ASSET PURCHASE AGREEMENT
among
Berkeley Capital Management
Berkeley (USA) Holdings Limited
and
Berkeley Capital Management LLC
Dated as of
March 7, 2003
ARTICLE I DEFINITIONS................................................................................1
1.1 Definitions................................................................................1
ARTICLE II SALE AND PURCHASE OF ASSETS AND ASSUMPTION OF CERTAIN LIABILITIES..........................4
2.1 Purchase and Sale of Assets................................................................4
2.2 Assumption of Obligations and Liabilities..................................................5
2.3 Documents of Conveyance....................................................................6
2.4 Consideration..............................................................................6
2.5 Allocation of Closing Consideration........................................................9
2.6 Post-Closing Revenues......................................................................9
2.7 Closing....................................................................................9
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER AND SHAREHOLDERS..................................9
3.1 Due Organization...........................................................................9
3.2 Due Authorization..........................................................................9
3.3 Subsidiaries..............................................................................10
3.4 Capitalization; Ownership.................................................................10
3.5 Liens, Property, and Obligations..........................................................10
3.6 Compliance with Licenses, Permits, Laws and Other Instruments.............................11
3.7 Contracts and Agreements..................................................................11
3.8 Taxes.....................................................................................11
3.9 Financial Statements......................................................................12
3.10 Absence of Certain Changes................................................................13
3.11 Litigation................................................................................13
3.12 Intellectual Property.....................................................................13
3.13 Business Relations........................................................................14
3.14 Employee Benefits.........................................................................14
3.15 Environmental, Health and Safety Matters..................................................15
3.16 Insurance.................................................................................15
3.17 Assets Under Management...................................................................15
3.18 Registration as Investment Adviser........................................................16
3.19 Filing of Reports; Maintenance of Records.................................................17
3.20 Fee Arrangements, Expenses and Custody of Funds...........................................18
3.21 Brokers...................................................................................18
3.22 Information Furnished.....................................................................18
ARTICLE IV BUYER'S REPRESENTATIONS AND WARRANTIES....................................................18
4.1 Due Organization..........................................................................18
4.2 Due Authorization.........................................................................18
ARTICLE V COVENANTS.................................................................................19
5.1 Pre-Closing Covenants.....................................................................19
5.2 Confidentiality; News Release.............................................................20
5.3 Post-Closing Covenants....................................................................21
ARTICLE VI CONDITIONS TO CLOSING.....................................................................21
6.1 Conditions to Buyer's Obligations.........................................................21
6.2 Conditions to Seller's Obligations........................................................24
ARTICLE VII INDEMNIFICATION...........................................................................25
7.1 Indemnification of Buyer..................................................................25
7.2 Indemnification of Seller and Shareholder.................................................25
7.3 Indemnification Offset....................................................................25
7.4 Cooperation for Indemnity.................................................................26
7.5 Survival of Indemnification Claims........................................................26
ARTICLE VIII EMPLOYEES.................................................................................27
8.1 Employees.................................................................................27
8.2 Claims....................................................................................27
8.3 Future Employment.........................................................................27
8.4 Employment Records........................................................................27
8.5 Assumption of Seller's Plans..............................................................27
ARTICLE IX TAXES.....................................................................................28
9.1 Taxes.....................................................................................28
ARTICLE X SURVIVAL OF REPRESENTATIONS AND WARRANTIES................................................28
10.1 Survival..................................................................................28
ARTICLE XI TERMINATION...............................................................................28
11.1 Termination...............................................................................28
11.2 Effect of Termination.....................................................................29
ARTICLE XII MISCELLANEOUS.............................................................................29
12.1 Modifications; Waiver.....................................................................29
12.2 Notices...................................................................................29
12.3 Counterparts..............................................................................30
12.4 Expenses..................................................................................30
12.5 Binding Effect; Assignment................................................................30
12.6 No Strict Construction....................................................................31
12.7 Entire and Sole Agreement; Review.........................................................31
12.8 Governing Law; Forum and Venue............................................................31
12.9 Attorney's Fees...........................................................................32
12.10 Invalid Provisions........................................................................32
12.11 Headings..................................................................................32
EXHIBITS
Exhibit A General Assignment, Xxxx Of Sale And
Assumption Agreement
Exhibit B Non Compete Agreement
SCHEDULES
Schedule 2.1A Assets
Schedule 2.1B Excluded Assets
Schedule 2.1(b) Assumed Contracts
Schedule 2.2(a) Assumed Liabilities
Schedule 3.5(b) Liens, Property, and Obligations
Schedule 3.7(a) Contracts and Agreements
Schedule 3.10 Absence of Certain Changes
Schedule 3.11 Litigation
Schedule 3.12 Intellectual Property
Schedule 3.16 Insurance
Schedule 3.17 Assets Under Management
Schedule 3.18 Registration as Investment Adviser
Schedule 8.1(a) Employees
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "Agreement") is entered into as of March
7, 2003, among Berkeley Capital Management, a California corporation ("Seller"
or the "Company"), Berkeley (USA) Holdings Limited, a California corporation and
sole shareholder of Seller ("Shareholder") and Berkeley Capital Management LLC,
a Delaware limited liability company ("Buyer").
RECITALS
A. Seller is a registered investment adviser under the Advisers Act and is
in the business of providing Investment Management Services (the "Business").
B. Seller desires to sell to Buyer, and Buyer desires to purchase, certain
of Seller's assets and to assume certain of Seller's liabilities on the terms
and subject to the conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
representations, warranties, covenants, agreements, terms and conditions set
forth below, the receipt and adequacy of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions.
(a) As used in this Agreement, the following terms shall have the
meanings set forth below:
"Advisers Act" means the United States Investment Advisers Act of 1940, as
amended.
"Advisory Agreement" means an agreement between Seller and any Person
pursuant to which Seller agrees to provide Investment Management Services to any
Person, including on a sub-advisory basis.
"Advisory Client" means any Person with whom Seller directly or indirectly,
including through a wrap contract relationship, has, or as the context requires,
has had on or after the date of this Agreement an Advisory Agreement.
"Affiliate" means, with respect to any Person, any other Person which
directly or indirectly controls, is controlled by or is under common control
with such Person.
"Client Consent" means the requisite consent or deemed consent of each
Advisory Client to the deemed assignment of such person's Advisory Agreement in
connection with the transactions contemplated by this Agreement as required by
the Advisers Act and the rules and regulations promulgated thereunder, the forms
of which are attached hereto.
"Closing Run Rate Revenues" means the aggregate annualized revenue
associated with all accounts of Advisory Clients (excluding, for this purpose,
revenues associated with growth
equity accounts of Xxxxxx Xxxxxxx related Advisory Clients) on the Closing Date
which shall be calculated by taking the product of (i) the average of the daily
closing market value of such account for the thirty calendar days prior to the
Closing Date or in the case of accounts not opened for the full thirty days
prior to the Closing Date, the average of the daily closing market value of such
account for all days such account was open prior to the Closing Date (each as
reasonably agreed by Buyer and Seller in accordance with standard industry
practice) and (ii) the annualized fee schedule for such account as of the
Closing Date.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and the rules and regulations promulgated thereunder.
"Employee Plan" means any employee benefit arrangement, "employee pension
benefit plan" (as defined in Section 3(2) of ERISA), pension plan and welfare
plan which cover any employee or former employee, independent contractor or
former independent contractor, officer, director or agent of Seller or any ERISA
Affiliates of Seller.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means (A) any entity which (or at any relevant time was)
a member of a "controlled group of corporations" with or under "common control"
(as such terms are defined in Sections 414(b) or (c) of the Code) with Seller,
or (B) any entity which is (or at any relevant time was) a member of an
"affiliated service group" (as such term is defined in Section 414(m) or (o) of
the Code) which includes Seller.
"Intellectual Property" means all (a) patents and patent rights, (b)
trademarks, trademark rights, trade names, trade name rights, service marks,
service xxxx rights, trade dress, logos, and corporate names and registrations
and applications for registration thereof, (c) copyrights and registrations and
applications for registration thereof, (d) trade secrets and confidential
information, including formulas, compositions, inventions (whether or not
patentable), know-how, processes, techniques, research, designs, drawing
specifications, plans, technical data and financial, marketing, and business
information (including pricing information, business and marketing plans and
customer and supplier lists and information), (e) other proprietary intellectual
property rights, and (f) computer programs, software documentation, data,
training manuals and related materials to the extent owned or licensed by Seller
other than off the shelf software not assignable by its terms.
"Investment Company Act" means the United States Investment Company Act of
1940, as amended.
"Investment Management Services" means any services which involve (i) the
management of an investment account or fund (or portions thereof or a group of
investment accounts or funds) for compensation, (ii) the giving of advice or the
provision of administration services with respect to the investment and/or
reinvestment of assets or funds (or any group of assets or funds) for
compensation or (iii) otherwise acting as an "investment adviser" within the
meaning of the Advisers Act, and performing activities related or incidental
thereto.
"Lien" means any mortgage, deed of trust, pledge, judgment lien, tax lien,
lien, charge, encumbrance, security interest or defect in title of any kind or
nature.
"LPA Sub-Advisory Agreement" shall mean that certain sub-advisory agreement
to be entered into between LPASI and Buyer at or prior to Closing.
"LPASI" shall mean London Pacific Advisory Services, Inc. a California
corporation, a registered investment advisor.
"Person" means an individual, corporation, partnership, trusts, limited
liability company, association, governmental authority or any other entity or
organization.
"Regulatory Entity" means any (a) court, administrative agency or
commission or other federal, state or local governmental authority or
instrumentality, domestic or foreign, or (b) any other governmental entity that
directly or indirectly regulates Seller.
"Run-Rate Revenue Ratio" means a percentage determined by dividing Seller's
Closing Run-Rate Revenues by its Signing Run-Rate Revenues.
"Seller Material Adverse Effect" means the death or disability of either
Xxxxx Xxxxxx or Xxxx Xxxx, or the receipt of written notice by Buyer from either
Xxxxx Xxxxxx or Xxxx Xxxx that either of them will breach their respective
obligations under their respective employment agreements with Buyer at Closing.
"Signing Run Rate Revenues" means the aggregate annualized revenue
associated with all accounts of Advisory Clients (excluding, for this purpose,
revenue associated with growth equity accounts of Xxxxxx Xxxxxxx related
Advisory Clients) as of the date hereof which shall be calculated by taking the
product of (i) the closing market value of such account (as reasonably agreed by
Buyer and Seller in accordance with standard industry practice) on the date
hereof and (ii) the annualized fee schedule for such account on the date hereof.
"Tax" or "Taxes" means all federal, state, local, and other taxes, assessments,
duties or similar charges of any kind, including all payroll, employment and
other withholding taxes, including any interest, penalties or additions imposed
with respect to such amounts.
"Small Cap Growth Product" means the to be launched product of Buyer which
will be managed in the same style as the Focused Growth Equity product currently
subadvised by Seller; provided, however, the existing LPASI Focused Growth
Equity assets shall not be included for purposes of this definition.
"Tax Return" means any return, report or similar statement required to be
filed with respect to any Taxes owed by Seller (including any attached
schedules), including, without limitation, any information return, claim for
refund, amended return and declaration of estimated Tax.
"Taxing Authority" means any governmental or quasi-governmental body
exercising any taxing authority or any other authority exercising Tax regulatory
authority.
(a) Each of the following terms is defined in the Section set forth
opposite such term:
Term Section
Accountants 2.4(g)
Agreement Introduction
Assets 2.1
Assignment Exhibit A Intro
Assumed Contracts 2.1(b)
Assumed Liabilities 2.2(a)
Authorizations 3.6(a)
Business Recital A
Buyer Introduction
Buyer Indemnified Parties 7.1
Closing 2.7
Closing Consideration 2.4(a)
Closing Date 2.7
E, H & S Laws 3.15
ERISA Client 3.7 (c)
Exchange Act 3.18(b)
Excluded Assets 2.1
Excluded Liabilities 2.2(b)
Final Closing Date Statement 2.4(c)
Financial Statements 3.9
First Deferred Payment 2.4(c)
GAAP 3.9
Indemnified Party 7.4(a)
Indemnifying Party 7.4(a)
LPG 3.2
Losses 7.1
PBGC 3.14(a)(i)
Seller Introduction
Seller Indemnified Parties 7.2
Seller's Plans 8.5
Shareholder Introduction
Sublease 6.1(c)
Transaction Documents 3.2
Transferred Employees 8.1(a)
ARTICLE II
SALE AND PURCHASE OF ASSETS AND
ASSUMPTION OF CERTAIN LIABILITIES
2.1 Purchase and Sale of Assets. On the terms and subject to the conditions
contained in this Agreement, Seller agrees to sell to Buyer and Buyer agrees to
purchase from Seller at the Closing all of Seller's right, title, and interest
in and to all assets and interests used in or arising from the conduct of the
Business on the Closing Date, other than the excluded assets listed on Schedule
2.1B ("Excluded Assets"), whether real, personal, tangible or intangible, free
and clear of all Liens (the "Assets"), including but not limited to the items
listed on Schedule 2.1A and the following:
(a) Seller's right, title and interest in and to all of the tangible
personal property owned or leased by Seller, including all goods, office
and other furniture, fixtures, equipment, computers and telecommunications
equipment;
(b) Seller's right, title and interest in and to the contracts,
equipment leases, commitments, licenses to use software, and other
agreements listed on Schedule 2.1(b) (all of which are sometimes referred
to herein collectively as the "Assumed Contracts");
(c) Seller's right, title and interest in and to all former and
current client contact and mailing lists;
(d) Copies of all current personnel files pertaining to any person now
providing or who has provided services for Seller during the twelve (12)
month period prior to the Closing Date as an independent contractor or
employee, together with any and all information customarily contained
therein, including, but not limited to, W-2's, W-4's, I-9's, 1099's,
employment agreements, personnel reviews, commission and/or bonus
arrangements and salary history;
(e) Shareholder's and Seller's right, title and interest in and to all
Intellectual Property, including the name "Berkeley Capital Management";
(f) All prepaid expenses of Seller, except for any pre-paid insurance;
(g) Cash, notes receivable and other accounts receivable due to Seller
in the amount sufficient to cover any working capital needs for 60 days
following the Closing Date, as reasonably agreed by the parties prior to
Closing.
(h) Copies of all books, records and documents of Seller pertaining to
the Assets and operations of Seller, excluding any accounting records and
legal file not requested by Buyer, provided however that Buyer shall have
access to such files after Closing in the manner provided for in Section
5.1(e) hereof;
(i) All licenses, permits and rights of participation relating to
Seller;
(j) All warranties, indemnities, guarantees and similar rights in
favor of Seller; and
(k) All claims or causes of action of Seller, whether known or
unknown, except for any claim or causes of action of Seller against
Shareholder, its Affiliates, and any officers, directors, employees or
agents thereof.
2.2 Assumption of Obligations and Liabilities.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, at Closing, Buyer shall execute and deliver to Seller the
General Assignment, Xxxx of Sale and Assumption as provided by Section 2.3
below, pursuant to which Buyer shall assume, discharge
in full and properly satisfy according to their terms, the following
liabilities, obligations and commitments of Seller (the "Assumed
Liabilities"):
(i) All obligations under the Assumed Contracts which are
incurred after the Closing Date, and all obligations of performance
under the Assumed Contracts due to be performed after the Closing
Date, subject to the limitations set forth in Section 2.2(b) below;
(ii) Liabilities of the Company listed on Schedule 2.2(a); and
(iii) All payables, liabilities and obligations of Seller as set
forth on the face of the balance sheet of Seller, other than payables
to related parties (but excluding from payables to related parties any
liabilities for shared services consistent with and for which Seller
has been allocated charges in accordance with recent past practices
rendered before or on the Closing Date), prepared by Seller and agreed
to by Buyer as of the Closing Date.
(b) Other than the Assumed Liabilities, Buyer shall not assume or be
bound by any obligations of Seller of any kind or nature, contingent,
unknown or otherwise whenever arising, including, but not limited to, (i)
any Tax liability, (ii) any liability or obligation of Seller to pay
salaries, severance, termination pay, accrued vacation pay, personal time
and sick leave payable, holiday pay, if any, bonuses, profit sharing
contributions, if any, xxxxxxx'x compensation liabilities or any other
payments to any current or former employee of Seller, (iii) any liabilities
arising under E, H & S Laws, including but not limited to any liabilities
arising from pre-existing conditions on or relating to the Assets; (iv) any
litigation or potential litigation disclosed on Schedule 3.11 or otherwise
in respect to claims arising prior to Closing; or (v) the operation of the
Business prior to Closing (collectively, the "Excluded Liabilities").
Seller makes no and shall not make any claim against Buyer regarding the
Excluded Liabilities. Seller shall, and Shareholder shall cause Seller to,
use its best efforts to satisfy or have satisfied all Excluded Liabilities
which are then due and payable at or prior to Closing, except any Excluded
Liabilities being contested in good faith by Seller.
2.3 Documents of Conveyance. Title to the Assets and the assumption of the
Assumed Liabilities shall be conveyed pursuant to a General Assignment, Xxxx of
Sale and Assumption Agreement substantially in the form attached hereto as
Exhibit A and by such other documents as are reasonably acceptable to Seller and
Buyer.
2.4 Consideration.
(a) In addition to the assumption and satisfaction of the Assumed
Liabilities, the consideration to be paid by Buyer for the Assets at
Closing shall be Seven Million, Seven Hundred Fifty Thousand Dollars
($7,750,000), as may be adjusted pursuant to Sections 2.4(b) below in cash
by wire transfer in immediately available funds to an account designated in
writing delivered to Buyer prior to such date (the "Closing
Consideration").
(b) The Closing Consideration payable at the Closing, shall be subject
to adjustment as set forth in the following table, based on the Run-Rate
Revenue Ratio:
Run-Rate Revenue Ratio Adjustment to Closing Consideration Payable at
Closing
Above 105% through 110% Increased at the rate of 2% for every 1% that the
Run-Rate Revenue Ratio exceeds 105% up to and
including 110%. Under no circumstances will the
Closing Consideration be greater than $8,525,000.
90% up to, but not including 95% Decreased at the rate of 2% for every 1% that the
Run-Rate Revenue Ratio is less than 95% but equal
to or greater than 90%. Under no circumstance will
the Closing Consideration be less than
$6,975,000.
95% through 105% No adjustment to the Closing Consideration.
The Closing Run-Rate Revenues used to calculate the Run-Rate Revenue Ratio shall
not include revenues relating to Advisory Agreements for which assignment has
not been consented to or deemed consented to pursuant to Section 5.1(b). At
least three Business Days prior to the Closing, Seller shall deliver to Buyer a
calculation of the estimated Run-Rate Revenue Ratio. At the Closing, Seller
shall deliver to Buyer a certificate signed by an executive officer of Seller
reflecting the calculation of the Run-Rate Revenue Ratio, including a list of
all Advisory Agreements for which assignment has been consented to or deemed
consented to pursuant to Section 5.1(b) and the amount of assets under
management pursuant to each such Advisory Agreement. Buyer and Seller will
negotiate in good faith to resolve any disagreements concerning the components
and calculation of the Run-Rate Revenue Ratio. If, within ninety (90) days after
the Closing, an error in the components or calculation of the Run-Rate Revenue
Ratio is discovered, the adjustment pursuant to this Section 2.4(b) shall be
recalculated based on the correct components and Run-Rate Revenue Ratio and an
appropriate adjusting payment shall be made by Buyer or Seller, as the case may
be.
(c) In addition to the Closing Consideration, on December 31, 2003,
Buyer shall pay to Seller $1,000,000 in cash (the "First Deferred Payment")
by wire transfer in immediately available funds to an account designated in
writing delivered to Buyer prior to such date, provided, however, if LPASI
(a) terminates the LPA Sub-Advisory Agreement, or (b) withdraws assets from
accounts managed pursuant to the LPA Sub-Advisory Agreement, prior to
December 31, 2003, the First Deferred Payment shall be reduced by an amount
equal to the prorated (for the period from the date of such termination or
withdrawal through December 31, 2003) annualized revenues as of the date of
such termination or withdrawal, calculated by multiplying (x) the assets
under management pursuant to the LPA Sub-Advisory Agreement at the date of
the termination or withdrawal by (y) the applicable fee rate on such
assets; and then multiplying the resulting amount by a fraction that is the
greater of (1) 90 divided by 365, or (2) the number of days between the
termination or withdrawal date and December 31, 2003 divided by 365;
provided, however, that under no circumstances shall the
amount payable on December 31, 2003 be less than zero. This First Deferred
Payment shall be supported by a standby letter of credit in favor of Seller
(as beneficiary) (the "Standby Letter of Credit"), subject to draw only
upon receipt by the issuing bank of a certified statement by Seller that
Buyer is in default of this Section 2.4(c). The Standby Letter of Credit
shall terminate automatically in the event that Seller is paid the First
Deferred Payment on December 31, 2003, in accordance with the terms and
conditions of this Section 2.4(c). Seller and Shareholder agree to pay for
all costs associated with the Standby Letter of Credit (except for the
issue amount of such Standby Letter of Credit), including reasonable costs
of counsel to Buyer.
(d) In addition to the Closing Consideration and the First Deferred
Payment, Buyer shall pay to Seller the amount of revenue received by Buyer
resulting from the Small Cap Growth Product for the calendar year 2003 (the
"Second Deferred Payment"), provided, however, in the event that LPASI (a)
terminates the LPA Sub-Advisory Agreement, or (b) withdraws assets from
accounts managed pursuant to the LPA Sub-Advisory Agreement after December
31, 2003, but prior to December 31, 2004, the next installment of the
Second Deferred Payment due in 2004 shall be offset by an amount equal to
the prorated (for the period from the date of termination or withdrawal
through December 31, 2004) annualized revenues as of the date of
termination or withdrawal, calculated by multiplying (x) the assets under
management of the LPA Sub-Advisory Agreement at the date of termination or
withdrawal by (y) the applicable fee rate on such assets; and then
multiplying the resulting amount by a fraction that is the greater of (1)
90 divided by 365, or (2) the number of days between the termination or
withdrawal date and December 31, 2004, divided by 365; provided, however,
that under no circumstances shall the amount payable on December 31, 2004
be less than zero. The Second Deferred Payment shall be paid to Seller by
Buyer in four (4) equal installments, without interest, on the last day of
March, June, September and December 2004.
(e) Buyer shall calculate the amount, if any, of the First Deferred
Payment and the Second Deferred Payment as soon as commercially practicable
after December 31, 2003, consistent with its production of the audit of the
books and records of Buyer.
(f) Notwithstanding anything to the contrary, the total amount of the
First Deferred Payment and the Second Deferred Payment shall in no event
exceed Two Million, Two Hundred Fifty Thousand Dollars ($2,250,000).
(g) In the event Buyer and Seller are unable to resolve a
disagreement, after using their best efforts to do so, with respect to the
amount of the Closing Consideration, the First Deferred Payment or the
Second Deferred Payment, and such disagreement involves amounts that in the
aggregate exceed $50,000, such amount shall be determined by an independent
firm of certified public accountants (the "Accountants") mutually agreeable
to Buyer and Seller. In the event that the parties fail to agree on a
mutually acceptable Accountant, they shall each choose an Accountant and
those two Accountants shall designate a third Accountant who shall render
the determination. If issues in dispute are submitted to the Accountants
for resolution, (i) each party shall furnish to the Accountants such
documents and information relating to the disputed issues as the
Accountants may request and are available to that party, and shall be
afforded the opportunity to present to the Accountants any material
relating to the determination and to discuss the determination with the
Accountants; (ii) the determination by the Accountants will be binding and
conclusive on the parties; and (iii) the fees and expenses of the
Accountants for such determination shall be paid by the parties based upon
the degree to which the Accountants accept the respective positions of the
parties. For example, if it is Buyer's position that the amount to be paid
is $300, Seller's position that the amount to be paid is $100 and the
Accountants' finding that the adjustment owed is $150, then Buyer shall pay
75% (300-150 / 300-100) of the Accountants' fees and expenses and Seller
shall pay 25% (150-100 / 300-100) of the Accountants' fees and expenses.
2.5 Allocation of Closing Consideration. The parties agree that the Closing
Consideration shall be allocated among the Assets in accordance with the
allocation scheduled attached hereto as Exhibit 2.5 pursuant to Section 1060 of
the Code. Seller and Buyer agree to report the federal, state and local income
and other tax consequences of the transactions contemplated hereby, and in
particular to report the information required by Section 1060(b) of the Code, in
a manner consistent with such allocation, and to file all other applicable tax
returns and forms to reflect such allocation. Buyer and Seller shall file IRS
Form 8594 in a manner consistent therewith.
2.6 Post-Closing Revenues. From and after the Closing Date, Seller and
Shareholder shall promptly forward to Buyer all collections Seller or
Shareholder may receive of any revenues derived from the operation of the
Business after the Closing Date, or to the extent included in the working
capital purchased by Buyer pursuant to Sec. 2.1(g).
2.7 Closing. The closing of the transactions contemplated hereby (the
"Closing") shall occur at 10:00 a.m. on the business day immediately following
the satisfaction or waiver by the appropriate party of all conditions to Closing
set forth herein, (the "Closing Date"), at the offices of Xxxxx Xxxxxx & Xxxxxx
LLP, 0000 00xx Xxxxxx, Xxxxxx, Xxxxxxxx 00000 or on such other date and/or at
such other place as Buyer and Seller shall agree.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
AND SHAREHOLDERS
Seller and Shareholder, jointly and severally, represent and warrant to
Buyer that the following statements contained in this Article III are correct
and complete as of the date hereof and will be correct and complete as of the
Closing Date, except as set forth in the Schedule of Exceptions accompanying
this Agreement and subject to the terms of this paragraph.
3.1 Due Organization. Seller is a corporation duly organized, validly
existing, and in good standing under the laws of the State of California and has
all requisite corporate power and authority to own, lease and operate its
properties and assets and carry on its business as presently conducted, and to
execute, deliver, and perform the Transaction Documents and the transactions
contemplated hereby and thereby. Seller is qualified as a foreign corporation
for the transaction of business and is in good standing under the laws of each
jurisdiction in which it owns or leases properties or conducts any business so
as to require such qualification.
3.2 Due Authorization. The execution, delivery and performance by Seller
and Shareholder of this Agreement and the other documents contemplated herein
(collectively, the "Transaction Documents") and the transactions contemplated
hereby and thereby have been duly and validly authorized by all necessary
corporate action, including approval of Seller's Board of Directors and
Shareholder. The Transaction Documents, when executed, will have been duly
and validly executed and delivered by Seller and Shareholder, as applicable, and
will constitute the valid and binding obligations of Seller and Shareholder,
respectively, enforceable against them in accordance with their respective terms
except to the extent that their enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, fraudulent conveyance or similar laws
affecting the rights of creditors generally and by legal and equitable
limitations on the enforceability of specific remedies. The execution, delivery,
and performance of the Transaction Documents (as well as all other instruments,
agreements, certificates, or other documents contemplated hereby or thereby) by
Seller and/or Shareholder, do not and will not, when executed (a) materially
violate any law, statute, rule, guideline, or regulation or any decree or
judgment of any court or Regulatory Entity applicable to Seller, Shareholder,
the Assets or the Assumed Liabilities, (b) violate or conflict with, or permit
the cancellation of, or constitute a default under, any agreement to which
Seller or Shareholder is a party, or by which Seller, Shareholder, the Assets or
the Assumed Liabilities are bound, (c) permit the acceleration of any right or
obligation affecting Seller, the Assets or the Assumed Liabilities, or (d)
violate or conflict with any provision of the Articles, Bylaws or other
governing document of Seller. To Seller's and Shareholder's knowledge, after due
inquiry, no notice to, filing with, or authorization, consent or approval of any
Regulatory Entity or other person or entity is required of Seller or Shareholder
in connection with the execution, delivery, and performance by Seller or
Shareholder of the Transaction Documents or the other documents and instruments
to be delivered by Seller or Shareholder pursuant hereto.
3.3 Subsidiaries. Seller has no subsidiaries.
3.4 Capitalization; Ownership. Shareholder is the sole shareholder of
Seller. Seller's shares held by Shareholder have been duly authorized and issued
and there are no rights, commitments, agreements or understandings obligating
Seller or Shareholder to issue, transfer, sell or redeem any securities or
equity interests in Seller.
3.5 Liens, Property, and Obligations.
(a) Seller has good and marketable title to (or valid leasehold,
license or contractual interests in) all personal property comprising the
Assets and the Assets are free and clear of all Liens. The Transaction
Documents will be sufficient to convey good and marketable title to the
Assets free and clear of all Liens to Buyer. Buyer is purchasing the
tangible assets included in the Assets in "as is" "where is" condition.
(b) Seller does not own or hold any interest in any real property of
any nature, and, except as set forth on Schedule 3.5(b), Seller has paid or
will pay when due all obligations related to the period prior to the
Closing Date related to the leasehold interests listed on Schedule 3.5(b),
including all rent, taxes, utility fees, and licenses fees, provided,
however that such amounts which are included in the Assumed Liabilities
shall be paid by Buyer. Each such leasehold interest is a legal, valid and
binding obligation of the parties thereto except as enforcement may be
limited by applicable bankruptcy, insolvency, reorganization, fraudulent
conveyance or similar laws affecting the rights of creditors generally, and
is in full force and effect and Seller enjoys peaceful and undisturbed
possession thereunder.
(c) All accounts receivable of Seller included in the Assets are,
subject to the reserve for doubtful accounts on the books of Seller, if
any, (i) valid, bona fide claims against
debtors for sales, rebates or other charges, and (ii) not subject to any
defenses, set-offs or counterclaims. Seller has fully performed all
obligations with respect to such accounts receivable that it was obligated
to perform to the date hereof and all accounts receivable are collectible
in the ordinary course of business.
3.6 Compliance with Licenses, Permits, Laws and Other Instruments.
(a) Seller has and holds all licenses, certificates, certifications
and permits of any Regulatory Entity which are necessary for or relate to
the conduct of the Business ("Authorizations"). Seller has complied with
the terms and conditions of all such Authorizations, and no violation of
any such Authorization or the laws or rules governing the issuance or
continued validity thereof has occurred or is occurring.
(b) Seller and each of its officers and employees has complied with
all applicable laws, statutes, rules and regulations and has not been
issued any citations, notices or orders of non-compliance under any law,
statute, rule, regulation, ordinance, order, judgment, or decree and to
Seller's and Shareholder's knowledge, there exists no basis for the
issuance of such a citation, notice or order irrespective of whether such a
citation, notice or order was actually issued. No consent, qualification,
order, approval, or authorization of, or filing with, any Regulatory Entity
is required in connection with Seller's or Shareholder's execution,
delivery and performance of the Transaction Documents or the consummation
of any transaction contemplated hereby.
3.7 Contracts and Agreements.
(a) Schedule 3.7(a) identifies each Assumed Contract that requires the
consent of a third party in order to assign such contract to Buyer. Each
Assumed Contract is in full force and effect and is a legal, valid and
binding agreement of Seller and of each other party thereto, enforceable in
accordance with its terms except to the extent that its enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, fraudulent
conveyance or similar laws affecting the rights of creditors generally and
by legal and equitable limitation or the enforceability of specific
remedies. Seller is not in default under (nor does there exist any
condition which upon the passage of time or the giving of notice would
cause such a violation of or default under) any Assumed Contract and to
Shareholder's knowledge no other party thereto is in default thereon.
3.8 Taxes.
(a) Seller and its Affiliates have filed all Tax Returns required to
be filed prior to the Closing Date. All such Tax Returns are correct and
complete in all material respects. Seller and its Affiliates have paid or
will pay in full when due all taxes due and owing by Seller on or before
the Closing Date, except such Taxes as Seller or its Affiliates shall in
good faith contest or defend. None of Seller nor any of its Affiliates
currently is the beneficiary of any extension of time within which to file
any Tax Return. None of Seller nor any of its Affiliates has received
written notice from an authority in a jurisdiction where Tax Returns are
not filed that it is or may be subject to taxation by that jurisdiction.
There are no Liens on any of the Assets that arose in connection with any
failure (or alleged failure) to pay any Tax.
(b) Seller has withheld and paid all Taxes required to have been
withheld and paid in connection with amounts paid or owed by Seller to any
employee, independent contractor, creditor, shareholder, or other third
party for the performance of services.
(c) None of Seller nor any of its Affiliates knows, nor do they have a
reasonable belief, that any authority will assess any additional Taxes for
any period for which Tax Returns have been filed. There is no dispute or
claim concerning any Tax Liability of Seller either (i) claimed or raised
by any authority in a writing received by Seller or its Affiliates, or (ii)
as to which Seller or its Affiliates, has knowledge. No Tax Returns have
been audited since the Tax Return for the year ended December 31, 1993.
(d) None of Seller nor any of its Affiliates has waived any statute of
limitations in respect of Taxes of Seller or agreed to any extension of
time with respect to a Tax assessment or deficiency of Seller.
(e) No consent under Code Section 341(f) concerning collapsible
corporations has been filed for Seller.
(f) Seller has not been a United States real property holding
corporation within the meaning of Code Section 897(c)(2) during the
applicable period specified in Code Section 897(c)(1)(A)(ii).
(g) Seller and its Affiliates have disclosed on Tax Returns all
positions taken therein that could give rise to a substantial
understatement of federal income Tax within the meaning of Code Section
6662.
(h) Seller is not a party to any Tax allocation or sharing agreement
pursuant to which the Seller's liabilities could be satisfied by a claim of
any type against the Assets.
(i) No items of income attributable to transactions occurring on or
before the close of the last preceding taxable year of Seller will be
required to be included in taxable income by Seller in a subsequent taxable
year by reason of Seller reporting income on the installment sales method
of accounting, the cash method of accounting, the completed contract method
of accounting or the percentage of completion-capitalized cost method of
accounting.
(j) None of the Assets is "tax exempt use property" within the meaning
of Section 168(h) of the Code.
3.9 Financial Statements. True, correct and complete copies of Seller's
internally prepared financial statements respecting the periods ended on
December 31, 1999, December 31, 2000, and December 31, 2001 and its audited
financial statements respecting the period ended on December 31, 2002, have been
delivered to Buyer (collectively, the "Financial Statements"). Except as set
forth in the Financial Statements, as of the date of such Financial Statements,
Seller has no liabilities or obligations of any nature required by United States
generally accepted accounting principals ("GAAP") to be set forth in such
Financial Statements. The Financial Statements are consistent with the books and
records of Seller, have been prepared in accordance with GAAP applied on a
consistent basis, and present fairly the financial condition and the results of
operations of Seller as of the dates and for the periods indicated, provided
however that the unaudited statements do not include footnotes or other audit
disclosures. Such Financial
Statements have accurate accruals of all employee benefit costs including, but
not limited to, payroll, commissions, bonuses, profit sharing benefits and
vacation accruals.
3.10 Absence of Certain Changes. Since December 31, 2002, Seller has not,
except as disclosed on Schedule 3.10 hereto (a) discharged or satisfied any
Liens or paid any obligation or liability, absolute or contingent, other than
current liabilities incurred and paid in the ordinary course of business; (b)
purchased, redeemed, acquired, or retired any stock or indebtedness; (c) made or
agreed to make any loans or advances or guaranteed or agreed to guarantee any
loans or advances to any party whatsoever; (d) permitted any Lien to arise or be
granted or created against or upon any of its assets, real or personal, tangible
or intangible or known or unknown; (e) cancelled, waived, or released or agreed
to cancel, waive, or release any of its debts, rights, or claims against third
parties; (f) sold, assigned, pledged, mortgaged, or otherwise transferred or
obligated to transfer, suffered any damage, destruction, or loss (whether or not
covered by insurance) to, any Assets; (g) amended its Articles or Bylaws; (h)
paid or made a commitment to pay any severance or termination payment to any
employee or consultant; (i) made any change in its method of accounting; (j)
made any capital expenditures (or series of related capital expenditures), or
entered into commitments to make capital expenditures, that exceed $100,000 in
the aggregate; (k) made any capital investment in, or any acquisition of the
securities or assets of, any other person or entity, or made a commitment
therefor other than cash equivalents; (l) made any payment or contracted for the
payment of any bonus, or other compensation, other than (A) wages, salaries,
commissions and bonuses paid in the ordinary course of business, and (B) wage,
commission and salary adjustments made in the ordinary course of business for
employees who are not officers, directors, or shareholders of Seller; (m)
amended or entered into any written employment contract or created or made any
change in any bonus, stock option, pension, retirement, profit sharing or other
employee benefit plan or arrangements; (n) amended or experienced a termination
of any contract, agreement, lease, franchise or license to which Seller is a
party; (o) entered into any other transactions except in the ordinary course of
business; or (p) agreed to do any of the foregoing.
3.11 Litigation.
(a) Except as set forth in Schedule 3.11, there is no claim, suit,
action or legal, administrative, arbitration or other proceeding, nor to
the best of Seller's or Shareholder's knowledge is there an investigation
by a Regulatory Entity or review pending or threatened, to which Seller is,
or could be, a party or by which they are or could be affected (and Seller
and Shareholder have no knowledge of any basis for any such action, suit,
or proceeding that may be brought).
(b) Except as set forth on Schedule 3.11, there does not exist any
judgment, decree, injunction, or rule or order of any Regulatory Entity or
arbitrator, outstanding against Seller.
3.12 Intellectual Property.
(a) Shareholder owns the right to use and transfer the name "Berkeley
Capital Management." To the Seller's and Shareholder's knowledge, after due
inquiry, Seller owns or has the right to use pursuant to a license, a
sublicense, an agreement or permission all Intellectual Property used in
the operation of the Business as currently conducted. Each item of
Intellectual
Property owned or used by Seller immediately prior to the Closing Date will
be owned or available for use by Buyer on the identical terms and
conditions as available to Seller immediately subsequent to the Closing
Date. Seller has taken all commercially reasonable and appropriate action
to maintain and protect the name "Berkeley Capital Management".
(b) To the Seller's and Shareholder's knowledge, after due inquiry,
Seller has not interfered with, infringed upon, misappropriated, or
otherwise come into conflict with any Intellectual Property rights of third
parties; neither Seller nor Shareholder have received any charge,
complaint, claim, demand, or notice alleging any such interference,
infringement, misappropriation, or violation (including any claim that
Seller must license or refrain from using any Intellectual Property rights
of any third party); and no third party has interfered with, infringed
upon, misappropriated, or otherwise come into conflict with any
Intellectual Property rights of Seller.
(c) Schedule 3.12 identifies each registration which has been issued
to Seller or Shareholder with respect to any of its trademarks and service
marks, if any, identifies each pending application for registration which
Seller has made with respect to any of its trademarks and service marks, if
any, and identifies each license, agreement, or other permission which
Seller has granted to any third party with respect to any of its
Intellectual Property (together with any exceptions). Seller has delivered
to Buyer correct and complete copies of all such registrations,
applications, licenses, agreements, and permissions (as amended to date).
Schedule 3.12 also identifies each trade name or unregistered trademark
owned and used by Seller.
(d) Schedule 3.12 identifies each material item of Intellectual
Property that any third party owns and that Seller uses pursuant to
license, sublicense, agreement, or permission. Seller has delivered to
Buyer correct and complete copies of all such licenses, sublicenses,
agreements, and permissions (as amended to date). Each such license,
sublicense, agreement, or permission covering the item is purchased "as is"
and "where is". No employee, agent, consultant or independent contractor of
Seller who has contributed to or participated in the conception and
development of Intellectual Property or other proprietary rights or
confidential information of Seller has asserted or threatened any claim
against Seller or Shareholder in connection with such person's involvement
in the conception and development of such rights or information of Seller
and, to the knowledge of Seller and Shareholder, no person has a reasonable
basis for any such claim.
3.13 Business Relations. Neither Seller nor Shareholder has knowledge that
any material supplier or client of Seller will terminate its business
relationship with the Business as a result of the consummation of the
transactions contemplated by this Agreement.
3.14 Employee Benefits.
(a) Respecting each Employee Plan as maintained or contributed to by
Seller:
(i) Seller is in compliance in all material respects with the
applicable provisions of ERISA and the Code, and has not incurred any
liability to the Pension Benefit Guaranty Corporation (the "PBGC") or
under an Employee Plan in connection with the termination of an
Employee Plan pursuant to Title IV of ERISA;
(ii) Seller does not maintain, administer or contribute to any
"multiemployer plan" as defined in Section 3(37) of ERISA.
(iii) Respecting any Employee Plan, as of the Closing Date there
will have been no prohibited transactions (as defined in Section
4975(c) of the Code and Section 406 of ERISA) that could result in the
imposition of a liability against Buyer, or reportable events (as
defined in Section 4043(b) of ERISA and regulations thereunder) which
have not been previously reported; and
(iv) Seller does not maintain, administer or contribute to any
profit sharing plan.
(b) As of the Closing Date, Seller will have no liability with respect
to any pension plan that is maintained or contributed to by an ERISA
Affiliate.
3.15 Environmental, Health and Safety Matters. There are no pending or, to
the knowledge of Seller or Shareholder, threatened claims, consents, orders,
consent decrees, settlement agreements, court or administrative orders, notices,
complaints, requests for information, or inquiries with respect to any alleged
violation of, or potential liability under, any applicable statute, regulation,
rule or common law regarding (i) the use, treatment, transport, handling,
storage or release of hazardous materials, (ii) pollution or (iii) protection of
human health, employee safety, the environment or wildlife ("E, H & S Laws"),
and Seller has complied, is in compliance with and is not in violation of any E,
H & S Laws.
3.16 Insurance. Schedule 3.16 identifies each insurance policy maintained
by or for the benefit of Seller or its employees. There are no pending claims
related to any insurance maintained by Seller and no insurers have denied
coverage or otherwise reserved rights. Seller has not been refused any insurance
nor has its coverage been limited by any insurance carrier to which it has
applied for any insurance. There are no risks with respect to the Assets for
which Seller is or has designated as being self-insured. Seller has no property
or casualty claim related to the Assets which are currently pending or which
have been made with an insurance carrier, and all losses incurred with respect
to self-insured risks, since January 1, 2000.
3.17 Assets Under Management.
(a) The aggregate assets under management of Seller as of February 28,
2003 are accurately set forth in Schedule 3.17. Set forth in Schedule 3.17
is a list as of February 28, 2003 of all Advisory Agreements, setting forth
with respect to each such Advisory Agreement:
(i) the name of the Advisory Client under such Advisory
Agreement, indicating any such Advisory Client that is an Affiliate of
Seller;
(ii) the fee schedule in effect with respect to such Advisory
Agreement (including identification of any applicable sub-components
of such fees, e.g., investment management fees, fees for any other
services, etc., as applicable); and
(iii) The amount of assets under management pursuant to such
Advisory Agreement.
Except as set forth in Schedule 3.17, there are no contracts, agreements,
arrangements or understandings pursuant to which Seller has undertaken or agreed
to cap, waive, offset, reimburse or otherwise reduce any or all fees or charges
payable by or with respect to any of the Advisory Clients set forth in Schedule
3.17 or pursuant to any of the contracts set forth in Schedule 3.17. Except as
set forth in Schedule 3.17, to the knowledge of Seller, as of the date hereof,
no Advisory Client of Seller has expressed to Seller an intention to terminate
or materially reduce its investment relationship, or adjust the fee schedule
with respect to any Advisory Agreement in a manner which would reduce the fees
payable to Seller.
(b) Except as set forth in Schedule 3.17, Seller has no Advisory
Agreement or other arrangement with respect to which amounts payable to
Seller are based on performance or otherwise provide for compensation on
the basis of a share of capital gains upon or capital appreciation of any
Advisory Client.
(c) Each Advisory Client to which Seller provides Investment
Management Services that is (i) an employee benefit plan, as defined in
Section 3(3) of ERISA, that is subject to Title I of ERISA, (ii) a person
acting on behalf of such a plan or (iii) an entity whose assets include the
assets of such a plan, within the meaning of ERISA and applicable
regulations (an "ERISA Client") has been managed by the Company such that
the Company in the exercise of management is in compliance in all material
respects with the applicable requirements of ERISA. The Company is not
disqualified from acting as a professional asset manager (as such term is
used in Prohibited Transaction Class Exemption 84-114) under any applicable
law or regulation.
(d) Seller does not provide Investment Management Services to (i) any
issuer or other Person that is an investment company (within the meaning of
the Investment Company Act), (ii) any issuer or other Person that would be
an investment company (within the meaning of the Investment Company Act)
but for the exemptions contained in Section 3(c)(1), Section 3(c)(7), the
final clause of Section 3(c)(3) (common trust funds) or the third or fourth
clauses of Section 3(c)(11) (single or collective trusts for qualified
plans) of the Investment Company Act, or (iii) any issuer or other Person
that is or is required to be registered under the laws of the appropriate
securities regulatory authority in the jurisdiction in which the issuer is
domiciled (other than the United States or the states thereof), which is or
holds itself out as engaged primarily in the business of investing,
reinvesting or trading in securities.
(e) To the knowledge of Seller, no controversy or disagreement exists
between Seller and any Advisory Client of Seller that has had or would
reasonably be expected to have a material adverse effect on Buyer.
(f) No exemptive orders, "no-action" letters or similar exemptions or
regulatory relief have been obtained, nor are any requests pending
therefor, by or with respect to Seller or any officer, director,
shareholder or employee of Seller, in connection with the business of
Seller, or by or with respect to any Advisory Client of Seller in
connection with the provision of Investment Management Services to such
Advisory Client.
3.18 Registration as Investment Adviser.
(a) Seller is duly registered as an investment adviser under the
Advisers Act and the rules and regulations thereunder and has completed
notice filings for each state requiring
such notice filings. Seller has filed a Form ADV with the SEC in accordance
with the Advisers Act, which form at the time of filing was, and as amended
and supplemented as of the date hereof is, in effect pursuant to the
requirements of the Advisers Act. Seller has heretofore made available to
Buyer copies of each such Form ADV as amended or supplemented through the
date hereof.
(b) Seller and to the knowledge of Seller, each of its investment
adviser representatives (as such term is defined in Rule 203A-3(a) under
the Advisers Act), have, and after giving effect to the Closing will have,
all material Authorizations required in order from them to conduct the
Business in the manner presently conducted. None of Seller or to the
knowledge of Seller, any of such representatives is subject to any material
limitation imposed in connection with one or more of the Authorizations.
Seller has not been a "broker" or "dealer" within the meaning of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), a
"commodity pool operator" or "commodity trading adviser" within the meaning
of the Commodity Exchange Act, as amended, or a trust company, at any time
since its inception. Except as set forth on Schedule 3.18, none of Seller
or any of its directors, officers or employees, is registered or required
to be registered as a broker or dealer, a commodity trading adviser, a
commodity pool operator, a futures commission merchant, an introducing
broker, a registered representative or associated person, a counseling
officer, an instance agent, a sales person or in any similar capacity with
the Securities and Exchange Commission, the Commodity Futures Trading
Commission, the National Futures Association, the National Association of
Securities Dealers, Inc. or the securities commission of any state or any
self-regulatory body. No person, other than full-time employees of Seller,
renders Investment Management Services to or on behalf of Advisory Clients
or solicits Advisory Clients with respect to the provision of Investment
Management Services by Seller.
(c) None of Seller or any person "associated" (as defined under both
the Investment Company Act and the Adviser Act) with Seller has been
convicted of any crime or is or has engaged in any conduct that would be a
basis for (i) denial, suspension or revocation of registration of an
investment adviser under Section 203(e) of the Advisers Act, or (ii)
ineligibility to serve as an investment adviser (or in any other capacity
contemplated by the Investment Company Act) to a registered investment
company pursuant to Section 9(a) or 9(b) of the Investment Company Act and,
to the knowledge of Seller, there is no proceeding or investigation for any
such ineligibility, disqualification, denial, suspension or revocation.
(d) Seller has adopted a written policy regarding xxxxxxx xxxxxxx and
a Code of Ethics. During the past three (3) years, to the knowledge of
Seller, there have been no material violations or allegations of material
violations of such Codes of Ethics or xxxxxxx xxxxxxx policies of Seller or
prohibitions under the Advisers Act.
3.19 Filing of Reports; Maintenance of Records. Seller (a) has made all
filings, including reports and other documents, required by the Advisers Act,
(b) has made all disclosures and delivered all documents required by the
Advisers Act to be delivered to its Advisory Clients and (c) has maintained all
certified books and other records required by the Advisers Act. Seller has
heretofore made available to Buyer copies of all such filings, disclosure
documents and books and records.
3.20 Fee Arrangements, Expenses and Custody of Funds. Seller has complied
in all material respects with the fee arrangement restrictions set forth in the
Advisers Act. Seller does not maintain custody or constructive custody of any
funds or securities of any Advisory Client.
3.21 Brokers. Seller has not engaged, or caused to be incurred, any
liability for any brokerage or finders' fees or agents' commissions or like
payments to, any finder, broker, or sales agent in connection with the origin,
negotiation, execution, delivery, or performance of this Agreement or the
transactions contemplated hereby for which Buyer may be or become liable.
3.22 Information Furnished. No representation or warranty made by Seller or
Shareholder in this Agreement, and no exhibit, certificate, schedule, document,
list or instrument prepared, made, or delivered, or to be prepared, made, or
delivered, by or on behalf of Seller or Shareholder pursuant hereto contains or
will contain, as of the Closing Date, any untrue statement of a material fact,
or omits any material fact.
ARTICLE IV
BUYER'S REPRESENTATIONS AND WARRANTIES
Buyer and, for the purposes of this Article IV only, Xxxxxx Xxxxxx Equity
Partners L.P., a Delaware limited partnership, jointly and severally, represents
and warrants to Seller that the following statements contained in this Article
IV, are correct and complete as of the date hereof and as of the Closing Date,
except as set forth in the disclosure schedules accompanying this Agreement.
4.1 Due Organization. Buyer is a limited liability company duly formed,
validly existing, and in good standing under the laws of the State of Delaware
and has all requisite power and authority to execute, deliver and perform the
Transaction Documents and the transactions contemplated hereby and thereby.
4.2 Due Authorization. The execution, delivery and performance of this
Agreement and the Transaction Documents and the transactions contemplated hereby
and thereby have been duly and validly authorized by all necessary action of
Buyer. The Transaction Documents, when executed and delivered, will have been
duly and validly executed and delivered by Buyer and will constitute the valid
and binding obligations of Buyer, enforceable against Buyer in accordance with
their respective terms except to the extent that their enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, fraudulent
conveyance or similar laws affecting the rights of creditors generally and by
legal and equitable limitations or the enforceability of specific remedies. The
execution, delivery, and performance of the Transaction Documents (as well as
other instruments, agreements, certificates, or other documents contemplated
hereby or thereby) by Buyer, do not and will not, when executed, (a) violate any
law, statute, rule, guideline, or regulation or any decree or judgment of any
court or Regulatory Entity applicable to Buyer or (b) violate or conflict with
any provision of the Articles of Organization or Limited Liability Company
Agreement of Buyer. No notice to, filing with, or authorization, consent or
approval of any public body or authority material to the consummation of this
transaction is required of Buyer or its equity holders in connection with the
execution, delivery, and performance by Buyer of the Transaction Documents or
the other documents and instruments to be delivered by Buyer pursuant hereto.
4.3 No Violation. Neither the execution, delivery, nor performance of this
Agreement by Buyer will (i) violate any provision of the certificate of
formation of Buyer, (ii) violate or be in conflict with, or constitute a default
(or an event which, with notice or lapse of time or both, would constitute a
default) under, or entitle any party to terminate any or all of the provisions
of, or cause the acceleration of or entitle any party to accelerate the
performance required by, or cause the acceleration of or entitle any party to
accelerate the maturity of any debt or obligation pursuant to, any contract,
agreement, arrangement, commitment or restriction of any kind to which Buyer is
a party or by which Buyer is bound; (iii) violate or conflict with any statute,
law, judgment, decree, order, regulation or rule of any court or governmental
authority applicable to Buyer, or (iv) require any waiver by, consent or
approval of, or any filing or registration with, any creditor of Buyer, any
court or governmental agency, or any other third party.
4.4 Litigation. There is no (i) action, suit, claim, proceeding or
investigation pending or, to Buyer's knowledge, threatened against or affecting
Buyer, at law or in equity, or before or by any federal, state, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, (ii) arbitration proceeding relating to
Buyer, or (iii) to Buyer's knowledge, governmental inquiry pending or threatened
against it or affecting it, which, if adversely determined, would question the
validity of, or prevent the consummation of, the transactions contemplated by
this Agreement.
4.5 Brokerage. There are no claims for brokerage commissions or finder's
fees or similar compensation in connection with the transactions contemplated by
this Agreement based on any arrangement or agreement made by or on behalf of
Buyer.
ARTICLE V
COVENANTS
5.1 Pre-Closing Covenants. Buyer, Seller and Shareholder agree as follows
with respect to the period between the execution of this Agreement and the
Closing.
(a) General. Each of the parties will use their best efforts to take
all action and to do all things necessary in order to consummate and make
effective the transactions contemplated by this Agreement (including
satisfaction, but not waiver, of the closing conditions set forth in
Article VI, below).
(b) Client Consents. As soon as practicable after the date hereof,
Seller shall provide written notifications in form and substance to be
mutually agreed upon by Seller and Buyer, notifying each Advisory Client of
the change in control of Seller that will occur upon consummation of the
transactions at Closing and requesting each Advisory Client for its Client
Consent. Seller shall use its best efforts to obtain the written consent to
the assignment of each Advisory Agreement and the Buyer shall provide all
commercially reasonable assistance to and cooperation with Sellers
regarding obtaining such Client Consent. If permitted pursuant to the terms
of the Advisory Agreement and applicable law, any Advisory Client who
receives the written notices described in this Section 5.1(b) and does not
object to the proposed assignment within the timeframe established by the
notices shall be deemed to have given Client Consent for
all purposes under this Agreement, including the calculation of the
Run-Rate Revenue Ratio and any adjustment to the Closing Consideration
pursuant to Section 2.4(b).
(c) Notices and Consents. Seller will give any notices to third
parties and will use its best efforts to obtain any third party consents
that may be required to consummate this transaction. Buyer shall obtain any
third party consents required to consummate this transaction on or prior to
the date hereof. Each of the parties will give any notices to, make any
filings with, and use its commercially reasonable efforts to obtain any
authorizations, consents, and approvals of governments and governmental
agencies.
(d) Operation of Business and Preservation of Business. Seller will
conduct the Business in its ordinary course of business and consistent with
Seller's past operating practice. Seller will use its reasonable good faith
efforts to keep its business and properties substantially and materially
intact, including its present operations, physical facilities, the Assets,
working conditions, and relationships with lessors, licensors, suppliers,
clients, and employees.
(e) Full Access. Seller will permit representatives of Buyer to have
access, at all reasonable times, and in a manner so as not to unreasonably
interfere with the normal business operations of Seller, to all premises,
properties, personnel, books, records, contracts, and documents of or
pertaining to Seller. In addition, Seller shall consult with Buyer's
representatives regarding operational and other matters related to the
Business.
(f) Notice of Developments. Each Party will give prompt written notice
to the other Party of any adverse development which may reasonably be
expected to cause a breach of any of its own representations and warranties
in Article III and Article IV above.
(g) Exclusivity. Seller will not (i) solicit, initiate, or encourage
the submission of any proposal or offer from any Person relating to the
acquisition of any capital stock or other voting securities, or any of the
assets outside Seller's ordinary course of business, (including any
acquisition structured as a merger, consolidation, or share exchange) or
(ii) participate in any discussions or negotiations regarding, furnish any
information with respect to, assist or participate in, or facilitate in any
other manner any effort or attempt by any Person to do or seek any of the
foregoing.
5.2 Confidentiality; News Release. All information furnished in writing by
one party to this Agreement to another party to this Agreement in connection
with this Agreement and the transactions contemplated by it shall be kept
confidential by the receiving party and shall be used by the receiving party
only in connection with this Agreement and the transactions contemplated hereby,
except to the extent that such information (i) is information which the
receiving party can demonstrate was already known to the receiving party when
received, (ii) thereafter becomes lawfully obtainable from other sources through
no act or failure to act on the part of the receiving party, or (iii) is
required to be disclosed in any document to be filed with any federal, state,
municipal or other government department, commission, board, bureau, agency or
instrumentality, domestic or foreign, or in connection with any litigation,
provided that the receiving party shall disclose only so much of the
confidential information as is legally required, and only after consultation
with counsel to the proprietary party. In the event that the Closing of the
transactions contemplated by this Agreement does not occur, each party to this
Agreement shall promptly return to the other all printed information received by
it from the other
party, and shall destroy all copies of, or extracts from, such information.
Except to the extent required by law, any news release or other announcement
concerning this Agreement or the transactions contemplated thereby shall be
issued or approved without first obtaining the prior written approval of the
other party as to the contents of the announcement and its release. Buyer and
Seller shall use their best efforts and establish reasonable precautions to
ensure that their Affiliates, principals, agents and employees abide by the
terms of this Section 5.2.
5.3 Post-Closing Covenants.
(a) Buyer, Seller and Shareholder agree that all books, records,
documents or materials retained by each party that relate to the Assets
shall be open for inspection by representatives of the other party at any
time during regular business hours until the earlier of (i) December 31,
2004, or (ii) such time as the full amount of the Second Deferred Payment
is made by Buyer to Seller. The other party may, during such period, at its
expense, make such copies or excerpts therefrom, in either case solely to
comply with legal, audit or tax obligations, as they may reasonably
request. For a period of twelve (12) months following the payment of the
Second Deferred Payment, neither party shall destroy or give up possession
of any original or final copy of any of the books and records relating to
the Assets reasonably required solely for the preparation of tax,
regulatory and other governmental compliance matters, without first
offering the other party the opportunity to obtain such original or final
copy or a copy thereof.
(b) Buyer and Seller agree to cooperate with respect to all regulatory
reporting or withdrawal matters before the Securities and Exchange
Commission, and state regulatory bodies.
(c) Seller agrees to promptly after Closing properly file the executed
Certificate of Amendment of Seller's Articles of Incorporation referred to
in Section 6.1(g) and to refrain thereafter from using the name "Berkeley
Capital Management" in connection with Seller or any of its Affiliates.
ARTICLE VI
CONDITIONS TO CLOSING
6.1 Conditions to Buyer's Obligations. The obligation of Buyer to
consummate the transactions contemplated by this Agreement are subject to the
satisfaction of the following conditions on or before (with satisfaction
continuing on) the Closing Date:
(a) The representations and warranties set forth in Article III hereof
shall be true and correct in all respects if qualified as to materiality,
and if not qualified as to materiality, shall be true and correct in all
material respects, each as of the Closing Date;
(b) Seller and Shareholder shall have performed in all material
respects (as determined in the sole discretion of Buyer reasonably
exercised) all the covenants and agreements required to be performed by
them prior to Closing under this Agreement;
(c) Seller shall have delivered an executed sublease regarding the use
of the office space at 000 Xxxxxxxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxxxxxxx,
Xxxxxxxxxx in a form and substance satisfactory to Buyer (the "Sublease");
(d) Seller shall have obtained and delivered to Buyer those consents,
approvals, agreements and waivers by any third parties that are required
for the consummation of the transactions contemplated hereby that are
listed on Schedule 2.1(b);
(e) Regulatory Entity approvals, as contemplated by this Agreement,
shall have been obtained and related filings required pursuant to any
applicable law or regulation will have been made, and approvals required
under the terms of this Agreement will have been obtained;
(f) No action, proceeding, or investigation by or before any court or
governmental or administrative body will have been initiated or be pending
wherein a judgment, decree or order might reasonably be issued that would
materially increase the costs to Buyer of the transactions contemplated
herein, or would prevent any of the transactions contemplated by this
Agreement or would cause such transactions to be declared unlawful or
rescinded, and no action, proceeding or investigation by or before any
court or governmental or administrative body has been concluded that have
enjoined the transactions contemplated herein;
(g) On the Closing Date, Seller will have delivered to Buyer the
following:
(i) A certificate signed by Seller dated as of the Closing Date
stating that the preconditions specified in subsection (a) and (b)
hereof have been satisfied;
(ii) Certified copies of the resolutions duly adopted by Seller's
board of directors and Shareholder each authorizing the execution,
delivery and performance of this Agreement, the other agreements and
the transactions contemplated hereby and thereby, including the change
in the name of Seller;
(iii) Good standing certificates for Seller from the State of
California and from each state in which it is required to be so
qualified to do business, dated not earlier than 30 days prior to the
Closing Date;
(iv) Copies of all required third party and Regulatory Entity
consents (or other evidence reasonably satisfactory to Buyer) actually
received by Seller that Buyer reasonably requires Seller to obtain in
order to effect the transactions contemplated by this Agreement;
(v) The General Assignment, Xxxx of Sale and Assumption
Agreement, in substantially the form attached hereto as Exhibit A,
executed by Seller;
(vi) The Noncompete Agreement executed by Seller and Shareholder,
in substantially the form attached hereto as Exhibit B;
(vii) Executed Certificate of Amendment to Seller's Article of
Incorporation sufficient to change, upon filing with the California
Secretary of State's Office, the name of Seller to a name other than
"Berkeley Capital Management";
(h) All actions to be taken by Seller in connection with the
consummation of the Closing on the Closing Date and the other transactions
contemplated hereby and all
documents required to be delivered by Seller in connection with the
transactions contemplated hereby will be reasonably satisfactory in form
and substance to Buyer;
(i) The Run Rate Revenue Ratio calculated pursuant to Section 2.4(b)
as of the Closing Date shall be at least 90%;
(j) Prior to the date of execution of this Agreement, Buyer and the
members of Seller's management requested by Buyer shall have entered into
employment agreements and the Limited Liability Company Agreement and
related documents of Buyer upon the terms and conditions satisfactory to
Buyer in its sole discretion, which agreements shall be held in escrow
pending Closing;
(k) Seller shall have delivered to Buyer an executed Services
Agreement, whereby Seller will provide certain services to Buyer after the
Closing Date, in form and substance satisfactory to Buyer in its sole
discretion;
(l) Seller shall have delivered to Buyer an executed Sub-Advisory
Agreement, whereby Buyer will provide certain sub-advisory services to
LPASI after the Closing Date, in form and substance satisfactory to Buyer
in its sole discretion;
(m) LPG shall have delivered to Buyer an executed Guarantee, whereby
LPG will guarantee the obligations of Seller and Shareholder hereunder in
form and substance satisfactory to Buyer in its sole discretion;
(n) Seller shall have delivered a consent to the transactions
contemplated herein by the Bank of Scotland related to that certain Term
Loan and Guarantee Facility dated on or about December 20, 2002 that Seller
and Shareholder are parties to and that certain Stock Pledge Agreement
dated on or about February 19, 2003 that Seller and Shareholder are parties
to (the "Stock Pledge") in a form satisfactory to Buyer;
(o) Shareholder shall have delivered a release of the Employee
Confidential Information Agreement for each person who will become an
employee of Buyer at Closing regarding confidential information that is
part of the Assets;
(p) Seller shall have received releases and resignations from its
employees;
(q) Shareholder shall have delivered to Buyer an executed assignment
and any other documents in proper form for the assignment of the trademark
"Berkeley Capital Management" to Buyer to be filed promptly after Closing
with the U.S. Patent and Trademark Office; and
(r) Seller and BUSA shall have delivered to Buyer an opinion of
counsel, subject to customary and reasonable qualifications, from in-house
counsel of Seller or BUSA that the Assets are free and clear of Liens and
that the Transaction Documents are duly authorized and enforceable.
Any condition specified in this Section 6.1 may be waived by Buyer provided
that no such waiver will be effective unless it is set forth in a writing
executed by Buyer.
6.2 Conditions to Seller's Obligations. The obligation of Seller to
consummate the transactions contemplated by this Agreement is subject to the
satisfaction of the following conditions on or before (with satisfaction
continuing on) the Closing Date:
(a) The representations and warranties set forth in Article IV hereof
shall be true and correct in all respects if qualified as to materiality
and if not qualified as to materiality, shall be true and correct in all
material respects as of the Closing Date;
(b) Buyer will have performed in all material respects (as determined
in the sole discretion of Seller reasonably exercised) all the covenants
and agreements required to be performed by it under this Agreement;
(c) No action, proceeding or investigation by or before any court or
governmental or administrative body will have been initiated or be pending
wherein a judgment, decree or order might reasonably be issued that would
prevent any of the transactions contemplated by this Agreement or cause
such transactions to be declared unlawful or rescinded, and no action,
proceeding or investigation by or before any court or governmental or
administrative body has been concluded that have enjoined or added
significant costs to the transactions contemplated herein;
(d) On the Closing Date, Buyer will have delivered to Seller the
following:
(i) A certificate executed by a Member or Manager of Buyer dated
as of the Closing Date, stating that the preconditions specified in
subsections (a) and (b) hereof have been satisfied;
(ii) The General Assignment, Xxxx of Sale and Assumption
Agreement, in substantially the form attached hereto as Exhibit A,
executed by Buyer;
(iii) The Closing Consideration by wire transfer, delivery of
other immediately available funds as agreed upon by Seller or other
mutually agreed upon method of delivery;
(iv) Buyer shall have delivered the Sublease duly executed by
Buyer;
(v) Buyer shall have delivered, or caused to be delivered, to
Seller, the Standby Letter of Credit referred to in Section 2.4(c).
(e) All actions to be taken by Buyer in connection with the
consummation of the Closing on the Closing Date and the other transactions
contemplated hereby and all documents required to be delivered by Buyer in
connection with the transactions contemplated hereby will be reasonably
satisfactory in form and substance to Seller;
(f) The Run Rate Revenue Ratio calculated pursuant to Section 2.4(b)
as of the Closing Date shall be at least 90%;
(g) Seller shall have received a consent to the transactions
contemplated herein by Bank of Scotland related to the Term Loan and the
Stock Pledge; and
(h) Regulatory Entity approvals, as contemplated by this Agreement,
shall have been obtained and related filings required pursuant to any
applicable law or regulation will have been made, and approvals required
under the terms of this Agreement will have been obtained; and
(i) Buyer shall have delivered to Seller and BUSA an opinion of
Buyer's counsel, subject to customary and reasonable qualifications, that
the Transaction Documents are duly authorized and enforceable.
Any condition specified in this Section 6.2 may be waived by Seller,
provided that no such waiver will be effective unless it is set forth in a
writing executed by Seller.
ARTICLE VII
INDEMNIFICATION
7.1 Indemnification of Buyer. Subject to the terms of this Agreement, each
of Seller and Shareholder agree that notwithstanding the Closing, Seller and
Shareholder will, jointly and severally, indemnify and hold harmless Buyer and
each member, manager, officer, agent and affiliate of Buyer (collectively, the
"Buyer Indemnified Parties") from and against any and all payments, damages,
losses, claims, liabilities, demands, charges, suits, penalties, costs and
expenses (including court costs and reasonable attorneys' fees and expenses
incurred in investigating and preparing for any litigation or proceeding)
(collectively, the "Losses"), which any of Buyer Indemnified Parties may
sustain, or to which any of Buyer Indemnified Parties may be subjected, arising
out of: (a) any misrepresentation, breach or default by Seller or Shareholder of
or under any of the covenants, agreements, representations, warranties or other
provisions of this Agreement or any agreement or document delivered in
connection herewith; (b) any failure by Seller or Shareholder to duly perform or
observe any term, provision, covenant, agreement or condition in this Agreement
to be performed or observed by Seller or Shareholder; or (c) any claim or claims
made against Buyer arising out of any of the Excluded Liabilities or the items
set forth on Disclosure Schedule 3.11.
7.2 Indemnification of Seller and Shareholder. Subject to the terms of this
Agreement, Buyer agrees that notwithstanding the Closing, Buyer will indemnify
and hold harmless Seller and Shareholder and each officer, director, agent and
affiliate of Seller (collectively, the "Seller Indemnified Parties") from and
against any and all Losses, which any of Seller Indemnified Parties may sustain,
or to which any of Seller Indemnified Parties may be subjected, arising out of:
(a) any misrepresentation, breach or default by Buyer of or under any of the
covenants, agreements, representations, warranties or other provisions of this
Agreement or any agreement or document delivered in connection herewith; or (b)
any failure by Buyer to duly perform or observe any term, provision, covenant,
agreement or condition in this Agreement to be performed or observed by Buyer.
7.3 Indemnification Offset. Seller and Shareholder agree that any Losses
incurred by Buyer for which Buyer is entitled to indemnification under Section
7.1 hereof may be offset against and deducted from amounts to be paid pursuant
to the First Deferred Payment or Second Deferred Payment to be made by Buyer, if
any. This ability to offset and deduct Losses against such payments shall be
cumulative and shall not preclude the assertion of other rights nor limit in
any way any indemnification obligations of or recourse for Losses against
Seller, Shareholder [or LPG] hereunder.
7.4 Cooperation for Indemnity.
(a) Whenever a claim for Losses shall arise for which one party (the
"Indemnified Party") shall be entitled to indemnification hereunder, the
Indemnified Party shall promptly notify the other party hereto (the
"Indemnifying Party") in writing describing the claim and the basis
therefor; provided however, that the failure to give prompt notice shall
not affect the right of the Indemnified Party to indemnification hereunder
except to the extent that such failure prejudices the ability of the
Indemnifying Party to defend any claim. The right of the Indemnified Party
to indemnification, as set forth in such notice, shall be deemed agreed to
by the Indemnifying Party unless, within 30 days after the mailing of such
notice, the Indemnifying Party shall notify the Indemnified Party in
writing that it disputes the right of the Indemnified Party to
indemnification. If the Indemnified Party shall be duly notified of such
dispute, the parties shall attempt to settle and compromise the same.
(b) Upon receipt by the Indemnifying Party of a notice from the
Indemnified Party with respect to any claim of a third party against the
Indemnified Party, and acknowledgment by the Indemnifying Party (whether
after resolution of a dispute or otherwise) of the Indemnified Party's
right to indemnification hereunder with respect to such claim, the
Indemnifying Party shall assume the defense of such claim with counsel
reasonably satisfactory to the Indemnified Party and the Indemnified Party
shall cooperate to the extent reasonably requested by the Indemnifying
Party in defense or prosecution thereof, provided that the Indemnified
Party is reimbursed by the Indemnifying Party for its reasonable
out-of-pocket costs in connection therewith. If the Indemnifying Party
shall acknowledge the Indemnified Party's right to indemnification and
elect to assume the defense of such claim, the Indemnified Party shall have
the right to employ its own counsel in any such case, but the fees and
expenses of such counsel shall be at the expense of the Indemnified Party,
unless there is, under applicable standards of conduct, a conflict or any
significant issue between Indemnifying Party and the Indemnified Party that
makes it improper for one counsel to represent both parties, in which case
the reasonable fees and expenses of such counsel shall be at the expense of
the Indemnifying Party. If the Indemnifying Party has assumed the defense
of any claim against the Indemnified Party, the Indemnifying Party shall
have the right to settle any claim for which indemnification has been
sought and is available hereunder; provided that, to the extent that such
settlement requires the Indemnified Party to take, or prohibits the
Indemnified Party from taking, any action or purports to obligate the
Indemnified Party, then the Indemnifying Party shall not settle such claim
without the prior written consent of the Indemnified Party, which consent
shall not be unreasonably withheld or delayed. If the Indemnifying Party
does not assume the defense of a third party claim and disputes the
Indemnified Party's right to indemnification, the Indemnifying Party shall
have the right to participate in the defense of such claim through counsel
of its choice, at the Indemnifying Party's expense, and the Indemnified
Party shall have control over the litigation and authority to resolve such
claim subject to this Section 7.4.
7.5 Survival of Indemnification Claims. Any claim for Losses pursuant to
Section 7.1 or Section 7.2, as applicable, whether incurred or contingent, must
be asserted in a writing delivered to the Indemnifying Party by the Indemnified
Party on or prior to the fifteenth (15)
month anniversary of the Closing Date, except to the extent based on
representations and warranties subject to different survival periods as provided
in Section 10.1.
ARTICLE VIII
EMPLOYEES
8.1 Employees.
(a) Buyer shall hire all of the Company's employees listed on Schedule
8.1(a) hereto (the "Transferred Employees"). The Transferred Employees
shall have resigned from Seller and shall have executed releases and
resignations and shall become employees of Buyer on the Closing Date. The
terms and conditions of employment of the Transferred Employees shall be
set by Buyer at its sole discretion. Except as otherwise set forth herein,
Buyer shall have no responsibility for severance payment or for payment of
compensation for services rendered on or before the Closing Date.
(b) Seller shall be responsible for any and all severance payments and
benefits due to its employees, if any, except for any Assumed Liabilities
for which Buyer has assumed and agreed to pay. Buyer shall be responsible
for any and all obligations and benefits which it is required by law to
offer to the Transferred Employees.
8.2 Claims. Except as provided in this Agreement, Seller shall administer
and retain liability, if any, for all employment and labor related claims of any
kind, including but not limited to any claims for severance pay, that arise out
of or that are attributable to events occurring prior to the Closing Date, and
Buyer shall administer and assume liability for all other claims of any kind
that are Assumed Liabilities or which arise out of or that are attributable to
events occurring on or after the Closing Date; provided, however, that workers'
compensation claims shall accrue and liability shall be assigned based on the
date the event giving rise to such claims occur.
8.3 Future Employment. Nothing in this Agreement shall be deemed or
construed to require Buyer to continue to employ any of the Transferred
Employees for any period after the Closing Date.
8.4 Employment Records. Seller agrees to provide Buyer with copies of all
labor and employment records, including but not limited to all salary history
and administration records, payroll, personnel, medical and immigration
(including I-9's) records for the Transferred Employees. Buyer shall have access
to the employment records of Seller's former employees at all reasonable times
for a period of five years following the Closing for the purpose of defending
against any claims brought against it by or on behalf of any former employee.
8.5 Assumption of Seller's Plans. It is expressly understood and agreed to
by the parties that Buyer is not adopting any pension, bonus, profit sharing,
stock option, stock incentive, savings, health, dental, vision, vacation,
disability, life insurance or other employee benefit plans of any kind
maintained by Seller, or to which Seller contributes or is required to
contribute, for the benefit of the Transferred Employees (the "Seller's Plans")
and that Buyer, as a result of this transaction, shall not assume any liability
or obligation arising under any of Seller's Plans. Any liability or obligation
relating to or arising under any of Seller's Plans shall
remain the sole and complete responsibility of Seller, except to the extent that
any such liability shall be an Assumed Liability.
ARTICLE IX
TAXES
9.1 Taxes.
(a) Seller shall be liable for and shall pay all Taxes levied and
assessed against Seller or the Assets with respect to periods ending on or
prior to the Closing. Buyer shall be liable for and shall pay all such
Taxes levied and assessed against the Assets with respect to periods after
the Closing.
(b) Sales and use taxes imposed on the purchase, sale, use or transfer
of any of the Assets by Seller to Buyer at Closing shall be borne by
Seller.
ARTICLE X
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
10.1 Survival. All, representations, warranties, indemnities, covenants and
agreements made by each of the parties hereto shall survive for fifteen (15)
months after the date of Closing, except for those set forth in Section 3.2 (Due
Authorization), Section 3.5 (Property and Liens), Section 3.10 (Taxes), Section
3.15 (Certain Employee Matters) and Section 3.16 (Environmental, Health and
Safety Matters), which shall survive until the expiration of the applicable
statute of limitations with respect to the matters contained therein.
ARTICLE XI
TERMINATION
11.1 Termination. This Agreement may be terminated at any time prior to the
Closing:
(a) By mutual written consent of Seller and Buyer;
(b) By Seller and Shareholder by written notice to Buyer if events
have occurred outside of the reasonable control of Seller or Shareholder
which have caused the failure of a condition to Seller's obligations set
forth in Section 6.2 after the use of Seller's best efforts to cure such
failure, which obligation is not waived by Seller and Shareholder, or if
there has been a material misrepresentation or material breach of warranty
on the part of Buyer in the representations and warranties of Buyer set
forth in this Agreement which has not been cured within thirty (30)
calendar days after notice thereof to Buyer; or
(c) By Buyer by written notice to Seller and Shareholder if (i) events
have occurred outside of the reasonable control of Buyer which have caused
the failure of a condition to Buyer's obligations set forth in Section 6.1
after use of Buyer's best efforts to cure such failure, which obligation is
not waived by Buyer, or (ii) there has been a material misrepresentation or
material breach of warranty on the part of Seller or Shareholder in the
representations and warranties of Seller or Shareholder set forth in this
Agreement which has not
been cured within thirty (30) calendar days after notice thereof to Seller
or Shareholder; or (iii) there has occurred a Seller Material Adverse
Effect; or
(d) By Seller and Shareholder, or by Buyer, by written notice to the
other parties if the Closing hereunder has not been consummated on or
before August 31, 2003, provided that if a willful breach of this Agreement
by Seller or Shareholder has prevented the consummation of the transactions
contemplated hereby, neither Seller nor Shareholder shall be entitled to
terminate pursuant to this Section 11.1(d) and provided, further, that if
Buyer's willful breach of this Agreement has prevented the consummation of
the transactions contemplated hereby, Buyer shall not be entitled to
terminate pursuant to this Section 11.1(d).
11.2 Effect of Termination. In the event of termination of this Agreement
by Seller and Shareholder, or by Buyer, as provided in this Agreement, this
Agreement will forthwith become void and there will be no liability on the part
of Buyer or Shareholder and Seller, except for material breaches of and material
misstatements or omissions in or pursuant to this Agreement by Buyer, Seller or
Shareholder, as appropriate, prior to the time of such termination (the
liability for which shall be borne by the party who commits the material willful
breach or makes the material intentional misstatement or omission). In the event
Buyer terminates this Agreement pursuant to Section 11.1(c)(iii), Buyer shall
assign to Seller and/or Shareholder any claims or causes of action Buyer may
have as a result of the events causing the Seller Material Adverse Effect.
ARTICLE XII
MISCELLANEOUS
12.1 Modifications; Waiver. Any amendment, change or modification of this
Agreement shall be ineffective unless in writing and signed by all parties
hereto. No failure or delay by any party hereto in exercising any right, power
or privilege hereunder, and no course of dealing between or among any of the
parties, shall operate as a waiver of any such right, power or privilege. No
waiver of any default on any one occasion shall constitute a waiver of any
subsequent or other default. No single or partial exercise of any such right,
power or privilege shall preclude the further or full exercise thereof.
12.2 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given when personally delivered,
mailed by certified mail, return receipt requested, or via Federal Express or
similar overnight courier service, if receipt is confirmed, or by facsimile.
Such notices or other communications shall be sent to the following addresses,
unless other addresses are subsequently specified in writing:
(i) If to Seller or Shareholder, to:
Berkeley International Capital Corporation
000 Xxxxxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Fax No. 000-000-0000
Attn: Xxxxxx X. Xxxxxxx
or to such other persons or addresses as Seller or any of them shall
furnish to Buyer in writing.
(ii) If to Buyer, to:
Berkeley Capital Management LLC
000 Xxxxxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Fax No. 000-000-0000
Attn: Xxxxx Xxxxxx
With a copy to:
Xxxxxx Xxxxxx NBF Private Equity
000 Xxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxxx Xxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx
Fax No. 000-000-0000
and
Xxxxx Xxxxxx & Xxxxxx LLP
0000 00xx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Fax No. 000.000.0000
Attn: Xxxxxxxx X. Xxxxxx, Esq.
or to such other person or address as Buyer shall furnish to Seller in writing.
12.3 Counterparts. This Agreement may be executed in multiple counterparts,
each of which shall be deemed an original but all of which counterparts
collectively shall constitute one instrument. Signatures may be exchanged by
facsimile, with original signatures to follow. Each party hereto agrees that it
will be bound by its own signature and that it accepts the facsimile signatures
of the other parties hereto.
12.4 Expenses. Each of the parties hereto will bear all costs, charges and
expenses incurred by such party in connection with the negotiation and drafting
of this Agreement and the Transaction Documents and the consummation of the
transactions contemplated herein.
12.5 Binding Effect; Assignment. This Agreement shall be binding upon and
inure to the benefit of Buyer, Seller and Shareholder, their respective
representatives, successors, and permitted assigns. No party shall assign its
rights or obligations hereunder without the prior written consent of the other
parties hereto.
12.6 No Strict Construction. The language used in this Agreement shall be
deemed to be the language chosen by the parties to express their mutual intent,
and no rule of strict construction shall be applied against any party hereto.
12.7 Entire and Sole Agreement; Review. This Agreement and the schedules,
exhibits and agreements referred to herein, constitute the entire agreement
between the parties hereto and supersede all prior agreements, negotiations,
representations, warranties, statements, promises, information, arrangements and
understandings, whether oral or written, express or implied, with respect to the
subject matter hereof. The schedules, exhibits and agreements identified in this
Agreement are incorporated herein by reference and made a part hereof. Each
party has read and understands all provisions of this Agreement and has, to the
extent believed necessary, discussed with its professional legal, tax and
financial advisors the provisions and implications of this Agreement. Each party
acknowledges that they have reviewed this Agreement prior to its execution and
that changes were made to this Agreement based upon its comments. If any
disputes arise with respect to the interpretation of any provision of this
Agreement, the provision shall be deemed to have been drafted by all of the
parties to it and shall not be construed against any party on the basis that the
party was responsible for drafting that provision.
12.8 Governing Law; Forum and Venue.
(a) This Agreement and its validity, construction, enforcement, and
interpretation shall be governed by the substantive law of the State of
California without reference to its conflict of laws provisions.
(b) Any legal action or other legal proceeding relating to this
Agreement or the enforcement of any provision of this Agreement may be
brought or otherwise commenced in any state or federal court located in the
City and County of San Francisco, California. Each party to this Agreement:
(i) expressly and irrevocably consents and submits to the
jurisdiction of each state and federal court located in the City and
County of San Francisco, California (and each appellate court located
in the State of California) in connection with any such legal
proceeding, including to enforce any settlement, order or award;
(ii) agrees that each state and federal court located in the City
and County of San Francisco, California shall be deemed to be a
convenient forum; and
(iii) waives and agrees not to assert (by way of motion, as a
defense or otherwise), in any such legal proceeding commenced in any
state or federal court located in the City and County of San Francisco
, California, any claim that such party is not subject personally to
the jurisdiction of such court, that such legal proceeding has been
brought in an inconvenient forum, that the venue of such proceeding is
improper or that this Agreement or the subject matter of this
Agreement may not be enforced in or by such court.
(c) Each party hereto agrees to the entry of an order to enforce any
resolution, settlement, order or award made pursuant to this Section by the
state and federal courts located in
the City and County of San Francisco, California and in connection
therewith hereby waives, and agrees not to assert by way of motion, as a
defense, or otherwise, any claim that such resolution, settlement, order or
award is inconsistent with or violative of the laws or public policy of the
laws of the State of California or any other jurisdiction.
(d) Each party to this Agreement hereby knowingly, voluntarily, and
intentionally waives the right to a trial by jury in respect of any
litigation arising out of, under or in connection with this Agreement, this
waiver being a material inducement for each such party to enter into this
Agreement.
12.9 Attorney's Fees. If any party shall commence any action or proceeding
against any other party in order to enforce the provisions hereof, or to recover
damages as the result of the alleged breach of any of the provisions hereof, the
prevailing party therein shall be entitled to recover all reasonable costs
incurred in connection therewith, including, but not limited to, reasonable
attorneys' fees, including the reasonable hourly rate for in-house counsel.
12.10 Invalid Provisions. If any provision of this Agreement is deemed or
held to be illegal, invalid or unenforceable, this Agreement shall be considered
divisible and inoperative as to such provision to the extent it is deemed to be
illegal, invalid or unenforceable, and in all other respects this Agreement
shall remain in full force and effect; provided, however, that if any provision
of this Agreement is deemed or held to be illegal, invalid or unenforceable
there shall be added hereto automatically a provision as similar as possible to
such illegal, invalid or unenforceable provision and be legal, valid and
enforceable. Further, should any provision contained in this Agreement ever be
reformed or rewritten by any judicial body of competent jurisdiction, such
provision as so reformed or rewritten shall be binding upon all parties hereto.
12.11 Headings. The descriptive section headings are for convenience of
reference only and shall not control or affect the meaning or construction of
any provision of this Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be duly executed as of the date and year first above written.
BUYER
BERKELEY CAPITAL MANAGEMENT LLC
By:
Name:
Title:
SELLER
BERKELEY CAPITAL MANAGEMENT
By:
Name:
Title:
BERKELEY (USA) HOLDINGS LIMITED
By:
Name:
Title:
For the purposes of Article IV only:
XXXXXX XXXXXX EQUITY PARTNERS, L.P.
By: Xxxxxx Xxxxxx Equity Advisors LLC
General Partner
By: Xxxxxx Xxxxxx Capital Partners Inc.
Managing Member
By:
Name:
Title:
