Exhibit 2.2
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PURCHASE AGREEMENT
BY AND AMONG
XXXXXXXXXX XXXXX HOLDINGS INC.,
XXXXXXXXXX & CO. INC.,
CIBC WORLD MARKETS CORP.
AND
CANADIAN IMPERIAL BANK OF COMMERCE
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DATED AS OF JANUARY 2, 2003
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
1.01 Certain Definitions.......................................................................1
1.02 Certain Terms............................................................................14
ARTICLE II
PURCHASE AND SALE OF ASSETS AND EQUITY INTERESTS
2.01 Assets to Be Sold........................................................................14
2.02 Equity Interests to Be Sold..............................................................19
2.03 Closings.................................................................................20
2.04 Certain Invesments.......................................................................20
2.05 Deliveries by the Parties................................................................20
2.06 Assumed Liabilities; Excluded Liabilities................................................21
2.07 Excluded Assets..........................................................................22
2.08 Consent of Third Parties.................................................................22
2.09 Post-Closing Adjsument...................................................................21
ARTICLE III
RELATED MATTERS
3.01 [Reserved]...............................................................................23
3.02 Employees; Employee Benefits.............................................................23
3.03 Tax Matters..............................................................................30
3.04 Mail Received After Closings.............................................................35
3.05 Books and Records........................................................................35
3.06 Accounts Receivable......................................................................36
3.07 Schedules................................................................................36
3.08 Certain Information......................................................................36
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
4.01 Organization of Seller Subsidiaries; Authority of Seller Entities........................36
4.02 Capital Structure........................................................................37
4.03 Title to Equity Interests................................................................38
4.04 No Violation; Consents and Approvals.....................................................38
4.05 Financial Statements.....................................................................39
4.06 Absence of Undisclosed Liabilities.......................................................40
4.07 Absence of Certain Changes or Events.....................................................40
4.08 Title to Assets..........................................................................40
4.09 Intellectual Property....................................................................41
4.10 Litigation...............................................................................43
4.11 Employees; Employee Benefits.............................................................44
4.12 Labor Matters............................................................................44
4.13 Certain Contracts and Arrangements.......................................................45
4.14 Compliance with Laws; Licenses...........................................................48
4.15 Brokers..................................................................................50
4.16 Assets Necessary to Business.............................................................50
4.17 Taxes....................................................................................50
4.18 Disclosure...............................................................................51
4.19 Transferred Accounts.....................................................................51
4.20 Transferred Account Information..........................................................52
4.21 Government Regulation....................................................................52
4.22 Registered Funds; Sub-Advised Registered Funds; Non-Registered Funds.....................55
4.23 Affiliate Transactions...................................................................58
4.24 Clients, Assets Under Management.........................................................58
4.25 Insurance................................................................................59
4.26 Investments..............................................................................59
4.27 No "Clawback" Provisions.................................................................60
4.28 No Co-Investments........................................................................60
4.29 Liquidated Affiliates....................................................................60
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER PARENT AND BUYER
5.01 Organization; Authority..................................................................60
5.02 No Violation; Consents and Approvals.....................................................61
5.03 Litigation...............................................................................61
5.04 Brokers..................................................................................61
5.05 Commission Filings.......................................................................61
5.06 Financial Statements.....................................................................62
5.07 Capitalization...........................................................................62
5.08 Absence of Undisclosed Liabilities.......................................................62
5.09 Non-Contravention........................................................................62
5.10 Disclosure...............................................................................62
ARTICLE VI
COVENANTS OF THE PARTIES
6.01 Conduct of the Asset Management Business.................................................63
6.02 Access to Information; Confidentiality...................................................66
6.03 Reasonable Best Efforts..................................................................66
6.04 Consents.................................................................................67
6.05 Regulatory Matters.......................................................................67
6.06 Discharge of Liens; Payment of Certain Obligations.......................................69
6.07 Public Announcements.....................................................................69
6.08 Tax Information Reporting................................................................69
6.09 Pending Tax Claims.......................................................................69
6.10 Litigation Cooperation...................................................................70
6.11 Seller Officer's Certificate.............................................................70
6.12 Client Consents and Approvals............................................................71
6.13 Failure to Consummate....................................................................74
6.14 Investment Company Act Matters...........................................................74
6.15 Certain Expenses.........................................................................74
6.16 Certain Actions..........................................................................74
6.17 Transition Services......................................................................75
6.18 Payments to Brokers......................................................................75
6.19 Consents, Indemnification................................................................75
6.20 OMEGA Brokers............................................................................75
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF SELLER
7.01 Conditions...............................................................................76
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF BUYER
8.01 Conditions...............................................................................77
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
9.01 Termination..............................................................................78
9.02 Procedure and Effect of Termination......................................................78
9.03 Other Remedies...........................................................................78
9.04 Amendment, Modification and Waiver.......................................................78
ARTICLE X
FEES AND EXPENSES: SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
10.01 Fees and Expenses........................................................................79
10.02 Survival of Representations..............................................................79
10.03 Seller's Agreement to Indemnify..........................................................79
10.04 Seller's Limitation of Liability.........................................................80
10.05 Buyer Parent's and Buyer's Agreement to Indemnify........................................80
10.06 Buyer Parent's and Buyer's Limitation of Liability.......................................81
10.07 Conditions of Indemnification............................................................81
10.08 Cooperation..............................................................................82
10.09 Other Indemnification Provisions.........................................................82
ARTICLE XI
MISCELLANEOUS
11.01 Further Assurances.......................................................................82
11.02 Notices..................................................................................82
11.03 Bulk Sales Laws..........................................................................84
11.04 Entire Agreement.........................................................................84
11.05 Severability.............................................................................84
11.06 Binding Effect; Assignment...............................................................85
11.07 No Third-Party Beneficiaries.............................................................85
11.08 Counterparts.............................................................................85
11.09 Headings.................................................................................85
11.10 Governing Law; Jurisdiction..............................................................85
11.11 Waiver of Jury Trial.....................................................................86
11.12 Specific Performance.....................................................................86
SCHEDULES
Schedule I ............................Assets and Property to be Acquired at the First Closing
Schedule II ...........................Assets and Property to be Acquired at the Second Closing
Schedule III ............................Assets and Property to be Acquired at the Third Closing
Schedule IV ..............................................................Purchased Investments
Schedule V .................................................................Seller Investments
EXHIBITS
Non-Solicitation Agreement..........................................................................A
PURCHASE AGREEMENT
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This PURCHASE AGREEMENT, dated as of January 2, 2003 (the
"Agreement"), is by and among Xxxxxxxxxx Xxxxx Holdings Inc., an Ontario
corporation ("Buyer Parent"), Xxxxxxxxxx & Co. Inc., a New York corporation
and a wholly-owned subsidiary of Buyer Parent ("Buyer"), Canadian Imperial
Bank of Commerce (the "Seller Parent") and CIBC World Markets Corp.
("Company" and, together with Seller Parent, the "Seller"). Capitalized
terms used herein but not defined shall have the meanings set forth in the
Brokerage Asset Purchase Agreement.
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, Buyer Parent, Buyer and Seller are parties to that certain
Asset Purchase Agreement, dated as of December 9, 2002 (the "Brokerage Asset
Purchase Agreement"), which agreement contemplates the Brokerage
Acquisition;
WHEREAS, Schedule I to the Brokerage Asset Purchase Agreement
contemplates the Asset
Management Acquisition;
WHEREAS, Buyer desires to purchase from Seller, and Seller desires
to sell to Buyer, the Asset Management Business pursuant to the terms of
this Agreement (the "Asset Management Acquisition"); and
WHEREAS, contemporaneously with the execution and delivery of this
Agreement, Buyer Parent, Buyer and Seller are entering into a
Non-Solicitation Agreement.
NOW, THEREFORE, in consideration of the foregoing and of the
representations, warranties, covenants, agreements and conditions contained
herein, and intending to be legally bound hereby, the parties agree as
follows:
ARTICLE I
DEFINITIONS
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1.01 Certain Definitions.
"AA Transfer Percentage" means the quotient of (a) such portion of
the assets under management (measured as of the Brokerage Closing) of the
Asia Tiger Fund and India Fund which are transferred to Buyer pursuant to
Section 6.12 on the Final Closing Date divided by (b) the aggregate assets
under management of such funds as of the Brokerage Closing.
"Accrued Fees" has the meaning set forth in Section 2.01(c).
"Acquired Property" has the meaning set forth in Section
2.01(c)(v).
"Advisers Act" means the Investment Advisers Act of 1940, as
amended.
"Advisory Agreement" means, with respect to any Person, each
Contract relating to its rendering of investment management or investment
advisory services, including any sub-advisory services, or similar services.
"Affiliate Agreement" means any Contract (including, without
limitation, any Advisory Agreement) or other commitment or transaction
between any Seller Entity and (a) any other Seller Entity or Fund, (b) any
Affiliate of any Seller Entity or any Fund or (c) any officer, director,
supervisor, member, partner or employee of any Seller Entity, Fund, any
Affiliate of any Seller Entity or any Fund or any immediate family member of
any of them.
"Affiliate" means, with respect to a specified Person, a Person
that directly or indirectly, through one or more intermediaries, controls,
or is controlled by or is under common control with, the Person specified.
"Agreement" has the meaning set forth in the Preamble.
"Ancillary Agreements" means the Non-Solicitation Agreement.
"Applicable Closing" means the First Closing, Second Closing or
Final Closing, as the case may be, pursuant to Section 2.03, and the related
sales, conveyances, assignments and transfers and assumptions in connection
therewith.
"Applicable Closing Date" means the First Closing Date, Second
Closing Date or Final Closing Date, as the case may be, pursuant to Section
2.01.
"Applicable Laws" has the meaning set forth in Section 4.14(a).
"Asset Management Acquisition" has the meaning set forth in the
recitals.
"Asset Management Assets" has the meaning set forth in Section
2.01(c).
"Asset Management Business" means the asset management, investment
advisory, financial advisory, wrap, asset allocation and related businesses
and activities of the Company and its Subsidiaries and Affiliates generally
known as the "Asset Management Division" of the Company (including the five
units set forth on Schedule I to the Brokerage Asset Purchase Agreement) as
conducted from and after November 30, 2002, including, for the avoidance of
doubt, the OMEGA Business and Wrap Business.
"Assumed Contracts" has the meaning set forth in Section 2.06(a).
"Assumed Liabilities" has the meaning set forth in Section 2.06(b).
"Authorization" means any approval, consent, declaration, license,
order, permit, registration, waiver, or other authorization issued, granted,
given, or otherwise made available by or under the authority of any
Governmental Entity or pursuant to any Law of any Governmental Entity.
"Xxxx of Sale" has the meaning set forth in Section 2.01(d).
"Books and Records" means all books and records, all books of
account, records, files and invoices, including all customer files, customer
account records, production data, equipment records, inventory records,
sales and promotional data, advertising materials, customer lists, cost and
pricing information, supplies lists, business plans, reference catalogs, tax
records, and tax returns and any other similar records and data (including
all computerized records and other computerized storage media) relating to
the Asset Management Business.
"Brokerage Asset Purchase Agreement" has the meaning set forth in
the recitals.
"Brokerage Closing" means the date of the closing of the
transactions contemplated by the Brokerage Asset Purchase Agreement.
"Business Employees" has the meaning set forth in Section 3.02(a).
"Buyer" has the meaning set forth in the Preamble.
"Buyer Claims" has the meaning set forth in Section 10.05.
"Buyer Disclosure Schedule" means the document delivered by Buyer
to Seller simultaneously with the execution hereof containing the
information required to be included therein pursuant to this Agreement.
"Buyer Indemnitees" has the meaning set forth in Section 10.03.
"Buyer Parent" has the meaning set forth in the Preamble.
"Buyer Parent Commission Documents" means, with respect to Buyer
Parent, (i) its annual reports on Form 10-K for its fiscal years ended
December 31, 1999, 2000 and 2001, (ii) its quarterly reports on Form 10-Q
for its fiscal quarters ended after December 31, 2001, (iii) any Form 8-Ks
filed in the past fiscal year and (iv) its proxy or information statements
relating to meetings of, or actions taken without a meeting by, the
shareholders of Buyer Parent held since December 31, 2001.
"Buyer Parent Financial Statements" has the meaning set forth in
Section 5.06.
"Buyer Related Instruments" has the meaning set forth in Section 5.01.
"CE Act" means the Commodity Exchange Act, as amended.
"Claims" has the meaning set forth in Section 10.07.
"Client" shall mean any Person to whom any of the Seller Entities
provides investment advisory, investment management, financial advisory,
wrap, asset allocation or administrative and related services in connection
with the Asset Management Business, including, without limitation, any Fund.
"COBRA Requirements" has the meaning set forth in Section 3.02(g).
"Code" means the United States Internal Revenue Code of 1986, as
amended, and the Treasury rules and regulations thereunder.
"Commission" means the United States Securities and Exchange
Commission.
"Company" has the meaning set forth in the Preamble or, as the
context may require, the Company and its Subsidiaries and Affiliates.
"Confidentiality Agreement" has the meaning set forth in Section
6.02(c).
"Consent" means any and all consents (including negative consents
to be obtained or made by any Person), approvals, authorizations, waivers,
permits, notices, licenses, grants, agreements, exemptions or orders of, or
registration, declaration or filing with, any Person, including without
limitation, any Governmental Entity, that are necessary in connection with
(i) the execution and delivery by the Seller Entities and Buyer of this
Agreement, the Instruments of Assignment and any other agreement
contemplated by this Agreement to which it is or is specified to be a party,
(ii) the consummation by the Seller Entities, the Funds and Buyer of the
transactions contemplated hereby or (iii) the conduct of the Asset
Management Business.
"Contracts" has the meaning set forth in Section 4.13(a).
"Control" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly, of the power to
direct or cause the direction of the management policies of a Person,
whether through the ownership of voting securities, by contract, as trustee
or executor, or otherwise.
"Controlled Entities" means issuers of the Equity Interests that
are Affiliates of Seller prior to the Final Closing.
"Customer Agreement" has the meaning set forth in Section 4.19(d).
"Damages" has the meaning set forth in Section 10.03.
"Deemed Assets" means an amount equal to the aggregate amount of
assets under management of all Clients (and all accounts of all such
Clients) of the Asset Management Business as of the Brokerage Closing;
provided that, in determining the amount of assets under management of any
account of any Client not transferred to Buyer by June 30, 2003, the amount
of such assets under management shall equal the amount of assets under
management of such account as of the Brokerage Closing and not on any later
date.
"Deferred Compensation Plan" has the meaning set forth in Section
3.02(f)(i).
"Distribution Agreements" shall mean all agreements or arrangements
for the sale or distribution of shares of any Registered Fund pursuant to
Rule 12b-1 of the Investment Company Act.
"Eligible Client Account" means, as of a specified date, each
account of any Client other than an Excluded Account, Eligible OMEGA Account
or Eligible Wrap Account.
"Eligible OMEGA Account" means, as of a specified date, each
account of any Client under the OMEGA wrap program other than the Excluded
OMEGA Accounts.
"Eligible Wrap Accounts" means, as of a specified date, each Wrap
Account or Separate Account other than an Excluded Wrap Account or Eligible
OMEGA Account.
"Environmental Laws" means any applicable United States federal,
state or local law or regulation relating to the pollution or protection of
the environment.
"Equity Interests" means each of the equity interests set forth in
Section 4.02(a) of the Seller Disclosure Schedule.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended and the rules and regulations promulgated thereunder.
"ERISA Affiliate" is any trade or business, whether or not
incorporated, that together with Seller would be deemed a "single employer"
within the meaning of Section 4001(b) of ERISA.
"ERISA Client" has the meaning set forth in Section 4.14(e).
"Exchange Act" means the United States Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated thereunder.
"Excluded Account" means, as of a specified date, each account of any Client
that (i) is an account with respect to which such Client has not
affirmatively consented to the assignment (or transfer) of such account
pursuant to Section 6.12 (or with respect to which Buyer and Seller have not
otherwise mutually agreed that consent has been given by such Client in
compliance with Applicable Law and any applicable agreement) or (ii) is
subject to any claim or existing litigation at the time of transfer.
"Excluded Assets" has the meaning set forth in Section 2.07.
"Excluded Liabilities" has the meaning set forth in Section 2.06(b).
"Excluded OMEGA Account" means, as of a specified date, each
account of any Client under the OMEGA wrap programs that (i) is an account
with respect to which such Client has not affirmatively consented to the
assignment (or transfer) of such account pursuant to Section 6.12 (or with
respect to which Buyer and Seller have not otherwise mutually agreed that
consent has been given by such Client in compliance with Applicable Law and
any applicable agreement) or (ii) is subject to any claim or existing
litigation at the time of transfer.
"Excluded Wrap Account" means, as of a specified date, each Wrap
Account or Separate Account of any Client (other than any account of such
Client under the OMEGA wrap programs) that (i) is an account with respect to
which such Client has not affirmatively consented to the assignment (or
transfer) of such account pursuant to Section 6.12 (or with respect to which
Buyer and Seller have not otherwise mutually agreed that consent has been
given by such Client in compliance with Applicable Law and any applicable
agreement) or (ii) is subject to any claim or existing litigation at the
time of transfer. "Filings" has the meaning set forth in Section 4.21(a).
"Final Closing" has the meaning set forth in Section 2.03(c).
"Final Closing Assets" has the meaning set forth in Section 2.01(c).
"Final Closing Date" has the meaning set forth in Section 2.03(c).
"Financial Statements" has the meaning set forth in Section 4.05(a).
"First Closing" has the meaning set forth in Section 2.03(a).
"First Closing Date" has the meaning set forth in Section 2.03(a).
"Follow-Up Notice" has the meaning set forth in Section 6.12(b).
"Funds" means, collectively, Registered Funds, Sub-Advised Registered
Funds and Non-Registered Funds.
"Fund Financial Statements" means the audited financial statements of
each Fund for the two most recently completed fiscal years, together with
reports on such year-end statements by each such Fund's independent public
accountants, including, in each case, for each investment portfolio thereof, a
statement of net assets or statement of assets and liabilities and schedule of
investments, a statement of operations and a statement of changes in net
assets.
"Fund Reports" has the meaning set forth in Section 4.22(i).
"GAAP" means generally accepted accounting principles in the United
States.
"Governmental Entity" means any court, administrative agency or
commission, government, SRO, federal, state, provincial, municipal, local or
other governmental entity, authority or instrumentality, whether domestic or
foreign, or any court, tribunal or arbitrator.
"Group Health Plan" has the meaning set forth in Section 3.02(9).
"Hire Date" means (a) March 31, 2003, with respect to the Business
Employees who perform services primarily for the Wrap Business and (b) the
Final Closing Date with respect to all other Business Employees, or in each
case, such earlier date as Buyer and Seller may mutually agree with respect to
one or more specified Business Employees.
"HSR Act" means the United States Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended.
"Inactive Employee" has the meaning set forth in Section 3.02(a).
"Indebtedness" means any loan agreements, indentures, letters of
credit (including related letter of credit applications and reimbursement
obligations), mortgages, security agreements, pledge agreements, deeds of
trust, debt securities, bonds, notes, guarantees, capital leases, payments in
respect of the deferred purchase price of property, instruments and other
contracts relating to the borrowing of money or obtaining of or extension of
credit, whether short-term or long-term, including accrued and unpaid interest
thereon, with or from any Person.
"Initial Notice" has the meaning set forth in Section 6.12(b).
"Instruments of Assignment" has the meaning set forth in Section
2.01(d).
"Intellectual Property" means, collectively, Internet domain names,
mynetassets intranet site; patents and industrial designs (including any
continuations, divisionals, continuations-in-part, renewals, reissues, and
applications for any of the foregoing); Trademarks; Software; copyrights
(including any registrations and applications for any of the foregoing); and
Trade Secrets, in each case, used in or necessary for the conduct of the Asset
Management Business.
"Investment Company Act" means the Investment Company Act of 1940, as
amended.
"Investment Company Board" means the board of directors or trustees
(or Persons performing similar functions) of a Fund.
"Investments" has the meaning set forth in Section 4.26.
"Labor Laws" means any applicable United States federal, state or
local law or regulation relating to employment and employment practices.
"Law" or "Laws" means any and all laws, statutes, ordinances, rules,
regulations, orders, judgments and decrees of any and all Governmental
Entities.
"Legal Proceeding" means any action, claim, complaint, lawsuit,
litigation, demand, suit, inquiry, hearing, investigation, indictment,
information, notice of a violation, arbitration, appeal or other dispute or
legal proceeding, whether civil, criminal, administrative or otherwise.
"License Agreements" has the meaning set forth in Section 4.09(b).
"Liens" means any and all liens, encumbrances, security interests,
mortgages, pledges, claims, options, charges, easements, limitations,
commitments, encroachments, option agreements, voting trusts or restrictions of
any kind whatsoever.
"Liquidated Affiliate" has the meaning set forth in Section 4.29.
"Litigation" has the meaning set forth in Section 4.10.
"Material Adverse Effect" means any condition, event, circumstance,
change or effect that, individually or in the aggregate, has had or could
reasonably be expected to have a material adverse effect on the business,
assets, properties, results of operation, condition (financial or otherwise) or
prospects of the Asset Management Business or the Asset Management Assets.
"NASD" means the NASD Regulation, Inc.
"Net Profits or Net Loss" means the net profit or net loss, as the
case may be, of the Asset Management Business (including all business units
thereof, whether or not any such business units have been transferred to Buyer
during the period in question) for the period from January 1, 2003 through and
including the Final Closing Date, calculated in a manner consistent with the
Financial Statements and past practices, provided that in determining such net
profit or net loss (a) revenues shall include revenue shares payable by the
Buyer consistent in nature and amount with past practice, (b) only costs,
expenses and other charges incurred by the Asset Management Business consistent
in nature and amount with past practice shall be taken into account (including
accruals for employee bonuses in respect of 2003 for the period ending on the
Final Closing Date), (c) any costs, expenses and other charges shall not
include any costs, expenses or charges (i) relating to the negotiation or
consummation of the transactions contemplated hereby or by the Brokerage Asset
Purchase Agreement or any costs associated with obtaining any Consents in
connection herewith or therewith or (ii) in respect of any intercompany charges
or allocations by Seller or its Affiliates and (d) the costs, expenses and
other charges shall include an amount equal to $100,000 per month for services
provided to the Asset Management Business by Seller and its Affiliates.
"NFA" means the National Futures Association.
"Non-Registered Fund" means any pooled investment vehicle that is not
required to be registered under the Investment Company Act for which any Seller
Entity acts as investment adviser, investment sub-adviser, general partner,
managing member, manager or sponsor.
"Non-Solicitation Agreement" means the non-solicitation agreement
between Buyer and Seller in respect of the Asset Management Business, dated as
of the date hereof, in the form attached as hereto as Exhibit A.
"NYSE" means the New York Stock Exchange, Inc.
"Off-Balance Sheet Transaction" has the meaning set forth in Section
4.05(d).
"Offering Materials" means all the placement memoranda, prospectuses,
offering memoranda and disclosure documents, all supplements thereto, and the
other written selling materials, brochures and other information used or
distributed in connection with the offer or sale of equity interests in any of
the Funds.
"OMEGA Assets" has the meaning set forth in Section 2.01(a).
"OMEGA Business" means the financial advisory, wrap, asset allocation
and related businesses and activities of the Company and its Subsidiaries and
Affiliates in connection with the OMEGA wrap programs as conducted from and
after November 30, 2002.
"Order" means any order, writ, judgment, arbitration award,
injunction, decree or ruling of or by a Governmental Entity.
"Organizational Documents" means, with respect to a limited
partnership, the certificate of limited partnership, limited partnership
agreement and subscription agreements with such partnership's partners then in
effect; with respect to a limited liability company, the certificate of
formation, limited liability company agreement and subscription agreements with
such company's members then in effect; and, with respect to a corporation, the
articles of incorporation and by-laws of such corporation, in each case, as in
effect from time to time, then in effect.
"Permits" means any approval, authorization, certificate, Consent,
easement, filing, franchise, license, notice, permit, exchange seats,
registration or right of any Governmental Entity or any other Person to which
any Person is a party or that is or may be binding upon or inure to the benefit
of any Person or its securities, assets or business.
"Permitted Liens" has the meaning set forth in Section 4.08(a).
"Person" means an individual, corporation, partnership, association,
trust, limited liability company or other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof.
"Post-Final-Closing Period" means, with respect to the Final Closing
Assets, any taxable period beginning after the Final Closing Date.
"Post-First-Closing Period" means, with respect to the OMEGA Assets,
any taxable period beginning after the First Closing Date.
"Post-Second-Closing Period" means, with respect to the Wrap Assets,
any taxable period beginning after the Second Closing Date.
"Pre-Final-Closing Period" means, with respect to the Final Closing
Assets, any taxable period or portion thereof ending on or before the Final
Closing Date.
"Pre-First-Closing Period" means, with respect to the OMEGA Assets,
any taxable period or portion thereof ending on or before the First Closing
Date.
"Pre-Second-Closing Period" means, with respect to the Wrap Assets,
any taxable period or portion thereof ending on or before the Second Closing
Date.
"Purchased Investment" has the meaning set forth in Section 2.04.
"Registered Fund" means any open-end investment company, closed-end
investment company, unit investment trust or business development company
required to be registered under the relevant provisions of the Investment
Company Act.
"Registered Representatives" has the meaning set forth in Section
4.14(b).
"Retained Employee" has the meaning set forth in Section 3.02(i).
"Retained Employee Liabilities" has the meaning set forth in Section
3.02(j).
"Second Closing" has the meaning set forth in Section 2.03(b).
"Second Closing Date" has the meaning set forth in Section 2.03(b).
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Seller" has the meaning set forth in the Preamble.
"Seller 401(k) Plans" has the meaning set forth in Section 3.02(e).
"Seller Claims" has the meaning set forth in Section 10.03.
"Seller Disclosure Schedule" means the document delivered by Seller to
Buyer and Buyer Parent pursuant to Section 3.07 containing the information
required to be included therein pursuant to this Agreement.
"Seller Entity" means each of the entities other than the Funds
constituting a part of, or transferring any portion of the Asset Management
Assets in accordance with Section 2.01 in respect of, the Asset Management
Business including Seller and each Seller Subsidiary.
"Seller Equity Plans" has the meaning set forth in Section 3.02(f)(ii).
"Seller Indemnitees" has the meaning set forth in Section 10.05.
"Seller Investments" as the meaning set forth in Section 6.01.
"Seller Parent" has the meaning set forth in the Preamble.
"Seller Related Instruments" has the meaning set forth in Section
4.01(b).
"Seller Subsidiary" means each Person constituting a part of the Asset
Management Business so that Buyer and its Affiliates may conduct the Asset
Management Business from and after the Final Closing.
"Seller Subsidiary Employee" has the meaning set forth in Section
4.11(c).
"Separate Accounts" means the any accounts of a Client other than the
Funds and Wrap Accounts.
"Services Agreements" shall mean all agreements and arrangements for
the performance of administrative services, custodial services, transfer agency
services, portfolio accounting services, distribution or other shareholder
services and other services relating to a Fund or the Asset Management
Business.
"Software" means any and all (a) computer programs, including any and
all software implementation of algorithms, models and methodologies, whether in
source code or object code form, (b) databases and compilations, including any
and all data and collections of data, (c) all documentation, including user
manuals and training materials, relating to any of the foregoing, and (d)
copyrights (including any registrations and applications for any of the
foregoing) related to any or all of (a) through (c).
"SRO" means a Self Regulatory Organization registered under the
Exchange Act, including the NYSE and NASD.
"Straddle Period" means, with respect to the OMEGA Assets, any taxable
period beginning on or before and ending after the First Closing Date, with
respect to the Wrap Assets, any taxable period beginning on or before and
ending after the Second Closing Date, and, with respect to the Final Closing
Assets, any taxable period beginning on or before and ending after the Final
Closing Date.
"Sub-Advised Registered Fund" means any Registered Fund for which the
Company or any Subsidiary thereof acts as investment sub-adviser as of the date
of this Agreement other than a Registered Fund sponsored by any Seller Entity.
"Subsidiary" means any corporation, limited liability company,
partnership, association, joint venture or other entity of which any person
(either alone or through or together with any other person pursuant to any
agreement, arrangement, contract or other commitment) owns, directly or
indirectly, 50% or more of the capital stock or other equity interests the
holders of which generally are entitled to vote for the election of the board
of directors or other governing body of such entity.
"Tax" or "Taxes" means (x) any and all taxes, fees, levies,
assessments, deficiencies, duties, tariffs, imposts and other charges or
impositions of any kind (together with any and all interest, penalties,
additions to tax and additional amounts imposed with respect thereto) imposed
by any government or taxing authority, including taxes or other charges on or
with respect to income, gross receipts, property, sales, transfer, recordation,
bulk transfer, real property transfer and gains, use, license, excise,
franchise, employment, social security, unemployment compensation, payroll,
premium, withholding, alternative or added minimum, ad valorem or excise tax,
or any other tax, custom, duty, governmental fee or other like assessment or
charge of any kind whatsoever; (y) any liability for the payment of any amounts
described in (x) as a result of being a member of an affiliated, consolidated,
combined, unitary or similar group or as a result of transferor or successor
liability; and (z) any liability for the payment of any amounts as a result of
being a party to any tax sharing agreement or as a result of any express or
implied obligation to indemnify any other Person with respect to the payment of
any amounts of the type described in clause (x) or (y).
"Tax Claim" has the meaning set forth in Section 3.03(c).
"Tax Indemnity Payments" has the meaning set forth in Section
3.03(b)(iii).
"Tax Return" means any return, report or similar statement required to
be filed with respect to any Tax (including any attached schedules), including,
without limitation, any information return, claim for refund, amended return or
declaration of estimated Tax.
"Trade Secrets" means, collectively, technology, trade secrets and
other confidential information, know-how, proprietary processes, formulae,
algorithms, models, and methodologies.
"Trademarks" means, collectively, all trademarks, service marks, trade
names, Internet domain names, designs, logos, slogans, and general intangibles
of like nature used in the Asset Management Business, together with all
goodwill, registrations and applications related to the foregoing (including
the Oppenheimer name) as set forth under "Trademarks" in Section 1.01(b) of the
Seller Disclosure Schedule, other than the CIBC name or any variation thereof.
"Transfer Tax Schedule" has the meaning set forth in Section 3.03.
"Transfer Taxes" means all conveyance, sales, use, excise, value,
value added, registration, stamp, franchise, property, transfer, real property
transfer, gains, recording registration and similar Taxes, levies, charges,
fees, together with any and all interest, penalties, additions to tax and
additional amounts imposed with respect thereto.
"Transferred Accounts" means the Transferred OMEGA Accounts,
Transferred Wrap Accounts and Transferred Final Accounts.
"Transferred Account Information" means the Transferred OMEGA Account
Information, Transferred Wrap Account Information and Transferred Final Account
Information.
"Transferred Final Accounts" has the meaning set forth in Section
2.01(c)(i).
"Transferred Final Account Information" has the meaning set forth in
Section 2.01(c)(iii).
"Transferred OMEGA Accounts" has the meaning set forth in Section
2.01(a)(i).
"Transferred OMEGA Account Information" has the meaning set forth in
Section 2.01(a)(iii).
"Transferred Employees" has the meaning set forth in Section 3.02(c).
"Transferred Wrap Accounts" has the meaning set forth in Section
2.01(b)(i).
"Transferred Wrap Account Information" has the meaning set forth in
Section 2.01(b)(iii).
"Undertaking" has the meaning set forth in Section 2.05(a)(i).
"Underwriting Agreements" means principal underwriting agreements with
any Registered Fund pursuant to which any Seller Entity or its Affiliate is the
principal underwriter.
"WARN Act" means the Worker Adjustment and Retraining Notification Act.
"WARN Obligations" has the meaning set forth in Section 3.02(h).
"Wrap Account" means, with respect to any Client, an account
maintained by any Seller Entity on behalf of such Client pursuant to a Wrap
Agreement.
"Wrap Agreement" means, with respect to any Person, each Contract
relating to "wrap" or similar services which are required to be disclosed on
Schedule H to Form ADV, including such Contracts under the "OMEGA", "Strategic
Asset Review", "Xxxxxxxxxxx Investment Advisers", "Portfolio Advisory Services"
and "Investment Advisory Services" wrap programs.
"Wrap Assets" has the meaning set forth in Section 2.01(b).
"Wrap Business" means the financial advisory, wrap, separate account,
asset allocation and related businesses and activities of the Company and its
Subsidiaries and Affiliates as conducted from and after November 30, 2002,
other than the OMEGA Business and businesses and activities related to the
management of, and provision of advisory services to, Funds.
1.02 Certain Terms.
(a) As used in this Agreement, the terms "affiliate" and
"associate" have the respective meanings set forth in Rule 12b-2 of the General
Rules and Regulations promulgated under the Exchange Act.
(b) The term "business day" means any day other than a Saturday,
Sunday or other day on which the NYSE is not open for trading.
(c) When used in this Agreement, the word "including" shall be
deemed to mean "including, without limitation."
(d) As used in this Agreement, the word "person" means an
individual, a partnership, a joint venture, a corporation, a trust, an
unincorporated organization and a government or any department or agency
thereof.
(e) Unless otherwise provided in this Agreement, all references
to "dollars" or "$" shall be to U.S. dollars.
(f) Unless otherwise provided, all references to Sections,
Articles, Schedules and Exhibits shall be deemed to mean such Sections,
Articles, Schedules or Exhibits "of this Agreement."
(g) The terms defined in this Agreement have the meanings
assigned to them and include the plural as well as the singular and the
pronouns of either gender or neuter, shall include, as appropriate, the other
pronoun forms.
ARTICLE II
PURCHASE AND SALE OF ASSETS AND EQUITY INTERESTS
------------------------------------------------
2.01 Assets to Be Sold.
(a) First Closing. Upon the terms and subject to the conditions
of this Agreement, at the First Closing provided for in Section 2.03 and for no
separate consideration under this Agreement or the Brokerage Asset Purchase
Agreement, subject to the allocation of the Purchase Price as provided for in
the Brokerage Asset Purchase Agreement, Seller shall, and shall cause each
other Seller Entity to, sell, convey, assign, transfer and deliver or cause to
be sold, conveyed, assigned, transferred and delivered to Buyer (or to a
Subsidiary of Buyer, as directed by Buyer), and Buyer (or such Subsidiary)
shall purchase, acquire and assume from each Seller Entity, good and valid
title in and to all of such Seller Entity's right, title and interest in and to
all of the property and assets, real, personal or mixed, tangible or intangible
(including goodwill), of every kind and description, wherever located (other
than the Excluded Assets, the Wrap Assets and the Final Closing Assets) used
primarily in or necessary to conduct the OMEGA Business (the "OMEGA Assets"),
free and clear of any Liens other than Permitted Liens, including:
(i) each Seller Entity's rights with respect to the
Eligible OMEGA Accounts as of the First Closing Date, other than the
Excluded OMEGA Accounts (the "Transferred OMEGA Accounts");
(ii) each Seller Entity's rights under any Wrap Agreements
or other agreements related to the Transferred OMEGA Accounts, including
each Seller Entity's rights as to all guarantees, warranties and
indemnities related thereto;
(iii) with respect to the Transferred OMEGA Accounts, but
subject to applicable privacy laws:
(A) all material information relating to each Transferred
OMEGA Account (all such information, the "Transferred OMEGA Account
Information"); and
(B) all rights granted by Clients to use Transferred OMEGA
Account Information, including all Client instructions and
consents with respect to solicitation;
(iv) each such Seller Entity's rights with respect to the
accrued and unpaid fees with respect to the Transferred OMEGA Accounts;
(v) except to the extent previously transferred to Buyer
under the Brokerage Asset Purchase Agreement, all equipment, furniture,
fixtures, improvements and all other tangible personal property used
primarily in or necessary to conduct the OMEGA business as set forth on
Schedule I, provided that any such property which is identified by Buyer
and Seller as being used in more than one business unit shall be
transferred to Buyer at the Final Closing;
(vi) each such Seller Entity's rights under all Assumed
Contracts as set forth in the applicable Undertaking used primarily in or
necessary to conduct the OMEGA Business;
(vii) all Permits received by or issued to any Seller
Entity or any employee or officer thereof to own, or lease and operate the
Transferred OMEGA Accounts or otherwise used primarily in or necessary to
conduct the OMEGA Business;
(viii) Trademarks and Intellectual Property, together with
all additions, modifications, updates and enhancements used primarily in
or necessary to conduct the OMEGA Business;
(ix) except to the extent previously transferred to Buyer
under the Brokerage Asset Purchase Agreement and subject to Section 3.05,
the Books and Records applicable to the OMEGA Business, provided that any
such Books and Records which are identified by Buyer and Seller as being
used in more than one business unit shall be transferred to Buyer at the
Final Closing; and
(x) such prepaid fees and expenses and other assets as
Buyer and Seller shall mutually agree as necessary and appropriate for the
operation by Buyer of the OMEGA Business.
(b) Second Closing. Upon the terms and subject to the conditions
of this Agreement, at the Second Closing provided for in Section 2.03 and for
no separate consideration under this Agreement or the Brokerage Asset Purchase
Agreement, subject to the allocation of the Purchase Price as provided for in
the Brokerage Asset Purchase Agreement, Seller shall, and shall cause each
other Seller Entity to, sell, convey, assign, transfer and deliver or cause to
be sold, conveyed, assigned, transferred and delivered to Buyer (or to a
Subsidiary of Buyer, as directed by Buyer), and Buyer (or such Subsidiary)
shall purchase, acquire and assume from each Seller Entity, good and valid
title in and to all of such Seller Entity's right, title and interest in and to
all of the property and assets, real, personal or mixed, tangible or intangible
(including goodwill), of every kind and description, wherever located (other
than the Excluded Assets, the OMEGA Assets and the Final Closing Assets) used
primarily in or necessary to conduct the Wrap Business (the "Wrap Assets"),
free and clear of any Liens other than Permitted Liens, including:
(i) each Seller Entity's rights with respect to the
Eligible Wrap Accounts as of the Second Closing Date, other than the
Excluded Wrap Accounts (the "Transferred Wrap Accounts");
(ii) each Seller Entity's rights under any agreements
related to the Transferred Wrap Accounts, including each Seller Entity's
rights as to all guarantees, warranties and indemnities related thereto;
(iii) with respect to the Transferred Wrap Accounts, but
subject to applicable privacy laws:
(A) all material information relating to each Transferred
Wrap Account (all such information, the "Transferred Wrap Account
Information");
(B) all rights granted by Clients to use Transferred Wrap
Account Information, including all Client instructions and consents
with respect to solicitation;
(iv) each such Seller Entity's rights with respect to the
accrued and unpaid fees with respect to the Transferred Wrap Accounts;
(v) except to the extent previously transferred to Buyer
under the Brokerage Asset Purchase Agreement, all equipment, furniture,
fixtures, improvements and all other tangible personal property used
primarily in or necessary to conduct the Wrap Business as set forth on
Schedule II, provided that any such property which is identified by Buyer
and Seller as being used in more than one business unit shall be
transferred to Buyer at the Final Closing;
(vi) each such Seller Entity's rights under all Assumed
Contracts as set forth in the applicable Undertaking used primarily in or
necessary to conduct the Wrap Business;
(vii) all Permits received by or issued to any Seller
Entity or any employee or officer thereof to own, or lease and operate the
Transferred Wrap Accounts or otherwise used primarily in or necessary to
conduct the Wrap Business;
(viii) Trademarks and Intellectual Property, together with
all additions, modifications, updates and enhancements used primarily in
or necessary to conduct the Wrap Business;
(ix) except to the extent previously transferred to Buyer
under the Brokerage Asset Purchase Agreement or the First Closing and
subject to Section 3.05, the Books and Records applicable to the Wrap
Business, provided that any such Books and Records which are identified by
Buyer and Seller as being used in more than one business unit shall be
transferred to Buyer at the Final Closing; and
(x) such prepaid fees and expenses and other assets as
Buyer and Seller shall mutually agree as necessary and appropriate for the
operation by Buyer of the Wrap Business.
(c) Final Closing. Upon the terms and subject to the conditions
of this Agreement, at the Final Closing provided for in Section 2.03 and,
except as provided below in this Section 2.01(c), for no separate consideration
under this Agreement or the Brokerage Asset Purchase Agreement, subject to the
allocation of the Purchase Price as provided for in the Brokerage Asset
Purchase Agreement, Seller shall, and shall cause each other Seller Entity to,
sell, convey, assign, transfer and deliver or cause to be sold, conveyed,
assigned, transferred and delivered to Buyer (or to a Subsidiary of Buyer, as
directed by Buyer), and Buyer (or such Subsidiary) shall purchase, acquire and
assume from each Seller Entity, good and valid title in and to all of such
Seller Entity's right, title and interest in and to all of the property and
assets, real, personal or mixed, tangible or intangible (including goodwill),
of every kind and description, wherever located (other than the Excluded
Assets, the OMEGA Assets, and the Wrap Assets) used primarily in or necessary
to conduct the Asset Management Business (the "Final Closing Assets", and
collectively with the OMEGA Assets and the Wrap Assets, the "Asset Management
Assets"), free and clear of any Liens other than Permitted Liens, including:
(i) each such Seller Entity's rights with respect to the
Eligible Client Accounts as of the Final Closing Date, other than the
Excluded Accounts, Eligible OMEGA Accounts and Eligible Wrap Accounts (the
"Transferred Final Accounts");
(ii) each such Seller Entity's rights under the Advisory
and Wrap Agreements and other agreements related to the Transferred Final
Accounts, including such Seller Entity's rights as to all guarantees,
warranties and indemnities related thereto;
(iii) with respect to the Transferred Final Accounts, but
subject to applicable privacy laws:
(A) all material information relating to each Final
Transferred Account (all such information, the "Transferred
Final Account Information");
(B) all rights granted by Clients to use Transferred Final
Account Information, including all Client instructions and
consents with respect to solicitation;
(iv) each such Seller Entity's rights with respect to the
accrued and unpaid fees (together with accrued and unpaid fees transferred
pursuant to Section 2.01(a)(iv) or 2.01(b)(iv), the "Accrued Fees") with
respect to the Transferred Final Accounts;
(v) except to the extent transferred at the First Closing
or the Second Closing, all equipment, furniture, fixtures, improvements
and all other tangible personal property used primarily in or necessary to
conduct the Asset Management Business as set forth on Schedule III
(together with such property set forth on Schedules I and II, the
"Acquired Property");
(vi) except to the extent transferred at the First Closing
or the Second Closing, each such Seller Entity's rights under all Assumed
Contracts as set forth in the applicable Undertaking;
(vii) except to the extent transferred at the First Closing
or the Second Closing, all Permits received by or issued to each such
Seller Entity or any employee or officer thereof to own, or lease and
operate the Asset Management Business and to conduct the Asset Management
Business;
(viii) except to the extent transferred at the First
Closing or the Second Closing, Trademarks and Intellectual Property,
together with all additions, modifications, updates and enhancements;
(ix) except to the extent previously transferred to Buyer
under the Brokerage Asset Purchase Agreement or at the First Closing or
the Second Closing and subject to Section 3.05, the Books and Records;
(x) except to the extent transferred at the First Closing
or the Second Closing, such prepaid fees and expenses and other assets as
Buyer and Seller shall mutually agree as necessary and appropriate for the
operation by Buyer of the Asset Management Business; and
(xi) all Purchased Investments, provided that the purchase
price for such Purchased Investments shall be as provided in Section 2.04.
(d) Such sales, conveyances, assignments, transfers and
deliveries under Section 2.01 and Section 2.02 shall be effected by delivery by
or on behalf of each Seller Entity to Buyer or its designees of (i) a duly
executed xxxx of sale and other appropriate documents of transfer in a form to
be mutually agreed (the "Xxxx of Sale"); and (ii) a duly executed assignment of
Trademarks and Intellectual Property, including patents, trademarks, trade
names, copyrights and licenses and applications therefor, in recordable form
and otherwise in a form to be mutually agreed and a duly executed assignment of
each Investment otherwise in a form to be mutually agreed (such assignments and
other documents of transfer, together with the Xxxx of Sale the "Instruments of
Assignment") as shall be necessary to vest in Buyer good and valid title to the
Asset Management Assets and the Equity Interests, in each case free and clear
of any and all liabilities, obligations and Liens, except the Assumed
Liabilities and Permitted Liens.
2.02 Equity Interests to Be Sold. Upon the terms and subject to the
conditions of this Agreement and the Brokerage Asset Purchase Agreement, at the
Final Closing, the applicable Seller Entities hereby agree to sell to Buyer,
free and clear of all Liens, and Buyer hereby agrees to purchase from the
applicable Seller Entities, all of the Equity Interests, including, for the
avoidance of doubt, all rights of such Seller Entities in respect of Advisory
Agreements.
2.03 Closings. (a) The First Closing (the "First Closing") shall take
place at the offices of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, 0 Xxxxx
Xxxxxx, Xxx Xxxx, XX 00000, at 10:00 a.m., Eastern time, on January 20, 2003 or
such earlier date or dates as Buyer may specify, or, if the conditions to the
First Closing set forth in Articles VII and VIII shall not have been satisfied
or waived by any such date or dates, as soon as practicable after such
conditions shall have been satisfied, or such other date and time as shall be
mutually agreed upon in writing by the parties hereto. The date on which the
First Closing actually occurs is referred to herein as the "First Closing
Date."
(b) The Second Closing (the "Second Closing") shall take place
at the offices of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, 0 Xxxxx Xxxxxx, Xxx
Xxxx, XX 00000, at 10:00 a.m., Eastern time, on or about March 31, 2003 or, if
the conditions to the Second Closing set forth in Articles VII and VIII shall
not have been satisfied or waived by such date, as soon as practicable after
such conditions shall have been satisfied, or such other date and time as shall
be mutually agreed upon in writing by the parties hereto. The date on which the
Second Closing actually occurs is referred to herein as the "Second Closing
Date."
(c) The Final Closing (the "Final Closing") shall take place at
the offices of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, 0 Xxxxx Xxxxxx, Xxx
Xxxx, XX 00000, at 10:00 a.m., Eastern time, on or about April 30, 2003 or on
such later date which is three (3) business days after the date on which the
scheduled meetings with respect to the Registered Funds shall have occurred or,
if the conditions to the Final Closing set forth in Articles VII and VIII shall
not have been satisfied or waived by such date, as soon as practicable after
such conditions shall have been satisfied, or such other date and time as shall
be mutually agreed upon in writing by the parties hereto. The date on which the
Final Closing actually occurs is referred to herein as the "Final Closing
Date."
2.04 Certain Investments. Upon the terms and subject to the conditions
of this Agreement, at the Final Closing, Seller shall, and shall cause each
other Seller Entity to, sell, convey, assign, transfer and deliver or cause to
be sold, conveyed, assigned, transferred and delivered to Buyer (or to a
Subsidiary of Buyer, as directed by Buyer), and Buyer (or such Subsidiary)
shall purchase, acquire and assume from each such Seller Entity as applicable,
good and valid title in and to all of such Seller Entity's right, title and
interest in and to each of the Investments set forth on Schedule IV (the
"Purchased Investments") for the purchase price specified therein, free and
clear of any Liens other than Permitted Liens, provided that Seller shall not
be obligated to sell, and Buyer shall not be obligated to purchase, any such
Purchased Investment relating to any Fund as to which the requisite client
Consents have not been obtained.
2.05 Deliveries by the Parties. At each of the Applicable Closings,
the parties shall deliver or cause to be delivered (unless delivered
previously) the following:
(a) Deliveries by Buyer:
(i) an undertaking by Buyer relating to the Assumed
Liabilities in respect of the Applicable Closing in the form used in
connection with the Brokerage Closing (each, an "Undertaking"); and
(ii) all other documents, certificates, instruments or
writings required to be delivered by Buyer or its Subsidiaries at or prior
to the Applicable Closing, pursuant to this Agreement or otherwise
required in connection herewith.
(b) Deliveries by the Seller Entities:
(i) the Instruments of Assignment;
(ii) subject to Section 3.05, the Books and Records; and
(iii) the officer's certificate referred to in Section 6.11.
(c) all other documents, certificates, instruments or writings
required to be delivered by any Seller Entity or any of such Seller Entity's
Subsidiaries at or prior to the Applicable Closing, pursuant to this Agreement
or otherwise required in connection herewith.
2.06 Assumed Liabilities; Excluded Liabilities.
(a) On the Applicable Closing Date, Buyer shall assume, perform
and discharge when due each Seller Entity's obligations (i) under Contracts
transferred to Buyer pursuant to Section 2.01(a), (b) or (c), as applicable,
and set forth in the Undertaking in respect of the Applicable Closing
(collectively, the "Assumed Contracts") required under the terms of such
Assumed Contracts to be performed after the Applicable Closing Date, (ii) with
respect to the Deferred Compensation Plan as set forth in Section 3.02(f)
required under the terms of such Deferred Compensation Plan to be performed
after such date and (iii) reserved against in the most recent balance sheet in
the Financial Statements or otherwise constituting normal trade payables
incurred in the ordinary course of the Asset Management Business after the date
thereof consistent in nature and amount with past practices thereof to the
extent related to the OMEGA Assets, Wrap Assets or Final Closing Assets, as the
case may be, in each case as set forth in Section 2.06 of the Seller Disclosure
Schedule in respect of each Applicable Closing, provided that the liabilities
assumed hereunder shall in no event include any costs, expenses or other
liabilities relating to the negotiation and consummation of the transactions
contemplated by the Brokerage Asset Purchase Agreement or this Agreement and
including any Consents relating thereto.
(b) Notwithstanding any other provision hereof, except as
expressly assumed pursuant to Section 2.06(a) (the "Assumed Liabilities"),
neither Buyer Parent nor Buyer has agreed to pay, and shall not be required to
assume, shall have no liability or obligation with respect to, and shall be
indemnified in accordance with Article X by Seller for, any liability or
obligation, direct or indirect, known or unknown, absolute, contingent or
accrued, with respect to the Asset Management Business, including liabilities
of any Seller Entity, any of their respective Subsidiaries or the Asset
Management Assets (the "Excluded Liabilities") including (i) any liability,
responsibility or obligation that is attributable to any Excluded Asset; (ii)
any liability, responsibility or obligation relating to the Asset Management
Assets or the Asset Management Business arising out of any event, circumstance
or condition occurring or existing prior to the Applicable Closing; (iii) any
liability, responsibility or obligation arising out of (A) any suit, action,
proceeding, arbitration, mediation, inquiry or investigation pending or
threatened as of, or arising out of any event, circumstance or condition
occurring or existing prior to, the Applicable Closing; or (B) any actual or
alleged violation of Law prior to the Applicable Closing; (iv) any Retained
Employee Liability; (v) except as expressly set forth in Section 3.02, any
liability, responsibility or obligation with respect to the operation or
maintenance of any employment or benefit plan, program or agreement or
arrangement provided by Seller or any related entity after the Applicable
Closing Date and (vi) any liability, responsibility or obligation for (A) Taxes
of Seller or any of its Affiliates or (B) Taxes attributable to the OMEGA
Assets, Wrap Assets or Final Closing Assets, as the case may be, relating to
any period or any portion of any period ending prior to the Applicable Closing
Date for such assets including any Taxes upon or arising out of the
distribution or other transfer by any Seller Entity to Seller or for the
account of any Affiliate of the Seller Investments as contemplated by Section
6.01. Subject to Section 2.09, Seller hereby agrees to pay, perform and
discharge when due, any and all of the Excluded Liabilities.
2.07 Excluded Assets. Notwithstanding any other provision hereof, no
Seller Entity shall sell or deliver to Buyer, and Buyer shall not purchase or
acquire from any Seller Entity and neither Buyer Parent nor Buyer shall have
liability or obligation with respect to, (a) any Excluded Account, (b) except
as provided in Section 2.01, any Company names, marks, (c) asset management
services for Excluded Accounts, (d) asset management and private client
business or services for any directors, officers and employees of any Seller
Entity other than to the extent it is determined by Seller that such services
may be provided by Buyer to such directors, officers or employees under
Applicable Law or the relevant compliance manual and (e) any insurance policies
owned by Seller, excluding such policies, if any, which provide coverage to any
Fund (the "Excluded Assets"). Notwithstanding Section 2.01, Seller and Buyer
agree to cooperate in good faith to determine the appropriate manner and timing
of the transfer or assignment of the accounts of any Transferred Employees to
Buyer.
2.08 Consent of Third Parties. To the extent that the sale,
conveyance, transfer or assignment of any Asset Management Asset or Equity
Interest requires the consent of a third party, this Agreement shall not
constitute an agreement to consummate such sale, conveyance, transfer or
assignment if such consummation would constitute a breach or violation thereof
or adversely affect Buyer's rights thereunder. Seller agrees to use its
reasonable best efforts (with no obligation to pay any fee to any third party
from whom any consent or approval is sought or any costs and expenses of such
third party in providing such consent or approval) to obtain such consents
prior to the Applicable Closing Date in accordance with Sections 6.04 and 6.12.
Except with respect to any Client consents contemplated by Section 6.12, to the
extent that any such consent is not obtained prior to the Applicable Closing
Date, (i) Seller shall use reasonable best efforts (with no obligation to pay
any fee to any third party from whom any consent or approval is sought or any
costs and expenses of such third party in providing such consent or approval)
to (A) obtain any such consent after the Applicable Closing Date, (B) to the
extent reasonably practicable, provide or cause to be provided to Buyer the
benefits of any such Asset Management Asset or Equity Interest for which such
consent or waiver has not been obtained, (C) cooperate in any arrangement,
reasonable and lawful as to Seller and Buyer, designed to provide such benefits
to Buyer, (D) enforce for the account of Buyer any rights of Seller arising
from such Asset Management Asset or Equity Interest for which such consent has
not been obtained against the other party, including, without limitation, the
right to elect to terminate in accordance with the terms thereof on the advice
of Buyer, and (E) Seller shall pay, defend, indemnify and hold Buyer harmless
from any liability suffered by Buyer as a result of any failure of Seller to
obtain such consent whether before or after the Applicable Closing Date; and
(ii) Buyer shall use reasonable best efforts to perform the obligations of
Seller arising under such Asset Management Asset or Equity Interest for which
such consent has not been obtained, to the extent that by reason of the
transactions consummated pursuant to this Agreement, Buyer has control over the
resources necessary to perform such obligations. Except with respect to any
Client consents contemplated by Section 6.12, nothing in this Section 2.08
shall be deemed (i) a waiver by Buyer of its rights to have received on or
before the Applicable Closing Date an effective assignment of all of the Asset
Management Assets and Equity Interests, (ii) a waiver by Buyer of its rights to
have each condition to each Applicable Closing set forth in Article VIII
satisfied on the Applicable Closing Date or (iii) to constitute an agreement to
exclude from the Asset Management Assets any properties, assets or rights
described under Section 2.01 or limit or affect the representations, warranties
and covenants of Seller Parent or any Seller Entity in this Agreement.
2.09 Post-Closing Adjustment. Seller, Buyer Parent and Buyer agree
that (a) if there is a Net Profit, such Net Profit shall be for the benefit of
Seller and a payment shall be made by Buyer to Seller as soon as practicable
following (and subject to the occurrence of) the Final Closing Date solely to
the extent that Seller has not already received such Net Profit and (b) if
there is a Net Loss, Buyer shall make a payment to Seller as soon as
practicable following (and subject to the occurrence of) the Final Closing Date
equal to such Net Loss multiplied by the AA Transfer Percentage.
ARTICLE III
RELATED MATTERS
---------------
3.01 [Reserved.]
3.02 Employees; Employee Benefits.
(a) Business Employees. Section 3.02(a) of the Seller Disclosure
Schedule sets forth a true and complete list of all employees of the Asset
Management Business as of the date hereof other than any employees transferred
to Buyer at the Brokerage Closing Date (the "Business Employees") indicating
each such employee's title, employer and business unit. Effective as of the
Hire Date applicable to each Business Employee, such Business Employee shall
cease to be an employee of Seller or an Affiliate of Seller. Buyer or an
Affiliate of Buyer has offered employment to all Business Employees, in
accordance with Section 3.02(b), (i) in substantially the same position, (ii)
in the same city, (iii) with the same base salary, and (iv) with the same
vacation policy applicable to each such Business Employee as of the applicable
Hire Date. Notwithstanding the foregoing or any other provision of this
Agreement, Buyer's offer to any Business Employee who is on short-term or
long-term disability or any approved leave of absence (each an "Inactive
Employee") as of the applicable Hire Date is conditioned on such Inactive
Employee's being ready and able to return to work within six months following
the applicable Hire Date, and such an Inactive Employee shall not become an
employee of Buyer or an Affiliate of Buyer unless and until they are ready and
able to work as of a date within six months of the applicable Hire Date. Prior
to the date Inactive Employees are hired by Buyer or an Affiliate of Buyer,
such Inactive Employees shall be retained as employees of Seller, but only for
such period as an individual on short-term or long-term disability or approved
leave of absence, respectively, would normally remain an employee in the
absence of this transaction, and Seller shall continue to provide such Inactive
Employees for the period that they remain employees of the Seller with such
benefits as Seller or an Affiliate of Seller was providing on the applicable
Hire Date to employees on long-term disability leave, short-term disability
leave or approved leave of absence, respectively. Seller shall remain and be
solely responsible for any severance or other liability of any nature
attributable to the cessation of employment of Business Employees with the
Seller, regardless of the date such cessation occurs; provided, however, that
Seller's retention of such responsibility and liability shall not preclude
Seller from seeking recourse against the Buyer or an Affiliate of Buyer for any
breach of Buyer's covenants in this Section 3.02, it being understood that
Seller shall retain all such responsibility and liability to the extent that
the business unit to which such Business Employee relates was not transferred
as contemplated hereunder. Subject to the provisions of this Section 3.02, as
of the applicable Hire Date, Buyer shall assume responsibility for all salary,
bonus, commission costs, benefits and other employment related costs accrued on
and after the applicable Hire Date with respect to each Transferred Employee.
Seller shall not take, and shall cause each of its Affiliates not to take, any
action that would impede, hinder, interfere or otherwise compete with Buyer's
or an Affiliate of Buyer's effort to hire or retain any Business Employee.
(b) Offers of Employment from Buyer. Buyer or an Affiliate of
Buyer has extended offers of employment to all Business Employees in accordance
with the provisions of Section 3.02(a).
(i) The terms of each offer specified that (except in the
case of Inactive Employees) the offer was deemed accepted unless the
Business Employee delivered a written rejection of the offer to Buyer no
later than December 16, 2002. Buyer has provided Seller with a complete
list of Business Employees who have rejected Buyer's offer of employment.
The terms of the offers further specified that the effective date of
employment with Buyer or an Affiliate of Buyer pursuant to the offer is
contingent upon whether the Business Employee is an Inactive Employee on
the applicable Hire Date. Business Employees who fail to timely reject an
offer of employment from Buyer, and who are not Inactive Employees, shall
become employees of Buyer on the applicable Hire Date.
(ii) The terms of each offer specified that each Business
Employee who is an Inactive Employee on the applicable Hire Date shall be
deemed to accept Buyer's offer and shall become an employee of Buyer or an
Affiliate of Buyer as soon as reasonably practicable after the date Seller
notifies Buyer that such individual has notified Seller that he or she is
ready and able to return to work, provided that (x) such notice to Buyer
is given within six months of the otherwise applicable Hire Date and (y)
on or prior to the time the Inactive Employee gives notice to the Seller
that he or she is ready to return to work, he or she has not expressly
rejected Buyer's offer. Inactive Employees who reject Buyer's offer shall
be deemed to have resigned their employment with Seller.
(c) Transferred Employees. Effective as of the applicable Hire
Date, except as expressly provided herein, Buyer shall cause each Business
Employee who accepts and commences employment with Buyer or an Affiliate of
Buyer as of the applicable Hire Date (the "Transferred Employees") to be
provided with compensation and benefits that shall, in the aggregate, in
Buyer's reasonable judgment be substantially equivalent to the compensation and
benefits provided by Buyer to its similarly situated employees; provided,
however, that for a period of one year following the applicable Hire Date, each
Transferred Employee shall be entitled to remain in substantially the same
position, with the same base salary and same vacation policy as maintained by
Seller as of the applicable Hire Date as set forth on Section 3.02(c) of the
Seller Disclosure Schedule (as updated by Seller after the date hereof),
provided that such employee remains employed by Buyer or an Affiliate of Buyer;
and provided, further, to the extent that substantially all the business unit
to which a Business Employee relates was not transferred as contemplated in
Article II, Seller shall remain and be solely responsible for all severance and
other liability of any nature attributable to the cessation of employment of
such Business Employee with the Seller regardless of the date such cessation
occurs. Nothing herein shall be construed as guaranteeing employment for any
specific period of time or altering the at-will employment status of any
employee. For a transition period, if any, commencing on the applicable Hire
Date and ending on the sixtieth (60th) day following the closing date of the
transactions contemplated by the Brokerage Asset Purchase Agreement (subject to
possible extension (or earlier termination) in accordance with the provisions
of the Transition Services Agreement contemplated by the Brokerage Asset
Purchase Agreement) (the "Transition Period"), subject to limitations in and
requirements of Applicable Laws and applicable plans and contracts, Seller or
an Affiliate of Seller shall use its reasonable best efforts to cause
Transferred Employees, (and Inactive Employees who commence employment with the
Buyer or an Affiliate of Buyer during the Transition Period) to continue to be
provided with the health and welfare benefits specified in the Transition
Services Agreement in accordance with the terms thereof, and Buyer shall pay
Seller or an Affiliate of Seller in respect thereof as detailed in the
Transition Services Agreement. If Seller or an Affiliate of Seller, using
reasonable best efforts is unable to continue to provide such coverage, Buyer
or an Affiliate of Buyer shall make available to such employees health and
welfare plan coverage that is substantially equivalent to the coverage then
provided by Buyer to its similarly situated employees, with no break in
coverage. Buyer shall not assume responsibility for the provision of benefits
to any Business Employee until such employee commences employment with Buyer or
an Affiliate of Buyer. Buyer shall not be precluded from modifying its
employment agreements, plans, policies and practices as to its employees
generally on or after the applicable Hire Date, provided that such changes
apply to all Buyer employees who are similarly situated to the Transferred
Employees, and further provided that (A) for a period of one year after the
applicable Hire Date Buyer shall continue to provide to each Transferred
Employee the same base salary and the same vacation policy as provided by
Seller as of immediately prior to the applicable Hire Date, provided that such
employee remains employed by Buyer or an Affiliate of Buyer; and (B) the
recognition of prior service, as described in Section 3.02(d), shall not be
eliminated. Buyer shall be solely liable in accordance with Section 3.02(g) for
the provision of COBRA benefits to any Transferred Employee who is terminated
by Buyer (or otherwise incurs a qualifying event) during the Transition Period.
Inactive Employees who commence employment with the Buyer or an Affiliate of
Buyer shall be treated as if such employees were Transferred Employees and
shall be subject to the terms and conditions of this Section 3.02, taking into
account their later commencement of employment date with the Buyer or an
Affiliate of Buyer.
(d) Credit for Service. Buyer shall permit Transferred Employees
to participate in all Buyer plans in which participation is open to similarly
situated employees of Buyer at comparable levels for such similarly situated
employees, except where such participation in Buyer plans would result in a
duplication of benefits for such Transferred Employee, and Buyer shall cause
the Transferred Employees to be given full credit for all service with Seller
or an Affiliate of Seller prior to the applicable Hire Date for purposes of
eligibility, vesting and determination of the level of benefits under any
employee benefit plans or arrangements of Buyer or an Affiliate of Buyer or any
plans of Seller that are assumed by or maintained by Buyer in which such
Transferred Employees participate after the applicable Hire Date, to the same
extent such service was recognized by Seller or an Affiliate of Seller
immediately prior to the applicable Hire Date; provided, however, that such
service need not be recognized for purposes of benefit accruals under any
defined benefit plan maintained by Buyer or an Affiliate of Buyer, nor shall
such service be recognized to the extent it would result in duplication of
benefits. Buyer or an Affiliate of Buyer shall (i) waive all limitations as to
preexisting conditions, exclusions and waiting periods with respect to
participation and coverage requirements applicable to Transferred Employees
under any welfare plan in which such employees may be eligible to participate
after the applicable Hire Date, other than limitations or waiting periods that
are already in effect with respect to such employees and that have not been
satisfied as of the applicable Hire Date under the corresponding welfare plan
of Seller or an Affiliate of Seller in which such Transferred Employees
participate immediately prior to the applicable Hire Date, and (ii) for the
plan year in which the applicable Hire Date occurs, provide each Transferred
Employee with credit for any co-payments and deductibles paid prior to the
applicable Hire Date in satisfying any applicable deductible or out-of-pocket
requirements under any welfare plans in which such employees are eligible to
participate after the applicable Hire Date, as if those deductibles or
co-payments had been paid under the welfare plans in which such employees are
eligible to participate after the applicable Hire Date.
(e) 401(k) Plan. Seller shall take such actions as may be
necessary to ensure that all Transferred Employees are, as of the applicable
Hire Date, 100% vested in their account balances under the Seller 401(k)
Savings Plan and the Xxxxxxxxxxx Capital Accumulation 401(k) Plan (collectively
the "Seller 401(k) Plans"), and shall contribute to the Seller 401(k) Savings
Plan, within two weeks of the applicable Hire Date, such additional matching
contributions, if any, required for each Transferred Employee in accordance
with the terms and conditions of the Seller 401(k) Savings Plan for the portion
of the Plan year in which the applicable Hire Date occurs during which such
Transferred Employees were employed by Seller. Commencing with the applicable
Hire Date, Transferred Employees shall be eligible to participate in Buyer's
401(k) plan, Buyer shall make any profit sharing contributions to such plan, on
the same terms and conditions as for comparable employees of Buyer, recognizing
their prior service to Seller and compensation from Seller, as service and
compensation with Buyer.
(f) Certain Plans.
(i) Effective as of the applicable Hire Date, Buyer shall,
or shall cause an Affiliate of Buyer to, assume and maintain as plan
sponsor and administrator and perform all obligations with respect to, the
Seller's Executive Voluntary Deferred Compensation Plan (the "Deferred
Compensation Plan"), as it applies to Transferred Employees. Between the
date hereof and the applicable Hire Date, at Buyer's request, Seller shall
provide a full and accurate report to Buyer as to the amounts accrued to
date attributable to the Transferred Employees under the Deferred
Compensation Plan. Seller shall transfer to Buyer, as of the close of
business on the applicable Hire Date, securities attributable to each
affected Transferred Employee's accounts under the Deferred Compensation
Plan.
(ii) Subject to the limitations and requirements of
Seller's Stock Participation Plan and various stock option plans
maintained by Seller (the "Seller Equity Plans"), Seller shall recognize
service with Buyer for the purposes of vesting and dividend distributions
under the Seller Equity Plans after the applicable Hire Date as if it were
service with Seller; provided, however, that Transferred Employees shall
not be entitled to any new award under any Seller Equity Plan after the
applicable Hire Date and provided, further, that nothing in this Section
3.02(f)(ii) shall be construed to affect or in any way limit (A) the
operation or application of any change in control provisions in any Seller
Equity Plan; or (B) any right to a dividend distribution to which a
Transferred Employee is otherwise entitled as a result of the transactions
contemplated herein.
(iii) As of the applicable Hire Date, Buyer shall allow
Transferred Employees to participate in its flexible spending account
program. At Buyer's request, Seller shall take such action as may be
necessary to transfer to Xxxxxxxxxx, subject to applicable law and those
requirements that must be complied with to maintain favorable tax
treatment, the positive net aggregate balances (i.e., actual salary
reductions, less expenses incurred), if any, under Seller's Flexible
Spending Account Program for each of the Transferred Employees. Each
salary reduction election executed by a Transferred Employee for 2003
under Seller's Flexible Spending Account Program shall continue in effect
for 2003 with respect to Buyer's flexible spending account program until
such salary reduction election is revoked or amended by such Transferred
Employee. Section 3.02(f)(iii) of the Seller Disclosure Schedule lists
each Business Employee's flexible spending account salary reduction
election made with respect to 2003.
(g) COBRA. To the extent that any employee of Seller
participates in a "group health plan" (within the meaning of Section 5000(b)(1)
of the Code maintained by Seller ("Group Health Plan") and such employee incurs
a qualifying event under Section 4980B of the Code on the applicable Hire Date
on account of his or her termination of employment with Seller, as determined
in accordance with applicable Treasury Regulations, Seller shall comply with
all notice and continuation coverage requirements applicable to the Group
Health Plans under Section 4980B of the Code known as COBRA ("COBRA
Requirements") with respect to such employees and any "qualified beneficiaries"
(as defined in Section 4980B of the Code)) under the group health plan in
accordance with Section 4980B of the Code and the regulations thereunder,
provided that if for any reason Buyer has not established a health plan that
covers the Transferred Employees prior to the expiration of the Transition
Period, and any such Transferred Employee elects COBRA coverage under Seller's
health plans, Buyer shall pay the full COBRA premium on behalf of such
Transferred Employee (except for the amount such Transferred Employee would
have been required to pay as an active employee of Seller) and shall reimburse
Seller to the extent that any claims paid for Transferred Employees electing
COBRA exceed COBRA premiums and stop loss reimbursements. To the extent that a
Covered Employee participates in a Group Health Plan on or after the applicable
Hire Date, whether maintained by Seller during the Transition Period, or by
Buyer at any time, and such employee incurs a qualifying event under Section
4980B of the Code after the applicable Hire Date, Buyer shall assume
responsibility and shall comply with all COBRA Requirements with respect to
such employees and any "qualified beneficiaries" (as defined in Section 4980B
of the Code) under the Group Health Plan in accordance with Section 4980B of
the Code and the regulations thereunder.
(h) WARN Act. To the extent that any obligations might arise
under the WARN Act or under any similar provision of any federal, state,
regional, foreign, or local law, rule, or regulation (hereinafter referred to
collectively as "WARN Obligations") as a consequence of the transactions
contemplated by this Agreement, Seller shall be responsible for any WARN
Obligations arising as a result of any employment losses occurring on or prior
to any Hire Date except to the extent such losses are attributable to Buyer's
material failure to perform any of the covenants described herein.
(i) Accrued Obligations. Seller shall be solely responsible for
all obligations and liabilities accrued prior to the applicable Hire Date of
each Business Employee, including, (i) payroll and fringe benefits, (ii) earned
bonuses and incentive compensation, (iii) accrued vacation and holiday pay,
(iv) workers' compensation and (v) claims incurred under health plans. Buyer
shall be solely responsible for all obligations and liabilities accrued
following the applicable Hire Date of each Transferred Employee, including, (i)
payroll and fringe benefits, (ii) earned bonuses and incentive compensation,
(iii) accrued vacation and holiday pay, (iv) workers' compensation and (v)
claims incurred under health plans; provided, however, that Seller shall remain
liable and responsible for payments to Transferred Employees of any annual
incentive compensation bonuses for fiscal year 2002 as determined in accordance
with the applicable bonus plans maintained by Seller in which the Transferred
Employees participate as of the applicable Hire Date; and provided, further,
that with respect to any such bonuses earned for Seller's fiscal year 2003,
Seller shall transfer to Buyer a cash amount equivalent to the sum of 1/6ths of
the actual fiscal year 2002 bonus payment awarded to each Transferred Employee
and Inactive Employee (subject to a pro rata reduction for any period in which
any Inactive Employee was not entitled to a bonus payment during Seller's
fiscal year 2003), within ten (10) business days following confirmation of
acceptance of the employment offer made to each such individual from Buyer or
an Affiliate of Buyer; and provided, further, to the extent that substantially
all the business unit to which a Business Employee relates was not transferred
as contemplated in Article II, Seller shall remain and be solely responsible
for all severance and other liability of any nature attributable to the
cessation of employment of such Business Employee with the Seller regardless of
the date such cessation occurs. Subject to receiving the funds, if any, payable
by Seller under this paragraph, Buyer shall assume all liability for bonus
obligations payable to the Transferred Employees beginning November 1, 2002
through the applicable Hire Date, and Buyer shall pay each employee the 1/6ths
amount transferred by Seller in respect of such employee (less applicable
withholdings specific to this payment) on or prior to the time Buyer makes
bonus payments in respect of fiscal year 2003.
(j) Retained Liabilities. Seller shall retain and be solely
responsible for (i) all employment-related obligations and liabilities
(including all obligations and liabilities under the WARN Act and COBRA, if
any) relating to each employee, officer, director or consultant of the Asset
Management Business who is not a Business Employee and each Business Employee
(and his dependents or beneficiaries) with respect to whom Buyer has fulfilled
its obligations under this Section 3.02 to offer or transfer employment, but
who does not become a Transferred Employee (including any Business Employee who
declines employment with Buyer or an Affiliate of Buyer or who does not return
to work from a disability or other leave of absence within six (6) months
following the applicable Hire Date) (a "Retained Employee") and (ii) all
compensation and benefit obligations and employment law claims of Transferred
Employees and other Business Employees who commence employment with the Buyer
or an Affiliate of the Buyer to the extent arising from events or conditions
that existed prior to the time as of which such employee commenced employment
with the Buyer or an Affiliate of Buyer ((i) and (ii) together, the "Retained
Employee Liabilities") (provided, however, that Seller's retention of such
responsibility and liability shall not preclude Seller from seeking recourse
against the Buyer or an Affiliate of Buyer for any breach of Buyer's covenants
in this Section 3.02). Buyer shall be solely liable for all compensation and
benefit obligations and employment law claims of Transferred Employees and
Inactive Employees who commence employment with Buyer or an Affiliate of Buyer
arising from events or conditions that arise or occur on or after the time as
of which they commence employment with the Buyer or an Affiliate of Buyer.
3.03 Tax Matters. Transfer Taxes. Company and Buyer shall each be
responsible for 50% of any and all Transfer Taxes which become payable in
connection with the transactions contemplated by this Agreement. No later than
five (5) days after the Applicable Closing Date, Company shall provide to Buyer
a schedule (the "Transfer Tax Schedule") setting forth in reasonable detail the
calculations of the amounts of such Transfer Taxes for Buyer's review and
consent (which shall not be unreasonably withheld). Seller shall file all Tax
Returns that must be filed in connection with payment of such Transfer Taxes
and shall pay such Transfer Taxes in the ordinary course of its business.
Company and Buyer agree to use reasonable best efforts to obtain a sale for
resale or other Tax exemption where available and otherwise to minimize the
amount of Transfer Taxes payable in connection with the transactions
contemplated by this Agreement. Buyer shall provide a resale certification at
Brokerage Closing or such other documents as may be reasonably requested by
Company for the purpose of reducing any such Transfer Taxes.
(a) Preparation and Filing of Tax Returns; Payment of Taxes.
(i) The Seller shall prepare and file or cause to be
prepared and filed at its own cost and expense (in a manner consistent
with past practice, except as required by Applicable Law), on a timely
basis (including extensions) all Tax Returns of the Controlled Entities
and all Tax Returns attributable to the OMEGA Assets, the Wrap Assets and
the Final Closing Assets for all Pre-First-Closing Periods,
Pre-Second-Closing Periods and Pre-Final-Closing Periods, as applicable.
The Seller shall pay all Taxes shown to be due and payable on such Tax
Returns.
(ii) Buyer shall prepare and file or cause to be prepared
and filed on a timely basis (including extensions) all Tax Returns of the
Controlled Entities and all Tax Returns attributable to the Asset
Management Assets other than those provided for in Section 3.03(b)(i) of
this Agreement. Subject to Section 3.03(c), Buyer shall pay all Taxes
shown to be due and payable thereon.
(b) Tax Indemnification.
(i) The Seller shall indemnify, defend and hold harmless
Buyer from and against any and all costs, expenses (including reasonable
attorneys', accountants', consultants' and experts' fees and expenses),
other liabilities (including costs and fines), 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 ("Losses") asserted against, resulting to, imposed
on, sustained, incurred or suffered by, or asserted against Buyer,
directly or indirectly, by reason of or resulting from: (i) all Taxes
imposed upon the Seller Entities or the Controlled Entities with respect
to any Pre-First-Closing Period, Pre-Second-Closing Period or
Pre-Final-Closing Period, as applicable, , including any such Loss
arising, directly or indirectly, by reason of or resulting from any
distribution or other transfer of the Seller Investments as contemplated
by Section 6.01, other than with respect to items contemplated by Treasury
Regulationss.1.1502-76(b)(1)(ii)(B), and all Taxes incurred by the Seller
Entities or the Controlled Entities, other than with respect to items
contemplated by Treasury Regulationss.1.1502-76(b)(1)(ii)(B), for any
Straddle Period, as applicable, but only with respect to the portion of
such Straddle Period ending on the close of the First Closing Date, Second
Closing Date or Final Closing Date, as applicable, (ii) all Taxes other
than with respect to items contemplated by Treasury
Regulationss.1.1502-76(b)(1)(ii)(B) imposed upon Buyer attributable to the
OMEGA Assets with respect to any Pre-First-Closing Period, attributable to
the Wrap Assets with respect to any Pre-Second-Closing Period and
attributable to the Final Closing Assets with respect to any
Pre-Final-Closing Period, as applicable, and any Straddle Period, but only
with respect to the portion of such Straddle Period ending on the close of
the Applicable Closing Date, (iii) any Taxes other than with respect to
items contemplated by Treasury Regulationss.1.1502-76(b)(1)(ii)(B) imposed
on any of the Controlled Entities underss.1.1502-6 of the Treasury
Regulations attributable to any Pre-First-Closing Period,
Pre-Second-Closing Period or Pre-Final-Closing Period, as applicable, and
the portion of any Straddle Period ending on the Applicable Closing Date,
(iv) the portion of any Transfer Taxes that are the responsibility of
Company pursuant to Section 3.03(a) of this Agreement, (v) any breach or
inaccuracy in any representation contained in Section 4.17 or (vi) any
breach or failure by the Seller to perform (or cause to be performed) any
of the covenants or agreements set forth in this Section 3.03.
(ii) Buyer shall indemnify, defend and hold harmless the
Seller from and against any and all Losses asserted against, resulting to,
imposed on, sustained, incurred or suffered by, or asserted against the
Seller, directly or indirectly, by reason of or resulting from (i) any and
all Taxes imposed upon any of the Seller Entities or the Controlled
Entities, (ii) any and all Taxes attributable to the Asset Management
Assets, in the case of clauses (i) and (ii) with respect to (x) any
Post-First-Closing Period, Post-Second-Closing Period or
Post-Final-Closing Period, as applicable, and, with respect to any item
contemplated by Treasury Regulationss.1.1502-76(b)(1)(ii)(B), a
Pre-First-Closing Period, Pre-Second-Closing Period or Pre-Final-Closing
Period and (y) the portion of any Straddle Period beginning after the
Applicable Closing Date; (iii) the portion of any Transfer Taxes that are
the responsibility of Buyer pursuant to Section 3.03(a) of this Agreement;
and (iv) any breach or failure by Buyer to perform (or cause to be
performed) any of the covenants or agreements set forth in this Section
3.03.
(iii) All amounts payable or to be paid under this Section
3.03 (the "Tax Indemnity Payments") shall be paid in immediately available
funds within fifteen (15) business days after the later of (i) receipt of
a written request from the party entitled to such Tax Indemnity Payment
and (ii) the day of payment of the amount that is the subject of the Tax
Indemnity Payment by the party entitled to receive the Tax Indemnity
Payment.
(iv) Notwithstanding any other provision in this Agreement,
for purposes of determining liability under this Section 3.03 with respect
to any Taxes arising out of, or attributable to, or resulting from any
inaccuracy in or breach or nonperformance of any of the representations or
warranties of any of the Seller Entities or Seller in Section 4.17 or any
covenant or agreement of any of the Buyer, Seller Entities or Seller
contained in this Section 3.03, no effect shall be given to any exception
in such representations and warranties or any such covenant or agreement
relating to materiality or Material Adverse Effect.
(c) Tax Indemnification Procedures.
(i) If a notice of deficiency, proposed adjustment,
adjustment, assessment, audit, examination or other administrative or
court proceeding, suit, dispute or other claim (a "Tax Claim") shall be
delivered or sent to or commenced or initiated against the Seller
Entities, Seller or Buyer by any taxing authority with respect to Taxes
for which one party to this Agreement is entitled to indemnification from
another party, the receiving party shall promptly notify the other party
in writing of the Tax Claim along with a copy of the relevant Tax Claim
notice; provided, that the failure by any party to notify another party
promptly of any such notice shall not release the other party from its
obligations under this Section 3.03 in whole or in part except to the
extent that the other party is materially and adversely prejudiced as a
consequence of such failure.
(ii) Seller shall control all Tax Claims with respect to
all Pre-First-Closing Periods, Pre-Second-Closing Periods or
Pre-Final-Closing Periods, and Buyer agrees to cooperate reasonably with
Seller in pursuing such contests. With respect to Tax Claims for which the
Seller would be liable to indemnify Buyer, the Seller may, upon written
notice to the Buyer (such written notice to be provided within the shorter
of (i) forty-five (45) days after notice thereof has been given to the
Seller and (ii) three (3) business days prior to the date required to
answer or respond to any such claim), assume and control the defense of
such Tax Claim at its own cost and expense and with its own counsel and
Buyer agrees to cooperate reasonably with the Seller in pursuing such
contest. If the Seller elects to assume the defense of any such Tax Claim,
notwithstanding anything to the contrary contained herein, (a) the Seller
shall consult with Buyer and shall not enter into any settlement with
respect to any such Tax Claim without Buyer's prior written consent, which
consent shall not be unreasonably withheld or delayed, provided, however,
that if such settlement could increase the Tax liability of Buyer or of
the Controlled Entities for any other taxable period, without the consent
of Buyer; (b) the Seller shall keep Buyer informed of all material
developments and events relating to such Tax Claim (including promptly
forwarding copies to Buyer of any related correspondence and providing
Buyer with a reasonable opportunity to review and comment on any related
correspondence prior to being sent by the Seller to any tax authority);
and (c) at its own cost and expense, Buyer shall have the right to
participate in (but not to control) the defense of such Tax Claim. (iii)
In connection with the contest of any Tax Claim that relates to (a) any
Post-First-Closing Period, Post-Second-Closing Period or
Post-Final-Closing Period, (b) any Straddle Period and (c) any Tax Claim
that the Seller has the ability to control pursuant to Section 3.03(d)(ii)
but does not timely elect to control pursuant to such section, such
contest shall be controlled by Buyer, and the Seller agrees to cooperate
reasonably with Buyer in pursuing such contest. In connection with any
such contest that relates to (b) or (c) above, Buyer shall keep the Seller
informed of all material developments and events relating to such Tax
Claim and the Seller, at its own cost and expense, shall have the right to
participate (including participation in any relevant meetings) in (but not
control) the defense of such Tax Claim. In the case of a Tax Claim
described in (b) or (c) above, the Buyer shall consult with the Seller and
shall not enter into any settlement with respect to any such Tax Claim
without the prior written consent of the Seller, which consent shall not
be unreasonably withheld or delayed.
(iv) Notwithstanding anything to the contrary contained
herein, the procedure for indemnification claims with regard to Taxes or
otherwise brought pursuant to this Section 3.03 shall be governed
exclusively by this Section 3.03.
(d) Conflicts; Survival. Notwithstanding any other provision of
this Agreement to the contrary, the obligations of the parties hereto set forth
in this Section 3.03 shall not be subject to any limitations contained in
Article X; provided, however, that the representations and warranties contained
in Section 4.17 shall survive the Closing until ninety (90) days following the
expiration of the applicable statute of limitations (taking into account all
extensions thereof); provided, further, in the event notice for indemnification
under Section 3.03(d) hereof shall have been given within the applicable
survival period, the representation or warranty that is the subject of such
indemnification claim shall survive until such time as such claim is finally
resolved. In the event of a conflict between this Section 3.03 and any other
provision of this Agreement, this Section 3.03 shall govern and control.
(e) Tax Treatment. The parties hereto agree, unless otherwise
required by Applicable Law, to treat any payment made pursuant to Article X or
Section 3.03 as an adjustment to the Purchase Price for all Tax purposes.
(f) Tax Records. Buyer shall, at its own expense, preserve and
keep the records in its possession or the possession of any affiliate of Buyer
relating to the preparation of any Tax Return including the Seller Entities or
the Funds for any Pre-First-Closing Period, Pre-Second-Closing Period or
Pre-Final-Closing Period, as applicable, and such records as Seller may
reasonably require for the defense of any audit, examination, administrative
appeal or litigation of any such Tax Return for a period of ten years from the
Applicable Closing Date and shall make such records available to Seller as may
be reasonably required by Seller. In the event Buyer wishes to destroy such
records after that time, Buyer shall first give ninety (90) days prior written
notice to Seller and Seller shall have the right at its option and expense,
upon prior written notice given to Buyer within that ninety (90) day period, to
take possession of the records within one hundred and eighty (180) days after
the date of such notice. Seller shall, at its own expense, preserve and keep
the records in its possession or the possession of an affiliate of the Seller
relating to the preparation of any Tax Return including the Seller Entities or
the Funds for any Post-First-Closing Period, Post-Second-Closing Period or
Post-Final-Closing Period, as applicable, and such records as Buyer may
reasonably require for the defense of any audit, examination, administrative
appeal or litigation of any such Tax Return for a period of ten years from the
Applicable Closing Date and shall make such records available to Buyer as may
be reasonably required by Buyer. In the event the Seller wishes to destroy such
records after that time, the Seller shall first give ninety (90) days prior
written notice to Buyer and Buyer shall have the right at its option and
expense, upon prior written notice given to the Seller within that ninety (90)
day period, to take possession of the records within one hundred and eighty
(180) days after the date of such notice.
(g) Assistance and Cooperation. Subject to Section 3.05, after
the Applicable Closing, the Seller and Buyer shall:
(i) provide (and cause their respective Affiliates to
provide) information reasonably requested by the other party for the
purpose of preparing any Tax Returns which such other party is responsible
for preparing and filing in accordance with this Section 3.03;
(ii) cooperate reasonably in providing information
reasonably requested for the preparation of any audits of, or disputes
with taxing authorities regarding, any Tax Returns with respect to the
Seller Entities or the Funds or the Asset Management Assets;
(iii) make available to the other and to any taxing
authority as reasonably requested all information, records, and documents
relating to Taxes of the Seller Entities or the Funds or the Asset
Management Assets; and
(iv) furnish the other with copies of all correspondence
received from any taxing authority in connection with any tax audit or
information request with respect to any taxable period for which the other
may have a liability under this Section 3.03.
3.04 Mail Received After Closings. On and after the Applicable Closing
Date, Buyer may receive and open all mail addressed to any Seller Entity and
deal with the contents thereof in its discretion to the extent that such mail
and the contents thereof relate to the Asset Management Business, the Asset
Management Assets or any of the Assumed Liabilities.
3.05 Books and Records. Except to the extent previously transferred to
Buyer under the Brokerage Asset Purchase Agreement, Seller shall transfer to
Buyer, as specified in Section 2.01 at the Applicable Closing, originals of all
Books and Records (other than such Books and Records or any part thereof which
are related solely to the Seller's or the Company's investment banking
businesses) to the extent it is legally permitted to do so and copies of Books
and Records (other than such Books and Records or any part thereof which are
related solely to the Seller's or the Company's investment banking businesses)
that it is prohibited by law from transferring to Buyer (including, without
limitation, such Books and Records as may be required or necessary under
Applicable Law). Buyer shall, after the Applicable Closing, (i) provide to
Seller copies of and access to all Books and Records, including originals to
the extent required, as reasonably requested by Seller and (ii) maintain or
return to Seller all Books and Records for the periods that Seller or its
Affiliates may be required (as specified in writing by Seller by June 30, 2003)
to maintain same under Applicable Law. Seller shall, after the Applicable
Closing, provide to Buyer copies of and access to all Books and Records as
specified in Section 2.01, including originals to the extent required, as
reasonably requested by Buyer to Buyer (including, without limitation, such
Books and Records as may be required or necessary under Applicable Law).
Notwithstanding the foregoing, Seller shall not be required to provide to Buyer
copies of or access to any Tax Returns of Seller Parent or Company (including
the consolidated U.S. federal income tax return of the affiliated group of
which CIBC Delaware Holdings, Inc. is the common parent), except for the
portion of such Tax Returns as shall relate to the Controlled Entities, the
Asset Management Business or the Funds, as the case may be and which does not
reveal any material information about the Seller Entities that is not related
to the Asset Management Business or the Asset Management Assets.
3.06 Accounts Receivable. Accounts receivable of Seller which are
Excluded Assets which are received by the Buyer shall be promptly turned over
to Seller. Seller acknowledges that Buyer shall have no duty to make efforts to
collect any such accounts receivable.
3.07 Schedules. The parties have agreed to execute and deliver this
Agreement prior to the preparation, review and acceptance by Buyer Parent and
Buyer of the Seller Disclosure Schedules. Promptly after such execution and
delivery of this Agreement and in no case later than the January 15, 2003,
Seller agrees to prepare (and update as necessary) such true and complete
schedules and to deliver them to Buyer for its review. Buyer and Seller shall
cooperate fully in connection with preparing such schedules. Such schedules
shall be deemed part of this Agreement and incorporated herein only upon their
written acceptance by Buyer. For the purpose of the rights and obligations of
the parties hereunder, such Seller Disclosure Schedules shall not be deemed to
have been disclosed as of the date of this Agreement and shall not in any way
affect the rights and remedies of Buyer Parent or Buyer in respect of the
representations and warranties made by Seller on the date hereof.
3.08 Certain Information. Promptly after the execution and delivery of
this Agreement and in no case later than January 15, 2003, Seller will make
available to Buyer Parent and Buyer and their counsel complete copies of any
contracts, financial statements or other information relating to the Asset
Management Business as has been requested in the due diligence request list,
dated November 22, 2002, previously furnished to Seller and its counsel.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
----------------------------------------
Each of Seller Parent and Company represents and warrants to Buyer
and Buyer Parent as follows:
4.01 Organization of Seller Subsidiaries; Authority of Seller
Entities.
(a) Section 4.01 of the Seller Disclosure Schedule sets forth a
complete and accurate list of each Seller Subsidiary including each Seller
Subsidiary's name, jurisdiction of organization or formation and the
jurisdictions in which each of them is licensed or qualified or, if applicable,
in good standing to do business. Seller Parent is a bank duly organized,
validly existing and in good standing under the Bank Act of Canada. Company is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. Each Seller Subsidiary is duly organized or
formed, validly existing and, if applicable, in good standing under the
Applicable Laws of the jurisdiction of its organization or formation. Each
Seller Subsidiary has all requisite corporate power and authority to own, lease
and operate its properties and assets and to conduct its business as it is now
being conducted. Each Seller Subsidiary is qualified or licensed to do business
as a foreign corporation and is in good standing in every jurisdiction in which
the character of the properties owned or leased by it or the nature of the
business conducted by it makes such qualification necessary, except where the
failure to be so qualified or licensed or in good standing would not have a
Material Adverse Effect. Seller has made available to the Buyer complete and
correct copies of the Organizational Documents, as in effect on the date
hereof, of each Seller Subsidiary. The shareholder or unitholder corporate
minutes of each Seller Subsidiary, the shareholder or unitholder minutes of
each Fund and the stock transfer books of each Seller Subsidiary accurately and
completely reflect all actions, whether formal or informal, taken by the Board
of Directors (or other governing body) of each such Seller Subsidiary and the
shareholders or unitholders of the Funds and reflect all transfers of any
Equity Interests.
(b) Seller has all requisite corporate power and authority to
enter into this Agreement, the Ancillary Agreements and any instruments and
agreements contemplated herein required to be executed and delivered by it
pursuant to this Agreement (including the Ancillary Agreements, collectively
referred to herein as the "Seller Related Instruments") and to consummate the
transactions contemplated hereby and thereby. The execution, delivery and
performance of this Agreement and the Seller Related Instruments to which it is
a party and the consummation of the transactions contemplated hereby and
thereby have been duly authorized by all necessary action on the part of each
Seller Entity and no other corporate proceedings on its part are necessary to
authorize such execution, delivery and performance. This Agreement has been,
and each of the Seller Related Instruments to which it is a party shall be,
duly executed and delivered by Seller and constitute a valid and binding
obligation of Seller, enforceable against such party in accordance with its
terms, except that (i) such enforcement may be subject to bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter
in effect relating to creditors' rights, and (ii) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject
to equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
4.02 Capital Structure.
(a) The authorized, issued and outstanding Equity Interests of
each Seller Subsidiary are set forth in Section 4.02(a) of the Seller
Disclosure Schedule. All of the outstanding Equity Interests have been duly
authorized and validly issued and are fully paid and nonassessable and are
owned beneficially and of record by the Person in the respective amounts
specified in Section 4.02(a) of the Seller Disclosure Schedule, and none of
such Equity Interests were issued in violation of any preemptive rights,
applicable Organizational Documents or Applicable Laws.
(b) There are no preemptive or similar rights on the part of any
holder of any class of equity interest in any of the Seller Subsidiaries.
Except for this Agreement, no subscriptions, options, warrants, conversion or
other rights, agreements, commitments, arrangements or understandings of any
kind obligating any Seller Subsidiary, contingently or otherwise, to issue or
sell, or cause to be issued or sold, any equity interests of them, or any
interests or rights convertible into or exchangeable for any equity interests
of them, are outstanding, and no authorization therefor has been given. There
are no (i) outstanding contractual or other rights or obligations to or of any
Seller Subsidiary or any other Person to repurchase, redeem or otherwise
acquire any outstanding shares or other equity interests of any Seller
Subsidiary, (ii) voting trusts or other agreements or understandings to which
any Seller Subsidiary is a party with respect to voting of or the exercise of
any other rights pertaining to, any Equity Interests of any Seller Subsidiary,
or (iii) outstanding Indebtedness, the holders of which could have the right to
vote, or which are convertible into or exercisable for Equity Interests of any
Seller Subsidiary or the right to vote on any matters with respect to the
Equity Interests.
(c) Section 4.02(c) of the Seller Disclosure Schedule sets forth
a true and complete list of each general partner or managing member, investment
adviser or sub-adviser, administrator, distributor or placement agent of, or
other service provider to, any Client. Except as set forth in Section 4.02(c)
of the Seller Disclosure Schedule, Seller is the sole beneficial owner and
holder of record of the equity interests in each such general partner, managing
member and investment adviser or sub-adviser.
4.03 Title to Equity Interests. Seller owns, directly or
indirectly, and will own at the time of the Final Closing, beneficially and of
record, the Equity Interests, free and clear of any Liens other than Liens
created by or attributable to Buyer. Upon the delivery of the executed
Instruments of Assignment at the Final Closing, Buyer will acquire good and
valid title to the Equity Interests, free and clear of any Lien other than any
Lien created by or attributable to Buyer, and each Equity Interest will entitle
the holder thereof to all the rights and privileges pertaining to each such
Equity Interest.
4.04 No Violation; Consents and Approvals.
(a) The execution and delivery of this Agreement and the Seller
Related Instruments does not, and the consummation of the transactions
contemplated hereby or thereby and compliance with the terms hereof or thereof
will not (i) violate or be in conflict with (A) any provision of the
Organizational Documents of any Seller Entity or (B) any Law applicable to any
Seller Entity, the Asset Management Business or the Asset Management Assets or
(ii) conflict in any material respect with, or result in any material violation
of or constitute a material default (or an event or condition which, with
notice or lapse of time or both, would constitute a material default) under, or
result in the termination of or loss of rights and benefits under, or
accelerate the performance required by, or cause the acceleration of the
maturity of any liability or obligation pursuant to, or result in the creation
or imposition of any Lien under, any Contract or other instrument or
obligation, commitment, undertaking, arrangement or restriction of any kind or
character to which any Seller Entity is a party or by which any Seller Entity
may be bound or affected or to which any of the Asset Management Assets or the
Asset Management Business may be subject.
(b) Except as set forth in Section 4.04(b) of the Seller
Disclosure Schedule, and except for compliance with the HSR Act, no consent,
approval, order or authorization of, or notice to, or registration, declaration
or filing with, any Governmental Entity or any third party is required to be
obtained or made by or with respect to any Seller Entity in connection with the
execution and delivery of this Agreement or the Seller Related Instruments or
the consummation by any Seller Entity of the transactions contemplated hereby
or thereby or to enable Buyer after each of the Applicable Closing to (i)
conduct the Asset Management Business, (ii) transfer the Transferred Accounts
to Buyer or (iii) continue to service the Transferred Accounts in the
geographic areas and in a manner consistent with that in which the Transferred
Accounts currently are serviced by Company.
4.05 Financial Statements.
(a) Section 4.05(a) of the Seller Disclosure Schedule sets forth
an unaudited profit and loss statement of each of the Seller Subsidiaries and
the Asset Management Business for the November 30, 2002 fiscal year then ended,
and an unaudited income statement of each of the Seller Subsidiaries and the
Asset Management Business for the November 30, 2002 fiscal year then ended (the
"Financial Statements").
(b) The Books and Records other than the Financial Statements of
each Seller Subsidiary and the Asset Management Business have been maintained
in accordance with GAAP and with all Applicable Laws. Except as set forth on
Section 4.05(b) of the Seller Disclosure Schedule, each of the Financial
Statements are based on the accounting books and records of each of the Seller
Subsidiaries and the Asset Management Business and, except as set forth in
Section 4.05(b) of the Seller Disclosure Schedule, have been prepared in
conformity with GAAP (subject to normal year end adjustments) applied on a
consistent basis throughout the periods indicated, and fairly and accurately
presents the financial condition of each of the Seller Subsidiaries and the
Asset Management Business as of the dates thereof and the results of operations
and cash flows of each of the Seller Subsidiaries and the Asset Management
Business for the periods then ended.
(c) Except as set forth in the Financial Statements or in
Section 4.05(c) of the Seller Disclosure Schedule, there are no material
special or nonrecurring items of income or expense during the periods covered
by the Financial Statements, and the balance sheets included in the Financial
Statements do not reflect any write-up or revaluation increasing the book value
of any assets. The balance sheets included in the Financial Statements do not
include any assets or liabilities that do not constitute a part of the Asset
Management Business after giving effect to the transactions contemplated by
this Agreement, and the income statements included in the Financial Statements
do not reflect the results of operations of any Person, business, property or
assets that do not constitute a part of the Asset Management Business after
giving effect to the transactions contemplated by this Agreement. Such income
statements reflect all costs, expenses and other charges that historically have
been incurred in connection with the operation of the Asset Management
Business.
(d) Except for transactions, Contracts, Indebtedness or other
relationships otherwise specifically identified on the balance sheet included
in the Financial Statements (including, without limitation, the identification
of the information set forth in the following sentence) or in Section 4.05(d)
of the Seller Disclosure Schedule, there are no transactions, Contracts,
Indebtedness or other relationships between and/or among any Seller Entity
and/or any their respective Affiliates and any unconsolidated entity or other
Person in respect of the Asset Management Business, including without
limitation, any structured finance, special purpose or limited purpose entity
(each, an "Off-Balance Sheet Transaction"). Section 4.05(d) of the Seller
Disclosure Schedule also sets forth (i) the business purpose and activities of
each Off-Balance Sheet Transaction, (ii) the economic substance of each
Off-Balance Sheet Transaction, (iii) the key terms and conditions of each
Off-Balance Sheet Transaction, (iv) each such Seller Subsidiary's or such
Affiliate's potential risk associated with each such Off-Balance Sheet
Transaction, (v) the amounts of any Indebtedness that could require such Seller
Subsidiary or such Affiliate to provide funding of any obligations under any
such Off-Balance Sheet Transaction and (vi) any other information with respect
to each such Off-Balance Sheet Transaction that, individually or in the
aggregate, has had or could reasonable be expected to have a Material Adverse
Effect.
(e) Aggregate revenues from advisory and other fees for the
Asset Management Business for the month of November 2002 were $3,618,400.
4.06 Absence of Undisclosed Liabilities. Except for liabilities and
obligations (i) reflected on the Financial Statements or (ii) incurred in the
ordinary course of business consistent with past practice since the date of the
Financial Statements, neither any Seller Subsidiary nor the Asset Management
Business has incurred any liabilities or obligations of whatsoever nature or
amount, direct or indirect, whether accrued, fixed, contingent or otherwise.
4.07 Absence of Certain Changes or Events.
Since December 1, 2002, (i) the Asset Management Business has been
operated only in the ordinary course consistent with past practice, (ii)
through the date of this Agreement, there has been no event, change or
development (including but not limited to any change in the Asset Management
Assets or the business, working capital, financial condition, results of
operation or liabilities of the Asset Management Business, or any loss of any
members, employees or Clients) which, individually or in the aggregate, has had
or is reasonably likely to have a Material Adverse Effect, (iii) no Client has
canceled or terminated, or threatened to cancel or terminate, its relationship
with any Seller Entity and, to the knowledge of Seller, no Client intends to
adversely modify such relationships in any material respect, either as a result
of the transactions contemplated by this Agreement or otherwise and (iv) Seller
has not taken and has not caused any Seller Entity to take any action which, if
taken without the consent of Buyer after the execution and delivery of this
Agreement, would constitute a breach or violation of Section 6.01.
4.08 Title to Assets.
(a) Each Seller Entity has good and valid title to all of the
Asset Management Assets owned by it and valid leasehold interests in, or other
rights to use, all of the Asset Management Assets. Except as set forth on
Section 4.08(a) of the Seller Disclosure Schedule, the Asset Management Assets
are owned by each Seller Entity, as the case may be, free and clear of all
Liens, other than (i) mechanics', carriers', workmen's, repairmen's or other
like liens arising or incurred in the ordinary course of business, (ii) liens
for Taxes, assessments and other governmental charges which are not due and
payable or which may hereafter be paid without penalty or which are being
contested in good faith by appropriate proceedings (for which adequate reserves
have been made in the Financial Statements in accordance with GAAP) and (iii)
other imperfections of title or encumbrances arising in the ordinary course of
business, if any, which do not materially impair the use of the Asset
Management Assets or the operation of the Asset Management Business (the
mortgages, liens, security interests and encumbrances described in clauses (i),
(ii) and (iii) above are collectively referred to herein as "Permitted Liens").
(b) Section 4.08(b) of the Seller Disclosure Schedule sets forth
a true and complete list of real property owned, leased or otherwise used in
the Asset Management Business.
(c) The Instruments of Assignment, when duly executed and
delivered by Seller to Buyer, and the delivery of the Asset Management Assets
and Equity Interests at the Applicable Closing, shall effectively vest in Buyer
good and valid title to all of the Asset Management Assets and Equity Interests
comprising the Asset Management Business, subject only to Permitted Liens and
Assumed Liabilities.
4.09 Intellectual Property.
(a) Section 4.09(a) of the Seller Disclosure Schedule sets forth
a true and complete list of all of the Intellectual Property used in the Asset
Management Business, including a complete and accurate list of all U.S. and
foreign (i) patents and patent applications; (ii) Internet domain
registrations; and (iii) Software (other than readily available commercial
software programs having an acquisition price of less than $5,000) which are
owned, licensed, leased, by any Seller Entity or any Subsidiary of any of them,
and any copyright registrations, copyright applications, and material
unregistered copyrights, in each case describing which Software is owned,
licensed, or leased, as the case may be; and (iv) all of Seller Entities' U.S.
Trademarks and, to Seller's knowledge, the foreign marks used with the Asset
Management Business.
(b) Section 4.09(b) of the Seller Disclosure Schedule sets forth
a complete and accurate list of all agreements (whether oral or written, and
whether between any Seller Entity and third parties or inter-corporate) with
respect to the Asset Management Business, (i) granting or obtaining any right
to use or practice any rights under any Intellectual Property (other than
licenses for readily available commercial software programs having an
acquisition price of less than $5,000), or (ii) to the knowledge of Seller,
restricting any Seller Entity's or any such Subsidiary's rights to use any
Intellectual Property, including license agreements, development agreements,
distribution agreements, settlement agreements, consent to use agreements, and
covenants not to xxx (collectively, the "License Agreements"). The License
Agreements are valid and binding obligations of all parties thereto,
enforceable in accordance with their terms, and there exists no event or
condition which will result in a violation or breach of, or constitute (with or
without due notice of lapse of time or both) a default by any party under any
such License Agreement. No Seller Entity has licensed or sublicensed its rights
in any Intellectual Property other than pursuant to the License Agreements. No
royalties, honoraria or other fees are payable by any Seller Entity to any
third parties for the use of or right to use any Intellectual Property except
pursuant to the License Agreements.
(c) Except as set forth on Section 4.09(c) of the Seller
Disclosure Schedule:
(i) The applicable Seller Entity owns, or has a valid right
to use, free and clear of all Liens, all of the Intellectual Property.
(ii) The Intellectual Property owned by the applicable
Seller Entity and, to the best of Seller's knowledge, any Intellectual
Property used by any Seller Entity, is subsisting, in full force and
effect, and has not been cancelled, expired, or abandoned, and, to the
best of Seller's knowledge is valid and enforceable.
(iii) There is no pending or, to the best of Seller's
knowledge, threatened claim, suit, arbitration or other adversarial
proceeding before any court, agency, arbitral tribunal, or registration
authority in any jurisdiction involving the Intellectual Property owned by
any Seller Entity, or, to the best of Seller's knowledge, the Intellectual
Property licensed to any Seller Entity, alleging that the activities or
the conduct of any Seller Entity's businesses infringe upon, violate or
constitute the unauthorized use of the intellectual property rights of any
third party or challenging the ownership, use, validity, enforceability or
registrability of any Intellectual Property by any Seller Entity. There
are no settlements, forbearances to xxx, consents, judgments, or orders or
similar obligations other than the License Agreements which (1) restrict
the right of any Seller Entity to use any Intellectual Property, (2)
restrict the businesses of any Seller Entity in order to accommodate a
third party's intellectual property rights or (3) permit third parties to
use any Intellectual Property owned or controlled by any Seller Entity.
(iv) The conduct of the business of any Seller Entity as
currently conducted or planned to be conducted does not infringe upon
(either directly or indirectly such as through contributory infringement
or inducement to infringe) any intellectual property rights owned or
controlled by any third party. To the best of Seller's knowledge, no third
party is misappropriating, infringing, diluting or violating any
Intellectual Property owned or used by any Seller Entity and no such
claims, suits, arbitrations or other adversarial proceedings have been
brought or threatened against any third party by any Seller Entity.
(v) Seller Parent or the applicable Seller Entity has taken
reasonable measures to protect the confidentiality of Trade Secrets. To
the best of Seller's knowledge, no Trade Secret has been disclosed or
authorized to be disclosed to any third party other than pursuant to a
non-disclosure agreement. To the best of Seller's knowledge, no party to
any non-disclosure agreement relating to its Trade Secrets is in breach or
default thereof.
(vi) No current or former partner, director, officer, or
employee of any Seller Entity (or any of their respective predecessors in
interest) shall, after giving effect to the transactions contemplated
herein, own or retain any rights to use any of the Intellectual Property
owned or used by any Seller Entity or any Subsidiary of any of them.
(d) The consummation of the transaction contemplated hereby
shall not result in the loss or impairment of the right of any Seller Entity
own or use any of the Intellectual Property, nor shall it require the consent
of any governmental authority or third party in respect of any such
Intellectual Property. No consents are required in order for Buyer to assume
the rights and obligations of the Seller Entities or the Subsidiaries of any of
them under each License Agreement.
(e) To the knowledge of Seller, the Oppenheimer Name as used in
the Asset Management Business does not infringe upon, violate or constitute the
unauthorized use of the intellectual property rights of any third party and
except as set forth in Section 4.09(e) of the Seller Disclosure Schedule,
Seller has not licensed the Xxxxxxxxxxx Name to any other party for the use
provided for in, or in any manner in conflict with, the Name Assignment
Agreement.
4.10 Litigation. Section 4.10 of the Seller Disclosure Schedule sets
forth a complete and accurate list of any and all material claims, actions,
suits, proceedings, investigations and inquiries ("Litigation") pending,
asserted or, to Seller's knowledge, threatened during the one year period prior
to the date hereof, against any Seller Entity or any Affiliates of such Seller
Entity with respect to the Asset Management Business or any of the Asset
Management Assets or any Registered Representative or other employee of the
Asset Management Business by or before any Governmental Entity, or by or on
behalf of any third party. None of the Litigation set forth on such Schedule is
reasonably likely to (i) result in material liability to any Seller Entity,
materially interfere with or inhibit the operation of the Asset Management
Business or materially impair the value of the Asset Management Assets, (ii)
have the effect of delaying, preventing, or making illegal the consummation of
the transactions contemplated hereby or (iii) materially interfering with the
ability of Buyer to operate the Asset Management Business after the Applicable
Closing.
4.11 Employees; Employee Benefits.
(a) Except as set forth on Section 4.11(a) of the Seller
Disclosure Schedule, the consummation of the transactions contemplated by this
Agreement will not, either alone or in combination with another event, (i)
entitle any current or former employee, officer or director of Seller or any
ERISA Affiliate to severance pay, unemployment compensation or any other
similar payment or (ii) accelerate the time of payment or vesting, or increase
the amount of or otherwise enhance any benefit due any such employee, officer
or director.
(b) The Deferred Compensation Plan has been operated and
administered in all material respects in accordance with its terms and with the
requirements prescribed by any and all Applicable Law, including ERISA and the
Code, as applicable.
(c) Except as set forth in the employment agreements and the
form agreements listed Section 4.11(c) of the Seller Disclosure Schedule, no
Seller Entity has entered into or currently maintains any employment agreements
or other employment arrangements whether written, oral or otherwise with any
Business Employee or any employee of any Seller Subsidiary (a "Seller
Subsidiary Employee"), and all of the Business Employees and Seller Subsidiary
Employees are "employees-at-will." No Seller Entity has received notice or
indication from, or has reason to believe that, any of the Business Employees
set forth in Section 3.02(a) of the Seller Disclosure Schedule shall (i) cease
to be Business Employees at any point prior to the applicable Hire Date; or
(ii) be unwilling or unable to become or otherwise restricted or prohibited
from becoming a Transferred Employee as of the applicable Hire Date.
(d) Employees of Seller Subsidiaries. Except for the employment
agreements and severance policies disclosed in Section 4.11(d) of the Seller
Disclosure Schedule, there is no employee benefit plan, arrangement or
agreement that is maintained, sponsored, contributed to or required to be
contributed to by any Seller Subsidiary.
4.12 Labor Matters.
(a) (i) No labor strike, dispute, slowdown, stoppage or lockout
is pending, or to the knowledge of Seller, threatened against or affecting any
Seller Entity and during the past five years there has not been any such
action, (ii) no Seller Entity is party to or bound by any collective bargaining
or similar agreement with any labor organization, or work rules or practices
agreed to with any labor organization or employee association applicable to
employees of such Seller Entity, (iii) no employees of any Seller Entity are
represented by any labor organization and Seller has no knowledge of any union
organizing activities among the employees of any Seller Entity within the past
five years, (iv) no material written personnel policies, rules or procedures
are applicable to employees of the Asset Management Business other than those
listed on Section 4.12(a) of the Seller Disclosure Schedule, true and correct
copies of which have been previously made available to Buyer, (v) each Seller
Entity is in compliance, in all material respects, with all requirements of Law
respecting employment and employment practices, terms and conditions of
employment, wages, hours of work and occupational safety and health, and, to
the knowledge of Seller, no Seller Entity is engaged in any unfair labor
practices as defined in the National Labor Relations Act or other Applicable
Laws, (vi) no unfair labor practice charge or complaint against any Seller
Entity is pending or, to the knowledge of Seller, threatened before the
National Labor Relations Board or any similar agency, (vii) no charge or
complaint with respect to or relating to any Seller Entity is pending before,
and no Seller Entity has received any notice of intent to conduct an
investigation from, the Equal Employment Opportunity Commission or any other
agency responsible for the prevention of unlawful employment practices, (viii)
no Seller Entity has received notice of the intent of any federal, state, local
or foreign agency responsible for the enforcement of labor or employment laws
to conduct an investigation with respect to or relating to any Seller Entity
and no such investigation is in progress and Seller has no knowledge of any
other person investigating any such allegation that could reasonably be
anticipated to result in significant liability, and (ix) no complaints,
lawsuits or other proceedings are pending or, to the knowledge of Seller,
threatened in any forum by or on behalf of any present or former employee of
any Seller Entity, any applicant for employment or classes of the foregoing
alleging breach of any express or implied contract or employment, any laws
governing employment or the termination thereof or other discriminatory,
wrongful or tortuous conduct in connection with the employment relationship.
(b) Except as set forth in Section 4.12(b) of the Seller
Disclosure Schedule, which shall be provided to Buyer on the Final Closing
Date, none of the Seller Entities' employees employed in the Asset Management
Business or at sites constituting "a single site of employment" (as defined in
the WARN Act or interpretive regulations) with the Asset Management Business,
suffered an "employment loss" (as defined in the WARN Act) during the six-month
period preceding the Final Closing Date.
4.13 Certain Contracts and Arrangements.
(a) Section 4.13(a) of the Seller Disclosure Schedule sets forth
a complete and accurate list of all material agreements, contracts and
commitments (and all amendments thereto) to which any Seller Entity or any
Affiliate of such Seller Entity is a party relating primarily to, or necessary
for the conduct of, the Asset Management Business or the Asset Management
Assets or by which the Asset Management Business or the Asset Management Assets
are bound or materially affected (the "Contracts"), including all of the
following:
(i) employment, consulting, severance, agency, bonus,
compensation, or other trusts, funds or other Contracts relating to or for
the benefit of current, future or former employees, officers, directors,
sales representatives, distributors, dealers, agents, independent
contractors or consultants; agreements relating to brokers, managers and
employees of the Asset Management Business, including, all compensation
related plans, programs and arrangements;
(ii) joint venture, strategic alliance, exclusive
distribution, partnership and similar Contracts involving a sharing of
profits or expenses or payments based on revenues, profits or assets under
management of any Seller Entity, any Client or any Affiliate of any of
them;
(iii) Contracts evidencing any Indebtedness;
(iv) Advisory Agreements;
(v) Distribution Agreements, Underwriting Agreements and
Services Agreements;
(vi) Wrap Agreements;
(vii) introducing broker agreements, marketing agreements
or similar agreements calling for the making of payments for the servicing
of accounts;
(viii) all real estate leases and related sub-leases and
service agreements;
(ix) sales, marketing and account solicitation agreements
and arrangements;
(x) finder's Contracts;
(xi) Affiliate Agreements;
(xii) Contracts or series of related Contracts with respect
to which the aggregate amount that could reasonably expected to be paid or
received thereunder in the future exceeds $[25,000] per annum or an
aggregate of $[75,000] under the terms of the contract;
(xiii) Contracts requiring any Seller Entity (i) to
co-invest with any Client or any other Person, (ii) to provide seed
capital or similar investment or (iii) to invest in any investment product
(including, without limitation, any such Contract requiring additional or
"follow-on" capital contributions to any Non-Registered Fund);
(xiv) Contracts containing "most favored nation"
provisions;
(xv) Contracts containing any undertaking to cap fees or to
return or reimburse fees payable to any Seller Entity thereunder, or any
"clawback" or similar provisions;
(xvi) Contracts having the purpose or effect of conferring
upon any of the Seller Entities liability as a general partner of any
Person;
(xvii) Organizational Documents of any Fund or any general
partner, managing member, investment advisory or sub-advisor thereof;
(xviii) Contracts providing for the indemnification of any
Person with respect to material liabilities, whether absolute, accrued,
contingent or otherwise;
(xix) Confidentiality agreements;
(xx) Contracts prohibiting or materially restricting the
ability of any Seller Entity to conduct the Asset Management Business, to
engage in any business or to operate in any geographical area or to
compete with any Person;
(xxi) any Contract not in the ordinary course of business
consistent with past practice;
(xxii) License Agreements or other Contracts in respect of
any Intellectual Property or data processing Contracts;
(xxiii) Contracts pursuant to which any Seller Entity
receives any compensation based on investment performance;
(xxiv) Contracts providing for future payments that are
conditioned, in whole or in part, on a change in control of any Seller
Entity;
(xxv) stock purchase agreements, asset purchase agreements
and other acquisition or divestiture agreements, including but not limited
to any agreements relating to the acquisition, lease or disposition of any
Seller Affiliate, any material assets or properties, any business, or any
capital stock of or other interest in any Person by any Seller Entity or
any Affiliate of any Seller Entity, within the last six years, or
involving continuing indemnity or other obligations; and
(xxvi) other material Contracts, leases, licenses,
commitments or instruments to which any Seller Entity or any Affiliate of
a Seller Entity is a party, relating primarily to, or necessary for the
conduct of the Asset Management Business.
(b) Each Contract is a legal, valid and binding obligation of
the applicable Seller Entity and, to the knowledge of Seller, the other parties
thereto, in full force and effect, enforceable against such Seller Entity and,
to the knowledge of Seller, such other parties, except that (i) such
enforcement may be subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights, and (ii) the remedy of specific performance and injunctive
and other forms of equitable relief may be subject to equitable defenses and to
the discretion of the court before which any proceeding therefor may be
brought, and are validly assignable to Buyer without the consent of any other
party, except as stated in Section 4.13(b) of the Seller Disclosure Schedule.
No Seller Entity or any Affiliate of a Seller Entity is, and to Seller's
knowledge, no other party thereto is, in breach of or default under any
Contract, nor does there exist, to Seller's knowledge, any basis for the
assertion of any such breach or default by or against any Seller Entity or any
of their respective Affiliates. There have been no written threatened
cancellations of, and there is no material pending dispute under, any Contract.
The terms and enforceability of the Contracts shall not be affected in any
manner by the execution and delivery of this Agreement or the consummation of
the transactions contemplated hereby.
(c) Except as set forth on Section 4.13(a) of the Seller
Disclosure Schedule, there are no Contracts necessary for Buyer to operate the
Asset Management Business after the Applicable Closing.
(d) No Seller Entity nor any Affiliate of a Seller Entity is
either (i) subject to any obligations, agreements, contracts, arrangements or
covenants that would, in any material respect, impede, restrict or prevent
Buyer from operating the Asset Management Business after each of the Applicable
Closing or (ii) required to obtain any consent, authorization, permit or waiver
from any Governmental Entity or third party, the absence of which would, in any
material respect, impede, restrict or prevent Buyer from operating the Asset
Management Business after the Applicable Closing.
(e) Seller has informed Buyer of any notification received by
any Seller Entity prior to the date of this Agreement with respect to the
withdrawal of any material funds managed by any Seller Entity on behalf of any
current Client or former Client who has terminated its relationship with such
Seller Entity within one year prior to the date hereof.
4.14 Compliance with Laws; Licenses.
(a) The Asset Management Business has been, and is being,
operated by the Seller Entities in compliance in all material respects with all
applicable Laws, including Environmental Laws and Labor Laws ("Applicable
Laws"). Section 4.14(a) of the Seller Disclosure Schedule sets forth a complete
list of all Permits required in connection with the operation of the Asset
Management Business and ownership of the Asset Management Assets under
Applicable Laws. Each Seller Entity, as applicable, possesses all such Permits,
and is in compliance in all material respects with, all such Permits.
(b) Each officer and employee of a Seller Entity who is required
to have any Permits for the activities conducted by such officer or employee
has and at all times has had such Permits in each state or jurisdiction in
which and with each Governmental Entity with whom each such Permit is so
required (such officers and employees are collectively, the "Registered
Representatives"). Section 4.14(b) of the Seller Disclosure Schedule sets forth
a true and complete list of all such Permits. To the knowledge of Seller, none
of the Registered Representatives is or has been subject to any disciplinary or
other regulatory compliance action or complaint by a regulator or customer.
(c) No Seller Entity, and to the knowledge of Seller, no
Affiliate of any Seller Entity or their respective officers and employees has
received any notification or communication from any Governmental Entity
relating to, involving or applying to the Asset Management Business or the
Asset Management Assets (i) asserting that any of them is not in compliance
with any of the statutes, rules, regulations, or ordinances which such
Governmental Entity enforces, or has otherwise engaged in any unlawful business
practice, (ii) threatening to revoke any license, franchise, Permit, seat on
any stock or commodities exchange or Authorization, (iii) requiring any of them
(including any of any Seller Entity's directors or controlling persons) to
enter into a cease and desist order, agreement, or memorandum of understanding
(or requiring the board of directors of any Seller Entity to adopt any
resolution or policy), or (iv) restricting or disqualifying the activities of
any Seller Entity (except for restrictions generally imposed by rule,
regulation or administrative policy on brokers or dealers generally).
(d) During the three (3) years prior to the date hereof, except
as set forth in Section 4.14(d) of the Seller Disclosure Schedule and except
for normal examinations or inspections conducted by any Governmental Entity in
the regular course of the Asset Management Business of the Seller Entities, (i)
to the Seller's knowledge, no Governmental Entity has initiated any
administrative proceeding or investigation into any Seller Entity, Registered
Representative or the Asset Management Business and (ii) no Seller Entity has
received any notice of any material violation or exception by any Governmental
Entity with respect to any report or statement by any Governmental Entity
relating to any examination or inspection of such Seller Entity. Copies of all
reports or letters with respect to any such examinations or investigations
during the past 3 years will be been made available to Buyer.
(e) ERISA Clients. Except as set forth in Section 4.14(e) of the
Seller Disclosure Schedule, each Client to which any Seller Entity provides
investment management, advisory or sub-advisory services that is (i) an
employee benefit plan, as defined in Section 3(3) of ERISA that is subject to
Title I of ERISA, (ii) a Person acting on behalf of such a plan or (iii) any
entity whose assets include the assets of such a plan, within the meaning of
ERISA and applicable regulations (hereinafter referred to as an "ERISA Client")
have been managed by any Seller Entity such that the exercise of such
management or provision of any services is in compliance with the applicable
requirements of ERISA at all times required by Applicable Law.
(f) Certain Employee or Director Disciplinary Matters. Except as
set forth in Section 4.14(f) of the Seller Disclosure Schedule, no director,
managing director, member, officer or employee of any Seller Entity who renders
services to or as part of the Asset Management Business is (i) subject to any
cease and desist, censure or other disciplinary or similar order issued by,
(ii) a party to any written agreement, consent agreement, memorandum of
understanding or disciplinary agreement with, (iii) a party to any commitment
letter or similar undertaking to, (iv) subject to any order or directive by or
(v) a recipient of any supervisory letter from, any Governmental Entity.
4.15 Brokers.
Except as set forth on Section 4.15 of the Seller Disclosure
Schedule, no broker, finder or financial advisor or other person is entitled to
any brokerage fees, commissions, finders' fees or financial advisory fees in
connection with the transactions contemplated hereby by reason of any action
taken by any Seller Entity or any of their respective directors, officers,
employees, representatives or agents.
4.16 Assets Necessary to Business.
The Asset Management Assets and Equity Interests constitute all
of the assets, properties, licenses and agreements which are being used on the
date hereof in the Asset Management Business and include all assets,
properties, licenses and agreements necessary for Buyer to operate the Asset
Management Business after the Final Closing, except for the Excluded Assets and
Brokerage Assets.
4.17 Taxes.
(a) Except as set forth in Section 4.17(a) of the Seller
Disclosure Schedule, all Tax Returns with respect to the Asset Management
Business or the Asset Management Assets or income attributable therefrom that
are required to be filed by the Company or any Controlled Affiliate of the
Company on or before the Applicable Closing Date have been or will be filed,
the information provided on such Tax Returns is or will be complete and
accurate in all material respects, and all Taxes shown to be due or as required
to be withheld on such Tax Returns have been or will be paid in full, to the
extent that a failure to file such Tax Returns or to withhold or to pay such
Taxes, or an inaccuracy in such Tax Returns, could result in Buyer being liable
for such Taxes or could give rise to a Lien on the Asset Management Assets.
(b) Except as set forth in Section 4.17(b) of the Seller
Disclosure Schedule, each of the Controlled Entities has (i) duly and timely
filed (or has had duly and timely filed on its behalf) with the appropriate
Governmental Authority all material Tax Returns required to be filed by it, and
all such Tax Returns are true, correct and complete in all material respects
and (ii) timely paid or withheld (or there has been timely paid or withheld on
its behalf) all material Taxes due, claimed to be due or required to be
withheld from or in respect of it by any Governmental Authority.
(c) No jurisdiction in which the Seller Entities do not file a
Tax Return has made a claim in writing that any of the Seller Entities is
required to file a Tax Return for such jurisdiction.
(d) The fair market value on the Brokerage Closing Date of the
assets of the Seller Entities and the Controlled Entities that are members of
the affiliated group (as defined in section 1504 of the Internal Revenue Code
of 1986, as amended, without regard to section 1504(b) thereof) of which Seller
Parent is the common parent was less than one-third of the total fair market
value on the Brokerage Closing Date of the assets of all corporations that were
members of such affiliated group immediately prior to the Brokerage Closing
Date. For purposes of the immediately preceding sentence, stock in a member of
such affiliated group shall not be treated as an asset of any member of such
affiliated group.
(e) Except as set forth in Section 4.17(e) of the Seller
Disclosure Schedule, each of the Controlled Entities that is a partnership or
limited liability company has been treated as a partnership or a disregarded
entity for United States federal income tax purposes since its formation.
(f) Each of the Controlled Entities that is a regulated
investment company for United States federal income tax purposes has been
treated as a regulated investment company for United States federal income tax
purposes since its formation. Each such Fund currently satisfies and at all
times since formation has satisfied the requirements of Sections 851 through
855 of the Code and the Treasury Regulations promulgated thereunder.
(g) The Company is not a foreign person within the meaning of
Section 1445 of the Code.
4.18 Disclosure.
No representation or warranty by Seller Parent or Company
contained in this Agreement, and no statement contained in this Agreement, the
Seller Related Instruments, the Financial Statements or the Seller Disclosure
Schedule, contains or will contain any untrue statement of a material fact, or
omits or will omit to state any material fact necessary, in light of the
circumstances under which it was or will be made, in order to make the
statements herein or therein not misleading, or necessary in order to fully and
fairly provide the information required to be provided in any such document.
4.19 Transferred Accounts.
(a) The Transferred Accounts have been created, maintained and
serviced by the applicable Seller Entity in compliance in all material respects
with all Applicable Laws of any applicable Governmental Entity.
(b) The transfer to Buyer of the Transferred Account Information
pursuant to the terms of this Agreement will not violate, in any material
respect any privacy right or other personal rights of any customer, prospective
customer or other person.
(c) There are no pending complaints or, to the best of Seller's
knowledge, threatened or other controversies regarding any Transferred Account,
that could reasonably be expected to result in a complaint, from or relating to
any Transferred Account, except those set forth in Section 4.19(c) of the
Seller Disclosure Schedule.
(d) Attached to Section 4.19(d) of the Seller Disclosure
Schedule is (i) a true and correct copy of the current form (and to the extent
any material term of a predecessor form is different from any material term of
the current form, such other predecessor form) of Advisory Agreement or Wrap
Agreement that any Seller Entity has entered into with any Client with respect
to a Transferred Account (each such agreement being referred to herein as a
"Customer Agreement") and (ii) a copy of each Advisory Agreement or Wrap
Agreement set forth as an "exception" pursuant to the immediately following
sentence of this Section 4.19(d). Except as set forth on Section 4.19(d) of the
Seller Disclosure Schedule, in respect of the Transferred Accounts, no Seller
Entity has entered into any contract or agreement with any Client, nor is it
rendering services to any Client, other than pursuant to a Customer Agreement.
Each Customer Agreement is a legal, valid and binding obligation of the
applicable Seller Entity and, to the knowledge of Seller, the other parties
thereto, in full force and effect, enforceable against the applicable Seller
Entity and, to the knowledge of Seller, such other parties, except that (i)
such enforcement may be subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights, and (ii) the remedy of specific performance and injunctive
and other forms of equitable relief may be subject to equitable defenses and to
the discretion of the court before which any proceeding therefor may be
brought.
4.20 Transferred Account Information. The Transferred Account
Information, all of which has been or shall be made available to Buyer prior to
or at the Applicable Closing is current, complete and correct in all material
respects (other than with respect to financial information, which is complete
and correct in all respects) and has been maintained on a consistent basis. At
the Applicable Closing, subject to applicable privacy laws, all of such
Transferred Account Information will be in the possession of Buyer. The
transfer to Buyer of the Transferred Account Information pursuant to the terms
of this Agreement does not violate any privacy right or other personal rights
of any customer, prospective customer or other person.
4.21 Government Regulation.
(a) Filings. Each Seller Entity is duly registered or licensed
in the capacities shown in Section 4.21(a) of the Seller Disclosure Schedule,
and has filed all material registrations, reports, statements, notices and
other material filings required under Applicable Law to be filed with the
Commission and any other Governmental Entity by such entity, to the extent
applicable, including all material amendments or supplements to any of the
above (the "Filings") for the past five (5) years. The Filings complied in all
respects, where applicable, with the requirements of the Exchange Act, the
Advisers Act, the Investment Company Act and all other Applicable Laws and did
not contain any untrue statement of material fact or omit to state a material
fact required to be stated therein, or necessary to make the statements
contained therein, in light of the circumstances under which they were made,
not misleading. Seller has made or will make available to Buyer complete and
correct copies of (i) all Filings made within the past five (5) years
(including, but not limited to all filings on Form ADV), (ii) all audit or
inspection reports received by any Seller Entity or any Fund from the
Commission or any other Governmental Entity and all written responses thereto
during the past five (5) years, (iii) copies of all inspection reports provided
to any Seller Entity by the Commission or any other Governmental Entity during
the past five (5) years, and (iv) all correspondence relating to any
investigation provided to any Seller Entity by the Commission or any other
Governmental Entity during the past two (2) years. Except as set forth in
Section 4.21(a) of the Seller Disclosure Schedule, as of the date of this
Agreement, there is no unresolved violation, criticism, or exception by any
Governmental Entity with respect to any report or statement relating to any
examinations or inspections of any Seller Entity that arose or was initiated
within the past two (2) years.
(b) Advisers Act.
(i) Except as set forth in Section 4.21(b)(i) of the Seller
Disclosure Schedule, each Seller Entity is, and at all times required by
the Advisers Act during the past five (5) years has been, duly registered
as an investment adviser under the Advisers Act. Except as set forth in
Section 4.21(b)(i) of the Seller Disclosure Schedule, each Seller Entity
is, and at all times required by Applicable Law (other than the Advisers
Act) during the past five (5) years has been, duly registered, licensed or
qualified as an investment adviser in each state or any other domestic or
foreign jurisdiction where the conduct of its business required such
registration, licensing or qualification. Each such United States federal
and state registration, license or qualification, as of the date hereof,
is listed in Section 4.21(b)(i) of the Seller Disclosure Schedule and is
in full force and effect. Except as set forth on Section 4.21(b)(i) of the
Seller Disclosure Schedule, no Affiliate of any Seller Entity has been
during the past five (5) years required to be registered, licensed or
qualified as an investment adviser under the Advisers Act or other
Applicable Law or subject to any material liability or disability by
reason of any failure to be so registered, licensed or qualified.
(ii) Ineligible Persons. None of the Seller Entities nor
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
referred to in Section 9(a) of the Investment Company Act) to a registered
investment company. None of the Seller Entities is ineligible pursuant to
Section 203 of the Investment Advisers Act or Section 15(b) of the
Exchange Act to serve as a registered investment adviser or broker-dealer
and no "associated person" (as defined in the Investment Advisers Act or
the Exchange Act) of any Seller Entity is ineligible pursuant to Section
203 of the Investment Advisers Act or Section 15(b) of the Exchange Act to
serve as an associated person of a registered investment adviser or
broker-dealer.
(iii) Each Form ADV filed (or any Part II thereof deemed to
be filed) by each Seller Entity, in its most recent form filed (or any
Part II thereof deemed to be filed) with the Commission, including any
amendments thereto filed (or any amendment to Part II thereof deemed to be
filed) with the Commission complies in all material respects with
Applicable Law.
(iv) Each Seller Entity's advertising and solicitation of
business has complied and will comply in all material respects with all
Applicable Laws, including Section 206 of the Advisers Act, SEC Rules
204-2(a)(16) and 206(4)-1 under the Advisers Act.
(c) Other Matters
(i) Each Seller Entity, as applicable, has implemented one
or more formal codes of ethics and written policies regarding xxxxxxx
xxxxxxx, each of which comply with Applicable Law and a complete and
accurate copy of each of which have been made available to Buyer. Section
4.21(c)(i) of the Seller Disclosure Schedule sets forth a true and
complete list of all such codes of ethics and written policies. Such codes
of ethics comply in all material respects with any Applicable Laws. Such
xxxxxxx xxxxxxx policies comply in all material respects with Section 204A
of the Advisers Act and Section 15(f) of the Exchange Act. The policies of
each of the Seller Entities as of the date hereof with respect to avoiding
conflicts of interest are as set forth in the most recent Form ADV or
policy manual of such Seller Entity, as applicable, as amended, which have
been made available to Buyer. To the knowledge of Seller, there have been
no violations during the past five years of such codes of ethics or such
policies that, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect.
(ii) No Seller Entity is or has been during the past five
(5) years (i) a broker-dealer (other than the Company), bank, trust
company, insurance company, insurance broker or transfer agent within the
meaning of any Applicable Law, (ii) required to be registered, licensed or
qualified as a broker-dealer (other than the Company), bank, trust
company, insurance company, insurance broker or transfer agent under any
Applicable Law or (iii) subject to any material liability or disability by
reason of any failure to be so registered, licensed or qualified. No
Seller Entity has received notice of any pending suit, proceeding or
investigation concerning any failure to obtain any broker-dealer, bank,
trust company, insurance company, insurance broker or transfer agent
license.(iii) Each officer, director, principal or employee of any Seller
Entity who is, or during the past five (5) years has been, required to be
registered as a registered representative, an investment adviser
representative, sales person, principal or associated person or other
capacity with any Governmental Entity is duly registered as such and such
registration is in full force and effect. There has been no violation,
cancellation, suspension, revocation, non-renewal of or default under any
Governmental Approval or receipt by any Seller Entity of any notice of
violation, cancellation, suspension, revocation, non-renewal, default or
dispute affecting such Governmental Approval, and no basis exists for any
such action, including, without limitation, as a result of the
consummation of the transactions contemplated by this Agreement.(iv) All
services are offered and sold in compliance with all Applicable Laws,
including the requirements for delivery of the Seller Entity's Form ADV,
Part II, as applicable and are exempt from registration or qualification
under Applicable Laws.
4.22 Registered Funds; Sub-Advised Registered Funds; Non-Registered
Funds.
(a) Section 4.22(a) of the Seller Disclosure Schedule sets forth
a true and complete list of each Registered Fund and Sub-Advised Registered
Fund. Each of the Registered Funds and the Sub-Advised Registered Funds that is
or during the past five (5) years has been required by the Investment Company
Act to be registered with the Commission as an investment company under the
Investment Company Act is, and at all times required by the Investment Company
Act during the past five (5) years has been, so registered.
(b) Each Registered Fund and each Sub-Advised Registered Fund
that is a juridical entity is duly organized, validly existing and, with
respect to jurisdictions that recognize the concept of "good standing," in good
standing under the laws of the jurisdiction of its organization and has the
requisite corporate, trust, company or partnership power and authority to own
its properties and to carry on its business as it is now conducted, and is
qualified to do business in each jurisdiction where it is required to be so
qualified under Applicable Law. There has been no violation, cancellation,
suspension, revocation, non-renewal of or default under any Governmental
Approval or receipt by any Registered Fund or Sub-Advised Registered Fund of
any notice of violation, cancellation, suspension, revocation, non-renewal,
default or dispute affecting such Governmental Approval, and no basis exists
for any such action, including, without limitation, as a result of the
consummation of the transactions contemplated by this Agreement.
(c) The boards of directors or trustees of each Registered Fund
and Sub-Advised Registered Fund have at all times been constituted and have
operated in conformity with the requirements and restrictions of Sections 10,
15(f) and 16 of the Investment Company Act.
(d) Each Seller Entity that acts as investment adviser or
sub-adviser to a Registered Fund or Sub-Advised Registered Fund has a written
Advisory Agreement pursuant to which such Seller Entity serves as investment
adviser or sub-adviser to such Registered Fund or Sub-Advised Registered Fund.
As of the date hereof, no Seller Entity nor any "interested person" of any of
them, as such term is defined in the Investment Company Act, receives or is
entitled to receive any compensation directly or indirectly (i) from any Person
in connection with the purchase or sale of securities or other property to,
from or on behalf of any of the Registered Funds or Sub-Advised Registered
Funds, other than bona fide ordinary compensation as principal underwriter,
distributor or sponsor for the Registered Funds or Sub-Advised Registered
Funds, or (ii) from the Registered Funds or Sub-Advised Registered Funds or
their respective security holders for other than bona fide investment advisory,
sub-advisory, accounting, shareholder servicing, transfer agency or similar
services.
(e) Each Advisory Agreement, Distribution Agreement,
Underwriting Agreement and Services Agreement with respect to any Registered
Fund and any Sub-Advised Registered Fund during the past five (5) years (or
such shorter period as to which such entity was a Registered Fund) has been
duly adopted and maintained in compliance in all material respects with Section
15 of the Investment Company Act, if applicable to such Registered Fund or such
Sub-Advised Registered Fund or such agreement.
(f) During the past five (5) years (or such shorter period as to
which such entity was a Registered Fund) each Registered Fund has been operated
in compliance with its respective investment objectives, policies and
restrictions, including without limitation those set forth in the applicable
prospectus and registration statement for such Registered Fund.
(g) (i) The shares or units of each Registered Fund and each
Sub-Advised Registered Fund have been issued and sold in substantial compliance
with Applicable Law, (ii) the shares or units of each Registered Fund and each
Sub-Advised Registered Fund are qualified for public offering and sale in each
jurisdiction where offers are made to the extent required under Applicable Law,
(iii) the shares or units of each Registered Fund and each Sub-Advised
Registered Fund have been duly authorized and validly issued and are fully paid
and nonassessable and (iv) each Registered Fund and each Sub-Advised Registered
Fund, has been operated for the past five (5) years (or such shorter period as
to which such entity was a Registered Fund or Sub-Advised Registered Fund) and
is currently operating in substantial compliance with Applicable Law.
(h) No Registered Fund or Sub-Advised Registered Funds has at
any time adopted or is otherwise party to or bound by any 12b-1 Plan. No
Registered Fund or Sub-Advised Registered Fund has paid or is paying, directly
or indirectly, any amount to any Person for the purpose of financing the
distribution of its shares or has made or is making any other payments in
violation of Applicable Law.
(i) Each Registered Fund and each Sub-Advised Registered Fund
has timely filed all prospectuses, annual information forms, registration
statements, proxy statements, financial statements, other forms, reports, sales
literature and advertising materials and any other documents required to be
filed with applicable regulatory or other Governmental Authorities, and any
amendments thereto (the "Fund Reports"), and has timely paid all fees and
interest required to be paid in connection therewith. The Fund Reports for the
Registered Funds and the Sub-Advised Registered Funds (i) have been prepared in
all material respects in accordance with the requirements of Applicable Law,
and (ii) did not at the time they were filed, and with respect to any
prospectus, proxy statement, sales literature or advertising material, did not
during the period of its authorized use, contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were or are made, not misleading.
(j) The statements of net assets or statements of assets and
liabilities and schedule of investments included in the Fund Financial
Statements for each of the Registered Funds and for each of the Sub-Advised
Registered Funds present fairly in all material respects the financial position
of each such Registered Fund and each such Sub-Advised Registered Fund as at
the respective dates thereof, and the statements of operations and statements
of changes in net assets included in the Fund Financial Statements for each of
the Registered Funds and for each of the Sub-Advised Registered Funds present
fairly in all material respects the results of operations and changes in net
assets of each such Registered Fund and each such Sub-Advised Registered Fund
for the respective periods indicated. The Fund Financial Statements comply with
applicable accounting requirements with respect thereto, and each of such
statements (including any related notes) has been prepared in accordance with
GAAP consistently applied during the periods involved (except for the absence
of footnotes and, in the case of the interim unaudited Fund Financial
Statements, recurring year-end adjustments normal in nature and amount) and on
that basis (subject to, in the case of the interim unaudited Fund Financial
Statements, recurring year-end adjustments normal in nature and amount) fairly
present in all material respects the financial results of operations and cash
flows of each Registered Fund and Sub-Advised Registered Fund as of the
respective periods indicated.
(k) Section 4.22(k) of the Seller Disclosure Schedule sets forth
a true and complete list of each Non-Registered Fund. Except with respect to
the Registered Funds and the Sub-Advised Registered Funds set forth in Section
4.22(a) of the Seller Disclosure Schedule and the Non-Registered Funds set
forth in Section 4.22(k) of the Seller Disclosure Schedule, none of the Seller
Entities acts as investment adviser, investment sub-adviser, general partner,
managing member, manager or sponsor to any other pooled investment vehicle. No
Non-Registered Fund is, or at any time since its inception was, required to be
registered under the relevant provisions of the Investment Company Act.
(l) (i) Each Non-Registered Fund that is a juridical entity has
been duly organized and is validly existing and in good standing under the laws
of the jurisdiction of its organization and has all requisite corporate
partnership, limited liability company, or similar power and authority, and
possesses all rights, licenses, authorizations and approvals necessary to
entitle it to use its name, to own, lease or otherwise hold its properties and
assets and to carry on its business as it is now conducted, and is duly
qualified, licensed or registered to do business in each jurisdiction where it
is required to do so under Applicable Law, (ii) all outstanding shares or units
of each Non-Registered Fund have been issued and sold in compliance with
Applicable Law and (iii) each Non-Registered Fund, during the past five (5)
years (or since inception of operations if shorter), has been operated and is
currently operating in substantial compliance with its investment objectives
and policies and Applicable Law. There has been no violation, cancellation,
suspension, revocation, non-renewal of or default under any Governmental
Approval or receipt by any Non-Registered Fund of any notice of violation,
cancellation, suspension, revocation, non-renewal, default or dispute affecting
such Governmental Approval, and no basis exists for any such action, including,
without limitation, as a result of the consummation of the transactions
contemplated by this Agreement.
(m) The statements of net assets or statements of assets and
liabilities and schedule of investments included in the Fund Financial
Statements for each of the Non-Registered Funds present fairly in all material
respects the financial position of each such Non-Registered Fund as at the
respective dates thereof, and the statements of operations and statements of
changes in net assets included in the Fund Financial Statements for each of the
Non-Registered Funds present fairly in all material respects the results of
operations and changes in net assets of each such Non-Registered Fund for the
respective periods indicated. The Financial Statements comply with applicable
accounting requirements with respect thereto, and each of such statements
(including any related notes) has been prepared in accordance with GAAP
consistently applied during the periods involved (except for the absence of
footnotes and, in the case of the interim unaudited Fund Financial Statements,
recurring year-end adjustments normal in nature and amount) and on that basis
(subject to, in the case of the interim unaudited Fund Financial Statements,
recurring year-end adjustments normal in nature and amount) fairly present in
all material respects the financial results of operations and cash flows of
each Non-Registered Fund as of the respective periods indicated.
(n) Each board of directors or trustees (or Persons performing
similar functions) of any Non-Registered Fund operates in substantial
conformity with all requirements and restrictions applicable to such
Non-Registered Fund under all Applicable Laws to which such Non-Registered Fund
is subject.
(o) The offer and sale of equity interests in each of the Funds,
and the use and distribution of Offering Materials in connection therewith, has
complied in all material respects with applicable requirements of the
Securities Act, the Exchange Act, the Investment Company Act, the CE Act
(including, without limitation, Rule 4.7 promulgated thereunder), all
applicable state securities and blue sky laws, and all applicable rules,
regulations, interpretive notices and guidelines promulgated by the NFA and the
NASD. The Offering Materials of each of the Funds have contained and currently
contain all statements which are required to be made and contained therein, and
have conformed and currently conform with, the requirements of U.S. federal
securities and commodities laws, including the Securities Act, the CE Act and
the rules and regulations thereunder.
4.23 Affiliate Transactions.
Except as set forth in Section 4.13(a)(xi) of the Seller Disclosure
Schedule, no Seller Entity nor any Fund has entered into any Affiliate
Agreement or similar transaction or arrangement in connection with the Asset
Management Business.
4.24 Clients, Assets Under Management.
(a) Section 4.24(a)(i) of the Seller Disclosure Schedule sets
forth a true and complete schedule, as of the close of business on November 30,
2002, of the aggregate amount of assets under management for (i) the Registered
Funds, (ii) the Sub-Advised Registered Funds, (iii) the Non-Registered Funds,
(iv) the Separate Accounts and (v) the Wrap Accounts. Section 4.24(a)(ii) of
the Seller Disclosure Schedule sets forth a true and complete schedule, as of
the close of business on November 30, 2002, of the amount of assets under
management for each Registered Fund, Sub-Advised Registered Fund and
Non-Registered Fund.
(b) Set forth in Section 4.24(b) of the Seller Disclosure
Schedule is a list of each Advisory Agreement and wrap program, as the case may
be, setting forth as of the close of business on November 30, 2002 (i) with
respect to each Advisory Agreement, the name of the Client, and with respect to
each wrap program, the number of Clients thereunder, indicating whether any
such Client is an Affiliate of Seller; (ii) the amount of assets under
management pursuant to such Advisory Agreement or wrap program; (iii) the fee
schedule in effect with respect to such Advisory Agreement or wrap program;
(iv) the manner of consent required for the "assignment" of such Advisory
Agreement or wrap program under the terms of such Advisory Agreement and under
Applicable Law in connection with the transactions contemplated hereby; (v) the
identity of which Seller Entities are parties to such Advisory Agreement and
provide services to such wrap program; and (vi) solely with respect to the wrap
programs, the selling or sponsoring broker-dealer organizations and a schedule
of fees for such sponsoring broker-dealer organization.
4.25 Insurance.
Section 4.25 of the Seller Disclosure Schedule sets forth a complete
and correct list, as of the date hereof, of the policies of insurance currently
in effect which provide coverage in respect of the Asset Management Business
(including fidelity bonds), which indicates the nature of the coverage under
each of such policies and sets forth the respective expiration dates thereof.
Such policies are in full force and effect and all premiums due with respect to
all periods to and including the Applicable Closing Date, have either been paid
or adequate provisions for the payment thereof have been made. Such policies
provide customary insurance coverage for a business such as the Asset
Management Business. No Seller Entity has received any notice of any material
increase of premiums with respect to, or cancellation or non-renewal of, any of
such policies. There are no claims by the insured under any of such policies as
to which any insurance company is denying liabilities or defending under a
reservation of rights or similar clause.
4.26 Investments.
Section 4.26 of the Seller Disclosure Schedule sets forth a true and
complete list of any capital stock or other equity interests or securities
owed, directly or indirectly, by any Seller Entity in any Person (other than a
Seller Entity but including any Fund) constituting part of the Asset Management
Business (together, the "Investments"), together with the cost and fair market
value of any such Investments as of November 30, 2002. Except to the extent set
forth in Sections 4.02(a) or 4.26 of the Seller Disclosure Schedule, no Seller
Entity owns, directly or indirectly, any capital stock or other equity
interests or securities in any Person or otherwise Controls any Person.
4.27 No "Clawback" Provisions. Except as set forth in Section
4.13(a)(xv) of the Seller Disclosure Schedule, no Seller Entity is subject or
may potentially be subject to any obligation of any kind requiring such Seller
Entity to cap or reimburse fees or expenses or which provides for a "clawback"
or similar undertaking requiring such Seller Entity to reimburse or refund of
any fees, gains, allocations or other amounts to any Person constituting part
of the Asset Management Business.
4.28 No Co-Investments. Except as set forth in Sections 4.13(a)(xiii)
or 4.26 of the Seller Disclosure Schedule, no Seller Entity has any
co-investment, seed capital or similar obligation or arrangement to make any
investment in, or capital contribution to, any Person constituting part of the
Asset Management Business.
4.29 Liquidated Affiliates. Section 4.29 of the Seller Disclosure
Schedule sets forth the name of each Affiliate of Seller or any Seller Entity
which has been liquidated or dissolved during the three (3) years prior to the
date of this Agreement (each, a "Liquidated Affiliate"). No Seller Entity nor
any of its Affiliates has any liabilities or financial obligations to any
Person with respect to any Liquidated Affiliate, or upon consummation of the
transactions contemplated by this Agreement, will have any liabilities or
financial obligations with respect to any Liquidated Affiliate.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER PARENT AND BUYER
--------------------------------------------------------
Each of Buyer Parent and Buyer hereby represents and warrants to
Seller Parent and Company as follows:
5.01 Organization; Authority.
Buyer is a corporation duly organized, validly existing and in good
standing under the laws of Delaware, and has all requisite corporate power
and authority to enter into this Agreement and any instruments and
agreements contemplated herein required to be executed and delivered
pursuant to this Agreement to which it is a party (including the Ancillary
Agreements, which are collectively referred to herein as the "Buyer Related
Instruments") and to consummate the transactions contemplated hereby and
thereby. Buyer Parent is a corporation duly organized and valid by
subsisting under the laws of the province of Ontario, and has all requisite
power and authority to enter into this Agreement, the Buyer Related
Instruments, as applicable, and to consummate the transactions contemplated
hereby and thereby, except where the failure to be so qualified or licensed
or in good standing would not have a Material Adverse Effect on Buyer and
Buyer Parent, taken as a whole. The execution, delivery and performance of
this Agreement and Buyer Related Instruments and the consummation of the
transactions contemplated hereby and thereby have been duly authorized by
all necessary corporate action on the part of each of Buyer Parent and
Buyer. This Agreement has been, and each of Buyer Related Instruments shall
be, duly executed and delivered by each of Buyer Parent and Buyer, as
applicable, and constitutes a valid and binding obligation of each of Buyer
Parent and Buyer, enforceable against Buyer Parent and Buyer, as the case
may be, in accordance with its terms, except that (i) such enforcement may
be subject to bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights, and
(ii) the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the discretion
of the court before which any proceeding therefor may be brought.
5.02 No Violation; Consents and Approvals.
The execution and delivery of this Agreement and Buyer Related
Instruments do not, and the consummation of the transactions contemplated
hereby or thereby and compliance with the terms hereof or thereof will not
violate or be in conflict with, (a) any provision of the Organizational
Documents of Buyer Parent or Buyer, (b) any material Law applicable to Buyer
Parent or Buyer or the property or assets of Buyer Parent or Buyer or (c) in
any material respect, any note, bond, mortgage, indenture, license, agreement,
lease or other instrument or obligation to which Buyer Parent or Buyer is a
party or by which Buyer Parent or Buyer may be bound or affected or to which
any of their respective assets may be subject. Except for the requirements of
the HSR Act and as set forth in Section 5.02 of the Buyer Disclosure Schedule,
no consent, approval, order or authorization of, or notice to, or registration,
declaration or filing with, any Governmental Entity or any third party is
required to be obtained or made by Buyer Parent or Buyer in connection with the
execution and delivery of this Agreement or Buyer Related Instruments or the
consummation by Buyer Parent or Buyer, as the case may be, of the transactions
contemplated hereby or thereby.
5.03 Litigation. Except as set forth in Section 5.03 of the Buyer
Disclosure Schedule, there is no material claim, action, suit, proceeding,
investigation or inquiry pending, asserted or, to Buyer's knowledge, threatened
during the one year period prior to the date hereof, against Buyer or Buyer
Parent by or before any Governmental Entity, or by or on behalf of any third
party, which challenges the validity of this Agreement or any Buyer Related
Instrument or which, if adversely determined, would adversely affect the
ability of Buyer Parent or Buyer to consummate the transactions contemplated by
this Agreement or any Buyer Related Instrument.
5.04 Brokers. No broker, finder or financial advisor or other person
is entitled to any brokerage fees, commissions, finders' fees or financial
advisory fees in connection with the transactions contemplated hereby by reason
of any action taken by Buyer Parent or Buyer or any of their respective
directors, officers, employees, representatives or agents.
5.05 Commission Filings. As of its filing date, each Buyer Parent
Commission Document complied as to form in all material respects with the
applicable requirements of the Exchange Act. As of its filing date, each Buyer
Parent Commission Document filed pursuant to the Exchange Act did not contain
any untrue statement of a material fact or omit any material fact necessary in
order to make the statements made therein, in the light of the circumstances
under which they were made, not false or misleading.
5.06 Financial Statements. The audited consolidated financial
statements and unaudited consolidated interim financial statements of Buyer
Parent (including any related notes and schedules) included in its annual
reports on Form 10-K and the quarterly reports on Form 10-Q referred to in this
Section 5.06 (collectively, the "Buyer Parent Financial Statements") present
fairly the financial position of Buyer Parent and its subsidiaries as of the
dates thereof and their results of operations and cash flows for the periods
then ended (subject to normal year-end adjustments and the absence of notes in
the case of any unaudited interim financial statements), in each case in
conformity with GAAP applied on a consistent basis (except as may be indicated
in the notes thereto).
5.07 Capitalization. As of the date of this Agreement but without
giving effect to the Brokerage Closing, Buyer Parent's authorized capital stock
consists of (i) an unlimited number of authorized Class A Non-Voting Shares, of
which 12,377,857 shares are issued and outstanding, (ii) 99,680 authorized
Class B Voting Shares, of which 99,680 shares are issued and outstanding and
(iii) an unlimited number of First Preference Shares issuable in series, of
which no shares are issued or outstanding. All such issued and outstanding
shares are duly authorized and validly issued, fully paid and nonassessable.
5.08 Absence of Undisclosed Liabilities. Except for liabilities and
obligations (i) reflected on the Buyer Parent Financial Statements or (ii)
incurred in the ordinary course of business consistent with past practice since
the date of the Buyer Parent Financial Statements, neither Buyer nor Buyer
Parent has incurred any liabilities or obligations of whatever nature, direct
or indirect, whether accrued, fixed, contingent or otherwise that would be
required to be reflected or reserved against on a consolidated balance sheet of
Buyer Parent prepared in accordance with GAAP.
5.09 Non-Contravention. The execution, delivery and performance by
Buyer and Buyer Parent of this Agreement will not contravene, result in any
breach of, or constitute a default under, or result in the creation of any Lien
in respect of any property of Buyer or Buyer Parent under any indenture,
mortgage, deed of trust, loan, purchase or credit agreement, lease, corporate
charter or by-laws, or any other material agreement or instrument to which
Buyer or Buyer Parent is bound or by which any of their prospective properties
may be bound or affected, which would affect the legal authority of Buyer and
Buyer Parent to materially comply with the terms of this Agreement.
5.10 Disclosure. No representation or warranty by Buyer or Buyer
Parent contained in this Agreement, and no statement contained in this
Agreement (the Buyer Related Instruments and the Buyer Parent Financial
Statements), list, certificate or other writing furnished or to be furnished by
or on behalf of Buyer or Buyer Parent to Seller or any of its representatives
in connection with the transactions contemplated hereby, contains or will
contain any untrue statement of a material fact, or omits or will omit to state
any material fact necessary, in light of the circumstances under which it was
or will be made, in order to make the statements herein or therein not
misleading, or necessary in order to fully and fairly provide the information
required to be provided in any such document.
5.11 Ineligible Persons. Neither Parent, Buyer nor any "affiliated
person" (as defined in the Investment Company Act) of either 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 referred to in Section
9(a) of the Investment Company Act) to a Registered Fund. Neither Parent nor
Buyer is ineligible pursuant to Section 203 of the Investment Advisers Act or
Section 15(b) of the Exchange Act to serve as a registered investment adviser
or broker-dealer and no "associated person" (as defined in the Investment
Advisers Act or the Exchange Act) of Parent or Buyer is ineligible pursuant to
Section 203 of the Investment Advisers Act or Section 15(b) of the Exchange Act
to serve as an associated person of a registered investment adviser or
broker-dealer.
5.12 Investment Purpose. Buyer (or its designee as the case may be) is
acquiring, as principal for its own account, the Equity Interests for its own
account and for the purpose of investment and not with a view to or for sale in
connection with any distribution thereof.
ARTICLE VI
COVENANTS OF THE PARTIES
------------------------
6.01 Conduct of the Asset Management Business. Except as and to the
extent expressly permitted by this Agreement or the Brokerage Asset Purchase
Agreement, during the period from the date of this Agreement up to the Final
Closing Date, Seller shall and shall cause the other Seller Entities to, (i)
conduct the Asset Management Business in the ordinary course consistent with
past practice, (ii) use its reasonable best efforts to preserve its current
relationships with its brokers and other employees, Clients, customers,
suppliers and others having business dealings with it and (iii) pay all Taxes
related to the Asset Management Business as they become due and payable.
Without limiting the generality of the foregoing, except as and to the extent
set forth in Section 6.01 of the Seller Disclosure Schedule, during the period
from the date of this Agreement through the Applicable Closing Date without the
prior written consent of Buyer, with respect to the Asset Management Business
or any of the Asset Management Assets, Seller shall not and shall cause Seller
Entities other than Seller, as applicable, not to:
(a) other than bonuses earned and accrued in respect of the 2002
fiscal year which have been awarded (but not paid) prior to the date hereof,
pay any bonus or increase, decrease or otherwise modify the rate of
compensation of, or any fees or fee schedule with respect to, or pay or agree
to pay, or withdraw or reduce, any benefit to, or terminate, any Person
employed by, or providing services with respect to, the Asset Management
Business or its Clients;
(b) enter into, adopt, amend or otherwise modify any plan that
would apply to any Transferred Employee;
(c) enter into, adopt or amend, any employment, consulting,
retention, change-in-control, collective bargaining, bonus or other incentive
compensation, profit-sharing, health or other welfare, stock option or other
equity, pension, retirement, vacation, severance, deferred compensation or
other employment, compensation or benefit plan, policy, agreement, trust, fund
or arrangement for the benefit of any officer, director, employee, sales
representative (including any promoter), agent, consultant or Affiliate except
for the employment, consulting, retention, bonus or incentive compensation
agreement entered into in the ordinary course of business consistent with past
practices;
(d) enter into any collective bargaining agreement or other
labor agreement;
(e) sell, lease, transfer or otherwise dispose of any Asset
Management Asset, other than in the ordinary course of business consistent with
past practice;
(f) grant or permit the imposition of any Lien on the Asset
Management Assets, except for Permitted Liens;
(g) create, renew, amend, terminate or cancel, or take any other
action that may result in the creation, renewal, amendment, impairment,
termination or cancellation of, any Contract except, other than any Affiliate
Agreement, in the ordinary course of business consistent with past practice;
(h) fail to maintain the accounts of the Asset Management
Business and Books and Records in the usual, regular and ordinary manner on a
basis consistently applied;
(i) sell, transfer, license, encumber or otherwise dispose of,
or compromise or permit the lapse of the right to use, any of the Trademarks or
Intellectual Property;
(j) make any change in the pricing, fees, interest rates or
service charges payable by any Client with respect to any Transferred Account
or institute new pricing, fees, interest rates or service charges payable by
any such Client or otherwise alter the terms of any Customer Agreement relating
to any Transferred Account other than in the ordinary cause of business and
consistent with past practices;
(k) except as required by applicable Law, with respect to any
Transferred Account, (i) implement or adopt any change in its risk procedures
or practices or (ii) make any change in the process of approving and opening
new Customer Accounts;
(l) cancel any debt or waive any claim or right of substantial
value;
(m) amend any Organizational Documents;
(n) conduct all affairs relating to Taxes other than in good
faith and in a manner consistent with past practice;
(o) enter into any new line of business unrelated to the Asset
Management Business;
(p) acquire or sell in any manner, including by way of merger,
consolidation or purchase or sale of an equity interest or assets, any business
or any corporation, partnership, association or other business organization or
division thereof;
(q) change any of the accounting practices, policies or
principles used by it, except as required by GAAP;
(r) except as required by Applicable Law or such actions as may
be approved by the independent directors of any Registered Fund, make any
material changes in policies or practices relating to terms of Client
transactions or accounting therefor or in policies of employment;
(s) take any action or omit to take any action that,
individually or in the aggregate, would reasonably be expected to result in a
Material Adverse Effect;
(t) incur, assume, guarantee (including by way of any agreement
to "keep well" or of any similar arrangement) or prepay any Indebtedness or
amend the terms relating to any Indebtedness (including, without limitation,
capital leases, payments in respect of the deferred purchase price of property,
letters of credit, loan agreements and other agreements relating to the
borrowing of money or extension of credit) or issue or sell any debt
securities, except for any such incurrence, assumption, guarantee or prepayment
of such Indebtedness or amendments of the terms of such Indebtedness in the
ordinary course of business consistent with past practice;
(u) take any action that would, or could reasonably be expected
to, cause Seller or its Subsidiaries to be in breach of any representation,
warranty, covenant or agreement contained in this Agreement or in any of the
Ancillary Agreements;
(v) make any Tax election or settle or compromise any Tax
liability if such election settlement or compromise could result in a Lien on
the Asset Management Assets or could have a material adverse Tax effect on the
Asset Management Assets;
(w) enter into any co-investment obligation or arrangement;
(x) sell, lease, transfer or otherwise dispose of any
Investment; or
(y) agree, whether in writing or otherwise, to do any of the
foregoing.
Notwithstanding the foregoing provisions of this Section 6.01,
Seller may, or may cause the applicable Seller Entity to, distribute or
otherwise transfer to Seller or an Affiliate of Seller the Seller Investments
specified on Schedule V (the "Seller Investments") prior to the Final Closing
to the extent permitted by and in accordance with the Fund agreements to which
the Investments relate, and otherwise in such manner as Seller may reasonably
determine, after consultation with Buyer, to minimize the adverse impact on the
Fund in question (including the prospects for obtaining any required Consents
relating to such Fund), provided that any costs, expenses or other liabilities
associated with such distribution or other transfer (including liabilities in
respect of Taxes) shall be Excluded Liabilities for all purposes of this
Agreement
6.02 Access to Information; Confidentiality.
(a) During the period from the date of this Agreement up to the
Final Closing Date, Buyer shall give Seller and its authorized representatives,
and Seller shall give and shall cause each of the Seller Entities other than
Seller to give Buyer and its authorized representatives, reasonable access,
during regular business hours and upon reasonable notice, to examine and make
copies of, all books and records as they may reasonably request.
(b) Following the First Closing, Buyer shall permit Seller and
its authorized representatives, and Seller shall permit and shall cause each of
the Seller Entities other than Seller to permit Buyer and its authorized
representatives, during regular business hours and upon reasonable notice, to
have reasonable access to, and examine and make copies of, all books and
records of the Asset Management Business, including as applicable, the Books
and Records, the books of original entry of Seller and agreements that are
necessary to support the account, which relate, (i) to transactions or events
occurring prior to the First Closing, (ii) events occurring subsequent to the
First Closing, which are related to or arise out of transactions or events
occurring prior to the First Closing or (iii) the liability of Buyer, Buyer
Parent or Seller to provide indemnification pursuant to Article X.
(c) Any information received by Buyer, Seller or any Seller
Entity other than Seller pursuant to this Agreement shall be held in confidence
in accordance with and subject to the terms of the Confidentiality Agreement
dated as of July 16, 2002 (the "Confidentiality Agreement"); provided, that,
not withstanding the foregoing Seller shall not share any such information with
any of its financial advisors that are competitors to Buyer or its Affiliates.
6.03 Reasonable Best Efforts. Subject to the terms and
conditions of this Agreement, each of the parties hereto shall use its
reasonable best efforts to take, or cause to be taken, all actions, and to do,
or cause to be done, all things necessary, proper or advisable under Applicable
Laws and regulations to consummate the transactions contemplated by this
Agreement at the earliest practicable date.
6.04 Consents.
(a) Without limiting the generality of Section 6.03 and subject
to Section 6.12, each of the parties hereto shall use its reasonable best
efforts to obtain all licenses, permits, authorizations, consents and approvals
of all third parties and Governmental Entities necessary in connection with the
consummation of the transactions contemplated by this Agreement prior to the
Applicable Closing. Notwithstanding the foregoing, Buyer shall have no
obligation to pay any fee to any third party for the purpose of obtaining any
consent or approval or any costs and expenses of any third party resulting from
the process of obtaining such consent or approval. Each of the parties hereto
shall make or cause to be made all filings and submissions under laws and
regulations applicable to it (and pay any requisite filing fees in connection
therewith) as may be required for the consummation of the transactions
contemplated by this Agreement. Buyer and Seller shall coordinate and cooperate
with each other, and Seller shall cause each Seller Entity other than Seller to
coordinate and cooperate with Buyer, in exchanging such information and
assistance as any of the parties hereto may reasonably request in connection
with the foregoing.
(b) Without limiting the generality of Section 6.04(a), Seller
shall use its reasonable best efforts to promptly undertake and make available,
and to cause each Seller Entity other than Seller to promptly undertake and
make available, the necessary personnel to obtain the written third party
consent, approval or authorization required in connection with the transfer
from any Seller Entity to Buyer of any Intellectual Property (including without
limitation the Intellectual Property set forth in Section 4.09(b) of the Seller
Disclosure Schedule). In the event that, after a reasonable period of time, any
Seller Entity, as applicable, has failed to obtain any such consent, approval
or authorization, Buyer may request that Seller or such Seller Entity explain
to Buyer the steps it has taken to date, and Buyer may request that Seller or
such Seller Entity undertake additional, specified, reasonable steps.
6.05 Regulatory Matters.
(a) Buyer and Seller shall use, and Seller shall cause each
Seller Entity other than Seller to use, their reasonable best efforts to
consummate the transactions contemplated hereby. Each of the parties hereto
shall use its reasonable best efforts to take, or cause to be taken, all
appropriate actions, and to do, or cause to be done, all things necessary,
proper or advisable under Applicable Laws and regulations to consummate and
make effective the transactions contemplated herein, including, without
limitation, (i) cooperating with the other in the preparation and filing of all
forms, notifications, reports and information, if any, required or reasonably
deemed advisable pursuant to any law, statute, rule or regulation including the
Commission (including, without limitation, the filing of any amendments to Form
ADV), NASD, NYSE and other stock exchange rules, (ii) using its reasonable best
efforts to obtain all licenses, permits, consents, approvals, authorizations,
qualifications and orders of any Governmental Entity or other Persons (as are
necessary for the consummation of the transactions contemplated hereby), (iii)
making on a prompt and timely basis all governmental or regulatory
notifications and filings required to be made by it for the consummation of the
transactions contemplated hereby, (iv) defending all Legal Proceedings
challenging this Agreement or the consummation of the transactions contemplated
hereby and to lift or rescind any injunction or restraining Order or other
Order adversely affecting the ability of the parties to consummate the
transactions contemplated hereby, and (v) executing and delivering such
additional instruments and other documents and shall take such further actions
as may be necessary or appropriate to effectuate, carry out and comply with all
of the terms of this Agreement and the transactions contemplated hereby. Each
party shall promptly advise the other party of any developments with respect to
the foregoing matters.
(b) Buyer Parent and Buyer agree that each of them shall, and
shall cause each of their Subsidiaries to, obtain such licenses, permits,
consents, approvals, authorizations, qualifications and orders of, and make
such filings with, any Governmental Entity as may required to be obtained or
made by them to conduct the Asset Management Business as it will be conducted
(i) with respect to the OMEGA Assets, on or prior to January 20, 2003 and (ii)
with respect to all other Asset Management Assets transferred under Section
2.01, on or prior to the earlier of (x) March 30, 2003 or (y) the date which is
60 days after the date on which Seller delivers complete and accurate Seller
Disclosure Schedules to Buyer Parent and Buyer.
(c) Each party to this Agreement shall, upon request, furnish
each other with all information concerning themselves, directors, officers and
shareholders and such other matters as may be reasonably necessary or advisable
in connection with any statement, filing, notice or application made by or on
behalf of Buyer or any Seller Entity to any Governmental Entity in connection
with the transactions contemplated by this Agreement (except to the extent that
such information would be, or relates to information that would be, filed under
a claim of confidentiality).
(d) The parties to this Agreement shall promptly advise each
other upon receiving any communication from any Governmental Entity whose
consent or approval is required for consummation of the transactions
contemplated by this Agreement which causes such party to believe that there is
a reasonable likelihood that any requisite regulatory approval will not be
obtained or that the receipt of any such approval will be materially delayed or
that the transactions contemplated hereby will become subject to additional
conditions imposed by such Governmental Entity.
(e) Each party to this Agreement shall provide to the other
party, as promptly as practicable after the filing or receipt thereof (unless a
different time period shall otherwise be specified herein), a copy of all
applications, notices, petitions, filings documents and notices referred to in
this Section 6.05.
6.06 Discharge of Liens; Payment of Certain Obligations. Seller
shall cause all Liens (other than Permitted Liens) on any Asset Management
Asset to be terminated or otherwise discharged prior to the Applicable Closing.
6.07 Public Announcements. Seller Entities and Buyer shall not
(i) issue any report, statement or press release or otherwise make any public
statement with respect to this Agreement and the transactions contemplated
hereby or (ii) issue any report, statement or otherwise inform any business or
managers of any Seller Entity, without prior consultation with and approval of
either Seller (in the case of Buyer performing the actions set forth in (i) or
(ii)) or Buyer (in the case of any Seller Entity performing the actions set
forth in (i) or (ii)), except as may be required by law or may be necessary in
order to discharge its disclosure obligations, in which case such party
nevertheless shall advise the other party and discuss the contents of the
disclosure before issuing any such report, statement or press release.
6.08 Tax Information Reporting. Company shall, for the period from
January 1, 2002 through the Applicable Closing Date provide customers of the
Asset Management Business with all applicable forms required for Tax
information reporting purposes (such as Forms 1099, 945, 1042 and 1042-S) with
respect to the accounts of such customers and Buyer shall, for the period on or
after the Applicable Closing Date provide such customers with such forms.
6.09 Tax Matters.
(a) On the Applicable Closing Date the Company shall inform
Buyer of (i) with respect to any Seller Entity or Controlled Entity, any
changes in a method of accounting, rulings received from a taxing authority or
agreements signed with a taxing authority which would be binding on Buyer or
any of the Controlled Entities after the Applicable Closing Date; (ii) Tax
sharing agreements, tax indemnification agreements or similar contracts or
arrangements, written or unwritten, to which any Controlled Entity is a party;
(iii) any outstanding waivers or comparable consents regarding the application
of the statute of limitations with respect to any Taxes or Tax Returns of the
Seller Entities or Controlled Entities, which waivers or consents would be
binding on Buyer or any Controlled Entity after the Applicable Closing Date
(iv) any requests by the Controlled Entities for an extension of time within
which to file any Tax Return in respect of any taxable period, which Tax Return
has not since been filed; (v) any federal, state, local or foreign audits or
other administrative proceedings formally commenced or presently pending with
regard to any Taxes, Tax Returns, Taxes due or Tax returns filed of, from, or
by any Controlled Entities; (vi) any deficiencies for any Tax that have been
assessed with respect to any of the Controlled Entities which has not been paid
in full; (vii) with respect to any Controlled Entity, any membership in a
United States federal, state, or local or foreign consolidated, combined,
unitary or similar group for Tax purposes with respect to which such Controlled
Entity may have liability under Treasury Regulations ss.1.1502-6 or equivalent
provisions of Applicable Laws for Taxes imposed on other members of such
consolidated, combined, unitary or similar group with respect to taxable years
for which the period for assessment of deficiencies has not closed; (viii) any
action, suit, claim, assessment or audit pending or proposed in writing with
respect to Taxes relating to the Asset Management Business or Asset Management
Assets, the resolution of which would be binding on the Buyer or any Controlled
Entities; and (ix) any powers of attorney with respect to any matter relating
to Taxes that have been granted with respect to the Asset Management Business
or the Asset Management Assets and which would be binding on the Buyer or any
Controlled Entities.
(b) Effective as of the Applicable Closing Date Company shall
have terminated or caused to be terminated, with respect to periods beginning
after the Final Closing Date, all of the Controlled Entities' obligations and
potential liabilities under any Tax sharing agreement, Tax indemnification
agreement or similar contract or arrangement, written or unwritten, referred to
in Section 6.09(a)(ii).
6.10 Litigation Cooperation. In connection with Seller's
retention of all pre-closing Litigation pursuant to this Agreement, Buyer
agrees to respond to all reasonable requests by Seller and reasonably cooperate
with Seller in connection with the defense and resolution of the Litigation,
including (a) providing Seller with reasonable access at reasonable hours to
all Books and Records and personnel, including the Transferred Employees, (b)
permitting employees and personnel, including the Transferred Employees, to
respond to reasonable requests for interviews, depositions, testimony,
interrogatories and other information in connection with such litigation and
claims and any proceedings in connection therewith; in each case, provided
access and such responses shall not disrupt Buyer's business activities or
prevent Transferred Employees from performing their duties. Seller's defense of
the Litigation and Buyer's cooperation therewith shall have no effect on the
provisions of Section 10.07.
6.11 Seller Officer's Certificate.
(i) (i) At each Applicable Closing, Seller shall deliver an
officer's certificate, signed by the chief executive officer or president
of Seller, certifying, to the best of such officer's knowledge after due
inquiry, that all representations and warranties of Seller in this
Agreement are true, complete and correct in all respects, as of the date
when made and at and as of each Applicable Closing Date, as though such
representations and warranties were made at and as of each Applicable
Date, except that representations and warranties that by their terms speak
as of the date of this Agreement or as of another specified date shall be
true, complete and correct only as of such date.
(b) If the officer's certificate called for in subsection (a)
above discloses exceptions to the representations and warranties, Buyer and
Buyer Parent shall be entitled to make a Seller Claim for indemnification under
Article X and receive the expense reimbursement set forth in subsection (e)
below.
(c) Notwithstanding anything to the contrary set forth in this
Agreement, including Article X, the parties agree and acknowledge that, with
respect to any Seller Claim arising out of this Section 6.11, Seller shall pay
all of Buyer's and any other Buyer Indemnitees' aggregate legal fees, costs and
other expenses arising as a result of, incurred in connection with or related
to such Seller Claim, to the extent such Seller Claim is not finally
adjudicated against Buyer.
6.12 Client Consents and Approvals.
(a) Registered Funds.
(i) Seller shall, and shall cause each of its
Affiliates to, (A) use its reasonable best efforts to cause the
Investment Company Board of each Registered Fund and Sub-Advised
Registered Fund to call a special meeting of the shareholders of such
Registered Fund to be held as promptly as reasonably practicable
following the date hereof but in no event later than April 30, 2003
for the purpose of obtaining the approval of such shareholders of a
new Advisory Agreement and, as necessary, a new Underwriting Agreement
or Services Agreement containing the same terms in all material
respects as the terms contained in the Advisory Agreement (or
Underwriting Agreement or Services Agreement) with such Registered
Fund and Sub-Advised Registered Fund existing on the date hereof, (B)
use its reasonable best efforts to cause each Registered Fund and
Sub-Advised Registered Fund to prepare, file with and cause to be
cleared by the Commission and all other Governmental Authorities
having jurisdiction there over, as promptly as practicable after the
date hereof but in no event later than February 15, 2003, all proxy
solicitation materials required to be distributed to shareholders of
each such Registered Fund and Sub-Advised Registered Fund with respect
to the actions recommended for shareholder approval by the Investment
Company Boards, (C) use its reasonable best efforts to cause each
Registered Fund and Sub-Advised Registered Fund to mail such proxy
solicitation materials to such shareholders promptly after clearance
by the Commission but in no event more than 5 days thereafter and
cause to be submitted to a special meeting of shareholders of such
Registered Fund and Sub-Advised Registered Fund by such date specified
in (A) above, (D) use, and use its reasonable best efforts to cause
each Registered Fund and Sub-Advised Registered Fund to use, its
reasonable best efforts to obtain, or cause to be obtained, the
approval of the Investment Company Boards and the shareholders of such
Registered Fund and Sub-Advised Registered Fund, pursuant to the
provisions of Section 15 of the Investment Company Act applicable
thereto, of such Advisory Agreement and, as necessary, such
Underwriting Agreement or Services Agreement for such Registered Fund
with Buyer or its Affiliates.
(ii) In connection with the preparation and filing of
the proxy solicitation materials referred to in the subsection (a)
above, Seller and Buyer will cooperate with each other and with the
Investment Company Board of each Registered Fund and Sub-Advised
Registered Fund, including providing such information as may be
reasonably requested for inclusion in such proxy statements. Each of
Seller and Buyer agrees that none of such information provided by it
for inclusion in such proxy solicitation materials will contain any
untrue statement of a material fact, or omit to state any material
fact required to make the statements therein, in light of the
circumstances in which they were made, not misleading.
(iii) As soon as possible following the date hereof,
Seller shall cause each Registered Fund and Sub-Advised Registered
Fund to file supplements or post-effective amendments to that
Registered Fund's registration statement on Form N-2, which
supplements or amendments shall reflect changes as necessary in that
Registered Fund's and Sub-Advised Registered Fund's affairs as a
consequence of the transactions contemplated by this Agreement and to
make any other filing necessary under Applicable Law to satisfy
disclosure requirements to enable the public distribution of the
shares of beneficial interest of that Registered Fund and Sub-Advised
Registered Fund to continue.
(iv) Prior to the earlier of the Final Closing Date or
the termination of this Agreement, Seller shall, and shall cause each
of its Affiliates to, ensure that no Registered Fund or Sub-Advised
Registered Fund takes any action that (a) would prevent any Registered
Fund from qualifying as a "regulated investment company" under Section
851 of the Code, or (b) would be inconsistent with each Registered
Fund's and Sub-Advised Registered Fund's prospectuses and other
offering, advertising and marketing materials, as amended or
supplemented.
(b) Client Consents (Other Than Funds). If Consent to the
assignment or deemed assignment of an Advisory Agreement or a Wrap
Agreement with Clients (other than Clients that are Registered Funds or
Non-Registered Funds) as a result of the transactions contemplated by this
Agreement is required by Applicable Law or by such Client's Advisory
Agreement or Wrap Agreement, as the case may be, as promptly as is
reasonably practicable following the date hereof but in no event later than
January 10, 2003, Seller shall, and shall cause any Affiliate to, send a
notice in form and substance acceptable to Buyer (an "Initial Notice")
informing such Clients of the transactions contemplated by this Agreement
and requesting written Consent to the assignment of such Client's Advisory
Agreement or Wrap Agreement, as the case may be. Upon the request of Buyer,
Seller shall, and shall cause any Affiliate to, send to Clients (other than
a Clients that are Registered Funds or Non-Registered Funds) who were sent,
but who have not by such date returned, an Initial Notice countersigned
indicating such Client's consent to the assignment of such Client's
Advisory Agreement or Wrap Agreement, as the case may be, resulting from
the transactions contemplated hereby, a subsequent notice or notices in
form and substance acceptable to Buyer (each, a "Follow-Up Notice")
requesting such Clients' written consent to the assignment of such Clients'
Advisory Agreement or Wrap Agreement, as the case may be, and informing
such Clients that their Advisory Agreement or Wrap Agreement, as the case
may be, may be terminated if such written consent is not received on or
prior to the date which is specified herein.
(c) Non-Registered Funds.
(i) Seller, as soon as possible after the date hereof
but in no event later than April 30, 2003, shall, and shall cause each
of its Affiliates to, (i) as may be required pursuant to the governing
documents of any Non-Registered Fund, cause each such Non-Registered
Fund to enter into new Advisory Agreements and, as necessary, new
placement agreements and other services agreements with Buyer or one
of its Affiliates, (ii) as may be required pursuant to the governing
documents of any Non-Registered Fund, use its reasonable best efforts
to cause each such Non-Registered Fund to prepare and mail to all of
the investors of such Non-Registered Fund, all consent materials
necessary and appropriate to be distributed to such investors pursuant
to the governing documents of such Non-Registered Fund in order to
cause such investors to approve (A) the appointment or substitution of
Buyer or one of its Affiliates as managing member or general partner
of (and, if necessary, investment adviser, placement agent other
service provider to) such Non-Registered Fund effective as of the
Final Closing and (B) if necessary pursuant to such governing
documents, the transfer or assignment of the applicable equity
interest in each such Non-Registered Fund held by Seller or one its
Affiliates to Buyer or one of its Affiliates effective as of the Final
Closing, (iii) use its reasonable best efforts to cause each
Non-Registered Fund to obtain, or cause to be obtained, the approvals
referred to subsection (i) of this Section 6.12(c) and (iv) use its
reasonable best efforts to cause each Non-Registered Fund to enter
into an Advisory Agreement with Buyer or one of its Affiliates (A)
providing for Buyer or one of its Affiliates to serve as the
sub-adviser of such Non-Registered Fund with the same advisory fees as
are in effect under the existing Advisory Agreement for such
Non-Registered Fund with Seller or one of its Affiliates on the date
hereof and (B) becoming effective at the time of the Final Closing for
any Non-Registered Fund whose investors have not, prior to the Final
Closing, consented to the approvals referred to subsection (i) of this
Section 6.12(c). Seller agrees that for a period of two (2) years
following the Final Closing, it shall not, and shall not permit any of
its Affiliates to, terminate, modify, alter or otherwise amend the
terms of any Advisory Agreement entered into pursuant to this Section
6.12(c) without the prior written consent of Buyer.
(ii) Seller, as soon as possible after the date hereof
but in no event later than required by Applicable Law or the governing
documents of any Non-Registered Fund, shall, and shall cause each of
its Affiliates to cause each Non-Registered Fund to file supplements
or amendments to each such Non-Registered Fund's Offering Materials,
which supplements or amendments shall reflect changes as necessary in
that Non-Registered Fund's affairs as a consequence of the
transactions contemplated by this Agreement and to make any other
filing necessary under Applicable Law.
(d) Client Procedures. In connection with obtaining the
Client Consents required by subsections (a) through (c), Seller shall, and
shall cause each of its Affiliates to keep Buyer informed of the status of
obtaining such Client Consents and, to the extent applicable, deliver to
Buyer prior to the Applicable Closing copies of all such executed Client
Consents and make available for inspection the originals of such Consents
prior to the Applicable Closing.
(e) Non-Consenting Clients. With respect to any Client for
which written consent to the transactions contemplated hereby has not been
provided in accordance with this Section 6.12, upon the request of Buyer
(given no earlier than the Applicable Closing Date), Seller shall, as soon
as reasonably practicable following such request of Buyer, request from
such Client instructions as to a Person, other than an Affiliate of Seller,
to whom such Client's account(s) (including any brokerage accounts) shall
be transferred. If not so instructed by such Client, upon the request of
Buyer, Seller shall terminate each such account, including any brokerage or
other accounts, of such Client as soon as reasonably practicable following
such request of Buyer.
6.13 Failure to Consummate. In the event that the transactions
contemplated by this Agreement are not consummated as a result of the failure
of Seller, the Company or any Affiliate thereof to use its respective
reasonable best efforts to obtain the consents of Clients pursuant to Section
6.12 by June 30, 2003, Seller Parent and the Company jointly and severally
agree to pay to Buyer an amount for each of the four months following June 30,
2003 equal to the product of (a) $1 million and (b) a fraction, the numerator
of which is the portion of the Deemed Assets which are not transferred to
Buyer as contemplated by this Agreement on or prior to June 30, 2003, and the
denominator of which is the total amount of Deemed Assets; provided, that the
amount of such payments shall not equal more than $4 million in the aggregate;
provided further that (i) Buyer may also not seek indemnity under Article X
for claims based solely on the failure of Seller obtain such Client consents
and (ii) subject to clause (i), nothing in this Section 6.13 shall reduce,
restrict or modify Buyer's rights or Seller's obligations under Article X. Any
payment required to be made to Buyer under this Section 6.13 shall be made to
Buyer no later than the fifth (5th) business day of the month in which such
payment is due, commencing with the first month following June 30, 2003.
6.14 Investment Company Act Matters. Seller and Buyer agree that
neither they nor any of their Affiliates has any express or implied
understanding or agreement that would impose an "unfair burden" (as defined in
the Investment Company Act) on any Registered Fund or would otherwise
interfere with any Registered Fund's reliance on Section 15(f) of the
Investment Company Act as a result of the transactions contemplated by this
Agreement. Seller and Buyer agree to comply and to use their respective
commercially reasonable efforts to cause the respective boards of directors of
each Registered Fund to comply with the provisions of Section 15(f) of the
1940 Act.
6.15 Certain Expenses. In addition to any amounts payable under
Section 6.13, Seller Parent and the Company agree to bear 100% of the costs
and expenses (including printing, mailing and professional fees and expenses)
incurred by either of them or Buyer or its Affiliates in connection with
obtaining new investment advisory agreements (or other agreements as required
by Applicable Law) or consents of Clients as may be necessary in connection
with the transfer of the Asset Management Business, provided that (i) such
costs and expenses shall not include any allocations of costs of Buyer
associated with its existing full-time employees or internal overhead and (ii)
Buyer shall be required to obtain the prior approval of Seller for any
contract or agreement with any third party that could involve the payment by
Buyer of in excess of $10,000 in connection with obtaining such new agreements
or consents, such approval not to be unreasonably withheld by Seller.
6.16 Certain Actions. Seller agrees to continue to provide Asset
Management Services to the Transferred Accounts (as defined in the Brokerage
Asset Purchase Agreement) or the brokers responsible for such accounts until
the earlier of (i) Final Closing and (ii) receipt of written notice from Buyer
that it no longer requires Seller to provide Asset Management Services to the
Transferred Accounts (as defined in the Brokerage Asset Purchase Agreement) or
the brokers responsible for such accounts as to any or all of such Asset
Management Services.
6.17 Support Services. Seller shall, and shall cause its Affiliates
to, provide such services to Buyer and its Affiliates comparable in nature and
scope to the services that are currently being provided by Seller and its
Affiliates to the Asset Management Business (including, for example, services
relating to finance, head office functions, human resources, equity and debt
trading, technology and software, shared spaces, accounting and legal and
regulatory compliance as generally described in the Transition Services
Agreement) from and after the First Closing through the Final Closing for a
fee of $100,000 per month. For a period of thirty (30) days following the
Final Closing Date, upon the request of Buyer, Seller shall, and shall cause
its Affiliates to, provide such services to Buyer and its Affiliates as may be
necessary for the continued operation of the Asset Management Business by
Buyer during such thirty (30) day period at a cost to Buyer not to exceed the
amount which is currently being charged to the Asset Management Business by
Seller for such requested services.
6.18 Payments to Brokers. Seller shall, and shall cause its
Affiliates, directly or indirectly, to continue to compensate brokers employed
by Buyer after the Brokerage Closing on currently applicable terms with
respect to their sales, servicing and other activities relating to the Asset
Management Business and its products and services. To the extent that Seller
pays any amounts to Buyer for the purpose of satisfying its obligations under
this Section 6.18, Buyer agrees to pay such amounts to such brokers promptly
upon receipt of such funds from Seller.
6.19 Consents, Indemnification.
(a) Notwithstanding anything in this Agreement to the contrary,
Seller shall (i) obtain as soon as possible but in no event later than 30 days
after the Applicable Closing Date the consents or approvals listed in Sections
4.04(b) and 4.13(b) of the Seller Disclosure Schedule for the assignment
pursuant to this Agreement of the leases listed therein to Buyer, and (ii) pay
any and all fees, costs and expenses arising out of or resulting from
obtaining such consents or approvals; and
(b) Seller shall indemnify, defend and hold harmless Buyer
Parent, Buyer and their respective directors, officers, employees,
representatives and Affiliates for any and all Damages resulting from the
failure of Seller to obtain the consents or approvals set forth in Sections
4.04(b) and 4.13(b) of the Seller Disclosure Schedule.
6.20 OMEGA Brokers. From the Brokerage Closing through January 20,
2003 or such later time as any OMEGA accounts are transferred to Buyer
pursuant to this Agreement, (i) Buyer will not, and will instruct its brokers
that they are not authorized by virtue of the Brokerage Closing to, provide
investment advisory services (but may make investment recommendations) in
respect of any Transferred OMEGA Accounts, (ii) will respect the independent
investment discretion and judgment of the employees of Seller acting as
supervisors with respect to such Transferred OMEGA Accounts, and (iii) none of
the brokers of Buyer will receive any special compensation in respect of any
Transferred OMEGA Accounts, but shall be entitled to receive such other
advisor and wrap related fees and commissions in respect of such Transferred
OMEGA Accounts.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF SELLER
-----------------------------------
7.01 Conditions. The obligation of Seller to consummate the
transactions contemplated by this Agreement is subject to the fulfillment at
or prior to each Applicable Closing of each of the following conditions (any
or all of which may be waived in whole or in part by Seller):
(a) Performance. Buyer Parent and Buyer shall have performed
and complied, in all material respects, with all agreements, obligations,
covenants and conditions required by this Agreement to be so performed or
complied with by Buyer Parent or Buyer, as the case may be, at or prior to
each Applicable Closing.
(b) No Violation of Orders, Injunction or Regulatory Actions.
No preliminary or permanent injunction or other order issued by any
Governmental Entity, no statute, rule or regulation, promulgated or enacted by
any Governmental Entity and no judgment, order, injunction or decree issued by
a court of competent jurisdiction that prevents, restrains or prohibits the
consummation of the transactions contemplated by this Agreement shall be in
effect. No actions, suits, claims, proceedings, investigations or inquiries
shall have been commenced (and not have been dismissed) by or on behalf of any
Governmental Entity.
(c) HSR Act Waiting Periods. Any waiting period (or an
extension thereof) applicable to this Agreement and the transactions
contemplated hereby under the HSR Act shall have expired or shall have been
terminated.
(d) Governmental Approvals. All consents and approvals of any
Governmental Entity required to consummate the transactions contemplated
hereby shall have been obtained, except where the failure to obtain any such
consent or approval would not materially impair the ability of Seller to
transfer the Asset Management Assets to Buyer.
(e) Documents. Seller shall have received the Buyer Related
Instruments duly executed by each party thereto (other than Seller and its
Affiliates).
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF BUYER
----------------------------------
8.01 Conditions. The obligations of Buyer and Buyer Parent to
consummate the transactions contemplated by this Agreement are subject to the
fulfillment at or prior to each Applicable Second Closing of each of the
following conditions (any or all of which may be waived in whole or in part by
Buyer or Buyer Parent):
(a) Performance. Seller, its Subsidiaries, the Seller Entities
and the Funds, as applicable, shall have performed and complied, in all
material respects, with all agreements, obligations, covenants and conditions
required by this Agreement to be so performed or complied with by Seller, its
Subsidiaries, the Seller Entities or the Funds, as the case may be, at or
prior to each Applicable Closing.
(b) No Violation of Orders, Injunction or Governmental Entity.
No preliminary or permanent injunction or other order issued by any
Governmental Entity, no statute, rule or regulation, promulgated or enacted by
any Governmental Entity and no judgment, order, injunction or decree issued by
a court of competent jurisdiction that prevents, restrains or prohibits the
consummation of the transactions contemplated by this Agreement shall be in
effect. No actions, suits, claims, proceedings, investigations or inquiries
shall have been commenced (and not have been dismissed) by or on behalf of any
Governmental Entity.
(c) HSR Act Waiting Periods. Any waiting period (or an
extension thereof) applicable to this Agreement and the transactions
contemplated hereby under the HSR Act shall have expired or shall have been
terminated.
(d) Governmental Approvals. All consents and approvals of any
Governmental Entity required to consummate the transactions contemplated
hereby shall have been obtained, except where the failure to obtain any such
consent or approval would not materially impair the ability of Buyer Parent or
Buyer to perform their obligations under the Agreement or to operate the Asset
Management Business after each Applicable Closing.
(e) Documents. Buyer shall have received Seller Related
Instruments, in each case, duly executed by each party thereto (other than
Buyer or Buyer Parent).
(f) Consents and Approvals. All material licenses, Permits,
consents, approvals, estoppels and authorizations of all third parties shall
have been obtained which are necessary, in the reasonable opinion of Buyer, in
connection with (a) the execution and delivery by Seller of the Agreement and
Seller Related Instruments, (b) the consummation by Seller of the transactions
contemplated hereby and thereby and the compliance by Seller with its
obligations hereunder and thereunder, (c) the ownership or operation by Buyer
of the Asset Management Business or the Asset Management Assets or (d) the
conduct by Buyer of the Asset Management Business after each Applicable
Closing.
(g) Brokerage Asset Purchase Agreement. The transactions
contemplated by the Brokerage Asset Purchase Agreement shall have closed.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
---------------------------------
9.01 Termination. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time prior to the
Final Closing:
(a) by mutual written agreement of Buyer and Seller;
(b) at any time after June 30, 2003, by either Buyer or Seller,
if the Final Closing shall not have occurred for any reason, other than a
breach of this Agreement by the terminating party; and
(c) by either party if the Brokerage Asset Purchase Agreement
is terminated.
9.02 Procedure and Effect of Termination. In the event of the
termination of this Agreement and the abandonment of the transactions
contemplated hereby pursuant to Section 9.01(b), written notice thereof shall
forthwith be given by the party so terminating to the other parties, and this
Agreement shall terminate, and the transactions contemplated hereby shall be
abandoned, without further action by Seller or Buyer. The obligations provided
for in this Section 9.02 and Section 10.01 and the confidentiality provision
contained in Section 6.02 shall survive any termination of this Agreement.
9.03 Other Remedies. In no event shall termination of this Agreement
limit or restrict the rights and remedies of any party hereto against any
other party which has breached the terms of this Agreement prior to
termination hereof.
9.04 Amendment, Modification and Waiver. This Agreement may be
amended, modified or supplemented at any time by written agreement of the
parties hereto. Any failure of a party to comply with any term or provision of
this Agreement may be waived by the other parties at any time by an instrument
in writing signed by or on behalf of such other parties, but such waiver or
failure to insist upon strict compliance with such term or provision shall not
operate as a waiver of, or estoppel with respect to, any subsequent or other
failure to comply.
ARTICLE X
FEES AND EXPENSES: SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
---------------------------------------------------------------
10.01 Fees and Expenses. Subject to the terms and conditions
hereof, whether or not the transactions contemplated hereby are consummated
pursuant hereto, Seller, on the one hand, and Buyer on the other hand, shall
pay all fees and expenses incurred by such person or on such person's behalf
in connection with or in anticipation of this Agreement and the consummation
of the transactions contemplated hereby.
10.02 Survival of Representations. The representations and warranties
in this Agreement and in any other document delivered in connection herewith
shall survive the Final Closing for three years regardless of any
investigation made by or on behalf of any party hereto; provided, that, the
representations made in Sections 4.01, 4.02, 4.03, 4.04, 4.08, 4.16, 5.01 and
5.02 shall survive indefinitely.
10.03 Seller's Agreement to Indemnify. Upon the terms and subject to
the conditions of this Article X, Seller Parent and Company agree, jointly and
severally, to indemnify, defend and hold harmless Buyer Parent, Buyer and
their respective directors, officers, employees, representatives and
Affiliates (collectively, "Buyer Indemnitees"), at any time and from time to
time after the Applicable Closing, from and against all demands, claims,
actions or causes of action, assessments, losses, damages, liabilities, costs
and expenses, including interest, penalties and reasonable attorneys' fees and
expenses (collectively, "Damages"), asserted against, resulting to, imposed
upon or incurred by Buyer Indemnitees, directly or indirectly, by reason of or
resulting from: (a) liabilities, obligations or claims of or against Seller
Parent, Company or any of their Affiliates or relating to the Asset Management
Business or the Asset Management Assets (whether absolute, accrued, contingent
or otherwise) existing as of the Applicable First Closing Date or arising out
of facts, conditions or circumstances occurring prior to the Applicable
Closing Date, whether or not such liabilities, obligations or claims were
known or disclosed at the time of the Applicable Closing (other than the
Assumed Liabilities); (b) breach of any representation or warranty of Seller
Parent or Company contained in or made pursuant to this Agreement or any facts
or circumstances constituting such a breach (disregarding for this purpose all
qualifications therein with respect to knowledge, materiality or Material
Adverse Effect); (c) breach of any covenant or agreement of Seller Parent or
Company contained in or made pursuant to this Agreement or any facts or
circumstances constituting such breach; (d) any of the Excluded Assets; (e)
any of the Excluded Liabilities; or (f) any failure by Seller to comply with
any "bulk sales" laws applicable to the transactions contemplated hereby (the
items referred to in clauses (a) through (f) being collectively referred to
herein as the "Seller Claims"); provided, however, that Seller Parent and
Company shall have no obligation to indemnify the Buyer Indemnitees for any
Seller Claims until the Buyer Indemnitees have suffered Damages pursuant to
this Section 10.03 and Section 10.03 of the Brokerage Asset Purchase Agreement
in excess of $1,000,000 in the aggregate with all other Seller Claims
hereunder and thereunder at which point Seller Parent and Company shall be
obligated to indemnify the Buyer Indemnitees for all Damages which exceed
$1,000,000. In satisfaction of any indemnity obligations to Buyer Parent,
Buyer or any of their direct or indirect subsidiaries, Seller may, in its
discretion, (A) pay any amounts payable pursuant to this Section 10.03 in
cash, or (B) reduce by such amounts the then outstanding principal amount of
first, the First Exchangeable Debenture, second, the Interim Debenture, third,
the Zero Coupon Note, and fourth, any other debt owed by Buyer Parent, Buyer
or any of their Affiliates to Seller.
10.04 Seller's Limitation of Liability. Anything in this Agreement to
the contrary notwithstanding, the liability of Seller Parent and Company to
indemnify Buyer Indemnitees pursuant to Section 10.03(b) against any Damages
sustained by reason of any Seller Claim thereunder for a breach of any
representation or warranty of Seller Parent or Company shall:
(a) be limited to Seller Claims as to which any of Buyer
Indemnitees has given Seller written notice thereof on or prior to the date,
if any, on which survival of such representation or warranty terminates
pursuant to Section 10.02, whether or not any Damages have then actually been
sustained; and
(b) when taken together with any damages sustained by reason of
any claim under Section 10.03(b) of the Brokerage Asset Purchase Agreement, of
not exceed the sum of (i) the Purchase Price and (ii) the original principal
amount of the Broker Loans.
10.05 Buyer Parent's and Buyer's Agreement to Indemnify. Upon
the terms and subject to the conditions of this Article X, Buyer Parent and
Buyer agree, jointly and severally, to indemnify, defend and hold harmless
Seller, and its directors, officers, employees, representatives and Affiliates
(collectively, the "Seller Indemnitees") at any time and from time to time
after the Applicable Closing, from and against all Damages asserted against,
resulting to, imposed upon or incurred by Seller Indemnitees, directly or
indirectly, by reason of or resulting from: (a) liabilities, obligations or
claims relating to the Asset Management Business or the Asset Management
Assets (whether absolute, accrued, contingent or otherwise) arising out of
facts, conditions or circumstances occurring on or after the Applicable
Closing Date; (b) breach of any representation or warranty of Buyer or Buyer
Parent contained in or made pursuant to this Agreement or any facts or
circumstances constituting such a breach (disregarding for this purpose all
qualifications therein with respect to knowledge, materiality or Material
Adverse Effect); (c) breach of any covenant or agreement of Buyer or Buyer
Parent contained in or made pursuant to this Agreement or any facts or
circumstances constituting such a breach; (d) any of the Assumed Liabilities;
and (e) actions of any of the OMEGA Brokers after the Brokerage Closing in the
course of their duties for Buyer (other than actions related to the transfer
of any Clients (or accounts thereof) to Buyer or obtaining any Consents
thereof) (the items referred to in clauses (a) through (e) being collectively
referred to herein as the "Buyer Claims"); provided, however, that Buyer and
Buyer Parent shall have no obligation to indemnify the Seller Indemnitees for
any Buyer Claims until the Seller Indemnitees have suffered Damages pursuant
to this Section 10.05 and Section 10.05 of the Brokerage Asset Purchase
Agreement in excess of $1,000,000 in the aggregate with all other Buyer Claims
hereunder and thereunder at which point Buyer and Buyer Parent shall be
obligated to indemnify the Seller Indemnitees for all Damages which exceed
$1,000,000. In satisfaction of any indemnity obligations to Company, Seller
Parent or any of their direct or indirect subsidiaries, Buyer Parent and Buyer
may, in their discretion, (A) pay any amounts payable pursuant to this Section
10.05 in cash, or (B) reduce the then outstanding principal amount of any
indebtedness or other payment obligation owed by Seller or any of its
Affiliates to Buyer Parent or Buyer, by such amount.
10.06 Buyer Parent's and Buyer's Limitation of Liability.
Anything in this Agreement to the contrary notwithstanding, the liability of
Buyer Parent and Buyer to indemnify Seller Indemnitees pursuant to Section
10.05(b) against any Damages sustained by reason of any Buyer Claim thereunder
for a breach of any representation or warranty of Buyer Parent or Buyer:
(a) shall be limited to Buyer Claims as to which any of Seller
Indemnitees has given Buyer Parent or Buyer written notice thereof on or prior
to the date, if any, on which survival of such representation or warranty
terminates pursuant to Section 10.02, whether or not any Damages have then
actually been sustained; and
(b) when taken together with any damages sustained by reason of
any claim under Section 10.05(b) of the Brokerage Asset Purchase Agreement, of
not exceed the sum of (i) the Purchase Price and (ii) the original principal
amount of the Broker Loans.
10.07 Conditions of Indemnification. The obligations and
liabilities of Seller Parent, Company, Buyer Parent and Buyer with respect to
Buyer Claims or Seller Claims (collectively, "Claims") made by third parties
shall be subject to the following terms and conditions:
(a) The indemnified party shall give the indemnifying party
prompt notice of any such Claim, and the indemnifying party shall have the
right to undertake the defense thereof by representatives chosen by it;
(b) If the indemnifying party, within a reasonable time after
notice of any such Claim, fails to defend the indemnified party against which
such Claim has been asserted, the indemnified party shall (upon further notice
to the indemnifying party) have the right to undertake the defense, compromise
or settlement of such Claim on behalf of and for the account and risk of the
indemnifying party subject to the right of the indemnifying party to assume
the defense of such Claim at any time prior to settlement, compromise or final
determination thereof; and
(c) Anything in this Article X to the contrary notwithstanding,
(i) if there is a reasonable probability that a Claim may materially and
adversely affect the indemnified party other than as a result of money damages
or other money payments, the indemnified party shall have the right, at its
own cost and expense, to defend, compromise or settle such Claim, and (ii) the
indemnifying party shall not, without the written consent of the indemnified
party, settle or compromise any Claim or consent to the entry of any judgment
in any manner that admits wrongdoing or any violation of law or which does not
include as an unconditional term thereof the giving by the claimant or the
plaintiff to the indemnified party a release from all liability in respect to
such Claim.
10.08 Cooperation. If requested by the indemnifying party, the
indemnified person shall cooperate with the indemnifying party and its counsel
in contesting any Claim which the indemnifying party elects to contest or, if
appropriate, in making any counterclaim against the person asserting the Claim
or any cross-complaint against any person and further agrees to take such
other action as reasonably may be requested by an indemnifying party to reduce
or eliminate any loss or expense for which the indemnifying party would have
responsibility, but the indemnifying party shall reimburse the indemnified
person for any expenses incurred by it in so cooperating or acting at the
request of the indemnifying party.
10.09 Other Indemnification Provisions.
(a) The amount of Damages incurred by any indemnified party
shall be reduced by and to the extent that such indemnified party shall have
received proceeds under insurance policies, risk sharing pools, or similar
arrangements specifically as a result of, and in compensation for, the subject
matter of the Claim in respect of such Damages, net of any increased premiums
resulting from or similar costs arising out of the making of such claims
against such insurance or other arrangements.
(b) The determination of the amount of Damages sustained by any
indemnified party in respect of any Claim shall not be reduced by Tax
benefits, if any, resulting from or relating to such Claim.
ARTICLE XI
MISCELLANEOUS
-------------
11.01 Further Assurances. From time to time after the Applicable
Closing Date, at the request of the other party hereto and at the expense of
the party so requesting, Seller and Buyer shall execute and deliver to such
requesting party such documents and take such other action as such requesting
party may reasonably request in order to consummate more effectively the
transactions contemplated hereby.
11.02 Notices. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given if delivered
personally, by mail (certified or registered mail, return receipt requested)
or by facsimile transmission (receipt of which is confirmed):
(a) If to Buyer Parent or Buyer, to:
Xxxxxxxxxx Xxxxx Holdings Inc.
X.X. Xxx 0000, Xxxxx 0000
00 Xxxxxxxx Xxxxxx Xxxx
Xxxxxxx, Xxxxxxx X0X 0X0
XXXXXX
Attention: X.X. Xxxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Email: xxxxxxxxxx@xxxxxxxxxx.xxx
With a copy to:
Xxxxxx Xxxxxx Gervais LLP
Scotia Plaza, Suite 4400
00 Xxxx Xxxxxx Xxxx
Xxxxxxx, Xxxxxxx X0X 0X0
XXXXXX
Attention: X. Xxxx Oughtred, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Email: xxxxxxxxx@xxxxxxxxx.xxx
and
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx Xxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Email: xxxxxxx@xxxxxxx.xxx
(b) If to Seller Parent or Company, to:
Canadian Imperial Bank of Commerce
Commerce Court West
Toronto, Ontario X0X 0X0
XXXXXX
Attention: Xxxxx XxXxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Email: xxxxxx.xxxxxxxxx@xxxx.xxx
With a copy to:
Mayer, Brown, Xxxx & Maw
0000 Xxxxxxxx
Xxx Xxxx, XX 00000-0000
Attention: Xxxxx X. Xxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Email: xxxxxxxx@xxxxxxxxxxxxxx.xxx
and
CIBC Legal and Compliance
000 Xxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx Xxxxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Email: xxxxxxx.xxxxxxxxx@xx.xxxx.xxx
or to such other person or address as any party shall specify by notice in
writing to the other party. All such notices, requests, demands, waivers and
communications shall be deemed to have been received on the date on which so
hand-delivered, on the third business day following the date on which so
mailed and on the date on which faxed and confirmed, except for a notice of
change of address, which shall be effective only upon receipt thereof.
11.03 Bulk Sales Laws. Each party hereto hereby waives compliance by
Buyer and Seller with the provisions of the "bulk sales," "bulk transfer" and
similar laws of any state. Seller shall indemnify Buyer against all losses
incurred by Buyer or any of its officers, directors or Affiliates as a result
of such failure to comply.
11.04 Entire Agreement. This Agreement, the Buyer Disclosure
Schedule, the Seller Disclosure Schedule, the Confidentiality Agreement, the
Brokerage Asset Purchase Agreement, the Ancillary Agreements and the exhibits,
schedules and other documents referred to herein which form a part hereof
contain the entire understanding of the parties hereto with respect to their
subject matter. This Agreement supersedes all prior agreements and
understandings, oral and written, with respect to its subject matter.
11.05 Severability. Should any provision of this Agreement for any
reason be declared invalid or unenforceable, such decision shall not affect
the validity or enforceability of any of the other provisions of this
Agreement, which other provisions shall remain in full force and effect and
the application of such invalid or unenforceable provision to persons or
circumstances other than those as to which it is held invalid or unenforceable
shall be valid and be enforced to the fullest extent permitted by law.
11.06 Binding Effect; Assignment. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the
parties hereto and their respective heirs, executors, successors and permitted
assigns, neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned, directly or indirectly, by (i) Buyer
or Buyer Parent without the consent of Seller and (ii) Seller, without the
prior written consent of Buyer Parent, except that each party may assign its
rights, interests and obligation, without the written consent of the other
parties or to any wholly-owned subsidiary; provided, that no assignment shall
limit or affect the assignor's obligations hereunder.
11.07 No Third-Party Beneficiaries. This Agreement is not intended
and shall not be deemed to confer upon or give any person except the parties
hereto and their respective successors and permitted assigns any remedy,
claim, liability, reimbursement, cause of action or other right under or by
reason of this Agreement.
11.08 Counterparts. This Agreement may be executed simultaneously in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11.09 Headings. The article and section headings contained in this
Agreement are solely for the purpose of reference, are not part of the
agreement of the parties and shall not in any way affect the meaning or
interpretation of this Agreement.
11.10 Governing Law; Jurisdiction.
(a) This Agreement shall be construed, performed and enforced
in accordance with, and governed by, the laws of the State of New York,
without giving effect to the principles of conflicts of laws thereof.
(b) Each party irrevocably submits to the exclusive
jurisdiction of (i) the Supreme Court of the State of New York, New York
County, and (ii) the United States District Court for the Southern District of
New York, for the purposes of any suit, action or other proceeding arising out
of this Agreement or any transaction contemplated hereby. Each party agrees to
commence any action, suit or proceeding relating hereto either in the United
States District Court for the Southern District of New York or if such suit,
action or other proceeding may not be brought in such court for reasons of
subject matter jurisdiction, in the Supreme Court of the State of New York,
New York County. Each party irrevocably and unconditionally waives any
objection to the laying of venue of any action, suit or proceeding arising out
of this Agreement or the transactions contemplated hereby in (A) the Supreme
Court of the State of New York, New York County, or (B) the United Sates
District Court for the Southern District of New York, and hereby further
irrevocably and unconditionally waives and agrees not to plead or claim in any
such court that any such action, suit or proceeding brought in any such court
has been brought in an inconvenient forum.
11.11 Waiver of Jury Trial. Each party hereby waives its
respective rights to a jury trial of any claim or cause of action based upon
or arising out of this agreement or any dealings between them relating to the
subject matter of this agreement and the relationship that is being
established. The scope of this waiver is intended to be all-encompassing of
any and all disputes that may be filed in any court and that relate to the
subject matter of this agreement, including, without limitation, contract
claims, tort claims, breach of duty claims, and all other common law and
statutory claims. The parties acknowledge that this waiver is a material
inducement to enter into a business relationship, that each party has already
relied on the waiver in entering into this agreement and that each party will
continue to rely on the waiver in their related future dealings. Each party
further warrants and represents it has reviewed this waiver with its legal
counsel, and that each knowingly and voluntarily waives its jury trial rights
following consultation with legal counsel. This waiver is irrevocable, meaning
that it may not be modified either orally or in writing, and the waiver shall
apply to any subsequent amendments, renewals, supplements or modifications to
this agreement or to any other documents or agreements relating to the
transaction contemplated hereby. In the event of litigation, this agreement
may be filed as a written consent to a trial by the court.
11.12 Specific Performance. Each of the parties hereto acknowledges
and agrees that in the event of any breach of this Agreement, each
non-breaching party would be irreparably and immediately harmed and could not
be made whole by monetary damages. It is accordingly agreed that the parties
hereto (a) will waive, in any action for specific performance, the defense of
adequacy of a remedy at law and (b) shall be entitled, in addition to any
other remedy to which they may be entitled at law or in equity, to compel
specific performance of this Agreement in any action instituted hereunder.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
XXXXXXXXXX XXXXX HOLDINGS INC.
/s/ X. X. Xxxxxxxxx
--------------------------------------------
Name: X. X. Xxxxxxxxx
Title: Chief Executive Officer and Chairman
of the Board
XXXXXXXXXX & CO. INC.
/s/ X. X. Xxxxxxxxx
--------------------------------------------
Name: X. X. Xxxxxxxxx
Title: Chief Executive Officer and Chairman
of the Board
CIBC WORLD MARKETS CORP.
/s/ Xxxxxxx Xxxxxxxxx
--------------------------------------------
Name: Xxxxxxx Xxxxxxxxx
Title: Managing Director
CANADIAN IMPERIAL BANK OF COMMERCE
/s/ Xxxxxxx Xxxxxxxxx
--------------------------------------------
Name: Xxxxxxx Xxxxxxxxx
Title: Senior Vice President
Schedule I
Acquired Assets at First Closing
--------------------------------
[To come.]
Schedule II
Acquired Assets at Second Closing
---------------------------------
[To come.]
Schedule III
Acquired Assets at Final Closing
--------------------------------
[To come.]
Schedule IV
Purchased Investments
---------------------
-------------------------------------------------------------- ----------------------------------------------
Fund Name Transfer to Xxxxxxxxxx
-------------------------------------------------------------- ----------------------------------------------
Catalyst $ 400,000
-------------------------------------------------------------- ----------------------------------------------
Emerging Markets $ 1,000,000
-------------------------------------------------------------- ----------------------------------------------
Contrarian
-------------------------------------------------------------- ----------------------------------------------
Value
-------------------------------------------------------------- ----------------------------------------------
Augusta, Troon, Sawgrass and Oppenheimer Advisers $ 1,500,000
-------------------------------------------------------------- ----------------------------------------------
COPEP $ 1,070,000
-------------------------------------------------------------- ----------------------------------------------
Tech Partners
-------------------------------------------------------------- ----------------------------------------------
Whistler Fund
-------------------------------------------------------------- ----------------------------------------------
Wynstone
-------------------------------------------------------------- ----------------------------------------------
Xanthus
-------------------------------------------------------------- ----------------------------------------------
Alyeska
------------------------------------------------------------- ----------------------------------------------
Xxxxxx
-------------------------------------------------------------- ----------------------------------------------
Global Tech
-------------------------------------------------------------- ----------------------------------------------
Deauville
-------------------------------------------------------------- ----------------------------------------------
Sawgrass ___________
-------------------------------------------------------------- ----------------------------------------------
$ 3,970,000
===========
-------------------------------------------------------------- ----------------------------------------------
Schedule V
Seller Investments
------------------
------------------------------------------------------------ ------------------------------------------------
Fund Name Seed Capital Invested
------------------------------------------------------------ ------------------------------------------------
Catalyst $ 400,000
------------------------------------------------------------ ------------------------------------------------
Emerging Markets $ 4,000,000
------------------------------------------------------------ ------------------------------------------------
Contrarian $ 5,000,000
------------------------------------------------------------ ------------------------------------------------
Value $ 450,000
------------------------------------------------------------ ------------------------------------------------
Augusta, Troon, Sawgrass and Oppenheimer Advisers $ 1,500,000
------------------------------------------------------------ ------------------------------------------------
COPEP $ 1,070,000
------------------------------------------------------------ ------------------------------------------------
Tech Partners $ 1,200,000
------------------------------------------------------------ ------------------------------------------------
Whistler Fund $ 5,600,000
------------------------------------------------------------ ------------------------------------------------
Wynstone $ 3,000,000
------------------------------------------------------------ ------------------------------------------------
Xanthus $ 1,000,000
------------------------------------------------------------ ------------------------------------------------
Alyeska $ 5,800,000
------------------------------------------------------------ ------------------------------------------------
Xxxxxx $ 700,000
------------------------------------------------------------ ------------------------------------------------
Global Tech $ 1,000,000
------------------------------------------------------------ ------------------------------------------------
Deauville $ 2,900,000
------------------------------------------------------------ ------------------------------------------------
Sawgrass $ 1,200,000
-----------
------------------------------------------------------------ ------------------------------------------------
$ 34,820,000
=============
------------------------------------------------------------ ------------------------------------------------