1
EXHIBIT 2.1
PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED PURSUANT TO A CONFIDENTIAL
TREATMENT REQUEST FILED WITH THE COMMISSION. ASTERISKS (*) IDENTIFY WHERE SUCH
CONFIDENTIAL INFORMATION HAS BEEN OMITTED. THE OMITTED PORTIONS HAVE BEEN FILED
SEPARATELY WITH THE COMMISSION.
PURCHASE AGREEMENT
by and among
AFFILIATED MANAGERS GROUP, INC.
as "Buyer"
TWEEDY, XXXXXX COMPANY L.P.
the "Company"
and
The Partners of the Company
August 15, 1997
2
PURCHASE AGREEMENT
INDEX
Page
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SECTION 1. SALE OF INTEREST AND PURCHASE PRICE......................................................1
1.1 Sale and Purchase........................................................................1
1.2 Calculation of Purchased Interest and Purchase Price.....................................2
1.3 Time and Place of Closing................................................................5
1.4 Further Assurances.......................................................................5
1.5 Transfer Taxes...........................................................................5
1.6 Additional Consents......................................................................6
1.7 Diligence; ****..........................................................................6
1.8 Purchase Price Allocation................................................................6
SECTION 2. CONVERSION INTO LLC AND EFFECTIVENESS OF LLC
AGREEMENT................................................................................7
2.1 Conversion...............................................................................7
2.2 Effectiveness of LLC Agreement...........................................................7
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE PARTNERS...........................................7
3.1 Making of Representations and Warranties.................................................7
3.2 Organization and Qualification of the Company............................................7
3.3 Capitalization; Beneficial Ownership.....................................................8
3.4 Subsidiaries.............................................................................8
3.5 Authority................................................................................8
3.6 Real and Personal Property...............................................................9
3.7 Assets Under Management.................................................................10
3.8 Financial Statements....................................................................11
3.9 Taxes...................................................................................11
3.10 Accounts Receivable.....................................................................12
3.11 Absence of Certain Changes..............................................................13
3.12 Ordinary Course.........................................................................13
3.13 Banking Relations.......................................................................13
3.14 Intellectual Property...................................................................13
3.15 Contracts...............................................................................14
3.16 Litigation..............................................................................15
3.17 Compliance with Laws....................................................................16
3.18 Business; Registrations.................................................................17
3.19 Insurance...............................................................................18
3.20 Powers of Attorney......................................................................18
3.21 Finder's Fee............................................................................18
(i)
3
Page
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3.22 Corporate Records; Copies of Documents..................................................18
3.23 Transactions with Interested Persons....................................................19
3.24 Employee Benefit Programs...............................................................19
3.25 Directors, Officers and Employees.......................................................21
3.26 Code of Ethics..........................................................................22
3.27 Certain Representations and Warranties as to Private Funds..............................22
3.28 Certain Representations and Warranties as to the Mutual Funds...........................24
3.29 Certain Representations and Warranties as to the Offshore Funds and
Offshore Related Partnerships...........................................................27
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE PARTNERS.................................................29
4.1 Authority...............................................................................29
4.2 Ownership of LLC Interests..............................................................30
4.3 Finder's Fee............................................................................30
4.4 Investment Advisory and Brokerage Representation........................................30
4.5 Agreements..............................................................................30
4.6 Employment Data.........................................................................30
SECTION 5. COVENANTS OF THE COMPANY AND THE PARTNERS...............................................31
5.1 Making of Covenants and Agreements......................................................31
5.2 Client Consents.........................................................................31
5.3 Filings and Regulatory Authorizations...................................................32
5.4 Authorization from Others...............................................................33
5.5 Conduct of Business.....................................................................33
5.6 Financial Statements....................................................................34
5.7 Preservation of Business and Assets.....................................................34
5.8 Access..................................................................................35
5.9 Consummation of Agreement...............................................................35
5.10 Cooperation of the Company and Partners.................................................35
5.11 No Solicitation of Other Offers.........................................................35
5.12 Confidentiality.........................................................................35
5.13 Policies and Procedure..................................................................36
5.14 Notification of Certain Matters.........................................................36
5.15 Amendment of Offshore Fund Organizational Documents.....................................36
5.16 Non-Solicitation/Non-Disclosure Agreements..............................................36
SECTION 6. REPRESENTATIONS AND WARRANTIES OF BUYER.................................................36
6.1 Making of Representations and Warranties................................................36
6.2 Organization of Buyer...................................................................37
6.3 Authority of Buyer......................................................................37
(ii)
4
Page
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6.4 Litigation..............................................................................37
6.5 Finder's Fee............................................................................37
6.6 Investment Intent.......................................................................37
6.7 Financial Statements....................................................................38
6.8 Compliance with Laws....................................................................38
SECTION 7. COVENANTS OF BUYER......................................................................38
7.1 Making of Covenants and Agreement.......................................................38
7.2 Confidentiality.........................................................................38
7.3 Consummation of Agreement...............................................................39
7.4 Cooperation of Buyer....................................................................39
7.5 Notification of Certain Matters.........................................................39
SECTION 8. CONDITIONS TO THE OBLIGATIONS OF BUYER..................................................39
8.1 Litigation; No Opposition...............................................................39
8.2 Representations, Warranties and Covenants...............................................40
8.3 Client Consents.........................................................................43
8.4 Registration as an Investment Adviser and Registration of Investment Adviser
Representatives.........................................................................43
8.5 Registration as a Broker-Dealer and Registration of Registered
Representatives.........................................................................44
8.6 Other Approvals.........................................................................44
8.7 Conversion..............................................................................44
8.8 LLC Agreement...........................................................................44
8.9 Employment Agreements...................................................................44
8.10 Intentionally Omitted...................................................................44
8.11 Agreements with Respect to Private Funds................................................44
8.12 Agreements with Respect to Offshore Funds...............................................45
8.13 Capitalization, Net Worth and Working Capital of the LLC................................45
8.14 Delivery................................................................................45
8.15 Escrow Agreement........................................................................46
8.16 Evidence of Insurability................................................................47
8.17 Insurance Policies......................................................................47
8.18 Material Adverse Change.................................................................47
SECTION 9. CONDITIONS TO OBLIGATIONS OF THE COMPANY AND THE
PARTNERS................................................................................47
9.1 No Litigation; No Opposition............................................................47
9.2 Representations, Warranties and Covenants...............................................47
(iii)
5
Page
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9.3 Client Consent and Approvals............................................................48
9.4 Delivery................................................................................48
SECTION 10. TERMINATION OF AGREEMENT; RIGHTS TO PROCEED...................................................49
10.1 Termination.............................................................................49
10.2 Effect of Termination...................................................................50
10.3 Right to Proceed........................................................................50
SECTION 11. RIGHTS AND OBLIGATIONS SUBSEQUENT TO CLOSING..................................................50
11.1 Survival of Representations, Warranties and Covenants...................................50
11.2 Regulatory Filings......................................................................50
11.3 Covenants With Respect to Section 15(f) of the
Investment Company Act .................................................................51
11.4 Agreement of Certain Partners...........................................................51
SECTION 12. INDEMNIFICATION...............................................................................52
12.1 Indemnification by the Partners.........................................................52
12.2 Limitations on Indemnification by the Partners..........................................53
12.3 Indemnification by Buyer................................................................54
12.4 Limitation on Indemnification by Buyer..................................................54
12.5 Notice; Defense of Claims...............................................................55
12.6 Satisfaction of the Partners' Indemnification Obligations...............................55
12.7 Exclusive Remedy........................................................................56
SECTION 13. DEFINITIONS...................................................................................56
13.1 Definitions.............................................................................56
SECTION 14. MISCELLANEOUS.................................................................................62
14.1 Fees and Expenses.......................................................................62
14.2 Dispute Resolution......................................................................62
14.3 Waivers.................................................................................63
14.4 Governing Law...........................................................................63
14.5 Notices.................................................................................63
14.6 Entire Agreement........................................................................64
14.7 Assignability; Binding Effect...........................................................65
14.8 Amendments..............................................................................65
14.9 Consent to Jurisdiction.................................................................65
14.10 Captions and Gender.....................................................................65
(iv)
6
Page
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14.11 Execution in Counterparts...............................................................66
14.12 Publicity and Disclosures...............................................................66
(v)
7
EXHIBITS
Exhibit 2.1A - Form of Certificate of Conversion
Exhibit 2.1B - Form of Certificate of Formation
Exhibit 2.2 - Form of LLC Agreement
Exhibit 5.16 - Form of Non-Solicitation/Non-Disclosure Agreement
Exhibit 8.9 - Form of Employment Agreement
Exhibit 8.14(g) - Form of Release
(vi)
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SCHEDULES ON AUGUST , 1997
Schedule 1.1 - Allocation of LLC Interest Purchase Price
Schedule 1.2 - Calculation of Gross Revenues and Related Percentages
Schedule 3.3(b) - Capitalization Prior to and Following Conversion
Schedule 3.8(a) - Company's Financial Statements
Schedule 6.7 - Buyer's Financial Statements
(vii)
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PURCHASE AGREEMENT
AGREEMENT entered into as of August 15, 1997, by and among Affiliated
Managers Group, Inc., a Delaware corporation ("Buyer"), Tweedy, Xxxxxx Company
L.P., a Delaware limited partnership, Xxxxxxxxxxx X. Xxxxxx, Xxxxxxx X. Xxxxxx,
Xxxx X. Xxxxxx and Xxxxx X. Xxxxx, Xx. (together, the "Partners" and, each
individually, a "Partner").
W I T N E S S E T H:
WHEREAS, the Company is engaged in the business of providing investment
management and advisory services to private accounts of certain institutional
and individual investors and public and private investment companies, and
effecting transactions in securities in connection therewith;
WHEREAS, the Partners own of record and beneficially all of the issued
and outstanding interests of the Company, consisting of general partner
interests and limited partner interests representing in the aggregate one
hundred percent of the capital and all rights to profits of the Company;
WHEREAS, the parties hereto desire and intend, and it is a condition
precedent to the obligations of Buyer hereunder, that, the Company will convert,
and the Partners will cause the Company to be converted, into Tweedy, Xxxxxx
Company LLC, a Delaware limited liability company (the "LLC"), as more fully
described below;
WHEREAS, the parties hereto desire to enter into this agreement
providing for the purchase by Buyer of certain interests in the LLC and further
desire that, in connection therewith, the LLC Agreement (as this and other
capitalized terms are defined in Section 13.1) become effective; and
WHEREAS, to induce Buyer to enter into this Agreement, and to receive
the benefits that will accrue to them if Buyer purchases interests in the LLC,
the Company and the Partners have agreed to make certain representations,
warranties and covenants as set forth herein.
NOW, THEREFORE, to consummate such purchase and sale and in
consideration of the mutual agreements set forth herein and other valuable
consideration, the receipt and adequacy whereof are hereby acknowledged, the
parties hereto agree as follows:
SECTION 1. SALE OF INTEREST AND PURCHASE PRICE.
1.1 SALE AND PURCHASE.
(a) Subject to the terms, provisions and conditions contained in this
Agreement and on the basis of the representations, warranties and covenants
herein set forth, each Partner hereby agrees to sell and deliver to Buyer, free
and clear of any restrictions, liens, claims, charges, security interests,
assignments, mortgages, deposit arrangements, pledges or encumbrances of any
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kind or nature whatsoever (collectively, "Claims"), other than Claims set forth
in the LLC Agreement, and Buyer hereby agrees to purchase from each Partner, the
portion of the LLC Capital Account and Class A LLC Points of such Partner at the
time of the Closing that is equal to the product obtained by multiplying (i) the
percentage set forth opposite such Partner's name on Schedule 1.1 hereto, by
(ii) the Purchased Percentage calculated pursuant to Section 1.2 below
(together, and in the aggregate for all of the Partners, the "Purchased LLC
Interest"), for a price equal to the product obtained by multiplying (I) the
percentage set forth opposite such Seller's name on Schedule 1.1 hereto, by (II)
the LLC Interest Purchase Price calculated pursuant to Section 1.2 below.
(b) The entire LLC Interest Purchase Price shall be paid in
cash at the Closing; provided, however, that a pro rata portion of the LLC
Interest Purchase Price payable to each Partner, with the aggregate amount
being ********** dollars ($**) of such LLC Interest Purchase Price for all
Partners, shall be placed into and held in escrow as contemplated in the
Escrow Agreement and Section 12.2(a).
1.2 CALCULATION OF PURCHASED INTEREST AND PURCHASE PRICE.
(a) Subject to adjustment as set forth below, the "Free Cash
Flow Percentage" shall be seventy percent (70%), the "Purchased Percentage"
shall be eighty percent (80%) and the "LLC Interest Purchase Price" shall be
three hundred million dollars ($300,000,000).
(b) Set forth as Schedule 1.2 hereto is a detailed calculation
of Gross Revenues as of June 30, 1997 and the resulting Free Cash Flow
Percentage, Purchased Percentage and LLC Interest Purchase Price.
**************** [The remainder of this section (approximately 3 pages) has
been omitted pursuant to the confidential treatment request referred to on the
cover page hereto. The omitted portions have been filed separately with the
Commission.]***************
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1.3 TIME AND PLACE OF CLOSING. The closing of the purchase and sale
provided for in this Agreement (herein called the "Closing") shall be held at
the offices of Xxxxxxx, Procter & Xxxx LLP at Exchange Place, Boston,
Massachusetts at 10:00 a.m. local time on the date of the Closing, which shall
be five (5) business days after the fulfillment or waiver of each of the
conditions set forth in Sections 8 (other than to the extent delivery at the
Closing is specified herein) and 9 (other than to the extent delivery at the
Closing is specified herein) hereof or at such other place, or an earlier or
later date or time as may be mutually agreed upon by Buyer and the Company.
1.4 FURTHER ASSURANCES. The Partners shall and the LLC shall (and the
Partners shall use all commercially reasonable efforts to cause the LLC to),
from time to time after the Closing, at the request of Buyer and without further
consideration, execute and deliver further instruments of transfer and
assignment and take such other action as Buyer may reasonably require to more
effectively transfer and assign to, and vest in, Buyer the Purchased LLC
Interest and all rights thereto, and to fully implement the provisions of this
Agreement.
1.5 TRANSFER TAXES. All transfer Taxes under applicable law incurred in
connection with the sale and transfer of the Purchased LLC Interest under this
Agreement will be borne and paid fifty percent (50%) by the Partners (pro rata
in accordance with the percentages of the LLC Interest Purchase Price to be
received by them) and fifty percent (50%) by Buyer, and the Partners (jointly
and severally) or Buyer, as the case may be, shall promptly reimburse the other
for any such Tax that the Company or the Partners, on the one hand, or Buyer on
the other hand, is required to pay under applicable law.
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1.6 ADDITIONAL CONSENTS. In the event that any ERISA Client whose
contract either prohibits assignment or terminates by its terms upon
consummation of the transactions contemplated hereby did not Consent at or prior
to the Closing (and Buyer in its sole discretion did not elect to treat such
Client as having Consented at the Closing), then (a) such ERISA Client shall be
treated, for purposes of calculating the Purchase Price, as having withdrawn its
assets, but the Company may continue to provide services to such ERISA Client,
subject in each case to the provisions of this Section 1.6, and an appropriate
modification of the LLC Agreement shall be made to allocate revenues
attributable to such contract of such Client for the sole benefit of the
Non-Manager Members (subject to reallocation as provided in clause (b) below)
and (b) if as of the date that is six (6) months after the date of the Closing,
such Client remains a Client of the Company and has made payments of advisory
fees to the Company since the Closing, then such Client shall remain a Client of
the Company thereafter, all revenues attributable to such contract of such
Client since the Closing shall be reallocated for the benefit of all Members of
the Company and Gross Revenues shall be recalculated, with appropriate
adjustments (consistent with the methodology set forth in Section 1.2 and based
upon the revenues attributable to such contract of such Client at the Closing)
made to the Purchased Percentage and the Free Cash Flow Percentage as determined
by the mutual agreement of the Partners and Buyer, unless (i) Buyer and the
Partners agree otherwise or (ii) Buyer so determines and the Partners are unable
to provide Buyer with an opinion of counsel reasonably satisfactory in form and
substance to Buyer to the effect that under applicable law, an agreement between
the Company and the Client substantially in accordance with the terms of the
written agreement in effect immediately prior to the Closing is in full force
and effect and is valid, binding and enforceable.
1.7 Diligence *****. As promptly as practicable after the date hereof,
and in any event not more than one (1) day after the date hereof, the Company
and the Partners shall permit Buyer and its agents to commence further due
diligence investigations at the offices of the Company and shall make available
to Buyer and its agents all information specifically referenced herein and all
such information and access to employees as may be reasonably requested by
Buyer and its agents. *** [The remainder of this section has been omitted
pursuant to the confidential treatment request referred to on the cover page
hereto. The contents have been filed separately with the Commission.] ***
1.8 PURCHASE PRICE ALLOCATION.
(a) Each of the Partners and Buyer hereby acknowledge and
agree that the LLC Interest Purchase Price is allocable, in its entirety, to (i)
the cash, cash items, accounts receivable, tangible personal property and other
balance sheet items of the Company (which shall be valued at fair market value
as of the Closing) and (ii) the goodwill associated with the business of the
Company (which shall represent the residual balance of the LLC Interest Purchase
Price after taking into account balance sheet items).
(b) Each of the Partners and Buyer hereby agree to take no
position inconsistent with the acknowledgment and agreement set forth in
subparagraph (a) of this Section 1.8 including, without limitation, on any Tax
return or report (including information returns, declarations and reports) or in
any audit or judicial or administrative proceedings before any Taxing Authority
or court of law or otherwise.
6
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SECTION 2. CONVERSION INTO LLC AND EFFECTIVENESS OF LLC AGREEMENT.
2.1 CONVERSION. Immediately prior to the Closing, the Company shall
convert into the LLC (the "Conversion") in the manner contemplated by Section
18-214 of the Delaware Act, and a certificate of conversion to a limited
liability company in the form attached hereto as Exhibit 2.1A (the "Certificate
of Conversion") and a certificate of formation of a limited liability company in
the form attached hereto as Exhibit 2.1B (the "Certificate of Formation") shall
be filed with the Secretary of State of the State of Delaware and shall become
effective.
2.2 EFFECTIVENESS OF LLC AGREEMENT. Simultaneously with the Closing,
the LLC Agreement in substantially the form attached hereto as Exhibit 2.2 shall
become effective as the operating agreement of the LLC.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE PARTNERS.
3.1 MAKING OF REPRESENTATIONS AND WARRANTIES. As a material inducement
to Buyer to enter into this Agreement and consummate the transactions
contemplated hereby, each Partner hereby makes to Buyer the representations and
warranties contained in this Section 3, which shall be subject to such
exceptions as may be disclosed in Schedules delivered to Buyer pursuant to
Section 1.7 of this Agreement. None of the Partners shall have any right of
indemnity or contribution from the Company or any other right against the
Company with respect to any breach of a representation or warranty by any
Partner hereunder.
3.2 ORGANIZATION AND QUALIFICATION OF THE COMPANY.
(a) The Company is a limited partnership duly organized,
validly existing and in good standing under the laws of the State of Delaware
with full power and authority to own or lease its properties and to conduct its
business in the manner and in the places where such properties are owned or
leased or such business is currently conducted or proposed to be conducted. The
copies of the Company's Certificate of Limited Partnership, as amended to date
(the "Certificate of Limited Partnership"), and of the Company's Agreement of
Limited Partnership, as amended and/or restated to date ("Agreement of Limited
Partnership"), each certified by the Company's Secretary, and heretofore
delivered to Buyer's counsel, are complete and correct, and no amendments
thereto are pending.
(b) The Company is not in violation of any term of its
Organizational Documents.
(c) The Company is duly qualified to do business as a foreign
entity under the laws of each jurisdiction in which the nature of its business
or the ownership or leasing of its properties requires such qualification,
except for those jurisdictions where the failure to so qualify, individually or
in the aggregate, would not have a Material Adverse Effect on the Company.
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3.3 CAPITALIZATION; BENEFICIAL OWNERSHIP.
(a) The authorized interests of the Company are all duly and
validly authorized, issued, outstanding and fully paid. There are no outstanding
options, warrants, rights, commitments, preemptive rights or agreements of any
kind for the issuance or sale of, or outstanding securities convertible into,
any additional interests of any class, series or type of the Company. None of
the Company's interests has been issued in violation of any federal or state
law.
(b) Each Partner owns beneficially and of record the interests
in the Company set forth opposite such Partner's name in Schedule 3.3(b) hereto,
free and clear of any Claims. The Partners are the only beneficial or record
holders of the Company's interests, and the interests shown in Schedule 3.3(b)
are the only interests of the Company held by each Partner or with respect to
which such Partner has any rights. Except as set forth in Schedule 3.3(b)
attached hereto, there are no voting trusts, voting agreements, proxies or other
agreements, instruments or undertakings with respect to the voting of the
interests of the Company to which the Company or any of the Partners is a party.
(c) Except as set forth in this Agreement or in the LLC
Agreement, there are no rights, commitments, agreements or understandings
obligating, or which might obligate the Company, any of the Partners or, to the
knowledge of the Company or any Partner after Due Inquiry, any other Person, to
issue, transfer, sell or redeem any securities or interests in the Company.
3.4 SUBSIDIARIES. The Company has no, nor in the last six (6) year(s)
has it had any, subsidiaries or equity investments in any other Person.
3.5 AUTHORITY. The Company has full right, authority and power to enter
into this Agreement and each contract or agreement specifically referred to in,
or executed and delivered by the Company pursuant to, this Agreement and to
carry out the transactions contemplated hereby and thereby, including without
limitation the Conversion. The execution, delivery and performance by the
Company of this Agreement and each such other agreement, document and instrument
have been duly authorized by all necessary action of the Company and the
Partners, and no other action on the part of the Company or the Partners is
required in connection therewith.
This Agreement and each contract or agreement specifically referenced
in, or executed and delivered by the Company pursuant to, this Agreement
constitutes, or when executed and delivered will constitute, valid and binding
obligations of the Company enforceable against the Company in accordance with
its terms. The execution, delivery and performance by the Company of this
Agreement and each such other contract or agreement:
(a) does not violate any provision of the Organizational
Documents of the Company, each as amended and/or restated to date;
8
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(b) does not violate any laws of the United States, or any
state or other jurisdiction (domestic or foreign) applicable to the Company or
require the Company to obtain any approval, consent or waiver of, or make any
filing with, any person or entity (governmental or otherwise) that has not been
obtained or made, except as specifically identified in Schedule 3.5 or Schedule
3.7; and
(c) does not result in a breach of, constitute a default
under, accelerate any obligation under, or give rise to a right of termination
of, any agreement, contract, instrument, mortgage, lien, lease, permit,
authorization, order, writ, judgment, injunction, decree, determination or
arbitration award to which the Company is a party, or by which any property of
the Company is bound or affected, or result in the creation or imposition of any
Claim on any of the Company's assets or, except to the extent imposed pursuant
to the Organizational Documents of the Company, on any Person's interest in the
Company.
3.6 REAL AND PERSONAL PROPERTY.
(a) The Company owns no real property. All of the real
property leased by the Company is identified in Schedule 3.6(a) and except as
set forth in therein, the Company does not lease, sublease or otherwise provide
(with or without rent or other consideration and with or without a written
agreement) any interest in real property or rights in connection therewith to
any Person. All leases with respect to real property to which the Company is a
party are identified in Schedule 3.6(a), and true and complete copies thereof
have been delivered to Buyer. Each of such leases has been duly authorized and
executed by the parties thereto and is in full force and effect. The Company is
not in default under any of such leases, nor has any event occurred which, with
notice or the passage of time, or both, would give rise to such a default.
(b) Attached hereto as Schedule 3.6(b) is a list of all the
assets of the Company including Intellectual Property. The Company has
separately provided Buyer the tax basis of each such asset. The Company owns all
its assets free and clear of any Claims and such assets are all of the assets
necessary for the conduct of the business of the Company as currently conducted
and for the conduct of such business by the LLC immediately following the
Conversion and the Closing.
3.7 ASSETS UNDER MANAGEMENT.
(a) The aggregate assets under management by the Company as of
December 31, 1996 and June 30, 1997, are accurately set forth in Schedule 3.7
hereto. In addition, set forth in Schedule 3.7 is a list as of December 31, 1996
and June 30, 1997, of all investment management, advisory or sub-advisory
contracts setting forth the name of the Client under each such contract, the
amount of assets under management with respect to each such contract, the fee
schedule in effect with respect to each such contract, the net contributions or
withdrawals from December 31, 1996 through June 30, 1997 and any material fee
adjustments or material contributions to or withdrawals from assets under
management (it being understood and agreed that contributions or withdrawals
greater than one million dollars ($1,000,000) are material)
9
16
implemented since June 30, 1997, or presently proposed to be instituted, the
consent required for the assignment of each such contract other than those that
by their terms terminate upon assignment (which are so identified), and the
country, if other than the United States of America, of which the Client is a
citizen, if such country is known to the Company. Schedule 3.7 also includes a
separate list of all contracts pursuant to which the Company has agreed to
provide Brokerage Services but does not provide Investment Management Services.
There are no contracts, arrangements or understandings pursuant to which the
Company has undertaken or agreed to cap, waive or reimburse any or all fees or
charges payable by any of the Clients set forth in Schedule 3.7 or pursuant to
any of the contracts set forth in Schedule 3.7. No Client of the Company has
expressed an intention to terminate or reduce its investment or brokerage
relationship with the Company, or adjust the fee schedule with respect to any
contract in a manner which would reduce the fee to the Company (or, after giving
effect to the Conversion, the fee to the LLC) and no fact is known to the
Company or any Partner that adversely affects or would adversely affect any of
the contracts set forth in Schedule 3.7.
(b) Each account to which the Company provides Investment
Management Services that is (i) an employee benefit plan, as defined in Section
3(3) of ERISA that is subject to Title I of ERISA; (ii) a person acting on
behalf of such a plan; or (iii) an entity whose assets include the assets of
such a plan within the meaning of ERISA and applicable regulations (hereinafter
referred to as an "ERISA Client") have been managed by the Company such that the
Company in the exercise of such management is in compliance in all material
respects with the applicable requirements of ERISA.
(c) Set forth in Schedule 3.7 is a list of each Client with
which the Company has a fee based on performance or otherwise providing for
compensation on the basis of a share of capital gains upon, or capital
appreciation of, the funds (or any portion thereof) of any Client, together with
a complete description of such fee or compensation and a calculation thereof for
each of the last three completed years and the most recently completed period.
3.8 FINANCIAL STATEMENTS.
(a) The Company has delivered to Buyer the following financial
statements, copies of which are attached hereto as Schedule 3.8:
(i) Audited statements of financial condition of the
Company at September 30, 1994, September 30, 1995 and September 30,
1996, and audited statements of income, changes in partners' capital
and cash flows for each of the three (3) years then ended. The audited
statement of financial condition of the Company at September 30, 1996
is referred to hereinafter as the "Base Balance Sheet."
(ii) Unaudited statements of financial condition of
the Company at December 31, 1996, March 31, 1997 and June 30, 1997 and
statements of income, changes in partners' capital and cash flows for
each period then ended, certified by the Company's senior financial
officer.
10
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All of the foregoing financial statements have been prepared in
accordance with GAAP using the accrual method of accounting, applied
consistently during the periods covered thereby (except that the Company's
unaudited financial statements do not include footnote disclosure and are
subject to normal, immaterial audit adjustments), are complete and correct to
the knowledge of the Company and each Partner after Due Inquiry, and (subject to
the foregoing exceptions with respect to unaudited financial statements) present
fairly the financial condition of the Company at the dates of such statements
and the results of its operations for the periods covered thereby.
(b) The Company does not and, as of the date of the Base
Balance Sheet, did not have any liabilities of any nature, whether accrued,
absolute, contingent or otherwise, asserted or unasserted, known or unknown
(including, without limitation, liabilities as guarantor or otherwise with
respect to obligations of others, liabilities for Taxes due or then accrued or
to become due, or contingent or potential liabilities relating to activities of
the Company or the conduct of its businesses prior to the applicable date
regardless of whether claims in respect thereof had been asserted as of such
date), except: (i) liabilities stated or adequately reserved against on the Base
Balance Sheet or the notes thereto; (ii) liabilities reflected in Schedules
furnished to Buyer under Section 1.7 hereof, effective as of the date hereof; or
(iii) immaterial liabilities incurred or recognized in the ordinary course of
business of the Company after the date of, and not in breach of any of the terms
of, this Agreement.
3.9 TAXES.
(a) The Company has paid or caused to be paid all federal,
state, local, foreign or add-on and other taxes, customs duties, government fees
or like amount, including, without limitation, income taxes, estimated taxes,
alternative minimum taxes, franchise taxes, sales taxes, use taxes, ad valorem
or value added taxes, capital stock taxes, employment and payroll-related taxes,
withholding taxes, and transfer taxes, stamp taxes, occupation taxes, windfall
projects taxes, and all deficiencies, or other additions to taxes, interest,
fines and penalties owed by it (collectively, "Taxes"), required to be paid by
it, whether disputed or not. The unpaid Taxes of the Company (i) did not, as of
September 30, 1996, exceed the reserve for tax liability (rather than the
reserve for deferred Taxes established to reflect timing differences between
book and Tax income) set forth in the Base Balance Sheet (rather than in any
notes thereto) and (ii) do not exceed that reserve as adjusted for the passage
of time through the date hereof and the date of the Closing in accordance with
the past custom and practice of the Company filing its Tax Returns.
(b) The Company has, in accordance with applicable law, filed
all federal, state, local and foreign Tax returns required to be filed by it,
and all such returns correctly and accurately set forth the amount of any Taxes
relating to the applicable period. A list of all federal, state, local and
foreign income Tax returns filed with respect to the Company for taxable periods
ended on or after December 31, 1990, is set forth in Schedule 3.9 attached
hereto, and such Schedule indicates those returns that have been audited or
currently are the subject of an audit. For each taxable period of the Company
ended on or after September 30, 1990, the Company has made available to Buyer
correct and complete copies of all federal, state, local and foreign income
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Tax returns, examination reports and statements of deficiencies assessed against
or agreed to by the Company.
(c) Neither the IRS nor any other governmental authority
responsible for the imposition or collection of any Tax (a "Taxing Authority")
is now asserting or, to the knowledge of the Company or any Partner after Due
Inquiry, threatening to assert against the Company any deficiency or claim for
additional Taxes. No claim has ever been made by a Taxing Authority in a
jurisdiction where the Company does not file reports and returns that the
Company is or may be subject to taxation by that jurisdiction. There are no
security interests on any of the assets of the Company that arose in connection
with any failure (or alleged failure) to pay any Taxes.
(d) There has not been any audit of any tax return filed by
the Company for any taxable period ending on or after December 30, 1990, no such
audit is in progress, and the Company has not been notified by any Taxing
Authority that any such audit is contemplated or pending. No extension of time
with respect to any date on which a Tax return was or is to be filed by the
Company is in force, and no waiver or agreement by the Company is in force for
the extension of time for the assessment or payment of any Taxes.
(e) The Company has never been (and has never had any
liability for unpaid Taxes because it once was) a member of an "affiliated
group" (as defined in Section 1504(a) of the Code). The Company has never filed,
and has never been required to file, a consolidated, combined or unitary Tax
return with any other entity. The Company is not a party to any Tax sharing
agreement.
3.10 ACCOUNTS RECEIVABLE. All of the accounts receivable of the Company
shown or reflected on the Company's statement of financial condition as of June
30, 1997, included as part of Schedule 3.8, or existing at the date this
representation is given (less the reserve for bad debts set forth on the
Company's statement of financial condition as of June 30, 1997 included as part
of Schedule 3.8) are valid and enforceable claims and subject to no set off or
counterclaim. The Company has no accounts or loans receivable from any person,
firm or corporation or other entity which is affiliated with the Company or from
any officer, partner or employee of the Company or any member of the Immediate
Family of any Partner.
3.11 ABSENCE OF CERTAIN CHANGES. Since the date of the Base Balance
Sheet there has not been any:
(a) change in the condition (financial or otherwise) of
properties, assets, liabilities, business, or operations of the Company, which
change by itself or in conjunction with all other such changes, whether or not
arising in the ordinary course of business, has had or could reasonably be
expected to have a Material Adverse Effect on the Company.
(b) occurrence, activity, omission or failure to act which
would require the consent of Buyer as Manager Member under Section 3.1(g) of,
would be prohibited under, or would be a violation of, the LLC Agreement if the
LLC Agreement were in effect at the time;
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(c) obligation or liability incurred by the Company to any of
its officers, partners, members or employees, or any member of the Immediate
Family of any Partner, or any loans or advances made by the Company to any of
their respective officers, partners, members or employees or any member of the
Immediate Family of any Partner that remain outstanding;
(d) change in accounting methods or practices, or billing or
collection policies used by the Company; or
(e) agreement or understanding, whether in writing or
otherwise, for the Company to take any of the actions specified in paragraphs
(a) through (d) above.
3.12 ORDINARY COURSE. Since the date of the Base Balance Sheet, other
than with respect to transactions specifically contemplated herein, the Company
has conducted its business only in the ordinary course and consistently with its
prior practices.
3.13 BANKING RELATIONS. All of the arrangements which the Company has
with any banking institution are completely and accurately described in Schedule
3.13 attached hereto, indicating with respect to each such arrangement the type
of arrangement maintained (such as checking account, borrowing arrangements,
etc.) and the person or persons authorized in respect thereof.
3.14 INTELLECTUAL PROPERTY.
(a) The Company has exclusive ownership of, or license to use,
all patent, copyright, trade secret, trademark, trade name, service xxxx,
formulas, designs, inventions or other proprietary rights (collectively,
"Intellectual Property") used or to be used in the business of the Company as
presently conducted or contemplated to be conducted by the LLC immediately after
giving effect to the Conversion. All of the rights of the Company in any such
Intellectual Property owned by the Company are freely transferable. No
proceedings have been instituted, or are pending or threatened, which challenge
the rights of the Company of any such Intellectual Property. The Company has the
right to use all customer lists, investment or other processes, computer
software, systems, data compilations, research results and other information
required for, or incident to, its services or its business as presently
conducted or contemplated to be conducted by the LLC immediately after giving
effect to the Conversion. Except for readily available Intellectual Property
licensed from others customer lists and related data and rights in and to the
name "Xxxxxx Xxxxxx," the Company has no Intellectual Property material to its
business.
(b) Neither the Company nor any Partner has any knowledge
after Due Inquiry of any infringement by others of any Intellectual Property
rights of the Company.
(c) The present and contemplated business, activities and
products of the Company, do not infringe any rights of any other Person in
Intellectual Property. No proceeding charging the Company with infringement of
any Intellectual Property of any other Person has been
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filed or is threatened to be filed. The Company is not making unauthorized use
of any confidential information or trade secrets of any Person, including
without limitation, any former employer of any past or present employee of the
Company. Neither the Company nor, to the knowledge of the Company and each
Partner, any of the Company's employees have any agreements or arrangements with
any Persons other than the Company related to confidential information or trade
secrets of such Persons or restricting any such employee's ability to engage in
business activities of any nature. The activities of the employees on behalf of
the Company do not violate any such agreements or arrangements known to the
Company.
3.15 CONTRACTS. Except for contracts, commitments, plans, agreements
and licenses described in Schedule 3.7, (true and complete copies of which will
have been made available to Buyer on or prior to the Delivery Date), the Company
is not a party to or subject to any:
(a) investment management or investment advisory or
sub-advisory contract or any other contract for the provision of Investment
Management Services or Brokerage Services;
(b) any agreement with respect to solicitation of prospective
Clients or of prospective investors for the Mutual Funds;
(c) plan or contract providing for bonuses, pensions, options,
stock (or beneficial interest) purchases (or other securities or phantom equity
purchases), deferred compensation, retirement payments, profit sharing, or the
like;
(d) employment contract, other than contracts terminable at
will by the Company without liability for any penalty or severance payment;
(e) contract for services involving payments by the Company in
excess of one hundred thousand dollars ($100,000) per year, which is not
terminable by the Company without liability for any termination payment on not
more than thirty (30) days prior notice;
(f) contract or agreement or series of related contracts or
agreements for the purchase of any assets, material or equipment except purchase
orders in the ordinary course of business for less than one hundred thousand
dollars ($100,000) per contract or agreement or series of related contracts or
agreements;
(g) contract containing covenants limiting the freedom of the
Company (or its Affiliates) to compete in any line of business or with any
person or entity;
(h) agreement providing for the borrowing or lending of money,
and the Company has no obligations, except as disclosed in the Base Balance
Sheet: (i) for borrowed money, (ii) evidenced by bonds, debentures, notes or
similar instruments, (iii) to pay the deferred purchase price of property or
services, (iv) under leases that would, in accordance with GAAP, appear on the
balance sheet of the lessee as a liability, (v) secured by a Claim, (vi) in
respect of letters of credit, or bankers acceptances, contingent or otherwise,
or (vii) in respect of any
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guaranty or endorsement or other obligations to be liable for the debts of
another person or entity; or
(i) other material contract or agreement to which the Company
is a party or by which it is bound.
Each of the contracts described in Schedule 3.6(a), Schedule 3.7,
Schedule 3.15, Schedule 3.24 and Schedule 3.25 is valid and effective in
accordance with its respective terms, and there is not, under any such contract,
an existing breach by the Company or event which, with the giving of notice or
the lapse of time or both, would become such a breach. Assuming that the
Consents set forth in Schedule 3.5 and Schedule 3.7 have been obtained or
Comparable Contracts have been entered into, and after giving effect to the
Conversion and the Closing, each such contract will remain valid and effective
in accordance with its respective terms with the LLC having succeeded to all the
rights and obligations of the Company thereunder, and the LLC will be entitled
to all rights and remedies thereunder to which the Company is entitled on the
date hereof. The Company has complied and is in compliance with the Client's
guidelines and restrictions set forth in any contract described in Schedule 3.7,
including, without limitation, any limitation set forth in the applicable
prospectus, offering memorandum or marketing material for a Private Fund, Mutual
Fund or Offshore Fund or governing documents for any Client delivered to the
Company by the Client. The Company is not bound by any agreement, contract or
arrangement the performance of which by the Company or its agents could have a
Material Adverse Effect on the condition (financial or otherwise), properties,
assets, liabilities, business, operations or prospects of Buyer or the Company.
3.16 LITIGATION. There is no litigation or legal (or other) action,
suit, proceeding or, to the knowledge of the Company and each Partner after Due
Inquiry, investigation, at law or in equity, or before any federal, state,
municipal or other governmental department, commission, bureau, board, agency or
instrumentality, domestic or foreign (including, without limitation, any
voluntary or involuntary proceedings under the Bankruptcy Code or any action,
suit, proceeding or investigation under any foreign, federal or state securities
law, rule or regulation), in which the Company or any officer, partner, member
or employee thereof is engaged, or, to the knowledge of the Company and each
Partner after Due Inquiry, with which any of them is threatened, in connection
with the business, affairs, properties or assets of the Company, or which call
into question the validity or hinder the enforceability or performance of this
Agreement, or of the other contracts or agreements, specifically referenced
herein and the transactions contemplated hereby and thereby. There are no
proceedings pending, or to the knowledge of the Company or any of the Partners
after Due Inquiry, threatened, relating to the termination of, or limitation of,
the rights of the Company under its registration under the Advisers Act as an
investment adviser, its registration under the Exchange Act as a broker-dealer,
its membership in any exchange (as defined under the Exchange Act) or other self
regulatory organization or any similar or related rights under any registrations
or qualifications with various self regulatory bodies, states or other
jurisdictions.
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3.17 COMPLIANCE WITH LAWS. The Company and each of the Partners is, and
at all times has been, in material compliance with all laws and governmental
rules and regulations, domestic or foreign to the extent either (a) such laws,
rules and regulations are applicable to the activities of the Company or such
Partner on behalf of the Company or (b) the violation of such laws, rules and
regulations could give rise to Material Adverse Effect on the Company or would
result in a disqualification under Section 9(a) of the Investment Company Act or
require an affirmative answer to any of the questions in Item 11 of Part I of
the Company's Form ADV (or any similar or successor form) or Item 7 of the
Company's Form BD, including, without limitation: (i) the Advisers Act, the
Investment Company Act, the Exchange Act, ERISA, the Commodity Exchange Act and
the Securities Act and the regulations promulgated under each of them; (ii) the
rules and regulations of the IML and the BMA; (iii) the by-laws, rules and
regulations of self-regulatory organizations including without limitation the
NASD and each applicable exchange (as defined under the Exchange Act); and (iv)
all other foreign, federal or state securities laws and regulations applicable
to the business or affairs or properties or assets of the Company, including
without limitation the business and affairs of the Private Funds and the
Offshore Funds ((i)-(iv), collectively "Investment Laws and Regulations").
Neither the Company, nor any officer, member, partner or employee thereof, is in
default with respect to any judgment, order, writ, injunction, decree, demand or
assessment relating to any aspect of the business or affairs or properties or
assets of the Company and issued by any court or any federal, state, municipal
or other governmental agency, board, commission, bureau, instrumentality or
department, domestic or foreign, or by any self-regulatory authority. Neither
the Company nor any officer, member, partner or employee thereof, is charged or,
to the knowledge of the Company and each Partner after Due Inquiry, threatened
with, or under investigation with respect to, any violation of any provision of
foreign, federal, state, municipal or other law or any administrative rule or
regulation, domestic or foreign, including, without limitation, any Investment
Laws and Regulations relating to any aspect of the business, affairs, properties
or assets of the Company, or the transactions contemplated hereby.
3.18 BUSINESS; REGISTRATIONS.
(a) The Company is engaged solely in the business of providing
Investment Management Services and Brokerage Services. The Company does not
provide Investment Management Services to: (i) any issuer other than the Private
Funds that would be required to register as an investment company (within the
meaning of the Investment Company Act) but for the exemptions contained in
Section 3(c)(1), the final clause of Section 3(c)(3), Section 3(c)(7) or the
third or fourth clauses of Section 3(c)(11) of the Investment Company Act; (ii)
any issuer other than the Offshore Funds that is registered under the laws of
the appropriate securities regulatory authority in the jurisdiction in which the
issuer is domiciled (other than the United States or the states thereof), and is
or holds itself out as engaged primarily in the business of investing,
reinvesting or trading in securities; or (iii) any issuer other than the Mutual
Funds that is required to be registered as an investment company (within the
meaning of the Investment Company Act).
(b) The Company is duly registered as an investment adviser
under the Advisers Act. The Company is duly registered, licensed and qualified
as an investment adviser in all
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jurisdictions where such registration, licensing or qualification is required in
order to conduct its business and where the failure to be so registered,
licensed or qualified could have a Material Adverse Effect on the Company. The
Company is in compliance with all foreign, federal and state laws requiring
registration, licensing or qualification as an investment adviser. The Company
has delivered to Buyer or its representatives, true and complete copies of its
most recent Form ADV, as amended to date, and has made available copies of all
foreign and state registration forms, likewise as amended to date. The
information contained in such forms was true and complete at the time of filing
and is true and complete.
(c) The Company is a member in good standing of the NASD and
duly registered as a broker-dealer under the Exchange Act. The Company is duly
registered, licensed and qualified as a broker-dealer in all jurisdictions where
such registration, licensing or qualification is required in order to conduct
its business and where the failure to be so registered, licensed or qualified
could have a Material Adverse Effect on the Company. The Company and its
Employees do not hold any registrations, memberships or similar membership
privileges with such national securities exchange, board of trade, commodities
exchange, clearing corporation or association, securities dealers association or
similar institutions. A true and compete copy of each agreement with respect to
such registration, membership or privileges has been delivered to Buyer and each
such Agreement is a valid and binding agreement of the Company and the
applicable Employee(s), enforceable in accordance with its terms. The Company is
in compliance with all foreign, federal and state laws requiring registration,
licensing or qualification as a broker-dealer, including without limitation all
net capital requirements. The Company has delivered to Buyer or its
representatives, true and complete copies of its most recent Form BD, as amended
to date, and has made available copies of all foreign and state registration
forms, likewise as amended to date. The information contained in such forms was
true and complete at the time of filing and is true and complete.
(d) Neither the Company nor, to the knowledge of the Company
and each Partner after Due Inquiry, any person "associated" (as defined under
the Advisers Act or the Exchange Act, as appropriate) with the Company, has been
convicted of any crime or has engaged in any conduct that would be a basis for
denial, suspension or revocation of registration of an investment adviser under
Section 203(e) of the Advisers Act or Rule 206(4)-4(b) thereunder, or is
otherwise subject to "statutory disqualification" (within the meaning of the
Exchange Act), and to the knowledge of the Company and each Partner after Due
Inquiry, there is no proceeding or investigation that is reasonably likely to
become the basis for any such disqualification, denial, suspension or
revocation.
(e) Neither the Company nor any of its affiliated persons (as
defined in the Investment Company Act) is subject to any of the restrictions set
forth in Section 9(a) of the Investment Company Act.
(f) The Company has all memberships, permits, registrations,
licenses, franchises, certifications and other approvals (collectively, the
"Licenses") required from self-regulatory bodies and from foreign, federal,
state or local authorities in order for the
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Company to conduct its business. The Company is not subject to any limitation
imposed in connection with one or more of the Licenses which could have a
Material Adverse Effect on the condition (financial or otherwise), properties,
assets, liabilities, business, operations or prospects of the Company or Buyer.
Neither the Company nor any of its officers and employees is required to be
registered as an investment adviser, a broker or dealer, a commodity trading
adviser, a commodity pool operator, a futures commission merchant, an
introducing broker, a registered representative or associated person, a
counseling officer, an insurance agent, a sales person or in any similar
capacity with the SEC, the Commodity Futures Trading Commission, the National
Futures Association, the NASD, the IML, the BMA, the securities commission of
any jurisdiction or any self-regulatory organization.
3.19 INSURANCE. The Company has in full force and effect such insurance
with respect to its business, property and assets (including without limitation
errors and omissions liability insurance) as set forth in Schedule 3.19 hereto
and all bonds required by ERISA and by any contract to which the Company is a
party as set forth in Schedule 3.19 hereto. The Company is not in default under
any such insurance policy or bond.
3.20 POWERS OF ATTORNEY. The Company has not granted to any Person any
power of attorney that remains outstanding.
3.21 FINDER'S FEE. Except for fees to Xxxxxxx, Xxxxx & Co., which fees
will be paid by the Partners, neither the Company nor any Partner has incurred
or become liable for any broker's commission or finder's fee relating to or in
connection with the transactions contemplated by this Agreement.
3.22 CORPORATE RECORDS; COPIES OF DOCUMENTS. On or prior to the
Delivery Date the Company and the Partners will have made available for
inspection and copying by Buyer and its counsel true and correct copies of all
documents referred to in this Agreement or in the Schedules delivered to Buyer
in connection herewith.
3.23 TRANSACTIONS WITH INTERESTED PERSONS. Neither the Company nor any
partner, member, officer, supervisory employee or director of the Company or, to
the knowledge of the Company and each Partner after Due Inquiry, any member of
the Immediate Family of such Partner, (a) is a competitor of, or a party to any
material transaction or material contract or arrangement with, the Company, or
(b) serves as an officer or director or in another similar capacity of, any
competitor or Client of the Company, or any organization which has a material
contract or agreement with the Company or (c) owns directly or indirectly on an
individual or joint-basis, (other than in or through beneficial ownership of
less than five percent (5%) of the outstanding securities of a publicly traded
company), any interests in any competitor or any organization that has a
material contract or agreement with the Company.
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3.24 EMPLOYEE BENEFIT PROGRAMS.
(a) Schedule 3.24, lists every Employee Program (as defined
below) that has been maintained (as defined below) by the Company at any time
during the three-year period ending on the date of this Agreement.
(b) Each Employee Program which is maintained by the Company
and which is 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 for all time periods necessary for its intended
operations. No event or omission has occurred which would cause any such
Employee Program to lose its qualification under the applicable Code section.
(c) The Company does not know and has no reason to know, of
any failure of any party to comply with any laws applicable to the Employee
Programs that have been maintained by the Company. With respect to any Employee
Program maintained by the Company, there has occurred no "prohibited
transaction," as defined in Section 406 of ERISA or Section 4975 of the Code, or
breach of any duty under ERISA or other applicable law (including, without
limitation, any health care continuation requirements or any other tax law
requirements, or conditions to favorable tax treatment, applicable to such
plan), which could result, directly or indirectly, in any taxes, penalties or
other liability to the LLC or Buyer. No litigation, arbitration, or governmental
administrative proceeding (or investigation) or other proceeding (other than
those relating to routine claims for benefits) is pending or threatened with
respect to any such Employee Program.
(d) Neither the Company nor any ERISA Affiliate (as defined
below) (i) has ever maintained any Employee Program which has been subject to
title IV of ERISA (including, but not limited to, any Multiemployer Plan (as
defined below)) 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 within the three (3) years preceding the Closing, complete and correct
copies of the following documents (if applicable to such Employee Program) have
previously been made available to Buyer: (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;
(ii) the most recent IRS determination or approval letter with respect to such
Employee Program under Code Sections 401 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 summary plan description for
such Employee Program (or other descriptions of such Employee Program provided
to employees) and all modifications thereto; (v) any insurance policy (including
any fiduciary liability insurance policy) related to such Employee Program; (vi)
any documents evidencing any loan to an Employee Program that is a leveraged
employee stock ownership plan; and (vii) all other
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materials reasonably necessary for Buyer to perform any of its responsibilities
with respect to any Employee Program subsequent to the Closing (including,
without limitation, health care continuation requirements).
(f) For purposes of this section:
(i) "Employee Program" means, whether written or
oral: (A) all employee benefit plans within the meaning of ERISA
Section 3(3), including, but not limited to, multiple employer welfare
arrangements (within the meaning of ERISA Section 3(4)), 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; and (B) all stock option plans, bonus or incentive award
plans, severance pay policies or agreements, termination pay
arrangements, deferred compensation agreements, supplemental income
arrangements, vacation plans, and all other employee benefit plans,
agreements, and arrangements not described in (A) above. In the case of
an Employee Program funded through an organization described in Code
Section 501(c)(9), each reference to such Employee Program shall
include a reference to such organization.
(ii) An entity "maintains" an Employee Program if
such entity sponsors, contributes to, or provides (or has promised to
provide) benefits under such Employee Program, or has any obligation
(by agreement or under applicable law) to contribute to or provide
benefits under 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 under ERISA Section 4001(b) or part of the same "controlled
group" as the Company for purposes of ERISA Section 302(d)(8)(C).
(iv) "Multiemployer Plan" means a (pension or
non-pension) employee benefit plan to which more than one employer
contributes and which is maintained pursuant to one or more collective
bargaining agreements.
3.25 DIRECTORS, OFFICERS AND EMPLOYEES.
(a) Schedule 3.25(a) hereto contains a true and complete list
of all current partners and officers of the Company. In addition, Schedule
3.25(a) hereto contains a list of all managers, employees and consultants of the
Company who, individually, have received or are scheduled to receive
compensation from the Company for the fiscal year ending December 31, 1997, in
excess of one hundred thousand dollars ($100,000). In each case such Schedule
includes the current job title and aggregate annual compensation of each such
individual.
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(b) To the knowledge of the Company and each Partner after Due
Inquiry, each employee listed in Schedule 3.25(a) hereto is in good health.
(c) As of June 30, 1997, the Company employs the employees
listed in Schedule 3.25(c) (the "Employees") (which schedule indicates which
employees are full-time and part-time employees) and generally enjoys good
employer-employee relationships. No consultant or other Person other than the
Employees renders Investment Management Services to or on behalf of the Company
or renders Brokerage Services in the name of the Company. The Company does not
have any obligation, contingent or otherwise, whether written or oral, under (a)
any collective bargaining or other labor agreement, (b) any retainer or
consulting arrangements, or (c) any other employee or employment-related
contract or non-terminable (whether with or without penalty) employment
arrangement (each, together with any service or employment-related agreements or
contracts disclosed in Schedules 3.15 and 3.24, an "Employment Arrangement").
The Company is not in default with respect to any material term or condition of
any Employment Arrangement, including, without limitation, after the giving of
notice, lapse of time or both. The Company is not delinquent in payments to any
of its employees for any wages, salaries, commissions, bonuses or other direct
compensation for any services performed for it to the date hereof or amounts
required to be reimbursed to such employees. Upon termination of the employment
of any of such employees, neither the Company nor Buyer would, by reason of the
transactions contemplated under this Agreement or anything done prior to the
Closing, be liable to any of such employees for so-called "severance pay" or any
other payments except as set forth in the LLC Agreement. The Company does not
have any policy, practice, plan or program of paying severance pay or any form
of severance compensation in connection with the termination of employment. The
Company is in compliance 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. There are no charges of
employment discrimination or unfair labor practices against or involving the
Company. There are no grievances, complaints or charges that have been filed
against the Company under any dispute resolution procedure that might have an
adverse effect on the Company or Buyer or the conduct of their respective
businesses, and there is no arbitration or similar proceeding pending and no
claim therefor has been asserted. The Company has in place all employee policies
required by applicable laws, rules and regulations, and there have been no
violations or alleged violations of any of such policies. None of the Company or
any of the Partners has received any information indicating that any of the
Company's employment policies or practices is currently being audited or
investigated by any federal, state or local government agency. The Company is,
and at all times since November 6, 1986 has been, in compliance with the
requirements of the Immigration Reform Control Act of 1986.
3.26 CODE OF ETHICS. The Company has a written policy regarding xxxxxxx
xxxxxxx and a Code of Ethics which complies with all applicable provisions of
Section 204A of the Advisers Act a copy of which has been delivered to Buyer
prior to the date hereof. All employees of the Company 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 interest are as set forth in the Company's Code of Ethics. There
have been no material
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violations or allegations of material violations of such Code of Ethics, xxxxxxx
xxxxxxx policy or conflicts policy.
3.27 CERTAIN REPRESENTATIONS AND WARRANTIES AS TO PRIVATE FUNDS.
(a) True, correct and complete copies of all of the current
investment advisory agreements and distribution or underwriting contracts,
administrative services and other services agreements, if any, and
organizational and offering documents, pertaining to each of the Private Funds
(i) will have been made available to Buyer prior to the Delivery Date and (ii)
are in full force and effect. Such offering materials did not, at the respective
dates thereof, or at any time at which such materials were distributed or made
available to investors or prospective investors, contain any 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 were made, not misleading.
(b) Each of the Private Funds is duly organized, validly
existing and in good standing in the jurisdiction in which it is organized and
has all requisite power and authority to conduct its business in the manner and
in the places where such business is currently conducted. Each Private Fund is
and, for the ten (10) years preceding the date hereof, has been engaged solely
in the business of investing and reinvesting in securities. Each Private Fund is
and, since its inception, has been in compliance with all Investment Laws and
Regulations to the extent such laws and regulations are applicable to, or
violation thereof could have a Material Adverse Effect on, such Private Fund.
(c) Each of the Private Funds has timely filed all Tax returns
and reports (including information returns, declarations and reports) (the
"Private Fund Tax Returns") required to be filed by it with any Taxing
Authorities for taxable periods ending after December 31, 1990 and has paid, or
withheld and paid over, all Taxes which were shown to be due on the Private Fund
Tax Returns. The information contained in such Private Fund Tax Returns is true,
correct and complete. With respect to each Private Fund, there are no
liabilities for Taxes which have not been paid in prior periods or for which an
adequate reserve for such liability does not exist. With respect to each Private
Fund, no claims have been or are being asserted by any Taxing Authorities with
respect to any Taxes and, to the knowledge of the Company and each Partner after
Due Inquiry, there are no threatened claims for Taxes.
(d) The Company has made available to Buyer true, correct and
complete copies of the audited financial statements, prepared in accordance with
GAAP, of each of the Private Funds for the past three fiscal years (each
hereinafter referred to as a "Private Fund Financial Statement"). Each of the
Private Fund Financial Statements is consistent with the books and records of
the applicable Private Fund, and presents fairly the consolidated financial
position of such Private Funds in accordance with GAAP applied on a consistent
basis (except as otherwise noted therein) at the respective date of such Private
Fund Financial Statement and the results of operations and cash flows for the
respective periods indicated, except in the case of the interim financial
statements which are subject to normal year-end adjustments which in the
aggregate are
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not material. The Private Fund Financial Statements reflect and disclose all
material changes in accounting principles and practices adopted by the
applicable Private Fund during the periods covered by each Private Fund
Financial Statement. The books of account of each of the Private Funds fairly
reflect their respective transactions.
(e) There are no special restrictions, consent judgments or
SEC orders on, or with regard to, any of the Private Funds. Since inception,
each of the Private Funds has been excluded from the definition of an investment
company under the Investment Company Act by virtue of Section 3(c)(1) thereof
and has been duly registered and in good standing under the laws of each
jurisdiction in which such qualification is necessary, except where the failure
to be duly registered and in good standing would not have a Material Adverse
Effect on the respective Private Fund or the Company.
(f) All interests of each of the Private Funds were sold
pursuant to a valid and effective exemption from registration under the
Securities Act and have been duly authorized and are validly issued. Each of the
Private Funds' investments have been made in accordance with its respective
investment policies and restrictions in effect at the time the investments were
made and have been held in accordance with its respective investment policies
and restrictions, to the extent applicable and in effect at the time such
investments were held.
(g) All consent solicitation materials to be prepared for use
by the Private Funds in connection with the transactions contemplated by this
Agreement at the time such information is provided or used, as then amended or
supplemented, in each case, will, insofar as it contains or consists of
information supplied by the Company or the Partners, be accurate and complete
and will not contain any untrue statement of a material fact, or omit to state
any material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
(h) There is no litigation or legal (or other) action, suit,
proceeding or investigation at law or in equity pending or, to the knowledge of
the Company and each Partner after Due Inquiry, threatened in any court or
before or by any governmental agency or instrumentality, department, commission,
board, bureau or agency, or before any arbitrator, by or against any of the
Private Funds. There are no judgments, injunctions, orders or other judicial or
administrative mandates outstanding against or affecting any of the Private
Funds.
(i) Each Private Fund has full right, authority and power to
enter into each Private Fund Management Agreement to which it is a party and to
carry out the transactions contemplated thereby. Each Private Fund Management
Agreement, when executed and delivered by the respective Private Fund, will
constitute the valid and binding obligation of such Private Fund, enforceable in
accordance with its terms. No such Private Fund Management Agreement will
violate any provision of the certificate of limited partnership or the
partnership agreement (or any other organizational document) of the respective
Private Fund (each as amended and/or restated to date) or will result in a
breach of, constitute a default under, accelerate any obligation under, or give
rise to a right of termination of any agreement, contract, instrument, lien,
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authorization, order, writ, judgment, injunction, decree or determination to
which the respective Private Fund is a party, or by which any property of such
respective Private Fund is bound or affected.
3.28 CERTAIN REPRESENTATIONS AND WARRANTIES AS TO THE MUTUAL FUNDS.
(a) True, correct and complete copies of all of the current
investment advisory agreements and distribution or underwriting contracts, plans
adopted pursuant to Rule 12b-1 under the Investment Company Act or arrangements
for the payment of service fees (as such term is defined in Rule 2830 of the
NASD Conduct Rules), and all administrative services and other services
agreements, if any (collectively, the "Mutual Fund Agreements"), pertaining to
each of the Mutual Funds and in effect on the date of this Agreement (i) have
been made available to Buyer prior to the date hereof and (ii) are in full force
and effect. As to each Mutual Fund, there has been in full force and effect an
investment advisory, sub-advisory, distribution or underwriting agreement (as
applicable) at all times since the inception of such Mutual Fund, and each
Mutual Fund Agreement pursuant to which the Company has received compensation
respecting its activities in connection with each of the Mutual Funds was duly
approved in accordance with the applicable provisions of the Investment Company
Act.
(b) There are no special restrictions, consent judgments or
SEC or judicial orders on or with regard to any of the Mutual Funds currently in
effect.
(c) Since inception, Tweedy, Xxxxxx Fund, Inc. has been a duly
registered investment company in material compliance with the Investment Company
Act and the rules and regulations promulgated thereunder and duly registered or
licensed and in good standing under the laws of each jurisdiction in which such
qualification is necessary, except where the failure to be duly registered and
in good standing will not and would not reasonably be expected to have a
Material Adverse Effect on the respective Mutual Fund or the Company. Since
their initial offering, shares of each of the Mutual Funds have been duly
qualified for sale under the securities laws of each jurisdiction in which they
have been sold or offered for sale at such time or times during which such
qualification was required, and, if not so qualified, the failure to so qualify
would not have a Material Adverse Effect on the respective Mutual Fund or the
Company. The offering and sale of shares of each of the Mutual Funds have been
registered under the Securities Act during such period or periods for which such
registration is required, the related registration statement has become
effective under the Securities Act, no stop order suspending the effectiveness
of any such registration statement has been issued and no proceedings for that
purpose have been instituted or, to the knowledge of the Company and each
Partner after Due Inquiry, are contemplated. Such registration statement under
the Investment Company Act and/or the Securities Act has, at all times when such
registration statement was effective, complied in all material respects with the
requirements of the Investment Company Act and the Securities Act then in effect
and neither such registration statement nor any amendments thereto contained at
the time such registration statement became effective, an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading. Copies of the current
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registration statement of Tweedy, Xxxxxx Fund, Inc. under the Investment Company
Act and/or the Securities Act have been made available to Buyer. All shares of
each of the Mutual Funds were sold pursuant to an effective registration
statement and have been duly authorized and are validly issued, fully-paid and
non-assessable. Each of the Mutual Funds' investments have been made in
accordance with its investment policies and restrictions set forth in its
registration statement in effect at the time the investments were made and have
been held in accordance with its respective investment policies and
restrictions, to the extent applicable and in effect at the time such
investments were held.
(d) All proxy statements to be prepared for use by Tweedy,
Xxxxxx Fund, Inc. in connection with the transactions contemplated by this
Agreement, the written information provided by the Mutual Funds to each Board of
Directors (or equivalent bodies) in connection with this Agreement or the
transactions contemplated hereby at the time such information is provided and,
in the case of a proxy statement, the date of the shareholder vote for which
such proxy statement will be used, as then amended or supplemented, in each
case, will, insofar as it contains or consists of information supplied by the
Company, be accurate and complete and will not contain any untrue statement of a
material fact, or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
(e) Each of the Mutual Funds has satisfied the relevant
requirements of the Code for all taxable years, or parts thereof, of such Mutual
Fund ending prior to the Closing as to its status as a regulated investment
company as defined in Sections 851-855 of the Code. Neither the Company nor, to
the knowledge of the Company and each Partner after Due Inquiry any of the
Mutual Funds has received any notice or other communication relating to or
affecting any Mutual Fund's compliance with any of these relevant requirements.
(f) Each of the Mutual Funds has timely filed all Tax returns
and reports (including information returns, declarations and reports) (the
"Mutual Fund Tax Returns") required to be filed by it with any Taxing
Authorities and has paid, or withheld and paid over, all Taxes which were shown
to be due on the Mutual Fund Tax Returns. The information contained in such
Mutual Fund Tax Returns is true, correct and complete. With respect to each
Mutual Fund, there are no liabilities for Taxes which have not been paid in
prior periods or for which an adequate reserve for such liability does not
exist. With respect to each Mutual Fund, no claims have been or are being
asserted by any Taxing Authorities with respect to any Taxes and, to the
knowledge of the Company and each Partner after Due Inquiry, there are no
threatened claims for Taxes.
(g) Neither the Company, any person who is an "affiliated
person" (as defined in the Investment Company Act) or any other "interested
person" of the Company (as defined in the Investment Company Act), receives or
is entitled to receive any compensation directly or indirectly (i) from any
person in connection with the purchase or sale of securities or other property
to, from or on behalf of any of the Mutual Funds, other than bona fide ordinary
compensation as principal underwriter for any of the Mutual Funds or as broker
in connection with
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the purchase or sale of securities in compliance with Section 17(e) of the
Investment Company Act, or (ii) from any of the Mutual Funds or its security
holders for other than bona fide investment advisory, administrative or other
services. Accurate and complete disclosure of all such compensation arrangements
has been made in the registration statement of Xxxxxx Xxxxxx Fund, Inc. filed
under the federal securities laws.
(h) The Company has made available to Buyer true, correct and
complete copies of the audited financial statements, prepared in accordance with
GAAP, of each of the Mutual Funds for the past three fiscal years (or such
shorter period as such Mutual Fund shall have been in existence), and unaudited
financial statements, prepared in accordance with GAAP, of each of the Mutual
Funds for the first six-months of its most recent fiscal year if the date of the
Mutual Fund's fiscal year end and six-month period financial statements (each
hereinafter referred to as a "Mutual Fund Financial Statement"). Each of the
Mutual Fund Financial Statements is consistent with the books and records of the
related Mutual Fund, and presents fairly the consolidated financial position of
the related Mutual Fund in accordance with GAAP applied on a consistent basis
(except as otherwise noted therein) at the respective date of such Mutual Fund
Financial Statement and the results of operations and cash flows for the
respective periods indicated. The Mutual Fund Financial Statements reflect and
disclose all material changes in accounting principles and practices adopted by
each of the Mutual Funds during the periods covered by each Mutual Fund
Financial Statement. The books of account pertaining to each of the Mutual Funds
fairly reflect their respective transactions.
(i) There is no litigation or legal (or other) action, suit,
proceeding or investigation at law or in equity pending or, to the knowledge of
the Company and each Partner after Due Inquiry, threatened in any court or
before or by any governmental agency or instrumentality, department, commission,
board, bureau or agency, or before any arbitrator, by or against any of the
Mutual Funds, or any officer or director thereof relating to the activities of
the Mutual Funds, any disqualification of the Company or any Partner under
Section 9(a) of the Investment Company Act, or any event which would require the
Company to give an affirmative response to any of the questions in Item 11 of
the Company's Form ADV (or any similar or successor form) or under Item 7 of the
Company's Form BD (or any similar or successor form). There are no judgments,
injunctions, orders or other judicial or administrative mandates outstanding
against or affecting any of the Mutual Funds or any officer or director thereof
relating to the activities of or affecting the Mutual Funds.
(j) Each Mutual Fund complies, and has been maintained in
compliance, in all material respects, with all applicable requirements,
including all reporting and disclosure requirements, prescribed by any and all
Investment Laws and Regulations and orders thereunder.
(k) The exhibit list in the current registration statement of
Xxxxxx Xxxxxx Fund, Inc. includes all of the documents that would be required to
be included thereon if such registration statement were being refiled.
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3.29 CERTAIN REPRESENTATIONS AND WARRANTIES AS TO THE OFFSHORE FUNDS
AND OFFSHORE RELATED PARTNERSHIPS.
(a) True, correct and complete copies of all of the current
investment advisory agreements and distribution or underwriting contracts,
arrangements for the payment of service fees, and all administrative services
and other services agreements, if any (collectively, the "Offshore Fund
Agreements"), pertaining to each of the Offshore Funds (i) will have been made
available to Buyer on or prior to the Delivery Date and (ii) are in full force
and effect. As to each Offshore Fund, there has been in full force and effect an
investment advisory, sub-advisory, distribution or underwriting agreement (as
applicable) at all times since the inception of such Offshore Fund, and each
Offshore Fund Agreement, pursuant to which the Company has received compensation
respecting its activities in connection with each of the Offshore Funds was duly
approved in accordance with the applicable provisions of the Investment Company
Act.
(b) There are no special restrictions, consent judgments or
orders of the SEC, the IML, the BMA or any other regulatory body under any
applicable Investment Laws and Regulations on or with regard to any of the
Offshore Funds or Offshore Related Partnerships currently in effect.
(c) Each of the Offshore Funds is duly organized, validly
existing and in good standing in the jurisdiction in which it is organized and
has all requisite power and authority to conduct its business in the manner and
in the places where such business is currently conducted. Each Offshore Fund is
and, since its inception has been, engaged solely in the business of an
investment company. Each Offshore Fund and Offshore Related Partnership is and,
since its inception has been, in compliance with all Investment Laws and
Regulations and orders thereunder.
(d) All offering materials used by the Offshore Funds and all
proxy or consent statements to be prepared for use by the Offshore Funds in
connection with the transactions contemplated by this Agreement, the written
information provided by the Company to each Board of Directors (or equivalent
bodies) of the Offshore Funds in connection with this Agreement or the
transactions contemplated hereby has been or will be accurate and complete and
has not or will not contain any untrue statement of a material fact, or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading or.
(e) None of the Offshore Funds is engaged in the conduct of a
trade or business in the United States (within the meaning of the Code). Each
Offshore Fund is a passive foreign investment company (within the meaning of the
Code) and is not a controlled foreign corporation (within the meaning of the
Code). Each of the Offshore Funds has in effect a QEF election. Each of the
Offshore Funds and the Related Offshore Partnerships has timely filed all Tax
returns and reports (including information returns, declarations and reports)
(the "Offshore Tax Returns") required to be filed by it with any Taxing
Authorities and has paid, or withheld and paid over, all Taxes which were shown
to be due on the Offshore Tax Returns. The information contained in
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such Offshore Tax Returns is true, correct and complete. With respect to each
Offshore Fund and Offshore Related Partnership, there are no liabilities for
Taxes which have not been paid in prior periods or for which an adequate reserve
for such liability does not exist. With respect to each Offshore Fund and
Offshore Related Partnership, no claims have been or are being asserted by any
Taxing Authorities with respect to any Taxes and, to the knowledge of the
Company and each Partner after Due Inquiry, there are no threatened claims for
Taxes.
(f) The Company has made available to Buyer true, correct and
complete copies of the audited financial statements, prepared in accordance with
GAAP, of each of the Offshore Funds and Offshore Related Partnerships for the
past three fiscal years (each hereinafter referred to as a "Offshore Financial
Statement"). Each of the Offshore Financial Statements is consistent with the
books and records of each of the Offshore Funds, and presents fairly the
consolidated financial position of each of the Offshore Funds in accordance with
GAAP applied on a consistent basis (except as otherwise noted therein) at the
respective date of such Offshore Financial Statements and the results of
operations and cash flows for the respective periods indicated. The Offshore
Financial Statements reflect and disclose all material changes in accounting
principles and practices adopted by the Offshore Funds and Offshore Related
Partnerships during the periods covered by each Offshore Financial Statement.
The books of account of each of the Offshore Funds fairly reflect their
respective transactions.
(g) There is no litigation or legal (or other) action, suit,
proceeding or investigation at law or in equity pending or, to the knowledge of
the Company and each Partner after Due Inquiry threatened in any court or before
or by any governmental agency or instrumentality, department, commission, board,
bureau or agency, or before any arbitrator, by or against any of the Offshore
Funds, or any officer or director thereof, relating to the activities of the
Offshore Funds, any disqualification of the Company an any Partner under Section
9(a) of the Investment Company Act, or any event which would require the Company
to give an affirmative response to any of the questions in Item 11 of the
Company's Form ADV (or any similar or successor form) or under Item 7 of the
Company's Form BD (or any similar or successor form). There are no judgements,
injunctions, orders or other judicial or administrative mandates outstanding
against or affecting any of the Offshore Funds or any officer or director
thereof, relating to the activities of or affecting the Offshore Funds.
(h) Each Offshore Fund complies, and has been maintained in
compliance, in all material respects, with all applicable requirements,
including all reporting and disclosure requirements, prescribed by any and all
Investment Laws and Regulations.
(i) Schedule 3.29(i) contains a true, complete and correct
list, as of the date hereof, of all contracts, agreements and commitments
written or oral, between any Offshore Fund and any Offshore Related Partnership
or by which one or more Offshore Funds and (or any of their respective
properties) one or more Offshore Related Partnerships (or any of their
respective properties) is bound as of the date hereof and such contracts,
agreements and commitments have been previously delivered by the Company and the
Partners to Buyer, and such contracts,
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agreements and commitments contain substantially the entire understanding
between the Offshore Funds and Offshore Related Partnerships with respect to the
subject matter thereof.
(j) Each Offshore Fund has full right, authority and power to
enter into amendments to each Offshore Management Agreement to which it is a
party in order to facilitate the transition contemplated by Section 5.7 of the
LLC Agreement and to carry out the transactions contemplated thereby (except to
the extent that certain provisions may be subject to subject to the receipt of
all necessary consents or approvals and the making of any necessary filings to
effect an amendment to the organizational documents of such Offshore Fund as
contemplated in Section 5.15). Each Offshore Management Agreement, at the time
the foregoing amendments are executed and delivered by the respective Offshore
Fund, will constitute a valid and binding obligation of such Offshore Fund,
enforceable in accordance with its terms (subject to the exception in the
foregoing sentence). No such Offshore Management Agreement will violate any
provision of the by-laws or articles of incorporation (or any other
organizational document) of the respective Offshore Fund (each as amended and/or
restated to date) or will result in a breach of, constitute a default under,
accelerate any obligation under, or give rise to a right of termination of any
agreement, contract, instrument, lien, authorization, order, writ, judgment,
injunction, decree or determination to which the respective Offshore Fund is a
party, or by which any property of such respective Offshore Fund is bound or
affected.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE PARTNERS.
As a material inducement to Buyer to enter into this Agreement and
consummate the transactions contemplated hereby, each Partner hereby makes to
Buyer each of the representations and warranties set forth in this Section 4
with respect to such Partner. No Partner shall have any right of indemnity or
contribution from the Company (or any other right against the Company) with
respect to the breach of any representation or warranty by any Partner
hereunder.
4.1 AUTHORITY. Such Partner has full right, authority, power and
capacity to enter into this Agreement and each contract or agreement
specifically referenced in, or executed and delivered by or on behalf of such
Partner pursuant to, or as contemplated by, this Agreement and to carry out the
transactions contemplated hereby and thereby. This Agreement and each contract
or agreement, specifically referenced in, or executed and delivered by such
Partner pursuant to, this Agreement constitutes, or when executed and delivered
will constitute, a valid and binding obligation of such Partner, enforceable
against such partner in accordance with its respective terms. The execution,
delivery and performance of this Agreement and each such agreement, contract,
document and instrument:
(a) does not and will not violate any provision of any laws of
the United States or any state or other jurisdiction applicable to such Partner,
or require such Partner to obtain any approval, consent or waiver from, or make
any filing with, any person or entity (governmental or otherwise) that has not
been obtained or made; and
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(b) does not and will not result in a breach of, constitute a
default under, accelerate any obligation under, or give rise to a right of
termination of, any agreement, contract, instrument, mortgage, lien, lease,
permit, authorization, order, writ, judgment, injunction, decree, determination
or arbitration award to which such Partner is a party or by which the property
of such Partner is bound or affected.
4.2 OWNERSHIP OF LLC INTERESTS. After giving effect to the Conversion
and the Closing, such Partner will be the record and beneficial owner of an
interest in the LLC, free and clear of any Claims other than restrictions
imposed pursuant to the LLC Agreement, in an amount set forth opposite his name
in Schedule 1.1. Such interest will constitute all the interests in the LLC or
rights in connection with interests in the LLC which are then held by such
Person, directly or indirectly.
4.3 FINDER'S FEE. Except for fees to Xxxxxxx, Sachs & Co., which fees
will be paid by the Partners, such Partner has not incurred or become liable for
any broker's commission or finder's fee relating to or in connection with the
transactions contemplated by this Agreement.
4.4 INVESTMENT ADVISORY AND BROKERAGE REPRESENTATION. Except as set
forth in Schedule 4.4, such Partner does not serve as an investment adviser
(within the meaning of the Advisers Act) or broker or dealer (within the meaning
of Exchange Act) to, or provide, directly or indirectly, Investment Management
Services or Brokerage Services to, any person or entity, other than on behalf of
the Company pursuant to an agreement between the Company and a Client thereof.
4.5 AGREEMENTS. There are no agreements, including without limitation,
non-competition, trade secret or confidentiality agreements, not contained
herein or disclosed in a Schedule hereto, to which such Partner is a party
relating to the business of the Company or the LLC or to such Partner's rights
and obligations as a partner, member, director, officer or employee of the
Company.
4.6 EMPLOYMENT DATA. Such Partner's date of birth and date of
commencement of employment with the Company are both accurately reflected in
Schedule 4.6 hereto.
SECTION 5. COVENANTS OF THE COMPANY AND THE PARTNERS.
5.1 MAKING OF COVENANTS AND AGREEMENTS. The Company and each Partner
hereby makes the covenants and agreements set forth in this Section 5 and the
Partners agree to cause the Company to comply with such agreements and
covenants. No Partner shall have any right of indemnity or contribution from the
Company (or any other right against the Company) with respect to the breach of
any covenant or agreement by the Company or any Partner hereunder.
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5.2 CLIENT CONSENTS AND APPROVALS.
(a)
(i) As soon as practicable after the date hereof, but
in any event prior to August 9, 1997, the Company shall notify each of
its Clients (excluding for these purposes the Mutual Funds, Offshore
Funds and Private Funds and shareholders or partners thereof and
Clients who are Clients solely with respect to Brokerage Services) of
the transactions contemplated hereby and by the other agreements,
documents and instruments contemplated hereby. Such notice shall be in
the form of Exhibit 5.2A hereto with respect to those Clients
(excluding for these purposes the Mutual Funds, Offshore Funds and
Private Funds and Clients who are Clients solely with respect to
Brokerage Services) whose contracts require affirmative written consent
for their assignment, and in the form of Exhibit 5.2B with respect to
those Clients (excluding for these purposes the Mutual Funds, Offshore
Funds and Private Fund and Clients who are Clients solely with respect
to Brokerage Services) whose contracts do not require affirmative
written consent for their assignment (in each case, with such changes
to Exhibit 5.2A and Exhibit 5.2B as may be agreed to by Buyer).
(ii) On or prior to September 5, 1997, the Company
shall send to each Client who was sent, but who has not by such date
returned, the notice in substantially the form of Exhibit 5.2A or
Exhibit 5.2B hereto countersigned indicating approval of the
transactions contemplated hereby, an additional notice in the form of
Exhibit 5.2C (with such changes thereto as may be agreed to by Buyer).
(b) With respect to the Offshore Funds, the Company and the
Partners shall use all commercially reasonable efforts to obtain such Consents
from regulatory authorities or investors as may be necessary or appropriate and
satisfactory to Buyer to permit consummation of the transactions contemplated
hereby.
(c) With respect to the Mutual Funds, the Company and the
Partners shall use all commercially reasonable efforts to cause each of the
Mutual Funds to call a meeting of its shareholders to consider, and to solicit
its shareholders with regard to, approval of the investment advisory agreement
with the LLC contemplated under Section 8.3(b), to be in effect at and after the
Closing, consistent with all of the requirements of federal securities laws
applicable to such solicitation.
(d) With respect to the Private Funds, the Company and the
Partners shall use all commercially reasonable efforts to obtain such Consents
from regulatory authorities or investors as may be necessary or appropriate and
satisfactory to Buyer to permit consummation of the transactions contemplated
hereby.
(e) The Company and the Partners shall use all commercially
reasonable efforts to obtain Consents from the Company's Clients in the manner
contemplated by this Section 5.2.
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5.3 FILINGS AND REGULATORY AUTHORIZATIONS.
(a) The Company and each of the Partners will cause the
Company to: (i) file, as soon as practicable after the date hereof, and in any
event prior to August 22, 1997, with the SEC, a Uniform Application for
Investment Adviser Registration on Form ADV to register the LLC as an investment
adviser under the Advisers Act; (ii) file the appropriate applications for
investment adviser registration as soon as practicable with all other
jurisdictions in which the Company is registered as an investment adviser and in
each other jurisdiction where it is necessary or desirable for the LLC to be
registered as an investment adviser in order to conduct its business (including,
without limitation, the business currently conducted by the Company) after the
Conversion and the Closing; (iii) file, as soon as practicable after the date
hereof, and in any event prior to August 22, 1997, with the Central Registration
Depository Operated by the NASD a Uniform Application for Broker-Dealer
Registration on Form BD to register the LLC as a broker-dealer under the
Exchange Act; and (iv) file the appropriate applications for broker-dealer
registration as soon as practicable with all other jurisdictions in which the
Company is registered as a broker-dealer and in each other jurisdiction where it
is necessary or desirable for the LLC to be registered as a broker-dealer in
order to conduct its business (including, without limitation, the business
currently conducted by the Company) after the Conversion and the Closing;
provided, however, that, upon advice of counsel to the Company and Buyer, the
Company and Buyer may elect to rely on successor registration provisions or the
continuance of the Company's current registrations under applicable laws, in
which case such successor or continuance filings shall be made as of the
Closing.
(b) The Partners and the Company will use all commercially
reasonable efforts to cause all applicable Employees to file, as soon as
practicable after the date hereof, such applications for licensing, registration
or qualification (i) of investment adviser representatives (within the meaning
of Rule 203A-3(a) under the Advisers Act) in each jurisdiction where such
applicable investment adviser representative has a place of business (within the
meaning of Rule 203A-3(b) under the Advisers Act) and such licensing,
registration or qualification is necessary in order to conduct the business of
the Company as currently conducted and (ii) of registered representatives,
principals and associated persons with the SEC, the NASD and in each
jurisdiction where such licensing, registration or qualification is necessary in
order to conduct the business of the Company in the manner conducted by the
Company as of the date of this Agreement; provided, however, that, upon advice
of counsel to the Company and Buyer, the Company and Buyer may elect to rely on
successor registration provisions or the continuance of the Company's current
registrations under applicable laws, in which case such successor or continuance
filings shall be made as of the Closing.
(c) The Company and each of the Partners will use all
commercially reasonable efforts to cause the Mutual Funds to prepare and file a
proxy statement and related materials with respect to a meeting of the
shareholders of the Mutual Funds, as contemplated by Section 5.2(c), as soon as
practical following the execution of this Agreement.
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(d) Prior to the Closing, the Partners will use all
commercially reasonable efforts to (i) cause the Company to inform the IML of
the transactions contemplated herein and provide the IML with a draft
publication describing the transaction and (ii) obtain such additional consents
and approvals as may be necessary and appropriate and satisfactory to Buyer in
connection with the consummation of the transactions contemplated hereby; and as
promptly as possible, but no more than seven (7) days after the Closing, the
Partners shall provide to the shareholders of the Offshore Funds, a copy of the
publication referred to above.
(e) Prior to the Closing, the Partners will use all
commercially reasonable efforts to obtain such BMA approval or and/or file such
notice with the BMA as may be necessary under applicable law, and/or obtain such
shareholder approval as may be necessary or appropriate and satisfactory to
Buyer in connection with the consummation of the transactions contemplated
hereby.
(f) The Company and each of the Partners will cause the
Company to make any additional filings necessary to obtain approvals in
connection with securing for the LLC the benefits of memberships and
registrations on Schedule 3.18(c).
(g) The Company and each of the Partners will use all
commercially reasonable efforts to cause the LLC to obtain all authorizations,
consents, orders and approvals of self-regulatory organizations, federal, state
and local regulatory bodies and officials that may be or become necessary for
their respective execution and delivery of, and the performance of their
respective obligations pursuant to, this Agreement and the other agreements,
documents and instruments contemplated hereby, and for the LLC to conduct the
business of the Company in the manner conducted by the Company as of the date of
this Agreement.
5.4 AUTHORIZATION FROM OTHERS. The Company and each of the Partners
will use all commercially reasonable efforts to obtain all authorizations,
consents, approvals, waivers and permits of others required to permit the
consummation by the Partners and the Company of the transactions contemplated by
this Agreement.
5.5 CONDUCT OF BUSINESS. Between the date of this Agreement and the
Closing, without the prior written consent of Buyer:
(a) the Company will conduct its business only in the ordinary
course of business, and consistent with past policies, procedures and practices;
(b) the Company shall not take any action or omit to take any
action if such action or omission would require the consent of Buyer as Manager
Member under Section 3.1(g) of, would be prohibited under, or would be a
violation of, the LLC Agreement if the LLC Agreement were in effect at the time;
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(c) the Company will not make or incur any obligation to make
a change in its Organizational Documents or authorized or issued capital or
interests, except as is contemplated hereunder with respect to the Conversion
and the LLC Agreement;
(d) the Company will not (and each Partner will cause the
Company not to) declare, set aside or pay any dividend or distribution, make (or
incur an obligation to make) any other distribution in respect of its capital or
interests or make (or incur an obligation to make) any direct or indirect
redemption, purchase or other acquisition of its stock or interests if as a
result of such dividend, distribution, redemption, purchase or acquisition, the
Company would be unable to satisfy the conditions set forth in Section 8.13;
(e) the Company will (and each Partner will cause the Company
to) use all commercially reasonable efforts to prevent any change with respect
to its management and supervisory personnel;
(f) the Company will (and each Partner will cause the Company
to) have in effect and maintain at all times all insurance of the kind, in the
amount and with the insurers set forth in Schedule 3.19 hereto or equivalent
insurance with any substitute insurers approved in writing by Buyer;
(g) The Company will not (and each Partner will not and will
cause the Company not to) enter into any agreement or understanding in
connection with any of the matters in paragraphs (a) through (f) above.
5.6 FINANCIAL STATEMENTS. Until the Closing, the Company will furnish
Buyer with copies of unaudited monthly financial information, in such form and
method of presentation as reasonably acceptable to Buyer.
5.7 PRESERVATION OF BUSINESS AND ASSETS. Until the Closing, the Company
and each of the Partners shall use all commercially reasonable efforts to: (a)
preserve the current business of the Company, (b) maintain the present Clients
of the Company, in each case, on terms that are at least as favorable as the
terms of the agreement between the Company and the relevant Client as in effect
on the date hereof, (c) preserve the goodwill of the Company, and (d) preserve
any Licenses required for, or useful in connection with, the business of the
Company (including without limitation all investment adviser and broker-dealer
registrations and all memberships or similar privileges in exchanges or
self-regulatory organizations). In addition, none of the Partners shall take any
material action not in the ordinary course of business relating to the Company
or which might have a material effect on the transactions contemplated hereby,
without the prior consent of Buyer.
5.8 ACCESS. The Company shall afford to Buyer and its representatives
and agents free access, during normal business hours and with reasonable notice,
to the properties and records of the Company in order that Buyer may have full
opportunity to make such investigation as it shall desire for purposes
consistent with this Agreement. The Company shall afford, or use all
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commercially reasonable efforts to cause to be afforded, to Buyer and its
representatives and agents free access, during normal business hours and with
reasonable notice, to the properties and records of the Private Funds, the
Mutual Funds, the Offshore Funds and the Offshore Related Partnerships in order
that Buyer may have full opportunity to make such investigation as it shall
desire for purposes consistent with this Agreement.
5.9 CONSUMMATION OF AGREEMENT. The Company and each of the Partners
shall use all commercially reasonable efforts to perform and fulfill all
conditions and obligations to be performed and fulfilled by each of them under
this Agreement, to the end that the transactions contemplated by this Agreement
shall be fully carried out. During the period from the date of this Agreement
and continuing through the Closing, except as required by applicable law or with
the prior written consent of Buyer, neither the Company nor any of the Partners
shall take any action which, or fail to take any action the failure of which to
be taken, would, or could reasonably be expected to: (a) result in any of the
representations and warranties of the Partners set forth in this Agreement being
or becoming untrue in any respect that would cause Section 8.2 not to be
satisfied; (b) result in any conditions to the Closing set forth in Section 8
not being satisfied; or (c) result in a material violation of any provision of
this Agreement.
5.10 COOPERATION OF THE COMPANY AND PARTNERS. The Company and each of
the Partners shall cooperate with all reasonable requests of Buyer and Buyer's
counsel in connection with the preparation of Schedules and due diligence
investigations contemplated in Section 1.7 hereof and the consummation of the
transactions contemplated hereby and the preparation and filing of a
registration statement or statements (including any supplements or amendments
thereto) with respect to Buyer or securities issued or to be issued by Buyer.)
Each Partner shall cooperate with Buyer in causing the Company to make an
election under Section 754 of the Code with respect to its taxable year ended on
the date of the Closing.
5.11 NO SOLICITATION OF OTHER OFFERS. Until the termination of this
Agreement pursuant to Section 10.1, none of the Company, any of the Partners, or
any of their representatives will, directly or indirectly, solicit, encourage,
assist, initiate discussions or engage in negotiations with, provide any
information to, or enter into any agreement or transaction with, any person,
other than Buyer, relating to the possible acquisition of any equity interests
of the Company, or any of the assets of the Company.
5.12 CONFIDENTIALITY. The Company and the Partners agree that, unless
and until the Closing has been consummated, each of the Company, the Partners
and their officers, partners, members, agents and representatives will hold in
strict confidence, and will not use, any confidential or proprietary data or
information obtained from Buyer with respect to its business or financial
condition except for the purpose of evaluating, negotiating and completing the
transaction contemplated hereby. Information generally known in Buyer's industry
or which has been disclosed to the Company or the Partners by third parties
which have a right to do so shall not be deemed confidential or proprietary
information for purposes of this Agreement. If the transactions contemplated by
this Agreement are not consummated, the Company and the Partners will return,
and cause their respective officers, directors, members, agents and
representatives to
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return, to Buyer (or certify that they have destroyed) all copies of such data
and information, including but not limited to financial information, customer
lists, business and corporate records, worksheets, test reports, tax returns,
lists, memoranda, and other documents prepared by or made available to the
Company or the Partners (and their officers, directors, members, agents and
representatives) in connection with the transaction.
5.13 POLICIES AND PROCEDURES. The Company and the Partners shall, and
shall cause the Employees of the Company to, cooperate with and assist in such
compliance audits and regulatory reviews as may reasonably be requested by
Buyer.
5.14 NOTIFICATION OF CERTAIN MATTERS. The Partners shall give prompt
notice to Buyer 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 their 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 its
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.
5.15 AMENDMENT OF OFFSHORE FUND ORGANIZATIONAL DOCUMENTS. As promptly
as practicable (which may be following the Closing), the Company and the
Partners shall use all commercially reasonable efforts to cause each Offshore
Fund to amend its organizational documents (and obtain all necessary consents
and approvals in connection therewith) to permit the modification of the
formulas for determination and payment of the Performance Increment thereunder
as, when and to the extent contemplated by the Offshore Management Agreements
and Section 5.7 of the LLC Agreement.
5.16 NON-SOLICITATION/NON-DISCLOSURE AGREEMENTS. Each Partner shall use
all commercially reasonable efforts to cause (a) Xxxxxx X. Xxxxxxx, Xx. and
Xxxxxx Xxxxxxx to enter into a Non-Solicitation/Non-Disclosure Agreement with
the Company in the form attached hereto as Exhibit 5.16, (each, a
"Non-Solicitation Agreement" and collectively, the "Non-Solicitation
Agreements") and (b) each such Non-Solicitation Agreement to be in full force
and effect for the benefit of the LLC at the Closing.
SECTION 6. REPRESENTATIONS AND WARRANTIES OF BUYER.
6.1 MAKING OF REPRESENTATIONS AND WARRANTIES. As a material inducement
to the Company and the Partners to enter into this Agreement and consummate the
transactions contemplated hereby, Buyer hereby makes the representations and
warranties to the Company and the Partners contained in this Section 6.
6.2 ORGANIZATION OF BUYER. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
with full corporate power and authority to own or lease its properties and to
conduct its business in the manner and in the places where such properties are
owned or leased or such business is conducted by it.
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6.3 AUTHORITY OF BUYER. Buyer has full right, authority and power to
enter into this Agreement, the LLC Agreement, and each other contract or
agreement specifically referenced in, or to be executed and delivered by Buyer
pursuant to, or as contemplated by, this Agreement and to carry out the
transactions contemplated hereby and thereby. The execution, delivery and
performance by Buyer of this Agreement, the LLC Agreement and each such other
contract or agreement have been duly authorized by all necessary corporate
action of Buyer and no other corporate action on the part of Buyer is required
in connection therewith. This Agreement, the LLC Agreement and each other
contract or agreement specifically referenced in, or executed and delivered by
Buyer pursuant to, this Agreement constitute, or when executed and delivered
will constitute, valid and binding obligations of Buyer enforceable in
accordance with their terms. The execution, delivery and performance by Buyer of
this Agreement, the LLC Agreement and each such other contract or agreement:
(a) does not violate any provision of the Certificate of
Incorporation or By-laws of Buyer, each as amended to date;
(b) does not violate any laws of the United States or of any
state or any other jurisdiction applicable to Buyer or require Buyer to obtain
any approval, consent or waiver of, or make any filing with, any person or
entity (governmental or otherwise) which has not been obtained or made; and
(c) does not result in a breach of, constitute a default
under, accelerate any obligation under, or give rise to a right of termination
of, any agreement, contract, instrument, mortgage, lien, lease, permit,
authorization, order, writ, judgment, injunction, decree, determination or
arbitration award to which Buyer is a party or by which any property of Buyer is
bound or affected and which is material to the business and financial condition
of Buyer and its affiliated organizations on a consolidated basis.
6.4 LITIGATION. There is no litigation pending or, to its knowledge
after Due Inquiry, threatened against Buyer which would prevent or hinder the
consummation of the transactions contemplated by this Agreement.
6.5 FINDER'S FEE. Buyer has not incurred or become liable for any
broker's commission or finder's fee relating to or in connection with the
transactions contemplated by this Agreement.
6.6 INVESTMENT INTENT. The Purchased LLC Interest will be acquired by
Buyer for investment for Buyer's own account, and Buyer has no present intention
of selling, granting participation in, or otherwise distributing the same. Buyer
represents and warrants that it is an "accredited investor" within the meaning
of Rule 501 promulgated by the SEC under the Securities Act.
6.7 FINANCIAL STATEMENTS. Buyer has delivered to the Company the
following financial statements, copies of which are attached hereto as Schedule
6.7:
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(a) Audited balance sheets of Buyer at December 31, 1994,
December 31, 1995 and December 31, 1996, and unaudited statements of income,
retained earnings and cash flows for each of the three (3) years then ended.
(b) All of the foregoing financial statements have been
prepared in accordance with GAAP using the accrual method of accounting, applied
consistently during the periods covered thereby are complete and correct to the
knowledge of Buyer after Due Inquiry, and present fairly the financial condition
of Buyer at the dates of such statements and the results of its operations for
the periods covered thereby (except that Buyer's unaudited financial statements
do not include footnote disclosure or year-end adjustments).
6.8 COMPLIANCE WITH LAWS. Buyer and each of its Controlled Affiliates
is, and at all times has been, in material compliance with all laws and
governmental rules and regulations, domestic or foreign to the extent applicable
to the activities of Buyer or such Controlled Affiliate, including, without
limitation: the Advisers Act, the Investment Company Act, the Exchange Act,
ERISA, the Commodity Exchange Act and the Securities Act and the regulations
promulgated under each of them, except where the failure to so comply could not
reasonably be expected to have a Material Adverse Effect on Buyer and its
Controlled Affiliates taken as a whole.
SECTION 7. COVENANTS OF BUYER.
7.1 MAKING OF COVENANTS AND AGREEMENT. Buyer hereby makes the covenants
and agreements set forth in this Section 7.
7.2 CONFIDENTIALITY. Buyer agrees that, unless and until the Closing
has been consummated, each of Buyer and its officers, directors, agents and
representatives will hold in strict confidence, and will not use, any
confidential or proprietary data or information obtained from the Company or the
Partners with respect to its business or financial condition except for the
purpose of evaluating, negotiating and completing the transaction contemplated
hereby and except for disclosures to Buyer's lenders and other financing sources
and except to the extent necessary or appropriate in connection with the
preparation and filing with the SEC of a registration statement or statements
(including any supplements or amendments thereto) with respect to Buyer or
securities issued or to be issued by Buyer. Information generally known in the
Company's industry or which has been disclosed to Buyer by third parties which
have a right to do so shall not be deemed confidential or proprietary
information for purposes of this Agreement. If the transactions contemplated by
this Agreement are not consummated, Buyer will return, and will cause its
officers, directors, agents and representatives to return, to the Company (or
certify that they have destroyed) all copies of such data and information,
including but not limited to financial information, customer lists, business and
corporate records, worksheets, test reports, tax returns, lists, memoranda, and
other documents prepared by or made available to Buyer (and its officers,
directors, agents and representatives) in connection with the transaction.
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7.3 CONSUMMATION OF AGREEMENT. Buyer shall use all commercially
reasonable efforts to perform and fulfill all conditions and obligations to be
performed and fulfilled by each of them under this Agreement, to the end that
the transactions contemplated by this Agreement shall be fully carried out.
During the period from the date of this Agreement and continuing through the
Closing, except as required by applicable law or with the prior written consent
of the Company, Buyer shall not take any action which, or fail to take any
action the failure of which to be taken, would, or could reasonably be expected
to: (a) result in any of the representations and warranties of the Company set
forth in this Agreement being or becoming untrue in any respect that would cause
Section 9.2 not to be satisfied; (b) result in any conditions to the Closing set
forth in Section 9 not being satisfied; or (c) result in a material violation of
any provision of this Agreement.
7.4 COOPERATION OF BUYER. Buyer shall cooperate with all reasonable
requests of the Company and the Company's counsel in connection with the
consummation of the transactions contemplated hereby.
7.5 NOTIFICATION OF CERTAIN MATTERS. Buyers shall give prompt notice to
Partners 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
their 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 its 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 8. CONDITIONS TO THE OBLIGATIONS OF BUYER.
The obligation of Buyer to consummate this Agreement and the
transactions contemplated hereby are subject to the fulfillment (or waiver by
Buyer), prior to or at the Closing, of the following conditions precedent:
8.1 LITIGATION; NO OPPOSITION. No judgment, injunction, order or decree
enjoining or prohibiting any of Buyer, the Company or any of the Partners or
other parties to this Agreement or any of the agreements, documents and
instruments contemplated hereby, from consummating the transactions contemplated
hereby or thereby, shall have been entered and no suit, action or proceeding
shall be pending or threatened at any time prior to or on the date of the
Closing before or by any court or governmental body seeking to restrain or
prohibit, or seeking damages or other relief in connection with, the execution
and delivery of this Agreement or any of the agreements, documents and
instruments contemplated hereby, or the consummation of the transactions
contemplated hereby or thereby or which could be expected to have an adverse
effect on the LLC or Buyer.
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8.2 REPRESENTATIONS, WARRANTIES AND COVENANTS.
(a) Each of the representations and warranties of each of the
Partners (or made by any person authorized by them to make representations on
their behalf) contained in this Agreement and in any Schedule or Exhibit
attached hereto and in each other contract, agreement, or certificate
contemplated hereby shall be true, correct and complete (i) in all material
respects as of the date of this Agreement and (ii) in all material respects as
of the Closing Date as though made on and as of the Closing Date (except to the
extent such representations and warranties speak as of or are limited to an
earlier date); provided, however, that solely for purposes of determining the
satisfaction of the conditions contained in this Section 8.2(a) and not for
purposes of determining liability under Section 12 hereof or otherwise, no
effect shall be given to any exception in such representations and warranties
relating to knowledge, materiality, or a Material Adverse Effect, and such
representations and warranties shall be deemed to be true, correct and complete
in all material respects only if the failure or failures of such representations
and warranties to be so true, correct and complete without regard to knowledge,
materiality, and Material Adverse Effect exceptions do not represent in the
aggregate a Material Adverse Effect on the Company or Buyer, and except that:
(i) the representations of Sections 3.2(a) and 3.3(b)
shall be made as of the time immediately prior to the Conversion,
instead of as of the Closing;
(ii) the representations in Section 3.7 shall also be
made with respect to assets under management and contracts as of a date
which is no more than ten (10) days prior to the Closing, instead of
being made with respect to assets under management and contracts as of
the date of the Closing;
(iii) as contemplated by the definition of "Company,"
all representations made with respect to the Company as of the date of
this Agreement (except the representations in Sections 3.2(a) or
3.3(b)) shall be made at the Closing with respect to the LLC as the
continuation by Conversion of the Company.
Each and all of the agreements, covenants, obligations and conditions to be
performed, complied with or satisfied by the Company (including without
limitation by the LLC as the continuation by conversion of the Company) and each
of the Partners hereunder and under the other contracts and agreements
contemplated hereby at or prior to the Closing shall have been duly performed,
complied with or satisfied.
(b) Each of the Partners shall represent to Buyer that each of
the following representations and warranties is true, correct and complete in
all material respects upon effectiveness of the Conversion and at the Closing
(or immediately prior to the Closing, if so specified below); provided, however,
that solely for purposes of determining the satisfaction of the conditions
contained in this Section 8.2(b) and not for purposes of determining liability
under Section 12 hereof or otherwise, no effect shall be given to any exception
in such representations and warranties relating to knowledge, materiality, or a
Material Adverse Effect, and such
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representations and warranties shall be deemed to be true, correct and complete
in all material respects only if the failure or failures of such representations
and warranties to be so true, correct and complete without regard to knowledge,
materiality, and Material Adverse Effect exceptions do not represent in the
aggregate a Material Adverse Effect on the Company or Buyer.
(i) The LLC is a limited liability company duly
formed, validly existing and in good standing under the laws of the
State of Delaware, with full power and authority under the Delaware Act
and the LLC Agreement to own or lease its properties and to conduct its
business in the manner and in the places where such properties are
owned or leased or such business is conducted or proposed to be
conducted. The copies of the LLC Agreement, certified by the Secretary
of the LLC, and of the Certificate of Conversion and Certificate of
Formation, certified by the Secretary of State of the State of
Delaware, delivered at the Closing are complete and correct, and no
amendments thereto are pending.
(ii) All contracts described in Schedule 3.6(a),
Schedule 3.7, and Schedule 3.15 remain valid and effective in
accordance with their respective terms (except, with respect to
contracts set forth in Schedule 3.7 as to which Consent has not been
provided) with the LLC having succeeded to all the obligations of the
Company thereunder, and the LLC is entitled to all rights and remedies
thereunder to which the Company is entitled on the date of this
Agreement, or such contract has been replaced by a Comparable Contract.
(iii) The LLC has all Licenses required from
self-regulatory bodies and from foreign, federal, state or local
authorities in order for the LLC to conduct the business being
conducted by the Company immediately prior to the Conversion, except to
the extent failure to be so licensed or qualified would not have a
Material Adverse Effect on the Company. Neither the Company nor the LLC
is subject to any limitation imposed in connection with one or more of
the Licenses which could have a Material Adverse Effect on the
condition (financial or otherwise), properties, assets, liabilities,
business, operations or prospects of the Company, the LLC or Buyer.
(iv) Each insurance policy or bond listed in Schedule
3.19 or equivalent policies or bonds are in full force and effect, with
the LLC as the sole owner and beneficiary of each such policy and bond.
(v) All proxy statements to be prepared for use by
Tweedy, Xxxxxx Fund, Inc. in connection with the transactions
contemplated by this Agreement, the written information provided by the
Mutual Funds to each Board of Directors in connection with this
Agreement or the transactions contemplated hereby at the time such
information was provided and, in the case of a proxy statement, the
date of the shareholder vote for which such proxy statement was used,
as then amended or supplemented, in each case, insofar as it contains
or consists of information supplied by the Company, has been accurate
and complete and has not contained any untrue statement of a material
fact, or omitted to state
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any material fact (a) required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under
which they were made, not misleading or (b) necessary to correct any
statement in any earlier communication that had become false or
misleading.
(vi) All offering materials used by the Offshore
Funds and all proxy or consent statements to prepared for use by the
Offshore Funds in connection with the transactions contemplated by this
Agreement, the written information provided by the Company to each
Board of Directors (or equivalent bodies) of the Offshore Funds in
connection with this Agreement or the transactions contemplated hereby
has been accurate and complete and has not contained any untrue
statement of a material fact, or omitted to state any material fact (a)
required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading or (b) necessary to correct any statement in any earlier
communication that had become false or misleading.
(c) Each of the Partners shall represent to Buyer that each of
the following representations is true and correct in all material respects:
(i) Upon effectiveness of the Conversion and
immediately prior to the Closing, the Partners are the sole members of
the LLC. After giving effect to the Conversion and the Closing, the
capitalization of the LLC is as set forth in Schedule 8.2 hereto (with
respect to both capital and profits interests), with all such interests
owned beneficially and of record by the entities and in the amounts
indicated in such Schedule 8.2 in each case, free and clear of any
Claims (other than restrictions imposed pursuant to the LLC Agreement).
After giving effect to the Conversion and the Closing, all outstanding
interests in the LLC have been duly authorized and issued under the LLC
Agreement and are fully paid and (except, as to the Non-Manager
Members, in connection with the Offshore Fund Adjustment and, as to all
Members, in connection with the establishment of reserves in accordance
with the provisions of the LLC Agreement) non-assessable. After giving
effect to the Conversion and the Closing, Buyer is the sole Manager
Member (as such term is defined in the LLC Agreement) and manager (as
such term is defined in the Delaware Act) of the LLC, and Buyer will
have good title to its interest in the LLC, as shown in Schedule 8.2.
Except as set forth in this Agreement or in the LLC Agreement, there
are no rights, commitments, agreements or understandings obligating or
which might obligate the LLC, the Company, any of the Partners or, to
the knowledge of the Company and each Partner, any other Person, to
issue, transfer, sell or redeem any securities or interests in the LLC.
Each Partner will be or is the record and beneficial owner of the
interests in the LLC shown as owned by it in Schedule 8.2 hereof, in
each case free and clear of any Claims other than restrictions imposed
pursuant to the LLC Agreement. The interests in the LLC shown as owned
by each Partner in Schedule 8.2 hereof constitute all the interests in
the LLC or rights in connection with interests in the LLC which are
held by such Person, directly or indirectly; and
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(ii) All of the accounts receivable of the Company
included in the Company's net worth or working capital for purposes of
Section 8.13 of this Agreement are enforceable and any reserves for
noncollectibility included in such net worth or working capital are
adequate under the requirements of GAAP.
(d) Each Partner shall have furnished Buyer with a certificate
dated as of the date of the Closing to the foregoing effect.
8.3 CLIENT CONSENTS AND APPROVALS.
(a) Clients of the Company whose advisory agreements provide
for the payment of fees constituting Gross Revenues calculated as of August 31,
1997 under Section 1.2(d) equal to at least ninety percent (90%) of Gross
Revenues calculated as of June 30, 1997 shall have Consented to the transactions
contemplated hereby, and advisory agreements which represent at least ninety
percent (90%) of the Gross Revenues calculated as of June 30, 1997 shall survive
the Conversion and the Closing and then be in full force and effect (or be
replaced by Comparable Contracts which are then in full force and effect).
(b) The Company shall have obtained Consent from each Mutual
Fund.
(c) At the Closing, the Company shall deliver a certificate
representing that Schedule 1.2 hereto is true, complete and correct and
certifying as to the calculation of the LLC Interest Purchase Price pursuant to
Section 1.2 and compliance with the foregoing, which certificate shall include
the calculation of compliance, including a list in the form of Schedule 3.7 of
all investment management or advisory contracts as of the date of calculation,
including all the categories of information set forth in Schedule 3.7.
8.4 REGISTRATION AS AN INVESTMENT ADVISER AND REGISTRATION OF
INVESTMENT ADVISER REPRESENTATIVES.
(a) The LLC shall be registered as an investment adviser under
the Advisers Act and the rules and regulations promulgated thereunder, and under
the laws of each state where such a registration may be necessary to enable the
LLC, after giving effect to the Conversion and the Closing, to conduct the
business of the Company in the manner conducted by the Company as of the date of
this Agreement.
(b) All applicable Employees shall be registered as investment
adviser representatives of the LLC under the laws of each state where such a
registration may be necessary or desirable (in the opinion of Buyer) to enable
the LLC, after giving effect to the Conversion and the Closing, to conduct the
business of the Company in the manner conducted by the Company as of the date of
this Agreement.
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8.5 REGISTRATION AS A BROKER-DEALER AND REGISTRATION OF REGISTERED
REPRESENTATIVES.
(a) The LLC and its Employees shall hold all of the Licenses
held by the Company and its Employees as of the date of this Agreement. The LLC
shall be registered as a broker-dealer under the Exchange Act and the rules and
regulations promulgated thereunder, and under the laws of each state, and shall
have such related Licenses as may be necessary to enable the LLC, after giving
effect to the Conversion and the Closing, to conduct the business of the Company
in the manner conducted by the Company as of the date of this Agreement.
(b) All applicable Employees shall be registered
representatives (within the meaning of the Exchange Act) of the LLC under the
Exchange Act and the laws of each state and shall have such related Licenses as
may be necessary to enable the LLC, after giving effect to the Conversion and
the Closing, to conduct the business of the Company in the manner conducted by
the Company as of the date of this Agreement.
8.6 OTHER APPROVALS. Except as otherwise specifically contemplated
hereby, all actions by or in respect of, or filings with or approvals of, any
self-regulatory organization, governmental body, agency, or official or
authority required to permit the consummation of the transactions contemplated
hereby so that after the Conversion and the Closing, the LLC shall be able to
carry on the business presently being conducted by the Company, in the manner
now conducted by the Company, shall have been taken, made or obtained, and any
and all other material permits, approvals, consents or other actions necessary
to consummate the transactions hereunder shall have been received or taken, and
none of such permits, approvals or consents shall contain any provisions which,
in the reasonable judgment of Buyer, are unduly burdensome.
8.7 CONVERSION. (a) The Conversion shall have occurred and (b) such
additional documents and instruments of transfer or conversion as Buyer shall
reasonably deem necessary in connection therewith, shall have been executed,
delivered and performed.
8.8 LLC AGREEMENT. Each Partner who is receiving interests in the LLC
shall have executed and delivered the LLC Agreement in substantially the form
attached hereto as Exhibit 2.2, with such changes therein as the Company and
Buyer may agree, upon advice of their respective counsel.
8.9 EMPLOYMENT AGREEMENTS. Each Partner (other than Xxxxx) shall have
entered into an Employment Agreement with the Company in the form and substance
materially consistent with Exhibit 8.9 hereto (each, an "Employment Agreement"
and collectively the "Employment Agreements"), and each such Employment
Agreement shall be in full force and effect for the benefit of the LLC at the
Closing.
8.10 INTENTIONALLY OMITTED.
8.11 AGREEMENTS WITH RESPECT TO PRIVATE FUNDS. Each Private Fund shall
have entered into an investment advisory agreement in form and substance
reasonably satisfactory to the
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Company and Buyer pursuant to which the Company shall provide investment
advisory services to such Private Fund, in consideration of a fee in the amount
of one and one half percent (1.5%) per annum of the net asset value of such
Private Fund on each valuation date (the "Private Fund Management Agreements"),
and each Private Fund Management Agreement shall be in full force in effect for
the benefit of the LLC upon the Conversion and at the Closing (having been
approved by all necessary consents or approvals and after the making of any
necessary filings).
8.12 AGREEMENTS WITH RESPECT TO OFFSHORE FUNDS. The Partners and the
managers or general partners of each Offshore Fund shall have entered into an
amendment to the existing management agreements in form and substance reasonably
satisfactory to the Company and Buyer pursuant to which the Company shall
provide investment advisory services to such Offshore Fund, in consideration of
a base fee in the amount of one half of one percent (0.5) per annum of the net
asset value of such Offshore Fund on each valuation date and an additional
payment, which shall initially be zero, but shall increase, subject to the
receipt of all necessary consents or approvals and the making of any necessary
filings to effect an amendment to the organizational documents of such Offshore
Fund as contemplated in Section 5.15, under certain circumstances contemplated
in the LLC Agreement to provide that the Performance Increment Accruals to
Manager Shares shall be reduced and the amount of such reduction paid to the LLC
(the "Offshore Management Agreements"), and each such Offshore Management
Agreement shall be in full force and effect (subject to the foregoing consents,
approvals and filings) for the benefit of the LLC upon the Conversion and at the
Closing.
8.13 CAPITALIZATION, NET WORTH AND WORKING CAPITAL OF THE LLC.
Immediately prior to the Closing, but after giving effect to the Conversion and
taking into account all transaction costs incurred by the Company or the LLC in
performing this Agreement which are not reimbursed by other Persons, the LLC
shall have a tangible net worth of at least one million seven hundred thousand
dollars ($1,700,000), working capital (defined as current assets less current
liabilities) of at least eight hundred thousand dollars ($800,000) and cash on
hand of at least one hundred seventy five thousand dollars ($175,000) (all as
determined in accordance with GAAP using the accrual method of accounting,
consistently applied), or such greater net worth, working capital or amount of
cash on hand as shall be necessary for the operation of the business of the LLC
consistent with past practices of the Company and applicable Investment Laws and
Regulations, including, without limitation, the net capital requirement
applicable to the Company as a registered broker-dealer.
8.14 DELIVERY. Each of the Company and the Partners shall have executed
(where applicable) and delivered to Buyer (or shall have caused to be executed
and delivered to Buyer by the appropriate person) the following:
(a) a copy of the Certificate of Conversion certified by the
Secretary of State of the State of Delaware, a copy of the Certificate of
Formation certified by the Secretary of State of the State of Delaware and all
such other documents of transfer and conversion as Buyer may reasonably require
in connection therewith;
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(b) a certificate issued by the appropriate Secretary of State
of each state in which, after giving effect to the Conversion, the LLC does
business certifying that the LLC, as applicable, is in good standing in such
state as of the most recent practicable date;
(c) true and correct copies of each of the agreements,
documents and instruments contemplated hereby (including, without limitation,
the LLC Agreement), and all agreements, documents, instruments and certificates
delivered or to be delivered in connection therewith;
(d) for each of the Partners of the Company (other than
Xxxxx), evidence that such person has had a physical examination within ninety
(90) days prior to the Closing, including a letter from a licensed physician
familiar with such person's health indicating that such person is in good health
at such date;
(e) a certificate of the Secretary of the LLC, certifying that
the Certificate of Conversion, Certificate of Formation and LLC Agreement in
paragraphs (a) and (c) above are in full force and effect and have not been
amended or modified, and that the officers of the LLC are those persons named in
the certificate;
(f) an opinion from counsel to the Company and the Partners,
in form and substance reasonably satisfactory to Buyer and its counsel;
(g) a release of the LLC from all liabilities other than those
arising out of the transactions or agreements contemplated hereby, from each of
the Partners in the form attached hereto as Exhibit 8.14(g); and
(h) such other certificates and documents as are required
hereby or are reasonably requested by Buyer, which certificates and documents
are hereby deemed to be referenced in this Agreement.
8.15 ESCROW AGREEMENT. Each Partner shall have entered into an Escrow
Agreement with Buyer and an escrow agent reasonably acceptable to the Partners
and Buyer (it being agreed that The Chase Manhattan Bank is acceptable)
providing for the establishment of an escrow fund in the initial aggregate
amount for all Partners of ********** dollars ($**), to be held for a period of
two (2) years plus the pendency of any claims for indemnification of any Buyer
Indemnified Parties asserted under Section 12 of this Agreement on or prior to
the Indemnification Cut-Off Date, which agreement shall be in form and substance
reasonably acceptable to the Partners, Buyer and such escrow agent and shall be
in full force and effect. It is contemplated that the escrow fund will initially
constitute cash and cash equivalents and that, under the Escrow Agreement, the
Partners shall have the authority to cause the escrow fund to be invested in
high grade fixed-income securities or in investment accounts or products made
available by the LLC.
8.16 EVIDENCE OF INSURABILITY. Buyer shall have received such evidence
as it shall deem necessary or appropriate as to the insurability of each of the
Persons listed in Schedule 3.25(b)
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hereto as and in amounts contemplated by the LLC Agreement with respect to both
key-man life insurance and disability insurance policies.
8.17 INSURANCE POLICIES. Each of the Company and the LLC shall have in
place insurance policies (a) with respect to the Company, covering liabilities
of directors and officers, in such amounts as previously disclosed to Buyer; (b)
with respect to the LLC, covering errors and omissions and other liabilities of
managers and officers, in such amounts as the Company and Buyer shall have
previously agreed; and (c) with respect to the LLC, as contemplated by Section
3.19.
8.18 MATERIAL ADVERSE CHANGE. There shall have been no event or
condition or events or conditions, which, either individually or in the
aggregate, is reasonably likely to have a Material Adverse Effect on the
condition (financial or otherwise), properties, assets, liabilities, business
operations or prospects of the LLC, and Buyer shall be provided with a
certificate from the President of the LLC to that effect at the Closing.
SECTION 9. CONDITIONS TO OBLIGATIONS OF THE COMPANY AND THE PARTNERS.
The obligation of the Company and the Partners to consummate this
Agreement and the transactions contemplated hereby is subject to the fulfillment
(or waiver by the Company), prior to or at the Closing, of the following
conditions precedent:
9.1 NO LITIGATION; NO OPPOSITION. No judgment, injunction, order or
decree enjoining or prohibiting any of Buyer or the Company or any of the
Partners or other parties to this Agreement or any of the agreements, documents
and instruments contemplated hereby, from consummating the transactions
contemplated hereby, or thereby shall have been entered and no suit, action or
proceeding shall be pending or threatened on the date of Closing before or by
any court or governmental body seeking to restrain or prohibit the execution and
delivery of this Agreement or any of the agreements, documents or instruments
contemplated hereby or the consummation of the transactions contemplated hereby
or thereby.
9.2 REPRESENTATIONS, WARRANTIES AND COVENANTS. Each of the
representations and warranties of Buyer (or made by any Person authorized by it
to make representations on its behalf) contained in this Agreement and in any
Schedule or Exhibit attached hereto and in each other contract, agreement, or
certificate contemplated hereby shall be true, correct and complete (a) in all
material respects as of the date of this Agreement and (b) in all material
respects as of the Closing Date as though made on and as of the Closing Date
(except to the extent such representations and warranties speak as of or are
limited to an earlier date); provided, however, that solely for purposes of
determining the satisfaction of the condition contained in this Section 9.2(b)
and not for purposes of determining liability under Section 12 hereof or
otherwise, no effect shall be given to any exception in such representations and
warranties relating to knowledge, materiality, or a Material Adverse Effect, and
such representations and warranties shall be deemed
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to be true, correct and complete in all material respects only if the failure or
failures of such representations and warranties to be so true, correct and
complete without regard to knowledge, materiality, and Material Adverse Effect
exceptions do not represent in the aggregate a Material Adverse Effect. Each and
all of the agreements, covenants, obligations and conditions to be performed,
complied with or satisfied by Buyer hereunder and under the other contracts and
agreements contemplated hereby at or prior to the Closing shall have been duly
performed, complied with or satisfied. Buyer shall have furnished the Partners
with a certificate dated as of the date of the Closing to the foregoing effect.
9.3 CLIENT CONSENT AND APPROVALS. The conditions set forth in Section
8.3 through 8.7 shall have been satisfied.
9.4 DELIVERY. Buyer shall have executed and delivered to the Company
and the Partners, the following:
(a) certified copies of resolutions of the board of directors
of Buyer authorizing the execution of this Agreement and each of the other
agreements, documents or instruments contemplated hereby to which Buyer is a
party;
(b) a copy of the Certificate of Incorporation and By-laws of
Buyer which, in the case of the Certificate of Incorporation is certified as of
a recent date by the Secretary of State of the State of Delaware;
(c) a certificate issued by the Secretary of State of the
State of Delaware certifying that Buyer is validly existing and in good standing
in Delaware as of the most recent practicable date;
(d) true and correct copies of each of the agreements,
documents and instruments contemplated hereby (including, without limitation,
the LLC Agreement) to which Buyer is a party, and all agreements, documents,
instruments and certificates delivered or to be delivered in connection
therewith by Buyer;
(e) a certificate of the Secretary of Buyer certifying that
the resolutions, Certificate of Incorporation and By-laws in paragraphs (a) and
(b) above are in full force and effect and have not been amended or modified,
and that the officers of Buyer are those persons named in the certificate; and
(f) an opinion from Xxxxxxx, Procter & Xxxx LLP in
substantially the form of Exhibit 9.4(f) hereto.
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SECTION 10. TERMINATION OF AGREEMENT; RIGHTS TO PROCEED.
10.1 TERMINATION. At any time prior to the Closing, this Agreement may
be terminated as follows:
(a) by mutual written consent of Buyer and the Company;
(b) by Buyer, pursuant to written notice by Buyer to the
Company and the Partners, if any of the conditions set forth in Section 8 of
this Agreement have not been satisfied at or prior to October 31, 1997, or if it
has become reasonably and objectively certain that any of such conditions will
not be satisfied at or prior to October 31, 1997, such written notice to set
forth such conditions which have not been or will not be so satisfied;
(c) by the Company, pursuant to written notice by the Company
to Buyer, if any of the conditions set forth in Section 9 of this Agreement have
not been satisfied at or prior to October 31, 1997, or if it has become
reasonably and objectively certain that any of such conditions will not be
satisfied at or prior to October 31, 1997, such written notice to set forth such
conditions which have not been or will not be so satisfied; provided, however,
that if any of the conditions set forth in Section 8 or Section 9 of this
Agreement are not satisfied for any reason other than material breach of this
Agreement by Buyer, then the termination right set forth in this Section 10.1(c)
shall be suspended, and may not be exercised, until December 15, 1997; and
(d) ********** [This subparagraph has been omitted pursuant to
the confidential treatment request referred to on the cover page hereto. The
contents of this subparagraph have been filed separately with the Commission.]
Notwithstanding the foregoing Sections 10.1(b) and (c), 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 10.1(b) or (c), as the case may be.
10.2 EFFECT OF TERMINATION. All obligations of the parties hereunder
shall cease upon any termination pursuant to Section 10.1; provided, however,
that (a) the provisions of this Section 10 and Sections 5.12, 7.2 and 14 hereof
shall survive any termination of this Agreement; (b) nothing in this Section
10.2 shall relieve any party from any liability for an error or omission in any
of its representations or warranties contained herein or a failure to comply
with any of its covenants, conditions or agreements contained herein, and (c)
any party may proceed as further set forth in Section 10.3 below.
10.3 RIGHT TO PROCEED. Anything in this Agreement to the contrary
notwithstanding, if any of the conditions specified in Section 8 hereof have not
been satisfied, Buyer shall have the right to proceed with the transactions
contemplated hereby without waiving any of its rights hereunder, and if any of
the conditions specified in Section 9 hereof have not been satisfied, the
Partners shall have the right to proceed with the transactions contemplated
hereby without waiving any of their rights hereunder.
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SECTION 11. RIGHTS AND OBLIGATIONS SUBSEQUENT TO CLOSING.
11.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. Each of the
representations, warranties, agreements, covenants and obligations herein or in
any schedule, exhibit or certificate delivered by any party to any other party
incident to the transactions contemplated hereby are material, shall be deemed
to have been relied upon by the other party and shall survive the Closing until
the second anniversary of the date of the Closing, except for the
representations and warranties made in Section 3.9 and each other representation
with respect to Taxes applicable to the Company or Tax related matters of the
Company (but only to the extent so related), which shall survive until the
expiration of the applicable statute of limitations, if any. The expiration of
any representation or warranty shall not affect any claim made prior to the date
of such expiration. All covenants herein not fully performed shall survive the
Closing and continue thereafter until fully performed. Any investigation, audit
or other examination that may have been made or may be made at any time by or on
behalf of the party to whom any such representation or warranty is made shall
not limit or diminish such representations and warranties, and the parties may
rely on the representations and warranties set forth in this Agreement
irrespective of any information obtained by them by any investigation, audit or
examination or otherwise.
11.2 REGULATORY FILINGS. Each of the Partners, the LLC and Buyer will
cooperate to enable Buyer and the LLC to make any and all regulatory filings
required by them with respect to the LLC or the transactions contemplated hereby
(including, by way of example and not of limitation, the filing of tax returns).
11.3 COVENANTS WITH RESPECT TO SECTION 15(f) OF THE INVESTMENT COMPANY
ACT.
(a) In accordance with Section 15(f) of the Investment Company
Act (i) for a period of three (3) years after the Closing, Buyer shall not
cause, and shall use all commercially reasonable efforts not to permit, any
"interested person" (as such term is defined in the Investment Company Act) of
Buyer or the LLC to become or to continue as a member of the Board of Directors
of the Mutual Funds unless, taking into account such interested person, at least
seventy-five percent (75%) of the members of such Board of Directors are not
interested persons of Buyer or the LLC and (ii) for a period of two (2) years
following the Closing, Buyer will not engage in or cause, and will use all
commercially reasonable efforts to prevent its Affiliates from engaging in or
causing, any act, practice or arrangement that imposes an unfair burden on the
Mutual Funds within the meaning of Section 15(f).
(b) In accordance with Section 15(f) of the Investment Company
Act (i) for a period of three (3) years after the effectiveness of the Closing
Date, the Partners and the LLC shall not cause, and shall use all commercially
reasonable efforts to cooperate with reasonable requests made by Buyer so as not
to permit, any "interested person" (as such term is defined in the Investment
Company Act) of Buyer, the Partners or the LLC to become or to continue as a
member of the Board of Directors of the Mutual Funds, and (ii) for a period of
two (2) years
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following the Closing, the Partners and the LLC will not engage in or cause, and
will use all commercially reasonable efforts to prevent their respective
Affiliates from engaging in or causing, any act, practice or arrangement that
imposes an unfair burden on the Mutual Funds within the meaning of Section
15(f), or if the Partners or the LLC and/or any of their respective Affiliates
or the Mutual Funds shall have obtained an order from the SEC providing an
exemption from the provisions of Section 15(f) or an opinion of counsel based on
judicial precedents under applicable federal law with respect to the meaning of
Section 15(f), which opinion is reasonably satisfactory in form and substance to
the Board of Directors of the Mutual Funds, then this Agreement shall be deemed
to be modified to the extent necessary to permit the Partners, the LLC and their
Affiliates to act in a manner consistent with such exemptive order or legal
opinion.
11.4 AGREEMENT OF CERTAIN PARTNERS. Effective for all periods on and
after the Closing, the Partners hereby amend the Agreement dated April 11, 1994
between Xxxxxxxxxxx X. Xxxxxx, Xxxxxxx X. Xxxxxx, Xxxx X. Xxxxxx as "Continuing
Partners" and Xxxxx X. Xxxxx, Xx. in the following respects: (i) the first
sentence of paragraph 4 of the recitals thereto is deleted, and the second
sentence of such paragraph 4 is amended to add the words ", other than
Affiliated Managers Group, Inc., a Delaware corporation, and its successors and
assigns ("AMG")," immediately after the words "any other person"; (ii) the first
sentence of Section 2 thereof is amended to state that "The Continuing Partners
undertake to cause to be allocated to Xxxxx with respect to the Covered Period
an amount equal to the sum of (A) the amounts allocable to him pursuant to
Article IV of the Limited Liability Company Agreement of Tweedy, Xxxxxx Company
LLC, dated as of the Closing Date, by and among AMG, the Continuing Partners,
Xxxxx and one or more of Xxxxxx Xxxxxxx and Xxxxxx X. Xxxxxxx, Xx., as amended
from time to time (the "LLC Agreement"), it being understood that Xxxxx'x
interest in Xxxxxx Xxxxxx and the Existing Partnerships listed in Exhibit C
shall be diluted pro rata with the Continuing Partners by the interests of AMG
and by interests and/or amounts (not in excess, for any one person, of 5% of the
income and profits of Xxxxxx Xxxxxx and 5% of the Covered Income of Covered
Entities other than Xxxxxx Xxxxxx) allocated and/or paid to Xxxxxxx, Xxxxxxx and
any other person (other than the Continuing Partners) who is active in the
business and becomes a Non-Manager Member (as such term is defined in the
aforementioned LLC Agreement), plus (B) 10% of the aggregate amount of the
salaries and bonuses paid by Xxxxxx Xxxxxx to Covered Persons, plus (C) 10% of
the Covered Income of the Covered Entities other than Xxxxxx Xxxxxx and the
Existing Partnerships listed in Exhibit C, calculated in accordance with Section
6."; (iii) the fourth sentence of Section 2 is amended to delete the phrase
"except that, in accordance with Section 6, the economic results of overlapping
fiscal periods shall be taken into account"; (iv) each of Xxxxxx Xxxxxx and the
Existing Partnerships listed in Exhibit C shall cease to be a Covered Entity for
purposes of Section 4; (v) Section 6 is deleted in its entirety and replaced
with "There shall be no reduction for salaries or bonuses to Covered Persons in
the calculation of Covered Income in the case of any Covered Entity, other than
Xxxxxx Xxxxxx and the Existing Partnerships listed in Exhibit C (it being
understood that the income and profits of Xxxxxx Xxxxxx shall be calculated in
accordance with the LLC Agreement). If any fiscal period of any Covered Entity,
other than Xxxxxx Xxxxxx and the Existing Partnerships listed in Exhibit C, is
partly within and partly without the Covered Period, the calculation of Covered
Income of such Covered Entity for such fiscal period shall be based upon the
income or profits of its entire fiscal period prorated on a daily
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basis."; (vi) Section 7 shall not apply to Xxxxxx Xxxxxx; (vii) Section 18 is
amended to add the words "with the prior written consent of AMG"; and (viii) a
new Section 22 shall be added to state "22. Third Party Beneficiary. AMG is an
intended third party beneficiary of the provisions of this Agreement. This
Agreement shall inure to the benefit of AMG and to any person or firm who may
succeed to substantially all of the assets of AMG."
SECTION 12. INDEMNIFICATION.
12.1 INDEMNIFICATION BY THE PARTNERS. The Partners agree subsequent to
the Closing to indemnify and hold Buyer and its subsidiaries and Affiliates and
persons serving as officers, directors, members, partners, stockholders, or
employees thereof or, to the extent the Loss claimed is suffered by the LLC, the
LLC (individually a "Buyer Indemnified Party" and collectively the "Buyer
Indemnified Parties") harmless from and against any damages, liabilities, losses
(including, without limitation, diminution in value), taxes, fines, penalties,
costs, and expenses (including, without limitation, reasonable fees and expenses
of counsel) of any kind or nature whatsoever (whether or not arising out of
third-party claims and including all amounts paid in investigation, defense or
settlement of the foregoing), and if the indemnified party is the LLC or is
claiming damage or harm through its interest in the LLC, net of any insurance
proceeds actually received by the LLC on account of insurance policies the
premiums on which were paid by the Company prior to the Conversion or by the LLC
out of Operating Cash Flow (as defined in the LLC Agreement), less the aggregate
premiums paid by the LLC for such insurance (collectively, "Losses") which may
be sustained or suffered by any of them arising out of, based upon any of the
following matters:
(a) fraud, intentional misrepresentation or any breach of any
representation, warranty or covenant of the Company or any Partner under this
Agreement or under any agreement, document or instrument contemplated hereby, or
in any certificate, schedule or exhibit delivered pursuant hereto or thereto, or
by reason of any claim, action or proceeding asserted or instituted growing out
of any matter or thing constituting such a breach; provided, however, that for
purposes of determining any such breach no effect shall be given to any
exception in any such representation, warranty or covenant relating to
knowledge, materiality, or a Material Adverse Effect; and
(b) the activities, conduct, business or operation of the
Company, the Private Funds, the Mutual Funds or the Offshore Funds prior to the
Closing, or arising out of facts, events or circumstances regarding the Company,
the Private Funds, the Mutual Funds or the Offshore Funds existing prior to the
Closing.
12.2 LIMITATIONS ON INDEMNIFICATION BY THE PARTNERS. Notwithstanding
the foregoing, the right of Buyer Indemnified Parties to indemnification under
Section 12.1 shall be subject to the following provisions:
(a) No indemnification shall be payable to a Buyer Indemnified
Party for Losses with respect to claims asserted pursuant to Section 12.1 above
(exclusive of any claims for
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indemnification arising out of, related to or based upon (i) fraud of the
Company or any Partner or (ii) Taxes applicable to the Company or based upon or
related to a breach of any representation, warranty or covenant with respect to
Taxes applicable to the Company or Tax related matters of the Company (whether
or not the representation which is breached specifically relates to Taxes
applicable to the Company) after the amount paid to Buyer Indemnified Parties by
the Partners under Section 12.1 of this Agreement exceeds ********** dollars
($**), provided that the purposes of this limitation, any payment to the LLC by
a Partner pursuant to the provisions of Section 12.1 of this Agreement shall be
treated as having been paid to Buyer Indemnified Parties in the amount equal to
the total amount paid to the LLC by such Partner, multiplied by the Free Cash
Flow Percentage (as defined in the LLC Agreement), multiplied by a fraction the
numerator of which is the number of LLC Points held by Buyer and the denominator
of which is the sum of the total number of LLC Points then outstanding and the
total number of Reserved Points (as defined in the LLC Agreement), all as
determined as of the date on which the payment under Section 12.1 is made to the
LLC.
(b) No indemnification shall be payable to a Buyer Indemnified
Party with respect to claims asserted pursuant to Section 12.1 above (exclusive
of any claims arising out of, related to or based upon (i) fraud of the Company
or any Partner or (ii) indemnification for Taxes applicable to the Company or
arising out of, based upon or related to a breach of any representation,
warranty or covenant with respect to Taxes applicable to the Company or Tax
related matters of the Company (whether or not the representation which is
breached specifically relates to Taxes) after the second anniversary of the date
of the Closing (the "Indemnification CutOff Date"); provided, however, that such
expiration shall not affect any claim with respect to which notice was given in
the manner contemplated by Section 12.5 hereof prior to the Indemnification
Cut-Off Date.
(c) ********** [This subparagraph has been omitted pursuant to
the confidential treatment request referred to on the cover page hereto. The
contents of this subparagraph have been filed separately with the Commission.]
12.3 INDEMNIFICATION BY BUYER. Buyer agrees to indemnify and hold the
Partners harmless from and against any Losses which may be sustained or suffered
by the Partners (either indirectly through their ownership of interests in the
Company or directly) arising out of or based upon any breach of any
representation, warranty or covenant made by Buyer in this Agreement or in any
agreement, document or instrument contemplated hereby, or in any certificate,
schedule or exhibit delivered pursuant hereto or thereto, or by reason of any
claim, action or proceeding asserted or instituted growing out of any matter or
thing constituting such a breach.
12.4 LIMITATION ON INDEMNIFICATION BY BUYER. Notwithstanding the
foregoing, the right of the Partners to indemnification under Section 12.3 shall
be subject to the following provisions:
(a) No indemnification shall be payable to the Partners with
respect to claims asserted pursuant to Section 12.3 above in amounts in excess
of twenty five million dollars ($25,000,000), less
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one-third (1/3) of the amount, if any, paid to the Members under Section 7 of
the LLC Agreement prior to the date any such claim is made.
(b) No indemnification shall be payable to the Partners with
respect to claims asserted pursuant to Section 12.3 above after the
Indemnification Cut-Off Date; provided, however, that such expiration shall not
affect any claim with respect to which notice was given in the manner
contemplated by Section 12.5 hereof prior to the Indemnification Cut-Off Date.
(c) No indemnification shall be payable to the Partners with
respect to claims asserted pursuant to Section 12.3 above unless the total of
all claims for indemnification pursuant to Section 12.3 shall exceed two million
five hundred thousand dollars ($2,500,000) in the aggregate, whereupon the full
amount of such claims shall be recoverable in accordance with the terms hereof.
12.5 NOTICE; DEFENSE OF CLAIMS. An indemnified party may make claims
for indemnification hereunder by giving written notice thereof to the
indemnifying party within the period in which indemnification claims can be made
hereunder. If indemnification is sought for a claim or liability asserted by a
third party, the indemnified party shall also give written notice thereof to the
indemnifying party promptly after it receives notice of the claim or liability
being asserted, but the failure to do so shall not relieve the indemnifying
party from any liability except to the extent that it is prejudiced by the
failure or delay in giving such notice. Such notice shall summarize the bases
for the claim for indemnification, the general nature and extent of the Losses
expected to be claimed and the details of any claim or liability being asserted
by a third party; provided, however, that the failure to provide complete
details or description of the general nature and extent of the losses shall not
relieve the indemnifying party from any liability except to the extent that it
is prejudiced by the failure to provide such information. Within twenty (20)
days after receiving such notice the indemnifying party shall give written
notice to the indemnified party stating whether it disputes the claim for
indemnification and whether it will defend against any third party claim or
liability at its own cost and expense. If the indemnifying party fails to give
notice that it disputes an indemnification claim within twenty (20) days after
receipt of notice thereof, it shall be deemed to have accepted and agreed to the
claim, which shall become immediately due and payable. The indemnifying party
shall be entitled to direct the defense against a third party claim or liability
with counsel selected by it (subject to the consent of the indemnified party,
which consent shall not be unreasonably withheld) as long as the indemnifying
party is conducting a good faith and diligent defense. The indemnified party
shall at all times have the right to fully participate in the defense of a third
party claim or liability at its own expense directly or through counsel;
provided, however, that if the named parties to the action or proceeding include
both the indemnifying party and the indemnified parties and the indemnified
parties are advised that representation of both parties by the same counsel
would be inappropriate under applicable standards of professional conduct, the
indemnified parties may engage a single separate counsel at the expense of the
indemnifying party. If no such notice of intent to dispute and defend a third
party claim or liability is given by the indemnifying party, or if such good
faith and diligent defense is not being or ceases to be conducted by the
indemnifying party, the indemnified party shall have the right, at the expense
of the indemnifying party, to undertake the defense of such claim or liability
(with counsel selected by the indemnified party), and, upon five
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(5) days notice to the indemnifying party, to compromise or settle it,
exercising reasonable business judgment. If the third party claim or liability
is one that by its nature cannot be defended solely by the indemnifying party,
then the indemnified party shall make available such information and assistance
as the indemnifying party may reasonably request and shall cooperate with the
indemnifying party in such defense, at the expense of the indemnifying party.
12.6 SATISFACTION OF THE PARTNERS' INDEMNIFICATION OBLIGATIONS. The
indemnification obligations of the Partners under this Section shall be
satisfied first out of the funds held in escrow pursuant to the Escrow
Agreement.
12.7 EXCLUSIVE REMEDY. Except in the case of claims arising out of,
based upon or related to fraud of the Company or any Partner, the
indemnification in this Section 12 shall be the exclusive remedy available to
any indemnified party against any indemnifying party for any Losses arising out
of or based upon the matters set forth in Sections 12.1 and 12.3 of this
Agreement, provided, however, that nothing herein shall limit the non-monetary
equitable remedies of any party hereto in respect to any breach of any covenant
or other agreement of any party required to be performed after the Closing. Any
and all disputes between the parties (except to the extent non-monetary
equitable remedies are sought) shall be resolved as contemplated in Section
14.2.
SECTION 13. DEFINITIONS.
13.1 DEFINITIONS. For purposes of this Agreement and the Exhibits and
Schedules hereto, the following terms shall have the respective meanings
specified in this Section 13.1
"Advisers Act" shall mean the Investment Advisers Act of 1940, as the
same may be amended from time to time, and any successor to such act.
"Affiliates" shall mean, with respect to any Person (herein the "first
party"), any other Person that directly or indirectly controls, or is controlled
by, or is under common control with, such first party. The term "control" as
used herein (including the terms "controlled by" and "under common control
with") means the possession, directly or indirectly, of the power to (a) vote
fifty percent (50%) or more of the outstanding voting securities of such Person
or (b) otherwise direct the management or policies of such Person by contract or
otherwise.
"Agreement of Limited Partnership" shall have the meaning specified in
Section 3.2(a) hereof.
"BMA" shall mean the Bermuda Monetary Authority.
"Base Balance Sheet" shall have the meaning specified in Section
3.8(a)(i) hereof.
"Brokerage Services" any services (other than Investment Management
Services) which involve the effecting of transactions in securities or the
buying and selling of securities as part of a regular business.
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"Buyer" shall have the meaning specified in the preamble hereto.
"Buyer Indemnified Party" shall have the meaning specified in Section
12.1 hereof.
"Certificate of Conversion" shall have the meaning specified in Section
2.1 hereof.
"Certificate of Formation" shall have the meaning specified in Section
2.1 hereof.
"Certificate of Limited Partnership" shall have the meaning specified
in Section 3.2(a) hereof.
"Claims" shall have the meaning specified in Section 1.1(a) hereof.
"Class A LLC Points" shall have the meaning specified in the LLC
Agreement.
"Client" shall mean any Person to whom the Company provides Investment
Management Services or Brokerage Services and, with respect to the Private Funds
and the Offshore Funds (but not the Mutual Funds) shall include each partner or
shareholder of such Private Fund or Offshore Fund.
"Closing" shall have the meaning specified in Section 1.3 hereof.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and any successor code thereto. For purposes of this Agreement,
all references to Sections of the Code shall include any predecessor provisions
to such Sections and any similar provisions of federal, state, local or foreign
law.
"Commodity Exchange Act" shall mean the Commodity Exchange Act, 7
U.S.C. Section 1 et. seq., as the same may be amended from time to time, and any
successor to such act.
"Company" shall mean Tweedy, Xxxxxx Company L.P., a Delaware limited
partnership, and shall include, unless otherwise specifically required by the
context, the LLC as a continuation of the Company at and after the Conversion.
"Comparable Contract" means a new contract between the LLC and the
party or parties to a prior contract with the Company which new contract is
substantially the same as such prior contract with the Company and is at least
as favorable in all respects (including without limitation with respect to
advisory fees) to the LLC as such prior contract (as in effect on the date
hereof) was to the Company.
"Consent" shall mean (a) with respect to an ERISA Client whose contract
by its terms terminates upon the consummation of the transactions contemplated
hereby, that the LLC shall have entered into a new contract on substantially
equivalent terms which contract is effective after giving effect to the
Conversion and the Closing; (b) with respect to a Private Fund or an Offshore
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Fund, such Private Fund or Offshore Fund shall have provided such consent as may
be required under the applicable contract and made such filings or obtained such
approvals as may be required by applicable law, and (c) with respect to a Mutual
Fund, the Company shall have obtained from each Mutual Fund (with the approval
of the Board of Directors (including a majority of the members of the Board of
Directors who are not "interested persons" (as such term is defined in the
Investment Company Act) and the shareholders of each Mutual Fund at a
shareholders meeting) new investment advisory contracts that are Comparable
Contracts, effective as of the Closing and (d) with respect to all other
Clients, the Company shall have complied in full with the procedures set forth
in Section 5.2 and not received from such Client a statement or indication that
such Client withholds or refuses to give its Consent as of the Closing.
Notwithstanding the foregoing, no Client of the Company shall be deemed to have
given its Consent or been retained as a Client if such Client has expressed an
intent to terminate its investment relationship with the Company and a Client
shall be deemed to have effected a partial withdrawal of assets to the extent
that such Client has expressed an intent to significantly reduce its investment
relationship with the Company or to adjust the fee schedule with respect to one
or more of its contracts in a manner that would materially reduce the revenues
attributable to such contract(s).
"Conversion" shall have the meaning specified in Section 2.1 hereof.
"Delaware Act" shall mean the Delaware Limited Liability Company Act, 6
Del. C. Section 18-101, et. seq., as amended from time to time, and any
successor to such act.
"Delivery Date" shall have the meaning specified in Section 1.7.
"Due Inquiry" shall mean consultation with each Partner and with the
Company's senior officers, senior employees, members, representatives and agents
but shall not include docket searches or inquiry of other third parties.
"Employees" shall have the meaning specified in Section 3.26.
"Employment Agreement" shall have the meaning specified in Section 8.9.
"Employment Arrangement" shall have the meaning specified in Section
3.26 hereof.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time, and any successor to such act.
"ERISA Client" shall have the meaning specified in Section 3.7(b)
hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, and any successor to such act.
"Free Cash Flow Percentage" shall have the meaning specified in Section
1.2(a) hereof.
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"GAAP" shall mean United States generally accepted accounting
principles as in effect from time to time and, with respect to the Offshore
Funds, shall mean international generally accepted accounting principles in
effect from time to time.
"Global Intrinsic Value Fund" shall mean Global Intrinsic Value Fund, a
mutual fund company organized under the laws of Bermuda.
"Gross Revenues" shall mean, as of the date of measurement, the sum of:
(a) the aggregate revenues from all investment accounts
(excluding the Offshore Funds and excluding the accounts covered by paragraphs
(c) and (e) below) to which the Company provides Investment Management Services
(and excluding for these purposes accounts of any Client whose commitment for
assets to be managed by the Company as set forth in such Client's contract with
the Company has not been fully invested except for cash balances in accordance
with customary practices of the Company), determined by multiplying the net
assets of each such account under management by the Company as of such date by
the applicable annualized advisory services fee rate in effect as of such date
with respect to such Client account (net of any fee reimbursements or waivers
and without giving effect to any performance or incentive fee);
(b) the product of (x) the net assets under management in each
Offshore Fund as of such date and (y) one and one half percent (1.5%), net of
any fee reimbursements and waivers;
(c) with respect to each Client of the Company whose
commitment for assets to be managed by the Company as set forth in such Client's
contract with the Company has not been fully invested (except for cash balances
in accordance with customary practices of the Company), the aggregate revenues
from each such account, determined to be an amount that is the greater of (i)
the product of fifty percent (50%) of the net assets of such account committed
to be managed by the Company as set forth in such Client's contract with the
Company and the applicable annualized advisory services fee rate in effect as of
such date with respect to such account or (ii) the product of the non-cash net
assets of such account under management by the Company as of such date and the
applicable annualized advisory services fee rate in effect as of such date with
respect to such account (in each case, net of any fee reimbursements or
waivers);
(d) one million five hundred thousand dollars ($1,500,000),
which represents an estimate of the annualized positive difference between (i)
the aggregate revenues from the provision of Brokerage Services and (ii)
commission expenses and clearing charges paid by the LLC in connection with the
provision of such Brokerage Services during the current year; and
(e) with respect to each investment account under management
by the Company which has a performance fee component, an amount equal to the
product of (x) the net assets under management in that account as of such date,
and (y) one and one-half percent (1.50%) (net of any fee reimbursements and
waivers).
"IML" shall mean the Institute Monetaire Luxembourgeois.
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"Immediate Family" shall mean, with respect to any individual, such
individual's former spouse, spouse, parents, grandparents, children,
grandchildren and siblings (and estates, trusts, partnerships and other entities
and legal relationships of which a substantial 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 individual).
"Indemnification Cut-Off Date" shall have the meaning specified in
Section 12.2(c) hereof.
"Intellectual Property" shall have the meaning specified in Section
3.14(a).
"Investment Company Act" shall mean the Investment Company Act of 1940,
as the same may be amended from time to time, and any successor to such act.
"Investment Laws and Regulations" shall have the meaning specified in
Section 3.17.
"Investment Management Services" shall mean any services which involve
(a) the management of an investment account or fund (or portions thereof or a
group of investment accounts or funds), or (b) the giving of advice with respect
to the investment and/or reinvestment of assets or funds (or any group of assets
or funds).
"IRS" shall mean the Internal Revenue Service.
"Licenses" shall have the meaning specified in Section 3.18(f) hereof.
"LLC" shall have the meaning specified in the preamble hereto.
"LLC Agreement" shall mean the Limited Liability Company Agreement of
the LLC in substantially the form attached hereto as Exhibit 2.2, as the same
may be amended from time to time in accordance with its terms.
"LLC Capital Account" shall mean a Capital Account as defined in the
LLC Agreement.
"LLC Interest Purchase Price" shall have the meaning specified in
Section 1.1(b) hereof.
"LLC Points" shall have the meaning specified in the LLC Agreement.
"Losses" shall have the meaning specified in Section 12.1 hereof.
"Material Adverse Effect" shall mean, with respect to a Person, a
material adverse effect on the condition (financial or otherwise), properties,
assets, liabilities, business, operations or prospects of such Person.
"Mutual Funds" shall mean Tweedy, Xxxxxx Global Value Fund and Tweedy,
Xxxxxx American Value Fund, each a series of Tweedy, Xxxxxx Fund Inc. a Maryland
corporation.
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"Mutual Fund Agreements" shall have the meaning specified in Section
3.28(a).
"Mutual Fund Financial Statements" shall have the meaning specified in
Section 3.28(h).
"Mutual Fund Tax Returns" shall have the meaning specified in Section
3.28(f).
"NASD" shall mean the National Association of Securities Dealers, Inc.
"Offshore Financial Statements" shall have the meaning specified in
Section 3.29(f) hereof.
"Offshore Fund Agreements" shall have the meaning specified in Section
3.29(a) hereof.
"Offshore Funds" shall mean Tweedy, Xxxxxx USA Value Fund, Xxxxxx
Xxxxxx International Value Fund and Tweedy Xxxxx International Swiss Franc Fund,
each a series of Tweedy, Xxxxxx Value Funds, a societe d'investissement a
capital variable established under the laws of the Grand Duchy of Luxembourg,
and Global Intrinsic Value Fund.
"Offshore Management Agreements" shall have the meaning specified in
Section 8.12 hereof.
"Offshore Tax Returns" shall have the meaning specified in Section
3.29(e) hereof.
"Offshore Related Partnerships" shall mean Alpine, Partners, L.P.,
Belgravia Partners, L.P., Genpar Partners II, L.P., Tweeco Partners, L.P. and 52
Associates, L.P., each a Delaware limited partnership, and any successors
thereto holding interests in the investment portfolio of the Offshore Funds.
"Organizational Documents" shall mean, up to the time of Conversion,
the Certificate of Limited Partnership and the Agreement of Limited Partnership,
and from and after the time of Conversion, the Certificate of Formation and the
LLC Agreement.
"Performance Increment Accruals to Manager Shares" shall mean the
definitive Performance Increment (within the meaning of the organizational
documents of the Offshore Funds) booked for the benefit of the Manager's Shares
(within the meaning of the organizational documents of the Offshore Funds).
"Person" shall mean any individual, partnership (general or limited),
corporation, limited liability company, limited liability partnership,
association, trust, joint venture, unincorporated organization, and any
government, governmental department or agency or political subdivision thereof.
"Private Fund Management Agreements" shall have the meaning specified
in Section 8.11 hereof.
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"Private Fund Financial Statements" shall have the meaning specified in
Section 3.27(d).
"Private Fund Tax Returns" shall have the meaning specified in Section
3.27(c).
"Private Funds" means TBK Partners, L.P., a Delaware limited
partnership, and Vanderbilt Partners, L.P., a Delaware limited partnership.
"Purchased Percentage" shall have the meaning specified in Section
1.2(a) hereof
"Purchased LLC Interest" shall have the meaning specified in Section
1.1 hereof.
"SEC" shall mean the Securities and Exchange Commission, or any
successor agency thereto.
"Securities Act" shall mean the Securities Act of 1933, as the same may
be amended from time to time, and any successor to such act.
"Taxes" shall have the meaning specified in Section 3.9(a) hereof.
"Taxing Authority" shall have the meaning specified in Section 3.9(c)
hereof.
SECTION 14. MISCELLANEOUS.
14.1 FEES AND EXPENSES.
(a) Buyer shall pay its own expenses incident to the
negotiation and consummation of the transactions contemplated by this Agreement
and the agreements, instruments and documents contemplated hereby. The Partners
shall pay their own expenses (and the expenses of the Company, the LLC, the
Private Funds, the Mutual Funds, the Offshore Funds and the Related Offshore
Partnerships) incident to the negotiation and consummation of the transactions
contemplated by this Agreement and the agreements, instruments and documents
contemplated hereby.
(b) The Company will pay all costs incurred, whether at or
subsequent to the Closing, in connection with the transfer of the Purchased LLC
Interest to Buyer as contemplated by this Agreement, including without
limitation, all transfer taxes and charges applicable to such transfer, and all
costs of obtaining permits, waivers, registrations or consents with respect to
any assets, rights or contracts of the Company.
(c) Notwithstanding the foregoing, the Partners collectively
and Buyer shall each be responsible for fifty percent (50%) of the expenses and
costs of printing and mailing the proxy statement and hiring a proxy solicitor
to obtain Consent from the Mutual Funds for the transactions contemplated
hereby.
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14.2 DISPUTE RESOLUTION. All disputes arising in connection with this
Agreement shall be resolved by binding arbitration in accordance with the
applicable rules of the American Arbitration Association. The arbitration shall
be held in The Commonwealth of Massachusetts before a single arbitrator selected
in accordance with Section 12 of the American Arbitration Association Commercial
Arbitration Rules who shall have substantial business experience in the
investment advisory industry, and shall otherwise be conducted in accordance
with the American Arbitration Association Commercial Arbitration Rules.
14.3 WAIVERS. Any waiver of any terms or conditions or of the breach of
any covenant, representation or warranty of this Agreement in any one instance,
shall not operate as or be deemed to be or construed as a further or continuing
waiver of any other breach of such term, condition, covenant, representation or
warranty or any other term, condition, covenant, representation or warranty, nor
shall any failure or delay at any time or times to enforce or require
performance of any provision hereof operate as a waiver of or affect in any
manner such party's right at a later time to enforce or require performance of
such provision or of any provision hereof; provided, however, that no such
waiver, unless it, by its own terms, explicitly provides to the contrary, shall
be construed to effect a continuing waiver of the provision being waived and no
such waiver in any instance shall constitute a waiver in any other instance or
for any other purpose or impair the right of the party against whom such waiver
is claimed in all other instances or for all other purposes to require full
compliance. The rights and remedies herein provided shall be cumulative and not
exclusive of any rights or remedies provided by law.
14.4 GOVERNING LAW. This Agreement shall be construed under and
governed by the internal laws of The Commonwealth of Massachusetts without
regard to its conflict of laws provisions.
14.5 NOTICES. Any notice, request, demand or other communication
required or permitted hereunder shall be in writing and shall be deemed to have
been given if delivered or sent by facsimile transmission, upon receipt, or if
sent by registered or certified mail, upon the sooner of the date on which
receipt is acknowledged or the expiration of three days after deposit in United
States post office facilities properly addressed with postage prepaid. All
notices to a party will be sent to the addresses set forth below or to such
other address or person as such party may designate by notice to each other
party hereunder:
TO BUYER: Affiliated Managers Group, Inc.
Xxx Xxxxxxxxxxxxx Xxxxx, 00xx Xxxxx
Xxxxxx, XX 00000
Attn: Xxxxxxxxx Xxxxxx, Senior Vice President
Facsimile No.: (000) 000-0000
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With a copy to: Xxxxxxx, Procter & Xxxx XXX
Xxxxxxxx Xxxxx
Xxxxxx, XX 00000
Attn: Xxxxxxx X. Floor, P.C.
Facsimile No.: (000) 000-0000
TO COMPANY: Tweedy, Xxxxxx Company L.P.
00 Xxxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxxxxxx X. Xxxxxx
Facsimile No.: (000) 000-0000
With a copy to: Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. Xxxxx, Esq.
Facsimile No.: (000) 000-0000
TO ANY PARTNER c/o Tweedy, Xxxxxx Company L.P.
00 Xxxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxxxxxx X. Xxxxxx
Facsimile No.: (000) 000-0000
With a copy to: Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. Xxxxx, Esq.
Facsimile No.: (000) 000-0000
TO THE LLC:
Tweedy, Xxxxxx Company LLC
00 Xxxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxxxxxx X. Xxxxxx
Facsimile No.: (000) 000-0000
With a copy to: Affiliated Managers Group, Inc.
Xxx Xxxxxxxxxxxxx Xxxxx, 00xx Xxxxx
Xxxxxx, XX 00000
Attn: Xxxxxxxxx Xxxxxx, Senior Vice President
Facsimile No.: (000) 000-0000
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Any notice given hereunder may be given on behalf of any party by his counsel or
other authorized representatives.
14.6 ENTIRE AGREEMENT. This Agreement, including the Schedules and
Exhibits referred to herein and the other writings specifically identified
herein or contemplated hereby, is complete, reflects the entire agreement of the
parties with respect to its subject matter, and supersedes all previous written
or oral negotiations, commitments and writings. No promises, representations,
understandings, warranties and agreements have been made by any of the parties
hereto except as referred to herein or in such Schedules and Exhibits or in such
other writings; and all inducements to the making of this Agreement and the
transactions contemplated hereby which were relied upon by either party hereto
have been expressed herein or in such Schedules or Exhibits or in such other
writings.
14.7 ASSIGNABILITY; BINDING EFFECT. This Agreement or any of the
obligations or rights hereunder (i) may not assigned by Buyer without the prior
written consent of the Company prior to the Closing and the prior written
consent of the Partners after the Closing, except that Buyer may at any time
assign this Agreement or such obligation or rights to a wholly owned subsidiary
of Buyer established either (a) solely for the purpose of holding Buyer's
interest in the Company following the Closing or (b) in connection with a
reincorporation merger or similar transaction of Buyer and (ii) may not be
assigned by any of the Company, the LLC or the Partners without the prior
written consent of Buyer; that Buyer hereby assents and agrees to the assignment
by operation of law of the Agreement from the Company to the LLC pursuant to the
Conversion. Subject to the foregoing, this Agreement shall be binding upon and
enforceable by, and shall inure to the benefit of, the parties hereto and their
respective successors and permitted assigns, including without limitation the
LLC upon the Conversion. Upon assignment permitted hereby, Buyer shall cause the
assignee to perform the obligations of Buyer hereunder and such assignee shall
be substituted for Buyer hereunder except to the extent the context otherwise
specifically requires.
14.8 AMENDMENTS. This Agreement may not be amended or modified, nor may
compliance with any condition or covenant set forth herein be waived, except by
a writing duly and validly executed (a) by Buyer and the Company prior to the
Closing and (b) by Buyer and the Partners after the Closing, or in the case of a
waiver, the party waiving compliance.
14.9 CONSENT TO JURISDICTION. Each of the parties hereby consents to
personal jurisdiction, service of process and venue in the federal or state
courts sitting in The Commonwealth of Massachusetts for any claim, suit or
proceeding arising under this Agreement to enforce any arbitration award or
obtain equitable relief, or in the case of a third party claim subject to
indemnification hereunder, in the court where such claim is brought and hereby
irrevocably agrees that all claims in respect of such action or proceeding may
be heard and determined in such state court or, to the extent permitted by law,
in such federal court. Each of the parties hereby irrevocably consents to the
service of process in any such action or proceeding by the mailing by certified
mail of copies of any service or copies of the summons and complaint and any
other process to such party at the address specified in Section 14.5 hereof. the
parties agree that a final judgment in any such action or proceeding shall be
conclusive and may be
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enforced in other jurisdictions by suit on the right of a party to service legal
process in any other manner permitted by law or affect the right of a party to
bring any action or proceeding in the courts of other jurisdictions.
14.10 CAPTIONS AND GENDER. The captions in this Agreement are for
convenience only and shall not affect the construction or interpretation of any
term or provision hereof. The use in this Agreement of the masculine pronoun in
reference to a party hereto shall be deemed to include the feminine or neuter,
as the context may require.
14.11 EXECUTION IN COUNTERPARTS. For the convenience of the parties and
to facilitate execution, this Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same document.
14.12 PUBLICITY AND DISCLOSURES. No press releases or public
disclosure, either written or oral, of the transactions contemplated by this
Agreement, shall be made by a party to this Agreement without the prior
knowledge and written consent of Buyer and the Company, except as may be
otherwise required by applicable laws, rules and regulations (including, without
limitation, the Securities Act, the Exchange Act and the rules and regulations
promulgated thereunder in connection with the preparation and filing of one or
more registration statements (including any exhibits, supplements and amendments
thereto) for the purpose of registering securities of Buyer under the Securities
Act or registering Buyer under the Exchange Act).
[END OF TEXT]
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IN WITNESS WHEREOF the parties hereto have caused this Agreement to be
executed as of the date set forth above by their duly authorized
representatives.
BUYER:
AFFILIATED MANAGERS GROUP, INC.
By:/s/ Xxxxxxx X. Xxxx
-------------------------------------
Name: Xxxxxxx X. Xxxx
-----------------------------------
Title: President and CEO
----------------------------------
COMPANY:
TWEEDY, XXXXXX COMPANY L.P.
By:/s/ Xxxxxxx X. Xxxxxx
-------------------------------------
Name: Xxxxxxx X. Xxxxxx
-----------------------------------
Title: General Partner
----------------------------------
/s/ Xxxxxxxxxxx X. Xxxxxx
----------------------------------------
Xxxxxxxxxxx X. Xxxxxx
/s/ Xxxxxxx X. Xxxxxx
----------------------------------------
Xxxxxxx X. Xxxxxx
/s/ Xxxx X. Xxxxxx
----------------------------------------
Xxxx X. Xxxxxx
/s/ Xxxxx X. Xxxxx, Xx.
----------------------------------------
Xxxxx X. Xxxxx, Xx.
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