-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JiUgWBFLaWbXKNeRGkxYG0JY2HwAtzKx9qABWMLUrSeKegIefrzwzWmzRhMra2sT /1mXBbUiFMRMHLVjQhTMvA== 0000950123-99-009075.txt : 19991018 0000950123-99-009075.hdr.sgml : 19991018 ACCESSION NUMBER: 0000950123-99-009075 CONFORMED SUBMISSION TYPE: SC 14D1 PUBLIC DOCUMENT COUNT: 15 FILED AS OF DATE: 19991004 GROUP MEMBERS: BRIDGE ACQUISITION CORP GROUP MEMBERS: CHASE MANHATTAN CORP /DE/ SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: HAMBRECHT & QUIST GROUP CENTRAL INDEX KEY: 0001017267 STANDARD INDUSTRIAL CLASSIFICATION: SECURITY BROKERS, DEALERS & FLOTATION COMPANIES [6211] IRS NUMBER: 943246636 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: SC 14D1 SEC ACT: SEC FILE NUMBER: 005-50083 FILM NUMBER: 99722631 BUSINESS ADDRESS: STREET 1: 0NE BUSH ST CITY: SAN FRANCISCO STATE: CA ZIP: 94104 BUSINESS PHONE: 4154393000 MAIL ADDRESS: STREET 1: ONE BUSH ST CITY: SAN FRANCISCO STATE: CA ZIP: 94104 FORMER COMPANY: FORMER CONFORMED NAME: HAMBRECHT & QUIST GROUP INC DATE OF NAME CHANGE: 19960619 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: CHASE MANHATTAN CORP /DE/ CENTRAL INDEX KEY: 0000019617 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 132624428 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D1 BUSINESS ADDRESS: STREET 1: 270 PARK AVE CITY: NEW YORK STATE: NY ZIP: 10017 BUSINESS PHONE: 2122706000 MAIL ADDRESS: STREET 1: 270 PARK AVENUE CITY: NEW YORK STATE: NY ZIP: 10017 FORMER COMPANY: FORMER CONFORMED NAME: CHEMICAL BANKING CORP DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: CHEMICAL NEW YORK CORP DATE OF NAME CHANGE: 19880508 SC 14D1 1 SCHEDULE 14D-1 1 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ SCHEDULE 14D-1 TENDER OFFER STATEMENT PURSUANT TO SECTION 14(d)(1) OF THE SECURITIES EXCHANGE ACT OF 1934 ------------------------ HAMBRECHT & QUIST GROUP (NAME OF SUBJECT COMPANY) BRIDGE ACQUISITION CORPORATION THE CHASE MANHATTAN CORPORATION (BIDDERS) COMMON STOCK, PAR VALUE $0.01 PER SHARE (TITLE OF CLASS OF SECURITIES) 406545103 (CUSIP NUMBER OF CLASS OF SECURITIES) ------------------------ WILLIAM H. MCDAVID, ESQ. GENERAL COUNSEL THE CHASE MANHATTAN CORPORATION 270 PARK AVENUE NEW YORK, NEW YORK 10017 TELEPHONE: (212) 270-6000 (NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDERS) COPY TO: LEE MEYERSON, ESQ. SIMPSON THACHER & BARTLETT 425 LEXINGTON AVENUE NEW YORK, NEW YORK 10017 TELEPHONE: (212) 455-2000 CALCULATION OF FILING FEE - ------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------ TRANSACTION VALUATION* AMOUNT OF FILING FEE** - ------------------------------------------------------------------------------------------------------ $1,494,022,750 $298,805 - ------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------
* Based on the offer to purchase all of the outstanding shares of Common Stock of the Subject Company at a purchase price of $50 cash per share and 24,595,169 shares issued and outstanding, outstanding options with respect to 5,278,958 shares, options granted subject to issuance with respect to 4,934 shares and outstanding warrants with respect to 1,394 shares, in each case as of September 27, 1999. ** 1/50 of 1% of Transaction Valuation. [ ] CHECK BOX IF ANY PART OF THE FEE IS OFFSET AS PROVIDED BY RULE 0-11(a)(2) AND IDENTIFY THE FILING WITH WHICH THE OFFSETTING FEE WAS PREVIOUSLY PAID. IDENTIFY THE PREVIOUS FILING BY REGISTRATION STATEMENT NUMBER, OR THE FORM OR SCHEDULE AND THE DATE OF ITS FILING.
Amount Previously Paid: Filing Party: Form of Registration No.: Date Filed:
- -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 This Tender Offer Statement on Schedule 14D-1 (the "Schedule 14D-1") relates to the offer by Bridge Acquisition Corporation, a Delaware corporation ("Purchaser"), to purchase all of the outstanding shares of Common Stock, par value $0.01 per share (the "Shares"), of Hambrecht & Quist Group, a Delaware corporation (the "Company"), at a purchase price of $50 per Share, net to the seller in cash, without interest thereon, upon the terms and subject to the conditions set forth in the Offer to Purchase dated October 4, 1999 (the "Offer to Purchase"), a copy of which is attached hereto as Exhibit (a)(1), and in the related Letter of Transmittal (which, together with the Offer to Purchase, as amended from time to time, constitute the "Offer"), a copy of which is attached hereto as Exhibit (a)(2). Purchaser is a subsidiary of The Chase Manhattan Corporation, a Delaware corporation ("Parent"). ITEM 1. SECURITY AND SUBJECT COMPANY. (a) The name of the subject company is Hambrecht & Quist Group. The information set forth in Section 7 ("Certain Information Concerning the Company") of the Offer to Purchase is incorporated herein by reference. (b) The exact title of the class of equity securities being sought in the Offer is Common Stock, par value $0.01 per share, of the Company. The information set forth in the Introduction of the Offer to Purchase is incorporated herein by reference. (c) The information set forth in Section 6 ("Price Range of Shares; Dividends") of the Offer to Purchase is incorporated herein by reference. ITEM 2. IDENTITY AND BACKGROUND. (a)-(d) and (g) This Statement is filed by Purchaser and Parent. The information set forth in Section 8 ("Certain Information Concerning Purchaser and Parent") of the Offer to Purchase and in Schedule I thereto is incorporated herein by reference. (e) and (f) During the last five years, neither Purchaser nor Parent nor, to the best knowledge of Purchaser or Parent, any of the persons listed in Schedule I to the Offer to Purchase (i) has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (ii) was a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting activities subject to, federal or state securities laws or finding any violation of such laws. ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY. (a) and (b) The information set forth in Section 8 ("Certain Information Concerning Purchaser and Parent"), Section 10 ("Background of the Offer; Contacts with the Company"), Section 11 ("The Merger Agreement and Other Agreements") and Section 12 ("Purpose of the Offer; The Merger; Plans for the Company") of the Offer to Purchase is incorporated herein by reference. ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. (a) The information set forth in Section 9 ("Source and Amount of Funds") of the Offer to Purchase is incorporated herein by reference. (b) and (c) Not applicable. ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER. (a)-(g) The information set forth in the Introduction, Section 10 ("Background of the Offer; Contacts with the Company"), Section 11 ("The Merger Agreement and Other Agreements"), Section 12 ("Purpose of the Offer; The Merger; Plans for the Company") and Section 14 ("Effect of the Offer on the Market for the Shares; Stock Exchange Listing and Exchange Act Registration") of the Offer to Purchase is incorporated herein by reference. ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY. (a) and (b) The information set forth in the Introduction, Section 8 ("Certain Information Concerning Purchaser and Parent") and Section 11 ("The Merger Agreement and Other Agreements") of the Offer to Purchase is incorporated herein by reference. 2 3 ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO THE SUBJECT COMPANY'S SECURITIES. The information set forth in the Introduction, Section 10 ("Background of the Offer; Contacts with the Company"), Section 11 ("The Merger Agreement and Other Agreements") and Section 12 ("Purpose of the Offer; The Merger; Plans for the Company") of the Offer to Purchase is incorporated herein by reference. ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED. The information set forth in the Introduction and Section 17 ("Fees and Expenses") of the Offer to Purchase is incorporated herein by reference. ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS. The information set forth in Section 8 ("Certain Information Concerning Purchaser and Parent") of the Offer to Purchase is incorporated herein by reference. ITEM 10. ADDITIONAL INFORMATION. (a) The information set forth in Section 11 ("The Merger Agreement and Other Agreements") is incorporated herein by reference. (b) and (c) The information set forth in Section 11 ("The Merger Agreement and Other Agreements") and Section 16 ("Certain Legal Matters and Regulatory Approvals") of the Offer to Purchase is incorporated herein by reference. (d) The information set forth in Section 14 ("Effect of the Offer on the Market for the Shares; Stock Exchange Listing and Exchange Act Registration") of the Offer to Purchase is incorporated herein by reference. (e) None. (f) The information set forth in the Offer to Purchase and the Letter of Transmittal is incorporated herein by reference. ITEM 11. MATERIAL TO BE FILED AS EXHIBITS. (a)(1) Offer to Purchase dated October 4, 1999. (a)(2) Form of Letter of Transmittal. (a)(3) Form of Notice of Guaranteed Delivery. (a)(4) Form of Letter from the Dealer Manager to Brokers, Dealers, Commercial Banks, Trust Companies and Nominees. (a)(5) Form of Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and Nominees. (a)(6) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9. (a)(7) Summary Advertisement as published on October 4, 1999. (a)(8) Joint Press Release issued by Parent and the Company on September 28, 1999. (b) Not applicable. (c)(1) Agreement and Plan of Merger, dated as of September 27, 1999, by and among Parent, Purchaser and the Company. (c)(2) Tender and Voting Agreement, dated September 27, 1999, among Parent and certain officers and directors of the Company named therein. (c)(3) Stock Option Agreement, dated as of September 27, 1999, between Parent and the Company. (c)(4) Employment Agreement, dated as of September 27, 1999, between Chase Securities Inc. and Daniel H. Case III. (c)(5) Confidentiality Agreement dated February 8, 1999, between Parent and the Company. (c)(6) Confidentiality Agreement dated March 29, 1999, between Parent and the Company. (d) Not applicable. (e) Not applicable. (f) Not applicable. 3 4 SIGNATURE After due inquiry and to the best of our knowledge and belief, we hereby certify that the information set forth in this Statement is true, complete and correct. THE CHASE MANHATTAN CORPORATION By: /s/ WILLIAM H. MCDAVID ------------------------------------ Name: William H. McDavid Title: General Counsel BRIDGE ACQUISITION CORPORATION By: /s/ WILLIAM H. MCDAVID ------------------------------------ Name: William H. McDavid Title: Vice President and Secretary Date: October 4, 1999 4 5 EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION - ------- ----------- 11(a)(1) Offer to Purchase dated October 4, 1999. 11(a)(2) Form of Letter of Transmittal. 11(a)(3) Form of Notice of Guaranteed Delivery. 11(a)(4) Form of Letter from the Dealer Manager to Brokers, Dealers, Commercial Banks, Trust Companies and Nominees. 11(a)(5) Form of Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and Nominees. 11(a)(6) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9. 11(a)(7) Summary Advertisement as published on October 4, 1999. 11(a)(8) Joint Press Release issued by Parent and the Company on September 28, 1999. 11(c)(1) Agreement and Plan of Merger, dated as of September 27, 1999, by and among Parent, Purchaser and the Company. 11(c)(2) Tender and Voting Agreement, dated September 27, 1999, among Parent and certain officers and directors of the Company named therein. 11(c)(3) Stock Option Agreement, dated as of September 27, 1999, between Parent and the Company. 11(c)(4) Employment Agreement, dated as of September 27, 1999, between Chase Securities Inc. and Daniel H. Case III. 11(c)(5) Confidentiality Agreement dated February 8, 1999, between Parent and the Company. 11(c)(6) Confidentiality Agreement dated March 29, 1999, between Parent and the Company.
5 EX-99.11.A.1 2 OFFER TO PURCHASE 1 OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK OF HAMBRECHT & QUIST GROUP AT $50.00 NET PER SHARE BY BRIDGE ACQUISITION CORPORATION A WHOLLY-OWNED SUBSIDIARY OF THE CHASE MANHATTAN CORPORATION THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON MONDAY, NOVEMBER 1, 1999, UNLESS THE OFFER IS EXTENDED. THE OFFER (AS DEFINED IN THE INTRODUCTION) IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED IN SECTION 1) A NUMBER OF SHARES WHICH CONSTITUTES MORE THAN 50% OF THE VOTING POWER (DETERMINED ON A FULLY-DILUTED BASIS) ON THE DATE OF PURCHASE OF ALL THE SECURITIES OF HAMBRECHT & QUIST GROUP ENTITLED TO VOTE GENERALLY IN THE ELECTION OF DIRECTORS OR IN A MERGER AND (2) ALL REGULATORY APPROVALS AND CONSENTS REQUIRED TO CONSUMMATE THE TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT (AS DEFINED IN THE INTRODUCTION), INCLUDING THE OFFER AND THE MERGER (AS DEFINED IN THE INTRODUCTION), HAVING BEEN OBTAINED AND REMAINING IN FULL FORCE AND EFFECT AND ANY STATUTORY WAITING PERIODS HAVING EXPIRED. THE OFFER IS ALSO SUBJECT TO CERTAIN OTHER TERMS AND CONDITIONS. SEE SECTIONS 1, 11, 15 AND 16. ------------------------ THE BOARD OF DIRECTORS OF HAMBRECHT & QUIST GROUP HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER, AND DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER ARE ADVISABLE AND FAIR TO, AND IN THE BEST INTERESTS OF, THE HOLDERS OF THE SHARES (AS DEFINED IN THE INTRODUCTION) AND RECOMMENDS THAT THE HOLDERS OF THE SHARES TENDER THEIR SHARES PURSUANT TO THE OFFER. ------------------------ IMPORTANT Any stockholder desiring to tender all or any portion of such stockholder's Shares should either (1) complete and sign the enclosed Letter of Transmittal (or a facsimile thereof) in accordance with the instructions in the Letter of Transmittal, mail or deliver the Letter of Transmittal (or such facsimile) and any other required documents to the Depositary (as defined in the Introduction), and either deliver the certificates representing the tendered Shares and any other required documents to the Depositary or tender such Shares pursuant to the procedure for book-entry transfer set forth in Section 3, or (2) request such stockholder's broker, dealer, commercial bank, trust company or other nominee to effect the transaction for such stockholder. Stockholders having Shares registered in the name of a broker, dealer, commercial bank, trust company or other nominee must contact such broker, dealer, commercial bank, trust company or other nominee if they desire to tender Shares so registered. A stockholder who desires to tender Shares and whose certificates representing such Shares are not immediately available, or who cannot deliver the certificates for Shares and all other required documents to reach the Depositary on or prior to the Expiration Date, or who cannot complete the procedure for book-entry transfer on a timely basis, may tender such Shares by following the procedures for guaranteed delivery set forth in Section 3. Questions and requests for assistance may be directed to Chase Securities Inc. (the "Dealer Manager") or to ChaseMellon Consulting Services, L.L.C. (the "Information Agent") at their respective addresses and telephone numbers set forth on the back cover of this Offer to Purchase. Additional copies of this Offer to Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery may also be obtained from the Information Agent or the Dealer Manager, or from brokers, dealers, commercial banks or trust companies. ------------------------ THE DEALER MANAGER FOR THE OFFER IS: CHASE SECURITIES INC. October 4, 1999 2 TABLE OF CONTENTS
PAGE ---- INTRODUCTION................................................ 1 THE TENDER OFFER............................................ 3 1. Terms of the Offer; Expiration Date.................... 3 2. Acceptance for Payment and Payment for Shares.......... 4 3. Procedure for Tendering Shares......................... 5 4. Withdrawal Rights...................................... 8 5. Certain United States Federal Income Tax Consequences.............................................. 9 6. Price Range of Shares; Dividends....................... 9 7. Certain Information Concerning the Company............. 10 8. Certain Information Concerning Purchaser and Parent.... 13 9. Source and Amount of Funds............................. 14 10. Background of the Offer; Contacts with the Company..... 14 11. The Merger Agreement and Other Agreements.............. 17 12. Purpose of the Offer; The Merger; Plans for the Company................................................... 35 13. Dividends and Distributions............................ 37 14. Effect of the Offer on the Market for the Shares; Stock Exchange Listing and Exchange Act Registration......... 37 15. Certain Conditions of the Offer........................ 38 16. Certain Legal Matters and Regulatory Approvals......... 39 17. Fees and Expenses...................................... 40 18. Miscellaneous.......................................... 41
SCHEDULE I -- DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER AND PARENT i 3 To the Stockholders of Hambrecht & Quist Group INTRODUCTION Bridge Acquisition Corporation, a Delaware corporation ("Purchaser") and a wholly-owned subsidiary of The Chase Manhattan Corporation, a Delaware corporation ("Parent"), hereby offers to purchase all of the outstanding shares of Common Stock, par value $0.01 per share (the "Shares"), of Hambrecht & Quist Group, a Delaware corporation (the "Company"), at a purchase price of $50 per Share, net to the seller in cash, without interest thereon, upon the terms and subject to the conditions set forth in this Offer to Purchase and in the related Letter of Transmittal (which, as amended from time to time, together constitute the "Offer"). Tendering stockholders will not be obligated to pay brokerage fees or commissions or, subject to Instruction 6 of the Letter of Transmittal, stock transfer taxes on the transfer and sale of Shares pursuant to the Offer. Purchaser will pay all fees and expenses incurred in connection with the Offer by Chase Securities Inc. ("CSI"), which is acting as Dealer Manager for the Offer, ChaseMellon Shareholder Services, L.L.C., which is acting as the Depositary (in such capacity, the "Depositary"), and ChaseMellon Consulting Services, L.L.C., which is acting as the Information Agent, each of which entities is an affiliate of Parent. See Section 17. THE BOARD OF DIRECTORS OF THE COMPANY (THE "COMPANY BOARD") HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT (AS DEFINED BELOW) AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER (AS DEFINED BELOW), AND DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER ARE ADVISABLE AND FAIR TO, AND IN THE BEST INTERESTS OF, THE HOLDERS OF THE SHARES AND RECOMMENDS THAT THE HOLDERS OF THE SHARES TENDER THEIR SHARES TO PURCHASER PURSUANT TO THE OFFER. The Company Board has received the written opinion dated September 27, 1999 of Hambrecht & Quist L.L.C. ("H&Q LLC"), financial advisor to the Company, to the effect that, as of such date and based upon and subject to certain matters stated therein, the $50 per Share cash consideration to be received in the Offer and the Merger by holders of Shares is fair to such holders (other than Parent and its affiliates) from a financial point of view. A copy of the written opinion of H&Q LLC is attached to the Company's Solicitation/ Recommendation Statement on Schedule 14D-9, which is being distributed to the stockholders of the Company, and stockholders are urged to read the opinion carefully in its entirety for the assumptions made, matters considered and limitations on the review undertaken by H&Q LLC. THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE A NUMBER OF SHARES WHICH CONSTITUTES MORE THAN 50% OF THE VOTING POWER (DETERMINED ON A FULLY-DILUTED BASIS) ON THE DATE OF PURCHASE OF ALL THE SECURITIES OF THE COMPANY ENTITLED TO VOTE GENERALLY IN THE ELECTION OF DIRECTORS OR IN A MERGER (THE "MINIMUM CONDITION") AND (2) ALL REGULATORY APPROVALS AND CONSENTS REQUIRED TO CONSUMMATE THE TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT, INCLUDING THE OFFER AND THE MERGER (THE "REQUISITE REGULATORY APPROVALS"), HAVING BEEN OBTAINED AND REMAINING IN FULL FORCE AND EFFECT AND ANY STATUTORY WAITING PERIODS HAVING EXPIRED (ALL SUCH APPROVALS AND CONSENTS AND THE EXPIRATION OF ALL SUCH WAITING PERIODS BEING REFERRED TO AS THE "REQUISITE REGULATORY APPROVALS CONDITION"). THE OFFER IS ALSO SUBJECT TO CERTAIN OTHER TERMS AND CONDITIONS. SEE SECTIONS 1, 11, 15 AND 16. IF PURCHASER PURCHASES AT LEAST THE NUMBER OF SHARES NEEDED TO SATISFY THE MINIMUM CONDITION, IT WILL BE ABLE TO EFFECT THE MERGER WITHOUT THE AFFIRMATIVE VOTE OF ANY OTHER STOCKHOLDER OF THE COMPANY. SEE SECTION 12. Purchaser reserves the right, in its sole discretion, subject only to the applicable rules and regulations of the Securities and Exchange Commission (the "Commission"), to waive each of the conditions (other than the Minimum Condition) to the obligations of Purchaser to consummate the Offer. The Offer is being made pursuant to an Agreement and Plan of Merger, dated as of September 27, 1999 (as it may be amended or supplemented from time to time, the "Merger Agreement"), among Parent, Purchaser and the Company. The Merger Agreement provides, among other things, for the making of the Offer by Purchaser, and further provides that, following the completion of the Offer, upon the terms and 1 4 subject to the conditions of the Merger Agreement, and in accordance with the Delaware General Corporation Law (the "DGCL"), Purchaser will be merged with and into the Company (the "Merger"). Following the effective time of the Merger (the "Effective Time"), the Company will continue as the surviving corporation (the "Surviving Corporation") and become a wholly-owned subsidiary of Parent and the separate corporate existence of Purchaser will cease. At the Effective Time, each Share issued and outstanding immediately prior to the Effective Time (other than (1) Shares held by the Company as treasury stock or by Parent, Purchaser or any other wholly-owned subsidiary of Parent or the Company (other than Trust Account Shares and DPC Shares (both as defined in Section 11)), which will be canceled, (2) Dissenting Shares (as defined in Section 11), if any, and (3) Restricted Shares (as defined in Section 11) that do not vest as of the Effective Time pursuant to the Company Stock Plans (as defined in Section 11)) will, by virtue of the Merger and without any action on the part of the holders of the Shares, be converted into the right to receive in cash the per Share price paid in the Offer (the "Merger Consideration"), payable to the holder thereof, without interest, upon surrender of the certificate formerly representing such Share, less any required withholding taxes. The Merger Agreement is more fully described in Section 11. Certain federal income tax consequences of the sale of the Shares pursuant to the Offer and the exchange of Shares for the Merger Consideration pursuant to the Merger are described in Section 5. In connection with entering into the Merger Agreement, the Company granted to Parent an irrevocable option (the "Option") to purchase up to 4,894,439 newly-issued Shares (as adjusted, the "Option Shares"), representing up to 19.9% of the issued and outstanding Shares, at a purchase price of $50 per Share. The Option is not currently exercisable but would become exercisable upon the occurrence of certain events generally relating to competing offers for the Company. See Section 11 for a discussion of the Stock Option Agreement, dated as of September 27, 1999, between Parent and the Company (the "Option Agreement"). Certain of the directors and executive officers of the Company holding Shares representing, as of the date hereof, approximately 13.9% of the issued and outstanding Shares (other than Restricted Shares) of the Company have contractually agreed with Parent, among other things, to tender their Shares in the Offer and to otherwise support the transaction. See Section 11 for a discussion of the Tender and Voting Agreement, dated as of September 27, 1999, among Parent and such directors and executive officers (the "Tender Agreement"). The Company has represented to Parent and Purchaser that as of the close of business on September 27, 1999, there were 24,595,169 Shares issued and outstanding, 5,278,958 Shares issuable upon the exercise of outstanding stock options (excluding the Option) and 1,394 Shares issuable upon the exercise of outstanding warrants. Under the terms of the Merger Agreement, the Company has reserved the right to complete the issuance of options previously granted with respect to an additional 4,934 Shares. Based upon the foregoing, Purchaser believes that approximately 14,940,228 Shares constitute 50% of the outstanding Shares on a fully-diluted basis as of the date of this Offer to Purchase. THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE WITH RESPECT TO THE OFFER. 2 5 THE TENDER OFFER 1. TERMS OF THE OFFER; EXPIRATION DATE. Upon the terms and subject to the conditions of the Offer (including, if the Offer is extended or amended, the terms and conditions of such extension or amendment), Purchaser will accept for payment and pay for all Shares validly tendered on or prior to the Expiration Date and not properly withdrawn as permitted by Section 4. The term "Expiration Date" means 12:00 Midnight, New York City time, on November 1, 1999, unless and until Purchaser, in its sole discretion (but subject to the terms and conditions of the Merger Agreement), extends the period during which the Offer is open, in which event the term "Expiration Date" means the latest time and date at which the Offer, as so extended by Purchaser, will expire. THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, SATISFACTION OF THE MINIMUM CONDITION AND THE REQUISITE REGULATORY APPROVALS CONDITION, AND CERTAIN OTHER CONDITIONS. SEE SECTION 15, WHICH SETS FORTH IN FULL THE CONDITIONS TO THE OFFER. SUBJECT TO THE PROVISIONS OF THE MERGER AGREEMENT AND THE APPLICABLE RULES AND REGULATIONS OF THE COMMISSION, PURCHASER RESERVES THE RIGHT, IN ITS SOLE DISCRETION, TO WAIVE ANY OR ALL CONDITIONS TO THE OFFER (OTHER THAN THE MINIMUM CONDITION) AND, SUBJECT TO THE PROVISIONS DESCRIBED BELOW, TO MAKE ANY OTHER CHANGES TO THE TERMS OF THE OFFER. SUBJECT TO THE PROVISIONS OF THE MERGER AGREEMENT, INCLUDING THE PROVISIONS OF THE MERGER AGREEMENT DESCRIBED IN THE NEXT PARAGRAPH, AND THE APPLICABLE RULES AND REGULATIONS OF THE COMMISSION, IF BY THE EXPIRATION DATE ANY OR ALL OF SUCH CONDITIONS TO THE OFFER HAVE NOT BEEN SATISFIED, PURCHASER RESERVES THE RIGHT (BUT WILL NOT BE OBLIGATED) TO (I) TERMINATE THE OFFER AND RETURN ALL TENDERED SHARES TO TENDERING STOCKHOLDERS, (II) WAIVE SUCH UNSATISFIED CONDITIONS (OTHER THAN THE MINIMUM CONDITION) AND PURCHASE ALL SHARES VALIDLY TENDERED OR (III) EXTEND THE OFFER AND, SUBJECT TO THE TERMS OF THE OFFER (INCLUDING THE RIGHTS OF STOCKHOLDERS TO WITHDRAW THEIR SHARES), RETAIN THE SHARES WHICH HAVE BEEN TENDERED UNTIL THE TERMINATION OF THE OFFER, AS EXTENDED. Subject to the applicable rules and regulations of the Commission and the provisions of the Merger Agreement, Purchaser expressly reserves the right, in its sole discretion, at any time and from time to time, and regardless of whether or not any of the events set forth in Section 15 have occurred or have been determined by Purchaser to have occurred, to (i) extend the period of time during which the Offer is open and thereby delay acceptance for payment of, and payment for, any Shares, by giving oral or written notice of such extension to the Depositary or (ii) amend the Offer in any respect permitted by the Merger Agreement by giving oral or written notice of such amendment to the Depositary. During any such extension, all Shares previously tendered and not properly withdrawn will remain subject to the Offer, subject to the right of a tendering stockholder to withdraw such stockholder's Shares. Under the terms of the Merger Agreement, Purchaser has agreed with the Company that it will not, without the prior written consent of the Company, amend or waive the Minimum Condition, change the form of consideration to be paid in the Offer (other than by adding cash consideration), decrease the cash per Share price paid in the Offer or the number of Shares sought, or amend any other condition of the Offer in any manner adverse to the holders of the Shares. The Merger Agreement provides that Purchaser may, without the consent of the Company, (i) extend the Offer on one or more occasions for up to ten business days for each such extension beyond the then-scheduled Expiration Date if at any such date any of the conditions to Purchaser's obligation to purchase Shares have not been satisfied or waived, until such time as such conditions are satisfied or waived, and, at the request of the Company, Purchaser will, subject to Parent's right to terminate the Merger Agreement pursuant to Article VIII thereof, extend the Offer for additional periods up to but not later than March 31, 2000, if the only condition not satisfied or earlier waived on the then-scheduled Expiration Date is the Requisite Regulatory Approvals Condition, (ii) extend the Offer for any period required by any rule, regulation, interpretation or position of the Commission or the staff thereof applicable to the Offer and (iii) extend the Offer for an aggregate period of not more than ten business days beyond the latest Expiration Date otherwise permitted under clause (i) or (ii) above if the Minimum Condition has been satisfied but there have not been tendered sufficient Shares so that the Merger could be effected without a vote of the Company's stockholders in accordance with Section 253 of the DGCL; provided, that, as a condition to the extension provided for in clause (iii), Purchaser irrevocably waives the satisfaction of the conditions to the Offer set forth in subclause (x) of clause (a) specified in Section 15 that subsequently may not be satisfied during any such extension of the Offer. The conditions to the Offer other than the Minimum Condition are solely for the benefit of 3 6 Purchaser and all of the conditions to the Offer may be asserted by Purchaser regardless of the circumstances resulting in a condition not being satisfied (except for any action or inaction by Purchaser or Parent constituting a breach of the Merger Agreement) and, except for the Minimum Condition, may be waived by Purchaser, in whole or in part at any time and from time to time, in its sole discretion. Any extension, delay, termination, waiver or amendment will be followed as promptly as practicable by public announcement thereof, and such announcement in the case of an extension will be made in accordance with Rule 14e-1(d) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date. Without limiting the manner in which Purchaser may choose to make any public announcement, except as provided by applicable law (including Rules 14d-4(c) and 14d-6(d) under the Exchange Act, which require that material changes be promptly disseminated to holders of Shares), Purchaser will have no obligation to publish, advertise or otherwise communicate any such public announcement other than by issuing a release to the Dow Jones News Service. If Purchaser makes a material change in the terms of the Offer or if it waives a material condition of the Offer, Purchaser will disseminate additional tender offer material and extend the Offer to the extent required by Rules 14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act. The minimum period during which an offer must remain open following material changes in the terms of the Offer, other than a change in price or a change in the percentage of securities sought, will depend upon the facts and circumstances, including the materiality of the changes. With respect to a change in price or, subject to certain limitations, a change in the percentage of securities sought, a minimum ten business day period from the day of such change is generally required to allow for adequate dissemination to stockholders. For purposes of the Offer, a "business day" means any day other than a Saturday, Sunday, or a federal holiday and consists of the time period from 12:01 a.m. through 12:00 Midnight, New York City time. The Company has provided Purchaser with the Company's stockholder list and security position listings for the purpose of disseminating the Offer to holders of Shares. This Offer to Purchase and the related Letter of Transmittal and other relevant materials will be mailed by Purchaser to record holders of Shares and furnished to brokers, dealers, commercial banks, trust companies and similar persons whose names, or the names of whose nominees, appear on the stockholder list or, if applicable, who are listed as participants in a clearing agency's security position listing, for subsequent transmittal to beneficial owners of Shares. 2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES. Upon the terms and subject to the conditions of the Offer (including, if the Offer is extended or amended, the terms and conditions of any such extension or amendment), Purchaser will accept for payment and will purchase and pay for all Shares validly tendered and not properly withdrawn commencing at the later of (i) the Expiration Date and (ii) the satisfaction or waiver of the conditions to the Offer set forth in Section 15, except to the extent, as described above in Section 1, that Purchaser extends the Offer in an effort to satisfy the requirements of Section 253 of the DGCL. Any such delays will be effected in compliance with Rule 14e-1(c) under the Exchange Act (relating to a bidder's obligation to pay for or return tendered securities promptly after the termination or withdrawal of such bidder's offer). For information with respect to regulatory approvals required to be obtained prior to the consummation of the Offer, see Section 16. In all cases, payment for Shares tendered and accepted for payment pursuant to the Offer will be made only after timely receipt by the Depositary of (i) certificates representing Shares (the "Share Certificates"), or timely confirmation (a "Book-Entry Confirmation") of a book-entry transfer of such Shares into the Depositary's account at The Depository Trust Company (the "Book-Entry Transfer Facility") pursuant to the procedures set forth in Section 3, (ii) the Letter of Transmittal (or a facsimile thereof), properly completed and duly executed, with any required signature guarantees, or an Agent's Message (as defined below) in connection with a book-entry transfer, and (iii) any other documents required by the Letter of Transmittal. The term "Agent's Message" means a message transmitted by the Book-Entry Transfer Facility to and received by the Depositary and forming a part of a Book-Entry Confirmation, which states that the 4 7 Book-Entry Transfer Facility has received an express acknowledgment from the participant in the Book-Entry Transfer Facility tendering the Shares that such participant has received and agrees to be bound by the terms of the Letter of Transmittal and that Purchaser may enforce such agreement against such participant. For purposes of the Offer, Purchaser will be deemed to have accepted for payment (and thereby purchased) Shares validly tendered and not properly withdrawn as, if and when Purchaser gives oral or written notice to the Depositary of Purchaser's acceptance for payment of such Shares pursuant to the Offer. Upon the terms and subject to the conditions of the Offer, payment for Shares accepted for payment pursuant to the Offer will be made by deposit of the purchase price therefor with the Depositary, which will act as agent for tendering stockholders for the purpose of receiving payments from Purchaser and transmitting such payments to stockholders whose Shares have been accepted for payment. UNDER NO CIRCUMSTANCES WILL INTEREST ON THE PURCHASE PRICE FOR SHARES BE PAID BY PURCHASER, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT. If, for any reason whatsoever, acceptance for payment of or payment for any Shares tendered pursuant to the Offer is delayed or Purchaser is unable to accept for payment or pay for Shares tendered pursuant to the Offer, then without prejudice to Purchaser's rights set forth herein, the Depositary may nevertheless, on behalf of Purchaser and subject to Rule 14e-1(c) under the Exchange Act, retain tendered Shares and such Shares may not be withdrawn except to the extent that the tendering stockholder is entitled to and duly exercises withdrawal rights as described in Section 4. If any tendered Shares are not accepted for payment for any reason or if Share Certificates are submitted for more Shares than are tendered, Share Certificates evidencing unpurchased or untendered Shares will be returned without expense to the tendering stockholder (or, in the case of Shares tendered by book-entry transfer into the Depositary's account at the Book-Entry Transfer Facility pursuant to the procedures set forth in Section 3, such Shares will be credited to an account maintained at the Book-Entry Transfer Facility), as promptly as practicable following the expiration, termination or withdrawal of the Offer. Purchaser reserves the right to transfer or assign, in whole or from time to time in part, to one or more of its affiliates the right to purchase all or any portion of the Shares tendered pursuant to the Offer, but any such transfer or assignment will not relieve Purchaser of its obligations under the Offer and will in no way prejudice the rights of tendering stockholders to receive payment for Shares validly tendered and accepted for payment pursuant to the Offer. 3. PROCEDURE FOR TENDERING SHARES. Valid Tenders. Except as set forth below, in order for Shares to be validly tendered pursuant to the Offer, the Letter of Transmittal (or a facsimile thereof), properly completed and duly executed, together with any required signature guarantees, or an Agent's Message in connection with a book-entry delivery of Shares, and any other documents required by the Letter of Transmittal, must be received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase on or prior to the Expiration Date and either (i) Share Certificates evidencing tendered Shares must be received by the Depositary at such address or such Shares must be tendered pursuant to the procedure for book-entry transfer described below and a Book-Entry Confirmation must be received by the Depositary, in each case on or prior to the Expiration Date or (ii) the guaranteed delivery procedures described below must be complied with. If Share Certificates are forwarded separately in multiple deliveries to the Depositary, a properly completed and duly executed Letter of Transmittal (or a facsimile thereof) must accompany each such delivery. No alternative, conditional or contingent tenders will be accepted and no fractional Shares will be purchased. Book-Entry Transfer. The Depositary will make a request to establish accounts with respect to the Shares at the Book-Entry Transfer Facility for purposes of the Offer within two business days after the date of this Offer to Purchase. Any financial institution that is a participant in the system of the Book-Entry Transfer Facility may make book-entry delivery of Shares by causing the Book-Entry Transfer Facility to transfer such Shares into the Depositary's account at the Book-Entry Transfer Facility in accordance with the Book-Entry Transfer Facility's procedures for such transfer. However, although delivery of Shares may be effected through book-entry transfer at a Book-Entry Transfer Facility, the Letter of Transmittal (or a facsimile thereof), properly completed and duly executed, together with any required signature guarantees, or an Agent's Message in connection with a book-entry transfer, and any other documents required by the Letter of 5 8 Transmittal, must in any case be received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase on or prior to the Expiration Date, or the guaranteed delivery procedures described below must be complied with. THE LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS MUST BE TRANSMITTED TO AND RECEIVED BY THE DEPOSITARY AT ONE OF ITS ADDRESSES SET FORTH ON THE BACK COVER OF THIS OFFER TO PURCHASE. DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH THE BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY. THE METHOD OF DELIVERY OF THE LETTER OF TRANSMITTAL, SHARE CERTIFICATES AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING, IN THE CASE OF BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY. Signature Guarantees. Signatures on Letters of Transmittal must be guaranteed by a firm which is a bank, broker, dealer, credit union, savings association or other entity which is a member in good standing of a recognized Medallion Program approved by the Securities Transfer Association Inc., including the Securities Transfer Agents Medallion Program (STAMP), the Stock Exchange Medallion Program (SEMP) and the New York Stock Exchange Medallion Signature Program (MSP) or any other "eligible guarantor institution" (as such term is defined in Rule 17Ad-15 under the Exchange Act) (each of the foregoing being referred to as an "Eligible Institution"), except in cases where Shares are tendered (i) by a registered holder of Shares who has not completed either the box labeled "Special Payment Instructions" or the box labeled "Special Delivery Instructions" on the Letter of Transmittal or (ii) for the account of an Eligible Institution. See Instructions 1 and 5 of the Letter of Transmittal. If the Share Certificates are registered in the name of a person other than the signer of the Letter of Transmittal, or if payment is to be made, or Share Certificates not accepted for payment or not tendered are to be returned, to a person other than the registered holder, the Share Certificates must be endorsed or accompanied by appropriate stock powers, in either case, signed exactly as the name of the registered holder appears on such certificates, with the signatures on such certificates or stock powers guaranteed as aforesaid. See Instructions 1 and 5 of the Letter of Transmittal. Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to the Offer and such stockholder's Share Certificates are not immediately available, or such stockholder cannot deliver the Share Certificates and all other required documents to reach the Depositary on or prior to the Expiration Date, or such stockholder cannot complete the procedure for delivery by book-entry transfer on a timely basis, such Shares may nevertheless be tendered, provided that all of the following conditions are satisfied: (i) such tender is made by or through an Eligible Institution; (ii) a properly completed and duly executed Notice of Guaranteed Delivery substantially in the form made available by Purchaser is received by the Depositary as provided below on or prior to the Expiration Date; and (iii) the Share Certificates (or a Book-Entry Confirmation), representing all tendered Shares in proper form for transfer, together with the Letter of Transmittal (or a facsimile thereof) properly completed and duly executed, with any required signature guarantees (or, in the case of a book-entry transfer, an Agent's Message) and any other documents required by the Letter of Transmittal are received by the Depositary within three trading days after the date of execution of such Notice of Guaranteed Delivery. A trading day is any day on which the New York Stock Exchange (the "NYSE") is open for business. The Notice of Guaranteed Delivery may be delivered by hand or transmitted by telegram, telex, facsimile transmission or mail to the Depositary and must include a guarantee by an Eligible Institution and a representation that the stockholder owns the Shares tendered within the meaning of, and that the tender of the 6 9 Shares effected thereby complies with, Rule 14e-4 under the Exchange Act, each in the form set forth in such Notice of Guaranteed Delivery. Notwithstanding any other provision hereof, payment for Shares accepted for payment pursuant to the Offer will in all cases be made only after timely receipt by the Depositary of Share Certificates for, or of Book-Entry Confirmation with respect to, such Shares, a properly completed and duly executed Letter of Transmittal (or a facsimile thereof), together with any required signature guarantees (or, in the case of a book-entry transfer, an Agent's Message), and any other documents required by the Letter of Transmittal. Accordingly, payment might not be made to all tendering stockholders at the same time and will depend upon when Share Certificates or Book-Entry Confirmations with respect to such Shares are received into the Depositary's account at a Book-Entry Transfer Facility. Appointment as Proxy. By executing the Letter of Transmittal (including delivery through an Agent's Message), a tendering stockholder irrevocably appoints designees of Purchaser and each of them as such stockholder's agents, attorneys-in-fact and proxies, with full power of substitution, in the manner set forth in the Letter of Transmittal, to the full extent of such stockholder's rights with respect to the Shares tendered by such stockholder and accepted for payment by Purchaser (and with respect to any and all dividends, distributions, rights, other Shares or other securities issued, paid or distributed or issuable, payable or distributable in respect of such Shares on or after September 27, 1999 and prior to the transfer to the name of Purchaser (or a nominee or transferee of Purchaser) on the Company's stock transfer record of such Shares (collectively, "Distributions")). All such powers of attorney and proxies will be considered irrevocable and coupled with an interest in the tendered Shares. Such appointment will be effective when, and only to the extent that, Purchaser accepts such Shares for payment. Upon such appointment, all prior powers of attorney, proxies and consents given by such stockholder with respect to such Shares (and Distributions) will be revoked without further action, and no subsequent powers of attorney and proxies may be given nor any subsequent written consents executed (and, if given or executed, will not be deemed effective). The designees of Purchaser will, with respect to the Shares (and Distributions) for which such appointment is effective, be empowered to exercise all voting and other rights of such stockholder as they in their sole discretion may deem proper at any annual or special meeting of the Company's stockholders or any adjournment or postponement thereof, by written consent in lieu of any such meeting or otherwise. Purchaser reserves the right to require that, in order for Shares to be deemed validly tendered, immediately upon Purchaser's payment for such Shares, Purchaser must be able to exercise full voting rights with respect to such Shares and all Distributions, including voting at any meeting of stockholders. Determination of Validity. All questions as to the validity, form, eligibility (including time of receipt) and acceptance for payment of any tender of Shares will be determined by Purchaser in its sole discretion, which determination is final and binding. Purchaser reserves the absolute right to reject any and all tenders determined by it not to be in proper form or the acceptance for payment of which may in the opinion of its counsel be unlawful. Purchaser also reserves the absolute right to waive any of the conditions of the Offer (subject to the provisions of the Merger Agreement and except for the Minimum Condition) or any defect or irregularity in any tender of Shares of any particular stockholder whether or not similar defects or irregularities are waived in the case of other stockholders. No tender of Shares will be deemed to have been validly made until all defects and irregularities have been cured or waived. None of Purchaser, Parent, any of their affiliates or assigns, the Dealer Manager, the Depositary, the Information Agent or any other person will be under any duty to give notification of any defects or irregularities in tenders or incur any liability for failure to give any such notification. Purchaser's interpretation of the terms and conditions of the Offer (including the Letter of Transmittal and the instructions thereto) will be final and binding. Backup U.S. Federal Income Tax Withholding and Substitute Form W-9. Under the "backup withholding" provisions of U.S. federal income tax law, the Depositary may be required to withhold 31% of the amount of any payments of cash pursuant to the Offer or the Merger. In order to avoid backup withholding, each stockholder surrendering Shares in the Offer must, unless an exemption applies, provide the payor of such cash with such stockholder's correct taxpayer identification number ("TIN") on a substitute Form W-9 and certify, under penalties of perjury, that such TIN is correct and that such stockholder is not subject to backup withholding. If a stockholder does not provide its correct TIN or fails to provide the 7 10 certifications described above, the Internal Revenue Service ("IRS") may impose a penalty on such stockholder and payment of cash to such stockholder pursuant to the Offer may be subject to backup withholding of 31%. All stockholders surrendering Shares pursuant to the Offer should complete and sign the substitute Form W-9 included in the Letter of Transmittal to provide the information and certification necessary to avoid backup withholding (unless an applicable exemption exists and is proved in a manner satisfactory to the Depositary). Certain stockholders (including, among others, all corporations and certain foreign individuals and entities) are not subject to backup withholding. Noncorporate foreign stockholders should complete and sign a Form W-8, Certificate of Foreign Status, a copy of which may be obtained from the Depositary, in order to avoid backup withholding. See Instruction 9 of the Letter of Transmittal. Other Requirements. Purchaser's acceptance for payment of Shares tendered pursuant to any of the procedures described above will constitute a binding agreement between the tendering stockholder and Purchaser upon the terms and subject to the conditions of the Offer, including the tendering stockholder's representation and warranty that the stockholder is the holder of the Shares within the meaning of, and that the tender of the Shares complies with, Rule 14e-4 under the Exchange Act. 4. WITHDRAWAL RIGHTS. Tenders of Shares made pursuant to the Offer are irrevocable, except that Shares tendered pursuant to the Offer may be withdrawn at any time on or prior to the Expiration Date and, unless theretofore accepted for payment by Purchaser pursuant to the Offer, may also be withdrawn at any time after December 4, 1999. If Purchaser extends the Offer, is delayed in its acceptance for payment of Shares or is unable to purchase Shares validly tendered pursuant to the Offer for any reason, then without prejudice to Purchaser's rights under the Offer, the Depositary may nevertheless, on behalf of Purchaser, retain tendered Shares and such Shares may not be withdrawn except to the extent that tendering stockholders are entitled to withdrawal rights as described in this Section 4. Any such delay in acceptance for payment will be accompanied by an extension of the Offer to the extent required by law. For a withdrawal to be effective, a written, telegraphic, telex or facsimile transmission notice of withdrawal must be timely received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase. Any notice of withdrawal must specify the name of the person who tendered the Shares to be withdrawn, the number of Shares to be withdrawn and the name of the registered holder, if different from that of the person who tendered such Shares. If Share Certificates to be withdrawn have been delivered or otherwise identified to the Depositary, then prior to the physical release of such certificates, the serial numbers shown on such certificates must be submitted to the Depositary and the signatures on the notice of withdrawal must be guaranteed by an Eligible Institution unless such Shares have been tendered for the account of an Eligible Institution. If Shares have been tendered pursuant to the procedure for book-entry transfer as set forth in Section 3, any notice of withdrawal must specify the name and number of the account at the Book-Entry Transfer Facility to be credited with the withdrawn Shares, in which case a notice of withdrawal will be effective if delivered to the Depositary by any method of delivery described in the first sentence of this paragraph. All questions as to the form and validity (including time of receipt) of any notice of withdrawal will be determined by Purchaser, in its sole discretion, whose determination will be final and binding. Purchaser reserves the absolute right to reject any and all withdrawals determined by it not to be in proper form. Purchaser also reserves the absolute right to waive any defect or irregularity in any withdrawal of Shares of any particular stockholder whether or not similar defects or irregularities are waived in the case of other stockholders. No withdrawal of Shares will be deemed to have been validly made until all defects and irregularities have been cured or waived. None of Purchaser, Parent, any of their affiliates or assigns, the Dealer Manager, the Depositary, the Information Agent or any other person will be under any duty to give notification of any defects or irregularities in any notice of withdrawal or incur any liability for failure to give any such notification. Withdrawals of Shares may not be rescinded. Any Shares properly withdrawn will thereafter be deemed not to have been validly tendered for purposes of the Offer. However, withdrawn Shares may be re-tendered at any time prior to the Expiration Date by following one of the procedures described in Section 3. 8 11 5. CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES. The summary of tax consequences set forth below is for general information only and is based on the law as currently in effect. The tax treatment of each stockholder will depend in part upon such stockholder's particular situation. Special tax consequences not described herein may be applicable to particular classes of taxpayers, such as financial institutions, broker-dealers, life insurance companies, holders of Dissenting Shares, stockholders who hold their Shares as part of a straddle, hedge, conversion or constructive sale transaction, stockholders who acquired their Shares through the exercise of an employee stock option or otherwise as compensation, and persons who received payments in respect of options to acquire Shares. This summary deals only with stockholders who are "United States persons" (as defined below) and who hold their Shares as capital assets. For purposes of this discussion (i) "United States person" means a person who is (a) a citizen or resident of the United States, (b) a corporation or partnership created or organized in the United States or under the laws of the United States or any political subdivision thereof, (c) an estate the income of which is subject to the United States federal income taxation regardless of its source or (d) a trust (x) that is subject to the primary supervision of a court within the United States and the control of one or more United States persons (as defined in Section 7701(a)(30) of the Internal Revenue Code of 1986, as amended (the "Code") or (y) that has a valid election in effect under applicable U.S. Treasury Regulations to be treated as a United States Person, and (ii) "Non-U.S. person" means a stockholder who is not a United States person. ALL STOCKHOLDERS SHOULD CONSULT WITH THEIR OWN TAX ADVISORS AS TO THE PARTICULAR TAX CONSEQUENCES OF THE OFFER AND THE MERGER TO THEM, INCLUDING THE APPLICABILITY AND EFFECT OF THE ALTERNATIVE MINIMUM TAX AND ANY STATE, LOCAL OR FOREIGN INCOME AND OTHER TAX LAWS AND CHANGES IN SUCH TAX LAWS. The receipt of cash pursuant to the Offer or the Merger will be a taxable transaction for U.S. federal income tax purposes, and may also be a taxable transaction under applicable state, local, foreign income or other tax laws. Generally, for U.S. federal income tax purposes, a stockholder will recognize gain or loss in an amount equal to the difference between the cash received by the stockholder pursuant to the Offer or the Merger and the stockholder's adjusted tax basis in the Shares exchanged therefor. Gain or loss will be calculated separately for each block of Shares tendered and purchased pursuant to the Offer or exchanged pursuant to the Merger, as the case may be. For U.S. federal income tax purposes, such gain or loss will be a capital gain or loss if the Shares are a capital asset in the hands of the stockholder, and a long-term capital gain or loss if the stockholder's holding period is more than one year as of the date Purchaser accepts such Shares for payment pursuant to the Offer or the effective date of the Merger, as the case may be. The long-term capital gains of individuals are subject to tax at a minimum rate of 20%. The deductibility of capital losses is subject to limitations. 6. PRICE RANGE OF SHARES; DIVIDENDS. The Shares are listed and traded on the NYSE and the Pacific Exchange under the symbol "HQ". The following table sets forth, for the quarters indicated, the high and low sales prices per Share as reported on the NYSE Composite Tape. The Company has not paid any dividends on its Shares since its initial public offering in August 1996.
HIGH LOW ---- --- Fiscal Year Ended September 30, 1998: First Quarter............................................. $46 1/4 $28 1/16 Second Quarter............................................ 37 11/16 28 3/8 Third Quarter............................................. 37 27 3/8 Fourth Quarter............................................ 39 3/4 17 1/2 Fiscal Year Ended September 30, 1999: First Quarter............................................. 27 15/16 12 1/4 Second Quarter............................................ 35 1/2 22 1/4 Third Quarter............................................. 41 1/8 31 Fourth Quarter............................................ 49 3/16 34 7/16
On September 27, 1999, the last full trading day prior to announcement of the signing of the Merger Agreement, the closing sale price per Share reported on the NYSE Composite Tape was $41 1/16. On 9 12 October 1, 1999, the last full trading day before commencement of the Offer, the closing sale price per Share reported on the NYSE Composite Tape was $48 7/8. STOCKHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES. 7. CERTAIN INFORMATION CONCERNING THE COMPANY. The information concerning the Company in this Section 7 and elsewhere in this Offer to Purchase is derived from the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1998 (the "1998 Annual Report"), the Company's Quarterly Reports on Form 10-Q for the quarters ended December 31, 1998, March 31, 1999 and June 30, 1999 (the "Quarterly Reports") and other publicly available information. The summary information set forth below is qualified in its entirety by reference to such reports (which may be obtained and inspected as described below) and should be considered in conjunction with the more comprehensive financial and other information in such reports and other publicly available reports and documents filed by the Company with the Commission and other publicly available information. Although neither Purchaser nor Parent has any knowledge that would indicate that any statements contained herein based upon such reports are untrue, neither Purchaser nor Parent assumes any responsibility for the accuracy or completeness of the information contained therein, or for any failure by the Company to disclose events that may have occurred and may affect the significance or accuracy of any such information but which are unknown to Parent and Purchaser. General. The Company was formed in June 1996 as a holding company for all of the operations of Hambrecht & Quist. The Company is the sole parent of Hambrecht & Quist California, a California corporation established in 1983 ("H&Q California") to succeed to the business of Hambrecht & Quist, a California partnership formed in 1968. H&Q California also succeeded to the business of Hambrecht & Quist, L.P., a California limited partnership established in 1993 ("H&Q LP"). In this section "General" and in "Business" below, unless the context otherwise requires, the "Company" refers to Hambrecht & Quist Group and its predecessors, affiliates and subsidiaries. The Company operates primarily as a holding company and indirectly owns all of the subsidiaries and equity interests in affiliated entities that previously were owned by either H&Q California or H&Q LP. H&Q LLC, the Company's 100% beneficially owned subsidiary, is the Company's principal investment banking subsidiary and securities broker-dealer. The Company's other principal operating subsidiaries or affiliated entities, which are directly or indirectly wholly owned except as indicated, are as follows: Hambrecht & Quist Capital Management Incorporated, a registered investment adviser to two publicly traded closed-end mutual funds; Hambrecht & Quist Venture Partners, a California limited partnership, a venture capital fund management partnership in which the Company has a controlling general partnership interest; and Hambrecht & Quist Guaranty Finance, LLC ("Guaranty Finance"), an 87.5% owned subsidiary of the Company engaged in asset-based, bridge loan and mezzanine financing. The Company also maintains minority, non-controlling investments in H&Q Asia Pacific, Ltd., which provides financial advisory and fund management services in the Asia Pacific region, Beeson Gregory Holdings Limited, a London-based brokerage firm and financial adviser specializing in growth companies, and Tamir Fishman & Co. Ltd., an investment bank, venture capital and financial consulting company focused on Israeli growth companies. The Company also has a 20% interest in Lewco Securities Corp., which acts as a clearing broker and depository for Schroder & Co. and the Company. In July 1998, the Company established a strategic relationship with H&Q Venture Associates, L.L.C. which manages or administers many of the Company's early stage venture capital investments. The Company's principal executive offices are located at One Bush Street, San Francisco, California 94104. The telephone number of the Company at such offices is (415) 439-3000. Business. The Company is a major bracket investment bank focusing on emerging growth companies and growth-oriented investors. The Company's core strength has been the early identification and sponsorship of leading growth companies in its chosen areas of focus through analysis of industry and technology trends. The Company leverages its industry expertise by providing growth companies and growth investors with a full 10 13 range of investment banking and brokerage services, and by investing its own capital in emerging growth and later-stage companies. The Company was formed in 1968 to focus on the needs of emerging growth companies and their investors. It has grown its business by expanding the range of services it provides to growth companies and investors, by servicing the needs of larger size companies, and by developing expertise in new industries and markets. The Company, from its inception, combined equity underwriting and brokerage services for emerging growth companies with venture capital investing. From its early concentration on the technology and healthcare industries, the Company has broadened its focus to encompass the branded consumer sector and companies providing business information, outsourcing and healthcare services. Financial Information. Set forth below are certain selected consolidated financial data which were derived from the 1998 Annual Report and the Quarterly Reports. More comprehensive financial information (including management's discussion and analysis of financial condition and results of operations) is included in the reports and other documents filed by the Company with the Commission, and the following financial data are qualified in their entirety by reference to such reports and other documents including the financial information and related notes contained therein. Such reports and other documents may be examined and copies thereof may be obtained from the offices of the Commission and the NYSE in the manner set forth below. 11 14 HAMBRECHT & QUIST GROUP SELECTED CONSOLIDATED FINANCIAL DATA (IN THOUSANDS, EXCEPT OUTSTANDING SHARES AND PER SHARE AMOUNTS)
FOR THE NINE MONTHS ENDED FOR THE FISCAL YEAR ENDED SEPTEMBER 30, JUNE 30, --------------------------------------------- 1999 1998 1997 1996 ----------- ---- ---- ---- (UNAUDITED) (AUDITED) CONSOLIDATED STATEMENT OF OPERATIONS DATA: Revenues Principal transactions............................ $ 123,780 $ 105,861 $ 122,817 $ 103,889 Commissions....................................... 49,878 49,725 38,707 34,420 Investment banking................................ 115,464 91,332 90,471 154,272 Corporate finance fees............................ 68,898 75,080 54,237 37,962 Interest and dividends............................ 19,890 27,236 22,629 14,707 Net investment gains.............................. 31,969 2,415 229 24,434 Other............................................. 21,352 21,476 17,142 23,017 ----------- ----------- ----------- ----------- Total revenues................................ 431,232 373,125 346,232 392,703 ----------- ----------- ----------- ----------- Expenses Compensation and benefits......................... 210,785 187,065 178,873 198,613 Brokerage and clearance........................... 21,800 23,064 17,258 13,629 Occupancy and equipment........................... 16,382 21,514 17,183 10,677 Communications.................................... 11,281 15,353 14,762 9,614 Interest.......................................... 2,710 3,628 4,454 4,314 Other............................................. 36,690 51,957 36,605 28,788 ----------- ----------- ----------- ----------- Total expenses................................ 299,648 302,581 269,135 265,635 ----------- ----------- ----------- ----------- Income before income tax provision................ 131,584 70,544 77,097 127,067 Income tax provision.................................. 56,581 30,333 33,923 38,466 ----------- ----------- ----------- ----------- Net income............................................ $ 75,003 $ 40,211 $ 43,174 $ 88,601 =========== =========== =========== =========== Earnings per share Basic............................................. $ 3.05 $ 1.64 $ 1.83 Diluted........................................... $ 2.83 $ 1.51 $ 1.68 Weighted average shares Basic............................................. 24,565,708 24,551,064 23,569,306 Diluted........................................... 26,502,630 26,613,541 25,682,887 PRO FORMA INFORMATION: (UNAUDITED) Net income before income tax adjustment............. $ 88,601 Income tax adjustment(1)............................ (17,443) ----------- Pro forma net income................................ $ 71,158 =========== Pro forma earnings per share(2) Basic............................................. $ 3.60 Diluted........................................... $ 3.27 Pro forma weighted average shares Basic............................................. 19,752,126 Diluted........................................... 21,734,143
CONSOLIDATED BALANCE SHEET DATA (END OF PERIOD): Total assets...................................... $ 814,563 $ 606,668 $ 678,937 $ 537,917 Debt obligations.................................. 1,500 0 2,700 8,365 Stockholders' equity and partners' capital........ 423,235 336,756 297,378 226,711
- --------------- (1) Includes taxes on H&Q LP's earnings as if H&Q LP's earnings were subject to an effective tax rate of 44 percent. (2) Pro forma earnings per common share are determined by dividing pro forma net income by the weighted average number of common shares, including common share equivalents, outstanding during the year. 12 15 Other Information. The Shares are registered under the Exchange Act. Accordingly, the Company is subject to the informational filing requirements of the Exchange Act and in accordance therewith is obligated to file periodic reports, proxy statements and other information with the Commission relating to its business, financial condition and other matters. Information as of particular dates concerning the Company's directors and officers, their remuneration, options granted to them, the principal holders of the Company's securities and any material interest of such persons in transactions with the Company is required to be disclosed in such proxy statements and distributed to the Company's stockholders and filed with the Commission. Such reports, proxy statements and other information are available for inspection at the public reference facilities of the Commission located in Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the regional offices of the Commission located at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661, and Seven World Trade Center, Suite 1300, New York, New York 10048. Such reports, proxy statements and other information may also be obtained at the Web site that the Commission maintains at http://www.sec.gov. Copies of this material may also be obtained by mail, upon payment of the Commission's customary fees, from the Commission's principal office at 450 Fifth Street, N.W., Washington, D.C. 20549. In addition, such material is also available for inspection at the library of the New York Stock Exchange, 20 Broad Street, New York, New York 10005. Except as otherwise noted in this Offer to Purchase, all of the information with respect to the Company set forth in this Offer to Purchase has been derived from publicly available information. 8. CERTAIN INFORMATION CONCERNING PURCHASER AND PARENT. Purchaser. Bridge Acquisition Corporation, a Delaware corporation and a wholly-owned subsidiary of The Chase Manhattan Corporation, was organized for the sole purposes of entering into the Merger Agreement and consummating the transactions contemplated thereby, including making the Offer, and has not carried on any activities to date other than those incident to its formation, entering into such agreement and the commencement of the Offer. Parent. The Chase Manhattan Corporation is a bank holding company organized under the laws of the State of Delaware in 1968 and registered under the Bank Holding Company Act of 1956, as amended (the "BHCA"). Parent conducts its domestic and international financial services businesses through various bank and non-bank subsidiaries. The principal bank subsidiaries of Parent are: The Chase Manhattan Bank ("Chase Bank"), a New York banking corporation headquartered in New York City; Chase Bank of Texas, National Association ("Chase Texas"), a national bank headquartered in Houston, Texas; and Chase Manhattan Bank USA, National Association, a national bank headquartered in Wilmington, Delaware. The principal non-bank subsidiary of Parent is Chase Securities Inc., Parent's "Section 20" subsidiary, which is engaged in securities underwriting and dealing activities. The bank and non-bank subsidiaries of Parent operate nationally as well as through overseas branches, representative offices and affiliated banks. Parent is the third largest bank holding company in the United States based on assets, with consolidated assets of $356.9 billion, total deposits of $209.5 billion and total stockholders' equity of $22.7 billion as of June 30, 1999. Both Parent's and Purchaser's executive offices are located at 270 Park Avenue, New York, New York 10017. The telephone number of both Parent and Purchaser at such offices is (212) 270-6000. The name, citizenship, business address, present principal occupation or employment and five year employment history of each of the directors and executive officers of Parent and Purchaser are set forth on Schedule I hereto. Parent's shares are registered under the Exchange Act. Accordingly, Parent is subject to the informational filing requirements of the Exchange Act and in accordance therewith is obligated to file periodic reports, proxy statements and other information with the Commission relating to its business, financial condition and other matters. Parent is required to disclose in such proxy statements certain information, as of particular dates, concerning Parent's directors and officers, their remuneration, options granted to them, the principal holders of Parent's securities and any material interest of such persons in transactions with Parent. Such reports, proxy statements and other information are available for inspection at the public reference facilities of the Commission located at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and 13 16 at the regional offices of the Commission located at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661, and Seven World Trade Center, Suite 1300, New York, New York 10048. Such reports, proxy statements and other information may also be obtained at the Web site that the Commission maintains at http://www.sec.gov. Copies of this material may also be obtained by mail, upon payment of the Commission's customary fees, from the Commission's principal office at 450 Fifth Street, N.W., Washington, D.C. 20549. Such material is also available for inspection at the offices of the NYSE, 20 Broad Street, New York, New York 10005. Certain Transactions. Except as set forth in this Offer to Purchase, none of Parent or Purchaser or, to the best knowledge of Parent or Purchaser, any of the persons listed in Schedule I hereto, or any associate or majority-owned subsidiary of Parent, Purchaser or any of such persons, beneficially owns, or has a right to acquire directly or indirectly, any Shares, and none of Parent or Purchaser or, to the best knowledge of Parent or Purchaser, any of the other persons referred to above, or any of the respective directors, executive officers or subsidiaries of any of the foregoing, has effected any transaction in the Shares during the past 60 days. In the ordinary course of its business, CSI actively trades in securities for its own account and for the accounts of its customers and, accordingly, may at any time hold a long or short position in the Shares. In addition, various bank and other subsidiaries of Parent may from time to time hold or effect transactions in the Shares for trust, custodial, brokerage, investment management and other similar accounts maintained in the ordinary course of business for the benefit of others. Except as set forth in this Offer to Purchase, none of Parent or Purchaser or, to the best knowledge of Parent and Purchaser, any of the persons listed in Schedule I hereto has any contract, arrangement, understanding or relationship with any other person with respect to any securities of the Company, including, without limitation, any contract, arrangement, understanding or relationship concerning the transfer or the voting of any securities of the Company, joint ventures, loan or option arrangements, puts or calls, guaranties of loans, guaranties against loss or the giving or withholding of proxies. Except as set forth in this Offer to Purchase, none of Parent or Purchaser or, to the best knowledge of Parent and Purchaser, any of the persons listed in Schedule I hereto has had any transactions with the Company, or any of its executive officers, directors or affiliates that would be required to be reported under the rules of the Commission. Except as set forth in this Offer to Purchase, there have been no contacts, negotiations or transactions between Parent or Purchaser, or their respective subsidiaries, or, to the best knowledge of Parent and Purchaser, any of the persons listed in Schedule I hereto, on the one hand, and the Company or its affiliates, on the other hand, concerning a merger, consolidation or acquisition, a tender offer or other acquisition of securities, an election of directors, or a sale or other transfer of a material amount of assets. See Introduction and Sections 10 and 11. 9. SOURCE AND AMOUNT OF FUNDS. Purchaser will require approximately $1.4 billion to (i) purchase the Shares outstanding on the date hereof (other than Restricted Shares which are unvested as of the Effective Time) pursuant to the Offer and the Merger and (ii) pay fees and expenses to be incurred in connection with the completion of the Offer and the Merger. All of the funds required to finance the foregoing will be furnished to Purchaser by Parent. Parent plans to use available funds. 10. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY. Over the past several years, the management of the Company and the Company Board have regularly reviewed the Company's performance, strategic direction and prospects in light of changes in the financial services environment, including industry consolidation, increased competition, trends toward full-service financial services companies, the impact of the Internet and other technological changes, and shifts in client preferences and needs. From time to time in recent years, senior executive officers of the Company have informally discussed these and other aspects of the financial services industry and the implications for financial services companies with senior executive officers of Parent and senior executive officers of certain other financial services companies. Some of these informal discussions included general discussions regarding the potential merits of a business combination, a product, distribution or geographic partnership, or other strategic transaction involving the Company. Senior executives of Parent and the Company also had informal discussions during the first half of 1999 regarding a potential transaction, and Parent and the Company 14 17 entered into a confidentiality agreement on February 8, 1999. Daniel H. Case III, Chairman and Chief Executive Officer of the Company, regularly briefed the Company Board and certain members of the Company's senior management on these discussions. These briefings were held at regularly scheduled Company Board meetings and certain special Company Board meetings, as well as during informal conversations with individual directors. None of the discussions with third parties resulted in any definitive agreement on the terms of any business combination, partnership or other strategic transaction involving the Company. In late June, 1999, William B. Harrison Jr., Chief Executive Officer of Parent, and Mr. Case discussed the potential benefits of a combination of their two companies. Mr. Harrison indicated that Parent continued to be interested in a possible transaction, although Parent wished to conduct preliminary due diligence on the Company before making a more specific proposal on the terms of such a transaction. After conferring with the Company Board on June 25, 1999, Mr. Case informed Mr. Harrison that the Company Board had authorized him to continue exploring a possible transaction with Parent and to allow Parent to commence a preliminary due diligence review of the Company. Representatives of Parent commenced the preliminary due diligence investigation in July, 1999, including holding meetings between certain members of the Company's and Parent's senior managements on July 9, 14 and 15. During this time, the senior managements of Parent and the Company discussed generally the possible structures and potential synergies of a business combination transaction. The Company Board was briefed in detail on these discussions on July 22, 1999 and in August, 1999, as well as during conversations with individual directors throughout August. These briefings included the progress to date of the discussions between the parties and of Parent's preliminary review of the Company's operations. At the deliberations in July and August, the Company Board authorized Mr. Case and senior management of the Company to continue discussions regarding a potential business combination with Parent. At the regular meeting of the Board of Directors of Parent (the "Parent Board") held on July 20, 1999, senior management of Parent briefed the Parent Board on their discussions to date with the senior management of the Company and on the potential strategic benefits of a transaction with the Company. On September 8, 1999, the Parent Board held a special meeting at which senior management reported on the results of their discussions with the Company and the proposed structure and range of terms of the transaction to be discussed with the Company. Senior management also briefed the Parent Board on the results of their review of the Company's business and operations and the anticipated synergies and other strategic benefits that could be obtained from the proposed transaction. Senior management noted that, among other things, the transaction with the Company would extend Parent's one-stop investment banking range of products in the highest growth sector of the U.S. economy and would be a step in developing Parent's public equities practice. After discussion, the Parent Board approved the proposed transaction and authorized senior management to negotiate and execute definitive transaction agreements with the Company. During the month of September, 1999, the senior managements of the Company and Parent began to discuss and later negotiate the amount and form of consideration that would be payable to Company stockholders in connection with a business combination, and they also discussed various strategies for retaining the services of key Company employees in the event of a business combination. On September 17, 1999, following negotiations regarding the amount and form of consideration, James B. Lee Jr., a Vice Chairman of Parent, called Mr. Case and informed him that a price of $50.00, payable in cash for each outstanding Share, would be Parent's best and highest proposal. On September 18, 1999, Mr. Harrison and Mr. Case met to discuss the status of the negotiations and other issues. Parent indicated that it would require Mr. Case to enter into a retention arrangement as a condition to its willingness to enter into a definitive merger agreement. While these conversations were occurring, representatives of Parent continued various aspects of their due diligence review. On September 20, 1999, certain members of the Company Board met with Messrs. Harrison and Lee to discuss Parent's final offer price and related matters. The full Company Board met on September 21 to discuss the proposal and related matters. At this meeting, the Company Board considered the Company's business, financial condition, results of operations, current business strategy and future prospects, recent and historical market prices and trading ranges for the Shares, strategic and other potential alternatives to the offer, and 15 18 other relevant matters, including information presented by senior management and by the Company's advisors regarding the progress of the negotiations between counsel for Parent and the Company over the terms of a definitive merger agreement. Senior management and the Company's financial and legal advisors discussed with the Company Board the proposed terms of the merger agreement, which contemplated a cash tender offer followed by a cash merger, as well as an associated stock option agreement, pursuant to which the Company would grant an option to Parent to purchase up to 19.9% of the outstanding Shares, exercisable on the occurrence of certain events relating to competing offers for the Company, and a support agreement pursuant to which certain affiliates of the Company would agree to tender their shares into the Offer and vote in favor of the Merger. Based on the information presented at these and previous meetings, and after extensive deliberation, the Company Board authorized senior management of the Company to proceed with the negotiation of definitive documentation relating to the proposed transaction. The Company Board also authorized senior management to proceed to negotiate satisfactory retention arrangements for key employees and for Mr. Case. From September 22 through 27, 1999, the parties and their advisors negotiated the remaining provisions of the Merger Agreement, the Option Agreement and the Tender Agreement, the terms of retention arrangements for key Company employees and the terms of Mr. Case's employment arrangement. At a meeting of the Company Board held on September 27, 1999, Mr. Case, other members of the Company's senior management and the Company's financial and legal advisors presented to the Company Board the terms of the proposed Merger Agreement, Option Agreement and Tender Agreement and such retention arrangements and discussed with the Company Board various business issues relating to the transactions contemplated thereby. The Company's financial advisor, H&Q LLC, presented a detailed financial analysis of the proposed transaction and rendered its opinion that, as of September 27, 1999, the $50 per Share cash consideration to be received in the Offer and the Merger by holders of Shares was fair to such holders (other than Parent and its affiliates) from a financial point of view. The Company's legal advisors discussed with the Company Board the legal standards applicable to its decisions with respect to the proposed transaction and reviewed the terms of the transaction documents. After discussion and due consideration, the Company Board unanimously approved (with one member absent) the Merger Agreement, the Option Agreement and the Tender Agreement and the transactions contemplated thereby, including the Offer and the Merger, resolved to recommend that holders of Shares tender their shares in the Offer and vote in favor of the Merger, and authorized Mr. Case to enter into the Employment Agreement (as defined in Section 11). Following the meeting, the director who was unable to attend the meeting was informed of the result of the meeting and indicated that he concurred in the Company Board's decisions. After execution and delivery of the Merger Agreement on September 28, 1999, the parties issued a joint press release announcing the definitive agreement, including the Offer and the Merger. 11. THE MERGER AGREEMENT AND OTHER AGREEMENTS. The following is a summary of the Merger Agreement and certain related agreements. This summary is qualified in its entirety by reference to the copies of such agreements filed as exhibits to the Tender Offer Statement on Schedule 14D-1 of which this Offer to Purchase is a part. THE MERGER AGREEMENT The Offer. The Merger Agreement provides that no later than five business days after the public announcement of the Merger Agreement, Parent will cause Purchaser to, and Purchaser will, commence the Offer. The parties to the Merger Agreement have agreed in the Merger Agreement that the obligation of Purchaser to consummate the Offer, and to accept for payment and pay for the Shares tendered pursuant to the Offer, is subject to the Minimum Condition and the other conditions of the Offer described in Section 15 hereof (the "Offer Conditions"). Under the Merger Agreement, each of Parent and Purchaser expressly reserved the right, in its sole discretion, to waive any such condition and to make any other changes to the terms of the Offer, provided, that without the consent of the Company, neither Parent nor Purchaser can (i) amend or waive the Minimum Condition, (ii) decrease the price per Share payable in the Offer, (iii) change the form of consideration to be paid in the Offer (other than by adding cash consideration), (iv) reduce the number of Shares to be purchased in the Offer or (v) amend any other condition of the Offer in a manner which is adverse to the holders of Shares. The Merger Agreement provides that the price per 16 19 Share to be paid in the Offer will be net to the sellers in cash, without interest, subject to reduction only for any applicable withholding taxes. Under the Merger Agreement, Purchaser may, without the consent of the Company, (i) extend the Offer on one or more occasions for up to ten business days for each such extension beyond the then-scheduled Expiration Date, if at such date any of the conditions to Purchaser's obligation to accept for payment and pay for the Shares is not satisfied or waived, until such time as such conditions are satisfied or waived, and, at the request of the Company, Purchaser will, subject to Parent's right to terminate the Merger Agreement pursuant to Article VIII thereof, extend the Offer for additional periods up to but not later than March 31, 2000, if the only condition not satisfied or earlier waived on the then-scheduled Expiration Date is the Requisite Regulatory Approvals Condition, (ii) extend the Offer for any period required by any rule, regulation, interpretation or position of the Commission or the staff thereof applicable to the Offer, and (iii) extend the Offer for an aggregate period of not more than ten business days beyond the latest Expiration Date otherwise permitted under clause (i) or (ii) above if the Minimum Condition has been satisfied but there have not been tendered sufficient Shares so that the Merger could be effected without a vote of the Company's stockholders in accordance with Section 253 of the DGCL; provided, that, as a condition to the extension provided for in clause (iii), Purchaser irrevocably waives the satisfaction or waiver of the conditions to the Offer set forth in subclause (x) of clause (a) of the Offer Conditions. The Merger Agreement provides that, subject to the terms of the Offer, including the Offer Conditions, Purchaser will accept for payment and pay for all Shares duly tendered at the earliest time at which it is permitted to do so under applicable law; provided, that, as set forth above, Purchaser will have the right, in its sole discretion, to extend the Offer for up to ten business days notwithstanding the prior satisfaction of the Offer Conditions, in order to attempt to satisfy the requirements of Section 253 of the DGCL. The Merger Agreement further provides that the Offer Conditions other than the Minimum Condition are solely for the benefit of Purchaser and that all Offer Conditions may be asserted by Purchaser regardless of the circumstances resulting in a condition not being satisfied (except for any action or inaction by Purchaser or Parent constituting a breach of the Merger Agreement) and, except with respect to the Minimum Condition, may be waived by Purchaser, in whole or in part at any time and from time to time, in its sole discretion. Company Recommendation. The Merger Agreement provides that the Company will file with the Commission and mail to its stockholders contemporaneously with the commencement of the Offer a Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9") which will reflect the actions of the Company Board and comply in all material respects with the provisions of applicable federal securities laws. Pursuant to the Merger Agreement, the Schedule 14D-9 will contain the Company Board Recommendation (as defined below), which recommendation will not be withdrawn, amended, modified or materially qualified in a manner adverse to Parent (nor will the Company Board publicly announce its intention to do so) unless (i) in the opinion of the Company's outside counsel, failure to take such action in response to an unsolicited bona fide written Superior Proposal (as defined in "No Solicitation" below) would constitute a breach by the Company Board of its fiduciary duties under applicable law, (ii) the Company has given Parent five business days' prior written notice of its intent to take such action, which notice describes all material terms of such Superior Proposal and attaches a copy of any written communications relating thereto, the Company Board has duly considered in good faith any proposed changes to the Merger Agreement (if any) proposed by Parent and (iii) the Company has fully and completely complied with its obligations under "No Solicitation" below. The Merger Agreement provides that, except as otherwise expressly provided therein, the Company's and the Company Board's obligations described in this paragraph and under all other provisions of the Merger Agreement will not be altered by the commencement, public proposal, public disclosure or communication to the Company of any Transaction Proposal (as defined in "No Solicitation", below), including without limitation a Superior Proposal. The Company Board, at a meeting duly called and held, has unanimously (with one director absent) (the "Company Board Recommendation") (i) determined that the Merger Agreement and the transactions contemplated thereby, including the Offer and the Merger, are advisable and fair to and in the best interests of the holders of Shares, (ii) approved and adopted the Merger Agreement and the Option Agreement and the transactions contemplated thereby, including the Offer and the Merger, and authorized entry into the Tender Agreement, in each case prior to the execution of such agreement (such approvals being sufficient to render the restrictions of Section 203 of the DGCL inapplicable 17 20 to the Merger Agreement, the Offer, the Merger, the Option Agreement and the Tender Agreement and the other transactions contemplated thereby) and (iii) resolved to recommend that the holders of Shares tender their Shares in the Offer and vote to approve and adopt the Merger Agreement. Following the meeting, the director who was unable to attend the meeting was informed of the result of the meeting and indicated that he concurred in the Company Board's decision. Directors Following the Offer. The Merger Agreement provides that, promptly upon the purchase of and payment for Shares which represent at least a majority of the outstanding Shares, Parent is entitled to designate a number of directors on the Company Board equal to the product (rounded up to the nearest whole number) of the total number of the directors on such Board (after giving effect to the directors elected pursuant to this sentence) multiplied by the percentage that such number of shares owned by Purchaser and its affiliates bears to the number of Shares outstanding. The Company will, upon request of Parent, use its best efforts promptly either to increase the size of the Company Board or, at the Company's election, secure the resignations of such number of its incumbent directors as is necessary to enable Parent's designees pursuant to this paragraph to be so elected or appointed to the Company Board, and will cause Parent's designees to be so elected or appointed. The Merger Agreement provides that the Company will use its reasonable best efforts to cause directors designated by Parent to constitute the same percentage as they represent on the Company Board (but in any event at least one Parent designee) (i) of each committee of the Company Board, (ii) of each board of directors of its subsidiaries and (iii) of each committee of each such board, in each case only to the extent permitted by law and the rules of the NYSE to the extent applicable. Notwithstanding the foregoing, until the Effective Time, the Company and Parent have agreed to use all reasonable best efforts to retain as members of the Company Board at least two directors who are directors of the Company on the date of the Merger Agreement and who are not designated by Parent or employees of the Company or its subsidiaries (the "Independent Directors"). Following the election or appointment of Parent's designees to the Company Board and prior to the Effective Time, the affirmative vote of a majority of the Independent Directors will be required for the Company to take action to (i) amend or terminate the Merger Agreement, (ii) exercise or waive any of the Company's rights or remedies thereunder, (iii) extend the time for performance of Parent's and Purchaser's respective obligations thereunder, or (iv) approve any other action by the Company that could adversely affect the interests of the stockholders of the Company (other than Parent, Purchaser and their affiliates) with respect to the transactions contemplated thereby. The Merger. The Merger Agreement provides that, subject to the terms and conditions of the Merger Agreement, and in accordance with the DGCL, at the Effective Time, Purchaser will be merged with and into the Company. The Merger Agreement provides that as a result of the Merger, the separate corporate existence of Purchaser will cease and the Company will continue as the Surviving Corporation. The Merger Agreement provides that at the Effective Time, the certificate of incorporation of the Company, as in effect immediately prior to the Effective Time, will be the certificate of incorporation of the Surviving Corporation until thereafter amended as provided therein and by the DGCL. The Merger Agreement provides that, at the Effective Time, the bylaws of Purchaser, as in effect immediately prior to the Effective Time, will be the bylaws of the Surviving Corporation until thereafter amended as provided therein and by the DGCL. The Merger Agreement further provides that, at the Effective Time, the directors and officers of Purchaser immediately prior to the Effective Time will be the directors and officers, respectively, of the Surviving Corporation following the Merger, to hold office in accordance with the Surviving Corporation's bylaws and applicable law. The Merger Agreement also provides that Parent may at any time change the method of effecting the Offer, including by providing that Parent or any other subsidiary of Parent make the Offer, or effecting the Merger, including by merging the Company with and into Parent, by merging a direct or indirect wholly-owned subsidiary of Parent with and into the Company or by merging the Company with and into any such direct or indirect wholly-owned subsidiary, and the Company will cooperate in such efforts, including by entering into an appropriate amendment to the Merger Agreement; provided, however, that such other subsidiary, if any, becomes a party to, and agrees to be bound by, the terms of the Merger Agreement, and that 18 21 any such actions not (a) alter or change the amount or kind of consideration to be issued to the Company's stockholders, or (b) materially delay the receipt of any Requisite Regulatory Approval or the consummation of the transactions contemplated by the Merger Agreement. The parties to the Merger Agreement have also agreed to take such actions as Parent may reasonably request to provide for the merger or consolidation of subsidiaries of the Company with other subsidiaries of the Company or of Parent, to be effective at or following the Effective Time. The Merger Agreement provides that at the Effective Time, by virtue of the Merger, and without any action on the part of Parent, Purchaser, the Company or the holder of any of the following securities: (i) each Share issued and outstanding immediately prior to the Effective Time (other than (x) Shares canceled pursuant to clause (iii) below, (y) Restricted Shares (as defined below) that do not vest as of the Effective Time pursuant to the Company Stock Plans (as defined below) and (z) Dissenting Shares, as defined below), will be converted into the right to receive the Merger Consideration; (ii) all of the Shares issued and outstanding immediately prior to the Effective Time will no longer be outstanding and will automatically be canceled and will cease to exist as of the Effective Time, and each Share Certificate previously representing any such Shares (other than shares canceled pursuant to clause (iii) below, certain unvested Restricted Shares and Dissenting Shares) will thereafter represent solely the right to receive the Merger Consideration into which the Shares represented by such Share Certificate have been converted pursuant to this paragraph; (iii) at the Effective Time, all Shares that are held by the Company as treasury stock or by Parent or any of the Company's or Parent's respective wholly-owned subsidiaries (other than Shares held, directly or indirectly, in trust accounts, managed accounts and the like or otherwise held in a fiduciary, nominee or custodial capacity that are beneficially owned by third parties, including shares held by mutual funds for which a subsidiary of Parent or the Company acts as investment adviser (any such shares being referred to herein as "Trust Account Shares") and other than any Shares held by Parent or the Company or any of their respective subsidiaries in respect of a debt previously contracted in good faith (any such Shares being referred to herein as "DPC Shares")) will automatically be canceled and will cease to exist and no cash, stock of Parent or other consideration will be delivered in exchange therefor; (iv) notwithstanding anything in the Merger Agreement to the contrary, Shares issued and outstanding immediately prior to the Effective Time held by holders (if any) who have not voted in favor of the Merger or consented thereto in writing and who have demanded appraisal rights with respect thereto in accordance with Section 262 of the DGCL and, as of the Effective Time, have not failed to perfect or have not effectively withdrawn or lost their rights to appraisal and payment under Section 262 of the DGCL ("Dissenting Shares") will not be converted into the right to receive the Merger Consideration as described in this paragraph, but holders of such Shares will be entitled to receive payment of the appraised value of such Dissenting Shares in accordance with the provisions of such Section 262, except that any Dissenting Shares held by a holder who has failed to perfect or has effectively withdrawn or lost its right to appraisal and payment under Section 262 of the DGCL will thereupon be deemed to have been converted into the right to receive the Merger Consideration and will no longer be considered Dissenting Shares. All Restricted Shares which are issued and outstanding immediately prior to the Effective Time and which are not converted into the Merger Consideration as described above in this paragraph will be converted into shares of restricted Parent Common Stock as described below. Under the Merger Agreement, the Company will give Parent (i) prompt notice of any written demands for appraisal of any shares, attempted withdrawals of such demands, and any other instruments served pursuant to the DGCL received by the Company relating to stockholders' rights of appraisal and (ii) the opportunity to direct all negotiations and proceedings with respect to demands for appraisal under the DGCL. The Company will not, except with the prior written consent of Parent, voluntarily make any payment with respect to any demands for appraisals of capital stock of the Company, offer to settle or settle any such demands or approve any withdrawal of any such demands. The Merger Agreement provides that each share of capital stock of Purchaser issued and outstanding immediately prior to the Effective Time will be converted into one identical share of the capital stock of the Surviving Corporation and will constitute the only issued and outstanding capital stock of the Surviving Corporation following the Effective Time. 19 22 The Merger Agreement provides that, prior to the Effective Time, the Company and its subsidiaries will take all action necessary (including obtaining any necessary consents and/or waivers) to ensure that from and after the Effective Time, all employee, consultant, independent contractor and director stock options to purchase Shares of the Company (each, a "Company Option"), which are then outstanding and unexercised, and all shares of restricted and unvested Shares (each, a "Restricted Share"), other than Restricted Shares converted into the Merger Consideration as described in the second preceding paragraph, which are then outstanding, will, without any further action on the part of the holders thereof, be converted into and become, respectively, options to purchase shares of common stock, par value $1.00 per share, of Parent (the "Parent Common Stock"), and shares of restricted Parent Common Stock on terms substantially identical to those in effect immediately prior to the Effective Time under the terms of the stock option plan, restricted stock plan or other agreement or award pursuant to which such Company Option or Restricted Share was granted (collectively, such plans, agreements and awards being hereinafter referred to as the "Company Stock Plans"); provided, however, that from and after the Effective Time (i) each such Company Option assumed by Parent may be exercised solely to purchase shares of Parent Common Stock, (ii) the number of shares of Parent Common Stock purchasable upon exercise of such Company Option will be equal to the number of shares of Company Common Stock that were purchasable under such Company Option immediately prior to the Effective Time multiplied by the Conversion Ratio (as defined below) and rounded to the nearest whole share, (iii) the per share exercise price under each such Company Option will be adjusted by dividing the per share exercise price of each such Company Option immediately prior to the Effective Time by the Conversion Ratio, and rounded to the nearest whole cent and (iv) the number of shares of restricted Parent Common Stock held by an individual following such conversion will be equal to the number of Restricted Shares held by such individual immediately prior to the Effective Time multiplied by the Conversion Ratio and rounded to the nearest whole cent. Under the Merger Agreement, "Conversion Ratio" means the quotient determined by dividing the Merger Consideration by the Parent Common Share Price, rounded to the nearest 1/100,000th, and the "Parent Common Share Price" will be equal to the average closing sale price of Parent Common Stock on the NYSE (rounded to the nearest one-thousandth) over the 20 consecutive full trading days in which such shares are traded on the NYSE ending at the close of business on the second business day prior to the Closing Date. The Merger Agreement further provides that the vesting of each Company Option and Restricted Share will not accelerate as a result of, or in connection with, the transactions contemplated by the Merger Agreement, except for Company Options and Restricted Shares that would otherwise become exercisable or free of restrictions within 12 months from the closing date of the Merger and otherwise to the extent required by the existing terms of the Company Stock Plan pursuant to which such Company Option or Restricted Share was granted, as in effect on the date of the Merger Agreement. In addition, except as may be necessary to cause the vesting of Company Options that would otherwise become exercisable within 12 months from the closing date of the Merger, the Company will ensure that no discretion is exercised by any body or person so as to cause the vesting of any Company Option or Restricted Share to accelerate. The number of shares and the per share exercise price of each Company Option which is intended to be an "incentive stock option" (as defined in Section 422 of the Code) will be adjusted in accordance with the requirements of Section 424 of the Code. Representations and Warranties. The Merger Agreement contains various customary representations and warranties of the parties thereto including, without limitation, representations and warranties by the Company as to the Company's organization, standing and corporate power, subsidiaries, capitalization, authorization, board recommendation, noncontravention of any governing instruments, laws or other agreements, regulatory and other third-party consents and approvals, filings with the Commission and other regulatory reports, agreements with regulatory agencies, financial statements, undisclosed liabilities, investment securities, interest rate risk management instruments, licenses, compliance with applicable laws, information provided in the Offer documents and Schedule 14D-9, absence of certain changes or events, legal proceedings, employee benefit plans, intellectual property, taxes, environmental matters, contracts, year 2000 matters, insurance and brokers. In addition, the Merger Agreement contains representations and warranties of Parent and Purchaser concerning their organization and standing, authorization, board recommendation and required stockholder vote for the agreement, noncontravention of any governing instruments, laws or other agreements, regulatory 20 23 and other third party consents and approvals, information provided in the Offer documents and Schedule 14D-9, funds and brokers. Interim Operations of the Company. In the Merger Agreement, the Company has agreed that, among other things, from the date of the Merger Agreement to the Effective Time, except as expressly required or permitted by the Merger Agreement or the Option Agreement, the Company will, and will cause each of its Subsidiaries to, (a) conduct its business in the usual, regular and ordinary course consistent with past practice and in compliance in all material respects with applicable laws, (b) use reasonable best efforts to maintain and preserve intact its business organization, employees and business relationships and retain the services of its key officers and key employees and (c) take no action which would adversely affect or delay in any material respect the ability of either Parent or the Company to obtain any necessary approvals of any regulatory agency or other governmental entity required for the transactions contemplated thereby or to perform its covenants and agreements under the Merger Agreement or the Option Agreement. In addition, the Merger Agreement provides that from the date of the Merger Agreement to the Effective Time, except as expressly required or permitted thereby or by the Option Agreement, the Company will not, and will not permit any of its subsidiaries to, without the prior written consent of Parent: (a) (i) incur any indebtedness for borrowed money (other than (A) short-term indebtedness incurred (x) to refinance existing short-term indebtedness, (y) pursuant to lines of credit and credit facilities existing on the date of the Merger Agreement, or (z) otherwise in the ordinary course of business consistent with past practice, and (B) indebtedness of the Company or any of its subsidiaries owed to the Company or any of its other wholly-owned subsidiaries), assume, guarantee, endorse or otherwise as an accommodation become responsible for the obligations of any other individual, corporation or other entity, or make any loan, advance or capital contribution (other than to the Company or any of its wholly-owned subsidiaries and other than in the ordinary course of Company's investment banking business consistent with past practice) or (ii) make or commit to make any capital expenditures in excess of $2,500,000 for any single or related group of capital expenditures; (b) (i) adjust, split, combine or reclassify any of its capital stock; (ii) make, declare, set aside or pay any dividend (except for dividends paid in the ordinary course of business by any wholly-owned subsidiaries of the Company to the Company or to any other of its wholly-owned subsidiaries) or make any other distribution on, or directly or indirectly (other than in connection with the surrender of Shares as full or partial payment of the exercise price or withholding tax in connection with the exercise of Company Options under the Company Stock Plans) redeem, purchase or otherwise acquire, any shares of its capital stock or any securities or obligations convertible into or exchangeable for any shares of its capital stock; (iii) grant any individual, corporation or other entity any right to acquire any shares of its capital stock or any stock appreciation or similar rights except as permitted by clause (i) below; (iv) issue or authorize the issuance of, deliver, sell, transfer, pledge or otherwise encumber any additional shares of capital stock or any securities or obligations convertible into or exchangeable for any shares of its capital stock, other than the issuance of Shares pursuant to the exercise of stock options disclosed in the Merger Agreement as being outstanding on the date of the Merger Agreement and granted pursuant to the Company Stock Plans; or (v) enter into any agreement, understanding or arrangement with respect to the sale or voting of its capital stock; (c) sell, transfer, mortgage, encumber or otherwise dispose of any of material portion of its properties or assets, including, without limitation, capital stock in any subsidiaries of the Company, to any individual, corporation or other entity other than a direct or indirect wholly-owned subsidiary, or cancel, release or assign any indebtedness to any such person or any claims held by any such person, except in the ordinary course of business consistent with past practice; (d) except for transactions in connection with underwriting activities in the ordinary course of business consistent with past practice and portfolio investments by investment subsidiaries in accordance with their applicable investment guidelines, make any material investment either by purchase of stock or securities, contributions to capital, property transfers, or purchase of any property or assets of any other 21 24 individual, corporation, limited partnership or other entity, other than an investment in a wholly-owned subsidiary of the Company; (e) acquire or agree to acquire by merging or consolidating with, or by purchasing a substantial portion of the stock or assets of, or by any other manner, any business or any corporation, partnership, joint venture, association or other business organization or division thereof; (f) acquire or agree to acquire voting or non-voting equity securities or similar ownership interests in any person (other than a subsidiary) in an amount (when combined with any voting or non-voting equity securities or similar interests already owned by the Company or its subsidiaries) exceeding 4.9% of any class of voting securities or interests or 24.9% of the total equity of any such person, other than securities or other similar ownership interests acquired in the ordinary course of the Company's or its subsidiaries' underwriting, dealing or market-making business consistent with past practice; (g) commence, undertake or engage in any new line of business; (h) enter into or terminate any material lease, contract or agreement, or make any change in any of its existing material leases, contracts or agreements; (i) (i) enter into, amend, modify or renew any employment, consulting, severance or similar agreements or arrangements with any director, officer, consultant, independent contractor, or employee of or with respect to the Company or any of its subsidiaries, or grant any salary, wage or bonus increase, except, (1) for normal individual increases in compensation to employees in the ordinary course of business consistent with past practice (subject, in the case of executive officers of the Company and others whose combined annual salary and bonus exceed $500,000, to prior consultation with Parent), (2) for other changes that are required by applicable law, (3) to satisfy contractual obligations existing as of the date of the Merger Agreement, (4) for employment arrangements for, or grants of awards to, newly hired employees in the ordinary course of business consistent with past or previously announced practice (subject, in the case of executive officers of the Company and others whose combined annual salary and target bonus would exceed $500,000, to prior consultation with Parent), or (5) for payment of bonuses by the Company to its employees in respect of its 1999 fiscal year; or (ii) enter into, establish, adopt or amend (except (1) as may be required by applicable law, (2) to satisfy contractual obligations existing as of the date of the Merger Agreement or (3) as otherwise provided by the Merger Agreement) any pension, retirement, stock option, stock purchase, savings, profit sharing, deferred compensation, consulting, bonus, group insurance or other employee benefit, incentive or welfare contract, plan or arrangement, or any trust agreement (or similar arrangement) related thereto in respect of any director, officer, consultant, independent contractor, or employee of or with respect to the Company or any of its subsidiaries, or, except as otherwise provided in the Merger Agreement, take any action to accelerate the vesting, exercisability, payment or funding of the Company Options, restricted stock or other compensation or benefits; (j) pay, discharge or satisfy any material claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), except for the payment, discharge or satisfaction of current liabilities or obligations, in accordance with their terms, in the ordinary course of business consistent with past practice, or waive, release, grant, or transfer any rights of material value or modify or change any existing license, lease, contract or other document in any manner that would be material to the Company and its subsidiaries; (k) settle or compromise any litigation (whether or not commenced prior to the date of the Merger Agreement), other than settlements or compromises of litigation where the amount paid does not exceed $250,000 for any single litigation matter or related group of litigation matters (provided such settlement or compromise agreements do not involve any non-monetary obligations on the part of the Company or any of its subsidiaries other than, in the case of litigation not involving any governmental entity or other regulatory agency, immaterial non-monetary obligations); (l) change any accounting principle used by it, except for such changes as may be required to be implemented following the date of the Merger Agreement pursuant to generally accepted accounting 22 25 principles or rules and regulations of the Commission promulgated following the date of the Merger Agreement as concurred with by the Company's independent auditors; (m) change any tax election, change any annual tax accounting period, change any method of tax accounting in any material respect, file any material amended tax return, enter into any closing agreement relating to any material tax, settle any material tax claim or assessment, surrender any right to claim a material tax refund or consent to any extension or waiver of the limitations period applicable to any material tax claim or assessment; (n) adopt or implement any amendment to its charter or bylaws or other comparable organizational documents, or enter into any plan of consolidation, merger or reorganization with any person other than a wholly-owned subsidiary of the Company; (o) materially restructure or materially change its investment securities portfolio, its hedging strategy or its gap position, through purchases, sales or otherwise, or the manner in which the portfolio is classified or reported or materially alter the credit or risk concentrations associated with its underwriting, market-making and other investment banking businesses; (p) adopt a plan of complete or partial liquidation or resolutions providing for or authorizing such a liquidation or a dissolution, restructuring, recapitalization or reorganization; (q) take any action that is intended or may reasonably be expected to result in any of its representations and warranties set forth in the Merger Agreement being or becoming untrue in any material respect, or in any of the conditions to the Merger set forth in "Conditions" below or the Offer Conditions not being satisfied or in a violation of any provision of the Merger Agreement, except, in each case, as may be required by applicable law; or (r) agree to, or make any commitment to, take, or authorize, any of the foregoing actions. Access to Information. The Merger Agreement provides that upon reasonable notice and subject to applicable laws relating to the exchange of information, the Company will, and will cause its subsidiaries to, afford to the officers, employees, accountants, counsel and other representatives of Parent, complete access, during normal business hours during the period prior to the Effective Time, to all its properties, books, contracts, commitments and records and, during such period, the Company will, and will cause its subsidiaries to, make available to Parent and such other parties (i) a copy of each report, schedule, registration statement and other document filed or received by it during such period pursuant to the requirements of federal securities laws or other federal or state laws and the rules of self-regulatory organizations relating to broker-dealers (other than reports or documents which the Company is not permitted to disclose under applicable law) and (ii) all other information concerning its business, properties and personnel as Parent may reasonably request, in all cases so that Parent may have full opportunity to make such investigations as it desires of the affairs and assets of the Company. Neither the Company nor any of its subsidiaries will be required to provide access to or to disclose information where such access or disclosure would violate or prejudice the rights of its customers, jeopardize the attorney-client privilege of the institution in possession or control of such information or contravene any law, rule, regulation, order, judgment, decree, or binding agreement entered into prior to the date of the Merger Agreement. The parties to the Merger Agreement have agreed to make appropriate substitute disclosure arrangements under circumstances in which the restrictions of the preceding sentence apply. The Merger Agreement provides that Parent will hold all information furnished by or on behalf of the Company or any of the Company's subsidiaries or representatives pursuant to the Merger Agreement in confidence to the extent required by, and in accordance with, the provisions of the confidentiality agreement, dated February 8, 1999 (the "Confidentiality Agreement"), between Parent and the Company. No investigation by Parent or its representatives will affect the representations and warranties of Company set forth in the Merger Agreement. Reasonable Best Efforts; Consents and Approvals. The Merger Agreement provides that each of the Company, Parent and Purchaser will, and will cause their respective subsidiaries to, use its reasonable best 23 26 efforts to take, or cause to be taken, all actions necessary, proper or advisable to comply promptly with all legal requirements which may be imposed on it or any of its subsidiaries with respect to the Offer and the Merger and, subject to the conditions set forth in "Conditions" below, to consummate the transactions contemplated by the Merger Agreement which actions will include, without limitation, furnishing all information in connection with approvals of or filings with any governmental entity, including, without limitation, (i) using its reasonable best efforts to as promptly as practicable prepare and file all necessary documentation, to effect all applications, notices, petitions and filings, to obtain as promptly as practicable all permits, consents, approvals and authorizations of all governmental entities and any other third parties which are necessary or advisable to consummate the transactions contemplated by the Merger Agreement or to prevent the termination of the Company's and its subsidiaries' contracts as a result thereof, (ii) complying fully with the terms and conditions of all such permits, consents, approvals and authorizations of all such governmental entities, (iii) lifting or rescinding any injunction or restraining order or other order adversely affecting the ability of the parties to consummate the transactions contemplated by the Merger Agreement, and (iv) defending any litigation seeking to enjoin, prevent or delay the consummation of the transactions contemplated thereby or seeking material damages. Parent and the Company have the right to review in advance, and, to the extent practicable, each will consult with the other on, in each case subject to applicable laws relating to the exchange of information, all the information relating to the Company or Parent, as the case may be, and any of their respective subsidiaries, which appear in any filing made with, or written materials submitted to, any governmental entity or any other third party in connection with the transactions contemplated by the Merger Agreement. In exercising the foregoing right, each of the parties to the Merger Agreement will act reasonably and as promptly as practicable. The Company, Parent and Purchaser have agreed that they will consult with each other with respect to the obtaining of all permits, consents, approvals and authorizations of all governmental entities and other third parties necessary or advisable to consummate the transactions contemplated by the Merger Agreement and each of the parties has agreed to keep the other apprised of the status of matters relating to completion of the transactions contemplated thereby. Employee Matters. The Merger Agreement provides that from and after the Effective Time but prior to January 1, 2000, employees of the Company and its subsidiaries who continue their employment with the Surviving Corporation, Parent or any of their respective subsidiaries ("Continued Employees") will be provided employee benefits which are substantially identical to those currently provided to such employees under the Company's employee welfare benefit plans, and which are comparable to those provided under the Company's defined contribution pension plan. After December 31, 1999, such employees will be provided employee benefits which are comparable to those provided by Parent and its subsidiaries to their similarly-situated employees; provided, however, that it is understood that after the Effective Time nothing will interfere with the Surviving Corporation's right to take any action or refrain from taking any action which the Company or any of its subsidiaries could take or refrain from taking prior to the Effective Time. The Merger Agreement further provides that for the purpose of determining eligibility to participate in any plans that Parent and its subsidiaries make available to Continued Employees, and determining the vesting of benefits thereunder (but not for the accrual of benefits under such plans), Parent and its subsidiaries will give effect to years of service with the Company or its subsidiaries, as the case may be, as if such service had been with Parent or its subsidiaries. From and after the Effective Time, Parent and its subsidiaries will, or will cause the Surviving Corporation to, (i) cause any pre-existing conditions or limitations and eligibility waiting periods under any group health plans of Parent or its subsidiaries to be waived with respect to Continued Employees and their eligible dependents and (ii) give each Continued Employee credit for the plan year in which the Effective Time occurs towards applicable deductibles and annual out-of-pocket limits for expenses incurred prior to the Effective Time. Pursuant to the Merger Agreement, the Company and Parent have agreed on the aggregate amount of bonuses to be paid by the Company to its employees in respect of the Company's fiscal year ended September 30, 1999. In addition, Parent has agreed to pay bonuses to certain employees of the Company in respect of the period commencing October 1, 1999 and ending December 31, 1999 and for the calendar year 2000 at least equal to certain aggregate amounts. Parent and the Company have also agreed to establish a retention pool, consisting of Parent Common Stock, to be allocated among certain key employees of the 24 27 Company to retain the services of those employees through and after the closing of the Merger. The shares of Parent Common Stock in the pool will be valued at $200 million in the aggregate and will vest in four equal installments on each of the first four anniversaries of the consummation of the Merger, subject to immediate vesting in full on the death or disability of a participant or termination of a participant's employment without cause. The allocation of shares in the retention pool among the participants will be mutually determined by Parent and the Company. The unvested portion of a participant's retention pool shares is subject to forfeiture if the participant voluntarily terminates his or her employment or violates certain confidentiality, non-compete and non-solicitation obligations, or a participant's employment is terminated for cause. No Solicitation. The Merger Agreement provides that neither the Company nor any of its subsidiaries will (whether directly or indirectly through advisors, agents or other intermediaries), nor will the Company or any of its subsidiaries authorize or permit any of its or their officers, directors, agents, representatives or advisors to, (a) solicit, initiate, encourage (including by way of furnishing information) or take any action knowingly to facilitate the submission of any inquiries, proposals or offers (whether or not in writing) from any person other than Parent relating to, (i) any acquisition or purchase of 10% or more of the consolidated assets of the Company and its subsidiaries (including through the formation of a joint venture) or of 10% or more of any class of equity securities of the Company or any of its subsidiaries, (ii) any tender offer or exchange offer (including a self-tender offer) that if consummated would result in any person beneficially owning 10% or more of any class of equity securities of the Company or any of its subsidiaries, (iii) any merger, consolidation, business combination, reorganization, recapitalization, liquidation, dissolution or similar transaction involving the Company or any of its subsidiaries, or (iv) any other transaction the consummation of which would or would reasonably be expected to impede, interfere with, prevent or materially delay the Offer or the Merger (any of the foregoing, a "Transaction Proposal"), or agree to, approve or endorse any Transaction Proposal, or (b) enter into or participate in any discussions or negotiations regarding any of the foregoing, or otherwise cooperate in any way with, or knowingly assist or participate in, facilitate or encourage, any effort or attempt by any other person to do or seek any of the foregoing. The Merger Agreement further provides that, notwithstanding the preceding paragraph, if the Company is not otherwise in breach or violation of the relevant provisions of the Merger Agreement, the Company may, in response and with respect to a bona fide unsolicited written proposal from a third party submitted after the date of the Merger Agreement which constitutes a Superior Proposal (as defined below), engage in the activities specified in clause (b) of the preceding paragraph, including furnishing information to such third party, if (i) in the opinion of the Company's outside counsel, failure to take such action in response to such a proposal would constitute a breach by the Company Board of its fiduciary duties under applicable law and (ii) the Company has received from such third party an executed confidentiality agreement with terms not materially less favorable to the Company than those contained in the Confidentiality Agreement. Pursuant to the Merger Agreement, if the Company receives a Transaction Proposal, or a request for nonpublic information relating to the Company or any of its subsidiaries or for access to the properties, books or records of the Company or any of its subsidiaries by any person or entity who is considering making or has made a Transaction Proposal, it will immediately inform Parent orally and will as promptly as practicable (and in any event within one day) inform Parent in writing of the terms and conditions of such proposal and the identity of the person making it, forwarding a copy of any related written communications. The Company has agreed to keep Parent fully informed on as prompt a basis as is practicable of the status and details of any such Transaction Proposal or request and any related discussions or negotiations, including by forwarding copies of any related material written communications. The Merger Agreement provides that the Company immediately cease and cause its subsidiaries, and its and their officers, directors, agents, representatives and advisors, to cease any and all existing activities, discussions or negotiations with any parties conducted theretofore with respect to any of the foregoing. The Merger Agreement further provides that the Company will use its reasonable best efforts to cause any such parties in possession of confidential information about the Company or its subsidiaries that was furnished by or on behalf of Company or its subsidiaries in connection with any of the foregoing to return or destroy all such information in the possession of any such party or in the possession of any agent or advisor of any such party. The Company has agreed not to release any third party from, or waive any provisions of, any confidentiality or standstill agreement to which it or its subsidiaries is a 25 28 party. The Company is required to ensure that its officers, directors and employees and those of its subsidiaries as well as any investment banker or other advisor or representative retained by such party are aware of and instructed to comply with the restrictions described in this section. However, the Merger Agreement does not prohibit the Company and the Company Board from taking and disclosing to the Company's stockholders a position with respect to a Transaction Proposal by a third party to the extent required under the Exchange Act, including Rules 14e-2 and 14d-9 thereunder, or from making such disclosure to the Company's stockholders which, in the opinion of the Company's outside counsel, is required under applicable law. For purposes of the foregoing provision as well as the definition of "Transaction Proposal" as used in the Merger Agreement, the term "subsidiaries" does not include any investment subsidiaries of the Company which are not, either individually or in the aggregate, material to the Company and its subsidiaries taken as a whole. A "Superior Proposal" means, for purposes of the Merger Agreement, any bona fide Transaction Proposal for at least a majority of the outstanding fully-diluted Shares on terms the Company Board determines in its good faith judgment (taking into account the advice of a financial advisor of nationally recognized reputation, and taking into account all the terms and conditions of the Transaction Proposal, including any break-up fees, expense reimbursement provisions and conditions to consummation) are more favorable and provide greater value to the Company's stockholders than the Merger Agreement, the Offer and the Merger taken as a whole, and which (i) is not subject to any financing contingency or other material contingency (except such other material contingency as the Company Board determines in its reasonable good faith judgment is likely to be satisfied), and (ii) is, in the Company Board's reasonable good faith judgment (taking into account all relevant legal, financial, regulatory and other considerations), reasonably capable of being consummated on the terms proposed. Publicity. The Merger Agreement provides that the Company, on the one hand, and Parent and Purchaser, on the other hand, will consult with each other before holding any press conferences, analyst calls or other meetings or discussions and before issuing any press releases or other public announcements or statements regarding the transactions contemplated by the Merger Agreement, the Option Agreement and the Tender Agreement, will provide each other the opportunity to review and comment upon any press release or other public announcement or statement with respect to the transactions contemplated by the Merger Agreement, the Option Agreement and the Tender Agreement, including the Offer and the Merger, and will not issue any such press release or other public announcement or statement prior to such consultation, except as may be required by applicable law, court process or by obligations pursuant to any listing agreement with any national securities exchange. In addition, the Company is required to, and to cause its subsidiaries to, (i) consult with Parent regarding communications with customers, stockholders and employees relating to the transactions contemplated by the Merger Agreement, (ii) provide Parent with stockholder lists of the Company and (iii) and allow and facilitate Parent contact with stockholders of the Company. Directors' and Officers' Insurance and Indemnification. The Merger Agreement provides that the certificate of incorporation and bylaws of the Surviving Corporation will contain, to the extent permitted by law, the provisions with respect to indemnification set forth in the certificate of incorporation and bylaws of the Company on the date of the Merger Agreement, which provisions may not be amended, repealed or otherwise modified for a period of six years after the Effective Time in any manner that would adversely affect the rights thereunder of the persons who at any time prior to the Effective Time were entitled to such indemnification under the certificate of incorporation or bylaws of the Company in respect of actions or omissions occurring at or prior to the Effective Time (including, without limitation, the transactions contemplated thereby), unless such modification is required by law; provided, that the certificate of incorporation and bylaws of the Surviving Corporation will not be required to contain such provisions if Parent otherwise provides the same level of indemnification for such individuals as contained in the certificate of incorporation and bylaws of the Surviving Corporation. The Merger Agreement further provides that Parent will, and will cause the Surviving Corporation to, indemnify, defend and hold harmless the present and former officers and directors of the Company or any of its subsidiaries in their capacities as such (each an "Indemnified Party") after the Effective Time against all losses, expenses, claims, damages or liabilities arising out of actions or omissions occurring on or prior to the Effective Time to the fullest extent now provided in their respective certificates of incorporation or bylaws, and 26 29 as permitted by applicable law. Parent has also agreed to use its reasonable best efforts to cause the persons serving as officers and directors of the Company immediately prior to the Effective Time to be covered for a period of six years from the Effective Time by the directors' and officers' liability insurance policy maintained by the Company (provided that Parent may substitute therefor policies of at least the same coverage and amounts containing terms and conditions which are not less advantageous than such policy) with respect to acts or omissions occurring prior to the Effective Time which were committed by such officers and directors in their capacity as such; provided, however, that in no event will Parent be required to expend more than 200% of the current amount expended by the Company (the "Insurance Amount") to maintain or procure such insurance coverage and further provided, that if Parent is unable to maintain or obtain the insurance described in this paragraph, Parent will use its reasonable best efforts to obtain as much comparable insurance as available for the Insurance Amount. In the event Parent, the Surviving Corporation or any of their respective successors or assigns (i) consolidates with or merges into any other person and is not the continuing or surviving corporation or entity of such consolidation or merger, or (ii) transfers or conveys all or substantially all of its properties and assets to any person, the Merger Agreement requires that in each such case, to the extent necessary, proper provision will be made so that the successors and assigns of Parent or the Surviving Corporation, as the case may be, assume the obligations described in this paragraph. The Merger Agreement provides that the provisions described above are intended to benefit and will be enforceable by the Indemnified Parties and their respective heirs and representatives. Company Stockholders Meeting; Preparation of Proxy Statement. The Merger Agreement provides that if the approval of the Company's stockholders is required under the DGCL to consummate the Merger, (i) the Company will cause a meeting of its stockholders (the "Company Stockholders Meeting") to be duly called and held as soon as practicable after the date on which Shares are purchased by Purchaser pursuant to the Offer for the purpose of voting on the adoption of the Merger Agreement, and (ii) Parent and the Company will prepare and file with the Commission a proxy statement in definitive form relating to the Company Stockholders Meeting (the "Proxy Statement"). Each of Parent and the Company have agreed to use all reasonable efforts to resolve any comments of the Commission as promptly as practicable after such filing, and the Company will thereafter mail or deliver the Proxy Statement to its stockholders as promptly as practicable. The Company Board will (i) include in the Proxy Statement the Company Board Recommendation and (ii) use its reasonable best efforts to obtain the necessary vote in favor of the adoption of the Merger Agreement by its stockholders. Pursuant to the Merger Agreement, Parent has agreed that it will vote, or cause to be voted, at the Company Stockholders Meeting, all Shares then owned by it or Purchaser in favor of the adoption of the Merger Agreement. Notwithstanding the above described provisions of the Merger Agreement, the Merger Agreement provides that in the event that Parent, Purchaser or any other subsidiary of Parent acquires at least 90% of the outstanding shares of each class of capital stock of the Company, the parties thereto will take all necessary and appropriate action to cause the Merger to become effective as soon as practicable after such acquisition, without a meeting of stockholders of the Company, in accordance with Section 253 of the DGCL. Conditions. The Merger Agreement provides that the obligations of the Company, on the one hand, and Parent and Purchaser, on the other hand, to consummate the Merger are subject to the satisfaction (or, if permissible, waiver by the party for whose benefit such conditions exist) of the following conditions: (1) Purchaser has purchased the Shares pursuant to the Offer; (2) if required under the DGCL, the Company Stockholder Approval has been obtained; and (3) no order, injunction or decree issued by any court or agency of competent jurisdiction or other legal restraint or prohibition preventing the consummation of the Merger is in effect and no statute, rule, regulation, order, injunction or decree has been enacted, entered, promulgated or enforced by any governmental entity which prohibits, materially restricts or makes illegal consummation of the Merger. 27 30 Termination. The Merger Agreement provides that it may be terminated at any time prior to the Effective Time, whether before or after approval by the Company's stockholders of the matters presented in connection with the Merger: (a) by the mutual consent of Parent and the Company; (b) by either Parent or the Company Board if any governmental entity of competent jurisdiction which must grant a Requisite Regulatory Approval has denied approval of the Offer or the Merger and such denial has become final and nonappealable or any governmental entity of competent jurisdiction issues an order, decree or ruling or takes any other action permanently restraining, enjoining or otherwise prohibiting the transactions contemplated by the Merger Agreement, and such order, decree, ruling or other action becomes final and nonappealable; provided, however, that the right to terminate the Merger Agreement as described in this clause (b) is not available to any party whose failure to comply with the section "Reasonable Best Efforts; Consents and Approvals" above or any other provision of the Merger Agreement has been the cause of such action; (c) (i) by the Board of Directors of the Company, if, prior to the purchase of any Shares by Purchaser pursuant to the Offer, Parent breaches any of its representations, covenants or agreements contained in the Merger Agreement (A) such that any of the Offer Conditions would not be satisfied, and (B) such breach either cannot be cured or is not cured prior to the earlier of (x) 10 days after the Company has furnished Parent with written notice of such breach and (y) two business days prior to the date on which the Offer is then scheduled to expire; or (ii) by Parent, if, prior to the purchase of any Shares by Purchaser pursuant to the Offer, the Company breaches any of its representations, covenants or agreements contained in the Merger Agreement (A) such that any of the Offer Conditions would not be satisfied, and (B) such breach either cannot be cured or is not cured prior to the earlier of (x) 10 days after Parent has furnished the Company with written notice of such breach and (y) two business days prior to the date on which the Offer is then scheduled to expire; (d) by Parent, if, prior to the purchase of any Shares by Purchaser pursuant to the Offer, the Company or the Company Board has (i) withdrawn, modified, amended or materially qualified in any respect adverse to Parent the Company Board Recommendation, (ii) failed to mail the Schedule 14D-9 as required under the Merger Agreement to its stockholders, or failed to include in the Schedule 14D-9 the Company Board Recommendation, (iii) resolved to do any of the foregoing or (iv) in response to the commencement of any tender offer or exchange offer for 10% or more of the outstanding Shares, or the public announcement or disclosure of any other Transaction Proposal, or the commencement of negotiations or discussions with any third party regarding a Transaction Proposal in accordance with the section "No Solicitation", failed to, fully and unconditionally, publicly recommend rejection of such tender or exchange offer or reject such other Transaction Proposal (and publicly announce such rejection, in the case of Transaction Proposals which have been publicly disclosed or become publicly known) within ten business days of such commencement, announcement or disclosure; or (e) by either Parent or the Board of Directors of the Company if (i) the Offer expires or terminates in accordance with the terms of the Merger Agreement without the purchase of any Shares thereunder or (ii) Purchaser has not purchased Shares under the Offer prior to March 31, 2000; provided, however, that the right to terminate the Merger Agreement as described in this clause (e) will not be available to any party to the extent that such party's failure to comply with the terms described under "Reasonable Best Efforts; Consents and Approvals" above or any other provision of the Merger Agreement has resulted in the failure of any of the Offer Conditions. Effect of Termination. The Merger Agreement provides that in the event of the termination of the Merger Agreement as described above, written notice thereof will forthwith be given to the other party or parties specifying the provision thereof pursuant to which such termination is made, and the Merger Agreement will forthwith become null and void, and there will be no liability on the part of Parent, Purchaser, the Company or any of their respective subsidiaries or any of the officers or directors of any of them except that (i) among others, the second paragraph under the section "Access to Information" above and the provisions described in this paragraph will survive any termination of the Merger Agreement, 28 31 (ii) notwithstanding anything to the contrary contained in the Merger Agreement, neither Parent nor the Company will be relieved or released from any liabilities or damages arising out of its willful breach of any provision of the Merger Agreement, and (iii) the Company will pay to Parent the Termination Fee (as defined below), if applicable, in accordance with the provisions described below. The Merger Agreement provides that the Company will pay Parent a termination fee if the Merger Agreement is terminated solely as follows: (a) In the event that the Merger Agreement is terminated by Parent as described under clause (d) under "Termination", above, the Company will pay to Parent an amount equal to $57.5 million (the "Termination Fee"). (b) If: (1) a Transaction Proposal is commenced, publicly disclosed, publicly proposed or otherwise communicated or made known in writing to the Company at any time on or after the date of the Merger Agreement and prior to the termination thereof, and the Merger Agreement is terminated (x) as described under clause (c)(ii) under "Termination", if the breach which gave rise to such termination was intentional, or (y) as described under clause (e) under "Termination", if the Minimum Condition was not met at the time of such termination, then, in the case of the foregoing clause (x) only, the Company will upon such termination pay to Parent an amount equal to 33.3% of the Termination Fee; and (2) within 18 months of the date of such termination, the Company enters into a definitive agreement with respect to, or consummates, any Transaction Proposal, then the Company will pay to Parent an amount equal to (x) the remaining 66.7% of the Termination Fee, in the circumstances described in clause (x) of the preceding paragraph (b)(1), or (y) the entire Termination Fee, in the circumstances described in clause (y) of the preceding paragraph (b)(1), in each case concurrently with the earlier of the execution of such definitive agreement or the consummation of such Transaction Proposal. Expenses. The Merger Agreement provides that, except as expressly otherwise provided in the Merger Agreement, all costs and expenses incurred in connection with the Merger Agreement and the consummation of the transactions contemplated thereby will be paid by the party incurring such expenses. Amendment and Modification. The Merger Agreement provides that, subject to compliance with applicable law, such agreement may be amended in writing by the parties thereto, by action taken or authorized by their respective boards of directors, at any time before or after approval of the matters presented in connection with the Merger by the stockholders of the Company; provided, however, that after any approval of the transactions contemplated by the Merger Agreement by the stockholders of the Company, there may not be, without further approval of such stockholders, any amendment of the Merger Agreement which changes the amount or the form of the consideration to be delivered to the holders of Shares thereunder other than as contemplated by the Merger Agreement. Extension; Waiver. The Merger Agreement provides that at any time prior to the Effective Time, the parties thereto, by action taken or authorized by their respective boards of directors, may, to the extent legally allowed, (i) extend the time for the performance of any of the obligations or other acts of the other parties thereto, (ii) waive any inaccuracies in the representations and warranties contained therein or in any document delivered pursuant thereto and (iii) waive compliance with any of the agreements or conditions contained therein; provided, however, that after any approval of the transactions contemplated by the Merger Agreement by the stockholders of the Company, there may not be, without further approval of such stockholders, any extension or waiver of the Merger Agreement or any portion thereof which reduces the amount or changes the form of the consideration to be delivered to the holders of Shares thereunder other than as contemplated by the Merger Agreement. Any agreement on the part of a party to the Merger Agreement to any such extension or waiver will be valid only if set forth in a written instrument signed on behalf of such party, but such extension or waiver or failure to insist on strict compliance with an obligation, 29 32 covenant, agreement or condition will not operate as a waiver of, or estoppel with respect to, any subsequent or other failure. TENDER AGREEMENT Concurrently with the execution and delivery of the Merger Agreement, Parent entered into the Tender Agreement with certain of the directors and executive officers of the Company (each, a "Management Stockholder" and, together, the "Management Stockholders") who together beneficially own 3,417,474 issued and outstanding Shares, representing approximately 13.9% of the issued and outstanding Shares as of the date hereof (the "Existing Shares" and, together with any other Shares of capital stock or other voting securities of the Company or any of its subsidiaries beneficially owned by them and any such shares of capital stock or other voting securities acquired, directly or indirectly, after the date of the Tender Agreement and prior to the termination thereof, whether upon the exercise of options, conversion of convertible securities or otherwise, the "Subject Shares"). Pursuant to the Tender Agreement, each of the Management Stockholders agreed, among other things, to validly tender his or her Subject Shares (other than Restricted Shares and Shares which are the subject of unexercised options) to Purchaser pursuant to the Offer within 15 business days of the commencement thereof, and not to withdraw or permit to be withdrawn any such Shares therefrom. Additionally, pursuant to the Tender Agreement, each of the Management Stockholders agreed that, during the term of the Tender Agreement, at any meeting of the stockholders of the Company, however called, or in any written consent of the stockholders of the Company, such Management Stockholder will appear at each such meeting, in person or by proxy, or otherwise cause the Subject Shares to be counted as present thereat for purposes of establishing a quorum, and each such Management Stockholder will vote (or cause to be voted) or act by written consent with respect to all of its Subject Shares that are beneficially owned by each such Management Stockholder or its affiliates or as to which such Management Stockholder has, directly or indirectly, the right to vote or direct the voting, (a) in favor of adoption and approval of the Merger Agreement and the Merger and the approval of the terms thereof and each of the other actions contemplated by the Merger Agreement, the Option Agreement and the Tender Agreement, and any other action requested by Parent in furtherance thereof, (b) against any action or agreement that would result in a breach of any covenant, representation or warranty or any other obligation or agreement of the Company contained in the Merger Agreement or the Option Agreement or of any Management Stockholder contained in the Tender Agreement, (c) against any Transaction Proposal made by any person other than Parent or any of its subsidiaries and (d) against any other action, agreement or transaction (other than the Merger Agreement and the transactions contemplated thereby) that is intended, or could reasonably be expected, to impede, interfere or be inconsistent with, delay, postpone, discourage or materially adversely affect the Offer or the Merger or the performance by each of the Management Stockholders of its obligations under the Tender Agreement, including, but not limited to: (i) any extraordinary corporate transaction, such as a merger, consolidation or other business combination involving the Company or its subsidiaries (other than the Offer and the Merger); (ii) a sale, lease or transfer of a material amount of assets of the Company or any of its subsidiaries or a reorganization, recapitalization or liquidation of the Company or any of its subsidiaries; (iii) a material change in the policies or management of the Company; (iv) an election of new members to the board of directors of the Company, except where the vote is cast in favor of the nominees of a majority of the existing directors; (v) any material change in the present capitalization or dividend policy of the Company or any amendment or other change to the Company's certificate of incorporation; or (vi) any other material change in the Company's corporate structure or business. Pursuant to the Tender Agreement, each Management Stockholder also agreed that it will not enter into any voting or other agreement or understanding with any person or entity or grant a proxy or power of attorney with respect to the Subject Shares prior to the termination of the Tender Agreement (other than as provided in the Tender Agreement) or vote or give instructions in any manner inconsistent with clauses (a), (b) or (c) of the preceding paragraph. Each Management Stockholder has also agreed, during the term of the Tender Agreement, not to, and not to permit any of its affiliates to, vote or execute any written consent in lieu of a stockholders meeting or vote, if such consent or vote by the stockholders of the Company would be 30 33 inconsistent with or frustrate the purposes of the other covenants of such Management Stockholder as described in this paragraph and the preceding paragraph. The Tender Agreement provides that each Management Stockholder, during the term of the Tender Agreement, will not (i) sell, transfer, pledge, encumber, grant, assign or otherwise dispose of, enforce any redemption agreement with the Company or enter into any contract, option or other arrangement or understanding with respect to or consent to the offer for sale, sale, transfer, pledge, encumbrance, grant, assignment or other disposition of, record or beneficial ownership of any of the Subject Shares or any interest in any of the foregoing, except to Parent, (ii) grant any proxies or powers of attorney, deposit any Subject Shares into a voting trust or enter into a voting agreement with respect to any Subject Shares, or any interest in any of the Subject Shares, except to Parent or (iii) take any action that would make any representation or warranty of such Management Stockholder contained therein untrue or incorrect or have the effect of preventing or disabling such Management Stockholder from performing such Management Stockholder's obligations under the Tender Agreement, or that would otherwise hinder or delay Parent from acquiring a majority of the outstanding Shares, determined on a fully diluted basis. The Tender Agreement also provides that each Management Stockholder, except with respect to Parent and its affiliates, during the term of the Tender Agreement, will not, and will not permit any of its affiliates or any director, officer, employee consultant, agent, advisor or representative of such Management Stockholder or any of its affiliates (collectively, the "Representatives") to initiate, solicit or encourage, directly or indirectly, any inquiries or the making of any proposal with respect to any matter described in the preceding paragraph or any Transaction Proposal with respect to the Company or any of its subsidiaries, participate in any negotiations concerning, or provide to any other person any information or data relating to the Company or any of its subsidiaries for the purpose of, or have any discussions with any person relating to, or cooperate with or assist or participate in, or facilitate, any inquiries or the making of any proposal which constitutes, or would reasonably be expected to lead to, any effort or attempt by any other person to seek to effect any matter described in the preceding paragraph or any Transaction Proposal with respect to the Company or any of its subsidiaries, or agree to or endorse any or release any third party from any obligation under any existing standstill agreement or arrangement relating to any such Transaction Proposal, or otherwise facilitate any effort or attempt to make or implement such a Transaction Proposal. Pursuant to the Tender Agreement, each Management Stockholder agreed, during the term of the Tender Agreement, to notify Parent promptly of (i) the number of any additional Shares and the number and type of any other Shares acquired by such Management Stockholder, if any, and (ii) any such inquiries or proposals that are received by, any such information that is requested from, or any such negotiations or discussions that are sought to be initiated or continued with, such Management Stockholder with respect to any matter described in the preceding two paragraphs. OPTION AGREEMENT Concurrently with the execution and delivery of the Merger Agreement, Parent and the Company entered into the Option Agreement pursuant to which the Company granted Parent the Option to purchase up to 4,894,439 Option Shares, not to exceed 19.9% of the issued and outstanding Shares, at a price per share equal to $50 (as adjusted, the "Purchase Price"), exercisable upon the occurrence of both an Initial Triggering Event (as defined below) and a Subsequent Triggering Event (as defined below). Notwithstanding the foregoing, the Option will terminate and be of no further force or effect upon the earliest to occur of (A) the Effective Time, (B) termination of the Merger Agreement in accordance with the terms thereof prior to the occurrence of an Initial Triggering Event and (C) 18 months after termination of the Merger Agreement following or in connection with the occurrence of an Initial Triggering Event; and, provided, further, that any purchase of Shares upon exercise of the Option will be subject to compliance with applicable law; and, provided, further, that the holder thereof has sent the written notice of such exercise within 90 days following such Subsequent Triggering Event. Notwithstanding the termination of the Option, Parent or another holder, as the case may be, will be entitled to purchase those Option Shares with respect to which it has exercised the Option in accordance with the Option Agreement prior to the termination of the Option. 31 34 As used in the Option Agreement, an "Initial Triggering Event" means any of the following events: (a) without Parent's prior written consent, the Company authorizes, recommends, publicly proposes or publicly discloses an intention to authorize, recommend or propose, or enters into one or more agreements with any person (other than Parent or any subsidiary of Parent) to effect, or effected, in a single transaction or a series of related transactions, any Transaction Proposal; (b) any person (other than Parent or any subsidiary of Parent) acquires beneficial ownership (as such term is defined in Rule 13d-3 promulgated under the Exchange Act) of or the right to acquire beneficial ownership of, or any group (as such term is defined in Section 13(d)(3) of the Exchange Act), other than a group of which Parent or any subsidiary of Parent is a member, forms which beneficially owns or has the right to acquire beneficial ownership of, Shares or other securities representing 10% or more of the voting power of the Company or any of its Significant Subsidiaries (as defined in Rule 1-02 of Regulation S-X of the SEC); (c) any person (other than Parent or any subsidiary of Parent) commences (as such term is defined in Rule 14d-2 under the Exchange Act), or files a registration statement under the Securities Act with respect to, a tender offer or exchange offer to purchase any Shares or other securities such that, upon consummation of such offer, such person would own or control Shares or other securities representing 10% or more of the voting power of the Company or any of its Significant Subsidiaries; (d) the Company or the Company Board withdraws, modifies, amends or materially qualifies in any respect adverse to Parent the Company Board Recommendation, fails to mail the Schedule 14D-9 to its stockholders as required by the Merger Agreement, or fails to include in such Schedule 14D-9 the Company Board Recommendation or resolves to take any of the foregoing actions; or (e) the Merger Agreement has been terminated in accordance with its terms and at the time of such termination the Termination Fee or any portion thereof is or upon the occurrence of certain events specified therein would become payable pursuant to the Merger Agreement. As used in the Option Agreement, a "Subsequent Triggering Event" means any of the following events: (a) the Initial Triggering Event described in paragraph (b) of the definition of Initial Triggering Event has occurred, except that the percentage referred to in such paragraph is 20% for the purposes of this paragraph (a); or (b) the Initial Triggering Event described in paragraph (a) of the definition of Initial Triggering Event has occurred, except that the percentages referred to in the definition of Transaction Proposal are 20% for the purposes of this paragraph (b). The Option Agreement provides that in the event that, prior to the termination of the Option, the Company enters into an agreement (other than the Merger Agreement) (i) to consolidate with or merge into any person, other than Parent or one of its subsidiaries, and is not the continuing or surviving corporation of such consolidation or merger, (ii) to permit any person, other than Parent or one of its subsidiaries, to merge into the Company and the Company is the continuing or surviving corporation, but, in connection with such merger, the then outstanding Shares are changed into or exchanged for another class or series of stock or other securities of the Company or any other person or cash or any other property or the outstanding Shares immediately prior to such merger will, after such merger, represent less than 50% of the outstanding shares and share equivalents having general voting power of the merged company, or (iii) to sell or otherwise transfer all or substantially all of its assets or a substantial part of the assets of its subsidiaries taken as a whole, in one transaction or a series of related transactions, to any person, other than Parent or one of its subsidiaries ((i), (ii) and (iii), each a "Substitution Event"), the Option will be converted into, or exchanged for, an option of either the acquiring entity or its parent, upon the terms described in the Option Agreement (the "Substitute Option"). The Option Agreement further provides that at the request of the holder at any time (i) commencing upon the first occurrence of a Repurchase Event (as defined below) and prior to the termination of the Option, the Company (or any successor) will repurchase from the holder (x) the Option and (y) all Shares purchased 32 35 by the holder pursuant thereto with respect to which such holder then has beneficial ownership. The Option repurchase will be for an aggregate price equal to the sum of: (a) the aggregate Purchase Price paid by such holder for any Shares acquired pursuant to the Option with respect to which such holder then has beneficial ownership; (b) the excess, if any, of (x) the Applicable Price (as defined below) for each Share over (y) the Purchase Price (subject to adjustment), multiplied by the number of Shares with respect to which the Option has not been exercised; and (c) the excess, if any, of the Applicable Price over the Purchase Price (subject to adjustment) paid (or, in the case of Option Shares with respect to which the Option has been exercised but the closing date has not occurred, payable) by such holder for each Share with respect to which the Option has been exercised and with respect to which such holder then has beneficial ownership, multiplied by the number of such Shares. As used in the Option Agreement: (a) "Applicable Price" means the highest of (i) the highest price per Share paid for any such Share by any person (other than Parent or any subsidiary of Parent) that has acquired beneficial ownership of (as such term is defined in Rule 13d-3 promulgated under the Exchange Act), or the right to acquire beneficial ownership of, or any group has been formed which beneficially owns or has the right to acquire beneficial ownership of, 15% or more of the then outstanding Shares, (ii) the price per Share received by holders thereof in connection with any merger or other business combination which is a Substitution Event, and (iii) the highest closing sales price per Share during the 60 business days preceding the request date for repurchase; provided, however, that in the event of a sale of less than all of the Company's assets, the Applicable Price is the sum of the price paid in such sale for such assets and the current market value of the remaining assets of the Company as determined by a nationally-recognized investment banking firm selected by the holder, divided by the number of Shares outstanding at the time of such sale. If any consideration to be offered, paid or received pursuant to either of the foregoing clauses (i) or (ii) is other than in cash, the value of such consideration will be determined in good faith by an independent nationally recognized investment banking firm selected by the holder, which determination is conclusive for all purposes of the Option Agreement; and (b) a "Repurchase Event" occurs if (A) (i) any person (other than Parent or any subsidiary of Parent) has acquired beneficial ownership of (as such term is defined in Rule 13d-3 promulgated under the Exchange Act), or the right to acquire beneficial ownership of, or any group has been formed which beneficially owns or has the right to acquire beneficial ownership of, 50% or more of the then outstanding Shares or (ii) any transaction that is a Substitution Event has been consummated and (B) a Subsequent Triggering Event has occurred prior to the termination of the Option. The Option Agreement provides that in no event will Parent's Total Profit (as defined below) exceed $57.5 million (the "Maximum Profit"), and, if it otherwise would exceed such amount, Parent, at its sole discretion, will either (i) reduce the number of shares subject to the Option (and any Substitute Option), (ii) deliver to Company, or the substitute issuer in the case of a Substitute Option, as the case may be, for cancellation shares of common stock of the Company or the substitute issuer, as the case may be (or other securities into which such Option Shares are converted or exchanged), (iii) pay cash to the Company, or the substitute issuer, as the case may be, or (iv) any combination of the foregoing, so that Parent's actually realized Total Profit will not exceed the Maximum Profit after taking into account the foregoing actions. Notwithstanding any other provision of the Option Agreement, the Option may not be exercised for a number of shares as would, as of the date of exercise, result in a Notional Total Profit (as defined below) of more than $57.5 million and, if exercise of the Option would otherwise result in the Notional Total Profit exceeding such amount, Parent, in its discretion, may take any of the actions specified in this paragraph; provided, that nothing in this sentence will restrict any subsequent exercise of the Option which at such time complies with this sentence. 33 36 For purposes of the Option Agreement, "Total Profit" means: (i) the aggregate amount of (A) the excess of (x) the net cash amounts received by Parent pursuant to a sale of Option Shares (or securities into which such shares are converted or exchanged) to any unaffiliated third party or a repurchase of Option Shares by the Company pursuant to the Option Agreement, over (y) Parent's aggregate purchase price for such Option Shares (or other securities), plus (B) all amounts received by Parent on the transfer of the Option to an unaffiliated third party (whether upon repurchase by the Company pursuant to the Option Agreement or otherwise), plus (C) all equivalent amounts with respect to a Substitute Option, plus (D) all amounts received by Parent pursuant to the provisions of the Merger Agreement described under "Effect of Termination" above, minus (ii) all amounts of cash previously paid to the Company pursuant to this paragraph plus the value of the Option Shares (or other securities) previously delivered to the Company for cancellation pursuant to this paragraph. For purposes of the Option Agreement, "Notional Total Profit" with respect to any number of Shares as to which Parent may propose to exercise the Option will be the Total Profit, determined as of the date of such proposed exercise assuming that the Option was exercised on such date for such number of Shares, and assuming that such shares, together with all other Option Shares held by Parent and its affiliates as of such date, were sold for cash at the closing market price for the common stock of the Company as of the close of business on the preceding trading day (less customary brokerage commissions). For purposes of the second preceding paragraph and clause (ii) of the preceding paragraph, the value of any Option Shares delivered to the Company will be the closing market price of such Option Shares as of the close of business on the preceding trading day and the value of any substitute common stock delivered to the substitute issuer will be the closing market price of such substitute common stock as of the close of business on the preceding trading day. The Option Agreement also contains customary provisions for such agreements, including certain registration rights with respect to the Option Shares. EMPLOYMENT AGREEMENT WITH THE CHIEF EXECUTIVE OFFICER In connection with the Merger Agreement, Parent (through CSI) entered into an Employment Agreement (the "Employment Agreement") with Daniel H. Case III. Pursuant to the Employment Agreement, Mr. Case has agreed to serve as Chairman and Chief Executive Officer of Chase Securities West and Head of Parent's Global Technology Group, for the period commencing on the Closing Date and ending December 31, 2002. The Employment Agreement contains restrictive covenants providing that Mr. Case will not, in any capacity, until the earlier of December 31, 2003 or one year following the end of his employment, directly or indirectly (or on his own behalf or on behalf of any other person or entity): (i) become involved in any business activity which is competitive with any aspect of the business of the Company as currently conducted (or as it may evolve following Parent's acquisition of the Company), (ii) solicit, assist in soliciting or offer employment to certain employees of Parent or its affiliates or (iii) solicit or assist in soliciting the business of certain clients of Parent or its affiliates. As compensation for Mr. Case's services pursuant to the Employment Agreement, he is entitled to: (i) an annual base salary of $300,000, (ii) an annual bonus of not less than $7,000,000 (prorated with respect to the last three months of 1999), (iii) restricted shares of Parent Common Stock valued at $14,000,000 (granted as of the Effective Date as part of the bonus retention pool described above and vesting in equal installments on each of the first four anniversaries thereof, provided that Mr. Case remains employed through the applicable vesting date and does not violate any of the foregoing restrictive covenants), (iv) options to purchase 283,305 shares of Parent Common Stock, with an exercise price of $74.125 per share (granted as of the Closing Date and with a three-year vesting period, provided Mr. Case remains employed through the applicable vesting date), (v) employee benefits comparable to those provided to similar executives, (vi) reimbursement of reasonable business expenses, and (vii) a gross-up payment to negate the impact of any excise tax which might be imposed upon him. In the event of Mr. Case's death or disability, his restricted shares and stock options will fully vest. If Mr. Case is terminated without cause (as defined in the Employment Agreement), or if he resigns for good reason (as defined in the Employment Agreement), then his restricted shares and stock options would likewise become fully vested, and (subject to his continued compliance with the foregoing 34 37 restrictive covenants) he would also be entitled to (i) continued payment of his base salary and annual bonus until December 31, 2002, (ii) certain outplacement and financial counseling services, and (iii) continued participation in employee welfare benefit plans. 12. PURPOSE OF THE OFFER; THE MERGER; PLANS FOR THE COMPANY. Purpose. The purpose of the Offer and the Merger is to acquire the entire equity interest in the Company and control of the Company. The Offer is being made pursuant to the Merger Agreement. As soon as practicable following consummation of the Offer and after satisfaction or waiver of all conditions to the Merger set forth in the Merger Agreement, Parent intends to acquire the remaining equity interest in the Company not acquired in the Offer by consummating the Merger. Vote Required to Approve the Merger. The Company Board has approved the Merger Agreement in accordance with the DGCL. If required for approval of the Merger, the Company has agreed, subject to the satisfaction of the conditions to the Merger set forth in the Merger Agreement, in accordance with and subject to the DGCL, to duly convene the Company Stockholders Meeting as promptly as practicable following the purchase of Shares pursuant to the Offer for the purpose of voting on the adoption of the Merger Agreement. If stockholder approval is required, the Merger Agreement must generally be approved by the vote or consent of the holders of a majority of the outstanding Shares. As a result, if the Minimum Condition is satisfied, Purchaser will have the power to approve the Merger Agreement without the affirmative vote of any other stockholder. The Offer is conditioned upon the Minimum Condition being satisfied. The Merger Agreement provides that, notwithstanding the foregoing, in the event Purchaser acquires at least 90% of the Shares in the Offer, Parent, Purchaser and the Company agree to take all necessary and appropriate action to cause the Merger to become effective as soon as practicable after such acquisition, without a meeting of stockholders of the Company, in accordance with Section 253 of the DGCL. This Offer to Purchase does not constitute a solicitation of a proxy, consent or authorization for or with respect to the annual meeting or any special meeting of the Company's stockholders or any action in lieu thereof. Any such solicitation which Purchaser may make will be made only pursuant to separate proxy materials in compliance with the requirements of Section 14(a) of the Exchange Act. Appraisal Rights. Stockholders do not have appraisal rights as a result of the Offer. However, if the Merger is consummated, stockholders of the Company at the time of the Merger who do not vote or consent in favor of the Merger and comply with all statutory requirements will have the right under the DGCL to demand appraisal of, and receive payment in cash of the fair value of, their Shares outstanding immediately prior to the effective date of the Merger in accordance with Section 262 of the DGCL. Under the DGCL, stockholders who properly demand appraisal and otherwise comply with the applicable statutory procedures will be entitled to receive a judicial determination of the fair value of their Shares (exclusive of any element of value arising from the accomplishment or expectation of the Merger) and to receive payment of such fair value in cash. Any such judicial determination of the fair value of such Shares could be based upon considerations other than or in addition to the price paid in the Offer and the Merger and the market value of the Shares. In Weinberger v. UOP, Inc., the Delaware Supreme Court stated, among other things, that "proof of value by any techniques or methods which are generally considered acceptable in the financial community and otherwise admissible in court" should be considered in an appraisal proceeding. Stockholders should recognize that the value so determined could be equal to or higher or lower than the price per Share paid pursuant to the Offer or the consideration per Share to be paid in the Merger. THE FOREGOING SUMMARY OF THE RIGHTS OF STOCKHOLDERS DOES NOT PURPORT TO BE A COMPLETE STATEMENT OF THE PROCEDURES TO BE FOLLOWED BY STOCKHOLDERS DESIRING TO EXERCISE ANY AVAILABLE APPRAISAL RIGHTS. THE PRESENTATION AND EXERCISE OF APPRAISAL RIGHTS REQUIRE STRICT ADHERENCE TO THE APPLICABLE PROVISIONS OF DELAWARE LAW. The foregoing description of certain provisions of the DGCL is not necessarily complete and is qualified in its entirety by reference to the DGCL. 35 38 Rule 13e-3. The Commission has adopted Rule 13e-3 under the Exchange Act which is applicable to certain "going private" transactions and which may under certain circumstances be applicable to the Merger following the purchase of Shares pursuant to the Offer in which Purchaser seeks to acquire any remaining Shares. Rule 13e-3 should not be applicable to the Merger if the Merger is consummated within one year after the expiration or termination of the Offer and the price paid in the Merger is not less than the per Share price paid pursuant to the Offer. However, in the event that Purchaser is deemed to have acquired control of the Company pursuant to the Offer and the Merger is consummated more than one year after completion of the Offer or an alternative acquisition transaction is effected whereby stockholders of the Company receive consideration less or in a different form than that paid pursuant to the Offer, in either case at a time when the Shares are still registered under the Exchange Act, Purchaser may be required to comply with Rule 13e-3 under the Exchange Act. If applicable, Rule 13e-3 would require, among other things, that certain financial information concerning the Company and certain information relating to the fairness of the Merger or such alternative transaction and the consideration offered to minority stockholders in the Merger or such alternative transaction, be filed with the Commission and disclosed to stockholders prior to consummation of the Merger or such alternative transaction. The purchase of a substantial number of Shares pursuant to the Offer may result in the Company being able to terminate its Exchange Act registration. See Section 14. If such registration were terminated, Rule 13e-3 would be inapplicable to any such future Merger or such alternative transaction. Plans for the Company. Parent will continue to evaluate and review the Company and its business, assets, corporate structure, capitalization, operations, properties, policies, management and personnel with a view towards determining how to optimally realize any potential benefits which arise from the combination of the operations of the Company with those of Parent. Such evaluation and review is ongoing and is not expected to be completed until after the consummation of the Offer and the Merger. If, as and to the extent that Purchaser acquires control of the Company, Parent and Purchaser will complete such evaluation and review of the Company and will determine what, if any, changes would be desirable in light of the circumstances which then exist. Such changes could include, among other things, changes in the Company's business, corporate structure, certificate of incorporation, bylaws, capitalization or management or involve consolidating and streamlining certain operations and reorganizing other businesses and operations. Except as described in this Offer to Purchase, neither Parent nor Purchaser has any present plans or proposals that would relate to or result in an extraordinary corporate transaction such as a merger, reorganization or liquidation involving the Company or any of its subsidiaries or a sale or other transfer of a material amount of assets of the Company or any of its subsidiaries, any material change in the capitalization or dividend policy of the Company or any other material change in the Company's corporate structure or business or the composition of its board of directors or management. 13. DIVIDENDS AND DISTRIBUTIONS. If the Company should, on or after the date of the Merger Agreement (except as contemplated thereby), split, combine or otherwise change the Shares or its capitalization, or disclose that it has taken any such action, then without prejudice to Purchaser's rights under Section 15, Purchaser may make such adjustments to the purchase price and other terms of the Offer as it deems appropriate to reflect such split, combination or other change. If on or after the date of the Merger Agreement (except as contemplated thereby), the Company should declare or pay any cash or stock dividend or other distribution on, or issue any right with respect to, the Shares that is payable or distributable to stockholders of record on a date prior to the transfer to the name of Purchaser or the nominee or transferee of Purchaser on the Company's stock transfer records of such Shares that are purchased pursuant to the Offer, then, without prejudice to Purchaser's rights under Section 15, (i) the purchase price payable per Share by Purchaser pursuant to the Offer will be reduced to the extent any such dividend or distribution is payable in cash and is not paid to, or at the direction of, Purchaser and (ii) any non-cash dividend, distribution (including additional Shares) or right received and held by a tendering stockholder will be required to be promptly remitted and transferred by the tendering stockholder to the Depositary for the account of Purchaser, accompanied by appropriate documentation of transfer. Pending such remittance or appropriate assurance thereof, Purchaser will, subject to applicable law, be entitled to all rights and privileges as owner of any such non-cash dividend, distribution or right and may withhold the entire 36 39 purchase price or deduct from the purchase price the amount or value thereof, as determined by Purchaser in its sole discretion. 14. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; STOCK EXCHANGE LISTING AND EXCHANGE ACT REGISTRATION. The purchase of Shares pursuant to the Offer will reduce the number of Shares that might otherwise trade publicly and will reduce the number of holders of Shares. This could adversely affect the liquidity and market value of the remaining Shares held by the public. Depending upon the number of Shares purchased pursuant to the Offer, the Shares may no longer meet the requirements of the NYSE or the Pacific Exchange for continued inclusion on such exchanges. If the Shares no longer meet the requirements of the NYSE or the Pacific Exchange for continued listing and the listing of the Shares is discontinued, the market for the Shares could be adversely affected. If the NYSE and the Pacific Exchange were to delist the Shares, it is possible that the Shares would continue to trade on another securities exchange or in the over-the-counter market and that price or other quotations would be reported by such exchange or through other sources. The extent of the public market therefor and the availability of such quotations would depend, however, upon such factors as the number of stockholders and/or the aggregate market value of the Shares remaining at such time, the interest in maintaining a market in the Shares on the part of securities firms, the possible termination of registration under the Exchange Act as described below and other factors. Purchaser cannot predict whether the reduction in the number of Shares that might otherwise trade publicly would have an adverse or beneficial effect on the market price for or marketability of the Shares or whether it would cause future market prices to be higher or lower than the Offer price. The Shares are currently registered under the Exchange Act. The purchase of Shares pursuant to the Offer may result in the Shares becoming eligible for deregistration under the Exchange Act. Registration of the Shares may be terminated upon application of the Company to the Commission if the Shares are not listed on a national securities exchange and there are fewer than 300 record holders. The termination of the registration of the Shares under the Exchange Act would substantially reduce the information required to be furnished by the Company to holders of the Shares and would make certain provisions of the Exchange Act, such as the short-swing profit recovery provisions of Section 16(b), the requirement of furnishing a proxy statement in connection with stockholders' meetings and the requirements of Rule 13e-3 under the Exchange Act with respect to "going private" transactions, no longer applicable to the Shares. Furthermore, "affiliates" of the Company and persons holding "restricted securities" of the Company may be deprived of the ability to dispose of the securities pursuant to Rule 144 under the Securities Act. The Shares are currently "margin securities" under the regulations of the Board of Governors of the Federal Reserve System (the "Federal Reserve Board"), which has the effect, among other things, of allowing brokers to extend credit on the collateral of such Shares. Depending upon factors similar to those described above regarding listing and market quotations, it is possible that, following the Offer, the Shares would no longer constitute "margin securities" for the purposes of the margin regulations of the Federal Reserve Board and therefore could no longer be used as collateral for loans made by brokers. If registration of Shares under the Exchange Act were terminated, the Shares would no longer be "margin securities". 15. CERTAIN CONDITIONS OF THE OFFER. Notwithstanding any other provisions of the Offer, and in addition to the conditions that at the expiration of the Offer (i) the Minimum Condition has been satisfied, (ii) the Requisite Regulatory Approvals Condition has been satisfied and (iii) any other approvals or consents of third parties required to consummate the transactions contemplated by the Merger Agreement (including the Offer and the Merger), other than such third party approvals and consents the failure to obtain which would not reasonably be expected to result in a Material Adverse Effect (as defined below) on Parent, Company or the Surviving Corporation following the Offer or the Merger, have been obtained and remain in full force and effect, Purchaser is not required to accept for payment, or subject to applicable rules and regulations of the Commission, including Rule 14e-1(c) under the Exchange Act (relating to Purchaser's obligation to pay for or return tendered Shares promptly after termination or withdrawal of the Offer), purchase or pay for any Shares tendered pursuant to the Offer, may postpone the acceptance for payment of Shares tendered, and subject to the terms and conditions of the Merger Agreement may terminate the Offer, if at any time on or 37 40 after the date of the Merger Agreement and at or before the time of payment for any such Shares any of the following conditions occurs or exists or has occurred or existed: (a) (x) the representations and warranties of the Company set forth in the Merger Agreement were not true and correct in all respects as of the date of the Merger Agreement, or are not true and correct in all respects as of the expiration of the Offer as though made at and as of the expiration of the Offer (except to the extent that such representations and warranties speak as of another date which will be required to be true and correct as of such date, and except for such failures to be so true and correct as do not have and would not reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect on the Company or Parent) or (y) the Company has breached in any material respect any of its covenants or obligations contained in the Merger Agreement; (b) there has been any action or proceeding taken or instituted and pending, or any statute, rule, regulation, judgment, order, injunction or decree promulgated, entered, enforced, enacted, issued or deemed applicable to the Offer or the Merger, or any other action taken, proposed or threatened, by any domestic or foreign federal or state governmental, regulatory or administrative agency or authority or court or legislative body or commission which has or could reasonably be expected to have the effect of (i) making the purchase of, or payment for, some or all of the Shares by Parent or Purchaser or their affiliates pursuant to the Offer or the Merger illegal, (ii) otherwise preventing consummation of the Offer or Merger, (iii) prohibiting the ownership or operation by Parent or any of its subsidiaries of all or any material portion of the business or assets of the Company and its subsidiaries, taken as a whole, or Parent and its Subsidiaries, taken as a whole, (iv) imposing material limitations on the ability of Parent, Purchaser or any of Parent's affiliates effectively to acquire or hold or to exercise full rights of ownership of the Shares of the Company, including, without limitation, the right to vote any such Shares acquired or owned by Parent or Purchaser or any of their affiliates on all matters properly presented to the stockholders of the Company, including, without limitation, the adoption of the Merger Agreement or the right to vote any shares of capital stock of any Company Subsidiary, or (v) requiring divestiture by Parent or Purchaser or any of their affiliates of any Shares of the Company; or (c) the Merger Agreement has been terminated by the Company, Parent or Purchaser in accordance with its terms. The term "Material Adverse Effect", as used in the Merger Agreement, means, with respect to Parent or the Company, as the case may be, a material adverse effect on the business, assets, liabilities, financial condition or results of operations of such party and its subsidiaries taken as a whole (other than any change, event, occurrence or effect relating to (x) the United States or global economy or securities markets in general, (y) the Merger Agreement or the transactions contemplated thereby or the announcement thereof, or (z) the financial services industry in general, and not specifically relating to Parent or the Company, as the case may be, or its subsidiaries) or on the ability of such party to perform its obligations under and to consummate the transactions contemplated by the Merger Agreement on a timely basis. The foregoing conditions (other than the Minimum Condition) are for the sole benefit of Purchaser and may be asserted by Purchaser regardless of the circumstances giving rise to such condition. The foregoing conditions (other than the Minimum Condition) may be waived by Purchaser in whole or in part at any time and from time to time in its sole discretion. The failure by Purchaser at any time to exercise any of the foregoing rights will not be deemed a waiver of any such right, the waiver of any such right with respect to particular facts and other circumstances will not be deemed a waiver with respect to any other facts and circumstances, and each such right will be deemed an ongoing right that may be asserted at any time and from time to time. 16. CERTAIN LEGAL MATTERS AND REGULATORY APPROVALS. Parent and the Company have agreed to use their reasonable best efforts to obtain the Requisite Regulatory Approvals, which include approval from the Federal Reserve Board and various other federal, state and foreign authorities and industry self-regulatory organizations. The Offer is conditioned on Parent having received all Requisite Regulatory Approvals. Parent and the Company believe that all Requisite Regulatory Approvals will be granted; however, there can be no assurance that such Requisite Regulatory Approvals will be obtained, and, if obtained, there can be no 38 41 assurance as to the date such approvals will be received or the absence of any litigation challenging such approvals. General. Except as set forth below, neither Purchaser nor Parent is aware of any licenses or other regulatory permits that appear to be material to the business of the Company and its subsidiaries, taken as a whole, that might be adversely affected by Purchaser's acquisition of Shares (and the indirect acquisition of the stock of the Company's subsidiaries) as contemplated herein, or of any filings, approvals or other actions by or with any domestic (federal or state), foreign or supranational governmental authority or administrative or regulatory agency that would be required prior to the acquisition of Shares by Purchaser pursuant to the Offer as contemplated herein. Should any such approval or other action be required, it is Parent's present intention to seek such approval or action. There can be no assurance that any such approval or other action, if needed, would be obtained. Federal Reserve Board. The Offer and the Merger are subject to prior approval by the Federal Reserve Board under the BHCA. Parent, as an acquiring bank holding company, is required to file a notice with the Federal Reserve Board which describes the Offer and the Merger and the proposed activities of the Company, the effect of the proposal on competition among entities that engage in such activities, the identity of the parties involved in the transaction, including subsidiaries of the parties, a description of the public benefits which may be expected from the transaction, a description of the terms of the transaction, the sources of funds for the transaction and other financial and managerial information. The information included in the notice and other requests for information will allow the Federal Reserve Board, when considering approval of the Offer and the Merger, to take into consideration the financial and managerial resources and prospects of the companies involved in the proposed transaction and the benefits which may be expected from the transaction. The Federal Reserve Board will, among other things, evaluate the adequacy of the capital levels of the acquiring bank holding company both before and following the proposed transaction. The Federal Reserve Board may deny a request for approval of an acquisition by a bank holding company if it determines that the transaction would result in a monopoly or be in furtherance of any combination or conspiracy to monopolize or to attempt to monopolize a given business activity in any part of the United States, or if its effect in any section of the country would be substantially to lessen competition or to tend to create a monopoly, or if it would in any other manner result in a restraint of trade, unless the Federal Reserve Board finds that the anticompetitive effects of the transaction are clearly outweighed by the probable effects of the transaction in providing benefits to the public. Applicable federal law provides for the publication of notice and public comment on notice applications filed with the Federal Reserve Board. The Offer and the Merger may not be consummated until after Federal Reserve Board approval is obtained. Parent's right to exercise the Option under the Option Agreement is also subject to the prior approval of the Federal Reserve Board, to the extent that the exercise of the Option would result in Parent owning more than 5% of the outstanding Shares. In considering whether to approve Parent's right to exercise the Option, the Federal Reserve Board would generally apply the same statutory criteria it would apply to its consideration of approval of the Offer and the Merger. Other Requisite Approvals and Consents. Consummation of the Offer and the Merger are also subject to certain filings with, or consents of, the securities commissions in the various states and other jurisdictions in which the Company's subsidiaries conduct business; various industry self-regulatory organizations (including the NYSE and the National Association of Securities Dealers, Inc.); and certain other federal, state and foreign regulatory authorities. State Takeover Laws. A number of states have adopted takeover laws and regulations which purport to varying degrees to be applicable to attempts to acquire securities of corporations which are incorporated in such states or which have or whose business operations have substantial economic effects in such states, or which have substantial assets, security holders, principal executive offices or principal places of business therein. In 1982, the Supreme Court of the United States, in Edgar v. Mite Corp., invalidated on constitutional grounds the Illinois Business Takeovers Act, which as a matter of state securities law made takeovers of 39 42 corporations meeting certain requirements more difficult, and the reasoning in such decision is likely to apply to certain other state takeover statutes. However, in 1987, in CTS Corp. v. Dynamics Corp. of America, the Supreme Court of the United States held that the State of Indiana could, as a matter of corporate law and in particular those aspects of corporate law concerning corporate governance, constitutionally disqualify a potential acquiror from voting on the affairs of a target corporation without the prior approval of the remaining stockholders, provided that such laws were applicable only under certain conditions. Subsequently, in TLX Acquisition Corp. v. Telex Corp., a federal district court in Oklahoma ruled that the Oklahoma statutes were unconstitutional insofar as they applied to corporations incorporated outside Oklahoma in that they would subject such corporations to inconsistent regulations. Similarly, in Tyson Foods, Inc. v. McReynolds, a federal district court in Tennessee ruled that four Tennessee takeover statutes were unconstitutional as applied to corporations incorporated outside Tennessee. This decision was affirmed by the United States Court of Appeals for the Sixth Circuit. In December 1988, a federal district court in Florida held in Grand Metropolitan PLC v. Butterworth that the provisions of the Florida Affiliated Transactions Act and the Florida Control Share Acquisition Act were unconstitutional as applied to corporations incorporated outside of Florida. In the Merger Agreement, the Company represents that the Company Board has taken all actions necessary to render the provisions of Section 203 of the DGCL inapplicable to the Merger Agreement, the Offer, the Merger, the Option Agreement and the Tender Agreement. Except as described herein, Purchaser has not attempted to comply with any state takeover statutes in connection with the Offer. Purchaser reserves the right to challenge the validity or applicability of any state law allegedly applicable to the Offer and nothing in this Offer to Purchase nor any action taken in connection herewith is intended as a waiver of that right. In the event that any state takeover statute is found applicable to the Offer, Purchaser might be unable to accept for payment or purchase Shares tendered pursuant to the Offer or be delayed in continuing or consummating the Offer. In such case, Purchaser may not be obligated to accept for purchase or pay for, any Shares tendered. See Section 15. 17. FEES AND EXPENSES. CSI is acting as Dealer Manager in connection with the Offer and financial advisor to Parent in connection with Parent's proposed acquisition of the Company, for which services CSI will receive customary compensation. Parent will also reimburse CSI for reasonable out-of-pocket expenses including reasonable attorney's fees and has also agreed to indemnify CSI against certain liabilities and expenses in connection with the Offer, including certain liabilities under the federal securities laws. CSI actively trades securities for its own account and for the account of its customers and, accordingly, may at any time hold a long or short position in the Shares. Purchaser has retained ChaseMellon Consulting Services, L.L.C. to act as the Information Agent and ChaseMellon Shareholder Services, L.L.C. to act as the Depositary in connection with the Offer. The Information Agent may contact holders of Shares by mail, telephone, telex, telegraph and personal interview and may request brokers, dealers and other nominee stockholders to forward the Offer materials to beneficial owners. The Information Agent and the Depositary will receive reasonable and customary compensation for services relating to the Offer and will be reimbursed for certain out-of-pocket expenses. Purchaser and Parent have also agreed to indemnify the Information Agent and the Depositary against certain liabilities and expenses in connection with the Offer, including certain liabilities under the federal securities laws. Purchaser will not pay any fees or commissions to any broker or dealer or any other person for soliciting tenders of Shares pursuant to the Offer (other than to the Dealer Manager, the Information Agent and the Depositary). Brokers, dealers, commercial banks and trust companies will, upon request, be reimbursed by Purchaser for customary mailing and handling expenses incurred by them in forwarding offering materials to their customers. 18. MISCELLANEOUS. The Offer is being made solely by this Offer to Purchase and the related Letter of Transmittal and is being made to all holders of Shares. Purchaser is not aware of any state where the making of the Offer is prohibited by administrative or judicial action pursuant to any valid state statute. If Purchaser becomes aware of any valid state statute prohibiting the making of the Offer or the acceptance of Shares pursuant thereto, Purchaser will make a good faith effort to comply with any such state statute. If after such 40 43 good faith effort, Purchaser cannot comply with such state statute, the Offer will not be made to nor will tenders be accepted from or on behalf of the holders of Shares in such state. In any jurisdiction where the securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer will be deemed to be made on behalf of Purchaser by the Dealer Manager or one or more registered brokers or dealers that are licensed under the laws of such jurisdiction. Purchaser and Parent have filed with the Commission a Schedule 14D-1 (including exhibits) pursuant to Rule 14d-3 under the Exchange Act, furnishing certain additional information with respect to the Offer. Such statement and any amendments thereto, including exhibits, may be inspected and copies may be obtained from the offices of the Commission (except that they will not be available at the regional offices of the Commission) in the manner set forth in Section 8 of this Offer to Purchase. NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION ON BEHALF OF PURCHASER OR PARENT NOT CONTAINED HEREIN OR IN THE LETTER OF TRANSMITTAL AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. BRIDGE ACQUISITION CORPORATION October 4, 1999 41 44 SCHEDULE I DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER AND PARENT In the following biographies, "heritage Chase" means the corporation which merged (the "Chemical Merger") into Parent on March 31, 1996. "MHC" means Manufacturers Hanover Corporation, which merged into Parent on December 31, 1991. Unless stated otherwise, all of the directors and executive officers of Parent have been continuously employed by their present employers (and in the case of executive officers, Parent and its predecessors) for more than five years. 1. DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER. The name and position with Purchaser of each director and executive officer of Purchaser are set forth below. Unless otherwise set forth below, the other required information with respect to each person is set forth under "Directors and Executive Officers of Parent". All directors and executive officers listed below are citizens of the United States.
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND MATERIAL OCCUPATIONS, POSITIONS, OFFICES OR NAME AND ADDRESS EMPLOYMENT HELD DURING THE LAST FIVE YEARS ---------------- ------------------------------------------------------- Dina Dublon..................................... Vice President, Treasurer and Director of Purchaser, and Chief Financial Officer of Parent and Chase Bank. Prior to assuming her current position in December 1998, Ms. Dublon served as Treasurer of Parent and Executive Vice President, Corporate Planning. James B. Lee Jr................................. President and Director of Purchaser, and Vice Chairman of Parent and Chase Bank, responsible for Global Client Management and Investment Banking. William H. McDavid.............................. Vice President, Secretary and Director of Purchaser, and General Counsel of Parent and Chase Bank since 1988.
2. DIRECTORS AND EXECUTIVE OFFICERS OF PARENT. The name, business address, present principal occupation or employment and material occupations, positions, offices or employments during the last five years of each director and executive officer of Parent and certain other information are set forth below. Unless otherwise indicated, the business address of each such director and executive officer (and each director and executive officer of Purchaser) is: c/o of The Chase Manhattan Corporation, 270 Park Avenue, New York, New York 10017. Unless otherwise indicated, each occupation set forth an individual's name refers to employment with Parent. All directors and executive officers listed below are citizens of the United States.
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND MATERIAL OCCUPATIONS, POSITIONS, OFFICES OR NAME AND ADDRESS EMPLOYMENT HELD DURING THE LAST FIVE YEARS ---------------- ------------------------------------------------------- Hans W. Becherer................................ Chairman of the Board and Chief Executive Officer of Deere & Company. Mr. Becherer is also a director of AlliedSignal Inc. and Schering-Plough Corporation. Mr. Becherer became a Director of Parent in 1998. His business address is: c/o Deere & Company, One John Deere Place, Moline, Illinois 61265. Frank A. Bennack Jr............................. President and Chief Executive Officer of The Hearst Corporation. Mr. Bennack is a director of The Hearst Corporation, Hearst-Argyle Television, Inc., American Home Products Corporation, and Polo Ralph Lauren Corporation. He had been a Director of MHC since 1981, and became a Director of Parent in 1991. His business address is: c/o The Hearst Corporation, 959 Eighth Avenue, Room 241, New York, New York 10019. Susan V. Berresford............................. President of The Ford Foundation. Ms. Berresford had been a Director of heritage Chase since 1995, and became a Director of Parent in 1996. Her business address is: c/o The Ford Foundation, 320 East 43rd Street, New York, New York 10017.
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PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND MATERIAL OCCUPATIONS, POSITIONS, OFFICES OR NAME AND ADDRESS EMPLOYMENT HELD DURING THE LAST FIVE YEARS ---------------- ------------------------------------------------------- Donald L. Boudreau.............................. Vice Chairman of Parent and Chase Bank. He became responsible for National Consumer Services in December 1997 and before that had been responsible for Parent's consumer credit businesses. Prior to the Chemical Merger, he was Vice Chairman and a Director of heritage Chase. M. Anthony Burns................................ Chairman of the Board and Chief Executive Officer of Ryder System, Inc. Mr. Burns is also a Director of J.C. Penney Company, Inc. and Pfizer Inc. He had been a Director of heritage Chase since 1990, and became a Director of Parent in 1996. His business address is: c/o Ryder System, Inc., 3600 N.W. 82nd Avenue, Miami, Florida 33166. John J. Farrell................................. Director Human Resources of Parent and Chase Bank. Prior to the Chemical Merger, he held the same position at heritage Chase since 1993. H. Laurance Fuller.............................. Co-Chairman of BP Amoco Plc. Mr. Fuller is also a Director of Abbott Laboratories, Motorola, Inc. and Security Capital Group, Inc. He had been a Director of heritage Chase since 1985, and became a Director of Parent in 1996. His business address is: c/o BP Amoco p.l.c., 200 East Randolph Drive, Chicago, Illinois 60601. Neal S. Garonzik................................ Vice Chairman of Parent and Chase Bank, responsible for Parent's asset management business and strategic initiatives in equities and other areas. Mr. Garonzik joined Parent in August 1999. From 1980 to 1989 and from 1993 to 1997, he was with Morgan Stanley Dean Witter & Co., most recently as a member of the firm's management committee and as head of its equity division. Melvin R. Goodes................................ Retired as Chairman of the Board and Chief Executive Officer of Warner-Lambert Company in May 1999. Mr. Goodes is also a Director of Ameritech Corporation and Unisys Corporation. He became a Director of Parent in 1986. His business address is: c/o Warner-Lambert Company, 201 Tabor Road, Morris Plains, New Jersey 07950. William H. Gray III............................. President and Chief Executive Officer of The College Fund/UNCF. Mr. Gray was a member of the United States House of Representatives from 1979 to 1991. He is also a Director of CBS Corp., Electronic Data Systems Corporation, MBIA Inc., The Prudential Insurance Company of America, Rockwell International Corporation, Union Pacific Corporation and Warner-Lambert Company. He had been a Director of heritage Chase since 1992, and became a Director of Parent in 1996. His business address is: c/o The College Fund/UNCF, 8260 Willow Oaks Corporate Drive, Fairfax, Virginia 22031. William B. Harrison Jr.......................... President and Chief Executive Officer of Parent since June 1999. Mr. Harrison served as Vice Chairman of the Board and has served as Director of Parent since 1991. Mr. Harrison is also a Director of Dillard Department Stores. Frederick W. Hill............................... Director Corporate Marketing and Communications of Parent and Chase Bank since September 1997. Before joining Parent, he had been senior vice president, communications and community relations, for McDonnell Douglas Corporation since 1995, prior to which he headed the communications function for Westinghouse Electric Corporation. Harold S. Hook.................................. Retired Chairman of the Board and Chief Executive Officer of American General Corporation. Mr. Hook had served as both Chairman and Chief Executive Officer of American General Corporation from 1978 until October 1996 and retired as Chairman in April 1997. Mr. Hook is also a Director of Duke Energy Corporation and Sprint Corporation. He became a Director of Parent in 1987. His business address is: c/o American General Corporation, 2727 Allen Parkway, Suite W16-01, Houston, Texas 77019-2125.
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PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND MATERIAL OCCUPATIONS, POSITIONS, OFFICES OR NAME AND ADDRESS EMPLOYMENT HELD DURING THE LAST FIVE YEARS ---------------- ------------------------------------------------------- Helene L. Kaplan................................ Of Counsel to the firm of Skadden, Arps, Slate, Meagher & Flom LLP. Mrs. Kaplan is also a Director of Bell Atlantic Corporation, The May Department Stores Company, Metropolitan Life Insurance Company and Mobil Corporation. She became a Director of Parent in 1987. Her business address is: c/o Skadden, Arps, Slate, Meagher & Flom LLP, 919 Third Avenue -- Room 29-72, New York, New York 10022. Donald H. Layton................................ Vice Chairman of Parent and Chase Bank, responsible for Global Markets, Global Services and International. James B. Lee Jr................................. Vice Chairman of Parent and Chase Bank, responsible for Global Client Management and Investment Banking. William H. McDavid.............................. General Counsel of Parent and Chase Bank since 1988. Denis J. O'Leary................................ Executive Vice President of Parent and Chase Bank, and deputy manager of National Consumer Services. Prior to assuming his current position in December 1997, Mr. O'Leary served as Chief Information Officer. Henry B. Schacht................................ Director and Senior Advisor of E.M. Warburg, Pincus & Co., LLC, commencing in 1999. Mr. Schacht served as Chairman of Lucent Technologies, Inc. from 1996 to 1998, as Chief Executive Officer from 1996 to 1997, and as Senior Advisor from 1998 to 1999. He served as Chairman of the Board of Cummins Engine Company, Inc. from 1977 to 1995 and as Chief Executive Officer from 1973 to 1994. Mr. Schacht is also a Director of Alcoa Inc., Cummins Engine Company, Johnson & Johnson, Knoll, Inc., Lucent Technologies, Inc. and The New York Times Company. He had been a Director of heritage Chase since 1982, and became a Director of Parent in 1996. His business address is: c/o E.M. Warburg, Pincus & Co., LLC, 466 Lexington Avenue, 10th Floor, New York, New York 10017. Marc J. Shapiro................................. Vice Chairman of Parent and Chase Bank, responsible for finance, risk management and administration. Prior to September 1997, he was Chairman, President and Chief Executive Officer of Chase Texas. Walter V. Shipley............................... Chairman of the Board of Parent. Mr. Shipley served as Chairman of the Board and Chief Executive Officer of Parent from 1983-1992 and from 1994 to June 1999. Mr. Shipley is also a Director of Bell Atlantic Corporation, Champion International Corporation and Exxon Corporation. He became a Director of Parent in 1982. Andrew C. Sigler................................ Retired as Chairman of the Board and Chief Executive Officer of Champion International Corporation in 1996. Mr. Sigler is a Director of AlliedSignal Inc. and General Electric Company, as well as a member of the Board of Trustees for Dartmouth College. He became a Director of Parent in 1979. His business address is: c/o Champion International Corporation, One Champion Plaza, Stamford, Connecticut 06921. Joseph G. Sponholz.............................. Vice Chairman of Parent and Chase Bank, responsible for Chase.com, which includes information technology and operations and a broad spectrum of electronic commerce initiatives. Prior to December 1997, he had been Executive Vice President and Chief Administrative Officer of Parent. John R. Stafford................................ Chairman, President and Chief Executive Officer of American Home Products Corporation. Mr. Stafford is also a Director of AlliedSignal Inc., Bell Atlantic Corporation and Deere & Company. He had been a Director of MHC since 1982, and became a Director of Parent in 1991. His business address is: c/o American Home Products Corporation, Five Giralda Farms, Madison, New Jersey 07940.
47
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND MATERIAL OCCUPATIONS, POSITIONS, OFFICES OR NAME AND ADDRESS EMPLOYMENT HELD DURING THE LAST FIVE YEARS ---------------- ------------------------------------------------------- Jeffrey C. Walker............................... Senior Managing Director of Parent and Chase Bank, and managing partner of Chase Capital Partners, Parent's global private equity organization. Marina N. Whitman............................... Professor of Business Administration and Public Policy, University of Michigan. Prior to her appointment at the University of Michigan in 1992, Dr. Whitman was Vice President and Group Executive of General Motors Corporation. She is also a Director of Alcoa Inc., The Procter & Gamble Company and Unocal Corp. Dr. Whitman had been a Director of MHC since 1973, and became a Director of Parent in 1991. Her business address is: c/o The University of Michigan, School of Public Policy, 411 Lorch Hall, 611 Tappan Street, Ann Arbor, Michigan 48109-1220.
48 Facsimile copies of the Letter of Transmittal, properly completed and duly executed, will be accepted. The Letter of Transmittal, certificates for Shares and any other required documents should be sent or delivered by each stockholder of the Company or his broker, dealer, commercial bank, trust company or other nominee to the Depositary as follows: THE DEPOSITARY FOR THE OFFER IS: CHASEMELLON SHAREHOLDER SERVICES, L.L.C. BY MAIL: BY HAND: BY OVERNIGHT DELIVERY: REORGANIZATION DEPARTMENT REORGANIZATION DEPARTMENT REORGANIZATION DEPARTMENT POST OFFICE BOX 3301 120 BROADWAY 85 CHALLENGER ROAD SOUTH HACKENSACK, NEW JERSEY 13TH FLOOR MAIL STOP-REORG 07606 NEW YORK, NEW YORK 10271 RIDGEFIELD PARK, NEW JERSEY 07660 BY FACSIMILE TRANSMISSION: CONFIRM RECEIPT OF FACSIMILE BY (FOR ELIGIBLE INSTITUTIONS ONLY) TELEPHONE ONLY: (201) 296-4293 (201) 296-4860
Any questions and requests for assistance may be directed to the Information Agent or the Dealer Manager at their respective telephone numbers and addresses. Additional copies of this Offer to Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery may also be obtained from the Information Agent. You may also contact your broker, dealer, commercial bank or trust company for assistance concerning the Offer. THE INFORMATION AGENT FOR THE OFFER IS: CHASEMELLON CONSULTING SERVICES, L.L.C. 450 WEST 33RD STREET 14TH FLOOR NEW YORK, NEW YORK 10001 BANKS AND BROKERS CALL COLLECT (212) 273-8083 ALL OTHERS CALL TOLL FREE (888) 556-9477 THE DEALER MANAGER FOR THE OFFER IS: CHASE SECURITIES INC. 270 PARK AVENUE NEW YORK, NEW YORK 10017 CALL COLLECT (212) 270-3094 EX-99.11.A.2 3 FORM OF LETTER OF TRANSMITTAL 1 LETTER OF TRANSMITTAL TO TENDER SHARES OF COMMON STOCK OF HAMBRECHT & QUIST GROUP PURSUANT TO THE OFFER TO PURCHASE DATED OCTOBER 4, 1999 BY BRIDGE ACQUISITION CORPORATION A WHOLLY-OWNED SUBSIDIARY OF THE CHASE MANHATTAN CORPORATION THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON MONDAY, NOVEMBER 1, 1999, UNLESS THE OFFER IS EXTENDED. The Depositary for the Offer is: CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
By Mail: By Hand: By Overnight Delivery: Reorganization Department Reorganization Department Reorganization Department Post Office Box 3301 120 Broadway, 13th Floor 85 Challenger Road, Mail Drop-Reorg South Hackensack, NJ 07606 New York, NY 10271 Ridgefield Park, NJ 07660 By Facsimile Transmission: Confirm Receipt of Facsimile by (For Eligible Institutions Only) Telephone Only: (201) 296-4293 (201) 296-4860
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE, OR TRANSMISSIONS OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED. This Letter of Transmittal is to be completed by stockholders, either if certificates for Shares (as defined below) are to be forwarded herewith or, unless an Agent's Message (as defined in the Offer to Purchase, as referred to below) is utilized, if tenders of Shares are to be made by book-entry transfer into the account of ChaseMellon Shareholder Services, L.L.C., as Depositary (the "Depositary"), at The Depository Trust Company (the "Book-Entry Transfer Facility" or "DTC") pursuant to the procedures set forth in Section 3 of the Offer to Purchase. Stockholders who tender Shares by book-entry transfer are referred to herein as "Book-Entry Stockholders". Holders of Shares whose certificates for such Shares (the "Share Certificates") are not immediately available or who cannot deliver their Share Certificates and all other required documents to the Depositary on or prior to the Expiration Date (as defined in Section 1 of the Offer to Purchase), or who cannot complete the procedure for book-entry transfer on a timely basis, must tender their Shares according to the guaranteed delivery procedure set forth in Section 3 of the Offer to Purchase. See Instruction 2. Delivery of documents to the Book-Entry Transfer Facility does not constitute delivery to the Depositary.
- ------------------------------------------------------------------------------------------------------------------------ DESCRIPTION OF SHARES TENDERED - ------------------------------------------------------------------------------------------------------------------------ NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) SHARE CERTIFICATE(S) AND SHARES TENDERED (PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) (ATTACH ADDITIONAL SIGNED LIST IF NECESSARY)* APPEAR(S) ON CERTIFICATE(S)) - ------------------------------------------------------------------------------------------------------------------------ TOTAL NUMBER SHARES OF SHARES NUMBER CERTIFICATE REPRESENTED BY OF SHARES NUMBER(S)* CERTIFICATE(S) TENDERED** - ------------------------------------------------------ - ------------------------------------------------------ - ------------------------------------------------------ - ------------------------------------------------------ Total Shares - ------------------------------------------------------------------------------------------------------------------------ * Need not be completed by Book-Entry Stockholders. ** Unless otherwise indicated, all Shares represented by certificates delivered to the Depositary will be deemed to have been tendered. See Instruction 4. - ------------------------------------------------------------------------------------------------------------------------
2 [ ] CHECK HERE IF SHARES ARE BEING TENDERED BY BOOK-ENTRY TRANSFER MADE TO AN ACCOUNT MAINTAINED BY THE DEPOSITARY WITH THE BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN THE BOOK-ENTRY TRANSFER FACILITY MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER): Name of Tendering Institution: Check box of Book-Entry Transfer Facility: [ ] The Depository Trust Company Account Number: Transaction Code Number: [ ] CHECK HERE IF SHARES ARE BEING TENDERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING: Name(s) of Registered Owner(s): Window Ticket Number (if any): Date of execution of Notice of Guaranteed Delivery: Name of Institution that Guaranteed Delivery: If delivered by Book-Entry Transfer, check box of Book-Entry Transfer Facility: [ ] The Depository Trust Company Account Number: Transaction Code Number: 2 3 NOTE: SIGNATURES MUST BE PROVIDED BELOW PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY Ladies and Gentlemen: The undersigned hereby tenders to Bridge Acquisition Corporation, a Delaware corporation ("Purchaser"), and a wholly-owned subsidiary of The Chase Manhattan Corporation, a Delaware corporation ("Parent"), the above-described shares of Common Stock, par value $0.01 per share (the "Shares"), of Hambrecht & Quist Group, a Delaware corporation (the "Company"), at a purchase price of $50.00 per Share, net to the seller in cash, without interest thereon, upon the terms and subject to the conditions set forth in the Offer to Purchase dated October 4, 1999 (the "Offer to Purchase") and in this Letter of Transmittal (which, as amended from time to time, together constitute the "Offer"). The undersigned understands that Purchaser reserves the right to transfer or assign, in whole or from time to time in part, to one or more of its affiliates the right to purchase all or any portion of the Shares tendered pursuant to the Offer. Subject to, and effective upon, acceptance for payment of the Shares tendered herewith in accordance with the terms of the Offer, the undersigned hereby sells, assigns and transfers to, or upon the order of, Purchaser all right, title and interest in and to all of the Shares that are being tendered hereby and any and all dividends, distributions, rights, other Shares or other securities issued, paid or distributed or issuable, payable or distributable in respect of such Shares on or after September 27, 1999 and prior to the transfer to the name of Purchaser (or a nominee or transferee of Purchaser) on the Company's stock transfer records of the Shares tendered herewith (collectively, a "Distribution"), and appoints the Depositary the true and lawful agent, attorney-in-fact and proxy of the undersigned with respect to such Shares (and any Distribution) with full power of substitution (such power of attorney being deemed to be an irrevocable power coupled with an interest) to (a) deliver such Share Certificates (and any Distribution) or transfer ownership of such Shares (and any Distribution) on the account books maintained by the Book-Entry Transfer Facility, together in either case with appropriate evidences of transfer, to the Depositary for the account of Purchaser, (b) present such Shares (and any Distribution) for transfer on the books of the Company and (c) receive all benefits and otherwise exercise all rights of beneficial ownership of such Shares (and any Distribution), all in accordance with the terms and subject to the conditions of the Offer. The undersigned irrevocably appoints designees of Purchaser as such undersigned's agents, attorneys-in-fact and proxies, with full power of substitution, to the full extent of such stockholder's rights with respect to the Shares (and any Distribution) tendered by such stockholder and accepted for payment by Purchaser. All such powers of attorney and proxies shall be considered irrevocable and coupled with an interest. Such appointment will be effective when, and only to the extent that, Purchaser accepts such Shares for payment. Upon such acceptance for payment, all prior attorneys, proxies and consents given by such stockholder with respect to such Shares (and any Distribution) will be revoked without further action, and no subsequent powers of attorney and proxies may be given nor any subsequent written consents executed (and, if given or executed, will not be deemed effective). The designees of Purchaser will, with respect to the Shares (and Distributions) for which such appointment is effective, be empowered to exercise all voting and other rights of such stockholder as they in their sole discretion may deem proper at any annual or special meeting of the Company's stockholders or any adjournment or postponement thereof, by written consent in lieu of any such meeting or otherwise. Purchaser reserves the right to require that, in order for Shares to be deemed validly tendered, immediately upon Purchaser's payment for such Shares, Purchaser must be able to exercise full voting rights with respect to such Shares and all Distributions including voting at any meeting of stockholders. The undersigned hereby represents and warrants that (a) the undersigned has full power and authority to tender, sell, assign and transfer the Shares (and any Distribution) tendered hereby, and (b) when the Shares are accepted for payment by Purchaser, Purchaser will acquire good, marketable and unencumbered title to the Shares (and any Distribution), free and clear of all liens, restrictions, charges and encumbrances, and the same will not be subject to any adverse claim and will not have been transferred to Purchaser in violation of any contractual or other restriction on the transfer thereof. The undersigned, upon request, will execute and deliver any additional documents deemed by the Depositary or Purchaser to be necessary or desirable to complete the sale, assignment and transfer of the Shares tendered hereby (and any Distribution). In addition, the undersigned shall promptly remit and transfer to the Depositary for the account of Purchaser any and all Distributions in respect of the Shares tendered hereby, accompanied by appropriate documentation of transfer and, pending such remittance or appropriate assurance thereof, Purchaser will be, subject to 3 4 applicable law, entitled to all rights and privileges as owner of any such Distribution and may withhold the entire purchase price or deduct from the purchase price the amount or value thereof, as determined by Purchaser in its sole discretion. All authority herein conferred or agreed to be conferred shall not be affected by and shall survive the death or incapacity of the undersigned and any obligation of the undersigned hereunder shall be binding upon the heirs, personal representatives, successors and assigns of the undersigned. Tenders of Shares made pursuant to the Offer are irrevocable, except that Shares tendered pursuant to the Offer may be withdrawn at any time prior to the Expiration Date and, unless theretofore accepted for payment by Purchaser pursuant to the Offer, may also be withdrawn at any time after December 4, 1999. See Section 4 of the Offer to Purchase. The undersigned understands that tenders of Shares pursuant to any of the procedures described in Section 3 of the Offer to Purchase and in the instructions hereto will constitute a binding agreement between the undersigned and Purchaser upon the terms and subject to the conditions set forth in the Offer, including the undersigned's representation that the undersigned owns the Shares being tendered. Unless otherwise indicated herein under "Special Payment Instructions", please issue the check for the purchase price and/or issue or return any certificate(s) for Shares not tendered or not accepted for payment in the name(s) of the registered holder(s) appearing under "Description of Shares Tendered". Similarly, unless otherwise indicated herein under "Special Delivery Instructions", please mail the check for the purchase price and/or any certificate(s) for Shares not tendered or not accepted for payment (and accompanying documents, as appropriate) to the address(es) of the registered holder(s) appearing under "Description of Shares Tendered". In the event that both the Special Delivery Instructions and the Special Payment Instructions are completed, please issue the check for the purchase price and/or any certificate(s) for Shares not tendered or accepted for payment in the name of, and deliver such check and/or such certificates to, the person or persons so indicated. Unless otherwise indicated herein under "Special Payment Instructions", please credit any Shares tendered herewith by book-entry transfer that are not accepted for payment by crediting the account at the Book-Entry Transfer Facility designated above. The undersigned recognizes that Purchaser has no obligation, pursuant to the Special Payment Instructions, to transfer any Shares from the name(s) of the registered holder(s) thereof if Purchaser does not accept for payment any of the Shares so tendered. [ ] CHECK HERE IF ANY CERTIFICATES REPRESENTING SHARES THAT YOU OWN HAVE BEEN LOST, STOLEN OR DESTROYED AND SEE INSTRUCTION 11 Number of Shares represented by lost, stolen or destroyed certificates: -------------------------------------------------- 4 5 ------------------------------------------------------------ SPECIAL PAYMENT INSTRUCTIONS (SEE INSTRUCTIONS 1, 5, 6 AND 7) To be completed ONLY if certificate(s) for Shares not tendered or not accepted for payment and/or the check for the purchase price of Shares accepted for payment are to be issued in the name of someone other than the undersigned or if Shares tendered by book-entry transfer which are not accepted for payment are to be returned by credit to an account maintained at the Book-Entry Transfer Facility other than that designated above. Issue: [ ] check [ ] certificates to: Name ---------------------------------------------------- (PLEASE PRINT) Address -------------------------------------------------- ------------------------------------------------------------ (INCLUDE ZIP CODE) ------------------------------------------------------------ (TAX ID. OR SOCIAL SECURITY NO.) (SEE SUBSTITUTE FORM W-9) [ ] Credit Shares tendered by book-entry transfer that are not accepted for payment to DTC to the account set forth below ------------------------------------------------------------ (DTC ACCOUNT NO.) ------------------------------------------------------------ ------------------------------------------------------------ SPECIAL DELIVERY INSTRUCTIONS (SEE INSTRUCTIONS 1, 5, 6 AND 7) To be completed ONLY if certificate(s) for Shares not tendered or not accepted for payment and/or the check for the purchase price of Shares accepted for payment are to be sent to someone other than the undersigned or to the undersigned at an address other than that shown above. Mail: [ ] check [ ] certificates to: Name ---------------------------------------------------- (PLEASE PRINT) Address -------------------------------------------------- ------------------------------------------------------------ (INCLUDE ZIP CODE) ------------------------------------------------------------ (TAX ID. OR SOCIAL SECURITY NO.) (SEE SUBSTITUTE FORM W-9) ------------------------------------------------------------ 5 6 SIGN SIGN HERE SIGN HERE AND COMPLETE SUBSTITUTE FORM W-9 HERE arrow right - -------------------------------------------------------------------------------- arrow left arrow right - -------------------------------------------------------------------------------- arrow left (SIGNATURE(S) OF HOLDER(S)) Dated: --------------------------- (Must be signed by the registered holder(s) exactly as name(s) appear(s) on Share Certificate(s) or on a security position listing or by person(s) authorized to become registered holder(s) by certificates and documents transmitted herewith. If signature is by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, please provide the following information and see Instruction 5.) Name(s) ------------------------------------------------------------------------ - -------------------------------------------------------------------------------- (PLEASE PRINT) Capacity (full title) ------------------------------------------------------------ Address------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (INCLUDE ZIP CODE) Area Code and Telephone Number ------------------------------------------- Tax Identification or Social Security No. ------------------------------------------------------------ GUARANTEE OF SIGNATURE(S) (SEE INSTRUCTIONS 1 AND 5) Authorized Signature ---------------------------------------------------------- Name -------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (PLEASE PRINT) Name of Firm ----------------------------------------------------------------- Address ----------------------------------------------------------------------- (INCLUDE ZIP CODE) Area Code and Telephone Number ------------------------------------------- Dated: ---------------------------- 6 7 INSTRUCTIONS FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER 1. GUARANTEE OF SIGNATURES. No signature guarantee is required on this Letter of Transmittal (a) if this Letter of Transmittal is signed by the registered holder(s) of Shares (which term, for purposes of this document, shall include any participant in the Book-Entry Transfer Facility whose name appears on a security position listing as the owner of Shares) tendered herewith, unless such holder(s) has completed either the box entitled "Special Payment Instructions" or the box entitled "Special Delivery Instructions" above, or (b) if such Shares are tendered for the account of a firm which is a bank, broker, dealer, credit union, savings association or other entity which is a member in good standing of a recognized Medallion Program approved by the Securities Transfer Association Inc., including the Securities Transfer Agents Medallion Program (STAMP), the Stock Exchange Medallion Program (SEMP) and the New York Stock Exchange Medallion Signature Program (MSP) or any other "eligible guarantor institution" (as such term is defined in Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended) (each of the foregoing being referred to as an "Eligible Institution"). In all other cases, all signatures on this Letter of Transmittal must be guaranteed by an Eligible Institution. See Instruction 5 of this Letter of Transmittal. 2. REQUIREMENTS OF TENDER. This Letter of Transmittal is to be completed by stockholders either if Share Certificates are to be forwarded herewith or, unless an Agent's Message is utilized, if tenders are to be made pursuant to the procedure for tender by book-entry transfer set forth in Section 3 of the Offer to Purchase. Share Certificates evidencing tendered Shares, or timely confirmation (a "Book-Entry Confirmation") of a book-entry transfer of Shares into the Depositary's account at the Book-Entry Transfer Facility, as well as this Letter of Transmittal (or a facsimile hereof), properly completed and duly executed, with any required signature guarantees, or an Agent's Message in connection with a book-entry transfer, and any other documents required by this Letter of Transmittal, must be received by the Depositary at one of its addresses set forth herein on or prior to the Expiration Date (as defined in Section 1 of the Offer to Purchase). Stockholders whose Share Certificates are not immediately available or who cannot deliver their Share Certificates and all other required documents to the Depositary on or prior to the Expiration Date or who cannot complete the procedure for delivery by book-entry transfer on a timely basis may tender their Shares by properly completing and duly executing a Notice of Guaranteed Delivery pursuant to the guaranteed delivery procedure set forth in Section 3 of the Offer to Purchase. Pursuant to such procedure: (i) such tender must be made by or through an Eligible Institution; (ii) a properly completed and duly executed Notice of Guaranteed Delivery, substantially in the form made available by Purchaser, must be received by the Depositary on or prior to the Expiration Date; and (iii) the Share Certificates (or a Book-Entry Confirmation) representing all tendered Shares in proper form for transfer, in each case together with the Letter of Transmittal (or a facsimile thereof), properly completed and duly executed, with any required signature guarantees (or, in the case of a book-entry delivery, an Agent's Message) and any other documents required by this Letter of Transmittal, must be received by the Depositary within three New York Stock Exchange trading days after the date of execution of such Notice of Guaranteed Delivery. If Share Certificates are forwarded separately in multiple deliveries to the Depositary, a properly completed and duly executed Letter of Transmittal (or a facsimile thereof) must accompany each such delivery. THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, SHARE CERTIFICATES AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING, IN THE CASE OF BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY. No alternative, conditional or contingent tenders will be accepted and no fractional Shares will be purchased. All tendering stockholders, by execution of this Letter of Transmittal (or a facsimile hereof), waive any right to receive any notice of the acceptance of their Shares for payment. 3. INADEQUATE SPACE. If the space provided herein is inadequate, the certificate numbers and/or the number of Shares and any other required information should be listed on a separate signed schedule attached hereto. 4. PARTIAL TENDERS. (Not Applicable to Book-Entry Stockholders) If fewer than all the Shares evidenced by any Share Certificate submitted are to be tendered, fill in the number of Shares which are to be tendered in the box entitled "Number of Shares Tendered". In such cases, new Share Certificates for the Shares that were evidenced by your old 7 8 Share Certificates, but were not tendered by you, will be sent to you, unless otherwise provided in the appropriate box on this Letter of Transmittal, as soon as practicable after the Expiration Date. All Shares represented by Share Certificates delivered to the Depositary will be deemed to have been tendered unless otherwise indicated. 5. SIGNATURES ON LETTER OF TRANSMITTAL, STOCK POWERS AND ENDORSEMENTS. If this Letter of Transmittal is signed by the registered holder(s) of the Shares tendered hereby, the signature(s) must correspond with the name(s) as written on the face of the certificate(s) without alteration, enlargement or any change whatsoever. If any of the Shares tendered hereby are owned of record by two or more joint owners, all such owners must sign this Letter of Transmittal. If any of the tendered Shares are registered in different names on several certificates, it will be necessary to complete, sign and submit as many separate Letters of Transmittal as there are different registrations of certificates. If this Letter of Transmittal or any certificates or stock powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing, and proper evidence satisfactory to Purchaser of their authority so to act must be submitted. If this Letter of Transmittal is signed by the registered holder(s) of the Shares listed and transmitted hereby, no endorsements of certificates or separate stock powers are required unless payment is to be made to or certificates for Shares not tendered or not purchased are to be issued in the name of a person other than the registered holder(s). In such latter case, signatures on such certificates or stock powers must be guaranteed by an Eligible Institution. If this Letter of Transmittal is signed by a person other than the registered holder(s) of the certificate(s) listed, the certificate(s) must be endorsed or accompanied by appropriate stock powers, in either case signed exactly as the name(s) of the registered holder(s) appear on the certificate(s). Signatures on such certificates or stock powers must be guaranteed by an Eligible Institution. 6. STOCK TRANSFER TAXES. Except as otherwise provided in this Instruction 6, Purchaser will pay any stock transfer taxes with respect to the transfer and sale of Shares to it or its order pursuant to the Offer. If, however, payment of the purchase price is to be made to, or if certificate(s) for Shares not tendered or accepted for payment are to be registered in the name of, any person other than the registered holder(s), or if tendered certificate(s) are registered in the name of any person other than the person(s) signing this Letter of Transmittal, the amount of any stock transfer taxes (whether imposed on the registered holder(s) or such person) payable on account of the transfer to such person will be deducted from the purchase price unless satisfactory evidence of the payment of such taxes or an exemption therefrom, is submitted. Except as otherwise provided in this Instruction 6, it will not be necessary for transfer tax stamps to be affixed to the certificate(s) listed in this Letter of Transmittal. 7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check is to be issued in the name of, and/or certificates for Shares not tendered or not accepted for payment are to be issued or returned to, a person other than the signer of this Letter of Transmittal or if a check and/or such certificates are to be returned to a person other than the person(s) signing this Letter of Transmittal or to an address other than that shown in this Letter of Transmittal, the appropriate boxes on this Letter of Transmittal must be completed. A Book-Entry Stockholder may request that Shares not accepted for payment be credited to such account maintained at the Book-Entry Transfer Facility as such Book-Entry Stockholder may designate under "Special Payment Instructions". If no such instructions are given, such Shares not accepted for payment will be returned by crediting the account at the Book-Entry Transfer Facility designated above. 8. WAIVER OF CONDITIONS. Subject to the terms and conditions of the Merger Agreement (as defined in the Offer to Purchase), the conditions of the Offer (other than the Minimum Condition, as defined in the Offer to Purchase) may be waived by Purchaser in whole or in part at any time and from time to time in its sole discretion. 9. 31% BACKUP WITHHOLDING; SUBSTITUTE FORM W-9. Under U.S. federal income tax law, a stockholder who tenders Shares pursuant to the Offer is required to provide the Depositary with his or her correct taxpayer identification number ("TIN") on Substitute Form W-9 and to certify that the TIN provided on Substitute Form W-9 is correct (or that such stockholder is awaiting a TIN). If such stockholder is an individual, the TIN is his or her social security number. If the Depositary is not provided with the correct TIN, the stockholder may be subject to a $50 penalty imposed 8 9 by the Internal Revenue Service and payments that are made to such stockholder with respect to Shares pursuant to the Offer may be subject to backup withholding (see below). A stockholder who does not have a TIN may check the box in Part 3 of the Substitute Form W-9 if the stockholder has applied for a number or intends to apply for a TIN in the near future. If the box in Part 3 is checked, the stockholder must also complete the Certificate of Awaiting Taxpayer Identification Number below in order to avoid backup withholding. If the box is checked, payments made will be subject to backup withholding unless the stockholder has furnished the Depositary with his or her TIN within 60 days. A stockholder who checks the box in Part 3 in lieu of furnishing his or her TIN should furnish the Depositary with his or her TIN as soon as it is received. Certain stockholders (including, among others, all corporations and certain foreign individuals) are not subject to these backup withholding requirements. In order for a foreign individual to qualify as an exempt recipient, that stockholder must submit a statement, signed under penalty of perjury, attesting to that individual's exempt status (Form W-8). Forms for such statements can be obtained from the Depositary. Stockholders are urged to consult their own tax advisors to determine whether they are exempt from these backup withholding and reporting requirements. If backup withholding applies, the Depositary is required to withhold 31% of any payments to be made to the stockholder. Backup withholding is not an additional tax. Rather, the tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund may be obtained by filing a tax return with the Internal Revenue service. The Depositary cannot refund amounts withheld by reason of backup withholding. 10. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions or requests for assistance may be directed to the Dealer Manager or the Information Agent at their respective addresses and telephone numbers set forth below. Additional copies of the Offer to Purchase, this Letter of Transmittal and the Notice of Guaranteed Delivery may also be obtained from the Information Agent or the Dealer Manager or from brokers, dealers, commercial banks or trust companies. 11. LOST, DESTROYED OR STOLEN CERTIFICATES. If any certificate representing Shares has been lost, destroyed or stolen, the stockholder should promptly notify the Depositary. The stockholder will then be instructed as to the steps that must be taken in order to replace the certificate. This Letter of Transmittal and related documents cannot be processed until the procedures for replacing lost or destroyed certificates have been followed. IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE HEREOF), TOGETHER WITH CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY TRANSFER OR THE NOTICE OF GUARANTEED DELIVERY, AND ALL OTHER REQUIRED DOCUMENTS, MUST BE RECEIVED BY THE DEPOSITARY ON OR PRIOR TO THE EXPIRATION DATE. 9 10 - ------------------------------------------------------------------------------------------------------------------------------ PAYER'S NAME: CHASEMELLON SHAREHOLDER SERVICES, L.L.C. - ------------------------------------------------------------------------------------------------------------------------------ SUBSTITUTE PART 1 -- PLEASE PROVIDE YOUR TIN IN THE BOX AT RIGHT AND ---------------------------- FORM W-9 CERTIFY BY SIGNING AND DATING BELOW. Social Security Number OR ---------------------------- Employer Identification Number -------------------------------------------------------------------------------------------------- DEPARTMENT OF THE PART 2 PART 3 -- TREASURY Certification -- Under penalties of perjury, I certify that: [ ] Awaiting TIN INTERNAL REVENUE (1) The number shown on this form is my correct Taxpayer SERVICE Identification Number (or I am waiting for a number to be issued to me), and PAYER'S REQUEST FOR (2) I am not subject to backup withholding because (a) I am TAXPAYER exempt from backup withholding, or (b) I have not been IDENTIFICATION notified by the Internal Revenue Service (the "IRS") that NUMBER (TIN) I am subject to backup withholding as a result of a failure to report all interest or dividends, or (c) the IRS has notified me that I am no longer subject to backup withholding. -------------------------------------------------------------------------------------------------- CERTIFICATE INSTRUCTIONS -- You must cross out item (2) above if you have been notified by the IRS that you are currently subject to backup withholding because of under-reporting interest or dividends on your tax return. However, if after being notified by the IRS that you were subject to backup withholding you received another notification from the IRS that you are no longer subject to backup withholding, do not cross out such item (2). - -------------------------------------------------------------------------------------------------------------------------- Sign Here SIGNATURE --------------------------------------------------------------------------------- DATE ---------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS. YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 3 OF SUBSTITUTE FORM W-9. CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER I certify under penalties of perjury that a taxpayer identification number has not been issued to me, and either (1) I have mailed or delivered an application to receive a taxpayer identification number to the appropriate Internal Revenue Service Center or Social Security Administration Office, or (2) I intend to mail or deliver an application in the near future. I understand that if I do not provide a taxpayer identification number by the time of payment, 31% of all reportable payments made to me will be withheld. Signature Date ------------------------------------- ---------------------------- 10 11 The Information Agent for the Offer is: CHASEMELLON CONSULTING SERVICES, L.L.C. 450 West 33rd Street 14th Floor New York, New York 10001 Bankers and Brokers Call Collect (212) 273-8083 All Others Call Toll Free (888) 566-9477 The Dealer Manager for the Offer is: CHASE SECURITIES INC. 270 Park Avenue New York, New York 10017 Call Collect (212) 270-3094 October 4, 1999 EX-99.11.A.3 4 FORM OF NOTICE OF GUARANTEED DELIVERY 1 NOTICE OF GUARANTEED DELIVERY TO TENDER SHARES OF COMMON STOCK OF HAMBRECHT & QUIST GROUP As set forth in Section 3 of the Offer to Purchase described below, this instrument or one substantially equivalent hereto must be used to accept the Offer (as defined below) if certificates for Shares (as defined below) are not immediately available or the certificates for Shares and all other required documents cannot be delivered to ChaseMellon Shareholder Services, L.L.C. (the "Depositary") on or prior to the Expiration Date (as defined in Section 1 of the Offer to Purchase) or if the procedure for delivery by book-entry transfer cannot be completed on a timely basis. This instrument may be delivered by hand or transmitted by facsimile transmission or mailed to the Depositary. The Depositary for the Offer is: CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
By Mail: By Hand: By Overnight Delivery: Reorganization Department Reorganization Department Reorganization Department Post Office Box 3301 120 Broadway 85 Challenger Road South Hackensack, New Jersey 07606 13th Floor Mail Drop-Reorg New York, New York 10271 Ridgefield Park, New Jersey 07660
By Facsimile Transmission: Confirm Receipt of Facsimile (For Eligible Institutions Only) By Telephone Only: (201) 296-4293 (201) 296-4860
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. This form is not to be used to guarantee signatures. If a signature on a Letter of Transmittal is required to be guaranteed by an Eligible Institution under the instructions thereto, such signature guarantee must appear in the applicable space provided in the signature box in the Letter of Transmittal. 2 Ladies and Gentlemen: The undersigned hereby tender(s) to Bridge Acquisition Corporation, a Delaware corporation and a wholly-owned subsidiary of The Chase Manhattan Corporation, a Delaware corporation, upon the terms and subject to the conditions set forth in the Offer to Purchase dated October 4, 1999 (the "Offer to Purchase"), and in the related Letter of Transmittal (which, as amended from time to time, together constitute the "Offer"), receipt of which is hereby acknowledged, the number of shares of Common Stock, par value $0.01 per share (the "Shares"), of Hambrecht & Quist Group, a Delaware corporation, indicated below pursuant to the guaranteed delivery procedure set forth in Section 3 of the Offer to Purchase. SIGN HERE Number of Shares: ---------------------------------- Certificate No(s) (if available): ----------------------------------------------------- ----------------------------------------------------- Check box if Shares will be tendered by book-entry transfer: [ ] The Depository Trust Company Account Number: ----------------------------------------------------- Dated: ---------------------------------------------- Name(s) of Record Holder(s): - ----------------------------------------------------- - ----------------------------------------------------- (Please Print) Address(es): - ---------------------------------------- - ----------------------------------------------------- (Zip Code) Area Code and Telephone No(s): - ----------------------------------------------------- Signature(s): - ---------------------------------------- - ----------------------------------------------------- GUARANTEE (NOT TO BE USED FOR SIGNATURE GUARANTEE) The undersigned, a firm which is a bank, broker, dealer, credit union, savings association or other entity which is a member in good standing of a recognized Medallion Program approved by the Securities Transfer Association Inc., including the Securities Transfer Agents Medallion Program (STAMP), the Stock Exchange Medallion Program (SEMP) and the New York Stock Exchange Medallion Signature Program (MSP) or any other "eligible guarantor institution" (as such term is defined in Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended), (a) represents that the above named person(s) "own(s)" the Shares tendered hereby within the meaning of Rule 14e-4 under the Securities Exchange Act of 1934, as amended ("Rule 14e-4"), (b) represents that such tender of Shares complies with Rule 14e-4, and (c) guarantees to deliver to the Depositary either the certificates evidencing all tendered Shares, in proper form for transfer, or a Book-Entry Confirmation (as defined in the Offer to Purchase) with respect to such Shares, in either case together with the Letter of Transmittal (or a facsimile thereof), properly completed and duly executed, with any required signature guarantees or an Agent's Message (as defined in the Offer to Purchase) in the case of a book-entry delivery, and any other required documents, all within three New York Stock Exchange trading days after the date hereof. Name of Firm: -------------------------------------- ----------------------------------------------------- (Authorized Signature) Address: -------------------------------------------- ----------------------------------------------------- (Zip Code) Title: - ----------------------------------------------- Name: - ---------------------------------------------- (Please Print or Type) Area Code and Telephone No.: - ---------------------- Dated: - ---------------------------------------------- NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE. CERTIFICATES FOR SHARES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL. 2 EX-99.11.A.4 5 FORM OF BROKER, DEALER LETTER 1 OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK OF HAMBRECHT & QUIST GROUP AT $50.00 NET PER SHARE BY BRIDGE ACQUISITION CORPORATION A WHOLLY-OWNED SUBSIDIARY OF THE CHASE MANHATTAN CORPORATION THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON MONDAY, NOVEMBER 1, 1999, UNLESS THE OFFER IS EXTENDED. October 4, 1999 To Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees: We have been appointed by Bridge Acquisition Corporation, a Delaware corporation ("Purchaser") and a wholly-owned subsidiary of The Chase Manhattan Corporation, a Delaware corporation ("Parent"), to act as Dealer Manager in connection with Purchaser's offer to purchase for cash all the outstanding shares of Common Stock, par value $0.01 per share (the "Shares"), of Hambrecht & Quist Group, a Delaware corporation (the "Company"), at a purchase price of $50.00 per Share, net to the seller in cash, without interest thereon, upon the terms and subject to the conditions set forth in the Offer to Purchase, dated October 4, 1999 (the "Offer to Purchase"), and in the related Letter of Transmittal (which, as amended from time to time, together constitute the "Offer") enclosed herewith. Holders of Shares whose certificates for such Shares (the "Share Certificates") are not immediately available or who cannot deliver their Share Certificates and all other required documents to the Depositary (as defined below) on or prior to the Expiration Date (as defined in the Offer to Purchase), or who cannot complete the procedure for book-entry transfer on a timely basis, must tender their Shares according to the guaranteed delivery procedures set forth in Section 3 of the Offer to Purchase. Please furnish copies of the enclosed materials to those of your clients for whose accounts you hold Shares registered in your name or in the name of your nominee. Enclosed herewith for your information and forwarding to your clients are copies of the following documents: 1. The Offer to Purchase, dated October 4, 1999. 2. The Letter of Transmittal to tender Shares for your use and for the information of your clients. Facsimile copies of the Letter of Transmittal may be used to tender Shares. 2 3. The Notice of Guaranteed Delivery for Shares to be used to accept the Offer if Share Certificates are not immediately available or if such certificates and all other required documents cannot be delivered to ChaseMellon Shareholder Services, L.L.C. (the "Depositary") on or prior to the Expiration Date or if the procedure for book-entry transfer cannot be completed by the Expiration Date. 4. The Letter to Stockholders of the Company from the Chairman of the Board and Chief Executive Officer of the Company, accompanied by the Company's Solicitation/Recommendation Statement on Schedule 14D-9. 5. A printed form of letter which may be sent to your clients for whose accounts you hold Shares registered in your name or in the name of your nominee, with space provided for obtaining such clients' instructions with regard to the Offer. 6. Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9. 7. A return envelope addressed to ChaseMellon Shareholder Services, L.L.C., Post Office Box 3301, South Hackensack, New Jersey 07606, Attn: Reorganization Department. YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT MIDNIGHT, NEW YORK CITY TIME, ON MONDAY, NOVEMBER 1, 1999 UNLESS THE OFFER IS EXTENDED. The Offer is conditioned upon, among other things, (1) there being validly tendered and not withdrawn prior to the expiration of the Offer a number of shares which constitutes more than 50% of the voting power (determined on a fully-diluted basis) on the date of purchase of all the securities of the Company entitled to vote generally in the election of directors or in a merger and (2) all regulatory approvals and consents required to consummate the transactions contemplated by the Merger Agreement (as defined below), including the Offer and the Merger (as defined below), having been obtained and remaining in full force and effect and any statutory waiting periods having expired. The Board of Directors of the Company has unanimously approved the Merger Agreement and the transactions contemplated thereby, including the Offer and the Merger, and determined that the terms of the Offer and the Merger are advisable and fair to, and in the best interests of, the holders of the Shares and recommends that the holders of the Shares tender their Shares to Purchaser pursuant to the Offer. The Offer is being made pursuant to an Agreement and Plan of Merger, dated as of September 27, 1999 (as it may be amended or supplemented from time to time, the "Merger Agreement"), among Parent, Purchaser, and the Company. The Merger Agreement provides, among other things, for the making of the Offer by Purchaser, and further provides that, following the completion of the Offer, upon the terms and subject to the conditions of the Merger Agreement, and in accordance with the Delaware General Corporation Law ("DGCL"), Purchaser will be merged with and into the Company (the "Merger"). Following the effective time of the Merger (the "Effective Time"), the Company will continue as the surviving corporation and become a wholly-owned subsidiary of Parent and the separate corporate existence of Purchaser will cease. At the Effective Time, each Share issued and outstanding immediately prior to the Effective Time (other than (1) Shares held by the Company as treasury stock or by Parent, Purchaser or any other wholly-owned subsidiary of Parent or the Company (other than Trust Account Shares and DPC Shares (both as defined in the Offer to Purchase)), which will be canceled, (2) Shares, if any, held by stockholders who have properly exercised appraisal rights under Section 262 of the DGCL and (3) Restricted Shares (as defined in the Offer to Purchase) that do not vest as of the Effective Time pursuant to the Company Stock Plans (as defined in the Offer to Purchase)) will, by virtue of the Merger and without any action on the part of the holders of the Shares, be converted into the right to receive in cash the per Share price paid in the Offer, payable to the holder thereof, without interest, upon surrender of the certificate formerly representing such Share, less any required withholding taxes. In order to take advantage of the Offer, (i) a duly executed and properly completed Letter of Transmittal (or a facsimile thereof) and any required signature guarantees, or an Agent's Message (as defined in the Offer 2 3 to Purchase) in connection with a book-entry delivery of Shares, and other required documents should be sent to the Depositary, and (ii) either Share Certificates representing the tendered Shares should be delivered to the Depositary or such Shares should be tendered by book-entry transfer and a Book-Entry Confirmation (as defined in the Offer to Purchase) with respect to such Shares should be delivered to the Depositary, all in accordance with the instructions set forth in the Letter of Transmittal and the Offer to Purchase. Holders of Shares whose Share Certificates are not immediately available or who cannot deliver their Share Certificates and all other required documents to the Depositary on or prior the expiration date of the Offer, or who cannot complete the procedure for delivery by book-entry transfer on a timely basis, must tender their Shares according to the guaranteed delivery procedures set forth in Section 3 of the Offer to Purchase. Purchaser will not pay any commissions or fees to any broker, dealer or other person (other than the Dealer Manager, the Depositary and ChaseMellon Consulting Services, L.L.C. (the "Information Agent") (as described in the Offer to Purchase)) for soliciting tenders of Shares pursuant to the Offer. Purchaser will, however, upon request, reimburse you for customary clerical and mailing expenses incurred by you in forwarding any of the enclosed materials to your clients. Purchaser will pay or cause to be paid any stock transfer taxes payable on the transfer of Shares to it, except as otherwise provided in Instruction 6 of the Letter of Transmittal. Inquiries you may have with respect to the Offer should be addressed to the Information Agent or the undersigned, at the respective addresses and telephone numbers set forth on the back cover of the Offer to Purchase. Additional copies of the enclosed materials may be obtained from the Information Agent. Very truly yours, CHASE SECURITIES INC. NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY OTHER PERSON THE AGENT OF PURCHASER, PARENT, THE DEALER MANAGER, THE COMPANY, THE DEPOSITARY OR THE INFORMATION AGENT, OR ANY AFFILIATE OF ANY OF THEM, OR AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENT OR USE ANY DOCUMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN. 3 EX-99.11.A.5 6 FORM OF CLIENT LETTER 1 OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK OF HAMBRECHT & QUIST GROUP AT $50.00 NET PER SHARE BY BRIDGE ACQUISITION CORPORATION A WHOLLY-OWNED SUBSIDIARY OF THE CHASE MANHATTAN CORPORATION THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON MONDAY, NOVEMBER 1, 1999, UNLESS THE OFFER IS EXTENDED. October 4, 1999 To Our Clients: Enclosed for your consideration is an Offer to Purchase dated October 4, 1999 (the "Offer to Purchase"), and the related Letter of Transmittal relating to an offer by Bridge Acquisition Corporation, a Delaware corporation ("Purchaser") and a wholly-owned subsidiary of The Chase Manhattan Corporation, a Delaware corporation ("Parent"), to purchase all of the outstanding shares of Common Stock, par value $0.01 per share (the "Shares"), of Hambrecht & Quist Group, a Delaware corporation (the "Company"), at a purchase price of $50.00 per Share, net to the seller in cash, without interest thereon, upon the terms and subject to the conditions set forth in the Offer to Purchase and in the related Letter of Transmittal (which, as amended from time to time, together constitute the "Offer") enclosed herewith. Holders of Shares whose certificates for such Shares (the "Share Certificates") are not immediately available or who cannot deliver their Share Certificates and all other required documents to ChaseMellon Shareholder Services, L.L.C., the Depositary, on or prior to the Expiration Date (as defined in the Offer to Purchase), or who cannot complete the procedure for delivery by book-entry transfer on a timely basis, must tender their Shares according to the guaranteed delivery procedures set forth in Section 3 of the Offer to Purchase. WE ARE THE HOLDER OF RECORD OF SHARES HELD BY US FOR YOUR ACCOUNT. A TENDER OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER SHARES HELD BY US FOR YOUR ACCOUNT. We request instructions as to whether you wish to have us tender on your behalf any or all of such Shares held by us for your account, pursuant to the terms and subject to the conditions set forth in the Offer to Purchase. Your attention is directed to the following: 1. The Offer price is $50.00 per share, net to the seller in cash, without interest thereon. 2. The Offer is made for all of the outstanding Shares. 3. The Board of Directors of the Company has unanimously approved the Merger Agreement and the transactions contemplated thereby, including the Offer and the Merger, and determined that the terms of the Offer and the Merger are advisable and fair to, and in the best interests of, the holders of the 2 Shares and recommends that the holders of the Shares tender their Shares to Purchaser pursuant to the Offer. 4. The Offer is being made pursuant to an Agreement and Plan of Merger, dated as of September 27, 1999 (as it may be amended or supplemented from time to time, the "Merger Agreement"), among Parent, Purchaser, and the Company. The Merger Agreement provides, among other things, for the making of the Offer by Purchaser, and further provides that, following the completion of the Offer, upon the terms and subject to the conditions of the Merger Agreement, and in accordance with the Delaware General Corporation Law (the "DGCL"), Purchaser will be merged with and into the Company (the "Merger"). Following the effective time of the Merger (the "Effective Time"), the Company will continue as the surviving corporation and become a wholly-owned subsidiary of Parent and the separate corporate existence of Purchaser will cease. At the Effective Time, each Share issued and outstanding immediately prior to the Effective Time (other than (1) Shares held by the Company as treasury stock or by Parent, Purchaser or any other wholly-owned subsidiary of Parent or the Company (other than Trust Account Shares and DPC Shares (both as defined in the Offer to Purchase)), which will be canceled, (2) Shares, if any, held by stockholders who have properly exercised appraisal rights under Section 262 of the DGCL and (3) Restricted Shares (as defined in the Offer to Purchase) that do not vest as of the Effective Time pursuant to the Company Stock Plans (as defined in the Offer to Purchase)) will, by virtue of the Merger and without any action on the part of the holders of the Shares be converted into the right to receive in cash the per Share price paid in the Offer, payable to the holder thereof, without interest, upon surrender of the certificate formerly representing such Share, less any required withholding taxes. 5. The Offer and withdrawal rights will expire at 12:00 Midnight, New York City time, on November 1, 1999, unless the Offer is extended. 6. Tendering stockholders will not be obligated to pay brokerage fees or commissions or, except as set forth in Instruction 6 of the Letter of Transmittal, stock transfer taxes on the purchase of Shares pursuant to the Offer. 7. The Offer is conditioned upon, among other things, (1) there being validly tendered and not withdrawn prior to the Expiration Date a number of shares which constitutes more than 50% of the voting power (determined on a fully-diluted basis) on the date of purchase of all the securities of the Company entitled to vote generally in the election of directors or in a merger and (2) all regulatory approvals and consents required to consummate the transactions contemplated by the Merger Agreement, including the Offer and the Merger, having been obtained and remaining in full force and effect and any statutory waiting periods having expired. The Offer is being made solely by the Offer to Purchase and the related Letter of Transmittal and is being made to all holders of Shares. Purchaser is not aware of any state where the making of the Offer is prohibited by administrative or judicial action pursuant to any valid state statute. If Purchaser becomes aware of any valid state statute prohibiting the making of the Offer or the acceptance of Shares pursuant thereto, Purchaser will make a good faith effort to comply with any such state statute. If, after such good faith effort, Purchaser cannot comply with such state statute, the Offer will not be made to nor will tenders be accepted from or on behalf of the holders of Shares in such state. In any jurisdiction where the securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer shall be deemed to be made on behalf of Purchaser by Chase Securities Inc. or one or more registered brokers or dealers that are licensed under the laws of such jurisdiction. IF YOU WISH TO HAVE US TENDER ANY OR ALL OF THE SHARES HELD BY US FOR YOUR ACCOUNT, PLEASE INSTRUCT US BY COMPLETING, EXECUTING AND RETURNING TO US THE INSTRUCTION FORM CONTAINED IN THIS LETTER. IF YOU AUTHORIZE A TENDER OF YOUR SHARES, ALL SUCH SHARES WILL BE TENDERED UNLESS OTHERWISE SPECIFIED IN SUCH INSTRUCTION FORM. YOUR INSTRUCTIONS SHOULD BE FORWARDED TO US IN AMPLE TIME TO PERMIT US TO SUBMIT A TENDER ON YOUR BEHALF ON OR PRIOR TO THE EXPIRATION OF THE OFFER. 2 3 INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK OF HAMBRECHT & QUIST GROUP BY BRIDGE ACQUISITION CORPORATION The undersigned acknowledge(s) receipt of your letter enclosing the Offer to Purchase dated October 4, 1999 (the "Offer to Purchase") and the related Letter of Transmittal pursuant to an offer by Bridge Acquisition Corporation, a Delaware corporation and a wholly-owned subsidiary of The Chase Manhattan Corporation, a Delaware corporation, to purchase all outstanding shares of Common Stock, par value $0.01 per share (the "Shares"), of Hambrecht & Quist Group, a Delaware corporation, at a purchase price of $50.00 per Share, net to the seller in cash, without interest thereon, upon the terms and subject to the conditions set forth in the Offer to Purchase and the related Letter of Transmittal. This will instruct you to tender the number of Shares indicated below (or, if no number is indicated below, all Shares) which are held by you for the account of the undersigned, upon the terms and subject to the conditions set forth in the Offer to Purchase and in the related Letter of Transmittal furnished to the undersigned. Number of Shares to be Tendered* SIGN HERE - ---------------------------------------- -------------------------------------------- -------------------------------------------- SIGNATURE(S) Dated: -------------------------------------------- PLEASE PRINT NAME(S) -------------------------------------------- ADDRESS -------------------------------------------- AREA CODE AND TELEPHONE NUMBER -------------------------------------------- TAX IDENTIFICATION, OR SOCIAL SECURITY NUMBER
- --------------- * Unless otherwise indicated, it will be assumed that all of your Shares held by us for your account are to be tendered. 3 EX-99.11.A.6 7 FORM W-9 TAX GUIDELINES 1 GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER FOR THE PAYEE (YOU) TO GIVE THE PAYER.--Social Security numbers have nine digits separated by two hyphens: i.e. 000-00-0000. Employer identification numbers have nine digits separated by only one hyphen: i.e. 00-0000000. The table below will help determine the number to give the payer. All "Section" references are to the Internal Revenue Code of 1986, as amended. "IRS" is the Internal Revenue Service. - ------------------------------------------------------------ GIVE THE FOR THIS TYPE OF ACCOUNT: SOCIAL SECURITY NUMBER OF-- - ------------------------------------------------------------ 1. Individual The individual 2. Two or more individuals (joint The actual owner of account) the account or, if combined funds, the first individual on the account(1) 3. Custodian account of a minor The minor(2) (Uniform Gift to Minors Act) 4. a. The usual revocable savings The grantor- trust account (grantor is also trustee(1) trustee) b. So called trust account that is The actual owner(1) not a legal or valid trust under state law 5. Sole proprietorship The owner(3) - ------------------------------------------------------------ - ------------------------------------------------------------ GIVE THE EMPLOYER FOR THIS TYPE OF ACCOUNT: IDENTIFICATION NUMBER OF-- - ------------------------------------------------------------ 6. A valid trust, estate, or pension The legal entity(4) trust 7. Corporate The corporation 8. Association, club, religious, The organization charitable, educational, or other tax-exempt organization account 9. Partnership The partnership 10. A broker or registered nominee The broker or nominee 11. Account with the Department of The public entity Agriculture in the name of a public entity (such as a state or local government, school district, or prison) that receives agricultural program payments - ------------------------------------------------------------
(1) List first and circle the name of the person whose number you furnish. If only one person on a joint account has a social security number, that person's number must be furnished. (2) Circle the minor's name and furnish the minor's social security number. (3) You must show your individual name, but you may also enter your business or "doing business as" name. You may use either your social security number or your employer identification number (if you have one). (4) List first and circle the name of the legal trust, estate, or pension trust. (Do not furnish the taxpayer identification number of the personal representative or trustee unless the legal entity itself is not designated in the account title.) NOTE: If no name is circled when there is more than one name, the number will be considered to be that of the first name listed. 2 GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 PAGE 2 OBTAINING A NUMBER If you do not have a taxpayer identification number or you don't know your number, obtain Form SS-5, Application for a Social Security Card, at the local Social Security Administration office, or Form SS-4, Application for Employer Identification Number, by calling 1 (800) TAX-FORM, and apply for a number. PAYEES EXEMPT FROM BACKUP WITHHOLDING Payees specifically exempted from withholding include: - An organization exempt from tax under section 501(a), an individual retirement account (IRA), or a custodial account under Section 403(b)(7), if the account satisfies the requirements of Section 401(f)(7). - The United States or a state thereof, the District of Columbia, a possession of the United States, or a political subdivision or wholly-owned agency or instrumentality of any one or more of the foregoing. - An international organization or any agency or instrumentality thereof. - A foreign government and any political subdivision, agency or instrumentality thereof. Payees that may be exempt from backup withholding include: - A corporation. - A financial institution. - A dealer in securities or commodities required to register in the United States, the District of Columbia, or a possession of the United States. - A real estate investment trust. - A common trust fund operated by a bank under Section 584(a). - An entity registered at all times during the tax year under the Investment Company Act of 1940. - A middleman known in the investment community as a nominee or who is listed in the most recent publication of the American Society of Corporate Secretaries, Inc., Nominee List. - A futures commission merchant registered with the Commodity Futures Trading Commission. - A foreign central bank of issue. Payments of dividends and patronage dividends generally exempt from backup withholding include: - Payments to nonresident aliens subject to withholding under Section 1441. - Payments to partnerships not engaged in a trade or business in the United States and that have at least one nonresident alien partner. - Payments of patronage dividends not paid in money. - Payments made by certain foreign organizations. - Section 404(k) payments made by an ESOP. Payments of interest generally exempt from backup withholding include: - Payments of interest on obligations issued by individuals. Note: You may be subject to backup withholding if this interest is $600 or more and you have not provided your correct taxpayer identification number to the payer. - Payments of tax-exempt interest (including exempt-interest dividends under Section 852). - Payments described in Section 6049(b)(5) to nonresident aliens. - Payments on tax-free covenant bonds under section 1451. - Payments made by certain foreign organizations. - Mortgage interest paid to you. Certain payments, other than payments of interest, dividends, and patronage dividends, that are exempt from information reporting are also exempt from backup withholding. For details, see sections 6041, 6041A, 6042, 6044, 6045, 6049, 6050A and 6050N. EXEMPT PAYEES DESCRIBED ABOVE MUST FILE FORM W-9 OR A SUBSTITUTE FORM W-9 TO AVOID POSSIBLE ERRONEOUS BACKUP WITHHOLDING. FILE THIS FORM WITH THE PAYER. FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" IN PART II OF THE FORM, AND RETURN TO THE PAYER IF THE PAYMENTS ARE OF INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS. ALSO SIGN AND DATE THE FORM. PRIVACY ACT NOTICE--Section 6109 requires you to provide your correct taxpayer identification number to payers, who must report the payments to the IRS. The IRS uses the number for identification purposes and may also provide this information to various government agencies for tax enforcement or litigation purposes. Payers must be given the numbers whether or not recipients are required to file tax returns. Payers must generally withhold 31% of taxable interest, dividend, and certain other payments to a payee who does not furnish a taxpayer identification number to a payer. Certain penalties may also apply. PENALTIES (1) FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER--If you fail to furnish your taxpayer identification number to a payer, you are subject to a penalty of $50 for each such failure unless your failure is due to reasonable cause and not to willful neglect. (2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING--If you make a false statement with no reasonable basis that results in no backup withholding, you are subject to a $500 penalty. (3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION--Willfully falsifying certifications or affirmations may subject you to criminal penalties including fines and/or imprisonment. FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE SERVICE EX-99.11.A.7 8 SUMMARY ADVERTISEMENT 1 Exhibit 11(a)(7) This announcement is neither an offer to purchase nor a solicitation of an offer to sell Shares (as defined below). The Offer (as defined below) is made solely by the Offer to Purchase dated October 4, 1999, and the related Letter of Transmittal, and any amendments thereto, and is being made to all holders of Shares. Purchaser (as defined below) is not aware of any state where the making of the Offer is prohibited by administrative or judicial action pursuant to any valid state statute. If Purchaser becomes aware of any valid state statute prohibiting the making of the Offer, Purchaser will make a good faith effort to comply with such statute. If, after such good faith effort, Purchaser cannot comply with such state statute, the Offer will not be made to nor will tenders be accepted from or on behalf of the holders of Shares in such state. In any jurisdiction where the securities, "blue sky" or other laws require the Offer to be made by a licensed broker or dealer, the Offer shall be deemed to be made on behalf of Purchaser by Chase Securities Inc., the Dealer Manager, or one or more registered brokers or dealers licensed under the laws of such jurisdiction. Notice of Offer to Purchase for Cash All Outstanding Shares of Common Stock of Hambrecht & Quist Group at $50 Net per Share by Bridge Acquisition Corporation a wholly-owned subsidiary of The Chase Manhattan Corporation Bridge Acquisition Corporation, a Delaware corporation ("Purchaser") and a wholly-owned subsidiary of The Chase Manhattan Corporation, a Delaware corporation ("Parent"), hereby offers to purchase all of the outstanding shares of Common Stock, par value $0.01 per share (the "Shares"), of Hambrecht & Quist Group, a Delaware corporation (the "Company"), at a purchase price of $50 per Share, net to the seller in cash, without interest thereon, upon the terms and subject to the conditions set forth in the Offer to Purchase dated October 4, 1999 (the "Offer to Purchase"), and in the related Letter of Transmittal (which, as amended from time to time, together constitute the "Offer"). THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON NOVEMBER 1, 1999, UNLESS THE OFFER IS EXTENDED. The Offer is conditioned upon, among other things, (1) there being validly tendered and not withdrawn prior to the expiration date of the Offer a number of Shares which constitutes more than 50% of the voting power (determined on a fully-diluted basis) on the date of purchase of all the securities of the Company entitled to vote generally in the election of directors or in a merger and (2) all regulatory approvals and consents required to consummate the transactions contemplated by the Merger Agreement (as defined below), including the Offer and the Merger (as defined below), having been obtained and remaining in full force and effect and any statutory waiting periods having expired. The purpose of the Offer is to acquire control of, and the entire equity interest in, the Company. As promptly as practicable following consummation of the Offer and after satisfaction or waiver of all conditions to the Merger set forth in the Merger Agreement, Purchaser intends to acquire the remaining equity interest in the Company not acquired in the Offer by consummating the Merger. The Offer is being made pursuant to an Agreement and Plan of Merger, dated as of September 27, 1999 (the "Merger Agreement"), among Parent, Purchaser and the Company. The Merger Agreement provides, among other things, for the making of the Offer by Purchaser, and further provides that, following the completion of the Offer, upon the terms and subject to the conditions of the Merger Agreement and in accordance with the Delaware General Corporation Law ("DGCL"), Purchaser 2 will be merged with and into the Company (the "Merger"). Following the effective time of the Merger (the "Effective Time"), the Company will continue as the surviving corporation (the "Surviving Corporation") and become a wholly-owned subsidiary of Parent and the separate corporate existence of Purchaser will cease. At the Effective Time, each Share issued and outstanding immediately prior to the Effective Time (other than (1) Shares held by the Company as treasury stock or by Parent, Purchaser or any other wholly-owned subsidiary of Parent or the Company (other than Trust Account Shares and DPC Shares (as both such terms are defined in the Offer to Purchase)), which will be canceled, (2) Shares, if any, held by stockholders who have properly exercised appraisal rights under Section 262 of the DGCL and (3) Restricted Shares (as such term is defined in the Offer to Purchase), other than Restricted Shares that vest as of the Effective Time pursuant to the Company Stock Plans (as such term is defined in the Offer to Purchase)) will, by virtue of the Merger and without any action on the part of the holders of the Shares be converted into the right to receive in cash the per Share price paid in the Offer, payable to the holder thereof, without interest, upon surrender of the certificate formerly representing such Share, less any required withholding taxes. The Merger Agreement is more fully described in Section 11 of the Offer to Purchase. The Board of Directors of the Company has unanimously approved the Merger Agreement and the transactions contemplated thereby, including the Offer and the Merger, and determined that the terms of the Offer and the Merger are advisable and fair to, and in the best interests of, the holders of the Shares and recommends that the holders of the Shares tender their Shares to Purchaser pursuant to the Offer. For purposes of the Offer, Purchaser will be deemed to have accepted for payment (and thereby purchased) Shares validly tendered and not properly withdrawn as, if and when Purchaser gives oral or written notice to ChaseMellon Shareholder Services, L.L.C. (the "Depositary") of Purchaser's acceptance for payment of such Shares pursuant to the Offer. Upon the terms and subject to the conditions of the Offer, payment for Shares accepted for payment pursuant to the Offer will be made by deposit of the purchase price therefor with the Depositary, which will act as agent for tendering stockholders for the purpose of receiving payments from Purchaser and transmitting such payments to stockholders whose Shares have been accepted for payment. Under no circumstances will interest on the purchase price for Shares be paid by the Purchaser, regardless of any extension of the Offer or any delay in making such payment. In all cases, payment for Shares tendered and accepted for payment pursuant to the Offer will be made only after timely receipt by the Depositary of (i) certificates representing such Shares, or timely confirmation of a book-entry transfer of such Shares into the Depositary's account at the Book-Entry Transfer Facility (as such term is defined in the Offer to Purchase) pursuant to the procedures set forth in Section 3 of the Offer to Purchase, (ii) the Letter of Transmittal (or a facsimile thereof), properly completed and duly executed, with any required signature guarantees, or an Agent's Message (as such term is defined in the Offer to Purchase) in connection with a book-entry transfer, and (iii) any other documents required by the Letter of Transmittal. Subject to the provisions of the Merger Agreement and the applicable rules and regulations of the Securities and Exchange Commission (the "Commission"), Purchaser reserves the right, in its sole discretion, to waive any or all conditions to the Offer (other than the Minimum Condition) and to make any other changes in the terms and conditions of the Offer. Subject to the provisions of the Merger Agreement and the applicable rules and regulations of the Commission, if by the Expiration Date any or all of the conditions to the Offer have not been satisfied, Purchaser reserves the right (but will not be obligated) to (i) terminate the Offer and return all tendered Shares to tendering stockholders, (ii) waive such unsatisfied conditions (other than the Minimum Condition) and 3 purchase all Shares validly tendered or (iii) extend the Offer and, subject to the terms of the Offer (including the rights of stockholders to withdraw their Shares), retain the Shares which have been tendered, until the termination of the Offer, as extended. Subject to the provisions of the Merger Agreement and the applicable rules and regulations of the Commission, Purchaser expressly reserves the right, in its sole discretion, at any time and from time to time, and regardless of whether or not any of the events set forth in Section 15 of the Offer to Purchase have occurred or have been determined by Purchaser to have occurred, to (i) extend the period of time during which the Offer is open and thereby delay acceptance for payment of, and payment for, any Shares, by giving oral or written notice of such extension to the Depositary and (ii) amend the Offer in any respect permitted by the Merger Agreement by giving oral or written notice of such amendment to the Depositary. Any extension, delay, termination, waiver or amendment will be followed as promptly as practicable by public announcement thereof to be made no later than 9:00 A.M., New York City time, on the next business day after the previously scheduled Expiration Date. During any such extension, all Shares previously tendered and not properly withdrawn will remain subject to the Offer, subject to the rights of a tendering stockholder to withdraw such stockholder's Shares. The term "Expiration Date" means 12:00 Midnight, New York City time, on November 1, 1999, unless and until the Purchaser, in its sole discretion (but subject to the terms and conditions of the Merger Agreement), has extended the period during which the Offer is open, in which event the term "Expiration Date" means the latest time and date at which the Offer, as so extended by the Purchaser, will expire. Tenders of Shares made pursuant to the Offer are irrevocable, except that Shares tendered pursuant to the Offer may be withdrawn at any time on or prior to the Expiration Date and, unless theretofore accepted for payment by Purchaser pursuant to the Offer, may also be withdrawn at any time after December 4, 1999. For a withdrawal to be effective, a written, telegraphic, telex or facsimile transmission notice of withdrawal must be timely received by the Depositary at one of its addresses set forth on the back cover of the Offer to Purchase. Any notice of withdrawal must specify the name of the person who tendered the Shares to be withdrawn, the number of Shares to be withdrawn and the name of the registered holder, if different from that of the person who tendered such Shares. If certificates for the Shares to be withdrawn have been delivered or otherwise identified to the Depositary, then prior to the physical release of the certificates, the serial numbers shown on such certificates must be submitted to the Depositary and the signatures on the notice of withdrawal must be guaranteed by an Eligible Institution (as such term is defined in the Offer to Purchase) unless such Shares have been tendered for the account of an Eligible Institution. If Shares have been tendered pursuant to the procedure for book-entry transfer as set forth in Section 3 of the Offer to Purchase, any notice of withdrawal must specify the name and number of the account at the Book-Entry Transfer Facility to be credited with the withdrawn Shares, in which case a notice of withdrawal will be effective if delivered to the Depositary by any method of delivery described in the second sentence of this paragraph. All questions as to the form and validity (including time of receipt) of any notice of withdrawal will be determined by the Purchaser, in its sole discretion, whose determination will be final and binding. None of Purchaser, Parent, any of their affiliates or assigns, the Dealer Manager, the Depositary, the Information Agent or any other person will be under any duty to give notification of any defects or irregularities in any notice of withdrawal or incur any liability for failure to give such notification. Withdrawals of Shares may not be rescinded. Any Shares properly withdrawn will thereafter be deemed not to have been validly tendered for purposes of the Offer. However, withdrawn Shares may be re-tendered 4 at any time prior to the Expiration Date by following one of the procedures described in Section 3 of the Offer to Purchase. The information required to be disclosed by Rule 14d-6(e)(1)(vii) of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended, is contained in the Offer to Purchase and is incorporated herein by reference. The Company has provided Purchaser with the Company's stockholder list and security position listings for the purpose of disseminating the Offer to holders of Shares. The Offer to Purchase and the related Letter of Transmittal and other relevant materials will be mailed by Purchaser to record holders of Shares and furnished to brokers, dealers, commercial banks, trust companies and similar persons whose names, or the names of whose nominees, appear on the stockholder list or, if applicable, who are listed as participants in a clearing agency's security position listing, for subsequent transmittal to beneficial owners of Shares. The Offer to Purchase and the related Letter of Transmittal contain important information which should be read carefully before any decision is made with respect to the Offer. Questions and requests for assistance may be directed to the Dealer Manager or the Information Agent as set forth below. Requests for copies of the Offer to Purchase and the related Letter of Transmittal and all other tender offer materials may be directed to the Information Agent and copies will be furnished promptly at Purchaser's expense. Purchaser will not pay any fees or commissions to any broker or dealer or any other person (other than the Dealer Manager and the Information Agent) for soliciting tenders of Shares pursuant to the Offer. The Information Agent for the Offer is: ChaseMellon Shareholder Services, L.L.C. 450 West 33rd Street, 14th Floor New York, New York 10001 Banks and Brokers, please call: (212) 273-8083 All others call toll-free: (888) 566-9477 The Dealer Manager for the Offer is: Chase Securities Inc. 270 Park Avenue New York, New York 10017 (212) 270-3094 October 4, 1999 EX-99.11.A.8 9 JOINT PRESS RELEASE 1 Exhibit 11(a)(8) Chase In Agreement To Acquire Hambrecht & Quist NEW YORK, September 28,1999 - The Chase Manhattan Corporation (NYSE: CMB) and Hambrecht & Quist Group (NYSE:HQ) today announced an agreement for Chase to acquire Hambrecht & Quist for $50 per share in cash or a total consideration of $1.35 billion. The agreement has been approved by the boards of directors of both companies and is expected to be completed by the end of this year. "The acquisition of Hambrecht & Quist is an important strategic move for Chase," said William B. Harrison, Jr., President and CEO of The Chase Manhattan Corporation. "It extends Chase's one-stop investment banking range of products in the highest growth sector of the U.S. economy, where media, telecommunications, information technology, and the Internet converge. Chase's clients will benefit immediately from Hambrecht & Quist's award-winning equity research and its high-quality equity platform. And Hambrecht & Quist's clients will benefit through the availability of Chase's market-leading products. Our goal is to offer the right financial relationships for companies in the new economy - from venture capital stage to IPO to mature company," said Harrison. "This is an important step for Chase in developing a public equities practice in a way that has a positive return to our shareholders," Harrison said. "We will continue to be very disciplined in the way we approach this platform." "The opportunity to become part of Chase and to help build its leadership in the 'new economy' is a compelling one," said Daniel H. Case III, Chairman and Chief Executive Officer of Hambrecht & Quist, who will become Chairman and Chief Executive Officer of Chase Securities West and Head of Chase's Global Technology Group. 2 "Our Board believes that this transaction is in the best interests of Hambrecht & Quist's customers, shareholders, and employees. In the last five years, Hambrecht & Quist's revenue and income have increased fivefold," Case added. "Hambrecht & Quist is choosing to partner from strength, and we believe we have chosen the strongest possible partner. I am excited about our planned 'global capability, local delivery' approach to integrating our businesses and serving our clients." Hambrecht & Quist will assume the Chase name and continue to be headquartered in San Francisco. As a part of the purchase contract, Chase will establish for Hambrecht & Quist's key employees a $200 million retention pool in Chase stock, payable over four years. Operationally, Hambrecht & Quist will become part of Chase Securities' investment banking arm, headed by James B. Lee, Jr., Vice Chairman. "We are very excited about the huge potential that this acquisition represents. First, it will allow us to enhance the very powerful 'one-stop' investment banking model, which we pioneered. Second, Hambrecht & Quist adds exceptional talent to our company, true professionals with the same vision and values," Lee said. He noted that the "new economy" accounted for more than half of all M&A and equity offerings this year, and that this transaction puts Chase's investment bank squarely in the middle of that growth potential. "As we have done in building other investment banking businesses, this acquisition will allow us to execute our integrated, one-culture, one-team approach to adding value to clients, especially in media, telecom, information technology, and the Internet, as well as healthcare," Lee added. The agreement between Chase and Hambrecht & Quist provides for a cash tender offer by Chase, to commence within the next five business days pursuant to documents to be filed with the Securities and Exchange Commission and mailed to the shareholders of Hambrecht & Quist. Consummation of the tender offer is subject to customary conditions, including acceptance by a majority of Hambrecht & Quist's outstanding shares and receipt of applicable regulatory approvals. 3 Chase Securities Inc. acted as financial advisor to The Chase Manhattan Corporation. Hambrecht & Quist, LLC acted as financial advisor to Hambrecht & Quist Group. Hambrecht & Quist is one of the most experienced providers of investment banking services to the "new economy," with a focus on growth industries, including technology, life sciences, and information services. Its products include public equity, private equity and venture capital, private placements, fixed-income, and M&A advisory services. Headquartered in San Francisco, Hambrecht & Quist employs roughly 1,000 people in offices in San Francisco, New York, Boston, Atlanta, London, Tel Aviv, and Tokyo. The Chase Manhattan Corporation, with more than $357 billion in assets, is one of the world's premier financial services institutions, with operations in 48 countries around the globe. Chase has top-tier ranking in all areas of investment banking, private banking, trading, and global markets activities as well as information and transaction processing. Chase is a leading provider of financial solutions to large corporations, government entities, middle market, small businesses, and individuals, and has relationships with more than 32 million consumers across the United States. Chase can be reached on the Web at www.chase.com. PRESS CONTACTS: Jim Finn, Chase (212) 270-7438 John Meyers, Chase (212) 270-7454 Carole Newman, Hambrecht & Quist (415) 439-3611 INVESTOR CONTACT: John Borden, Chase (212) 270-7318 EX-99.11.C.1 10 AGREEMENT AND PLAN OF MERGER 1 Exhibit 11(c)(1) AGREEMENT AND PLAN OF MERGER by and among THE CHASE MANHATTAN CORPORATION, BRIDGE ACQUISITION CORPORATION and HAMBRECHT & QUIST GROUP Dated as of September 27, 1999 2 TABLE OF CONTENTS Page ARTICLE I The Offer and the Merger 1.1 The Offer......................................................... 2 1.2 Company Action.................................................... 3 1.3 Directors......................................................... 5 1.4 The Merger........................................................ 6 1.5 Closing........................................................... 6 1.6 Effective Time.................................................... 6 1.7 Effects of the Merger............................................. 7 1.8 Conversion of Company Common Stock................................ 7 1.9 Options; Restricted Shares........................................ 8 1.10 Certificate of Incorporation..................................... 10 1.11 Bylaws........................................................... 10 1.12 Directors and Officers of Surviving Corporation.................. 10 1.13 Alternate Transaction Structures, Etc............................ 10 ARTICLE II Exchange of Shares 2.1 Establishment of Exchange Fund.................................... 11 2.2 Exchange of Shares................................................ 11 ARTICLE III Representations and Warranties of Company 3.1 Corporate Organization............................................ 13 3.2 Capitalization.................................................... 15 3.3 Authority; No Violation........................................... 16 3.4 Consents and Approvals............................................ 18 3.5 Regulatory Reports................................................ 18 3.6 Broker's Fees..................................................... 19 3.7 Absence of Certain Changes or Events.............................. 19 3.8 Legal Proceedings................................................. 19 3.9 Taxes and Tax Returns............................................. 19 3.10 Employees........................................................ 21 3.11 SEC Reports...................................................... 22 i 3 Page 3.12 Financial Statements............................................... 23 3.13 Licenses; Compliance with Applicable Law........................... 23 3.14 Certain Contracts.................................................. 25 3.15 Agreements with Regulatory Agencies................................ 26 3.16 Investment Securities.............................................. 26 3.17 Interest Rate Risk Management Instruments.......................... 26 3.18 Undisclosed Liabilities............................................ 27 3.19 Environmental Liability............................................ 27 3.20 Information Supplied............................................... 27 3.21 State Takeover Laws................................................ 28 3.22 Insurance.......................................................... 28 3.23 Year 2000 Compliance............................................... 28 3.24 Intellectual Property.............................................. 29 ARTICLE IV Representations and Warranties of Parent and Sub 4.1 Corporate Organization.............................................. 29 4.2 Authority; No Violation............................................. 29 4.3 Consents and Approvals.............................................. 30 4.4 Broker's Fees....................................................... 31 4.5 Funds............................................................... 31 4.6 Information Supplied................................................ 31 ARTICLE V Covenants Relating to Conduct of Business 5.1 Conduct of Company Businesses Prior to the Effective Time........... 32 5.2 Forbearances of Company............................................. 32 5.3 Transition.......................................................... 36 ARTICLE VI Additional Agreements 6.1 Company Stockholders Meeting; Preparation of Proxy Statement........ 36 6.2 Reasonable Best Efforts............................................. 37 6.3 Access to Information............................................... 38 ii 4 Page 6.4 Employee Benefits................................................... 39 6.5 Indemnification; Directors' and Officers' Insurance................. 40 6.6 Additional Agreements............................................... 41 6.7 Advice of Changes................................................... 41 6.8 [Reserved].......................................................... 41 6.9 No Solicitation..................................................... 41 6.10 Publicity.......................................................... 43 6.11 Stockholder Litigation............................................. 43 6.12 State Takeover Statutes............................................ 44 6.13 Section 15 of the Investment Company Act........................... 44 ARTICLE VII Conditions Precedent 7.1 Conditions to Each Party's Obligation To Effect the Merger.......... 45 ARTICLE VIII Termination and Amendment 8.1 Termination......................................................... 45 8.2 Effect of Termination............................................... 47 8.3 Amendment........................................................... 48 8.4 Extension; Waiver................................................... 48 ARTICLE IX General Provisions 9.1 Nonsurvival of Representations, Warranties and Agreements........... 49 9.2 Expenses............................................................ 49 9.3 Notices............................................................. 49 9.4 Interpretation...................................................... 50 9.5 Counterparts........................................................ 50 9.6 Entire Agreement.................................................... 50 9.7 Governing Law....................................................... 51 9.8 Severability........................................................ 51 9.9 Assignment; Third Party Beneficiaries............................... 51 Annex I - Conditions of the Offer iii 5 AGREEMENT AND PLAN OF MERGER AGREEMENT AND PLAN OF MERGER, dated as of September 27, 1999 (this "Agreement") by and among THE CHASE MANHATTAN CORPORATION, a Delaware corporation ("Parent"), BRIDGE ACQUISITION CORPORATION, a Delaware corporation and a wholly-owned subsidiary of Parent ("Sub"), and HAMBRECHT & QUIST GROUP, a Delaware corporation ("Company"). WHEREAS, the respective Boards of Directors of Parent, Sub and Company have determined that the Offer (as defined in Section 1.1) and (ii) the merger of Sub with and into Company (the "Merger") following the consummation of the Offer, with Company as the surviving corporation of the Merger (the "Surviving Corporation"), each upon the terms and subject to the conditions set forth in this Agreement, are advisable and fair to and in the best interests of their respective stockholders; WHEREAS, as an inducement and condition to Parent and Sub entering into this Agreement, the Board of Directors of Company has approved, and concurrently with the execution of this Agreement Company is executing and delivering to Parent, a stock option agreement (the "Company Option Agreement") dated as of the date hereof; WHEREAS, as an inducement and condition to Parent and Sub entering into this Agreement, and concurrently with the execution of this Agreement, certain directors and executive officers of Company are executing and delivering to Parent a Tender and Voting Agreement (the "Support Agreement") dated as of the date hereof; WHEREAS, as an inducement and condition to Parent and Sub entering into this Agreement, and concurrently with the execution of this Agreement, Daniel H. Case III is executing and delivering to Parent an employment agreement dated as of the date hereof and to be effective from and after the consummation of the Offer; and WHEREAS, the parties desire to make certain representations, warranties and agreements in connection with the Offer and the Merger and also to prescribe certain conditions therefor. NOW, THEREFORE, in consideration of the mutual covenants, representations, warranties and agreements contained herein, and intending to be legally bound hereby, the parties agree as follows: 6 2 ARTICLE I THE OFFER AND THE MERGER 1.1 The Offer. (a) Provided that this Agreement shall not have been terminated in accordance with Section 8.1, Parent shall cause Sub to, and Sub shall, as soon as practicable after the date hereof, but in any event within five business days after the public announcement of the execution hereof, commence (within the meaning of Rule 14d-2(a) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")), a tender offer (the "Offer") for all of the issued and outstanding shares of common stock, par value $0.01 per share, of Company (the "Company Common Stock") at a price of $50.00 per share (the "Per Share Price"), net to the sellers thereof in cash, subject to the conditions set forth in Annex I hereto (the "Offer Conditions") including the Minimum Condition (as defined therein). (b) The Offer shall be made by means of an offer to purchase which shall contain as conditions only the Minimum Condition and the other conditions set forth in Annex I hereto, and, subject to the next succeeding sentence, shall otherwise contain, and be consistent with, the terms and conditions of the Offer as described in this Agreement. Each of Sub and Parent expressly reserves the right, in its sole discretion, to waive any such condition and make any other changes to the terms of the Offer; provided, that, without the consent of Company, neither Parent nor Sub shall amend or waive the Minimum Condition, change the form of consideration to be paid in the Offer (other than by adding cash consideration), decrease the Per Share Price or the number of shares of Company Common Stock sought, or amend any other condition of the Offer in any manner adverse to the holders of the shares of Company Common Stock. The Per Share Price shall be net to the sellers in cash, without interest, subject to reduction only for any applicable withholding taxes. Notwithstanding the foregoing, Sub may, without the consent of Company, (i) extend the Offer on one or more occasions for up to ten business days for each such extension beyond the then-scheduled expiration date (the initial scheduled expiration date being 20 business days following commencement of the Offer), if at the then-scheduled expiration date of the Offer any of the conditions to Sub's obligation to accept for payment and pay for the shares of Company Common Stock shall not be satisfied or waived, until such time as such conditions are satisfied or waived, and, at the request of Company, Sub shall, subject to Parent's right to terminate this Agreement pursuant to Article VIII, extend the Offer for additional periods up to but not later than March 31, 2000, if the only condition not satisfied or earlier waived on the then-scheduled expiration date is the Requisite Regulatory Approvals Condition (as defined in Annex I hereto), (ii) extend the Offer for any period required by any rule, regulation, interpretation or position of the Securities and Exchange Commission (the "SEC") or the staff thereof applicable to the Offer and (iii) extend the Offer for an aggregate period of not more than ten business days beyond the latest expiration date that would otherwise 7 3 be permitted under clause (i) or (ii) of this sentence if the Minimum Condition shall have been satisfied but there shall not have been tendered sufficient shares of Company Common Stock so that the Merger could be effected without a vote of Company's stockholders in accordance with Section 253 of the DGCL (as defined in Section 1.4); provided, that, as a condition to the extension provided for in clause (iii), Sub irrevocably waives the satisfaction of the conditions to the Offer set forth in subclause (x) of clause (a) of Annex I hereto that subsequently may not be satisfied during any such extension of the Offer. Subject to the terms of the Offer, including the Offer Conditions, Sub shall accept for payment and pay for all shares of Company Common Stock duly tendered at the earliest time at which it is permitted to do so under applicable law; provided, that, as set forth above, Sub shall have the right, in its sole discretion, to extend the Offer for up to ten business days notwithstanding the prior satisfaction or waiver of the Offer Conditions, in order to attempt to satisfy the requirements of Section 253 of the DGCL. It is agreed that the Offer Conditions other than the Minimum Condition are solely for the benefit of Sub and that all Offer Conditions may be asserted by Sub regardless of the circumstances resulting in a condition not being satisfied (except for any action or inaction by Sub or Parent constituting a breach of this Agreement) and, except with respect to the Minimum Condition, may be waived by Sub, in whole or in part at any time and from time to time, in its sole discretion. (c) On the date of commencement of the Offer, Parent and Sub, with the cooperation of, and subject to the prior review thereof by, Company, shall file with the SEC a Schedule 14D-1 (the "Schedule 14D-1") with respect to the Offer that will contain or will incorporate by reference the Offer (or portions thereof) and forms of the related letter of transmittal and summary advertisement (which documents, together with any supplements or amendments thereto, are referred to herein collectively as the "Offer Documents"). Each of Parent, Sub and Company, with respect to information supplied by it for use in the Schedule 14D-1 or the Offer Documents, agrees promptly to correct the Schedule 14D-1 or the Offer Documents if and to the extent that any of them shall have become false or misleading in any material respect or any event occurs which should be set forth in an amendment or supplement to the Schedule 14D-1, and Sub shall take all steps necessary to cause the Schedule 14D-1 as so corrected or supplemented to be filed with the SEC and such Offer Documents as so corrected to be disseminated to holders of shares of Company Common Stock, in each case as and to the extent required by applicable federal securities laws. 1.2 Company Action. (a) Subject to Section 1.2(b) below, Company hereby consents to the inclusion in the Offer Documents of the Company Board Recommendation (as defined in Section 3.21). 8 4 (b) Company agrees to file with the SEC and mail to its stockholders contemporaneously with the commencement of the Offer a Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9") which shall reflect the actions of the Board of Directors of Company referred to above and shall comply in all material respects with the provisions of applicable federal securities laws. Each of Company, Parent and Sub, with respect to information supplied by it for use in the Schedule 14D-9, agrees promptly to correct the Schedule 14D-9 if and to the extent that it shall have become false or misleading in any material respect, and Company shall take all steps necessary to cause the Schedule 14D-9 as so corrected to be filed with the SEC and mailed to holders of shares of Company Common Stock to the extent required by applicable federal securities laws. The Schedule 14D-9 shall contain the Company Board Recommendation recommending that the holders of shares of Company Common Stock accept the Offer, which recommendation shall not be withdrawn, amended, modified or materially qualified in a manner adverse to Parent (nor shall the Board of Directors of Company publicly announce its intention to do so) unless, (i) in the opinion of Company's outside counsel, failure to take such action in response to an unsolicited bona fide written Superior Proposal (as defined below) would constitute a breach by the Board of Directors of Company of its fiduciary duties under applicable law, (ii) Company has given Parent five business days' prior written notice of its intent to take such action, which notice describes all material terms of such Superior Proposal and attaches a copy of any written communications relating thereto, and Company's Board of Directors has duly considered in good faith any proposed changes to this Agreement (if any) proposed by Parent and (iii) Company has fully and completely complied with Section 6.9. For the purposes of this Agreement, "Superior Proposal" shall mean any bona fide Transaction Proposal (as defined in Section 6.9) for at least a majority of the outstanding fully-diluted shares of Company Common Stock on terms the Board of Directors of Company determines in its good faith judgment (taking into account the advice of a financial advisor of nationally recognized reputation, and taking into account all the terms and conditions of the Transaction Proposal, including any break-up fees, expense reimbursement provisions and conditions to consummation) are more favorable and provide greater value to the Company's stockholders than this Agreement, the Offer and the Merger taken as a whole, and which (i) is not subject to any financing contingency or other material contingency (except such other material contingency as the Board of Directors determines in its reasonable good faith judgment is likely to be satisfied), and (ii) is, in the Board of Directors' reasonable good faith judgment (taking into account all relevant legal, financial, regulatory and other considerations), reasonably capable of being consummated on the terms proposed. Without limiting the generality of the foregoing, Company agrees that, except as otherwise expressly provided herein, its and its Board of Directors' obligations under this Section 1.2, and under all other provisions of this Agreement, shall not be altered by the commencement, public proposal, public disclosure or communication to Company of any Transaction Proposal, including without limitation a Superior Proposal. 9 5 (c) Company shall promptly furnish Parent or Sub with a list of the record holders of shares of Company Common Stock and their addresses, as well as mailing labels containing the names and addresses of the record holders of such shares, lists of any non-objecting beneficial owners of such shares and lists of securities positions of such shares held in stock depositories, each as of the most recent practicable date, and shall furnish Parent or Sub with such additional information, including updated lists of holders of such shares, mailing labels and lists of securities positions, and other assistance as Parent, Sub or their agents may reasonably request for the purpose of disseminating the Offer Documents and communicating with the record and beneficial holders of shares of Company Common Stock with respect thereto. 1.3 Directors. (a) Promptly upon the purchase of and payment for shares of Company Common Stock by Sub which represent at least a majority of the outstanding shares of Company Common Stock, Parent shall be entitled to designate a number of directors on the Board of Directors of Company equal to the product (rounded up to the nearest whole number) of the total number of the directors on such Board (after giving effect to the directors elected pursuant to this sentence) multiplied by the percentage that such number of shares owned by Sub and its affiliates bears to the number of shares of Company Common Stock outstanding. Company's obligations under this Section 1.3(a) shall be subject to Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder. Parent or Sub will supply Company with any information with respect to either of them and their nominees, officers, directors and affiliates required by Section 14(f) and Rule 14f-1. Upon receipt of such information from Parent or Sub, Company shall include in the Schedule 14D-9 (as an annex or otherwise) or a separate Rule 14f-1 information statement mailed to stockholders of Company promptly after the commencement of the Offer the information required by Section 14(f) and Rule 14f-1 as is necessary to enable Parent's designees to be elected to the Board of Directors of Company. (b) At the time specified in the first sentence of Section 1.3(a), Company shall, upon request of Parent, use its best efforts promptly either to increase the size of the Board of Directors of Company or, at Company's election, secure the resignations of such number of its incumbent directors as is necessary to enable Parent's designees pursuant to Section 1.3(a) to be so elected or appointed to Company's Board of Directors, and shall cause Parent's designees to be so elected or appointed. Company will use its reasonable best efforts to cause directors designated by Parent to constitute the same percentage as is on the board (but in any event at least one Parent designee) (i) of each committee of its Board of Directors, (ii) of each board of directors of its Subsidiaries (as defined in Section 3.1) and (iii) of each committee of each such board, in each case only to the extent permitted by law and the rules of the New York Stock Exchange (the "NYSE") to the extent applicable. Notwithstanding the foregoing, until the 10 6 Effective Time (as defined in Section 1.6), Company and Parent shall use all reasonable best efforts to retain as members of Company's Board of Directors at least two directors who are directors of Company on the date hereof and who are not designated by Parent or employees of Company or its Subsidiaries (the "Independent Directors"). (c) Notwithstanding anything in this Agreement to the contrary, following the election or appointment of Parent's designees to Company's Board of Directors and prior to the Effective Time, the affirmative vote of a majority of the Independent Directors shall be required for Company to take action to (i) amend or terminate this Agreement, (ii) exercise or waive any of Company's rights or remedies hereunder, (iii) extend the time for performance of Parent's and Sub's respective obligations hereunder, or (iv) approve any other action by Company that could adversely affect the interests of the stockholders of Company (other than Parent, Sub and their affiliates) with respect to the transactions contemplated hereby. 1.4 The Merger. Subject to the terms and conditions of this Agreement, in accordance with the Delaware General Corporation Law (the "DGCL"), at the Effective Time, Sub shall merge with and into Company. Company shall be the Surviving Corporation in the Merger, and shall continue its corporate existence under the laws of the State of Delaware. Upon consummation of the Merger, the separate corporate existence of Sub shall terminate. 1.5 Closing. Unless this Agreement shall have been terminated and the transactions herein contemplated shall have been abandoned pursuant to Section 8.1, the closing of the Merger (the "Closing") will take place at 10:00 a.m., New York City time, on the second business day after satisfaction or waiver of the conditions (excluding conditions that, by their terms, cannot be satisfied until the Closing Date (as defined below), but subject to satisfaction or waiver of such conditions on the Closing Date) set forth in Article VII (the "Closing Date"), at the offices of Simpson Thacher & Bartlett, 425 Lexington Avenue, New York, New York 10017, unless another date, time or place is agreed to in writing by the parties hereto. Each of the parties undertakes to use its reasonable best efforts to ensure that the Merger occurs as soon as practicable following the date on which Sub consummates the Offer. 1.6 Effective Time. Upon the Closing, the parties shall file a certificate of merger (the "Certificate of Merger") with the Secretary of State of the State of Delaware and shall make all other filings or recordings required under the DGCL. The Merger shall become effective at such time as the Certificate of Merger shall have been duly filed with the Secretary of State of the State of Delaware, or at such later time as is agreed by Parent and Company and specified in the Certificate of Merger (the time the Merger becomes effective being the "Effective Time"). 11 7 1.7 Effects of the Merger. At and after the Effective Time, the Merger shall have the effects set forth in Sections 259, 260 and 261 of the DGCL. 1.8 Conversion of Company Common Stock. At the Effective Time by virtue of the Merger and without any action on the part of Parent, Sub, Company or the holder of any of the following securities: (a) Each share of Company Common Stock issued and outstanding immediately prior to the Effective Time (other than (x) shares of Company Common Stock canceled pursuant to Section 1.8(c), (y) Restricted Shares ( as defined in Section 1.9(a)), other than Restricted Shares that vest effective as of the Effective Time pursuant to the Company Stock Plans (as defined in Section 1.9), and (z) Dissenting Shares, as defined in Section 1.8(d)), shall be converted into the right to receive cash in an amount equal to the Per Share Price or any higher per share price as may be paid in the Offer, payable to the holder thereof, without interest thereon (the "Merger Consideration"). (b) All of the shares of Company Common Stock issued and outstanding immediately prior to the Effective Time shall no longer be outstanding and shall automatically be canceled and shall cease to exist as of the Effective Time, and each certificate (each a "Common Certificate") previously representing any such shares of Company Common Stock (other than shares canceled pursuant to Section 1.8(c), Restricted Shares which are converted into shares of restricted Parent Common Stock pursuant to Section 1.9(a), and Dissenting Shares) shall thereafter represent solely the right to receive the Merger Consideration into which the shares of Company Common Stock represented by such Common Certificate have been converted pursuant to this Section 1.8. All Restricted Shares which are issued and outstanding immediately prior to the Effective Time and which are not converted into the Merger Consideration pursuant to this Section 1.8 shall be converted into shares of restricted Parent Common Stock as provided in Section 1.9(a). (c) All shares of Company Common Stock that are held by Company as treasury stock or by Parent or any of Company's or Parent's respective wholly-owned Subsidiaries (other than shares of Company Common Stock held, directly or indirectly, in trust accounts, managed accounts and the like or otherwise held in a fiduciary, nominee or custodial capacity that are beneficially owned by third parties, including shares held by mutual funds for which a Subsidiary (as defined in Section 3.1) of Parent or Company acts as investment adviser (any such shares being referred to herein as "Trust Account Shares") and other than any shares of Company Common Stock held by Parent or Company or any of their respective Subsidiaries in respect of a debt previously 12 8 contracted in good faith (any such shares of Company Common Stock being referred to herein as "DPC Shares")) shall automatically be canceled and shall cease to exist and no cash, stock of Parent or other consideration shall be delivered in exchange therefor. (d) Notwithstanding anything in this Agreement to the contrary, shares of Company Common Stock issued and outstanding immediately prior to the Effective Time held by holders (if any) who have not voted in favor of the Merger or consented thereto in writing and who have demanded appraisal rights with respect thereto in accordance with Section 262 of the DGCL and, as of the Effective Time, have not failed to perfect or have not effectively withdrawn or lost their rights to appraisal and payment under Section 262 of the DGCL ("Dissenting Shares") shall not be converted into the right to receive the Merger Consideration as described in Section 1.8(a), but holders of such shares shall be entitled to receive payment of the appraised value of such Dissenting Shares in accordance with the provisions of such Section 262, except that any Dissenting Shares held by a holder who shall have failed to perfect or shall have effectively withdrawn or lost its right to appraisal and payment under Section 262 of the DGCL shall thereupon be deemed to have been converted into the right to receive the Merger Consideration and shall no longer be considered Dissenting Shares. Company shall give Parent (i) prompt notice of any written demands for appraisal of any shares, attempted withdrawals of such demands, and any other instruments served pursuant to the DGCL received by Company relating to stockholders' rights of appraisal and (ii) the opportunity to direct all negotiations and proceedings with respect to demands for appraisal under the DGCL. Company shall not, except with the prior written consent of Parent, voluntarily make any payment with respect to any demands for appraisals of capital stock of Company, offer to settle or settle any such demands or approve any withdrawal of any such demands. (e) Each share of capital stock of Sub issued and outstanding immediately prior to the Effective Time shall be converted into one identical share of the capital stock of the Surviving Corporation and shall constitute the only issued and outstanding capital stock of the Surviving Corporation following the Effective Time. 1.9 Options; Restricted Shares. (a) Prior to the Effective Time, Company and its Subsidiaries shall take all action necessary (including obtaining any necessary consents and/or waivers) to ensure that from and after the Effective Time, all employee, consultant, independent contractor and director stock options to purchase shares of Company Common Stock (each, a "Company Option"), which are then outstanding and unexercised, and all shares of restricted and unvested Company Common Stock (each, a "Restricted Share"), other than Restricted Shares converted into the Merger Consideration pursuant to Section 1.8, which are then outstanding, 13 9 shall, without any further action on the part of the holders thereof, be converted into and become, respectively, options to purchase shares of common stock, par value $1.00 per share, of Parent (the "Parent Common Stock") and shares of restricted Parent Common Stock on terms substantially identical to those in effect immediately prior to the Effective Time under the terms of the stock option plan, restricted stock plan or other agreement or award pursuant to which such Company Option or Restricted Share was granted (collectively, such plans, agreements and awards being hereinafter referred to as the "Company Stock Plans"); provided, however, that from and after the Effective Time (i) each such Company Option assumed by Parent may be exercised solely to purchase shares of Parent Common Stock, (ii) the number of shares of Parent Common Stock purchasable upon exercise of such Company Option shall be equal to the number of shares of Company Common Stock that were purchasable under such Company Option immediately prior to the Effective Time multiplied by the Conversion Ratio (as defined below) and rounded to the nearest whole share, (iii) the per share exercise price under each such Company Option shall be adjusted by dividing the per share exercise price of each such Company Option immediately prior to the Effective Time by the Conversion Ratio, and rounded to the nearest whole cent, and (iv) the number of shares of restricted Parent Common Stock held by an individual following such conversion shall be equal to the number of Restricted Shares held by such individual immediately prior to the Effective Time multiplied by the Conversion Ratio and rounded to the nearest whole share. (b) For purposes of this Section, the "Conversion Ratio" means the quotient determined by dividing the Merger Consideration by the Parent Common Share Price, rounded to the nearest 1/100,000th, and the "Parent Common Share Price" shall be equal to the average closing sale price of Parent Common Stock on the NYSE (rounded to the nearest one-thousandth) over the 20 consecutive full trading days in which such shares are traded on the NYSE ending at the close of business on the second business day prior to the Closing Date. (c) The vesting of each Company Option and Restricted Share shall not accelerate as a result of, or in connection with, the transactions contemplated hereby, except for Company Options and Restricted Shares that would otherwise become exercisable or free of restrictions within 12 months from the Closing Date and otherwise to the extent required by the existing terms of the Company Stock Plan pursuant to which such Company Option or Restricted Share was granted, as in effect on the date hereof. In addition, except as may be necessary to cause the vesting of Company Options that would otherwise become exercisable within 12 months from the Closing Date, Company shall ensure that no discretion is exercised by any body or person so as to cause the vesting of any Company Option or Restricted Share to accelerate. Notwithstanding the foregoing, the number of shares and the per share exercise price of each Company Option which is intended to be an "incentive stock option" (as defined in 14 10 Section 422 of the Internal Revenue Code of 1986, as amended (the "Code")) shall be adjusted in accordance with the requirements of Section 424 of the Code. 1.10 Certificate of Incorporation. Subject to the terms and conditions of this Agreement, at the Effective Time, the Certificate of Incorporation of Company, as in effect immediately prior to the Effective Time, shall be the certificate of incorporation of the Surviving Corporation until thereafter amended as provided therein and by the DGCL. 1.11 Bylaws. Subject to the terms and conditions of this Agreement, at the Effective Time, the Bylaws of Sub, as in effect immediately prior to the Effective Time, shall, subject to the provisions of Section 6.5, be the Bylaws of the Surviving Corporation until thereafter amended as provided therein and by the DGCL. 1.12 Directors and Officers of Surviving Corporation. At the Effective Time, the directors and officers of Sub immediately prior to the Effective Time shall be the directors and officers, respectively, of the Surviving Corporation following the Merger, to hold office in accordance with the Surviving Corporation's Bylaws and applicable law. 1.13 Alternate Transaction Structures, Etc. The parties agree that Parent may at any time change the method of effecting the Offer, including by providing that Parent or any other Subsidiary of Parent shall make the Offer, or the Merger, including by merging Company with and into Parent, by merging a direct or indirect wholly-owned Subsidiary of Parent with and into Company or by merging Company with and into any such direct or indirect wholly-owned Subsidiary, and Company shall cooperate in such efforts, including by entering into an appropriate amendment to this Agreement; provided, however, that such other Subsidiary, if any, shall become a party to, and shall agree to be bound by, the terms of this Agreement, and that any such actions shall not (a) alter or change the amount or kind of consideration to be issued to holders of Company Common Stock as provided for in this Agreement, or (b) materially delay the receipt of any Requisite Regulatory Approval (as defined in Annex I hereto) or the consummation of the transactions contemplated by this Agreement. The parties also agree to take such actions as Parent may reasonably request to provide for the merger or consolidation of Subsidiaries of Company with other Subsidiaries of Company or of Parent, to be effective at or following the Effective Time. 15 11 ARTICLE II EXCHANGE OF SHARES 2.1 Establishment of Exchange Fund. Prior to the Effective Time, Parent shall designate a bank or trust company, which may be a Subsidiary or affiliate of Parent, to act as exchange agent (the "Exchange Agent") for the payment of the Merger Consideration. At or prior to the Effective Time, Parent shall deposit, or shall cause to be deposited, with the Exchange Agent, for the benefit of the holders of Common Certificates, for exchange in accordance with this Article II, cash (such cash being hereinafter referred to as the "Exchange Fund") to be paid pursuant to Section 2.2(a) in exchange for outstanding shares of Company Common Stock. 2.2 Exchange of Shares. (a) As soon as practicable after the Effective Time, the Exchange Agent shall mail to each holder of record as of the Effective Time of one or more Common Certificates (other than with respect to shares of Company Common Stock canceled pursuant to Section 1.8(c)) a letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the Common Certificates shall pass, only upon delivery of the Common Certificates to the Exchange Agent) and instructions for use in effecting the surrender of the Common Certificates in exchange for the Merger Consideration. Upon proper surrender of a Common Certificate for exchange and cancellation to the Exchange Agent, together with such properly completed letter of transmittal, duly executed, covering such Common Certificate, the holder of such Common Certificate shall be entitled to receive in exchange therefor a check representing the amount of the Merger Consideration, and the Common Certificate so surrendered shall forthwith be canceled. No interest will be paid or accrued on the Merger Consideration payable to holders of Common Certificates. (b) If the payment of the Merger Consideration is to be made to a person other than the registered holder of the Common Certificate surrendered in exchange therefor, it shall be a condition to the payment thereof that the Common Certificate so surrendered shall be properly endorsed (or accompanied by an appropriate instrument of transfer) and otherwise in proper form for transfer, and that the person requesting such exchange shall pay to the Exchange Agent in advance any transfer or other taxes required by reason of the issuance, delivery or payment of such Merger Consideration to any person other than the registered holder of the Common Certificate surrendered, or required for any other reason, or shall establish to the satisfaction of the Exchange Agent that such tax has been paid or is not payable. (c) After the Effective Time, there shall be no transfers on the stock transfer books of Company of the shares of Company Common Stock which were issued and outstanding 16 12 immediately prior to the Effective Time. If, after the Effective Time, Common Certificates representing such shares are presented for transfer to the Exchange Agent, they shall be canceled and exchanged for the applicable Merger Consideration as provided in this Article II. (d) Any portion of the Exchange Fund that remains unclaimed by the stockholders of Company for 6 months after the Effective Time shall be paid to Parent. Any stockholders of Company who have not theretofore complied with this Article II shall thereafter look only to Parent for payment of the Merger Consideration, without any interest thereon. Notwithstanding the foregoing, none of the Surviving Corporation, Parent, the Exchange Agent or any other person shall be liable to any former holder of shares of Company Common Stock for any Merger Consideration delivered to a public official pursuant to applicable abandoned property, escheat or similar laws. (e) In the event any Common Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming such Common Certificate to be lost, stolen or destroyed and, if reasonably required by Parent, the posting by such person of a bond in such amount as Parent may determine is reasonably necessary as indemnity against any claim that may be made against it with respect to such Common Certificate, the Exchange Agent will issue in exchange for such lost, stolen or destroyed Common Certificate the Merger Consideration. (f) All cash paid upon the surrender of the Common Certificates in accordance with the terms of Articles I and II shall be deemed to have been paid in full satisfaction of all rights pertaining to the shares of the Company Common Stock theretofore represented by such Common Certificates; subject, however, to the Surviving Corporation's obligation, with respect to shares of Company Common Stock outstanding immediately prior to the Effective Time, to pay any dividends or make any other distributions with a record date prior to the Effective Time which may have been declared or made by Company on such shares of Company Common Stock in accordance with the terms of this Agreement or prior to the date of this Agreement and which remain unpaid at the Effective Time. (g) The Exchange Agent shall invest the Exchange Fund as directed by Parent. Any interest and other income resulting from such investments shall be paid to Parent. 17 13 ARTICLE III REPRESENTATIONS AND WARRANTIES OF COMPANY Company hereby represents and warrants to Parent and Sub that, except as set forth in the Company Disclosure Schedule (as defined in Section 3.1(a) below) (provided, that the listing of an item in one section of the Company Disclosure Schedule shall be deemed to be a listing in another section of the Company Disclosure Schedule and apply to any other representation and warranty of Company in this Agreement only to the extent that it is reasonably apparent from a reading of such disclosure item that it would also qualify or apply to such other section or representation and warranty) and for any exceptions to the following as do not have and would not reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect on Company or Parent (as defined in Section 3.1(a) below): 3.1 Corporate Organization. (a) Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. Company has all requisite corporate power and authority to own or lease all of its properties and assets and to carry on its business as it is now being conducted, and is duly licensed or qualified to do business and in good standing in each jurisdiction in which the nature of the business conducted by it or the character or location of the properties and assets owned or leased by it makes such licensing or qualification necessary. As used in this Agreement, (i) the term "Subsidiary" when used with respect to any party means any corporation or other organization, whether incorporated or unincorporated, (x) of which such party or any other Subsidiary of such party is a general partner (excluding partnerships, the general partnership interests of which held by such party or any Subsidiary of such party do not have a majority of the voting interests in such partnership), or (y) a majority of the securities or other interests of which having by their terms ordinary voting power to elect a majority of the board of directors or other body performing similar functions with respect to such corporation or other organization is directly or indirectly owned or controlled by such party or by any one or more of its Subsidiaries, or by such party and one or more of its Subsidiaries, and (ii) the term "Material Adverse Effect" means, with respect to Parent or Company, as the case may be, a material adverse effect on the business, assets, liabilities, financial condition or results of operations of such party and its Subsidiaries taken as a whole (other than any change, event, occurrence or effect relating to (x) the United States or global economy or securities markets in general, (y) this Agreement or the transactions contemplated hereby or the announcement thereof, or (z) the financial services industry in general, and not specifically relating to Parent or Company, as the case may be, or its Subsidiaries) or on the ability of such party to perform its obligations under and to consummate the transactions contemplated by this Agreement on a timely basis. Section 3.1(a) of the Company disclosure schedule delivered to Parent concurrently herewith (the "Company 18 14 Disclosure Schedule") contains true and complete copies of the Certificate of Incorporation and Bylaws of Company, as in effect as of the date of this Agreement. Such organizational documents are in full force and effect and no other organizational documents are applicable to or binding upon Company. Company is not in violation of any of the provisions of its Certificate of Incorporation or Bylaws. (b) Part I of Section 3.1(b) of the Company Disclosure Schedule sets forth a complete and correct list of all of Company's Subsidiaries (each a "Company Subsidiary" and collectively the "Company Subsidiaries") and indicates, as to each such Subsidiary (other than Subsidiaries which were formed and exist for the principal purpose of holding portfolio investments and other investment securities for Company and its other Subsidiaries or for the benefit of third parties for whom Company or its other Subsidiaries manage such investments ("Investment Subsidiaries")), the number and type of outstanding shares of capital stock or other equity securities of each such Subsidiary, any issued and outstanding options, warrants, stock appreciation rights, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, shares of any capital stock or other equity securities of such Subsidiary, and any contracts, commitments, understandings or arrangements by which such Subsidiary may become bound to issue additional shares of its capital stock or other equity securities, or options, warrants, scrip on rights to purchase, acquire, subscribe to, calls on or commitments for any shares of its capital stock or other equity securities and the identity of the parties to any such agreements or arrangements. All of the outstanding shares of capital stock or other securities evidencing ownership of the Company Subsidiaries have been duly authorized and validly issued and are fully paid and non-assessable with no personal liability attaching to the ownership thereof and such shares or other securities are owned by Company or its wholly-owned Subsidiaries free and clear of any lien, claim, charge, option, encumbrance, mortgage, pledge or security interest (a "Lien") with respect thereto. Each Company Subsidiary (i) is a duly organized and validly existing corporation, partnership or limited liability company or other legal entity under the laws of its jurisdiction of organization, (ii) is duly licensed or qualified to do business and in good standing in all jurisdictions (whether federal, state, local or foreign) where its ownership or leasing of property or the conduct of its business requires it to be so qualified, and (iii) has all requisite corporate power and authority to own or lease all of its properties and assets and to carry on its business as now conducted. Except for (i) the ownership interests set forth in Part II of Section 3.1(b) of the Company Disclosure Schedule, (ii) the ownership interests in its Subsidiaries disclosed in Part I of Section 3.1(b) of the Company Disclosure Schedule, (iii) publicly traded securities acquired in the ordinary course of Company's underwriting and market-making activities, and (iv) securities held by Investment Subsidiaries and by investment entities managed by entities that are not Subsidiaries, Company does not own, directly or indirectly, any capital stock or other ownership interest, and does not have any option or similar right to acquire any equity or other ownership 19 15 interest, which represents 5% or more of the outstanding shares of any class of voting securities or ownership interests in any entity. Part III of Section 3.1(b) of the Company Disclosure Schedule provides a complete and accurate description of all partnership, joint venture and similar investments held by Company or any Company Subsidiary, including, without limitation, all such investments in which any Company employee or affiliate serves as a director. Company has provided or made available to Parent a complete and accurate copy of all such partnership, joint venture or similar agreements to which Company or any Company Subsidiary is a party. Except as set forth in Part IV of Section 3.1(b) of the Company Disclosure Schedule, neither Company nor any Company Subsidiary is subject to any obligation or requirement to provide funds to or make any investment (in the form of a loan, capital contribution or otherwise) in any corporate entity. (c) Except as set forth in Section 3.1(c) of the Company Disclosure Schedule, the minute books of Company accurately reflect in all respects all corporate meetings and actions held or taken since January 1, 1997 by its stockholders and Board of Directors (including committees of the Board of Directors of Company). 3.2 Capitalization. The authorized capital stock of Company consists of 100,000,000 shares of Company Common Stock, of which, as of September 27, 1999, 24,595,169 shares were issued and outstanding and 748 shares were held in treasury. All of the issued and outstanding shares of Company Common Stock have been duly authorized and validly issued and are fully paid, non-assessable and free of preemptive rights, with no personal liability attaching to the ownership thereof. The shares of Company Common Stock which are issuable upon exercise of Company Options and the Option (as defined in the Company Option Agreement) have been duly authorized and reserved for issuance and, if and when issued pursuant to the terms thereof, will be validly issued, fully paid and non-assessable and free of preemptive rights, with no personal liability attaching to the ownership thereof. Part I of Section 3.2 of the Company Disclosure Schedule sets forth, in each case as of September 27, 1999, (i) the number of shares of Company Common Stock that were reserved for issuance upon the exercise of authorized but unissued stock options pursuant to the Company Stock Plans, (ii) the number of shares of Company Common Stock issuable upon the exercise of outstanding Company Options pursuant to the Company Stock Plans and (iii) the number of Restricted Shares. Except as set forth in Part I of Section 3.2 of the Company Disclosure Schedule, no other shares of Company Common Stock or other equity or voting securities of Company were outstanding or reserved for issuance as of September 27, 1999. Part II of Section 3.2 of the Company Disclosure Schedule sets forth a list, as of September 27, 1999, of the holders of Company Options, the date of grant of each Company Option granted and outstanding, the number of shares subject to each such option, the expiration date of each such option, the vesting schedule of each such option and the price at which each such option may be exercised under the 20 16 applicable Company Stock Plan. Part III of Section 3.2 of the Company Disclosure Schedule sets forth a list as of September 27, 1999, of the holders of Restricted Shares, the date of grant of each Restricted Share outstanding and the vesting schedule of each such share. Holders of Restricted Shares are prohibited from tendering such shares in the Offer. Except as set forth in Part IV of Section 3.2 of the Company Disclosure Schedule, since September 27, 1999, Company has not (i) issued any shares of its capital stock or other equity or voting securities or any securities convertible into or exercisable or exchangeable for any shares of its capital stock or other equity or voting securities, other than shares of Company Common Stock issued upon the exercise or conversion of Company Options outstanding as of September 27, 1999 as described in the immediately preceding sentence or (ii) taken any actions which would cause an antidilution adjustment under any outstanding options of Company. There are no outstanding bonds, debentures, notes or other indebtedness or other securities of Company having the right to vote (or convertible into, or exchangeable or exercisable for, securities having the right to vote) on any matters on which stockholders of Company may vote. Except as set forth above and except for the Company Option Agreement, there are no outstanding securities, options, warrants, calls, rights, commitments, agreements, arrangements or undertakings of any kind to which Company or any of its Subsidiaries is a party or by which any of them is bound obligating Company or any of its Subsidiaries to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares or shares of capital stock or other equity or voting securities of Company or of any of its Subsidiaries or obligating Company or any of its Subsidiaries to issue, grant, extend or enter into any such security, option, warrant, call, right, commitment, agreement, arrangement or undertaking. There are no outstanding contractual obligations, commitments, understandings or arrangements of Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire any shares of capital stock of Company or any of its Subsidiaries, other than in connection with the surrender of Company Common Stock as full or partial payment of the exercise price or withholding tax in connection with the exercise of Company Options under the Company Stock Plans. There are no agreements or arrangements pursuant to which Company is or could be required to register shares of Company Common Stock or other securities under the Securities Act of 1933, as amended (the "Securities Act"), or other agreements or arrangements with or among any securityholders of Company with respect to securities of Company. There are no voting, sale, transfer or other similar agreements to which Company or any of its Subsidiaries is a party with respect to the capital stock of Company or its Subsidiaries or any other securities of Company or its Subsidiaries which are convertible or exchangeable into or exercisable for shares of the capital stock of Company or its Subsidiaries. None of the shares of Company Common Stock are held, directly or indirectly, by any of the Company Subsidiaries (except for Trust Account Shares and DPC Shares). 3.3 Authority; No Violation. (a) Company has full corporate power and authority to execute and deliver this Agreement and the Company Option Agreement and to 21 17 consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement and the Company Option Agreement by Company and the consummation of the transactions contemplated hereby and thereby have been duly and validly authorized by the Board of Directors of Company. The Board of Directors of Company has directed that this Agreement be submitted to Company's stockholders for approval at a meeting of such stockholders and, except for the adoption of this Agreement by the affirmative vote of the holders of a majority of the outstanding shares of Company Common Stock entitled to vote thereon in connection with the Merger (the "Company Stockholder Approval"), no other corporate proceedings on the part of Company and no other votes or consents of any holders of Company securities are necessary to approve this Agreement and the Company Option Agreement and to consummate the transactions contemplated hereby and thereby. This Agreement and the Company Option Agreement have been duly and validly executed and delivered by Company and (assuming due authorization, execution and delivery by Parent and Sub) constitute valid and binding obligations of Company, enforceable against Company in accordance with their respective terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, and general equitable principles (whether considered in a proceeding in equity or at law). (b) Except as set forth in Section 3.3(b) of the Company Disclosure Schedule, neither the execution and delivery of this Agreement or the Company Option Agreement by Company nor the consummation by Company of the transactions contemplated hereby or thereby, nor compliance by Company with any of the terms or provisions hereof or thereof, will (i) violate any provision of the Certificate of Incorporation or Bylaws of Company or any Company Subsidiary or (ii) assuming that the consents and approvals referred to in Section 3.4 are duly obtained, violate any statute, code, ordinance, rule, regulation, judgment, order, writ, decree or injunction applicable to Company or any of its Subsidiaries or any of their respective properties or assets, or violate, conflict with, result in a breach of any provision of or the loss of any benefit under, constitute a default (or an event which, with notice or lapse of time, or both, would constitute a default) under, result in the termination of or a right of termination or cancellation under, accelerate the performance required by or rights or obligations under, or result in the creation of any Lien upon any of the respective properties or assets of Company or any of its Subsidiaries under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, deed of trust, permit, concession, franchise, license, lease, agreement, contract, or other instrument or obligation to which Company or any of its Subsidiaries is a party, or by which they or any of their respective properties, assets or business activities may be bound or affected. 22 18 3.4 Consents and Approvals. Except for (i) the requisite filings with, notices to and approval of the Board of Governors of the Federal Reserve System (the "Federal Reserve Board") under the Bank Holding Company Act of 1956, as amended (the "BHCA"), (ii) the filing of any required applications or notices with other applicable federal, state or foreign governmental agencies or authorities as set forth in Schedule 3.4 of the Company Disclosure Schedule and approval of such applications and notices (the "Additional Regulatory Approvals"), (iii) the filing with the SEC of a proxy statement in definitive form relating to the meeting of Company's stockholders to be held in connection with the Merger (the "Proxy Statement"), (iv) the filing with the SEC of the Offer Documents and the Schedule 14D-9, (v) the filing of the Certificate of Merger with the Secretary of State of the State of Delaware pursuant to the DGCL, (vi) any consents, authorizations, approvals, filings or exemptions in connection with compliance with the applicable provisions of federal, state and foreign laws relating to the regulation of broker-dealers and futures commission merchants and any applicable domestic or foreign industry self-regulatory organization ("SRO"), and the rules of the NYSE and the Pacific Exchange, (vii) the expiration of any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), (viii) the consents, approvals and notices required under the Investment Company Act of 1940, as amended (the "1940 Act") and the Investment Advisers Act of 1940, as amended (the "Advisers Act"), (ix) the Company Stockholder Approval, and (x) the filing with the SEC of such reports under the Exchange Act, as may be required in connection with the execution and delivery of this Agreement and the Company Option Agreement and the transactions contemplated by this Agreement and the Company Option Agreement, no consents or approvals of or filings or registrations with any court, administrative agency or commission or other governmental or regulatory authority or instrumentality (each a "Governmental Entity"), or of or with any third party, are necessary in connection with the execution and delivery by Company of this Agreement and the Company Option Agreement and the consummation by Company of the transactions contemplated by this Agreement and the Company Option Agreement. Company has no reason to believe that any Requisite Regulatory Approvals (as defined in Annex I hereto) will not be obtained on a timely basis. 3.5 Regulatory Reports. Company and each of its Subsidiaries have filed all regulatory reports, schedules, forms, registrations and other documents, together with any amendments required to be made with respect thereto, that they were required to file since January 1, 1997 with (i) the SEC, (ii) any SRO and (iii) any other federal, state or foreign governmental or regulatory agency or authority (collectively with the SEC and the SROs, "Regulatory Agencies"), and have paid all fees and assessments due and payable in connection therewith. Except as disclosed in Section 3.5 of the Company Disclosure Schedule and for normal examinations conducted by a Regulatory Agency in the regular course of the business of Company and its Subsidiaries, no Regulatory Agency has initiated any proceeding or, to the 23 19 knowledge of Company, investigation into the business or operations of Company or any of its Subsidiaries since January 1, 1997. Except as set forth in Section 3.5 of the Company Disclosure Schedule, there is no unresolved violation, criticism, or exception by any Regulatory Agency with respect to any report or statement relating to any examinations of Company or any of its Subsidiaries. 3.6 Broker's Fees. Neither Company nor any Company Subsidiary nor any of their respective officers or directors has employed any broker or finder or incurred any liability for any broker's fees, commissions or finder's fees in connection with the transactions contemplated by this Agreement or the Company Option Agreement. 3.7 Absence of Certain Changes or Events. (a) Except as set forth in Section 3.7(a) of the Company Disclosure Schedule, since September 30, 1998, no event, change or circumstance has occurred which has had, or would reasonably be expected to result in, individually or in the aggregate, a Material Adverse Effect on Company. (b) Since September 30, 1998, Company and its Subsidiaries have in all respects carried on their respective businesses only in the ordinary and usual course consistent with their past practices. (c) Except as disclosed in Section 3.7(c) of the Company Disclosure Schedule, since June 30, 1999, there has not occurred any event which, if it had taken place following the execution of this Agreement, would not have been permitted by Section 5.2 (other than subsection (b) thereof) without the prior consent of Parent. 3.8 Legal Proceedings. Except as set forth in Section 3.8 of the Company Disclosure Schedule, there are no suits, actions, counterclaims, proceedings (whether judicial, arbitral, administrative or other) or governmental, or regulatory investigations pending or, to the best knowledge of Company, threatened against or affecting Company or any of its Subsidiaries. There is not any judgment, decree, injunction, rule or order of any Governmental Entity or arbitrator outstanding against Company or any of its Subsidiaries. 3.9 Taxes and Tax Returns. Except as set forth in Section 3.9 of the Company Disclosure Schedule, (a) Company and each of its Subsidiaries, and any consolidated, combined, unitary or aggregate group for tax purposes of which Company or any of its Subsidiaries is or has been a member, has timely filed all Tax Returns (as defined below) required to be filed by it in the manner provided by law and all such Tax Returns are true, correct and complete in all respects. Company and each of its Subsidiaries has paid all Taxes (as defined below) whether or not shown thereon to be due other than Taxes which are being contested in good faith and for 24 20 which an adequate reserve has been provided in accordance with GAAP. No claim has been made by any Taxing authority in a jurisdiction where any of Company or its Subsidiaries does not file Tax Returns that it is or may be subject to taxation by that jurisdiction. (b) There are no audits or disputes pending, or claims asserted, for Taxes upon Company (or any of its predecessors) or any of its Subsidiaries (or any of their respective predecessors). No closing agreements, private letter rulings, technical advice memoranda or similar agreements or rulings have been entered into or issued by any Taxing authority with respect to Company or any of its Subsidiaries that have a continuing impact on any Taxes. (c) Proper and accurate amounts have been withheld by Company and its Subsidiaries from their employees in compliance with the tax withholding provisions of applicable federal, state and local laws and have been paid over to the appropriate taxing authorities. (d) There are no Tax liens upon any property or assets of Company or any of its Subsidiaries except liens for Taxes not yet due and payable. (e) None of Company and its Subsidiaries has filed a consent under section 341(f) of the Code concerning collapsible corporations. None of Company and its Subsidiaries has been required to include in income any adjustment pursuant to section 481 of the Code (or any similar provision of state, local or foreign tax law) by reason of a voluntary change in accounting method initiated by Company or any of its Subsidiaries, and the IRS has not initiated or proposed any such adjustment or change in accounting method. (f) None of Company or any of its Subsidiaries has liability for any Taxes of any predecessor for any Tax periods prior to its formation. (g) Neither Company nor any of its Subsidiaries (i) has been a member of an affiliated group filing consolidated federal income tax return (other than a group the common parent of which was Company), (ii) is a party to a Tax allocation or Tax sharing agreement (other than an agreement solely among members of a group the common parent of which is Company), or (iii) has any liability for the Taxes of any person (other than any of Company or its Subsidiaries) including, but not limited to, (x) under Treasury Regulation section 1.1502-6 (or any similar provision of state, local or foreign law), (y) as a transferee or successor or (z) by contract. For purposes of this Agreement, "Taxes" shall mean any taxes of any kind, including but not limited to those on or measured by or referred to as income, gross receipts, 25 21 capital, sales, use, ad valorem, franchise, profits, license, withholding, payroll, employment, excise, severance, stamp, occupation, premium, value added, property or windfall profits taxes, customs, duties or similar fees, assessments or charges of any kind whatsoever, together with any interest and any penalties, additions to tax or additional amounts imposed by any governmental authority, domestic or foreign. For purposes of this Agreement, "Tax Return" shall mean any return, report or statement required to be filed with any governmental authority with respect to Taxes, including any schedule or attachment thereto or amendment thereof. 3.10 Employees. (a) Section 3.10(a) of the Company Disclosure Schedule identifies each "employee benefit plan" (as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations promulgated thereunder ("ERISA")) and each employment, severance or similar contract or arrangement (whether or not written) and each plan, policy, fund, program, contract or arrangement (whether or not written) providing for compensation, bonus, profit-sharing, stock options, other stock related rights, other forms of incentive or deferred compensation, vacation benefits, insurance coverage (including any self-insured arrangements), health or medical benefits, disability benefits, workers' compensation, supplemental unemployment benefits, severance benefits, or post-employment or retirement benefits that (i) is maintained, administered or contributed to by Company, any of its Subsidiaries, or any entity which, together with Company or any of its Subsidiaries, would be treated as a single employer under Section 414 of the Code (each such entity, an "ERISA Affiliate") and (ii) covers any current or former employee, consultant, independent contractor or director of or with respect to Company or any of its Subsidiaries (each, an "Employee Plan"). Company has made available to Parent accurate and complete copies of the Employee Plans (and, if applicable, related trust agreements), all amendments thereto, and all written interpretations thereof, together with the most recent annual report (Form 5500) prepared in connection with each Employee Plan. (b) None of Company, any of its Subsidiaries or any ERISA Affiliate has at any time during the last six years (i) maintained or contributed to any plan subject to Title IV of ERISA or Section 412 of the Code, (ii) been required to contribute to any multiemployer plan (as defined in Section 3(37) of ERISA), or (iii) incurred any current or projected liability in respect of post-employment or post-retirement health, medical or life insurance benefits for current, former or retired employees of Company or any of its Subsidiaries, except as required to avoid an excise tax under Section 4980B of the Code. (c) Each Employee Plan that is intended to be qualified under Section 401(a) of the Code is so qualified and has been so qualified during the period since its adoption; each trust created under any such Plan is exempt from tax under Section 501(a) of the Code and has been so exempt since its creation. Company has made available to Parent the most recent 26 22 determination letter of the Internal Revenue Service relating to each such Employee Plan. Each Employee Plan has been maintained in compliance with its terms and with the requirements prescribed by any and all applicable statutes, orders, rules and regulations, including but not limited to ERISA and the Code and has been maintained in good standing with applicable regulatory authorities, and is not "top-heavy". (d) There has been no amendment to, written interpretation of or announcement (whether or not written) by Company or any of its Subsidiaries or ERISA Affiliates relating to, or any change in employee participation or coverage under, any Employee Plan that would increase the expense of maintaining such Employee Plan above the level of the expense incurred in respect thereof for the most recent fiscal year ended prior to the date hereof. (e) Except as set forth in Section 3.10(e) of the Company Disclosure Schedule, there is no contract, plan or arrangement (written or otherwise) covering any employee or former employee of Company or any of its Subsidiaries that, individually or collectively, could give rise to the payment of any amount that would not be deductible pursuant to the terms of Section 162 or 280G of the Code. (f) Except as set forth in Section 3.10(f) of the Company Disclosure Schedule, no employee or former employee of Company or any of its Subsidiaries will become entitled to any bonus, retirement, severance, job security or similar benefit or enhanced such benefit (including acceleration of vesting or exercise of an incentive award) as a result of the transactions contemplated by this Agreement. (g) Except as set forth in Section 3.10(g) of the Company Disclosure Schedule, no Employee Plan is maintained outside the jurisdiction of the United States, or covers any employee residing or working outside the United States. 3.11 SEC Reports. Company has made available to Parent an accurate and complete copy of each (a) final registration statement, prospectus, report, schedule, form and definitive proxy statement filed since January 1, 1996 by Company with the SEC pursuant to the Securities Act or the Exchange Act (collectively, and in each case including all exhibits and schedules thereto and documents incorporated by reference therein, the "Company Reports"), and (b) communication mailed by Company to its stockholders since January 1, 1996. As of their respective dates of filing or mailing, as the case may be, each Company Report and each such communication complied in all respects with the requirements of the Securities Act or the Exchange Act, as the case may be, and the rules and regulations of the SEC promulgated thereunder applicable to such Company Report or communication, and as of such dates no such Company Report or communication (including any and all financial statements included 27 23 therein) contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances in which they were made, not misleading. Since January 1, 1996, Company and each of its Subsidiaries has filed all reports and other documents required to be filed by them under the Securities Act and the Exchange Act on a timely basis. 3.12 Financial Statements. Each of the consolidated financial statements (including the notes thereto) included in the Company Reports complied as to form, as of their respective dates of filing with the SEC, in all respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto, have been prepared in accordance with generally accepted accounting principles ("GAAP") (except, in the case of unaudited consolidated quarterly statements, as permitted by Form 10-Q of the SEC) applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto) and fairly present the consolidated financial position of Company and its Subsidiaries as of the dates thereof and the consolidated results of their operations and cash flows for the periods then ended. The books and records of Company and its Subsidiaries have been, and are being, maintained in all respects in accordance with GAAP and any other applicable legal and accounting requirements. 3.13 Licenses; Compliance with Applicable Law. (a) Except as set forth in Section 3.13(a) of the Company Disclosure Schedule, Company and its Subsidiaries hold, and have been and are in compliance with, all permits, licenses, exemptions, orders and approvals ("Permits") of all Governmental Entities and SROs necessary for the operation of their respective businesses, and there are no proceedings pending or, to the best knowledge of Company, threatened or contemplated by any Governmental Entity or SRO seeking to terminate, revoke or limit any such permit, license, exemption, order or approval, nor, to the best knowledge of Company, do adequate grounds exist for any such action by any Governmental Entity or SRO, and all officers, directors and employees of Company and its Subsidiaries required to be registered or licensed with a Governmental Entity or SRO are currently registered or licensed in the appropriate capacity with such Governmental Entity or SRO and all such registrations and licenses are in full force and effect and no suspension or cancellation of any of them is, to the best knowledge of Company, pending or threatened. Company has delivered to Parent a true and complete copy of Company's and each Company Subsidiary's currently effective Forms BD and ADV as filed with the SEC, all state and other federal registration forms, all reports and all material correspondence filed by Company or any of its Subsidiaries with the SEC or any SRO under the Exchange Act, the 1940 Act and the Advisers Act and the rules promulgated thereunder and under similar state and federal statutes within the last three years, and Company will deliver to Parent such forms and reports as are filed from and after the date hereof and prior to the Closing Date. The information contained in such forms and reports 28 24 was (or will be, in the case of any forms and reports filed after the date of this Agreement) complete and accurate in all respects as of the time of filing thereof. (b) Neither Company nor any of its Subsidiaries nor the conduct of any of their respective businesses is in conflict with, or in default or violation of, any statutes, laws, regulations, ordinances, permits, rules, judgments, orders, decrees or arbitration awards of any Governmental Entity or SRO applicable to Company or any of its Subsidiaries or by which its or any of their respective properties are bound or affected. (c) Except as disclosed in Section 3.13(c) of the Company Disclosure Schedule, neither Company nor any of its Subsidiaries, nor any of their respective officers, directors or employees, has been the subject of any disciplinary proceedings or orders of any Governmental Entity or SRO arising under applicable laws which would be required to be disclosed on SEC Forms ADV or BD, and no such disciplinary proceeding or order is pending or, to the best knowledge of Company, threatened, nor, to the best knowledge of Company, do adequate grounds exist for any such action by any Governmental Entity or SRO; and except as disclosed on such SEC Forms ADV or BD, neither Company nor any of its Subsidiaries, nor any of the respective officers, directors or employees of any of the foregoing, has been permanently enjoined by the order, judgment or decree of any Governmental Entity from engaging in or continuing any conduct or practice in connection with any activity or in connection with the purchase or sale of any security. Except as disclosed on such SEC Forms ADV or BD, neither Company nor any of its Subsidiaries, nor any of their respective officers, directors or employees, is or has been ineligible to serve as, or subject to any disqualification which would be the basis for any denial, suspension or revocation of the registration of or for any limitation on the activities of Company or any of its Subsidiaries as, an investment adviser under the provisions of the Advisers Act or as a broker-dealer under the Exchange Act or ineligible to serve in, or subject to any disqualification which would be the basis for any limitation on serving in, any of the capacities specified in Section 9(a) or 9(b) of the 1940 Act. (d) Neither Company nor any of its Subsidiaries, nor any "associated person" (as defined in the Exchange Act) thereof, is subject to a "statutory disqualification" as defined in Section 3(a)(39) of the Exchange Act or otherwise ineligible to serve as a broker-dealer or as an associated person to a registered broker-dealer. (e) Section 3.13(e) of the Company Disclosure Schedule sets forth a complete list of each Subsidiary of Company which is registered or licensed as (i) a broker-dealer under the Exchange Act or under any similar state or foreign laws, together with a listing of all such registrations and licenses with all applicable Regulatory Agencies, or (ii) as a futures commission merchant, commodities trading adviser, commodity pool operator or introducing 29 25 broker under the Commodities and Futures Trading Act or under any similar state or foreign laws, together with a listing of all such registrations and licenses with all applicable Regulatory Agencies, or (iii) as an investment adviser under the Advisers Act or under any similar state or foreign laws, together with a listing of all such registrations and licenses with all applicable Regulatory Agencies. (f) Section 3.13(f) of the Company Disclosure Schedule sets forth a complete list of all registered investment companies and unregistered collective investment vehicles to which, or on whose behalf, Company or any of its Subsidiaries acts as investment adviser or sub-adviser or otherwise provides investment management or advisory services. Neither Company nor any of its Subsidiaries acts as sponsor, advisor, sub-adviser or principal underwriter for any open-end company (as such term is defined in Section 5 of the 1940 Act). (g) Section 3.13(g) of the Company Disclosure Schedule sets forth a complete list of all securities exchanges, commodities exchanges, boards of trade and similar organizations in which Company and its Subsidiaries hold memberships or have been granted trading privileges. 3.14 Certain Contracts. Except as set forth in Section 3.14 of the Company Disclosure Schedule or as expressly permitted by Section 5.2, neither Company nor any of its Subsidiaries is a party to or bound by any contract, arrangement, commitment or understanding (i) with respect to the employment of any directors, executive officers or key employees, or with any consultants involving the payment of $1,000,000 or more per annum, (ii) which is a "material contract" (as such term is defined in Item 601(b)(10) of Regulation S-K of the SEC) that has not been filed as an exhibit to or incorporated by reference in the Company Reports, (iii) which limits in any way the ability of Company or any of its Subsidiaries to compete in any line of business, in any geographic area or with any person, or which requires referrals of any business or requires Company or any of its affiliates to make available investment opportunities to any person on a priority, equal or exclusive basis, (iv) with or to a labor union or guild (including any collective bargaining agreement), (v) any of the benefits of which will be increased, or the vesting of the benefits of which will be accelerated, by the occurrence of any of the transactions contemplated by this Agreement or the Company Option Agreement, or the value of any of the benefits of which will be calculated on the basis of any of the transactions contemplated by this Agreement or the Company Option Agreement (other than those agreements and arrangements disclosed in Section 3.11 of the Company Disclosure Schedule), or (vi) which would prohibit or delay the consummation of any of the transactions contemplated by this Agreement or the Company Option Agreement. Company has previously made available to Parent complete and accurate copies of all Company Contracts (as defined below). Each contract, arrangement, commitment or understanding of the type described in this Section 3.14, 30 26 whether or not set forth in Section 3.14 of the Company Disclosure Schedule, is referred to herein as a "Company Contract", and neither Company nor any of its Subsidiaries knows of, or has received notice of, any violation of the above by any of the other parties thereto. All contracts, agreements, arrangements or understandings of any kind between any affiliate of Company (other than any wholly-owned Subsidiary of Company), on the one hand, and Company or any Subsidiary of Company, on the other hand, are on terms no less favorable to Company or to such Subsidiary of Company than would be obtained with an unaffiliated third party on an arm's-length basis. 3.15 Agreements with Regulatory Agencies. Except as set forth in Section 3.15 of the Company Disclosure Schedule, neither Company nor any of its Subsidiaries is subject to any cease-and-desist or other order issued by, or is a party to any written agreement, consent agreement or memorandum of understanding with, or is a party to any commitment letter or similar undertaking to, or is subject to any order or directive issued by, or is a recipient of any supervisory letter from or has adopted any board resolutions at the request of, any Regulatory Agency or other Governmental Entity that restricts the conduct of its business or that in any manner relates to its capital adequacy, its credit policies, its management or its business (each, whether or not set forth in the Company Disclosure Schedule, a "Company Regulatory Agreement"), nor has Company or any of its Subsidiaries been advised since January 1, 1997 by any Regulatory Agency or other Governmental Entity that it is considering issuing or requesting any such Company Regulatory Agreement. 3.16 Investment Securities. Each of Company and its Subsidiaries has good and marketable title to all securities held by it (except securities sold under repurchase agreements or held in any fiduciary or agency capacity), free and clear of any Lien, except to the extent such securities are pledged in the ordinary course of business consistent with prudent business practices to secure obligations of Company or any of its Subsidiaries. Such securities are valued on the books of Company in accordance with GAAP. 3.17 Interest Rate Risk Management Instruments. Any interest rate swaps, caps, floors and option agreements and other interest rate risk management arrangements, whether entered into for the account of Company or one of its Subsidiaries or entered into by Company or one of its Subsidiaries for the account of a customer of Company or one of its Subsidiaries, were entered into in the ordinary course of business and, to Company's knowledge, in accordance with prudent business practice and applicable rules, regulations and policies of any Regulatory Authority and with counterparties reasonably believed by Company to be financially responsible at the time and are legal, valid and binding obligations of Company or one of its Subsidiaries and of the other parties thereto enforceable in accordance with their terms (except as may be limited by bankruptcy, insolvency, moratorium, reorganization or similar laws 31 27 affecting the rights of creditors generally and the availability of equitable remedies), and are in full force and effect. Company and each of its Subsidiaries have duly performed all of their obligations thereunder to the extent that such obligations to perform have accrued, and, to Company's knowledge, there are no breaches, violations or defaults or allegations or assertions of such by any party thereunder. 3.18 Undisclosed Liabilities. Except for (i) those liabilities that are fully reflected or reserved for in the consolidated balance sheet of Company included in its Quarterly Report on Form 10-Q for the three-month period ended June 30, 1999, as filed with the SEC, (ii) liabilities disclosed in Section 3.18 of the Company Disclosure Schedule, and (iii) liabilities incurred since June 30, 1999 in the ordinary course of business consistent with past practice, at June 30, 1999, neither Company nor any of its Subsidiaries had, and since such date none of them has incurred, any liabilities or obligations of any nature whatsoever (whether accrued, absolute, contingent or otherwise and whether or not required to be reflected in Company's financial statements in accordance with GAAP). 3.19 Environmental Liability. There are no legal, administrative, arbitral or other proceedings, claims, actions, causes of action, private environmental investigations or remediation activities or governmental investigations of any nature seeking to impose, or that could reasonably result in the imposition, on Company or any of its Subsidiaries of any liability or obligation arising under common law or under any local, state or federal environmental statute, regulation or ordinance including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended ("CERCLA"), pending or threatened against Company or any of its Subsidiaries. To the knowledge of Company, there is no reasonable basis for any such proceeding, claim, action or governmental investigation that would impose any liability or obligation. 3.20 Information Supplied. None of the information supplied or to be supplied by Company for inclusion or incorporation by reference in the Offer Documents or the Schedule 14D-9 will, at the time such documents are filed with the SEC or distributed to Company's stockholders, or at the consummation of the Offer, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. The Proxy Statement to be sent to the stockholders of Company in connection with the Company Stockholders Meeting, will not, at the date it is first mailed to Company's stockholders or at the time of the Company Stockholders Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading. The Schedule 14D-9 and the Proxy Statement will comply as to form in all 32 28 respects with the requirements of the Exchange Act and the rules and regulations of the SEC thereunder, except that no representation is made by Company with respect to statements made or incorporated by reference therein based on information supplied by Parent or Sub for inclusion or incorporation by reference in such documents. Company shall promptly inform Parent of the discovery of any information which should be set forth in a corrected Schedule 14D-9 or a supplement to the Offer Documents or the Proxy Statement. 3.21 State Takeover Laws. The Board of Directors of Company, at a meeting duly called and held, has unanimously (the "Company Board Recommendation") (i) determined that this Agreement and the transactions contemplated hereby, including the Offer and the Merger, are advisable and fair to and in the best interests of the holders of shares of Company Common Stock, (ii) duly approved and adopted this Agreement and the Company Option Agreement and approved the transactions contemplated hereby and thereby, including the Merger and the Offer, and approved the execution and performance of the Support Agreement, in each case prior to the execution of such agreement (such approvals being sufficient to render the restrictions of Section 203 of the DGCL inapplicable to this Agreement, the Offer, the Merger, the Company Option Agreement and the Support Agreement and the other transactions contemplated hereby and thereby) and (iii) resolved to recommend that the holders of shares of Company Common Stock accept the Offer, tender their shares of Company Common Stock pursuant thereto and vote to approve and adopt this Agreement. 3.22 Insurance. Company and its Subsidiaries maintain insurance policies and performance bonds on their respective properties and assets, and with respect to their employees and operations, with reputable insurance carriers, and such insurance policies provide full and adequate coverage for all normal risks incident to the business of Company and its Subsidiaries and their respective properties and assets and are in character and amount at least equivalent to that carried by persons engaged in similar businesses and subject to the same or similar perils or hazards. Company and its Subsidiaries are not in default under any of their insurance policies and have paid all premiums owed thereunder, and no claims for coverage thereunder have been denied. 3.23 Year 2000 Compliance. Except as disclosed in Section 3.23 of the Company Disclosure Schedule, all computer hardware, software, databases, systems and other computer equipment (collectively, "Software") owned, held, and/or used by Company or any Company Subsidiary can be used prior to, during and after the calendar year 2000 A.D., and will operate during each such time period, either on a stand-alone basis, or by interacting or interoperating with third-party Software without error relating to the processing, calculating, comparing, sequencing or other use of date data (the foregoing ability, "Year 2000 Compliant"). 33 29 3.24 Intellectual Property. Company and its Subsidiaries own or have a valid license to use all trademarks, trade names, service marks, copyrights and other intellectual property (collectively, "Intellectual Property") used in the conduct of their business. Except as set forth in Section 3.24 of the Company Disclosure Schedule, neither Company nor any of its Subsidiaries is bound by or subject to any license or other agreement with respect to any such Intellectual Property (including, without limitation, the rights to the name "Hambrecht & Quist" and any variations thereof). Neither Company nor any of its Subsidiaries has received any notice or other communication alleging that its usage of such Intellectual Property violates the intellectual property rights of any other person. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB Parent and, with respect to Sections 4.1 and 4.2, Sub hereby represent and warrant to Company that, except for any exceptions to the following as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Parent: 4.1 Corporate Organization. Each of Parent and Sub is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. Parent is duly registered as a bank holding company under the BHCA. Each of Parent and Sub has all requisite corporate power and authority to own or lease all of its properties and assets and to carry on its business as it is now being conducted, and is duly licensed or qualified to do business and in good standing in each jurisdiction in which the nature of the business conducted by it or the character or location of the properties and assets owned or leased by it makes such licensing or qualification necessary. 4.2 Authority; No Violation. (a) Each of Parent and Sub has full corporate power and authority to execute and deliver this Agreement and the Company Option Agreement and to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement and the Company Option Agreement by Parent and Sub and the consummation of the transactions contemplated hereby and thereby have been duly and validly authorized by the Board of Directors of each of Parent and Sub and by Parent in its capacity as sole stockholder of Sub. No other corporate proceedings on the part of Parent or Sub and no other votes or consents of any holders of Parent securities are necessary on the part of Parent or Sub to approve this Agreement and the Company Option Agreement and to consummate the transactions contemplated hereby and thereby. This Agreement and the Company Option 34 30 Agreement have been duly and validly executed and delivered by each of Parent and Sub and (assuming due authorization, execution and delivery by Company) constitute valid and binding obligations of Parent and Sub, enforceable against each of them in accordance with their respective terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, and general equitable principles (whether considered in a proceeding in equity or at law). (b) Neither the execution and delivery of this Agreement or the Company Option Agreement by Parent or Sub nor the consummation by Parent or Sub of the transactions contemplated hereby or thereby, nor compliance by Parent or Sub with any of the terms or provisions hereof or thereof, will (i) violate any provision of the Certificate of Incorporation or Bylaws of Parent or Sub, as applicable, or (ii) assuming that the consents and approvals referred to in Section 4.3 are duly obtained, violate any statute, code, ordinance, rule, regulation, judgment, order, writ, decree or injunction applicable to Parent or any of its material Subsidiaries or any of their respective properties or assets, or violate, conflict with, result in a breach of any provision of or the loss of any benefit under, constitute a default (or an event which, with notice or lapse of time, or both, would constitute a default) under, result in the termination of or a right of termination or cancellation under, accelerate the performance required by or rights or obligations under, or result in the creation of any Lien upon any of the respective properties or assets of Parent or any of its material Subsidiaries under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, deed of trust, permit, concession, franchise, license, lease, agreement, contract, or other instrument or obligation to which Parent or any of its material Subsidiaries is a party, or by which they or any of their respective properties, assets or business activities may be bound or affected. 4.3 Consents and Approvals. Except for (i) the requisite filings with, notices to and approval of the Federal Reserve Board under the BHCA, (ii) the Additional Regulatory Approvals, (iii) the filing with the SEC of the Proxy Statement, (iv) the filing with the SEC of the Offer Documents and the Schedule 14D-9, (v) the filing of the Certificate of Merger with the Secretary of State of the State of Delaware pursuant to the DGCL, (vi) any consents, authorizations, approvals, filings or exemptions in connection with compliance with the applicable provisions of federal, state and foreign laws relating to the regulation of broker-dealers and futures commission merchants and any applicable SRO, and the rules of the NYSE and the Pacific Exchange, (vii) the expiration of any applicable waiting period under the HSR Act, (viii) the consents, approvals and notices required under the 1940 Act and the Advisers Act, (ix) the Company Stockholder Approval, and (x) the filing with the SEC of such reports under the Exchange Act as may be required in connection with the execution and delivery of this Agreement and the Company Option Agreement and the transactions 35 31 contemplated by this Agreement and the Company Option Agreement, no consents or approvals of or filings or registrations with any Governmental Entity, or of or with any third party, are necessary in connection with the execution and delivery by Parent of this Agreement and the Company Option Agreement and the consummation by Parent of the transactions contemplated by this Agreement and the Company Option Agreement. Parent has no reason to believe that any Requisite Regulatory Approvals will not be obtained on a timely basis. 4.4 Broker's Fees. Neither Parent nor any Parent Subsidiary nor any of their respective officers or directors has employed any broker or finder or incurred any liability for any broker's fees, commissions or finder's fees in connection with the transactions contemplated by this Agreement or the Company Option Agreement. 4.5 Funds. Either Parent or Sub has, or will have prior to the consummation of the Offer, sufficient funds available to satisfy the obligation to pay for shares of Company Common Stock in the Offer and to pay the Merger Consideration in the Merger. 4.6 Information Supplied. None of the information supplied or to be supplied by Parent for inclusion or incorporation by reference in the Offer Documents or the Schedule 14D-9 will, at the time such documents are filed with the SEC or distributed to Company's stockholders, or at the consummation of the Offer, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. The Proxy Statement to be sent to the stockholders of Company in connection with the Company Stockholders Meeting, will not, at the date it is first mailed to Company's stockholders or at the time of the Company Stockholders Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading. The Offer Documents will comply as to form in all respects with the requirements of the Exchange Act and the rules and regulations of the SEC thereunder, except that no representation is made by Parent with respect to statements made or incorporated by reference therein based on information supplied by Company for inclusion or incorporation by reference in such documents. Parent shall promptly inform Company of the discovery by it or Sub of any information which should be set forth in a corrected Schedule 14D-9 or a supplement to the Offer Documents or the Proxy Statement. ARTICLE V COVENANTS RELATING TO CONDUCT OF BUSINESS 36 32 5.1 Conduct of Company Businesses Prior to the Effective Time. During the period from the date of this Agreement to the Effective Time, except as expressly required or permitted by this Agreement or the Company Option Agreement, Company shall, and shall cause each of its Subsidiaries to, (a) conduct its business in the usual, regular and ordinary course consistent with past practice and in compliance in all material respects with applicable laws, (b) use reasonable best efforts to maintain and preserve intact its business organization, employees and business relationships and retain the services of its key officers and key employees and (c) take no action which would adversely affect or delay in any material respect the ability of either Parent or Company to obtain any necessary approvals of any Regulatory Agency or other Governmental Entity required for the transactions contemplated hereby or to perform its covenants and agreements under this Agreement or the Company Option Agreement. 5.2 Forbearances of Company. During the period from the date of this Agreement to the Effective Time, except as set forth in Section 5.2 of the Company Disclosure Schedule and except as expressly required or permitted by this Agreement or the Company Option Agreement, Company shall not, and shall not permit any of its Subsidiaries to, without the prior written consent of Parent: (a) (i) incur any indebtedness for borrowed money (other than (A) short-term indebtedness incurred (x) to refinance existing short-term indebtedness, (y) pursuant to lines of credit and credit facilities existing on the date of this Agreement, or (z) otherwise in the ordinary course of business consistent with past practice, and (B) indebtedness of Company or any of its Subsidiaries owed to Company or any of its other wholly-owned Subsidiaries), assume, guarantee, endorse or otherwise as an accommodation become responsible for the obligations of any other individual, corporation or other entity, or make any loan, advance or capital contribution (other than to Company or any of its wholly-owned Subsidiaries and other than in the ordinary course of Company's investment banking business consistent with past practice) or (ii) make or commit to make any capital expenditures in excess of $2,500,000 for any single or related group of capital expenditures; (b) (i) adjust, split, combine or reclassify any of its capital stock; (ii) make, declare, set aside or pay any dividend (except for dividends paid in the ordinary course of business by any wholly-owned Subsidiaries of Company to Company or to any other of its wholly-owned Subsidiaries) or make any other distribution on, or directly or indirectly (other than in connection with the surrender of Company Common Stock as full or partial payment of the exercise price or withholding tax in connection with the exercise of Company Options under the Company Stock Plans) redeem, purchase or otherwise acquire, any shares of its capital stock or any securities or obligations 37 33 convertible into or exchangeable for any shares of its capital stock; (iii) grant any individual, corporation or other entity any right to acquire any shares of its capital stock or any stock appreciation or similar rights except as permitted by Section 5.2(i); (iv) issue or authorize the issuance of, deliver, sell, transfer, pledge or otherwise encumber any additional shares of capital stock or any securities or obligations convertible into or exchangeable for any shares of its capital stock, other than the issuance of Company Common Stock pursuant to the exercise of stock options disclosed in Section 3.2 of the Company Disclosure Schedule as being outstanding on the date of this Agreement and granted pursuant to the Company Stock Plans; or (v) enter into any agreement, understanding or arrangement with respect to the sale or voting of its capital stock; (c) sell, transfer, mortgage, encumber or otherwise dispose of any material portion of its properties or assets, including, without limitation, capital stock in any Subsidiaries of Company, to any individual, corporation or other entity other than a direct or indirect wholly-owned Subsidiary, or cancel, release or assign any indebtedness to any such person or any claims held by any such person, except in the ordinary course of business consistent with past practice; (d) except for transactions in connection with underwriting activities in the ordinary course of business consistent with past practice and portfolio investments by Investment Subsidiaries in accordance with their applicable investment guidelines, make any material investment either by purchase of stock or securities, contributions to capital, property transfers, or purchase of any property or assets of any other individual, corporation, limited partnership or other entity, other than an investment in a wholly-owned Subsidiary of Company; (e) acquire or agree to acquire by merging or consolidating with, or by purchasing a substantial portion of the stock or assets of, or by any other manner, any business or any corporation, partnership, joint venture, association or other business organization or division thereof; (f) acquire or agree to acquire voting or non-voting equity securities or similar ownership interests in any person (other than a Subsidiary) in an amount (when combined with any voting or non-voting equity securities or similar interests already owned by Company or its Subsidiaries) exceeding 4.9% of any class of voting securities or interests or 24.9% of the total equity of any such person, other than securities or other similar ownership interests acquired in the ordinary course of Company's or its Subsidiaries' underwriting, dealing or market-making business consistent with past practice; 38 34 (g) commence, undertake or engage in any new line of business; (h) enter into or terminate any material lease, contract or agreement, or make any change in any of its existing material leases, contracts or agreements; (i) (i) enter into, amend, modify or renew any employment, consulting, severance or similar agreements or arrangements with any director, officer, consultant, independent contractor, or employee of or with respect to Company or any of its Subsidiaries, or grant any salary, wage or bonus increase, except, (1) for normal individual increases in compensation to employees in the ordinary course of business consistent with past practice (subject, in the case of executive officers of Company and others whose combined annual salary and bonus exceed $500,000, to prior consultation with Parent), (2) for other changes that are required by applicable law, (3) to satisfy contractual obligations existing as of the date of this Agreement, (4) for employment arrangements for, or grants of awards to, newly hired employees in the ordinary course of business consistent with past or previously announced practice (subject, in the case of executive officers of Company and others whose combined annual salary and target bonus would exceed $500,000, to prior consultation with Parent), or (5) for payment of bonuses by Company to its employees in respect of its 1999 fiscal year, or (ii) enter into, establish, adopt or amend (except (1) as may be required by applicable law, (2) to satisfy contractual obligations existing as of the date of this Agreement or (3) as otherwise provided by this Agreement) any pension, retirement, stock option, stock purchase, savings, profit sharing, deferred compensation, consulting, bonus, group insurance or other employee benefit, incentive or welfare contract, plan or arrangement, or any trust agreement (or similar arrangement) related thereto in respect of any director, officer, consultant, independent contractor, or employee of or with respect to Company or any of its Subsidiaries, or, except as otherwise provided by this Agreement, take any action to accelerate the vesting, exercisability, payment or funding of Company Options, restricted stock or other compensation or benefits; (j) pay, discharge or satisfy any material claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), except for the payment, discharge or satisfaction of current liabilities or obligations, in accordance with their terms, in the ordinary course of business consistent with past practice, or waive, release, grant, or transfer any rights of material value or modify or change any existing license, lease, contract or other document in any manner that would be material to Company and its Subsidiaries; 39 35 (k) settle or compromise any litigation (whether or not commenced prior to the date of this Agreement), other than settlements or compromises of litigation where the amount paid does not exceed $250,000 for any single litigation matter or related group of litigation matters (provided such settlement or compromise agreements do not involve any non-monetary obligations on the part of Company or any of its Subsidiaries other than, in the case of litigation not involving any Governmental Entity or other Regulatory Agency, immaterial non-monetary obligations); (l) change any accounting principle used by it, except for such changes as may be required to be implemented following the date of this Agreement pursuant to generally accepted accounting principles or rules and regulations of the SEC promulgated following the date hereof, as concurred in by Company's independent auditors; (m) change any Tax election, change any annual Tax accounting period, change any method of Tax accounting in any material respect, file any material amended Tax return, enter into any closing agreement relating to any material Tax, settle any material Tax claim or assessment, surrender any right to claim a material Tax refund or consent to any extension or waiver of the limitations period applicable to any material Tax claim or assessment; (n) adopt or implement any amendment to its charter or bylaws or other comparable organizational documents, or enter into any plan of consolidation, merger or reorganization with any person other than a wholly-owned Subsidiary of Company; (o) materially restructure or materially change its investment securities portfolio, its hedging strategy or its gap position, through purchases, sales or otherwise, or the manner in which the portfolio is classified or reported or materially alter the credit or risk concentrations associated with its underwriting, market-making and other investment banking businesses; (p) adopt a plan of complete or partial liquidation or resolutions providing for or authorizing such a liquidation or a dissolution, restructuring, recapitalization or reorganization; (q) take any action that is intended or would reasonably be expected to result in any of its representations and warranties set forth in this Agreement being or becoming untrue in any material respect, or in any of the conditions to the Merger set forth in Article VII or to the Offer set forth in Annex I not being satisfied or in a violation of any 40 36 provision of this Agreement, except, in each case, as may be required by applicable law; or (r) agree to, or make any commitment to, take, or authorize, any of the actions prohibited by this Section 5.2. 5.3 Transition. In order to facilitate an orderly transition of the management of the business of Company and its Subsidiaries to Parent and in order to facilitate the integration of the operations of Company and Parent and their Subsidiaries and to permit the coordination of their related operations on a timely basis, and in an effort to accelerate to the earliest time possible following the Effective Time the realization of synergies, operating efficiencies and other benefits expected to be realized by Parent and Company as a result of the Merger, Company shall and shall cause its Subsidiaries to consult with Parent on all strategic and operational matters to the extent such consultation is not in violation of applicable laws, including laws regarding the exchange of information and other laws regarding competition. Company shall and shall cause its Subsidiaries to make available to Parent at the facilities of Company and its Subsidiaries, where determined by Parent to be appropriate and necessary, office space in order to assist it in observing all operations and reviewing all matters concerning Company's affairs. Without in any way limiting the provisions of Section 6.2, Parent, its Subsidiaries, officers, employees, counsel, financial advisors and other representatives shall, upon reasonable notice to Company, be entitled to review the operations and visit the facilities of Company and its Subsidiaries at all times as may be deemed reasonably necessary by Parent in order to accomplish the foregoing arrangements. Notwithstanding the foregoing, nothing contained in this Agreement shall give Parent, directly or indirectly, the right to control or direct Company's operations prior to the date on which the directors of Company designated by Parent shall have been elected or appointed to, and shall constitute a majority of, the Board of Directors of Company (the "Appointment Date"). Prior to the Appointment Date, each of Company and Parent shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over its and its Subsidiaries' respective operations. ARTICLE VI ADDITIONAL AGREEMENTS 6.1 Company Stockholders Meeting; Preparation of Proxy Statement. (a) If the Company Stockholder Approval is required under the DGCL to consummate the Merger, (i) Company shall cause a meeting of its stockholders (the "Company 41 37 Stockholders Meeting") to be duly called and held as soon as practicable after the date on which shares of Company Common Stock are purchased by Sub pursuant to the Offer for the purpose of voting on the adoption of this Agreement, and (ii) Parent and Company shall prepare and file with the SEC the Proxy Statement. Each of Parent and Company shall use all reasonable efforts to resolve any comments of the SEC as promptly as practicable after such filing, and Company shall thereafter mail or deliver the Proxy Statement to its stockholders as promptly as practicable. The Board of Directors of Company shall (i) include in the Proxy Statement the Company Board Recommendation and (ii) use its reasonable best efforts to obtain the necessary vote in favor of the adoption of this Agreement by its stockholders. The Board of Directors of Company shall not withdraw, amend, modify or materially qualify in a manner adverse to Parent the Company Board Recommendation (or announce publicly its intention to do so). Without limiting the generality of the foregoing, Company agrees that its and its Board of Directors' obligations under this Section 6.1, and (except as expressly otherwise provided elsewhere herein) under all other provisions of this Agreement, shall not be altered by the commencement, public proposal, public disclosure or communication to Company of any Transaction Proposal (as defined in Section 6.9), including without limitation a Superior Proposal. (b) Parent agrees that it will vote, or cause to be voted, at the Company Stockholders Meeting, all shares of Company Common Stock then owned by it or Sub in favor of the adoption of this Agreement. (c) Notwithstanding this Section 6.1, in the event that Parent, Sub or any other Subsidiary of Parent shall acquire at least 90% of the outstanding shares of each class of capital stock of Company, the parties hereto agree to take all necessary and appropriate action to cause the Merger to become effective as soon as practicable after such acquisition, without a meeting of stockholders of Company, in accordance with Section 253 of the DGCL. 6.2 Reasonable Best Efforts. (a) Each of Parent and Company shall, and shall cause their respective Subsidiaries to, use their reasonable best efforts to take, or cause to be taken, all actions necessary, proper or advisable to comply promptly with all legal requirements which may be imposed on such party or any of its Subsidiaries with respect to the Offer and the Merger and, subject to the conditions set forth in Article VII hereof, to consummate the transactions contemplated by this Agreement. (b) The parties hereto shall cooperate with each other and use their reasonable best efforts to as promptly as practicable prepare and file all necessary documentation, to effect all applications, notices, petitions and filings, to obtain as promptly as practicable all permits, consents, approvals and authorizations of all Governmental Entities and any other third parties which are necessary or advisable to consummate the transactions contemplated by this 42 38 Agreement (including, without limitation, the Offer and the Merger) or to prevent the termination of Company's and its Subsidiaries contracts as a result thereof, to comply fully with the terms and conditions of all such permits, consents, approvals and authorizations of all such Governmental Entities, to lift or rescind any injunction or restraining order or other order adversely affecting the ability of the parties to consummate the transactions contemplated hereby, and to defend any litigation seeking to enjoin, prevent or delay the consummation of the transactions contemplated hereby or seek material damages. Parent and Company shall have the right to review in advance, and, to the extent practicable, each will consult with the other on, in each case subject to applicable laws relating to the exchange of information, all the information relating to Company or Parent, as the case may be, and any of their respective Subsidiaries, which appear in any filing made with, or written materials submitted to, any Governmental Entity or any other third party in connection with the transactions contemplated by this Agreement. In exercising the foregoing right, each of the parties hereto shall act reasonably and as promptly as practicable. The parties hereto agree that they will consult with each other with respect to the obtaining of all permits, consents, approvals and authorizations of all Governmental Entities and other third parties necessary or advisable to consummate the transactions contemplated by this Agreement and each party will keep the other apprised of the status of matters relating to completion of the transactions contemplated hereby. (c) Parent and Company shall, upon request, furnish each other with all information concerning themselves, their Subsidiaries, directors, officers and stockholders and such other matters as may be reasonably necessary or advisable in connection with the Offer Documents, the Schedule 14D-9 or the Proxy Statement or any other statement, filing, notice or application made by or on behalf of Parent, Company or any of their respective Subsidiaries to any Governmental Entity in connection with the Offer, the Merger and the other transactions contemplated by this Agreement. (d) Parent and Company agree to take the further actions set forth in Section 6.2(d) of the disclosure schedule of Parent delivered to Company concurrently herewith (the "Parent Disclosure Schedule"). 6.3 Access to Information. (a) Upon reasonable notice and subject to applicable laws relating to the exchange of information, Company shall, and shall cause its Subsidiaries to, afford to the officers, employees, accountants, counsel and other representatives of Parent, complete access, during normal business hours during the period prior to the Effective Time, to all its properties, books, contracts, commitments and records and, during such period, Company shall, and shall cause its Subsidiaries to, make available to Parent and such other parties (i) a copy of each report, schedule, registration statement and other document filed or received by it during such period pursuant to the requirements of federal securities laws or other federal or 43 39 state laws and the rules of SROs relating to broker-dealers (other than reports or documents which Company is not permitted to disclose under applicable law) and (ii) all other information concerning its business, properties and personnel as Parent may reasonably request, in all cases so that Parent may have full opportunity to make such investigations as it desires of the affairs and assets of Company. Neither Company nor any of its Subsidiaries shall be required to provide access to or to disclose information where such access or disclosure would violate or prejudice the rights of its customers, jeopardize the attorney-client privilege of the institution in possession or control of such information or contravene any law, rule, regulation, order, judgment, decree, or binding agreement entered into prior to the date of this Agreement. The parties hereto will make appropriate substitute disclosure arrangements under circumstances in which the restrictions of the preceding sentence apply. (b) Parent shall hold all information furnished by or on behalf of Company or any of Company's Subsidiaries or representatives pursuant to Section 6.3(a) in confidence to the extent required by, and in accordance with, the provisions of the confidentiality agreement, dated February 8, 1999 between Parent and Company (the "Confidentiality Agreement"). (c) No investigation by Parent or its representatives shall affect the representations and warranties of Company set forth herein. 6.4 Employee Benefits. (a) From and after the Effective Time but prior to January 1, 2000, employees of Company and its Subsidiaries who continue their employment with the Surviving Corporation, Parent or any of their respective Subsidiaries ("Continued Employees") will be provided employee benefits which are substantially identical to those currently provided to such employees under Company's employee welfare benefit plans, and which are comparable to those provided under Company's defined contribution pension plan. After December 31, 1999, such employees will be provided employee benefits which are comparable to those provided by Parent and its Subsidiaries to their similarly-situated employees; provided, however, that it is understood that after the Effective Time nothing herein shall interfere with Parent's or the Surviving Corporation's right to take any action or refrain from taking any action which Company or any of its Subsidiaries could take or refrain from taking prior to the Effective Time. (b) For the purpose of determining eligibility to participate in any plans Parent and its Subsidiaries make available to Continued Employees, and determining the vesting of benefits thereunder (but not for the accrual of benefits under such plans), Parent and its Subsidiaries shall give effect to years of service with Company or its Subsidiaries, as the case may be, as if such service had been with Parent or its Subsidiaries. From and after the Effective Time, Parent and its Subsidiaries will, or will cause the Surviving Corporation to, (i) cause any 44 40 pre-existing conditions or limitations and eligibility waiting periods under any group health plans of Parent or its Subsidiaries to be waived with respect to Continued Employees and their eligible dependents and (ii) give each Continued Employee credit for the plan year in which the Effective Time occurs towards applicable deductibles and annual out-of-pocket limits for expenses incurred prior to the Effective Time. (c) The payment of certain bonuses to employees of Company and its Subsidiaries subsequent to the date hereof and the establishment of a retention pool consisting of restricted shares of Parent Common Stock shall be in accordance with the provisions set forth in Section 6.4(c) of the Parent Disclosure Schedule. 6.5 Indemnification; Directors' and Officers' Insurance. (a) The Certificate of Incorporation and Bylaws of the Surviving Corporation shall contain, to the extent permitted by law, the provisions with respect to indemnification set forth in the Certificate of Incorporation and Bylaws of Company on the date hereof, which provisions shall not be amended, repealed or otherwise modified for a period of six years after the Effective Time in any manner that would adversely affect the rights thereunder of the persons who at any time prior to the Effective Time were entitled to such indemnification under the Certificate of Incorporation or Bylaws of Company in respect of actions or omissions occurring at or prior to the Effective Time (including, without limitation, the transactions contemplated hereby), unless such modification is required by law; provided, that the Certificate of Incorporation and Bylaws of the Surviving Corporation shall not be required to contain such provisions if Parent otherwise provides the same level of indemnification for such individuals as contained in the Certificate of Incorporation and Bylaws of the Surviving Corporation. (b) Parent shall, and shall cause the Surviving Corporation to, indemnify, defend and hold harmless the present and former officers and directors of Company or any of Company's Subsidiaries in their capacities as such (each an "Indemnified Party") after the Effective Time against all losses, expenses, claims, damages or liabilities arising out of actions or omissions occurring on or prior to the Effective Time to the fullest extent now provided in their respective Certificates of Incorporation or Bylaws, and as permitted by applicable law. (c) Parent shall use its reasonable best efforts to cause the persons serving as officers and directors of Company immediately prior to the Effective Time to be covered for a period of six years from the Effective Time by the directors' and officers' liability insurance policy maintained by Company (provided that Parent may substitute therefor policies of at least the same coverage and amounts containing terms and conditions which are not less advantageous than such policy) with respect to acts or omissions occurring prior to the Effective Time which were committed by such officers and directors in their capacity as such; provided, however, that 45 41 in no event shall Parent be required to expend more than 200% of the current amount expended by Company (the "Insurance Amount") to maintain or procure insurance coverage pursuant hereto and further provided, that if Parent is unable to maintain or obtain the insurance called for by this Section 6.5(c), Parent shall use its reasonable best efforts to obtain as much comparable insurance as available for the Insurance Amount. (d) In the event Parent, the Surviving Corporation or any of their respective successors or assigns (i) consolidates with or merges into any other person and shall not be the continuing or surviving corporation or entity of such consolidation or merger, or (ii) transfers or conveys all or substantially all of its properties and assets to any person, then, and in each such case, to the extent necessary, proper provision shall be made so that the successors and assigns of Parent or the Surviving Corporation, as the case may be, assume the obligations set forth in this section. (e) The provisions of this Section 6.5 are intended to be for the benefit of, and shall be enforceable by, each Indemnified Party and his or her heirs and representatives. 6.6 Additional Agreements. In case at any time after the Effective Time any further action is necessary or desirable to carry out the purposes of this Agreement (including, without limitation, any other merger between a Subsidiary of Company and a Subsidiary of Parent) or to vest the Surviving Corporation with full title to all properties, assets, rights, approvals, immunities and franchises of any of the parties to the Merger, the proper officers and directors of each party to this Agreement and their respective Subsidiaries shall take all such necessary action as may be reasonably requested by Parent. 6.7 Advice of Changes. Parent and Company shall promptly advise the other party of any change or event having a Material Adverse Effect on it or which it believes would or would be reasonably likely to cause or constitute a material breach of any of its representations or warranties or covenants contained herein; provided, however, that the delivery of any notice pursuant to this Section 6.7 shall not limit or otherwise affect the remedies available hereunder to any party receiving such notice. 6.8 [Reserved] 6.9 No Solicitation. Neither Company nor any of its Subsidiaries shall (whether directly or indirectly through advisors, agents or other intermediaries), nor shall Company or any of its Subsidiaries authorize or permit any of its or their officers, directors, agents, representatives or advisors to, (a) solicit, initiate, encourage (including by way of furnishing information) or take any action knowingly to facilitate the submission of any inquiries, proposals 46 42 or offers (whether or not in writing) from any person other than Parent relating to, (i) any acquisition or purchase of 10% or more of the consolidated assets of Company and its Subsidiaries (including through the formation of a joint venture) or of 10% or more of any class of equity securities of Company or any of its Subsidiaries, (ii) any tender offer or exchange offer (including a self-tender offer) that if consummated would result in any person beneficially owning 10% or more of any class of equity securities of Company or any of its Subsidiaries, (iii) any merger, consolidation, business combination, reorganization, recapitalization, liquidation, dissolution or similar transaction involving Company or any of its Subsidiaries, or (iv) any other transaction the consummation of which would or would reasonably be expected to impede, interfere with, prevent or materially delay the Offer or the Merger (any of the foregoing, a "Transaction Proposal"), or agree to, approve or endorse any Transaction Proposal, or (b) enter into or participate in any discussions or negotiations regarding any of the foregoing, or otherwise cooperate in any way with, or knowingly assist or participate in, facilitate or encourage, any effort or attempt by any other person to do or seek any of the foregoing; provided, that Company may, in response and with respect to a bona fide unsolicited written proposal from a third party submitted after the date of this Agreement which constitutes a Superior Proposal, engage in the activities specified in clause (b), including furnishing information to such third party, if (i) in the opinion of Company's outside counsel, failure to take such action in response to such a proposal would constitute a breach by the Board of Directors of Company of its fiduciary duties under applicable law, (ii) Company has received from such third party an executed confidentiality agreement with terms not materially less favorable to Company than those contained in the Confidentiality Agreement, and (iii) Company has fully and completely complied with this Section 6.9. If Company receives a Transaction Proposal, or a request for nonpublic information relating to Company or any of its Subsidiaries or for access to the properties, books or records of Company or any of its Subsidiaries by any Person who is considering making or has made a Transaction Proposal, it shall immediately inform Parent orally and shall as promptly as practicable (and in any event within one day) inform Parent in writing of the terms and conditions of such proposal and the identity of the person making it, forwarding a copy of any written communications relating thereto. Company will keep Parent fully informed on as prompt a basis as is practicable of the status and details of any such Transaction Proposal or request and any related discussions or negotiations, including by forwarding copies of any material written communications relating thereto. Company will immediately cease and cause its Subsidiaries, and its and their officers, directors, agents, representatives and advisors, to cease any and all existing activities, discussions or negotiations with any parties conducted heretofore with respect to any of the foregoing, and shall use its reasonable best efforts to cause any such parties in possession of confidential information about Company or its Subsidiaries that was furnished by or on behalf of Company or its Subsidiaries in connection with any of the foregoing to return or destroy all such information in the possession of any such party or in the possession of any agent or advisor of any such party. Company agrees not to release any third party from, 47 43 or waive any provisions of, any confidentiality or standstill agreement to which it or its Subsidiaries is a party. Company shall ensure that the officers, directors and employees of Company and its Subsidiaries and any investment banker or other advisor or representative retained by such party are aware of and instructed to comply with the restrictions described in this Section 6.9. Nothing in this Section 6.9 shall prohibit Company or its Board of Directors from taking and disclosing to Company's stockholders a position with respect to a Transaction Proposal by a third party to the extent required under the Exchange Act, including Rules 14e-2 and 14d-9 thereunder, or from making such disclosure to Company's stockholders which, in the opinion of Company's outside counsel, is required under applicable law; provided, that nothing in this sentence shall affect the obligations of Company and its Board of Directors under any other provision of this Agreement. For purposes of this Section 6.9 and the definition of "Transaction Proposal" as used elsewhere in this Agreement, the term "Subsidiaries" shall not include any Investment Subsidiaries which are not, either individually or in the aggregate, material to Company and its Subsidiaries taken as a whole. 6.10 Publicity. Company, on the one hand, and Parent and Sub, on the other hand, will consult with each other before holding any press conferences, analyst calls or other meetings or discussions and before issuing any press releases or other public announcements or statements regarding the transactions contemplated hereby and by the Company Option Agreement and Support Agreement. The parties will provide each other the opportunity to review and comment upon any press release or other public announcement or statement with respect to the transactions contemplated by this Agreement, the Company Option Agreement and the Support Agreement, including the Offer and the Merger, and shall not issue any such press release or other public announcement or statement prior to such consultation, except as may be required by applicable law, court process or by obligations pursuant to any listing agreement with any national securities exchange. The parties agree that the initial press release or releases to be issued with respect to the transactions contemplated by this Agreement shall be mutually agreed upon prior to the issuance thereof. In addition, Company shall, and shall cause its Subsidiaries to, (a) consult with Parent regarding communications with customers, stockholders and employees relating to the transactions contemplated hereby, (b) provide Parent with stockholder lists of Company, and (c) allow and facilitate Parent contact with stockholders of Company. 6.11 Stockholder Litigation. The parties to this Agreement shall cooperate and consult with one another, to the fullest extent possible, in connection with any stockholder litigation against any of them or any of their respective directors or officers with respect to the transactions contemplated by this Agreement. In furtherance of and without in any way limiting the foregoing, each of the parties shall use its respective reasonable best efforts to prevail in such litigation so as to permit the consummation of the transactions contemplated by this Agreement 48 44 in the manner contemplated by this Agreement. Notwithstanding the foregoing, Company agrees that it will not compromise or settle any litigation commenced against it or its directors or officers relating to this Agreement, the Company Option Agreement or the Support Agreement or the transactions contemplated hereby or thereby (including the Offer and the Merger) without Parent's prior written consent, which shall not be unreasonably withheld. 6.12 State Takeover Statutes. Each party will take all steps necessary to exempt (or continue the exemption of) the Offer, the Merger and the other transactions contemplated hereby and by the Company Option Agreement and the Support Agreement from, and challenge the validity of, any applicable state takeover law (including Section 203 of the DGCL), as now or hereafter in effect. 6.13 Section 15 of the Investment Company Act. (a) Unless Parent reasonably concludes that the existing investment advisory agreements will not terminate as a result of the transactions contemplated hereby, Company will use its reasonable best efforts to obtain, as promptly as practicable after the date of this Agreement, the approval of the boards of directors and the stockholders of each registered investment company for which a Subsidiary of Company serves as adviser, sub-adviser or manager (collectively, the "Funds"), pursuant to the provisions of Section 15 of the 1940 Act applicable thereto, of a new investment advisory agreement for each such Fund identical in all respects (except for the date thereof) to that in effect immediately prior to the date on which the Offer is consummated. (b) Company shall use its reasonable best efforts to assure, prior to the date on which the Offer is consummated, the satisfaction of the conditions set forth in Section 15(f) of the 1940 Act with respect to each Fund. (c) Parent agrees to use its reasonable best efforts to assure compliance with the conditions of Section 15(f) of the 1940 Act with respect to the Funds from and after the Appointment Date. Without limiting the foregoing, Parent agrees that (i) for a period of not less than three years after the Appointment Date, Parent shall assure that no more than 25% of the members of the Board of Directors of any Fund shall be "interested persons" (as defined in the 1940 Act) of Parent (or such other entity which acts as adviser or sub-adviser to the Funds) or of the predecessor investment adviser of the Funds and (ii) neither Parent nor any affiliate (including any parent company of Parent) of Parent (or any entity which will act as adviser to the Funds), for a period of not less than two years after the Appointment Date, shall have any express or implied understanding, arrangement or intention to impose an unfair burden on any of the Funds as a result of the transactions contemplated hereby. 49 45 ARTICLE VII CONDITIONS PRECEDENT 7.1 Conditions to Each Party's Obligation To Effect the Merger. The respective obligation of each party to effect the Merger shall be subject to the satisfaction at or prior to the Effective Time of the following conditions: (a) Consummation of the Offer. Sub shall have purchased shares of Company Common Stock pursuant to the Offer. (b) Company Stockholder Approval. If required under the DGCL, the Company Stockholder Approval shall have been obtained. (c) No Injunctions or Restraints; Illegality. No order, injunction or decree issued by any court or agency of competent jurisdiction or other legal restraint or prohibition (an "Injunction") preventing the consummation of the Merger shall be in effect. No statute, rule, regulation, order, injunction or decree shall have been enacted, entered, promulgated or enforced by any Governmental Entity which prohibits, materially restricts or makes illegal consummation of the Merger. ARTICLE VIII TERMINATION AND AMENDMENT 8.1 Termination. This Agreement may be terminated at any time prior to the Effective Time, whether before or after approval by the stockholders of Company of the matters presented in connection with the Merger: (a) by mutual consent of Parent and Company; (b) by either Parent or the Board of Directors of Company if any Governmental Entity of competent jurisdiction which must grant a Requisite Regulatory Approval has denied approval of the Offer or the Merger and such denial has become final and nonappealable or any Governmental Entity of competent jurisdiction shall have issued an order, decree or ruling or taken any other action permanently restraining, enjoining or otherwise prohibiting the transactions contemplated by this Agreement, and such order, decree, ruling or other action shall have become final and nonappealable; provided, 50 46 however, that the right to terminate this Agreement under this Section 8.1(b) shall not be available to any party whose failure to comply with Section 6.2 or any other provision of this Agreement has been the cause of such action; (c) (i) by the Board of Directors of Company, if, prior to the purchase of any shares of Company Common Stock by Sub pursuant to the Offer, Parent breaches any of its representations, covenants or agreements contained in this Agreement (A) such that any of the conditions set forth in Annex I would not be satisfied, and (B) such breach either cannot be cured or is not cured prior to the earlier of (x) 10 days after Company has furnished Parent with written notice of such breach and (y) two business days prior to the date on which the Offer is then scheduled to expire; or (ii) by Parent, if, prior to the purchase of any shares of Company Common Stock by Sub pursuant to the Offer, Company breaches any of its representations, covenants or agreements contained in this Agreement (A) such that any of the conditions set forth in Annex I would not be satisfied, and (B) such breach either cannot be cured or is not cured prior to the earlier of (x) 10 days after Parent has furnished Company with written notice of such breach and (y) two business days prior to the date on which the Offer is then scheduled to expire; (d) by Parent, if, prior to the purchase of any shares of Company Common Stock by Sub pursuant to the Offer, Company or its Board of Directors shall have (i) withdrawn, modified, amended or materially qualified in any respect adverse to Parent the Company Board Recommendation, (ii) failed to mail the Schedule 14D-9 as required by Section 1.2(b) to its stockholders, or failed to include in the Schedule 14D-9 the Company Board Recommendation, (iii) resolved to do any of the foregoing or (iv) in response to the commencement of any tender offer or exchange offer for 10% or more of the outstanding shares of Company Common Stock, or the public announcement or disclosure of any other Transaction Proposal, or the commencement of negotiations or discussions with any third party regarding a Transaction Proposal in accordance with the terms of Section 6.9, failed to, fully and unconditionally, publicly recommend rejection of such tender or exchange offer or reject such other Transaction Proposal (and publicly announce such rejection, in the case of Transaction Proposals which have been publicly disclosed or become publicly known) within ten business days of such commencement, announcement or disclosure; or (e) by either Parent or the Board of Directors of Company if (i) the Offer expires or terminates in accordance with the terms hereof without the purchase of any shares of Company Common Stock thereunder or (ii) Sub shall not have purchased Shares under the Offer prior to March 31, 2000; provided, however, that the right to terminate this Agreement under this Section 8.1(e) shall not be available to any party to 51 47 the extent that such party's failure to comply with Section 6.2 or any other provision of this Agreement has resulted in the failure of any of the conditions set forth on Annex I hereto. 8.2 Effect of Termination. (a) In the event of termination of this Agreement by either Parent or Company as provided in Section 8.1, written notice thereof shall forthwith be given to the other party or parties specifying the provision hereof pursuant to which such termination is made, and this Agreement shall forthwith become void and have no effect, and none of Parent, Company, any of their respective Subsidiaries or any of the officers or directors of any of them shall have any liability of any nature whatsoever hereunder, or in connection with the transactions contemplated hereby, except that (i) Section 6.3(b), this Section 8.2 and Article IX shall survive any termination of this Agreement, (ii) notwithstanding anything to the contrary contained in this Agreement, neither Parent nor Company shall be relieved or released from any liabilities or damages arising out of its willful breach of any provision of this Agreement, and (iii) Company shall pay to Parent the Termination Fee (as defined below), if applicable, in accordance with this Section 8.2. (b) In the event that this Agreement is terminated by Parent pursuant to clause (d) of Section 8.1, Company shall pay to Parent by wire transfer of immediately available funds to an account designated by Parent on the next business day following such termination an amount equal to $57.5 million (the "Termination Fee"). (c) If: (i) a Transaction Proposal is commenced, publicly disclosed, publicly proposed or otherwise communicated or made known in writing to Company at any time on or after the date of this Agreement and prior to the termination hereof, and this Agreement is terminated (x) pursuant to clause (c)(ii) of Section 8.1, if the breach which gave rise to such termination was intentional, or (y) pursuant to clause (e) of Section 8.1 if the Minimum Condition was not met at the time of such termination, then, in the case of the foregoing clause (x) only, Company shall upon such termination pay to Parent an amount equal to 33.3% of the Termination Fee; and (ii) within 18 months of the date of such termination, Company enters into a definitive agreement with respect to, or consummates, any Transaction Proposal, then Company shall pay to Parent an amount equal to (x) the remaining 66.7% of the Termination Fee, in the circumstances described in clause (x) of the preceding paragraph (c)(i), or (y) the entire Termination Fee, in the circumstances described in clause (y) of 52 48 the preceding paragraph (c)(i), in each case concurrently with the earlier of the execution of such definitive agreement or the consummation of such Transaction Proposal. (d) If Company fails to pay Parent any amounts due to Parent under this Section 8.2 within the time periods specified herein, Company shall pay all costs and expenses (including legal fees and expenses) incurred by Parent in connection with any action or proceeding (including the filing of any lawsuit) taken by it to collect such unpaid amounts, together with interest on such unpaid amounts at the publicly announced prime or base lending rate of The Chase Manhattan Bank from the date such amounts were required to be paid until the date actually received by Parent. 8.3 Amendment. Subject to compliance with applicable law, this Agreement may be amended by the parties hereto, by action taken or authorized by their respective Boards of Directors, at any time before or after approval of the matters presented in connection with the Merger by the stockholders of Company; provided, however, that after any approval of the transactions contemplated by this Agreement by the stockholders of Company, there may not be, without further approval of such stockholders, any amendment of this Agreement which changes the amount or the form of the consideration to be delivered to the holders of Company Common Stock hereunder other than as contemplated by this Agreement. This Agreement may not be amended except by an instrument in writing signed on behalf of each of the parties hereto. 8.4 Extension; Waiver. At any time prior to the Effective Time, the parties hereto, by action taken or authorized by their respective Boards of Directors, may, to the extent legally allowed, (a) extend the time for the performance of any of the obligations or other acts of the other parties hereto, (b) waive any inaccuracies in the representations and warranties contained herein or in any document delivered pursuant hereto and (c) waive compliance with any of the agreements or conditions contained herein; provided, however, that after any approval of the transactions contemplated by this Agreement by the stockholders of Company, there may not be, without further approval of such stockholders, any extension or waiver of this Agreement or any portion thereof which reduces the amount or changes the form of the consideration to be delivered to the holders of Company Common Stock hereunder other than as contemplated by this Agreement. Any agreement on the part of a party hereto to any such extension or waiver shall be valid only if set forth in a written instrument signed on behalf of such party, but such extension or waiver or failure to insist on strict compliance with an obligation, covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure. 53 49 ARTICLE IX GENERAL PROVISIONS 9.1 Nonsurvival of Representations, Warranties and Agreements. None of the representations, warranties, covenants and agreements in this Agreement or in any instrument delivered pursuant to this Agreement (other than pursuant to the Company Option Agreement and the Support Agreement, which shall terminate in accordance with their respective terms) shall survive the Effective Time, except for those covenants and agreements contained herein and therein which by their terms apply in whole or in part after the Effective Time. 9.2 Expenses. All costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such expense; provided, however, that the costs and expenses of printing and mailing the Offer Documents, the Schedule 14D-9 and the Proxy Statement, and all filing and other fees paid to the SEC in connection with the Offer and the Merger, shall be borne equally by Parent and Company. 9.3 Notices. All notices and other communications hereunder shall be in writing and shall be deemed given if delivered personally, telecopied (with confirmation), mailed by registered or certified mail (return receipt requested) or delivered by an express courier (with confirmation) to the parties at the following addresses (or at such other address for a party as shall be specified by like notice): (a) if to Parent, to: The Chase Manhattan Corporation 270 Park Avenue New York, NY 10017 Attention: William H. McDavid, Esq. Fax: (212) 270-4288 with a copy to: Simpson Thacher & Bartlett 425 Lexington Avenue New York, NY 10017 Attention: Lee Meyerson, Esq. Fax: (212) 455-2502 54 50 and (b) if to Company, to: Hambrecht & Quist Group 1 Bush St. San Francisco, CA 94104 Attention: Daniel H. Case III Fax: (415) 439-3638 with a copy to: Wachtell, Lipton, Rosen & Katz 51 West 52nd Street New York, NY 10019 Attention: Edward D. Herlihy, Esq. Fax: (212) 403-2000 9.4 Interpretation. When a reference is made in this Agreement to Sections, Exhibits or Schedules, such reference shall be to a Section of or Exhibit or Schedule to this Agreement unless otherwise indicated. The table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Whenever the words "include," "includes" or "including" are used in this Agreement, they shall be deemed to be followed by the words "without limitation". No provision of this Agreement shall be construed to require Company, Parent or any of their respective Subsidiaries or affiliates to take any action which would violate any applicable law, rule or regulation. 9.5 Counterparts. This Agreement may be executed in counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each of the parties and delivered to the other parties, it being understood that all parties need not sign the same counterpart. 9.6 Entire Agreement. This Agreement (including the documents and the instruments referred to herein) constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof other than the Company Option Agreement, the Support Agreement, the Confidentiality Agreement and the Confidentiality Agreement dated March 29, 1999, between Parent and Company. 55 51 9.7 Governing Law. This Agreement shall be governed and construed in accordance with the laws of the State of New York. 9.8 Severability. Any term or provision of this Agreement which is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement or affecting the validity or enforceability of any of the terms or provisions of this Agreement in any other jurisdiction. If any provision of this Agreement is so broad as to be unenforceable, the provision shall be interpreted to be only so broad as is enforceable. 9.9 Assignment; Third Party Beneficiaries. Subject to Section 1.13, neither this Agreement nor any of the rights, interests or obligations shall be assigned by either of the parties hereto (whether by operation of law or otherwise) without the prior written consent of the other party. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of and be enforceable by the parties and their respective successors and assigns. Except as otherwise specifically provided in Section 6.5, this Agreement (including the documents and instruments referred to herein) is not intended to confer upon any person other than the parties hereto any rights or remedies hereunder. 9.10 Enforcement. The parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement in any Federal court or New York State court sitting in the Borough of Manhattan, City of New York, this being in addition to any other remedy to which they are entitled at law or in equity. 56 52 IN WITNESS WHEREOF, Parent, Sub and Company have caused this Agreement to be executed by their respective officers thereunto duly authorized as of the date first above written. THE CHASE MANHATTAN CORPORATION By: /s/ William H. McDavid ------------------------------------ Name: William H. McDavid Title: General Counsel BRIDGE ACQUISITION CORPORATION By: /s/ William H. McDavid ------------------------------------ Name: William H. McDavid Title: HAMBRECHT & QUIST GROUP By: /s/ Daniel H. Case III ------------------------------------ Name: Daniel H. Case III Title: 57 ANNEX I CONDITIONS OF THE OFFER The capitalized terms used in this Annex I have the meanings set forth in the attached Agreement, except that the term "Merger Agreement" shall be deemed to refer to the attached Agreement. Notwithstanding any other provisions of the Offer, and in addition to the conditions that at the expiration of the Offer (i) there shall have been validly tendered and not withdrawn prior to the expiration of the Offer a number of shares of Company Common Stock which, together with any other shares beneficially owned by Parent or its wholly-owned Subsidiaries (other than Trust Account Shares), constitute more than 50% of the voting power (determined on a fully-diluted basis) on the date of purchase of all the securities of Company entitled to vote generally in the election of directors or in a merger (the "Minimum Condition"), (ii) all regulatory approvals and consents required to consummate the transactions contemplated by the Merger Agreement, including the Offer and the Merger (the "Requisite Regulatory Approvals"), shall have been obtained and shall remain in full force and effect and any statutory waiting periods shall have expired (all such approvals and consents and the expiration of all such waiting periods being referred to as the "Requisite Regulatory Approvals Condition"), and (iii) any other approvals or consents of third parties required to consummate the transactions contemplated by the Merger Agreement (including the Offer and the Merger), other than such third party approvals and consents the failure to obtain which would not reasonably be expected to result in a Material Adverse Effect on Parent, Company or the Surviving Corporation following the Offer or the Merger, shall have been obtained and shall remain in full force and effect, Sub shall not be required to accept for payment, or subject to applicable rules and regulations of the SEC, including Rule 14e-1(c) under the Exchange Act (relating to Sub's obligation to pay for or return tendered Shares promptly after termination or withdrawal of the Offer), purchase or pay for any shares tendered pursuant to the Offer, may postpone the acceptance for payment of shares tendered, and subject to the terms and conditions of the Merger Agreement may terminate the Offer, if at any time on or after the date of the Merger Agreement and at or before the time of payment for any such shares any of the following conditions shall occur or exist or has occurred or existed: (a)(x) the representations and warranties of Company set forth in the Merger Agreement shall not have been true and correct in all respects as of the date of the Merger Agreement, or shall not be true and correct in all respects as of the expiration of the Offer as though made at and as of the expiration of the Offer (except to the extent that such representations and warranties speak as of another date which shall be required to be true and correct as of such date, and in each case subject to and after giving effect to the qualification set forth in the introductory paragraph of Article III of the Merger Agreement), or (y) Company shall have breached in any material respect any of its covenants or obligations contained in the Merger Agreement; 58 I-2 (b) there shall have been any action or proceeding taken or instituted and pending, or any statute, rule, regulation, judgment, order, injunction or decree promulgated, entered, enforced, enacted, issued or deemed applicable to the Offer or the Merger, or any other action taken, proposed or threatened, by any domestic or foreign federal or state governmental, regulatory or administrative agency or authority or court or legislative body or commission which has or could reasonably be expected to have the effect of (i) making the purchase of, or payment for, some or all of the shares of Company Common Stock by Parent or Sub or their affiliates pursuant to the Offer or the Merger illegal, (ii) otherwise preventing consummation of the Offer or Merger, (iii) prohibiting the ownership or operation by Parent or any of its Subsidiaries of all or any material portion of the business or assets of Company and its Subsidiaries, taken as a whole, or Parent and its Subsidiaries, taken as a whole, (iv) imposing material limitations on the ability of Parent, Sub or any of Parent's affiliates effectively to acquire or hold or to exercise full rights of ownership of the shares of Company Common Stock, including, without limitation, the right to vote any such shares acquired or owned by Parent or Sub or any of their affiliates on all matters properly presented to the stockholders of Company, including, without limitation, the adoption of the Merger Agreement or the right to vote any shares of capital stock of any Company Subsidiary, or (v) requiring divestiture by Parent or Sub or any of their affiliates of any shares of Company Common Stock; or (c) the Merger Agreement shall have been terminated by Company, Parent or Sub in accordance with its terms. The foregoing conditions (other than the Minimum Condition) are for the sole benefit of Sub and may be asserted by Sub regardless of the circumstances giving rise to such condition. The foregoing conditions (other than the Minimum Condition) may be waived by Sub in whole or in part at any time and from time to time in its sole discretion. The failure by Sub at any time to exercise any of the foregoing rights shall not be deemed a waiver of any such right, the waiver of any such right with respect to particular facts and other circumstances shall not be deemed a waiver with respect to any other facts and circumstances, and each such right shall be deemed an ongoing right that may be asserted at any time and from time to time. EX-99.11.C.2 11 TENDER AND VOTING AGREEMENT 1 Exhibit 11(c)(2) TENDER AND VOTING AGREEMENT TENDER AND VOTING AGREEMENT, dated as of September 27, 1999 (this "Agreement"), between THE CHASE MANHATTAN CORPORATION, a Delaware corporation ("Parent"), and each stockholder of HAMBRECHT & QUIST GROUP, a Delaware corporation ("Company"), whose name and signature is set forth on the signature page hereof (collectively, the "Stockholders", each a "Stockholder"). WHEREAS, Parent, Company and Bridge Acquisition Corporation, a Delaware corporation and a wholly-owned subsidiary of Parent ("Sub"), are, concurrently with the execution hereof, entering into an Agreement and Plan of Merger, dated as of September 27, 1999 (the "Merger Agreement"), pursuant to which Sub will make an offer (the "Offer") for all of the issued and outstanding shares of common stock, par value $0.01 per share, of Company (the "Company Common Stock"), at a price of $50.00 per share, net in cash, the consummation of which will be followed by the merger of Sub with and into Company, with Company being the surviving corporation (the "Merger"); WHEREAS, each Stockholder is the record and/or beneficial owner of such number of shares of Company Common Stock as is set forth opposite his or her name on Schedule I hereto (collectively, the "Existing Shares"); all such Existing Shares, together with all other shares of capital stock or other voting securities of Company or any of its Subsidiaries with respect to which the Stockholders have beneficial ownership (for purposes of this Agreement, "beneficial ownership" shall have the meaning set forth in Rule 13d-3 under the Exchange Act) as of the date of this Agreement, and any shares of capital stock or other voting securities of Company or any of its Subsidiaries, beneficial ownership of which is directly or indirectly acquired after the date hereof, including, without limitation, shares received pursuant to any stock splits, stock dividends or distributions, shares acquired by purchase or upon the exercise, conversion or exchange of any option, warrant or convertible security or otherwise, and shares or any voting securities of Company or any of its Subsidiaries received pursuant to any change in the capital stock of Company or such Subsidiary by reason of any recapitalization, merger, reorganization, consolidation, combination, exchange of shares or the like, are referred to herein as the "Shares"; WHEREAS, each of the parties hereto desires to enter into this Agreement to provide for, among other things, (1) the obligation of each Stockholder to tender, or cause the record holder of the Shares to tender, the Shares (other than Restricted Shares and Shares the subject of unexercised options) (the "Tender Shares") in the Offer, (2) the obligation of each Stockholder to vote, or cause the record holder of the Shares to vote, the Shares (other than Shares the subject of unexercised options) (the "Voting Shares") in the manner specified herein and (3) certain restrictions on the sale or the transfer of the record and beneficial ownership of Shares by any Stockholder; this Agreement and all other agreements, instruments and other documents executed and delivered by each Stockholder in connection with this Agreement are collectively referred to as the "Support Documents"; and 2 WHEREAS, each Stockholder acknowledges that Parent is entering into the Merger Agreement in reliance on the representations, warranties, covenants and other agreements of such Stockholder set forth in this Agreement and would not enter into the Merger Agreement if such Stockholder did not enter into this Agreement. NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants and agreements set forth herein and in the Merger Agreement, and intending to be legally bound hereby, Parent and each Stockholder agree as follows: 1. Defined Terms. Capitalized terms used herein without definition shall have the meanings assigned to such terms in the Merger Agreement. 2. Agreement to Tender. Each Stockholder hereby agrees to validly tender, or cause the record owner to validly tender, all of its Tender Shares pursuant to and in accordance with the terms of the Offer within 15 business days of the commencement thereof, and not to withdraw or permit to be withdrawn any Shares therefrom. 3. Agreement to Vote. Each Stockholder hereby agrees that, from and after the date hereof and until the Termination Date (as defined in Section 20), at any meeting of the stockholders of Company, however called, or in connection with any written consent of the stockholders of Company, such Stockholder shall appear at each such meeting, in person or by proxy, or otherwise cause the Voting Shares to be counted as present thereat for purposes of establishing a quorum, and each such Stockholder shall vote (or cause to be voted) or act by written consent with respect to all of its Voting Shares that are beneficially owned by each such Stockholder or its affiliates or as to which such Stockholder has, directly or indirectly, the right to vote or direct the voting, (a) in favor of adoption and approval of the Merger Agreement and the Merger and the approval of the terms thereof and each of the other actions contemplated by the Merger Agreement, the Company Option Agreement and this Agreement, and any other action requested by Parent in furtherance thereof; (b) against any action or agreement that would result in a breach of any covenant, representation or warranty or any other obligation or agreement of Company contained in the Merger Agreement or the Company Option Agreement or of any Stockholder contained in this Agreement; (c) against any Transaction Proposal made by any person other than Parent or any of its Subsidiaries; and (d) against any other action, agreement or transaction (other than the Merger Agreement and the transactions contemplated thereby) that is intended, or could reasonably be expected, to impede, interfere or be inconsistent with, delay, postpone, discourage or materially adversely affect the Offer or the Merger or the performance by each of the Stockholders of its obligations under this Agreement, including, but not limited to: (i) any extraordinary corporate transaction, such as a merger, consolidation or other business combination involving Company or its Subsidiaries (other than the Offer and the Merger); (ii) a sale, lease or transfer of a material amount of assets of Company or any of its Subsidiaries or a reorganization, recapitalization or liquidation of Company or any Subsidiaries; (iii) a material change in the policies or management of Company; (iv) an election of new members to the board of directors of Company, except where the vote is cast in favor of the nominees of a majority of the existing directors; (v) any material change in the present 2 3 capitalization or dividend policy of Company or any amendment or other change to Company's certificate of incorporation; or (vi) any other material change in Company's corporate structure or business. Each Stockholder hereby agrees that it will not enter into any voting or other agreement or understanding with any person or entity or grant a proxy or power of attorney with respect to the Shares prior to the Termination Date (other than a proxy or power of attorney to an officer of Company that may be exercised solely in accordance with this Section 3 and except as provided in Section 4 below) or vote or give instructions in any manner inconsistent with clauses (a), (b) or (c) of the preceding sentence. Each Stockholder hereby agrees, during the period commencing on the date hereof and ending on the Termination Date, not to, and not to permit any of its affiliates to, vote or execute any written consent in lieu of a stockholders meeting or vote, if such consent or vote by the stockholders of Company would be inconsistent with or frustrate the purposes of the other covenants of such Stockholder pursuant to this paragraph. As used in this Agreement, "person" shall have the meaning specified in Sections 3(a)(9) and 13(d)(3) of the Exchange Act. 4. PROXY. SUBJECT TO SECTION 20 HEREOF, EACH STOCKHOLDER HEREBY GRANTS TO, AND APPOINTS, DINA DUBLON, ANTHONY J. HORAN AND MARC SHAPIRO, IN THEIR RESPECTIVE CAPACITIES AS OFFICERS OF PARENT, AND ANY INDIVIDUAL WHO SHALL HEREAFTER SUCCEED TO ANY SUCH OFFICER OF PARENT, AND ANY OTHER PERSON DESIGNATED IN WRITING BY PARENT, EACH OF THEM INDIVIDUALLY, SUCH STOCKHOLDER'S PROXY AND ATTORNEY-IN-FACT (WITH FULL POWER OF SUBSTITUTION) TO VOTE OR ACT BY WRITTEN CONSENT, TO THE FULLEST EXTENT PERMITTED BY AND SUBJECT TO APPLICABLE LAW (INCLUDING, WITHOUT LIMITATION, THE BANK HOLDING COMPANY ACT OF 1956, AS AMENDED), WITH RESPECT TO THE SHARES IN ACCORDANCE WITH SECTION 3 HEREOF. THIS PROXY IS COUPLED WITH AN INTEREST AND SHALL BE IRREVOCABLE. SUCH STOCKHOLDER WILL TAKE SUCH FURTHER ACTION OR EXECUTE SUCH OTHER INSTRUMENTS AS MAY BE NECESSARY TO EFFECTUATE THE INTENT OF THIS PROXY AND HEREBY REVOKES ANY PROXY PREVIOUSLY GRANTED BY SUCH STOCKHOLDER WITH RESPECT TO THE SHARES. NOTWITHSTANDING THE FOREGOING, NEITHER PARENT NOR ANY OF THE AFORENAMED PROXIES SHALL EXERCISE THE POWERS SET FORTH IN THIS SECTION 4 UNLESS AND UNTIL PARENT SHALL HAVE RECEIVED ALL APPROVALS OF THE FEDERAL RESERVE BOARD AND ANY OTHER APPLICABLE REGULATORY AUTHORITIES REQUIRED UNDER APPLICABLE LAW FOR SUCH EXERCISE. 5. Representations and Warranties of Parent. Parent represents and warrants to each Stockholder as follows: (a) Parent is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. 3 4 (b) Parent has the requisite corporate power and authority to enter into this Agreement and to carry out its obligations hereunder. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by Parent's Board of Directors and no other corporate proceedings on the part of Parent are necessary to authorize the execution and delivery of this Agreement by Parent and the consummation by it of the transactions contemplated hereby. This Agreement has been duly executed and delivered by Parent and (assuming the valid authorization, execution and delivery of this Agreement by each Stockholder) is a valid and binding obligation of Parent, enforceable in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar laws relating to or affecting creditors' rights generally and general equitable principles (whether considered in a proceeding in equity or at law). (c) The execution and delivery of this Agreement by Parent do not, and the performance of this Agreement by Parent will not, (i) conflict with or violate the certificate of incorporation or by-laws of Parent, (ii) conflict with or violate any law, rule, regulation or order applicable to Parent or by which any of respective properties is bound, or (iii) conflict with, result in any breach of or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, or require payment under, or result in the creation of any Lien on the properties or assets of Parent pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other instrument or obligation to which Parent is a party or by which Parent or any of its respective properties is bound, except for any thereof that could not reasonably be expected to materially impair the ability of Parent to perform its obligations hereunder or to consummate the transactions contemplated hereby on a timely basis. 6. Representations and Warranties of the Stockholders. Each Stockholder represents and warrants to Parent as follows: (a) If such Stockholder is a corporation, limited liability company, partnership or trust, such Stockholder has been duly organized and is validly existing and in good standing under the laws of the jurisdiction of its organization. (b) If such Stockholder is a corporation, limited liability company, partnership or trust, such Stockholder has all necessary corporate authority to enter into this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby, and the execution, delivery and performance of this Agreement by such Stockholder and the consummation by such Stockholder of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of such Stockholder. (c) This Agreement has been duly executed and delivered by such Stockholder and (assuming the valid authorization, execution and delivery of this Agreement by Parent) is a valid and binding obligation of such Stockholder, enforceable in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar laws relating to or affecting creditors' rights 4 5 generally and general equitable principles (whether considered in a proceeding in equity or at law). (d) The execution and delivery of this Agreement by such Stockholder do not, and the performance of this Agreement by such Stockholder will not, (i) if such Stockholder is a corporation, limited liability company, partnership or trust, conflict with or violate the certificate of incorporation or by-laws, or other organizational documents, of such Stockholder, (ii) conflict with or violate any law, rule, regulation or order applicable to such Stockholder or by which any of its properties is bound, or (iii) conflict with, result in any breach of or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, or require payment under, or result in the creation of any Lien on the properties or assets of such Stockholder pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other instrument or obligation to which such Stockholder is a party or by which such Stockholder or any of its properties is bound, except for any thereof that would not result in the imposition of a Lien on such Stockholder's Shares and would not reasonably be expected to materially impair the ability of such Stockholder to perform its obligations hereunder or to consummate the transactions contemplated hereby on a timely basis. (e) The execution and delivery of this Agreement by such Stockholder do not, and the performance by such Stockholder of its obligations hereunder will not, require such Stockholder to obtain any consent, approval, authorization or permit of, or to make any filing with or notification to, any Governmental Entity. (f) There is no suit, action, investigation or proceeding pending or, to the knowledge of such Stockholder, threatened against such Stockholder at law or in equity before or by any Governmental Entity that could reasonably be expected to materially impair the ability of such Stockholder to perform its obligations hereunder on a timely basis, and there is no agreement, commitment or law to which such Stockholder is subject that could reasonably be expected to materially impair the ability of such Stockholder to perform its obligations hereunder on a timely basis. (g) Such Stockholder's Existing Shares are owned beneficially and of record by such Stockholder except as indicated on Schedule I opposite such Stockholder's name. Such Stockholder's Existing Shares constitute all of the shares of Company Common Stock owned of record or beneficially by such Stockholder. All of the Existing Shares are issued and outstanding and, except as indicated on Schedule I opposite such Stockholder's name, such Stockholder does not own, of record or beneficially, any warrants, options, convertible securities or other rights to acquire any shares of Company Common Stock. Such Stockholder has not appointed or granted any proxy which is still effective with respect to any Shares other than as provided in this Agreement. Except as indicated on Schedule I opposite such Stockholder's name, such Stockholder has sole voting power and sole power of disposition with respect to all of its Existing Shares, with no restrictions on such Stockholder's rights of disposition pertaining thereto. 5 6 7. Agreements of the Stockholders. (a) Each Stockholder hereby agrees, while this Agreement is in effect, and except as expressly contemplated hereby, not to (i) sell, transfer, pledge, encumber, grant, assign or otherwise dispose of, enforce any redemption agreement with Company or enter into any contract, option or other arrangement or understanding with respect to or consent to the offer for sale, sale, transfer, pledge, encumbrance, grant, assignment or other disposition of, record or beneficial ownership of any of the Shares (whether acquired heretofore or hereafter) or any interest in any of the foregoing, except to Parent, (ii) grant any proxies or powers of attorney, deposit any Shares into a voting trust or enter into a voting agreement with respect to any Shares, or any interest in any of the Shares, except to Parent or (iii) take any action that would make any representation or warranty of such Stockholder contained herein untrue or incorrect or have the effect of preventing or disabling such Stockholder from performing such Stockholder's obligations under this Agreement, or that would otherwise hinder or delay Parent from acquiring a majority of the outstanding Company Common Stock, determined on a fully diluted basis. (b) Each Stockholder hereby agrees, except with respect to Parent and its affiliates, that on or after the date hereof, such Stockholder shall not, and shall not permit any of its affiliates or any director, officer, employee consultant, agent, advisor or representative of such Stockholder or any of its affiliates (collectively, the "Representatives") to initiate, solicit or encourage, directly or indirectly, any inquiries or the making of any proposal with respect to any matter described in Section 7(a) hereof or any Transaction Proposal with respect to Company or any of its Subsidiaries, participate in any negotiations concerning, or provide to any other person any information or data relating to Company or any of its Subsidiaries for the purpose of, or have any discussions with any person relating to, or cooperate with or assist or participate in, or facilitate, any inquiries or the making of any proposal which constitutes, or would reasonably be expected to lead to, any effort or attempt by any other person to seek to effect any matter described in Section 7(a) hereof or any Transaction Proposal with respect to Company or any of its Subsidiaries, or agree to or endorse any or release any third party from any obligation under any existing standstill agreement or arrangement relating to any such Transaction Proposal, or otherwise facilitate any effort or attempt to make or implement such a Transaction Proposal. Each Stockholder agrees immediately to cease and cause to be terminated any existing activities, discussions or negotiations with any parties conducted heretofore by it with respect to any possible Transaction Proposal with respect to Company or any of its Subsidiaries, or any matter described in Section 7(a) hereof, and will take the necessary steps to inform its Representatives of the obligations undertaken by such Stockholder with respect to its Representatives in this Section 7. (c) Each Stockholder hereby agrees, while this Agreement is in effect, to notify Parent promptly of (i) the number of any additional shares of Company Common Stock and the number and type of any other Shares acquired by such Stockholder, if any, after the date hereof and (ii) any such inquiries or proposals that are received by, any such information that is requested from, or any such negotiations or discussions that are sought to be initiated or continued with, such Stockholder with respect to any matter described in Section 7(a) or 7(b). 6 7 8. Record Ownership. Each Stockholder agrees to use its reasonable best efforts such that within ten business days after receiving a request therefor from Parent, such Stockholder will no longer hold any Shares in "street name" or in the name of any nominee. 9. Further Assurances. From time to time, at the other party's request and without further consideration, each party hereto shall execute and deliver such additional documents and take all such further action as may be necessary or desirable to consummate and make effective, in the most expeditious manner practicable, the transactions contemplated by this Agreement. Without limiting the generality of the foregoing, none of the parties hereto shall enter into an agreement or arrangement (or alter, amend or terminate any existing agreement or arrangement) if such action would materially impair the ability of such party to effectuate, carry out or comply with all the terms of this Agreement. 10. Survival. None of the representations, warranties, covenants and agreements of the parties herein shall survive beyond the Termination Date. 11. Notices. All notices and other communications hereunder shall be in writing and shall be deemed duly given (1) on the date of delivery if delivered personally, or by telecopy or telefacsimile, upon confirmation of receipt, (2) on the first business day following the date of dispatch if delivered by a recognized next-day courier service, or (3) on the tenth business day following the date of mailing if delivered by registered or certified mail, return receipt requested, postage prepaid. All notices hereunder shall be given the party at its address stated on the signature pages of this Agreement or at any other address as the party may specify for this purpose by notice to the other party pursuant to this Section 11. 12. No Waivers. No failure or delay by Parent in exercising any right, power or privilege under any Support Document shall operate as a waiver of that right, power or privilege. A single or partial exercise of any right, power or privilege shall not preclude any other or further exercise of that right, power or privilege or the exercise of any other right, power or privilege. The rights and remedies provided in the Support Documents shall be cumulative and not exclusive of any rights or remedies provided by law. 13. Amendments, Etc. No amendment, modification, termination or waiver of any provision of any Support Document, and no consent to any departure by any Stockholder or Parent from any provision of any Support Document, shall be effective unless it shall be in writing and signed and delivered by each Stockholder and Parent, and then it shall be effective only in the specific instance and for the specific purpose for which it is given. 14. Successors and Assigns; Third Party Beneficiaries. (a) No party shall assign any of its rights or remedies or delegate any of its obligations or liabilities, in whole or in part, under any Support Document. Any assignment or delegation in contravention of this Section 14 shall be void ab initio and shall not relieve the assigning or delegating party of any obligation under any Support Document. 7 8 (b) The provisions of each Support Document shall be binding upon and inure solely to the benefit of the parties hereto and their respective permitted heirs, executors, legal representatives, successors and assigns, and no other person. 15. Governing Law. This Agreement and each other Support Document and all rights, remedies, liabilities, powers and duties of the parties hereto and thereto, shall be governed by and construed in accordance with the laws of the State of New York. 16. Severability of Provisions. If any term or other provision of any Support Document is invalid, illegal or incapable of being enforced by any law or public policy, all other terms and provisions of such Support Document shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties shall negotiate in good faith to modify such Support Document so as to effect the original intent of the parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible. 17. Headings and References. Article and section headings in any Support Document are included for the convenience of reference only and do not constitute a part of the Support Document for any other purpose. References to articles and sections in any Support Document are references to the sections of the Support Document unless the context shall require otherwise. Any of the terms defined in this Agreement may, unless the context otherwise requires, be used in the singular or the plural, depending on the reference. The use in this Agreement of the word "include" or "including," when following any general statement, term or matter, shall not be construed to limit such statement, term or matter to the specific items or matters set forth immediately following such word or to similar items or matters, whether or not nonlimiting language (such as "without limitation" or "but not limited to" or words of similar import) is used with reference thereto, but rather shall be deemed to refer to all other items or matters that fall within the broadest possible scope of such general statement, term or matter. 18. Entire Agreement. The Support Documents embody the entire agreement and understanding of each of the parties hereto, and supersede all other written or oral prior agreements or understandings, with respect to the subject matters of the Support Documents. 19. Enforcement. The parties agree that irreparable damage would occur in the event that any of the provisions of any Support Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent breaches of the Support Agreements and to enforce specifically the terms and provisions of the Support Agreements in any Federal court or New York State court sitting in the Borough of Manhattan, City of New York, this being in addition to any other remedy to which they are entitled at law or in equity. 20. Termination. This Agreement and the proxy set forth in Section 4 shall terminate upon the earliest of the following dates (such date is referred to herein as the 8 9 "Termination Date"): (i) the date on which the Merger Agreement is terminated in accordance with Article VIII thereof; (ii) the date on which Parent terminates this Agreement upon written notice to each of the Stockholders (Parent may so terminate this Agreement and the proxy set forth herein at any time); and (iii) the Effective Time. 21. Counterparts. This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if all signatures were on the same instrument. 22. Waiver of Jury Trial. EACH PARTY TO THIS AGREEMENT, AS A CONDITION OF ITS RIGHT TO ENFORCE OR DEFEND ANY RIGHT UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER SUPPORT DOCUMENT, WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION TO ENFORCE OR DEFEND ANY RIGHT UNDER THIS AGREEMENT OR ANY OTHER SUPPORT DOCUMENT AND AGREES THAT ANY ACTION SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. 9 10 IN WITNESS WHEREOF, Parent and each of the undersigned Stockholders have caused this Agreement to be duly executed as of the day and year first above written. THE CHASE MANHATTAN CORPORATION By: /s/ William H. McDavid ---------------------------------- Name: William H. McDavid Title: General Counsel DANIEL H. CASE III /s/ Daniel H. Case III -------------------------------------- (Signature) Address: One Bush Street -------------------------------------- San Francisco, CA 94104 -------------------------------------- -------------------------------------- -------------------------------------- PATRICK J. ALLEN /s/ Patrick J. Allen -------------------------------------- (Signature) Address: One Bush Street -------------------------------------- San Francisco, CA 94104 -------------------------------------- -------------------------------------- -------------------------------------- 11 TODD D. BAKAR /s/ Todd D. Bakar -------------------------------------- (Signature) Address: 50 Willard Lane -------------------------------------- Hillsborough, CA 94010 -------------------------------------- -------------------------------------- DAVID G. GOLDEN /s/ David Golden --------------------------------------- (Signature) Address: One Bush Street -------------------------------------- San Francisco, CA 94104 -------------------------------------- -------------------------------------- 12 JOHN P. HULLAR /s/ John P. Hullar -------------------------------------- (Signature) Address: One Bush Street -------------------------------------- San Francisco, CA 94104 -------------------------------------- -------------------------------------- DAVID M. MCAULIFFE /s/ David M. McAuliffe -------------------------------------- (Signature) Address: -------------------------------------- -------------------------------------- -------------------------------------- 13 CRISTINA M. MORGAN /s/ Cristina M. Morgan --------------------------------------- (Signature) Address: One Bush Street --------------------------------------- San Francisco, CA 94104 --------------------------------------- --------------------------------------- WILLIAM E. MAYER /s/ William E. Mayer --------------------------------------- (Signature) Address: 172 Long Neck Point --------------------------------------- Darien, CT 06826 --------------------------------------- --------------------------------------- 14 WILLIAM R. TIMKEN /s/ William R. Timken --------------------------------------- (Signature) Address: --------------------------------------- --------------------------------------- --------------------------------------- WILLIAM J. PERRY /s/ William J. Perry --------------------------------------- (Signature) Address: --------------------------------------- --------------------------------------- --------------------------------------- 15 SCHEDULE I
OPTIONS IN SHARES EXPECTED PRIOR COLUMN SHARES SHARES HELD TO VEST BETWEEN TOTAL THAT ARE VESTED HELD (VESTED AS (UNVESTED AS OF 10/1/99 AND OPTIONS OR THAT WILL NAME OF 9/30/99) 9/30/99)* 11/5/99 HELD VEST IN 60 DAYS Dan Case 1,125,226 220,203 187,637 972,680 551,608 Patrick Allen 898 15,398 3,185 100,650 41,050 Todd Bakar 57,791 27,645 5,382 128,000 58,400 David Golden 89,085 41,488 10,855 130,000 48,000 John Hullar 8,939 16,187 4,104 130,000 56,000 David McAuliffe 244,171 29,821 5,582 210,000 130,000 Cristina Morgan 284,741 29,721 8,150 70,000 30,000 Bill Mayer 104,800 0 0 32,000 24,000 Bill Timken 1,121,360 0 0 30,000 6,000 Bill Perry 0 0 0 20,000 8,000
*There will be an additional grant of unvested shares in early November for which amount have not yet been determined. EX-99.11.C.3 12 STOCK OPTION AGREEMENT 1 Exhibit 11(c)(3) THE TRANSFER OF THIS AGREEMENT IS SUBJECT TO CERTAIN RESTRICTIONS CONTAINED HEREIN AND TO RESALE RESTRICTIONS UNDER THE SECURITIES ACT OF 1933, AS AMENDED STOCK OPTION AGREEMENT STOCK OPTION AGREEMENT, dated as of September 27, 1999 (the "Agreement"), by and between HAMBRECHT & QUIST GROUP, a Delaware corporation ("Issuer"), and THE CHASE MANHATTAN CORPORATION, a Delaware corporation ("Grantee"). WHEREAS, Grantee and Issuer are concurrently herewith entering into an Agreement and Plan of Merger, dated as of the date hereof (the "Merger Agreement"), among Issuer, Grantee and Bridge Acquisition Corporation, a Delaware corporation and a wholly-owned subsidiary of Grantee ("Sub"), pursuant to which Sub will make an offer (the "Offer") for all of the issued and outstanding shares of common stock, par value $0.01 per share, of Issuer (the "Issuer Common Stock"), at a price of $50.00 per share, net in cash, the consummation of which will be followed by the merger of Sub with and into Issuer, with Issuer being the surviving corporation (the "Merger"); and WHEREAS, as a condition and inducement to Grantee's and Sub's execution of the Merger Agreement, Grantee has required that Issuer agree, and Issuer has agreed, to grant Grantee the Option (as defined in Section 2). NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants and agreements set forth herein and in the Merger Agreement, and intending to be legally bound hereby, Issuer and Grantee agree as follows: 1. Defined Terms. Capitalized terms which are used but not defined herein shall have the meanings ascribed to such terms in the Merger Agreement. 2. Grant of Option. Subject to the terms and conditions set forth herein, Issuer hereby grants to Grantee an irrevocable option (the "Option") to purchase up to 4,894,439 shares (as adjusted as set forth herein, the "Option Shares") of Issuer Common Stock, at a purchase price per Option Share (as adjusted as set forth herein, the "Purchase Price") equal to $50.00; provided, that in no event shall the number of Option Shares for which this Option is exercisable exceed 19.9% of the issued and outstanding shares of Issuer Common Stock. Issuer shall make proper provision so that each Option Share issued upon exercise of the Option shall be accompanied by the applicable number of rights or other benefits as may be provided in any Issuer rights agreement or similar agreement that may be adopted after the date hereof. 2 3. Exercise of Option. (a) Holder (as hereinafter defined) may exercise the Option, in whole or in part, at any time and from time to time following the occurrence of both an Initial Triggering Event (as defined in Section 3(b)) and a Subsequent Triggering Event (as defined in Section 3(c)); provided, that the Option shall terminate and be of no further force or effect upon the earliest to occur of (A) the Effective Time, (B) termination of the Merger Agreement in accordance with the terms thereof prior to the occurrence of an Initial Triggering Event or (C) 18 months after termination of the Merger Agreement following or in connection with the occurrence of an Initial Triggering Event; and provided, further, that any purchase of shares upon exercise of the Option shall be subject to compliance with applicable law; and, provided, further, that the Holder shall have sent the written notice of such exercise (as provided in subsection (e) of this Section 2) within 90 days following such Subsequent Triggering Event. Notwithstanding the termination of the Option, Grantee or Holder, as the case may be, shall be entitled to purchase those Option Shares with respect to which it has exercised the Option in accordance herewith prior to the termination of the Option. The term "Holder" shall mean the holder or holders of the Option from time to time, which initially is Grantee. The termination of the Option shall not affect any rights hereunder which by their terms extend beyond the date of such termination. (b) As used herein, an "Initial Triggering Event" means any of the following events: (i) without Grantee's prior written consent, Issuer shall have authorized, recommended, publicly proposed or publicly disclosed an intention to authorize, recommend or propose, or entered into one or more agreements with any person (other than Grantee or any Subsidiary of Grantee) to effect, or effected, in a single transaction or a series of related transactions, any Transaction Proposal; (ii) any person (other than Grantee or any Subsidiary of Grantee) shall have acquired beneficial ownership (as such term is defined in Rule 13d-3 promulgated under the Exchange Act) of or the right to acquire beneficial ownership of, or any group (as such term is defined in Section 13(d)(3) of the Exchange Act), other than a group of which Grantee or any Subsidiary of Grantee is a member, shall have been formed which beneficially owns or has the right to acquire beneficial ownership of, shares of Issuer Common Stock or other securities representing 10% or more of the voting power of Issuer or any of its Significant Subsidiaries (as defined in Rule 1-02 of Regulation S-X of the SEC); (iii) any person (other than Grantee or any Subsidiary of Grantee) shall have commenced (as such term is defined in Rule 14d-2 under the Exchange Act), or shall have filed a registration statement under the Securities Act with respect to, a tender offer or exchange offer to purchase any shares of Issuer Common Stock or other securities such that, upon consummation of such offer, such person would own or control shares of Issuer Common Stock or other securities representing 10% or more of the voting power of Issuer or any of its 2 3 Significant Subsidiaries (such an offer being referred to herein as a "Tender Offer" or an "Exchange Offer," respectively); (iv) Issuer or its Board of Directors shall have withdrawn, modified, amended or materially qualified in any respect adverse to Grantee the Company Board Recommendation, failed to mail the Schedule 14D-9 to its stockholders as required by Section 1.2(b) of the Merger Agreement, or failed to include in such Schedule 14D-9 the Company Board Recommendation or resolved to take any of the foregoing actions; or (v) the Merger Agreement shall have been terminated in accordance with its terms and at the time of such termination the Termination Fee or any portion thereof is or upon the occurrence of certain events specified therein would become payable pursuant to Section 8.2 of the Merger Agreement. As used in this Agreement, "person" shall have the meaning specified in Sections 3(a)(9) and 13(d)(3) of the Exchange Act. (c) As used herein, a "Subsequent Triggering Event" means any of the following events: (i) the Initial Triggering Event described in paragraph (ii) of subsection (b) of this Section 3 shall have occurred, except that the percentage referred to in such paragraph shall be 20% for the purposes of this paragraph (i); or (ii) the Initial Triggering Event described in paragraph (i) of subsection (b) of this Section 3 shall have occurred, except that the percentages referred to in the definition of Transaction Proposal in Section 6.9 of the Merger Agreement shall each be 20% for the purposes of this paragraph (ii). (d) Issuer shall notify Grantee promptly in writing of the occurrence of any Initial Triggering Event or Subsequent Triggering Event (together, a "Triggering Event"), it being understood that the giving of such notice by Issuer shall not be a condition to the right of Holder to exercise the Option. (e) In the event Holder wishes to exercise the Option, it shall send to Issuer a written notice (the date of which is herein referred to as the "Notice Date") specifying (i) the total number of Option Shares it intends to purchase pursuant to such exercise and (ii) a place and date not earlier than three business days nor later than 60 business days from the Notice Date for the closing (the "Closing") of such purchase (the "Closing Date"); provided, that if the Closing cannot be consummated by reason of any applicable law, rule, regulation or order or the need to obtain any necessary approvals or consents of applicable Governmental Entities, the period of time that otherwise would run pursuant to this sentence shall run instead from the date on which such restriction on consummation has expired or been terminated; and provided, further, without limiting the foregoing, that if prior notification or application to, approval of or authorization by any Governmental Entity is required in connection with such purchase, Issuer 3 4 shall use its reasonable best efforts to cooperate with the Holder in the prompt filing of the required notice or application for approval or authorization, and the Closing shall occur immediately following the date on which such approvals have been obtained or any required notification or waiting periods have expired. Any exercise of the Option shall be deemed to occur on the Notice Date relating thereto. (f) Notwithstanding Section 3(e), in no event shall any Closing Date be more than nine months after the related Notice Date, and if the Closing Date shall not have occurred within nine months after the related Notice Date due to the failure to obtain any such required approval, the exercise of the Option effected on the Notice Date shall be deemed to have expired. In the event (i) Holder receives official notice that an approval of any Governmental Entity required for the purchase of Option Shares will not be issued or granted or (ii) a Closing Date shall not have occurred within nine months after the related Notice Date due to the failure to obtain any such required approval, Grantee shall be entitled to exercise the Option (whether or not the Option would have otherwise terminated) in connection with the resale of Issuer Common Stock or other securities pursuant to a registration statement as provided in Section 10. The provisions of this Section 3 and Section 4 shall apply with appropriate adjustments to any such exercise. 4. Payment and Delivery of Certificates. (a) On each Closing Date, Holder shall (i) pay to Issuer, in immediately available funds by wire transfer to a bank account designated by Issuer (provided that the failure or refusal of Issuer to designate a bank account shall not preclude the Holder from exercising the Option), an amount equal to the Purchase Price multiplied by the number of Option Shares to be purchased on such Closing Date, and (ii) present and surrender this Agreement to the Issuer at the address of the Issuer specified in Section 13(f). (b) At each Closing, simultaneously with the delivery of immediately available funds and surrender of this Agreement as provided in Section 4(a), (i) Issuer shall deliver to Holder (A) a certificate or certificates representing the Option Shares to be purchased at such Closing, which Option Shares shall be fully paid, validly issued and non-assessable, free and clear of all Liens and subject to no preemptive or other similar rights, and (B) if the Option is exercised in part only, an executed new agreement with the same terms as this Agreement evidencing the right to purchase the balance of the shares of Issuer Common Stock purchasable hereunder, and (ii) Holder shall deliver to Issuer a letter agreeing that Holder shall not offer to sell or otherwise dispose of such Option Shares in violation of applicable federal and state law or of the provisions of this Agreement. (c) In addition to any other legend that is required by applicable law, certificates for the Option Shares delivered at each Closing shall be endorsed with a restrictive legend which shall read substantially as follows: THE TRANSFER OF THE STOCK REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933, 4 5 AS AMENDED, AND PURSUANT TO THE TERMS OF A STOCK OPTION AGREEMENT DATED AS OF SEPTEMBER 27, 1999. A COPY OF SUCH AGREEMENT WILL BE PROVIDED TO THE HOLDER HEREOF WITHOUT CHARGE UPON RECEIPT BY THE SECRETARY OF THE ISSUER OF A WRITTEN REQUEST THEREFOR. It is understood and agreed that (i) the portion of the above legend relating to the Securities Act shall be removed by delivery of substitute certificate(s) without such legend if such Option Shares have been registered pursuant to the Securities Act, such Option Shares have been sold in reliance on and in accordance with Rule 144 under the Securities Act or Holder shall have delivered to Issuer a copy of a letter from the staff of the SEC, or an opinion of counsel in form and substance reasonably satisfactory to Issuer and its counsel, to the effect that such legend is not required for purposes of the Securities Act, (ii) the reference to restrictions pursuant to this Agreement in the above legend shall be removed by delivery of substitute certificate(s) without such reference if the Option Shares evidenced by certificate(s) containing such reference have been sold or transferred in compliance with the provisions of this Agreement under circumstances that do not require the retention of such reference and (iii) such legend shall be removed in its entirety if the conditions in the preceding clauses (i) and (ii) are both satisfied. (d) Upon the giving by Holder to Issuer of the written notice of exercise of the Option provided for under Section 3(e), the tender of the applicable Purchase Price in immediately available funds and the tender of this Agreement to Issuer, Holder shall be deemed to be the holder of record of the shares of Issuer Common Stock issuable upon such exercise, regardless of whether the stock transfer books of Issuer are then closed or certificates representing such shares of Issuer Common Stock are then actually delivered to Holder. Issuer shall pay all expenses, and any and all federal, foreign, state, and local taxes and other charges, that may be payable in connection with the preparation, issuance and delivery of stock certificates under this Section 4(d) in the name of Holder or its assignee, transferee, or designee. (e) Issuer agrees (i) that it shall at all times maintain, free from Liens and preemptive or similar rights, sufficient authorized but unissued or treasury shares of Issuer Common Stock so that the Option may be exercised without additional authorization of Issuer Common Stock after giving effect to all other options, warrants, convertible securities and other rights to purchase Issuer Common Stock then outstanding, (ii) that it will not, by charter amendment or through reorganization, recapitalization, consolidation, merger, dissolution, liquidation, spin-off, sale of assets or similar transaction, or by any other voluntary act, avoid or seek to avoid the observance or performance of any of the covenants, agreements, stipulations or conditions to be observed or performed hereunder by Issuer, (iii) that it will promptly take all action as may from time to time be required (including (A) complying with all premerger notification, reporting and waiting period requirements and (B) in the event prior approval or authorization of or notice or application to any Governmental Entity is necessary before the Option may be exercised, cooperating fully with Holder in preparing such applications or notices and providing such information to such Governmental Entity as it may require) in order to permit Holder to exercise the Option and Issuer to duly and effectively issue shares of the Issuer 5 6 Common Stock pursuant hereto, and (iv) that it will promptly take all action provided herein to protect the rights of Holder against dilution. 5. Representations and Warranties of Issuer. Issuer hereby represents and warrants to Grantee (and Holder, if different than Grantee) as follows: (a) Corporate Authority. Issuer has full corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby; the execution and delivery of this Agreement and, subject to receiving any necessary approvals or authorizations from Governmental Entities, the consummation of the transactions contemplated hereby have been duly and validly authorized by the Board of Directors of Issuer, and no other corporate proceedings on the part of Issuer are necessary to authorize this Agreement or to consummate the transactions so contemplated; this Agreement has been duly and validly executed and delivered by Issuer and (assuming due authorization, execution and delivery by Grantee) constitutes a valid and binding obligation of Issuer, enforceable against Issuer in accordance with its terms, except that (i) such enforcement may be subject to applicable bankruptcy, insolvency, fraudulent conveyance, moratorium or other similar laws, now or hereinafter in effect, affecting creditors' rights generally, and (ii) the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought. (b) Shares Reserved for Issuance; Capital Stock. Issuer has taken all necessary corporate action to authorize and reserve and permit it to issue, and at all times from the date hereof through the termination of this Agreement in accordance with its terms, will have reserved for issuance, upon the exercise of the Option, that number of shares of Issuer Common Stock equal to the maximum number of shares of Issuer Common Stock and other shares and securities which are at any time and from time to time purchasable upon exercise of the Option, and all such shares and other securities, upon issuance pursuant to the Option, will be duly authorized, validly issued, fully paid and non-assessable, and will be delivered free and clear of all Liens (other than those created by this Agreement) and not subject to any preemptive or other similar rights. (c) No Violations. The execution, delivery and performance of this Agreement does not and will not, and the consummation by Issuer of any of the transactions contemplated hereby will not, constitute or result in (A) a breach or violation of, or a default under, its certificate of incorporation or by-laws, or the comparable governing instruments of any of its Subsidiaries, or (B) a breach or violation of, or a default under, any agreement, lease, contract, note, mortgage, indenture, arrangement or other obligation of it or any of its Subsidiaries (with or without the giving of notice, the lapse of time or both) or under any law, rule, regulation or order or governmental or non-governmental permit or license to which it or any of its Subsidiaries is subject, that would, in any case give any other person the ability to prevent or enjoin Issuer's performance under this Agreement in any material respect. (d) Board Action. The Board of Directors of Issuer has approved this Agreement and the consummation of the transactions contemplated hereby as required under 6 7 Section 203 of the DGCL and any other applicable state takeover laws so that any such state takeover laws do not or will not apply to this Agreement or any of the transactions contemplated hereby (including the purchase of shares of Issuer Common Stock pursuant to this Agreement). 6. Representations and Warranties of Grantee. Grantee hereby represents and warrants to Issuer as follows: (a) Corporate Authority. Grantee has full corporate power and authority to enter into this Agreement and, subject to obtaining the approvals referred to in this Agreement, to consummate the transactions contemplated by this Agreement; the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of Grantee; and this Agreement has been duly executed and delivered by Grantee and (assuming due authorization, execution and delivery by Issuer) constitutes a valid and binding obligation of the Grantee, enforceable against the Grantee in accordance with its terms. (b) Purchase Not for Distribution. Any Option Shares or other securities acquired by Grantee upon exercise of the Option will not be taken with a view to the public distribution thereof and will not be transferred or otherwise disposed of except in a transaction registered or exempt from registration under the Securities Act. 7. Adjustment upon Changes in Issuer Capitalization, Etc. (a) In the event of any change from time to time in Issuer Common Stock or any other shares or securities subject to the Option by reason of a stock dividend, subdivision, spinoff, stock split, split-up, merger, consolidation, recapitalization, combination, exchange of shares, dividend or distribution on or in respect of the Issuer Common Stock, the type and number of shares or securities subject to the Option, and the Purchase Price therefor, shall be adjusted appropriately, and proper provision shall be made in the agreements governing such transaction, so that Holder shall receive, upon exercise of the Option, the economic benefits provided hereunder, including the number and class of shares or other securities or property that Holder would have received in respect of Issuer Common Stock if the Option had been exercised immediately prior to such event, or the record date therefor, as applicable. If any additional shares of Issuer Common Stock are issued or otherwise become outstanding after the date of this Agreement (other than pursuant to an event described in the first sentence of this Section 7(a) or upon exercise of the Option) or are redeemed, repurchased, retired or otherwise cease to be outstanding, the number of shares of Issuer Common Stock subject to the Option shall be increased or decreased, as applicable, so that, after such issuance, it, together with any shares of Issuer Common Stock previously issued pursuant hereto, equals 19.9% of the number of shares of Issuer Common Stock then issued and outstanding, without giving effect to any shares subject to or issued pursuant to the Option. No provision of this Section 7 shall be deemed to affect or change, or constitute authorization for any violation of, any of the covenants, agreements, representations or warranties in the Merger Agreement. 7 8 (b) Without limiting the parties' relative rights, remedies, liabilities and obligations under the Merger Agreement or this Agreement, in the event that, prior to the termination of the Option, Issuer shall enter into an agreement (other than the Merger Agreement) (i) to consolidate with or merge into any person, other than Grantee or one of its Subsidiaries, and shall not be the continuing or surviving corporation of such consolidation or merger, (ii) to permit any person, other than Grantee or one of its Subsidiaries, to merge into Issuer and Issuer shall be the continuing or surviving corporation, but, in connection with such merger, the then outstanding shares of Issuer Common Stock shall be changed into or exchanged for another class or series of stock or other securities of Issuer or any other person or cash or any other property or the outstanding shares of Issuer Common Stock immediately prior to such merger shall, after such merger, represent less than 50% of the outstanding shares and share equivalents having general voting power of the merged company, or (iii) to sell or otherwise transfer all or substantially all of its assets or a substantial part of the assets of its Subsidiaries taken as a whole, in one transaction or a series of related transactions, to any person, other than Grantee or one of its Subsidiaries, then, and in each such case, the agreement governing such transaction shall make proper provisions so that the Option shall, upon the consummation of any such transaction and upon the terms and conditions set forth herein, be converted into, or exchanged for, an option (the "Substitute Option"), at the election of Holder, of either (x) the Acquiring Corporation (as hereinafter defined), (y) any person that controls the Acquiring Corporation, or (z) in the case of a merger described in clause (ii), Issuer (such person being referred to as "Substitute Option Issuer"). (c) The Substitute Option shall have the same terms as the Option; provided, that the exercise price therefor and number of shares subject thereto shall be as set forth in this Section 7 and the repurchase rights relating thereto shall be as set forth in Section 9; provided, further, that the Substitute Option shall be exercisable immediately upon issuance without the occurrence of a further Triggering Event; provided, further, that if the terms of the Substitute Option cannot, for legal reasons, be the same as the Option, such terms shall be as similar as possible and in no event less advantageous to Holder. Substitute Option Issuer shall also enter into an agreement with Holder in substantially the same form as this Agreement, which shall be applicable to the Substitute Option. (d) The Substitute Option shall be exercisable for such number of shares of Substitute Common Stock (as hereinafter defined) as is equal to the Assigned Value (as hereinafter defined) multiplied by the number of shares of Issuer Common Stock for which the Option was theretofore exercisable, divided by the Average Price (as hereinafter defined). The exercise price of the Substitute Option per share of Substitute Common Stock (the "Substitute Option Price") shall then be equal to the Purchase Price multiplied by a fraction in which the numerator is the number of shares of Issuer Common Stock for which the Option was theretofore exercisable and the denominator is the number of shares of Substitute Common Stock for which the Substitute Option is exercisable. (e) The following terms have the meanings indicated: 8 9 (i) "Acquiring Corporation" shall mean (x) the continuing or surviving corporation of a consolidation or merger with Issuer (if other than Issuer), (y) Issuer in a merger in which Issuer is the continuing or surviving person, or (z) the transferee of all or substantially all of Issuer's assets (or a substantial part of the assets of its Subsidiaries taken as a whole). (ii) "Assigned Value" shall mean the highest of (w) the highest price per share of Issuer Common Stock at which a Tender Offer or an Exchange Offer therefor has been made, (x) the highest price per share of Issuer Common Stock to be paid by any third party pursuant to an agreement with Issuer, (y) the highest closing price for shares of Issuer Common Stock within the 12-month period immediately preceding the date on which the merger, consolidation, asset sale or other transaction in question is consummated, and (z) in the event of a sale of all or substantially all of Issuer's assets (or a substantial part of the assets of its Subsidiaries as a whole) an amount equal to (I) the sum of the price paid in such sale for such assets and the current market value of the remaining assets of Issuer, as determined by a nationally-recognized investment banking firm selected by Holder, divided by (II) the number of shares of Issuer Common Stock outstanding at such time. In calculating the Assigned Value, in the event that a Tender Offer or an Exchange Offer is made for Issuer Common Stock or an agreement is entered into involving consideration other than cash, the value of the securities or other property issuable or deliverable in exchange for Issuer Common Stock shall be determined by a nationally-recognized investment banking firm selected by Holder. (iii) "Average Price" shall mean the average closing sales price per share of a share of Substitute Common Stock quoted on the NYSE (or if Substitute Common Stock is not quoted on the NYSE, the average closing sales price per share as quoted on the Nasdaq National Market System or, if the shares of Substitute Common Stock are not quoted thereon, the highest bid price per share as quoted on the principal trading market on which such shares are traded as reported by a recognized source) for the 12-month period immediately preceding the date of consummation of the consolidation, merger or sale in question, but in no event higher than the closing sales price of the shares of Substitute Common Stock on the day preceding the date of consummation of such consolidation, merger or sale; provided, that if Issuer is the issuer of the Substitute Option, the Average Price shall be computed with respect to a share of common stock issued by Issuer, by the person merging into Issuer or by any company which controls such person, as Holder may elect. (iv) "Substitute Common Stock" shall mean the shares of capital stock (or similar equity interest) with the greatest voting power in respect of the election of directors (or persons similarly responsible for the direction of the business and affairs) of the Substitute Option Issuer. (f) In no event, pursuant to any of the foregoing paragraphs, shall the Substitute Option be exercisable for more than 19.9% of the aggregate of the shares of Substitute Common Stock outstanding prior to exercise of the Substitute Option. In the event that the Substitute Option would be exercisable for more than 19.9% of the aggregate of the shares of Substitute Common Stock but for the limitation in the first sentence of this Section 7(f), 9 10 Substitute Option Issuer shall make a cash payment to Holder equal to the excess of (i) the value of the Substitute Option without giving effect to the limitation in the first sentence of this Section 7(f) over (ii) the value of the Substitute Option after giving effect to the limitation in the first sentence of this Section 7(f). This difference in value shall be determined by a nationally-recognized investment banking firm selected by Holder. (g) Issuer shall not enter into any transaction described in Section 7(b) unless the Acquiring Corporation and any person that controls the Acquiring Corporation assume in writing all the obligations of Issuer hereunder and take all other actions that may be necessary so that the provisions of this Section 7 are given full force and effect (including, without limitation, any action that may be necessary so that the holders of the other shares of common stock issued by Substitute Option Issuer are not entitled to exercise any rights by reason of the issuance or exercise of the Substitute Option and the shares of Substitute Common Stock are otherwise in no way distinguishable from or have lesser economic value (other than any diminution in value resulting from the fact that the Substitute Common Stock are restricted securities, as defined in Rule 144 under the Securities Act or any successor provision) than other shares of common stock issued by Substitute Option Issuer). 8. Repurchase at the Option of Holder. (a) At the request of Holder at any time (i) commencing upon the first occurrence of a Repurchase Event (as defined in Section 8(d)) and prior to the termination of the Option pursuant to Section 3(a), Issuer (or any successor) shall repurchase from Holder (x) the Option and (y) all shares of Issuer Common Stock purchased by Holder pursuant hereto with respect to which Holder then has beneficial ownership. The date on which Holder exercises its rights under this Section 8 is referred to as the "Request Date". Such repurchase shall be at an aggregate price (the "Section 8 Repurchase Consideration") equal to the sum of: (i) the aggregate Purchase Price paid by Holder for any shares of Issuer Common Stock acquired pursuant to the Option with respect to which Holder then has beneficial ownership; (ii) the excess, if any, of (x) the Applicable Price (as defined below) for each share of Issuer Common Stock over (y) the Purchase Price (subject to adjustment pursuant to Section 7), multiplied by the number of shares of Issuer Common Stock with respect to which the Option has not been exercised; and (iii) the excess, if any, of the Applicable Price over the Purchase Price (subject to adjustment pursuant to Section 7) paid (or, in the case of Option Shares with respect to which the option has been exercised but the Closing Date has not occurred, payable) by Holder for each share of Issuer Common Stock with respect to which the Option has been exercised and with respect to which Holder then has beneficial ownership, multiplied by the number of such shares. 10 11 (b) If Holder exercises its rights under this Section 8, Issuer shall, within 5 business days after the Request Date, pay the Section 8 Repurchase Consideration to Holder in immediately available funds, and contemporaneously with such payment, Holder shall surrender to Issuer the Option and the certificates evidencing the shares of Issuer Common Stock purchased thereunder with respect to which Holder then has beneficial ownership, and Holder shall warrant that it has sole record and beneficial ownership of such shares and that the same are then free and clear of all Liens. Notwithstanding the foregoing, to the extent that prior notification to or approval of any Governmental Entity is required in connection with the payment of all or any portion of the Section 8 Repurchase Consideration, Holder shall have the ongoing option to revoke its request for repurchase pursuant to Section 8, in whole or in part, or to require that Issuer deliver from time to time that portion of the Section 8 Repurchase Consideration that it is not then so prohibited from paying and promptly file the required notice or application for approval and expeditiously process the same (and each party shall cooperate with the other in the filing of any such notice or application and the obtaining of any such approval) and the period of time that would otherwise run pursuant to the preceding sentence for the payment of the portion of the Section 8 Repurchase Consideration shall run instead from the date on which, as the case may be, (i) any required notification period has expired or been terminated or (ii) such approval has been obtained and, in either event, any requisite waiting period shall have passed. If any Governmental Entity disapproves of any part of Issuer's proposed repurchase pursuant to this Section 8, Issuer shall promptly give notice of such fact to Holder. If any Governmental Entity prohibits the repurchase (and Issuer hereby undertakes to use its reasonable best efforts to obtain all required approvals from Governmental Entities to accomplish such repurchase) in part but not in whole, then Holder shall have the right (i) to revoke the repurchase request or (ii) to the extent permitted by such Governmental Entity, determine whether the repurchase should apply to the Option and/or Option Shares and to what extent to each, and Holder shall thereupon have the right to exercise the Option as to the number of Option Shares for which the Option was exercisable at the Request Date less the sum of the number of shares covered by the Option in respect of which payment has been made pursuant to Section 8(a)(ii) and the number of shares covered by the portion of the Option (if any) that has been repurchased; whereupon, in the case of clause (ii), Issuer shall promptly (x) deliver to the Holder that portion of the Section 8 Repurchase Consideration that Issuer is not prohibited from delivering and (y) deliver to the Holder, as appropriate, either (A) a new Stock Option Agreement evidencing the right of the Holder to purchase that number of shares of Issuer Common Stock obtained by multiplying the number of shares of Common Stock for which the surrendered Stock Option Agreement was exercisable at the time of delivery of the notice of repurchase by a fraction, the numerator of which is the Section 8 Repurchase Consideration less the portion thereof theretofore delivered to the Holder and the denominator of which is the Section 8 Repurchase Consideration, or (B) a certificate for the Option Shares it is then so prohibited from repurchasing; provided, that if the Option shall have terminated prior to the date of such notice or shall be scheduled to terminate at any time before the expiration of a period ending on the thirtieth business day after such date, Holder shall nonetheless have the right so to exercise the Option or exercise its rights under Section 8 until the expiration of such period of 30 business days. Holder shall notify Issuer of its determination under the preceding sentence within 10 business days of receipt of notice of disapproval of the repurchase. 11 12 (c) For purposes of this Agreement, the "Applicable Price" means the highest of (i) the highest price per share of Issuer Common Stock paid for any such share by any person (other than Grantee or any Subsidiary of Grantee) that shall have acquired beneficial ownership of (as such term is defined in Rule 13d-3 promulgated under the Exchange Act), or the right to acquire beneficial ownership of, or any group that shall have been formed which beneficially owns or has the right to acquire beneficial ownership of, 15% or more of the then outstanding shares of Issuer Common Stock, (ii) the price per share of Issuer Common Stock received by holders of Issuer Common Stock in connection with any merger or other business combination transaction described in Section 7(b)(i), 7(b)(ii) or 7(b)(iii), and (iii) the highest closing sales price per share of Issuer Common Stock during the 60 business days preceding the Request Date; provided, however, that in the event of a sale of less than all of Issuer's assets, the Applicable Price shall be the sum of the price paid in such sale for such assets and the current market value of the remaining assets of Issuer as determined by a nationally-recognized investment banking firm selected by Holder, divided by the number of shares of the Issuer Common Stock outstanding at the time of such sale. If any consideration to be offered, paid or received pursuant to either of the foregoing clauses (i) or (ii) shall be other than in cash, the value of such consideration shall be determined in good faith by an independent nationally-recognized investment banking firm selected by Holder, which determination shall be conclusive for all purposes of this Agreement. (d) As used herein, a "Repurchase Event" shall occur if (A) (i) any person (other than Grantee or any Subsidiary of Grantee) shall have acquired beneficial ownership of (as such term is defined in Rule 13d-3 promulgated under the Exchange Act), or the right to acquire beneficial ownership of, or any group shall have been formed which beneficially owns or has the right to acquire beneficial ownership of, 50% or more of the then outstanding shares of Issuer Common Stock or (ii) any of the transactions described in Section 7(b)(i), 7(b)(ii) or 7(b)(iii) has been consummated and (B) a Subsequent Triggering Event shall have occurred prior to the termination of the Option. 9. Repurchase of Substitute Option. (a) At the request of Holder at any time, Substitute Option Issuer (or any successor) shall repurchase from Holder (x) the Substitute Option and (y) all shares of Substitute Common Stock purchased by Holder pursuant hereto with respect to which Holder then has beneficial ownership. The date on which Holder exercises its rights under this Section 9 is referred to as the "Section 9 Request Date". Such repurchase shall be at an aggregate price (the "Section 9 Repurchase Consideration") equal to the sum of: (i) the aggregate Purchase Price paid by Holder for any shares of Substitute Common Stock acquired pursuant to the Substitute Option with respect to which Holder then has beneficial ownership; (ii) the excess, if any, of (x) the Substitute Applicable Price (as defined below) for each share of Substitute Common Stock over (y) the Purchase Price (subject 12 13 to adjustment pursuant to Section 7), multiplied by the number of shares of Substitute Common Stock with respect to which the Substitute Option has not been exercised; and (iii) the excess, if any, of the Substitute Applicable Price over the Purchase Price (subject to adjustment pursuant to Section 7) paid (or, in the case of Option Shares (for purposes of this Agreement, Option Shares shall include shares of Substitute Common Stock and related securities subject to the Substitute Option) with respect to which the Substitute Option has been exercised but the Closing Date has not occurred, payable) by Holder for each share of Substitute Common Stock with respect to which the Substitute Option has been exercised and with respect to which Holder then has beneficial ownership, multiplied by the number of such shares. (b) If Holder exercises its rights under this Section 9, Substitute Option Issuer shall, within 5 business days after the Section 9 Request Date, pay the Section 9 Repurchase Consideration to Holder in immediately available funds, and contemporaneously with such payment, Holder shall surrender to Substitute Option Issuer the Substitute Option and the certificates evidencing the shares of Substitute Common Stock purchased thereunder with respect to which Holder then has beneficial ownership, and Holder shall warrant that it has sole record and beneficial ownership of such shares and that the same are then free and clear of all Liens. Notwithstanding the foregoing, to the extent that prior notification to or approval of any Governmental Entity is required in connection with the payment of all or any portion of the Section 9 Repurchase Consideration, Holder shall have the ongoing option to revoke its request for repurchase pursuant to Section 9, in whole or in part, or to require that Substitute Option Issuer deliver from time to time that portion of the Section 9 Repurchase Consideration that it is not then so prohibited from paying and promptly file the required notice or application for approval and expeditiously process the same (and each party shall cooperate with the other in the filing of any such notice or application and the obtaining of any such approval) and the period of time that would otherwise run pursuant to the preceding sentence for the payment of the portion of the Section 9 Repurchase Consideration shall run instead from the date on which, as the case may be, (i) any required notification period has expired or been terminated or (ii) such approval has been obtained and, in either event, any requisite waiting period shall have passed. If any Governmental Entity disapproves of any part of Substitute Option Issuer's proposed repurchase pursuant to this Section 9, Substitute Option Issuer shall promptly give notice of such fact to Holder. If any Governmental Entity prohibits the repurchase (and Substitute Option Issuer hereby undertakes to use its reasonable best efforts to obtain all required approvals from Governmental Entities to accomplish such repurchase) in part but not in whole, then Holder shall have the right (i) to revoke the repurchase request or (ii) to the extent permitted by such Governmental Entity, determine whether the repurchase should apply to the Substitute Option and/or Option Shares and to what extent to each, and Holder shall thereupon have the right to exercise the Substitute Option as to the number of Option Shares for which the Substitute Option was exercisable at the Section 9 Request Date less the sum of the number of shares covered by the Substitute Option in respect of which payment has been made pursuant to Section 9(a)(ii) and the number of shares covered by the portion of the Substitute Option (if any) that has been repurchased; whereupon, in the case of clause (ii), Substitute Option Issuer shall promptly (x) deliver to the Holder that portion of the Section 9 Repurchase Consideration that Substitute 13 14 Option Issuer is not prohibited from delivering and (y) deliver to the Holder, as appropriate, either (A) a new Stock Option Agreement evidencing the right of the Holder to purchase that number of shares of Substitute Common Stock obtained by multiplying the number of shares of Substitute Common Stock for which the surrendered Stock Option Agreement was exercisable at the time of delivery of the notice of repurchase by a fraction, the numerator of which is the Section 9 Repurchase Consideration less the portion thereof theretofore delivered to the Holder and the denominator of which is the Section 9 Repurchase Consideration or (B) a certificate for the Option Shares it is then so prohibited from repurchasing; provided, that if the Substitute Option shall have terminated prior to the date of such notice or shall be scheduled to terminate at any time before the expiration of a period ending on the thirtieth business day after such date, Holder shall nonetheless have the right so to exercise the Substitute Option or exercise its rights under Section 9 until the expiration of such period of 30 business days. Holder shall notify Substitute Option Issuer of its determination under the preceding sentence within ten (10) business days of receipt of notice of disapproval of the repurchase. (c) For purposes of this Agreement, the "Substitute Applicable Price" means the highest closing sales price per share of Substitute Common Stock during the 60 business days preceding the Section 9 Request Date. (d) Following the conversion of the Option into a Substitute Option, all references to "Issuer", "Issuer Common Stock" and "Section 8" contained herein shall also be deemed to be references to "Substitute Option Issuer", "Substitute Common Stock" and "Section 9", respectively. 10. Registration Rights. (a) Demand Registration Rights. Issuer shall, subject to the conditions of Section 10(c) below, if requested by any Holder following a Subsequent Triggering Event that occurs prior to the termination of the Option, including Grantee and any permitted transferee ("Selling Stockholder"), as expeditiously as possible prepare, file and keep current a registration statement under the Securities Act if such registration is necessary in order to permit the sale or other disposition of any or all shares of Issuer Common Stock or other securities that have been acquired by or are issuable to the Selling Stockholder upon exercise of the Option in accordance with the intended method of sale or other disposition stated by the Selling Stockholder in such request, including, without limitation, a "shelf" registration statement under Rule 415 under the Securities Act or any successor provision, and Issuer shall use its best efforts to qualify such shares or other securities for sale under any applicable state securities laws. (b) Additional Registration Rights. If Issuer at any time after the exercise of the Option proposes to register any shares of Issuer Common Stock under the Securities Act in connection with an underwritten public offering of such Issuer Common Stock, Issuer will promptly give written notice to the Holder of its intention to do so and, upon the written request of any Selling Stockholder given within 30 days after receipt of any such notice (which request shall specify the number of shares of Issuer Common Stock intended to be included in such underwritten public offering by the Selling Stockholder), Issuer will cause all 14 15 such shares for which a Selling Stockholder requests participation in such registration to be so registered and included in such underwritten public offering; provided, however, that Issuer may elect to not cause any such shares to be so registered (i) if in the reasonable good faith opinion of the underwriters for such offering, the inclusion of all such shares by the Selling Stockholder would materially interfere with the marketing of such offering (in which case Issuer shall register as many shares as possible without materially interfering with the marketing of the offering), or (ii) in the case of a registration solely to implement an employee benefit plan or a registration filed on Form S-4 of the Securities Act or any successor Form; provided, further, however, that such election pursuant to (i) may only be made two times. If some but not all the shares of Issuer Common Stock with respect to which Issuer shall have received requests for registration pursuant to this Section 10(b) shall be excluded from such registration, Issuer shall make appropriate allocation of shares to be registered among the Selling Stockholders desiring to register their shares pro rata in the proportion that the number of shares requested to be registered by each such Selling Stockholder bears to the total number of shares requested to be registered by all such Selling Stockholders then desiring to have Issuer Common Stock registered for sale. (c) Conditions to Required Registration. Issuer shall use its reasonable best efforts to cause each registration statement referred to in Section 10(a) above to become effective and to obtain all consents or waivers of other parties which are required therefor and to keep such registration statement effective; provided, however, that Issuer may delay any registration of Option Shares required pursuant to Section 10(a) above for a period not exceeding 90 days provided Issuer shall in good faith determine that any such registration would adversely affect an offering or contemplated offering of other securities by Issuer, and Issuer shall not be required to register Option Shares under the Securities Act pursuant to Section 10(a) above: (i) prior to the earlier of (a) termination of the Merger Agreement pursuant to Article VIII thereof and (b) a Subsequent Triggering Event; (ii) on more than two occasions during any calendar year; (iii) within 90 days after the effective date of a registration referred to in Section 10(b) above pursuant to which the Selling Stockholder or Selling Stockholders concerned were afforded the opportunity to register all such shares under the Securities Act and shares were registered to the extent requested; and (iv) unless a request therefor is made to Issuer by Selling Stockholders that hold at least 25% or more of the aggregate number of Option Shares (including shares of Issuer Common Stock and other securities issuable upon exercise of the Option) then outstanding. In addition to the foregoing, Issuer shall not be required to maintain the effectiveness of any registration statement after the expiration of six months from the effective date of such registration statement. Issuer shall use its reasonable best reasonable efforts to 15 16 make any filings, and take all steps, under all applicable state securities laws to the extent necessary to permit the sale or other disposition of the Option Shares so registered in accordance with the intended method of distribution for such shares; provided, however, that Issuer shall not be required to consent to general jurisdiction or qualify to do business in any state where it is not otherwise required to so consent to such jurisdiction or to so qualify to do business. If requested by any such Holder in connection with such registration, Issuer shall become a party to any underwriting agreement relating to the sale of such shares, but only to the extent of obligating itself in respect of representations, warranties, indemnities and other agreements customarily included in secondary offering underwriting agreements. Upon receiving any request under this Section 10 from any Holder, Issuer agrees to send a copy thereof to any other person known to Issuer to be entitled to registration rights under this Section 10, in each case by promptly mailing the same, postage prepaid, to the address of record of the persons entitled to receive such copies. (d) Expenses. Except where applicable state law prohibits such payments, Issuer will pay all expenses (including, without limitation, registration fees, qualification fees, blue sky fees and expenses (including the fees and expenses of counsel), legal fees and expenses, including the reasonable fees and expenses of one counsel to the holders whose Option Shares are being registered, printing expenses and the costs of special audits or "cold comfort" letters, expenses of underwriters, excluding discounts and commissions but including liability insurance if Issuer so desires or the underwriters so require, and the reasonable fees and expenses of any necessary special experts) in connection with each registration pursuant to Section 10(a) or 10(b) above (including the related offerings and sales by holders of Option Shares) and all other qualifications, notifications or exemptions pursuant to Section 10(a) or 10(b) above. (e) Indemnification. In connection with any registration under Section 10(a) or 10(b) above Issuer hereby indemnifies the Selling Stockholders, and each underwriter thereof, including each person, if any, who controls such Selling Stockholders or underwriter within the meaning of Section 15 of the Securities Act, and including each director, officer, stockholder, partner, member, employee, representative and agent of any thereof, against all expenses, losses, claims, damages and liabilities caused by any untrue, or alleged untrue, statement of a material fact contained in any registration statement or prospectus or notification or offering circular (including any amendments or supplements thereto) or any preliminary prospectus, or caused by any omission, or alleged omission, to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as such expenses, losses, claims, damages or liabilities of such indemnified party are caused by any untrue statement or alleged untrue statement that was included by Issuer in any such registration statement or prospectus or notification or offering circular (including any amendments or supplements thereto) in reliance upon and in conformity with, information furnished in writing to Issuer by such indemnified party expressly for use therein, and Issuer and each person, if any, who controls Issuer within the meaning of Section 15 of the Securities Act, and each director, officer, stockholder, partner, member, employee, representative and agent of Issuer shall be indemnified by such Selling Stockholders, or by such underwriter, as the case may be, for all such expenses, losses, claims, damages and liabilities caused by any untrue, or alleged untrue, statement, that was included by Issuer in any such registration statement or 16 17 prospectus or notification or offering circular (including any amendments or supplements thereto) in reliance upon, and in conformity with, information furnished in writing to Issuer by such Selling Stockholders or such underwriter, as the case may be, expressly for such use. Promptly upon receipt by a party indemnified under this Section 10(e) of notice of the commencement of any action against such indemnified party in respect of which indemnity or reimbursement may be sought against any indemnifying party under this Section 10(e), such indemnified party shall notify the indemnifying party in writing of the commencement of such action, but the failure so to notify the indemnifying party shall not relieve it of any liability which it may otherwise have to any indemnified party under this Section 10(e) unless the failure so to notify the indemnified party results in substantial prejudice thereto. In case notice of commencement of any such action shall be given to the indemnifying party as above provided, the indemnifying party shall be entitled to participate in and, to the extent it may wish, jointly with any other indemnifying party similarly notified, to assume the defense of such action at its own expense, with counsel chosen by it and satisfactory to such indemnified party. The indemnified party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel (other than reasonable costs of investigation) shall be paid by the indemnified party unless (i) the indemnifying party agrees to pay the same, (ii) the indemnifying party fails to assume the defense of such action with counsel satisfactory to the indemnified party, or (iii) the indemnified party has been advised by counsel that one or more legal defenses may be available to the indemnifying party that may be contrary to the interest of the indemnified party, in which case the indemnifying party shall be entitled to assume the defense of such action notwithstanding its obligation to bear fees and expenses of such counsel. No indemnifying party shall be liable for any settlement entered into without its consent, which consent may not be unreasonably withheld. If the indemnification provided for in this Section 10(e) is unavailable to a party otherwise entitled to be indemnified in respect of any expenses, losses, claims, damages or liabilities referred to herein, then the indemnifying party, in lieu of indemnifying such party otherwise entitled to be indemnified, shall contribute to the amount paid or payable by such party to be indemnified as a result of such expenses, losses, claims, damages or liabilities in such proportion as is appropriate to reflect the relative benefits received by Issuer, the Selling Stockholders and the underwriters from the offering of the securities and also the relative fault of Issuer, the Selling Stockholders and the underwriters in connection with the statements or omissions which resulted in such expenses, losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The amount paid or payable by a party as a result of the expenses, losses, claims, damages and liabilities referred to above shall be deemed to include any legal or other fees or expenses reasonably incurred by such party in connection with investigating or defending any action or claim; provided, however, that in no case shall any Selling Stockholder be responsible, in the aggregate, for any amount in excess of the net offering proceeds attributable to its Option Shares included in the offering. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent 17 18 misrepresentation. Any obligation by any Selling Stockholder to indemnify shall be several and not joint with other Selling Stockholders. In connection with any registration pursuant to Section 10(a) or 10(b) above, Issuer and each Selling Stockholder (other than Grantee) shall enter into an agreement containing the indemnification provisions of this Section 10(e). (f) Miscellaneous Reporting. Issuer shall comply with all reporting requirements and will do all such other things as may be necessary to permit the expeditious sale at any time of any Option Shares by the Selling Stockholders thereof in accordance with and to the extent permitted by any rule or regulation promulgated by the SEC from time to time, including, without limitation, Rule 144. Issuer shall at its expense provide the Selling Stockholders with any information necessary in connection with the completion and filing of any reports or forms required to be filed by them under the Securities Act or the Exchange Act, or required pursuant to any state securities laws or the rules of the NASD or any stock exchange. (g) Issue Taxes. Issuer will pay all stamp taxes in connection with the issuance and the sale of the Option Shares and in connection with the exercise of the Option, and will save the Selling Stockholders harmless, without limitation as to time, against any and all liabilities with respect to all such taxes. 11. Quotation: Listing. If Issuer Common Stock or any other securities to be acquired in connection with the exercise of the Option are then authorized for quotation or trading or listing on the NYSE, the Nasdaq National Market System or any other securities exchange or securities quotation system, Issuer, upon the request of Holder, will promptly file an application, if required, to authorize for quotation or trading or listing the shares of Issuer Common Stock or any other securities to be acquired upon exercise of the Option on the NYSE, the Nasdaq National Market System or such other securities exchange or securities quotation system and will use its reasonable best efforts to obtain approval, if required, of such quotation or listing as soon as practicable. 12. Division of Option. This Agreement (and the Option granted hereby) are exchangeable, without expense, at the option of Holder, upon presentation and surrender of this Agreement at the principal office of Issuer for other Agreements providing for Options of different denominations entitling the holder thereof to purchase in the aggregate the same number of shares of Issuer Common Stock purchasable hereunder. The terms "Agreement" and "Option" as used herein include any other Stock Option Agreement and related Options for which this Agreement (and the Option granted hereby) may be exchanged. Upon receipt by Issuer of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Agreement, and (in the case of loss, theft or destruction) of reasonably satisfactory indemnification, and upon surrender and cancellation of this Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like tenor and date. Any such new Agreement executed and delivered shall constitute an additional contractual obligation on the part of Issuer, whether or not the Agreement so lost, stolen, destroyed or mutilated shall at any time be enforceable by anyone. 18 19 13. Limitation of Grantee Profit. (a) Notwithstanding any other provision herein, in no event shall Grantee's Total Profit (as defined below) exceed $57.5 million (the "Maximum Profit"), and, if it otherwise would exceed such amount, Grantee, at its sole discretion, shall either (i) reduce the number of shares subject to the Option (and any Substitute Option), (ii) deliver to Issuer, or the Substitute Issuer, as the case may be, for cancellation shares of Issuer Common Stock or Substitute Common Stock, as the case may be (or other securities into which such Option Shares are converted or exchanged), (iii) pay cash to Issuer, or the Substitute Issuer, as the case may be, or (iv) any combination of the foregoing, so that Grantee's actually realized Total Profit shall not exceed the Maximum Profit after taking into account the foregoing actions. Notwithstanding any other provision of this Agreement, the Option may not be exercised for a number of shares as would, as of the date of exercise, result in a Notional Total Profit (as defined below) of more than $57.5 million and, if exercise of the Option would otherwise result in the Notional Total Profit exceeding such amount, Grantee, in its discretion, may take any of the actions specified in this Section 13(a); provided, that nothing in this sentence shall restrict any subsequent exercise of the Option which at such time complies with this sentence. (b) For purposes of this Agreement, "Total Profit" shall mean: (i) the aggregate amount of (A) the excess of (x) the net cash amounts received by Grantee pursuant to a sale of Option Shares (or securities into which such shares are converted or exchanged) to any unaffiliated third party or a repurchase of Option Shares by Issuer pursuant hereto, over (y) the Grantee's aggregate purchase price for such Option Shares (or other securities), plus (B) all amounts received by Grantee on the transfer of the Option to an unaffiliated third party (whether upon repurchase by Issuer pursuant hereto or otherwise), plus (C) all equivalent amounts with respect to the Substitute Option, plus (D) all amounts received by Grantee pursuant to Sections 8.2(b) and (c) of the Merger Agreement, minus (ii) all amounts of cash previously paid to Issuer pursuant to this Section 13(b) plus the value of the Option Shares (or other securities) previously delivered to Issuer for cancellation pursuant to this Section 13(b). For purposes of this Agreement, "Notional Total Profit" with respect to any number of shares as to which Grantee may propose to exercise the Option, shall be the Total Profit, determined as of the date of such proposed exercise assuming that the Option were exercised on such date for such number of shares, and assuming that such shares, together with all other Option Shares held by Grantee and its affiliates as of such date, were sold for cash at the closing market price for the Issuer Common Stock as of the close of business on the preceding trading day (less customary brokerage commissions). (c) Notwithstanding any other provision of this Agreement, nothing in this Agreement shall affect the ability of Grantee to receive, nor relieve Issuer's obligation to pay, any payment provided for in Section 8.2 (b) or (c) of the Merger Agreement; provided, that if and to the extent the Total Profit received by Grantee would exceed the Maximum Profit following receipt of such payment, Grantee shall be obligated to comply with the terms of Section 13(a) within 30 days of the latest of (i) the date of receipt of such payment, (ii) the date of receipt of the net cash by Grantee pursuant to the sale of Option Shares (or securities into which such Option Shares are converted or exchanged) to any unaffiliated party, (iii) the date of receipt of net cash from the disposition of the Option or Substitute Option, as the case 19 20 may be, and (iv) the date of receipt of equivalent amounts pursuant to the sale of the Substitute Option or shares of Substitute Common Stock (or other securities into which such Substitute Common Stock is converted or exchanged). (d) For purposes of paragraph (a) of this Section and clause (b)(ii) of this Section, the value of any Option Shares delivered to Issuer shall be the closing market price of such Option Shares as of the close of business on the preceding trading day and the value of any Substitute Common Stock delivered to Substitute Issuer shall be the closing market price of such Substitute Common Stock as of the close of business on the preceding trading day. 14. Miscellaneous. (a) Expenses. Except as otherwise provided herein or in the Merger Agreement, each of the parties hereto shall bear and pay all costs and expenses incurred by it or on its behalf in connection with the transactions contemplated hereunder, including, without limitation, fees and expenses of its own financial consultants, investment bankers, accountants and counsel. (b) Waiver and Amendment. Any provision of this Agreement may be waived at any time by the party that is entitled to the benefits of such provision. This Agreement may not be modified, amended, altered or supplemented except upon the execution and delivery of a written agreement executed by the parties hereto. The failure of any party to this Agreement to assert any of its rights under this Agreement or otherwise shall not constitute a waiver of such rights. No single or partial exercise of any right, remedy, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. Any waiver shall be effective only in the specific instance and for the specific purpose for which given and shall not constitute a waiver to any subsequent or other exercise of any right, remedy, power or privilege hereunder. (c) Entire Agreement: No Third-Party Beneficiaries; Severability. This Agreement, together with the Merger Agreement and the other documents and instruments referred to herein and therein, between Grantee and Issuer (i) constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, between the parties with respect to the subject matter hereof and (ii) is not intended to confer upon any person other than the parties hereto (or their respective successors and assigns) (other than any transferees of the Option Shares or any permitted transferee of this Agreement pursuant to Section 14(h)) any rights, remedies, obligations or liabilities hereunder. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or Governmental Entity to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected impaired or invalidated. If for any reason such court or Governmental Entity determines that the Option does not permit Holder to acquire, or does not require Issuer to repurchase, the full number of shares of Issuer Common Stock as provided in Section 2 (as may be adjusted herein), it is the express intention of Issuer to allow Holder to 20 21 acquire or to require Issuer to repurchase such lesser number of shares as may be permissible without any amendment or modification hereof. (d) Governing Law. This Agreement shall be governed and construed in accordance with the laws of the State of New York. (e) Descriptive Headings. The descriptive headings contained herein are for convenience of reference only and shall not affect in any way the meaning or interpretation of this Agreement. (f) Notices. All notices and other communications hereunder shall be in writing and shall be deemed given if delivered personally, telecopied (with confirmation) or mailed by registered or certified mail (return receipt requested) to the parties at the addresses set forth in the Merger Agreement (or at such other address for a party as shall be specified by like notice). (g) Counterparts. This Agreement and any amendments hereto may be executed in two counterparts, each of which shall be considered one and the same agreement and shall become effective when both counterparts have been signed, it being understood that both parties need not sign the same counterpart. (h) Assignment. Neither this Agreement nor any of the rights, interests or obligations hereunder or under the Option shall be assigned by any of the parties hereto (whether by operation of law or otherwise) without the prior written consent of the other party, except that Holder may assign this Agreement to a wholly-owned Subsidiary of Holder and Holder may assign its rights hereunder in whole or in part after the occurrence of a Subsequent Triggering Event. Subject to the preceding sentence, this Agreement shall be binding upon, inure to the benefit of and be enforceable by the parties and their respective successors and assigns. (i) Further Assurances. In the event of any exercise of the Option by the Holder, Issuer and the Holder shall execute and deliver all other documents and instruments and take all other action that may be reasonably necessary in order to consummate the transactions provided for by such exercise. (j) Enforcement. The parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement in any Federal court or New York State court sitting in the Borough of Manhattan, City of New York, this being in addition to any other remedy to which they are entitled at law or in equity. 21 22 IN WITNESS WHEREOF, Issuer and Grantee have caused this Stock Option Agreement to be signed by their respective officers thereunto duly authorized, all as of the day and year first written above. THE CHASE MANHATTAN CORPORATION By: /s/ William H. McDavid ------------------------------------- Name: William H. McDavid Title: General Counsel HAMBRECHT & QUIST GROUP By: /s/ Daniel H. Case III ------------------------------------- Name: Title: 22 EX-99.11.C.4 13 EMPLOYMENT AGREEMENT 1 Exhibit 11(c)(4) EMPLOYMENT AGREEMENT EMPLOYMENT AGREEMENT (the "Agreement"), dated September 27, 1999, by and between Chase Securities Inc. (the "Company") and Daniel H. Case, III (the "Executive"). WHEREAS, the Company desires to employ Executive and to enter into an agreement embodying the terms of such employment and Executive desires to accept such employment and enter into such an agreement; and WHEREAS, The Chase Manhattan Corporation ("Parent"), as a precondition to entering into the Agreement and Plan of Merger by and among Parent, Bridge Acquisition Corporation and Hambrecht & Quist Group ("Predecessor") (dated as of September 27, 1999) (the "Merger Agreement"), has required Executive to agree to the restrictive covenants and other provisions of this Agreement; NOW, THEREFORE, in consideration of the premises and mutual covenants herein and for other good and valuable consideration, the parties agree as follows: 1. Term of Employment; Executive Representation. a. Employment Term. Subject to the other provisions of this Agreement, Executive shall be employed by the Company for a period commencing on the Closing Date (as defined in Section 1.5 of the Merger Agreement) and ending on December 31, 2002 (the "Employment Term") on the terms and subject to the conditions set forth in this Agreement. b. Executive Representation. Executive hereby represents to the Company that the execution and delivery of this Agreement by Executive and the Company and the performance by Executive of his duties hereunder shall not constitute a breach of, or otherwise contravene, the terms of any employment agreement or other agreement or policy to which Executive is a party or otherwise bound. c. Prior Agreements. This Agreement supercedes all prior agreements and understandings (including oral agreements) between Executive and Predecessor and/or its affiliates regarding the terms and conditions of his employment. 2. Position; Reporting Responsibility; Employment Responsibilities. a. During the Employment Term: (i) Executive's title shall be Chairman and Chief Executive Officer, Parent Securities West Coast and Head of Global Technology Group (and he may have other corporate titles in various corporate entities affiliated with Parent as appropriate); (ii)Executive shall principally perform his duties to the Company and its affiliates from the Company's offices in the San Francisco, California metropolitan area (subject to normal and customary travel requirements in the conduct of the Company's business); and, (iii)Executive shall report to Parent's Vice Chairman (the "Vice Chairman"), Global Investment Banking ("GIB"), and shall coordinate, as appropriate, with Parent's Vice 2 2 Chairman, Global Markets and International ("VCGM") and Parent's Vice Chairman for Public Equities and Investment Management ("VCEIM"). b. During the Employment Term, Executive shall have the following duties: (i) direct responsibility (with significant input from the VCGM and the VCEIM) for Parent's equity underwriting, dealing and research activities in the same market segments (in terms of industry, size and geography) as the current Predecessor client base, which activities shall be coordinated with parent's GIB industry group heads; (ii) co-managing, on a dotted line basis, with GIB industry and product group heads the industry and product personnel in Parent Securities West Coast; (iii) direct responsibility for investment banking and brokerage relationship management with venture capital firms (coordinating with GIB industry and product group heads); and (iv) performing such other duties (not inconsistent with the foregoing) as shall be determined from time to time by the Company and/or the Vice Chairman. c. During the Employment Term, Executive will devote his full business time and best efforts to the performance of his duties hereunder and will not engage in any other business, profession or occupation for compensation or otherwise which would conflict with the rendition of such services either directly or indirectly, without the prior written consent of the Company or the Vice Chairman; provided that nothing herein shall preclude Executive from continuing to serve on the board of directors or trustees of any business entity or charitable organization on which he currently serves and which is identified on Appendix A hereto, provided in each case, and in the aggregate, that such activities do not interfere with the performance of Executive's duties hereunder or conflict with Section 9. 3. Base Salary. During the Employment Term, the Company shall pay Executive a base salary (the "Base Salary") at the annual rate of $300,000, payable in regular installments in accordance with the GIB's usual payment practices. Executive shall be entitled to such increases in his Base Salary, if any, as may be determined from time to time in the sole discretion of the Company or Parent. 4. Annual Bonus. With respect to the final quarter of calendar year 1999, Executive shall be entitled to a bonus from the Company or Predecessor in an amount of no less than $1,750,000. With respect to each calendar year during the Employment Term, Executive shall be entitled to an annual bonus award (an "Annual Bonus") in an amount of no less than $7,000,000 (the "Minimum Bonus"). All such bonuses shall be payable in accordance with the then prevailing practices of the GIB applicable to other executives at his level. 5. Equity Arrangements. (a) As of the Closing Date, Executive shall be granted restricted shares (the "Restricted Shares") of common stock, par value $1.00 per share, of Parent ("Common Stock") with a fair market value of $14,000,000 (based on the Parent Common Share Price (as defined in the Merger Agreement)). Restricted Shares shall vest and become unrestricted shares of Common Stock in equal installments on each of the first four anniversaries of the Closing Date if Executive remains employed by the Company on each applicable vesting date, unless Executive has violated any of the provisions of Section 9 or 10. 3 3 The Restricted Shares shall also vest if Executive dies or incurs a Disability (as defined below) while employed before an applicable vesting date; provided that any unvested Restricted Shares shall become fully vested, except as otherwise provided herein if (i) Executive terminates his employment with the Company for Good Reason, or (ii) the Company terminates Executive's employment without Cause. (b) As of the Closing Date, Executive shall be granted options ("Options") to purchase 283,305 shares of Common Stock at an exercise price of $74.125 per share, which shall become vested and exercisable in three equal installments on the first, second and third anniversaries of the Closing Date, subject to the generally applicable terms of Parent's stock option plan (except as otherwise specified herein). Upon becoming vested, the Options shall remain exercisable until the tenth anniversary of the Closing Date, notwithstanding Executive's termination of employment, but provided Executive does not violate any of the provisions of Section 9 or 10. 6. Employee Benefits. During the Employment Term, Executive shall be provided, in accordance with the terms of the Company's employee benefit plans and policies as in effect from time to time, health insurance, short term and long term disability insurance, retirement benefits, fringe benefits and paid vacation (collectively "Employee Benefits") on the same basis as those benefits are generally made available to other senior executives of the GIB. 7. Business Expenses. During the Employment Term, reasonable business expenses incurred by Executive in the performance of his duties hereunder shall be reimbursed by the Company in accordance with the GIB's policies. 8. Termination. The Employment Term and Executive's employment hereunder may be terminated by the Company at any time and for any reason. Notwithstanding any other provision of this Agreement, the provisions of this Section 8 shall exclusively govern Executive's rights upon termination of employment with the Company and its affiliates (subject to the application of Sections 9, 10 and 11 below). a. Termination by the Company for Cause or Resignation by Executive without Good Reason. (i) The Employment Term and Executive's employment hereunder may be terminated by the Company for Cause, and the provisions of this Section 8(a) shall also apply in the event of Executive's resignation without Good Reason (as defined below). For purposes of this Agreement, "Cause" shall mean (A) Executive's willful and continued failure to perform his duties hereunder (other than as a result of total or partial incapacity due to physical or mental illness); (B) the willful engaging by Executive in conduct which is demonstrably injurious to the Company or its affiliates, monetarily or otherwise; (C) Executive's substantial violation of any provision of Parent's Code of Conduct; (D) Executive's conviction of a felony; or, (E) Executive's violation of any provision of Section 9 or 10; provided that none of the events described in clauses (A), (B), (C) or (E) of this Section 8(a)(i), if such event is capable of being 4 4 cured, shall constitute Cause unless the Company shall have notified Executive in writing describing the events which constitute Cause and then only if Executive shall have failed to cure such event within thirty days after Executive's receipt of such written notice. (ii) If Executive's employment is terminated by the Company for Cause, or if Executive resigns without Good Reason, Executive, subject to his continued compliance with the provisions of Sections 9 and 10, shall be entitled to receive: (A) the Base Salary through the date of termination; (B) any Annual Bonus earned but unpaid as of the date of termination for any previously completed calendar year; (C) reimbursement for any unreimbursed business expenses properly incurred by Executive in accordance with the GIB's policy prior to the date of Executive's termination; and (D) such Employee Benefits, if any, as to which Executive may be entitled under the employee benefit plans of the Company (the amounts described in clauses (A) through (D) hereof being referred to as the "Accrued Rights"). Following such termination of Executive's employment by the Company for Cause or resignation by Executive without Good Reason, except as set forth in this Section 8(a), Executive shall have no further rights to any compensation or any other benefits under this Agreement. b. Disability or Death. (i) The Employment Term and Executive's employment hereunder shall terminate upon his death and may be terminated by the Company if Executive becomes physically or mentally incapacitated and is therefore unable for a period of six consecutive months or for an aggregate of nine months in any 24 consecutive month period to perform his duties (such incapacity is hereinafter referred to as "Disability"). Any question as to the existence of the Disability of Executive as to which Executive and the Company cannot agree shall be determined in writing by a qualified independent physician mutually acceptable to Executive and the Company. If Executive and the Company cannot agree as to a qualified independent physician, each shall appoint such a physician and those two physicians shall select a third who shall make such determination in writing. The determination of Disability made in writing to the Company and Executive shall be final and conclusive for all purposes of the Agreement. (ii) Upon termination of Executive's employment hereunder for either Disability or death, Executive or his estate (as the case may be) shall be entitled to receive: 5 5 (A) the Accrued Rights; (B) an amount equal to the Minimum Bonus multiplied by the percentage of the calendar year (or other applicable period) that shall have elapsed through the date of Executive's termination of employment, payable when such Annual Bonus would have otherwise been payable had the Executive's employment not terminated; and, (C) the Restricted Shares and Options, and all other restricted shares and options to purchase Common Stock then held by Executive, shall vest and/or become exercisable, as the case may be, on the date of such termination. Following Executives employment due to death or Disability, except as set forth in this Section 8(b), Executive shall have no further rights to any compensation or any other benefits under this Agreement. c. Termination by the Company Without Cause or Resignation by Executive for Good Reason. (i) The Employment Term and Executive's employment hereunder may be terminated by the Company without Cause or by Executive's resignation for Good Reason. (ii) For purposes of this Agreement, "Good Reason" shall mean: (A) a reduction in Executive's Base Salary or Minimum Bonus; (B) any material diminution in (I) Executive's title, (II) Executive's reporting responsibility (unless such diminution is as the result of a reporting restructuring subsequent to a merger, acquisition or similar transaction involving Parent or Company which does not have a material adverse effect on Executive's ability to operate the businesses for which he is responsible), or (III) those employment responsibilities set forth in Sections 2(b)(i) and (ii) above; (C) the relocation of Executive outside the San Francisco metropolitan area; or (D) any other breach by the Company of any material provision of this Agreement; provided that none of the events described in clauses (A) , (B), (C) or (D) of this Section 8(c)(ii) shall constitute Good Reason unless Executive shall have notified the Company in writing describing the events which constitute Good Reason and then only if the Company shall have failed to cure such event within thirty days after the Company's receipt of such written notice. (iii) If Executive's employment is terminated by the Company without Cause (other than by reason of death or Disability) or if Executive resigns for Good Reason, Executive shall be entitled to receive: (A) the Accrued Rights; (B) subject to Executive's continued compliance with the provisions of Sections 9 and 10, continued payment of the Base Salary and Minimum Bonus (in 6 6 cash) until December 31, 2002; provided that the aggregate amount described in this clause (B) shall be reduced by the present value of any other cash severance or termination benefits payable to Executive under any other plans, programs or arrangements of the Company or its affiliates; and (C) the Restricted Shares and Options, and all other restricted shares and options to purchase Common Stock then held by Executive, shall vest and/or become exercisable, as the case may be, on the date of such termination; and (D) Executive shall be entitled to outplacement services, financial counseling and continued participation in the Company's welfare plans (at the levels then in effect) until December 31, 2002; provided that any welfare benefits available pursuant to this Section shall be reduced to the extent comparable benefits are actually received by or made available to Executive without cost during such period following Executive's termination of employment (and any such benefits shall be reported to the Company by Executive). Following termination of Executive's employment by the Company without Cause (other than by reason of Executive's death or Disability) or by Executive's resignation for Good Reason, except as set forth in this section 8(c), Executive shall have no further rights to any compensation or any other benefits under this Agreement. d. Notice of Termination. Any purported termination of employment by the Company or by Executive (other than due to Executive's death) shall be communicated by written Notice of Termination to the other party hereto. For purposes of this Agreement, a "Notice of Termination" shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of employment under the provision so indicated. 9. Non-Competition. a. In consideration for Parent's entry into the Merger Agreement and the payments and benefits specified hereunder, Executive agrees that until the earlier of (x) December 31, 2003, or (y) one year following the end of Executive's employment with the Company, (i) he will not, directly or indirectly, as a principal, manager, agent, consultant, officer, stockholder, partner, employee or in any other capacity, become involved in any business activity within the United States which is competitive with any aspect of the business of Predecessor or its subsidiaries as currently conducted, and as said business may evolve following Predecessor's acquisition by Parent through the date this covenant expires; (ii) he shall not, on his own behalf or on behalf of any person, firm or company, directly or indirectly, as a principal, manager, agent, consultant, officer, stockholder, partner, employee or in any other capacity, solicit, assist in soliciting or offer employment to any person who has been employed by the Company or its affiliates subsequent to the date hereof and at any time during the six months 7 7 immediately preceding such solicitation; and (iii) he shall not, on his own behalf or on behalf of any person, firm or company, directly or indirectly, as a principal, manager, agent, consultant, officer, stockholder, partner, employee or in any other capacity, solicit or assist in soliciting the business of any client or individual or entity whom he knows to be a prospective client of the Company or its affiliates: (1) with which he has had personal contact or dealings on behalf of the Company during the twelve months immediately preceding the date of the termination or Executive's employment with the Company; (2) with which employees directly reporting to him have had personal contact or dealings on behalf of the Company during the twelve months immediately preceding the date of the termination of Executive's employment with the Company; or (3) for which he was responsible during the twelve months immediately preceding the date of the termination of Executive's employment with the Company; provided that nothing in this Section shall preclude Executive from acquiring or retaining up to 1% of the securities of another company (provided such securities are publicly traded and such investments are passive); provided, however, that after termination of employment, Executive may invest in private companies or public companies with a market capitalization of up to $100,000,000 (the "Permitted Companies"), for his own account, or provide advisory services to Permitted Companies (but only acting as a sole practitioner with no employees). Notwithstanding the foregoing, Executive shall not raise, or become directly or indirectly involved in, any investment fund, or engage in any underwriting activities. b. Executive has carefully considered the nature and extent of the foregoing covenants he is subject hereto and the rights and remedies conferred upon the Company under these covenants, and Executive hereby acknowledges and agrees that such covenants, rights and remedies are reasonable in time and territory, are designed to eliminate competition which otherwise would be unfair to the Company and its affiliates, do not stifle the inherent skill and experience of Executive, would not operate as a bar to Executive's sole means of support, are fully required to protect the legitimate interests of the Company and its affiliates following the transactions contemplated by the Merger Agreement and do not confer a benefit upon the Company and its affiliates that is disproportionate to the detriment to Executive. c. In the event that a court of competent jurisdiction shall hold that any covenants that Executive is subject hereto, are excessively restrictive and not reasonable in any respect, such court shall have the right, power and authority to excise or modify such provision or provisions thereof as to the court shall appear not reasonable and to enforce the remainder of the covenants as so amended, as such court shall consider necessary or appropriate for the protection of the legitimate interests of the Company and its affiliates. 10. Confidentiality. At any time during or after Executive's employment with the Company, Executive shall not, without the prior written consent of the Company, use, divulge, disclose or make accessible to any other person, firm, partnership, corporation or other entity any Confidential Information (as hereinafter defined) pertaining to the business of the Company or any of its subsidiaries, except (i) while employed by the Company, in the business of and for the benefit of the Company, or (ii) when required to do so by a court of competent jurisdiction, by any governmental agency having supervisory authority over the business of the 8 8 Company, or by any administrative body or legislative body (including a committee thereof) with jurisdiction to order Executive to divulge, disclose or make accessible such information. For purposes of this section 10, "Confidential Information" shall mean information concerning the financial data, strategic business plans, and other proprietary and confidential information of the Company, its subsidiaries, or their respective affiliates as in existence as of the date of Executive's termination of employment that, in any case, is not otherwise available to the public (other than by Executive's breach of the terms hereof). 11. Specific Performance. Executive agrees and acknowledges that the injury to the Company and its affiliates resulting from any violation by Executive of any of the provisions of these covenants will be irreparable and of such a character that it cannot be compensated by money damages, that the remedy at law for any such violation will be inadequate, and that the damages resulting from any such violation are not readily susceptible to being measured in monetary terms. Accordingly, the Company may, in addition to pursuing its other remedies, obtain a temporary restraining order and preliminary and permanent injunctive relief from any court having jurisdiction over the matter restraining any such violation and any threatened or further violation; and no bond or other security shall be required in connection with any such restraining order or injunctive relief. Nothing in this Section 11 shall be deemed to limit any other or additional remedies, whether at law or in equity or otherwise, for any violation by Executive of any of the provisions of this Agreement which may be pursued or availed of by the Company. 12. Gross-Up Payment. The provisions of Appendix B hereto shall apply to Executive if any excise tax under Section 4999 of the Internal Revenue Code of 1986, as amended, is imposed upon Executive as the result of any payments to Executive from the Company or its affiliates. 13. Miscellaneous. a. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California, without regard to conflicts of laws principles thereof. b. Entire Agreement/Amendments. This Agreement contains the entire understanding of the parties with respect to the employment of Executive by the Company. There are no restrictions, agreements, promises, warranties, covenants or undertakings between the parties with respect to the subject matter herein other than those expressly set forth herein. This Agreement may not be altered, modified, or amended except by written instrument signed by the parties hereto. c. No Waiver. The failure of a party to insist upon strict adherence to any term of this Agreement on any occasion shall not be considered a waiver of such party's rights or deprive such party of the right thereafter to insist upon strict adherence to that term or any other term of this Agreement. 9 9 d. Severability. In the event that any one or more of the provisions of this Agreement shall be or become invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions of this Agreement shall not be affected thereby. e. Assignment. This Agreement shall not be assignable by Executive. This Agreement may be assigned by the Company to a company which is a successor in interest to substantially all of the business operations of the Company. Such assignment shall become effective when the Company notifies the Executive of such assignment or at such later date as may be specified in such notice. Upon such assignment, the rights and obligations of the Company hereunder shall become the rights and obligations of such successor company, provided that any assignee expressly assumes the obligations, rights and privileges of this Agreement. f. Mitigation. Executive shall not be required to mitigate the amount of any payment provided for pursuant to this Agreement by seeking other employment. g. Successors; Binding Agreement. This Agreement shall inure to the benefit of and be binding upon personal or legal representatives, executors, administrators, successors, heirs, distributes, devises and legatees. h. Notice. For the purpose of this Agreement, notices and all other communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States registered mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth below Agreement, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt. If to the Company: c/o The Chase Manhattan Bank 270 Park Avenue New York, New York 10017 Attention: General Counsel with a copy to: Simpson Thacher & Bartlett 425 Lexington Avenue New York, New York 10017 Attention: Lee Meyerson, Esq. Fax: (212) 455-2502 10 10 If to Executive: To the most recent address of Executive set forth in the personnel records of the Company. with a copy to: Wachtell, Lipton, Rosen & Katz 51 West 52nd Street New York, New York 10019 Attention: Edward D. Herlihy, Esq. Fax: (212) 403-2000 i. Withholding Taxes. The Company may withhold from any amounts payable under this Agreement such Federal, state and local taxes as may be required to be withheld pursuant to any applicable law or regulation. j. Counterparts. This Agreement may be signed in counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. k. Legal Fees. The Company shall be obligated to reimburse Executive for all reasonable legal fees in connection with the enforcement or contest of this Agreement, provided if in connection with litigation concerning this Agreement, Executive prevails in at least one material issue in such litigation. 11 11 IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written. /s/ Daniel H. Case III ------------------------------------ Daniel H. Case III CHASE SECURITIES INC. By: /s/ Douglas Braunstein -------------------------------- Title: Managing Director 12 APPENDIX A OUTSIDE DIRECTORSHIPS AMB Property Corporation Electronic Arts Inc. Rational Software Corporation National Science and Technology Medal Foundation Bay Area Council Securities Industry Association NYSE Nominating Committee Technology Network 13 APPENDIX B EXCISE TAX PROCEDURES 1. If any payments (the "Payments") to Executive from the Company or any of its affiliates will be subject to any excise tax ("Excise Tax") imposed under Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code"), the Company shall pay to Executive an additional amount (the "Gross-Up Payment") such that the net amount retained by Executive, after deduction of any Excise Tax on the Payments and any federal, state and local income tax and Excise Tax upon the payment provided for by this Section, shall be equal to the Payments. For purposes of determining whether any of the Payments will be subject to the Excise Tax and the amount of such Excise Tax: (a) the Payments shall be treated as "parachute payments" within the meaning of Section 280G(b)(2) of the Code, and all "excess parachute payments" within the meaning of Section 280G(b)(1) of the Code shall be treated as subject to the Excise Tax, unless in the opinion of tax counsel selected by the Company's independent auditors and reasonably acceptable to Executive such Payments (in whole or in part) do not constitute parachute payments, or such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered, or are otherwise not subject to the Excise Tax; and (b) the value of any non-cash benefits or any deferred payment or benefit shall be determined by the Company's independent auditors in accordance with the principles of Sections 280G(d)(3) and 280G(d)(4) of the Code. For purposes of determining the amount of the Gross-Up Payment, Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made and applicable state and local income taxes at the highest marginal rate of taxation, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes. In the event that the Excise Tax is subsequently determined to be less than the amount taken into account hereunder at the time of termination of Executive's employment, Executive shall repay to the Company, at the time that the amount of such reduction in Excise Tax is finally determined, the portion of the Gross-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment being repaid by Executive to the extent that such repayment results in a reduction in Excise Tax and/or a federal, state or local income tax deduction) plus interest on the amount of such repayment at the rate provided in Section 1274(b)(2) of the Code. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time of the termination of Executive's employment (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall make an additional Gross-Up Payment in respect of such excess (plus any interest, penalties or additions payable by Executive with respect to such excess) at the time that the amount of such excess is finally determined. Executive and the Company shall each reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax with respect to the Payments. 2. The payments provided for in Section 1 hereof shall be made not later than the fifteenth day following the date Executive's employment with the Company terminates; 14 2 provided, however, that if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to Executive on such day an estimate, as determined in good faith by the Company, of the minimum amount of such payments to which Executive is clearly entitled and shall pay the remainder of such payments (together with interest at the rate provided in Section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but in no event later than the 30th day after the date of termination. In the event that the amount of the estimated payments exceed the amount subsequently determined to have been due, such excess shall constitute a loan by the Company to Executive, payable on the fifth business day after demand by the Company (together with interest at the rate provided in Section 1274(b)(2)(B) of the Code). At the time that payments are made under this Section, the Company shall provide Executive with a written statement setting forth the manner in which such payments were calculated and the basis for such calculations including, without limitation, any opinions or other advice the Company has received from outside counsel, auditors or consultants (and any such opinions or advice which are in writing shall be attached to the statement). EX-99.11.C.5 14 CONFIDENTIALITY AGREEMENT 1 Exhibit 11(c)(5) [LETTERHEAD OF HAMBRECHT & QUIST GROUP] February 8, 1999 The Chase Manhattan Corporation 270 Park Avenue New York, NY 10017 CONFIDENTIALITY AGREEMENT ------------------------- Dear Sirs: In connection with your possible interest in the purchase of (the "Transaction") Hambrecht and Quist Group (the "Company"), you have requested that we furnish you or your representatives with certain information relating to the Company or the Transaction. All such information (whether written or oral) furnished (whether before or after the date hereof) by us or our directors, officers, employees, affiliates, representatives (including, without limitation, financial advisors, attorneys and accountants) or agents (collectively, "our Representatives") to you or your directors, officers, employees, affiliates, representatives (including, without limitation, financial advisors, attorneys and accountants) or agents or your potential sources of financing for the Transaction (collectively, "your Representatives") and all analyses, compilations, forecasts, studies or other documents prepared by you or your Representative in connection with your or their review of, or your interest in, the Transaction which contain or reflect any such information is hereinafter referred to as the "Information". The term Information will not, however, include information which (a) is or becomes publicly available other than as a result of a disclosure by you or your Representatives, (b) was available to you on a nonconfidential basis prior to its disclosure to you by us or our Representatives, or (c) was or becomes available to you on a nonconfidential basis from a person, other than by us or our Representatives, who is not known by you to be bound by a confidentiality agreement with us. Accordingly, you hereby agree that: 1. You and your Representatives (i) will keep the Information confidential and will not (except as required by applicable law, regulation or legal process, and only after compliance with paragraph 3 below), without our prior written consent, disclose any Information in any manner whatsoever, and (ii) will not use any Information other than in connection with the Transaction; provided, however, that you may reveal the Information to your Representatives (a) who need to know the Information for the purpose of evaluating the Transaction, (b) who are informed by you of the confidential nature of the Information and (c) who agree to act in accordance with the terms of this letter agreement; and provided, further, that you may disclose to your Federal or state banking regulator, on a confidential basis, such of the Information as may be deemed advisable or necessary upon advice of your counsel. You will cause your Representative to observe the terms of this letter agreement, and you will be responsible for any breach of this letter agreement by any of your Representatives. 2. You and your Representatives will not (except as permitted above with respect to your banking regulators or as required by applicable law, regulation or legal process, and 2 only after compliance with paragraph 3 below), without our prior written consent, disclose to any person the fact that the Information exists or has been made available that you are considering the Transaction or any other transaction involving the Company, or that discussions or negotiations are taking or have taken place concerning the Transaction or involving the Company or any term, condition or other fact relating to the Transaction or such discussions or negotiations, including, without limitation, the status thereof. 3. In the event that you or any of your Representatives are requested pursuant to, or required by, applicable law, regulation or legal process to disclose any of the Information, you will notify us promptly so that we may seek a protective order or other appropriate remedy or, in our sole discretion, waive compliance with the terms of this letter agreement. In the event that no such protective order or other remedy is obtained, or that the Company does not waive compliance with the terms of this letter agreement, you will furnish only that portion of the Information which you are advised by counsel is legally required and will exercise all reasonable efforts to obtain reliable assurance that confidential treatment will be accorded the Information. 4. If you determine not to proceed with the Transaction, you will promptly inform us of that decision and at any time upon the request of the Company or any of our Representatives, you will either (i) promptly destroy all copies of the written Information in you or your Representatives' possession and confirm such destruction to us in writing, or (ii) promptly deliver to the Company at your own expense all copies of the written Information in you or your Representatives' possession. Any oral Information will continue to be subject to the terms of this letter agreement. The foregoing shall not apply to any analysis derived from Information contained in presentations to your Board of Directors. 5. You acknowledge that neither we, nor any of our officers, directors, employees, agents or controlling persons within the meaning of Section 20 of the Securities Exchange Act of 1934, as amended, makes any express or implied representation or warranty as to the accuracy or completeness of the Information, and you agree that no such person will have any liability relating to the Information or for any errors therein or omissions therefrom. You further agree that you are not entitled to rely on the accuracy or completeness of the Information and that you will be entitled to rely solely on such representations and warranties as may be included in any definitive agreement with respect to the Transaction, subject to such limitations and restrictions as may be contained therein. 6. You are aware, and you will advise your Representatives who are informed of the matters that are the subject of this letter agreement, of the restrictions imposed by the United States securities laws on the purchase or sale of securities by any person who has received material, non-public information from the issuer of such securities and on the communication of such information to any other person when it is reasonably foreseeable that such other person is likely to purchase or sell such securities in reliance upon such information. 7. You agree that, for a period of eighteen months from the date of this letter agreement, neither you nor any of your affiliates will, without the prior written consent of the Company or its Board of Directors other than in the ordinary course of your brokerage, investment advisory, private banking or asset management businesses or otherwise acting in the ordinary course of your business as trustee or other fiduciary capacity: (i) acquire, offer to acquire, or agree to acquire, directly or indirectly, by purchase or otherwise, any voting securities or direct or indirect rights to acquire any voting 3 securities of the Company, or any subsidiary thereof, or any successor to or person in control of the Company, or any assets of the Company or any subsidiary or division thereof or of any such successor or controlling person; (ii) make, or in any way participate in, directly or indirectly, any "solicitation" of "proxies" (as such terms are sued in the rules of the Securities Exchange Commission) to vote, or seek to advise or influence any person or entitle with respect to the voting of, any voting securities of the Company; (iii) make any public announcement with respect to, or submit a proposal for, or offer of (without conditions) any extraordinary transaction involving the Company or its securities or assets; or (iv) form, join or in any way participate in a "group" (as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended) in connection with any of the foregoing. 8. You agree that, for a period of eighteen months from the date of this letter agreement, you will not, directly or indirectly, solicit for employment or hire any employee of the Company who became known to you in connection with your consideration of the Transaction; provided, however, that the foregoing provision will not prevent you from employing any such person who contacts you on his or her own initiative without any direct or indirect solicitation by or encouragement from you or who contacts you on the basis of a public advertisement or general solicitation. 9. You acknowledge and agree that (a) we and our Representatives are free to conduct the process leading up to a possible Transaction as we and our Representatives, in our sole discretion, determine (including, without limitation, by negotiating with any prospective buyer and entering into a preliminary or definitive agreement without prior notice to you or any other person), (b) we reserve the right, in our sole discretion, to change the procedures relating to our consideration of the Transaction at any time without prior notice to you or any other person, to reject any and all proposals made by you or any of your Representatives with regard to the Transaction, and to terminate discussions and negotiations with you at any time and none of our Representatives will have any liability to you with respect to the Transaction, whether by virtue of this letter agreement, any other written or oral expression with respect to the Transaction or otherwise. 10. You acknowledge that remedies at law may be inadequate to protect us against any actual or threatened breach of this letter agreement by you or by your Representatives, and, without prejudice to any other rights and remedies otherwise available to us, you agree to the granting of injunctive relief in our favor without proof of actual damages. 11. You agree that no failure or delay by us in exercising any right, power or privilege hereunder will operate as a waiver thereof, nor will any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any right, power or privilege hereunder. 12. Except as otherwise specifically provided for in Paragraphs 7 and 8 hereof, your obligations under this letter agreement shall terminate upon the earlier of (i) the consummation of the Transaction with us and (ii) the second anniversary of the date first written above. This letter agreement shall be governed by and construed in accordance with the laws of the State of New York applicable to contracts executed in and to be performed in that state. This letter agreement contains the entire agreement between you and us concerning the confidentiality of the Information, and no modifications of this letter agreement or waiver of the terms and conditions hereof will be binding upon you or us, less approved in writing by each of you and us. 4 Please confirm your agreement with the foregoing by signing and returning to the undersigned the duplicate copy of this letter enclosed herewith. Very truly yours, HAMBRECHT & QUIST By: /s/ Patrick J. Allen -------------------------------- Name: Patrick J. Allen -------------------------------- Title: Chief Financial Officer -------------------------------- Accepted and Agreed as of the date first written above: The Chase Manhattan Corporation - ------------------------------- By: /s/ William H. McDavid -------------------------- Name: William H. McDavid -------------------------- Title: General Counsel -------------------------- EX-99.11.C.6 15 CONFIDENTIALITY AGREEMENT 1 Exhibit 11(c)(6) [CHASE MANHATTAN BANK LETTERHEAD] March 29, 1999 Hambrecht & Quist Group One Bush Street San Francisco, California 94104 CONFIDENTIALITY AGREEMENT Dear Sirs: Reference is hereby made to the Confidentiality Agreement, dated February 8, 1999 (the "Initial Agreement"), between The Chase Manhattan Corporation ("Chase") and Hambrecht & Quist Group (the "Company"), pursuant to which the Company agreed to provide certain information to Chase and its representatives on a confidential basis in connection with a possible transaction referred to in the Initial Agreement. Unless otherwise defined in this letter agreement, capitalized terms used in this agreement are used as defined in the Initial Agreement. In connection with the Transaction referred to in the Initial Agreement, the Company has requested that Chase furnish the Company and the Company's representatives with certain information relating to Chase or the Transaction. All such information (whether written or oral) furnished (whether before or after the date hereof) by Chase or its directors, officers, employees, affiliates, representatives (including, without limitation, financial advisors, attorneys and accountants) or agents (collectively, "Chase's Representatives") to the Company or its directors, officers, employees, affiliates, representatives (including, without limitation, financial advisors, attorneys and accountants), agents or potential sources of financing for the Transaction (collectively, the "Company's Representatives") and all analyses, compilations, forecasts, studies or other documents prepared by the Company or the Company's Representatives in connection with the Company's or their review of, or the Company's interest in, the Transaction which contain or reflect any such information is hereinafter referred to as the "Chase Information". The term Chase Information will not, however, include information which (a) is or becomes publicly available other than as a result of a disclosure by the Company or the Company's Representatives, (b) was available to the Company on a nonconfidential basis prior to its disclosure to the Company by Chase or Chase's Representatives, or (c) was or becomes available to the Company on a 2 nonconfidential basis from a person, other than by Chase or Chase's Representatives, who is not known by the Company to be bound by a confidentiality agreement with Chase. Accordingly, Chase and the Company hereby agree that, in connection with the Transaction and the Chase Information: 1. The Company and the Company's Representatives will be bound by all provisions of Sections 1 through 8 and 10 through 12 of the Initial Agreement as if such Initial Agreement had been addressed to the Company and dated the date of this letter agreement. Accordingly, the provisions of Sections 1 through 8 and 10 through 12 of the Initial Agreement shall be deemed to be incorporated by reference into this letter agreement in full, except that: (i) all references therein to the "Information" shall be deemed to be references to the Chase Information; (ii) all references therein to "you", "your" or "your Representatives" shall be deemed to be references to the Company or the Company's Representatives, as the case may be; (iii) all references therein to "the Company", "we", "us", "our" or "our Representatives" shall be deemed to be references to Chase or Chase's Representatives, as the case may be; and (iv) all references therein to the "date of this letter agreement" or the "date first written above" shall be deemed to be references to March 25, 1999. 2. The Company acknowledges and agrees that Chase reserves the right in its sole discretion to reject any and all proposals made by the Company or any of the Company's Representatives with regard to the Transaction, and to terminate discussions and negotiations with the Company at any time and neither Chase nor any of Chase's Representatives will have any liability to the Company with respect to the Transaction, whether by virtue of this letter agreement, any other written or oral expression with respect to the Transaction or otherwise. 3 Please confirm your agreement with the foregoing by signing and returning to the undersigned the duplicate copy of this letter enclosed herewith. Very truly yours, THE CHASE MANHATTAN CORPORATION By: /s/ ANTHONY S. MATTIA ---------------------------- Name: Anthony S. Mattia Title: Managing Director Accepted and Agreed as of the date first written above: HAMBRECHT & QUIST GROUP By: /s/ PATRICK J. ALLEN ----------------------------- Name: Patrick J. Allen Title: CFO -----END PRIVACY-ENHANCED MESSAGE-----