposes under comparable plans to which the Company
was a party; PROVIDED, HOWEVER, that such crediting of service shall not operate
to duplicate any benefit or the funding of any such benefit.
SECTION 6.03. WARN. The Company shall be responsible for any
notices required to be given under, or otherwise comply with, WARN or any
applicable state or local statutes or regulations relating to any plant closing
or mass layoff (or similar triggering event) with respect to employees of the
Company prior to the Closing Date. The Purchaser shall be responsible for any
notices required to be given under, or otherwise comply with, WARN or any
applicable state or local statutes or regulations relating to any plant closing
or mass layoff (or similar triggering event) with respect to its employees on or
after the Closing Date. For the purposes of WARN and this Agreement, the Closing
Date is and shall be the same as the "effective date" within the meaning of
WARN.
ARTICLE VII
TAX MATTERS
SECTION 7.01. TAX INDEMNITIES. (a) From and after the Closing
Date, the Seller shall indemnify and hold the Purchaser, the Company and their
respective officers, directors, employees and Affiliates harmless from and
against any and all Taxes, losses or other costs arising out of or incident to
(i) the imposition, assessment or assertion against the
Purchaser, any Affiliate of the Purchaser, the Company or any
subsidiary of the Company of any Taxes with respect to any taxable
period or portion thereof that ends on or before the Closing Date;
(ii) the breach or inaccuracy of any representation or
warranty made by the Seller in Section 3.20 (except with respect to
representations made in Section 3.20(a) where the Taxes, losses or
other costs result from the Purchaser's failure to file any Tax Returns
for periods ending after the Closing Date);
(iii) the breach of any covenant of Seller contained in this
Article VII;
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(iv) with respect to taxable periods beginning before the
Closing Date and ending after the Closing Date, Taxes imposed on the
Company which are allocable, pursuant to Section 7.01(b), to the
portion of such period ending on the Closing Date;
(v) any Taxes of any other person for whom the Company may be
liable as a result of filing a Tax Return on a combined, consolidated,
unitary or affiliated basis in any period that begins before the
Closing Date (whether such liability is imposed pursuant to Treasury
Regulation Section 1.1502-6 or any similar provision of state, local or
foreign law) as a successor, by contract or otherwise; and
(vi) the LLC Conversion (including, without limitation, any
net loss of or reduction in Tax benefits that would have been available
to the Purchaser, the Company, the LLC or any of their respective
Affiliates or successors had the transactions contemplated by this
Agreement been structured as a sale of 100% of the corporate stock of
the Company by Seller to Purchaser with the relevant parties making a
valid election pursuant to Section 338(h)(10) of the Code (and any
similar election available under state or local Tax law) rather than a
sale of the LLC Interests following the LLC Conversion); PROVIDED,
HOWEVER, that the Purchaser, the Company, the LLC or any of their
respective Affiliates or successors shall fully cooperate with the
Seller in taking any reasonable actions requested by Seller to mitigate
Seller's costs with respect to this clause (vi), including, without
limitation,
(x) filing all required Tax Returns in a manner
consistent with the Intended Characterization (as defined in
Section 7.07) for: (A) all federal tax purposes and (B) for
all other income tax purposes, except to the extent that the
Purchaser shall receive an opinion from nationally recognized
counsel that it will be subject to penalties for treating this
transaction as an asset purchase; and
(y) for purposes of filing Canadian income tax
returns, the Purchaser and its Affiliates shall take the
position that the LLC did not earn any "Foreign Accruals
Property Income" for the pre-Closing portion of any Tax period
that begins before the Closing Date and ends after the Closing
Date, except to the extent that the Purchaser shall receive an
opinion from nationally recognized counsel that it will be
subject to penalties for taking such position.
(b) For purposes of this Agreement, in the case of any Tax
imposed on the Company that is imposed on a periodic basis and is payable for a
taxable period that begins before the Closing Date and ends after the Closing
Date, the portion of such Taxes which is payable for the portion of such taxable
period ending on the Closing Date shall be (i) in the case of any Tax other than
a Tax based upon or measured by gross or net income or receipts, the amount of
such Tax for the entire taxable period (or, in the case of such Taxes determined
on an arrears basis, the amount of such Tax for the immediately preceding
period) multiplied by a fraction, the numerator of which is the number of days
in the portion of such taxable period ending at the end of the day on the
Closing Date and the denominator of which is the number of days in the entire
taxable period and (ii) in the case of Taxes that are either based upon or
measured by gross or net income or receipts, the amount which would be payable
if the relevant taxable period ended on the Closing Date.
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SECTION 7.02. REFUNDS AND TAX BENEFITS. (a) The Purchaser
shall promptly pay to the Seller the amount of any refund or credit (including
any interest paid or credited with respect thereto) received or used, in the
case of a credit, by the Purchaser or by the Company of Taxes (i) relating
solely to taxable periods or portions thereof ending on or before the Closing
Date or (ii) attributable solely to an amount paid by the Seller under Section
7.01 hereof. The Purchaser shall cooperate in filing refund claims requested by
the Seller in accordance with Section 7.04.
(b) Any amount otherwise payable by the Seller under Section
7.01 shall be reduced by the estimated present value of any net Tax benefit
reasonably expected to be available to the Purchaser or its Affiliates in
connection with the payment of Taxes for which the Seller is responsible under
Section 7.01. For the avoidance of doubt, the estimated present value of any net
Tax benefit referred to in the previous sentence (and in Section 9.02(d)) shall
be reduced (but not below zero) by the estimated present value of any Tax costs
(including, without limitation, any lost amortization deductions from reduction
in basis of assets) reasonably expected to be incurred by Purchaser, the LLC or
any of their respective Affiliates or successors as a result of the receipt of
any indemnity payment. The estimated present value of any net Tax benefit and
the estimated present value of any Tax costs referred to in this subsection (and
in Section 9.02(d)) shall be computed using the applicable federal rate for the
appropriate time period as defined in Section 1274(d)(1) of the Code as the
discount rate and a tax rate for all relevant years of 38%.
SECTION 7.03. CONTESTS. (a) After the Closing Date, the
Purchaser shall promptly notify the Seller in writing of the commencement of any
Tax audit or administrative or judicial proceeding or of any demand or claim on
the Purchaser or the Company which, if determined adversely to the taxpayer or
after the lapse of time, would be grounds for indemnification by the Seller
under Section 7.01 ("INDEMNIFICATION ITEM").
(b) In the case of a Tax audit or administrative or judicial
proceeding (or part thereof) ("PROCEEDING") that relates solely to an
Indemnification Item for which the Seller is exclusively liable under Section
7.01 (a "CONTEST") , the Seller shall have the sole right, at its expense, to
control the conduct of such Contest that relates solely to the Indemnification
Item; PROVIDED, HOWEVER, that the Seller shall
(i) obtain the Purchaser's written consent to any advisors
(including any law or accounting firm) retained by the Seller with
respect to any Contest regarding any Indemnification Item, which
consent shall not be unreasonably withheld or delayed, and which
consent is deemed to have been given for KPMG, LLP and its affiliates
and any successor firms, and Shearman & Sterling and any successor
firms,
(ii) keep the Purchaser informed of the progress of any
Contest,
(iii) allow the Purchaser to review and comment on all
materials to be submitted to any Governmental Authority in connection
with any Contest,
(iv) provide the Purchaser with reasonable notice in advance
of all meetings, telephone conversations and other communications
("COMMUNICATIONS") with any
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Governmental Authority in connection with any Contest, and allow
Purchaser's representatives to participate in any Communications, and
(v) not settle or compromise (or offer to settle or
compromise) any Contest without the written consent of the Purchaser,
which consent shall not be unreasonably withheld or delayed.
However, for any Contest that does not impact Taxes of the Purchaser, the LLC or
their respective successors or Affiliates for periods after the Closing, the
Purchaser will (a) not have any of the rights listed in subsections (i) through
(v) above and (b) be deemed to have consented to any settlement or compromise
proposal by the Seller. The Purchaser and the Seller agree to cooperate, and the
Purchaser agrees to cause the Company to cooperate, in the defense against or
compromise of any claim in any audit or proceeding, including, by executing
appropriate powers of attorney empowering representatives of the Seller. Any
expenses or fees incurred by the Purchaser in connection with the activities
described in subsections (i) through (v) above shall not be payable or
indemnified by Seller.
(c) In the case of a Proceeding that relates to an issue where
both the Seller and the Purchaser would reasonably be expected to have liability
and the Purchaser's reasonably anticipated liability with respect to such issue
exceeds the Seller's reasonably anticipated liability with respect to such
issue, the Purchaser shall have the sole right, at its expense, to control the
conduct of such Proceeding; PROVIDED, HOWEVER, that Seller shall have the same
rights with respect to such Proceeding as are granted to the Purchaser with
respect to a Contest pursuant to Section 7.03(b)(i) through (v) (except that the
deemed consent to representation by Shearman & Sterling (and successors) in
Section 7.03(b)(i) shall be replaced by deemed consent to representation by
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP and affiliates (and successors)).
(d) In the case of a Proceeding that relates to an issue where
both the Seller and the Purchaser would reasonably be expected to have liability
with respect to that issue and the Seller's reasonably anticipated liability
with respect to such issue exceeds the Purchaser's reasonably anticipated
liability with respect to such issue, the Seller shall have the sole right, at
its expense, to control the conduct of such Proceeding; PROVIDED, HOWEVER, that
Purchaser shall have the same rights with respect to such Proceeding as are
granted to the Purchaser with respect to a Contest pursuant to Section
7.03(b)(i) through (v).
SECTION 7.04. COOPERATION AND EXCHANGE OF INFORMATION. The
Seller and the Purchaser will provide each other with such cooperation and
information as either of them reasonably may request of the other in filing any
Tax return, amended return or claim for refund, determining a liability for
Taxes or a right to a refund of Taxes or participating in or conducting any
audit or other proceeding in respect of Taxes. Such cooperation and information
shall include providing copies of relevant Tax returns or portions thereof,
together with accompanying schedules and related work papers and documents
relating to rulings or other determinations by taxing authorities. Each party
shall make its employees reasonably available on a mutually convenient basis to
provide explanations of any documents or information provided hereunder. Each
party will retain all returns, schedules and work papers and all material
records or other documents relating to Tax matters of the Company for the
taxable period that includes the Closing Date and for all prior taxable periods
until the later of (i) the expiration of the statute of
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limitations of the taxable periods to which such returns and other documents
relate, without regard to extensions except to the extent notified by the other
party in writing of such extensions for the respective Tax periods or (ii) eight
years following the due date (without extension) for such returns; provided,
however, that a party shall not dispose of any such materials if at least 90
Business Days before the later of the end of either of the periods described in
clause (i) or (ii) the other party has notified the disposing party of its
desire to review such material in which case such other party shall be given an
opportunity, at its cost and expense, to remove and retain all or any part of
such materials. Any information obtained under this Section 7.04 shall be kept
confidential, except as may be otherwise necessary in connection with the filing
of returns or claims for refund or in conducting an audit or other proceeding.
SECTION 7.05. CONVEYANCE TAXES. The Seller shall be liable
for, shall hold the Purchaser harmless against, and agrees to pay all sales,
transfer, stamp, stock transfer, value added, use, real property transfer or
gains and similar Taxes that may be imposed upon, or payable or collectible or
incurred in connection with this Agreement and the transactions contemplated
hereby. The Purchaser and Seller agree to cooperate in the execution and
delivery of all instruments and certificates necessary to enable the Seller
and/or Purchaser to comply with any pre-Closing filing requirements.
SECTION 7.06. MISCELLANEOUS. (a) For Tax purposes, the parties
agree to treat all payments made under this Article VII (other than payments
made by the Seller pursuant to Section 7.05), under any other indemnity
provisions contained in this Agreement, and for any misrepresentations or
breaches of warranties or covenants, as adjustments to the Purchase Price.
(b) Intentionally left blank.
(c) For purposes of this Article VII and Section 3.20 of this
Agreement, all references to the Purchaser and the Seller shall include their
successors, if any; and for purposes of Sections 7.03 and 7.04, shall include
their Affiliates.
(d) Notwithstanding any provision in this Agreement to the
contrary, the covenants and agreements of the parties hereto contained in this
Article VII (i) shall be unconditional and absolute and (ii) shall survive the
Closing and shall remain in full force and effect until 90 days after the
expiration of the applicable statutes of limitations (taking into account any
extensions or waivers thereof).
(e) All Tax sharing agreements or similar agreements with
respect to or involving the Company shall be terminated on or prior to the
Closing Date and, after the Closing Date, none of the Seller, its Affiliates or
the Company shall be bound thereby or have any liability thereunder, including
with respect to any payable or receivable thereunder.
(f) The sum of the Purchase Price and the amount of
liabilities of the Company (as determined for federal income Tax purposes) (the
"RELEVANT LIABILITIES") shall be allocated among the assets of the Company as
agreed by Purchaser and Seller as of the Closing Date in accordance with the
"Residual Method" as provided in the Treasury Regulations promulgated under
Sections 338 and 1060 of the Code. Any subsequent adjustments to the sum of the
Purchase Price and the Relevant Liabilities shall be reflected in the allocation
as agreed by
42
Purchaser and Seller hereunder in a manner consistent with such Treasury
Regulations. The Seller and the Purchaser shall timely file Form 8594 (and any
similar forms required under state or local tax law) in accordance with the
requirements of Section 1060 of the Code (or state or local tax law, as the case
may be) and this Section 7.06(f). In the event that Purchaser and Seller are
unable to agree on the allocation described in the previous sentence within 120
days following the Closing, Purchaser and Seller shall appoint KPMG as an
independent appraiser (the "APPRAISER") to determine the allocation. (In the
event KPMG is unable to serve as the Appraiser, the Purchaser and Seller shall
jointly select another party as the Appraiser.) The expenses of the Appraiser
shall be borne equally by Purchaser and Seller.
(g) For avoidance of doubt, nothing in Article VII or Article
IX shall require the Seller to indemnify the Purchaser for the same Taxes,
losses or costs more than once.
SECTION 7.07. INTENDED CHARACTERIZATION. Each of the Seller
and the Purchaser covenants and agrees that
(a) it intends for (i) the LLC to be treated as a disregarded
entity at all times beginning at the time of the LLC Conversion and ending with
the Closing and (ii) all transactions contemplated by this Agreement to be
characterized as a purchase of assets by Purchaser from Xxxxxxxxx, Xxxxxx &
Xxxxxxxx Securities Corporation, in each case for all United States federal,
state and local income Tax purposes (the "INTENDED CHARACTERIZATION");
(b) it will not (and will cause all of its Affiliates to not)
file any applicable Tax Returns taking a position that is inconsistent with the
Intended Characterization; and
(c) it will not (and will cause all of its Affiliates to not)
take any position in an audit, litigation or other proceeding that is
inconsistent with the Intended Characterization.
ARTICLE VIII
CONDITIONS TO CLOSING
SECTION 8.01. CONDITIONS TO OBLIGATIONS OF THE SELLER. The
obligations of the Seller to consummate the transactions contemplated by this
Agreement shall be subject to the fulfillment, at or prior to the Closing, of
each of the following conditions:
(a) REPRESENTATIONS, WARRANTIES AND COVENANTS. (i) Each of the
representations and warranties of the Purchaser contained in this
Agreement that is qualified by materiality shall have been true and
correct when made and shall be true and correct as of the Closing and
each of the representations and warranties that is not so qualified
shall have been true and correct in all material respects when made and
shall be true and correct in all material respects as of the Closing,
with the same force and effect as if made as of the Closing Date (other
than such representations and warranties as are made as of another
date, which shall be true and correct as of such date), in each case,
except where the failure to be true and correct would not have a
material adverse effect on the ability of the Purchaser to perform its
obligations under this Agreement or consummate the transactions
contemplated hereby, (ii) the covenants and agreements contained in
this Agreement to be complied with by the Purchaser on or before the
43
Closing shall have been complied with in all material respects and
(iii) the Seller shall have received a certificate from the Purchaser
to such effect signed by a duly authorized officer thereof;
(b) HSR ACT. Any waiting period (and any extension thereof)
under the HSR Act applicable to the purchase of the LLC Interests
contemplated hereby shall have expired or shall have been terminated;
(c) NO ORDER. No Governmental Authority shall have issued an
Order or taken any other action that is then in effect restraining,
enjoining or otherwise having the effect of making illegal any of the
transactions contemplated by this Agreement or the Ancillary Agreements
or otherwise prohibiting the consummation of the transactions
contemplated by this Agreement and the Ancillary Agreement;
(d) RECEIPT OF RELEASE. The Seller shall have received the
release described in Section 5.08(a) of this Agreement;
(e) OPINION OF COUNSEL. The Seller shall have received an
opinion of Skadden, Arps, Slate, Xxxxxxx & Xxxx (Illinois), dated the
Closing Date, in form and substance reasonably acceptable to the Seller
and its counsel addressing the matters described in Exhibit 8.01(e);
and
(f) ANCILLARY AGREEMENTS. The Purchaser shall have executed
and delivered to the Seller each of the Ancillary Agreements to which
it is a party.
SECTION 8.02. CONDITIONS TO OBLIGATIONS OF THE PURCHASER. The
obligations of the Purchaser to consummate the transactions contemplated by this
Agreement shall be subject to the fulfillment, at or prior to the Closing, of
each of the following conditions:
(a) REPRESENTATIONS, WARRANTIES AND COVENANTS. (i) Each of the
representations and warranties of the Seller contained in this
Agreement shall have been true and correct when made and shall be true
and correct as of the Closing, with the same force and effect as if
made as of the Closing (other than such representations and warranties
as are made as of another date, which shall be true and correct as of
such date), except where the failure to be so true and correct (without
giving effect to any limitation or qualification as to "materiality"
(including the word "material") or "Material Adverse Effect" set forth
therein) would not, individually or in the aggregate, have a Material
Adverse Effect, (ii) the covenants and agreements contained in this
Agreement to be complied with by the Seller on or before the Closing
shall have been complied with in all material respects and (iii) the
Purchaser shall have received a certificate of the Seller as to the
matters set forth in clauses (i) and (ii) above signed by a duly
authorized officer of the Seller;
(b) HSR ACT. Any waiting period (and any extension thereof)
under the HSR Act applicable to the purchase of the LLC Interests
contemplated hereby shall have expired or shall have been terminated;
44
(c) NO ORDER. No Governmental Authority shall have issued an
Order or taken any other action that is then in effect restraining,
enjoining or otherwise having the effect of making illegal any of the
transactions contemplated by this Agreement or the Ancillary Agreements
or otherwise prohibiting the consummation of the transactions
contemplated by this Agreement and the Ancillary Agreements;
(d) RELEASE. The Purchaser shall have received the release
(with respect to the period prior to the Closing Date) described in
Section 5.08(b) of this Agreement.
(e) RESIGNATIONS OF THE COMPANY'S DIRECTORS. The Purchaser
shall have received the resignations, effective as of the Closing, of
all the directors and officers of the Company, except for such persons
as shall have been designated in writing prior to the Closing by the
Purchaser to the Seller;
(f) ANCILLARY AGREEMENTS. The Seller or its applicable
Affiliate shall have executed and delivered to the Purchaser each of
the Ancillary Agreements to which it is a party;
(g) CANADIAN APPROVAL. The Purchaser shall have received any
approval of the OSFI necessary for the consummation of the transactions
described herein; and
(h) ADDITIONAL DOCUMENTS. Each of the following documents
shall have been delivered to the Purchaser:
(x) an opinion of Shearman & Sterling, dated the
Closing Date, in form and substance reasonably acceptable to
the Purchaser and its counsel addressing the matters described
in Exhibit 8.02(h)(i); and
(y) a certificate in form and substance reasonably
satisfactory to the Purchaser to the effect that the Seller is
not a "foreign person" within the meaning of Section 1445 of
the Code.
ARTICLE IX
INDEMNIFICATION
SECTION 9.01. SURVIVAL OF REPRESENTATIONS AND
WARRANTIES. The representations and warranties set forth in this Agreement or
any certificate delivered pursuant hereto shall survive for a period of
eighteen months following the Closing Date; provided, however, that the
representations and warranties set forth in Sections 3.03, 3.19(g) and 3.20
shall survive until the 90th day following the expiration of the applicable
statute of limitations. Notwithstanding the foregoing, Section 3.17 shall
survive for a period of three years from the Closing Date solely to the
extent a claim for indemnification for any breach of Section 3.17 pertains to
infringement of any patent of a Third Party by the Licensed Software (as
defined in the iNautix Agreement). The covenants and agreements contained
herein shall survive the Closing without limitation as to time unless the
covenant or agreement specifies a term, in which case such covenant or
agreement shall survive for such specified term. Except as provided in
Article VII or in the case of fraud, the sole and exclusive remedy for any
breach of any
45
representation, warranty, covenant or agreement shall be pursuant to Section
9.02. Under no circumstances shall either party be liable to the other parties
for consequential, incidental or punitive damages, except where such damages
have been awarded to third parties with respect to claims for which a party is
entitled to be indemnified hereunder.
SECTION 9.02. INDEMNIFICATION. (a) From and after the Closing,
the Purchaser shall be entitled to assert claims against the Seller in respect
of any liabilities, costs or expenses (including reasonable expenses of
investigation and reasonable attorneys' fees), judgments, fines, losses, claims,
damages and amounts paid in settlement (collectively, "DAMAGES") arising from or
in connection with (i) any inaccuracy in any representation or the breach of any
warranty of the Seller under this Agreement (except representations and
warranties contained in Section 3.03 or Section 3.19(g)) or the certificate
delivered pursuant to 8.02(a), in each case without giving effect to any
materiality, "Material Adverse Effect" or knowledge qualifiers set forth
therein, (ii) any inaccuracy in any representation or the breach of any warranty
of the Seller contained in Section 3.03 or in Section 3.19(g), (iii) the failure
of the Seller to duly perform or observe any term, provision, covenant or
agreement to be performed or observed by the Seller pursuant to this Agreement,
(iv) the termination of any employees of the Company prior to the Closing,
including, notwithstanding anything to the contrary in Section 6.03, any related
Damages arising under the WARN Act, (v) the matters set forth in Section
5.08(b), (vi) the application of Section 5.12(b) including but not limited to
any Damages reasonably incurred in respect of business interruption, (vii) the
transactions described in the Schedule TO filed by a wholly-owned subsidiary of
Credit Suisse First Boston, Inc. and dated July 24, 2001, as subsequently
amended, (viii) the LLC Conversion and the consequences thereof (other than Tax,
which is the subject of Article VII), including but not limited to, the
termination, amendment or modification of any Contract as a result of such LLC
Conversion that would not have occurred had the Purchaser acquired 100% of the
capital stock of the Company and made a valid election pursuant to Section
338(h)(10) of the Code, (ix) any claim by any Person for brokerage or finder's
fees or commissions or similar payments based upon any agreement or
understanding alleged to have been made by such Person with the Seller or the
Company (or any Person acting on their behalf) in connection with the
transactions contemplated by this Agreement or the sale of the Company and (x)
the matters set forth in Section 9.02 of the Disclosure Schedule.
Notwithstanding anything herein to the contrary, no claims by the Purchaser
shall be asserted pursuant to this Section 9.02(a)(i) unless and until the
aggregate amount of Damages that would otherwise be payable pursuant to this
Section 9.02(a)(ii) exceeds $10,000,000 (the "DEDUCTIBLE AMOUNT"), in which case
the Purchaser shall be entitled to receive only that amount in excess of the
Deductible Amount. In calculating the Deductible Amount or Damages hereunder,
all claims for Damages which individually total less than $5,000 shall be
excluded in their entirety, and the Purchaser shall have no recourse for such
Damages. Notwithstanding anything herein to the contrary, the maximum aggregate
liability of the Seller under Section 9.02(a)(i) shall not exceed $208,000,000.
(b) From and after the Closing, the Seller shall be entitled
to assert claims against the Purchaser in respect of any Damages arising from or
in connection with (i) any inaccuracy in any representation or the breach of any
warranty of the Purchaser under this Agreement or (ii) the failure of the
Purchaser to duly perform or observe any term, provision, covenant or agreement
to be performed or observed by the Purchaser pursuant to this Agreement.
Notwithstanding anything herein to the contrary, no claims by the Seller shall
be asserted
46
pursuant to this Section 9.02(b)(i) unless and until the aggregate amount of
Damages that would otherwise be payable pursuant to this Section 9.02(b)(i)
exceeds the Deductible Amount, in which case the Seller shall be entitled to
receive only that amount in excess of the Deductible Amount. In calculating the
Deductible Amount or Damages hereunder, all claims for Damages which
individually total less than $5,000 shall be excluded in their entirety, and the
Seller shall have no recourse for such Damages. Notwithstanding anything herein
to the contrary, the maximum aggregate liability of the Purchaser under Section
9.02(b)(i) shall not exceed $208,000,000.
(c) No action, claim or setoff for Damages under this Section
9.02 shall be brought or made (i) with respect to claims for Damages resulting
from a breach of any covenant contained in this Agreement after the date on
which such covenant shall terminate pursuant Section 9.01 hereof; and (ii) with
respect to claims for Damages resulting from a breach of any representation or
warranty, after the date on which such representation or warranty shall
terminate pursuant to Section 9.01 hereof; PROVIDED, HOWEVER, that any claim
made with reasonable specificity by the party seeking to be indemnified within
the time periods set forth above shall survive until it is finally and fully
resolved.
(d) For all purposes of this Article IX, "Damages" shall be
net of (i) any insurance or other recoveries actually received (net of Taxes or
other expenses incurred in connection with such recovery) by the indemnified
party or its Affiliates in connection with the facts giving rise to the right of
indemnification and (ii) the estimated present value of any net Tax benefit
reasonably expected to be available to such indemnified party or its Affiliates.
In determining the estimated present value of any net Tax benefit, the
principles of Section 7.02(b) shall apply.
SECTION 9.03. THIRD PARTY CLAIMS. (a) Upon receipt by the
party seeking to be indemnified pursuant to Section 9.02 (the "INDEMNITEE") of
notice of any action, suit, proceedings, audit, claim, demand or assessment
(each, a "CLAIM") against it which might give rise to a claim for Damages, the
Indemnitee shall give prompt written notice thereof (which shall be within ten
days of receipt by the Indemnitee of such Claim) to the party from which it
seeks to be indemnified (the "INDEMNITOR") indicating the nature of such Claim
and the basis therefor; PROVIDED, HOWEVER, that any delay or failure by the
Indemnitee to give notice to the Indemnitor shall relieve the Indemnitor of its
obligations hereunder only to the extent, if at all, that it is materially
prejudiced by reason of such delay or failure.
(b) Subject to Section 9.03(c), if the Indemnitor acknowledges
in writing its obligation to indemnify the Indemnitee against any Damages that
may result from a Claim, then the Indemnitor shall be entitled to assume and
control the defense of such Claim at its expense and through counsel of its
choice if it gives notice of its intention to do so to the Indemnitee within
five days of the receipt of notice from the Indemnitee delivered pursuant to
Section 9.03(a). The Indemnitee agrees to cooperate fully with the Indemnitor
and its counsel in the compromise of, or defense against, any such Claim;
PROVIDED, HOWEVER, that the Indemnitor shall not settle any such Claim without
the prior written consent of the Indemnitee unless the relief consists solely of
money damages and includes a provision whereby the plaintiff or claimant in the
matter releases the Indemnitee from all liability with respect thereto, in which
case no consent of the Indemnitee shall be required. Notwithstanding an election
to assume the defense
47
of such action or proceeding, the Indemnitee shall have the right to employ
separate counsel and to participate in the defense of such action or proceeding,
and the Indemnitor shall bear the reasonable fees, costs and expenses of such
separate counsel if (A) the Indemnitor shall not have employed counsel
reasonably satisfactory to the Indemnitee to represent it within a reasonable
time after notice of the institution of such action or proceeding, (B) the
Indemnitee shall have determined in good faith that an actual or potential
conflict of interest makes representation by the same counsel or the counsel
selected by the Indemnitor inappropriate or (C) the Indemnitor shall have
authorized the Indemnitee to employ separate counsel at the Indemnitor's
expense. In the event the Indemnitee employs separate counsel pursuant to clause
(A) and/or (C) above, but not in the case of clause (B) above, the Indemnitee
and its counsel shall cooperate with the Indemnitor and its counsel and keep
such person informed of all material developments relating to any such Claims
and provide copies of all relevant correspondence and documentation relating
thereto. All costs and expenses incurred in connection with the Indemnitee's
cooperation shall be borne by the Indemnitor. In any event, the Indemnitee shall
have the right at its own expense to participate in the defense of such asserted
liability. In no event shall the Indemnitee settle any claim without the written
consent of the Indemnitor (which consent will not be unreasonably withheld).
(c) Notwithstanding the foregoing, if a claim is brought by a
Governmental Authority, the Indemnitee may, by notice to the Indemnitor, assume
the exclusive right to defend, compromise, or settle such Proceeding, but the
indemnifying party will not be bound by any determination of a Proceeding so
defended or any compromise or settlement so effected without its consent.
ARTICLE X
TERMINATION AND WAIVER
SECTION 10.01. TERMINATION. This Agreement may be terminated
at any time prior to the Closing:
(a) by either the Seller or the Purchaser if the Closing shall
not have occurred by June 30, 2002; PROVIDED, HOWEVER, that the right
to terminate this Agreement under this Section 10.01(a) shall not be
available to any party whose failure to fulfill any obligation under
this Agreement shall have been the cause of, or shall have resulted in,
the failure of the Closing to occur on or prior to such date;
(b) by either the Purchaser or the Seller in the event that
any Governmental Authority shall have issued an order, decree or ruling
or taken any other action restraining, enjoining or otherwise
prohibiting the transactions contemplated by this Agreement and such
order, decree, ruling or other action shall have become final and
nonappealable;
(c) by the mutual written consent of the Seller and the
Purchaser;
48
(d) by Purchaser, in the event of the occurrence of any breach
of any representation, warranty or covenant of the Seller, in each case
that may make the satisfaction of any of the conditions set forth in
Section 8.02 impossible; or
(e) by the Seller, in the event of the occurrence of any
breach of any representation, warranty or covenant of the Purchaser, in
each case that may make the satisfaction of any of the conditions set
forth in Section 8.01 impossible.
SECTION 10.02. EFFECT OF TERMINATION. In the event of
termination of this Agreement as provided in Section 10.01, this Agreement shall
forthwith become void and there shall be no liability on the part of either
party hereto except (a) as set forth in Section 5.03 and Article XI and (b) that
nothing herein shall relieve either party from liability for any breach of this
Agreement.
SECTION 10.03. WAIVER. Either party to this Agreement may (a)
extend the time for the performance of any of the obligations or other acts of
the other party, (b) waive any inaccuracies in the representations and
warranties of the other party contained herein or in any document delivered by
the other party pursuant hereto or (c) waive compliance with any of the
agreements or conditions of the other party contained herein. Any such extension
or waiver shall be valid only if set forth in an instrument in writing signed by
the party to be bound thereby. Any waiver of any term or condition shall not be
construed as a waiver of any subsequent breach or a subsequent waiver of the
same term or condition, or a waiver of any other term or condition, of this
Agreement. The failure of any party to assert any of its rights hereunder shall
not constitute a waiver of any of such rights.
ARTICLE XI
GENERAL PROVISIONS
SECTION 11.01. EXPENSES. Except as otherwise specified in this
Agreement, all costs and expenses, including fees and disbursements of counsel,
financial advisors and accountants, incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such costs and expenses, whether or not the Closing shall have occurred.
SECTION 11.02. NOTICES. All notices, requests, claims, demands
and other communications hereunder shall be in writing and shall be given or
made (and shall be deemed to have been duly given or made upon receipt) by
delivery in person, by courier service, by cable, by telecopy, by telegram, by
telex or by registered or certified mail (postage prepaid, return receipt
requested) to the respective parties at the following addresses (or at such
other address for a party as shall be specified in a notice given in accordance
with this Section 11.02):
(a) if to the Seller:
Credit Suisse First Boston (USA), Inc.
Eleven Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
49
Attention: Xxxx Xxxxx
with a copy to:
Shearman & Sterling
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxx X'Xxxxx, Esq.
(b) if to the Purchaser:
Bankmont Financial Corp.
000 Xxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxx Xxxxxx, Esq.
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx (Illinois)
000 Xxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxx X. Xxxxxx, Esq.
SECTION 11.03. PUBLIC ANNOUNCEMENTS. No party to this
Agreement shall make, or cause to be made, any press release, public
announcement or communication to employees or customers in respect of this
Agreement or the transactions contemplated hereby or otherwise communicate with
any third party without the prior written consent of the other party unless
otherwise required by any Legal Requirement or stock exchange regulation, and
the parties shall cooperate as to the timing and contents of any such press
release, public announcement or communication.
SECTION 11.04. HEADINGS. The descriptive headings contained in
this Agreement are for convenience of reference only and shall not affect in any
way the meaning or interpretation of this Agreement.
SECTION 11.05. SEVERABILITY. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any Legal
Requirement or public policy, all other terms and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner materially adverse to any party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an acceptable
manner in order that the transactions contemplated hereby are consummated as
originally contemplated to the greatest extent possible.
50
SECTION 11.06. ENTIRE AGREEMENT. This Agreement and the
Ancillary Agreements constitute the entire agreement of the parties hereto with
respect to the subject matter hereof and supersede all prior agreements and
undertakings, both written and oral, between the Seller and the Purchaser with
respect to the subject matter hereof and thereof.
SECTION 11.07. ASSIGNMENT. This Agreement may not be assigned
by operation of law or otherwise without the express written consent of the
Seller and the Purchaser (which consent may be granted or withheld in the sole
discretion of the Seller or the Purchaser, as the case may be); PROVIDED,
HOWEVER, that the Seller or the Purchaser may assign this Agreement to an
Affiliate without such consent; PROVIDED that no such assignment shall relieve
the Seller or the Purchaser, as the case may be, of its obligations if the
assignee does not perform such obligations.
SECTION 11.08. NO THIRD PARTY BENEFICIARIES. This Agreement
shall be binding upon and inure solely to the benefit of the parties hereto and
their permitted assigns and nothing herein, express or implied, is intended to
or shall confer upon any other Person any legal or equitable right, benefit or
remedy of any nature whatsoever under or by reason of this Agreement.
SECTION 11.09. AMENDMENT. This Agreement may not be amended or
modified except (a) by an instrument in writing signed by, or on behalf of, the
Seller and the Purchaser or (b) by a waiver in accordance with Section 10.03.
SECTION 11.10. GOVERNING LEGAL REQUIREMENT. This Agreement
shall be governed by, and construed in accordance with, the laws of the State of
New York, applicable to contracts executed in and to be performed entirely
within that state. All actions and proceedings arising out of or relating to
this Agreement shall be heard and determined in any Delaware state or federal
court sitting in the City of Wilmington. The parties hereto unconditionally and
irrevocably agree and consent to the exclusive jurisdiction of, and service of
process and venue in, the courts of the State of Delaware and waive any
objection with respect thereto, for the purpose of any action, suit or
proceeding arising out of or relating to this Agreement or the transactions
contemplated hereby and further agree not to commence any such action, suit or
proceeding except in any such court.
SECTION 11.11. COUNTERPARTS. This Agreement may be executed in
one or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement.
SECTION 11.12. SPECIFIC PERFORMANCE. The parties hereto agree
that irreparable damage would occur in the event any provision of this Agreement
was not performed in accordance with the terms hereof and that the parties shall
be entitled to specific performance of the terms hereof, in addition to any
other remedy at law or equity.
51
IN WITNESS WHEREOF, the Seller and the Purchaser have caused
this Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
CREDIT SUISSE FIRST BOSTON (USA), INC.
By /s/ XXXX XXXXX
------------------------------------------
Name: Xxxx Xxxxx
Title: Managing Director
BANKMONT FINANCIAL CORP.
By /s/ Xxxx X. Xxxxxx
-------------------------------------------
Name: Xxxx X. Xxxxxx
Title: General Counsel
DISCLOSURE SCHEDULE
to the
PURCHASE AGREEMENT
between
CREDIT SUISSE FIRST BOSTON (USA), INC.
and
BANKMONT FINANCIAL CORP.
dated as of November 28, 2001
SELLER'S DISCLOSURE SCHEDULE
----------------------------
This Disclosure Schedule has been prepared and delivered in connection
with the Purchase Agreement dated as of November 28, 2001 (the "PURCHASE
AGREEMENT") between Credit Suisse First Boston (USA), Inc. (the "SELLER") and
Bankmont Financial Corp. (the "PURCHASER"). Certain agreements and other matters
are listed in this Disclosure Schedule for informational purposes
notwithstanding the fact that, because they do not rise above applicable
materiality thresholds or otherwise, they are not required to be listed herein
by the terms of the Purchase Agreement. In no event shall the listing of such
agreements or other matters in this Disclosure Schedule be deemed or interpreted
to broaden or otherwise amplify the representations and warranties contained in
the Purchase Agreement.
Disclosure of any fact or item in any schedule referenced by a
particular paragraph or Section in the Purchase Agreement shall, should the
existence of the fact or item or its contents be relevant to any other paragraph
or Section of the Purchase Agreement, be deemed to be disclosed with respect to
such other paragraph or Section of the Purchase Agreement whether or not an
explicit cross-reference appears, to the extent that the relevance of such
disclosure is readily apparent.
The section headings in this Disclosure Schedule are for convenience of
reference only and shall not be deemed to alter or affect the express
description of the sections of this Disclosure Schedule as set forth in the
Purchase Agreement.
Except as otherwise defined therein, capitalized terms used herein have
the meanings assigned in the Purchase Agreement.
Section 2.02
PURCHASE PRICE
See attached spread sheet.
2
Schedule 2.06(a)
PREPARATION OF THE COMPANY'S CLOSING BALANCE SHEET
For purposes of preparing the Closing Balance Sheet, the
Closing Balance Sheet shall be prepared as of the Closing Date and in a manner
consistent with the preparation of the balance sheet of the Company attached to
the Purchase Agreement as Exhibit 2.06(a), as modified to take into account the
following:
A. Exclude the following accounts:
1. Non-marketable investments - CSFB GL account BD1340/ DLJ
account 0000000
2. Intercompany obligations - CSFB GL AD5605/DLJ account 0000000,
CSFB account AD6175/DLJ account 0000000, CSFB account
AD6180/DLJ account 0000000, CSFB account AD6185/DLJ account
0000000, CSFB account 6195/DLJ account 0000000
3. Accrued expense obligation - CSFB GL account CD1740/DLJ
account 0000000
B. As part of the preparation of the Closing Balance Sheet, all general
ledger accounts shall be reconciled to the underlying books and records
of the Company. Unreconciled differences shall be written off.
3
Section 3.02
ORGANIZATION, AUTHORITY AND QUALIFICATION OF THE COMPANY
The Company is duly licensed and qualified to do business in the following
jurisdictions:
a) Arizona
b) California
c) Connecticut
d) Colorado
e) Washington D.C.
f) Florida
g) Georgia
h) Illinois
i) Maryland
j) Minnesota
k) New Jersey
l) New York
m) North Carolina
n) Oregon
o) Pennsylvania
p) Texas
q) Utah
r) Virginia
4
Section 3.06(b)
NO CONFLICT
(a) LEASE AGREEMENT REGARDING THE SHOPPES AND MARKET AT ALBRECHTS, LOCATED
IN LOWER MERION TOWNSHIP, PA. Section 22(a) of the lease provides that
landlord consent is required for any "assignment encumbrancing or
subletting which would otherwise occur by operation of law, merger,
consolidation, reorganization, transfer or other change of Tenant's
corporate or proprietary structure, stock or equity."
(b) LEASE AGREEMENT REGARDING THE SHOPS AT XXXXXX VILLAGE, LOCATED IN
SCOTTSDALE, AZ. Section 12.1 of the lease provides that the "change or
conversion of Tenant to any company, partnership or other entity which
possesses the characteristics of limited liability" is deemed a
transfer requiring Landlord's consent under the lease. Additionally,
Tenant's exclusive use clause becomes void upon such transfer
(Article 1).
5
Section 3.07(a)
CONSENTS AND APPROVALS
(a) The execution, delivery and/or performance of the Purchase Agreement
will require consents, approvals, authorizations or notifications in
connection with the following agreements:
o CSFBdirect Tournament of Champions Title Sponsorship
Agreement, dated June 22, 2000, between Event Engine, Inc. and
CSFBdirect Inc.
o Cusip Electronic Distribution Agreement, dated March 26, 2001,
between Standard & Poor's Cusip Service Bureau and CFSBdirect
Inc.
o Content Distribution Agreement, dated July 7, 1999, amended as
of August 21, 2001, between Dow Xxxxx & Company, Inc. and
DLJdirect Inc.
o Long Term News License Agreement, dated as of May 1, 2001,
between and among Dow Xxxxx & Company, Inc. and CSFBdirect
Inc., Pershing Clearing Corporation and Credit Suisse First
Boston Corporation
o Charter Media Content License Agreement, dated December 12,
1997 between Charter Media, Inc. and DLJdirect Inc.
o TIN Website Agreement, dated December 29, 1997, between
Thomson Investors Network and DLJdirect Inc.
o Intuit Marketing Agreement Online Investment Services, dated
May 8, 1998, between Intuit Inc. and DLJdirect Inc.
o Wireless Internet Service Agreement, dated as of January 8,
2001, between Sprint Spectrum L.P. and DLJdirect Inc.
o Sublicense Agreement dated March 11, 1999, between DLJ
Holdings, Inc. and DLJdirect Inc.(1)
o Intercompany Services Agreement, dated August 14, 1996,
between PC Financial Networks, Holdings Inc. and PC Financial
Networks, Inc.
o Dow Xxxxx Newswire Distribution and Sales Agency Agreement
dated October 9, 2001, between Dow Xxxxx & Co., Inc. and the
Company
o Content Distribution Agreement, dated May 1, 2000, between
Omnisky, Inc. and DLJdirect Inc.
----------
(1) This agreement will be superceded by the Ancillary Agreements to be
entered into by Purchaser and the Company upon Closing.
6
o Morningstar, Inc. License Agreement, effective November 9,
2001 between Morningstar, Inc. and CSFBdirect Inc.
o Morningstar, Inc. License Agreement, effective October 9,
2001, between Morningstar, Inc. and CSFBdirect Inc.
o Morningstar, Inc. License Agreement dated as of December 1,
2001 between Morningstar, Inc. and CSFBdirect Inc.
o Co-Marketing Agreement, dated January 21, 2000, between
GoAmerica Communications Corp. and DLJdirect Inc.
o License Agreement Terms and Conditions dated as of September
13, 1999 between DLJdirect Inc. and CommScan L.L.C.
o License Agreement, dated September 2, 1997, between DLJ Long
Term Investment Corporation and DLJdirect Inc.
o Interactive Marketing Agreement dated as of December 15, 2000,
amended as of March 25, 2001 and August 27, 2001, between
America Online, Inc. and DLJdirect Inc.
o Broker Agreement, dated May 25, 2000, between MBNA America
Bank, NA and DLJdirect Inc.
o Smartmoney Content Distribution Agreement, dated June 15,
2001, between Dow Xxxxx and Company, Inc., Hearst
Communications, Inc. and CSFBdirect Inc.
o IMG Worldwide, Inc Golf Sponsorship, dated March 17, 2000,
amended as of May 16, 2001, between IMG Worldwide, Inc. and
DLJdirect Inc.
o Dow Xxxxx Indexes Enterprise Distribution Agreement dated as
of June 1, 2001 between CSFBdirect Inc. and Dow Xxxxx &
Company, Inc.
o Data Subscriber License Agreement and Order Form, Xxxxxxx
Financial Systems, Inc. Securities History Data, dated October
1, 1996, between Xxxxxxx Financial Systems, Inc. and PC
Financial Network.
o Vendor Agreement for Level 1 Service, Last Sale Service and
NQDS, dated October 22, 2001, between NASDAQ and the Company
o Severance Agreement by and between K. Xxxxx Xxxxx and Credit
Suisse First Boston Corporation
o Severance Agreement by and between Xxxxx Xxxxxx and Credit
Suisse First Boston Corporation
7
o Lease Agreement for Harborside Financial Center, Jersey City,
NJ, dated April 12, 1999, subsequently amended, between
Cal-Harbor II and III Urban Renewal Associates LP and
Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation and
CSFBdirect Inc.
o Lease Agreement for 000 Xxxx Xxxxxx, Xxx Xxxx, XX, dated
October 30, 2000, between TST 300 Park, L.P. and Xxxxxxxxx,
Lufkin & Xxxxxxxx Securities Corporation and DLJdirect Inc.
o Lease Agreement for 00 Xxxxx XxXxxxx, Xxxxxxx, XX, dated
December 26, 2000, between Thirty-Three Associates LLC and
Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation and
DLJdirect Inc.
o Lease Agreement for The Shoppes at Addison Place, Delray
Beach, FL, dated February 1, 2000, between The Bear on Jog,
Ltd. and Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation
o Lease Agreement for Xxxxxx Corporate Center III, Parsippany,
NJ, dated January 27, 1977, subsequently amended, between
Xxxxxx Corporate Center III, LLC and Xxxxxxxxx, Lufkin &
Xxxxxxxx Securities Corporation
o Lease Agreement for the Xxxxx Xxxxx Xxxxxxxxx Xxxxxx, Xxxxx,
Xxxx, dated April 4, 2000, between the Workers Compensation
Fund of Utah and Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities
Corporation
o Lease Agreement for The Shoppes and Market at Albrechts, Lower
Xxxxxx Township, PA, dated December 20, 2000, between 000
Xxxxxxxxxx Xxxxxx Investors and DLJdirect Inc.
o Introducing Broker Agreement, dated November 8, 1999, between
Xxxxxxx Financial Services, Inc. and DLJdirect Inc.
o Corporate Partnership Agreement, dated September 23, 1999,
amended July 1, 2001, between Vail Resorts Management Company
and CSFBdirect Inc.
(b) Prior notice to NASD and NYSE is required with respect to the
Restructuring and the transactions contemplated by the Purchase
Agreement.
(c) Amendments to the Company's filings on Form BD will be required in
connection with the Restructuring and the transactions contemplated by
the Purchase Agreement.
(d) State filings may be required with respect to the Restructuring and the
transactions contemplated by the Purchase Agreement.
(e) Modification of the Company's filings on Form ADV will be required in
connection with the transactions contemplated by the Purchase
Agreement.
8
Section 3.07(b)
CONSENTS AND APPROVALS
(a) Prior notice to NASD and NYSE is required with respect to the
Restructuring and the transactions contemplated by the Purchase
Agreement.
(b) Amendments to the Company's filings on Form BD will be required in
connection with the Restructuring and the transactions contemplated by
the Purchase Agreement.
(c) State filings may be required in connection with the Restructuring and
the transactions contemplated by the Purchase Agreement.
(d) Section 3.07(a) of this Disclosure Schedule is incorporated herein by
reference.
9
Section 3.09
NO UNDISCLOSED LIABILITIES
Section 3.11 of this Disclosure Schedule is incorporated herein by
reference.
10
Section 3.10
CONDUCT IN THE ORDINARY COURSE; ABSENCE OF CERTAIN CHANGES, EVENTS AND
CONDITIONS
Each of the following numbered paragraphs contains the disclosure
required by the corresponding paragraphs of Section 3.10 of the Purchase
Agreement.
(i) (A) On November 20, 2001, the Company transferred its equity
investment in Redibook to DLJ Securities Corp. for an amount
equal to the market value with respect to the investment; (B)
on November 20, 2001, the Company transferred warrants held by
it in the NASDAQ to DLJ Securities Corp. for an amount equal
to the market value with respect to such warrants; (C) Siemens
Fire Systems and QED, two subcontractors of Xxxxxxx Electric,
did not receive payments from Xxxxxxx Electric for services
provided in connection with the installation of mechanical
equipment at the Company's Sandy, UT facility. Accordingly,
each of Siemens Fire Systems and QED placed liens on the
building where the equipment was installed. A bond with
respect to the Siemens Fire Systems lien has been filed by the
Company's surety, XL Surety. The Company has an ongoing
relationship with XL Surety to cover these occurrences. The
QED lien is for $2,300.62 and a bond will be posted with
respect to such lien by XL Surety.
(ii) None
(iii) None, except for the transactions contemplated by the Purchase
Agreement
(iv) None
(v) None, except for the transactions contemplated by the Purchase
Agreement
(vi) (A) Severance Agreement by and between K. Xxxxx Xxxxx and
Credit Suisse First Boston Corporation; (B) Severance
Agreement by and between Xxxxx Xxxxxx and Credit Suisse First
Boston Corporation; (C) The Company cancelled its car lease
program without providing for any alternative compensatory
benefit.
(vii) None
(viii) None
(ix) None
(x) None
(xi) None
(xii) As a consequence of the downsizing effected by the Company
after September 30, 2001, terminated employees (i) became
vested in their DLJdirect options (which were converted into a
right to receive cash from Credit Suisse First Boston
Corporation) through the end of the year, (ii) became fully
vested in their DLJ
11
options (which were converted into Credit Suisse First Boston
Corporation options) and (iii) became fully vested in their
retention awards.
(xiii) Agreements with the following entities have been terminated as
part of the downsizing effected by the Company after September
30, 2001.
x Xxxxxxx
o XX Xxxxxxxx
o DoubleClick (DFA contract dated November, 2001)
o Modem Media (Master Services Agreement, dated October
4, 2000)
o Fuel NA
o Quicken
o CBS MarketWatch (Marketing Agreement)
o MotleyFool
o Prodigy
o Various CPM-CPA deals
x Xxxxxxxxxxxx
In addition, the Company has given notice of termination to
Continental Airlines under the DLJdirect/Continental Airlines
Agreement dated April 10, 2000.
(xiv) None
(xv) None
(xvi) None
(xvii) Although the lease for the premises located at Scottsdale, AZ
is still in effect, the Company has discontinued operations at
such offices.
(xviii) None
(xix) None
12
Section 3.11.
LITIGATION
(a) Xxxxxxxxxxx Litigation. Xxxx and Xxxxxxxx Xxxxxxxxxxx had been
bombarding the Company's computer systems with hundreds of emails a day
for months. On December 13, 2000, the Company obtained a temporary
restraining order ("TRO") against the Wotherspoons. The injunction
hearing was set for February 1, 2000. In the period after the issuance
of the TRO and before the hearing, the Wotherspoons stopped sending
emails and the Company decided that it was unnecessary to proceed. The
case was therefore dismissed without prejudice for the Company.
Thereafter, the Wotherspoons resumed bombarding the Company with
emails. Therefore, the Company filed, for the second time, a motion for
Preliminary Injunction and Application for Temporary Restraining Order
in New York State Supreme court, to prevent Xxxx and Xxxxxxxx
Xxxxxxxxxxx from sending hundreds of emails a day to the Company. The
Wotherspoons have not filed any counterclaims nor demanded any damages.
The Company has obtained a new TRO.
(b) Xxxxxxxxx v. CSFBdirect (employee claims he did not receive appropriate
compensation at time of termination; the Company offered $7,000 to
settle the claim; employee failed to report to work for several weeks
following a vacation and also failed to return to work on the date
requested by the Company).
(c) Xxxxxxx v. CSFBdirect (employee claims age and sex discrimination
caused her to be laid off from her position as sales representative;
also claims harassment and a hostile work environment and poor work
reviews; employee was laid off during a downsizing and had received
consecutive poor reviews).
(d) Section 3.17(b) of this Disclosure Schedule is incorporated herein by
reference.
13
Section 3.12
CUSTOMER MARGIN ACCOUNTS
A copy of the form of Customer Account Agreement is attached hereto.
14
Section 3.13(a)
REGISTRATIONS
The Company is registered as a broker-dealer under Section 15
of the Exchange Act, with the NASD and in all 50 states, as well as Puerto Rico.
In addition, the Company and its agents listed below may rely on an exemption
under Canada's National Instrument 53-101 and, therefore, are permitted to
practice business as broker-dealers in all Provinces and Territories of Canada.
o Xxxxxxx Xxxxxx
o Xxxx Xxxxxxxx
o Xxxx Xxxx
o Xxxxxxxxxxx Xxxxxx
o Xxxxxx Xxxxxxxxx
o Xxxxxx Xxxxx
o Xxxxx XxXxxxxxxx
o Xxxx Xxxxx
o Xxxxxxx Xxxxx
o Xxxxx Xxxxx
o Xxxxxxx Page
o Xxxxxx Xxxxxx
o Xxxxx Xxxxxxx
o Xxxxx Xxxxxx
o Xxxxxxx Xxxxxx
o Xxxx Xxxx
o Xxxxxx Xxxxxxxx
o Xxxxxxxxx XxXxxx
o Xxxxxx Xxxxx
15
Section 3.14(b)
COMPLIANCE WITH LEGAL REQUIREMENTS
List all Governmental Authorities with which the Company is required to be
registered as a broker-dealer:
o SEC
o NASD
o Each of the 50 States and Puerto Rico
16
Section 3.15(a)
MATERIAL CONTRACTS
(i) All Contracts and agreements that involve payment of an amount or value
in excess of $50,000
a) Presenting Sponsorship Contract, dated May 30, 2000, between
Vail Valley Foundation and DLJdirect Inc.
b) Corporate Partnership Agreement, dated September 23, 1999,
between Vail Resorts Management Company and CSFBdirect Inc.,
as amended
c) IMG Worldwide, Inc Golf Sponsorship, dated March 17, 2000,
amended as of May 16, 2001, between IMG Worldwide, Inc. and
DLJdirect Inc.
d) CSFBdirect Tournament of Champions Title Sponsorship
Agreement, dated June 22, 2000, between Event Engine, Inc. and
CSFBdirect Inc.
e) Services Agreement, dated July 24, 2001, between Keynote
Systems, Inc. and CSFBdirect Inc.
f) Content Subscription and Marketing Agreement, dated June 15,
1999, between The Xxxxxx.xxx, Inc. and DLJdirect Inc.
g) Interactive Marketing Agreement dated as of December 15, 2000,
amended as of March 25, 2001 and August 27, 2001, between
America Online, Inc. and DLJdirect Inc.
h) DLJdirect/Continental Airlines Agreement dated April 10, 2000,
between DLJdirect Inc. and Continental Airlines, Inc.(2)
i) MBNA Affinity Agreement, dated May 25, 2000, between MBNA
America Bank, N.A. and DLJdirect Inc.
j) RCL Agreement for Research Project, dated July 23, 0000,
xxxxxxx XXX Xxxxx Xxxxxxx and CSFBdirect Inc.
k) Agreement, dated August 23, 2001, between CNN and CSFBdirect
Inc. (Order Confirmation)
l) Agreement, dated August 28, 2001, between Time Warner Cable
and CSFBdirect Inc. (Receipt of Proposal)
m) Agreement, dated August 27, 2001, between Money Magazine and
CSFBdirect Inc. (Insertion Order)
----------
(2) Notice of termination of the contract was given by the Company.
17
n) Agreement, dated October 1, 2001, between New York Times and
CSFBdirect Inc. (Insertion Order)
o) Q4 2001 Online Marketing Retainer, dated September 26, 2001,
between Modem Media, Inc. and CSFBdirect Inc.
p) DART Service Agreement, dated December 13, 2000, between
DoubleClick Inc. and DLJdirect Inc.
q) Emessaging Software License & Services Agreement, dated
January 12, 2001, between FloNetwork Inc. (currently
DoubleClick) and DLJdirect Inc.
r) Expovillage Official Sponsor Agreement, dated November 1,
2000, between Xxxx Xxxxxx Worldwide and DLJdirect Inc.
(Bloomberg agreement)
s) Letter of Agreement, dated August 4, 2001, between
Competitrack Advertising Tracking Service and MVBMS/CSFBdirect
Inc.
t) BondDesk Trading Master Client Access Agreement, dated
September 18, 2000, between BondDesk Trading LLC and DLJdirect
Inc.
u) Intuit Marketing Agreement Online Investment Services, dated
May 8, 1998, between Intuit Inc. and DLJdirect Inc.
v) RiskMetrics Group, Inc. Hosted Services Agreement, dated
August 20, 2001, between RiskMetrics Group, Inc. and
CSFBdirect Inc.
w) Financial Consulting Services Agreement, dated April 27, 2001,
between London Pacific Advisory Services, Inc. and CSFBdirect
Inc.
x) CheckFree APL System Agreement, dated August 20, 2001, between
CheckFree Corporation and CSFBdirect Inc.
y) Long Term News License Agreement, dated as of May 1, 2001,
between and among Dow Xxxxx & Company, Inc. and CSFBdirect
Inc., Pershing Clearing Corporation and Credit Suisse First
Boston Corporation
z) Cusip Electronic Distribution Agreement, dated March 26, 2001,
between Standard & Poor's Cusip Service Bureau and CSFBdirect
Inc.
aa) Vendor Agreement for Level 1 Service, Last Sale Service and
NQDS, dated October 22, 2001, between NASDAQ and the
Company(3)
----------
(3) The Company sent an executed version of this agreement to the NASDAQ to
replace the existing agreement between the NASDAQ and the Pershing
division of DLJ Securities Corporation. The agreement has not yet been
executed by the NASDAQ.
18
bb) Agreement for receipt and use of market data between New York
Stock Exchange, Inc. and CSFBdirect Inc.(4)
cc) Options Price Reporting Authority Vendor Contract between the
Options Price Reporting Authority and the Company(5)
dd) Morningstar Content License Agreement, dated November 18,
2001, between Morningstar, Inc. and CSFBdirect Inc.
ee) Agreement, dated October 1, 1996 between the Pershing division
of DLJ Securities Corporation and Standard & Poor's
ff) TIN Website Agreement, dated December 29, 1997, between
Thomson Investors Network and DLJdirect Inc.
gg) Content Licensing Agreement, dated November 1, 1998, between
Zacks Investment Research Incorporated and DLJdirect Inc.
hh) Content Distribution Agreement, dated July 7, 1999, amended as
of August 21, 2001, between Dow Xxxxx & Company, Inc. and
DLJdirect Inc.
ii) Smartmoney Content Distribution Agreement, dated June 15,
2001, between Dow Xxxxx and Company, Inc., Hearst
Communications, Inc. and CSFBdirect Inc.
jj) Fully Disclosed Clearing Agreement dated September 24, 1997,
between the Pershing Division of Xxxxxxxxx Xxxxxx and Xxxxxxxx
Securities Corporation and DLJdirect Inc.
kk) Research Products Agreement, dated April 28, 1999, between
Xxxxxxxxx Lufkin & Xxxxxxxx Securities Corporation and
DLJdirect Inc.
ll) Subscription to Equity Research, dated August 21, 2001,
between CSFBdirect Institutional Services and Credit Suisse
First Boston Corporation.
mm) Interim License Agreement, dated January 12, 2001, between
Credit Suisse Group and PC Financial Network, Inc.
(ii) All Contracts relating to indebtedness for borrowed money of the
Company to a third party
None
----------
(4) The Company sent an executed version of this agreement to NYSE to
replace the existing agreement between NYSE and the Pershing division
of DLJ Securities Corporation. The agreement has not yet been executed
by the NYSE.
(5) The Company sent an executed version of this agreement to OPRA to
replace the existing agreement between OPRA and iNautix Technologies,
Inc.. The agreement has not yet been executed by the NASDAQ.
19
(iii) All Contracts with any Governmental Authority to which the Company is a
Party
a) Vendor Agreement for Level 1 Service, Last Sale Service and
NQDS, dated October 22, 2001, between NASDAQ and the
Company(6)
b) Agreement for receipt and use of market data between New York
Stock Exchange, Inc. and CSFBdirect Inc.(7)
c) Options Price Reporting Authority Vendor Contract between the
Options Price Reporting Authority and the Company(8)
(iv) All Contracts that limit or purport to limit the ability of the Company
to compete in any line of business or with any Person or in any
geographic area or during any period of time
a) DLJdirect/Continental Airlines Agreement dated April 10, 2000,
between DLJdirect Inc. and Continental Airlines, Inc.(9)
b) MBNA Affinity Agreement, dated May 25, 2000, between MBNA
America Bank, N.A. and DLJdirect Inc.
(v) All Contracts between or among the Company and the Seller or any
Affiliate of the Seller contemplating an exchange of value in excess of
$50,000
a) Fully Disclosed Clearing Agreement dated September 24, 1997,
between the Pershing Division of Xxxxxxxxx Xxxxxx and Xxxxxxxx
Securities Corporation and DLJdirect Inc.
b) Private Label Managed Account Program, dated October 26, 2000,
between Pershing Division of Xxxxxxxxx, Xxxxxx & Xxxxxxxx
Securities Corporation and DLJdirect Inc.
c) Subscription to Equity Research, dated August 21, 2001,
between CSFBdirect Institutional Services and Credit Suisse
First Boston Corporation.
d) License Agreement, dated September 2, 1997, between DLJ Long
Term Investment Corporation and DLJdirect Inc.
----------
(6) The Company sent an executed version of this agreement to the NASDAQ to
replace the existing agreement between the NASDAQ and the Pershing
division of DLJ Securities Corporation. The agreement has not yet been
executed by the NASDAQ.
(7) The Company sent an executed version of this agreement to NYSE to
replace the existing agreement between NYSE and the Pershing division
of DLJ Securities Corporation. The agreement has not yet been executed
by the NYSE.
(8) The Company sent an executed version of this agreement to OPRA to
replace the existing agreement between OPRA and iNautix Technologies,
Inc.. The agreement has not yet been executed by the NASDAQ.
(9) Notice of termination of the contract was given by the Company. 20
20
e) Letter Agreement dated June 2, 1997 between Xxxxxxxxx Xxxxxx &
Xxxxxxxx Securities Corporation and PC Financial Network, Inc.
f) Research Products Agreement, dated April 28, 1999, between
Xxxxxxxxx Xxxxxx & Xxxxxxxx Securities Corporation and
DLJdirect Inc.
g) Sublicense Agreement dated March 11, 1999, between DLJdirect
Holdings, Inc. and DLJdirect Inc.
h) Intercompany Services Agreement, dated August 14, 1996,
between PC Financial Networks, Holdings Inc. and PC Financial
Networks, Inc.
i) General Services Agreement, dated August 1, 2000, between
DLJdirect Inc. and DLJ Asset Management Group, Inc.
j) Introducing Broker Agreement, dated June, 2000, between
DLJdirect Ltd. and DLJdirect Inc.
(vi) All material broker, distributor, dealer, agency, sales promotion,
market research, marketing consulting and advertising Contracts to
which the Company is a party
a) Research Products Agreement, dated April 28, 1999 between
Xxxxxxxxx Xxxxxx and Xxxxxxxx Securities Corporation and
DLJdirect Inc.
b) Services Agreement, dated July 24, 2001, between Keynote
Systems, Inc. and CSFBdirect Inc.
c) Master Agreement Among Underwriters, dated December 1, 1986,
subsequently amended as of March 21, 1996 and as of October
17, 1996, between Bear, Xxxxxx & Co. Inc. and DLJdirect Inc.
d) Master Selling Agreement, dated December 1, 1986, subsequently
amended as of March 21, 1996 and as of October 17, 1996,
between Bear, Xxxxxx & Co. Inc. and DLJdirect Inc.
e) Master Agreement Among Underwriters, dated November 19, 1997
between X.X. Xxxxxxxxx, Towbin and DLJdirect Inc.
f) Master Selling Agreement, dated September 1, 1987 between
Xxxxxxxxxxx & Co. Inc. and DLJdirect Inc.
g) Master Agreement Among Underwriters, dated December 15, 1998
between Credit Suisse First Boston and CSFBdirect Inc.
h) Master Selected Dealers Agreement dated May 1, 1998 between
Credit Suisse First Boston and CSFBdirect Inc.
21
i) Master Agreement Among Underwriters, dated July, 1998 between
BT Alex.Xxxxx Incorporated and DLJdirect Inc.
j) Master Selected Dealers Agreement, dated July, 1998 between BT
Alex.Xxxxx Incorporated and DLJdirect Inc.
k) Form of Master Selected Dealers Agreement, dated March 14,
2001 between ABN AMRO Incorporated and CSFBdirect Inc.
l) Representative Form of Master Selected Dealers Agreement,
dated June 1, 2001 between ABN AMRO Financial Services, Inc.
and CSFBdirect Inc.
m) Master Agreement between LaSalle Bank N.A. and CSFBdirect Inc.
n) Master Selected Dealer Agreement, dated as of October 10, 2001
between Incapital LLC and CSFBdirect Inc.
o) Agreement Among Underwriters, dated June 1, 2000, among DLJ
International Securities, CA IB Investmentbank
Aktiengesellschaft, DLJdirect Inc. and HSBC Investment Bank
plc
p) Account Agreement, dated October 15, 2001 between eBondTrade
LLC and CSFBdirect Inc.
q) Master Agreement Among Underwriters, dated as of May 15, 2000,
between ING Barings LLC and DLJdirect Inc.
r) Underwriting Agreement, dated March 28, 2000, among meVC
Xxxxxx Xxxxxx Jurvetson Fund I, Inc., Prudential Xxxxx
Technology, Xxxxxxx Xxxxx & Associates, Inc., Gruntel & Co.,
Fidelity Capital Markets and DLJdirect Inc.
s) Master Agreement Among Underwriters, dated September 1, 1998,
between BancBoston Xxxxxxxxx Xxxxxxxx and DLJdirect Inc.
t) Master Selected Dealers Agreement, dated September 1, 1998,
between BancBoston Xxxxxxxxx Xxxxxxxx and DLJdirect Inc.
u) Master Agreement Among Underwriters, dated November 15, 2000,
between The Xxxxxxxx-Xxxxxxxx Company, LLC and DLJdirect Inc.;
v) Master Selected Dealer Agreement, dated November 15, 2000,
between The Xxxxxxxx-Xxxxxxxx Company, LLC and DLJdirect Inc.
w) Master Agreement Among Underwriters, dated July 18, 1985,
between Xxxxx Xxxxxx, Xxxxxx Xxxxx & Co. Incorporated (now
known as Xxxxxxx Xxxxx Barney) and DLJdirect Inc.
22
x) Master Selected Dealer Agreement, dated July 1, 1999, between
Xxxxxxx Xxxxx Xxxxxx, Inc. and DLJdirect Inc. (re-executed on
September 10, 2001 by CSFBdirect Inc.)
y) Master Agreement Among Underwriters, dated August 4, 1999,
between U.S. Bancorp Xxxxx Xxxxxxx) and DLJdirect Inc.
z) Master Selected Dealer Agreement, dated August 4, 1999,
between U.S. Bancorp Xxxxx Xxxxxxx) and DLJdirect Inc.
aa) Master Selected Dealers Agreement, dated December 6, 1999,
between X.X. Xxxxxxxxx & Co., LLC and DLJdirect Inc.
bb) OpenIPO Participation Agreement, dated December 6, 1999,
between X.X. Xxxxxxxxx & Co., LLC and DLJdirect Inc.
cc) Underwriting Agreement dated December 7, 1999, among
Xxxxxxx.Xxx, Inc., between X.X. Xxxxxxxxx & Co., LLC, Advest,
Inc. and DLJdirect Inc.
dd) Master Agreement Among Underwriters, dated June 8, 1999,
between X.X. Xxxxxxxxx & Co., LLC and DLJdirect Inc.
ee) Special Dealer Agreement, dated March 15, 2001, between
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated and
CSFBdirect Inc.
ff) Master Dealer Agreement, dated August 1, 1982, between Xxxxxx
Xxxxxxx & Co. Incorporated and DLJdirect Inc.
gg) Master Agreement Among Underwriters, dated August 1, 1982,
between Xxxxxx Xxxxxxx & Co. Incorporated and DLJdirect Inc.
hh) Agreement, dated May 6, 1999 between Xxxxx Online Inc. and
DLJdirect Inc.
ii) Interactive Marketing Agreement dated as of December 15, 2000,
amended as of March 25, 2001 and August 27, 2001, between
America Online, Inc. and DLJdirect Inc.
jj) CSFBdirect Tournament of Champions Title Sponsorship
Agreement, dated June 22, 2000, between Event Engine, Inc. and
CSFBdirect Inc.
kk) Cusip Electronic Distribution Agreement, dated March 26, 2001,
between Standard & Poor's Cusip Service Bureau and CSFBdirect
Inc.
ll) Content Distribution Agreement, dated July 7, 1999, amended as
of August 21, 2001, between Dow Xxxxx & Company, Inc. and
DLJdirect Inc.
mm) Dow Xxxxx Newswire Distribution and Sales Agency Agreement
dated October 9, 2001, between Dow Xxxxx & Co., Inc. and the
CSFBdirect Inc.
23
nn) Long Term News License Agreement, dated as of May 1, 2001,
between and among Dow Xxxxx & Company, Inc. and CSFBdirect
Inc., Pershing Clearing Corporation and Credit Suisse First
Boston Corporation
oo) Intuit Marketing Agreement Online Investment Services, dated
May 8, 1998, between Intuit Inc. and DLJdirect Inc.
pp) Content Distribution Agreement, dated May 1, 2000, between
Omnisky, Inc. and DLJdirect Inc.
qq) Letter of Agreement between Business Wire and PC Financial
Network, dated October 24, 1996
rr) Morningstar, Inc. License Agreement, effective December 1,
2001, between Morningstar, Inc. and CSFBdirect Inc.
ss) Morningstar, Inc. License Agreement, effective November 9,
2001 between Morningstar, Inc. and CSFBdirect Inc.
tt) Morningstar, Inc. License Agreement, effective October 9,
2001, between Morningstar, Inc. and CSFBdirect Inc.
uu) Co-Marketing Agreement, dated January 21, 2000, between
GoAmerica Communications Corp. and DLJdirect Inc.
vv) Riskmetrics Group, Inc. Hosted Services Agreement, dated
August 20, 2001, between Riskmetrics Group, Inc. and
CSFBdirect Inc.
ww) Broker Agreement, dated May 25, 2000, between MBNA America
Bank, NA and DLJdirect Inc.
xx) MuniGroup Trading Master Client Access Agreement, dated
September 18, 2000, between XxxxXxxxx.xxx LLC and DLJdirect
Inc.
yy) Content Licensing Agreement, dated November 1, 1998, between
Zacks Investment Research Incorporated and DLJdirect Inc.
zz) Smartmoney Content Distribution Agreement, dated June 15,
2001, between Dow Xxxxx and Company, Inc., Hearst
Communications, Inc. and CSFBdirect Inc.
aaa) eCheck Secure, dated March 22, 2001 between Xxxx Systems
International, Inc. and CSFBdirect Holdings Inc.
bbb) Dow Xxxxx Indexes Enterprise Distribution Agreement, dated
June 1, 2001, between Dow Xxxxx and Company, Inc. and
CSFBdirect Inc.
ccc) Morningstar Content License Agreement, dated November 18,
2001, between Morningstar, Inc. and CSFBdirect Inc.
24
ddd) Data Subscriber License Agreement and Order Form, Xxxxxxx
Financial Systems, Inc. Securities History Data, dated October
1, 1996, between Xxxxxxx Financial Systems, Inc. and PC
Financial Network.
eee) Xxxxxx Xxxxxx and Company Investment Advisors, dated September
13, 2000, between Xxxxxx Xxxxxx Management, Inc. and DLJdirect
Inc.
fff) Wireless Internet Services Agreement, dated January 8, 2001
between Sprint Spectrum L.P. and DLJdirect Inc.
ggg) Financial Consulting Services Agreement, dated April 27, 2001,
between London Pacific Advisory Services, Inc. and CSFBdirect
Inc.
hhh) Customer Referral Agreement, dated November 28, 2000, between
Xxxxxx Associates LLC and Xxxxxx Financial Services LLC and
DLJdirect Inc.
iii) CheckFree APL System Agreement, dated August 20, 2001, between
CheckFree Corporation and CSFBdirect Inc.
jjj) Mobile Channel Agreement Letter, dated October 2, 2000,
between AT&T Wireless Services and DLJdirect Inc.
kkk) Customer Referral Agreement, dated September 4, 2000, between
Xxxxxx Retail Management, Inc. and DLJdirect Inc.
lll) License Agreement, dated September 2, 1997, between DLJ Long
Term Investment Corporation and DLJdirect Inc.
mmm) BondDesk Trading Master Client Access Agreement, dated
September 18, 2000, between BondDesk Trading LLC and DLJdirect
Inc.
nnn) Content Subscription and Marketing Agreement, dated June 15,
1999, between XxxXxxxxx.xxx, Inc. and DLJdirect Inc.
ooo) Presenting Sponsorship Contract, dated May 30, 2000, between
Vail Valley Foundation and DLJdirect Inc.
ppp) IMG Worldwide, Inc Golf Sponsorship, dated March 17, 2000,
amended as of May 16, 2001, between IMG Worldwide, Inc. and
DLJdirect Inc.
qqq) DLJdirect/Continental Airlines Agreement dated April 10, 2000,
between DLJdirect Inc. and Continental Airlines, Inc.10
rrr) DART Service Agreement, dated December 13, 2000, between
DoubleClick Inc. and DLJdirect Inc.
----------
(10) Notice of termination of the contract was given by the Company.
25
sss) Q4 2001 Online Marketing Retainer, dated September 26, 2001,
between Modem Media, Inc. and CSFBdirect Inc.
ttt) Agreement, dated August 23, 2001, between CNN and CSFBdirect
Inc. (Order Confirmation)
uuu) Agreement, dated August 28, 2001, between Time Warner Cable
and CSFBdirect Inc. (Receipt of Proposal)
vvv) Agreement, dated August 27, 2001, between Money Magazine and
CSFBdirect Inc. (Insertion Order)
www) Agreement, dated October 1, 2001, between New York Times and
CSFBdirect Inc. (Insertion Order)
xxx) RCL Agreement for Research Project,, dated July 23, 0000,
xxxxxxx XXX Xxxxx Xxxxxxx and CSFBdirect Inc.
yyy) Expovillage Official Sponsor Agreement, dated November 1,
2000, between Xxxx Xxxxxx Worldwide and DLJdirect Inc.
(Bloomberg agreement)
zzz) Letter of Agreement, dated August 4, 2001, between
Competitrack Advertising Tracking Service and MVBMS/CSFBdirect
Inc.
aaaa) License Agreement, Dated September 13, 1999, between Comm
Scan, LLC and DLJdirect Inc.
bbbb) Power of Attorney, dated July 27 1999, with regard to an
Agreement Among Underwriters, among First Union Capital
Markets Corp., X.X. Xxxxxxxx & Co., Wachovia Securities, Inc.
and DLJdirect Inc.
cccc) Agreement Among Underwriters with Xxxxxxx Xxxxx & Company
dddd) Sales Agreement, dated July 29, 1999, between WSW Capital,
Inc. and DLJdirect Inc.
(vii) All leases and subleases in respect of Leased Real Property
Section 3.16(a) and 3.16(c) hereof are hereby incorporated by reference
(viii) Contracts entered into by the Company relating to the acquisition or
divestiture of a business that contain ongoing indemnification
liabilities.
None
(ix) All Contracts for capital expenditures in excess of $50,000
None
26
(x) Contracts for Clearing or sub-clearing services
a) Fully Disclosed Clearing Agreement dated September 24, 1997,
between the Pershing Division of Xxxxxxxxx Xxxxxx and Xxxxxxxx
Securities Corporation and DLJdirect Inc.
(xi) All Material Company IP Licenses
a) Emessaging Software License & Services Agreement, dated
January 12, 2001, between FloNetwork Inc. (currently
DoubleClick) and DLJdirect Inc.
b) BondDesk Trading Master Client Access Agreement dated as of
September 18, 2000 between BondDesk Trading LLC and DLJdirect
Inc.
c) Content Distribution Agreement dated as of May 1, 2000 between
OmniSky, Inc. and DLJdirect Inc., as amended
d) Amendment No. 1 dated as of October 1, 1998 between Xxxxxxxxx,
Lufkin & Xxxxxxxx Securities Corporation and Standard &
Poor's.
e) Letter of Agreement Business Wire and PC Financial Network
dated as of October 24, 1996 between Business Wire and PC
Financial Network.
f) Intuit Marketing Agreement Online Investment Services dated as
of May 8, 1998 between Intuit Inc. and DLJdirect Inc.
g) Morningstar, Inc. License Agreement dated as of December 1,
2001 between Morningstar, Inc. and CSFBdirect Inc.
h) Co-Marketing Agreement V.2 dated as of January 21, 2000
between GoAmerica Communications Corp. and DLJdirect Inc.
i) RiskMetrics Group, Inc. Hosted Services Agreement dated as of
August 20, 2001 between CSFBdirect Inc. and RiskMetrics Group,
Inc.
j) TIN Website Agreement dated as of December 29, 1997 between
Thomson Investors Network and DLJdirect Inc.
k) Proposal for Site Maintenance Agreement dated as January 26,
2001 between CSFBdirect Inc. and Industrial Cooling
Corporation.
l) License Agreement Terms and Conditions dated as of September
13, 1999 between DLJdirect Inc. and CommScan L.L.C.
m) Interactive Marketing Agreement dated as of December 15, 2000,
amended as of March 25, 2001 and August 27, 2001 between
America Online, Inc. and DLJdirect Inc.
27
n) Mobile Channel Agreement, dated as of October 2, 2000 between
DLJdirect Inc. and AT&T Wireless Services, Inc.
o) Introducing Broker Agreement dated as of May 25, 2000 between
MBNA America Bank, N.A. and DLJdirect Inc.
p) License Agreement dated as of May 25, 2000 between MBNA
America Bank, N.A. and DLJdirect Inc.
q) Affinity Agreement dated as of May 25, 2000 between America
Bank, N.A. and DLJdirect Inc.
r) Presenting Sponsorship Contract dated as of May 30, 2000
between Vail Valley Foundation and DLJdirect Inc.
s) MuniGroup Trading Master Client Access Agreement dated as of
September 18, 2000 between XxxxXxxxx.xxx, LLC and DLJdirect
Inc.
t) Smartmoney Content Distribution Agreement, dated June 15,
2001, between Dow Xxxxx and Company, Inc., Hearst
Communications, Inc. and CSFBdirect Inc.
u) IMG Worldwide, Inc Golf Sponsorship, dated March 17, 2000,
amended as of May 16, 2001, between IMG Worldwide, Inc. and
DLJdirect Inc.
v) Corporate Partnership Agreement, dated September 23, 1999,
amended July 1, 2001, between Vail Resorts Management Company
and CSFBdirect Inc.
w) Content Distribution Agreement, dated July 7, 1999, amended as
of August 21, 2001, between Dow Xxxxx & Company, Inc. and
DLJdirect Inc.
x) Dow Xxxxx Indexes Enterprise Distribution Agreement dated as
of June 1, 2001 between CSFBdirect Inc. and Dow Xxxxx &
Company, Inc.
y) Cusip Electronic Distribution Agreement, dated March 26, 2001,
between Standard & Poor's Cusip Service Bureau and CFSBdirect
Inc.
z) Content License Agreement dated as of December 12, 1997
between DLJdirect Inc. and Charter Media, Inc.
aa) Morningstar, Inc. License Agreement dated as of November 9,
2001 between Morningstar, Inc. and CSFBdirect Inc.
bb) Morningstar, Inc. License Agreement dated as of October 9,
2001 between Morningstar, Inc. and CSFBdirect Inc.
cc) Morningstar, Inc. License Agreement dated as of December 1,
2001 between Morningstar, Inc. and CSFBdirect Inc.
28
dd) Content Subscription and Marketing Agreement dated as of June
15, 1999 between XxxXxxxxx.xxx and DLJdirect Inc.
ee) Data Subscriber License Agreement and Order Form, Xxxxxxx
Financial Systems, Inc. Securities History Data, dated October
1, 1996, between Xxxxxxx Financial Systems, Inc. and PC
Financial Network.
ff) Asset Master License Agreement between DLJdirect Inc. and
Mastercard
(xii) All advertising Contracts providing for aggregate payments exceeding
$100,000
a) CSFBdirect Tournament of Champions Title Sponsorship
Agreement, dated June 22, 2000, between Event Engine, Inc. and
CSFBdirect Inc.
b) Presenting Sponsorship Contract, dated May 30, 2000, between
Vail Valley Foundation and DLJdirect Inc.
c) Corporate Partnership Agreement, dated September 23, 1999,
between Vail Resorts Management Company and CSFBdirect Inc.,
as amended
d) IMG Worldwide, Inc Golf Sponsorship, dated March 17, 2000,
amended as of May 16, 2001, between IMG Worldwide, Inc. and
DLJdirect Inc.
e) Content Subscription and Marketing Agreement, dated June 15,
1999, between The Xxxxxx.xxx, Inc. and DLJdirect Inc.
f) Interactive Marketing Agreement dated as of December 15, 2000,
amended as of March 25, 2001 and August 27, 2001, between
America Online, Inc. and DLJdirect Inc.
g) Agreement, dated August 23, 2001, between CNN and CSFBdirect
Inc. (Order Confirmation)
h) Agreement, dated August 28, 2001, between Time Warner Cable
and CSFBdirect Inc. (Receipt of Proposal)
i) Agreement, dated August 27, 2001, between Money Magazine and
CSFBdirect Inc. (Insertion Order)
j) Agreement, dated October 1, 2001, between New York Times and
CSFBdirect Inc. (Insertion Order)
k) Expovillage Official Sponsor Agreement, dated November 1,
2000, between Xxxx Xxxxxx Worldwide and DLJdirect Inc.
(Bloomberg agreement)
l) Letter of Agreement, dated August 4, 2001, between
Competitrack Advertising Tracking Service and MVBMS/CSFBdirect
Inc.
29
(xiii) All material Contracts in respect of or with affinity partnerships and
registered investment advisors.
a) Sales Agreement, dated as of July 29, 1999, between DLJdirect
Inc. and WSW Capital, Inc., on behalf of and its capacity as
general partner or investment advisor to certain investment
funds, partnerships or other vehicles.
b) MBNA Affinity Agreement, dated May 25, 2000, between MBNA
America Bank, NA and DLJdirect Inc.
c) Self-Directed Brokerage Agreement, dated May 3, 1999, between
Xxxxxx Fiduciary Trust Company and DLJdirect Inc.
d) Introducing Broker Agreement, dated March 1, 2000, between
Bessemer Investor Services, Inc. and DLJdirect Inc.
e) Introducing Broker Agreement, dated November 8, 1999, between,
Xxxxxxx Financial Services, Inc. DLJdirect Inc.
f) Introducing Broker Agreement, dated as of December 28, 2000,
between Nomura Securities International, Inc. and DLJdirect
Inc.
g) Introducing Broker Agreement, dated June, 2000, between
DLJdirect Ltd. and DLJdirect Inc.
h) Self-Directed Brokerage Services Agreement, dated March 19,
2001, between CNA Trust Corporation and CSFBdirect Inc.
i) Self-Directed Brokerage Services Agreement, dated April 30,
2001, between SunGard Institutional Brokerage Inc., SunGard
Investment Products Inc., and CSFBdirect Inc.
j) Self-directed Brokerage Services Agreement, dated June 26,
2001, between Nationwide Trust Company, FSB, Nationwide
Retirement Solutions, Inc., Nationwide Investment Services
Corporation and CSFBdirect Inc.
k) Self-directed Brokerage Services Agreement, dated August 23,
1999, between 401(K) Company and DLJdirect Inc.
l) Self-Directed Brokerage Services Agreement, dated June 1,
2001, between Xxxxxx Associates LLC, Xxxxxx Financial Services
LLC, and CSFBdirect Inc.
m) Self-Directed Brokerage Services Agreement, dated February 25,
2000, between Exeter Trust Company, Inc. and DLJdirect Inc.
n) Self-Directed Brokerage Services Agreement, dated February 28,
2001, between Transamerica Life Insurance and Annuity Company,
AUSA Life Insurance Company, Inc. and Transamerica Financial
Resources Inc.
30
o) Self-Directed Brokerage Services Agreement, dated July 7,
2000, between New England Financial and DLJdirect Inc.
p) Institutional Self-Directed Brokerage Agreement, dated
September 21, 2000, between Bank of New York and DLJdirect
Inc.
q) Institutional Self-Directed Brokerage Services Agreement,
dated April 20, 2001, between Aetna Investment Services, LLC
and CSFBdirect Inc.
r) Self-Directed Brokerage Services Agreement, dated June 28,
2000, between Financial Administrative Services Corporation,
Greenwood Investments, Inc. and DLJdirect Inc.
s) Self-Directed Brokerage Services Agreement, dated May 5, 2000,
between Xxxx Xxxxxxx Funds, Inc. and DLJdirect Inc.
t) Self-Directed Brokerage Services Agreement, dated August 18,
2000, between MFS Retirement Services, Inc. and DLFdirect Inc.
u) Self-Directed Brokerage Account Processing Services and Fee
Agreement, dated September 13, 2000, between Reliance Trust
Company and DLJdirect Inc.
v) Customer Referral Agreement, dated April 4, 2000, between
Citistreet LLC and DLJdirect Inc.
w) Service Agreement, dated October 22, 2001, between Accredited
Only, Inc. and CSFBdirect Inc.
x) Separate Account Manager Services Agreement, dated October 30,
2001, between Nordea Securities, Inc. and CSFBdirect Inc.
y) In addition, the Company is a party to a Services Agreement
with each of the institutions listed below. Pursuant to such
agreements, which are all substantially on the same form, the
Company provides brokerage and related services to the
institution to effect transactions for such institution's
clients who enter into customer agreements with the Company.
In addition, the Company provides the institution with access
to software, databases, access devices or other communication
facilities which enable the institution to enter purchase and
sale orders for securities for such institution's clients.
o Advisor Partners, LLC, dated August 29, 2001
x Xxxxxx Management Co., Inc., dated October 15, 2001
x Xxxxx Financial Advisors, Inc., dated November 13,
2001
o Diesslin and Associates, Inc., dated March 28, 2001
o Vestar Strategic, LLC, dated December 13, 2000
x Xxxxx and Xxxxxx Portfolio Management, dated October
3, 2001
o Xxxxxx X. Xxxxxx Companies, LLC, dated September 7,
2001
31
x Xxxxxx Financial Services, Inc., dated August 21,
2001
o Hennsler Asset Management, LLC, dated September 4,
2001
o The Xxxxxx Group, dated January 12, 2001
o Liberty Capital Management, dated December 12, 2000
x XxXxxxxx Financial Planning, dated October 15, 2001
o The MDE Group, dated October 3, 2001
o Spectrum Asset Management, dated October 9, 2001
x Xxxxx and Xxxxxx Financial Group, dated August 7,
2001
o SORA Associates, LLC, dated October 15, 2001
o Silver Creek Equity Management, LLC, dated October
30, 2001
o Talkot Capital, LLC, dated September 4, 2001
o Seattle Capital*
o Xxxxxxxx Xxxxxxxxx*
x Xxxxx Asset Management*
o Allegiance Capital*
x Xxxxx*
o AIM Funds*
o Brandeis*
o 1838 Investment Advisors*
z) The Company is a party to a CSFBdirect Institutional Services
Agreement with each of the Institutions listed below. Pursuant
to such agreements, which are all substantially on the same
form, the Company provides brokerage and related services to
the institution to effect transactions for such institution's
clients who enter into customer agreements with the Company.
In addition, the Company provides the institution with access
to software, databases, access devices or other communication
facilities which enable the institution to enter purchase and
sale orders for securities for such institution's clients.
o Buckhead Capital Management, LLC, dated May 14, 2001
o Caprock Capital Advisors, Inc., dated July 2, 2001
o The Commonwealth Group, Inc., dated July 27, 2001
o Corbin and Company, dated June 6, 2001
o CFS Investment Advisory Services, LLC, dated June 15,
2001
o GMG Asset Management, Inc., dated July 2, 2001
o Knightsbridge Asset Management, LLC, dated November
10, 2000
o One Capital Management, LLC, dated August 29, 2001
o Quantitative Advantage, July 25, 2001
x Xxxxxxxxx, Griege & Xxxxxx Capital Management, dated
May 31, 2001
o Xxxxxx Xxxxx, dated June 15, 2001
o Wetherby Asset Management, dated May 18, 2001
----------
* Pending
32
aa) The company is a party to a CSFBdirect Institutional Sub-
Advisor Services Agreement with each of the institutions
listed below. Pursuant to such agreements, which are all
substantially on the same form, the Company provides brokerage
and related services to the institution to effect transactions
for such institution's clients who enter into customer
agreements with the Company. In addition, the Company provides
the institution with access to software, databases, access
devices or other communication facilities which enable the
institution to enter purchase and sale orders for securities
for such institution's clients.
o Capstone Asset Management Company, dated August 24,
2001
o Miller/Xxxxxx Investments, dated September 17, 2001
o Navallier & Associates, dated October 15, 2001
o Starbuck, Tisdale & Associates, August 25, 2001
o Oak Associates, Ltd., dated November 6, 2001
33
Section 3.16(a)
REAL AND TANGIBLE PROPERTY
CITY PROPERTY COMPANY CURRENT STATUS AREA IN FT(2) LEASE END DATE
ATLANTA, GA The Capital CSFBdirect Inc. Occupied/Retail 1,776 April 15, 0000
Xxxxxxxx, Xxxx
Xxxxx Xxxxx Xxxx
XXXXXXX, XX 33 North CSFBdirect Inc. Occupied/Retail 1,603 February 29, 0000
XxXxxxx Xxxxxx
XXXXXX XXXXX, XX The Shoppes at DLJ Securities Occupied/Retail 1,335 January 31, 0000
Xxxxxxx Xxxxx Xxxxxxxxxxx
XXX XXXX, XX 000 Xxxx Xxxxxx XXXXxxxxxx Inc. Occupied/Retail 3,000 March 31, 0000
XXXXXXXXXXXX, XX The Shoppes and CSFBdirect Inc. Occupied/Retail 1,760 March 31, 0000
Xxxxxx xx
Xxxxxxxx, Xxxxx
Xxxxxx Xxxxxxxx
XXXXXXXXXX, XX 8989 North CSFBdirect Inc. Vacant 2,117 December 31, 0000
Xxxxxxxxxx Xxxx
34
CITY PROPERTY COMPANY CURRENT STATUS AREA IN FT(2) LEASE END DATE
XXXXXXXXX Xxx Xxxx Xxxxxx XXX Securities Occupied/ 87,184 September 20, 2009
Plaza Corporation Offices
XXXXXXXXX Xxx Xxxxx Xxxxx XXX Securities Offices/vacant 25,237 January 14, 2004
Xxxxx Xxxxxxxxxxx
XXXXXX XXXX Xxxxx XX, XXX Securities 6th floor sublet to 206,185 less October 31, 2011
Harborside Corporation and Metlife except 81,851
Financial Center CSFBdirect data center, sublet =
Holdings Inc. 5th floor CSFBdirect 124,334
and iNautix
including
data center. 0xx
Xxxxx XXXXxxxxxx
XXXXXXXXXX Xxxxxx XXX Securities Vacant former 36,580 September 30, 2003
Corporate Corporation call center
Center III
XXXX XXXX XXXX 000 Xxxx Xxxxx XXX Securities Part occupied/part 144,927 November 30, 0000
Xxxxxx Xxxxx Corporation vacant former
call center
35
Section 3.16(c)
SUBLEASED REAL PROPERTY
None
36
Section 3.17(a)
INTELLECTUAL PROPERTY
(i) o Trademark registrations and applications owned by the Company
None
o Trademark registrations and applications licensed to the
Company by DLJ Long Term Investment Corp.
REGISTRATIONS AND APPLICATIONS FOR MARKS
USED IN THE TERRITORY
REGISTRATION/
TRADEMARK COUNTRY APPLICATION RENEWAL DATE
NUMBER
FUNDCENTER Mexico 617212 30-Jun-2009
FUNDCENTER Xxxxxx Xxxxxx 0000000 29-Jul-2007
FUNDCENTER Canada 1016843 (App)
FUNDSCAN Cayman Islands 2198997 01-Jun-2009
XXXXXXXX Xxxxxx 000000 10-Jun-2009
FUNDSCAN Xxxxxx Xxxxxx 0000000 20-Feb-2011
FUNDSCAN Canada 1016839 (App)
[FUNDSCAN BERMUDA 30790 (APP)]
MARKETSPEED United States 2421979 16-Jan-2011
XXXXXXXXXXX Xxxxxx Xxxxxx 0000000 12-Sep-2010
XXXXXXXXXXX Xxxxxx 000000 04-Jun-2009
XXXXXXXXXXX Xxxxxx 000000 04-Jun-2009
XXXXXXXXXXX Xxxxxx 000000 17-Dec-2009
MARKETSPEED Cayman Islands 2216815 00-Xxx-0000
XXXXXXXXXXX Xxxxxx Xxxxxxx 0000000
XXXXXXXXXXX Xxxxxx 1050126 (App)
MARKETSPEED Canada 1016844 (Xxx)
[XXXXXXXXXXX XXXXXXX 00000 (XXX)]
[MARKETSPEED BERMUDA 30788 (APP)]
[MARKETSPEED BERMUDA 31223 (APP)]
XXXXXXXXX Xxxxxx 000000 21-Jul-2009
XXXXXXXXX Xxxxxx 000000 21-Jul-2009
XXXXXXXXX Xxxxxx Xxxxxx 0000000 01-Aug-2010
STOCKSCAN Canada 1019514 (Xxx)
[XXXXXXXXX XXXXXXX 00000 (XXX)]
[STOCKSCAN BERMUDA 30786 (APP)]
37
REGISTRATION/
TRADEMARK COUNTRY APPLICATION RENEWAL DATE
NUMBER
TRADETALK Cayman Islands 2202989 14-Jul-2009
TRADETALK Canada 1016838 (App)
TRADETALK United States 75/743643 (Xxx)
[XXXXXXXXX XXXXXXX 00000 (XXX)]
TRADE TALK Mexico 630350 10-Jun-2009
TRADE UP Xxxxxx Xxxxxx 0000000 16-May-2010
TRADE UP Mexico 617208 10-Jun-2009
TRADE UP Canada 1016842 (App)
[TRADE UP BERMUDA 30792 (APP)]
REGISTRATIONS FOR MARKS OWNED BY
COMPANY IN THE TERRITORY
REGISTRATION/
TRADEMARK COUNTRY APPLICATION RENEWAL DATE
NUMBER
PUTTING OUR
REPUTATION ONLINE United States 2451945 15-May-2011
TRANSFER TRACKER United States 76/186556 (App)
MARKS PREVIOUSLY USED IN THE TERRITORY
REGISTRATION/
TRADEMARK COUNTRY APPLICATION RENEWAL DATE
NUMBER
PC FINANCIAL NETWORK
(AND DESIGN) Xxxxxx Xxxxxx 0000000 16-Apr-2006
PC FINANCIAL
NETWORK'S MAXIMIZER United States 1964265 26-Mar-2006
DOLLAR SIGN COLOR
DESIGN (PC FINANCIAL
NETWORK DESIGN) Xxxxxx Xxxxxx 0000000 31-Oct-2005
PCFN United States
PERSONAL CONTROL
FINANCIAL NETWORK United States
DLJ DIRECT United States 2270195 17-Aug-2009
DLJ DIRECT (XXXXX
XXXXXXX) Xxxxxx 000000 20-Aug-2008
38
REGISTRATION/
TRADEMARK COUNTRY APPLICATION RENEWAL DATE
NUMBER
DLJ DIRECT (BLOCK
LETTERS) Mexico 626709 20-Aug-2008
DLJ DIRECT (BLOCK
LETTERS) Cayman Islands 2175943 27-Aug-2008
DLJ DIRECT (BLOCK AND
STYLIZED SERIES) Bermuda 30068 23-Sep-2005
DLJ DIRECT (BLOCK AND
STYLIZED SERIES) Bermuda 30069 23-Sep-2005
DLJ DIRECT (B&W LOGO) Mexico 617551 20-Aug-2008
DLJ DIRECT (B&W LOGO) Mexico 617552 20-Aug-2008
DLJ DIRECT (B&W LOGO) Xxxxxx Xxxxxx 0000000 00-Xxx-0000
XXX DIRECT SERIES (B&W
AND COLOR LOGO) Bermuda 30070 23-Sep-2005
DLJ DIRECT SERIES (B&W
AND COLOR LOGO) Bermuda 30071 23-Sep-2005
DLJ DIRECT SERIES (B&W
AND COLOR LOGO) Cayman Islands 2175942 27-Aug-2008
DLJ DIRECT (COLOR
LOGO) Mexico 617553 20-Aug-2008
DLJ DIRECT (COLOR
LOGO) Mexico 617554 20-Aug-2008
DLJ DIRECT (COLOR
LOGO) Xxxxxx Xxxxxx 0000000 28-Dec-2009
(ii) o The following domain name registrations are registered to CSFBdirect
Holdings, Inc.:
XXXXXXXXXXXXXXXXX.XXX
XXXXXXXXXXXXXXX.XXX
XXXXXXXXXXXXXXXXX.XXX
XXXXXXXXXXXXXXXXX.XXX
XXXXXXXXXXXXXXXXX.XXX
XXXXXXXXXXXXXXXXX.XXX
XXXXXXXXXXXXXXXXX.XXX
XXXXXXXXXXXXXXXXX.XXX
o The following domain name registrations are registered to DLJdirect
Holdings, Inc.:
XXXXXXXXXX.XXX
39
XXXXXXXXXXXXXXXXX.XXX
XXXXXXXXXX.XXX
XXXXXXXXXXXX.XXX
XXXXXXXXXXXXXXXXX.XXX
XXXXXXXXXXXXXXX.XXX
XXXXXXX.XXX
XXXXXXXXX.XXX
XXXXXXXXXXXXXX.XXX
XXXXXXXXX.XXX
XXXXXXXXXXXXXXXX.XXX
XXXXXXX.XXX
XXXXXXXXXXXXXXXXXXXX.XXX
XXXXXXXXXXXXXXXXXXXXXXX.XXX
XXXXXXXXXX.XXX
XXXXXXXXXX-XX.XXX
XXXXXXXXXXX.XXX
XXXXXXXXXX-XX.XXX
XXXXXXXXXXXXXXX-XXXXXXXXXX.XXX
XXXXXXXXXXXXXXX.XXX
XXXXXXXXXXXXXXXXX.XXX
XXXXX.XXX
XXXXXXXXXXXXXXXXXX.XXX
XXXXXXXXXXXXXXXXXXXXXX.XXX
XXXXXXXXXXXXXXXXXX.XXX
XXXXXXXXXXXXXXX.XXX
40
XXXXXXXXXX.XXX
XXXXXXXXX-XXXXXX.XXX
XXXXXXX.XXX
XXXXXXXXXXXXXXXXX.XXX
XXXXX.XXX
XXXXXXXXXX-XXXXXXX.XXX
XXXXXXXX.XXX
XXXXXXXXXXX.XXX
XXXXXXXXXXXXXXXX.XXX
XXXXXXXX.XXX
XXXXXXXXXXXXXX.XXX
XXXXXXXXXXXXXX.XXX
XXXXXXXXXXXX.XXX
XXXXXXXXXX-XXXXXX.XXX
XXXXXXXXXX-XXXXXX.XXX
(iii) Common law Trademarks material to the Company's business.
None
(iv) Material Software.
Software licensed pursuant to the Company IP Licenses and Excluded IP
Licenses, as applicable, and the iNautix Agreement.
41
Section 3.17(b)
INTELLECTUAL PROPERTY
a) Xxxx: Attorney representing Xxxx sent a letter to a client of
CSFBdirect Inc. alleging that Xxxx'x patents were being infringed by
CSFBdirect Inc.'s IVR telephone system. A complaint has not been filed.
b) Techsearch LLC: Techsearch notified CSFBdirect that its website induces
the infringement by others of various parts of Techsearch's patent.
Techsearch is willing to grant a license for a one-time payment of
$80,000. A complaint has not been filed.
c) XXXXXXXX V. DLJDIRECT: Xxxxxxxx claims that his patents cover all but
the most rudimentary Internet security methods and that CSFBdirect has
infringed these patents.
d) WARNER-XXXXXXXXX PUBLISHING CORP. V. DLJDIRECT INC., DLJ INC. AND
KISHENBAUM BOND & PARTNERS: Warner-Xxxxxxxxx claims that CSFBdirect
used a copyrighted musical composition in a CSFBdirect television
commercial without permission. Kishenbaum has agreed to indemnify the
Company pursuant to its indemnification agreement and has retained
counsel to represent both CSFBdirect and DLJ Securities in this matter.
e) Brazil: DLJLTIC V. ULTRAPRISE CORPORATION: DLJLTIC Xxxx: TRADE UP,
Application No. 821688774 v. Ultraprise Xxxx: TRADE ON, Application No.
821867067. Opposition Filed 12/6/1999, Published, 10/16/2001; Response
Due: 12/16/2001
f) CTM: DLJLTIC V. ULTRAPRISE CORPORATION, OPPOSITON NO. B292237: DLJLTIC
Xxxx: TRADE UP, Application No. 1193788 v. Ultraprise Corporation Xxxx:
TRADE ON, Application No. 1253483. Opposition Filed 7/27/1999
g) CTM: ULTRAPRISE CORPORATION V. DLJLTIC: Ultraprise Corporation Xxxx:
TRADE ON, Application No. 1253483 v. DLJLTIC Xxxx: TRADE UP,
Application No. 1193788. Opposition Filed 12/4/2000
42
Section 3.18
ASSETS
a) Lipper Inc. Research and Webfeed Agreement dated as of September 1,
1999 between Lipper Inc. and Xxxxxxxxx, Lufkin & Xxxxxxxx Securities
Corporation.
b) ECheck Secure for CSFBdirect Holdings Inc. dated as of March 22, 2001
between Xxxx Systems International, Inc. and CSFBdirect Holdings, Inc.
c) Agreement dated as of December 10, 1999 between ILX Systems and iNautix
Technologies Inc.
d) Content License & Services Agreement dated as of August 22, 2000
between XxxxxxXxxxx.xxx, Inc. and iNautix Technologies Inc.
e) A-T Financial Master Distribution Terms and Conditions Agreement, dated
November 30, 2000, between A-T Financial Information, Inc. and iNautix
Technologies, Inc.
f) Agreement, dated October 1, 1996 between the Pershing division of DLJ
Securities Corporation and Standard & Poor's
g) Consulting Services Agreement, dated February 3, 2000, between
Chordiant (formerly Prime Response) and iNautix Technologies, Inc.
h) Software License Agreement, dated April 25, 2000, between Speechworks
International, Inc. and iNautix Technologies, Inc.
i) Professional Services Agreement, dated April 25, 2000, between
Speechworks International, Inc. and iNautix Technologies, Inc.
j) Amendment To Professional Services Agreement, dated December 20, 2000,
between Speechworks International, Inc. and iNautix Technologies, Inc.
k) Agreement for the Development and License of Software, dated March 27,
1998, between A-T Financial Information, Inc. and iNautix Technologies,
Inc.
l) Customer Agreement, dated May 29, 1997, between Aspect
Telecommunication Corporation and the Pershing division of DLJ
Securities Corporation
m) Content Licensing Agreement dated as of November 1, 1998 between
DLJdirect Inc. and Zacks Investment Research Incorporated, subsequently
assigned by the Company to iNautix Technologies, Inc. on June 23, 2000
n) Software End User License and Services Agreement, dated June 30, 1995
between Peoplesoft USA Inc. and Xxxxxxxxx Leasing Corp.
43
o) US Volume Purchase Agreement dated April 6, 2000, between Cisco
Systems, Inc. and iNautix Technologies, Inc.
p) Master Services Agreement dated April 10, 2000, between Cisco Systems,
Inc. and iNautix Technologies, Inc.
q) Non-Disclosure Agreement dated July 10, 2001, between Cisco Systems,
Inc. and iNautix Technologies, Inc.
44
Section 3.19(a)
EMPLOYEE BENEFIT PLANS; LABOR MATTERS
a) Severance Agreement by and between K. Xxxxx Xxxxx and Credit Suisse
First Boston Corporation
b) Severance Agreement by and between Xxxxx Xxxxxx and Credit Suisse First
Boston Corporation
c) Employees' Savings and Retirement Plan of Credit Suisse First Boston
d) Employees' Pension Plan of Credit Suisse First Boston
e) Deferred Compensation Plan of Credit Suisse First Boston
f) Defined Benefit Master Trust Agreement by and between Credit Suisse
First Boston Corporation and Mellon Bank, N.A.
g) Trust Agreement between Credit Suisse First Boston Corporation and
Fidelity Management Trust Company establishing Employees' Savings and
Profit Sharing Plan of Credit Suisse First Boston Trust
h) Human Resources Policies and Procedures Manual
o Maternity and Paternity Benefits
o Adoption Leave
o Honeymoon Leave
o Family, Medical and Personal Leave Policies
o Tuition Reimbursement
o Vacation
o Annual Required Absence
o Bonus Days
o Leave for Analysts Promoted to Associates
o Sabbatical Leave
o Health Club Reimbursement
o Executive Physicals
45
o Loyalty Bonus
o Mortgage Assistance
o Avoiding Workplace Harassment Policy
i) CSFBdirect Severance Plan
j) Health Care Plans
k) Dental Plan
l) Flexible Spending Accounts (including the Pre-tax Contribution Plan,
the Medical Reimbursement Plan and the Dependent Care Plan)
m) Flexible Life Insurance Plan
n) Spousal Life Insurance Plan
o) Personal Accident Insurance
p) Business Travel Accident Insurance
q) Short-Term Disability Plan
r) Long-Term Disability Plan
s) Group Personal Excess Liability Insurance
t) Accidental Death & Dismemberment Insurance
u) Workers' Compensation Insurance
v) Employee Assistance Program
w) Child Care Centers and Programs
x) Merchant Banking Plans: The following arrangements are leveraged
co-investment arrangements in which certain CSFB employees participate,
including CSFBdirect employees. CSFBdirect participants will continue
to participate, if applicable, pursuant to the terms of the
arrangements.
o EMA 2001
o DLJ/LBO Incentive Plans (1992 - 1999)
o DLJ/LBO Incentive Plans (2000 and 2001 LBO Plans)
o DLJ/MBIP Incentive Plans (1992 - 2000)
46
o DLJ Fund Investment Partners II, L.P.
y) LTI VI Plan: [Long term incentive plan which will be paid out in July
2002].
z) Executive Supplemental Retirement Programs: [Benefits will be paid out
pursuant to the terms of the plan.]
o DLJ Executive Supplemental Retirement Program I
o DLJ Executive Supplemental Retirement Program II
o DLJ Executive Supplemental Retirement Program III
- Employees of the Company participate, or are eligible to participate in, each
of the Company Plans, except for the Employee Pension Plan of Credit Suisse
First Boston.
- Other than the CSFBdirect Severance Plan, the Company does not sponsor any
Company Benefit Plan.
47
Section 3.19(g)
EMPLOYEE BENEFIT PLANS; LABOR MATTERS
Severance Agreement by and between K. Xxxxx Xxxxx and Credit Suisse First Boston
Corporation
48
Section 3.20
TAXES
None
49
Section 3.21
RELATIONSHIPS WITH RELATED PERSONS
None
50
Section 5.01(a)
CONDUCT OF BUSINESS PRIOR TO CLOSING
The Company presently intends to terminate the Letter Agreement dated
June 2, 1997 between Xxxxxxxxx Lufkin & Xxxxxxxx Securities Corporation and PC
Financial Network, Inc.
51
Section 5.01(b)
CONDUCT OF BUSINESS PRIOR TO THE CLOSING
None
52
Section 5.08
RELEASE OF INDEMNITY OBLIGATIONS; ASSUMPTION OF CERTAIN EMPLOYEE OBLIGATIONS
None
53
Section 9.02
INDEMNIFICATION OF THE PURCHASER
a) The investigation being conducted by various governmental authorities
and SROs in connection with the allocation of shares in IPOs, and all
claims and litigation arising out of the investigation, including third
party claims.
b) The matters described in clauses (a), (b) and (c) of Section 3.17(b) of
the Disclosure Schedules.
c) The Xxxxxxx.xxx matter.
d) The Xxxxxxxx matter.
54
FIRST AMENDMENT TO
PURCHASE AGREEMENT
THIS FIRST AMENDMENT TO PURCHASE AGREEMENT (this "Amendment") dated as
of February 1, 2002 is entered into by and between Credit Suisse First Boston
(USA), Inc., a Delaware corporation (the "Seller") and Bankmont Financial Corp.,
a Delaware corporation (the "Purchaser").
WHEREAS, the Seller and the Purchaser are parties to a Purchase
Agreement, dated as of November 28, 2001 (as amended, the "Purchase Agreement").
Capitalized terms used but not otherwise defined herein shall have the meanings
set forth in the Purchase Agreement; and
WHEREAS, the Seller and Purchaser desire to make certain amendments to
the Purchase Agreement on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises, and intending to be
legally bound hereby, the Seller and the Purchaser hereby agree as follows:
SECTION 1 PURCHASE AGREEMENT.
Subject to and upon the terms and conditions set forth herein, the
Purchase Agreement is amended as follows:
1.1 Section 2.02 of the Purchase Agreement shall be amended and
restated to read as follows:
"Section 2.02. PURCHASE PRICE. The Purchase price for the LLC
Interests and the assets set forth in Section 2.02 of the Disclosure
Schedule shall be $517,339,321, (the "PURCHASE PRICE"), together with
interest thereon during the period from (and including) February 2
through February 3, 2002 at the interest rate equal to that earned by
the Purchaser (or any of its affiliates) on such funds during such
period, subject to the adjustment set forth in Section 2.06."
1.2 Section 2.06 of the Purchase Agreement shall be amended by adding
the following to the end of such Section as a new subsection(d):
"(d) Notwithstanding anything contained in this Section 2.06 that may
be construed to the contrary, in no event shall the Purchase Price be
adjusted in connection with the transfer of the assets set forth in
Section 2.02 of the Disclosure Schedule, including without limitation
to reflect any capital contribution made in connection therewith."
1.3 The following sentence shall be inserted at the end of
Section 5.15 of the Purchase Agreement:
"The Seller shall use its reasonable best efforts to cause the
Introducing Broker Agreement, dated February 11, 2000, between DLJDIRECT-eUnion
and DLJDIRECT Inc. (the "INTRODUCING BROKER AGREEMENT") to be terminated or
assigned to another person as soon as practicable after the Closing and the
Purchaser agrees to cause the Company to cooperate with the Seller in effecting
the foregoing. In addition, the Seller agrees to pay to the Company, monthly in
arrears by wire transfer of immediately available funds to a bank account
designated by the Company, $25,000 for each week (or portion thereof) following
the Closing Date in which the Introducing Broker Agreement has not been so
terminated or assigned."
1.4 Section 5.16 of the Purchase Agreement shall be amended by adding
the following to the beginning of such Section:
"Except as agreed by the Seller and the Purchaser,"
1.5 Section 5.18 of the Purchase Agreement shall be amended and
restated as follows:
"At or prior to the Closing, the Seller shall cause all right, title
and interest to the assets described in Section 2.02 of the Disclosure
Schedule to be transferred to the Company pursuant to an assignment
agreement in form and substance (not including purchase price, which
shall be determined pursuant to Section 7.06(f)) reasonably
satisfactory to the Purchaser. In addition, at Closing, the Purchaser
shall cause all right, title and interest to the assets described in
Exhibit A hereto to be transferred to Seller pursuant to a Xxxx of
Sale in the form attached hereto as Exhibit B. If and to the extent
that any asset has been mistakenly transferred to the Company or
retained by the Seller on the Closing Date, the parties shall, within
30 days after the Closing, use all reasonable efforts to transfer such
assets for no consideration from the Company to the Seller or from the
Seller to the Company, as appropriate."
1.6 The following Section 5.20 shall be added to the Purchase
Agreement:
5.20. UNITED KINGDOM. Following the Closing, the Seller will use its
reasonable best efforts to assist the Purchaser in transferring the
accounts arising out of the Introducing Broker Agreement, dated
June 16, 2000, by and between DLJDIRECT Ltd. and DLJDIRECTInc., to a
third party."
1.7 The following clause (xi) shall be inserted at the conclusion of
the first sentence in Section 9.02(a), and the "and" prior to clause (x) shall
be deleted:
2
"and (xi) the Introducing Broker Agreement that do not arise from a
breach by the Company of any of its obligations under such agreement."
SECTION 2 SCHEDULES.
2.1 Section 2.02 of the Disclosure Schedule shall be replaced in its
entirety by Exhibit D hereto.
2.2 All references to the License Agreement, dated September 2, 1997,
between DLJ Long Term Investment Corporation and DLJDIRECT Inc., in the
Disclosure Schedule, including but not limited to the eighteenth bullet-point
under Section 3.07(a)(a) of the Disclosure Schedule, shall refer instead to the
License Agreement, dated March 11, 1999, between DLJ Long Term Investment
Corporation and DLJdirect Holdings, Inc.
SECTION 3 GENERAL.
3.1 COUNTERPARTS. This Amendment may be executed in any number of
counterparts and either party hereto may execute any counterpart, each of which
when executed and delivered will be deemed to be an original and all of which,
when taken together, will be deemed to be one and the same Amendment.
3.2 REAFFIRMATION. As herein modified, the Purchase Agreement shall
remain in full force and effect and is hereby ratified, approved and confirmed
in all respects.
3.3 REFERENCES. On and after the date hereof, each reference in the
Purchase Agreement and the related documents to "Purchase Agreement," "this
Agreement" or words of like import shall, unless the context otherwise requires,
be deemed to refer to the Purchase Agreement as modified hereby.
3.4 BINDING AGREEMENT. This Amendment shall be binding upon the Seller
and the Purchaser and their respective successors and assigns.
3
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed by their respective officers thereunto duly authorized as of the day
and year first above written.
CREDIT SUISSE FIRST BOSTON (USA),
INC.
By: /s/ Xxxx Xxxxx
-------------------------
Title:
BANKMONT FINANCIAL CORP.
By:
---------------------
Title:
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed by their respective officers thereunto duly authorized as of the day
and year first above written.
CREDIT SUISSE FIRST BOSTON (USA),
INC.
By:
----------------------------
Title:
BANKMONT FINANCIAL CORP.
By:
/s/ [ILLEGIBLE]
----------------------------
Title: Executive VP and General Counsel
EXHIBIT A
SCOTTSDALE, ARIZONA TRANSFERRED ASSETS
See attached list
5
DECEMBER 31 2001 JANUARY 31 2002
ESTIMATED ESTIMATED
SCOTTSDALE AMOUNT DEPRECIATION NBV DEPRECIATION NBV
----------------------- ------------- ------------------ ------------- ---------------- -----------------
NETWORK EQUIP 30,564.26 (2,673.99) 27,890.29 (509.41) 27,380.88
SOFTWARE 0.00 0.00 0.00 0.00 0.00
PC'S 4,431.40 (797.95) 3,663.45 (123.09) 3,510.36
COMMUNICATION EQUIP 18,963.05 (796.62) 18,166.43 (316.05) 17,850.37
FURNITURE AND FIXTURES 11,557.13 (120.39) 11,436.74 (120.39) 11,316.35
EQUIPMENT 55,713.00 (4,616.08) 51,096.92 (773.79) 50,323.13
LEASEHOLD 584,686.08 (29,245.24) 555,440.82 (5,142.99) 550,297.83
----------------------- ------------- ------------------ ------------- ---------------- -----------------
TOTAL 705,914.92 (38,250.27) 667,664.65 6,985.73 660,678.92
----------------------- ------------- ------------------ ------------- ---------------- -----------------
EXHIBIT B
XXXX OF SALE
6
XXXX OF SALE AND ASSINGNMENT AND ASSUMPTION AGREEMENT
XXXX OF SALE AND ASSIGNMENT AND ASSUMPTION AGREEMENT, dated as of
February 1, 2002 (this "AGREEMENT"), by and between CSFBDIRECT HOLDINGS LLC, a
Delaware limited liability company ("CSFB"), and CSFBDIRECT LLC, a Delaware
limited liability company (the "COMPANY").
WHEREAS, Credit Suisse First Boston (USA), Inc., a Delaware
corporation, and Bankmont Financial Corp., a Delaware corporation, have entered
into a Purchase Agreement, dated as of November 28, 2001, as amended on February
1, 2001 (the "PURCHASE AGREEMENT;" unless otherwise defined herein, capitalized
terms shall be used herein as defined in the Purchase Agreement); and
WHEREAS, the Company desires to transfer certain assets to CSFB at
Closing;
NOW, THEREFORE, in consideration of the promises and mutual agreements
set forth in the Purchase Agreement, and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, CSFB and the
Company hereby agree as follows:
1. SALE AND ASSIGNMENT OF ASSETS. The Company hereby sells, assigns,
transfers and conveys unto CSFB and its successors and assigns, forever, the
entire right, title and interest of the Company free and clear of all
Encumbrances in and to any and all of the assets included in the categories of
assets listed as Schedule 1 hereto (the "ASSETS").
2. ASSUMPTION OF LIABILITIES. CSFB hereby unconditionally and
irrevocably assumes and agrees to pay, perform and discharge promptly and fully
when due any and all Liabilities directly related to, or arising out of, the
Assets.
3. FURTHER ASSURANCES. The Company hereby covenants and agrees that,
at any time and from time to time after the date of this Agreement at CSFB's
request, the Company will do, execute, acknowledge and deliver, or will cause to
be done, executed, acknowledged and delivered, any and all further acts,
conveyances, transfers, assignments, and assurances as reasonably necessary to
sell, assign, transfer or convey to CSFB any of the Assets.
4. POWER OF ATTORNEY. The Company hereby constitutes and appoints
CSFB, its successors and assigns, the true and lawful attorney and attorneys of
the Company, with full power of substitution, in the name of CSFB or in the name
and stead of the Company, but on behalf of and for the benefit of CSFB, its
successors and assigns (and at the expense of the Company):
(a) to collect, demand and receive any and all Assets transferred
hereunder and to give receipts and releases for and in respect of the
same;
(b) to institute and prosecute in the Company's name, or
otherwise, for the benefit of CSFB, any and all actions, suits or
proceedings, at law, in equity or otherwise,
which CSFB may deem proper in order to collect, assert or enforce any
claim, right or title of any kind in or to the Assets hereby sold and
assigned to CSFB or intended so to be, to defend or compromise any and
all such actions, suits or proceedings in respect of any of such
Assets, and to do all such acts and things in relation thereto as CSFB
shall deem advisable for the collection or reduction to possession of
any of such Assets; and
(c) to take any and all other reasonable action designed to vest
more fully in CSFB the Assets hereby sold and assigned to CSFB or
intended so to be and in order to provide for CSFB the benefit, use,
enjoyment and possession of such Assets.
The Company acknowledges that the foregoing powers are coupled with an
interest and shall be irrevocable by it or upon its subsequent dissolution or in
any manner or for any reason. CSFB shall be entitled to retain for its own
account any amounts collected pursuant to the foregoing powers, including any
amounts payable as interest with respect thereto. The Company shall from time to
time pay to CSFB, when received, any amounts that shall be received directly or
indirectly by the Company (including amounts received as interest) in respect of
any Assets sold, assigned or transferred to CSFB pursuant hereto.
5. ASSIGNMENT. This Agreement may not be assigned by operation of Law
or otherwise without the express written consent of the Company and CSFB;
PROVIDED, HOWEVER, that the Company or CSFB may assign this Agreement to an
Affiliate without such consent.
6. NO THIRD PARTY BENEFICIARIES. This Agreement shall be binding upon
and inure solely to the benefit of the parties hereto and their permitted
assigns and nothing herein, express or implied, is intended to or shall confer
upon any other Person any legal or equitable right, benefit or remedy of any
nature whatsoever under or by reason of this Agreement.
7. NO REPRESENTATIONS AND WARRANTIES. No representations or
warranties, express or implied, are made by the parties.
8. AMENDMENTS; NO WAIVER. This Agreement may not be amended or
modified except by an instrument in writing signed by, or on behalf of, the
Company and CSFB. No failure or delay on the part of either part in exercising
any right hereunder will operate as a waiver of, or impair, any such right. No
single or partial exercise of any such right will preclude any other or further
exercise thereof or the exercise of any other right. No waiver of any such right
will be deemed a waiver of any other right hereunder.
9. SEVERABILITY. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any Law or public policy, all
other terms and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner in order that the
transactions contemplated hereby are consummated as originally contemplated to
the greatest extent possible.
2
10. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
11. SPECIFIC PERFORMANCE. The parties hereto agree that irreparable
damage would occur in the event any provision of this Agreement was not
performed in accordance with the terms hereof and that the parties hereto shall
be entitled to specific performance of the terms hereof in addition to any other
remedy at law or equity.
12. GOVERNING LAW. This Agreement shall be construed in accordance
with and governed by the laws of the State of New York.
3
IN WITNESS WHEREOF, this Agreement has been executed by the Company
and CSFB as of the date first above written.
CSFBDIRECT HOLDINGS LLC
By:
----------------------------------
Name:
Title:
CSFBDIRECT LLC
By:
----------------------------------
Name:
Title:
EXHIBIT C
REVISED SECTION 2.02
7
Project Charlie
---------------
Summary of Fixed Assets
-----------------------
Category
--------
PerHarbor PerParsip PerCharlotte SandCity Pplaza - 1&10 Pplaza - 3&4 Pplaza - 11
Acquisition Acquisition Acquisition Acquisition Acquisition Acquisition Acquisition
Value Value Value Value Value Value Value
Communications Gross BV - -
Equipment Accum Dep - -
NBV 768,018 - - 1,696,460 -
Misc. Equipment Gross BV - -
Accum Dep - -
NBV 365,096 - - 248,817 -
Funiture & Gross BV - -
Fixtures Accum Dep - -
NBV 629,258 - - 292,271 -
Network Gross BV - -
Accum Dep - -
NBV 1,391,592 - - 1,210,857 -
PC's Gross BV - -
Accum Dep - -
NBV 486,116 - - 451,507 -
Software Gross BV - -
Accum Dep - -
NBV 1,594,262 - - - -
Leaseholds Gross BV - -
Accum Dep - -
NBV 2,051,311 - - 1,259,909 -
Total Gross BV - -
Accum Dep - -
NBV 7,285,654 - - 5,159,821 -
PerLakech Ebrunswick 300 Park PerTechCnt Pershing Total Total
Acquisition Acquisition Acquisition Acquisition Acquisition Acquisition Proposed
Value Value Value Value Value Value Value
Communications Gross BV
Equipment Accum Dep
NBV 1,302,757 32,004 - 3,799,239 379,924
Misc. Equipment Gross BV
Accum Dep
NBV 24,728 129,675 - 768,316 153,663
Funiture & Gross BV
Fixtures Accum Dep -
NBV 544,903 33,597 1,500,209 300,006
Network Gross BV
Accum Dep
NBV 483,306 31,790 3,117,548 311,755
PC's Gross BV
Accum Dep
NBV 447,483 33,541 1,418,647 141,865
Software Gross BV
Accum Dep
NBV 2,999 - 1,597,261 159,726
Leaseholds Gross BV
Accum Dep
NBV 1,903,379 1,354,726 6,569,325 1,642,331
Total Gross BV
Accum Dep
NBV 4,709,556 1,615,333 18,770,363 3,089,270
