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EXHIBIT 4.3
AFFILIATED MANAGERS GROUP, INC.
10,448 Shares of
Series B-1 Voting Convertible Preferred Stock
and 19,403 Shares of
Series B-2 Non-Voting Convertible Preferred Stock
-------------------------------
STOCK PURCHASE AGREEMENT
-------------------------------
November 7, 1995
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Affiliated Managers Group, Inc.
Stock Purchase Agreement
November 7, 1995
INDEX
Page
SECTION 1. TERMS OF PURCHASE................................................ 1
1.1 Description of Securities...................................... 1
1.2 Reserved Shares................................................ 1
1.3 Sale and Purchase.............................................. 2
1.4 Closing........................................................ 2
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.................. 2
2.1 Organization and Corporate Power............................... 2
2.2 Authorization.................................................. 3
2.3 Capitalization; Rule 701 Offering.............................. 3
2.4 Subsidiaries; Investments...................................... 5
2.5 Financial Statements........................................... 5
2.6 Absence of Undisclosed Liabilities............................. 5
2.7 Absence of Certain Developments................................ 5
2.8 Title to Properties............................................ 6
2.9 Tax Matters.................................................... 6
2.10 Certain Contracts and Arrangements............................. 7
2.11 Proprietary Information........................................ 8
2.12 Effect of Transactions......................................... 9
2.13 Employee Benefit Plans......................................... 9
2.14 Litigation..................................................... 9
2.15 Offerees...................................................... 10
2.16 Business; Compliance with Laws................................ 10
2.17 Investment Banking; Brokerage................................. 10
2.18 Transactions with Affiliates.................................. 10
2.19 Disclosure.................................................... 11
SECTION 3. CONDITIONS OF PURCHASE........................................ 11
3.1 Satisfaction of Conditions.................................... 11
3.2 Authorization................................................. 11
3.3 Amended and Restated Certificate of Incorporation............. 11
3.4 Director Election............................................. 11
3.5 Opinion of Counsel............................................ 12
3.6 Stockholders' Agreement....................................... 12
3.7 All Proceedings Satisfactory.................................. 12
3.8 No Violation or Injunction.................................... 12
(i)
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Page
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3.9 Delivery of Documents......................................... 12
SECTION 4. COVENANTS OF THE COMPANY...................................... 13
4.1 Financial Statements; Minutes................................. 13
4.2 Budget and Operating Forecast................................. 14
4.3 Conduct of Business........................................... 14
4.4 Payment of Taxes, Compliance with Laws, etc................... 14
4.5 Material Adverse Effect....................................... 14
4.6 Insurance..................................................... 15
4.7 Life Insurance................................................ 15
4.8 Affiliated Transactions....................................... 15
4.9 Use of Proceeds............................................... 15
4.10 Inspection.................................................... 15
4.11 Directors Liability........................................... 16
4.12 Stock Plans................................................... 16
4.13 Restrictions and Limitations.................................. 16
SECTION 5. REPRESENTATIONS OF INVESTORS.................................. 18
SECTION 6. DEFINITIONS................................................... 19
SECTION 7. GENERAL....................................................... 22
7.1 Amendments, Waivers and Consents.............................. 22
7.2 Survival of Covenants; Assignability of Rights................ 23
7.3 Notices....................................................... 23
7.4 Headings...................................................... 24
7.5 Counterparts.................................................. 24
7.6 Entire Agreement.............................................. 25
7.7 Adjustments................................................... 25
7.8 Law Governing................................................. 25
7.9 Severability.................................................. 25
7.10 Expenses...................................................... 25
(ii)
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EXHIBITS
Exhibit A- List of Investors
Exhibit B- Amended and Restated Certificate of Incorporation
Exhibit C- Company Counsel Opinion
Exhibit D- Form of Stockholders' Agreement
Exhibit E- Amended and Restated 1994 Stock Incentive Plan
Exhibit F- 1995 Stock Incentive Plan
SCHEDULES
Schedule 2.3 - Capitalization
Schedule 2.4 - Subsidiaries
Schedule 2.5 - Financial Statements
Schedule 2.6 - Liabilities
Schedule 2.7 - Developments
Schedule 2.8 - Title Matters
Schedule 2.9 - Tax Matters
Schedule 2.10- Contracts and Commitments
Schedule 2.13- Employee Benefit Plans
Schedule 2.18- Transactions with Affiliates
(iii)
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT is made as of this 7th day of November,
1995, by and among Affiliated Managers Group, Inc., a corporation incorporated
under the laws of the State of Delaware (the "Company"), and the Investors
listed on the signature pages hereof (the "Investors" and each individually an
"Investor").
W I T N E S S E T H
WHEREAS, each of the Investors desires to purchase, and the Company
desires to sell, shares of its Series B-1 Voting Convertible Preferred Stock and
shares of its Series B-2 NonVoting Convertible Preferred Stock (as such terms
are hereafter defined) in the amounts and on the terms and conditions set forth
herein.
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants
and agreements hereinafter set forth, and other good and valuable consideration,
the receipt and sufficiency whereof are hereby acknowledged, the parties hereto
agree as follows:
SECTION 1. TERMS OF PURCHASE
1.1 Description of Securities. The Company has authorized the issuance and
sale to the Investors of Ten Thousand Four Hundred and Forty-Eight (10,448)
shares of its authorized but unissued Series B-1 Voting Convertible Preferred
Stock, par value $.01 per share (the "Series B-1 Voting Convertible Preferred
Stock") and Nineteen Thousand Four Hundred and Three (19,403) shares of its
authorized but unissued Series B-2 Non-Voting Convertible Preferred Stock, par
value $.01 per share (the "Series B-2 Non-Voting Convertible Preferred Stock"
and, together with the Series B-1 Voting Convertible Preferred Stock, the "Class
B Convertible Preferred Stock"). The Class B Convertible Preferred Stock and the
Company's Class A Convertible Preferred Stock, par value $.01 per share (the
"Class A Convertible Preferred Stock") are referred to as the "Preferred
Shares."
1.2 Reserved Shares. The Company has authorized and has reserved and
covenants to continue to reserve, a sufficient number of shares of its Class B
Common Stock, par value $.01 per share (the "Class B Common Stock") to satisfy
the rights of conversion of the holders of the Series B-2 Non-Voting Convertible
Preferred Stock. The Company has authorized and has reserved and covenants to
continue to reserve, a sufficient number of shares of its Common Stock, par
value $.01 per share (the "Common Stock") to satisfy the rights of conversion of
the holders of the Series B-1 Voting Convertible Preferred Stock and the rights
of conversion of holders of shares of Class B Common Stock or Series B-1 Voting
Convertible Preferred Stock issuable upon conversion of the shares of Series B-2
Non-Voting Convertible Preferred Stock. Any shares of Common Stock, Class B
Common Stock or Series B-1 Voting Convertible Preferred Stock or any successor
class or classes of capital stock of the Company thereafter issued or issuable
(directly or indirectly) upon conversion of Class B Convertible Preferred Stock
are herein referred to as "Conversion Shares," and the Class B Convertible
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Preferred Stock and the Conversion Shares are herein collectively referred to as
the "Securities."
1.3 Sale and Purchase. Subject to the terms and conditions herein set
forth, the Company shall issue and sell to each of the Investors, and each
Investor shall purchase from the Company, the number of shares of Class B
Convertible Preferred Stock set forth opposite the name of such Investor in
Column 2 or 3 of Exhibit A hereto, for the aggregate purchase price set forth in
the corresponding row of Column 4 of said Exhibit A, which Class B Convertible
Preferred Stock shall be shares of either Series B-1 Voting Convertible
Preferred Stock or shares of Series B-2 Non-Voting Convertible Preferred Stock,
as set forth on Exhibit A.
1.4 Closing. The closing (the "Closing") of the sale and purchase of the
Class B Convertible Preferred Stock shall take place at the offices of Xxxxxxx,
Procter & Xxxx, located at Exchange Place, Boston, Massachusetts, at 10:00 A.M.,
on November 7, 1995 (the "Closing Date"). At the Closing, the Company will
deliver the Class B Convertible Preferred Stock being acquired by each Investor
in the form of a certificate issued in such Investor's name or in the name of
its nominee (of which the Investor shall notify the Company not less than three
business days prior to the Closing Date), against payment of the full purchase
price therefor by or on behalf of each Investor to the Company by wire transfer
of immediately available funds to the Company's account (of which the Company
shall notify the Investors not less than three business days prior to the
Closing Date) or by check, as agreed to by the Company.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
In order to induce the Investors to enter into this Agreement, the Company
represents and warrants to the Investors, that as of the date hereof:
2.1 Organization and Corporate Power.
(a) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware, and is qualified
to do business as a foreign corporation and is in good standing in each
jurisdiction where the failure to be so qualified could reasonably be expected
to have a Material Adverse Effect. The Company has all required corporate power
and authority to own its property, to carry on its business as presently
conducted, to enter into and perform this Agreement and the agreements
contemplated hereby, and generally to carry out the transactions contemplated
hereby and thereby. The copies of the Certificate of Incorporation and By-laws
of the Company, as amended to date, which have been furnished to counsel for the
Investors by the Company, are correct and complete at the date hereof. The
Company is not in violation, in any material respect, of any term of its
Certificate of Incorporation or By-laws, or in violation, in any
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material respect, of any term of any agreement, instrument, judgment, decree,
order, statute, rule or government regulation applicable to the Company, other
than any such violations which in the aggregate could not reasonably be expected
to have a Material Adverse Effect.
(b) Each of the Subsidiaries is duly organized, validly or legally
existing (as the case may be) and in good standing under the laws of the State
of Delaware, and is qualified to do business in each jurisdiction where the
failure to be so qualified could reasonably be expected to have a Material
Adverse Effect. Each of the Subsidiaries has all required corporate or
partnership (as applicable) power and authority to own its property and to carry
on its business as presently conducted. The copies of the organizational
documents of each Subsidiary, as amended to date, which have been furnished to
counsel for the Investors by the Company, are correct and complete at the date
hereof. None of the Subsidiaries is in violation, in any material respect, of
any term of its organizational documents, or in violation, in any material
respect, of any term of any agreement, instrument, judgment, decree, order,
statute, rule or government regulation applicable to it, other than any such
violation which could not reasonably be expected to have a Material Adverse
Effect.
2.2 Authorization. This Agreement and all other documents and instruments
executed pursuant hereto are valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms. The execution,
delivery and performance of this Agreement and the Stockholders' Agreement and
all other documents and other instruments contemplated hereby to be executed by
the Company and the issuance of the Class B Convertible Preferred Stock and,
upon conversion thereof, the Conversion Shares have been duly authorized by all
necessary corporate or other action of the Company. No consent, approval or
authorization of, or designation, declaration or filing with, any governmental
authority or other third party is required of the Company in connection with the
execution, delivery and performance of this Agreement, or the issuance and
delivery of the Class B Convertible Preferred Stock in accordance with the terms
of this Agreement and the Conversion Shares upon conversion of the Class B
Convertible Preferred Stock in accordance with the terms of the Amended and
Restated Certificate of Incorporation of the Company in the form attached hereto
as Exhibit B (the "Certificate of Incorporation") (or the issuance and delivery
of the shares of Common Stock upon the conversion of the Class B Common Stock or
Series B-1 Voting Convertible Preferred Stock in accordance with the terms of
the Certificate of Incorporation), or the performance or consummation of any
other transaction contemplated hereby other than those which have been obtained
or made prior to the date hereof and which are in full force and effect and
other than those which do not need to be made until after the date hereof.
2.3 Capitalization; Rule 701 Offering.
(a) The authorized and issued capital stock of the Company is as set
forth in Schedule 2.3 attached hereto. Except as disclosed in Schedule 2.3, the
Company has not issued any other shares of its capital stock and there are no
outstanding warrants, options or
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other rights to purchase or acquire any of such shares, nor any outstanding
securities convertible into such shares or outstanding warrants, options or
other rights to acquire any such convertible securities. As of the Closing, all
the outstanding shares of capital stock of the Company will have been duly and
validly authorized and issued and will be fully paid and nonassessable and will
have been offered, issued, sold and delivered in compliance with applicable
federal and state securities laws. The shares of Class B Convertible Preferred
Stock have been duly and validly authorized and, when delivered and paid for
pursuant to this Agreement, will be validly issued, fully paid and
nonassessable. The relative rights, preferences, restrictions and other
provisions relating to the Preferred Shares and Conversion Shares are as set
forth in Exhibit B attached hereto. The Company has authorized and reserved for
issuance upon conversion of the Class B Convertible Preferred Stock not less
than Ten Thousand Four Hundred and Forty-Eight (10,448) shares of its Common
Stock, Nineteen Thousand Four Hundred and Three (19,403) shares of its Class B
Common Stock and Nineteen Thousand Four Hundred and Three (19,403) shares of its
Series B-1 Voting Convertible Preferred Stock, and such Conversion Shares will
be, when issued in accordance with the Certificate of Incorporation of the
Company, duly and validly authorized and issued, fully paid and nonassessable.
The Company has authorized and reserved for issuance upon conversion of the
shares of Class B Common Stock (or the Series B-1 Voting Convertible Preferred
Stock issuable upon conversion of the Series B-2 Non-Voting Convertible
Preferred Stock) not less than Nineteen Thousand Four Hundred and Three (19,403)
shares of its Common Stock, and such shares of Common Stock will be, when issued
in accordance with the Certificate of Incorporation of the Company, duly and
validly authorized and issued, fully paid and nonassessable. Except as set forth
on Schedule 2.3, there are no preemptive rights or rights of first refusal with
respect to the issuance or sale of the Company's capital stock, other than
rights to which holders of the Class B Convertible Preferred Stock and
Conversion Shares and holders of Class A Convertible Preferred Stock and the
Common Stock issuable upon the conversion thereof are entitled as set forth in
the Stockholders' Agreement referred to in Section 3.6 hereof. Except as
disclosed in Schedule 2.3, there are no restrictions on the transfer of the
Company's capital stock other than those arising from federal and state
securities laws or under this Agreement or the Stockholders' Agreement referred
to in Section 3.6 hereof. Except as set forth in the Stockholders' Agreement, or
as disclosed in Schedule 2.3, there are no rights to have the Company's capital
stock registered for sale in connection with the laws of any jurisdiction. Set
forth in Schedule 2.3 is a listing of all partners and shareholders (including
the number of shares of each class owned by each such person) of the Company and
each Subsidiary and of the holders of all outstanding stock options, warrants,
calls and other rights relating to the issuance of equity in the Company and
each Subsidiary. The outstanding capital stock of the Company will not be
subject to adjustment (except inasmuch as the rights, preferences, restrictions
and other provisions relating thereto have changed pursuant to the provisions of
the Certificate of Incorporation) by reason of the issuance of the Class B
Convertible Preferred Stock on the date hereof.
(b) Subsequent to the Closing Date, it is contemplated that the
Company may issue and sell not more than 4,477 shares of Series B-1 Voting
Convertible Preferred
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Stock at a purchase price of $670.00 per share to certain qualifying persons of
the type enumerated in clause (i) of Rule 701(b)(1) promulgated under the
Securities Act of 1933 (the "Securities Act") and who are selected by the Board
of Directors of the Company in its sole discretion.
2.4 Subsidiaries; Investments. Except as set forth on Schedule 2.4, the
Company does not have any ownership interest in any corporation, partnership,
limited liability company, limited liability partnership, joint venture or other
entity. Set forth on Schedule 2.4 is a description of the ownership structure of
each Subsidiary and each other entity in which the Company has a ownership
interest.
2.5 Financial Statements. Included in Schedule 2.5 are the following
consolidated financial statements of the Company, all of which fairly present
the consolidated financial position of the Company on the dates of such
statements and the results of its operations for the periods covered thereby:
audited consolidated balance sheet of the Company as of December 31, 1994, and
unaudited consolidated balance sheets of the Company as of June 30, 1995, and
September 30, 1995, and the related statements of income and cash flows for the
year and periods then ended. The foregoing financial statements have been
prepared in accordance with GAAP consistently applied over the periods covered
thereby (except that the unaudited financial statements included therein do not
include footnote disclosure and may be subject to year-end audit adjustments)
none of which alone or in the aggregate would have a Material Adverse Effect.
2.6 Absence of Undisclosed Liabilities. Except as and to the extent
disclosed in Schedule 2.6 and to the extent reflected or reserved against in the
balance sheet of the Company as of September 30, 1995, included in Schedule 2.5
(the "Base Balance Sheet"), neither the Company nor any Subsidiary has any
material accrued or contingent liability or liabilities arising out of any
transaction or state of facts existing prior to the date hereof, which has
arisen other than in the ordinary course of business and which is of a nature
required to be reflected or reserved against in the Base Balance Sheet in
accordance with GAAP.
2.7 Absence of Certain Developments. Except as disclosed in Schedule 2.7,
since September 30, 1995, there has been (i) no material adverse change in the
condition, financial or otherwise, of the Company or any Subsidiary or in the
assets, liabilities, properties, operations or business of the Company or any
Subsidiary, and, to the best knowledge of the Company, there exists no
condition, event or occurrence (other than conditions, events and occurrences
affecting businesses in the same or similar businesses as the Company and its
Subsidiaries) that, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect on the condition, financial or
otherwise, of the Company or any Subsidiary or on the assets, liabilities,
properties, operations or business of the Company or any Subsidiary, (ii) no
declaration, setting aside or payment of any dividend or other distribution with
respect to, or any direct or indirect redemption or acquisition of, any of the
capital stock of the Company or any Subsidiary, (iii) no waiver of any valuable
right of the
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Company or any Subsidiary or cancellation of any debt or claim held by the
Company or any Subsidiary, (iv) no loan by the Company or any Subsidiary to any
officer, director, employee or stockholder of the Company, or any agreement or
commitment therefor, (v) no material loss, destruction or damage to any property
of the Company or any Subsidiary, whether or not insured, and (vi) no labor
trouble involving the Company or any Subsidiary, no material loss of personnel
of the Company or any Subsidiary and no material change in the terms and
conditions of the employment of the Company's key personnel (including, without
limitation, Messrs. Xxxx and Xxxxxx) or the key personnel of any Subsidiary.
2.8 Title to Properties. Each of the Company and each of its Subsidiaries
has good and marketable title to all of its properties and assets, free and
clear of all liens, restrictions or encumbrances, except as disclosed in
Schedule 2.8 and except where the failure to have such title or for such
property to be so free and clear, either individually or in the aggregate, could
not reasonably be expected to have a Material Adverse Effect. Neither the
Company nor any Subsidiary owns any real property. All machinery and equipment
included in such properties which is necessary to the business of the Company or
any Subsidiary as presently conducted is in good condition and repair and all
leases of real or personal property to which the Company or any of its
Subsidiaries is a party are fully effective and afford the Company or its
Subsidiary, as applicable, peaceful and undisturbed possession of the subject
matter of the lease except where the failure to be in such condition or to be so
effective, either individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect. Neither the Company nor any
Subsidiary is in violation of any material zoning, building or safety ordinance,
regulation or requirement or other law or regulation applicable to the operation
of its owned or leased properties, which violation could reasonably be expected
to have a Material Adverse Effect.
2.9 Tax Matters. The Company and each of the Subsidiaries from the date it
became a Subsidiary, and to the best knowledge of the Company prior to the date
it became a Subsidiary, has filed all tax returns which it is required to file
pursuant to any federal, state or local law, and all such returns are correct
and complete in all material respects. Except as set forth in Schedule 2.9, all
foreign, federal, state and local taxes owed by the Company have been paid.
Except as set forth on said Schedule 2.9, the provision for taxes on the Base
Balance Sheet is sufficient for the payment of all accrued and unpaid foreign,
federal, state, county and local taxes of the Company, whether or not assessed
or disputed as of the date of said balance sheet. Except as set forth on
Schedule 2.9, there exist no material unpaid assessments on the Company for any
fiscal period. All taxes and other assessments and levies which the Company is
required to withhold or collect have been withheld and collected and have been
paid over to the proper governmental authorities. With regard to the federal or
state income tax returns of the Company, the Company has never received notice
of any audit or of any proposed deficiencies from the Internal Revenue Service
or any state taxing authority. There are in effect no waivers of applicable
statutes of limitations with respect to any taxes owed by the Company for any
year. Neither the Internal Revenue Service nor any other taxing authority is now
asserting or, to the knowledge of the Company, threatening to assert against
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the Company any deficiency or claim for additional taxes or interest thereon or
penalties in connection therewith. Except as set forth in Schedule 2.9, each of
the Subsidiaries is an entity classified as a partnership for federal tax
purposes.
2.10 Certain Contracts and Arrangements. Except as set forth in Schedule
2.10 hereto, the Company is not a party or subject to:
(a) any plan or contract providing for collective bargaining or the
like, or any contract or agreement with any labor union;
(b) any contract or agreement creating any obligation of the Company
to pay to any third party $500,000 or more in any twelve-month period with
respect to any single such contract or agreement;
(c) any contract containing covenants limiting the freedom of the
Company or any Subsidiary to compete in any line of business or with any person
or entity;
(d) any contract or agreement for the purchase of any leasehold
improvements, equipment or fixed assets for a price in excess of $500,000;
(e) any indenture, mortgage, promissory note, loan agreement,
guaranty or other agreement or commitment for borrowing in excess of $500,000,
other than the Credit Agreement and related Promissory Notes dated as of May 11,
1995, among the Company, the several Lenders named in the Credit Agreement and
Chemical Bank, a New York banking corporation, as Administrative Agent (the
"Senior Loan Agreement");
(f) any material partnership, limited liability company or joint
venture agreement;
(g) any employment contracts, or agreements (other than
non-competition, non-solicitation and/or non-disclosure agreements) with
officers, directors, employees or stockholders of the Company or persons or
organizations related to or affiliated with any such persons;
(h) any stock redemption or purchase agreements;
(i) any stock option or other stock purchase or similar equity
issuance plans; or
(j) any commission or fee sharing agreement (other than with
employees of the Company incurred in the ordinary course of business).
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Except as otherwise described on the Schedules hereto, neither the Company
nor any of its Subsidiaries is a party to any agreement or instrument or subject
to any corporate restriction that has resulted or could be reasonably expected
to result, individually or in the aggregate, in a Material Adverse Effect. Each
material agreement, contract, lease, license, commitment or other instrument to
which the Company or any of its Subsidiaries is a party or by which it or any of
its properties or assets may be bound as of the date hereof is set forth on
Schedule 2.10 (collectively, the "Material Contracts").
Except as set forth on Schedule 2.10, and after giving effect to the
transactions contemplated hereby, all of the Material Contracts are valid,
binding and in full force and effect and enforceable by the Company in
accordance with their terms. Except as set forth in Schedule 2.10, each of the
Company and the Subsidiaries has performed in all material respects all
obligations required to be performed by it to date under the Material Contracts
and, to the knowledge of the Company, no other party to any of the Material
Contracts is (with or without the lapse of time or the giving of notice, or
both) in breach or default in any material respect thereunder in any such case
which either individually as in the aggregate would have a Material Adverse
Effect. Except as disclosed on Schedule 2.7, neither the Company, nor any of the
Subsidiaries, nor, to the knowledge of the Company, any other party to any
Material Contract has given notice of termination of, or taken any action
inconsistent with the continuation of, any Material Contract. None of such other
parties has any presently exercisable right to terminate any Material Contract
(other than those Material Contracts which are investment advisory or management
agreements) nor will any such other party have any right to terminate any
Material Contract on account of the execution, delivery or performance of this
Agreement, the Stockholders' Agreement or any other document executed and
delivered in connection herewith.
2.11 Proprietary Information. All proprietary information developed by or
belonging to the Company or any of the Subsidiaries (including, without
limitation, contact lists and transaction structures) and which is material to
the business of the Company has been kept confidential. None of the Company or
any of the Subsidiaries is making unlawful use of any intellectual property of
any other person, including without limitation any former employer of any past
or present employees of the Company. Neither the Company nor any of the
Company's employees or consultants nor any of the Subsidiaries or any of their
employees or consultants has any agreements or arrangements with former
employers of such employees or consultants relating to any intellectual property
of such employers, which interfere or conflict with the performance of such
employee's or consultant's duties for the Company or such Subsidiary or results
in any former employers of such employees and consultants having any rights in,
or claims on, the Company's intellectual property or the intellectual property
of any of the Subsidiaries. The activities of the Company's employees and
consultants and the employees and consultants of each Subsidiary on behalf of
the Company or such Subsidiary do not violate any agreements or arrangements
which any such employees have with former employers. Each current and former
employee of the Company and its Subsidiaries, and each of the Company's and its
Subsidiaries' consultants has executed an agreement regarding
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confidentiality and proprietary information (except where the failure of such
person to have executed such agreement cannot reasonably be anticipated to have
a Material Adverse Effect) and, to the knowledge of the Company, none of such
employees and consultants are in violation of such agreements.
2.12 Effect of Transactions. The execution, delivery and performance by
the Company of this Agreement, the Stockholders' Agreement and the agreements
and transactions contemplated hereby will not conflict with or result in any
violation of or default under any material contract, obligation or commitment of
the Company or any Subsidiary (with or without the lapse of time, the giving of
notice, or both), or any provision of any organizational document of the Company
or any Subsidiary, or result in the creation of any lien, charge or encumbrance
of any nature upon any of the properties or assets of the Company or any
Subsidiary except as contemplated by this Agreement and the Stockholders'
Agreement. The Company's execution and delivery of this Agreement and the
Stockholders' Agreement and its performance of the transactions contemplated
hereby will not violate any judgment, decree, order, statute, rule or regulation
of any federal, state or local government or agency applicable to the Company or
any Subsidiary or to which the Company or any Subsidiary is a party.
2.13 Employee Benefit Plans. Except as set forth in Schedule 2.13, the
Company does not maintain or contribute to any employee benefit plan, stock
option, bonus or incentive plan, severance pay policy or agreement, deferred
compensation agreement, or any similar plan or agreement (an "Employee Benefit
Plan") nor has it ever maintained or contributed to an Employee Benefit Plan
except as described in Schedule 2.13. The terms and operation of each Employee
Benefit Plan comply in all material respects with all applicable laws and
regulations relating to such Employee Benefit Plans and no such plan is a
so-called multi-employer plan. There are no unfunded obligations of the Company
under any retirement, pension, profit-sharing, deferred compensation plan or
similar program.
Except as specifically set forth in Schedule 2.13, or as required by
Section 4980B of the Internal Revenue Code or Section 601 et seq. of the
Employee Retirement Income Security Act of 1974, as amended, the Company has
never maintained or contributed to any Employee Benefit Plan providing or
promising any health or other non-pension benefit to terminated employees.
2.14 Litigation. There is no litigation or governmental proceeding or
investigation pending or, to the best knowledge of the Company, threatened
against the Company or any Subsidiary affecting any of their respective
businesses, properties or assets, or against any officer or key employee of the
Company or any Subsidiary in his capacity as an officer or key employee of the
Company or such Subsidiary, or which may call into question the validity or
hinder the enforceability or performance of this Agreement or the agreements and
transactions contemplated hereby; nor, to the best knowledge of the Company, has
there occurred any event nor does there exist any condition on the basis of
which any litigation, proceeding or investigation might properly be instituted.
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2.15 Offerees. Neither the Company nor anyone acting on its behalf has in
the past or will sell, offer for sale or solicit offers to buy any securities of
the Company so as to bring the offer, issuance or sale of the Class B
Convertible Preferred Stock or the Conversion Shares, as contemplated by this
Agreement, within the provisions of Section 5 of the Securities Act, unless such
offer, issuance or sale was or will be within the exemptions of Section 4
thereof. The Company has and will comply with all applicable state "blue-sky" or
securities laws in connection with the issuance and sale of its Common Stock,
Class B Convertible Preferred Stock and other securities heretofore issued and
to be issued upon the closing of the Agreement.
2.16 Business; Compliance with Laws.
(a) Each of the Subsidiaries other than J M H Management Corporation
is registered as an investment adviser under the Investment Advisers Act of
1940, as amended (the "Advisers Act"), and each of the Subsidiaries is duly
registered, licensed and qualified as an investment adviser in all jurisdictions
where such registration, licensing or qualification is required in order to
conduct its business (except for failures to be so authorized that, individually
or in the aggregate, could not reasonably be expected to have a Material Adverse
Effect).
(b) The Company and each Subsidiary has all necessary franchises,
permits, licenses and other rights and privileges necessary to permit it to own
its property and to conduct its business as it is presently or contemplated to
be conducted in each case, except where the failure to have any of such
franchises, permits, licenses, rights or privileges, either individually or in
the aggregate, could not reasonably be expected to have a Material Adverse
Effect. Neither the Company nor any Subsidiary is in violation, in any material
respect, of any law, regulation, authorization or order of any public authority
relevant to the ownership of its properties or the carrying on of its business
as it is presently conducted except where any such violation, either
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect. The Company and each Subsidiary is in compliance, in
all material respects, with all federal, state and local laws and regulations
relating to its business as presently conducted, except where any such failure
to comply, either individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect.
2.17 Investment Banking; Brokerage. No broker, finder, agent or similar
intermediary has acted on behalf of the Company in connection with this
Agreement or the transactions contemplated hereby and there are no brokerage
commissions, finders fees or similar fees or commissions payable in connection
therewith.
2.18 Transactions with Affiliates. Except as set forth on Schedule 2.18
hereto, to the best of the Company's knowledge, without investigation, no person
directly or indirectly holding an interest in the Company is a party to any
material agreement, commitment or
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transaction with the Company, or (other than as a client thereof) any of its
Subsidiaries or has any material interest in any property used by the Company or
any of its Subsidiaries.
2.19 Disclosure. Neither this Agreement, the exhibits or schedules hereto,
the Stockholders' Agreement and all other documents and instruments executed
pursuant hereto contains any untrue statement of any material fact, or omits to
state any material fact that is necessary in order to make the statements
contained herein or therein, in the light of the circumstances under which they
were made, not misleading.
SECTION 3. CONDITIONS OF PURCHASE
Each Investor's obligation to purchase and pay for the Class B Convertible
Preferred Stock shall be subject to compliance by the Company with its
agreements herein contained and to the fulfillment to each Investor's
satisfaction on or before and at the Closing Date of the following conditions:
3.1 Satisfaction of Conditions. The representations and warranties of the
Company made in Section 2 hereof shall be true and correct on and as of the
Closing Date; each of the conditions specified in this Section 3 shall have been
satisfied or waived in writing; and on the Closing Date, certificates to such
effect executed by the President or the Executive Vice President of the Company
and by the principal financial officer of the Company shall be delivered to the
Investors.
3.2 Authorization. The Board of Directors and the stockholders of the
Company shall have duly adopted resolutions in form reasonably satisfactory to
the Investors authorizing the Company to consummate the transactions
contemplated hereby in accordance with the terms hereof, and the Investors shall
have received a duly executed certificate of the Secretary of the Company
setting forth a copy of such resolutions and confirming that such resolutions
have not been modified, rescinded or amended and are in full force and effect,
setting forth a copy of the Certificate of Incorporation and By-laws of the
Company, as in effect on the Closing Date, setting forth an incumbency and
specimen signature of each officer executing this Agreement or any other
document delivered in connection herewith on behalf of the Company and such
other matters as may be requested by the Investors.
3.3 Amended and Restated Certificate of Incorporation. The Board of
Directors and Stockholders of the Company shall have unanimously adopted
resolutions providing for the restatement of the Company's Certificate of
Incorporation in the form attached hereto as Exhibit B and such restated
Certificate of Incorporation shall have been filed with the Secretary of State
of Delaware.
3.4 Director Election. Xxxxxxx X. Xxxxxxx shall have been elected as a
Director of the Company.
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3.5 Opinion of Counsel. The Investors shall have received from counsel for
the Company, Messrs. Xxxxxxx, Procter & Xxxx, their favorable opinion, dated the
Closing Date, substantially in the form attached hereto as Exhibit C.
3.6 Stockholders' Agreement. The Company, the Investors and all the other
stockholders of the Company shall have executed and delivered a Stockholders'
Agreement in the form of Exhibit D hereto (the "Stockholders' Agreement").
3.7 All Proceedings Satisfactory. All corporate and other proceedings
taken prior to or at the Closing in connection with the transactions
contemplated by this Agreement, and all documents and evidences incident
thereto, shall be reasonably satisfactory in form and substance to the
Investors, and the Investors shall receive such copies thereof and other
materials (certified, if requested) as they may reasonably request in connection
therewith. The issuance and sale of the Class B Convertible Preferred Stock to
the Investors shall be made in conformity with all applicable state and federal
securities laws.
3.8 No Violation or Injunction. The consummation of the transactions
contemplated by this Agreement shall not be in violation of any law or
regulation and shall not be subject to any injunction, stay or restraining
order.
3.9 Delivery of Documents. The Company shall have executed and delivered
to the Investors (or shall have caused to be executed and delivered to the
Investors by the appropriate persons) the following:
(a) Certificates for the Class B Convertible Preferred Stock as set
forth in Exhibit A;
(b) Certified copies of resolutions of the Board of Directors (and,
to the extent necessary, the stockholders) of the Company authorizing the
execution and delivery of this Agreement, the Stockholders' Agreement, the
Restated Certificate, the issuance of the Class B Convertible Preferred Stock
and upon conversion of the Class B Convertible Preferred Stock, the issuance of
the Conversion Shares;
(c) A copy of the Company's corporate charter, certified as of a
recent date by the appropriate Secretary of State;
(d) A copy of the Certificate of Incorporation certified by the
appropriate Secretary of State;
(e) A copy of the by-laws of the Company certified by the secretary
of the Company;
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(f) A certificate issued by the appropriate Secretary of State of
the state of incorporation of the Company certifying that the Company is in good
standing in such state;
(g) A certificate issued by the appropriate Secretary of State of
the state of organization of each Subsidiary certifying that, to the extent
applicable, each such Subsidiary is in good standing in such state;
(h) A certificate issued by the Secretary of State of the
Commonwealth of Massachusetts certifying that the Company is in good standing in
Massachusetts;
(i) Payment or reimbursement on the Closing Date of fees of the
Investors in accordance with Section 7.10 hereof; and
(j) Such other supporting documents and certificates as the
Investors may reasonably request.
SECTION 4. COVENANTS OF THE COMPANY
The Company shall comply with the following covenants until such time as
(i) the Investors own less than, in the aggregate, 10% of the Class B Preferred
Stock issued at the Closing (or Conversion Shares issued or issuable upon the
conversion thereof), (ii) a Qualified Public Offering occurs, or (iii) a
Qualified Public Float exists at the Average Qualifying Price.
4.1 Financial Statements; Minutes. The Company will maintain a comparative
system of accounts in accordance with GAAP, keep full and complete financial
records and furnish to all Investors the following reports: (a) within 120 days
after the end of each fiscal year, a copy of the consolidated balance sheet of
the Company as at the end of such year, together with a consolidated statement
of income and retained earnings and of cash flows of the Company for such year,
audited and certified by independent public accountants of recognized national
standing, prepared in accordance with GAAP consistently applied; (b) within 45
days after the end of each of month commencing with November 1995, a
consolidated unaudited balance sheet of the Company as at the end of such month
and, if such month end is also the end of a fiscal quarter but not the end of a
fiscal year, within 45 days after the end of such month a consolidated unaudited
statement of income and retained earnings and of cash flow for the Company for
such quarter and for the year to date; (c) promptly, and in no event more than
ten days after the Company's receipt thereof, copies of all audit reports,
so-called "management letters" and other communications and reports submitted to
the Company or any of its Subsidiaries by independent certified public
accountants in connection with each interim or special audit of the Company or
any of its Subsidiaries made by such accountants; and (d) simultaneously with
delivery to the lenders under the Senior Loan Agreement, copies of all financial
statements, information and notices delivered under Section 5.2 of the Senior
Loan Agreement which are not otherwise delivered to the Investors pursuant to
this Section 4.1.
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4.2 Budget and Operating Forecast. Commencing with the Company's 1996
fiscal year, the Company will prepare and submit to the Board of Directors of
the Company a budget for the Company for each fiscal year of the Company at
least 30 days prior to the beginning of such fiscal year, together with
management's written discussion and analysis of such budget. The budget shall be
accepted as the budget for such fiscal year when it has been approved by a
majority of the full Board of Directors of the Company and, thereupon, a copy of
such budget promptly shall be sent to the Investors. The Company shall review
the budget periodically and shall advise the Board of Directors of all changes
therein and all material deviations therefrom.
4.3 Conduct of Business. The Company will, and will cause each of its
Subsidiaries to, continue to engage principally in the business now conducted by
the Company or such Subsidiary and businesses similar or related thereto and
those reasonably compatible therewith. The Company will keep in full force and
effect its corporate existence and will use commercially reasonable efforts to
maintain all properties used or useful in the conduct of its business in good
repair, working order and condition, ordinary wear and tear excepted, as
necessary to permit such business to be properly and advantageously conducted.
4.4 Payment of Taxes, Compliance with Laws, etc. The Company will, and
will cause each of its Subsidiaries to, pay and discharge all lawful taxes,
assessments and governmental charges or levies imposed upon it or upon its
income or property before the same shall become in default, as well as all
lawful claims for labor, materials and supplies which, if not paid when due,
might become a lien or charge upon its property or any part thereof; provided,
however, that neither the Company nor any Subsidiary shall be required to pay
and discharge any such tax, assessment, charge, levy or claim so long as the
validity thereof is being contested by the Company or such Subsidiary in good
faith by appropriate proceedings and an adequate reserve therefor has been
established on its books. The Company will comply with all applicable laws and
regulations in the conduct of its business, including, without limitation, the
Advisers Act and the Investment Company Act of 1940, as amended (the "1940
Act"), and will comply with all applicable federal and state securities laws in
connection with the issuance of any shares of its capital stock.
4.5 Material Adverse Effect. The Company will promptly advise the
Investors of any event which has a Material Adverse Effect on the Company, and
of each suit or proceeding commenced or threatened against the Company or any
Subsidiary which, if adversely determined, could reasonably be expected to have
a Material Adverse Effect on the Company. The Company will also promptly notify
the Investors of any facts which, if such facts had existed on the Closing Date,
would have constituted a material breach of the representations and warranties
contained herein.
4.6 Insurance. The Company will keep its insurable properties insured,
upon reasonable business terms, by financially sound and reputable insurers
against liability, and the perils of casualty, fire and extended coverage in
amounts of coverage at least equal to those customarily maintained by companies
in the same or similar business as the Company. The
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Company will also maintain with such insurers insurance against other hazards
and risks and liability to persons and property to the extent and in the manner
customary for the operation of its business.
4.7 Life Insurance. The Company will maintain, and continue to pay the
premiums on, "key-man" term life insurance from financially sound and reputable
insurers on the life of Xxxxxxx X. Xxxx in the face amount of $5,000,000 with
the proceeds payable to the Company. The Company hereby agrees that such policy
shall not be assigned, borrowed against, pledged or encumbered in any other way.
4.8 Affiliated Transactions. All transactions by and between the Company
and any officer, key employee or stockholder of the Company or persons
controlling, controlled by, under common control with or otherwise affiliated
with such officer, key employee or stockholder, shall be conducted on an
arm's-length basis, shall be on terms and conditions no less favorable to the
Company than could be obtained from nonrelated persons and shall be approved in
advance by the Board of Directors after full disclosure of the terms thereof,
for which purpose the interested party, if a Director, and any affiliate of the
interested party who is a Director, shall not be entitled to vote.
4.9 Use of Proceeds. The Company will use the proceeds from the sale of
the Class B Convertible Preferred Stock to reduce the Company's debt under the
Senior Loan Agreement, to make investments in investment managers and advisers,
and for working capital. Pending use for the above described purposes, said
proceeds shall be temporarily invested in short-term, interest bearing
securities, including U.S. Government securities, certificates of deposit and
similar instruments, and money market mutual funds.
4.10 Inspection. The Company will, upon reasonable prior notice to the
Company, permit authorized representatives of the Investors to visit and inspect
any of the properties of the Company, including its books of account, and to
discuss its affairs, finances and accounts with its officers, administrative
employees and independent accountants, all at such reasonable times and as often
as may be reasonably requested. Each Investor (on behalf of itself and its
representatives) agrees always to keep secret and not ever publish, divulge,
furnish, use or make accessible to anyone (otherwise than in its, his or her
regular business relating to the Company) any knowledge or information of a
confidential or proprietary nature with respect to any records, data, plans,
strategies, business operations or techniques of the Company or any affiliate
(which, to the extent they were disclosed to the Investor or its representative
in writing, where identified as confidential or proprietary) ("Confidential
Information") other than information which (a) is or becomes generally available
to the public other than as a result of disclosure by such Investor or its
representatives in violation of this Agreement, (b) is required by law or
government regulation to be disclosed to a court or government regulatory or
supervisory body; provided, however, that prior to disclosing such information,
the applicable Investor or representative shall give the Company notice and
shall use their respective reasonable efforts to obtain confidential treatment
therefor, (c) such Investors can
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show was contained in a writing in its possession at the time of disclosure,
which information had not been wrongfully acquired, directly or indirectly from
the Company or any affiliate and such Investor is not under an obligation of
confidentiality with respect thereto, (d) is subsequently disclosed to such
Investor by a third party not in violation of any rights of, or obligations to,
the Company or (e) any information which is independently developed by an
employee or agent of such Investor who has not had access to any Confidential
Information.
4.11 Directors Liability. The Certificate of Incorporation or By-laws of
the Company will, at all times during which any nominee of any of the Investors
serves as a director of the Company, provide for indemnification of the
directors of the Company and limitations on the liability of the directors of
the Company to the fullest extent permitted under applicable state law.
4.12 Stock Plans. Effective as of the Closing, the Company shall amend and
restate the Company's 1994 Stock Incentive Plan so that it is in the form
attached hereto as Exhibit E and will adopt the Company's 1995 Stock Incentive
Plan in the form attached hereto as Exhibit F (the "Plan") providing for the
issuance of, or options to purchase, up to 8,500 shares of Common Stock.
Pursuant to the terms of such Plan, shares of stock and stock options may be
granted only to certain categories of officers, employees and directors of the
Company and only pursuant to and in accordance with the terms of the Plan.
4.13 Restrictions and Limitations.
(a) So long as any shares of the Preferred Stock remain outstanding,
the Company shall not, without the written consent of a Majority in Interest of
the Investors:
(i) Increase the number of directors on the Company's Board of
Directors;
(ii) Redeem, purchase or otherwise acquire for value (or pay
into or set aside for a sinking fund for such purpose) any of the
Common Stock, or any other capital stock of the Company; provided,
however, that this restriction shall not apply (i) to the repurchase
or redemption of shares of Common Stock issued pursuant to stock
repurchase provisions or agreements under which the Company has the
option to repurchase such Shares upon the occurrence of certain
events, including the termination of employment and involuntary
transfers by operation of law, provided that (unless the purchase or
agreement containing its terms is or was approved by unanimous vote
of the Board of Directors of the Company) the repurchase price paid
by the Company does not exceed the purchase price paid to the
Company for such shares; or (ii) the provisions of certain
agreements entered into in connection with an investment by the
Company in a Subsidiary or Additional Subsidiary;
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(iii) Declare, pay or enter into an agreement to declare or
pay, dividends on or any distributions in respect of shares of
Common Stock.
(b) So long as any shares of the Preferred Stock remain outstanding,
the Company shall not, without the affirmative vote or written consent of (i) a
Majority in Interest of the Investors acting as a single class, and, (ii) if the
proceeds to be received in respect of each share of Class B Convertible
Preferred Stock is less than the then applicable Qualifying Price, a Majority in
Interest of the Class B Convertible Preferred Stock acting as a single class,
authorize any merger or consolidation of the Company with or into another
Company or entity (except into or with a wholly-owned subsidiary of the Company
with the requisite shareholder approval), or authorize the sale of all or
substantially all the assets of the Company.
(c) So long as any shares of the Preferred Stock remain outstanding,
the Company shall not (i) amend the Certificate of Incorporation or By-Laws of
the Company in any manner adverse to the holders of any class, series, classes
or series of Preferred Stock without the written consent of the holders of a
Majority in Interest of each such affected class, series or classes or series of
Preferred Stock (provided, that the holders of the Series B-1 Voting Convertible
Preferred Stock and the holders of the Series B-2 Non-Voting Convertible
Preferred Stock shall act together as a single class unless otherwise required
by law), (ii) authorize, issue or obligate itself to issue, any preferred stock
which is senior to any class or series of Preferred Stock as to liquidation
preferences, redemption or dividend rights or with voting rights which are
preferential to those of the holders of the Class A Convertible Preferred Stock
and Series B-1 Voting Convertible Preferred Stock, without the written consent
of the holders of a majority of the shares of each class, series, classes or
series, of Preferred Stock as to which such rights are senior or preferential
(provided, that the holders of the Series B-1 Voting Convertible Preferred Stock
and the holders of the Series B-2 NonVoting Convertible Preferred Stock shall
act together as a single class unless otherwise required by law), and (iii)
authorize, issue or obligate itself to issue, any other preferred stock which is
on a parity with any class or series of Preferred Stock as to liquidation
preferences without the written consent of the holders of a majority of the
shares of each class, series, classes or series of Preferred Stock as to which
such rights are on a parity (and, if there is more than one class, series,
classes or series as to which such rights are on a parity, the holders of such
classes or series shall act together as one class); provided, however, that the
Company may, without complying with this clause (iii), authorize, issue and/or
obligate itself to issue (A) additional shares of preferred stock (other than
shares of Class A or Class B Convertible Preferred Stock except as contemplated
by Section 2.3(b) hereof) so long as such shares of preferred stock have rights
(including with respect to liquidation preferences, redemption, dividend rights
and voting) identical (or inferior) to an equal number of shares of Series B-1
Voting Convertible Preferred Stock and are issued or to be issued at a price
equal to or greater than $670 per share (as appropriately adjusted for stock
splits, stock dividends and the like), (B) securities to be issued pursuant to
the Stock Purchase Agreement, (C) securities (other than shares of Class A or
Class B Convertible Preferred Stock except as contemplated by Section 2.3(b)
hereof) in connection with an investment by the Company or any of its
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subsidiaries, directly or indirectly, in another entity, or issuable upon the
exercise of any rights granted in connection with an investment by the Company
or any of its subsidiaries, directly or indirectly, in another entity, (D)
securities pursuant to the exercise of warrants, options or other rights or upon
the conversion of securities, in each case, as to which the holders of such
class of Preferred Stock consented to the issuance pursuant to this Section 7(c)
or which were issued pursuant to an exemption set forth in clauses (A) through
(F) hereof, (E) securities issued pursuant to any merger, sale or similar
transaction, and (F) securities (other than shares of Class A or Class B
Convertible Preferred Stock except as contemplated by Section 2.3(b) hereof)
issued as a result of any stock split, stock dividend, reclassification or
reorganization of the Company.
SECTION 5. REPRESENTATIONS OF INVESTORS
It is the understanding of the Company, and each Investor hereby severally
represents with respect to such Investor's purchase of Securities hereunder
that:
(a) The execution of this Agreement has been duly authorized by all
necessary action on the part of the Investor, has been duly executed and
delivered, and constitutes a valid, binding and enforceable agreement of the
Investor.
(b) The Investor is acquiring the Class B Convertible Preferred
Stock for its own account, for investment, and not with a view to any
"distribution" thereof within the meaning of the Securities Act, and such
Investor has no present or presently contemplated agreement, undertaking,
arrangement, obligation or commitment providing for the distribution thereof;
provided, however, that the disposition of such Investor's property shall at all
times be and remain within its control. The Investor was not formed or organized
for the purpose of acquiring the Class B Convertible Preferred Stock.
(c) The Investor understands that because the Class B Convertible
Preferred Stock have not been registered under the Securities Act, it cannot
dispose of any or all of the Class B Convertible Preferred Stock or the Common
Stock or the Class B Common Stock issuable upon conversion thereof unless the
shares of the relevant series of Class B Preferred Stock or Common Stock or the
Class B Common Stock are subsequently registered under the Act or exemptions
from such registration are available.
(d) The Investor is sufficiently knowledgeable and experienced in
the making of private investments so as to be able to evaluate the risks and
merits of its investment in the Company, and is able to bear the economic risk
of loss of its investment in the Company. The Investor is an "accredited
investor" as such term is defined in Rule 501 promulgated under the Securities
Act. The Investor has carefully reviewed the representations concerning the
Company contained in this Agreement, and has made detailed inquiry concerning
the Company, its business and its personnel; and the officers of the Company
have
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made available to the Investor any and all written information which it has
requested and have answered to such Investor's satisfaction all inquiries made
by such Investor; provided, however, that the foregoing shall in no way affect,
diminish or derogate from the representations and warranties made by the
Corporation hereunder and the right of the Investors to rely thereon and to seek
indemnification hereunder.
(e) The Investor has been advised that the Class B Convertible
Preferred Stock have not been and are not being registered under the Securities
Act or under the "blue sky" laws of any jurisdiction and that the Company in
issuing the Class B Convertible Preferred Stock is relying upon, among other
things, the representations and warranties of the Investor contained in this
Section 5.
(f) No broker, finder, agent or similar intermediary has acted on
behalf of the Investor in connection with this Agreement or the transactions
contemplated hereby and there are no brokerage commissions, finder's fees or
similar fees or commissions payable in connection therewith.
SECTION 6. DEFINITIONS
Capitalized terms used in this Agreement and not otherwise defined herein
shall have the meanings set forth below:
"Additional Subsidiary" shall mean any entity which, after the date
hereof, becomes controlled by the Company or any Subsidiary as a result of the
ownership by the Company or an Additional Subsidiary, singularly or
collectively, of more than 50% of the outstanding voting securities of such
entity or the Company becoming a general partner, managing member or holding
another similar position that enables it to direct management and policies
thereof.
"Advisors Act" means the Investment Advisers Act of 1940, as amended, and
any successor to such Act.
"Average Qualifying Price" shall have the meaning set forth in the
Certificate of Incorporation.
"Base Balance Sheet" shall mean the consolidated balance sheet of the
Company and the Subsidiaries as of September 30, 1995, included in Schedule 2.5.
"Class A Convertible Preferred Stock" shall mean the Company's Class A
Convertible Preferred Stock, par value $.01 per share.
"Class B Convertible Preferred Stock" shall mean the Series B-1 Voting
Convertible Preferred Stock together with the Series B-2 Non-Voting Convertible
Preferred Stock.
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"Class B Common Stock" shall mean the Company's Class B Common Stock, par
value $.01 per share.
"Certificate of Incorporation" shall mean the Company's Amended and
Restated Certificate of Incorporation in the form attached hereto as Exhibit B,
as the same may be amended and/or restated from time to time.
"Closing Date" shall mean November 7, 1995.
"Common Stock" shall mean the Company's Common Stock, par value $.01 per
share.
"GAAP" shall mean generally accepted accounting principles as applied in
the United States of America.
"Governmental Authority" shall mean any Federal, state, local or foreign
governmental department, commission, board, bureau, authority, agency, court,
instrumentality or judicial or regulatory body or entity.
"Investors" shall mean the entities and individuals listed on the
signature page hereof.
"Majority in Interest" shall mean (i) when used with respect to the Class
A Convertible Preferred Stock, Investors holding a majority of the shares of
Common Stock issued or issuable upon conversion of the Class A Convertible
Preferred Stock, (ii) when used with respect to the Class B Convertible
Preferred Stock, Investors holding a majority of the shares of Common Stock
issued or issuable upon conversion of the Series B-1 Voting Convertible
Preferred Stock and Series B-2 Non-Voting Convertible Preferred Stock (after
giving effect to the conversion of the shares of Series B-1 Voting Convertible
Preferred Stock or Class B Common Stock issued or issuable upon such
conversion), and (iii) when used with respect to the Investors, Investors
holding a majority of the shares of Common Stock held by all the Investors
including all shares of Common Stock issuable upon conversion of the Class B
Common Stock, Class A Convertible Preferred Stock, Series B-1 Voting Convertible
Preferred Stock and Series B-2 Non-Voting Convertible Preferred Stock (after
giving effect to the conversion of the shares of Series B-1 Voting Convertible
Preferred Stock or Class B Common Stock issuable upon such conversion).
"Material Adverse Effect" shall mean a material adverse effect upon the
business, assets, operations or financial condition of the Company or the
ownership or leasing of its properties.
"Material Contract" shall have the meaning assigned to such term in
Section 2.10.
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"Plan" shall mean the Affiliated Managers Group, Inc. Amended and Restated
1994 Stock Incentive Plan in the form attached hereto to Exhibit F, as the same
may be amended from time to time.
"Preferred Shares" shall mean the shares of the Class A Convertible
Preferred Stock and Class B Convertible Preferred Stock.
"Qualified Public Float" shall have the meaning set forth in the
Certificate of Incorporation, and shall initially mean the occurrence of (A) a
period of twenty consecutive trading days when the closing price (as hereinafter
defined) for each such day equals or exceeds the applicable Qualifying Price (as
appropriately adjusted for stock splits, stock dividends and the like), when (B)
during such period of twenty consecutive trading days, the aggregate market
value of the Common Stock held by non-affiliates (as such term is defined in
Rule 405 promulgated under the Securities Act) is equal to or greater than
$40,000,000.
"Qualified Public Offering" shall have the meaning set forth in the
Certificate of Incorporation and shall initially mean an underwritten public
offering pursuant to an effective registration statement under the Securities
Act covering the offer and sale of Common Stock of the Corporation to the public
in which the proceeds received by the Corporation and any selling shareholders,
net of underwriting discounts and commissions, equal or exceed $40,000,000 at a
per share sale price to the public which results in the value of the Common
Stock into which each share of Series B-1 Voting Convertible Preferred Stock is
convertible being equal to the Qualifying Price.
"Qualifying Price" shall have the meaning set forth in the Certificate of
Incorporation and shall initially mean $670.00 together with a rate of
appreciation equal to at least 15% per annum compounded annually through
November 7, 2000 (determined on a daily basis); provided, however, that any per
share sale price equal to or in excess of $1,347.60 (as appropriately adjusted
for stock splits, stock dividends and the like) shall be deemed a Qualifying
Price.
"Securities" shall mean the Class B Preferred Stock issued at the Closing
and the Conversion Shares.
"Senior Loan Agreement" shall mean the Credit Agreement and related
Promissory Notes dated as of May 11, 1995, among the Company, the several
Lenders named in the Credit Agreement and Chemical Bank, a New York banking
corporation, as Administrative Agent.
"Series B-1 Voting Convertible Preferred Stock" shall mean the Company's
Series B-1 Voting Convertible Preferred Stock, par value $.01 per share.
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"Series B-2 Non-Voting Convertible Preferred Stock" shall mean the
Company's Series B-2 Non-Voting Convertible Preferred Stock, par value $.01 per
share.
"Stockholders' Agreement" means that certain Stockholders' Agreement dated
November 7, 1995, by and among the Company and all of its stockholders as of the
date hereof.
"Subsidiaries" and "Subsidiary" shall mean and include J M H Management
Corporation, a Delaware corporation, XX Xxxxxxxx Limited Partnership, a Delaware
limited partnership, Systematic Financial Management, L.P., a Delaware limited
partnership, and Skyline Asset Management, L.P., a Delaware limited partnership
and all Additional Subsidiaries from and after the date they become Additional
Subsidiaries.
"1940 Act" means, the Investment Company Act of 1940, as amended, and any
successor to such Act.
SECTION 7. GENERAL
7.1 Amendments, Waivers and Consents.
(a) Sections 1, 2, 3, 5, 6 and, subject to Section 7.1(b) hereof,
Section 7 of this Agreement may be amended, and compliance with any covenant or
provision set forth therein may be waived, if the Company so consents and
obtains written consent thereto from the holder(s) of a Majority in Interest of
the Class B Convertible Preferred Stock; provided, however, that any such
amendment or waiver shall affect all holders of Preferred Shares share for share
alike.
(b) Section 4 and, to the extent any such action would affect the
provisions of such Section, Section 5, 6 and 7 of this Agreement may be amended,
and compliance with any covenant or provision set forth therein may be waived,
if the Company so consents and obtains written consent thereto from the
holder(s) of two-thirds (2/3) of the then outstanding Preferred Shares, or
Common Stock or Class B Common Stock issued upon conversion thereof, acting as a
single class; (with each Preferred Share and each share of Class B Common Stock
being equivalent to the number of shares of Common Stock into which it could
then be converted (after giving effect to the conversion of any resulting shares
of Series B-1 Voting Convertible Preferred Stock or Class B Common Stock
issuable upon any conversion of any such Preferred Share)) provided, however,
that if any such amendment or waiver adversely effects the rights of the holders
of one or more class, series or classes or series of the Company's Preferred
Stock, such amendment or waiver shall only be effective if consented to in
writing by the holder(s) of an aggregate of a Majority in Interest of such
class, series, classes or series of Preferred Stock, consenting as a single
class (and, if there is more than one class or series adversely affected, the
holder of such classes or series shall act together as one
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class; provided, further, that Sections 4.13(b) and (c) may only be amended, and
compliance therewith waived, if the Company obtains written consent from the
holders of a Majority in Interest of the Class B Convertible Preferred Stock).
7.2 Survival of Covenants; Assignability of Rights.
(a) All covenants, agreements, representations and warranties of the
Company made herein and to be performed prior to or at the Closing and in the
certificates, lists, exhibits, schedules or other written information delivered
or furnished by or on behalf of the Company to any Investor in connection
herewith shall be deemed material and to have been relied upon by such Investor,
and, except as otherwise provided in this Agreement (including, with respect to
representations and warranties, paragraph (b) below), shall survive the delivery
of the Class B Convertible Preferred Stock and shall bind the Company's
successors and assigns, whether so expressed or not, and, except as otherwise
provided in this Agreement, all such covenants, agreements, representations and
warranties shall inure to the benefit of the Investors' successors and assigns
and to transferees of the Securities, whether so expressed or not. The
representations and warranties made by the Investors in Section 5 of this
Agreement shall survive the delivery of the Class B Convertible Preferred Stock
and shall bind the Investors' successors and assigns and shall inure to the
benefit of the Company's successors and assigns.
(b) The representations and warranties contained herein and in any
certificate or other writing delivered pursuant hereto shall survive the Closing
Date and the consummation of any or all of the transactions contemplated hereby
but only until December 31, 1996, except for any representations and warranties
pursuant to Section 2.9, which shall survive until the expiration of the
applicable tax statute of limitations (if any). The expiration of any
representation or warranty shall not affect any claim made prior to the date of
such expiration.
7.3 Notices. All notices and other communications provided for herein
shall be in writing and shall be deemed to have been duly given, delivered and
received (a) if delivered personally or (b) if sent by telex or facsimile,
registered or certified mail (return receipt requested) postage prepaid, or by
courier guaranteeing next day delivery, in each case to the party to whom it is
directed at the following addresses (or at such other address for any party as
shall be specified by notice given in accordance with the provisions hereof,
provided that notices of a change of address shall be effective only upon
receipt thereof). Notices delivered personally shall be effective on the day so
delivered, notices sent by registered or certified mail shall be effective upon
their delivery notices sent by telex shall be effective when answered back,
notices sent by facsimile shall be effective when receipt is acknowledged, and
notices sent by courier guaranteeing next day delivery shall be effective on the
day of actual delivery by the courier:
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(a) if to the Company to:
Affiliated Managers Group, Inc.
Xxx Xxxxxxxxxxxxx Xxxxx
00xx Xxxxx
Xxxxxx, XX 00000
Facsimile: (000) 000-0000
Attn: Xxxxxxx X. Xxxx
President and CEO
with a copy (which shall not constitute notice) to:
Xxxxxxx, Procter & Xxxx
Xxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attn: Xxxxxxx X. Floor, P.C.
(b) if to the Investors to:
The addresses as set forth on Exhibit A hereof
with a copy (which shall not constitute notice) to:
Fennebresque, Clark, Xxxxxxxx & Hay
Nationsbank Corporate Center
000 Xxxxx Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attn: Xxxxxxx Xxx, Esq.
7.4 Headings. The Section headings used or contained in this Agreement are
for convenience of the reference only and shall not affect the construction of
this Agreement.
7.5 Counterparts. This Agreement may be executed in one or more
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which together
shall be deemed to constitute one and the same agreement.
7.6 Entire Agreement. This Agreement is intended by the parties as a final
expression of their agreement and intended to be complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained
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herein and therein. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
7.7 Adjustments. All references to share prices and amounts herein shall
be equitably adjusted to reflect stock splits, stock dividends,
recapitalizations and similar changes affecting the capital stock of the
Company.
7.8 Law Governing. This Agreement shall be construed and enforced in
accordance with and governed by the internal laws of the state of Delaware
(without giving effect to conflicts or choice of law principles).
7.9 Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such a manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be deemed
prohibited or invalid under such applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, and such
prohibition or invalidity shall not invalidate the remainder of such provision
or the other provisions of this Agreement.
7.10 Expenses. The Company shall pay all costs and expenses that it incurs
with respect to the negotiation, execution, delivery and performance of this
Agreement and the agreements, documents and instruments contemplated hereby or
executed pursuant hereto, and shall pay the reasonable out-of-pocket expenses of
the Investors incurred with respect to the negotiation, execution and delivery
of this Agreement and the agreements, documents and instruments contemplated
hereby or executed pursuant hereto, provided that the reimbursement owed by the
Company to the Investors with respect to legal fees shall be limited to legal
fees, up to a maximum of $25,000, for the professional services of Fennebresque,
Clark, Xxxxxxxx & Hay, special counsel for the Investors, incurred in connection
with the negotiation, execution and delivery of this Agreement and the
agreements, documents and instruments contemplated hereby or executed pursuant
hereto.
[End of Text]
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as a
sealed instrument as of the day and year first above written.
AFFILIATED MANAGERS GROUP, INC.
By: /s/ Xxxxxxx X. Xxxx
----------------------------------------
Xxxxxxx X. Xxxx
President and Chief Executive Officer
NATIONSBANC INVESTMENT CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------------------
Xxxxxxx X. Xxxxxxx
Senior Vice President
HARTFORD ACCIDENT AND
INDEMNITY COMPANY
By: /s/ Xxxxxx X. Xxxxxx
----------------------------------------
Xxxxxx X. Xxxxxx
CIO and Senior Vice President
ADVENT VII L.P.
By: TA Associates VII L.P., its General Partner
By: TA Associates, Inc., its General Partner
By: *
----------------------------------------
X. Xxxxxxx XxXxxx
Managing Director
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ADVENT ATLANTIC AND PACIFIC II L.P.
By: TA Associates AAP II Partners, its General
Partner
By: TA Associates, Inc., its General Partner
By: *
----------------------------------------
X. Xxxxxxx XxXxxx
Managing Director
CHESTNUT III LIMITED PARTNERSHIP
By: TA Associates VI L.P., its Attorney-in-Fact
By: TA Associates, Inc., its General Partner
By: *
----------------------------------------
X. Xxxxxxx XxXxxx
Managing Director
CHESTNUT CAPITAL INTERNATIONAL III
LIMITED PARTNERSHIP
By: TA Associates VI L.P., its Attorney- in-Fact
By: TA Associates, Inc., its General Partner
By: *
----------------------------------------
X. Xxxxxxx XxXxxx
Managing Director
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ADVENT NEW YORK L.P.
By: TA Associates VI L.P., its General Partner
By: TA Associates, Inc., its General Partner
By: *
----------------------------------------
X. Xxxxxxx XxXxxx
Managing Director
ADVENT INDUSTRIAL II L.P.
By: TA Associates VI L.P., its General Partner
By: TA Associates, Inc., its General Partner
By: *
----------------------------------------
X. Xxxxxxx XxXxxx
Managing Director
TA VENTURE INVESTORS LIMITED
PARTNERSHIP
By: /s/ X. Xxxxxxx XxXxxx
----------------------------------------
X. Xxxxxxx XxXxxx
General Partner
* /s/ X. Xxxxxxx XxXxxx
-----------------------
X. Xxxxxxx XxXxxx
Managing Director
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33
/s/ Xxxxxxx X. Xxxx
----------------------------------------
Xxxxxxx X. Xxxx
/s/ Xxxx X. Xxxxxx
----------------------------------------
Xxxx X. Xxxxxx
/s/ Xxxxxxx X. Floor
----------------------------------------
Xxxxxxx X. Floor
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34
Exhibit A
List of Investors
SHARES OF SERIES B-1 SHARES OF SERIES B-2
NAME VOTING NON-VOTING
AND CONVERTIBLE CONVERTIBLE
ADDRESS PREFERRED STOCK PREFERRED STOCK PURCHASE PRICE
------- --------------- ----------------- --------------
NationsBanc Investment 19,403 $ 13,000,010
Corporation
NationsBank Corporate Center
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Hartford Accident and 7,463 $ 5,000,210
Indemnity Company
Attn: Xxxxxx X. Xxxxxx
000 Xxxxxxxxx Xxxxxx
X.X. Xxx 0000
Xxxxxxxx, XX 00000
Advent VII, L.P. 1868.1249 $ 1,251,643.69
Advent Atlantic and Pacific II 384.1322 257,368.57
Chestnut III 145.2949 97,347.58
Chestnut Capital International III 48.4689 32,474.16
Advent New York 186.8237 125,171.88
Advent Industrial II 138.5040 92,797.68
TA Venture Investors 30.8201 20,649.47
x/x XX Xxxxxxxxxx, Xxx.
Xxxx Xxxxxx Xxxxx
Xxxxx 0000
000 Xxxx Xxxxxx
Xxxxxx, XX 00000
Xxxxxxx X. Xxxx 149.2500 $ 99,997.50
c/o Affiliated Managers Group,
Inc.
Xxx Xxxxxxxxxxxxx Xxxxx
00xx Xxxxx
Xxxxxx, XX 00000
Xxxx X. Xxxxxx 3.7313 $ 2,499.97
c/o Affiliated Managers Group,
Inc.
Xxx Xxxxxxxxxxxxx Xxxxx
00xx Xxxxx
Xxxxxx, XX 00000
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35
SHARES OF SERIES B-1 SHARES OF SERIES B-2
NAME VOTING NON-VOTING
AND CONVERTIBLE CONVERTIBLE
ADDRESS PREFERRED STOCK PREFERRED STOCK PURCHASE PRICE
------- --------------- --------------- --------------
Xxxxxxx X. Floor 29.8500 $ 19,999.50
x/x Xxxxxxx, Xxxxxxx & Xxxx
Xxxxxxxx Xxxxx
Xxxxxx, XX 00000
TOTAL 10,448 19,403 $ 20,000,170
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