AGREEMENT AND PLAN OF MERGER
AMONG
CHICAGO MERCANTILE EXCHANGE HOLDINGS INC.,
CBOT HOLDINGS, INC.
AND
BOARD OF TRADE OF THE CITY OF CHICAGO, INC.
DATED AS OF OCTOBER 17, 2006
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER, dated as of October 17, 2006 (this ''Agreement''),
among CHICAGO MERCANTILE EXCHANGE HOLDINGS INC., a Delaware corporation (''CME Holdings''),
CBOT HOLDINGS, INC., a Delaware corporation (''CBOT Holdings''), and BOARD OF TRADE
OF THE CITY OF CHICAGO, INC., a Delaware non-stock corporation and subsidiary of CBOT
Holdings (''CBOT''). CME Holdings, CBOT Holdings and CBOT are referred to individually
as a ''Party'' and collectively as the ''Parties.''
RECITALS
WHEREAS, the Boards of Directors of CME Holdings, CBOT Holdings and CBOT have
each determined that the transactions described herein are consistent with, and
will further, their respective business strategies and goals, and have deemed it
advisable and in the best interests of their respective companies, stockholders
and members that CME Holdings and CBOT Holdings engage in a business combination;
WHEREAS, in furtherance thereof, the Boards of Directors of CME Holdings and
CBOT Holdings have approved and declared advisable this Agreement and the merger
of CBOT Holdings with and into CME Holdings (the ''Merger'') in accordance with the
applicable provisions of the Delaware General Corporation Law (the ''DGCL'') and upon
the terms and subject to the conditions set forth in this Agreement; and
WHEREAS, it is intended that, for U.S. federal income tax purposes, the Merger
shall qualify as a reorganization under Section 368(a) of the Code.
NOW, THEREFORE, in consideration of the foregoing and their respective representations,
warranties, covenants and agreements set forth in this Agreement, and intending
to be legally bound hereby, the Parties agree as follows:
ARTICLE I
DEFINED TERMS; THE MERGER; CERTAIN RELATED MATTERS
Section 1.01 Certain Defined Terms. As used in this Agreement, the following terms
have the meanings specified in this Section 1.1.
''Actual Cash Amount'' has the meaning set forth in Section 1.9(a)(ii).
''Affiliate'' means, with respect to any Person, another Person that directly or
indirectly through one or more intermediaries, controls, is controlled by, or is
under common control with, such first Person, where ''control'' means the possession,
directly or indirectly, of the power to direct or cause the direction of the management
policies of a Person, whether through the ownership of voting securities, by contract,
as trustee or executor or otherwise.
''Affiliate Agreement'' has the meaning set forth in Section 6.12.
''Agreement'' has the meaning set forth in the Preamble.
''ALTA'' means the American Land Title Association.
''Alternative Agreement'' has the meaning set forth in Section 6.5(a).
''Antitrust Division'' has the meaning set forth in Section 6.4(a).
''Antitrust Laws'' has the meaning set forth in Section 6.4(a)
''Available Cash Amount'' has the meaning set forth in Section 1.9(a)(ii).
''Available CBOT Holdings Stock Plan Shares'' has the meaning set forth in Section
1.11(d).
''Average CME Holdings Stock Price'' means the average closing sales price, rounded
to four decimal points, of shares of CME Holdings Class A Common Stock on the NYSE
(as reported in the Wall Street Journal, New York City edition) for the period of
the ten consecutive trading days ending on the second full trading day prior to
the Effective Time.
''Board of Directors'' means the board of directors of any specified Person.
''Book-Entry Shares'' has the meaning set forth in Section 2.1(a).
''Burdensome Condition'' has the meaning set forth in Section 6.4(c).
''Business Combination Transaction'' has the meaning set forth in Section 6.5(e).
''Business Day'' means any day except Saturday or Sunday on which commercial banks
are not required or authorized to close in the City of Chicago.
''By-Laws'' has the meaning set forth in Section 1.5(b).
''Cancelled Shares'' has the meaning set forth in Section 1.9(d).
''Cash Fraction'' has the meaning set forth in Section
1.9(a)(ii).
''Cash Share'' has the meaning set forth in Section 1.9(a)(ii).
''CBOT'' has the meaning set forth in the Preamble.
''CBOT Holdings'' has the meaning set forth in the Preamble.
''CBOT Holdings Benefit Plans'' has the meaning set forth in Section 3.16(a).
''CBOT Holdings Class A Common Stock'' has the meaning set forth in Section 3.3(a).
''CBOT Holdings Class B Common Stock'' has the meaning set forth in Section 3.3(a).
''CBOT Holdings Common Stock'' has the meaning set forth in Section 3.3(a).
''CBOT Holdings Contracts'' has the meaning set forth in Section 3.19(b).
''CBOT Holdings Director Notice'' has the meaning set forth in Section 1.7(a).
''CBOT Holdings Directors'' has the meaning set forth in Section 1.7(a).
''CBOT Holdings Disclosure Letter'' has the meaning set forth in Article III.
''CBOT Holdings Financial Advisor'' has the meaning set forth in Section 3.23.
''CBOT Holdings Financial Statements'' means the consolidated financial statements
of CBOT Holdings and the CBOT Holdings Subsidiaries included in the CBOT Holdings
SEC Documents together, in the case of year-end statements, with reports thereon
by Deloitte & Touche LLP, the independent auditors of CBOT Holdings, including in
each case a consolidated balance sheet, a consolidated statement of income, a consolidated
statement of stockholders equity and a consolidated statement of cash flows, and
accompanying notes.
''CBOT Holdings Identified Representations'' means Section 3.3, Section 3.4 and
Section 3.5.
''CBOT Holdings Improvements'' has the meaning set forth in Section 3.15(b)(ii).
''CBOT Holdings Leased Real Property'' means all real property interests leased
by CBOT Holdings or any of the CBOT Holdings Subsidiaries pursuant to Leases.
''CBOT Holdings License Agreements'' has the meaning set forth in Section 3.19(a)(ix).
''CBOT Holdings Material Leases'' has the meaning set forth in Section 3.15(b)(v).
''CBOT Holdings Meetings'' has the meaning set forth in Section 6.2(a).
''CBOT Holdings Owned Intellectual Property'' has the meaning set forth in Section
3.18(a).
''CBOT Holdings Owned Real Property'' means real property, together with all improvements
and fixtures presently or hereafter located thereon or attached or appurtenant thereto
or owned by CBOT Holdings or any CBOT Holdings Subsidiary, and all easements, licenses,
rights and appurtenances relating to the foregoing.
''CBOT Holdings Permits'' has the meaning set forth in Section 3.13(a).
''CBOT Holdings Preferred Stock'' has the meaning set forth in Section 3.3(a).
''CBOT Holdings Real Property'' has the meaning set forth in Section 3.15.
''CBOT Holdings Recommendation'' has the meaning set forth in Section 6.2(a).
''CBOT Holdings Rights'' means the rights distributed to the holders of CBOT Holdings
Class A Common Stock pursuant to the CBOT Holdings Rights Agreement.
''CBOT Holdings Rights Agreement'' means the amended and restated rights agreement,
dated as of September 14, 2006, between CBOT Holdings and Computershare Investor
Services LLC, as rights agent.
''CBOT Holdings SEC Documents'' has the meaning set forth in Section 3.8(a).
''CBOT Holdings Special Committee'' means the special negotiating committee of
the Board of Directors of CBOT Holdings that was formed in connection with the transactions
contemplated by this Agreement.
''CBOT Holdings Stock Option'' has the meaning set forth in Section 1.11(a).
''CBOT Holdings Stock Plan'' has the meaning set forth in Section 1.11(a).
''CBOT Holdings Stock-Based Award'' has the meaning set forth in Section 1.11(b).
''CBOT Holdings Stockholder Approval'' has the meaning set forth in Section 3.4(a).
''CBOT Holdings Stockholders Meeting'' has the meaning set forth in Section 6.2(a).
''CBOT Holdings Subsidiary'' has the meaning set forth in Section 3.2(a).
''CBOT Membership Approval'' means (i) the approval of the Repurchase by the holders
of a majority of the outstanding voting power of the Series B-1 and Series B-2 Membership
Interests, (ii) the adoption of the Second Amended and Restated Certificate of Incorporation
of CBOT in the form attached hereto as Exhibit C by the affirmative vote of the
majority of the votes cast by the holders of the Series B-1 and Series B-2 Membership
Interests at the CBOT Membership Meeting and (iii) the adoption of the Second Amended
and Restated By-Laws of CBOT in the form attached hereto as Exhibit D by the affirmative
vote of the majority of the votes cast by the holders of the Series B-1 and Series
B-2 Membership Interests at the CBOT Membership Meeting; provided that for each
such approval, (A) the holders of Series B-1 Memberships and Series B-2 Memberships
shall be considered as a single class and (B) the holders of Series B-1 Memberships
and Series B-2 Memberships shall have the voting rights provided in Article IV.C.
of the certificate of incorporation of CBOT as currently in effect.
''CBOT Membership Meeting'' has the meaning set forth in Section 6.2(a).
''Certificate'' has the meaning set forth in Section 1.9(b).
''Certificate of Incorporation'' has the meaning set forth
in Section 1.5(a).
''Certificate of Merger'' has the meaning set forth in Section 1.4.
''CFTC'' means the Commodity Futures Trading Commission.
''Change'' has the meaning set forth in Section 6.2(a).
''Change in Recommendation'' has the meaning set forth in Section 6.5(c)(I).
''Change in CBOT Holdings Recommendation'' has the meaning set forth in Section
6.2(a).
''Change in CME Holdings Recommendation'' has the meaning set forth in Section
6.2(b).
''Class A Membership'' means the one (1) Class A Membership in CBOT.
''Class B Memberships'' means, collectively, the Series B-1 Memberships, the Series
B-2 Memberships, the Series B-3 Memberships, the Series B-4 Memberships and the
Series B-5 Memberships in CBOT.
''Clayton Act'' means the Clayton Act of 1914, as amended, and the rules and regulations
promulgated thereunder.
''Clearing Agreement'' has the meaning set forth in Section 6.17.
''Closing'' has the meaning set forth in Section 1.3.
''Closing Date'' has the meaning set forth in Section 1.3.
''CME'' means Chicago Mercantile Exchange Inc., a wholly owned subsidiary of CME
Holdings.
''CME Common Stock'' has the meaning set forth in Section 4.3(c).
''CME Holdings'' has the meaning set forth in the Preamble.
''CME Holdings Benefit Plans'' has the meaning set forth in Section 4.14(a).
''CME Holdings Class A Common Stock'' has the meaning set forth in Section 4.3(a).
''CME Holdings Class B Common Stock'' has the meaning set forth in Section 4.3(a).
''CME Holdings Common Stock'' has the meaning set forth in Section 4.3(a).
''CME Holdings Contracts'' has the meaning set forth in Section 4.17(b).
''CME Holdings Directors'' has the meaning set forth in Section 1.7(a).
''CME Holdings Disclosure Letter'' has the meaning set forth in Article IV.
''CME Holdings Financial Advisors'' has the meaning set forth in Section 4.21.
''CME Holdings Financial Statements'' means the consolidated financial statements
of CME Holdings and the CME Holdings Subsidiaries included in the CME Holdings SEC
Documents together, in the case of year-end statements, with reports thereon by
Ernst & Young LLP, the independent auditors of CME Holdings, including in each case
a consolidated balance sheet, a consolidated statement of income, a consolidated
statement of stockholders equity and a consolidated statement of cash flows, and
accompanying notes.
''CME Holdings Identified Representations'' means Section 4.3 and Section 4.4.
''CME Holdings Improvements'' has the meaning set forth in Section 4.13(a).
''CME Holdings Leased Real Property'' means all real property interests leased
by CME Holdings or any of the CME Holdings Subsidiaries pursuant to the Leases.
''CME Holdings License Agreements'' has the meaning set forth in Section 4.17(a)(ix).
''CME Holdings Material Lease'' has the meaning set forth in Section 4.13(a).
''CME Holdings Owned Intellectual Property'' has the meaning set forth in Section
4.16(a).
''CME Holdings Permits'' has the meaning set forth in Section 4.11(a).
''CME Holdings Preferred Stock'' has the meaning set forth in Section 4.3(a).
''CME Holdings Recommendation'' has the meaning set forth in Section 6.2(b).
''CME Holdings Rights'' means the rights distributed to the holders of CME Holdings
Class A Common Stock and CME Holdings Class B Common Stock pursuant to the CME Holdings
Rights Agreement.
''CME Holdings Rights Agreement'' means the rights agreement, dated as of November
30, 2001, as amended, between CME Holdings and Computershare Investor Services LLC,
as rights agent.
''CME Holdings SEC Documents'' has the meaning set forth in Section 4.6(a).
''CME Holdings Stock Option'' has the meaning set forth in Section 1.11(a).
''CME Holdings Stock Plans'' has the meaning set forth in Section 4.3(b).
''CME Holdings Stock-Based Award'' has the meaning set forth in Section 1.11(b).
''CME Holdings Stockholder Approval'' has the meaning set forth in Section 4.4(a).
''CME Holdings Stockholders Meeting'' has the meaning set forth in Section 6.2(b).
''CME Holdings Subsidiary'' has the meaning set forth in Section 4.2(a).
''Code'' means the Internal Revenue Code of 1986, as amended, and the rules and
regulations promulgated thereunder.
''Commodity Exchange Act'' means the Commodity Exchange Act, 7 U.S.C. §§ 1, et
seq., as amended, and the rules and regulations promulgated thereunder.
''Confidentiality Agreement'' has the meaning set forth in Section 6.3(c).
''Constituent Documents'' means with respect to any entity, its certificate or
articles of incorporation, by-laws, exchange rules and regulations, as applicable,
and any similar charter or other organizational documents of such entity.
''Continuing Employees'' has the meaning set forth in Section 6.6(a).
''Copyrights'' has the meaning set forth in Section 3.18(k).
''Determination Date'' has the meaning set forth in Section 2.1(a).
''D & O Insurance'' has the meaning set forth in Section 6.8.
''DGCL'' has the meaning set forth in the Recitals.
''Effective Time'' has the meaning set forth in Section 1.4.
''Election Date'' has the meaning set forth in Section 1.10(d).
''Election Form'' has the meaning set forth in Section 1.10(a).
''Environmental Law'' means any foreign, federal, state or local law, treaty, statute,
rule, regulation, order, ordinance, decree, injunction, judgment, governmental restriction
or any other requirement of law (including common law) regulating or relating to
the protection of human health, safety (as it relates to Releases of Hazardous Substances),
natural resources or the environment, including laws relating to wetlands, pollution,
contamination or the use, generation, management, handling, transport, treatment,
disposal, storage, Release, threatened Release of, or exposure to, Hazardous Substances.
''Environmental Permit'' means any permit, license, authorization or consent required
pursuant to applicable Environmental Laws.
''Equity Rights'' means, with respect to any Person, securities, or obligations
convertible into or exercisable or exchangeable for, or giving any Person any right
to subscribe for or acquire, or any options, calls, restricted stock, deferred stock
awards, stock units, phantom awards, dividend equivalents, or commitments relating
to, or any stock appreciation right or other instrument the value of which is determined
in whole or in part by reference to the market price or value of, shares of capital
stock or earnings of such Person, and shall include the CME Holdings Stock Options,
CME Holdings Stock-Based Awards, CBOT Holdings Stock Options and CBOT Holdings Stock-Based
Awards, as applicable, but shall not include the CBOT Holdings Rights.
''ERISA'' means the Employee Retirement Income Security Act of 1974, as amended,
and the rules and regulations promulgated thereunder.
''ERISA Affiliate'' means, with respect to any entity, any trade or business, whether
or not incorporated, that together with such entity and its Subsidiaries would be
deemed a ''single employer'' within the meaning of Section 4001 of ERISA.
''Exchange Act'' means the Securities and Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.
''Exchange Agent'' has the meaning set forth in Section 2.1(a).
''Exchange Ratio'' has the meaning set forth in Section 1.9(a)(i).
''Expenses'' has the meaning set forth in Section 6.7.
''Foreign Competition Laws'' has the meaning set forth in Section 3.7(b).
''Foreign CBOT Holdings Benefit Plan'' has the meaning set forth in Section 3.16(r).
''Foreign CME Holdings Benefit Plan'' has the meaning set forth in Section 4.14(p).
''Form S-4'' has the meaning set forth in Section 3.10.
''FTC'' has the meaning set forth in Section 6.4(a).
''GAAP'' has the meaning set forth in Section 3.8(b).
''Governmental Entity'' means any supranational, national, state, municipal, local
or foreign government, any instrumentality, subdivision, court, administrative agency
or commission, including the CFTC, or other governmental authority or instrumentality.
''Hazardous Substances'' means all substances defined as Hazardous Substances,
Oils, Pollutants or Contaminants in the National Oil and Hazardous Substances Pollution
Contingency Plan, 40 C.F.R. § 300.5, or toxic mold, or defined as such by, or regulated
as such under, any Environmental Law.
''HSR Act'' has the meaning set forth in Section 3.7(b).
''Indebtedness'' means, with respect to any Person, without duplication, (i) all
obligations of such Person and its Subsidiaries for borrowed money, or with respect
to deposits or advances of any kind, (ii) all obligations of such Person and its
Subsidiaries evidenced by bonds, debentures, notes, mortgages or similar instruments
or securities, (iii) all obligations of such Person upon which interest charges
are customarily paid (other than trade payables incurred in the ordinary course
of business consistent with past practices), (iv) all obligations of such Person
and its Subsidiaries under conditional sale or other title retention agreements
relating to any property purchased by such Person or any of its Subsidiaries, (v)
all obligations of such Person and its Subsidiaries issued or assumed as the deferred
purchase price of property or services (excluding obligations of such Person and its Subsidiaries to creditors for inventory, services
and supplies incurred in the ordinary course of business consistent with past practices),
(vi) all lease obligations of such Person and its Subsidiaries capitalized on the
books and records of such Person or any of its Subsidiaries, (vii) all obligations
of others secured by a Lien on property or assets owned or acquired by such Person
or any of its Subsidiaries, whether or not the obligations secured thereby have
been assumed, (viii) all letters of credit or performance bonds issued for the account
of such Person or any of its Subsidiaries (excluding (a) letters of credit issued
for the benefit of suppliers to support accounts payable to suppliers incurred in
the ordinary course of business consistent with past practices, (b) standby letters
of credit relating to workers compensation insurance and surety bonds, (c) surety
bonds and customs bonds and (d) clearing house guarantees) and (ix) all guarantees
and arrangements having the economic effect of a guarantee of such Person or any
of its Subsidiaries of any Indebtedness of any other Person, other than clearing
house guarantees. Notwithstanding the foregoing, ''Indebtedness'' shall not include
intercompany indebtedness, obligations or liabilities between either (i) CBOT Holdings
or one of the wholly-owned CBOT Holdings Subsidiaries on the one hand, and another
wholly-owned CBOT Holdings Subsidiary on the other hand, or (ii) CME Holdings or
one of the wholly-owned CME Holdings Subsidiaries on the one hand, and another wholly-owned
CME Holdings Subsidiary on the other hand.
''Indemnified Persons'' has the meaning set forth in Section 6.8.
''Intellectual Property'' has the meaning set forth in Section 3.18(k).
''IRS'' means the Internal Revenue Service.
''Joint Proxy Statement/Prospectus'' has the meaning set forth in Section 6.1(a).
''known'' or ''knowledge'' means, with respect to any Party, the knowledge of such
Partys executive officers.
''Law'' (and with the correlative meaning ''Laws'') means any rule, regulation, statute,
Order, ordinance or code promulgated by any Governmental Entity, including any common
law, state and federal law, securities law and law of any foreign jurisdictions.
''Leases'' means leases, subleases, licenses and occupancy agreements.
''Liens'' means any mortgage, pledge, hypothecation, assignment, deposit arrangement,
encumbrance, lien (statutory or other), other charge or security interest of any
kind or nature whatsoever (including any conditional sale or other title retention
agreement and any capital lease having substantially the same economic effect as
any of the foregoing).
''Mailing Date'' has the meaning set forth in Section 1.10(a).
''Matching Bid'' has the meaning set forth in Section 6.5(c).
''Material Adverse Effect'' means, with respect to any entity, a material adverse
effect on (i) the business, financial condition or results of operations of such
entity and its Subsidiaries, taken as a whole, other than any such effect relating
to or resulting from (A) changes or conditions generally affecting the economy or
the financial, credit or securities markets, (B)political or regulatory conditions (including any changes thereto), to the extent
such changes do not affect such entity and its Subsidiaries, taken as a whole, in
a materially disproportionate manner relative to other participants in the businesses
and industries in which such entity and its Subsidiaries operate, (C) changes in,
or events or conditions effecting, any of the businesses and industries in which
such entity and its Subsidiaries operate, to the extent such changes do not affect
such entity and its Subsidiaries, taken as a whole, in a materially disproportionate
manner relative to other participants in such businesses and industries, (D) changes,
after the date hereof, in GAAP or the accounting rules or regulations of the SEC,
to the extent such changes do not affect such entity and its Subsidiaries, taken
as a whole, in a materially disproportionate manner relative to other participants
in the businesses and industries in which such entity and its Subsidiaries operate,
(E) the announcement of this Agreement, (F) actions expressly permitted by this
Agreement or that are taken with the prior informed written consent of the other
Party or (G) changes in any Law, to the extent such changes do not affect such entity
and its Subsidiaries, taken as a whole, in a materially disproportionate manner
relative to other participants in the businesses and industries in which such entity
and its Subsidiaries operate or (ii) the ability of such entity to perform its obligations
under this Agreement or to consummate the transactions contemplated by this Agreement.
''Maximum Annual Premium'' has the meaning set forth in Section 6.8.
''Members'' means the holders of the Membership Interests in CBOT.
''Membership Interests'' has the meaning set forth in Section 3.3(c).
''Merger'' has the meaning set forth in the Recitals.
''Merger Consideration'' has the meaning set forth in Section 1.9(a).
''Multiemployer Plan'' has the meaning set forth in Section 3.16(c).
''Nasdaq'' means the NASDAQ Global Select Market.
''No Election Shares'' has the meaning set forth in Section 1.10(b).
''NYSE'' means The New York Stock Exchange.
''Order'' means any charge, order, writ, injunction, judgment, decree, ruling,
determination, directive, award or settlement, whether civil, criminal or administrative
and whether formal or informal.
''Outside Date'' has the meaning set forth in Section 8.1(b)(i).
''Party'' or ''Parties'' has the meaning set forth in the Preamble.
''Patents'' has the meaning set forth in Section 3.18(k).
''Per Share Cash Consideration'' has the meaning set forth in Section 1.9(a)(ii).
''Permitted Liens'' means (i) any liens for taxes not yet delinquent or which are
being contested in good faith by appropriate proceedings, (ii) carriers, warehousemens,
mechanics, materialmens, repairmens or other similar liens, (iii) pledges or
deposits in connection with workers compensation, unemployment insurance, and other
social security legislation, (iv) easements, rights-of-way, restrictions and other
similar encumbrances, which, in the aggregate, are not substantial in amount and
which do not in any case materially detract from the value of the property subject
thereto and (v) any Lien reflected in the CME Holdings Financial Statements or the
CBOT Holdings Financial Statements (as applicable).
''Person'' means an individual, corporation, limited liability company, partnership,
association, trust, unincorporated organization, other entity or group (as defined
in the Exchange Act).
''Proceeding'' has the meaning set forth in Section 5.1(k).
''Release'' means any releasing, disposing, discharging, injecting, spilling, leaking,
leaching, pumping, dumping, emitting, escaping, emptying, seeping, dispersal, migration,
transporting, placing and the like, including the moving of any materials through,
into or upon, any land, soil, surface water, groundwater or air, or otherwise entering
into the indoor or outdoor environment.
''Representatives'' has the meaning set forth in Section 6.3.
''Repurchase'' means the repurchase by CBOT Holdings of the outstanding share of
CBOT Holdings Class B Common Stock pursuant to the terms of the Voting Trust and
the certificate of incorporation of CBOT Holdings.
''Restraint'' has the meaning set forth in Section 7.1(d).
''Sarbanes-Oxley Act'' has the meaning set forth in Section 3.8(a).
''SEC'' has the meaning set forth in Section 3.7(b).
''Securities'' means, with respect to any entity, the authorized shares of any
series of capital stock of, or other equity interests or membership interests in,
such entity.
''Securities Act'' means the Securities Act of 1933, as amended, and the rules
and regulations promulgated thereunder.
''Self-Regulatory Organization'' means any U.S. or foreign commission, board, agency
or body that is not a Governmental Entity but is charged with regulating its own
members through the adoption and enforcement of financial, sales practice and other
requirements for brokers, dealers, securities underwriting or trading, stock exchanges,
commodity exchanges, commodity intermediaries, electronic communications networks,
insurance companies or agents, investment companies or investment advisers.
''Sherman Act'' means the Sherman Antitrust Act of 1890, as amended, and the rules
and regulations promulgated thereunder.
''Software'' has the meaning set forth in Section 3.18(k).
''Stock Consideration'' has the meaning set forth in Section 1.9(a)(i).
''Stockholder Approval'' has the meaning set forth in Section 6.5(a).
''Stockholder Vote Option'' has the meaning set forth in Section 6.5(c)(II).
''Subsidiary'' when used with respect to any entity means any corporation or other
organization, whether incorporated or unincorporated, (i) of which such entity or
any other Subsidiary of such entity is a general partner (excluding partnerships,
the general partnership interests of which are held by such entity or any Subsidiary
of such entity do not have a majority of the voting interests in such partnership)
or (ii) at least a majority of the Securities or other interests of which having
by their terms ordinary voting power to elect a majority of the Board of Directors
or others performing similar functions with respect to such corporation or other
organization is directly or indirectly owned or controlled by such entity or by
any one or more of its Subsidiaries, or by such entity and one or more of its Subsidiaries.
''Superior Proposal'' has the meaning set forth in Section 6.5(e).
''Surviving Entity'' has the meaning set forth in Section 1.2.
''Surviving Entity Chairman'' has the meaning set forth in Section 1.7(a).
''Surviving Entity Plans'' has the meaning set forth in Section 6.6(a).
''Surviving Entity Vice Chairman'' has the meaning set forth in Section 1.7(a).
''Takeover Proposal'' has the meaning set forth in Section 6.5(e).
''Tax'' (and with the correlative meaning ''Taxes'') means (i) any U.S. federal,
state, local or foreign net income, franchise, gross income, sales, use, value added,
goods and services, ad valorem, turnover, real property, personal property, gross
receipts, net proceeds, license, capital stock, payroll, employment, unemployment,
disability, customs duties, unclaimed property, withholding, social security (or
similar), excise, severance, transfer, alternative or add-on minimum, stamp, estimated,
registration, fuel, occupation, premium, environmental, excess profits, windfall
profits taxes, or other tax of any kind and similar charges, fees, levies, imposts,
duties, tariffs, licenses or other assessments, together with any interest and any
penalties, additions to tax or additional amounts imposed by any Taxing Authority
or Governmental Entity, (ii) any liability for payment of amounts described in clause
(i) whether as a result of transferee liability, of being a member of an affiliated,
consolidated, combined or unitary group for any period, transferor liability, successor
liability or otherwise through operation of law, and (iii) any liability for the
payment of amounts described in clauses (i) or (ii) as a result of any tax sharing,
tax indemnity or tax allocation agreement or any other express or implied agreement
to indemnify any other person.
''Tax Return'' means any return, report, declaration, election, estimate, information
statement, claim for refund, or other document (including any related or supporting
information and any amendment to any of the foregoing) filed or required to be filed
with respect to Taxes.
''Taxing Authority'' means, with respect to any Tax, the Governmental Entity that
imposes such Tax, and the agency (if any) charged with the collection of such Tax
for such Governmental Entity.
''Termination Fee'' has the meaning set forth in Section 8.3(a).
''Third Party'' has the meaning set forth in Section 6.5(e).
''Trade Secrets'' has the meaning set forth in Section 3.18(k).
''Trademarks'' has the meaning set forth in Section 3.18(k).
''U.S.'' means the United States of America.
''Voting Trust'' means the Subsidiary Voting Trust Agreement, dated as of October
12, 2005, among CBOT Holdings, CBOT and Wilmington Trust Company, a Delaware banking
corporation, as trustee, as amended.
''WARN Act'' has the meaning set forth in Section 3.17(g).
Section 1.2 The Merger. Upon the terms and subject to the conditions set forth
in this Agreement, at the Effective Time, CBOT Holdings shall be merged with and
into CME Holdings and the separate corporate existence of CBOT Holdings shall thereupon
cease. CME Holdings shall be the surviving entity in the Merger (with respect to
all post-Closing periods, the ''Surviving Entity''). At the Effective Time, the effect
of the Merger shall be as provided in this Agreement, the Certificate of Merger
and the applicable provisions of the DGCL.
Section 1.3 Closing. The closing of the Merger (the ''Closing'') shall take place
at the offices of Skadden, Arps, Slate, Meagher & Flom LLP, 333 West Wacker Drive,
Chicago, Illinois, at 9:00 a.m., Chicago time, on the date when the Effective Time
is to occur (the ''Closing Date'').
Section 1.4 Effective Time. Subject to the provisions of this Agreement, on the
Closing Date, CME Holdings and CBOT Holdings shall file a certificate of merger
as contemplated by the DGCL (the ''Certificate of Merger'') with the Secretary of
State of the State of Delaware, in such form as required by, and executed in accordance
with, the DGCL. The Merger shall become effective at such time as the Certificate
of Merger is duly filed with such Secretary of State on the Closing Date, or at
such other time as CME Holdings and CBOT Holdings shall agree and specify in the
Certificate of Merger. Subject to the provisions of this Agreement, unless otherwise
mutually agreed upon by CME Holdings and CBOT Holdings, CME Holdings and CBOT Holdings
shall cause the Effective Time to occur on the fifth Business Day after all of the
conditions set forth in Article VII have been fulfilled or waived (other than those
conditions that by their nature are to be satisfied at the Closing, but subject
to the fulfillment or waiver of those conditions). As used herein, the ''Effective
Time'' shall mean the time at which the Merger shall become effective.
Section 1.5 Surviving Entity Constituent Documents.
(a) The certificate of incorporation of the Surviving Entity (the
''Certificate
of Incorporation'') shall be in the form attached hereto as Exhibit A (it being understood
that, in preparing the final version of such document, the Parties shall complete
the blanks represented by bracketed language in the manner contemplated by such
bracketed language and this Agreement), until thereafter changed or amended as provided
therein or by applicable Law.
(b) The by-laws of the Surviving Entity (the ''By-Laws'') shall be in the form
attached hereto as Exhibit B (it being understood that, in preparing the final version
of such document, the Parties shall complete the blanks represented by bracketed
language in the manner contemplated by such bracketed language and this Agreement),
until thereafter changed or amended as provided therein or by applicable Law.
Section 1.6 CBOT Constituent Documents.
(a) Concurrently with the Effective Time, the Amended and Restated Certificate
of Incorporation of CBOT shall be amended and restated in the form attached hereto
as Exhibit C (it being understood that, in preparing the final version of such document,
the Parties shall complete the blanks represented by bracketed language in the manner
contemplated by such bracketed language and this Agreement), until thereafter changed
or amended as provided therein or by applicable Law.
(b) Concurrently with the Effective Time, the Amended and Restated Bylaws of
CBOT shall be amended and restated in the form attached hereto as Exhibit D (it
being understood that, in preparing the final version of such document, the Parties
shall complete the blanks represented by bracketed language in the manner contemplated
by such bracketed language and this Agreement), until thereafter changed or amended
as provided therein or by applicable Law.
Section 1.7 Directors.
(a) At the Effective Time, as reflected in the Certificate of Incorporation and
By-Laws, the number of directors of the Surviving Entity shall be twenty-nine (29),
consisting of twenty (20) directors of CME Holdings as of immediately prior to the
Effective Time (the ''CME Holdings Directors'') and nine (9) directors of CBOT Holdings
as of immediately prior to the Effective Time (the ''CBOT Holdings Directors''). At
least ten (10) Business Days prior to the Effective Time, CBOT Holdings shall deliver
in writing to CME Holdings (the ''CBOT Holdings Director Notice'') the names of the
CBOT Holdings Directors (it being understood that one of the CBOT Holdings Directors
shall be the Chairman of the Board of Directors of CBOT Holdings immediately prior
to the Effective Time and at least two of the CBOT Holdings Directors shall be Non-Industry
Directors (as defined in the By-Laws)). The CBOT Holdings Director Notice shall
identify (i) which CBOT Holdings Directors shall be members of the Executive Committee
of the Board of Directors of the Surviving Entity in accordance with Section 1.7(b)
and (ii) which CBOT Holdings Directors shall be members of the Nominating Committee
of the Board of Directors of the Surviving Entity in accordance with Section 1.7(c).
The CBOT Holdings Directors shall be allocated among the different classes of directors
of the Surviving Entity as may be mutually agreed by CBOT Holdings and CME Holdings
so that (i) the classes of directors expiring at the next two annual meetings of the stockholders of the Surviving Entity after the
Effective Time have ten (10) directors and (ii) the other class of directors has
nine (9) directors. Immediately following the Effective Time, the Chairman of the
Board of Directors of CME Holdings immediately prior to the Effective Time shall
serve as the Chairman of the Board of Directors of the Surviving Entity (the ''Surviving
Entity Chairman'') and the Chairman of the Board of Directors of CBOT Holdings immediately
prior to the Effective Time shall serve as Vice Chairman of the Board of Directors
of the Surviving Entity (the ''Surviving Entity Vice Chairman''). Subject to Article
X of the By-Laws, each director shall hold office until his or her successor has
been duly elected or appointed and qualified or until his or her earlier death,
resignation or removal in accordance with the Certificate of Incorporation, the
By-Laws and applicable Law.
(b) At the Effective Time, as reflected in the By-Laws, the Executive Committee
of the Board of Directors of the Surviving Entity shall be comprised of eight (8)
directors, consisting of five (5) CME Holdings Directors and the three (3) CBOT
Holdings Directors identified in the CBOT Holdings Director Notice. Immediately
following the Effective Time, as reflected in the By-Laws, the Surviving Entity
Chairman shall serve as the Chairman of the Executive Committee and the Surviving
Entity Vice Chairman shall serve as the Vice Chairman of the Executive Committee.
(c) At the Effective Time, as reflected in the By-Laws, the Nominating Committee
of the Board of Directors of the Surviving Entity shall be comprised of six (6)
directors, consisting of four (4) CME Holdings Directors and the two (2) CBOT Holdings
Directors identified in the CBOT Holdings Director Notice.
Section 1.8 Officers. Subject to Section 1.7(a), the officers of CME Holdings
immediately prior to the Effective Time shall, from and after the Effective Time,
be the officers of the Surviving Entity until their successors have been duly elected
or appointed and qualified or until their earlier death, resignation or removal
in accordance with the Certificate of Incorporation and the By-Laws.
Section 1.9 Effect on Capital Stock.
(a) At the Effective Time, subject to the other provisions of Article I and Article
II, each share of CBOT Holdings Class A Common Stock issued and outstanding immediately
prior to the Effective Time (other than shares of CBOT Holdings Class A Common Stock
owned by CME Holdings or CBOT Holdings or any of their respective wholly-owned subsidiaries),
together with the CBOT Holdings Rights attached thereto or associated therewith,
shall, by virtue of this Agreement and without any action on the part of the holder
thereof, be converted into and shall thereafter represent the right to receive the
following consideration (collectively, the ''Merger Consideration''):
(i) Each share of CBOT Holdings Class A Common Stock with respect to which an
election to receive Stock Consideration is properly made and not revoked or lost
pursuant to Section 2.1 and each No Election Share shall be converted into the right
to receive .3006 shares (the ''Exchange Ratio'') of CME Holdings Class A Common Stock,
together with the CME Holdings Rights attached thereto or associated therewith and
subject to adjustment in accordance with Section 1.9(c) (the ''Stock Consideration'');
and
(ii) Each share of CBOT Holdings Class A Common Stock with respect to which an
election to receive cash has been properly made and not revoked or lost pursuant
to Section 2.1 (each, a ''Cash Share'') shall be converted (provided that the Available
Cash Amount equals or exceeds the Actual Cash Amount) into the right to receive
an amount in cash, without interest, equal to the product determined by multiplying
the Exchange Ratio by the Average CME Holdings Stock Price (the ''Per Share Cash
Consideration''); if, however, (A) the product of the number of Cash Shares and the
Per Share Cash Consideration (such product being the ''Actual Cash Amount'') exceeds
(B) $3.0 billion (the ''Available Cash Amount''), then each Cash Share shall be converted
into a right to receive (1) an amount of cash (without interest) equal to the product
of (p) the Per Share Cash Consideration and (q) a fraction, the numerator of which
shall be the Available Cash Amount and the denominator of which shall be the Actual
Cash Amount (such fraction being the ''Cash Fraction'') and (2) a number of shares
of CME Holdings Class A Common Stock equal to the product of (r) the Exchange Ratio
and (s) one (1) minus the Cash Fraction.
(b) From and after the Effective Time, all of the shares of CBOT Holdings Class
A Common Stock, and associated CBOT Holdings Rights, converted into the Merger Consideration
pursuant to this Article I shall no longer be outstanding and shall automatically
be cancelled and retired and shall cease to exist, and each holder of a certificate
(each a ''Certificate'') previously representing any such shares of CBOT Holdings
Class A Common Stock shall thereafter cease to have any rights with respect to such
securities, except the right to receive (i) the Merger Consideration and (ii) any
dividends and other distributions in accordance with Section 2.1(f).
(c) If at any time during the period between the date of this Agreement and the
Effective Time, any change in the outstanding shares of capital stock of CME Holdings
or CBOT Holdings shall occur by reason of any reclassification, recapitalization,
stock split or combination, exchange or readjustment of shares, or any stock dividend
thereon with a record date during such period, the Merger Consideration, the Exchange
Ratio, the Stock Consideration, the Per Share Cash Consideration, and any other
similarly dependent items, as the case may be, shall be appropriately adjusted to
provide the holders of shares of CBOT Holdings Class A Common Stock the same economic
effect as contemplated by this Agreement prior to such event.
(d) At the Effective Time, all shares of CBOT Holdings Class A Common Stock that
are owned by CME Holdings or CBOT Holdings or any of their respective wholly-owned
Subsidiaries (the ''Cancelled Shares'') shall be cancelled and retired and shall cease
to exist and no stock of CME Holdings, cash or other consideration shall be delivered
in exchange therefor.
(e) This Agreement is intended to meet the requirements of Treasury Regulation
section 1.368-1(e) (including Treasury Regulation section 1.368-l(e)(2)(iii)(B)(1)(ii))
and shall be interpreted in a manner consistent therewith, such that in no event
shall the value of CBOT Holdings Class A Common Stock (included for purposes of
''continuity of interest'' within the meaning of Treasury Regulation section 1.368-l(e))
exchanged for CME Holdings Class A Common Stock (based on the fair market value of CME Holdings Class A Common Stock
as of the last Business Day before the execution of this Agreement) constitute less
than 45% of the proprietary interests in CBOT Holdings.
Section 1.10 Election Procedures.
(a) An election form and other appropriate and customary transmittal materials
(which shall specify that delivery shall be effected, and risk of loss and title
to the Certificates theretofore representing shares of CBOT Holdings Class A Common
Stock shall pass, only upon proper delivery of such Election Form and Certificates
to the Exchange Agent) in such form as CBOT Holdings and CME Holdings shall reasonably
agree (the ''Election Form'') shall be mailed with the Joint Proxy Statement/Prospectus
(the date of such mailing being referred to as the ''Mailing Date'') to each holder
of record as of the record date for the CBOT Holdings Stockholders Meeting.
(b) Each Election Form shall permit the holder (or the beneficial owner through
appropriate and customary documentation and instructions) to specify (i) the number
of shares of such holders CBOT Holdings Class A Common Stock with respect to which
such holder elects to receive the Stock Consideration, (ii) the number of shares
of such holders CBOT Holdings Class A Common Stock with respect to which such holder
elects to receive the Per Share Cash Consideration or (iii) that such holder makes
no election with respect to such holders shares of CBOT Holdings Class A Common
Stock (''No Election Shares''). Any CBOT Holdings Class A Common Stock with respect
to which the Exchange Agent has not received an effective, properly completed Election
Form on or before 5:00 p.m., Chicago time, on the Election Date shall also be deemed
to be No Election Shares.
(c) CME Holdings shall make available one or more Election Forms as may reasonably
be requested from time to time by all Persons who become holders (or beneficial
owners) of CBOT Holdings Class A Common Stock between the record date for the CBOT
Holdings Stockholders Meeting and the close of business on the Business Day prior
to the Election Date, and CBOT Holdings shall provide to the Exchange Agent all
information reasonably necessary for it to perform as specified herein.
(d) Any record holders election shall have been properly made only if the Exchange
Agent shall have received at its designated office, by 5:00 p.m., New York City
time, on the date specified on the Election Form as agreed upon by the parties,
or if no such date is specified, on the later of (1) the date of the CBOT Holdings
Stockholders Meeting or (2) if the Effective Time is more than four Business Days
following the CBOT Holdings Stockholders Meeting, three Business Days preceding
the Effective Time (the ''Election Date''), an Election Form properly completed and
signed and accompanied by (i) Certificates representing the shares of CBOT Holdings
Common Stock to which such Election Form relates, duly endorsed in blank or otherwise
in form acceptable for transfer on the books of CBOT Holdings (or by an appropriate
guarantee of delivery of such Certificates as set forth in such Election Form from
a firm that is an ''eligible guarantor institution'' (as defined in Rule 17Ad-15 under
the Exchange Act); provided that such Certificates are in fact delivered to the
Exchange Agent by the time set forth in such guarantee of delivery) or (ii) in the
case of CBOT Holdings Book-Entry Shares, any additional documents required by the
procedures set forth in the Election Form. After an election is validly made with respect to any shares of CBOT Holdings Class A Common Stock, no further registration
of transfers of such shares shall be made on the stock transfer books of CBOT Holdings,
unless and until such election is properly revoked.
(e) CME Holdings and CBOT Holdings shall publicly announce the anticipated Election
Date at least five Business Days prior to the anticipated Effective Time. If the
Effective Time is delayed to a subsequent date, the Election Date shall be similarly
delayed to a subsequent date, and CME Holdings and CBOT Holdings shall promptly
announce any such delay and, when determined, the rescheduled Election Date.
(f) Any election may be revoked with respect to all or a portion of the shares
of CBOT Holdings Class A Common Stock subject thereto by the holder who submitted
the applicable Election Form by written notice received by the Exchange Agent prior
to 5:00 p.m., New York City time, on the Election Date. In the event an Election
Form is revoked prior to the Election Date, the shares of CBOT Holdings Class A
Common Stock represented by such Election Form shall become No Election Shares and
CME Holdings shall cause the Certificates representing such shares of CBOT Holdings
Class A Common Stock to be promptly returned without charge to the Person submitting
the Election Form upon written request to that effect from the holder who submitted
the Election Form, except to the extent (if any) a subsequent election is properly
made with respect to any or all of such shares of CBOT Holdings Class A Common Stock.
In addition, all elections shall automatically be revoked if this Agreement is terminated
in accordance with Article VIII.
Section 1.11 Treatment of CBOT Holdings Equity-Based Awards.
(a) Each option to purchase shares of CBOT Holdings Class A Common Stock (a
''CBOT
Holdings Stock Option'') granted under the 2005 Long-Term Equity Incentive Plan or
any other equity or equity-based compensation plan of CBOT Holdings (each, a ''CBOT
Holdings Stock Plan''), whether vested or unvested, that is outstanding and unexercised
immediately prior to the Effective Time shall cease, at the Effective Time, to represent
a right to acquire shares of CBOT Holdings Class A Common Stock and shall be converted
at the Effective Time, without any action on the part of any holder of any CBOT
Holdings Stock Option, into an option to purchase a share of CME Holdings Class
A Common Stock (a ''CME Holdings Stock Option''), together with the CME Holdings Rights
attached thereto or associated therewith, on the same terms and conditions as were
applicable under such CBOT Holdings Stock Option (but taking into account any changes
thereto, including any acceleration or vesting thereof, provided for in the relevant
CBOT Holdings Stock Plan, or in the related award document (including any employment
agreement and the retention policy set forth in Section 5.1(h) of the CBOT Holdings
Disclosure Letter) by reason of the transactions contemplated hereby). The number
of shares of CME Holdings Class A Common Stock subject to each such CBOT Holdings
Stock Option shall be equal to the number of shares of CBOT Holdings Class A Common
Stock subject to each such CBOT Holdings Stock Option multiplied by the Exchange
Ratio, rounded down to the nearest whole share of CME Holdings Class A Common Stock,
and such CME Holdings Stock Option shall have an exercise price per share (rounded
up to the nearest cent) equal to the per share exercise price specified in such
CBOT Holdings Stock Option divided by the Exchange Ratio; provided that, in the
case of any CBOT Holdings Stock Option to which Section 421 of the Code applies
as of the Effective Time (after taking into account the effect of any accelerated
vesting thereof, if applicable) by reason of its qualification under Section 422 or Section 423 of the Code,
the exercise price, the number of shares of CME Holdings Class A Common Stock subject
to such option and the terms and conditions of exercise of such option shall be
determined in a manner consistent with the requirements of Section 424(a) of the
Code; provided, further, that, in the case of any CBOT Holdings Stock Option to
which Section 409A of the Code applies as of the Effective Time, the exercise price,
the number of shares of CME Holdings Class A Common Stock subject to such option
and the terms and conditions of exercise of such option shall be determined in a
manner consistent with the requirements of Section 409A of the Code.
(b) At the Effective Time, each Equity Right consisting of, based on or relating
to shares of CBOT Holdings Class A Common Stock granted under a CBOT Holdings Stock
Plan, other than CBOT Holdings Stock Options (each, a ''CBOT Holdings Stock-Based
Award''), whether contingent or accrued, which is outstanding immediately prior to
the Effective Time shall cease, at the Effective Time, to represent an Equity Right
with respect to shares of CBOT Holdings Class A Common Stock and shall be converted
without any action on the part of any holder of an Equity Right, at the Effective
Time, into an Equity Right consisting of, based on or relating to shares of CME
Holdings Class A Common Stock granted under a CME Holdings Stock Plan, other than
CME Holdings Stock Options (each, a ''CME Holdings Stock-Based Award''), on the same
terms and conditions as were applicable under the CBOT Holdings Stock-Based Awards
(but taking into account any changes thereto, including any acceleration or vesting
thereof, provided for in the relevant CBOT Holdings Stock Plan or in the related
award document (including any employment agreement and the retention policy set
forth in Section 5.1(h) of the CBOT Holdings Disclosure Letter) by reason of the
transactions contemplated hereby). The number of shares of CME Holdings Class A
Common Stock subject to each such CME Holdings Stock-Based Award shall be equal
to the number of shares of CBOT Holdings Class A Common Stock subject to the CBOT
Holdings Stock-Based Award multiplied by the Exchange Ratio, rounded down to the
nearest whole share of CME Holdings Class A Common Stock and, if applicable, such
CME Holdings Stock-Based Award shall have an exercise price per share (rounded up
to the nearest cent) equal to the per share exercise price specified in the CBOT
Holdings Stock-Based Award divided by the Exchange Ratio. Any dividend equivalents
credited to the account of each holder of a CBOT Holdings Stock-Based Award as of
the Effective Time shall remain credited to such holders account immediately following
the Effective Time, subject to adjustment in accordance with the foregoing.
(c) As soon as practicable after the Effective Time, CME Holdings shall deliver
to the holders of CBOT Holdings Stock Options and CBOT Holdings Stock-Based Awards
any required notices setting forth such holders rights pursuant to the relevant
CBOT Holdings Stock Plans and award documents and stating that such CBOT Holdings
Stock Options and CBOT Holdings Stock-Based Awards have been assumed by CME Holdings
and shall continue in effect on the same terms and conditions (subject to the adjustments
required by this Section 1.11 after giving effect to the Merger and the terms of
the relevant CBOT Holdings Stock Plans).
(d) Following the Effective Time, CME Holdings may maintain the CBOT Holdings
Stock Plans for purposes of granting future awards in accordance with NYSE and Nasdaq
rules. If any CBOT Holdings Stock Plans are so maintained, the provisions of such
CBOT Holdings Stock Plans, including the respective terms of such plans, shall not
be changed by the Surviving Entity, except that (i) all Equity Rights issued by
CME Holdings pursuant to the CBOT Holdings Stock Plans following the Effective Time shall be Equity Rights in respect
of CME Holdings Class A Common Stock, (ii) all references to CBOT Holdings (other
than any references relating to a ''change in control'' of CBOT Holdings) in each
CBOT Holdings Stock Plan and in each agreement evidencing any award thereunder shall
be deemed to refer to CME Holdings, unless CME Holdings determines otherwise and
(iii) the number of shares of CME Holdings Class A Common Stock available for future
issuance pursuant to each CBOT Holdings Stock Plan following the Effective Time
(the ''Available CBOT Holdings Stock Plan Shares'') shall be equal to the number of
shares of CBOT Holdings Class A Common Stock so available immediately prior to the
Effective Time multiplied by the Exchange Ratio, rounded down to the nearest whole
share of CME Holdings Class A Common Stock.
(e) Prior to the Effective Time, CBOT Holdings shall take all necessary action
for the adjustment of CBOT Holdings Stock Options and CBOT Holdings Stock-Based
Awards under this Section 1.11. CME Holdings shall reserve for future issuance a
number of shares of CME Holdings Class A Common Stock at least equal to the number
of shares of CME Holdings Class A Common Stock that will be subject to CME Holdings
Stock Options and CME Holdings Stock-Based Awards as a result of the actions contemplated
by this Section 1.11, plus the number of Available CBOT Holdings Stock Plan Shares
in the event that CME Holdings maintains the CBOT Holdings Stock Plans as contemplated
by this Section 1.11. As soon as practicable following the Effective Time, CME Holdings
shall file a registration statement on Form S-8 or S-3, as the case dictates (or
any successor form, or if Form S-8 or S-3 is not available, other appropriate forms),
with respect to the shares of CME Holdings Class A Common Stock subject to such
CME Holdings Stock Options and CME Holdings Stock-Based Awards (and the Available
CBOT Holdings Stock Plan Shares, as the case dictates) and shall maintain the effectiveness
of such registration statement or registration statements (and maintain the current
status of the prospectus or prospectuses contained therein) for so long as such
CME Holdings Stock Options and CME Holdings Stock-Based Awards remain outstanding.
Section 1.12 Appraisal Rights. The parties hereto agree that, in accordance with
Section 262 of the DGCL, no appraisal rights will be available to holders of shares
of CBOT Holdings Class A Common Stock in connection with the Merger.
Section 1.13 Associated Rights. References in Article I and Article II of this
Agreement to CBOT Holdings Class A Common Stock shall include, unless the context
requires otherwise, the associated CBOT Holdings Rights.
ARTICLE II
EXCHANGE OF CERTIFICATES
Section 2.1 Surrender and Payment.
(a) Prior to the Mailing Date, CME Holdings shall appoint an exchange agent reasonably
acceptable to CBOT Holdings (the ''Exchange Agent'') for the purpose of exchanging
Certificates representing shares of CBOT Holdings Class A Common Stock and non-certificated
shares represented by book entry (''Book-Entry Shares'') for the Merger Consideration.
Promptly after the Effective Time, but in no event more than three (3) Business
Days thereafter, the Surviving Entity will send, or will cause the Exchange Agent to send, to each
holder of record of shares of CBOT Holdings Class A Common Stock as of the Effective
Time (other than any holder which has previously and properly surrendered all of
its Certificate(s) to the Exchange Agent in accordance with Section 1.10 ), a letter
of transmittal for use in such exchange (which shall specify that the delivery shall
be effected, and risk of loss and title shall pass, only upon proper delivery of
the Certificates to the Exchange Agent) in such form as CBOT Holdings and CME Holdings
may reasonably agree, for use in effecting delivery of shares of CBOT Holdings Class
A Common Stock to the Exchange Agent. As promptly as practicable after the Election
Date (and in no event later than three (3) Business Days after the Election Date),
the Exchange Agent shall determine the Actual Cash Amount and the allocation of
Merger Consideration and shall notify CME Holdings of such determination (the date
of such determination, the ''Determination Date''). At the Effective Time, CME Holdings
shall deposit with the Exchange Agent (i) the number of shares of CME Holdings Class
A Common Stock (including fractional shares) to be delivered as Stock Consideration
in respect of the No Election Shares and the shares of CBOT Holdings Class A Common
Stock for which an election to receive stock consideration is properly made and
not revoked or lost pursuant to this Section 2.1, (ii) the number of shares of CME
Holdings Class A Common Stock (including fractional shares) as shall be necessary
to deliver the Stock Consideration in respect of the shares of CBOT Holdings Class
A Common Stock for which an election to receive the Stock Consideration is properly
made and not revoked or lost pursuant to this Section 2.1, and (iii) the Available
Cash Amount. CME Holdings shall also make sufficient funds available to the Exchange
Agent from time to time as needed to pay cash in respect of dividends or other distributions
contemplated by Section 2.1(f). Exchange of any Book-Entry Shares shall be effected
in accordance with CME Holdings customary procedures with respect to securities
represented by book entry.
(b) Each holder of shares of CBOT Holdings Class A Common Stock that have been
converted into a right to receive the Merger Consideration, upon surrender to the
Exchange Agent of a Certificate, together with a properly completed letter of transmittal,
will be entitled to receive (A) one or more certificates of CME Holdings Class A
Common Stock (which shall be in non-certificated book-entry form unless a physical
certificate is requested) representing, in the aggregate, the number of shares of
CME Holdings Class A Common Stock, if any, that such holder has the right to receive
pursuant to Section 1.9 and (B) a check in the amount equal to the cash portion
of the Merger Consideration, if any, that such holder has the right to receive pursuant
to Section 1.9 and this Article II, including dividends and other distributions
payable pursuant to Section 2.1(f). The Merger Consideration shall be paid as promptly
as practicable after receipt by the Exchange Agent of the Certificate and letter
of transmittal in accordance with the foregoing. No interest shall be paid or accrued
on any Merger Consideration or on any unpaid dividends and distributions payable
to holders of Certificates. Until so surrendered, each such Certificate shall, after
the Effective Time, represent for all purposes only the right to receive such Merger
Consideration.
(c) If any portion of the Merger Consideration is to be registered in the name
of a Person other than the Person in whose name the applicable surrendered Certificate
is registered, it shall be a condition to the registration thereof that the surrendered
Certificate shall be properly endorsed or otherwise be in proper form for transfer
and that the Person requesting such delivery of the Merger Consideration shall pay
to the Exchange Agent any transfer or other similar Taxes required as a result of
such registration in the name of a Person other than the registered holder of such
Certificate or establish to the satisfaction of the Exchange Agent that such Tax
has been paid or is not payable.
(d) After the Effective Time, there shall be no further registration of transfers
of shares of CBOT Holdings Class A Common Stock. If, after the Effective Time, Certificates
are presented to the Exchange Agent or the Surviving Entity, they shall be canceled
and exchanged for the consideration provided for, and in accordance with the procedures
set forth in this Article II.
(e) Any portion of the Merger Consideration made available to the Exchange Agent
pursuant to Section 2.1(a) that remains unclaimed by the holders of shares of CBOT
Holdings Class A Common Stock one year after the Effective Time shall be returned
to the Surviving Entity, upon demand, and any such holder who has not exchanged
his or her shares of CBOT Holdings Class A Common Stock for the Merger Consideration
in accordance with this Section 2.1 prior to that time shall thereafter look only
to the Surviving Entity for delivery of the Merger Consideration in respect of such
holders shares. Notwithstanding the foregoing, the Surviving Entity shall not be
liable to any holder of shares for any Merger Consideration properly delivered to
a public official pursuant to applicable abandoned property laws. Any Merger Consideration
remaining unclaimed by holders of shares of CBOT Holdings Class A Common Stock immediately
prior to such time as such amounts would otherwise escheat to or become property
of any Governmental Entity shall, to the extent permitted by applicable Law, become
the property of the Surviving Entity free and clear of any claims or interest of
any Person previously entitled thereto.
(f) No dividends or other distributions with respect to shares of CME Holdings
Class A Common Stock issued in the Merger shall be paid to the holder of any unsurrendered
Certificates or Book-Entry Shares until such Certificates or Book-Entry Shares are
surrendered as provided in this Section 2.1. Following such surrender, there shall
be paid, without interest, to the record holder of the shares of CME Holdings Class
A Common Stock issued in exchange therefor (i) at the time of such surrender, all
dividends and other distributions payable in respect of such shares of CME Holdings
Class A Common Stock with a record date after the Effective Time and a payment date
on or prior to the date of such surrender and not previously paid and (ii) at the
appropriate payment date, the dividends or other distributions payable with respect
to such shares of CME Holdings Class A Common Stock with a record date after the
Effective Time but with a payment date subsequent to such surrender. For purposes
of dividends or other distributions in respect of shares of CME Holdings Class A
Common Stock, all shares of CME Holdings Class A Common Stock to be issued pursuant
to the Merger shall be entitled to dividends pursuant to the immediately preceding
sentence as if issued and outstanding as of the Effective Time.
Section 2.2 [Reserved.]
Section 2.3 Lost Certificates. If any Certificate shall have been lost, stolen
or destroyed, upon the making of an affidavit of that fact by the Person claiming
such Certificate to be lost, stolen or destroyed and, if required by the Surviving
Entity, the posting by such Person of a bond, in such reasonable amount as the Surviving
Entity may direct, as indemnity against any claim that may be made against it with
respect to such Certificate, the Exchange Agent will issue in exchange for such lost, stolen or destroyed Certificate the Merger Consideration
to be paid in respect of the shares of CBOT Holdings Class A Common Stock represented
by such Certificate as contemplated by this Article II.
Section 2.4 Withholding Rights. Each of the Exchange Agent and the Surviving
Entity shall be entitled to deduct and withhold from the consideration otherwise
payable to any Person pursuant to Article I and Article II such amounts as it is
required to deduct and withhold with respect to the making of such payment under
the Code and the rules and regulations promulgated thereunder, or any provision
of state, local or foreign Tax Law. To the extent that amounts are so deducted or
withheld and paid over to the applicable Governmental Entity or Taxing Authority,
such deducted or withheld amounts shall be treated for all purposes of this Agreement
as having been paid to the holder of the shares of CBOT Holdings Class A Common
Stock in respect of which such deduction and withholding was made.
Section 2.5 Further Assurances. After the Effective Time, the officers and directors
of the Surviving Entity will be authorized to execute and deliver, in the name and
on behalf of CBOT Holdings, any deeds, bills of sale, assignments or assurances
and to take and do, in the name and on behalf of CBOT Holdings, any other actions
and things to vest, perfect or confirm of record or otherwise in the Surviving Entity
any and all right, title and interest in, to and under any of the rights, properties
or assets acquired or to be acquired by the Surviving Entity as a result of, or
in connection with, the Merger.
Section 2.6 Affiliates. Notwithstanding anything to the contrary herein, to the
fullest extent permitted by Law, no certificates representing shares of CME Holdings
Class A Common Stock or cash shall be delivered to a Person who may be deemed an
''affiliate'' of CBOT Holdings in accordance with Section 6.12 hereof for purposes
of Rule 145 under the Securities Act, until such Person has executed and delivered
an Affiliate Agreement to CME Holdings.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF CBOT HOLDINGS AND CBOT
Except as otherwise disclosed or identified in the CBOT Holdings SEC Documents
filed prior to the date hereof (excluding any disclosures included in such CBOT
Holdings SEC Documents that are predictive or forward-looking in nature) or in a
letter (the ''CBOT Holdings Disclosure Letter'') delivered to CME Holdings by CBOT
Holdings prior to the execution of this Agreement (with specific reference to the
representations and warranties in this Article III to which the information in such
letter relates; provided, that, disclosure in the CBOT Holdings Disclosure Letter
as to a specific representation or warranty shall qualify any other sections of
this Agreement to the extent (notwithstanding the absence of a specific cross reference)
it is reasonably apparent that such disclosure relates to such other sections),
CBOT Holdings and CBOT jointly and severally represent and warrant to CME Holdings
as follows:
Section 3.01 Organization. CBOT Holdings is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware and has all
requisite corporate power and authority to own, lease and operate its properties
and assets and to carry on its business as now being conducted. CBOT Holdings has
made available to CME Holdings true, correct and complete copies of its Constituent
Documents, as amended and in effect on the date of this Agreement.
Section 3.02 Subsidiaries.
(a) Section 3.2(a) of the CBOT Holdings Disclosure Letter sets forth (i) each
Subsidiary of CBOT Holdings (individually, a ''CBOT Holdings Subsidiary'' and collectively,
the ''CBOT Holdings Subsidiaries''), (ii) each CBOT Holdings Subsidiarys jurisdiction
of incorporation or organization and (iii) the location of each CBOT Holdings Subsidiarys
principal executive offices. Each CBOT Holdings Subsidiary is a corporation duly
incorporated or a limited liability company, partnership or other entity duly organized
and is validly existing and in good standing under the laws of the jurisdiction
of its incorporation or organization, as the case may be, and has all requisite
corporate or other power and authority, as the case may be, to own, lease and operate
its properties and assets and to carry on its business as now being conducted. CBOT
Holdings has made available to CME Holdings true, correct and complete copies of
the Constituent Documents of each CBOT Holdings Subsidiary, as amended and in effect
on the date of this Agreement.
(b) Except for the Class B Memberships in CBOT, CBOT Holdings is, directly or
indirectly, the record and beneficial owner of all of the outstanding Securities
of each CBOT Holdings Subsidiary, free and clear of any Liens and free of any other
limitation or restriction (including any limitation or restriction on the right
to vote, sell, transfer or otherwise dispose of the Securities). All of such Securities
so owned by CBOT Holdings have been duly authorized, validly issued, fully paid
and nonassessable (and no such shares have been issued in violation of any preemptive
or similar rights). Except for the Securities of the CBOT Holdings Subsidiaries,
CBOT Holdings does not own, directly or indirectly, any capital stock or other ownership
interest in any entity.
Section 3.3 Capitalization; Membership Interests.
(a) As of the date of this Agreement, the authorized capital stock of CBOT Holdings
consists of (i) 200,000,000 shares of Class A Common Stock, par value $0.001 per
share (the ''CBOT Holdings Class A Common Stock''), of which 16,457,138 shares have
been designated as Series A-1 Class A Common Stock, 16,451,412 shares have been
designated as Series A-2 Class A Common Stock and 16,451,412 shares have been designated
as Series A-3 Class A Common Stock, (ii) one (1) share of Class B Common Stock,
par value $0.001 per share (the ''CBOT Holdings Class B Common Stock'' and, together
with the CBOT Holdings Class A Common Stock, the ''CBOT Holdings Common Stock'') and
(iii) 20,000,000 shares of Preferred Stock, par value $0.001 per share (the ''CBOT
Holdings Preferred Stock''), of which 2,000,000 shares have been designated as Series
A Junior Participating Preferred Stock.
(b) At the close of business on October 13, 2006: (i) 52,839,473 shares of CBOT
Holdings Class A Common Stock were issued and outstanding as follows: (1) no shares
of Series A-1 Class A Common Stock were issued and outstanding, (2) 16,353,172 shares
of Series A-2 Class A Common Stock were issued and outstanding and (3) 16,579,159
shares of Series A-3 Class A Common Stock were issued and outstanding; (ii) one
(1) share of CBOT Holdings Class B Common Stock was issued and outstanding; (iii)
no shares of CBOT Holdings Preferred Stock were issued and outstanding; and (iv) 1,200,000 shares of CBOT Holdings Class
A Common Stock were reserved for issuance pursuant to the CBOT Holdings Stock Plans.
Except as set forth above, as of October 13, 2006, no shares of capital stock of
CBOT Holdings were issued, reserved for issuance or outstanding. All issued and
outstanding shares of CBOT Holdings Common Stock and CBOT Holdings Preferred Stock
have been, and all shares of CBOT Holdings Class A Common Stock that may be issued
pursuant to the exercise of outstanding options will be, when issued in accordance
with the terms thereof, duly authorized, validly issued, fully paid and nonassessable
and are subject to no preemptive or similar rights.
(c) As of the date of this Agreement, the authorized membership in CBOT consists
of (i) one (1) Class A Membership and (ii) 3,681 Class B Memberships (together with
the Class A Membership, the ''Membership Interests''), which have been divided into
five series as follows: (1) 1,402 Series B-1 Memberships, (2) 867 Series B-2 Memberships,
(3) 128 Series B-3 Memberships, (4) 641 Series B-4 Memberships and (5) 643 Series
B-5 Memberships.
(d) At the close of business on October 13, 2006: (i) one (1) Class A Membership
was issued and outstanding; and (ii) 3,601 Class B Memberships were issued and outstanding
as follows: (1) 1,402 Series B-1 Memberships were issued and outstanding, (2) 811
Series B-2 Memberships were issued and outstanding, (3) 104 Series B-3 Memberships
were issued and outstanding, (4) 641 Series B-4 Memberships were issued and outstanding
and (5) 643 Series B-5 Memberships were issued and outstanding. Except as set forth
above, as of October 13, 2006, no Membership Interests were issued or outstanding.
As of October 13, 2006, the sole Class A Membership was held by CBOT Holdings. All
issued and outstanding Membership Interests in CBOT have been duly authorized, validly
issued, fully paid and nonassessable and are subject to no preemptive or similar
rights. Except as set forth in the Constituent Documents of CBOT Holdings and CBOT,
neither CBOT Holdings nor any CBOT Holdings Subsidiary is a party to any agreements
with, or have granted any rights for the benefit of or taken any similar action
with respect to, any Members. The only corporate governance rights or entitlements
of any Members with respect to CBOT Holdings or the CBOT Holdings Subsidiaries are
those corporate governance rights and entitlements provided for in the Constituent
Documents of CBOT Holdings and CBOT.
(e) CBOT Holdings has made available to CME Holdings a complete and correct copy
of the CBOT Holdings Rights Agreement as in effect on the date hereof.
(f) Section 3.3(f) of the CBOT Holdings Disclosure Letter sets forth each CBOT
Holdings Stock Plan and, as of October 13, 2006, the aggregate number of shares
of CBOT Holdings Class A Common Stock relating to outstanding and available awards
under each CBOT Holdings Stock Plan. CBOT Holdings has made available to CME Holdings
the form of agreement related to each such award. No material changes have been
made to such form in connection with any award.
(g) There are no preemptive or similar rights on the part of any holder of any
class of Securities of CBOT Holdings or any CBOT Holdings Subsidiary. Neither CBOT
Holdings nor any CBOT Holdings Subsidiary has outstanding any bonds, debentures,
notes or other obligations the holders of which have the right to vote (or which
are convertible into or exercisable for securities having the right to vote) with
the holders of any class of Securities of CBOT Holdings or any CBOT Holdings Subsidiary
on any matter submitted to such holders of Securities. As of the date of this Agreement, there are no options, warrants, calls, rights, convertible
or exchangeable securities, ''phantom'' stock rights, stock appreciation rights, stock-based
performance units, commitments, contracts, arrangements or undertakings of any kind
to which CBOT Holdings or any CBOT Holdings Subsidiary is a party or by which any
of them is bound (i) obligating CBOT Holdings or any CBOT Holdings Subsidiary to
issue, deliver, sell or transfer or repurchase, redeem or otherwise acquire, or
cause to be issued, delivered, sold or transferred or repurchased, redeemed or otherwise
acquired, any Securities of CBOT Holdings or any CBOT Holdings Subsidiary, or any
security convertible or exercisable for or exchangeable into any Securities of CBOT
Holdings or any CBOT Holdings Subsidiary, (ii) obligating CBOT Holdings or any CBOT
Holdings Subsidiary to issue, grant, extend or enter into any such option, warrant,
call, right, security, commitment, contract, arrangement or undertaking or (iii)
that give any Person the right to receive any economic benefit or right similar
to or derived from the economic benefits and rights accruing to holders of Securities
of CBOT Holdings or any CBOT Holdings Subsidiary. As of the date of this Agreement,
there are no outstanding contractual obligations of CBOT Holdings or any CBOT Holdings
Subsidiary to repurchase, redeem or otherwise acquire any Securities of CBOT Holdings
or any CBOT Holdings Subsidiary. Except for the Voting Trust, there are no proxies,
voting trusts or other agreements or understandings to which CBOT Holdings or any
CBOT Holdings Subsidiary is a party or is bound with respect to the voting of the
Securities of CBOT Holdings or CBOT.
Section 3.4 Authorization; Board Approval; Voting Requirements.
(a) Each of CBOT Holdings and CBOT has all requisite corporate power and authority
to execute and deliver this Agreement, to perform its obligations hereunder and,
subject to (i) with respect to CBOT Holdings, receipt of approval by the holders
of a majority of the outstanding shares of CBOT Holdings Class A Common Stock entitled
to vote in accordance with the DGCL and (ii) with respect to CBOT, receipt of the
CBOT Membership Approval (collectively, the ''CBOT Holdings Stockholder Approval''),
to consummate the Merger and the other transactions contemplated hereby. The execution,
delivery and performance of this Agreement and the consummation of the Merger and
the other transactions contemplated hereby have been duly and validly authorized
by all necessary corporate actions, and no other corporate proceedings on the part
of either CBOT Holdings or CBOT are necessary for it to authorize this Agreement
or to consummate the transactions contemplated hereby, except for the adoption of
this Agreement and the transactions contemplated hereby by the CBOT Holdings Stockholder
Approval. This Agreement has been duly and validly executed and delivered by each
of CBOT Holdings and CBOT and, assuming due authorization, execution and delivery
by CME Holdings, is a legal, valid and binding obligation of each of CBOT Holdings
and CBOT, enforceable against each of CBOT Holdings and CBOT in accordance with
its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting creditors
rights and to general equity principles.
(b) The Board of Directors of CBOT Holdings, at a meeting duly called and held,
duly and unanimously adopted resolutions (i) determining that the terms of the Merger
and the other transactions contemplated by this Agreement are advisable, fair to
and in the best interests of CBOT Holdings and its stockholders, (ii) approving
this Agreement, the Merger and the other transactions contemplated by this Agreement,
(iii) recommending that CBOT Holdings stockholders adopt this Agreement and approve
the transactions contemplated hereby and (iv) eliminating any transfer restrictions on all Series A-2 and Series A-3 shares
of CBOT Holdings Class A Common Stock pursuant to the terms of the certificate of
incorporation of CBOT Holdings in order to permit the holders of such shares to
exchange such shares in the Merger.
(c) The Board of Directors of CBOT, at a meeting duly called and held, duly and
unanimously adopted resolutions (i) approving this Agreement and the transactions
contemplated by this Agreement, (ii) determining that the amendments to the certificate
of incorporation of CBOT set forth in the Amended and Restated Certificate of Incorporation
of CBOT in the form attached hereto as Exhibit C are advisable and (iii) recommending
that the holders of the Series B-1 and Series B-2 Membership Interests vote to (1)
approve the Repurchase, (2) adopt the Amended and Restated Certificate of Incorporation
of CBOT in the form attached hereto as Exhibit C and (3) adopt the Amended and Restated
By-Laws of CBOT in the form attached hereto as Exhibit D.
(d) Assuming the accuracy of the representations and warranties of CME Holdings
set forth in Section 4.23, the affirmative vote of holders of a majority of the
outstanding CBOT Holdings Class A Common Stock at the CBOT Holdings Stockholders
Meeting or any adjournment or postponement thereof to adopt this Agreement is the
only vote of the holders of any class or series of Securities of CBOT Holdings necessary
to adopt this Agreement and approve the transactions contemplated hereby.
(e) The receipt of the CBOT Membership Approval at the CBOT Membership Meeting
or any adjournment or postponement thereof is the only vote of the holders of any
class or series of Securities of CBOT necessary to consummate the transactions contemplated
hereby.
Section 3.5 Takeover Statute; No Restrictions on the Merger.
(a) No state ''fair price,'' ''moratorium,'' ''control share acquisition'' or similar
anti-takeover statute is applicable to the Merger or the other transactions contemplated
by this Agreement.
(b) Assuming the accuracy of the representations and warranties of CME Holdings
set forth in Section 4.23, CBOT Holdings has taken all necessary action to render
the restrictions on business combinations contained in Section 203 of the DGCL hereby
inapplicable to this Agreement and the transactions contemplated hereby.
(c) CBOT Holdings has or caused to be taken all necessary action in order to
make this Agreement and the transactions contemplated hereby comply with, and this
Agreement and the transactions contemplated hereby do comply with, the requirements
in the Constituent Documents of CBOT Holdings and the CBOT Holdings Subsidiaries
concerning ''business combination,'' ''fair price,'' ''voting requirement'' or other related
provisions.
Section 3.6 Rights Agreement. CBOT Holdings has taken all necessary action so
that the execution of this Agreement and the consummation of the transactions contemplated
hereby do not and will not result in the ability of any Person to exercise any rights
under the CBOT Holdings Rights Agreement or enable or require the CBOT Holdings
Rights to separate from the shares of CBOT Holdings Class A Common Stock to which
they are attached or to be triggered or become exercisable or unredeemable. No Distribution
Date, as defined in the CBOT Holdings Rights Agreement, has occurred or will occur
as a result of the transactions contemplated hereby.
Section 3.7 Consents and Approvals; No Violations.
(a) The execution and delivery of this Agreement by each of CBOT Holdings and
CBOT do not and the consummation by each of CBOT Holdings and CBOT of the transactions
contemplated hereby will not: (i) conflict with any provisions of the Constituent
Documents of CBOT Holdings or any CBOT Holdings Subsidiary, or conflict with any
provisions of the Voting Trust; (ii) violate any Law or Order (assuming compliance
with the matters set forth in Section 3.7(b)); (iii) result in any violation of
or default or loss of a benefit under, or permit the acceleration or termination
of any obligation under or require any consent under, any mortgage, indenture, lease,
agreement or other instrument, permit, concession, grant, franchise or license;
(iv) result in the creation or imposition of any Lien upon any properties or assets
of CBOT Holdings or any CBOT Holdings Subsidiary; or (v) cause the suspension or
revocation of any permit, license, governmental authorization, consent or approval
necessary for CBOT Holdings or any CBOT Holdings Subsidiary to conduct its business
as currently conducted, except, in the case of clauses (ii), (iii), (iv) and (v),
as would not, individually or in the aggregate, reasonably be expected to result
in a Material Adverse Effect on CBOT Holdings and as would not reasonably be expected
to materially delay or impair the consummation of the Merger.
(b) No consent, approval, order or authorization of, or declaration, registration
or filing with, or notice to any Governmental Entity or Self-Regulatory Organization
is required to be made or obtained by CBOT Holdings or any CBOT Holdings Subsidiary
in connection with the execution or delivery of this Agreement by CBOT Holdings
and CBOT or the consummation by CBOT Holdings and CBOT of the transactions contemplated
hereby, except for: (i) compliance by CBOT Holdings with the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the ''HSR Act''), any required filings or notifications
under any foreign antitrust merger control laws (the ''Foreign Competition Laws'');
(ii) the filing of the Certificate of Merger with the Secretary of State of the
State of Delaware in accordance with the DGCL; (iii) the filings with the Securities
and Exchange Commission (the ''SEC'') of (A) the Joint Proxy Statement/Prospectus
in accordance with Regulation 14A promulgated under the Exchange Act, (B) the registration
statement on Form S-4 promulgated under the Securities Act and (C) such reports
under and such other compliance with the Exchange Act and the Securities Act as
may be required in connection with this Agreement and the transactions contemplated
hereby; (iv) such clearances, consents, approvals, orders, licenses, authorizations,
registrations, declarations, permits, filings and notifications as may be required
under applicable U.S. federal and state securities Laws; (v) the filings, notices,
approvals and/or consents to be obtained from the CFTC and under the Commodity Exchange
Act; and (vi) any consent, approval, order or authorization of, or declaration,
registration or filing with, or notice to any Governmental Entity or Self-Regulatory
Organization (other than any of the foregoing addressed in clauses (i) through (v)
above), the failure to make or obtain would not, individually or in the aggregate,
reasonably be expected to result in a Material Adverse Effect on CBOT Holdings.
Section 3.8 SEC Reports; CBOT Holdings Financial Statements.
(a) CBOT Holdings and each CBOT Holdings Subsidiary has filed or furnished all
reports, schedules, forms, statements and other documents required to be filed or
furnished by it with or to the SEC since February 14, 2005 (together with all exhibits,
financial statements and schedules thereto and all information incorporated therein
by reference, the ''CBOT Holdings SEC Documents''). As of its respective date, or,
if amended, as of the date of the last such amendment, each of the CBOT Holdings
SEC Documents complied when filed or furnished (or, if applicable, when amended)
in all material respects with the requirements of the Exchange Act, the Securities
Act and the Sarbanes-Oxley Act of 2002 and the related rules and regulations promulgated
under such Act (the ''Sarbanes-Oxley Act'') applicable to such CBOT Holdings SEC Documents,
and did not, and any CBOT Holdings SEC Documents filed with the SEC subsequent to
the date hereof will not, contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or incorporated by reference
therein or necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. None of the CBOT Holdings Subsidiaries
is required to make any filings with the SEC pursuant to Section 13 or 15(d) of
the Exchange Act.
(b) The CBOT Holdings Financial Statements have been derived from the accounting
books and records of CBOT Holdings and the CBOT Holdings Subsidiaries and have been
prepared in accordance with U.S. generally accepted accounting principles (''GAAP'')
applied on a consistent basis throughout the periods presented, except as otherwise
noted therein. The consolidated balance sheets (including the related notes) included
in the CBOT Holdings Financial Statements present fairly in all material respects
the financial position of CBOT Holdings and the CBOT Holdings Subsidiaries as at
the respective dates thereof, and the consolidated statements of income, consolidated
statements of stockholders equity and consolidated statements of cash flows (in
each case including the related notes) included in such CBOT Holdings Financial
Statements present fairly in all material respects the results of operations, stockholders
equity and cash flows of CBOT Holdings and the CBOT Holdings Subsidiaries for the
respective periods indicated.
(c) There are no amendments or modifications, which are or, to the knowledge
of CBOT Holdings, will be required to be filed with the SEC, but have not yet been
filed with the SEC, to (i) agreements, documents or other instruments which previously
have been filed by CBOT Holdings with the SEC pursuant to the Exchange Act or (ii)
the CBOT Holdings SEC Documents. CBOT Holdings has timely responded to all comment
letters of the staff of the SEC relating to the CBOT Holdings SEC Documents, and
the SEC has not asserted that any of such responses are inadequate, insufficient
or otherwise non-responsive. CBOT Holdings has made available to CME Holdings true,
correct and complete copies of all material correspondence with the SEC occurring
since January 1, 2004. None of the CBOT Holdings SEC Documents is, to the knowledge
of CBOT Holdings, the subject of ongoing SEC review.
Section 3.9 Absence of Undisclosed Liabilities. CBOT Holdings and the CBOT Holdings
Subsidiaries do not have any liabilities or obligations, whether or not accrued,
known or unknown, contingent or otherwise and whether or not required to be disclosed
or reflected on or reserved against in the consolidated balance sheet of CBOT Holdings
and the CBOT Holdings Subsidiaries, except liabilities and obligations that would
not, individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect on CBOT Holdings.
Section 3.10 Form S-4; Joint Proxy Statement/Prospectus. None of the information
supplied or to be supplied by CBOT Holdings or CBOT for inclusion or incorporation
by reference in (i) the registration statement on Form S-4 to be filed with the
SEC by CME Holdings in connection with the issuance of shares of CME Holdings Class
A Common Stock in the Merger (the ''Form S-4'') will, at the time the Form S-4 is
filed with the SEC or at any time it is supplemented or amended or at the time it
becomes effective under the Securities Act, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they are
made, not misleading or (ii) the Joint Proxy Statement/Prospectus will, on the date
mailed to the stockholders of CBOT Holdings and CME Holdings and to the Members
of CBOT and at the time of the CBOT Holdings Meetings and the CME Holdings Stockholders
Meeting, contain any untrue statement of a fact or omit to state any fact required
to be stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they are made, not misleading.
Section 3.11 Absence of Certain Changes. Since January 1, 2006, (i) CBOT Holdings
and the CBOT Holdings Subsidiaries have conducted their respective businesses only
in the ordinary course consistent with past practice; (ii) except as required by
GAAP, there has not been any change by CBOT Holdings in its accounting principles,
practices or methods and (iii) there has not been any change by CBOT Holdings in
its system of internal accounting controls. Since January 1, 2006, there have not
been any changes, circumstances or events that, individually or in the aggregate,
have resulted in or would reasonably be expected to result in a Material Adverse
Effect on CBOT Holdings.
Section 3.12 Litigation. There is no material suit, action, proceeding, claim,
review or investigation (whether at law or in equity, before or by any Governmental
Entity, Self-Regulatory Organization or before any arbitrator) pending, affecting,
or to the knowledge of CBOT Holdings, threatened within the three-year period prior
to the date of this Agreement against CBOT Holdings or any CBOT Holdings Subsidiary,
or their respective properties or rights. There is no material Order of any Governmental
Entity, Self-Regulatory Organization or arbitrator outstanding against CBOT Holdings
or any CBOT Holdings Subsidiary. There is no suit, claim, action, proceeding, arbitration
or investigation pending or, to the knowledge of CBOT Holdings, threatened against
CBOT Holdings or any CBOT Holdings Subsidiary, which seeks to, or could reasonably
be expected to, restrain, enjoin or delay the consummation of the Merger or any
of the other transactions contemplated hereby or which seeks damages in connection
therewith, and no injunction of any type has been entered or issued.
Section 3.13 Compliance with Laws.
(a) Each of CBOT Holdings and the CBOT Holdings Subsidiaries hold all material
permits, licenses, variances, exemptions, Orders and approvals of all Governmental
Entities and Self-Regulatory Organizations necessary for the lawful conduct of their
respective businesses or ownership of their respective assets and properties (the
''CBOT Holdings Permits''). Each of CBOT Holdings and the CBOT Holdings Subsidiaries
is, and since January 1, 2004, has been in compliance in all material respects with
the terms of the CBOT Holdings Permits. The businesses of CBOT Holdings and each
of the CBOT Holdings Subsidiaries are, and since January 1, 2004, have been conducted
in compliance in all material respects with all Laws and the applicable rules of any Self-Regulatory Organization. Each of CBOT Holdings and
the CBOT Holdings Subsidiaries is in compliance with its Constituent Documents and,
as applicable, the Voting Trust. Except as, individually or in the aggregate, would
not reasonably be expected to result in a Material Adverse Effect on CBOT Holdings,
(x) no material change is required in CBOT Holdings or any CBOT Holdings Subsidiarys
processes, properties or procedures to comply with any Laws in effect on the date
hereof or enacted as of the date hereof and scheduled to be effective after the
date hereof and (y) CBOT Holdings has not received any written notice or written
communication of any noncompliance with any Laws and no Governmental Entity or Self-Regulatory
Organization has otherwise identified any instance in which CBOT Holdings or any
CBOT Holdings Subsidiary is or may be in violation of applicable Laws.
(b) Each of the principal executive officer of CBOT Holdings and the principal
financial officer of CBOT Holdings (or each former principal executive officer of
CBOT Holdings and each former principal financial officer of CBOT Holdings, as applicable)
has made all certifications required by Rule 13a-14 or 15d-14 under the Exchange
Act and Sections 302 and 906 of the Sarbanes-Oxley Act with respect to the CBOT
Holdings SEC Documents, and the statements contained in such certifications are
true and accurate. For purposes of the preceding sentence, ''principal executive
officer'' and ''principal financial officer'' shall have the meanings given to such
terms in the Sarbanes-Oxley Act. Except as permitted by the Exchange Act, including
Sections 13(k)(2) and (3), since the enactment of the Sarbanes-Oxley Act, neither
CBOT Holdings nor any of its Affiliates has directly or indirectly extended or maintained
credit, arranged for the extension of credit, renewed an extension of credit or
materially modified an extension of credit in the form of personal loans to any
executive officer or director (or equivalent thereof) of CBOT Holdings or any CBOT
Holdings Subsidiary.
(c) CBOT Holdings maintains a system of internal accounting controls sufficient
to provide reasonable assurance that (i) transactions are executed in accordance
with managements general or specific authorizations, (ii) access to assets is permitted
only in accordance with managements general or specific authorization and (iii)
the recorded accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
(d) CBOT Holdings ''disclosure controls and procedures'' (as defined in Rules
13a-15(e) and 15d-15(e) of the Exchange Act) are reasonably designed to ensure that
information required to be disclosed by CBOT Holdings in the reports that it files
or submits under the Exchange Act is recorded, processed, summarized and reported
within the time period specified in the rules and forms of the SEC, and that all
such information is accumulated and communicated to CBOT Holdings management as
appropriate to allow timely decisions regarding required disclosure and to make
the certifications of the chief executive officer and chief financial officer of
CBOT Holdings required under the Exchange Act with respect to such reports.
(e) CBOT Holdings has made available to CME Holdings copies of any written notifications
it has received to date since January 1, 2004 of a (i) ''significant deficiency''
or (ii) ''material weakness'' in CBOT Holdings internal controls. For purposes of
this Agreement, the terms ''significant deficiency'' and ''material weakness'' shall
have the meanings assigned to them in the Statements of Auditing Standards No. 60,
as in effect on the date hereof.
(f) CBOT has been designated by the CFTC as a ''contract market'' and is registered
with the CFTC as a ''derivatives clearing organization'' under the Commodity Exchange
Act. Other than CBOT, neither CBOT Holdings nor any CBOT Holdings Subsidiary is
required to apply to the CFTC for designation as a contract market or to be registered
with the CFTC as a derivatives clearing organization.
Section 3.14 Taxes.
(a) CBOT Holdings and each CBOT Holdings Subsidiary have (i) duly and timely
filed (or there have been duly and timely filed on its behalf) with the appropriate
Governmental Entities or Taxing Authorities all Tax Returns required to be filed
by it in respect of any material Taxes, which Tax Returns were true, correct and
complete in all material respects, (ii) duly and timely paid in full (or CBOT Holdings
has paid on the CBOT Holdings Subsidiaries behalf) all Taxes shown as due on such
Tax Returns, (iii) duly and timely paid in full or withheld, or established adequate
reserves in accordance with GAAP for, all material Taxes that are due and payable
by it, (iv) established reserves in accordance with GAAP that are adequate for the
payment of all material Taxes not yet due and payable with respect to the results
of operations of CBOT Holdings and each CBOT Holdings Subsidiary through the date
of this Agreement and (v) complied in all material respects with all laws applicable
to the withholding and payment over of Taxes and has timely withheld and paid over
to, or, where amounts have not been so withheld, established an adequate reserve
under GAAP for the payment to, the respective proper Governmental Entities or Taxing
Authorities all material amounts required to be so withheld and paid over.
(b) There (i) is no deficiency, claim, audit, suit, proceeding, request for information
or investigation now pending, outstanding or, to the knowledge of CBOT Holdings,
threatened against or with respect to CBOT Holdings or any CBOT Holdings Subsidiary
in respect of any material Taxes or material Tax Returns and (ii) are no requests
for rulings or determinations in respect of any material Taxes or material Tax Returns
pending between CBOT Holdings or any CBOT Holdings Subsidiary and any authority
responsible for such Taxes or Tax Returns.
(c) No material deficiency for any Tax has been asserted or assessed by any Governmental
Entity or Taxing Authority in writing against CBOT Holdings or any CBOT Holdings
Subsidiary (or, to the knowledge of CBOT Holdings or any CBOT Holdings Subsidiary,
has been threatened or proposed), except for deficiencies which have been satisfied
by payment, settled or been withdrawn or which are being diligently contested in
good faith by appropriate proceedings and for which adequate reserves have been
established in accordance with GAAP.
(d) There are no tax sharing agreements, tax indemnity agreements or other similar
agreements with respect to or involving CBOT Holdings or any CBOT Holdings Subsidiary.
(e) None of CBOT Holdings or any CBOT Holdings Subsidiary has any liability for
material Taxes as a result of having been a member of any affiliated group within
the meaning of Section 1504(a) of the Code, or any similar affiliated or consolidated
group for tax purposes under state, local or foreign law (other than a group the
common parent of which is CBOT Holdings), or has any liability for the Taxes of
any Person (other than CBOT Holdings or the CBOT Holdings Subsidiaries) under Treasury
Regulations Section 1.1502-6 (or any similar provision of state, local or foreign
law), or as a transferee or successor, by contract or otherwise.
(f) There are no material adjustments under Section 481 of the Code (or similar
or analogous provision of state, local or foreign law) for income tax purposes applicable
to or required to be made by CBOT Holdings or any CBOT Holdings Subsidiary as a
result of changes in methods of accounting or other events occurring on or before
the date hereof.
(g) None of CBOT Holdings or any CBOT Holdings Subsidiary will be required to
include any item of income in, or exclude any item of deduction from, taxable income
for any taxable period (or portion thereof) ending after the Closing Date as a result
of any (i) change in method of accounting for a taxable period ending on or prior
to the Closing Date, (ii) ''closing agreement'' as described in Section 7121 of the
Code (or any corresponding or similar provision of state, local or foreign Tax law)
executed on or prior to the Closing Date, (iii) intercompany transactions or excess
loss account described in Treasury Regulations under Section 1502 of the Code (or
any corresponding or similar provision of state, local or foreign Tax law), (iv)
installment sale or open transaction disposition made on or prior to the Closing
Date, (v) prepaid amount received on or prior to the Closing Date or (vi) otherwise
as a result of a transaction or accounting method that accelerated an item of deduction
into periods ending on or before the Closing Date or a transaction or accounting
method that deferred an item of income into periods beginning after the Closing
Date except, in the case of each of the foregoing clauses (i) - (v), for amounts
reflected in a reserve for Taxes reflected in the CBOT Holdings Financial Statements.
(h) There are no Liens for Taxes upon any property or assets of CBOT Holdings
or any CBOT Holdings Subsidiary, except for Permitted Liens.
(i) Neither CBOT Holdings nor any CBOT Holdings Subsidiary has participated in
a ''listed transaction'' within the meaning of Treasury Regulations Section 1.6011-4(b)(2).
(j) No claim, other than claims defeated or withdrawn, has ever been made by
an authority in a jurisdiction where CBOT Holdings or any CBOT Holdings Subsidiary
has not filed Tax Returns that it is or may be subject to taxation by that jurisdiction.
(k) Neither CBOT Holdings nor any CBOT Holdings Subsidiary has waived any statute
of limitations in respect of Taxes or agreed to any extension of time with regard
to a Tax assessment or deficiency (other than pursuant to extensions of time to
file Tax Returns obtained in the ordinary course).
(l) None of CBOT Holdings or any CBOT Holdings Subsidiary has been a
''controlled
corporation'' or a ''distributing corporation'' in any distribution occurring during
the two-year period ending on the date hereof that was purported or intended to
be governed by Section 355 of the Code (or any similar provision of state, local
or foreign Law).
(m) CBOT Holdings is not, and has not been at any time within the last five years,
a ''United States real property holding corporation'' within the meaning of Section
897(c)(2) of the Code.
(n) There is no power of attorney given by or binding upon CBOT Holdings or any
CBOT Holdings Subsidiary with respect to Taxes for any period for which the statute
of limitations (including any waivers or extensions) has not yet expired.
(o) CBOT Holdings and each CBOT Holdings Subsidiary have made (or there has been
made on their behalf) all required current estimated Tax payments sufficient to
avoid any underpayment penalties.
(p) None of the indebtedness of CBOT Holdings or any CBOT Holdings Subsidiary
constitutes (i) ''corporate acquisition indebtedness'' (as defined in
Section 279(b) of the Code) with respect to which any interest deductions may
be disallowed under Section 279 of the Code or (ii) an ''applicable high yield discount
obligation'' under Section 163(i) of the Code.
(q) None of CBOT Holdings or any CBOT Holdings Subsidiary has taken or failed
to take any action, or has knowledge of any facts or circumstances, that would prevent
the Merger from constituting a tax-free reorganization described in Section 368(a)
and related provisions of the Code.
(r) None of CBOT Holdings or any CBOT Holdings Subsidiary has taken or failed
to take any action, or has knowledge of any facts or circumstances, that would invalidate
the rulings received from the IRS in connection with CBOT Holdings demutualization
transactions.
Section 3.15 Real Property. The CBOT Holdings Owned Real Property and the CBOT
Holdings Leased Real Property described in Section 3.15 of the CBOT Holdings Disclosure
Letter (collectively, the ''CBOT Holdings Real Property'') constitute all the fee
and leasehold interests in real property of CBOT Holdings and the CBOT Holdings
Subsidiaries.
(a) With respect to the CBOT Holdings Real Property:
(i) no portion of any CBOT Holdings Owned Real Property has suffered any damage
by fire or other casualty loss which has not heretofore been completely repaired
and restored, except as would not, individually or in the aggregate, reasonably
be expected to materially and adversely interfere with the use of the CBOT Holdings
Owned Real Property;
(ii) CBOT Holdings has made available to CME Holdings complete and accurate copies
of all of the following materials relating to any CBOT Holdings Real Property, to
the extent in CBOT Holdings or any CBOT Holdings Subsidiarys possession or control:
all Leases of CBOT Holdings Leased Real Property (including any amendments, modifications
or supplements thereto); all CBOT Holdings Material Leases (including any amendments,
modifications or supplements thereto), and with respect to the CBOT Holdings Owned
Real Property, the current rent roll, receivables report, and, to the knowledge
of CBOT Holdings, the most recent title insurance policy for the East Building and
the most recent Tax appraisals; and
(iii) all of the materials with respect to the CBOT Holdings Real Property that
have been made available to CME Holdings, other than those specifically described
in Section 3.15(a)(ii) above, are not, to CBOT Holdings knowledge, misleading in
any material respect.
(b) With respect to the CBOT Holdings Owned Real Property:
(i) CBOT Holdings or the applicable CBOT Holdings Subsidiary has good and marketable
title to such CBOT Holdings Owned Real Property, free and clear of all Liens other
than Permitted Liens and those Liens set forth in Section 3.15(b)(i) of the CBOT
Holdings Disclosure Letter;
(ii) Other than with respect to matters being addressed with the Vaulted Sidewalk
and Bollard Project affecting the North Building and with respect to one of the
five back-up chillers which is not in working order, all buildings, structures,
fixtures and improvements included within the CBOT Holdings Owned Real Property
(the ''CBOT Holdings Improvements'') are in good repair and operating condition in
all material respects, subject only to ordinary wear and tear, and are adequate
and suitable in all material respects for the purposes for which they are presently
being used or held for use, and to the knowledge of CBOT Holdings, there are no
facts or conditions affecting any of the CBOT Holdings Improvements that, in the
aggregate, would reasonably be expected to materially and adversely interfere with
the current use, occupancy or operation thereof;
(iii) the existing buildings and improvements located on such CBOT Holdings Owned
Real Property are located, to the knowledge of CBOT Holdings, entirely within the
boundary lines of such CBOT Holdings Owned Real Property or on permanent easements
on adjoining land benefiting such CBOT Holdings Owned Real Property and may lawfully
be used under applicable zoning and land use laws (either as of right, by special
permit or variance, or as a grandfathered use) for their material current uses;
(iv) there are no outstanding purchase agreements, options or rights of first
refusal to purchase such CBOT Holdings Owned Real Property, or any material portion
thereof or any material interest therein;
(v) other than the Parking Agreement listed on Section 3.15(b)(i) of the CBOT
Holdings Disclosure Letter, Section 3.15(b)(v) of the CBOT Holdings Disclosure Letter
sets forth all Leases, written or oral, granting to any party (other than CBOT Holdings
or any CBOT Holdings Subsidiary) the right of use or occupancy of more than 10,000
square feet of any CBOT Holdings Owned Real Property, whether by one Lease or by
more than one Lease to the same party (each, a ''CBOT Holdings Material Lease'' and
collectively, the ''CBOT Holdings Material Leases''), and each CBOT Holdings Lease
is the legal, valid, binding, and enforceable obligation of CBOT Holdings or the
applicable CBOT Holdings Subsidiary that is lessor thereunder, and, with respect
to each CBOT Holdings Material Lease:
(1) to the knowledge of CBOT Holdings, each such CBOT Holdings Material Lease
is in full force | 
