Exhibit 10.7 Xxxxxxx Acquisition Agreement, as amended January 19, 2004
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is made and entered into on this
10th day of September, 2003, by and between XXXXXXXX ADVISORS, INC., a
California corporation ("Buyer"), and XXXXXXX ASSET MANAGEMENT, INC., a Michigan
corporation ("Seller").
RECITALS:
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A. Seller is a registered investment adviser under the Investment Advisers Act
of 1940, as amended.
B. Seller serves as investment adviser to the Xxxxxxx Funds, as defined herein,
and is the owner of certain property, including property used or useful in
providing investment advisory services to the Xxxxxxx Funds.
C. Buyer wishes to acquire from Seller, and Seller wishes to sell to Buyer, such
property upon the terms and subject to the conditions hereinafter set forth.
AGREEMENTS
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In consideration of the foregoing premises and the covenants
and agreements contained herein, Buyer and Seller, intending to be bound
legally, agree as follows:
1. DEFINED TERMS
The following terms shall have the following meanings in this
Agreement (other terms shall be defined in the text of this Agreement).
"Affiliated Person" means an affiliated person as defined in
Section 2(a)(3) of the Investment Company Act.
"Affiliate" means a person or entity that directly or
indirectly controls, is controlled by or is under common control with a
specified person or entity.
"Agreement" means this Asset Purchase Agreement together with
all schedules and exhibits attached hereto, and all amendments hereto and
thereof.
"Closing" means the completion of those actions described in
Section 8.2 and Section 8.3 of this Agreement.
"Closing Date" means the date of the Closing specified in
Section 8.1 of this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the Securities and Exchange Commission.
"Fund Transactions" means the reorganization of the Xxxxxxx
Funds into Xxxxxxxx Funds as follows: (i) Xxxxxxx Communications Fund
reorganized into Xxxxxxxx Cornerstone Growth Fund; (ii) Xxxxxxx Growth & Income
Fund reorganized into Xxxxxxxx Cornerstone Value Fund; (iii) Xxxxxxx Large-Cap
Growth Fund reorganized into Xxxxxxxx Total Return Fund; (iv) Xxxxxxx Market
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Neutral Fund reorganized into Xxxxxxxx Balanced Fund; and (v) Xxxxxxx Small-Cap
Growth Fund reorganized into Xxxxxxxx Cornerstone Growth Fund.
"Xxxxxxxx Funds" means those investment companies registered
under the Investment Company Act for which Buyer serves as investment adviser.
"Investment Advisers Act" means the Investment Advisers Act of
1940, as amended, and rules and regulations promulgated thereunder.
"Investment Company Act" means the Investment Company Act of
1940, as amended, and rules and regulations promulgated thereunder.
"Liens" means any security interest, mortgage, lien, pledge,
charge, title retention, security agreement, lease, option, defect of title or
other encumbrance or right of others, except for taxes not yet due or payable
and encumbrances which do not materially impair the use, value or marketability
of the assets to which they relate.
"Xxxxxxx Funds" means the Xxxxxxx Communications Fund, Xxxxxxx
Growth & Income Fund, Xxxxxxx Large-Cap Growth Fund, Xxxxxxx Market Neutral Fund
and Xxxxxxx Small-Cap Growth Fund as they presently exist and the Xxxxxxxx Funds
into which the Xxxxxxx Funds are reorganized.
"Xxxxxxx Investments" means Xxxxxxx Investments, a
Massachusetts business trust, of which the Xxxxxxx Funds are each a separate
investment portfolio.
"Material Adverse Effect" means:
i. with respect to Seller, an effect on the
business, licenses, prospects or condition (financial or otherwise) of Seller
that would materially and adversely affect the ability of Seller to consummate
the transactions contemplated by this Agreement or materially and adversely
affect the Buyer's ability to advise or manage the investments of the Xxxxxxx
Funds (or any of them);
ii. with respect to the Buyer, an effect on the
business, licenses, prospects or condition (financial or otherwise) of the Buyer
that would materially and adversely affect Buyer's ability to advise or manage
the investments of the Xxxxxxxx Funds or the Xxxxxxx Funds (or any of them) or
adversely affect the ability of Buyer to consummate the transaction contemplated
by this Agreement; provided, however, that any condition materially and
adversely affecting the mutual fund or investment management industries
generally shall not be deemed to constitute a Material Adverse Effect; and
iii. with respect to the Xxxxxxx Funds, means an
effect that would cause the Xxxxxxx Funds (or any of them) to incur any
liabilities not reflected in their net asset values as of the Closing Date or
cause the previously reported net asset value of any of the Xxxxxxx Funds on any
date prior to the Closing Date to be incorrect in an amount equal to or greater
than $0.01.
"Mutual Fund" means any investment company which is registered
under Section 8(b) of the Investment Company Act, 15 U.S.C. ss. 80a-8(b).
"Net Assets" means the aggregate net asset value of each of
the Xxxxxxx Funds.
"Notice of Termination" means the notice described in Section
9.1 of this Agreement.
"Purchased Assets" means the assets specified in Section 2.1
of this Agreement.
"Securities Act" means the Securities Act of 1933, as amended,
and rules and regulations thereunder.
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"Securities Exchange Act" means the Securities Exchange Act of
1934, as amended, and rules and regulations thereunder.
"Wrap Account" means any account in which the funds of third
parties are managed in exchange for a flat, periodic fee.
2. PURCHASED ASSETS; PURCHASE PRICE
a. Purchased Assets. On the Closing Date, Seller shall
deliver to Buyer originals or true copies of the following assets (the
"Purchased Assets"), and only such assets:
i. originals or true copies of all files, books,
records and data files (in whatever form or forms including hard copy,
microfilm, microfiche, CD ROM or other electronic media, including the software
necessary to access the same) owned by or in the possession of Seller relating
to investment accounts and investment history of the Xxxxxxx Funds (except to
the extent that Seller is required by applicable law to retain such materials or
copies thereof in which event Seller shall, at Seller's expense, provide to
Buyer such materials or copies thereof, whichever is available);
ii. originals or true copies of all records required
to be maintained and retained under the Investment Company Act or the Investment
Advisers Act in connection with Seller's provision of investment advisory
services to the Xxxxxxx Funds (except to the extent that Seller is required by
applicable law to retain such materials or copies thereof in which event Seller
shall provide to Buyer such materials or copies thereof, whichever is
available); and
iii. all of Seller's and its Affiliates' rights to
use the name "Xxxxxxx," all derivations thereof, and all registered or
unregistered trademarks, trade names and similar intangibles owned by Seller and
its Affiliates.
b. Purchase Price. On the Closing Date, Buyer shall pay
Seller, by wire transfer of immediately available funds to an account designated
by Seller in writing at least two days prior to the Closing Date, an amount
equal to 2.625% of the aggregate value of the Net Assets of the Xxxxxxx Funds at
the close of business on the business day immediately preceding the Closing
Date, excluding the value of the Net Assets of any Xxxxxxx Funds whose
shareholders have not approved the applicable Fund Transaction (the "Purchase
Price").
3. REPRESENTATIONS AND WARRANTIES OF Seller
Seller represents and warrants to Buyer as follows:
a. Organization, Standing and Authority. Seller is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Michigan. Seller has all requisite corporate power and authority
to conduct its business as presently conducted as it relates to providing
investment advisory services to the Xxxxxxx Funds, to execute and deliver this
Agreement and the documents contemplated hereby and to perform and comply with
all of the terms, covenants and conditions to be performed and complied with by
Seller hereunder and thereunder. Seller is duly qualified or licensed to do
business as a foreign corporation, and is in good standing, in every
jurisdiction where failure to be so qualified or licensed would be reasonably
likely to have a Material Adverse Effect on Seller or the Xxxxxxx Funds (or any
of them).
b. Authorization and Binding Obligation. Subject to
obtaining the approval of its Board of Directors, the execution, delivery and
performance of this Agreement by Seller have been duly authorized by all
necessary corporate action on the part of Seller. Subject to obtaining the
approval of its Board of Directors, this Agreement has been duly executed and
delivered by Seller and, assuming the due authorization, execution and delivery
of this Agreement by Buyer constitutes the legal, valid and binding obligation
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of Seller, enforceable against Seller in accordance with its terms, except as
the enforceability hereof may be limited by bankruptcy, insolvency,
reorganization or similar laws relating to or affecting creditors' rights
generally, or by general equity principles (whether applied in a court of law or
a court of equity and including limitations on the availability of specific
performance or other equitable remedies).
c. Registered Investment Adviser. Seller is registered with
the Commission as an investment adviser under the Investment Advisers Act.
d. No Violations. Except as set forth on Schedule 3.4, the
execution, delivery and performance by Seller of this Agreement and the
documents contemplated hereby (i) will not conflict with any provision of
Seller's articles of incorporation or by-laws; (ii) will not conflict with,
result in a breach of, or constitute a default under, any applicable law,
judgment, order, ordinance, injunction, decree, rule, regulation or ruling of
any court or governmental instrumentality, except as will not individually or in
the aggregate have a Material Adverse Effect with respect to Seller or the
Xxxxxxx Funds (or any of them) or as will be cured or waived prior to the
Closing Date; and (iii) will not conflict with, constitute grounds for
termination of, result in a breach of, constitute a default under or accelerate
or permit the acceleration of any performance required by the terms of, any
agreement, instrument, license or permit to which Seller is a party or by which
Seller may be bound, except as will not singly or in the aggregate have a
Material Adverse Effect with respect to Seller or the Xxxxxxx Funds (or any of
them), or as will be cured or waived prior to the Closing Date.
e. Title to and Condition of Assets. As of the date hereof,
Seller has good and marketable title to the Purchased Assets, and on the Closing
Date will have good and marketable title to the Purchased Assets sufficient to
convey title to the Purchased Assets to Buyer, free and clear of all Liens.
f. Consents; Governmental/Regulatory Authorities. Seller is
not required to submit any notice, report or other filing with, or obtain any
authorization, consent or approval from, any governmental authority or self-
regulatory organization prior to the execution, delivery and performance by
Seller of this Agreement or the consummation of the transaction contemplated
herein, other than notices, reports or other filings, authorizations, consents
or approvals relating to matters that, in the aggregate, will not have a
Material Adverse Effect with respect to the Seller or the Xxxxxxx Funds (or any
of them).
g. Financial Condition; Effect of Sale of Assets. Seller is
not insolvent on the date of this Agreement and shall not be insolvent on the
Closing Date. The transactions contemplated by this Agreement (i) will not
render Seller insolvent or leave Seller with assets unreasonably small in
relation to the business in which it is engaged and (ii) is not being undertaken
by Seller with the intent to hinder, delay or defraud its creditors.
h. Legal Actions. There is no action, suit, proceeding,
complaint, litigation, investigation, inquiry or governmental proceeding
pending, or to the knowledge of the Seller threatened, before any court or
governmental or regulatory authority, against (i) any of the Purchased Assets or
(ii) Seller, or to the knowledge of Seller any party, that reasonably could be
expected to have a Material Adverse Effect on Seller or the Xxxxxxx Funds (or
any of them). Except as set forth on Schedule 3.8, the Seller is not subject to,
or bound by, any judgment, order, writ, injunction or decree of any court, or of
any governmental body, including the Commission, or of any arbitrator, that
would prevent the conduct of business of Seller or the Xxxxxxx Funds (or any of
them) in accordance with current practice.
i. Compliance with Laws. Seller's business of providing
investment advisory services to the Xxxxxxx Funds is being operated in material
compliance with all applicable laws, rules, regulations, ordinances, orders or
requirements of all federal, state and local governmental or regulatory
authorities. Seller has complied in all material respects with all written
notices and demands to it from all governmental or regulatory authorities with
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respect to the ownership, use and operation of all of the Purchased Assets and
the provision of investment advisory services to the Xxxxxxx Funds.
j. The Xxxxxxx Funds. To the knowledge of Seller:
i. Registration and Regulation. Each of the Xxxxxxx
Funds are duly registered with the Commission as investment companies under the
Investment Company Act, and all shares of each of the Xxxxxxx Funds which, since
their organization, have been or are being offered for sale have been duly
registered under the Securities Act and have been duly registered, qualified or
are exempt from registration or qualification under the securities laws of each
state or other jurisdiction in which such shares have been or are being offered.
Each of the Xxxxxxx Funds are in compliance with all applicable laws, rules and
regulations, including, without limitation, the Investment Company Act, the
Securities Act, the Securities Exchange Act and all applicable state securities
laws, except where the failure to be so in compliance would not have a Material
Adverse Effect on Seller or the Xxxxxxx Funds (or any of them). Each of the
Xxxxxxx Funds are in compliance with the investment policies and restrictions
set forth in their registration statements currently in effect under the
Securities Act, except where the failure to be so in compliance would not have a
Material Adverse Effect on Seller or the Xxxxxxx Funds (or any of them). The
value of the net assets of each of the Xxxxxxx Funds is determined pursuant to
the requirements of the Investment Company Act and purchases and redemptions of
shares of the Xxxxxxx Funds, since their organization have been effected at the
net asset value per share calculated in such manner. There are no legal or
governmental actions, investigations, inquiries or proceedings pending or
threatened against the Xxxxxxx Funds which could have a Material Adverse Effect
on the condition (financial or otherwise) of Seller or the Xxxxxxx Funds (or any
of them).
ii. Financial Statements. The books of account and
related records of the Xxxxxxx Funds fairly reflect the respective assets of
each of the Xxxxxxx Funds, liabilities and transactions in accordance with
generally accepted accounting principles applied on a consistent basis. The
audited financial statements as of and for the fiscal year ended June 30, 2003
(the "Financial Statement Date"), of the Xxxxxxx Funds previously delivered to
Buyer (the "Xxxxxxx Fund Financial Statements") present fairly in all material
respects the financial position of the Xxxxxxx Funds and the results of
operations and cash flows for the accounting principles applied on a consistent
basis as at the dates indicated. The Xxxxxxx Fund Financial Statements have been
certified by an independent accounting firm.
iii. No Material Adverse Changes. Since the Financial
Statement Date, no material adverse change has occurred in the financial
condition, results of operations, business, assets or liabilities of the Xxxxxxx
Funds (or any of them) or the status of the Xxxxxxx Funds (or any of them) as
regulated investment companies under the Code, other than changes resulting from
any hange in the mutual fund industry, in general conditions in the financial or
securities markets or the performance of any investments made by any of the
Xxxxxxx Funds and other than changes occurring in the ordinary course of
business of the applicable Xxxxxxx Fund.
iv. Contracts. Except for contracts and agreements
disclosed on Schedule 3.10 (which shall be updated by Seller at Closing), the
Xxxxxxx Funds are not a party to any material contract, debt arrangement,
futures contract, plan, lease, franchise, license or permit (other than permits
issued under any state securities law) of any kind or nature whatsoever. No
default by the Xxxxxxx Funds, nor to the knowledge of Seller by any other party,
exists under any of the contracts and agreements listed on Schedule 3.10 which
would have a Material Adverse Effect on Seller or the Xxxxxxx Funds (or any of
them).
v. Taxes. All federal income tax returns, all other
material federal tax returns, and all material state and local tax returns for
any open tax periods required to be filed by the Xxxxxxx Funds on or prior to
the Closing Date have been or will be timely filed, such returns are or will be
correct in all material respects, and all taxes shows as payable on such returns
have been or will be timely paid. For any period for which tax returns of the
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Xxxxxxx Funds are not required to have been filed in accordance with the
previous sentence by the Closing Date, each of the Xxxxxxx Funds have made, or
will make by the Closing Date, an adequate accrual on their books of any taxes
due or to become due, if any, as a result of actions occurring on or before the
Closing Date. Each of the Xxxxxxx Funds has qualified as a regulated investment
company under the Code in respect of each of the taxable years since
commencement of the pplicable Xxxxxxx Fund and the Xxxxxxx Funds are, and shall
be, in compliance with the requirements of Section 851 of Subchapter M of the
Code for each of the applicable fiscal periods ending on or prior to the Closing
Date. Each of the Xxxxxxx Funds have timely provided to their shareholders any
notices relating to the character of shareholder distributions or portions
thereof required under Sections 852 or 853 of the Code and Section 19 of the
Investment Company Act and have properly withheld or collected all taxes
required by law to be withheld or collected from amounts payable to the
shareholders of the Xxxxxxx Funds and have timely remitted such withheld or
collected taxes to the appropriate taxing authority, agency or body.
vi. Books and Records. The books and records of the
Xxxxxxx Funds reflecting, among other things, the purchase and sale of shares of
the Xxxxxxx Funds by their shareholders, the number of issued and outstanding
shares owned by each shareholder and the state or other jurisdiction in which
such shares were offered and sold, are complete and accurate in all material
respects.
vii. Prospectuses. The current prospectuses and
statements of additional information for the Xxxxxxx Funds as of the date on
which they were issued did not contain, and as supplemented by any supplements
thereto dated prior to or on the Closing Date, do not and will not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading.
viii. Ability to Conduct Business. Except as set forth
on Schedule 3.8, none of the Xxxxxxx Funds are subject to, or bound by, any
judgment, order, writ, injunction or decree of any court, or of any governmental
body, including the Commission, or of any arbitrator, that would prevent the
conduct of business of the Xxxxxxx Funds (or any of them) in accordance with
current practice.
ix. Litigation or Proceeding. No litigation is
pending or threatened, and no investigation, inquiry or governmental proceeding
is pending or, to the best of Seller's knowledge, threatened against or
affecting the Xxxxxxx Funds (or any of them) before any court, arbitrator or
federal, state, local or foreign governmental or regulatory agency or authority
or self-regulatory authority (including, but not limited to, the Commission, the
Commodities Futures Trading Commission and the Internal Revenue Service) that
would be reasonably likely to materially and adversely affect the business
operation's or financial condition of the Xxxxxxx Funds (or any of them) or
materially delay, materially hinder or prohibit the solicitation of proxies from
shareholders of the Xxxxxxx Funds (or any of them).
x. Absence of Undisclosed Liabilities. As of the
Financial Statement Date, the Xxxxxxx Funds had no material debts, obligations
or liabilities, whether due or to become due, absolute, contingent or otherwise,
that are required to be reflected in the Xxxxxxx Fund Financial Statements in
accordance with generally accepted accounting principles, that are not so
reflected.
xi. No Pending Transaction. The Xxxxxxx Funds are
not a party to or bound by any agreement, undertaking or commitment (i) to merge
or consolidate with, or acquire all or substantially all of the property and
assets of, any other corporation, trust or person or (ii) to sell, lease or
exchange all or substantially all of their property and assets to any other
corporation, trust or person.
xii. Suspension or Revocation of Adviser
Registration. Except as previously disclosed in writing by Seller to Buyer, on
the date of this Agreement neither the Seller nor any Affiliated Person of
Seller has been convicted of any felony or misdemeanor, described in Section
9(a)(1) of the Investment Company Act, nor has any investment adviser, or any
"person associated" (as defined in the Investment Advisers Act) with any
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investment adviser, of the Xxxxxxx Funds (or any of them) been subject, or
presently is subject, to any disqualification that would be a basis for denial,
suspension or revocation of registration of an investment adviser under Section
203(e) of the Investment Advisers Act or Rule 206(4)-4(b) thereunder or of a
broker-dealer under Section 15 of the Securities Exchange Act, or for
disqualification as an investment adviser, employee, officer or director of an
investment company under Section 9 of the Investment Company Act, and, to
Seller's knowledge, there is no proceeding or investigation that is reasonably
likely to become the basis for, any such disqualification, denial, suspension or
revocation.
k. Purchased Assets; Trade Rights. Except as set forth on
Schedule 3.8, in order to conduct the management or operations of the Xxxxxxx
Funds, as such are currently being conducted, Seller does not require any assets
other than the Purchased Assets. To the knowledge of Seller, Seller is not
infringing and has not infringed any trade or other rights of another in the
management or operations of the Xxxxxxx Funds, nor is any other person
infringing the trade rights of Seller. No one has made or threatened to make and
claim that Seller is in violation of or has infringed any rights of any third
parties with respect to its use of the "Xxxxxxx" name. Seller does not pay any
royalties or other consideration for the right to use any Purchased Assets or
other trade rights. There is no litigation pending or, to the knowledge of
Seller, threatened to challenge Seller's right, title and interest with respect
to its continued use and right to preclude others from using any Purchased
Assets.
l. Sales or Transfer Taxes. The transactions contemplated
by this Agreement shall not result in either Buyer or Seller incurring any
liability for sales, use, transfer or purchase taxes or fees under the laws of
any state.
m. Full Disclosure. No representation or warranty made by
Seller herein nor any certificate furnished or to be furnished by Seller
pursuant hereto contains or, at the date of its delivery, will contain any
untrue statement of a material fact, or omits or will omit any statement of a
material fact known to Seller and known by Seller to be required to make the
statements herein or therein not misleading.
n. Registration Statements. The information to be provide
to Buyer by Seller with respect to Seller and the Xxxxxxx Funds for inclusion in
the registration statements to be filed with the Commission by Buyer on Form
N-14 (the "N-14 Registration Statements") relating to the shares of the Xxxxxxxx
Funds issuable in the proposed Fund Transactions, and the proxy statements of
Xxxxxxx Funds included as a part of the N-14 Registration Statements (the "Proxy
Statements"), on the effective date of the N-14 Registration Statements and at
the time of the shareholders' meeting to approve the Fund Transactions (a) will
comply in all material respects with the provisions of the Securities Act, the
Securities Exchange Act and the Investment Company Act and the rules and
regulations thereunder and (b) will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided, however, that
none of the representations and warranties in this subsection shall apply to
statements in or omissions from the N-14 Registration Statements or the Proxy
Statements made in reasonable reliance upon and in conformity with information
furnished by Buyer to Seller for use in the N-14 Registration Statements or the
Proxy Statements.
4. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
a. Organization, Standing and Authority. Buyer is a
corporation duly organized, validly existing and in good standing under the laws
of the State of California. Buyer is duly qualified or licensed to do business
as a foreign corporation, and is in good standing, in every jurisdiction where
the failure to be so qualified or licensed would be reasonably likely to have a
Material Adverse Effect on the Buyer or the Xxxxxxxx Funds (or any of them).
Buyer has all requisite corporate power and authority to conduct its business as
presently conducted as it relates to providing investment advisory services to
the Xxxxxxxx Funds, to execute and deliver this Agreement and the documents
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contemplated hereby, and to perform and comply with all of the terms, covenants
and conditions to be performed and complied with by Buyer hereunder and
thereunder.
b. Authorization and Binding Obligation. Subject to
obtaining the approval of its Board of Directors, the execution, delivery and
performance of this Agreement by Buyer have been duly authorized by all
necessary corporate action on the part of Buyer. Subject to obtaining the
approval of its Board of Directors, this Agreement has been duly executed and
delivered by Buyer and, assuming the due authorization, execution and delivery
of this Agreement by Seller, constitutes the legal, valid and binding obligation
of Buyer, enforceable against Buyer in accordance with its terms, except as the
enforceability hereof may be affected by bankruptcy, insolvency, reorganization
or similar laws relating to or affecting creditors' rights generally, or by
general equity principles (whether applied in a court of law or a court of
equity and including limitations on the availability of specific performance or
other equitable remedies).
c. No Violations. The execution, delivery and performance
by Buyer of this Agreement and the documents contemplated hereby (i) will not
conflict with any provision of Buyer's articles of incorporation or by-laws;
(ii) will not conflict with, result in a breach of, or constitute a default
under, any applicable law, judgment, order, ordinance, injunction, decree, rule,
regulation or ruling of any court or governmental instrumentality, except as
will not individually or in the aggregate have a Material Adverse Effect with
respect to Buyer or the Xxxxxxxx Funds (or any of them) or as will be cured by
waiver prior to the Closing Date; and (iii) will not conflict with, constitute
grounds for termination of, result in a breach of, constitute a default under or
accelerate or permit the acceleration of any performance required by the terms
of, any agreement, instrument, license or permit to which Buyer is a party or
which Buyer is bound, except as will not singly or in the aggregate have a
Material Adverse Effect with respect to Buyer or the Xxxxxxxx Funds (or any of
them) or as will be cured or waived prior to the Closing Date.
d. Consents; Governmental/Regulatory Authorities. Buyer is
not required to submit any notice, report or other filing with, or obtain any
authorization, consent or approval from, any governmental authority or self-
regulatory organization prior to the execution, delivery and performance by
Buyer of this Agreement or the consummation of the transaction contemplated
hereby, other than notices, reports or other filings, authorizations, consents
or approvals relating to matters that, in the aggregate, will not have a
Material Adverse Effect with respect to Buyer or the Xxxxxxxx Funds (or any of
them).
e. Disqualifying Conduct. Neither Buyer nor any Affiliated
Person of Buyer is ineligible to serve as an employee, officer, director, member
of an advisory board, investment adviser, depositor or principal underwriter of
any investment company registered under the Investment Company Act by reason of
any conviction of a felony or misdemeanor, described in Section 9(a)(1) of the
Investment Company Act, or by reason of any order, judgment or decree of any
court of competent jurisdiction, described in Section 9(a)(2) of the Investment
Company Act, and is not subject to any order issued by the Commission under
Section 9(b) of the Investment Company Act. Neither Buyer nor any "associated
person" (as defined in the Investment Advisers Act) of Buyer that is registered
as an investment adviser is ineligible pursuant to Section 203 of the Investment
Advisers Act to serve as an investment advisor or an associated person thereof.
To the best of Buyer's knowledge, no facts exist with respect to Buyer, or any
Affiliated Person or associated person of Buyer, which would form a basis for
any such disqualification or ineligibility.
f. Litigation; Proceedings. No litigation, proceeding or
governmental investigation, or inquiry is pending or, to the best of Buyer's
knowledge, threatened, against Buyer that seeks to delay, hinder or prohibit
execution of this Agreement or consummation of the transaction contemplated
herein or that, if determined against Buyer would be reasonably likely to have a
Material Adverse Effect on Buyer.
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g. Registered Investment Adviser. Buyer is registered as an
investment adviser under the Investment Advisers Act. Buyer has delivered to
Seller a true and complete copy of its current Form ADV, including Part II
thereof.
h. Compliance with Laws. Buyer's business of providing
investment advisory services to the Xxxxxxxx Funds is being operated in material
compliance with all applicable laws, rules, regulations, ordinances, orders or
requirements of all federal, state and local governmental or regulatory
authorities. Buyer has complied in all material respects with all written
notices and demands to it from all governmental or regulatory authorities with
respect to the ownership, use and operation of all of its business and the
provision of investment advisory services to the Xxxxxxxx Funds.
i. Full Disclosure. No representation or warranty made by
Buyer herein nor any certificate furnished or to be furnished by Buyer pursuant
hereto contains or, at the date of its delivery, will contain any untrue
statement of a material fact, or omits or will omit any statement of a material
fact known to Buyer and known by Buyer to be required to make the statements
herein or therein not misleading.
j. Registration Statements. The N-14 Registration
Statements and the Proxy Statements, on the effective date of the N-14
Registration Statements and at the time of the shareholders' meeting to approve
the Fund Transactions and insofar as they relate to Buyer, the Xxxxxxxx Funds
involved in the proposed Fund Transactions and the proposed Fund Transactions
themselves (a) will comply in all material respects with the provisions the
Securities Act, the Securities Exchange Act and the Investment Company Act and
the rules and regulations thereunder, and (b) will not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading;
provided, however, that none of the representations and warranties in this
subsection shall apply to statements in or omissions from the N-14 Registration
Statements or the Proxy Statements made in reasonable reliance upon and in
conformity with information furnished by Seller or the Xxxxxxx Funds to Buyer
for use in the N-14 Registration Statements or the Proxy Statements.
k. The Xxxxxxxx Funds. To the knowledge of Buyer:
i. Registration and Regulation. Each of the
Xxxxxxxx Funds are duly registered with the Commission as investment companies
under the Investment Company Act, and all shares of each of the Xxxxxxxx Funds
which, since their organization, have been or are being offered for sale have
been duly registered under the Securities Act and have been duly registered,
qualified or are exempt from registration or qualification under the securities
laws of each state or other jurisdiction in which such shares have been or are
being offered. Each of the Xxxxxxxx Funds are in compliance with all applicable
laws, rules and regulations, including, without limitation, the Investment
Company Act, the Securities Act, the Securities Exchange Act and all applicable
state securities laws, except where the failure to be so in compliance would not
have a Material Adverse Effect on Buyer or the Xxxxxxxx Funds (or any of them).
Each of the Xxxxxxxx Funds are in compliance with the investment policies and
restrictions set forth in their registration statements currently in effect
under the Securities Act, except where the failure to be so in compliance would
not have a Material Adverse Effect on Buyer or the Xxxxxxxx Funds (or any of
them). The value of the net assets of each of the Xxxxxxxx Funds is determined
pursuant to the requirements of the Investment Company Act and purchases and
redemptions of shares of the Xxxxxxxx Funds, since their organization have been
effected at the net asset value per share calculated in such manner. There are
no legal or governmental actions, investigations, inquiries or proceedings
pending or threatened against the Xxxxxxxx Funds which could have a Material
Adverse Effect on the condition (financial or otherwise) of Buyer or the
Xxxxxxxx Funds (or any of them).
ii. Financial Statements. The books of account and
related records of the Xxxxxxxx Funds fairly reflect the respective assets of
each of the Xxxxxxxx Funds, liabilities and transactions in accordance with
generally accepted accounting principles applied on a consistent basis. The
audited financial statements as of and for the fiscal year ended June 30, 2003,
47
of the Xxxxxxxx Total Return Fund and the Xxxxxxxx Balanced Fund, and the
audited financial statements as of and for the fiscal year ended September 30,
2002 of the Xxxxxxxx Cornerstone Growth Fund and the Xxxxxxxx Cornerstone Value
Fund previously delivered to Buyer (the "Xxxxxxxx Fund Financial Statements")
present fairly in all material respects the financial position of the Xxxxxxxx
Funds and the results of operations and cash flows for the accounting principles
applied on a consistent basis as at the dates indicated. The Xxxxxxxx Fund
Financial Statements have been certified by an independent accounting firm.
iii. No Material Adverse Changes. Since the
respective dates of the Xxxxxxxx Fund Financial Statements, no material adverse
change has occurred in the financial condition, results of operations, business,
assets or liabilities of the Xxxxxxxx Funds (or any of them) or the status of
the Xxxxxxxx Funds (or any of them) as regulated investment companies under the
Code, other than changes resulting from any change in the mutual fund industry,
in general conditions in the financial or securities markets or the performance
of any investments made by any of the Xxxxxxxx Funds and other than changes
occurring in the ordinary course of business of the applicable Xxxxxxxx Fund.
iv. Taxes. All federal income tax returns, all other
material federal tax returns, and all material state and local tax returns for
any open tax periods required to be filed by the Xxxxxxxx Funds on or prior to
the Closing Date have been or will be timely filed, such returns are or will be
correct in all material respects, and all taxes shows as payable on such returns
have been or will be timely paid. Each of the Xxxxxxxx Funds has qualified as a
regulated investment company under the Code in respect of each of the taxable
years since commencement of the applicable Xxxxxxxx Fund and the Xxxxxxxx Funds
are, and shall be, in compliance with the requirements of Section 851 of
Subchapter M of the Code for each of the applicable fiscal periods ending on or
prior to the Closing Date. Each of the Xxxxxxxx Funds have timely provided to
their shareholders any notices relating to the character of shareholder
distributions or portions thereof required under Sections 852 or 853 of the Code
and Section 19 of the Investment Company Act and have properly withheld or
collected all taxes required by law to be withheld or collected from amounts
payable to the shareholders of the Xxxxxxxx Funds and have timely remitted such
withheld or collected taxes to the appropriate taxing authority, agency or body.
v. Prospectuses. The current prospectuses and
statements of additional information for the Xxxxxxxx Funds as of the date on
which they were issued did not contain, and as supplemented by any supplements
thereto dated prior to or on the Closing Date, do not and will not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading.
vi. Ability to Conduct Business. None of the
Xxxxxxxx Funds are subject to, or bound by, any judgment, order, writ,
injunction or decree of any court, or of any governmental body, including the
Commission, or of any arbitrator, that would prevent the conduct of business of
the Xxxxxxxx Funds (or any of them) in accordance with current practice.
vii. Litigation or Proceeding. No litigation is
pending or threatened, and no investigation, inquiry or governmental proceeding
is pending or, to the best of Buyer's knowledge, threatened against or affecting
the Xxxxxxxx Funds (or any of them) before any court, arbitrator or federal,
state, local or foreign governmental or regulatory agency or authority or self-
regulatory authority (including, but not limited to, the Commission, the
Commodities Futures Trading Commission and the Internal Revenue Service) that
would be reasonably likely to materially and adversely affect the business
operation's or financial condition of the Xxxxxxxx Funds (or any of them).
48
5. COVENANTS
a. Covenants of Seller.
i. Maintenance of Business. Except as contemplated
by this Agreement or with the prior written consent of Buyer, between the date
hereof and the Closing Date, Seller shall operate Seller's business as it
relates to management of the investments of the Xxxxxxx Funds in the ordinary
course of business in accordance with past practices (except where such action
would conflict with Seller's obligations under this Agreement) and agrees not to
engage in any extraordinary transactions affecting the Xxxxxxx Funds.
ii. Approvals. Subject in all cases to any fiduciary
duties to which it may be subject, Seller shall use its reasonable best efforts,
prior to the Closing Date or earlier termination of this Agreement in accordance
with its terms, to obtain the actions of the Board of Trustees of Xxxxxxx
Investments enumerated in Section 7.1(c) and to cause the Xxxxxxx Funds to
solicit their respective shareholders with regard to approval of the Fund
Transactions for which shareholder approval is required, as well as other
matters relating directly or indirectly to such Fund Transactions, consistent
with all requirements of the Investment Company Act and the Securities Exchange
Act applicable to such solicitation.
iii. Access to Information. Subject to applicable
confidentiality agreements, Seller shall allow Buyer and its authorized
representatives on prior notice reasonable access at Buyer's expense during
normal business hours to Seller's employees responsible for the Xxxxxxx Funds,
the books and records of the Xxxxxxx Funds, the Purchased Assets and to all
other properties, equipment and contracts relating to Seller's business of
providing investment advisory services to the Xxxxxxx Funds for the purpose of
review and inspection, and furnish or cause to be furnished to Buyer or its
authorized representatives all information with respect to Seller's business of
providing investment advisory services to the Xxxxxxx Funds as Buyer may
reasonably request, it being understood that the rights of Buyer hereunder shall
not be exercised in such a manner as to interfere with the operation of Seller's
business.
iv. Transition. Seller shall cooperate with and
assist Buyer in effecting the transfer to Buyer of Seller's business of
providing investment advisory services to the Xxxxxxx Funds as contemplated by
this Agreement, including the reorganization of the Xxxxxxx Funds into Xxxxxxxx
Funds, and shall provide the Buyer with such information maintained by Seller as
Buyer may reasonably request to facilitate (i) preparation and filing of tax
returns for the Xxxxxxx Funds for their tax years next ending after the date of
this Agreement and (ii) the provision of information to shareholders in
compliance with the Code and the Investment Company Act.
x. Xxxxxxx Funds Prospectuses. Upon the
satisfaction of the conditions enumerated in Sections 7.1(e), (f) and (i),
Seller shall supplement pursuant to Rule 497 of the Commission under the
Securities Act the prospectuses used to sell the shares of the Xxxxxxx Funds
pending the approval of the Fund Transactions by the shareholders of the Xxxxxxx
Funds to disclose the transactions contemplated by this Agreement.
vi. Registration Statements. Seller will cooperate
with the Buyer with respect to the preparation and filing by Buyer of the N-14
Registration Statements, and will furnish to the Buyer the information relating
to itself required by the Securities Act, the Securities Exchange Act and the
Investment Company Act and the rules and regulations thereunder to be set forth
in the N-14 Registration Statements.
vii. Contracts. Subject to Seller's rights under
Article IX, Seller shall not, without the prior written consent of Buyer or as
contemplated by this Agreement (with notice to Buyer) (i) sell, assign or
otherwise transfer or dispose of any of the Purchased Assets or (ii) enter into
any contract relating to Seller's business of providing investment advisory
services to the Xxxxxxx Funds after the date hereof, other than contracts that
relate to the operations of the Seller or the Xxxxxxx Funds in the ordinary
course of their respective businesses, without receiving the written consent of
Buyer prior to execution of such contracts. All requests for such consents shall
be in writing and shall include a copy of each such contract.
49
viii. Discussions; Negotiations. Subject to Seller's
rights under Article IX, from and after the date on which Buyer has satisfied
the conditions enumerated in Sections 7.1(e), (f) and (i), Seller shall not,
without the prior written consent of Buyer or as contemplated by this Agreement
(with notice to Buyer), do any of the following: (i) share information
concerning the Purchased Assets or the Xxxxxxx Funds with, (ii) institute,
continue, discuss, pursue or enter into any discussions, negotiations or
agreements (whether preliminary or definitive) with, or (iii) entertain or
respond to any offer, inquiry, initiation or invitation from, any person or
entity other than Buyer concerning any merger, disposition or sale of any of the
Purchased Assets or capital stock of the Seller or other business combination
involving the Seller.
b. Covenants of Buyer
i. Access to Information. Buyer shall provide
Seller with such information regarding Buyer and Affiliated Persons of Buyer as
Seller or the Board of Directors of Seller may reasonably request to assist it
in fulfilling its duties to Seller under the Investment Company Act and as may
be reasonably necessary or desirable in connection with the solicitation of
proxies from the shareholders of the Xxxxxxx Funds.
ii. Registration Statements. Buyer will cooperate
with the Seller and will use its reasonable best efforts to complete and file
the N-14 Registration Statements, and will furnish to the Seller such number of
copies of the N-14 Registration Statements as the Seller reasonably requests.
iii. Financing. On or before October 3, 2003, Buyer
shall provide Seller with written evidence reasonably satisfactory to Seller
that Buyer has available financing to consummate the purchase of the Purchased
Assets and the completion of all other transactions contemplated by this
Agreement.
6. SPECIAL COVENANTS AND AGREEMENTS
a. Fees and Expenses. Buyer shall pay all costs associated
with the satisfaction of the condition set forth in Section 7.1(g) of this
Agreement. Notwithstanding the foregoing, each of Buyer and Seller shall be
responsible for paying its own expenses, including legal fees, incurred in
connection with this Agreement and the transactions contemplated herein,
including the Fund Transactions.
b. Brokers. Seller and Buyer each represent to the other
that they have not used any finder or broker in connection with the transaction
contemplated by this Agreement. Buyer and Seller agree to indemnify and hold
harmless the other party with respect to any claim or liability for any finders'
or brokers' fees or commissions in connection with the transaction contemplated
by this Agreement as a result of the indemnifying party's conduct or alleged
conduct upon which any such claim or liability is based.
c. Noncompetition. Subject to the Closing, and as an
inducement to Buyer to execute this Agreement and complete the transactions
contemplated hereby, in order to preserve the goodwill associated with the
Purchased Assets of Seller being sold pursuant to this Agreement, Seller and
Xxxx Xxxxxxxx, individually, hereby covenant and agree that for a period three
years from the Closing Date, neither of them will, directly or indirectly,
organize, sponsor, provide investment advisory service to or otherwise assist
any Mutual Fund or Wrap Account of any type or nature; provided, however,
nothing in this Section 6.3 shall prevent Xxxx Xxxxxxxx from serving as an
"independent director," as defined in Section 2(a)(19) of the Investment Company
Act. In the event a court of competent jurisdiction determines that the
provisions of this covenant not to compete are excessively broad as to duration,
geographical scope or activity, it is expressly agreed that this covenant not to
compete shall be construed so that the remaining provisions shall not be
affected, but shall remain in full force and effect, and any such overbroad
provisions shall be deemed, without further action on the part of any person, to
50
be modified, amended and/or limited, but only to the extent necessary to render
the same valid and enforceable in such jurisdiction.
d. Confidential Information. The confidentiality agreements
previously entered into between Seller and Buyer relating to confidentiality of
information provided by either to the other shall remain in effect following the
execution of this Agreement; provided, however, that the restrictions on Buyer
contained in such agreements shall lapse and be of no further force and effect
on and after the Closing Date.
e. Cooperation. Buyer and Seller shall cooperate fully with
each other and their respective counsel and accountants in connection with any
actions required to be taken as part of their respective obligations under this
Agreement, and Buyer and Seller shall execute such other documents as may be
necessary and desirable to the implementation and consummation of this
Agreement, and otherwise use their reasonable best efforts to consummate the
transaction contemplated hereby and to fulfill their obligations hereunder.
f. Technical Assistance. From the Closing Date through the
last day of the calendar quarter which begins immediately after the Closing
Date, Seller shall provide technical assistance without charge to Buyer
respecting the day-to-day operations of the Xxxxxxx Funds. If on-site assistance
is reasonably required at places other than Seller's principal place of
business, Buyer will pay for reasonable accommodations and travel cost of
Seller's personnel providing such on-site assistance, but Buyer shall not pay
Seller's compensation costs for such personnel.
g. Covenants With Respect to Changes in Condition and
Litigation.
i. Litigation; Proceedings.
(1) From the date of this Agreement through
the Closing Date or earlier termination of this Agreement in accordance with its
terms: (A) Seller shall notify Buyer promptly of any actions, proceedings or
investigations that from the date of this Agreement are commenced against (i)
the Xxxxxxx Funds or (ii) the Seller and relate to the administration,
management, operation or distribution of shares of the Xxxxxxx Funds (or any of
them) and (B) Buyer shall notify Seller promptly of any actions, proceedings or
investigations that from the date of this Agreement are commenced against any of
the Xxxxxxxx Funds or Buyer or any of its Affiliates and relate to the
administration, management, operation or distribution of the Xxxxxxxx Funds.
(2) From the date of this Agreement through
the Closing Date or earlier termination of this Agreement in accordance with its
terms, Buyer shall notify Seller, and Seller shall notify Buyer, promptly of any
actions, proceedings or investigations that are commenced against Buyer or any
of its Affiliates or any actions, proceedings or investigations that are
commenced against Seller or any of its Affiliates, respectively, that would be
reasonably likely to affect adversely the Xxxxxxx Funds (or any of them), the
Xxxxxxxx Funds, the Fund Transactions, the transaction contemplated herein or
that would restrain or enjoin the consummation of, or declare unlawful, the Fund
Transactions or the transaction contemplated herein, or cause such transaction
to be rescinded or that would restrain or enjoin execution or performance of
this Agreement.
ii. Change in Condition.
(1) From the date of this Agreement through
the Closing Date or earlier termination of this Agreement, Buyer agrees to
advise Seller promptly and in writing of any material adverse change in the
financial condition, operations, properties or business of the Xxxxxxxx Funds
(or any of them), other than changes in the value of fund assets resulting from
changes occurring in the financial or securities markets. From the date of this
Agreement through the Closing Date or earlier termination of this Agreement,
Buyer agrees to advise Seller promptly and in writing of any change in the
financial condition, operations, properties or business of the Buyer or any of
51
its Affiliates which individually or taken as a whole would have a Material
Adverse Effect with respect to the Buyer.
(2) From the date of this Agreement through
the Closing Date or earlier termination of this Agreement, Seller agrees to
advise Buyer promptly and in writing of any material adverse change in the
financial condition, operations, properties or business of the Xxxxxxx Funds (or
any of them), other than changes in the value of fund assets resulting from
changes occurring in the financial or securities markets. From the date of this
Agreement through the Closing Date or earlier termination of this Agreement,
Seller agrees to advise Buyer promptly in writing of any change in the financial
condition, operations, properties or business of Seller which individually or
taken as a whole would have a Material Adverse Effect with respect to Seller.
h. Covenants With Respect to Information in Proxy Materials
and Registration Statements.
i. Seller covenants that the last post effective
amendment to the registration statements on Form N-1A filed by the Xxxxxxx Funds
with the Commission preceding the date of this Agreement, any subsequent post-
effective amendment thereto hereafter filed by the Xxxxxxx Funds prior to the
shareholder approval of the Fund Transactions and any prospectuses or
supplements thereto used for the sale of shares of the Xxxxxxx Funds (or any of
them) and the proxy materials required for the shareholders' meeting or meetings
or meetings of the Xxxxxxx Funds called for the purpose, pursuant to the
Investment Company Act, of approving the Fund Transactions or other matters
relating directly or indirectly to the Fund Transactions do not or will not
contain, at the time any such amendment becomes effective or any such prospectus
is delivered in connection with a sale of shares of the Xxxxxxx Funds or at the
time such proxy materials are furnished or at the time of such meeting or
meetings, any untrue statement of material fact or omit to state any material
fact required to be stated therein, where necessary in order to make the
statements made therein, in the light of the circumstances under which they are
made, not misleading; provided, however, that this covenant shall not apply to
any information or data provided by Buyer that describes Buyer, the Xxxxxxxx
Funds or any of their respective business operations or plans for use in the
prospectuses or proxy materials.
ii. Buyer covenants that any information or data
provided by Buyer that describes Buyer, the Xxxxxxxx Funds or any of their
respective business operations or plans for use in and prospectuses or
prospectus supplements for the Xxxxxxx Funds or the proxy materials required for
the shareholders' meeting or meetings of the Xxxxxxx Funds called for the
purpose, pursuant to the Investment Company Act, of approving the Fund
Transactions or other matters relating directly or indirectly to the Fund
Transactions will not contain, at the time any such prospectuses or prospectus
supplements is delivered, or at the times such proxy materials are furnished or
at the time of such meeting or meetings, any untrue statement of material fact
or omit to state any material fact required to be stated therein, where
necessary in order to make the statements made therein, in the light of the
circumstance under which they were made, not misleading.
i. Access to Third Parties. Buyer and Seller shall agree on
mutually acceptable procedures to contact the Xxxxxxx Funds and third party
providers of the Xxxxxxx Funds or Seller including, but not limited to,
auditors, transfer agents, administrators or any other service providers, and
authorize such third party providers to communicate with Buyer and to provide
information requested by Buyer.
j. Cooperation Regarding Financial Matters. From the date
of this Agreement, Seller and each of their representatives shall fully
cooperate with, and provide to, Buyer all information and detail, and full and
complete access to Seller's financial and accounting personnel and books and
records (including all accountants' work papers and work product), as Buyer
shall request.
k. Compliance with Investment Company Act. The parties
agree that for a period of three years after the completion of each Fund
Transaction, (i) at least 75% of the members of the Board of Directors or Board
52
of Trustees of the relevant Xxxxxxxx Funds will consist of persons who are not
"interested persons" (as such term is defined in the Investment Company Act) of
the Buyer or the Seller and (ii) there is not imposed any "unfair burden" (as
such term is defined in the Investment Company Act) on any of the Xxxxxxx or
Xxxxxxxx Funds as a result of any Fund Transaction or any express or implied
terms, conditions or understandings applicable thereto (including any
arrangement during the two-year period following a Fund Transaction whereby the
Buyer or Seller or any interested person of either of them receives or is
entitled to receive any compensation, directly or indirectly, from any person
for other than bona fide investment advisory or other services).
7. CONDITIONS
a. Conditions to Obligations of Buyer. All obligations of
Buyer at the Closing hereunder are subject to the fulfillment prior to and at
the Closing Date, or such earlier date as is enumerated hereafter, of each of
the following conditions, which may be waived, in writing, in whole or in part
by Buyer:
i. Representations and Warranties. All
representations and warranties of Seller shall be true, correct and complete at
and as of the Closing Date as though such representations and warranties were
made at and as of such time, unless the facts causing such representation or
warranty not to be true, correct or complete could not reasonably be expected to
have a Material Adverse Effect with respect to Seller, Buyer or the Xxxxxxx
Funds (or any of them).
ii. Covenants and Conditions. Seller shall have in
all material respects performed and complied with all covenants, agreements and
conditions required by this Agreement to be performed or complied with by it
prior to or on the Closing Date.
iii. Xxxxxxx Investments Board Action. On or before
October 15, 2003, the Board of Trustees of Xxxxxxx Investments shall have taken
action:
(1) to approve the Fund Transactions and
authorize and direct appropriate officers to take all necessary actions to
fulfill the conditions precedent thereto; and
(2) to call shareholders meetings of the
applicable Xxxxxxx Fund to approve the Fund Transactions.
iv. Xxxxxxxx Funds Board Action. On or before
October 15, 2003, the Board of Directors of each of the applicable Xxxxxxxx
Funds shall have taken action to approve the Fund Transactions and authorize and
direct appropriate officers to take all necessary actions to fulfill the
conditions precedent thereto.
v. Buyer Board Action. On or before September 15,
2003, Buyer's Board of Directors shall have approved this Agreement and the
transactions contemplated hereby, and the Fund Transactions, and authorized and
directed the appropriate officers of Buyer to take all necessary actions to
fulfill the conditions precedent thereto.
vi. Financing. On or before October 3, 2003, Buyer
shall have satisfied and fully performed its covenant set forth in Section
5.2(c).
vii. Shareholder Approval. The Fund Transactions
shall have been approved by the requisite vote of the outstanding voting
securities of each of the Xxxxxxx Funds.
viii. Conditions Precedent to Fund Transactions. All
conditions precedent to consummation of each of the Fund Transactions shall have
been satisfied or complied with in all material respects prior to the Closing
Date.
53
ix. Due Diligence. On or before October 3, 2003,
Buyer shall have satisfactorily concluded its due diligence investigation of the
Purchased Assets and the Xxxxxxx Funds.
x. Deliveries. Seller shall have made or stand
willing and able to immediately make all the deliveries to Buyer set forth in
Section 8.2.
xi. Seller Board Action. On or before September 15,
2003, Seller's Board of Directors shall have approved this Agreement and the
transactions contemplated hereby and authorized and directed the appropriate
officers of Seller to take all necessary actions to fulfill the conditions
precedent thereto.
b. Conditions to Obligations of Seller. All obligations of
Seller at the Closing with respect to each of the Fund Transactions and the
related transactions contemplated hereunder are subject to the fulfillment prior
to and at the Closing Date, or such earlier date as is enumerated hereafter, of
each of the following conditions which may be waived, in writing, in whole or in
part by Seller:
i. Representations and Warranties. All
representations and warranties of Buyer contained in this Agreement shall be
true and complete at and as of the Closing Date as though such representations
and warranties were made at and as of such time, unless the fact causing such
representation or warranty not to be true, correct or compete could not
reasonably be expected to have a Material Adverse Effect with respect to Buyer.
ii. Covenants and Conditions. Buyer shall have in
all material respects performed and complied with all covenants, agreements and
conditions required by this Agreement to be performed or complied with by it
prior to or on the Closing Date.
iii. Xxxxxxx Investments Board Action. On or before
October 15, 2003, the Board of Trustees of Xxxxxxx Investments shall have taken
action:
(1) to approve the Fund Transactions and
authorize and direct appropriate officers to take all necessary actions to
fulfill the conditions precedent thereto; and
(2) to call a shareholders meeting of the
applicable Xxxxxxx Fund to approve the Fund Transactions.
iv. Shareholder Approval. The Fund Transactions
shall have been approved by the requisite vote of the outstanding voting
securities of each of the Xxxxxxx Funds.
v. Conditions Precedent to Fund Transactions. All
conditions precedent to consummation of each of the Fund Transactions shall have
been satisfied or complied with in all material respects prior to the Closing
Date.
vi. Seller Board Action. On or before September 15,
2003, Seller's Board of Directors shall have approved this Agreement and the
transactions contemplated hereby and authorized and directed the appropriate
officers of Seller to take all necessary actions to fulfill the conditions
precedent thereto.
vii. Buyer Board Action. On or before September 15,
2003, Buyer's Board of Directors shall have approved this Agreement and the
transactions contemplated hereby, and the Fund Transactions, and authorized and
directed the appropriate officers of Buyer to take all necessary actions to
fulfill the conditions precedent thereto.
viii. Financing. On or before October 3, 2003, Buyer
shall have satisfied and fully performed its covenant set forth in Section
5.2(c).
54
ix. Due Diligence. On or before October 3, 2003,
Buyer shall have satisfactorily concluded its due diligence investigation of the
Purchased Assets and the Xxxxxxx Funds and Buyer shall have delivered to Seller
written confirmation of such fact.
x. Deliveries. Buyer shall have made or stand
willing and able to immediately make all the deliveries set forth in Section
8.3.
Notwithstanding anything to the contrary in this Agreement, if the conditions
precedent to the Fund Transactions and the related transactions contemplated
hereunder have not been satisfied with respect to one or more of the Xxxxxxx
Funds, then Seller shall be obligated to sell the Purchased Assets associated
with the Xxxxxxx Funds with respect to the Fund Transactions and the related
transactions for which all conditions precedent have been satisfied.
8. CLOSING AND CLOSING DELIVERIES
a. Closing. The Closing Date shall be five (5) business
days after the satisfaction or waiver of the conditions set forth in Article VII
of this Agreement or such other date that is agreed to in writing by the Buyer
and Seller, but in no event after January 31, 2004. Closing shall be held at the
offices of Buyer's counsel, or at such other place as shall be mutually agreed
upon by Buyer and Seller.
b. Deliveries by Seller. Prior to or on the Closing Date,
Seller shall deliver to Buyer the following, in form and substance reasonably
satisfactory to Buyer and its counsel:
i. Officer's Certificate. A certificate, dated as
of the Closing Date, executed on behalf of Seller by an authorized officer
certifying that the conditions set forth in Sections 7.1(a) and (b) have been
satisfied;
ii. Secretary's Certificate. A certificate, dated as
of the Closing Date, executed by Seller's Secretary on Seller's behalf
certifying: (i) that the resolutions, as attached to such certificate, were duly
adopted by Seller authorizing and approving the execution of this Agreement and
the consummation of the transaction contemplated hereby and that such
resolutions remain in full force and effect; and (ii) that Seller has taken no
action to dissolve and that no grounds exist for administrative of judicial
action to dissolve the Seller and providing, as an attachment thereto, a
Certificate of Good Standing certified by the Michigan Department of Consumer
and Industry Services as of a date not more than fifteen (15) days before the
Closing Date;
iii. Opinion of Counsel. Opinion of Seller's counsel
dated as of the Closing Date in a form reasonably acceptable to Buyer and its
counsel as to the matters set forth in Schedule 8.2(c); and
iv. Delivery of Purchased Assets. Delivery by Seller
to a location specified by Buyer of the Purchased Assets.
c. Deliveries by Buyer. Prior to or on the Closing Date,
Buyer shall deliver to Seller the following, in form and substance reasonably
satisfactory to Seller and its counsel:
i. Purchase Price. The Purchase Price as provided
in Section 2.4;
ii. Officer's Certificate. A certificate, dated as
of the Closing Date, executed on behalf of Buyer by an authorized officer
certifying that the conditions set forth in Section 7.2(a) and (b) have been
satisfied;
iii. Secretary's Certificate. A certificate, dated as
of the Closing Date, executed by Buyer's Secretary on its behalf certifying: (i)
that the resolutions, as attached to such certificate, were duly adopted by
Buyer's Board of Directors, authorizing and approving the execution of this
Agreement and the consummation of the transaction contemplated hereby and that
55
such resolutions remain in full force and effect; and (ii) that Buyer has taken
no action to dissolve and that no grounds exist for administrative or judicial
action to dissolve the Buyer and providing, as attachments thereto, a
certificate of good standing certified by an appropriate state official of the
State of California as of a date not more than fifteen (15) days before the
Closing Date and by Buyer's Secretary as of the Closing Date; and
iv. Opinion of Counsel. An opinion of Buyer's
counsel dated as of the Closing Date in a form reasonably acceptable to Seller
and Seller's counsel as to the matters set forth in Schedule 8.3(d).
9. TERMINATION
a. Termination Rights. This Agreement and, subject to the
provisions of this Article IX, the obligations hereunder may be terminated and
the transaction contemplated hereby abandoned:
i. By Buyer if any of the conditions set forth in
Section 7.1 hereof shall not have been satisfied or waived by Buyer as of the
time for the Closing Date provided in Section 8.1, or as of such earlier date as
is enumerated in Section 7.1; or
ii. By Seller if all of the conditions set forth in
Section 7.2 hereof shall not have been satisfied or waived by Seller as of the
time for the Closing Date provided in Section 8.1, or as of such earlier date as
is enumerated in Section 7.1; or
iii. By Buyer or Seller if there is in effect on the
Closing Date (or the latest permissible time for the Closing Date provided in
Section 8.1) any judgment, decree or order that would prevent or make unlawful
the Closing hereunder; or
iv. By mutual consent of Buyer and Seller.
Any termination of this Agreement pursuant to this Section 9.1 shall be effected
by notice in writing to the other party.
b. Effect of Termination. If this Agreement is terminated
pursuant to and in accordance with Section 9.1, the termination shall be without
liability of any party, or of any Affiliate of such party, or any shareholder,
director, trustee, officer, employee, agent, consultant or representative, of
such party or of any of its Affiliates, or of Xxxxxxx Funds and any of their
officers or trustees, to the other party to this Agreement; provided, however,
that, if the termination shall result from the breach by a party of any covenant
or agreement of such party contained in this Agreement, such party responsible
for the breach shall be fully liable for any and all reasonable costs and
expenses (including reasonable counsel fees and disbursements) sustained or
incurred by the non-breaching party; and provided further that the terms of the
confidentiality obligations referred to in Section 6.4 shall survive any
termination of this Agreement.
10. REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
a. Representations and Warranties. The representations and
warranties contained in this Agreement shall survive until twelve months after
Closing.
b. Indemnification by Seller. Seller shall indemnify,
defend and hold harmless the Buyer against any and all claims, actions, damages,
obligations, losses, liabilities, costs and expenses of Buyer or the Xxxxxxx
Funds (or any of them) of which Buyer gives Seller notice pursuant to Section
10.4(a) on or before the expiration of the survival period as set forth above
(including reasonable attorneys' fees, costs of collection and other costs of
defense) (collectively, "Damages"), arising from or in connection with any
breach of any representation or warranty of Seller or any covenant by Seller
56
contained in this Agreement or from any litigation, the basis of which relates
to the period prior to the Closing Date. All amounts recovered by Buyer as a
result of claims, actions, damages, obligations, losses, liabilities, costs and
expenses of the Xxxxxxx Funds shall be recovered by Buyer on behalf of any of
the Xxxxxxx Funds and Buyer shall promptly transfer all such recoveries to the
Xxxxxxx Funds.
c. Indemnification by Buyer. Buyer shall indemnify defend
and hold harmless Seller against any and all claims, actions, damages,
obligations, losses, liabilities, costs and expenses of which Seller gives Buyer
notice pursuant to Section 10.4(a) on or before twelve months after Closing
(including reasonable attorney's fees and costs of collection and other costs of
defense) (collectively, "Damages") incurred or suffered arising from or in
connection with any breach of any representation or warranty of Buyer or any
covenant by Buyer contained in this Agreement, including any failure of Buyer to
pay amounts owed to Seller pursuant to Section 2.2 hereof.
d. Procedure for Indemnification. The procedure for seeking
indemnification shall be as follows.
i. The party claiming indemnification (the
"Claimant") shall promptly give notice to the party from whom indemnification is
claimed (the "Indemnifying Party") of any claim, whether between the parties or
brought by a third party, specifying (i) the factual basis for such claim and
(ii) if known, the estimated amount of the claim. If the claim relates to an
action, suit or proceeding filed by a third party against Claimant, such notice
shall be given by Claimant within five (5) business days after written notice of
such action, suit or proceeding as given to Claimant. Such notice shall not be a
condition precedent to any liability of the Indemnifying Party under the
provisions for indemnification contained in this Agreement, unless (and only to
the extent that) failure to give such notice materially prejudices the rights of
the Indemnifying Party with respect to such actions or proceedings.
ii. Following receipt of notice from the Claimant of
a claim for indemnification, the Indemnifying Party shall have thirty (30) days
to make such investigation of the claim as the Indemnifying Party deems
necessary or desirable. For the purposes of such investigation, the Claimant
agrees to make available to the Indemnifying Party and its authorized
representative(s) the information relied upon by the Claimant to substantiate
the claim. If the Claimant and the Indemnifying Party agree at or prior to the
expiration of said thirty (30) day period (or any mutually agreed upon extension
thereof) to the validity and amount of such claim, the Indemnifying Party shall
immediately pay to the Claimant the full amount of the claim. If the Claimant
and the Indemnifying Party do not agree within said period (or any mutually
agreed upon extension thereof), the Claimant may seek appropriate legal remedy.
iii. With respect to any claim by a third party as to
which the Claimant is entitled to indemnification hereunder, the Indemnifying
Party shall have the right at its own expense, to participate in or assume
control of the defense of such claim, and the Claimant shall cooperate fully
with the Indemnifying Party, subject to reimbursement for actual out-of-pocket
expenses incurred by the Claimant as the result of a request by the Indemnifying
Party. If the Indemnifying Party elects to assume control of the defense of any
third-party claim, the Claimant shall have the right to participate in the
defense of such claim at its own expense. Notwithstanding the election of the
Indemnifying Party to assume the defense of such action, the Claimant shall have
the right to employ separate counsel and to participate in the defense of such
action, and the Indemnifying Party shall bear the reasonable fees, costs and
expenses of separate counsel if (a) in the reasonable judgment of the Claimant
the use of counsel chosen by the Indemnifying Party to represent the Claimant
would present such counsel with a conflict of interest; (b) the defendants in,
or targets of, any such action include both the Indemnifying Party and the
Claimant, and the Claimant shall have reasonably concluded that there may be
legal defenses available to it which are different from or additional to those
available to the Indemnifying Party (in which case the Indemnifying Party shall
not have the right to direct the defense of such action on behalf of the
Claimant); (c) the Indemnifying Party shall not have employed counsel
satisfactory to the Claimant, in the exercise of the Claimant's reasonable
judgment, to represent the Claimant within a reasonable time after notice of the
57
institution of such action; or (d) the Indemnifying Party shall authorize in
writing the Claimant to employ separate counsel at the expense of the
Indemnifying Party. If the Indemnifying Party chooses to defend any claim, the
Claimant shall make available to the Indemnifying Party any books, records or
other documents within its control that are necessary or appropriate for such
defense, subject to attorney client privilege and confidentiality agreements. In
any event, the Claimant, the Indemnifying Party and the Indemnifying Party's
counsel (and, if applicable, the Claimant's counsel), shall cooperate (at no
material cost to the Claimant other than the cost of Claimant's counsel) in the
compromise of, or defense against, any such asserted liability. If the
Indemnifying Party assumes the defense of such an action, no compromise or
settlement thereof may be effected by the Indemnifying Party without the
Claimant's consent (which shall in any event not be unreasonably withheld)
unless (i) there is no finding or admission of any violation of the rights of
any person by the Claimant and no effect on any other claims that may be made
against the Claimant and (ii) the sole relief provided is monetary damages that
are paid in full by the Indemnifying Party.
iv. If a claim, whether between the parties or by a
third party, requires immediate action, the parties will make every effort to
reach a decision with respect thereto as expeditiously as possible.
v. The Claimant may not compromise any such claim
without the prior written consent of the Indemnifying Party, which consent may
not be unreasonably withheld.
vi. The indemnification rights provided in Sections
10.2 and 10.3 shall extend to the shareholders, directors, officers, employees,
Affiliates and agents of the Claimant although for the purpose of the procedures
set forth in this Section 10.4, any indemnification claims by such parties shall
be made by and through the Claimant.
vii. The indemnification obligations of Buyer and
Seller under this Article X shall constitute the sole and exclusive remedies of
Buyer and Seller for recovery of money damages after the Closing Date.
e. Limitations.
i. Except for intentional or fraudulent breaches,
neither Buyer nor Seller shall be liable to the other under this Article X for
any damages until the aggregate amount of damages otherwise due the party being
indemnified exceeds Eighty Thousand Dollars ($80,000).
ii. Neither Buyer nor Seller shall have aggregate
indemnity obligations in an amount in excess of the Purchase Price.
11. MISCELLANEOUS
a. Notices. All notices, demands and requests required or
permitted to be given under the provisions of this Agreement shall be (i) in
writing, (ii) delivered by personal delivery, or sent by commercial delivery
service or registered or certified mail, return receipt requested (iii) deemed
to have been given on the date of personal delivery or the date set forth in the
records of the delivery service or on the return receipt or on the date receipt
is confirmed as set forth in the confirmation of the properly transmitted
facsimile, and (iv) addressed as follows:
58
If to Seller: Xxxxxxx Asset Management, Inc.
------------ 000 Xxxx Xxxx Xxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxxxxx, Chairman
FAX: 000-000-0000
with copies (which shall not constitute notice) to:
-----------
Xxxxxx Xxxxxxx PLLC
000 Xxxxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxxxxxxx
FAX: 000-000-0000
If to Buyer: Xxxx X. Xxxxxxxx
----------- Xxxxxxxx Advisors, Inc.
The Courtyard Square
000 Xxxxx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
FAX: 000-000-0000
with copies (which shall not constitute notice) to:
-----------
Xxxxxxx X. Xxxxxx Xxxxx & Xxxxxxx
000 Xxxx Xxxxxxxxx Xxxxxx 00xx Xxxxx
Xxxxxxxxx, Xxxxxxxxx 00000 FAX:
000-000-0000
or to any such other or additional persons and addresses as the parties may from
time to time designate in a writing delivered in accordance with this Section
11.1; provided that any facsimile should be sent to a number provided by the
intended recipient.
b. Publicity. Except as required by law, including any
applicable securities law or other legal disclosure obligations, no
announcement, press release or other communication concerning the transactions
contemplated by this Agreement shall be made by Buyer or Seller prior to the
last date on which Buyer has satisfied all of the conditions enumerated in
Sections 7.1(e), (f) and (i) hereof. All announcements, press releases and other
communications concerning the transactions contemplated by this Agreement shall
be made only after mutual agreement by the parties as to the content and timing
thereof; provided, however, that nothing in this Section 11.2 shall prohibit
Buyer from making such disclosure that it reasonably believes is required by
law, including any applicable securities law or other legal disclosure
obligations.
c. Benefit and Binding Effect. Neither party hereto may
assign this Agreement without the prior written consent of the other party
hereto, except that Buyer may assign some or all of its rights and obligations
under this Agreement to any member of the affiliated group of corporations of
which Buyer is a part or to any purchaser of successor to Buyer's business,
provided that such assignee agrees in writing to be bound by the provisions of
this Agreement. This Agreement is for the sole benefit of and shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns and is not for the benefit of any other person.
d. Governing Law. This Agreement shall be governed,
construed and enforced in accordance with the substantive laws of (without
regard to conflict of law principles), and the sole forum for the judicial
resolution of any dispute arising under this Agreement shall be, the State of
Illinois.
e. Headings. The headings herein are included for ease of
reference only and shall not control or affect the meaning or construction of
the provisions of this Agreement.
f. Gender and Rules of Construction. All references in this
Agreement to the masculine gender shall include the feminine and neuter genders,
and vice versa, and all references to the singular shall include the plural, and
vice versa. Any reference to any Section, Schedule or Exhibit contained in this
Agreement shall refer to such Section, Schedule or Exhibit as set forth in or
59
attached to this Agreement, notwithstanding use of or failure to use the term
"hereof," "hereto" or "herein" in connection with such reference.
g. Entire Agreement. This Agreement, all Schedules hereto,
and all documents and certificates to be delivered by the parties pursuant
hereto collectively represent the entire understanding and agreement between
Buyer and Seller with respect to the subject matter hereof except as otherwise
provided in Section 6.4. All Schedules required by this Agreement shall be
deemed part of this Agreement and incorporated herein, where applicable, as if
fully set forth herein. This Agreement supersedes all prior negotiations between
Buyer and Seller and all letters of intent and other writings relating to such
negotiations, and cannot be amended, supplemented or modified except by an
agreement in writing which makes specific reference to this Agreement or an
agreement delivered pursuant hereto, as the case may be, and which is signed by
the party against which enforcement of any such amendment, supplement or
modification is sought.
h. Counterparts. This Agreement may be signed in any number
of counterparts with the same effect as if the signature on each such
counterpart were upon the same instrument. An electronic facsimile or photocopy
of this Agreement shall be deemed an original and may be admitted in evidence
for all purposes.
60
IN WITNESS WHEREOF, this Agreement has been executed by Buyer
and Seller as of the date first above written.
XXXXXXXX ADVISORS, INC.
By: /s/ Xxxx X. Xxxxxxxx
-------------------------------------
Xxxx X. Xxxxxxxx, President
XXXXXXX ASSET MANAGEMENT, INC.
By: /s/ Xxxx X. Xxxxxxxx
-------------------------------------
Xxxx X. Xxxxxxxx, Chairman and CEO
61
Schedule 3.4
------------
Consummation of the transactions contemplated by the Agreement may give Xxxxxxx
Investments the right to terminate the current Investment Management Agreement
and the current Administration Agreement between Xxxxxxx Investments and Seller.
62
Schedule 3.8
------------
Seller and Xxxxxxx Investments are subject to an exemptive order entered by the
Commission on November 30, 2001, under Section 6(c) of the Investment Company
Act granting an exemption from the requirements of Section 15(a) of such Act and
Rule 18f-2 thereunder to permit Seller to act in a "manager-of-managers" style
and enter into, amend and terminate advisory contracts with unaffiliated
subadvisers without any need to obtain shareholder approval of the affected
mutual fund, which order will not be transferable to Buyer.
Seller and Xxxxxxx Investments are also subject to an exemptive order entered by
the Commission on April 17, 2001, under Sections 6(c), 12(d)(1)(J) and 17(b) of
the Investment Company Act granting an exemption from the requirements of
Section 17(d) of such Act and Rule 17d-1 thereunder to permit the Xxxxxxx Funds
other than Xxxxxxx Government Money Market Fund to invest uninvested cash in
shares of the Xxxxxxx Government Money Market Fund, which order will not be
transferable to Buyer.
63
Schedule 3.10
-------------
LIST OF CONTRACTS AND AGREEMENTS
1. Investment Management Agreement between Seller and Xxxxxxx Investments,
dated as of August 1, 2001.
2. Administration Agreement between Seller and Xxxxxxx Investments, dated
as of August 1, 2001.
3. Custody Agreement between Xxxxxxx Investments and U.S. Bank National
Association, dated as of August 7, 2002.
4. Distribution Agreement between Xxxxxxx Investments and Quasar
Distributors, LLC, dated as of August 1, 2001.
5. Transfer Agent Servicing Agreement between Xxxxxxx Investments and U.S.
Bancorp Fund Services, LLC, dated as of February 19, 2001.
64
Schedule 8.2(c)
---------------
MATTERS COVERED BY OPINION OF COUNSEL TO SELLER
1. Seller is duly incorporated and validly existing under the laws
of the State of Michigan and has the corporate power to conduct the business in
which it is currently engaged.
2. Seller (i) has all necessary corporate power and authority to
execute, deliver and perform its obligations under the Agreement and the
documents contemplated thereby, and (ii) has taken all necessary corporate
action to authorize such execution, delivery and performance.
3. The Agreement and the documents contemplated thereby have been
duly executed and delivered on behalf of Seller, and constitute the legal, valid
and binding obligation of Seller, enforceable against the Seller in accordance
with their terms, such enforcement subject to bankruptcy, insolvency,
reorganization, moratorium, or similar laws of general application affecting
creditors' rights and the application of general principles of equity.
4. The execution, delivery and performance by Seller of the
Agreement and the documents contemplated thereby (i) will not conflict with any
provision of Seller's articles of incorporation or by-laws and (ii) to the
knowledge of Seller's counsel, will not conflict with, result in a breach of, or
constitute a default under, any applicable law, judgment, order, ordinance,
injunction, decree, rule, regulation or ruling of any court or governmental
instrumentality.
5. Seller is not required to submit any notice, report or other
filing with, or obtain any authorization, consent or approval from, any
governmental authority or self-regulatory organization prior to the execution,
delivery and performance by Seller of the Agreement or the consummation of the
transaction contemplated therein.
We confirm to you that to our knowledge, after inquiry of each
lawyer who is the current primary contact for Seller or who has devoted
substantive attention to matters on behalf of Seller during the preceding twelve
months and who is still currently employed by or a member of this firm, no
litigation or governmental proceeding is pending or threatened in writing
against the Seller (i) with respect to the Agreement or (ii) which individually
seeks in excess of $10,000.
65
Schedule 8.3(d)
---------------
MATTERS COVERED BY OPINION OF COUNSEL TO BUYER
Buyer is duly incorporated and validly existing under the laws
of the State of California, and has the corporate power to conduct the business
in which it is currently engaged.
6. Buyer (i) has all necessary corporate power and authority to
execute, deliver and perform its obligations under the Agreement and the
documents contemplated thereby, and (ii) has taken all necessary corporate
action to authorize such execution, delivery and performance.
7. The Agreement and the documents contemplated thereby have been
duly executed and delivered on behalf of Buyer, and constitute the legal, valid
and binding obligation of Buyer, enforceable against the Buyer in accordance
with their terms, such enforcement subject to bankruptcy, insolvency,
reorganization, moratorium, or similar laws of general application affecting
creditors' rights and the application of general principles of equity.
8. The execution, delivery and performance by Buyer of the
Agreement and the documents contemplated thereby (i) will not conflict with any
provision of Buyer's articles of incorporation or by-laws and (ii) will not
conflict with, result in a breach of, or constitute a default under, any
applicable law, judgment, order, ordinance, injunction, decree, rule, regulation
or ruling of any court or governmental instrumentality.
9. Buyer is not required to submit any notice, report or other
filing with, or obtain any authorization, consent or approval from, any
governmental authority or self-- regulatory organization prior to the execution,
delivery and performance by Buyer of the Agreement or the consummation of the
transaction contemplated therein.
We confirm to you that to our knowledge, after inquiry of each
lawyer who is the current primary contact for Buyer or who has devoted
substantive attention to matters on behalf of Buyer during the preceding twelve
months and who is still currently employed by or a member of this firm, no
litigation or governmental proceeding is pending or threatened in writing
against the Buyer (i) with respect to the Agreement or (ii) which individually
seeks in excess of $10,000.
66
FIRST AMENDMENT TO ASSET PURCHASE AGREEMENT
This First Amendment to Asset Purchase Agreement (the "First
Amendment") is made as of January 19, 2004, by and between XXXXXXX ASSET
MANAGEMENT, INC., a Michigan corporation ("Seller") and XXXXXXXX ADVISORS, INC.,
a California corporation ("Buyer").
Buyer and Seller have previously entered into an Asset Purchase
Agreement, dated September 10, 2003 (the "Agreement"), and now desire to amend
such agreement to extend the date by which the transactions contemplated by the
Agreement must be completed.
In consideration of the mutual agreements set forth in the Agreement
and this First Amendment, the parties agree as follows:
1. Section 8.1 of the Agreement is hereby amended to read in its
entirety as follows:
"Section 8.1 Closing. The Closing Date shall be five (5)
business days after the satisfaction or waiver of the
conditions set forth in Article VII of this Agreement or such
other date that is agreed to in writing by the Buyer and
Seller, but in no event after March 15, 2004. Closing shall be
held at the offices of Buyer's counsel, or at such other place
as shall be mutually agreed upon by Buyer and Seller."
2. Except as explicitly amended by this First Amendment, all of the
terms and conditions of the Agreement shall remain in full force and effect for
all purposes.
3. All references in the Agreement to "this Agreement" or the
"Agreement" shall be deemed to refer to the Agreement as amended hereby.
4. This First Amendment may be signed in any number of counterparts
with the same effect as if the signature on each such counterpart were upon the
same instrument. An electronic facsimile or photocopy of this First Amendment
shall be deemed an original and may be admitted in evidence for all purposes.
IN WITNESS WHEREOF the parties have signed this First Amendment.
XXXXXXXX ADVISORS, INC.
By: /s/ Xxxx X. Xxxxxxxx
--------------------------------------
Xxxx X. Xxxxxxxx, President
XXXXXXX ASSET MANAGEMENT, INC.
By: /s/ Xxxx X. Xxxxxxxx
--------------------------------------
Xxxx X. Xxxxxxxx, Chairman
67
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Fees billed by our accounting firms (KPMG LLP and Xxxxxxx &
Xxxxxxx LLP) for audit services, SEC compliance reviews and tax
preparation services were as follows, for the fiscal years ending
September 30, 2004 and 2003:
Other
Audit Audit-Related Tax Fees (3) Total Fees
Fees Fees(1) Fees(2) (4)
------------------------------------------------------------------------------------------------------------------
Fiscal Year 2004
--KPMG $ 0 $ 0 $ 0 $10,000 $10,000
--Xxxxxxx & Xxxxxxx $21,922 $21,458 $3,500 $ 5,011 $51,891
Fiscal Year 2003
--KPMG $28,000 $36,000 $ 0 $ 0 $64,000
--Xxxxxxx & Xxxxxxx $ 0 $ 4,500 $3,500 $ 0 $ 8,000
(1) Audit related fees are for SEC compliance reviews of Form
10-QSB.
(2) Tax fees are for preparation of federal and state income
tax returns.
(3) KPMG "Other Fees" were for review of Form 10-KSB and issuance of
related consent.
(4) Xxxxxxx & Xxxxxxx "Other Fees" were for attendance at audit
committee meetings and the annual meeting of shareholders.
All decisions regarding selection of independent accounting
firms and approval of accounting services and fees are made by the
Audit Committee of Xxxxxxxx Advisors, Inc., in accordance with the
provisions of the Xxxxxxxx-Xxxxx Act of 2002. There are no
exceptions to the policy of securing prior approval by our audit
committee for any service provided by our independent accounting
firm.
68
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, as duly authorized:
Xxxxxxxx Advisors, Inc.
(Registrant)
By: /s/ Xxxx X. Xxxxxxxx Dated: December 14, 2004
-------------------------
Xxxx X. Xxxxxxxx
Chief Executive Officer and President
(As a duly authorized Officer on behalf of the Registrant and as Principal
Executive Officer and Chairman of the Board of Directors)
By: /s/ Xxxxxx X. Xxxxxx Dated: December 14, 2004
-------------------------
Xxxxxx X. Xxxxxx
Chief Financial Officer, Secretary and Director
By: /s/ Xxxxxx X. Xxxxxxxx Dated: December 14, 2004
-------------------------
Xxxxxx X. Xxxxxxxx
Executive Vice President and Director
By: /s/ Xxxxx X. Xxxxxxx Dated: December 14, 2004
-------------------------
Xxxxx X. Xxxxxxx
Controller
By: /s/ Xxxxxx X. Xxxxxxx Dated: December 14, 2004
-------------------------
Xxxxxx X. Xxxxxxx
Director
By: /s/ Xxxxxx X. Xxxxxx Dated: December 14, 2004
-------------------------
Xxxxxx X. Xxxxxx
Director
By: /s/ Xxxxx Xxxxxx Dated: December 14, 2004
-------------------------
Xxxxx Xxxxxx
Director
By: /s/ Xxxxx X. Xxxxxxxx Dated: December 14, 2004
-------------------------
Xxxxx X. Xxxxxxxx
Director
By: /s/ Xxxxxx Xxxxxxxxx Dated: December 14, 2004
-------------------------
Xxxxxx Xxxxxxxxx
Director
69
Xxxxxxxx Advisors, Inc.
Exhibit Index
2.1* Form of Agreement of Merger of Xxxxxxxx Advisors, Inc., Xxxxxxxx
Management Co., L.P. and Xxxxxxxx Management Co. 2, L.P.
3.1* Amended and Restated Articles of Incorporation
3.2* Bylaws
10.1* Management Agreement, dated June 30, 2000, between Registrant and
Xxxxxxxx Mutual Funds, Inc.
10.2* Investment Advisory Agreement, dated July 1, 1998, between The
Xxxxxxxx Funds, Inc., and the Xxxxxxxx Management Co., L.P.
10.3* Investment Advisory Agreement, dated June 30, 1998, between The
Xxxxxxxx Funds, Inc., and the Xxxxxxxx Management Co., 2, L.P.
10.4* Xxxxxxxx Advisors, Inc. 2001 Omnibus Plan**
10.4(a)* Form of Option Award Agreement**
10.5* Employment Agreement of Xxxx X. Xxxxxxxx**
10.6*** Loan Agreement between the Registrant and US Bank National
Association, dated March 15, 2004
10.7 Xxxxxxx Acquisition Agreement as amended, January 19, 2004
14.1**** Xxxxxxxx Advisors, Inc. Code of Ethics as amended November 3, 2004,
and approved by the mutual fund directors on November 16, 2004.
23.3 Consent of Xxxxxxx & Xxxxxxx LLP
31.1 Rule 13a - 14a Certification of the Chief Executive Officer
31.2 Rule 13a - 14a Certification of the Chief Financial Officer
32.1 Written Statement of the Chief Executive Officer, Pursuant to 18
U.S.C. ss. 1350
32.2 Written Statement of the Chief Financial Officer, Pursuant to 18
U.S.C. ss. 1350
Note:
* = incorporated by reference from the Company's Form SB-2 registration
statement (SEC File No. 333-66970)
** = management contract or compensatory plan or arrangement
*** = incorporated by reference from the Company's Form 10-QSB for the
quarter ended March 31, 2004 (SEC File No. 000-49872)
**** = incorporated by reference from the Company's Form 8-K furnished
December 10, 2004
70
