Exhibit 2.1
Execution Version
AGREEMENT AND PLAN OF MERGER
by and among
J NET ENTERPRISES, INC.
EPOCH ACQUISITION CORP.
and
EPOCH INVESTMENT PARTNERS, INC.
dated as of
June 2, 2004
Table of Contents
ARTICLE I THE MERGER
Section 1.1 The Merger
Section 1.2 Effective Time
Section 1.3 Closing
Section 1.4 Directors and Officers of the Surviving Corporation
Section 1.5 Shareholders' Consent
Section 1.6 Directors of Parent
Section 1.7 Subsequent Actions
ARTICLE II CONVERSION OF SECURITIES
Section 2.1 Conversion of Capital Stock
Section 2.2 Exchange of Certificates
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 3.1 Organization of the Company
Section 3.2 Capital Structure
Section 3.3 Subsidiaries
Section 3.4 Title to Shares
Section 3.5 Authority; Validity of Agreement; Board of Directors
Approvals Regarding Transactions
Section 3.6 Vote Required
Section 3.7 No Conflicts
Section 3.8 Consents and Approvals
Section 3.9 Compliance with Laws; Government Regulation; Company Filings
Section 3.10 Real Property
Section 3.11 Absence of Undisclosed Liabilities
Section 3.12 Contracts
Section 3.13 Absence of Certain Changes
Section 3.14 Legal Proceedings
Section 3.15 Taxes
Section 3.16 Employee Benefit Plans; ERISA
Section 3.17 Technology Systems and Intellectual Property
Section 3.18 Fund Filings, Etc
Section 3.19 Investment Contracts and Clients
Section 3.20 Books and Records
Section 3.21 Bank Holding Company Act; FDIC
Section 3.22 Brokers
Section 3.23 No Other Representations
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Section 4.1 Organization of Parent and Merger Sub
Section 4.2 Capital Structure
Section 4.3 Subsidiaries
Section 4.4 Title to Shares of Capital Stock of Merger Sub
Section 4.5 Authority; Validity of Agreement; Board of Director Approvals
Regarding Transactions
Section 4.6 No Conflicts
Section 4.7 Consents and Approvals
Section 4.8 Compliance with Laws; Government Regulation
Section 4.9 SEC Reports and Parent Financial Statements and
Certifications; Internal Controls and Disclosure Controls
Section 4.10 Books and Records
Section 4.11 Real Property
Section 4.12 Absence of Undisclosed Liabilities
Section 4.13 Contracts
Section 4.14 Absence of Certain Changes
Section 4.15 Legal Proceedings
Section 4.16 Taxes
Section 4.17 Employee Benefit Plans: ERISA
Section 4.18 Technology Systems and Intellectual Property
Section 4.19 Insurance
Section 4.20 Affiliate Transactions
Section 4.21 Brokers
Section 4.22 Share Ownership
Section 4.23 Merger Sub's Operations
Section 4.24 No Other Representations
ARTICLE V COVENANTS
Section 5.1 Interim Operations
Section 5.2 Access and Confidentiality
Section 5.3 Reasonable Best Efforts
Section 5.4 [Intentionally Omitted]
Section 5.5 [Intentionally Omitted]
Section 5.6 Transfer of Shareholders' Shares
Section 5.7 Publicity
Section 5.8 Notification of Certain Matters
Section 5.9 Merger Sub Compliance
Section 5.10 Advisory Agreements
Section 5.11 Tax Matters
ARTICLE VI CONDITIONS
Section 6.1 Conditions to Each Party's Obligation to Effect the Merger
Section 6.2 Conditions to Parent's and Merger Sub's Obligations to Effect
the Merger
Section 6.3 Conditions to Company's Obligations to Effect the
Merger
ARTICLE VII TERMINATION
Section 7.1 Termination
Section 7.2 Effect of Termination
ARTICLE VIII DEFINITIONS AND INTERPRETATION
Section 8.1 Definitions
Section 8.2 Interpretation
ARTICLE IX MISCELLANEOUS
Section 9.1 Fees and Expenses
Section 9.2 Amendment and Modification
Section 9.3 Nonsurvival of Representations and Warranties
Section 9.4 Notices
Section 9.5 Counterparts
Section 9.6 Entire Agreement; No Third Party Beneficiaries
Section 9.7 Severability
Section 9.8 Governing Law
Section 9.9 Enforcement
Section 9.10 Time of Essence
Section 9.11 Extension; Waiver
Section 9.12 Assignment
Exhibit I Merger Consideration
Annex A Certificate of Incorporation of the Surviving Company
Annex B Forms of Opinion
Annex C Form of Stockholders Agreement
Annex D Form of Registration Rights Agreements
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of June 2, 2004, by and
among J Net Enterprises, Inc., a Nevada corporation ("Parent"), Epoch
Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of
Parent ("Merger Sub"), and Epoch Investment Partners, Inc., a Delaware
corporation (the "Company"). Certain capitalized terms used in this
Agreement have the meanings ascribed to them in Article VIII.
WHEREAS, the Board of Directors of each of Parent, Merger Sub and
the Company has approved, and deems it advisable and in the best interests
of its respective shareholders to consummate, the Merger upon the terms and
subject to the conditions set forth herein;
WHEREAS, in furtherance thereof, the Board of Directors of each
of Merger Sub and the Company have approved this Agreement and the Merger
in accordance with the General Corporation Law of the State of Delaware (as
amended from time to time, the "DGCL") and upon the terms and subject to
the conditions set forth herein, and the Board of Directors of Parent has
approved this Agreement and the Merger in accordance with the General
Corporation Law of the State of Nevada (as amended from time to time, the
"NGCL") and upon the terms and subject to the conditions set forth herein;
WHEREAS, the Company Board of Directors has determined that the
consideration to be paid for each Share in the Merger is fair to the
holders of such Shares and has resolved to recommend that the holders of
such Shares approve this Agreement and each of the Transactions upon the
terms and subject to the conditions set forth herein;
WHEREAS, for federal income tax purposes, it is intended by
Parent, Merger Sub and the Company that the Merger shall qualify as a
"reorganization" within the meaning of Section 368(a) of the Code, and that
this Agreement shall constitute a plan of "reorganization"; and
WHEREAS, the Company, Parent and Merger Sub desire to make
certain representations, warranties, covenants and agreements in connection
with the Merger;
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements set forth herein,
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. Subject to the terms and conditions of
this Agreement, at the Effective Time, the Company and Merger Sub shall
consummate a merger pursuant to which (a) Merger Sub shall be merged with
and into the Company and the separate corporate existence of Merger Sub
shall thereupon cease, (b) the Company shall be the successor or surviving
corporation in the Merger and shall continue to be governed by the laws of
the State of Delaware, and (c) the separate corporate existence of the
Company with all its rights, privileges, immunities, powers and franchises
shall continue unaffected by the Merger, except as set forth in Section
1.4. Pursuant to the Merger, (x) the certificate of incorporation of the
Company shall be amended in its entirety to read as set forth in Annex A,
and, as so amended, shall be the certificate of incorporation of the
Surviving Corporation until thereafter amended as provided by Applicable
Law and such certificate of incorporation, and (y) the by-laws of Merger
Sub, as in effect immediately prior to the Effective Time, shall be the
by-laws of the Surviving Corporation until thereafter amended as provided
by Applicable Law, by such certificate of incorporation or by such bylaws.
The Merger shall have the effects specified in the DGCL.
Section 1.2 Effective Time. Parent, Merger Sub and the Company
shall cause a certificate of merger to be executed and filed on the Closing
Date (or on such other date as Parent and the Company may agree) with the
Secretary of State of Delaware as provided in the DGCL. The Merger shall
become effective on the date on which such certificate of merger is duly
filed with the Secretary of State of the State of Delaware or such other
time as is agreed upon by the parties and specified in such certificate of
merger.
Section 1.3 Closing. The closing of the Merger shall take place
at 10:00 a.m. on a date to be agreed upon by the parties, and if such date
is not agreed upon by the parties, the Closing shall occur on the business
day after satisfaction or waiver of all of the conditions set forth in
Article VI, at such place as the parties shall determine.
Section 1.4 Directors and Officers of the Surviving Corporation.
The directors of the Company and the officers of the Company at the
Effective Time shall, from and after the Effective Time, be the directors
and officers, respectively, of the Surviving Corporation until their
successors shall have been duly elected or appointed or qualified or until
their earlier death, resignation or removal in accordance with the
certificate of incorporation and the by-laws of the Surviving Corporation.
If, at the Effective Time, a vacancy shall exist on the Company Board of
Directors or in any office of the Surviving Corporation, such vacancy may
thereafter be filled in the manner provided by Applicable Law.
Section 1.5 Shareholders' Consent.
(a) The Company, acting through its Board of Directors,
shall, in accordance with Applicable Law:
(i) recommend that the Shareholders shall approve the
Merger and the adoption of this Agreement as of the date hereof,
(ii) obtain from the Shareholders their unanimous
written consent to the Merger and the adoption of this Agreement as of
the date hereof and shall take all other action required by Applicable
Law to effect the Merger.
(b) Parent, in its capacity as the sole shareholder of
Merger Sub, hereby approves and consents to the Merger and the adoption of
this Agreement as of the date hereof.
Section 1.6 Directors of Parent. Parent shall procure, prior to
the Effective Time, the resignation of two directors from the Parent Board
of Directors, effective as of the Effective Time. Parent shall take all
actions required under Applicable Law and the articles of incorporation and
by-laws of Parent to allow the nomination of two persons designated by the
Company to fill the vacancies on the Parent Board of Directors and the
election, effective immediately after the Effective Time, to the Parent
Board of Directors of such nominees by the Parent Board of Directors or by
written consent signed by a majority of the stockholders of Parent (without
a meeting and without notice).
Section 1.7 Subsequent Actions. If at any time after the
Effective Time, the Surviving Corporation shall consider or be advised that
any deeds, bills of sale, assignments, assurances or any other actions or
things are necessary or desirable to vest, perfect or confirm of record or
otherwise in the Surviving Corporation its right, title or interest in, to
or under any of the rights, properties or assets of either of the Company
or Merger Sub acquired or to be acquired by the Surviving Corporation as a
result of, or in connection with, the Merger or otherwise to carry out this
Agreement, the officers and directors of the Surviving Corporation shall be
authorized to execute and deliver, in the name and on behalf of either the
Company or Merger Sub, all such deeds, bills of sale, instruments of
conveyance, assignments and assurances and to take and do, in the name and
on behalf of each of such corporations or otherwise, all such other actions
and things as may be necessary or desirable to vest, perfect or confirm any
and all right, title and interest in, to and under such rights, properties
or assets in the Surviving Corporation or otherwise to carry out this
Agreement.
ARTICLE II
CONVERSION OF SECURITIES
Section 2.1 Conversion of Capital Stock. As of the Effective
Time, by virtue of the Merger and without any further action on the part of
the holders of any Shares or holders of Merger Sub Common Stock:
(a) Merger Sub Common Stock. Each issued and outstanding
share of Merger Sub Common Stock shall be converted into and become one
fully paid and nonassessable share of common stock of the Surviving
Corporation.
(b) Cancellation of Treasury Stock. Each Share owned by the
Company as treasury stock shall be cancelled and retired and shall cease to
exist, and no consideration shall be delivered in exchange therefor.
(c) Conversion of Shares. Each issued and outstanding Share
(other than Shares to be cancelled in accordance with Section 2.1(b) and
other than any Dissenting Shares) shall be converted into the right to
receive the consideration specified in Exhibit I attached to this Agreement
(the "Merger Consideration"), upon surrender of the certificate formerly
representing such Share in the manner provided in Section 2.2. From and
after the Effective Time, all such converted Shares shall no longer be
outstanding and shall be deemed to be cancelled and retired and shall cease
to exist, and each holder of a certificate representing any such Shares
shall cease to have any rights with respect to such shares except the right
to receive the Merger Consideration therefor, without interest, upon the
surrender of such certificate in accordance with Section 2.2 or the right,
if any, to receive payment from the Surviving Corporation of the "fair
value" of such Shares as determined in accordance with Section 262 of the
DGCL.
(d) No Fractional Shares. No fraction of a share of capital
stock of Parent shall be issued by virtue of the Merger.
Section 2.2 Exchange of Certificates.
(a) At the Closing, Parent shall issue and deliver to each
Shareholder one or more share certificates representing the aggregate
number of shares of Parent Common Stock constituting the Per Share Initial
Stock Consideration that such Shareholder has a right to receive (rounded
up to the nearest whole share) upon the delivery by such Shareholder, free
and clear of any liens, of one or more certificates representing all of the
Shares owned by such Shareholder, duly endorsed in blank or accompanied by
stock powers or other instruments of transfer fully executed in blank, and
bearing or accompanied by all requisite stock transfer stamps.
(b) Transfer Books; No Further Ownership Rights in the
Shares. At the Effective Time, the stock transfer books of the Company
shall be closed, and thereafter there shall be no further registration of
transfers of the Shares on the records of the Company. From and after the
Effective Time, the holders of certificates evidencing ownership of the
Shares outstanding immediately prior to the Effective Time shall cease to
have any rights with respect to such Shares, except as otherwise provided
for herein or by Applicable Law.
ARTICLE III
REPRESENTATIONS AND
WARRANTIES OF THE COMPANY
Except as set forth in the Company Disclosure Letter prepared and
signed by the Company and delivered to Parent simultaneously with the
execution hereof, the Company represents and warrants to Parent and Merger
Sub that all of the statements contained in this Article III are true and
correct as of the date of this Agreement (or, if made as of a specified
date, as of such date), and (except for any statement made as of a
specified date) will be true and correct as of the Closing Date as though
made on the Closing Date. Each exception set forth in the Company
Disclosure Letter and each other response to this Agreement set forth in
the Company Disclosure Letter is identified by reference to, or has been
grouped under a heading referring to, a specific individual section of this
Agreement and relates only to such section, except to the extent that one
portion of the Company Disclosure Letter specifically refers to another
portion thereof, identifying such other portion by section reference or
similar specific cross reference.
Section 3.1 Organization of the Company. The Company is a
corporation duly incorporated, validly existing and in good standing under
the laws of the State of Delaware. The Company has the requisite corporate
power and authority to carry on the Company Business and to own, lease and
operate all of its properties and assets, as now conducted, owned, leased
or operated. The Company is duly qualified to do business in each
jurisdiction in which the nature of the Company Business or the character
or location of the properties and assets owned, leased or operated by it
makes such qualification necessary, except where the failure to be so
qualified would not, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect. The Company has made
available to Parent complete and correct copies of its certificate of
incorporation and by-laws, each as amended to the date of this Agreement.
Section 3.2 Capital Structure. The authorized capital stock of
the Company is 3,000 Shares, of which 1,000 Shares are issued and
outstanding. All of the issued and outstanding shares of capital stock of
the Company have been duly authorized and validly issued and are fully paid
and nonassessable. Except where provided by this Agreement, there are no
outstanding options, warrants, calls, conversion or other rights,
preemptive or similar rights, commitments, agreements, arrangements or
undertakings of any kind to which the Company or any Shareholder is a party
or by which any of them is bound, obligating the Company or any Shareholder
to issue, deliver, purchase or sell, or cause to be issued, delivered,
purchased or sold, any shares of capital stock of the Company or obligating
the Company or any Shareholder to issue, grant or enter into any such
option, warrant, call, conversion or other right, commitment, agreement,
arrangement or undertaking, and no authorization therefor has been given.
The Company has no outstanding Voting Debt.
Section 3.3 Subsidiaries. The Company has no Subsidiaries.
Section 3.4 Title to Shares. The Shareholders are the record and
beneficial owners of all the issued and outstanding Shares, free and clear
of all Encumbrances, except for any Encumbrances created by this Agreement.
Section 3.5 Authority; Validity of Agreement; Board of Directors
Approvals Regarding Transactions. (a) Authority; Validity of Agreement.
The Company has the corporate power and authority to execute and deliver
this Agreement and to take all actions necessary or appropriate to
consummate the Transactions. The execution and delivery of this Agreement
and the consummation of the Transactions have been duly and validly
approved by all requisite corporate action on the part of the Company, and
no other corporate action on the part of the Company is necessary to
authorize the execution and delivery of this Agreement or to consummate the
Transactions. This Agreement has been duly and validly executed and
delivered by the Company and, assuming due and valid authorization,
execution and delivery by Parent and Merger Sub, constitutes a valid and
binding obligation of the Company enforceable against the Company in
accordance with its terms, except as enforcement may be limited by general
principles of equity whether applied in a court of law or court of equity
and by bankruptcy, insolvency, moratorium and similar laws affecting
creditors' rights and remedies generally.
(b) Board of Directors Approvals Regarding Transactions.
The Company Board of Directors, at a meeting duly called and held, has (i)
unanimously determined that each of the Agreement and the Merger are fair
to and in the best interests of the Shareholders, (ii) approved the
Transactions, (iii) resolved to recommend that the Shareholders approve and
adopt this Agreement and the Merger, and none of the aforesaid actions by
the Company Board of Directors has been amended, rescinded or modified. No
state takeover statute or control share acquisition statute is applicable
to the Merger or the other Transactions.
Section 3.6 Vote Required. The affirmative vote or written
consent of the holders of a bare majority of the outstanding Shares is the
only vote or written consent of the holders of any class or series of the
Company's capital stock necessary to approve the Merger. No vote or written
consent of any class or series of the Company's capital stock is necessary
to approve any of the Transactions other than the Merger.
Section 3.7 No Conflicts. The execution, delivery and
performance of this Agreement by the Company will not result in (a) any
conflict with or breach of the certificate of incorporation or by-laws of
the Company or (b) assuming that the Consents referred to in Section 3.8
hereof are duly obtained, (i) any violation of any Applicable Law or (ii)
any violation or breach of or constitute (with or without due notice or
lapse of time or both) a default under any Contract to which the Company is
a party or (c) the creation or imposition of any material Encumbrance
(other than any Encumbrance created by or resulting from the actions of
Parent, Merger Sub or any of their respective Affiliates), except, in the
case of clauses (b) and (c), any Permitted Encumbrance or any such
violation, breach, conflict, default or Encumbrance which would not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect.
Section 3.8 Consents and Approvals. Except for Consents which,
if not made or obtained, would not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect, no
Consents with any Governmental Authority or third party are necessary in
connection with the execution and delivery by the Company of this Agreement
and the consummation of the Transactions.
Section 3.9 Compliance with Laws; Government Regulation; Company
Filings.
(a) Permits; Compliance with Applicable Law. The Company
holds all licenses, franchises, permits, orders, approvals and
authorizations (collectively, "Permits") necessary for the Company
Business. All such Permits are in full force and effect and are not subject
to any suspension, modification or revocation or proceedings related
thereto. The Company is not in material violation of any Applicable Law
relating to the Company or any of its assets, properties or operations and
the Company has not received written notice asserting any such material
violation by the Company.
(b) The Advisers Act. The Company is, and at all times
required by the Advisers Act since its incorporation has been, duly
registered as an investment adviser under the Advisers Act. The Company
is, and at all times required by Applicable Law (other than the Advisers
Act) since its incorporation has been, duly registered, licensed or
qualified as an investment adviser in each state or any other jurisdiction
where the conduct of its business required such registration, licensing or
qualification, except for any such failure to be so registered, licensed or
qualified that would not, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect.
(c) Company Filings. The Company has filed all material
registrations, reports, statements, notices and other material filings
(including all filings on Form ADV) required to be filed with the SEC and
any other Governmental Authority (other than a Taxing Authority) by the
Company, including all material amendments or supplements to any of the
above (the "Filings") since its incorporation. The Filings complied in all
material respects, where applicable, with the requirements of Applicable
Laws. The Company has made available to Parent complete and correct copies
of (i) all Filings made since its incorporation, (ii) all audit or
inspection reports received by the Company from the SEC or any other
Governmental Authority (other than a Taxing Authority) since its
incorporation and all written responses thereto made by the Company since
its incorporation, (iii) copies of all inspection reports provided to the
Company by the SEC or any other Governmental Authority (other than a Taxing
Authority) since its incorporation and (iv) all correspondence relating to
any investigation by the SEC or any other Governmental Authority (other
than a Taxing Authority) since its incorporation provided to the Company by
the SEC or such other Governmental Authority (other than a Taxing
Authority).
(d) Government Examinations. Except for normal examinations
conducted by any Governmental Authority in the regular course of the
Company Business, since the Company's incorporation, (i) no Governmental
Authority has initiated any material administrative proceeding or
investigation into the Company Business or Company's operations and (ii)
the Company has not received any written notice of any unresolved violation
or exception by any Governmental Authority with respect to any report or
statement by any Governmental Authority relating to any examination of the
Company.
(e) Agreements with Governmental Authorities. The Company
is not subject to any material cease-and-desist or other order issued by,
or is a party to any material written agreement, consent agreement or
memorandum of understanding with, or is a party to any commitment letter or
similar undertaking to, or is subject to any material order or directive
issued by, or is a recipient of any supervisory letter from or has adopted
any board resolutions at the request of, any Governmental Authority that
restricts the conduct of its business or that in any manner relates to its
capital adequacy, its credit policies, its management or its business
(each, whether or not set forth in the Company Disclosure Letter, a
"Company Regulatory Agreement"), nor has the Company ever been advised
since its conception by any Governmental Authority that it is considering
issuing or requesting any such Company Regulatory Agreement.
(f) Code of Ethics, Etc. The Company has adopted a formal
code of ethics (to the extent required under applicable law) and a written
policy regarding xxxxxxx xxxxxxx. Such code and policy comply, in all
material respects, to the extent applicable thereto, with Section 204A of
the Advisers Act, respectively. The policies of the Company with respect
to avoiding conflicts of interest are as set forth in their most recent
Form ADV (or incorporated by reference therein) (as applicable). As of the
date hereof and to the knowledge of the Company, there have been no
material violations or allegations of material violations of such policies
that have occurred or been made.
(g) Disqualification, Etc. Neither the Company nor, to the
Company's knowledge, any person "associated" (as defined under the Advisers
Act) with any Company, has for a period not less than five years prior to
the date hereof been convicted of any crime or is or has been subject to
any disqualification that would be a basis for denial, suspension or
revocation of registration of an investment adviser under Section 203(e) of
the Advisers Act or Rule 206(4)-4(b) thereunder or for disqualification as
an investment adviser for any Registered Investment Company pursuant to
Section 9(a) of the Investment Company Act, and to the Company's knowledge
there is no basis for, or proceeding or investigation that is reasonably
likely to become the basis for, any such disqualification, denial,
suspension or revocation.
Section 3.10 Real Property. Section 3.10 of the Company
Disclosure Letter sets forth a complete list and the location of all Real
Property owned or leased by the Company. Complete and correct copies of (i)
all leases, deeds, title insurance policies and surveys relating to such
Real Property and (ii) all documents evidencing all Encumbrances (other
than Permitted Encumbrances) upon such Real Property have heretofore been
furnished to Parent. Section 3.10 of the Company Disclosure Letter lists
each material item of tangible personal property leased by the Company. The
Company has valid and subsisting leasehold interests in the Real Property
and tangible personal property listed on Section 3.10 of the Company
Disclosure Letter as leased by it subject to no Encumbrance, except for
Permitted Encumbrances. Each such tangible asset has been maintained in
accordance with normal industry practice, is in good operating condition
and repair (subject to normal wear and tear), and is suitable for the
purpose for which it is currently used. The Company owns or has the right
to use all of the properties and assets used in and which are necessary to
the conduct of the Company Business as presently conducted.
Section 3.11 Absence of Undisclosed Liabilities. The Company is
not subject to any liabilities or obligations (whether absolute, accrued,
contingent or otherwise) except obligations and liabilities that (a) were
incurred in the ordinary course of business since the incorporation of the
Company and (b) would not, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect.
Section 3.12 Contracts. (a) Section 3.12 of the Company
Disclosure Letter lists all Contracts in existence as of the date hereof,
the annual revenue or cost to the Company, taken as a whole, of which
exceeds $100,000 or which are not cancelable by the Company on notice of 60
days or less without penalty, complete copies of which, including all
amendments and supplements thereto, have been made available to Parent.
(b) No breach, default or event which constitutes or would
(with the passage of time, notice or both) constitute a breach or default
under any material Contract of the Company has occurred, or, assuming
receipt of the appropriate Consents, will occur as a result of this
Agreement or the performance by the Company of any of its covenants or
obligations hereunder; and each such Contract is valid and binding on the
Company and, assuming due authorization, execution and delivery by the
other parties thereto, each such Contract is in full force and effect and
is enforceable against the Company in accordance with its terms.
(c) There are no agreements of the Company containing an
unexpired covenant not to compete or similar restriction applying to the
Company. There are no existing defaults (or circumstances or events that,
with the giving of notice or lapse of time or both would become defaults)
of the Company (or, to the knowledge of the Company, any other party
thereto) under any such Contract, except for such defaults which would not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect.
Section 3.13 Absence of Certain Changes. Since its incorporation
date, except as permitted under this Agreement, the Company has conducted
the Company Business in the ordinary course of business consistent with
past practices, and there has not been (a) any change in its working
capital, financial condition, results of operation or assets or liabilities
which would, individually or in the aggregate, reasonably be expected to
have a Company Material Adverse Effect, (b) any declaration, payment or
setting aside for payment of any dividend or other distribution in respect
of the capital stock of the Company, (c) any change in accounting methods
or practices or (d) any agreement with respect to any of the foregoing.
Section 3.14 Legal Proceedings. There are no Proceedings,
claims, inquiries, actions or investigations pending or, to the knowledge
of the Company, threatened in writing against the Company or any of its
properties or assets which (i) would, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect or (ii)
challenge the validity of the transactions contemplated by this Agreement.
Section 3.15 Taxes. (a) The Company has (i) timely filed all
income and other material Tax Returns required to be filed by it on or
prior to the date of this Agreement and all such returns are true, correct
and complete in all material respects and (ii) duly paid or made provisions
for the payment of all material Taxes that have been incurred or are due or
claimed to be due from it by any Taxing Authority other than Taxes which
are not yet delinquent or are being contested in good faith. No federal,
state, local or foreign audits, examinations, investigations or other
administrative proceedings or court proceedings are presently pending with
regard to any Taxes or Tax Returns filed by or on behalf of the Company.
(b) There are no outstanding requests, agreements, consents
or waivers to extend the statutory period of limitations applicable to the
assessment of any Taxes or deficiencies against the Company.
(c) The Company is not a party to any tax sharing, tax
indemnity or other agreement or arrangement with any Person.
(d) The Company has not taken or agreed to take any action,
or failed to take any action, that is reasonably likely to prevent the
Merger from qualifying as a reorganization within the meaning of Section
368(a) of the Code. The Company has no plan or intention to take (or fail
to take) any action that could result in the Merger not qualifying as a
reorganization within the meaning of Section 368(a) of the Code.
Section 3.16 Employee Benefit Plans; ERISA.
Except as set forth on Section 3.16 of the Company Disclosure
Letter, the Company has (a) no material bonus, deferred compensation,
incentive compensation, stock purchase, option, employment,
consulting, severance or termination pay, hospitalization or other medical,
life or other insurance, supplemental unemployment benefits,
profit-sharing, pension or retirement plan, program, agreement or
arrangement, and (b) no other "employee benefit plan" (within the meaning
of Section 3(3) of ERISA), whether formal or informal, written or oral and
whether legally binding or not, that is maintained or contributed to or was
maintained or contributed to at any time by the Company or any Company
ERISA Affiliate for the benefit of any employee, former employee or
consultant of the Company as to which the Company has any liability.
Section 3.17 Technology Systems and Intellectual Property.
(a) The Company owns or has the right to use all components
of the Company Technology Systems that are reasonably necessary to the
normal operations of the Company Business as currently conducted. The
consummation of the Transactions will not materially alter or impair the
ownership or right of the Surviving Corporation to use the components of
the Company Technology Systems.
(b) The Company owns the Company Intellectual Property free
and clear of any Encumbrances other than Permitted Encumbrances. No Company
Intellectual Property application or registration owned by the Company is
the subject of any pending, existing or threatened opposition,
interference, cancellation proceeding or other similar legal or
governmental proceeding before any Governmental Authority. The conduct of
the Company Business does not infringe in any material respect upon any
intellectual property right owned or controlled by any third party. There
are no material claims, proceedings or actions pending or, to the knowledge
of the Company, threatened, and the Company has not received any notice of
any claim or suit (i) alleging that the activities of the Company infringe
upon or constitute the unauthorized use of the proprietary rights of any
third party or (ii) challenging the ownership, use, validity or
enforceability of any Company Intellectual Property owned or controlled by
the Company, and, to the knowledge of the Company, no valid basis for any
such claim or suit exists. To the knowledge of the Company, no third party
is infringing upon any Company Intellectual Property owned by the Company
and no such claims have been made by the Company.
Section 3.18 Fund Filings, Etc.
(a) The Company does not currently nor has it ever since
inception provided Investment Advisory Services or Brokerage Services that
are sponsored by the Company and/or for which the Company acts as a general
partner, managing member or in a similar capacity to an Investment Company.
(b) Each of the Company's officers, and employees which is
or who are required to be registered as an investment adviser, a
broker-dealer, a registered representative, a sales person or in any
commodities-related capacity with the SEC, the securities commission, the
National Futures Association, NASD, Inc. or any state or any SRO is duly
registered as such and such registration is in full force and effect,
except where the failure to be so registered or to have such registration
in full force and effect would, individually or in the aggregate, not have
a Company Material Adverse Effect.
(c) There are no proceedings pending (or, to the knowledge
of the Company, threatened, nor to the knowledge of the Company has any
event occurred or does any condition exist that is reasonably likely to
form the basis for any proceeding) that is reasonably likely to result in
the revocation, cancellation or suspension, or any adverse modification, of
any permit, license, certificate of authority, order or approval having a
Company Material Adverse Effect, and the execution and delivery of this
Agreement and the consummation of any transactions contemplated hereby will
not result in any such revocation, cancellation, suspension or modification
which, individually or in the aggregate, would have a Company Material
Adverse Effect.
(d) Since the Company's inception, there has existed no "out
of balance" condition, pricing error or similar condition with respect to
any customer account maintained by the Company, except for such conditions,
individually or in the aggregate, as have since been rectified and have not
had and would not have a Company Material Adverse Effect and, for the
purposes of Section 6.2(a) in the case of any such event occurring after
the date hereof, that is material to the Company.
(e) The Company holds no registrations and licenses as (i) a
broker-dealer under the Exchange Act or under any similar state or foreign
laws, (ii) a futures commission merchant, commodities trading adviser,
commodity pool operator or introducing broker under the Commodities and
Futures Trading Act or under any similar state or foreign laws, (iii) an
investment adviser under the Advisers Act or under any similar state or
foreign laws (other than as set forth in Section 3.18 of the Company
Disclosure Letter), (iv) a bank or trust company or (v) an insurance
company.
(f) The Company holds no memberships in and has not been
granted trading privileges by any securities exchanges, commodities
exchanges, boards of trade and similar organizations.
Section 3.19 Investment Contracts and Clients. As of the date
hereof, the Company does not provide, and since its inception has not
provided, Investment Advisory Services or other services pursuant to
Investment Contracts.
Section 3.20 Books and Records. The books, records and accounts
of the Company are maintained, in all material respects, in accordance with
the requirements of Section 13(b)(2) of the Exchange Act (regardless of
whether the Company is subject to that section), including the maintenance
of a system of internal controls that provides reasonable assurance that
(i) transactions are executed with management's authorization; (ii)
transactions are recorded as necessary to permit preparation of the
consolidated financial statements of the Company and to maintain
accountability for the Company's consolidated assets; (iii) access to the
Company's assets is permitted only in accordance with management's
authorization; (iv) the reporting of the Company's assets is compared with
existing assets at reasonable intervals; and (v) accounts, notes and other
receivables and inventory are recorded accurately, and proper and adequate
procedures are implemented to effect the collection thereof on a current
and timely basis.
Section 3.21 Bank Holding Company Act; FDIC. The Company does
not own or "control" (as defined in Section 2(a)(2) of the Bank Holding
Company Act of 1956, as amended, and the rules and regulations promulgated
thereunder (the "BHCA")) a "bank" (as defined in Section 2(c) of the BHCA)
or a "bank holding company" (as defined in Section 2(a)(i) of the BHCA).
The Company is not an "insured depository institution" under the Federal
Deposit Insurance Act.
Section 3.22 Brokers. No broker, finder or similar intermediary
has acted for or on behalf of, or is entitled to any broker's, finder's or
similar fee or other commission from, the Company in connection with this
Agreement or the Transactions.
Section 3.23 No Other Representations. Except for the
representations and warranties contained in this Article III, neither the
Company nor any other person or entity acting on behalf of the Company,
makes any other representation or warranty, express or implied, with
respect to the Company, the Company Business or the Transactions.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PARENT AND MERGER SUB
Except as set forth in the Parent Disclosure Letter prepared and
signed by Parent and delivered to the Company simultaneously with the
execution hereof, Parent and Merger Sub represent and warrant to the
Company that all of the statements contained in this Article IV are correct
and complete as of the date of this Agreement (or, if made as of a
specified date, as of such date), and (except for any statement made as of
a specified date) will be true and correct as of the Closing Date as though
made on the Closing Date. Each exception set forth in the Parent Disclosure
Letter and each other response to this Agreement set forth in the Parent
Disclosure Letter is identified by reference to, or has been grouped under
a heading referring to, a specific individual section of this Agreement and
relates only to such section, except to the extent that one portion of the
Parent Disclosure Letter specifically refers to another portion thereof,
identifying such other portion by section reference or similar specific
cross reference.
Section 4.1 Organization of Parent and Merger Sub. Each of
Parent and Merger Sub is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of its incorporation. Each
of Parent and Merger Sub has the requisite corporate power and authority to
carry on its business and to own, lease and operate all of its properties
and assets, as now conducted, owned, leased or operated. Each of Parent and
Merger Sub is duly qualified to do business in each jurisdiction in which
the nature of its business or the character or location of the properties
and assets owned, leased or operated by it makes such qualification
necessary, except where the failure to be so qualified would not,
individually or in the aggregate, reasonably be expected to have a Parent
Material Adverse Effect. Each of Parent and Merger Sub has made available
to the Company complete and correct copies of its articles of incorporation
or certificate of incorporation, as applicable, and by-laws, each as
amended to the date of this Agreement and minutes (whether in draft or
final form) of all meetings of their boards of directors or any committees
thereof since January 1, 2000.
Section 4.2 Capital Structure. The authorized capital stock of
Parent is 60,000,000 shares of common stock, par value $0.01, of which
8,539,0211 shares are issued and outstanding, and 1,000,000 shares of
preferred stock, par value $1.00, of which none are issued and outstanding,
and 150,000 shares of preferred stock were designated as "Series A Junior
Preferred Stock" and reserved for issuance upon exercise of the rights
issued pursuant to that certain Rights Agreement, dated as of July 11,
1994, by and between Parent and Continental Stock Transfer & Trust Company,
as Rights Agent (the "Rights Agreement"). The authorized capital stock of
Merger Sub is 100 shares of common stock, par value $0.01, of which 100
shares are issued and outstanding. All of the issued and outstanding shares
of capital stock of each of Parent and Merger Sub have been duly authorized
and validly issued and are fully paid and nonassessable. Except where
provided by this Agreement, there are no outstanding options, warrants,
calls, conversion or other rights, preemptive or similar rights,
commitments, agreements, arrangements or undertakings of any kind to which
any of Parent or Merger Sub is a party or by which either of them is bound,
obligating Parent or Merger Sub to issue, deliver, purchase or sell, or
cause to be issued, delivered, purchased or sold, any shares of capital
stock of Parent or Merger Sub or obligating Parent or Merger Sub to issue,
grant or enter into any such option, wan-ant, call, conversion or other
right, commitment, agreement, arrangement or undertaking, and no
authorization therefor has been given. Each of Parent and Merger Sub has no
outstanding Voting Debt.
Section 4.3 Subsidiaries. The authorized capital stock of each
Subsidiary of Parent (other than Merger Sub) and the number of issued and
outstanding shares of each such Subsidiary are set forth in Section 4.3 of
the Parent Disclosure Letter. All such issued and outstanding shares are
owned directly or indirectly by Parent, free and clear of all Encumbrances
and have been duly authorized and validly issued and are fully paid and
non-assessable. Each such Subsidiary (a) is a corporation or limited
liability company duly organized, validly existing and in good standing
under the laws of its state of organization; (b) has full corporate or
limited liability company power and authority to carry on its business as
it is now being conducted and to own the properties and assets it now owns;
and (c) is duly qualified or licensed to do business as a foreign
corporation or limited liability company in good standing in each
jurisdiction in which the failure to be so qualified or licensed would
reasonably be expected to have a Parent Material Adverse Effect. No
Subsidiary of parent has any outstanding Voting Debt.
Section 4.4 Title to Shares of Capital Stock of Merger Sub.
Parent is the record and beneficial owner of all the issued and outstanding
shares of capital stock of Merger Sub, free and clear of all Encumbrances,
except for any Encumbrances created by this Agreement.
Section 4.5 Authority; Validity of Agreement; Board of Director
Approvals Regarding Transactions.
(a) Authority Validity of Agreements. Each of Parent and
Merger Sub has the corporate power and authority to execute and deliver
this Agreement and to take all actions necessary or appropriate to
consummate the Transactions. The execution and delivery of this Agreement
and the consummation of the Transactions have been duly and validly
approved by all requisite corporate action on the part of each of Parent
and Merger Sub, and no other corporate action on the part of Parent or
Merger Sub is necessary to authorize the execution and delivery of this
Agreement or to consummate the Transactions. This Agreement has been duly
and validly executed and delivered by each of Parent and Merger Sub and,
assuming due and valid authorization, execution and delivery by the
Company, constitutes a valid and binding obligation of each of Parent and
Merger Sub enforceable against each of Parent and Merger Sub in accordance
with its terms, except as enforcement may be limited by general principles
of equity whether applied in a court of law or court of equity and by
bankruptcy, insolvency, moratorium and similar laws affecting creditors'
rights and remedies generally.
(b) Board of Directors Approvals Regarding Transactions.
The Merger Sub Board of Directors, at a meeting duly called and held, has
(i) unanimously determined that each of the Agreement and the Merger are
fair to and in the best interests of Parent as the sole shareholder of
Merger Sub, (ii) approved the Transactions, (iii) resolved to recommend
that Parent as the sole shareholder of Merger Sub approve and adopt this
Agreement and the Merger, and none of the aforesaid actions by the Merger
Sub Board of Directors has been amended, rescinded or modified. Parent
Board of Directors, at a meeting duly called and held, has (i) unanimously
determined that each of the Agreement and the Merger are fair to and in the
best interests of Parent as the sole shareholder of Merger Sub, (ii)
approved the Transactions, (iii) resolved that Parent as the sole
shareholder of Merger Sub approve and adopt this Agreement and the Merger,
and none of the aforesaid actions by Parent Board of Directors has been
amended, rescinded or modified. No state takeover statute or control share
acquisition statute is applicable to the Merger or the other Transactions.
Section 4.6 No Conflicts. The execution, delivery and
performance of this Agreement by each of Parent and Merger Sub (including,
without limitation, the issuance of the Merger Consideration) will not
result in (a) any conflict with or breach of the certificate of
incorporation or articles of incorporation, as applicable, or by-laws of
Parent or Merger Sub or (b) assuming that the Consents referred to in
Section 4.7 hereof are duly obtained, (i) any violation of any Applicable
Law or (ii) any violation or breach of or constitute (with or without due
notice or lapse of time or both) a default under any Contract to which
Parent or Merger Sub is a party or (c) the creation or imposition of any
material Encumbrance (other than any Encumbrance created by or resulting
from the actions of the Company or any of its Affiliates), except, in the
case of clauses (b) and (c), any Permitted Encumbrance or any such
violation, breach, conflict, default or Encumbrance which would not,
individually or in the aggregate, reasonably be expected to have a Parent
Material Adverse Effect.
Section 4.7 Consents and Approvals. Except for Consents which,
if not made or obtained, would not, individually or in the aggregate,
reasonably be expected to have a Parent Material Adverse Effect, no
Consents with any Governmental Authority or third party (including any
consents of holders of shares of Parent capital stock) are necessary in
connection with the execution and delivery by Parent or Merger Sub of this
Agreement and the consummation of the Transactions.
Section 4.8 Compliance with Laws; Government Regulation.
(a) Permits; Compliance with Applicable Law. Parent holds
all Permits necessary for the Parent Business. All such Permits are in full
force and effect and are not subject to any suspension, modification or
revocation or proceedings related thereto. Neither Parent nor any of its
Subsidiaries is, and at all times since January 1, 2000 has been, in
material violation of any Applicable Law relating to Parent or any of its
Subsidiaries or any of their respective assets, properties or operations,
and neither Parent nor any of its Subsidiaries has received written notice
asserting any such material violation by Parent nor any of its
Subsidiaries.
(b) Investment Company. Parent is not, and at all times
since January 1, 2000 except as set forth in Section 4.8(c) of the Parent
Disclosure Letter has not been, and upon the consummation of the
Transactions will not be, subject to registration as an "investment
company" under the Investment Company Act of 1940, as amended.
(c) Government Examinations. Except as set forth in Section
4.8(c) of the Parent Disclosure Letter and for normal examinations
conducted by any Governmental Authority in the regular course of the Parent
Business, since January 1, 2000, (i) no Governmental Authority has
initiated any administrative proceeding or, to the knowledge of Parent,
investigation into the Parent Business or operations of Parent or any of
its Subsidiaries and (ii) neither Parent nor any of its Subsidiaries has
received any written notice of any unresolved violation or exception by any
Governmental Authority with respect to any report or statement by any
Governmental Authority relating to any examination of Parent or any of its
Subsidiaries.
(d) Disqualification, Etc. Neither Parent nor, to Parent's
knowledge, any person "associated" (as defined under the Advisers Act) with
Parent, has for a period not less than five years prior to the date hereof
been convicted of any crime or is or has been subject to any
disqualification that would be a basis for denial, suspension or revocation
of registration of an investment adviser under Section 203(e) of the
Advisers Act or Rule 206(4)-4(b) thereunder or for disqualification as an
investment adviser for any Registered Investment Company pursuant to
Section 9(a) of the Investment Company Act, and to Parent's knowledge there
is no basis for, or proceeding or investigation that is reasonably likely
to become the basis for, any such disqualification, denial, suspension or
revocation.
Section 4.9 SEC Reports and Parent Financial Statements and
Certifications; Internal Controls and Disclosure Controls.
(a) SEC Reports and Parent Financial Statements. Parent has
filed with the SEC, and has heretofore made available to the Company,
complete and correct copies of, the Parent SEC Documents. As of their
respective dates or, if amended, as of the date of the last such amendment
filed prior to the date hereof, the Parent SEC Documents, including,
without limitation, any financial statements or schedules included therein
(a) did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order
to make the statements made therein, in the light of the circumstances
under which they were made, not misleading and (b) complied in all material
respects with the applicable requirements of the Exchange Act, the
Securities Act, and the Xxxxxxxx-Xxxxx Act, as the case may be. Other than
the Public Parent Subsidiary, no subsidiary of Parent, was in the last five
years or, is required to file any forms, reports, schedules, statements or
other documents with the SEC under the Exchange Act, the Securities Act or
the Xxxxxxxx-Xxxxx Act. The Parent Financial Statements have been prepared
from, and are in accordance with, the books and records of Parent and its
consolidated Subsidiaries, comply in all material respects with applicable
accounting requirements and with the published rules and regulations of the
SEC with respect thereto, have been prepared in accordance with GAAP
(except, in the case of unaudited consolidated quarterly financial
statements, as permitted by the instructions to Form 10Q promulgated
pursuant to the Exchange Act) applied on a consistent basis during the
period involved (except as may be stated in the notes thereto) and fairly
present the consolidated financial position and the consolidated results of
operations and cash flows (and changes in financial position, if any) of
Parent and its consolidated Subsidiaries as of the times and for the
periods referred to therein.
(b) Certifications. No executive officer of Parent has
failed in any respect to make the certifications required of such executive
officer under Section 302 and Section 906 of the Xxxxxxxx-Xxxxx Act.
(c) Disclosure Controls and Procedures. Parent has in place
the "disclosure controls and procedures" (as defined in Rules 13a-15(e) and
15(d)-15(e) of the Exchange Act) required in order for the principal
executive officer and principal financial officer of Parent to engage in
the review and evaluation process mandated by the Exchange Act. Parent's
"disclosure controls and procedures" are reasonably designed to ensure that
all information (both financial and non-financial) required to be disclosed
by Parent in the reports that it files or submits under the Exchange Act is
recorded, processed, summarized and reported within the time periods
specified in the rules and forms of the SEC, and that all such information
is accumulated and communicated to Parent's management as appropriate to
allow timely decisions regarding required disclosure and to make the
certifications of the Chief Executive Officer and Chief Financial Officer
of Parent required under the Exchange Act with respect to such reports.
(d) Off-Balance Sheet Arrangements. Section 4.9(d) of the
Parent Disclosure Letter describes, and Parent has delivered to the Company
complete and correct copies of all documents governing, all "off balance
sheet arrangements" (as defined by item 303(a)(4) of Regulation S-K
promulgated by the SEC) in respect of Parent or any of its Controlled
Affiliates.
Section 4.10 Books and Records. The books, records and accounts
of the Parent and each of its Subsidiaries are maintained, in all material
respects, in accordance with the requirements of Section 13(b)(2) of the
Exchange Act (regardless of whether the Parent or its Subsidiaries are
subject to that section), including the maintenance of a system of internal
controls that provides reasonable assurance that (i) transactions are
executed with management's authorization; (ii) transactions are recorded as
necessary to permit preparation of the consolidated financial statements of
the Parent and to maintain accountability for the Parent's consolidated
assets; (iii) access to the Parent's assets is permitted only in accordance
with management's authorization; (iv) the reporting of the Parent's assets
is compared with existing assets at reasonable intervals; and (v) accounts,
notes and other receivables and inventory are recorded accurately, and
proper and adequate procedures are implemented to effect the collection
thereof on a current and timely basis.
Section 4.11 Real Property. Section 4.11 of the Parent
Disclosure Letter sets forth a complete list and the location of all Real
Property owned or leased by Parent. Complete and correct copies of (i) all
leases, deeds, title insurance policies and surveys relating to such Real
Property and (ii) all documents evidencing all Encumbrances (other than
Permitted Encumbrances) upon such Real Property have heretofore been
furnished to the Company. Section 4.11 of the Parent Disclosure Letter
lists each material item of tangible personal property leased by Parent.
Each of Parent and its Subsidiaries has (a) valid and subsisting leasehold
interests in the Real Property and tangible personal property listed on
Section 4.11 of the Parent Disclosure Letter as leased by it and (b) legal
and beneficial ownership of all of its tangible personal property included
in the Parent Financial Statements dated as of March 31, 2004 (except for
properties disposed of since such date in the ordinary course of business),
in each case subject to no Encumbrance, except for Permitted Encumbrances.
Each such tangible asset has been maintained in accordance with normal
industry practice, is in good operating condition and repair (subject to
normal wear and tear), and is suitable for the purpose for which it is
currently used. Parent or its Subsidiaries own or have the right to use all
of the properties and assets used in and which are necessary to the conduct
of the Parent Business as presently conducted.
Section 4.12 Absence of Undisclosed Liabilities. Neither Parent
nor any of its Subsidiaries is subject to any liabilities or obligations
(whether absolute, accrued, contingent or otherwise) except (a) obligations
and liabilities reflected or reserved in the audited consolidated balance
sheet included in the most recent Parent Financial Statements or (b)
obligations and liabilities incurred in the ordinary course of business
since the date of the audited consolidated balance sheet included in the
most recent Parent Financial Statements that would not, individually or in
the aggregate, reasonably be expected to have a Parent Material Adverse
Effect.
Section 4.13 Contracts. Section 4.13 of the Parent Disclosure
Letter lists all Contracts in existence as of the date hereof the annual
revenue or cost to Parent or its Subsidiaries, taken as a whole, of which
exceeds $l00,000 or which are not cancelable by Parent or any of its
Subsidiaries on notice of 60 days or less without penalty (other than real
property leases, labor or employment-related agreements and intellectual
property licenses, which are provided for in Sections 4.11, 4.17 and 4.18,
respectively), complete copies of which, including all amendments and
supplements thereto, have been made available to the Company.
(b) No breach, default or event which constitutes or would
(with the passage of time, notice or both) constitute a breach or default
under any such Contract, has occurred, or, assuming receipt of the
appropriate Consents, will occur as a result of this Agreement or the
performance by each of Parent and Merger Sub of any of its covenants or
obligations hereunder; and each such Contract is valid and binding on
Parent or, any Subsidiary of Parent that is a party thereto, and, assuming
due authorization, execution and delivery by the other parties thereto,
each such Contract is in full force and effect and is enforceable against
Parent or any such Subsidiary, as the case may be, in accordance with its
terms.
(c) There are no agreements of Parent or any of its
Subsidiaries containing an unexpired covenant not to compete or similar
restriction applying to Parent or any such Subsidiary. There are no
existing defaults (or circumstances or events that, with the giving of
notice or lapse of time or both would become defaults) of Parent or any of
its Subsidiaries (or, to the knowledge of Parent, any other party thereto)
under any such Contract, except for such defaults which would not,
individually or in the aggregate, reasonably be expected to have a Parent
Material Adverse Effect.
Section 4.14 Absence of Certain Changes. Since June 30, 2003,
except as permitted under this Agreement, each of Parent and its
Subsidiaries has conducted the Parent Business in the ordinary course of
business consistent with past practices, and there has not been (a) any
change in its working capital, financial condition, results of operation or
assets or liabilities which would, individually or in the aggregate,
reasonably be expected to have a Parent Material Adverse Effect, (b) any
purchase or redemption or other acquisition by Parent or any of its
Subsidiaries of any shares of capital stock of Parent or any of its
Subsidiaries, (c) any declaration, payment or setting aside for payment of
any dividend or other distribution in respect of the capital stock of
Parent or any of its Subsidiaries, (d) any change in accounting methods or
practices or any significant change in any of its Internal Controls or in
other factors that could significantly affect any of its Internal Controls
or (e) any agreement with respect to any of the foregoing.
Section 4.15 Legal Proceedings. There are no Proceedings,
claims, inquiries, actions or investigations pending or, to the knowledge
of Parent, threatened in writing against Parent or any of its Subsidiaries
or any of their respective properties or assets which (i) would,
individually or in the aggregate, reasonably be expected to have a Parent
Material Adverse Effect or (ii) challenge the validity of the Transactions.
Section 4.16 Taxes.
(a) Each of Parent and its Subsidiaries has (i) timely filed
all income and other material Tax Returns required to be filed by it on or
prior to the date of this Agreement and all such returns are true, correct
and complete in all material respects and (ii) duly paid or made provisions
for the payment of all material Taxes that have been incurred or are due or
claimed to be due from it by any Taxing Authority other than Taxes which
are not yet delinquent or are being contested in good faith. No federal,
state, local or foreign audits, examinations, investigations or other
administrative proceedings or court proceedings are presently pending with
regard to any Taxes or Tax Returns filed by or on behalf of Parent or any
of its Subsidiaries.
(b) There are no outstanding requests, agreements, consents
or waivers to extend the statutory period of limitations applicable to the
assessment of any Taxes or deficiencies against Parent or any of its
Subsidiaries.
(c) Neither Parent nor any of its Subsidiaries is a party to
any tax sharing, tax indemnity or other agreement or arrangement with any
Person.
(d) Neither Parent nor any of its Subsidiaries has taken or
agreed to take any action, or failed to take any action, that is reasonably
likely to prevent the Merger from qualifying as a reorganization within the
meaning of Section 368(a) of the Code. Neither Parent nor any of its
Subsidiaries has any plan or intention to take any action (or fail to take
any action) that could result in the Merger not qualifying as a
reorganization within the meaning of Section 368(a) of the Code.
Section 4.17 Employee Benefit Plans: ERISA.
(a) Section 4.17(a) of the Parent Disclosure Letter sets
forth a true and complete list of each bonus, deferred compensation,
incentive compensation, stock purchase, option and other equity
compensation, employment, consulting, retention, severance or termination
pay, surgical, hospitalization or other medical, life or other insurance,
supplemental unemployment benefits, profit-sharing, stock bonus, pension or
retirement plan, fund, program, agreement or arrangement, and each other
"employee benefit plan" (within the meaning of Section 3(3) of ERISA),
whether formal or informal, written or oral and whether legally binding or
not, that is sponsored, maintained or contributed to or was sponsored,
maintained or contributed to at any time by Parent, any of its Subsidiaries
or any Parent ERISA Affiliate for the benefit of any employee, former
employee, consultant or director of Parent or any of its Subsidiaries or as
to which Parent or such Subsidiary has any liability (a "Plan").
(b) With respect to each Plan, Parent has made available to
the Company true and complete copies of each of the following documents:
(i) a copy of the Plan (including all amendments
thereto) or if the Plan is not a written Plan, a description thereof;
(ii) a copy of any annual report required under ERISA
or other Applicable Law with respect to each such Plan for the most
recently completed plan year;
(iii) a copy of any actuarial report required under
ERISA or other Applicable Law with respect to each such Plan for the
recently completed plan year;
(iv) a copy of the most recent summary plan
description;
(v) if the Plan is funded through a trust or any third
party funding vehicle, a copy of the trust or other funding agreement
(including all amendments thereto) and the most recent financial
statement related thereto;
(vi) all contracts relating to any Plan with respect to
which Parent or any of its Subsidiaries has any material liability;
and
(vii) the most recent determination letter received
from the Internal Revenue Service with respect to each Plan that is
intended to be qualified under Section 401 of the Code.
(c) (i) No Plan is a "multiemployer plan," as such term is
defined in Section (3)(37) of ERISA and no Plan is subject to Title IV of
ERISA; (ii) each Plan has been operated and administered in all respects in
accordance with the requirements of all Applicable Law except for any such
failure that could not, individually or in the aggregate, reasonably be
expected to have a Parent Material Adverse Effect; (iii) each of the Plans
intended to be "qualified" within the meaning of Section 40 1(a) of the
Code is so qualified and no Plan has an accumulated or waived funding
deficiency within the meaning of Section 412 of the Code; (iv) each Plan
intended to satisfy the requirements of Section 501 (c)(9) of the Code has
satisfied such requirements; (v) neither Parent, any of its Subsidiaries,
any Parent ERISA Affiliate, any Plan, any trust created thereunder, nor any
trustee or administrator thereof has engaged in a transaction in connection
with which Parent, any of its Subsidiaries, any Parent ERISA Affiliate, any
Plan, any such trust, or any trustee or administrator thereof, or any party
dealing with any Plan or any such trust could be subject to either a civil
penalty assessed pursuant to section 409 or 502(i) of ERISA or a tax
imposed pursuant to section 4975 or 4976 of the Code; (vi) neither Parent,
any of its Subsidiaries nor a Parent ERISA Affiliate has incurred, directly
or indirectly, any liability (including any material contingent liability)
pursuant to Title IV of ERISA that has not been satisfied in full and no
condition exists that presents a material risk to Parent, any such
Subsidiary, or any Parent ERISA Affiliate of incurring such liability or
contingent liability; and (vii) neither Parent, any of its Subsidiaries nor
any Parent ERISA Affiliate made, or was required to make, contributions to
any plan subject to Title IV of ERISA (a "Title IV Plan") during the six
year period ending on the last day of the most recent Title IV Plan year
ended prior to the Closing Date.
(d) No Plan provides benefits, including, without
limitation, death, surgical, hospitalization, or medical benefits (whether
or not insured), with respect to current or former employees of Parent or
any of its Subsidiaries for periods extending beyond their retirement or
other termination of service other than (i) coverage required to be
provided under Applicable Law, (ii) death benefits or retirement benefits
under any "employee pension plan," as that term is defined in Section 3(2)
of ERISA, (iii) deferred compensation benefits accrued as liabilities on
the books of Parent or any of its Subsidiaries or a Parent ERISA Affiliate
or (iv) benefits the full cost of which is borne by the current or former
employee (or his beneficiary).
(e) There are no pending, threatened or anticipated claims
(other than routine claims for benefits) by, on behalf of or against any of
the Plans by any employee or beneficiary covered under any such Plan, or
otherwise involving any such Plan.
(f) The consummation of the Transactions will not, either
alone or in combination with another event, (i) entitle any current or
former employee, director or officer of Parent or any of its Subsidiaries
to severance pay, unemployment compensation or any other similar payment,
or (ii) accelerate the time of payment or vesting or increase the amount of
compensation due any such employee.
(g) No amounts payable under the Plans will fail to be
deductible for federal income tax purposes by virtue of section 280G of the
Code.
Section 4.18 Technology Systems and Intellectual Property.
(a) Parent and its Subsidiaries, taken as a whole, own or
have the right to use all components of the Parent Technology Systems that
are reasonably necessary to the normal operations of the Parent Business.
The consummation of the Transactions will not materially alter or impair
the ownership or right of Parent and its Subsidiaries, taken as a whole, to
use the components of the Parent Technology Systems.
(b) Parent and its Subsidiaries, taken as a whole, own the
Parent Intellectual Property free and clear of any Encumbrances other than
Permitted Encumbrances. No Parent Intellectual Property application or
registration owned by Parent or any of its Subsidiaries is the subject of
any pending, existing or threatened opposition, interference, cancellation
proceeding or other similar legal or governmental proceeding before any
Governmental Authority. The conduct of the Parent Business does not
infringe in any material respect upon any intellectual property right owned
or controlled by any third party. There are no material claims, proceedings
or actions pending or, to the knowledge of Parent, threatened, and neither
Parent nor any of its Subsidiaries has received any notice of any claim or
suit (i) alleging that the activities of Parent or any of its Subsidiaries
infringe upon or constitute the unauthorized use of the proprietary rights
of any third party or (ii) challenging the ownership, use, validity or
enforceability of any Parent Intellectual Property owned or controlled by
Parent or any of its Subsidiaries, and, to the knowledge of Parent, no
valid basis for any such claim or suit exists. To the knowledge of Parent,
no third party is infringing upon any Parent Intellectual Property owned by
Parent or any of its Subsidiaries and no such claims have been made by
Parent or any of its Subsidiaries.
Section 4.19 Insurance. All insurance policies and indemnity
bonds of Parent or any of its Subsidiaries in effect as of the date hereof
are listed in Section 4.19 of the Parent Disclosure Letter. Each such
insurance policy or bond is in full force and effect, and neither Parent
nor any of its Subsidiaries has received written notice from any insurer or
agent of any intent to cancel any such insurance policy or bond.
Section 4.20 Affiliate Transactions. Section 4.20 of the Parent
Disclosure Letter sets forth a correct and complete list of all Contracts
in effect as of the date hereof between Parent or any of its Subsidiaries,
on the one hand, and any Affiliate of Parent or any of its Subsidiaries or
officer, director or shareholder of Parent or any of its Subsidiaries or
any such Affiliate, on the other hand. A complete and correct copy of each
such Contract has been made available to the Company. Neither Parent nor
any if its Subsidiaries has any personal loan outstanding, and since July
30, 2002 has not extended or maintained credit, or arranged for the
extension of credit, to any director or executive officer (within the
meaning of Section 402 of the Xxxxxxxx-Xxxxx Act).
Section 4.21 Brokers. Other than Xxxx Xxxx & Co., the fees and
expenses of which will be paid by Parent, no broker, finder or similar
intermediary has acted for or on behalf of, or is entitled to any broker's,
finder's or similar fee or other commission from, Parent or any of its
Subsidiaries in connection with this Agreement or the Transactions.
Section 4.22 Share Ownership. None of Parent, Merger Sub or any
of their respective Affiliates or Associates beneficially owns any Shares.
Section 4.23 Merger Sub's Operations. Merger Sub was formed
solely for the purpose of engaging in the Transactions and has not engaged
in any business activities or conducted any operations other than in
connection with the Transactions.
Section 4.24 No Other Representations. Except for the
representations and warranties contained in this Article IV, neither
Parent, Merger Sub nor any other person or entity acting on their behalf,
makes any other representation or warranty, express or implied, with
respect to Parent or any of its Subsidiaries, the Parent Business or the
Transactions.
ARTICLE V
COVENANTS
Section 5.1 Interim Operations.
(a) Interim Operations of the Company. The Company covenants
and agrees that prior to the Effective Time, except (1) as expressly
contemplated by this Agreement, (2) as set forth in Section 5.1 of the
Company Disclosure Letter, or (3) as agreed in writing by Parent, after the
date hereof, the Company Business shall be conducted only in the usual,
regular and ordinary course and substantially in the same manner as
heretofore conducted, and the Company shall use its best efforts to
preserve its business organization intact.
(b) Interim Operations of Parent. Parent covenants and
agrees that prior to the Effective Time, except (1) as expressly
contemplated by this Agreement, (2) as set forth in Section 5.1 of the
Parent Disclosure Letter, or (3) as agreed in writing by the Company, after
the date hereof, the Parent Business shall be conducted only in the usual,
regular and ordinary course and substantially in the same manner as
heretofore conducted, and each of Parent and its Subsidiaries shall use its
best efforts to preserve its business organization intact.
Section 5.2 Access and Confidentiality.
(a) The Company. The Company shall afford to the officers,
employees, accountants, counsel, and other representatives of Parent, full
access during the period prior to the Effective Time, to all its
properties, books, contracts, commitments and records and, during such
period, the Company shall furnish promptly to Parent all information
concerning its business, properties and personnel as Parent may reasonably
request. Until the Effective Time, unless otherwise required by Applicable
Law, Parent shall hold any such information which is nonpublic in
confidence.
(b) Parent. Parent shall (and shall cause each of its
Subsidiaries to) afford to the officers, employees, accountants, counsel,
and other representatives of the Company, full access during the period
prior to the Effective Time, to all its properties, books, contracts,
commitments and records and, during such period, Parent shall (and shall
cause each of its Subsidiaries to) furnish promptly to the Company (i) a
copy of each Parent SEC Document filed or received by it during such
period, and (ii) all other information concerning its business, properties
and personnel as the Company may reasonably request. Access shall include
the right to conduct such environmental studies as the Company, in its
discretion, shall deem appropriate. Until the Effective Time, unless
otherwise required by Applicable Law, the Company shall hold any such
information which is nonpublic in confidence.
Section 5.3 Reasonable Best Efforts.
(a) Prior to the Closing, upon the terms and subject to the
conditions of this Agreement, Parent, Merger Sub and the Company agree to
use their respective reasonable best efforts to take, or cause to be taken,
all actions, and to do, or cause to be done, all things necessary, proper
or advisable (subject to any Applicable Law) to consummate and make
effective the Merger and the other Transactions as promptly as practicable
including (i) the preparation and filing of all forms, registrations and
notices required to be filed to consummate the Merger and the other
Transactions and the taking of such actions as are necessary to obtain any
requisite approvals, consents, orders, exemptions or waivers by any third
party or Governmental Authority, and (ii) the satisfaction of the other
parties' conditions to Closing. In addition, no party hereto shall take any
action after the date hereof that would reasonably be expected to
materially delay the obtaining of, or result in not obtaining, any
permission, approval or consent from any Governmental Authority necessary
to be obtained prior to Closing.
(b) Prior to the Closing, each party shall promptly consult
with the other parties hereto with respect to, provide any necessary
information with respect to, and provide the other parties (or their
respective counsel) with copies of, all filings made by such party with any
Governmental Authority or any other information supplied by such party to a
Governmental Authority in connection with this Agreement, the Merger and
the other Transactions. Each party hereto shall promptly inform the other
of any communication from any Governmental Authority regarding any of the
Transactions. If any party hereto or Affiliate thereof receives a request
for additional information or documentary material from any such
Governmental Authority with respect to any of the Transactions, then such
party shall endeavor in good faith to make, or cause to be made, as soon as
reasonably practicable and after consultation with the other parties, an
appropriate response in compliance with such request. To the extent that
transfers, amendments or modifications of permits (including environmental
permits) are required as a result of the execution of this Agreement or
consummation of any of the Transactions, each party shall use its best
efforts to effect such transfers, amendments or modifications.
(c) Notwithstanding the foregoing, nothing in this Agreement
shall be deemed to require any party to commence any litigation against any
entity in order to facilitate the consummation of any of the Transactions
or to defend against any litigation brought by any Governmental Authority
seeking to prevent the consummation of any of the Transactions.
Section 5.4 [Intentionally Omitted]
Section 5.5 [Intentionally Omitted]
Section 5.6 Transfer of Shareholders' Shares. The Company hereby
waives any rights the Company may have under any agreement or otherwise to
object to the transfer to Merger Sub or Parent of any or all Shares held by
the Shareholders and hereby covenants not to consent to the transfer of any
Shares held by the Shareholders to any other Person unless (i) the Company
will have obtained the specific, prior written consent of Parent with
respect to any such transfer or (ii) this Agreement will have been
terminated pursuant to Article VII.
Section 5.7 Publicity. The initial press release with respect to
the execution of this Agreement shall be a joint press release acceptable
to Parent and the Company. Thereafter, until the Closing Date, or the date
the Transactions are terminated or abandoned pursuant to Article VII,
neither the Company, Parent nor any of their respective Affiliates shall
issue or cause the publication of any press release or other announcement
with respect to the Merger, this Agreement or the other Transactions
without prior consultation with each other party, except as may be required
by Applicable Law or by any listing agreement with a national securities
exchange or trading market.
Section 5.8 Notification of Certain Matters. Each party shall
give prompt notice to the other parties of (i) the occurrence or
non-occurrence of any event the occurrence or non-occurrence of which would
cause any representation or warranty contained in this Agreement to be
untrue or inaccurate in any material respect at or prior to the Effective
Time, and (ii) any material failure of such party to comply with or satisfy
any covenant, condition or agreement to be complied with or satisfied by it
hereunder; provided, however, that the delivery of any notice pursuant to
this Section 5.8 shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
Section 5.9 Merger Sub Compliance. Parent shall cause Merger Sub
to comply with all of its obligations under or related to this Agreement.
Section 5.10 Advisory Agreements.
(a) As soon as reasonably practicable following the date
hereof (unless otherwise performed prior hereto), the Company shall send a
notice to each Client informing such Client of the Merger and either:
(i) (A) informing such Client that SPS intends to
assign such Client's investment advisory agreement to the Company and
that the Company intends to continue to provide investment advisory
services to such Client in accordance with the Client's investment
advisory agreement with SPS, (B) requesting such Client to consent to
such assignment and (C) informing such Client that the consent of such
Client will be deemed to have been granted if such Client continues to
accept such investment advisory services for a period of at least
thirty (30) days after the sending of such notice unless such Client
requests the termination of such investment advisory services (the
"Negative Consent Notice") or
(ii) requesting such Client deliver an instruction to
SPS and the Company regarding the transfer of such Client's account to
the Company and informing such Client of any other actions required to
transfer the management of such Client's investment advisory account
to the Company (the "Affirmative Consent Notice").
(b) The parties hereto agree that a Client's consent shall
be deemed given for all purposes hereunder (and that such Client shall be a
"Consenting Client" for purposes of Exhibit I hereto), (A) in the case of
any Client that received the Negative Consent Notice, (i) if the written
consent requested in such notice is received or (ii) if the written consent
requested in such notice is not received within thirty (30) days of the
sending of such notice to the Client, unless such Client shall have
affirmatively stated to the Company that it does not so consent or that it
intends to terminate its investment advisory account with the Company, (B)
in the case of any Client that received the Affirmative Consent Notice,
upon receipt of the instruction requested by such notice by either the
Company or SPS from such Client and (C) in the case of any Client that
received either the Negative Consent Notice or the Affirmative Consent
Notice, (i) upon such Client entering into an investment advisory agreement
with the Company, (ii) upon such Client otherwise affirmatively consenting
in writing to the assignment of its investment advisory agreement from SPS
to the Company or (iii) upon such Client otherwise providing evidence
showing its clear intention to transfer its investment advisory account
from SPS to the Company.
(c) Without limiting the foregoing, with respect to each Client
that is an Investment Company but not registered as an investment company
under the Investment Company Act, the Company shall use its reasonable best
efforts to obtain in accordance with the constituent documents of such
Investment Company and applicable law, as promptly as practicable following
the date hereof, the consent and approval (as applicable) of any governing
body of such Investment Company and of its investors required by such
constituent documents and applicable law of either (a) the continuation of
each Investment Contract between the Company and such Investment Company to
the assignment or deemed assignment of such Investment Contract as a result
of the Merger (to the extent any such agreement may continue in effect
following the Merger with such consent) or (b) a new Investment Contract
and a replacement of any other existing agreement between the Company and
such Investment Company, to the extent the existing advisory agreement
and/or any other such existing agreement will terminate as a result of the
Merger) (in each case to be in effect as of, and subject to, the Closing)
on terms substantially identical (and identical with respect to fee rates)
to the terms of the Company's existing Investment Contract and other
applicable agreement with such Investment Company. The manner of consent
and approval solicited with respect to each such Investment Company that is
not a Registered Investment Company shall be reasonably acceptable to
Parent, and all solicitation and related materials distributed in
connection with the consents and approvals described in this paragraph
shall be in form and substance reasonably acceptable to Parent and Parent
shall be provided a reasonable opportunity to review all such solicitation
and related materials prior to distribution and to have its reasonable
comments reflected therein.
Section 5.11 Tax Matters. Parent and the Company shall use
reasonable best efforts to cause the Merger to qualify as a
"reorganization" within the meaning of Section 3 68(a) of the Code. This
Agreement is intended to constitute a "plan of reorganization" within the
meaning of Treas. Reg. Section 1.368-2(g). Parent shall not take or fail to
take, and shall cause its Affiliates (including after the Effective Time,
the Company) not to take or fail to take, any action that could result in
the Merger not qualifying as a reorganization within the meaning of Section
368(a) of the Code. Parent shall not take or fail to take, and shall cause
its Affiliates (including after the Effective Time, the Company) not to
take or fail to take, any position on any Federal, state or local income
Tax Return or franchise Tax Return, or any other reporting position, that
is inconsistent with the treatment of the Merger as a reorganization within
the meaning of Section 368(a) of the Code, or any of the representations
set forth in Section 4.16(d) hereof, unless otherwise required by a
decision of the Tax Court or a judgment, decree or other order by any court
of competent jurisdiction, which has become final or non-appealable, or by
applicable state or local income or franchise Tax law.
ARTICLE VI
CONDITIONS
Section 6.1 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligation of each party to effect the Merger shall
be subject to the satisfaction at or prior to the Effective Time of each of
the following conditions, any and all of which may be waived in whole or in
part by the Company, Parent or Merger Sub, as the case may be, to the
extent permitted by Applicable Law:
(a) Shareholder Approval. This Agreement shall have been
approved and adopted by the unanimous vote of the holders of the Shares;
and
(b) No Legal Prohibition, Etc. No order, injunction,
judgment or decree issued by any court or other Governmental Authority or
other legal restraint or prohibition preventing the consummation of the
Merger or the Transactions shall be in effect, no Proceeding initiated by
any Governmental Authority shall be pending or threatened that seeks (i) to
restrain, enjoin or otherwise prevent or prohibit the consummation of the
Merger or the Transactions or (ii) to recover any material damages or other
material relief as a result of the consummation of the Merger or the
Transactions, and no law shall have been enacted, entered, promulgated or
enforced by any court or Governmental Authority that prohibits, restricts
or makes illegal the consummation of the Merger or the Transactions.
Section 6.2 Conditions to Parent's and Merger Sub's Obligations
to Effect the Merger. The obligations of Parent and Merger Sub to
consummate the Merger shall be subject to the satisfaction on or prior to
the Closing Date of each of the following conditions, any and all of which
may be waived in whole or in part by Parent and Merger Sub, to the extent
permitted by Applicable Law:
(a) Representations and Warranties. The representations and
warranties of the Company set forth in Article III shall be true in all
material respects on the date of this Agreement and as of the Effective
Time;
(b) Covenants. The Company shall have complied in all
material respects with its obligations under the terms of this Agreement;
(c) Stockholders Agreement. The Stockholders Agreement, by
and among the Shareholders and the other parties thereto, substantially in
the form of Annex C hereto (the "Stockholders Agreement"), shall have been
duly executed and delivered by the Shareholders;
(d) Registration Rights Agreement. The Registration Rights
Agreement, by and among the Shareholders and the other parties thereto,
substantially in the form of Annex D hereto (the "Registration Rights
Agreement"), shall have been duly executed and delivered by the
Shareholders; and
(e) Consent. The Company shall have received and delivered
to Parent an Affirmative Consent Notice from CI Mutual Funds Inc.
Section 6.3 Conditions to Company's Obligations to Effect the
Merger. The obligations of the Company to consummate the Merger shall be
subject to the satisfaction on or prior to the Closing Date of each of the
following conditions, any and all of which may be waived in whole or in
part by the Company, to the extent permitted by Applicable Law:
(a) Representations and Warranties. The representations and
warranties of each of Parent and Merger Sub set forth in Article IV shall
be true in all material respects on the date of this Agreement and as of
the Effective Time;
(b) Covenants. Each of Parent and Merger Sub shall have
complied in all material respects with its obligations under the terms of
this Agreement;
(c) Opinion. The Company shall have received the legal
opinion of McDonald, Carano, Wilson, McCune, Xxxxxx, Xxxxxxxxxx & Xxxxx
LLP, Nevada counsel to Parent, substantially in the form attached hereto as
Annex B;
(d) Stockholders Agreement. The Stockholders Agreement shall
have been duly executed and delivered by each party thereto other than the
Shareholders; and
(e) Registration Rights Agreement. The Registration Rights
Agreement shall have been duly executed and delivered by each party thereto
other than the Shareholders.
ARTICLE VII
TERMINATION
Section 7.1 Termination. The Transactions may be terminated or
abandoned at any time prior to the Effective Time, whether before or after
shareholder approval thereof:
(a) By the mutual written consent of Parent and the Company.
(b) By either of the Company or Parent:
(i) if any Governmental Authority shall have issued an
order, decree or ruling or taken any other action (which order,
decree, ruling or other action the parties hereto shall use their
reasonable efforts to lift), which permanently restrains, enjoins or
otherwise prohibits the consummation of the Merger or the
Transactions; or
(ii) if the Closing has not occurred on or before the
Business Day following the date of this Agreement.
(c) By the Company if Parent or Merger Sub shall have
breached in any material respect any of their respective representations,
warranties, covenants or other agreements contained in this Agreement,
which breach cannot be or has not been cured within one Business Day after
the giving of written notice by the Company to Parent or Merger Sub, as
applicable.
(d) By Parent if the Company shall have breached in any
material respect any of its representations, warranties, covenants or other
agreements contained in this Agreement, which breach cannot be or has not
been cured within one Business Day after the giving of written notice by
Parent to the Company.
Section 7.2 Effect of Termination. In the event of the
termination or abandonment of the Transactions by any party hereto pursuant
to the terms of this Agreement, (i) written notice thereof shall forthwith
be given to the other party or parties specifying the provision hereof
pursuant to which such termination or abandonment of the Transactions is
made, and (ii) this Agreement shall immediately become void and there shall
be no liability on the part of Parent, Merger Sub or the Company except (A)
for fraud or for breach of this Agreement prior to such termination or
abandonment of the Transactions and (B) as set forth in (1) the last
sentence of each of Section 5.2(a) and Section 5.2(b), (2) this Section
7.2, and (3) Section 9.1 and the remainder of Article IX (other than
Section 9.3) to the extent applicable to each surviving section.
ARTICLE VIII
DEFINITIONS AND INTERPRETATION
Section 8.1 Definitions. For all purposes of this Agreement,
except as otherwise expressly provided or unless the context clearly
requires otherwise:
"Advisers Act" shall mean the Investment Advisers Act of 1940, as
amended, and the rules and regulations of the SEC thereunder.
"Affiliate" shall have the meaning set forth in Rule 12b-2 of the
Exchange Act.
"Affirmative Consent Note" shall have the meaning set forth in
Section 5.10.
"Agreement" or "this Agreement" shall mean this Agreement and
Plan of Merger, together with the Exhibits and Appendices hereto and the
Disclosure Letters.
"Applicable Law" shall mean any domestic or foreign federal,
state or local statute, law, ordinance, rule, administrative
interpretation, regulation, order, writ, injunction, directive, judgment or
decree applicable to the parties or any of their respective Affiliates or
any of the properties or assets of any such Person, as the case may be.
"Associate" shall have the meaning set forth in Rule 12b-2 of the
Exchange Act.
"Base Date" means April 30, 2004.
"BHCA" shall have the meaning set forth in Section 3.23.
"Brokerage Services" shall mean acting as a broker-dealer within
the meaning of the Exchange Act.
"Business Day" shall mean any day other than a Saturday, a Sunday
or a day on which banks in the State of Delaware are generally closed for
regular banking business.
"Client List" means the list of clients attached as Exhibit I to
the Company Disclosure Letter.
"Client" means any Person listed on the Client List.
"Closing" shall mean the closing referred to in Section 1.3.
"Closing Date" shall mean the date on which the Closing occurs.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Company" shall have the meaning set forth in the introductory
paragraph to this Agreement.
"Company Board of Directors" shall mean the board of directors of
the Company.
"Company Business" shall mean the business of the Company in
rendering investment advisory, investment management and related services
for compensation.
"Company Disclosure Letter" shall mean the letter of even date
herewith prepared and signed by the Company and delivered to Parent
simultaneously with the execution hereof.
"Company ERISA Affiliate" shall mean any trade or business,
whether or not incorporated, that together with the Company would be deemed
a "single employer" within the meaning of Section 4001(b) of ERISA.
"Company Intellectual Property" shall mean all material domestic
and foreign copyrights, patents, proprietary models, processes, formulas
and databases, client lists, service marks, Software, know-how, trade
names, trademarks and trade secrets, which are used by the Company for the
Company Business, all registrations or applications for registration of any
of the foregoing and all licenses and agreements pursuant to which the
Company has acquired rights in or to any of the foregoing.
"Company Regulatory Agreement" shall have the meaning set forth
in Section 3.21.
"Company's knowledge" or" knowledge of the Company" shall mean
the knowledge that the directors and officers of the Company and the
employees, if any, of the Company having responsibility for the particular
subject matter at issue have or would possess after reasonable
investigation and inquiry.
"Company Material Adverse Effect" shall mean any effect (a) that
is material and adverse to the business, assets, revenues, financial
condition, results of operations or assets under management of the Company,
or (b) which is reasonably likely to prevent the Company from consummating
the transactions contemplated by this Agreement; provided that declines in
U.S. or global securities markets, currency fluctuations or industry or
economic conditions in general, or changes in the asset management industry
generally, shall be excluded from any determination as to the occurrence of
a Company Material Adverse Effect.
"Company Technology Systems" shall mean all material electronic
data processing, information, record-keeping, communications,
telecommunications, portfolio trading and computer systems (including
Software) which are used in the Company Business, excluding commercially
available off-the-shelf software.
"Consent" shall mean any filings, notices, consents or approvals
(including negative consents) from any Governmental Authority or third
party that are necessary in connection with (a) the execution and delivery
of this Agreement and (b) the consummation of the Transactions.
"Contract" shall mean any agreement, indenture, undertaking, debt
instrument, contract, guarantee, loan, note, mortgage, arrangement,
license, lease or other commitment relating to the ownership of or use by
any Person of any of its properties or assets or relating to the conduct of
its businesses to which such Person is a party at any specified date,
including, in the case of Contracts of the Company, any Investment
Management Agreement.
"Control" or "Controlled" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management
policies of a Person, whether through the ownership of voting securities,
by contract, as trustee or executor, or otherwise. For purposes of this
definition, a general partner or managing member of a Person shall always
be considered to Control such Person.
"DGCL" shall have the meaning set forth in the recitals to this
Agreement.
"Disclosure Letters" shall mean the Company Disclosure Letter and
the Parent Disclosure Letter.
"Dissenting Shares" shall mean any Shares as to which the holder
thereof has demanded appraisal with respect to the Merger in accordance
with Section 262 of the DGCL and as of the Effective Time has neither
effectively withdrawn nor lost his right to such appraisal.
"Effective Time" shall mean the date on which the certificate of
merger referred to in Section 1.2 is duly filed with the Secretary of State
of the State of Delaware or such other time as is agreed upon by the
parties and specified in such certificate of merger.
"Encumbrance" shall mean any mortgage, pledge, hypothecation,
rights of others, claim, security interest, encumbrance, title defect,
title retention agreement, voting trust agreement, interest, equity,
option, lien, charge, easement encroachments or other conditions,
commitments, restrictions or limitations of any nature whatsoever.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"Escrow Consideration" shall have the meaning set forth in
Exhibit I.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended and the rules and regulations of the SEC thereunder.
"GAAP" shall mean generally accepted accounting principles as
used in the United States of America as in effect at the time any
applicable financial statements were prepared or any act requiring the
application of GAAP was performed.
"Governmental Authority" shall mean any government, any state or
other political subdivision thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government, including the SEC or any other government
authority, agency, department, board, commission or instrumentality of the
United States, any State of the United States or any political subdivision
thereof, and any court, tribunal or arbitrator(s) of competent
jurisdiction, and any governmental or non-governmental self-regulatory
organization, agency or authority.
"Indemnified Person" shall mean each present and former officer
and director of the Company, Parent or any of Parent's Subsidiaries as of
the Effective Time.
"Internal Controls" shall have the meaning set forth in Section
4.10(b).
"Investment Advisory Services" shall mean acting as an investment
advisor within the meaning of the Advisers Act.
"Investment Company" shall have the meaning provided in the
Investment Company Act; provided, however that for purposes of this
Agreement the term Investment Company shall include persons that would be
an investment company, as defined in the Investment Company Act, but for
the exemption contained in Section 3(c)(i), the final clause of Section
3(c)(3) or Section 3(c)(7) of the Investment Company Act.
"Investment Company Act" shall mean the Investment Company Act of
1940, as amended, and the rules and regulations of the SEC thereunder.
"Investment Contract" shall mean each contract or agreement in
effect on the date hereof to which the Company is a party pursuant to which
the Company provides to any Client investment advisory, distribution,
brokerage, trust, other fiduciary or administrative services.
"Investment Management Agreements" shall mean all agreements and
arrangements for the performance of investment advisory, investment
management or investment sub-advisory services for any Client.
"IRS" shall mean the Internal Revenue Service.
"Merger" shall mean the merger of Merger Sub into the Company
referred to in Section 1.1.
"Merger Consideration" shall have the meaning set forth in
Section 2.1(c).
"Merger Sub" shall have the meaning set forth in the introductory
paragraph to this Agreement.
"Merger Sub Common Stock" shall mean common stock, par value 0.01
per share, of Merger Sub.
"Negative Consent Notice" shall have the meaning set forth in
Section 5.10.
"NGCL" shall have the meaning set forth in the recitals to this
Agreement.
"Parent" shall have the meaning set forth in the introductory
paragraph to this Agreement.
"Parent Business" shall mean the business conducted by Parent or
its Subsidiaries as of March 31, 2004.
"Parent Common Stock" shall mean shares of common stock par value
$0.01 per share, of Parent.
"Parent Disclosure Letter" shall mean the disclosure schedule of
even date herewith prepared and signed by Parent and Merger Sub and
delivered to the Company simultaneously with the execution hereof.
"Parent ERISA Affiliate" shall mean any trade or business,
whether or not incorporated, that together with Parent or any of its
Subsidiaries would be deemed a "single employer" within the meaning of
Section 400 1(b) of ERISA.
"Parent Financial Statements" shall mean the consolidated
financial statements of Parent and its consolidated subsidiaries included
in the Parent Group SEC Documents.
"Parent Intellectual Property" shall mean all material domestic
and foreign copyrights, patents, proprietary models, processes, formulas
and databases, client lists, service marks, Software, know-how, trade
names, trademarks and trade secrets, which are used by Parent or any of its
Subsidiaries for the Parent Business, all registrations or applications for
registration of any of the foregoing and all licenses and agreements
pursuant to which Parent or any of its Subsidiaries has acquired rights in
or to any of the foregoing.
"Parent Material Adverse Effect" shall mean any effect (a) that
is material and adverse to the business, assets, financial condition or
results of operations of Parent, Merger Sub or their Affiliates, taken as a
whole, or (b) which is reasonably likely to prevent Parent or Merger Sub
from consummating the Transactions; provided that declines in U.S. or
global securities markets, currency fluctuations or industry or economic
conditions in general shall be excluded from any determination as to the
occurrence of a Parent Material Adverse Effect.
"Parent Option" shall mean an option to purchase shares of Parent
Common Stock.
"Parent SEC Documents" shall mean each form, report, schedule,
statement, certification and other document required to be filed by Parent
since January 1, 2001 under the Exchange Act, the Securities Act, and the
Xxxxxxxx-Xxxxx Act (including without limitation all certifications and
statements required by Rule 13 a14 or 15d-14 under the Exchange Act and
Section 906 of the Xxxxxxxx-Xxxxx Act), including any amendment to such
document, whether or not such amendment is required to be so filed.
"Parent Technology Systems" shall mean all material electronic
data processing, information, record-keeping, communications,
telecommunications, portfolio trading and computer systems (including
Software) which are used in the Parent Business, excluding commercially
available off-the-shelf software.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"Permits" has the meaning set forth in Section 3.9.
"Permitted Encumbrances" shall mean, as to any Person, all
Encumbrances which are:
(1) for Taxes or assessments that are not yet due and
payable or which are being contested in good faith and by
appropriate proceedings;
(2) Encumbrances or pledges to secure payments of workmen's
compensation and other payments, unemployment and other
insurance, old-age pensions or other social security
obligations, or the performance of bids, tenders, leases,
contracts, public or statutory obligations, surety, stay or
appeal bonds, or other similar obligations arising in the
ordinary course of business;
(3) workmen's, repairmen's, warehousemen's, vendors' or
carriers' Encumbrances or other similar Encumbrances arising in
the ordinary course of business or deposits or pledges to obtain
the release of any such Encumbrances;
(4) statutory landlords' Encumbrances under leases to which
such Person is a party;
(5) any Encumbrance constituting a renewal, extension or
replacement of an Encumbrance constituting a Permitted
Encumbrance;
(6) leases or subleases granted to other Persons not
materially interfering with the conduct of the Business;
(7) zoning restrictions, easements, rights of way, licenses
and restrictions on the use of Real Property or minor
irregularities in title thereto;
(8) statutory or common law Encumbrances (such as rights of
setoff) on deposit accounts of such Person;
(9) Encumbrances set forth, described in or established by
any Contract pursuant to which such Person has leased, licensed
or obtained an ownership interest or any other right to use any
property of another Person;
(10) Encumbrances which do not materially impair the use of
the asset or property to which it relates; and
(11) Encumbrances disclosed in any Disclosure Letter hereto
delivered in connection with the execution and delivery hereof
or in the text accompanying the Parent Financial Statements.
"Plan" has the meaning set forth in Section 4.17(a).
"Per Share Initial Stock Consideration" shall have the meaning
set forth in Exhibit I.
"Person" shall mean a natural person, partnership, corporation,
limited liability company, business trust, joint stock company, trust,
unincorporated association, joint venture, Governmental Authority or other
entity or organization.
"Proceeding" means any civil, criminal, arbitral, administrative
or other proceeding, investigation or dispute with any Governmental
Authority in relation to the business, assets or affairs of Parent or any
of its Subsidiaries.
"Real Property" shall mean all real property, appurtenances
thereto, fixtures and improvements, rights in connection therewith, or any
interest therein, including, without limitation, leasehold estates.
"Registration Rights Agreement" shall have the meaning set forth
in Section 6.2(d).
"Xxxxxxxx-Xxxxx Act" shall mean the Xxxxxxxx-Xxxxx Act of 2002,
as amended, and any law enacted or promulgated pursuant or relating
thereto.
"SEC" shall mean the United States Securities and Exchange
Commission.
"Securities Act" shall mean the Securities Act of 1933, as
amended, and the rules and regulations of the SEC thereunder.
"Senior Manager" shall mean members of senior management of
Parent or its Subsidiaries.
"Shareholder Agreement" shall have the meaning set forth in
Section 6.2(c).
"Shareholders" shall mean Xxxxxxx X. Xxxxxx, Xxxxxxxx Epoch LLC,
Xxxxxxx X. Xxxxxxx, J Xxxxxx/Xxxxxxx X Xxxxx Trust u/a 10/06/1994 and Xxxxx
Xxxxx.
"Shares" shall mean shares of common stock, par value $0.01,
issued by the Company.
"SPS" means Xxxxxxxxx Priest & Sloane Capital Management, LLC, a
Delaware limited liability company.
"SRO" shall mean any governmental or non-governmental
self-regulatory organization.
"Subsidiary" of a Person shall mean an Affiliate of such Person
of which fifty percent (50%) or more of the voting stock (or of any general
partnership or other voting or controlling equity interest in the case of a
Person that is not a corporation) is beneficially owned by the Person
directly or indirectly through one or more other Persons.
"Surviving Corporation" shall mean the successor or surviving
corporation in the Merger.
"Tax" or "Taxes" shall mean all taxes, charges, fees, duties,
levies, penalties or other assessments imposed by any federal, state, local
or foreign governmental authority income, gross receipts, excise, property,
sales, gain, use, license, custom duty, unemployment, capital stock,
transfer, franchise, payroll, withholding, social security, minimum
estimated, and other taxes, and shall include interest, penalties or
additions attributable thereto.
"Tax Return" shall mean any return, declaration, report, claim
for refund, or information return or statement relating to Taxes, including
any schedule or attachment thereto, and including any amendment thereof.
"Taxing Authority" shall mean the IRS and any other domestic or
foreign Governmental Authority responsible for the administration of any
Taxes.
"Title IV Plan" has the meaning set forth in Section 4.17(c).
"Transactions" shall mean the transactions provided for or
contemplated by this Agreement, including the Merger.
"Voting Debt" shall mean indebtedness having general voting
rights and debt convertible into securities having such rights.
Section 8.2 Interpretation. When a reference is made in this
Agreement to a section or article, such reference shall be to a section or
article of this Agreement unless otherwise clearly indicated to the
contrary. Whenever the words "include," "includes" or "including" are used
in this Agreement they shall be deemed to be followed by the words "without
limitation." The words "hereof," "herein" and "herewith" and words of
similar import shall, unless otherwise stated, be construed to refer to
this Agreement as a whole and not to any particular provision of this
Agreement, and article, section, paragraph, exhibit and schedule references
are to the articles, sections, paragraphs, exhibits and schedules of this
Agreement unless otherwise specified. The plural of any defined term shall
have a meaning correlative to such defined term, and words denoting any
gender shall include all genders. Where a word or phrase is defined herein,
each of its other grammatical forms shall have a corresponding meaning. A
reference to any party to this Agreement or any other agreement or document
shall include such party's successors and permitted assigns. A reference to
any legislation or to any provision of any legislation shall include any
modification or re-enactment thereof, any legislative provision substituted
therefor and all regulations and statutory instruments issued thereunder or
pursuant thereto. 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 shall
arise favoring or disfavoring any party by virtue of the authorship of any
provisions of this Agreement.
ARTICLE IX
MISCELLANEOUS
Section 9.1 Fees and Expenses. Unless this Agreement is
terminated pursuant to Section 7.1(d) or except as specifically provided to
the contrary in this Agreement, whether or not the Merger is consummated,
all costs and expenses incurred by any party hereto or any Shareholder (to
the extent the costs of such Shareholders do not in the aggregate exceed
$70,000) in connection with this Agreement and the consummation of the
Transactions by the Company, the Shareholders and Parent shall be paid by
Parent.
Section 9.2 Amendment and Modification. Subject to Applicable
Law, this Agreement may be amended, modified and supplemented in any and
all respects, whether before or after any vote of the Shareholders
contemplated hereby, by written agreement of the parties hereto, by action
taken by their respective Boards of Directors, at any time prior to the
Closing Date with respect to any of the terms contained herein.
Section 9.3 Nonsurvival of Representations and Warranties. None
of the representations and warranties in this Agreement or in any schedule,
instrument or other document delivered pursuant to this Agreement shall
survive the Effective Time. The foregoing sentence shall not limit any
covenant or agreement of the parties which by its terms contemplates
performance after the Effective Time.
Section 9.4 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given if delivered
personally, telecopied (which is confirmed) or sent by an overnight courier
service, such as Federal Express, to the parties at the following addresses
(or at such other address for a party as shall be specified by like
notice):
(a) if to Parent or Merger Sub, to:
J Net Enterprises, Inc.
0000 Xxxx Xxxxx Xxxxx, #000
Xxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
with a copy (which shall not constitute notice) to:
Xxxxxxxxx Xxxxxxx, LLP
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Annex, Esq.
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
and
(b) if to the Company, to:
Epoch Investment Partners, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
with a copy (which shall not constitute notice) to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
0 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxxx X. D'Oench, III
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
Section 9.5 Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall be considered one and the same
agreement and shall become effective when two or more counterparts have
been signed by each of the parties and delivered to the other parties.
Section 9.6 Entire Agreement; No Third Party Beneficiaries. This
Agreement, the Stockholder Agreement and the Registration Rights Agreement
(including the documents and the instruments referred to herein and
therein): (a) constitute the entire agreement and supersede all prior
agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof and thereof, and (b) are not
intended to confer upon any person other than the parties hereto and
thereto any rights or remedies hereunder.
Section 9.7 Severability. Any term or provision of this
Agreement that is held by a court of competent jurisdiction or other
authority to be invalid, void 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. If the final judgment of a court of competent jurisdiction or
other authority declares that any term or provision hereof is invalid, void
or unenforceable, the parties agree that the court making such
determination shall have the power to reduce the scope, duration, area or
applicability of the term or provision, to delete specific words or
phrases, or to replace any invalid, void 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.
Section 9.8 Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware without
giving effect to the principles of conflicts of law thereof
Section 9.9 Enforcement. The parties agree that irreparable
damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions of this
Agreement in any court of the United States located in the State of
Delaware or in Delaware state court, this being in addition to any other
remedy to which they are entitled at law or in equity. In addition, each of
the parties hereto (a) consents to submit itself to the personal
jurisdiction of any Federal court located in the State of Delaware or any
Delaware state court in the event any dispute arises out of this Agreement
or any of the Transactions contemplated by this Agreement, (b) agrees that
it will not attempt to deny or defeat such personal jurisdiction by motion
or other request for leave from any such court and (c) agrees that it will
not bring any action relating to this Agreement or any of the Transactions
contemplated by this Agreement in any court other than a Federal or state
court sitting in the State of Delaware.
Section 9.10 Time of Essence. Each of the parties hereto hereby
agrees that, with regard to all dates and time periods set forth or
referred to in this Agreement, time is of the essence.
Section 9.11 Extension; Waiver. At any time prior to the
Effective Time, the parties may (a) extend the time for the performance of
any of the obligations or other acts of the other parties, (b) waive any
inaccuracies in the representations and warranties of the other parties
contained in this Agreement or in any document delivered pursuant to this
Agreement or (c) waive compliance by the other parties with any of the
agreements or conditions contained in this Agreement. Any agreement on the
part of a party to any such extension or waiver shall be valid only if set
forth in an instrument in writing signed on behalf of such party. The
failure of any party to this Agreement to assert any of its rights under
this Agreement or otherwise shall not constitute a waiver of those rights.
Section 9.12 Assignment. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties. Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of and be
enforceable by the parties and their respective successors and assigns.
[Signature page follows]
IN WITNESS WHEREOF, Parent, Merger Sub and the Company have
caused this Agreement to be signed by their respective officers thereunto
duly authorized as of the date first written above.
J NET ENTERPRISES, INC.
By /s/ Xxxxx X. Xxxxxxx
________________________
Name: Xxxxx X. Xxxxxxx
Title: Chief Executive Officer
EPOCH ACQUISITION CORP.
By /s/ Xxxxx X. Xxxxxxx
_____________________
Name: Xxxxx X. Xxxxxxx
Title: Chief Executive Officer
EPOCH INVESTMENT PARTNERS, INC.
By /s/ Xxxxxxx X. Xxxxxx
________________________
Name: Xxxxxxx X. Xxxxxx
Title: President
Exhibit I
Merger Consideration
____________________
The Merger Consideration shall include (a) the Per Share Initial
Stock Consideration, (b) the Per Share Escrow Consideration and (c) the Per
Share Contingent Stock Consideration. Capitalized terms have the meaning
set forth either in Section 6 of this Exhibit or the Agreement.
1. Per Share Initial Stock Consideration.
______________________________________
(a) The Per Share Initial Stock Consideration shall be delivered at the
Closing to each Shareholder as provided in Section 2.2(a) of this
Agreement.
(b) A number of shares of Parent Common Stock equal to the excess, if
any, of the number of Eligible Shares over the Pro Forma Company Shares at
the Effective Time shall be issued to each Shareholder pro rata in
proportion to the number of Shares delivered by such Shareholder pursuant
to Section 2.2(a) and held by the Company in escrow until the determination
of the Per Share Escrow Consideration and the delivery thereof to each
Shareholder following the Escrow Resolution Date. Each such Shareholder
shall have the right to vote and receive dividends in respect of such
shares held in escrow by Parent.
2. Per Share Escrow Consideration.
_______________________________
(a) At least five Business Days prior to the Escrow Resolution Date,
Parent shall provide a notice to each Shareholder of the time, date and
location of a closing at which Parent will transfer Parent Common Stock
representing the Per Share Escrow Consideration, such date to be no greater
than 15 Business Days following the Escrow Resolution Date.
(b) At such closing, Parent shall deliver to each Shareholder one or
more share certificates representing the aggregate number of shares of
Parent Common Stock constituting the Per Share Escrow Consideration that
such Shareholder has a right to receive (rounded up to the nearest whole
share), provided that such Shareholder previously made the delivery
required by Section 2.2(a).
(c) Any of the Eligible Shares not delivered as part of the Per Share
Initial Stock Consideration or the Per Share Escrow Consideration shall be
promptly cancelled by the Company following the delivery of the Per Share
Escrow Consideration.
3. Per Share Contingent Stock Consideration.
_________________________________________
(a) In the event that the Tax Loss Amount is greater than $0, promptly
(and in any event within 10 Business Days) following the determination of
the Tax Loss Amount (but in all cases following the Escrow Resolution
Date), Parent shall provide a notice to each Shareholder informing such
Shareholder of the time, date and location of a closing at which Parent
will issue the Per Share Contingent Stock Consideration, such date to be no
more than 15 Business Days following the date of such notice.
(b) At such closing, Parent shall issue and deliver to each Shareholder
one or more share certificates representing the aggregate number of shares
of Parent Common Stock constituting the Per Share Contingent Stock
Consideration that such Shareholder has a right to receive (rounded up to
the nearest whole share), provided that such Shareholder previously made
the delivery required by Section 2.2(a).
4. Adjustment Upon Changes in Capitalization. In the event of any change
__________________________________________
in the outstanding shares of Parent by reason of stock dividends,
split-ups, recapitalizations, combinations, exchanges of shares and the
like, the term "shares of Parent Common Stock" shall refer to and include
the securities received or resulting therefrom and the terms and provisions
of this Agreement shall be appropriately adjusted so that each shareholder
will thereafter continue to have and be subject to, to the greatest extent
practicable, the same rights and obligations he, she or it had been subject
to prior to such change.
5. Calculation Procedures. This Section is intended for illustration
______________________
purposes only based on the assumptions set forth herein.
(a) Calculation of Per Share Initial Stock Consideration:
____________________________________________________
i. Calculate Adjusted AUM as of the Effective Time. For purposes
of illustration only, assume that the Adjusted AUM as of the Effective Time
is $647,220,329.
ii. Calculate the AUM Credit Percentage as of the Effective Time
and Target AUM. For purposes of illustration only, assume that the Target
AUM is $842,125,691. The AUM Credit Percentage is the Adjusted AUM divided
by the Target AUM multiplied by .925, or 83.09%.
(647,220,329/(842,125,691*.925)).
iii. Calculate the Implied Company Ownership Percentage as of the
Effective Time. The Implied Company Ownership Percentage is The AUM
Credit Percentage as of the Effective Time multiplied by .51, or 42.37%.
(83.09*.51).
iv. Calculate the Pro Forma Total Shares as of the Effective Time.
The Pro Forma Total Shares is the number of Non-Company Shares divided by
one minus the Implied Company Ownership Percentage. For purposes of
illustration only, assume that the number of Non-Company Shares is
8,739,021. The Pro Forma Total Shares is 15,165,174.
(8,739,021/(1-.4237)).
v. Calculate the Pro Forma Company Shares as of the Effective
Time. The Pro Forma Company Shares is the Pro Forma Total Shares less the
Non-Company Shares. The Pro-Forma Company Shares is 6,426,153.
(15,165,174 less 8,739,021).
vi. Calculate the Per Share Initial Stock Consideration. The Per
Share Initial Consideration is the Pro Forma Company Shares as of the
Effective Time divided by the number of Company Shares outstanding as of
the Effective Time. For purposes of illustration only, assume that the
number of Company Shares outstanding as of the Effective Time is 1,000.
The Per Share Initial Consideration is 6,426.153. (6,426,153/1,000).
(b) Calculation of Per Share Escrow Consideration:
______________________________________________
i. Calculate Adjusted AUM as of the Escrow Resolution Date. For
purposes of illustration only, assume that the Adjusted AUM is
$842,125,691.
ii. Calculate the AUM Credit Percentage as of the Escrow
Resolution Date. See Section 5(a)(ii) above. The percentage, however,
cannot exceed 1. The AUM Credit Percentage is 1.
(842,125,691/(842,125,691*.925), not to exceed 1).
iii. Calculate the Implied Company Ownership Percentage as of the
Escrow Resolution Date. See Section 5(a)(iii) above. The Implied Company
Ownership Percentage is 51%. (.51 * 1).
iv. Calculate the Pro Forma Total Shares as of the Escrow
Resolution Date. See Section 5(a)(iv). The Pro Forma Total Shares is
17,834,737. (8,739,021/(1-.51))
v. Calculate the Pro Forma Company Shares as of the Escrow
Resolution Date. See Section 5(a)(v). The Pro Forma Company Shares is
8,887,552. (17,834,737 less 8,739,021).
vi. Calculate the Total Escrow Stock Consideration. The Total
Escrow Stock Consideration is the Pro Forma Company Shares at the Escrow
Resolution Date less such Shares at the Effective Time, or 2,669,562.
(8,739,021 less 6,426,153).
vii. Calculate the Per Share Escrow Consideration. The Per Share
Escrow Consideration is the Total Escrow Consideration divided by the
number of Company Shares outstanding as of the Effective Time, or
2,669.562. (2,669/1,000).
(c) Calculation of Per Share Contingent Stock Consideration:
i. Calculate the Pre-Closing Value of Parent. For purposes of
illustration only, assume that the Pre-Closing Value of Parent is
$13,099,792.
ii. Calculate the Pre-Tax Liability Value of Parent. For
purposes of illustration only, assume that that the Pre-Tax Liability Value
of Parent is $34,956,084.
iii. Calculate the Pre-Closing Value of the Company. The
Pre-Closing Value of the Company is the Pre-Closing Value of the Parent
multiplied by the Implied Company Ownership Percentage at the Escrow
Resolution Date divided by the Implied Parent Ownership Percentage at the
Escrow Resolution Date. The Implied Parent Ownership Percentage is 1 less
the Implied Company Ownership Percentage. The Pre-Closing Value of the
Company is $13,634,478. (13,099,792 * (51/49)).
iv. Calculate the Pre-Tax Liability Value of the Company. The
Pre-Tax Liability Value of Liability of the Company is the Pre Tax
Liability of the Parent multiplied by the Implied Company Ownership
Percentage at the Escrow Resolution Date divided by the Implied Parent
Ownership Percentage at the Escrow Resolution Date, or $36,382,863.
(34,956,084 * (.51/.49)).
v. Calculate the Adjusted Value of Parent. The Adjusted Value of
Parent is the average of the Pre-Closing Value of Parent and Pre-Tax
Liability of Parent less the Tax Loss Amount. For purposes of illustration
only, assume that the Tax Loss Amount is $6,000,000. The Adjusted Value of
Parent is $18,027,938. ((13,099,792 + 34,956,084)/2) - 6,000,000).
vi. Calculate the Adjusted Ownership Percentage. The Adjusted
Ownership Percentage is the Value of the Company divided by the sum of the
Value of the Company and the Adjusted Value of Parent. The Value of the
Company is the average of the Pre-Closing Value of the Company and the
Pre-Tax Liability Value of the Company, or $25,008,670. ((13,634,478 +
36,382,863)/2). The Adjusted Ownership Percentage is 58.11%.
(25,008,670/(25,008,670 + 18,027,938).
vii. Calculate the Implied Pro-Forma Total Shares. The Implied
Pro-Forma Total Shares is the Non-Company Shares divided by 1 less the
Adjusted Ownership Percentage, or 20,861,943. (8,739,021/1-.5811).
viii. Calculate the Contingent Stock Consideration. The
Contingent Stock Consideration is the Implied Pro-Forma Total Shares over
the Pro Forma Total Shares at the Escrow Resolution Date, or 3,027,207.
(20,861,943 less 17,834,737).
ix. Calculate the Per Share Contingent Stock Consideration. The
Per Share Escrow Consideration is the Contingent Stock Consideration
divided by the number of Company Shares outstanding as of the Effective
Time, or 3,027.207. (3,027,207/1,000).
6. Defined Terms
_____________
"Adjusted AUM" means (a) for any Client as of a particular date,
the amount of assets under management by SPS for such Client as of the Base
Date, as adjusted to reflect net cash flow (additions, withdrawals and
reinvestments), new accounts and terminated accounts from and after the
Base Date (it being understood that (i) such adjustment is intended to
exclude any increase or decrease in assets under management due to market
appreciation or depreciation or currency fluctuations from and after the
Base Date and (ii) no adjustment shall be made for any withdrawals or
terminations resulting from the transfer of such Client's assets under
management from SPS to the Company) and (b) for any other Consenting Client
as of a particular date, the aggregate of net cash flow (additions,
withdrawals and reinvestments) to investment advisory accounts of such
other Consenting Clients with the Company from and after the Base Date.
"Adjusted Ownership Percentage" means a percentage, expressed as
a fraction the numerator of which is the Value of the Company and the
denominator of which is the sum of the Value of the Company and the
Adjusted Value of Parent.
"Adjusted Value of Parent" shall mean the excess of (a) the
average of the Pre-Closing Value of Parent and the Pre-Tax Liability Value
of Parent over (b) the Tax Loss Amount.
"AUM Credit Percentage" means, with respect to any date or time,
a percentage, not to exceed 100%, calculated by dividing the aggregate
Adjusted AUM of all Consenting Clients as of such date or time by the
product of the Target AUM multiplied by 0.925.
"Base Date" means April 30, 2004.
"Consenting Client" means, as of any date, (a) any Client that
has provided consent in accordance with Section 5.10 of this Agreement on
or prior to such date and (b) any other Person that is an investment
advisory client of the Company as of such date.
"Contingent Stock Consideration" shall mean the excess of the
Implied Pro-Forma Total Shares over the Pro Forma Total Shares at the
Escrow Resolution Date.
"Eligible Shares" means a number of shares of Parent Common Stock
as is equal to the product of the number of issued and outstanding shares
of Parent Common Stock as of the Effective Time multiplied by a fraction
the numerator of which is 51 and the denominator of which is 49.
"Escrow Resolution Date" a Business Day specified in a written
notice from the Company to Parent that is at least 45 calendar days, and
not more than 120 calendar days, following the Effective Time.
"Implied Company Ownership Percentage" means, with respect to any
date or time, a percentage equal to 0.51 times the AUM Credit Percentage as
of such date or time.
"Implied Parent Ownership Percentage" means, with respect to any
date or time, one minus the Implied Company Ownership Percentage as of such
date or time.
"Implied Pro-Forma Total Shares" means the number of shares of
Parent Common Stock equal to the number of Non-Company Shares divided by
one less the Adjusted Ownership Percentage.
"Non-Company Shares" means the shares of Parent Common Stock
issued and outstanding immediately prior to the Effective Time other than
shares owned by Parent as treasury stock.
"Per Share Contingent Stock Consideration" means the number of
shares of Parent Common Stock as is equal to the Contingent Stock
Consideration divided by the number of Shares issued and outstanding as of
the Effective Time (other than any Share to be cancelled in accordance with
Section 2.1(b)).
"Per Share Escrow Consideration" means the number of shares of
Parent Common Stock as is equal to the Total Escrow Consideration divided
by the number of Shares issued and outstanding as of the Effective Time
(other than any Share to be cancelled in accordance with Section 2.1(b)).
"Per Share Initial Stock Consideration" means the number of shares of
"Parent Common Stock as is equal to the Pro Forma Company Shares
as of the Effective Time divided by the number of Shares issued and
outstanding as of the Effective Time (other than any Share to be cancelled
in accordance with Section 2.1(b)).
"Pre-Closing Value of Parent" means the product of (a) the
average closing bid price per share of Parent Company Stock on a recognized
list for over-the-counter securities for the ten consecutive trading days
ending on April 30, 2004 multiplied by (b) the number of Non-Company
Shares.
"Pre-Closing Value of the Company" shall mean the product of the
Pre-Closing Value of Parent multiplied by a fraction, the numerator of
which is the Implied Company Ownership Percentage as of the Escrow
Resolution Date and the denominator of which is the Implied Parent
Ownership Percentage as of the Escrow Resolution Date.
"Pre-Tax Liability Value of the Company" shall mean the product
of the Pre-Tax Liability Value of Parent multiplied by a fraction, the
numerator of which is the Implied Company Ownership Percentage as of the
Escrow Resolution Date and the denominator of which is the Implied Parent
Ownership Percentage as of the Escrow Resolution Date.
"Pre-Tax Liability Value of Parent" means the product of (a) the
average closing bid price per share of Parent Company Stock on a recognized
list for over-the-counter securities (or, if Parent is traded on a national
securities exchange, the average closing price per share on Parent Company
Stock on the exchange on which Parent Company Stock is primarily traded)
for the ten consecutive trading days ending on the Tax Liability Resolution
Date multiplied by (b) the number of Non-Company Shares.
"Pro Forma Company Shares" means, with respect to any date or
time, a number of shares equal to the excess of the number of Pro Forma
Total Shares as of such date or time over the number of Non-Company Shares.
"Pro Forma Total Shares" means, with respect to any date or time,
a number of shares equal to the quotient of (a) the number of Non-Company
Shares divided by (b) one minus the Implied Company Ownership Percentage as
of such date or time.
"Target AUM" means the aggregate assets under management of the
Clients with SPS as of the Base Date.
"Tax Liability Resolution Date" means the date on which, in the
good faith judgment of Parent, all issues regarding pre-closing tax
liabilities of Parent are finally resolved.
"Tax Loss Amount" means the excess, if any, of the total amount
of any losses incurred by Parent after the Effective Time relating to Taxes
for any period ending on or prior to the Effective Time over $2 million,
provided that such excess shall not exceed $6 million.
"Total Escrow Consideration" means that number of shares of
Parent Common Stock as is equal to the excess, if any, of the number of Pro
Forma Company Shares at the Escrow Resolution Date over the number of Pro
Forma Company Shares at the Effective Time.
"Value of the Company" shall mean the average of the Pre-Closing
Value of the Company and the Pre-Tax Liability Value of the Company.