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EXHIBIT 2.1
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MERGER AGREEMENT
Among
▇▇▇▇▇▇▇▇▇▇ ASSOCIATES,
and
U.S. TRUST COMPANY OF CALIFORNIA, N.A.,
UST-LA, INC.,
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
OCTOBER 11, 1996
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TABLE OF CONTENTS
ARTICLE Page
ARTICLE I THE MERGER; CLOSING: DELIVERY ................................. 1
1.1 Merger ........................................ 1
1.2 Closing ....................................... 1
1.3 Articles of Incorporation and By-Laws
of the Surviving Corporation ............... 2
1.4 Officers and Directors of the Surviving
Corporation ................................ 2
1.5 Conversion of Shares in the Merger ............ 2
1.6 Delivery ...................................... 4
ARTICLE II TRANSFER, STAMP AND OTHER TAXES .............................. 4
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER .................... 4
3.1 Organization, Good Standing and
Qualification .............................. 4
3.2 Authority ..................................... 4
3.3 Capital Structure ............................. 5
3.4 Financial Statements .......................... 5
3.5 Absence of Specified Changes .................. 5
3.6 Tax Returns and Audits ........................ 7
3.7 Real Property ................................. 7
3.8 Other Tangible Personal Property .............. 7
3.9 Copyrights, Trademarks and Patents ............ 7
3.10 Title to Assets ............................... 8
3.11 Existing Employment Contracts ................. 8
3.12 Insurance Policies ............................ 9
3.13 Other Contracts ............................... 9
3.14 Compliance with Laws .......................... 9
3.15 Litigation .................................... 9
3.16 Assets Sufficient for Conduct of Business ..... 10
3.17 Agreement Will Not Cause Breach or
Violation .................................. 10
3.18 Authority and Consents ........................ 10
3.19 Interest in Customers, Suppliers,
and Competitors ............................ 10
3.20 Corporate Documents ........................... 10
3.21 Personnel Identification and Compensation ..... 10
3.22 Powers of Attorney and Bank Accounts .......... 11
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Section Page
3.23 Business Addresses ............................ 11
3.24 Absence of Undisclosed Liabilities ............ 11
3.25 Full Disclosure ............................... 11
3.26 Specified Events .............................. 11
3.27 Tangible Book Value ........................... 12
ARTICLE IV BUYER'S AND MERGER SUB'S REPRESENTATIONS
AND WARRANTIES ................................................. 12
4.1 Organization .................................. 12
4.2 Authorization ................................. 12
4.3 Consents and Approvals ........................ 12
ARTICLE V SELLER'S OBLIGATIONS BEFORE THE CLOSING DATE .................. 13
5.1 Buyer's Access to Premises and Information .... 13
5.2 Conduct of Business in Normal Course .......... 13
5.3 Preservation of Business and Relationships .... 13
5.4 Maintenance of Insurance ...................... 13
5.5 Employees and Compensation .................... 13
5.6 Controlled Acts ............................... 14
5.7 Payment of Liabilities and Waiver of Claims ... 15
5.8 Existing Agreements ........................... 15
5.9 Statutory Filings ............................. 15
5.10 Delivery of Tax Returns ....................... 15
5.11 Client Consents ............................... 15
5.12 Termination of Qualified Plans ................ 15
ARTICLE VI BUYER'S OBLIGATIONS BEFORE THE CLOSING DATE .................. 15
6.1 Confidentiality ............................... 15
6.2 Governmental Filings .......................... 16
6.3 Best Efforts .................................. 16
6.4 Consents ...................................... 16
6.5 Contact with Clients .......................... 16
ARTICLE VII CONDITIONS PRECEDENT TO BUYER'S AND
MERGER SUB'S PERFORMANCE ..................................... 16
7.1 Accuracy of Seller's Representations
and Warranties ............................ 16
7.2 Absence of Liens ............................. 16
7.3 Seller's Performance ......................... 17
7.4 Opinion of Seller's Counsel .................. 17
7.5 Consents ..................................... 17
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Section Page
7.6 Approval of Documentation .................... 17
7.7 Employment Agreements ........................ 17
7.8 Condition of Assets .......................... 17
7.9 Certificates of the Secretary of the Company . 17
7.10 Pooling of Interests ......................... 17
7.11 Delivery of Client Consents .................. 18
7.12 Certificate of Merger ........................ 18
7.13 No Injunction ................................ 18
7.14 No Government Proceeding or Litigation ....... 18
7.15 No Statute, Rule or Regulation ............... 18
7.16 INTENTIONALLY LEFT BLANK ..................... 18
7.17 Absence of Litigation ........................ 18
7.18 Doctor's Letter .............................. 18
7.19 Termination of Qualified Plans ............... 19
ARTICLE VIII CONDITIONS PRECEDENT TO SELLER'S PERFORMANCE .............. 19
8.1 Accuracy of Buyer's and Merger Sub's
Representations and Warranties ............ 19
8.2 Buyer's and Merger Sub's Performance ......... 19
8.3 Opinion of Buyer's Counsel ................... 19
8.4 Consents ..................................... 19
8.5 Employment Agreements ........................ 19
8.6 Benefit Plans ................................ 19
8.7 Securities Registration ...................... 20
8.8 Certificate of Merger ........................ 20
8.9 No Injunction ................................ 20
8.10 No Government Proceeding or Litigation ....... 20
8.11 No Statute, Rule or Regulation ............... 20
8.12 Absence of Litigation ........................ 20
ARTICLE IX SELLER'S AND BUYER'S OBLIGATIONS AFTER THE CLOSING .......... 20
9.1 Preservation of Goodwill ..................... 21
9.2 Use of Name .................................. 21
9.3 Indemnification .............................. 21
9.4 Right to Cure Defaults ....................... 23
9.5 Sale of Stock ................................ 23
9.6 Qualification of Benefit Plans ............... 23
ARTICLE X COSTS ........................................................ 23
10.1 Finder's or Broker's Fees .................... 24
10.2 Expenses ..................................... 24
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Section Page
ARTICLE XI FORM OF AGREEMENT ........................................... 24
11.1 Headings ..................................... 24
11.2 Entire Agreement; Modification; Waiver ....... 24
11.3 Counterparts ................................. 24
ARTICLE XII PARTIES .................................................... 24
12.1 Parties in Interest .......................... 24
12.2 Assignment ................................... 25
ARTICLE XIII TERMINATION ............................................... 25
13.1 Conditions Permitting Termination ............ 25
13.2 Defaults Permitting Termination .............. 25
ARTICLE XIV NOTICES .................................................... 25
ARTICLE XV GOVERNING LAW; VENUE ........................................ 26
ARTICLE XVI REGISTRATION OF THE USTC MERGER
SHARES ...................................................... 26
ARTICLE XVII MISCELLANEOUS ............................................. 28
17.1 Announcements ................................ 28
17.2 References ................................... 28
17.3 Currency ..................................... 28
17.4 Counterparts ................................. 28
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MERGER AGREEMENT
This Merger Agreement ("Agreement"), dated October 11, 1996,
among U.S. Trust Company of California, N.A., a national banking organization
chartered by the office of the Comptroller of the Currency ("Buyer"), UST-LA,
Inc., a California corporation ("Merger Sub"), ▇▇▇▇▇▇▇▇▇▇ Associates, a
California corporation (the "Company"), ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ (collectively the "Seller"), being the only shareholders
of the Company.
WITNESSETH:
WHEREAS, the Seller and Buyer desire that Company merge with
and into the Merger Sub in a merger that will be treated as a tax-free
reorganization by reason of Sections 368 (a )(1)(B) of the Internal Revenue Code
of 1986, as amended, and the Company desires to merge with and into Merger Sub
on such basis;
WHEREAS, all of the issued and outstanding shares of Merger
Sub's capital stock are currently owned beneficially and of record by the Buyer;
and
WHEREAS, all the issued and outstanding shares of the
Company's capital stock (the "Shares") are currently held beneficially and of
record by the Seller.
NOW, THEREFORE, in consideration of the mutual covenants,
agreements, representations, and warranties contained in this Agreement, the
parties agree as follows:
ARTICLE I THE MERGER; CLOSING: DELIVERY.
1.1. Merger. Subject to the terms and conditions of this
Agreement, at the Effective Time (as hereinafter defined), the Company shall be
merged with the Merger Sub and the separate corporate existence of the Merger
Sub shall thereupon cease (the "Merger"). The time on which the Merger shall
become effective shall be termed the "Effective Time". The Company shall be the
surviving corporation in the Merger (sometimes hereinafter referred to as the
"Surviving Corporation"), and shall continue to be governed by the laws of the
State of California. From and after the Effective Time, the Surviving
Corporation shall continue its separate corporate existence under the laws of
the State of California as a wholly-owned subsidiary of the Buyer and shall
possess all of the purposes, objects, rights, privileges, powers and franchises,
and shall assume and be liable for all of the liabilities, obligations and
penalties, of each of Merger Sub and the Company.
1.2. Closing. Subject to the provisions hereof, the closing
of the Merger (the "Closing") shall take place: (i) at the office of the Buyer
at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
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Suite 2700, Los Angeles, California at 9:00 A.M., local time, on the later of
December 31, 1996 or the fifth (5th) business day after the day on or by which
the last to be fulfilled or waived of the conditions to the Closing hereof shall
be fulfilled or waived; or (ii) at such other time and place and/or on such
later date as the Seller, Buyer, Company and Merger Sub may agree in writing.
The date on which the Closing occurs is hereinafter referred to as the "Closing
Date". If all conditions shall have been fulfilled or waived, the parties hereto
shall cause an Agreement of Merger and Officers' Certificate of the Company and
Merger Sub meeting the statutory requirements of California law to be properly
executed and filed in accordance with applicable law on the Closing Date and
shall take any and all other lawful actions necessary to cause the Merger to
become effective.
1.3. Articles of Incorporation and By-Laws of the Surviving
Corporation. The Articles of Incorporation and By-Laws of the Company in effect
immediately prior to the Effective Time shall be the Articles of Incorporation
and By-Laws of the Surviving Corporation, until duly amended in accordance with
their respective terms and applicable law.
1.4. Officers and Directors of the Surviving Corporation. The
officers and directors of the Company as of the date hereof shall resign as of
the Closing Date and the Buyer shall appoint new officers and directors of the
Surviving Corporation.
1.5. Conversion of Shares in the Merger. The manner of
converting shares of the Company and Merger Sub in the Merger shall be as
follows:
(a) It is agreed by the parties that the Company's
revenue base (the "Revenue Base") shall be equal to the sum of: (i), for Current
Clients as defined below who are billed by the Company quarterly, the revenues
billed as of the end of the months of July, August and September of 1996
annualized for a 12 month period; and (ii) for Current Clients who are not
billed quarterly, the total fees billed to such clients for the twelve (12)
months prior to the date of this Agreement. Current Clients are those clients of
the Company who have agreed in writing to remain clients of the Company pursuant
to the form of the letter attached as Exhibit 7.11 (Consent Letter). (Both the
identity of such Current Clients and the annualized revenues therefrom shall be
determined by the parties hereto in an examination of the Company's records. If
the parties cannot agree, the Current Clients and their annualized revenues
shall be determined by Coopers & ▇▇▇▇▇▇▇ and the cost of such examination shall
be borne equally by the Company and the Buyer.) For the avoidance of doubt, any
client from whom the Company earned revenues during such twelve month period but
who is no longer a client of the Company as of the Closing Date shall not be
considered a Current Client.
(b) At the Effective Time, each share of common stock
of the Company issued shall, by virtue of the Merger and without any action on
the part of any holder thereof, automatically be converted into that number of
shares of Common Stock of the U.S. Trust Corporation ("Common Shares") as is
obtained (i) by dividing (x) $2.4 million (the "Merger Consideration") subject
to adjustment under Section 1.5(c) below by (y) the average
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of the closing sales prices of the Common Shares as quoted on the National
Association of Securities Dealers Automated Quotation System -- National Market
System for the twenty (20) trading days ending two trading days prior to the
Closing Date (such average being hereinafter referred to as the "Conversion
Price"), provided that if there are no reported sales of Common Shares on any of
the twenty (20) trading days referenced above, such trading day shall be counted
as one of the twenty (20) trading days but the results thereof shall not be
utilized in any manner in computing the average closing prices of the Common
Shares for purposes of computing the exchange ratio, and provided further, that
such average closing price shall not be deemed to be greater than $70 nor less
than $44.50, regardless of the actual average closing price; and (ii) by
dividing the results of (i) by twenty eight hundred (2,800) shares, which shall
be the total number of shares of the Company's common stock issued and
outstanding at the Effective Time. During the aforementioned twenty (20) trading
days, the Buyer will cause its parent, to refrain from purchasing any U.S. Trust
Corporation shares in the open market in a manner to materially influence the
reported market price of such shares. The Common Shares to be issued in the
Merger are sometimes referred to herein as "USTC Merger Shares". At the
Effective Time, all outstanding shares of the Company, by virtue of the Merger
and without any action on the part of the holders thereof, shall no longer be
outstanding and shall be canceled and retired and shall cease to exist, and each
holder of a certificate representing any such shares shall thereafter cease to
have any rights with respect to such shares, except the right to receive Common
Shares (or cash in lieu of fractional Common Shares) for such shares upon the
surrender of such certificate. Each share of the Company held in the Company's
treasury as of the Effective Time shall, by virtue of the Merger, be canceled
without any payment of any consideration therefor.
For purposes of computing the Revenue Base, the annualized
revenues received from clients of the Company which do not indicate in writing
prior to the Closing any intent either to continue or not to continue their
relationship with the Company ("Non-Responding Clients") shall not be included
in the Revenue Base. However, that number of USTC Merger Shares which, according
to the formula set forth above, would be paid in respect of the annualized
revenues of such Non-Responding Clients shall be placed in escrow ("Escrow
Shares") with Buyer for 30 days. At the end of such 30-day escrow period, the
Revenue Base shall be recalculated to include as Current Clients those
Non-Responding Clients who have agreed by such date to remain clients of the
Company. A sufficient number of Escrow Shares shall be released to Seller to
bring the aggregate consideration received by Seller to the final Merger
Consideration, based on such final Revenue Base. The Escrow Shares shall be
valued at the Conversion Price for purposes of calculating the number of Escrow
Shares to be released to Seller. Escrow Shares not released to Seller shall
revert to Buyer. Any escrow established pursuant to this section shall comply in
all respects with Internal Revenue Service Revenue Procedure 84-42, 1984-1 C.B.
521.
(c) The Merger Consideration shall be equal to the
result of multiplying $2.4 million by the result of a fraction, the numerator of
which is the Revenue Base and the denominator of which is $1.1 million.
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1.6. Delivery.
(a) By Seller. At the Closing, the Seller shall
deliver to Buyer, upon receipt of certificates representing the USTC Merger
Shares, the stock certificates representing the shares of the Company's common
stock owned by them, duly endorsed in blank, with all necessary transfer taxes
paid or provided for, and free and clear of all adverse claims (as defined in
Section 8-302 of the Uniform Commercial Code of the State of California), except
for the rights of the Buyer under this Agreement.
(b) By Buyer and Merger Sub. At the Closing, the
Buyer and Merger Sub shall deliver to Seller stock certificates representing the
number of USTC Merger Shares to be delivered to them in accordance with Section
1.5 hereof. The USTC Merger Shares, when delivered to Seller, shall be duly
authorized, validly issued, fully paid and non-assessable.
ARTICLE II TRANSFER, STAMP AND OTHER TAXES. The Seller shall pay all transfer,
stamp and other taxes, if any, related to the transfer of shares of Company
common stock.
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER. Subject to that certain
Disclosure Letter ("DL") dated the date hereof executed by the Seller, a draft
of which was delivered to Buyer ten business days before the execution of this
Agreement and the definitive version of which shall be delivered to Buyer on or
prior to the date hereof, Seller hereby represents and warrants to Buyer (which
representations and warranties constitute the basis upon which Buyer and Merger
Sub have been induced to enter into and perform this Agreement) as follows:
3.1. Organization, Good Standing and Qualification. The
Company is a corporation validly existing and in good standing under the laws of
the State of California, has all necessary corporate powers, licenses and
permits to own its properties and to carry on its business as now owned and
operated by it and is not qualified as a foreign corporation in any other
jurisdiction. Annexed to the DL are true, correct and complete copies of the
Company's Articles of Incorporation and By-laws as in full force and effect on
the date hereof.
3.2. Authority. The Seller has, and at the Closing will have,
full legal right and power and all approvals required by law, to enter into this
Agreement in the manner provided herein and perform all of their obligations
hereunder. This Agreement has been duly executed and delivered by the Seller and
is a legal, valid and binding agreement of the Seller enforceable against the
Seller in accordance with its terms subject to bankruptcy, insolvency,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors' rights generally and to general principles of equity,
whether asserted in a proceeding
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in equity or at law. This Agreement has been duly authorized, executed and
delivered by the Company, and is a valid, legal and binding agreement of the
Company, enforceable against it in accordance with its terms subject to
bankruptcy, insolvency, reorganization, moratorium and similar laws of relating
to or affecting creditors' rights generally and to general principles of equity,
whether asserted in a proceeding in equity or at law.
3.3. Capital Structure. The authorized number of capital
shares of the Company is ten thousand (10,000) shares of common stock, of which
twenty-eight hundred (2,800) shares are issued and outstanding and owned of
record and beneficially by the Seller as set forth in the DL. All the shares are
duly authorized, validly issued, fully paid, and non-assessable. There are no
outstanding subscriptions, options, rights, warrants, convertible securities, or
other agreements or commitments obligating the Company to issue or to transfer
from treasury any additional shares and no outstanding options, pledge
agreements or shareholder agreements (other than a "buy-back" agreement dated
3/20/1989 as amended 3/1/1991 and 6/19/1992), or other agreements obligating the
Seller to transfer the shares or granting any person (other than the owner of
record) any right or interest whatsoever in the shares. The Company has no
subsidiaries, direct or indirect, owns no stock for its own account in other
corporations and is not a partner in any partnerships.
3.4. Financial Statements. Attached to the DL are the
unaudited balance sheets, statements of income and condition of the Company as
of December 31, 1995, (the "Last Fiscal Year End") as well as the balance
sheets, statements of income and condition for the years ended December 31,
1994, 1993, and 1992 (the foregoing financial statements being referred to
herein as the "Financial Statements"). The Financial Statements of the Company
are complete and correct in all material respects and have been prepared in
accordance with generally accepted accounting principles consistently followed
by the Company throughout the periods indicated, and fairly present the
financial condition of the Company as of the respective dates of the balance
sheets included in the Financial Statements and the results of its operations
for the respective periods indicated.
3.5. Absence of Specified Changes. Except as expressly
contemplated by this Agreement, since the Last Fiscal Year End there has not
been any:
(a) Transaction by the Company except in the ordinary
course of business as conducted on that date except for this Agreement and the
transactions contemplated hereby;
(b) Capital expenditure by the Company exceeding
$5,000;
(c) Material adverse change in the consolidated
financial condition, liabilities, assets or business of the Company;
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(d) Destruction, damage to, or loss of any assets of
the Company (whether or not covered by insurance) that materially and adversely
affects the financial condition, liabilities, assets or business of the Company;
(e) Any loss of accounts materially and adversely
affecting the financial condition, liabilities, assets or business of the
Company;
(f) Change in accounting methods or practices
(including, without limitation, any change in depreciation or amortization
policies or rates) by the Company;
(g) Revaluation by the Company of any of its assets;
(h) Increase of more than 3% in the aggregate
salaries or other compensation payable or to become payable by the Company to
all of the employees of the Company, other than the Seller, or the declaration,
payment, or commitment or obligation of any kind for the payment by the Company
of a bonus or other additional salary or compensation which would result in an
increase of more than 3% in the aggregate compensation payable or to become
payable by the Company to all of the employees of the Company, as a group;
except: (i) salary increases set forth on Exhibit 3.5 (Bonus and Salary
Increases); (ii) contributions by the Company to the qualified plans in
existence on the Last Fiscal Year End; and (iii) bonuses approved by Buyer and
paid prior to Closing;
(i) Sale or transfer of any asset of the Company,
except in the ordinary course of business;
(j) Execution, creation, amendment or termination of
any material contract, agreement, or license to which the Company is a party,
except in the ordinary course of business, except for the termination of all
qualified plans without additional liability to the Company;
(k) Indebtedness incurred or guaranteed by the
Company that would, if outstanding on the Closing Date, be recorded in
accordance with generally accepted accounting principles on its balance sheet;
(l) Waiver or release of any material right or claim
of the Company, except in the ordinary course of business;
(m) Mortgage, pledge, or other encumbrance of any
material asset of the Company except for liens: (i) of mechanics, materialmen
and landlords incurred in the ordinary course of business for sums not overdue
and not in excess of $5,000 in the aggregate; (ii) incurred in the ordinary
course of business in connection with workers' compensation, unemployment
insurance, or other forms of governmental insurance or benefits; (iii) for
taxes, assessments or other governmental charges or levies which are not at the
time delinquent or are
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subject to an effective extension for the filing of the related tax returns or
reports (if applicable) granted by the appropriate authorities;
(n) Other event or condition of any character that
has a material and adverse effect on the financial condition, business or assets
of the Company; or
(o) Agreement by the Company to do any of the things
described in the preceding clauses (a) through (l).
3.6. Tax Returns and Audits. The Company has duly and timely
filed all federal, state and local tax returns and reports required by law to
have been filed on or prior to the date of this Agreement, and all taxes,
assessments, fees, penalties and other governmental charges in respect of the
Company and upon its properties, assets, income and franchises which are due and
payable have been paid or are adequately provided for in the Financial
Statements or on the books and records of the Company. There is no tax,
withholding deficiency, fee, assessment or governmental deficiency which has
been, or which the Seller reasonably believes will be, asserted against the
Company which would adversely affect the consolidated business or operations of
the Company. There are no present disputes with, or audits by, any governmental
authority as to any taxes, assessments, fees, penalties or other governmental
charges of any nature payable by the Company nor is the Company awaiting the
outcome of any audit. There are no agreements or applications by the Company for
any extension of time for the assessment or payment of any taxes nor has it
executed any document to extend the time in which a tax may be assessed or
collected.
3.7. Real Property. The Company owns no real property. The DL
contains true, correct and complete copies of each lease covering any premises
leased by the Company. All such leases are valid and in full force, and there
does not exist any default or event that with notice or lapse of time, or both,
would permit the landlord to terminate any such lease; provided, however, that
the transaction contemplated by this Agreement may require the consent of the
lessor of the space currently serving as the headquarters of the Company.
3.8. Other Tangible Personal Property. The furniture,
equipment, vehicles and other property described in the DL (collectively, the
"Equipment") constitute all the items of tangible personal property having a
value of $200 or more, owned by, leased by or used by the Company in connection
with their business.
None of the Equipment used by the Company in connection with
its business is held under any lease, security agreement, conditional sales
contract, or other title retention or security arrangement, is subject to any
lien (other than those described in Section 3.5(m)), or is located other than in
the possession of the Company.
3.9. Copyrights, Trademarks and Patents. The Company owns no
registered copyrights, trademarks or patents. No copyrighted, trademarked or
patented
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material, other than such material that is sold at retail or is otherwise
generally commercially available, is necessary for the operation of the business
of the Company; and the Company is not infringing the copyrights, trademarks or
patents of any other person.
3.10. Title to Assets. The Company has a good and marketable
title to all its assets and interests in assets, whether personal, mixed,
tangible, or intangible (including, without limitation, all the assets reflected
in the Financial Statements). All these assets are free and clear of mortgages,
liens, pledges, charges, encumbrances, equities, claims, easements, rights of
way, covenants, conditions and restrictions whatsoever, except for: (i) those
disclosed in the Financial Statements; (ii) those disclosed in the DL; (iii)
liens of mechanics, materialmen and landlords incurred in the ordinary course of
business for sums not overdue (which sums do not exceed $5,000 in the
aggregate), or incurred in the ordinary course of business in connection with
workers' compensation, unemployment insurance, or other forms of governmental
insurance or benefits, or for taxes, assessments or other governmental charges
or levies which are not at the time delinquent or are subject to an effective
extension for the filing of the related tax returns or reports (if applicable)
granted by the appropriate authorities; and (iv) possible minor matters that, in
the aggregate, do not exceed $10,000 and do not materially detract from or
interfere with the present or intended use of any of these assets, nor
materially impair the Company's consolidated business operations (collectively,
the "Permitted Liens"). All tangible personal property of the Company necessary
for the operation of their business is in operating condition and repair,
ordinary wear and tear excepted. The Company is in possession of all premises
leased to it from others. Neither any officer, director or employee of the
Company, nor any spouse, child, parent or sibling of any of these persons, or
any other relative of any of these persons, owns, or has any interest, directly
or indirectly, in any of the real or personal property owned by or leased to the
Company.
3.11. Existing Employment Contracts. The DL sets forth a list
of all written employment contracts and collective bargaining agreements, and
all pension, retirement, disability, bonus, profit-sharing, deferred
compensation, incentive stock option, medical, dental or other health insurance
plans, life insurance or other death benefit plans, severance plans or other
agreements or arrangements or plans providing for employee remuneration or
benefits to which the Company is a party or by which the Company is bound and
under which employees or former employees of the Company are eligible to
participate or derive a benefit (collectively, "Employee Plans"), and copies of
any Employee Plans have been provided to Buyer at least 7 days prior to the
execution of this Agreement. There is no pending or threatened labor dispute,
strike, or work stoppage materially affecting the Company's business. The
Company is not indebted to the Seller or to any director, officer or employee
except for amounts due under the Employee Plans or as normal salaries, expenses
and bonuses for the Company's current fiscal year. The Company has no Employee
Plans other than those listed in the DL and each Employee Plan is in full force
and effect. All Employee Plans may be terminated at any time without additional
liability to any party hereto. The Company is in full compliance with all
applicable laws governing such Employee Plans. There are no
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actions, audits, suits or claims pending (other than routine claims for
benefits) arising out of the Employee Plans.
3.12. Insurance Policies. The DL includes a summary
description of all insurance policies held by the Company. All such policies are
in the respective principal amounts set forth in the DL.
3.13. Other Contracts. Set forth in the DL is a true and
correct list of every contract (other than contracts with current clients) to
which the Company is a party which: (i) will result in annual payments by or to
the Company in excess of $2,500 or cumulative payments in excess of $5,000 and
is not cancelable by the Company upon notice of 30 days or less; or (ii) could
be reasonably expected to result in annual payments by or to the Company in
excess of $25,000 or cumulative payments in excess of $50,000. The Company
heretofore has delivered or made available to the Buyer true and correct copies
of all such contracts. There is no material default or event that with a notice
or lapse of time, or both, would constitute a default by the Company or by any
other party to any of the contracts listed in the DL. Neither the Seller nor the
Company has received notice that any party to any of the agreements listed in
the DL intends to cancel or terminate any of such agreements or to exercise or
not exercise any options under any such agreements.
3.14. Compliance with Laws. The Company has substantially
complied with all, and is not in material violation of any, applicable federal,
state, or local statutes, laws, and regulations affecting its properties, or the
operation or conduct of its business, or the qualification of any employee of
the Company to give investment advice or otherwise to act on behalf of the
Company in accordance with his or her present or past duties.
3.15. Litigation. There is no suit, action, arbitration, or
legal, administrative, or other proceeding, or governmental investigation or
disciplinary investigation pending or threatened against or affecting the
Company, or the business, assets, liabilities or financial condition of the
Company that would, individually or in the aggregate, have a material adverse
effect on the financial condition, operations or business of the Company. The
Seller has furnished or made available to Buyer copies of all relevant court
papers and other documents relating to the matters set forth in the DL. Neither
the Company nor the Seller is in default with respect to any order, writ,
injunction, or decree of any federal, state, local, or foreign court,
department, agency, or instrumentality. The Company is not presently engaged in
any legal action or arbitration proceeding to recover moneys due to it or
damages sustained by it or to obtain other relief. Since January 1, 1992, no
written charges of misconduct have been brought against the Company, its
subsidiaries or against any of its employees in their capacity as employees of
the Company, and the Company has not been the subject of any investigation or
audit by any state or federal authority. No employee of the Company, in his or
her capacity as an employee of the Company, has been the subject of any formal
disciplinary proceeding by any governmental agency.
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3.16. Assets Sufficient for Conduct of Business. The assets
and property presently owned or leased by the Company constitute all of the
assets and property necessary and appropriate by the Company to conduct its
business as it is presently conducted.
3.17. Agreement Will Not Cause Breach or Violation. Except for
the lease of the space currently serving as the headquarters of the Company,
neither the entry into this Agreement nor the consummation of the transactions
contemplated hereby will result in or constitute any of the following: (i) a
default or an event that, with notice or lapse of time or both, would be a
default, breach, or violation of the Articles of Incorporation or By-laws of the
Company or a material default, breach or violation of any shareholders'
agreement, lease, license, promissory note, conditional sales contract,
commitment, indenture, mortgage, deed of trust, or other agreement, instrument,
or arrangement to which the Seller, or the Company is a party or by which the
Seller, the Company, or their assets is or are bound; (ii) an event that would
permit any party to terminate any agreement or to accelerate the maturity of any
indebtedness or other obligation of the Company or of the Seller in an amount in
excess of $5,000 individually or in excess of $10,000 in the aggregate; (iii)
the creation or imposition of any material lien, charge, or encumbrance on any
of the assets of the Company; or (iv) the violation of any law, regulation,
ordinance, judgment, order, or decree applicable to or affecting the Company, or
its assets.
3.18. Authority and Consents. Except for the filing and
recordation of appropriate merger documents, ADV forms required by California,
Massachusetts, Oregon, Virginia and federal law, no approvals or consents of or
notices to or filings with any persons, governmental agency or governmental body
are necessary on the part of the Company or the Seller in connection with the
execution, delivery or performance of this Agreement.
3.19. Interest in Customers, Suppliers, and Competitors.
Neither the Company, nor any of its officers or directors nor any spouse,
parent, child or sibling, or any other relative, or any of them, has more than
5% direct or indirect interest in any competitor, supplier, or customer of the
Company or in any person with whom the Company is doing business.
3.20. Corporate Documents. The Seller has made available to
Buyer for its examination all minute books, stock books and stock records for
the Company. The minute books, stock books and stock records of the Company are
complete and accurate in all material respects, and the signatures therein are
the true signatures of the persons purporting to have signed them, and all
material corporate actions taken by the directors and stockholders of the
Company since their organization have been duly authorized or subsequently
ratified as necessary.
3.21. Personnel Identification and Compensation. The DL sets
forth a list of the names and addresses of all current officers, directors,
employees and consultants of the
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Company, stating the rates of compensation payable to each. No other person,
except accountants, auditors, attorneys and investment managers, regularly
performs compensable services for the Company.
3.22. Powers of Attorney and Bank Accounts. The DL lists: (i)
the names and addresses of all persons holding a power of attorney on behalf of
the Company; and (ii) the names and addresses of all banks or other financial
institutions in which the Company has an account, deposit, or safe-deposit box,
with the names of all persons authorized to draw on these accounts or deposits
or who have access to these boxes.
3.23. Business Addresses. The DL lists each current and former
address of the Company for the past five years. During the past five years, the
Company has not conducted business at or from any other address, and has not
engaged in or solicited business in any state other than those designated in the
DL.
3.24. Absence of Undisclosed Liabilities. Except as and to
the extent reflected or reserved against in the Financial Statements and except
as to those liabilities or obligations incurred in the ordinary course of
business, since the date of the most recent Company's balance sheet attached to
the DL, the Company has not incurred any liabilities or obligations, whether due
or to become due, absolute or contingent, accrued or unaccrued, including
without limitation liabilities for taxes or interest or penalties thereon, which
would be required to be reflected in a balance sheet of the Company or the notes
thereto prepared in accordance with generally accepted accounting principles
consistently applied.
3.25. Full Disclosure. None of the representations and
warranties made by the Seller or made in the DL or any certificate furnished or
to be furnished pursuant to the terms of this Agreement by the Seller, or on his
behalf, contains or will contain any untrue statement of a material fact, or
omits to state any material fact necessary to make the statements contained
therein, in the light of the circumstances under which they were made, not
misleading.
3.26. Specified Events.
(a) As of the date of this Agreement, none of the
current clients of the Company has advised the Company or the Seller that it
intends to cease doing business with the Company, or to materially reduce the
amount of the business that such client is presently doing with the Company.
(b) Neither ▇▇. ▇▇▇▇▇▇▇▇▇▇ nor ▇▇. ▇▇▇▇▇▇▇▇ currently
have any health problems which would materially impair his abilities to fulfill
his duties under his respective Employment Agreement or have an existing
condition which may progress in a fashion which would materially impair his
ability to fulfill his duties under his Employment Agreement during the
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full term of such Agreement, and each of them agrees to deliver at Closing a
letter from his doctor to such effect.
3.27 Tangible Book Value. The net tangible book value of the
Company's assets as of the Closing, based on generally accepted accounting
principles consistently applied and accruing for the costs for the Company to
contribute to the qualified plans and then terminate such plans, shall not be
less than $50,000. If any receivables transferred hereunder are aged more than
90 days, a reserve for bad debt equal to such receivables shall be recorded.
ARTICLE IV BUYER'S AND MERGER SUB'S REPRESENTATIONS AND WARRANTIES. Buyer hereby
represents and warrants to the Company and the Seller as follows:
4.1. Organization. Buyer is a national bank duly organized,
validly existing, and in good standing under the federal laws applicable to
national banks. Merger Sub is a corporation duly organized, validly existing and
in good standing under the laws of the State of California. The Buyer has
previously delivered true, correct and complete copies of the Buyer's and Merger
Sub's Articles of Incorporation and By-laws as in full force and effect on the
date hereof.
4.2. Authorization. Each of Buyer and Merger Sub has, and at
the Closing will have, full legal right and power to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized and approved by
Buyer's and Merger Sub's Boards of Directors, and Merger Sub's shareholder, and
no other corporate proceedings on the part of Buyer or Merger Sub are necessary
to authorize this Agreement or the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by the Buyer and
Merger Sub and constitutes a valid, legal and binding agreement of each of the
Buyer and Merger Sub, enforceable against each of them in accordance with its
terms except that the enforceability of such agreement is subject to bankruptcy,
insolvency, reorganization, and similar laws of general applicability relating
to or affecting creditors' rights.
4.3. Consents and Approvals. Except for any filing and
recordation of appropriate merger documents required by California law and
except for the filings with the Office of the Comptroller of the Currency, the
California Department of Corporations and the Securities and Exchange
Commission, the execution and delivery of this Agreement by the Buyer and Merger
Sub and the consummation by the Buyer and Merger Sub of the transactions
contemplated hereby will not: (i) violate any provision of the Articles of
Incorporation or By-Laws of the Buyer or Merger Sub; (ii) violate any statute,
rule, regulation, order or decree of any public body or authority by which the
Buyer or Merger Sub or any of their respective properties or assets may be
bound; (iii) require any declaration or filing with, or permit,
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consent, authorization, order, license, certificate or other form of approval
of, any public body or authority or any other person or entity; or (iv) result
in a violation or breach of, or constitute (with or without due notice or lapse
of time or both) a default (or give rise to any right of termination,
cancellation or acceleration) under, any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, license, franchise, permit, agreement or
other instrument or obligation to which the Buyer or Merger Sub is a party, or
by which any of them or any of their respective properties or assets may be
bound, excluding from the foregoing clauses (ii), (iii) and (iv) violations,
breaches and defaults which, and filings, permits, consents and approvals the
absence of which, either individually or in the aggregate, would not have a
material adverse effect on the business, operations, or financial condition of
the Buyer and Merger Sub taken as a whole.
ARTICLE V SELLER'S OBLIGATIONS BEFORE THE CLOSING DATE.
The Seller covenants that:
5.1. Buyer's Access to Premises and Information. Buyer and
its counsel, accountants, and other representatives shall be entitled to have
full access during normal business hours and upon reasonable notice to all the
Company's properties, books, accounts, records, contracts, and documents. The
Seller shall furnish or cause to be furnished to Buyer and its representatives
all data and information concerning the business, finances, and properties of
the Company that may be reasonably requested, including but not limited to
financial statements, including but not limited to interim financial statements.
5.2. Conduct of Business in Normal Course. The Seller shall
cause the Company to carry on its business and activities diligently and, except
as otherwise permitted herein, in substantially the same manner as they
previously have been carried on, and to not institute any new methods of
purchase, sale, lease, management, accounting or operation that will vary
materially from the methods used by the Company as of the date of this
Agreement.
5.3. Preservation of Business and Relationships. The Seller
shall use his diligent efforts to cause the Company to preserve its business
organization intact and preserve its present relationships with suppliers,
regulating agencies, customers, and others having business relationships with
it.
5.4. Maintenance of Insurance. The Seller shall cause the
Company to continue to carry its existing insurance through the Closing Date. At
the request of Buyer and at Buyer's sole expense, the amount of insurance
against fire and other casualties or losses which, at the date of this
Agreement, the Company carries on any of its properties or in respect of its
operations shall, subject to availability, be increased by such amount or
amounts as Buyer shall specify.
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5.5. Employees and Compensation. The Seller shall not,
without the written consent of Buyer, or except as otherwise permitted herein or
as required under existing written contractual arrangements, permit the Company
to do, or agree to do, any of the following acts: (i) grant any increase in
salaries payable or to become payable to any officer, employee, sales agent, or
representative which would result in an increase of more than 3%, since December
31, 1995, in the aggregate salaries or other compensation payable or to become
payable by the Company to all of the employees of the Company as a group, other
than the Seller; (ii) increase benefits payable to any officer, employee, sales
agent, or representative under any bonus or pension plan or other contract or
commitment except pursuant to the provisions of such plan, contract or
commitment which would result in an increase of more than 3%, since December 31,
1995, in the aggregate salaries or other compensation payable or to become
payable by the Company to all of the employees of the Company as a group, other
than the Seller; or (iii) modify any collective bargaining agreement to which it
is a party or by which it may be bound; provided that (I) salary increases set
forth on Exhibit 3.5 (Bonus and Salary Increases); (ii) contributions by the
Company to the qualified plans in existence on the Last Fiscal Year End; and
(iii) bonuses approved by Buyer and paid prior to Closing shall not be deemed to
be a violation of this section.
5.6. Controlled Acts. Except as otherwise permitted by this
Agreement, the Seller shall not, without the prior written consent of Buyer,
permit the Company to do or agree to do any of the following acts:
(a) Enter into any contract, commitment, or
transaction not in the usual and ordinary course of its business;
(b) Except in the ordinary course of business, make
any capital expenditures in excess of $5,000 for any single item or $10,000 in
the aggregate, or enter into any leases of capital equipment or property under
which the annual lease charge is in excess of $5,000;
(c) Except in the ordinary course of business, sell
or dispose of any capital assets with a net book value in excess of $5,000
individually, or $10,000 in the aggregate;
(d) Declare any dividend, unless after the payment of
the dividend the Company maintains a net tangible book value of at least
$50,000;
(e) Change the name or any trade name of the Company
or change the nature of the business of the Company as currently conducted;
(f) Adopt or modify any employment agreement;
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(g) Authorize the sale or merger of the Company or
the sale of substantially all of its or their assets;
(h) Issue any stock;
(i) Amend its Articles of Incorporation or By-Laws;
or
(j) Take any action or omit to take any action which,
in the opinion of Buyer's independent public accountants, would prevent Buyer
from accounting for the Merger as a "pooling of interests"; provided however,
that the Company is expressly permitted to solicit the consent of Non-Responding
Clients during the 30 day escrow period described in Section 1.5 (b) to secure
the release of Escrow Shares.
5.7. Payment of Liabilities and Waiver of Claims. The Seller
shall not permit the Company to do, or agree to do, any of the following acts:
(i) pay, prior to the due date thereof, any material obligation or liability,
fixed or contingent, other than current liabilities; (ii) waive or compromise
any material right or claim other than in the ordinary course of business; or
(iii) cancel, without full payment, any note, loan, or other material obligation
owing to the Company.
5.8. Existing Agreements. The Seller shall not permit the
Company to modify, amend, cancel, or terminate any of its existing material
contracts or agreements, or agree to do any of those acts, except in the
ordinary course of business.
5.9. Statutory Filings. The Seller shall cooperate fully with
Buyer in preparing and filing all information and documents deemed necessary or
desirable by Buyer, under any statutes or governmental rules or regulations
pertaining to the transactions contemplated by this Agreement.
5.10. Delivery of Tax Returns. As soon as possible after the
execution of this Agreement, the Seller shall deliver to Buyer copies of all tax
returns for all open years relating or pertaining to the Company.
5.11. Client Consents. As soon as practicable after the
execution of this Agreement, the Seller shall cause the Company to, and the
Company shall seek to obtain, consents of Current Clients to the transfer
contemplated by this Agreement, as is further set forth in Section 7.11.
5.12. Termination of Qualified Plans. Prior to the Closing,
Seller shall cause the Company to terminate and distribute all qualified plans
without liability to the Company.
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ARTICLE VI BUYER'S OBLIGATIONS BEFORE THE CLOSING DATE.
6.1. Confidentiality. Prior to the Closing Date, Buyer and
Merger Sub shall preserve the confidentiality of this Agreement, the Schedules,
the DL and any commercial information which is disclosed to Buyer or Merger Sub
or to their representatives by the Seller, the Company or their respective
representatives.
6.2. Governmental Filings. Buyer will make all governmental
filings (including but not limited to filings with the Office of the Comptroller
of the Currency , the California Department of Corporations and the Securities
and Exchange Commission) necessary to consummate this transaction and shall
cooperate fully with the Company and the Seller in preparing and filing all
information and documents deemed necessary by the Company or the Seller under
any statutes or governmental rules or regulations pertaining to the transactions
contemplated by this Agreement.
6.3. Best Efforts. Buyer will use its best efforts to take, or
cause to be taken, all action, and to do, or cause to be done, all things
necessary, proper or advisable to consummate and make effective the transactions
contemplated by this Agreement.
6.4. Consents. Buyer shall use its best efforts to obtain all
permits, authorizations, consents and approvals from third parties necessary to
consummate the Agreement and the transactions contemplated hereby.
6.5. Contact with Clients. Unless the prior consent of the
Company has been obtained between the date hereof and the Closing Date, neither
the Buyer, Merger Sub nor any of their respective officers, directors,
employees, agents or representatives shall contact, or communicate with, any of
the clients of the Company.
ARTICLE VII CONDITIONS PRECEDENT TO BUYER'S AND MERGER SUB'S PERFORMANCE
Unless Buyer and Merger Sub provide Seller and the Company a
written waiver of a condition set forth in this Article VII, the obligations of
Buyer and Merger Sub to conclude the Merger under this Agreement are subject to
the satisfaction, at or before the Closing, of all the conditions set out below.
7.1. Accuracy of Seller's Representations and Warranties. All
representations and warranties made by the Seller in this Agreement or in the DL
shall be true in all material respects on and as of the Closing Date as though
made at that time, and the Seller shall have delivered to Buyer a Certificate of
the Seller so certifying to this.
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7.2. Absence of Liens. As of the Closing Date, except for such
liens, claims, charges or encumbrances disclosed in the Financial Statements or
in the DL, there shall be no liens, claims, charges or encumbrances on any
assets of the Company other than liens: (i) of mechanics, materialmen and
landlord incurred in the ordinary course of business for sums not overdue and
not in excess of $1,000 in the aggregate; (ii) incurred in the ordinary course
of business in connection with workers' compensation, unemployment insurance, or
other forms of governmental insurance or benefits; and (iii) for taxes,
assessments or other governmental charges or levies which are not at the time
delinquent or are subject to an effective extension for the filing of the
related tax returns or reports (if applicable) granted by the appropriate
authorities.
7.3. Seller's Performance. The Seller shall have performed,
satisfied, and complied in all material respects with all covenants, agreements,
and conditions required by this Agreement to be performed or complied with by
the Seller on or before the Closing Date.
7.4. Opinion of Seller's Counsel. Buyer shall have received
from counsel for the Seller and the Company opinions dated the Closing Date, in
the forms attached hereto as Exhibit 7.4 (Seller's Opinion of counsel).
7.5. Consents. All necessary notices to, and agreements,
approvals and consents of, any person, entity or governmental body to the
consummation of the transactions contemplated by this Agreement, or otherwise
pertaining to the matters covered by it, shall have been obtained by the Seller
or the Company and delivered to the Buyer, including, without limitation,
Seller's obtaining the consent of the lessor of the assignment of the lease of
the space currently serving as the headquarters of the Company without changing
the tangible net worth of the Company set forth in Section 3.27 and the existing
rent for such space.
7.6. Approval of Documentation. The form and substance of all
certificates, instruments, opinions, and other documents delivered to Buyer
under this Agreement shall be satisfactory in all reasonable respects to Buyer
and its counsel.
7.7. Employment Agreements. ▇▇. ▇▇▇▇▇▇▇▇▇▇ and ▇▇. ▇▇▇▇▇▇▇▇
shall each deliver to Buyer an employment agreement substantially in the forms
attached hereto as Exhibit 7.7 ("Employment Agreement"), duly executed by such
party, and there shall be no default existing on the Closing Date under the
Employment Agreement, and the Employment Agreement shall be in full force and
effect on the Closing Date and each party shall be capable on the Closing Date
of performing his or its obligations under the Employment Agreement.
7.8. Condition of Assets. The property and assets of the
Company shall not have been materially or adversely affected in any way as a
result of any fire, accident, storm or other casualty or labor or civil
disturbance or act of God or the public enemy.
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7.9. Certificates of the Secretary of the Company. Buyer shall
have received from the Secretary of the Company a certificate stating that no
amendments or modifications have been made to the Articles of Incorporation or
the By-laws of the Company since the signing of this Agreement except as
consented to in writing by Buyer or otherwise permitted hereunder.
7.10. Pooling of Interests. Coopers & ▇▇▇▇▇▇▇, independent
accountants to the Buyer, shall have rendered its opinion to the Buyer, dated
the Closing Date, that the Merger will qualify as a pooling of interests
transaction; provided, if the transaction does not qualify for pooling of
interests accounting because of the escrow arrangement described in Section
1.5(b) or any other condition within the control of the Buyer, this condition
shall nonetheless be deemed satisfied.
7.11. Delivery of Client Consents. Seller shall have delivered
to Buyer at or prior to the Closing written letters (in the form attached hereto
as Exhibit 7.11 (Consent Letter), which has been mutually agreed by the Seller
and the Buyer) from Current Clients of their intent to continue their
relationship with the Company after the Closing, duly executed in writing by
Current Clients whose business with the Company accounts for at least 75% of the
Company's Revenue Base.
7.12 Certificate of Merger. The Company and the Seller shall
have executed and delivered to the Buyer counterparts of the Agreement of Merger
and Officers' Certificate of the Company to be filed with the Secretary of State
of the State of California in connection with the Merger and such Merger shall
become effective.
7.13. No Injunction. Neither the Seller, Buyer, Merger Sub nor
the Company shall be subject to any order, decree or injunction of a court of
competent jurisdiction within the United States which prevents or materially
delays the consummation of the Merger.
7.14. No Government Proceeding or Litigation. No suit, action
or proceeding before any court or any governmental or regulatory authority shall
be pending or threatened by any state or federal governmental or regulatory
authority, against the Seller or the Buyer, Merger Sub or the Company,
affiliates, officers or directors seeking to restrain, prevent or change in any
material respect the transactions contemplated hereby (including, without
limitation the Employment Agreement) or seeking damages in connection with such
transactions which are material to the Company, taken as a whole.
7.15. No Statute, Rule or Regulation. No statute, rule or
regulation shall have been enacted by the government (or any governmental
agency) of the United States or any state, municipality or other political
subdivision thereof that makes the consummation of the Merger and any other
transaction contemplated hereby (including, without limitation the Employment
Agreement) illegal.
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7.16. INTENTIONALLY LEFT BLANK
7.17. Absence of Litigation. No action, suit, or proceeding
before any court or any governmental body or authority, pertaining to this
Agreement, to the Employment Agreement or to any transaction contemplated hereby
or thereby, shall have been instituted and remain pending or threatened on or
before the Closing Date.
7.18 Doctor's Letter. The Buyer shall have received prior to
Closing the doctor's letters referred to in Section 3.26.
7.19 Termination of Qualified Plans. Seller shall cause the
Company to terminate and distribute all qualified plans without liability to any
party hereto.
ARTICLE VIII CONDITIONS PRECEDENT TO SELLER'S PERFORMANCE
Unless the Seller and the Company provide to Buyer and Merger
Sub a written waiver of a condition set forth in this Article VIII, the
obligations of the Seller and the Company to conclude the Merger under this
Agreement are subject to the satisfaction, at or before the Closing, of all the
following conditions:
8.1. Accuracy of Buyer's and Merger Sub's Representations and
Warranties. All representations and warranties made by Buyer and Merger Sub
contained in this Agreement, including any schedule hereto, shall be true in all
material respects on and as of the Closing as though such representations and
warranties were made on and as of that date, and Buyer and Merger Sub shall have
delivered to the Seller a Certificate at Closing so certifying to this.
8.2. Buyer's and Merger Sub's Performance. Buyer and Merger
Sub shall have performed and complied with all covenants and agreements, and
satisfied all conditions that they are required by this Agreement to perform,
comply with, or satisfy, before or at the Closing.
8.3. Opinion of Buyer's Counsel. Buyer shall have furnished
the Seller with an opinion, dated the Closing Date, of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
Esq., General Counsel for Buyer, in the form attached hereto as Exhibit 8.3
(Buyer's Opinion of Counsel).
8.4. Consents. All necessary notices to, and agreements,
approvals and consents of, any person, entity or governmental body, to the
consummation of the transactions contemplated by this Agreement, or otherwise
pertaining to the matters covered by it, shall have been obtained by Buyer and
Merger Sub and delivered to the Seller.
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8.5. Employment Agreements. The Buyer and Merger Sub shall
have caused the Company to deliver to ▇▇. ▇▇▇▇▇▇▇▇▇▇ and ▇▇. ▇▇▇▇▇▇▇▇ the
Employment Agreements, duly executed by such party and the Company, and there
shall be no default existing on the Closing Date under their Employment
Agreements, which shall be in full force and effect on the Closing Date and each
party shall be capable on the Closing Date of performing his or its obligations
under the Employment Agreements.
8.6. Benefit Plans. The employee benefit plans of the Buyer
described in the 1996 UST Benefits Portfolio (the "Portfolio") previously
delivered to the Company and selected by the Company with respect to each
employee of the Company who continues in employment with the Company in
accordance with the terms thereof, shall be implemented with respect to each
such employee without any waiting period, medical examination or pre-existing
condition limitation and without any lapse of coverage from the Company's'
Employee Plans, although such coverage may be different depending on the terms
and conditions described in the Portfolio.
8.7. Securities Registration. The Registration Statement shall
have been declared effective under the Securities Act and shall not be subject
to a stop order or any threatened stop order. In addition, an exemption from the
state blue sky registration requirements of California permitting the public
sale of the USTC Merger Shares in the State of California shall be available and
all conditions to obtaining such exemption shall have been satisfied.
8.8. Certificate of Merger. The Buyer and Merger Sub shall
have executed and delivered to the Company and the Seller counterparts of the
Agreement of Merger and Officers' Certificate of Merger Sub to be filed with the
Secretary of State of the State of California in connection with the Merger and
such Merger shall have become effective.
8.9. No Injunction. Neither the Seller, Buyer, Merger Sub nor
the Company shall be subject to any order, decree or injunction of a court of
competent jurisdiction within the United States which prevents or materially
delays the consummation of the Merger.
8.10. No Government Proceeding or Litigation. No suit, action
or proceeding before any court or any governmental or regulatory authority shall
be pending or threatened by any state or federal governmental or regulatory
authority, against the Seller or the Buyer, Merger Sub or the Company, or any of
its affiliates, officers or directors seeking to restrain, prevent or change in
any material respect the transactions contemplated hereby (including, without
limitation, the Employment Agreement) or seeking damages in connection with such
transactions.
8.11. No Statute, Rule or Regulation. No statute, rule or
regulation shall have been enacted by the government (or any governmental
agency) of the United States or
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any state, municipality or other political subdivision thereof that makes the
consummation of the Merger and any other transaction contemplated hereby
(including, without limitation the Employment Agreement) illegal.
8.12. Absence of Litigation. No action, suit, or proceeding
before any court or any government body or authority, pertaining to this
Agreement, to any Employment Agreement or to any transaction contemplated hereby
or thereby, shall have been instituted and remain pending or threatened on or
before the Closing Date.
ARTICLE IX SELLER'S AND BUYER'S OBLIGATIONS AFTER THE CLOSING.
9.1. Preservation of Goodwill. Each Seller agrees that, for a
period of five years following the Closing, that Seller will not, individually
or through an agent, for himself or on behalf of another, as an employee,
director, owner, partner, sole proprietor, consultant, agent, representative,
shareholder, or in any other manner or capacity whatsoever, other than in his
capacity as an employee of the Company:
(a) except to the extent required by law, disclose to
any person or use for the Seller's own benefit any fee schedules, fee data,
customer lists or similar matters possessed by the Seller relating to the
Company, or its business unless the Seller first obtains written permission from
the Company;
(b) solicit or induce any clients of the Company to
terminate or reduce their respective relationships with the Company; or
(c) solicit for hire the services of any person then
employed by the Company to terminate such employment.
For purposes this section, the term "Company" shall include
any firm or corporation directly or indirectly controlled by Buyer or under
common control with Buyer.
9.2. Use of Name. The Seller agrees that after the Closing
Date he shall not use or employ in any matter, directly or indirectly, the name
▇▇▇▇▇▇▇▇▇▇ Associates, or any variant thereof; provided however that ▇▇.
▇▇▇▇▇▇▇▇▇▇ may use his own name except in connection with the investment
management business.
9.3. Indemnification.
(a) Indemnification by the Seller. Subject to the
limitations set forth below and excepting Section 9.1 for which each Seller
shall severally but not jointly indemnify the Buyer and the Company as provided
in this Section 9.3, each Seller shall jointly and severally indemnify, hold
harmless and defend the Company and the Buyer, at all times
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after the date of this Agreement, against and in respect of any and all claims,
demands, liabilities, losses, costs, expenses and deficiencies (including
interest, penalties, reasonable attorneys' fees and litigation expenses) (such
claims, demands, liabilities, losses, costs, expenses and deficiencies being
hereinafter referred to singly as a "Buyer Claim" and collectively as the "Buyer
Claims") arising out of or in connection with or based upon (i) the inaccuracy
of any representation or warranty made by the Seller herein or in any
certificate or other document delivered pursuant hereto or (ii) the breach by
the Seller of any agreement or covenant made herein or in any document delivered
pursuant hereto or (iii) the tax qualified status of and the tax deductible and
non tax deductible contributions made to the pension and profit sharing plans
of the Company or the exempt status of the trusts associated with such plans
and the distributions and roll-overs from such plans (the "ERISA Indemnities").
(b) Limitations on Indemnification by the Seller.
(i) The Seller's aggregate liability for
indemnification for all provisions under this Agreement shall under no
circumstances exceed an amount equal to the total consideration received by the
Seller under this Agreement, as measured by the value, based upon the Conversion
Price, of the USTC Merger Shares received by the Seller. Any liability of the
Seller for any Buyer Claim shall be satisfied through the delivery of Common
Shares to the Buyer, such shares to be valued at the Conversion Price.
(ii) A claim for breach of warranty,
representation or covenant may not be made under this Agreement and the Seller
shall not be liable for indemnification under this section, unless notice of the
Buyer Claim on which such claim or right to indemnification is based is given in
writing or through telex or telecopier by the Buyer to the Seller reasonably
promptly after the Buyer shall become aware of the Buyer Claim, but in any event
with respect to a Buyer Claim, within one year after the Closing Date; provided,
however, that notwithstanding the foregoing, a Buyer Claim made under Section
3.6 with respect to an open tax year may be made without any time limitation and
any ERISA Indemnity shall only expire after the applicable statute of
limitations for a claim which would be the subject of such indemnity.
(iii) Subject to the limitations on
indemnification set forth in Sections (a)-(b) above, if the Company is covered
by insurance for any Buyer Claim that is the subject of indemnification, the
Buyer shall only recover an amount equal to its losses net of any insurance
proceeds with regard thereto.
(iv) This indemnification shall not apply to
any claims which the Company has chosen not to pursue if without such claims the
Company can continue to comply with Section 3.27 (Tangible Net Worth).
(c) Procedure for Establishment of Buyer Claim.
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(i) In the event that any claim shall be
asserted by any party against a party hereto entitled to indemnification
hereunder (an "Indemnified Party"), which, if sustained, would result in a Buyer
Claim, (an "Indemnifiable Claim"), Indemnified Party, within a reasonable time
after learning of such claim, shall notify the other party (the "Indemnitor") of
such claim giving the particulars thereof, and shall extend to Indemnitor a
reasonable opportunity to defend against such claim, at Indemnitor's sole
expense and through legal counsel reasonably acceptable to Indemnified Party,
provided that Indemnitor proceeds in good faith, expeditiously and diligently.
No determination shall be made pursuant to subparagraph (b) below while such
defense is still being made until the earlier of: (i) the resolution of said
claim by Indemnitor with the claimant; or (ii) the termination of the defense by
Indemnitor against such claim or the failure of Indemnitor to prosecute such
defense in good faith in an expeditious and diligent manner. Indemnified Party
shall be entitled to rely upon the opinion of its counsel as to the occurrence
of either of said events. Indemnified Party, at its option and expense, shall
have the right to participate in any defense undertaken by Indemnitor with legal
counsel of its own selection. No settlement or compromise of any claim which may
result in an Indemnifiable Claim, as the case may be, may be made by Indemnitor
without the prior written consent of Indemnified Party unless (A) prior to such
settlement or compromise Indemnitor acknowledges in writing its obligation to
pay in full the amount of the settlement or compromise and all associated
expenses and (B) Indemnified Party is furnished with security reasonably
satisfactory to Indemnified Party that Indemnitor will in fact pay such amount
and expenses.
(ii) In the event that an Indemnified Party
asserts the existence of any Indemnifiable Claim, Indemnified Party shall give
written notice to Indemnitor of the nature and amount of the Indemnifiable Claim
asserted. If Indemnitor, within a period of fifteen (15) days after the giving
of Indemnified Party's notice, shall not give written notice to Indemnified
Party announcing its intent to contest such assertion of Indemnified Party (such
notice by Indemnitor being hereinafter called the "contest notice"), such
assertion of Indemnified Party shall be deemed accepted and the amount of the
Indemnifiable Claim shall be deemed established. In the event, however, that a
contest notice is given to Indemnified Party within said fifteen-day period,
then at any time thereafter a party may commence a legal proceeding in
accordance with this Article to resolve the contested assertion of an
Indemnifiable Claim.
(iii) Indemnified Party and Indemnitor may
agree in writing, at any time, as to the existence and amount of an
Indemnifiable Claim, and, upon the execution of such agreement, such
Indemnifiable Claim shall be deemed established.
9.4. Right to Cure Defaults. If Buyer becomes aware of any
breach of a representation or warranty or non-fulfillment of any covenant or
obligation of the other party hereunder, the Buyer becoming so aware shall
promptly notify the other party of such breach or non-fulfillment and afford
such other party a reasonable opportunity to cure such breach or
non-fulfillment.
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9.5. Sale of Stock. The Seller agrees: (i) not to sell any
USTC Merger Shares or otherwise hedge or offset the risk of its investment in
USTC Merger Shares until the publication of financial statements reflecting 30
days of combined operations of U.S. Trust Corporation and the Surviving
Corporation; (ii) not to engage in any dividend or compensation payment which
would prevent the Merger from being treated as a "pooling of interests"; and
(iii) not to take any other actions which would prevent the Merger from being
treated as a "pooling of interests."
9.6. Qualification of Benefit Plans. Immediately after the
Termination Date, all employees of the Company may participate in the Buyer's
medical and dental plans on the same terms and conditions as similarly situated
employees of the Buyer.
ARTICLE X COSTS
10.1. Finder's or Broker's Fees. Each of the parties
represents and warrants that, except for the Buyer's engagement of Berkshire
Capital Corporation, Buyer and Seller have not engaged or dealt with any broker
or finder in connection with any of the transactions contemplated by this
Agreement, and, insofar as Buyer or Seller knows, no broker or other person is
entitled to any commission or finder's fee in connection with any of these
transactions. Each of the parties agrees to pay all reasonable fees and other
amounts which may be or become owing to any broker or finder engaged or dealt
with by such party in connection with this Agreement or the transactions
contemplated hereby, and in particular, the Buyer agrees to pay the reasonable
fees of Berkshire Capital Corporation.
10.2. Expenses. Each of the parties shall pay all costs and
expenses incurred or to be incurred by him or it in negotiating and preparing
this Agreement and in closing and carrying out the transactions contemplated by
this Agreement.
ARTICLE XI FORM OF AGREEMENT
11.1. Headings. The subject headings of the Articles and
Sections of this Agreement are included for purposes of convenience only, and
shall not affect the construction or interpretation of any of its provisions.
11.2. Entire Agreement; Modification; Waiver. This Agreement
constitutes the entire agreement between the parties pertaining to the subject
matter contained in it and supersedes all prior and contemporaneous agreements,
representations, and understandings of the parties. No supplement, modification,
or amendment of this Agreement shall be binding unless executed in writing by
all the parties to be bound hereby. No waiver of any of the provisions of this
Agreement shall be deemed, or shall constitute, a waiver of any other provision,
whether or not similar, nor shall any waiver constitute a continuing waiver. No
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31
delay or failure of any party to exercise any of its, or his rights hereunder
shall be construed as a waiver of such right. No waiver shall be binding unless
made expressly and executed in writing by the party making the waiver.
11.3. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
ARTICLE XII PARTIES
12.1. Parties in Interest. Nothing in this Agreement, whether
expressed or implied, is intended to confer any rights or remedies under or by
reason of this Agreement on any persons other than the parties to it and their
respective successors and assigns, nor is anything in this Agreement intended to
relieve or discharge the obligation or liability of any third persons to any
party to this Agreement, nor shall any provision give any third persons any
right of subrogation or action over or against any party to this Agreement.
12.2. Assignment. This Agreement shall be binding on and shall
inure to the benefit of the parties to it and their respective heirs, legal
representatives, successors, and permitted assigns; provided, that the Seller
shall have no right to assign any or all of his rights hereunder without the
prior written consent of Buyer.
ARTICLE XIII TERMINATION.
13.1. Conditions Permitting Termination. Any party may
terminate this Agreement by written notice to the other, without liability to
the other, if: (i) any bona fide legal action or proceeding shall be pending
against any party that could result in an unfavorable judgment, decree, or order
that would prevent or make unlawful the carrying out of this Agreement; or (ii)
if Closing shall not have occurred by March 1, 1997, unless all of the parties
hereto mutually agree in writing to extend such date.
13.2. Defaults Permitting Termination. In addition to the
respective parties' rights not to proceed with the Closing because of failure of
any of the conditions contained herein, if Buyer or the Seller materially
defaults in the due and timely performance of any of its, or his warranties,
covenants, or agreements under this Agreement, the non-defaulting party or
parties may give notice of termination of this Agreement, in the manner provided
herein. The notice shall specify with particularity the default or defaults on
which the notice is based. The termination shall be effective ten business days
after receipt, unless the specified default or defaults have been cured on or
before such effective date for termination.
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ARTICLE XIV NOTICES.
All notices, requests, demands, and other communications under
this Agreement shall be in writing and shall be deemed to have been duly given
on the date of service if served personally on the party to whom such notice,
request, demand or other communication is to be given, or on the fifth day after
mailing if mailed to the party to whom such communication is to be given, by
first class mail registered or certified, postage prepaid, and properly
addressed as follows:
To Seller as follows:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ Associates
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
With a copy to:
McCutchen, Doyle, ▇▇▇▇▇ & Enersen, LLP
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
To Buyer and Merger Sub at:
U.S. Trust Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Managing Director and General Counsel
Any party may change its address for purposes of this Article by giving the
other party written notice of the new address in the manner set forth above.
ARTICLE XV GOVERNING LAW; VENUE.
This Agreement shall be construed in accordance with, and
governed in all respects by, the laws of the State of California, excepting its
choice of law provisions. Any litigation arising out of or relating to this
Agreement shall be conducted solely and exclusively
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in any federal or state court located in California having jurisdiction over the
subject matter hereof, and to the extent permitted by law all parties hereto
consent to such jurisdiction and venue.
ARTICLE XVI REGISTRATION OF THE USTC MERGER SHARES.
(a) Subject in all respects to subsection (b) below,
the Seller hereby acknowledges and agrees that: (i) the USTC Merger Shares (if
ever issued) will not have been registered for sale by Buyer to Seller under the
Securities Act of 1933, as amended (the "Securities Act"), in reliance on the
exemption contained in Section 4(2) of the Securities Act; and (ii) such shares
may not be transferred or sold by them unless registered under the Securities
Act (as contemplated by subsection (b) below) or transferred or sold pursuant to
an applicable exemption from registration under the Securities Act.
(b) As soon as practicable after the date hereof,
Buyer shall use its best efforts to cause to be prepared and filed with the SEC
a Registration Statement under the Securities Act to permit the offer and sale
of the USTC Merger Shares (which term, for the purposes of this Article, shall
include any securities into which or for which the USTC Merger Shares
subsequently may be converted or exchanged) by the Seller from time to time
hereof through the facilities of the National Association of Securities Dealers
Automated Quotation System National Market System at market prices current at
the time of sale or in other transactions at negotiated prices. Buyer shall use
its best efforts to cause such Registration Statement to become effective prior
to or at the Closing Date and to remain effective as provided herein. If the SEC
does not make the Registration Statement for the USTC Merger Shares effective
prior to the Closing Date and all of the Sellers give the Buyer and the Merger
Sub a waiver of the condition in Section 8.7 (Securities Registration), Buyer
shall continue to use its best efforts to obtain an effective Registration
Statement for the USTC Merger Shares after the Closing Date. Buyer shall use its
best efforts to cause to be promptly prepared and filed with the SEC such
amendments and supplements to the Registration Statement and the related
Prospectus (the "Prospectus") as may be necessary to permit the sale thereunder
of the USTC Merger Shares in the manner contemplated above until the first to
occur of: (i) the earliest date on which all of such shares shall have been sold
or may be sold without regard to volume limitations and holding period
limitations under the provisions of Rule 144 under the Securities Act or any
successor or similar rule hereafter adopted; and (ii) the sixth anniversary of
the Closing Date; provided, however, that if at any time prior to the sixth
anniversary of the Closing Date, Rule 144 or any successor or similar rule
hereafter adopted shall cease to be available without regard to volume
limitations and holding period limitations for sales of the USTC Merger Shares
by the Seller other than by reason of his actions, the obligations of Buyer to
register such shares as provided herein shall be reinstated and shall continue
until the first to occur thereafter of (i) and (ii) above. Buyer shall furnish
to Seller such number of copies of the Prospectus, as amended from time to time,
and supplements thereto as the Seller may reasonably request. The Buyer shall
use its best efforts to register or qualify the USTC
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Merger Shares under such other securities or blue sky laws of the States of New
York and California and do any and all other acts and things which may be
reasonably necessary or advisable to enable the Seller to consummate the
disposition in the States of California of the USTC Merger Shares owned by the
Seller; provided, however, that this obligation shall cease at the time that
Buyers' obligation under this Article 16(b) with respect to the Securities Act
shall terminate. Buyer shall cause the USTC Merger Shares to be listed on such
securities exchange or quoted on such automated quotation system on which the
Common Shares are then listed or quoted.
(c) All expenses incident to the obligations of Buyer
under Article 16(b) (including, without limitation, registration fees, blue sky
filing fees, printing or document reproduction expense, messenger and delivery
expenses (including printing of the prospectus, if any) and fees and expenses of
its counsel and accountants) shall be borne by Buyer and all other expenses
incident to the disposition by the Seller of the USTC Merger Shares held by him
(including, without limitation, fees and expenses of his counsel and all
brokerage and similar fees) shall be borne by the Seller.
(d) The Seller shall: (i) furnish to Buyer such
information as Buyer may from time to time reasonably request in connection with
the Registration Statement and Prospectus and any amendment or supplement
thereto; (ii) from and after the Closing Date and for so long as the
Registration Statement remains effective, promptly after the sale or any other
disposition by him of USTC Merger Shares, give Buyer written notification of
same; (iii) promptly notify Buyer of any event which comes to his attention
which would necessitate an amendment or supplement to the Registration Statement
or Prospectus; and (iv) suspend sales of USTC Merger Shares under the
Registration Statement promptly upon receipt of notice from Buyer that such
sales may not be made until the Registration Statement and Prospectus are
amended or supplemented as necessary.
ARTICLE XVII MISCELLANEOUS.
17.1. Announcements. The Company and the Seller, on the one
hand, and the Buyer, on the other hand, will not make any announcements to the
public concerning this Agreement or the transactions contemplated hereby without
the prior approval of the other party (except as otherwise required under
applicable law).
17.2. References. Unless otherwise specified, references to
Sections or Articles are to Sections or Articles in this Agreement.
17.3. Currency. All dollar amounts set forth herein are
expressed in terms of United States dollars.
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17.4 Counterparts. The parties may execute this Agreement in
any number of counterparts and, as so executed, the counterparts shall
constitute one and the same Agreement. The parties agree that each such
counterpart is an original and shall be binding upon all the parties, even
though all of the parties are not signatories to the same counterpart.
IN WITNESS THEREOF, the parties to this Agreement have duly
executed it as of the day and year first above written.
U.S. TRUST COMPANY OF CALIFORNIA, N.A.
By:
-----------------------------------------
Its:
----------------------------------------
▇▇▇▇▇▇▇▇▇▇ ASSOCIATES
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
----------------------------------------
Its: President
---------------------------------------
UST-LA, INC.
By:
----------------------------------------
Its:
---------------------------------------
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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CONFIRMATION STATEMENT OF SPOUSE
I acknowledge that I have read the foregoing Merger Agreement
dated as of October 11, 1996 (the "Agreement) and that I know the contents of
such Agreement. I am aware that on the occurrence of certain conditions, my
spouse agrees to sell all the Shares held in the name of my spouse in ▇▇▇▇▇▇▇▇▇▇
Associates, a California corporation (the "Company), including any community
interest I may have in these Shares. I hereby consent to the sale of such
Shares, approve of the provisions of the Agreement, agree that those Shares and
any current or future interest I may have in such Shares are subject to the
provisions of the Agreement, and confirm that I will take no action at any time
to hinder operation of the Agreement on those Shares or my interest in them.
Dated: October 11, 1996 /s/ June ▇. ▇▇▇▇▇▇▇▇▇▇
--------------------------
June ▇. ▇▇▇▇▇▇▇▇▇▇
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ACKNOWLEDGEMENT AND WAIVER OF SPOUSE
I am the spouse of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇. I acknowledge that the shares of
▇▇▇▇▇▇▇▇▇▇ Associates, a California corporation, held by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
are his separate property. I have no objection to disposition of such shares in
accordance with the terms of the Merger Agreement among U.S. Trust Company of
California, N.A., ▇▇▇▇▇▇▇▇▇▇ Associates and the shareholders of ▇▇▇▇▇▇▇▇▇▇
Associates. I waive and release any claim I have or may have in the future
against U.S. Trust Company of California, N.A., and all of its affiliates,
officers, directors, employees and agents with respect to such shares and the
consideration paid or received for such shares.
I have read the entire Section of California Civil Code Section 1542
described below and, upon advice of legal counsel, I expressly waive any and
all rights and benefits available to me by Section 1542 of the California Civil
Code, which provides:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES
NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING
THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED
HIS SETTLEMENT WITH THE DEBTOR.
I agree that this release is voluntarily and knowingly given with the
express intention of effecting the legal consequences provided in Section 1541
of the California Civil Code, which provides:
AN OBLIGATION IS EXTINGUISHED BY A RELEASE THEREFROM GIVEN TO THE
DEBTOR BY THE CREDITOR, UPON A NEW CONSIDERATION, OR IN WRITING,
WITH OR WITHOUT NEW CONSIDERATION.
Dated: October 16, 1996 ▇▇▇ ▇▇▇▇▇▇▇▇▇▇
----------------------------------
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------------
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ACKNOWLEDGEMENT AND WAIVER OF SPOUSE
I am the spouse of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇. I acknowledge that the shares of
▇▇▇▇▇▇▇▇▇▇ Associates, a California corporation, held by ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ are
his separate property. I have no objection to disposition of such shares in
accordance with the terms of the Merger Agreement among U.S. Trust Company of
California, N.A., ▇▇▇▇▇▇▇▇▇▇ Associates and the shareholders of ▇▇▇▇▇▇▇▇▇▇
Associates. I waive and release any claim I have or may have in the future
against U.S. Trust Company of California, N.A., and all of its affiliates,
officers, directors, employees and agents with respect to such shares and the
consideration paid or received for such shares.
I have read the entire Section of California Civil Code Section 1542
described below and, upon advice of legal counsel, I expressly waive any and
all rights and benefits available to me by Section 1542 of the California Civil
Code, which provides:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR
DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF
EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY
AFFECTED HIS SETTLEMENT WITH THE DEBTOR.
I agree that this release is voluntarily and knowingly given with the
express intention of effecting the legal consequences provided in Section 1541
of the California Civil Code, which provides:
AN OBLIGATION IS EXTINGUISHED BY A RELEASE THEREFROM GIVEN TO
THE DEBTOR BY THE CREDITOR, UPON A NEW CONSIDERATION, OR IN
WRITING, WITH OR WITHOUT NEW CONSIDERATION.
Dated: October 16, 1996 /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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Exhibit 3.5
Bonus and Salary Increases
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LA Bonus Calculations - 1995
12/20/95
JGL BJM RBM MJB ▇▇▇ Total
--- --- --- --- --- -----
1995 Salary ($M) 264.0 190.8 101.8 56.0 28.1 640.7
(excludes 3M (includes
bonus 1/95) OT)
of total (%) 41.20 29.78 15.89 8.74 4.39 100.00
Melon ($M) 100.5 72.6 38.7 21.3 10.8 243.9
=====
Actual 1995 pay 264.0 190.8 101.8 59.0 28.1 643.7
Pension e 10% 15.0 15.0 11.3 6.4 3.1 50.8
Profit share 15% 15.0 15.0 16.8 9.7 4.7 61.2
Bonus 70.5 42.6 10.6 5.2 3.0 131.9
-----
243.9
=====
Pay + Bonus 334.5 233.4 112.4 64.2 31.1
Melon
1995F profit per $217.81h
▇▇▇▇▇▇ G
Pension ▇▇▇▇▇ +36.1
Target PT income -10.0
------
243.9
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LA 1996 SALARIES
JANUARY 23, 1996
1995-Annual 1996
rate 12/95 Change Raise Annual Per Month
---------- ------ ----- ------ ---------
JGL $265M +10% 26.5 290 $24,167
BJM 183 +10 18.3 201 16,750
RBM 110 +10 11.0 121 10,083
MJB 56 +15 8.4 65 5,417
▇▇▇ 27 +10 2.7 30 2,500
---- ---- ---
641 66.9 707
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Exhibit 7.4
Opinion of Seller's Counsel
36
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[For ▇▇▇▇▇▇▇▇▇ Stationery)
December 31, 1996
U.S. Trust Company of California, N.A
UST-LA, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Gentlemen:
We have acted as counsel to ▇▇▇▇▇▇▇▇▇▇ Associates, a
California corporation (the "Company"), ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ (individually as "Seller" and collectively as "Sellers")
in connection with the execution and delivery of the Merger Agreement dated
October __, 1996 (the "Merger Agreement"), among the Company, the Sellers U.S.
Trust Company of California, N.A.("Buyer") and UST-LA, Inc. ("Merger Sub"), and
in connection with the Closing being held today pursuant to Section 1.2 of the
Merger Agreement. This opinion is being delivered to you pursuant to Section 7.4
of the Merger Agreement, and unless the context indicates otherwise, terms
defined in the Merger Agreement and not otherwise defined herein, are used
herein with the meanings so defined.
In connection with this opinion, we have examined originals or
copies, certified or otherwise identified to our satisfaction, of the Merger
Agreement and the Employment Agreements dated the date hereof between the
Company and each of the Sellers (the "Employment Agreements").
With respect to certain factual matters, we have relied upon
the representations and warranties made by the Sellers in the Merger Agreement,
and upon certificates of the Sellers and of the officers of the Company
delivered thereunder. We have also examined and relied upon originals or copies,
certified or otherwise identified to our satisfaction, of such corporate
records, agreements and other documents and instruments, and certificates of
public officials, and have made such inquiries of the officers of the Company,
and have relied upon such statements made to us by such officers, and considered
such questions of law, as we have deemed relevant and necessary for purposes of
rendering the opinions expressed below.
For purposes of this opinion, we have assumed the genuineness
of all signatures on original and certified documents and the conformity to
original documents of all documents submitted to us as conformed, photostat or
other copies thereof, and we have assumed the legal capacity of all natural
persons executing such documents, instruments and other papers. We have also
assumed that each entity that has executed such documents, instruments and other
papers, other than the Company, has the power to enter into and perform all of
such entity's obligations thereunder, that such documents, instruments and other
papers have been
1
44
duly authorized, executed and delivered by each entity other than the Company,
and that such documents, instruments and other papers are binding on each party
thereto other than the Company.
Statements made herein "to the best of our knowledge" or with
respect to matters "known to us" are based solely on information actually known
to those attorneys currently practicing with this firm and engaged in
representing the Company in connection with the transactions contemplated by the
Merger Agreement. Except as otherwise expressly indicated, we have not
undertaken any independent investigation of factual matters.
Based upon the foregoing, and subject to the qualifications
stated herein, it is our opinion that:
(a) The Company is a corporation duly organized and
validly existing under the laws of the State of
California, and has the corporate power necessary to
own, lease and operate and to carry on its business
as now conducted.
(b) The Company has all requisite corporate power and
authority to enter into the Merger Agreement and to
carry out its obligations thereunder.
(c) The execution, delivery and performance of the Merger
Agreement and all other documents required to be
delivered by the Company thereunder have been duly
and validly authorized and no other corporate
proceedings on the part of the Company are necessary
to authorize the Merger Agreement or the transaction
or the transactions contemplated thereby.
(d) The Employment Agreements are valid and binding
agreements of the Company and the Employees,
enforceable against the Company and the Employees in
accordance with their terms.
(e) No consent, approval or authorization of or filing
with any California or federal governmental authority
is required to be made by the Company in connection
with the execution and delivery by the Company of the
Merger Agreement or the Employment Agreements or the
consummation by the Company of the transactions
contemplated thereby, except for such consents,
approvals, authorizations or filings which have been
obtained or made.
(f) The execution and delivery of the Merger Agreement
and the Employment Agreements do not, and the
consummation of the transactions contemplated therein
will not, result in or constitute a breach of or
default under any agreement or other instrument known
to
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45
us to which the Company is a party or violate the
Articles of Incorporation or Bylaws of the Company or
any California or federal law or regulation, or any
judgment, writ, injunction, decree, order or ruling
known to us of any court or governmental authority
binding on the Company.
(g) The Merger has been duly authorized and has been
consummated in accordance with the Merger Agreement,
the Agreement of Merger, the Officers' Certificate of
the Company and the Officers' Certificate of the
Merger Sub and, upon the acceptance by the California
Secretary of the Agreement of Merger, the Officers'
Certificate of the Company and the Officers'
Certificate of the Merger Sub, will become effective
under the laws of the State of California.
Furthermore, we advise you that, to the best of our knowledge,
there are no disputes, claims, actions, suits or proceedings, arbitrations or
investigations, either administrative or judicial, pending or threatened against
or affecting the Company, at law or in equity or otherwise, before or by any
court or governmental agency or body, domestic of foreign, or before an
arbitrator of any kind, except as disclosed in the Disclosure Letter.
The opinions set forth are subject to the following
qualifications and limitations:
(i) We express no opinion as to the effect of the
application of equitable principles (whether
considered in a proceeding at law or in equity) or of
bankruptcy, insolvency, reorganization, moratorium
and other laws now or hereafter in effect affecting
the enforcement of creditors' rights and remedies
including those relating to fraudulent conveyances
and transfer;
(ii) Insofar as the opinions expressed above relate to, or
are based upon, the effectiveness of the Merger, they
are subject to the power of the courts to order
rescission of the consummated transactions in such
cases as violations of federal or state securities
laws or for failure to satisfy basic equitable
requirements of good faith and fair treatment; and
(iii) We express no opinion concerning the laws of any
jurisdiction other than the law of the State of
California and the federal law of the United States
of America.
This opinion is provided to you as a legal opinion only, and
not as a guarantee or warranty of the matters discussed herein. This opinion has
been rendered as of the date hereof, and we disclaim any obligation to advise
you of any changes in the circumstances, laws or events that you may occur
subsequent to the date hereof, or otherwise to update this opinion.
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46
This letter is furnished to you by us, as counsel to the
Company, and is solely for your benefit in connection with the transactions
contemplated by the Merger Agreement. This opinion may not be relied upon by any
other party, except to the extent that we may expressly and in writing authorize
reliance by other persons.
Very truly yours,
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47
Exhibit 7.7
Employment Agreements of ▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇
48
EMPLOYMENT AGREEMENT
Between
▇▇▇▇▇▇▇▇▇▇ Associates.
and
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
49
TABLE OF CONTENTS
Page
----
ARTICLE 1. Employment and Term.......................................................................1
1.1. Employment..........................................................................1
1.2. Conflicts of Interest...............................................................1
1.3. Term................................................................................2
1.4. Key Man Insurance...................................................................2
ARTICLE 2. Salary....................................................................................2
ARTICLE 3. Incentive Calculation.....................................................................2
3.1. Long Term Incentive Compensation....................................................2
3.1. Special Incentive Compensation......................................................2
ARTICLE 4. Other Benefits............................................................................2
4.1. Health Insurance and Other Benefits.................................................2
4.2. Reasonable Business Expenses........................................................3
4.3. Vacation............................................................................3
4.4. Payments to Representatives.........................................................3
ARTICLE 5. Termination of Employment.................................................................3
5.1. Termination........................................................................3
5.2. Death or Permanent Disability of Employee..........................................4
5.3. Termination Without Cause..........................................................4
5.4. Compensation Upon Voluntary Resignation, Death, Disability or
Termination for Cause..............................................................4
5.5. Compensation for Termination without Cause.........................................4
ARTICLE 6. Confidential Information.................................................................4
ARTICLE 7. Agreement Not to Solicit or Compete......................................................5
7.1. Non-Solicitation and Non-Competition...............................................5
7.2. Exceptions to Non-Solicitation and Non-Competition.................................5
ARTICLE 8. Severability.............................................................................6
ARTICLE 9. Set off..................................................................................6
ARTICLE 10. Injunctive Relief .......................................................................6
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ARTICLE 11. Entire Agreement.........................................................................6
ARTICLE 12. Notices..................................................................................6
ARTICLE 13. Assignment...............................................................................7
ARTICLE 14. Amendment; Waiver........................................................................7
ARTICLE 15. Construction.............................................................................8
ii
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EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into
as of , 1996 by and between ▇▇▇▇▇▇▇▇▇▇ Associates, a California
corporation (the "Company") and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ (the "Employee").
Recitals
A. The Company is being acquired by U.S. Trust Company
of California ("UST") pursuant to a certain Merger Agreement dated October 11,
1996 among UST, UST-LA, Inc, the Company, and the Employee, among others (the
"Merger Agreement").
B. As part of the transaction referred to above,
Employee agrees to and is entering into this Employment Agreement with the
Company as of October 11, 1996 (the "Prior Agreement").
C. Capitalized terms used but not otherwise defined
herein shall have the same meaning as set forth in the Merger Agreement.
Accordingly, the parties agree as follows:
1. Employment and Term.
1.1 Employment. Subject to the terms and conditions of
this Agreement, the Company hereby employs Employee during the term of
employment set forth in Section 1.3. Employee shall have such powers and perform
such duties as may be assigned or delegated to him from time to time by the
Board of Directors of the Company (the "Board of Directors") or their designee.
Employee hereby accepts such employment and agrees to perform all such services
faithfully and diligently, and to discharge the responsibilities thereof to the
best of his ability. Employee shall devote all of his business time and
attention and energies to the duties of his employment: The Company may require
that Employee travel on the business of the Company to an extent substantially
consistent with the present business travel obligations and business of the
Company. Except when engaged in travel on behalf of the Company, the Employee's
place of employment shall be within a twenty-five mile radius of San Francisco,
CA.
1.2 Conflicts of Interest. Employee has reviewed with the
President or his designee Employee's ownership positions in non publicly traded
companies, the present directorship and other positions held by Employee in all
of the business organizations of Employee, whether or not competitive or in
conflict with the Company, and agrees to review these with the President or his
designee whenever requested by the President or his designee. Employee is
precluded from owning an interest in a non publicly traded company or serving as
a director or member of a company until such interest is presented to the
President or his
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designee and the President or his designee determines that such interest is not
in a business competitive with the Business Of The Company and would not
represent a conflict of interest for Employee. A business is competitive with
the Business Of The Company if the business involves the investment management
business. Non-business activities such as service on the board of directors of,
or for the benefit of, recognized educational, religious or other similar
institutions need not be reviewed with the Board.
1.3 Term. The term of employment of Employee under this
Agreement shall begin on the date of this Agreement and end five (5) years from
the date hereof, unless otherwise terminated in accordance with the provisions
set forth in Section 5 below (the "Employment Period").
1.4 Key Man Insurance. Employee agrees to cooperate with
the Company in applying for key man insurance with respect to Employee, if the
Company in its sole discretion determines that such insurance is advisable.
2. Salary. In consideration for the services to be
rendered hereunder, and subject to the terms and conditions of this Agreement,
the Company hereby agrees to pay Employee, in accordance with its normal
practices, an annual base salary of $190,000 for each year terminating on the
anniversary date hereof (the "Annual Base Salary").
3. Incentive Calculation.
3.1. Long Term Incentive Compensation. One of the
principal responsibilities of the Employee is the successful maintenance and
development of new and existing accounts, consequently Employee is eligible for
the Annual Incentive Payment Plan and the Sales Compensation Plan of UST.
3.2 Special Incentive Compensation. In the event that the
revenues of the Company derived from fees charged to clients for the calendar
year ending December 31, 1997 are at least $1.1 million, a special incentive
compensation of $40,000 shall be awarded to Employee.
4. Other Benefits.
4.1 Health Insurance and Other Benefits. During the
Employment Period, and except as provided in the Merger Agreement, Employee
shall be allowed to participate in any medical, dental and life insurance plans
or policies and any pension and retirement plans and any disability plans that
are available from time to time to other similarly situated employees of
subsidiaries of United States Trust Company of New York. A description of the
benefits currently available to similarly situated employees of affiliates of
UST is set forth in the 1996 UST Benefits Portfolio, which is incorporated
herein by reference.
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53
4.2 Reasonable Business Expenses. During the Employment
Period, Employee shall be reimbursed for ordinary, necessary and reasonable
business and entertainment expenses in connection with the performance of his
duties hereunder; provided, that Employee shall be required to present receipts
in accordance with UST's Travel and Entertainment policy as in force from time
to time in order to obtain reimbursement for such expense.
4.3 Vacation. Employee shall be entitled to annual
vacation (without deduction of salary or other compensation) in accordance with
the Company's vacation policy for executives similarly situated in effect from
time to time, but in no event less than four (4) weeks, such vacation to be
taken at such time or times during such year as may reasonably be mutually
agreed upon between the Employee and the Company.
4.4 Payments to Representatives. In the event of
Employee's death or other inability to receive payments under this Agreement,
payments shall be made to Employee's estate, heirs or other representative as
may be legally appropriate.
5. Termination of Employment.
5.1 Termination. This employment contract may be
terminated at any time by the Company, either with or without cause. The term
"cause" shall include any of the following events:
(a) misappropriation by Employee of funds or
property of the Company or any affiliate of the Company; intentional dishonesty;
disloyalty to the Company or its affiliates; intentional breach of any provision
of Section 6 or Section 7; any attempt by Employee to secure any personal profit
related to the business of the Company or any affiliate of the Company and not
fairly disclosed to and approved in writing by the Board of Directors;
Employee's actions bringing public discredit on the Company, or providing
information to the Company which Employee knows, or has reason to know, is not
true; or a felony conviction or plea of nolo contendere of Employee or
conviction or plea of nolo contendere of an offense involving moral turpitude.
Termination for any of the reasons listed above shall not be subject to any cure
provisions, and
(b) Employee's extended absence from duty
(other than on account of illness, medical condition, or permitted vacation);
refusal to carry out any direction of the Company's Board of Directors with
respect to the duties to be performed by Employee hereunder; or any
unintentional material breach by Employee of any of his duties or obligations
under any section of this Agreement other than Section 6 or Section 7 which
material breach is not specified in Section 5.1(a); provided, however that for
the first instance of any act contained in this Section 5.1(b), the Employee
shall be given written notice by the Company and a ten (10) day period to cure,
and if the Employee cures the action to the reasonable satisfaction of the
Company within such time period, the action contained in the
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notice shall not constitute "cause" hereunder. Notwithstanding
the foregoing, nothing contained herein shall require the Company to give more
than one notice and opportunity to cure under this Section 5.1(b).
5.2. Death or Permanent Disability of Employee. Employee's
employment hereunder shall terminate upon his death. In addition, the Company
shall have the right to terminate Employee's employment hereunder if and when
Employee becomes permanently disabled within the meaning of any permanent
disability insurance policy which may be maintained by the Company for the
benefit of Employee and under which the Employee is entitled to benefits subject
to Section 5.4 below.
5.3. Termination Without Cause. The Company, by written
notice to Employee, at any time after authorization by the Board of Directors,
shall also have the right to terminate Employee's employment without cause for
any reason, subject to Section 5.5 hereof.
5.4. Compensation Upon Voluntary Resignation, Death,
Disability or Termination for Cause. In the event of (i) termination of
Employee's employment for cause as described in Section 5.1 above, (ii)
termination upon death or disability of the Employee as described in Section 5.2
above, or (iii) the voluntary resignation of the Employee from the employment by
the Company, the Company shall pay the Employee (i) the unpaid salary and
vacation earned by him before the date of termination as provided for in this
Agreement, computed pro rata up to and including such date, in lieu of any and
all other compensation, benefits and claims of any kind, excepting only such
additional amounts as may be provided for under the express terms of any
applicable benefit plans or as may be required by law to be paid.
5.5. Compensation for Termination without Cause. In the
event that Employee's employment with the Company is terminated by the Company
without cause (as set forth in Section 5.3), the Company shall pay to Employee,
(i) all unpaid salary and vacation earned by him up to and including the date of
termination; (ii) one additional year's salary; and (iii) such additional
amounts as may be provided for under the express terms of any applicable benefit
plans. Such payments shall be in lieu of any and all compensation, benefits and
claims of any kind, excepting only such additional amounts as may be required by
law to be paid.
6. Confidential Information. During the term of
employment under this Agreement, Employee will have access to and become
acquainted with confidential proprietary information of the Company, including
without limitation, client or supplier identities and relationships,
compilations of information, records, and specifications owned by the Company
(collectively, "Confidential Information"). Employee shall not disclose any of
the Company's Confidential Information (including without limitation any client
lists or other confidential information relating to the Company's business),
directly or indirectly, or use them in any
4
55
way, either during the term of this Agreement or at any time thereafter, except
as required in the course of his employment by the Company. All files, records,
documents, drawings, specifications, equipment and similar items relating to the
business of the Company, whether prepared by Employee or otherwise coming into
his possession, shall remain the exclusive property of the Company, and if
removed from the premises of the Company shall be immediately returned to the
Company upon any termination of his employment. In this Section 6, the term (a)
"the Company" shall include any firm or corporation directly or indirectly
controlling or controlled by UST or under common control with UST; and (b)
"Confidential Information" shall not include information which (i) is already in
Employee's possession other than through his employment with the Company; (ii)
becomes or has been generally available to the public other than as a result of
Employee's disclosure; (iii) was available to Employee on a non-confidential
basis prior to its disclosure by the Company; or (iv) is independently developed
or becomes available to Employee on a non-confidential basis from a source other
than the Company.
7. Agreement Not to Solicit or Compete.
7.1 Non-Solicitation and Non-Competition. Employee will
not, individually or through an agent, for himself or on behalf of another, as
an employee, director, owner, partner, sole proprietor, consultant, agent,
representative, shareholder, or in any other manner or capacity whatsoever,
either during the Employment Period or at any time during the three-year period
immediately thereafter, (a) solicit or induce any clients of the Company with
whom he has dealt during his term of employment hereunder, to terminate or
reduce their respective relationships with the Company, (b) accept any business
from any clients of the Company with whom he has dealt during his term of
employment hereunder, or enter into a business relationship with any such
clients, if any, unless (i) Employee continues to be employed by the Company
during such three-year period; and (ii) all compensation from such clients
during such three-year period shall accrue to the Company in accordance with the
UST's Business Ethics Policy; (c) solicit or induce any person then employed by
the Company with whom he has dealt during his term of employment hereunder to
terminate such employment, (d) advance or lend funds to, or acquire an interest
in excess of three percent (3%) in, any corporation, partnership, joint venture,
trust, sole proprietorship or individual which is or may be competitive with the
Company or which might place Employee in a position competitive with the
Company; or (e) use, permit the use of, display, or license the use of the name
▇▇▇▇▇▇▇▇▇▇ in connection with any business or business activity which is or may
be competitive with the Business Of The Company or which might place Employee in
a position competitive with the Business Of The Company. Any written notice or
oral presentation made jointly by the Company and the Employee during such
three-year period shall not be deemed to violate any provision of this Section
7.1. In this Section 7.1 the term "the Company" shall include any firm or
corporation directly or indirectly controlling or controlled by UST or under
common control with UST.
7.2 Exception to Non-Solicitation and Non-Competition.
The restrictions set
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56
forth in Section 7.1 shall not apply to the ownership of a less than 5% interest
in any corporation or partnership whose securities are publicly traded.
8. Severability. In the event that any of the
provisions of this Agreement shall be deemed by any court of competent
jurisdiction to be in violation of applicable law for any reason whatsoever,
then any such provision shall not be deemed to be void, but shall be deemed to
be automatically amended so as to comply with applicable law. In the event that
any of the provisions of this Agreement shall be deemed by any court of
competent jurisdiction to be wholly or partially invalid, such determination
shall not affect the binding effect of the other provisions of this Agreement.
9. Set off. Employee grants to the Company the right,
at any time and from time to time, to set off from any and all amounts owed to
Employee, dollar for dollar, the amounts owed to the Company resulting from
damages to the Company for the breach by Employee of the confidentiality or
covenant not to compete provisions of this Agreement, but only to the extent
that the liability of Employee and the amount of liability of Employee are not
reasonably subject to dispute.
10. Injunctive Relief. Employee acknowledges that the
damage to the Company resulting from a breach of the obligations of trust and
confidence set forth in Sections 6 and 7 hereof may cause irreparable injury to
the Company, and Employee hereby agrees and consents to the entry of an
injunction by any court of competent jurisdiction, enjoining him from violating
any term or terms of this Agreement, and such injunctive relief may be granted
without the necessity of proving actual damages. In addition, the Employee
waives any right to require a bond to be posted by the Company as a condition of
receiving any equitable relief. Such injunctive relief, however, shall be in
addition to any other remedies provided by law, in equity or otherwise, to the
Company.
11. Entire Agreement. This Agreement, and the employee
benefit plans referred to herein, contain the entire understanding of the
Company and the Employee with respect to Employee's employment with the Company
and his compensation therefore. Specifically, Employee acknowledges that no
commitment has been made by the Company to him with respect to any employment
beyond the term of this Agreement (whether ending by lapse of time or earlier
termination pursuant to its terms) or with respect to any benefits not expressly
set forth in this Agreement or incorporated herein by reference.
12. Notices. All notices under this Agreement shall be in
writing and shall be deemed effective when delivered in person (in the Company's
case, to its respective Secretary) or upon receipt after deposit thereof in the
U.S. mails, postage prepaid, addressed to Employee or the Company as follows, or
to such other address as the party to be notified may specify by notice to the
other party in the manner provided in this Section:
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57
If to Employee: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
With a copy to: McCutchen, Doyle, ▇▇▇▇▇ & Enersen, LLP
▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
If to the Company: ▇▇▇▇▇▇▇▇▇▇ Associates
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
With a copy to: U.S. Trust Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
13. Assignment. Neither this Agreement nor any rights or
obligations hereunder may be assigned by one party without the consent of the
other, except that (i) this Agreement shall be binding upon and inure to the
benefit of any successor or successors of the Company, whether by merger,
consolidation, sale of assets or otherwise, and reference herein to the Company
shall be deemed to include any such successor or successors, and (ii) this
Agreement is freely assignable by the Company to any corporation or entity
controlling, controlled by, or under common control with, the Company.
14. Amendment; Waiver. This Agreement may be amended and
any right or claim hereunder waived, only by a written instrument signed by
Employee and the Company. Nothing in this Agreement, express or implied, is
intended to confer upon any third person any rights or remedies under or by
reason of this Agreement. No amendment or waiver of this Agreement requires the
consent of any individual, partnership, corporation or other entity not a party
to this Agreement.
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58
15. Construction. This Agreement shall be construed
under and governed by the laws of the State of California. The section headings
are for convenience only and shall not be considered a part of the terms and
provisions of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement.
▇▇▇▇▇▇▇▇▇▇ Associates, a California corporation.
By:
----------------------------
Title:
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
-------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
8
59
EMPLOYMENT AGREEMENT
Between
▇▇▇▇▇▇▇▇▇▇ Associates.
and
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
60
TABLE OF CONTENTS
Section Page
------- ----
ARTICLE 1. Employment and Term......................................................1
1.1. Employment.........................................................1
1.2. Conflicts of Interest..............................................1
1.3. Term...............................................................2
1.4. Key Man InsuranceTerm..............................................2
ARTICLE 2. Salary...................................................................2
ARTICLE 3. Long-Term Incentive Calculation..........................................2
ARTICLE 4. Other Benefits...........................................................2
4.1. Health Insurance and Other Benefits................................2
4.2. Reasonable Business Expenses.......................................2
4.3. Vacation...........................................................3
4.4. Payments to Representatives........................................3
ARTICLE 5. Termination of Employment................................................3
5.1. Termination........................................................3
5.2. Death or Permanent Disability of Employee..........................3
5.3. Termination Without Cause..........................................4
5.4. Compensation Upon Voluntary Resignation, Death, Disability or
Termination for Cause..............................................4
5.5. Compensation Upon Termination without Cause........................4
ARTICLE 6. Confidential Information.................................................4
ARTICLE 7. Agreement Not to Solicit or Compete......................................5
7.1. Non-Solicitation and Non-Competition...............................5
7.2. Exceptions to Non-Solicitation and Non-Competition.................5
ARTICLE 8. Severability.............................................................5
ARTICLE 9. Set Off..................................................................6
ARTICLE 10.Injunctive Relief........................................................6
ARTICLE 11 Entire Agreement.........................................................6
ARTICLE 12 Notices..................................................................6
ARTICLE 13.Assignment...............................................................7
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ARTICLE 14.Amendment; Waiver........................................................7
ARTICLE ▇▇.▇▇▇▇▇▇▇▇▇▇▇▇.............................................................7
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EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into
as of , 1996 by and between ▇▇▇▇▇▇▇▇▇▇ Associates, a California
corporation (the "Company") and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ (the "Employee").
Recitals
A. The Company is being acquired by U.S. Trust Company
of California ("UST") pursuant to a certain Merger Agreement dated October 11,
1996 among UST, UST-LA, Inc, the Company, and the Employee, among others (the
"Merger Agreement").
B. As part of the transaction referred to above,
Employee agrees to and is entering into this Employment Agreement with the
Company as of October 11, 1996 (the "Prior Agreement").
C. Capitalized terms used but not otherwise defined
herein shall have the same meaning as set forth in the Merger Agreement.
Accordingly, the parties agree as follows:
1. Employment and Term.
1.1 Employment. Subject to the terms and conditions of
this Agreement, the Company hereby employs Employee during the term of
employment set forth in Section 1.3. Employee shall have such powers and perform
such duties as may be assigned or delegated to him from time to time by the
Board of Directors of the Company (the "Board of Directors") or their designee.
Employee hereby accepts such employment and agrees to perform all such services
faithfully and diligently, and to discharge the responsibilities thereof to the
best of his ability. Employee shall devote at least four days a week to the
duties of his employment: The Company may require that Employee travel on the
business of the Company to an extent substantially consistent with the present
business travel obligations and business of the Company. Except when engaged in
travel on behalf of the Company, the Employee's place of employment shall be
within a twenty-five mile radius of San Francisco, CA.
1.2 Conflicts Of Interest. Employee has reviewed with the
President or his designee Employee's ownership positions in non publicly traded
companies, the present directorship and other positions held by Employee in all
of the business organizations of Employee, whether or not competitive or in
conflict with the Company, and agrees to review these with the President or his
designee whenever requested by the President or his designee. Employee is
precluded from owning an interest in a non publicly traded company or serving as
a director or member of a company until such interest is presented to the
President or his designee and the President or his designee determines that such
interest is not in a business
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competitive with the Business Of The Company and would not represent a conflict
of interest for Employee. A business is competitive with the Business Of The
Company if the business involves the investment management business.
Non-business activities such as service on the board of directors of, or for the
benefit of, recognized educational, religious or other similar institutions need
not be reviewed with the Board.
1.3 Term. The term of employment of Employee under this
Agreement shall begin on the date of this Agreement and end May 30, 1998, unless
otherwise terminated in accordance with the provisions set forth in Section 5
below (the "Employment Period").
1.4 Key Man Insurance. Employee agrees to cooperate with
the Company in applying for key man insurance with respect to Employee, if the
Company in its sole discretion determines that such insurance is advisable.
2. Salary. In consideration for the services to be
rendered hereunder, and subject to the terms and conditions of this Agreement,
the Company hereby agrees to pay Employee, in accordance with its normal
practices, an annual base salary of $140,000 for each year terminating on the
anniversary date hereof (the "Annual Base Salary").
3. Incentive Calculation.
3.1. Long Term Incentive Compensation. One of the
principal responsibilities of the Employee is the successful maintenance and
development of new and existing accounts, consequently Employee is eligible for
the Annual Incentive Payment Plan and the Sales Compensation Plan of UST.
3.2 Special Incentive Compensation. In the event that the
revenues of the Company derived from fees charged to clients for the calendar
year ending December 31, 1997 are at least $1.1 million, a special incentive
compensation of $30,000 shall be awarded to Employee.
4. Other Benefits.
4.1 Health Insurance and Other Benefits. During the
Employment Period, and except as provided in the Merger Agreement, Employee
shall be allowed to participate in any medical, dental and life insurance plans
or policies and any pension and retirement plans and any disability plans that
are available from time to time to other similarly situated employees of
subsidiaries of United States Trust Company of New York. A description of the
benefits currently available to similarly situated employees of affiliates of
UST is set forth in the 1996 UST Benefits Portfolio, which is incorporated
herein by reference.
4.2 Reasonable Business Expenses. During the Employment
Period, Employee shall be reimbursed for ordinary, necessary and reasonable
business and
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entertainment expenses in connection with the performance of his duties
hereunder; provided, that Employee shall be required to present receipts in
accordance with UST's Travel and Entertainment policy as in force from time to
time in order to obtain reimbursement for such expense.
4.3 Vacation. Employee shall be entitled to annual
vacation (without deduction of salary or other compensation) in accordance with
the Company's vacation policy for executives similarly situated in effect from
time to time, but in no event less than four (4) weeks, such vacation to be
taken at such time or times during such year as may reasonably be mutually
agreed upon between the Employee and the Company.
4.4 Payments to Representatives. In the event of
Employee's death or other inability to receive payments under this Agreement,
payments shall be made to Employee's estate, heirs or other representative as
may be legally appropriate.
5. Termination of Employment.
5.1 Termination. This employment contract may be
terminated at any time by the Company, either with or without cause. The term
"cause" shall include any of the following events:
(a) misappropriation by Employee of funds or
property of the Company or any affiliate of the Company; intentional dishonesty;
disloyalty to the Company or its affiliates; intentional breach of any provision
of Section 6 or Section 7; any attempt by Employee to secure any personal profit
related to the business of the Company or any affiliate of the Company and not
fairly disclosed to and approved in writing by the Board of Directors;
Employee's actions bringing public discredit on the Company, or providing
information to the Company which Employee knows, or has reason to know, is not
true; or a felony conviction or plea of nolo contendere of Employee or
conviction or plea of nolo contendere of an offense involving moral turpitude.
Termination for any of the reasons listed above shall not be subject to any cure
provisions, and
(b) Employee's extended absence from duty
(other than on account of illness, medical condition, or permitted vacation);
refusal to carry out any direction of the Company's Board of Directors with
respect to the duties to be performed by Employee hereunder; or any
unintentional material breach by Employee of any of his duties or obligations
under any section of this Agreement other than Section 6 or Section 7 which
material breach is not specified in Section 5.1(a); provided, however that for
the first instance of any act contained in this Section 5.1(b), the Employee
shall be given written notice by the Company and a ten (10) day period to cure,
and if the Employee cures the action to the reasonable satisfaction of the
Company within such time period, the action contained in the notice shall not
constitute "cause" hereunder. Notwithstanding the foregoing, nothing contained
herein shall require the Company to give more than one notice and opportunity to
cure under this Section 5.1(b).
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65
5.2. Death or Permanent Disability of Employee. Employee's
employment hereunder shall terminate upon his death. In addition, the Company
shall have the right to terminate Employee's employment hereunder if and when
Employee becomes permanently disabled within the meaning of any permanent
disability insurance policy which may be maintained by the Company for the
benefit of Employee and under which the Employee is entitled to benefits subject
to Section 5.4 below.
5.3. Termination Without Cause. The Company, by written
notice to Employee, at any time after authorization by the Board of Directors,
shall also have the right to terminate Employee's employment without cause for
any reason, subject to Section 5.5 hereof.
5.4. Compensation Upon Voluntary Resignation, Death,
Disability or Termination for Cause. In the event of (i) termination of
Employee's employment for cause as described in Section 5.1 above, (ii)
termination upon death or disability of the Employee as described in Section 5.2
above, or (iii) the voluntary resignation of the Employee from the employment by
the Company, the Company shall pay the Employee (i) the unpaid salary and
vacation earned by him before the date of termination as provided for in this
Agreement, computed pro rata up to and including such date, in lieu of any and
all other compensation, benefits and claims of any kind, excepting only such
additional amounts as may be provided for under the express terms of any
applicable benefit plans or as may be required by law to be paid.
5.5. Compensation for Termination without Cause. In the
event that Employee's employment with the Company is terminated by the Company
without cause (as set forth in Section 5.3), the Company shall pay to Employee,
(i) all unpaid salary and vacation earned by him up to and including the date of
termination; (ii) one additional year's salary; and (iii) such additional
amounts as may be provided for under the express terms of any applicable benefit
plans. Such payments shall be in lieu of any and all compensation, benefits and
claims of any kind, excepting only such additional amounts as may be required by
law to be paid.
6. Confidential Information. During the term of
employment under this Agreement, Employee will have access to and become
acquainted with confidential proprietary information of the Company, including
without limitation, client or supplier identities and relationships,
compilations of information, records, and specifications owned by the Company
(collectively, "Confidential Information"). Employee shall not disclose any of
the Company's Confidential Information (including without limitation any client
lists or other confidential information relating to the Company's business),
directly or indirectly, or use them in any way, either during the term of this
Agreement or at any time thereafter, except as required in the course of his
employment by the Company. All files, records, documents, drawings,
specifications, equipment and similar items relating to the business of the
Company, whether prepared by Employee or otherwise coming into his possession,
shall remain the exclusive property of the Company, and if removed from the
premises of the Company shall be
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66
immediately returned to the Company upon any termination of his employment. In
this Section 6, the term (a) "the Company" shall include any firm or corporation
directly or indirectly controlling or controlled by UST or under common control
with UST; and (b) "Confidential Information" shall not include information which
(i) is already in Employee's possession other than through his employment with
the Company; (ii) becomes or has been generally available to the public other
than as a result of Employee's disclosure; (iii) was available to Employee on a
non-confidential basis prior to its disclosure by the Company; or (iv) is
independently developed or becomes available to Employee on a non-confidential
basis from a source other than the Company.
7. Agreement Not to Solicit or Compete.
7.1 Non-Solicitation and Non-Competition. Employee will
not, individually or through an agent, for himself or on behalf of another, as
an employee, director, owner, partner, sole proprietor, consultant, agent,
representative, shareholder, or in any other manner or capacity whatsoever,
either during the Employment Period or at any time during the three-year period
immediately thereafter, (a) solicit or induce any clients of the Company with
whom he has dealt during his term of employment hereunder, to terminate or
reduce their respective relationships with the Company, (b) accept any business
from any clients of the Company with whom he has dealt during his term of
employment hereunder, or enter into a business relationship with any such
clients, if any, unless (i) Employee continues to be employed by the Company
during such three-year period; and (ii) all compensation from such clients
during such three-year period shall accrue to the Company in accordance with the
UST's Business Ethics Policy; (c) solicit or induce any person then employed by
the Company with whom he has dealt during his term of employment hereunder to
terminate such employment, (d) advance or lend funds to, or acquire an interest
in excess of three percent (3%) in, any corporation, partnership, joint venture,
trust, sole proprietorship or individual which is or may be competitive with the
Company or which might place Employee in a position competitive with the
Company; or (e) use, permit the use of, display, or license the use of the name
▇▇▇▇▇▇▇▇▇▇ in connection with any business or business activity which is or may
be competitive with the Business Of The Company or which might place Employee in
a position competitive with the Business Of The Company. Any written notice or
oral presentation made jointly by the Company and the Employee during such
three-year period shall not be deemed to violate any provision of this Section
7.1. In this Section 7.1 the term "the Company" shall include any firm or
corporation directly or indirectly controlling or controlled by UST or under
common control with UST.
7.2 Exception to Non-Solicitation and Non-Competition.
The restrictions set forth in Section 7.1 shall not apply to the ownership of a
less than 5% interest in any corporation or partnership whose securities are
publicly traded.
8. Severability. In the event that any of the provisions
of this Agreement shall be deemed by any court of competent jurisdiction to be
in violation of applicable law for any reason whatsoever, then any such
provision shall not be deemed to be void, but shall be
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67
deemed to be automatically amended so as to comply with applicable law. In the
event that any of the provisions of this Agreement shall be deemed by any court
of competent jurisdiction to be wholly or partially invalid, such determination
shall not affect the binding effect of the other provisions of this Agreement.
9. Set off Employee grants to the Company the right, at
any time and from time to time, to set off from any and all amounts owed to
Employee, dollar for dollar, the amounts owed to the Company resulting from
damages to the Company for the breach by Employee of the confidentiality or
covenant not to compete provisions of this Agreement, but only to the extent
that the liability of Employee and the amount of liability of Employee are not
reasonably subject to dispute.
10 Injunctive Relief. Employee acknowledges that the
damage to the Company resulting from a breach of the obligations of trust and
confidence set forth in Sections 6 and 7 hereof may cause irreparable injury to
the Company, and Employee hereby agrees and consents to the entry of an
injunction by any court of competent jurisdiction, enjoining him from violating
any term or terms of this Agreement, and such injunctive relief may be granted
without the necessity of proving actual damages. In addition, the Employee
waives any right to require a bond to be posted by the Company as a condition of
receiving any equitable relief. Such injunctive relief, however, shall be in
addition to any other remedies provided by law, in equity or otherwise, to the
Company.
11. Entire Agreement. This Agreement, and the employee
benefit plans referred to herein, contain the entire understanding of the
Company and the Employee with respect to Employee's employment with the Company
and his compensation therefore. Specifically, Employee acknowledges that no
commitment has been made by the Company to him with respect to any employment
beyond the term of this Agreement (whether ending by lapse of time or earlier
termination pursuant to its terms) or with respect to any benefits not expressly
set forth in this Agreement or incorporated herein by reference.
12. Notices. All notices under this Agreement shall be in
writing and shall be deemed effective when delivered in person (in the Company's
case, to its respective Secretary) or upon receipt after deposit thereof in the
U.S. mails, postage prepaid, addressed to Employee or the Company as follows, or
to such other address as the party to be notified may specify by notice to the
other party in the manner provided in this Section:
If to Employee: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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With a copy to: McCutchen, Doyle, ▇▇▇▇▇ & ▇▇▇▇▇▇▇, LLP
▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
If to the Company: ▇▇▇▇▇▇▇▇▇▇ Associates
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
With a copy to: U.S. Trust Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
10. Assignment. Neither this Agreement nor any rights or
obligations hereunder may be assigned by one party without the consent of the
other, except that (i) this Agreement shall be binding upon and inure to the
benefit of any successor or successors of the Company, whether by merger,
consolidation, sale of assets or otherwise, and reference herein to the Company
shall be deemed to include any such successor or successors, and (ii) this
Agreement is freely assignable by the Company to any corporation or entity
controlling, controlled by, or under common control with, the Company.
11. Amendment; Waiver. This Agreement may be amended and
any right or claim hereunder waived, only by a written instrument signed by
Employee and the Company. Nothing in this Agreement, express or implied, is
intended to confer upon any third person any rights or remedies under or by
reason of this Agreement. No amendment or waiver of this Agreement requires the
consent of any individual, partnership, corporation or other entity not a party
to this Agreement.
12. Construction. This Agreement shall be construed
under and governed by the laws of the State of California. The section headings
are for convenience only and shall not be considered a part of the terms and
provisions of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement.
▇▇▇▇▇▇▇▇▇▇ Associates, a California corporation.
By:
-----------------------------
Title:
--------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Exhibit 7.11
Consent Letter to ▇▇▇▇▇▇▇▇▇▇ Clients
------------------------------------
36
70
[▇▇▇▇▇▇▇▇▇▇ LETTERHEAD]
October ___, 1996
Dear _______________:
As we discussed before, our firm will become the San Francisco subsidiary of
U.S. Trust Corporation subject to regulatory approval.
U.S. Trust has been in business since 1853, concentrating on providing
investment management for individuals, trusts and charitable institutions. It
manages assets in excess of $35 billion through 14 offices nationwide.
Most importantly, the Company's investment philosophy matches our own. The
availability of 15 equity and fixed income security analysts in New York and Los
Angeles significantly strengthens ▇▇▇▇▇▇▇▇▇▇ Associates' capability. And their
banking and custodianship facilities provide additional services. So that you
may know more about U.S. Trust, we're enclosing a copy of a brochure describing
their operations.
Once the transaction is complete, we envision relatively minor changes in the
manner in which we'll be working with you. Our investment counsel agreement with
you will remain unchanged and we will continue to ▇▇▇▇ you at the same annual
rate of _____________ (the" Investment Counsel Agreement"). ▇▇▇▇▇, Randy,
Marilyn, ▇▇▇ and I will be right here as always and available to you as usual.
We'll be reporting to you four times [or once] a year as we have in the past.
We'll meet with you at your convenience. However, appraisals and cash statements
for your accounts will be produced monthly in New York.
While we are becoming a subsidiary of U.S. Trust Corporation and your Investment
Counsel Agreement with us remains unchanged, the Investment Advisors Act of 1940
considers this process an assignment of the Investment Counsel Agreement
requiring that you consent to the assignment before we can continue to work with
you. Therefore, please sign, date and return the copy of this letter in the
envelope provided.
71
[▇▇▇▇▇▇▇▇▇▇ LETTERHEAD]
October ___, 1996
Dear _______________:
As we discussed before, our firm will become the San Francisco subsidiary of
U.S. Trust Corporation subject to regulatory approval.
U.S. Trust has been in business since 1853, concentrating on providing
investment management for individuals, trusts and charitable institutions. It
manages assets in excess of $35 billion through 14 offices nationwide.
Most importantly, the Company's investment philosophy matches our own. The
availability of 15 equity and fixed income security analysts in New York and Los
Angeles significantly strengthens ▇▇▇▇▇▇▇▇▇▇ Associates' capability. And their
banking and custodianship facilities provide additional services. So that you
may know more about U.S. Trust, we're enclosing a copy of a brochure describing
their operations.
Once the transaction is complete, we envision relatively minor changes in the
manner in which we'll be working with you. Our investment counsel agreement with
you will remain unchanged and we will continue to ▇▇▇▇ you at the same annual
rate of _____________ (the" Investment Counsel Agreement"). ▇▇▇▇▇, Randy,
Marilyn, ▇▇▇ and I will be right here as always and available to you as usual.
We'll be reporting to you four times [or once] a year as we have in the past.
We'll meet with you at your convenience. However, appraisals and cash statements
for your accounts will be produced monthly in New York.
While we are becoming a subsidiary of U.S. Trust Corporation and your Investment
Counsel Agreement with us remains unchanged, the Investment Advisors Act of 1940
considers this process an assignment of the Investment Counsel Agreement
requiring that you consent to the assignment before we can continue to work with
you. Therefore, please sign, date and return the copy of this letter in the
envelope provided.
72
Let us know if you'd like to discuss any of these matters further or have any
questions we have not covered before.
Sincerely,
▇▇▇▇▇▇▇▇▇▇ ASSOCIATES
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Agree to Assignment of Investment
Counsel Agreement:
------------------------------------
(type name)
------------------------------------
Date
73
Exhibit 8.3
Opinion of Buyer's Counsel
74
[For U.S. Trust Company of California Stationery)
December 31, 1996
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ Associates
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Gentlemen:
I am Senior Vice-President and General Counsel of U.S. Trust Company of
California, N.A. (the"Buyer") and UST-LA, Inc., a California corporation
(the"Merger Sub"). I have acted as counsel for Buyer and Merger Sub in
connection with the execution and delivery of the Merger Agreement dated October
__, 1996 (the "Merger Agreement"), among ▇▇▇▇▇▇▇▇▇▇ Associates, a California
corporation (the "Company"), ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇ (individually as "Seller" and collectively as "Sellers") and in
connection with the Closing being held today pursuant to Section 1.2 of the
Merger Agreement. This opinion is being delivered to you pursuant to Section 8.3
of the Merger Agreement, and unless the context indicates otherwise, terms
defined in the Merger Agreement and not otherwise defined herein, are used
herein with the meanings so defined.
In connection with this opinion, I have examined originals or copies,
certified or otherwise identified to my satisfaction, of the Merger Agreement
and the Employment Agreements dated the date hereof between the Company and each
of the Sellers (the "Employment Agreements").
With respect to certain factual matters, I have relied upon the
representations and warranties made by the parties in the Merger Agreement and
by the officers and representatives of the Buyer delivered thereunder, and upon
statements made to me in discussion with Buyer's management. I have also
examined and relied upon originals or copies, certified or otherwise identified
to my satisfaction, of such corporate records, agreements and other documents
and instruments, and certificates of public officials, and have made such
inquiries of the officers of the Buyer and Merger Sub, and have relied upon such
statements made to me by such officers, and considered such questions of law, as
I have deemed relevant and necessary for purposes of rendering the opinions
expressed below.
For purposes of this opinion, I have assumed the genuineness of all
signatures on original and certified documents and the conformity to original
documents of all documents submitted to me as conformed, photostat or other
copies thereof, and I have assumed the legal capacity of all natural persons
executing such documents, instruments and other papers. I have also assumed that
each entity that has executed such documents, instruments and other papers,
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other than the Buyer and Merger Sub, has the power to enter into and perform all
of such entity's obligations thereunder, that such documents, instruments and
other papers have been duly authorized, executed and delivered by each entity
other than the Buyer and Merger Sub, and that such documents, instruments and
other papers are binding on each party thereto, other than the Buyer and Merger
Sub.
Statements made herein "to the best of my knowledge" or with respect to
matters "known to me" are based solely on information actually known to me and
to those attorneys currently employed with the Buyer and Merger Sub and engaged
in representing the Buyer and Merger Sub in connection with the transactions
contemplated by the Merger Agreement. Except as otherwise expressly indicated, I
have not undertaken any independent investigation of factual matters.
Based upon the foregoing, and subject to the qualifications stated
herein, it is my opinion that:
(a) Buyer is a national banking organization chartered by the
office of the Comptroller of the Currency duly organized,
validly existing and in good standing under the laws of the
State of California, and Merger Sub is a corporation duly
organized, validly existing and in good standing under the
laws of the State of California.
(b) Buyer and Merger Sub have all requisite corporate power and
authority to execute, deliver and perform the Merger Agreement
and all other documents required to be delivered to Sellers at
closing (the "Closing Documents") and the performance by Buyer
and Merger Sub of their respective obligations thereunder,
have been duly and validly authorized and no other corporate
proceedings on the part of Buyer or Merger Sub are necessary
to authorize the Merger Agreement.
(c) The Merger Agreement and the Closing Documents have been duly
executed and delivered by Buyer and Merger Sub, as the case
may be, and constitute the legal, valid and binding
obligations of Buyer and Merger Sub, as the case may be,
enforceable against Buyer and Merger Sub, as the case may be,
in accordance with their respective terms, except as limited
by bankruptcy and insolvency laws and by other laws affecting
the rights of creditors generally.
(d) The execution and delivery by Buyer and Merger Sub of the
Merger Agreement and the Closing Documents, and the
performance by Buyer and Merger Sub of the transactions
contemplated thereunder, do not and will not conflict with, or
constitute a breach of or a default or permit acceleration of
any obligation under, or create a lien or other encumbrance on
any assets of Buyer or Merger Sub under, (i) any law,
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regulation, rule, judgment, order, writ, injunction or decree
applicable to Buyer or Merger Sub, or (ii) any agreement,
lease, indenture, instrument or contract to which Buyer or
Merger Sub is a party or by which Buyer or Merger Sub is
bound.
(e) No consent, approval or authorization of or filing with any
New York, California or federal governmental authority is
required in connection with the execution and delivery of the
Merger Agreement by Buyer or Merger Sub or for the
consummation by Buyer or Merger Sub of the transactions
contemplated thereby, except for such consents, approvals,
authorizations or filings which have been obtained or made.
(f) The USTC Merger Shares have been duly authorized and, upon
delivery to the Sellers in accordance with the terms of the
Merger Agreement, have been validly issued, fully paid and
nonassessable and free of preemptive rights.
(g) The Registration Statement of US Trust Corporation on Form
S-3, as amended, Registration No. _____________ (as amended,
the "Registration Statement"), has become effective under the
Securities Act of 1933, as amended (the "Act"), and to the
best of my knowledge, no stop order suspending the
effectiveness of the Registration Statement has been issued
and no proceedings for that purpose have been instituted or
are threatened under the Act, and the Registration Statement
and the prospectus contained therein and any amendments or
supplements thereto, as of their respective effective dates,
comply as to form and all material respects with the Act, and
nothing has come to my attention which leads me to believe
that the Registration Statement at the time it became
effective contained, or on the date hereof contains, an untrue
statement of a material fact or omitted or omits a material
fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which
they were made, not misleading.
(h) If the offer and sale are made pursuant to the Registration
Statement, the offer and sale will be duly registered under
the Act.
(i) The offer and sale of the USTC Merger Shares by the Sellers
will be exempt from registration or qualification under the
state securities laws of the State of New York and California,
and all conditions for obtaining such exemptions have been
satisfied.
Furthermore, to the best of my knowledge, there is no pending or
threatened suit, action or litigation, or administrative, arbitration or other
proceeding or governmental
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inquiry or investigation, questioning the validity of the Merger Agreement, or
any of the Closing Documents, or any of the transactions contemplated thereby.
The opinions set forth are subject to the following qualifications and
limitations:
(i) I express no opinion as to the effect of the application of
equitable principles (whether considered in a proceeding at
law or in equity) or of bankruptcy, insolvency,
reorganization, moratorium and other laws now or hereafter in
effect affecting the enforcement of creditors' rights and
remedies including those relating to fraudulent conveyances
and transfer;
(ii) Insofar as the opinions expressed above relate to, or are
based upon, the effectiveness of the Merger, they are subject
to the power of the courts to order rescission of the
consummated transactions in such cases as violations of
federal or state securities laws or for failure to satisfy
basic equitable requirements of good faith and fair treatment;
and
(iii) I express no opinion concerning the laws of any jurisdiction
other than the law of the State of New York and California and
the federal law of the United States of America.
This opinion is provided to you as a legal opinion only, and not as a
guarantee or warranty of the matters discussed herein. This opinion has been
rendered as of the date hereof, and I disclaim any obligation to advise you of
any changes in the circumstances, laws or events that you may occur subsequent
to the date hereof, or otherwise to update this opinion.
This letter is furnished to you by me, as counsel to the Buyer and
Merger Sub, and is solely for your benefit in connection with the transactions
contemplated by the Merger Agreement. This opinion may not be relied upon by any
other party, except to the extent that we may expressly and in writing authorize
reliance by other persons.
Very truly yours,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
Senior Vice President and General Counsel
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