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EXHIBIT 2.4
PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED PURSUANT TO A CONFIDENTIAL TREATMENT
REQUEST FILED WITH THE COMMISSION. ASTERISKS (*) IDENTIFY WHERE SUCH
CONFIDENTIAL INFORMATION HAS BEEN OMITTED. THE OMITTED PORTIONS HAVE BEEN FILED
SEPARATELY WITH THE COMMISSION.
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PURCHASE AGREEMENT
by and among
ASSET ALLIANCE CORPORATION
METROPOLITAN CAPITAL ADVISORS LLC
METROPOLITAN CAPITAL MANAGERS LLC
METROPOLITAN CAPITAL ADVISORS, INC.
KJ ADVISORS, INC.
METROPOLITAN CAPITAL III, INC
METROPOLITAN CAPITAL ADVISORS, L.P.
METROPOLITAN CAPITAL PARTNERS II, L.P.
METROPOLITAN CAPITAL PARTNERS III, L.P.
XXXXXXX XXXXXXX
XXXXX XXXXXXXX
and
XXXXXXX XXXXXXX CHILDREN'S TRUST
Dated as of: March 24, 1998
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TABLE OF CONTENTS
Page
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ARTICLE I.
DEFINITIONS
Section 1.1. Definitions..............................................2
ARTICLE II.
RELATED TRANSACTIONS
Section 2.1. Qualification of LLC.....................................9
Section 2.2. Employment Agreements....................................9
Section 2.3. Transfer of Assets to LLC................................9
Section 2.4. LLC Agreements...........................................9
ARTICLE III.
PURCHASE AND SALE; CLOSING; RELATED MATTERS
Section 3.1. Purchase and Sale.......................................10
Section 3.2. Purchase Price..........................................11
Section 3.3. The Closing.............................................13
Section 3.4. Further Actions.........................................13
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF
THE HOLDING COMPANIES AND EQUITYHOLDERS
Section 4.1. Organization and Related Matters........................15
Section 4.2. Authority; No Violation; Consents.......................16
Section 4.3. Assets Under Management.................................17
Section 4.4. Financial Statements....................................17
Section 4.5. Compliance with Applicable Law..........................18
Section 4.6. Books and Records.......................................19
Section 4.7. Ineligible Persons......................................19
Section 4.8. Company Assets..........................................19
Section 4.9. Company Contracts.......................................19
Section 4.10. Technology and Intellectual Property....................20
Section 4.11. Legal Proceedings.......................................20
Section 4.12. Taxes and Tax Returns...................................20
Section 4.13. Insurance...............................................22
Section 4.14. Labor and Employment Matters............................22
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Section 4.15. Benefit Plan Obligations................................23
Section 4.16. No Broker...............................................24
Section 4.17. Absence of Changes......................................24
Section 4.18. The Equityholders.......................................24
Section 4.19. Additional Representations Regarding Pooled Products....24
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF
THE PARENT
Section 5.1. Organization............................................26
Section 5.2. Authority; No Violation; Consents.......................26
Section 5.3. No Actions, Suits or Proceedings........................27
Section 5.4. Financial Statements....................................27
Section 5.5. Capitalization..........................................28
Section 5.6. Compliance with Applicable Law..........................28
Section 5.7. Eligibility.............................................29
Section 5.8. No Broker...............................................29
Section 5.9. Other Instruments.......................................29
ARTICLE VI.
COVENANTS
Section 6.1. Conduct of Business.....................................30
Section 6.2. Advisory Contract Consents and Approvals and Other
Actions ................................................31
Section 6.3. Confidentiality and Announcements.......................31
Section 6.4. Expenses................................................32
Section 6.5. Release of Each Manager.................................32
Section 6.6. Covenants of the Parent.................................32
Section 6.7. Access; Certain Communications..........................32
Section 6.8. Regulatory Matters; Third Party Consents................33
Section 6.9. Insurance...............................................33
Section 6.10. Notification of Certain Matters.........................33
Section 6.11. No Solicitation.........................................33
Section 6.12. Registration Rights; Lockup Agreements..................34
Section 6.13. Standstill..............................................34
Section 6.14. Cash at Closing.........................................34
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ARTICLE VII.
CONDITIONS TO CLOSING
Section 7.1. Conditions to the Parent's Obligations..................35
Section 7.2. Conditions to the Holding Companies',
Equityholders' and Advisors' Obligations................36
Section 7.3. Satisfaction of Conditions - IPO........................37
Section 7.4. Mutual Condition........................................37
ARTICLE VIII.
INDEMNIFICATION
Section 8.1. Obligations of the Shareholders.........................38
Section 8.2. Obligations of the Parent...............................38
Section 8.3. Procedure...............................................38
Section 8.4. Notice of Non-Third Party Claims........................40
Section 8.5. Survival of Indemnity...................................40
Section 8.6. Adjustments to Indemnification Obligations..............40
Section 8.7. Limitation on Indemnification...........................41
Section 8.8. Purchase Price Adjustment...............................41
Section 8.9. Exclusive Remedy........................................41
ARTICLE IX.
TAX MATTERS
Section 9.1. Tax Cooperation.........................................42
Section 9.2. Tax Returns.............................................42
Section 9.3. Liability for Taxes.....................................42
Section 9.4. Procedures Related to Tax Claims........................43
Section 9.5. Survival of Tax Claims and Section 4.12 Representation..43
Section 9.6. Exclusive Remedy........................................43
Section 9.7. Payments for Indemnification under Article IX...........43
Section 9.8. Code Section 754 Election...............................43
Section 9.9. Interim Closing of the Books............................44
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ARTICLE X.
TERMINATION/SURVIVAL
Section 10.1. Termination.............................................44
Section 10.2. Effect of Termination...................................45
Section 10.3. Survival of Representations and Warranties..............45
ARTICLE XI.
MISCELLANEOUS
Section 11.1. Disputes................................................45
Section 11.2. Amendments; Extension; Waiver...........................46
Section 11.3. Entire Agreement........................................46
Section 11.4. Specific Performance; Injunctive Relief.................46
Section 11.5. Interpretation..........................................46
Section 11.6. Severability............................................46
Section 11.7. Notices.................................................47
Section 11.8. Binding Effect; Persons Benefitting; No Assignment......48
Section 11.9. Counterparts............................................48
Section 11.10 Governing Law...........................................48
Section 11.11 Jurisdiction............................................48
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PURCHASE AGREEMENT
PURCHASE AGREEMENT, dated as of March 24, 1998 (this "Agreement"),
by and among Asset Alliance Corporation, a Delaware corporation (the "Parent"),
Metropolitan Capital Advisors LLC, a Delaware limited liability company
("LLC-1"), Metropolitan Capital Managers LLC, a Delaware limited liability
company ("LLC-2"), Metropolitan Capital Managers II LLC ("LLC-3" and,
collectively with LLC-1 and LLC-2, the "LLCs"), Metropolitan Capital Advisors,
Inc., a New York corporation ("MCA"), KJ Advisor's, Inc., a New York corporation
("KJ"), Metropolitan Capital III, Inc., a New York corporation ("Capital" and
together with MCA and KJ the "Holding Companies"), Metropolitan Capital
Advisors, L.P., a Delaware limited partnership ("Capital Advisors"),
Metropolitan Capital Partners II, L.P., a New York limited partnership,
("Capital Partners"), Metropolitan Capital Partners III, L.P., a Delaware
limited partnership, ("Capital III" and together with Capital Advisors and
Capital Partners the "Advisors"), Xxxxxxx Xxxxxxx ("Xxxxxxx"), Xxxxx Xxxxxxxx
("Xxxxxxxx") and Xxxxxxx Xxxxxxx Children's Trust (the "Trust" and collectively
with Xxxxxxx and Finerman the "Equityholders").
RECITALS:
WHEREAS, Xxxxxxx and Xxxxxxxx own all of the capital stock of the
Holding Companies and the Equityholders and the Holding Companies own all of the
general and limited partnership interests in the Advisors;
WHEREAS, the Equityholders and the Holding Companies wish to
transfer all of their interests in Capital Advisors to LLC-1 and in Capital
Partners to LLC-2 and Capital III to LLC-3 in exchange for all of the membership
interests therein on the terms and conditions and for the consideration
described in this Agreement; and
WHEREAS, the Equityholders desire to sell to Parent and Parent
desires to purchase from the Equityholders a membership interest in each of
LLC-1, LLC-2 and LLC-3;
NOW, THEREFORE, in consideration of and premised upon the various
representations, warranties, covenants and other agreements and undertakings of
the parties contained in this Agreement, and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties agree as follows:
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ARTICLE I.
DEFINITIONS
Section 1.1. Definitions. (a) For all purposes in this Agreement,
the following terms shall have the respective meanings set forth in this Section
1.1 (such definitions to be equally applicable to both the singular and plural
forms of the terms herein defined):
"Advisers Act" means the Investment Advisers Act of 1940, as
amended, and all rules and regulations of the SEC thereunder.
"Affiliate" means any corporation, partnership, entity or other
Person that directly, or indirectly through one or more intermediaries, controls
or is controlled by, or is under common control with, the Person specified
including with respect to Parent, any Subsidiary or Manager.
"Applicable Law" means any statute, law, ordinance, rule, public
administrative interpretation, regulation, order, writ, injunction, directive,
judgment, decree or other requirement of any Governmental Authority applicable
to the Parent, any Manager, any Holding Company or Advisor, any Pooled Product,
or any of their respective properties, assets, officers, directors, employees or
agents.
"Business Day" means any day other than a Saturday, a Sunday or a
day on which banks in the City of New York are generally closed for regular
banking business.
"Closing" means the completion of the transactions contemplated by
Sections 2.3 and 3.1 of this Agreement and the effectiveness of the Agreements
contemplated in Sections 2.2 and 2.4 of this Agreement.
"Closing Date" means the date of the Closing.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company Assets" means all assets of the Advisors as of the date
hereof or as of the Closing (other than Excluded Assets), as applicable,
including, but not limited to, the Company Contracts, Furniture, Fixtures and
Equipment, Intellectual Property, Leased Properties, Real Property, Records,
Software and any other material assets of the Advisors.
"Company Contract" means any written investment advisory agreement
or partnership agreement to which any Advisor is a party and any lease, license
or other agreement relating to the use by any Advisor of any Furniture, Fixtures
and Equipment, Intellectual Property, Software and Technology Systems, together
with all amendments and
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supplements thereto, and all rights and interests of any Advisor arising
thereunder or in connection therewith.
"Encumbrance" means any lien, pledge, security interest, claim,
charge, easement, limitation, commitment, encroachment, restriction or
encumbrance of any kind or nature whatsoever.
"Environmental Law" means all applicable foreign, federal and state
laws, rules, regulations, common law, ordinances, decrees, orders, contracts and
other binding obligations relating to pollution (including the treatment,
storage and disposal of hazardous wastes and the cleanup of releases and
threatened releases of materials), the preservation of the environment or the
exposure to hazardous materials in the environment or workplace.
"Equity Securities" means capital stock, partner interests or other
equity interests of any Person or any securities convertible into or
exchangeable for capital stock or other equity interests or any other rights,
warrants or options to acquire any of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
"Excluded Assets" means all cash or cash equivalents held by, or for
the account of, the Advisors as of the close of business on the Closing Date
which exceeds the product of (x) the number of days from the Closing Date
through the end of the month in which the Closing occurs, inclusive, and (y)
$2,500 and the exclusion of which would not give rise to a Purchase Price
adjustment under clause (ii) of the proviso within Section 3.2(a) as of such
date, and any assets set forth on Schedule 1.1 hereto.
"Furniture, Fixtures and Equipment" means all furniture, fixtures
and equipment that are located in the ordinary course at any Operating Site.
"GAAP" means, with respect to any Person, generally accepted
accounting principles as used in the United States of America as in effect at
the time any applicable financial statements were prepared or any act requiring
the application of GAAP was performed, applied on a consistent basis.
"Governmental Authority" means any nation, state, territory,
province, county, city or other unit or subdivision thereof or any entity,
authority, agency, department, board, commission, instrumentality, court or
other judicial body authorized on behalf of any of the foregoing to exercise
legislative, judicial, regulatory or administrative functions of or pertaining
to government, and any governmental or non-governmental self-regulatory
organization of which any party hereto is a member.
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"Immediate Family" means, with respect to any individual, such
individual's spouse, parents and children (and estates, trusts, partnerships and
other entities and legal relationships of which a substantial majority in
interest of the beneficiaries, members, owners, investors or participants at all
times in question are, directly or indirectly, one or more of the Persons
described above and/or such individual).
"Indemnifiable Claim" means any Loss for which a Person is entitled
to indemnification under this Agreement.
"Indemnified Party" means a Person entitled to the benefits of
indemnification hereunder.
"Indemnifying Party" means a Person obligated to provide
indemnification hereunder.
"Independent Accounting Firm" means any accounting firm of
recognized national standing, except for any such firm that serves as the
independent public accountants of any of the parties or any of their respective
Affiliates; provided, however, that if there exists no accounting firm that
meets the qualifications set forth above in this definition, then the term
"Independent Accounting Firm" shall mean any accounting firm designated as such
by the Parent and the Equityholders.
"Intellectual Property" means all domestic and foreign letters
patent, patents, software, know-how, trade names, common law and other
trademarks, service marks, copyright registrations and applications and state or
federal common law usages, and all registrations or applications for
registration of any of the foregoing.
"Investment Company Act" means the Investment Company Act of 1940,
as amended, and all rules and regulations of the SEC thereunder.
"IPO" means the issuance of shares of parent Common Stock to the
public pursuant to a "firm underwritten" offering registered with the SEC.
"IRS" means the Internal Revenue Service.
"Lease" means any of the real estate leases or subleases, or a
sublease of any Advisor with respect to any Operating Site.
"Leased Properties" means all leasehold interests of any Advisor in
real property.
"Loss" means any and all monetary claims, losses, liabilities,
costs, penalties, fines and expenses (including reasonable attorneys',
accountants', consultants' and experts'
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fees and expenses), damages, monetary obligations to third parties,
expenditures, monetary judgments or awards payable or due to any other party
that are imposed upon or otherwise incurred or suffered by the relevant Person.
"Manager" means any investment advisor in which Parent owns a
preferred equity interest, and any of their respective principal owners, or
officers, directors or general partners and any other Affiliate of Parent which
provides money management and investment advisory services, including by
management of a Pooled Product.
"Membership Interest" means, with respect to LLC-1, LLC-2 or LLC-3,
the limited liability company interest of a member of such LLC at any particular
time, including any and all rights and benefits to which such member is entitled
under the LLC Agreement relating to such LLC and the Delaware Limited Liability
Company Act, together with the obligations of such member under such LLC
Agreement and such Act.
"Operating Sites" means all offices at which any Advisor conducts
business.
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"Permitted Encumbrances" means all Encumbrances which are:
(1) Encumbrances set forth on Schedule 1.1(b);
(2) Taxes or assessments that are not yet due and payable;
(3) matters which would be shown on an accurate survey and any other
defect or exception which would be disclosed by a search of title, which
in each case does not materially impair the use, operation, value or
marketability of the asset to which it relates;
(4) liens of landlords and liens of carriers, warehousemen,
mechanics and materialmen and other like liens arising in the Ordinary
Course of Business for sums not yet due and payable; or
(5) other liens or imperfections on assets which individually or in
the aggregate do not exceed $25,000 and do not materially detract from the
value of or materially impair the existing use of the assets affected by
such liens or imperfections.
"Parent Member Interests" means the membership interests owned by
AAC and its Affiliates.
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"Person" means any individual, corporation, company, limited
liability company, partnership (limited or general), joint venture, association,
trust or other entity.
"Pooled Products" means each vehicle for collective investment (in
whatever form of organization, including in the form of a corporation, company,
limited liability company, partnership (limited or general), association, trust
or other entity and including each separate portfolio of any of the foregoing)
with respect to which any Advisor (in the case of representations in Article IV)
or Parent, or any Manager or other affiliate of the Parent (in the case of
representations in Article V) acts as the sponsor, general partner, managing
member, investment manager, investment adviser or in a similar capacity.
"Real Property" means all real property, appurtenances thereto,
fixtures and improvements, rights in connection therewith, or any interest
therein, including, without limitation, leasehold estates, of any Advisor.
"Records" means all records and original documents in the possession
of any Holding Company or Advisor which pertain to or are utilized by any
Advisor to administer, reflect, monitor, evidence or record information
respecting the business or conduct of any Advisor including: (1) all such
records maintained on electronic or magnetic media, or in the electronic data
base system of any Advisor, and (2) all such records and original documents
respecting the Company Contracts as necessary to comply with any Applicable Law,
including any and all records kept in accordance with, or documents filed
pursuant to, any Securities Laws.
"Related Agreements" means each of the Employment Agreements and the
LLC Agreements.
"SEC" means the Securities and Exchange Commission.
"SEC Documents" means all reports and registration statements filed,
or required to be filed, by law, by contract or otherwise, by an entity pursuant
to the Securities Laws.
"Securities Laws" means the Securities Act of 1933, as amended; the
Securities Exchange Act of 1934, as amended; the Investment Company Act; the
Advisers Act; the published rules and regulations of the SEC promulgated
thereunder; and the securities or "blue sky" laws of any state or territory of
the United States.
"Software" means all computer programs, software, firmware and
related documentation used in the operation of the Technology Systems.
"Subsidiary" means, when used with respect to any Person which is
not a natural person, any corporation, association or other business entity a
majority of the voting or
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similar power of which is at the time owned by such Person or by one or more
Subsidiaries of such Person or by such Person and one or more Subsidiaries of
such Person.
"Taxes" mean all federal, provincial, territorial, state, municipal,
local, foreign or other taxes, imposts, rates, levies, assessments and other
charges including, without limitation, all income, franchise, gains, capital,
real property, goods and services, transfer, value added, gross receipts,
windfall profits, severance, ad valorem, personal property, production, sales,
use, license, stamp, documentary stamp, mortgage recording, excise, employment,
payroll, social security, unemployment, disability, estimated or withholding
taxes, and all customs and import duties, together with any interest, additions,
fines or penalties with respect thereto or in respect of any failure to comply
with any requirement regarding Tax Returns and any interest in respect of such
additions, fines or penalties.
"Tax Return" means any return, report, information statement,
schedule or other document (including any related or supporting information)
with respect to Taxes.
"Treasury Regulations" means the regulations promulgated under the
Code.
"Value Per Share" means the average closing price per share of
Parent Common Stock on a national securities exchange or in the National Market
portion of the National Association of Securities Dealers' Automated Quotation
System for the ten trading days immediately preceding such date of determination
(or, if no trades were reported for a particular day or the Parent Common Stock
is traded in a market for which closing prices are not reported, the average of
the most recent bid and ask price per share of Parent Common Stock).
(b) The following terms shall have the meaning specified in the
indicated section of this Agreement:
Term Section
---- -------
Advisors ......................... Opening Paragraph
Agreement ........................ Opening Paragraph
Benchmark ........................ Section 2.2(b)
Capital .......................... Opening Paragraph
Capital Advisors ................. Opening Paragraph
Capital Partners ................. Opening Paragraph
Capital III ...................... Opening Paragraph
Claim ............................ Section 3.1
Company Balance Sheets ........... Section 4.4
Company Financial Statements ..... Section 4.4
Debenture ........................ Section 3.2
Finerman ......................... Opening Paragraph
Employment Agreement ............. Section 2.2
Equityholders .................... Opening Paragraph
ERISA Affiliate .................. Section 4.15(a)
Holding Companies ................ Opening Paragraph
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KJ ............................... Opening Paragraph
LLC-1 ............................ Opening Paragraph
LLC-2 ............................ Opening Paragraph
LLC-3 ............................ Opening Paragraph
LLC Agreements ................... Section 2.4
Material Adverse Effect .......... Section 4.1
Non-Third Party Claim ............ Section 8.4
Parent ........................... Opening Paragraph
Parent Balance Sheet ............. Section 5.4
Parent Common Stock .............. Section 3.2(a)
Parent Financial Statements ...... Section 5.4
Parent Material Adverse Effect ... Section 5.1
Permits .......................... Section 4.5
Plans ............................ Section 4.15(a)
Purchase ......................... Section
Release .......................... Section 6.5
Xxxxxxx .......................... Opening Paragraph
Tax Claim ........................ Section 9.3(a)
Technology Systems ............... Section 4.10
Third Party Claim ................ Section 8.3(a)
Transfer Agreement ............... Section 2.3
Trust ............................ Opening Paragraph
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ARTICLE II.
RELATED TRANSACTIONS
Section 2.1. Qualification of LLC. As promptly as practicable after
the date hereof, the Equityholders will make all appropriate regulatory and
other filings necessary to form LLC-1, LLC-2 and LLC-3 and to enable them to
continue the business of the Advisors after the Closing.
Section 2.2. Employment Agreements. At the Closing, each of Xxxxxxx
and Finerman shall deliver to LLC-2 an executed Employment Agreement (an
"Employment Agreement") in substantially the form annexed hereto as Exhibit 2.2.
Section 2.3. Transfer of Assets to LLC. Immediately prior to the
Closing, (a) the Holding Companies and the Equityholders shall transfer all of
their partner interests in Capital Advisors to LLC-1 and all of their partner
interests in Capital Partners and Capital III to LLC-2 and LLC-3, respectively,
in exchange for all of the membership interests in LLC-2 and LLC-3 and the
assumption by LLC-1, LLC-2 and LLC-3 of all of the liabilities of Capital
Advisors, Capital Partners and Capital III, respectively, (b) LLC-1 shall cause
Capital Advisors to convert into a limited liability company under the laws of
the state of Delaware with LLC-1 as the sole member thereof and (c) LLC-2 shall
cause Capital Partners and Capital III to liquidate into LLC-2 and LLC-3,
respectively; provided, however, that the conversion set forth in paragraph (b)
shall occur only if the Parent, in good faith, determines that such transfer
will not grant the limited partners of Bedford Falls Investors, L.P. ("BFI") (i)
the right to terminate BFI or (ii) the right to consent to or approve the
transactions contemplated by this Agreement.
Section 2.4. LLC Agreements. Immediately after the Closing, LLC-1
and LLC-2 and LLC-3 shall commence operations in accordance with the LLC
Agreements (the "LLC Agreements") each in the form annexed hereto as Exhibit 2.4
except that the LLC-3 agreement shall be modified to reflect the offshore
structure involved. Notwithstanding the foregoing, each party hereto will
consider, in good faith, any changes to the LLC Agreement which are proposed as
reasonably necessary to correct any ambiguity or defect in, or to otherwise
modify the terms of, the LLC Agreements in a manner necessary to accomplish the
transactions contemplated herein; provided, however, that no party shall be
required to consent to any change which is adverse to their current or future
economic rights, or materially adverse to their governance or control rights.
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ARTICLE III.
PURCHASE AND SALE; CLOSING; RELATED MATTERS
Section 3.1. Purchase and Sale.
(a) Subject to the terms and conditions of this Agreement, at the
Closing each of the Equityholders hereby agrees to sell and deliver
through a series of related transactions to Parent or any of its wholly
owned subsidiaries, as determined by Parent, free and clear of any
restrictions, liens, claims, charges, security interests, assignments,
mortgages, deposit arrangements, pledges or encumbrances of any kind or
nature whatsoever (collectively, "Claims"), other than as set forth in the
LLC Agreements, and Parent hereby agrees to purchase from each
Equityholder, for the price set forth in Section 3.2, 100% of such
Person's Manager Membership Interest, but not such Person's Non-Manager
Member Membership Interest, (as defined in the LLC Agreements), which will
include an approximately 50% profits and loss participation in each LLC
and approximately 49% of the total Capital Accounts of each LLC.
Immediately thereafter, each LLC shall distribute to the Non-Manager
Members, pro rata in accordance with their Percentage Interests (as
defined in the LLC Agreements), the Excluded Assets in redemption of a
portion of such Non-Manager Members' interests in the LLCs. In connection
with such redemptive distributions, each LLC shall revalue its assets and
restate its Capital Accounts (as defined in the LLC Agreements) in
accordance with Treas. Reg. ss.1.704-1(b)(2)(iv)(f) such that, immediately
after the purchases and sales and redemptive distributions, the aggregate
Capital Accounts of the Non-Manager Members, on the one hand, and the
Manager Members, on the other, in each LLC are equal; provided, however,
that the Non- Manager Members' Capital Accounts shall be larger than the
Manager's Capital Accounts to the extent of the Gross Asset Value (as
defined in the LLC Agreements), if any, of the Received Catch-Up Revenues,
and, in connection therewith, the parties hereto agree that the purchases
and sales do not include any performance fees earned, but not yet paid,
for the period from January 1, 1998 until the Closing Date.
(b) Notwithstanding anything else herein to the contrary, the
Equityholders shall not be required to proceed with the transactions
described herein, if, prior to the Closing Date, a regulatory body
initiates a formal proceeding against the Parent or any of its Managers,
subsidiaries or any of their respective affiliates, or informs such party
they are a target of an investigation by that agency involving a violation
of law. Parent shall notify Equityholder promptly of any matter described
in this subsection. The Equityholders must provide written notice to the
Parent of their decision not to proceed under this Agreement within five
days of receiving notice of such event from the Parent.
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Section 3.2. Purchase Price.
(a) The aggregate purchase price for the Manager Membership
Interests shall be in the form one or more Subordinated Convertible
Debentures in the aggregate principal amount of $17,850,000, in the form
attached hereto as Exhibit 3.2(a) (the "Debenture") convertible in the
aggregate into 1,785,000 shares (subject to adjustment as provided below)
of Common Stock, par value $.01 per share, of Parent ("Parent Common
Stock") at a conversion price of $10 per share (the "Conversion Price"),
$17,850,000 in cash and (subject to the Purchase Price Adjustment
described in Section 3.2(b) below) the right to receive such
Equityholder's pro rata portion of the contingent payment described in
Section 3.2(c) below, without interest (collectively, the "Purchase
Price"); provided, however, that (i) ****[The remainder of this subsection
has been omitted pursuant to the confidential treatment request referenced
on the cover page hereto. The omitted portion has been filed separately
with the Commission.]****
(b) ****[This subsection has been omitted pursuant to the
confidential treatment request referenced on the cover page hereto. The
omitted portion has been filed separately with the Commission.]****
(c) ****[This subsection has been omitted pursuant to the
confidential treatment request referenced on the cover page hereto. The
omitted portion has been filed separately with the Commission.]****
(d) ****[This subsection has been omitted pursuant to the
confidential treatment request referenced on the cover page hereto. The
omitted portion has been filed separately with the Commission.]****
(e) If between the date hereof and the date on which the Parent is
obligated to deliver or repurchase, or any Equityholder is obligated to
return, any shares of Parent Common Stock, the shares of Parent Common
Stock are subdivided or combined or a dividend is paid in such shares in
respect of such shares, the number and maximum number of such shares
subject to such obligation, or the amount of cash due on any such
repurchase, shall be proportionally adjusted to reflect such occurrence.
(f) Each certificate representing shares of Parent Common Stock and
each evidence of Membership Interests in the LLCs shall bear a suitable
legend regarding restrictions on transfer under Applicable Law and the
related LLC Agreement as applicable. For so long as there may be an
adjustment due under Section 3.2(b), the Equityholders shall retain the
Debentures in an aggregate amount, pro rata among the Equityholders, equal
to the excess of $13 million over the Parent Revenue Allocation as of any
date, but in no event more than $5 million, provided, however, that
conversion of the entire Debenture may nevertheless be permitted subject
to the
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Equityholders agreeing to retain the stock thereby acquired until such
adjustment is finally determined.
(g) The determinations required by Section 3.2(b) and (c) above
shall be made by the parties as promptly as practicable, and in any event
within 45 days, after the applicable measurement date.
(h) Each of the Equityholders and Advisors and the Parent
acknowledges and agrees that the Purchase Price is allocable, in its
entirety, to (i) the cash, cash items, receivables, tangible personal
property and other balance sheet items (including liabilities appearing
therein as deducting therefrom) of the Advisors (which shall be valued at
fair market value as of the Closing) and (ii) the goodwill associated with
the business of the Advisors (which shall represent the residual balance
of the Purchase Price after taking into account such balance sheet items)
and that the allocation of the Purchase Price among and between such items
shall be as set forth on Annex 3.2(h) attached hereto.
(i) Each of the parties hereto agrees that the purchase price does
not include the capital account of Capital Advisors in BFI nor any of the
interests in the profits or losses of the interest as a general partner in
BFI, and that subsequent to the Closing, the Equityholders (and not the
Parent) shall maintain any minimum balance of such capital account
required by the governing documents of BFI; provided, however, if such
minimum balance requirement results in more than an additional $2.1
million being contributed as a result of capital contributions being made
to BFI, the parties shall mutually determine alternatives to the
maintenance of such minimum balance.
(j) Each of the parties hereto agrees to take no position
inconsistent with the acknowledgment and agreement set forth in Section
3.2(h) above including, without limitation, on any Tax return or report
(including information returns, declarations and reports) or in any audit
or judicial or administrative proceedings before any Governmental
Authority or otherwise.
Section 3.3. The Closing. The Closing shall take place (i) at the
office of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000 at 10:00 a.m., New York City time, no later than 31 days after
the last to be fulfilled or waived of the conditions set forth in Article VII
hereof shall be fulfilled or waived in accordance herewith or (ii) at such other
time and place and/or on such other date as the Equityholders and Parent may
agree.
Section 3.4. Further Actions. If at any time after the Closing,
Parent 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 Parent or any of its Affiliates its
right, title or interest in, to or under any of the rights,
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properties or assets of any of the entities party to any of the transactions
contemplated hereby acquired or to be acquired by Parent or any of its
Affiliates as a result of, or in connection with, such transactions or otherwise
to carry out this Agreement, the officers, directors and partners of the Holding
Companies and the Advisors shall be authorized to execute and deliver, in the
name and on behalf of each of the entities party to any of such transactions or
otherwise, all such deeds, bills of sale, assignments and assurances and to take
and do, in the name and on behalf of each such entity or otherwise, all such
other reasonable 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 Parent or any of its Affiliates or otherwise to
carry out this Agreement.
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ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF
THE HOLDING COMPANIES AND EQUITYHOLDERS
Except as set forth in writing in a Schedule by reference to the
appropriate section, subsection or clause hereof and delivered to the Parent
prior to the date hereof, each Holding Company and Equityholder represents and
warrants to the Parent as follows:
Section 4.1. Organization and Related Matters. Each Holding Company
is a corporation, duly incorporated, validly existing and in good standing under
the laws of the state of their incorporation. Each Advisor is a limited
partnership duly formed, validly existing and in good standing under the laws of
the state of their incorporation. Each Pooled Product has been duly organized as
a corporation, general partnership, limited partnership or group trust, as the
case may be, and is validly existing and, if applicable, in good standing under
the laws of its jurisdiction of organization. Each Holding Company, Advisor,
Equityholder and Pooled Product has the corporate or other requisite power and
authority to carry on its business as it is now being conducted, to own, lease
and operate all of its properties and assets, and is duly licensed or qualified
to do business in each jurisdiction in which the nature of the business
conducted by it or the character or location of the properties and assets owned,
leased or operated by it makes such qualification or licensing necessary, except
where the failure to be so qualified or licensed would not have a material
adverse effect on the business, assets, financial condition or results of
operations of the Advisors taken as a whole or any of the Pooled Products, or on
the ability of any of the parties to complete the transactions contemplated
hereby (a "Material Adverse Effect"). The charter and by-laws or comparable
organizational documents and any amendments thereto of each Advisor and each
Pooled Product, complete and correct copies of which as currently in effect have
heretofore been delivered or made available to the Parent, have been filed with
or notified to any applicable Governmental Authority in accordance with all
Applicable Law. Other than the equity interests in the Advisors, all of which
are duly and validly authorized, issued, outstanding, fully paid, nonassessable
(except as required by the Delaware Limited Partnership Act) and owned of record
and beneficially by the Equityholders and the Holding Companies, none of the
Advisors has any outstanding securities or partner interests, is subject to any
obligation, contingent or otherwise, to issue any securities or partner
interests to any Person or is subject to any preemptive or similar rights in
favor of any Person in the event of the issuance of any securities or partner
interests by any of the Advisors. None of the equity interests in any of the
Advisors has been issued in violation of any Applicable Law excluding from the
foregoing violations which would not have a Material Adverse Effect. None of the
Advisors has any Subsidiaries or owns any Equity Securities other than Equity
Securities issued by the Pooled Products or any other securities other than
short-term high quality money market securities. At the Closing Date, none of
the Holding Companies shall conduct any business other than acting as the
general partner of one of the Advisors.
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Section 4.2. Authority; No Violation; Consents.
(a) Each Holding Company and Advisor and such Equityholder has full
power, right and authority to execute and deliver this Agreement and each
Related Agreement to which it is a party and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this Agreement
and each Related Agreement to which any Holding Company or Advisor or such
Equityholder is a party and the consummation of the transactions contemplated
hereby and thereby have been duly and validly approved by all requisite action
on the part of each Holding Company and Advisor and each of the Equityholders,
and no other proceedings on the part of any of them are necessary to approve
this Agreement or any Related Agreement or to consummate the transactions
contemplated hereby or thereby. This Agreement has been duly executed and
delivered by each Holding Company and Advisor and such Equityholder. Assuming
the due authorization, execution and delivery of this Agreement by the Parent
and of each Related Agreement by the other parties thereto, this Agreement (and
upon execution and delivery thereof each Related Agreement) constitutes the
legal, valid and binding obligation of each Holding Company and Advisor and such
Equityholder, enforceable against each of them in accordance with its terms,
except as enforcement may be limited by general principles of equity whether
applied in a court of law or a court of equity and by bankruptcy, insolvency and
similar laws affecting creditors' rights and remedies generally.
(b) Neither the execution, delivery and performance of this
Agreement or any Related Agreement by any Holding Company or Advisor or such
Equityholder nor the consummation by them of the transactions contemplated
hereby, will (i) violate, conflict with, or result in a breach of any provisions
of, or constitute a default (or an event which, with notice or lapse of time or
both, would constitute a default) under, or result in the termination of, or
accelerate the performance required by, or result in a right of termination or
acceleration (which is not expressly waived) under, or the creation of any
Encumbrance upon any of the Company Assets or the Equity Securities issued by
the Holding Companies and the Advisors under any of the terms, conditions or
provisions of (x) the organizational documents of any Holding Company or
Advisor, the Trust or any of the Pooled Products, or (y) any note, bond,
mortgage, indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which any Holding Company or Advisor or such
Equityholder or any of the Pooled Products is a party or by or to which it or
any of its properties may be bound or subject; or (ii) violate any Applicable
Law excluding from the foregoing clauses (i) and (ii), violations, conflicts,
breaches, defaults and Encumbrances which would not have a Material Adverse
Effect.
(c) No material notice to, filing with, authorization of, exemption
by, or consent or approval of, any Governmental Authority is necessary for the
consummation by each Holding Company and Advisor and such Equityholder of the
transactions contemplated by this Agreement or any Related Agreement.
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(d) Each Equityholder is acquiring its portion of the Purchase Price
constituting securities for such Equityholder's own account and such
Equityholder has no intention of selling, granting any participation in or
otherwise distributing any portion of the Purchase Price constituting
securities.
Section 4.3. Assets Under Management. The aggregate amount of assets
under management by the Advisors, amount of assets under management by the
Advisors for each client for which the Advisors manage more than $5 million, as
of June 30, 1997, July 1, 1997, December 31, 1997 and January 1, 1998 are
accurately set forth in Annex 4.3 hereto, together with a brief summary of the
fee or profit allocation arrangements in effect with respect to each such
client. Other than as set forth on Annex 4.3, there are no agreements or
understandings pursuant to which any Advisor has capped, waived or reimbursed or
will under any circumstances cap, waive or reimburse any or all fees, profit
allocations or charges payable by or allocable from any of such clients or any
investors in any such client.
Section 4.4. Financial Statements. (a) The Holding Companies and
Equityholders have previously delivered to the Parent copies of the audited
balance sheets of each Advisor as of December 31 for the fiscal years 1994, 1995
and 1996, and the related audited statements of income, changes in partners'
equity and cash flows for the fiscal years 1994, 1995 and 1996, inclusive,
together with the related notes thereto, in each case accompanied by the audit
report of Ernst & Young LLP, independent public accountants with respect
thereto, and have delivered to the Parent the audited balance sheet of each
Advisor as of December 31, 1997, together with related notes thereto (the
"Company Balance Sheets") and the related audited statements of income for the
fiscal year then ended (collectively, the statements referred to in clauses
(i)-(ii) above being referred to as the "Company Financial Statements"). The
audited balance sheets of the Advisors referred to in the previous sentence
(including the related notes) fairly present the financial position of the
Company as of the dates thereof, and the other Company Financial Statements
fairly present (subject, in the case of the unaudited statements, to recurring
adjustments normal in nature and amount) the results of the operations, cash
flows and changes in partners' equity of the Advisors for the respective fiscal
periods therein set forth; and each of such statements of the Company (including
the related notes, where applicable) has been prepared in accordance with GAAP
consistently applied during the periods involved.
(b) Except for (i) liabilities or items set forth in Annex 4.4, (ii)
liabilities that are fully reflected in the Company Financial Statements or
fully reserved against on the Company Balance Sheets, (iii) liabilities that
were incurred in the Ordinary Course of Business on or prior to the date of the
Company Balance Sheets which are not required by GAAP to be reflected in the
Company Financial Statements or which were fully reserved against on the Company
Balance Sheets, (iv) liabilities incurred since the date of the Company Balance
Sheet, none of which, individually or in the aggregate, are material to the
business or operations of the Advisors, (v) liabilities the incurrence of which
is expressly permitted by this Agreement or authorized by the Parent in writing,
and (vi) nonmonetary obligations arising under the
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terms of any agreement other than obligations arising as a result of a breach
thereof or default thereunder, the Advisors do not have any liabilities, whether
absolute, accrued, contingent or otherwise and whether known or unknown or due
or to become due.
Section 4.5. Compliance with Applicable Law. (a) Except for
instances of failure that would not have a Material Adverse Effect, each
Advisor, Equityholder and Pooled Product and each employee of each of them
holds, and has at all pertinent times held, all licenses, franchises, permits,
qualifications and authorizations (collectively, "Permits") necessary for the
lawful ownership and use of the respective properties and assets of the Advisors
and each such Pooled Product and the conduct of the respective businesses of the
Advisors and each such Pooled Product under and pursuant to every, and have
complied with each, and are not in default in any material respect under any,
Applicable Law relating to the Advisors, any Pooled Product or any of their
respective assets, properties or operations, and neither any Advisor nor any
Equityholder knows of any violations of any of the above or has received notice
asserting any such violation. To the Holding Companies' and Equityholders'
knowledge, all such Permits are valid and in good standing and are not subject
to any proceeding for the suspension, modification or revocation thereof or
proceedings related thereto.
(b) Except for normal examinations conducted by any
Governmental Authority in the regular course of the business of the Advisors, no
Governmental Authority has initiated any pending proceeding or, to the knowledge
of any Holding Company or such Equityholder, any pending investigation into the
business or operations of any Advisor or any of their partners, officers,
directors or employees in their capacity as such with the Advisors. There is no
unresolved violation, criticism, or exception by any Governmental Authority with
respect to any examination of any Advisor or any Pooled Product.
(c) Each Advisor has at all times rendered investment advisory
services to investment advisory clients, including Pooled Products, with whom
such Advisor is or was a party to an investment advisory agreement or similar
arrangement in material compliance with all applicable requirements as to
portfolio composition and portfolio management including, but not limited to,
the terms of such investment advisory agreements, written instructions from such
investment advisory clients, the organizational documents of such investment
advisory clients made available to such Advisor, prospectuses, board of director
or trustee directives and Applicable Law.
(d) Except for such instances of failure to make filings or
payments which, either individually or in the aggregate, would not have a
Material Adverse Effect, each Holding Company, Manager and Pooled Product has
timely filed all reports, registration statements and other documents, together
with any amendments required to be made with respect thereto, that they were
required to file with any Governmental Authority, in a form which was accurate
in all material respects and have paid all fees and assessments due and payable
in connection therewith.
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(e) None of the Advisors, Equityholders or employees of any of
them is obligated to be registered with or have any license or permit from any
Governmental Authority or self-regulatory body. As of their respective dates,
the SEC Documents of the Advisors and Equityholders complied in all material
respects with the requirements of the Securities Laws applicable to such SEC
Documents. The Holding Companies have previously delivered or made available to
the Parent a complete copy of each SEC Document filed by the Advisors or
Equityholders since December 31, 1994 and prior to the date hereof and will
deliver to the Parent at the same time as the filing thereof a complete copy of
each SEC Document filed after the date hereof and prior to the Closing Date by
or on behalf of any of them.
Section 4.6. Books and Records. Each Advisor and Pooled Product has
at all times since formation maintained Records which accurately reflect all its
material transactions in reasonable detail, and have at all times maintained
accounting controls, policies and procedures reasonably designed to provide that
such transactions are executed in accordance with its management's general or
specific authorization, as applicable, and (ii) beginning with the period ending
June 30, 1997, recorded in a manner which permits the preparation of financial
statements in accordance with GAAP and applicable regulatory accounting
requirements and other account and financial data, and the documentation
pertaining thereto is retained, protected and duplicated in accordance with
applicable regulatory requirements.
Section 4.7. Ineligible Persons. None of the Advisors or
Equityholders or any "affiliated person" (as defined in the Investment Company
Act) of any thereof is ineligible pursuant to Section 9(a) or 9(b) of the
Investment Company Act to serve as an investment adviser (or in any other
capacity contemplated by the Investment Company Act) to a registered investment
company. None of the Advisors or Equityholders or any "associated person" (as
defined in the Advisers Act or the Exchange Act) of any thereof, is ineligible
pursuant to Section 203 of the Advisers Act to serve as a registered investment
adviser or broker-dealer or as an associated person to a registered investment
adviser. None of the Advisors or Equityholders or any "affiliated person" (as
defined in the Investment Company Act) of any thereof is subject to a "statutory
disqualification" pursuant to Section 3(a)(39) of the Exchange Act.
Section 4.8. Company Assets. The Advisors have good and marketable
title to all material Company Assets and good and insurable leasehold interests
in the Leased Property, in each case free and clear of all Encumbrances other
than Permitted Encumbrances. Annex 4.8 contains a true and complete list of all
Operating Sites. The Advisors do not own any Real Property.
Section 4.9. Company Contracts. Annex 4.9 lists under separate
headings, and the Holding Companies have made available to Parent copies of: (a)
each Company Contract that is not cancellable without penalty by the Advisor
party thereto upon 90 days or less notice or that involves the receipt or
payment by the Advisor party thereto in any of the two prior
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fiscal years (or is reasonably likely to involve the receipt of payment by the
Advisor party thereto in the current or any future fiscal year) of an amount in
excess of $50,000, (b) each Company Contract with one or more of the
Equityholders or members of their Immediate Families or entities in which any of
them has greater than a 5% equity interest, and (c) each other Company Contract
material to the business, governance, operations or financial condition of any
Advisor party thereto. The Holding Companies have made available to the Parent
copies of all sales, marketing and account solicitation agreements and material
marketing arrangements of each Advisor. Each Advisor has duly performed all its
material obligations under each Company Contract to which it is a party, in each
case, to the extent that such obligations have accrued; no breach or default,
alleged breach or default, or event which constitutes or would (with the passage
of time, notice or both) constitute a breach or default thereunder, or would
permit termination or acceleration thereof by any party thereto, has occurred,
or, as a result of this Agreement or the performance by any Advisor party
thereto of any of its covenants or obligations hereunder, will occur; excluding
from the foregoing any instances which would not have a Material Adverse Effect,
and to the Holding Companies' and such Equityholder's knowledge, each Company
Contract is valid and binding on the Advisor party thereto and on all of the
other parties thereto, is in full force and effect and is enforceable in
accordance with its terms.
Section 4.10. Technology and Intellectual Property. The electronic
data processing, information, communications, telecommunications and computer
systems, databases, Software and Intellectual Property which are used by the
Advisors in their businesses (collectively, the "Technology Systems") are
adequate for their intended use and for the operation of the Operating Sites as
currently operated and the Advisors own or have the right to use all components
of the Technology Systems. There has not been any material malfunction with
respect to any of the Technology Systems which has had or could have a Material
Adverse Effect.
Section 4.11. Legal Proceedings. Neither any Holding Company,
Adviser or Equityholder nor any Pooled Product is a party to any, and there are
no pending or, to such Equityholder's knowledge, threatened, legal,
administrative, arbitral or other proceedings, claims, actions or governmental
or regulatory investigations of any nature against any Holding Company, Advisor
or Equityholder or any Pooled Product or any of their respective properties,
assets, partners, directors, officers or employees which, if adversely
determined, individually or in the aggregate, would have a Material Adverse
Effect, or that challenges any of the transactions contemplated by this
Agreement or any of the Related Documents, and there is no injunction, order,
judgment, decree, or regulatory restriction imposed upon any Holding Company,
Advisor or Equityholder or any Pooled Product or any of their respective
properties, assets, officers or employees which, individually or in the
aggregate, has had or could reasonably be expected to have a Material Adverse
Effect.
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Section 4.12. Taxes and Tax Returns.
(a) Each Advisor has timely filed all Tax Returns required by
Applicable Law to be filed by it on or before the date hereof, taking into
account any extensions of the time within which to file such returns. All such
Tax Returns are true, complete and correct in all material respects.
(b) All Taxes attributable to any Advisor that are or were due
and payable (without regard to whether such Taxes have been assessed) have been
paid. Each Advisor has made adequate provisions on its books and records in
accordance with prior accounting practices, consistently applied, for the
payment of all Taxes reasonably expected to be due and payable with respect to
the current and any prior tax periods.
(c) Each Advisor has complied (and until the Closing will
comply) in all material respects with all Applicable Laws relating to the
payment and withholding of Taxes by such Advisor (including, without limitation
withholding of Taxes pursuant to Code sections 1441 and 1442 or similar
provisions under any state or foreign law) and has, within the time and in the
manner prescribed by law, withheld from employee wages and paid over to the
proper governmental authorities all material amounts required to be so withheld
and paid over under all Applicable Laws.
(d) Neither any Advisor nor any predecessor company has
executed or filed with the IRS or any other Taxing Authority any agreement or
other document extending, or having the effect of extending, the period for the
assessment or collection of any Taxes.
(e) There are no Encumbrances for Taxes upon any of the
Company Assets other than Encumbrances for Taxes not yet due or payable.
(f) No power of attorney has been granted by any Advisor or
any Holding Company with respect to any Advisor with respect to any matter
relating to Taxes which is currently in force.
(g) No Advisor is a party to or bound by any agreement
providing for the allocation or sharing or indemnification of any Taxes.
(h) There are no claims, audits, suits, proceedings, or
investigations now pending against or with respect to any Advisor with respect
to any Taxes.
(i) Each Advisor is properly treated as a "partnership" under
the Code. Neither any Advisor nor any predecessor has been a member of an
affiliated group filing a consolidated, combined, or unitary Tax Return.
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(j) No Advisor has or will have any liability for the Taxes of
any other Person as a transferee or successor, or otherwise.
(k) No Advisor has filed and none will file a consent pursuant
to Code section 341(f) or agreed to have Code section 341(f)(2) apply to any
disposition of a subsection (f) asset (as such term is defined in Code section
341(f)(4)).
(l) No Advisor is a party to any agreements, contracts, or
arrangements that would result, separately or in the aggregate, in the payment
of any "excess parachute payments" within the meaning of Code section 280G. The
consummation of the transactions contemplated hereby will not cause any payments
to be made by any Advisor to become subject to the limitations imposed under
Code section 280G.
Section 4.13. Insurance. The Advisors maintain with reputable
insurers worker's compensation, business personal property and business owners
insurance.
Section 4.14. Labor and Employment Matters. Excluding instances
which would not give rise to a Material Adverse Effect, (a) (1) No Advisor has
engaged in any unfair labor practice which could reasonably be expected to
result in any material liability to any Advisor; (2) there is no labor strike,
dispute, slowdown or stoppage pending or threatened against any Advisor; (3) no
union is currently certified or recognized, there is no union representation
question, no employee representative body or bodies and no union or other
organizational activity that would be subject to the National Labor Relations
Act (29 U.S.C. ss. 151 et seq.) exists or, to the Equityholders' knowledge, is
threatened with respect to the operations of any Advisor; (4) no grievance or
arbitration proceeding arising out of or under collective bargaining agreements
is pending and, to such Equityholder's knowledge, no claims therefor exist or
are threatened with respect to the operations of any Advisor; and (5) no Advisor
is delinquent in any material respect in payments to any of its current or
former partners, officers, directors, employees, consultants, or agents for any
wages, salaries, commissions, bonuses, benefits, expenses or other compensation
for any services performed by them or amounts required to be reimbursed to them;
and (6) in the event of termination of the employment of any employee of any
Advisor, neither the Advisor or LLC-1, LLC-2 or LLC-3 nor the Parent or any of
its Affiliates will be liable to any such employee under any agreement in effect
at the Closing for so-called "severance pay," incentive pay, liquidated damages
or any other payments or benefits, including, without limitation,
post-employment health care, pension or insurance benefits.
(b) No Advisor has had any claim made against it by any Person
before any Governmental Authority in respect of employment with such Advisor or
discrimination or harassment on account of sex, race or other characteristic
protected by law and there are no pending or to such Equityholder's knowledge,
threatened proceedings in relation thereto.
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Section 4.15. Benefit Plan Obligations. (a) Annex 4.15(a) contains a
true and complete list of each commission, bonus, deferred compensation,
incentive compensation, stock purchase, stock option, share scheme, equity-based
award, severance, redundancy or termination pay, hospitalization or other
medical, accident, disability, life or other insurance, supplemental
unemployment benefits, fringe, other welfare benefit, profit-sharing, pension,
or retirement plan, program, agreement, or arrangement, and each other employee
benefit plan, program, agreement, or arrangement (a "Plan") as of the date
hereof sponsored, maintained, or contributed to or required to be contributed to
by any Advisor or any ERISA Affiliate (as defined below) for the benefit of any
employee or terminated employee of any Advisor, or any ERISA Affiliate. No
proposal has been announced to establish any other program for providing such
benefits. For purposes of this Agreement, "ERISA Affiliate" means any entity or
Person that together with any Advisor would be deemed a "single employer" within
the meaning of section 4001 of ERISA or would be considered as being "members"
of a controlled group of corporations within the meaning of section 414 of the
Code with any Advisor. Each Plan may be modified or terminated by the Advisor
party thereto, or the applicable ERISA Affiliate, without liability to any
Advisor, or their ERISA Affiliates, subject only to claims filed or occurred
prior to such modification or termination. True and correct copies of each
written agreement, declaration of trust or other document pursuant to which a
Plan was formed or any Advisor's obligations under a Plan have been established,
all amendments thereto, any written interpretations thereof distributed to
employees, and all contracts relating thereto or the funding thereof (including,
without limitation, all trust or other funding agreements and the most recent
financial statements thereof, insurance contracts, administration contracts, and
investment management agreements), summary plan descriptions, the two most
recent annual reports (Form 5500 including, if applicable, Schedule B thereto),
the most recent actuarial valuation report and the most recent report prepared
in connection with any Plan in accordance with Statement of Financial Accounting
Standards No. 87, Employer's Accounting for Pensions, and the most recent
determination letter received form the IRS with respect to each Plan intended to
qualify under Section 401 of the Code have been made available to the Parent.
(b) Neither any Advisor nor any ERISA Affiliate (i) has ever
maintained any Plan which has been subject to Title IV of ERISA or (ii) has ever
provided health care or any other non-pension benefits to any employees after
their employment is terminated (other than as required by part 6 of Subtitle B
of title I of ERISA) or has ever agreed to provide such post-termination
benefits.
(c) No Plan is a "multi-employer pension plan," as defined in
section 3(37) of ERISA.
(d) Each Plan which is intended to be "qualified" within the
meaning of section 401(a) of the Code is so qualified and has been so qualified
during the period from its adoption to date, and each trust maintained
thereunder is exempt from taxation under section 501(a) of the Code.
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(e) There is no matter pending (other than routine
qualification determination filings, copies of which have been furnished to the
Parent, or will be promptly furnished to the Parent when made) with respect to
any of the Plans before the IRS or Department of Labor. There are no pending,
or, to the knowledge of the Equityholders, threatened or anticipated actions,
suits, or claims by or on behalf of any Plan, by any employee or beneficiary
covered thereunder, or otherwise involving any such Plan (other than routine
claims for benefits).
Section 4.16. No Broker. 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 any Holding Company, Advisor or
Equityholder in connection with this Agreement or the transactions contemplated
hereby.
Section 4.17. Absence of Changes. Since December 31, 1997, except as
contemplated by this Agreement, neither any Advisor nor any Pooled Product has
taken any action or suffered to exist any condition which, had it been taken or
suffered after the date hereof, would have been prohibited by or in violation of
Section 6.1 hereof.
Section 4.18. The Equityholders. Neither such Equityholder nor any
member of the Immediate Family of such Equityholder (excluding for this purpose,
Xxxxxxxx Xxxxx) (a) is a competitor of, or a party to any transaction or
contract or arrangement with, any Advisor, (b) serves as an officer, director,
employee, consultant, partner, member or in similar capacity of any competitor
of any Advisor or any Person which has a contract or agreement with any Advisor
or (c) owns directly or indirectly (other than in or through beneficial
ownership of less than 5% of the outstanding securities of a publicly traded
company) any interests in any competitor or any Person that has a material
contract or agreement with any Advisor.
Section 4.19. Additional Representations Regarding Pooled Products.
(a) True, correct and complete copies of any offering
documents, subscription agreements, administrative services distribution and
solicitation agreements and custody agreements pertaining to each of the Pooled
Products have been made available to the Parent. Such offering materials did
not, at any time such materials were made available to investors or prospective
investors, contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstance under which they were made, not
misleading.
(b) True, correct and complete copies of the audited financial
statements, prepared in accordance with GAAP, of each of the Pooled Products for
the fiscal years from inception or 1994, whichever is later, through 1997 have
been made available to the Parent. Each of such financial statements is
consistent with the books and records of the applicable Pooled Product, and
presents fairly the consolidated financial position of such
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Pooled Product in accordance with GAAP applied on a consistent basis (except as
otherwise noted therein) at the respective date of such financial statements and
the results of operations and cash flows for the respective periods indicated,
except in the case of the interim financial statements which are subject to
normal year-end adjustments which in the aggregate are not material. Such
financial statements reflect and disclose all material changes in accounting
principles and practices adopted by the applicable Pooled Product during the
periods covered by each such financial statement. The books of account of each
Pooled Product fairly reflect its transactions.
(c) There are no special restrictions, consent judgments or
orders of any Governmental Authority on, or with regard to, any Pooled Product.
Since inception, each Pooled Product has been excluded from the definition of an
investment company under the Investment Company Act by virtue of Section 3(c)(1)
or Section 3(c)(7) thereof, as applicable, or has been unregulated thereunder by
virtue of Section 7(d) thereof. Since inception each Pooled Product has been
duly registered and in good standing under the laws of each jurisdiction in
which such qualification has been necessary, except where the failure to be duly
registered and in good standing would not have a Material Adverse Effect.
(d) All interests of each Pooled Product were sold pursuant to
a valid and effective exemption from registration under the Securities Act and
each other Applicable Law and have been duly authorized and are validly issued.
(e) All consent solicitation materials to be prepared for use
by the Pooled Products in connection with the transactions contemplated by this
Agreement at the time such information is provided or used, as then amended or
supplemented, in each case, will, insofar as it contains or consists of
information supplied by any Manager, be accurate and complete and will not
contain any untrue statement of a material fact, or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading.
(f) Each Pooled Product has timely filed or will file or cause
to be filed on a timely basis all Tax Returns required by Applicable Law to be
filed by it on or before the Closing Date, taking into account any extensions of
the time within which to file such returns. All such Tax Returns are true,
complete and correct in all material respects and all Taxes attributable to any
Pooled Product that are or were due and payable (without regard to whether such
Taxes have been assessed) have been paid.
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ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF
THE PARENT
Except as set forth in writing in a Schedule delivered to the
Equityholders prior to the date hereof, by reference to the appropriate section,
subsection or clause hereof, the Parent represents and warrants to the
Equityholders as follows (with each such representation and warranty as to a
Manager, its business, its officers, directors or employees or any of its
affiliated persons expressly qualified as to knowledge).
Section 5.1. Organization. The Parent is a corporation duly
organized, validly existing and in good standing under the laws of the state of
Delaware. The Parent has the corporate or other requisite power and authority to
carry on its business as it is now being or is currently proposed to be
conducted, to own or use the properties and assets that it purports to or
currently proposes to own or use, and is duly qualified to do business in each
jurisdiction in which the nature of the business conducted by it or the
ownership or use of the properties used by it requires such qualification,
except where the failure to be so qualified would not have a material adverse
effect on the business of Parent or on the ability of Parent to complete the
transactions contemplated hereby ("Parent Material Adverse Effect"). The charter
and by-laws and any amendments thereto of Parent, complete and correct copies of
which are currently in effect, have heretofore been delivered or made available
to each Equityholder, have been filed with or notified to any applicable
Governmental Authority in accordance with all statutes, laws, ordinances, rules,
public administrative interpretations, regulations, orders, writs, injunctions,
directives, judgments, decrees or other requirements of any Governmental
Authority applicable to Parent and its properties, assets, officers, directors,
employees and agents ("Legal Requirements"). None of the Parent Common Stock has
been issued in violation of any Applicable Law.
Section 5.2. Authority; No Violation; Consents.
(a) The Parent has full power, right and authority to execute
and deliver this Agreement and the Related Agreements to which it is a party and
to consummate the transactions contemplated hereby and thereby. The execution
and delivery of this Agreement and such Related Agreements and the consummation
of the transactions contemplated hereby and thereby have been duly and validly
approved by all requisite action on the part of the Parent and no other
proceedings on the part of the Parent are necessary to approve this Agreement or
such Related Agreements or to consummate the transactions contemplated hereby
and thereby. Each of this Agreement and such Related Agreements has been duly
and validly executed and delivered by the Parent. Assuming the due
authorization, execution and delivery of this Agreement and each of the Related
Agreements by the other parties hereto, each of this Agreement and such Related
Agreements constitutes a legal, valid and binding obligation of the Parent,
enforceable against it in accordance with its terms,
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except as enforcement may be limited by general principles of equity whether
applied in a court of law or a court of equity and by bankruptcy, insolvency and
similar laws affecting creditors' rights and remedies generally.
(b) Neither the execution, delivery and performance of this
Agreement or any Related Agreement by Parent nor the consummation by them of the
transactions contemplated hereby, will (i) violate, conflict with, or result in
a breach of any provisions of, or constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default) under, or result in
the termination of, or accelerate the performance required by, or result in a
right of termination or acceleration under, or the creation of any Encumbrance
upon any of the assets of Parent as of the date hereof or as of the Closing, as
applicable ("Parent Assets") under any of the terms, conditions or provision of
(x) the organizational documents of Parent, or (y) any note, bond, mortgage,
indenture, deed of trust, license, lease, agreement or other instrument or
obligation to which Parent is a party or by or to which it or any of its
properties may be bound or subject; or (ii) violate any Applicable Law.
(c) Except as is expressly contemplated hereby, no material
notice to, filing with, authorization of, exemption by, or consent or approval
of, any Governmental Authority is necessary for the consummation by Parent of
the transactions contemplated by this Agreement or any Related Agreement.
Section 5.3. No Actions, Suits or Proceedings. There is no pending
action, suit or proceeding, nor, to the knowledge of the Parent, has any
litigation been threatened, against the Parent or any of its subsidiaries,
properties, assets, directors, officers, employees or Affiliates before any
Governmental Authority or otherwise which, if adversely determined, individually
or in the aggregate, would have a Parent Material Adverse Effect, or that
questions the validity or legality of this Agreement or any of the Related
Agreements or of the transactions contemplated hereby or thereby, or which seeks
to prevent the consummation of the transactions contemplated hereby or thereby
and there is no injunction, order, judgment, decree or regulatory restriction
imposed upon the Parent or any of its Affiliates which, individually or in the
aggregate, has had or could reasonably be expected to have a Parent Material
Adverse Effect.
Section 5.4. Financial Statements. The Parent has previously
delivered to the Equityholders copies of (i) the audited balance sheets of the
Parent on a consolidated basis as of December 31 for the fiscal year 1996 and
the related audited statements of income, changes in stockholders' equity and
cash flows for the fiscal year 1996, inclusive, together with the related notes
thereto, in each case accompanied by the audit report of Ernst & Young LLP,
independent public accountants with respect to the Parent, and (ii) the
unaudited balance sheet of the Parent on a consolidated basis as of December 31,
1997, together with related notes thereto (the "Parent Balance Sheet") and the
related unaudited statements of income, changes in stockholders' equity and cash
flows for the fiscal year then ended (collectively, the
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statements referred to in clauses (i)-(ii) above being referred to as the
"Parent Financial Statements"). The audited balance sheets of the Parent
referred to in the previous sentence (including the related notes) fairly
present the financial position of the Parent on a consolidated basis as of the
dates thereof, and the other Parent Financial Statements fairly present
(subject, in the case of the unaudited statements, to recurring adjustments
normal in nature and amount) the results of the operations, cash flows and
changes in stockholders' equity of the Parent on a consolidated basis for the
respective fiscal periods therein set forth; and each of such statements of the
Parent (including the related notes, where applicable) has been prepared in
accordance with GAAP consistently applied during the periods involved. As of the
respective dates of such financial statements, Parent had no known liabilities
of the type required to be reflected as liabilities on a balance sheet prepared
in accordance with GAAP (whether absolute, accrued, contingent or otherwise),
except for liabilities reflected or reserved against in the Parent Balance
Sheet.
Section 5.5. Capitalization. As of the date of this Agreement, the
Parent has authorized capital stock consisting of (a) 100,000,000 shares of
Parent Common Stock, of which 7,365,000 shares are outstanding and 4,775,180
shares are reserved for issuance and (b) 2,000,000 shares of preferred stock,
par value $.01 per share, of which 200,000 shares are outstanding. As of the
date of this Agreement, the Parent has outstanding options to purchase an
aggregate of 748,000 shares of Parent Common Stock. In addition to the foregoing
amount, Parent will reserve for issuance an aggregate of 2,285,000 shares of
Parent Common Stock (subject to adjustment) upon conversion of the Debenture and
for potential issuance in connection with Section 3.2(c) and issue additional
securities convertible into shares of Parent Common Stock in connection with the
purchase of preferred equity interests in certain investment advisory firms.
Each outstanding share of Parent Common Stock is, and upon issuance and delivery
thereof in accordance with the terms of Section 3.2 hereof each share
constituting Purchase Price will be, duly and validly authorized and issued,
fully paid and nonassessable.
Section 5.6. Compliance with Applicable Law.
(a) Except for instances of failure that would not have a
Parent Material Adverse Effect, the Parent and each Affiliate of the Parent
holds, and has at all pertinent times held, all licenses, franchises, permits,
qualifications and authorizations (collectively, "Permits") necessary for the
lawful ownership and use of the respective properties and assets of their
respective business and the conduct of their respective business and under and
pursuant to every, and have complied with each, and are not in default in any
material respect under any, Applicable Law relating to any of their assets,
properties or operations, and the Parent does not know of any violations of any
of the above and has not received notice asserting any such violation. To the
Parent's knowledge, all such Permits are valid and in good standing and are not
subject to any proceeding for the suspension, modification or revocation thereof
or proceedings related thereto.
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(b) Except for normal examinations conducted by any
Governmental Authority in the regular course of the business of the Parent and
its Affiliates, no Governmental Authority has initiated any pending proceeding
or, to the knowledge of the Parent, any pending investigation into the business
or operations of the Parent or any of or any Affiliate, or of any of their
officers, directors or employees or, to the knowledge of Parent, any pending
proceeding or investigation into the business or operations of the Parent's
Subsidiaries. There is no unresolved violation, criticism, or exception by any
Governmental Authority with respect to any examination of the Parent or its
Affiliates.
Section 5.7. Eligibility. None of the Parent, its Affiliates, or any
"affiliated person" (as defined in the Investment Company Act) of any of them is
ineligible pursuant to Section 9(a) or 9(b) of the Investment Company Act to
serve as an investment adviser (or in any other capacity contemplated by the
Investment Company Act) to a registered investment company. None of the Parent,
its Affiliates, or any "associated person" (as defined in the Advisers Act or
the Exchange Act) of any of them, is ineligible pursuant to Section 203 of the
Advisers Act to serve as a registered investment adviser or broker-dealer or as
an associated person to a registered investment adviser. None of the Parent, its
Affiliates, or any "affiliated person" (as defined in the Investment Company
Act) of any of them thereof is subject to a "statutory disqualification"
pursuant to Section 3(a)(39) of the Exchange Act.
Section 5.8. No Broker. Other than Xxxxxx Xxxxxxx, 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 Parent or its
Affiliates in connection with this Agreement or the transactions contemplated
hereby, it being understood and agreed that the fees and costs due to Xxxxxx
Xxxxxxx or any of his Affiliates shall be the sole responsibility of the Parent.
Section 5.9. Other Instruments. Neither AAC nor any of its
Affiliates is the issuer of any obligation of a "comparable character" to the
Debenture that is "readily tradable in an established securities market," nor is
the Debenture "part of an issue or series of issues" that are "readily tradable
in an established securities market." For purposes of this representation, the
terms quoted in the preceding sentence shall be interpreted consistently with
Treas. Reg. ss. 15A.453-1(e)(4)(ii).
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ARTICLE VI.
COVENANTS
Section 6.1. Conduct of Business. (a) During the period from the
date of this Agreement and continuing through the Closing Date, except as
required by Applicable Law and disclosed to the Parent, as expressly
contemplated or permitted by this Agreement or with the prior written consent of
the Parent, each Advisor shall, and each Advisor, to the extent within its
control and consistent with its duties thereto, shall cause each Pooled Product
to: (i) carry on its respective business in the Ordinary Course of Business
consistent with past business practice; (ii) use commercially reasonable efforts
to preserve its respective present business organization and relationships;
(iii) use commercially reasonable efforts to keep available the present services
of its employees (it being understood and agreed that an Advisor (x) shall not
be obligated to increase the compensation or benefits of any person and (y)
shall not be restricted in terminating the employment of any Person who is not
an Equityholder, if such termination is consistent with prudent business
practice); (iv) use commercially reasonable efforts to preserve and enhance its
assets under management and profitability and the goodwill and relations of its
clients and others with whom business relationships exist consistent with past
practice; (v) not enter into any business venture, contract, agreement,
understanding or any other arrangement, whether written or oral (except for
normal, recurring expenditures incurred in the Ordinary Course of Business), in
any amount in excess of $50,000 in respect of any individual arrangement or any
contract, agreement, understanding or other arrangement, whether written or
oral, with any of the Equityholders, any parent, sibling, spouse or child
thereof, any parent, sibling, spouse or child of any of the foregoing or any
Affiliate of any of the foregoing; (vi) not take or omit any action that would
or could result in any of their representations and warranties set forth herein
or in any of the Related Agreements being or becoming untrue in any material
respect or any of their agreements herein or therein being breached in any
material respect; (vii) not amend the partnership agreement, articles of
incorporation, by-laws or any similar organizational documents; (viii) not
grant, issue or sell any security of which the Company is the issuer; (ix) not
effect any recapitalization, leveraging of its partners' equity,
reclassification, stock dividend, stock split or like change in capitalization
of any Advisor; (x) not capitalize any lease obligation of any Advisor
regardless of when such lease obligation was entered into; and (xi) not enter
into any agreement or understanding with respect to any of the foregoing
matters.
(b) Upon request by Parent, from time to time prior to the
Closing Date the Holding Companies and Equityholders shall update or cause to be
updated each of the Schedules and Annexes to this Agreement required pursuant to
Article I or Article IV hereof to reflect changes to the information set forth
therein occurring through a date not more than two days prior to the Closing
Date. For purposes of determining the accuracy of the representations and
warranties of the Holding Companies and Equityholders contained in Article IV in
order to determine the fulfillment of the condition set forth in Section 7.1(a),
the Schedules and Annexes delivered by them shall be deemed to include only that
information
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contained therein on the date of this Agreement and shall be deemed to exclude
any information contained in any subsequent supplement or amendment thereto. For
purposes of determining the accuracy of the representations and warranties of
the Holding Companies and Equityholders contained in Article IV in order to
determine any indemnification obligation of the Equityholders pursuant to
Article VIII, the Schedules and Annexes delivered by the Equityholders shall not
be deemed to include any information contained in any subsequent supplement or
amendment thereto.
(c) The Holding Companies and Equityholders shall cause each
Advisor to prepare and deliver to the Parent within 15 days after the end of
each month after the date hereof and prior to the Closing Date an unaudited
balance sheet of such Advisor and the related unaudited statement of income of
such Advisor, together with notes describing significant differences between the
information therein and the requirements of GAAP. The Holding Companies and
Equityholders shall engage Ernst & Young to audit the balance sheet and
statements of income changes in partners' equity and cash flows of the Advisors
as at and for the year ended December 31, 1997 and as at and for any other
period required in connection with the IPO and shall deliver such audited
financial statements, and the audit reports related thereto promptly upon
receipt thereof.
Section 6.2. Advisory Contract Consents and Approvals and Other
Actions. As soon as reasonably practicable and in any event by the 15th Business
Day following the filing of the Draft S-1, the Holding Companies and
Equityholders shall cause the Advisors (a) to notify in writing the general
partner or other controlling body of each Pooled Product and the investors in
each of the Pooled Products and to notify in writing each other investment
advisory client of the transactions contemplated by this Agreement, and such
notification shall be provided to the Parent for its prior review, (b) to
request the written consent of the general partner controlling body of each
Pooled Product and each other investment advisory client (it being understood
and agreed that investors in the Pooled Products are not in such capacity
clients of the Company) to the assignment of their investment advisory
agreements deemed to occur as a result of the consummation of such transactions
and (c) to use reasonable efforts to obtain such consents.
Section 6.3. Confidentiality and Announcements.
(a) None of the parties or any of their respective Affiliates,
except as otherwise required by Applicable Law, shall disclose publicly any of
the contents hereof other than as required by Section 6.2 or by Applicable Law
upon prior notice to Advisors or the Parent, as the case may be.
(b) Advisors and the Parent shall agree with each other on
behalf of all the parties as to the form and substance of any press release
related to this Agreement and the Related Agreements or the transactions
contemplated hereby and thereby; provided, however, that nothing contained
herein shall prohibit any party, following notification to the
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other parties if practicable, from making any disclosure which its counsel
concludes is required by law.
Section 6.4. Expenses. Except as provided elsewhere herein, the
Holding Companies and the Equityholders shall bear the direct and indirect
expenses of the Holding Companies, Equityholders and Advisors, respectively, and
the Parent shall bear the direct and indirect expenses of the Parent, incurred
in connection with the negotiation and preparation of this Agreement and the
Related Agreements and the consummation of the transactions contemplated hereby
and thereby. In the event the IPO does not occur, the Parent shall bear the
expenses incurred in connection with the audit of the Holding Companies and
Advisors for all periods prior to the Closing.
Section 6.5. Release of Each Manager. At the Closing, each of the
Holding Companies and the Equityholders shall deliver to each Advisor for the
benefit of the LLCs, and the Parent a Release (each, a "Release") in the form
annexed hereto as Exhibit 6.5 releasing and forever discharging each Advisor
from any and all causes of action, rights or claims that any such person may
have had in the past, may now have or may have in the future related to,
connected with, or arising out of such Person's status as a partner of such
Advisor prior to the Effective Time.
Section 6.6. Covenants of the Parent. During the period from the
date of this Agreement and continuing through the Closing Date, except as
required by Applicable Law or with the prior written consent of Advisors, the
Parent shall not take any action, or fail to take any action, that would, or
could reasonably be expected to (i) result in any of the Parent's
representations and warranties set forth in this Agreement or any of the Related
Agreements being or becoming untrue in any material respect except that Parent
expects to issue or agree to issue additional shares of capital stock of Parent
and securities convertible into or exchangeable for capital stock of Parent;
(ii) result in a material violation of any provision of this Agreement or any of
the Related Agreements; or (iii) adversely affect or materially delay the
receipt of any of the requisite regulatory approvals.
Section 6.7. Access; Certain Communications. Between the date of
this Agreement and the Closing Date, subject to Applicable Laws relating to the
exchange of information, the Holding Companies and the Equityholders shall
afford to the Parent and its authorized agents and representatives reasonable
access, upon reasonable prior notice and during normal business hours, to
contracts, documents and information of or relating to the assets, liabilities,
business, operations, personnel and such similar aspects of the business of the
Advisors and the Pooled Products as the Parent shall reasonably request and the
Parent shall afford to the Holding Companies and the Equityholders and their
authorized agents and representatives the same degree of access regarding the
business of the Parent; provided, however, that such investigations shall be
conducted in a manner which does not unreasonably interfere with the other
party's normal operations, customers and employee relations. No investigation
pursuant to this Section 6.7 or otherwise shall affect or limit the
representations
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and warranties of the Holding Companies and the Equityholders or of the Parent,
as the case may be, set forth herein.
Section 6.8. Regulatory Matters; Third Party Consents. (a) The
Holding Companies and the Equityholders, on the one hand, and the Parent, on the
other hand, shall cooperate with each other and use all reasonable efforts
promptly to prepare and file all necessary documentation, to effect all
applications, notices, petitions and filings, to obtain as promptly as
practicable all permits, consents, approvals, waivers and authorizations of all
third parties and Governmental Authorities and to satisfy all conditions which
are necessary to consummate the transactions contemplated by this Agreement (it
being understood that the Holding Companies and the Equityholders shall be
responsible for obtaining all such approvals, waivers and consents from such
parties with whom the Advisors are in contractual privity including all
investment advisory clients). If any required consent of or waiver by any third
party (excluding any Governmental Authority and consents of clients under
investment advisory agreements) is not obtained prior to the Closing, the
Holding Companies and the Equityholders or the Parent, as the case may be, each
without cost, expense or liability to the other (except as provided in Article
VII hereof), shall cooperate in good faith to seek an alternative arrangement to
achieve the economic results intended.
Section 6.9. Insurance. The Advisors will maintain in effect at
least until and including the Closing Date or will make all commercially
reasonable efforts to obtain all casualty, public liability and other policies
of insurance maintained by the Advisors on the date hereof, relating to the
business of the Advisors, the Operating Sites and the other Company Assets, or
will procure comparable replacement policies and maintain such replacement
policies in effect at least until and including the Closing Date.
Section 6.10. Notification of Certain Matters. Each party shall give
prompt notice to the other parties of (i) the occurrence, or failure to occur,
of any event or existence of any condition that has caused or could reasonably
be expected to cause any representations or warranties made by it in this
Agreement or any Related Agreement to be untrue or inaccurate in any material
respect at any time after the date of this Agreement, up to and including the
Closing Date, and (ii) any failure on its part to comply with or satisfy, in any
material respect, any of its covenants or agreements in this Agreement or any
Related Agreement and any failure of any condition to another party's obligation
to complete the transactions contemplated hereby to be satisfied.
Section 6.11. No Solicitation. Except as permitted herein or
contemplated hereby, until the termination of this Agreement pursuant to Section
10.1, none of the Holding Companies, Equityholders or Advisors or their
officers, directors, employees, agents or representatives of any of them will,
directly or indirectly, solicit, encourage, assist, initiate discussions or
engage in negotiations with, provide any information to, or enter into any
agreement or transaction with, any Person relating to the possible acquisition
of any equity
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interests in or assets (other than Excluded Assets) of any of the Advisors by
any Person other than the Parent and its Affiliates.
Section 6.12. Registration Rights; Lockup Agreements. ****[This
section (approximately half a page) has been omitted pursuant to the
confidential treatment request referenced on the cover page hereto. The omitted
portion has been filed separately with the Commission.]****
Section 6.13. Standstill. Each of the Holding Companies and
Equityholders agrees that it will not acquire beneficial ownership (whether
through purchase, formation or inclusion in a group or otherwise) of any shares
of voting stock of the Parent if such acquisition would increase the percentage
of shares of voting stock of the Parent beneficially owned by such Person above
the percentage owned immediately after the Closing, including shares which may
be acquired upon the conversion of the Debentures. Each of the Holding Companies
and Equityholders agrees that it will not vote or give consent with respect to
any shares of capital stock of the Parent over which it has voting power in any
manner contrary to the recommendation of the Board of Directors of the Parent
unless the Holding Companies and Equityholders determine that such vote or
consent shall be adverse to their interests as stockholders.
Section 6.14. Cash at Closing. As of the Closing Date, the Advisors
shall have cash on hand of at least two thousand five hundred dollars ($2,500)
for each calendar day remaining, including the Closing Date, in the month during
which the Closing shall occur. For the purposes of this Section, cash shall
include cash equivalents and receivables that are presently due or due on or
before the third business day after the Closing Date and are considered by the
Advisors to be fully collectible.
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ARTICLE VII.
CONDITIONS TO CLOSING
Section 7.1. Conditions to the Parent's Obligations. The obligations
of the Parent to effect the transactions contemplated hereby shall be subject to
the following conditions any one or more of which may be waived in writing by
the Parent in whole or in part:
(a) Each of the representations and warranties of the Holding
Companies and Equityholders set forth in this Agreement, any Related Agreement
or any Schedule, Exhibit or Annex hereto or thereto shall be true and correct in
all material respects as of the date of this Agreement and (except to the extent
any such representation or warranty speaks as of or is limited to an earlier
date) as of the first business day following the IPO as though made on and as of
the first business day following the IPO (allowing for such changes thereto as
have occurred in the Ordinary Course of Business), provided, however, that
solely for purposes of determining the satisfaction of the conditions contained
in this Section 7.1(a) and not for purposes of determining liability under
Section 8 hereof or otherwise, no effect shall be given to any exception in such
representations and warranties relating to knowledge, materiality, or a Material
Adverse Effect, and such representations and warranties shall be deemed to be
true, correct and complete in all material respects only if the failures of such
representations and warranties to be so true, correct and complete without
regard to knowledge, materiality, and Material Adverse Effect exceptions do not
represent in the aggregate a Material Adverse Effect and such Material Adverse
Effect is not susceptible to cure by Seller within thirty (30) days after
written notice thereof is given by Buyer.
(b) The Holding Companies, Equityholders and Advisors shall
have performed and complied in all material respects with all agreements,
covenants, obligations and conditions required by this Agreement, any Related
Agreement or any Schedule, Exhibit or Annex hereto or thereto to be performed or
complied with by them at or prior to the Closing Date;
(c) The Holding Companies and Equityholders shall have
delivered to the Parent a certificate dated as of the Closing Date, confirming
the satisfaction of the conditions contained in paragraphs (a) and (b) of this
Section 7.1;
(d) Each Advisor shall have obtained from each of its clients
any necessary consent or approval if any in accordance with Section 6.2 hereof;
(e) Each of the Employment Agreements shall be in full force
and effect without any breach thereof by the individual party thereto;
(f) The IPO shall have occurred.
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(g) No requisite regulatory approval shall impose any term,
condition or restriction upon the Parent or any of its Affiliates that the
Parent reasonably determines would so materially adversely affect the economic
or business benefits of the transactions contemplated by this Agreement to the
Parent as to render inadvisable in the reasonable good faith judgment of the
Parent the consummation of the transactions contemplated hereby;
(h) The dollar-weighted average total return (net of fees and
expenses) of the net assets under management by the Advisors for the period from
January 1, 1998 through the first business day after the IPO shall not be worse
than -5.0% and no event shall have occurred since December 31, 1997 through the
first business day after the IPO which has had or could reasonably be expected
to have, individually or in the aggregate with any other event, a Material
Adverse Effect; provided, however, that any decrease in assets under management
shall not cause a failure of this condition to be satisfied, it being agreed
that decreases in net assets shall be treated in accordance with Section 3.2(a);
(i) The Parent shall have received the opinion of counsel to
the Holding Companies, Equityholders and Advisors dated the Closing Date and
substantially in the form annexed hereto as Exhibit 7.1(i);
(j) The Parent shall have received evidence that Xxxxxxx
Xxxxxxx and Xxxxx Xxxxxxxx are insurable with respect to both key-man life
insurance and disability insurance policies.
Section 7.2. Conditions to the Holding Companies', Equityholders'
and Advisors' Obligations. The obligation of the Holding Companies,
Equityholders and Advisors to effect the transactions contemplated hereby shall
be subject to the following conditions which may be waived in writing by them:
(a) Each of the representations and warranties of the Parent
contained in this Agreement, any Related Agreement or any schedule, Exhibit or
Annex hereto or thereto shall be true in all material respects as of the date of
this Agreement and (except to the extent any such representation or warranty
speaks as of or is limited to an earlier date) as of the Closing Date with the
same effect as though made on and as of the Closing Date; provided, however,
that solely for purposes of determining the satisfaction of the conditions
contained in this Section 7.2(a) and not for purposes of determining liability
under Section 8 hereof or otherwise, no effect shall be given to any exception
in such representations and warranties relating to knowledge, materiality, or a
Parent Material Adverse Effect, and such representations and warranties shall be
deemed to be true, correct and complete in all material respect only if the
failure or failures of such representations and warranties to be so true,
correct and complete without regard to knowledge, materiality, and Parent
Material Adverse Effect exceptions do not represent in the aggregate a Parent
Material Adverse Effect;
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(b) The Parent shall have performed and complied in all
material respects with all covenants, obligations and conditions required by
this Agreement, any Related Agreement or any Schedule, Exhibit or Annex hereto
or thereto to be performed or complied with by them at or prior to the Closing
Date;
(c) The Parent shall have delivered to the Holding Companies
and Equityholders a certificate, dated as of the Closing Date, from an officer
of the Parent confirming the satisfaction of the conditions contained in
paragraphs (a) and (b) of this Section 7.2;
(d) No requisite regulatory approval shall have imposed any
term, condition or restriction upon the LLCs that the Equityholders reasonably
determine would so materially adversely affect the economic or business benefits
to the Holding Companies and Equityholders of the transactions contemplated by
this Agreement as to render inadvisable in the reasonable good faith judgment of
the Equityholders the consummation of the transactions contemplated hereby;
(e) The Holding Companies and Equityholders shall have
received the opinion of counsel to the Parent, dated the Closing Date,
substantially in the form annexed hereto as Exhibit 7.2(e).
(f) The IPO shall have occurred.
Section 7.3. Satisfaction of Conditions - IPO. Upon the occurrence
of the IPO, the conditions of all parties hereto which are or have been
satisfied as of the business day following the IPO shall be deemed to be
satisfied if such conditions are otherwise satisfied for all times thereafter
until the Closing.
Section 7.4. Mutual Condition. The obligations of each of the
Holding Companies, Equityholders and Advisors, on the one hand, and the Parent,
on the other hand, to effect the Closing shall be subject to the condition that
no order, injunction or decree issued by any court or agency of competent
jurisdiction or other legal restraint or prohibition preventing the consummation
of the transactions contemplated by this Agreement shall be in effect, that no
proceeding initiated by any Governmental Authority seeking an injunction shall
be pending and that no statute, rule, regulation, order, injunction or decree
shall have been enacted, entered, promulgated or enforced by any Governmental
Authority which prohibits, restricts or makes illegal consummation of the
transactions contemplated hereby. In addition, each of the parties hereto shall
promptly notify each other party hereto upon such time as, in any such party's
reasonable judgment, any of the Closing Conditions in Sections 7.1, 7.2 or 7.3
hereof are unlikely to be satisfied as of July 31, 1998.
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ARTICLE VIII.
INDEMNIFICATION
Section 8.1. Obligations of the Shareholders. From and after the
Closing Date, the Holding Companies and the Equityholders hereby agree,
severally in proportion to their interests in the Advisors immediately prior to
the Closing (provided that each Equityholder shall also be responsible for any
failure by a Holding Company to provide any required indemnification to the
extent provided herein), to indemnify, defend and hold harmless the Parent and
its employees, officers, partners and other Affiliates (other than the LLCs or
other Managers) from and against any and all Losses (other than any Losses for
or relating to Taxes, which shall be subject to the provisions of Article IX of
this Agreement and other than intercompany obligations) which any of them may
suffer, incur or sustain arising out of, attributable to, or resulting from: (a)
any inaccuracy in or breach or nonperformance of any of the representations or
warranties of the Holding Companies and the Equityholders, or any covenant or
agreement of the Holding Companies and the Equityholders, made in or pursuant to
this Agreement or any Related Agreement (it being agreed that solely for
purposes of establishing whether any matter is indemnifiable pursuant to this
clause (a), no effect shall be given to any qualification regarding knowledge,
materiality, Material Adverse Effect or Parent Material Adverse Effect) and (b)
the activities, conduct, business or operation of any of the Advisors or any of
the Pooled Products prior to the Closing, or arising out of facts, events or
circumstances regarding any Manager or any Pooled Product existing prior to the
Closing.
Section 8.2. Obligations of the Parent. From and after the Closing
Date, the Parent shall indemnify, defend and hold harmless the Holding Companies
and the Equityholders from and against any Losses which they may suffer, incur,
or sustain arising out of, attributable to or resulting from any inaccuracy in
or breach or nonperformance of any of the representations, warranties, covenants
or agreements made by the Parent in or pursuant to this Agreement or any Related
Agreement prior to the Closing (it being agreed that solely for purposes of
establishing whether any matter is indemnifiable pursuant to this Section 8.2,
no effect shall be given to any qualification regarding knowledge other than
with respect to Sections 5.3 (to the extent it relates to Managers) and 5.6(b))
or materiality or Parent Material Adverse Effect.
Section 8.3. Procedure. (a) Notice of Third Party Claims. Any
Indemnified Party seeking indemnification for any Loss or potential Loss arising
from a claim asserted by a third party against the Indemnified Party (a "Third
Party Claim") shall give written notice to the Indemnifying Party. Written
notice to the Indemnifying Party of the existence of a Third Party Claim shall
be given by the Indemnified Party within 15 days after its receipt of a written
assertion of liability from the third party; provided, however, that the
Indemnified Party shall not be foreclosed from seeking indemnification pursuant
to this Article VIII by any failure to provide timely notice of the existence of
a Third Party Claim to the Indemnifying Party except and only to the extent that
the Indemnifying Party actually incurs an incremental
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out-of-pocket expense or otherwise has been materially damaged or prejudiced as
a result of such delay.
(b) Defense. Except as otherwise provided herein, the
Indemnifying Party may elect to compromise or defend, at such Indemnifying
Party's own expense and by such Indemnifying Party's own counsel (which counsel
shall be reasonably satisfactory to the Indemnified Party), any Third Party
Claim. If the Indemnifying Party elects to compromise or defend such Third Party
Claim, it shall, within 30 days after receiving notice of the Third Party Claim,
notify the Indemnified Party of its intent to do so, and the Indemnified Party
shall cooperate, at the expense of the Indemnifying Party, in the compromise of,
or defense against, such Third Party Claim. If the Indemnifying Party elects not
to compromise or defend against the Third Party Claim, or fails to notify the
Indemnified Party of its election to do so as herein provided, or otherwise
abandons the defense of such Third Party Claim, (i) the Indemnified Party may
pay (without prejudice of any of its rights as against the Indemnifying Party),
compromise or defend such Third Party Claim and (ii) the costs and expenses of
the Indemnified Party incurred in connection therewith shall be indemnifiable by
the Indemnifying Party pursuant to the terms of this Agreement. Notwithstanding
anything to the contrary contained herein, in connection with any Third Party
Claim in which the Indemnified Party shall reasonably conclude, based upon the
written advice of its counsel, that (x) there is a conflict of interest between
the Indemnifying Party and the Indemnified Party in the conduct of the defense
of such Third Party Claim, or (y) there are specific defenses available to the
Indemnified Party which are different from or additional to those available to
the Indemnifying Party and which could be materially adverse to the Indemnifying
Party, then the Indemnified Party shall have the right to assume and direct the
defense and compromise of such Third Party Claim insofar as it relates to the
Indemnified Party. In such an event, the Indemnifying Party shall pay the
reasonable fees and disbursements of counsel to the Indemnifying Party or
Parties and the Indemnified Party provided that the Indemnifying Party shall not
be liable for the fees and expenses of more than one counsel for the Indemnified
Parties other than local counsel. Notwithstanding the foregoing, neither the
Indemnifying Party nor the Indemnified Party may settle or compromise any claim
(unless the sole relief payable to a third party in respect of such Third Party
Claim is monetary damages that are paid in full by the party settling or
compromising such claim and the settlement or compromise includes a complete
release of the other party or parties hereto) over the objection of the other,
provided, however, that consent to settlement or compromise shall not be
unreasonably withheld. In any event, except as otherwise provided herein, the
Indemnified Party and the Indemnifying Party may each participate, at its own
expense, in the defense of such Third Party Claim. If the Indemnifying Party
chooses to defend any claim, the Indemnified Party shall make available to the
Indemnifying Party any personnel or any books, records or other documents within
its control that are reasonably necessary or appropriate for such defense,
subject to the receipt of appropriate confidentiality agreements.
(c) Settlement. If a settlement offer solely for money damages
is made by a third party claimant, and the Indemnifying Party notifies the
Indemnified Party in
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writing of the Indemnifying Party's willingness to accept the settlement offer
and pay the amount called for by such offer, and the Indemnified Party declines
to accept such offer, the Indemnified Party may continue to contest such claim,
free of any participation by the Indemnifying Party, and the amount of any
ultimate liability with respect to such Indemnifiable Claim that the
Indemnifying Party has an obligation to pay hereunder shall be limited to the
lesser of (A) the amount of the settlement offer that the Indemnified Party
declined to accept plus the costs and expenses of the Indemnified Party prior to
the date the Indemnifying Party notifies the Indemnified Party of the
Indemnifying Party's willingness to settle or compromise such Third Party Claim
and (B) the aggregate Losses of the Indemnified Party with respect to such
claim.
(d) Miscellaneous. The procedures set forth in this Section
8.3 shall not apply to any Tax Claim, which instead shall be resolved in
accordance with the procedures set forth in Article IX. The procedures set forth
in this Section 8.3 shall apply solely with respect to Third Party Claims and
shall not be deemed to apply to, or otherwise affect or limit, an Indemnified
Party's rights under this Agreement with respect to any claim other than a Third
Party Claim.
Section 8.4. Notice of Non-Third Party Claims. Any Indemnified Party
seeking indemnification for any Loss or potential Loss arising from a claim
asserted by any party to this Agreement against the Indemnified Party (a
"Non-Third Party Claim") shall give written notice to the Indemnifying Party.
Written notice to the Indemnifying Party of the existence of a Non-Third Party
Claim shall be given by the Indemnified Party promptly after discovery of the
potential claim; provided, however, that the Indemnified Party shall not be
foreclosed from seeking indemnification pursuant to this Article VIII by any
failure to provide timely notice of the existence of a Non-Third Party Claim to
the Indemnifying Party except and only to the extent that the Indemnifying Party
actually incurs an incremental out-of-pocket expense or otherwise has been
materially damaged or prejudiced as a result of such delay.
Section 8.5. Survival of Indemnity. Any matter as to which a claim
has been specifically asserted in writing that is pending or unresolved at the
end of any applicable limitation period set forth in Section 10.3 hereof shall
continue to be covered by this Article VIII notwithstanding any applicable
statute of limitations (which the parties hereby waive) until such matter is
finally terminated or otherwise resolved in accordance with this Agreement and
any amounts payable hereunder are finally determined and paid.
Section 8.6. Adjustments to Indemnification Obligations. The amount
which any Indemnifying Party is or may be required to pay any Indemnified Party
pursuant to this Article VIII shall be reduced by an amount equal to any
insurance proceeds actually realized and increased by any adverse insurance
consequences incurred (such as premium adjustments and other detriments) that
affect the overall economic impact of the Losses to the Indemnified Party.
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Section 8.7. Limitation on Indemnification. ****[This section
(approximately half of a page) has been omitted pursuant to the confidential
treatment request referenced on the cover page hereto. The omitted portion has
been filed separately with the Commission.]****
Section 8.8. Purchase Price Adjustment. Any indemnification payment
required to be made by Parent or the Holding Companies or Equityholders pursuant
to the terms of this Article VIII may be made, in whole or in part, at the
election of the Indemnified Party, first through a reduction of the contingent
giveback described in Section 3.2(b) or the contingent consideration described
in Section 3.2(c), as the case may be, which the Indemnifying Party was
previously entitled to receive. Any indemnification payments made to an
Indemnified Party through reduction of the contingent giveback or consideration
described in Section 3.2(b) or (c) shall be considered adjustments to the
Purchase Price.
Section 8.9. Exclusive Remedy. After the Closing the sole and
exclusive remedy of any party for any inaccuracy, untruth, violation or breach
of any representation, warranty, agreement or obligation made in connection with
this Agreement and required to be performed prior to the Closing shall be,
subject to Section 11.4 hereof, the indemnification contained in this Article
VIII and Article IX.
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ARTICLE IX.
TAX MATTERS
Section 9.1. Tax Cooperation. The Holding Companies and
Equityholders and the Parent shall each: (a) cooperate in the preparation of any
Tax Returns; (b) cooperate fully in preparing for any audits of, or disputes
with taxing authorities regarding, any Tax liability of the Advisors; (c) make
available to the other and to any taxing authority, as reasonably requested, all
information, records, and documents relating to any Tax; (d) provide timely
notice to the other in writing of any written notice received concerning any
pending or threatened audits or assessments relating to any Tax liability of the
Advisors for which the other may have liability pursuant to Section 9.3
hereunder; and (e) furnish the other with copies of all correspondence received
from any taxing authority in connection with any audit or information request
with respect to any Tax for which the other may have liability pursuant to
Section 9.3 hereunder.
Section 9.2. Tax Returns. The Holding Companies and Equityholders
shall be responsible for preparing and filing (or causing the preparation and
filing of) any Tax Returns required to be filed by the Advisors as to any period
ending on or before the Closing Date. The parties agree with respect to such Tax
Returns to determine the income, gain, expenses, losses, deductions, and credits
of the Advisors in a manner consistent with prior practices of the Advisors and
in a manner that apportions such income, gain, expenses, loss, deductions and
credits equitably from period to period; provided, however, that in all events
such Tax Returns shall be prepared in a manner consistent with Applicable Law
and without prejudice to the rights of indemnification of any party (other than
the LLCs) hereunder with respect to any Tax Claim. No amended return may be
filed by or on behalf of any Advisor with respect to any period ending on or
prior to the Closing Date without the written consent of the Shareholders and
Parent which consent shall not unreasonably delayed or withheld.
Section 9.3. Liability for Taxes.
(a) From and after the Closing Date, the Holding Companies and
the Equityholders (severally, in proportion to their interests in the Advisors
immediately prior to the Closing) shall indemnify the Parent and its Affiliates
(other than the LLCs), and hold them harmless from and against, any Taxes
imposed on any Advisor or the LLCs (or their successors in interest) for any
taxable period of any Advisor ending on or before the Closing Date; provided
that such indemnification shall not apply or extend to any Taxes which are
properly reflected as a liability on the financial records of an Advisor in
accordance with prior practice as of the Closing Date.
(b) To the extent Parent receives any refund or credit for
Taxes previously paid by or on behalf of a Advisor in respect of any tax period
ending on or before the Closing Date (other than any refund or credit reflected
on the financial records of such
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Advisor in accordance with prior practice as of the Closing Date), such refund
or credit shall be promptly paid to the Holding Companies and the Equityholders.
Section 9.4. Procedures Related to Tax Claims.
(a) If any claim for Taxes shall be made by any Taxing
Authority against any Advisors (or any successor in interest) or against any
Holding Company or Equityholder in respect of any Advisors, the party receiving
such claim shall promptly notify the other parties.
(b) If such Tax Claim, if successful, might require the
Holding Companies and Equityholders to make an indemnity payment pursuant to
Section 9.3(a), the Holding Companies and Equityholders shall have the sole
right (but not the obligation) to control, defend, settle, compromise, or
contest in any manner such Tax Claim; provided, however, that (i) the Holding
Companies and Equityholders shall keep Parent fully informed of any proceedings
in connection with such Tax Claim and (ii) Parent shall be entitled to receive
copies of all correspondence and documents related to such Tax Claim and may, at
its option, observe such proceedings (including any meetings or conferences). No
such Tax Claim may be settled by the Holding Companies and Equityholders without
the consent of Parent, which consent shall not unreasonably be withheld or
delayed. Such consent shall not be necessary to the extent the Holding Companies
and Equityholders have indemnified Parent with respect to the economic
consequences of such settlement. The costs and expenses incurred in contesting
any such Tax Claim shall be borne by the Holding Companies and Equityholders.
Section 9.5. Survival of Tax Claims and Section 4.12 Representation.
Any Tax Claim to be made pursuant to this Article IX shall survive until the
closing of the applicable statute of limitations. The representations and
warranties made by the Holding Companies and Equityholders in Section 4.12 shall
not survive the Closing Date.
Section 9.6. Exclusive Remedy. Notwithstanding any other provision
of this Agreement to the contrary, the provisions of this Article IX shall be
the exclusive means by which any party may recover damages from any other party
with respect to any claim based on Taxes pertaining to any Advisor.
Section 9.7. Payments for Indemnification under Article IX. Any
indemnification amounts payable pursuant to this Article IX by a Holding Company
or Equityholder shall be paid in the same manner as indemnification payments
under Section 8.7.
Section 9.8. Code Section 754 Election. The Holding Companies and
Equityholders and the Parent consent to each of the Advisors and the LLCs making
an election under Section 754 of the Code (and a corresponding adjustment to the
tax basis of the property owned by each of the Advisors under Section 743 of the
Code).
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Section 9.9. Interim Closing of the Books. The Holding Companies and
Equityholders and the Parent agree that each of the Advisors and the LLCs shall
undertake an interim closing of its books on the Closing Date for purposes of
allocating items of income, gain, deduction and loss among its partners and
members.
ARTICLE X.
TERMINATION/SURVIVAL
Section 10.1. Termination. (a) This Agreement may be terminated at
any time prior to the Closing as follows:
(1) by the mutual written consent of the Parent and the
Equityholders;
(2) by the Equityholders or by the Parent if it has
become reasonably and objectively certain that any of the conditions to
the other party's obligation to close the transactions contemplated by
this Agreement will not be satisfied on or prior to the date set forth in
Section 10.1(a)(5) below;
(3) by Equityholder, on the one hand, or by the Parent,
on the other hand, if there shall have been a breach of any of the
representations and warranties set forth in this Agreement on the part of
the other party, which breach would entitle the party receiving such
representation or warranty not to consummate the transactions contemplated
hereby under Section 7.1(a) (in the case of a breach of representation or
warranty by the Holding Companies and the Equityholders) or Section 7.2(a)
(in the case of a breach of representation or warranty by Parent) and
which breach by its nature cannot be cured prior to the date set forth in
Section 10.1(a)(5) below;
(4) by Equityholders on the one hand, or by the Parent,
on the other hand, if there shall have been a material breach of any of
the covenants or agreements set forth in this Agreement on the part of the
Parent (in the case of termination by Equityholders) or on the part of the
Holding Companies, Equityholders or Advisors (in the case of termination
by the Parent), which breach shall not have been cured within 20 Business
Days following receipt by the breaching party of written notice of such
breach from the other; and
(5) at the election of the Parent or Equityholders, if
the Closing Date shall not be on or before July 31, 1998.
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Notwithstanding Section 10.1(a)(2)-(5) hereof, a party who is in
material breach of any of its obligations or representations and warranties
hereunder shall not have the right to terminate this Agreement pursuant to
Section 10.1(a)(2)-(5).
(b) The termination of this Agreement shall be effectuated by
the delivery by the party terminating this Agreement to the other party of a
written notice of such termination. If this Agreement so terminates, it shall
become null and void and have no further force or effect, except as provided in
Section 10.2.
Section 10.2. Effect of Termination. In the event of termination of
this Agreement as provided in Section 10.1, this Agreement shall forthwith
become void and have no effect except (i) the confidentiality provisions
contained in Section 6.3 shall survive any termination of this Agreement, and
(ii) notwithstanding anything to the contrary contained in this Agreement, no
party shall be relieved or released from any liabilities or damages arising out
of its willful breach of any provision of this Agreement.
Section 10.3. Survival of Representations and Warranties. Except as
provided in Sections 8.5 and 9.5, the respective representations and warranties
of the Holding Companies and the Equityholders and the Parent contained herein
and in the certificates of the Holding Companies and the Equityholders and the
Parent to be delivered at the Closing, and the right of any Person to initiate a
claim under Article VIII, shall expire and be terminated and extinguished *****.
Following the appropriate expiration date for any representation or warranty
referred to in the previous sentence, except as provided in Sections 8.5 and
9.5, no party shall have any liability whatsoever with respect to any such
referenced representation or warranty or any other claim under Article VIII
except with respect to claims previously asserted pursuant to Article VIII or IX
hereof.
ARTICLE XI.
MISCELLANEOUS
Section 11.1. Disputes. Except for requests for injunctive relief,
specific performance or enforcement of the award of an arbitrator, all disputes
arising in connection with this Agreement shall be resolved by binding
arbitration in accordance with the applicable rules of the American Arbitration
Association. The arbitration shall be held, in the State of New York before a
single arbitrator selected in accordance with Section 12 of the American
Arbitration Association Commercial Arbitration Rules who shall have substantial
business experience in the investment advisory industry, and shall otherwise be
conducted in accordance with such association's Commercial Arbitration Rules.
The award of such arbitrator shall be enforceable in any court having
jurisdiction over the parties to such arbitration.
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Section 11.2. Amendments; Extension; Waiver. Subject to compliance
with Applicable Law, this Agreement may be amended, altered or modified by
written instrument executed by each of the parties hereto: provided, however,
that the Equityholders may waive in writing the performance by the Parent of any
of its representations, warranties, covenants or other agreements and that the
Parent may waive in writing the performance by any of the Holding Companies,
Equityholders or Advisors of any of its representations, warranties covenants or
other agreements and that any party may waive any of the conditions to its
obligations to close the transactions contemplated hereby.
Section 11.3. Entire Agreement. This Agreement (including Schedules,
certificates and lists referred to herein, and any documents executed by the
parties simultaneously herewith or pursuant hereto) and the Related Agreements
constitutes the entire understanding and agreement of the parties hereto, except
as provided herein, and supersedes all prior agreements and understandings,
written and oral, among the parties with respect to the subject matter hereof.
Section 11.4. Specific Performance; Injunctive Relief. Each party
understands and agrees that it will be irreparably damaged in the event this
Agreement is not specifically enforced. Each party, therefore, agrees that in
the event of a breach of any material provision of this Agreement, the aggrieved
party may elect to institute and prosecute proceedings in any court of competent
jurisdiction to enforce specific performance or to enjoin the continuing breach
of this Agreement. Such remedies shall, however, be cumulative and not
exclusive, and shall, except as provided in Section 8.9, be in addition to any
other remedy which a party may have.
Section 11.5. Interpretation. When a reference is made in this
Agreement to a Section, Exhibit, Annex or Schedule, such reference shall be to a
Section of or Exhibit, Annex or Schedule to this Agreement unless otherwise
indicated. The table of contents and headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include," "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation." Whenever the words "to the knowledge of" a
specified Person or terms of similar import, are used in this Agreement, they
shall be deemed to be followed by the words "and after due inquiry by the
officers of" such Person. Whenever the context may require, any pronouns used in
this Agreement shall include the corresponding masculine, feminine or neuter
forms and the singular form of nouns and pronouns shall include the plural and
vice versa. The phrases "the date of this Agreement," "the date hereof" and
terms of similar import, unless the context otherwise requires, shall be deemed
to refer to the date set forth in the first paragraph of this Agreement.
Section 11.6. Severability. Any term or provision of this Agreement
which is invalid or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the
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remaining terms and provisions of this Agreement or affecting the validity or
enforceability of any of the terms or provisions of this Agreement in any other
jurisdiction. If any provision of this Agreement is so broad as to be
unenforceable, the provision shall be interpreted to be only so broad as is
enforceable.
Section 11.7. Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given if (a) delivered in
person, (b) transmitted by telecopy (with confirmation), (c) mailed by certified
or registered mail (return receipt requested) or (d) delivered by an express
courier (with confirmation) to the parties at the following addresses (or at
such other address for a party as shall be specified by like notice):
If to the Parent:
Asset Alliance Corporation
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxx Xxxxxxx, President
With a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx, Esq.
If to the LLC's Holding Companies, the Equityholders or the
Advisors:
Metropolitan Capital Advisors LLC
c/o Xxxxxxx Xxxxxxx
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX
With a copy to:
Xxxx Xxxxxx & Xxxxx LLP
000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxx
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Section 11.8. Binding Effect; Persons Benefitting; No Assignment.
This Agreement shall inure to the benefit of and be binding upon the parties
hereto and the respective heirs, legal representatives, estates, executors,
successors and permitted assigns of the parties and such persons. Nothing in
this Agreement is intended or shall be construed to confer upon any entity or
person other than the parties hereto and their respective heirs, legal
representatives, estates, executors, successors and permitted assigns any right,
remedy or claim under or by reason of their Agreement or any part hereof.
Without the prior written consent of each of the other parties hereto, this
Agreement may not be assigned by any of the parties hereto. Notwithstanding the
foregoing, the Parent may assign to any Affiliate of the Parent all or any
portion of the Parent's rights hereunder whether prior to or after the Parent
exercises such right, provided that in the event of any such assignment such
assignee shall be deemed to have all of the rights and obligations of the Parent
set forth herein. No assignment shall release the Parent from any liability or
obligation under this Agreement
Section 11.9. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
taken together shall constitute one and the same agreement, it being understood
that all of the parties need not sign the same counterpart.
Section 11.10. Governing Law. THIS AGREEMENT, THE LEGAL RELATIONS
BETWEEN THE PARTIES AND THE ADJUDICATION AND THE ENFORCEMENT THEREOF, SHALL BE
GOVERNED BY AND INTERPRETED AND CONSTRUED IN ACCORDANCE WITH THE SUBSTANTIVE
LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF
LAW THEREOF.
Section 11.11. Jurisdiction. Subject to Section 11.1 hereof, each of
the parties hereto agrees to personal jurisdiction in any action brought in any
court, federal or state, within the state of Delaware or New York having subject
matter jurisdiction over matters arising under this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date first above written.
ASSET ALLIANCE CORPORATION METROPOLITAN CAPITAL
ADVISORS, INC.
By: /s/ Xxxxxx X. Xxxxx By: /s/ Xxxxx Xxxxxxxx
----------------------- ----------------------
XXXXXX X. XXXXX XXXXX XXXXXXXX
EXECUTIVE VICE PRESIDENT PRESIDENT
KJ ADVISORS, INC. METROPOLITAN CAPITAL III, INC.
By: /s/ Xxxxx Xxxxxxxx By: /s/ Xxxxx Xxxxxxxx
----------------------- ----------------------
XXXXX XXXXXXXX XXXXX XXXXXXXX
PRESIDENT PRESIDENT
METROPOLITAN CAPITAL METROPOLITAN CAPITAL
ADVISORS, L.P. PARTNERS II, L.P.
by: METROPLITAN CAPITAL by: KJ ADVISORS, INC.
ADVISORS, INC. its: GENERAL PARTNER
its: GENERAL PARTNER
By: /s/ Xxxxx Xxxxxxxx By: /s/ Xxxxx Xxxxxxxx
----------------------- ----------------------
XXXXX XXXXXXXX XXXXX XXXXXXXX
PRESIDENT PRESIDENT
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METROPOLITAN CAPITAL
PARTNERS III, L.P.
by: METROPOLITAN CAPITAL III,
INC.
its: GENERAL PARTNER
By: /s/ Xxxxx Xxxxxxxx
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XXXXX XXXXXXXX
PRESIDENT
/s/ Xxxxxxx X. Xxxxxxx
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XXXXXXX X. XXXXXXX
/s/ Xxxxx Xxxxxxxx
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XXXXX XXXXXXXX
XXXXXXX XXXXXXX
CHILDREN'S TRUST
By: /s/ Xxxxxxxx X. Xxxxxxx
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XXXXXXXX X. XXXXXXX
TRUSTEE
By: /s/ Xxxx X. Xxxxxxxxxx
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XXXX X. XXXXXXXXXX
TRUSTEE
