-----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, BCWoYpYGj3eQCyILSAe2xhgzgf9DyCz5HrnffbfwozivIsgFmg1UMaxsqVeqyJiX d4rfHNo9eVlqLaWQRZkBNQ== 0000950123-97-006998.txt : 19970818 0000950123-97-006998.hdr.sgml : 19970818 ACCESSION NUMBER: 0000950123-97-006998 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19970807 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19970815 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PAINE WEBBER GROUP INC CENTRAL INDEX KEY: 0000075754 STANDARD INDUSTRIAL CLASSIFICATION: SECURITY BROKERS, DEALERS & FLOTATION COMPANIES [6211] IRS NUMBER: 132760086 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-07367 FILM NUMBER: 97664787 BUSINESS ADDRESS: STREET 1: 1285 AVE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10019 BUSINESS PHONE: 2127132000 FORMER COMPANY: FORMER CONFORMED NAME: PAINE WEBBER INC DATE OF NAME CHANGE: 19840523 8-K 1 PAINWEBBER GROUP INC. 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): August 7, 1997 PAINE WEBBER GROUP INC. (Exact Name of Registrant as specified in its charter) DELAWARE NO. 1-7367 NO. 13-2760086 (State or other (Commission (IRS Employer jurisdiction of File Number) incorporation) Identification No.) 1285 AVENUE OF THE AMERICAS NEW YORK, NEW YORK 10019 (Address of principal (Zip code) executive offices) Registrant's telephone number, including area code: (212) 713-2000 2 Item 5. Other Events. (a) The Registrant has entered into (i) an Amended and Restated Stockholders Agreement, dated August 6, 1997, with General Electric Company ("GE"), General Electric Capital Corporation, General Electric Capital Services, Inc. ("GECS"), and Kidder Peabody Group Inc. and (ii) a Share Purchase Agreement dated August 6, 1997, with GE and GECS, which are attached hereto as Exhibits 4.1 and 10.1, respectively, and each of which is incorporated herein by reference. Item 7. Financial Statements and Exhibits. (c) The following exhibits are filed herewith:
Exhibit Number Description ------ ----------- 4.1 Amended and Restated Stockholders Agreement, dated August 6, 1997, between Paine Webber Group Inc., General Electric Company, General Electric Capital Corporation, General Electric Capital Services, Inc. and Kidder Peabody Group Inc. 10.1 Share Purchase Agreement, dated August 6, 1997, by and among General Electric Company and General Electric Capital Services, Inc. and Paine Webber Group Inc. 99.1 Copy of the Registrant's press release relating to the transactions contemplated by the Share Purchase Agreement (filed as Exhibit 10.1 hereto).
3 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. PAINE WEBBER GROUP INC. By: /s/REGINA DOLAN ----------------------------------- Name: Regina Dolan Title: Vice President and Chief Financial Officer Dated: August 15, 1997 4 EXHIBIT INDEX
Exhibit Number Description ------ ----------- 4.1 Amended and Restated Stockholders Agreement, dated August 6, 1997, between Paine Webber Group Inc., General Electric Company, General Electric Capital Corporation, General Electric Capital Services, Inc. and Kidder Peabody Group Inc. 10.1 Share Purchase Agreement, dated August 6, 1997, by and among General Electric Company and General Electric Capital Services, Inc. and Paine Webber Group Inc. 99.1 Copy of the Registrant's press release relating to the transactions contemplated by the Share Purchase Agreement (filed as Exhibit 10.1 hereto).
EX-4.1 2 AMENDED AND RESTATED STOCKHOLDERS AGREEMENT 1 AMENDED AND RESTATED STOCKHOLDERS AGREEMENT dated August 6, 1997 between Paine Webber Group Inc., General Electric Company, General Electric Capital Corporation, General Electric Capital Services, Inc. and Kidder, Peabody Group Inc. 2 TABLE OF CONTENTS --------------- PAGE ---- ARTICLE 1 DEFINITIONS SECTION 1.01. Definitions.....................................................1 ARTICLE 2 REPRESENTATIONS AND WARRANTIES SECTION 2.01. Representations and Warranties..................................4 ARTICLE 3 STANDSTILL AND VOTING PROVISIONS SECTION 3.01. Restrictions of Certain Actions by Shareholder..................4 SECTION 3.02. Board Representation............................................6 SECTION 3.03. Voting..........................................................6 ARTICLE 4 TRANSFER RESTRICTIONS SECTION 4.01. Restrictions of Transfer........................................7 SECTION 4.02. Permitted Transfers.............................................7 SECTION 4.03. Company Call Right..............................................8 SECTION 4.04. Right of First Refusal.........................................10 SECTION 4.05. Assignment.....................................................11 ARTICLE 5 REGISTRATION RIGHTS SECTION 5.01. Registration upon Request......................................11 SECTION 5.02. Incidental Registration Rights.................................13 SECTION 5.03. Broad Public Distribution; Lead Manager........................14 SECTION 5.04. Registration Mechanics.........................................14 SECTION 5.05. Expenses.......................................................17 SECTION 5.06. Indemnification and Contribution...............................17 SECTION 5.07. Underwriting Agreement.........................................20 3 PAGE ---- ARTICLE 6 SHAREHOLDER PURCHASE RIGHTS SECTION 6.01. Shareholder Purchase Rights....................................21 ARTICLE 7 MISCELLANEOUS SECTION 7.01. Termination....................................................22 SECTION 7.02. Financial Services Group.......................................22 SECTION 7.03. Legend.........................................................22 SECTION 7.04. Specific Performance...........................................23 SECTION 7.05. Entire Agreement...............................................24 SECTION 7.06. Severability...................................................24 SECTION 7.07. Headings.......................................................24 SECTION 7.08. Counterparts...................................................24 SECTION 7.09. Notices........................................................24 SECTION 7.10. Successors and Assigns.........................................26 SECTION 7.11. Governing Law..................................................26 SECTION 7.12. Compliance by Affiliates.......................................26 SECTION 7.13. Reports........................................................26 SECTION 7.14. Fair Market Value Determination................................26 SECTION 7.15. Aggregation; Definition of Shareholder.........................27 SECTION 7.16. Effectiveness..................................................27 ii 4 AMENDED AND RESTATED STOCKHOLDERS AGREEMENT This AMENDED AND RESTATED STOCKHOLDERS AGREEMENT (this "Agreement"), dated August 6, 1997, is between Paine Webber Group Inc., a Delaware corporation (the "Company"), General Electric Company, a New York corporation ("Parent"), Kidder, Peabody Group Inc., a Delaware corporation and an indirect wholly-owned subsidiary of Parent ("Group"), General Electric Capital Services, Inc., a Delaware corporation ("GECS") and General Electric Capital Corporation, a New York corporation (together with GECS, the "Shareholder", which term shall include Parent and any subsidiary (as defined below) of Parent to the extent Voting Securities (as defined below) have been transferred to Parent or such subsidiary pursuant to Section 4.02(a)(i)). WHEREAS, the Company, Parent and Group (i) have previously entered into a Stockholders Agreement dated December 16, 1994 and (ii) desire to amend and restate such Stockholders Agreement, effective upon consummation of the sale of the capital stock of Kidder, Peabody & Co. Incorporated pursuant to a Share Purchase Agreement (the "Share Purchase Agreement") dated the date hereof among the Company, Parent and GECS; and WHEREAS, Shareholder currently holds 1,000,000 shares of the Company's 6% Cumulative Convertible Redeemable Preferred Stock, Series A, stated value $100 per share, and 2,500,000 shares of the Company's 9% Cumulative Redeemable Preferred Stock, Series C, stated value $100 per share, and, upon consummation of the sale of the capital stock of Kidder, Peabody & Co. Incorporated pursuant to the Share Purchase Agreement, is acquiring 15,500,000 shares of the Company's Common Stock, par value $1.00 per share; NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, the parties hereto agree as follows: ARTICLE 1 DEFINITIONS SECTION 1.01. Definitions. (a) The following terms, as used herein, have the following meanings: 5 "Asset Purchase Agreement" means the Asset Purchase Agreement dated as of October 17, 1994 between the Company, Parent and Group, as amended and supplemented. "Broad Public Distribution" means an underwritten distribution registered under the 1933 Act or a distribution exempt from registration thereunder in which Shareholder uses its best efforts to cause the underwriters expressly to agree in writing for the benefit of the Company that they collectively will not sell Voting Securities to any "person" within the meaning of Section 13(d)(3) of the 1934 Act who, to the best of such underwriters' knowledge after inquiry, would own, immediately after such distribution, Voting Securities having aggregate voting power of more than 3% of the voting power of all the then outstanding Voting Securities. "Common Stock" means the common stock, par value $1.00 per share, of the Company. "Convertible Preferred Stock" means the 6% Cumulative Convertible Redeemable Preferred Stock, Series A, stated value $100 per share, of the Company. "Equity Treatment Percentage" means the lesser of (i) 20% and (ii) the minimum percentage of Common Stock required to be owned to permit Parent to account for its beneficial ownership of Voting Securities in accordance with the "equity" method of accounting. "Fair Market Value" of the Common Stock as of any day shall mean the average daily closing sales price of the Common Stock for the ten consecutive trading days preceding such day. The closing price for each day shall be the last reported sales price regular way or, in case no such reported sale takes place on such day, the average of the reported closing bid and asked prices regular way, in either case on the principal national securities exchange on which the Common Stock is listed and admitted to trading, or if not listed and admitted to trading on any such exchange, on the NASDAQ National Market System, or if not quoted on the National Market System, the average of the closing bid and asked prices in the over-the-counter market as furnished by any New York Stock Exchange member firm selected from time to time by the Company for that purpose. "Financial Services Group" means General Electric Capital Services, Inc. and its subsidiaries (including, without limitation, Kidder, Peabody Group Inc. and General Electric Capital Corporation), General Electric Investment Corporation, General Electric Investment Management Incorporated or any other Affiliate of Parent engaged in the financial services business. 2 6 "Preferred Stock" means, collectively, the Convertible Preferred Stock and the Redeemable Preferred Stock. "Redeemable Preferred Stock" means the 9% Cumulative Redeemable Preferred Stock, Series C, stated value $100 per share, of the Company. "subsidiary" shall mean, with respect to any person (herein referred to as the "parent"), (i) any corporation of which securities representing more than 50% of the equity and more than 50% of the ordinary voting power are, at the time any determination is being made, owned by the parent or one or more subsidiaries of the parent or by the parent and one or more subsidiaries of the parent or (ii) any entity (other than a corporation) controlled by the parent of which securities or other ownership interests having ordinary voting power to elect a majority of the board of directors or other persons performing similar functions and representing more than 50% of the equity are, at the time any determination is being made, owned by the parent or one or more subsidiaries of the parent or by the parent and one or more subsidiaries of the parent. "Third Party Account" means any account managed for the benefit of another person (other than Parent or any Affiliate of Parent) by any member of the Financial Services Group. "Total Voting Power" means the aggregate number of votes which may be cast by holders of outstanding Voting Securities. "Voting Securities" means any securities of the Company entitled to vote generally in the election of directors of the Company or any direct or indirect rights or options to acquire any such securities or any securities convertible or exercisable into or exchangeable for such securities. (b) Except as otherwise specified herein, terms used in this Agreement shall have the respective meanings assigned to such terms in the Asset Purchase Agreement. The rules of interpretation specified in Section 1.02 of the Asset Purchase Agreement shall be applicable to this Agreement. Unless otherwise specified all references to "days" shall be deemed to be references to calendar days. 3 7 ARTICLE 2 REPRESENTATIONS AND WARRANTIES SECTION 2.01. Representations and Warranties. Each of Parent and Shareholder represents and warrants to the Company that (i) each Shareholder entity is a wholly-owned indirect subsidiary of Parent; and (ii)(a) Shareholder "beneficially owns" (as such term is defined in Rule 13d-3 under the 1934 Act) 2,500,000 shares of Redeemable Preferred Stock, 1,000,000 shares of Convertible Preferred Stock and 15,500,000 shares of Common Stock, (b) the Financial Services Group (which includes Shareholder) does not beneficially own any other Voting Securities except for any Voting Securities held in any Third Party Account and (c) to the best knowledge of Parent, neither it nor any of its Affiliates beneficially owns any other Voting Securities, except for any Voting Securities held in any Third Party Account. ARTICLE 3 STANDSTILL AND VOTING PROVISIONS SECTION 3.01. Restrictions of Certain Actions by Shareholder. Parent will not, and will cause each of its Affiliates not to, singly or as part of a partnership, limited partnership, syndicate or other group (as those terms are defined in Section 13(d)(3) of the 1934 Act), directly or indirectly: (a) except as permitted under Section 6.01, acquire, offer to acquire, or agree to acquire, by purchase, gift or otherwise, any Voting Securities, except pursuant to a stock split, stock dividend, rights offering, recapitalization, reclassification or similar transaction; (b) make, or in any way participate in any "solicitation" of "proxies" to vote (as such terms are defined in Rule 14a-1 under the 1934 Act), solicit any consent or communicate with or seek to advise or influence any person or entity with respect to the voting of any Voting Securities or become a "participant" in any "election contest" (as such terms are defined or used in Rule 14a-11 under the 1934 Act) with respect to the Company; (c) form, join, encourage or in any way participate in the formation of, any "person" within the meaning of Section 13(d)(3) of the 1934 Act with respect to any Voting Securities; provided that this Section 3.01(c) shall not prohibit any such arrangement solely among Parent and any of its wholly-owned subsidiaries; 4 8 (d) deposit any Voting Securities into a voting trust or subject any such Voting Securities to any arrangement or agreement with respect to the voting thereof; provided that this Section 3.01(d) shall not prohibit any such arrangement solely among Parent and any of its wholly-owned subsidiaries; (e) initiate, propose or otherwise solicit stockholders for the approval of one or more stockholder proposals with respect to the Company as described in Rule 14a-8 under the 1934 Act, or induce or attempt to induce any other person to initiate any stockholder proposal; (f) except in accordance with and pursuant to Section 3.02, seek election to or seek to place a representative on the Board of Directors of the Company or, except with the approval of management of the Company, seek the removal of any member of the Board of Directors of the Company; (g) except with the approval of management of the Company, call or seek to have called any meeting of the stockholders of the Company; (h) except through its representative on the Board of Directors of the Company, otherwise act to seek to control, disrupt or influence the management, business, operations, policies or affairs of the Company except with the approval of management of the Company; (i) (A) solicit, seek to effect, negotiate with or provide any information to any other party with respect to, (B) make any statement or proposal, whether written or oral, to the Board of Directors of the Company or any director or officer of the Company with respect to, or (C) otherwise make any public announcement or proposal whatsoever with respect to, any form of business combination transaction involving the Company, including, without limitation, a merger, exchange offer or liquidation of the Company's assets, or any restructuring, recapitalization or similar transaction with respect to the Company; provided that the foregoing shall not (x) apply to discussions between officers, employees or agents of Parent or Shareholder and the representative of Shareholder on the Board of Directors of the Company or (y) in the case of clause (B) above, be interpreted to limit the ability of such representative to make any such statement or proposal or to discuss any such proposal with any officer, director or advisor to the Company or the Board of Directors of the Company in connection with the performance by such representative of his duty as a director; (j) disclose or announce any intention, plan or arrangement inconsistent with the foregoing; or 5 9 (k) advise, assist, instigate or encourage any third party to do any of the foregoing (except, for purposes of clause (a) above, in connection with any transfer of Voting Securities permitted under Section 4.02). If Parent or any of its Affiliates owns or acquires any Voting Securities in violation of this Agreement, such Voting Securities shall immediately be disposed of to persons who are not Affiliates thereof but only in compliance with the provisions of this Agreement; provided that the Company may also pursue any other available remedy to which it may be entitled as a result of such violation. SECTION 3.02. Board Representation.The Company will cause one person mutually agreed upon by Parent and the Company to be elected to the Company's Board of Directors concurrently with the execution hereof. (b) Thereafter, so long as Shareholder owns Voting Securities representing at least 10% of Total Voting Power (calculated on a fully diluted basis assuming conversion or exchange of all outstanding securities of the Company convertible into or exchangeable for Voting Securities and the exercise of all rights or options to acquire Voting Securities), subject to the further provisions of this Section 3.02, the Company's Nominating Committee (or any other committee exercising a similar function) (the "Nominating Committee") shall recommend to the Board of Directors of the Company that such person (or any successor designated by Parent and approved by the Nominating Committee) be included in the slate of nominees recommended by the Board of Directors of the Company to shareholders for election as directors at each annual meeting of shareholders of the Company at which such person's term expires. (c) In the event that the designee of Shareholder shall cease to serve as a director for any reason, the vacancy resulting thereby shall be filled by a person designated by Parent and approved by the Nominating Committee. (d) In the event that at any time Shareholder shall own Voting Securities representing less than 10% of Total Voting Power (calculated as provided in Section 3.02(b)), Shareholder shall have no further rights under this Section 3.02 and shall promptly cause to resign, and take all other action reasonably necessary to cause the prompt removal of, its designee to the Board of Directors of the Company. SECTION 3.03. Voting. Whenever Shareholder shall have the right to vote any Voting Securities, Shareholder shall (i) be present, in person or represented by proxy, at all stockholder meetings of the Company so that all Voting Securities beneficially owned by it shall be counted for the purpose of determining the presence of a quorum at such meetings, and (ii) subject to 6 10 Section 3.03(b) below, vote or cause to be voted, or consent with respect to, all Voting Securities beneficially owned by it in the manner recommended by the Company's Board of Directors, except that during any period or at any time when there shall be in full force and effect a valid order or judgment of a court of competent jurisdiction or a ruling, pronouncement or requirement of the New York Stock Exchange, Inc. ("NYSE") to the effect that the foregoing provision of this Section 3.03 is invalid, void, unenforceable or not in accordance with NYSE policy, then Shareholder will, if so requested by the Board of Directors of the Company, vote or cause to be voted all Voting Securities beneficially owned by it in the same proportion as the votes cast by or on behalf of the other holders of Voting Securities. (b) Notwithstanding anything to the contrary contained in Section 3.03(a) above, Shareholder shall have the right to vote freely, without regard to any request or recommendation of the Board of Directors of the Company, with respect to (i) all matters specified in paragraph (8) of the Certificate of Designation of Rights and Preferences for the Convertible Preferred Stock and paragraph (7) of the Certificate of Designation of Rights and Preferences for the Redeemable Preferred Stock and (ii) any "Rule 13e-3 transaction" (as defined in Rule 13e-3(a)(3) under the 1934 Act as in effect on the date hereof) unless such transaction has been approved by a majority of the disinterested directors of the Board of Directors of the Company. ARTICLE 4 TRANSFER RESTRICTIONS SECTION 4.01. Restrictions of Transfer. Except as otherwise expressly permitted in this Agreement, Parent will not, and will not permit its Affiliates to, directly or indirectly, transfer, sell, assign, pledge, convey, hypothecate or otherwise encumber or dispose of ("transfer") any Voting Securities. SECTION 4.02. Permitted Transfers. (a) Notwithstanding the provisions of Section 4.01, Parent and its Affiliates shall be permitted to transfer any portion of or all their shares of Voting Securities or Redeemable Preferred Stock under the following circumstances: (i) transfers to any subsidiary of Parent, but only if such transferee agrees in writing to be bound by the terms of this Agreement, provided that such subsidiary shall be permitted to own such Voting Securities only so long as such subsidiary shall remain a subsidiary of 7 11 Parent and provided further that no such transfer shall relieve Parent or Shareholder of their obligations under this Agreement; (ii) subject to the Company's rights under Section 4.04, in the case of shares of Common Stock (including Common Stock issuable upon conversion or redemption of the Convertible Preferred Stock), transfers made pursuant to (A) a Broad Public Distribution or (B) Rule 144 under the 1933 Act, provided that any such sale pursuant to Rule 144 shall be subject to the volume and manner of sale limitations set forth in such Rule whether or not legally required; (iii) subject to the Company's rights under Section 4.04, in the case of shares of Convertible Preferred Stock, after December 16, 1999, transfers made pursuant to a demand registration under Section 5.01(a); (iv) pursuant to a tender offer or exchange offer or acquisition of control of the Company or similar transaction, at any time following the time at which the Company shall publicly announce or otherwise disclose to Shareholder that the Board of Directors of the Company does not oppose such transaction; or (v) transfers of any portion of or all its shares of Redeemable Preferred Stock to any person, provided that (A) Parent shall give not less than 45 days prior written notice to the Company of its intention to transfer such shares and (B) such person agrees in writing to be bound by the terms of this Section 4.02(a)(v). Such notice shall specify the number of shares of Redeemable Preferred Stock proposed to be transferred and the date of the proposed transfer of such shares. (b) Notwithstanding anything to the contrary in this Agreement, Voting Securities shall not be transferred by Parent or any of its Affiliates to any person (i) pursuant to a tender offer or exchange offer or acquisition of control of the Company or similar transaction which is opposed by the Company's Board of Directors or (ii) during the 12 months following the date of effectiveness of this Agreement other than transfers permitted pursuant to Section 4.02(a)(i) or Section 4.02(a)(iv). SECTION 4.03. Company Call Right. (a) The Company shall have the right (the "Call Right"), exercisable at any time or from time to time, upon written notice to Shareholder (the "Call Notice"), to elect to purchase a portion (to the extent provided below) of or all the shares of Common Stock then held by Shareholder, at a purchase price per share payable in cash (the "Call Price") equal to the greater of (x) the Fair Market Value of the Common Stock as of the date of 8 12 delivery of the Call Notice and (y) $23.95634. Delivery of any Call Notice by the Company to Shareholder shall be irrevocable. (b) Notwithstanding the provisions of Section 4.03(a), if the Company exercises its Call Right for less than all of the Common Stock then held by Shareholder, (i) if immediately prior to such exercise, Parent beneficially owns not less than the Equity Treatment Percentage of outstanding Common Stock and, at such time, Parent accounts for such ownership of Common Stock in accordance with the equity method of accounting, then the Company shall be permitted to exercise its Call Right in part only to the extent that such exercise would not reduce the percentage of outstanding Common Stock beneficially owned by Parent below the Equity Treatment Percentage and (ii) if immediately prior to such exercise, the Company is a 20-percent owned corporation within the meaning of Section 243(c)(2) of the Code as in effect on the date hereof (a "20-percent owned corporation") of the Shareholder, then the Company shall be permitted to exercise its Call Right in part only to the extent that such exercise would not result in the Company ceasing to be a 20-percent owned corporation of the Shareholder. For purposes of clause (ii) of this paragraph (b), (A) the term "stock" shall have the same meaning as in Section 243(c)(2) of the Code as in effect on the date hereof and (B) all shares of stock of the Company held by Shareholder or any Affiliate of Shareholder shall be treated as if they were held by a single legal entity. Nothing in this Section 4.03(b) shall be construed to limit the Company's right to exercise its Call Right at any time in respect of all the Common Stock held by Shareholder at such time. (c) Notwithstanding the provisions of Section 4.03(a), the Call Right shall be suspended and shall not be exercisable by the Company during the pendency of any transaction described in Section 4.02(a)(iv) following the time at which the Company shall publicly announce or otherwise disclose to Shareholder that the Board of Directors of the Company does not oppose such transaction. (d) Any purchase of Common Stock by the Company pursuant to this Section 4.03 shall be on a mutually determined closing date which shall not be more than 30 days after delivery of the Call Notice. The closing shall be held at 10:00 a.m., local time, at the principal office of the Company, or at such other time or place as the parties mutually agree. (e) On the closing date, Shareholder shall deliver (i) certificates representing the shares of Common Stock being sold, free and clear of any lien, claim or encumbrance, and (ii) such other documents, including evidence of ownership and authority, as the Company may reasonably request. The Call Price shall be paid by wire transfer of immediately available funds no later than 2:00 p.m., local time, on the closing date. 9 13 SECTION 4.04. Right of First Refusal. (a) If Shareholder desires to transfer any shares of Common Stock (including Common Stock issuable upon conversion or redemption of the Convertible Preferred Stock) pursuant to Section 4.02(a)(ii) or shares of Convertible Preferred Stock pursuant to Section 4.02(a)(iii), Shareholder shall give prompt written notice (the "Transfer Notice") to the Company of such intention, specifying the number of shares of Common Stock or Convertible Preferred Stock proposed to be transferred (the "Offered Shares"). The Transfer Notice shall constitute an irrevocable offer (the "Offer") by Shareholder to sell to the Company the Offered Shares at a price (the "Offer Price") equal to (x) in the case of the Convertible Preferred Stock, the aggregate price specified by Shareholder in the Transfer Notice and (y) in the case of the Common Stock, the aggregate Fair Market Value of such Offered Shares on the date of delivery of the Transfer Notice. The Company shall have the right, exercisable by written notice given by the Company to Shareholder within 30 days after receipt of such Transfer Notice, to purchase (or to cause a person or group designated by the Company to purchase) all, but not a part of, the Offered Shares specified in such Transfer Notice for cash at the Offer Price by delivery of a notice (the "Exercise Notice") to Shareholder stating the Company's irrevocable acceptance of the Offer. (b) If the Company elects to purchase the Offered Shares, the closing of the purchase of the Offered Shares shall take place on a mutually acceptable closing date which shall be not more than 30 days after delivery of the Exercise Notice. The closing shall be held at 10:00 a.m., local time, at the principal office of the Company or at such other time or place as the parties mutually agree. (c) On the closing date, Shareholder shall deliver (or cause to be delivered) (i) certificates representing the Offered Shares, free and clear of any lien, claim or encumbrance, and (ii) such other documents, including evidence of ownership and authority, as the Company may reasonably request. The Offer Price shall be paid by wire transfer of immediately available funds no later than 2:00 p.m., local time, on the closing date. (d) If the Company fails to elect to purchase the Offered Shares within the period specified in Section 4.03(a), (i) Shareholder shall be free, during the period of 90 days following the expiration of such period, to transfer any portion of or all the Offered Shares pursuant to Section 4.02(a)(ii) or 4.02(a)(iii), as the case may be, and (ii) the Company shall not be entitled to exercise its Call Right with respect to the Offered Shares during the period from the date of the Transfer Notice to the end of such 90-day period. Offered Shares not so transferred within such 90-day period shall again become subject to the procedures provided for in this Section 4.04 and to the Call Right. Notwithstanding the foregoing, in the case 10 14 of any proposed transfer of any portion or all of the Offered Shares pursuant to Section 4.02(a)(ii)(B) under Rule 144 at a price (the "Reduced Offer Price") less than 95% of the Offer Price, Shareholder shall first offer such Offered Shares to the Company by notice (oral or written) to the Senior Vice President and Senior Associate General Counsel of PaineWebber Incorporated made during regular business hours. The Company shall have the right, exercisable by the close of business on the immediately following Business Day after receipt of such notice from Shareholder, to purchase all, but not a part of, such Offered Shares at the Reduced Offer Price. If the Company does not elect to purchase such Offered Shares, Shareholder may transfer such Offered Shares under Rule 144 pursuant to Section 4.02(a)(ii)(B) at a price equal to or above the Reduced Offer Price, provided that any Offered Shares not so transferred within ten Business Days shall again become subject to the procedures provided for in this Section 4.04(d). SECTION 4.05. Assignment. The Company may assign any of its rights under Section 4.03 or 4.04 to any person without the consent of Shareholder; provided that no such assignment shall relieve the Company of any of its obligations pursuant to Section 4.03 or 4.04. In the event that the Company elects to exercise a right under Section 4.03 or 4.04, the Company may specify in its Call Notice or Exercise Notice, as applicable, or thereafter prior to purchase, another such person as its designee to purchase the Offered Shares to which such Call Notice or Exercise Notice, as applicable, relates. ARTICLE 5 REGISTRATION RIGHTS SECTION 5.01. Registration upon Request. (a) From and after the first anniversary of the date of effectiveness of this Agreement, Parent shall have the right to make written demand upon the Company, on not more than five separate occasions (subject to the provisions of this Section 5.01), to register under the 1933 Act (i) shares of Redeemable Preferred Stock, (ii) shares of Common Stock issued to Shareholder pursuant to the Share Purchase Agreement, acquired upon conversion of the Convertible Preferred Stock, or acquired in accordance with Section 6.01 of this Agreement or (iii) at any time after December 16, 1999, shares of Convertible Preferred Stock (the shares subject to such demand hereunder being referred to as the "Subject Stock"), and the Company shall use its best efforts to cause such shares to be registered under the 1933 Act as soon as reasonably practicable so as to permit the sale thereof promptly; provided that each such demand shall cover at least (A) $50,000,000 liquidation preference of Redeemable Preferred Stock, (B) $100,000,000 liquidation preference of 11 15 Convertible Preferred Stock or (C) 5,000,000 shares of Common Stock, in the case of the first such demand relating to Common Stock, or 2,500,000 shares of Common Stock in any subsequent demand relating to Common Stock (subject in each case to adjustment for stock splits, reverse stock splits, stock dividends and similar events after the date hereof), as the case may be. In connection therewith, the Company shall as promptly as practicable prepare, file (on Form S-3 if permitted or otherwise on the appropriate form) and use its best efforts to cause to become effective a registration statement under the 1933 Act to effect such registration. Parent and Shareholder agree to provide all such information and materials and to take all such action as may be reasonably required in order to permit the Company to comply with all applicable requirements of the 1933 Act and the Commission and to obtain any desired acceleration of the effective date of such registration statement. (b) Notwithstanding the provisions of Section 5.01(a) and 5.01(c), the Company (i) shall not be obligated to prepare or file more than one registration statement pursuant to this Section 5.01 during any 12-month period and (ii) shall be entitled to postpone the filing of any registration statement otherwise required to be prepared and filed by the Company pursuant to Section 5.01(a) (A) for a period of up to 60 days following completion of any underwritten public offering of securities contemplated by the Company prior to receipt of a demand for registration hereunder, provided that the Company is advised by its managing underwriter or underwriters in writing (with a copy to Shareholder), that the price at which securities would be offered in such offering would, in its or their opinion, be materially adversely affected by the registration so requested, or (B) for a period of up to 135 days if the Company determines in its reasonable judgment and in good faith that the registration and distribution of the shares of Subject Stock would impair or interfere with in any material respect any contemplated material financing, acquisition, disposition, corporate reorganization or other similar transaction or other material corporate development involving the Company or any of its subsidiaries or Affiliates or would require premature disclosure thereof, and such disclosure is not practicable in the Company's reasonable judgment in light of the facts and circumstances then existing or would impair or interfere with in any material respect such transaction or would otherwise materially adversely affect the Company. In the event of such postponement, Parent shall have the right to withdraw the request for registration by giving written notice to the Company within 20 days after receipt of notice of postponement and, in the event of such withdrawal, such request shall not be counted for purposes of determining the number of registrations to which Parent is entitled pursuant to this Section 5.01. (c) In addition to the rights of Parent set forth in Section 5.01(a), if at any time the Company shall exercise its right pursuant to paragraph (5)(d) of the 12 16 Certificate of Designation of Rights and Preferences for the Convertible Preferred Stock to deliver shares of Common Stock in lieu of cash in payment of the redemption price for any shares of Convertible Preferred Stock, Parent shall have the right, exercisable within 30 days following receipt of notice of such redemption for Common Stock, to make an additional written demand upon the Company to register under the 1933 Act any or all shares of Common Stock received in connection with such redemption, and the Company shall use its best efforts to cause such shares to be registered under the 1933 Act as soon as reasonably practicable so as to permit the sale thereof promptly, subject to the provisions of Section 5.01(b). (d) Except in accordance with the provisions of the Amended and Restated Investment Agreement (the "Yasuda Agreement") dated as of November 5, 1992, between the Company and The Yasuda Mutual Life Insurance Company ("Yasuda"), the Company shall not grant to any other holder of its securities, whether currently outstanding or issued in the future, any incidental or piggyback registration rights with respect to any registration statement filed pursuant to a demand registration under this Section 5.01 and, except as aforesaid with respect to the rights of Yasuda, without the prior consent of Parent, the Company will not permit any holder of its securities other than Yasuda to participate in any offering made pursuant to a demand registration under this Section 5.01. SECTION 5.02. Incidental Registration Rights. If the Company proposes to register any of its Common Stock under the 1933 Act (other than (i) pursuant to Section 5.01 hereof, (ii) securities to be issued pursuant to a stock option or other employee benefit or similar plan, or (iii) securities proposed to be issued in exchange for securities or assets of, or in connection with a merger or consolidation with, another corporation) the Company shall, as promptly as practicable, give written notice to Parent of the Company's intention to effect such registration. If, within 15 days after receipt of such notice, Parent submits a written request to the Company specifying the amount of Common Stock that it proposes to sell or otherwise dispose of in accordance with this Section 5.02, the Company shall use its best efforts to include the shares specified in Parent's request in such registration. If in a registration other than pursuant to Section 2.3 of the Yasuda Agreement, the managing underwriters reasonably determine in good faith and advise Shareholder in writing that the inclusion in the registration statement of all the Common Stock proposed to be included would interfere with the successful marketing and sale of the securities proposed to be registered, then the amount of Common Stock to be registered by Parent pursuant to this Section 5.02 shall be reduced to the amount, if any, determined by the managing underwriters in good faith that would not interfere with such marketing and sale, provided that if securities are being offered for the account of any Person other 13 17 than the Company, then the amount of securities of such other Person and Shareholder shall be reduced proportionately based on the number of securities each such Person requested to be included in the offering. If in a registration pursuant to Section 2.3 of the Yasuda Agreement, Yasuda advises the Company that in Yasuda's reasonable judgment registration of the Shareholder's shares of Common Stock would adversely affect the offering and sale of its securities under the Yasuda Agreement, then the number of Shareholder's shares of Common Stock to be included in such offering shall be reduced to the amount, if any, determined by Yasuda in its reasonable judgment, that would not adversely affect such offering and sale. No registration effected under this Section 5.02 shall relieve the Company of its obligation to effect any registration upon request under Section 5.01. If Shareholder has been permitted to participate in a proposed offering pursuant to this Section 5.02, the Company thereafter may determine either not to file a registration statement relating thereto, or to withdraw such registration statement, or otherwise not to consummate such offering, without any liability hereunder. SECTION 5.03. Broad Public Distribution; Lead Manager. (a) The Company shall be required to register Subject Stock that is Common Stock pursuant to this Article V only if such Common Stock is to be offered and sold in a Broad Public Distribution. (b) The Company shall be required to register Subject Stock pursuant to this Article V only if such Subject Stock is to be offered and sold in an underwritten distribution lead-managed by the Company's principal broker-dealer subsidiary, provided that, in the reasonable judgment of Parent, the proposed terms of offering by such subsidiary are customary and reasonably competitive and provided further that Parent in all cases shall have the right to designate a non-book-running co-lead manager for any such offering. SECTION 5.04. Registration Mechanics. (a) In connection with any offering of shares of Subject Stock registered pursuant to Section 5.01 or 5.02 herein, the Company shall (i) furnish to Shareholder such number of copies of any prospectus (including preliminary and summary prospectuses) and conformed copies of the registration statement (including amendments or supplements thereto and, in each case, all exhibits) and such other documents as it may reasonably request, but only while the Company shall be required under the provisions hereof to cause the registration statement to remain current; (ii) (A) use its best efforts to register or qualify the Subject Stock covered by such registration statement under such blue sky or other state securities laws for offer and sale as Shareholder shall reasonably request and (B) keep such registration or qualification in effect for so long as the registration statement remains in effect; provided that the Company shall not be obligated to qualify to do business as a foreign corporation under the 14 18 laws of any jurisdiction in which it shall not then be qualified or to file any general consent to service of process in any jurisdiction in which such a consent has not been previously filed or subject itself to taxation in any jurisdiction wherein it would not otherwise be subject to tax but for the requirements of this Section 5.04; (iii) use its best efforts to cause all shares of Subject Stock covered by such registration statement to be registered with or approved by such other federal or state government agencies or authorities as may be necessary in the opinion of counsel to the Company to enable Shareholder to consummate the disposition of such shares of Subject Stock; (iv) notify Shareholder any time when a prospectus relating thereto is required to be delivered under the 1933 Act upon discovery that, or upon the happening of any event as a result of which, the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading, in the light of the circumstances under which they were made, and (subject to the good faith determination of the Company's Board of Directors as to whether to permit sales under such registration statement), at the request of Shareholder promptly prepare and furnish to it a reasonable number of copies of a supplement to or an amendment of such prospectus as may be necessary so that, as thereafter delivered to the purchasers of such securities, such prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, in the light of the circumstances under which they were made; (v) otherwise use its best efforts to comply with all applicable rules and regulations of the SEC; (vi) use its best efforts to list, if required by the rules of the applicable securities exchange or, if securities of the same class are then so listed, the Subject Stock covered by such registration statement on the NYSE or on any other securities exchange on which Subject Stock is then listed; (vii) before filing any registration statement or any amendment or supplement thereto, and as far in advance as is reasonably practicable, furnish to Shareholder and its counsel copies of such documents; and (viii) furnish to Shareholder, addressed to it, an opinion of counsel for the Company, dated the date of the closing under the underwriting agreement relating to any underwritten offering covering substantially the same matters with respect to such registration statement (and the prospectus included therein) as are customarily covered in opinions of counsel delivered to underwriters in underwritten public offerings of securities. (b) In connection with any offering of Subject Stock registered pursuant to Section 5.01 or 5.02, the Company shall (x) furnish to the underwriter, if any, unlegended certificates representing ownership of the Subject Stock being sold in such denominations as requested and (y) instruct any transfer agent and registrar of the Subject Stock to release any stop transfer orders with respect to such Subject Stock. 15 19 (c) At any time that Parent shall not be entitled to designate a nominee for election to the Board of Directors pursuant to Section 3.02, in connection with the preparation and filing of each registration statement registering Subject Stock under the 1933 Act, the Company will give Shareholder and the underwriters, if any, and their respective counsel and accountants (collectively, the "Inspectors"), such reasonable and customary access to its books and records (collectively, the "Records") and such opportunities to discuss the business of the Company with its officers and the independent public accountants who have certified its financial statements as shall be necessary, in the opinion of Shareholder and such underwriters or their respective counsel, to conduct a reasonable investigation within the meaning of the 1933 Act. Records which the Company reasonably determines to be confidential and which it notifies the Inspectors in writing are confidential shall not be disclosed by the Inspectors unless (i) the disclosure of such Records is necessary or appropriate to avoid or correct a misstatement or omission in the registration statement, (ii) the portion of the Records to be disclosed has otherwise become publicly known, (iii) the information in such Records is to be used in connection with any litigation or governmental investigation or hearing relating to any registration statement or (iv) the release of such Records is ordered pursuant to a subpoena or other order. Shareholder agrees that it will, upon learning that disclosure of such Records is sought in a court of competent jurisdiction, give notice to the Company. (d) Upon any registration becoming effective pursuant to Section 5.01, the Company shall use its best efforts to keep such registration statement current for a period of 90 days or such shorter period as shall be necessary to effect the distribution of the Subject Stock. (e) Shareholder agrees that upon receipt of any notice from the Company of the happening of any event of the kind described in clause (iv) of Section 5.04(a), it will forthwith discontinue its disposition of Subject Stock pursuant to the registration statement relating to such Subject Stock until its receipt of the copies of the supplemented or amended prospectus contemplated by clause (iv) of Section 5.03(a) and, if so directed by the Company, will deliver to the Company all copies then in its possession of the prospectus relating to such Subject Stock current at the time of receipt of such notice. If Shareholder's disposition of Subject Stock is discontinued pursuant to the foregoing sentence, unless the Company thereafter extends the effectiveness of the registration statement to permit dispositions of Subject Stock by Shareholder for an aggregate of 90 days, whether or not consecutive, the registration statement shall not be counted for purposes of determining the number of registrations to which Shareholder is entitled pursuant to Section 5.01. 16 20 SECTION 5.05. Expenses. In connection with any registration pursuant to this Article V (i) Shareholder shall pay all agent fees and commissions and underwriting discounts and commissions related to shares of Subject Stock being sold by Shareholder and the fees and disbursements of its counsel and accountants and (ii) the Company shall pay all fees and disbursements of its counsel and accountants and the expenses (including the fees of any separate counsel) of any "qualified independent underwriter" required in accordance with the Rules of Fair Practice of the National Association of Securities Dealers, Inc. All other fees and expenses in connection with any registration statement (including, without limitation, all registration and filing fees, all printing costs, all fees and expenses of complying with securities or blue sky laws) shall (i) in the case of a registration pursuant to Section 5.01, be borne by Shareholder and (ii) in the case of a registration pursuant to Section 5.02, be shared pro rata based upon the respective market values of the securities to be sold by the Company, Shareholder and any other holders participating in such offering; provided that Shareholder shall not pay any expenses relating to work that would otherwise be incurred by the Company including, but not limited to, the preparation and filing of periodic reports with the Commission. SECTION 5.06. Indemnification and Contribution. In the case of any offering registered pursuant to this Article V, the Company agrees to indemnify and hold Shareholder, each underwriter, if any, of the Subject Stock under such registration and each person who controls any of the foregoing within the meaning of Section 15 of the 1933 Act, and any officer, employee or partner of the foregoing, harmless against any and all losses, claims, damages, or liabilities (including reasonable legal fees and other reasonable expenses incurred in the investigation and defense thereof) to which they or any of them may become subject under the 1933 Act or otherwise (collectively "Losses"), insofar as any such Losses shall arise out of or shall be based upon (i) any untrue statement or alleged untrue statement of a material fact contained in the registration statement relating to the sale of such Subject Stock (as amended if the Company shall have filed with the SEC any amendment thereof), or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading or (ii) any untrue statement or alleged untrue statement of a material fact contained in the prospectus relating to the sale of such Subject Stock (as amended or supplemented if the Company shall have filed with the SEC any amendment thereof or supplement thereto), or the omission or alleged omission to state therein a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading; provided that the indemnification contained in this Section 5.06 shall not apply to such Losses which shall arise out of or shall be based upon any such untrue statement or alleged untrue statement, or any such omission or alleged omission, which shall have been made in reliance upon and in conformity with 17 21 information furnished in writing to the Company by Shareholder or any such underwriter, as the case may be, specifically for use in connection with the preparation of the registration statement or prospectus contained in the registration statement or any such amendment thereof or supplement therein. Notwithstanding the foregoing provisions of this Section 5.06, the Company will not be liable to Shareholder, any person who participates as an underwriter in the offering or sale of Subject Stock or any other person, if any, who controls Shareholder or any underwriter (within the meaning of the 1933 Act), under the indemnity agreement in this Section 5.06 for any such Losses that arise out of Shareholder or other person's failure to send or give a copy of the final prospectus to the person asserting an untrue statement or alleged untrue statement or omission or alleged omission at or prior to the written confirmation of the sale of the Subject Stock to such person if such statement or omission was corrected in such final prospectus and the Company has previously furnished copies thereof in accordance with this Agreement. In the case of each offering registered pursuant to this Article V, Parent shall, or shall cause General Electric Capital Services, Inc. or another member of the Financial Services Group, reasonably satisfactory to the Company (the "Parent Indemnitor") to, agree and each underwriter, if any, participating therein shall agree, substantially in the same manner and to the same extent as set forth in the preceding paragraph, severally to indemnify and hold harmless the Company and each person who controls the Company within the meaning of Section 15 of the 1933 Act, and any director, officer, employee or partner of the Company, with respect to any statement in or omission from such registration statement or prospectus contained in such registration statement (as amended or as supplemented, if amended or supplemented as aforesaid) if such statement or omission shall have been made in reliance upon and in conformity with information furnished in writing to the Company by Parent, Shareholder or such underwriter, as the case may be, specifically for use in connection with the preparation of such registration statement or prospectus contained in such registration statement or any such amendment thereof or supplement thereto. Each party indemnified under this Section 5.06 shall, promptly after receipt of notice of the commencement of any claim against such indemnified party in respect of which indemnity may be sought hereunder, notify the indemnifying party in writing of the commencement thereof. The failure of any indemnified party to so notify an indemnifying party shall not relieve the indemnifying party from any liability in respect of such action which it may have to such indemnified party on account of the indemnity contained in this Section 5.06, unless (and only to the extent) the indemnifying party was prejudiced by such failure, and in no event shall such failure relieve the indemnifying party from 18 22 any other liability which it may have to such indemnified party. In case any action in respect of which indemnification may be sought hereunder shall be brought against any indemnified party and it shall notify an indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it may desire, jointly with any other indemnifying party similarly notified, to assume the defense thereof through counsel reasonably satisfactory to the indemnified party, and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party shall not be liable to such indemnified party under this Section 5.06 for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof, other than reasonable costs of investigation (unless (i) such indemnified party reasonably objects to such assumption on the grounds that there may be defenses available to it which are different from or in addition to those available to such indemnifying party, (ii) the indemnifying party and such indemnified party shall have mutually agreed to the retention of such counsel or (iii) in the reasonable opinion of such indemnified party representation of such indemnified party by the counsel retained by the indemnifying party would be inappropriate due to actual or potential differing interests between such indemnified party and any other party represented by such counsel in such proceeding, in which case the indemnified party shall be reimbursed by the indemnifying party for the reasonable expenses incurred in connection with retaining separate legal counsel). No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any claim or pending or threatened proceeding in respect of which the indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party, unless such settlement includes an unconditional release of such indemnified party from all liability arising out of such claim or proceeding. If the indemnification provided for in this Section 5.06 is unavailable to an indemnified party or is insufficient to hold such indemnified party harmless from any Losses in respect of which this Section 5.06 would otherwise apply by its terms (other than by reason of exceptions provided herein), then each applicable indemnifying party, in lieu of indemnifying such indemnified party, shall have a joint and several obligation to contribute to the amount paid or payable by such indemnified party as a result of such Losses, in such proportion as is appropriate to reflect the relative benefits received by and fault of the indemnifying party, on the one hand, and such indemnified party, on the other hand, in connection with the offering to which such contribution relates as well as any other relevant equitable considerations. The relative benefit shall be determined by reference to, among other things, the amount of proceeds received by each party from the offering to which such contribution relates. The relative fault shall be determined by reference to, among other things, each party's relative knowledge and access to 19 23 information concerning the matter with respect to which the claim was asserted, and the opportunity to correct and prevent any statement or omission. The amount paid or payable by a party as a result of any Losses shall be deemed to include any legal or other fees or expenses incurred by such party in connection with any investigation or proceeding, to the extent such party would have been indemnified for such expenses if the indemnification provided for in this Section 5.06 was available to such party. The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 5.06 were determined by pro rata allocation or by any other method of allocation that does not take account of the equitable considerations referred to in the immediately preceding paragraph. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. SECTION 5.07. Underwriting Agreement. (a) In connection with any underwritten offering of Subject Stock pursuant to a registration requested under Section 5.01, the Company, the Parent Indemnitor and Shareholder will enter into an underwriting agreement with the underwriters for such offering, such agreement to contain such representations and warranties by the Company, the Parent Indemnitor and Shareholder and such other terms and provisions as are customarily contained in the underwriting agreements with respect to secondary distributions, including, without limitation, indemnities and contribution to the effect and to the extent provided in Section 5.06 (and customary provisions with respect to indemnities and contribution by such underwriters). (b) In connection with any underwritten offering of Subject Stock pursuant to a registration requested under Section 5.02, the Company may require the Common Stock requested to be registered pursuant to Section 5.02 to be included in such underwriting on the same terms and conditions as shall be applicable to Common Stock being sold by the Company through underwriters under such registration. In such case, the Parent Indemnitor and Shareholder shall be a party to any such underwriting agreement. Such agreement shall contain such representations, warranties and covenants by the Parent Indemnitor and Shareholder and such other terms and provisions as are customarily contained in underwriting agreements with respect to secondary distributions, including, without limitation, indemnities and contribution to the effect and to the extent provided in Section 5.06 (and customary provisions with respect to indemnities and contribution by such underwriters). 20 24 ARTICLE 6 SHAREHOLDER PURCHASE RIGHTS SECTION 6.01. Shareholder Purchase Rights. (a) If, immediately after giving effect to and as a result of any issuance of Voting Securities by the Company, Parent shall beneficially own Common Stock representing less than the Equity Treatment Percentage of the total number of shares of Common Stock then outstanding (it being understood for all purposes of this Agreement that any shares of Common Stock beneficially owned by Kidder, Peabody & Co. Incorporated shall not be considered to be outstanding so long as it is a subsidiary of the Company) and, at such time, Parent accounts for such ownership of Common Stock in accordance with the equity method of accounting, Parent shall have the right to acquire, at any time or from time to time thereafter, in the open market or in private transactions, a number of shares of Common Stock in the aggregate equal to the excess of (x) the number of shares representing the Equity Treatment Percentage of the then outstanding Common Stock over (y) the number of shares of Common Stock then beneficially owned by Parent (including any shares of Common Stock acquired by Shareholder pursuant to Section 6.01(b)). (b) If, immediately after giving effect to and as a result of any issuance of stock by the Company after the date hereof, the Company shall not be a 20- percent owned corporation of the Shareholder and immediately prior thereto the Company was a 20-percent owned corporation of the Shareholder, Shareholder shall have the right to acquire at any time or from time to time thereafter, in the open market or in private transactions, a number of shares of Common Stock sufficient (together with any shares acquired pursuant to Section 6.01(a)) to enable Shareholder to treat the Company as a 20-percent owned corporation. For purposes of this paragraph (b), (i) the term "stock" shall have the same meaning as in Section 243(c)(2) of the Code as in effect on the date hereof, and (ii) all shares of stock of the Company held by Shareholder or any Affiliate of Shareholder shall be treated as if they were held by a single legal entity. ARTICLE 7 MISCELLANEOUS SECTION 7.01. Termination. This Agreement shall terminate upon (a) the written agreement of the Company, Shareholder and Parent to terminate this Agreement; or (b) the earlier of (i) December 16, 2009 and (ii) the third anniversary of the date on which Parent and its Affiliates shall no longer beneficially own any Voting Securities. The provisions of Articles 3 and 4 of this 21 25 Agreement shall terminate upon any failure by the Company to observe and perform its obligations under Section 3.02. SECTION 7.02. Financial Services Group. Notwithstanding any other provision of this Agreement, nothing contained herein shall apply to any Voting Securities held in any Third Party Account, and any such Voting Securities shall not be counted for purposes of this Agreement as being owned by Parent or any of its Affiliates. SECTION 7.03. Legend. (a) All certificates representing Common Stock subject to this Agreement shall bear the following legend: "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND NEITHER THE SHARES NOR ANY INTEREST THEREIN MAY BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION UNDER SUCH ACT IS NOT REQUIRED. THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO AN AMENDED AND RESTATED STOCKHOLDERS AGREEMENT DATED AUGUST 6, 1997 (A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY) WHICH PROVIDES, AMONG OTHER THINGS, FOR CERTAIN RIGHTS OF PURCHASE OF SUCH SHARES BY THE COMPANY AND CERTAIN RESTRICTIONS ON TRANSFER THEREOF. ANY SALE OR OTHER TRANSFER NOT IN COMPLIANCE WITH SAID AGREEMENT SHALL BE VOID." (b) All certificates representing Preferred Stock subject to this Agreement shall bear the following legend, in addition to the legend (with the date appropriately completed) which such certificates currently bear (and, on such date as this Agreement shall become effective, Shareholder will submit such certificates to the Company to be so legended): "THE STOCKHOLDERS AGREEMENT DATED AS OF DECEMBER 16, 1994 HAS BEEN AMENDED AND RESTATED EFFECTIVE AUGUST __, 1997. THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE AMENDED AND RESTATED STOCKHOLDERS AGREEMENT DATED AUGUST 6, 1997 (A COPY OF WHICH 22 26 IS ON FILE WITH THE SECRETARY OF THE COMPANY) WHICH PROVIDES, AMONG OTHER THINGS, FOR CERTAIN RIGHTS OF PURCHASE OF SUCH SHARES BY THE COMPANY AND CERTAIN RESTRICTIONS ON TRANSFER THEREOF. ANY SALE OR OTHER TRANSFER NOT IN COMPLIANCE WITH SAID AGREEMENT SHALL BE VOID." SECTION 7.04. Specific Performance. (a) Parent and Shareholder, on the one hand, and the Company, on the other, acknowledge and agree that irreparable damage would occur if any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. Accordingly, the parties will be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically its provisions in any court of the United States or any state having jurisdiction, this being in addition to any other remedy to which they may be entitled at law or in equity. (b) Parent and Shareholder, on the one part, and the Company, on the other part, each irrevocably agrees that any legal action or proceeding against it with respect to this Agreement and any transaction contemplated by this Agreement may be brought in the courts of the State of New York, or of the United States of America for the Southern District of New York, and by execution and delivery of this Agreement Shareholder, Parent and the Company each irrevocably submits to the jurisdiction of such court and irrevocably designates, appoints and empowers the Secretary of State of the State of New York to receive for and on its behalf service of process in the State of New York and further irrevocably consents to the service or process outside of the territorial jurisdiction of such courts by mailing copies by registered United States mail, postage prepaid, to its address specified in this Agreement. SECTION 7.05. Entire Agreement. The Transaction Documents (other than the Stockholders Agreement) and the documents referred to therein, the Share Purchase Agreement and the documents referred to therein and this Agreement constitute the entire agreement and understanding of the parties with respect to the transactions contemplated by such parties. This Agreement may be amended only by an agreement in writing executed by the Company and Parent. SECTION 7.06. Severability. If any provision of this Agreement is held by a court of competent jurisdiction to be unenforceable, the remaining provisions shall remain in full force and effect. It is declared to be the intention of the parties that they would have executed the remaining provisions without including any that may be declared unenforceable. 23 27 SECTION 7.07. Headings. Descriptive headings are for convenience only and will not control or affect the meaning or construction of any provision of this Agreement. SECTION 7.08. Counterparts. For the convenience of the parties, any number of counterparts of this Agreement may be executed by the parties, and each such executed counterpart will be an original instrument. SECTION 7.09. Notices. All notices, requests, demands and other communications required or permitted hereunder shall be made in writing by hand-delivery, registered first-class mail, telex, telecopier or air courier guaranteeing overnight delivery: (a) If to the Company, to: Paine Webber Group Inc. 1285 Avenue of the Americas New York, New York 10019 Attention: General Counsel Telecopy: 212-713-2114 (with copies to): Cravath, Swaine & Moore 825 Eighth Avenue New York, New York 10019 Attention: Peter S. Wilson Telecopy: 212-474-3700 (b) If to Shareholder (including any other subsidiary of Parent to which shares of Common Stock or Preferred Stock are transferred pursuant to Section 4.02(a)(i)) or Group, to: General Electric Capital Services, Inc. General Electric Capital Corporation 260 Long Ridge Road Stamford, Connecticut 06927 Attention: General Counsel Telecopy: 203-357-3365 (with copies to): Parent 24 28 (c) If to Parent, to: General Electric Company 3135 Easton Turnpike Fairfield, Connecticut 06431 Attention: Senior Counsel for Transactions Telecopy: 202-373-3008 (with copies to): Davis Polk & Wardwell 450 Lexington Avenue New York, New York 10017 Attention: Dennis S. Hersch Telecopy: 212-450-4800 or to such other person or address as any party shall furnish to each other party hereto in writing. All such notices, requests, demands and other communications shall be deemed to have been duly given: at the time of delivery by hand, if personally delivered; five business days after being deposited in the mail, postage prepaid, if mailed; when answered back, if telexed; when receipt acknowledged, if telecopied; and on the next business day, if timely delivered to an air courier guaranteeing overnight delivery. SECTION 7.10. Successors and Assigns. This Agreement shall bind the successors and assigns of the parties, and inure to the benefit of any successor or assign of any of the parties; provided that, except as provided in Section 4.05, no party may assign this Agreement without the other party's prior written consent. SECTION 7.11. Governing Law. This Agreement will be governed by and construed and enforced in accordance with the internal laws of the State of New York, without giving effect to the conflict of laws principles thereof. SECTION 7.12. Compliance by Affiliates. Subject to Section 7.02, Parent shall, and shall cause its Affiliates to, observe and perform all covenants and agreements of Parent and Shareholder set forth in this Agreement as if such covenants and agreements were directly applicable to Parent and such Affiliates. SECTION 7.13. Reports. So long as Shareholder shall own any Voting Securities, the Company will furnish Shareholder with the quarterly and annual financial reports that the Company is required to file with the Commission 25 29 pursuant to Section 13 or Section 15(d) of the 1934 Act or, in the event the Company is not required to file such reports, reports containing the same information as would be required in such reports. SECTION 7.14. Fair Market Value Determination. So long as Shareholder shall own any Convertible Preferred Stock, if Parent shall object to any determination of the fair market value of noncash consideration made by the Board of Directors of the Company in accordance with paragraph (7)(g)(ii) of the Certificate of Designation of Rights and Preferences for such Convertible Preferred Stock, the parties shall negotiate in good faith in order to agree on such fair market value. If the parties are unable to agree on such fair market value within 30 days, the Board of Directors of the Company shall retain a nationally recognized investment banking firm reasonably satisfactory to Parent to determine such fair market value. The fees and expenses of such investment banking firm shall be shared equally by Parent and the Company. Parent shall be notified promptly of any consideration other than cash subject to any such determination and furnished with a description of the consideration and the fair market value thereof, as determined by the Board of Directors of the Company. SECTION 7.15. Aggregation; Definition of Shareholder. For purposes of this Agreement, all shares of Voting Securities and Redeemable Preferred Stock held by each Shareholder shall be treated as if they were held by a single legal entity. Each reference to Shareholder, where the context so requires, shall be deemed to be a reference to Parent or the relevant subsidiary or subsidiaries of Parent which holds Voting Securities. SECTION 7.16. Effectiveness. This Agreement shall become effective immediately upon consummation of the sale of the capital stock of Kidder, Peabody & Co. Incorporated pursuant to the Share Purchase Agreement, without any further action by any of the parties hereto, and shall be of no force or effect until such time. 26 30 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized on the date first above written. PAINE WEBBER GROUP INC. By: /s/ F. Daniel Corkery ----------------------------------------- Name: F. Daniel Corkery Title: Senior Vice President and Senior Associate General Counsel GENERAL ELECTRIC COMPANY By: /s/ Pamela Daley ----------------------------------------- Name: Pamela Daley Title: Vice President and Senior Counsel for Transactions GENERAL ELECTRIC CAPITAL SERVICES, INC. By: /s/ Joan Amble ----------------------------------------- Name: Joan Amble Title: Vice President and Controller GENERAL ELECTRIC CAPITAL CORPORATION By: /s/ Joan Amble ----------------------------------------- Name: Joan Amble Title: Vice President and Controller KIDDER, PEABODY GROUP INC. By: /s/ Joan Amble ----------------------------------------- Name: Joan Amble Title: Senior Vice President EX-10.1 3 SHARE PURCHASE AGREEMENT 1 - -------------------------------------------------------------------------------- SHARE PURCHASE AGREEMENT By and Among GENERAL ELECTRIC COMPANY and GENERAL ELECTRIC CAPITAL SERVICES, INC., As Seller, and PAINE WEBBER GROUP INC., As Purchaser --------------------------- Dated August 6, 1997 --------------------------- - -------------------------------------------------------------------------------- 2 SHARE PURCHASE AGREEMENT SHARE PURCHASE AGREEMENT, dated August 6, 1997, by and among GENERAL ELECTRIC CAPITAL SERVICES, INC. ("GECS"), GENERAL ELECTRIC COMPANY ("GE") and PAINE WEBBER GROUP INC. ("PWG"). R E C I T A L S : A. GECS is the owner and holder of the KP & Co. Shares (as hereinafter defined). B. On the terms and subject to the conditions hereinafter set forth, GECS desires to sell and PWG desires to purchase the KP & Co. Shares for consideration consisting of (i) cash, (ii) the Purchase Money Note (as hereinafter defined), (iii) the New PW Shares (as hereinafter defined) and (iv) the Contingent Purchase Consideration (as hereinafter defined). A G R E E M E N T : The parties hereto agree as follows: ARTICLE I. DEFINITIONS 1.1. Definitions. (a) As used in this Agreement, unless the context requires a different meaning, the following terms have the meanings indicated: "Acquisition Transaction" means a tender offer or exchange offer for PWG's common stock by a Person other than PWG or one or more of its wholly-owned Subsidiaries, or a merger, consolidation or other business combination involving PWG and one or more Persons other than PWG or one of its wholly-owned Subsidiaries or a similar transaction or series of related transactions that, in any case, results in holders of 50% or more of PWG's common stock receiving consideration in exchange for such common stock having a fair market value in excess of $36.50 per share. "Administrative Services Agreement" means the administrative services agreement dated the date hereof by and 3 -2- among GECC, KP & Co. and PWG, as amended from time to time in accordance with the terms thereof. "Affiliate" means, with respect to any Person, any Person that, directly or indirectly, controls, is controlled by or is under common control with such Person. For the purposes of this definition, "control" (including, with correlative meanings, the terms "controlled by" and "under common control with") shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities or by contract or otherwise. "Agreement" means this Share Purchase Agreement, as amended from time to time in accordance with the terms hereof. "Amended Stockholders Agreement" means the amended and restated stockholders agreement, dated the date hereof, by and among PWG, GE, GECC, GECS and Kidder, Peabody Group Inc. "Asset Purchase Agreement" means the asset purchase agreement dated as of October 17, 1994, between PWG, GE and Kidder, Peabody Group Inc., as amended from time to time in accordance with the terms thereof. "Assumption Agreement" means the assumption agreement dated the date hereof between GECS and KP & Co. "Closing" has the meaning provided therefor in Section 2.1.3 of this Agreement. "Closing Balance Sheet" has the meaning provided in Section 3.1.8 hereof. "Closing Date" means the actual date that the Closing occurs. "Contingent Purchase Consideration" means an amount equal to the product of (i) $219,000,000 and (ii) a fraction, the numerator of which is the excess, if any, of (y) the amount equal to the sum of the cash portion, if any, and the fair market value of the non-cash portion, if any, of the consideration per share of PWG's common stock received by the stockholders of PWG in connection with any Acquisition Transaction over (z) $36.50, and the denominator of which is $36.50. 4 -3- "Equity Distribution" means, in respect of any Person, (i) any dividend or distribution on account of any equity securities of such Person, (ii) any redemption, retirement, sinking fund or similar payment for or in respect of the acquisition of any equity securities of such Person or (iii) any payment made to retire or surrender options, warrants or other rights to acquire equity securities of such Person. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "GECC" means General Electric Capital Corporation. "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. "KP & Co." means Kidder, Peabody & Co. Incorporated. "KP & Co. Shares" means all the outstanding shares of capital stock of KP & Co., consisting of 100 shares of KP & Co. common stock. "Lien" means, with respect to any asset, any mortgage, lien, claim, option, pledge, encumbrance, charge or security interest of any kind in or on such asset or the revenues or income therefrom. "Litigation" means all civil, criminal, administrative, regulatory, self-regulatory or other actions, suits, investigations, arbitrations or other proceedings. "Losses" means, in respect of any Person, all losses, liabilities, claims, damages, penalties, fines, settlement payments, obligations to third parties, costs or expenses (including legal, accounting, appraisal, consulting, expert or similar fees and expenses) suffered or incurred by such Person but only to the extent such Person has not received insurance proceeds in respect thereof, increased to take account of any net Federal, State and local tax cost incurred by such Person arising from the receipt or accrual of indemnity payments hereunder (grossed up for such increase) and reduced by the amount of any net Federal, State, and local tax benefit realized (both such increase and such reduction using an assumed combined Federal, State and local income tax rate 5 -4- equal to the highest Federal income tax rate applicable to corporations plus 5%) by such Person or any Affiliate as a result of such losses, liabilities, claims, damages, penalties, fines, settlement payments, obligations to third parties, costs or expenses. For purposes of this Agreement (except for Section 5.6), a tax benefit is deemed realized (at the rate specified in the preceding sentence) in respect of an indemnified item at the time the item is accrued for income tax purposes. "New PW Shares" means 15,500,000 shares of common stock of PWG. "Person" means an individual or a corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or political subdivision thereof) or other entity of any kind. "Purchase Money Note" means the promissory note in the principal amount of $442,000,000 of PWG in the form of Exhibit A annexed hereto. "Securities Act" means the Securities Act of 1933, as amended. "Stockholders Agreement" means the stockholders agreement dated December 16, 1994 between PWG, GE and Kidder, Peabody Group Inc. "Subsidiary" means, with respect to any Person, (i) a corporation, whose capital stock with voting power, under ordinary circumstances, to elect a majority of directors is at the time, directly or indirectly, owned by such Person, by a Subsidiary of such Person or by such Person and a Subsidiary thereof or (ii) any other Person (other than a corporation) controlled by such Person in which such Person, a Subsidiary thereof or such Person and a Subsidiary thereof, directly or indirectly, at the date of determination thereof has at least a majority ownership interest. (b) For purposes hereof, "including" means including, without limitation. 6 -5- ARTICLE II. PURCHASE OF SHARES 2.1. Sale of KP & Co. Shares; the Closing. 2.1.1. Subject to the terms and conditions herein set forth, on the Closing Date, (i) GECS shall sell, assign and transfer to PWG the KP & Co. Shares and (ii) PWG shall issue to GECS the Purchase Money Note and the New PW Shares, all of which New PW Shares shall be duly and validly issued, fully paid and nonassessable, and pay to GECS immediately available funds in the amount of $219,000,000 (the "Cash Consideration"). 2.1.2. As additional consideration for the purchase and sale herein contemplated, PWG agrees that, in the event that, at any time on or prior to the first anniversary of the Closing Date, (i) PWG enters into a definitive agreement, letter of intent or other understanding relating to the terms of any Acquisition Transaction that is required to be disclosed pursuant to the Federal securities laws or the rules of the New York Stock Exchange, or (ii) any Person shall have commenced, or announced an intention to commence, an Acquisition Transaction and, in either case, such Acquisition Transaction is consummated within eighteen (18) months after the Closing Date, PWG shall pay to GECS, simultaneously with the consummation of such Acquisition Transaction, the Contingent Purchase Consideration in immediately available funds. PWG shall not enter into an agreement or letter of intent with respect to an Acquisition Transaction pursuant to which PWG will not be the ultimate parent entity of the entity of which PWG is to be a part after consummation of the Acquisition Transaction (the "Ultimate Parent Entity") unless such agreement or letter of intent includes (i) an express acknowledgment by the Ultimate Parent Entity of PWG's obligations under this Section 2.1.2 and (ii) an irrevocable and unconditional guarantee by the Ultimate Parent Entity of PWG's obligations under this Section 2.1.2. In the event of the consummation of an Acquisition Transaction in respect of which PWG has not entered into an agreement or letter of intent, the acquiring party in such Acquisition Transaction, upon consummation thereof, shall be deemed to have made the acknowledgment, and granted the guarantee, referred to in clauses (i) and (ii) of the previous sentence. 2.1.3. The purchase and sale transaction herein contemplated shall take place at a closing (the "Closing") to be held at the offices of Cahill Gordon & Reindel, 80 Pine Street, New 7 -6- York, New York 10005, on the first business day after the date on which all applicable waiting periods in respect of the transactions contemplated by this Agreement under the HSR Act shall have expired or been terminated. GECS and PWG agree to file the applicable Notification and Report Forms under the HSR Act no later than August 7, 1997 and to use their best efforts to ensure that the applicable waiting period under the HSR Act expires or is terminated as promptly after the date hereof as is possible. 2.1.4. Delivery of the KP & Co. Shares shall be made at the Closing by delivery to PWG, against delivery of one or more certificates evidencing the New PW Shares and payment of the Cash Consideration and delivery of the Purchase Money Note, of stock certificates representing the KP & Co. Shares duly endorsed, or accompanied by stock powers duly executed, by GECS for transfer to PWG, with all appropriate stock transfer stamps attached at GECS' expense. 2.1.5. Simultaneously with the execution and delivery of this Agreement the parties are executing and delivering or causing to be executed and delivered (i) the Amended Stockholders Agreement, (ii) the Administrative Services Agreement and (iii) the Assumption Agreement, all of which shall become effective without further action by any Person upon the occurrence of the Closing. ARTICLE III. REPRESENTATIONS AND WARRANTIES 3.1. Representations and Warranties of GE and GECS. GE and GECS represent and warrant, as of the date hereof unless otherwise expressly set forth below, as follows: 3.1.1. Organization and Good Standing. Each of GE and GECS is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation. 3.1.2. Corporate Authorizations. Each of GE and GECS has all requisite corporate power and authority to execute, deliver and perform its obligations under this Agreement. The execution and delivery by GE and GECS of this Agreement and the consummation of the transactions contemplated hereby have been duly and validly authorized by all necessary corporate action. This Agreement has been duly executed and delivered by GE and GECS. 8 -7- 3.1.3. The KP & Co. Shares. GECS has good and valid title to the KP & Co. Shares, free and clear of any Liens. Assuming PWG has the requisite power and authority to be the lawful owner of the KP & Co. Shares, upon delivery to PWG at the Closing of certificates representing the KP & Co. Shares, duly endorsed, or accompanied by stock powers duly executed, by GECS for transfer to PWG, and upon GECS's receipt of the consideration provided for in Section 2.1.1, good and valid title to the KP & Co. Shares will pass to PWG, free and clear of any Liens other than those arising from acts of PWG or its Affiliates. Other than this Agreement, the KP & Co. Shares are not subject to any voting trust agreement or other contract, agreement, arrangement, commitment or understanding, including any such contract, agreement, arrangement, commitment or understanding restricting or otherwise relating to the voting, dividend rights or disposition of the KP & Co. Shares. 3.1.4. Conflicting Agreements and Other Matters. Neither the execution and delivery of this Agreement nor the consummation of the transaction contemplated hereby will (i) violate any provision of any United States Federal, State, local or foreign law, statute, rule or regulation, or any order, judgment, injunction, decree, determination or award of any United States Federal, State, local or foreign court or governmental or regulatory or self-regulatory authority presently in effect having applicability to GE, GECS or KP & Co. except such violations as will not individually, or in the aggregate, have a material adverse effect upon the financial condition, properties, assets, business or results of operation of KP & Co. or on the ability of GE, GECS or KP & Co. to consummate the transaction contemplated by this Agreement (a "KP & Co. Material Adverse Effect"), (ii) conflict with or result in a breach of or constitute a default under the Certificate of Incorporation or By-laws of GE, GECS or KP & Co., (iii) as of the Closing Date, require any consent, approval or notice under, or conflict with or result in a breach of or constitute a default under, any note, bond, mortgage, license, indenture or loan or credit agreement, or any other agreement or instrument, to which GE, GECS or KP & Co. is a party or by which any of their respective properties is bound, except such consents, approvals, notices, conflicts, breaches or defaults as will not have a KP & Co. Material Adverse Effect. 3.1.5. Enforceability. This Agreement constitutes a legal, valid and binding obligation of each of GE and GECS, enforceable against each of GE and GECS in accordance with its terms. 9 -8- 3.1.6. Governmental Consents. As of the Closing Date no authorization, consent, approval, waiver, license, qualification or formal exemption from, nor any filing, declaration, qualification or registration with, any court, governmental agency or regulatory authority or any securities exchange will be required in connection with the execution, delivery or performance by GE or GECS of this Agreement and the performance of their respective obligations hereunder other than any of which if not made would not individually, or in the aggregate, have a KP & Co. Material Adverse Effect. 3.1.7. Securities Act. GECS acknowledges that the New PW Shares and the Purchase Money Note have not been registered under the Securities Act and are being issued in reliance upon an exemption from registration contained in the Securities Act. GECS is acquiring the New PW Shares and the Purchase Money Note with no intention of distributing or reselling the New PW Shares or the Purchase Money Note or any part of the New PW Shares or the Purchase Money Note in any transaction which would be in violation of the Securities Act. 3.1.8. Financial Condition. GECS has previously delivered to PWG the unaudited balance sheet of KP & Co. as of July 31, 1997, as adjusted to reflect the changes in the assets and liabilities of KP & Co. agreed by the parties to occur on or prior to the Closing (the "Signing Balance Sheet"). At the Closing, GECS will deliver to PWG an unaudited balance sheet of KP & Co. as of the Closing Date (the "Closing Balance Sheet"). The Closing Balance Sheet will reflect net book value (on the basis of presentation reflected in the notes to the Signing Balance Sheet) not less than the net book value (on the basis of presentation reflected in the notes to the Signing Balance Sheet) on the Signing Balance Sheet (disregarding any changes in the value of the PWG common stock held by KP & Co.), will include 21,500,000 shares of PWG common stock and cash and cash equivalents not less than the cash and cash equivalents on the Signing Balance Sheet and, except for changes occurring in the ordinary course of business consistent with current practice of KP & Co. between the date hereof and the Closing, will include only the assets and liabilities included on the Signing Balance Sheet. Prior to the execution of this Agreement, KP & Co. has sold in accordance with the terms of the Stockholders Agreement all the preferred stock of PWG previously owned by it to GECC for cash in the amount of $475,000,000, all of which cash (net of a tax sharing payment of $47,000,000) is included on the Signing Balance Sheet. 10 -9- 3.1.9. Financial Statements; Undisclosed Liabilities. (i) GECS has previously delivered to PWG (A) the unaudited balance sheet of KP & Co. as of July 31, 1997 (the "July 31 Balance Sheet"), and (B) the unaudited balance sheet of KP & Co. as of December 31, 1996 (the financial statements described in clauses (A) and (B) above, together the "Financial Statements"). The Financial Statements have been, and the Closing Balance Sheet will be, prepared in conformity with United States generally accepted accounting principles consistently applied (except in each case as described in any notes thereto, which in the case of the Closing Balance Sheet will include only notes consistent with the notes to the Signing Balance Sheet) and on that basis fairly present (subject to normal, recurring year-end audit adjustments) the financial condition of KP & Co. as of the dates thereof. (ii) KP & Co. does not have any material liabilities or obligations of any nature (whether accrued, absolute, contingent, unasserted or otherwise), except (1) as disclosed, reflected or reserved against in the July 31 Balance Sheet and the notes thereto, (2) for liabilities and obligations incurred in the ordinary course of business consistent with past practice since the date of the July 31 Balance Sheet, and (3) for liabilities and obligations with respect to Litigation against KP & Co. that is not required by United States generally accepted accounting principles to be reflected or reserved against on a balance sheet of KP & Co. or in the notes thereto but is fully indemnified pursuant to Section 6.2 (it being understood that matters to be funded out of the Pre-Tax Reserve (as hereinafter defined) shall be deemed to be fully indemnified pursuant to Section 6.2). (iii) Since the date of the July 31 Balance Sheet, there has not been any material adverse change in the financial condition, properties, assets or business of KP & Co. 3.1.10. Organization and Authority of KP & Co. KP & Co. is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. KP & Co. has all requisite corporate power and authority to own its assets and carry on its business as presently conducted. Other than Broad Street Advisors, Inc. (formerly known as Financial Counselors, Inc.), KP & Co. has no Subsidiaries. Broad Street Advisors, Inc. is wholly owned by KP & Co. and conducts no business other than that contemplated in Section 3.02 of that certain Third Supplemental Agreement dated as of January 27, 1995 among PWG, GE and Kidder, Peabody Group Inc. and, as of the date hereof, GE and Kidder, Peabody Group Inc. have complied with their obligations under such 11 -10- Section 3.02. KP & Co. is qualified to do business in each jurisdiction where such qualification is required except where the failure to be so qualified would not have a KP & Co. Material Adverse Effect. 3.1.11. Capitalization of KP & Co. The KP & Co. Shares constitute all the outstanding and issued shares of capital stock of KP & Co. All such shares are duly and validly issued, fully paid and non-assessable and are not subject to any preemptive rights of any Person. There are no (i) outstanding options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible or exchangeable into, shares of any capital stock or other equity or voting securities of KP & Co., or contracts, commitments, understandings or arrangements by which KP & Co. is or may become bound to issue additional shares of its capital stock or other equity or voting securities or options, warrants or rights to purchase or acquire any shares of its capital stock or other equity or voting securities or (ii) voting trusts or other agreements or understandings with respect to the voting or transfer of the capital stock of KP & Co. 3.1.12. Litigation. Except as previously disclosed by GE or GECS to PWG, GE and GECS do not have any reason to believe that KP & Co. is a subject or target of any criminal investigation. GECS has previously delivered to PWG a list of all the Litigations pending against KP & Co. as of the date hereof (the "Litigation Letter"), which list also indicates all material Litigations pending, or to the knowledge of GE or GECS threatened, against KP & Co as of the date hereof. 3.1.13. Intercompany Agreements. As of the Closing, KP & Co. is not a party to any tax sharing or other agreement with GE, GECS or any Affiliate of GE or GECS, other than the Administrative Services Agreement, the Assumption Agreement, a sublease relating to office space at 1251 Avenue of the Americas, New York, New York and other agreements to which PWG is a party. 3.1.14. Investment Company, etc. KP & Co. is not required to register under the Investment Company Act of 1940. KP & Co. is not, and is not required to be, registered or otherwise qualified as a broker-dealer or investment advisor or otherwise in any other regulated capacity under any Federal, State, local or foreign law, statute, rule or regulation and is not a member of any securities exchange or any self-regulatory organization. Section 9(a) of the Investment Company Act of 1940 is not currently 12 -11- applicable to and would not be applicable to KP & Co. if it were a broker-dealer or investment adviser and there is no Litigation currently pending or, to the knowledge of GE or GECS, threatened against KP & Co. which would subject KP & Co. or, after the Closing, any Affiliate of PWG to the provisions of such Section. 3.1.15. Taxes. Except as previously disclosed in writing by GECS to PWG, to the knowledge of GECS: (i) all material tax returns, statements, reports or forms ("Returns") required to be filed on or before the Closing Date (including applicable extensions) by KP & Co. have been (or will be) filed on or before the Closing Date in accordance with all applicable laws, and such Returns are (or will be) complete and accurate in all material respects, (ii) all taxes which were shown to be due on such Returns have been (or will be) timely paid, (iii) KP & Co. is not delinquent in the payment of any material tax, (iv) there are no material outstanding requests for rulings or determinations in respect of any tax pending between KP & Co. and any governmental authority (domestic or foreign) responsible for the imposition of any tax ("Taxing Authority"), (v) there are no material Liens for taxes (except for taxes not yet due) on any of the assets of KP & Co., and no action has been instituted against KP & Co. that would reasonably result in any such material Lien, (vi) no power of attorney has been executed by KP & Co. with respect to any material matter relating to taxes which is currently in force, and (vii) KP & Co. will not be required to recognize for tax purposes in a taxable year beginning on or after the Closing Date any income or gain which would otherwise have been required to be recognized under the accrual method of accounting for tax purposes in a pre- Closing tax period as a result of KP & Co., in a pre-Closing tax period (A) using the installment method of accounting, (B) making a change in method of accounting, or (C) otherwise deferring the recognition of income into a post-Closing tax period as a result of the accounting method used in a pre-Closing tax period. 3.1.16. Reserves and Liabilities. At least $116,000,000 of the costs and expenses comprising reserves or other liabilities on the Closing Balance Sheet are of a type or character that are deductible for federal income tax purposes to KP & Co. as of the Closing Date but for the fact that as of the Closing Date all events have not occurred to determine the fact of liability for such costs or expenses or to determine the amount thereof with reasonable accuracy (or, with respect to deferred compensation, but for the fact that no payment has been made). All events will occur to determine the fact of liability for such $116,000,000 of costs and expenses and to determine the amount thereof with reasonable 13 -12- accuracy (or, with respect to deferred compensation, payment will be made) within five years after the Closing Date. 3.1.17. Litigation Reserve. Each of GE and GECS is familiar with the activities, assets, liabilities, employees, properties, businesses and operations, including any disposed of or ceased prior to the Closing, of KP & Co. and the Litigation set forth in the Litigation Letter and has carefully evaluated based on reasonably available information as of the date hereof (x) the Litigation set forth in the Litigation Letter and (y) any unasserted claims against KP & Co. of which GE or GECS has knowledge or reason to know. Based on such familiarity and evaluation, in the judgment of the management of GE and GECS, taking into account the number, variety and status of the actions, suits, investigations, arbitrations and other proceedings included in the Litigation set forth in the Litigation Letter and any such unasserted claims, many of which are at very preliminary stages, and recognizing the uncertainties of litigation generally, the $90,000,000 Pre-Tax Reserve is a reasonable estimate of the amount that is likely to be sufficient to resolve such Litigation and any such unasserted claims (including any related costs and expenses of the defense thereof). 3.1.18. Miscellaneous Assets. The assets of KP & Co. described as "miscellaneous assets" in the Closing Balance Sheet have a tax basis equal to or greater than $14,000,000. 3.2. Representations and Warranties of PWG. PWG represents and warrants, as of the date hereof unless otherwise expressly set forth below, as follows: 3.2.1. Organization and Good Standing. PWG is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation. PWG has all requisite corporate power and authority to own its assets and to carry on its businesses as presently conducted. 3.2.2. Corporate Authorizations. PWG has all requisite corporate power and authority to execute, deliver and perform its obligations under this Agreement. The execution and delivery by PWG of this Agreement and the consummation of the transactions contemplated hereby have been duly and validly authorized by all necessary corporate action. This Agreement has been duly executed and delivered by PWG. 14 -13- 3.2.3. The New PW Shares. Assuming GECS has the requisite power and authority to be the lawful owner of the New PW Shares, upon delivery to GECS at the Closing of certificates representing the New PW Shares, and upon PWG's receipt of the consideration provided for in Section 2.1.1, good and valid title to the New PW Shares will pass to GECS, free and clear of any Liens other than those arising from acts of GECS or its Affiliates. 3.2.4. Conflicting Agreements and Other Matters. Neither the execution and delivery of this Agreement nor the consummation of the transaction contemplated hereby will (i) violate any provision of any United States Federal, State, local or foreign law, statute, rule or regulation, or any order, judgment, injunction, decree, determination or award of any United States Federal, State, local or foreign court or governmental or regulatory or self-regulatory authority presently in effect having applicability to PWG except such violations as will not individually, or in the aggregate, have a material adverse effect upon its financial condition, properties, assets, business or results of operation or on the ability of PWG to consummate the transaction contemplated by this Agreement (a "PWG Material Adverse Effect"), (ii) conflict with or result in a breach of or constitute a default under the Certificate of Incorporation or By-laws of PWG, or (iii) as of the Closing Date, require any consent, approval or notice under, or conflict with or result in a breach of or constitute a default under, any note, bond, mortgage, license, indenture or loan or credit agreement, or any other agreement or instrument, to which PWG is a party or by which any of its properties is bound, except such consents, approvals, notices, conflicts, breaches or defaults as will not have a PWG Material Adverse Effect. 3.2.5. Enforceability. This Agreement constitutes a legal, valid and binding obligation of PWG, enforceable against PWG in accordance with its terms. 3.2.6. Governmental Consents. As of the Closing Date no authorization, consent, approval, waiver, license, qualification or formal exemption from, nor any filing, declaration, qualification or registration with, any court, governmental agency or regulatory authority or any securities exchange will be required in connection with the execution, delivery or performance by PWG of this Agreement and the performance of its obligations hereunder other than any of which if not made would not, individually or in the aggregate, have a PWG Material Adverse Effect. 15 -14- 3.2.7. No Liquidation. As of the date hereof PWG has, and as of the Closing Date PWG will have, no plan or intention to dissolve or liquidate KP & Co. or to cause or permit it to make any Equity Distribution. 3.2.8. Securities Act. PWG acknowledges that the KP & Co. Shares have not been registered under the Securities Act and are being sold in reliance upon an exemption from registration contained in the Securities Act. PWG is acquiring the KP & Co. Shares with no intention of distributing or reselling the KP & Co. Shares or any part of the KP & Co. Shares in any transaction which would be in violation of the Securities Act. ARTICLE IV. CONDITIONS PRECEDENT TO CLOSING 4.1. Conditions Precedent to Obligations of PWG. The obligation of PWG to consummate the transaction contemplated herein is subject, at the Closing Date, to the prior or simultaneous satisfaction or waiver of the following conditions: 4.1.1. The transaction contemplated by this Agreement shall not be prohibited or enjoined (temporarily or permanently) by any applicable judicial action, law or governmental regulation. 4.1.2. All applicable waiting periods in respect of the transaction contemplated by this Agreement under the HSR Act shall have expired or been terminated. 4.2. Conditions Precedent to Obligations of GECS. The obligation of GECS to consummate the transaction contemplated herein is subject to the prior or simultaneous satisfaction or waiver of the following conditions: 4.2.1. The transaction contemplated by this Agreement shall not be prohibited or enjoined (temporarily or permanently) by any applicable judicial action, law or governmental regulation. 4.2.2. All applicable waiting periods in respect of the transaction contemplated by this Agreement under the HSR Act shall have expired or been terminated. 16 -15- ARTICLE V. COVENANTS 5.1. Access to Records. On and after the Closing Date, without waiving any applicable privileges, including the attorney-client privilege, each party shall provide to the other party and its agents reasonable access to the books and records of KP & Co. in its possession that such party may need to file or defend tax returns or other tax or regulatory filings made or filed in respect of periods prior to the Closing Date, to prepare financial statements and for any other valid business purposes. 5.2. Maintenance of Existence. PWG shall not cause or permit KP & Co. to make any Equity Distribution and shall cause KP & Co. to maintain its corporate existence, in each case, until the earlier of (i) the occurrence of the second anniversary of the Closing Date and (ii) the date that substantially all Litigations currently pending against KP & Co. and any related claims are resolved, through settlement or otherwise. 5.3. Ordinary Course. From the date of this Agreement through the Closing, GE and GECS shall cause KP & Co. to operate only in the ordinary course of business consistent with current practice and shall not permit KP & Co. to make (i) any Equity Distribution or (ii) any change in its assets or liabilities reflected on the Signing Balance Sheet which, in either case, would cause any representation and warranty of GE and GECS herein to be untrue as of the Closing Date as if made as of such date. Until Closing, GE and GECS shall not permit KP & Co. to effect any transfer of the PWG common stock currently held by KP & Co. pursuant to Section 4.02(a)(i) of the Stockholders Agreement. 5.4. Miscellaneous Assets. In the event that the assets of KP & Co. described as "miscellaneous assets" in the Closing Balance Sheet shall not have been liquidated or otherwise realized for cash in at least the amount of $15,500,000, net after related costs and expenses for collection or otherwise, within eighteen months after the Closing Date, GECS shall pay to KP & Co. on the date eighteen months following the Closing Date in immediately available funds the difference between $15,500,000 and the actual amount of cash then realized in respect of such assets. Without in any way affecting the obligations of GECS under the immediately preceding sentence, the manner and timing of the procedure of collection of such miscellaneous assets shall be as mutually agreed by the parties. 17 -16- 5.5. Employees. PWG agrees that the 13 current KP & Co. employees will initially remain employees of KP & Co. and that such 13 current employees, and such additional employees as may be hired by KP & Co. from time to time, will be placed on PWG payroll and pension and benefit plans generally available to similarly situated PWG employees (with the exception of any PWG severance or layoff plan), without regard to preexisting conditions. Prior to the Closing, GECS will negotiate on behalf of KP & Co. in good faith appropriate amendments to the existing letter agreements between KP & Co. and its current employees to reflect the changed circumstances resulting from the purchase of the capital stock of KP & Co. GECS agrees that the amendments to such letter agreements will not increase any obligations or liabilities of KP & Co. under such letter agreements and GECS on behalf of KP & Co. will make any payments to such employees or any other Person in connection with or arising as a result of such amendments. PWG agrees not to terminate any of the 13 current KP & Co. employees prior to December 31, 1997 without the consent of GECS, which consent will not be unreasonably withheld. PWG agrees at the end of any employment term of an employee pursuant to the terms of the letter agreement with respect to such employee, such employee will become an employee at will of KP & Co. or on such other terms as PWG may approve. 5.6. Certain Tax Benefits. So long as there is a reasonable basis to do so, PWG will claim on its Federal, State and local income tax returns for all tax periods ending on or before the tenth anniversary of the Closing Date a deduction in respect of any payment made by GECS of the Liabilities of the type described in the Assumption Agreement, and (at the sole cost of GECS in a manner reasonably acceptable to PWG) will pursue such claim with reasonable diligence. For periods ending after the tenth anniversary of the Closing Date, PWG shall claim such deductions unless PWG in its sole judgment determines it is burdensome to do so. GE and GECS agree to provide PWG in a reasonable and timely manner with all information, records and cooperation necessary to claim such deductions and pursue such claims. In the event that PWG is allowed such deduction, it shall pay the actual resulting tax benefit to GECS as an increase in the purchase price under this Agreement. The determination of the amount of the tax benefit to PWG shall be conclusive absent manifest error. 18 -17- ARTICLE VI. SURVIVAL AND INDEMNIFICATION 6.1. Survival of Agreements. The representations, warranties and covenants of each party hereto shall survive the Closing. 6.2. Indemnification by GE and GECS. GE and GECS, jointly and severally, will indemnify PWG, KP & Co., each of their respective Affiliates and each of their respective officers, directors, employees, stockholders, agents and representatives against and hold each of them harmless from, without duplication, any and all Losses suffered or incurred by any such indemnified party arising from, relating to or otherwise in respect of (i) the breach or incorrectness of, or non-compliance with, any representation, warranty, covenant or agreement of GE or GECS in this Agreement, (ii) any (a) taxes incurred by KP & Co. with respect to periods ending prior to the Closing Date and with respect to the portion ending prior to the Closing Date of any period that begins before and ends on or after the Closing Date (a "Straddle Period"), (b) taxes incurred prior to the Closing Date by any person which was affiliated with KP & Co. prior to the Closing Date or with which KP & Co. joined prior to the Closing Date (or was required to join) in filing any consolidated, combined, unitary or aggregate return, prior to the Closing Date (as a result of Treasury Regulation ss. 1.1502-6(a) or otherwise), (c) taxes incurred by KP & Co. attributable to the dividend or transfer of any assets to GECS or any of its Affiliates prior to the sale of the capital stock of KP & Co. or (d) taxes incurred by KP & Co. arising (directly or indirectly) as a result of the recognition by GECS, KP & Co., or any other Affiliate of any "deferred intercompany gain" or "excess loss account", in each case within the meaning of Treasury Regulations adopted under Section 1502 of the Internal Revenue Code, (iii) any Litigation pending or threatened against KP & Co. as of the Closing (whether or not set forth in the Litigation Letter), (iv) (A) the employment or termination of employment of any employee of KP & Co. (including any claim or Litigation brought against KP & Co., PWG or any of its Affiliates in connection therewith) to the extent such employee is actually engaged in activities relating to KP & Co.'s Litigation or the activities, assets, liabilities, properties, business or operations of KP & Co. being conducted as of the Closing by KP & Co., that were disposed of or ceased by KP & Co. on or prior to the Closing or were in existence or being pursued by KP & Co. on or prior to the Closing, or (B) any actions or omissions by any such employee 19 -18- or any compensation paid or benefits provided to any such employee, (v) any liabilities or obligations disclosed, reflected or reserved against in the Closing Balance Sheet and the notes thereto, (vi) any actions or omissions by or on behalf of GECC or any of its Affiliates pursuant to the Administrative Services Agreement, or (vii) any obligation or liability of whatever kind or nature, primary or secondary, direct or indirect, absolute or contingent, known or unknown, whether or not accrued, whether arising before, at or after the Closing, or any claim or Litigation, in any such case that arises out of, relates to or is otherwise in respect of KP & Co. or any of its activities or assets, liabilities, employees, properties, businesses or operations, including any disposed of or ceased prior to the Closing, but excluding, in the case of clause (vii) of this Section 6.2 only, (A) any and all matters as to which PWG is obligated to indemnify GECS under clause (ii) or (iii) of Section 6.3 hereof and (B) any liabilities to the extent expressly assumed by PWG under the Asset Purchase Agreement. It is understood that the first $90,000,000 of Losses (determined without regard to the provisions of the definition of "Losses" relating to any net tax cost or benefit) which otherwise would be subject to indemnification by GE and GECS under clause (iii) of this Section 6.2 will instead be funded from the cash "prefunded pre-tax contingencies" reserve of KP & Co. (the "Pre-Tax Reserve") included in the Signing Balance Sheet and the Closing Balance Sheet and GE and GECS will not be obligated to make any cash payment in respect thereof. It is further understood that the first $15,600,000 of Losses which otherwise would be subject to indemnification by GE and GECS under clause (iv) (but only to the extent that it relates to compensation paid or benefits provided to any such employee) and clauses (v) and (vii) of this Section 6.2 in respect of "PW Broker Payments" of deferred production bonuses or operating and other miscellaneous costs of KP & Co. will instead be funded from the cash "pre-funded after-tax contingencies" reserve of KP & Co. included in the Signing Balance Sheet and the Closing Balance Sheet and GE and GECS will not be obligated to make any cash payment in respect thereof. It is understood that the foregoing provisions of the two immediately preceding sentences shall not limit in any manner GE's and GECS' obligations under the other Sections of this Article VI and that matters to be funded out of such reserves shall be deemed to be indemnified matters pursuant to this Section 6.2. For purposes of this Agreement, income, deductions, and other items arising in a Straddle Period shall be allocated between the portion thereof ending prior to the Closing Date and the remaining portion based on an actual closing of the books of KP & Co. on the day prior to the Closing Date, provided that if the Closing occurs on a date other than the first day of a 20 -19- fiscal month, then income, deductions and other items for such month (other than amounts attributable to transactions not in the ordinary course of business) will be prorated on a daily basis. PWG will cause KP & Co. to pay over to GECS, promptly upon receipt by KP & Co. or any Affiliate, the amounts of any refunds of taxes (and related interest) with respect to periods ending prior to the Closing Date or with respect to the portions ending prior to the Closing Date of any Straddle Periods. Notwithstanding the foregoing, KP & Co. shall not pay over to GE or GECS any refund of taxes attributable to the carryback from a taxable period beginning after the Closing Date (or the portion of a Straddle Period that begins on the Closing Date) of items of loss, deduction or credit, or other tax items, of KP & Co. arising from items indemnified by GE and GECS under the Pre-Tax Reserve or $15,600,000 reserve described above. 6.3. Indemnification by PWG. PWG shall indemnify and hold harmless GE, GECS, each of their respective Affiliates (excluding KP & Co.) and each of their respective officers, directors, employees, stockholders, agents and representatives against and hold each of them harmless from, without duplication, any and all Losses suffered or incurred by such Person arising from, relating to or otherwise in respect of (i) the breach or incorrectness of, or non-compliance with, any representation, warranty, covenant or agreement of PWG in this Agreement, (ii) liabilities of KP & Co. that both (a) arise out of actions taken by PWG, KP & Co., any of their respective Affiliates or any of their respective officers, directors, employees, agents or representatives (collectively, the "PWG Entities") (it being understood that actions taken by or on behalf of any Person (other than PWG or KP & Co.) pursuant to the Administrative Services Agreement shall not be deemed actions of any of the PWG Entities for any purpose of this Agreement) after the Closing other than at the request or with the consent of GE or one of its Affiliates and other than actions taken in the ordinary course of conducting the activities, businesses or operations of KP & Co. being conducted as of the Closing by KP & Co. where such actions do not constitute gross negligence or willful misconduct, and (b) do not relate to, and have not arisen as a result of, directly or indirectly, activities, assets, liabilities, employees, properties, businesses or operations of KP & Co. that (1) were disposed of or ceased by KP & Co. on or prior to the Closing or (2) were in existence or were being pursued by KP & Co. on or prior to the Closing, and (iii) taxes incurred by KP & Co. with respect to periods beginning on or after the Closing Date and with respect to the portion beginning on the Closing Date of any Straddle Period. 21 -20- 6.4. Adjustment to Purchase Price. The parties intend that any payment pursuant to Section 6.2 or 6.3 (and any other payment that may be made between the parties after the Closing Date arising from this Agreement) will be treated as an adjustment to purchase price. Neither party will take any position inconsistent with such treatment for income tax purposes. 6.5. Notice and Copies of Third Party Claims. For purposes of this Agreement, "Third Party Claim" means (i) any Litigation pending or threatened against KP & Co. or Broad Street Advisors, Inc. as of the Closing (whether or not listed in the Litigation Letter) and (ii) any Litigation or other claim or demand commenced or made by any Person against a party (an "indemnified party") who is entitled to any indemnification provided for under this Agreement in respect of, arising out of or involving such Litigation, claim or demand, whether such Litigation, claim or demand is commenced or made before, on or after the Closing. An indemnified party will notify the indemnifying party in writing of any Third Party Claim commenced or made against such indemnified party after the Closing with reasonable promptness; provided, however, that the failure to give such notice shall not affect the indemnification hereunder except to the extent the indemnifying party shall have been actually materially prejudiced as a result of such failure. Thereafter, the indemnified party shall deliver to the indemnifying party, reasonably promptly after the indemnified party's receipt thereof, copies of all notices and documents (including court papers) received by the indemnified party relating to the Third Party Claim, other than notices and documents (including court papers) separately addressed to the indemnifying party; provided, however, that the failure to deliver any such notice or document shall not affect the indemnification provided hereunder except to the extent the indemnifying party shall have been actually materially prejudiced as a result of such failure. 6.6. Procedures Relating to Indemnification. If a Third Party Claim is made against an indemnified party, the indemnifying party shall be entitled to participate in the defense thereof and, if it so chooses, at its sole cost and upon written notice to the indemnified party acknowledging its obligation to indemnify the indemnified party therefor in accordance with the terms of this Agreement, to assume the defense thereof with counsel selected by the indemnifying party; provided, however, that such counsel is reasonably satisfactory to the indemnified party. GE and GECS hereby acknowledge their obligation to indemnify the indemnified parties under Section 6.2 in respect of the Litigation listed in the Litigation Letter in accordance with the terms of this 22 -21- Agreement and, subject to any limitations set forth in this Article VI, GE and GECS intend to continue to defend against all such Litigation. GE and GECS shall be obligated to assume the defense of the Litigation listed in the Litigation Letter and all other Third Party Claims subject to indemnification pursuant to Section 6.2, except as to any such Litigation or Third Party Claims as to which PWG advises GE and GECS that PWG has elected not to permit GE and GECS to assume such defense pursuant to PWG's rights under this Article VI. Should the indemnifying party so elect to assume the defense of a Third Party Claim, the indemnifying party shall not be liable to the indemnified party for legal expenses subsequently incurred by the indemnified party in connection with the defense thereof, provided, however, that (i) if the indemnifying party assumes such defense, the indemnified party shall have the right to participate in the defense thereof and to employ counsel, at its own expense, separate from the counsel employed by the indemnifying party, it being understood that the indemnifying party shall control such defense and (ii) the indemnified party shall be entitled to employ separate counsel, at the expense of the indemnifying party, and to participate in the defense of such Third Party Claim if in the opinion of counsel to such indemnified party a conflict or potential conflict (including as to the availability of defenses) exists between such indemnified party and the indemnifying party that would make such separate representation advisable (provided that the indemnifying party shall only be responsible under this clause (ii) for the fees of one counsel in each relevant jurisdiction for all indemnified parties). The indemnifying party shall be liable for the fees and expenses of counsel employed by the indemnified party for any period during which the indemnifying party has failed to assume the defense thereof. If the indemnifying party so elects to assume the defense of any Third Party Claim, the indemnified parties shall cooperate with the indemnifying party in the defense thereof. Such cooperation shall include the retention and (upon the indemnifying party's reasonable request) the provision to the indemnifying party of records and information of KP & Co. that are relevant to such Third Party Claim and that are in the possession of such indemnified party. Such cooperation shall not include the making available of any current employee of PWG or any of its Subsidiaries (other than KP & Co.), other than any such employee who has already entered into a cooperation agreement with respect to Litigation involving KP & Co. prior to the date hereof. In addition, if the 23 -22- indemnifying party so elects to assume the defense of any Third Party Claim, the indemnifying party shall (i) consult with the indemnified parties to determine litigation strategies, including the selection of the appropriate forum and determination to interpose defenses or to raise counterclaims, (ii) promptly advise the indemnified parties of all material developments in respect of each significant claim as they occur, (iii) consider in good faith all reasonable requests that the indemnified parties may make concerning the conduct of any such defenses or counterclaims. With respect to indemnification under Section 6.2 where GE or GECS has assumed the defense of any Third Party Claim, upon request of GE or GECS, PWG will cause KP & Co. to permit GE and GECS to assert any rights of KP & Co. which arose prior to the Closing or derived from the same facts or circumstances giving rise to such Third Party Claim and which may be the basis for a counterclaim or defense of such Third Party Claim. If the indemnifying party shall have assumed the defense of a Third Party Claim, the indemnified party shall agree to any settlement, compromise or discharge of a Third Party Claim which the indemnifying party may recommend and which by its terms obligates the indemnifying party to pay the full amount required to be paid under this Article VI by the indemnifying party in respect of such Third Party Claim (which payment shall be made contemporaneously with the indemnified party's agreement to such settlement, compromise or discharge), which releases the indemnified party completely in connection with such Third Party Claim and which would not otherwise adversely affect (other than to a de minimis degree) the indemnified party. The indemnified party shall not admit any liability with respect to, or settle, compromise or discharge, any Third Party Claim the defense of which shall have been assumed by the indemnifying party in accordance with the terms hereof without the indemnifying party's prior written consent (which consent shall not be unreasonably withheld). The indemnified party shall have the right to admit any liability with respect to, or settle, compromise or discharge, any Third Party Claim the defense of which shall not have been assumed by the indemnifying party. Notwithstanding the foregoing, the indemnifying party shall not be entitled to assume the defense of any Third Party Claim (but shall be liable for the fees and expenses of counsel incurred by the indemnified party in defending such Third Party Claim) if the Third Party Claim seeks relief which, if granted, would impose on the indemnified parties non-monetary obligations or penalties. If such non-monetary relief portion of the Third Party 24 -23- Claim can be separated from that for money damages, the indemnifying party shall be entitled to assume the defense of the portion relating to money damages. In conducting the defense of any Third Party Claim where non-monetary and monetary relief cannot be separated, the indemnified parties shall promptly advise the indemnifying parties of all material developments in respect of such Third Party Claim as they occur. The indemnification required by Sections 6.2 and 6.3 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received or Losses are incurred. The indemnifying party shall pay to the indemnified party or its designee amounts owing under this Article VI in respect of any bills, judgments and other matters sufficiently in advance for the indemnified party to make timely payments thereof. 6.7. Other Claims. In the event any indemnified party should have a claim for indemnity against any indemnifying party under Section 6.2 or 6.3 that does not involve a Third Party Claim being asserted against or sought to be collected from such indemnified party, the indemnified party shall deliver notice of such claim with reasonable promptness to the indemnifying party. The failure by any indemnified party so to notify the indemnifying party shall not relieve the indemnifying party from any liability which it may have to such indemnified party under Section 6.2 or 6.3. If the indemnifying party does not notify the indemnified party within 20 calendar days following its receipt of such notice that the indemnifying party disputes its liability to the indemnified party under Section 6.2 or 6.3, such claim specified by the indemnified party in such notice shall be conclusively deemed a liability of the indemnifying party under Section 6.2 or 6.3 and the indemnifying party shall pay the amount of such liability to the indemnified party on demand or, in the case of any notice in which the amount of the claim (or any portion thereof) is estimated, on such later date when the amount of such claim (or such portion thereof) becomes finally determined. If the indemnifying party has timely disputed its liability with respect to such claim, as provided above, the indemnifying party and the indemnified party shall proceed in good faith to negotiate a resolution of such dispute and, if not resolved through negotiations, such dispute shall be resolved by litigation in an appropriate court of competent jurisdiction. 6.8. Burden of Proof. In the event of any dispute as to any indemnification claimed by an indemnified party under Section 6.2, the indemnified party shall be presumed to be entitled to indemnification under Section 6.2 in the amount claimed and the 25 -24- burden of proof shall be on the indemnifying party to establish that the indemnified party is not entitled to indemnification under Section 6.2, or that the amount claimed is not correct, and pending resolution of such dispute the indemnifying party shall pay the indemnified party the amount claimed within five (5) business days of receipt of the indemnified party's demand for payment. 6.9. Period of Indemnity. The indemnities set forth in clause (ii) of Section 6.2 and clause (iii) of Section 6.3 shall expire six (6) months after the running of the relevant statute of limitations. All other indemnities set forth in Sections 6.2 and 6.3 shall not expire until performed in full. 6.10. Damages. Any and all monetary recoveries for any breach or incorrectness of, or non-compliance with, any representation, warranty, covenant or agreement hereunder, if payable based on a claim pursued under any Article herein other than this Article VI, shall be limited to the amount that would have been payable if such claim had been pursued under this Article VI. 6.11. Reference. All references to KP & Co. in Sections 6.2 and 6.3 of this Article VI shall include Broad Street Advisors, Inc. ARTICLE VII. MISCELLANEOUS 7.1. No Waiver; Modifications in Writing. No failure or delay on the part of GE, GECS or PWG in exercising any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy. The remedies provided for herein are cumulative and, except as otherwise provided in Section 6.10 or Section 7.9, are not exclusive of any remedies that may be available to GE, GECS or PWG at law or in equity. No waiver of or consent to any departure by GE, GECS or PWG from any provision of this Agreement shall be effective unless signed in writing by the party entitled to the benefit thereof. No amendment, modification or termination of any provision of this Agreement shall be effective unless signed in writing by or on behalf of GECS and PWG. Any amendment, supplement or modification of or to any of this Agreement, any waiver of any provision of this Agreement, and any 26 -25- consent to any departure from the terms of any provision of this Agreement, shall be effective only in the specific instance and for the specific purpose for which made or given. 7.2. Notices. All notices and demands provided for hereunder shall be in writing, and shall be given by registered or certified mail, return receipt requested, telecopy, courier service or personal delivery, and, if to PWG, addressed to PWG at: 1285 Avenue of the Americas New York, New York 10019 Attention: General Counsel Telecopy: 212-713-2114 (with copies to): Cravath, Swaine & Moore 825 Eighth Avenue New York, New York 10019 Attention: Peter S. Wilson Telecopy: 212-474-3700 or to such other address as PWG may designate to GECS in writing and, if to GE or GECS, addressed to GECS at: 260 Long Ridge Road Stamford, CT 06927 Attention: General Counsel Telecopy: 203-373-3365 with copies to: General Electric Company 3135 Easton Turnpike Fairfield, Connecticut 06431 Attention: Senior Counsel for Transactions Telecopy: 202-373-3008 Cahill Gordon & Reindel Eighty Pine Street New York, New York 10005 Attention: Richard J. Sabella Telecopy: 212-269-5420 27 -26- Davis Polk & Wardwell 450 Lexington Avenue New York, New York 10017 Attention: John Knight Telecopy: 212-450-4800 or to such other address as GECS may designate to PWG in writing. All such notices, demands and other communications shall be deemed to have been duly given: at the time of delivery by hand, if personally delivered; five business days after being deposited in the mail, postage prepaid, if mailed; when answered back, if telexed; when receipt acknowledged, if telecopied; and on the next business day, if timely delivered to an air courier guaranteeing overnight delivery. 7.3. Execution in Counterparts. This Agreement may be executed in any number of counterparts and by different parties hereto on separate counterparts, each of which counterparts, when so executed and delivered, shall be deemed to be an original and all of which counterparts, taken together, shall constitute but one and the same Agreement. 7.4. Binding Effect; Assignment. This Agreement and the rights and obligations of GE, GECS or PWG may not be assigned (except by operation of law pursuant to a merger or otherwise) to any other Person except with the prior written consent of the other parties hereto. Except as expressly provided in Article VI, this Agreement shall not be construed so as to confer any right or benefit upon any Person other than the parties to this Agreement, and their respective successors and permitted assigns. This Agreement shall be binding upon the parties hereto, and their respective successors and permitted assigns. 7.5. GOVERNING LAW. THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF THE STATE OF NEW YORK, AND FOR ALL PURPOSES SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF SAID STATE, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS. 7.6. Severability of Provisions. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or affecting the validity or enforceability of such provision in any other jurisdiction. 28 -27- 7.7. Headings. The Article and Section headings used or contained in this Agreement are for convenience of reference only and shall not affect the construction of this Agreement. 7.8. Attorneys' Fees. In any action or proceeding brought to enforce any provision of this Agreement or any other document or instrument contemplated hereby, or where any provision hereof is validly asserted as a defense, the successful party shall be entitled to recover attorneys' fees in addition to any other available remedy. 7.9. Entire Agreement. (a) This Agreement, together with the Amended Stockholders Agreement, the Purchase Money Note, the Administrative Services Agreement and the Assumption Agreement, constitute the entire agreement among the parties with respect to the transactions contemplated herein and there are no promises or undertakings with respect thereto relative to the subject matter hereof not expressly set forth or referred to herein. Except as provided below, the Asset Purchase Agreement and related documents (other than, upon consummation of the transactions contemplated hereby, the Stockholders Agreement) shall continue in full force and effect in accordance with their respective terms. (b) Notwithstanding anything in this Agreement or the Asset Purchase Agreement to the contrary, the parties hereto agree as follows: (i) from and after the Closing Date, KP & Co. and Broad Street Advisors, Inc. shall be considered and treated as Purchaser Indemnitees (as defined in the Asset Purchase Agreement) for any purpose under the Asset Purchase Agreement; (ii) none of the Purchaser Indemnitees may seek indemnity under the Asset Purchase Agreement with respect to (A) any claim that gives rise to any Losses to the extent such Losses are Losses for which GE and GECS would otherwise be obligated to provide indemnification under Section 6.2 and have been funded as part of the Pre-Tax Reserve or the "pre-funded after-tax contingencies" reserve included in the Signing Balance Sheet (or would be so funded if any indemnity claim was made under Section 6.2) or (B) any matter to the extent PWG would be obligated to provide indemnification under Section 6.3 in respect of such matter (whether or not any of the 29 -28- indemnified parties under Section 6.3 have incurred or suffered any Loss with respect thereto); and (iii) for each case where any of PWG, KP & Co., or their respective Affiliates, officers, directors, employees, stockholders, agents or representatives is entitled to indemnification in respect of any Litigation, claim or matter under both this Agreement and the Asset Purchase Agreement, to the extent that the amount of such indemnification (determined without regard to the amount and timing of the effect of any related tax cost or benefit) available under the Asset Purchase Agreement does not exceed the amount of such indemnification (as so determined) available under the provisions of this Agreement, (A) any indemnification payment in respect of such Litigation, claim or matter will be made, and the amount and timing of the effect of any related tax cost or benefit will be determined, under the provisions of this Agreement, (B) any such indemnification payment made in respect of such Litigation, claim or matter will be treated as a purchase price adjustment under Section 6.4 of this Agreement, and (C) all procedural matters relating to such right of indemnification (including all matters relating to notice, contest rights and burden of proof) will be determined under the provisions of this Agreement; provided, however, that if PWG so elects in writing within sixty days after giving notice in respect of such Litigation, claim or matter, all such procedural matters will be governed by the provisions of the Asset Purchase Agreement. For purposes of the preceding sentence, any entitlement to money damages shall be treated as an entitlement to indemnification. 30 -29- IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed on the date first above written. GENERAL ELECTRIC CAPITAL SERVICES, INC. By: /s/ Joan Amble ------------------------------------- Name: Joan Amble Title: Vice President and Controller GENERAL ELECTRIC COMPANY By: /s/ Pamela Daley ------------------------------------- Name: Pamela Daley Title: Vice President and Senior Counsel for Transactions PAINE WEBBER GROUP INC. By: /s/ F. Daniel Corkery ------------------------------------- Name: F. Daniel Corkery Title: Senior Vice President and Senior Associate General Counsel 31 EXHIBIT A TO SHARE PURCHASE AGREEMENT -------------- PURCHASE MONEY PROMISSORY NOTE ------------------------------ US$442,000,000 August , 1997 FOR VALUE RECEIVED, Paine Webber Group Inc. (the "Borrower") hereby promises to pay to the order of General Electric Capital Services, Inc. (the "Lender") at 260 Long Ridge Road, Stamford CT 06927 on the fifteenth day following the date hereof the principal amount of US$442,000,000, with interest thereon from and including the date hereof to but excluding the date all amounts payable hereunder are paid in full at the rate of 5.75% per annum and calculated based on the exact number of days elapsed on the basis of a 360 day year. Payment of principal and interest shall be made by wire transfer of immediately available funds to an account designated by the Lender. The Borrower may, at its option, at any time and from time to time, without premium or penalty of any kind, prepay in whole or in part this Note. The Borrower hereby waives presentment for payment, protest, notice of protect, and notice of nonpayment of this Note. This Note shall be goverened by and construed in accordance with the laws of the State of New York. PAINE WEBBER GROUP INC. By: -------------------- Name: Title: EX-99.1 4 PRESS RELEASE 1 EXHIBIT 99.1 FOR IMMEDIATE RELEASE Contact: Tony Zehnder Gus Carlson GE Capital Services Paine Webber Group Inc. (203) 357-4728 (212) 713-8502 PAINE WEBBER GROUP AND GE CAPITAL REACH AGREEMENT ON STOCK SALE NEW YORK, August 7, 1997 -- Paine Webber Group Inc. and General Electric Capital Services jointly announced today that they have signed a definitive agreement under which GE Capital Services will sell to PaineWebber a subsidiary, the principal asset of which is the PaineWebber common voting stock acquired in connection with the sale of certain assets and businesses of Kidder, Peabody to PaineWebber in 1994. The effect of the sale would reduce GE Capital's holdings of PaineWebber common voting stock from 21.5 million shares to 15.5 million shares. Following this transaction, GE Capital will continue to own about 23 percent of PaineWebber on a fully diluted basis. GE Capital will continue to have a representative on PaineWebber's board of directors and the provisions of the previous shareholder agreement will continue to apply. John F. Welch, Jr., chairman and chief executive officer of General Electric, said "We are very pleased with our investment in PaineWebber and intend to continue as a long-term shareholder." Donald B. Marron, chairman and chief executive officer of PaineWebber, said "We anticipate a long and rewarding partnership with GE and are pleased that this transaction will meet a number of financial objectives and accommodate the best interests of both companies." PaineWebber said it plans to use the shares to fund employee stock ownership programs and for other corporate purposes. The transaction is subject to approval by regulatory authorities. GE Capital Services, with assets of over US $227 billion, is a global, diversified financial services company with 27 specialized businesses. A wholly-owned subsidiary of General Electric Company, GE Capital Services, based in Stamford, CT., provides equipment management, mid-market and specialized financing, specialty insurance and a variety of consumer services, such as car leasing, home mortgages and credit cards to businesses and individuals around the world. GE is a diversified manufacturing, technology and services company with operations worldwide. Paine Webber Group Inc., together with its subsidiaries, serves the investment and capital needs of a worldwide client base. The firm employs 16,105 people in 298 offices. -----END PRIVACY-ENHANCED MESSAGE-----