EXHIBIT 4.11
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STOCK PURCHASE AGREEMENT
BY AND AMONG
OLD MUTUAL PLC,
OLD MUTUAL (US) HOLDINGS INC.,
UNITED ASSET MANAGEMENT HOLDINGS, INC.
AMVESCAP PLC
AND
INVESCO NORTH AMERICAN HOLDINGS, INC.
DATED APRIL 26, 2001
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Table of Contents
ARTICLE I - DEFINITIONS..............................................................2
1.1 Definitions................................................................2
1.2 Other Definitional Provisions..............................................9
1.3 Cross Reference of Other Definitions......................................10
ARTICLE II - PURCHASE AND SALE OF STOCK.............................................11
2.1 Stock Purchase............................................................11
2.2 Purchase Price for Common Stock...........................................11
2.3 Computation of Base Annual Xxxxxxxx and Adjusted Base Annual Xxxxxxxx.....11
2.4 Additional Consideration..................................................13
2.5 Estimated Closing Balance Sheet...........................................13
2.6 Post-Closing Adjustment for Net Tangible Assets...........................14
2.7 Closing Transactions......................................................14
ARTICLE III - CONDITIONS TO CLOSING.................................................15
3.1 Conditions to the Purchaser's Obligations.................................15
3.2 Conditions to the Sellers' Obligations....................................18
ARTICLE IV - COVENANTS PRIOR TO CLOSING.............................................19
4.1 Affirmative Covenants of Old Mutual.......................................19
4.2 Client Consents...........................................................20
4.3 Section 15 of the 1940 Act; Reorganization of the Mid Cap Portfolio.......21
4.4 Negative Covenants of Old Mutual..........................................22
4.5 Covenants of the Purchaser................................................23
4.6 Regulatory Matters; Third Party Consents..................................24
4.7 Retention Bonus Plan......................................................24
4.8 Employment Agreements.....................................................25
4.9 Xxxxx-Xxxxx-Xxxxxx........................................................25
4.10 Release...................................................................25
4.11 Regarding Certain Trust Investments.......................................25
4.12 Revenue Sharing Purchase Agreement; Signing Bonus Plan....................27
4.13 Termination of Employee Benefit Plans.....................................27
4.14 401(K) Plan Transfer......................................................27
4.15 Redemption of Unit Awards.................................................27
4.16 Acquisition Event.........................................................27
4.17 Cooperation...............................................................28
ARTICLE V- REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANIES..................28
5.1 Organization and Corporate Power..........................................28
5.2 Authorization of Transactions.............................................28
5.3 Capitalization............................................................28
5.4 Subsidiaries; Investments.................................................29
5.5 Absence of Conflicts......................................................29
5.6 Financial Statements and Related Matters..................................30
5.7 Absence of Undisclosed Liabilities........................................30
5.8 Absence of Certain Developments...........................................30
5.9 Title to Properties.......................................................32
5.10 Reserved..................................................................33
5.11 Contracts and Commitments.................................................33
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5.12 Proprietary Rights........................................................34
5.13 Litigation; Proceedings...................................................34
5.14 Brokerage.................................................................35
5.15 Governmental Filings......................................................35
5.16 Employee Benefit Plans....................................................35
5.17 Insurance.................................................................37
5.18 Affiliate Transactions....................................................37
5.19 Compliance with Laws......................................................37
5.20 Disclosure................................................................38
5.21 Investment Contracts, Funds and Clients...................................39
5.22 Assets Under Management...................................................41
5.23 Labor Matters, etc........................................................41
5.24 Derivative Products.......................................................41
5.25 Section 15(f) Materials...................................................41
ARTICLE VI - REPRESENTATIONS AND WARRANTIES CONCERNING THE SELLERS..................42
6.1 Organization and Corporate Power..........................................42
6.2 Authorization of Transactions.............................................42
6.3 No Violation..............................................................42
6.4 Shares....................................................................42
6.5 Taxes.....................................................................42
6.6 Litigation................................................................44
6.7 Brokerage.................................................................44
6.8 Governmental Filings......................................................44
6.9 Insurance.................................................................44
ARTICLE VII - REPRESENTATIONS AND WARRANTIES CONCERNING THE PURCHASER...............45
7.1 Organization and Corporate Power..........................................45
7.2 Authorization of Transaction..............................................45
7.3 No Violation..............................................................45
7.4 Governmental Authorities and Consents.....................................45
7.5 Litigation................................................................45
7.6 Brokerage.................................................................46
7.7 Purchase Price............................................................46
7.8 Ineligible Persons........................................................46
7.9 Facts Affecting Regulatory Approvals......................................46
ARTICLE VIII - TERMINATION..........................................................46
8.1 Termination...............................................................46
8.2 Effect of Termination.....................................................47
ARTICLE IX - INDEMNIFICATION AND RELATED MATTERS....................................48
9.1 Survival..................................................................48
9.2 Indemnification...........................................................48
9.3 Procedure.................................................................51
9.4 Exclusive Remedy..........................................................52
9.5 Net Recovery..............................................................52
9.6 Right of Off-Set/Set-Off..................................................53
9.7 Adjustment to Purchase Price..............................................53
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ARTICLE X - ADDITIONAL AGREEMENTS...................................................53
10.1 Tax Matters...............................................................53
10.2 Press Releases and Announcements..........................................55
10.3 Further Transfers.........................................................56
10.4 Expenses..................................................................56
10.5 Exclusivity...............................................................56
10.6 Books and Records.........................................................56
10.7 Confidentiality and Non-Disclosure........................................57
10.8 Guarantee.................................................................57
10.9 Personnel Changes.........................................................57
10.10 Disposition of Business of the Companies...............................57
ARTICLE XI - MISCELLANEOUS..........................................................58
11.1 Amendment and Waiver......................................................58
11.2 Notices...................................................................58
11.3 Binding Agreement; Assignment.............................................60
11.4 Severability..............................................................60
11.5 No Strict Construction....................................................60
11.6 Captions..................................................................60
11.7 Entire Agreement..........................................................60
11.8 Counterparts..............................................................60
11.9 Governing Law.............................................................60
11.10 Parties in Interest.......................................................60
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INDEX OF EXHIBITS
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Exhibit A - Form of Client Notice
Exhibit B-1 - Form of Employment Agreement
Exhibit B-2 - List of Persons to Enter Into Employment Agreements
Exhibit C - Form of Retention Bonus Plan
Exhibit D - List of Employees
Exhibit E - Reserved
Exhibit F - List of Offices of the Companies
Exhibit G - Form of Revenue Sharing Purchase Agreement
INDEX OF SCHEDULES
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Schedule 2.3(a) Client Schedule
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Schedule 4.9 Gramm Xxxxx-Xxxxxx Schedule (not referenced in text)
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Schedule 5.1 Organization Schedule (Companies)
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Schedule 5.4 Subsidiaries Schedule (Companies)
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Schedule 5.5 Conflicts Schedule (Companies)
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Schedule 5.6 Financial Statements Schedule (Companies)
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Schedule 5.7 Undisclosed Liabilities (Companies)
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Schedule 5.8 Developments Schedule (Companies)
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Schedule 5.9 Leased Property Schedule (Companies)
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Schedule 5.11 Material Contracts Schedule (Companies)
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Schedule 5.12 Proprietary Rights Schedule (Companies)
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Schedule 5.13 Litigation Schedule (Companies)
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Schedule 5.14 Brokerage Schedule (Companies)
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Schedule 5.16 Benefit Plans Schedule (Companies)
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Schedule 5.16(c) Filings with respect to Benefit Plans (Companies)
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Schedule 5.17 Insurance Schedule (Companies)
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Schedule 5.18 Affiliate Transactions Schedule
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Schedule 5.19 Compliance with Laws Schedule
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Schedule 5.21(a) Investment Contracts, Funds and Clients Schedule
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Schedule 6.4 Shares Schedule (Sellers)
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Schedule 6.5 Taxes Schedule (Sellers)
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Schedule 6.7 Brokerage Schedule (Sellers)
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Schedule 6.9 Insurance Schedule (Sellers)
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT is made as of April 26, 2001, by and among
OLD MUTUAL PLC, a corporation incorporated under the laws of England and Wales
("Parent"), OLD MUTUAL (US) HOLDINGS INC., a Delaware corporation ("Old
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Mutual"), UNITED ASSET MANAGEMENT HOLDINGS, INC., a Delaware corporation
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("Holdings"), AMVESCAP PLC, a corporation incorporated under the laws of England
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and Wales ("AMVESCAP"), and INVESCO NORTH AMERICAN HOLDINGS, INC., a Delaware
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corporation (the "Purchaser"). Parent, Old Mutual, Holdings, AMVESCAP and the
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Purchaser are referred to herein collectively as the "Parties" and individually
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as a "Party."
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W I T N E S S E T H:
WHEREAS, Parent owns beneficially and of record all of the issued and
outstanding shares of capital stock of Old Mutual; and
WHEREAS, Old Mutual owns beneficially and of record all of the issued and
outstanding shares of capital stock of Holdings, and Holdings in turn owns
beneficially and of record all of the issued and outstanding common stock of
Pell Xxxxxx & Co., Inc., a Delaware corporation ("Pell Xxxxxx"); and
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WHEREAS, Old Mutual owns beneficially and of record all of the issued and
outstanding shares of capital stock of Rothschild/Pell Xxxxxx, Inc., a Maryland
corporation ("Rothschild"); and
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WHEREAS, Xxxxxx X. Xxxxxx ("Xxxxxx") and Xxxxxxx X. Xxxxxx ("Xxxxxx") hold
certain rights under the Revenue Sharing Agreements with respect to the
business, market and rights to provide services of Pell Xxxxxx; and
WHEREAS, AMVESCAP owns beneficially and of record all of the issued and
outstanding shares of capital stock of the Purchaser; and
WHEREAS, the Purchaser desires to acquire from Old Mutual and Holdings, and
Old Mutual and Holdings desire to sell to the Purchaser, all of the shares of
capital stock of Pell Xxxxxx and of Rothschild; and
WHEREAS, Purchaser desires to acquire from Xxxxxx and Xxxxxx and Xxxxxx and
Xxxxxx desire to sell to the Purchaser, all of their respective right, title and
interest in and to the Revenue Sharing Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties, intending to become
legally bound, hereby agree as follows:
ARTICLE I
DEFINITIONS
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1.1 Definitions. For purposes hereof, the following terms, when used herein
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with initial capital letters, shall have the respective meanings set forth
herein:
"Acquisition Event" means: (x) any merger or consolidation after which the
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Person holding at least 50% of the voting securities of any of the Companies
outstanding immediately prior thereto (either by remaining outstanding or by
being converted into voting securities of the surviving or acquiring entity)
holds less than 50% of the combined voting power of the voting securities of
such Company or such surviving or acquiring entity outstanding immediately after
such event; or (y) any sale of all or substantially all of the assets or capital
stock of any of the Companies, in either case, which occurs after the Closing
Date.
"Adverse Consequences" means all actions, suits, proceedings, hearings,
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investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, fines, costs, amounts paid in
settlement, Liabilities, obligations, Taxes, Liens, Losses, expenses, and fees,
including court costs and reasonable fees and expenses of attorneys and other
advisors.
"Advisers Act" means the Investment Advisers Act of 1940, as amended.
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"Advisory Entity" means Rothschild and Sovereign, each of which is
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registered under the Advisers Act.
"Affiliate" of any Person means any other Person controlling, controlled by
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or under common control with such first Person, where "control" means the
possession, directly or indirectly, of the power to direct the management and
policies of a Person whether through the ownership of voting securities or
otherwise.
"Affiliated Group" means an affiliated group as defined in Section 1504 of
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the Code (or any similar combined, consolidated or unitary group defined under
state, local or foreign income Tax law).
"Agreement" means this Stock Purchase Agreement, including all Exhibits and
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Schedules hereto, as it may be amended from time to time in accordance with its
terms.
"Anniversary Date" means either of the First Anniversary Date or the Second
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Anniversary Date.
"Anniversary Date Revenue" means, as of any Anniversary Date, the aggregate
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revenues of the Companies derived from management, trust, custodial or advisory
services to Clients (provided, however, as to revenues from and with respect to
Clients with whom the Companies had no relationship, direct or indirect, prior
to the Closing Date, revenues from such Clients shall be included in such
aggregate revenues only if the Client relationship is sourced from the offices
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of the Companies listed on Exhibit F hereto). Such aggregate revenues will be
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measured for the twelve months ending on (i) the last day of the calendar month
next preceding such Anniversary Date or (ii) if such Anniversary Date is the
last day of a calendar month, such Anniversary Date; provided, however, in
calculating Anniversary Date Revenues there shall be subtracted from any
revenues included therein any performance based fees and such revenues shall be
net of and shall take into account any fee waivers or caps, expense limitations,
expense reimbursements and any un-reimbursed payments by any Company with
respect to the distribution of shares of the Mid Cap Portfolio. For purposes of
the foregoing, the policies and procedures employed in recognizing revenues
shall be consistent with those employed by the Companies immediately prior to
the Closing Date to the extent those employed immediately prior to the Closing
Date are consistent with GAAP.
"Applicable Law" means any federal, state, local or foreign law, statute,
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ordinance, rule, regulation, judgment, order, injunction, decree, arbitration
award, agency requirement, license or permit of any Governmental Authority.
"Atlantic" means Pell Xxxxxx Trust Company (Atlantic), N.A., a national
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banking association and a wholly-owned subsidiary of Pell Xxxxxx.
"Banks" means Atlantic and PR Trust.
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"Business Day" means any day other than a Saturday, a Sunday or a day on
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which banks in the State of New York are generally closed for regular banking
business.
"Code" means the United States Internal Revenue Code of 1986, as amended.
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"Committee" means the committee comprised of Xxxxxxx Xxxxx, Xxxxx
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Xxxxxxxxx, Xxx Xxxxxxx, Xxxxxx Xxxxxx and Xxxxx Xxxxxxx, or their respective
successors.
"Common Stock" means, together, 100 shares of common stock of Pell Xxxxxx,
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no par value, and 638.6316 shares of Rothschild, no par value.
"Companies" means Pell Rudman, Rothschild, Sovereign, the Banks and each
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Subsidiary thereof.
"Company Confidential Information" means information regarding the identity
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of, assets under management for, revenues derived from or investment objectives
of Clients.
"Consent" shall mean any and all filings, consents or approvals, whether
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from a regulatory authority or other third party, that are necessary in
connection with (i) the execution and delivery by the Companies, the Sellers and
the Purchaser of this Agreement and (ii) the consummation by the Companies, the
Sellers and the Purchaser of the transactions contemplated hereby.
"Effective Time" has the meaning set forth in Section 2.4(a).
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"Employment Agreement" means that certain employment agreement
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substantially in the form of Exhibit B-1 to be entered into between the Persons
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set forth in Exhibit B-2 and the Purchaser concurrently with the execution of
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this Agreement.
"Estimated Closing Balance Sheet" has the meaning set forth in Section 2.4.
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"First Anniversary Date" means the date that is the first anniversary of
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the Closing Date.
"First Contingent Payment" means an amount (not less than zero) equal to
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the lesser of the following amounts:
1. 4 x [FADR - ABAB] x .8; or
2. 4 x [.5 (50,000,000 - ABAB)] x .8;
where FADR means Anniversary Date Revenue as of the First Anniversary Date. For
purposes of the foregoing, ABAB cannot exceed $50 million.
"Funds" means Sovereign New Millenium Fund, L.P., Sovereign New Millenium
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Fund II, L.P., and Pell Xxxxxx Venture Partners, L.P.
"GAAP" means generally accepted accounting principles as used in the United
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States of America as in effect at the time any applicable financial statements
were prepared or any act requiring the application of GAAP was performed.
"Governmental Authority" means any government, any state or other political
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subdivision thereof, any entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government, including
the SEC or any other government authority, agency, department, board, commission
or instrumentality of the United States, any State of the United States or any
political subdivision thereof, and any court, tribunal or arbitrator(s) of
competent jurisdiction, and any governmental or non-governmental self-regulatory
organization, agency or authority.
"Indebtedness" of any Person means, without duplication: (a) indebtedness
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for borrowed money or for the deferred purchase price of property or services in
respect of which such Person is liable, contingently or otherwise, as obligor or
otherwise (other than trade payables and other current liabilities incurred in
the ordinary course of business) and any commitment by which such Person assures
a creditor against loss, including contingent reimbursement obligations with
respect to letters of credit; (b) indebtedness guaranteed in any manner by such
Person, including a guarantee in the form of an agreement to repurchase or
reimburse; and (c) obligations under capitalized leases in respect of which such
Person is liable, contingently or otherwise, as obligor, guarantor or otherwise,
or in respect of which obligations such Person assures a creditor against loss.
"Initial Payment Amount" means an amount (not less than zero) determined in
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accordance with the following formula:
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4 x ABAB - {[(4 x ABAB - 100,000,000) x .5] - 5,000,000} x .4
where ABAB means Adjusted Base Annual Xxxxxxxx. For purposes of the foregoing,
ABAB cannot exceed $50 million.
"Insider" means, any officer or director of each of the Companies or any
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immediate family member of such Person (including, without limitation, any
Person related by marriage or adoption to any such individual), or any entity in
which any such Person owns any beneficial interest.
"Knowledge" means actual knowledge after Reasonable Inquiry.
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"Liability" means any liability (whether known or unknown, whether asserted
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or unasserted, whether absolute or contingent, whether accrued or unaccrued,
whether liquidated or unliquidated, and whether due or to become due), including
any liability for Taxes.
"LIBOR" means the one year London Interbank Offered Rates as reported in
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the Wall Street Journal as the same may be changed from time to time.
"Lien" means any mortgage, pledge, security interest, encumbrance,
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easement, restriction, charge, or other lien.
"Loss" means, with respect to any Person, any damage, liability, demand,
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claim, action, cause of action, cost, deficiency, penalty, fine or other loss or
expense, whether or not arising out of a third party claim, including all
penalties, reasonable attorneys' fees and expenses and all amounts paid or
incurred in connection with any action, demand, proceeding, investigation or
claim by any third party (including any Governmental Authority) against or
affecting such Person or which, if determined adversely to such Person, would
give rise to, evidence the existence of, or relate to, any other Loss, and
includes the investigation, defense or settlement of any of the foregoing.
"Material Adverse Effect" means: (a) any material adverse effect on the
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business, financial condition, operations, or properties of the Companies, taken
as a whole, other than any change or effect arising out of (i) a decline or
deterioration in the economy or the capital markets in general or the markets in
which the Companies operate, or (ii) this Agreement or the transactions
contemplated hereby or the announcement thereof or (b) an effect which is
reasonably likely to prevent, materially delay or materially impair the ability
of the Parties to consummate the transactions contemplated by this Agreement.
"Material Contract" means any contract required to be disclosed on Schedule
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5.11 of this Agreement.
"Mid Cap Portfolio" means the Pell Xxxxxx Mid Cap Growth Portfolio, a
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series of UAM Funds, Inc., a series management company registered under the 1940
Act.
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"Net Tangible Assets" means, (i) the book value of the Companies' total
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assets determined on a combined basis in accordance with GAAP consistently
applied with those principles followed in preparation of the Financial
Statements, but excluding amounts relating to contracts, accumulated contract
amortization, goodwill and accumulated amortization of goodwill, and other
assets classified by GAAP as intangible, minus (ii) the book value of the
Company's total liabilities, determined on a combined basis in accordance with
GAAP consistently applied as aforesaid and including (a) an accrual for all
unpaid amounts owed to Old Mutual or any of its Affiliates under any Related
Party Agreement to and including the Closing Date, (b) an accrual for all unpaid
bonuses, compensation, and deferred compensation payable, whether before or
after the Closing Date, with respect to services provided prior to the Closing
Date, (other than amounts payable pursuant to the Retention Bonus Plan referred
to in Section 4.7, the Signing Bonus Plan and other than amounts payable in
redemption of the Unit Awards redeemed as provided in Section 4.15), (c) an
accrual for amounts potentially payable to Xxxx XxXxxxxxx under his employment
agreement as if the measurement period for such payments ended immediately prior
to the Closing Date; (d) adequate accruals for all unpaid expenses (without
related tax benefits) incurred or payable by the Companies in connection with
the transactions contemplated by this Agreement, (e) an accrual for all amounts
payable with respect to the purchase of shares from the Federal Reserve Bank as
described in Item 7 of Schedule 5.19, if such shares have not been purchased
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prior to the Closing Date and (f) an accrual for all amounts payable with
respect to the settlement of the lawsuit described as Item 2 on Schedule 5.8.
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"OCC" means the Office of the Comptroller of the Currency.
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"Old Mutual's Knowledge" means the Knowledge of any of Xxxxxxxx X. Xxxxxx,
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Xxxxxx X. Xxxxxxx, Xxxxxxx X. Xxxxx III, or Xxxxx X. Xxx III after Reasonable
Inquiry.
"Ordinary Course of Business" means the ordinary course of business
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consistent with past practice (including, without limitation, with respect to
collection of accounts receivable, purchases of services, payment of accounts
payable and accrued expenses, levels of capital expenditures and operation of
cash management practices generally).
"Permit" shall mean any approval, authorization, certificate, consent,
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easement, filing, franchise, license, notice, permit, registration or right of
any Governmental Authority or any other Person to which any Person is a party or
that is or may be binding upon or inure to the benefit of any Person or its
securities, assets or business.
"Person" means an individual, a partnership, a corporation, an association,
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a limited liability company, a joint stock company, a trust, a joint venture, an
unincorporated organization, a Governmental Authority or any department, agency
or political subdivision thereof and any other entity.
"PR Trust" means Pell Xxxxxx Trust Company, N.A., a national banking
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association and a wholly-owned subsidiary of Pell Xxxxxx.
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"Proprietary Rights" means any and all patents, patent applications,
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trademarks, service marks, trademark or service xxxx applications and
registrations, trade and corporate names, copyrights, copyright applications and
registrations, trade secrets, know-how, technology, computer software and
software systems, business and marketing plans, customer and supplier lists,
confidential information and all other proprietary intangible property, rights
and interests.
"Reasonable Inquiry" means when used with reference to "Old Mutual's
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Knowledge" that Old Mutual has caused each of the representations and warranties
made or given by it herein that relates in any way to the business, affairs,
properties, assets, liabilities or financial affairs of any of the Companies,
and all Schedules related to any such representations and warranties, to be
reviewed by Xxxxxx, Xxxxxx, Xxxxx X. Xxxxxxx ("Xxxxxxx"), Xxxxxx X. Xxxx
("Xxxx") and Xxxx X. Xxxxxxxx ("Xxxxxxxx"), and Old Mutual shall have obtained
from each of Xxxxxx, Xxxxxx, Xxxxxxx, Xxxx and Xxxxxxxx, their certificate that
(i) they have reviewed for completeness and accuracy the representations and
warranties concerning the Companies in Article V of this Agreement, (ii) they
have reviewed for completeness and accuracy the disclosure Schedules relating
thereto (as the same shall have been amended and updated through the time of
Closing), (iii) they have caused the representations and warranties contained in
Article V of this Agreement to the extent they relate to Sovereign, and all
Schedules relating thereto, to be reviewed by Xxxxxxxxx X. Xxxxxxxxx and Xxxx X.
Xxxxxx, and (iv) they have conducted such other inquiry which they as such
officers have deemed reasonable and appropriate, and (v) based on the foregoing
inquiry, nothing has come to their attention that would lead them to believe
that such representations and warranties contain any untrue statement of
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein contained not misleading; and shall
mean when used with reference to the "Knowledge" of any other Person such degree
of inquiry as is commercially reasonable under the circumstances; provided
however, the certificates of Xxxxxxxxx and Xxxxxx described above may be limited
to matters relating to Sovereign.
"Related Party Agreements" means any agreement or arrangement, whether oral
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or written, between any of the Companies and Old Mutual or any Affiliate thereof
pursuant to which (a) the Company party thereto is obligated to pay any amounts
to Old Mutual or such Affiliate, (b) Old Mutual or any Affiliate thereof
provides any goods or services to any Company party thereto, or (c) any Company
is indebted to Old Mutual or any Affiliate thereof with respect to any loan or
other advance (howsoever characterized) made by Old Mutual or any Affiliate
thereof to any Company, and Related Party Agreement shall include, specifically
but without limitation, the Revenue Sharing Agreements; provided however that
Xxxxxxxxx and Xxxxxx'x rights to carried interest distributions under the
Sovereign New Millennium Fund, L.P. Limited Partnership Agreement dated
September 26, 1997 by and among Sovereign Financial Services, LLC as general
partner and the limited partners and the Sovereign New Millennium Fund II, L.P.
Limited Partnership Agreement dated November 30, 1999 by and among Sovereign New
Millennium, LLC as general partner and the limited partners shall not fall
within the definition of Related Party Agreement.
"Required Amount" means the greater of (a) $5,000,000 or (b) the minimum
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amount of regulatory capital required of the Banks under the regulations of the
OCC; provided, however, if
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the minimum amount of regulatory capital so required is in excess of $7,000,000,
the amount in this clause (b) shall be limited to the sum of (x) $7,000,000 plus
(y) one-half of the amount of such required regulatory capital in excess of
$7,000,000.
"Retention Bonus Plan" means the Retention Bonus Plan substantially in the
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form of Exhibit C hereto.
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"Revenue Sharing Agreements" means (i) that certain Amended and Restated
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Revenue Sharing Agreement, dated January 2, 1998 between Old Mutual, Pell
Xxxxxx, Holdings, Xxxxxx X. Xxxxxx, Xxxxx X. XxXxxxxx and Xxxxxxx X. Xxxxxx; and
(ii) that certain Revenue Sharing Agreement dated November 1, 1994 by and among
Old Mutual, Xxxxxxxxxx, Xxxxxx X. Xxxxxx, Xxxxx X. XxXxxxxx, and Xxxxxxx X.
Xxxxxx.
"SEC" means the Securities and Exchange Commission.
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"Second Anniversary Date" means the date that is the second anniversary of
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the Closing Date.
"Second Contingent Payment" means an amount (not less than zero) determined
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as follows:
a. If FADR exceeds ABAB and if the First Contingent Payment is determined
by line 1 of the definition of such term:
4 x [SADR - FADR] x .8
b. If FADR exceeds ABAB and if the First Contingent Payment is determined
by line 2 of the definition of such term:
4 x [SADR - (ABAB + .5 (50,000,000 - ABAB))] x .8
c. If ABAB equals or exceeds FADR:
4 x [SADR - ABAB] x .8
where SADR means Anniversary Date Revenue as of the Second Anniversary Date. For
purposes of the foregoing, neither SADR nor ABAB can exceed $50 million.
"Sellers" means Old Mutual and Holdings, acting jointly and severally.
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"Sovereign" means Sovereign Financial Services, Inc., a Delaware
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corporation, and a wholly-owned subsidiary of Pell Xxxxxx.
"Subsidiary" means, with respect to any Person, any corporation a majority
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of the total voting power of shares of stock of which is entitled (without
regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned
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or controlled, directly or indirectly, by that Person or one or more of the
other Subsidiaries of that Person or a combination thereof, or any partnership,
association or other business entity a majority of the partnership or other
similar ownership interest of which is at the time owned or controlled, directly
or indirectly, by that Person or one or more Subsidiaries of that Person or a
combination thereof. For purposes of this definition, a Person is deemed to have
a majority ownership interest in a partnership, association or other business
entity if such Person is allocated a majority of the gains or losses of such
partnership, association or other business entity or is or controls a managing
director or general partner of such partnership, association or other business
entity.
"Tax Returns" means returns, declarations, reports, claims for refund,
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information returns or other documents (including any related or supporting
schedules, statements or information) filed, or required to be filed, in
connection with the determination, assessment or collection of Taxes of any
party or the administration of any laws, regulations or administrative
requirements relating to any Taxes.
"Taxes" means any federal, state, local, or foreign income, gross receipts,
-----
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental, customs duties, capital stock, franchise,
profits, withholding, social security, unemployment, disability, real property,
personal property, sales, use, transfer, registration, value added, alternative
or add-on minimum, or other tax, fee, assessment or charge of any kind
whatsoever, including any interest, penalty, or addition thereto, whether
disputed or not.
"Total Contingent Payment" shall equal (a) one hundred eighty-two million
------------------------
dollars ($182,000,000) less (b) the Initial Payment Amount.
"Transaction Documents" means this Agreement, and all other agreements,
---------------------
instruments, certificates and other documents to be entered into or delivered by
any Party in connection with the transactions contemplated to be consummated
pursuant to this Agreement.
"Treasury Regulations" means the United States Treasury Regulations
--------------------
promulgated pursuant to the Code.
"Unit Award" means a Unit Award issued under the United Asset Management
----------
Corporation Marketing Incentive Plan, as from time to time in effect.
"1940 Act" means the Investment Company Act of 1940, as amended.
--------
1.2 Other Definitional Provisions.
-----------------------------
(a) Accounting Terms. Accounting terms which are not otherwise defined in
----------------
this Agreement have the meanings given to them under GAAP. To the extent that
the definition of an accounting term that is defined in this Agreement is
inconsistent with the meaning of such term under GAAP, the definition set forth
in this Agreement will control.
-9-
(b) "Hereof," etc. The terms "hereof," "herein" and "hereunder" and terms
------------
of similar import are references to this Agreement as a whole and not to any
particular provision of this Agreement. Section, clause, Schedule and Exhibit
references contained in this Agreement are references to Sections, clauses,
Schedules and Exhibits in or to this Agreement, unless otherwise specified.
(c) Successor Laws. Any reference to any particular Code or Treasury
--------------
Regulation section or any other law or regulation will be interpreted to include
any revision of or successor to that section regardless of how it is numbered or
classified.
1.3 Cross Reference of Other Definitions. Each capitalized term listed
------------------------------------
below is defined in the corresponding Section of
this Agreement:
Term Section
---- -------
Actual Net Tangible Assets 2.6(a)
Adjusted Base Annual Xxxxxxxx 2.3(b)
Advisory Contract 5.21(a)
Applicable Limitation Date 9.1
Base Annual Xxxxxxxx 2.3(a)
Cap 9.2(b)(iii)
Change in Bank Control Act 3.1(d)
Client 5.21(a)
Closing 2.7(a)
Closing Date 2.7(a)
Closing Transactions 2.7(b)
Contracts 5.21(a)
Draft Computation 2.6(a)
Effective Time 2.7(a)
Employee Benefit Plan 5.16(a)
ERISA 5.16(a)
ERISA Affiliate 5.16(a)
Exempt Fund Client 5.21(a)
Financial Statements 5.6
GLBA 4.9
Holdings Preface
HSR Act 3.1 (d)
Income Statement 2.6
Indemnified Party 9.3(a)
Indemnifying Party 9.3(a)
Interim Advisory Agreement 4.3
Latest Balance Sheet 5.6
Leased Properties 5.9(b)
Non-Limited Reps 9.2(b)(ii)
Notice 4.2
-10-
Objection Notice 2.6(a)
Old Mutual Preface
Old Mutual Parties 9.2(c)
Original Schedule 2.3
Parent Recitals
Party Preface
Pell Xxxxxx Recitals
PPM 5.20(b)
Purchase Agreement 3.1(k)
Purchase Price 2.2
Purchaser Preface
Purchaser Parties 9.2(a)
Revised Schedule 2.3(b)
Rothschild Recitals
Xxxxxx Recitals
Signing Bonus Plan 4.12(b)
Subsidiary Stock 5.4
Third Party Claim 9.3(b)
Xxxxxx Recitals
Trust Agreement 5.21(a)
2000 Combined Audited Financials 4.1(j)
ARTICLE II
PURCHASE AND SALE OF STOCK
--------------------------
2.1 Stock Purchase. On the Closing Date, subject to the terms and
--------------
conditions set forth in this Agreement, AMVESCAP shall cause the Purchaser to
purchase from the Sellers, and the Sellers shall sell and transfer to the
Purchaser, all of the shares of Common Stock owned by the Sellers, free and
clear of any Liens.
2.2 Purchase Price for Common Stock. The aggregate purchase price to be
-------------------------------
paid to the Sellers for the Common Stock (the "Purchase Price") is the sum of
--------------
(i) the Initial Payment Amount, plus or minus (ii) 80% of the amount by which
Actual Net Tangible Assets exceed or are less than the Required Amount, plus
(iii) the First Contingent Payment and plus (iv) the Second Contingent Payment.
2.3 Computation of Base Annual Xxxxxxxx and Adjusted Base Annual Xxxxxxxx.
---------------------------------------------------------------------
(a) Pell Xxxxxx will prepare and deliver to the Purchaser promptly after
the date hereof, a list (Schedule 2.3(a) or the "Original Schedule") of all
------------------------------------------
Clients of the Companies, as of March 31, 2001, showing for each Client as of
that date, the Client's name, fee arrangements, assets under management or held
in trust, custodial or advisory accounts (as the case may be), and pro forma
annual xxxxxxxx calculated by multiplying the assets under management or in
trust, custodial or advisory accounts on March 31, 2001 by the annual percentage
fee in effect with
-11-
such client on March 31, 2001. The Parties agree that the total of such pro
forma annual xxxxxxxx reflected on the Original Schedule is $43,000,000 (the
"Base Annual Xxxxxxxx").
(b) At the Closing, Pell Xxxxxx will deliver to the Purchaser Schedule
--------
2.3(b) (the "Revised Schedule") as of the close of business on the last day of
----- ----------------
the month ending immediately before the Closing (the "Revision Date") prepared
-------------
as follows which shows only the following adjustments to Base Annual Xxxxxxxx:
(i) The pro forma annual xxxxxxxx under any management, trust,
custodial or advisory relationship of a Client with the Companies that has
been terminated by such Client, or as to which the Client has notified any
of the Companies (orally or in writing) of its decision to terminate such
relationship, since the date of the Original Schedule shall be subtracted.
With respect to the Mid Cap Portfolio, the failure of the board of
directors of UAM Funds, Inc. to vote in person to approve an interim
advisory contract pursuant to Rule 15a-4 of the 1940 Act or, in the
alternative, of the shareholders to approve a new investment advisory
agreement, shall be deemed to be a termination of the advisory
relationship.
(ii) The pro forma annual xxxxxxxx of any Client that has engaged any
of the Companies to provide management, trust, custodial or advisory
services and for whom any of the Companies has commenced providing such
services since the date of the Original Schedule shall be added.
(iii) A portion of the pro forma annual xxxxxxxx of any Client that
has withdrawn assets in excess of income earned during the period from the
date of the Original Schedule to the Revision Date from the management,
trust, custodial or advisory services by any of the Companies since the
date of the Original Schedule equal to the percentage calculated by
dividing (a) the value of the assets so withdrawn (as of the date of
withdrawal) in excess of income so earned, by (b) the aggregate value of
the assets of such Client subject to management, trust, custodial or
advisory services by any of the Companies as of the date of the Original
Schedule shall be subtracted. If on or prior to the Closing Date any of the
Companies has been notified (orally or in writing) of a Client's decision
to withdraw assets in excess of income earned during the period from the
date of the Original Schedule to the Revision Date from the management,
trust custodial or advisory services by any of the Companies, a portion of
the pro forma xxxxxxxx of such Client equal to the percentage calculated by
dividing (a) the value of the assets to be so withdrawn in excess of income
so earned by (b) the aggregate value of the assets of such Client subject
to management, trust, custodial or advisory services as of the date of the
Original Schedule shall be subtracted.
(iv) The amount of the increase in the pro forma annual xxxxxxxx for
any Client that has added assets with respect to which any of the Companies
provide management, trust, custodial or advisory services at any time prior
to the Closing Date (including any income earned during the period from the
date of the Original Schedule to the Revision Date) attributable to such
added assets shall be added.
-12-
(v) Except as expressly provided above, pro forma annual xxxxxxxx will
be determined in the manner specified in Section 2.3.
(vi) If any of the Companies shall, after the date hereof, implement a
fee increase with respect to any Client account that is included in the
Original Schedule, the revenues of such client reflected on the Revised
Schedule shall reflect that fee increase.
(vii) The aggregate net amount of the foregoing additions and
subtractions shall be determined and shall be added to (if a positive
amount), or subtracted from (if a negative amount) Base Annual Xxxxxxxx and
the amount so determined shall be the "Adjusted Base Annual Xxxxxxxx."
-----------------------------
2.4 Additional Consideration.
------------------------
(a) As additional consideration for the Common Stock, the Purchaser agrees
to pay to the Sellers additional amounts, if any, as follows:
(i) Not later than sixty (60) days following the First Anniversary
Date, an amount not less than zero equal to the First Contingent Payment;
and
(ii) Not later than sixty (60) days following the Second Anniversary
Date, an amount not less than zero equal to the Second Contingent Payment;
provided, however, that in no event shall the sum of the First Contingent
Payment and the Second Contingent Payment exceed the Total Contingent
Payment.
(b) Payment of any amounts payable under this Section 2.4 shall be made by
wire transfer of immediately available funds to an account of Old Mutual
designated in writing delivered to Purchaser.
2.5 Estimated Closing Balance Sheet. Not later than five (5) Business Days
-------------------------------
prior to the Closing Date, Old Mutual shall cause the Companies to deliver to
the Purchaser a pro forma estimated combined balance sheet of the Companies as
of the Closing Date, reflecting the good faith best estimate of the Sellers as
to the book value of the assets and the amount of the liabilities of the Company
as of the close of business on the Business Day before the Closing Date and
prepared in a manner consistent with the definition of Net Tangible Assets (the
"Estimated Closing Balance Sheet"). The Estimated Closing Balance Sheet, when so
-------------------------------
delivered, shall be accompanied by a schedule (the "Estimated Closing Schedule")
--------------------------
prepared by the chief financial officer of the Companies, showing the Estimated
Net Tangible Assets as of the close of business on the Business Day before the
Closing Date as reflected on the Estimated Closing Balance Sheet, which
Estimated Closing Balance Schedule shall reflect thereon the written concurrence
of Old Mutual to the Net Tangible Assets shown thereon. The Net Tangible Assets
reflected on the Estimated Closing Schedule is referred to herein as the
"Estimated Net Tangible Assets."
-----------------------------
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2.6 Post-Closing Adjustment for Net Tangible Assets.
-----------------------------------------------
(a) Within sixty (60) days after the Closing Date, the Purchaser will
prepare and deliver to Old Mutual a computation of the Net Tangible Assets as of
the close of business on the Business Day before the Closing Date (the "Draft
-----
Computation"). The Purchaser will make available to Old Mutual all records and
-----------
work papers used in preparing the Draft Computation. If Old Mutual disagrees
with the computation of the Net Tangible Assets reflected on the Draft
Computation, Old Mutual may, within thirty (30) days after receipt of the Draft
Computation, deliver a notice (an "Objection Notice") to the Purchaser setting
----------------
forth Old Mutual's calculation of the amount of the Net Tangible Assets as of
the close of business on the Business Day before the Closing Date. The Purchaser
and Old Mutual will attempt in good faith to resolve any disagreements as to the
computation of the Net Tangible Assets, but if they do not obtain a final
resolution within thirty (30) days after delivery of an Objection Notice, the
Purchaser and Old Mutual will jointly retain an independent accounting firm of
recognized national or regional standing (the "Firm") to resolve any remaining
----
disagreements. If the Purchaser and Old Mutual are unable to agree on the choice
of the Firm, the Firm will be a "big-five" accounting firm (or successor
thereof) selected by lot (after excluding one firm designated by the Purchaser
and one firm designated by Old Mutual). The Purchaser and Old Mutual will
request that the Firm use its best efforts to render a determination within
sixty (60) days of its retention and the Purchaser, Old Mutual and their
respective agents will cooperate with the Firm during its engagement. The Firm
will consider only those items and amounts in the Draft Computation set forth in
the Objection Notice which the Purchaser and Old Mutual are unable to resolve.
The Firm's determination will be based on the definition of Net Tangible Assets
included herein. The determination of the Firm will be conclusive and binding
upon the Purchaser and the Sellers. The Purchaser and Old Mutual shall bear the
costs and expenses of the Firm based on the percentage which the portion of the
contested amount not awarded to each Party bears to the amount actually
contested by such Party. The Net Tangible Assets, as finally determined pursuant
to this Section 2.6(a), is referred to herein as the "Actual Net Tangible
-------------------
Assets."
------
(b) If the amount of the Actual Net Tangible Assets is less than the amount
of the Estimated Net Tangible Assets, Old Mutual shall pay to the Purchaser,
within five (5) Business Days after the determination of the Actual Net Tangible
Assets, 80% of the amount of such shortfall by wire transfer. If, on the other
hand, the amount of the Actual Net Tangible Assets is greater than the amount of
the Estimated Net Tangible Assets, the Purchaser shall pay to Old Mutual, within
five (5) Business Days after the determination of the Actual Net Tangible
Assets, 80% of the amount of such excess by wire transfer. Payments due under
Section 2.6(b) shall bear and be accompanied by interest at a rate equal to
LIBOR from the Closing Date until paid.
2.7 Closing Transactions.
--------------------
(a) Closing. The closing of the transactions contemplated by this Agreement
-------
(the "Closing") shall take place at the offices of Hill & Xxxxxx, One
-------
Xxxxxxxxxxxxx Xxxxx, Xxxxxx, XX 00000, commencing at 10:00 a.m. on the tenth
Business Day following the end of the calendar month during which occurs the
satisfaction or waiver of all conditions to the obligations of the Parties to
consummate the transactions contemplated hereby (other than conditions with
respect
-14-
to actions the respective Parties will take at the Closing itself), or at such
other place or on such other date as may be mutually agreeable to the Purchaser
and Old Mutual. The date and time of the Closing are herein referred to as the
"Closing Date." The consummation of the transactions contemplated hereby shall
------------
be deemed effective as of 12:01 A.M. on the Closing Date (the "Effective Time").
(b) Closing Transactions. Subject to the conditions set forth in this
--------------------
Agreement, the Parties shall consummate the following transactions (the "Closing
-------
Transactions") on the Closing Date:
------------
(i) The Sellers shall deliver to the Purchaser certificates
representing the Common Stock, duly endorsed for transfer or accompanied by
duly executed stock powers with all requisite state and federal transfer
stamps affixed thereto;
(ii) The Purchaser shall deliver to Old Mutual by wire transfer, to an
account designated by Old Mutual by a writing delivered to Purchaser not
later than five (5) Business Days prior to the Closing Date, an amount
equal to the Initial Payment Amount plus or minus, as the case may be, 80%
of the amount by which Estimated Net Tangible Assets exceed or are less
than the Required Amount; and
(iii) The Sellers and the Purchaser, as applicable, shall deliver the
certificates and other documents and instruments required to be delivered
by or on behalf of such Party under Article III.
ARTICLE III
CONDITIONS TO CLOSING
---------------------
3.1 Conditions to the Purchaser's Obligations. The obligation of the
-----------------------------------------
Purchaser to consummate the transactions contemplated by this Agreement is
subject to the satisfaction of the following conditions as of the Closing Date:
(a) The representations and warranties set forth in Article V and Article
VI hereof shall be true and correct in all material respects at and as of the
date of this Agreement and shall be true and correct in all material respects at
and as of the Closing Date as though then made and as though the Closing Date
were substituted for the date of this Agreement throughout such representations
and warranties, after taking into account any disclosures made by the Companies
or the Sellers, as the case may be, to the Purchaser pursuant to Section
4.1(f)(i) hereof, provided, however, to the extent the representations and
warranties set forth in Section 5.6 shall be untrue in any material respect and
the facts or circumstances giving rise to such untruth can be remedied as
provided in clause (i) of Section 8.1(f) or are subject to indemnification as
provided in clause (ii) of Section 8.1(f), such untruth shall be excepted from
the condition precedent stated in this Section 3.1(a);
-15-
(b) The Sellers shall have performed and complied in all material respects
with all of the covenants and agreements required to be performed by them under
this Agreement on or prior to the Closing;
(c) All Consents by third parties under any Material Contract (other than
Advisory Contracts and Trust Agreements), the absence of which would have a
Material Adverse Effect, shall have been obtained, and releases of any and all
Liens held by third parties on the Common Stock shall have been obtained, all on
terms reasonably satisfactory to the Purchaser;
(d) The applicable waiting period, if any, under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), shall have
-------
expired or been terminated; and the Purchaser shall have either received notice
from the OCC that pursuant to the Change in Bank Control Act of 1978 (the
"Change in Bank Control Act") or applicable regulations, the OCC will not
-------------------------
disapprove of the Purchaser's acquisition of either Atlantic or PR Trust, or the
period of time for OCC review of the transactions specified in the Change in
Bank Control Act or the applicable regulations shall have expired;
(e) No action, suit, or proceeding shall be pending or threatened before
any court or quasi-judicial or administrative agency of any federal, state,
local, or foreign jurisdiction or before any arbitrator wherein an unfavorable
judgment, decree, injunction, order or ruling would prevent the performance of
this Agreement or any of the transactions contemplated hereby, declare unlawful
the transactions contemplated by this Agreement, cause such transactions to be
rescinded or materially and adversely affect the right of the Purchaser to own,
operate or control any of the Companies, and no judgment, decree, injunction,
order or ruling shall have been entered which has any of the foregoing effects;
(f) All Related Party Agreements shall have been terminated by any Seller
parties thereto and any Affiliates of Sellers who are parties thereto effective
as of the close of business on the Closing Date, all amounts payable to Old
Mutual or any Affiliate thereof thereunder for any period to and including the
effective date of such termination shall have been paid, all Seller parties and
any Affiliates of Sellers who are parties thereto to such Related Party
Agreements shall have released in writing the Companies and the Purchaser from
any claims or liability thereunder, and the Purchaser shall have received
evidence reasonably satisfactory to it of such termination and release.
Notwithstanding the foregoing, the Companies shall make payment to Old Mutual
after the Closing Date of amounts owed to Old Mutual as of the Closing Date
under the Revenue Sharing Agreements, but only to the extent such amounts are
accrued for and included in the determination of Actual Net Tangible Assets, as
such amounts are collected during the calendar quarter following the Closing
Date from receivables that were in existence and revenues that were unbilled as
of the Closing Date, in a manner consistent with past practice; provided,
however, that all such amounts shall be paid no later than the last day of the
first quarter ending following the Closing Date.
(g) All Unit Awards shall have been redeemed as provided in Section 4.15
below, and Purchaser shall have received evidence reasonably satisfactory to it
of such redemptions.
-16-
(h) No change in the business of the Companies shall have occurred which
would have a Material Adverse Effect;
(i) On or prior to the Closing Date, the Sellers shall have delivered to
the Purchaser all of the following:
(i) a certificate from each of the Companies in a form reasonably
satisfactory to the Purchaser, dated the Closing Date, stating that the
preconditions specified in Sections 3.1 (a) through (h), inclusive, have
been satisfied;
(ii) copies of all third party and governmental Consents, approvals,
filings, releases and terminations required by the terms of this Agreement
in connection with the consummation of the transactions contemplated
herein;
(iii) certified copies of the resolutions of Old Mutual's and
Holdings' board of directors approving the transactions contemplated by
this Agreement;
(iv) with respect to each of the Companies, certificates of the
secretary of state of such Company's state of incorporation and each state
where such Company is required to qualify to do business, which
certificates shall be dated not more than twenty (20) days prior to the
Closing Date, providing that such Company is in good standing in such
jurisdiction;
(v) true and correct copies of the certificates of each of Xxxxxx,
Xxxxxx, Xxxxxxx, Xxxx and Xxxxxxxx, as described in the definition of
Reasonable Inquiry;
(vi) a true and correct copy of each amended trust agreement, consent
or waiver required under Section 4.11(b) hereof, and true and correct
copies of amended trust agreements, consents or waivers as contemplated by
Section 4.11(a) from the trustee or co-trustees under trusts described in
that Section 4.11(a) that in the aggregate represent not less than 75% of
the aggregate amount of the assets of such trusts invested in the Funds;
and
(vii) such other documents or instruments as the Purchaser may
reasonably request to effect the transactions contemplated hereby;
(j) All proceedings to be taken by the Sellers in connection with the
consummation of the Closing Transactions and the other transactions contemplated
hereby and all certificates, opinions, instruments and other documents required
to be delivered by the Sellers to effect the transactions contemplated hereby
reasonably requested by the Purchaser shall be reasonably satisfactory in form
and substance to the Purchaser; and
(k) The transactions provided for in a Revenue Sharing Purchase Agreement
substantially in the form of Exhibit G hereto ("Purchase Agreement") with each
of Xxxxxx and Xxxxxx shall have been consummated.
-17-
Any condition specified in this Section 3.1 may be waived by the Purchaser;
provided that no such waiver shall be effective unless it is set forth in
writing executed by the Purchaser.
3.2 Conditions to the Sellers' Obligations. The obligation of the Sellers
--------------------------------------
to consummate the transactions contemplated by this Agreement is subject to the
satisfaction of the following conditions as of the Closing Date:
(a) The representations and warranties set forth in Article VII hereof
shall be true and correct in all material respects at and as of the date of this
Agreement, and shall be true and correct in all material respects at and as of
the Closing Date as though then made and as though the Closing Date were
substituted for the date of this Agreement throughout such representations and
warranties, after taking into account any disclosures made by the Purchaser to
Old Mutual pursuant to Section 4.5(a)(i) hereof;
(b) The Purchaser shall have performed and complied with all of the
covenants and agreements required to be performed by it under this Agreement on
or prior to the Closing;
(c) The applicable waiting period, if any, under the HSR Act shall have
expired or been terminated; and not more than six (6) months prior to the
Closing Date the Purchaser shall have either received notice from the OCC that
pursuant to the Change in Bank Control Act or applicable regulations, OCC will
not disapprove of the Purchaser's acquisition of either Atlantic or PR Trust, or
the period of time for OCC review of the transactions specified in the Change in
Bank Control Act or the applicable regulations shall have expired;
(d) No action, suit, or proceeding shall be pending before any court or
quasi-judicial or administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator wherein an unfavorable judgment, decree,
injunction, order or ruling would prevent the performance of this Agreement or
any of the transactions contemplated hereby, declare unlawful the transactions
contemplated by this Agreement, cause such transactions to be rescinded or
materially and adversely affect the right of the Purchaser to own, operate or
control any of the Companies, and no judgment, decree, injunction, order or
ruling shall have been entered which has any of the foregoing effects;
(e) On or prior to the Closing Date, the Purchaser shall have delivered to
Old Mutual all of the following:
(i) a certificate from the Purchaser in a form reasonably satisfactory
to Old Mutual, dated the Closing Date, stating that the preconditions
specified in Sections 3.2(a) through (d), inclusive, have been satisfied;
(ii) certified copies of the resolutions of the Purchaser's board of
directors approving the transactions contemplated by this Agreement; and
-18-
(iii) such other documents or instruments as Old Mutual may reasonably
request to effect the transactions contemplated hereby;
(f) All amounts payable to Old Mutual or any Affiliate thereof under any
Related Party Agreement for any period to and including the Closing Date shall
have been paid or an accrual for the payment of any unpaid amounts due
thereunder shall be reflected on the Estimated Closing Balance Sheet and the
Closing Review;
(g) All proceedings to be taken by the Purchaser in connection with the
consummation of the Closing Transactions and the other transactions contemplated
hereby and all certificates, opinions, instruments and other documents required
to be delivered by the Purchaser to effect the transactions contemplated hereby
reasonably requested by Old Mutual shall be reasonably satisfactory in form and
substance to Old Mutual; and
(h) The transactions provided for in the Purchase Agreement with each of
Xxxxxx and Xxxxxx shall have been consummated.
Any condition specified in this Section 3.2 may be waived by Old Mutual;
provided that no such waiver shall be effective unless it is set forth in a
writing executed by Old Mutual.
ARTICLE IV
COVENANTS PRIOR TO CLOSING
--------------------------
4.1 Affirmative Covenants of Old Mutual. Prior to the Closing, unless the
------------------------------------
Purchaser otherwise agrees in writing, Old Mutual shall cause each of the
Companies to:
(a) conduct its business and operations only in the Ordinary Course of
Business;
(b) keep in full force and effect its corporate existence and use
commercially reasonable efforts to keep all rights, franchises and Proprietary
Rights relating or pertaining to its business and to cause its current insurance
(or reinsurance) policies not to be canceled or terminated or any of the
coverage thereunder to lapse, except where the failure to do so would not have a
Material Adverse Effect;
(c) use commercially reasonable efforts to carry on its business in the
same manner as presently conducted and keep its business organization and
properties intact, including its present business operations, physical
facilities, working conditions and employees and its present relationships with
lessors, licensors, suppliers, Clients and others having business relations with
it, except where the failure to do so would not have a Material Adverse Effect;
(d) maintain its material assets in good repair, order and condition
(normal wear and tear excepted) consistent with current needs and, in the event
of a casualty, loss or damage to any of such assets or properties prior to the
Closing Date, whether or not it is insured, either repair or replace such
damaged property or use the proceeds of such insurance in such other manner as
mutually agreed upon by Old Mutual and the Purchaser;
-19-
(e) maintain its books, accounts and records in accordance with past custom
and practice as used in the preparation of the Financial Statements;
(f) promptly (once Old Mutual obtains Knowledge thereof) inform the
Purchaser in writing of (i) any variances from the representations and
warranties contained in Article V or Article VI hereof which arise as a result
of the occurrence of events between the date hereof and the Closing Date, and as
a result of which, if such representations and warranties were restated on the
Closing Date, such representations and warranties would not be true and correct
in all material respects, and (ii) any material breach of any representation,
warranty or covenant hereunder by the Sellers;
(g) cooperate with the Purchaser and use commercially reasonable efforts to
cause the conditions to the Purchaser's obligation to close to be satisfied
(including, without limitation, the execution and delivery of all agreements
contemplated hereunder to be so executed and delivered and the making and
obtaining of all third party and governmental notices, filings, authorizations,
approvals, consents, releases and terminations);
(h) cooperate with the Purchaser in the Purchaser's investigation of the
business and properties of the Companies, to permit the Purchaser and its
employees, agents, accounting, legal and other authorized representatives to the
extent permitted by Applicable Law to (i) have full access to the premises,
books and records of each of the Companies at reasonable hours, (ii) visit and
inspect any of the properties of each of the Companies, and (iii) discuss the
affairs, finances and accounts of each of the Companies with the respective
directors, officers, and key employees of each of the Companies;
(i) use commercially reasonable efforts to obtain from the OCC, SEC or any
applicable state Governmental Authority such authority as may be necessary to
make available to Purchaser the reports of examination of the Banks and all
correspondence between any of the Banks or the Companies and the OCC, the SEC,
or state Governmental Authorities and to make all such reports and
correspondence available to Purchaser; and
(j) cause to be delivered to Purchaser as soon as practicable after the
date hereof, but in any event at least ten (10) Business Days prior to the
Closing Date, the audited combined financial statements of the Companies for the
fiscal year ended December 31, 2000 (the "2000 Combined Audited Financials").
--------------------------------
4.2 Client Consents.
---------------
(a) As soon as reasonably practicable following the date hereof, Old Mutual
shall cause the Advisory Entities and the Banks to send notices substantially in
the form attached hereto as Exhibit A (each, a "Notice"), (a) informing their
--------- ------
Clients of the transactions contemplated by this Agreement; and (b) requesting
the consent or approval of the assignment or deemed assignment if Client consent
to such assignment or deemed assignment is required by Applicable Law or is
required under the respective Advisory Contract for such assignment or
-20-
deemed assignment resulting from the transactions contemplated hereby. Old
Mutual shall also cause the Companies and Banks to request any Consents and
approvals or to provide notice as required by the governing documents of their
Exempt Fund Clients. The Purchaser shall use its commercially reasonable efforts
to cooperate with and assist the Advisory Entities in obtaining Client consents
pursuant to this Section 4.2.
(b) Old Mutual and the Companies shall make available to Purchaser copies
of any and all correspondence between it and Clients or Exempt Fund Clients
relating to the consent solicitation provided for in this Section 4.2, and shall
promptly inform Purchaser of the substance of any material oral communications
by a Client or Exempt Fund Client relating to such consent solicitation.
(c) In connection with obtaining the Client Consents required by
subsections (a) above and Section 4.3 below, Old Mutual and the Companies shall
keep the Purchaser informed of the status of obtaining such Client Consents and
deliver to the Purchaser prior to the Closing copies of all such executed Client
Consents and make available for inspection the originals of such Consents prior
to the Closing.
4.3 Section 15 of the 1940 Act; Reorganization of the Mid Cap Portfolio.
-------------------------------------------------------------------
(a) Old Mutual shall, as promptly as practical, use its commercially
reasonable efforts to assure that the board of directors of UAM Funds Trust,
acting on behalf of the Mid Cap Portfolio, votes in person to: (i) approve the
transfer of the assets of the Mid Cap Portfolio to a new portfolio, which will
be a series of the Invesco Funds Group, and with entities designated by AMVESCAP
serving as the investment adviser, administrator and distributor (such transfer
is referred to herein as the "Reorganization"), (ii) call a special meeting of
the shareholders of the Mid Cap Portfolio to be held as promptly as reasonably
practical for the purpose of obtaining the approval of such shareholders of a
new Investment Advisory Agreement with the investment adviser designated by
AMVESCAP pursuant to and in accordance with the provisions of Section 15 of the
1940 Act and the Reorganization and any other matters as may be required by the
1940 Act, (iii) cause UAM Funds Trust, to approve, and to use its commercially
reasonable efforts to obtain, or cause to be obtained, the approval by the
shareholders of the Mid Cap Portfolio of, such new Investment Advisory Agreement
pursuant to and in accordance with the provisions of Section 15 of the 1940 Act
and the Reorganization and any other matters as may be required by the 1940 Act,
(iv) cause the Mid Cap Portfolio to prepare, file with and cause to be cleared
by the SEC and all other Governmental Authorities having jurisdiction thereof,
as promptly as practical after the date hereof, all proxy solicitation materials
required to be distributed to the shareholders of the Mid Cap Portfolio with
respect to the actions recommended for shareholder approval by UAM Funds Trust,
(v) cause the Mid Cap Portfolio to mail such proxy materials to such
shareholders promptly after clearance by the SEC and cause to be submitted to a
meeting of the shareholders of the Mid Cap Portfolio as soon as practical after
such mailing the proposals described in clause (iii) above, (vi) cause UAM Funds
Trust, acting on behalf of the Mid Cap Portfolio to approve, pursuant to and in
conformity with SEC Rule 15a-4 under the 1940 Act, an interim investment
advisory contract between the Mid Cap Portfolio and an entity designated by
AMVESCAP (the "Interim Advisory Agreement").
--------------------------
-21-
(b) Prior to the earlier of the Closing Date or the termination of this
Agreement, Old Mutual and the Purchaser will cooperate with each other and each
will endeavor in good faith to cause the Mid Cap Portfolio to file revised
prospectuses or post-effective amendments to its registration statement on Form
N-1A or S-6, which revised prospectuses or amendments shall reflect changes as
necessary in its affairs as a consequence of the transactions contemplated by
this Agreement, and shall cooperate with one another in causing the Mid Cap
Portfolio to make any other filing necessary to satisfy disclosure requirements
to enable the public distribution of its shares of beneficial interest to
continue unabated after the Closing.
(c) Prior to the earlier of the Closing Date or the termination of this
Agreement, Old Mutual shall use its commercially reasonable efforts to ensure
that the Mid Cap Portfolio does not take any action that (a) would prevent it
from qualifying as a "regulated investment company" under Section 851 of the
Code, or (b) would be inconsistent with each of its prospectuses and other
offering, advertising and marketing materials, as amended or supplemented.
(d) In connection with the preparation and filing of the proxy solicitation
materials referred to in Section 4.3(a) above, Old Mutual, the Advisory Entities
and Purchaser will cooperate with each other and with the board of directors of
UAM Funds Trust, including providing such information as may be reasonably
requested for inclusion in such proxy statements. Each of UAM, the Advisor
Entities and Purchaser agrees that none of such information provided by it for
inclusion in such proxy solicitation materials will contain any untrue statement
of material fact, or omit to state any material fact required to make the
statements therein, in light of the circumstances in which they were made, not
misleading.
4.4 Negative Covenants of Old Mutual. Prior to the Closing, unless the
--------------------------------
Purchaser otherwise agrees in writing, Old Mutual shall cause each of the
Companies to not:
(a) make any loans, enter into any transaction with any Insider, or, except
in the Ordinary Course of Business, make or grant any increase in any officer's
or director's compensation, or make or grant any increase in any employee
benefit plan, incentive arrangement or other benefit covering any of its
employees;
(b) establish any pension, retirement, profit sharing or stock bonus plan
covering its employees, or contribute to any existing pension, retirement,
profit sharing or stock bonus plan covering its employees except in amounts
consistent with past practice;
(c) except as specifically contemplated by this Agreement, enter into any
contract, agreement or transaction, other than in the Ordinary Course of
Business;
(d) issue, sell, transfer, contribute, distribute, or otherwise dispose of
any of its securities or any material assets to any Person; provided, however,
-------- -------
distributions under the Revenue Sharing Agreements may continue to be made in
the Ordinary Course of Business;
-22-
(e) incur any Indebtedness other than Indebtedness necessary to finance its
working capital needs;
(f) create, renew, amend, terminate or cancel, or take any other action
that may result in the creation, renewal, amendment, termination or cancellation
of, any Contract except in the Ordinary Course of Business;
(g) take any action impairing its rights in any Contract or its assets
other than in the Ordinary Course of Business;
(h) purchase or lease any assets from, or sell or lease any assets to, any
of its Affiliates;
(i) amend its certificate or articles of incorporation, by-laws or other
organizational documents;
(j) terminate senior officers of any Company;
(k) enter into any new line of business unrelated to the business as
currently conducted;
(l) acquire or sell in any manner, including by way of merger,
consolidation or purchase or sale of an equity interest or assets, any business
or any corporation, partnership, association or other business organization or
division thereof;
(m) take or fail to take any action which action or omission constitutes a
breach or default under any Material Contract or material license to which any
Company is a party or by which it or any of its properties are bound, the effect
of which could reasonably be expected to cause or result in a Material Adverse
Effect; or
(n) agree to do any of the foregoing other than in the Ordinary Course of
Business.
4.5 Covenants of the Purchaser. Prior to the Closing, the Purchaser shall:
--------------------------
(a) promptly (once it obtains knowledge thereof) inform Old Mutual in
writing of any (i) variances from the representations and warranties contained
in Article VII hereof which arise as a result of the occurrence of events
between the date hereof and the Closing Date, and as a result of which, if such
representations and warranties were restated on the Closing Date, such
representations and warranties would not be true and correct in all material
respects, and (ii) breach of any representation, warranty or covenant hereunder
by the Purchaser;
(b) cooperate with Old Mutual and use commercially reasonable efforts to
cause the conditions to the Sellers' obligation to close to be satisfied
(including, without limitation, the execution and delivery of all agreements
contemplated hereunder to be so executed and delivered
-23-
and the making and obtaining of all third party and governmental filings,
authorizations, approvals, consents, releases and terminations); and
(c) as soon as practical following the date of this Agreement, file any
notice required under the Change in Bank Control Act or applicable regulations
with the OCC with respect to the Purchaser's acquisition of Atlantic and PR
Trust and use commercially reasonable efforts to obtain promptly a determination
from the OCC that the acquisition has not been disapproved.
4.6 Regulatory Matters; Third Party Consents. The parties to this Agreement
----------------------------------------
shall cooperate with each other and use all reasonable efforts promptly to
prepare and file all necessary documentation, to effect all applications,
notices, petitions and filings, and to obtain as promptly as practicable all
Consents and Permits which are necessary or advisable to consummate the
transactions contemplated by this Agreement (it being understood that the
Companies and the Sellers shall be responsible only for using commercially
reasonable efforts to obtain all such approvals, waivers and Consents from such
parties with whom the Companies are in contractual privity). If any required
Consent of or waiver by any third party (excluding any Governmental Authority
and excluding any Consent required to be obtained from a Client) is not obtained
prior to the Closing, the Parties hereto, each without cost, expense or
liability to any other Party, shall cooperate in good faith to seek, if
possible, an alternative arrangement to achieve the economic results intended.
The parties to this Agreement will have the right to review in advance, and will
consult with the other on, in each case subject to Applicable Laws relating to
the exchange of information, all of the information relating to Purchaser, the
Companies or the Sellers, as the case may be, which appear in any filing made
with, or written materials submitted to, any third party or any Governmental
Authority in connection with the transactions contemplated by this Agreement;
provided, however, that nothing contained herein shall be deemed to provide any
-------- -------
party to this Agreement with a right to review any information provided to any
Governmental Authority on a confidential basis in connection with the
transactions contemplated hereby. The parties to this Agreement agree that they
will consult with each other with respect to the obtaining of all permits,
Consents, approvals and authorizations of all third parties and Governmental
Authority necessary or advisable to consummate the transactions contemplated by
this Agreement and each party will keep the others appraised of the status of
matters relating to completion of the transactions contemplated herein. The
party responsible for a filing as set forth above shall promptly deliver or make
available to the other parties hereto evidence of the filing of all
applications, filings, registrations and notifications relating thereto (except
for any confidential portions thereof), and any supplement, amendment or item of
additional information in connection therewith (except for any confidential
portions thereof). The party responsible for a filing shall also promptly
deliver or make available to the other parties hereto a copy of each material
notice, order, opinion and other item of correspondence received by such filing
party from any Governmental Authority in respect of any such application (except
for any confidential portions thereof). In exercising the foregoing rights and
obligations, Purchaser, the Companies and the Sellers shall each act reasonably
and as promptly as practicable.
4.7 Retention Bonus Plan. Purchaser agrees that it will cause the Companies
--------------------
to (a) adopt and implement, as soon as practicable effective as of the Closing
Date, a retention bonus plan (the "Retention Bonus Plan"), which shall provide
--------------------
for payments to the participants therein
-24-
substantially on the terms and conditions and over the periods set forth in
Exhibit C, and (b) designate as participants in such Retention Bonus Plan those
---------
employees of the Companies listed on Exhibit D who remain in the employment of
---------
the Companies immediately following the Closing Date.
4.8 Employment Agreements. Each of the senior executive employees of the
---------------------
Companies whose name is set forth on Exhibit B-1 has entered into an employment
-----------
agreement with Purchaser substantially in the form of Exhibit B-2 hereto.
-----------
4.9 Xxxxx-Xxxxx-Xxxxxx ("GLBA"). Old Mutual and each of the Companies shall
---------------------------
prosecute with commercially reasonable diligence the action described as Item 1
on Schedule 4.9.
------------
4.10 Release. If the transactions contemplated by this Agreement are
-------
consummated, effective at the Effective Time, Old Mutual hereby agrees to the
termination, effective as of the day before the Closing Date, of each Related
Party Agreement (provided, however, that the Purchaser agrees to pay all amounts
accrued and owed under the Revenue Sharing Agreements as of the Closing Date no
later than the last day of the first quarter ending following the Closing Date),
and each Seller hereby releases and discharges the Companies and the Purchaser,
and their Affiliates and their respective past, present and future officers,
directors, agents and employees, of, from, against and in respect of any action,
cause of action, damage, claim, or liability based upon, arising out of, or
relating to (a) any Related Party Agreement, or (b) the ownership by such Seller
of shares of the capital stock of any Company (including, without limitation,
any claim for payment of any dividends accrued and unpaid or declared but
unpaid) at any time or for any period ending on, prior to or after the Effective
Time; provided, however, no Seller shall be deemed to release any claim based
upon rights of such Seller under this Agreement including the right of Old
Mutual to receive payments accrued on the Estimated Closing Balance Sheet or the
Closing Review but unpaid under the Revenue Sharing Agreements for any period
ended with or prior to the effective time of the termination of such agreement.
4.11 Regarding Certain Trust Investments. Prior to the Closing, Old Mutual
-----------------------------------
and Holdings shall take the following actions with respect to any trust
agreement, whether revocable or irrevocable, to which either Bank or any
employee thereof is a party, pursuant to which such Bank or employee, as trustee
or co-trustee thereunder, has caused any portion of the assets of such trust to
be invested in either of the Funds, to the reasonable satisfaction of the
Purchaser:
(a) In the case of any trust which may be altered, amended, or revoked by
the grantor thereof as of the date of this Agreement,
(i) to communicate to the grantor that assets of the trust have been
invested in either or both of the Funds, and to describe such assets and
such investments in detail;
(ii) to describe in detail in such communication to the grantor the
nature of the relationship between the Bank and the Fund(s) in which trust
assets have been invested, any interest the Bank and/or any of its
Affiliates may have in the underwriting or distribution of the Fund(s) in
which trust assets have been invested or any other securities
-25-
in which trust assets have been invested, any capacity in which the Bank
and/or any of its Affiliates acts for the issuer of the Fund(s) in which
trust assets have been invested or any other securities in which trust
assets have been invested, and any services provided by the Bank and/or any
of its Affiliates to the Fund(s) in which trust assets have been invested
or any other investment company in the securities of which trust assets
have been invested and the compensation received for such services;
(iii) to enter into an amendment of such trust with the grantor
thereof pursuant to which (a) appropriate waivers and/or consents are given
by the grantor of such trust to the making of, and the continuation prior
to the date of such amendment of, the investment of such trust assets in
the Funds or any other securities required to be described in the
communication required by subparagraphs 1 and 2, and (b) waiving any
failure of the Bank party to such trust agreement to timely make any
disclosures required by applicable law or regulation with respect to such
investment, and (c) granting to the Bank, as trustee, the express authority
to continue such investment of trust assets in the Funds following the
Closing Date.
(b) In the case of any trust which may not be altered, amended, or revoked
by the grantor thereof as of the date of this Agreement, or which becomes
unalterable, unamendable, or irrevocable before the provisions of paragraph (a)
have been complied with (for example, because of the grantor's death before the
Closing Date),
(i) to communicate to each person to whom statements for the trust are
rendered (or required to be rendered), or to whom statements for the trust
have previously been rendered (or required to be rendered), or to whom
statements for the trust are expected to be rendered (or required to be
rendered) before the Closing Date, that assets of the trust have been
invested in either or both of the Funds, and to describe such assets and
such investments in detail;
(ii) to describe in detail in such communication(s) the nature of the
relationship between the Bank and the Fund(s) in which trust assets have
been invested, any interest the Bank and/or any of its Affiliates may have
in the underwriting or distribution of the Fund(s) in which trust assets
have been invested or any other securities in which trust assets have been
invested, any capacity in which the Bank and/or any of its Affiliates acts
for the issuer of the Fund(s) in which trust assets have been invested or
any other securities in which trust assets have been invested, and any
services provided by the Bank and/or any of its Affiliates to the Fund(s)
in which trust assets have been invested or any other investment company in
the securities of which trust assets have been invested and the
compensation received for such services;
(iii) to secure from each person entitled to receive the
communications required by subparagraphs 1 and 2 appropriate waivers and/or
consents to the making of, and the continuation prior to the date of such
waivers and/or consents, the investment of such trust assets in the Funds
or any other securities required to be described in the communication
required by subparagraphs 1 and 2, and (b) waiving any failure of the
-26-
Bank party to such trust agreement to timely make any disclosures required
by applicable law or regulation with respect to such investment, and (c)
granting to the Bank, as trustee, the express authority to continue such
investment of trust assets in the Funds following the Closing Date.
4.12 Revenue Sharing Purchase Agreement; Signing Bonus Plan.
------------------------------------------------------
(a) Contemporaneously with and as a part of the execution and delivery of
this Agreement, Purchaser has entered into a Purchase Agreement with each of
Xxxxxx and Xxxxxx providing for the purchase by Purchaser simultaneously with
and as a part of the Closing of the respective interest of Xxxxxx and Xxxxxx in
the Revenue Sharing Agreements.
(b) Prior to the Closing Date, Old Mutual shall have adopted the Signing
Bonus Plan (the "Signing Bonus Plan"), pursuant to which amounts shall be paid
------------------
by Old Mutual to the participants in the Signing Bonus Plan on the terms, at the
times and subject to the conditions to payment stated therein. Old Mutual shall
be solely responsible for payment of all amounts that are or become payable
under the Signing Bonus Plan, and neither Purchaser, AMVESCAP nor any of the
Companies shall have any liability or obligation with respect to payment of any
amounts payable thereunder.
4.13 Termination of Employee Benefit Plans. Prior to the Closing Date,
-------------------------------------
Purchaser may require the Companies to take all steps reasonably necessary to
terminate any Employee Benefit Plan that is maintained or contributed to solely
by one of the Companies, including, but not limited to, providing any required
notices, adopting any required amendments or resolutions to be effective before
or coincident with the Closing Date.
4.14 401(k) Plan Transfer. As soon as practicable following the Closing
--------------------
Date, Sellers shall cause the trustees of the United Asset Management
Corporation Profit Sharing and 401(k) Plan (the "UAM 401(k) Plan") to transfer
to a defined contribution plan maintained by Purchaser or an Affiliate thereof
an amount equal to the aggregate account balances of participants (or their
beneficiaries) in the UAM 401(k) Plan who are either currently employed by one
of the Companies or last employed by one of the Companies immediately prior to
separating from service with an Affiliate. Such transfer shall be evidenced by
an agreement in a form as shall be mutually agreed upon by the parties hereto.
4.15 Redemption of Unit Awards. Prior to the Closing Date, Old Mutual shall
-------------------------
redeem or cause to be redeemed each Unit Award issued and outstanding such that
no Unit Awards will be outstanding at the time of the Closing. Old Mutual shall
be solely responsible for, and shall pay, all amounts that shall become payable
in respect of any Unit Award prior to its redemption and in respect of the
redemption of all Unit Awards as required herein, and neither Purchaser,
AMVESCAP nor any of the Companies shall have any liability or obligation with
respect to the payment of any such amounts.
4.16 Acquisition Event. If an Acquisition Event is consummated prior to the
-----------------
Second Anniversary Date, Purchaser shall require the Person or entity holding
more than fifty percent
-27-
(50%) of the combined voting power of the applicable voting securities
immediately following such consummation to assume all of the Purchaser's
unfulfilled obligations and covenants under this Agreement.
4.17 Cooperation. Except as otherwise permitted in this Agreement, Sellers
-----------
shall not take any action to prevent the transactions contemplated by each of
the Purchase Agreements to be consummated.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
------------------------------
CONCERNING THE COMPANIES
------------------------
As a material inducement to the Purchaser to enter into this Agreement, the
Sellers hereby represent and warrant that:
5.1 Organization and Corporate Power. Each of the Advisory Entities is a
--------------------------------
corporation duly organized, validly existing and in good standing under the laws
of its state of incorporation and is qualified to do business in every
jurisdiction in which it is required to be qualified, except where the failure
to be so qualified would not have a Material Adverse Effect. Each of the Banks
is a corporation duly organized, validly existing and in good standing under the
laws of the United States as a national banking association authorized to engage
in fiduciary activities. Each of the Banks meets the requirements for exclusion
from the definition of "bank" under Section 2(c)(1)(D) of the Bank Holding
Company Act. The jurisdictions of incorporation of each of the Companies and
Banks and all jurisdictions in which such Companies are qualified to do business
are set forth on Schedule 5.1 attached hereto. Each of the Companies has full
------------
power and authority and all licenses, permits and authorizations necessary to
own and operate its properties and to carry on its business as now conducted,
except where the failure to obtain such licenses, permits and authorizations
would not have a Material Adverse Effect. Correct and complete copies of each of
the Companies' certificate of incorporation (or articles of association, in the
case of the Banks) and by-laws have been furnished to the Purchaser, which
documents reflect all amendments made thereto at any time prior to the date of
this Agreement. Correct and complete copies of the minute books containing the
records of meetings of the stockholders and board of directors, the stock
certificate books and the stock record books of each of the Companies have been
made available to the Purchaser. No Company is in default under or in violation
of any provision of its certificates of incorporation (or articles of
association, in the case of the Banks) or its by-laws.
5.2 Authorization of Transactions. All corporate proceedings on the part of
-----------------------------
any of the Companies necessary to approve and authorize the execution and
delivery of the Transaction Documents and the consummation of the transactions
contemplated thereby have been taken.
5.3 Capitalization. The authorized capital stock of Pell Xxxxxx consists of
--------------
100 shares of common stock, no par value, of which 100 shares are issued and
outstanding and owned, beneficially and of record, by Holdings. The authorized
capital stock of Rothschild consists of 5,000 shares of common stock, no par
value, of which 638.6316 shares are issued and
-28-
outstanding and owned, beneficially and of record, by Old Mutual. All of the
issued and outstanding shares of Pell Xxxxxx'x and Xxxxxxxxxx'x capital stock
have been duly authorized, are validly issued, fully paid, and nonassessable,
are owned of record and beneficially free and clear of all Liens, and are not
subject to, nor were they issued in violation of, any preemptive rights or
rights of first refusal. There are no outstanding or authorized options,
warrants, rights, contracts, calls, puts, rights to subscribe, conversion rights
or other agreements or commitments to which Pell Xxxxxx or Xxxxxxxxxx is a party
or which are binding upon Pell Xxxxxx or Xxxxxxxxxx providing for the issuance,
disposition or acquisition of any of their capital stock (other than this
Agreement). There are no outstanding or authorized stock appreciation, phantom
stock or similar rights with respect to Pell Xxxxxx or Xxxxxxxxxx. There are no
voting trusts, proxies or any other agreements or understandings with respect to
the voting of the capital stock of Pell Xxxxxx or Xxxxxxxxxx. Neither Pell
Xxxxxx nor Xxxxxxxxxx is subject to any obligation (contingent or otherwise) to
repurchase or otherwise acquire or retire any shares of its capital stock.
5.4 Subsidiaries; Investments. Except as set forth on Schedule 5.4 attached
------------------------- ------------
hereto, neither Pell Xxxxxx, Xxxxxxxxxx nor any Subsidiary of Pell Xxxxxx or
Xxxxxxxxxx owns or holds any shares of stock or any other security or interest
in any other Person or any rights to acquire any such stock or other security or
interest. All of the authorized, issued and outstanding shares of capital stock
of each of the Subsidiaries identified on Schedule 5.4 (the "Subsidiary Stock")
------------ ----------------
and the class and par value of such Subsidiary Stock are set forth on such
Schedule. All of the issued and outstanding shares of Subsidiary Stock have been
duly authorized, are validly issued, fully paid, and nonassessable, and are held
of record and beneficially by the Persons and in the amounts set forth on
Schedule 5.4 and are not subject to, nor were they issued in violation of, any
------------
preemptive rights or rights of first refusal, and are owned of record and
beneficially by the respective Persons as set forth on such Schedule free and
clear of all Liens (except as otherwise set forth on such Schedule). There are
no outstanding or authorized options, warrants, rights, contracts, calls, puts,
rights to subscribe, conversion rights or other agreements or commitments to
which any Subsidiary identified on Schedule 5.4 is a party or which are binding
------------
upon any of the Subsidiaries providing for the issuance, disposition or
acquisition of any capital stock of any of the Subsidiaries. There are no
outstanding or authorized stock appreciation, phantom stock or similar rights
with respect to the Subsidiaries. There are no voting trusts, proxies or any
other agreements or understandings with respect to the voting of the Subsidiary
Stock. None of the Subsidiaries is subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any shares of Subsidiary
Stock.
5.5 Absence of Conflicts. Except as set forth on Schedule 5.5 attached
-------------------- ------------
hereto, and except for the filing requirements under the HSR Act and the Change
in Bank Control Act, the execution, delivery and performance of the Transaction
Documents and the consummation of the transactions contemplated thereby by the
Companies do not and shall not (a) conflict with or result in any breach of any
of the terms, conditions or provisions of, (b) constitute a default under, (c)
result in a violation of, (d) give any third party the right to modify,
terminate or accelerate any obligation under, (e) result in the creation of any
Lien upon the Common Stock or the assets of the Companies, or (f) require any
authorization, consent, approval, exemption or other action by or notice or
declaration to, or filing with, any court or administrative or other
-29-
governmental body or agency, under the provisions of the certificates of
incorporation (or articles of association in the case of the Banks) or by-laws
of the Companies or any indenture, mortgage, lease, loan agreement or other
agreement or instrument to which any of the Companies is bound or affected, or
any Applicable Law to which any of the Companies is subject.
5.6 Financial Statements and Related Matters. Attached hereto as Schedule
---------------------------------------- --------
5.6 are copies of (i) the unaudited combined balance sheet for the Companies as
--- ---------
of December 31, 2000 (the "Latest Balance Sheet") and the related statements of
--------------------
income for the 12-month period then ended, (ii) the audited balance sheets for
-------
the Banks and related statements of income and cash flows as of and for the
fiscal years ended December 31, 2000, 1999 and 1998, (iii) the unaudited
combined balance sheets for the Companies and related statements of income as of
and for the fiscal years ended December 31, 1999 and 1998; and (iv) the
unaudited combined balance sheets and related statements of income for the
Companies as of and for the three (3) month period ended March 31, 2001. Each of
the foregoing financial statements (including in all cases the notes thereto, if
any) (the "Financial Statements") is accurate and complete in all material
--------------------
respects, is consistent with the Companies' books and records (which, in turn,
are accurate and complete in all material respects), presents fairly the
Companies' financial condition and results of operations as of the times and for
the periods referred to therein, and has been prepared in accordance with GAAP
applied on a consistent basis throughout the periods covered, and, with respect
to unaudited financial statements are subject to normal year-end adjustments.
5.7 Absence of Undisclosed Liabilities. Except as set forth on Schedule
---------------------------------- --------
5.7, none of the Companies has any obligations or liabilities arising out of
---
transactions entered into at or prior to the Closing, or any action or inaction
at or prior to the Closing, or any state of facts existing at or prior to the
Closing, which would be required to be reflected on the liabilities side of a
balance sheet under GAAP, except (i) liabilities reflected on the liabilities
side of the Latest Balance Sheet, and (ii) liabilities which have arisen after
the date of the Latest Balance Sheet in the Ordinary Course of Business or
otherwise in accordance with the terms and conditions of this Agreement.
5.8 Absence of Certain Developments. Except as set forth on the Schedule
------------------------------- --------
5.8 attached hereto and except as expressly contemplated by this Agreement,
---
since December 31, 2000, none of the Companies has:
(a) suffered any change that has had a Material Adverse Effect or suffered
any theft, damage, destruction or casualty loss that has had or could reasonably
be expected to have a Material Adverse Effect, to its assets, whether or not
covered by insurance;
(b) redeemed or repurchased, directly or indirectly, any shares of capital
stock or other equity security or declared, set aside or paid any dividends or
made any other distributions (whether in cash or in kind) with respect to any
shares of its capital stock or other equity security other than in the Ordinary
Course of Business;
-30-
(c) issued, sold or transferred any Company equity securities, any
securities convertible, exchangeable or exercisable into shares of its capital
stock or other equity securities, or warrants, options or other rights to
acquire shares of its capital stock or other equity securities;
(d) incurred or become subject to any liabilities, except liabilities
incurred in the Ordinary Course of Business;
(e) subjected any portion of its properties or assets to any Lien;
(f) sold, leased, assigned or transferred any portion of its material
tangible assets, or canceled without fair consideration any material debts or
claims owing to or held by it;
(g) sold, assigned, licensed or transferred any Proprietary Rights owned
by, issued to or licensed to it or disclosed any confidential information (other
than pursuant to agreements requiring the party to which such information is
disclosed to maintain the confidentiality of and preserving all rights of the
relevant Company in such confidential information), or received any confidential
information of any third party in violation of any obligation of
confidentiality, except where such action would not have a Material Adverse
Effect;
(h) suffered any extraordinary losses or waived any rights of material
value;
(i) incurred any Indebtedness (other than indebtedness to finance its
working capital needs);
(j) entered into, amended or terminated any material lease, contract,
agreement or commitment, or taken any other action or entered into any other
transaction other than in the Ordinary Course of Business;
(k) entered into any other material transaction, or materially changed any
business practice;
(l) made or granted any bonus or any wage, salary or compensation increase
to any director or officer, or made or granted any increase in any employee
benefit plan or arrangement, or amended or terminated any existing employee
benefit plan or arrangement or adopted any new employee benefit plan or
arrangement other than in the Ordinary Course of Business and consistent both as
to amount and to the recipients thereof with past practices;
(m) made any other change in employment terms for any of its directors and
officers outside the Ordinary Course of Business;
(n) made any capital expenditures or commitments for capital expenditures
that aggregate in excess of $200,000;
(o) made any material loans or advances to, or guarantees for the benefit
of, any Persons;
-31-
(p) made any material charitable contributions, pledges, association fees
or dues;
(q) changed (or authorized any change) in its certificates of incorporation
(or articles of association, in the case of the Banks) or by-laws; or
(r) enforceably agreed or committed to do any of the foregoing.
5.9 Title to Properties.
-------------------
(a) Owned Properties. None of the Companies owns any real property.
----------------
(b) Leased Properties. The leases and subleases described on Schedule 5.9
----------------- ------------
attached hereto (the "Leased Properties") constitute all of the leases and
-----------------
subleases under which any of the Companies holds leasehold or subleasehold
interests in real property. The real property leases and subleases described on
Schedule 5.9 are, to Old Mutual's Knowledge, valid, binding, enforceable and in
------------
full force and effect and have not been modified (except to the extent disclosed
in the documents delivered to the Purchaser), and the relevant Company holds a
valid and existing leasehold interest under such leases or subleases to which it
is a party for the term set forth on Schedule 5.9. The Companies have delivered
------------
to the Purchaser complete and accurate copies of each of the leases or subleases
described on Schedule 5.9. With respect to each lease and sublease listed on
------------
Schedule 5.9 and except as set forth therein:
------------
(i) the lease or sublease shall continue to be legal, valid, binding,
enforceable and in full force and effect on identical terms immediately
following the Closing;
(ii) no Company nor, to Old Mutual's Knowledge, any other party to the
lease or sublease is in material breach or default, and no event has
occurred which, with notice or lapse of time, would constitute such a
breach or default or permit termination, modification or acceleration under
the lease or sublease;
(iii) no Company nor, to Old Mutual's Knowledge, any other party to
the lease or sublease has repudiated any material provision thereof and
there are no material disputes, oral agreements or forbearance programs in
effect as to the lease or sublease; and
(iv) no Company has assigned, transferred, conveyed, mortgaged, deeded
in trust or encumbered any interest in the leasehold or subleasehold.
(c) No Other Real Property. The real property described on Schedule 5.9
---------------------- ------------
constitutes all of the real property used or occupied by the Companies.
(d) Personal Property. One or more of the Companies owns good title to, or
-----------------
a valid leasehold interest in, free and clear of all Liens, all of the personal
property and assets which are
-32-
shown on the Latest Balance Sheet or which have been acquired by one of the
Companies thereafter.
5.10 Reserved.
5.11 Contracts and Commitments.
-------------------------
(a) Except as set forth on Schedule 5.11 attached hereto, and other than
-------------
the Contracts described in Section 5.21, no Company is a party to, or bound by,
any:
(i) collective bargaining agreement or contract with any labor union
or any bonus, pension, profit sharing, retirement or any other form of
deferred compensation plan or any stock purchase, stock option,
hospitalization insurance or similar plan or practice;
(ii) contract for the employment of any officer;
(iii) agreement or indenture relating to the borrowing of money or to
mortgaging, pledging or otherwise placing a Lien on any of its assets;
(iv) agreements with respect to the lending or investing of funds;
(v) material license or royalty agreements;
(vi) guaranty of any obligation, other than endorsements made for
collection;
(vii) material lease or agreement under which it is lessor of or
permits any third party to hold or operate any property, real or personal,
owned or controlled by it;
(viii) contract or group of related contracts with the same party
continuing over a period of more than six months from the date or dates
thereof, not terminable by it on 30 days or less notice without penalties
or involving more than $10,000;
(ix) contract which prohibits it from freely engaging in business
anywhere in the world; or
(x) other agreement material to it whether or not entered into in the
Ordinary Course of Business.
(b) Except as disclosed on Schedule 5.11 or addressed in Section 5.21 and
-------------
except to the extent that any of the following could not reasonably be expected
to have a Material Adverse Effect, (i) no contract or commitment required to be
disclosed on Schedule 5.11 has been breached or canceled by the other party, and
-------------
Old Mutual has no Knowledge of any anticipated breach by any other party to any
contract required to be set forth on Schedule 5.11, (ii) to Old Mutual's
-------------
Knowledge, no supplier has indicated in writing to any Company that it desires
to
-33-
renegotiate its contract or current arrangement with such Company, (iii) each
of the Companies has performed all the obligations required to be performed by
it in connection with the contracts or commitments required to be disclosed on
Schedule 5.11 and is not in default under or in breach of any contract or
-------------
commitment required to be disclosed on Schedule 5.11, and no event has occurred
-------------
which with the passage of time or the giving of notice or both would result in
such a default or breach thereunder, and (iv) each agreement required to be set
forth on Schedule 5.11 is legal, valid, binding, enforceable and in full force
-------------
and effect and will continue as such following the consummation of the
transactions contemplated hereby.
(c) The Companies have provided the Purchaser with a true and correct copy
of all written contracts which are required to be disclosed on Schedule 5.11, in
-------------
each case together with all material amendments, waivers or other changes
thereto.
(d) Neither Xxxxx X. XxXxxxxx nor any other party, other than Sellers,
Parent, the Companies, Xxxxxx and Xxxxxx, has any presently existing or
contingent right, title or interest in the Revenue Sharing Agreements.
5.12 Proprietary Rights.
------------------
(a) Schedule 5.12 attached hereto sets forth a complete and correct list
-------------
of: (i) all material patented, registered or applied for Proprietary Rights
owned or used by any of the Companies; (ii) all material trade names,
unregistered trademarks and material unregistered copyrights owned or used by
any of the Companies; (iii) all material licenses or other similar agreements to
which any of the Companies is a party, either as licensee or licensor, for any
Proprietary Rights.
(b) Except as set forth on Schedule 5.12, (i) each of the Companies owns
-------------
and possesses without material restriction as to use, all right, title and
interest in and to the Proprietary Rights necessary for the operation of such
Company's business as currently conducted; (ii) no Company has received any
notices of invalidity, infringement or misappropriation from any third party
with respect to any such Proprietary Rights; (iii) to Old Mutual's Knowledge, no
Company has interfered with, infringed upon, misappropriated or otherwise come
into conflict with any Proprietary Rights of any third parties; and (iv) to Old
Mutual's Knowledge, no third party has interfered with, infringed upon,
misappropriated, or otherwise come into conflict with any Proprietary Rights of
any of the Companies.
5.13 Litigation; Proceedings. Except as set forth on Schedule 5.13 attached
----------------------- -------------
hereto, there are no actions, suits, proceedings, orders, judgments, decrees or
investigations pending or, to Old Mutual's Knowledge, threatened against or
affecting any of the Companies 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. No Company is subject to any
outstanding order, judgment or decree issued by any court or quasi judicial or
administrative agency of any federal, state, local or foreign jurisdiction or
any arbitrator.
-34-
5.14 Brokerage. Except as set forth on Schedule 5.14 attached hereto, there
--------- -------------
are no claims for brokerage commissions, finders' 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 any of the Companies. All such
commissions, finders' fees or similar compensation shown on Schedule 5.14 shall
be the sole responsibility of, and shall be paid by, Old Mutual.
5.15 Governmental Filings. Other than the filings and/or notices under the
--------------------
HSR Act, the 1940 Act, and the Advisers Act, no filings, reports or notices are
required to be made by any Company with, nor are any consents, registrations,
approvals, permits or authorizations required to be obtained by any Company
from, any Governmental Authority, in connection with the execution and delivery
of this Agreement and the consummation of the transactions contemplated hereby,
except such as would not have a Material Adverse Effect.
5.16 Employee Benefit Plans.
----------------------
(a) Attached hereto as Schedule 5.16 is a list of plans and arrangements
-------------
that Old Mutual or one of the Companies maintains or contributes to, or has any
actual or potential liability with respect to and for the benefit of the
Companies' employees, former employees, retirees, dependents, spouses,
directors, independent contractors, or other beneficiaries, including any (i)
deferred compensation or bonus or retirement plans or arrangements, (ii)
qualified or nonqualified defined contribution or defined benefit plans or
arrangements which are employee pension benefit plans (as defined in Section
3(2) of the Employee Retirement Income Security Act of 1974 ("ERISA")), or (iii)
-----
employee welfare benefit plans, (as defined in Section 3(1) of ERISA), stock
option or stock purchase plans, or material fringe benefit plans or programs
whether in writing or oral and whether or not terminated ("Employee Benefit
Plan"). Neither Sellers nor any entity that is considered a single employer with
the Sellers under Section 4001 of ERISA or Code Section 414 (an "ERISA
Affiliate") has ever contributed to a multiemployer pension plan (as defined in
Section 3(37) of ERISA), and neither Sellers nor any ERISA Affiliate has ever
maintained or contributed to any defined benefit plan (as defined in Section
3(35) of ERISA) that has or could create a Loss for any Company. Neither Sellers
nor any ERISA Affiliate has ever maintained or contributed to any employee
welfare benefit plan (as defined in Section 3(1) of ERISA) that provides health,
accident or life insurance benefits to former employees, their spouses or
dependents, other than in accordance with Section 4980B of the Code that has or
could create a Loss for any Company.
(b) The Employee Benefit Plans (and related trusts and insurance contracts)
comply in form and in operation in all material respects with the requirements
of Applicable Laws and regulations, including, but not limited to, ERISA and the
Code. Each Employee Benefit Plan (and all prior versions thereof) that is
intended to be qualified under Code Section 401(a) has received a favorable
determination letter from the Internal Revenue Service, and neither Sellers nor
Companies are aware of any circumstances likely to result in revocation of any
such favorable determination letter.
(c) Except as disclosed on Schedule 5.16(c), all required reports and
----------------
descriptions (including Form 5500 Annual Reports, Summary Annual Reports and
Summary Plan
-35-
Descriptions) with respect to the Employee Benefit Plans have been properly and
timely filed with the appropriate government agency and distributed to
participants as required.
(d) With respect to each Employee Benefit Plan, (i) there have been no
"prohibited transactions" as defined in Section 406 of ERISA or Section 4975 of
the Code, (ii) no fiduciary (as defined in Section 3(21) of ERISA) has any
liability for breach of fiduciary duty or any other failure to act or comply in
connection with the administration or investment of the assets of such plans,
and (iii) no actions, investigations, suits or claims with respect to the assets
thereof (other than routine claims for benefits) are pending or threatened.
(e) With respect to each Employee Benefit Plan maintained for the benefit
of the Companies' employees, Old Mutual has furnished or made available to the
Purchaser true and complete copies of (i) the plan documents (including
amendments thereto), summary plan descriptions and summaries of material
modifications and other material employee communications; (ii) determination
letters, rulings, opinion letters, information letters, or advisory opinions
issued by the Internal Revenue Service or the Department of Labor; (iii) annual
reports or returns, audited or unaudited financial statements, actuarial
valuations and reports, and summary annual reports; (iv) all related trust
agreements, insurance contracts or other funding agreements which implement such
plans; and (v) all contracts relating to each such plan, including, without
limitation, service provider agreements, insurance contracts, investment
management agreements and recordkeeping agreements.
(f) There are no restrictions on the rights of Sellers or the Companies to
amend or terminate any Employee Benefit Plan without incurring any Liability
thereunder. No tax under Code Sections 4980B or 5000 has been incurred with
respect to any Employee Benefit Plan and no circumstances exist which could give
rise to such taxes.
(g) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) result in any
payment (including severance, unemployment compensation, golden parachute, or
otherwise) becoming due to any director or any employee of any Company other
than as required pursuant to Section 4.15, (ii) increase any benefits otherwise
payable under any Employee Benefit Plan, or (iii) result in any acceleration of
the time of payment or vesting of any such benefit. No payment that is owed or
may become due to any shareholder, director, officer, employee or agent of a
Company will be non-deductible or subject to tax under Code Section 280G or
4999; nor will any Company be required to "gross up" or otherwise compensate
such individuals because of the imposition of any excise tax upon payment to
such individual.
(h) No event has occurred or circumstances exist that could result in a
material increase in premiums or costs under any Employee Benefit Plan.
(i) Sellers and the Companies have performed all of their respective
obligations under the Employee Benefit Plans and have made appropriate entries
in their financial records and statements for all such obligations that have
accrued but that are not yet due. The actuarial present values of all accrued
deferred compensation entitlements (including entitlements under
-36-
any executive compensation, supplemental retirement, or employment agreement) of
employees and former employees of any Company and their respective beneficiaries
have been fully reflected on the Companies' financial statements to the extent
required by and in accordance with GAAP. Sellers and the Companies have made all
required contributions and payments under each Employee Benefit Plan for all
periods through and including the Closing Date.
5.17 Insurance. Schedule 5.17 attached hereto lists each insurance policy
--------- -------------
maintained by each of the Companies with respect to its properties, assets and
business. All of the insurance policies listed on Schedule 5.17 are in full
-------------
force and effect, and no Company is in default with respect to its obligations
under any such insurance policies.
5.18 Affiliate Transactions. Except as set forth on Schedule 5.18, no
---------------------- -------------
Insider is a party to any agreement, contract, commitment or transaction with
any of the Companies or which pertains to the business of any of the Companies
or has any interest in any property, real or personal or mixed, tangible or
intangible, used in or pertaining to the business of any of the Companies.
5.19 Compliance with Laws.
--------------------
(a) Except as set forth on Schedule 5.19 or is not, individually or in the
-------------
aggregate, reasonably likely to cause or result in a Material Adverse Effect,
each of the Companies and its respective officers, directors, and employees have
complied with, and is in compliance with, all Applicable Laws which are
applicable to the business and business practices of such Company, no claims
have been filed against any of the Companies alleging a violation of any such
laws or regulations which remains unsatisfied, and no Company has received
notice of any such violations within the past two years;
(b) Except as set forth on Schedule 5.19, the businesses of each of the
-------------
Companies that are required to be licensed or registered as a broker/dealer, an
investment adviser, a registered representative, a commodity trading advisor,
commodity pool operator, futures commission merchant, trust company, or transfer
agent (or in a similar capacity) with any Governmental Authority, are duly
registered or licensed or, in the case of any officer or employee, in the
process of being duly licensed or registered as such, and each such registration
or license is in full force and effect; and each of the officers, employees and
affiliates of each of the Companies that is required to be registered or
licensed as a broker/dealer, an investment adviser, a registered representative,
an investment adviser representative, a commodity trading advisor, a commodity
pool operator, a futures commission merchant, a trust company, a transfer agent
or a sales person (or in a similar capacity) with any Governmental Authority, is
duly registered or licensed or, in the case of any officer or employee, in the
process of being duly registered or licensed as such, and each such registration
or license is in full force and effect;
(c) Except as set forth on Schedule 5.19, each of the Companies has
-------------
administered all accounts for which such Person acts as fiduciary or agent,
including but not limited to accounts for which it serves as a trustee, agent,
custodian, personal representative, guardian or conservator,
-37-
in compliance with the terms of the governing documents and Applicable Law,
where the failure to do so would have a Material Adverse Effect;
(d) Except as set forth on Schedule 5.19, no Company is registered as, or
-------------
is required to be registered as, an investment company under the 1940 Act; and
(e) Each Form ADV filed by each of the Companies that is a registered
investment adviser under the Advisers Act in its most recent form filed with the
SEC, including any amendments thereto filed with the SEC, is complete and
correct in all material respects and omits no material facts required to be
stated therein.
(f) Except as set forth on Schedule 5.19, each of the common trust funds
-------------
offered by the Companies has been operated in accordance with OCC Regulation 9
and federal securities laws.
5.20 Disclosure.
----------
(a) Neither the representations and warranties in this Agreement nor any of
the Schedules hereto, contain any untrue statement of a material fact or omit a
material fact necessary to make each statement contained herein or therein, not
misleading.
(b) Neither the Companies nor any of the Sellers, nor representatives of
the Companies or any of the Sellers, have made any representations or warranties
relating to the Companies or their business, operations or prospects or
otherwise in connection with the transactions contemplated herein other than
those expressly set forth in this Article V. Without limiting the generality of
the foregoing, neither the Companies nor any Sellers, nor representatives of the
Companies or any of the Sellers has made, and shall not be deemed to have made,
any representations or warranties in the Confidential Memorandum dated December,
2000 (together with all revisions thereof or supplements thereto, the "PPM") or
---
in any presentation of the business of the Companies in connection with the
transactions contemplated hereby, and no statement contained in the PPM or made
in any such presentation shall be deemed a representation or warranty hereunder
or otherwise. It is expressly understood that any cost estimates, projections,
predictions or forward-looking statements contained in any data, financial
information, memoranda or offering materials or presentations, including but not
limited to the PPM, are not and shall not be deemed to be or include
representations or warranties of the Companies or any Sellers or any
representative of the Companies or the Sellers.
(c) Certain information set forth in the Schedules may be included solely
for informational purposes and may not be required to be disclosed pursuant to
this Agreement. The disclosure of such information shall not be deemed to
constitute an acknowledgment that such information is required to be disclosed
in connection with the representations and warranties made by the Sellers in
this Agreement or that it is material, nor shall information be deemed to
establish a standard of materiality.
-38-
5.21 Investment Contracts, Funds and Clients
---------------------------------------
(a) The Advisory Entities provide investment management and investment
advisory services; each contract for such services is referred to herein as an
"Advisory Contract." The Banks provide financial counseling, estate planning,
-----------------
trust, custody and family office services; each contract for such services is
referred to herein as a "Trust Agreement." The Advisory Contracts and the Trust
---------------
Agreements are referred to collectively herein as "Contracts." Each other party
---------
or other Person with respect to which a Company provides the services described
above is referred to herein as a "Client"; and each Client that is an investment
------
company but is exempt from registration under the 1940 Act by virtue of Sections
3(c)(1) or 3(c)(7) of that Act is referred to herein as an "Exempt Fund Client."
------------------
The only Client that is a series of an investment company registered under the
1940 Act is the Mid Cap Portfolio.
(i) Except as is not, individually or in the aggregate, reasonably
likely to have a Material Adverse Effect, there does not exist under any
Contract any event or condition that, after notice or lapse of time or
both, would constitute an event of default thereunder on the part of any
Company, or, to Old Mutual's Knowledge, any other party thereto.
(ii) Except as is not, individually or in the aggregate, reasonably
likely to have a Material Adverse Effect, neither of the Advisory Entities,
nor, to Old Mutual's Knowledge, any other person "associated" with either
of the Advisory Entities (as defined under the Advisers Act), has been
convicted of any crime or has been subject to any disqualification that
would be a basis for denial, suspension, or revocation of registration of
an investment adviser under Section 203(e) of the Advisers Act or Rule
206(4)-4(b) thereunder during the five-year period immediately preceding
the date hereof; and, to Old Mutual's Knowledge, there is no basis for, or
proceeding or investigation that could reasonably be expected to become the
basis for, any such disqualification, denial, suspension or revocation.
(iii) Except as set forth on Schedule 5.21(a), the Trust Agreements
----------------
are consistent with federal law and applicable state law and provide
sufficient authority under federal law and applicable state law for the
Banks to make the investments that have been made for Clients who are
parties to such Trust Agreements.
(b) Mid Cap Portfolio.
-----------------
(i) The Mid Cap Portfolio is, and at all times required under the
securities laws has been, a series of UAM Funds, Inc., a registered
investment company under the 1940 Act; and except as would not,
individually or in the aggregate, reasonably be likely to have a Material
Adverse Effect, is in compliance with (x) the Applicable Laws, regulations,
rules or orders of the SEC, and (y) the Applicable Laws of any state in
which the Mid Cap Portfolio is registered, qualified, or sold.
(ii) Except as is not, individually or in the aggregate, reasonably
likely to have a Material Adverse Effect, (x) each Advisory Contract in
effect on the date hereof
-39-
between any of the Advisory Entities and the Mid Cap Portfolio and any
subsequent renewal has been duly authorized, executed and delivered by such
Advisory Entity, the Mid Cap Portfolio and, to Old Mutual's Knowledge, each
other party thereto, if any; and is a valid and legally binding agreement,
enforceable against such Advisory Entity, and, to Old Mutual's Knowledge,
each other party thereto; and (y) each Advisory Contract with the Mid Cap
Portfolio, except as is not, individually or in the aggregate, reasonably
likely to have a Material Adverse Effect, has been adopted in compliance
with Section 15 of the 1940 Act.
(iii) Each Advisory Entity that acts as an investment adviser to an
investment company registered under the 1940 Act has adopted a formal code
of ethics and a written policy regarding xxxxxxx xxxxxxx, each of which
complies with Applicable Law. The policies of each Advisory Entity with
respect to avoiding conflicts of interest are as set forth in the most
recent Forms ADV thereof, as amended; and to Old Mutual's Knowledge, there
have been no material violations or allegations of violations of such
policies that have occurred or been made that have not been addressed in
accordance with these procedures.
(iv) None of the Advisory Entities nor, to the best of Old Mutual's
Knowledge, any of their respective officers, directors, or employees has
any express or implied understanding or arrangement that would impose an
unfair burden on the Mid Cap Portfolio or would in any way violate Section
15(f) of the 1940 Act as a result of this transaction.
(v) Neither any of the Advisory Entities, the Mid Cap Portfolio nor,
to Old Mutual's Knowledge, any other person "associated" (as defined under
the Advisers Act) with any of the Advisory Entities or the Mid Cap
Portfolio, has for a period not less than ten (10) years prior to the date
hereof, been convicted of any crime, or is or has been subject to any
disqualification that would be a basis for disqualification as an
investment adviser to any investment company pursuant to Section 9(a) of
the 1940 Act, and, to Old Mutual's Knowledge, there is no basis for, or
proceeding or investigation that could become the basis for, any such
disqualification.
(c) Exempt Fund Clients.
-------------------
(i) Except as is not, individually or in the aggregate, reasonably
likely to have a Material Adverse Effect, (x) each Exempt Fund Client that
is a juridical entity has been duly organized, and is validly existing and
in good standing under the laws of the jurisdiction of its organization and
has all requisite corporate, partnership, limited liability company, or
similar power and authority, and possesses all rights, licenses,
authorizations and approvals necessary to entitle it to use its name, to
own, lease or otherwise hold its properties and assets and to carry on its
business as it is now conducted, and is duly qualified, licensed or
registered to do business in each jurisdiction where it is required to do
so under Applicable Law (except where the failure to do so is not material
to its
-40-
business); and (y) each Exempt Fund Client is in substantial
compliance with the terms and conditions of its constituent documents.
(ii) Except as is not, individually or in the aggregate, reasonably
likely to have a Material Adverse Effect, (x) all outstanding shares or
units of each Exempt Fund Client have been issued and sold in substantial
compliance with Applicable Law; and (y) each Exempt Fund Client, since
inception of operations, has been operated and is currently operating in
substantial compliance with its respective investment objectives and
policies and Applicable Law.
(iii) Except as is not, individually or in the aggregate, reasonably
likely to have a Material Adverse Effect, none of the Exempt Fund Clients
has been enjoined, indicted, convicted or made the subject of disciplinary
proceedings, consent decrees or administrative orders on account of any
violation of the rules or orders of the Governmental Authority or self
regulatory body having jurisdiction over the Exempt Fund Client.
5.22 Assets Under Management. As of the close of business on March 31,
-----------------------
2001, the aggregate amount of assets under management (i.e., assets as to which
any Company is entitled to receive asset management fees) (i) for the Mid Cap
Portfolio was approximately $18,000,000, (ii) for assets held pursuant to
Contracts was approximately $7,791,000,000. Other than the Mid Cap Portfolio, no
more than $591,000,000 assets under management are under Contracts with an
Advisory Entity requiring Consent.
5.23 Labor Matters, etc. No Company is a party to or bound by any
------------------
collective bargaining or other labor agreement. Each Company is currently in
compliance with and for the past five (5) years has materially complied with all
applicable provisions of Applicable Laws pertaining to the employment or
termination of employment of its employees, except for any failures to comply
that, individually or in the aggregate, could not reasonably be expected to have
a Material Adverse Effect.
5.24 Derivative Products. None of the Companies, either on its own behalf
-------------------
or on behalf of any Client, has entered into any, interest rate swaps, caps,
floors, option agreements, futures and forward Contracts and other similar risk
management arrangements; provided, however, from time to time the Companies
advise Clients to place funds into such arrangements sponsored or offered by
other entities.
5.25 Section 15(f) Materials. The books and records of each Company, the
-----------------------
Mid Cap Portfolio and each Client and account have been fully, properly and
accurately maintained in all material respects, and there are no material
inaccuracies or discrepancies of any kind contained or reflected therein, and
they fairly present in all material respects the financial position of the
Companies, and the assets and performance of the Mid Cap Portfolio and each
Client and account. The valuations of the assets and liabilities of the Mid Cap
Portfolio and each Client and account have been supplied by sources that the
Sellers believe are reasonably reliable and
-41-
accurate, and, to Old Mutual's Knowledge, accurately reflect the fair market
values of such assets and liabilities as of the dates thereof.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
------------------------------
CONCERNING THE SELLERS
----------------------
As a material inducement to the Purchaser to enter into this Agreement, the
Sellers hereby represent and warrant that:
6.1 Organization and Corporate Power. Each of the Sellers is a corporation
--------------------------------
duly organized, validly existing and in good standing under the laws of its
state of incorporation with full corporate power and authority to enter into the
Transaction Documents to which such Seller is a party and to perform its
obligations thereunder.
6.2 Authorization of Transactions. The execution, delivery and performance
-----------------------------
of this Agreement and the other Transaction Documents to which either of the
Sellers is a party have been duly and validly authorized by all requisite
corporate action on the part of such Seller, and no other corporate proceedings
on the part of the Sellers are necessary to authorize the execution, delivery or
performance of this Agreement or the other Transaction Documents. This Agreement
has been duly executed and delivered and constitutes, and each of the other
Transaction Documents to which either of the Sellers is a party shall when
executed constitute, a valid and binding obligation of such Seller, enforceable
in accordance with their respective terms.
6.3 No Violation. Neither of the Sellers is subject to or obligated under
------------
its certificate of incorporation, its by-laws, any Applicable Law, or any
agreement or instrument, or any license, franchise or permit, or subject to any
order, writ, injunction or decree, which would be breached or violated by its
execution, delivery or performance of this Agreement and the other Transaction
Documents to which such Seller is a party.
6.4 Shares. Each Seller holds of record and owns beneficially the shares of
------
Common Stock as indicated on Schedule 6.4 attached hereto, free and clear of any
------------
Liens. No Seller is a party to any option, warrant, right, contract, call, put
or other agreement or commitment providing for the disposition or acquisition of
any capital stock of either Pell Xxxxxx or Xxxxxxxxxx (other than this
Agreement). No Seller is a party to any voting trust, proxy or other agreement
or understanding with respect to the voting of any capital stock of either Pell
Xxxxxx or Xxxxxxxxxx.
6.5 Taxes. Except as set forth on Schedule 6.5 attached hereto:
----- ------------
(a) Old Mutual has timely filed prior to the date hereof or has sought an
extension with respect to all Tax Returns which are required to be filed with
respect to the business or assets of the Companies, all such Tax Returns are
true, complete and accurate in all material respects and have been prepared in
compliance with Applicable Law, and Schedule 6.5
------------
-42-
indicates the jurisdictions in that Old Mutual or the Companies are required to
file Tax Returns that include any of the Companies;
(b) all Taxes due and payable by Old Mutual or by each of the Companies
with respect to any of the Companies or for which they could be held liable,
whether or not shown on a Tax Return, have been paid or will be paid prior to
the expiration of any applicable extension period, and no such Taxes are
delinquent;
(c) no deficiency for any amount of Tax that has not been resolved has been
asserted or assessed by a taxing authority against Old Mutual with respect to
any of the Companies or for which they could be held liable, and Old Mutual has
no Knowledge that any such assessment or asserted Tax liability shall be made;
(d) there is no action, suit, taxing authority proceeding or audit now in
progress, pending or, to Old Mutual's Knowledge, threatened against or with
respect to any Tax Return of Old Mutual which includes any of the Companies;
(e) Old Mutual has not (i) waived any statute of limitations, (ii) agreed
to any extension of the period for assessment or collection or (iii) executed or
filed any power of attorney, which power of attorney is currently in force, in
each case with respect to any Tax Return which includes any of the Companies.
(f) Old Mutual has delivered to Purchaser correct and complete copies of
all Tax Returns, examination reports, and statements of deficiencies assessed
against, affecting or agreed to by any of the Companies since December 31, 1995;
(g) none of the Companies has filed a consent under Code Section 341(f)
concerning collapsible corporations;
(h) none of the Companies has made any payments, is obligated to make any
payments, or is a party to an agreement that under certain circumstances could
obligate it to make any payments that will not be deductible under Code Section
280G or 162(m);
(i) none of the Companies has been a United States real property holding
corporation within the meaning of Code ss.897(c)(2) during the applicable period
specified in Code Section.897(c)(1)(A)(ii);
(j) within the past six years, none of the Companies has been a member of
an Affiliated Group, or any similar group defined under local, state or foreign
Tax law, other than an Affiliated Group of which Old Mutual is a part;
(k) no Company is a party to or bound by any Tax allocation, sharing,
indemnity or similar agreement or arrangement with any Person, and no Company
has any current or potential contractual obligation to indemnify any other
Person with respect to Taxes;
-43-
(l) no claim has ever been made by a taxing authority in a jurisdiction
where any Company does not pay Taxes or file Tax Returns that such Company is or
may be subject to Taxes assessed by such jurisdiction;
(m) each of the Companies has withheld and paid all Taxes required to have
been withheld and paid in connection with amounts paid or owing to any employee,
creditor, independent contractor or other third party;
(n) any partnership or limited liability company owned in whole or in part
by any of the Companies is treated for all federal and state income tax purposes
as either a partnership or a disregarded entity; and
(o) none of the Companies is, or owns or is deemed to own an interest
directly or indirectly in a passive foreign investment company as defined in
Section 1297(a) of the Code.
Notwithstanding the foregoing, with respect to any Tax imposed by any state
governing or taxing authority (or any political subdivision thereof), other than
a Tax based in whole or in part on income or net worth of a taxpayer, the
foregoing representations are made by Old Mutual solely to its Knowledge. In
addition, to the extent any of the foregoing representations are related to Old
Mutual or its Affiliates (other than the Companies), such representations are
made only to the extent that the failure of such statements to be true could
have a material adverse affect on the business or assets of the Companies,
either directly or indirectly.
6.6 Litigation. There are no actions, suits, proceedings or orders pending
----------
or, to Old Mutual's Knowledge, threatened against or affecting the Sellers 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, which would adversely affect either Seller's performance
under this Agreement and the other Transaction Documents to which such Seller is
a party or the consummation of the transactions contemplated hereby.
6.7 Brokerage. Except as set forth on Schedule 6.7 attached hereto, there
--------- ------------
are no claims for brokerage commissions, finders' 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 either of the Sellers. All such
commissions, finders' fees or similar compensation shown on Schedule 6.7 shall
------------
be the sole responsibility of, and shall be paid by, Old Mutual.
6.8 Governmental Filings. Other than the filings and/or notices under the
--------------------
HSR Act and the Advisers Act, no filings, reports or notices are required to be
made by either Seller with, nor are any consents, registrations, approvals,
permits or authorizations required to be obtained by either Seller from, any
Governmental Authority, in connection with the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby.
6.9 Insurance. Schedule 6.9 attached hereto lists each insurance policy
--------- ------------
maintained by Old Mutual with respect to the properties, assets and business of
any of the Companies. All
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of the insurance policies listed on Schedule 6.9 are in full force and effect,
------------
and Old Mutual is not in default with respect to its obligations under any such
insurance policies.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
------------------------------
CONCERNING THE PURCHASER
------------------------
As a material inducement to the Sellers to enter into this Agreement, the
Purchaser and AMVESCAP hereby jointly and severally represent and warrant that:
7.1 Organization and Corporate Power. The Purchaser is a corporation duly
--------------------------------
organized, validly existing and in good standing under the laws of the State of
Delaware, with full corporate power and authority to enter into the Transaction
Documents to which the Purchaser is a party and to perform its obligations
hereunder and thereunder. AMVESCAP is a corporation duly organized, validly
existing and in good standing under the laws of England and Wales, with full
corporate power and authority to enter into the Transaction Documents to which
it is a party and to perform its obligations hereunder and thereunder.
7.2 Authorization of Transaction. The execution, delivery and performance
----------------------------
of this Agreement and the other Transaction Documents to which each of the
Purchaser and AMVESCAP is a party have been duly and validly authorized by all
requisite corporate action on the part of the Purchaser and/or AMVESCAP (as the
case may be), and no other corporate proceedings on its part are necessary to
authorize the execution, delivery or performance of this Agreement or the other
Transaction Documents. This Agreement has been duly executed and delivered and
constitutes, and each of the other Transaction Documents to which the Purchaser
or AMVESCAP is a party shall when executed constitute, a valid and binding
obligation of the Purchaser and/or AMVESCAP (as the case may be), enforceable in
accordance with their respective terms.
7.3 No Violation. Neither AMVESCAP nor the Purchaser is subject to or
------------
obligated under its certificate of incorporation, its by-laws, any Applicable
Law, or any agreement or instrument, or any license, franchise or permit, or
subject to any order, writ, injunction or decree, which would be breached or
violated by its execution, delivery or performance of this Agreement and the
other Transaction Documents to which either the Purchaser or AMVESCAP is a
party.
7.4 Governmental Authorities and Consents. Other than the filings and/or
-------------------------------------
notices under the HSR Act, the Advisers Act, and the Change in Bank Control Act,
no filings, reports or notices are required to be made by the Purchaser or
AMVESCAP with, nor are any consents, registrations, approvals, permits or
authorizations required to be obtained by the Purchaser from, any Governmental
Authority, in connection with the execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby.
7.5 Litigation. There are no actions, suits, proceedings or orders pending
----------
or, to the Purchaser's knowledge, threatened against or affecting the Purchaser
or AMVESCAP at law or in equity, or before or by any federal, state, municipal
or other governmental department,
-45-
commission, board, bureau, agency or instrumentality, domestic or foreign, which
would adversely affect the Purchaser's or AMVESCAP's performance under this
Agreement and the other agreements contemplated hereby to which the Purchaser or
AMVESCAP is a party or the consummation of the transactions contemplated hereby
or thereby.
7.6 Brokerage. Except for fees payable to xx Xxxxxxxxx Advisors, Inc., the
---------
fees and expenses of which will be paid by Purchaser, there are no claims for
brokerage commissions, finders' 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 the Purchaser.
7.7 Purchase Price. The Purchaser has readily-available funds sufficient to
--------------
pay the Purchase Price.
7.8 Ineligible Persons. Neither the Purchaser nor any "affiliated person"
------------------
(as defined in the 0000 Xxx) thereof, as applicable, is ineligible pursuant to
Section 9(a) or 9(b) of the 1940 Act to serve as an investment adviser (or in
any other capacity contemplated by the 0000 Xxx) to a registered investment
company. Neither the Purchaser nor any "person associated with an investment
adviser" (as defined in the Advisers Act) thereof, as applicable, is ineligible
pursuant to Section 203 of the Advisers Act to serve as an investment adviser or
as an associated person to a registered investment adviser or has committed any
act enumerated in Rule 206(4)-4(b) under the Advisers Act. Neither the Purchaser
nor any "associated person" (as defined in the Securities Exchange Act of 1934,
as amended) thereof, as applicable, is ineligible pursuant to Section 15(b) of
that Act to serve as a broker-dealer or as an associated person to a registered
broker-dealer.
7.9 Facts Affecting Regulatory Approvals. There is no fact, event or
------------------------------------
condition applicable to the Purchaser which will, or reasonably could be
expected to, adversely affect the likelihood of securing the requisite approvals
or consents of any Governmental Authority to the transactions contemplated by
this Agreement.
ARTICLE VIII
TERMINATION
-----------
8.1 Termination. This Agreement may be terminated at any time prior to the
-----------
Closing:
(a) by mutual written consent of Old Mutual and the Purchaser;
(b) by the Sellers, (i) in the event of a material breach of this Agreement
by the Purchaser that has not been cured, or if any representation or warranty
of the Purchaser shall have become untrue in any material respect, provided that
in either case such breach or untruth is incapable of being cured by the Closing
Date or will prevent or delay consummation of the transactions contemplated by
this Agreement by or beyond the Termination Date or (ii) if events have occurred
which have made it impossible to satisfy an unwaived condition precedent to the
Purchaser's obligations to consummate the transactions contemplated hereby,
unless Old
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Mutual's or Holdings' willful or knowing breach of this Agreement has caused the
condition to be unsatisfied;
(c) by the Purchaser, (i) in the event of a material breach of this
Agreement by the Sellers that has not been cured, or if any representation or
warranty of the Sellers shall have become untrue in any material respect,
provided that in either case such breach or untruth is incapable of being cured
by the Closing Date, or (ii) if events have occurred which have made it
impossible to satisfy an unwaived condition precedent to the Sellers'
obligations to consummate the transactions contemplated hereby, unless the
Purchaser's willful or knowing breach of this Agreement has caused the condition
to be unsatisfied;
(d) by Old Mutual or the Purchaser if the Closing has not occurred on or
prior to November 30, 2001; provided, however, that neither the Purchaser nor
Old Mutual shall be entitled to terminate this Agreement pursuant to this
Section 8.1 (d) if such Party's willful or knowing breach of this Agreement has
prevented the consummation of the transactions contemplated hereby at or prior
to such time; or
(e) by Old Mutual or the Purchaser upon the expiration of thirty (30) days
after any Governmental Authority denies or refuses to grant any approval,
consent or authorization required to be obtained in order to consummate the
transactions contemplated by this Agreement unless, within said thirty (30) day
period after such denial or refusal, the Parties agree to resubmit the
application or notice to the Governmental Authority that has denied or refused
to grant the approval, consent or qualification requested.
(f) by the Purchaser, by giving notice to Sellers prior to 5:00 p.m.
(Eastern time) on the tenth Business Day after receipt by Purchaser of the
audited combined balance sheet of the Companies as at December 31, 2000 and the
audited combined results of operations of the Companies 2000 Combined Audited
Financials, if in the reasonable opinion of Purchaser there is a material
difference in the financial position at December 31, 2000 and results of
operations of the Companies, each on a combined basis, for the twelve month
period then ended as reflected on the 2000 Combined Audited Financials
(including the footnotes thereto) from the financial position at such date and
results of operations of the Companies, each on a combined basis, for such
period as reflected on the unaudited combined December 31, 2000 financial
statements (including the footnotes thereto) delivered to Purchaser pursuant to
Schedule 5.6 together with the 2000 Audited Financial Statements with respect to
PR Trust and Atlantic (including the footnotes thereto) (the "2000 Combined
Unaudited Financials") unless (i) the matters which constitute or make up any
such material difference are subject or susceptible to resolution pursuant to
the provisions of Section 2.6, or (ii) the Sellers and Parent have agreed in
writing to indemnify Purchaser and the Companies, fully and without limitation,
for any Loss based upon, resulting from or arising out of such material
difference.
8.2 Effect of Termination. In the event of termination of this Agreement by
---------------------
either Old Mutual or the Purchaser as provided in Section 8.1, this Agreement
shall forthwith become void, and there shall be no liability on the part of any
Party to any other Party under this Agreement, except that the provisions of
Article IX shall continue in full force and effect, and
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except that nothing herein shall relieve any Party from liability for any breach
of this Agreement prior to such termination.
ARTICLE IX
INDEMNIFICATION AND RELATED MATTERS
-----------------------------------
9.1 Survival. All representations, warranties, covenants and agreements set
--------
forth in this Agreement shall survive the Closing Date and the consummation of
the transactions contemplated hereby and shall not be affected by any
examination made for or on behalf of any Party, the knowledge of any of such
Party's officers, directors, stockholders, employees or agents, or the
acceptance of any certificate or opinion. Notwithstanding the foregoing, (i) the
Parties' exclusive remedy for any claims arising in respect of this Agreement
from and after the Closing shall be as set forth in Section 9.2; and (ii) no
Party shall be entitled to recover for any Loss pursuant to Section 9.2(a)(i) or
Section 9.2(c)(i) unless written notice of a claim thereof is delivered to the
other Party, with reasonable particularity, prior to the Applicable Limitation
Date. For purposes of this Agreement, the term "Applicable Limitation Date"
--------------------------
shall mean the second anniversary following the Closing Date; provided that the
Applicable Limitation Date with respect to the following Losses shall be as
follows: (i) with respect to any Loss arising from or related to a breach of the
representations and warranties set forth in Section 6.5 (Taxes) or Section 5.16
(Employee Benefit Plans), the Applicable Limitation Date shall be the 30th day
after expiration of the applicable statute of limitations (including any
extensions thereto to the extent that such statute of limitations may be tolled)
for the assertion against the Companies of Liability based upon facts or
circumstances the existence or occurrence of which constitutes a breach of such
representations or warranties, and (ii) with respect to any Loss arising from or
related to a breach of the representations and warranties set forth in Sections
5.1, 5.2, 5.3 and 5.4, a claim for such Loss may be asserted without limitation
as to any time or date.
9.2 Indemnification.
---------------
(a) The Sellers and Parent shall jointly and severally indemnify the
Purchaser, and each of its respective officers, directors, stockholders,
employees, agents, representatives, Affiliates, successors and assigns
(collectively, the "Purchaser Parties") and hold each of them harmless from and
-----------------
against and pay on behalf of or reimburse such Purchaser Parties in respect of
any Loss which any such Purchaser Party may suffer, sustain or become subject
to, as a result of, arising out of, based upon or relating to:
(i) the breach of any representation or warranty made by the Sellers
contained in this Agreement or any certificate delivered by the Sellers (or
either of them) to the Purchaser with respect thereto in connection with
the Closing, or any matter or circumstance described in Items 1, 2, 4, 6, 7
or 8 of Schedule 5.19; or
-------------
(ii) the breach of any covenant or agreement made by the Sellers
contained in this Agreement, the other Transaction Documents, any Exhibit
hereto or any certificate delivered by the Sellers (or either of them) to
the Purchaser with respect thereto in connection with the Closing; or
-48-
(iii) any matter or circumstance described in Items 3 or 5 on Schedule 5.19
-------------
or Item 2 on Schedule 5.21(a) hereto; or
----------------
(iv) the matter described in Item 3 of Schedule 5.8 hereto.
------------
For purposes of Section 9.2(a)(i), the existence of an inaccuracy or breach
of any representation or warranty of Sellers made in this Agreement shall be
determined without giving effect to any exception in such representation or
warranty relating to materiality or Material Adverse Effect.
(b) The indemnification provided for in Section 9.2(a)(i) above is subject
to the following limitations:
(i) the Sellers will be liable to the Purchaser Parties with respect
to claims referred to in Section 9.2(a)(i) only if the Purchaser Party
gives Old Mutual written notice thereof, with reasonable particularity,
prior to the Applicable Limitation Date, if any;
(ii) the Sellers will be liable to the Purchaser Parties with respect
to claims referred to in Section 9.2(a)(i) based upon or arising out of the
breach of any representation or warranty of Sellers, other than the
representations and warranties of Sellers contained in Sections 5.1 (except
with respect to qualification and possession of all necessary licenses,
permits and authorizations), 5.2, 5.3, 5.4, 5.16 and 6.5 (the "Non-Limited
-----------
Reps") only if the aggregate amount of all Losses relating to any and all
----
claims referred to in Section 9.2(a)(i), other than claims based on a
breach of the Non-Limited Reps, exceeds $2,500,000 in which event Sellers
shall be liable for all Losses in excess of $2,500,000.
(iii) the aggregate amount of all payments made by the Sellers in
satisfaction of claims for indemnification pursuant to Section 9.2(a)(i)
based upon or arising out of the breach of any representation or warranty
of Sellers, other than the Non-Limited Reps, shall not exceed fifty percent
(50%) of the Purchase Price (the "Cap"); and
---
(iv) no Indemnified Party shall be entitled to recover hereunder
punitive, exemplary or consequential damages, except to the extent the
indemnified matter requires the Indemnified Party to pay such damages to a
third party.
Notwithstanding any implication to the contrary contained in this Agreement, so
long as the Purchaser delivers written notice of a claim in respect of which a
Loss has occurred to Old Mutual, with reasonable particularity, no later than
the Applicable Limitation Date, the Sellers shall be required to indemnify the
Purchaser Parties for all Losses (up to the Cap) which the Purchaser Parties may
incur in respect of the matters which are the subject of such claim, regardless
of when incurred.
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(c) The Purchaser shall indemnify and hold each of the Sellers and their
respective officers, directors, stockholders, employees, agents,
representatives, Affiliates, successors and assigns (collectively, the "Old
---
Mutual Parties") harmless from and against and pay on behalf of or reimburse
--------------
such Old Mutual Party in respect of any Loss which any Old Mutual Party may
suffer, sustain or become subject to, as a result of, arising out of, based upon
or relating to:
(i) the breach of any representation or warranty made by the Purchaser
contained in Article VII of this Agreement or any certificate delivered by
the Purchaser to the Sellers (or either of them) with respect thereto in
connection with the Closing; or
(ii) the breach of any covenant or agreement made by the Purchaser
contained in this Agreement, the other Transaction Documents, any Exhibit
hereto or any certificate delivered by the Purchaser to the Sellers (or
either of them) with respect thereto in connection with the Closing.
(d) The indemnification provided for in Section 9.2(c)(i) above is subject
to the following limitations:
(i) The Purchaser will be liable to the Old Mutual Parties with
respect to claims referred to in Section 9.2(c)(i) only if Old Mutual gives
the Purchaser written notice thereof, with reasonable particularity, prior
to the Applicable Limitation Date;
(ii) the Purchaser will be liable to the Old Mutual Parties with
respect to claims referred to in Section 9.2(c)(i) only if the aggregate
amount of all Losses relating to any and all claims referred to in Section
9.2(c)(i) exceeds $2,500,000 and then only to the extent of such excess;
and
(iii) The aggregate amount of all payments made by the Purchaser in
satisfaction of claims for indemnification pursuant to Section 9.2(c)(i)
shall not exceed the Cap.
Notwithstanding any implication to the contrary contained in this Agreement, so
long as the Old Mutual Party delivers written notice of a claim in respect of
which a Loss has occurred to the Purchaser, with reasonable particularity, no
later than the Applicable Limitation Date, the Purchaser shall be required to
indemnify the Old Mutual Parties for all Losses (up to the Cap) which the Old
Mutual Parties may incur in respect of the matters which are the subject of such
claim, regardless of when incurred.
(e) Notwithstanding any other provision of this Article IX, Sellers and
Parent, jointly and severally, agrees to indemnify the Purchaser and the
Companies from and against the entirety of any Loss the Companies or the
Purchaser may suffer resulting from, arising out of, relating to, in the nature
of, or caused by any liability of the Company (x) for any Taxes of the Companies
with respect to any Tax year or portion thereof ending on or before the Closing
Date (or for any Tax to the extent allocable (determined in a manner consistent
with ss. 10.1(b)) to the portion of such period beginning before and ending on
the Closing Date)to the extent such Taxes are not
-50-
reflected in the reserve for Tax Liabilities (rather than any reserve for
deferred Taxes established to reflect timing differences between book and Tax
income) shown on the face of the Estimated Closing Balance Sheet (rather than in
any notes thereto), and (y) for any Taxes of the Affiliate Group arising under
Treasury Regulation ss. 1.1502-6 (or any similar provision of state, local, or
foreign law), as a transferee or successor, by contract, or otherwise or of the
Companies arising as a result of their ceasing to be members of Old Mutual's
Affiliated Group; provided, however, Sellers and Parent shall not be obligated
to indemnify Purchasers and the Companies under this Section 9.2(e) except to
the extent that the aggregate amount of all Losses that are described in this
Section 9.2(e) shall exceed the amount accrued for Taxes with respect to periods
ended on or prior to the Closing Date and taken into account in determining
Actual Net Tangible Assets.
(f) Sellers and Parent, jointly and severally, shall indemnify and hold
each of the Purchasers and their respective officers, directors, stockholders,
employees, agents, representatives, Affiliates, employee benefit plans,
trustees, their successors and assigns harmless from and against and pay on
behalf of or reimburse such party in respect of any Loss which any such party
may suffer, sustain or become subject to, as a result of or relating to any
Employee Benefit Plan (as defined in Section 5.16 hereof) that is not maintained
or sponsored solely by one of the Companies; except that the Sellers shall not
have any liability with respect to acts or omissions that occur with respect to
transferred accounts after the consummation of the transfer described in Section
4.14.
9.3 Procedure.
---------
(a) Notice of Claims. Any indemnified party seeking indemnification for any
----------------
Loss or potential Loss the ("Indemnified Party") shall give written notice to
the applicable party from whom indemnification hereunder is being sought (the
"Indemnifying Party"), specifying in detail (i) the representation and warranty
or covenant or other agreement that is alleged to have been inaccurate or to
have been breached, (ii) the basis for such allegation, including the provision
of supporting documentation and (iii) if known, the aggregate amount of the
Losses for which a claim is being made under this Article IX or, to the extent
that such Losses are not known or have not been incurred at the time such claim
is made, an estimate, to be prepared in good faith and accompanied by supporting
documentation, of the aggregate potential amount of such Losses. Written notice
to such Indemnifying Party of the existence of a Claim shall be given by the
Indemnified Party promptly after the Indemnified Party first receives notice of
the potential claim; provided, however, that the Indemnified Party shall not be
-------- -------
foreclosed from seeking indemnification pursuant to this Article IX by any
failure to provide such prompt notice of the existence of a Claim to the
applicable Indemnifying Party except and only to the extent that such
Indemnifying Party actually incurs an incremental out-of-pocket expense or
otherwise has been materially damaged or prejudiced as a result of such delay.
(b) Defense. Except as otherwise provided herein, in the case of any claim
-------
asserted by a Person that is not a party to this Agreement (a "Third Party
-----------
Claim"), an Indemnifying Party may elect to compromise or defend, at such
-----
Indemnifying Party's own expense and by such Indemnifying Party's own counsel
(which counsel shall be reasonably satisfactory to the Indemnified Party), any
Third Party Claim. If an Indemnifying Party elects to compromise or
-51-
defend such Third Party Claim, it shall promptly notify the Indemnified Party
and any other Indemnifying Parties of its intent to do so, and the Indemnified
Party shall cooperate, at the expense of the applicable Indemnifying Party or
Indemnifying Parties, in the compromise of, or defense against, such Third Party
Claim. For so long as no Indemnifying Party elects to compromise or defend
against the Third party Claim, fails to notify the Indemnified Party of its
election to do so, or otherwise abandons the defense of such Third Party Claim,
(i) the Indemnified Party may pay (without prejudice of any of its rights as
against any applicable Indemnifying Party), compromise or defend such Third
Party Claim (until such defense is assumed by an applicable Indemnifying Party)
and (ii) the costs and expenses of the Indemnified Party incurred in connection
therewith shall be indemnifiable by the applicable Indemnifying Party or
Indemnifying Parties pursuant to the terms of this Agreement. Notwithstanding
anything to the contrary contained herein, in connection with any Third Party
Claim in which the Indemnified Party shall reasonably conclude, based upon the
written advice of its counsel, that (iii) there is a conflict of interest
between an applicable Indemnifying Party and the Indemnified Party in the
conduct of the defense of such Third Party Claim or (iv) there are specific
defenses available to the Indemnified Party which are different from or
additional to those available to an applicable Indemnifying Party and which
could be materially adverse to such Indemnifying Party, then the Indemnified
Party shall have the right to assume and direct the defense of such Third Party
Claim. In such an event, the applicable Indemnifying Party or Indemnifying
Parties shall pay the reasonable fees and disbursements of their own counsel and
one counsel to all the Indemnified Parties. Notwithstanding the foregoing, the
Indemnifying Party shall not have the right to assume control of such defense
and shall pay the fees and expenses of counsel retained by the Indemnified
Party, if the claim over which the Indemnifying Party seeks to assume control
(i) seeks non-monetary relief, (ii) involves criminal or quasi-criminal
allegations, or (iii) involves a claim which, upon petition by the Indemnified
Party, the appropriate court rules that the Indemnifying Party failed or is
failing to vigorously prosecute or defend. In any event, except as otherwise
provided herein, any applicable Indemnified Party and any Indemnifying Party
that has any liability with respect to such claim may each participate, at its
own expense, in the defense of such Third Party Claim without, in the case of
such Indemnified Party, any right to control such defense. If an Indemnifying
Party chooses to defend any claim, the Indemnified Party shall make available to
such Indemnifying Party any personnel or any books, records or other documents
within its control that are reasonably necessary or appropriate for such
defense, subject to the receipt of appropriate confidentiality agreements.
9.4 Exclusive Remedy. The indemnification provisions set forth in this
----------------
Article IX shall be the exclusive remedy following and subject to the Closing
for any breaches or alleged breaches of any representation, warranty or covenant
contained in this Agreement or any Transaction Document, except for breaches of
any covenant or agreement contained herein or in any Transaction Document which
by its terms is required to be performed after the Closing.
9.5 Net Recovery. The amount to which an Indemnified Party may become
------------
entitled under this Article IX shall be net of any recovery (whether by way of
payment, discount, credit, set-off, tax benefit, counterclaim or otherwise)
received from a third party (including any insurer or taxing authority) in
respect of such claim. If any such recovery shall be received by an Indemnified
Party after payment by an Indemnifying Party of an amount in respect of a claim
-52-
which did not take such recovery into account, the amount of any such recovery,
less all reasonable costs, charges and expenses incurred by the relevant
Indemnified Party in obtaining such recovery from the third party, shall be
repaid by the relevant Indemnified Party to the relevant Indemnifying Party
promptly upon the receipt thereof from the third party.
9.6 Right of Off-Set/Set-Off. To the extent it is determined that the
------------------------
Purchaser has an indemnifiable Loss under Section 9.2, and subject to the
limitations contained in Section 9.2(b), Purchaser shall have the right to
off-set or set-off any indemnification payment from a Seller to which it is
entitled pursuant to this Article IX against any other payment to be made by
Purchaser to such Seller, whether pursuant to this Agreement or otherwise. No
permitted exercise by Purchaser of such right of off-set or set-off shall
constitute a default in the payment of any amount against which such off-set or
set-off is made.
9.7 Adjustment to Purchase Price. Amounts paid to or on behalf of the
----------------------------
Sellers or the Purchaser as indemnification shall be treated as adjustments to
the Purchase Price for Tax purposes.
ARTICLE X
ADDITIONAL AGREEMENTS
---------------------
10.1 Tax Matters. The following provisions shall govern the allocation of
-----------
responsibility as between the Purchaser and Old Mutual for certain tax matters
following the Closing Date:
(a) Tax Periods Ending on or Before the Closing Date. Old Mutual shall
------------------------------------------------
prepare or cause to be prepared all Tax Returns for each of the Companies for
all periods ending on or prior to the Closing Date which are filed after the
Closing Date. Old Mutual shall pay all Taxes attributable to the income earned
during Tax periods ending on or before the Closing Date to the extent such Taxes
are not reflected in the reserve for Tax Liabilities (rather than any reserve
for deferred Taxes established to reflect timing difference between book and Tax
income) shown on the face of the estimated Closing Balance Sheet (rather than in
any notes thereto) and the Purchaser shall pay or cause the Companies to pay any
other amounts due and owning. The Companies will furnish Tax information to Old
Mutual for inclusion in Old Mutual's federal consolidated income Tax Return for
the period which includes the Closing Date in accordance with the Companies'
past custom and practice. Old Mutual will allow the Purchaser an opportunity to
review and comment upon such Tax Returns (including any amended returns) to the
extent that they relate to the Companies at least thirty (30) days in advance of
the proposed filing thereof. Old Mutual will take no position on such Tax
Returns that relate to the Companies that would adversely affect the Companies
after the Closing Date unless such position would be reasonable in the case of a
Person that owned the Companies both before and after the Closing Date. The
income of the Companies will be apportioned to the period up to and including
the Closing Date and the period after the Closing Date by closing the books of
the Companies as of the end of the Closing Date. After the Closing, the
Companies shall cooperate in the preparation, execution (to the extent required)
and filing of any such return.
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(b) Tax Periods Beginning Before and Ending After the Closing Date. With
--------------------------------------------------------------
the assistance of and subject to review by Old Mutual, the Purchaser shall
prepare or cause to be prepared and file or cause to be filed any Tax Returns
for each of the Companies for Tax periods which begin before the Closing Date
and end after the Closing Date. Old Mutual shall pay to the Purchaser within
fifteen (15) days of the date on which Taxes are paid with respect to such
periods an amount equal to the portion of such Taxes which relates to the
portion of such Taxable period ending on the Closing Date to the extent the
amounts of such Taxes are not utilized in determining the Actual Net Tangible
Assets. For purposes of this Section, in the case of any Taxes that are imposed
on a periodic basis and are payable for a Taxable period that includes (but does
not end on) the Closing Date, the portion of such Taxes which relates to the
portion of such Taxable period ending on the Closing Date shall (i) in the case
of any Taxes other than Taxes based upon or related to income, be deemed to be
the amount of such Tax for the entire Taxable period multiplied by a fraction
the numerator of which is the number of days in the Taxable period ending on the
Closing Date and the denominator of which is the number of days in the entire
Taxable period, and (ii) in the case of any Tax based upon or related to income
be deemed equal to the amount which would be payable if the relevant Taxable
period ended on the Closing Date. All determinations necessary to give effect to
the foregoing allocations shall be made in a manner consistent with prior
practice of the applicable Company.
(c) Section 338(h)(10) Election. Old Mutual will join with the Purchaser in
---------------------------
making an election under Section 338(h)(10) of the Code (and any corresponding
elections under state, local, or foreign tax law) with respect to the purchase
and sale of the Common Stock hereunder. Old Mutual will pay any Tax attributable
to the making of such election and will indemnify the Purchaser and the
Companies against any Adverse Consequences arising out of any failure to pay
such Tax. Old Mutual will also pay any state, local, or foreign Tax (and
indemnify the Purchaser and the Companies against any Adverse Consequences
arising out of any failure to pay such Tax) attributable to an election under
state, local, or foreign law similar to the election available under Section
338(g) of the Code (or which results from the making of an election under
Section 338(g) of the Code) with respect to the purchase and sale of the Common
Stock hereunder. The Parties agree that the Purchase Price and the Liabilities
of the Companies (plus other relevant items including payments under the
Purchase Agreement) will be allocated to the assets of the Companies for
purposes of this election as proposed by Purchaser and approved by Old Mutual
(which approval will not be unreasonably withheld). The Purchaser, the
Companies, and Old Mutual will file all Tax Returns (including amended returns
and claims for refund) and information reports in a manner consistent with such
allocation.
(d) Cooperation on Tax Matters.
--------------------------
(i) The Purchaser and Old Mutual shall cooperate fully, as and to the
extent reasonably requested by the other party, in connection with the
filing of Tax Returns and any audit, litigation or other proceeding with
respect to Taxes. Such cooperation shall include the retention and (upon
the other Party's request) the provision of records and information which
are reasonably relevant to any such audit, litigation or other proceeding
and making employees available on a mutually convenient basis to provide
additional information and explanation of any material provided hereunder.
Old Mutual
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agrees to retain all books and records with respect to Tax matters and
pertinent to Companies relating to any taxable period beginning before the
Closing Date until the expiration of the statute of limitations (and, to
the extent notified by the Purchaser, any extensions thereof of the
respective taxable periods), and to abide by all record retention
agreements entered into with any taxing authority.
(ii) The Purchaser and Old Mutual further agree, upon request, to use
commercially reasonable efforts to obtain any certificate or other document
from any governmental authority or any other Person as may be necessary to
mitigate, reduce or eliminate any Tax that could be imposed (including, but
not limited to, with respect to the transactions contemplated hereby).
(e) Certain Taxes. All transfer, documentary, sales, use, stamp,
-------------
registration and other such Taxes and fees (including any penalties and
interest) incurred in connection with this Agreement, shall be paid by Old
Mutual when due, and Old Mutual will, at its own expense, file all necessary Tax
Returns and other documentation with respect to all such transfer, documentary,
sales, use, stamp, registration and other Taxes and fees, and, if required by
applicable law. The Purchaser will, and will cause its Affiliates to, join in
the execution of any such Tax Returns and other documentation.
(f) Tax Sharing Agreements. All tax-sharing agreements or similar
----------------------
agreements with respect to any of the Companies shall be terminated as of the
Closing Date and, after the Closing Date, no Company shall be bound thereby or
have any liability thereunder (whether the current year, a future year, or a
past year).
(g) Real Property Holding Corporation. Old Mutual will furnish the
---------------------------------
Purchaser prior to the Closing a certification pursuant to Treasury Regulation
ss. 1.897-2 to the effect that Old Mutual is not a "United States real property
holding corporation" as defined in Section 897 of the Code.
(h) Audits. Old Mutual will allow the Companies and their advisors to
------
participate in any audits of Old Mutual's consolidated federal income Tax
Returns to the extent that such returns relate to the Companies and such audit
could result in adjustments affecting periods for which the Purchaser is
responsible. In such event, Old Mutual will not settle any such audit in a
manner which would adversely affect the Companies after the Closing Date without
the prior written consent of the Purchaser, which consent shall not unreasonably
be withheld.
(i) Retention of Carryovers. Old Mutual will not elect to retain any net
-----------------------
operating loss carryovers or capital loss carryovers of the Companies under
Reg.ss.1.1502-20(g).
10.2 Press Releases and Announcements. Prior to the Closing Date, no press
--------------------------------
releases related to this Agreement and the transactions contemplated herein, or
other announcements to the employees, customers or suppliers of any of the
Companies shall be issued without the mutual approval of all Parties, except for
any public disclosure which any Party in good faith believes is required by law
or regulation; provided that the Purchaser shall be entitled
-55-
to (a) disclose the transactions contemplated hereby in any document filed with
the SEC or the OCC, and (b) include a detailed description of the Companies in
such filing. After the Closing Date, no press releases related to this Agreement
and the transactions contemplated herein, or other announcements to the
employees, customers or suppliers of any of the Companies shall be issued
without the Purchaser's consent (which shall not be unreasonably withheld).
10.3 Further Transfers. The Sellers shall execute and deliver such further
-----------------
instruments of conveyance and transfer and take such additional action as the
Purchaser may reasonably request to effect, consummate, confirm or evidence the
transfer to the Purchaser of the Common Stock and any other transactions
contemplated hereby.
10.4 Expenses. Except as otherwise provided herein, the Sellers and the
--------
Purchaser shall pay all of their own fees, costs and expenses (including,
without limitation, fees, costs and expenses of legal counsel, investment
bankers, brokers or other representatives and consultants and appraisal fees,
costs and expenses) incurred in connection with the negotiation of this
Agreement and the other agreements contemplated hereby, the performance of its
obligations hereunder and thereunder, and the consummation of the transactions
contemplated hereby and thereby.
10.5 Exclusivity. Until this Agreement is terminated by its terms Old
-----------
Mutual may not (and Old Mutual shall not cause or permit any Insider or agent or
any other Person acting on behalf of Old Mutual to), (a) solicit, initiate or
encourage the submission of any proposal or offer from any Person (including any
of them) relating to any (i) liquidation, dissolution or recapitalization of;
(ii) merger or consolidation with or into; (iii) acquisition or purchase of
assets of or any equity interest in; or (iv) similar transaction or business
combination involving any of the Companies, or (b) 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 other Person to do or seek any of the foregoing. Old Mutual
agrees that it will discontinue immediately (and will cause any Insider or agent
or any other Person acting on behalf of Old Mutual to discontinue immediately)
any negotiations or discussion with respect to any of the foregoing. Until this
Agreement is terminated by its terms, Old Mutual shall notify the Purchaser
immediately if any Person makes any proposal, offer, inquiry or contact with
respect to any of the foregoing.
10.6 Books and Records. Unless otherwise consented to in writing by Old
-----------------
Mutual and the Purchaser, the Purchaser and Old Mutual will not, for a period of
seven (7) years following the date hereof, destroy, alter or otherwise dispose
of any of the books and records of any of the Companies acquired by the
Purchaser hereunder or retained by Old Mutual without first offering to
surrender to the other Party such books and records or any portion thereof of
which Old Mutual or the Purchaser may intend to destroy, alter or dispose. The
Purchaser and Old Mutual will allow the other Party's representatives, attorneys
and accountants access to such books and records, upon reasonable request during
such Party's normal business hours, for the purpose of examining and copying the
same in connection with any matter whether or not related to or arising out of
this Agreement or the transactions contemplated hereby.
-56-
10.7 Confidentiality and Non-Disclosure.
----------------------------------
(a) Old Mutual, for itself and its Affiliates, and the respective
successors and assigns of Old Mutual and each such Affiliate, hereby covenants
and agrees that all Company Confidential Information furnished to or known by
Old Mutual or Holdings will be kept confidential, and will not be used or
disclosed by Old Mutual or Holdings, or by the respective successors or assigns
of Old Mutual or Holdings, in any manner whatsoever, other than with the prior
expressed written consent of Purchaser.
(b) In the event that any Party or its Affiliate is requested or required
(by oral question or request for information or documents in any legal
proceeding, interrogatory, subpoena, civil investigative demand, or similar
process) to disclose any Company Confidential Information, such Party shall
notify the other Party promptly of the request or requirement so that such other
Party may seek an appropriate protective order or waive compliance with the
provisions of this Section 10.7. If, in the absence of a protective order or the
receipt of a waiver hereunder, any Party is, on the advice of counsel, compelled
to disclose any Company Confidential Information to any tribunal or else stand
liable for contempt, such Party may disclose the Company Confidential
Information to the tribunal; provided that such disclosing Party shall use
commercially reasonable efforts to obtain, at the request of the other Party, an
order or other assurance that confidential treatment shall be accorded to such
portion of the Company Confidential Information required to be disclosed as the
Party to whom such information relates shall designate.
(c) Old Mutual covenants and agrees that it will not, nor will it cause,
permit or allow any of its Affiliates to, conduct any business or enterprise
involving investment advisory or trust services under any name like or similar
to the name of any Company, as such name exists on the date hereof, or any name
incorporating the name "Pell," "Xxxxxx," "Xxxxxxxxxx" or "Sovereign" or any
combination thereof or in combination with any other name or xxxx.
10.8 Guarantee. AMVESCAP guarantees the performance and payment of all of
---------
Purchaser's covenants and obligations under this Agreement and the other
Transaction Documents.
10.9 Personnel Changes. Purchaser agrees that it will not, in the operation
-----------------
of the Companies during the two year period following the Closing Date, assign
any managerial employee of the Companies to provide such employee's services,
for any period of more than sixty (60) Business Days in any twelve (12) month
period, to Purchaser or any Affiliate thereof or require any managerial employee
of the Company to relocate to another office of the Companies, Purchaser or any
Affiliate thereof, in either case without the consent of (a) all members of the
Committee, and (b) such employee.
10.10 Disposition of Business of the Companies. If Purchaser shall, at any
-----------------------------------------
time during the two (2) year period following the Closing Date, sell or
otherwise dispose of the stock or any of the assets of any Company to any
entity, other than an Affiliate of AMVESCAP and other than in a transaction in
which all of the stock or substantially all of the assets of all of the
Companies
-57-
are sold as a unit, for all purposes of the determinations of any payment due on
any Anniversary Date occurring after the date of such sale or disposition (a)
all revenues that would otherwise be includable in the determination of
Anniversary Date Revenue with respect to the payment due on such Anniversary
Date that were derived from, or are attributable to, the assets so disposed of,
or to the Company or Companies whose stock is sold, and which revenues resulted
from the operation of the business of such Company or Companies or the business
transacted with such assets during the portion of the period with respect to
which such Anniversary Date Revenues are being determined that occurred prior to
the date of such sale or disposition, shall be excluded from the determination
of Anniversary Date Revenues, and (b) there shall, in lieu of such excluded
revenues, be included in the determination of such Anniversary Date Revenues an
amount equal to (i) the net revenues (determined using the principles contained
in the definition of Anniversary Date Revenues) derived from or attributable to
the assets so disposed of or to the Company or Companies whose stock is sold
during the calendar quarter ended next prior to the date of such sale or
disposition, multiplied by (ii) four (4).
ARTICLE XI
MISCELLANEOUS
-------------
11.1 Amendment and Waiver. This Agreement may be amended and any provision
--------------------
of this Agreement may be waived, provided that any such amendment or waiver
shall be binding upon a Party only if such amendment or waiver is set forth in a
writing executed by the Purchaser and Old Mutual. No course of dealing between
or among any persons having any interest in this Agreement shall be deemed
effective to modify, amend or discharge any part of this Agreement or any rights
or obligations of any Party under or by reason of this Agreement.
11.2 Notices. All notices, demands and other communications given or
-------
delivered under this Agreement shall be in writing and shall be personally
delivered, mailed by first class mail, return receipt requested, delivered by
express courier service, or telecopied (with hard copy to follow), and shall be
effective upon receipt. Unless another address is specified in writing, such
notices, demands or other communications shall be sent to the address or
telecopy number indicated below:
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Notice to Sellers: with a copy to:
----------------- --------------
Attn: Xxxxxx X. Xxxxxxx, Esq. Xxxxxxxx X. Xxxxxxx, Esq.
Old Mutual (US) Holdings, Inc. Hill & Xxxxxx
One International Place One International Place
Boston, MA 02110 Xxxxxx, XX 00000
(T): (000) 000-0000 (T): (000) 000-0000
(F): (000) 000-0000 (F): (000) 000-0000
Xx. Xxxxxx X. Xxxxxx Xxxxxxx Xxxxx, Esq.
Xxxx Xxxxxx & Co., Inc. Xxxxxxxxxxx Xxxxx, Esq.
000 Xxxxxxx Xxxxxx Xxxxxxxx & Xxxxxxxxx XXX
Xxxxxx, XX 00000 One Post Office Square
(T): (000) 000-0000 Xxxxxx, XX 00000
(F): (000) 000-0000 (T): (000) 000-0000
(F): (000) 000-0000
Notices to Purchaser: with a copy to:
-------------------- --------------
AMVESCAP PLC L. Xxxx Xxxxxxxx, Esq.
00 Xxxxxxxxxx Xxxxxx XXXXXXXX
Xxxxxx XX0 X0XX 0000 Xxxxxxxxx Xxxxxx, XX
Xxxxxx Xxxxxxx Suite 500
Attn: Company Secretary Xxxxxxx, XX 00000
(T): (000) 000-0000
(F): (000) 000-0000
Xxxxxx XxXxxxxxxx
AMVESCAP
0000 Xxxxxxxxx Xxxxxx, XX
Xxxxx 000
Xxxxxxx, XX 00000
(T): (000) 000-0000
(F): (000) 000-0000
Xxxxxx X. Xxxxxx, Esq.
Xxxxxx & Bird LLP
One Atlantic Center
0000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
(T): (000) 000-0000
(F): (000) 000-0000
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11.3 Binding Agreement; Assignment. This Agreement and all of the
-----------------------------
provisions hereof shall be binding upon and inure to the benefit of the Parties
and their respective successors and permitted assigns; provided that neither
this Agreement nor any of the rights, interests or obligations hereunder may be
assigned by any Party without the prior written consent of the other Parties.
11.4 Severability. Whenever possible, each provision of this Agreement
------------
shall be interpreted in such manner as to be effective and valid under
Applicable Law, but if any provision of this Agreement is held to be prohibited
by or invalid under Applicable Law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of such provisions or the remaining provisions of this Agreement.
11.5 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.
Each provision hereof has been subject to the mutual consultation, negotiation
and agreement of the Parties, and there shall be no construction against any
Party based on any presumption of that Party's involvement in the drafting
thereof.
11.6 Captions. The captions used in this Agreement are for convenience of
--------
reference only and do not constitute a part of this Agreement and shall not be
deemed to limit, characterize or in any way affect any provision of this
Agreement, and all provisions of this Agreement shall be enforced and construed
as if no captions had been used in this Agreement.
11.7 Entire Agreement. This Agreement and the other Transaction Documents
----------------
contain the entire agreement between the Parties and supersede any prior
understandings, agreements or representations by or between the Parties, written
or oral, which may have related to the subject matter hereof in any way.
11.8 Counterparts. This Agreement may be executed in multiple counterparts,
------------
each of which shall be deemed an original but all of which taken together shall
constitute one and the same instrument.
11.9 Governing Law. All questions concerning the construction, validity and
-------------
interpretation of this Agreement shall be governed by and construed in
accordance with the domestic laws of the Commonwealth of Massachusetts, without
giving effect to any choice of law or conflict of law provision (whether of the
Commonwealth of Massachusetts or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the Commonwealth of
Massachusetts.
11.10 Parties in Interest. Nothing in this Agreement, express or implied,
--------------------
is intended to confer on any person other than the Parties and their respective
successors and assigns any rights or remedies under or by virtue of this
Agreement.
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IN WITNESS WHEREOF, the Parties have executed this Stock Purchase Agreement
as of the date first written above.
OLD MUTUAL (US) HOLDINGS INC.
By: /s/ Xxxxxxxx X. Xxxxxx
----------------------
Name: Xxxxxxxx X. Xxxxxx
Title: Senior Vice President
UNITED ASSET MANAGEMENT HOLDINGS, INC.
By: /s/ Xxxxxx X. Xxxxxxx
---------------------
Name: Xxxxxx X. Xxxxxxx
Title: Vice President
OLD MUTUAL PLC
By: /s/ X. X. Xxxxxx
----------------
Name: X. X. Xxxxxx
Title: Chairman and Chief Executive
INVESCO NORTH AMERICAN HOLDINGS, INC.
By: /s/ Xxxx Xxxxxxxx
-----------------
Name: Xxxx Xxxxxxxx
Title: Secretary and General Counsel
AMVESCAP PLC
By: /s/ Xxxxxx X. XxXxxxxxxx
------------------------
Name: Xxxxxx X. XxXxxxxxxx
Title: CFO
-61-
