AGREEMENT OF PURCHASE AND SALE among PIPER JAFFRAY NEWCO INC., PIPER JAFFRAY COMPANIES, WG CAR, LLC and THE INDIVIDUALS LISTED ON SCHEDULE I HERETO Dated as of April 12, 2007
Exhibit 2.1
AGREEMENT OF PURCHASE AND SALE
among
XXXXX XXXXXXX NEWCO INC.,
XXXXX XXXXXXX COMPANIES,
WG CAR, LLC
and
THE INDIVIDUALS LISTED ON SCHEDULE I HERETO
Dated as of April 12, 2007
AGREEMENT OF PURCHASE AND SALE
AGREEMENT OF PURCHASE AND SALE, dated as of April 12, 2007 (this “Agreement”), by and
among Xxxxx Xxxxxxx Newco Inc., a Delaware corporation (the “Purchaser”), Xxxxx Xxxxxxx
Companies, a Delaware corporation (the “Parent”), WG CAR, LLC, a Missouri limited liability
company (the “Seller”), and each of the individuals listed on Schedule I attached
hereto (each, a “Principal” and, collectively, the “Principals”).
W I T N E S S E T H:
WHEREAS, as of the date hereof each of the Principals owns a corporation (such entities,
collectively, the “S-Corporations”) which in turn owns an ownership interest in Fiduciary
Asset Management, LLC, a Missouri limited liability company (the “Company”), and
collectively all of the S-Corporations own all of the issued and outstanding membership interests
in the Company (collectively, the “Membership Interests”);
WHEREAS, the Seller is a Missouri limited liability company and at or prior to the Closing,
(i) the Principals will transfer or cause to be transferred to the Seller all of the
Membership Interests, and (ii) the Principals will, and will cause the Seller and the
S-Corporations to, enter into certain other transactions required to effect the Recapitalization,
as more fully described in Section 2.1;
WHEREAS, upon completion of the Recapitalization, the Seller will own all of the Membership
Interests;
WHEREAS, following the Recapitalization the Principals and the Seller desire that the Seller
sell and transfer all of the Membership Interests to the Purchaser, and the Purchaser wishes to
purchase and acquire all of the Membership Interests from the Seller, all upon the terms and
subject to the conditions set forth herein; and
WHEREAS, as an inducement for the Purchaser to enter into the transactions contemplated
hereby, each of the Principals has entered into an employment agreement with the Company, each
dated as of the date hereof, but to be effective as of the Closing Date (each, an “Employment
Agreement” and, collectively, the “Employment Agreements”).
NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements
hereinafter set forth, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. The following terms when used in this Agreement shall have
the following meanings:
“Accounting Firm” means KPMG LLP or, if such firm shall decline or is unable to act or
is not, at the time of such submission, independent of the Company, the Seller, each of the
Principals, the Purchaser and each of their respective Affiliates, another independent accounting
firm mutually acceptable to the Seller and the Purchaser.
“Acquirer” has the meaning set forth in Section 2.4(e).
“Acquisition Proposal” means, other than the transactions contemplated by this
Agreement (including, without limitation, the Recapitalization) or the Ancillary Agreements, any
third-party offer, proposal or inquiry relating to, or any third-party indication of interest in,
any acquisition or purchase, direct or indirect, whether by way of asset purchase, stock purchase,
merger, consolidation, share exchange, business combination or otherwise, of any material assets of
the Company or any other transaction intended to frustrate the purposes of, impede, interfere with,
prevent or materially delay the transactions contemplated by this Agreement (including, without
limitation, the Recapitalization) or that could reasonably be expected to dilute materially the
benefits to the Purchaser of the transactions contemplated by this Agreement (including, without
limitation, the Recapitalization).
“Adjusted EBITDA” means, with respect to any period, the consolidated net earnings of
the Company for such period, before interest expense, interest income, income taxes, depreciation
and amortization, in each case on an unconsolidated, stand-alone basis, calculated and adjusted in
accordance with the Applicable Accounting Principles.
“Adjustment Factor” has the meaning set forth in Section 2.5(a).
“Administration Contract” means any written agreement that relates to the provision by
the Company of administrative, accounting, bookkeeping, transfer agent or similar services to any
Advisory Client.
“Advisory Client” means any client to whom the Company provides investment advisory
services or investment sub-advisory services (including, without limitation, the Sponsored Funds,
the Sub-Advised Funds and the Separate Account Clients).
“Advisory Contract” means any written agreement pursuant to which the Company provides
investment advisory services or investment sub-advisory services to any Advisory Client.
“Affected Employee” has the meaning set forth in Section 7.1(a).
“Affiliate” means, with respect to any Person, any other Person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or is under common
control with such first Person. The term “control” (including its correlative meanings “controlled
by” and “under common control with”) means possession, directly or indirectly, of power to direct
or cause the direction of management or policies (whether through ownership of securities or other
ownership interests, by contract, or otherwise).
“Affiliate Transaction” has the meaning set forth in Section 4.21.
“Aggregate Bonus Amount” has the meaning set forth in Section 7.3(a).
“Aggregate Closing Advisory Revenue Run-Rate” means the sum of the Closing Advisory
Revenue Run-Rates for all of the Advisory Clients with respect to which Client Consent has been
obtained (and remains in full force and effect) as of the Closing Date; provided
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that if the Seller is entitled to the maximum upward adjustment to the Closing Payment
pursuant to Section 2.5(a) because the Adjustment Factor determined under Section 2.5(a)(B) is more
than 0.1 (before any adjustment thereto pursuant to the proviso to Section 2.5(a)(B)), then
“Aggregate Closing Advisory Revenue Run-Rate” shall mean 110% of the Baseline Advisory Revenue
Run-Rate.
“Agreement” has the meaning set forth in the introductory paragraph hereof.
“Allocation Schedule” has the meaning set forth in Section 2.7.
“Ancillary Agreements” means, collectively, the Employment Agreements and the
Assignment Agreement.
“Applicable Accounting Principles” means the accounting principles, practices and
methodologies set forth on Schedule II attached hereto.
“Applicable Laws” means any applicable laws, statutes, ordinances, rules, regulations,
administrative orders, decrees, directives or treaties.
“Assets” has the meaning set forth in Section 4.15(a).
“Assignment Agreement” has the meaning set forth in Section 3.2(b).
“Audited Balance Sheet” has the meaning set forth in Section 7.3(b).
“Audited Income Statement” has the meaning set forth in Section 7.3(b).
“Average Multiple” means (1) 111/3, if the applicable
Commencement Date is prior to the completion of the first Future Payment Period, or (2) 11, if the
applicable Commencement Date is after the expiration of the first Future Payment Period.
“Balance Sheet” means the audited balance sheet of the Company, dated as of the
Balance Sheet Date and included in the Financial Statements.
“Balance Sheet Date” means December 31, 2006.
“Base Date” means March 31, 2007.
“Baseline Advisory Revenue Run-Rate” means $21,023,477.
“Bonus Allocation Statement” has the meaning set forth in Section 7.3(c).
“Bonus Payments” has the meaning set forth in Section 7.3(a).
“Bonus Statement” has the meaning set forth in Section 7.3(b).
“Bonus Period” has the meaning set forth in Section 7.3(a).
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“Business” means the business and operations of the Company as conducted as of the
date hereof and at any time between the date hereof and the Closing Date.
“Business Day” means any day which is not a Saturday, Sunday or a day on which banks
in St. Louis, Missouri, are authorized or obligated by law or executive order to be closed.
“Buy-Out Dispute Notice” has the meaning set forth in Section 2.4(e).
“Buy-Out Notice” has the meaning set forth in Section 2.4(e).
“Buy-Out Payment” has the meaning set forth in Section 2.4(e).
“Buy-Out Period” has the meaning set forth in Section 2.4(e).
“Buy-Out Procedure” has the meaning set forth in Section 2.4(e).
“Buy-Out Review Period” has the meaning set forth in Section 2.4(e).
“Cap” has the meaning set forth in Section 11.4(a).
“Change of Control Agreement” has the meaning set forth in Section 2.4(e).
“Change of Control Notice” has the meaning set forth in Section 2.4(e).
“Change of Control Transaction” means any transaction as a result of which any Person
or “group” (as defined in section 13(d) of the Exchange Act) other than the Purchaser, any of its
Affiliates or any employee benefit plan (or related trust) sponsored or maintained by the Purchaser
or any of its Affiliates acquires (as a result of a sale of equity interests, reorganization,
merger, consolidation, sale of assets or otherwise), direct or indirect ownership of (i) a
majority of the then issued and outstanding voting equity securities of the Company, or
(ii) all or substantially all of the assets of the Company.
“Client Consent” means:
(i) With respect to a Sub-Advised Fund, that the Company shall have obtained Fund Board
Approval and, if shareholder approval is required under section 15 of the Investment Company
Act, Fund Shareholder Approval of a new Advisory Contract to be in effect with respect to
such Sub-Advised Fund as of immediately following the Closing, in each case on the terms and
conditions contemplated by Section 6.4(b);
(ii) With respect to a Separate Account Client, that the Company shall have obtained
its Separate Account Consent on the terms and conditions contemplated by Section 6.4(c); and
(iii) With respect to any Sponsored Fund, that the Company shall have obtained its
Sponsored Fund Consent on the terms and conditions contemplated by Section 6.4(d).
“Closing” has the meaning set forth in Section 3.1.
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“Closing Assets Under Management” means, with respect to any Advisory Client, the
dollar amount of assets under management by the Company for such Advisory Client as of the Base
Date (or, in the case of any Advisory Client who became an Advisory Client after the Base Date, the
dollar amount of the assets such Advisory Client placed under management by the Company on the date
such Person became an Advisory Client), as adjusted to reflect any contributions or purchases or
redemptions or withdrawals by such Advisory Client after the Base Date (or, in the case of any
Advisory Client who first became an Advisory Client after the Base Date any contributions or
purchases or redemptions or withdrawals by such Advisory Client after the Base Date) and prior to
the Closing Date, but not including any contributions or purchases by the Seller, the Principals or
any of their Affiliates, family members or “associates” (as such term is defined in Rule 12b-2
under the Exchange Act). For the avoidance of doubt, the calculation of “Closing Assets Under
Management” is intended to exclude any market appreciation or depreciation of assets under
management following the Base Date.
“Closing Advisory Revenue Run-Rate” means, with respect to any Advisory Client, an
amount equal to the product of (x) the Closing Assets Under Management of such Advisory
Client multiplied by (y) the applicable Closing Fee Rate.
“Closing Date” has the meaning set forth in Section 3.1.
“Closing Date Balance Sheet” has the meaning set forth in Section 2.6(b).
“Closing Fee Rate” means, with respect to any Advisory Client, an amount equal to the
lower of (i) the actual fee rate payable to the Company pursuant to the Advisory Contract
of such Advisory Client that is in effect as of the date that is two Business Days immediately
preceding the Closing Date, or (ii) the fee rate that will be payable to the Company
pursuant to such Advisory Contract following the Closing (including, without limitation, as a
result of any reduction in the applicable fee rate required by the board of directors or trustees
of any Sub-Advised Fund as a condition to such board’s consenting to the “assignment” of such
Advisory Contract in connection with the transactions contemplated hereby), in each case calculated
on a pro-forma basis with respect to the twelve-month period commencing on the Closing Date.
“Closing Payment” has the meaning set forth in Section 2.3(a).
“Closing Statement” has the meaning set forth in Section 2.6(b).
“Closing Working Capital Amount” has the meaning set forth in Section 2.6(b).
“Code” means the Internal Revenue Code of 1986, as amended, or any successor thereto.
“Commencement Date” has the meaning set forth in Section 2.4(e).
“Communications Materials” means, collectively, those certain client and other letters
(and accompanying documents, such as fact sheets, questions and answers and biographical
information), announcements, press releases and other materials and information jointly prepared by
the parties for distribution to clients, consultants, news sources or the general public, in either
written or electronic form, in connection with the execution of this Agreement and the transactions
contemplated hereby.
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“Company” has the meaning set forth in the recitals to this Agreement.
“Company Benefit Plans” means each written or oral employee benefit plan, scheme,
program, policy, arrangement or contract (including, but not limited to, any “employee benefit
plan,” as defined in section 3(3) of ERISA, whether or not subject to ERISA, and any bonus,
deferred compensation, stock bonus, stock purchase, restricted stock, stock option or other
equity-based arrangement, and any employment, termination, retention, bonus, change in control or
severance plan, program, policy, arrangement or contract, or any material fringe benefit) for the
benefit of any current or former officer, employee or director of, or any consultant or contractor
providing services to, the Company or any Company Related Person that is maintained or contributed
to by the Company or any Company Related Person or with respect to which the Company or any Company
Related Person has any liability.
“Company Intellectual Property” has the meaning set forth in Section 4.16(a).
“Company Related Person” means the Company and any Person that would be or, at any
time during the past six years, would have been treated as a single employer with the Company for
purposes of section 414(b), (c), (m) or (o) of the Code, including any Person who may be so treated
as a result of the Recapitalization.
“Confidentiality Agreement” means the Confidentiality Agreement, dated as of August
22, 2006, between UBS Securities LLC, as agent for the Company, and Xxxxx Xxxxxxx & Co.
“Contract” means any mortgage, indenture, lease, license, note, contract, agreement,
commitment, employee benefit plan or other instrument or arrangement.
“Deductible” has the meaning set forth in Section 11.4(a).
“Distribution Agreement” means (i) any agreement between a Sponsored Fund or a
Sub-Advised Fund, on the one hand, and the Company, on the other hand, or (ii) any
agreement between a Sponsored Fund, a Sub-Advised Fund or the Company, on the one hand, and a
Third-Party intermediary, on the other hand, pursuant to which (A) the Company or any
Affiliate thereof makes available to its clients or customers investment products for which the
Company serves as an investment adviser, sub-advisor or distributor or provides shareholder
services with respect to such investment products or (B) such intermediary makes available
to its clients or customers investment products for which the Company serves as an investment
adviser, sub-advisor or distributor or provides shareholder services with respect to such
investment products or pursuant to which such intermediary and the Company share revenues relating
to such intermediary’s clients or customers (in each case, including, without limitation, any
agreement or arrangement pursuant to which the Company makes payments to an intermediary out of its
own resources, for services relating to the distribution of fund shares, shareholder services or
the provision of non-distribution services for or on behalf of purchasers of fund shares or the
Sponsored Funds or the Sub-Advised Funds).
“Employment Agreements” has the meaning set forth in the Recitals.
“End Date” has the meaning set forth in Section 9.1(b).
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“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
“ERISA Client” means any plan that is subject to ERISA, or any plan that is defined in
Section 4975(e)(1) of the Code.
“Exchange Act” means the Securities Exchange Act of 1934 and the rules and regulations
of the SEC thereunder, in each case, as amended.
“Final Buy-Out Notice” has the meaning set forth in Section 2.4(e).
“Fund Client” means the Sponsored Funds and the Sub-Advised Funds.
“Final Future Payment Certificate” has the meaning set forth in Section 2.4(c).
“Financial Statements” has the meaning set forth in Section 4.6(a).
“Fund Board Approval” has the meaning set forth in Section 6.4(b).
“Fund Shareholder Approval” has the meaning set forth in Section 6.4(b).
“Future Payments” has the meaning set forth in Section 2.4(a).
“Future Payment Certificate” has the meaning set forth in Section 2.4(b).
“Future Payment Dispute Notice” has the meaning set forth in Section 2.4(b).
“Future Payment Period” has the meaning set forth in Section 2.4(a).
“Future Payment Review Period” has the meaning set forth in Section 2.4(b).
“GAAP” means generally accepted accounting principles in the United States,
consistently applied.
“Governmental Approval” means any consent, authorization, order or approval of, filing
or registration with, or notice to, any Governmental Authority.
“Governmental Authority” means (i) any national, state or local government or
political subdivision thereof, (ii) any entity, authority or body exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining to government,
(iii) any court, tribunal or arbitrator, or (iv) any self-regulatory organization.
“Guaranteed Obligations” has the meaning set forth in Section 12.11.
“HSR Act” means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976 and the rules
and regulations promulgated thereunder, in each case, as amended.
“Income Taxes” means all Taxes (other than Transfer Taxes and sales, use, property,
recording, and similar Taxes) based upon or measured by gross or net receipts or gross or net
income (including Taxes in the nature of minimum taxes, tax preference items, and alternative
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minimum taxes) and including any liability arising pursuant to the application of Treasury
Regulation Section 1.1502-6 (or any similar provision of state, local, or foreign law), as a
transferee or successor, by contract or otherwise.
“Indemnified Party” has the meaning set forth in Section 11.5.
“Indemnifying Party” has the meaning set forth in Section 11.5.
“Initial Aggregate Bonus Amount” has the meaning set forth in Section 7.3(a).
“Initial Bonus Payments” has the meaning set forth in Section 7.3(a).
“Initial Bonus Period” has the meaning set forth in Section 7.3(a).
“Intellectual Property” means U.S. and foreign intellectual property, including
patents and patent applications, copyrights and copyrightable works and registrations and
applications to register or renew the registration of any of the foregoing; trademarks, service
marks, trade names, corporate names, domain names, logos, trade dress, including all goodwill
associated with the foregoing, and other source indicators, and registrations and applications to
register or renew the registration of any of the foregoing.
“Investment Advisers Act” means the Investment Advisers Act of 1940 and the rules and
regulations of the SEC thereunder, in each case, as amended.
“Investment Company Act” means the Investment Company Act of 1940 and the rules and
regulations of the SEC thereunder, in each case, as amended.
“IRS” means the U.S. Internal Revenue Service.
“Knowledge of the Seller” means the actual, conscious (and not constructive) knowledge
of any of the Principals or any of the individuals identified in Section 1.1(i) of the
Seller Disclosure Letter.
“Leases” has the meaning set forth in Section 4.15(c).
“Leased Real Property” has the meaning set forth in Section 4.15(c).
“Licensed Intellectual Property” has the meaning set forth in Section 4.16(a).
“Lien” means any mortgage, pledge, lien, charge, security interest or other similar
encumbrance or any adverse claim of any kind.
“Litigation” means any action, cause of action, claim, cease and desist letter,
demand, suit, arbitration or other dispute resolution proceeding, citation, summons, subpoena or
investigation of any nature, civil, criminal, regulatory or otherwise, in law or in equity.
“Loss” means any (a) claim, damage, obligation, loss, liability, judgment,
arbitration award, amount paid in settlement, penalty, fine, interest, reasonable expenses of
investigation, enforcement and collection and (b) reasonable attorneys’, accountants’ and
other professional
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fees and expenses in connection with any Litigation, but excluding any operating costs and
expenses incurred by the Indemnified Party in the ordinary course of business.
“Material Adverse Effect” means (a) any effect on or change to the Company
that is or would reasonably be expected to be, either individually or in the aggregate, materially
adverse to the Business or the assets, operations, operating results, or financial or other
condition of the Company, other than any such effect or change attributable to or resulting from:
(i) any change in the capital markets or securities markets, (ii) any change in
general economic conditions or interest rates, (iii) any change or condition generally
affecting the industry in which the Company operates, unless such change or condition affects the
Company or the Business in a disproportionate manner relative to comparable Persons in the
investment management industry, or (iv) any change in Applicable Law or GAAP, or in the
official interpretations of any of the foregoing; provided that any decline in the
Aggregate Closing Advisory Revenue Run-Rate compared to the Baseline Advisory Revenue Run-Rate that
results from the failure to obtain Client Consents from Advisory Clients and/or from withdrawals of
Client assets under management following the Base Date, to the extent that such decline results in
an adjustment to the Purchase Price pursuant to Section 2.4 (or would result in an adjustment to
the Purchase Price except that the Aggregate Closing Advisory Revenue Run-Rate is at least equal to
90 percent of the Baseline Advisory Revenue Run-Rate), shall not constitute a Material Adverse
Effect, or (b) any effect, change or circumstance that would reasonably be expected to
prohibit or materially impair the ability of the Seller or any Affiliate of the Seller (including
the Principals) to consummate the transactions contemplated hereby or by the Ancillary Agreements
or perform their respective obligations hereunder or thereunder on a timely basis.
“Material Contract” has the meaning set forth in Section 4.17(b).
“Membership Interests” has the meaning set forth in the recitals.
“Xx. Xxxxxxxxx” means Xxxxxxx X. Xxxxxxxxx.
“Multiple” means 12 for the first Future Payment Period and 11 for each Future Payment
Period thereafter.
“NASD” means the National Association of Securities Dealers, Inc.
“Notice of Disapproval” has the meaning set forth in Section 7.3(c).
“Operating Agreement” means that certain Amended and Restated Operating Agreement of
the Company, dated as of January 1, 2001, as amended from time to time.
“Order” means any decision, order, judgment, ruling, stipulation, decree, injunction,
subpoena, verdict, determination or award issued, made or rendered by any Governmental Authority
having competent jurisdiction.
“Organizational Documents” means, collectively, (i) the articles of
organization or certificate of formation of the Company and (ii) the Operating Agreement,
in each case as amended from time to time.
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“Owned Intellectual Property” has the meaning set forth in Section 4.16(a).
“Parent” has the meaning set forth in the introductory paragraph hereof.
“Parent Guaranty” has the meaning set forth in Section 12.11.
“Permit” means any approval, consent, waiver, license, franchise, permit, certificate
or other similar authorization issued, granted, given or otherwise made available by or under the
authority of any Governmental Authority or pursuant to any Applicable Law.
“Permitted Assignee” has the meaning set forth in Section 12.8.
“Permitted Liens” means (i) Liens for Taxes and other governmental charges and
assessments not yet due and payable or that are being contested in good faith and for which
adequate accruals or reserves have been established on the Balance Sheet, (ii) Liens of
carriers, warehousemen, mechanics, materialmen and other like Liens arising in the ordinary course
of business, (iii) easements, rights of way, zoning ordinances and other similar
encumbrances affecting real property and (iv) statutory Liens in favor of lessors arising
in connection with any property leased to the Company, which Liens and other encumbrances described
in clauses (i) through (iv) of this definition do not materially interfere with the
current use by the Company of the assets, properties or rights affected thereby and would not
reasonably be expected to have or result in a Material Adverse Effect.
“Person” means any individual, corporation, company, partnership (limited or general),
limited liability company, joint venture, association, trust, unincorporated organization or other
business entity.
“Post-Bonus EBITDA” means, with respect to any period, 80 percent of Adjusted EBITDA
for such period.
“Pre-Closing Date Tax Period” means any Tax period ending on or before the Closing
Date, and with respect to a Straddle Period, any portion thereof ending on the Closing Date.
“Pre-Closing Date Tax Returns” has the meaning assigned thereto in Section 10.1.
“Profit Sharing Plan” means the Fiduciary Asset Management, LLC Profit Sharing Plan,
dated as of January 1, 2003, as amended.
“Projected Post-Bonus EBITDA” has the meaning set forth in Section 2.4(e).
“Purchase Price” has the meaning set forth in Section 2.3.
“Purchaser” has the meaning set forth in the introductory paragraph hereof.
“Purchaser Indemnitees” has the meaning set forth in Section 11.2.
“Purchaser Material Adverse Effect” means (a) any effect on or change to the
Parent and its Subsidiaries that is or would reasonably be expected to be, either individually or
in the
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aggregate, materially adverse to the reputation in the financial services industry of the
Parent and its Subsidiaries, taken as a whole, to such an extent that the operation of the Business
by the Company following the Closing would reasonably be expected to be materially impaired, other
than any such effect or change attributable to or resulting from: (i) any change in the
capital markets or securities markets, (ii) any change in general economic conditions or
interest rates, (iii) any change or condition generally affecting the industry in which the
Parent or its Subsidiaries operate, unless such change or condition affects the business of the
Parent or any of its Subsidiaries, taken as a whole, in a disproportionate manner relative to
comparable Persons in such industry, or (iv) any change in Applicable Law or GAAP, or in
the official interpretations of any of the foregoing, or (b) any effect, change or
circumstance that would reasonably be expected to prohibit or materially impair the ability of the
Purchaser to consummate the transactions contemplated hereby or by the Ancillary Agreements or the
ability of the Purchaser and the Parent to perform their obligations hereunder or thereunder on a
timely basis.
“Recapitalization” has the meaning set forth in Section 2.1.
“Restricted Activities” has the meaning given thereto in the applicable Principal’s
Employment Agreement.
“Restricted Period” has the meaning given thereto in the applicable Principal’s
Employment Agreement.
“Revenue” means, with respect to any period, the revenue of the Company for such
period, calculated in accordance with the Applicable Accounting Principles.
“Run-Rate Adjustment Amount” has the meaning set forth in Section 2.5(a).
“S-Corporations” has the meaning set forth in the recitals.
“Xxxxxxxx-Xxxxx Act” means the Xxxxxxxx-Xxxxx Act of 2002 and the rules and
regulations of the SEC thereunder, in each case, as amended.
“Scheduled Intellectual Property” means all Intellectual Property consisting of
patents, patent applications, common law trademarks, trademark applications, trademark
registrations, common law service marks, service xxxx applications, service xxxx registrations,
trade names, domain names, copyright registrations and material unregistered copyrights owned by
the Company.
“SEC” means the United States Securities and Exchange Commission.
“Securities Act” means the Securities Act of 1933 and the rules and regulations of the
SEC thereunder, in each case, as amended.
“Seller” has the meaning set forth in the introductory paragraph hereof.
“Seller Disclosure Letter” means the disclosure letter, dated as of the date hereof,
delivered by the Seller to the Purchaser at the time of execution hereof.
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“Seller Indemnitees” has the meaning set forth in Section 11.3.
“Seller Operating Agreement” has the meaning set forth in Section 2.1(d).
“Separate Account Client” means each Advisory Client that is not a Fund Client,
including Advisory Clients under third-party wrap programs, and as more specifically identified in
Section 4.20(a) of the Seller Disclosure Letter.
“Separate Account Consent” has the meaning set forth in Section 6.4(c).
“Sponsored Fund Consent” has the meaning set forth in Section 6.4(d).
“Sponsored Funds” means each pooled investment vehicle that relies on an exemption
from registration under either Section 3(c)(1) or 3(c)(7) of the Investment Company Act that is
sponsored, advised, issued or distributed by the Company or any of its Affiliates and as more
specifically identified in Section 4.20(a) of the Seller Disclosure Letter.
“Straddle Period” means any complete Tax period that includes but does not end on the
Closing Date.
“Sub-Advised Fund” means each investment company (or series thereof) registered under
the Investment Company Act that is an Advisory Client and is sponsored, advised, issued or
distributed by a Person other than the Company or any of its Affiliates and as more specifically
identified in Section 4.20(a) of the Seller Disclosure Letter.
“Subsequent Aggregate Bonus Amount” has the meaning set forth in Section 7.3(a).
“Subsequent Bonus Payments” has the meaning set forth in Section 7.3(a).
“Subsequent Bonus Period” has the meaning set forth in Section 7.3(a).
“Subsidiary” means, with respect to any Person, any other Person in which the first
Person owns, directly or indirectly through one or more intermediaries, outstanding shares of
capital stock or other equity interests having ordinary voting power to elect a majority of the
board of directors (or comparable body) of such other Person; provided, however,
that ownership through fiduciary, trust, custodial or similar arrangements for the account of
customers shall not constitute ownership of capital stock or other equity interests for purposes of
this definition.
“Tax Returns” means all federal, state, local, foreign, and other returns, information
returns (including without limitation, IRS Forms 1098, 1099, 1042, and 1042-S), forms,
declarations, elections, claims for refund, statements and reports relating to Taxes, including any
schedules or attachments thereto and any amendments thereof.
“Taxes” means all federal, state, local, or foreign and other income, estimated
income, alternative or add-on minimum, gross receipts, profits, business, license, occupation,
stamp, premium, value added, utility, franchise, service, personal and real property (including
special assessments or charges), sales, use, transfer, gains, excise, severance, environmental,
unclaimed property, employment, unemployment, payroll, withholding, disability, social security,
minimum
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tax, capital stock, registration, or any other tax, custom duty, governmental fee, or other
like assessment or charge of any kind, together with any interest or any penalty, addition to tax,
or additional amount, whether disputed or not, and including any liability for the Taxes of any
person under Treasury Regulations Section 1.1502-6 (or any similar provision of state, local, or
foreign law), as a transferee or successor, by contract or otherwise.
“Third Party” means any Person that is neither a party to this Agreement nor an
Affiliate of any party to this Agreement.
“Third-Party Claim” has the meaning set forth in Section 11.5.
“Third-Party Consent” means any consent, authorization, approval or waiver from or
notice to any Third Party that is a party (other than a Governmental Authority) to any Contract.
“Transfer Taxes” has the meaning set forth in Section 10.4.
“Treasury Regulations” means the U.S. Treasury Regulations (including any successor
regulations promulgated pursuant to the Code).
“Web Sites” has the meaning set forth in Section 4.16(d).
“Working Capital Amount” means (x) the current assets of the Company
minus (y) the current liabilities of the Company, in each case, as determined in
accordance with the Applicable Accounting Principles.
ARTICLE II
RECAPITALIZATION; PURCHASE AND SALE OF MEMBERSHIP INTERESTS
Section 2.1 Recapitalization. Prior to the Closing, the Seller and the Principals
shall, and the Principals shall cause the S-Corporations to, enter into the following transactions
(such transactions, collectively, the “Recapitalization”):
(a) The Principals shall cause the S-Corporations to contribute to the Seller all of
the Membership Interests in exchange for membership interests in the Seller, and the Seller
shall issue to each of the Principals (or the applicable S-Corporations) membership
interests in the Seller in exchange for such contribution;
(b) The Seller shall enter into a joinder to the Operating Agreement, in form and
substance satisfying the requirements set forth in Section 6.4 of the Operating Agreement;
(c) The Principals shall cause each of the S-Corporations that is a Class A Member (as
such term is defined in the Operating Agreement) to execute and deliver to the Manager (as
such term is defined in the Operating Agreement) a written approval of the transfer of the
Principals’ respective membership interests in the Company to the Seller and the admission
of the Seller as a “Substitute Member” within the meaning of Section 6.4 of the Operating
Agreement; and
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(d) The Principals shall cause the S-Corporations to enter into an amended and restated
operating agreement of the Seller, effective as of the Closing Date (the “Seller
Operating Agreement”), in a form prepared by the Seller and approved by the Purchaser
(such approval not to be unreasonably withheld or delayed).
Section 2.2 Purchase and Sale of Membership Interests. On the terms and subject to
the conditions set forth in this Agreement, at the Closing, the Seller shall sell, transfer, assign
and deliver to the Purchaser all of the Membership Interests, free and clear of any Liens other
than Liens created by the Purchaser or its Affiliates.
Section 2.3 Purchase Price. On the terms and subject to the conditions set forth in
this Agreement, the Purchaser shall pay to the Seller for the Membership Interests a purchase price
(the “Purchase Price”) that shall consist of the following:
(a) the sum of $66.4 million (the “Closing Payment”), payable in cash at the
Closing, subject to adjustment as provided in Section 2.5 and subject to further adjustment
pursuant to Section 2.6; and
(b) the Future Payments, payable as provided in Section 2.4.
Section 2.4 Future Payments.
(a) Eligibility. Following each of the calendar years 2008, 2009, and 2010 (each such
calendar year a “Future Payment Period”), the Purchaser shall pay or cause to be paid to
the Seller an aggregate amount in cash (each such payment, a “Future Payment” and,
collectively, the “Future Payments”) equal to 10% of an amount equal to the applicable
Multiple for the Future Payment Period just ended times Post-Bonus EBITDA for the Future Payment
Period just ended; provided, however, that the Purchaser shall have no obligation
to make a Future Payment with respect to any Future Payment Period in which Revenue is less than
80% of the Aggregate Closing Advisory Revenue Run-Rate.
(b) Payment of Estimated Future Payments and Certification of Post-Bonus EBITDA.
(i) On or before December 15 of each Future Payment Period, the Purchaser and the
Seller shall jointly prepare in good faith an estimate of Revenue and Post-Bonus EBITDA for
such Future Payment Period based on financial data for the Company as of November 30 of such
Future Payment Period. If such estimate shows projected Revenue for such Future Payment
Period to be at least 80% of the Aggregate Closing Advisory Revenue Run-Rate, then the
Purchaser shall pay to the Seller an amount equal to 80% of the Future Payment that would be
payable under Section 2.4(b)(ii) if Post-Bonus EBITDA set forth in such estimate were set
forth on the Future Payment Certificate for such Future Payment Period.
(ii) As soon as reasonably possible after the preparation of Parent’s audited
consolidated financial statements following the end of each Future Payment Period, but in no
event later than 90 days after the end of each Future Payment Period, the Purchaser shall
prepare (or caused to be prepared) and deliver to the Seller a certificate (each, a
“Future Payment Certificate”) setting forth the Purchaser’s calculation, in
reasonable
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detail, of (x) Post-Bonus EBITDA for such Future Payment Period, (y)
Revenue for such Future Payment Period, and (z) the amount of the Future Payment, if any,
for such Future Payment Period, together with the Company’s income statement with respect to
such Future Payment Period prepared in accordance with the Applicable Accounting Principles.
(iii) The Seller shall have 20 days from the date on which a Future Payment Certificate
is delivered to it (the “Future Payment Review Period”) to review such Future
Payment Certificate. The Purchaser shall, and shall cause the Company to, grant to the
Seller and its accountants reasonable access to such information as the Seller may
reasonably request in connection with such review, including the work papers of the
Purchaser and its accountants and the books and records of the Company. If the Seller
disagrees with any item or amount shown or reflected on any Future Payment Certificate, the
Seller may, on or prior to the last day of such Future Payment Review Period, deliver to the
Purchaser a notice of disagreement (a “Future Payment Dispute Notice”) setting forth
in reasonable detail each disputed item or amount and the basis for the Seller’s
disagreement therewith, together with the Seller’s calculation of Post-Bonus EBITDA,
Revenue, and the Future Payment, if any, for the relevant Future Payment Period. If no
Future Payment Dispute Notice is received by the Purchaser on or prior to the last day of
the applicable Future Payment Review Period, the Future Payment Certificate shall be deemed
accepted by the Seller and shall be final, binding and conclusive on the parties hereto.
(c) Determination of Final Future Payment Certificate Following A Dispute. If Seller
has delivered to the Purchaser a Future Payment Dispute Notice pursuant to Section 2.4(b)(iii), the
Seller and the Purchaser shall first attempt to reconcile their differences, and any resolution by
them as to any disputed amounts or calculations shall be final, binding and conclusive on the
parties hereto. If the Seller and the Purchaser are unable to reach a resolution with such effect
within 10 Business Days, the Seller and the Purchaser shall submit the items remaining in dispute
for resolution to the Accounting Firm, which shall determine and report to the Seller and the
Purchaser upon such remaining disputed items or calculations, and such report shall be final,
binding and conclusive on the parties hereto. The Purchaser and the Seller shall make reasonably
available to the Accounting Firm all relevant books and records, any work papers (including those
of the parties’ respective accountants, to the extent applicable) and supporting documentation
relating to the determination of Post-Bonus EBITDA, Revenue, and the Future Payment, if any, for
the relevant Future Payment Period. The fees and disbursements of the Accounting Firm shall be
borne equally by the Purchaser and the Seller. The Accounting Firm’s determination shall be made
within 30 days after the submission of the items remaining in dispute under the Future Payment
Dispute Notice and shall be set forth in a written statement delivered to the Seller and the
Purchaser, which statement shall set forth any resulting adjustment to the Future Payment
Certificate.
(d) Reconciliation of Future Payments. Following the final determination of each
Future Payment under Section 2.4(b)(iii) or 2.4(c):
(i) if the payment made pursuant to Section 2.4(b)(i) is less than the Future Payment
shown on the applicable Future Payment Certificate (as finally determined),
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then the Purchaser shall within five Business Days pay the Seller, in cash, by wire
transfer of immediately available funds to the bank account or accounts designated by the
Seller, the amount equal to the excess of the Future Payment shown on the applicable Future
Payment Certificate (as finally determined) over the payment made pursuant to Section
2.4(b)(i); or
(ii) if the payment made pursuant to Section 2.4(b)(i) is more than the Future Payment
shown on the applicable Future Payment Certificate (as finally determined), then the Seller
shall within five Business Days pay the Purchaser, in cash, by wire transfer of immediately
available funds to the bank account or accounts designated by the Purchaser, the amount
equal to the excess of the payment made pursuant to Section 2.4(b)(i) over the Future
Payment shown on the applicable Future Payment Certificate (as finally determined).
(e) Buy-Out Procedure.
(i) Following the Closing, the Purchaser and the Seller shall each have the right to
commence, as provided in clause (iii) or (vii) of this Section 2.4(e), as
applicable, a buy-out procedure with respect to the Future Payments (such procedure, the
“Buy-Out Procedure”), pursuant to which the Purchaser will pay to the Seller, in
cash, an amount (such amount, the “Buy-Out Payment”) equal to the product of
(x) an amount equal to ten percent (10%) of an amount resulting from multiplying
the Average Multiple times Projected Post-Bonus EBITDA and (y) the number of Future
Payment Periods that have not expired prior to or at the date on which the Buy-Out
Procedure is commenced (such date, the “Commencement Date”); provided,
however, no Buy-Out Procedure may be commenced if Revenue for the 12-month period ending on
the date that would have been the Commencement Date but for this proviso is less than 80%
of the Aggregate Closing Advisory Revenue Run-Rate. For purposes of this Section 2.4(e),
“Projected Post-Bonus EBITDA” shall mean the average annual Adjusted EBITDA for the
24-month period immediately preceding the first day of the month in which the Commencement
Date occurs.
(ii) If at any time after the Closing Date, the Purchaser or Parent enters, or causes
the Company to enter, into a definitive agreement with respect to a Change of Control
Transaction (such agreement, a “Change of Control Agreement”), the Purchaser shall
give a written notice to the Seller of such Change of Control Agreement and the Change of
Control Transaction contemplated thereby (such notice, a “Change of Control
Notice”) within two (2) Business Days after the Purchaser executes such definitive
agreement, provided that the Seller shall, and shall cause its Affiliates,
officers, directors, employees, accountants, counsel, consultants, advisors and agents to
hold in confidence, unless compelled to disclose by judicial or administrative process or
by other requirements of law, all confidential information concerning the Change of Control
Transaction contained in such Change of Control Notice.
(iii) Within sixty (60) days after the consummation of the Change of Control
Transaction (such period, the “Buy-Out Period”), the Purchaser or, following the
consummation of such Change of Control Transaction, the counter-party to such Change
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of Control Transaction (such counter-party, the “Acquirer”), shall have the
right to commence the Buy-Out Procedure by delivering to the Seller, during the period
Buy-Out Period:
(A) A written notice to the effect that the Acquirer is exercising the Buy-Out
Option (a “Buy-Out Notice”), which notice shall include a calculation, in
reasonable detail, of (I) Projected Post-Bonus EBITDA and (II) the Buy-Out Payment
(it being understood that such Buy-Out Notice may be included in the Change of
Control Notice, in which case the Change of Control Notice shall be deemed to
constitute a Buy-Out Notice for purposes of this Section 2.4(e)); and
(B) A payment equal to the Buy-Out Payment set forth in the Buy-Out Notice.
(iv) The Seller shall have forty-five (45) days from the date on which the Buy-Out
Notice is delivered to it (the “Buy-Out Review Period”) to review such Buy-Out
Notice and the calculation of the Buy-Out Payment set forth therein. The Purchaser (or,
following the consummation of such Change of Control Transaction, the Acquirer) shall, and
shall cause the Company to, grant to the Seller and its accountants reasonable access to
such information as the Seller may reasonably request in connection with such review,
including the work papers of the Purchaser or the Acquirer, as applicable, and its
accountants and the books and records of the Company. If the Seller disagrees with any item
or amount shown or reflected on any Buy-Out Notice, the Seller may, on or prior to the last
day of such Buy-Out Review Period, deliver to the Purchaser or the Acquirer, as applicable,
a notice of disagreement (a “Buy-Out Dispute Notice”) setting forth in reasonable
detail each disputed item or amount and the basis for the Seller’s disagreement therewith,
together with the Seller’s calculation of Projected Post-Bonus EBITDA and the Buy-Out
Payment. If no Buy-Out Dispute Notice is received by the Purchaser or the Acquirer, as
applicable, on or prior to the last day of the Buy-Out Review Period, the Buy-Out Notice and
the calculation of the Buy-Out Payment set forth therein shall be deemed accepted by the
Seller.
(v) If the Seller has delivered to the Purchaser or the Acquirer, as applicable, a
Buy-Out Dispute Notice pursuant to clause (iv) of this Section 2.4(e), the Seller
and the Purchaser or the Acquirer, as applicable, shall first attempt to reconcile their
differences, and any resolution by them as to any disputed amounts or calculations shall be
final, binding and conclusive on the parties hereto. If the Seller and the Purchaser or the
Acquirer, as applicable, are unable to reach a resolution with such effect within ten (10)
Business Days, the Seller and the Purchaser or the Acquirer, as applicable, shall submit the
items remaining in dispute for resolution to the Accounting Firm, which shall determine and
report to the Seller and the Purchaser or the Acquirer, as applicable, upon such remaining
disputed items or calculations, and such report shall be final, binding and conclusive on
the Seller and the Purchaser or the Acquirer, as applicable. The Purchaser or the Acquirer,
as applicable, and the Seller shall make reasonably available to the Accounting Firm all
relevant books and records, any work papers (including those of the parties’ respective
accountants, to the extent applicable) and supporting documentation relating to the
determination of Projected Post-Bonus EBITDA and the Buy-Out
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Payment. The fees and disbursements of the Accounting Firm shall be borne equally by
the Purchaser or the Acquirer, as applicable, on the one hand, and the Seller, on the other
hand. The Accounting Firm’s determination shall be made within thirty (30) days after the
submission of the items remaining in dispute under the Buy-Out Dispute Notice and shall be
set forth in a written statement delivered to the Seller and the Purchaser or the Acquirer,
as applicable, the “Final Buy-Out Notice,” which statement shall set forth any
resulting adjustment to the Buy-Out Payment.
(vi) Within five (5) Business Days after delivery of the Final Buy-Out Statement, the
parties shall take the following applicable actions:
(A) If the Buy-Out Payment set forth in the Final Buy-Out Statement exceeds the
amount of the Buy-Out Payment that was made pursuant to Section 2.4(e)(iii) then the
Purchaser shall pay to the Seller, in cash, by wire transfer of immediately
available funds to the bank account or accounts designated by the Seller, the amount
by which the Buy-Out Payment set forth in the Final Buy-Out Statement exceeds the
amount of the Buy-Out Payment that was made pursuant to Section 2.4(e)(iii); or
(B) If the Buy-Out Payment set forth in the Final Buy-Out Statement is less
than the amount of the Buy-Out Payment that was made pursuant to Section 2.4(e)(iii)
then Seller shall pay to Purchaser, in cash, by wire transfer of immediately
available funds to the bank account or accounts designated by Purchaser, the amount
by which the Buy-Out Payment set forth in the Final Buy-Out Statement is less than
the amount of the Buy-Out Payment that was made pursuant to Section 2.4(e)(iii).
(vii) At any time prior to the one-year anniversary of the consummation of the Change
of Control Transaction, the Seller shall have the right to commence the Buy-Out Procedure by
delivering to the Purchaser or the Acquirer, as applicable, a written notice to that effect,
if any of the following shall have occurred during such one-year period: (A) any
Principal shall have terminated his Employment Agreement for Good Reason (as defined in such
Employment Agreement), (B) Purchaser, Parent, an Affiliate of Purchaser or Parent,
or the Acquirer, as applicable, shall have terminated any of the Employment Agreements for
any reason other than Cause (as defined in such Employment Agreement), (C)
Purchaser, Parent, an Affiliate of Purchaser or Parent, or the Acquirer, as applicable,
shall have breached the terms of any of the Employment Agreements or of this Agreement,
including the terms and conditions of Section 6.11, 7.1, 7.2, or 7.3 of this Agreement,
(D) Purchaser, Parent, an Affiliate of Purchaser or Parent, or the Acquirer, as
applicable, shall have indicated that it does not intend to continue to provide
substantially all of the investment-advisory services offered by the Company immediately
prior to the Change of Control Transaction, or (E) Purchaser, Parent, an Affiliate
of Purchaser or Parent, or the Acquirer, as applicable, materially diminishes or
unreasonably withholds resources that are necessary for the Company to execute its strategic
plan. If the Seller has delivered to the Purchaser or the Acquirer, as applicable, a
written notice of the Seller’s intention to commence the Buy-Out Procedure in accordance
with this clause (vii) of this Section 2.4(e), then the Purchaser or the Acquirer,
as applicable, shall, within
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fifteen (15) days after its receipt of such notice, deliver to the Seller a Buy-Out
Notice and But-Out Payment in accordance with clause (iii) of this Section 2.4(e),
and the procedures set forth in clauses (iv), (v) and (vi) of this
Section 2.4(e) shall thereafter apply, provided that when the Purchaser or the Acquirer, as
applicable, is preparing the Buy-Out Notice, the Commencement Date shall be considered the
date on which the Change of Control Transaction is consummated and not the date that the
Seller provides notice pursuant to this Section 2.4(e)(vii).
(viii) Any Buy-Out Payments made pursuant to this Section 2.4(e) shall be subject to
the terms and conditions of Section 11.7. After the final Buy-Out Payments are delivered to
the Seller in accordance with clauses (vi) or (vii) of this Section 2.4(e),
all obligations of the Purchaser with respect to the Future Payments shall terminate, and
the Seller shall be deemed to have relinquished the right to the Future Payments and shall
have no further rights with respect thereto. For the avoidance of doubt, if the Change of
Control Transaction is not consummated for any reason, the Purchaser shall not be required
to make the Buy-Out Payment to the Seller pursuant to this Section 2.4(e).
Section 2.5 Purchase Price Adjustment Based on Changes in Revenue Run-Rate.
(a) Adjustment of Closing Payment. At the Closing, the Closing Payment shall be adjusted as
follows:
(i) If the Aggregate Closing Advisory Revenue Run-Rate is less than 95 percent of the
Baseline Advisory Revenue Run-Rate, the Closing Payment shall be reduced by an amount equal
to the Run-Rate Adjustment Amount (as defined below); or
(ii) If the Aggregate Closing Advisory Revenue Run-Rate is more than 105 percent of the
Baseline Advisory Revenue Run-Rate, the Closing Payment shall be increased by an amount
equal to the Run-Rate Adjustment Amount.
“Run-Rate Adjustment Amount” means an amount equal to the product of (x) the
Closing Payment and (y) a fraction (such fraction, expressed as a decimal rounded to four
decimal places, the “Adjustment Factor”) calculated as follows:
(A) If the Aggregate Closing Advisory Revenue Run-Rate is less than 95 percent of the
Baseline Advisory Revenue Run-Rate, the Adjustment Factor shall be equal to the product of
(x) 0.95 minus a fraction, the numerator of which is the Aggregate Closing
Advisory Revenue Run-Rate and the denominator of which is the Baseline Advisory Revenue
Run-Rate, and (y) 2.18; or
(B) If the Aggregate Closing Advisory Revenue Run-Rate is more than 105 percent of the
Baseline Advisory Revenue Run-Rate, the Adjustment Factor shall be equal to the product of
(x) a fraction, the numerator of which is the Aggregate Closing Advisory Revenue
Run-Rate and the denominator of which is the Baseline Advisory Revenue Run-Rate,
minus 1.05 and (y) 2.18; provided, however, that if the
Adjustment Factor is more than one tenth (0.1), then the Adjustment Factor shall be deemed
to be equal to one tenth (0.1).
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(b) Closing Statements. As of the close of business on the date that is two Business
Days immediately preceding the Closing Date, the Seller shall prepare (or cause to be prepared) in
good faith, and shall deliver to the Purchaser not later than noon on the next Business Day, a
statement showing (i) a calculation, in reasonable detail, of the Aggregate Closing
Advisory Revenue Run-Rate and (ii) a calculation of the Run-Rate Adjustment Amount.
(c) Disputes. The Seller shall, and shall cause the Company and its advisers, counsel
and accountants to, give the Purchaser and its advisers, counsel and accountants reasonable access
to the Company books, records and personnel in order to enable the Purchaser to review the
statement delivered by the Seller pursuant to Section 2.5(b). If the Purchaser disputes such
statement or any amounts or calculations contained therein, the Purchaser shall give a written
notice of such dispute to the Seller within 15 days following the Closing Date and such dispute
thereafter shall be resolved as follows:
(i) The Seller and the Purchaser shall first attempt to reconcile their differences,
and any resolution by them as to any disputed amounts or calculations shall be final,
binding and conclusive on the parties hereto.
(ii) If the Seller and the Purchaser are unable to reach a resolution with such effect
within 10 Business Days, the Seller and the Purchaser shall submit the items remaining in
dispute for resolution to the Accounting Firm, which shall, within 15 Business Days after
such submission, determine and report to the Seller and the Purchaser upon such remaining
disputed items or calculations, and such report shall be final, binding and conclusive on
the Seller and the Purchaser. The Purchaser and the Seller shall make reasonably available
to the Accounting Firm all relevant books and records, any work papers (including those of
the parties’ respective accountants, to the extent applicable) and supporting documentation
relating to the determination of the Aggregate Closing Advisory Revenue Run-Rate and the
applicable adjustment of the Closing Payment, if any. The fees and disbursements of the
Accounting Firm shall be borne equally by the Purchaser and the Seller.
(d) Final Adjustment. The calculation of the Aggregate Closing Advisory Revenue
Run-Rate and the Run-Rate Adjustment Amount shall be deemed final for purposes of this Section 2.5
upon the earliest of the following: (i) the failure of the Purchaser to notify the Seller
of a dispute within 15 days following the Closing Date; (ii) the resolution of all disputes
by the Seller and the Purchaser pursuant to clause (i) of Section 2.5(c); or (iii)
the resolution of all disputes by the Accounting Firm pursuant to clause (ii) of Section
2.5(c). Any amount that is disputed by the Purchaser but paid to the Seller at the Closing shall
be promptly refunded by the Seller to the Purchaser if such dispute is thereafter resolved in favor
of the Purchaser. Any payments required to be made by either party pursuant to this Section 2.5(d)
shall be accompanied by interest thereon, payable in cash and calculated from the Closing Date
through the date of payment at the prime lending rate prevailing during such period, as published
in The Wall Street Journal.
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Section 2.6 Working Capital Purchase Price Adjustment.
(a) Closing of Books. The Seller shall use its reasonable best efforts to cause a
full balance sheet closing to take place on the Closing Date as if it were the last day of a fiscal
period for the Company.
(b) Closing Date Balance Sheet. As promptly as practicable, but in any event within
60 days following the Closing Date, the Seller shall prepare and deliver to the Purchaser a
statement (the “Closing Statement”) consisting of (i) a balance sheet of the
Company as of the close of business on the Closing Date (but without giving effect to the Closing)
(the “Closing Date Balance Sheet”) and (ii) a calculation in reasonable detail of
the Working Capital Amount as of the close of business on the Closing Date, based on the Closing
Date Balance Sheet (the “Closing Working Capital Amount”). The Closing Date Balance Sheet
shall be prepared, and the Closing Working Capital Amount shall be calculated, in accordance with
the Applicable Accounting Principles. The Purchaser shall assist and cooperate with the Seller in
all commercially reasonable respects in the preparation of the Closing Date Balance Sheet and the
calculation of the Closing Working Capital Amount, including by providing the Seller with
reasonable access to any relevant personnel, books and records of or related to the Company.
(c) Disputes. The Seller shall provide the Purchaser and its accountants with
reasonable access to the work papers of the Seller and its accountants in connection with the
Purchaser’s review of the Closing Date Balance Sheet and the calculation of the Closing Working
Capital Amount. The Purchaser may dispute amounts on the Closing Date Balance Sheet or the
calculation of the Closing Working Capital Amount by notifying the Seller in writing within 15 days
of the Purchaser’s receipt of the Closing Date Balance Sheet and calculation of the Closing Working
Capital Amount from the Seller that the Purchaser believes the Closing Date Balance Sheet or the
calculation of the Closing Working Capital Amount contains mathematical errors or was not prepared
in accordance with Section 2.6(b) and setting forth, in reasonable detail, the basis for such
dispute. In the event of such a dispute, the Seller and the Purchaser shall attempt to reconcile
their differences, and any resolution by them as to any disputed amounts or calculations shall be
final, binding and conclusive on the parties hereto. If the Seller and the Purchaser are unable to
reach a resolution with such effect within ten (10) Business Days after the receipt by the Seller
of the Purchaser’s written notice of dispute, the Seller and the Purchaser shall submit the items
remaining in dispute for resolution to the Accounting Firm, which shall, within 45 days after such
submission, determine and report to the Seller and the Purchaser upon such remaining disputed items
or calculations, and such report shall be final, binding and conclusive on the Seller and the
Purchaser. The Purchaser and the Seller shall make reasonably available to the Accounting Firm all
relevant books and records, any work papers (including those of the parties’ respective
accountants, to the extent applicable) and supporting documentation relating to the Closing Date
Balance Sheet, the calculation of the Closing Working Capital Amount and any other items reasonably
requested by the Accounting Firm. The fees and disbursements of the Accounting Firm shall be borne
equally by the Seller and Purchaser.
(d) Final Adjustment. The Closing Date Balance Sheet and calculation of the Closing
Working Capital Amount shall be deemed final for the purposes of this Section 2.6 upon the earliest
of (i) the failure of the Purchaser to notify the Seller of a dispute within 15 days of the
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Purchaser’s receipt of the Closing Date Balance Sheet from the Seller, (ii) the
resolution of all disputes by the Seller and the Purchaser pursuant to Section 2.6(c) or
(iii) the resolution of all disputes by the Accounting Firm pursuant to Section 2.6(c).
(e) Payment. Within five (5) Business Days following the date on which the Closing
Date Balance Sheet and calculation of the Closing Working Capital Amount are deemed final pursuant
to Section 2.6(d), the Closing Payment shall be adjusted as follows: (i) if the Closing
Working Capital Amount is $1.1 million or more, the Purchaser shall pay to the Seller an amount
equal to the amount by which the Closing Working Capital Amount exceeds $1.1 million; or
(ii) if the Closing Working Capital Amount is $900,000 or less, the Seller shall pay to the
Purchaser an amount equal to the amount by which the Closing Working Capital Amount is less than
$900,000. For the avoidance of doubt, if the Closing Working Capital Amount is more than $900,000
but less than $1.1 million, no Closing Payment adjustment shall be made.
(f) Manner of Payment; Interest. Any payments required to be made by the Seller or
the Purchaser pursuant to Section 2.6(e) shall be made in cash, by wire transfer of immediately
available federal funds to such bank account(s) as shall be designated in writing by the party to
which such payment is due and shall be treated as an adjustment to the Purchase Price for tax
purposes. Any payments required to be made by the Seller or the Purchaser pursuant to Section
2.6(e) shall be accompanied by cash interest thereon, calculated from the Closing Date through the
date of payment at the prime lending rate prevailing during such period as published in The Wall
Street Journal.
Section 2.7 Purchase Price Allocation. Not later than sixty (60) days following the
Closing Date, the Purchaser shall prepare and deliver to Seller a statement allocating the Purchase
Price, as then known, plus the liabilities of the Company as of the Closing Date, among the Assets
of the Company (the “Allocation Statement”). The Allocation Statement will be consistent
with the provisions of Section 1060 of the Code and the Treasury Regulations thereunder. Within
ten (10) days after Seller’s receipt of the Allocation Statement, Seller shall indicate its
concurrence therewith, or propose to Purchaser any changes to the Allocation Statement. Seller’s
failure to notify Purchaser of any objection to the Allocation Statement within ten (10) days after
receipt thereof shall constitute Seller’s concurrence therewith. Should the Seller propose any
change to the Allocation Statement, the Purchaser and the Seller shall resolve any disagreement
regarding the Allocation Statement in accordance with the provisions of Section 2.4(c). The
allocation so determined shall be binding on the parties and, subject to the following sentence,
all Tax Returns filed by Purchaser, Seller, the Principals, and each of their Affiliates shall be
prepared consistently with such allocation, and none of them shall take a position on any Tax
Return or other form or statement contrary to such allocation (unless required to do so by a
Governmental Authority). Upon each subsequent adjustment of the Purchase Price after the Closing
Date to reflect (i) the Working Capital Purchase Price Adjustment provided in Section 2.6, if any,
and (ii) each of the Future Payments, if any, Purchaser and Seller will each revise its IRS Forms
8594 in accordance with the above procedure. Each of the parties agrees to notify the other if the
IRS or any other Governmental Authority proposes a reallocation of amounts allocated pursuant to
this Section 2.7.
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ARTICLE III
CLOSING
Section 3.1 Closing Date. Unless this Agreement shall have theretofore been
terminated and the transactions herein abandoned pursuant to Section 9.1, subject to the provisions
of Article VIII, the closing (the “Closing”) of the transactions contemplated by this
Agreement shall take place at the offices of The Lowenbaum Partnership, St. Louis, Missouri, as of
10:00 a.m., Central time, on the date that is two (2) Business Days after the conditions set forth
in Sections 8.1, Section 8.2 and Section 8.3 have been satisfied or waived (other than conditions
that by their terms are to be satisfied at the Closing, but subject to the satisfaction or waiver
of such conditions), or at such other place or on such other date as the parties may agree to in
writing (the date on which the Closing occurs is referred to herein as the “Closing Date”).
Section 3.2 Closing Deliveries. At the Closing:
(a) the Purchaser shall pay to the Seller the Closing Payment, as adjusted pursuant to
Section 2.5 and subject to further adjustment pursuant to Section 2.6, by wire transfer of
immediately available funds to such account or accounts as the Seller shall designate in
writing to the Purchaser not less than three Business Days prior to the Closing Date; and
(b) the Seller shall execute and deliver to the Purchaser an Assignment Agreement (the
“Assignment Agreement”), dated as of the Closing Date, with respect to the
Membership Interests, in a form prepared by the Seller and approved by the Purchaser (such
approval not to be unreasonably withheld or delayed).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE SELLER AND PRINCIPALS
Except as expressly set forth in the Seller Disclosure Letter, as of the date hereof and as of
the Closing Date, the Seller represents and warrants to the Purchaser as follows; in addition,
except as expressly set forth in the Seller Disclosure Letter, each Principal also makes the
representations and warranties contained in Sections 4.1, 4.2, 4.3, 4.4, 4.5 (as to each such
Section each Principal makes such representation and warranty for himself only) and clause
(iii) of the first sentence of Section 4.7(a) to the Purchaser as of the date hereof and as
of the Closing Date:
Section 4.1 Organization, Power, etc.
(a) The Company is a limited liability company validly existing and in good standing under the
laws of the State of Missouri. The Company is qualified or licensed to do business and is in good
standing in each of the jurisdictions in which the nature of the Business or the properties or
assets owned or operated by the Company makes such qualification or license necessary, except where
failure to be so qualified or licensed would not reasonably be expected to have a Material Adverse
Effect. True copies of the Organizational Documents, as in effect as of the date hereof, have been
made available to the Purchaser, and the Company is not in material violation of any of their
provisions. The Company has all organizational authority necessary to carry on the Business. The
Company has no Subsidiaries and does not own any
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capital stock of, or other equity interest in, any Person (other than ownership through
fiduciary, trust, custodial or similar arrangements for the account of customers).
(b) The Seller is a limited liability company validly existing and in good standing under the
laws of the State of Missouri. Since its formation, the Seller has not engaged in any other
business and does not and will not as of the Closing Date own any assets other than the Membership
Interests and the proceeds of the sale of the Membership Interests. True copies of the articles of
organization and operating agreement of the Seller, as in effect as of the date hereof, have been
made available to the Purchaser, and the Seller is not in material violation of any of their
provisions.
Section 4.2 Capitalization; Title to Membership Interests; etc. The Membership
Interests constitute all of the outstanding equity interests in the Company and are uncertificated.
As of the date of this Agreement, the S-Corporations own all of the Membership Interests free and
clear of any Liens. Upon completion of the Recapitalization, the Seller will be the sole owner of
all of the Membership Interests, free of any Liens. All of the Membership Interests have been
validly issued. Upon the delivery and payment for the Membership Interests as contemplated herein,
(i) the Seller will have transferred to the Purchaser valid title to the Membership Interests, free
of any Liens (other than Liens created or incurred by the Purchaser or any of its Affiliates) and
(ii) the Purchaser will be the owner of all outstanding equity interests in the Company.
Section 4.3 Authorization. The Seller is authorized to execute this Agreement,
perform its obligations hereunder and consummate the transactions contemplated hereby. This
Agreement has been validly executed by Seller and each of the Principals and, assuming the due
authorization and execution by Purchaser, will constitute the Seller’s and Principals’ binding
obligation.
Section 4.4 Non-Contravention.
(a) The execution and performance of this Agreement by the Seller and each of the Principals,
require no action by or in respect of, or filing with, any Governmental Authority other than
(i) compliance with any applicable requirements of the HSR Act, (ii) the actions
and filings set forth in Section 4.4(a) of the Seller Disclosure Letter and (iii)
any actions or filings under any Applicable Laws the absence of which would not, individually or in
the aggregate, reasonably be expected to result in a Material Adverse Effect.
(b) The execution by the Seller and each of the Principals of this Agreement do not, and their
performance of their obligations hereunder (including the Recapitalization) will not: (i)
violate any provision of the articles of organization or operating agreement of the Seller or of
the Organizational Documents; or (ii) assuming that (x) all Governmental Approvals
set forth in Section 4.4(a) of the Seller Disclosure Letter, (y) all Third-Party
Consents contemplated by Section 4.5, and (z) all Client Consents of Advisory Clients
contemplated by Section 6.4 have been obtained or, in the case of filings, registrations and
notices, made, (A) conflict with or violate any Applicable Laws, (B) except as set
forth in Section 4.4(b) of the Seller Disclosure Letter, require the consent of or other
action by any Person under, violate, result in the termination or acceleration of, or of any right
under, give rise to or modify any right or
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obligation under, or conflict with, breach or constitute a default under, any Contract to
which the Seller, any of the Principals or the Company is a party or by which any of their assets
is bound or (C) result in the creation of any Lien on the Membership Interests or any of
the equity interests in, or any assets of, the Company, except, in the case of clauses (B)
and (C), for any such violation, termination, acceleration, conflict, default or Lien as
would not, individually or in the aggregate, reasonably be expected to have or result in a Material
Adverse Effect.
Section 4.5 Consents, etc. Except as contemplated by Section 6.4, no Third-Party
Consent is required for the execution of this Agreement and the Ancillary Agreements by the Seller
or any of the Principals or for performance of their respective obligations, except in any such
case for any such Third-Party Consent the failure of which to be obtained or made would not,
individually or in the aggregate, reasonably be expected to have or result in a Material Adverse
Effect.
Section 4.6 Financial Statements; Off-Balance Sheet Arrangements.
(a) The Seller has delivered to the Purchaser complete copies of the audited financial
statements of the Company for the periods ended December 31, 2004, 2005 and 2006, together with the
reports of the Company’s independent auditors thereon (the “Financial Statements”).
(b) The Financial Statements (including the notes thereto) have been prepared in accordance
with GAAP throughout the periods covered thereby and present fairly the financial condition of the
Company as of such dates and the results of operations of the Company for the periods then ended.
(c) The Company is not a party to and does not have any off-balance sheet transactions,
arrangements or obligations (including contingent obligations).
Section 4.7 Litigation.
(a) Since January 1, 2004 and except as stated in Section 4.7(a) of the Seller
Disclosure Letter, there has been no Litigation pending before any Governmental Authority or, to
the Knowledge of the Seller, threatened: (i) against or affecting the Company, the Business
or any of their assets; (ii) against or affecting any of the Sponsored Funds; or
(iii) challenging, or that would reasonably be expected to substantially interfere with
consummation of any of the transactions contemplated by this Agreement (including the
Recapitalization), or materially impair the ability of the Seller or the Principals to timely
perform their obligations hereunder. To the Knowledge of the Seller, no circumstance exists that
would reasonably be expected to serve as a basis for the commencement of any such Litigation before
any Governmental Authority. The Seller has provided the Purchaser with access to, all material
pleadings, correspondence and other documents relating to each Litigation listed in Section
4.7(a) of the Seller Disclosure Letter.
(b) The Company is not, and has not been since January 1, 2004, a party or subject to any
settlement agreements with any Governmental Authority relating to the Company or the Business.
There are no outstanding Orders (other than exemptive orders) to which the Company or any of the
Sponsored Funds is subject, bound or affected, and there have been no such Orders (other than
exemptive orders) since January 1, 2004.
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Section 4.8 Compliance with Laws, Regulatory Reports, and Registrations.
(a) Except as stated in Section 4.8(a) of the Seller Disclosure Letter, since January
1, 2004, the operations of the Company and the Sponsored Funds have been, and are being, conducted
in compliance in all material respects with all Applicable Laws.
(b) To the Knowledge of the Seller, the Company and the Sponsored Funds are not under
investigation with respect to (i) any material violation of any Applicable Law or
(ii) any actual or alleged obligation on the part of the Company or the Sponsored Funds to
undertake, or to bear all or any portion of the cost of, any corrective action of any material
nature.
(c) To the Knowledge of the Seller, neither the Company nor the Sponsored Funds have been
threatened to be charged with, and has not received any notice or other communication from any
Governmental Authority or any other Person regarding any matters described in clause (i) or
(ii) of the preceding subsection.
(d) The Company and the Sponsored Funds are, and, since January 1, 2004, have been in material
compliance with all registration, qualification and licensure requirements under all Applicable
Laws for themselves and the Company’s employees.
(e) The Company and the Sponsored Funds are and, since January 1, 2004, have been in material
compliance with all filing, disclosure, reporting, notice and registration requirements of all
Applicable Laws. Interests in the Sponsored Funds have been offered and sold pursuant to valid
exemptions from the registration requirements of applicable federal and state securities laws.
(f) To the Knowledge of the Seller, no Governmental Authority has threatened any proceeding
against the Company or the Sponsored Funds with respect to a violation of Applicable Law. To the
Knowledge of the Seller, no examination of the Company, the Sponsored Funds or the Business (other
than routine examinations in the ordinary course of Business that will not result in any material
expense or liability) conducted by any Governmental Authority is ongoing, unresolved or threatened
by any Governmental Authority. Neither the Company nor any of the Sponsored Funds is, or since
January 1, 2004, has been, (i) subject to any cease and desist, censure or other
disciplinary order issued by, (ii) a party to any written agreement consent or disciplinary
agreement with, (iii) a party to any commitment letter or similar undertaking to,
(iv) subject to any Order or directive by (other than exemptive orders) or (v) a
recipient of any supervisory letter from, any Governmental Authority.
(g) Since January 1, 2004, there have been no no-action letters or exemptive orders issued to
the Company.
(h) Neither the Company nor any of the Sponsored Funds is, and since January 1, 2004 neither
has been, subject to any material disability or limitation with respect to the operation or
performance of their Business by reason of violation of any Applicable Law.
(i) Since January 1, 2004, no material unremedied pricing error has occurred, and no similar
condition has existed with respect to any Sponsored Fund, or any Separate Account Client.
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(j) The Company has adopted and implemented, and is in material compliance with, written
policies and procedures reasonably designed to prevent violation, by the Company and its supervised
persons, of the Investment Advisers Act.
(k) The Company has adopted and is in material compliance with, procedures for the allocation
of securities purchased for its Advisory Clients, which comply in all material respects with
Applicable Laws.
Section 4.9 Permits and Licenses. The Company holds all material Permits necessary
for the operation of the Business. Each of the material Permits is valid and in full force and
effect. None of the material Permits will be terminated or impaired or become terminable as a
result of the transactions contemplated by this Agreement (including the Recapitalization). Since
January 1, 2004, the Company and the Sponsored Funds have not received any notification from any
Governmental Authority asserting that such Governmental Authority intends to revoke or suspend any
material Permit held by any of them.
Section 4.10 Absence of Certain Changes; No Undisclosed Liabilities.
(a) Since December 31, 2006, no event has occurred affecting the Company or the Sponsored
Funds that has had or would reasonably be expected to have a Material Adverse Effect. Since
December 31, 2006, no event has occurred that, if it occurred between the date hereof and the
Closing Date, would constitute a breach of Section 6.1.
(b) The Company does not have any liabilities or obligations (whether accrued, absolute,
contingent or otherwise) except for liabilities: (i) contemplated by this Agreement,
(ii) disclosed in the Seller Disclosure Letter, (iii) disclosed or reserved for in
the Balance Sheet, (iv) that are non-material and incurred in the ordinary course of business, and
(v) incurred by the Company after the Balance Sheet Date in the ordinary course of
business.
Section 4.11 Employees.
(a) Section 4.11(a) of the Seller Disclosure Letter provided a list of all employees
of and consultants to the Company and indicating each employee who is on an approved leave of
absence or in layoff status) as of the Business Day immediately preceding the date hereof,
including for each date of hire, current annual salary rate and estimated bonus payable.
(b) No director, officer or employee of the Company has any agreement with any other Person
that would reasonably be expected to adversely affect his or her ability (i) to perform as
a director, officer or employee of the Company or (ii) to engage in any conduct relating to
the Business or (iii) to assign to the Company or any other Person any rights to any
invention, improvement or discovery.
(c) No current director, officer or significant employee of the Company has provided the
Company with notice of termination of his or her employment with the Company or, to the Knowledge
of the Seller, intends to terminate his or her employment. All employees of the Company are
employed on an “at will” basis and may be terminated at any time without notice or payment of
consideration by the Company.
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Section 4.12 Labor Matters; Compliance.
(a) The Company is not a party to or bound by any collective bargaining agreements, and there
are no labor unions or other organizations representing or purporting to represent any employees of
the Company. Since January 1, 2004, there has not occurred or, to the Knowledge of the Seller,
been threatened any strike, slowdown, picketing, work stoppage, concerted refusal to work overtime
or other similar labor activity with respect to any employees of the Company. There has not been,
there is not presently pending and, to the Knowledge of the Seller, there is not threatened any
(i) organizational activity or other labor or employment dispute affecting the Company or
(ii) application for certification of a collective bargaining agent. There is no lockout
of any employees by the Company, and no such action is contemplated. No event has occurred or
circumstance exists that could reasonably be expected to provide the basis for any work stoppage or
other labor dispute.
(b) Except as accrued on the Balance Sheet and as may become due after the Balance Sheet Date
in the ordinary course of business, the Company is not liable for the payment of any compensation
relating to the terms of any employment, consulting, severance, agency or compensation agreement.
Section 4.13 Employee Benefit Plans and Related Matters; ERISA.
(a) Disclosure. Section 4.13(a) of the Seller Disclosure Letter sets forth a
true and complete list of the Company Benefit Plans. For each Company Benefit Plan, the Seller has
made available to the Purchaser: (i) copies of all written plans; (ii) written
descriptions of all oral plans; (iii) all funding arrangements; (iv) the most
recent IRS determination letter; (v) the current summary plan description; (vi) all
material communications received from or sent to the IRS, the Pension Benefit Guaranty Corporation
or the Department of Labor; (vii) all current employee handbooks and manuals and
(viii) all amendments to such documents. Except as expressly contemplated by this
Agreement or the Ancillary Agreements, the Company has not communicated to any current or former
employee any intention to amend any Company Benefit Plan or to establish any other benefit plan.
(b) Qualification. Each Company Benefit Plan intended to be qualified under section
401(a) of the Code, and the trust forming a part thereof, is so qualified in form and as
administered. The predecessor to the current Profit Sharing Plan has received a favorable
determination letter from the IRS, and no material event has since occurred that could adversely
affect the qualified status of the Profit Sharing Plan. A determination letter for the current
Profit Sharing Plan has been applied for, or the time for filing such determination letter has not
yet expired. All material amendments and actions required to bring each Company Benefit Plan into
conformity with the provisions of Applicable Laws have been made or taken, except to the extent
they are not required to be made or taken until after the Closing Date. Except as stated in
Section 4.13(b) of the Seller Disclosure Letter, each Company Benefit Plan has been operated in all
material respects in accordance with its terms and Applicable Law.
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(c) Liability; Compliance.
(i) Neither the Company nor any Company Related Person has been involved in any
transaction that could cause the Company or, following the Closing Date, the Purchaser or
any of their respective Affiliates to be subject to liability under section 4069 or 4212 of
ERISA. Neither the Company nor any Company Related Person has incurred any unsatisfied
liability under or pursuant to Title I or IV of ERISA or the penalty or excise Tax
provisions of the Code relating to employee benefit plans, and no event has occurred or
exists that could result in any such liability. All contributions and premiums required to
have been paid to any Company Benefit Plan have been paid within the appropriate time
prescribed.
(ii) There are no pending or, to the Knowledge of the Seller, threatened claims by or
on behalf of any participant with respect to or involving any of the Company Benefit Plans
(other than routine claims for benefits). To the Knowledge of Seller, the Company Benefit
Plans are not under examination (nor has notice been received of a potential examination)
by any Governmental Authority, and no matters are pending under the IRS’s Voluntary
Compliance Resolution program, its Closing Agreement Program, or other similar programs of
the IRS or Department of Labor.
(iii) None of the Seller, the Company or any Company Related Person maintains or has
any liability with respect to a defined benefit plan (as defined in section 3(35) of
ERISA), a plan subject to Title IV of ERISA or a plan subject to section 412 of the Code,
or has maintained or had any liability with respect to any such plan within the past six
years. The Company does not have any withdrawal liability in respect of any such plan.
(iv) The Company does not have any liability for any post-retirement health, medical
or life insurance benefits for retired, former or current employees of, or consultants or
contractors to, the Company or any Company Related Person, except as required by Section
4980B of the Code (or comparable state law).
(d) Section 280G. With respect to any Company Benefit Plan, performance of this
Agreement will not increase any amounts of compensation or benefits nor accelerate vesting or
timing of any payment in respect of any person increase or accelerate any funding obligation.
Performance of this Agreement will not result in a “parachute payment” under Section 280G of the
Code.
(e) Section 409A. Since January 1, 2005, each Company Benefit Plan that is a
“nonqualified deferred compensation plan” subject to section 409A of the Code has been operated in
good faith compliance with Section 409A of the Code.
(f) Multi-Employer Plans. None of the Company Benefit Plans is a plan maintained by
more than one employer within the meaning of Section 413(c) of the Code.
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Section 4.14 Tax Matters.
(a) (i) All Tax Returns required to be filed on or before the Closing Date by, or with
respect to, the Company and each of the Sponsored Funds have been duly and timely filed (taking
into account any extensions); (ii) the information included in the Tax Returns filed by or with
respect to the Company and each of the Sponsored Funds is complete and accurate in all material
respects; and (iii) all Taxes due and payable on or before the Closing Date by the Company and each
of the Sponsored Funds will have been timely paid.
(b) (i) No action, suit, examination, proceeding, investigation, audit, or claim is now
proposed, pending, or, to the Knowledge of the Seller, threatened with respect to the Company or
any of the Sponsored Funds in respect of any Tax, and there are no discussions among the Seller,
the Company, or any of the Sponsored Funds, on the one hand, and any Governmental Authority, on the
other hand, with respect to Taxes that are likely to result in a material additional amount of Tax;
and (ii) no notice or claim has been made by a Governmental Authority in a jurisdiction where the
Company or any of the Sponsored Funds does not file a particular Tax Return that it is or may be
subject to that particular Tax in that jurisdiction.
(c) There are no liens for Taxes upon the assets of the Company or any of the Sponsored Funds,
other than Permitted Liens.
(d) No request has been made for an extension of time within which to file Tax Returns with
respect to the Company or any of the Sponsored Funds for which Tax Returns have not yet been filed.
(e) There has been no extension or waiver of the statute of limitations period applicable to
any Tax of the Company or any of the Sponsored Funds, which period (after giving effect to such
extension or waiver) has not yet expired.
(f) The Balance Sheet reflects an adequate reserve for all Taxes for which the Company,
directly or as a partner or member of any of the Sponsored Funds, may be liable for all taxable
periods and portions thereof through the date thereof.
(g) The Company and each of the Sponsored Funds has withheld and paid all Taxes required to
have been withheld and paid on or before the Closing Date in connection with any amounts paid or
owing to any employee, independent contractor, creditor, or other third party.
(h) The Company has delivered or made available to Purchaser copies of all requested federal,
state, local, and foreign Tax Returns filed with respect to each of the Company and each of the
Sponsored Funds.
(i) Neither the Company nor any of the Sponsored Funds has any liability for Taxes of any
person as a transferee or successor, by contract, or otherwise.
(j) Neither the Company nor any of the Sponsored Funds is now nor has it ever been a party to
or bound by any Tax-indemnity, Tax-allocation, or Tax-sharing agreement.
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(k) The Company has properly been taxed as either a partnership or as a “disregarded entity”
for U.S. federal Income Tax purposes (and similar purposes under state, local, and foreign law)
during all periods of its existence, and has made no election in any jurisdiction to be treated as
an association for U.S. federal or other Tax purposes.
(l) Each of the Sponsored Funds has properly been taxed as either a partnership or as a
“disregarded entity” for U.S. federal Income Tax purposes (and similar purposes under state, local,
and foreign law) during all periods of their existence, and none of them has made any election in
any jurisdiction to be treated as an association for U.S. federal or other Tax purposes.
(m) Neither the Company nor any of the Sponsored Funds has agreed or been required to include
any material item of income in, or exclude any material item of deduction from, taxable income for
any taxable period (or portion thereof) ending after the Closing Date as a result of any (i) change
in method of accounting for a taxable period ending on or prior to the Closing Date under Section
481 of the Code (or any corresponding or similar provision of state, local, or foreign Income Tax
law) made on or prior to the Closing Date; (ii) any agreement with any Governmental Authority with
regard to the Tax liability of either the Company or any of the Sponsored Funds, executed on or
prior to the Closing Date; (iii) installment sale or open transaction disposition made on or prior
to the Closing Date; or (iv) prepaid amount received on or prior to the Closing Date.
(n) Neither the Company nor any of the Sponsored Funds has received or applied for a Tax
ruling or entered into a closing agreement pursuant to section 7121 of the Code, or is now or ever
has been a member of any affiliated, consolidated, combined or unitary group for filing Tax Returns
or paying Taxes.
(o) Neither the Company nor any of the Sponsored Funds has participated in or has been a
“material advisor” with respect to any “reportable transaction” (within the meaning of sections
6011 and 6707A(c) of the Code).
(p) The Purchaser will not be required to deduct and withhold any amount pursuant to section
1445 of the Code upon the purchase of the Membership Interests by the Purchaser under this
Agreement.
Section 4.15 Properties.
(a) Title to Assets, etc. The Company has valid title to, or has the right to use
pursuant to a valid lease, license or contract, all assets, properties and rights used or held for
use in the Business or as reflected on the Balance Sheet or acquired after the Balance Sheet Date
(collectively, the “Assets”), except as may be disposed of in the ordinary course of
business. All such assets, properties and rights are held by the Company or the Sponsored Funds,
as appropriate, free of any Lien other than Permitted Liens.
(b) Sufficiency of Assets, etc. The Assets constitute all of the assets, properties
and rights reasonably required for the conduct of the Business. The Assets are in the appropriate
working order, subject to ordinary wear and tear, and are reasonably adequate for the purposes for
which they are being used or held for use.
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(c) Real Property. Section 4.15(c) of the Seller Disclosure Letter lists all
real property and interests in real property leased by the Company (the “Leases” and
“Leased Real Property”), and sets forth the address, landlord and tenant for each Lease.
The Seller has made available to the Purchaser complete copies of each Lease. Except as set forth
in Section 4.15(c) of the Seller Disclosure Letter, the Company is not a sublessor or
grantor under any sublease or similar instrument. The Company has never owned any real property in
fee simple.
(d) Current Use. The Company’s use of the Leased Real Property does not violate in
any material respect any Applicable Laws, covenants, conditions, restrictions, easements, licenses,
Permits, agreements or Orders of any Governmental Authority.
Section 4.16 Intellectual Property.
(a) Owned Intellectual Property. Section 4.16(a) of the Seller Disclosure
Letter lists the Intellectual Property owned by the Company that is material to the Business,
including all Scheduled Intellectual Property (collectively, the “Owned Intellectual
Property”). The Owned Intellectual Property and the Intellectual Property used or held by the
Company pursuant to the licenses and arrangements described in Section 4.16(b) (the “Licensed
Intellectual Property” and, together with the Owned Intellectual Property, the “Company
Intellectual Property”) constitute all Intellectual Property that is used in the Business. The
trade name “FAMCO” (and any other names owned, used or held for use by the Company) and the related
logo have been duly registered with applicable Governmental Authorities to ensure protection under
Applicable Law. All Company Intellectual Property is held free of any Lien.
(b) Licensed Intellectual Property. Section 4.16(b) of the Seller Disclosure
Letter lists all licenses and agreements to which the Company is a party or by which it is
otherwise bound that relate to Intellectual Property (except for any license implied by the sale of
a product and perpetual, shrink-wrap licenses for commonly available software under which the
Company is the licensee), to the extent material to the Business.
(c) Software and Information Technology. Since January 1, 2004, the Company has
complied in all material respects with all license agreements relating to all software programs
used by the Company, and the Company has obtained the appropriate number of licenses for their
proper use. Except for (x) any Licensed Intellectual Property and (y) commonly
available software licensed in the ordinary course of business, there are no fixed or contingent
amounts payable by the Company to any Person for any software used by the Company. To the
Knowledge of the Seller, there are no defects in any material software used by the Company that
would prevent such software from performing its intended functions. The Company has taken
commercially reasonable steps (i) to protect its interests in the software used or held for
use by the Company and (ii) to protect all information technology systems and equipment
used or held for use by the Company from loss (including data corruption), misuse or unauthorized
access. Since January 1, 2004, the Company has not, with respect to its software and computer
systems, experienced any loss (including data corruption), misuse or unauthorized access.
(d) Web Sites. Section 4.16(d) of the Seller Disclosure Letter contains an
accurate list of the Company’s web sites and URLs (the “Web Sites”). The Company is the
owner or registrant of all of the Web Sites, and, to the Knowledge of the Seller, no action or
proceeding
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has been commenced or threatened with respect to any of the Web Sites. The Company does not
collect, disseminate or process any private data (including personally identifiable data) through
the Web Sites.
(e) No Infringement. The use of the Owned Intellectual Property and, to the Knowledge
of the Seller, the Licensed Intellectual Property in the Business does not infringe any Person’s
right, and no claim or demand has been made or, to the Knowledge of the Seller, threatened to that
effect. To the Knowledge of the Seller, no Person is infringing the Company’s or any Sponsored
Fund’s rights with respect to any of the Owned Intellectual Property or with respect to any of the
Licensed Intellectual Property which is licensed to the Company on an exclusive basis.
Section 4.17 Material Contracts; No Defaults.
(a) Section 4.17(a) of the Seller Disclosure Letter contains an accurate list of, and
the Seller has made available to Purchaser copies of, each of the Contracts currently in effect to
which the Company is a party and pursuant to which the Company is required to make payments over
the entire term of such Contract in excess of $50,000. Section 4.17(a) of the Seller
Disclosure Letter does not contain Contracts that the Company may cancel without penalty and
Contracts that the Company may execute on behalf of Advisory Clients in the ordinary course of the
Business.
(b) Each of the Contracts disclosed pursuant to Section 4.17(a) or Sections 4.13, 4.15(c) or
4.16(b) (each, a “Material Contract”) is in effect and is an enforceable agreement of the
Company and, to the Knowledge of the Seller, of each of the other parties thereto.
(c) The Company is, and at all times since the date of the respective Material Contract has
been, in compliance with all material terms of such Material Contract.
(d) To the Knowledge of the Seller, each other Person that has any obligation or liability
under any Material Contract is, and at all times since the conclusion of such Material Contract has
been, in compliance with all applicable material terms of such Material Contract.
(e) There are no renegotiations pending of any Material Contract and no Person has made
written demand for such renegotiation.
Section 4.18 Brokers. Other than UBS Investment Bank, whose fees and expenses shall
be paid by the Seller, no intermediary has been retained by or is authorized to act on behalf of
the Company, the Seller, any of the Principals or any of their respective Affiliates or is entitled
to any fee or commission in connection with the transactions contemplated by this Agreement
(including the Recapitalization).
Section 4.19 ERISA Clients.
(a) At all relevant times (including immediately before the Closing), the Company (i)
has been qualified to be a “Qualified Professional Asset Manager” within the meaning of PTCE 84-14
with respect to each ERISA Client (other than with respect to the plans of General
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Dynamics Corporation as a result of Part I subsection (e) of PTCE 84-14) and (ii) has
acknowledged its fiduciary status with respect to such ERISA Client.
(b) The Company has not and does not engage in any revenue sharing arrangements with respect
to assets managed for any ERISA Clients.
(c) The Company has not engaged in any non-exempt prohibited transaction under ERISA Section
406 or Code Section 4975 with respect to any ERISA Clients.
Section 4.20 Assets Under Management; Fee Rates; Advisory Contracts.
(a) Section 4.20(a) of the Seller Disclosure Letter sets forth, as of the Base Date
(i) each Advisory Client to which the Company is providing investment advisory or
sub-advisory services; (ii) the amount of assets under management for each Client; and
(iii) the fee rate for each Client.
(b) Except as set forth in the offering documents of any Sub-Advised Fund or Sponsored Funds
or Form ADV of the Company or Section 4.20(b) of the Seller Disclosure Letter, no Advisory
Contract contains any undertaking to waive or reimburse fees thereunder resulting in an effective
fee rate lower than the fee rate stated in such Advisory Contract or to provide “most favored
client” treatment for any Client.
(c) Each Advisory Contract (i) is a valid and legally binding agreement, enforceable
against the Company and, to the Knowledge of the Seller, against each other party thereto, subject
to termination rights that may arise as a result of the transactions contemplated by this Agreement
and limitations imposed by applicable bankruptcy, insolvency, reorganization, moratorium and
similar laws affecting the rights and remedies of creditors generally and to general principles of
equity, and (ii) is in all material respects in compliance with all Applicable Laws.
(d) The Company is not in material default in the observance or the performance of any
material term or obligation to be performed by it under any Advisory Contract. To the Knowledge of
the Seller, no other person is in material default in the observance or the performance of any
material term or obligation to be performed by it under any Advisory Contract.
(e) The Company has never been responsible for providing to any Advisory Client any advice or
services with respect to market timing or late trading in violation of stated policies and/or
guidelines of any investment company, fund or other collective investment vehicle.
Section 4.21 Transactions with Affiliates. No agreements or other commitments
(including the provision of any Assets or services) exist by which the Company, on the one hand,
and the Seller, any of the Principals or any of their respective Affiliates (other than the
Company), on the other hand, is or has been a party or otherwise is bound that (a) are
currently in effect and (b) involve continuing liabilities or obligations that,
individually or in the aggregate, have been or will be material to the Company (each, an
“Affiliate Transaction”). Neither any of the Principals nor any of their respective
Affiliates owns, directly or indirectly, any interest in any material asset or other property used
in or held for use in the Business. For purposes of this
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Section 4.21, Affiliates of the Principals shall be deemed to include (A) any Person
ten percent (10%) or more of whose outstanding voting securities or other equity interests are
directly or indirectly beneficially owned or controlled by any of the Principals and (B)
any “associates” or members of the “immediate family” (as such terms are respectively defined in
Rule 12b-2 and Rule 16a-1 of the Exchange Act) of any of the Principals. For purposes of this
Section 4.21, the ownership by the Company, any Company Affiliate, any Principal or any any
Principal Affiliate of any interest or voting securities or rights in any of the Sponsored Funds
shall not be considered an Affiliate Transaction.
Section 4.22 Insurance. Section 4.22 of the Seller Disclosure Letter lists
all insurance policies (including fidelity bonds) held by the Company relating to the Assets, the
Business or the managers, directors, officers or employees of the Company. There is no claim by or
with respect to the Company pending under any of such policies as to which coverage has been
questioned, denied or disputed. All premiums have been timely paid, and the Company has complied
with the terms of such policies. The Seller does not know of any threatened termination of or
alteration of coverage under, any of such policies.
Section 4.23 Communications Materials. To the extent they relate to the Company, the
Business, the Seller or any of the Principals, the Communications Materials will not contain any
untrue statement of a material fact or omit to state any material fact required to be stated to
make the statements contained therein, not misleading as of the date thereof.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Seller, as of the date hereof and as of the
Closing Date, as follows:
Section 5.1 Organization. The Purchaser is a Delaware corporation duly organized,
validly existing under the laws of its jurisdiction of organization.
Section 5.2 Authorization. The Purchaser has all requisite authority to execute this
Agreement, to perform its obligations and to consummate the transactions contemplated hereby. The
execution by the Purchaser of this Agreement and the Ancillary Agreements, the performance by the
Purchaser of its obligations hereunder and thereunder, and the consummation of the transactions
contemplated hereby and thereby have been duly authorized. This Agreement and the Ancillary
Agreements have each been validly executed by the Purchaser and, assuming the due authorization,
execution by the Seller and each of the Principals, constitute binding obligations of the
Purchaser.
Section 5.3 Non-Contravention.
(a) The execution and performance of this Agreement and the Ancillary Agreements by the
Purchaser require no action by or in respect of, or filing with, any Governmental Authority other
than (i) compliance with any applicable requirements of the HSR Act and (ii) any
actions or filings under any Applicable Laws the absence of which would not, individually or in the
aggregate, reasonably be expected to materially impair the Purchaser’s
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ability to consummate the transactions contemplated by this Agreement or any of the Ancillary
Agreement or to perform its obligations hereunder or thereunder.
(b) The execution and delivery by the Purchaser of this Agreement and the Ancillary Agreements
and the performance by the Purchaser of its obligations hereunder will not: (i) violate any
provision of the certificate of incorporation or by-laws of the Purchaser; or (ii) assuming
that all Governmental Approvals referred to in Section 5.3(a) and all Third-Party Consents referred
to in Section 5.4 have been obtained or, in the case of filings, registrations and notices, made,
(A) conflict with or violate any Applicable Laws, (B) require the consent of or
other action by any Person under, violate, result in the termination or acceleration of, or of any
right under, give rise to or modify any right or obligation under or conflict with, breach or
constitute a default under any Contract to which the Purchaser is a party, except, in the case of
clauses (i) and (ii), for any such violation, termination, acceleration, conflict
or default as would not, individually or in the aggregate, reasonably be expected to materially
impair the Purchaser’s ability to consummate the transactions contemplated by this Agreement or any
of the Ancillary Agreements or to perform its obligations hereunder or thereunder.
Section 5.4 Consents, etc. No Third-Party Consent is required for the execution of
this Agreement or the Ancillary Agreements or for performance by the Purchaser of its obligations
hereunder and thereunder and the consummation of the transactions contemplated hereby and thereby,
except in any such case for any such Third-Party Consent the failure of which to be obtained or
made would not reasonably be expected to materially impair the Purchaser’s ability to consummate
the transactions contemplated by this Agreement or any of the Ancillary Agreements or to perform
its obligations hereunder or thereunder.
Section 5.5 Litigation. There is no Litigation pending or, to the knowledge of the
Purchaser, threatened against the Purchaser before any Governmental Authority that would
reasonably be expected, individually or in the aggregate, to materially impair the Purchaser’s
ability to consummate the transactions contemplated by this Agreement or any of the Ancillary
Agreements or to perform its obligations hereunder or thereunder.
Section 5.6 Brokers. Other than Xxxxxx Xxxxxx NBF Securities Inc., whose fees and
expenses shall be paid by Parent or the Purchaser, no investment banker, broker, finder or other
intermediary has been retained by or is authorized to act on behalf of the Purchaser or any of its
Affiliates or is entitled to any fee or commission from the Purchaser or any of its Affiliates in
connection with the transactions contemplated by this Agreement.
Section 5.7 Available Funds. The Purchaser has or will have as of the Closing
available to it all funds necessary to satisfy all of its obligations in connection with the
transactions contemplated hereby that are due and owing as of the Closing, and the Purchaser will
have available to it all funds necessary to satisfy all of its obligations to make Future Payments
hereunder when such payments may become due and owing. The Purchaser’s ability to consummate such
transactions is not conditional upon the receipt of financing (whether debt or equity) from any
Third Party.
Section 5.8 Investment Intent. The Purchaser is an accredited investor as such term
is defined in Rule 501(a) of the Securities Act. The Purchaser is acquiring the Membership
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Interests for its own account, for investment purposes only and not with a view to, or for
resale in connection with, the distribution thereof. The Purchaser understands that the
Membership Interests may not be sold, transferred or otherwise disposed of without registration
under the Securities Act, except pursuant to an exemption from such registration available under
the Securities Act.
Section 5.9 Communications Materials. To the extent they relate to the Purchaser, the
Parent and their respective businesses, the Communications Materials will not contain any untrue
statement of a material fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements contained therein not misleading as of the date thereof.
Section 5.10 Independent Analysis.
(a) The Purchaser acknowledges that it has conducted an independent investigation of the
financial condition, results of operations, assets, liabilities and projected operations of the
Company and, in making its determination to proceed with this Agreement and the Ancillary
Agreements, other than the representations, warranties, covenants and agreements of the Seller and
the Principals set forth in this Agreement, as modified by the Seller Disclosure Letter, and in any
certificates and other documents delivered by the Seller or the Principals pursuant to Article
VIII, the Purchaser has relied solely on the results of such investigation.
(b) The Purchaser acknowledges that the representations and warranties of the Seller and the
Principals set forth in Article IV as modified by the Seller Disclosure Letter, constitute the
exclusive representations and warranties of the Seller and the Principals to the Purchaser in
connection with this Agreement and the Ancillary Agreements, and the Purchaser agrees that neither
the Seller nor any of its officers, employees, attorneys, accountants, financial advisors,
consultants and other representatives, nor any of the Principals or any other Person, has made any
representation or warranty beyond those expressly given in this Agreement, as modified by the
Seller Disclosure Letter, the Ancillary Agreements and any written certificate delivered at the
Closing.
(c) The Purchaser further acknowledges and agrees that any cost estimates, forecasts,
projections or other predictions or forward-looking information that may have been provided to the
Purchaser or any of its Affiliates, officers, employees, attorneys, accountants, financial
advisors, consultants and other representatives were prepared for internal planning purposes only
and are not representations or warranties of the Seller or the Principals, and that no assurances
can be given that any estimated, forecasted, projected or predicted results will be achieved.
ARTICLE VI
COVENANTS
Section 6.1 Conduct of Business.
(a) During the period from the date hereof to the earlier of the termination of this Agreement
and the Closing Date, except as (x) expressly contemplated by this Agreement or (y)
otherwise consented to by the Purchaser in writing (not to be unreasonably withheld), the Seller
and the Principals shall, and shall cause the Company to, (i) operate the Business in the
ordinary course consistent with past practice and (ii) use commercially reasonable efforts
to (A) preserve
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the Company’s business organization, (B) retain the services of the Company’s
employees, (C) preserve the Company’s rights, franchises and goodwill and (D)
ensure that Persons that have material contractual relationships with the Company (including
Advisory Clients) or material contractual or investor relationships with the Sponsored Funds
continue such relationships, in the ordinary course consistent with past practice, after the
Closing.
(b) Without limiting Section 6.1(a), during the period from the date hereof to the earlier of
the termination of this Agreement and the Closing Date, except as (x) expressly
contemplated by this Agreement (including the Recapitalization), (y) set forth in
Section 6.1(b) of the Seller Disclosure Letter or (z) otherwise consented to by the
Purchaser in writing (not to be unreasonably withheld), the Seller and the Principals shall not,
and shall cause the Company not to:
(i) amend any of the Organizational Documents;
(ii) issue any equity interests (including profit interests) in the Company or any
securities convertible into or exchangeable for equity interests;
(iii) make any material change to the Company’s accounting methods, principles or
practices, except as required by changes in GAAP or Applicable Law after the date hereof;
(iv) other than in the ordinary course of business, cancel or allow to lapse any of
the policies of insurance identified in Section 4.22 of the Seller Disclosure
Letter unless such policies are appropriately replaced, reviewed or allowed to expire
because the coverage is no longer necessary or appropriate;
(v) other than in the ordinary course of business consistent with past practice, enter
into any Contract that would constitute a Material Contract or any transaction that would
be material to the Business, or enter into or permit any modification in respect of any
Material Contract;
(vi) other than in the ordinary course of business dispose of, abandon or encumber any
of the Company’s material properties or assets;
(vii) other than in the ordinary course of business cancel any debts, waive or
compromise any claims or rights which are material to the Business, or compromise any
material litigation;
(viii) grant any increase in the compensation of any officers or employees of, or
consultants or contractors to, the Company (other than the compensation of the Principals
on or following the Closing Date pursuant to this Agreement and the Employment Agreements),
except for increases to base compensation in the ordinary course of business, or as
required by any Company Benefit Plan or by Applicable Law, provided
however, nothing contained in this Agreement will prohibit the Company from making
distributions to the S-Corporations consistent with past practices prior to the Closing;
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(ix) establish or announce any intention to establish any new Company Benefit Plan in
which employees of the Company will participate, or modify any existing Company Benefit
Plan unless Seller reasonably establishes that neither Purchaser nor the Company will incur
any material increase in liability under the relevant Plan as a result of such
modification;
(x) incur or assume indebtedness except to the extent reflected in the calculation of
the Working Capital Amount;
(xi) merge or consolidate with, or acquire substantially all of the assets or equity
securities of, any other entity;
(xii) (A) make any Tax election, (B) change any Tax accounting method,
(C) compromise any Tax liabilities or (D) amend any Tax Return with respect
to the Company or any of the Sponsored Funds, except as required by Applicable Law; or
(xiii) agree or commit, whether in writing or otherwise, to take any of the foregoing
actions.
(c) The Company and the Principals shall, subject to their fiduciary duties under Applicable
Law, cause each of the Sponsored Funds to carry on its business in the ordinary course. Neither
the Company, nor any of the Principals, shall cause any Sponsored Fund to (i) amend its
organizational documents, (ii) enter into or assume any contract or other modification
thereof, except (for contracts other than Advisory Contracts) in the ordinary course of business,
or (iii) merge or consolidate with, or agree to merge or consolidate with, or acquire any
material amount of the assets of, or any equity investment in, any other Person (other than in
connection with investment activities consistent with such Sponsored Fund’s investment objectives
and policies).
Section 6.2 Access to Information. Purchaser and Parent shall complete their due
diligence review prior to execution of this Agreement. From the date hereof until the Closing, the
Seller and the Principals shall assist and cooperate in developing and implementing an integration
plan. In order to develop and implement such integration plan the Seller and the Principals
shall, and shall cause the Company to, permit the Purchaser and its authorized representatives to
have reasonable access to the premises, books and records of the Company and any Sponsored Fund,
upon reasonable advance notice during normal business hours, provided that such access does not
unreasonably interfere with the normal operations of the Company or such Sponsored Fund. Neither
the Seller nor the Company shall be obligated to make available any information that would,
in the reasonable judgment of the Seller, violate any Applicable Law. The Seller shall have the
right to have a representative present at all times during which the Purchaser and its authorized
representatives are utilizing the Company’s premises, books and records to develop and implement an
integration plan. Any information concerning the Company obtained by the Purchaser or its
representatives pursuant to this Section 6.2 shall be subject to, and held in accordance with, the
terms of the Confidentiality Agreement.
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Section 6.3 Commercially Reasonable Efforts; Further Assurances.
(a) Subject to the terms of this Agreement, the Seller, the Principals and the Purchaser shall
use commercially reasonable efforts to take or cause to be taken all actions necessary, to
consummate the transactions contemplated by this Agreement or the Ancillary Agreements.
(b) The Seller, the Principals and the Purchaser shall (i) as soon as practicable
after the date hereof, (A) file (or cause to be filed) such notices, registrations and
requests as may be required with any Governmental Authority to consummate the transactions
contemplated hereby, and (B) use commercially reasonable efforts to perform all
tasks necessary to obtain all Governmental Approvals necessary to consummate the transactions
contemplated hereby, and (ii) furnish the other parties with copies of all such documents
(except documents or portions thereof for which confidential treatment has been requested or given)
and correspondence (A) prepared for submission to any Governmental Authority and
(B) received from any Governmental Authority, and (iii) use commercially reasonable
efforts to consult with the other parties as to the status of such matters. To the extent that any
document to be filed by any party contains any significant information relating to the other
parties or to the Company, prior to submitting document to any Governmental Authority, such party
will permit the other parties to review such information and will consider in good faith their
suggestions with respect thereto.
(c) The Seller, the Principals and the Purchaser shall use commercially reasonable efforts to
cooperate with the other parties in the preparation, filing and resolution of any applications,
notices or registrations with Governmental Authorities in connection with the transactions
contemplated by this Agreement (including, without limitation, the Recapitalization).
Section 6.4 Third-Party Consents.
(a) To the extent that any Third-Party Consent is required (i) under any Contract to
which the Company is a party or (ii) in the case of Advisory Contracts relating to any
Sub-Advised Funds, for the approval of a new Advisory Contract, in either case in connection with
the consummation of the transactions contemplated by this Agreement (including, without limitation,
the Recapitalization), the Seller and the Principals shall, and shall cause the Company to, use
commercially reasonable efforts to obtain such Third-Party Consent on or prior to the Closing Date;
provided, however, that notwithstanding anything to the contrary in this Agreement,
except in connection with obtaining any Fund Board Approvals or Fund Shareholder Approvals, neither
the Seller nor any of its Affiliates shall have any obligation under this Agreement to pay any
money or other consideration to any Person or to initiate any claim or proceeding against any
Person in order to obtain any Third-Party Consents.
(b) In furtherance (and without limitation) of Section 6.4(a) above, with respect to each
Sub-Advised Fund, the Seller and the Principals shall, and shall cause the Company to, use
commercially reasonable efforts to obtain, as promptly as practicable following the date hereof,
the due consideration and approval by the board of directors or trustees (as applicable) of such
Sub-Advised Fund (each such approval, a “Fund Board Approval”) of, in accordance with
section 15 of the Investment Company Act, a new Advisory Contract with the Company or the
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Purchaser or its Affiliate to be in effect as of the Closing Date (and subject to the
Closing), in all material respects on the same terms and conditions as the terms of the Company’s
existing Advisory Contract relating to such Sub-Advised Fund (with the exception of the effective
and termination dates of such Advisory Contract) or otherwise in form and substance reasonably
satisfactory to the Purchaser. To the extent Fund Board Approval has been obtained with respect to
a new Advisory Contract relating to a Sub-Advised Fund in accordance with this Section 6.4(b), the
Seller and the Principals shall, and shall cause the Company to, use commercially reasonable
efforts to cause the sponsor of such Sub-Advised Fund to obtain, as promptly as practicable
following the date of such Fund Board Approval, the due consideration and approval by the
shareholders of such Sub-Advised Fund (each such approval, a “Fund Shareholder Approval”)
of such new Advisory Contract in accordance with section 15 of the Investment Company Act.
(c) In furtherance (and without limitation) of Section 6.4(a) above, with respect to each
Separate Account Client, the Seller and the Principals shall, and shall cause the Company to, use
commercially reasonable efforts to obtain, as promptly as practicable following the date hereof,
such consent of such Separate Account Client to the “assignment” of its Advisory Contract resulting
from the consummation of the transactions contemplated hereby as is required by the terms of such
Advisory Contract and the Investment Advisers Act (each such consent, a “Separate Account
Consent”). The parties hereto agree that the Separate Account Consent for any such Advisory
Contract shall be deemed given for all purposes of this Agreement as follows: (i) for those
Advisory Contracts set forth in Section 6.4(c) of the Seller Disclosure Letter, upon
receipt of written consent prior to the Closing Date, (ii) for all other such Advisory
Contracts, (A) if written consent is required under Applicable Law or the applicable
Advisory Contract, upon receipt of written consent prior to the Closing Date, or (B) if
consent other than written consent is sufficient under Applicable Law and the applicable Advisory
Contract, (x) upon receipt of a written consent prior to the Closing Date or (y) if
no such written consent is received, if 60 days shall have passed since the sending of a notice of
the transactions contemplated by this Agreement and the related assignment of the applicable
Advisory Contract (which notice must be sent by the Company to the Separate Account Client at least
60 days prior to the Closing Date); provided, however, that any Advisory Client who
has informed the Company or any Seller, whether orally or in writing, of its intention to terminate
or seek a material modification of the terms of its Advisory Contract with the Company, withdraw
assets under management by the Company (other than in the ordinary course of business consistent
with past practice), put its account up for bid or refuse or delay its consent prior to the Closing
Date shall be deemed not to have provided its Separate Account Consent unless, as of the Closing
Date, such notice shall have been rescinded or withdrawn.
(d) In furtherance (and without limitation) of Section 6.4(a) above, with respect to each
Sponsored Fund, the Seller and the Principals shall, and shall cause the Company to, use
commercially reasonable efforts to obtain, as promptly as practicable following the date hereof,
such consents of investors in each of the Sponsored Funds representing a majority-in-interest of
the limited partners or members of such Sponsored Fund (as applicable) to the “assignment” of such
Sponsored Fund’s Advisory Contract resulting from the consummation of the transactions contemplated
hereby (each such consent, a “Sponsored Fund Consent”).
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(e) The Seller, the Principals and the Purchaser shall cooperate, jointly plan and share
information with respect to all material communications with any Advisory Clients with respect to
the transactions contemplated by this Agreement and the operation of the Business following the
Closing. All notices and related materials distributed to any Advisory Clients by the Seller or
the Company in connection with obtaining any Client Consents or any other Third-Party Consents
pursuant to this Section 6.4 shall be in form and substance reasonably acceptable to the Purchaser,
and to the extent not restricted under the terms of the applicable Advisory Contract or Applicable
Law, the Purchaser shall be provided the opportunity to review and comment on all such notices and
related materials within a reasonable period of time prior to their distribution.
(f) Upon the request of the Seller, the Purchaser shall use commercially reasonable efforts to
assist the Seller and the Company in obtaining the Third-Party Consents pursuant to this Section
6.4, to the extent reasonably requested by the Seller; provided, however, that
notwithstanding anything to the contrary in this Agreement, except as set forth in Section 12.4,
neither the Purchaser nor any of its Affiliates shall have any obligation under this Agreement to
pay any money or other consideration to any Person or to initiate any claim or proceeding against
any Person in order to obtain any Third-Party Consents.
Section 6.5 Notices of Certain Events; Reports.
(a) From the date hereof until the Closing Date, the Seller shall promptly notify the
Purchaser in writing, as specified in Section 12.1, upon becoming aware of: (i) any event
or circumstance that (A) has had or would reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect, or (B) would reasonably be expected to result
in the failure of any of the conditions set forth in Article VIII to be satisfied; (ii) any
litigation commenced or, to the Knowledge of the Seller, threatened, that, if pending on the date
of this Agreement, would have been required to have been disclosed pursuant to Section 4.7; and
(iii) any proceeding or examination initiated or, to the Knowledge of the Seller,
threatened by any Governmental Authority; provided, however, that any noncompliance
with the foregoing clauses (i) through (iii) shall not constitute a failure of any
condition to the Closing set forth in Article VIII or give rise to any right of termination under
Article IX unless the underlying breach independently constitutes such a failure or gives rise to
such a right.
(b) From time to time after the date hereof and prior to the Closing, Seller will supplement
or amend the Seller Disclosure Letter with respect to any matter arising in the ordinary course of
business after the date of this Agreement that, if existing prior to or at the date of this
Agreement, would have been required to be set forth or described in Seller’s Disclosure Letter in
response to a representation or warranty in Article IV hereof. Purchaser is not required or
obligated to take such supplemental or amended disclosure into account for purposes of determining
whether or not the condition to closing set forth in Section 8.2(a) has been satisfied, but if
Purchaser elects to close notwithstanding the effect of such disclosure on the satisfaction of such
closing condition, then, following the Closing, such supplemental or amended disclosure shall be
taken into account, and shall be deemed to have been included in the Seller Disclosure Letter as of
the date of this Agreement.
(c) The Purchaser acknowledges that certain information required to be set forth in the Seller
Disclosure Letter has been redacted as of the date hereof, to the extent such
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information pertains to the identity of certain Advisory Clients or is otherwise subject to a
valid, legally binding and enforceable obligation of Advisory Client confidentiality applicable to
this Agreement and the transactions contemplated hereby; provided, however, that
(i) a complete copy of the Seller Disclosure Letter containing such information (other than
as otherwise disclosed in the Seller Disclosure Letter) has been provided to the Purchaser’s
counsel and (ii) the Seller and the Principals shall disclose such information to the
Purchaser prior to the Closing Date, provided that the applicable Advisory Client consents
to the “assignment” of its Advisory Contract in connection with the transactions contemplated
hereby (which consent shall be deemed, for all purposes under this Agreement, to constitute such
Advisory Client’s consent to the disclosure of all information with respect or pertaining to such
Advisory Client that is required to be set forth in the Seller Disclosure Letter).
Section 6.6 No Solicitation. From the date hereof until the Closing, neither the
Seller nor any of its Affiliates (including the Company and the Principals) shall, nor shall the
Seller or any of its Affiliates (including the Company and the Principals) authorize or permit any
of their respective officers, directors, employees, investment bankers, attorneys, accountants,
consultants or other agents or advisors to, directly or indirectly, (a) take any action to
solicit, initiate or encourage the submission of any Acquisition Proposal, (b) engage in
any discussions or negotiations with, furnish any nonpublic information relating to the Company or
afford access to the properties, assets, books or records of the Company to, otherwise cooperate
in any way with, or knowingly assist, participate in, facilitate or encourage any effort by any
Third Party that is seeking to make, or has made, an Acquisition Proposal or a modification of a
previously received Acquisition Proposal, or (c) enter into any agreement with respect to
an Acquisition Proposal.
Section 6.7 Confidentiality. From and after the Closing Date, the Seller and the
Principals shall, or shall cause their respective Affiliates to, at the direction and expense of
the Purchaser, use reasonable best efforts to enforce their rights under any confidentiality,
non-solicitation and similar agreements with any Person entered into in connection with the
proposed sale of the Company.
Section 6.8 Public Announcements. Promptly following execution and delivery of this
Agreement, the parties shall jointly issue a press release in the form approved by the parties
prior to the date hereof, such approval not to be unreasonably withheld or delayed. Except for
such press release, prior to the Closing Date, no news release or other public announcement
pertaining to the transactions contemplated by this Agreement (including, without limitation, the
Recapitalization) shall be made by or on behalf of any party hereto without the prior approval,
not to be unreasonably withheld or delayed, of the other parties, unless the party making such
public announcement or disclosure shall give prior written notice to the other parties and
consider in good faith their suggestions with respect thereto, to the extent possible and legally
permissible.
Section 6.9 Resticted Activites During the Restricted Period.
(a) During the Restricted Period, neither the Seller nor any of the Principals shall, and each
of them shall cause each of their respective controlled Affiliates not to, engage in any of the
Restricted Activities.
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(b) The Seller and the Principals acknowledge that the Purchaser would be irreparably harmed
by any breach of this Section 6.9 and that there would be no adequate remedy at law or in damages
to compensate the Purchaser for any such breach. The Seller and the Principals agree that in the
event of any such breach, the Purchaser shall be entitled to obtain, upon application to a court of
competent jurisdiction, injunctive relief requiring specific performance of this Section 6.9. If
the final judgment of a court of competent jurisdiction declares that any term or provision of this
Section 6.9 is invalid or unenforceable, the parties hereto agree that the court making the
determination of invalidity or unenforceability shall have the power to reduce the duration, or
area of the term or provision, to delete specific words or phrases, or to replace any invalid or
unenforceable term or provision with a term or provision that is valid and enforceable and that
comes closest to expressing the intention of the invalid or unenforceable term or provision, and
this Agreement shall be enforceable as so modified.
Section 6.10 Section 15(f) Compliance.
(a) The Purchaser acknowledges that the Seller has entered into this Agreement in reliance
upon the benefits and protections afforded by section 15(f) of the Investment Company Act. In
furtherance (and not limitation) of the foregoing, the Purchaser will use its best efforts to
ensure, insofar as within the control of the Purchaser and its Affiliates, compliance with the
conditions of section 15(f) of the Investment Company Act as it applies to the transactions
contemplated by this Agreement. Without limitation of the foregoing, and recognizing that the
Purchaser will not control the Sub-Advised Funds, their boards of directors or trustees, or their
Third-Party Advisers, from and after the Closing Date, the Purchaser shall not take any action, or
permit any of its Affiliates to take any action, that (i) for a period of at least three
years after the Closing Date, would result in more than 25% of the members of the board of
directors or trustees (as applicable) of each such Sub-Advised Fund being “interested persons” of
the Seller or any Affiliate thereof or Purchaser or any Affiliate thereof, and (ii) for a
period of at least two years after the Closing Date, would impose on any Sub-Advised Fund an
“unfair burden” (within the meaning of section 15(f) of the Investment Company Act) as a result of
the transactions contemplated by this Agreement.
(b) Prior to the Closing, the Seller shall, subject to applicable fiduciary duties to the
Sub-Advised Funds, use its reasonable best efforts to ensure that, insofar as within the control of
the Seller and its Affiliates, at least 75% of members of the board of directors or trustees of
each Sub-Advised Fund are not “interested persons” of the Seller or any of its Affiliates. For a
period of at least three years after the Closing Date, Seller shall not take any action that would
result in more than 25% of the members of the board of directors or trustees (as applicable) of
each such Sub-Advised Fund being “interested persons” of the Seller or any Affiliate thereof.
(c) Notwithstanding anything to the contrary contained herein, the covenants of the parties
contained in this Section 6.10 are intended only for the benefit of the parties to this Agreement
and of no other Person.
Section 6.11 Ongoing Involvement in the Company’s Operations.
(a) After the Closing and prior to the expiration of the final Future Payment Period,
Purchaser shall consult with Xx. Xxxxxxxxx prior to (i) changing the Company’s personnel or
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employment-related policies or procedures (other than changes to such policies and procedures
that similarly affect employees of Parent and its Affiliates), (ii) requiring the Company
to purchase (or receive a corporate allocation for) any service or resource from Purchaser or any
of its Affiliates at a rate that is less favorable than the rate that could be procured by the
Company from an unaffiliated third-party vendor for services of the same or substantially similar
nature and quality, (iii) establishing or, once established, modifying the Company’s
strategic plan or budget, and (iv) any Change of Control Transaction (other than any Change
of Control Transaction arising due to Parent’s sale of equity interests, reorganization, merger,
consolidation, sale of assets, or other extraordinary transaction).
(b) In addition, after the Closing and prior to the expiration of the final Future Payment
Period, Xx. Xxxxxxxxx must give his approval before any of the following occur: (i) any new
business/product lines being placed in or allocated to the Company, (ii) moving any
profitable Company business/product lines from the Company, (iii) changes to the
compensation or benefits provided to Company employees (other than changes that similarly affect
employees of Parent and its Affiliates), and (iv) charging or allocating to the Company
general and administrative costs and expenses of Purchaser or any of its Affiliates (other than as
provided in Schedule II). Notwithstanding the above, the Seller and Xx. Xxxxxxxxx acknowledge and
agree that Purchaser and its Affiliates intend to provide marketing-related services to support the
growth of the Company and that Purchaser and/or such Affiliates will be entitled to charge (or
allocate to) the Company revenue-based marketing commissions in connection with revenue generated
for the Company based on a mutually acceptable commission-based schedule (as amended from time to
time); provided such marketing cost allocations do not exceed the lesser of actual expenses
or revenues generated from such marketing services.
(c) If Xx. Xxxxxxxxx is no longer employed by the Company or an Affiliate of the Company, then
one of the other Principals then employed by the Company or an Affiliate of the Company shall serve
in role described for Xx. Xxxxxxxxx in this Section 6.11. Such Principal shall be appointed by a
majority vote of the Principals then employed by the Company or an Affiliate of the Company and
shall be reasonably acceptable to Purchaser, provided, Purchaser shall not unreasonably
withhold Purchaser’s acceptance of a Principal. If no Principals are then employed by the Company
or an Affiliate of the Company or if no Principal obtains such a majority vote, then this Section
6.11 shall have no further force or effect.
Section 6.12 Employee Transition Payments. The Purchaser shall pay an aggregate of $1
million in each of calendar years 2008 and 2009 to such employees of the Company and in such
amounts as recommend by the Seller and acceptable to the Purchaser (which acceptance shall not be
unreasonably withheld).
ARTICLE VII
CERTAIN EMPLOYEE MATTERS
Section 7.1 General.
(a) The Purchaser shall, or shall cause the Company to, continue the following Company Benefit
Plans for employees of the Company immediately prior to the Closing
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(“Affected Employees”), as such plans were in effect immediately prior to Closing,
through December 31, 2007: (a) the Company’s 401(k) plan and (b) the Company’s group medical,
dental, vision, disability, and flexible spending account plans. With respect to any other
employee benefit plan, during the period following the Closing through December 31, 2007, the
Purchaser, at its discretion, shall, or shall cause the Company to, either continue such Company
Benefit Plan for Affected Employees, as such plan was in effect immediately prior to Closing, or
shall provide Affected Employees with benefits under terms and conditions substantially similar to
the terms and conditions applicable to similarly situated employees of the Purchaser and its
domestic Affiliates.
(b) After the period specified in Section 7.1(a), and except as otherwise provided in this
Article VII, the Purchaser shall, or shall cause any of its Affiliates (including the Company) to,
provide employee benefits to Affected Employees under terms and conditions substantially similar to
the terms and conditions applicable to similarly situated employees of the Purchaser and its
domestic Affiliates.
(c) Nothing contained herein, expressed or implied, is intended to interfere with the right of
the Purchaser to terminate or cause to be terminated the employment of any Affected Employee at any
time, with or without cause, or to modify or terminate any employee benefit plan or program.
Nothing contained herein, express or implied, is intended to prohibit any amendment to any Company
Benefit Plan that is continued following the Closing to the extent such amendment is required by
law or required to maintain the tax status of such plan under the Code.
Section 7.2 Special Welfare Plan and Service Crediting Rules.
(a) Pre-Existing Condition Waiver. At such time as the Purchaser extends its group
health plan or other welfare benefit plan to Affected Employees, the Purchaser shall waive any
“pre-existing condition” exclusions under such plan to the extent permissible under the terms
thereof and Applicable Law, subject to any pre-existing condition limitations provided by the
welfare benefits plans of the Seller as of the Closing Date. Further, to the extent permissible
under the terms thereof and Applicable Law, the Purchaser shall credit the Affected Employees and
their eligible dependents under any group health plan offered to the Affected Employees with any
deductibles, copayments or other cost-sharing amounts incurred by the Affected Employee or eligible
dependent under group health plan of the Company during the period beginning on the first day of
the most recent plan year of the applicable plan offered by the Purchaser to Affected Employees and
ending on the date of coverage under the group health plan of the Purchaser.
(b) COBRA Coverage. At such time as the Purchaser extends its group health plan to
Affected Employees, the Purchaser acknowledges and agrees that it will have an obligation under
Section 4980B of the Code to make continuation coverage available under such plan to any “M & A
Qualified Beneficiary” with respect to a stock sale (as described in Treasury Regulation Section
54.4980B-9 Q&A-4(a)).
(c) Special Service Credit Rules. At such time as the Purchaser extends any of its
employee benefit plans to the Affected Employees, the Purchaser shall cause the service
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rendered by the Affected Employees to the Company prior to the Closing Date to be counted for
purposes of determining eligibility and vesting (but not for purposes of benefit accrual or other
entitlement) under such employee benefit plan. Additionally, at such time as the Purchaser extends
any vacation or paid time off policy to the Affected Employees, the Purchaser shall cause the
service rendered by the Affected Employees to the Company prior to the Closing Date to be counted
for purposes of determining eligibility and accrual of vacation or paid time off pursuant to any
such policy.
Section 7.3 Bonus Payments.
(a) Eligibility. At the end of 2007 the Principals (other than Xx. Xxxxxxxxx) shall
be eligible to receive from the Company bonus payments (collectively, the “Initial Bonus
Payments”) in an aggregate amount (the “Initial Aggregate Bonus Amount”) equal to 20
percent of Adjusted EBITDA for the period beginning on the Closing Date and ending on December 31,
2007 (the “Initial Bonus Period”). In addition, at the end of each calendar year in which
a Future Payment Period occurs (each such calendar year, a “Subsequent Bonus Period” and
together with the Initial Bonus Period, the “Bonus Period”), the Principals (other than Xx.
Xxxxxxxxx) shall be eligible to receive from the Company bonus payments (collectively, the
“Subsequent Bonus Payments” and together with the Initial Bonus Payments, the “Bonus
Payments”) in an aggregate amount (the “Subsequent Aggregate Bonus Amount” and together
with the Initial Bonus Amount, the “Aggregate Bonus Amount”) equal to 20 percent of
Adjusted EBITDA for the applicable Subsequent Bonus Period. The Bonus Payments shall be made to
the Principals (other than Xx. Xxxxxxxxx) who were employed by the Purchaser or any of its
Affiliates (including the Company) as of December 31 of the applicable Bonus Period, in such
amounts and to such Principals as recommended by Seller and acceptable to the Purchaser,
provided, Purchaser shall not unreasonably withhold Purchaser’s acceptance of the
allocation recommended by Seller. The payment of the Bonus Payments is subject to the terms and
conditions of this Section 7.3 and such Principals’ Employment Agreements. The Bonus Payments
shall be paid in cash and/or restricted stock of the Parent in accordance with the Parent’s
then-applicable incentive-compensation policies and practices.
(b) Preparation of Bonus Statements. As soon as reasonably possible after the
preparation of Parent’s audited consolidated financial statements following the end of each Bonus
Period, but in no event later than 90 days after the end of each Bonus Period, the Purchaser shall
prepare (or cause to be prepared) and deliver to Seller (i) the Company’s audited balance
sheet and income statement with respect to such Bonus Period, prepared in accordance with the
Applicable Accounting Principles (the “Audited Balance Sheet” and the “Audited Income
Statement,” respectively), and (ii) a statement (each, a “Bonus Statement”)
setting forth the Purchaser’s calculation, based on the Audited Balance Sheet and the Audited
Income Statement, of (x) Adjusted EBITDA for such Bonus Period and (y) the
Aggregate Bonus Amount payable with respect to such Bonus Period.
(c) Allocation and Payment. Within five Business Days after a Bonus Statement is
delivered to Seller, Seller shall deliver to the Purchaser a statement (each, a “Bonus
Allocation Statement”) showing (x) the names of the Principals to whom the Aggregate
Bonus Amount for such Bonus Period is proposed to be allocated and (y) the proposed
allocation to each of such Principals. On the next regularly scheduled payroll date of the
Purchaser that is at least five
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Business Days following the delivery by Seller of such Bonus Allocation Statement to the
Purchaser, the Purchaser shall pay to each of such Principals, in cash to the bank account or
accounts designated by such Principal, the amount allocated to such Principal, net of such amounts
as may be required to be deducted and withheld.
(d) Successor Bonus Program. At least one hundred eighty (180) days prior to the
expiration of the initial term of the Employment Agreements, the Purchaser shall provide each of
the Principals (other than Xx. Xxxxxxxxx) with a description of the bonus program that will be in
effect after the initial term of the Employment Agreements. Such description shall include a
sample calculation of what bonus would have been paid for the previous calendar year if the new
bonus program would have been in effect.
ARTICLE VIII
CONDITIONS TO THE CLOSING
Section 8.1 Conditions to Obligations of Each Party. The respective obligations of
the Purchaser and the Seller to consummate the transactions contemplated by this Agreement are
subject to the satisfaction (or waiver in writing by the Purchaser and the Seller), as of the
Closing Date, of the following conditions:
(a) HSR Act Notification. The notifications of the Purchaser and the Seller
pursuant to the HSR Act, if required, shall have been made and the applicable waiting period
and any extensions thereof shall have expired or been terminated.
(b) No Injunction. Consummation of the transactions contemplated hereby or by
the Ancillary Agreements shall not have been restrained, enjoined or otherwise prohibited or
made illegal by any Applicable Law.
(c) Governmental Approvals. The Seller shall have obtained all Governmental
Approvals set forth in Section 4.4(a) of the Seller Disclosure Letter, in form and
substance reasonably satisfactory to the Seller and the Purchaser, and no such Governmental
Approval shall have been revoked.
(d) Fund Board Approvals; Fund Shareholder Approvals; Sponsored Fund
Consents. The following consents and approvals, which shall not be subject to any
requirements or conditions that are not reasonably acceptable to the Purchaser, shall have
been obtained: (i) (A) Fund Board Approvals with respect to each of the
Sub-Advised Funds and (B) Fund Shareholder Approvals with respect to each of the
Sub-Advised Funds, and (ii) Sponsored Fund Consents with respect to each of the
Sponsored Funds
(e) Section 15 Compliance. No more than 25% of the members of the board of
directors or trustees (as applicable) of any Sub-Advised Fund shall be “interested persons”
(as defined in the Investment Company Act) of the Seller or any Affiliate thereof (including
the Company), or the Purchaser or any of its Affiliates, for purposes of section 15(f)(1)(A)
of the Investment Company Act.
Section 8.2 Additional Conditions to the Obligations of the Purchaser. The
obligation of the Purchaser to consummate the transactions contemplated by this Agreement is
subject to
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the satisfaction (or waiver in writing by the Purchaser), as of the Closing Date, of each of
the following additional conditions:
(a) Representations and Warranties. The representations and warranties of the
Seller contained in Article IV of this Agreement or in any Ancillary Agreement and in any
certificate delivered pursuant hereto shall not be untrue or incorrect in any material
respect. Solely for purposes of this Section 8.2(a), any representation or warranty that is
qualified by “materiality” or “Material Adverse Effect” shall be true and correct in all
respects.
(b) Performance of Covenants. The Seller and each of the Principals shall have
performed in all material respects all their respective obligations and agreements, and
shall have complied in all material respects with all of their respective covenants and
conditions, contained in this Agreement to be performed or complied with by them prior to or
at the Closing Date.
(c) Certificate. The Seller shall have delivered to the Purchaser a
certificate, dated the Closing Date and executed by a duly authorized officer on behalf of
the Seller, to the effect that the conditions specified in paragraphs (a) and (b) above and
(d) below have been fulfilled.
(d) No Material Adverse Effect. No event, occurrence, fact, condition, change,
development or effect shall exist or have occurred or come to exist or been threatened in
writing since the date hereof that, individually or in the aggregate, has resulted, or would
reasonably be expected to result, in a Material Adverse Effect.
(e) FIRPTA. The Seller shall have delivered to the Purchaser a certificate, in
form and substance reasonably satisfactory to the Purchaser and duly executed certifying any
facts that would exempt the transactions contemplated hereby from withholding under section
1445 of the Code.
(f) Revenue Run-Rate. The Aggregate Closing Advisory Revenue Run-Rate shall be
no less than 80 percent of the Baseline Advisory Revenue Run-Rate.
Section 8.3 Additional Conditions to the Obligations of the Seller. The obligation
of the Seller to consummate the transactions contemplated by this Agreement is subject to the
satisfaction (or waiver in writing by the Seller), as of the Closing Date, of each of the
following additional conditions:
(a) Representations and Warranties. The representations and warranties of the
Purchaser contained in Article V of this Agreement or in any Ancillary Agreement and in any
certificate delivered pursuant hereto shall not be untrue or incorrect in any material
respect. Solely for purposes of this Section 8.3(a), any representation or warranty that is
qualified by “materiality” shall be true and correct in all respects.
(b) Performance of Covenants. The Purchaser shall have performed in all
material respects all their respective obligations and agreements, and shall have complied
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in all material respects with all of their respective covenants and conditions,
contained in this Agreement to be performed or complied with by it prior to or at the
Closing Date.
(c) Certificate. The Purchaser shall have delivered to the Seller a
certificate, dated the Closing Date and executed by a duly authorized officer executed on
behalf of the Purchaser, to the effect that the conditions specified in paragraphs (a) and
(b) above and (d) below have been fulfilled.
(d) No Purchaser Material Adverse Effect. No event, occurrence, fact,
condition, change, development or effect shall exist or have occurred or come to exist or
been threatened in writing since the date hereof that, individually or in the aggregate,
have resulted, or would reasonably be expected to result, in a Purchaser Material Adverse
Effect.
(e) Closing Payment. The Purchaser shall have tendered to the Seller the
Closing Payment in accordance with Section 3.2(a).
(f) Revenue Run-Rate. The Aggregate Closing Advisory Revenue Run-Rate shall be
no less than 70 percent of the Baseline Advisory Revenue Run-Rate.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.1 Termination. This Agreement may be terminated, and the transactions
contemplated hereby may be abandoned, at any time prior to the Closing Date:
(a) By mutual written consent of the Seller and the Purchaser, as evidenced by a
writing signed by each of the Seller and the Purchaser;
(b) By either the Seller or the Purchaser upon written notice to the other party, if:
(i) (A) any Governmental Authority (including any court of competent
jurisdiction) shall have issued an Order or taken any other official action
enjoining or otherwise prohibiting the transactions contemplated by this Agreement
(including, without limitation, the Recapitalization), and such Order or other
action shall have become final and non-appealable, or (B) there shall be any
Applicable Law that makes the consummation of the Closing illegal or otherwise
prohibited; or
(ii) the Closing shall not have taken place on or before October 31, 2007 (the
“End Date”); provided, however, that the right to terminate
this Agreement pursuant to this Section 9.1(b)(ii) shall not be available to any
party whose breach of any provision of this Agreement results in the failure of the
Closing to be consummated by the End Date; and provided further that
the End Date may be extended by mutual written consent of the Seller and the
Purchaser, as evidenced by a writing signed by each of the Seller and the Purchaser;
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(c) By the Purchaser upon written notice to the Seller, if a Material Adverse Effect
shall have occurred;
(d) By Seller upon written notice to Purchaser, if a Purchaser Material Adverse Effect
shall have occurred;
(e) By Purchaser (i) if any condition in Sections 8.1 or 8.2 shall have become
incapable of fulfillment at Closing (provided Purchaser has not waived such condition), or
(ii) if there has been a material breach of a representation, warranty, covenant, or
agreement by Seller or the Principals, unless such breach is cured within 10 days after
notice thereof is given to Seller; or
(f) By Seller (i) if any condition in Sections 8.1 or 8.3 shall have become incapable
of fulfillment at Closing (provided Seller has not waived such condition), or (ii) if there
has been a material breach of a representation, warranty, covenant, or agreement by
Purchaser, unless such breach is cured within 10 days after notice thereof is given to
Purchaser.
Section 9.2 Effect of Termination. In the event of the termination of this Agreement
as provided above, this Agreement (other than this Section 9.2) shall become wholly void and of no
further force and effect, and there shall be no duties, liabilities or obligations of any kind or
nature whatsoever on the part of any party hereto to the other parties based upon, relating to or
arising from or in connection with this Agreement or the transactions contemplated hereby, except
that: (a) the obligations of the parties set forth in Section 6.7 and Sections 12.4
through 12.6 shall continue to apply following any such termination of this Agreement; and
(b) no party shall be relieved or released from any liabilities or damages arising out of
or caused by the willful breach by such party, prior to such termination (or, with respect to any
obligations set forth in Section 6.7 or Sections 12.4 through 12.6, at any time), of its
obligations under this Agreement.
ARTICLE X
TAX MATTERS
Section 10.1 Tax Returns and Payments. Seller shall prepare and file, or shall cause
each of the Company and each of the Sponsored Funds, as the case may be, to prepare and file all
Tax Returns that are required to be filed (taking into account extensions therefor) on or prior to
the Closing Date (the “Pre-Closing Date Tax Returns”). Such Pre-Closing Date Tax Returns
shall be prepared in accordance with past practice (unless a contrary position is required by
Applicable Law). The Purchaser shall file or cause to be filed all Tax Returns for which Seller
does not have filing responsibility pursuant to the first sentence of this Section 10.1. The
parties shall cooperate fully, as and to the extent reasonably requested by each party and at the
requesting party’s expense, in connection with the filing of any Tax Return and the making of any
Tax election. The Purchaser and Seller shall discharge, or cause to be discharged, all Tax
liabilities shown on Tax Returns based on the assumption and allocation of Tax liabilities provided
in this Agreement without regard to the party that has prepared the Tax Return, and the party
responsible for payment of any amount of Taxes shown due on a Tax Return shall pay such
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unpaid amount to the party filing the Tax Return no later than one Business Day prior to the
filing of such Tax Return.
Section 10.2 Allocation of Taxes.
(a) Seller shall be responsible for (i) the payment of all Taxes attributable to any
Pre-Closing Date Tax Period, whether with respect to the Company or any of the Sponsored Funds
(except to the extent such Taxes are set forth as an accrued liability on the Closing Date Balance
Sheet and are taken into account in the calculation of the Closing Working Capital Amount); (ii)
all Taxes, if any, attributable to the Recapitalization; and (iii) the Seller’s portion of Transfer
Taxes, if any, as provided in Section 10.4.
(b) Purchaser, subsequent to the Closing, shall be responsible for the payment of (i) all
Taxes, whether with respect to the Company or any of the Sponsored Funds, attributable to any
period beginning after the Closing Date, including, in the case of a Straddle Period, the portion
of the Straddle Period beginning after the Closing Date; (ii) all Taxes set forth as an accrued
liability on the Closing Date Balance Sheet and that are taken into account in the calculation of
the Closing Working Capital Amount; and (iii) Purchaser’s portion of Transfer Taxes, if any, as
provided in Section 10.4.
(c) For purposes of clauses 10.2(a)(i) and 10.2(b)(i), the Taxes related to the portion of a
Straddle Period ending on the Closing Date shall (i) in the case of Taxes other than Taxes based
upon or related to income, sales, gross receipts, wages, capital expenditures, expenses or any
similar Tax base, be deemed to be the amount of such Tax for the entire Straddle Period multiplied
by a fraction the numerator of which is the number of days in the Straddle Period ending on the
Closing Date and the denominator of which is the number of days in the entire Straddle Period, and
(ii) in the case of any Tax based upon or related to income, sales, gross receipts, wages, capital
expenditures, expenses or any similar Tax base, be deemed equal to the amount which would be
payable if the relevant Tax period ended on the Closing Date. Any credits relating to a Straddle
Period shall be taken into account as though the relevant Tax period ended on the Closing Date.
Section 10.3 Tax Cooperation; Tax Audits. After the Closing Date, the Purchaser on
the one hand, and the Seller and the Principals, on the other hand, shall, and shall cause their
respective Affiliates to, cooperate in the preparation of all Tax Returns and shall provide, or
cause to be provided, to the requesting party any records or other information requested by such
party in connection therewith. The Seller and the Purchaser shall give prompt notice to each other
of any proposed adjustment to Taxes relating to any Pre-Closing Date Tax Period. Each party shall
cooperate with the others in connection with any Tax investigation, audit, or other proceeding;
provided, however, that claims for indemnification under this Article 10 shall be subject to the
procedures set forth in Section 11.5. A party shall be reimbursed for reasonable out-of-pocket
expenses incurred in taking any action requested by the other party or parties under this Section
10.3.
Section 10.4 Transfer Taxes. The Purchaser and Seller shall each pay one-half of all
sales, use, value-added, business, goods and services, transfer, documentary, conveyance, or
similar Taxes or expenses and all recording fees that may be imposed as a result of the sale and
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transfer of the Membership Interests under this Agreement (including any stamp, duty, or other
Tax chargeable in respect of any instrument transferring property, together with any and all
penalties, interest, and additions to Tax with respect thereto) (“Transfer Taxes”), and
Seller and the Purchaser shall cooperate in a timely manner in making all filings, returns,
reports, and forms as may be required to comply with the provisions of laws related to Transfer
Taxes. Seller and the Purchaser agree that, upon request, they shall use their reasonable best
efforts to obtain any certificates or other documents from any Governmental Authority or any other
persons as may be necessary or helpful to mitigate, reduce, or eliminate any Transfer Taxes that
would otherwise be imposed with respect to the transactions contemplated by this Agreement. For
the avoidance of doubt, Transfer Taxes do not include any Taxes that are attributable to the
Recapitalization.
Section 10.5 Record Retention. The Purchaser and the Seller shall retain or cause to
be retained all Tax Returns and all books and records relating to Taxes of the Company or any
Sponsored Fund for all taxable periods beginning on or before the Closing Date until 60 days after
the expiration of the applicable statute of limitations for the Tax in question (and, to the extent
notified by the Purchaser or the Seller, any waiver or extension thereof) of the respective taxable
periods, and abide by all record retention agreements entered into with any Governmental Authority.
The Purchaser and the Seller shall each provide the other with reasonable written notice prior to
transferring, destroying or discarding any such books and records.
Section 10.6 Refunds. Seller shall be entitled to any refunds with respect to Taxes
that were paid by the Company or the Seller and for which Seller is responsible under this
Agreement, and Purchaser shall file any claims for such refunds as may reasonably be requested by
Seller. Except to the extent set forth in the preceding sentence, the Purchaser shall be entitled
to any refunds of Taxes. Purchaser shall promptly forward to Seller any refund due to Seller
(pursuant to the terms of this Section 10.7) after receipt thereof, and Seller shall promptly
forward to the Purchaser any refund due the Purchaser (pursuant to the terms of this section 10.6)
after receipt thereof. Refunds of Taxes for a Straddle Period shall be allocated in the manner in
which Taxes are allocated in Section 10.2.
ARTICLE XI
INDEMNIFICATION
Section 11.1 Survival. The representations and warranties of the parties contained in
this Agreement, the Seller Disclosure Letter or any certificates or other documents delivered
pursuant to Article VIII shall survive for twenty-four (24) months following the Closing Date;
provided, however, that (a) the representations and warranties set forth in
Sections 4.1, 4.2, 4.3, 4.15(a), 4.18, 5.1, 5.2, 5.6, 5.7 and 5.8 shall survive indefinitely or
until the latest date permitted by law and (b) the representations and warranties set forth
in Sections 4.13 and 4.14 shall survive for the duration of the applicable statute of limitations
(including waivers) plus thirty (30) days. The covenants and agreements of the parties contained
in this Agreement or in any certificates or other documents delivered pursuant to Article VIII
shall survive the Closing indefinitely or for the shorter period explicitly specified therein.
Notwithstanding the preceding sentences, any inaccuracy or breach of any representation, warranty,
covenant or agreement in respect of which indemnity may be sought under this Agreement shall
survive the time at which it would otherwise terminate pursuant to the preceding sentences, if
notice of the inaccuracy or breach
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thereof giving rise to such right of indemnity shall have been given to the party against whom
such indemnity may be sought prior to such time, until any such claim for indemnity has been
finally resolved.
Section 11.2 Indemnification by the Seller. The Seller shall defend, indemnify and
hold harmless the Parent, the Purchaser, their Affiliates (including, after the Closing, the
Company) and their respective officers, directors, employees, agents, advisers and representatives
(collectively, the “Purchaser Indemnitees”) from and against, and pay or reimburse the
Purchaser Indemnitees for, any and all Losses incurred in connection with, resulting from or
arising out of (a) any inaccuracy in or breach of any representation or warranty when made
or deemed made by the Seller and the Principals in or pursuant to Article IV of this Agreement,
(b) any failure of the Seller or any of the Principals (or, prior to the Closing, the
Company) to perform any of their covenants or agreements under this Agreement, or (c) the
matters set forth on Schedule III attached hereto.
Section 11.3 Indemnification by the Purchaser. The Purchaser shall defend, indemnify
and hold harmless the Seller, its Affiliates (including the Principals) and their respective
officers, directors, employees, agents, advisers and representatives (collectively, the “Seller
Indemnitees”) from and against, and pay or reimburse the Seller Indemnitees for, any and all
Losses incurred in connection with, resulting from or arising out of (a) any inaccuracy in
or breach of any representation or warranty made or deemed made by the Purchaser in or pursuant to
Article V of this Agreement or (b) any failure of the Purchaser to perform any of its
covenants or agreements under this Agreement.
Section 11.4 Certain Limitations.
(a) After the Closing, the Seller shall not be required to indemnify Purchaser Indemnitees (i)
for any Losses under Section 11.2(a), except with respect to inaccuracies in or breaches of the
representations and warranties contained in Sections 4.1, 4.2, 4.3, 4.13, 4.14, 4.15(a), 4.18 and
4.19 (for which the limitations in this Section 11.4(a)(i) shall not apply) until the aggregate
amount of all such Losses exceeds $750,000 (the “Deductible”), after which event the Seller
shall be responsible or liable only for such Losses in the aggregate in excess of the Deductible
and up to thirty percent (30%) of the Closing Payment (the “Cap”), and (ii) for any
Losses under Section 11.2(a) with respect to inaccuracies in or breaches of the representations and
warranties contained in Sections 4.1, 4.2, 4.3, 4.13, 4.14, 4.15(a), 4.18 and 4.19 in the aggregate
in excess of an amount equal to the Purchase Price.
(b) After the Closing, the Purchaser and the Parent shall not be required to indemnify Seller
Indemnitees (i) for any Losses under Section 11.3(a), except with respect to inaccuracies
in or breaches of the representations and warranties contained in Sections 5.1, 5.2, 5.6, 5.7 and
5.8 (for which the limitations in this Section 11.4(b)(i) shall not apply), until the aggregate
amount of all such Losses exceeds the Deductible, in which event the Purchaser and the Parent shall
be responsible only for such Losses in the aggregate in excess of the Deductible and up to the Cap,
and (ii) for any Losses under Section 11.3(a) with respect to inaccuracies in or breaches
of the representations and warranties contained in Sections 5.1, 5.2, 5.6, 5.7 and 5.8, in the
aggregate in excess of an amount equal to the Purchase Price.
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(c) For the purpose of calculating the amount of any Loss for which a Purchaser Indemnitee or
a Seller Indemnitee is entitled to indemnification under this Agreement, the amount of such Loss
shall be deemed to be an amount net of (i) any amounts paid by the Seller pursuant to any
adjustment to the Purchase Price under Section 2.5 or 2.6 to the extent that such adjustment is in
respect of such Loss, and (ii) any insurance proceeds actually received by such Person or
its Affiliates in respect of such claim. Any payment made to any Purchaser Indemnitees on the one
hand, or by the Purchaser to any Seller Indemnitees on the other hand, pursuant to this Article XI
in respect of any Loss shall be (A) reduced by an amount equal to the Income Tax benefits,
if any, attributable to any such Loss and (B) increased by an amount equal to the Income
Taxes, if any, attributable to the receipt of such indemnity payment, but only to the extent that
such Tax benefits are actually realized, or such Income Taxes are actually paid, either directly or
as an offset against any refund otherwise due, as the case may be, by such Purchaser Indemnitee or
any consolidated, combined, or unitary group of which such Purchaser Indemnitee is a member.
(d) In connection with any claim for indemnification under this Article XI, each Purchaser
Indemnitee or each Seller Indemnitee, as the case may be, shall use all commercially reasonable
efforts to mitigate any Loss upon and after becoming aware of any event that would reasonably be
expected to give rise to such Loss. The failure of Purchaser Indemnitee or each Seller Indemnitee,
as the case may be, to mitigate any Loss shall not relieve the Indemnifying Party of its
indemnification obligation under this Agreement except to the extent that the Indemnifying Party is
materially prejudiced as a result of such failure to mitigate.
(e) For purposes of Article X and this Article XI, any inaccuracy in or breach of any
representation or warranty (except the representations and warranties contained in the first
sentence of Section 4.10(a)) shall be determined without regard to any materiality, “Material
Adverse Effect” or similar qualification.
(f) No party to this Agreement (or any of its Affiliates) shall, in any event, be liable or
otherwise responsible to any other party (or any of its Affiliates) for any punitive damages of
such other party (or any of its Affiliates) arising out of or relating to this Agreement or the
performance or breach hereof, other than any such damages incurred by a Third Party and arising in
connection with a Third-Party Claim. In addition, no party to this Agreement (or any of its
Affiliates) shall, in any event, be liable or otherwise responsible to any other party (or any of
its Affiliates) for any diminution in value, consequential damages or speculative damages arising
out of or relating to this Agreement or the performance or breach hereof, other than any such
damages incurred by a Third Party and arising in connection with a Third-Party Claim.
(g) Any indemnification payments made pursuant to this Agreement shall be considered an
adjustment to the Purchase Price. If a Purchaser Indemnitee incurs a Loss that results in a
decrease in Post-Bonus EBITDA (and thereby a decrease in a Future Payment) and the Purchaser
Indemnitee is subsequently reimbursed for such Loss pursuant to this Article XI then within five
(5) days of such payment Purchaser shall pay Seller the amount by which such Future Payment was
decreased.
Section 11.5 Third-Party Claim Procedures. In the case of any Litigation asserted by
a Third Party (a “Third-Party Claim”) against a party entitled to indemnification under
this
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Agreement with respect to such Litigation (an “Indemnified Party”), notice shall be
given by the Indemnified Party to the party or parties required to provide indemnification (the
“Indemnifying Party”) promptly after such Indemnified Party has actual knowledge of such
Third-Party Claim, and the Indemnifying Party (at the expense of such Indemnifying Party) shall
assume the defense of such Third-Party Claim, provided that (a) the Indemnified Party may
participate in such defense at such Indemnified Party’s expense, and (b) the failure of
any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party
of its indemnification obligation under this Agreement except to the extent that the Indemnifying
Party is materially prejudiced as a result of such failure to give notice. If the Indemnifying
Party does not assume the defense of such Third-Party Claim within ten (10) Business Days
following notice thereof, the Indemnified Party shall be entitled to assume and control such
defense and to settle or agree to pay in full such Third-Party Claim without the consent of the
Indemnifying Party, without prejudice to the ability of the Indemnified Party to enforce its claim
for indemnification against the Indemnifying Party hereunder. Except with the prior written
consent of the Indemnified Party, no Indemnifying Party, in the defense of any such Third-Party
Claim, shall consent to entry of any judgment or enter into any settlement that provides for
injunctive, criminal or other non-monetary relief affecting the Indemnified Party or that does not
include as an unconditional term thereof the giving by each claimant or plaintiff to such
Indemnified Party of an irrevocable release from all liability with respect to such Third-Party
Claim. In any event, the Seller and the Purchaser shall cooperate in the defense of any
Third-Party Claim subject to this Article XI and the records of each shall be made reasonably
available to the other with respect to such defense.
Section 11.6 Indemnification Contribution.
(a) If Seller fails to make an indemnification payment that is validily due pursuant to this
Article XI within five Business Days after written demand therefor by a Purchaser Indemnitee
(taking into account the terms and conditions of Sections 11.4 and 11.7) then such Purchaser
Indemnitee shall contact Xx. Xxxxxxxxx and if such indemnification payment is validily due pursuant
to this Article XI Xx. Xxxxxxxxx will make such indemnification payment within ten (10) Business
Days after receipt of such request. Nothing contained in this Agreement will be deemed to alter or
waive any right that Xx. Xxxxxxxxx may have to seek contribution from the other Principals for
amounts that Xx. Xxxxxxxxx may pay pursuant to this Section 11.6. For the avoidance of doubt, Xx.
Xxxxxxxxx hereby acknowledges and agrees that his obligations pursuant to this Section 11.6 shall
run to his estate following his death, should such event occur prior to the fulfillment of such
obligations.
(b) If Xx. Xxxxxxxxx (or his estate) fails to make an indemnification payment that is validly
due after written demand therefor by a Purchaser Indemnitee pursuant to Section 11.6(a), then such
Purchaser Indemnitee shall contact the other Principals and, within ten (10) Business Days after
receipt of such valid request, each of the other Principals will pay the Purchaser Indemnitee an
amount equal to 10% of such indemnification payment.
Section 11.7 Right of Set-Off.
(a) If pursuant to this Article XI a Purchaser Indemnitee is entitled to be indemnified under
this Agreement for a Loss and the Purchaser may owe Seller Future Payments then such
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Purchaser Indemnitee must first set off as much of the amount of such Loss against the Future
Payments as is possible; provided that the Purchaser shall deliver to the Seller, as
promptly as practicable, but in any event within ten (10) days after its determination to set off
the amount of any Loss against all or any portion of any Future Payment, a written notice of such
determination, which notice shall contain a reasonably detailed description of such Loss and the
Purchaser’s calculation of the amount thereof. For the avoidance of doubt, no action or claim may
be brought by any Purchaser Indemnitee against Seller, Xx. Xxxxxxxxx, or the other Principals with
respect to indemnification for any Loss unless all Future Payments have been paid, exhausted
through set-off or are otherwise unavailable for set-off.
(b) In the case of any Loss that does not result from a Third-Party Claim, if any amount of
such Loss set off by the Purchaser against all or any portion of the Future Payments pursuant to
Section 11.7(a) is disputed by the Seller or any of the Principals, then such disputed amount shall
be deposited by the Purchaser with a financial or banking institution mutually acceptable to the
Purchaser and the Seller, to be held in escrow until such dispute is resolved by a final,
non-appealable judgment of a court of competent jurisdiction, at which time such amount, or the
appropriate portion thereof, and any interest thereon, shall be released to the prevailing party,
and the balance of such amount, if any, shall be released to the other party.
(c) If Seller is no longer due and owed any Future Payments as a result of the expiration of
the Future Payment Periods, prior payment of all Future Payments or exhaustion of the Future
Payments through set-off, then the Indemnifying Party shall pay to the Purchaser Indemnitees all
amounts due the Purchaser Indemnitees under this Article XI.
Section 11.8 Exclusive Remedy. Except as provided in Sections 11.7 and 12.7, from and
after the Closing, the indemnification provisions set forth in Article X and this Article XI
(including, with respect to the Purchaser’s obligations, the Parent Guaranty) shall provide the
sole and exclusive remedy of Purchaser Indemnitees or Seller Indemnitees, as the case may be, for
any inaccuracy or breach of any representation, warranty, covenant or agreement of the Seller, the
Principals or the Purchaser, respectively, contained herein. Nothing herein shall limit in any way
any party’s liability for fraud, intentional material misrepresentation or intentional material
omission, provided no party shall be liable for fraud, intentional material
misrepresentation or intentional material omission for failure to disclose any matter required to
be disclosed by such party pursuant to this Agreement unless, at the time such disclosure was
required to be made, such party had actual knowledge of such matter.
ARTICLE XII
GENERAL PROVISIONS
Section 12.1 Notices. All notices, requests and other communications to any party
hereunder shall be in writing (including facsimile transmission) and shall be given:
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(i)
|
if to the Purchaser or to the Parent, to it at: | |
| Xxxxx Xxxxxxx Companies | ||
| 000 Xxxxxxxx Xxxx, Xxxxx 000 | ||
| Xxxxxxxxxxx, XX 00000 | ||
| Attn: General Counsel | ||
| Telecopy: (000) 000-0000 | ||
| with a copy to: | ||
| Faegre & Xxxxxx LLP | ||
| 2200 Xxxxx Fargo Center | ||
| 00 Xxxxx Xxxxxxx Xxxxxx | ||
| Xxxxxxxxxxx, XX 00000 | ||
| Attn: Xxxxxxx Xxxxxxxxxxx | ||
| Telecopy: (000) 000-0000 | ||
(ii)
|
if to the Seller, to it at: | |
| WG CAR, LLC | ||
| c/o Fiduciary Asset Management, LLC | ||
| 0000 Xxxxxxxx Xxxxxx | ||
| Xxxxx Xxxxx, XX 00000 | ||
| Attn: Xxxxxxx X. Xxxxxxxxx | ||
| Telecopy: (000) 000-0000 | ||
| with a copy to: | ||
| The Lowenbaum Partnership | ||
| 000 X. Xxxxxxx | ||
| Xxxxx 000 | ||
| Xx. Xxxxx, Xxxxxxxx 00000 | ||
| Attn: Xxxxxxx X. Xxxxxxxxx, Esq. | ||
| Telecopy: (000) 000-0000 | ||
(iii)
|
if to any of the Principals, to such Principal at: | |
| c/o Fiduciary Asset Management, LLC | ||
| 0000 Xxxxxxxx Xxxxxx | ||
| Xxxxx Xxxxx, XX 00000 | ||
| Attn: Xxxxxxx X. Xxxxxxxxx | ||
| Telecopy: (000) 000-0000 |
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| with a copy to: | ||
| The Lowenbaum Partnership | ||
| 000 X. Xxxxxxx | ||
| Xxxxx 000 | ||
| Xx. Xxxxx, Xxxxxxxx 00000 | ||
| Attn: Xxxxxxx X. Xxxxxxxxx, Esq. | ||
| Telecopy: (000) 000-0000 |
or such other address or facsimile number as such party may hereafter specify for the purpose by
notice to the other parties hereto. All such notices, requests and other communications shall be
deemed received on the date of receipt by the recipient thereof if received prior to 5:00 p.m. on a
Business Day in the place of receipt. Otherwise, any such notice, request or communication shall
be deemed to have been received on the next succeeding Business Day in the place of receipt.
Section 12.2 Amendment; Waiver. No amendment, modification or discharge of this
Agreement, and no waiver hereunder, shall be valid or binding unless set forth in writing and duly
executed by the party against whom enforcement of the amendment, modification, discharge or waiver
is sought. Any such waiver shall constitute a waiver only with respect to the specific matter
described in such writing and shall in no way impair the rights of the party granting such waiver
in any other respect or at any other time. Neither the waiver by any of the parties hereto of a
breach of or a default under any of the provisions of this Agreement, nor the failure by any of the
parties, on one or more occasions, to enforce any of the provisions of this Agreement or to
exercise any right or privilege hereunder, shall be construed as a waiver of any other breach or
default of a similar nature, or as a waiver of any of such provisions, rights or privileges
hereunder. The rights and remedies herein provided are cumulative and none is exclusive of any
other, or of any rights or remedies that any party may otherwise have at law or in equity.
Section 12.3 Entire Agreement. This Agreement (including the Seller Disclosure
Letter, the Purchaser Disclosure Letter and other documents and instruments referred to herein)
and, until the Closing, the Confidentiality Agreement, constitute the entire agreement and
supersede all prior agreements and understandings, both written and oral, between the parties with
respect to the subject matter hereof. Effective upon the Closing, the Confidentiality Agreement
and all obligations of the parties thereto thereunder shall terminate and be of no further force or
effect.
Section 12.4 Fees and Expenses. Except as set forth in Section 10.4, whether or not
the transactions contemplated hereby are consummated, all fees and expenses incurred in connection
with this Agreement and the transactions contemplated hereby shall be paid by the party incurring
such expenses. Notwithstanding anything to the contrary in this Agreement, all costs and expenses
incurred by the Company in connection with seeking or obtaining any Client Consents in connection
with the transactions contemplated hereby (including, without limitation, any document preparation,
printing, mailing and other costs and expenses associated with any Fund Board Approvals or Fund
Shareholder Approvals) shall be borne by the Seller. Notwithstanding anything to the contrary in
this Agreement, Purchaser shall be solely
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responsible for all costs and expenses associated with obtaining any required HSR Act
approvals of the transactions contemplated hereby.
Section 12.5 Governing Law. THIS AGREEMENT SHALL BE GOVERNED IN ALL RESPECTS,
INCLUDING AS TO VALIDITY, INTERPRETATION AND EFFECT, BY THE LAWS OF THE STATE OF MISSOURI, WITHOUT
GIVING EFFECT TO ITS PRINCIPLES OR RULES OF CONFLICT OF LAWS.
Section 12.6 Jurisdiction; Waiver of Jury Trial.
(a) Each of the parties hereby irrevocably submits to the jurisdiction of the courts of the
State of Missouri and the federal courts of the United States of America located in the City of St.
Louis, Missouri solely in respect of the interpretation and enforcement of the provisions of this
Agreement and of the documents referred to in this Agreement, and in respect of the transactions
contemplated hereby and thereby. Each of the parties irrevocably agrees that all claims in respect
of the interpretation and enforcement of the provisions of this Agreement and of the documents
referred to in this Agreement, and in respect of the transactions contemplated hereby and thereby,
or with respect to any such action or proceeding, shall be heard and determined in such a Missouri
State or federal court, and that such jurisdiction of such courts with respect thereto shall be
exclusive, except solely to the extent that all such courts shall lawfully decline to exercise such
jurisdiction. Each of the parties hereby waives, and agrees not to assert, as a defense in any
action, suit or proceeding for the interpretation or enforcement hereof or of any such document or
in respect of any such transaction, that it is not subject to such jurisdiction. Each of the
parties hereby waives, and agrees not to assert, to the maximum extent permitted by law, as a
defense in any action, suit or proceeding for the interpretation or enforcement hereof or of any
such document or in respect of any such transaction, that such action, suit or proceeding may not
be brought or is not maintainable in such courts or that the venue thereof may not be appropriate
or that this Agreement or any such document may not be enforced in or by such courts. Each of the
parties hereby consents to and grants any such court jurisdiction over the person of such party and
over the subject matter of any such dispute and agrees that mailing of process or other papers in
connection with any such action or proceeding in the manner provided in Section 12.1 or in such
other manner as may be permitted by law, shall be valid and sufficient service thereof.
(b) EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO
A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
Section 12.7 Specific Performance. The parties agree that irreparable damage would
occur if any provision of this Agreement were not performed in accordance with the terms hereof and
that the parties shall be entitled to an injunction or injunctions to prevent breaches of this
Agreement or to enforce specifically the performance of the terms and provisions hereof in any
court specified in Section 12.6(a), in addition to any other remedy to which they are entitled at
law or in equity.
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Section 12.8 Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective heirs, successors and permitted assigns;
provided that except as permitted below, this Agreement shall not be assignable or otherwise
transferable by any party hereto without the prior written consent of the other party hereto.
Section 12.9 Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement
shall remain in full force and effect and shall in no way be affected, impaired or invalidated so
long as the economic or legal substance of the transactions contemplated hereby is not affected in
any manner materially adverse to any party. Upon such a determination, the parties shall negotiate
in good faith to modify this Agreement so as to affect the original intent of the parties as
closely as possible in an acceptable manner in order that the transactions contemplated hereby be
consummated as originally contemplated to the fullest extent possible.
Section 12.10 Counterparts; Effectiveness; Third-Party Beneficiaries. This Agreement
may be executed in several counterparts, each of which shall be deemed an original and all of which
shall together constitute one and the same instrument. This Agreement shall become effective when
each party shall have received a counterpart hereof signed by all of the other parties. Until and
unless each party has received a counterpart hereof signed by the other party, this Agreement shall
have no effect and no party shall have any right or obligation hereunder (whether by virtue of any
other oral or written agreement or other communication). Except as provided under Article XI, no
provision of this Agreement is intended to confer any rights, benefits, remedies, obligations, or
liabilities hereunder upon any Person other than the parties and their respective successors and
assigns.
Section 12.11 Parent Guaranty. The Parent hereby unconditionally and irrevocably
guarantees to the Seller and the Principals (a) the prompt payment in full of all of the
payment obligations of the Purchaser under this Agreement, which shall include any obligation to
pay the Closing Payment (including, without limitation, any payment by the Purchaser that may be
due upon adjustment in accordance with Section 2.5 or Section 2.6) and the Future Payments and
(b) the prompt and complete payment and performance of any indemnity obligations of the
Purchaser under Article XI (collectively, the “Guarantied Obligations”). The guaranty set
forth in this Section 12.11 is a guaranty of payment and not of collection, such that (i)
the Parent shall be primarily (rather than secondarily as a surety) liable, jointly and severally
with the Purchaser, for the payment of the Guarantied Obligations and (ii) the Seller shall
not be required to take any of the following actions as a condition to payment or performance by
the Parent of the Guarantied Obligations: (A) to prosecute collection or seek to enforce or
resort to any remedies against the Purchaser with respect to the Guarantied Obligations; or
(B) seek to enforce or resort to any remedies with respect to any security interests, lines
or encumbrances granted to the Seller by the Purchaser.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed on their
behalf by their respective officers hereunto duly authorized all as of the date first written
above.
| Purchaser: | ||||||||
| XXXXX XXXXXXX NEWCO INC. | ||||||||
| By: | /s/ Xxxxxx X. Xxxx | |||||||
| Name: | Xxxxxx X. Xxxx | |||||||
| Title: | President | |||||||
| Parent: | ||||||||
| XXXXX XXXXXXX COMPANIES | ||||||||
| By: | /s/ Xxxxxx X. Xxxx | |||||||
| Name: | Xxxxxx X. Xxxx | |||||||
| Title: | Chairman and Chief Executive Officer | |||||||
| Seller: | ||||||||
| WG CAR, LLC | ||||||||
| By: X.X. Xxxxxxxxx, Inc., its Manager | ||||||||
| By: | /s/ Xxxxxxx X. Xxxxxxxxx | |||||||
| Name: | Xxxxxxx X. Xxxxxxxxx | |||||||
| Title: | President | |||||||
| Principals: | ||||||||
| /s/ Xxxxxxx X. Xxxxxxxxx | ||||||||
| Xxxxxxx X. Xxxxxxxxx | ||||||||
| /s/ Xxxxxx X. Xxxxxxxxx, Xx. | ||||||||
| Xxxxxx X. Xxxxxxxxx, Xx. | ||||||||
| /s/ Wiley X. Xxxxxx | ||||||||
| Wiley X. Xxxxxx | ||||||||
| /s/ Xxxxx X. Xxxxxxx, Xx. | ||||||||
| Xxxxx X. Xxxxxxx, Xx. | ||||||||
| /s/ Xxxxxxxx Xxxx | ||||||||
| Xxxxxxxx Xxxx | ||||||||
