Exhibit 2.5
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STOCK PURCHASE AGREEMENT
AMONG
IPSWICH CAPITAL INVESTMENT CORP.,
THE XX XXXXX GROUP, INC.,
THE SELLERS NAMED HEREIN,
THE SELLERS' REPRESENTATIVE NAMED HEREIN
AND
THE FIRST NATIONAL BANK OF IPSWICH
(WITH RESPECT TO SECTION 8.9 ONLY)
November 24, 2004
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TABLE OF CONTENTS
1. PURCHASE AND SALE OF THE SHARES............................................1
1.1. Purchase and Sale................................................1
1.2. Purchase Price...................................................1
1.3. The Closing......................................................1
1.4. Deferred Payments................................................2
1.5. Initial Purchase Price...........................................4
2. REPRESENTATIONS AND WARRANTIES RELATING TO THE SELLERS.....................5
2.1. Authorization....................................................6
2.2. No Violation or Approval.........................................6
2.3. Title to Shares..................................................6
2.4. Brokers, Finders, etc............................................6
3. REPRESENTATIONS AND WARRANTIES RELATING TO THE COMPANY.....................7
3.1. Organization.....................................................7
3.2. Authorization....................................................7
3.3. Capitalization...................................................7
3.4. Subsidiaries.....................................................8
3.5. No Violation or Approval; Consents...............................8
3.6. Financial Statements; No Undisclosed Liabilities.................8
3.7. Absence of Changes; Operations in Ordinary Course................9
3.8. Taxes............................................................9
3.9. Properties......................................................11
3.10. Operations in Conformity with Law; Permits......................11
3.11. Benefit Plans...................................................12
3.12. Labor Relations.................................................13
3.13. Intellectual Property...........................................13
3.14. Environmental Matters...........................................15
3.15. Contracts.......................................................15
3.16. Transactions with Affiliates....................................16
3.17. Litigation......................................................16
3.18. Insurance Coverage..............................................17
3.19. No Illegal Payments, etc........................................17
3.20. Advisory Accounts...............................................17
3.21. Registration under the Advisers Act.............................18
3.22. Ineligible Persons..............................................18
3.23. Disciplinary Information........................................18
3.24. Brokers, Finders, etc...........................................18
4. REPRESENTATIONS AND WARRANTIES RELATING TO THE BUYER......................18
4.1. Organization....................................................18
4.2. Authorization...................................................18
4.3. No Violation or Approval........................................19
4.4. Brokers, Finders, etc...........................................19
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4.5. Investment Representation.......................................19
4.6. Financing.......................................................19
5. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE BUYER......................19
5.1. Representations and Warranties..................................19
5.2. Performance of Obligations......................................20
5.3. Injunctions, etc................................................20
5.4. Governmental Approvals..........................................20
5.5. Consents........................................................20
5.6. No Material Adverse Effect......................................20
5.7. Officer's Certificate...........................................20
5.8. Opinion of Counsel..............................................20
5.9. Resignations....................................................21
5.10. Corporate Proceedings...........................................21
5.11. FIRPTA..........................................................21
5.12. Employment Agreements...........................................21
5.13. Profit Sharing Plan.............................................21
5.14. Minimum Cash Balance............................................21
5.15. Fees............................................................21
5.16. General.........................................................21
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SELLERS........................22
6.1. Representations and Warranties..................................22
6.2. Performance of Obligations......................................22
6.3. Injunctions, etc................................................22
6.4. Governmental Approvals..........................................22
6.5. Officer's Certificate...........................................22
6.6. Profit Sharing Plan.............................................22
6.7. Termination of Lease Guarantee..................................22
6.8. General.........................................................22
7. COVENANTS OF THE PARTIES..................................................23
7.1. Access..........................................................23
7.2. Conduct of Business.............................................23
7.3. Exclusivity.....................................................24
7.4. Non-Competition; Non-Solicitation...............................24
7.5. Preparation for Closing.........................................26
7.6. Confidentiality.................................................26
7.7. Director and Officer Liability..................................27
7.8. Transfer Taxes..................................................27
7.9. S Corporation Status............................................27
7.10. Section 338(h)(10) Election.....................................27
7.11. Allocation of Purchase Price....................................28
7.12. Board of Directors..............................................28
7.13. New Accounts....................................................28
7.14. Books and Records...............................................29
7.15. Accounts Receivable.............................................29
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7.16. Articles of Incorporation.......................................29
7.17. Further Assurances..............................................29
8. INDEMNIFICATION...........................................................29
8.1. Survival of Representations, Warranties, Covenants and
Indemnities.................................................29
8.2. Indemnity by the Company........................................30
8.3. Indemnity by C Xxxxxxx xx Xxxxx, Xx.............................30
8.4. Indemnity by Sellers Other than C. Xxxxxxx xx Xxxxx, Xx.........31
8.5. Indemnity by the Buyer..........................................32
8.6. Limitations on Indemnity........................................32
8.7. Matters Involving Third Parties.................................33
8.8. Calculation of Losses...........................................34
8.9. Guarantee.......................................................34
8.10. Exclusive Remedy................................................34
9. DEFINITIONS...............................................................34
10. MISCELLANEOUS............................................................43
10.1. Appointment of the Sellers' Representative......................43
10.2. Notices.........................................................45
10.3. Expenses of Transaction.........................................46
10.4. Entire Agreement................................................46
10.5. Assignment; No Third Party Beneficiaries........................46
10.6. Governing Law; Consent to Jurisdiction; etc.....................47
10.7. [Intentionally Omitted.]........................................47
10.8. Counterparts....................................................47
10.9. Headings........................................................47
10.10. Termination.....................................................47
10.11. Effect of Termination...........................................49
10.12. Schedules; Listed Documents, etc................................49
10.13. Construction....................................................49
10.14. Severability....................................................49
10.15. Amendment and Waiver............................................50
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List of Schedules
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1.1 Shares
2.3 Title to Shares
3.3 Capitalization
3.5 No Violation or Approval; Consents
3.6 No Undisclosed Liabilities
3.7(1) No Material Adverse Effect
3.7(2) Operations in the Ordinary Course
3.7(3) No Change in Clients
3.8 Taxes
3.9 Leases
3.10(1) Operations in Conflict with Law
3.10(2) Permits
3.11 Benefit Plans
3.12 Labor Relations
3.13(1) Company Intellectual Property
3.13(2) Written Licenses
3.14 Environmental Matters
3.15 Contracts
3.16 Transactions with Affiliates
3.17 Litigation
3.18 Insurance Coverage
3.20 Advisory Accounts
3.23 Disciplinary Information
4.4 Brokers, Finders, etc.
7.2(2)(h) Transactions with Affiliates
7.11 Expected Allocation of Purchase Price
List of Exhibits
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A Example Calculations of Deferred Payments
B Form of Opinion of Counsel
C-1 Form of Employment Agreement for C. Xxxxxxx xx Xxxxx, Xx.
C-2 Forms of Employment Agreements for Xxxxx X. Xxxxxxx and Xxxxxxx
X.X. Xxxxxxx
C-3 Forms of Severance Letters for Xxxxxx X. Xxxxxx, Xxxxx X. Marcinow
and Xxxxxx X. Xxxxxxx
D Amendment to Certificate of Incorporation of the Company
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made as of November
24, 2004 by and among IPSWICH CAPITAL INVESTMENT CORP., a Massachusetts
corporation (the "Buyer"); The xx Xxxxx Group, Inc., a Massachusetts corporation
(the "Company"); C. Xxxxxxx xx Xxxxx, Xx., Xxxxx X. Xxxxxxx, Xxxxxxx X.X.
Xxxxxxx, Xxxxxx X. Xxxxxxx, Xxxxx X. Marcinow, Xxxxxx X. Xxxxxx, AND Xxxxx X. xx
xxxxx (collectively, the "Sellers"); and C. Xxxxxxx xx Xxxxx, Xx., as the
Sellers' Representative; and, with respect to Section 8.9 only, THE FIRST
NATIONAL BANK OF IPSWICH (the "Guarantor"), on the terms and conditions set
forth herein.
WHEREAS, the Company conducts an investment advisory business (the
"Business");
WHEREAS, the Sellers are the record and beneficial owners of all of the
outstanding shares of capital stock of the Company; and
WHEREAS, the Sellers desire to sell to the Buyer, and the Buyer desires to
purchase from the Sellers, the Shares (as hereinafter defined), upon the terms
and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of these premises, the respective
covenants of the Buyer, the Company, the Sellers and the Sellers' Representative
set forth herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Purchase and Sale of the Shares.
1.1. Purchase and Sale. Upon the terms and subject to the conditions of
this Agreement and in reliance on the representations and warranties set forth
in this Agreement, each Seller agrees to sell to the Buyer, and the Buyer agrees
to purchase from each Seller, at the Closing, the number of Shares set forth
opposite each such Seller's name on Schedule 1.1 for such Seller's Pro Rata
Portion of the purchase price specified in Section 1.2.
1.2. Purchase Price. The aggregate purchase price to be paid by the Buyer
to the Sellers for the Shares shall be cash in an amount up to $4,500,500 (the
"Purchase Price"). The Purchase Price shall be paid as provided in Sections 1.3
and 1.4 and shall be determined pursuant to Sections 1.4 and 1.5.
1.3. The Closing. The closing (the "Closing") of the purchase and sale of
the Shares hereunder shall be held at the offices of Ropes & Xxxx LLP, Xxx
Xxxxxxxxxxxxx Xxxxx, Xxxxxx, XX 00000, on or about December 31, 2004, subject to
the satisfaction of the conditions set forth in Articles 5 and 6, or on such
other date as the Buyer and the Sellers' Representative may agree upon in
writing (the date on which the Closing actually occurs, the "Closing Date"). At
the Closing:
(1) Each Seller shall deliver to the Buyer stock certificates
representing the number of Shares set forth opposite such Seller's name on
Schedule 1.1, duly endorsed or accompanied by stock powers duly endorsed
in blank, with any required transfer stamps affixed thereto.
(2) The Buyer shall deliver to each Seller his or her Pro Rata
Portion of the Initial Purchase Price, as determined in accordance with
Section 1.5, in immediately available funds by wire transfer to a
depositary account of each such Seller designated in writing by each such
Seller at least one business day prior to the Closing Date.
1.4. Deferred Payments.
(1) Within 30 business days following each of the two year
anniversary and four year anniversary of the Adjusted Closing Date, the
Buyer shall cause to be prepared and delivered to the Sellers'
Representative a statement setting forth the Buyer's calculation of the
Average Return on Investment for the First Deferred Payment Period or the
Second Deferred Payment Period, as the case may be (a "Deferred Payment
Statement").
(2) A Deferred Payment Statement and the Buyer's calculation of the
Average Return on Investment for the First Deferred Payment Period or the
Second Deferred Payment Period, as the case may be, shall be conclusive
and binding on the Buyer and the Sellers unless the Sellers'
Representative shall notify the Buyer in writing (the "Dispute Notice")
within 15 business days after receipt thereof of any objection to such
Deferred Payment Statement and the Buyer's calculation of the Average
Return on Investment for the First Deferred Payment Period or the Second
Deferred Payment Period, as the case may be, specifying in reasonable
detail the nature and amount of such objection. Upon receipt of each
Deferred Payment Statement, the Sellers' Representative shall be afforded
reasonable access to the books, records and work papers used to prepare
such Deferred Payment Statement and the related Average Return on
Investment. Any item or amount not specifically objected to in the Dispute
Notice shall be binding and conclusive on the Buyer and the Sellers. The
Buyer and the Sellers' Representative shall attempt to resolve any such
dispute and agree in writing upon a final Deferred Payment Statement and a
final Average Return on Investment for the First Deferred Payment Period
or the Second Deferred Payment Period, as the case may be, which such
final Deferred Payment Statement and final Average Return on Investment
for the First Deferred Payment Period or the Second Deferred Payment
Period, as the case may be, shall be conclusive and binding on the Buyer
and the Sellers. If the Buyer and the Sellers' Representative cannot so
agree within 20 days after the delivery by the Sellers' Representative to
the Buyer of the Dispute Notice, then either the Buyer or the Sellers'
Representative may submit such dispute to an independent accounting firm
to be agreed upon by the Buyer and the Sellers' Representative (the
"Independent Accountant"). The Independent Accountant shall, as promptly
as practicable, review only those items and amounts specifically set forth
and objected to in the Dispute Notice and resolve the dispute with respect
to such specific items and amounts. The fees and expenses of the
Independent Accountant shall be shared equally by the Buyer, on the one
hand, and the Sellers, on the other hand, and the decision of the
Independent Accountant with respect to such Deferred Payment Statement and
the Average Return on Investment for the First Deferred Payment
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Period or the Second Deferred Payment Period, as the case may be, shall be
final and binding on the Buyer and the Sellers.
(3) Within five business days following the determination of a final
Deferred Payment Statement and the final Average Return on Investment for
the First Deferred Payment Period or the Second Deferred Payment Period,
as the case may be, pursuant to Section 1.4(2), the Buyer shall deliver to
each Seller his or her Pro Rata Portion of any Deferred Payment earned
during such Deferred Payment Period; provided, however, that, subject to
Section 1.4, the Buyer shall have no obligation to deliver or otherwise
pay to Sellers any Deferred Payment earned during any such Deferred
Payment Period if the Average Return on Investment for such period is less
than 15.75%. See Exhibit A attached hereto for example calculations of
Deferred Payment amounts at varying Average Return on Investment levels.
(4) Notwithstanding anything to the contrary in this Section 1.4:
(a) If the Buyer does not deliver the Deferred Payment earned
during the First Deferred Payment Period solely as a result of the
fact that the final Average Return on Investment for such period was
less than 15.75%, within 30 business days following the three year
anniversary of the Adjusted Closing Date, the Buyer shall cause to
be prepared and delivered to the Sellers' Representative a Deferred
Payment Statement setting forth the Buyer's calculation of the
Average Return on Investment for the Adjusted First Deferred Payment
Period. The Deferred Payment Schedule and the Buyer's calculation of
the Average Return on Investment for the Adjusted First Deferred
Payment Period shall be subject to the dispute resolution provisions
of Section 1.4(2). If the final Average Return on Investment for the
Adjusted First Deferred Payment Period is not less than 15.75%,
within five business days following the determination of the final
Deferred Payment Statement and the final Average Return on
Investment for the Adjusted First Deferred Payment Period, the Buyer
shall deliver to each Seller his or her Pro Rata Portion of the
Deferred Payment that would have been paid for the First Deferred
Payment Period if the Average Return on Investment for such period
had been 15.75% or greater.
(b) If the Buyer does not deliver the Deferred Payment earned
during the Second Deferred Payment Period solely as a result of the
fact that the final Average Return on Investment for such period was
less than 15.75%, within 30 business days following the five year
anniversary of the Adjusted Closing Date, the Buyer shall cause to
be prepared and delivered to the Sellers' Representative a Deferred
Payment Statement setting forth the Buyer's calculation of the
Average Return on Investment for the Adjusted Second Deferred
Payment Period. The Deferred Payment Schedule and the Buyer's
calculation of the Average Return on Investment for the Adjusted
Second Deferred Payment Period shall be subject to the dispute
resolution provisions of Section 1.4(2). If the final Average Return
on Investment for the Adjusted Second Deferred Payment Period is not
less than 15.75%, within five business days following the
determination of the final Deferred Payment Statement and the final
Average Return on
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Investment for the Adjusted Second Deferred Payment Period, the
Buyer shall deliver to each Seller his or her Pro Rata Portion of
the Deferred Payment that would have been paid for the Second
Deferred Payment Period if the Average Return on Investment for such
period had been 15.75% or greater.
(c) Until the end of the Second Deferred Payment Period (or,
if applicable, the Adjusted Second Deferred Payment Period), the
Buyer shall not cause the Company to acquire all or substantially
all of the equity securities or assets of, or merge or consolidate
with or into, any other entity unless such acquisition, merger or
consolidation is mutually acceptable to both the Seller's
Representative and the Buyer.
(d) Seller acknowledges and agrees (i) that Buyer and its
affiliates may acquire and control other investment advisors either
before or after the Closing and (ii) that neither Buyer nor its
affiliates is under any obligation to provide new business
opportunities (including, without limitation, acquisitions of
investment advisory business, new accounts and potential new
employees) to the Company either before or after the Closing.
1.5. Initial Purchase Price.
(1) Five business days prior to the Closing Date, the Company shall
prepare in good faith, and deliver to the Buyer, a schedule certified by a
duly authorized officer of the Company (the "Consenting Client Accounts
Schedule"), listing, as of such date, all of the investment advisory
accounts of Clients who have affirmatively consented to the assignment of
their respective Advisory Contracts deemed to occur as a result of the
consummation of the transactions contemplated by this Agreement (the
"Consenting Client Accounts"). The Consenting Client Accounts Schedule
shall set forth the following information with respect to each Consenting
Client Account: (a) the aggregate market value of the assets under
management held in each account (determined in accordance with the
immediately following sentence), (b) the current fee rate charged by the
Company applicable to each account and (c) the annualized revenues to be
earned by the Company from each account (determined as the product of
clause (a) multiplied by clause (b) for a 12 month period). For purposes
of preparing the Consenting Client Accounts Schedule, the aggregate market
value of the assets under management held in each Consenting Client
Account shall be determined in accordance with the principles set forth
below:
(a) with respect to Consenting Client Accounts that were in
existence as of December 31, 2003, the aggregate market value of the
assets under management held therein shall be the aggregate market
value of the assets under management held therein on December 31,
2003, subject to the following adjustments: (y) to the extent that
any assets under management are withdrawn from such an account from
and after December 31, 2003 but prior to the date of the Consenting
Client Accounts Schedule, the aggregate market value of the assets
under management held therein shall be reduced by the market value
of assets under management so withdrawn determined as of the date of
withdrawal and (z) to the extent that any new assets under
management are deposited into such an account from and after
December 31, 2003 but prior to the date of the Consenting Client
Accounts Schedule, the aggregate market value of the assets under
management held therein shall be increased by the market value of
assets under management so deposited determined as of the date of
deposit. For the avoidance of doubt, increases or decreases due to
market appreciation or depreciation of assets under management from
and after December 31, 2003 or after the relevant date of withdrawal
or deposit, as the case may be, shall not be
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taken into account in calculating the aggregate market value of the
assets under management; and
(b) in the event that any Person becomes a Client from and
after December 31, 2003 but prior to the date of the Consenting
Client Accounts Schedule and affirmatively consents to the
assignment of its respective Advisory Contract deemed to occur as a
result of the consummation of the transactions contemplated by this
Agreement, the aggregate market value of the assets under management
held in such Client's Consenting Client Account shall be the
aggregate market value of the assets under management held therein
determined as of the date of the Consenting Client Accounts
Schedule.
(2) The "Initial Purchase Price" shall be determined as
follows:
(a) If the aggregate annualized revenue to be earned from all
Consenting Client Accounts, as set forth on the Consenting Client
Accounts Schedule (the "Consenting Client Accounts Annualized
Revenue Amount"), is greater than 95% of $1,464,688 (the "Target
Annualized Revenue Amount"), the Initial Purchase Price shall be
$2,125,500; or
(b) If the Consenting Client Accounts Annualized Revenue
Amount is equal to, or less than, 95% of the Target Annualized
Revenue Amount, the Initial Purchase Price shall be an amount equal
to the product of (w) $2,125,500 multiplied by (x) the difference
between (1) 98% less (2) 2% for each additional percentage point
below 95% of the amount of the shortfall in revenue of the
Consenting Client Accounts Annualized Revenue Amount from the Target
Annualized Revenue Amount (it being understood that foregoing
additional ratable 2% reduction shall be calculated on a straight
line basis for shortfalls in revenue of increments of less than 1%);
provided, however, that in no event shall the Initial Purchase Price
be less than $1,912,500. For example, if the Consenting Client
Accounts Annualized Revenue Amount is equal to 93.5% of the Target
Annualized Revenue Amount, the Initial Purchase Price would be an
amount equal to the product of (y) $2,125,500 multiplied by (z) 95%.
2. Representations and Warranties Relating to the Sellers. Each Seller,
severally and not jointly, represents and warrants to the Buyer (which
representations and warranties shall be deemed to be made again on and as of the
Closing Date (except that any such representation or warranty that expressly is
given only as of a particular date or period and relates solely to such
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particular date or period shall be given only as of such date or period)), but
only with respect to such Seller and the Shares owned by such Seller, as
follows:
2.1. Authorization. This Agreement has been, and each Ancillary Agreement
to which such Seller will be a party will be, duly executed and delivered by
such Seller and constitute or will constitute, as the case may be, legal, valid
and binding obligations of such Seller, enforceable against such Seller in
accordance with their terms, except to the extent that enforcement of the rights
and remedies created hereby and thereby is subject to bankruptcy, insolvency,
reorganization, moratorium and other similar laws of general application
affecting the rights and remedies of creditors and except for general principles
of equity (regardless of whether enforceability is considered in a proceeding in
equity or at law).
2.2. No Violation or Approval. The execution, delivery and performance by
such Seller of this Agreement and each Ancillary Agreement to which such Seller
will be a party and the consummation by such Seller of the transactions
contemplated hereby and thereby will not result in a breach or violation of, or
a default under, (a) any statute applicable to such Seller, (b) any Contract to
which such Seller is a party or by which such Seller or any of such Seller's
Shares or other assets is bound, (c) any fiduciary duty of such Seller or (d)
any order, judgment, decree, rule or regulation of any court or any governmental
agency or body having jurisdiction over such Seller or any of such Seller's
Shares or other assets. No consent, approval, order or authorization of, or
declaration or filing with, any governmental authority or other Person is
required of such Seller in connection with the execution and delivery by such
Seller of this Agreement and each Ancillary Agreement to which such Seller will
be a party or the consummation of any of the transactions contemplated hereby or
thereby.
2.3. Title to Shares. Such Seller is the sole record and beneficial owner
of, and has good and marketable title to, the Shares set forth opposite such
Seller's name on Schedule 2.3, free and clear of any Lien (except for
restrictions on transfer imposed by applicable securities laws). Except for the
Stock Restriction Agreement, originally dated as of October 1, 1987, as
subsequently amended by additional joinders (the "Stock Restriction Agreement"),
by and among the Company and the stockholders named therein, such Seller is not
party to any option, warrant, purchase right or other Contract or commitment
that requires such Seller to sell, transfer or otherwise dispose of or vote any
capital stock of the Company, except for this Agreement. Such Seller has full
right, power and authority to enter into this Agreement and to sell, transfer
and deliver to the Buyer, free and clear of any Lien (except for restrictions on
transfer imposed by applicable securities laws and the Stock Restriction
Agreement), the Shares set forth opposite such Seller's name on Schedule 1.1,
and upon delivery to the Buyer of stock certificates representing such Shares,
duly endorsed or accompanied by stock powers duly endorsed in blank, and the
delivery of consideration therefor as contemplated herein, the Buyer will
receive good and marketable title to such Shares, free and clear of any Lien
(except for restrictions on transfer imposed by applicable securities laws and,
from and after the Closing, the Stockholders Agreement), and subject to no
rescission or similar rights or equities of any kind.
2.4. Brokers, Finders, etc. All negotiations relating to this Agreement
and the transactions contemplated hereby have been carried on without the
intervention of any Person acting on behalf of such Seller in such manner as to
give rise to any valid claim against such Seller for any brokerage or finder's
commission, fee or similar compensation.
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3. Representations and Warranties Relating to the Company. The Principal
Sellers, jointly and severally, represent and warrant to the Buyer (which
representations and warranties shall be deemed to be made again on and as of the
Closing Date (except that any such representation or warranty that expressly is
given only as of a particular date or period and relates solely to such
particular date or period shall be given only as of such date or period)), as
follows:
3.1. Organization. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the Commonwealth of
Massachusetts. The Company has full corporate power and authority and all
governmental licenses, authorizations, permits, consents and approvals required
to carry on the Business and to own and use the properties owned and used by it.
The Company is duly qualified or licensed as a foreign corporation to do
business, and is in good standing, in each jurisdiction where the character of
the properties owned, leased or operated by it or the nature of its activities
makes such qualification or licensing necessary, except for such failures to be
so duly qualified or licensed and in good standing as would not reasonably be
expected to have a Material Adverse Effect. The Sellers have delivered to the
Buyer a true, complete and correct copy of each of the Company's Articles of
Organization and Bylaws, each as in effect on the date hereof (collectively, the
"Company Charter Documents"). The minute books (containing the records of
meetings of the stockholders, the board of directors, and all committees of the
board of directors of the Company), the stock certificate books and the stock
record books of the Company are all true, complete and correct and copies
thereof have been made available to the Buyer.
3.2. Authorization. The Company has the power and authority (including,
without limitation, full corporate power and authority) to execute and deliver
this Agreement and each Ancillary Agreement to which the Company will be a party
and to perform its obligations hereunder and thereunder. The board of directors
of the Company has duly authorized the execution, delivery and performance by
the Company of this Agreement and each Ancillary Agreement to which the Company
will be a party. All corporate and other actions or proceedings to be taken by
or on the part of the Company to authorize and permit the execution and delivery
by the Company of this Agreement and each Ancillary Agreement to which the
Company will be a party, the performance by the Company of its obligations
hereunder and thereunder and the consummation by the Company of the transactions
contemplated hereby and thereby, have been duly and properly taken. This
Agreement has been, and each Ancillary Agreement to which the Company will be a
party will be, duly executed and delivered by the Company and constitute or will
constitute, as the case may be, legal, valid and binding obligations of the
Company, enforceable against the Company in accordance with their terms, except
to the extent that enforcement of the rights and remedies created hereby and
thereby is subject to bankruptcy, insolvency, reorganization, moratorium and
other similar laws of general application affecting the rights and remedies of
creditors and except for general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at law).
3.3. Capitalization. The authorized capital stock of the Company consists
solely of 5,000 shares of common stock, without par value per share (the "Common
Stock"), of which 4,025 shares are issued and outstanding. All of such issued
and outstanding shares of Common Stock are duly authorized, validly issued,
fully paid and non-assessable, were not issued in violation of any law or of the
preemptive rights of any stockholder and are held of record by the Sellers.
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Except as set forth on Schedule 3.3, there are no (a) shares of capital stock or
voting securities of the Company, (b) warrants, rights, options, purchase
rights, conversion privileges, stock purchase plans, puts, calls or other
contractual obligations relating to the offer, issuance, purchase, sale,
repurchase, redemption, acquisition, exchange, conversion, voting or transfer of
any shares of capital stock or voting securities of the Company, (c)
Indebtedness of the Company or other securities convertible into or exchangeable
for capital stock or voting securities of the Company (now, in the future or
upon the occurrence of any contingency) or (d) stock appreciation, phantom
stock, profit participation or similar rights entitling any Person to share in
the equity, profit, earnings, losses or gains of the Company (collectively,
"Company Securities"). There are no agreements to register any securities or
sales or resales thereof under the federal or state securities laws. None of the
outstanding shares of capital stock of the Company were issued in violation of
the Securities Act or the securities or blue sky laws of any state or
jurisdiction.
3.4. Subsidiaries. The Company has no Subsidiaries and does not own or
otherwise hold an equity interest in any other Person, except for securities
held in investment advisory accounts of Clients in the Ordinary Course of
Business.
3.5. No Violation or Approval; Consents. Except for obtaining the consent
of Clients under Advisory Contracts and except as set forth on Schedule 3.5, the
execution, delivery and performance by the Company of this Agreement and each
Ancillary Agreement to which the Company will be a party and the consummation by
the Company of the transactions contemplated hereby and thereby will not result
in a breach or violation of, or a default under, (a) any of the Company Charter
Documents, (b) any statute applicable to the Company or any of its Subsidiaries,
(c) any Contract to which the Company is a party or by which the Company or any
of the Assets is bound, (d) any fiduciary duty of the Company, (e) any order,
judgment, decree, rule or regulation of any court or any governmental agency or
body having jurisdiction over the Company or any of the Assets or (f) any
governmental license, authorization, permit, consent or approval of the Company.
Except for the consent of Clients under Advisory Contracts and except as set
forth on Schedule 3.5, no consent, approval, order or authorization of, or
declaration or filing with, any governmental authority or other Person is
required in connection with the execution and delivery by the Company of this
Agreement and each Ancillary Agreement to which the Company will be a party or
the consummation by the Company of the transactions contemplated hereby or
thereby.
3.6. Financial Statements; No Undisclosed Liabilities. The Sellers have
furnished the Buyer with copies of the following financial statements of the
Company: (a) the unaudited balance sheets of the Company as of December 31,
2003, 2002 and 2001 and the related unaudited statements of income for each of
the years ended December 31, 2003, 2002 and 2001 (the "Annual Financial
Statements"); and (b) the unaudited balance sheet (the "Most Recent Balance
Sheet") of the Company as of June 30, 2004 (the "Most Recent Balance Sheet
Date") and the related unaudited statement of income for the 6 months ended on
the Most Recent Balance Sheet Date (the "Interim Financial Statements"; and
collectively with the Annual Financial Statements, the "Financial Statements").
The Financial Statements present fairly in all material respects the financial
position of the Company and the results of operations of the Company as of the
respective dates thereof and for the periods covered thereby. There are no
liabilities of the Company of any kind whatsoever, whether accrued, contingent,
absolute, determined, determinable or otherwise, other than: (w) liabilities
-8-
provided for in the Most Recent Balance Sheet, (x) liabilities incurred since
the Most Recent Balance Sheet Date in the Ordinary Course of Business, (y)
liabilities disclosed on Schedule 3.6 or (z) other undisclosed liabilities
which, individually or in the aggregate, are not material to the Company.
3.7. Absence of Changes; Operations in Ordinary Course.
(1) No Material Adverse Change. Except as set forth on Schedule
3.7(1), since December 31, 2003, there has not been a Material Adverse
Effect.
(2) Operations in Ordinary Course. Except as set forth on Schedule
3.7(2), since December 31, 2003, the Company has not: (i) increased the
compensation or other benefits payable to any of its officers, directors
or employees other than in the Ordinary Course of Business or otherwise
granted any severance or termination pay to any of its officers, directors
or employees; (ii) incurred, assumed or guaranteed any Indebtedness; (iii)
entered into or performed any Contract or other transaction (including,
without limitation, the acquisition or disposition of any assets or stock
or the merger or consolidation with any other Person) other than in the
Ordinary Course of Business; (iv) relinquished any Contract or other
right; (v) made any loan, capital contribution or advance of funds or
assets of any kind to, or forgiven any loan or advance to, any Person
other than in the Ordinary Course of Business; (vi) created or otherwise
incurred any Lien on any Asset (other than Permitted Liens); (vii) changed
any method of accounting or accounting practice; (viii) declared, set
aside or paid any dividend or other distribution with respect to any
shares of capital stock of the Company or repurchased, redeemed or
otherwise acquired any outstanding shares of capital stock or other
securities of the Company; or (ix) amended the Company Charter Documents
or any material term of any outstanding security of the Company.
(3) No Change in Clients. Except as set forth on Schedule 3.7(3),
since December 31, 2003, no Client has terminated or substantially reduced
its business relationship with the Company, and, to the knowledge of the
Principal Sellers, no Client (i) intends to terminate, or is considering a
termination of, its business relationship with the Company or (ii) intends
to substantially reduce its business relationship with the Company.
3.8. Taxes.
(1) Tax Returns. The Company has timely filed, in accordance with
all applicable laws, all Tax Returns required to be filed. All such Tax
Returns were true, complete and correct. The Company has paid all Taxes
due and payable (whether or not shown on any Tax Return). No claim has
ever been made by an authority in a jurisdiction where the Company does
not file Tax Returns that the Company is or may be subject to Taxation by
that jurisdiction. The Company currently is not the beneficiary of any
extension of time within which to file any Tax Return. There are no Liens
with respect to Taxes upon any of the Assets other than customary Liens
for current Taxes not yet due and payable.
-9-
(2) Withholding. All Taxes required to have been withheld and paid
in connection with amounts paid or owing to any employee, independent
contractor, creditor, stockholder or other third Person have been withheld
and timely paid to the appropriate governmental authority.
(3) Disputes; Filing of Tax Returns. There is no dispute or claim
concerning any Tax liability of the Company either claimed or raised by an
authority in writing or as to which any Principal Seller has knowledge.
Schedule 3.8(3) lists all federal, state, local and foreign income Tax
Returns filed with respect to the Company for taxable periods ending on or
after December 31, 2000, and indicates those Tax Returns that have been
audited or that currently are the subject of audit.
(4) Waivers; Powers of Attorney. There has been no waiver of any
statute of limitations in respect of Taxes of the Company nor any
extension of time with respect to an assessment or deficiency relating to
Taxes of the Company. There are no powers of attorney (including, without
limitation, IRS Form 2848 or other similar authority) with respect to
Taxes of the Company currently in force.
(5) Tax Sharing; Affiliated Groups; Partnerships. The Company is not
a party to any Tax sharing or Tax allocation agreement, arrangement or
understanding. The Company has not been a member of an affiliated group
filing a consolidated federal income Tax Return. The Company is not liable
for the Taxes of any other Person under Treasury Regulation 1.1502-6 (or
any similar provision of state, local or foreign law), as a transferee or
successor, by Contract or otherwise. The Company is not a party to any
joint venture, partnership or other arrangement that could be treated as a
partnership for federal or applicable state, local or foreign income Tax
purposes.
(6) Unpaid Taxes. The unpaid Taxes of the Company (i) did not as of
the Most Recent Balance Sheet Date exceed the reserve for Taxes (in
accounts set aside for the purpose) set forth on the face of the Most
Recent Balance Sheet (rather than in any notes thereto) and (ii) do not
exceed that reserve as adjusted for the passage of time through the
Closing Date for operations in the Ordinary Course of Business in
accordance with GAAP and with the past custom and practice of the Company
in filing its Tax Returns.
(7) S Corporation Status. The Company and any predecessor to the
Company has been a validly electing S corporation, within the meaning of
Section 1361 and Section 1362 of the Code and for state Tax law purposes,
except in those states which do not recognize S corporation status, at all
times since April 1, 1987, and will be an S corporation up to and
including the Closing Date. The Company has not had and does not have any
Subsidiaries other than Subsidiaries that always have been "qualified
subchapter S subsidiaries."
(8) Section 1374. The Company has not, in the past 10 years, (i)
acquired assets from another corporation in a transaction in which the
Company's Tax basis for the acquired assets was determined, in whole or in
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part, by reference to the Tax basis of the acquired assets (or any other
property) in the hands of the transferor or (ii) acquired the stock of any
corporation.
3.9. Properties.
(1) The Company does not own any real property. Schedule 3.9 sets
forth a complete and correct description of all leases of real property to
which the Company is a party (the "Leases"). Each Lease (i) is a legal,
valid, binding and enforceable obligation of the Company and is in full
force and effect against the Company, (ii) to the knowledge of the
Principal Sellers, is a legal, valid, binding and enforceable obligation
of each other party thereto and, to the knowledge of the Principal
Sellers, is in full force and effect against each other party thereto,
(iii) subject to giving the necessary notices and obtaining the necessary
consents as set forth on Schedule 3.5, will continue to be a legal, valid,
binding and enforceable obligation of the Company and will remain in full
force and effect against the Company on identical terms following the
consummation of the transactions contemplated hereby and (iv) to the
knowledge of the Principal Sellers, will continue to be a legal, valid,
binding and enforceable obligation of each other party thereto and will
remain in full force and effect against each other party thereto on
identical terms following the consummation of the transactions
contemplated hereby. True, complete and correct copies of all of the
Leases have been delivered to the Buyer. No action has been taken or
omitted by the Company, and, to the knowledge of the Principal Sellers, no
other event has occurred or condition exists, that constitutes, or after
notice or lapse of time or both would constitute, a material default under
any Lease or that may reasonably be expected to result in a loss of
material rights or the creation of any material Lien thereunder or
pursuant thereto.
(2) The Company has good and marketable, indefeasible, fee simple
title to, or in the case of leased property and assets, has valid
leasehold interests in, all of the properties, rights and assets, whether
real or personal and whether tangible or intangible, used in the Business
(collectively, the "Assets"), including, without limitation, all
properties, rights and assets reflected on the Most Recent Balance Sheet
(except for Assets which have been sold or otherwise disposed of since the
Most Recent Balance Sheet Date) or acquired after the Most Recent Balance
Sheet Date. None of the Assets is subject to any Lien (other than
Permitted Liens).
(3) There are no developments affecting any of the Assets pending
or, to the knowledge of the Principal Sellers, threatened which might
materially detract from the value, materially interfere with any present
use, or materially adversely affect the marketability, of any of the
Assets. The Assets constitute all of the property and assets used or held
for use in connection with the Business and are adequate to conduct the
Business as currently conducted.
3.10. Operations in Conformity with Law; Permits.
(1) Except as set forth on Schedule 3.10(1), the Company is not in
violation of, and has not since January 1, 2001 violated, and, to the
knowledge of the Principal Sellers, is not under investigation with
respect to, and has not been threatened to be charged with or given notice
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of any violation of, any law, statute, standard, ordinance, code, order,
rule, regulation, judgment or decree, whether heretofore or now in effect,
except for such violations and defaults as have not had and would not
reasonably be expected to have a Material Adverse Effect.
(2) Schedule 3.10(2) sets forth a true, complete and correct list of
each governmental license, authorization, permit, consent and approval
affecting, or relating in any way to, the Assets or the Business (the
"Permits"). The Permits constitute all of the governmental licenses,
authorizations, permits, consents and approvals necessary in connection
with the operations of the Company. Each Permit is valid and in full force
and effect and the Company is not in material default under, or in
material breach or violation of, nor has an event occurred that (with or
without notice, lapse of time or both) would constitute a material default
by the Company under, any Permit.
3.11. Benefit Plans.
(1) Schedule 3.11 sets forth a true, complete and correct list of:
(i) all Employee Plans (A) that are maintained by the Company or by any
corporation, trust, partnership or other entity (a "Related Entity") that
would be considered as a single employer with the Company under Section
4001(b)(1) of ERISA or Section 414(b), 414(c), 414(m) or 414(o) of the
Code, or to which the Company or any Related Entity contributes or is
required to contribute or with respect to which the Company or any Related
Entity has or may have any liability (a "Company Plan"); and (ii) all
plans, agreements, policies and arrangements that would be Company Plans
if the term "employee" were construed to include outside directors,
consultants or other independent contractors who provide services to, or
for the benefit of, the Company. With respect to each Employee Plan, the
Company has provided to the Buyer true, complete and correct copies of
each of the following: (A) if the plan has been reduced to writing, the
plan document together with all amendments thereto; (B) if the plan has
not been reduced to writing, a written summary of all material plan terms;
and (C) copies of any summary plan descriptions, employee handbooks or
similar employee communications.
(2) No Liability. No circumstance exists and no event (including,
without limitation, any action or any failure to take any action) has
occurred with respect to any Employee Plan currently or formerly
maintained by the Company or any Related Entity, or to which the Company
or any Related Entity is or has been required to contribute, that could
subject the Company to any liability (including, without limitation, any
penalty for failure to timely file any required report with any
governmental agency) or Lien under ERISA or the Code, nor will the
transactions contemplated by this Agreement give rise to any such
liability or Lien.
(3) Multiemployer Plans. With respect to current and former
employees of the Company, neither the Company nor any Related Entity
contributes, or ever has contributed or been required to contribute, to
any Multiemployer plan within the meaning of Section 3(37) of ERISA (a
"Multiemployer Plan") or has any liability to employees (including,
without limitation, withdrawal liability) under any Multiemployer Plan.
-12-
(4) Retiree Benefits; Certain Welfare Plans. Except as required
under Section 601 et seq. of ERISA, no Employee Plan that is a Welfare
Plan provides benefits or coverage following retirement or other
termination of employment. Nothing has occurred with respect to any
Employee Plan described in Section 4980B of the Code that could subject
the Company or any Related Party to a Tax under Section 4980B of the Code.
(5) No Restrictions on Termination. No provision of any Employee
Plan would result in any limitation on the ability of the Company to
terminate such Employee Plan with respect to the employees of the Company
without material liability.
(6) Severance, etc. The transactions contemplated by this Agreement
will not, whether alone or upon the occurrence of any additional or
subsequent event, result in any payment of severance or other compensation
to, or any acceleration, vesting or increase in benefits under any
Employee Plan for the benefit of, any employee.
3.12. Labor Relations. Except as set forth on Schedule 3.12, there
currently is no existing dispute or controversy between the Company and any of
its employees that has had or would reasonably be expected to have a Material
Adverse Effect. The Company is in compliance in all material respects with all
employment agreements and all other agreements or understandings, whether oral
or written, with all past, present and prospective employees of the Company, and
a true, complete and correct copy of each such agreement has been delivered to
the Buyer. The Company has complied, and is in compliance, in all material
respects, with all applicable state, federal and foreign laws and regulations
respecting employment and employment practices, terms and conditions of
employment, wages and hours and other laws related to employment. The Company
has not, and is not, engaged in any unfair labor practice. The Company is not in
arrears in the payment of wages, withholding or social security taxes,
unemployment insurance premiums or other similar obligations.
3.13. Intellectual Property.
(1) Company Intellectual Property. The Company has (i) all right,
title and interest in and to the name under which it is incorporated and
each name under which it conducts the Business and (ii) all rights to use
each such name in the conduct of the Business as currently conducted. To
the knowledge of the Principal Sellers, no other Person has any right to
use any such name in the conduct of any business. The Company has all
right, title and interest in and to all material Intellectual Property
used in the conduct of the Business and necessary for the ongoing conduct
of the Business, all of which is identified on Schedule 3.13(1) (the
"Company Intellectual Property"). To the knowledge of the Principal
Sellers, the Company has not interfered with, infringed upon,
misappropriated or violated any Intellectual Property rights of any third
Person, and none of the Company or any of its officers or directors has
ever received any charge, complaint, claim, demand or notice alleging any
such interference, infringement, misappropriation or violation (including,
without limitation, any claim that the Company must license or refrain
from using any Intellectual Property rights of any third party). To the
knowledge of the Principal Sellers, no third Person has interfered with,
infringed upon, or misappropriated any Company Intellectual Property.
-13-
Except as disclosed on Schedule 3.13(1), to the knowledge of the Principal
Sellers, with respect to each item of Company Intellectual Property: (A)
the Company possesses all right, title and interest in and to such item,
free and clear of any Lien (other than Permitted Liens), license or other
restriction; (B) such item is not subject to any outstanding injunction,
judgment, order, decree, ruling or charge; (C) no action, suit,
proceeding, hearing, investigation, charge, complaint, claim or demand is
pending, and the Company has not received notice that any such action,
suit, proceeding, hearing, investigation, charge, complaint, claim or
demand is threatened, which challenges the legality, validity,
enforceability, use or ownership of such item; and (D) the Company has
never agreed to indemnify any Person from or against any interference,
infringement, misappropriation or other conflict with respect to such
item.
(2) Licenses. Schedule 3.13(2) identifies (i) each written license,
sublicense, agreement or permission pursuant to which the Company uses any
Intellectual Property owned by a third party, except shrink wrap software
licenses (the "Written Licenses") and (ii) each item of Intellectual
Property covered by the Written Licenses. The Company has delivered to the
Buyer true, complete and correct copies of all of the Written Licenses,
each as amended and in effect. With respect to each item of Intellectual
Property required to be identified on Schedule 3.13(2):
(a) the Written License covering such item (i) is a legal,
valid, binding and enforceable obligation of the Company and is in
full force and effect against the Company and (ii) to the knowledge
of the Principal Sellers, is a legal, valid, binding and enforceable
obligation of each other party thereto and, to the knowledge of the
Principal Sellers, is in full force and effect against each other
party thereto;
(b) the Written License covering such item (i) subject to
giving necessary notices and obtaining necessary consents as set
forth on Schedule 3.5, will continue to be a legal, valid, binding
and enforceable obligation of the Company and will remain in full
force and effect against the Company on identical terms following
the consummation of the transactions contemplated hereby and (ii) to
the knowledge of the Principal Sellers, will continue to be a legal,
valid, binding and enforceable obligation of each other party
thereto and will remain in full force and effect against each other
party thereto on identical terms following the consummation of the
transactions contemplated hereby;
(c) the Company is not in material breach or default of the
Written License covering such item, and no event has occurred with
respect to the Company which with notice or the lapse of time would
constitute a material breach or default or permit termination,
modification or acceleration thereunder;
(d) to the knowledge of the Principal Sellers, no other party
to the Written License covering such item is in material breach or
default, and no event has occurred which with notice or lapse of
time would constitute a material breach or default or permit
termination, modification or acceleration thereunder;
-14-
(e) neither the Company nor, to the knowledge of the Principal
Sellers, any other party to the Written License covering such item
has repudiated any provision thereof; and
(f) to the knowledge of the Principal Sellers, such item is
not subject to any material outstanding injunction, judgment, order,
decree, ruling or charge and no material action, suit, proceeding,
hearing, investigation, charge or complaint is pending, claimed,
demanded or threatened which challenges the legality, validity or
enforceability of such item.
3.14. Environmental Matters. Except as set forth on Schedule 3.14 the
Company has operated in compliance in all material respects with all
Environmental Laws, and has not violated in any material respect and is not in
violation of, or liable under, in any material respect any Environmental Law.
Except as set forth on Schedule 3.14, to the knowledge of the Principal Sellers,
there has not been, and there is not (a) any past or continuing release or
threat of release of any Hazardous Substance into the environment at, or (b) any
manufacturing, refinement, transportation, importation, use or processing of any
Hazardous Substance on or from, any real property currently or previously leased
or owned by the Company or any of its predecessors. Except as set forth on
Schedule 3.14, to the knowledge of the Principal Sellers, no Hazardous
Substances of, or generated by, the Company or any of its predecessors have been
disposed of or come to rest at any site that has been included in any published
federal, state or local "Superfund" site list or any other list of hazardous or
toxic waste sites. Except as set forth on Schedule 3.14, to the knowledge of the
Principal Sellers, there never has been, and there currently is not, any
underground storage tank, landfill, surface impoundment or disposal area located
on, any polychlorinated biphenyls ("PCBs") or PCB-containing equipment used,
treated or stored on, or any "hazardous waste" (as defined by the federal
Resource Conservation and Recovery Act or any comparable state or local law)
used, treated, contained or stored on, any real property currently or previously
leased or owned by the Company or any of its predecessors.
3.15. Contracts. Schedule 3.15 contains a true, complete and correct list
of all Contracts of the types described below that are currently in effect:
(1) all employment, management or consulting Contracts;
(2) all Contracts (or group of related Contracts) or options to sell
or lease (as lessor) any Asset;
(3) all Contracts (or group of related Contracts) pursuant to which
the Company (i) possesses or uses, or has agreed to acquire or lease, any
Asset and (ii) is required to make payments, accrue expenses or incur
charges in excess of $5,000 per annum;
(4) all Contracts (or group of related Contracts) for the purchase
of materials, supplies, goods, services, equipment or other assets
providing for either (i) annual payments by the Company in excess of
$5,000 or (ii) aggregate payments by the Company in excess of $5,000;
(5) all Advisory Contracts;
-15-
(6) all custodian, consultancy, solicitation, administration or
brokerage Contracts;
(7) all agency, dealer, sales representative, marketing or other
similar Contracts;
(8) all Contracts relating to Indebtedness;
(9) all partnership, joint venture or other similar Contracts;
(10) all Contracts that limit the freedom of the Company to compete
in any line of business or with any Person or in any area or which would
so limit the freedom of the Company after the Closing Date;
(11) all Contracts relating to the acquisition or disposition of any
business (whether by merger, sale of stock, sale of assets or otherwise);
(12) all Contracts (or group of related Contracts), plans or
programs pursuant to which payments, or an acceleration of or increase in
benefits, may be required upon or after a change of control of the
Company; and
(13) any other Contract (or group of related Contracts) not made in
the Ordinary Course of Business and that is material to the Company or the
Business.
The Company has heretofore made available to the Buyer a true, complete and
correct copy of (i) each written Contract described above (together with the
oral Contracts described above, collectively, the "Disclosed Contracts"), each
as in effect on the date hereof, and (ii) all amendments and supplements thereto
and all waivers thereunder. Each Disclosed Contract is a valid and binding
agreement of the Company and is in full force and effect. Neither the Company
nor, to the knowledge of the Principal Sellers, any other party to any Disclosed
Contract is in default under, or in breach or violation of, nor has an event
occurred that (with or without notice, lapse of time or both) would constitute a
default by the Company or, to the knowledge of the Principal Sellers, any other
party under, any Disclosed Contract, other than such defaults, breaches and
violations under the Contracts as have not had and would not reasonably be
expected to have a Material Adverse Effect.
3.16. Transactions with Affiliates. Except as set forth in Schedule 3.16,
neither any Seller nor any other Affiliate of the Company nor any member of the
immediate family of any Seller or any other Affiliate of the Company (a) is a
competitor, Client or supplier of the Company, (b) is a party to any Contract
with the Company, (c) has any right to, or interest in, any Asset or (d) has any
Indebtedness to or from the Company.
3.17. Litigation. Except as set forth on Schedule 3.17, there is no
action, claim suit, investigation or proceeding pending against or, to the
knowledge of the Principal Sellers, threatened against or affecting the Company,
the Assets, the Business or any employee of the Company (in his or her capacity
as an employee or as a result of his or her conduct during the course of
employment) before any court or arbitrator or any governmental body, agency or
official. There is no action, claim suit, investigation or proceeding pending
against or, to the knowledge of the Principal Sellers, threatened against the
-16-
Company or the Sellers which seeks rescission of, seeks to enjoin the
consummation of, or otherwise relates to, this Agreement or any of the
transactions contemplated hereby. No undischarged judgment, decree or order of
any court or arbitrator or any governmental body, agency or official (a) has
been issued against any Person which has had or would reasonably be expected to
have a Material Adverse Effect or (b) has been issued against the Company, the
Assets, the Business or any employee of the Company (in his or her capacity as
an employee or as a result of his or her conduct during the course of
employment).
3.18. Insurance Coverage. Set forth on Schedule 3.18 is a list of all
liability, workers' compensation, property, casualty, directors and officers,
errors and omissions and other policies by which the Company, the Business, the
Assets or any of the employees, officers and directors of the Company have been
insured since December 31, 2000. Such list includes the type of policy, form of
coverage, policy number and insurer, coverage dates, named insured, limit of
liability and deductible. There is no claim by the Company pending under any of
such policies as to which coverage has been denied or disputed by the
underwriters or in respect of which the underwriters have reserved their rights.
All premiums payable under all such policies have been timely paid and the
Company otherwise has complied fully with the terms and conditions of such
policies. Such policies remain in full force and effect and are of the type and
in amounts customarily carried by Persons conducting businesses similar to the
Business.
3.19. No Illegal Payments, etc. None of the Company, any of the Sellers or
any of the directors, officers, employees, agents or Affiliates of the Company
(a) has directly or indirectly (i) given or agreed to give any illegal gift,
contribution, payment or similar benefit to any supplier, Client, governmental
official or employee or other Person who was, is or may be in a position to help
or hinder the Company (or assist in connection with any actual or proposed
transaction) or (ii) made or agreed to make any illegal contribution, or
reimbursed any illegal political gift or contribution made by any other Person,
to any candidate for federal, state, local or foreign public office, in each
case which might subject the Company to any damage or penalty in any civil,
criminal or governmental litigation or proceeding or (b) has established or
maintained any unrecorded fund or asset or made any false entries on any books
or records for any purpose.
3.20. Advisory Accounts. Schedule 3.20 sets forth a true, complete and
correct list, as of December 31, 2003, of all of the investment advisory
accounts of Clients, specifying for each such account the following
information:(a) the aggregate market value of the assets under management held
in each account, determined as of December 31, 2003, (b) the fee rate charged by
the Company applicable to each account, (c) the annualized revenues to be earned
by the Company from each account (determined as the product of clause (a)
multiplied by clause (b) for a 12 month period), (d) any fee adjustments or net
withdrawals (except for (i) payroll distributions from the municipal accounts
and (ii) regularly scheduled monthly withdrawals, whether determined from
income, total return, market value or another formula; provided that unit trust
payments made pursuant to IRS formulas shall be scheduled) or deposits with
respect to each account during 2003 or 2004 and (e) any investment restrictions
or guidelines with respect to such account. There are no Contracts in effect
pursuant to which the Company has capped, waived or reimbursed or will under any
circumstances cap, waive or reimburse any or all fees payable by its Clients.
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3.21. Registration under the Advisers Act. The Company is duly registered
under the Advisers Act as an investment adviser with the SEC. The Company is
duly registered, licensed or qualified as an investment adviser in each
jurisdiction where the conduct of the Business requires such registration.
3.22. Ineligible Persons. Neither the Company nor any "associated person"
(as defined in the Advisers Act) thereof is ineligible pursuant to Section 203
of the Advisers Act or Section 15(b) of the Exchange Act to serve as a
registered investment adviser or broker-dealer or as an associated person of a
registered investment adviser or broker-dealer.
3.23. Disciplinary Information. Except as set forth on Schedule 3.23,
neither the Company nor, to the knowledge of the Principal Sellers, any officer,
director or employee of the Company or any other Person "associated" (as defined
in the Advisers Act) with the Company, is in default with respect to any order,
judgment, decree, rule or regulation of any court or any governmental agency or
body relating to any aspect of the Business, which would need to be disclosed
pursuant to Rule 206(4)-4(b) under the Advisers Act, or which could give rise to
an affirmative answer to any of the questions in Item 11, Part I of the Form ADV
of the Company. Neither the Company nor, to the knowledge of the Principal
Sellers, any officer, director or employee of the Company or any other Person
"associated" (as defined in the Advisers Act) with the Company, has been
convicted of any crime or is or has engaged in any conduct of the type that
would be a basis for denial, suspension or revocation of registration of an
investment adviser under Section 203(e) of the Advisers Act, and to the
knowledge of the Principal Sellers, there is no proceeding or investigation that
reasonably would be expected to become the basis for any such disqualification,
denial, suspension or revocation.
3.24. Brokers, Finders, etc. All negotiations relating to this Agreement
and the transactions contemplated hereby have been carried on without the
intervention of any Person acting on behalf of the Company or any of the Sellers
in such manner as to give rise to any valid claim against the Company for any
brokerage or finder's commission, fee or similar compensation.
4. Representations and Warranties Relating to the Buyer. The Buyer represents
and warrants to the Sellers (which representations and warranties shall be
deemed to be made again on and as of the Closing Date (except that any such
representation or warranty that expressly is given only as of a particular date
or period and relates solely to such particular date or period shall be given
only as of such date or period)) as follows:
4.1. Organization. The Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the Commonwealth of
Massachusetts.
4.2. Authorization. The Buyer has the legal capacity, power and authority
(including, without limitation, full corporate power and authority) to execute
and deliver this Agreement and each Ancillary Agreement to which the Buyer will
be a party and to perform its obligations hereunder and thereunder. The board of
directors of the Buyer has duly authorized the execution, delivery and
performance by the Buyer of this Agreement and each Ancillary Agreement to which
the Buyer will be a party. All corporate and other actions or proceedings to be
taken by or on the part of the Buyer to authorize and permit the execution and
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delivery by the Buyer of this Agreement and each Ancillary Agreement to which
the Buyer will be a party, the performance by the Buyer of its obligations
hereunder and thereunder and the consummation by the Buyer of the transactions
contemplated hereby and thereby, have been duly and properly taken. This
Agreement has been, and each Ancillary Agreement to which the Buyer will be a
party will be, duly executed and delivered by the Buyer and constitute or will
constitute, as the case may be, legal, valid and binding obligations of the
Buyer, enforceable against the Buyer in accordance with their terms, except to
the extent that enforcement of the rights and remedies created hereby and
thereby is subject to bankruptcy, insolvency, reorganization, moratorium and
other similar laws of general application affecting the rights and remedies of
creditors and except for general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at law).
4.3. No Violation or Approval. The execution, delivery and performance by
the Buyer of this Agreement and each Ancillary Agreement to which the Buyer will
be a party and the consummation by the Buyer of the transactions contemplated
hereby and thereby will not result in a breach or violation of, or a default
under, (a) the Buyer's Certificate of Incorporation or Bylaws, (b) any statute
applicable to the Buyer, (c) any Contract to which the Buyer is a party or by
which the Buyer or any of its assets is bound, (d) any fiduciary duty of the
Buyer or (e) any order, judgment, decree, rule or regulation of any court or any
governmental agency or body having jurisdiction over the Buyer or any of its
assets. No consent, approval, order or authorization of, or declaration or
filing with, any governmental authority or other Person is required in
connection with the execution and delivery by the Buyer of this Agreement and
each Ancillary Agreement to which the Buyer will be a party or the consummation
by the Buyer of the transactions contemplated hereby and thereby.
4.4. Brokers, Finders, etc. Except as set forth on Schedule 4.4, all
negotiations relating to this Agreement and the transactions contemplated hereby
have been carried on without the intervention of any Person acting on behalf of
the Buyer in such manner as to give rise to any valid claim against the Buyer
for any brokerage or finder's commission, fee or similar compensation.
4.5. Investment Representation. The Buyer is acquiring the Shares for
investment and not with a view to, or in connection with, any distribution or
sale thereof in violation of the Securities Act. The Buyer has sufficient
knowledge and experience in financial and business matters so as to be capable
of evaluating the merits and risks of its investment in the Shares and is
capable of bearing the economic risks of such investment.
4.6. Financing. The Buyer has, or will have prior to the Closing,
sufficient cash, available lines of credit or other sources of immediately
available funds to enable it to make payment of the Purchase Price and any other
amounts to be paid by it hereunder.
5. Conditions Precedent to the Obligations of the Buyer. The obligations of the
Buyer to purchase the Shares and to consummate the other transactions
contemplated hereby are subject to the satisfaction on or prior to the Closing
Date of each of the following conditions:
5.1. Representations and Warranties. The representations and warranties of
the Sellers contained in this Agreement (including, without limitation, Articles
2 and 3) (a) that are not qualified by reference to materiality or Material
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Adverse Effect shall be true and correct in all material respects on and as of
the Closing Date with the same force and effect as if made on and as of the
Closing Date and (b) that are qualified by reference to materiality or Material
Adverse Effect shall be true and correct in all respects on and as of the
Closing Date with the same force and effect as if made on and as of the Closing
Date, in each case, other than representations and warranties that expressly
speak only as of a specific date or time, which shall continue to be true and
correct as of such specified date or time.
5.2. Performance of Obligations. Each of the Company and the Sellers shall
have performed and complied with, in all material respects, all agreements,
obligations and covenants contained in this Agreement that are required to be
performed or complied with by them on or prior to the Closing Date.
5.3. Injunctions, etc. No action or proceeding shall have been instituted
or threatened prior to or on the Closing Date before any court or governmental
body or authority pertaining to the transactions contemplated by this Agreement,
the result of which could prevent, or in any way limit or make illegal the
consummation of such transactions. No United States, state or foreign
governmental authority or other agency or commission or United States, state or
foreign court of competent jurisdiction shall have enacted, issued, promulgated,
enforced or entered any statute, rule, regulation, injunction or other order
(whether temporary, preliminary or permanent) that is in effect and has the
effect of prohibiting consummation of the transactions contemplated by this
Agreement.
5.4. Governmental Approvals. All governmental authorities, the consent,
approval, order or authorization of which are necessary under any applicable
law, rule, order or regulation for the consummation of the transactions
contemplated by this Agreement, shall have consented to, approved authorized or
otherwise permitted such transactions. All declarations or filings with
governmental authorities necessary under any applicable law, rule, order or
regulation for the consummation of the transactions contemplated by this
Agreement shall have been made.
5.5. Consents. The Sellers shall have obtained all consents, waivers and
approvals required under any Contracts set forth on Schedule 3.5, in a manner
reasonably satisfactory in form and substance to the Buyer, and no such
consents, waivers or approvals shall have been revoked. The Consenting Client
Accounts Annualized Revenue Amount shall be greater than or equal to 91% of the
Target Annualized Revenue Amount.
5.6. No Material Adverse Effect. Since the date of this Agreement, there
shall not have occurred a Material Adverse Effect.
5.7. Officer's Certificate. The Company shall have delivered to the Buyer
a certificate executed by a duly authorized officer of the Company certifying
that each of the conditions set forth in Sections 5.1 (Representations and
Warranties), 5.2 (Performance of Obligations) and 5.6 (No Material Adverse
Effect) has been satisfied in all respects.
5.8. Opinion of Counsel. The Sellers shall have furnished the Buyer with
an opinion of Xxxxx Xxxxxxx Xxxxxxx Israels LLP, counsel to the Company and the
Sellers, substantially in the form attached hereto as Exhibit B.
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5.9. Resignations. The Buyer shall have received executed letters of
resignation, effective on or prior to the Closing Date, from each director of
the Company other than C. Xxxxxxx xx Xxxxx, Xx.
5.10. Corporate Proceedings. The Company shall have furnished to the
Buyer:
(1) Certificate of a recent date of the Secretary of State of the
Commonwealth of Massachusetts, certifying that the Company is duly
organized, validly existing and in good standing.
(2) Certificate of Incorporation of the Company, certified as of a
recent date by the Secretary of State of the Commonwealth of
Massachusetts.
(3) Certificate of the Secretary of the Company certifying as to (a)
attached resolutions of the board of directors of the Company authorizing
and approving this Agreement and the transactions contemplated hereby
(including, without limitation, the Employment Agreements), (b) incumbency
and signatures of signing officers, (c) the attached Bylaws of the Company
and (d) no change in good standing or the Company's Certificate of
Incorporation since the date of such documents provided under Section
5.10(1) and 5.10(2).
5.11. FIRPTA. The Buyer shall have received from each Seller an executed
certification meeting the requirements of Treasury Regulation Section
1.1445-2(2) to the effect that such Seller is not a foreign person.
5.12. Employment Agreements. The board of directors of the Company shall
have duly authorized and approved, and the Company and each Seller (other than
Xxxxx X. xx Xxxxx) shall have executed and delivered, the Employment Agreements.
5.13. Profit Sharing Plan. The Company's Profit Sharing Plan shall have
been terminated on terms mutually acceptable to both Buyer and Seller.
5.14. Minimum Cash Balance. The Buyer shall have received a certificate of
an officer of the Company certifying that, as of the Closing, the Company holds
$95,000 in cash.
5.15. Fees. The Company shall have furnished to the Buyer a schedule of
all fees earned by the Company but not yet billed as of the Closing Date (as
described in Section 7.15), which schedule shall be subject to the reasonable
review and reasonable approval of Buyer as to whether such fees were earned but
not billed as of the Closing Date.
5.16. General. All corporate and other proceedings in connection with the
transactions contemplated by this Agreement and all documents incident thereto
shall be reasonably satisfactory in form and substance to the Buyer and its
counsel, and they shall have received all such counterpart original and
certified or other copies of such documents as they may reasonably request.
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6. Conditions Precedent to Obligations of the Sellers. The obligations of the
Sellers to effect the sale of the Shares and to consummate the other
transactions contemplated hereby are subject to the satisfaction on or prior to
the Closing Date of each of the following conditions:
6.1. Representations and Warranties. The representations and warranties of
the Buyer contained in this Agreement (including, without limitation, Article 4)
(a) that are not qualified by reference to materiality shall be true and correct
in all material respects on and as of the Closing Date with the same force and
effect as if made on and as of the Closing Date and (b) that are qualified by
reference to materiality shall be true and correct in all respects on and as of
the Closing Date with the same force and effect as if made on and as of the
Closing Date, in each case, other than representations and warranties that
expressly speak only as of a specific date or time, which shall continue to be
true and correct as of such specified date or time.
6.2. Performance of Obligations. The Buyer shall have performed and
complied with, in all material respects, all agreements, obligations and
covenants contained in this Agreement that are required to be performed or
complied with by it on or prior to the Closing Date.
6.3. Injunctions, etc. No action or proceeding shall have been instituted
or threatened prior to or on the Closing Date before any court or governmental
body or authority pertaining to the transactions contemplated by this Agreement,
the result of which could prevent, in any way limit or make illegal the
consummation of any such transactions. No United States, state or foreign
governmental authority or other agency or commission or United States, state or
foreign court of competent jurisdiction shall have enacted, issued, promulgated,
enforced or entered any statute, rule, regulation, injunction or other order
(whether temporary, preliminary or permanent) that is in effect and has the
effect of prohibiting consummation of the transactions contemplated by this
Agreement.
6.4. Governmental Approvals. All governmental authorities, the consent,
approval, order or authorization of which are necessary under any applicable
law, rule, order or regulation for the consummation of the transactions
contemplated by this Agreement, shall have consented to, approved authorized or
otherwise permitted such transactions. All declarations or filings with
governmental authorities necessary under any applicable law, rule, order or
regulation for the consummation of the transactions contemplated by this
Agreement shall have been made.
6.5. Officer's Certificate. The Buyer shall have delivered to the Sellers
a certificate executed by a duly authorized officer of the Buyer certifying that
each of the conditions set forth in Sections 6.1 (Representations and
Warranties) and 6.2 (Performance of Obligations) has been satisfied in all
respects.
6.6. Profit Sharing Plan. The Company's Profit Sharing Plan shall have
been terminated on terms mutually acceptable to both Seller and Buyer.
6.7. Termination of Lease Guarantee. The personal guarantee of C. Xxxxxxx
xx Xxxxx, Xx. under the Company's lease of office space at 00 Xxxxxxx Xxxxxx,
Xxxxxx, XX 00000, which lease is described on Schedule 3.9 attached hereto,
shall have been terminated.
6.8. General. All corporate and other proceedings in connection with the
transactions contemplated by this Agreement and all documents incident thereto
shall be reasonably satisfactory in form and substance to the Sellers and their
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counsel, and they shall have received all such counterpart original and
certified or other copies of such documents as they may reasonably request.
7. Covenants of the Parties.
7.1. Access. From the date of this Agreement until the Closing Date and
subject to the terms and provisions of the Confidentiality Agreement, the
Sellers and the Company shall, and the Sellers shall cause the Company to,
permit the Buyer and its authorized representatives to have reasonable access
during normal operating hours to all officers and employees of the Company and
to all premises, offices, properties, books, records (including, without
limitation, Tax records), Contracts, financial and operating data and
information and documents pertaining to the Company, the Assets and the Business
and make copies of such books, records, Contracts, data, information and
documents that the Buyer and its authorized representatives may reasonably
request.
7.2. Conduct of Business.
(1) Conduct of Business. From the date of this Agreement until the
Closing Date, the Company shall:
(a) conduct the Business only in the Ordinary Course of
Business;
(b) use reasonable efforts to maintain the value of the
Business as a going concern;
(c) to the extent that any Person becomes a Client of the
Company, charge such Client a fee in accordance with the Form ADV of
the Company;
(d) use reasonable efforts to preserve intact its business
organization and relationships with third Persons (including,
without limitation, lessors, licensors, suppliers and Clients) and
keep available the services of its present officers and employees;
and
(e) consult with the Buyer prior to taking any action or
entering into any transaction that may be of strategic importance to
the Company.
(2) Prohibited Acts. Without limiting the generality of Section
7.2(1), without the written consent of the Buyer, from the date of this
Agreement until the Closing Date, the Company shall not:
(a) take or omit to take any action that would cause any of
the representations and warranties in Article 3 to be untrue in any
material respect on, or as of any time prior to, the Closing Date;
(b) authorize, issue, sell, grant or otherwise dispose of any
Common Stock or Company Securities;
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(c) adopt or propose any change to the Company Charter
Documents;
(d) merge or consolidate with any other Person or acquire a
material amount of stock or assets of any other Person;
(e) repurchase, redeem or otherwise acquire any outstanding
shares of capital stock or other securities of the Company;
(f) sell, lease, license or otherwise dispose of any material
Assets;
(g) reduce, lower, cap, waive or reimburse any fee payable by
any Client to the Company (other than in the Ordinary Course of
Business in an amount not to exceed, individually or in the
aggregate, 5% of the Target Annualized Revenue Amount);
(h) except as set forth on Schedule 7.2(2)(h), enter into or
perform any transactions with any Seller or any other Affiliate of
the Company or any member of the immediate family of any Seller or
any other Affiliate of the Company or any other transactions other
than on an arms length basis and in the Ordinary Course of Business;
(i) incur, assume, or guaranty Indebtedness other than
Indebtedness which is incurred in the Ordinary Course of Business
and which in the aggregate does not exceed $5,000;
(j) adopt, amend or modify any Company Plan; or
(k) agree or commit to do any of the foregoing.
7.3. Exclusivity. From the date of this Agreement until the earlier of the
Closing or the termination of this Agreement pursuant to Section 10.10, the
Company and the Sellers shall not, and shall cause their respective Affiliates,
advisors and representatives not to, directly or indirectly: (a) solicit or
initiate, or encourage the submission of, any proposal or offer from any Person
relating to, or enter into or consummate any transaction relating to, the
acquisition of the Company or any capital stock or other securities of the
Company or any substantial portion of the Assets, including, without limitation,
any acquisition structured as a merger, consolidation or share exchange or any
similar transaction; or (b) participate in any discussions or negotiations
regarding, furnish any information with respect to, assist or participate in, or
facilitate in any other manner, any effort or attempt by any Person to do or
seek any of the foregoing. The Principal Sellers shall promptly notify the Buyer
immediately if any Person makes any proposal, offer, inquiry or contact (whether
solicited or unsolicited) with respect to any of the foregoing, including
disclosing to the Buyer the terms of the offer and the identity of the offeror
thereof.
7.4. Non-Competition; Non-Solicitation. In consideration of the purchase
by the Buyer of the Shares hereunder, each of the Principal Sellers (other than
Xxxxx X. xx Xxxxx) hereby agrees, severally and not jointly, as follows:
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(1) Non-Competition. For a period of three (3) years from and after
the Closing Date, such Principal Seller shall not, directly or indirectly,
whether as owner, partner, investor, consultant, agent, employee,
co-venturer or otherwise, compete with the Company or any of its
Affiliates within Massachusetts, Maine or New Hampshire or undertake any
planning for any business competitive with the Company or any of its
Affiliates; provided, that a Principal Seller will not be deemed to be an
"owner" of a public company unless such Principal Seller, together with
its Affiliates, owns more than 2% of the total outstanding shares of such
company; and provided further that a Principal Seller shall be entitled to
provide services to the entities listed on Schedule II to such Principal
Seller's Employment Agreement in accordance with the terms of such
Employment Agreement. In particular, but without limiting the foregoing,
for a period of three (3) years from and after the Closing Date, such
Principal Seller shall not work or provide services, in any capacity,
whether as an employee, independent contractor or otherwise, whether with
or without compensation, to any Person that is engaged in any business
that is competitive with the Business, as conducted on the Closing Date.
(2) Non-Solicitation. For a period of three (3) years from and after
the Closing Date, such Principal Seller shall not (a) hire or attempt to
hire any employee of the Company, the Buyer or any of their respective
Affiliates, assist in such hiring by any Person, or seek to persuade any
employee of the Company, the Buyer or any of their respective Affiliates
to discontinue employment, (b) solicit or encourage any client of the
Company, the Buyer or any of their respective Affiliates to terminate or
diminish its relationship with them or (c) seek to persuade any client or
any prospective client (as identified on a list to be maintained by the
Company (a "Prospective Client")) of the Company, the Buyer or any of
their respective Affiliates to conduct with anyone else any business or
activity that such client or Prospective Client conducts or could conduct
with the Company, the Buyer or any of their respective Affiliates.
(3) Unenforceability. If the final judgment of a court of competent
jurisdiction declares that any term or provision of this Section 7.4 is
invalid or unenforceable, the parties hereto agree that the court making
the determination of invalidity or unenforceability shall have the power
to reduce the scope, duration or area of the term or provision, to delete
specific words or phrases, or to replace any invalid or unenforceable term
or provision with a term or provision that is valid and enforceable and
that comes closest to expressing the intention of the invalid or
unenforceable term or provision, and this Agreement shall be enforceable
as so modified after the expiration of the time within which the judgment
may be appealed.
(4) Assurances. In signing this Agreement, each of the Sellers gives
the Buyer assurance that such Seller has carefully read and considered all
the terms and conditions of this Agreement, including, without limitation,
the restraints imposed on such Principal Sellers (other than Xxxxx X. xx
Xxxxx) under this Section 7.4. Each Principal Seller (other than Xxxxx X.
xx Xxxxx) agrees without reservation that these restraints are necessary
for the reasonable and proper protection of the Company, the Buyer and
their respective Affiliates, including the protection of the confidential
information of the Company, the Buyer and their respective Affiliates, and
that each and every one of the restraints is reasonable with respect to
subject matter, length of time and geographic area.
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Each Principal Seller (other than Xxxxx X. xx Xxxxx) further agrees that,
were such Principal Seller to breach any of the covenants contained in
this Section 7.4, the damage to the Company, the Buyer and their
respective Affiliates would be irreparable. Each Principal Seller (other
than Xxxxx X. xx Xxxxx) therefore agrees that the Buyer, in addition to
any other remedies available to it, shall be entitled to preliminary and
permanent injunctive relief against any breach or threatened breach by
such Principal Seller of any of those covenants. It is also agreed that
each Affiliate of the Buyer shall have the right to enforce all of the
obligations of each of the Sellers to such Affiliate under this Agreement,
including, without limitation, the obligations of the Sellers pursuant to
this Section 7.4.
7.5. Preparation for Closing.
(1) Subject to the terms and conditions of this Agreement, each of
the parties hereto agrees to use all commercially reasonable efforts to
take, or cause to be taken, all actions and do, or cause to be done, all
things necessary, proper or advisable under applicable law, rules, orders
and regulations to bring about the fulfillment of the conditions precedent
contained in Article 5 or 6, as the case may be, and consummate the
transactions contemplated hereby.
(2) In furtherance and not in limitation of Section 7.5(1), the
Company shall:
(a) as soon as reasonably practicable and in any event by the
fifth business day following the date of this Agreement, inform in
compliance with applicable law the Clients of the transactions
contemplated hereby, request each such Client's written affirmative
consent to the assignment of its respective Advisory Contract deemed
to occur as a result of the consummation of the transactions
contemplated hereby and use all reasonable efforts to obtain such
consent or, in the case of Advisory Contracts that prohibit
assignment or a change in control or state by their terms that they
terminate upon assignment or a change in control, new investment
advisory agreements with the Company to be effective upon the
Closing Date; provided, however, that except as consented to in
writing by the Buyer (which consent will not be unreasonably
withheld) any such new investment advisory agreements shall be
identical in all material respects to the Advisory Contracts; and
(b) use reasonable efforts to obtain any and all necessary
consents, approvals, orders, authorizations and waivers of, and make
all necessary declarations and filings with, governmental
authorities, for the consummation of the transactions contemplated
by this Agreement.
7.6. Confidentiality.
(1) Non-Disclosure. Each Seller acknowledges that the success of the
Acquired Companies after the Closing depends upon the continued
preservation of the confidentiality of certain information possessed by
such Seller, that the preservation of the confidentiality of such
information by such Seller is an
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essential premise of the bargain between the Sellers and the Buyer, and
that the Buyer would be unwilling to enter into this Agreement in the
absence of this Section 7.6(1). Accordingly, each Seller, severally and
not jointly, agrees that, except as may be required for the proper
performance of such Seller's regular duties for the Company as an employee
of the Company from and after the Closing Date, such Seller shall not, and
shall cause its Affiliates, representatives and advisors not to, at any
time on or after the Closing Date, directly or indirectly, use or disclose
any Confidential Information. The Sellers agree that they shall be
responsible for any breach or violation of the provisions of this Section
7.6(1) by any of their respective Affiliates, representatives or advisors.
(2) Announcements. No public announcement or disclosure shall be
made by any party with respect to the subject matter of this Agreement or
the transactions contemplated hereby without the prior written consent of
the Buyer and the Sellers' Representative; provided, however, that the
provisions of this Section 7.6(2) shall not prohibit (a) any disclosure
required by any applicable law, rule, order or regulation (in which case
the disclosing party shall provide the other party with the opportunity to
review in advance the disclosure) or (b) any disclosure made in connection
with the enforcement of any right or remedy relating to this Agreement or
the transactions contemplated hereby.
7.7. Director and Officer Liability. The Buyer hereby agrees that all
rights to indemnification and all limitations on liability existing in favor of
any officer or director of the Company as provided in the Company Charter
Documents shall, in respect of acts or omissions occurring on or prior to the
Closing Date, continue in full force and effect in accordance with their terms
from and after the Closing Date.
7.8. Transfer Taxes. All transfer, documentary, sales, use, stamp,
registration and other such Taxes and fees (including, without limitation, any
penalties and interest) incurred in connection with the transactions
contemplated by this Agreement shall be paid by the Sellers.
7.9. S Corporation Status. From the date of this Agreement until the
Closing, the Company and the Sellers shall not revoke the Company's election to
be taxed as an S corporation within the meaning of Sections 1361 and 1362 of the
Code. From the date of this Agreement until the Closing, the Company and the
Sellers shall not take or allow any action other than the purchase and sale of
the Shares pursuant to this Agreement, or omit to take any action, which action
or omission would result in the termination of the Company's status as a validly
electing S corporation within the meaning of Sections 1361 and 1362 of the Code.
The Principal Sellers shall (i) prepare the Company's final S corporation
federal and state tax returns for the calendar year in which the Closing Date
occurs, (ii) provide the Buyer with a reasonable opportunity to review such
returns prior to filing and (iii) timely file such returns.
7.10. Section 338(h)(10) Election. At the Buyer's election, the Company
and each Seller shall join with the Buyer in making an election under Section
338(h)(10) of the Code (and any corresponding election under state, local, and
foreign Tax law) with respect to the purchase and sale of the Shares hereunder
(a "Section 338(h)(10) Election"). The Sellers shall include any income, gain,
loss, deduction, or other pass-through Tax item resulting from the Section
338(h)(10) Election on their Tax Returns to the extent permitted by applicable
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law. The Company and the Sellers shall take all actions necessary to implement
such Section 338(h)(10) Election and shall not take or allow to be taken any
action to modify or revoke the Section 338(h)(10) Election.
7.11. Allocation of Purchase Price. If the Buyer elects to make a Section
338(h)(10) Election, the Buyer, the Company and the Sellers agree that the
Purchase Price and the liabilities of the Company (plus other relevant items)
shall be allocated to the assets of the Company for all purposes (including,
without limitation, Tax and financial accounting) in accordance with Schedule
7.11, subject to reasonable adjustment by the Buyer prior to Closing to reflect
any changes required by U.S. generally accepted accounting principles as a
result of changes in the terms of any investment advisory contract of the
Company between the date hereof and the Closing Date. The Buyer, the Company and
the Sellers shall file all Tax Returns (including, without limitation, amended
returns, claims for refund, and information reports, and including IRS Forms
8883 and 8023) and take positions in all Tax proceedings in a manner consistent
with such allocation.
7.12. Board of Directors. From the Closing Date until the end of the
Second Deferred Payment Period (or, if applicable, the Adjusted Second Deferred
Payment Period), the Buyer, and, if the Buyer transfers any shares to one or
more of its Affiliates, such Affiliates, shall vote the Shares at any regular or
special meeting of the stockholders of the Company called for the purpose of
filling positions on the Company's board of directors (the "Board"), or in any
written consent executed in lieu of such a meeting of stockholders, and shall
otherwise take all actions necessary to ensure (i) that the Board consists of
five members and (ii) that the following members are elected to the Board: (A)
two of the Principal Sellers (other than Xxxxx X. xx Xxxxx), as designated by
the Principal Sellers (such two individuals being referred to herein as the
"Seller Nominees") and (B) three individuals designated by the Buyer (such three
individuals being referred to herein as the "Buyer Nominees"; the parties hereby
agree that Xxxxx Xxxxxxx shall be one of the Buyer Nominees for so long as he is
employed by the Buyer). If, following election to the Board and prior to the end
of the Second Deferred Payment Period (or, if applicable, the Adjusted Second
Deferred Payment Period), any Seller Nominee or any Buyer Nominee shall resign
or be removed or be unable to serve for any reason prior to the expiration of
his or her term as a director of the Company, the Principal Sellers or the
Buyer, as applicable, shall notify the Board in writing of a replacement Seller
Nominee or Buyer Nominee, as applicable, and the Buyer, and, if the Buyer
transfers any shares to one or more of its Affiliates, such Affiliates, shall
vote the Shares at any regular or special meeting of the stockholders of the
Company called for the purpose of filling the vacancy on the Board to cause such
replacement nominee to be elected to the Board. Until the end of the Second
Deferred Payment Period (or, if applicable, the Adjusted Second Deferred Payment
Period), a Seller Nominee shall not be removed from the Board without the
consent of the other Seller Nominee, and a Buyer Nominee shall not be removed
from the Board without the consent of at least one other Buyer Nominee.
Notwithstanding the first sentence of this Section 7.12, if a Seller Nominee
continues to be an executive officer of the Company following the end of the
Second Deferred Payment Period (or, if applicable, the Adjusted Second Deferred
Payment Period), then such Seller Nominee shall be entitled to remain on the
Board until he or she ceases to be an executive officer of the Company.
7.13. New Accounts. Except as otherwise provided in this Agreement, until
the end of the Second Deferred Payment Period (or, if applicable, the Adjusted
Second Deferred Payment Period) the Company shall not be required to accept a
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new customer account if its acceptance is objected to by 20% or more of the
members of the Board.
7.14. Books and Records. From the Closing Date until the end of the Second
Deferred Payment Period (or, if applicable, the Adjusted Second Deferred Payment
Period), the Company shall maintain its books and records without consolidating
them with those of the Buyer, the Guarantor or their Affiliates.
7.15. Accounts Receivable. The Buyer and the Sellers hereby agree that,
following the Closing Date, the Buyer shall cause the Company to forward to the
Seller's Representative any (i) fees earned by the Company but not yet billed as
of the Closing Date, which amounts shall be set forth on a schedule to be
prepared by the Company prior to the Closing Date and shall be subject to
reasonable review and reasonable approval by the Buyer as to whether such fees
were earned but not billed as of the Closing Date, and (ii) fees not received by
the Company from accounts receivable that existed as of the Closing Date, and
the Seller's Representative shall subsequently distribute such amounts among the
Sellers in a manner agreed upon by the Sellers.
7.16. Articles of Incorporation. The Sellers and the Buyer hereby agree
that promptly following the Closing Date, the Company shall file with the
Secretary of the Commonwealth of the Commonwealth of Massachusetts an amendment
to its Articles of Incorporation to add the provision set forth on Exhibit D
hereto to its Articles of Incorporation.
7.17. Further Assurances. From time to time after the Closing, at the
request of the Buyer, the Sellers shall execute and deliver any further
instruments and take such other action as the Buyer may reasonably request to
carry out the transactions contemplated hereby.
8. Indemnification.
8.1. Survival of Representations, Warranties, Covenants and Indemnities.
The representations and warranties of the parties contained in this Agreement or
in any document, certificate or other instrument required to be delivered
hereunder shall survive the Closing and continue in full force and effect until
the 18 month anniversary of the Closing Date; provided; however, that the
representations and warranties of the Sellers contained in Sections 2.1
(Authorization), 2.3 (Title to Shares), 3.2 (Authorization) and 3.3
(Capitalization) shall survive the Closing and continue in full force and effect
without limit as to time (subject to any statutes of limitations applicable to
the matters covered thereby and any extensions or waivers thereof); and provided
further, that the representations and warranties of the Sellers contained in
Section 3.8 (Taxes) shall survive the Closing and continue in full force and
effect until the third anniversary of the Closing Date, unless on such third
anniversary the Internal Revenue Service is auditing or disputing the returns of
the Company with respect to any pre-Closing taxable period, in which case the
representations and warranties of the Sellers contained in Section 3.8 shall
continue in full force and effect without limit as to time (subject to any
statutes of limitations applicable to the matters covered thereby and any
extensions or waivers thereof). Notwithstanding the preceding sentence, (i) any
representation or warranty in respect of which indemnity may be bought under
this Agreement shall survive the time at which it would otherwise terminate
pursuant to the preceding sentence, if written notice of the inaccuracy or
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breach thereof giving rise to such right of indemnity shall have been given to
the party against whom such indemnity may be sought prior to such termination
time and (ii) claims for indemnity based upon fraud or intentional
misrepresentation of any representation or warranty contained in this Agreement
or in any document, certificate or other instrument required to be delivered
hereunder may be brought under this Article 8 without limit as to time (subject
to any statutes of limitations applicable to the matters covered thereby and any
extensions or waivers thereof). For the avoidance of doubt, all covenants of the
parties contained in this Agreement or in any document, certificate or other
instrument required to be delivered hereunder shall survive the Closing and
continue in full force and effect without limit as to time. With respect to the
indemnification obligations set forth in Sections 8.3(4) and 8.4(4), such
obligations shall terminate on the third anniversary of the Closing Date, unless
on such third anniversary the Internal Revenue Service is auditing or disputing
the returns of the Company with respect to any pre-Closing taxable period, in
which case the indemnification obligations set forth in Sections 8.3(4) and
8.4(4) shall continue in full force and effect without limit as to time (subject
to any statutes of limitations applicable to the matters covered thereby and any
extensions or waivers thereof).
8.2. Indemnity by the Company. In the event that the Closing does not
occur, the Company hereby agrees to jointly and severally indemnify, defend and
hold harmless the Buyer and each of its directors, officers, shareholders and
Affiliates (collectively, the "Buyer Indemnified Parties") from, against and in
respect of all Losses resulting from, arising out of, relating to, in the nature
of, or caused by any breach or default in performance by the Company of any
covenant, agreement or obligation contained in this Agreement or in any
document, certificate or other instrument required to be delivered hereunder.
8.3. Indemnity by C Xxxxxxx xx Xxxxx, Xx. Except as otherwise provided in
this Section 8.3 and subject to Section 8.6(1), C. Xxxxxxx xx Xxxxx, Xx. hereby
agrees to jointly and severally indemnify, defend and hold harmless the Buyer
Indemnified Parties from, against and in respect of all Losses resulting from,
arising out of, relating to, in the nature of, or caused by:
(1) any breach of, or inaccuracy in, any representation or warranty
made by any Principal Seller in this Agreement or in any document,
certificate or other instrument required to be delivered hereunder (in
each case, as each such representation or warranty would read if all
qualifications as to materiality, including, without limitation, each
reference to the defined term "Material Adverse Effect," were deleted
therefrom);
(2) any breach or default in performance by the Company prior to or
on the Closing Date (if the Closing occurs) or C. Xxxxxxx xx Xxxxx, Xx. of
any covenant, agreement or obligation contained in this Agreement or in
any document, certificate or other instrument required to be delivered
hereunder;
(3) any fraud or intentional misrepresentation by the Company or C.
Xxxxxxx xx Xxxxx, Xx.; or
(4) Taxes of the Company with respect to any Pre-Closing Period and
Taxes of the Company resulting from a Contract entered into or an event
which occurred in any Pre-Closing Period (including, without limitation,
all Taxes of the Company resulting from or attributable to the making of a
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Section 338(h)(10) Election or the deemed sale of assets resulting
therefrom);
provided, however, that, in the case of any breach by any Seller other than C.
Xxxxxxx xx Xxxxx, Xx. of any representation or warranty contained in Article 2,
C. Xxxxxxx xx Xxxxx, Xx. shall have no liability for any indemnification
obligations under this Article 8 resulting from such breach; provided further
that, beginning with the date that is 18 months after the Closing Date, the
indemnification obligation of C. Xxxxxxx xx Xxxxx, Xx. with respect to a breach
of, or inaccuracy in, any representation or warranty contained in Section 3.8
(Taxes) or pursuant to Section 8.3(4) above shall become several and not joint
and shall be borne pro rata according to each Seller's Pro Rata Portion, unless
on such date the Internal Revenue Service is auditing or disputing the returns
of the Company with respect to any pre-Closing taxable period, in which case C.
Xxxxxxx xx Xxxxx, Xx. shall remain jointly and severally liable for the entire
amount of the indemnification obligation. The applicable Buyer Indemnified Party
shall provide the Sellers' Representative with written notice for any claim made
in respect of the indemnification provided in this Section 8.3, whether or not
arising out of a claim by a third party.
8.4. Indemnity by Sellers Other than C. Xxxxxxx xx Xxxxx, Xx. Except as
otherwise provided in this Section 8.4 and subject to Section 8.6(1), each
Seller other than C. Xxxxxxx xx Xxxxx, Xx. hereby agrees to severally and not
jointly indemnify, defend and hold harmless the Buyer Indemnified Parties from,
against and in respect of all Losses resulting from, arising out of, relating
to, in the nature of, or caused by:
(1) any breach of, or inaccuracy in, any representation or warranty
made by such Seller in this Agreement or in any document, certificate or
other instrument required to be delivered hereunder (in each case, as each
such representation or warranty would read if all qualifications as to
materiality, including, without limitation, each reference to the defined
term "Material Adverse Effect," were deleted therefrom);
(2) any breach or default in performance by the Company prior to or
on the Closing Date (if the Closing occurs) or such Seller of any
covenant, agreement or obligation contained in this Agreement or in any
document, certificate or other instrument required to be delivered
hereunder;
(3) any fraud or intentional misrepresentation by such Seller; or
(4) Taxes of the Company with respect to any Pre-Closing Period and
Taxes of the Company resulting from a Contract entered into or an event
which occurred in any Pre-Closing Period (including, without limitation,
all Taxes of the Company resulting from or attributable to the making of a
Section 338(h)(10) Election or the deemed sale of assets resulting
therefrom);
provided, however, that, except with respect to a breach by a Minority Seller of
a covenant under Article 7 or a representation and warranty under Article 2, for
which such Minority Seller shall be severally and not jointly liable for any
indemnification obligations under this Article 8 resulting from such breach,
such Minority Seller shall not be liable for any other indemnification
obligations under this Article 8 resulting from any other breach of this
Agreement. The applicable Buyer Indemnified Party shall provide the Sellers'
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Representative with written notice for any claim made in respect of the
indemnification provided in this Section 8.4, whether or not arising out of a
claim by a third party.
8.5. Indemnity by the Buyer. Subject to Section 8.6(2), the Buyer hereby
agrees to indemnify, defend and hold harmless the Sellers and their respective
Affiliates (collectively, the "Seller Indemnified Parties") from, against and in
respect of all Losses resulting from, arising out of, relating to, in the nature
of, or caused by:
(1) any breach of, or inaccuracy in, any representation or warranty
made by the Buyer in this Agreement or in any document, certificate or
other instrument required to be delivered hereunder (in each case, as each
such representation or warranty would read if all qualifications as to
materiality were deleted therefrom);
(2) any breach or default in performance by the Buyer of any
covenant, agreement or obligation contained in this Agreement or in any
document, certificate or other instrument required to be delivered
hereunder; or
(3) any fraud or intentional misrepresentation by the Buyer.
The applicable Seller Indemnified Party shall provide the Buyer with written
notice for any claim made in respect of the indemnification provided in this
Section 8.5, whether or not arising out of a claim by a third party.
8.6. Limitations on Indemnity.
(1) Limitations on Indemnity by the Sellers. Subject to the second
sentence of this Section 8.6(1), the Sellers shall only be liable under
Sections 8.3(1) and 8.4(1) in respect of the Losses contemplated therein
for the aggregate amount of all such Losses in excess of $36,000;
provided, that the aggregate liability of C. Xxxxxxx xx Xxxxx, Xx. for
indemnification claims under Section 8.3(1) shall be limited to 20% of the
Initial Purchase Price (the "Cap"), and the aggregate liability for each
other Seller under Section 8.4(1) shall be limited to its Pro Rata Portion
of the Cap. Notwithstanding any provision of the preceding sentence to the
contrary, the limitations on indemnification set forth in such sentence
shall not apply to any indemnification claim under Sections 8.3(1) or
8.4(1) with respect to any breach of, or inaccuracy in, any representation
or warranty contained in Sections 2.1 (Authorization), 2.3 (Title to
Shares), 3.2 (Authorization), 3.3 (Capitalization) and 3.8 (Taxes). For
the avoidance of doubt, the limitations on indemnification set forth in
the first two sentences of this Section 8.6(1) shall not apply to any
indemnification claim under Section 8.3(2), 8.3(3), 8.3(4), 8.4(2),
8.4(3), or 8.4(4).
(2) Limitations on Indemnity by the Buyer. The Purchaser shall only
be liable under Section 8.5(1) in respect of Losses contemplated therein
for the aggregate amount of all such Losses in excess of $36,000;
provided, that the aggregate liability of the Buyer for indemnification
claims under Section 8.5(1) shall be limited to 20% of the Initial
Purchase Price. For the avoidance of doubt, the limitations on
indemnification set forth in the preceding sentence shall not apply to any
indemnification claim under Section 8.5(2) or 8.5(3).
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(3) No Duplicate Recovery. With respect to a Loss for which
indemnification is available to Buyer under both Section 8.3 and Section
8.4, Buyer may elect to pursue recovery of such Loss under one or both of
such sections; provided, that the aggregate amount recovered by Buyer for
such Loss under Sections 8.3 and 8.4 shall not exceed the total amount of
such Loss.
8.7. Matters Involving Third Parties.
(1) If any third party shall notify any party (the "Indemnified
Party") with respect to any matter (a "Third Party Claim") which may give
rise to a claim for indemnification against any other party (the
"Indemnifying Party") under this Article 8, then the Indemnified Party
shall promptly notify the Indemnifying Party (in the case of the Sellers,
the Sellers' Representative) thereof in writing; provided, however, that
no delay on the part of the Indemnified Party in notifying the
Indemnifying Party shall relieve the Indemnifying Party from any
obligation hereunder unless (and then solely to the extent) the
Indemnifying Party thereby is prejudiced.
(2) Any Indemnifying Party shall have the right to defend the
Indemnified Party against the Third Party Claim with counsel of its choice
reasonably satisfactory to the Indemnified Party so long as (i) the
Indemnifying Party notifies the Indemnified Party in writing within 15
days after the Indemnified Party has given notice of the Third Party Claim
that the Indemnifying Party will indemnify, subject to the limitations set
forth in this Article 8, the Indemnified Party from and against the
entirety of any Losses the Indemnified Party may incur or sustain
resulting from, arising out of, relating to, in the nature of, or caused
by the Third Party Claim, (ii) the Indemnifying Party provides the
Indemnified Party with evidence reasonably acceptable to the Indemnified
Party that the Indemnifying Party will have the financial resources to
defend against the Third Party Claim and fulfill its indemnification
obligations hereunder, (iii) the Third Party Claim involves only monetary
damages and does not seek an injunction or other equitable relief and (iv)
the Indemnifying Party conducts the defense of the Third Party Claim
actively and diligently.
(3) So long as the Indemnifying Party is conducting the defense of
the Third Party Claim in accordance with Section 8.7(2) above, (i) the
Indemnified Party may retain separate co-counsel at its sole cost and
expense and participate in the defense of the Third Party Claim, (ii) the
Indemnified Party shall not consent to the entry of any judgment or enter
into any settlement with respect to the Third Party Claim without the
prior written consent of the Indemnifying Party (which consent shall not
unreasonably be withheld) and (iii) the Indemnifying Party shall not
consent to the entry of any judgment or enter into any settlement with
respect to the Third Party Claim unless (x) written agreement is obtained
releasing the Indemnified Party from all liability thereunder and (z)
settlement of, or an adverse judgment with respect to, the Third Party
Claim is not, in the good faith judgment of the Indemnified Party, likely
to establish a precedential custom or practice adverse to the continuing
business interests of the Indemnified Party.
(4) In the event any of the conditions in Section 8.7(2) above is or
becomes unsatisfied, however, (i) the Indemnified Party may defend
against, and, except with respect to a Third Party Claim in which only
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condition (iii) of Section 8.7(2) is or becomes unsatisfied, consent to
the entry of any judgment or enter into any settlement with respect to,
the Third Party Claim in any manner it may deem appropriate (and the
Indemnified Party need not consult with, or obtain any consent from, any
Indemnifying Party in connection therewith), (ii) the Indemnifying Parties
shall reimburse the Indemnified Party promptly and periodically for the
costs of defending against the Third Party Claim (including, without
limitation, attorneys' fees and expenses) and (iii) the Indemnifying
Parties shall remain responsible for any Losses the Indemnified Party may
suffer resulting from, arising out of, relating to, in the nature of, or
caused by the Third Party Claim to the fullest extent provided in this
Article 8.
8.8. Calculation of Losses. The Indemnified Party shall act in good faith
to collect insurance proceeds owed to it under applicable insurance policies in
connection with any Losses. The amount of any Losses payable under this Article
8 by the Indemnifying Party shall be net of any amounts actually recovered by
the Indemnified Party under applicable insurance policies (less the amount of
any deductible or increase in premium paid or payable by the Indemnified Party
in connection therewith).
8.9. Guarantee. The Guarantor hereby agrees to guarantee the performance
of Buyer's obligations under this Agreement.
8.10. Exclusive Remedy. Except for remedies that cannot be waived as a
matter of law, if the Closing occurs, indemnification pursuant to this Article 8
will be the exclusive remedy for any breach of, or inaccuracy in, any
representation or warranty made in this Agreement or in any document,
certificate or other instrument required to be delivered hereunder, other than
in respect of claims based on conduct constituting fraud, fraud in the
inducement or intentional misrepresentation.
9. Definitions. Certain capitalized terms are used in this Agreement with the
specific meanings defined below in this Article 9:
"Adjusted Closing Date" means (i) if the Closing occurs on the final
calendar day of a month, the Closing Date or (ii) if the Closing does not occur
on the final calendar of a month, the nearest final calendar day of a month to
the Closing Date, whether the Closing Date is before or after such date.
"Adjusted First Deferred Payment Period" means the period of time from
(and including) the Adjusted Closing Date to (but excluding) the three year
anniversary of the Adjusted Closing Date.
"Adjusted Second Deferred Payment Period" means the period of time from
(and including) the two year anniversary of the Adjusted Closing Date to (but
excluding) the five year anniversary of the Adjusted Closing Date.
"Advisers Act" means the Investment Advisers Act of 1940, as amended, and
the regulations promulgated thereunder.
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"Advisory Contract" means any investment advisory or subadvisory Contract
between the Company and any Client.
"Affiliate" shall have the meaning set forth in Rule 12b-2 of the
regulations promulgated under the Exchange Act.
"Agreement" has the meaning set forth in the preamble.
"Ancillary Agreements" means the Stockholders Agreement and the Employment
Agreements.
"Annual Financial Statements" has the meaning set forth in Section 3.6.
"Assets" has the meaning set forth in Section 3.9(2).
"Average Return on Investment" means:
(a) with respect to the First Deferred Payment Period, the
simple average of the Return on Investment for the period of time
from (and including) the Adjusted Closing Date to (but excluding)
the one year anniversary of the Adjusted Closing Date and the Return
on Investment for the period of time from (and including) the one
year anniversary of the Adjusted Closing Date to (but excluding) the
two year anniversary of the Adjusted Closing Date;
(b) with respect to the Second Deferred Payment Period, the
simple average of the Return on Investment for the period of time
from (and including) the two year anniversary of the Adjusted
Closing Date to (but excluding) the three year anniversary of the
Adjusted Closing Date and the Return on Investment for the period of
time from (and including) the three year anniversary of the Adjusted
Closing Date to (but excluding) the four year anniversary of the
Adjusted Closing Date;
(c) with respect to the Adjusted First Deferred Payment
Period, the simple average of the Return on Investment for the
period of time from (and including) the Adjusted Closing Date to
(but excluding) the one year anniversary of the Adjusted Closing
Date, the Return on Investment for the period of time from (and
including) the one year anniversary of the Adjusted Closing Date to
(but excluding) the two year anniversary of the Adjusted Closing
Date and the Return on Investment for the period of time from (and
including) the two year anniversary of the Adjusted Closing Date to
(but excluding) the three year anniversary of the Adjusted Closing
Date; and
(d) with respect to the Adjusted Second Deferred Payment
Period, the simple average of the Return on Investment for the
period of time from (and including) the two year anniversary of the
Adjusted Closing Date to (but excluding) the three year anniversary
of the Adjusted Closing Date, the Return on Investment for the
period of time from (and including) the three year anniversary of
the Adjusted Closing Date to (but excluding) the four year
anniversary of the Adjusted Closing Date and the Return on
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Investment for the period of time from (and including) the four year
anniversary of the Adjusted Closing Date to (but excluding) the five
year anniversary of the Adjusted Closing Date
"Board" has the meaning set forth in Section 7.12.
"Business" has the meaning set forth in the preamble.
"Buyer" has the meaning set forth in the preamble.
"Buyer Indemnified Parties" has the meaning set forth in Section 8.3.
"Buyer Nominees" has the meaning set forth in Section 7.12.
"Cap" has the meaning set forth in Section 8.6(1).
"Client" means any Person who is an advisee or investment customer of, or
recipient of advice with respect to the investment and/or reinvestment of assets
or funds from, the Company.
"Closing" has the meaning set forth in Section 1.3.
"Closing Date" has the meaning set forth in Section 1.3.
"Code" means the Internal Revenue Code of 1986, as amended and the
regulations promulgated thereunder.
"Common Stock" has the meaning set forth in Section 3.3.
"Company" has the meaning set forth in the preamble.
"Company Charter Documents" has the meaning set forth in Section 3.1.
"Company Expenses" has the meaning set forth in Section 10.3.
"Company Intellectual Property" has the meaning set forth in Section
3.13(1).
"Company Securities" has the meaning set forth in Section 3.3.
"Company Plan" has the meaning set forth in Section 3.11(1).
"Confidential Information" means any and all information of the Company
that is not generally available to the public. Confidential Information also
includes any information received by the Company from any Person with any
understanding, express or implied, that it will not be disclosed. Confidential
Information does not include information that enters the public domain, other
than through a breach of any obligation under this Agreement.
"Confidentiality Agreement" shall mean the confidentiality agreement,
dated as of November 20, 2003, by and between the Buyer and the Company.
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"Consenting Client Accounts" has the meaning set forth in Section 1.5(1).
"Consenting Client Accounts Annualized Revenue" has the meaning set forth
in Section 1.5(2)(a).
"Consenting Client Accounts Schedule" has the meaning set forth in Section
1.5(1).
"Contract" means any written or oral contract, agreement, deed, mortgage,
lease, license, instrument, note, commitment, engagement letter, undertaking,
arrangement or understanding.
"Deferred Payment" means, with respect to any Deferred Payment Period, an
amount in cash equal to the difference between: (a) the product of (i) $100,000
multiplied by (ii) the Average Return on Investment (expressed as a percentage)
for such Deferred Payment Period multiplied by (iii) 100, less (b) $1,012,500;
provided, however, that in no event shall any Deferred Payment exceed
$1,187,500.
"Deferred Payment Period" means any of the First Deferred Payment Period,
the Second Deferred Payment Period, the Adjusted First Deferred Payment Period
or the Adjusted Second Deferred Payment Period.
"Deferred Payment Statement" has the meaning set forth in Section 1.4(1).
"Disclosed Contracts" has the meaning set forth in Section 3.15.
"Dispute Notice" has the meaning set forth in Section 1.4(2).
"Employee Plan" means any plan, program, agreement, policy or arrangement,
whether covering a single individual or group of individuals, and whether or not
reduced to writing, that is: (a) a Welfare Plan; (b) a pension benefit plan
within the meaning of Section 3(2) of ERISA; (c) a stock bonus, stock purchase,
stock option, restricted stock, stock appreciation right or similar equity-based
plan; or (d) any other deferred-compensation, retirement, welfare-benefit,
bonus, incentive or fringe benefit plan or arrangement.
"Employment Agreements" means the employment agreements by and between the
Company and each Seller (other than Xxxxx X. xx Xxxxx), substantially in the
forms attached hereto as Exhibits C-1, C-2, and C-3.
"End Date" has the meaning set forth in Section 10.10(2).
"Environment" shall mean soil, land surface or subsurface strata, real
property, surface waters (including, without limitation, navigable waters, ocean
waters, streams, ponds, drainage basins and wetlands), groundwater, water body
sediments, drinking water supply, stream sediments, ambient air (including,
without limitation, indoor air), plant and animal life and any other
environmental medium or natural resource.
"Environmental Laws" shall mean the Comprehensive Environmental Response,
Compensation and Liability Act, the Resource Conservation and Recovery Act, the
Clean Air Act, and the Clean Water Act, each, as amended and any other federal,
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state, foreign or local laws or any regulation, code, plan, order, decree,
judgment, notice or demand letter issued, entered, promulgated or approved
thereunder relating to: (a) the Release, containment, removal, remediation,
response, cleanup or abatement of any sort of any Hazardous Substance; (b) the
manufacture, generation, formulation, processing, labeling, distribution,
introduction into commerce, use, treatment, handling, storage, recycling,
disposal or transportation of any Hazardous Substance; (c) exposure of persons,
including, without limitation, employees, to any Hazardous Substance; (d) the
physical structure, use or condition of a building, facility, fixture or other
structure relating to the management, use, storage, disposal, cleanup or removal
of any Hazardous Substance or (e) the protection of the Environment.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the regulations promulgated thereunder.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the regulations promulgated thereunder.
"Financial Statements" has the meaning set forth in Section 3.6.
"First Deferred Payment Period" means the period of time from (and
including) the Adjusted Closing Date to (but excluding) the two year anniversary
of the Adjusted Closing Date.
"GAAP" means generally accepted accounting principles in the United
States.
"Guarantee" shall mean (i) any guarantee of the payment or performance of,
or any contingent obligation in respect of, any indebtedness or other obligation
of any other Person, (ii) any other arrangement whereby credit is extended to
one obligor on the basis of any promise or undertaking of another Person (A) to
pay the indebtedness of such obligor, (B) to purchase any obligation owed by
such obligor, (C) to purchase or lease assets (other than inventory in the
ordinary course of business) under circumstances that would enable such obligor
to discharge one or more of its obligations, or (D) to maintain the capital,
working capital, solvency or general financial condition of such obligor, and
(iii) any liability as a general partner of a partnership or as a venturer in a
joint venture in respect of indebtedness or other obligations of such
partnership or joint venture.
"Guarantor" has the meaning set forth in the preamble.
"Hazardous Substance" shall mean any (i) pollutant, contaminant, hazardous
substance, hazardous waste, solid waste, mixed waste, toxic substance, toxic
chemical, toxic waste; (ii) petroleum or any fraction thereof; (iii) asbestos or
asbestos-containing material; (iv) polychlorinated biphenyl; (v)
chlorofluoracarbons; and (vi) other substance, material or waste, which is
identified or regulated under any Environmental Law, as now and hereinafter in
effect, or other comparable laws.
"Indebtedness" means, with respect to any Person, all obligations
(including, without limitation, all obligations in respect of principal, accrued
interest, penalties, fees and premiums) of such Person: (a) for borrowed money
(including, without limitation, overdraft facilities); (b) evidenced by notes,
bonds, debentures or similar instruments; (c) under capital leases (in
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accordance with GAAP); (d) for the deferred purchase price of property, goods or
services (other than trade payables or accruals incurred in the Ordinary Course
of Business); (e) in respect of conditional sale or other title retention
agreements; (f) in respect of letters of credit and bankers' acceptances; (g) in
respect of Contracts relating to interest rate protection, swap agreements and
collar agreements; and (h) in the nature of Guarantees of the obligations
described in clauses (a) through (g) above of any other Person.
"Indemnified Party" has the meaning set forth in Section 8.7(1).
"Indemnifying Party" has the meaning set forth in Section 8.7(1).
"Independent Accountant" has the meaning set forth in Section 1.4(2).
"Initial Purchase Price" has the meaning set forth in Section 1.5(2).
"Intellectual Property" means: (a) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto,
and all patents, patent applications, and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions, extensions, and
reexaminations thereof; (b) all trademarks, service marks, trade dress, logos,
trade names, and corporate names, together with all translations, adaptations,
derivations, and combinations thereof and including all goodwill associated
therewith, and all applications, registrations, and renewals in connection
therewith; (c) all copyrightable works, all copyrights, and all applications,
registrations, and renewals in connection therewith; (d) all trade secrets and
confidential business information (including, without limitation, ideas,
research and development, know-how, formulas, compositions, manufacturing and
production processes and techniques, technical data, designs, drawings,
specifications, customer and supplier lists, pricing and cost information, and
business and marketing plans and proposals); (e) all computer software
(including, without limitation, data and related documentation); (f) all other
proprietary rights; and (g) all copies and tangible embodiments thereof (in
whatever form or medium).
"Interim Financial Statements" has the meaning set forth in Section 3.6.
"IRS" means the United States Internal Revenue Service.
"Leases" has the meaning set forth in Section 3.9(1).
"Lien" means any mortgage, pledge, lien, security interest, charge, claim,
equitable interest, encumbrance, restriction on transfer, conditional sale or
other title retention device or arrangement (including, without limitation, a
capital lease), transfer for the purpose of subjection to the payment of any
Indebtedness, or restriction on the creation of any of the foregoing, whether
relating to any property or right or the income or profits therefrom.
"Losses" means liabilities, obligations, judgments, Liens, injunctions,
charges, orders, decrees, rulings, damages, dues, assessments, taxes, losses
(including, without limitation, any diminution in value), fines, penalties,
fees, costs, amounts paid in settlement and expenses (including, without
limitation, interest which may be imposed in connection with any of the
foregoing and court costs and reasonable fees and disbursements of counsel and
expert witnesses in connection with investigating, defending or settling any
action or threatened action), arising out of any condition, claim, damages,
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complaint, demand, cause of action, audit, investigation, hearing, action, suit
or other proceeding asserted or initiated or otherwise existing in respect of
any matter.
"Material Adverse Effect" means any change, effect or circumstance that,
individually or when taken together with all other such changes, effects or
circumstances that have occurred prior to the date of determination of the
occurrence of the Material Adverse Effect (a) is, or could reasonably be
expected to be, materially adverse to the Business, Assets, financial condition
or results of operations of the Company or (b) has materially delayed or
prevented, or could reasonably be expected to materially delay or prevent, the
consummation of the transactions contemplated hereby, it being understood that
general industry, economic, regulatory or political trends, developments or
changes that do not disproportionately affect the Company compared with other
persons also involved in such industry, or, the economy, generally, shall not be
deemed to constitute or result in a Material Adverse Effect for purposes of this
Agreement. For the avoidance of doubt, a reduction in net assets under
management by the Company shall not be deemed a Material Adverse Effect unless
net assets under management by the Company decrease by 25% or more between
December 31, 2003 and the Closing Date.
"Majority Sellers" has the meaning set forth in Section 10.1.
"Minority Sellers" means each of Xxxxxx X. Xxxxxxx, Xxxxx X. Marcinow and
Xxxxxx X. Xxxxxx.
"Most Recent Balance Sheet" has the meaning set forth in Section 3.6.
"Most Recent Balance Sheet Date" has the meaning set forth in Section 3.6.
"Multiemployer Plan" has the meaning set forth in Section 3.11(3).
"Ordinary Course of Business" means the ordinary course of business,
consistent with past practice and custom (including with respect to quantity and
frequency).
"PCBs" has the meaning set forth in Section 3.14.
"Permits" has the meaning set forth in Section 3.10(2).
"Permitted Liens" means (a) statutory liens for Taxes to the extent that
the payment thereof is not in arrears or otherwise due, (b) statutory or common
law liens in favor of carriers, warehousemen, mechanics and materialmen, in each
case, which secure obligations to the extent that payment thereof is not in
arrears or otherwise due, (c) encumbrances in the nature of zoning restrictions,
easements, rights or restrictions of record on the use of real property if the
same do not detract from the value of such property or impair its use in the
Business as currently conducted or (d) statutory or common law liens to secure
landlords, lessors or renters under leases or rental agreements confined to the
premises rented to the extent that no payment or performance under any such
lease or rental agreement is in arrears or is otherwise due.
"Person" means any natural person or any corporation, association,
partnership, joint venture, limited liability, joint stock or other company,
business trust, trust, organization, business or other entity or any government
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or any governmental agency or political subdivision thereof.
"Pre-Closing Period" means any taxable period ending on or before the
Closing Date and the portion of any Straddle Period ending on (and including)
the Closing Date.
"Principal Sellers" means each of C. Xxxxxxx xx Xxxxx, Xx., Xxxxx X.
Xxxxxxx, Xxxxxxx X.X. Xxxxxxx and Xxxxx X. xx Xxxxx.
"Pro Rata Portion" means, with respect to each Seller, (a) the number of
Shares to be sold by such Seller to the Buyer set forth opposite each such
Seller's name on Schedule 1.1 divided by (b) the aggregate number of Shares to
be sold by all of the Sellers to the Buyer.
"Prospective Client" has the meaning set forth in Section 7.4(2).
"Purchase Price" has the meaning set forth in Section 1.2.
"Related Entity" has the meaning set forth in Section 3.11(1).
"Release" shall mean any actual or threatened spilling, leaking, pumping,
pouring, emitting, dispersing, emptying, discharging, injecting, escaping,
leaching, dumping, or disposing of any Hazardous Substance into the Environment
(including, without limitation, the disposal or abandonment of barrels,
containers, tanks or other receptacles containing or previously containing any
Hazardous Substance).
"Return on Investment" means, with respect to any period of time, an
amount (expressed as a percentage) equal to the quotient of (a) the Company's
earnings before interest, taxes, depreciation and amortization during such
period of time, determined in accordance with GAAP, divided by (b) the sum of
(i) the Initial Purchase Price paid by the Buyer to the Sellers pursuant to
Section 1.3(2) plus (ii) the amount of any Deferred Payments paid by the Buyer
to the Sellers pursuant to Section 1.4 prior to the relevant date of
determination of the Return on Investment. For purposes of this definition, the
calculation of EBITDA shall be subject to the following provisions,
notwithstanding how such items would be treated for purposes of GAAP:
(1) All expenses of the Company and the Buyer directly related to
the negotiation and consummation of the transactions contemplated by this
Agreement shall be eliminated (it being understood that such expenses
shall be borne in accordance with Section 10.3).
(2) All incidental expenses, such as legal fees and expenses and
wire transfer fees, incurred by the Company in connection with the payment
of the Deferred Payment shall be excluded.
(3) All expenses associated with upgrading the Company's current
client accounting and performance calculation technology shall be
excluded; provided that the total amount excluded pursuant to this clause
(3) shall in no event exceed $65,000.
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For the avoidance of doubt, any Deferred Payments payable under this Agreement
shall be paid by the Buyer and not the Company.
"SEC" means the Securities and Exchange Commission.
"Second Deferred Payment Period" means the period of time from (and
including) the two year anniversary of the Adjusted Closing Date to (but
excluding) the four year anniversary of the Adjusted Closing Date.
"Section 338(h)(10) Election" has the meaning set forth in Section 7.10.
"Securities Act" means the Securities Act of 1933, as amended and the
regulations promulgated thereunder.
"Sellers" has the meaning set forth in the preamble.
"Seller Indemnified Parties" has the meaning set forth in Section 8.4.
"Seller Nominees" has the meaning set forth in Section 7.12.
"Sellers' Representative" has the meaning set forth in Section 10.1(1).
"Shares" means 4,025 shares of Common Stock.
"Stock Restriction Agreement" has the meaning set forth in Section 2.3.
"Straddle Period" means any taxable period beginning on or before, and
ending after, the Closing Date.
"Subsidiary" means with respect to any Person: (a) any corporation at
least a majority of whose outstanding voting stock is owned, directly or
indirectly, by such Person or by one or more of its Subsidiaries, or by such
Person and one or more of its Subsidiaries; (b) any general partnership, joint
venture or similar entity, at least a majority of whose outstanding partnership
or similar interests shall at the time be owned by such Person, or by one or
more of its Subsidiaries, or by such Person and one or more of its Subsidiaries;
and (c) any limited partnership of which such Person or any of its Subsidiaries
is a general partner. For the purposes of this definition, "voting stock" means
shares, interests, participations or other equivalents in the equity interest
(however designated) in such Person having ordinary voting power for the
election of a majority of the directors (or the equivalent) of such Person,
other than shares, interests, participations or other equivalents having such
power only by reason of contingency.
"Target Annualized Revenue Amount" has the meaning set forth in Section
1.5(2)(a).
"Tax" means all taxes, fees, levies, duties, tariffs, imposts, and
governmental impositions or charges of any kind in the nature of (or similar to)
taxes, payable to any federal, state, local or foreign taxing authority, whether
disputed or not, including, without limitation, (a) income, franchise, profits,
gross receipts, ad valorem, net worth, value added, sales, use, service, real or
personal property, special assessments, capital stock, license, payroll,
withholding, employment, social security (or similar), workers' compensation,
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unemployment compensation, disability, utility, severance, production, excise,
stamp, occupation, premiums, windfall profits, environmental (including, without
limitation, taxes under Code Section 59A), customs duties, registration,
alternative and add-on minimum, estimated, transfer and gains taxes, or other
tax of any kind whatsoever and (b) in all cases, including interest, penalties,
additional taxes and additions to tax imposed with respect thereto, whether
disputed or not.
"Tax Returns" means returns, reports, declarations, forms and information
returns or statements relating to Taxes including, without limitation, any
schedule or attachment thereto required to be filed with the U.S. Internal
Revenue Service or any other federal, foreign, state, local or provincial taxing
authority, domestic or foreign, including, without limitation, consolidated,
combined and unitary tax returns, including any amendments thereto.
"Termination Date" has the meaning set forth in Section 10.10.
"Third Party Claim" has the meaning set forth in Section 8.7(1).
"Welfare Plan" means a welfare benefit plan within the meaning of Section
3(1) of ERISA.
"Written Licenses" has the meaning set forth in Section 3.13(2).
10. Miscellaneous.
10.1. Appointment of the Sellers' Representative.
(1) Each of the Sellers hereby appoints C. Xxxxxxx xx Xxxxx, Xx.
(the "Sellers' Representative") or its designee (as appointed in writing),
as the agent, proxy, and attorney-in-fact for such Seller for all purposes
under this Agreement (including, without limitation, full power and
authority to act on such Seller's behalf) to take any action, should it
elect to do so in its sole discretion. Without limiting the generality of
the foregoing, the Sellers' Representative shall be authorized to:
(a) in connection with the Closing, execute and receive all
documents, instruments, certificates, statements and agreements on
behalf of, and in the name of, the Sellers necessary to effectuate
the Closing and consummate the transactions contemplated by this
Agreement;
(b) take all actions on behalf of the Sellers with respect to
the matters set forth in Sections 1.4 and 1.5;
(c) take all actions on behalf of the Sellers in connection
with any claims made under Article 8, including, without limitation,
defending or settling any such claims and making any payments in
respect thereof;
(d) receive notice demands, claims and other communications on
behalf of any Seller under Section 10.2 of this Agreement, and
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(e) take all other actions to be taken by or on behalf of the
Sellers and exercise any and all rights which the Sellers are
permitted or required to do or exercise under this Agreement.
(2) Each Seller hereby unconditionally and irrevocably agrees to pay to
the Sellers' Representative, promptly upon request and in any event within 10
days of such request, such Seller's share of any amounts paid by the Sellers'
Representative on behalf of the Sellers and agrees to pay his or her share of
any and all costs and expenses (including, without limitation, counsel and legal
fees and expenses) incurred by the Sellers' Representative in connection with
the protection, defense, expense or enforcement of any rights under this
Agreement. Any and all payments made by any Sellers under this Section 10.1
shall be made free and clear of any present or future Taxes, deductions, charges
or withholdings and all liabilities with respect thereto.
(3) The Sellers' Representative shall not be liable to any Seller for any
action taken by it in good faith pursuant to this Agreement. Each Seller
severally and not jointly hereby agrees to indemnify and hold harmless the
Sellers' Representative from and against any and all Losses incurred by the
Sellers' Representative relating to the Sellers' Representative's capacity as
the Sellers' Representative other than such claims or losses resulting from the
Sellers' Representative's gross negligence or willful misconduct.
(4) The provisions of this Section 10.1 are independent and severable, are
irrevocable and coupled with an interest, and shall be enforceable
notwithstanding any rights or remedies that the Company or any Seller may have
in connection with the transactions contemplated by this Agreement.
(5) The provisions of this Section 10.1 shall be binding upon the
executors, heirs, legal representatives, personal representatives, successor
trustees, and successors of each Seller, and any references in this Agreement to
a Seller shall mean and include the successors to such Seller's right hereunder,
whether pursuant to testamentary disposition, the laws of descent and
distraction or otherwise.
(6) In the event that C. Xxxxxxx xx Xxxxx, Xx. dies, becomes unable to
perform his responsibilities hereunder or resigns from the office of Sellers'
Representative, Xxxxx X. Xxxxxxx (or her designee) shall fill such vacancy and
shall be deemed to be the Seller's Representative for all purposes of this
Agreement and the documents delivered pursuant hereto.
(7) The Sellers' Representative may resign, and, subject to clause (6) of
this Section 10.1, any vacancy that results for any reason in the office of the
Sellers' Representative may be filled, by those Sellers holding a majority of
the outstanding shares of Common Stock held by all Sellers immediately after the
Closing (the "Majority Sellers") upon not less than ten (10) days' prior written
notice to Buyer. The Sellers shall not require the posting of any bond or other
form of security by the Sellers' Representative and the Sellers' Representative
shall receive no compensation for services rendered.
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10.2. Notices. All notices, requests, demands, claims and other
communications hereunder shall be in writing and shall be sent by facsimile,
overnight courier, registered mail or certified mail. Any notice, request,
demand, claim or other communication hereunder shall be deemed duly given, as
applicable, (a) upon confirmation of facsimile, (b) one business day following
the date sent if sent by overnight delivery or (c) five business days following
the date mailed if mailed by registered or certified mail return receipt
requested and postage prepaid at the following address:
If to any Seller, to the Sellers' Representative at:
The xx Xxxxx Group, Inc.
00 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Facsimile number: (000) 000-0000
Attention: C. Xxxxxxx xx Xxxxx, Xx.
With a copy to:
Xxxxx Xxxxxxx Xxxxxxx Israels LLP
Xxx Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Facsimile number: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
If to the Buyer, to it at:
Ipswich Capital Investment Corp.
c/o The First National Bank of Ipswich
00 Xxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: Xxxxx Xxxxxxx
With a copy to:
Ropes & Xxxx LLP
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Facsimile number: (000) 000-0000
Attention: Xxxx Xxx Xxxxxx, Esq.
If to the Company, to it at:
The xx Xxxxx Group, Inc.
00 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Facsimile number: (000) 000-0000
Attention: C. Xxxxxxx xx Xxxxx, Xx.
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With a copy to:
Xxxxx Xxxxxxx Berlack Israels LLP
Xxx Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Facsimile number: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
Notwithstanding the foregoing, any party may send any notice, request,
demand, claim or other communication hereunder to the intended recipient at the
address set forth above using any other means (including, without limitation,
personal delivery, expedited courier, messenger service, telecopy, telex,
ordinary mail or electronic mail); provided, however, that no such notice,
request, demand, claim or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
party may change the address to which notices, requests, demands, claims and
other communications hereunder are to be delivered by giving the other parties
notice in the manner herein set forth.
10.3. Expenses of Transaction. Except as otherwise expressly provided in
this Agreement, whether or not the transactions provided for herein are
consummated, each of the parties hereto shall assume and bear all expenses,
costs and fees (including, without limitation, legal and accounting fees and
expenses) incurred by such party in connection with the preparation, negotiation
and execution of this Agreement and the consummation of the transactions
contemplated hereby; provided, however, that the Sellers shall assume and bear
all expenses, costs and fees (including, without limitation, legal and
accounting fees and expenses) incurred by the Company in connection with the
preparation, negotiation and execution of this Agreement and the consummation of
the transactions contemplated hereby (collectively, the "Company Expenses"). The
Sellers hereby agree to pay any and all Company Expenses prior to the Closing;
provided, however, that if the Agreement is terminated and the Closing does not
occur, then the Company shall reimburse the Sellers for all Company Expenses
actually paid by the Sellers. In the event that the Company receives an invoice,
xxxx or other request for payment of Company Expenses following the Closing, the
Sellers shall pay to the Company or the Buyer, as instructed by the Buyer, the
amount of any such Company Expenses. All transfer and other taxes incurred in
connection with the transfer of the Shares shall be paid by the Sellers when
due, and the Sellers shall, at their own expense, file all necessary Tax Returns
and other documentation with respect to all such transfer and other Taxes.
10.4. Entire Agreement. The agreement of the parties that is comprised of
this Agreement, the Exhibits and Schedules hereto and the other documents,
instruments and certificates explicitly referred to herein (including, without
limitation, the Ancillary Agreements) constitutes the entire agreement and
understanding among the parties with respect to the subject matter hereof and
supersedes any and all prior discussions, proposals, undertakings, agreements
and understandings, whether oral or written, with respect thereto.
10.5. Assignment; No Third Party Beneficiaries. This Agreement shall be
binding upon and inure to the benefit of and be enforceable by the successors
and permissible assigns of the parties hereto. This Agreement and any rights,
interests or obligations hereunder shall not be assigned, hypothecated,
delegated or otherwise transferred by any party hereto without the prior written
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consent of the other parties hereto, which consent shall not unreasonably be
withheld; provided, however, that the Buyer may assign any or all of its rights,
interests or obligations hereunder to any of its Affiliates without the consent
of any party hereto so long as the Buyer guarantees the obligations of such
Affiliate. Any assignment in contravention of this provision shall be void.
Except as expressly provided herein, this Agreement is for the sole benefit of
the parties and their successors and permissible assigns and nothing herein
expressed or implied will give or be construed to give any Person, other than
the parties and such successors and permissible assigns, any legal or equitable
rights hereunder.
10.6. Governing Law; Consent to Jurisdiction; etc. This Agreement, the
rights of the parties and all actions, suits or proceedings arising in whole or
in part under or in connection herewith, shall be governed by and construed in
accordance with the domestic substantive laws of The Commonwealth of
Massachusetts, without giving effect to any choice or conflict of law provision
or rule that would cause the application of the laws of any other jurisdiction.
Each party to this Agreement hereby irrevocably (a) submits to the exclusive
jurisdiction of the courts of The Commonwealth of Massachusetts and of the
United States of America located in The Commonwealth of Massachusetts for the
purpose of any actions, suits or proceedings between the parties and arising in
whole or in part under or in connection herewith, (b) waives to the extent not
prohibited by applicable law, and agrees not to assert, by way of motion, as a
defense or otherwise, in any such action, suit or proceeding, any claim that it
is not subject personally to the jurisdiction of the above-named courts, that
its property is exempt or immune from attachment or execution, that any such
action, suit or proceeding brought in one of the above-named courts should be
dismissed on grounds of forum non conveniens, should be transferred or removed
to any court other than one of the above-named courts, or should be stayed by
reason of the pendency of some other proceeding in any other court other than
one of the above-named courts, or that this Agreement or the subject matter
hereof may not be enforced in or by such court and (c) agrees not to commence
any such action, suit or proceeding other than before one of the above-named
courts. Notwithstanding the previous sentence a party may commence any action,
suit or proceeding in a court other than the above-named courts solely for the
purpose of enforcing an order or judgment issued by one of the above-named
courts.
10.7. [Intentionally Omitted.]
10.8. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original for all purposes and all
of which together shall constitute one and the same instrument.
10.9. Headings. The headings contained in this Agreement (including,
without limitation, in the Schedules) are inserted only as a matter of
convenience and for reference and in no way define, limit, or describe the scope
or intent of this Agreement.
10.10. Termination. This Agreement may be terminated (the date on which
the Agreement is terminated, the "Termination Date") at any time prior to the
Closing:
(1) by mutual written agreement of the Buyer and the Sellers'
Representative;
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(2) by either the Buyer or the Sellers' Representative, if the
Closing shall have not occurred on or before December 31, 2004 (the "End
Date") if the Closing shall not have occurred by reason of the failure of
any condition set forth in Article 5, in the case of the Buyer, or Article
6, in the case of the Sellers' Representative, to be satisfied (unless
such failure is the result of one or more breaches or violations of, or
inaccuracy in any covenant, agreement, representation or warranty of this
Agreement by the terminating party);
(3) by the Buyer if (i) in the case of representations and
warranties of the Sellers contained in this Agreement that are qualified
by reference to materiality (including, without limitation, reference to
the defined term "Material Adverse Effect"), there is a breach of, or
inaccuracy in, any such representation or warranty as of the date of this
Agreement or as of any subsequent date (other than such representations or
warranties that expressly speak only as of a specific date or time, with
respect to which the Buyer's right to terminate shall arise only in the
event of a breach of, or inaccuracy in, such representation or warranty as
of such specified date or time), which breach or inaccuracy has not been
cured (or is not capable of being cured) on or before ten (10) business
days after the Buyer notifies the Sellers' Representative of such breach
or inaccuracy, (ii) in the case of representations and warranties of the
Sellers contained in this Agreement that are not qualified by reference to
materiality (including, without limitation, reference to the defined term
"Material Adverse Effect"), there is a breach of, or inaccuracy in, any
such representation or warranty in any material respect as of the date of
this Agreement or as of any subsequent date (other than such
representations or warranties that expressly speak only as of a specific
date or time, with respect to which the Buyer's right to terminate shall
arise only in the event of a breach of, or inaccuracy in, such
representation or warranty in any material respect as of such specified
date or time), which breach or inaccuracy has not been cured (or is not
capable of being cured) on or before ten (10) business days after the
Buyer notifies the Sellers' Representative of such breach or inaccuracy or
(iii) any Seller or the Company breaches or violates in any material
respect any of its respective covenants and agreements contained in this
Agreement, which breach or violation has not been cured on or before ten
(10) business days after the Buyer notifies the Sellers' Representative of
such breach or violation; or
(4) by the Sellers' Representative if (i) in the case of
representations and warranties of the Buyer contained in this Agreement
that are qualified by reference to materiality, there is a breach of, or
inaccuracy in, any such representation or warranty as of the date of this
Agreement or as of any subsequent date (other than such representations or
warranties that expressly speak only as of a specific date or time, with
respect to which the Sellers' Representative's right to terminate shall
arise only in the event of a breach of, or inaccuracy in, such
representation or warranty as of such specified date or time), which
breach or inaccuracy has not been cured (or is not capable of being cured)
on or before ten (10) business days after the Sellers' Representative
notifies the Buyer of such breach or inaccuracy, (ii) in the case of
representations and warranties of the Buyer contained in this Agreement
that are not qualified by reference to materiality, there is a breach of,
or inaccuracy in, any such representation or warranty in any material
respect as of the date of this Agreement or as of any subsequent date
(other than such representations or warranties that expressly speak only
as of a specific date or time, with respect to which the Sellers'
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Representative's right to terminate shall arise only in the event of a
breach of, or inaccuracy in, such representation or warranty in any
material respect as of such specified date or time), which breach or
inaccuracy has not been cured (or is not capable of being cured) on or
before ten (10) business days after the Sellers' Representative notifies
the Buyer of such breach or inaccuracy or (iii) the Buyer breaches or
violates in any material respect any of its covenants and agreements
contained in this Agreement, which breach or violation has not been cured
on or before ten (10) business days after the Sellers' Representative
notifies the Buyer of such breach or violation.
10.11. Effect of Termination. In the event of the termination of this
Agreement pursuant to Section 10.10, this Agreement - other than the provisions
of Sections 2.4 (Brokers, Finders, etc.), 3.24 (Brokers, Finders, etc.), 4.4
(Brokers, Finders, etc.), 7.6(2) (Announcements), 10.2 (Notices), 10.3 (Expenses
of Transaction) and 10.6 (Governing Law; Consent to Jurisdiction; etc.) - shall
then be null and void and have no further force and effect and all other rights
and liabilities of the parties hereunder shall terminate without any liability
of any party to any other party, except for liabilities arising in respect of
breaches under this Agreement by any party on or prior to the Termination Date.
10.12. Schedules; Listed Documents, etc. For purposes of this Agreement,
with respect to any matter that is clearly disclosed on any Schedule hereto in
such a way as to make its relevance to the information called for by another
Section of, or Schedule to, this Agreement readily apparent, such matter shall
be deemed to have been disclosed in response to such other Section and/or
Schedule, notwithstanding the omission of any appropriate cross-reference
thereto; provided, however, that the Sellers and the Company hereby covenant to
make a good faith diligent effort to make all appropriate cross-references
within and to any and all Sections and Schedules.
10.13. Construction. The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof will
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement. The parties intend that each representation,
warranty and covenant contained herein shall have independent significance. If
any party has breached or violated, or if there is an inaccuracy in, any
representation, warranty or covenant contained herein in any respect, the fact
that there exists another representation, warranty or covenant relating to the
same subject matter (regardless of the relative levels of specificity) which the
party has not breached or violated, or in respect of which there is not an
inaccuracy, shall not detract from or mitigate the fact that the party has
breached or violated, or there is an inaccuracy in, the first representation,
warranty or covenant.
10.14. Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction. In the event that any provision hereof
would, under applicable law, be invalid or unenforceable in any respect, each
party hereto intends that such provision shall be construed by modifying or
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limiting it so as to be valid and enforceable to the maximum extent compatible
with, and possible under, applicable law.
10.15. Amendment and Waiver. No amendment or waiver of any provision of
this Agreement shall be valid and binding unless it is in writing and signed, in
the case of an amendment, by the Buyer, the Company and the Majority Sellers, or
in the case of a waiver, by the party (in the case of the Sellers, the Majority
Sellers) against whom the waiver is to be effective. No waiver by any party of
any breach or violation or, default under or inaccuracy in any representation,
warranty or covenant hereunder, whether intentional or not, shall be deemed to
extend to any prior or subsequent breach, violation, default of, or inaccuracy
in, any such representation, warranty or covenant hereunder or affect in any way
any rights arising by virtue of any prior or subsequent such occurrence. No
delay or omission on the part of any party in exercising any right, power or
remedy under this Agreement shall operate as a waiver thereof.
[remainder of page intentionally left blank]
-50-
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their respective duly authorized officers as of the date first written above.
Buyer: IPSWICH CAPITAL INVESTMENT CORP.
By: /s/ Xxxxx X. Xxxxxxx, Xx.
--------------------------
Name: Xxxxx X. Xxxxxxx, Xx.
Title: President
GUARANTOR: (as to Section 8.9 only) THE FIRST NATIONAL BANK OF IPSWICH
By: /s/ Xxxxxx X. Xxxx
-------------------
Name: Xxxxxx X. Xxxx
Title: President
[signatures continue on next page]
[SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT]
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their respective duly authorized officers as of the date first written above.
COMPANY: THE XX XXXXX GROUP, INC.
By: /s/ C. Xxxxxxx xx Xxxxx, Xx.
-----------------------------
Name: C. Xxxxxxx xx Xxxxx, Xx.
Title: President
SELLERS:
/s/ C. Xxxxxxx xx Xxxxx, Xx.
------------------------------
C. Xxxxxxx xx Xxxxx, Xx.
/s/ Xxxxx X. Xxxxxxx
------------------------------
Xxxxx X. Xxxxxxx
/s/ Xxxxxxx X.X. Xxxxxxx
------------------------------
Xxxxxxx X.X. Xxxxxxx
/s/ Xxxxxx X. Xxxxxxx
------------------------------
Xxxxxx X. Xxxxxxx
/s/ Xxxxx X. Marcinow
------------------------------
Xxxxx X. Marcinow
/s/ Xxxxxx X. Xxxxxx
------------------------------
Xxxxxx X. Xxxxxx
/s/ Xxxxx X. xx Xxxxx
------------------------------
Xxxxx X. xx Xxxxx
SELLERS' REPRESENTATIVE:
/s/ C. Xxxxxxx xx Xxxxx, Xx.
-------------------------------------
C. Xxxxxxx xx Xxxxx, Xx., as Sellers'
Representative
[SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT]
Exhibit A
Exhibit B
Exhibit C-1
Exhibit C-2
Exhibit C-3
Exhibit D
