STOCK PURCHASE AGREEMENT by and among MILES CAPITAL HOLDINGS, INC. and WEST BANCORPORATION, INC. and WB CAPITAL MANAGEMENT INC. October 1, 2009
EXHIBIT
2.1
by and
among
MILES
CAPITAL HOLDINGS, INC.
and
WEST
BANCORPORATION, INC.
and
WB
CAPITAL MANAGEMENT INC.
October
1, 2009
TABLE OF
CONTENTS
Page
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||
ARTICLE
1 DEFINITIONS
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1
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ARTICLE
2 PURCHASE, SALE AND EXCHANGE OF MEMBERSHIP INTERESTS
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7
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2.1.
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Purchase
and Sale.
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7
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2.2.
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Closing
Purchase Price
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7
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2.3.
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The
Closing
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7
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2.4.
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Payment
of the Closing Purchase Price; Exchange of Shares
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7
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ARTICLE
3 REPRESENTATIONS AND WARRANTIES ABOUT SELLER
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7
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3.1.
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General
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7
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3.2.
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Ownership
Matters
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8
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ARTICLE
4 REPRESENTATIONS AND WARRANTIES ABOUT THE COMPANY
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8
|
|
4.1.
|
Organization,
Power and Authorization
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8
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4.2.
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Binding
Effect and Noncontravention
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9
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4.3.
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Required
Filings and Consents
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9
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4.4.
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Capitalization;
Subsidiaries
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11
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4.5.
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Financial
Statements; Undisclosed Liabilities
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11
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4.6.
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Events
Subsequent to the Latest Balance Sheet
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12
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4.7.
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Title
to Assets
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13
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4.8.
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Investment
Advisers Act Compliance
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13
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4.9.
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Tax
Matters
|
16
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4.10.
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Environmental
Matters
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17
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4.11.
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Intellectual
Property
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17
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4.12.
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Real
Estate
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18
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4.13.
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Litigation
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19
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4.14.
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Employee
Benefits
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19
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4.15.
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Insurance
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21
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4.16.
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Material
Contracts
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21
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4.17.
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Employees
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23
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4.18.
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Affiliate
Transactions
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25
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4.19.
|
Brokerage
|
25
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4.20.
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Advisory
Contracts
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25
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4.21.
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Ineligible
Persons
|
26
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4.22.
|
Assets
Under Management; Registered and Private Funds
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26
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4.23.
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No
Notice of Diminution of Business
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28
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4.24.
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Disclosure
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28
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ARTICLE
5 REPRESENTATIONS AND WARRANTIES OF BUYER
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28
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5.1.
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Organization,
Power and Authorization
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28
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5.2.
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Binding
Effect and Noncontravention
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28
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5.3.
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Brokerage
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29
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5.4.
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Litigation
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29
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5.5.
|
Investment
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29
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ARTICLE
6 COVENANTS
|
29
|
|
6.1.
|
Pre-Closing
Covenants
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29
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6.2.
|
Registered
Fund Proxy Statements; Registration Statements.
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32
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6.3.
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Investment
Company Act.
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33
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6.4.
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Post-Closing
Covenants
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33
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6.5.
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Benefit
Plans
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34
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6.6.
|
Seller’s
Covenant Not to Compete or Solicit
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36
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6.7.
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Certain
Tax Matters.
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36
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ARTICLE
7 SURVIVAL AND INDEMNIFICATION
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38
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7.1.
|
Survival
of Representations and Warranties
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38
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7.2.
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Indemnification
Obligations of Seller
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38
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7.3.
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Indemnification
Obligations of Buyer
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39
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7.4.
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Due
Diligence
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39
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7.5.
|
Indemnification
Procedures
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39
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ARTICLE
8 CONDITIONS TO THE CLOSING
|
40
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|
8.1.
|
Conditions
of Buyer’s Obligation
|
40
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8.2.
|
Conditions
of Seller’s Obligation
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42
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ARTICLE
9 MISCELLANEOUS
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43
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9.1.
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Termination
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43
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9.2.
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Transaction
Expenses
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44
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9.3.
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Amendments
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44
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9.4.
|
Successors
and Assigns
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44
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9.5.
|
Governing
Law
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44
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9.6.
|
Notices
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44
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9.7.
|
Schedules
and Exhibits
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45
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9.8.
|
Counterparts
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45
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9.9.
|
No
Third Party Beneficiaries
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45
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9.10.
|
Headings
|
45
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9.11.
|
Entire
Agreement
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46
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9.12.
|
Severability
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46
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9.13.
|
Construction
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46
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9.14.
|
Public
Announcements
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46
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ii
THIS
STOCK PURCHASE AGREEMENT (this “Agreement”) is made as of October 1, 2009, by
and among Miles Capital Holdings, Inc., a Delaware corporation (“Buyer”), WB
Capital Management Inc., an Iowa corporation (the “Company”), and West
Bancorporation, Inc., an Iowa corporation (“Seller”). Buyer, Seller
and the Company are each individually referred to in this Agreement as a “Party”
and are collectively referred to as the “Parties.”
BACKGROUND
WHEREAS, Seller owns 1000
shares of common stock, par value $.01 per share, of the Company constituting
all the issued and outstanding shares of capital stock of the Company (such
shares being referred to herein as the “Shares”).
WHEREAS, Seller desires to
sell, and Buyer desires to purchase the Shares on the terms and subject to the
conditions set forth in this Agreement;
NOW, THEREFORE, in
consideration of the representations, warranties, and covenants herein contained
and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the Parties hereby agree as follows:
ARTICLE
1
DEFINITIONS
For
purposes of this Agreement, the following terms have the meanings set forth
below:
“Acquisition
Transaction” has the meaning set forth in Section 6.1(f).
“Advisory
Agreement(s)” means all agreements and arrangements for the performance of
investment advisory services for any Client.
“Advisor
Compliance Policies” has the meaning set forth in Section 4.8.
“Affirmative
Consent Client” means any Client with respect to which affirmative and/or
written Consent is expressly required under such Client’s Advisory Agreement, as
set forth in Section 4.20 of the Disclosure Schedule.
“Affiliate”
of any particular Person means any other Person controlling, controlled by or
under common control with such particular Person. For the purposes of
this definition, “control” means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of a
Person whether through the ownership of voting securities, contract or
otherwise.
“Assets
Under Management” means the assets of Clients under management by the Company
pursuant to Advisory Agreements.
“Business”
means the business of the Company as conducted on the date of this
Agreement.
“Business
Day” means any day of the year other than (i) any Saturday or Sunday or (ii) any
other day on which banks located in Des Moines, Iowa generally are closed for
business.
“Buyer”
has the meaning set forth in the preamble.
“Client”
means any Person to which the Company provides investment advisory services
pursuant to an Advisory Agreement.
“Client
Notice” has the meaning set forth in Section 6.1(h).
“Closing”
has the meaning set forth in Section 2.3.
“Closing
Date” has the meaning set forth in Section 2.3.
“Closing
Purchase Price” has the meaning set forth in Section 2.2.
“COBRA”
means the requirements of Part 6 of Subtitle B of Title 1 of ERISA,
Section 4980B of the Code and of any similar state law.
“Code”
means the Internal Revenue Code of 1986, as amended.
“Company”
has the meaning set forth in the preamble.
“Company
Benefit Plan” means any “employee benefit plan” (as such term is defined in
Section 3(3) of ERISA) and any other employee benefit plan, program or
arrangement (including any “nonqualified deferred compensation plan” subject to
Code section 409A) that the Company maintains or contributes to, or under
which any employee or former employee (or their beneficiaries or dependents) of
the Company has any rights.
“Company
Intellectual Property” means any Intellectual Property owned or used by the
Company.
“Company
Permits” has the meaning set forth in Section 4.7(a).
“Company
SEC Documents” has the meaning set forth in Section 4.7(b).
“Computer
Systems” means any combination of the computer software (including source code,
executable code, databases and related documentation), computer firmware,
computer hardware (whether general or special purpose), and other similar or
related items of automated, computerized, and/or software systems that are used
or relied on by the Company.
“Consent”
means any authorization, filing, notice, consent or approval.
“Contingency
Payments” has the meaning set forth in Section 2.2.
“Disclosure
Schedule” means the disclosure schedule prepared by Seller attached to this
Agreement which sets forth the exceptions to the representations and warranties
contained in Articles 3 and 4, and certain other information called for by the
Agreement.
2
“Environmental
Laws” means all Legal Requirements concerning occupational safety and health
hazards, pollution or protection of the environment, including without
limitation all those relating to the presence, use, production, generation,
handling, transportation, treatment, storage, disposal, distribution, labeling,
testing, processing, discharge, release, threatened release, control, or cleanup
of any hazardous materials, substances or wastes.
“ERISA”
means the Employee Retirement Income Security Act of 1974, as
amended.
“ERISA
Affiliate” means each entity that is treated as a single employer with the
Company for purposes of Section 414 of the Code, or Section 4001(a)(14) or
4001(b) of ERISA.
“Filings”
has the meaning set forth in Section 4.8(c).
“Financial
Statements” has the meaning set forth in Section 4.5.
“FINRA”
means the Financial Industry Regulatory Authority and any
predecessors.
“Fund”
means any Registered Fund and Private Fund.
“GAAP”
means United States generally accepted accounting principles as in effect from
time to time.
“Government
Entity” means any (i) nation, principality, state, commonwealth, province,
territory, county, municipality, district or other jurisdiction of any nature;
(ii) federal, state, local, municipal, foreign or other government;
(iii) Government or quasi Government authority of any nature, including
without limitation the SEC or FINRA; (iv) multi-national organization or
body; or (v) Person exercising, or entitled to exercise, any executive,
legislative, judicial, administrative, regulatory, police, military or taxing
authority or power of any nature.
“Indebtedness”
of any Person shall mean the following, excluding payables incurred in the
Ordinary Course of Business: (a) all indebtedness of such Person
to lending institutions and all other indebtedness for borrowed money created,
incurred or accrued by such Person or guaranteed by such Person or for which
such Person is otherwise liable or responsible (including an agreement to assume
the indebtedness of others); (b) all obligations of such Person under
capital leases; (c) all liability of such Person in respect of bankers
acceptances or letters of credit; (d) all amounts owing by such Person
under purchase money mortgages, indentures, deeds of trust or other purchase
money liens or conditional sale or other title retention agreements;
(e) all indebtedness secured by any mortgage, indenture or deed of trust
upon any assets of such Person even though such Person may not have assumed or
become liable for the payment of such indebtedness; (f) all accruals of
management or other fees payable to the Seller or any Affiliate of the Seller;
(g) all liability for deferred taxes; and (h) all interest, fees and other
expenses with respect to any of the foregoing, excluding, however, any
Transaction Expenses.
“Indemnification
Claim Notice” has the meaning set forth in Section 7.5(a).
“Indemnified
Party” means a Party who is seeking indemnification under Section 7.2 or
7.3.
3
“Indemnifying
Party” means a Party from whom indemnification is being sought under
Section 7.2 or 7.3.
“Insurance
Policies” has the meaning set forth in Section 4.15.
“Intellectual
Property” means any or all of the following: (i) patents, patent
applications and patent disclosures; (ii) trademarks, service marks,
corporate names, trade names, slogans, brand names, logos and Internet domain
names, together with goodwill associated with any of the foregoing;
(iii) copyrights and copyrightable works; (iv) registrations and
applications for any of the foregoing; (v) trade secrets, confidential
information, know how and inventions; (vi) computer software (including all
source code and related documentation); and (vii) all other intellectual
property and proprietary rights.
“Investment
Advisers Act” means the Investment Advisers Act of 1940, as
amended.
“Investment
Company Act” means the Investment Company Act of 1940, as amended.
“Knowledge”
means, (i) with respect to an individual, the actual knowledge of such
individual; and (ii) with respect to a Person other than an individual, the
actual knowledge of any individual who is serving as a director, manager, member
or officer (or similar executive) of such Person. The Company’s
Knowledge means the Knowledge of Xxxx Xxxxxxx, Xxx Xxxxxxxx, Xxx Xxxxx, Xxxxx
Xxxxxxx, Xxxx XxXxxxxx, Xxxx Xxxxxxxxxxxxx, Xxxxx Xxxxxx, Xxxxx X. Xxxxxxxx and
Xxxx X. Xxxxxxxxxxxx. The Seller’s Knowledge means the Knowledge of
Xxxx Xxxxxxx.
“Largest
Clients of the Company” means the 26 largest Clients of the Company measured by
revenues as of the six month period ended June 30, 2009 and identified in
Section 4.20(c) to the Disclosure Schedule.
“Latest
Balance Sheet” means the Company’s unaudited balance sheet as of June 30,
2009.
“Legal
Requirement” means any law, statute, legislation, constitution, principle of
common law, resolution, ordinance, code, judgment, order, decree, treaty, rule,
regulation, ruling, determination, charge, direction or other restriction of an
arbitrator, Government Entity or self-regulatory organization.
“Liability”
has the meaning set forth in Section 4.4.
“Lien”
means any mortgage, claim, pledge, security interest, charge, lien, restriction,
reservation, option or other right to purchase or any other encumbrance
whatsoever.
“Loss”
means, with respect to any Person, any liability, cost, damage, deficiency,
penalty, fine, Lien, fee, or other loss or expense, including court costs and
reasonable attorneys’ fees and expenses, whether or not arising out of a third
party claim, against or affecting such Person.
4
“Material
Adverse Effect” means any effect, or series of effects that, individually or in
the aggregate, materially adversely affects, or would be reasonably likely to
materially adversely affect, the Business, operations or financial condition of
the Company.
“Material
Contracts” has the meaning set forth in Section 4.16(a).
“Negative
Consent Client” means any Client with respect to which affirmative and/or
written Consent is not expressly required under such Client’s Advisory
Agreement, the Investment Advisers Act or the Investment Company Act, as set
forth in Section 4.20 of the Disclosure Schedule.
“Net
Working Capital” means current assets less current liabilities as set forth in
Section 4.5 of the Disclosure Schedule.
“Parties”
has the meaning set forth in the preamble.
“Permitted
Liens” means (i) liens for Taxes or assessments and similar charges, which
are not yet due or delinquent or are being contested in good faith and by
appropriate proceedings, (ii) mechanics’, materialmen’s or contractors’
liens or encumbrances or any similar statutory lien or restriction for amounts
not yet due and payable or which are being contested in good faith,
(iii) zoning, entitlement, building and other land use regulations which do
not materially impair, prohibit or restrict the occupancy or current use of the
real property which they encumber, and (iv) covenants, conditions,
restrictions, easements and other similar matters of record affecting title to
the real property which do not materially impair, prohibit or restrict the
occupancy or current use of the real property which they encumber.
“Person”
means an individual, a partnership, a corporation, an association, a limited
liability company, a joint stock company, a trust, a joint venture, an
unincorporated organization, an estate, a labor union, or a Government
Entity.
“Prepayment
Contingency Amount” has the meaning set forth in Section 2.2(B).
“Private
Fund” means each vehicle for collective investment (in whatever form of
organization, including, but not limited to, a corporation, company, limited
liability company, partnership association, trust or other entity, and including
each separate portfolio or series of any of the foregoing) that is not
registered or required to be registered with the SEC as an investment company
under the Investment Company Act, but only during the period with respect to
which the Company acted or acts as the sponsor, general partner, managing
member, trustee, investment manager, investment adviser or in a similar
capacity.
“Proprietary
Information Technology Systems” means the Computer Systems (or portions of
Computer Systems) that the Company (either directly or through a third Person)
have developed, customized or enhanced, or are in the process of developing,
customizing or enhancing.
“Real
Property” has the meaning set forth in Section 4.12.
5
“Registered
Fund” means each vehicle for collective investment (in whatever form of
organization, including, but not limited to, a corporation, limited liability
company, partnership, association, trust or other entity, and including each
separate portfolio or series of any of the foregoing) the interests of which are
publicly offered and that is registered or required to be registered with the
SEC as an investment company under the Investment Company Act, but only during
the period with respect to which the Company acted or acts as sponsor, general
partner, managing member, trustee, investment manager, investment adviser or in
a similar capacity.
“Registered
Fund Board” means the board of directors or trustees (or persons performing
similar functions) of a Registered Fund.
“Registered
Fund Consent” has the meaning set forth in Section 6.1.
“SEC”
means the United States Securities and Exchange Commission.
“Securities
Act” means the Securities Act of 1933, as amended.
“Securities
Exchange Act” means the Securities Exchange Act of 1934, as amended, and the
rules and regulations of the SEC thereunder.
“Seller”
has the meaning set forth in the preamble.
“Shares”
has the meaning set forth in the preamble.
“Subsidiaries”
means each corporation, limited liability company, partnership, association,
trust or other business entity of which the Company owns beneficially or of
record any equity security of such person except for interests held for
clients.
“Target
Net Working Capital” means $200,000.
“Tax” or
“Taxes” means any federal, state, local or foreign income, gross receipts,
capital stock, franchise, profits, payroll, employment, withholding, social
security, unemployment, disability, real property, ad valorem/personal property,
stamp, excise, license, occupation, sales, use, transfer, registration, value
added, alternative minimum, estimated or other tax, including any interest,
penalty or addition thereto, whether disputed or not.
“Tax
Return” means any return, report, information return or other document relating
to Taxes.
“Third
Party Claim” has the meaning set forth in Section 7.5(a).
“Transaction
Documents” means this Agreement, the Promissory Note, Pledge Agreement,
Investment Advisory Agreement, Transition Services Agreement, Access Agreement
and any other document contemplated by this Agreement.
6
ARTICLE
2
PURCHASE,
SALE AND EXCHANGE OF SHARES
2.1. Purchase and
Sale. At the Closing, subject to the terms and conditions set
forth in Article 8, Buyer shall purchase from Seller, and Seller shall sell,
convey, assign, transfer, and deliver to Buyer, all of the right, title and
interest of Seller in and to the Shares.
2.2. Closing Purchase
Price. The aggregate purchase price for the Shares (the “Closing Purchase
Price”) shall be as follows: (A) two million dollars
($2,000,000.00) consisting of a two million dollar ($2,000,000.00)
seven year promissory note (the “Note Consideration”)
in a form reasonably satisfactory to the Parties (the “Promissory Note”)
secured by a pledge of the Shares pursuant to a Pledge Agreement in a form
reasonably satisfactory to the Parties (the “Pledge Agreement”);
and (B) contingency payments from Buyer equal to 20% of the amount that the
Company’s annual revenues in each of the fiscal years ending December 31, 2010,
2011, 2012, 2013 and 2014 exceed $5.0 million (the “Contingency
Payments”), except that to the extent that the Company’s annual revenues
in any of these years does not exceed $5.0 million, the Contingency Payment will
not be owed and will be reduced for subsequent years in an amount equal to 20%
of the amount that the Company’s annual revenues fall below $5.0
million. By way of example only, if on December 31, 2010, the
Company’s annual revenues are $4.0 million, then no Contingency Payment will be
owed for 2010, and a $200,000 credit toward any future Contingency Payment will
be carried forward to subsequent years until exhausted. Buyer may
prepay the Contingency Payment obligation at any time by paying to Seller $1.17
million in cash less any Contingency Payments previously paid (the “Prepayment Contingency
Amount”). Contingency Payments are due on or before March
15th
following fiscal year end in which a Contingency Payment is due.
2.3. The
Closing. The closing of the purchase, sale and exchange of the
Shares and the transactions relating thereto (the “Closing”), shall take place
at the offices of Seller in West Des Moines, Iowa (or at such other location as
the Parties may agree), commencing at 9:00 a.m. local time, subject to the
provisions of Section 9.1, on the second day following the satisfaction or
waiver of all conditions to the obligations of the Parties to consummate the
transactions contemplated hereby (other than conditions with respect to actions
the Parties shall take at the Closing). The date and time of the
Closing are referred to as the “Closing Date.”
2.4. Delivery of
Shares. At the Closing, subject to the satisfaction or waiver
of each of the conditions specified in Article 8, Buyer shall deliver the
Promissory Note and Pledge Agreement to Seller. Seller shall deliver
the certificates representing the Shares duly endorsed for transfer in blank, or
accompanied by stock transfer powers duly executed in blank by
Seller.
ARTICLE
3
REPRESENTATIONS
AND WARRANTIES ABOUT SELLER
Except as
otherwise set forth on the Disclosure Schedule:
3.1. General. Seller
represents and warrants to Buyer that:
(a) Organization, Power and
Authorization. Seller is duly incorporated and is in good
standing under the laws of the State of Iowa, and (ii) has the requisite power
and authority necessary to enter into, deliver and perform its obligations
pursuant to each of the Transaction Documents to which it is a
party.
7
(b) Binding Effect and
Noncontravention.
(i) This
Agreement has been duly executed and delivered by Seller and constitutes, and
each other Transaction Document to which such Seller is a party when executed
and delivered will constitute, a valid and binding obligation of Seller,
enforceable against Seller in accordance with its terms except as such
enforceability may be limited by (A) applicable insolvency, bankruptcy,
reorganization, moratorium or other similar laws affecting creditors’ rights
generally, and (B) applicable equitable principles (whether considered in a
proceeding at law or in equity).
(ii) The
execution, delivery and performance of the Transaction Documents by Seller do
not (A) violate any material Legal Requirement to which Seller is subject, any
provision of its charter or bylaws or equivalent organizational documents, (B)
conflict with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify,
or cancel, or require any notice under any material agreement, contract, lease,
license, instrument, or other arrangement to which Seller is a party or by which
Seller is bound or to which Seller’s assets are subject, (C) result in the
creation of any Lien on Seller’s Shares, or (D) require any Consent by or to any
Person.
3.2.
Ownership
Matters. Seller
represents and warrants to Buyer that it holds of record, owns beneficially, and
has good and marketable title to the Shares, free and clear of all
Liens. The Shares represent all of the issued and outstanding shares
of common stock of the Company and there are no other classes of equity
outstanding. Seller is not a party to any voting trust, proxy, or
other agreement or understanding with respect to the voting of such
Shares.
ARTICLE
4
REPRESENTATIONS
AND WARRANTIES
ABOUT
THE COMPANY
Except as
otherwise set forth on the Disclosure Schedule, Seller represents and warrants
to Buyer that:
4.1.
Organization, Power and
Authorization. The Company is a corporation, duly organized,
validly existing and in good standing under the laws of the State of
Iowa. The Company is duly authorized to conduct business and is in
good standing under the laws of each jurisdiction where such qualification is
required (with each such jurisdiction being listed in Section 4.1 of the
Disclosure Schedule), except where the lack of such qualification would not have
a Material Adverse Effect. The Company has the organizational power
to carry on the businesses in which it is engaged and to own and use the
properties owned and used by it. The Company has the requisite power
and authority necessary to enter into, deliver and perform its obligations
pursuant to each of the Transaction Documents to which it is a
party. Seller has delivered to Buyer true, correct and complete
copies of the articles or certificate of incorporation and other organizational
documents of the Company. Section 4.1 of the Disclosure Schedule
lists the officers, directors and employees of the Company. The
Company has no Subsidiaries.
8
4.2. Binding Effect and
Noncontravention.
(a) Each
Transaction Document to which the Company is a party, when executed and
delivered, will constitute a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms except as such
enforceability may be limited by (i) applicable insolvency, bankruptcy,
reorganization, moratorium or other similar laws affecting creditors’ rights
generally, and (ii) applicable equitable principles (whether considered in a
proceeding at law or in equity).
(b) The
execution, delivery and performance by the Company of the Transaction Documents
to which it is a party do not (i) violate any material Legal Requirement to
which the Company is subject or its certificate or articles of incorporation,
bylaws or equivalent organizational documents, (ii) conflict with, result
in a breach of, constitute a default under, result in the acceleration of,
create in any party the right to accelerate, terminate, not renew, modify, or
cancel, or require any notice under any material agreement, contract, lease,
license, instrument, or other material arrangement to which the Company is a
party or by which the Company is bound or to which the Company’s assets are
subject, (iii) result in the creation of any Lien on any assets of the Company,
or (iv) require any Consent by or to any Person except as set forth in Section
4.2(b) of the Disclosure Schedule with respect to (1) Consents required from any
Government Entity, (2) Consents required from any Clients, and (3) Consents
required under any Material Contracts.
4.3. Required Filings and
Consents. The execution, delivery and performance of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated by this Agreement do not and will not require any consent,
approval, authorization or permit of, or filing with or notification to, any
international, foreign, supranational, national, federal, state, provincial or
local Government, regulatory or administrative authority, including the SEC and
any self-regulatory authority (“SRO”) (including the
New York Stock Exchange, or any successor entity or entities thereto
(collectively, the “NYSE”), FINRA, the
National Futures Association (the “NFA”)), the Municipal
Security Rulemaking Board (“MSRB”), or other
agency, commission, court, tribunal or arbitral body, whether domestic or
foreign, and in each case whether legislative, executive, judicial or otherwise
other than: (i) any filings with, and approvals from, relevant state securities
administrators or related to the blue sky laws of Iowa; (ii) the filings or
notices required or contemplated under the Investment Advisers Act or Investment
Company Act; (iii) the filings or notices required by, and any approvals
required under the rules and regulations of FINRA or other SROs (including the
NYSE, the NFA and MSRB)); and (iv) in such other circumstances where the failure
to obtain such consents, approvals, authorizations or permits, or to make such
filings or notifications, would not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse
Effect.
9
(a) The
Company is and has been since January 1, 2004, in compliance with applicable
Laws, except for such events of non-compliance that would not, individually or
in the aggregate, reasonably be expected to have a Company Material Adverse
Effect.
(b) The
Company has all material licenses, permits, certificates of authority,
authorizations, approvals, registrations and similar consents granted or issued
by any Government Entity to the Company that is necessary for the conduct of the
Business, each of which is listed in Section 4.3(b) of the Disclosure Schedule
(the “Company Permits”). All
Company Permits are in full force and effect in all material respects and are
not subject to any suspension, modification or revocation or proceedings related
thereto. The Company has not received notice or communication
asserting any violation of a Company Permit by the Company. The
Company is not in any material violation, or has not been in material violation
since January 1, 2004, of any Legal Requirements (including any environmental
law or regulation) except those that would not have a Material Adverse
Effect. The Company has not received any notice or communication
since January 1, 2004, asserting any violation of Legal Requirements (including
any environmental law or regulation) by the Company except those that would not
have a Material Adverse Effect. The consummation of the transactions
contemplated by this Agreement, in and of themselves, will not cause the
revocation, termination or cancellation of any Company Permit except those that
would not have a Material Adverse Effect.
(c) Except
for normal examinations conducted by any Government Entity in the regular course
of the business of the Company since January 1, 2004, through the date of this
Agreement, no Government Entity has, to the Knowledge of the Company, initiated,
and no Government Entity has provided written notice to the Company of any
threatened proceeding or investigation into the business or operations of the
Company. Except for normal examinations conducted by any Government
Entity in the regular course of the business of the Company, since the date of
this Agreement, no Government Entity has, to the Knowledge of the Company,
initiated, and no Government Entity has provided written notice to the Company
of any threatened proceeding or investigation into the business or operations of
the Company, except as would not, individually or in the aggregate, reasonably
be expected to have a Company Material Adverse Effect. There is no
deficiency, violation or exception claimed or asserted in writing since January
1, 2004, through the date of this Agreement by any Government Entity with
respect to any examination of the Company to the Knowledge of the Company, has
not been resolved in all material respects. Except for deficiencies,
violations or exceptions that would not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect, there is no
deficiency, violation or exception claimed or asserted in writing since the date
of this Agreement by any Government Entity with respect to any examination of
the Company.
(d) Each
employee of the Company who is required to be registered or licensed as a
registered representative, investment adviser representative, salesperson or
equivalent with any Government Entity is duly registered as such and such
registration is in full force and effect, except where the failure to be so
registered, individually or in the aggregate, would not reasonably be expected
to have a Company Material Adverse
Effect.
10
(e) The
Company has made available to Buyer a true and correct copy of each material
no-action letter and exemptive order issued by the SEC to any of the Company or
any Fund that remains applicable to its respective business as conducted on the
date of this Agreement. The Company and the Funds are in compliance
in all material respects with any such material no-action letters and exemptive
orders.
4.4. Capitalization;
Subsidiaries.
(a) The
Company currently has 1000 shares of common stock (par value $.01 per
share) issued and outstanding. All of the issued and outstanding
shares of common stock of the Company have been duly authorized, are validly
issued, fully paid, and nonassessable. There are no (i) pre-emptive
rights outstanding or authorized options, warrants, purchase rights,
subscription rights, conversion rights, exchange rights, or other contracts or
commitments that could require the Company to issue, sell, or otherwise cause to
become outstanding any of its shares of common stock; or (ii) options,
phantom stock, stock appreciation right, warrant, equity profit participation or
similar right with respect to the Company.
(b) The
Company has no Subsidiaries.
4.5. Financial Statements;
Undisclosed Liabilities. Section 4.5(a) to the Disclosure
Schedule contains the following financial statements (the “Financial
Statements”): (i) the Seller’s consolidated audited balance
sheets and related consolidated statements of income, stockholders’ equity, and
statements of cash flows for the fiscal years ended December 31, 2008, December
31, 2007, and December 31, 2006; and unaudited financial statements as of June
30, 2009; and (ii) the Company’s unaudited balance sheet and related
statement of income for the fiscal years ended December 31, 2008, December 31,
2007, and December 31, 2006; and for the six months ended June 30,
2009. The Financial Statements have been prepared in accordance with
GAAP applied on a consistent basis throughout the periods covered thereby and
present fairly, in all material respects, the financial condition of the Company
as of such dates and the results of operations for the periods specified; provided, that the
unaudited June 30, 2009 Financial Statements described above are subject to
normal year-end adjustments (which adjustments would not be material,
individually or in the aggregate, and would be of a normal and recurring type)
and absence of footnotes and other presentation items (which notes would be
consistent in all material respects with the notes to the Seller’s most recent
audited Financial Statements).
The
Company has no liability or obligation of whatever kind or nature (whether
asserted or unasserted, absolute or contingent, accrued or unaccrued, liquidated
or unliquidated, or due or to become due) that would be required by GAAP to be
disclosed on the Financial Statements (“Liability”), except
for any Liabilities: (i) set forth on the face of the Financial
Statements; (ii) listed in Section 4.5 of the Disclosure Schedule;
(iii) that have arisen in the ordinary course of business since the date of
the Latest Balance Sheet (which do not result from or arise out of, does not
relate to, is not in the nature of and was not caused by any breach of contract,
breach of warranty, tort, infringement or violation of applicable law);
(iv) under this Agreement or any ancillary document or in connection with
the transactions contemplated herein or therein; or (v) disclosed as a
Liability in another section of the Disclosure Schedule. The
Company’s Net Working Capital as of the Latest Balance Sheet Date is stated in
Section 4.5(b) of the Disclosure Schedule along with the account values used in
its determination.
11
4.6. Events Subsequent to the
Latest Balance Sheet. Since the date of the Latest Balance
Sheet:
(a) except
as disclosed in Section 4.6(a) of the Disclosure Schedule, there has been no
event or occurrence that has resulted in a Material Adverse Effect,
and
(b) except
as expressly contemplated by this Agreement, the Company has not:
(i)
incurred any Indebtedness or incurred or become subject to any
material liabilities (other than liabilities incurred in the ordinary course of
business and liabilities under contracts entered into in the ordinary course of
business);
(ii) mortgaged,
pledged or become subjected to any Lien (other than Permitted Liens) on any of
its assets;
(iii)
sold, assigned, transferred, leased or licensed any material assets, except in
the ordinary course of business;
(iv) sold,
assigned, transferred, leased or licensed any material Intellectual Property,
except in the ordinary course of business;
(v) suffered
any material extraordinary losses or waived any rights of material
value;
(vi)
issued, sold or transferred any of its equity securities, securities convertible
into its equity securities or other equity securities or warrants, options or
other rights to acquire its equity securities, or any bonds or debt
securities;
(vii) made
any material capital expenditures or commitments therefor, except in the
ordinary course of business;
(viii) declared
or made any payment or distribution of cash or other property to equity holders
other than a $600,000 dividend payable by Company to Seller, or purchased or
redeemed any stock units or other equity securities ;
(ix)
made any material changes in any employee compensation, benefits, severance or
termination agreement, other than routine salary increases in the ordinary
course of business; or
12
(x) agreed
to do any of the foregoing.
4.7. Title to
Assets. The Company has good and marketable title to, or a
valid leasehold interest in, the tangible personal property used in the conduct
of the Business, free and clear of all Liens (other than Permitted Liens),
except for any tangible personal property disposed of in the ordinary course of
business after the date hereof. The tangible personal property owned
or used by the Company is free from known material defects and is in good
operating condition and repair (subject to normal wear and tear). The
Company owns or has valid rights to use all of the tangible personal property
reasonably necessary for the conduct of the Business.
4.8. Investment Advisers Act
Compliance. The Company is registered as an investment adviser
under the Advisers Act and has been since January 1, 2004, duly registered as an
investment adviser under the Investment Advisers Act. The Company and
each investment adviser representative thereof is, and at all times required by
Legal Requirements has been, duly licensed or qualified in each state or any
other jurisdiction where the conduct of the Business required such licensing or
qualification except where the failure to be so licensed or qualified would not
have a Material Adverse Effect. Each of the aforementioned
registrations, licenses and qualifications, as of the date hereof, is in full
force and effect in all material respects. The Company has in effect,
and at all times required by Legal Requirements has had in effect, (i) a written
policy regarding xxxxxxx xxxxxxx and the protection of material non-public
information, (ii) a written code of ethics, as required by Rule 204A-1 under the
Investment Advisers Act, (iii) policies and procedures with respect to the
protection of nonpublic personal information about customers, clients and other
third parties designed to assure compliance with Legal Requirements, (iv) a
proxy voting policy as required by Rule 206(4)-6 under the Investment Advisers
Act, (v) policies and procedures with respect to business continuity plans in
the event of business disruptions and (vi) all such other policies and
procedures required by Rule 206(4)-7 under the Investment Advisers Act
(collectively, “Adviser Compliance Policies”), and has designated and approved
an appropriate chief compliance officer in accordance with Rule
206(4)-7. Copies of all such Investment Adviser Compliance Policies
have been provided or made available to Buyer. All such Adviser
Compliance Policies comply in all material respects with Legal Requirements,
including Sections 204A and 206 of the Investment Advisers Act, and there
have been no material allegations of violations by any employee or client of the
Company or any of its Affiliates or any Government Entity of material violations
of such Adviser Compliance Policies since January 1, 2004. The
policies of the Company with respect to avoiding conflicts of interest, to the
extent they are required to be disclosed pursuant to Legal Requirements, are as
set forth in its most recent Form ADV.
(a) Since
January 1, 2004, each Form ADV of the Company, as of the date of filing with the
SEC (and with respect to Form ADV Part II or its equivalent, its date) did not,
as of such respective date, contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. The Company has implemented written
policies and procedures as required by applicable Law (including Rule 206(4)-7
under the Investment Advisers Act), complete and correct copies of which
(including any reports or filings under such policies and procedures since
January 1, 2004 relating to compliance by the Company and its employees subject
thereto) have been delivered to Buyer and, except as otherwise noted in any such
reports or filings, the Company has been in compliance, in all material
respects, with such policies and procedures.
13
(b) Regulatory Inspection
Letters. The Company has provided Buyer with a copy of all
regulatory audit, inspection or examination letters from the SEC, FINRA or other
federal, state or local authorities with regulatory jurisdiction over the
Company, and the Company’s responses to each such letter.
(c) Regulatory
Filings. The Company has filed all registrations, reports,
statements, notices and other material filings required to be filed with the
SEC, the FINRA and any other Government Entity, including all amendments or
supplements to any of the above (the “Filings”). The
Filings complied with the requirements of Legal Requirements. The
Company and Seller have listed on Disclosure Schedule 4.8(c) and made available
to Buyer complete and correct copies of all Filings made by the Company within
the past five years (including, but not limited to, all filings on Form
ADV).
(d) Compliance with Advisory
Agreements. The Company has complied in all material respects
with all applicable obligations, requirements and conditions of each Advisory
Agreement, with all enforceable instructions from Clients and with Legal
Requirements.
(e) “Soft
Dollar” Services. The
receipt of soft dollar brokerage and research benefits and services by the
Company qualifies and has at all times qualified for the safe harbor afforded by
Section 28(e) of the Securities Exchange Act, and the Company has complied with
all related disclosure rules in all material respects. The Company
has satisfied in all material respects its duty of “best execution” (as such
term is understood under the Investment Advisers Act) for all Clients for whom
it exercises trading discretion.
(f) Anti-Money
Laundering. The
Company has a written anti-money laundering program and a written customer
identification program, copies of which have been made available to Buyer, and
has complied with the terms of such programs and Legal Requirements in all
material respects.
(g) Registrations. Except
for the registration of the Company as an investment adviser, none of the
Company, or its respective directors, officers or employees is required to be
registered, licensed or qualified as a commodity broker dealer, broker-dealer
commodity pool operator, futures commission agent, commodity trading advisor,
bank, trust company, real estate broker, insurance company, insurance producer,
insurance agent or insurance broker. The Company has not received
notices of, and is not aware of any basis for, any pending proceeding concerning
any failure to obtain any such registrations.
14
(h) Performance
Information. To the Company’s Knowledge, all performance
information provided, presented or made available by or at the direction of the
Company to any Client has complied in all material respects with Legal
Requirements. The Company maintains all documentation necessary to
form the basis for, demonstrate or recreate the calculation of the performance
or rate of return of all accounts that are included in a composite (current and
historical performance results) as required by Legal Requirements.
(i) Trade
Allocations. The Company has adopted and implemented
procedures or practices for the allocation of securities purchased for its
Clients that comply in all material respects with Legal Requirements, including
procedures or practices relating to the allocation to Clients or other accounts
of securities in which the Company or any of its officers, directors employees
or Affiliates has an interest.
(j) Directed
Brokerage. The Company has not directly or indirectly caused a
securities transaction to be effected on behalf of any Client that involved a
directed brokerage arrangement that did not comply in all material respects with
Legal Requirements.
(k) Revenue Sharing
Agreements. Neither the Seller nor the Company has directly or
indirectly been a party to, participated in or facilitated any revenue sharing
practice or agreement that did not comply in all material respects with Legal
Requirements.
(l) Financial
Products. To the Knowledge of Seller, all financial products
sold, distributed, issued or administered by the Company have been sold,
distributed, issued and administered by the Company, in all material respects,
in accordance with all Legal Requirements and the terms of the disclosure,
selling or offering documents relating thereto.
(m) Compliance with Investment
Company Act. Each Client’s account is and has at all times
been managed on the basis of the Client’s individual financial situation and
investment objectives, and in accordance with restrictions, if any, imposed by
the Client on the management of the account. The Company obtains
information about each Client’s financial situation and investment objectives
(including any restrictions that the Client may wish to impose regarding the
management of the account) at the time the account is opened, contacts the
Client not less frequently than annually to determine whether there have been
any changes regarding that information, and notifies the Client in person or in
writing at least quarterly that the Company should be contacted if there are any
such changes. The Company is reasonably available to consult with
each Client regarding the management of such Client’s account. Each
Client is, and has been, provided with account statements at least quarterly
containing a description of all activity in the Client’s
account. Each Client retains certain indicia of ownership of the
securities and funds in the Client’s account, including the right to withdraw
such securities or funds, the right (unless delegated in writing to the Company)
to vote securities in the account, and the right to proceed directly as a
security holder against the issuer of the securities in the account without the
obligation to join other Clients (or any other person or party) as a condition
precedent to initiating such proceeding.
15
(n) Pay to Play
Practices. Except as disclosed in Section 4.8(n) of the
Disclosure Schedule, the Company, its officers, directors, employees or
Affiliates have not made political contributions in excess of $250 per election
per candidate to any political candidate that has or could influence the
selection of the Company as an investment adviser to public pension funds or
similar government plans. Neither the Company nor its officers,
directors, employees or Affiliates have solicited contributions through third
parties or political action committees for elected officials or political
parties that could influence the selection of the Company as an investment
adviser for any Client. Except as disclosed in Section 4.8(n) of the
Disclosure Schedule, none of the Company, its officers, directors, employees or
Affiliates has paid any Person to solicit public pension funds or similar Funds
for Governmental Entities.
(o) Custody. Except
as disclosed in Section 4.8(o) to the Disclosure Schedule, no separate Consent
is required from custodians of Client Assets Under Management other than
Consents described in Section 6.1 hereof.
(p) Advertising. All
advertising, performance materials, promotional information, marketing and
similar materials, whether oral, written, electronic or otherwise has complied
and complies with the requirements of the Investment Advisers Act, the
Investment Company Act and applicable rules and requirements of the Global
Investment Performance Standards (“GIPS”).
4.9. Tax
Matters. All federal, state, local and foreign Tax Returns,
including information returns, required to be filed by or on behalf of the
Company through the date hereof have been timely and properly
filed. To the Knowledge of Seller and Company all such Tax Returns
correctly and accurately set forth in all material respects the amount of any
Taxes relating to the applicable period. All Taxes required to be
paid by or on behalf of the Company either directly, as part of the consolidated
Tax Return of another taxpayer, or otherwise, whether disputed or not and
whether or not shown on any Tax Return, have been paid in full, except for Taxes which
have not yet accrued or otherwise become due or for which there is an adequate
reserve on the financial statements of the Company as of the date
hereof. No claim has ever been made by an authority in a jurisdiction
where the Company does not file Tax Returns that it is or may be subject to
taxation by that jurisdiction. There are no liens, charges, claims,
restrictions or encumbrances for Taxes (other than Taxes not yet due and
payable) upon any of the assets of the Company. All Taxes and other
assessments and levies which the Company was or is required to withhold or
collect have been withheld and collected and have been paid over to the proper
Government authorities. Neither the Company nor Seller has waived any
statute of limitations in respect of Taxes or agreed to any extension of time
with respect to Tax payment, assessment, deficiency or
collection. The Company has withheld and paid all Taxes required to
have been withheld and paid in connection with any amounts paid or owing to any
employee, independent contractor, creditor, shareholder, or other third
party. Neither the IRS nor any other taxing authority is now
asserting or, to the knowledge of the Company or Seller, threatening to assert
against the Company any deficiency or claim for additional Taxes or interest
thereon or penalties in connection therewith in respect of the
Company. The Company is not a party to any Tax allocation, Tax
sharing or similar agreement or arrangement (whether or not written) pursuant to
which it will have any obligation to make any payments after
Closing. The Company has no liability for the taxes of any Person
(other than the Company) under Reg. §1.1502-6 (or any similar provision of
state, local, or foreign law), as a transferee or successor, by contract, or
otherwise. The Seller is not a “foreign person” within the meaning of
Section 1445 of the Code and Treasury Regulations
Section 1.1445-2. Neither the Company nor any other Person
(including Seller) on behalf of the Company has (i) agreed to or is required to
make any adjustments pursuant to Section 481(a) of the Code or any similar
provision of state, local or foreign law by reason of a change in accounting
method initiated by the Company or has any knowledge that the Internal Revenue
Service has proposed any such adjustment or change in accounting method, or has
any application pending with any taxing authority requesting permission for any
changes in accounting methods that relate to the business or operations of the
Company, or (ii) executed or entered into a closing agreement pursuant to
Section 7121 of the Code or any predecessor provision thereof or any similar
provision of state, local or foreign law with respect to the
Company.
16
4.10. Environmental
Matters. The Company is in compliance with all applicable
Environmental Laws. The Company is in compliance with all permits,
licenses and other authorizations that may be required pursuant to the
Environmental Laws. The Company has not received any written notice
from any Government Entity of any actual or alleged violations or liabilities,
including any investigatory, remedial or corrective obligations, arising under
Environmental Laws, and to the Company’s Knowledge no other Person has alleged
any violations or liabilities of or under any Environmental
Laws. This Section 4.10 contains the sole and exclusive
representations and warranties of Seller with respect to any matters arising
under any Environmental Laws.
4.11. Intellectual
Property.
(a) Set
forth on Section 4.11(a) of the Disclosure Schedule are all of the following
that are owned or used by the Company, together in each case with the applicable
serial number or registration number, the applicable
jurisdictions(s)/territory(ies), and the name of the owner of such
item: (i) patents and patent applications; (ii) registered trademarks
and service marks, applications to register trademarks and service marks, and
material common law marks; (iii) registered copyrights and applications to
register copyrights, and material unregistered copyrights; (iv) domain names;
(v) all Intellectual Property (except for commercially available off-the-shelf
software where the aggregate value of all licenses of the same or substantially
identical software is less than $10,000) owned by any Person that the Company
uses under any license, sublicense, grant, or other agreement and that is
material to the Business. With respect to those items scheduled
pursuant to clauses (i)-(iv) of this paragraph, each such item is valid,
subsisting and enforceable.
(b) The
Company has (and at all times when used has had) a valid right to use all
Intellectual Property that has been used in the conduct of the Business, without
any obligation or liability whatsoever to make any payments by way of royalties,
fees or otherwise (other than pursuant to agreements set forth on Section 4.16
of the Disclosure Schedule or the non-disclosure of which would not constitute a
misrepresentation under Section 4.16). The Company owns all of the
Intellectual Property purported to be owned by it free and clear of all Liens
other than Permitted Liens. The consummation of the transactions
contemplated by this Agreement will not alter or impair any ownership or license
rights in any Company Intellectual Property. None of the Company
Intellectual Property is owned in whole or in part by Seller or employees of the
Company. The Company owns or has valid licenses to all Intellectual
Property that is required to operate the Business as it is presently being
conducted as is reasonably expected to be conducted in the
future.
17
(c) The
Company has not received any claims during the three year period prior to the
date of this Agreement alleging that the Company has infringed, misappropriated
or otherwise violated the Intellectual Property of any other Person or regarding
the validity, enforceability or ownership of any of the Company Intellectual
Property. No Person is, to the Company’s Knowledge, infringing upon,
misappropriating or otherwise violating any material Intellectual Property owned
or used by the Company, and the Company has not made any claims or threats
alleging any such infringement, misappropriation or violation by any
Person. The Company is not and has not, to its knowledge, infringed
upon, misappropriated or otherwise violated the Intellectual Property of any
other Person.
(d) Set
forth on Section 4.11(d) of the Disclosure Schedule are all material Proprietary
Information Technology Systems which are either existing or are under
development and identifies the owner of each material Proprietary Information
Technology System. The Disclosure Schedule also sets forth all other
material Computer Systems used in the Business and identifies who is the owner
or licensee of each material Computer System. The documentation and
the source code with its embedded commentary, descriptions and indicated
authorships, the specifications and the other informational materials which
describe the operation, functions and technical characteristics applicable to
the Proprietary Information Technology Systems set forth on the Disclosure
Schedule are true, correct and complete in all material respects and sufficient
to permit the Company to support and maintain the products and services of the
Business. The copyright for each of the Proprietary Information
Technology Systems set forth on Section 4.11 (d) of the Disclosure Schedule is
owned by the Company.
(e) Each
Computer System used in the Business substantially conforms to the Company’s
functional requirements, design specifications, documentation and other
specifications. The Company has not experienced any material
interruptions, errors, data losses, data integrity problems, hacking attempts,
security breaches or other material problems related to any Computer System used
in the Business which has had a Material Adverse Effect.
4.12. Real
Estate.
(a) The
Company owns no real property. Set forth on Section 4.12 of the
Disclosure Schedule is all real property leased by the Company (the “Real
Property”). The Real Property comprises all of the real
property used or intended to be used in the Business and the Company is not a
party to any agreement or option to purchase any real property or interest
therein.
18
(b) Set
forth on Section 4.12 of the Disclosure Schedule is each lease pursuant to which
the Company leases any Real Property. Each such lease is a valid and
binding obligation of the Company enforceable against the Company in accordance
with its terms except as such enforceability may be limited by
(i) applicable insolvency, bankruptcy, reorganization, moratorium or other
similar laws affecting creditors’ rights generally, and (ii) applicable
equitable principles (whether considered in a proceeding at law or in
equity). The Company is not in material violation or breach of or
default under any such lease. To the Company’s Knowledge, the other
parties to each such lease are not in material violation or breach of or default
thereunder. The Company has provided to the Buyer a true, correct and
complete copy of each such lease. No security deposit or portion
thereof deposited with respect to any such lease has been applied in respect of
a breach of or default under such lease that has not been redeposited in
full. The Company owes no brokerage commissions or finder’s fees with
respect to any such lease. The Company has not subleased or otherwise
granted to any Person the right to use or occupy such leased Real Property or
any portion thereof. The Company has not collaterally assigned or
granted any other Lien in any such lease or any interest therein, except for
Permitted Liens. Any security deposit for the benefit of the Company
shall remain the property of the Company following the transactions contemplated
by this Agreement without any further actions by Company, Seller or
Buyer.
4.13. Litigation. The
Company is not (i) subject to any outstanding injunction, judgment, order or
decree, or (ii) party to or, to the Company’s Knowledge, threatened to be
made a party to, any proceeding, hearing, investigation, claim, legal action,
suit, arbitration, Government investigation or other legal or administrative
proceeding.
4.14. Employee
Benefits. Section 4.14 of the Disclosure Schedule contains a
list of each Company Benefit Plan that the Company or any ERISA Affiliate
maintains, to which the Company or any ERISA Affiliate contributes or has any
obligation to contribute, or with respect to which the Company or any ERISA
Affiliate has any Liability or has maintained, contributed to, had any
obligation to contribute or had any Liability. Each Company Benefit
Plan has been maintained in accordance with its terms and complies in form and
in operation with all applicable Legal Requirements. The reserves
reflected in the Financial Statements for the liabilities of the Company under
the Company Benefit Plans were determined in accordance with
GAAP. The Company has no liabilities arising out of any action or
inaction by any fiduciary (as defined in Section 3(21) of ERISA) in
connection with any Company Benefit Plan.
(a) Each
Company Benefit Plan which is intended to be qualified under Section 401(a) of
the Code has received a favorable determination, advisory or opinion letter from
the Internal Revenue Service to the effect that such Company Benefit Plan is so
qualified as to form with respect to all requirements of the Code other than
those for which the remedial amendment period under Section 401(b) of the Code
has not expired, nothing has occurred since the date of such determination that
could reasonably be expected to adversely affect the qualification of such
Company Benefit Plan, and there are no plan document failures, operation
failures, demographic failures or employee eligibility failures which have not
been corrected within the meaning of Rev. Proc. 2008-50 with respect to any such
Company Benefit Plan.
19
(b) Neither
the Company nor any ERISA Affiliate maintains, contributes to, has any
obligation to contribute to, or has (or ever had) any Liability under or with
respect to any “defined benefit plan” (as defined in Section (3)(35) of ERISA)
or any “multiemployer plan” (as defined in Section (3)(37) or 4001(a)(3) or
ERISA). Neither the Company nor any ERISA Affiliate has ever
maintained or contributed to a plan subject to Section 412 of the
Code. No Company Benefit Plan provides any health, death or other
welfare benefits with respect to any current or former employees of the Company
beyond their termination of employment, other than as may be required under
applicable Legal Requirements.
(c) With
respect to each Company Benefit Plan, the Company has delivered to Buyer correct
and complete copies of (to the extent applicable): (i) each Company Benefit Plan
document (including all amendments and related trust documents) and, in the case
of unwritten Company Benefit Plans, written descriptions thereof, (ii) the most
recent summary plan descriptions provided to participants, (iii) the most recent
determination, advisory or opinion letter received from the Internal Revenue
Service, (iv) the most recent annual report (Form 5500 series) with all
applicable attachments, and (v) all related trust agreements, insurance
contracts, service or other agreements and the most recent compliance testing
information, list of assets and other funding arrangements related to each such
Company Benefit Plan.
(d) There
are no pending or, to the Company’s Knowledge, threatened claims by or on behalf
of any Company Benefit Plan, any employee or beneficiary covered under any
Company Benefit Plan, any Government Entity, or otherwise involving any Company
Benefit Plan (other than routine claims for benefits). To the
Knowledge of the Company and Seller, no fiduciary has any Liability for breach
of fiduciary duty or any other failure to act or comply in connection with the
administration or investment of the assets of any such Company Benefit
Plan. No Action, suit, proceeding, hearing, or investigation with
respect to the administration or the investment of the assets of any such
Company Benefit Plan (other than routine claims for benefits) is pending or, to
the Knowledge of the Company or Seller, threatened. To the Knowledge
of the Company or Seller, there is no basis for any such action, suit,
proceeding, hearing, or investigation.
(e) There
are no nonexempt prohibited transactions within the meaning of Section 4975 of
the Code or Section 406 of ERISA or any breach of fiduciary duty under
Article IV of ERISA with respect to any Company Benefit Plan.
(f) Except
as disclosed in Section 4.14(g) of the Disclosure Schedule, no employee of the
Company is a party to any employment or other agreement with the Company that
entitles him or her to compensation or other consideration upon the acquisition
by any person of control of the Company, or to benefits or increased benefits
under any Company Benefit Plan covering such employee as a result of such
acquisition of control. Except as agreed to by the parties to this
Agreement, the consummation of the transactions contemplated by this Agreement
(alone or together with any other event) will not entitle any person to,
accelerate the time of payment or vesting of, or increase the amount of, any
compensation or any benefit under any Company Benefit Plan.
20
(g) Each
Company Benefit Plan which is a nonqualified deferred compensation plan subject
to Code Section 409A is in good faith compliance, in form and in operation,
with the applicable requirements of that section, the regulations thereunder and
guidance provided by the Internal Revenue Service, and no participant in such a
plan will incur taxes or penalties on the benefits under such plan as a result
of actions by the Company prior to the date the benefits are actually paid to
the employee.
(h) All
contributions (including all employer contributions and employee salary
reduction contributions) that are due have been made within the time periods
prescribed by ERISA and the Code to each such Company Benefit Plan that is an
"employee pension benefit plan" (as such term is defined in Section 3(2) of
ERISA) and all contributions for any period ending on or before the Closing Date
which are not yet due have been made to each such employee pension benefit plan
or accrued by the Company in accordance with GAAP. All premiums,
other payments or accruals for incurred but not reported liability for any
Company Benefit Plan for all periods ending on or before the Closing Date have
been paid or accrued consistent with GAAP with respect to each such Company
Benefit Plan that is an employee welfare benefit plan.
(i) All
required reports and descriptions (including annual reports (IRS Form 5500),
summary annual reports, and summary plan descriptions) have been timely filed
and/or distributed in accordance with the applicable requirements of ERISA and
the Code with respect to each such Company Benefit Plan. The
requirements of COBRA have been met with respect to each such Company Benefit
Plan which is an "employee welfare benefit plan" (as such term is defined in
Section 3(1) of ERISA) subject to COBRA.
4.15. Insurance. Section
4.15 of the Disclosure Schedule contains a description of each material
insurance policy, bond or other form of insurance maintained by the Company or
the Seller (the “Insurance
Policies”). All the Insurance Policies are in full force and
effect and the Company is not in material default with respect to its
obligations under any of the Insurance Policies. No written notice of
cancellation or termination has been received by the Company or Seller with
respect to any Insurance Policy. Except as set forth on Section 4.15
of the Disclosure Schedule, no Insurance Policy contains a provision that would
permit the termination, limitation, lapse, exclusion or change in the terms of
coverage of such Insurance Policy (including, without limitation, change in the
limits of liability) by reason of the consummation of the transactions
contemplated by this Agreement.
4.16. Material
Contracts.
(a) Section
4.16 of the Disclosure Schedule contains a list of each of the following
contracts, agreements or other arrangements to which the Company is a party or
by which any of their respective assets or properties is bound including but not
limited to any contracts, agreements, or arrangements between the Company and
any Affiliate (the “Material Contracts”):
21
(i) contract
(other than open purchase orders) that involves the performance of services or
delivery of goods or materials by the Company resulting in annual revenue to the
Company in excess of $10,000;
(ii) contract
(other than open sales orders) that involves the performance of services for, or
delivery of goods or materials to, the Company resulting in annual expenses to
the Company in excess of $10,000;
(iii) agreement
or contract for the employment of any Person on a full-time, part-time,
consulting or other basis (A) providing annual cash or other compensation in
excess of $10,000 or (B) providing for the payment of any cash or other
compensation or benefits upon the consummation of the transactions contemplated
hereby;
(iv) agreement,
guaranty or indenture relating to Indebtedness of the Company or the mortgaging
or pledging of any material asset of the Company;
(v) agreement
that restricts in any material respect the ability of the Company to engage in
any line of business or compete with any Person;
(vi) joint
venture or partnership agreement involving a sharing of profits, losses, costs
or liabilities by the Company with any other Person;
(vii) lease
or agreement under which the Company is (A) lessee of or holds or operates any
tangible personal property owned by any other Person, except for any lease of
tangible personal property under which the aggregate annual rental payments do
not exceed $10,000, or (B) lessor of or permits any other Person to hold or
operate any tangible property owned by the Company;
(viii) agreement
regarding Intellectual Property or Computer Systems (except for licenses for
commercially available off-the-shelf software where the aggregate value of all
licenses of the same or substantially identical software is less than
($10,000);
(ix) contract
or agreement relating in any way to compliance with any state insurance
regulatory or licensing requirement; and
(x) any
other contract, agreement or other arrangement that is material to the
Business.
(b) Each
Material Contract is a valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms except as such enforceability
may be limited by (i) applicable insolvency, bankruptcy, reorganization,
moratorium or other similar laws affecting creditors’ rights generally, and (ii)
applicable equitable principles (whether considered in a proceeding at law or in
equity).
22
(c) The
Company is not in material violation or breach of or default under any Material
Contract. To the Company’s Knowledge, the other parties to each
Material Contract are not in material violation or breach of or default
thereunder. The Company has provided to the Buyer a true, correct and
complete copy of each written Material Contract and a written description of the
material terms of each oral Material Contract.
4.17. Employees.
(a) The
Company is not a party to or bound by or subject to any collective bargaining
agreement or other similar contract with any labor union. The Company
has not experienced any strike or material grievance, claim of unfair labor
practices, or other collective bargaining dispute since its
inception. To the Company’s or Seller’s Knowledge, no organizational
effort is presently being made or threatened by or on behalf of any labor union
with respect to employees of the Company.
(b) The
Company is in compliance with all requirements of applicable federal, state and
local laws and regulations governing employment and employee relations,
including but not limited to laws relating to employment discrimination, civil
rights, equal pay, wages, hours, collective bargaining and labor relations,
occupational safety and health, workers’ compensation, immigration, or the
withholding and payment of income, social security (FICA) or similar taxes, and
any similar laws of any foreign jurisdiction. No suits, charges or
administrative proceedings relating to any such law or regulation will be
pending as of the Closing Date. To the Company’s Knowledge, no suit,
charge or administrative investigation alleging a violation of any such law or
regulation has been threatened since January 1, 2004. On and after
the Closing Date neither Buyer nor the Company shall have any liability to any
employee of the Company (or to any Government Entity with respect to any such
employee) under any such law or regulation relating to claims arising out of or
related to any event occurring on or prior to the Closing Date.
(c) As
of the Closing Date, neither the Company nor Seller has engaged in any plant
closing, workforce reduction or other action which has resulted or could result
in liability under the Worker Adjustment and Retraining Notification Act of
1988, or under any comparable law or regulation of a state or a foreign
jurisdiction, and has not issued any notice that any such action is to occur in
the future.
(d) Except
as listed in Section 4.17(d) of the Disclosure Schedule, (i) the Company
has in its files a Form I-9 that is validly and properly completed in
accordance with applicable Legal Requirements for each employee with respect to
whom such form is required; (ii) neither the Company nor Seller has
received notice or other communication from any Government Entity or other third
party regarding any violation or alleged violation of any applicable Legal
Requirement relating to hiring, recruiting, employing (or continuing to employ)
anyone not authorized to work in the United States; and (iii) for each
employee of the Company whose social security number (or purported social
security number) has appeared on any “no-match” notification from the Social
Security Administration (SSA), such employee or the Company has resolved in
accordance with applicable Legal Requirements each discrepancy or
non-compliance with respect to such social security number (or, if applicable,
such purported social security number).
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(e) The
consummation of the transaction contemplated by this Agreement will not, either
immediately or upon the occurrence of any event thereafter, entitle any current
or former employer, officer or director of either Seller or Company to
severance pay, unemployment compensation or any other payment or accelerate the
time of payment or vesting or increase the amount of compensation otherwise due
any such individual.
(f) Except
as set forth in Section 4.17(f) to the Disclosure Schedule, neither of the
Seller nor the Company is a party to, has any obligation or other
arrangement with respect to, or is bound by (or at any time in the two (2) years
prior to the Closing Date was a party to, had an obligation or other arrangement
with respect to, or was bound by) any employment or consulting agreement. Seller
and Company have provided Buyer with true, correct and complete copies of
each such employment or consulting agreement (or a complete written description
thereof if the employee arrangement is not set forth in writing).
(g) Section 4.17(g)
of the Disclosure Schedule hereto contains a true and complete list of all
persons employed by the Company, or otherwise providing services to the Company,
in connection with the conduct of the Business (including, without
limitation, employees of the Company and employees on leave of absence
and the reason for the leave of absence), including date of hire, job title and
job description, address, current annual or hourly compensation (and a
description of other material compensation arrangements, including any bonus or
commission opportunity), employee loans, accrued vacation and service credited
for purposes of vesting and eligibility to participate in the Employee Benefits
plans. To the Knowledge of Seller, none of the employees will terminate his or
her employment with the Company as a result of the consummation of the
transactions contemplated by this Agreement or otherwise, except for any
employee terminations the Buyer has knowledge of as of the date of this
agreement.
(h) Except
as set forth in Section 4.17(h) of the Disclosure Schedule, neither the
Sellers nor the Company is a party to any consent decree, contract,
agreement, or arrangement with any of their employees that (i) restricts such
employer’s right to terminate the employment of any employee without cause or
without a specified notice period, (ii) obligates such employer to pay severance
to any such employee upon termination of such employee’s employment or (iii)
transfer, hire, compensate or promote any such employee.
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(i) Neither
the Seller nor the Company is a party to, has any obligation or other
arrangement with respect to, or is bound by any contract which individually or
collectively, would upon the consummation of the transaction contemplated by
this Agreement require payment of a Change of Control Payment (as hereinafter
defined). For purposes of the foregoing sentence, the term "Change of Control
Payment" shall include (without limitation) (1) any payment,
acceleration, forgiveness of indebtedness, vesting, distribution, increase in
benefits or obligation to fund benefits. The execution of this Agreement and the
consummation of the transactions contemplated by this Agreement (alone or
together with any other event which, standing alone, would not by itself trigger
such entitlement or acceleration) will not entitle any person to any Change of
Control Payment, (2) otherwise trigger any acceleration (of vesting or payment
of benefits or otherwise) under or with respect to any Company Benefits Plan, or
(3) trigger any obligation to fund any Company Benefits Plan.
(j) To
the Knowledge of Seller, none of the employees of either Seller or the
Company have suffered or is suffering from any illness or disease caused
directly or indirectly by any employment related condition or by contact with
any hazardous materials within the scope of such employee’s
employment.
(k) To
the Knowledge of Seller, no employee of either Seller or the Company is
subject to any secrecy or noncompetition agreement or any other agreement or
restriction of any kind that would impede in any way the ability of such
employee to carry out fully all activities of such employee in furtherance of
the Business.
(l) To
the Knowledge of Seller, neither the Seller nor the Company is a
covered federal contractor or subcontractor under Executive Order 11246, as
amended (including Section 503 of the Rehabilitation Act of 1973 and the
Vietnam Era Veterans Readjustment Assistance Act of 1974). Neither the Seller
nor the Company has any affirmative action plans with any state or
local agencies.
4.18. Affiliate
Transactions. No officer, director, or Affiliate of the
Company (or any of their immediate family members), (i) is a party to any
material agreement, contract, commitment, transaction or arrangement with the
Company, or (ii) has any interest in any material property used by the Company
directly in the Business, or (iii) owns, directly or indirectly, any interest in
any Person that competes in any material manner with the Company.
4.19. Brokerage. The
Company has not retained any broker in connection with the transactions
contemplated by this Agreement. Buyer will not have any obligation to
pay any broker’s, finder’s, investment banker’s, financial advisor’s or similar
fee in connection with this Agreement or the transactions contemplated by this
Agreement by reason of any action taken by or on behalf of the
Company.
4.20. Advisory
Contracts. Section 4.20(a) of the Disclosure Schedule lists
all of the Advisory Agreements in existence as of the date hereof, complete and
correct copies of which, including all amendments and supplements thereto, have
been made available to Buyer. Section 4.20(a) of the Disclosure
Schedule indicates which Advisory Agreements are with Affirmative Consent
Clients and which are with Negative Consent Clients. All Affirmative
Consent Clients have an Advisory Agreement in the form attached as Section
4.20(a) of the Disclosure Schedule. All Negative Consent Clients have
an Advisory Agreement in the form attached as Section 4.20(b) of the Disclosure
Schedule. The Company is in compliance with each Advisory Agreement
in all material respects and, assuming receipt of the appropriate Consents, no
breach or default of any Advisory Agreement will occur as a result of the
Transaction Documents or the performance by the Company and the Seller of any of
their respective covenants or obligations thereunder. Each Advisory
Agreement is valid and binding on the Company and is in full force and effect
and is enforceable against the Company and each applicable Client in accordance
with its terms. Section 4.20(c) of the disclosure Schedule lists the
Largest Clients of the Company.
25
4.21. Ineligible
Persons. Neither the Company nor any “associated person” (as
defined in the Exchange Act or the Investment Advisers Act) is ineligible
pursuant to Section 15(b) of the Exchange Act or Section 203 of the
Investment Advisers Act to serve as a registered investment adviser or
“associated person” of a registered investment adviser, or
broker-dealer, nor is there any legal proceeding pending or, to the
Knowledge of Seller, threatened by any Government Entity which would result in
the ineligibility of either the Company or any “associated person” to serve in
any such capacities. Neither the Company nor any “affiliated person”
(as defined in the Investment Company Act) 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 to a registered investment company.
4.22. Assets Under Management;
Registered and Private Funds.
(a) Section
4.22(a) of the Disclosure Schedule lists the aggregate Assets Under Management
for which the Company provided investment advisory services pursuant to Advisory
Agreements as of December 31, 2008, December 31, 2007 and December 31,
2006. As of August 31, 2009, the aggregate Assets Under Management
for which the Company provided investment advisory services pursuant to Advisory
Agreements was $4,618 million.
(b) Except
as set forth on Section 4.22(b) of the Disclosure Schedule, none of the Advisory
Agreements contains any undertaking of the Company or any of its affiliates to
waive or reimburse advisory fees or expenses thereunder.
(c) Each
Registered Fund is duly registered with the SEC as an investment company under
the Investment Company Act and has, since January 1, 2004, filed all Registered
Fund SEC Documents in compliance in all material respects with the Securities
Act and the Investment Company Act, except where the failure by any such
Registered Fund to so file, individually or in the aggregate, would not
reasonably be expected to have a Company Material Adverse Effect.
(d) Each
Fund that is a juridical entity is duly organized, validly existing and, with
respect to entities in jurisdictions that recognize the concept of “good
standing,” in good standing under the laws of the jurisdiction of its
organization and has the requisite corporate, trust, company or partnership
power and authority to own its properties and to carry on its business as
currently conducted, and is qualified to do business in each jurisdiction where
it is required to be so qualified under applicable Legal Requirements (except
where failure to do so is not material to its business).
(e) Each
Fund currently is, and has since January 1, 2004 (or, if later, its inception),
operated in compliance in all material respects (A) with applicable Legal
Requirements and (B) with its respective investment objectives, policies and
restrictions.
26
(f) The
shares or units of each Fund (A) have been issued and sold in compliance with
applicable Legal Requirements in all material respects and (B) are registered or
qualified for public offering and sale in each jurisdiction where offers are
made to the extent required under applicable Legal Requirements.
(g) Since
January 1, 2004, each Registered Fund has filed all Registered Fund SEC
Documents in compliance in all material respects with applicable Legal
Requirements. Since January 1, 2004, each Registered Fund’s (A)
prospectus (including supplements thereto) forming the part of any registration
statement filed with the SEC under the Securities Act and the Investment Company
Act and (B) annual and semi-annual shareholder reports filed with the SEC
pursuant to Section 30 of the Investment Company Act did not at the time they
were filed, and did not during the period of their authorized use, contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were or are made, not
misleading.
(h) Each
such Registered Fund has duly adopted written policies and procedures required
by Rule 38a-1 under the Investment Company Act and, to the Knowledge of the
Company, all such policies and procedures comply in all material respects with
the applicable Legal Requirements.
(i) All
payments made with respect to those Registered Funds that are registered under
the Investment Company Act as an open-end management investment company and
relating to the distribution of their shares (other than payments that are not
required by applicable Legal Requirements to be paid pursuant to a 12b-1 Plan)
have been made in compliance in all material respects with the related 12b-1
Plan adopted by such open-end Registered Funds, and such payments and the
operation of each such 12b-1 Plan complies in all material respects with Rule
12b-1 of the Investment Company Act and other applicable Legal
Requirements.
(j) For
all taxable years since its inception, each of the Registered Funds has elected
to be treated as, and has qualified to be classified as, a regulated investment
company taxable under Subchapter M of Chapter 1 of the Code.
(k) The
most recent annual report to shareholders of each Registered Fund, comprising
part of the Registered Fund SEC Documents of such Registered Fund, describes the
respective total net assets for each such Registered Fund and the respective
fees payable to the Company by each Registered Fund under the applicable
Investment Advisory Agreement, each as of the date of such annual
report.
27
(l) Each
Investment Advisory Agreement subject to Section 15 of the Investment Company
Act to which the Company is a party has been duly approved and, if applicable,
continued and is in compliance in all material respects with the Investment
Company Act. Since January 1, 2004, each such Investment Advisory
Agreement has been performed by the Company in accordance with its terms and
with the Investment Company Act and other applicable Legal Requirements, in each
case, in all material respects.
(m) Since
January 1, 2004, each Investment Advisory Agreement with a Client other than a
Registered Fund has been performed by the Company in accordance with its terms
and with the Investment Advisers Act and other applicable Legal Requirements, in
each case, in all material respects.
4.23. No Notice of Diminution of
Business. None of the Largest Clients of the Company have
given notice, threatened or expressed orally or in writing any intention to
terminate the Company’s Advisory Agreement or reduce the Assets Under Management
that the Company manages with respect to these clients.
4.24. Disclosure. Neither
this Agreement, nor any schedule or exhibit to this Agreement, contains, with
respect to the Company, an untrue statement of a material fact or omits a
material fact necessary to make the statements contained herein or therein not
misleading. The written statements, documents, certificates and other
items prepared or supplied by Company or Seller with respect to the transactions
contemplated hereby, taken as whole, do not contain an untrue statement of a
material fact or omit a material fact necessary to make the statements contained
therein not misleading. There is no fact which the Company or Seller
has not disclosed to Buyer which Company or Seller is aware which could be
expected to have a Material Adverse Effect.
ARTICLE
5
REPRESENTATIONS
AND WARRANTIES OF BUYER
Buyer
represents and warrants to Seller that:
5.1. Organization, Power and
Authorization. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Delaware. Buyer is duly authorized to conduct business and is in good
standing under the laws of each jurisdiction where such qualification is
required. Buyer has the power to carry on the businesses in which it
is engaged and to own and use the properties owned and used by
it. Buyer has the requisite power and authority necessary to enter
into, deliver and perform its obligations pursuant to each of the Transaction
Documents to which it is a party. Buyer’s execution, delivery and
performance of each Transaction Document to which it is a party has been duly
authorized by Buyer.
5.2. Binding Effect and
Noncontravention.
(a) This
Agreement has been duly executed and delivered by Buyer and constitutes, and
each other Transaction Document to which Buyer is a party when executed and
delivered will constitute, a valid and binding obligation of Buyer, enforceable
against Buyer in accordance with its terms except as such enforceability may be
limited by (i) applicable insolvency, bankruptcy, reorganization, moratorium or
other similar laws affecting creditors’ rights generally, and (ii) applicable
equitable principles (whether considered in a proceeding at law or in
equity).
28
(b) The
execution, delivery and performance by Buyer of the Transaction Documents to
which it is a party do not (i) violate any material Legal Requirement to which
Buyer is subject or its charter or bylaws or equivalent organizational
documents, (ii) conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
material agreement, contract, lease, license, instrument, or other material
arrangement to which Buyer is a party or by which Buyer is bound or to which
Buyer’s assets are subject, (iii) result in the creation of any Lien on any
assets of Buyer, or (iv) require any Consent by or to any Person.
5.3. Brokerage. Buyer
has not retained any broker in connection with the transactions contemplated by
this Agreement. Neither the Company nor Seller will have any
obligation to pay any broker’s, finder’s, investment banker’s, financial
advisor’s or similar fee in connection with this Agreement or the transactions
contemplated by this Agreement by reason of any action taken by or on behalf of
Buyer.
5.4. Litigation. Buyer
(i) is not subject to any outstanding injunction, judgment, order or decree, and
(ii) is not party to or, to Buyer’s Knowledge, threatened to be made a party to,
any proceeding, hearing, investigation, claim, legal action, suit, arbitration,
Government investigation or other legal or administrative proceeding, which
would reasonably be expected to have an adverse effect on Buyer’s ability to
consummate the transactions contemplated by this Agreement or otherwise perform
its obligations under any Transaction Document to which it is a
party.
5.5. Investment. Buyer
is acquiring the Shares for its own account, for investment only, and not with a
view to any resale or public distribution thereof. Buyer shall not
offer to sell or otherwise dispose of the Shares in violation of any Legal
Requirement applicable to any such offer, sale or other
disposition. Buyer acknowledges that (i) the Shares have not been
registered under the Securities Act, or any state securities laws, (ii) there is
no public market for the Shares and there can be no assurance that a public
market shall develop, and (iii) it must bear the economic risk of its investment
in the Shares for an indefinite period of time. Buyer is an
“accredited investor” within the meaning of SEC Rule 501 of Regulation D under
the Securities Act, as presently in effect.
ARTICLE
6
COVENANTS
6.1. Pre-Closing
Covenants. The Parties agree as follows with respect to the
period between the execution of this Agreement and the Closing:
(a) General. Each
of the Parties shall use commercially reasonable efforts to timely take all
actions and do all things necessary, proper, or advisable in order to consummate
the transactions contemplated by this Agreement (including satisfaction, but not
waiver, of the closing conditions set forth in Article 8).
29
(b) Operation of
Business. Except as Buyer may approve (with such approval not
to be unreasonably withheld), or as otherwise expressly contemplated or
permitted by this Agreement, Seller shall cause the Company to conduct the
Business in the ordinary course in accordance with past practice and to not take
any affirmative action, or fail to take any reasonable action within their
control, which is likely to result in a change or event listed in Section 4.6 or
which is likely to cause any representation or warranty to be inaccurate.
Without limiting the generality of the foregoing, from the date hereof until the
Closing, except as may be consented to in writing by Buyer, Company shall not
(i) enter into any Material Contract (other than Advisory Agreements, and
renewals thereof, with Clients in the ordinary course of business) or any
transaction which is material to the Company, or (ii) amend or revise any
Advisory Agreement to reduce, waive or agree to offset any fee or reimburse any
expenses payable under such Advisory Agreement to the Company or offer or
promise to any Client any reduced fee, fee waiver or expense reimbursement in
connection with the procurement of its Consent to the assignment or deemed
assignment of its Advisory Agreement or otherwise.
(c) Access to
Records. Seller shall cause the Company to permit Buyer to
have access at reasonable times, and in a manner so as not to interfere with the
normal business operations of the Company, to the employees of the Company, and
all books, records (including tax records), contracts, and documents of or
pertaining to the Company.
(d) Notice of
Developments. Each Party shall promptly notify the other Party
in writing (i) if any representation or warranty of such notifying Party set
forth in this Agreement was untrue when made, (ii) of any breach of any covenant
or obligation of such Party set forth in this Agreement or (iii) of any
development occurring after the date of this Agreement that would cause or
constitute a material breach of any of such Party’s representations and
warranties set forth in this Agreement if such representation or warranty had
been made at the time of such development.
(e) Contact with Customers and
Suppliers. Buyer agrees that it is not authorized to and shall
not (and shall not permit any of its employees, agents, representatives or
Affiliates to) contact any employee (other than an officer), supplier,
distributor, customer or other material business relation of the Company prior
to the Closing without the prior written consent of the Company.
(f) Exclusivity. Until
this Agreement is terminated pursuant to Section 9.1, Seller will not permit the
Company or any representative thereof to, directly or indirectly: (i) solicit,
initiate or encourage any inquiry, proposal or offer from any Person relating to
any transaction involving the sale of the business or assets (other than in the
ordinary course of business) of the Company, or any of the equity interests of
the Company, or any merger, consolidation, business combination, or similar
transaction involving the Company (an “Acquisition Transaction”); (ii)
participate in any discussions or negotiations or enter into any agreement with,
or provide any non-public information to, any Person (other than Buyer) relating
to or in connection with a possible Acquisition Transaction; or (iii) consider,
entertain or accept any proposal or offer from any Person (other than Buyer)
relating to a possible Acquisition Transaction.
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(g) Confidentiality. Each
of the Parties hereto agrees that the terms and conditions set forth in that
certain Letter of Intent, dated as of July 29, 2009, as executed by Seller
and The Miles Group, LLC
on behalf of the Buyer (the “Confidentiality Agreement”) shall remain in full
force and effect following the execution of this Agreement. The
obligations of The Miles Group, LLC under the Letter of Intent shall be fully
applicable to Buyer and each of its Affiliates and representatives.
(h) Consents by Clients Other
Than Registered Funds. The Company shall send a notice (the
“Client
Notice”) informing Clients other than Registered Funds of the
transactions contemplated by this Agreement and requesting written consent to
the assignment of such Client’s Investment Advisory Agreement. The
Notice shall inform such Client: (i) of the intention to complete the
transactions contemplated by this Agreement, which will result in a deemed
assignment of such Investment Advisory Agreement; (ii) of the intention of the
Company to continue to provide the advisory services pursuant to the existing
Investment Advisory Agreement with such Client after the Closing if such Client
does not terminate such agreement prior to the Closing; (iii) requesting the
written consent of such Client to the assignment; and (iv) the Investment
Advisory Agreement will be terminated without consent to the assignment, and
consent will be deemed to have been granted if such Client continues to accept
such advisory services for a period of at least forty-five (45) days after the
sending of the Client Notice without termination.
(i) Consents by Registered Fund
Clients. The Company shall use its commercially reasonable
efforts to, in accordance with applicable Legal Requirements, (i) as promptly as
practicable after the date of this Agreement obtain the approval of each of the
Registered Fund Boards of a new Investment Advisory Agreement, to be effective
as of the Closing Date, containing terms, taken as a whole, that are no less
favorable to the Company than the applicable existing Investment Advisory
Agreement and (ii) request the Registered Funds to obtain, as promptly as
practicable, the necessary approval of the shareholders of each Registered Fund
of such new Investment Advisory Agreement. The Parties agree that
consent for any Investment Advisory Agreement with a Registered Fund (“Registered Fund
Consent”) shall be deemed given for all purposes under this Agreement if
a new Investment Advisory Agreement has been approved in accordance with the
preceding sentence and is in full force and effect at the Closing; provided that the
term “Registered Fund Consent” shall not include any interim Investment Advisory
Agreement approved in accordance with Rule 15a-4 under the Investment Company
Act. In the event that a Registered Fund Consent is not obtained
prior to the Closing, the Company may, in its sole discretion,
request the board of directors or trustees of such Registered Fund to approve,
in conformity with Rule 15a-4 under the Investment Company Act, an interim
Investment Advisory Agreement, to be effective immediately following the
Closing, for each such Registered Fund containing the same terms and conditions
as the existing applicable Company (except as permitted under Rule 15a-4 under
the Investment Company Act) with each such Registered Fund. In the
event that the provisions of Rule 15a-4 under the Investment Company Act are
utilized, the Company and Buyer and shall use commercially reasonable efforts to
obtain the required shareholder consents as promptly as practicable following
the Closing Date (and in any event prior to the expiration of such interim
contracts).
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(j) In
connection with obtaining the Client consents and other actions required by
subsections (a) and (b) of this Section 6.1, at all
times prior to the Closing the Company or Seller shall take reasonable steps to
keep Buyer promptly informed of the status of obtaining such Client consents
and, upon Buyer’s request, make available to Buyer copies of all such executed
Client consents and make available for Buyer’s inspection the originals of such
consents and any related materials and other records relating to the Client
consent process.
(k) In
connection with obtaining the Client consents required under subsection (a) of
this Section
6.1, Buyer shall have the right to review in advance of distribution any
notices or other materials to be distributed by the Company to Clients and shall
have the right to have its reasonable comments reflected therein prior to
distribution.
6.2. Registered Fund Proxy
Statements; Registration Statements.
(a) As
promptly as practicable following approval of the Registered Fund Boards
described in Section 6.1, the Company will (in coordination with the applicable
Registered Fund and under the general direction of the applicable Registered
Fund Board) prepare and file proxy materials for the Registered Fund shareholder
meeting to approve the new Investment Advisory Agreement. In
connection with such proxy materials, Buyer shall have the right to review in
advance of submission to the SEC the proxy materials (and any amendment or
supplement thereto) to be furnished to the shareholders of any Registered Fund
and to (i) approve information or data that is provided by or on behalf of Buyer
or its Affiliates specifically for inclusion in such proxy materials (such
approval not to be unreasonably withheld, delayed or conditioned) and (ii)
provide reasonable comments on such material which the Company (in coordination
with the applicable Registered Fund and under the general direction of the
applicable Registered Fund Board) will use commercially reasonable efforts to
include.
(b) As
soon as possible following the date hereof, the Company shall use its
commercially reasonable efforts to cause each Registered Fund then engaged in a
public offering of its shares to (i) file supplements to its prospectus forming
a part of its registration statement then currently in use, which supplements or
amendments shall reflect changes as necessary in such Registered Fund’s affairs
as a consequence of this Agreement, and (ii) make any other filing necessary
under any applicable Legal Requirements to satisfy disclosure requirements to
enable the public distribution of the shares of that Registered Fund to
continue. Buyer shall have the right to provide reasonable comments
on such materials to the same extent as provided in Section 6.1(a).
32
6.3. Investment Company
Act.
(a) Buyer
acknowledges that the Company has entered into this Agreement in reliance upon
the benefits and protections provided by Section 15(f) of the Investment Company
Act. In furtherance (and not limitation) of the foregoing, Buyer
shall, and shall cause each of its Affiliates to, conduct its business and use
commercially reasonable efforts to enable the following to be true regarding
Section 15(f) of the Investment Company Act in relation to any Registered Fund
for which the Company provides investment advisory or sub-advisory services: (a)
for a period of not less than three (3) years after the Closing (and provided
the 75% standard for disinterested directors is in effect at the Closing), no
more than 25% of the members of the board of directors or trustees of any
Registered Fund shall be “interested persons” (as defined in the Investment
Company Act) of the Company, the Buyer or any of its Affiliates, and (b) for a
period of not less than two (2) years after the Closing, neither Buyer nor any
of its Affiliates shall impose an “unfair burden” (within the meaning of the
Investment Company Act, including any interpretations or no-action letters of
the SEC) on any such Registered Fund as a result of the transactions
contemplated by this Agreement.
(b) For
a period of three (3) years from the Closing, Buyer shall not engage, and shall
cause its Affiliates not to engage, in any transaction that would constitute an
“assignment” (as defined in the Investment Company Act) to a third party of any
Investment Advisory Agreement between Buyer or any of its Affiliates and any
registered investment company managed or advised by the Company as of the date
of this Agreement, without first obtaining a covenant in all material respects
the same as that contained in this Section. Notwithstanding anything to the
contrary contained herein, the covenants of the Parties hereto contained in this
Section are intended only for the benefit of such Parties and for no other
Person.
6.4. Post-Closing
Covenants. The Parties agree as follows with respect to the
period following the Closing:
(a) Further
Assurances. Buyer and Seller, severally and not jointly, shall
execute and deliver such further instruments of conveyance and transfer and take
such other action as may be reasonably necessary to effectuate the transactions
contemplated by this Agreement.
(b) Record
Retention. The Parties agree that for a period of seven years
after the Closing Date, without the prior written consent of Seller, which will
not be unreasonably withheld, none of Buyer, the Company, or any of their
respective Affiliates or successors and assigns shall dispose of or destroy any
of the books and records of the Company which may be relevant to any legal,
regulatory or tax audit, investigation, inquiry or requirement of Seller or the
Company without first offering such records to Seller. As a condition
to requiring Buyer to offer such records to Seller, Seller shall execute a
confidentiality agreement in form and substance reasonably satisfactory to
Buyer.
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(c) Litigation
Support. In the event that and for so long as any Party or the
Company is actively contesting or defending against any third party action,
suit, proceeding, hearing, investigation, charge, complaint, claim, or demand in
connection with any transaction contemplated under this Agreement, or any fact,
situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction on or prior
to the Closing Date involving the Company or its operations, each Party agrees
to (i) cooperate with the contesting or defending Party and its counsel, (ii)
make available its employees (including, without limitation, the employees of
the Company, and its successors and assigns) to provide testimony, to be
deposed, to act as witnesses and to assist counsel, and (iii) provide access to
its books and records (including, without limitation, the books and records of
the Company and its successors and assigns) as shall be necessary in connection
with the defense or contest, all at the sole cost and expense of the contesting
or defending party (unless the contesting or defending party is entitled to
indemnification therefor under Section 7 below).
6.5. Benefit
Plans. Company and Seller will take all action necessary or
required to terminate the Company’s participation in all Company Benefit Plans
prior to the Closing, and Seller shall indemnify Buyer or the Company for any
claims or Liability related to administration of the Company Benefit Plans prior
to the Closing. For the period prior to the Closing, the Company
shall remain responsible for:
(a) all
Liabilities arising out of or relating to employee benefits or compensation
plans, programs, agreements or arrangements sponsored, maintained or contributed
to by the Company, including (i) all Liabilities arising under the Company
Benefit Plans, and (ii) all Liabilities with respect to salaries, wages,
commissions, bonuses, vacation, sick pay or paid time off and other employee
benefits of any nature that are payable or owed to any current or former
employee or independent contractor of the Company in respect of services
rendered by such individuals prior to the Closing Date.
(b) all
severance and related obligations arising in connection with the termination of
any employee of the Company whose employment is terminated prior to the Closing
Date, including all Liabilities to provide "continuation coverage" to employees
(and their covered dependents) under the applicable health plans of the Company
with respect to all qualifying events under COBRA; and
(c) all
Liabilities arising out of or relating to any claims by any current or former
employees or independent contractors of the Company with respect to any personal
injuries, including workers’ compensation, disability or similar workers’
protection claims, arising prior to the Closing Date, regardless of when any
such claim is made or asserted.
(d) Company
will pay or provide to the Company employees all compensation (including
bonuses) and other benefits (including accrued sick leave, vacation, paid time
off and personal days earned or accrued with respect to such employees’ service
with the Company through the Closing.
34
(e) Seller
shall be responsible for any profit sharing contributions for 2009, if
any. Prior to the Closing Date, Company and Seller shall take all
actions necessary to fully vest each Company employee in all of such employee’s
accounts under the West Bancorporation, Inc. Employee Savings and Stock
Ownership Plan (“Seller’s 401(k) Plan”). Within a reasonable period
of time on or after the Closing, Seller shall transfer from the Plan to the
Section 401(a) defined contribution plan established by the Buyer (“Buyer’s
401(k) Plan”) an amount equal to the aggregate account balances of the non-ESOP
portion of the Seller’s 401(k) Plan held in the Seller’s 401(k) Plan as of the
date of transfer with respect to all Company employees. The transfer
of assets contemplated by this Section 6.5(e) shall be in cash or a combination
of cash and in kind, as may be mutually agreeable to Seller and
Buyer. Prior to the date of such transfer, and as preconditions
thereto: Seller shall deliver to Buyer a copy of the most recently
issued IRS determination letter that the Seller’s 401(k) Plan is qualified under
the Code together with a representation from the Seller that from the date of
such determination letter through the date of the transfer nothing has occurred
which would bring into question the validity of such letter and the
qualifications of the Seller’s 401(k) Plan under the Code or
ERISA. Seller shall not take any action with respect to the Seller’s
401(k) Plan to create a right on behalf of the Company employees to distribution
of non-ESOP plan assets from the Seller’s 401(k) Plan prior to such
transfer. Notwithstanding the foregoing, in the event Buyer
determines that a transfer of assets would require one or more amendments to the
Buyer’s 401(k) Plan to comply with the requirements of § 411(d)(6) of the Code,
no transfer of assets to the Buyer’s 401(k) Plan will be required unless Buyer,
in its sole discretion, consents to making such amendment(s). On or
prior to the Closing Date, Seller shall deliver to Buyer a list of all Company
employees, indicating thereon the total amount deferred in pre-tax or after-tax
dollars to the Seller’s 401(k) Plan by each Company employee under the terms of
§ 402(g) of the Code with respect to the plan year of the Seller’s 401(k) Plan
in which the Closing occurs and the amount and terms of any promissory notes
representing loans taken by participants in the Seller’s 401(k) Plan that are
outstanding as of the Closing Date.
(f) Seller
shall be responsible for the costs and consequences associated with the
termination of any Company employee who does not remain employed with the
Company through Closing.
(g)
Seller shall be responsible for providing all notices and
continuation coverage required under COBRA to all employees of the Company who
are or become "M&A Qualified Beneficiaries" (as such term is defined in
Treasury Regulations §54.4980B-9) as a result of the consummation of this
Agreement. Specifically, Seller agrees that all obligations to
provide such continuation coverage to M&A Qualified Beneficiaries are being
allocated to Seller. If Seller or any of its Affiliates cease to
maintain a group health care plan, then, notwithstanding any other provision of
this Agreement to the contrary, Seller shall reimburse Buyers for any and all
expenses incurred by Buyer in excess of the premiums collection by Buyers from
M&A Qualified Beneficiaries and any actual reinsurance recoveries (including
claims incurred under Buyers or its affiliates' group health plan,
administrative fees, reinsurance premiums, etc.) in providing such continuation
coverage to such M&A Qualified Beneficiaries.
35
6.6. Seller’s Covenant Not to
Compete or Solicit. For a period of five (5) years following
the Closing, Seller and its Affiliates shall not directly or indirectly, in any
capacity, engage in or have any investment in, or be affiliated in or affiliated
with any business which is competitive with any business now actively conducted
by the Company including but not limited to the investment advisory business,
investment brokerage, and investment and money management (collectively defined
as “Investment
Advice”). This covenant not to compete shall not prevent West
Bank’s trust department from providing those services offered as of the date of
this Agreement, or West Bank’s ownership of and banking arrangements with
SmartyPig, L.L.C. Further, this covenant not to compete may be
terminated prior to five years from Closing, if in connection with a merger,
combination, or acquisition between or involving Seller or its Affiliates and
another entity engaged in the business of Investment Advice (an “Investment Business
Transaction”): (1) Seller forgives in writing 40% of the
outstanding remaining principal due on the Promissory Note described in Section
2.2(A) of this Agreement, such amount to be determined as of the day of closing
of the Investment Business Transaction, and (2) Seller agrees in writing to
forgo 40% of the Prepayment Contingency Amount as described in Section 2.2(B) of
this Agreement determined as of the day of closing of the Investment Business
Transaction. For a period of five (5) years following the Closing,
Seller and its Affiliates shall not directly or indirectly solicit or otherwise
induce any person employed by the Company to terminate his or her employment or
relationship with the Company, provided however, it
shall not be a violation of this covenant for Seller to generally advertise
employment opportunities in a widely disseminated manner in which employees of
the Company respond but are not otherwise directly solicited.
6.7. Certain Tax
Matters.
(a) Responsibility
for Filing Tax Returns.
(i) Seller
shall include the income of the Company (including any deferred items triggered
into income by Treasury Regulation Section 1.1502-13 and any excess loss account
taken into income under Treasury Regulation Section 1.1502-19) on Seller’s
consolidated federal income Tax Returns and all other consolidated, combined or
unitary Tax Returns of Seller and its Affiliates that include the Company for
all periods through and including the Closing Date, and shall pay any and all
Taxes attributable to such income. Seller also shall file or cause
the Company to file all other Tax Returns of or which include the Company
required to be filed (taking into account any extensions) on or prior to the
Closing Date and shall pay any and all Taxes due with respect to such Tax
Returns. All Tax Returns described in this Section 6.7(a)(i) shall be
prepared in a manner consistent with prior practice (including as to Tax
elections and Tax accounting methods) unless a contrary treatment is required by
applicable tax laws (or the judicial or administrative interpretations thereof).
Seller’s consolidated federal income Tax Return for the taxable period that
includes the Closing Date shall be filed in accordance with Treasury Regulation
Sections 1.1502-76(b)(2)(i) and 1.1502-76(b)(2)(vi) (determined using the
closing of the books method), with no election under Treasury Regulation Section
1.1502-76(b)(2)(ii)(D)).
36
(ii) Following
the Closing, Buyer shall be responsible for preparing or causing to be prepared
all federal, foreign, state and local Tax Returns required to be filed by the
Company on a separate return basis after the Closing Date, including Straddle
Period Tax Returns. Buyer shall file or cause to be filed all such
Tax Returns and shall, subject to receiving the payments from Seller referred to
in Section 6.7(a)(iii), pay the Taxes shown due thereon; provided, however, that
nothing contained in the foregoing shall in any manner terminate, limit or
adversely affect any right of Buyer to receive indemnification pursuant to any
provision in this Agreement.
(iii) Not
later than five (5) days before the due date for payment of Taxes with respect
to any Tax Returns which Buyer has the responsibility to file, Seller shall pay
to Buyer an amount equal to that portion of the Taxes shown on such return for
which Seller has an obligation to indemnify Buyer Parties pursuant to the
provisions of Section 6.7(c).
(b) Allocation of
Taxes. In the case of any Tax that relates to any taxable
period of the Company (or Seller where applicable) that begins on or before or
includes the Closing Date but does not end on or before the Closing Date (a
“Straddle Period”), the portion of the Tax attributable to the Business or for
which the Company may be liable for the Pre-Closing Period shall be determined
as follows: (i) in the case of any Tax that is based on net or gross
income, based on an interim closing of the books as of the close of business on
the Closing Date; (ii) in the case of any Tax based on a specific event or
transaction, based on the actual date of such event or transaction; and (iii)
for all other Taxes, the portion attributable to the Pre-Closing Period shall be
the amount of the Tax for the entire taxable period multiplied by a fraction the
numerator of which is the number of days in the Pre-Closing Period and the
denominator of which is the number of days in the entire taxable
period. For periods ending on or before the Closing Date, the entire
amount of Taxes owed with respect to such period shall be allocable to the
Pre-Closing Period.
(c) Indemnification. Seller
shall be liable for, and agree to defend, hold harmless and indemnify Buyer and
its Affiliates (including, after the Closing Date, the Company), officers,
directors, employees or agents (the “Buyer Parties”), from and against any and
all claims with respect to:
(i) any
and all Taxes of or attributable to the Business or for which Seller or the
Company may be liable with respect to any period, or portion thereof, ending on
or before the Closing Date (“Pre-Closing Periods”);
(ii) any
and all Taxes arising by reason of any breach of the representations and
warranties contained in Section 4.9;
37
(iii) any
and all Taxes of Seller or any other corporation or Person, other than the
Company, that is or was a member of a consolidated, combined or unitary group of
which the Company (or any predecessor) is or was a member, including any Taxes
for which the Company is or may be or become liable for under Treasury
Regulation Section 1.1502-6 or 1.1502-78(b)(2) or any similar provision under
any applicable Legal Requirements regarding Taxes; and
(iv) any
and all Taxes for which the Company is liable by reason of being a
successor-in-interest or transferee of another entity.
(d) Tax Sharing
Agreements. Any and all Tax sharing agreements or
arrangements, whether formal or informal, that may exist between Seller or any
of its Affiliates and the Company shall terminate with respect to the Company as
of the Closing Date. After the Closing Date, neither the Company nor
Seller nor any of its Affiliates shall have any further liabilities or
obligations under any such agreements or arrangements.
(e) Cooperation on Tax
Matters. Buyer, the Company and Seller shall cooperate fully,
as and to the extent reasonably requested by the other Party, in connection with
the filing of Tax Returns and any audit, litigation or other proceeding with
respect to Taxes. Such cooperation shall include the retention and
provision of records and information which are reasonably relevant to any such
audit, litigation or other proceeding and making employees available on a
mutually convenient basis to provide additional information and explanation of
any material provided hereunder. Buyer and Seller further agree, upon
request, to use their commercially reasonable efforts to obtain any certificate
or other document from any Government Entity or any other Person as may be
necessary to mitigate, reduce or eliminate any Tax that could be imposed
(including, but not limited to, with respect to the transactions contemplated
hereby). Buyer and Seller further agree, upon request, to provide the
other Party with all information that either party may be required to report
pursuant to Section 6043 of the Code and all Treasury Department
Regulations promulgated thereunder.
ARTICLE
7
SURVIVAL
AND INDEMNIFICATION
7.1. Survival of Representations
and Warranties. All of the representations and warranties
contained in this Agreement shall survive the Closing and continue in full force
and effect until the 36 month anniversary of the
Closing, except that the representations and warranties contained in
Articles 3 and 5 and Sections 4.1 and 4.2 (collectively, the “Special
Representations”) shall continue in full force and effect forever.
7.2. Indemnification Obligations
of Seller.
(a) Seller
shall indemnify and hold harmless Buyer and its owners, officers and directors
and their successors and assigns from and against any Loss that Buyer incurs as
a result of, without duplication, (i) the breach of any covenant made by Seller
in this Agreement; (ii) the breach of any of the representations and warranties
made by Seller in this Agreement; and (iii) third party claims relating in any
manner to the operation of the Business arising prior to the Closing whether or
not asserted, accrued, known or unknown, liquidated or
unliquidated.
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(b) Seller
shall indemnify Buyer from and against any Loss that Buyer incurs that arises in
connection with or relating to the Company’s pre-closing investment advisory
services to any Client Accounts that relates to any litigation,
regulatory proceeding, investigation, inquiry or examination
concerning or with respect to AMCORE Financial, Inc. or its
Affiliates.
7.3. Indemnification Obligations
of Buyer. Buyer shall indemnify and hold harmless Seller and
its owners, officers and directors and their successors and assigns from and
against any Loss that Seller incurs as a result of, without duplication, (i) the
breach of any of the covenants made by Buyer in this Agreement; (ii) the breach
of any of the representations and warranties made by Buyer contained in this
Agreement; and (iii) third party claims relating in any manner to the operation
of the Business after the Closing.
7.4. Due
Diligence. The Parties acknowledge and agree that one of the
purposes of the representations, warranties, covenants, agreements, and
indemnities made in this Agreement is to shift the economic risk and
responsibility for certain known and unknown liabilities among the
Parties. Accordingly, the fact that an Indemnified party or related
indemnitee conducted a due diligence investigation or had knowledge of a breach
of a representation or warranty, or of the non-performance of a covenant or
agreement, shall not be a defense to an Indemnifying Party’s obligations under
this Article 7.
7.5. Indemnification
Procedures.
(a) Third Party
Claims.
(i) Notice. If
any third party notifies any Indemnified Party of any matter that may give rise
to a claim by such Indemnified Party for indemnification pursuant to Section 7.2
or 7.3 (a “Third Party
Claim”), such Indemnified Party must give the Indemnifying Party from
whom indemnification is sought written notice of such Indemnified Party’s claim
for indemnification (an “Indemnification Claim
Notice”) promptly after the Indemnified Party receives written notice of
such Third Party Claim (it being understood that any claim for indemnity related
to a breach of a representation or warranty must be made by notice given within
the applicable survival period specified in Section 7.1); provided, however, that the
failure of any Indemnified Party to give timely notice will not affect any
rights to indemnification hereunder except to the extent that the Indemnifying
Party demonstrates actual damage caused by such failure. Such notice
must contain a reasonably detailed description of the claim and the nature and
amount of such Loss, if known.
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(ii) Control of Defense;
Settlement. An Indemnifying Party, at its option, may assume
control of the defense of any Third Party Claim within sixty (60) days of
receiving notice of the Third Party Claim from the Indemnified Party, and may
appoint counsel for such Third Party Claim. In the event an
Indemnifying Party assumes control of the defense of a Third Party Claim, the
Indemnified Party may participate in the defense of such claim and independently
employ counsel of its choice for such purpose if the Indemnified Party
determines, in good faith, that a conflict of interest exists with respect to
the Indemnifying Party, and in such case, the reasonable legal fees of such
independent counsel shall be borne by the Indemnifying Party. Neither
the Indemnifying Party nor the Indemnified Party may consent to the entry of any
judgment or enter into any settlement with respect to any Third Party Claim
without the prior written consent of the other Party (such consent not to be
withheld unreasonably); except that the Indemnifying Party may enter into a
settlement without the consent of the Indemnified Party if the sole relief
provided is monetary damages that will be paid in full by the Indemnifying
Party.
(b) Other
Claims. Any Indemnified Party may make a claim for
indemnification pursuant to Section 7.2 or 7.3 by providing an
Indemnification Claim Notice to the Indemnifying Party (it being understood that
any claim for indemnity related to a breach of a representation or warranty must
be made by notice given within the applicable survival period specified in
Section 7.1 and then shall survive until its final
resolution). Such notice must contain a reasonably detailed
description of the claim and the nature and amount of such Loss.
(c) Subrogation. Upon
making any payment to an Indemnified Party in respect of any Loss, the
Indemnifying Party will, to the extent of such payment, be subrogated to all
rights of the Indemnified Party against any third party in respect of the Losses
to which such payment relates. The Indemnified Party will execute
upon request all instruments reasonably necessary to evidence and perfect such
subrogation rights of the Indemnifying Party.
ARTICLE
8
CONDITIONS
TO THE CLOSING
8.1. Conditions of Buyer’s
Obligation. Buyer’s obligation to effect the transactions
contemplated by this Agreement is subject to the satisfaction as of the Closing
of the following conditions precedent:
(a) Representations and
Warranties; Covenants. Each representation and warranty set
forth in Articles 3 and 4 shall be true and correct in all material respects at
and as of the Closing as though then made. Seller shall have
performed and observed in all material respects each covenant or other
obligation required to be performed or observed by it pursuant to the Agreement
through the Closing.
(b) Proceedings. There
shall not be any injunction, judgment, order, decree or ruling in effect before
any Government Entity the result of which would prevent or prohibit the
consummation of the transactions contemplated by this Agreement or cause any
such transaction to be rescinded following consummation.
40
(c) Consents. All
Consents of Government Entities required for the consummation of the
transactions contemplated hereby shall have been obtained, including Consents,
if any, required by the SEC, FINRA or any SRO.
(d) No Material Adverse
Effect. Since the date of this Agreement, there has been no
event or occurrence that has had or is reasonably likely to have a Material
Adverse Effect.
(e) Client
Consents. The following Client Consents shall be
procured: (i) Affirmative Client Consents shall have been procured
with respect to no less than 90% of the Largest Clients of the Company listed on
Schedule 4.20(c) of the Disclosure Schedule, and (ii) Affirmative or Negative
Client Consents shall have been procured with respect to at least 90% of the
remaining Clients of the Company not including the Largest Clients of the
Company.
(f) Target Net Working
Capital. Seller shall have delivered to Buyer at least 5 days
prior to the Closing a schedule showing a minimum Target Net Working Capital
which shall be computed consistently with the same methodology as set forth in
Section 4.5(b) to the Disclosure Schedule.
(g) Company’s
Assets. The Company’s Assets Under Management, not including
Clients Accounts related to AMCORE Financial, Inc., shall be not less than $3.2
billion as determined by the company custodian.
(h) Expenses of the National
Renewable Energy Investment Fund. Seller shall have paid all expenses of
the Company related to or arising from the offering of the National Renewable
Energy Investment Fund that have been incurred or arisen prior to the Closing
whether or not accrued by the Company or billed to the Company as of the date of
Closing.
(i) Accrual for any Soft Dollar
Shortfall. The Company shall have paid for or accrued
sufficient cash reserves in excess of the Target Net Working Capital to cover
any shortfall for expenses of the Company for goods or services that the Company
expected to pay for with soft dollars through the end of the year but based on
brokerage commissions that have been paid up to Closing, it is reasonably
expected that such brokerage commissions will not be sufficient to pay for good
and services through the end of the year.
(j) Seller’ Closing
Documents. The following documents (duly executed as
appropriate) shall have been delivered to Buyer:
(i) a
certificate of Seller, dated as of the Closing Date and signed by its Chief
Executive Officer expressly certifying that the conditions set forth in Sections
8.1(a) – (g) with respect to Seller have been met;
(ii) certificates
(dated not more than ten (10) days prior to the Closing), as to the good
standing of the Company in its jurisdiction of incorporation;
41
(iii) a
legal opinion of Xxxxxx & Xxxxxx, P.C., counsel to Seller and the Company,
in form and substance satisfactory to Buyer and its counsel based on customary
legal opinions for transactions like those contemplated by this
Agreement;
(iv) any
other documents or closing deliveries reasonably requested by Buyer, including
the documents described in Section 2.4 of this Agreement..
(k) Material Contract
Consents. All Consents required by Material Contracts shall
have been obtained, in a form satisfactory to Buyer, and delivered to
Buyer.
(l) Employment
Agreements. The Company shall have entered into employment
agreements in a form satisfactory to Buyer with Xxx Xxxxx, Xxxxxx Xxxxxx, and
Xxx Xxxxxxxx.
(m) Transition Services
Agreement. Execution of a Transition Services Agreement
reasonably satisfactory to the Parties.
(n) Investment Advisory
Agreement. Execution by the Company and West Bank of an
Investment Advisory Agreement reasonably satisfactory to the
Parties.
(o) Resignation of Officers and
Directors. The officers and directors of the Company
identified by Buyer shall have submitted resignations to be effective upon
Closing.
(p) Sublease. The
Parties shall have executed a sublease agreement in a form reasonably
satisfactory to both Parties.
8.2. Conditions of Seller’s
Obligation. Seller’s obligation to effect the transactions
contemplated by this Agreement is subject to the satisfaction as of the Closing
of the following conditions precedent:
(a) Representations and
Warranties; Covenants. Each representation and warranty set
forth in Article 5 shall be true and correct in all material respects at and as
of the Closing as though then made. Buyer shall have performed and
observed in all material respects each covenant or other obligation required to
be performed or observed by it pursuant to this Agreement through the
Closing.
(b) Proceedings. There
shall not be any injunction, judgment, order, decree or ruling in effect before
any Government Entity the result of which would prevent or prohibit the
consummation of the transactions contemplated by this Agreement or cause any
such transaction to be rescinded following consummation.
(c) Consents. All
Consents of Government Entities required for the consummation of the
transactions contemplated hereby shall have been obtained, including Consents,
if any, required by the SEC, any SRO or FINRA.
42
(d) Promissory Note and Pledge
Agreement. Buyer shall execute and deliver the Promissory Note
and Pledge Agreement reasonably satisfactory to the Parties.
(e) Buyer’s Closing
Documents. The following documents (duly executed as
appropriate) shall have been delivered to Seller:
(i) a
certificate of Buyer, dated as of the Closing Date and signed by an officer of
Buyer, expressly certifying that the conditions in Section 8.2(a),
Section 8.2(b), and Section 8.2(c) have been met; and
(ii) a
certificate (dated not more than ten (10) days prior to the Closing), as to the
good standing of Buyer in its jurisdiction of organization or
incorporation;
(iii) a
legal opinion of Xxxxxxxxx & Xxxxxx P.L.L.P., counsel to Buyer in form and
substance satisfactory to Seller and its counsel based on customary legal
opinions for transactions like those contemplated by this Agreement;
and
(iv) any
other documents or closing deliveries reasonably requested by Seller, including
the documents described in Section 2.4 of this Agreement.
ARTICLE
9
MISCELLANEOUS
9.1. Termination.
(a) This
Agreement may be terminated:
(i) at
any time prior to the Closing by mutual written agreement of Buyer and
Seller;
(ii) by
Buyer, at any time prior to the Closing in the event that Seller is in breach,
in any material respect, of the representations, warranties or covenants made by
Seller in this Agreement; provided, that Seller
shall have five (5) days to cure such breach following the receipt of written
notice of Buyer’s election to terminate;
(iii) by
Seller, at any time prior to the Closing in the event that Buyer is in breach,
in any material respect, of the representations, warranties or covenants made by
Buyer in this Agreement; provided, that Buyer
shall have five (5) days to cure such breach following the receipt of written
notice of Seller’ election to terminate;
(iv) by
Seller or Buyer, at any time after December 31, 2009 if the Closing shall not
have occurred by such date, unless the failure or delay resulted primarily from
the breach of any representation, warranty, or covenant contained in this
Agreement by the Party initiating such termination.
43
(b) Any
termination of this Agreement pursuant to Section 9.1(a)(ii), (iii) or (iv)
shall be effected by written notice from Seller to Buyer (if Seller is the
terminating party) or Buyer to Seller (if Buyer is the terminating party), which
notice shall specify the basis therefor. Any termination of this
Agreement pursuant to Section 9.1(a)(ii), (iii) or (iv) shall not terminate the
liability of any Party for any breach or default of any covenant or other
agreement set forth in this Agreement which exists at the time of such
termination.
9.2. Transaction
Expenses. Buyer, Seller and the Company shall each bear its
own costs and expenses (including legal fees and expenses) incurred in
connection with this Agreement and the transactions contemplated
hereby.
9.3. Amendments. No
amendment, modification or waiver of this Agreement will be effective unless
specifically made in writing and duly signed by the Party to be bound
thereby. No other course of dealing between or among any of the
parties or any delay in exercising any rights pursuant to this Agreement shall
operate as a waiver of any rights of any Party.
9.4. Successors and
Assigns. All covenants and agreements set forth in this
Agreement shall bind and inure to the benefit of the respective successors and
permitted assigns of the Parties, except that neither this Agreement nor any of
the rights, interests or obligations hereunder may be assigned by Buyer or
Seller without the prior written consent of the other Parties.
9.5. Governing
Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Iowa, without giving effect to any
choice of law or conflict provision or rule (whether of such State or any other
jurisdiction) that would cause the laws of any other jurisdiction to be
applied.
9.6. Notices. All
demands, notices, communications and reports provided for in this Agreement
shall be in writing and shall be sent by facsimile with confirmation to the
number specified below, personally delivered or sent by reputable overnight
courier service (delivery charges prepaid) to any Party at the address specified
below, or at such address, to the attention of such other Person, and with such
other copy, as the recipient Party has specified by prior written notice to the
sending Party pursuant to the provisions of this Section.
If to
Buyer, addressed to:
Miles
Capital Holdings, Inc.
0000
Xxxxx Xxxx Xxxx
Xxxx Xxx
Xxxxxx, Xxxx 00000
Tel: (000)
000-0000
Fax: (000)
000-0000
Attn: Xxxxx
X. Xxxxx, President and CEO
44
with a
copy to:
Xxxxxxxxx
& Xxxxxx, P.L.L.P.
0000 XXX
Xxxxxx
00 Xxxxx
Xxxxxx Xxxxxx
Xxxxxxxxxxx,
XX 00000
Tel: (000)
000-0000
Fax: (000)
000-0000
Attn: Xxxxxxxx
X. Xxxx
If to
Seller, addressed to:
West
Bancorporation
0000
00xx
Xxxxxx
Xxxx Xxx
Xxxxxx, Xxxx 00000
Tel: (000)
000-0000
Fax: (000)
000-0000
Attn: Xxxx
Xxxxxxx, Executive Vice President and Chief Financial Officer
with a
copy to:
Xxxxxx
& Xxxxxx P.C
000 Xxxxx
Xxxxxx
Xxx
Xxxxxx, Xxxx 00000
Tel: (000)
000-0000
Fax: 000-000-0000
Attn: Xxxx
X. Xxxxxx III
Any such
demand, notice, communication or report shall be deemed to have been given
pursuant to this Agreement when delivered personally, when confirmed if by
facsimile or on the second day after deposit with a reputable overnight courier
service, as the case may be.
9.7. Schedules and
Exhibits. The exhibits and schedules to this Agreement
constitute a part of this Agreement and are incorporated into this Agreement for
all purposes as if fully set forth herein.
9.8. Counterparts. The
Parties may execute this Agreement in two or more counterparts (no one of which
need contain the signatures of all parties), each of which shall be an original
and all of which together shall constitute one and the same
instrument. The Parties may deliver an executed copy of this
Agreement (and an executed copy of any of the Transaction Documents contemplated
by this Agreement) by facsimile or other electronic transmission to the other
Party, and such delivery will have the same force and effect as any other
delivery of a manually signed copy of this Agreement (or such other Transaction
Document).
9.9. No Third Party
Beneficiaries. Nothing in this Agreement is intended to confer
or provide any rights, remedies or obligations of any nature whatsoever to any
third party including but not limited to any employee of the Company, Seller or
Buyer.
9.10. Headings. The
headings used in this Agreement are for the purpose of reference only and shall
not affect the meaning or interpretation of any provision of this
Agreement.
45
9.11. Entire
Agreement. Except as otherwise provided in this Agreement,
this Agreement sets forth the entire understanding of the Parties relating to
the subject matter hereof, and all prior understandings, whether written or oral
are superseded by this Agreement, and all prior understandings, and all related
agreements and understandings are hereby terminated.
9.12. Severability. In
case any one or more of the provisions contained in this Agreement shall be held
to be invalid, illegal, or unenforceable in any respect, such invalidity,
illegality, or unenforceability shall not effect any other provision of this
Agreement, but this Agreement shall be construed as if such invalid, illegal, or
unenforceable provision or provisions had never been contained
herein.
9.13. Construction. The
Parties have participated jointly in the negotiation and drafting of this
Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the Parties and no presumption or burden of proof shall arise favoring or
disfavoring any Party by virtue of the authorship of any of the provisions of
this Agreement.
9.14. Public
Announcements. Neither Seller nor Buyer shall make, or permit
any agent or Affiliate to make, any public statements, including, without
limitation, any press releases, with respect to this Agreement and the
transactions contemplated hereby without the prior written consent of the
Parties, except as may be required by applicable Legal
Requirements. The Parties shall jointly agree on the content and
substance of all public announcements concerning the transactions contemplated
hereby.
* * * *
*
46
IN WITNESS WHEREOF, the
Parties have executed this Stock Purchase Agreement as of the date first written
above.
BUYER:
|
SELLER:
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MILES
CAPITAL HOLDINGS, INC.
|
WEST
BANCORPORATION, INC.
|
|||||
By:
|
/s/ Xxxxx X. Xxxxx
|
By:
|
/s/ Xxxxx X. Xxxxxxxx
|
|||
Its:
|
President & |
CEO
|
Its:
|
CEO
|
||
COMPANY:
|
||||||
WB
CAPITAL MANAGEMENT INC.
|
||||||
By:
|
/s/ Xxxxxxx X. Xxxxxxx
|
|||||
Its:
|
CEO
|