EXHIBIT 2.1
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STOCK PURCHASE AGREEMENT
by and among
XXXXXXX & XXXX FINANCIAL, INC.,
MACKENZIE FINANCIAL CORPORATION,
MACKENZIE INVESTMENT MANAGEMENT, INC.
and
IVY ACQUISITION CORPORATION
Dated as of: August 29, 2002
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TABLE OF CONTENTS
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ARTICLE I DEFINITIONS
Section 1.1 Definitions.....................................................................................2
ARTICLE II PURCHASE AND SALE OF SHARES PURCHASE AND SALE OF SHARES;
CLOSING; RELATED MATTERS
Section 2.1 Purchase and Sale of the Shares................................................................10
Section 2.2 Closing; Delivery of the Shares................................................................11
Section 2.3 Payment........................................................................................11
Section 2.4 Purchase Consideration.........................................................................11
Section 2.5 Determination of Closing AUM and Preliminary Excess Adjusted Working Capital...................11
Section 2.6 Preliminary Adjustments; Reserves..............................................................11
Section 2.7 Closing Excess Adjusted Working Capital........................................................12
Section 2.8 Closing Purchase Consideration Adjustments.....................................................13
Section 2.9 Success Fee Adjustments........................................................................13
Section 2.10 Adjustment to Purchase Consideration...........................................................13
Section 2.11 Treatment of Options...........................................................................13
ARTICLE III REPRESENTATIONS AND WARRANTIES OF MIMI AND NEWCO
Section 3.1 Organization and Related Matters...............................................................14
Section 3.2 Approval by MIMI and Newco; Vote Required......................................................15
Section 3.3 Authority; No Violation; Consents..............................................................15
Section 3.4 Books and Records..............................................................................16
Section 3.5 Securities Filings; Financial Statements; Liabilities..........................................16
Section 3.6 Compliance with Applicable Laws................................................................17
Section 3.7 Additional Representations Regarding Funds.....................................................19
Section 3.8 Assets Under Management........................................................................23
Section 3.9 Title..........................................................................................23
Section 3.10 Contracts......................................................................................23
Section 3.11 Technology and Intellectual Property...........................................................25
Section 3.12 Legal Proceedings..............................................................................26
Section 3.13 Taxes and Tax Returns..........................................................................26
Section 3.14 Insurance......................................................................................28
Section 3.15 Labor and Employment Matters...................................................................28
Section 3.16 Benefit Plan Obligations.......................................................................28
Section 3.17 Fairness Opinion; No Brokers...................................................................30
Section 3.18 Derivatives, Etc...............................................................................30
Section 3.19 Absence of Changes.............................................................................30
Section 3.20 Competition Act (Canada) and Investment Canada Act.............................................31
Section 3.21 Valid Exemption................................................................................31
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE BUYER
Section 4.1 Organization...................................................................................31
Section 4.2 Authority; No Violation; Consents..............................................................31
Section 4.3 Legal Proceedings..............................................................................32
Section 4.4 No Ineligible Persons..........................................................................32
Section 4.5 Certain Regulatory Filings.....................................................................32
Section 4.6 No Brokers.....................................................................................33
Section 4.7 No Unfair Burden...............................................................................33
Section 4.8 Absence of Changes.............................................................................33
Section 4.9 Financing......................................................................................33
Section 4.10 Share Ownership................................................................................33
ARTICLE V COVENANTS
Section 5.1 Conduct of Business............................................................................34
Section 5.2 Preparation Of Proxy Statement; Waivers; Pre-Closing Transactions..............................36
Section 5.3 Stockholders' Meeting; Board Recommendation....................................................37
Section 5.4 Approval Of New Fund Contracts and Directors...................................................37
Section 5.5 Governmental Consents and Filings..............................................................38
Section 5.6 Additional Agreements..........................................................................39
Section 5.7 Acquisition Proposals..........................................................................39
Section 5.8 Fair Price Structure...........................................................................40
Section 5.9 Expenses.......................................................................................40
Section 5.10 Access; Certain Communications.................................................................41
Section 5.11 Notification of Certain Matters................................................................41
Section 5.12 Safe Harbor....................................................................................41
Section 5.13 Confidentiality................................................................................41
Section 5.14 Financing......................................................................................41
Section 5.15 Use of Name....................................................................................42
Section 5.16 Additional Buyer Covenants.....................................................................43
ARTICLE VI CONDITIONS TO CLOSING
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Section 6.1 Conditions to Buyer's Obligations..............................................................44
Section 6.2 Conditions to MIMI's, Parent's and Newco's Obligations.........................................45
Section 6.3 Mutual Conditions..............................................................................46
ARTICLE VII TERMINATION/SURVIVAL
Section 7.1 Termination....................................................................................47
Section 7.2 Effect of Termination..........................................................................48
ARTICLE VIII MISCELLANEOUS
Section 8.1 Amendments; Extension; Waiver..................................................................48
Section 8.2 Entire Agreement...............................................................................48
Section 8.3 Interpretation.................................................................................48
Section 8.4 Severability...................................................................................48
Section 8.5 Notices........................................................................................49
Section 8.6 Binding Effect; Persons Benefiting; No Assignment..............................................50
Section 8.7 Counterparts...................................................................................50
Section 8.8 Governing Law..................................................................................50
Section 8.9 Waiver of Jury Trial...........................................................................50
Section 8.10 No Punitive or Consequential Damages...........................................................50
Exhibits
Exhibit A - Plan of Dissolution
Exhibit B - Subadvisory Agreement
Exhibit C - Trademark Agreement
Exhibit D - Opinion Matters for Counsel to Parent, Newco and MIMI
Exhibit E - Tax Matters Agreement
Exhibit F - Marketing Agreement
Exhibit G - Opinion Matters for Counsel to Buyer
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of August 29, 2002 (this "Agreement"),
by and among Xxxxxxx & Xxxx Financial, Inc., a
Delaware corporation (the
"Buyer"), Mackenzie Financial Corporation, a corporation amalgamated under the
laws of Ontario, Canada ("Parent"), Mackenzie Investment Management, Inc., a
Delaware corporation ("MIMI"), and Ivy Acquisition Corporation, a
Delaware
corporation ("Newco").
RECITALS:
WHEREAS, as of the date hereof Parent owns beneficially and of record
approximately 85.7% of the outstanding shares of MIMI's Common Stock, par value
$0.01 per share (the "Common Stock");
WHEREAS, Parent has formed Newco for the purpose of engaging in the
transactions set forth herein;
WHEREAS, prior to the Closing (as defined herein) (a) Parent will
contribute all the shares of Common Stock owned and held of record by it to the
capital of Newco in exchange for shares of common stock of Newco (the "Share
Contribution"), and (b) following the Share Contribution, the Board of Directors
of MIMI and the stockholders of MIMI (the "Stockholders") will adopt a plan of
complete liquidation and dissolution under
Delaware law (the "Plan of
Dissolution") pursuant to which (i) MIMI will distribute to the Stockholders
(other than Newco) cash consideration in the Pre-Closing Dissolution (as defined
herein) with a per share value not less than the consideration that would have
been received by such Stockholders if the Purchase Consideration (as defined
herein) paid to Parent had been paid pro rata to all Stockholders prior to the
Pre-Closing Transactions, and (ii) MIMI will distribute to Newco all other
assets and liabilities of MIMI.
WHEREAS, Parent desires to sell to Buyer, and Buyer desires to purchase all
outstanding shares of capital stock (collectively, the "Shares") of Newco on the
terms and subject to the conditions set forth in this Agreement;
WHEREAS, the Boards of Directors of Buyer, MIMI and Newco have approved
this Agreement and the transactions contemplated by this Agreement (except that
the Pre-Closing Dissolution (as defined herein) has not yet been approved by the
Board of Directors of MIMI) in accordance with the provisions of the
Delaware
General Corporation Law;
WHEREAS, the Board of Directors of Parent has approved this Agreement and
the transactions contemplated by this Agreement in accordance with the
provisions of Applicable Law, and Parent, as the sole stockholder of Newco, has
approved this Agreement and the transactions contemplated by this Agreement in
accordance with the provisions of the
Delaware General Corporation Law;
WHEREAS, simultaneously with the execution of this Agreement, Buyer and
Parent are entering into a Voting, Support and Indemnification Agreement, dated
as of the date hereof (the "Support Agreement"), whereby Parent agrees to vote
in favor of the transactions contemplated
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by this Agreement and to indemnify Buyer for certain breaches of this Agreement
by MIMI or Newco; and
WHEREAS, Buyer, Newco and MIMI desire to make certain representations,
covenants and agreements in connection with the transactions contemplated by
this Agreement.
NOW, THEREFORE, in consideration of and premised upon the various
representations, warranties, covenants and other agreements and undertakings of
the parties contained in this Agreement, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 DEFINITIONS.
(a) For all purposes in this Agreement, the following terms
shall have the respective meanings set forth in this Section 1.1 (such
definitions to be equally applicable to both the singular and plural forms of
the terms herein defined):
"Advised Fund" means a collective investment vehicle with respect to which
any Company acts in an advisory capacity, subadvisory capacity or otherwise
provides services on behalf of Parent other than the Ivy Fund, any Portfolio or
any Subadvised Fund.
"Advisers Act" means the United States Investment Advisers Act of 1940 and
all rules and regulations of the SEC thereunder.
"Affiliate" means any Person that directly, or indirectly through one or
more intermediaries, controls or is controlled by, or is under common control
with, the Person specified. For the purposes of this definition, "control", when
used with respect to any specified Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of Equity Interests, by
Contract or otherwise; and the terms "controlling" and "controlled" have
correlative meanings to the foregoing. For purposes of the definition of
"control", a general partner or managing member of a Person shall always be
considered to control such Person.
"Applicable Law" means any statute, law, ordinance, rule, public
administrative interpretation, published policy statement, regulation, order,
writ, injunction, directive, judgment, decree or other requirement of any
Governmental Authority applicable to the Person or Persons referenced or to any
of the assets, officers, directors, employees, agents, shareholders, partners,
members, beneficiaries or other owners of Equity Interests in such Person or
Persons.
"Assets Under Management" or "AUM" means, at any particular date, with
respect to (i) the referenced Portfolio, the product of (A) the number of shares
or other units of equity interest of such Portfolio outstanding as of the close
of business on the Business Day immediately prior to such particular date and
(B) the net asset value (as calculated in accordance with the prospectus or
other offering document of such Portfolio) in U.S. dollars of each such share or
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other unit of equity interest of such Portfolio as of the close of business on
the Business Day immediately prior to the applicable date or (ii) the referenced
Advised Fund, the product of (A) the number of shares or other units of equity
interest of such Advised Fund outstanding as of the close of business on the
Business Day immediately prior to such particular date and (B) the net asset
value (as calculated in accordance with the prospectus or other offering
document of such Advised Fund) in U.S. dollars (or as converted into U.S.
dollars at the New York foreign exchange rate at 4:00 p.m. Eastern Time on the
Business Day immediately prior to such particular date as listed in The Wall
Street Journal) of each such share or equity interest of such Advised Fund as of
the close of business on the Business Day immediately prior to the applicable
date.
"Board Dissolution Approval" means (i) the adoption of the Plan of
Dissolution and the approval of the Pre-Closing Dissolution by the Board of
Directors of MIMI, (ii) the determination by the Board of Directors of MIMI that
the Pre-Closing Transactions are fair to, advisable and in the best interests of
the Stockholders and (iii) the recommendation by the Board of Directors of MIMI
of the approval of the Pre-Closing Dissolution by the Stockholders, in each case
within ten days following the Share Contribution.
"Business Day" means any day other than a Saturday, Sunday or a day on
which the New York Stock Exchange is authorized or required to be closed for
regular business; provided, that for subpart (ii) of the definition of "Assets
Under Management" or "AUM", Business Day shall mean any day other than a
Saturday, Sunday or a day on which the TSX is authorized or required to be
closed for regular business.
"Buyer Material Adverse Effect" means (i) a material adverse effect on the
business, assets, revenues, financial conditions, results of operations of
Buyer, excluding effects to the extent attributable to (a) declines in any
relevant securities market or segment thereof, (b) changes in the asset
management industry generally, or (c) general national, international or
regional economic or financial conditions, or any outbreaks of hostilities or
terrorism or escalation thereof or other calamity or crisis, in each case only
to the extent Buyer is not disproportionately affected by such change or
decline; or (ii) a material burden on or impairment of Buyer's ability to
consummate the transactions contemplated by this Agreement.
"Canadian GAAP" means, with respect to the referenced Company or Fund,
generally accepted accounting principles as used in Canada as in effect at the
time any applicable financial statements were prepared or any act requiring the
application of, or reconciliation to, Canadian GAAP was performed.
"Canadian Securities Laws" means all applicable securities laws in each of
the provinces and territories of Canada and the respective regulations and rules
under such laws together with applicable published policy statements of the
Canadian Securities Regulators and the securities regulatory authorities in the
provinces and territories of Canada.
"Canadian Securities Regulators" means the applicable securities commission
or securities regulatory authority in each of the provinces and territories of
Canada.
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"Canadian Tax Act" means the INCOME TAX ACT (Canada) and the regulations
under that Act.
"Closing" means the completion of the transactions contemplated by this
Agreement.
"Closing Date" means the date of the Closing.
"Code" means the Internal Revenue Code of 1986, as amended.
"Companies" means MIMI, Newco, Ivy Management, Inc., a corporation
organized under the laws of the Commonwealth of Massachusetts, Xxx Xxxxxxxxx
Distributors, Inc., a Florida corporation, and Xxx Xxxxxxxxx Services Corp., a
Florida corporation, collectively.
"Company" means each or any one of the Companies individually, as the
context may require.
"Confidentiality Agreement" means the Confidentiality Agreement, dated
January 23, 2002, between Buyer and MIMI.
"Contract" means with respect to any Person, any agreement, indenture, debt
instrument, contract, guarantee, loan, note, mortgage, license, lease or other
binding commitment, whether oral or written, to which such Person is a party or
by which it is bound or to which any of its assets or properties is subject.
"Derivative Contract" means any exchange-traded, over-the-counter or other
swap, cap, floor, collar, option agreement, futures or forward contract and each
other similar Contract.
"Dollar" or "Dollars" or "$" means United States dollar currency in all
cases, unless otherwise specified.
"Encumbrance" means any lien, pledge, security interest, claim, charge,
easement, limitation, commitment, encroachment, restriction or encumbrance of
any kind or nature whatsoever, except for restrictions imposed by applicable
securities laws.
"Equity Interests" means: (a) capital stock, partner interests, member
interests, beneficial interests or any other equity or ownership interests in
the Person referenced; (b) any instruments convertible into or exchangeable for,
or whose value is determined by reference to, any such interests; or (c) any
other rights, warrants or options to acquire or dispose of any of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and all rules and regulations of the Department of Labor thereunder.
"Excess Adjusted Working Capital" means, at any time, with respect to MIMI
or Newco, as applicable, the following, each component of which is determined on
a consolidated basis with the Companies in accordance with GAAP applied on a
basis consistent with the Most Recent Balance Sheet:
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(i) the sum of the amounts in the "Total Cash and Cash
Equivalents", "Total Receivables" and "Total Investments" line items on the
applicable balance sheet, plus
(ii) the Restructuring Costs Accrued ; less
(iii) the sum of the amounts in the "Total Accounts Payable" and
"Accrued Liabilities" line items on such balance sheet and $1,480,000;
provided, that for the avoidance of doubt, (w) "Total Receivables" shall
include a current tax receivable (to the extent not a deferred tax asset)
created by an anticipated refund arising as a result of the carryback of a
net operating loss attributable to the adjustment under Section 481(a) of
the Code described in Section 4.3 of the Support Agreement, (x) the amounts
in the "Net Intangible Assets", "Fixed Assets: Book Value" and "Other
Assets: Deferred/Prepaid/Other" line items on such balance sheet shall not
be included in the calculation in clause (i) above; (y) the liability
amounts in the "Deferred Compensation", "T/A Restructuring" and "Deferred
Rent" line items on such balance sheet shall not be included in the
calculation in clause (iii) above; and (z) the liability amounts in the
"Total Accounts Payable" and "Accrued Liabilities" line items on such
balance sheet shall include all amounts relating to any financial advisor,
legal, accounting and all other transaction fees and expenses payable by
any Company in connection with this Agreement or the transactions
contemplated by this Agreement (except to the extent that such fees and
expenses are to be paid or assumed by Parent or another company); and
provided, further, that for "Accrued Liabilities: Bonuses," bonus accruals
for individuals employed by MIMI immediately prior to the Pre-Closing
Dissolution or by Newco at the time of Closing, as applicable, are at least
as large as the greater of the pro rata amount actually paid to each of
such employees as employed by MIMI in the prior year or the pro rata amount
of 75% of "target" bonus levels, as defined by Company policy.
For the avoidance of doubt in understanding the composition of the line
items referred to in this definition, the balance sheet of MIMI as of
June 30, 2002 is attached hereto as SCHEDULE 1.1(a)(ii) resulting in a net
balance of Excess Adjusted Working Capital of $47,000,000.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fund" means Ivy Fund, each Portfolio, each Advised Fund and each
Subadvised Fund.
"GAAP" means, with respect to the referenced Company or Fund, generally
accepted accounting principles as used in the United States of America, as in
effect at the time any applicable financial statements were prepared or any
transaction or activity requiring the application of GAAP was performed.
"Governmental Authority" means any nation, state, territory, province,
county, city or other unit or subdivision thereof or any entity, authority,
agency, department, board, commission, instrumentality, court or other judicial
body authorized on behalf of any of the foregoing to
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exercise legislative, judicial, regulatory or administrative functions of or
pertaining to government, and any governmental or non-governmental
Self-Regulatory Organization.
"Governmental Documents" means all reports, registration statements,
prospectuses, annual information forms, financial statements, notices and other
filings filed, or required to be filed, by law, by contract or otherwise, by the
referenced Person or Persons pursuant to the authority of any Governmental
Authority.
"Intellectual Property" means patents, patent applications, trademarks and
service marks (whether registered or unregistered), trade names, logos,
copyrights, maskworks, know-how, trade secrets, ideas, Internet domain names,
inventions, processes, Software, and any other tangible or intangible
proprietary information, material or right, including, without limitation, any
application, registration, pending registration or "intent to use" filing with
respect to any of the foregoing.
"Investment Company Act" means the United States Investment Company Act of
1940 and all rules and regulations of the SEC thereunder.
"IRS" means the Internal Revenue Service of the United States.
"Ivy Fund" means Ivy Fund, a Massachusetts business trust consisting of
sixteen separate Portfolios.
"Leased Properties" means all leasehold interests of any Company in real
property.
"MIMI Stockholder Approval" means the approval by a majority of outstanding
shares of Common Stock of MIMI of the Pre-Closing Dissolution; provided, that if
either the Pre-Closing Transactions are not exempt under OSC Rule 61-501 and QSC
Policy Q-27 or the Waivers are not received, then the MIMI Stockholder Approval
shall also include meeting the applicable requirements of OSC Rule 61-501 and
QSC Policy Q-27.
"Options" means the collective reference to all options to purchase shares
of Common Stock issued pursuant to the Option Plan that are outstanding
immediately prior to the consummation of Pre-Closing Transactions.
"Ordinary Course of Business" means the ordinary course of business of the
referenced Person or Persons consistent with past practice.
"Permitted Encumbrances" means all Encumbrances which are:
(1) Encumbrances set forth on SCHEDULE 1.1(b);
(2) liens for Taxes or assessments that are not yet due and
payable; or
(3) liens of landlords and liens of carriers, warehousemen,
mechanics and materialmen and other like liens arising in the Ordinary
Course of Business for sums not yet due and payable.
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"Person" means any natural person, corporation, company, limited liability
company, partnership (limited or general), joint venture, association, trust or
other entity.
"Portfolio" means an individual mutual fund within the Ivy Fund.
"Pre-Closing Dissolution" means the dissolution of MIMI pursuant to the
Plan of Dissolution, substantially in the form attached hereto as EXHIBIT A,
whereby the Stockholders (other than Newco) shall receive cash and Newco shall
receive all of the other assets and liabilities of MIMI, and the other
transactions contemplated by the Plan of Dissolution.
"Pre-Closing Transactions" means (i) the Share Contribution and (ii) the
Pre-Closing Dissolution.
"Records" means all records and original documents in the possession of any
referenced Person or Persons which pertain to or have been or are utilized by
such Person or Persons to administer, monitor, evidence or record information
respecting the business or conduct of such Person or Persons including, without
limitation, (a) all such records and original documents maintained on electronic
or magnetic media and (b) all such records and original documents respecting the
Contracts of such Person as may be necessary to comply with any Applicable Law,
including, without limitation, any and all records and original documents kept
in accordance with, or filed pursuant to, any Securities Laws.
"Restructuring Costs Accrued" means any liability accrued but not yet paid
between July 31, 2002 and Closing Date related to (A) the termination by any of
the Companies of office space, office equipment or other office lease, (B)
payments due under the agreements and plans listed on SCHEDULE 3.10(a) for
termination of any of the Companies' employees, and (C) severance benefits and
related costs for termination of any of the Companies' employees that are
mutually agreed to by the Buyer and MIMI.
"Restructuring Costs Paid" means any liability incurred and paid between
the signing date of this Agreement and Closing Date related to (A) the
termination by any of the Companies of office space, office equipment or other
office lease, (B) payments due under the agreements and plans listed on SCHEDULE
3.10(a) for termination of any of the Companies' employees, and (C) severance
benefits and related costs for termination of any of the Companies' employees
that are mutually agreed to by the Buyer and MIMI.
"SEC" means the United States Securities and Exchange Commission.
"Securities Laws" means the United States Securities Act of 1933; the
United States Securities Exchange Act of 1934; the Investment Company Act; the
Advisers Act; the published rules and regulations of the SEC promulgated
thereunder; the securities or "blue sky" laws of any state or territory of the
United States; the rules and regulations of The National Association of
Securities Dealers, Inc. ("NASD"); the Canadian Securities Laws; the by-laws,
rules and regulations of the TSX; and the comparable laws, rules and regulations
in effect in any other country.
"Self-Regulatory Organization" means the NASD, the MSRB, the National
Futures Association, each national securities exchange in the United States, the
Investment Dealers
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Association of Canada, the Mutual Fund Dealers Association of Canada and the TSX
and each or other commission, board, agency or body, whether United States or
foreign, that is charged with the supervision or regulation of brokers, dealers,
securities underwriting or trading, stock exchanges, commodities exchanges,
investment companies or investment advisers, or to the jurisdiction of which any
of the Companies is otherwise subject.
"Seller Material Adverse Effect" means (i) a material adverse effect on the
business, assets, revenues, financial condition, results of operations or the
amount of assets under management of the Companies taken as a whole, excluding
effects to the extent attributable to (a) declines in any relevant securities
market or segment thereof, (b) changes in the asset management industry
generally, or (c) general national, international or regional economic or
financial conditions, or any outbreaks of hostilities or terrorism or escalation
thereof or other calamity or crisis, in each case only to the extent that the
Companies are not disproportionately affected by such change or decline; or (ii)
a material burden on or impairment of the Companies' ability to consummate the
transactions contemplated by this Agreement.
"Software" means computer software programs or applications (in source code
and/or object code form) and computer databases, including all associated user
documentation and technical documentation.
"Subadvised Fund" means all collective investment vehicles for which any
Company provides any services or with respect to which any Company acts in a
subadvisory capacity other than Ivy Fund, a Portfolio or an Advised Fund.
"Subsidiary", when used with respect to any Person, means another Person,
an amount of the voting securities, other voting ownership or voting partnership
interests of which is sufficient to elect at least a majority of its board of
directors or other governing body (or, if there are no such voting interests,
50% or more of the equity interests of which) is owned directly or indirectly by
such Person.
"Tax" or "Taxes" means any taxes, assessments, fees and other governmental
charges imposed by any Governmental Authority, including without limitation
income, profits, gross receipts, net proceeds, alternative or add-on minimum, ad
valorem, value added, turnover, sales, use, property, personal property
(tangible and intangible), environmental, stamp, leasing, lease, user, excise,
duty, franchise, capital, capital stock, transfer, registration, license,
withholding, social security (or similar), unemployment, disability, payroll,
employment, fuel, excess profits, occupational, premium, windfall profit,
severance, estimated, or other charge of any kind whatsoever, including any
interest, penalty, or addition thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Taxing Authority" means, with respect to any Tax, the governmental entity
or political subdivision thereof that imposes such Tax, and the agency (if any)
charged with the collection of such Tax for such entity or subdivision,
including any governmental or quasi-governmental
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entity or agency that imposes, or is charged with collecting, social security or
similar charges or premiums.
"Treasury Regulations" means the regulations promulgated under the Code.
"TSX" means the Toronto Stock Exchange.
"Waivers" means the receipt by MIMI of any necessary exemptive relief from
the Ontario Securities Commission and the Quebec Securities Commission from the
applicable requirements of Ontario Securities Commission Rule 61-501 ("OSC Rule
61-501") and Quebec Securities Commission Policy Q-27 ("QSC Policy Q-27"),
respectively, in respect of the Pre-Closing Transactions and in form and
substance reasonably acceptable to the Buyer.
(b) The following terms shall have the meaning specified in the
indicated section of this Agreement:
Term Section
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12b-1 Plan........................................................Section 3.7(i)
Acquisition Proposal..............................................Section 5.7(a)
Agreement...............................................................Preamble
Buyer...................................................................Preamble
Closing AUM..........................................................Section 2.5
Closing Balance Sheet................................................Section 2.7
Closing Excess Adjusted Working Capital..............................Section 2.7
Closing Excess Adjusted Working Capital Adjustment...................Section 2.8
Common Stock.......................................................First Recital
Deferred Compensation..................................................Article I
ERISA Affiliate..................................................Section 3.16(a)
Financial Advisor................................................Section 3.17(a)
Foreign Plans....................................................Section 3.16(d)
Fund Board........................................................Section 3.7(g)
Fund Board Approvals..............................................Section 5.4(a)
Fund Contracts....................................................Section 3.7(a)
Fund Shareholder Approval.........................................Section 5.4(b)
Fund Transactions.................................................Section 5.4(a)
Governmental Consents.............................................Section 3.3(c)
HSR Act..............................................................Section 5.5
Interim Trade Name...............................................Section 5.15(b)
License Term.....................................................Section 5.15(b)
Licensed Business................................................Section 5.15(b)
Licensed Names...................................................Section 5.15(b)
Material Contracts..................................................Section 3.10
MIMI....................................................................Preamble
Minutes..............................................................Section 3.4
Most Recent Balance Sheet.........................................Section 3.5(c)
NASD..............................................................Section 1.1(a)
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Net Excess Fees......................................................Section 2.9
Newco...................................................................Preamble
Option Plan.......................................................Section 3.1(c)
OSC Rule 61-501......................................................Section 3.2
Parent..................................................................Preamble
Parent Marks.....................................................Section 5.15(a)
Permits...........................................................Section 3.6(b)
Plan.............................................................Section 3.16(a)
Plan of Dissolution................................................Third Recital
Preliminary Balance Sheet............................................Section 2.5
Preliminary Excess Adjusted Working Capital..........................Section 2.5
Proxy Statement...................................................Section 3.5(d)
Purchase Consideration...............................................Section 2.4
QSC Policy Q-27......................................................Section 3.2
Qualified Acquisition Proposal....................................Section 5.7(c)
Referee..............................................................Section 2.7
Reserve...........................................................Section 2.6(b)
RIC...............................................................Section 3.7(h)
Securities Filings...................................................Section 3.5
Shares............................................................Fourth Recital
Share Contribution.................................................Third Recital
Stockholders.......................................................Third Recital
Stockholders' Meeting................................................Section 5.3
Success Fee Reserve...............................................Section 2.6(b)
Subadvisory Agreement.............................................Section 6.1(e)
Subsequent Action.................................................Section 5.7(c)
Support Agreement..................................................Fifth Recital
Tax Items........................................................Section 3.13(a)
Technology Systems...............................................Section 3.11(a)
Third Party.......................................................Section 5.7(a)
Third Party Consents..............................................Section 3.3(b)
Trademark Agreement...............................................Section 6.1(g)
US Plan..........................................................Section 3.16(a)
Working Capital Reference Amount..................................Section 2.6(a)
ARTICLE II
PURCHASE AND SALE OF SHARES
PURCHASE AND SALE OF SHARES; CLOSING; RELATED MATTERS
Section 2.1 PURCHASE AND SALE OF THE SHARES. Upon the terms and subject
to the conditions set forth in this Agreement, at the Closing, Parent shall
sell, convey, transfer and deliver to Buyer, and Buyer shall purchase, acquire
and accept from Parent, all right, title and interest in and to the Shares. The
consideration to be paid by Buyer for the Shares is set forth in Section 2.4
hereof, subject to the adjustments set forth in Sections 2.6, 2.8 and 2.9.
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Section 2.2 CLOSING; DELIVERY OF THE SHARES. The Closing shall take
place (a) at the offices of Xxxxxx & Xxxxxx L.L.P., 3700 Xxxxxxxx Xxxx Center,
0000 Xxxx Xxxxxx, Xxxxxx, Xxxxx 00000, at 10:00 a.m. on the second Business Day
following the date on which the last of the conditions set forth in Article VI
that are capable of being satisfied before Closing are fulfilled or waived in
accordance with this Agreement or (b) at such other place, time or date as Buyer
and Parent may agree. The parties hereto agree to use their commercially
reasonable efforts to ensure that the Closing occurs on or prior to December 31,
2002. At the Closing, Parent will deliver to Buyer, free and clear of any
Encumbrances, one or more certificates representing all of the Shares, duly
endorsed in blank or accompanied by stock powers or other instruments of
transfer duly executed in blank, and bearing or accompanied by all requisite
stock transfer stamps.
Section 2.3 PAYMENT. In consideration of the sale of the Shares to
Buyer in accordance with this Agreement, Buyer shall pay to Parent at the
Closing, by wire transfer of immediately available funds to an account
designated in writing by Parent to Buyer not less than five (5) Business Days
prior to the Closing, the Purchase Consideration to be paid at the Closing (as
adjusted pursuant to Section 2.6).
Section 2.4 PURCHASE CONSIDERATION. The aggregate amount payable by
Buyer to Parent in respect of the Shares (the "Purchase Consideration") shall be
$74,000,000, subject to adjustment as set forth in Sections 2.6, 2.8 and 2.9.
Section 2.5 DETERMINATION OF CLOSING AUM AND PRELIMINARY EXCESS ADJUSTED
WORKING CAPITAL. As soon as reasonably possible and at least five Business Days
prior to the estimated Closing Date, MIMI (with the input and assistance of
Buyer to the extent reasonably requested by Buyer) shall cause to be prepared
and delivered to Buyer a consolidated balance sheet of MIMI as at the most
recent month end prior to the Closing Date (or, if the Closing Date is within
the first 10 days of any calendar month, as at the month end prior to such most
recent month end) (the "Preliminary Balance Sheet"), together with a certificate
of the Chief Financial Officer of MIMI setting forth the Excess Adjusted Working
Capital of MIMI as at such date (the "Preliminary Excess Adjusted Working
Capital"), including reasonable detail on the calculation of the Preliminary
Excess Adjusted Working Capital. The Preliminary Balance Sheet shall be prepared
in accordance with GAAP, applied on a basis consistent with the Most Recent
Balance Sheet, except as set forth on SCHEDULE 2.5 hereto. For the avoidance of
doubt, all amounts paid or to be paid to the Stockholders (other than Parent) in
the Pre-Closing Dissolution and all amounts paid or required to be paid to
holders of Options, as contemplated by Section 2.10, shall be deducted from the
Preliminary Excess Adjusted Working Capital. In addition, as early as possible
on the Business Day immediately prior to the Closing Date, MIMI shall cause to
be prepared and delivered to Buyer a certificate of the Chief Financial Officer
of MIMI setting forth the Assets Under Management for each Portfolio of the Ivy
Fund as at the Closing Date, excluding the Assets Under Management for any
Portfolio for which a Fund Shareholder Approval has not been obtained (the
"Closing AUM"), including reasonable detail on the calculation of the Closing
AUM.
Section 2.6 PRELIMINARY ADJUSTMENTS; RESERVES. (a) Immediately prior
to the Closing, (i) the Purchase Consideration shall be adjusted upward by 1.9%
of the excess, or downward by 1.9% of the deficiency, of the Closing AUM of the
Ivy Fund over $760,000,000; provided, that
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to the extent the Closing AUM of the Ivy Fund is less than $500,000,000, the
Purchase Consideration shall be adjusted downward by 1.9% of the deficiency
between $760,000,000 and $500,000,000 and by 5.0% of the amount that such
Closing AUM is less than $500,000,000; provided further, that in no event shall
any negative adjustment pursuant to this SECTION 2.6(a)(i) be greater than an
aggregate $20,000,000, and (ii) the Purchase Consideration shall be adjusted
upward by the excess, or downward by the deficiency, of the Preliminary Excess
Adjusted Working Capital over $44,000,000 (such $44,000,000 the "Working Capital
Reference Amount"). However, the Working Capital Reference Amount shall be
reduced by the amount of any Restructuring Costs Paid.
(b) Buyer shall reserve from the Purchase Consideration
(as adjusted pursuant to SECTION 2.6(a)) to be paid at the Closing an amount
equal to $3,000,000 (the "Reserve"). In addition, Buyer shall reserve from the
Purchase Consideration (as adjusted pursuant to Section 2.6(a)) to be paid at
the Closing an amount equal to the maximum aggregate amounts potentially payable
by MIMI or Newco pursuant to the agreements set forth in SCHEDULE 3.10(a)(14)
(the "Success Fee Reserve"). The Reserve and the Success Fee Reserve shall each
be held by Buyer in separate accounts.
Section 2.7 CLOSING EXCESS ADJUSTED WORKING CAPITAL. As soon as
reasonably possible and no later than 60 days after the Closing Date, Buyer
shall cause to be prepared and delivered to Parent a consolidated balance sheet
of Newco as at the Closing Date (the "Closing Balance Sheet"), together with a
certificate of the Chief Financial Officer of Buyer setting forth the Excess
Adjusted Working Capital of Newco as at the Closing Date (the "Closing Excess
Adjusted Working Capital"), including reasonable detail on the calculation of
the Closing Excess Adjusted Working Capital. The Closing Balance Sheet shall be
prepared in accordance with GAAP, applied on a consistent basis with the Most
Recent Balance Sheet, except as set forth on SCHEDULE 2.7 hereto. For greater
certainty, such Closing Balance Sheet shall be prepared based on information
available at the time and may vary from the post-Closing opening balance sheet
of Newco. If within 15 Business Days following delivery of the Closing Balance
Sheet and the certificate setting forth the Closing Excess Adjusted Working
Capital to Parent, Parent has not given Buyer written notice of its objection to
the Closing Balance Sheet or Closing Excess Adjusted Working Capital describing
in reasonable detail the basis of such objection, then the Closing Excess
Adjusted Working Capital shall be final and conclusive. If Parent gives such
written notice of objection within such period and Buyer and Parent are unable
to resolve such issues prior to the date that is 15 days after delivery of such
written notice, then the issues in dispute will be submitted for resolution to a
nationally recognized accounting firm to be selected jointly by Parent and Buyer
within the following five days or, if they fail to agree within such period,
such accounting firm shall be Ernst & Young LLP (it being understood that Ernst
& Young LLP was chosen because of representations made that neither party nor
their respective Affiliates have a material relationship with such firm, and if
any such party develops a material relationship with such firm, the party having
such relationship shall promptly notify the other party of such relationship and
the parties will select another nationally recognized accounting firm with which
none of such parties has a material relationship to serve as the accounting
firm) (the "Referee"). The Referee shall determine the Closing Balance Sheet and
Closing Excess Adjusted Working Capital as soon as reasonably possible and no
later than 45 days after the dispute is submitted to it. If issues in dispute
are submitted to the Referee for resolution, (a) each party will furnish to the
Referee such work papers and other documents and information relating
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to the disputed issues as the Referee may request and are available to that
party or its Subsidiaries (or its independent public accountants) and will be
afforded the opportunity to present to the Referee any materials relating to the
determination of the Closing Balance Sheet and Closing Excess Adjusted Working
Capital and to discuss such determination with the Referee; (b) the
determination by the Referee of the Closing Excess Adjusted Working Capital, as
set forth in a written notice delivered to both parties by the Referee, will be
binding and conclusive on the parties; and (c) Buyer and Parent will each bear
one-half of the fees and expenses of the Referee for such determination. The
determinations made by the Referee shall be final.
Section 2.8 CLOSING PURCHASE CONSIDERATION ADJUSTMENTS. As soon as
reasonably possible after the determination of the Closing Excess Adjusted
Working Capital, the Purchase Consideration shall be adjusted upward by the
excess, or downward by the deficiency, of the Closing Excess Adjusted Working
Capital over the Preliminary Excess Adjusted Working Capital (the "Closing
Excess Adjusted Working Capital Adjustment"). Within five days after the
determination of the Closing Excess Adjusted Working Capital Adjustment, (a) if
the Closing Excess Adjusted Working Capital Adjustment is a positive number,
Buyer shall pay Parent the Reserve together with an amount equal to the Closing
Excess Adjusted Working Capital Adjustment, or (b) if the Closing Excess
Adjusted Working Capital Adjustment is a negative number, Buyer shall pay Parent
the excess, if any, of the Reserve over the net amount of such adjustment;
provided however, that if the Closing Excess Adjusted Working Capital Adjustment
is a negative number larger than the Reserve, then Buyer shall retain the
Reserve and Parent shall pay Buyer the amount by which such Closing Excess
Adjusted Working Capital Adjustment exceeds the Reserve.
Section 2.9 SUCCESS FEE ADJUSTMENTS. Within 30 days after the final
determination by Buyer of the amounts, if any, payable by MIMI or Newco pursuant
to the agreements set forth on SCHEDULE 3.10(a)(14), Buyer shall pay Parent the
excess, if any, of the Success Fee Reserve over the Net Success Fees. For
purposes hereof, the "Net Success Fees" shall mean the aggregate amounts payable
by Buyer, MIMI or Newco pursuant to the agreements set forth on SCHEDULE
3.10(a)(14), net of any reduction in Taxes realized by Buyer, MIMI or Newco as a
result of such amounts payable (the "Net Success Fees"). If the Net Success Fees
are greater than the Success Fee Reserve, Buyer shall retain the Success Fee
Reserve and Parent shall pay Buyer the amount by which the Net Success Fees
exceed the Success Fee Reserve.
Section 2.10 ADJUSTMENT TO PURCHASE CONSIDERATION. Amounts paid or
payable pursuant to Sections 2.6, 2.8 or 2.9 shall be treated by the parties for
Tax purposes as adjustments to the Purchase Consideration.
Section 2.11 TREATMENT OF OPTIONS. In connection with the Pre-Closing
Transactions, and prior to the consummation of the transactions contemplated
hereby, all outstanding Options, whether or not then exercisable, will have been
cancelled in accordance with terms of the Option Plan and all consideration
payable in connection therewith will have been paid by MIMI or Newco.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF MIMI AND NEWCO
Except as set forth in writing in a Schedule by reference to the
appropriate section, subsection or clause hereof and delivered to Buyer prior to
the date hereof, MIMI and Newco each, jointly and severally, represents and
warrants to Buyer as follows:
Section 3.1 ORGANIZATION AND RELATED MATTERS. (a) Each Company is
a corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization. Each Company has the corporate power
and authority to carry on its business as it is now being conducted and to own,
lease and operate all of its properties and assets. Each Company is duly
licensed or qualified to do business in each jurisdiction in which the nature of
the business conducted by it or the character or location of the properties and
assets owned, leased or operated by it makes such qualification or licensing
necessary, except where the failure to be so licensed or qualified would not,
individually or in the aggregate, reasonably be expected to have a Seller
Material Adverse Effect. Complete and correct copies of the charter and bylaws
and any amendments thereto of each Company have heretofore been delivered to
Buyer.
(b) All of the Equity Interests in each of the Companies are
(i) duly authorized, validly issued, fully paid and nonassessable, (ii) not
subject to preemptive rights, (iii) not issued in violation of any preemptive
rights to which such Company, respectively, is subject, and (iv) (except for the
Common Stock of MIMI) owned of record and beneficially as set forth in SCHEDULE
3.1(b), free and clear of any Encumbrances. None of the Companies owns any
Equity Interests (other than Equity Interests issued by other Companies or by
the Funds) or any other securities other than short-term high quality money
market securities. None of the Equity Interests in any of the Companies has been
issued in violation of any Applicable Law. There are no Contracts by which any
Company is a party or is otherwise bound to redeem, purchase or otherwise
acquire any Equity Interests of any Company (or any rights therein) and there
are no Contracts to which any Company is a party or is otherwise bound or, to
the knowledge of MIMI, to which any holder of such Equity Interest is a party or
is otherwise bound, with respect to voting the Equity Interest of any Company.
(c) The authorized capital stock of MIMI consists of 100,000,000
shares of Common Stock. As of the date hereof, there were issued and outstanding
18,655,550 shares of Common Stock of MIMI. Except for up to 3,114,220 shares of
Common Stock reserved for issuance to employees, officers, directors, and
consultants of the Companies pursuant to the MIMI 1994 Stock Option Plan (as
amended or restated through the date hereof, the "Option Plan"), of which
Options to purchase 1,185,500 shares of Common Stock are outstanding, there is
no outstanding option, warrant, right (including conversion or preemptive
rights), or agreement for the purchase or acquisition from any Company of any
Equity Interests of any Company, except as contemplated by the Share
Contribution.
(d) The authorized capital stock of Newco consists of 1,000
shares of common stock. 100 shares of common stock of Newco are issued and
outstanding. There are no outstanding options, warrants, rights (including
conversion or preemptive rights), or agreements
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for the purchase or acquisition from Newco of any Equity Interests of Newco.
Parent owns, beneficially and of record, all outstanding shares of common stock
of Newco.
Section 3.2 APPROVAL BY MIMI AND NEWCO; VOTE REQUIRED. MIMI's Board
of Directors and Newco's Board of Directors have each duly adopted resolutions
(i) authorizing the execution and delivery of this Agreement by MIMI or Newco,
as applicable, and the consummation by MIMI or Newco, as applicable, of the
transactions contemplated hereby (except that the consummation by MIMI of the
Pre-Closing Dissolution is subject to the Board Dissolution Approval), and (ii)
approving and authorizing or ratifying each severance or retention Contract with
any employee, officer or director of any Company, including the change in
control employment agreements with certain officers of MIMI, as amended, each of
which are set forth in subsection (f) of SCHEDULE 3.10. Newco's Board of
Directors has, in addition, duly adopted resolutions approving and authorizing
the Share Contribution. The MIMI Stockholder Approval is the only vote or
consent of holders of any Equity Interests of any Company necessary to approve
the Pre-Closing Transactions, this Agreement or the transactions contemplated by
this Agreement.
Section 3.3 AUTHORITY; NO VIOLATION; CONSENTS.
(a) MIMI and Newco each have all requisite corporate power and
authority to execute and deliver this Agreement and to perform their respective
obligations hereunder and, subject to obtaining the Board Dissolution Approval
and the MIMI Stockholder Approval prior to the consummation of the Pre-Closing
Dissolution, to consummate the transactions contemplated hereby. The execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly approved by all
requisite action on the part of MIMI and Newco and no other corporate
proceedings on the part of MIMI or Newco, respectively, are necessary to approve
this Agreement or, other than the Board Dissolution Approval and the MIMI
Stockholder Approval, to consummate the transactions contemplated hereby. This
Agreement has been duly executed and delivered by MIMI and Newco. Assuming the
due authorization, execution and delivery of this Agreement by Buyer, this
Agreement constitutes the legal, valid and binding obligation of each of MIMI
and Newco, enforceable against each of them in accordance with its terms, except
as enforcement may be limited by general principles of equity whether applied in
a court of law or a court of equity and by bankruptcy, insolvency, moratorium
and similar laws affecting creditors' rights and remedies generally.
(b) Neither the execution and delivery of this Agreement by MIMI
or Newco, nor the consummation by MIMI or Newco of the transactions contemplated
hereby and the performance of this Agreement by MIMI or Newco, assuming that the
Board Dissolution Approval, the MIMI Stockholder Approval and the Waivers,
Governmental Consents, Fund Board Approvals and Fund Shareholder Approvals have
been obtained prior to the Closing, will (i) (x) violate, conflict with, or
result in a breach of any provision of the charter, by-laws or other
organizational documents of any of the Companies or Portfolios, or (y) except as
set forth on SCHEDULE 3.3(b) (the "Third Party Consents"), require consent
under, violate, conflict with, or result in a breach, in any material respect,
of any provision of, or constitute a default (or an event that, with notice or
lapse of time or both, would constitute a default) under, or result in the
termination of, or accelerate the performance or payment required by, or result
in a right of
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termination or acceleration under, or result in the creation of any material
Encumbrance upon any of the properties or assets of any of the Companies or
Portfolios, under any of the terms, conditions or provisions of any material
Contract to which any of the Companies or Portfolios is a party or to which any
of them or any of their respective properties or assets may be subject, or (ii)
violate any judgment, ruling, order, writ, injunction, decree, statute, rule or
regulation applicable to any Company, the Ivy Fund or any of the Portfolios or
any of their respective properties or assets, except for such violations which
would not reasonably be expected to have a Seller Material Adverse Effect.
(c) Except for the Waivers and except as set forth on SCHEDULE
3.3(c) (the "Governmental Consents"), no material notice to, filing with,
authorization of, exemption by, or consent or approval of, any Governmental
Authority is necessary for the consummation by MIMI, Newco or Parent of any of
the transactions contemplated by this Agreement. MIMI is not aware of any reason
why the Governmental Consents could not be obtained.
Section3.4 BOOKS AND RECORDS. Each of the Companies and each of the
Portfolios has at all times during the previous five (5) years maintained
Records which accurately reflect all its material transactions in reasonable
detail, and has at all times maintained accounting controls, policies and
procedures reasonably designed to provide that (A) such transactions are
executed in accordance with its management's general or specific authorization,
as applicable, (B) such transactions are recorded in a manner which permits the
preparation of financial statements in accordance with GAAP and applicable
regulatory accounting requirements, and (C) the documentation pertaining thereto
is retained, protected and duplicated in accordance with Applicable Law. MIMI
has provided to Buyer complete and correct copies of all minutes of meetings,
written consents and other actions of the boards of trustees (or other governing
body), and any committees thereof, of each Company, the Ivy Fund and each
Portfolio since January 1, 1999 (the "Minutes"). The Records and the Minutes of
the Companies and the Portfolios are complete and correct in all material
respects.
Section 3.5 SECURITIES FILINGS; FINANCIAL STATEMENTS; LIABILITIES.
(a) Since September 30, 1999, MIMI has filed with the SEC, the
Canadian Securities Regulators and the TSX all reports, schedules, forms,
statements and other documents required to be filed under the Exchange Act and
Canadian Securities Laws through the date hereof. All such documents (including
exhibits and financial statement schedules) filed by MIMI with the SEC pursuant
to the Exchange Act or with the Canadian Securities Regulators and the TSX
pursuant to the Canadian Securities Laws, are referred to herein as the
"Securities Filings." The Securities Filings (i) complied, as of their
respective dates, in all material respects with the applicable requirements of
the Exchange Act and the Canadian Securities Laws; (ii) did not at the time they
were filed contain, or have been amended to correct, any untrue statement of
material fact; (iii) did not at the time they were filed omit to state a
material fact necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading, or have been amended to
correct any such omission; and (iv) in the event of subsequent modifications of
the circumstances or the basis on which they had been made, were, to the extent
required by the Exchange Act or the Canadian Securities Laws, as applicable,
amended in order to make them not misleading in any material respects in the
light of such new circumstances or basis.
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(b) Except as set forth in SCHEDULE 3.5(b), each of the
consolidated financial statements (including, in each case, any related notes or
schedules) included in the Securities Filings was prepared in accordance with
GAAP consistently applied (except as may be indicated in the notes thereto) and
reconciled to Canadian GAAP to the extent required by Canadian Securities Laws
(except in the case of unaudited consolidated quarterly statements (i) as
permitted by Form 10-Q of the SEC, (ii) as may be indicated in footnotes thereto
or in the Securities Filings and (iii) that they are subject to normal and
recurring year-end adjustments), and fairly present in all material respects the
consolidated financial position of MIMI and the other Companies on a
consolidated basis as at the dates thereof and the consolidated results of their
operations, cash flows and changes in stockholders' equity for the periods then
ended.
(c) Except as set forth in SCHEDULE 3.5(c) and except for (i)
liabilities that are fully reflected or reserved against in the consolidated
balance sheets contained in the most recent consolidated financial statements
included in the Securities Filings as of June 30, 2002 (the "Most Recent Balance
Sheet"), (ii) liabilities incurred since the date of the Most Recent Balance
Sheet in the Ordinary Course of Business and which are not individually or in
the aggregate material to the business or operations of the Companies, taken as
a whole, (iii) liabilities the incurrence of which are permitted by this
Agreement, or that arise from items disclosed in the Schedules to this Agreement
or that are authorized in advance by Buyer in writing, or (iv) as described in
Securities Filings filed since June 30, 2002 and prior to the date hereof, the
Companies do not have any material liabilities, whether absolute, accrued,
contingent or otherwise. Except for the rights and obligations under this
Agreement and the assets and liabilities acquired or assumed pursuant to the
Pre-Closing Transactions, Newco has no assets or liabilities.
(d) The proxy statement of MIMI to be mailed to the Stockholders
in connection with their approval of the Pre-Closing Transactions (the "Proxy
Statement"), on the date the Proxy Statement is filed with the SEC, the Canadian
Securities Regulators and the TSX, and on the date the Proxy Statement is first
published, sent or given to security holders and on the date of the
Stockholders' Meeting will comply in all material respects with the provisions
of Applicable Law and will not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances in which
they were made, not misleading, provided that no representation or warranty is
made pursuant to this Section 3.5(d) with respect to any written information
regarding Buyer or its Affiliates provided by Buyer in writing specifically for
inclusion in the Proxy Statement. MIMI agrees to promptly correct the Proxy
Statement if and to the extent that it shall have become false or misleading in
any material respect (provided that, with respect to any false or misleading
information regarding Buyer or its Affiliates provided by Buyer in writing
specifically for inclusion in the Proxy Statement, Buyer shall have provided
MIMI with corrected information) and MIMI shall take all steps necessary to
cause the Proxy Statement as so corrected to be filed with the SEC and the
Canadian Securities Regulators, and mailed to the Stockholders to the extent
required under the Exchange Act and the Canadian Securities Laws.
Section 3.6 COMPLIANCE WITH APPLICABLE LAWS.
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(a) Except as set forth on SCHEDULE 3.6(a), each Company and
each Portfolio is in substantial compliance with all Applicable Laws. Except as
disclosed in SCHEDULE 3.6(a), each Company, the Ivy Fund and each Portfolio and
each employee, if any, of each of them holds, and has at all pertinent times
held, all licenses, franchises, permits, qualifications and authorizations
necessary for the lawful ownership and use of their respective properties and
assets and the conduct of their respective businesses under and pursuant to each
Applicable Law (collectively, "Permits"), except where the failure to hold such
Permit would not, when aggregated with all other such failures, reasonably be
expected to have a Seller Material Adverse Effect. Except as described in the
Securities Filings or where the failure to comply would not, when aggregated
with all other such failures (including those described in the Securities
Filings) would not reasonably be likely to have a Seller Material Adverse
Effect, each Company, the Ivy Fund and each Portfolio and each employee, if any,
of each of them has complied with, and is not in default in any material respect
under, each such Permit, and MIMI does not know of any violations of any of the
above and has not received notice asserting any such violation. All such Permits
are valid and in good standing and are not subject to any proceeding for the
suspension, modification or revocation thereof or proceedings related thereto.
Subject to receipt of the Governmental Consents, the consummation of the
transactions contemplated by this Agreement will not result in any revocation,
cancellation, limitation or suspension of any such Permits.
(b) There is no unresolved violation by any Company, the Ivy
Fund or any Portfolio with respect to any Governmental Authority's examination
of any of the Companies, the Ivy Fund or any Portfolio. Neither any Company, the
Ivy Fund or any Portfolio, nor any of their respective officers, directors or
employees is subject to any cease and desist, censure or other disciplinary or
similar order issued by, or is a party to any written agreement, consent
agreement, memorandum of understanding or similar disciplinary agreement with,
any Governmental Authority with respect to the business of such Person.
(c) Except as set forth on SCHEDULE 3.6(c) or as otherwise
disclosed to the board of trustees (or other governing body) of a Company or a
Fund and reflected in the Minutes (or in the materials referenced in such
Minutes for any board meeting prior to September 1, 2000), each Company that
provides investment advisory services has at all times rendered investment
advisory services to investment advisory clients, including each Fund, with whom
such entity is or was a party to an investment advisory agreement or similar
arrangement in material compliance with all applicable requirements as to
portfolio composition and portfolio management including, but not limited to,
the terms of such investment advisory agreements, written instructions from such
investment advisory clients, the organizational documents of such investment
advisory clients that are Funds, prospectuses or other offering materials, board
of director or trustee directives and Applicable Law, except where the failure
to so comply would not reasonably be expected to have a Seller Material Adverse
Effect.
(d) Each of the Companies, the Ivy Fund and the Portfolios have
timely filed all Governmental Documents that it was required to file with any
Governmental Authority, and has paid all fees and assessments due and payable in
connection therewith, except for such failures to file or pay which would not
reasonably be excepted to have a Material Adverse Effect. As of their respective
dates, the Governmental Documents of each of the Companies, the Ivy Fund and the
Portfolios complied in all material respects with the requirements of the
Securities Laws applicable to such Governmental Documents. MIMI has previously
delivered or made
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available to Buyer a complete copy of each Governmental Document filed by any of
the foregoing entities or any of their employees on behalf of any of the
foregoing entities since March 31, 1999 and will deliver or by notice make
available to Buyer at the same time as the filing thereof a complete copy of
each Governmental Document filed after the date hereof and prior to the Closing
Date by or on behalf of any Company, the Ivy Fund or any Portfolio.
(e) None of the Companies or any "affiliated person" (as defined
in the Investment Company Act) of any Company is ineligible pursuant to Section
9(a) or 9(b) of the Investment Company Act to serve in any capacity referred to
in Section 9(a) thereof with respect to a registered investment company. None of
the Companies or, to the knowledge of MIMI, any "associated person" (as defined
in the Advisers Act or the Exchange Act) of any thereof is ineligible pursuant
to Section 203(e), (f) or (h) of the Advisers Act or Section 15(b)(4), (5), (6)
or (7) of the Exchange Act to serve as a registered investment adviser or
broker-dealer or as an associated person of a registered investment adviser or
broker-dealer.
(f) (i) Each of the Companies which is required to be registered
as a broker/dealer, dealer, an investment adviser, adviser, a registered
representative, a commodity trading advisor, commodity pool operator, futures
commission merchant or transfer agent (or in a similar capacity) with any
Governmental Authority, is duly registered as such, and each such registration
is in full force and effect except where the failure to do so would not
reasonably be expected to have a Seller Material Adverse Effect; and (ii) except
where the failure to so register, when aggregated with all other such failures,
would not reasonably be expected to have a Seller Material Adverse Effect, each
of the officers and employees in their capacity as such of each of the Companies
which is required to be registered as a broker/dealer, an investment adviser, an
adviser, a registered representative, a commodity trading advisor, commodity
pool operator, futures commission merchant or transfer agent (or in a similar
capacity) with any Governmental Authority, is duly registered or, in the case of
any officer or employee, in the process of being duly registered as such, and
each such registration is in full force and effect. SCHEDULE 3.6(f) sets forth a
list of each Company that acts or has acted as a broker or dealer in securities
in the United States or otherwise. Each such Company has instituted procedures
to comply with Section 11(a) of the Exchange Act and has followed such
procedures in all material respects. Each such Company has made available to
Buyer its current compliance manual, New York Stock Exchange Floor Brokerage
Compliance and Supervisory Manual, and Compliance and Supervisory Outline for
Institutional Services Sales Trading Department and Investment Management
Domestic and International Equity Trading Departments, as applicable.
Section 3.7 ADDITIONAL REPRESENTATIONS REGARDING FUNDS.
(a) The only vehicle for collective investment with respect to
which any Company has acted or acts as the sponsor, general partner, managing
member, trustee, investment manager, investment adviser (other than in a
subadvisory capacity), or underwriter or acts in a similar capacity, that is
required to be registered under the Investment Company Act is the Ivy Fund.
SCHEDULE 3.7(a)(i) sets forth a true, complete and correct list of all Advised
Funds and Subadvised Funds, identifying for each such Advised Fund and
Subadvised Fund all services provided by a Company to or for the benefit of such
Advised Fund or Subadvised Fund and the capacity in which such Company provides
such services. No Company is a party to any Contract for the purpose of
providing investment advisory services to or for the benefit of any Person
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other than a Fund. MIMI has made available to Buyer each Contract entered into
by any Company with or for the benefit of any Fund (the "Fund Contracts") and
each material Fund Contract that is currently in effect is listed on SCHEDULE
3.7(a)(ii). The Ivy Fund has been duly organized, and is validly existing and in
good standing under the laws of the jurisdiction of its organization and has the
requisite power and authority to own its material properties and assets, and to
carry on its business as it is now being conducted.
(b) True, correct and complete copies of any offering documents,
subscription agreements, administrative services, distribution and solicitation
agreements and custody agreements pertaining to the Ivy Fund and each of the
Portfolios that are currently in effect have been made available to Buyer. Such
offering materials do not, and did not at any time such materials were made
available to investors or prospective investors, contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. (c) True, correct and complete copies of
the audited financial statements of each Portfolio, from January 1, 2000 through
the most recent fiscal year ended on or prior to June 30, 2002 and of the
unaudited financial statements thereof for quarterly or semiannual fiscal
periods since the most recent fiscal year end have been made available to Buyer.
The financial statements of each Portfolio are consistent in all material
respects with the books and records of such Portfolio and present fairly in all
material respects the financial position of the Portfolios in accordance with
GAAP, applied on a consistent basis (except as otherwise noted therein) at the
respective date of such financial statements and the results of operations,
changes in net assets and financial highlights for the respective periods
indicated (subject, in the case of the interim statements, to recurring
adjustments normal in nature and amount and the addition of footnotes). Such
financial statements of each Portfolio have been prepared in accordance with
GAAP, consistently applied throughout the periods involved except as noted
therein.
(d) All interests in each Portfolio sold by any Company were
sold pursuant to a valid and effective registration statement or prospectus with
each relevant Governmental Authority or pursuant to an exemption from such
registration under the Securities Act, the Investment Company Act, the Canadian
Securities Laws or other federal or state securities laws.
(e) Except as set forth on SCHEDULE 3.7(e) or as disclosed by
any Company to a Fund's board of trustees (or other governing body) and
reflected in the Minutes (or in the materials referenced in such Minutes for any
board meeting prior to September 1, 2000), each Portfolio or, in the case of any
advisory or sub-advisory relationship with respect to an Advised Fund or
Subadvised Fund, the portion of the Advised Fund or Subadvised Fund that is
managed by any Company, has been managed in all material respects in accordance
with its respective objectives, policies and restrictions, including without
limitation those set forth in the respective organizational documents,
prospectuses or other offering materials, board of directors or trustees
directives and Applicable Law, except where the failure to so comply would not
reasonably be expected to have a Seller Material Adverse Effect.
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(f) The Ivy Fund is governed by a board of trustees (the "Fund
Board") at least 75% of whom are not "interested persons" (as defined in the
Investment Company Act) of the investment adviser to the Ivy Fund.
(g) (i) The Ivy Fund has elected to be treated as a "regulated
investment company" under Subchapter M of Chapter 1 of Subtitle A of the Code (a
"RIC") and has qualified for all taxable periods with respect to which the
applicable statute of limitations (including extensions) has not expired prior
to and including the Closing Date as a RIC, and has complied with all applicable
provisions of law necessary to preserve and retain its election and status as a
RIC; (ii) each Portfolio has timely filed all federal, state, provincial, local
and foreign income and other material Tax Returns that it is required to file
and all such Tax Returns are accurate and complete in all material respects;
(iii) each Portfolio has timely paid all Taxes that it is required to pay,
whether or not assessed by the relevant Taxing Authority; (iv) the Ivy Fund and
each Portfolio has duly and timely withheld all Taxes required to be withheld by
it (including Taxes required to be withheld by it in respect of amounts paid or
credited to or for the account of employees, officers or directors and
non-resident withholding Taxes) and has duly and timely remitted to the
appropriate Taxing Authority such Taxes required to be remitted by it; (v) the
Ivy Fund and each Portfolio has complied with all required Tax information
reporting requirements to which it is subject, and such Tax information
reporting returns and reports have been timely filed and are accurate and
complete in all material respects; (vii) there is no material judicial or
administrative claim, audit, action, suit, proceeding or investigation pending
or, to the knowledge of MIMI, threatened against the Ivy Fund in respect of any
Tax, and (viii) the Ivy Fund has for each taxable year distributed at least
ninety percent (90%) of its taxable income and tax-exempt interest income to the
extent required by law.
(h) (i) Each Fund Contract and any subsequent renewal effected
prior to the date hereof has been duly authorized, executed and delivered by a
Company and the Fund party thereto and, to the knowledge of MIMI, each other
party thereto and, to the extent applicable, has been adopted in compliance with
Section 15 of the Investment Company Act and Rule 12b-1 thereunder and in
compliance in all material respects with any statute, order, ordinance, rule or
regulation to which such Company, Fund or Fund Contract is subject and is a
valid and binding agreement of the Company and the Portfolio party thereto and,
to MIMI's knowledge, each Advised Fund party, each Subadvised Fund party and
each other party thereto, enforceable in accordance with its terms (subject to
bankruptcy, insolvency, moratorium, fraudulent transfer and similar laws
affecting creditors' rights generally and to general equity principles); (ii)
each of the Companies and each Fund party thereto is in compliance in all
material respects with the terms of each Fund Contract to which it is a party,
and is not currently in default under any of the terms of any such Fund
Contract; (iii) to MIMI's knowledge, no event has occurred or condition exists
that with notice or the passage of time or both would constitute such a default;
(iv) all payments due under each distribution or principal underwriting
agreement to which the Ivy Fund or any Portfolio is a party have been made in
compliance with the related distribution plan adopted by the Fund Board under
Rule 12b-1 under the Investment Company Act (a "12b-1 Plan"); (v) each 12b-1
Plan adopted by the Ivy Fund or any Portfolio and the operation of each such
12b-1 Plan currently complies in all material respects with Rule 12b-1; and (vi)
each Fund Contract is in full force and effect.
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(i) There exists no material "out of balance," "out of proof" or
similar condition with respect to any shareholder account maintained by any
Company, the Ivy Fund or any Portfolio.
(j) Each of (i) the proxy solicitation materials to be
distributed to the shareholders of any Portfolio, (ii) the material provided to
the Fund Boards in connection with such proxy solicitations, and (iii) Forms ADV
and BD of those Companies that are registered as investment advisers under the
Advisers Act or as broker-dealers under the Exchange Act (as the case may be),
as in effect as of the Closing Date, have provided and will provide all
information necessary in order to make the disclosure of information therein
satisfy in all material respects the requirements of the Exchange Act, the
Investment Company Act, the Advisers Act and such Forms ADV and BD, as
applicable, and such materials and information will be complete in all material
respects and will not contain (at the time such materials or information is
distributed, filed or provided, as the case may be) any statement which, at the
time and in the light of the circumstances under which it is made, is false or
misleading with respect to any material fact, and will not omit to state any
material fact necessary in order to make the statements therein not false or
misleading or (with respect to information included in proxy statements)
necessary to correct any statement or any earlier communication with respect to
the solicitation of a proxy for the same meeting or subject matter which has
become false or misleading.
(k) Each of the Companies providing investment advice to any
Fund or acting as a distributor for any Fund has adopted a formal code of ethics
and a written policy regarding xxxxxxx xxxxxxx, a complete and accurate copy of
each of which has been made available to Buyer. Such codes of ethics and xxxxxxx
xxxxxxx policies comply in all material respects with Section 17(j) of the
Investment Company Act, Rule 17j-1 thereunder, Section 204A of the Advisers Act
and Section 15(f) of the Exchange Act, as applicable. The policies of each of
the Companies providing investment advice with respect to avoiding conflicts of
interest are as set forth in the most recent Form ADV of the respective Company,
as amended, which has been made available to Buyer. Except as set forth on
SCHEDULE 3.7(k) or as disclosed to the Fund Board and reflected in the Minutes
(or in the materials referenced in such Minutes for any board meeting prior to
September 1, 2000), there have been no material violations of such codes of
ethics or such xxxxxxx xxxxxxx policies.
(l) Except as set forth on SCHEDULE 3.7(l) or as disclosed to
the Ivy Fund Board and reflected in the Minutes (or in the materials referenced
in such Minutes for any board meeting prior to September 1, 2000), the Ivy Fund
has duly adopted procedures pursuant to Rule 17a-7 under the Investment Company
Act, to the extent applicable. The Ivy Fund has for the past two years been
operated and is currently operating in compliance in all material respects with
Rules 17a-7, 17e-1 and 10f-3 thereunder, to the extent applicable.
(m) The Companies have made (or in the case of filings after the
date hereof, will make) available to Buyer true and complete copies of (i) all
filings made by any of the Companies with the SEC or the Canadian Securities
Regulators (other than the Securities Filings) within the past two years
(including but not limited to all filings on Form ADV, Form TA, Form NSAR, Form
BD and most recent FOCUS Report), (ii) all inspection reports related to any of
the Companies provided to any of the Companies by the SEC or any Governmental
Authority during the past four years and (iii) all material correspondence
relating to any inquiry
-22-
or investigation by a Governmental Authority relating to any of the Companies
provided to any of the Companies since January 1, 2000.
(n) Neither the Ivy Fund nor any of the Portfolios, and to the
knowledge of MIMI none of the Advised Funds or Subadvised Funds, has proposed or
is in the process of (i) liquidating, dissolving, winding up or otherwise
ceasing its ordinary course of operations, (ii) consolidating, merging,
reorganizing or otherwise materially changing its form or structure, (iii)
selling or otherwise transferring all or substantially all of its assets or
properties, or (iv) changing or materially altering its investment objective.
Section 3.8 ASSETS UNDER MANAGEMENT. The aggregate amount of Assets
Under Management by the Companies, the amount of Assets Under Management by the
Companies (including in a subadvisory capacity) for each Portfolio and each
Advised Fund and any material fee adjustments or waivers being made by the
Companies ($100,000 or more on an annualized basis) or gross contributions or
withdrawals ($1,000,000 or more) with respect to any such Portfolio or Advised
Fund during fiscal year 2001 and through 5 Business Days prior to the Closing
Date are accurately set forth in SCHEDULE 3.8 hereto, together with a brief
summary of the fee arrangements in effect with respect to each such Portfolio or
Advised Fund. Except as set forth in SCHEDULE 3.8, or disclosed in a Portfolio
or Advised Fund's prospectus or financial reports, there are no agreements or
understandings in effect pursuant to which any of the Companies has capped,
waived or reimbursed or will under any circumstances cap, waive or reimburse any
or all fees, profit allocations or charges payable by or allocable from any of
its clients (including any Portfolio or Advised Fund) or any investors in any
Portfolio or Advised Fund. To the knowledge of MIMI, no client as of the date
hereof of any of the Companies has expressed an intention to terminate or
materially reduce its relationship with the Companies, and neither MIMI nor
Newco has any reason to believe any such client will terminate or materially
reduce its relationship with the Companies.
Section 3.9 TITLE. None of the Companies owns any real property, and
each of the Companies has good and marketable title to all of its assets and has
good and insurable leasehold interests in its Leased Property, in each case free
and clear of all Encumbrances other than Permitted Encumbrances. The only
offices or locations at which any Company conducts business are the Leased
Properties, each of which is set forth on Schedule 3.9.
Section 3.10 CONTRACTS. Schedule 3.10 sets forth a complete and correct
list as of the date hereof of all of the following Contracts to which any
Company is a party or under which any Company may be liable:
(a) any Contract with any director or officer of any Company
(other than (i) Contracts terminable by such Company upon no more than 60 days'
notice without penalty or payment of any kind (other than amounts accrued
through the effective date of termination) and (ii) the Company Benefit Plans
and any Contract with any Affiliate of any Company;
(b) any Contract that is a "material contract" (as such term is
defined in Item 601(b)(10) of Regulation S-K promulgated by the SEC under the
Exchange Act) of any Company to be performed in whole or in part after the date
of this Agreement;
-23-
(c) any Contract that, after the Closing, will restrict the
conduct of any line of business by the Companies in any material respect or upon
consummation of the transactions contemplated hereby will materially restrict
the ability of the Companies to engage in any line of business in which they may
lawfully engage;
(d) each real estate lease or sublease (or related Contract)
with respect to each Leased Property;
(e) any Contract with a labor union (including any collective
bargaining agreement);
(f) any Contract pursuant to which any of the benefits of which
will or could be increased, or the vesting of the benefits of which will or
could be accelerated, by the consummation of the transactions contemplated by
this Agreement, or the value of any of the benefits of which will or could be
calculated on the basis of the transactions contemplated by this Agreement;
(g) any Contract (other than the Company Benefit Plans) not
otherwise disclosed pursuant to this SECTION 3.10 calling for annual payments
aggregating more than $100,000, whether payable by or to any Company;
(h) any partnership, joint venture or other similar contract;
(i) any funding agreement, indenture, credit agreement, loan
agreement, note, mortgage, guarantee security agreement or other Contract for
financing or funding relating to the securing or borrowing of money in an amount
in excess of $100,000 pursuant to which any Company is the obligor or guarantor,
including any sale or encumbrance of any amounts due under a distribution or
principal underwriting agreement under Rule 12b-1;
(j) any Contract entered into since January 1, 2000 pursuant to
which MIMI acquired any Company, any Company acquired another Company or any
Company acquired or sold, or agreed to acquire or sell, all or materially all of
the capital stock or other equity interest of another entity, or all or
materially all of the assets of another entity; and
(k) other than as disclosed pursuant to Subsections (a) through
(j) above, any Contract currently in effect that is outside the Ordinary Course
of Business.
All of the foregoing, together with the material Fund Contracts, are
collectively referred to in this Agreement as the "Material Contracts." To the
extent that a Material Contract is evidenced by documents, copies thereof
(including any amendments or waivers with respect thereto) have been delivered
to Buyer. To the extent that a Material Contract is not evidenced by documents,
MIMI has made available to Buyer a written description of all of the material
terms and conditions of such Material Contract. Each Material Contract is in
full force and effect and is enforceable in accordance with its terms. There
does not exist under any Material Contract any default or condition or event
that, after notice or lapse of time or both, would constitute a default on the
part of any Company or, to the knowledge of MIMI, on the part of any other
parties to such Material Contracts, except for such defaults, conditions or
events that would not,
-24-
individually or in the aggregate, reasonably be expected to result in a Seller
Material Adverse Effect.
Section 3.11 TECHNOLOGY AND INTELLECTUAL PROPERTY.
(a) The electronic data processing, information, recordkeeping,
communications, telecommunications, portfolio trading and computer systems and
Intellectual Property (including Software) which are used, executed, displayed,
reproduced, licensed, sold or distributed by the Companies or the Ivy Fund in
their businesses, including any Intellectual Property owned by a third party and
incorporated in the Companies' Software, products or services (collectively, the
"Technology Systems") perform adequately. One or more of the Companies or the
Ivy Fund owns or has the right to use all components of the Technology Systems
used in their businesses as currently conducted by them. The consummation of the
transactions contemplated by the Agreement will not alter or impair the
ownership or right of the Companies or the Ivy Fund to use each of the
components of the Technology Systems except as would not reasonably be expected
to have a Seller Material Adverse Effect. No trade secret, know how, model,
process, formula, database or Software created by any of the Companies or the
Ivy Fund included in the Intellectual Property of the Companies or the Ivy Fund
has been disclosed or authorized to be disclosed to any third-party other than
for use in connection with the Companies' or the Ivy Fund's business or pursuant
to a confidentiality or non-disclosure agreement that reasonably protects the
Companies' and the Ivy Fund's interest in and to such matters, except for such
disclosures that would not, individually and in the aggregate, reasonably be
expected to have a Seller Material Adverse Effect.
(b) Set forth on SCHEDULE 3.11(b) is a true and complete list of
all Software that is used in and material to the conduct of the Companies' or
the Ivy Funds' business and all patents, patent applications, trademarks,
service marks, trademark and service xxxx applications, trade names, copyright
registrations, and domain name registrations, owned by any Company, the Ivy Fund
or any Portfolio, or used in the conduct of the Companies', the Ivy Fund's or
any Portfolios' businesses as currently conducted, as well as any agreement
under which any Company, the Ivy Fund or any Portfolio uses any third party's
Intellectual Property or confidential information used by such Company, Ivy Fund
or Portfolio in its business. SCHEDULE 3.11(b) shall also indicate for each of
the above listed items whether each item is owned or under a license or similar
grant of access or use by each Company, the Ivy Fund or Portfolio. All
Intellectual Property registrations owned by the Companies, the Ivy Fund or the
Portfolios are subsisting, are held in the name of the Companies, the Ivy Fund
or the Portfolios and validly maintained. To the knowledge of MIMI, no
Intellectual Property application or registration owned by the Companies, the
Ivy Fund or the Portfolios is the subject of any pending or existing opposition,
interference, cancellation proceeding or other legal or governmental proceeding
before any registration authority in any jurisdiction. To the knowledge of MIMI,
the conduct of the business of the Companies, the Ivy Fund and the Portfolios
does not infringe upon any Intellectual Property of any third-party, except for
such infringement that would not, individually and in the aggregate, reasonably
be expected to have a Seller Material Adverse Effect. There are no claims,
proceedings or actions pending or, to MIMI's knowledge, threatened, and none of
the Companies, the Ivy Fund or the Portfolios has received any notice of any
claim or suit (i) alleging that the Companies', the Ivy Fund's or the
Portfolios' activities infringe upon or constitute the unauthorized use of the
Intellectual Property of any third-party or (ii) challenging
-25-
the ownership, use, validity or enforceability of any Intellectual Property
owned by any of the Companies, the Ivy Fund or the Portfolios, nor is there, to
MIMI's knowledge, a valid basis for any such claim or suit. To MIMI's knowledge
no third-party is infringing upon any Intellectual Property owned by the
Companies, the Ivy Fund or the Portfolios, and no such claims have been made by
the Companies, the Ivy Fund or the Portfolios.
(c) The Companies or the Ivy Fund owns, or has the full right to
use (without additional license fees or royalties), the name "MIMI" and all
derivations thereof used by any Company or the Ivy Fund, and the Companies and
the Ivy Fund have taken all reasonable actions to protect and preserve such name
and derivations. The sales reporting system that is part of the Technology
Systems is adequate for its intended use, one or more of the Companies owns or
licenses all components of such system and there has not been any material
malfunction with respect to such system that has not been remedied or replaced.
Section 3.12 LEGAL PROCEEDINGS. Except as set forth in Schedule 3.12,
neither the Ivy Fund, nor any Company or director, member, officer or employee
of any Company or the Ivy Fund has at any time since September 30, 1999, been or
is a party to any, and there have not at any time since September 30, 1999 been
and there are not any material legal, administrative, arbitral or other
proceedings, claims, actions or governmental or regulatory investigations of any
nature pending or, to the knowledge of MIMI, threatened against any of them or
any of their respective properties or assets relating to the business of any
Company or the Ivy Fund or that challenges the validity or legality of this
Agreement or of the transactions contemplated hereby or which seeks to prevent
the consummation of such transactions and, except as set forth in the Securities
Filings, there have not at any time since September 30, 1999 been and there is
not any injunction, order, judgment, decree, or regulatory restriction imposed
specifically upon any of them or any of their respective properties, assets,
partners, directors, members, officers or employees relating to the business of
any Company or the Ivy Fund.
Section 3.13 TAXES AND TAX RETURNS.
(a) (i) Except at set forth on SCHEDULE 3.13(a), all material
Tax Returns which were required to be filed by or with respect to any of the
Companies have been duly and timely filed; (ii) except as set forth on SCHEDULE
3.13(a), all material items of income, gain, loss, deduction and credit or other
items ("Tax Items") required to be included in each such Tax Return have been so
included and all such Tax Items and any other material information provided in
each such Tax Return is true, correct and complete; (iii) all material Taxes
owed by any of the Companies which are or have become due have been timely paid
in full; (iv) the accrual for Taxes on the Most Recent Balance Sheet would be
adequate to pay all Tax liabilities of the Companies if their current Tax year
were treated as ending on the date of the Most Recent Balance Sheet; (v) since
the date of the Most Recent Balance Sheet, none of the Companies has incurred or
will incur any liability for Taxes other than in the ordinary course of
business; (vi) no material penalty, interest or other charge is or will become
due with respect to the late filing of any such Tax Return or late payment of
any such Tax; (vii) all Tax withholding and deposit requirements imposed on or
with respect to any of the Companies have been satisfied in full in all
respects; (viii) there are no Encumbrances on any of the assets or properties of
any of the Companies that arose in connection with any failure (or alleged
failure) to pay any Tax; and (ix)
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none of the Companies carries on business in Canada through a permanent
establishment for purposes of the Canadian Tax Act.
(b) SCHEDULE 3.13(b) lists all federal, state, local and foreign
Tax Returns filed with respect to any of the Companies for the three taxable
years ending prior to the date hereof, indicates those Tax Returns that have
been audited, indicates those Tax Returns that are currently the subject of
audit, and indicates those Tax Returns whose audits have been closed.
(c) There is no claim against any Company for any material
Taxes, and no assessment, deficiency or adjustment has been asserted, proposed,
or threatened with respect to any Tax Return of or with respect to any of the
Companies, other than those disclosed (and to which are attached true and
complete copies of all audit or similar reports) in SCHEDULE 3.13(c).
(d) To the knowledge of MIMI, no claim has ever been made by an
authority in a jurisdiction where any of the Companies does not file Tax Returns
that it is or may be subject to taxation in that jurisdiction.
(e) Except as set forth on SCHEDULE 3.13(e), there is not in
force any extension of time with respect to the due date for the filing of any
Tax Return of or with respect to any of the Companies or any waiver or agreement
for any extension of time for the assessment or payment of any Tax of or with
respect to any of the Companies.
(f) The total amounts set up as liabilities, if any, for current
and deferred Taxes in the Most Recent Balance Sheet are, and the total amounts
set up as liabilities, if any, for current and deferred Taxes in the Preliminary
Balance Sheet and Closing Balance Sheet will be, sufficient to cover the payment
of all Taxes, whether or not assessed or disputed, which are, or are hereafter
found to be, or to have been, due by or with respect to any of the Companies up
to and through the periods ending on the dates thereof.
(g) SCHEDULE 3.13(g) contains a true and complete copy of each
written Tax allocation or sharing agreement and a true and complete description
of each unwritten Tax allocation or sharing arrangement affecting any of the
Companies. No payments are due or will become due by any of the Companies
pursuant to any such agreement or arrangement or any tax indemnification
agreement except as set forth in SCHEDULE 3.13(g).
(h) SCHEDULE 3.13(h) sets forth with respect to each of the
Companies as of the most recent practicable date the amount of any material
deferred gain or loss allocable to each of the Companies arising out of any
intercompany transaction.
(i) Neither the purchase and sale of the Shares nor the
Pre-Closing Transactions will result in any Tax liability or the recognition of
any items of income or gain to any of the Companies.
(j) None of the Companies has made any payments, is obligated to
make any payments, or is a party to any agreement that under certain
circumstances could obligate it to make any payments that would not be
deductible under Section 280G of the Code.
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(k) None of the Companies (i) has been a member of an affiliated
group filing a consolidated federal income Tax Return (other than a group the
common parent of which was MIMI or, following the Share Contribution, Newco) or
(ii) has any liability for the Taxes of any Person (other than any of the
Companies) under Treasury Regulation Section 1.1502-6 (or any similar provision
of state, local, or foreign law), as a transferee or successor, by contract, or
otherwise.
(l) None of the Companies has entered into any agreement or
arrangement with any Taxing Authority that requires any of the Companies to take
any action or to refrain from taking any action.
(m) None of the Companies has been a party to a distribution of
stock pursuant to Section 355 of the Code during the two-year period preceding
the date hereof as either a distributing corporation or a controlled
corporation, as those terms are defined in Section 355(a) of the Code.
Section 3.14 INSURANCE. One or more of the Companies maintains with
reputable insurers worker's compensation, comprehensive property and casualty,
liability, directors' and officers', errors and omissions, fidelity and other
insurance policies described on Schedule 3.14 hereto, true and complete copies
of which have been delivered to Buyer, and which insurance is, in the reasonable
opinion of MIMI and Newco, sufficient for the operation of its business.
Section 3.15 LABOR AND EMPLOYMENT MATTERS. (a) None of the Companies is
delinquent in any material respect in payments to any of its current or former
members, partners, officers, directors, employees, consultants, or agents for
any wages, salaries, commissions, bonuses, benefits, expenses or other
compensation for any services performed by them or amounts required to be
reimbursed to them; and in the event of termination of the employment of any
employee of the Companies, except as set forth in Schedule 3.15(a), the
Companies will not be liable to any such employee under any agreement in effect
at the Closing for so-called "severance pay," incentive pay, liquidated damages
or any other payments or benefits, including, without limitation,
post-employment health care, pension or insurance benefits.
(b) Except as set forth in SCHEDULE 3.15(b), none of the
Companies has had any material claim made against it by any Person before any
Governmental Authority in respect of employment with any of the Companies for
discrimination or harassment on account of sex, race or other characteristic
protected by law except for claims which have been dismissed or finally resolved
without material liability to the Companies prior to the date of this Agreement,
and there are no pending or, to the knowledge of MIMI, threatened proceedings in
relation thereto.
Section 3.16 BENEFIT PLAN OBLIGATIONS. (a) SCHEDULE 3.16(a) contains a
true and complete list of each compensation, commission, bonus, deferred
compensation, incentive compensation, equity purchase, equity option, share
scheme, equity-based award, severance, redundancy or termination pay,
hospitalization or other medical, accident, disability, life or other insurance,
supplemental unemployment benefits, fringe, other welfare benefit,
profit-sharing, pension, or retirement plan, program, agreement, or arrangement,
and each other employee benefit plan, program, agreement, or arrangement (a
"Plan") as of the date hereof sponsored,
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maintained, or contributed to or required to be contributed to by any of the
Companies or any ERISA Affiliate (as defined below) for the benefit of any
employee or terminated employee of any of the Companies (a "Company Plan") or
any ERISA Affiliate. Any Plan maintained within the jurisdiction of the United
States shall be referred to herein as a "US Plan." For purposes of this
Agreement, "ERISA Affiliate" means any entity or Person that together with any
of the Companies would be deemed a "single employer" within the meaning of
Section 4001 of ERISA or would be considered as being "members" of a controlled
group of corporations within the meaning of Section 414 of the Code with any of
the Companies. Each Company Plan may be modified or terminated by one of the
Companies, or the applicable ERISA Affiliate, without liability to any Company,
or its ERISA Affiliate, subject only to claims filed or incurred prior to such
modification or termination and the restrictions imposed by the Code and ERISA.
(b) True, correct and complete copies of each of the Company
Plans, related trusts, insurance or group annuity contracts and each other
funding or financing arrangement relating to any Company Plan, including all
amendments thereto, have been furnished to Buyer. There has also been furnished
to Buyer, with respect to each Company Plan that constitutes a US Plan required
to file or furnish such report or description, the reports on IRS Form 5500 and
the summary plan descriptions, in each case since March 31, 1999, each of which
has been duly completed and filed or furnished in accordance with Applicable Law
in all material respects, and such reports and descriptions constitute all such
reports and descriptions required to be filed or furnished with respect to the
Company Plans that constitute US Plans pursuant to Applicable Law. Additionally,
the most recent determination letter form the IRS for each of the Company Plans
that constitute US Plans intended to be qualified under Section 401(a) of the
Code, and any outstanding determination letter applications for such Plans, has
been furnished to Buyer.
(c) Except as otherwise set forth on SCHEDULE 3.16(c):
(1) Neither any of the Companies nor any ERISA Affiliate
(i) has ever maintained any US Plan which has been subject to Title IV of ERISA
or any similar law of any other jurisdiction or (ii) has ever provided or agreed
to provide health care or any other welfare benefits (as described in Section
3(1) of ERISA) to any employees after their employment is terminated (other than
as required by part 6 of Subtitle B of title I of ERISA or any similar law of
any other jurisdiction) or has ever agreed to provide such post-termination
benefits.
(2) No US Plan sponsored by any of the Companies or their
ERISA Affiliates is a "multi-employer pension plan," as defined in Section 3(37)
of ERISA.
(3) The Companies or their ERISA Affiliates have
substantially performed all obligations, whether arising by operation of law or
by contract, required to be performed by them in connection with the Company
Plans that constitute US Plans and to the knowledge of the Companies there have
been no material uncorrected defaults or violations by any other party with
respect to the Company Plans that constitute US Plans;
(4) Each Company Plan that constitutes a US Plan has been
administered in all material respects in compliance with its terms, the
applicable provisions of ERISA, the Code and all other Applicable Laws and the
terms of all applicable collective bargaining agreements.
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(5) There are no actions, suits or claims pending (other
than routine claims for benefits) or, to the knowledge of the Companies or any
of their ERISA Affiliates, threatened against, or with respect to, any of the
Company Plans or their assets, nor are there any such actions, suits or claims
by or on behalf of any Company Plan.
(6) Each Company Plan that constitutes a US Plan which is
intended to be "qualified" within the meaning of Section 401(a) of the Code is
so qualified and has been so qualified since the date of its adoption, and each
trust maintained thereunder is exempt from taxation under Section 501(a) of the
Code.
(7) There is no matter pending (other than routine
qualification determination filings, copies of which have been furnished to
Buyer, or will be promptly furnished to Buyer when made) with respect to any of
the Company Plans before any Governmental Authority that would reasonably be
expected to have a Seller Material Adverse Effect.
(d) Except as otherwise set forth on SCHEDULE 3.16(d), each
Company Plan as of the date hereof sponsored, maintained, or contributed to or
required to be contributed to by any of the Companies or any ERISA Affiliate for
the benefit of any employee or terminated employee of any of the Companies or
any ERISA Affiliate that is a Company Plan maintained outside the jurisdiction
of the United States, but excluding plans maintained by a governmental entity
("Foreign Plans") has been operated and administered in all material respects in
compliance with its terms and with applicable law and there are no uncorrected
defaults or violations with respect to the Foreign Plans that would result in
the Companies incurring material liability.
Section 3.17 FAIRNESS OPINION; NO BROKERS. (a) The Board of Directors
of MIMI has received the opinion of Xxxxxx Xxxxxx Securities, Inc. (the
"Financial Advisor") to the effect that, as of the date of such opinion, the
consideration to be received by the Stockholders pursuant to the transactions
contemplated by this Agreement is fair, from a financial point of view to the
Stockholders. MIMI has been authorized by the Financial Advisor, subject to
prior review by the Financial Advisor, to include such written fairness opinion
in the Proxy Statement.
(b) Other than the Financial Advisor, whose fees shall be paid
by MIMI or Parent, no broker, finder or similar intermediary has acted for or on
behalf of, or is entitled to any broker's, finder's or similar fee or other
commission from any of the Companies in connection with this Agreement or the
transactions contemplated hereby.
Section 3.18 DERIVATIVES, ETC. No Company is a party to, or is bound by,
any Derivative Contract.
Section 3.19 ABSENCE OF CHANGES. Except as disclosed in the Securities
Filings, since March 31, 2002, none of the Companies has suffered a Seller
Material Adverse Effect and the Companies have carried on and operated their
respective businesses in the Ordinary Course of Business, except for operations
outside the Ordinary Course of Business that would not, individually or in the
aggregate, reasonably be expected to have a Seller Material Adverse Effect.
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Section 3.20 COMPETITION ACT (CANADA) AND INVESTMENT CANADA ACT. Based
on the audited consolidated financial statements of MIMI and the other Companies
for the most recently completed fiscal year, the book value of the Companies'
assets in Canada is less than CND $5 million and the Companies' gross revenues
from Canada are less than CND $35 million.
Section 3.21 VALID EXEMPTION. In the event that the Waivers are not
received by MIMI and the MIMI Stockholder Approval does not include meeting the
applicable requirements of OSC Rule 61-501 and QSC Policy Q-27, then the
transactions contemplated by the Pre-Closing Transactions and this Agreement may
be completed without meeting the applicable requirements of OSC Rule 61-501 and
QSC Policy Q-27 and without receipt of any exemptive relief from such
requirements.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE BUYER
Buyer represents and warrants to MIMI and Newco as follows.
Section 4.1 ORGANIZATION. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of
Delaware. Buyer has the
corporate power and authority to carry on its business as it is now being or is
currently proposed to be conducted, to own, lease and operate all of its
properties and assets, and is duly licensed or qualified to do business in each
jurisdiction in which the nature of the business conducted by it or the
character or location of the properties and assets owned, leased or operated by
it makes such qualification or licensing necessary except where the failure to
be so licensed or qualified would not individually or in the aggregate have a
Buyer Material Adverse Effect.
Section 4.2 AUTHORITY; NO VIOLATION; CONSENTS.
(a) Buyer has all requisite corporate power and authority to
execute and deliver this Agreement and to perform its obligations hereunder and
to consummate the transactions contemplated hereby. The execution and delivery
of this Agreement and the consummation of the transactions contemplated hereby
have been duly and validly approved by all requisite action on the part of Buyer
and no other corporate proceedings on the part of Buyer are necessary to approve
this Agreement or to consummate the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by Buyer. Assuming
the due authorization, execution and delivery of this Agreement by MIMI, Parent
and Newco, this Agreement constitutes the legal, valid and binding obligation of
Buyer, enforceable against Buyer in accordance with its terms, except as
enforcement may be limited by general principles of equity whether applied in a
court of law or a court of equity and by bankruptcy, insolvency, moratorium and
similar laws affecting creditors' rights and remedies generally.
(b) Neither the execution, delivery and performance of this
Agreement by Buyer, nor the consummation by Buyer of the transactions
contemplated hereby and the performance of this Agreement by Buyer, assuming
that the Governmental Consents, MIMI Stockholder Approval, Waivers, Fund Board
Approvals and Fund Shareholder Approvals have
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been obtained prior to the Closing, will (i) (x) violate, conflict with, or
result in a breach of any provision of the charter or by-laws or other
organizational documents of Buyer, or (y) require consent under, violate,
conflict with, or result in a breach of any provision of, or constitute a
default (or an event that, with notice or lapse of time or both, would
constitute a default) under, or result in the termination of, or accelerate the
performance or payment required by, or result in a right of termination or
acceleration under, or result in the creation of any material Encumbrance upon
any of the properties or assets of Buyer, under any of the terms, conditions or
provisions of any Contract to which Buyer is a party or to which Buyer or any of
its properties or assets may be subject, except for such consents, violations,
conflicts, breaches, defaults, terminations, accelerations or Encumbrance
creations which would not reasonably be expected to have a Buyer Material
Adverse Effect, or (ii) violate any judgment, ruling, order, writ, injunction,
decree, statute, rule or regulation applicable to it or any properties or assets
of Buyer, except for such violations which would not reasonably be expected to
have a Buyer Material Adverse Effect.
(c) No material notice to, filing with, authorization of,
exemption by, or consent or approval of, any Governmental Authority is necessary
for the consummation by Buyer of the transactions contemplated by this
Agreement, other than the Waivers and Governmental Consents.
Section 4.3 LEGAL PROCEEDINGS. Neither Buyer nor any director,
officer, member or employee of Buyer is a party to any, and there are no
material legal, administrative, arbitral or other proceedings, claims, actions
or governmental or regulatory investigations of any nature pending or, to the
knowledge of Buyer, threatened against Buyer or any of its properties, assets or
Subsidiaries that challenges the validity or legality of this Agreement or of
the transactions contemplated hereby or which seeks to prevent the consummation
of such transactions and there is no injunction, decree, or regulatory
restriction imposed specifically upon Buyer or any of its respective properties,
assets, partners, directors, members, officers, or employees that challenges the
validity or legality of this Agreement or of the transactions contemplated
hereby.
Section 4.4 NO INELIGIBLE PERSONS. Neither Buyer nor any "affiliated
person" (as defined in the Investment Company Act) of Buyer is ineligible
pursuant to Section 9(a) or 9(b) of the Investment Company Act to serve in any
capacity referred to in Section 9(a) thereof with respect to a registered
investment company. Neither Buyer nor, to Buyer's knowledge, any "associated
person" (as defined in the Advisers Act or the Exchange Act) of Buyer is
ineligible pursuant to Section 203(e) or (f) of the Advisers Act or Section
15(b)(4), (5), (6) or (7) of the Exchange Act to serve as a registered
investment adviser or broker-dealer or as an associated person of a registered
investment adviser or broker-dealer.
Section 4.5 CERTAIN REGULATORY FILINGS.
(a) The information regarding Buyer and its Affiliates supplied
in writing by Buyer specifically for inclusion in the Proxy Statement, on the
date the Proxy Statement is filed with the SEC, on the date the Proxy Statement
is first sent or given to the Stockholders, and on the date of the meeting of
the Stockholders, will not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not
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misleading. Buyer agrees to provide in writing all information concerning Buyer
and its Affiliates that MIMI reasonably believes is required to be included in
the Proxy Statement under the Exchange Act and the rules and regulations
thereunder. Buyer agrees to promptly provide MIMI with any information
reasonably necessary to allow MIMI to correct such information if and to the
extent that the information provided by Buyer (including without limitation
information concerning its Affiliates) for inclusion in the Proxy Statement
becomes false or misleading in any material respect.
(b) The information regarding Buyer and its Affiliates included
in each of the proxy solicitation materials to be distributed to the holders of
the Ivy Fund and that is approved in writing by Buyer, on the date such
materials are filed with the SEC, on the date such materials are first sent or
given to the holders, and on the date of the meeting of the holders, shall not
contain any untrue statements of a material fact or omit to state a material
fact necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading. Buyer agrees to
provide in writing all information concerning Buyer and its Affiliates MIMI
reasonably believes that is required to be included in the Ivy Fund's proxy
statement under the Exchange Act, the Investment Company Act or the rules and
regulations thereunder. Buyer agrees to promptly provide MIMI with any
information reasonably necessary to allow MIMI to correct such information if
and to the extent that the information provided by Buyer (including without
limitation information concerning its Affiliates) for inclusion in the Ivy
Fund's proxy statement becomes false or misleading in any material respect.
Section 4.6 NO BROKERS. No broker, finder or similar intermediary has
acted for or on behalf of, or is entitled to any broker's, finder's or similar
fee or other commission from, Buyer or its Affiliates in connection with this
Agreement or the transactions contemplated hereby.
Section 4.7 NO UNFAIR BURDEN. In connection with the transactions
contemplated by this Agreement, neither Buyer nor any of its affiliates (as the
term "affiliate" is defined in the Investment Company Act) nor any "Interested
Person" (as such term is defined in the Investment Company Act) of Buyer or any
of its affiliates, has imposed and none intend to impose, an unfair burden on
the Ivy Funds as a result of such transactions, or as a result of any express or
implied terms, conditions, or understandings applicable to such transactions
within the meaning of Section 15(f) of the Investment Company Act.
Section 4.8 ABSENCE OF CHANGES. Since June 30, 2002, Buyer has not
suffered a Buyer Material Adverse Effect and Buyer has carried on and operated
its business in all material respects in the Ordinary Course of Business, except
for such deviations of Buyer's business from the Ordinary Course of Business
which would not reasonably be expected to have a Buyer Material Adverse Effect.
Section 4.9 FINANCING. Buyer will have at the Effective Date sufficient
funds to enable Buyer to pay the Purchase Consideration to perform Buyer's
obligations under this Agreement and to pay all fees and expenses of Buyer
related to the transactions contemplated by this Agreement payable by it.
Section 4.10 SHARE OWNERSHIP. As of the date hereof, Buyer does not own
of record any shares of Common Stock.
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ARTICLE V
COVENANTS
Section 5.1 CONDUCT OF BUSINESS.
(a) During the period from the date of this Agreement and
continuing through the Closing Date, except as expressly contemplated by this
Agreement, as required by Applicable Law or as described in SCHEDULE 5.1(a) or
with the prior written consent of Buyer, each of the Companies shall and, to the
extent within its control, shall cause the Ivy Fund to: (i) carry on its
respective business in the Ordinary Course of Business; (ii) use commercially
reasonable efforts to preserve its respective present business organization and
relationships; (iii) use commercially reasonable efforts to keep available the
present services of its employees; (iv) use commercially reasonable efforts to
preserve its assets under management and profitability and the goodwill and
relations of its clients and others with whom business relationships exist
consistent with past practice; (v) not enter into any business venture, Contract
or any other arrangement, whether written or oral (except for normal, recurring
expenditures incurred in the Ordinary Course of Business), in any amount in
excess of $100,000, or any Contract or other arrangement, whether written or
oral, with any director, officer or Affiliate of any Company; (vi) not take any
action the taking of which would or could reasonably be expected to result in
any of the representations and warranties of MIMI and Newco set forth herein
being or becoming untrue in any material respect or any of its agreements herein
being breached in any material respect; (vii) not amend its organizational
documents; (viii) not grant, issue or sell any Equity Interest of which any of
the Companies is the issuer other than pursuant to the exercise of up to
1,185,500 stock options outstanding as of the date hereof; (ix) not effect any
recapitalization, reclassification, dividend or split of Equity Interests or any
similar change in capitalization of any of the Companies; (x) not merge,
consolidate, amalgamate, transfer all or substantially all of its assets or
engage in any similar transaction; (xi) not declare, set aside or pay any
dividend or distribution to the holders of the Equity Interests of any Company;
(xii) not acquire, transfer, sell, lease, pledge, or encumber any assets
material to any Company; (xiii) not acquire (by merger, consolidation or
acquisition of stock or assets) any Person or division thereof or (other than by
the Ivy Fund) make any material investment by purchase of stock or securities,
contributions to capital (other than to other Companies), property transfer or
purchase of property or assets of any Person; (xiv) other than in the Ordinary
Course of Business, not incur any indebtedness for money borrowed, any capital
lease obligation or other long term liability or issue any debt securities or
assume, guarantee, endorse or otherwise become responsible for, the obligations
of any other Person, or make any loans or advances; (xv) with respect to any
Company, not enter into any new Contract that would satisfy the definition of
Material Contract if in effect on the date hereof or terminate, amend, modify or
waive compliance of any provision of any Material Contract in any respect
materially adverse to any of the Companies; (xvi) with respect to any Company,
not make or change any material Tax election, release, assign, settle or
compromise any material Tax liability, dispute or controversy, or waive any
statute of limitations for any Tax claim or assessment, except in connection
with the Request (as defined in the Support Agreement) or any income Tax refund
relating to MIMI's fiscal year ending March 31, 2002; (xvii) subject to
applicable fiduciary responsibilities to the Ivy Fund, not allow the Ivy Fund to
make or change any material Tax election, release, assign, settle or compromise
any Tax liability, dispute, or controversy, or waive any statute of limitations
for any Tax claim or
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assessment; (xviii) except as may be required as result of a change in
Applicable Law or in GAAP, not change any accounting principles or practices;
(xix) not release, assign, settle or compromise any claim or litigation other
than in the Ordinary Course of Business; (xx) with respect to any Company, pay,
discharge or satisfy any claims, liabilities or obligations, other than the
payment, discharge or satisfaction in the Ordinary Course of Business; and (xxi)
not enter into any agreement or understanding that would be inconsistent with
any of the foregoing matters. Notwithstanding the foregoing, prior to the
Closing, MIMI shall have the right to cause Ivy Management, Inc. to undertake
not to pursue any claims relating to accounts payable by MIMI to Ivy Management,
Inc. existing as of the Closing Date against any Person who receives any
proceeds in the Pre-Closing Dissolution (other than Newco) or against any
directors or officers of MIMI to the extent that such Persons, directors or
officers become liable for such claims a result of the Pre-Closing Dissolution.
In addition, Buyer shall not, and Buyer shall cause its Subsidiaries not to,
pursue any claims relating to accounts payable by MIMI to Ivy Management, Inc.
as of the Closing Date against any Person who receives any proceeds in the
Pre-Closing Dissolution (other than Newco) or against any directors or officers
of MIMI to the extent that such Persons, directors or officers become liable for
such claims a result of the Pre-Closing Dissolution.
(b) No Company, except as may be required by its respective
fiduciary duties or as contemplated by this Agreement, will seek to cause the
Fund Board to take any action with respect to the Ivy Fund other than in the
Ordinary Course of Business of the Ivy Fund.
(c) No Company shall adopt or amend in any material respect
(except as may be required by law or permitted under this Agreement) any bonus,
profit sharing, compensation, stock option, stock purchase, pension, retirement,
deferred compensation, severance, retention, or other employee benefit plan,
agreement, trust, fund or other arrangement for the benefit or welfare of any
director, officer or employee or former director, officer or employee of any
Company (other than commercially reasonable arrangements entered into with any
new hires) or, other than in the Ordinary Course of Business, increase the
compensation or fringe benefits of any employee or former director, officer or
employee of any Company or pay any benefit not required by any existing plan,
arrangement or agreement.
(d) No Company shall take any action with respect to the grant,
acceleration or amendment of any change in control, retention, severance or
termination pay or with respect to any increase of benefits payable under its
change in control, retention, severance or termination pay policies in effect on
the date hereof with respect to employees of any of the Companies.
(e) Upon request by Buyer, from time to time prior to the
Closing Date MIMI and Newco shall promptly update or cause to be updated each of
the Schedules to this Agreement to reflect changes to the information set forth
therein occurring through a date not more than two days prior to the Closing
Date. For purposes of determining the accuracy of the representations and
warranties of MIMI and Newco contained in ARTICLE III in order to determine the
fulfillment of the condition set forth in SECTION 6.1(a), the Schedules
delivered by MIMI and Newco shall be deemed to include only that information
contained therein on the date of this Agreement and shall be deemed to exclude
any information contained in any subsequent supplement or amendment thereto.
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(f) MIMI shall prepare and deliver to Buyer within 15 days after
the end of each month after the date hereof and prior to the Closing Date (i) an
unaudited consolidated balance sheet of the Companies and the related
consolidated unaudited statements of income of the Companies and (ii) an AUM
roll-forward for each of the Portfolios and Advised Funds.
(g) At all times prior to the Closing, MIMI and Newco shall, and
will cause each of the Companies to, maintain in effect all policies of
insurance maintained by the Companies on the date hereof, or will procure
comparable replacement policies and maintain such replacement policies.
(h) MIMI shall not, prior to Closing, withdraw any of its
securities from registration under the Exchange Act.
(i) MIMI shall take all actions necessary to effectuate the
termination of any Plan maintained by MIMI pursuant to Section 401(a) of the
Code prior to the Pre-Closing Dissolution such that any such Plan and the assets
and trust associated with the Plan shall be transferred to Newco in the form of
a terminated Plan. The actions taken by MIMI to comply with the foregoing
sentence shall not be deemed to result in a breach of Sections 3.16(c)(5),
5.1(c) or 5.1(d) of this Agreement. Any action taken pursuant to this Section
5.1(i) shall not be deemed to result in a constructive discharge for purposes of
any change in control agreement maintained by MIMI, as of the date hereof, for
the benefit of a MIMI executive.
Section 5.2 PREPARATION OF PROXY STATEMENT; WAIVERS; PRE-CLOSING
TRANSACTIONS.
(a) MIMI shall prepare, in cooperation with Buyer, the Proxy
Statement and use commercially reasonable efforts to obtain and furnish the
information required to be included by it and the Companies in the Proxy
Statement, shall file the Proxy Statement with the SEC, the Canadian Securities
Regulators and the TSX, and respond promptly to any comments made by the SEC
with respect to the Proxy Statement and any preliminary version thereof and
cause the Proxy Statement to be mailed to the Stockholders at the earliest
practicable time following the execution of this Agreement. Buyer and its
counsel shall be given reasonable opportunity to review and discuss with MIMI's
counsel the Proxy Statement prior to its filing with the SEC, and shall be
provided with any comments that MIMI and its counsel may receive from the SEC or
its staff with respect to the Proxy Statement promptly after receipt of such
comments. If prior to the Closing any event shall occur which is required to be
set forth in an amendment or a supplement to the Proxy Statement, MIMI will
promptly prepare and mail to the Stockholders such an amendment or supplement,
provided, that, with respect to any event or information relating to Buyer
giving rise to such requirement, Buyer shall have notified MIMI in writing
thereof in a timely fashion.
(b) MIMI shall prepare, in cooperation with Buyer, materials
(including, if necessary, applications) to obtain the Waivers or an exemption
for the Pre-Closing Transactions under OSC Rule 61-501 and QSC Policy Q-27, and
shall furnish all information required to be included by it and the Companies
therein. The applications shall be made as soon as reasonably practical after
the date hereof and MIMI shall promptly respond to any comments or requests made
by the Ontario Securities Commission or the Quebec Securities Commission with
respect
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thereto, and shall otherwise use commercially reasonable efforts to obtain the
Waivers as promptly as practicable.
(c) Subject to obtaining the MIMI Stockholder Approval, MIMI and
Newco shall cause the Pre-Closing Transactions to be consummated prior to the
Closing. In any event, Parent shall, within 30 days following the date hereof,
consummate the Share Contribution to Newco and MIMI shall, within 10 days after
the Share Contribution, obtain the Board Dissolution Approval.
Section 5.3 STOCKHOLDERS' MEETING; BOARD RECOMMENDATION. MIMI through its
Board of Directors shall (i) except as expressly permitted by Section 5.7(c),
recommend the approval of the Pre-Closing Dissolution by the Stockholders in the
Proxy Statement and not withdraw such recommendation at any time at or prior to
the vote for the approval of the Pre-Closing Dissolution by the Stockholders at
a stockholders' meeting (including any adjournments thereof, the "Stockholders'
Meeting"), (ii) duly call, give notice of, convene and hold the Stockholders'
Meeting, and (iii) subject to applicable fiduciary duties, use its commercially
reasonable efforts to obtain the approval of the Pre-Closing Dissolution at the
Stockholders' Meeting as promptly as practicable following the execution of this
Agreement.
Section 5.4 APPROVAL OF NEW FUND CONTRACTS AND DIRECTORS.
(a) MIMI and Buyer recognize that the consummation of the
transactions contemplated by this Agreement shall constitute an assignment and
termination of certain of the Fund Contracts with the Portfolios and the
underwriting agreements for the Portfolios under the terms thereof and the
Investment Company Act. MIMI will, and Buyer will use commercially reasonable
efforts to cooperate to, solicit the approval ("Fund Board Approvals") of the
Fund Board of the Ivy Fund or the Portfolios, as applicable, and, if necessary,
the governing bodies of any Advised Fund or Subadvised Fund, in accordance with
the requirements of the Investment Company Act, with respect to the Fund
Transactions pertaining to such Fund. The term "Fund Transactions", with respect
to a Fund, means (i) adoption by or on behalf of such Fund of (A) an investment
management agreement with the applicable Company, (B) an underwriting agreement
on behalf of such Fund with the applicable Company, provided, that this clause
(B) shall not apply to any Fund which as of the date hereof does not have an
underwriting agreement with a Company, (C) the form of servicing agreements
which shall be adopted by the Fund Board under Rule 12b-1 under the Investment
Company Act, and (D) administrative services and fund accounting services
agreements with the applicable Company with respect to other services provided
to the Funds (all of which agreements described in clauses (A), (B), (C) and (D)
above shall be in form and substance substantially identical to such Funds'
existing agreements with such Fund or Company for such services); and (ii) all
required actions under federal or state securities laws in connection with the
foregoing. SCHEDULE 5.4 lists the investment management agreements, the
underwriting agreements, the distribution plans and the administrative services
and other agreements referred to in subsections (A) through (D) herein.
(b) MIMI, Newco and Buyer will expeditiously use commercially
reasonable efforts and cooperate to (i) cause to be prepared and filed with the
SEC or other applicable Governmental Authority, cleared by the SEC or other
applicable Governmental Authority, and mailed to the holders of the Portfolios,
proxy statements pertaining to such of the Fund
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Transactions as may require approval of such holders under the Investment
Company Act or other Applicable Law, such proxy statements to contain all
required information and disclosures, (ii) cause special meetings of the holders
of the Portfolios to be called to vote on such Fund Transactions and (iii) cause
the holders of the Portfolios to approve such Fund Transactions (each a "Fund
Shareholder Approval"). Buyer and its counsel shall be given reasonable
opportunity to review and comment on such proxy statements and disclosures with
MIMI's and Newco's counsel prior to their filing with the SEC or other
Governmental Authority.
(c) Subject to applicable fiduciary duties to the Ivy Fund, MIMI
and Newco shall use its commercially reasonable efforts to encourage the
nomination and election of at least nine additional directors as members of the
Fund Board effective as of the Closing Date. Subject to the exercise of
independent discretion of the existing directors of the Ivy Fund who are not
"interested persons" thereof, to the extent contemplated by Section 16(b) of the
Investment Company Act, MIMI and Newco shall use its commercially reasonable
efforts to encourage the nomination and election to the Fund Board by the
securityholders of the Ivy Fund of the requisite number of new independent
directors to fulfill the condition described in Section 15(f)(1) of the
Investment Company Act. Buyer shall cooperate with MIMI and Newco in all
commercially reasonable respects in connection with the requirements of this
SECTION 5.4(C).
(d) Subject to applicable fiduciary duties to the Portfolios,
MIMI and Newco will each use commercially reasonable efforts to ensure that the
Ivy Fund and the Portfolios take no action (i) that would prevent the Ivy Fund
from qualifying as an RIC, (ii) that would be inconsistent with any Portfolio's
prospectus and other offering, advertising and marketing materials.
(e) MIMI and Newco will each use commercially reasonable efforts
to cause each Portfolio to amend or modify its prospectus or other offering
documents to the extent required by Applicable Law to reflect the Fund
Transactions.
Section 5.5 GOVERNMENTAL CONSENTS AND FILINGS. Each of the parties
hereto shall use commercially reasonable efforts to promptly prepare and file
all necessary documentation, to effect all applications, notices, petitions and
filings and to obtain as promptly as practicable all permits, consents,
approvals and authorizations of all Governmental Authorities, including without
limitation the Waivers, if necessary, and any filings required by the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976 and the rules and
regulations thereunder (the "HSR Act"). MIMI and Newco shall promptly provide
Buyer (or its counsel) with copies of all filings made by MIMI, Parent, Newco or
any of their Affiliates with any Governmental Authority in connection with this
Agreement and the consummation of the transactions contemplated by this
Agreement. Buyer shall promptly provide MIMI (or its counsel) with copies of all
filings made by Buyer or any of its Affiliates with any Governmental Authority
in connection with this Agreement and the consummation of the transactions
contemplated by this Agreement. Subject to applicable laws relating to the
exchange of information, MIMI, Newco and Buyer shall to the extent practicable
consult the other with respect to all information relating to the Companies or
Buyer, as the case may be, and any of their respective Affiliates, that appear
in any filing made with, or written materials submitted to, any third party
and/or Governmental Authority in connection with the transactions contemplated
by this Agreement.
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Section 5.6 ADDITIONAL AGREEMENTS. Subject to the terms and conditions
provided in this Agreement, each of the parties hereto agrees to use
commercially reasonable efforts to take, or cause to be taken, all actions and
to do, or cause to be done, all things necessary, proper or advisable to
consummate and make effective as promptly as practicable the transactions
contemplated by this Agreement, and to cooperate with each of the other parties
hereto in connection with the foregoing. Buyer agrees to use commercially
reasonable efforts to cooperate with Parent with respect to any claims to which
Parent is a party that are brought after the Closing that are covered by
policies of insurance of MIMI in effect prior to the Closing.
Section 5.7 ACQUISITION PROPOSALS.
(a) During the period from the date of this Agreement and until
the earlier of the Closing or the termination of this Agreement, none of MIMI,
any of the Companies or any of their respective officers, directors, employees,
representatives and agents shall, and MIMI and Newco shall use commercially
reasonable efforts to cause any of the Company's Affiliates not to, directly or
indirectly, solicit or knowingly encourage any proposals or offers from any
corporation, partnership, person or other entity or group other than the Buyer
or an Affiliate of the Buyer (a "Third Party") concerning any acquisition,
consolidation, tender or exchange offer, merger, business combination, sale of
securities or substantial assets of any of the Companies or any other
transaction that would result in the sale of all or any of the Companies or
their respective businesses (other than sales of assets in the Ordinary Course
of Business) or that would otherwise adversely affect the ability of Parent,
MIMI, Newco and Buyer to consummate the transactions contemplated by this
Agreement (any such transaction being referred to herein as an "Acquisition
Proposal").
(b) MIMI and Newco will promptly (and in no event later than 36
hours after receipt) notify Buyer in writing of, and will disclose to Buyer all
material details (including, without limitation, the identity of the Third Party
making such Acquisition Proposal) of, any Acquisition Proposal, whether oral or
written, that any of MIMI, any Company or any of their respective Affiliates,
officers, directors, employees, representatives or agents receives after the
date of this Agreement.
(c) MIMI, the Companies, and their respective Affiliates,
officers, directors, employees, representatives and agents shall not, and shall
not resolve to (i) furnish or cause to be furnished information concerning the
Companies' businesses, properties or assets to a Third Party, or enter into,
participate in, conduct or engage in discussions or negotiations with such Third
Party, (ii) take any position with respect to an Acquisition Proposal in the
Proxy Statement or otherwise in accordance with Rules 14d-9 and 14e-2 under the
Exchange Act in any manner adverse to Buyer or the transactions contemplated by
this Agreement or make disclosure to the Stockholders regarding such Acquisition
Proposal, (iii) not recommend, or withdraw its approval or recommendation of,
the Pre-Closing Dissolution, (iv) modify or qualify such approval or
recommendation in a manner adverse to Buyer, (v) approve or recommend any
proposed Acquisition Proposal or (vi) cause or allow any Company to enter into
any letter of intent, agreement in principle, merger agreement, acquisition
agreement, option agreement or other similar agreement relating to an
Acquisition Proposal. Notwithstanding the foregoing, if prior to the
Stockholders' Meeting the Board of Directors of MIMI determines in good faith,
after it has received a Qualified Acquisition Proposal and after consultation
with its financial advisors and
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legal counsel, that it must take such action to comply with its fiduciary duties
to the Stockholders under Applicable Law, then MIMI's Board of Directors may
(subject to this sentence) take any of the actions contemplated by clauses (i)
through (v) (but not any of the actions contemplated by clause (vi)) of the
immediately preceding sentence (a "Subsequent Action"), but only if (1) in
connection with any Subsequent Action contemplated by clause (i) above, the
relevant Third Party executes a confidentiality agreement on terms no less
favorable in the aggregate to the Company than those in the Confidentiality
Agreement, (2) MIMI delivers to Buyer a written notice advising Buyer that
MIMI's Board of Directors has received a Qualified Acquisition Proposal and
specifying the material terms and conditions of such Qualified Acquisition
Proposal, identifying the person making such Qualified Acquisition Proposal and
stating that, not earlier than the second Business Day following receipt by
Buyer of such notice, MIMI's Board of Directors intends to take a Subsequent
Action; (3) during such two Business Day period, MIMI shall have considered, and
shall have caused its Affiliates, officers, directors, employees,
representatives and agents to have considered, in good faith any adjustments in
the terms and conditions of this Agreement that Buyer may propose; and (4) Buyer
does not, within such two Business Day period, offer to make such adjustments in
the terms and conditions of this Agreement or other proposals regarding MIMI
such that MIMI's Board of Directors determines in its good faith judgment (after
consultation with its financial advisors and legal counsel) that this Agreement,
together with such adjustments offered by Buyer, is at least as favorable to the
Stockholders as such Qualified Acquisition Proposal. As used herein, "Qualified
Acquisition Proposal" means a bona fide written Acquisition Proposal or
Acquisition Proposals to acquire all or substantially all of the capital stock
or assets of the Companies as a whole on terms and subject to conditions that
the Company's Board of Directors believes in good faith, taking into account all
of the terms and conditions of such Acquisition Proposal or Acquisition
Proposals, would, if consummated, be superior to the transactions contemplated
by this Agreement and in the best interests of the Stockholders of MIMI.
(d) None of the Companies shall waive any provision of any
confidentiality or similar Contract relating to an actual or possible
Acquisition Proposal (whether entered into prior to the date hereof or
hereafter) without the advance written consent of Buyer.
Section 5.8 FAIR PRICE STRUCTURE. If any "fair price" or "control share
acquisition" or "anti-takeover" statute, or other similar statute or regulation
or any state "blue sky" statute shall become applicable to the transactions
contemplated hereby, MIMI, Newco and each of their respective Boards of
Directors shall grant, subject to the terms of this Agreement, such approvals
and take such actions as are reasonably necessary so that the transactions
contemplated hereby and thereby may be consummated as promptly as practicable on
the terms contemplated hereby and thereby, and otherwise act to minimize the
effects of such statute or regulation on the transactions contemplated hereby or
thereby.
Section 5.9 EXPENSES. Except as provided elsewhere herein or in the
Support Agreement, each party hereto shall bear the expenses incurred by it in
connection with the negotiation and preparation of this Agreement and the
consummation of the transactions contemplated hereby; provided, that all filing
fees paid or payable under the HSR Act shall be paid one-half by Buyer and
one-half by MIMI.
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Section 5.10 ACCESS; CERTAIN COMMUNICATIONS. Between the date of this
Agreement and the Closing Date, subject to Applicable Laws relating to the
exchange of information, the Companies shall afford to Buyer and its authorized
agents and representatives reasonable access, upon reasonable prior notice and
during normal business hours, to contracts, documents and information of or
relating to the assets, liabilities, business, operations, personnel (including
meetings with portfolio managers, marketing personnel and wholesalers) and such
other aspects of the business of the Companies and the Funds as Buyer shall
reasonably request; provided, however, that such investigations shall be
conducted in a manner which does not unreasonably interfere with the Companies'
normal operations, clients and employee relations, jeopardize the work product
privilege of the entity in possession or control of such information or
contravene any Applicable Law, fiduciary duty or binding agreement entered into
prior to the date of this Agreement. No investigation pursuant to this Section
5.10 or otherwise shall affect or limit the representations and warranties of
MIMI and Newco set forth herein.
Section 5.11 NOTIFICATION OF CERTAIN MATTERS. At all times prior to the
Closing, MIMI, Newco and Buyer each shall give prompt notice to the other of (i)
the occurrence, or failure to occur, of any event or existence of any condition
that has caused or could reasonably be expected to cause any representations or
warranties made by the notifying party in this Agreement to be untrue or
inaccurate in any material respect at any time after the date of this Agreement,
up to and including the Closing Date, and (ii) any failure on its part to comply
with or satisfy, in any material respect, any of its covenants or agreements in
this Agreement and any failure of any condition to another party's obligation to
complete the transactions contemplated hereby to be satisfied; provided, that
the delivery of any notice pursuant to this Section 5.11 shall not limit or
otherwise affect the remedies available hereunder to the party receiving such
notice.
Section 5.12 SAFE HARBOR. MIMI, Newco and Buyer and their respective
affiliates (as the term "affiliate" is defined in the Investment Company Act)
shall comply, and shall each use its commercially reasonable efforts to cause
the Board of Trustees of each Ivy Fund to comply, until the third anniversary of
the Closing Date with Section 15(f) of the Investment Company Act. Without
limitation as to the immediately preceding sentence, compliance with Section
15(f) of the Investment Company Act shall include the requirements for the
minimum time periods specified in Section 15(f) and Section 16(b) of the
Investment Company Act.
Section 5.13 CONFIDENTIALITY. (a) This Agreement, the transactions
contemplated hereby and all information disclosed pursuant to Section 5.10
hereof shall be subject to the Confidentiality Agreement.
(b) Parent and Buyer shall agree with each other as to
the form and substance of any press release related to this Agreement or the
transactions contemplated hereby; provided, however, that nothing contained
herein shall prohibit any party, following notification to the other parties if
practicable, from making any disclosure required by Applicable Law.
Section 5.14 FINANCING. On the Closing Date, Buyer shall have sufficient
funds available (through cash on hand and existing credit arrangements) to
consummate the transactions contemplated by this Agreement and to pay all fees
and expenses owed by it related to the transactions contemplated by this
Agreement.
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Section 5.15 USE OF NAME.
(a) Anything herein to the contrary notwithstanding, no interest
in or right to use the name or xxxx XXXXXXXXX, any derivation thereof, any name
or xxxx confusingly similar therewith, or any logo used in connection therewith
(collectively, the "Parent Marks"), is being transferred to Buyer, Newco or MIMI
or their respective Affiliates pursuant to the transactions contemplated hereby.
Except as set forth in this SECTION 5.15, after the Closing Buyer, Newco and
MIMI and their respective Affiliates will cease to have any interest in or right
to use the Parent Marks. Buyer, Newco and MIMI agree to and agree to cause their
respective Affiliates to cease all use of the Parent Marks, including without
limitation the use of the Parent Marks as or as components of Internet domain
name registrations, and to cause the name of Xxx Xxxxxxxxx Distributors, Inc.
and Xxx Xxxxxxxxx Services Corp. to be changed promptly after the Closing to
eliminate any reference to the Parent Marks.
(b) Parent grants Buyer, Newco and MIMI a limited license,
commencing on the Closing Date and ending on the date ninety (90) days
immediately following the Closing Date (the "License Term"), (i) to use the term
MACKENZIE solely as a component of the trade names Mackenzie Investment
Management, Inc. and Xxx Xxxxxxxxx Distributors, Inc. (the "Interim Trade
Names") solely in connection with the management of the Ivy Fund (the "Licensed
Business"), and (ii) to use, solely in connection with the Licensed Business,
any marketing or promotional brochures or related material, prospectuses,
reports, sales orders, labels, letterhead, shipping documents, displays,
advertising, and other materials existing on the Closing Date that bear any
Parent Marks. Notwithstanding the foregoing, each of Buyer and MIMI agrees to
use its best efforts to discontinue its use and to cause their respective
Affiliates to discontinue their use of the Parent Marks as soon after the
Closing as commercially practicable, and in no event will Buyer, Newco or MIMI
or its respective Affiliates put into use after the License Term any marketing
or promotional brochures or related material, prospectuses, reports, sales
orders, labels, letterhead, shipping documents, displays, advertising, or other
materials that bear any Parent Marks. Each of Buyer, Newco and MIMI agrees that
all of its and its Affiliates' use of the Parent Marks and Interim Trade Names
(together, the "Licensed Names") shall inure to the exclusive benefit of Parent
for trademark purposes, and each of Buyer, Newco and MIMI and their respective
Affiliates agrees not to challenge Parent's ownership of the Licensed Names or
the validity of the Licensed Names or this license.
(c) Each of Buyer, Newco and MIMI and their respective
Affiliates shall only use the Interim Trade Names in providing services
associated with the Licensed Business, and shall ensure that the Licensed
Business is provided with levels of customer service, responsiveness and
integrity equal or superior to those provided by the Parent as of the Closing
Date. During the License Term, Parent shall have the right, upon reasonable
notice and during regular business hours, to monitor and inspect the quality of
the services associated with the Licensed Business, and any and all advertising,
promotional, sales or marketing materials used by either of Buyer, Newco or MIMI
or their respective Affiliates in association with the Licensed Business that
bear the Licensed Names. During the License Term, at Parent's request, Buyer,
Newco and/or MIMI shall submit for Parent's inspection representative samples of
all advertising, promotional and marketing materials bearing the Licensed Names
used in connection with the Licensed Business. Each of Buyer, Newco and MIMI
acknowledges that the purpose of the inspections conducted and quality control
standards prescribed by Parent in this
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Agreement is to maintain the reputation, image and goodwill of the Licensed
Names. Parent shall not bear or assume any responsibility or liability to third
parties as a result of setting or enforcing such standards or for any failure of
the Licensed Business or of Buyer's, Newco's and/or MIMI's and/or their
respective Affiliates' conduct of the Licensed Business to conform to such
standards. Each of Buyer, Newco and MIMI and their respective Affiliates shall
indemnify, defend and hold Parent harmless against any and all claims, losses,
liabilities, damages, and expenses (including attorneys' fees and expenses)
arising from or relating to the use by Buyer, Newco and/or MIMI and/or their
respective Affiliates of the Licensed Names in conducting the Licensed Business.
(d) Buyer, Newco and MIMI and their respective Affiliates shall
take no action that would prejudice or interfere with the validity of or
Parent's ownership of the Parent Marks, and none of Buyer, Newco or MIMI nor
their respective Affiliates shall enter into any agreement with any third party
that in any way alters, diminishes or restricts the rights of Parent in the
Parent Marks, or that places any restrictions or conditions upon the use or
appearance of any Licensed Name. Buyer shall not adopt as a trademark, service
xxxx or trade name, or prosecute any application for the registration of any
trademark, service xxxx or trade name containing any form or variation of any
Parent Marks, in any jurisdiction in the world. During the License Term, each of
Buyer, Newco and MIMI and their respective Affiliates shall fully cooperate with
Parent in maintaining and defending the validity and ownership of the Parent
Marks and any registrations of the Parent Marks, and in protecting the Parent
Marks against infringement. Buyer, Newco and MIMI shall promptly notify Parent
(i) upon becoming aware of any unauthorized use or infringement by any Affiliate
or third party of any Parent Marks or (ii) of any assertion by any third party
that Buyer's, Newco's or MIMI's or their respective Affiliates' use of the
Parent Marks or the Licensed Names constitutes trademark, service xxxx, trade
dress or trade name infringement, unfair competition or any other tortious act.
Parent may in its sole discretion choose to initiate or defend any legal action
with regard to any Parent Marks, and if Parent chooses to do so, Buyer, Newco
and/or MIMI and/or their respective Affiliates shall cooperate reasonably, at
Parent's costs, with Parent in the prosecution or defense of such action. Buyer,
Newco and/or MIMI shall not prosecute or defend any action alleging
infringement, dilution, or unfair competition involving any Licensed Name or
Parent Marks without Parent's prior written consent. Buyer, Newco and/or MIMI
shall cause their respective Affiliates not to prosecute or defend any action
alleging infringement, dilution, or unfair competition involving any Licensed
Name or Patent Marks without Parent's prior written consent. Parent grants this
license "as is", and makes no representations or warranties concerning the
Licensed Names. None of Buyer, Newco or MIMI nor any of their respective
Affiliates may assign, sublicense, pledge, grant or otherwise encumber or
transfer this license or any of its rights and obligations hereunder (whether by
operation of law or otherwise) without the prior written consent of Parent.
Parent may freely assign all of its rights and obligations under this license.
Section 5.16 ADDITIONAL BUYER COVENANTS. Buyer has no present plan or
intention to liquidate, merge or dispose of Newco in a transaction other than a
transaction with an entity that is taxable as a corporation for U.S. federal
income tax purposes. Buyer has no present plan or intention to cause Newco to
transfer any of the assets of MIMI that will be received by Newco in connection
with the Pre-Closing Dissolution to a corporation of which Newco holds, directly
or indirectly, 20% or more of the value of the outstanding stock.
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ARTICLE VI
CONDITIONS TO CLOSING
Section 6.1 CONDITIONS TO BUYER'S OBLIGATIONS. The obligations of Buyer
to effect the transactions contemplated hereby shall be subject to the following
conditions, any one or more of which may be waived in writing by Buyer in whole
or in part:
(a) each of the representations and warranties of MIMI and Newco
set forth in this Agreement shall be true and correct in all material respects
(provided that any representation or warranty of MIMI or Newco contained herein
that is qualified by a materiality standard or a Seller Material Adverse Effect
standard shall not be further qualified hereby) as of the Closing Date (except
to the extent any such representation or warranty speaks as of or is limited to
an earlier date);
(b) the Companies shall have performed and complied in all
material respects with all agreements, covenants, obligations and conditions
required by this Agreement to be performed or complied with by them at or prior
to the Closing Date;
(c) no events or conditions shall have occurred that,
individually or in the aggregate, have had or would be reasonably likely to have
a Seller Material Adverse Effect;
(d) Newco shall have delivered to Buyer a certificate dated as
of the Closing Date, confirming the satisfaction of the conditions contained in
paragraphs (a) through (c) of this SECTION 6.1;
(e) the Companies shall have obtained all Fund Board Approvals,
all Fund Shareholder Approvals, the Fund Board elections contemplated by SECTION
5.4(c), all new Fund Contracts contemplated by the Fund Transactions and each
other item necessary to consummate the Fund Transactions as contemplated by
Section 5.4; provided however, to the extent that the Companies shall have
obtained Fund Shareholder Approvals with respect to Portfolios representing at
least 92.5% of the AUM of the Ivy Fund as of the Closing Date, which Portfolios
must include Ivy Global Natural Resources, Ivy Cundhill Global Value Fund, and
Ivy Pacific Opportunities Fund, this Section 6.1(e) shall be deemed satisfied
with respect to such Fund Shareholder Approvals;
(f) Parent shall have duly executed and delivered a Subadvisory
Agreement (the "Subadvisory Agreement") with Ivy Management, Inc. replacing each
existing subadvisory or other Contract between Parent and each Company,
substantially in the form attached as EXHIBIT B, which Subadvisory Agreement
shall be in full force and effect immediately after the Closing; (g) Parent
shall have duly executed and delivered a Trademark Agreement (the "Trademark
Agreement"), substantially in the form attached as EXHIBIT C;
(h) Parent shall have performed in all material respects each of
its obligations under the Support Agreement to be performed on or prior to the
Closing Date;
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(i) the parties hereto shall have made and obtained all
Governmental Consents and all Third Party Consents, each in form and substance
reasonably satisfactory to Buyer;
(j) Buyer shall have received a favorable opinion or opinions of
counsel to Parent, MIMI and Newco covering the matters set forth in EXHIBIT D
and such other matters as Buyer shall reasonably request, all in form and
substance reasonably satisfactory to Buyer;
(k) Buyer shall have received the opinion of counsel to MIMI, in
form and substance reasonably acceptable to Buyer, substantially to the effect
that, for federal income tax purposes, (i) the Share Contribution should be
treated as a "qualified stock purchase" (as defined in Section 338(d) of the
Code) by Newco of the stock of MIMI, and (ii) the Pre-Closing Dissolution should
be treated as a distribution of the assets and liabilities of MIMI in complete
liquidation pursuant to Section 332 of the Code;
(l) Newco shall have assumed all of the agreements listed on
SCHEDULE 3.10(a);
(m) each officer of Newco that is not an employee of Newco on
the Closing Date and each director of Newco shall have resigned as an officer or
director of Newco;
(n) Parent shall have duly executed and delivered a Tax Matters
Agreement, substantially in the form attached as EXHIBIT E;
(o) Parent shall have duly executed and delivered a Marketing
Agreement, substantially in the form attached as EXHIBIT F; and
(p) all registrations of MIMI under applicable securities laws
shall have been terminated and, if necessary, Newco shall have duly registered
as an investment advisor under all Applicable Laws.
Section 6.2 CONDITIONS TO MIMI'S, PARENT'S AND NEWCO'S OBLIGATIONS. The
obligation of Parent, MIMI and Newco to effect the transactions contemplated
hereby shall be subject to the following conditions, any one or more of which
may be waived in whole or in part by Parent in writing:
(a) each of the representations and warranties of Buyer
contained in this Agreement shall be true and correct in all material respects
(provided that any representation or warranty of Buyer contained herein that is
qualified by a materiality standard shall not be further qualified hereby) as of
the Closing Date (except to the extent any such representation or warranty
speaks as of or is limited to an earlier date);
(b) Buyer shall have performed and complied in all material
respects with all agreements, covenants, obligations and conditions required by
this Agreement to be performed or complied with by it at or prior to the Closing
Date;
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(c) Buyer shall have delivered to Newco a certificate, dated as
of the Closing Date, from a senior executive officer of Buyer confirming the
satisfaction of the conditions contained in paragraphs (a) and (b) of this
SECTION 6.2;
(d) Buyer shall have duly executed and delivered a Trademark
Agreement, substantially in the form attached as EXHIBIT C;
(e) the parties hereto shall have made or obtained all
Governmental Consents in form and substance reasonably satisfactory to Parent;
(f) Newco shall have received a favorable opinion of counsel to
Buyer covering the matters set forth in EXHIBIT G and such other matters as
Newco shall reasonably request, all in form and substance reasonably
satisfactory to Newco;
(g) Ivy Management, Inc. shall have duly executed and delivered
the Subadvisory Agreement;
(h) Buyer shall have duly executed and delivered a Tax Matters
Agreement, substantially in the form attached as EXHIBIT E; and
(i) Buyer shall have duly executed and delivered a Marketing
Agreement, substantially in the form attached as EXHIBIT F.
Section 6.3 MUTUAL CONDITIONS. The obligations of Parent, MIMI and
Newco, on the one hand, and Buyer, on the other hand, to effect the Closing
shall be subject to the following conditions:
(a) no order, injunction or decree issued by any court or agency
of competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the transactions contemplated by this Agreement shall be in
effect, that no proceeding initiated by any Governmental Authority seeking an
injunction shall be pending and that no statute, rule, regulation, order,
injunction or decree shall have been enacted, entered, promulgated or enforced
by any Governmental Authority which prohibits, restricts or makes illegal
consummation of the transactions contemplated hereby;
(b) the Pre-Closing Dissolution shall have been approved as
contemplated by the MIMI Stockholder Approval;
(c) the Plan of Dissolution shall have been filed with the
Delaware Secretary of State and shall have become effective pursuant to the
Delaware General Corporation Law, and all transactions contemplated by the
Pre-Closing Transactions shall have been consummated; and
(d) any applicable waiting period, clearance, approval and
filing under the HSR Act relating to the transactions contemplated hereby shall
have expired or been terminated.
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ARTICLE VII
TERMINATION/SURVIVAL
Section 7.1 TERMINATION. (a) Notwithstanding anything herein or
elsewhere to the contrary or any approval of the Pre-Closing Dissolution by the
MIMI Stockholder Approval, this Agreement may be terminated and the transactions
contemplated herein may be abandoned at any time prior to the Closing as
follows:
(1) by the mutual written consent of Buyer and Parent;
(2) by either Parent or Buyer if a judgment, injunction,
order or decree of a court or other competent Governmental Authority enjoining
Parent, MIMI, Newco or Buyer from consummating the transactions contemplated by
this Agreement shall have been entered, and such judgment, injunction, order or
decree shall have become final and nonappealable; provided that a party may not
terminate this Agreement pursuant to Section 7.1(a)(2) if it or its Affiliates'
failure to perform its obligations under this Agreement resulted in or
substantially contributed to the issuance of such judgment, injunction or
decree;
(3) by either Parent or Buyer if the Pre-Closing
Dissolution shall fail to receive the MIMI Stockholder Approval;
(4) by Parent, on the one hand, or by Buyer, on the other
hand, if there shall have been a material breach by the other of any of its
representations and warranties set forth in this Agreement, which breach would,
under SECTION 6.1(a) (in the case of a breach of representation or warranty by
MIMI or Newco) or SECTION 6.2(a) (in the case of a breach of representation or
warranty by Buyer), entitle the party receiving such representations and
warranties not to consummate the transactions contemplated hereby and which
breach, if it is of a nature that it may be cured, shall not have been cured
within 30 days after notice thereof shall have been received by the party
alleged to be in breach;
(5) by Parent, on the one hand, or by Buyer, on the other
hand, if there shall have been a material breach of any of the covenants or
agreements set forth in this Agreement on the part of Buyer (in the case of
termination by Parent) or in this Agreement or in the Support Agreement on the
part of any of the Companies or Parent (in the case of termination by Buyer),
which breach shall not have been cured within 30 days following receipt by the
breaching party of written notice of such breach from the other; and
(6) at the election of Buyer or Parent, if the Closing
Date shall not be on or before February 28, 2003.
Notwithstanding SECTIONS 7.1(a)(2)-(6) hereof, a party who is in material
breach of any of its obligations or representations and warranties hereunder
shall not have the right to terminate this Agreement pursuant to SECTIONS
7.1(a)(2)-(6).
(b) The termination of this Agreement shall be effectuated by
the delivery by the party terminating this Agreement to the other party of a
written notice of such termination. If
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this Agreement so terminates, it shall become null and void and have no further
force or effect, except as provided in SECTION 7.2.
Section 7.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement as provided in Section 7.1, this Agreement (other than Section 5.9)
shall forthwith become void and have no effect except that, notwithstanding
anything to the contrary contained in this Agreement, no party shall be relieved
or released from any liabilities or damages arising out of its willful breach of
any provision of this Agreement; provided, that if this Agreement is terminated
by either party pursuant to Section 7.1(a)(3), then MIMI shall promptly pay to
Buyer a cash break-up fee equal to $2,000,000.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 AMENDMENTS; EXTENSION; WAIVER. Subject to compliance with
Applicable Law, this Agreement may be amended, altered or modified by written
instrument executed by each of the parties hereto; provided, that after the
occurrence of MIMI Stockholder Approval of the Pre-Closing Dissolution no
amendment to this Agreement may be made that would: (i) reduce the Purchase
Consideration or change the form thereof; (ii) change any other terms and
conditions of this Agreement if such changes, alone or in the aggregate, would
materially and adversely affect the Stockholders (other than Parent or Newco).
Section 8.2 ENTIRE AGREEMENT. This Agreement, together with the
Confidentiality Agreement and the Master Agreement, constitute the entire
understanding and agreement of the parties hereto, except as provided herein,
and supersedes all prior agreements and understandings, written and oral, among
the parties with respect to the subject matter hereof.
Section 8.3 INTERPRETATION. When a reference is made in this Agreement
to a Section, Exhibit or Schedule, such reference shall be to a Section of or
Exhibit or Schedule to this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include," "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation." Whenever the context may require, any pronouns used in this
Agreement shall include the corresponding masculine, feminine or neuter forms
and the singular form of nouns and pronouns shall include the plural and vice
versa. The phrases "the date of this Agreement," "the date hereof" and terms of
similar import, unless the context otherwise requires, shall be deemed to refer
to the date set forth in the first paragraph of this Agreement.
Section 8.4 SEVERABILITY. Any term or provision of this Agreement which
is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction,
be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
-48-
Section 8.5 NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed given if (a) delivered in person, (b)
transmitted by telecopy (with confirmation), (c) mailed by certified or
registered mail (return receipt requested and obtained) or (d) delivered by an
express courier (with confirmation) to the parties at the following addresses
(or at such other address for a party as shall be specified by like notice):
If to Parent: Mackenzie Financial Corporation
000 Xxxxx Xxxxxx Xxxx Xxxxxxx
Xxxxxxx, Xxxxxxx X0X 0X0
Xxxxxx
Attention: President
Facsimile: (000) 000-0000
With a copy to: Dechert
00 Xxxx Xxxxxx Xxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000-0000
Attention: Xxxxxx Xxxxxxx, Esq.
Facsimile: (000) 000-0000
If to MIMI or Newco: Mackenzie Investment Management, Inc.
000 Xxxxx Xxxxxxx Xxxxxxx
Xxxx Xxxxx, Xxxxxxx 00000
Attention: President
Facsimile: (000) 000-0000
With a copy to: Dechert
00 Xxxx Xxxxxx Xxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000-0000
Attention: Xxxxxx Xxxxxxx, Esq.
Facsimile: (000) 000-0000
If to Buyer: Xxxxxxx & Xxxx Financial, Inc.
0000 Xxxxx Xxxxxx
Xxxxxxx Xxxxxxx, Xxxxxx 00000
Attention: Chief Financial Officer
Facsimile: (000) 000-0000
With a copy to: Xxxxxxx & Xxxx Financial, Inc.
0000 Xxxxx Xxxxxx
Xxxxxxx Xxxxxxx, Xxxxxx 00000
Attention: General Counsel
Facsimile: (000) 000-0000
and to: Xxxxxx & Xxxxxx L.L.P.
0000 Xxxxxxxx Xxxx Xxxxxx
0000 Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000-0000
-49-
Attention: Xxxx X. Xxxxxxxx, Esq.
Facsimile: (000) 000-0000
Section 8.6 BINDING EFFECT; PERSONS BENEFITING; NO ASSIGNMENT. This
Agreement shall inure to the benefit of and be binding upon the parties hereto
and the respective successors and permitted assigns of the parties. Except as
set forth in the preceding sentence, nothing in this Agreement is intended or
shall be construed to confer upon any Person other than the parties hereto and
their successors and permitted assigns any right, remedy or claim under or by
reason of this Agreement or any part hereof. Without the prior written consent
of each of the other parties hereto, this Agreement and the rights hereunder may
not be assigned by any of the parties hereto.
Section 8.7 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which. taken
together shall constitute one and the same agreement, it being understood that
all of the parties need not sign the same counterpart.
Section 8.8 GOVERNING LAW. THIS AGREEMENT, THE LEGAL RELATIONS BETWEEN
THE PARTIES AND THE ADJUDICATION AND THE ENFORCEMENT THEREOF, SHALL BE GOVERNED
BY AND INTERPRETED AND CONSTRUED IN ACCORDANCE WITH THE SUBSTANTIVE LAWS OF THE
STATE OF
DELAWARE, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW THEREOF.
Section 8.9 WAIVER OF JURY TRIAL. PARENT, MIMI, NEWCO AND BUYER EACH
HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, ANY OF THE AGREEMENTS
CONTEMPLATED HEREBY OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN OR THEREIN,
INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER
COMMON LAW OR STATUTORY CLAIMS. EACH PARTY RECOGNIZES AND AGREES THAT THE
FOREGOING WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR IT TO ENTER INTO THIS
AGREEMENT. EACH PARTY REPRESENTS AND WARRANTS THAT IT HAS REVIEWED THIS WAIVER
WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY
TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.
Section 8.10 NO PUNITIVE OR CONSEQUENTIAL DAMAGES. No party hereto shall
be liable for any punitive damages or other special, exemplary or consequential
damages of any other Person arising out of or in connection with this Agreement,
any of the agreements contemplated hereby or any of the transactions
contemplated hereby or thereby.
-50-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
MACKENZIE FINANCIAL CORPORATION
By: /s/ Xxxxx X. Xxxxxx
-------------------
Name: Xxxxx X. Xxxxxx
Title: President and Chief Executive Officer
MACKENZIE INVESTMENT MANAGEMENT, INC.
By: /s/ Xxxxx X. Xxxxxxx
--------------------
Name: Xxxxx X. Xxxxxxx
Title: President and Chief Executive Officer
XXXXXXX & XXXX FINANCIAL, INC.
By: /s/ Xxxx X. Xxxxxxx, Xx.
------------------------
Name: Xxxx X. Xxxxxxx, Xx.
Title: Senior Vice President
IVY ACQUISITION CORPORATION
By: /s/ Xxxxx X. Xxxxxxx
--------------------
Name: Xxxxx X. Xxxxxxx
Title: President
SIGNATURE PAGE TO
STOCK PURCHASE AGREEMENT
Exhibit A
DECHERT DRAFT DATED 8/29/02
MACKENZIE INVESTMENT MANAGEMENT INC.
PLAN OF COMPLETE LIQUIDATION AND VOLUNTARY DISSOLUTION
PURSUANT TO SECTION 332 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED
AND SECTION 281(b) OF THE DELAWARE GENERAL CORPORATION LAW
This is a Plan of Complete Liquidation and Dissolution (the "Plan") of
Mackenzie Investment Management Inc., a Delaware corporation (the "Company"),
adopted pursuant to Section 332 of the Internal Revenue Code of 1986, as
amended, and Section 281(b) of the Delaware General Corporation Law (the
"DGCL").
1. The holders of record of all of the Company's issued and outstanding
capital stock (the "Shareholders") are listed on SCHEDULE A hereto.
2. The Company shall (i) pay, or make reasonable provision to pay, all
claims and obligations, including all contingent, conditional or unmatured
contractual claims known to the Company; (ii) make such provision as will be
reasonably likely to be sufficient to provide compensation for any claim against
the Company which is the subject of a pending action, suit or proceeding to
which the Company is a party; and (iii) make such provision as will be
reasonably likely to be sufficient to provide compensation for claims that have
not been made known to the Company or that have not arisen but that, based on
facts known to the Company, are likely to arise or to become known to the
Company within ten years after the date of dissolution. Such claims shall be
paid in full and any such provision for payment made shall be made in full if
there are sufficient assets. In addition, upon the effectiveness of this Plan,
each option granted under the Mackenzie Investment Management Inc. 1994 Stock
Option Plan (the "Option Plan") that is unexercised and outstanding shall be
cancelled in exchange for cash payments in an amount equal to the excess, if
any, between the fair market value of the stock underlying the option as of that
date over the exercise price of the option, as provided in Section 9.1 of the
Option Plan. If there are insufficient assets, such claims and obligations shall
be paid or provided for according to their priority and, among claims of equal
priority, ratably to the extent of assets legally available therefor. The
remaining assets of the Company shall be distributed pursuant to the Plan, on or
before the end of its current taxable year, as follows: (i) $____ per share in
cash to shareholders of the Company (the "Unaffiliated Shareholders") other than
Ivy Acquisition Corporation, a Delaware corporation ("Ivy Acquisition") and (ii)
distribute $____ per share to Ivy Acquisition in a combination of cash (if any
remains after distribution of dissolution proceeds to the Unaffiliated
Shareholders) and the non-cash assets and liabilities of the Company. In the
event that the sale of all the capital stock of Ivy Acquisition to [Buyer]
results in the receipt by the sole shareholder of Ivy Acquisition of aggregate
consideration in excess of the proceeds distributed to Sections 2(i) and 2(ii)
hereof (the "Excess Amount"), the Excess Amount shall be distributed by the sole
stockholder of Ivy Acquisition (as of the date of adoption of this Plan by the
Board of Directors of the Company) among the former shareholders of the Company
on a pro rata basis, based upon the number of shares of Common Stock of the
Company they owned immediately prior to the filing of a certificate of
dissolution of the Company pursuant to Section 275 of the DGCL. The right to
receive the Excess Amount shall not be assignable except by operation of law.
3. The Company shall (i) during its liquidation and the winding up of its
affairs, indemnify and advance expenses to any director, officer, employee or
agent of the Company who is serving at the request of the Company in
effectuating the intent and purpose of the Plan to the full extent permitted by
the DGCL; and (ii) upon its liquidation and the winding up of its affairs and
the filing of a Certificate of Dissolution pursuant to Section 275 of the DGCL,
purchase, maintain and pay all premiums for such additional insurance on behalf
of such persons, as may be necessary or advisable, against any liability
asserted against them and incurred by them in such a capacity, or arising out of
their status as a director, officer, employee of agent of the Company, to the
full extent permitted by the DGCL.
4. Upon effective filing of the Certificate of Dissolution of the Company
with the Office of the Secretary of State of the State of Delaware, the Company
shall be dissolved under Delaware law.
5. This Plan shall be adopted by the Board of Directors of the Company
only at such time as Ivy Acquisition holds 80% or more of the outstanding stock
of the Company and shall become effective upon its adoption by the holders of a
majority of the outstanding capital stock of the Company in accordance with the
DGCL.
6. The directors and officers of the Company are authorized and directed
to file all of the required papers and take all of the necessary steps to
dissolve the Company.
7. Promptly after filing the Certificate of Dissolution, the Company
shall close its stock transfer books and discontinue recording transfers of its
capital stock.
8. Nothing stated herein shall be construed as a limitation upon the
authority of the directors of the Company to sign, record, transfer or file any
and all forms, records, deeds, evidences of indebtedness or any other document,
or to enter into negotiations, seek the advice of counsel, or take any other
actions necessary to conform with the laws of the State of Delaware. Nor shall
any provision of this Plan be construed as a limitation upon the authority of
the directors of the Company to amend and modify this Plan to conform with such
laws, or to abandon this Plan if the directors of the Company deem that it is in
the best interests of the Company and its stockholders to do so.
9. The approval by the stockholders of the Company of this Plan
constitutes a waiver of any and all rights of such stockholders of the Company,
now or hereafter, to vote upon any modification or amendment to this Plan which
the directors of the Company consider necessary to conform with the pertinent
provisions of Delaware law, as well as the regulations promulgated thereunder,
governing corporate liquidations.
Exhibit B
DRAFT: AUGUST 26, 2002
SUB-ADVISORY AGREEMENT
BETWEEN
[PARENT]
AND
[HEDERA MANAGEMENT, INC.]
MADE AS OF DECEMBER __, 2002
SUB-ADVISORY AGREEMENT
AGREEMENT made the __ day of December, 2002.
BETWEEN:
[PARENT], a company amalgamated under the laws of Ontario, Canada,
with its principal place of business at 000 Xxxxx Xxxxxx Xxxx, Xxxxx
000, Xxxxxxx, Xxxxxxx, Xxxxxx X0X 0X0 (hereinafter called the
"Manager").
- and -
[HEDERA MANAGEMENT, INC.], a company incorporated under the laws of
the Commonwealth of Massachusetts, with its principal place of
business at ___________ (hereinafter called the "Sub-Advisor").
RECITALS:
1. The Manager is the trustee and/or manager and the portfolio advisor to the
mutual funds listed in Schedule "A" of this Agreement (the "Funds"), each
of which are either mutual fund trusts or separate classes or series of
shares of a mutual fund corporation organized under the laws of the
Province of Ontario.
2. The Master Declaration of Trust, the Master Management Agreement or the
Articles governing the Funds empowers the Manager to engage investment
advisors to manage the investment portfolios of the Funds and to perform
other investment advisory or administrative services to the Funds.
3. The Manager wishes to engage the Sub-Advisor to act as investment
sub-advisor to all or a portion of the assets of the Funds, each as
described in Schedule "A" (the "Sub-Advised Portfolios"), and has requested
the Sub-Advisor to provide the Funds with investment advice and other
administrative services with respect to the Sub-Advised Portfolios to
assist the Manager to achieve the investment objectives of the Funds.
-2-
AGREEMENT:
IN CONSIDERATION of the mutual covenants contained in this Agreement and
for other good and valuable consideration, each of the parties agrees as
follows:
PART 1: SUB-ADVISORY SERVICES
1. APPOINTMENT OF SUB-ADVISOR. The Manager hereby appoints the Sub-Advisor to
provide investment sub-advisory services to the Manager for the Sub-Advised
Portfolios. The Manager agrees to amend the simplified prospectus, annual
information form and such other documents as may be necessary to reflect
the appointment of the Sub-Advisor. In its capacity as investment
sub-advisor for the Sub-Advised Portfolios, the Sub-Advisor will:
(a) make all portfolio investment decisions concerning the Sub-Advised
Portfolios on a full discretionary basis, including selection of
appropriate stock and bond investments for each of the Sub-Advised
Portfolios consistent with the investment objectives and strategies of
each Fund; provided, that the Manager acknowledges and agrees that the
Sub-Advisor shall have no responsibility for filing claims on behalf
of the Sub-Advised Portfolios with respect to any class action,
bankruptcy proceeding or any other action or proceeding in which the
Funds may be entitled to participate as a result of securities
holdings and provided that the Sub-Advisor promptly notifies the
Manager of such action or proceeding;
(b) make all appropriate brokerage arrangements to implement the purchase
and sale of portfolio investments, on the basis of its estimate of
their ability to obtain, for reasonable and competitive commissions,
the best execution of particular and related portfolio transactions
consistent with applicable U.S. and Canadian securities regulation.
For this purpose, "best execution" means prompt and reliable execution
at the most favourable price obtainable, subject to the following:
(i) Such brokerage arrangements may be selected on the basis of
all relevant factors, including the execution
-3-
capabilities required by the transaction or transactions, the
importance of speed, efficiency, or confidentiality, and the
willingness of the broker to provide useful or desirable
investment research and/or special execution services;
(ii) The Sub-Advisor shall have no duty to seek advance
competitive bids and may select brokers and brokerage
arrangements based solely on its current knowledge of
prevailing commission rates;
(iii) The Sub-Advisor shall have discretion, in the interest of
the Sub-Advised Portfolios, to direct the execution of
portfolio transactions to brokers that provide brokerage and/or
research services for Sub-Advised Portfolios and/or other
clients of the Sub-Advisor or one or more of its affiliates (on
the basis permitted under O.S.C. Policy 1.9 or any policy, rule
or national instrument adopted in replacement thereof); and in
connection with such transactions, to pay commissions in excess
of the amount another adequately qualified broker would have
charged if the Sub-Advisor determines, in good faith, that such
commission is reasonable in relation to the value of the
brokerage and/or research services provided by such broker,
viewed in terms of either that particular transaction or the
overall responsibilities of the Sub-Advisor and its investment
advisory affiliates with respect to the accounts for which they
exercise investment discretion; in reaching such determination,
the Sub-Advisor will not be required to attempt to place a
specified dollar amount on the brokerage and/or research
services provided by such broker, provided that the Sub-Advisor
shall be prepared to demonstrate that such determinations were
made in good faith and that all commissions paid by any
Sub-Advised Portfolio over a representative period were
reasonable in relation to the benefits to such Sub-Advised
Portfolio;
(c) determine whether and in what manner to vote, and whether and in what
manner to exercise all voting rights in respect of investments in each
of the Sub-Advised Portfolios (other than voting any proxies relating
to securities of the Sub-Advised Portfolios that have a record
-4-
date prior to the date of this Agreement or on or after the
termination of this Agreement);
(d) issue appropriate instructions to the custodian (or the sub-custodian)
of the Funds to facilitate delivery and settlement of portfolio
transactions;
(e) maintain complete and accurate books and records relating to the
Sub-Advised Portfolio transactions implemented by the Sub-Advisor and
make such books and records reasonably available to the Fund and the
Manager; provided that the Sub-Advisor may delegate such obligations
to affiliates, which delegation shall not relieve the Sub-Advisor of
its obligations hereunder; and
(f) carry out such other actions ancillary to its role as investment
sub-advisor as may be beneficial to the administration of the
Sub-Advised Portfolios, including providing regular investment reports
to the Manager in a form and on a schedule agreed to from time to time
by the Sub-Advisor and the Manager.
2. INVESTMENT OBJECTIVES AND STRATEGIES OF THE FUNDS.
(a) The investment objectives and investment strategies for each of the
Funds have been determined by the Manager and are set out in the
current simplified prospectus for the Funds as it may be amended or
renewed from time to time by the Manager in its sole discretion. The
Funds are subject to the investment restrictions described in the
annual information forms of the Funds and those contained in NI 81-102
and certain provincial securities acts of which the Sub-Advisor
acknowledges it is aware and which it agrees to follow in providing
the investment advisory services under this Agreement. Attached as
Annex I is a listing, in relation to the Funds, of each related person
or company (as such term is defined in the Securities Act (Ontario))
as of the date hereof and an indication of whether or not the Funds
are permitted to invest in the securities of each such person or
company on the basis of an exemption order issued by certain Canadian
securities regulatory authorities.
(b) The Manager has furnished or will furnish the Sub-Advisor with true,
correct and complete copies of the governing documents of the
-5-
Funds, and each Fund's most recent prospectus and annual information
form (and all amendments and supplements thereto). If they could
reasonably be material to the Fund, the Manager will promptly furnish
the Sub-Advisor with copies of all amendments, supplements,
modifications or replacements of, or additions to, each of the
foregoing.
(c) The Sub-Advisor agrees to comply with the investment objectives,
restrictions and strategies of the Funds with respect to each
Sub-Advised Portfolio and the provisions of the governing documents of
the Funds, as such documents may be amended from time to time and
which have been received by the Sub-Advisor, in providing its
investment advisory services. The Sub-Advisor shall notify the Manager
on a timely basis of any lapse in compliance with the objectives and
strategies. However, the Sub-Advisor makes no representations or
guarantees whatsoever that the objectives of the Funds or the
Sub-Advised Portfolios will be achieved.
(d) The Manager will notify the Sub-Advisor on a timely basis, but in any
event at least 5 days prior thereto, of any change in the investment
objectives, restrictions or strategies of the Funds or their governing
documents before the implementation date of the change to ensure an
orderly transition to the new objectives or strategies.
(e) The Sub-Advisor agrees to notify the Manager promptly when it becomes
aware of a change in any portfolio managers advising the Funds or any
other changes to the Sub-Advisor or its affiliates which would affect
the Funds or any documents relating to the Funds.
3. FEES FOR SUB-ADVISORY SERVICES.
(a) Subject to the terms of this Section 3, the Manager will pay the
Sub-Advisor fees for its investment advisory services for each
Sub-Advised Portfolio advised by the Sub-Advisor on behalf of the
Manager as set out in Schedule "B" to this Agreement.
(b) Each Fund's net assets will be calculated daily on each day that The
Toronto Stock Exchange is open for trading. The daily equivalent of
the annualized fees based on the rates as described in Schedule "B"
-6-
will then be calculated and paid to the Sub-Advisor monthly within 10
days of month end.
(c) During the term of this Agreement, the Sub-Advisor will pay all
expenses incurred by it in connection with its activities under this
Agreement other than the cost of securities, commodities and other
investments (including brokerage and other transaction charges, if
any) purchased for the Sub-Advised Portfolios. The Sub-Advisor shall
not be responsible for the Manager's or the Fund's expenses, which
shall include without limitation any of the following expenses related
to the Manager or the Funds: (i) organizational and offering expenses
(including out of pocket expenses), (ii) expenses for legal,
accounting and auditing services, (iii) taxes and governmental fees,
(iv) dues and expenses incurred in connection with membership in
investment company or similar organizations, (v) costs of printing and
distributing securityholders reports, proxy materials, prospectuses,
certificates and distribution of dividends, (vi) charges of a Fund's
custodians and sub-custodians, administrators and sub-administrators,
registrars, transfer agents, dividend disbursing agents and dividend
reinvestment plan agents, (vii) payment for portfolio pricing services
to a pricing agent, (viii) registration and filing fees of applicable
regulatory authorities, (ix) expenses of registering or qualifying
securities of the Funds for sale in any jurisdiction, (x) freight and
other charges in connection with the shipment of the Funds' portfolio
securities, (xi) fees and expenses of trustees or managers, (xii)
salaries of securityholder relations personnel, (xiii) costs of
securityholder meetings, (xiv) insurance, (xv) interest, (xvi)
brokerage costs, and (xvii) litigation and other extraordinary or
non-recurring expenses. The Manager shall reimburse the Sub-Advisor
for any expenses of the Manager or any Fund as may be reasonably
incurred by the Sub-Advisor on behalf of the Funds or the Manager. The
Sub-Advisor shall keep and supply to the Manager reasonable records of
all such expenses. However, the Sub-Advisor shall not incur, or cause
any Fund or the Manager to incur, any such expenses (other than
expenses described in clauses (vi), regarding custodians and
sub-custodians, (x) or (xvi) above) without the prior written
agreement of the Manager.
-7-
4. STANDARD OF CARE OF SUB-ADVISOR; RESPONSIBILITY FOR ADVICE.
(a) The Sub-Advisor shall exercise its powers and discharge the duties as
sub-advisor honestly, in good faith and in the best interests of the
Funds and, in connection therewith, shall exercise the degree of care,
diligence and skill that a reasonably prudent person would exercise in
comparable circumstances.
(b) The Manager acknowledges that, in accordance with Subsection 7.3(b) of
Rule 35-502 under the SECURITIES ACT (Ontario) with respect to the
investment sub-advisory services rendered by the Sub-Advisor, the
Manager has agreed with the Funds to be responsible to the Funds for
any failure of the Sub-Advisor to act in accordance with the standard
set forth in Section 4(a). The parties hereto agree that the Manager's
liability to the Funds shall in no way impair its ability to seek
indemnification from the Sub-Advisor under Section 13(b) of this
Agreement.
5. INFORMATION FOR REPORTS OR REGISTRATION AND ACCESS TO FUND RECORDS. The
Sub-Advisor will cooperate with the Manager to provide any information
required to be included in any reports that must be filed with any
governmental authority by or on behalf of the Funds or the Manager and any
other reports that the Manager shall reasonably request. The Sub-Advisor
shall permit the books and records with respect to the Sub-Advised
Portfolios to be inspected by the Manager, the Funds or their respective
agents upon reasonable notice of a specific request by the Manager at all
reasonable times during normal business hours.
6. CONFLICTS WITH OTHER SUB-ADVISOR ACCOUNTS.
(a) The Sub-Advisor now acts and may in the future act as an investment
advisor to fiduciary or other managed accounts, and as an investment
advisor, sub-advisor and/or administrator to other investment
companies on a discretionary or other basis. The Manager has no
objection to the Sub-Advisor's acting in such capacities, as long as
such services do not impair the services rendered to the Sub-Advised
Portfolios. The Manager recognizes that, in some cases, this may
adversely affect the size of the position that a Sub-Advised Portfolio
may obtain in a particular security. In addition, the Manager
understands that the persons employed by
-8-
the Sub-Advisor to assist in the Sub-Advisor's obligations under this
Agreement may not devote their full time to such service and nothing
contained in this Agreement will be deemed to limit or restrict the
right of the Sub-Advisor or any of its affiliates to engage in and
devote time and attention to other businesses or to render services of
whatever kind and nature, except as specifically set forth in Section
14.
(b) If the availability of any particular investment security is limited
and that security meets the investment objectives of any Sub-Advised
Portfolio and also that of one or more of the Sub-Advisor's other
managed accounts, such security will be allocated on a fair and
equitable basis.
(c) The Sub-Advisor agrees to adopt written trade allocation procedures
that are fair and equitable and in accordance with applicable U.S. and
Canadian laws and to keep accurate and complete records of all
transactions effected under its trade allocation procedures. Any
allocation made in accordance with the Sub-Advisor's allocation
procedures, as from time to time amended, shall be presumed fair and
equitable if the Sub-Advisor has provided a copy of such procedures
and amendments to the Manager and the Manager has not objected thereto
in writing prior to such allocation and provided that the
Sub-Advisor's procedures are in substantial compliance with applicable
U.S. and Canadian laws.
(d) On occasions when the Sub-Advisor deems the purchase or sale of a
security to be in the best interest of a Sub-Advised Portfolio as well
as other clients of the Sub-Advisor or its affiliates, the
Sub-Advisor, to the extent permitted by applicable laws and
regulations, may, but shall be under no obligation to, aggregate the
securities to be so purchased or sold in order to obtain the most
favourable price or lower brokerage commissions and efficient
execution.
7. RESTRICTED USE OF INFORMATION BY MANAGER. The Manager agrees not to use the
investment advice or services provided by the Sub-Advisor pursuant to this
Agreement for any purpose except the management of the Funds and the
promotion of sales of securities issued by the Funds.
-9-
8. SELF-DEALING. Except as permitted by U.S. and Canadian law, neither the
Sub-Advisor, nor any officer, director or employee of the Sub-Advisor shall
act as principal in connection with the purchase or sale of portfolio
investments by or on behalf of the Sub-Advised Portfolios, or receive any
compensation as a result of such purchases and sales other than the
compensation provided for in this Agreement.
PART 2: REPRESENTATIONS, WARRANTIES, COVENANTS
9. RESPONSIBILITY FOR COMPLIANCE. The Sub-Advisor shall be, at all times, in
compliance in all material respects with U.S. and Canadian laws applicable
to it. The Sub-Advisor shall notify the Manager if there are any lapses in
such compliance on a timely basis. The Sub-Advisor agrees to conduct
monitoring of the Sub-Advised Portfolios' holdings on as frequent a basis
as is required to ensure compliance by Sub-Advisor with laws applicable to
it and with the provisions of this Agreement. The Manager is solely
responsible for maintaining regulatory compliance with respect to the
Funds, and the Sub-Advisor is only obligated to comply with laws applicable
to it and with the provisions of this Agreement with respect to the
Sub-Advised Portfolios.
10. REGISTRATION.
(a) SUB-ADVISOR DULY REGISTERED. The Sub-Advisor represents and warrants
that it is duly registered with the U.S. Securities and Exchange
Commission as an investment advisor under the U.S. Investment Advisers
Act of 1940, as amended, to provide investment advisory services to
managed accounts on a full discretionary basis. The Sub-Advisor is
providing its services under this Agreement on the basis of the
exemption from registration contained in Section 7.3 of Rule 35-502
under the SECURITIES ACT (Ontario) and, if there are reasonable
grounds for believing that changes will be introduced affecting
Ontario Securities Commission Rule 35-502 such that such exemption
will become unavailable to the Sub-Advisor, the Sub-Advisor agrees to
register under the SECURITIES ACT (Ontario) as an international
adviser in the categories of investment counsel and portfolio manager
to provide the services set forth in this Agreement. In accordance
with the foregoing, the Sub-Advisor agrees to maintain all necessary
registrations while this Agreement is in effect
-10-
to enable it to continue to provide continuous investment sub-advisory
services to the Sub-Advised Portfolios.
(b) MANAGER DULY REGISTERED. The Manager represents and warrants that it
is duly registered under the Securities Act (Ontario) as an adviser in
the categories of investment counsel and portfolio manager.
11. FORMATION OF THE FUNDS. The Manager represents and warrants that each of
the Funds has been duly formed and complies with all applicable
requirements in order to be offered to Canadian investors as an open-end
mutual fund trust or as a separate class of shares of an open-end mutual
fund corporation.
12. GENERAL REPRESENTATIONS AND WARRANTIES. Each of the Manager and the
Sub-Advisor represent and warrant to each other that:
(a) it is duly organized and validly existing under the laws of its
jurisdiction of incorporation;
(b) it has the corporate power and capacity to enter into and to perform
its obligations under this Agreement;
(c) this Agreement has been duly authorized, executed and delivered and
constitutes a validly binding obligation of it, enforceable in
accordance with its terms, subject to bankruptcy, insolvency and other
laws relating to or affecting the enforceability of creditors' rights
generally and to principles governing the availability of equitable
remedies;
(d) to the best of its knowledge, the execution, delivery and performance
of this Agreement by it will not violate or result in any default
under its constitutive documents or the constitutional documents of
any of its sponsored funds, any other agreement to which any of them
might be a party or their assets are bound, or any applicable statute,
rule, regulation, or order of government, government agency or
government body;
(e) there are no consents, approvals, orders or authorizations of any
persons or governmental authorities in the Canadian jurisdictions in
-11-
which its funds will be offered or in its home jurisdictions or any
other declarations, notices or filings with any authority required to
be obtained by it in connection with the entering into of this
Agreement; and
(f) except as otherwise disclosed herein, it has all necessary
registrations to provide all of the services to be rendered in this
Agreement and that such registrations have been maintained in good
standing.
PART 3: INDEMNIFICATION
13. INDEMNIFICATION.
(a) The Manager agrees to indemnify the Sub-Advisor, its directors,
officers and employees from any loss, claim, liability, litigation,
damage or expense (including reasonable legal fees) which arises out
of:
(i) the Manager's failure to perform its obligations under this
Agreement;
(ii) any misrepresentation or breach of any representation,
warranty or agreement of the Manager contained in this
Agreement; or
(iii) any untrue statement of a material fact contained in the
prospectus documents distributed in connection with the public
offering of the securities of the Funds to Canadian investors,
or any omission to state in the prospectus documents a material
fact required to be stated therein or necessary to make any
statements in the prospectus documents not misleading, except
for statements provided to the Manager by the Sub-Advisor in
writing specifically for the purpose of inclusion in any
prospectus document for the Funds.
(b) The Sub-Advisor agrees to indemnify the Manager, its directors,
officers and employees from any loss, claim, liability, litigation,
-12-
damage or expense (including reasonable legal fees) which arises out
of:
(i) the Sub-Advisor's failure to perform its obligations under
this Agreement;
(ii) any misrepresentation or breach of any representation,
warranty or agreement of the Sub-Advisor contained in this
Agreement; or
(iii) any untrue statement or omission to state a material fact
contained in a statement provided to the Manager by the
Sub-Advisor in writing specifically for the purpose of
inclusion in any prospectus document for the Funds.
PART 4: GENERAL MATTERS
14. EXCLUSIVITY.
During the period of this Agreement and for a period of twelve months from
the effective date of termination of this Agreement by the Manager pursuant
to Section 24(d) or by the Sub-Advisor pursuant to Sections 23 and 24(f),
the Sub-Advisor agrees that neither it nor any of its affiliates will
provide any services including investment advisory services to or for the
benefit of any mutual fund, segregated fund or other investment product
(excluding pension funds or investment products targeted at institutions
offered in Canada which are not managed by the Manager or any of the
companies within the Power Group of Companies and which are sold through
financial advisors or which are targeted at Canadian retail investors.
Companies within the Power Group of Companies include Great-West Life
Corporation, Investors Group Inc. and any of their subsidiaries or
affiliates.
15. MARKETING SUPPORT AND RELATED MATTERS. The Manager and the Sub-Advisor
agree to enter into the Marketing Agreement simultaneously with the
execution of this Agreement.
16. CONFIDENTIALITY.
-13-
(a) The Sub-Advisor agrees to maintain in strict confidence the investment
program of the Funds and the assets in each of the Sub-Advised
Portfolios, except as may be required by applicable law.
(b) Each party agrees to keep confidential all information concerning the
other party which it believes in good faith is not in the public
domain and which has been acquired by virtue of this Agreement,
including trade secrets, except as may be required by applicable law.
(c) Both parties to this Agreement agree to keep the terms of this
Agreement confidential, except as may be required by applicable law.
17. USE OF TRADE MARKS.
(a) Subject to the terms of this Agreement, the Sub-Advisor hereby grants
to the Manager a non-exclusive royalty free right and license to use
in Canada the Sub-Advisor's trade marks and names solely in connection
with the qualification, promotion, marketing and distribution of the
Funds using the investment advisory services of the Sub-Advisor.
(b) Any and all use by the Manager of the Sub-Advisor's trade marks and
names shall only be in accordance with such standards and
specifications and of such quality as is approved by the Sub-Advisor
from time to time prior to the commencement of such use and only in a
manner that protects and preserves all the rights of the other party
as owner of the trade marks and names and not to impair the validity
or to depreciate the value of the goodwill associated with the trade
marks or names.
(c) Upon termination of this Agreement, the Manager shall cease any and
all use by it of the trade marks and/or names of the Sub-Advisor,
except as otherwise agreed, and shall immediately remove all signs,
labels and/or any other indicia of its right to use any such trade
marks and/or names of the Sub-Advisor and shall not adopt or use any
other word, marks or names which are confusingly similar.
(d) No party shall at any time directly or indirectly contest the validity
of the registration of the trade marks or business names of the other
-14-
party, the exclusive ownership rights of the other party, their
successors and assigns or the right of such party to grant the rights
therein granted.
18. AMENDMENT OF AGREEMENT. No provision of this Agreement may be changed,
waived, discharged or discontinued except by a document signed by both the
Manager and the Sub-Advisor.
19. ASSIGNMENT BY SUB-ADVISOR. This Agreement shall not be assigned by the
Sub-Advisor to any other person or company without the Manager's prior
written consent, except that (i) the Sub-Advisor may assign its rights and
obligations under this Agreement to, or enter into sub-advisory agreements
as to one or more Sub-Advised Portfolios with, Xxxxxxx & Xxxx Investment
Management Company provided that pursuant to such assignment its parent
company continues to have the same share ownership, or (ii) with the
written consent of the Manager which shall not be unreasonably withheld,
Sub-Advisor may enter into sub-advisory agreements as to one or more
Sub-Advised Portfolios with any entity directly or indirectly owned or
controlled by, or under common control with, the Sub-Advisor.
20. NOTICE. Any notice to be given under this Agreement shall be in writing and
shall be delivered, sent by prepaid mail, or sent by telecommunications
facility to the address set out on the first page of this Agreement. Any
such notice shall be effective when received if sent by delivery or
telecommunications facility, and three days after mailing if sent by
prepaid mail. Either party may change its address for notice by giving
notice in accordance with this Section. All notices under this Agreement
shall be sent to the attention of the President of the recipient of the
notice with a copy to the General Counsel.
21. SEVERABILITY. If any provision or provisions of this Agreement are held to
be invalid, illegal or unenforceable by any arbitrator or by any court of
competent jurisdiction, such provision shall be severable from this
Agreement, and the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
22. GOVERNING LAW. This Agreement shall be construed in accordance with the
laws of the Province of Ontario and the laws of Canada applicable in
-15-
that province, and the Advisor irrevocably submits to the jurisdiction of
the Ontario courts in connection with any dispute arising out of this
Agreement.
PART 5: TERM AND TERMINATION
23. TERM OF AGREEMENT. This Agreement is effective as of December __, 2002 and,
subject to Section 24, will continue for a period of five years and
thereafter until terminated by either party on not less than 90 days' prior
written notice to the other party.
24. TERMINATION OF AGREEMENT OR AGREEMENT IN RESPECT OF SUB-ADVISED PORTFOLIOS.
(a) The Manager can terminate this Agreement in respect of one or more
Sub-Advised Portfolios (but not the entire Agreement) on 30 days'
written notice to the Sub-Advisor, provided that the Manager continues
to pay the amount described as "C" in the fee formulas in Schedule "B"
for the period up to December __, 2007 plus, the amount described as
"D" in the fee formulas in Schedule "B" for the period up to December
__, 2005. The amount described as "D" in the fee formulas in Schedule
"B" shall continue to include the Sub-Advised Portfolios terminated
pursuant to this Section 24(a), based on the net asset value of such
Sub-Advised Portfolios on the effective date of termination. The
Agreement will continue with respect to the remaining Sub-Advised
Portfolios.
(b) (i) The Manager may terminate this Agreement immediately in respect
of one or more Sub-Advised Portfolios in the event of a Change
of Control of the Sub-Advisor. A "Change of Control" shall be
deemed to occur, subject to the qualifications set forth in
Subsections 24(b)(ii) and 24(b)(iii), if one of the following
shall occur:
(A) [Buyer] ceases to hold, directly or indirectly, at least
a majority of the voting securities of the Sub-Advisor;
(B) the acquisition in one or more transactions by any person
or company of 50% or more of the voting securities of
[Buyer or any parent company thereof];
-16-
(C) as a result of or in connection with a contested election
of directors, the individuals who constitute the board of
[Buyer ] immediately prior to such election together with
the directors approved or nominated by the board prior to
such election cease to constitute at least a majority of
the board as a result of such election;
(D) [Buyer or any parent company thereof] merges or
consolidates with or into another entity and, as a result
of such merger or consolidation, the shareholders of
[Buyer or any parent company thereof] immediately prior
to such merger or consolidation do not own, directly or
indirectly, immediately following the merger or
consolidation at least a majority of the voting
securities of [Buyer] or the surviving entity;
(E) a sale, lease, abandonment, transfer or other disposition
of all or substantially all of the assets of the
Sub-Advisor; or
(F) acceptance by the shareholders of [Buyer or any parent
company thereof] of a share exchange if the shareholders
of [Buyer or any parent company thereof] immediately
prior to such share exchange do not own, directly or
indirectly, immediately following the share exchange at
least a majority of the voting securities of the
corporation resulting from such share exchange.
(ii) No Change of Control shall be deemed to have occurred, unless
the Manager has performed reasonable due diligence in respect
of the resulting or acquiring entity and, as a result of that
due diligence, has made a reasonable determination that the
Sub-Advisor or acquiring entity, as a result of such Change of
Control, does not offer the same or reasonably equivalent
reputational and marketing benefits and portfolio management
expertise as the Sub-Advisor offered prior to such Change of
Control. If the acquiring entity is a major competitor of the
Manager in Canada, this sub-section shall not apply.
-17-
(iii) No Change of Control shall be deemed to have occurred, unless
both Xxxxx Xxxxxx and Xxxx Xxxxxxxx resign or are removed or
replaced in their capacity as CEO and CIO of the Sub-Advisor or
its parent at any time prior or within 18 months following the
occurrence of an event described in Section 24(b)(i)(A) through
(F). Notwithstanding this clause, a Change of Control shall be
deemed to have occurred if, within 12 months following the
occurrence of an event described in Section 24(b)(i)(A) through
(F):
(A) the executive management team of the Sub-Advisor and its
affiliates does not remain substantially intact; and
(B) portfolio managers advising at least 66 2/3% of the Funds
no longer advise the Funds.
(c) The Manager may terminate this Agreement at any time if Xxxx Xxxxxxxx
resigns or is removed or replaced in his capacity as CIO of the
Sub-Advisor or its parent and, within any twelve-month period, more
than one-half of the portfolio managers that service the Sub-Advised
Portfolios resign or are removed or replaced.
(d) This Agreement may be terminated at any time by either party if:
(i) the other party is in breach of any of the material terms
of this Agreement after having been given 30 days' prior
written notice of the breach and an opportunity to cure the
breach during the 30-day period;
(ii) the other party ceases to carry on business, becomes
bankrupt or insolvent, resolves to wind up or liquidate or if a
receiver of a substantial portion of its assets is appointed;
or
(iii) the adviser registration or an exemption therefrom (for the
Sub-Advisor) or the adviser registration (for the Manager) or
the manager registration (for the Manager, as may be required
at any future date) of the other party in any jurisdiction has
not been obtained, is not available or has been revoked or
-18-
restricted in a manner which makes it impossible for that other
party to discharge its obligations under this Agreement.
(e) Either party may terminate the Agreement immediately by notice in
writing if any court or regulatory body of competent jurisdiction
establishes that the other party has committed fraud or a material
regulatory violation in conducting its business that materially
affects its capacity to act as Sub-Advisor or Manager in the
reasonable opinion of the other party.
(f) The Sub-Advisor may terminate this Agreement after December __, 2005
and up until December __, 2007, upon 120 days written notice to
Manager.
(g) Any termination of this Agreement shall not affect the liability of
the parties in respect of any action undertaken before such notice was
given.
(h) The Sub-Advisor will be entitled to receive all fees which have
accrued up to the effective date of termination in accordance with the
provisions of this Agreement and shall not be entitled to receive any
additional payment upon termination unless that payment is expressly
provided for under the provisions of this Agreement.
25. DUTIES DURING TERMINATION PERIOD. During the time period between the date
of notice of termination and the effective date of termination, the
Sub-Advisor agrees to continue to provide investment sub-advisory services
to the Sub-Advised Portfolios in accordance with the standard of care set
out in Section 4 of this Agreement.
26. BOOKS AND RECORDS.
(a) The Sub-Advisor agrees that all books and records which it maintains
relating to the investment assets of each of the Sub-Advised
Portfolios are the property of the relevant Fund and that it will
surrender any of such books and records to such Fund promptly upon the
Fund's request, provided that the Sub-Advisor may keep copies of such
books and records for internal use and to the extent necessary for the
Sub-Advisor to comply with any applicable laws.
-19-
(b) Upon termination of the Sub-Advisor's appointment hereunder, the
Sub-Advisor shall forthwith deliver to the Funds (or as the Funds may
direct) all written records, documents and books of account, and all
material and supplies which have been supplied by the Funds or the
Manager, which are in the possession or control of the Sub-Advisor and
which relate to the performance by the Sub-Advisor of its obligations
under this Agreement; provided, however, that the Sub-Advisor may
retain copies of such records, documents, books of account, materials
and supplies of the applicable Fund, as may be required to comply with
applicable law.
27. ENUREMENT. This Agreement shall enure to the benefit of and be binding upon
the parties hereto and their respective successors and permitted assigns.
28. COUNTERPARTS. This Agreement may be executed in any number of counterparts
all of which taken together shall constitute this Agreement.
29. NATURE OF AGREEMENT. This Agreement is not intended to be and shall not be
treated as anything other than an investment advisory agreement relating to
the provision of investment advisory services, with the rights of the
parties being none other than the rights ascribed to them under this
Agreement. Without limitation, this Agreement shall not be deemed in any
way or for any purpose to constitute any party a partner or agent of the
other party to this Agreement in the conduct of any business or otherwise
or a member of a joint venture or joint enterprise with the other party to
this Agreement.
30. ENTIRE AGREEMENT; TERMINATION OF AGREEMENTS.
(a) This Agreement, together with the Schedules hereto, constitutes the
entire agreement between the parties hereto pertaining to the subject
matter hereof and supersedes all prior and contemporaneous agreements,
understandings, negotiations and discussions, whether oral or written,
of the parties and there are no warranties, representations or other
agreements between the parties in connection with the subject matter
hereof, except as specifically set forth in this Agreement and in the
Schedules hereto.
-20-
(b) Without limiting the foregoing, all prior agreements between the
Manager and the Sub-Advisor for investment advisory services provided
by the Sub-Advisor are hereby terminated in their entireties as of the
effectiveness of this Agreement and each party represents to the other
that that it has no claims against the other under or arising out of
any such prior agreement between the parties other than claims for
fees and expenses pursuant to the terms of such agreements to the date
of termination.]
31. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVERS ITS RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT, ANY OF THE AGREEMENTS CONTEMPLATED HEREBY OR
ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN OR THEREIN, INCLUDING CONTRACT
CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
STATUTORY CLAIMS. EACH PARTY RECOGNIZES AND AGREES THAT THE FOREGOING
WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR IT TO ENTER INTO THIS
AGREEMENT. EACH PARTY REPRESENTS AND WARRANTS THAT IT HAS REVIEWED THIS
WAIVER WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES
ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.
-21-
32. SURVIVAL. The provisions included in Sections 13, 16, 17 and 24, as
applicable, shall survive the termination of this Agreement.
IN WITNESS WHEREOF each of the parties has duly executed this Agreement.
[HEDERA MANAGEMENT, INC.]
By:
---------------------------------------
Name
Title
By:
---------------------------------------
Name
Title
[PARENT]
By:
---------------------------------------
Xxxxx Xxxxxxx
Executive Vice-President
By:
---------------------------------------
Xxxxx X. Xxxxxx
President
SCHEDULE "A"
to the Sub-Advisory Agreement with
[Hedera Management, Inc.]
EFFECTIVE DECEMBER __, 2002
A. LISTING OF SUB-ADVISED PORTFOLIOS (THE "EXISTING FUNDS")
% OF ASSETS ADVISED
AS AT DECEMBER __,
NAME OF FUND 2002
------------ ---------------------
Mackenzie Universal Select Managers Capital Class [30%]*
Mackenzie Universal Select Managers Fund [30%]*
Mackenzie Universal Select Managers USA Capital Class [40%]*
Mackenzie Universal U.S. Blue Chip Capital Class 100%
Mackenzie Universal U.S. Blue Chip Fund 100%
Mackenzie Universal U.S. Emerging Growth Capital Class 100%
Mackenzie Universal U.S. Emerging Growth Fund 100%
Mackenzie Universal World Income RRSP Fund 100%
Mackenzie Yield Advantage Fund [__%]
* Percentages in these Funds may differ from time to time from these target
weightings.
[HEDERA MANAGEMENT, INC.]
By:
---------------------------------------
Name
Title
By:
---------------------------------------
Name
Title
[PARENT]
By:
---------------------------------------
Xxxxx Xxxxxxx
Executive Vice-President
By:
---------------------------------------
Xxxxx X. Xxxxxx
President
-2-
ANNEX I
to the Sub-Advisory Agreement with
[Hedera Management, Inc.]
EFFECTIVE DECEMBER __, 2002
LISTING OF PARTIES RELATED TO MANAGER
PERMITTED RELATED COMPANIES
Great-West Life Assurance Company
Power Financial Corporation
Power Corporation
NON-PERMITTED RELATED COMPANIES
Investors Group Inc.
Exhibit C
AGREEMENT
This Agreement (the "Agreement") is entered into this _____
day of ______ 2002, by and between Mackenzie Financial Corp., a Canadian
corporation ("Parent"), The Trustees of the Ivy Fund, a Massachusetts
business trust ("The Trust"), and [Hedera], a Delaware corporation ("Hedera").
BACKGROUND
----------
A. Parent has adopted, used, is using and is the owner of the
trademark and/or trademark registration of IVY FUNDS, in word and logo formats,
in Canada, for use in connection with the distribution of mutual funds. The
Trust owns the trademarks and trademark registrations of IVY FUNDS, in word and
logo formats, in the United States of America in connection with mutual fund
investment services managed by Mackenzie Investment Management, Inc. ("MIMI"), a
majority-owned subsidiary of Parent. A non-exhaustive list of the trademarks is
set forth at Schedule A attached hereto.
B. The IVY FUNDS marks (the "Marks") have been in use in different
countries for different funds without confusion because the funds and fund
services associated with the Marks have been managed by or through Parent.
C. In connection with a Merger Agreement executed concurrently with
this Agreement among Parent, Hedera and [certain other parties] (the "Merger
Agreement"), Hedera shall succeed to the mutual fund investment services
business of MIMI in the United States of America (the "Hedera Services"),
including the use of the IVY FUNDS marks in the United States of America.
D. The parties acknowledge that confusion could result if their
respective use of the Marks and promotion of their respective funds going
forward are not confined to their respective countries.
E. The parties desire to set forth certain understandings related to
the ongoing use by Hedera in the United States of the IVY FUNDS marks for the
Hedera Services, and by Parent of the IVY FUNDS xxxx in connection with mutual
fund distribution services in Canada (the "Parent Services") in order to avoid
any future likelihood of confusion among the marks, or harm to the reputation of
the marks.
NOW, THEREFORE, in consideration of the premises and mutual
covenants set forth herein, the sufficiency of which is hereby mutually
acknowledged, the parties hereto agree as follows:
1. All capitalized terms herein that are not otherwise defined
herein shall have the meanings given to them in the Merger Agreement.
2. Hedera agrees that it shall not, directly or indirectly, promote,
market or advertise in Canada mutual fund investment or related financial
services using the IVY FUNDS marks or any other xxxx incorporating the word IVY.
For purposes of illustration only, Hedera shall not itself and shall not cause
any third party to advertise or to distribute promotional materials related to
the Hedera Services using IVY FUNDS or any xxxx incorporating the word IVY,
whether in hard copy or electronic format, through print, broadcast or
electronic media originating in Canada.
3. Parent agrees that it shall not, directly or indirectly, promote,
market or advertise in the United States of America mutual fund investment or
related financial services using the IVY FUNDS xxxx, or any xxxx incorporating
the word IVY. For purposes of illustration only, Parent shall not itself and
shall not cause any third party to advertise or to distribute promotional
materials related to the Parent Services using IVY FUNDS, or any xxxx
incorporating the word IVY, whether in hard copy or electronic format, through
print, broadcast or electronic media originating in the United States of
America.
4. Each of Parent and Hedera acknowledge and agree that it may be
advisable to provide the means by which prospective investors who access the
Internet web sites maintained by a party hereto may be transferred to the web
site of the other party. At the request of Parent, Hedera shall provide and
maintain a link from the Internet web site resolving at xxxx://xxx.xxxxxxxx.xxx
(the "Hedera Site") to the Parent web site resolving at
xxxx://xxx.xxxxxxxxxxxxxxxxxx.xxx (the "Parent Site") in order to permit web
site visitors who enter the Hedera web site in search of information about the
Parent Services to access information about such services. At Hedera's request,
Parent shall provide and maintain a reciprocal link from the Parent Site to the
Hedera Site in order to permit web site visitors who enter the Parent Site in
search of information about Hedera Services to access information about such
services. Any such links shall include prominent disclaimers stating that (i)
Parent and Hedera are not related companies and do not sponsor, guarantee,
endorse or otherwise engage in the provision of the services of the other, and
(ii) as applicable, (a) the Hedera funds are not available in Canada, are not
affiliated with the IVY FUNDS marketed in Canada, and may be sold only to
persons who are eligible to purchase United States registered investment funds,
or (b) the Parent Services are not available in the United States, are not
affiliated with the IVY FUNDS marketed in the United States, and that investors
who are not resident in Canada should consult with a financial adviser to
determine if the funds may lawfully be sold in their jurisdiction.
5. The parties acknowledge and agree that certain media originating
in, respectively, Canada and the United States of America, may be available to
residents of the other country. As a result, it may not be possible to ensure
that residents of Canada will not be exposed to references to the Hedera
Services under the IVY FUNDS marks, or that residents of the United States of
America will not be exposed to references to the Parent Services under the IVY
FUNDS xxxx. The parties therefore shall take such commercially reasonable steps
as may be necessary to avoid any likelihood of confusion among the Marks.
2
6. MIMI has in the past used in connection with the Hedera Services
the trademark IVY FUNDS and Design (U.S. Reg. No. 2,056,769), consisting of the
IVY FUNDS word xxxx and an image of a castle tower (such image, the "Castle
Logo"). Hedera agrees that, following the Closing Date, it shall not use the
Castle Logo, nor adopt, directly or indirectly, any trademark, service xxxx,
logo or design consisting of or including a design confusingly similar to the
Castle Logo. Notwithstanding the foregoing, Hedera may use such marketing or
promotional brochures or related material, prospectuses, reports, sales orders,
labels, letterhead, shipping documents, displays, advertising, and other
materials in existence as of the Closing Date that bear the Castle Logo for
ninety (90) days from the Closing Date or the exhaustion of such materials and
supplies in existence as of the Closing Date, whichever is earlier.
7. After the Closing, Hedera agrees that it will not, directly or
indirectly, adopt or use a trade dress in the United States that suggests a
connection or affiliation with, or endorsement by Parent, if the use by Hedera
of such trade dress in Canada would constitute infringement or dilution of
Parent's trade dress rights (assuming the application in Canada of United States
trademark law in determining whether such trade dress constitutes dilution or
infringement of the Parent's trade dress). After the Closing, Parent agrees that
it will not, directly or indirectly, adopt or use in Canada a trade dress that
suggests a connection or affiliation with, or endorsement by Hedera, if the use
by Parent of such trade dress in the United States would constitute infringement
or dilution of Hedera's trade dress rights under United Stated trademark law.
8. ADDITIONAL COVENANTS OF THE PARTIES.
Parent and Hedera hereby covenant to each other that they shall,
on a continuing basis, provide the Parent Services and Hedera Services,
respectively, in a manner consistent with the standards of integrity,
responsiveness, and customer service associated with the management by Parent
of the IVY FUNDS funds as of the effective date of the Merger Agreement.
Parent and Hedera shall timely file or cause to be timely filed any and all
Governmental Documents; shall manage the Parent Services and Hedera Services,
respectively, in conformance with the applicable Securities Laws; and shall
not knowingly do or knowingly cause to be done any acts which individually or
in the aggregate would reasonably be expected to damage the reputational
interest in the IVY FUNDS marks. In the event of (i) any extant or threatened
investigation, finding, claim, proceeding or examination of the Parent
Services or Hedera Services by any Governmental Authority (other than an
examination in the normal course of business which does not involve or result
in a claim or finding that, individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect), or (ii) any suit,
claim, demand or proceeding brought by any third party against Hedera or
Parent and alleging facts that, if true, would likely damage the reputation
of the Marks, then to the extent lawfully permitted, Parent or Hedera shall
notify the other of such investigation or claim and the parties shall
cooperate to take such steps as may be reasonably necessary to mitigate such
injury to the Marks. In the event that either Parent or Hedera ceases to use
the IVY FUNDS marks in connection with their respective services, the party
no longer using the IVY FUNDS marks shall notify the other of such
3
determination.
9. CONTINUED ASSURANCES. The parties agree to cooperate in good
faith as needed to carry out the spirit and intent of this Agreement. In the
event the parties receive evidence of actual confusion arising as a result of
their respective uses of the Marks, they agree to take any further reasonable
actions and execute any further agreements that they in good xxxxx xxxx
necessary to obviate such confusion. In the event either Parent or Hedera
reasonably determines that the provision of services by the other in association
with the IVY FUNDS marks tarnishes or is likely to tarnish or bring into
disrepute the IVY FUNDS marks, the objecting party shall notify the other in
writing of its concerns, and the parties shall discuss in good faith steps to be
taken by the non-objecting party in order to mitigate any reputational injury to
the IVY FUNDS marks.
10. THE TRUST'S OBLIGATIONS. Parent shall have a right of
first refusal upon commercially equivalent terms in respect of any sale or
offer of license by The Trust to any third party to use the IVY FUNDS marks
in connection with mutual fund investment services in the United States.
Following the Closing Date, The Trust shall not use or license or otherwise
authorize others to use the Castle Logo, nor adopt or use, directly or
indirectly, any trademark, service xxxx, logo or design consisting of or
including a design confusingly similar to the Castle Logo. At Parent's
request, The Trust shall, within sixty (60) days of the Closing Date and at
its sole cost, petition the Unites States Patent and Trademark Office (the
"PTO") to surrender for cancellation U.S. Reg. No. 2,056,769 pursuant to 15
U.S.C. Section 1507(e). Additionally, in no event shall The Trust file or
cause to be filed with the POT any affidavit of use or incontestability, or
registration of the Castle Logo, and in the event that the cancellation
petition of U.S. Reg. No. 2,056,769 is not affirmed by the PTO on or before
April 29, 2003, then The Trust shall permit U.S. Reg. No. 2,056,769 to be
cancelled for non-use.
11. This Agreement (a) constitutes the entire agreement between the
parties with respect to the subject matter contained herein, (b) supersedes any
prior agreements, understandings, representations or negotiations, whether
written or oral, by or between the parties with respect to such subject matter,
(c) will bind and inure to the benefit of the successors, assigns, subsidiaries,
affiliates and licensees of each party, (d) may be amended or modified only by
the parties' mutual written consent, and (e) may be executed in one or more
counterparts, each of which shall be deemed to be an original, and all of which
together shall constitute the entire agreement.
SIGNATURE PAGE FOLLOWS
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to
be executed by a duly authorized individual.
MACKENZIE FINANCIAL CORPORATION
By:
----------------------------------
Name:
Title:
THE TRUSTEES OF THE IVY FUND
By:
----------------------------------
Name:
Title:
[HEDERA]
By:
----------------------------------
Name:
Title:
5
SCHEDULE A
Trademarks
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XXXX APP./REG. NO. JURISDICTION OWNER
----------------------------------------------------------------------------------
----------------------------------------------------------------------------------
----------------------------------------------------------------------------------
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IVY FUNDS TMA440064 Canada MacKenzie Financial
Corporation
----------------------------------------------------------------------------------
IVY FUNDS & Design 1,545,635 United States The Trustees of the Ivy Fund
----------------------------------------------------------------------------------
IVY FUNDS 1,995,556 United States The Trustees of the Ivy Fund
----------------------------------------------------------------------------------
IVY FUNDS & Design 2,056,769 United States The Trustees of the Ivy Fund
----------------------------------------------------------------------------------
IVY FUNDS 76/334,331 United States The Trustees of the Ivy Fund
EMBRACING THE WORLD &
Design
----------------------------------------------------------------------------------
6
EXHIBIT D
OPINION MATTERS FOR COUNSEL TO PARENT, MIMI AND NEWCO
1. The following agreements have been duly authorized, executed and delivered
by each of Parent, MIMI and Newco, as applicable, and represent the legal, valid
and binding obligations of each of Parent, MIMI and Newco, as applicable,
enforceable against each of them, as applicable, in accordance with their terms:
Stock Purchase Agreement
Voting, Support and Indemnification Agreement
Subadvisory Agreement
Tax Matters Agreement
2. Approval, validity and effect of the Plan of Dissolution under Applicable
Law.
3. Non-contravention of the agreements listed in item 1 above of the charter
and bylaws of each of Parent, MIMI and Newco, laws and regulations and
identified material contracts.
4. Receipt of governmental consents, filings and approvals.
Exhibit E
TAX MATTERS AGREEMENT
TAX MATTERS AGREEMENT (this "Agreement"), dated as of __________, 2002, is
entered into by and between Mackenzie Financial Corporation, a corporation
amalgamated under the laws of Ontario, Canada ("Parent"), and Xxxxxxx & Xxxx
Financial, Inc., a Delaware corporation ("Buyer").
RECITALS:
WHEREAS, Buyer, Mackenzie Investment Management, Inc., a Delaware
corporation and 85.7%-owned subsidiary of Parent ("MIMI"), and Ivy Acquisition
Corporation, a Delaware corporation and wholly-owned subsidiary of Parent
("Newco"), have entered into a
Stock Purchase Agreement dated as of __________
(the "
Stock Purchase Agreement") pursuant to which Buyer will purchase all of
the outstanding shares of capital stock of Newco;
WHEREAS, Buyer and Parent have entered into a Voting, Support and
Indemnification Agreement, dated as of __________ (the "Support Agreement"),
whereby Parent agrees to vote in favor of the transactions contemplated by the
Stock Purchase Agreement and to indemnify Buyer for certain breaches of the
Stock Purchase Agreement by MIMI;
WHEREAS, in order to facilitate the acquisition of the assets of MIMI
(which include the stock of the Subsidiaries owned by MIMI), Buyer has agreed to
the Pre-Closing Transactions subject to the terms and conditions of the
Stock
Purchase Agreement and the Support Agreement;
WHEREAS, Parent and Buyer desire to set forth their agreement with respect
to certain Tax matters related to the Pre-Closing Transactions;
NOW THEREFORE, in consideration of the premises and the mutual covenants
herein contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
1. DEFINED TERMS. Capitalized terms used herein and not otherwise defined
herein shall have the meanings given to them in the Stock Purchase Agreement.
2. TAX INDEMNITY.
(a) Parent shall be responsible for and shall indemnify and hold
harmless Buyer and its Affiliates (including Newco and it Subsidiaries), and
their respective successors and assigns (collectively, the "Buyer Group") from
all Taxes and all reasonable costs and expenses arising out of, based upon or
attributable to the Pre-Closing Transactions (any payment under this Section
2(a), an "Indemnity Payment").
(b) The parties agree to report any Indemnity Payment under Section
2(a) for Tax purposes as an adjustment to the Purchase Consideration.
1
(c) In the event that, pursuant to a "Final Determination" (as defined
in Section 3 below) and contrary to Section 2(b), an Indemnity Payment is
determined to be subject to Tax, such Indemnity Payment shall be supplemented by
a further payment (the "Gross-Up") such that, after reduction for all Taxes
imposed on the Buyer Group as a result of the receipt or accrual of such
Indemnity Payment and the Gross-Up, the net amount of the Indemnity Payment
together with the Gross-Up received by Buyer shall be equal to the gross amount
of such Indemnity Payment.
(d) In calculating the amount of any indemnity obligation pursuant to
this Section 2, including the applicable Gross-Up, it shall be assumed that the
Buyer Group (and all members thereof) are subject to Tax at the maximum federal,
state and local income Tax rates applicable to the Buyer Group (and members
thereof) for the year in which the Pre-Closing Transactions occur.
(e) In the event that, following a payment by Parent of an Indemnity
Payment hereunder, a member of the Buyer Group becomes entitled to a refund of,
or credit for, Taxes for which an Indemnity Payment has previously been made, or
to the extent that a member of the Buyer Group becomes entitled to a refund or
reduction in Taxes as a result of any Tax benefit (including an adjustment
related to timing differences) attributable to the Tax item that is the cause of
an Indemnity Payment hereunder, Buyer shall pay, or shall cause to be paid the
amount of such refund, credit or reduction in Taxes actually realized by the
member of the Buyer Group; provided that in no event shall Buyer pay or cause to
be paid an amount pursuant to this Section 2(e) that is greater than the total
amount of Indemnity Payments received under this Section 2 minus all prior
payments (if any) to Parent by Buyer paid pursuant to this Section 2(e).
3. CONTEST PROVISIONS. Whenever Buyer becomes aware of the existence of
an issue raised by any taxing authority which could reasonably be expected to
result in a determination that would require an indemnity payment under this
Agreement (an "Indemnity Issue"), Buyer shall in good faith promptly give notice
to Parent of such Indemnity Issue. The failure of Buyer to give such notice
shall not relieve Parent of its obligations under this Agreement except to the
extent Parent is actually materially prejudiced by such failure to give notice.
Parent and its Affiliates, at Parent's expense, shall be entitled to participate
(A) in all conferences, meetings or proceedings with any taxing authority, the
subject matter of which is or includes an Indemnity Issue and (B) in all
appearances before any court, the subject matter of which is or includes an
Indemnity Issue. Buyer shall control all audits and similar proceedings;
provided, however, Buyer shall take such reasonable action in contesting an
Indemnity Issue as Parent shall reasonably request in writing from time to time,
including the selection of counsel and experts and the execution of powers of
attorney; provided that (i) within fifteen days after the notice required by
this Section 3 has been delivered, Parent requests that such claim be contested;
(ii) prior to taking such action, Parent shall have furnished Buyer with an
opinion of Dechert (or other national law or accounting firm of recognized
standing chosen by Parent and reasonably acceptable to Buyer) to the effect that
there exists "substantial authority" within the meaning of Code Section 6662 for
the position to be asserted by Buyer in contesting the Indemnity Issue; (iii)
prior to taking such action Parent shall have acknowledged in writing its
obligation to indemnify Buyer hereunder in the event Buyer does not prevail in
such contest with respect to
2
the Indemnity Issue and Parent shall have agreed to indemnify and reimburse (and
shall indemnify and reimburse) Buyer, on demand from time to time, all costs,
fees and expenses that the Buyer Group may reasonably incur in connection with
contesting such Indemnity Issue, including, without limitation, (A) reasonable
attorneys' and accountants' fees and disbursements and (B) the amount of any
interest, penalties or additions to tax indemnified hereunder that may
ultimately be payable as a result of contesting such Indemnity Issue; (iv) such
action would not likely increase the amount of Taxes payable by the Buyer Group
for which Parent is not obligated to indemnify the Buyer Group; and (v) if the
Buyer Group is requested by Parent to pay the Tax claimed and xxx for a refund,
or if the Indemnity Issue is otherwise paid, Parent shall have advanced to the
Buyer Group, on an interest-free basis, the amount of such claim. In the event
any of the above conditions is or becomes unsatisfied (x) the Buyer Group may
defend against, and consent to the entry of any judgment or enter into any
settlement with respect to, such Indemnity Issue in any manner it may deem
appropriate (and the Buyer Group need not consult with, or obtain any consent
from, Parent in connection therewith), (y) Parent will reimburse the Buyer Group
promptly and periodically for the costs of defending against such Indemnity
Issue (including reasonable attorneys' fees and expenses), and (z) Parent will
remain responsible for any Taxes and other liabilities the Buyer Group may
suffer resulting from, arising out of, relating to, in the nature of, or caused
by the Indemnity Issue to the fullest extent provided in this Agreement. If
Parent shall have requested the Buyer Group to contest an adjustment and have
complied with each of the terms and conditions set forth above, the Buyer Group
shall not settle or compromise any adjustment for which indemnity is sought
hereunder without the written consent of Parent (which consent shall not be
unreasonably withheld) unless it simultaneously releases Parent from its
obligations to indemnify and reimburse the Buyer Group with respect to the
issues so settled or compromised, and in the event that the Buyer Group
concludes such a settlement or compromise without Parent's written consent,
Parent shall be deemed conclusively to have been so released. If Parent shall be
willing to accept any settlement proposed by any taxing authority with respect
to an Indemnity Issue as to which Parent has an indemnity obligation hereunder,
but the Buyer Group refuses to approve such settlement, Parent's obligations to
indemnify the Buyer Group with respect to such issue shall thereafter be limited
in amount to the amount Parent would have been required to pay pursuant to such
settlement. The Buyer Group shall cooperate with Parent in order to contest
effectively any Indemnity Issue. If Parent shall have requested Buyer to contest
any Indemnity Issue as above provided and shall have duly complied with all
terms of this Section 3, Parent's liability with respect to such indemnity
obligation as a consequence of such Indemnity Issue shall become fixed upon a
Final Determination of the liability of Buyer for the Tax claimed, and Parent
shall, within five days of such final determination, pay to Buyer the full
amount due hereunder. For purposes of this agreement, a "Final Determination"
shall be deemed to occur when (i) there is a decision, judgment, decree or other
order by any court of competent jurisdiction, which decision, judgment, decree
or other order has become final, I.E., all allowable appeals have been exhausted
by either party to the action, (ii) there is a closing agreement under Code
Section 7121 or (iii) the time for instituting a claim for refund has expired,
or if a claim was filed, the time for instituting suit with respect thereto has
expired.
4. TAX RETURNS. Buyer shall prepare or cause to be prepared and shall
file or cause to be filed all income Tax Returns of the Buyer Group, Newco and
its Subsidiaries for any Taxable period that includes the Closing Date (each, an
"Indemnified Period Tax Return").
3
Buyer agrees that it shall report the Pre-Closing Transactions as (i) a
"qualified stock purchase" (as defined in Section 338(d) of the Code) by Newco
of the stock of MIMI owned by Parent followed by (ii) a distribution of the
assets and liabilities of MIMI in complete liquidation satisfying the
requirements of Sections 332(a) and (b) of the Code. At least 30 days prior to
the applicable filing deadline (including any extensions), Buyer shall deliver
to Parent for its review and comment a copy of the portion of any Indemnified
Period Tax Return reporting any aspect of the Pre-Closing Transactions (a
"Reported Pre-Closing Transactions Item"). Within 15 days of receipt of a
proposed Reported Pre-Closing Transactions Item, Parent shall deliver to Buyer
notice of any disputed items with respect to the calculation or description of a
Reported Pre-Closing Transactions Item. If Buyer and Parent are unable to
resolve any disputes with respect to such Reported Pre-Closing Transactions Item
within a period of 5 days, such dispute shall be submitted to a national
accounting firm of recognized standing selected by Buyer and reasonably
acceptable to Parent for final resolution. All fees and expenses payable to an
accounting firm under this paragraph shall be borne by Parent.
5. SEPARATE AGREEMENTS; NO BASKET; NO CAP. This Agreement is in addition
to and separate from any indemnities, covenants, warranties, representations or
other obligations of any party arising from or in connection with the Stock
Purchase Agreement or the Support Agreement. Without limiting the foregoing,
this Agreement shall not be subject to Section 3.7 of the Support Agreement.
6. BACKUP WITHHOLDING; INFORMATION REPORTING. In connection with any
distribution to shareholders of MIMI other than Newco upon the dissolution of
MIMI, MIMI shall comply with all applicable withholding and information
reporting requirements, including but not limited to either (i) holding a valid
duly executed IRS Form W-8 or W-9 completed by each such shareholder or (ii)
backup withholding at the applicable rate as required by any applicable law.
7. SURVIVAL. The obligations of this Agreement shall survive until the
date that is 120 days after the expiration of the applicable statutes of
limitation (including extensions).
8. AMENDMENTS; EXTENSION; WAIVER. Subject to compliance with Applicable
Law, this Agreement may be amended, altered or modified by written instrument
executed by each of the parties hereto.
9. ENTIRE AGREEMENT. This Agreement constitutes the entire understanding
and agreement of the parties hereto, except as provided herein, and supersedes
all prior agreements and understandings, written and oral, among the parties
with respect to the subject matter hereof.
10. INTERPRETATION. When a reference is made in this Agreement to a
Section, such reference shall be to a Section of this Agreement unless otherwise
indicated. The headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement.
11. SEVERABILITY. Any term or provision of this Agreement which is invalid
or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such
4
invalidity or unenforceability without rendering invalid or unenforceable the
remaining terms and provisions of this Agreement or affecting the validity or
enforceability of any of the terms or provisions of this Agreement in any other
jurisdiction. If any provision of this Agreement is so broad as to be
unenforceable, the provision shall be interpreted to be only so broad as is
enforceable.
12. NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed given if (a) delivered in person, (b) transmitted by
telecopy (with confirmation), (c) mailed by certified or registered mail (return
receipt requested and obtained) or (d) delivered by an express courier (with
confirmation) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
If to Parent: Mackenzie Financial Corporation
000 Xxxxx Xxxxxx Xxxx Xxxxxxx
Xxxxxxx, Xxxxxxx X0X 0X0
Xxxxxx
Attention: President
Facsimile: (000) 000-0000
With a copy to: Dechert
00 Xxxx Xxxxxx Xxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000-0000
Attention: Xxxxxx Xxxxxxx, Esq.
Facsimile: (000) 000-0000
If to Buyer: Xxxxxxx & Xxxx Financial, Inc.
0000 Xxxxx Xxxxxx
Xxxxxxx Xxxxxxx, Xxxxxx 00000
Attention: Chief Executive Officer
Facsimile: (000) 000-0000
With a copy to: Xxxxxxx & Xxxx Financial, Inc.
0000 Xxxxx Xxxxxx
Xxxxxxx Xxxxxxx, Xxxxxx 00000
Attention: General Counsel
Facsimile: (000) 000-0000
and to: Xxxxxx & Xxxxxx L.L.P.
0000 Xxxxxxxx Xxxx Xxxxxx
0000 Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000-0000
Attention: Xxxx X. Xxxxxxxx, Esq.
Facsimile: (000) 000-0000
13. BINDING EFFECT; PERSONS BENEFITING; NO ASSIGNMENT. This Agreement
shall inure to the benefit of and be binding upon the parties hereto and the
respective successors and
5
permitted assigns of such Persons. Except as set forth in the preceding
sentence, nothing in this Agreement is intended or shall be construed to confer
upon any Person other than the parties hereto and their successors and permitted
assigns any right, remedy or claim under or by reason of this Agreement or any
part hereof. Without the prior written consent of each of the parties hereto,
this Agreement and the rights hereunder may not be assigned by any Person.
14. NO IMPAIRMENT. This Agreement shall remain in full force and effect
without regard to, and the obligations of the parties hereunder shall not be
affected or impaired by: (a) any amendment, modification of or supplement to the
Stock Purchase Agreement; (b) any extension, indulgence or other action or
inaction in respect of the Stock Purchase Agreement; (c) any default by any
party under, or any invalidity or unenforceability of, or any irregularity or
other defect in the Stock Purchase Agreement; (d) any exercise or non-exercise
of any right, remedy, power or privilege in respect of the Stock Purchase
Agreement; or (e) any other circumstance or cause, whether similar or dissimilar
to any of the foregoing, that might constitute a legal or equitable discharge or
defense of any of the parties hereto and whether or not any of the parties
hereto shall have had notice or knowledge thereof.
15. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same agreement, it being understood that
all of the parties need not sign the same counterpart.
16. GOVERNING LAW. THIS AGREEMENT, THE LEGAL RELATIONS BETWEEN THE PARTIES
AND THE ADJUDICATION AND THE ENFORCEMENT THEREOF, SHALL BE GOVERNED BY AND
INTERPRETED AND CONSTRUED IN ACCORDANCE WITH THE SUBSTANTIVE LAWS OF THE STATE
OF DELAWARE, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW THEREOF.
17. WAIVER OF JURY TRIAL. PARENT AND BUYER EACH HEREBY WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT, ANY OF THE AGREEMENTS CONTEMPLATED HEREBY OR ANY
OF THE TRANSACTIONS CONTEMPLATED HEREIN OR THEREIN, INCLUDING CONTRACT CLAIMS,
TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY
CLAIMS. EACH PARTY RECOGNIZES AND AGREES THAT THE FOREGOING WAIVER CONSTITUTES A
MATERIAL INDUCEMENT FOR IT TO ENTER INTO THIS AGREEMENT. EACH PARTY REPRESENTS
AND WARRANTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT
KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION
WITH LEGAL COUNSEL.
18. NO PUNITIVE OR CONSEQUENTIAL DAMAGES. No party hereto shall be liable
for any punitive damages or other special, exemplary or consequential damages of
any other Person arising out of or in connection with this Agreement, any of the
agreements contemplated hereby or any of the transactions contemplated hereby or
thereby.
6
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
MACKENZIE FINANCIAL CORPORATION
By:
---------------------------------
Name:
---------------------------------
Title:
---------------------------------
XXXXXXX & XXXX FINANCIAL INC.
By:
---------------------------------
Name:
---------------------------------
Title:
---------------------------------
7
EXHIBIT G
OPINION MATTERS FOR COUNSEL TO BUYER
1. The following agreements have been duly authorized, executed and delivered
by Buyer, and represent the legal, valid and binding obligations of Buyer
enforceable against it in accordance with their terms:
Stock Purchase Agreement
Voting, Support and Indemnification Agreement
Tax Matters Agreement
2. Non-contravention of the agreements listed in item 1 above of the charter
and bylaws of Buyer, laws and regulations and identified material contracts.
3. Receipt of governmental consents, filings and approvals.
VOTING, SUPPORT AND INDEMNIFICATION AGREEMENT
VOTING, SUPPORT AND INDEMNIFICATION AGREEMENT (this "Agreement"), dated as
of August 29, 2002, by and between Mackenzie Financial Corporation, a
corporation amalgamated under the laws of Ontario, Canada ("Parent"), and
Xxxxxxx & Xxxx Financial, Inc., a Delaware corporation ("Buyer").
RECITALS:
WHEREAS, concurrently herewith, Buyer, Parent, Mackenzie Investment
Management, Inc., a Delaware corporation and 85.7%-owned subsidiary of Parent
("MIMI"), and Ivy Acquisition Corporation, a Delaware corporation and
wholly-owned subsidiary of Parent ("Newco"), have entered into a Stock
Purchase Agreement dated as of the date hereof (the "Stock Purchase
Agreement") pursuant to which Buyer will purchase all of the outstanding
shares of capital stock of Newco. All capitalized terms herein that are not
otherwise defined herein shall have the meanings given to them in the Stock
Purchase Agreement.
WHEREAS, in connection with the transactions contemplated by the Stock
Purchase Agreement, and as a material inducement to Buyer to enter into the
Stock Purchase Agreement, Parent desires to agree to vote all shares of
common stock, par value $0.01 per share ("Common Stock"), of MIMI held by
Parent or over which Parent has voting control (the "Shares") in favor of the
Pre-Closing Dissolution.
WHEREAS, Parent and Buyer also wish to indemnify the other party for
breaches of certain representations, warranties and covenants contained in
the Stock Purchase Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
ARTICLE I
VOTING AND SUPPORT
SECTION 1.1 VOTING AT STOCKHOLDERS' MEETING. Parent shall vote or cause
to be voted all of the Shares (i) in favor of approval of the Pre-Closing
Dissolution at the Stockholders' Meeting and (ii) against any matters which
would reasonably be expected to be inconsistent with the Pre-Closing
Transactions or the transactions contemplated by the Stock Purchase
Agreement, prior to the first to occur of (a) the date on which the Stock
Purchase Agreement is terminated in accordance with its terms and (b) the
Closing.
SECTION 1.2 NO SALE, ENCUMBRANCE, ETC. Parent shall not directly or
indirectly sell, transfer, pledge, or create or allow to exist any
Encumbrance on, the Shares or any equity securities of Newco prior to the
first to occur of (i) the date on which the Stock Purchase Agreement is
terminated in accordance with its terms and (ii) the Closing.
SECTION 1.3 STOCK PURCHASE AGREEMENT COVENANTS. Parent shall use
commercially reasonable efforts to take all actions reasonably within its
control to cause each of the Companies and the Funds to perform and comply
with all covenants and obligations under the Stock
Purchase Agreement to be performed or observed by each such Company or Fund.
Parent agrees to use commercially reasonable efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary or
advisable to consummate and make effective as promptly as practicable the
transactions contemplated by the Stock Purchase Agreement, and to cooperate
with each of the other parties thereto in connection with the foregoing,
including using commercially reasonable efforts: (A) to obtain all
authorizations, consents and approvals required by the Applicable Laws; and
(B) to lift or rescind any injunction or restraining order or other order
adversely affecting the ability of the parties to consummate the transactions
contemplated thereby.
SECTION 1.4 ACQUISITION PROPOSALS.
(a) During the period from the date of this Agreement and until
the earlier of the Closing or the termination of the Stock Purchase
Agreement, none of Parent or any of its officers, directors, employees,
representatives or agents shall, directly or indirectly, (i) solicit or
knowingly encourage any proposals or offers from any Third Party concerning
any Acquisition Proposal or (ii) furnish or cause to be furnished information
concerning the Companies' businesses, properties or assets to a Third Party,
or enter into, participate in, conduct or engage in discussions or
negotiations with such Third Party.
(b) Parent will promptly (and in no event later than 36 hours
after receipt) notify Buyer in writing of, and will disclose to Buyer all
material details (including, without limitation, the identity of the Third
Party making such Acquisition Proposal) of, any Acquisition Proposal, whether
oral or written, that Parent or any of its Affiliates, officers, directors,
employees, representatives or agents receives after the date of this
Agreement.
(c) Parent shall not waive any provision of any confidentiality
or similar Contract relating to an actual or possible Acquisition Proposal
(whether entered into prior to the date hereof or hereafter) without the
advance written consent of Buyer.
SECTION 1.5 TAX.
(a) At least fifteen days prior to the Closing Date, Parent shall
deliver to Buyer (i) a certification by MIMI with respect to its Shares which
meets the requirements of Treasury Regulation Section 1.1445-2(c)(3) dated
within 30 days prior to the Closing Date, and (ii) a valid duly completed
United States IRS Form W-8BEN certifying Parent's status as not a U.S. person.
(b) Any amounts paid or payable pursuant to Sections 3.2 or 3.3
shall be treated by the parties for Tax purposes as an adjustment to the
Purchase Consideration.
ARTICLE II
REPRESENTATIONS OF PARENT
SECTION 2.1 ORGANIZATION AND RELATED MATTERS. Parent is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization. Complete and correct copies of the charter and
by-laws and any amendments thereto of Parent have been delivered to Buyer.
2
SECTION 2.2 SHARES. Parent is the sole record and beneficial holder of
all of the Shares, free and clear of any Encumbrances, and Parent has the
full right, power and authority to vote the Shares in accordance with Section
1.1 hereof. The Shares consist of 15,987,910 shares of Common Stock, which as
of the date hereof constitute at least 85.7% of the total issued and
outstanding shares of Common Stock. To the knowledge of Parent, all of the
Shares are duly authorized, validly issued, fully paid and nonassessable. To
the knowledge of Parent, none of the Shares has been issued in violation of
any Applicable Law. There are no Contracts to which Parent is a party or by
which Parent or the Shares is otherwise bound to redeem, purchase or
otherwise acquire any Shares and, except for this Agreement, there are no
Contracts to which Parent is a party or by which Parent or the Shares are
otherwise bound with respect to voting the Shares. There is no outstanding
option, warrant, right (including conversion or preemptive rights), or
agreement for the purchase or acquisition from Parent of any of the Shares.
SECTION 2.3 AUTHORITY; NO VIOLATION; CONSENTS.
(a) Parent has all requisite corporate power and authority to
execute and deliver this Agreement and the Stock Purchase Agreement and to
perform its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby. The execution, delivery and
performance of this Agreement and the Stock Purchase Agreement and the
consummation of the transactions contemplated hereby and thereby have been
duly and validly approved by all requisite action on the part of Parent and
no other corporate proceedings on the part of Parent or its stockholders are
necessary to approve this Agreement or the Stock Purchase Agreement or to
consummate the transactions contemplated hereby or thereby. This Agreement
and the Stockholder Purchase Agreement have each been duly executed and
delivered by Parent. Assuming the due authorization, execution and delivery
of this Agreement by Buyer and of the Stock Purchase Agreement by Buyer, MIMI
and Newco, this Agreement and the Stock Purchase Agreement each constitute
the legal, valid and binding obligation of Parent, enforceable against it in
accordance with its terms, except as enforcement may be limited by general
principles of equity whether applied in a court of law or a court of equity
and by bankruptcy, insolvency, moratorium and similar laws affecting
creditors' rights and remedies generally.
(b) Neither the execution and delivery of this Agreement or the
Stock Purchase Agreement by Parent, nor the consummation by Parent of the
transactions contemplated hereby or thereby and the performance of this
Agreement or the Stock Purchase Agreement by Parent, assuming that the
Governmental Consents have been obtained prior to the Closing, will (i) (x)
violate, conflict with, or result in a breach of any provision of the
articles, by-laws or other organizational documents of Parent, or (y)
violate, conflict with, or result in a breach of any provision of, or
constitute a default (or an event that, with notice or lapse of time or both,
would constitute a default) under, or result in the termination of, or
accelerate the performance or payment required by, or result in a right of
termination or acceleration under, or result in the creation of any material
Encumbrance upon any of the properties or assets of Parent, under any of the
terms, conditions or provisions of any Contract to which Parent is a party or
to which it or any of its properties or assets may be subject, except as
would not reasonably be expected to have a material adverse effect on Parent
or be a material burden on or impairment of Parent's or the Companies'
ability to consummate the transactions contemplated by this Agreement and the
Stock Purchase Agreement, or (ii) violate any judgment, ruling, order, writ,
3
injunction, decree, statute, rule or regulation applicable to Parent or any
of its properties or assets, except for such violations which would not
reasonably be expected to have a material adverse effect on Parent or be a
material burden on or impairment of Parent's or the Companies' ability to
consummate the transactions contemplated by this Agreement and the Stock
Purchase Agreement.
(c) Except for the Governmental Consents, no notice to, filing
with, authorization of, exemption by, or consent or approval of, any
Governmental Authority is necessary for the consummation by Parent of any of
the transactions contemplated by this Agreement or the Stock Purchase
Agreement.
SECTION 2.4 NO ACTIONS, SUITS OR PROCEEDINGS. Parent is not a party to
any and there are no legal, administrative, arbitral or other proceedings,
claims, actions or governmental or regulatory investigations of any nature
pending, or to the knowledge of Parent, threatened against Parent or any of
its properties or assets that challenge the validity or legality of this
Agreement or the Stock Purchase Agreement or of the transactions contemplated
hereby or thereby or that seek to prevent the consummation of such
transactions and there is no injunction, order, judgment, decree, or
regulatory restriction imposed specifically upon it or any of its properties
or assets that challenges the validity or legality of this Agreement or of
the transactions contemplated hereby.
SECTION 2.5 NO BROKERS. Other than Xxxxxx Xxxxxx Securities, Inc.,
whose fees shall be paid by MIMI or Parent, no broker, finder or similar
intermediary has acted for or on behalf of, or is entitled to any broker's,
finder's or similar fee or other commission from Parent or any of the
Companies in connection with this Agreement, the Stock Purchase Agreement or
the transactions contemplated hereby or thereby.
ARTICLE III
INDEMNIFICATION
SECTION 3.1 CERTAIN DEFINITIONS. As used herein the following terms
shall have the respective meanings set forth below (such definitions to be
equally applicable to both the singular and plural forms of the terms herein
defined):
"Buyer Indemnified Parties" means Buyer and each officer, director,
employee, consultant, stockholder, Affiliate of Buyer and ERISA Affiliate of
Buyer, including from and after the Closing Date, each Company.
"Buyer Indemnified Costs" means any and all damages, losses, claims,
liabilities, demands, charges, suits, penalties, costs, and expenses
(including court costs, reasonable attorneys' fees and other expenses
incurred in investigating and preparing for, or otherwise in connection with,
any litigation or proceeding) that any of the Buyer Indemnified Parties
incurs and that relate to or arise out of (a) any breach or default by MIMI
or Newco of any of the representations or warranties (provided, that any
representation or warranty that is qualified by a materiality or Seller
Material Adverse Effect standard shall not be so qualified for purposes
hereof) contained in Sections 3.1, 3.2, 3.3, 3.5, 3.7(a), 3.7(g), 3.13, and
3.17(b) of the Stock Purchase Agreement or by Parent of any of the
representations or warranties under this
4
Agreement, (b) any breach or default by Parent, Newco or MIMI of any of the
covenants or agreements under this Agreement or the Stock Purchase Agreement,
(c) the Pre-Closing Transactions, (d) the matters set forth on Schedule
3.5(b) to the Stock Purchase Agreement, and (e) any merger of Ivy Management,
Inc. with and into Newco that is reasonably designed to be tax free for U.S.
federal income tax purposes; provided, that such merger is effected within
180 days after the Closing Date; and provided, further, that if such merger
could be effected as of the Closing Date in compliance with all Applicable
Laws, then such merger, when effected, complies with all Applicable Laws; and
provided, further that such merger is effected in a manner so as to comply
with Rule 2a-6 of the Investment Company Act.
"Indemnified Costs" means the Buyer Indemnified Costs or the Parent
Indemnified Costs, as the case may be.
"Indemnified Parties" means the Buyer Indemnified Parties or the Parent
Indemnified Parties, as the case may be.
"Parent Indemnified Costs" means any and all damages, losses, claims,
liabilities, demands, charges, suits, penalties, costs, and expenses (including
court costs, reasonable attorneys' fees and other expenses incurred in
investigating and preparing for, or otherwise in connection with, any litigation
or proceeding) that any of the Parent Indemnified Parties incurs and that relate
to or arise out of (a) any breach or default by Buyer of any of the
representations or warranties (provided, that any representation or warranty
that is qualified by a materiality or Buyer Material Adverse Effect standard
shall not be so qualified for purposes hereof) contained in Sections 4.1, 4.2,
4.5, 4.6, and 4.7 of the Stock Purchase Agreement; and (b) any breach or default
by Buyer of any covenant or agreement under this Agreement or the Stock Purchase
Agreement.
"Parent Indemnified Parties" means Parent and each officer, director,
employee, consultant, stockholder, and Affiliate of Parent, including prior to
the Closing Date, each Company.
SECTION 3.2 INDEMNIFICATION OF BUYER. Subject to the provisions of this
Article III, Parent shall indemnify and hold harmless the Buyer Indemnified
Parties from and against any and all Buyer Indemnified Costs.
SECTION 3.3 INDEMNIFICATION OF PARENT. Subject to the provisions of this
Article III, Buyer shall indemnify and hold harmless the Parent Indemnified
Parties from and against any and all Parent Indemnified Costs.
SECTION 3.4 DEFENSE OF THIRD-PARTY CLAIMS. An Indemnified Party shall
give prompt written notice to the other party who is obligated to provide
indemnification hereunder (an "Indemnifying Party") of the commencement or
assertion of any action, proceeding, demand, or claim by a third party
(collectively, a "third-party action") in respect of which such Indemnified
Party shall seek indemnification hereunder. Any failure to so notify an
Indemnifying Party shall not relieve such Indemnifying Party from any
liability that it may have to such Indemnified Party under this Article III
unless the failure to give such notice materially and adversely prejudices
such Indemnifying Party. The Indemnifying Party shall have the right to
assume control of the
5
defense of, settle, or otherwise dispose of such third-party action on such
terms as it deems appropriate; provided, however, that:
(a) The Indemnified Party shall be entitled, at its own expense,
to participate in the defense of such third-party action (provided, that the
Indemnifying Party shall pay the attorneys' fees of the Indemnified Party if
(i) the employment of separate counsel shall have been authorized in writing
by the Indemnifying Party in connection with the defense of such third-party
action, (ii) the Indemnifying Party shall not have employed counsel
reasonably satisfactory to the Indemnified Party to have charge of such
third-party action, (iii) the Indemnified Party shall have reasonably
concluded that there may be defenses available to such Indemnified Party that
are different from or additional to those available to the Indemnifying
Party, or (iv) the Indemnified Party's counsel shall have advised the
Indemnified Party in writing, with a copy delivered to the Indemnifying
Party, that there is a conflict of interest that could make it inappropriate
under applicable standards of professional conduct to have common counsel);
(b) The Indemnifying Party shall obtain the prior written
approval of the Indemnified Party, which shall not be unreasonably withheld,
before entering into or making any settlement, compromise, admission, or
acknowledgment of the validity of such third-party action or any liability in
respect thereof; and
(c) The Indemnifying Party shall not be entitled to control (but
shall be entitled to participate at its own expense in the defense of), and
the Indemnified Party shall be entitled to have sole control over, the
defense or settlement, compromise, admission, or acknowledgment of any
third-party action (i) as to which the Indemnifying Party fails to assume the
defense within a reasonable length of time which shall not in any event
exceed 30 days or (ii) to the extent the third-party action seeks an order,
injunction, or other equitable relief against an Indemnified Party which, if
successful, would materially adversely affect the business, operations,
assets, or financial condition of such Indemnified Party.
SECTION 3.5 COOPERATION. The parties hereto shall extend reasonable
cooperation in connection with the defense of any third-party action pursuant to
this Article III and, in connection therewith, shall furnish such records,
information, and testimony and attend such conferences, discovery proceedings,
hearings, trials, and appeals as may be reasonably requested.
SECTION 3.6 DIRECT CLAIMS. In any case in which an Indemnified Party seeks
indemnification hereunder which is not subject to Section 3.4 because no
third-party action is involved, the Indemnified Party shall notify the
Indemnifying Party in writing of any Indemnified Costs which such Indemnified
Party claims are subject to indemnification under the terms hereof. The failure
of the Indemnified Party to exercise promptness in such notification shall not
amount to a waiver of such claim unless the resulting delay materially
prejudices the position of the Indemnifying Party with respect to such claim.
SECTION 3.7 LIMITATION ON INDEMNIFICATION.
An Indemnifying Party shall not be liable for Indemnified Costs unless
the aggregate Indemnified Costs, including claims in connection with breaches
of representations or
6
warranties, exceed $750,000, in which case the Indemnifying Party shall be
liable for all Indemnified Costs that exceed an aggregate of $500,000. In no
event shall an Indemnifying Party be liable for Indemnified Costs under this
Article III in excess of an aggregate of $30 million.
ARTICLE IV
MISCELLANEOUS
SECTION 4.1 FURTHER ASSURANCES. Each party hereto shall execute such
documents and other papers and take such further actions as any other party
may reasonably request in order to carry out the provisions of this
Agreement. Parent shall use commercially its best efforts to introduce Buyer
to the relevant governing bodies of each Subadvised Fund.
SECTION 4.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND COVENANTS;
SURVIVAL OF STOCK PURCHASE AGREEMENT.
(a) The representations, warranties and covenants of Parent and
Buyer contained in or made pursuant to this Agreement shall survive the
execution and delivery of this Agreement and the Closing, and (i) (except as
otherwise provided in Section 4.2(c)) the representations and warranties set
forth in this Agreement shall terminate 18 months after the Closing Date,
except that this time limitation shall not apply to any claims for breaches
of the representations and warranties contained in Section 2.2 (relating to
share ownership), which representations and warranties shall survive for a
period of four years, and (ii) the indemnification obligations set forth in
subpart (e) of the definition of "Buyer Indemnified Costs" in Section 3.1
hereof shall terminate on the date that is 30 days after the expiration of
the applicable statutes of limitations.
(b) As between Parent and Buyer, and for all purposes of the
indemnification provisions in Article III, the representations, warranties
and covenants of Parent, MIMI, Newco and Buyer contained in or made pursuant
to the Stock Purchase Agreement shall survive the Closing and (except as
otherwise provided in Section 4.2(c) herein) the representations and
warranties set forth in the Stock Purchase Agreement shall terminate 18
months after the Closing Date, except that this time limitation shall not
apply to claims for breaches of the representations and warranties
(i) contained in Section 3.7(g) of the Stock Purchase Agreement (related to
Taxes of the Ivy Fund or any Portfolio), Section 3.13 of the Stock Purchase
Agreement (related to Taxes) and Section 4.7 of the Stock Purchase Agreement
(related to No Unfair Burden), which shall survive until the date that is 30
days after the expiration of the applicable statutes of limitations,
(ii) contained in Section 3.2 of the Stock Purchase Agreement (related to
approval) and Section 3.17(b) of the Stock Purchase Agreement (related to
brokers), which shall survive for a period of three years, or (iii) contained
in the first, third and fourth sentences of Section 3.1(b) (other than with
respect to the capitalization of MIMI) and in Section 3.1(d) of the Stock
Purchase Agreement (related to capitalization), which shall survive for a
period of four years.
(c) Following the date of termination of a representation or
warranty, in the absence of fraud or willful misconduct, no claim can be
brought with respect to a breach of such representation or warranty, but such
termination shall not affect any claim for a breach of a representation or
warranty that was asserted before the date of termination. No claim for
breach
7
of a representation, warranty or covenant shall in any way be affected by any
investigation of the subject matter of such representations, warranties and
covenants.
SECTION 4.3 CHANGE IN ACCOUNTING METHOD. On July 22, 2002, the Company
filed Form 3115, Request for Change in Accounting Method (the "Request") with
the Internal Revenue Service ("IRS"), pursuant to which it requested a change
in accounting method for federal income tax purposes to permit it to deduct
the full amount of certain commissions related to the sales of Class A shares
rather than amortize those commissions over a period of years. If the Request
is granted, the Company will be entitled to claim as an additional deduction
in the year the Request is granted, as an adjustment under Section 481(a) of
the Code, an amount equal to the underdeducted expenses at the time such
change in accounting method is adopted (the "481 Tax Deductions"). If the
Request is granted after Closing, and only to the extent the reduction in
Taxes is not reflected in the determination of Excess Adjusted Working
Capital on the Preliminary Balance Sheet or the Closing Balance Sheet, the
Buyer agrees to pay to Parent (i) an amount equal to the reduction in Taxes
of the Company actually realized as a result of the 481 Tax Deductions or
(ii) any refund actually received by the Buyer or the Company as a result of
the 481 Tax Deductions. Amounts payable under this Section 4.3 with respect
to a reduction in Taxes described in (i) above, shall be paid to Parent on or
before the filing deadline (determined without regard to extensions) for each
federal income Tax Return of the Company for which it is permited to claim
the 481 Tax Deductions. Amounts payable under this Section 4.3 with respect
to the receipt of a refund described in (ii) above, shall be paid to Parent
within 10 Business Days after receipt of such refund by Buyer or the Company.
Any amounts not paid on a timely basis shall bear interest at the rate of
five percent (5%). Buyer agrees to cause the Company, following the Closing,
to take such actions as are reasonably necessary to secure the IRS's approval
of the Request.
SECTION 4.4 TERMINATION. In the event of the termination of the Stock
Purchase Agreement pursuant to the provisions of Article VII thereof, this
Agreement shall forthwith become void and shall have no effect except that,
notwithstanding anything to the contrary contained in this Agreement, no
party shall be relieved or released from any liabilities or damages arising
out of its breach of any provision of this Agreement.
SECTION 4.5 AMENDMENTS; EXTENSION; WAIVER. Subject to compliance with
Applicable Law, this Agreement may be amended, altered or modified by written
instrument executed by each of the parties hereto, and without any notice to
or consent or approval by any other Indemnified Party.
SECTION 4.6 ENTIRE AGREEMENT. This Agreement, together with the
Confidentiality Agreement, constitutes the entire understanding and agreement
of the parties hereto, except as provided herein, and supersedes all prior
agreements and understandings, written and oral, among the parties with
respect to the subject matter hereof.
SECTION 4.7 EXPENSES. Except as provided elsewhere herein or in the
Stock Purchase Agreement, each party hereto shall bear the expenses incurred
by it in connection with the negotiation and preparation of this Agreement
and the consummation of the transactions contemplated hereby.
8
SECTION 4.8 SPECIFIC PERFORMANCE. The parties recognize that in the
event Parent should refuse to perform under Article I of this Agreement,
monetary damages alone will not be adequate. Buyer shall therefore be
entitled, in addition to any other remedies which may be available, including
money damages, to obtain specific performance of the terms of Article I of
this Agreement. In the event of any action to enforce this Agreement
specifically, Parent hereby waives the defense that there is an adequate
remedy at law.
SECTION 4.9 INTERPRETATION. When a reference is made in this Agreement
to a Section, such reference shall be to a Section of this Agreement unless
otherwise indicated. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include," "includes" or
"including" are used in this Agreement, they shall be deemed to be followed
by the words "without limitation." Whenever the context may require, any
pronouns used in this Agreement shall include the corresponding masculine,
feminine or neutral forms and the singular form of nouns and pronouns shall
include the plural and vice versa. The phrases "the date of this Agreement,"
"the date hereof" and terms of similar import, unless the context otherwise
requires, shall be deemed to refer to the date set forth in the first
paragraph of this Agreement.
SECTION 4.10 SEVERABILITY. Any term or provision of this Agreement
which is invalid or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining
terms and provisions of this Agreement or affecting the validity or
enforceability of any of the terms or provisions of this Agreement in any
other jurisdiction. If any provision of this Agreement is so broad as to be
unenforceable, the provision shall be interpreted to be only so broad as is
enforceable.
SECTION 4.11 NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed given if (a) delivered in person, (b)
transmitted by telecopy (with confirmation), (c) mailed by certified or
registered mail (return receipt requested and obtained) or (d) delivered by
an express courier (with confirmation) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
If to Parent: Mackenzie Financial Corporation
000 Xxxxx Xxxxxx Xxxx Xxxxxxx
Xxxxxxx, Xxxxxxx X0X 0X0
Xxxxxx
Attention: President
Facsimile: (000) 000-0000
With a copy to: Dechert
00 Xxxx Xxxxxx Xxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000-0000
Attention: Xxxxxx Xxxxxxx, Esq.
Facsimile: (000) 000-0000
If to Buyer: Xxxxxxx & Xxxx Financial, Inc.
0000 Xxxxx Xxxxxx
0
Xxxxxxx Xxxxxxx, Xxxxxx 00000
Attention: Chief Financial Officer
Facsimile: (000) 000-0000
With a copy to: Xxxxxxx & Xxxx Financial, Inc.
0000 Xxxxx Xxxxxx
Xxxxxxx Xxxxxxx, Xxxxxx 00000
Attention: General Counsel
Facsimile: (000) 000-0000
and to: Xxxxxx & Xxxxxx L.L.P.
0000 Xxxxxxxx Xxxx Xxxxxx
0000 Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000-0000
Attention: Xxxx X. Xxxxxxxx, Esq.
Facsimile: (000) 000-0000
SECTION 4.12 BINDING EFFECT; PERSONS BENEFITING; NO ASSIGNMENT. This
Agreement shall inure to the benefit of and be binding upon the parties
hereto, the Indemnified Parties and the respective successors and permitted
assigns of such Persons. Except as set forth in the preceding sentence,
nothing in this Agreement is intended or shall be construed to confer upon
any Person other than the parties hereto and their successors and permitted
assigns any right, remedy or claim under or by reason of this Agreement or
any part hereof. Without the prior written consent of each of the parties
hereto, this Agreement and the rights hereunder may not be assigned by any
Person.
SECTION 4.13 NO IMPAIRMENT. This Agreement shall remain in full force
and effect without regard to, and the obligations of the parties hereunder
shall not be affected or impaired by: (a) any amendment, modification of or
supplement to the Stock Purchase Agreement; (b) any extension, indulgence or
other action or inaction in respect of the Stock Purchase Agreement; (c) any
default by any party under, or any invalidity or unenforceability of, or any
irregularity or other defect in the Stock Purchase Agreement; (d) any
exercise or non-exercise of any right, remedy, power or privilege in respect
of the Stock Purchase Agreement; or (e) any other circumstance or cause,
whether similar or dissimilar to any of the foregoing, that might constitute
a legal or equitable discharge or defense of any of the parties hereto and
whether or not any of the parties hereto shall have had notice or knowledge
thereof.
SECTION 4.14 COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of
which taken together shall constitute one and the same agreement, it being
understood that all of the parties need not sign the same counterpart.
SECTION 4.15 GOVERNING LAW. THIS AGREEMENT, THE LEGAL RELATIONS BETWEEN
THE PARTIES AND THE ADJUDICATION AND THE ENFORCEMENT THEREOF, SHALL BE
GOVERNED BY AND INTERPRETED AND CONSTRUED IN ACCORDANCE WITH THE SUBSTANTIVE
LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS
OF LAW THEREOF.
10
SECTION 4.16 WAIVER OF JURY TRIAL. PARENT AND BUYER EACH HEREBY WAIVE
THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF THIS AGREEMENT, ANY OF THE AGREEMENTS CONTEMPLATED HEREBY
OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN OR THEREIN, INCLUDING CONTRACT
CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
STATUTORY CLAIMS. EACH PARTY RECOGNIZES AND AGREES THAT THE FOREGOING WAIVER
CONSTITUTES A MATERIAL INDUCEMENT FOR IT TO ENTER INTO THIS AGREEMENT. EACH
PARTY REPRESENTS AND WARRANTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL
COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS
FOLLOWING CONSULTATION WITH LEGAL COUNSEL.
SECTION 4.17 NO PUNITIVE OR CONSEQUENTIAL DAMAGES. No party hereto shall
be liable for any punitive damages or other special, exemplary or consequential
damages of any other Person arising out of or in connection with this Agreement,
any of the agreements contemplated hereby or any of the transactions
contemplated hereby or thereby.
11
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
MACKENZIE FINANCIAL CORPORATION
By: /s/ Xxxxx X. Xxxxxx
---------------------------------
Name: Xxxxx X. Xxxxxx
Title: President and Chief Executive Officer
XXXXXXX & XXXX FINANCIAL, INC.
By: /s/ Xxxx X. Xxxxxxx, Xx.
------------------------
Name: Xxxx X. Xxxxxxx, Xx.
Title: Senior Vice President
SIGNATURE PAGE TO VOTING, SUPPORT AND INDEMNIFICATION AGREEMENT
