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AGREEMENT AND PLAN OF MERGER
by and among
WASHINGTON TRUST BANCORP, INC.,
THE WASHINGTON TRUST COMPANY,
PHXIMC ACQUISITION CORP.,
PHOENIX INVESTMENT MANAGEMENT COMPANY, INC.
and
The Individual Shareholders Party Hereto
Dated as of: April 24, 2000
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TABLE OF CONTENTS
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ARTICLE I.
DEFINITIONS.................................................................... 2
Section 1.1. Definitions..................................................... 2
ARTICLE II.
THE MERGER AND RELATED MATTERS................................................. 9
Section 2.1. General......................................................... 9
Section 2.2. Conversion of Shares............................................ 9
Section 2.3. Surviving Company............................................... 9
Section 2.4. Effect of the Merger............................................ 10
Section 2.5. Organizational Documents........................................ 10
Section 2.6. Directors and Officers.......................................... 10
Section 2.7. Effective Time.................................................. 10
Section 2.8. Tax Consequences................................................ 10
Section 2.9. Accounting Treatment............................................ 10
Section 2.10. Pre-Closing Distributions....................................... 11
ARTICLE III.
THE CLOSING.................................................................... 11
Section 3.1. Closing......................................................... 11
Section 3.2. Instruments of Transfer......................................... 12
ARTICLE IV.
CERTAIN REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS......................... 12
Section 4.1. Authority; No Violation; Consents............................... 12
Section 4.2. Shareholders' Title............................................. 13
Section 4.3. Shareholders' Litigation........................................ 13
Section 4.4. Shareholders' Preemptive or Other Rights........................ 13
Section 4.5. Shareholders' Share Ownership................................... 14
Section 4.6. Shareholders' Investment Intent................................. 14
ARTICLE V.
JOINT REPRESENTATIONS AND WARRANTIES
OF THE COMPANY AND THE SHAREHOLDERS............................................ 14
(i)
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Section 5.1. Organization and Related Matters................................ 14
Section 5.2. No Violation.................................................... 15
Section 5.3. Financial Statements............................................ 15
Section 5.4. Regulatory Documents............................................ 15
Section 5.5. Books and Records............................................... 17
Section 5.6. Investment Companies/Pooled Products; Ineligible Persons........ 17
Section 5.7. Compliance with Applicable Law.................................. 17
Section 5.8. Administration of Fiduciary Accounts............................ 18
Section 5.9. Company Assets.................................................. 18
Section 5.10. Company Contracts............................................... 19
Section 5.11. Technology and Intellectual Property............................ 20
Section 5.12. Legal Proceedings............................................... 20
Section 5.13. Environmental Compliance........................................ 21
Section 5.14. Tax Matters..................................................... 21
Section 5.15. Insurance....................................................... 22
Section 5.16. Labor and Employment Matters.................................... 23
Section 5.17. Benefit Plan Obligations........................................ 24
Section 5.18. No Other Broker................................................. 27
Section 5.19. Undisclosed Liabilities......................................... 27
Section 5.20. Capitalization.................................................. 27
Section 5.21. Absence of Changes.............................................. 28
Section 5.22. Disclosure...................................................... 28
ARTICLE VI.
REPRESENTATIONS AND WARRANTIES OF
PARENT, BANK AND MERGER SUB.................................................... 29
Section 6.1. Organization.................................................... 29
Section 6.2. Authority, No Violation......................................... 29
Section 6.3. Consents and Approvals.......................................... 31
Section 6.4. No Actions, Suits or Proceedings................................ 31
Section 6.5. Financial Ability............................................... 31
Section 6.6. No Other Broker................................................. 31
Section 6.7. Parent Shares................................................... 31
Section 6.8. Parent Reports.................................................. 31
Section 6.9. Ownership of Merger Sub, No Prior Activities.................... 32
ARTICLE VII.
COVENANTS...................................................................... 32
Section 7.1. Conduct of Business............................................. 32
Section 7.2. Advisory Contract Consents and Approvals and Other Actions...... 36
Section 7.3. No Transfer of Shares........................................... 36
(ii)
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Section 7.4. Confidentiality and Announcements............................... 36
Section 7.5. Expenses........................................................ 37
Section 7.6. Release of the Company and its Affiliates....................... 37
Section 7.7. Covenants of Parent............................................. 37
Section 7.8. Access; Certain Communication................................... 37
Section 7.9. Regulatory Matters; Third Party Consents........................ 38
Section 7.10. Surviving Corporation........................................... 39
Section 7.11. Further Assurances.............................................. 39
Section 7.12. Notification of Certain Matters................................. 39
Section 7.13. Maintenance of Records.......................................... 39
Section 7.14. Non-Competition/Non-Solicitation................................ 40
Section 7.15. Non-Solicitation of Other Offers................................ 40
Section 7.16. Pooling Accounting Treatment.................................... 41
Section 7.17. Affiliate Letters............................................... 41
Section 7.18. Issuance of the Purchase Shares................................. 41
Section 7.19. Registration of Purchase Shares................................. 42
Section 7.20. Offers of Employment............................................ 42
ARTICLE VIII.
CONDITIONS TO CLOSING.......................................................... 43
Section 8.1. Conditions to the Parent's and Merger Sub's Obligations......... 43
Section 8.2. Conditions to the Company's and the Shareholders' Obligations... 44
Section 8.3. Mutual Conditions............................................... 45
ARTICLE IX.
INDEMNIFICATION................................................................ 46
Section 9.1. Obligations of the Shareholders................................. 46
Section 9.2. Obligations of Parent........................................... 46
Section 9.3. Procedure....................................................... 46
Section 9.4. Notice of Non-Third Party Claims................................ 48
Section 9.5. Survival of Indemnity........................................... 48
Section 9.6. Minimum Indemnification Obligation.............................. 48
Section 9.7. Exclusive Remedy................................................ 48
ARTICLE X.
TAX MATTERS.................................................................... 49
Section 10.1. Tax Cooperation................................................. 49
Section 10.2. Filing and Tax Responsibility................................... 49
Section 10.3. Refunds or Credits.............................................. 50
Section 10.4. Certain Taxes................................................... 50
(iii)
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ARTICLE XI.
TERMINATION/SURVIVAL........................................................... 50
Section 11.1. Termination..................................................... 50
Section 11.2. Effect of Termination........................................... 51
Section 11.3. Survival of Representations and Warranties...................... 51
ARTICLE XII.
MISCELLANEOUS.................................................................. 52
Section 12.1. Expenses........................................................ 52
Section 12.2. Amendments; Extension; Waiver................................... 52
Section 12.3. Entire Agreement................................................ 52
Section 12.4. Specific Performance; Injunctive Relief......................... 52
Section 12.5. Interpretation.................................................. 53
Section 12.6. Severability.................................................... 53
Section 12.7. Notices......................................................... 53
Section 12.8. Binding Effect; Persons Benefiting; No Assignment............... 54
Section 12.9. Counterparts.................................................... 54
Section 12.10. Governing Law................................................... 55
Section 12.11. Service; Jurisdiction........................................... 55
Exhibit A-1 Employment Agreement (Xxxxxxxx)
Exhibit A-2 Employment Agreement (Xxxxxxx)
Exhibit B Investment Advisory Notice
Exhibit C Opinion of Cameron & Xxxxxxxxx LLP
Exhibit D KPMG LLP Letter
Exhibit E Piccerelli, Gilstein & Company, LLP Letter
Exhibit F Form of Affiliate Letter
(iv)
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of April 24, 2000 (this
"Agreement"), by and among Washington Trust Bancorp, Inc., a Rhode Island
corporation ("Parent"), The Washington Trust Company, a Rhode Island chartered
trust company and a wholly-owned subsidiary of Parent ("Bank"), PhxIMC
Acquisition Corp., a Rhode Island corporation and wholly-owned subsidiary of
Parent (the "Merger Sub"), Phoenix Investment Management Company, Inc., a Rhode
Island corporation (the "Company"), and Xxxxx X. Xxxxxxxx and Xxxxxx X. Xxxxxxx
(collectively, the "Shareholders" and each a "Shareholder").
RECITALS:
WHEREAS, the Shareholders own all of the issued and outstanding shares
of common stock, no par value (the "Shares"), of the Company;
WHEREAS, the Company serves as investment adviser to pension funds,
other institutional accounts and individual clients;
WHEREAS, Parent and Bank wish to acquire the Company upon the terms and
subject to the conditions set forth in this Agreement;
WHEREAS, the respective boards of directors of Parent, Merger Sub and
the Company, and Parent as the sole shareholder of Merger Sub, and the
Shareholders as all of the holders of the Shares, have each approved the merger
of Merger Sub with and into the Company (the "Merger") upon the terms and
subject to the conditions set forth in this Agreement and in accordance with
Title 19 of the General Laws of Rhode Island and the Rhode Island Business
Corporation Act (the "RIBCA") and the other transactions contemplated hereby;
WHEREAS, Merger Sub and the Company intend that the Merger will be
treated as a tax-free reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code"), that this Agreement
shall constitute a plan of reorganization for the purposes of Section 368 of the
Code and that the Merger will be treated as a pooling of interests in accordance
with Accounting Principles Board Opinion No. 16;
WHEREAS, following the Merger, Parent desires to contribute to Bank all
of its shares in the Surviving Company (as hereinafter defined) and, upon
receiving such contribution, Bank desires to liquidate and dissolve the
Surviving Company and thereafter conduct the business of the Surviving Company
through Bank;
WHEREAS, in furtherance of the consummation of the transactions
contemplated herein, the parties hereto desire to enter into this Agreement;
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NOW, THEREFORE, in consideration of and premised upon the various
representations, warranties, covenants and other agreements and undertakings of
Parent, Bank, Merger Sub, the Company and the Shareholders contained in this
Agreement, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I.
DEFINITIONS
Section 1.1. Definitions.
(a) For all purposes in this Agreement, the following terms
shall have the respective meanings set forth in this Section 1.1 (such
definitions to be equally applicable to both the singular and plural forms of
the terms herein defined):
"Acquisition Transaction" shall mean (i) a merger,
consolidation or similar transaction involving the Company or any of its
Subsidiaries, (ii) the disposition, by sale, lease, exchange or otherwise, of
assets of the Company or any of its Subsidiaries representing 24.9% or more of
the consolidated assets of the Company and its Subsidiaries, in a single
transaction or series of transactions, or (iii) the issuance, sale or other
disposition of (including by way of merger, consolidation, share exchange or any
similar transaction) securities representing 24.9% or more of the voting power
of the Company or any of its Subsidiaries.
"Adjusted Advisory Revenue" means the annualized base revenues
(exclusive of performance fees) of the Company as of the third Business Day
prior to the Closing Date from all investment advisory agreements in effect and
to which it is a party as of the Closing. For this purpose, the only investment
advisory agreements to be treated as being in effect at such time are those
investment advisory agreements as to which written consent to the transactions
hereunder or a new investment advisory agreement effective at the Closing has
been received and is in effect at the Closing in accordance with Section 7.2
hereof. Adjusted Advisory Revenue shall be calculated based upon the fee rates
to be in effect immediately after the Closing under each applicable investment
advisory agreement and the Deemed Market Value of the assets subject to each
such agreement. For purposes of calculating the Deemed Market Value of the
assets subject to any such agreement, an investment advisory agreement with any
client treated as being in effect as of the Closing Date that replaces (or
otherwise relates to the same assets as) an investment advisory agreement in
effect on December 31, 1999 with such client or such client's predecessor shall
be considered the same agreement as the agreement in effect on such date.
"Advisers Act" means the Investment Advisers Act of 1940, as
amended, and all rules and regulations of the SEC thereunder.
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"Advisory Revenue Threshold" means the annualized base
revenues (exclusive of performance fees) of the Company as of December 31, 1999
from all investment advisory agreements in effect as of such date, calculated
based upon the fee rates in effect on such date under each applicable investment
advisory agreement and the market value as of such date of the assets then
subject to such agreement.
"Affiliate" of a Person means any corporation, partnership,
entity or other Person that directly, or indirectly through one or more
intermediaries, controls or is controlled by, or is under common control with,
the Person specified.
"Applicable Law" means any domestic or foreign federal, state
or local statute, law, ordinance, rule, administrative interpretation,
regulation, order, writ, injunction, directive, judgment, decree, policy,
guideline or other requirement applicable to the Company or any Shareholder or
Parent, Bank or Merger Sub, as the case may be, or to any of their respective
Affiliates, properties, assets, officers, directors, employees or agents.
"Business Day" means any day other than a Saturday, a Sunday
or a day on which state-chartered banks in the State of Rhode Island generally
are closed for regular banking business.
"Buyer Agreements" means this Agreement and the Employment
Agreements.
"Company Assets" means all assets of the Company as of the
date hereof and as of the Closing Date, including, but not limited to, Company
Contracts, Furniture, Fixtures and Equipment, Intellectual Property, Leases,
Real Property, Records, Software and any other material assets of the Company,
each of which other material assets as of the date hereof is set forth on
Schedule 1.1(a) hereto.
"Company Contracts" means any investment advisory agreement
and any lease, license or other agreement relating to the use by the Company of
Furniture, Fixtures and Equipment, Intellectual Property, Software and
Technology Systems in the ordinary course of its business, and all rights and
interests of the Company arising thereunder or in connection therewith.
"Deemed Market Value" of the assets subject to any applicable
investment advisory agreement (whether such agreement was entered into on, prior
to or after December 31, 1999) shall equal (a) the market value as of December
31, 1999 of the assets then subject to such agreement, plus (b) the market value
of any assets contributed by a client after December 31, 1999 to the assets
subject to such agreement, with such assets being valued at the time they were
so contributed and with cash assets having their face value, minus (c) the
market value of any assets subject to such agreement at or at any time after
December 31, 1999 but withdrawn from being subject to such agreement at or prior
to the Closing Date, with such assets being valued at the time they were so
withdrawn and with cash assets having their face value.
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"Encumbrance" means any lien, pledge, security interest,
claim, charge, easement, limitation, commitment, encroachment, restriction or
encumbrance of any kind or nature whatsoever.
"Environmental Law" means all applicable federal, state and
local laws, rules, regulations, common law, ordinances, decrees, orders,
contracts and other binding obligations relating to pollution (including the
treatment, storage and disposal of wastes and the cleanup of releases and
threatened releases of materials), the preservation of the environment or the
exposure to materials in the environment or workplace.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Furniture, Fixtures and Equipment" means all furniture,
fixtures and equipment that are located in the ordinary course at any Operating
Site and used by the Company.
"GAAP" means generally accepted accounting principles as used
in the United States of America as in effect at the time any applicable
financial statements were prepared or any act requiring the application of GAAP
was performed, applied on a consistent basis.
"Governmental Authority" means any nation or government, any
state, territory or other political subdivision, any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, including the SEC or any other government authority,
agency, department, board, commission or instrumentality of the United States,
any foreign government, any state or territory of the United States or any
political subdivision thereof, and any court, tribunal or arbitrator(s) of
competent jurisdiction, and any governmental or non-governmental self-regulatory
organization, agency or authority (including the National Association of
Securities Dealers, Inc., the Commodities and Futures Trading Commission, the
National Futures Association, the Board of Governors of the Federal Reserve
System, the Federal Deposit Insurance Corporation, the Office of the Comptroller
of the Currency, the Office of Trust Supervision and the Rhode Island Department
of Business Regulation.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended, and the rules and regulations promulgated thereunder.
"Immediate Family" means with respect to any natural person,
such person's spouse, parents, grandparents, children, grandchildren and
siblings, nieces, nephews and in-laws (and estates, trusts, partnerships and
other entities and legal relationships of which at least a majority in interest
of the beneficiaries, owners, investors, members or participants at all times in
question are, directly or indirectly, one or more of the persons described above
and/or such natural person).
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"Indemnifiable Claim" means any Loss for which a party is
entitled to indemnification under this Agreement.
"Indemnified Party" means the party entitled to the benefits
of indemnification hereunder.
"Indemnifying Party" means the party obligated to provide
indemnification hereunder.
"Intellectual Property" means all domestic and foreign letters
patent, patents, Software, know-how, trade names, common law and other
trademarks, service marks, copyright registrations and applications and state or
federal common law usages, and all registrations or applications for
registration of any of the foregoing.
"Investment Company Act" means the Investment Company Act of
1940, as amended, and all rules and regulations of the SEC thereunder.
"Investment Company" means any Person registered or required
to be registered as an investment company under the Investment Company Act.
"Investment Management Services" means any advice which
involves: (a) the sponsorship, administration or management of an investment
fund (or portions thereof or a group of investment funds), (b) the management of
an investment account (or portions thereof or a group of investment accounts) or
(c) the giving of advice with respect to either the investment and/or
reinvestment of assets or funds (as any group of assets or funds) or the
selection of investment management professionals or firms, and activities
related or incidental thereto.
"IRS" means the Internal Revenue Service.
"Lease" means any of the real estate leases or subleases, or a
sublease of the Company with respect to any Operating Site.
"Leased Properties" means all leasehold interests in real
property leased by the Company in which an Operating Site is located.
"Leasehold Improvements" means all improvements to the Leased
Properties installed or constructed by or on behalf of the Company and used in
connection with the operation or maintenance of any Operating Site.
"Loss" means any and all claims, losses, liabilities, costs,
penalties, fines and expenses (including reasonable attorney's, accountant's,
consultant's and expert's fees and expenses), damages, obligations to third
parties, expenditures, proceedings, judgments, awards or demands that are
imposed upon or otherwise, incurred or suffered by the relevant party.
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"Operating Sites" means all offices at which the Company
conducts business.
"Ordinary Course of Business" means the ordinary course of
business consistent with past custom and practice (including with respect to
quantity and frequency).
"Parent Shares" means shares of common stock, $0.0625 par
value per share, of Parent.
"Permitted Encumbrances" means all Encumbrances which are:
(1) Encumbrances set forth on Schedule 1.1(b);
(2) Taxes or assessments that are not yet due and
payable;
(3) matters which would be shown on an accurate
survey and any other defect or exception which would be
disclosed by a search of title, which in each case does not
materially impair the use, operation, value or marketability
of the Company Asset to which it relates;
(4) liens of landlords and liens of carriers,
warehousemen, mechanics and materialmen and other like liens
arising in the Ordinary Course of Business for sums not yet
due and payable; or
(5) other liens or imperfections on property which do
not materially detract from the value of or materially impair
the existing use of the property affected by such liens or
imperfections.
"Person" means any individual, corporation, company, limited
liability company, partnership (limited or general), joint venture, association,
trust or other entity.
"Pooled Product" means any vehicle for collective investment
(in whatever form of organization, including in the form of a corporation,
company, limited liability company, partnership (limited or general),
association or trust and including each separate portfolio of any of the
foregoing) with respect to which the Company is the sponsor.
"Prior Entity" means Phoenix Investment Management Company,
L.P., a Rhode Island limited partnership, for which prior to its termination,
the Company served as the general partner and the Shareholders were its limited
partners, and which upon its termination transferred all its business and assets
and assigned all its liabilities to the Company.
"Purchase Shares" means the number of Parent Shares equal to
the product of (a) 1,150,000 multiplied by (b) the quotient of the Adjusted
Advisory Revenues as divided by the Advisory Revenue Threshold, and such product
shall be rounded up to the nearest whole number; provided, however, that if the
Adjusted Advisory Revenues equal or exceed 95% of
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the Advisory Revenue Threshold, the number of Purchase Shares shall be
1,150,000; provided, further, however, that in no event shall the number of
Purchase Shares exceed 1,150,000.
"Real Property" means all real property, appurtenances
thereto, fixtures and improvements, rights in connection therewith, or any
interest therein, including, without limitation, leasehold estates, of the
Company.
"Records" means all records and original documents in the
Company's possession that pertain to or are utilized by the Company to
administer, reflect, monitor, evidence or record information respecting the
business or conduct of the Company, including: (1) all such records maintained
on electronic or magnetic media, or in the electronic data base system of the
Company and (2) all such records and original documents respecting Company
Contracts or necessary or appropriate to comply with any Applicable Law,
including any and all records kept in accordance with the requirements of the
Advisers Act or the Investment Company Act or documents filed pursuant to any
Securities Laws.
"SEC" shall mean the Securities and Exchange Commission.
"SEC Documents" shall mean all reports and registration
statements filed, or required to be filed, by law, by contract or otherwise, by
an entity pursuant to the Securities Laws.
"Securities Laws" shall mean the Securities Act of 1933, as
amended; the Securities Exchange Act of 1934, as amended; the Investment Company
Act; the Advisers Act; the Trust Indenture Act of 1939, as amended; the
Commodity Exchange Act, as amended; the published rules and regulations of the
SEC and the Commodities Futures Trading Commission promulgated under such acts;
and the securities or "blue sky" laws of each state or territory of the United
States.
"Software" means all computer programs, software, firmware and
related documentation used in the operation of the Technology Systems.
"Subsidiary" means, when used with respect to any Person which
is not a natural person, any corporation, association or other business entity a
majority (by the number of votes) of the voting securities of which is at the
time owned by such Person or by one or more Subsidiaries of such Person or by
such Person and one or more Subsidiaries of such Person.
"Tax Authority" includes the IRS and any state, local, foreign
or other governmental authority responsible for the administration of any Taxes.
"Taxes" mean all federal, provincial, territorial, state,
municipal, local, foreign or other taxes, imposts, rates, levies, assessments
and other charges including, without
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limitation, all income, franchise, gains, capital, real property, goods and
services, transfer, value added, gross receipts, windfall profits, severance, ad
valorem, personal property, production, sales, use, license, stamp, documentary
stamp, mortgage recording, excise, employment, payroll, social security,
unemployment, disability, estimated or withholding taxes, and all customs and
import duties, together with any interest, additions, fines or penalties with
respect thereto or in respect of any failure to comply with any requirement
regarding Tax Returns and any interest in respect of such additions, fines or
penalties.
"Tax Return" means any return, report, information statement,
schedule or other document (including any related or supporting information)
with respect to Taxes.
"Treasury Regulations" means the regulations promulgated under
the Code.
"Unsponsored Pooled Products" means all vehicles for
collective investment (in whatever form of organization, including in the form
of a corporation, company, limited liability company, partnership (limited or
general), association or trust and including separate portfolios of any of the
foregoing) with respect to which the Company serves as investment adviser,
manager or equivalent role and does not serve as sponsor.
(b) The following terms shall have the meaning specified in
the indicated section of this Agreement:
Term Section
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Articles of Merger..................................... Section 2.7
Agreement.............................................. Preamble
Balance Sheet.......................................... Section 5.3
Bank................................................... Preamble
Closing................................................ Section 3.1
Closing Date........................................... Section 3.1
Code................................................... Recitals
Company................................................ Preamble
Contingent Worker...................................... Section 5.16(c)
Effective Time......................................... Section 2.7
Employment Agreements.................................. Section 8.1(f)
Employee Program....................................... Section 5.17(i)(i)
ERISA Affiliate........................................ Section 5.17(i)(iii)
Expiration Date........................................ Section 11.3
Financial Statements................................... Section 5.3
Material Adverse Effect................................ Section 5.1
Merger................................................. Recitals
Merger Sub............................................. Preamble
Multiemployer Plan..................................... Section 5.17(i)(iv)
Non-Third Party Claim.................................. Section 9.4
Parent................................................. Preamble
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Permits............................................... Section 5.7(a)
Pre-Closing Tax Period................................ Section 10.2(a)
SEC Reports........................................... Section 6.8(a)
Secretary............................................. Section 2.7
Shareholders.......................................... Preamble
Shares................................................ Recitals
Straddle Period....................................... Section 10.2(c)
Surviving Company..................................... Section 2.3
Technology Systems.................................... Section 5.11(a)
Third Party Claim..................................... Section 9.3(a)
ARTICLE II.
THE MERGER AND RELATED MATTERS
Section 2.1. General. Subject to the terms and conditions of this
Agreement, and in accordance with Title 19 of the General Laws of Rhode Island
and the RIBCA, at the Effective Time (as hereinafter defined), Merger Sub will
merge with and into the Company. In the Merger, the then outstanding Shares will
be converted at the Effective Time into the right to receive, at the Closing and
subject to the terms of this Agreement, the Purchase Shares.
Section 2.2. Conversion of Shares.
(a) At the Effective Time, (i) each Share issued and
outstanding immediately prior to the Effective Time (other than Shares which are
held by the Company or any of its respective subsidiaries, all of which shares
will at the Effective Time be canceled and retired and shall cease to exist, and
no stock of Parent or other consideration shall be delivered in exchange
therefor) shall, by virtue of this Agreement and without any action on the part
of the holder thereof, be converted into the right to receive a number of Parent
Shares equal to the quotient of the number of Purchase Shares divided by the
number of Shares issued and outstanding, and (ii) each share of common stock, no
par value, of Merger Sub issued and outstanding immediately prior to the
Effective Time shall be converted into one share of common stock, no par value,
of the Surviving Company.
(b) If prior to the Effective Time, Parent should split or
combine its Parent Shares, or pay a dividend or other distribution on such
Parent Shares in Parent Shares, then the number of Purchase Shares converted
hereunder shall be appropriately adjusted to reflect such split, combination,
dividend or distribution.
Section 2.3. Surviving Company. In accordance with the provisions of
this Agreement and the RIBCA, the Company shall be the Surviving Company in the
Merger and shall continue its existence under the laws of the State of Rhode
Island. The name of the Surviving Company shall be the name of the Company
immediately prior to the Effective
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Time. The purpose of the Surviving Company shall be to engage in Investment
Management Services and to engage in and carry on any other business or other
activity permitted to a corporation organized under the RIBCA, whether or not
related to the engagement in Investment Management Services. Upon consummation
of the Merger, the separate existence of Merger Sub shall cease.
Section 2.4. Effect of the Merger. At and after the Effective Time, the
Merger shall have the effects provided herein and set forth in Section 7-1.1-69
of the RIBCA. Without limiting the generality of the foregoing and subject
thereto, at the Effective Time, all the property, rights, privileges, powers and
franchises of the Company and Merger Sub shall vest in the Surviving Company,
and all debts, liabilities, obligations, restrictions, disabilities and duties
of the Company shall become the debts, liabilities, obligations, restrictions,
disabilities and duties of the Surviving Company. This Agreement shall
constitute a plan of merger for purposes of Section 7-1.1-65 of the RIBCA.
Section 2.5. Organizational Documents. At and after the Effective Time,
(a) the Articles of Incorporation of the Company as they exist immediately prior
to the Effective Time shall become the Articles of Incorporation of the
Surviving Company until thereafter amended in accordance with Applicable Law and
such Articles of Incorporation and (b) the by-laws of the Company as they exist
immediately prior to the Effective Time shall become the by-laws of the
Surviving Company until thereafter amended in accordance with Applicable Law,
the Articles of Incorporation of the Surviving Company and such by-laws. At the
Closing, the Shareholders shall deliver or cause to be delivered to Parent the
stock book, stock ledger, minute book and corporate seal, if any, of the Company
and all organizational books and records related to the Prior Entity.
Section 2.6. Directors and Officers. The directors and officers of the
Surviving Company shall consist of the directors and officers of the Company
immediately prior to the Effective Time, each to hold office in accordance with
the RIBCA, the Articles of Incorporation of the Surviving Company and the
By-Laws of the Surviving Company, until their respective successors are duly
elected and qualified.
Section 2.7. Effective Time. The Merger shall become effective on the
Closing Date at the time (the "Effective Time") set forth in the articles of
merger with respect to the Merger (the "Articles of Merger") to be filed with
the Secretary of State of the State of Rhode Island (the "Secretary") pursuant
to Section 7-1.1-68 of the RIBCA.
Section 2.8. Tax Consequences. It is intended that the Merger shall
constitute a tax-free reorganization within the meaning of Section 368(a) of the
Code, and that this Agreement shall constitute a "plan of reorganization" for
the purposes of Section 368 of the Code.
Section 2.9. Accounting Treatment. It is intended that the Merger be
accounted for as a "pooling of interests" under GAAP.
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Section 2.10. Pre-Closing Distributions.
(a) The Company shall, and each of the Company and the
Shareholders shall cause the Company to, xxxx and collect its accounts
receivable, pay its expenses and generally carry on its business in the Ordinary
Course of Business consistent with prudent business practice during the period
from the date of this Agreement and continuing through the Closing Date.
(b) From the date hereof through the earlier of the Closing
Date or June 30, 2000, the Shareholders may receive dividends and distributions
with respect to their capital stock in the Company up to the amount of any cash
basis net income of the Company (less any expenses of the Shareholders under
Sections 7.5 and 12.1 paid by the Company which were not includible as taxable
expenses) during the period from January 1, 2000 through the earlier of the
Closing Date or June 30, 2000, to the extent such amounts have not previously
been distributed to them.
(c) If the Closing has not occurred on or prior to June 30,
2000, any accounts receivable that would normally be billed by the Company after
June 30, 2000, whether or not relating to services performed prior to that date,
shall be for the account of the Surviving Corporation, subject to the right of
the Shareholders to receive distributions from the Company in the actual amounts
necessary to pay their Subchapter S cash basis Tax liability with respect to the
net income of the Company during the period from July 1, 2000 to the Closing
Date.
(d) Each of the Shareholders shall, and shall cause the
Company to, use commercially reasonable efforts to cause the total amounts to be
billed by the Company in July 2000 in accordance with the Ordinary Course of
Business to clients under investment advisory agreements for investment
management services rendered through June 30, 2000 to be not be less than
$580,000.
ARTICLE III.
THE CLOSING
Section 3.1. Closing. Subject to the terms and conditions of this
Agreement, the closing of the transactions contemplated by this Agreement (the
"Closing") shall be at 10:00 a.m. (Boston time) at the offices of Xxxxxxx,
Procter & Xxxx LLP, Exchange Place, 00 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx
00000, or at such other location designated by Parent, on the date (the "Closing
Date" ) that is the latest of (i) August 22, 2000 or (ii) the earliest
practicable date on which the conditions set forth in Article VIII hereof (other
than those conditions designating instruments, opinions, certificates or other
documents to be delivered at the Closing) have been satisfied or waived.
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Section 3.2. Instruments of Transfer.
(a) At the Closing, the Shareholders shall deliver, or shall
cause to be delivered, the following:
(i) to Parent, certificates representing all of the
Shares free and clear of any Encumbrance, except
transfer restrictions under Securities Laws; and
(ii) to Parent, the documents required to be delivered
pursuant to Section 8.1 hereof.
(b) At the Closing, Parent shall deliver, or shall cause to be
delivered, the following:
(i) to the Shareholders in accordance with instructions
provided to Parent by the Shareholders, certificates
representing in the aggregate the number of Purchase
Shares, such certificates bearing or accompanied by
all requisite stock transfer stamps and free and
clear of any Encumbrance except transfer restrictions
under the Securities Laws; and
(ii) to the Shareholders, the documents required to be
delivered pursuant to Section 8.2 hereof.
ARTICLE IV.
CERTAIN REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS
Each Shareholder jointly and severally represents and warrants to
Parent, Bank and Merger Sub as follows:
Section 4.1. Authority; No Violation; Consents.
(a) Each Shareholder has full power, right and authority to
enter into and carry out its obligations under this Agreement. This Agreement
has been duly executed and delivered by each Shareholder. This Agreement is the
legal, valid and binding obligation of each Shareholder, enforceable in
accordance with its terms, and is not subject to any rights of spousal or other
comparable consent or approval, except as enforcement may be limited by general
principles of equity whether applied in a court of law or a court of equity and
by bankruptcy, insolvency and similar laws affecting creditors' rights and
remedies generally.
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The consummation of the transactions contemplated hereby have been duly and
validly approved by all requisite action on the part of the Shareholder as a
shareholder of the Company, and no other action on the part of the Shareholder
as a shareholder of the Company is necessary to approve this Agreement and to
consummate the transactions contemplated hereby.
(b) Neither the execution, delivery and performance of this
Agreement by each Shareholder, nor the consummation of the transactions
contemplated hereby or thereby, will (i) violate, conflict with, or result in a
breach of any provisions of, or constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default) under, or result in
the termination of, or accelerate the performance required by, or result in a
right of termination or acceleration under, or the creation of any Encumbrance
upon any of the properties or assets of any Shareholder under any of the terms,
conditions or provisions of (x) the Articles of Incorporation or Bylaws of the
Company or (y) any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other instrument or obligation to which any Shareholder is a
party or by which any of them may be bound, or to which any Shareholder or any
of his or her properties or assets may be subject; or (ii) violate any judgment,
ruling, order, writ, injunction, decree, statute, rule or regulation applicable
to any Shareholder or to any of his or her properties or assets.
(c) Except for required filings under the HSR Act, those
notices, filings or authorizations described in Section 6.3 and as provided in
Schedule 4.1(c), no material notice to, filing with, authorization of, exemption
by, or consent or approval of, any regulatory authority is necessary for the
consummation by any Shareholder of the transactions contemplated by this
Agreement.
Section 4.2. Shareholders' Title. Each Shareholder has good and
marketable title to his or her Shares free and clear of any restrictions on
transfer or voting, Encumbrances or preemptive rights. The Shares are fully paid
and non-assessable. Each Shareholder has the full power, right and capacity to
enter into this Agreement and to carry out the transactions contemplated hereby,
and upon consummation of the transactions contemplated by this Agreement, Parent
will have acquired good and marketable title to the Shares free and clear of any
restrictions on transfer or voting or Encumbrances except such as may be created
by Parent.
Section 4.3. Shareholders' Litigation. There is no action, suit or
proceeding pending against, or to the knowledge of any Shareholder threatened
against or affecting, any Shareholder or any of his or her respective properties
before any court or arbitrator or any governmental body, agency or official
which in any manner challenges or seeks to prevent, enjoin, alter or materially
delay any of the transactions contemplated hereby.
Section 4.4. Shareholders' Preemptive or Other Rights. Except as
provided in Section 7-1.2-24 of the RIBCA, no Shareholder has preemptive or
other similar rights to acquire any shares of capital stock of any class of the
Company or any securities convertible
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into or exchangeable for any such shares. Except for this Agreement, no
subscriptions, options, warrants, conversion or other rights, agreements,
commitments, arrangements or understandings of any kind obligating any
Shareholder, contingently or otherwise, to issue or sell, or cause to be issued
or sold, any shares of capital stock of any class of the Company or any
securities convertible into or exchangeable for any such shares, are
outstanding, and no authorization therefor has been given.
Section 4.5. Shareholders' Share Ownership. Except as set forth on
Schedule 4.5, no Shareholder owns any Shares or any other security issued by the
Company.
Section 4.6. Shareholders' Investment Intent. The Purchase Shares
issuable to each Shareholder hereunder are being acquired by such Shareholder
for such Shareholder's own account, for investment for an indefinite period of
time, not as nominee or agent for any other person, firm or corporation and not
for distribution or resale to others in contravention of the Securities Act of
1933, as amended, and the rules and regulations promulgated thereunder. Each
Shareholder qualifies as an "accredited investor," as such term is defined in
Rule 501 under the Securities Act of 1933, as amended.
ARTICLE V.
JOINT REPRESENTATIONS AND WARRANTIES
OF THE COMPANY AND THE SHAREHOLDERS
The Company and each of the Shareholders jointly and severally
represents and warrants to Parent, Bank and Merger Sub as follows:
Section 5.1. Organization and Related Matters. The Company is a
corporation, duly incorporated, validly existing and in good standing under the
laws of the State of Rhode Island. The Company is the sole successor in interest
to all of the business and assets, and has assumed all of the liabilities, of
the Prior Entity and all representations and warranties set forth in this
Agreement relating to the Company shall be deemed to include the Prior Entity.
The Company has the corporate or other requisite power and authority to carry on
its business as it is now being conducted and to own, lease and operate all of
its properties and assets, and is duly licensed or qualified to do business in
each jurisdiction in which the nature of the business conducted by it or the
character or location of the properties and assets owned, leased or operated by
it makes such qualification or licensing necessary, except where the failure to
be so qualified or licensed would not have a material adverse effect on the
business, assets, financial condition or results of operations of the Company
taken as a whole or on the ability of any of the parties to complete the
transactions contemplated hereby (a "Material Adverse Effect"). The copies of
the charter, by-laws, comparable organizational document and any amendments
thereto of the Company heretofore delivered to Parent are complete and correct
copies of such instruments as currently in effect. The Company has no
Subsidiaries. The consummation of the transactions contemplated hereby have been
approved by all requisite
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corporate actions on the part of the Company and each of its shareholders, no
other corporate action on the part of the Company or its shareholders is
necessary to approve this Agreement or to consummate the transactions
contemplated hereby and no Shareholder has objected or will object to the
transactions contemplated hereby.
Section 5.2. No Violation. The consummation of the transactions
contemplated hereby will not (i) violate any provision of the Articles of
Incorporation or By-Laws of the Company or (ii) assuming that the consents and
approvals referred to in Section 7.2 hereof are duly obtained, (A) violate any
statute, code, ordinance, rule, regulation, judgment, order, writ, decree or
injunction applicable to the Company or any of its respective properties or
assets, or (B) violate, conflict with, result in a breach of any provision of or
the loss of any benefit under, constitute a default (or an event which, with
notice or lapse of time, or both, would constitute a default) under, result in
the termination of or a right of termination or cancellation under, accelerate
the performance required by, or result in the creation of any Encumbrance upon,
any of the Company Assets, or any note, bond, mortgage, indenture, deed of
trust, license, lease, agreement or other instrument or obligation to which the
Company is a party, or by which the Company, or any of its respective properties
or assets may be bound or affected.
Section 5.3. Financial Statements. The Company and the Shareholders
previously have delivered to Parent copies of the audited balance sheet of each
of the Company and the Prior Entity as of December 31, 1999, together with
related notes thereto (the "Balance Sheet"), and as of December 31, 1998 and
December 31, 1997, together with the related notes thereto, and the related
audited statements of income, changes in shareholders' equity or partners'
capital, as the case may be, and cash flows for the fiscal year ended December
31, 1999, together with the related notes thereto, in each case accompanied by
the audit report of Piccerelli, Gilstein & Company, LLP, independent accountants
with respect to the Company and the Prior Entity, and the unaudited balance
sheet of each of the Company and the Prior Entity as of February 29, 2000 and
the related unaudited statements of income, changes in shareholders' equity or
partners' capital, as the case may be, and cash flows for the 2-month period
then ended, together with related notes thereto (the statements referred to
above being collectively referred to as the "Financial Statements"). The audited
financial statements of the Company and the Prior Entity referred to in the
immediately preceding sentence (including the related notes) fairly present the
financial position of the Company and the Prior Entity as of the dates thereof,
and the results of the operations, cash flows and changes in shareholders'
equity or partners' capital, as the case may be, of the Company and the Prior
Entity for the respective fiscal periods therein set forth; and have been
prepared in accordance with GAAP consistently applied during the periods
involved. The interim unaudited financial statements referred to in the first
sentence above have been prepared from the financial records of the Company and
the Prior Entity and are true and correct in all material respects.
Section 5.4. Regulatory Documents.
(a) Since March 1, 2000, the Company has been engaged solely
in the business of providing Investment Management Services, and from the time
of the Prior
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Entity's inception until its termination on March 1, 2000, the Prior Entity was
engaged solely in the business of providing Investment Management Services. The
Prior Entity was duly registered as an investment adviser under the Advisers Act
at all times during which it provided Investment Management Services. The
Company currently is registered as an investment adviser under the Advisers Act
as the successor to the Prior Entity and has been so registered at all times
since March 1, 2000. The Company currently has effective registration and notice
filings with respect to its status as an investment adviser in each of the
jurisdictions listed on Schedule 5.4(a). Except as disclosed in Schedule 5.4(a),
the Company is not required to be registered, qualified or licensed, or file
notice filings, as an investment adviser in any other jurisdiction. The Company
and the Shareholders have delivered to Parent a true and complete copy of its
and the Prior Entity's most recent Form ADV, as amended to date, and has made
available copies of all foreign and state filings, likewise as amended to date.
(b) The Company is not, and neither the Company nor the Prior
Entity nor any of their partners, directors, officers or employees has been,
required to register as a broker or dealer under the Securities Exchange Act of
1934, as amended, or as a futures commission merchant, commodity trading advisor
or commodity pool operator under the Commodity Exchange Act, as amended.
(c) Except for instances of failure to make filings or
payments that have not had or could not reasonably be expected to have
individually or in the aggregate a Material Adverse Effect, the Company and the
Prior Entity have timely filed all reports, registration statements and other
documents, together with any amendments required to be made with respect
thereto, that they were required to file with any Governmental Authority and
have paid all fees and assessments due and payable in connection therewith.
(d) As of their respective dates, the SEC Documents of the
Company and the Prior Entity complied in all material respects with the
requirements of the Securities Laws, and none of such SEC Documents, as of their
respective dates, contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading.
(e) The Company has, and the Prior Entity has had, at all
times since its inception, a written policy regarding xxxxxxx xxxxxxx and a Code
of Ethics which complies with all applicable provisions of Section 203A of the
Advisers Act, copies of which have been provided to Parent prior to the date
hereof. All employees of the Company and the Prior Entity have executed
acknowledgments that they are bound by the provisions of such Code of Ethics and
xxxxxxx xxxxxxx policy. The policies of the Company with respect to avoiding
conflicts of interests are summarized in the Company's most recent Form ADV or
incorporated by reference therein. There have been no violations or allegations
of violations of such Code of Ethics, xxxxxxx xxxxxxx policy or conflicts
policy.
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Section 5.5. Books and Records. The Company and the Prior Entity have
at all times maintained Records which accurately reflect transactions in
reasonable detail, and accounting controls, policies and procedures sufficient
to ensure that such transactions are (a) executed in accordance with its
management's general or specific authorization, as applicable, and (b) recorded
in a manner which permits the preparation of financial statements in accordance
with GAAP and applicable regulatory accounting requirements and other account
and financial data, including performance results, in accordance with applicable
regulatory requirements, and the documentation pertaining thereto is retained,
protected and duplicated in accordance with prudent business practices and
applicable regulatory requirements, including the Advisers Act and the
Investment Company Act.
Section 5.6. Investment Companies/Pooled Products; Ineligible Persons.
Neither the Company nor the Prior Entity nor any "affiliated person" (as defined
in the Investment Company Act) of the Company or the Prior Entity has served as
an investment adviser or investment subadviser to an Investment Company or a
Pooled Product. Neither the Company nor any "associated person" of the Company
(as defined in the Advisers Act) is ineligible pursuant to Section 203 of the
Advisers Act to serve as a registered investment adviser or as an associated
person to an investment adviser registered under the Advisers Act.
Section 5.7. Compliance with Applicable Law.
(a) Except for instances of failure to hold or be in
compliance and instances of default or violations that have not had or could not
reasonably be expected to have in the aggregate a Material Adverse Effect: (i)
the Company holds, and each of the Company and the Prior Entity has at all times
since December 31, 1995 held, all licenses, franchises, permits and
authorizations (collectively, "Permits") necessary for the lawful ownership and
use of their respective properties and assets and the conduct of their
respective businesses under and pursuant to every, and since December 31, 1995
have complied with each, and are not in default under any, Applicable Law
relating to the Company, the Prior Entity or any of their respective assets,
properties or operations, (ii) there have been no violations of any of the above
and no Shareholder or the Company has received any notice asserting any such
violation and (iii) all such Permits are valid and in good standing and are not
subject to any suspension, modification or revocation or proceedings related
thereto.
(b) Except for normal examinations conducted by any
Governmental Authority in the regular course of the business of the Company and
the Prior Entity, no Governmental Authority has initiated any proceeding or, to
the knowledge of the Company or the Shareholders, any investigation into the
business or operations of the Company or the Prior Entity. To the knowledge of
the Company or the Shareholders, there is no unresolved violation, criticism or
exception by any Governmental Authority with respect to any report or statement
relating to any examination of the Company or the Prior Entity.
(c) Each of the Company and the Prior Entity has at all times
since December 31, 1995 rendered Investment Management Services to Persons,
including
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Unsponsored Pooled Products, with whom either or both of the Company and the
Prior Entity is or was a party to an investment advisory agreement in material
compliance with all applicable requirements as to portfolio composition and
portfolio management including, but not limited to, the terms of such investment
advisory agreements, written instructions from such Persons, the organizational
documents of such Persons, prospectuses, board of director or trustee directives
and Applicable Law.
Section 5.8. Administration of Fiduciary Accounts. Each of the Company
and the Prior Entity has properly administered in all respects all accounts for
which it acts or has acted as a fiduciary, including but not limited to accounts
for which it serves or has served as a trustee, agent, custodian, personal
representative, guardian, conservator or investment adviser, in accordance with
the terms of the governing documents and applicable state and federal law and
regulation and common law. Except for instances of breaches that have not had or
could not reasonably be expected to have in the aggregate a Material Adverse
Effect, neither the Company nor the Prior Entity nor any of their directors,
officers or employees has committed any breach of trust with respect to any
account for which any of them serves as a fiduciary, and the accounting for each
such fiduciary account is true and correct in all respects and accurately
reflects the assets of such fiduciary account.
Section 5.9. Company Assets.
(a) The Company has good and marketable title to, or, as to
the Leased Properties, a good, marketable and insurable leasehold interest in,
each of the Company Assets, free and clear of all Encumbrances other than
Permitted Encumbrances. Schedule 5.9(a) contains a true and complete list of all
Operating Sites.
(b) The Company owns no Real Property. Schedule 5.9(b)
contains a correct and complete schedule of all of the Leased Properties and
Leasehold Improvements on the date hereof. The Company and the Shareholders have
heretofore provided Parent with a true, correct and complete copy of each
written Lease, together with all amendments, modifications, alterations, and
other changes thereto, and there are no unwritten Leases.
(i) All Leases are legal, valid and binding leases,
enforceable by and against the Company in accordance with their
respective terms;
(ii) All conditions precedent to the enforceability
of each Lease by the Company have been satisfied, and no notice of
default or termination under any Lease is outstanding. No termination
event or condition or uncured default on the part of the Company, the
lessor or any sublessor exists under any Lease, and no event has
occurred and no condition exists, and the consummation of the
transactions contemplated by this Agreement will not create or result
in an event or condition which with or without the giving of notice or
the lapse of time or both, would constitute such a default or
termination event or condition. Neither the Shareholders, the Company
nor any employee of any of them is or has any ownership interest in the
landlord under any
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Lease. All rent and other sums and charges payable by or to the Company
as tenant, sublessor or sublessee thereunder are current;
(iii) Neither the Company nor the Prior Entity or any
Shareholder has received any written notice of non-compliance with any
restriction encumbering any of the Leased Properties or of any existing
or potential disturbance to or interruption in its quiet use and
enjoyment of such Leased Properties;
(iv) Except for Permitted Encumbrances, no Lease
contains any covenant that restricts the use, transferability or value
of the subject Leased Property; and
(v) The Company has obtained all required estoppel
letters from its lessors.
(c) All of the Leasehold Improvements, Furniture, Fixtures and
Equipment and other tangible personal property that constitute Company Assets or
that are used in the conduct of the Company's business are in good working
condition and free from defects, subject to ordinary wear and tear.
Section 5.10. Company Contracts. Except for Company Contracts listed on
another Schedule hereto, Schedule 5.10(a)(1) lists all of the Company Contracts
involving the receipt or payment by the Company or the Prior Entity in any of
the two (2) prior fiscal years or reasonably likely to involve the payment by
the Company or the Prior Entity in the current or any future fiscal year of an
amount in excess of $10,000 and all investment advisory contracts without regard
to such threshold amount, in existence as of a date not more than three (3) days
prior to the date hereof, true, correct and complete copies of which, including
all amendments and supplements thereto, have previously been made available to
Parent. The Company has succeeded to the rights of the Prior Entity under all
investment advisory and other contracts to which the Prior Entity was or is a
party without the need for any consents or approvals of any other parties. The
Company and the Shareholders have made available to Parent copies of all sales,
marketing and account solicitation agreements and arrangements of the Company.
Assuming that the consents and approvals referred to in Section 7.2 hereof are
duly obtained: (a) the Company or the Prior Entity has duly performed all its
obligations under each Company Contract, including all investment advisory
contracts, to the extent that such obligations have accrued, (b) no breach or
default, alleged breach or default, or event which constitutes or would (with
the passage of time, notice or both) constitute a breach or default thereunder,
or which would permit termination, modification or acceleration thereof by any
party thereto, has occurred, or, as a result of this Agreement or the
performance by the Company and the Shareholders of any of their respective
covenants or obligations hereunder, will occur, and (c) each Company Contract is
valid and binding on the Company and on all of the other parties thereto, is in
full force and effect and is enforceable in accordance with its terms.
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Section 5.11. Technology and Intellectual Property.
(a) Schedule 5.11(a) contains a true and complete list and
description of each of the electronic data processing, information,
communications, telecommunications and computer systems which are material to
the business of the Company or to the operation of the Operating Sites
(collectively, the "Technology Systems") as of the date hereof, including (i) a
description of any computer hardware or Software leased, owned or used by any of
them that is used in the operation of the Technology Systems and (ii) a list of
any contracts pursuant to which the Company is granted rights which are used in
the operation of the Technology Systems, including soft dollar arrangements,
Software licenses and similar agreements.
(b) Each of the Technology Systems is adequate for its
intended use and for the operation of the Operating Sites as currently operated
and there has not been any material malfunction with respect to any of the
Technology Systems.
(c) Schedule 5.11(c) contains a true and complete list and
description of all material Intellectual Property licensed to or owned or used
by the Company as of the date hereof and all material licenses or similar
agreements as of the date hereof pursuant to which the Company has granted or
has been granted rights with respect to Intellectual Property not owned and used
exclusively by them.
(d) The Company has the right to use the Intellectual Property
in accordance with the terms of the relevant contracts governing such use, free
and clear of any claims by any Person (other than the claims of any licensor
under licensing or similar agreements), and the consummation of the transactions
contemplated by this Agreement will not alter or impair the unrestricted right
of the Company to use the Intellectual Property, free and clear of any claims by
any Person (other than the claims of any licensor under licensing or similar
agreements). No claims have been asserted by any Person against the Company with
respect to the use by the Company of the Intellectual Property or challenging or
questioning the validity or effectiveness of any license or similar agreement
with respect thereto, and, to the knowledge of the Company or the Shareholders,
there is no basis for any such claim. To the knowledge of the Company or the
Shareholders, the Intellectual Property is not subject to any outstanding order,
judgment, decree, stipulation or agreement restricting the use thereof by the
Company.
Section 5.12. Legal Proceedings. The Company is not a party to any, and
there are no pending or, to the knowledge of the Company or the Shareholders,
threatened, legal, administrative, arbitral or other proceedings, claims,
actions or governmental or regulatory investigations, of any nature against or
otherwise affecting, directly or indirectly, the Company, or any of its
respective properties or assets or challenging the validity or propriety of the
transactions contemplated by this Agreement and there is no injunction, order,
judgment, decree or regulatory restriction imposed upon the Company, or any of
its properties or assets.
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Section 5.13. Environmental Compliance. Except for instances of
noncompliance which have not had or could not reasonably be expected to have in
the aggregate a Material Adverse Effect, with respect to the Leased Properties,
the Company is and has been in compliance with, and, to the knowledge of the
Company or the Shareholders, there are no outstanding allegations by any Person
or entity that the Company has not been in compliance with, all Environmental
Laws. Schedule 5.13 contains a complete and accurate list of all environmental
or worker safety and health reports, studies, investigations and audits of which
the Company or any Shareholder has knowledge relating to the Operating Sites as
of the date hereof, copies of which have previously been provided to Parent.
Section 5.14. Tax Matters.
(a) Each of the Company and the Prior Entity has duly filed on
a timely basis all Tax Returns required to be filed by it for all periods ending
on or before the Closing Date, and such Tax Returns are true, correct and
complete. Each of the Company and the Prior Entity has duly paid on a timely
basis all Taxes that are due and payable with respect to the Company and the
Prior Entity, except Taxes which are not yet delinquent. Neither the Company nor
the Prior Entity is the beneficiary of any extension of time within which to
file any Tax Return.
(b) Neither the Company nor the Prior Entity has (i) received
any notice of deficiency or assessment from any Tax Authority with respect to
liability for its Taxes or Taxes of the Shareholders relating to its income that
have not been fully paid or finally settled or (ii) signed or filed any written
requests, agreements, consents or waivers to extend the statutory period of
limitations applicable to the assessment of any Taxes with respect to any of its
Tax Returns.
(c) No audit or other proceeding by any Tax Authority is
presently pending with respect to any Taxes or Tax Return of the Company or the
Prior Entity. Neither the Company nor the Prior Entity has received any
notification of intent to audit from any Tax Authority. No director, officer or
employee responsible for tax matters of the Company or the Prior Entity expects
any authority to assess any additional Taxes for any period for which Tax
Returns have been filed.
(d) There are no Encumbrances for Taxes upon any of the
Company Assets other than Encumbrances for Taxes not yet due or payable.
(e) No payment which will, or may, be made to any Shareholder
or any employee, director or agent of the Company will constitute an "excess
parachute payment" within the meaning of Section 280G of the Code.
(f) The Prior Entity was classified as a partnership for
federal and state income Tax purposes at all times during its existence. The
Company and each predecessor of the Company has been a validly electing S
corporation, within the meaning of Sections 1361
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and 1362 of the Code, at all times during its existence. The Company will be an
S corporation up to and including the date before the Closing Date. The Company
does not have any "qualified subchapter S subsidiaries" within the meaning of
Section 1361(b)(3)(B) of the Code. The Company has not in the past ten years (i)
acquired assets from another corporation in a transaction in which the Company's
tax basis for the acquired assets was determined, in whole or in part, by
reference to the tax basis of the acquired assets (or any other property) in the
hands of the transferor, or (ii) acquired the stock of any corporation which is
a qualified subchapter S subsidiary. The Company would not be liable for any Tax
under Section 1374 of the Code if its assets were sold for their fair market
value as of the Closing Date.
(g) The Company is not a party to, is not bound by, and does
not have any obligation under any Tax sharing, indemnity or similar contract or
arrangement and is not liable for the Taxes of any other Person under Treasury
Regulations Section 1.1502-6 or any similar provision of state or local law. No
power of attorney has been granted by the Company with respect to any matter
relating to Taxes which is currently in force.
(h) No claim has ever been made by any Tax Authority in a
jurisdiction where the Company or the Prior Entity does not file, or has not
filed, Tax Returns that the Company may be subject to taxation by that
jurisdiction. Neither the Company nor the Prior Entity is, or has been, required
to file any state Tax Return other than in the State of Rhode Island.
(i) Each of the Company and the Prior Entity has withheld and
timely paid all amounts required to be withheld by Sections 1441 and 1442 of the
Code and have timely withheld and paid all Taxes required to have been withheld
and paid in connection with amounts paid or owing to any employee, independent
contractor, creditor, shareholder or other third party.
(j) There are, and as of the Closing Date, there will be, no
unpaid Taxes of the Company.
Section 5.15. Insurance. The Company maintains and at all times since
December 31, 1995, each of the Company and the Prior Entity has maintained, with
reputable insurers, insurance and indemnity bonds providing coverage for the
Company against all risks normally insured or bonded against by companies in
similar lines of business. All such insurance policies and bonds maintained as
of the date hereof are listed in Schedule 5.15. Each such insurance policy or
bond is in full force and effect, and the Company has not received written
notice or any other indication from any insurer or agent of any intent to cancel
any such insurance policy or bond. Neither the Company nor the Prior Entity has
received, and neither the Company nor any Shareholder has knowledge of, any
notice or request from any insurance company or board of fire underwriters
requesting the performance of any work or alteration with respect to the Company
Assets. The Company has not received any notice from any insurance company with
respect to, nor is the Company or any Shareholder aware of, any defects or
inadequacies in the Company Assets which, if not corrected, would result in the
termination or limitation in any material respect of insurance coverage or any
material increase in the cost of such insurance. All premiums due on the
insurance have been paid.
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Section 5.16. Labor and Employment Matters.
(a) (i) The Company is not engaged in, nor has the Company or
the Prior Entity since December 31, 1995 engaged in, any unfair labor practice
which could reasonably be expected to result in any material liability to the
Company; (ii) there is no labor strike, dispute, slowdown or stoppage pending,
or, to the knowledge of the Company or the Shareholders, threatened against the
Company; (iii) no union is currently certified, there is no union representation
question and no union or other organizational activity that would be subject to
the National Labor Relations Act exists or, to the knowledge of the Company or
the Shareholders, is threatened with respect to the operations of the Company;
(iv) no grievance or arbitration proceeding arising out of or under a collective
bargaining agreement is pending, and no claims therefor exist or, to the
knowledge of the Company or the Shareholders, are threatened with respect to the
operations of the Company; (v) no collective bargaining agreement exists which
is binding on the Company; (vi) neither the Company nor the Prior Entity has
experienced any work stoppage or other material labor difficulty; (vii) the
Company is not delinquent in any material respect in payments to any of its or
the Prior Entity's current or former officers, directors, employees or agents
for any wages, salaries, commissions, bonuses, benefits or other compensation
for any services performed by them or amounts required to be reimbursed to them;
and (viii) in the event of termination of the employment of any employee of the
Company, neither the Company nor Parent or any of its Affiliates will be liable
to any such employee under any agreement in effect at the Closing for so-called
"severance pay" or any other payments or benefits, including, without
limitation, post-employment health care or insurance benefits.
(b) The Company and its Subsidiaries employ a total of
approximately Six (6) full-time employees and no part-time employees and
generally enjoy good employer-employee relationships. All such employees,
including the name, date of hire, wages and bonuses of such employees for the
fiscal year 1999 and as of the date hereof are listed on Schedule 5.16(b). The
Company and its Subsidiaries do not employ a total of 100 or more employees
(excluding employees who work less than 20 hours per week or who have worked for
the Company or any of its Subsidiaries less than six of the last twelve months)
and will not have employed 100 or more employees at any point during the 90 days
prior to and including the Closing Date. The Company is in compliance in all
material respects with all applicable laws and regulations respecting labor,
employment, fair employment practices, work place safety and health, terms and
conditions of employment, and wages and hours. The Company is not delinquent in
any material respect in any payments to any of its or the Prior Entity's
employees or Contingent Workers (as that term is defined below) for any wages,
salaries, commissions, bonuses, fees or other direct compensation due with
respect to any services performed for it to the date hereof or amounts required
to be reimbursed to such employees or Contingent Workers. There are no
grievances, complaints or charges with respect to employment or labor matters
(including, without limitation, charges of employment discrimination,
retaliation or unfair labor practices) pending or, to the knowledge of the
Company or the Shareholders, threatened in any judicial, regulatory or
administrative forum, or under any dispute resolution procedure (including, but
not limited to, any proceedings under any dispute resolution procedure under any
collective bargaining agreement). To the knowledge of the Company or the
Shareholders, none of the
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Company's or the Prior Entity's employment policies or practices is currently
being audited or investigated, subject to imminent audit or investigation, by
any federal, state or local government agency. The Company is not subject to any
consent decree, court order or settlement in respect of any labor or employment
matters. No arbitration or similar proceeding with respect to employment matters
is pending or, to the knowledge of the Company or the Shareholders, threatened
and no claim therefor has been asserted. The Company does not have any policy,
plan or program of paying severance pay or any form of severance compensation in
connection with the termination of the Company's employees. The Company and each
of its Subsidiaries is, and each of the Company and the Prior Entity and any of
its Subsidiaries at all time since November 6, 1986 has been, in material
compliance with the requirements of the Immigration Reform Control Act of 1986.
(c) The Company does not employ any independent contractors,
temporary employees, leased employees or any other servants or agents
compensated other than through reportable wages paid by the Company
(collectively, "Contingent Workers"). To the extent that the Company employs
Contingent Workers, it has properly classified and treated them in all material
respects in accordance with applicable laws and for purposes of all benefit
plans and perquisites.
(d) Schedule 5.16(d) or Schedule 5.17(a) lists each contract,
agreement or material arrangement, in effect as of the date of this Agreement,
between the Company, on the one hand, and any Person, on the other hand,
relating to such Person's employment with the Company.
Section 5.17. Benefit Plan Obligations.
(a) Schedule 5.17(a) sets forth a list of every Employee
Program that has been maintained by the Company, the Prior Entity, or an ERISA
Affiliate at any time during the six (6) year period ending on the Closing Date.
(b) Each Employee Program which has ever been maintained by
the Company, the Prior Entity, or an ERISA Affiliate and which has been intended
to qualify under Section 401(a) or 501(c)(9) of the Code has received a
favorable determination or approval letter from the IRS regarding its
qualification under such section and has, in fact, been qualified under the
applicable section of the Code from the effective date of such Employee Program
through and including the Closing Date (or, if earlier, the date that all of
such Employee Program's assets were distributed). No event or omission has
occurred which would cause any Employee Program to lose its qualification or
otherwise fail to satisfy the relevant requirements to provide tax-favored
benefits under the applicable section of the Code (including without limitation
Sections 105, 125, 401(a) and 501(c)(9) of the Code). Each asset held under any
such Employee Program may be liquidated or terminated without the imposition of
any redemption fee, surrender charge or comparable liability. No partial
termination (within the meaning of Section 411(d)(3) of the Code) has occurred
with respect to any Employee Program.
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(c) Neither the Company nor the Shareholders know, nor should
any of them reasonably know, of any failure of any party to comply with any laws
applicable with respect to the Employee Programs that have ever been maintained
by the Company, the Prior Entity or any ERISA Affiliate. With respect to any
Employee Program ever maintained by the Company, the Prior Entity or any ERISA
Affiliate, there has been no (i) "prohibited transaction," as defined in Section
406 of ERISA or Section 4975 of the Code, (ii) failure to comply with any
provision of ERISA, other applicable law or any agreement, or (iii)
non-deductible contribution, which, in the case of any of (i), (ii) or (iii),
could subject the Company or any ERISA Affiliate to liability either directly or
indirectly (including, without limitation, through any obligation of
indemnification or contribution) for any damages, penalties or taxes, or any
other loss or expense, except for those liabilities that have not had or could
not reasonably be expected to have in the aggregate a Material Adverse Effect.
No litigation or governmental administrative proceeding (or investigation) or
other proceeding (other than those relating to routine claims for benefits) is
pending or, to the knowledge of the Company or the Shareholders, threatened with
respect to any such Employee Program. All payments and/or contributions required
to have been made (under the provisions of any agreements or other governing
documents or applicable law) with respect to all Employee Programs ever
maintained by the Company, the Prior Entity or any ERISA Affiliate, for all
periods prior to the Closing Date, either have been made or have been accrued
(and all such unpaid but accrued amounts are described on Schedule 5.17(a)).
(d) Neither the Company nor the Prior Entity nor any ERISA
Affiliate (i) has ever maintained any Employee Program which has been subject to
Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, including,
but not limited to, any Multiemployer Plan or (ii) has ever provided health care
or any other non-pension benefits to any employees after their employment is
terminated (other than as required by part 6 of subtitle B of Title I of ERISA)
or has ever promised to provide such post-termination benefits.
(e) With respect to each Employee Program maintained by the
Company, the Prior Entity, or an Affiliate within the three (3) years preceding
the Closing Date, complete and correct copies of the following documents (if
applicable to such Employee Program) have previously been delivered to Parent:
(i) all documents embodying or governing such Employee Program, and any funding
medium for the Employee Program (including, without limitation, trust
agreements) as they may have been amended to the date hereof; (ii) the most
recent IRS determination or approval letter with respect to such Employee
Program under Code Section 401(a) or 501(c)(9), and any applications for
determination or approval subsequently filed with the IRS; (iii) the three (3)
most recently filed IRS Forms 5500, with all applicable schedules and
accountants' opinions attached thereto; (iv) the three (3) most recent actuarial
valuation reports completed with respect to such Employee Program; (v) the
summary plan description for such Employee Program (or other descriptions of
such Employee Program provided to employees) and all modifications thereto; (vi)
any insurance policy (including any fiduciary liability insurance policy or
fidelity bond) related to such Employee Program; (vii) any registration
statement or other filing made pursuant to any federal or state securities law
and
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(viii) all correspondence to and from any state or federal agency within the
last three (3) years with respect to such Employee Program.
(f) Each Employee Program required to be listed on Schedule
5.17(a) may be amended, terminated, or otherwise modified by the Company or an
ERISA Affiliate to the greatest extent permitted by applicable law, including
the elimination of any and all future benefit accruals under any Employee
Program, and no employee communications or provision of any Employee Program
document has failed effectively to reserve the right of the Company or the ERISA
Affiliate to so amend, terminate or otherwise modify such Employee Program.
(g) Each Employee Program ever maintained by the Company, the
Prior Entity or any ERISA Affiliate (including each non-qualified deferred
compensation arrangement) has been maintained in compliance with all applicable
requirements of the Securities Laws, except for those instances of
non-compliance that have not had or could not reasonably be expected to have in
the aggregate a Material Adverse Effect.
(h) Each Employee Program ever maintained by the Company, the
Prior Entity or an ERISA Affiliate has complied with the applicable notification
and other applicable requirements of the Consolidated Omnibus Budget
Reconciliation Act of 1985, Health Insurance Portability and Accountability Act
of 1996, the Newborns' and Mothers' Health Protection Act of 1996, the Mental
Health Parity Act of 1996, and the Women's Health and Cancer Rights Act of 1998.
(i) For purposes of this section:
(i) "Employee Program" means (A) all employee benefit
plans within the meaning of Section 3(3) of ERISA, including, but not
limited to, multiple employer welfare arrangements (within the meaning
of Section 3(40) of ERISA), plans to which more than one unaffiliated
employer contributes and employee benefit plans (such as foreign or
excess benefit plans) which are not subject to ERISA; (B) all stock
option plans, stock purchase plans, bonus or incentive award plans,
severance pay policies or agreements, deferred compensation agreements,
supplemental income arrangements, vacation plans, and all other
employee benefit plans, agreements, and arrangements (including any
informal arrangements) not described in (A) above, including without
limitation any arrangement intended to comply with Section 120, 125,
127, 129 or 137 of the Code; and (C) all plans or arrangements
providing compensation to employee and non-employee directors. In the
case of an Employee Program funded through a trust described in Section
401(a) of the Code or an organization described in Section 501(c)(9) of
the Code, or any other funding vehicle, each reference to such Employee
Program shall include a reference to such trust, organization or other
vehicle.
(ii) An entity "maintains" an Employee Program if
such entity sponsors, contributes to, or provides benefits under or
through such Employee
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Program, or has any obligation (by agreement or under applicable law)
to contribute to or provide benefits under or through such Employee
Program, or if such Employee Program provides benefits to or otherwise
covers employees of such entity (or their spouses, dependents, or
beneficiaries).
(iii) An entity is an "ERISA Affiliate" of the
Company if it would have ever been considered a single employer with
the Company or Prior Entity under Section 4001(b) of ERISA or part of
the same "controlled group" as the Company for purposes of Section
302(d)(8)(C) of ERISA.
(iv) "Multiemployer Plan" means an employee pension
or welfare benefit plan to which more than one unaffiliated employer
contributes and which is maintained pursuant to one or more collective
bargaining agreements.
Section 5.18. No Other Broker. Other than Berkshire Capital
Corporation, the fees and expenses of which will be paid by the Shareholders, no
broker, finder or similar intermediary has acted for or on behalf of, or is
entitled to any broker's, finder's or similar fee or other commission from the
Company or the Shareholders in connection with this Agreement or the
transactions contemplated hereby.
Section 5.19. Undisclosed Liabilities. Except for (a) liabilities or
items set forth in Schedule 5.19, (b) liabilities that are fully reflected or
reserved against on the Balance Sheet, (c) liabilities incurred in the Ordinary
Course of Business since the date of the Balance Sheet, none of which are
material to the business or operations of the Company, (d) liabilities the
incurrence of which is expressly contemplated by this Agreement or authorized by
Parent in writing and (e) nonmonetary obligations arising under the terms of any
agreement other than obligations arising as a result of a breach thereof or
default thereunder, the Company has no liabilities of any nature whatsoever,
whether absolute, accrued, contingent or otherwise and whether known or unknown
or due or to become due.
Section 5.20. Capitalization.
(a) The authorized capital stock of the Company consists of
1,500 shares divided into 1,000 shares of No Par Value Voting Common Stock and
500 shares of Series B No Par Value Non-voting Common Stock, of which only 200
shares of No Par Value Voting Common Stock, all of which are owned by the
Shareholders, have been issued and are outstanding. The Shares have been duly
authorized and validly issued and are fully paid and not assessable.
(b) Except as provided in Section 7-1.2-24 of the RIBCA, there
are no preemptive or similar rights on the part of any holders of any class of
securities of the Company. No subscriptions, options, warrants, conversion or
other rights, agreements, commitments, arrangements or understandings of any
kind obligating the Company, contingently or otherwise, to issue or sell, or
cause to be issued or sold, any shares of capital
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stock of any class of the Company, or any securities convertible into or
exchangeable for any such shares, are outstanding, and no authorization therefor
has been given. Except as provided in this Agreement, there are no outstanding
contractual obligations of any Person to repurchase, redeem or otherwise acquire
any outstanding shares or other equity interests of the Company.
(c) Each repurchase, retirement, exchange, cancellation or
other action taken by the Company with respect to securities of which it was the
issuer constituted the legal and valid action of the Company in accordance with
Applicable Law and its respective charter, bylaws, partnership agreement or
other organizational document and the Company has no ongoing liabilities in
connection therewith.
(d) The Company was the sole general partner of the Prior
Entity, and the Shareholders were the only limited partners of the Prior Entity,
at all times prior to the termination of the Prior Entity. The capitalization of
the Prior Entity (with respect to capital accounts and interests in profits)
immediately prior to the termination of the Prior Entity, is set forth on
Schedule 5.20(d) hereto, with all such interests having been owned beneficially
and of record by the Persons and in the amounts indicated on Schedule 5.20(d),
in each case free and clear of any Encumbrance other than restrictions imposed
pursuant to the limited partnership agreement of the Prior Entity. No interest
in the Prior Entity had been issued in violation of any federal or state law.
Section 5.21. Absence of Changes. Since December 31, 1999, except as
contemplated by this Agreement or disclosed in Schedule 5.21, neither the
Company nor the Prior Entity has taken any action or suffered to exist any
condition which, had it been taken or suffered after the date hereof, would have
been prohibited by or in violation of Section 7.1(a) hereof.
Section 5.22. Disclosure. No representation or warranty to Parent, Bank
or Merger Sub contained in this Agreement or any of the agreements referred to
herein, and no statement contained in any certificate, agreement, document or
other writing furnished or to be furnished to Parent, Bank or Merger Sub at the
Closing pursuant to Article III hereof, contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
necessary in order to make the statements herein or therein, in light of the
circumstances in which they are made, not misleading.
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ARTICLE VI.
REPRESENTATIONS AND WARRANTIES OF
PARENT, BANK AND MERGER SUB
Parent, Bank and Merger Sub jointly and severally represent and warrant
to the Shareholders as follows:
Section 6.1. Organization.
(a) Each of Parent and Merger Sub is a corporation, duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has the requisite corporate power and
authority to carry on its business as it is now being conducted and to own,
lease and operate all of its properties and assets, and is duly licensed or
qualified to do business in each jurisdiction in which the nature of the
business conducted by it or the character or location of the properties and
assets owned, leased or operated by it make such licensing or qualification
necessary, except where the failure to be so qualified or licensed, either
individually or in the aggregate, would not have a material adverse effect on
the business, assets, financial condition or results of operations of Parent and
its Subsidiaries, taken as a whole, or on the ability of Parent, Bank and Merger
Sub to complete the transactions contemplated hereby (a "Buyer's Material
Adverse Effect"). Merger Sub is a wholly-owned Subsidiary of Parent.
(b) Bank is a chartered trust company, duly organized, validly
existing and in good standing under the laws of the State of Rhode Island and
has the requisite power and authority to carry on its business as it is now
being conducted, and to own, lease or operate all of its properties and assets,
and is duly licensed or qualified to do business in each jurisdiction in which
the nature of the business conducted by it or the character or location of the
properties and assets owned, leased or operated by it makes such licensing or
qualification necessary, except where the failure to be so licensed or
qualified, either individually or in the aggregate, would not have a Buyer's
Material Adverse Effect. The deposit accounts of Bank are insured by the Federal
Deposit Insurance Corporation through the Bank Insurance Fund to the fullest
extent permitted by law, and all premiums and assessments required in connection
therewith have been paid by Bank. Bank is a wholly-owned subsidiary of Parent.
Section 6.2. Authority, No Violation.
(a) The Bank has full corporate power and authority and all
necessary approvals of Governmental Agencies to engage in Investment Management
Services. Parent, Bank and Merger Sub each have full power and authority to
execute and deliver each of the respective Buyer Agreements executed and
delivered by them and to consummate the transactions contemplated thereby. The
execution and delivery of the respective Buyer Agreements executed by them and
the consummation of the transactions contemplated thereby have been duly and
validly approved by all requisite action on the part of Parent, Bank and
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Merger Sub, and no other proceedings on the part of Parent, Bank or Merger Sub
are necessary to approve the Buyer Agreements and to consummate the transactions
contemplated thereby. This Agreement has been duly and validly executed and
delivered by Parent, Bank and Merger Sub, and prior to the Closing each of the
other Buyer Agreements to be executed by Parent, Bank or Merger Sub will be duly
and validly executed by Parent, Bank or Merger Sub, as the case may be. Assuming
the due authorization, execution and delivery of the Buyer Agreements by the
other parties thereto (other than Parent, Bank and Merger Sub), each Buyer
Agreement to which Parent, Bank or Merger Sub is a party constitutes (or when
executed and delivered by Parent, Bank or Merger Sub, as the case may be, will
constitute) a valid and binding obligation of Parent, Bank or Merger Sub, as the
case may be, enforceable against Parent, Bank or Merger Sub in accordance with
its terms, except as enforcement may be limited by general principles of equity
whether applied in a court of law or a court of equity and by bankruptcy,
insolvency and similar laws affecting creditors' rights and remedies generally.
(b) Each of Parent and Merger Sub has heretofore furnished to
the Company a complete and correct copy of its Articles of Incorporation and
By-Laws, as amended to date. Such Agreements to Form and By-Laws are in full
force and effect. Neither Parent nor Merger Sub is in violation of any of the
provisions of its Articles of Incorporation or By-Laws. Bank has heretofore
furnished to the Company a complete and correct copy of its governing documents,
as amended to date. Such documents are in full force and effect. Bank is not in
violation of any of the provisions of its governing documents.
(c) The authorized capital stock of Parent consists of
30,000,000 Parent Shares. As of December 31, 1999, there were (i) 10,914,763
Parent Shares issued and outstanding and (ii) 2,419,741 Parent Shares reserved
for issuance under the 1988 Amended and Restated Stock Option Plan, the 1997
Equity Incentive Plan and the Amended and Restated Dividend Reinvestment and
Stock Purchase Plan. Except as set forth in Schedule 6.2(c), there are no
options, warrants or other rights, agreements or commitments obligating Parent
to issue or sell any shares of capital stock of, or other equity interests in,
Parent.
(d) The execution and delivery of the respective Buyer
Agreements by Parent, Bank and Merger Sub, the consummation by Parent, Bank and
Merger Sub of the transactions contemplated thereby, and compliance by Parent,
Bank and Merger Sub with any of the terms or provisions thereof, will not (i)
violate any provision of the charter or by-laws or other constituent documents
of Parent, Bank or Merger Sub or (ii) conflict with or result in a breach of any
of, the terms or provisions of, or constitute a default (or an event which, with
notice or lapse of time, or both, would constitute a default) under, result in
the termination of or a right of termination or cancellation under, accelerate
the performance required by, or result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of Parent, Bank or
Merger Sub under (x) any indenture, mortgage or loan or any other Agreement or
instrument to which Parent, Bank or Merger Sub is a party or by which they may
be bound or to which any of their properties or assets may be subject or (y) any
existing applicable law, rule, regulation, judgment, order or decree of any
Governmental Authority
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having jurisdiction over Parent, Bank or Merger Sub as the case may be, or any
of their properties.
Section 6.3. Consents and Approvals. No authorization or approval or
other action by, and no notice to or filing with, any Governmental Authority or
any third party will be required to be obtained or made by Parent, Bank or
Merger Sub in connection with the due execution and delivery by Parent, Bank and
Merger Sub of the respective Buyer Agreements executed and delivered by them and
the consummation by Parent, Bank and Merger Sub of the transactions as
contemplated thereby other than (i) such other consents, approvals,
authorizations, filings or notices as have been made or received on or prior to
the date hereof or are set forth in Schedule 6.3; (ii) the applicable filings
under the HSR Act; and (iii) filings, authorizations, consents or approvals the
failure to make or obtain which would not adversely affect Parent's, Bank's or
Merger Sub's ability to consummate the transactions contemplated hereunder in
accordance with the terms and conditions of this Agreement.
Section 6.4. No Actions, Suits or Proceedings. There is no pending
action, suit or proceeding, nor, to the knowledge of Parent, Bank and Merger Sub
has any litigation been threatened, against Parent, Bank or Merger Sub, or
before any Governmental Authority which questions the validity or legality of
any Buyer Agreement or of the transactions contemplated thereby, or which seeks
to prevent the consummation of the transactions contemplated thereby.
Section 6.5. Financial Ability. Parent has, or will have on or before
the Closing Date, sufficient authorized and unissued Parent Shares to consummate
the Merger.
Section 6.6. No Other Broker. Other than Xxxxx, Xxxxxxxx & Xxxxx, Inc.,
the fees and expenses of which will be paid by Parent or one of its Affiliates,
no broker, finder or similar intermediary has acted for or on behalf of, or is
entitled to any broker's, finder's or similar fee or other commission from
Parent, Bank or Merger Sub in connection with this Agreement or the transactions
contemplated hereby.
Section 6.7. Parent Shares. The Parent Shares to be issued to the
Shareholders pursuant to this Agreement will be, when issued and delivered to
the Shareholders in accordance with this Agreement, duly authorized, validly
issued, fully paid, non-assessable and free and clear of any Encumbrances,
subject to restrictions imposed herein, on the certificate or certificates
therefor or by the Securities Laws.
Section 6.8. Parent Reports.
(a) Parent has heretofore delivered to the Shareholders, in
the form filed with the SEC, (i) its Annual Report on Form 10-K for the fiscal
year ended December 31, 1999, (ii) its proxy statement relating to Parent's
meeting of shareholders to be held April 25, 2000 and (iii) all amendments and
supplements to all such reports and statements filed by Parent with the SEC
(collectively, the "SEC Reports"). The SEC Reports (i) were prepared in all
material respects in accordance with the requirements of the Securities Exchange
Act of
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1934, as amended, and (ii) did not at the time they were filed (or if amended or
superseded by a filing prior to the date of this Agreement, then on the date of
such filing) contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
(b) Each of the consolidated financial statements (including,
in each case, any related notes thereto) contained in the SEC Reports has been
prepared in accordance with GAAP applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes thereto) and each
fairly presents in all material respects the consolidated financial position of
Parent and its Subsidiaries as at the respective dates thereof and the
consolidated results of its operations and cash flows for the periods indicated,
except that the unaudited interim financial statements were or are subject to
normal and recurring year-end adjustments and the absence of footnote
disclosure.
(c) Between December 31, 1999 and the date hereof, except as
disclosed in the SEC Reports or Schedule 6.8(c), there has not been any change
in the business or operations of Parent which has had or would reasonably be
expected to have a Buyer's Material Adverse Effect.
Section 6.9. Ownership of Merger Sub, No Prior Activities.
(a) Merger Sub was formed solely for the purpose of engaging
in the transactions contemplated by this Agreement.
(b) Except for obligations or liabilities incurred in
connection with its incorporation or organization and the transactions
contemplated by this Agreement and except for this Agreement and any other
agreements or arrangements contemplated by this Agreement, Merger Sub has not
incurred, directly or indirectly, through any subsidiary or affiliate, any
obligations or liabilities or engaged in any business activities of any type or
kind whatsoever or entered into any agreements or arrangements with any Person.
ARTICLE VII.
COVENANTS
Section 7.1. Conduct of Business.
(a) During the period from the date of this Agreement and
continuing through the Closing Date, except as required by Applicable Law and
disclosed to Parent, expressly contemplated or permitted by this Agreement or
with the prior written consent of Parent, the Company shall, and the
Shareholders shall cause the Company to:
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(i) xxxx and collect its accounts receivable, pay its
expenses and generally carry on its business in the Ordinary Course of
Business consistent with prudent business practice;
(ii) use commercially reasonable efforts to preserve
its present business organization and relationships;
(iii) use commercially reasonable efforts to keep
available the present services of its employees;
(iv) use commercially reasonable efforts to preserve
the rights, franchises, goodwill and relations of its customers and
others with whom business relationships exist;
(v) maintain such insurance policies and bonds listed
on Schedule 5.15 or procure comparable replacement policies and
maintain such replacement policies in effect until and including the
Closing Date; and
(vi) file on a timely basis all Tax Returns required
to be filed by it or the Prior Entity for all periods ending on or
before the Closing Date and to pay on a timely basis all Taxes that are
due and payable with respect to the Company or the Prior Entity, except
Taxes which are not yet delinquent.
(b) Without limiting the generality of paragraph (a) of this
Section 7.1, and except as required by Applicable Law or as otherwise
contemplated by this Agreement or consented to in writing by Parent, the Company
shall not be permitted, and the Shareholders shall not cause the Company, to:
(i) declare or pay any dividend on, or make other
distributions in respect of, any of its capital stock, except as may be
permitted by Section 2.10 of this Agreement;
(ii) (A) split, combine or reclassify any shares of
its capital stock or issue or authorize or propose the issuance of any
other securities in respect of, in lieu of or in substitution for
shares of its capital stock, or (B) repurchase, redeem or otherwise
acquire any shares of the capital stock of the Company or any of its
Subsidiaries, or any securities convertible into or exercisable for any
shares of the capital stock of the Company or any of its Subsidiaries;
(iii) issue, deliver or sell, or authorize or propose
the issuance, delivery or sale of, any shares of its capital stock or
any securities convertible into or exercisable for, or any rights,
warrants or options to acquire, any such shares, or enter into any
agreement with respect to any of the foregoing;
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(iv) amend its Articles of Incorporation, By-laws or
other similar governing documents;
(v) authorize any single capital expenditure which is
in excess of $10,000 or capital expenditures which are, in the
aggregate, in excess of $50,000 for the Company and its Subsidiaries
taken as a whole, except for contractual commitments entered into prior
to the date of this Agreement as heretofore disclosed in Schedule
5.10(a)(1) of this Agreement;
(vi) enter into any new line of business;
(vii) acquire or agree to acquire, by merging or
consolidating with, or by purchasing a substantial equity interest in
or a substantial portion of the assets of, or by any other manner, any
Person or otherwise acquire any assets which would be material, either
individually or in the aggregate, to the Company;
(viii) change its method, policies or procedures of
accounting in effect at December 31, 1999, except as required by
changes in GAAP or regulatory accounting principles as concurred to by
the Company's independent auditors;
(ix) make any tax election or settle or compromise
any federal, state, local or foreign tax liability;
(x) pay, discharge or satisfy any claim, liability or
obligation, other than the payment, discharge or satisfaction, in the
Ordinary Course of Business, of liabilities reflected or reserved
against in the Balance Sheet, or subsequently incurred in the Ordinary
Course of Business of the Company;
(xi) adopt, amend, renew or terminate any plan or any
agreement, arrangement, plan or policy between the Company or any
Subsidiary and one or more of its current or former directors, officers
or employees;
(xii) increase in any manner the compensation or
fringe benefits of any director, officer or employee, other than salary
increases for employees other than the Shareholders at their regular
review dates, not to exceed, in an aggregate amount for all employees,
5% of the annualized base salaries of such employees, or pay any
benefit not required by any plan or agreement as in effect as of the
date hereof (including, without limitation, the granting of stock
options, stock appreciation rights, restricted stock, restricted stock
units or performance units or shares);
(xiii) hire new employees;
(xiv) enter into, modify or renew any employment,
severance or other agreement with any director, officer or employee of
the Company or any of its
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Subsidiaries, or establish, adopt, enter into or amend any collective
bargaining, bonus, profit sharing, thrift, compensation, stock option,
restricted stock, pension, retirement, deferred compensation,
employment, termination, severance or other plan, agreement, trust,
fund, policy or arrangement providing for any benefit to any director,
officer or employee;
(xv) sell, lease, encumber, assign or otherwise
dispose of, or agree to sell, lease, encumber, assign or otherwise
dispose of, any of its assets, properties or other rights or agreements
other than in the Ordinary Course of Business;
(xvi) incur any indebtedness for borrowed money,
assume, guarantee, endorse or otherwise as an accommodation become
responsible for the obligations of any other individual, corporation or
other entity, or make any loan or advance;
(xvii) file any application to open, relocate or
terminate the operations of any Operating Site or any of its
Subsidiaries;
(xviii) commit any act or omission which constitutes
a breach or default under any contract or license to which the Company
or any of its Subsidiaries is a party or by which any of them or their
respective properties is bound;
(xix) make any equity investment or commitment to
make such an investment;
(xx) enter into or renew, amend or terminate, or give
notice of a proposed renewal, amendment or termination or make any
commitment with respect to any Lease;
(xxi) make any loan or waive any right, whether in
equity or at law, that it has with respect to any loan; or
(xxii) agree to do any of the foregoing.
(c) From time to time prior to the Closing Date, the Company
and the Shareholders shall update or cause to be updated each of the Schedules
to this Agreement required hereof to reflect changes to the information set
forth therein occurring through the Closing Date; provided, however, that no
update of any Schedule to this Agreement shall affect the truth or veracity of
any representation or warranty of the Company or any Shareholder in this
Agreement prior to the time that such update has been made.
(d) During the period from the date of this Agreement and
continuing through the Closing Date, except as required by Applicable Law and
disclosed to Parent, or as expressly contemplated or permitted by this Agreement
or with the prior written consent of Parent, neither the Company nor Shareholder
shall take or omit any action that is intended or
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results in or may reasonably be expected to result in any of its representations
and warranties set forth herein being or becoming untrue or any of its
agreements herein being breached in any respect.
(e) The Company and the Shareholders will deliver to Parent at
the same time as the filing thereof a complete copy of each SEC Document filed
after the date of this Agreement and prior to the Closing with respect to the
Company and the Prior Entity.
Section 7.2. Advisory Contract Consents and Approvals and Other
Actions. As soon as reasonably practicable and in any event by the fifth
Business Day following the date hereof, the Company shall, and the Shareholders
shall cause the Company to, (i) inform its investment advisory clients of the
transactions contemplated by this Agreement, (ii) request such clients' consent
(in the form described below) to the assignment of their investment advisory
agreements deemed to occur as a result of the consummation thereof and (iii) use
its best efforts to obtain such consents. The Company and the Shareholders may
satisfy this obligation only by providing each such client with the notice
contemplated by the first sentence of this Section 7.2(a) and obtaining such
client's consent in the form of an actual written consent or a new investment
advisory agreement with the Bank or its assigns, acting as investment adviser,
to be effective upon the Closing Date; provided, however, that except as
consented to in writing by Parent such agreements shall be identical in all
material respects to the existing agreements. Any notice in the form of Exhibit
B hereto that is timely delivered to a client and that accurately identifies the
investment advisory agreement or agreements of such client to be assigned shall
be a valid notice with respect to such client for the purposes of this Section
7.2(a).
Section 7.3. No Transfer of Shares. No Shareholder will sell, transfer,
assign or dispose of any of his or her Shares other than pursuant to the terms
of this Agreement.
Section 7.4. Confidentiality and Announcements.
(a) None of the Company, either Shareholder, Parent, Bank,
Merger Sub or any of their respective Affiliates shall disclose publicly any of
the contents hereof other than as required by Section 7.3, permitted by this
Section 7.4, to obtain regulatory consent to engage in the Merger or as required
by Applicable Law upon prior notice to the other party.
(b) The Company, the Shareholders, Parent, Bank and Merger Sub
shall agree with each other as to the form and substance of any press release
prior to the earlier to occur of the Closing Date or termination of this
Agreement pursuant to Section 11.1 hereof, related to this Agreement or the
transactions contemplated hereby, and shall consult each other as to the form
and substance of other public, disclosures prior to the earlier to occur of the
Closing Date or termination of this Agreement pursuant to Section 11.1 hereof,
related thereto and shall not issue any such press release without the consent
of the other party, which consent shall not be unreasonably withheld; provided,
however, that nothing contained herein shall prohibit either party, following
notification to the other party if practicable, from making any
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disclosure which its legal counsel deems to be required by any applicable
Governmental Authority or any Applicable Law.
Section 7.5. Expenses. Except as provided in Section 12.1, Parent shall
bear the direct and indirect expenses of Parent and its Affiliates incurred in
connection with the negotiation and preparation of this Agreement and the
consummation of the transactions contemplated hereby. Except as provided in
Section 12.1, the Shareholders shall bear the direct and indirect expenses of
the Shareholders and the Company incurred in connection with the negotiation and
preparation of this Agreement and the consummation of the transactions
contemplated hereby. Without in any way limiting the foregoing, the fees and
disbursements of Cameron & Xxxxxxxxx LLP in connection with this transaction
shall be paid or borne by the Shareholders, and the fees and disbursements of
Xxxxxxx, Procter & Xxxx LLP in connection with this transaction shall be paid or
borne by Parent or an Affiliate of Parent.
Section 7.6. Release of the Company and its Affiliates. Effective upon the
Closing, each of the Shareholders hereby releases and forever discharges the
Company, Parent, Bank, Merger Sub and their respective Affiliates from any and
all causes of action, rights or claims that such Shareholder may have had in the
past, may now have or may have in the future related to, connected with, or
arising out of such Shareholder's status as a shareholder of the Company prior
to the Closing, other than with respect to any rights the Shareholders may have
as a result of the transactions contemplated in this Agreement.
Section 7.7. Covenants of Parent. During the period from the date of this
Agreement and continuing through the Closing Date, except as required by
Applicable Law or with the prior written consent of the Shareholders, Parent,
Bank and Merger Sub shall not take any action, or fail to take any action, that
would, or could reasonably be expected to (i) result in any of Parent's, Bank's
or Merger Sub's representations and warranties set forth in this Agreement being
or becoming untrue in any material respect; (ii) result in any of the conditions
to the Closing set forth in Article VIII not being satisfied; (iii) result in a
material violation of any provision of this Agreement; (iv) result in an
acquisition of, or an agreement to acquire by Parent, Bank or Merger Sub, any
other investment adviser registered under the Advisers Act; or (v) adversely
affect or materially delay the receipt of any of the requisite regulatory
approvals.
Section 7.8. Access; Certain Communication.
(a) Between the date of this Agreement and the Closing Date, subject to
Applicable Laws relating to the exchange of information, the Company and the
Shareholders shall afford to Parent, Bank and Merger Sub and its authorized
agents and representatives, complete access, upon reasonable notice and during
normal business hours, to contracts, documents and information of or relating to
the assets, liabilities, business, operations, personnel and other aspects of
the business of the Company. The Company shall, and the Shareholders shall cause
the Company and its personnel to, provide assistance to Parent, Bank and Merger
Sub, as the case may be, in the investigation of matters relating to this
transaction;
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provided, however, that the investigation shall be conducted in a manner which
does not unreasonably interfere with normal operations, customers and employee
relations.
(b) Between the date of this Agreement and the Closing Date, subject to
Applicable Laws relating to the exchange of information, Parent, Bank and Merger
Sub shall afford to the Shareholders and its authorized agents and
representatives, access, upon reasonable notice and during normal business
hours, to contracts, documents and information of or relating to the assets,
liabilities, business, operations, personnel and other aspects of the Investment
Management Services currently provided by Bank; provided, however, that such
access shall be conducted in a manner which does not unreasonably interfere with
normal operations, customers and employee relations.
(c) No information directly or indirectly obtained because of access or
investigations permitted in this Section 7.8 shall affect or limit the
representations and warranties set forth in this Agreement.
Section 7.9. Regulatory Matters; Third Party Consents.
(a) The Company and the Shareholders, on the one hand, and Parent, Bank
and Merger Sub, on the other hand, shall cooperate with each other and use all
reasonable efforts promptly to prepare and file all necessary documentation, to
effect all applications, notices, petitions and filings, and to obtain as
promptly as practicable all permits, consents, approvals, waivers and
authorizations of all third parties and Governmental Entities which are
necessary to consummate the transactions contemplated by this Agreement (it
being understood that the Shareholders shall be responsible for obtaining all
such approvals, waivers and consents from such parties with whom the Company is
in contractual privity including all investment advisory clientele). If any
required consent of or waiver by any third party (excluding any Governmental
Authority and consents of clients under investment advisory agreements) is not
obtained prior to the Closing, or if the assignment of any Company Contract
(other than an investment advisory agreement) would be ineffective or would
adversely affect any rights or benefits thereunder so that Parent would not in
fact receive all such rights and benefits, the parties, each without cost,
expense or liability to the other (except as provided in Article IX hereof),
shall cooperate in good faith to seek, if possible, an alternative arrangement
to achieve the economic results intended. Parent and the Shareholders will have
the right to review in advance, and will consult with the other on, in each case
subject to Applicable Laws relating to the exchange of information, all the
information relating to Parent or the Company, as the case may be, and any of
their respective, Affiliates, which appear in any filing made with, or written
materials submitted to, any third, party or any Governmental Authority in
connection with the transactions contemplated by this Agreement.
(b) Parent, Bank and Merger Sub, on the one hand, and the Company and
the Shareholders, on the other hand, shall promptly advise each other upon
receiving any communication from any Governmental Authority whose consent or
approval is required for consummation of the transactions contemplated by this
Agreement which causes such party to
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believe that there is a reasonable likelihood that any requisite regulatory
approval will not be obtained or that the receipt of any such approval will be
materially delayed.
Section 7.10. Surviving Corporation. On and within thirty (30) days of the
Closing Date, Parent shall transfer the shares of the Surviving Company from
Parent to Bank and cause the Bank to liquidate and dissolve the Surviving
Company, and each Shareholder shall, and shall cause the other officers of the
Surviving Company to, execute, acknowledge, file and deliver all such
instruments and take such actions as may be reasonably necessary and appropriate
effectively to consummate such transactions.
Section 7.11. Further Assurances. On and after the Closing Date, the
Shareholders shall give such further assistance to Parent and the Surviving
Company, and Parent and the Surviving Company shall give such further assistance
to the Shareholders, and each shall execute, acknowledge, file and deliver all
such instruments, including without limitation the Articles of Merger, and take
such further action, as may be reasonably necessary and appropriate effectively
to consummate the transactions contemplated hereby and to vest in the Parent
full, legal and equitable title to the Shares.
Section 7.12. Notification of Certain Matters. Each party shall give prompt
notice to the other parties hereto of (a) the occurrence, or failure to occur,
of any event or existence of any condition that has caused or could reasonably
be expected to cause any of such party's representations or warranties contained
in this Agreement to be untrue or inaccurate in any material respect at any time
after the date of this Agreement, up to and including the Closing Date, and (b)
any failure on such party's part to comply with or satisfy, in any material
respect, any covenant, condition or agreement to be complied with or satisfied
by it under this Agreement.
Section 7.13. Maintenance of Records.
(a) Through the Closing Date, the Company will, and the Shareholders
will cause the Company, to maintain the Records in the same manner and with the
same care that the Records have been maintained prior to the execution of this
Agreement. From and after the Closing Date, each of the parties shall permit the
other parties hereto reasonable access to any applicable Records in its
possession relating to matters arising on or before the Closing Date and
reasonably necessary in connection with any claim, action, litigation or other
proceeding involving the party requesting access to such Records or in
connection with any legal obligation owed by such party to any present or former
customer of the Company.
(b) For a period of six (6) years from the Closing Date, none of
Parent, the Surviving Company or any Shareholder shall dispose of or destroy any
business records or files relating to Taxes or Tax Returns pertaining to the
Company, and no Shareholder shall dispose of or destroy any such records without
first offering to turn over possession thereof by written notice to Parent at
least thirty (30) days prior to the proposed date of such disposition or
destruction.
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Section 7.14. Non-Competition/Non-Solicitation.
(a) For a period of five (5) years from the Closing Date, no
Shareholder shall, directly or indirectly, engage in any of the following
activities, directly or indirectly, whether individually or as owner,
part-owner, shareholder, partner, member, director, officer, trustee, employee,
agent or consultant, or in any other capacity, on behalf of himself or herself
or any Person other than the Bank or its assigns (the "Employer"): (i) provide
Investment Management Services to any Person; (ii) solicit or induce any Person
for the purpose (which need not be the sole or primary purpose) of (A) causing
any funds with respect to which the Employer provides Investment Management
Services to be withdrawn from such management, or (B) causing any client of the
Employer not to engage the Employer or any of its Affiliates to provide
Investment Management Services for any or additional funds; (iii) contact or
communicate with, in either case in connection with Investment Management
Services, any Person; or (iv) solicit or induce, or attempt to solicit or
induce, any employee or agent of, or consultant to, the Employer or any of its
Affiliates to terminate its, his or her relationship therewith, hire any such
employee, agent or consultant, or Former Employee, Agent or Consultant, or work
in any enterprise involving Investment Management Services with any employee,
agent or consultant or Former Employee, Agent or Consultant, (excluding for all
purposes of this sentence, secretaries and persons holding other similar
positions); provided, however, that clauses (i), (ii) and (iii) shall not be
applicable to clients of the Employer who also are members of the Immediate
Family of the Shareholder. "Former Employee, Agent or Consultant" means any
person who was employed by or otherwise worked with the Employer (or any
predecessor) on its Affiliates during the six (6) month period preceding the
termination of the Employment with the Employer.
(b) In the event that any provision or portion of a provision of this
Section 7.14 shall be determined to be illegal, invalid or unenforceable, the
remainder of this Section 7.14 shall be enforced to the fullest extent possible
and the illegal, invalid or unenforceable provision or portion of a provision
will be amended by a court of competent jurisdiction, or otherwise thereafter
shall be interpreted, to reflect as nearly as possible without being illegal,
invalid or unenforceable the parties' intent if possible. If such amendment or
interpretation is not possible, the illegal, invalid or unenforceable provision
or portion of a provision will be severed from the remainder of this Section
7.14 and the remainder of this Section 7.14 shall be enforced to the fullest
extent possible as if such illegal, invalid or unenforceable provision or
portion of a provision was not included.
Section 7.15. Non-Solicitation of Other Offers. During the term of this
Agreement, neither the Company nor any Shareholder will, directly or indirectly,
solicit, encourage, assist, initiate discussions or engage in negotiations with,
provide any information to, or enter into or consummate any agreement or
transaction with, any person or persons, other than Parent, Bank, Merger Sub and
any respective Affiliates, concerning the acquisition or possible acquisition of
the Company, all or any portion of the Company Assets or all or any portion of
the Shares, except for the sale of assets in the Ordinary Course of Business of
the Company consistent with the terms of this Agreement.
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Section 7.16. Pooling Accounting Treatment. Each of Parent, Bank, Merger
Sub, the Company and the Shareholders agrees not to take any action that to its
or their knowledge could reasonably be expected to adversely affect the ability
of Parent to treat the transaction contemplated by this Agreement as a pooling
of interests. If required, the Shareholders, individually or as officers of the
Company, will execute any documentation reasonably required by Parent's
independent public accountants with respect to pooling of interest accounting
issues, including a letter from the Company addressed to Piccerelli, Gilstein &
Company LLP and an attestation to a letter from Parent to KPMG LLP.
Section 7.17. Affiliate Letters. To ensure that the business combination to
be effected by this Agreement and the transactions contemplated hereby will be
accounted for as a pooling of interests, on or prior to the Closing Date, each
individual Shareholder agrees to execute and deliver to Parent a letter in the
form of Exhibit F hereto and to comply and abide with the agreements of the
Shareholder contained therein.
Section 7.18. Issuance of the Purchase Shares.
(a) Each Shareholder consents to the placement of a legend on any
certificate or other document evidencing the Purchase Shares substantially in
the following form:
The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended, or qualified
under any state securities laws. The securities may not be offered,
sold transferred or otherwise disposed of unless they have been
registered under said Act and qualified under applicable state
securities law, or exemptions from registration and qualification are
available.
Each Shareholder is aware that Parent will make a notation in its appropriate
records with respect to the transactions on the transferability of such Parent
Shares. Each Shareholder also consents and acknowledges that "stop transfer"
instructions may be noted against the Parent Shares received by him or her as
consideration hereunder.
(b) Parent shall remove any legend described in Section 7.17(a) or to
rescind any "stop transfer" instructions described in Section 7.17(a) as to any
Shareholder's Purchase Shares (i) if such Shareholder furnishes Parent with an
opinion of counsel or other written information satisfactory in form and content
to Parent that such legend or any such instructions are no longer required (as
applicable) or (ii) with respect to and at the time of the disposition of any
such Purchase Shares pursuant to an effective registration statement under the
Securities Act of 1933, as amended.
(c) Until the Expiration Date, the Shareholders may not sell or
otherwise transfer to any Person more than 90% of the Purchase Shares.
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Section 7.19. Registration of Purchase Shares.
(a) Within thirty (30) days after the Closing Date, Parent shall file
with the SEC a registration statement of Form S-3 or, if such form is not then
available to Parent, such other appropriate form as Parent may elect,
registering the Purchase Shares. Parent shall use commercially reasonable
efforts to (i) cause such registration to become effective as soon as
practicable after the initial filing date, (ii) cause such registration to
remain effective until the earlier of (A) such time as all Purchase Shares have
been disposed of in accordance with the registration statement and (B) one (1)
year after the Closing Date, (iii) cause the Purchase Shares to be approved for
quotation, upon official notice of issuance, on the NASDAQ Stock Market, and
(iv) at any time when a prospectus relating to the registration hereunder is
required to be delivered under the Securities Act of 1933, as amended, of the
happening of an event as a result of which Parent shall have received notice or
otherwise obtained knowledge that the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material fact or
omits to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, Parent shall prepare and furnish to the Shareholders a
reasonable number of copies of a supplement to or an amendment of such
prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such Shares, such prospectus shall not include an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading; .
(b) Rule 144 Information. With a view to making available to the
Shareholders the benefits of Rule 144 promulgated under the Securities Act of
1933, as amended, ("Rule 144") and any other rule or regulation of the SEC that
may at any time permit a Shareholder to sell Purchase Shares to the public
without registration, Parent agrees to: (i) to file with the SEC all reports and
other documents required of Parent to be filed pursuant to the Securities Act of
1933, as amended, or the Securities Exchange Act of 1934, as amended; and (ii)
furnish to any Shareholder forthwith upon request (A) a written statement by
Parent as to its compliance with the reporting requirements of paragraph (c)(1)
of Rule 144, (B) a copy of the most recent annual or quarterly report of Parent
and (C) at the Shareholder's expense, such other public, non-confidential
information as may be reasonably requested in availing any Shareholder of any
rule or regulation of the SEC which permits the selling of any such securities
without registration or pursuant to such form.
(c) Parent shall bear all expenses related to the registration of the
Purchase Shares pursuant to this Section 7.19 other than underwriting discounts
and commissions, stock transfer taxes or fees and expenses of legal, tax and
other counsel or advisers to the Shareholders.
Section 7.20. Offers of Employment. On or before the Closing, Bank shall
offer to each employee of the Company, other than the Shareholders, a position
with the Bank comparable to his or her position with the Company, at the same
salary as such employee is
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receiving from the Company immediately prior to the Closing, and with the
opportunity to participate in those employee benefit plans currently available
to employees of the Bank at a comparable level of authority. The Bank will
recognize each employee's original date of hire by the Company or the Prior
Entity for purposes of determining eligibility under such plans, but not for
purposes of benefit accrual.
ARTICLE VIII.
CONDITIONS TO CLOSING
Section 8.1. Conditions to the Parent's and Merger Sub's Obligations. The
obligations of Parent, Bank and Merger Sub to effect the Closing shall be
subject to the following additional conditions, which may be waived in writing
by Parent:
(a) The representations and warranties of the Company and the
Shareholders set forth in this Agreement shall be true and correct in all
material respects as of the date of this Agreement and (except to the extent
such representations and warranties speak as of an earlier date) as of the
Closing Date as though made on and as of the Closing Date; provided, however,
that for purposes of determining the satisfaction of the condition contained in
this Section 8.1(a), (i) no effect shall be given to any exception or reference
in such representations and warranties relating to knowledge, materiality or a
Material Adverse Effect; and (ii) such representations and warranties shall be
deemed to be true and correct in all material respects only if the failure or
failures of such representations and warranties to be so true and correct
(without giving effect to such knowledge, materiality and Material Adverse
Effect exceptions and references) do not represent in the aggregate a Material
Adverse Effect.
(b) The Company and the Shareholders shall have performed and complied
in all material respects with all agreements, covenants, obligations and
conditions required by this Agreement to be performed or complied with by the
Company and the Shareholders at or prior to the Closing Date;
(c) The Company and the Shareholders shall have delivered to Parent a
certificate dated as of the Closing Date, confirming the satisfaction of the
conditions contained in paragraphs (a) and (b) of this Section 8.1;
(d) Parent shall have received the opinion of Cameron & Xxxxxxxxx LLP,
counsel to the Company and the Shareholders, dated the Closing Date,
substantially in the form attached hereto as Exhibit C;
(e) No requisite regulatory approval shall impose any term, condition
or restriction upon Parent, Bank, Merger Sub or any of their respective
Affiliates that Parent, Bank or Merger Sub reasonably determines would so
materially adversely affect the economic or business benefits of the
transactions contemplated by this Agreement to Parent, Bank or
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Merger Sub as to render inadvisable in the reasonable good faith judgment of
Parent the consummation of the transactions contemplated hereby;
(f) The employment agreements, substantially in the form attached
hereto as Exhibit A-1, between Bank and Xxxxx X. Xxxxxxxx, and Exhibit A-2,
between Bank and Xxxxxx X. Xxxxxxx, (together, the "Employment Agreements")
shall have been entered into and shall be in full force and effect except to the
extent that the failure of any such agreement to be in full force and effect is
attributable to the death of any such individual;
(g) Since December 31, 1999, no event has occurred which has had or
could reasonably be expected to have, individually or in the aggregate with any
other event, a Material Adverse Effect; provided, however, that (i) a decline in
the value of assets under management by the Company (or any reduction in the
base revenues of the Company resulting therefrom) resulting from a general
decline in securities prices shall not constitute a Material Adverse Effect and
(ii) the failure of any client of the Company to consent to the transactions
contemplated hereby or the termination by any such client of its relationship
with the Company or the giving by any such client of any notice of its intention
to effect such a termination shall not constitute a Material Adverse Effect (it
being understood that Section 8.1(h) shall be the only closing condition
applicable to the matters discussed in this clause (ii));
(h) (i) The Company or the Shareholders shall have obtained from
clients in accordance with Section 7.2 hereof written consents or (ii) the
Company shall have entered into new investment advisory agreements with clients
in accordance with Section 7.2 hereof, such consents and new agreements
representing in the aggregate Adjusted Advisory Revenues equal to not less than
80% of the Advisory Revenue Threshold; provided, however, that the Shareholders
shall not be required to proceed with the Closing during the sixty (60) day
period after the date of this Agreement unless such aggregate Adjusted Advisory
Revenues equal or exceed 95% of the Advisory Revenue Threshold.
(i) Parent shall have received letters from KPMG LLP and Piccerelli,
Gilstein & Company, LLP independent accountants for Parent and the Company,
respectively, confirming that the business combination to be effected by this
Agreement and the transactions contemplated hereby will be accounted for as a
pooling of interests, in substantially the form attached hereto as Exhibit D and
Exhibit E as if the same had been issued and delivered to Parent as of the
Closing Date.
Section 8.2. Conditions to the Company's and the Shareholders' Obligations.
The obligation of the Company and Shareholders to effect the Closing shall be
subject to the following additional conditions, which may be waived in writing
by the Company or the Shareholders:
(a) The representations and warranties of Parent, Bank and the Merger
Sub contained in this Agreement shall be true and correct in all material
respects as of the date of this Agreement and (except to the extent that such
representations and warranties speak to an
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earlier date) on the Closing Date with the same effect as though made at such
time; provided, however, that for purposes of determining the satisfaction of
the condition contained in this Section 8.2(a), (i) no effect shall be given to
any exception or reference in such representations and warranties relating to
knowledge, materiality or a Buyer's Material Adverse Effect and (ii) such
representations and warranties shall be deemed true and correct in all material
respects only if the failure or failures of such representations and warranties
to be so true and correct (without giving effect to such knowledge, materiality
and Buyer's Material Adverse Effect exceptions and references) do not represent
in the aggregate a Buyer's Material Adverse Effect;
(b) Parent, Bank and Merger Sub shall have performed and complied in
all material respects with all covenants, obligations and conditions required by
this Agreement to be performed or complied with by them at or prior to the
Closing Date;
(c) Each of the Parent, Bank and Merger Sub shall have delivered to the
Shareholders a certificate, dated as of the Closing Date, from the President of
Parent, Bank and Merger Sub, respectively, on behalf of Parent, Bank and Merger
Sub in such individual's capacity as an officer of Parent, Bank and Merger Sub
and not as an individual, confirming the satisfaction of the conditions
contained in paragraphs (a) and (b) of this Section 8.2.
Section 8.3. Mutual Conditions. The obligations of each of the Company, the
Shareholders, Parent, Bank and Merger Sub to effect the Closing shall be subject
to the following conditions:
(a) (i) No order, injunction or decree issued by any court or agency of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the transactions contemplated by this Agreement shall be in
effect; (ii) no proceeding initiated by any Governmental Authority seeking an
injunction of the transaction contemplated hereby shall be pending; and (iii) no
statute, rule, regulation, order, injunction or decree shall have been enacted,
entered, promulgated or enforced by any Governmental Authority which prohibits,
restricts or makes illegal consummation of the transactions contemplated hereby;
(b) All regulatory approvals required to consummate the transactions
contemplated hereby shall have been obtained and shall remain in full force and
effect and all statutory waiting periods in respect thereof shall have expired;
and
(c) In respect of the notifications of Parent, the Company and any
Shareholder pursuant to the HSR Act, the applicable waiting period and any
extensions thereof shall have expired or been terminated.
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ARTICLE IX.
INDEMNIFICATION
Section 9.1. Obligations of the Shareholders. From and after the Closing
Date, the Shareholders hereby agree jointly and severally to indemnify, defend
and hold harmless Parent and its employees, officers, partners and other
Affiliates (including Bank) from and against any and all Losses which any of
them may suffer, incur or sustain arising out of, attributable to, or resulting
from (a) any inaccuracy in or breach of any of the representations or warranties
of the Company or either Shareholder made in or pursuant to this Agreement; and
(b) any breach or nonperformance of any of the covenants or agreements made by
the Company or either Shareholder in or pursuant to, this Agreement.
Section 9.2. Obligations of Parent. From and after the Closing Date, Parent
shall indemnify, defend and hold harmless the Shareholders from and against any
Losses which any of them may suffer, incur or sustain arising out of,
attributable to or resulting from any inaccuracy in or breach or nonperformance
of any of the representations, warranties, covenants or agreements made by
Parent, Bank or Merger Sub in or pursuant to this Agreement.
Section 9.3. Procedure.
(a) Notice to Third Party Claims. Any Indemnified Party seeking
indemnification for any Loss or potential Loss arising from a claim asserted by
a third party against the Indemnified Party (a "Third Party Claim") shall give
written notice to the Indemnifying Party. Written notice to the Indemnifying
Party of the existence of a Third Party Claim shall be given by the Indemnified
Party within 30 days after its receipt of a written assertion of liability from
the third party; provided, however, that the Indemnified Party shall not be
foreclosed from seeking indemnification pursuant to this Article IX by any
failure to provide timely notice of the existence of a Third Party Claim to the
Indemnifying Party except and only to the extent that the Indemnifying Party
actually incurs an incremental out-of-pocket expense or otherwise has been
materially damaged or prejudiced as a result of such delay.
(b) Defense. Except as otherwise provided herein, the Indemnifying
Party may elect to compromise or defend, at such Indemnifying Party's own
expense and by such Indemnifying Party's own counsel (which counsel shall be
reasonably satisfactory to the Indemnified Party), any Third Party Claim. If the
Indemnifying Party elects to compromise or defend such Third Party Claim, it
shall, within 30 days after receiving notice of the Third Party Claim, notify
the Indemnified Party of its intent to do so, and the Indemnified Party shall
cooperate, at the expense of the Indemnifying Party, in the compromise of, or
defense against, such Third Party Claim. If the Indemnifying Party elects not to
compromise or defend against the Third Party Claim, or fails to notify the
Indemnified Party of its election to do so as herein provided, or otherwise
abandons the defense of such Third Party Claim, (i) the Indemnified Party may
pay (without prejudice of any of its rights as against the Indemnifying Party),
compromise or defend such Third Party Claim and (ii) the costs and expenses of
the
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Indemnified Party incurred in connection therewith shall be indemnifiable by the
Indemnifying Party pursuant to the terms of this Agreement. Notwithstanding
anything to the contrary contained herein, in connection with any Third Party
Claim in which the Indemnified Party shall reasonably conclude, based upon the
written advice of its counsel, that (x) there is a conflict of interest between
the Indemnifying Party and the Indemnified Party in the conduct of the defense
of such Third Party Claim or (y) there are specific defenses available to the
Indemnified Party which are different from or additional to those available to
the Indemnifying Party and which could be materially adverse to the Indemnifying
Party, then the Indemnified Party shall have the right to assume and direct the
defense and compromise of such Third Party Claim. In such an event, the
Indemnifying Party shall indemnify the Indemnified Party for the fees and
disbursements of counsel to each of the Indemnifying Party and the Indemnified
Party. Notwithstanding the foregoing, neither the Indemnifying Party nor the
Indemnified Party may settle or compromise any claim, (unless the sole relief
payable to a third party in respect of such Third Party Claim is monetary
damages that are paid in full by the party settling or compromising such claim)
over the objection of the other; provided, however, that consent to settlement
or compromise shall not be unreasonably withheld. In any event, except as
otherwise provided herein, the Indemnified Party and the Indemnifying Party may
each participate, at its own expense, in the defense of such Third Party Claim.
If the Indemnifying Party chooses to defend any claim, the Indemnified Party
shall make available to the Indemnifying Party any personnel or any books,
records or other documents within its control that are reasonably necessary or
appropriate for such defense, subject to the receipt of appropriate
confidentiality agreements. Notwithstanding anything to the contrary contained
in this paragraph (b), in the event prompt action is required with respect to
the defense of a Third Party Claim, the Indemnified Party shall, subject to the
terms and conditions of this Article IX, have the right to assume the defense of
such Third Party Claim; provided, however, that in the event that the
Indemnifying Party subsequently elects to assume the defense of such Third Party
Claim, then the provisions set forth in this paragraph (b) shall be applicable
and the Indemnifying Party shall, subject to the terms and conditions of this
Article IX, indemnify the Indemnified Party for any costs and expenses incurred
by the Indemnified Party prior to the date the Indemnifying Party assumes
control of such Third Party Claim.
(c) Settlement. If a settlement offer solely for money damages is made
by a third party claimant, and the Indemnifying Party notifies the Indemnified
Party in writing of the Indemnifying Party's willingness to accept the
settlement offer and pay the amount called for by such offer, and the
Indemnified Party declines to accept such offer, the Indemnified Party may
continue to contest such claim, free of any participation by the Indemnifying
Party, and the amount of any ultimate liability with respect to such
Indemnifiable Claim that the Indemnifying Party has an obligation to indemnify
the Indemnified Party for hereunder shall be limited to the lesser of (A) the
amount of the settlement offer that the Indemnified Party declined to accept
plus the costs and expenses of the Indemnified Party prior to the date the
Indemnifying Party notifies the Indemnified Party of the Indemnifying Party's
willingness to settle or compromise such Third Party Claim and (B) the aggregate
Losses of the Indemnified Party with respect to such claim.
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(d) Miscellaneous. The procedures set forth in this Section 9.3 shall
apply solely with respect to Third Party Claims and shall not be deemed to apply
to, or otherwise affect or limit, an Indemnified Party's rights under this
Article IX with respect to any claim other than a Third Party Claim.
Section 9.4. Notice of Non-Third Party Claims. Any Indemnified Party
seeking indemnification for any Loss or potential Loss arising from a claim
asserted by any party to this Agreement against the Indemnified Party (a
"Non-Third Party Claim"), including any claim by an Indemnified Party for
indemnification pursuant to Section 9.3 of this Agreement, shall give written
notice to the Indemnifying Party. Written notice to the Indemnifying Party of
the existence of a Non-Third Party Claim shall be given by the Indemnified Party
promptly after discovery of the potential claim; provided, however, that the
Indemnified Party shall not be foreclosed from seeking indemnification pursuant
to this Article IX by any failure to provide timely notice of the existence of a
Non-Third Party Claim to the Indemnifying Party except and only to the extent
that the Indemnifying Party actually incurs an incremental out-of-pocket expense
or otherwise has been materially damaged or prejudiced as a result of such
delay.
Section 9.5. Survival of Indemnity. Any matter as to which a claim has been
asserted in writing prior to, but that is pending or unresolved at the end of,
the survival periods set forth in Section 11.3 hereof shall continue to be
covered by this Article IX notwithstanding any applicable statute of limitations
(which the parties hereby waive) or the expiration dates set forth in Section
11.3 hereof until such matter is finally terminated or otherwise resolved by the
parties pursuant to the terms of this Agreement or by a court of competent
jurisdiction and until any amounts payable hereunder are finally determined and
paid.
Section 9.6. Minimum Indemnification Obligation. Except with respect to
claims relating to Taxes or based upon fraud by any Shareholder against Parent
or its Affiliates in connection with the representations, warranties or
covenants of the Shareholders contained in this Agreement or any of the
transactions contemplated by this Agreement, no Shareholder shall be required to
provide any indemnification under the provisions of Article IX of this Agreement
unless and until the aggregate Losses of all parties to whom the Shareholders
owe such obligations hereunder exceed $10,000, whereupon the Indemnified Parties
shall be entitled to indemnification for the aggregate cumulative amount of all
Losses in excess of such amount.
Section 9.7. Exclusive Remedy. Except with respect to claims based upon
fraud, the maximum liability of the Shareholders under this Article IX shall be
the value of 10% of the Purchase Shares, and this Article IX shall provide the
sole and exclusive remedy for any and all Losses with respect to any inaccuracy
in or breach of the representations or warranties or breach or nonperformance of
any of the covenants or agreements made by any party in or pursuant to this
Agreement.
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ARTICLE X.
TAX MATTERS
Section 10.1. Tax Cooperation. The Shareholders, Parent, Bank and the
Surviving Company shall each: (a) cooperate in the preparation of any Tax
Returns which the other is responsible for preparing and filing pursuant to
Section 10.2 hereunder; (b) cooperate fully in preparing for any audits of, or
disputes with Tax Authorities regarding, any Tax liability of the Company or the
Prior Entity; (c) make available to the other and to any Tax Authority, as
reasonably requested, all information, records, and documents relating to any
Tax; (d) provide timely notice to the other in writing of any written notice
received concerning any pending or threatened audits or assessments relating to
any Tax liability of the Company or the Prior Entity; and (e) furnish the other
with copies of all correspondence received from any Tax Authority in connection
with any audit or information request with respect to any Tax.
Section 10.2. Filing and Tax Responsibility.
(a) The Shareholders shall prepare and file, or cause to be prepared
and filed, on a timely basis (in each case, at their own cost and expense and
consistent with past practice and subject to prior review and approval by
Parent) all federal and state income Tax Returns relating to the Company and the
Prior Entity for taxable periods ending on or prior to the Closing Date (a
"Pre-Closing Tax Period"). The Shareholders shall be responsible for and shall
indemnify Parent and the Surviving Company for any federal income Taxes relating
thereto.
(b) Parent shall prepare and file, or cause to be prepared and filed,
on a timely basis (in each case, at its sole cost and expense) all other Tax
Returns relating to the Company (or the Surviving Company), including Tax
Returns, if any, for the Straddle Period, as defined below.
(c) Parent and Shareholders shall make all necessary elections with the
relevant federal, state and local tax authorities to close the taxable year of
the Company at 11:59 p.m. Eastern Time on the Closing Date. In any case where
applicable law does not permit such election to be made, for any taxable period
that includes (but does not end on) the Closing Date (a "Straddle Period"), the
Taxes of any Subsidiary of the Company for the Pre-Closing Tax Period shall be
computed using an interim-closing-of-the-books method on the assumption that
such taxable period ended on and included the Closing Date, except that (i) all
standard deductions, exemptions, allowances, progressivity in rates and other
similar items shall be apportioned to the Pre-Closing Tax Period on a per diem
basis and (ii) real, personal and intangible property Taxes of any Subsidiary of
the Company for any Straddle Period shall be apportioned among Parent and the
Shareholders in accordance with the principles under Section 164(d) of the Code.
The Shareholders shall reimburse Parent for any Taxes paid by it or its
subsidiaries and attributable to any Pre-Closing Tax Period (including a
Straddle Period) within fifteen (15) days after payment.
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Section 10.3. Refunds or Credits. The Shareholders shall be entitled to any
and all refunds of Taxes relating to the Company's Subchapter S, and the Prior
Entity's, cash basis tax reporting and attributable to any Pre-Closing Tax
Period. Parent and Bank shall be entitled to any and all refunds of Taxes
relating to the Company or the Prior Entity which are attributable to any other
tax period, including any Straddle Period, unless such refunds or credits relate
directly to Taxes previously paid or reimbursed by the Shareholders pursuant to
Section 10.2(b). Refunds and credits received by one party but due another party
shall be held for the account of the other party and shall be paid to the other
party within five (5) Business Days after the receipt of such refunds or the
utilization of such credits.
Section 10.4. Certain Taxes. All transfer, documentary, sales, use, stamp,
registration, and other such Taxes and fees (including any penalties and
interest) incurred in connection with this Agreement (including any New York
State Gains Tax, New York City Transfer Tax, and any similar tax imposed in
other states or subdivisions), shall be paid by the Shareholders when due, and
the Shareholders will, at their own expense, file all necessary Tax Returns and
other documentation with respect to all such transfer, documentary, sales, use,
stamp, registration, and other such Taxes and fees, and, if required by
applicable law, Parent will, and will cause its affiliates to, join in the
execution of any such Tax Returns and other documentation.
ARTICLE XI.
TERMINATION/SURVIVAL
Section 11.1. Termination. (a) This Agreement may be terminated at any time
prior to the Closing as follows:
(i) by the mutual written consent of Parent and the Shareholders;
(ii) by the Shareholders or by Parent if circumstances that would
entitle either to invoke the failure of the condition set forth in
Section 8.3(a) if the Closing were to be scheduled for such time have
existed for a period of not less than 15 consecutive days as of the
date of termination;
(iii) by the Shareholders, on the one hand, or by Parent on the
other hand, if there shall have been a breach of any of the
representations and warranties set forth in this Agreement on the part
of the other party, which breach would entitle the party receiving
such representation or warranty not to consummate the transactions
contemplated hereby under Section 8.1(a) (in the case of a breach of
representation or warranty by the Company or the Shareholders) or
Section 8.2(a) (in the case of a breach of representation or warranty
by Parent, Bank or Merger Sub) and which breach by its nature cannot
be cured prior to the date set forth in Section 11.1(a)(v);
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(iv) by the Shareholders, on the one hand, or by Parent, on the
other hand, if there shall have been a material breach of any of the
covenants or agreements set forth in this Agreement on the part of the
other party, which breach shall not have been cured within 20 Business
Days following receipt by the breaching party of written notice of
such breach from the Shareholders or by Parent, as the case may be; or
(v) at the election of Parent or the Shareholders, if the Closing
Date shall not be on or before 120 days after the date of this
Agreement.
Notwithstanding Section 11.1(a)(ii)-(v) hereof, a party who is in
material breach of any of its obligations or representations and warranties
hereunder shall not have the right to terminate this Agreement pursuant to
Section 11.1(a)(ii)-(v)
(b) The termination of this Agreement shall be effectuated by the
delivery by the party terminating this Agreement to the other party of a written
notice of such termination. If this Agreement so terminates, it shall become
null and void and have no further force or effect, except as provided in Section
11.2.
Section 11.2. Effect of Termination. In the event of termination of this
Agreement as provided in Section 11.1, this Agreement shall forthwith become
void and have no effect except (a) the confidentiality provisions contained in
Section 7.3 shall survive any termination of this Agreement, and (b)
notwithstanding anything to the contrary contained in this Agreement, no party
shall be relieved or released from any liabilities or damages arising out of its
willful breach of any provision of this Agreement.
Section 11.3. Survival of Representations and Warranties. Subject to
Section 9.5, the respective representations and warranties of the Shareholders,
the Company, Parent, Bank and Merger Sub contained herein and in the
certificates of the Shareholders, the Company, Parent, Bank and Merger Sub to be
delivered at the Closing shall expire and be terminated and extinguished (a) as
to any breaches of representations and warranties that are not with respect to
Taxes, as of the date (the "Expiration Date") which is the earlier of (i) the
date of completion of the audit relating to the financial statements of Parent
for the fiscal year ending December 31, 2000 and (ii) March 31, 2001; and (b) as
to any breaches of representations and warranties with respect to Taxes, as of
the expiration of the applicable statute of limitation. Following the
appropriate expiration date for any representation or warranty referred to in
the previous sentence, subject to the provisions of Section 9.5, no party shall
have any liability whatsoever with respect to any such referenced representation
or warranty.
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ARTICLE XII.
MISCELLANEOUS
Section 12.1. Expenses.
(a) Except as otherwise expressly provided herein, all fees and
out-of-pocket expenses of outside counsel, independent public accountants,
investment bankers, brokers, finders and other consultants shall be paid or
provided for by the party employing such person.
(b) Notwithstanding Section 12.1(a), the Shareholders shall pay, or
cause the Company to pay prior to the earlier of the Closing Date or June 30,
2000, the following costs and expenses of the transactions contemplated hereby:
(i) any third-party assignment penalties or premiums (whether
imposed in the form of fees, penalties, assessments, increased
rentals, loss of servicing income or otherwise) and all other external
costs incurred in securing third party consents or transferring the
Shares; and
(ii) all sales, use, transfer, filing, recordation and similar
taxes and fees (including all real estate transfer taxes and
conveyance and recording fees, other than real estate or personal
property gains taxes), if any, and all stamp taxes, registration
taxes, duties or other charges, if any, imposed on or in connection
with the Merger pursuant to this Agreement.
Section 12.2. Amendments; Extension; Waiver. Subject to compliance with
applicable law, this Agreement may not be amended, altered or modified except by
written instrument executed by Parent, Bank, Merger Sub (if applicable), the
Company (or the Surviving Company, as the case may be) and the Shareholders.
Section 12.3. Entire Agreement. This Agreement (including Schedules,
certificates and lists referred to herein, and any documents executed by the
parties simultaneously herewith or pursuant hereto) constitutes the entire
understanding and agreement of the parties hereto, except as provided herein,
and supersedes all prior agreements and understandings, written and oral, among
the parties with respect to the subject matter hereof.
Section 12.4. Specific Performance; Injunctive Relief. Each party
understands and agrees that it will be irreparably damaged in the event this
Agreement is not specifically enforced. Each party, therefore, agrees that in
the event of a breach of any material provision of this Agreement, the aggrieved
party may elect to institute and prosecute proceedings in any court of competent
jurisdiction to enforce specific performance or to enjoin the continuing breach
of this Agreement. Such remedies shall, however, be cumulative and not
exclusive, and shall be in addition to any other remedy which a party may have.
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Section 12.5. Interpretation. When a reference is made in this Agreement to
Sections, Exhibits or Schedules, such reference shall be to a Section of or
Exhibit or Schedule to this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include," "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation." The phrases "the date of this Agreement," "the date hereof" and
terms of similar import, unless the context otherwise requires, shall be deemed
to refer to the date set forth in the first paragraph of this Agreement.
Section 12.6. Severability. Any term or provision of this Agreement which
is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction,
be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or, enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
Section 12.7. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed given if (a) delivered in person, (b)
transmitted by telecopy (with confirmation), (c) mailed by certified or
registered mail (return receipt requested) or (d) delivered by an express
courier (with confirmation) to the parties at the following addresses (or at
such other address for a party as shall be specified by like notice):
If to Parent, Bank, Merger Sub or the Surviving Company:
Washington Trust Bancorp, inc.
00 Xxxxx Xxxxxx
Xxxxxxxx, Xxxxx Xxxxxx 00000
Telecopy: (000) 000-0000
Attention: President
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With a copy to:
Xxxxxxx, Procter & Xxxx LLP
Exchange Place
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxx X. Xxx, P.C.
If to the Shareholders:
Xxxxx X. Xxxxxxxx
Xxxxxx X. Xxxxxxx
c/o Phoenix Investment Management Company,
A Division of The Washington Trust Company
Xxx Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxx Xxxxxx 00000
Telecopy: (000) 000-0000
With a copy to:
Cameron & Xxxxxxxxx LLP
00 Xxxxxxxx Xxxxxxx
Xxxxxxxxxx, Xxxxx Xxxxxx 00000
Telecopy: (000) 000-0000
Attention: E. Xxxxx Xxxxxxx, Esquire
Section 12.8. Binding Effect; Persons Benefiting; No Assignment. This
Agreement shall inure to the benefit of and be binding upon the parties hereto
and the respective heirs, legal representatives, estates, executors, successors
and permitted assigns of the parties and such persons. Nothing in this Agreement
is intended or shall be construed to confer upon any entity or person other
than, the parties hereto and their respective heirs, legal representatives,
estates, executors, successors and permitted assigns any right, remedy or claim
under or by reason of their Agreement or any part hereof. Without the prior
written consent of the parties hereto, this Agreement may not be assigned by any
of the parties hereto.
Notwithstanding the foregoing, Parent may assign to any Affiliate of Parent
all or any portion of Parent's rights and obligations hereunder whether prior to
or after Parent exercises such right or is required to satisfy such obligation,
provided that in the event of any such assignment such assignee shall be deemed
to have all of the rights and obligations of Parent set forth herein.
Section 12.9. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which taken
together shall
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constitute one and the same agreement, it being understood that all of the
parties need not sign the same counterpart.
Section 12.10. Governing Law. THIS AGREEMENT, THE LEGAL RELATIONS BETWEEN
THE PARTIES AND THE ADJUDICATION AND THE ENFORCEMENT THEREOF, SHALL BE GOVERNED
BY AND INTERPRETED AND CONSTRUED IN ACCORDANCE WITH THE SUBSTANTIVE LAWS OF THE
STATE OF RHODE ISLAND, WITHOUT REGARD TO APPLICABLE CONFLICT OF LAW.
Section 12.11. Service; Jurisdiction. Each of the parties hereto agrees to:
(i) the irrevocable designation of the Secretary of State of the State of Rhode
Island as its agent upon whom process against it may be served, and (ii)
personal jurisdiction in any action brought in any court, federal or state,
within the State of Rhode Island subject matter jurisdiction over matters
arising under this Agreement.
[Rest of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed under seal as of the date first above written.
WASHINGTON TRUST BANCORP., INC.
By: /s/ Xxxx X. Xxxxxx
_________________________________
Name: Xxxx X. Xxxxxx
Title: Chairman & Chief Executive Officer
THE WASHINGTON TRUST COMPANY
By: /s/ Xxxx X. Xxxxxx
_________________________________
Name: Xxxx X. Xxxxxx
Title: Chairman & Chief Executive Officer
PHXIMC ACQUISITION CORP.
By: /s/ Xxxx X. Xxxxxx
_________________________________
Name: Xxxx X. Xxxxxx
Title: Chairman & Chief Executive Officer
PHOENIX INVESTMENT MANAGEMENT
COMPANY, INC.
By: /s/ Xxxxx X. Xxxxxxxx
_________________________________
Name: Xxxxx X. Xxxxxxxx
Title: President
/s/ Xxxxx X. Xxxxxxxx
_____________________________________
Xxxxx X. Xxxxxxxx
/s/ Xxxxxx X. Xxxxxxx
_____________________________________
Xxxxxx X. Xxxxxxx
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