AGREEMENT AND PLAN OF MERGER
BY AND AMONG
THE XXXXXXX COMPANIES, INC.,
PMC INTERNATIONAL, INC.,
THE ENVESTNET GROUP, INC.
AND
ENVESTNET ACQUISITION CORP.
DATED AS OF JULY 12, 2001
SECTION 1.A DEFINITIONS 1
ARTICLE I. THE MERGER 10
Section 1.1. The Merger 10
Section 1.2. Effective Time of the Merger 11
ARTICLE II. THE SURVIVING CORPORATION 11
Section 2.1. Certificate of Incorporation
of the Surviving Corporation 11
Section 2.2. By-Laws of the Surviving Corporation 11
Section 2.3. Directors and Officers
of the Surviving Corporation 11
ARTICLE III. CONVERSION OF SHARES 11
Section 3.1. Merger Consideration 11
Section 3.2. Closing of Company Transfer Books 12
Section 3.3. Closing 12
Section 3.4. Instruments of Transfer;
Payment of Merger Consideration 12
ARTICLE IV. REPRESENTATIONS AND WARRANTIES
OF THE COMPANY AND THE SHAREHOLDER 13
Section 4.1. Organization and Related Matters 13
Section 4.2. Authority; No Violation 14
Section 4.3. Consents and Approvals 14
Section 4.4. Capitalization 14
Section 4.5. Regulatory Documents 15
Section 4.6. Financial Statements 16
Section 4.7. Ineligible Persons 16
Section 4.8. Contracts 17
Section 4.9. Related Party Transactions 17
Section 4.10. Environmental Matters 18
Section 4.11. No Broker 18
Section 4.12. Legal Proceedings 18
Section 4.13. Compliance with Applicable Law 18
Section 4.14. Insurance 19
Section 4.15. Labor and Employment Matters 19
Section 4.16. Employee Benefit Plans; ERISA 20
Section 4.17. Technology and Intellectual Property 22
Section 4.18. Taxes and Tax Returns 22
Section 4.19. No Adverse Change 24
Section 4.20. Real Property 24
Section 4.21. Accounts Receivable 24
Section 4.22. Title to Assets 25
Section 4.23. Purchase for Investment 25
Section 4.24. Accuracy of Warranties 25
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF BUYER 25
Section 5.1. Organization and Related Matters 25
Section 5.2. Authority; No Violation 25
Section 5.3. Consents and Approvals 26
Section 5.4. Capitalization 26
Section 5.5. Regulatory Documents 27
Section 5.6. Financial Statements 28
Section 5.7. Contracts 28
Section 5.8. Subsidiaries 28
Section 5.9. Legal Proceedings 28
Section 5.10. Ineligible Persons 29
Section 5.11. No Broker 29
Section 5.12. Compliance with Applicable Law 29
Section 5.13. Insurance 30
Section 5.14. Labor and Employment Matters 30
Section 5.15. Taxes 30
Section 5.16. Environmental Matters 31
Section 5.17. Employee Benefit Plans; ERISA 32
Section 5.18. Technology and Intellectual Property 34
Section 5.19. No Adverse Change 34
Section 5.20. Real Property 34
Section 5.21. Related Party Transactions 34
Section 5.22. Accounts Receivable 35
Section 5.23. Title to Assets 35
Section 5.24. Accuracy of Warranties 35
ARTICLE VI. COVENANTS 35
Section 6.1. Conduct of Business by the Companies 35
Section 6.2. Elimination of Intra-Company
Payables and Indebtedness 38
Section 6.3. Debt Adjustment 38
Section 6.4. Payment of Demand Note 38
Section 6.5. Tax Covenants 39
Section 6.6. Advisory Agreement Consents 40
Section 6.7. Maintenance of Records 40
Section 6.8. Employees, Employee Benefits 40
Section 6.9. Further Assurances 42
Section 6.10. Efforts of Parties to Close 42
Section 6.11. Confidentiality and Announcements 42
Section 6.12. Regulatory Matters; Third Party Consents 43
Section 6.13. Notification of Certain Matters 44
Section 6.14. Expenses 44
Section 6.15. No Internet-Based WRAP Program 44
Section 6.16. Third Party Proposals 45
Section 6.17. Disposition of Merger Consideration 45
Section 6.18. Voting of Shares 45
Section 6.19. Positive Current Ratio 45
Section 6.20. Assignment of PCS Contracts 46
Section 6.21. Elimination of Encumbrances 46
Section 6.22. License to Software 46
Section 6.23. Buyer Duty to Notify 46
ARTICLE VII. CONDITIONS TO CONSUMMATION OF THE MERGER 46
Section 7.1. Conditions to Buyer's Obligations 46
Section 7.2. Conditions to the Company's
and the Shareholder's Obligations 47
Section 7.3. Mutual Conditions 48
ARTICLE VIII. INDEMNIFICATION 48
Section 8.1. Survival of Representations,
Warranties and Covenants 48
Section 8.2. Obligations of the Shareholder 48
Section 8.3. Obligations of Buyer 49
Section 8.4. Procedure 49
Section 8.5. Survival of Indemnity 51
Section 8.6. Minimum Threshold 51
Section 8.7. Maximum Indemnification 51
Section 8.8. Subrogation 51
Section 8.9. Adjustments to Indemnification Obligations 51
Section 8.10. Set-Off 52
Section 8.11. Remedies 52
ARTICLE IX. TERMINATION 52
Section 9.1. Termination 52
Section 9.2. Survival After Termination 53
ARTICLE X. MISCELLANEOUS 53
Section 10.1. Amendments; Waiver 53
Section 10.2. Entire Agreement 53
Section 10.3. Interpretation 53
Section 10.4. Severability 54
Section 10.5. Notices 54
Section 10.6. Binding Effect; Persons Benefiting; No Assignment 55
Section 10.7. Counterparts 55
Section 10.8. Governing Law 55
Section 10.9. Specific Performance 55
Section 10.10. WAIVER OF JURY TRIAL AND PUNITIVE DAMAGES 55
Section 10.11. Disclosure Schedules 56
LIST OF EXHIBITS AND SCHEDULES
Exhibits
--------
Exhibit A Certificate of Merger
Exhibit B Demand Note
Exhibit C Pipeline Intermediaries
Exhibit D One Year Note
Exhibit E PCS Contracts
Exhibit F Registration Rights Agreement
Exhibit G Services Agreements
Exhibit H Original Stockholders' Agreement
Exhibit I Certain Terms of Stockholders' Agreement
Exhibit J Two Year Note
Exhibit K Opinion of Xxxxxxx & Xxxxx LLP
Exhibit L Opinion of Xxxxxxx, Carton & Xxxxxxx
Company Schedules
-----------------
Schedule 4.1 Organization and Related Matters
Schedule 4.2(b) No Violation
Schedule 4.3 Required Consents
Schedule 4.4 Stock Ownership
Schedule 4.5 Regulatory Documents
Schedule 4.6 Financial Statements
Schedule 4.7 Ineligible Persons
Schedule 4.8 Contracts
Schedule 4.9 Related Party Transactions
Schedule 4.10 Environmental Matters
Schedule 4.11 No Broker
Schedule 4.12 Legal Proceedings
Schedule 4.13 Compliance with Applicable Law
Schedule 4.14 Insurance Policies
Schedule 4.15 Labor and Employment Matters
Schedule 4.16(a) Company Plans
Schedule 4.16(h) Employee Benefit Effects of Transaction
Schedule 4.16(j) Unaccrued Employee Obligations
Schedule 4.17 Technology and Intellectual Property
Schedule 4.18(b) Taxes
Schedule 4.18(g) Adjusted Basis of Assets
Schedule 4.18(h) Adjusted Tax Basis
Schedule 4.18(j) NOLs
Schedule 4.19 No Adverse Change
Schedule 4.20 Real Property Leases
Schedule 4.21 Accounts Receivable
Schedule 4.22 Encumbrances
Schedule 4.23 Purchase for Investment
Schedule 4.24 Accuracy of Warranties
Buyer Schedules
---------------
Schedule 5.2(b) No Violation
Schedule 5.3 Required Consents
Schedule 5.5(a) Investment Adviser Registration
Schedule 5.4 Equity Commitments
Schedule 5.8 Subsidiaries
Schedule 5.9 Legal Proceedings
Schedule 5.12(a) Permits
Schedule 5.12(b) Governmental Proceedings
Schedule 5.12(c) ERISA Asset Management
Schedule 5.13 Insurance Policies
Schedule 5.14 Labor and Employment Matters
Schedule 5.15 Taxes
Schedule 5.17(a) Buyer Plans
Schedule 5.17(h) Employee Benefit Effects of Transaction
Schedule 5.17(j) Unaccrued Employee Obligations
Schedule 5.18(a) Intellectual Property
Schedule 5.18(b) IP Ownership
Schedule 5.19 No Adverse Change
Schedule 5.20 Real Property Leases
Schedule 5.21(a) Related Party Indebtedness
Schedule 5.21(c) Related Party Contracts
Schedule 5.22 Accounts Receivable
Schedule 5.23 Encumbrances
Other Schedules
---------------
Schedule 6.1 Conduct of Business
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of July 12, 2001, by and among The
EnvestNet Group, Inc., a Delaware corporation ("Buyer"), EnvestNet Acquisition
Corp., a Colorado corporation ("Transitory Subsidiary"), PMC International,
Inc., a Colorado corporation (the "Company," and collectively with Portfolio
Management Consultants, Inc., a Colorado corporation ("PMC"), and Portfolio
Brokerage Services, Inc., a Colorado corporation ("PBS"), the "Companies"), and
The Xxxxxxx Companies, Inc. (the "Shareholder").
WHEREAS, this Agreement contemplates a transaction in which Buyer will
acquire all of the outstanding capital stock of the Company for Buyer Common
Stock through a reverse subsidiary merger of the Transitory Subsidiary with and
into the Company (the "Merger");
WHEREAS, the Merger has been approved by the Boards of Directors of Buyer,
Transitory Subsidiary and the Company, and by the Shareholder;
WHEREAS, Shareholder is the owner of the Shares (defined below) of the
Company, which Shares constitute all of the issued and outstanding shares of the
capital stock of the Company;
WHEREAS, the parties intend that the Merger qualify as a tax-free
reorganization within the meaning of Section 368(a) of the Internal Revenue Code
of 1986, as amended (together with the Treasury regulations thereunder); and
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein and
subject to the conditions and other terms herein set forth, the parties hereto
hereby agree as follows:
Section 1.A Definitions. For all purposes of this Agreement (as defined
-----------
below), the following terms shall have the respective meanings set forth in this
Section 1.A (such definitions to be equally applicable to both the singular and
plural forms of the terms herein defined):
"Acceptable Payables" shall have the meaning set forth in Section 6.2.
"Acquisition Proposal" shall have the meaning set forth in Section 6.16.
"Advisers Act" shall mean the Investment Advisers Act of 1940, as amended,
and the applicable written rules and regulations of the SEC thereunder.
"Advisory Agreement" shall mean any legally binding investment advisory or
investment administration agreement entered into by PMC for the purpose of
providing investment advisory or investment administration services to a client.
"Advisory Intermediary" shall mean an investment adviser, broker-dealer or
other financial institution that has contracted with PMC to introduce clients to
PMC.
"Affected Employee" shall have the meaning set forth in Section 6.8(a).
"Affiliate" shall mean any individual, partnership, corporation, entity or
other person that directly, or indirectly through one or more intermediaries,
controls or is controlled by, or is under common control with, the person
specified.
"Agreement" shall mean this Agreement among the Shareholder, the Company,
the Transitory Subsidiary and Buyer as such may hereafter be amended.
"Applicable Law" shall mean any written and effective domestic or foreign
federal, state or local statute, law, ordinance, rule, administrative
interpretation, regulation, order, writ, injunction, directive, judgment,
decree, policy, guideline or other requirement (including those of the NASD)
applicable to the Shareholder, the Companies, Buyer or any of their respective
Affiliates, properties, assets, officers, directors, employees or agents, as the
case may be.
"Business Day" shall mean any day that banks in the State of Colorado are
generally open for regular banking business.
"Buyer" shall have the meaning set forth on the first page hereof and
includes any direct or indirect successor or assign.
"Buyer Balance Sheet" shall have the meaning set forth in Section 5.6.
"Buyer Common Stock" shall mean the common stock, par value $0.001 per
share, of Buyer.
"Buyer Financial Statements" shall have the meaning set forth in Section
5.6.
"Buyer Intellectual Property" shall have the meaning set forth in
Section 5.18.
"Buyer Material Adverse Change" shall mean an adverse change in, or the
occurrence of an event which has resulted or could result in an adverse change
in, the operations, properties (whether tangible or intangible), profits or
condition (financial or other) of Buyer or Buyer's business, in excess of
$1,000,000.
"Buyer Material Adverse Effect" shall mean any matter or matters affecting
Buyer or any of its Affiliates that has or have a material adverse effect on the
business, assets, financial condition or results of operations of Buyer and its
Subsidiaries taken as a whole.
"Buyer Plan" shall have the meaning set forth in Section 5.17(a).
"Buyer 401(k) Plan" shall have the meaning set forth in Section 6.8(a).
"Buyer Stock Option Plan" shall mean Buyer's 2000 Stock Incentive Plan.
"Buyer Preferred Stock" shall mean the preferred stock, par value $0.001
per share, of Buyer.
"Buyer Welfare Plans" shall have the meaning set forth in Section 6.8(b).
"CBCA" shall have the meaning set forth in Section 1.1.
"Certificate of Merger" shall mean that certain Certificate of Merger
meeting the requirements of Section 0-000-000 of the CBCA, which Certificate of
Merger shall be in the form attached hereto as Exhibit A.
"Closing" shall mean the completion of the transactions contemplated by
Section 3.3 of this Agreement and shall be the same time as the Effective Time.
"Closing Date" shall mean the date of the Closing.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Common Stock Equivalent Price" shall be an amount determined by dividing
the total consideration paid to EnvestNet in the EnvestNet Financing, before
deduction of any fees, commissions or expenses paid to placement agents and
others in connection with the EnvestNet Financing, by the total number of Pro
Forma Shares of Common Stock of the Company acquired by investors in the
EnvestNet Financing.
"Company" and "Companies" shall have the meaning set forth in the Recitals
to this Agreement.
"Company Balance Sheet" shall have the meaning set forth in Section 4.6.
"Company Financial Statements" shall have the meaning set forth in Section
4.6.
"Company 401(k) Plan" shall have the meaning set forth in Section 6.8(a).
"Company Intellectual Property" shall have the meaning set forth in Section
4.17(a).
"Company Material Adverse Change" shall mean an adverse change in, or the
occurrence of an event which has resulted or could result in an adverse change
in, the operations, properties (whether tangible or intangible), profits or
condition (financial or other) of the Companies or the Companies' business, in
excess of $1,000,000.
"Company Material Adverse Effect" shall mean any matter or matters
affecting the Companies or any of their Affiliates that has or have a material
adverse effect on the business, assets, financial condition or results of
operations of the Companies and their Subsidiaries taken as a whole.
"Company Plan" shall have the meaning set forth in Section 4.16(a).
"Confidentiality Agreement" shall mean that certain letter agreement, dated
January 5, 2001, relating to protection of confidential information executed by
Buyer and the Shareholder.
"Contracts" shall have the meaning set forth in Section 4.8.
"Current Ratio" shall mean the current assets of a Person (cash, prepaid
expenses and accounts receivable) minus the current liabilities of a Person
(accounts payable and other current obligations); provided, however, that the
-------- -------
Current Ratio of the Company shall be measured immediately following the
Effective Time and shall not include any obligations relating to the Demand Note
or the Notes, even if recorded as a current liability.
"Debt Adjustment Event" shall mean a determination by the Company, in
accordance with Section 6.3, that there is a Permitted Debt Adjustment Amount.
"Delivered Run Rate Revenue" shall mean the annualized net revenue during
the Run Rate Period from all PMC Customers who are PMC Customers on the
thirtieth (30th) day following the Closing Date and who have or have been deemed
to consent to the assignment of their advisory agreement as a result of the
Merger.
"Demand Note" shall mean a Promissory Note, payable to the Shareholder,
dated the date of Closing, in the principal amount of $3,500,000 and in the form
attached hereto as Exhibit B, which Demand Note replaces the promissory notes
dated as of March 31, 1999 which the Company has executed in favor of the
Shareholder.
"Defined Benefit Plan" shall have the meaning set forth in Section 4.16(b).
"Effective Time" shall mean the effective time of the Merger contemplated
by Section 1.2 of this Agreement and shall be the same time as the Closing.
"Encumbrance" shall mean any lien, pledge, security interest, claim,
charge, easement, limitation, commitment, encroachment, restriction or
encumbrance of any kind or nature whatsoever.
"EnvestNet Financing" shall mean an equity financing by Buyer sufficient to
raise gross proceeds of at least $12,000,000.
"Environmental and Health Laws" shall mean all written applicable federal,
state and local laws, rules, regulations, orders, guidelines, ordinances and
requirements relating to pollution or protection of the environment, and public
health and safety, including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C.
SectionSection9601 et seq., the Resource Conservation and Recovery Act of 1976,
42 U.S.C. SectionSection6901 et seq., the Emergency Planning and Community
Right-to-Know Act, 42 U.S.C. SectionSection11001 et seq., the Clean Air Act, 42
U.S.C. SectionSection7401 et seq., the Federal Water Pollution Control Act, 33
U.S.C. SectionSection1251 et seq., the Toxic Substances Control Act, 15 U.S.C.
SectionSection2601 et seq., the Safe Drinking Water Act, 42 U.S.C.
SectionSection300f et seq., and the Hazardous Materials Transportation Act, 49
U.S.C. SectionSection1801, each as amended, and any regulations, rules,
ordinances adopted or publications promulgated pursuant thereto.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended, and the applicable written rules, regulations and class exemptions of
the Department of Labor thereunder.
"ERISA Affiliate" shall mean any entity, trade or business that is a member
of a group described in Section 414(b), (c), (m) or (o) of the Code or Section
4001(b)(1) of ERISA that includes any of the Companies, or that is a member of
the same "controlled group" as any of the Companies pursuant to Section
4001(a)(14) of ERISA.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
and the applicable written rules and regulations of the SEC thereunder.
"GAAP" shall mean generally accepted accounting principles as used in the
United States of America as in effect at the time any applicable financial
statements were prepared or any act requiring the application of GAAP was
performed.
"Governmental Authority" shall mean any government, any state or other
political subdivision thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government,
including the SEC or any other government authority, agency, department, board,
commission or instrumentality of the United States, any State of the United
States or any political subdivision thereof, and any court, tribunal or
arbitrator(s) of competent jurisdiction, and any governmental or
non-governmental self-regulatory organization, agency or authority (including
the NASD).
"Indemnifiable Claim" shall mean any Loss for which a party is entitled to
indemnification under this Agreement.
"Indemnified Party" shall mean the party entitled to the benefits of
indemnification hereunder.
"Indemnifying Party" shall mean the party obligated to provide
indemnification hereunder.
"Investment Company Act" shall mean the Investment Company Act of 1940, as
amended, and the applicable written rules and regulations of the SEC thereunder.
"IRS" shall mean the Internal Revenue Service.
"Knowledge," in the case of the Companies or the Shareholder, shall mean
actual knowledge of the officers and senior management employees listed at the
beginning of Schedule 4.2(b), as well as Knowledge of such matters as such
persons should reasonably be expected to have in the ordinary exercise of their
duties, and "Knowledge," in the case of Buyer, shall mean actual knowledge of
officers and senior management employees listed at the beginning of Schedule
5.2(b), as well as Knowledge of such matters as such persons should reasonably
be expected to have in the ordinary exercise of their duties.
"Loss" shall mean any and all claims, losses, liabilities, costs,
penalties, fines and expenses (including reasonable expenses for attorneys,
accountants, consultants and experts), damages, obligations to third parties,
expenditures, proceedings, judgments, awards, settlements or demands that are
imposed upon or otherwise incurred, suffered or sustained by the relevant party.
"Merger" shall have the meaning set forth in the Recitals to this
Agreement.
"Merger Consideration" shall mean a number of shares of Buyer Common Stock
determined by dividing the Share Consideration Amount by the number that is the
Common Stock Equivalent Price in the EnvestNet Financing.
"Multiemployer Plan" shall have the meaning set forth in Section 4.16(b).
"Multiple Employer Plan" shall have the meaning set forth in Section
4.16(b).
"NASD" shall have the meaning set forth in Section 4.5(a).
"Net book value" shall mean stockholders' equity as determined in
accordance with GAAP.
"New Advisory Agreement" shall mean an Advisory Agreement with a client
that (i) was introduced to PMC by an intermediary listed on Exhibit C, and
(ii) did not have assets under management with PMC prior to the last day of the
Run Rate Period.
"New Annualized Revenue" shall mean the annualized revenue obtained by
multiplying (i) assets under management or administration relating to New
Advisory Agreements, determined based on the amount of such assets under
management or administration existing on the date which is the one-year
anniversary of the Closing Date, by (ii) the weighted average annual management
or administration fee under the applicable New Advisory Agreements.
"New Annualized Revenue Excess" shall mean the amount, if any, by which New
Annualized Revenue exceeds the New Revenue Hurdle.
"New Revenue Hurdle" shall mean the amount, if any, by which $9,658,000
exceeds the Delivered Run Rate Revenue.
"Non-Third Party Claim" shall have the meaning set forth in Section 8.4(e).
"Notes" shall mean the One Year Note and the Two Year Note.
"One Year Note" shall mean a Promissory Note in the aggregate principal
amount of $1,500,000 with accrued interest paid quarterly at an annual rate of
10% and principal due one (1) year from the Closing Date, which One Year Note
shall be (i) in the form attached hereto as Exhibit D and (ii) a replacement for
the Promissory Note dated as of January 31, 2001 which the Company has executed
in favor of the Shareholder.
"Original Stockholders' Agreement" shall mean that certain Stockholders'
Agreement, dated as of May 16, 2000, among the Company, holders of Buyer Common
Stock and holders of Series A Preferred.
"PBS" shall have the meaning set forth in the Recitals to this Agreement.
"PCS Client Contracts" shall mean the Advisory Agreements entered into or
to be entered into between X.X. Xxxxxxx and Company (or a predecessor) and
clients of financial intermediaries with whom X.X. Xxxxxxx and Company has
executed or will execute PCS Intermediary Contracts.
"PCS Contracts" shall mean the PCS Client Contracts and the PCS
Intermediary Contracts. The PCS Client Contracts and PCS Intermediary Contracts
in existence on the date hereof are listed on Exhibit E hereto.
"PCS Intermediary Contracts" shall mean the agreements between X.X. Xxxxxxx
and Company (or a predecessor) and financial intermediaries unaffiliated with
the Shareholder pursuant to which Shareholder or its affiliates provide separate
account management services to the clients of such financial intermediaries.
"Permitted Debt Adjustment Amount" shall mean the amount, if any, by which
the product of (i) 1.1 and (ii) the Run Rate Revenue Reduction Amount, if any,
EXCEEDS the product of (i) 1.1 and (ii) the New Annualized Revenue Excess.
"Permits" shall have the meaning set forth in Section 4.13(a).
"Person" shall mean any individual, corporation, company, partnership
(limited or general), joint venture, association, trust or other entity or
similar contractual arrangement or relationship.
"PMC" shall have the meaning set forth in the Recitals to this Agreement.
"PMC Customer" shall mean an advisory, administrative or other client of
PMC.
"Pro Forma Shares of Common Stock of the Company" shall mean the number of
shares of Common Stock of the Company issued in the EnvestNet Financing plus the
number of such shares issuable upon conversion of convertible securities issued
in the EnvestNet Financing.
"Qualified Plan" shall have the meaning set forth in Section 4.16(d).
"Records" shall mean all written records and original documents (and copies
thereof) in the Companies' permanent possession as of the Closing Date (a) which
pertain to or are utilized by the Companies to administer, reflect, monitor,
evidence or record information respecting the business or conduct of the
Companies, or (b) necessary or appropriate to comply with any Applicable Law,
including records kept or filed in accordance with any Securities Laws and shall
include in the case of (a) and (b) above, all such records maintained on
electronic or magnetic media, or in the electronic data base system of the
Companies.
"Registration Rights Agreement" shall mean that certain Registration Rights
Agreement to be executed by Buyer and the Shareholder in the form attached
hereto as Exhibit F.
"Regulatory Documents" shall mean, with respect to a Person, all forms,
reports, registration statements, schedules and other documents filed, or
required to be filed since January 1, 1998 by such Person pursuant to the
Securities Laws; provided, however, that with respect to Buyer, "Regulatory
-------- -------
Documents" shall not mean any Form BD or other applications that Buyer or an
Affiliate may have filed with the SEC or the NASD, which Form BD and other
applications have been withdrawn.
"Right" shall have the meaning set forth in Section 6.1(ii).
"Run Rate Period" shall mean the three month period ending on the last full
month prior to the Closing Date.
"Run Rate Revenue Reduction Amount" shall mean an amount equal to the
amount, if any, by which (i) the product of 0.95 and the annualized net revenue
during the Run Rate Period from all PMC Customers EXCEEDS (ii) the annualized
net revenue during the Run Rate Period from all PMC Customers who (a) have
consented to the assignment of their advisory agreement by the Closing Date or
(b) are PMC Customers on the thirtieth (30th) day following the Closing Date and
have been deemed to consent to the assignment of their advisory agreement as a
result of the Merger; provided, however, that the following category of customer
-------- -------
shall not be counted for purposes of either (i) or (ii) of this sentence: PMC
Customers who, after being informed about the Merger, terminate their investment
advisory agreement with PMC, execute an investment advisory agreement with Buyer
and transfer their assets to Buyer, all prior to the Closing Date. If PMC
Customers representing less than 60% of PMC's net revenue for the Run Rate
Period consent to the assignment of such customers' agreements with PMC in
connection with the Merger, the Run Rate Revenue Reduction Amount shall be
calculated as if customers representing 60% of PMC's net revenue for the Run
Rate Period shall have consented to the assignment of such customers' agreements
with PMC in connection with the Merger. If PMC Customers representing 95% or
more of PMC's net revenue for the Run Rate Period consent to the assignment of
such customers' agreements with PMC in connection with the Merger, the Permitted
Debt Adjustment Amount shall be zero. For purposes of calculation of the Run
Rate Revenue Reduction Amount, a PMC Customer shall be deemed to have consented
to assignment of its agreement with PMC if the PMC has provided the customer
with notice of, and opportunity to object to, the assignment at least thirty
(30) days prior to the Effective Time and the customer has not objected to the
assignment within thirty (30) days after the Effective Time.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended, and the
written rules and regulations of the SEC thereunder.
"Securities" shall mean any security as defined in the Securities Act.
"Securities Laws" shall mean the Securities Act; the Exchange Act; the
Investment Company Act; the Advisers Act; and state "blue sky" laws.
"Self Regulatory Organization" shall have the meaning ascribed to such term
in the Exchange Act.
"Series A Preferred" shall have the meaning set forth in Section 5.4.
"Services Agreements" shall mean those certain Service Agreements to be
executed by Buyer and the Shareholder, which Services Agreements shall be in the
forms attached hereto as Exhibit G.
"Share Consideration Amount" shall mean $9,500,000, reduced by the amount,
if any, by which (A) the Permitted Debt Adjustment Amount EXCEEDS (B)
$4,500,000.
"Shareholder" shall have the meaning set forth in the Recitals to this
Agreement.
"Shares" shall mean 4,446,842 shares of common stock, $0.01 par value per
share, and 450,000 shares of preferred stock, no par value, of the Company,
which shares constitute all of the issued and outstanding shares of the
Company's capital stock.
"Stockholders' Agreement" shall mean that certain Amended and Restated
Stockholders' Agreement to be executed by Buyer, the shareholders of Buyer,
investors in the EnvestNet Financing and the Shareholder, which Stockholders'
Agreement shall include, with respect to holders of Buyer Common Stock, rights
and obligations similar to those applicable to holders of Buyer Common Stock in
the Original Stockholders' Agreement, a copy of which is included in Exhibit H,
and with respect to holders of Series A Preferred and investors in the EnvestNet
Financing, rights and obligations similar to those applicable to holders of
Series A Preferred in the Original Stockholders' Agreement, and with respect to
the Shareholder, rights and obligations consistent with the terms contained in
the term sheet, a copy of which is included in Exhibit I.
"Subsidiary" of a Person shall mean an Affiliate of such Person fifty
percent (50%) or more of the voting stock (or of any other form of general
partnership or other voting or controlling equity interest in the case of a
Person that is not a corporation) of which is beneficially owned by the Person
directly or indirectly through one or more other Persons.
"Subsidiary Shares" shall have the meaning set forth in Section 4.4(a).
"Supervised Persons" shall have the meaning ascribed to such term in the
Advisers Act.
"Surviving Corporation" shall have the meaning set forth in Section 1.1.
"Tax Return" shall mean any return, report, information statement, schedule
or other document (including any related or supporting information and including
any Form 1099 or other document or report required to be provided by any of the
Companies to third parties) with respect to Taxes, including any document
required to be retained or provided to any governmental authority pursuant to 31
U.S.C. Sections 5311-5328 and regulations promulgated thereunder, relating to
the Company or any consolidated group of which any such entity was a member at
the applicable time, and any amended Tax Returns.
"Tax" or "Taxes" shall mean all federal, provincial, territorial, state,
municipal, local, foreign or other taxes, imposts, rates, levies, assessments
and other charges (and all interest and penalties thereon), including, without
limitation, all income, excise, franchise, gains, capital, real property, goods
and services, transfer, value added, gross receipts, windfall profits,
severance, ad valorem, personal property production, sales, use, license, stamp,
documentary stamp, mortgage recording, employment, payroll, social security,
unemployment, disability, estimated or withholding taxes, and all customs and
import duties, and all interest, penalties and Losses thereon or associated
therewith or associated with any Tax Return and any amounts payable pursuant to
any tax sharing agreement or arrangement.
"Third Party Claim" shall have the meaning set forth in Section 8.4(a).
"Transitory Subsidiary" shall have the meaning set forth on the first page
hereof and includes any direct or indirect successor or assign.
"Two Year Note" shall mean a Promissory Note in the aggregate principal
amount of $3,000,000 with accrued interest paid quarterly at an annual rate of
12% and principal due two (2) years from the Closing Date, which Two Year Note
shall be (i) in the form attached hereto as Exhibit J and (ii) a replacement for
the Promissory Notes dated as of December 31, 2000 and November 1, 1998 which
the Company has executed in favor of the Shareholder.
"Wire Transfer" shall mean a payment in immediately available funds by wire
transfer in lawful money of the United States of America to such account or to a
number of accounts up to, but not in excess of, fifteen accounts, as shall have
been designated by written notice to the paying party.
ARTICLE I.
THE MERGER
Section 1.1. The Merger. Upon the terms and subject to the conditions
----------
hereof, at the Effective Time and pursuant to this Agreement, the Transitory
Subsidiary shall be merged with and into the Company and the separate corporate
existence of the Transitory Subsidiary shall thereupon cease, and the Company
shall be the surviving corporation in the Merger (sometimes hereinafter referred
to as the "Surviving Corporation") and all of its rights, privileges, powers,
immunities, purposes and franchises shall continue unaffected by the Merger. The
Merger shall have the effects set forth in the Colorado Business Corporation Act
(the "CBCA").
Section 1.2. Effective Time of the Merger. The Merger shall become
----------------------------
effective when a properly executed Certificate of Merger meeting the
requirements of Section 0-000-000 of the CBCA is duly filed with the Secretary
of State of the State of Colorado, or at such later time as the parties hereto
shall have designated in such filing as the effective time of the Merger (the
"Effective Time"). The Surviving Corporation may, at any time after the
Effective Time, take any action (including executing and delivering any
document) in the name and on behalf of either the Company or the Transitory
Subsidiary in order to carry out and effectuate the transactions contemplated by
this Agreement.
ARTICLE II.
THE SURVIVING CORPORATION
Section 2.1. Certificate of Incorporation of the Surviving Corporation.
---------------------------------------------------------
The Articles of Incorporation of the Surviving Corporation shall be amended and
restated at and as of the Effective Time to read as did the Articles of
Incorporation of the Transitory Subsidiary immediately prior to the Effective
Time (except that the name of the Surviving Corporation will remain unchanged).
Section 2.2. By-Laws of the Surviving Corporation. The By-Laws of the
-------------------------------------
Surviving Corporation shall be amended and restated at and as of the Effective
Time to read as did the By-Laws of the Transitory Subsidiary immediately prior
to the Effective Time (except that the name of the Surviving Corporation will
remain unchanged).
Section 2.3. Directors and Officers of the Surviving Corporation. The
---------------------------------------------------
directors and officers of the Transitory Subsidiary shall become the directors
and officers of the Surviving Corporation at and as of the Effective Time
(retaining their respective positions and terms of office).
ARTICLE III.
CONVERSION OF SHARES
Section 3.1. Merger Consideration. At the Effective Time, by virtue of
--------------------
the merger and without any action on the part of the holder thereof:
Upon the terms and subject to the conditions set forth in this Agreement,
the Shares shall be converted into the right to receive the Merger
Consideration. No share of capital stock of the Company, including the Shares,
shall be deemed to be outstanding or to have any rights other than those set
forth in this Section 3.1 after the Effective Time.
(a) Each share of the common stock, $0.01 par value per share, of the
Transitory Subsidiary that is issued and outstanding immediately prior to
the Effective Time shall be converted into one share of common stock, $0.01
par value per share, of the Surviving Corporation.
(b) Following the Effective Time, all issued and outstanding shares
of Buyer Common Stock shall continue to be fully paid and nonassessable
shares of Buyer Common Stock. Each certificate of Buyer evidencing
ownership of any such shares shall immediately thereafter continue to
evidence ownership of the same number of shares of Buyer Common Stock.
(c) If, between the date of this Agreement and the Effective Time,
the outstanding shares of Buyer Common Stock shall have been changed into a
different number of shares or a different class by reason of any
subdivision or combination, or stock dividend, split-up or
reclassification, the number of shares of Buyer Common Stock to be issued
and delivered in the Merger in exchange for each outstanding share of
Company Common Stock as provided in this Agreement shall be appropriately
adjusted, if necessary.
Section 3.2. Closing of Company Transfer Books. After the close of
---------------------------------
business on the Closing Date, transfers of shares of the Company's capital stock
outstanding prior to the Effective Time, including the Shares, shall not be made
on the stock transfer books of the Surviving Corporation. If, after the
Effective Time, certificates representing Shares are presented to Buyer, they
shall be cancelled and exchanged for their pro rata share of the Merger
Consideration.
Section 3.3. Closing. The closing of the transactions contemplated by
-------
this Agreement shall be the same as the Effective Time (the "Closing") and shall
take place at the offices of Xxxxxxx, Carton & Xxxxxxx, 000 Xxxxx Xxxxx Xxxxxx,
Xxxxxxx, Xxxxxxxx 00000 at 10:00 a.m., local time, on the third Business Day
after the conditions set forth in Article VII have been satisfied or waived or
at such other date, time and place as Buyer and the Company shall agree in
writing (the date on which the Closing takes place being referred to herein as
the "Closing Date").
Section 3.4. Instruments of Transfer; Payment of Merger Consideration.
--------------------------------------------------------
(a) Not less than two Business Days prior to the Closing Date, the
Shareholder shall deliver to Buyer written Wire Transfer instructions.
(b) At the Closing, the Shareholder shall deliver, or shall cause to
be delivered, to Buyer the following:
(1) one or more certificates representing all of the Shares duly
executed in blank or accompanied by stock powers duly executed in blank, in
proper form for transfer, with all appropriate stock transfer tax stamps
affixed;
(2) a certificate of the Secretary of State of the State of
Colorado as to the good standing of the Company dated as of a date not
earlier than 14 days prior to the Closing Date, together with a copy of the
Articles of Incorporation, as amended, of the Company, certified by the
Secretary of State of the State of Colorado; and
(3) executed copies of the documents required to be delivered
pursuant to Section 7.1.
(c) At the Closing, Buyer shall deliver, or shall cause to be
delivered, to the Shareholder the following:
(1) executed copies of the documents required to be delivered
pursuant to Section 7.2;
(2) full payment of the principal amount of the Demand Note; and
(3) one or more certificates constituting 50% of the Merger
Consideration, which shares subject to such certificate(s) shall be
calculated assuming the Share Consideration Amount is $9,500,000.
(d) At the Closing, Buyer shall deliver, or shall cause to be
delivered, to Xxxxxxx & Xxxxx, one or more certificates constituting the
remaining 50% of the Merger Consideration, which shares subject to such
certificates shall be calculated assuming the Share Consideration Amount is
$9,500,000, and Xxxxxxx & Xxxxx shall hold such certificates in escrow
until it shall have received joint instructions from Buyer and the
Shareholder to be given no later than seventy-five (75) days following the
Closing Date to either deliver such certificates to the Shareholder, in the
event the Share Consideration Amount is determined to equal $9,500,000, or
return such certificates (including, if necessary, the certificates
delivered to Shareholder pursuant to Section 3.4(c)(3)) to Buyer so that
Buyer may issue new certificates for the appropriate number of shares, in
the event the Share Consideration Amount is determined to be less than
$9,500,000. The Shareholder shall have full rights, including but not
limited to, dividend and voting rights, with respect to the shares held in
escrow.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF
THE COMPANY AND THE SHAREHOLDER
Except as qualified by the Schedules referencing this Article IV, the
Company and the Shareholder jointly and severally represent and warrant to Buyer
as of the date of this Agreement as follows:
Section 4.1. Organization and Related Matters. Each of the Companies is
--------------------------------
a Colorado corporation, duly incorporated, validly existing and in good sanding
under the laws of the State of Colorado. Each of the Companies has the
corporate power and authority to carry on its material business as it is now
being conducted and to own, lease and operate all of its properties and assets.
Each of the Companies is duly licensed or qualified to do business in each
jurisdiction in which the nature of the business conducted by it or the
character or location of the properties and assets owned, leased or operated by
it makes such qualification or licensing necessary, except where the failure to
be so qualified or licensed would not have a Company Material Adverse Effect.
The copies of the Articles of Incorporation and By-laws and any amendments
thereto of each of the Companies heretofore delivered to Buyer are complete and
correct copies of such instruments as in effect as of the date of this
Agreement.
Section 4.2. Authority; No Violation.
-----------------------
(a) The Company has full corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby have been duly and validly approved
by all requisite corporate action on the part of the Company and the
Shareholder, and no other corporate proceedings on the part of the Company
(including without limitation any additional approval of the Shareholder)
are necessary to approve this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by the Company and the Shareholder and (assuming the due
authorization, execution and delivery of this Agreement by Buyer)
constitutes a valid and binding obligation of the Company and the
Shareholder, enforceable against the Company and the Shareholder in
accordance with its terms.
(b) Neither the execution and delivery of this Agreement by the
Company or the Shareholder, nor the consummation by the Company or the
Shareholder, as the case may be, of the transactions contemplated hereby to
be performed by them, nor compliance by the Company or the Shareholder with
any of the terms or provisions hereof, will (i) violate any provision of
the Articles of Incorporation or By-laws of any of the Companies or (ii)
except as set forth in Schedule 4.2(b), and assuming that the consents and
approvals referred to in Section 6.4 and 6.5 hereof are duly obtained, (x)
violate, conflict with or require any notice, filing, consent or approval
under any Applicable Law to which any of the Companies or any of its
Affiliates or any of their properties, contracts or assets are subject, or
(y) violate, conflict with, result in a breach of any provision of or the
loss of any benefit under, constitute a default (or an event which, with
notice or lapse of time, or both, would constitute a default) under, result
in the termination of or a right of termination or cancellation under,
accelerate or result in a right of acceleration of the performance required
by, result in the creation of any material Encumbrance upon the Shares or
the properties, contracts or assets of the Companies, or require any
notice, approval or consent under any note, bond, mortgage, indenture, deed
of trust, license, lease, agreement or other instrument or obligation to
which any of the Companies or its Affiliates is a party, or by which the
Companies, any of their Affiliates or the Shareholder, or any of their
respective properties or assets, may be bound or affected.
Section 4.3. Consents and Approvals. Except for consents, approvals and
----------------------
notices as are set forth in Section 6.6 and Schedule 4.3, no consents or
approvals of or filings or registrations with any Governmental Authority or
third party are necessary in connection with (i) the execution and delivery by
the Company and the Shareholder of this Agreement and (ii) the consummation by
the Company and the Shareholder of the transactions contemplated hereby. Neither
the Company nor the Shareholder has any reason to believe that any approval or
consent set forth in Section 6.6, in Schedule 4.3 or in this Section 4.3 will
not be obtained prior to the Closing.
Section 4.4. Capitalization. The authorized capital stock of the Company
--------------
consists of 50,000,000 shares of common stock, $0.01 par value per share, and
5,000,000 shares of preferred stock, no par value. The Shareholder owns
beneficially and of record all of the Shares, and the Shareholder has the full
and unrestricted power to sell, assign, transfer and deliver the Shares to Buyer
in accordance with the terms of this Agreement free and clear of Encumbrances.
There are no shares of capital stock of the Company issued or outstanding other
than the Shares. All of the Shares are duly authorized, validly issued, fully
paid, nonassessable and free of any pre-emptive rights. Except as set forth in
Schedule 4.4, there is no outstanding option, warrant, convertible or
exchangeable security, right, subscription, call, unsatisfied pre-emptive right
or other agreement or right of any kind to purchase or otherwise acquire
(including, without limitation, by exchange or conversion) from the Company or
the Shareholder any capital stock of the Company, whether issued and
outstanding, authorized but unissued or treasury shares. Except as set forth in
Schedule 4.4, there are no agreements or understandings of any kind with respect
to the voting of the Shares. The Company owns beneficially and of record all of
the capital stock of PMC and PBS ("Subsidiary Shares") free and clear of any
Encumbrances, and the Company has the full and unrestricted power to sell,
assign, transfer and deliver the Subsidiary Shares free and clear of
Encumbrances. There are no shares of capital stock of PMC or PBS issued or
outstanding other than the Subsidiary Shares. All of the Subsidiary Shares are
duly authorized, validly issued, fully paid, nonassessable and free of any
preemptive rights. There is no outstanding option, warrant, convertible or
exchangeable security, right, subscription, call, unsatisfied pre-emptive right
or other agreement or right of any kind to purchase or otherwise acquire
(including, without limitation, by exchange or conversion) from any of the
Companies or the Shareholder any capital stock of PMC or PBS, whether issued or
outstanding, authorized but unissued or treasury shares. The Company does not
have any Subsidiaries, and does not own, directly or indirectly, any equity or
other ownership interest in any Person, other than PMC and PBS.
Section 4.5. Regulatory Documents.
--------------------
(a) Since January 1, 1999, the Companies and their Affiliates have
timely filed all forms, reports, registration statements, schedules and
other documents, together with any amendments required to be made with
respect thereto, that were required to be filed with any Governmental
Authority, including the SEC and the National Association of Securities
Dealers, Inc. ("NASD"), and have paid all fees and assessments due and
payable in connection therewith. PMC is and has been for all applicable
periods duly registered as an investment advisor under the Advisers Act.
All Supervised Persons of PMC who are required to be registered or licensed
in any state are duly registered or licensed in each state where said
registration or licensing is required. Schedule 4.5(a) lists the states in
which each Supervised Person of PMC is registered or licensed, indicating
the identity of the person and the state. Each such federal and state
registration is in full force and effect.
(b) Except as set forth in Schedule 4.5, PBS is and has been duly
registered as a broker-dealer with the SEC and the NASD in all fifty (50)
States and the District of Columbia (but not Puerto Rico) under applicable
federal and state statutes. To the Knowledge of each of the Companies and
the Shareholder, each such federal and state registration is currently in
full force and effect. PBS is a member in good standing and has all
material licenses and authorizations in self regulatory or trade
organizations or registered clearing agencies, required to permit the
operation of its business in all material respects as presently conducted.
Set forth in Schedule 4.5(b) are all Self Regulatory Organizations of which
the Company or any Subsidiary is a member.
(c) As of their respective dates, the Regulatory Documents of the
Companies and their Affiliates complied in all material respects with the
requirements of the Securities Laws, as the case may be, and the rules and
regulations of the SEC promulgated thereunder applicable to such Regulatory
Documents, and none of such Regulatory Documents, as of their respective
dates, contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which
they were made, not misleading. The Company has previously delivered or
made available to Buyer a true, correct and complete copy of each such
Regulatory Document filed with the SEC after January 1, 1999 and prior to
the date hereof (including the Form ADV of PMC and the Form BD of PBS, each
as in effect on the date hereof) and will deliver to Buyer promptly after
the filing thereof a true, correct and complete copy of each Regulatory
Document filed by any of the Companies or their Affiliates with the SEC
after the date hereof and prior to the Closing Date.
Section 4.6. Financial Statements. The Company has previously delivered
--------------------
to Buyer copies of (a) consolidated balance sheets of the Company as of December
31st for the fiscal years 1998 (audited), 1999 (unaudited) and 2000 (unaudited),
and the related statements of income, changes in shareholders' equity and cash
flows for the fiscal years 1998, 1999 and 2000, inclusive, and in the case of
the 1998 balance sheet, accompanied by the audit report, and (b) the unaudited
interim consolidated balance sheet and related statements of income, changes in
shareholders' equity and cash flows of the Company as of and for the five (5)
month period ended May 31, 2001 (collectively, the statements referred to above
being referred to as the "Company Financial Statements" and the balance sheet as
of May 31, 2001 being referred to as the "Company Balance Sheet"). The balance
sheets referred to in the previous sentence (including the related notes, where
applicable) present fairly in all material respects the consolidated financial
position of the Company as of the dates thereof, and the other financial
statements referred to in this Section 4.6 present fairly in all material
respects (subject, in the case of the unaudited statements, to recurring audit
adjustments normal in nature and amount) the consolidated results of its
operations and its cash flows for the respective fiscal periods therein set
forth; each of such statements (including the related notes, where applicable)
comply in all material respects with applicable accounting requirements with
respect thereto; and, except as set forth in Schedule 4.6 hereto, each of such
statements (including the related notes, where applicable) has been prepared in
accordance with GAAP consistently applied during the periods involved. Except
for (i) those liabilities that are fully reflected or reserved against on the
Company Balance Sheet and (ii) liabilities incurred in the ordinary course of
business consistent with past practice since the date of the Company Balance
Sheet and which are not material, individually or in the aggregate, the Company
has no liabilities or obligations of any nature, whether absolute, accrued,
contingent or otherwise and whether due or to become due, which are or would be
required by GAAP to be shown on its consolidated balance sheet for such date.
Section 4.7. Ineligible Persons. To the Knowledge of the Company, none
------------------
of the Companies, nor any "affiliated person" (as defined in the Investment
Company Act) thereof, as applicable, is ineligible pursuant to Section 9(a) or
9(b) of the Investment Company Act to serve as an investment adviser (or in any
other capacity contemplated by the Investment Company Act and material to the
business of the Companies) to a registered investment company. To the Knowledge
of the Company, none of the Companies nor any "associated person" (as defined in
the Advisers Act) thereof, as applicable, is ineligible pursuant to Section 203
of the Advisers Act to serve as an investment adviser or as an associated person
to a registered investment adviser. None of the Companies nor any "associated
person" (as defined in the Exchange Act) thereof, as applicable, is ineligible
pursuant to Section 15(b) of the Exchange Act to serve as a broker-dealer or as
an associated person to a registered broker-dealer.
Section 4.8. Contracts. Schedule 4.8 sets forth a complete and accurate
---------
list of all written or oral contracts, agreements, guarantees, leases and
executory commitments: (A) to which any of the Companies is a party (excluding
policies of insurance in the ordinary course of business) or by which any of
their properties or assets are bound which: (i) contain obligations of any of
the Companies in excess of $150,000; (ii) which involve payments based on
profits or revenues of any of the Companies; (iii) represents an arrangement
with an Advisory Intermediary; (iv) represents an arrangement with a money
manager managing accounts of customers of the Companies; (v) represents an
arrangement with a custodian of assets; (vi) restricts the Company or any
Subsidiary from competing (x) in any line of business, (y) with any Person, or
(z) in any geographic area; (vii) relates to the acquisition or disposition of
any material business or operations since January 1, 1999 (whether by merger,
stock sale or purchase, asset sale or purchase or otherwise); or (viii) if
terminated by the other party thereto, would represent a Company Material
Adverse Change; and (B) which are PCS Intermediary Contracts (hereinafter
referred to collectively as the "Contracts"). To the Company's Knowledge, each
of the Contracts is in full force and effect and enforceable in accordance with
its terms. Neither the Shareholder nor any of the Companies has received
written notice of cancellation of or default under or intent to cancel or call a
default under any of the Contracts. To the Companies' Knowledge, there exists no
event or condition which with or without notice or lapse of time or both would
be a breach or a default on the part of any of the Companies or on the part of
the other party to such Contracts. The Company has previously provided or made
available to Buyer copies of each Advisory Agreement.
Section 4.9. Related Party Transactions.
--------------------------
(a) Except as disclosed in Schedule 4.9, no employee, officer or
director of the Company or any of its Subsidiaries, or member of the
immediate family of any of them, is indebted to the Company or any
Subsidiary, nor is the Company or any of its Subsidiaries indebted (or
committed to make loans or extend or guarantee credit) to any of them.
(b) To the Company's Knowledge, no employee, officer or director of
the Company or any of its Subsidiaries, or member of the immediate family
of any of them, has any direct or indirect ownership interest in (i) any
Person with which the Company or any of its Subsidiaries is affiliated or
with which the Company or any of its Subsidiaries has a business
relationship, or (ii) any Person that competes with the Company.
(c) Except as disclosed in Schedule 4.9, to the Company's
Knowledge, no employee, officer or director of the Company or any of its
Subsidiaries, or member of the immediate family of any of them, is,
directly or indirectly, interested in any material contract with the
Company or any of its Subsidiaries.
Section 4.10. Environmental Matters.
---------------------
(a) To the Company's Knowledge, the Company and each of its
Subsidiaries have complied with all Environmental and Health Laws, and no
action, suit, proceeding, hearing, investigation, charge, complaint, claim,
demand, or notice has been filed or commenced against any of them alleging
any failure so to comply. Without limiting the generality of the preceding
sentence, the Company and each of its Subsidiaries have obtained and been
in material compliance with all of the terms and conditions of all permits,
licenses, and other authorizations which are required under, and have
materially complied with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules, and
timetables which are contained in, all Environmental and Health Laws.
(b) To the Company's Knowledge, none of the Company or any of its
Subsidiaries has any material liability (and none of the Company or any of
its Subsidiaries has handled or disposed of any substance, arranged for the
disposal of any substance, exposed any employee or other individual to any
substance or condition, or owned or operated any property or facility in
any manner that could form the basis for any present or future action,
suit, proceeding, hearing, investigation, charge, complaint, claim, or
demand against the Company or one of its Subsidiaries giving rise to any
liability) for damage to any site, location, or body of water (surface or
subsurface), for any illness of or personal injury to any employee or other
individual, or for any reason under any Environmental and Health Law.
Section 4.11. No Broker. No broker, finder or similar intermediary has
---------
acted for or on behalf of, or is entitled to any broker's, finder's or similar
fee or other commission from the Companies or the Shareholder or any of their
Affiliates in connection with this Agreement or the transactions contemplated
hereby.
Section 4.12. Legal Proceedings. Except as disclosed in Schedule 4.12,
-----------------
there are no legal, administrative, arbitral or other proceedings (including
proceedings by any Governmental Authority), claims, suits, actions or
governmental or regulatory investigations of any nature that are pending or, to
the Company's Knowledge, threatened against or relating to any of the Companies
or any of their respective properties, assets or businesses, or any officers,
director or employee of any of the Companies in connection with their activities
on behalf of any of the Companies, or that challenge the validity or propriety
of the transactions contemplated by this Agreement, and there is no injunction,
order, judgment, decree, or regulatory restriction imposed upon any of the
Companies or any of their respective properties, assets or businesses.
Section 4.13. Compliance with Applicable Law.
------------------------------
(a) Except as disclosed in Schedule 4.13, each of the Companies
holds, and has at all times held, all material licenses, franchises,
permits and authorizations (collectively, "Permits") necessary for the
lawful ownership and use of its properties and assets and the material
conduct of its businesses under and pursuant to every, and has complied in
all material respects with each, and is not in default in any material
respect under any, Applicable Law relating to any of the Companies or any
of its assets, properties or operations, and the Company does not know of
any outstanding violations of any of the above and has not received notice
asserting any such violation. All such Permits are valid and in good
standing.
(b) Except as disclosed in Schedule 4.13, since January 1, 1999
and except for normal examinations conducted by any Governmental Authority
in the regular course of the business of the Companies, no Governmental
Authority has initiated any administrative proceeding or, to the Knowledge
of the Company, investigation into or related to the business or operations
of the Companies. There is no unresolved violation, criticism or exception
by any Governmental Authority with respect to any report or statement by
any Governmental Authority relating to any examination of the Companies.
(c) Except as disclosed in Schedule 4.13, none of the Companies
nor any of their respective officers, directors or employees, in the
conduct of the business with respect to employee benefit plans subject to
Title I of ERISA or Section 4975 of the Code, has (A) engaged in any
conduct which would subject them to liability under Sections 405, 406, 409,
502(i) or 502(l) of ERISA or Section 4975 of the Code, or (B) engaged in
any conduct that could constitute a crime or violation listed in Section
411 of ERISA which would preclude such person from providing services to
any such employee benefit plan.
(d) Each of the Companies has maintained records which accurately
reflect transactions in reasonable detail, and accounting controls,
policies and procedures sufficient to ensure that such transactions are
recorded in a manner which permits the preparation of financial statements
in accordance with GAAP and applicable regulatory accounting requirements.
Section 4.14. Insurance. All of the Companies' insurance policies and
---------
bonds are listed in Schedule 4.14. To the Knowledge of the Company, each such
insurance policy or bond is in full force and effect and the Companies have not
received notice or any other written notice from any insurer or agent of any
intent to cancel any such insurance policy or bond.
Section 4.15. Labor and Employment Matters. Except as set forth in
----------------------------
Schedule 4.15, (a) no collective bargaining agreement or similar agreement with
any labor organization, or work rules or practices agreed to with any labor
organization or employee association, exists which is binding on any of the
Companies, (b) each of the Companies is, and has at all times been, in
compliance in all material respects with all Applicable Law respecting
employment and employment practices, terms and conditions of employment, wages,
hours of work, and occupational safety and health, and is not engaged in any
unfair labor practice, (c) there is no labor strike, dispute, slowdown or
stoppage actually pending or threatened against or affecting any of the
Companies, and (d) there are no written or oral agreements relating to the
employment of any individual by any of the Companies on a basis other than "at
will."
Section 4.16. Employee Benefit Plans; ERISA.
-----------------------------
(a) Except as set forth in Schedule 4.16(a), with respect to any
employees or former employees, directors or officers of the Companies, the
Companies do not maintain, or participate under, and are not required to
contribute to, any "Company Plan" (as defined herein). For purposes of
this Agreement, the term "Company Plan" includes any pension, retirement,
savings, profit-sharing, deferred compensation, disability, medical,
dental, health, life, severance pay, death benefit, group insurance, stock
option, stock purchase, stock appreciation right, restricted stock,
performance unit, incentive, bonus, vacation pay, trust, contract,
agreement, or policy (including, without limitation, any "pension plan" as
defined in Section 3(2) of ERISA, and any "welfare plan" as defined in
Section 3(1) of ERISA), whether or not any of the foregoing is funded or
insured, (i) which provides benefits to employees of the Companies; (ii) to
which the Companies are a party or by which any of them is bound; or
(iii) which is maintained by any ERISA Affiliate.
(b) The Companies have no liability under any (i) defined benefit
plan (within the meaning of Section 3(35) of ERISA) ("Defined Benefit
Plan"); (ii) multiemployer plan (within the meaning of Sections 3(37) and
4001(a)(3) of ERISA) (a "Multiemployer Plan"); or (iii) multiple employer
plan (within the meaning of Section 413(b) of the Code and of Section 4063
of ERISA) (a "Multiple Employer Plan"), nor has any of the Companies or any
ERISA Affiliate, at any time since September 2, 1974, contributed to or
been obligated to contribute to any Multiemployer Plan or Multiple Employer
Plan.
(c) With respect to each Company Plan, the Companies have delivered
or made available to the Buyer a true, correct and complete copy of: (i)
each writing constituting a part of such Company Plan, including without
limitation all plan documents, benefit schedules, trust agreements,
insurance contracts and other funding vehicles and any amendment or
addendum thereto; (ii) the most recent Annual Report (Form 5500 Series) and
accompanying schedule, if any; (iii) the current summary plan description,
if any; (iv) the most recent annual financial report, if any; and (v) the
most recent determination or opinion letter from the IRS, if any. Except
as specifically provided in this Agreement or the foregoing documents
delivered or made available to Buyer, there are no amendments to any
Company Plan that have been adopted or approved nor has any Company
undertaken to make any such amendments.
(d) Schedule 4.16(a) identifies each Company Plan that is intended to
be a "qualified plan" within the meaning of Section 401(a) of the Code
("Qualified Plan"). Each Qualified Plan has received a favorable
determination or opinion letter from the Internal Revenue Service that has
not been revoked, and to the knowledge of the Companies there are no
existing circumstances nor any events that have occurred that are likely to
have a material adverse effect on the qualified status of any Qualified
Plan or the tax-exempt status of any related trust. No Company Plan is
intended to meet the requirements of Code Section 501(c)(9).
(e) All contributions required to be made to any Company Plan by
applicable law or regulation or by any plan document or other contractual
undertaking, and all premiums due or payable with respect to insurance
policies funding any Company Plan, for any period through the date hereof
have been timely made or paid in full or, to the extent not required to be
made or paid on or before the date hereof, have been fully reflected on the
Company Financial Statements.
(f) To the Knowledge of the Companies, (i) the administrators and
fiduciaries of each Company Plan, and the Companies are and have been in
compliance in all material respects with the applicable requirements of
ERISA (including without limitation the fiduciary responsibilities imposed
by Part 4 of Title I, Subtitle B of ERISA), the Code and any other
Applicable Law governing each Company Plan; (ii) each Company Plan has at
all times been properly administered in compliance in all material respects
with its terms and in accordance with all such Applicable Laws; and (iii)
with respect to each Company Plan, there has not occurred, nor is any
person contractually bound to enter into, any non-exempt "prohibited
transaction" nor any "party-in-interest transaction" (as such terms are
defined under Section 4975 of the Code or Section 406 of ERISA), which such
transaction would subject any Company Plan, the Companies or any officer,
director or employee thereof to a tax or penalty under Section 4975 of the
Code or Section 502(i) of ERISA.
(g) Except for health continuation coverage required by law under
Section 4980B of the Code and Part 6 of Title I of ERISA, the Companies
have no liabilities for post-retirement welfare benefits, including without
limitation retiree medical or life benefits.
(h) Except as set forth in Schedule 4.16(h), neither the execution
and delivery of this Agreement nor the consummation of any or all of the
transactions contemplated hereby will: (i) entitle any employee or former
employee of any Company to severance pay, unemployment compensation or any
similar payment, (ii) accelerate the time of payment or vesting or increase
the amount of any compensation or benefit due to any employee or former
employee of any Company, or (iii) directly or indirectly result in any
payment made to or on behalf of any person that would constitute an "excess
parachute payment" within the meaning of Section 280G of the Code.
(i) There are (i) no actions, suits or claims pending (other than
routine claims for benefits) or, to the Knowledge of the Companies,
threatened against, or with respect to, any Company Plan or its assets, and
(ii) no examinations or investigations (other than a routine determination
letter filing) pending with respect to any Company Plan before the Internal
Revenue Service, the Department of Labor, the Pension Benefit Guaranty
Corporation, the Securities and Exchange Commission or any other federal or
provincial government agency, that could reasonably be expected to result
in any material liability of any Company.
(j) Set forth in Schedule 4.16(j) is an accounting of all
obligations, contingent or otherwise, of the Companies (other than
obligations to pay base salary and annual bonuses in the ordinary course of
business consistent with past practice) owing or payable to, or on behalf
of, employees or former employees of the Companies that are not accrued or
otherwise reflected on the Company Balance Sheet.
Section 4.17. Technology and Intellectual Property.
------------------------------------
(a) Attached hereto as Schedule 4.17(a) is a list of all material (i)
domestic and foreign registered trademarks and service marks, registered
copyrights and patents, (ii) applications for registration or grant of any
of the foregoing, (iii) unregistered trademarks, service marks, trade
names, logos and assumed names, and (iv) except for Fund Counselor and
Allocation Manager license agreements, licenses for any of the foregoing,
in each case, owned by any of the Companies or used in or necessary to
conduct the business of any of the Companies. The items on Schedule
4.17(a), together with all other material trademarks, service marks, trade
names, logos, assumed names, patents, copyrights, trade secrets, computer
software, licenses, formulae, customer lists or other databases, designs
and inventions currently used in or necessary to conduct the business of
any of the Companies constitute the "Company Intellectual Property."
(b) Except as set forth in Schedule 4.17(b), each of the Companies
has ownership of, or such other rights by license, lease or other agreement
in and to, the Company Intellectual Property as necessary to conduct its
business as presently conducted. To the Knowledge of the Company, the
Companies have not infringed or violated any trademark, trade name,
copyright, patent, trade secret right or other proprietary right of others.
None of the Companies has received notice of any claim respecting any such
violation or infringement. Except as set forth on Schedule 4.17(b), the
Company has no reason to believe that upon consummation of the transactions
contemplated hereby Buyer or any of its Affiliates will be in any way
restricted in the use of any of the Company Intellectual Property under any
Applicable Law, contract or otherwise, or that use of such Company
Intellectual Property by Buyer or any of its Affiliates will violate or
infringe the rights of any Person, or subject any of Buyer or its
Affiliates to liability of any kind, under any Applicable Law, contract or
otherwise.
Section 4.18. Taxes and Tax Returns.
---------------------
(a) Each of the Companies is a member of the affiliated group of
corporations (as defined in Section 1504 of the Code) of which the
Shareholder is the common parent and which files a consolidated federal
income tax return and will file a consolidated federal income tax return
for the taxable year which includes the Closing Date. Each of the
Companies and the Shareholder have timely filed, or caused to be timely
filed, all material Tax Returns required to be filed by the Companies or
which are required to include the Companies, and such Tax Returns are true,
correct and complete in all material respects. Except as set forth in
Schedule 4.18, each of the Companies and the Shareholder have paid,
collected or withheld, or caused to be paid, collected or withheld, all
material Taxes required to be paid, collected or withheld for which any of
the Companies is or may be liable, including without limitation liability
arising under Treasury Regulation 1.1502-6 or any similar or comparable
provisions of Applicable Law, other than such Taxes for which adequate
reserves in the Company Financial Statements have been established. There
are no material claims or assessments pending against the Shareholder or
any of the Companies for any alleged deficiency in any material Tax for
which any of the Companies is or may be liable, including without
limitation liability arising under Treasury Regulation 1.1502-6 or any
similar or comparable provisions of Applicable Law, and none of the
Shareholder or any of the Companies has been notified in writing of any
proposed Tax claim or assessment against the Companies for which any of the
Companies may be liable, including without limitation liability arising
under Treasury Regulation 1.1502-6 or any similar or comparable provisions
of Applicable Law (other than, in each case, claims or assessments for
which adequate reserves in the Company Financial Statements have been
established or which are being contested in good faith or are immaterial in
amount). There are no outstanding waivers or extensions of any applicable
statute of limitations to assess any amount of Taxes for which any of the
Companies is or may be liable, including without limitation liability
arising under Treasury Regulation 1.1502-6 or any similar or comparable
provisions of Applicable Law. Except as set forth in Schedule 4.18(b),
there are no outstanding requests by any of the Companies or the
Shareholder for any extension of time within which to file any Tax Return
or within which to pay any Taxes shown to be due on any return. There are
no liens for Taxes on the assets of any of the Companies, except for
statutory liens for current Taxes not yet due and payable.
(b) Except as set forth in Schedule 4.18(b), the execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby will not result in any payment (whether of severance
pay, unemployment compensation, golden parachute, bonus or otherwise),
acceleration, forgiveness of indebtedness, vesting, distribution, increase
in benefits or obligation to fund benefits with respect to any employee or
director of any of the Companies.
(c) None of the Companies has been a member of any consolidated,
combined, unitary or affiliated group of corporations for any Tax purposes
other than the group of which the Company is presently a member or for
which the Company was the common parent.
(d) None of the Companies is or has been a United States real
property holding corporation within the meaning of Section 897(c)(2) of the
Code.
(e) The Company will not as a result of the transactions contemplated
by this Agreement make or become obligated to make any parachute payment as
defined in Section 280(G) of the Code.
(f) No election under Section 341(f) of the Code is in effect with
respect to any of the Companies.
(g) To the Company's Knowledge, the approximate adjusted basis of the
assets of the Companies for federal income tax purposes as of June 30, 2001
is as set forth on Schedule 4.18(g).
(h) To the Company's Knowledge, the Shareholder's adjusted tax basis
in the Shares as of the Closing Date is set forth on Schedule 4.18(h).
(i) To the Company's Knowledge, none of the Companies or the
Shareholder has applied for or received a tax ruling from the IRS or any
domestic or foreign federal, state or local taxing authority and has not
entered into a closing agreement pursuant to Section 7121 of the Code or
similar provision of Applicable Law which is still in effect and applies to
any of the Companies.
(j) To the Company's Knowledge, for federal income tax purposes, the
Companies will have allocated to them upon the Closing Date a net operating
loss carryover in an amount approximately equal to that set forth on
Schedule 4.18(j) (which currently is subject to limitation under Section
382 of the Code of approximately $194,000 per year), and for state income
tax purposes, the Companies will have allocated to them upon the Closing
Date a net operating loss carryover in an amount approximately equal to
that set forth on Schedule 4.18(j).
(k) None of the Companies has either distributed stock of a
controlled corporation pursuant to Section 355 of the Code or had its stock
distributed by another corporation pursuant to Section 355 of the Code.
(l) To the Company's Knowledge, no claim has been made or is expected
to be made against or in respect of the Companies or the Shareholder by any
Governmental Authority in a jurisdiction in which the Shareholder or any of
the Companies does not file Tax Returns or pay or collect Taxes, in respect
of a particular type of Tax imposed by that jurisdiction, alleging that any
of the Companies or the Shareholder is or may be subject to an obligation
to file Tax Returns or is liable for Taxes or is to collect or pay Taxes in
respect of such Tax in that jurisdiction.
(m) True, correct and complete copies of all income, franchise,
property, payroll, sales and use Tax Returns and forms filed by or with
respect to the Companies for the last three (3) years have previously been
furnished to Buyer.
Section 4.19. No Adverse Change. Except as provided on Schedule 4.19 or
-----------------
otherwise disclosed in this Agreement, since December 31, 2000, (i) each of the
Companies has operated its material business only in the ordinary course of
business consistent with past practice; (ii) there has been no Company Material
Adverse Change; and (iii) none of the Companies have taken any action or
suffered any event that if taken or suffered after the date hereof would violate
Section 6.1 of this Agreement.
Section 4.20. Real Property. The assets of the Companies that consist of
-------------
leasehold interests in real property are listed in Schedule 4.20, together with
annual lease payments and all Encumbrances thereon. All offices where each of
the Companies presently conducts its business are subject to leases listed in
Schedule 4.20. None of the Companies have any interests in any real property
except for the leases set forth in Schedule 4.20. The Company has furnished
Buyer with true, correct and complete copies of all leases listed in Schedule
4.20. To the Knowledge of the Company, all leases listed in Schedule 4.20 are in
full force and effect in accordance with their respective terms, and there is
not any existing default or event which with notice or lapse of time or both
would become a default under any such lease.
Section 4.21. Accounts Receivable. Except as identified on Schedule 4.21,
-------------------
all accounts receivable shown on the Company Balance Sheet or incurred since the
date thereof, represent arm's length transactions actually made in the ordinary
course of business and are believed collectible in the ordinary course of
business without the necessity of commencing legal proceedings, and, to the
Company's Knowledge, are not subject to counterclaim or set-off or in dispute.
Section 4.22. Title to Assets. The Company and its Subsidiaries own good
---------------
and valid title to the assets and properties which they own or purport to own,
free and clear of any and all Encumbrances affecting material assets and
properties of the Company and its Subsidiaries, except those Encumbrances
identified on Schedule 4.22 and Encumbrances for taxes not yet due and payable
and such other Encumbrances or minor imperfections of title, if any, which do
not materially detract from the value or interfere with the present use of the
affected asset or which individually or in the aggregate would not have a
Company Material Adverse Effect.
Section 4.23. Purchase for Investment. The Shareholder is acquiring the
-----------------------
Merger Consideration for investment purposes only and not with a view to, or for
resale in connection with, the distribution or other disposition thereof or with
any present intention of distributing or reselling any thereof.
Section 4.24. Accuracy of Warranties. No representation or warranty by
----------------------
the Company or the Shareholder in this Agreement, and no Exhibit, certificate,
Schedule, instrument or document prepared or delivered, or to be delivered, by
the Company or the Shareholder pursuant hereto or in connection with the
transactions contemplated herein, contains or will contain any untrue statement
of a material fact or omits or will omit to state a material fact necessary in
order to make the statements herein and therein not misleading.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF BUYER
Except as qualified by the Schedules referencing this Article V, Buyer
represents and warrants to the Shareholder as of the date of this Agreement as
follows:
Section 5.1. Organization and Related Matters. Buyer is a corporation
--------------------------------
duly incorporated, validly existing and in good standing under the laws of the
State of Delaware. Buyer has the corporate power and authority to carry on its
material business as it is now being conducted and to own, lease and operate all
of its properties and assets. Buyer is duly licensed or qualified to do business
in each jurisdiction in which the nature of the business conducted by it or the
character or location of the properties and assets owned, leased or operated by
it makes such qualification or licensing necessary, except where the failure to
be so qualified or licensed would not have a Buyer Material Adverse Effect. The
copies of the organizational documents and any amendments thereto of Buyer
heretofore delivered to the Company are complete and correct copies of such
instruments as in effect as of the date of this Agreement.
Section 5.2. Authority; No Violation.
-----------------------
(a) Buyer has full corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby have been duly and validly approved
by all requisite corporate action on the part of Buyer, and no other
corporate proceedings on the part of Buyer or its shareholders are
necessary to approve this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by Buyer and (assuming the due authorization, execution and
delivery of this Agreement by the Company and the Shareholder) constitutes
a valid and binding obligation of Buyer, enforceable against Buyer in
accordance with its terms.
(b) Neither the execution and delivery of this Agreement by Buyer,
nor the consummation by Buyer of the transactions contemplated hereby to be
performed by it, nor compliance by Buyer with any of the terms or
provisions hereof, will (i) violate any provision of the organizational
documents of Buyer or (ii) except as set forth in Schedule 5.2(b), and
assuming that the consents and approvals referred to in Sections 5.3 and
6.6 and Schedule 5.3 hereof are duly obtained, (x) violate, conflict with
or require any notice, filing, consent or approval under any Applicable Law
to which Buyer or any of its Affiliates or any of its properties, contracts
or assets are subject, or (y) violate, conflict with, result in a breach of
any provision of or the loss of any benefit under, constitute a default (or
an event which, with notice or lapse of time, or both, would constitute a
default) under, result in the termination of or a right of termination or
cancellation under, accelerate or result in a right of acceleration of the
performance required by, result in the creation of any material Encumbrance
upon the properties, contracts or assets of the Buyer, or require any
notice, approval or consent under any note, bond, mortgage, indenture, deed
of trust, license, lease agreement or other instrument or obligation to
which Buyer or any of its Affiliates is a party, or by which Buyer or any
of its Affiliates, or any of its or their properties or assets, may be
bound or affected.
Section 5.3. Consents and Approvals. Except for consents, approvals and
----------------------
notices as are set forth in Schedule 5.3 and Section 6.6, no consents or
approvals of or filings or registrations with any Governmental Authority or any
third party are necessary in connection with (i) the execution and delivery by
Buyer of this Agreement and (ii) the consummation by Buyer of the transactions
as contemplated hereby. Neither Buyer nor its Affiliates has any reason to
believe that any approval or consent set forth in Schedule 5.3 or in this
Section 5.3 will not be obtained prior to the Closing.
Section 5.4. Capitalization.
--------------
(a) The authorized capital stock of Buyer consists of 80,000,000
shares of Buyer Common Stock and 20,000,000 shares of Buyer Preferred
Stock, of which 9,000,000 shares are designated Series A Preferred Stock
("Series A Preferred"). Except as set forth in Schedule 5.4, on the date
hereof and without taking into effect any shares of Buyer's capital stock
issued pursuant to the EnvestNet Financing and any increase in the number
of shares of Buyer Common Stock reserved for issuance under the Buyer
Stock Option Plan in connection with the EnvestNet Financing, the issued
and outstanding capital stock of the Company, as well as capital stock
which is reserved for issuance or committed to be issued, consists of:
(i) 6,903,057 fully paid and non-assessable shares of Series
A Preferred;
(ii) 6,903,057 shares of authorized, unissued Buyer Common
Stock reserved for issuance upon conversion of the Series A Preferred;
(iii) 9,510,671 fully paid and non-assessable shares of Buyer
Common Stock;
(iv) 2,800,000 shares of authorized, unissued Buyer Common
Stock reserved for issuance to employees of and consultants to Buyer
upon exercise of stock options granted and to be granted pursuant to
the Buyer Stock Option Plan.
(b) Except as provided in the Stockholders' Agreement or as set forth
in Schedule 5.4, no Person is entitled to any preemptive right or right of
first refusal with respect to the issuance of Buyer Common Stock and Buyer
Preferred Stock, and all such preemptive rights and rights of first refusal
have been waived in connection with the issuance of the Merger
Consideration hereunder. There are no outstanding preemptive rights,
options, warrants, conversion rights, agreements or other rights to
purchase any of the authorized but unissued stock of Buyer or any of its
Subsidiaries other than those identified above, identified in Schedule 5.4
or issued, reserved or committed to be issued pursuant to this Agreement
and other than those granted in the Stockholders' Agreement.
Section 5.5. Regulatory Documents.
--------------------
(a) Since January 1, 1999, Buyer and its Affiliates have timely filed
all forms, reports, registration statements, schedules and other documents,
together with any amendments required to be made with respect thereto, that
were required to be filed with any Governmental Authority, including the
SEC, and have paid all fees and assessments due and payable in connection
therewith. EnvestNet Advisory Corp. is and has been for all applicable
periods duly registered as an investment advisor under the Advisers Act.
All Supervised Persons of EnvestNet Advisory Corp. who are required to be
registered or licensed in any state are duly registered or licensed in each
state where said registration or licensing is required. Schedule 5.5(a)
lists the states in which each Supervised Person of EnvestNet Advisory
Corp. is registered or licensed, indicating the identity of the person and
the state. Each such federal and state registration is in full force and
effect.
(b) As of their respective dates, the Regulatory Documents of Buyer
and its Affiliates complied in all material respects with the requirements
of the Securities Laws, as the case may be, and the rules and regulations
of the SEC promulgated thereunder applicable to such Regulatory Documents,
and none of such Regulatory Documents, as of their respective dates,
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading. Buyer has previously delivered or made available to
the Shareholder a true, correct and complete copy of each such Regulatory
Document filed with the SEC after January 1, 1999 and prior to the date
hereof (including the Form ADV of EnvestNet Advisory Corp. as in effect on
the date hereof) and will deliver to Shareholder promptly after the filing
thereof a true, correct and complete copy of each Regulatory Document filed
by Buyer or any of its Affiliates with the SEC after the date hereof and
prior to the Closing Date.
Section 5.6. Financial Statements. Buyer has previously delivered to the
--------------------
Company copies of (a) the unaudited consolidated balance sheet of Buyer as of
December 31, 2000, and the related unaudited statements of income, changes in
shareholders' equity and cash flows for the fiscal year ended December 31, 2000,
and (b) the unaudited interim consolidated balance sheet and related statements
of income, changes in shareholders' equity and cash flows of Buyer as of and for
the five (5) month period ended May 31, 2001 (collectively, the statements
referred to above being referred to as the "Buyer Financial Statements" and the
balance sheet as of May 31, 2000 being referred to as the "Buyer Balance
Sheet"). The balance sheets referred to in the previous sentence (including the
related notes, where applicable) present fairly in all material respects the
consolidated financial position of Buyer as of the dates thereof, and the other
financial statements referred to in this Section 5.6 present fairly in all
material respects (subject, in the case of the unaudited statements, to
recurring audit adjustments normal in nature and amount) the consolidated
results of its operations and its cash flows for the respective fiscal periods
therein set forth; each of such statements (including the related notes, where
applicable) comply in all material respects with applicable accounting
requirements with respect thereto; and each of such statements (including the
related notes, where applicable) has been prepared in accordance with GAAP
consistently applied during the periods involved. Except for (i) those
liabilities that are fully reflected or reserved against on the Buyer Balance
Sheet and (ii) liabilities incurred in the ordinary course of business
consistent with past practice since the date of the Buyer Balance Sheet and
which are not material, individually or in the aggregate, Buyer has no
liabilities or obligations of any nature, whether absolute, accrued, contingent
or otherwise and whether due or to become due, which are or would be required by
GAAP to be shown on its consolidated balance sheet for such date.
Section 5.7. Contracts. To the Knowledge of Buyer, each agreement that
---------
is material to its business is in full force and effect and enforceable in
accordance with its terms. Buyer has not received written notice of cancellation
of or default under or intent to cancel or call a default under any of such
agreements. To Buyer's best knowledge, there exists no event or condition which
with or without notice or lapse of time or both would be a breach or a default
on the part of Buyer or on the part of the other party to such agreements.
Section 5.8. Subsidiaries. Schedule 5.8 sets forth the names of each of
------------
Buyer's Subsidiaries, each of which is a wholly-owned Subsidiary of the Company.
Each Subsidiary is a corporation duly organized and validly existing and in good
standing under the laws of the State of Delaware with the requisite legal and
corporate power to own its property and to carry on its business as proposed to
be conducted by it. Each Subsidiary is qualified and authorized to transact
business and is in good standing as a foreign corporation in Illinois and each
other jurisdiction in which the failure so to qualify would have a Buyer
Material Adverse Effect. Except for the Subsidiaries disclosed on Schedule 5.8,
Buyer does not own of record or beneficially any securities of, or any interest
in, any Person.
Section 5.9. Legal Proceedings. Except as disclosed on Schedule 5.9,
-----------------
there are no legal, administrative, arbitral or other proceedings (including
proceedings by any Governmental Authority), claims, actions, suits or
governmental or regulatory investigations of any nature that are pending or, to
Buyer's Knowledge, threatened against or relating to Buyer or any of its
Affiliates or its or their properties, assets or businesses, or any officers,
director or employee of Buyer or any of its Affiliates in connection with their
activities on behalf of Buyer or any of its Affiliates, or that challenge the
validity or propriety of the transactions contemplated by this Agreement, and
there is no injunction, order, judgment, decree, or regulatory restriction
imposed upon Buyer or any of its Affiliates or its or their properties, assets
or businesses.
Section 5.10. Ineligible Persons. Neither Buyer nor any "affiliated
------------------
person" (as defined in the Investment Company Act) thereof, as applicable, is
ineligible pursuant to Section 9(a) or 9(b) of the Investment Company Act to
serve as an investment adviser (or in any other capacity contemplated by the
Investment Company Act) to a registered investment company. Neither Buyer nor
any "associated person" (as defined in the Advisers Act) thereof, as applicable,
is ineligible pursuant to Section 203 of the Advisers Act to serve as an
investment adviser or as an associated person to a registered investment
adviser. Neither Buyer nor any "associated person" (as defined in the Exchange
Act) thereof, as applicable, is ineligible pursuant to Section 15(b) of the
Exchange Act to serve as a broker-dealer or as an associated person to a
registered broker-dealer.
Section 5.11. No Broker. Except for Xxxxxx Xxxxxx with respect to the
---------
EnvestNet Financing, no broker, finder or similar intermediary has acted for or
on behalf of, or is entitled to any broker's, finder's or similar fee or other
commission from Buyer or any of its Affiliates in connection with this Agreement
or the transactions contemplated hereby.
Section 5.12. Compliance with Applicable Law.
------------------------------
(a) Except as disclosed in Schedule 5.12(a), Buyer and its Affiliates
hold, and at all times have held, all material Permits necessary for the
lawful ownership and use of their properties and assets and the material
conduct of their businesses under and pursuant to every, and have complied
in all material respects with each, and are not in default in any material
respect under any, Applicable Law relating to Buyer and its Affiliates or
any of its or their assets, properties or operations, and Buyer does not
know of any outstanding violations of any of the above and has not received
notice asserting any such violation. All such Permits are valid and in
good standing.
(b) Except as disclosed on Schedule 5.12(b), since January 1, 1999
and except for normal examinations conducted by any Governmental Authority
in the regular course of the business of Buyer or any of its Affiliates, no
Governmental Authority has initiated any administrative proceeding or, to
the Knowledge of Buyer, investigation into or related to the business or
operations of Buyer or any of its Affiliates. There is no unresolved
violation, criticism or exception by any Governmental Authority with
respect to any report or statement by any Governmental Authority relating
to any examination of Buyer or any of its Affiliates.
(c) Except as disclosed in Schedule 5.12(c), none of Buyer nor any of
its respective officers, directors or employees, in the conduct of the
business with respect to employee benefit plans subject to Title I of ERISA
or Section 4975 of the Code, has (A) engaged in any conduct which would
subject them to liability under Sections 405, 406, 409, 502(i) or 502(l) of
ERISA or Section 4975 of the Code, or (B) engaged in any conduct that could
constitute a crime or violation listed in Section 411 of ERISA which would
preclude such person from providing services to any such employee benefit
plan.
(d) Buyer and each of its Affiliates have maintained records which
accurately reflect transactions in reasonable detail, and accounting
controls, policies and procedures sufficient to ensure that such
transactions are recorded in a manner which permits the preparation of
financial statements in accordance with GAAP and applicable regulatory
accounting requirements.
Section 5.13. Insurance. All of the Buyer's insurance policies and bonds
---------
are listed in Schedule 5.13. To the Knowledge of the Buyer, each such insurance
policy or bond is in full force and effect and Buyer has not received notice or
any other written notice from any insurer or agent of any intent to cancel any
such insurance policy or bond.
Section 5.14. Labor and Employment Matters. Except as set forth in
----------------------------
Schedule 5.14, (a) no collective bargaining agreement or similar agreement with
any labor organization, or work rules or practices agreed to with any labor
organization or employee association, exists which is binding on Buyer, (b)
Buyer is, and has at all times been, in compliance in all material respects with
all Applicable Law respecting employment and employment practices, terms and
conditions of employment, wages, hours of work, and occupational safety and
health, and is not engaged in any unfair labor practice, (c) there is no labor
strike, dispute, slowdown or stoppage actually pending or threatened against or
affecting Buyer, and (d) there are no written or oral agreements relating to the
employment of any individual by Buyer or any of its Affiliates on a basis other
than "at will."
Section 5.15. Taxes.
-----
(a) Buyer has timely filed, or caused to be timely filed, all
material Tax Returns required to be filed by it or any of its Subsidiaries,
and such Tax Returns are true, correct and complete in all material
respects. Except as set forth in Schedule 5.15, Buyer has paid, collected
or withheld, or caused to be paid, collected or withheld, all material
Taxes required to be paid, collected or withheld for which it or any of its
Subsidiaries is or may be liable, including without limitation liability
arising under Treasury Regulation 1.1502-6 or any similar or comparable
provisions of Applicable Law, other than such Taxes for which adequate
reserves in the Buyer Financial Statements have been established. There
are no material claims or assessments pending against Buyer or any of its
Subsidiaries for any alleged deficiency in any material Tax for which it or
any of its Subsidiaries is or may be liable, including without limitation
liability arising under Treasury Regulation 1.1502-6 or any similar or
comparable provisions of Applicable Law, and none of the Buyer or any of
its Subsidiaries has been notified in writing of any proposed Tax claim or
assessment against any of them for which any of them may be liable,
including without limitation liability arising under Treasury Regulation
1.1502-6 or any similar or comparable provisions of Applicable Law (other
than, in each case, claims or assessments for which adequate reserves in
the Buyer Financial Statements have been established or which are being
contested in good faith or are immaterial in amount). There are no
outstanding waivers or extensions of any applicable statute of limitations
to assess any amount of Taxes for which any of Buyer or its Subsidiaries is
or may be liable, including without limitation liability arising under
Treasury Regulation 1.1502-6 or any similar or comparable provisions of
Applicable Law. There are no outstanding requests by any of Buyer or its
Subsidiaries for any extension of time within which to file any Tax Return
or within which to pay any Taxes shown to be due on any return. There are
no liens for Taxes on the assets of any Buyer or its Subsidiaries, except
for statutory liens for current Taxes not yet due and payable.
(b) The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby will not result in any payment
(whether of severance pay, unemployment compensation, golden parachute,
bonus or otherwise), acceleration, forgiveness of indebtedness, vesting,
distribution, increase in benefits or obligation to fund benefits with
respect to any employee or director of any of Buyer or any of its
Subsidiaries.
(c) None of Buyer or any of its Subsidiaries has been a member of any
consolidated, combined, unitary or affiliated group of corporations for any
Tax purposes other than the group of which they are presently a member or
for which the Buyer was the common parent.
(d) None of Buyer or its Subsidiaries is or has been a United States
real property holding corporation within the meaning of Section 897(c)(2)
of the Code.
(e) Buyer will not as a result of the transactions contemplated by
this Agreement make or become obligated to make any parachute payment as
defined in Section 280(G) of the Code.
(f) No election under Section 341(f) of the Code is in effect with
respect to Buyer or any of its Subsidiaries.
(g) To Buyer's Knowledge, no claim has been made or is expected to be
made against or in respect of Buyer or its Subsidiaries by any Governmental
Authority in a jurisdiction in which any of them does not file Tax Returns
or pay or collect Taxes, in respect of a particular type of Tax imposed by
that jurisdiction, alleging that any of them is or may be subject to an
obligation to file Tax Returns or is liable for Taxes or is to collect or
pay Taxes in respect of such Tax in that jurisdiction.
Section 5.16. Environmental Matters.
---------------------
(a) To Buyer's Knowledge, Buyer and each of its Subsidiaries have
complied with all Environmental and Health Laws, and no action, suit,
proceeding, hearing, investigation, charge, complaint, claim, demand, or
notice has been filed or commenced against any of them alleging any failure
so to comply. Without limiting the generality of the preceding sentence,
Buyer and each of its Subsidiaries have obtained and been in material
compliance with all of the terms and conditions of all permits, licenses,
and other authorizations which are required under, and have materially
complied with all other limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules, and timetables which
are contained in, all Environmental and Health Laws.
(b) To Buyer's Knowledge, none of the Buyer or any of its
Subsidiaries has any material liability (and none of the Buyer or any of
its Subsidiaries has handled or disposed of any substance, arranged for the
disposal of any substance, exposed any employee or other individual to any
substance or condition, or owned or operated any property or facility in
any manner that could form the basis for any present or future action,
suit, proceeding, hearing, investigation, charge, complaint, claim, or
demand against Buyer or one of its Subsidiaries giving rise to any
liability) for damage to any site, location, or body of water (surface or
subsurface), for any illness of or personal injury to any employee or other
individual, or for any reason under any Environmental and Health Law.
Section 5.17. Employee Benefit Plans; ERISA.
-----------------------------
(a) Except as set forth in Schedule 5.17(a), with respect to any
employees or former employees, directors or officers of the Buyer, the
Buyer does not maintain, or participate under, and is not required to
contribute to, any "Buyer Plan" (as defined herein). For purposes of this
Agreement, the term "Buyer Plan" includes any pension, retirement, savings,
profit-sharing, deferred compensation, disability, medical, dental, health,
life, employment, severance pay, death benefit, group insurance, stock
option, stock purchase, stock appreciation right, restricted stock,
performance unit, incentive, bonus, vacation pay, trust, contract,
agreement, or policy (including, without limitation, any "pension plan" as
defined in Section 3(2) of ERISA, and any "welfare plan" as defined in
Section 3(1) of ERISA), whether or not any of the foregoing is funded or
insured, (i) which provides benefits to employees of the Buyer; (ii) to
which the Buyer is a party or by which it is bound; or (iii) which is
maintained by any ERISA Affiliate.
(b) The Buyer has no liability under any (i) Defined Benefit Plan;
(ii) Multiemployer Plan; or (iii) Multiple Employer Plan, nor has the Buyer
or any ERISA Affiliate, at any time since September 2, 1974, contributed to
or been obligated to contribute to any Multiemployer Plan or Multiple
Employer Plan.
(c) With respect to each Buyer Plan, the Buyer has delivered or made
available to the Company a true, correct and complete copy of: (i) each
writing constituting a part of such Buyer Plan, including without
limitation all plan documents, benefit schedules, trust agreements,
insurance contracts and other funding vehicles and any amendment or
addendum thereto; (ii) the most recent Annual Report (Form 5500 Series) and
accompanying schedule, if any; (iii) the current summary plan description,
if any; (iv) the most recent annual financial report, if any; and (v) the
most recent determination or opinion letter from the IRS, if any. Except
as specifically provided in this Agreement or the foregoing documents
delivered or made available to the Company, there are no amendments to any
Buyer Plan that have been adopted or approved nor has the Buyer undertaken
to make any such amendments.
(d) Schedule 5.17(a) identifies each Buyer Plan that is intended to
be a Qualified Plan. Each Qualified Plan has received a favorable
determination or opinion letter from the Internal Revenue Service that has
not been revoked, and to the knowledge of the Buyer there are no existing
circumstances nor any events that have occurred that are likely to have a
material adverse effect on the qualified status of any Qualified Plan or
the tax-exempt status of any related trust. No Buyer Plan is intended to
meet the requirements of Code Section 501(c)(9).
(e) All contributions required to be made to any Buyer Plan by
applicable law or regulation or by any plan document or other contractual
undertaking, and all premiums due or payable with respect to insurance
policies funding any Buyer Plan, for any period through the date hereof
have been timely made or paid in full or, to the extent not required to be
made or paid on or before the date hereof, have been fully reflected on the
Buyer Financial Statements.
(f) To the Knowledge of the Buyer (i) the administrators and
fiduciaries of each Buyer Plan, and the Buyer is and have been in
compliance in all material respects with the applicable requirements of
ERISA (including without limitation the fiduciary responsibilities imposed
by Part 4 of Title I, Subtitle B of ERISA), the Code and any other
Applicable Law governing each Buyer Plan; (ii) each Buyer Plan has at all
times been properly administered in compliance in all material respects
with its terms and in accordance with all such Applicable Laws; and (iii)
with respect to each Buyer Plan, there has not occurred, nor is any person
contractually bound to enter into, any non-exempt "prohibited transaction"
nor any "party-in-interest transaction" (as such terms are defined under
Section 4975 of the Code or Section 406 of ERISA), which such transaction
would subject any Buyer Plan, the Buyer or any officer, director or
employee thereof to a tax or penalty under Section 4975 of the Code or
Section 502(i) of ERISA.
(g) Except for health continuation coverage required by law under
Section 4980B of the Code and Part 6 of Title I of ERISA, the Buyer has no
liabilities for post-retirement welfare benefits, including without
limitation retiree medical or life benefits.
(h) Except as set forth in Schedule 5.17(h), neither the execution
and delivery of this Agreement nor the consummation of any or all of the
transactions contemplated hereby will: (i) entitle any employee or former
employee of the Buyer to severance pay, unemployment compensation or any
similar payment, (ii) accelerate the time of payment or vesting or increase
the amount of any compensation or benefit due to any employee or former
employee of the Buyer, or (iii) directly or indirectly result in any
payment made to or on behalf of any person that would constitute a "excess
parachute payment" within the meaning of Section 280G of the Code.
(i) There are (i) no actions, suits or claims pending (other than
routine claims for benefits) or, to the Knowledge of the Buyer, threatened
against, or with respect to, any Buyer Plan or its assets, and (ii) no
examinations or investigations (other than a routine determination letter
filing) pending with respect to any Buyer Plan before the Internal Revenue
Service, the Department of Labor, the Pension Benefit Guaranty Corporation,
the Securities and Exchange Commission or any other federal or provincial
government agency, that could reasonably be expected to result in any
material liability of the Buyer.
(j) Set forth in Schedule 5.17(j) is an accounting of all
obligations, contingent or otherwise, of the Buyer (other than obligations
to pay base salary and annual bonuses in the ordinary course of business
consistent with past practice) owing or payable to, or on behalf of,
employees or former employees of the Buyer that are not accrued or
otherwise reflected on the Buyer Balance Sheet.
Section 5.18. Technology and Intellectual Property.
------------------------------------
(a) Attached hereto as Schedule 5.18(a) is a list of all material (i)
domestic and foreign registered trademarks and service marks, registered
copyrights and patents, (ii) applications for registration or grant of any
of the foregoing, (iii) unregistered trademarks, service marks, trade
names, logos and assumed names, and (iv) licenses for any of the foregoing,
in each case, owned by Buyer or used in or necessary to conduct the
business of Buyer. The items on Schedule 5.18(a), together with all other
material trademarks, service marks, trade names, logos, assumed names,
patents, copyrights, trade secrets, computer software, licenses, formulae,
customer lists or other databases, designs and inventions currently used in
or necessary to conduct the business of any of the Companies constitute the
"Buyer Intellectual Property."
(b) Except as set forth in Schedule 5.18(b), Buyer has ownership of,
or such other rights by license, lease or other agreement in and to, the
Buyer Intellectual Property as necessary to conduct its business as
presently conducted. To the Knowledge of the Buyer, Buyer has not infringed
or violated any trademark, trade name, copyright, patent, trade secret
right or other proprietary right of others. Buyer has not received any
notice of any claim respecting any such violation or infringement.
Section 5.19. No Adverse Change. Except as provided on Schedule 5.19 or
-----------------
otherwise disclosed in this Agreement, since December 31, 2000, (i) Buyer has
operated its material business only in the ordinary course of business
consistent with past practice; and (ii) there has been no Buyer Material Adverse
Change.
Section 5.20. Real Property. The assets of Buyer that consist of
-------------
leasehold interests in real property are listed in Schedule 5.20, together with
annual lease payments and all Encumbrances thereon. All offices where Buyer or
one of its Subsidiaries presently conducts its business are subject to leases
listed in Schedule 5.20. Buyer has no interests in any real property except for
the leases set forth in Schedule 5.20. Buyer has furnished the Company with
true, correct and complete copies of all leases listed in Schedule 5.20. To the
Knowledge of Buyer, all leases listed in Schedule 5.20 are in full force and
effect in accordance with their respective terms, and there is not any existing
default or event which with notice or lapse of time or both would become a
default under any such lease.
Section 5.21. Related Party Transactions.
--------------------------
(a) Except as disclosed in Schedule 5.21(a), no employee, officer or
director of Buyer or any of its Subsidiaries, or member of the immediate
family of any of them, is indebted to Buyer or any of its Subsidiaries, nor
is Buyer or any of its Subsidiaries indebted (or committed to make loans or
extend or guarantee credit) to any of them.
(b) To the Buyer's Knowledge, no employee, officer or director of
Buyer or any of its Subsidiaries, or member of the immediate family of any
of them, has any direct or indirect ownership interest in (i) any Person
with which Buyer or any of its Subsidiaries is affiliated or with which
Buyer or any of its Subsidiaries has a business relationship, or (ii) any
Person that competes with Buyer.
(c) Except as disclosed in Schedule 5.21(c), to Buyer's Knowledge, no
employee, officer or director of Buyer or any of its Subsidiaries, or
member of the immediate family of any of them, is, directly or indirectly,
interested in any material contract with Buyer or any of its Subsidiaries.
Section 5.22. Accounts Receivable. Except as identified on Schedule 5.22,
-------------------
all accounts receivable shown on the Buyer Balance Sheet or incurred by Buyer
since the date thereof, represent arm's length transactions actually made in the
ordinary course of business and are believed collectible in the ordinary course
of business without the necessity of commencing legal proceedings, and, to the
Buyer's Knowledge, are not subject to counterclaim or set-off or in dispute.
Section 5.23. Title to Assets. Buyer and its Subsidiaries own good and
---------------
valid title to the assets and properties which they own or purport to own, free
and clear of any and all Encumbrances affecting material assets and properties
of Buyer and its Subsidiaries, except those Encumbrances identified on Schedule
5.23 and Encumbrances for taxes not yet due and payable and such other
Encumbrances or minor imperfections of title, if any, which do not materially
detract from the value or interfere with the present use of the affected asset
or which individually or in the aggregate would not have a Buyer Material
Adverse Effect.
Section 5.24. Accuracy of Warranties. No representation or warranty by
----------------------
the Buyer in this Agreement, and no Exhibit, certificate, Schedule, instrument
or document prepared or delivered, or to be delivered, by the Buyer pursuant
hereto or in connection with the transactions contemplated herein, contains or
will contain any untrue statement of a material fact or omits or will omit to
state a material fact necessary in order to make the statements herein and
therein not misleading.
ARTICLE VI.
COVENANTS
Section 6.1. Conduct of Business by the Companies. During the period
------------------------------------
from the date of this Agreement and continuing through the Closing Date, except
as expressly contemplated or permitted by this Agreement or with the prior
written consent of Buyer, each of the Companies shall (a) carry on its business
in the ordinary course consistent with past practice; (b) make all commercially
reasonable efforts to preserve its present business organization and
relationships; (c) make all commercially reasonable efforts to keep available
the present services of its employees; and (d) make all commercially reasonable
efforts to preserve its rights, franchises, goodwill and relations with its
customers and others with whom it conducts business, consistent with past
practice. Without limiting the generality of the foregoing, except as set forth
in Schedule 6.1, expressly permitted or contemplated by this Agreement or
consented to in writing by Buyer, none of the Companies shall, directly or
indirectly:
(i) amend, or agree to amend its Articles of Incorporation or
By-laws (or comparable instruments), or merge with or into or
consolidate with, or agree to merge with or into or consolidate with,
any other Person, subdivide or in any way reclassify any shares of its
capital stock, or change or agree to change in any manner the rights
of its outstanding capital stock;
(ii) issue or sell or purchase, or issue any option, warrant,
convertible or exchangeable security, right, subscription, call,
unsatisfied pre-emptive right or other agreement or right of any kind
to purchase or otherwise acquire (including, without limitation, by
exchange or conversion) (each a "Right"), or enter into any contracts,
agreements or arrangements to issue or sell, any shares of its capital
stock;
(iii) incur any indebtedness for borrowed money or guarantee
the indebtedness of other Persons, except in the ordinary course of
business consistent with past practice;
(iv) waive, or agree to waive, any right of material value to
its business;
(v) make, or agree to make, any material change in its
accounting methods or practices for Tax or accounting purposes or
make, or agree to make, any material change in depreciation or
amortization policies or rates adopted by it for Tax or accounting
purposes;
(vi) materially change, or agree to materially change, any of
its business policies or practices that relate to its business,
including, without limitation, fee structure, fee waivers, expense
reimbursement, interest rate management, security selection, sales and
marketing, personnel, budget or product development policies;
(vii) make any loan or advance to the Shareholder or any of its
Affiliates, officers, directors, employees, consultants, agents or
other representatives (other than travel advances made in the ordinary
course of business), or make any other loan or advance otherwise than
in the ordinary course of business;
(viii) sell, offer to sell, abandon or make any other
disposition of any of its assets, except in the ordinary course of
business; grant or suffer, or agree to grant or suffer, any
Encumbrance on any of its material assets;
(ix) except in the ordinary course of business or in amounts
less than $25,000 in the aggregate, incur or assume, or agree to incur
or assume, any liability or obligation (whether or not currently due
and payable) relating to its business or any of its assets;
(x) make any material change in its overall investment
strategy or mix of products;
(xi) enter into, or agree to enter into, any contract,
agreement or arrangement with any of its Affiliates, except as
necessary to transfer servicing obligations under the PCS Contracts to
the Buyer;
(xii) declare dividends or declare or make any other
distributions of any kind payable to the Shareholder or make any
direct or indirect redemption, retirement, purchase or other
acquisition of any shares of its capital stock or Rights;
(xiii) create, renew, amend, terminate or cancel, or take any
other action that may result in the creation, renewal, amendment,
termination or cancellation of, any lease or Contract, except in the
ordinary course of business and as could not, in the aggregate,
reasonably be expected to have a Company Material Adverse Effect;
enter into or amend, or agree to enter into or amend, (x) any
agreement pursuant to which it agrees to indemnify any party on behalf
of its business or pursuant to which it agrees to refrain from
competing with any party with respect to its business or (y) any
sub-advisory, management, distribution, marketing, custody or other
services agreement;
(xiv) take any action impairing its rights under any Contract
other than in the ordinary course of business;
(xv) adopt, amend, renew or terminate any Company Plan or any
other employee program, agreement, arrangement or policy between any
of the Companies and one or more of its employees, other than in the
ordinary course of business;
(xvi) commit any act or omission which constitutes a breach or
default under any Contract or material license to which it is a party
or by which it or any of its properties or assets is bound the effect
of which, in the aggregate, could reasonably be expected to have a
Company Material Adverse Effect;
(xvii) enter into any new line of business;
(xviii) acquire or agree to acquire in any manner, including by
way of merger, consolidation, purchase of an equity interest or
assets, any business or any corporation, partnership, association or
other business organization or division thereof;
(xix) increase the salary or wages of any Company officers or
employees except in the case of employees in accordance with past
practices;
(xx) make, or agree to make, any capital commitments of
expenditures other than in the ordinary course of business consistent
with past practice;
(xxi) agree (by contract or otherwise) to do any of the
foregoing.
Section 6.2. Elimination of Intra-Company Payables and Indebtedness.
------------------------------------------------------
Immediately prior to the Closing, the Shareholder and the Company will cause the
Company to have no liabilities, obligations or accounts payable to any Affiliate
except for (i) the Demand Note, (ii) the Notes and (iii) other payables not to
exceed $20,000 relating to the most recent month's services that are of the
nature and type that will be provided to the Company pursuant to one of the
Services Agreements after the Closing ("Acceptable Payables"). The elimination
of any such liabilities, obligations or accounts payable (other than the Demand
Notes, the Notes and the Acceptable Payables) shall be effected by contributing
the amount of such liability, obligation or payable to the equity capital of the
Company.
Section 6.3. Debt Adjustment. Within seventy-five (75) days following
---------------
the Effective Time, the Company will determine whether there has occurred a Debt
Adjustment Event. In the event a Debt Adjustment Event has occurred, the
Shareholder shall make a capital contribution to the Company in the amount of
Permitted Debt Adjustment Amount, deemed to be made as of the Effective Time, as
follows:
(a) the principal amount of the Two Year Note shall be reduced by the
amount of the Permitted Debt Adjustment Amount; and
(b) the principal amount of the One Year Note shall be reduced by the
amount, if any, by which the Permitted Debt Adjustment Amount exceeds
$3,000,000.
Section 6.4. Payment of Demand Note. Promptly following the Closing and
----------------------
on the Closing Date, Buyer shall cause the Demand Note to be paid in full by
wire transfer of immediately available funds to the holder thereof. After the
Closing Date, the Buyer will cause the Company to perform all of its obligations
under the Notes.
Section 6.5. Tax Covenants.
-------------
(a) Without the prior written consent of Buyer, not to be
unreasonably withheld, neither the Company, the Shareholder, nor any
Affiliate of the Shareholder shall, to the extent it may affect or relate
to the Companies, make or change any Tax election, change any annual tax
accounting period, adopt or change any method of Tax accounting, file any
amended Tax Return, enter into any closing agreement, settle any Tax claim
or assessment, surrender any right to claim a Tax refund, consent to any
extension or waiver of the limitations period applicable to any Tax claim
or assessment, if any such action would have the effect of materially
increasing the Tax liability or materially reducing any Tax asset
(including net operating losses) of the Buyer, or any of the Companies.
(b) Without the prior written consent of the Shareholder, not to be
unreasonably withheld, neither Buyer nor any Affiliate of Buyer shall, to
the extent it may affect or relate to the Companies, make or change any Tax
election, change any annual Tax accounting period, adopt or change any
method of Tax accounting, file any amended Tax Return, enter into any
closing agreement, settle any Tax claim or assessment, surrender any right
to claim a Tax refund, or consent to any extension or waiver of the
limitations period applicable to any Tax claim or assessment, if any such
action would have the effect of increasing Shareholder's Tax liability or
obligation to indemnify Buyer.
(c) All Tax Returns not required to be filed on or before the Closing
Date, the filing responsibility for which is allocated in accordance with
Section 6.4(d), and relating in whole or in part to any taxable period
beginning before the Closing Date, (i) will be filed when due in accordance
with all applicable laws, and (ii) as of the time of filing, will
accurately reflect the facts regarding the income, business, assets,
operations, activities and status of the Companies, and any other
information required to be shown therein.
(d) The Shareholder shall include, through the close of business on
the Closing Date, the Companies in its consolidated federal Tax Return and
in the Tax Returns of any state or local jurisdictions in which Shareholder
files Tax Returns with any of the Companies on a consolidated, combined or
unitary basis for purpose of income or franchise tax and report all income,
gain or loss of the Companies through the Closing Date and all income, gain
or loss, if any, arising as a result of the Merger, including, but not
limited to, the recapture of any excess loss accounts as defined in
Treasury Regulation 1.1502-19 and all deferred intercompany items in
accordance with Treasury Regulation 1.1502-13 in the calculation of taxable
income on such return.
(e) Unless otherwise requested in writing by the Buyer, the
Shareholder shall prepare and file or shall cause the Companies to prepare
and file the following Tax Returns with respect to the Companies:
(i) all Tax Returns for any taxable period ending on or before
the Closing Date; and
(ii) all other Tax Returns required to be filed (taking into
account extensions) prior to the Closing Date.
Any Taxes or inter-company payables relating to Taxes due with respect to
periods identified in Section 6.5(e), whether payable by the Company or the
Shareholder, shall be considered an Acceptable Payable pursuant to Section
6.2 and shall be limited to $20,000 (including any other Acceptable
Payables), with the Shareholder solely responsible for any Taxes owed with
respect to such periods in excess of such amount.
(f) All Tax sharing agreements or arrangements by and among the
Shareholder, its Affiliates and the Companies shall be terminated as of the
Closing Date and there shall be no continuing obligations under such
agreements or arrangements.
Section 6.6. Advisory Agreement Consents. The Shareholder and the
---------------------------
Companies shall use their commercially reasonable best efforts to obtain
consents to the assignments of the contracts under the Advisers Act required for
the consummation of the transactions contemplated hereby. Buyer agrees to
assist the Shareholder and the Companies in obtaining such consents upon request
of the Shareholder. Buyer agrees that, except in the case of Advisory
Agreements which prohibit assignment or state by their terms that they terminate
upon assignment, consent for any Advisory Agreement may be obtained by
requesting written consent as aforesaid and informing such client of: (a) the
intention to complete the Merger, which will result in a deemed assignment of
such Advisory Agreement; (b) PMC's intention to continue the advisory services,
pursuant to the existing Advisory Agreement with such client after the Closing
if such client does not terminate such agreement prior to the Closing; and
(c) that the consent of such client will be implied if such client does not
terminate the Advisory Agreement and continues to accept such advisory services
for at least 30 days after Closing and Notice is given at least 30 days prior to
Closing.
Section 6.7. Maintenance of Records.
----------------------
(a) Through the Closing Date, the Companies will maintain the Records
in substantially the same manner and with the same care that the Records
have been maintained prior to the execution of this Agreement. From and
after the Closing Date, each party to this Agreement shall permit the other
parties reasonable access to any applicable Records in its possession
reasonably necessary in connection with any claim, action, litigation or
other proceeding involving the party requesting access to such Records or
in connection with any legal obligation owed by such party to any
Governmental Authority or any present or former client of the Companies.
(b) For a period of not less than six (6) years after the Closing
Date, neither Buyer nor any of its Affiliates shall dispose of or destroy
any Records, and thereafter none of the above persons shall dispose of or
destroy any such Records without first offering to turn over possession
thereof (at the Shareholder's expense) by written notice to the
Shareholder, at least 30 days prior to the proposed date of such
disposition or destruction.
Section 6.8. Employees, Employee Benefits.
----------------------------
(a) Effective as of the Closing Date, the individuals who are
employed by the Companies immediately prior to the Closing (the "Affected
Employees") shall be eligible to participate in the Buyer Plans that are
Qualified Plans on the same basis as similarly situated Buyer employees who
are not Affected Employees, subject to the eligibility requirements
thereunder. The Buyer shall credit Affected Employees with continuous
service with the Companies or any Subsidiary of the Companies immediately
prior to the Closing for purposes of eligibility and vesting, but not
benefit accrual, under any applicable Buyer Qualified Plan. Subject to the
foregoing, effective as of the Closing Date or as soon as administratively
feasible thereafter, Affected Employees shall be eligible to participate in
the EnvestNet 401(k) Retirement Plan ("Buyer 401(k) Plan") and shall cease
to participate in the PMC International, Inc. 401(k) Plan ("Company 401(k)
Plan").
(b) Affected Employees shall be eligible to participate in the Buyer
Plans that are welfare plans as defined in Section 3(1) of ERISA ("Buyer
Welfare Plans") maintained by Buyer on or after the Closing Date, on the
same basis as similarly situated Buyer employees who are not Affected
Employees, subject to the eligibility requirements thereunder. The Buyer
shall credit Affected Employees with continuous service with the Companies
or any Subsidiary of the Companies immediately prior to the Closing for
purposes of eligibility and vesting. The Buyer shall use reasonable
efforts to cause the relevant service providers and insurers to credit
Affected Employees participating in Buyer Welfare Plans after the Closing
Date with annual coinsurance and deductibles that have been satisfied to
date and to waive any preexisting condition limitations and waiting periods
other than such limitations or waiting periods that an Affected Employee
would have had to satisfy and had not yet satisfied under a Company Plan
that is a welfare plan ("Company Welfare Plans") immediately prior to the
Closing Date. Affected Employees shall cease to participate in the Company
Welfare Plans effective as of the Closing Date.
(c) Shareholder shall retain or assume all liabilities with respect
to (i) the Company Qualified Plans, including the Company 401(k) Plan, and
shall freeze or terminate any such plan or merge them into comparable
Shareholder qualified plans; (ii) the Company Welfare Plans; and (iii) any
other Company Plans. Buyer shall assume all liabilities with respect to
(i) any health care continuation coverage required under Section 4980B of
the Code and Part 6 of Subtitle B of Title 1 of ERISA ("COBRA") with
respect to any former employee of the Companies (or their dependents) who
(1) are covered under any Company Welfare Plan in accordance with COBRA as
of the Closing Date, or (2) have a right to elect health care continuation
coverage under any Company Welfare Plan in accordance with COBRA as of the
Closing Date, and (ii) any health care continuation coverage required with
respect to any Affected Employee under any Buyer Welfare Plan in accordance
COBRA after the Closing Date.
(d) For a period of one (1) year following the Closing, neither the
Shareholder nor any of its Affiliates shall solicit or hire any employees
employed by the Companies as of the Closing Date, unless such employees
shall have been involuntarily terminated by the Companies.
(e) For a period of one (1) year following the Closing, neither the
Buyer nor any of its Affiliates shall solicit or hire any employees
employed by the Shareholder or any of its Affiliates (other than the
Companies) as of the Closing Date, unless such employees shall have been
involuntarily terminated by the Shareholder or any of its Affiliates.
Section 6.9. Further Assurances. Each party to this Agreement shall
------------------
execute such documents and other papers and perform such further acts as may be
reasonably required to carry out the provisions hereof and the transactions
contemplated hereby, together with other consolidation activities. For a
reasonable period of time after the Closing Date upon the request of Buyer, the
Companies, its Affiliates and the Shareholder shall promptly execute and deliver
such further instruments of assignment, transfer, conveyance, endorsement,
direction or authorization and other documents as Buyer may reasonably request
to effectuate the purposes of this Agreement.
Section 6.10. Efforts of Parties to Close. During the period from the
---------------------------
date of this Agreement through the Closing Date, each party hereto shall use its
reasonable best efforts to fulfill or obtain the fulfillment of the conditions
precedent to the consummation of the transactions contemplated hereby, including
the execution and delivery of any documents, certificates, instruments or other
papers that are reasonably required for the consummation of the transactions
contemplated hereby. During the period from the date of this Agreement and
continuing through the Closing, except as required by Applicable Law or with the
prior written consent of the other parties to this Agreement, no party to this
Agreement shall take any action which, or fail to take any action the failure of
which to be taken, would, or could reasonably be expected to, (a) result in any
of the representations and warranties set forth in this Agreement on the part of
the party taking or failing to take such action being or becoming untrue in any
material respect; (b) result in any conditions to the Closing set forth in
Article VII not being satisfied; (c) result in a material violation of any
provision of this Agreement; or (d) adversely affect or materially delay the
receipt of any of the requisite regulatory approvals.
Section 6.11. Confidentiality and Announcements.
---------------------------------
(a) The parties agree to be bound by and comply with the provisions
set forth in the Confidentiality Agreement, the provisions of which are
hereby incorporated herein by reference.
(b) Other than (i) in connection with Buyer's efforts to consummate
the EnvestNet Financing, (ii) in connection with the Shareholder's and the
Company's efforts to obtain all necessary consents to the Merger and the
transactions contemplated by the Merger, or (iii) as required in the
disclosing party's sole judgment by law upon prior notice to the other
parties or with the prior consent of the other parties, neither the
Shareholder, the Companies, nor Buyer shall, and each of the foregoing
shall cause each of its Affiliates, employees, directors, partners and
agents, including accountants, lenders, counsel and investment bankers not
to, disclose to any Person the fact of execution and delivery hereof or any
of the contents hereof.
(c) Subject to Section 6.11(a) and (b), the parties to this Agreement
shall agree with each other as to the form and substance of any press
release related to this Agreement or the transactions contemplated hereby
and shall consult each other as to the form and substance of other public
disclosures related hereto and thereto, excluding disclosures required by
law, the form and substance of which shall be in the sole discretion of the
disclosing party.
Section 6.12. Regulatory Matters; Third Party Consents.
----------------------------------------
(a) The parties to this Agreement shall cooperate with each other and
use their reasonable best efforts promptly to prepare and file all
necessary documentation, to effect all applications, notices, petitions and
filings, and to obtain as promptly as practicable all permits, consents,
approvals, waivers and authorizations of all third parties and Governmental
Authorities which are necessary or advisable to consummate the transactions
contemplated by this Agreement. If any required consent of or waiver by
any third party (excluding any Governmental Authority) is not obtained
prior to the Closing, or if the assignment of any Contract would be
ineffective or would adversely affect any material rights or benefits
thereunder so that Buyer would not in fact receive all such material rights
and benefits, the parties hereto, each without cost, expense or liability
to the other (except as provided in Article VIII hereof), shall cooperate
in good faith to seek, if reasonably possible, an alternative arrangement
to achieve the economic results intended. The parties to this Agreement
will have the right to review in advance, and will consult with the other
on, all the information relating to Buyer, the Companies or the
Shareholder, as the case may be, which appear in any filing made with, or
written materials submitted to, any third party or any Governmental
Authority in connection with the transactions contemplated by this
Agreement; provided, however, that nothing contained herein shall be deemed
-------- -------
to provide any party to this Agreement with a right to review any
information provided to any Governmental Authority on a confidential basis
in connection with the transactions contemplated hereby. The parties to
this Agreement agree that they will consult with each other with respect to
the obtaining of all permits, consents, approvals and authorizations of all
third parties and Governmental Authorities necessary or advisable to
consummate the transactions contemplated by this Agreement and each party
will keep the others apprised of the status of matters relating to
completion of the transactions contemplated herein. The party responsible
for a filing as set forth above shall promptly deliver to the other parties
hereto evidence of the filing of all applications, filings, registrations
and notifications relating thereto (except for any confidential portions
thereof), and any supplement, amendment or item of additional information
in connection therewith (except for any confidential portions thereof). The
party responsible for a filing shall also promptly deliver to the other
parties hereto a copy of each material notice, order, opinion and other
item of correspondence received by such filing party from any Governmental
Authority in respect of any such application (except for any confidential
portions thereof). In exercising the foregoing rights and obligations,
Buyer, the Companies and the Shareholder shall each act reasonably and as
promptly as practicable.
(b) Each party to this Agreement shall, upon request, furnish each
other with all information concerning themselves, directors, officers and
stockholders 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, the Companies or the Shareholder to any
Governmental Authority 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).
(c) The parties to this Agreement shall promptly advise each other
upon receiving any communication from any Governmental Authority 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.
Section 6.13. Notification of Certain Matters.
-------------------------------
(a) Each party to this Agreement shall give prompt notice to the
other parties of (i) the occurrence, or failure to occur, of any event or
existence of any condition that has caused any of its representations or
warranties contained in this Agreement to be untrue or inaccurate in any
material respect at any time after the date of this Agreement, up to and
including the Closing Date, and (ii) any failure on its part to comply with
or satisfy, in any material respect, any covenant, condition or agreement
to be complied with or satisfied by it under this Agreement. In connection
with the Closing, the Companies and Buyer will promptly supplement or amend
the various Schedules to this Agreement to reflect any matter which, if
existing, occurring or known at the date of this Agreement, would have been
required to be set forth or described in such Schedules or which is
necessary to correct any information in such Schedules which was or has
been rendered inaccurate thereby. No such supplement or amendment to the
Schedules shall have any effect for the purpose of determining satisfaction
of the conditions set forth in Article VII hereof, or the compliance by any
party hereto with its covenants and agreements set forth herein, or for
purposes of determining any party's indemnification obligations pursuant to
Article VIII hereof.
(b) During the period from the date of this Agreement to the Closing
Date, each party will, upon request, cause one or more of its designated
representatives to periodically confer with representatives of the other
party and to report the general status of the ongoing operations of the
reporting party. Each party will promptly notify the other party of any
material change in the conduct of its business or in the operation of its
properties and of any governmental complaints, investigations or hearings
(or communications indicating that the same may be contemplated), or the
institution or the threat of litigation involving the reporting party, and
will keep the other party fully informed of such events.
Section 6.14. Expenses. Each party shall be responsible for its own
--------
legal, accounting, brokerage and other advisory fees and expenses incurred in
connection with the negotiation and preparation of this Agreement and the
consummation of the transactions contemplated hereby, except that the
Shareholder shall be responsible for the Company's and its own legal,
accounting, brokerage and other advisory fees and expenses incurred in
connection with the negotiation and preparation of this Agreement and the
consummation of the transactions contemplated hereby provided, however, Buyer
-------- -------
agrees to reimburse shareholder for 15% of the Shareholder's and the Company's
legal fees and expenses up to a maximum of $20,000.
Section 6.15. No Internet-Based WRAP Program. The Shareholder, on behalf
------------------------------
of itself and its Affiliates, shall not, for a period of two (2) years following
the Closing Date, (i) sponsor any internet-based WRAP fee business, or (ii)
solicit any advisory client of the Company to become a WRAP fee business
advisory client of the Shareholder, any Affiliate of the Shareholder or of any
other Person; provided, however, nothing herein shall prevent (1) the
-------- -------
Shareholder and its Affiliates from fulfilling their obligations under the
Services Agreements and the PCS Contracts, (2) a company that operates an
internet-based WRAP fee business from acquiring the Shareholder or one of its
Affiliates or (3) the Shareholder or one of its Affiliates from acquiring a
company which, incidental to its primary line of business, operates an internet-
based WRAP fee business (but in such event the Shareholder and any Affiliate
agrees not to expand such internet-based WRAP fee business until after
expiration of the two (2) year period).
Section 6.16. Third Party Proposals. Neither the Company, any of its
---------------------
Subsidiaries, the Shareholder nor any of their respective Affiliates shall
directly or indirectly solicit, encourage or facilitate inquiries or proposals,
or enter into any definitive agreement, with respect to, or initiate or
participate in any negotiations or discussions with any Person concerning, any
acquisition or purchase of all or a substantial portion of the assets of, or of
any equity interest in, the Company or any of its Subsidiaries or any merger or
business combination with the Company or any of its Subsidiaries other than as
contemplated by this Agreement (each, an "Acquisition Proposal") or furnish any
information to any such Person. The Company, the Shareholder and any of their
respective Affiliates and agents shall notify Buyer immediately if any
Acquisition Proposal (including the terms thereof) is received by, any such
information is requested from, or any such negotiations or discussions are
sought to be initiated with, any of the Company, its Subsidiaries, the
Shareholder or any of their respective Affiliates. The Company and the
Shareholder shall, and shall cause their respective Affiliates, officers,
directors, employees, representatives and advisors to, immediately cease or
cause to be terminated any existing activities, including discussions or
negotiations with any parties, conducted prior to the date hereof with respect
to any Acquisition Proposal and shall seek to have all materials distributed to
such Persons by the Company, the Shareholder or any of their respective
Affiliates or advisors returned to the Company promptly. None of the Company,
the Shareholder or any of their respective Affiliates shall amend, modify, waive
or terminate, or otherwise release any Person from, any standstill,
confidentiality or similar agreement or arrangement currently in effect. The
Company and the Shareholder shall cause their respective officers, directors,
agents, advisors and Affiliates to comply with the provisions of this Section
6.16.
Section 6.17. Disposition of Merger Consideration. Each certificate
-----------------------------------
representing shares of Buyer Common Stock issued to the Shareholder shall bear a
legend to the effect that such shares may not be transferred, sold or otherwise
disposed of unless pursuant to the terms of the Stockholders' Agreement.
Section 6.18. Voting of Shares. During the period from the date of this
----------------
Agreement and continuing through the Closing Date, the Shareholder shall not
deposit the Shares into a voting trust or enter into a voting agreement or
arrangement with respect to such Shares or grant any proxy with respect thereto.
Section 6.19. Positive Current Ratio. After the Shareholder and the
----------------------
Company comply with the covenants contained in Section 6.2, the Shareholder and
the Company will cause the Company to have a positive Current Ratio.
Section 6.20. Assignment of PCS Contracts. Upon request of Buyer, but in
---------------------------
no event later than the second anniversary of the Closing Date, the Shareholder
shall cause its Affiliates to assign the PCS Contracts to the Company (or one of
its affiliates) and will use its best efforts to assist Buyer and the Company in
obtaining the consent of the other parties to the PCS Contracts to such
assignment.
Section 6.21. Elimination of Encumbrances. Promptly, but in any event not
---------------------------
later than twenty (20) days after the date of this Agreement, the Company and
Shareholder shall take all actions necessary to obtain the release, elimination
and removal of any and all Encumbrances referenced in Schedule 4.22; provided,
--------
however, Encumbrances which relate to executory equipment leases shall be
-------
permitted to remain in place.
Section 6.22. License to Software. Prior to Closing, the Shareholder
-------------------
shall have caused itself or one of its Affiliates to execute a perpetual,
royalty-free license or sub-license in favor of the Companies for any and all
computer software that is currently owned or held under license by the
Shareholder or any of its Affiliates and used by the Companies.
Section 6.23. Buyer Duty to Notify. Between the date hereof and the
--------------------
Closing Date, Buyer shall notify Shareholder of any events which do not occur in
the ordinary course of Buyer's business and are not consistent with past
practice.
ARTICLE VII.
CONDITIONS TO CONSUMMATION
OF THE MERGER
Section 7.1. Conditions to Buyer's Obligations. The obligations of Buyer
---------------------------------
to effect the Merger shall be subject to the following conditions, any of which
may be waived in writing by Buyer:
(a) The representations and warranties of the Company and the
Shareholder set forth in this Agreement shall be true and correct in all
material respects as of the date of this Agreement and (except to the
extent such representations and warranties speak as of an earlier date) as
of the Closing Date as though made on and as of the Closing Date; provided,
--------
however, that for purposes of determining the satisfaction of the condition
-------
contained in this Section 7.1(a), no effect shall be given to any exception
in such representations and warranties relating to materiality or a Company
Material Adverse Effect, and such representations and warranties shall be
deemed to be true and correct in all material respects only if the failure
or failures of such representations and warranties to be so true and
correct without regard to materiality and Company Material Adverse Effect
exceptions do not represent in the aggregate a Company Material Adverse
Effect;
(b) The Company and the Shareholder shall have performed and complied
in all material respects with all agreements, covenants, obligations and
conditions required by this Agreement to be performed or complied with by
them at or prior to the Closing Date;
(c) The Company shall have delivered to Buyer a certificate, dated as
of the Closing Date, signed on behalf of the Company by its Chief Executive
Officer and Chief Financial Officer confirming the satisfaction of the
conditions contained in paragraphs (a) and (b) of this Section 7.1;
(d) Buyer shall have received an opinion of Xxxxxxx & Xxxxx LLP,
counsel to the Company, dated the Closing Date, substantially in the form
attached hereto as Exhibit K;
(e) There shall not have occurred a Company Material Adverse Change.
Section 7.2. Conditions to the Company's and the Shareholder's
-------------------------------------------------
Obligations. The obligation of the Company or the Shareholder to effect the
-----------
Merger shall be subject to the following conditions, which may be waived in
writing by the Company:
(a) The representations and warranties of Buyer set forth in this
Agreement shall be true and correct in all material respects as of the date
of this Agreement and (except to the extent such representations and
warranties speak as of an earlier date) as of the Closing Date as though
made on and as of the Closing Date; provided, however, that for purposes of
-------- -------
determining the satisfaction of the condition contained in this Section
7.2(a), no effect shall be given to any exception in such representations
and warranties relating to materiality or a Buyer Material Adverse Effect,
and such representations and warranties shall be deemed to be true and
correct in all material respects only if the failure or failures of such
representations and warranties to be so true and correct without regard to
materiality, and Buyer Material Adverse Effect exceptions do not represent
in the aggregate a Buyer Material Adverse Effect;
(b) Buyer shall have performed and complied in all material respects
with all agreements, covenants, obligations and conditions required by this
Agreement to be performed or complied with by it at or prior to the Closing
Date;
(c) Buyer shall have delivered to the Company and Shareholder a
certificate, dated as of the Closing Date, signed on behalf of Buyer by its
Chief Executive Officer and Chief Financial Officer confirming the
satisfaction of the conditions contained in paragraphs (a) and (b) of this
Section 7.2;
(d) The Company and the Shareholder shall have received the opinion
of Xxxxxxx, Carton & Xxxxxxx, counsel to Buyer, dated the Closing Date,
substantially in the form attached hereto as Exhibit L;
(e) Buyer shall have executed and delivered the Demand Note and the
Notes;
(f) Buyer shall close on the EnvestNet Financing in an amount not
less than $12,000,000 in gross proceeds;
(g) Each of Buyer, Buyer's existing common and preferred
shareholders, investors in the EnvestNet Financing, and Shareholder shall
have executed the Stockholders' Agreement;
(h) Buyer shall have executed the Registration Rights Agreement; and
(i) There shall not have occurred a Buyer Material Adverse Change.
Section 7.3. Mutual Conditions. The obligations of each party to this
-----------------
Agreement to effect the Merger shall be subject to the following conditions, any
of which may be waived in writing by both the Company and the Shareholder, on
the one hand, and Buyer, on the other hand:
(a) No order, injunction or decree issued by any court or agency of
competent jurisdiction or other legal restraint or prohibition preventing
the consummation of the transactions contemplated by this Agreement shall
be in effect. No proceeding initiated by any Governmental Authority
seeking an injunction shall be pending. No statute, rule, regulation,
order, injunction or decree shall have been enacted, entered, promulgated
or enforced by any Governmental Authority which prohibits, restricts or
makes illegal consummation of the transactions contemplated hereby;
(b) All consents, waivers, authorizations and approvals required from
all Governmental Authorities to consummate the transactions contemplated
hereby shall have been obtained and shall remain in full force and effect
and all statutory waiting periods in respect thereof shall have expired;
(c) The Stockholders' Agreement shall have been executed by Buyer,
the shareholders of Buyer, investors in the EnvestNet Financing and the
Shareholder; and
(d) The Services Agreements shall have been executed by Buyer and the
Shareholder.
ARTICLE VIII.
INDEMNIFICATION
Section 8.1. Survival of Representations, Warranties and Covenants. All
-----------------------------------------------------
representations and warranties of the parties contained in this Agreement,
including any schedules made a part hereof, and any covenants or other
agreements the performance of which is specified to occur on or prior to the
Closing or the Closing Date, shall survive the Merger hereunder for a period of
two (2) years following the Closing Date; provided, however, that the
-------- -------
representations and warranties of the parties contained in Sections 4.2,
4.13(a), 4.18, 5.2, 5.12(a) and 5.15 shall survive the Merger hereunder for a
period from the Closing Date until the expiration of the applicable statutory
period of limitations provided, further, however, that the representations and
-------- ------- -------
warranties contained in Sections 4.18(g) though (j) shall terminate as of the
Closing. Any covenant or other agreement herein any portion of the performance
of which may or is specified to occur after the Closing shall survive the Merger
hereunder indefinitely or for such lesser period of time as may be specified
therein.
Section 8.2. Obligations of the Shareholder. From and after the Closing
------------------------------
Date, the Shareholder hereby agrees to indemnify, defend and hold harmless
Buyer, the Company and their respective directors, employees, officers, partners
and other Affiliates from and against any and all Losses which any of them may
suffer, incur or sustain arising out of, attributable to, or resulting from:
(a) any inaccuracy in or breach of any of the representations or warranties of
the Company or the Shareholder made to Buyer in this Agreement (it being agreed
that solely for purposes of establishing whether any matter is indemnifiable
pursuant to this clause (a), the accuracy of the representations and warranties
made by the Company or the Shareholder shall be determined without giving effect
to the qualifications to such representations and warranties concerning
materiality or Company Material Adverse Effect); and (b) any breach or
nonperformance of any of the covenants or other agreements made by the Company
or the Shareholder in or pursuant to this Agreement.
Section 8.3. Obligations of Buyer. From and after the Closing Date,
--------------------
Buyer hereby agrees to indemnify, defend and hold harmless the Shareholder and
its respective directors, employees, officers, partners and other Affiliates
from and against any and all Losses which any of them may suffer, incur, or
sustain arising out of, attributable to, or resulting from: (a) any inaccuracy
in or breach of any of the representations and warranties of Buyer made to
Shareholder in this Agreement (it being agreed that solely for purposes of
establishing whether any matter is indemnifiable pursuant to this clause (a) the
accuracy of the representations and warranties made by Buyer shall be determined
without giving effect to the qualifications to such representations and
warranties concerning materiality or Buyer Material Adverse Effect); and (b) any
breach or nonperformance of any of the covenants or other agreements made by
Buyer in or pursuant to this Agreement.
Section 8.4. Procedure.
---------
(a) Notice of Third Party Claims. Any Indemnified Party seeking
----------------------------
indemnification for any Loss or potential Loss arising from a claim
asserted by a third party against the Indemnified Party (a "Third Party
Claim") shall give written notice to the Indemnifying Party specifying in
reasonable detail the source of the Loss or potential Loss under Section
8.2 or 8.3, as the case may be. Written notice to the Indemnifying Party
of the existence of a Third Party Claim shall be given by the Indemnified
Party promptly after notice of the potential claim; provided, however, that
-------- -------
the Indemnified Party shall not be foreclosed from seeking indemnification
pursuant to this Article VIII by any failure to provide such prompt notice
of the existence of a Third Party Claim to the Indemnifying Party except
and only to the extent that the Indemnifying Party actually incurs an
incremental out-of-pocket expense or otherwise has been materially damaged
or prejudiced as a result of such delay.
(b) Defense. Except as otherwise provided herein, the Indemnifying
-------
Party may elect to compromise or defend, at such Indemnifying Party's own
expense and by such Indemnifying Party's own counsel (which counsel shall
be reasonably satisfactory to the Indemnified Party), any Third Party
Claim. If the Indemnifying Party elects to compromise or defend such Third
Party Claim, it shall, within 30 days after receiving notice of the Third
Party Claim (10 days if the Indemnified Party states in such notice that
prompt action is required), notify the Indemnified Party of its intent to
do so, and the Indemnified Party shall cooperate, at the expense of the
Indemnifying Party, in the compromise of, or defense against, such Third
Party Claim. If the Indemnifying Party elects not to compromise or defend
against the Third Party Claim, or fails to notify the Indemnified Party of
its election to do so as herein provided, or otherwise abandons the defense
of such Third Party Claim, (i) the Indemnified Party may pay (without
prejudice of any of its rights as against the Indemnifying Party),
compromise or defend such Third Party Claim (until such defense is assumed
by the Indemnifying Party) and (ii) the costs and expenses of the
Indemnified Party incurred in connection therewith shall be indemnifiable
by the Indemnifying Party pursuant to the terms of this Agreement.
Notwithstanding anything to the contrary contained herein, in connection
with any Third Party Claim in which the Indemnified Party shall reasonably
conclude, based upon advice of its outside legal counsel, that (x) there is
a conflict of interest between the Indemnifying Party and the Indemnified
Party in the conduct of the defense of such Third Party Claim or (y) there
are specific defenses available to the Indemnified Party which are
different from or additional to those available to the Indemnifying Party
and which could be materially adverse to the Indemnifying Party, then the
Indemnified Party shall have the right to assume and direct the defense of
such Third Party Claim. In such an event, the Indemnifying Party shall pay
the reasonable fees and disbursements of counsel of the Indemnifying Party
and one counsel to all the Indemnified Parties. Notwithstanding the
foregoing, neither the Indemnifying Party nor the Indemnified Party may
settle or compromise any claim (however, if the sole settlement relief
payable to a third party in respect of such Third Party Claim is monetary
damages that are paid in full by the Indemnifying Party, the Indemnifying
Party may settle such claim without the consent of the Indemnified Party)
over the objection of the other; provided, however, that consent to
-------- -------
settlement or compromise shall not be unreasonably withheld by the
Indemnified Party. In any event, except as otherwise provided herein, the
Indemnified Party and the Indemnifying Party may each participate, at its
own expense, in the defense of such Third Party Claim. If the Indemnifying
Party chooses to defend any claim, the Indemnified Party shall make
available to the Indemnifying Party any personnel or any books, records or
other documents within its control that are reasonably necessary or
appropriate for such defense, subject to the receipt of appropriate
confidentiality agreements.
(c) Settlement. If a settlement offer solely for money damages is
----------
made by a third party claimant, and the Indemnifying Party notifies the
Indemnified Party in writing of the Indemnifying Party's willingness to
accept the settlement offer and pay the amount called for by such offer,
and the Indemnified Party declines to accept such offer, the Indemnified
Party may continue to contest such claim, free of any participation by the
Indemnifying Party, and the amount of any ultimate liability with respect
to such Indemnifiable Claim that the Indemnifying Party has an obligation
to pay hereunder shall be limited to the lesser of (A) the amount of the
settlement offer that the Indemnified Party declined to accept plus the
costs and expenses of the Indemnified Party prior to the date the
Indemnifying Party notifies the Indemnified Party of the Indemnifying
Party's willingness to settle or compromise such Third Party Claim and (B)
the aggregate Losses of the Indemnified Party with respect to such claim.
(d) Miscellaneous. The procedures set forth in Section 8.4(a)-(c)
-------------
above shall apply solely with respect to Third Party Claims and shall not
be deemed to apply to, or otherwise affect or limit, an Indemnified Party's
rights under this Agreement with respect to any claim other than a Third
Party Claim.
(e) Notice of Non-Third Party Claims. Any Indemnified Party seeking
---------------------------------
indemnification for any Loss or potential Loss arising from a claim
asserted by any party to this Agreement against the Indemnifying Party (a
"Non-Third Party Claim") shall give written notice to the Indemnifying
Party specifying in reasonable detail the source of the Loss or potential
Loss under Section 8.2 or 8.3, as the case may be. Written notice to the
Indemnifying Party of the existence of a Non-Third Party Claim shall be
given by the Indemnified Party promptly after the Indemnified Party becomes
aware of the potential claim; provided, however, that the Indemnified Party
-------- -------
shall not be foreclosed from seeking indemnification pursuant to this
Article VIII by any failure to provide such prompt notice of the existence
of a Non-Third Party Claim to the Indemnifying Party except and only to the
extent that the Indemnifying Party actually incurs an incremental
out-of-pocket expense or otherwise has been materially damaged or
prejudiced as a result of such.
Section 8.5. Survival of Indemnity. Any matter as to which a claim has
---------------------
been asserted by formal notice pursuant to Section 8.4 and within the time
limitation applicable by reason of Section 8.1 that is pending or unresolved at
the end of any applicable limitation period under this Article VIII shall
continue to be covered by this Article VIII notwithstanding any applicable
statute of limitations (which the parties hereby waive) or the expiration dates
set forth in Section 8.1 until such matter is finally terminated or otherwise
resolved by the parties under this Agreement or by a court of competent
jurisdiction and any amounts payable hereunder are finally determined and paid.
Section 8.6. Minimum Threshold. No party shall have any right to obtain
-----------------
indemnification under this Agreement until aggregate Losses of such party and
its Affiliates and the successors and assigns of such party and its Affiliates
exceed $500,000, after which time the aggregate amount of all Losses exceeding
$500,000 shall be recoverable in accordance with the terms hereof; provided,
--------
however, that this Section 8.6 should not apply to Losses from any breaches of
-------
(i) the representations or warranties in Section 4.18, which breaches were made
with the Knowledge of the Companies or the Shareholder, or (ii) the covenants in
Sections 6.2, 6.3, 6.14, 6.19 or 6.21, and any Losses resulting from such
breaches set forth in (i) and (ii) above shall be disregarded in determining
whether the $500,000 threshold has been reached.
Section 8.7. Maximum Indemnification. No party shall have any right to
-----------------------
obtain an indemnification payment under this Agreement to the extent amounts
received by such party and its Affiliates and the successors and assigns of such
party and its Affiliates as indemnification payments hereunder exceed
$8,750,000.
Section 8.8. Subrogation. Any Indemnifying Party shall be subrogated to
-----------
any right of action which the Indemnified Party may have against any other
person with respect to any matter giving rise to a claim for indemnification
hereunder.
Section 8.9. Adjustments to Indemnification Obligations.
------------------------------------------
(a) All indemnity payments made under this Article VIII shall be
treated as adjustments to the Merger Consideration, unless so treating such
payments would, in the view of Shareholder's tax counsel, cause the
transaction not to qualify as a reorganization within the meaning of
Section 368(a).
(b) The amount which any Indemnifying Party is or may be required to
pay any Indemnified Party pursuant to this Article VIII shall be reduced
(including without limitation, retroactively) by any insurance proceeds or
other amounts actually recovered by or on behalf of such Indemnified Party
in reduction of the related Loss. If an Indemnified Party shall have
received the payment required by this Agreement from an Indemnifying Party
in respect of a Loss and shall subsequently actually receive insurance
proceeds or other amounts in respect of such Loss, then such Indemnified
Party shall pay to such Indemnifying Party a sum equal to the amount of
such insurance proceeds or other amounts actually received (net of any
expenses in obtaining the same).
Section 8.10. Set-Off. Buyer may set-off an Indemnifiable Claim that has
-------
been agreed to in writing by the parties or finally adjudicated through a
reduction in principal and/or interest of the Notes. Prior to agreement on, or
final adjudication of, an Indemnifiable Claim, Buyer shall make all payments
under the Notes, when due, to an escrow agent (who shall be agreed to by the
parties), which escrow agent shall hold such payments in escrow until such
Indemnifiable Claim shall have been agreed to or finally adjudicated.
Section 8.11. Remedies. This Article VIII shall not restrict the ability
--------
of any party to seek specific performance of this Agreement or any provision
hereof or any other form of equitable or legal relief against any breach by any
other party hereto. Nothing in this Article VIII shall limit the remedies
available to an Indemnified Party to enforce its right to indemnification.
ARTICLE IX.
TERMINATION
Section 9.1. Termination.
-----------
(a) This Agreement may be terminated prior to the Closing as follows:
(i) by written consent of the Shareholder and Buyer;
(ii) by the Shareholder or Buyer if a condition to the
terminating party's obligation to close set forth in Section 7.3 (or
7.1 or 7.2, as the respective case may be) cannot be satisfied prior
to the date set forth in Section 9.1(a)(iv) below unless caused by the
breach of any covenant or agreement under this Agreement (x) by the
Company or the Shareholder, in the case of a termination by the
Company, or (y) by Buyer, in the case of termination by Buyer;
(iii) by the Shareholder or Buyer (provided that the
terminating party is not then in material breach of any
representation, warranty, covenant or other agreement contained
herein) if there shall have been a material breach of any of the
covenants or agreements or any of the representations or warranties
set forth in this Agreement on the part of the Company or the
Shareholder, in the case of a termination by Buyer, or on the part of
Buyer, in the case of a termination by the Company, which breach is
not cured within thirty (30) days following written notice given by
the terminating party to the party committing such breach, or which
breach, by its nature, cannot be cured prior to the Closing; and
(iv) by Buyer or the Company or the Shareholder, if the
Closing has not occurred on or before September 15, 2001.
Notwithstanding Section 9.1(a)(ii)-(iv) hereof, a party who is or
whose Affiliate is in material breach of any of its obligations or
representations and warranties hereunder shall not have the right to
terminate this Agreement pursuant to Section 9.1(a)(iii).
(b) The termination of this Agreement shall be effectuated by the
delivery by the party terminating this Agreement to each other party of a
written notice of such termination. If this Agreement so terminates, it
shall become null and void and have no further force or effect, except as
provided in Section 9.2.
Section 9.2. Survival After Termination. If this Agreement is terminated
--------------------------
in accordance with Section 9.1 hereof and the transactions contemplated hereby
are not consummated, this Agreement shall become void and of no further force
and effect, without any liability on the part of any party hereto, except for
the provisions of Sections 6.10 and 6.13. Notwithstanding the foregoing,
nothing in this Section 9.2 shall relieve any party to this Agreement of
liability for a material breach of any provision of this Agreement or any
agreement made as of the date hereof or subsequent thereto pursuant to this
Agreement.
ARTICLE X.
MISCELLANEOUS
Section 10.1. Amendments; Waiver. This Agreement may not be amended,
------------------
altered or modified except by written instrument executed by all the parties
hereto. Any agreement on the part of any party to waive (i) any inaccuracies in
the representations and warranties contained herein by any other party or in any
document, certificate or writing delivered pursuant hereto by any other party,
or (ii) compliance with any of the agreements, covenants or conditions contained
herein, shall be valid only if set forth in an instrument in writing signed on
behalf of such party. No such waiver shall constitute a waiver of, or estoppel
with respect to, any subsequent or other inaccuracy, breach or failure to
strictly comply with the provisions of this Agreement, and any waiver may be
limited in purpose so that a waiver for purposes of the conditions set forth in
Article VII need not be a waiver of an Indemnifiable Claim under Article VIII.
Section 10.2. Entire Agreement. This Agreement (including Schedules,
----------------
Exhibits, certificates, lists and documents referred to herein, and any
documents executed by the parties simultaneously herewith or pursuant thereto)
constitutes the entire agreement of the parties hereto, except as provided
herein, and supersedes all prior agreements and understandings, written and
oral, among the parties with respect to the subject matter hereof.
Section 10.3. Interpretation. When a reference is made in this Agreement
--------------
to Sections, Exhibits or Schedules, such reference shall be to a Section of or
Exhibit or Schedule to this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include," "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation." The phrases "the date of this Agreement," "the date hereof" and
terms of similar import, unless the context otherwise requires, shall be deemed
to refer to the date set forth in the first paragraph of this Agreement.
Section 10.4. Severability. Any term or provision of this Agreement which
------------
is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction,
be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of
this Agreement is so broad as to be unenforceable, the provision shall be
interpreted to be only so broad as is enforceable.
Section 10.5. Notices. All notices and other communications hereunder
-------
shall be in writing and shall be deemed given if (a) delivered in person, (b)
transmitted by telecopy (with written confirmation), (c) mailed by certified or
registered mail (return receipt requested) or (d) delivered by an express
courier (with written confirmation) to the parties at the following addresses
(or at such other address for a party as shall be specified by like notice):
If to the Company:
PMC International, Inc.
0000 Xxxxxxxx
0xx Xxxxx
Xxxxxx, Xxxxxxxx 00000
Telecopy: 000-000-0000
Attention: Xxxx X. Xxxxxxx, President
If to the Shareholder:
The Xxxxxxx Companies, Inc.
000 Xxxx Xxxxxx
Xxxx Xxxx, XX 00000-0000
Telecopy: 000-000-0000
Attention: Xxxxxxx X'Xxxxx, General Counsel
With a copy to:
Xxxxxxx & Xxxxx, LLP
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000-0000
Telecopy: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx, Esq.
If to Buyer:
The EnvestNet Group, Inc.
00 Xxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx, Chief Financial Officer
With copies to:
Xxxxxxx, Carton & Xxxxxxx
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxx, Xx., Esq.
Section 10.6. Binding Effect; Persons Benefiting; No Assignment. This
-------------------------------------------------
Agreement shall inure to the benefit of and be binding upon the parties hereto
and their respective successors and assigns. Nothing in this Agreement is
intended or shall be construed to confer upon any entity or person other than
the parties hereto and their respective successors and permitted assigns any
right, remedy or claim under or by reason of their Agreement or any part hereof.
This Agreement may not be assigned by any of the parties hereto without the
prior written consent of each of the other parties hereto.
Section 10.7. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same agreement, it being understood that
all of the parties need not sign the same counterpart.
Section 10.8. Governing Law. THIS AGREEMENT, THE LEGAL RELATIONS BETWEEN
-------------
THE PARTIES AND THE ADJUDICATION AND THE ENFORCEMENT THEREOF, SHALL BE GOVERNED
BY AND INTERPRETED AND CONSTRUED IN ACCORDANCE WITH THE SUBSTANTIVE LAWS OF THE
STATE OF ILLINOIS, WITHOUT REGARD TO APPLICABLE CHOICE OF LAW PROVISIONS
THEREOF.
Section 10.9. Specific Performance. The Company, the Shareholder and
--------------------
Buyer each acknowledge that, in view of the uniqueness of its business and the
transactions contemplated by this Agreement, each party would not have an
adequate remedy at law for money damages in the event that the covenants to be
performed after the Closing Date have not been performed in accordance with
their terms, and therefore agree that the other parties shall be entitled to
specific enforcement of the terms hereof in addition to indemnification
hereunder and any other equitable remedy to which such parties may be entitled.
Section 10.10. WAIVER OF JURY TRIAL AND PUNITIVE DAMAGES. AFTER THE
-----------------------------------------
CLOSING DATE, THE PARTIES TO THIS AGREEMENT AGREE TO WAIVE ANY RIGHT TO A JURY
TRIAL AS TO ALL DISPUTES AND ANY RIGHT TO SEEK PUNITIVE DAMAGES. ANY DISPUTE OR
DISAGREEMENT BETWEEN THE PARTIES CONCERNING THE INTERPRETATION OF THIS
AGREEMENT, THE VALIDITY OF THIS AGREEMENT, ANY BREACH OR ALLEDGED BREACH BY ANY
PARTY UNDER THIS AGREEMENT OR ANY OTHER MATTER RELATING IN ANY WAY TO THIS
AGREEMENT SHALL BE RESOLVED BY BINDING ARBITRATION BY PANEL OF THREE (3)
AMERICAN ARBITRATION ASSOCIATION ARBITRATORS LOCATED IN CHICAGO, ILLINOIS
ACCORDING TO THE NASD CODE FOR COMPLEX LITIGATION.
Section 10.11. Disclosure Schedules. A reference in a section or
--------------------
subsection of this Agreement to the Schedules is not required for information in
the Schedules to create an exception to the representation or warranty set forth
in such section or subsection. Terms used in the Schedules and not otherwise
defined therein have the same meanings as set forth in this Agreement. The
Schedules shall not vary or change the literal meaning of the representations
and warranties in this Agreement, other than creating specific exceptions
thereto which are directly responsive to the language of the applicable
warranties and representations.
[SIGNATURES ON NEXT PAGE]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
PMC INTERNATIONAL, INC.
By: /s/Xxxx X. Xxxxxxx
----------------------------------------
Name: Xxxx X. Xxxxxxx
Title: President and Chief Operating
Officer
THE XXXXXXX COMPANIES, INC.
By: /s/Xxxx X. Xxxxxxxx
----------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: President and Chief Executive
Officer
ENVESTNET ACQUISITION CORP.
By: /s/Xxxxxx Xxxxxxx
----------------------------------------
Name: Xxxxxx Xxxxxxx
Title: President
THE ENVESTNET GROUP, INC.
By: /s/Xxxxxx Xxxxxxx
----------------------------------------
Name: Xxxxxx Xxxxxxx
Title: Chief Executive Officer
