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o | No fee required. |
þ | Fee computed on table below per Exchange ActRules 14a-6(i)(1) and 0-11. |
(1) | Title of each class of securities to which transaction applies: |
(2) | Aggregate number of securities to which transaction applies: 100% of the equity interests of the Acquired Companies. |
(3) | Per unit price or other underlying value of transaction computed pursuant to Exchange ActRule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): $52,131,000, representing the combined book value as of March 31, 2007 of the aggregate equity interests of the Acquired Companies to be acquired. |
(4) | Proposed maximum aggregate value of transaction: $52,131,0001 |
(5) | Total fee paid: $1,600.421 |
o | Fee paid previously with preliminary materials: |
o | Check box if any part of the fee is offset as provided by Exchange ActRule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing. |
(1) | Amount Previously Paid: |
(2) | Form, Schedule or Registration No.: |
(3) | Filing Party: |
(4) | Date Filed |
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1114 Avenue of the Americas, 41st Floor
New York, New York 10036
• | The Acquisition Proposal — a proposal to approve the acquisition by Freedom of GLG Partners LP and certain affiliated entities pursuant to the Purchase Agreement, dated as of June 22, 2007, by and among Freedom, certain wholly owned subsidiaries of Freedom and the equity holders of GLG Partners LP and certain affiliated entities party thereto, and the transactions contemplated thereby; | |
• | The Pre-Closing Certificate Amendment Proposals — four proposals to amend the amended and restated certificate of incorporation of Freedom, which we refer to as the certificate of incorporation, in connection with the consummation of the acquisition: |
• | Name Change Proposal — a proposal to change Freedom’s name from “Freedom Acquisition Holdings, Inc.” to “GLG Partners, Inc.”; | |
• | Authorized Share Proposal — a proposal to increase the number of authorized shares of Freedom capital stock from 201,000,000 shares to 1,150,000,000 shares, including: |
• | increasing the authorized shares of Freedom common stock from 200,000,000 to 1,000,000,000 shares; and | |
• | increasing the authorized shares of Freedom preferred stock from 1,000,000 to 150,000,000 shares, of which it is expected that 58,923,874 shares will be designated by the board of directors as a new series of Freedom preferred stock titled Series A voting preferred stock, which will be entitled to one vote per share and to vote as a single class with the common stock on all matters, but which will not be entitled to dividends or certain other distributions; |
• | Super-Majority Vote Proposal — a proposal to increase to the affirmative vote of at least 662/3% of the combined voting power of all outstanding shares of Freedom capital stock entitled to vote generally, voting together as a single class, the vote required for Freedom’s stockholders to: |
• | adopt, alter, amend or repeal the by-laws; | |
• | remove a director from office, with or without cause; and | |
• | amend, alter or repeal certain provisions of the certificate of incorporation which require a stockholder vote higher than a majority vote, including the amendment provision itself, or to adopt any provision inconsistent with those provisions; and |
• | Other Pre-Closing Certificate Amendments Proposal — a proposal to amend certain other provisions of the certificate of incorporation relating to, among other things, Freedom’s registered agent, the ability to call special meetings of stockholders, the scope of the indemnification of officers and directors and certain other ministerial amendments; |
• | The Post-Closing Certificate Amendment Proposal — a proposal to remove, effective after the consummation of the acquisition, (1) certain provisions of Article Third and Article Fourth, paragraph B and (2) the entirety of Article Fifth of the certificate of incorporation, all of which relate to the operation of Freedom as a blank check company prior to the consummation of a business combination, and to add provisions regarding dividends and distributions; | |
• | The Incentive Plan Proposal — a proposal to approve the adoption of the Freedom 2007 Long-Term Incentive Plan, which we refer to as the LTIP, pursuant to which Freedom will reserve shares of Freedom common stock for issuance pursuant to the LTIP; |
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• | The Adjournment Proposal — a proposal to authorize the adjournment of the special meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies in the event there are insufficient votes at the time of the special meeting to adopt the acquisition proposal, the pre-closing certificate amendment proposals, the post-closing certificate amendment proposal or the incentive plan proposal; and | |
• | To transact such other business as may properly come before the meeting or any adjournment or postponement thereof. |
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• | a proposal to change Freedom’s name from “Freedom Acquisition Holdings, Inc.” to “GLG Partners, Inc.”; | |
• | a proposal to increase the number of authorized shares of Freedom capital stock from 201,000,000 shares to 1,150,000,000 shares, including: |
• | increasing the authorized shares of Freedom common stock, par value $0.0001 per share, from 200,000,000 to 1,000,000,000 shares; and | |
• | increasing the authorized shares of Freedom preferred stock, par value $0.0001 per share, from 1,000,000 to 150,000,000 shares, of which it is expected that 58,923,874 shares will be designated by the board of directors as a new series of Freedom preferred stock titled Series A voting preferred stock, which will be entitled to one vote per share and to vote as a single class with the common stock on all matters, but which will not be entitled to dividends or certain other distributions (the “Series A preferred stock”); |
• | a proposal to increase from the affirmative vote of a majority of the quorum present at the meeting or a majority of the outstanding shares of Freedom common stock, as the case may be, to the affirmative vote of at least 662/3% of the combined voting power of all outstanding shares of Freedom capital stock entitled to vote generally, voting together as a single class, the vote required for Freedom’s stockholders to: |
• | adopt, alter, amend or repeal the by-laws; |
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• | remove a director (other than directors elected by a series of preferred stock of Freedom, if any, entitled to elect a class of directors) from office, with or without cause; and | |
• | amend, alter or repeal certain provisions of the certificate of incorporation which require a stockholder vote higher than a majority vote, including the amendment provision itself, or to adopt any provision inconsistent with those provisions; and |
• | a proposal to amend certain other provisions of the certificate of incorporation relating to, among other things, Freedom’s registered agent, the ability to call special meetings of stockholders, the scope of the indemnification of officers and directors and certain other ministerial amendments; |
• | $1.0 billion in cash, reduced by the amount of any promissory notes issued to certain GLG Shareowners at their election; | |
• | promissory notes, if certain GLG Shareowners elect to receive promissory notes in lieu of all or a portion of the cash consideration payable to electing GLG Shareowners; and | |
• | 230,000,000 shares of Freedom common stock, which consists of: (1) 138,136,070 shares of Freedom common stock issuable by Freedom upon the consummation of the acquisition, including 10,000,000 shares of common stock to be issued for the benefit of GLG’s employees, key personnel and certain other individuals; (2) 32,940,056 shares of common stock payable by Freedom upon exercise of certain put or call rights with respect to 32,940,056 ordinary shares to be issued by FA Sub 1 Limited to certain GLG Shareowners upon the consummation of the acquisition; and (3)��58,923,874 shares of common stock to be issued upon the exchange of 58,923,874 exchangeable Class B ordinary shares (the “Exchangeable Shares”) to be issued by FA Sub 2 Limited to certain GLG |
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Shareowners upon the consummation of the acquisition. Each of the ordinary shares to be issued by FA Sub 1 Limited may be put by the holder to, or called by, Freedom immediately following consummation of the acquisition in exchange for one share of Freedom common stock. Each Exchangeable Share is exchangeable at any time at the election of the holder for one share of Freedom common stock; and |
• | 58,923,874 shares of Series A preferred stock which will be issued with the corresponding Exchangeable Shares and will carry only voting rights and nominal economic rights as described in the accompanying proxy statement, and will automatically be redeemed on a share for share basis as Exchangeable Shares are exchanged for shares of Freedom common stock. |
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INDEX TO FINANCIAL STATEMENTS | F-1 | |||
Annex A — Purchase Agreement | A-1 | |||
Annex B — Form of Support Agreement | B-1 | |||
Annex C — Form of Shares Exchange Agreement | C-1 | |||
Annex D — GLG Shareholders Agreement | D-1 | |||
Annex E — Founders Agreement | E-1 | |||
Annex F — Voting Agreement | F-1 | |||
Annex G — Agreement Among Principals and Trustees | G-1 | |||
Annex H — Form of Restated Certificate of Incorporation After Giving Effect to the Pre-Closing and Post-Closing Certificate Amendment Proposals | H-1 | |||
Annex I — Form of 2007 Long-Term Incentive Plan | I-1 |
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• | amendments to Freedom’s certificate of incorporation effective immediately prior to the consummation of the acquisition to: |
• | change Freedom’s corporate name to “GLG Partners, Inc.”; | |
• | increase the total number of authorized shares of Freedom common and preferred stock, which will allow Freedom to issue additional shares of common stock and create and issue Series A preferred stock, which will be entitled to one vote per share and to vote as a single class with the common stock on all matters, but which will not be entitled to dividends or certain other distributions; | |
• | increase to the affirmative vote of at least 662/3% of the combined voting power of all outstanding shares of Freedom capital stock entitled to vote generally, voting together as a single class, the vote required for Freedom’s stockholders to: |
• | adopt, alter, amend or repeal the by-laws; | |
• | remove a director (other than directors elected by a series of preferred stock of Freedom, if any, entitled to elect a class of directors) from office, with or without cause; and | |
• | amend, alter or repeal certain provisions of the certificate of incorporation which require a stockholder vote higher than a majority vote; and |
• | amend certain other provisions of the certificate of incorporation relating to, among other things, Freedom’s registered agent, the ability to call special meetings of stockholders, the scope of the indemnification of officers and directors and certain other ministerial amendments; |
• | amendments to Freedom’s certificate of incorporation to remove, effective after the consummation of the acquisition, certain provisions of Article Third and Article Fourth, paragraph B and the entirety of Article Fifth relating to the operation of Freedom as a blank check company and to add provisions regarding dividends and distributions; | |
• | the adoption of the 2007 Long-Term Incentive Plan; and | |
• | if necessary, the adjournment of the special meeting to a later date or dates. |
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• | Each of GLG’s principals, Noam Gottesman, Emmanuel Roman and Pierre Lagrange, whom we refer to collectively as the Principals; | |
• | Leslie J. Schreyer, in his capacity as trustee of the Gottesman GLG Trust, a trust established by Mr. Gottesman for the benefit of himself and his family, which we refer to as the Gottesman GLG Trust; | |
• | G&S Trustees Limited, in its capacity as trustee of the Lagrange GLG Trust, a trust established by Mr. Lagrange for the benefit of himself and his family, which we refer to as the Lagrange GLG Trust; | |
• | Jeffrey A. Robins, in his capacity as trustee of the Roman GLG Trust, a trust established by Mr. Roman for the benefit of himself and his family, which we refer to as the Roman GLG Trust; | |
• | Abacus (C.I.) Limited, in its capacity as trustee of the Green GLG Trust; | |
• | Lehman (Cayman Islands) Ltd; | |
• | Lavender Heights Capital LP; | |
• | Ogier Fiduciary Services (Cayman) Limited, in its capacity as trustee of the Green Hill Trust; | |
• | Sage Summit LP; and | |
• | Ogier Fiduciary Services (Cayman) Limited, in its capacity as trustee of the Blue Hill Trust. |
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• | Freedom’s stockholders have approved the acquisition, the pre-closing and post-closing amendments to Freedom’s certificate of incorporation and the LTIP; | |
• | holders of less than 20% of the shares of Freedom common stock issued in its initial public offering vote against the acquisition proposal and elect to have Freedom redeem their shares for cash; and | |
• | the other conditions specified in the purchase agreement described below under “— Conditions to the Completion of the Acquisition” have been satisfied or waived. |
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• | the representations and warranties of the other group that are qualified by materiality must be true and correct in all respects and the representations and warranties of the other group that are not so qualified must be true in all material respects on the date of the purchase agreement and as of the closing date as if they were made on that date; | |
• | the other group’s performance or compliance with its covenants and agreements contained in the purchase agreement or the transaction documents; | |
• | no litigation or action being threatened in writing, instituted or pending which is reasonably likely to make illegal, delay, restrain, prohibit or otherwise adversely affect consummation of the acquisition or which would otherwise have a material adverse effect on GLG or the Freedom Group as applicable; | |
• | the absence of any law or action by any court or other government entity which may inhibit or have a material adverse effect on the acquisition; | |
• | the receipt of all required approvals and consents and their submission to the other group; | |
• | the termination or expiration of all antitrust-related waiting periods, the receipt of all antitrust approvals and consents and the filing of all antitrust notices or filings required to have been made; | |
• | the approval by Freedom’s stockholders of the acquisition proposal and the other proposals contained in this proxy statement; | |
• | the execution and delivery by each of the other parties of each of the transaction documents; and | |
• | the availability for funding on the closing date of the entire amount that may be borrowed under the credit agreement by FA Sub 3 Limited and the satisfaction of all conditions precedent to the borrowing of $550.0 million. |
• | by mutual written agreement of Freedom and the GLG Shareowners’ representative; | |
• | by either group, if the closing has not occurred before the termination date of December 31, 2007; | |
• | by either group, if there is any law or court or governmental order, which is not subject to appeal or has become final, that makes consummation of the acquisition illegal or otherwise prohibited; | |
• | by either group, if there has been a breach of any representation, warranty, covenant or agreement by the other group such that the conditions set forth above with respect to representations, warranties, covenants and agreements under “— Conditions to the Completion of the Acquisition” would not be satisfied as of such time, unless such breach is curable and the breaching party continues to exercises reasonable best efforts to cure it; or |
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• | by either group, if the required approvals of Freedom’s stockholders related to the acquisition are not obtained. |
• | increasing the authorized shares of Freedom common stock from 200,000,000 to 1,000,000,000 shares; and | |
• | increasing the authorized shares of Freedom preferred stock from 1,000,000 to 150,000,000 shares, of which it is expected that 58,923,874 shares will be designated by the board of directors as a new series of Freedom preferred stock titled Series A voting preferred stock, which will be entitled to one vote per share and to vote as a single class with the common stock on all matters, but which will not be entitled to dividends or certain other distributions. |
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• | shares of common stock will be reserved for issuance; | |
• | the LTIP will be administered by the Freedom board of directors, or a committee thereof, and any particular term of a grant or award will be at the board’s discretion; and | |
• | the LTIP will provide for awards of stock, restricted stock, restricted stock units, options, stock appreciation rights, performance units and performance shares. |
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Three Months | ||||||||||||||||||||||||||||
Years Ended December 31, | Ended March 31, | |||||||||||||||||||||||||||
2002 | 2003 | 2004 | 2005 | 2006 | 2006 | 2007 | ||||||||||||||||||||||
(US dollars in thousands) | ||||||||||||||||||||||||||||
Combined Statement of Operations Data: | ||||||||||||||||||||||||||||
Net revenues and other income: | ||||||||||||||||||||||||||||
Management fees | $ | 30,108 | $ | 65,259 | $ | 138,988 | $ | 137,958 | $ | 186,273 | $ | 37,292 | $ | 57,343 | ||||||||||||||
Performance fees | 31,288 | 206,685 | 178,024 | 279,405 | 394,740 | 3,251 | 2,521 | |||||||||||||||||||||
Administration fees | — | — | — | 311 | 34,814 | 7,422 | 12,645 | |||||||||||||||||||||
Transaction charges | 80,613 | 115,945 | 191,585 | 184,252 | — | — | — | |||||||||||||||||||||
Other | 626 | 6,497 | 6,110 | 1,476 | 5,039 | 2,293 | 498 | |||||||||||||||||||||
Total net revenues and other income | 142,635 | 394,386 | 514,707 | 603,402 | 620,866 | 50,258 | 73,007 | |||||||||||||||||||||
Expenses: | ||||||||||||||||||||||||||||
Employee compensation and benefits | (88,994 | ) | (158,789 | ) | (196,784 | ) | (345,918 | ) | (168,386 | ) | (26,054 | ) | (25,048 | ) | ||||||||||||||
General, administrative and other | (22,052 | ) | (23,005 | ) | (42,002 | ) | (64,032 | ) | (68,404 | ) | (11,588 | ) | (25,764 | ) | ||||||||||||||
Total expenses | (111,046 | ) | (181,794 | ) | (238,786 | ) | (409,950 | ) | (236,790 | ) | (37,642 | ) | (50,812 | ) | ||||||||||||||
Income from operations | 31,589 | 212,592 | 275,921 | 193,452 | 384,076 | 12,616 | 22,195 | |||||||||||||||||||||
Interest income, net | 882 | 709 | 519 | 2,795 | 4,657 | 1,635 | 1,475 | |||||||||||||||||||||
Income before income taxes | 32,471 | 213,301 | 276,440 | 196,247 | 388,733 | 14,251 | 23,670 | |||||||||||||||||||||
Income taxes | (8,456 | ) | (49,966 | ) | (48,372 | ) | (25,345 | ) | (29,225 | ) | (1,501 | ) | (3,255 | ) | ||||||||||||||
Net income | $ | 24,015 | $ | 163,335 | $ | 228,068 | $ | 170,902 | $ | 359,508 | $ | 12,750 | $ | 20,415 | ||||||||||||||
As of December 31, | As of March 31, | |||||||||||||||||||||||||||
2002 | 2003 | 2004 | 2005 | 2006 | 2006 | 2007 | ||||||||||||||||||||||
(US dollars in thousands) | ||||||||||||||||||||||||||||
Combined Balance Sheet Data: | ||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 28,450 | $ | 65,655 | $ | 136,378 | $ | 236,261 | $ | 273,148 | $ | 87,805 | $ | 149,193 | ||||||||||||||
Fees receivable | 34,826 | 139,103 | 163,235 | 246,179 | 251,963 | 19,016 | 32,077 | |||||||||||||||||||||
Working capital | 15,579 | 25,940 | 20,395 | 42,387 | 370,094 | 55,164 | 58,110 | |||||||||||||||||||||
Property and equipment, net | 4,102 | 3,801 | 4,342 | 3,290 | 6,121 | 3,319 | 7,601 | |||||||||||||||||||||
Total assets | 75,359 | 220,829 | 310,592 | 495,340 | 557,377 | 120,277 | 207,747 | |||||||||||||||||||||
Accrued compensation and benefits | 21,654 | 25,038 | 125,850 | 247,745 | 102,507 | 24,517 | 26,334 | |||||||||||||||||||||
Other liabilities | — | — | — | — | 5,100 | — | 7,100 | |||||||||||||||||||||
Loans payable | 13,000 | 13,000 | 13,000 | 13,000 | 13,000 | 13,000 | 13,000 | |||||||||||||||||||||
Total members’ equity | 19,400 | 112,722 | 117,980 | 180,229 | 361,952 | 44,235 | 52,131 |
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Year Ended | Three Months Ended | |||||||||||||||
December 31, 2006 | March 31, 2007 | |||||||||||||||
Maximum | Minimum | Maximum | Minimum | |||||||||||||
Approval | Approval | Approval | Approval | |||||||||||||
(US dollars in thousands, except per share amounts) | ||||||||||||||||
Pro Forma Statement of Operations Data: | ||||||||||||||||
Net revenues and other income | $ | 620,866 | $ | 620,866 | $ | 73,007 | $ | 73,007 | ||||||||
Income (loss) from operations | 4,256 | 4,256 | (72,746 | ) | (72,746 | ) | ||||||||||
Income (loss) before income taxes | (22,765 | ) | (29,925 | ) | (78,889 | ) | (80,615 | ) | ||||||||
Income taxes | (22,501 | ) | (20,353 | ) | (1,696 | ) | (1,178 | ) | ||||||||
Net income (loss) | (45,266 | ) | (50,278 | ) | (80,585 | ) | (81,793 | ) | ||||||||
Net income (loss) applicable to equity interest holders | (45,448 | ) | (50,460 | ) | (80,795 | ) | (82,003 | ) | ||||||||
Basic and diluted net income (loss) per common share | $ | (0.18 | ) | $ | (0.21 | ) | $ | (0.27 | ) | $ | (0.28 | ) | ||||
Shares used in computing basic and diluted net income (loss) per common share | 248,012 | 237,457 | 298,573 | 288,018 | ||||||||||||
Pro Forma Balance Sheet Data (at period end): | ||||||||||||||||
Cash and cash equivalents | $ | 119,005 | $ | 119,005 | ||||||||||||
Working capital | 26,584 | 26,584 | ||||||||||||||
Total assets | 303,899 | 303,899 | ||||||||||||||
Loans payable | 466,945 | 570,000 | ||||||||||||||
Stockholders’/Members’ equity | (358,479 | ) | (461,534 | ) |
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As of and for the | As of and for the | |||||||
Year Ended | Three Months Ended | |||||||
December 31, 2006 | March 31, 2007 | |||||||
Freedom — Historical: | ||||||||
Net income (loss) per common share — Basic | $ | 0.78 | $ | (0.06 | ) | |||
Net income (loss) per common share — Diluted | $ | 0.75 | $ | (0.06 | ) | |||
Cash dividends declared per common share | — | — | ||||||
Book value per common share | $ | 6.87 | $ | 6.79 |
As of and for the | As of and for the | |||||||||||||||
Year Ended | Three Months Ended | |||||||||||||||
December 31, 2006 | March 31, 2007 | |||||||||||||||
Maximum | Minimum | Maximum | Minimum | |||||||||||||
Approval | Approval | Approval | Approval | |||||||||||||
Pro Forma Combined: | ||||||||||||||||
Net income (loss) per common share — Basic | $ | (0.18 | ) | $ | (0.21 | ) | $ | (0.27 | ) | $ | (0.28 | ) | ||||
Net income (loss) per common share — Diluted | $ | (0.18 | ) | $ | (0.21 | ) | $ | (0.27 | ) | $ | (0.28 | ) | ||||
Cash dividends declared per common share | $ | — | $ | — | $ | — | $ | — | ||||||||
Book value per common share | $ | $ | $ | $ |
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• | in maintaining adequate financial and business controls; | |
• | in implementing new or updated information and financial systems and procedures; and | |
• | in training, managing and appropriately sizing our work force and other components of our business on a timely and cost-effective basis. |
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• | Fraud, misconduct or improper practice by any of our personnel, including failure to comply with applicable regulations or non-adherence by a portfolio manager to the investment guidelines applicable to each fund. Such actions can be particularly detrimental in the provision of financial services and could involve, for example, fraudulent transactions entered into for a client’s account, diversion of funds, the intentional or inadvertent release of confidential information or failure to follow internal procedures. Such actions could expose us to financial losses resulting from the need to reimburse customers or other business partners or as a result of fines or other regulatory sanctions, and may significantly damage our reputation. | |
• | Failure to manage inside information. GLG frequently trades in multiple securities of the same issuer. In the course of transactions involving these securities, we may receive inside information in relation to certain issuers. If we do not sufficiently control the use of this inside information or any other inside information we receive, weand/or our employees could be subject to investigation and criminal or civil liability. | |
• | Failure to manage conflicts of interest. As GLG has expanded the scope of its business and client base, it has been increasingly exposed to potential conflicts of interest. If we fail, or appear to fail, to deal appropriately with conflicts of interest, we could face significant damage to our reputation, litigation or regulatory proceedings or penalties. |
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• | it is or holds itself out as being engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting or trading in securities; or | |
• | absent an applicable exemption, it owns or proposes to acquire investment securities having a value exceeding 40% of the value of its total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis. |
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• | Limitation of risk assessment methodologies. Decisions to enter into these derivatives and other securities contracts will be based on estimates of returns and probabilities of loss derived from our own calculations and analysis. There can be no assurance that the estimates or the methodologies, or the assumptions which underlie such estimates and methodologies, will turn out to be valid or appropriate; | |
• | Risks underlying the derivative and securities contracts. A general rise in the frequency, occurrence or severity of certain non-financial risks such as accidentsand/or natural catastrophes will lead to a general decrease in the returns and the possibility of returns from these derivatives and securities contracts, which will not be reflected in the methodology or assumption underlying the analysis of any specific derivative or securities contract; and |
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• | Particular risks. The particular instruments in which we will invest on behalf of the GLG Funds may produce an unusually and unexpectedly high amount of losses, which will not be reflected in the methodology or assumptions underlying the analysis of any specific derivative or securities contract. |
The GLG Funds are subject to risks in using prime brokers, custodians, administrators and other agents. |
• | Certain of the GLG Funds are newly established funds without any operating history or are managed by management companies or general partners who do not have a significant track record as an independent manager; | |
• | Generally, there are few limitations on the execution of the GLG Funds’ investment strategies, which are subject to the sole discretion of the management company of such funds; | |
• | The GLG Funds may engage in short-selling, which is subject to the theoretically unlimited risk of loss because there is no limit on how much the price of a security may appreciate before the short position is closed out. A GLG Fund may be subject to losses if a security lender demands return of the lent securities and an alternative lending source cannot be found or if the GLG Fund is otherwise unable to borrow securities that are necessary to hedge its positions; | |
• | Credit risk may arise through a default by one of several large institutions that are dependent on one another to meet their liquidity or operational needs, so that a default by one institution causes a series of defaults by the other institutions. This “systemic risk” may adversely affect the financial intermediaries (such as clearing agencies, clearing houses, banks, securities firms and exchanges) with which the GLG Funds interact on a daily basis; | |
• | The efficacy of investment and trading strategies depends largely on the ability to establish and maintain an overall market position in a combination of financial instruments. Trading orders may not be executed in a timely and efficient manner due to various circumstances, including systems failures or human error. In such event, the GLG Funds might only be able to acquire some but not all of the components of the position, or if the overall position were to need adjustment, the GLG Funds might not be able to make such adjustment. As a result, the GLG Funds would not be able to achieve the market position selected by the management company or general partner of such funds, and might incur a loss in liquidating their position; and | |
• | The investments held by the GLG Funds are subject to risks relating to investments in commodities, futures, options and other derivatives, the prices of which are highly volatile and may be subject to the theoretically unlimited risk of loss in certain circumstances, including if the fund writes a call option. Price movements of commodities, futures and options contracts and payments pursuant to swap agreements are influenced by, among other things, interest rates, changing supply and demand relationships, trade, fiscal, monetary and exchange control programs and policies of governments and national and international political and economic events and policies. The value of futures, options and swap agreements also depends upon the price of the commodities underlying them. In addition, the assets of the GLG Funds are subject to the risk of the failure of any of the exchanges on which their |
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positions trade or of their clearinghouses or counterparties. Most U.S. commodities exchanges limit fluctuations in certain commodity interest prices during a single day by imposing “daily price fluctuation limits” or “daily limits,” the existence of which may reduce liquidity or effectively curtail trading in particular markets. |
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• | tariffs and trade barriers; | |
• | regulations related to customs and import/export matters; | |
• | tax issues, such as tax law changes and variations in tax laws as compared to the United States; | |
• | cultural differences; and | |
• | foreign exchange controls. |
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• | variations in our quarterly operating results or dividends; | |
• | failure to meet analysts’ earnings estimates or failure to meet, or the lowering of, our own earnings guidance; | |
• | publication of research reports about us or the investment management industry or the failure of securities analysts to cover our shares after the acquisition; | |
• | additions or departures of the Principals and other GLG key personnel; | |
• | adverse market reaction to any indebtedness we may incur or securities we may issue in the future; | |
• | actions by stockholders; | |
• | changes in market valuations of similar companies; | |
• | speculation in the press or investment community; | |
• | changes or proposed changes in laws or regulations or differing interpretations thereof affecting our business or enforcement of these laws and regulations, or announcements relating to these matters; | |
• | adverse publicity about the asset management industry generally or individual scandals, specifically; and | |
• | general market and economic conditions. |
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• | a decrease in revenues will result in a disproportionately greater percentage decrease in earnings; | |
• | we may not have sufficient liquidity to fund all of these fixed costs if our revenues decline or costs increase; | |
• | we may have to use our working capital to fund these fixed costs instead of funding general corporate requirements, including capital expenditures; and | |
• | we may not have sufficient liquidity to respond to business opportunities, competitive developments and adverse economic conditions. |
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• | a limited availability for market quotations for our securities; | |
• | reduced liquidity with respect to our securities; | |
• | a determination that our common stock is a “penny stock” which will require brokers trading in our common stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our common stock; | |
• | limited amount of news and analyst coverage for our company; and | |
• | a decreased ability to issue additional securities or obtain additional financing in the future. |
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• | our board of directors would, consistent with its obligations described in our certificate of incorporation and Delaware law, consider a resolution for us to dissolve and consider a plan of distribution which it may then vote to recommend to our stockholders; at such time it would also cause to be prepared a preliminary proxy statement setting out such plan of distribution as well as the board’s recommendation of such plan; | |
• | upon such deadline, we would file our preliminary proxy statement with the SEC; | |
• | if the SEC were not to review the preliminary proxy statement, then, not less than 10 days following the passing of such deadline, we would mail the proxy statement to our stockholders, and 30 days following the passing of such deadline we would convene a meeting of our stockholders, at which they would either approve or reject our dissolution and plan of distribution; and |
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• | if the SEC were to review the preliminary proxy statement, we currently estimate that we would receive their comments 30 days following the passing of such deadline. We would mail the proxy statement to our stockholders following the conclusion of the comment and review process (the length of which we cannot predict with any certainty, and which may be substantial) and we would convene a meeting of our stockholders at which they would either approve or reject our dissolution and plan of distribution. |
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• | Freedom’s ability to complete a combination with one or more target businesses, including the acquisition of GLG; | |
• | Freedom’s success in retaining or recruiting, or changes required in, its management or directors following a business combination; | |
• | Freedom’s potential inability to obtain additional financing to complete the acquisition; | |
• | Freedom’s limited pool of prospective target businesses, including if the acquisition fails to close; | |
• | the change in control of Freedom once the acquisition is consummated; | |
• | public securities’ limited liquidity and trading; | |
• | the delisting of Freedom’s securities from the American Stock Exchange or an inability to have Freedom’s securities listed on the American Stock Exchange, the New York Stock Exchange or another exchange following the consummation of the acquisition; | |
• | use of proceeds not in trust or available to Freedom from interest income on the trust account balance; | |
• | financial performance; | |
• | market conditions for GLG’s investment funds; | |
• | investment performance of GLG’s investment funds and the related performance fee revenue and impact on fund inflows and outflows; | |
• | operational risk; or | |
• | risks associated with the use of leverage, investment in derivatives, interest rates and currency fluctuations. |
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• | approve the acquisition of GLG by Freedom pursuant to a purchase agreement by and among Freedom, FA Sub 1 Limited, FA Sub 2 Limited, FA Sub 3 Limited and the GLG Shareowners; | |
• | approve four proposals to amend the certificate of incorporation immediately prior to the consummation of the acquisition to: |
• | change Freedom’s name from “Freedom Acquisition Holdings, Inc.” to “GLG Partners, Inc.”; | |
• | increase the number of authorized shares of Freedom capital stock from 201,000,000 shares to 1,150,000,000 shares, including: |
• | increasing the authorized shares of Freedom common stock from 200,000,000 to 1,000,000,000 shares; and | |
• | increasing the authorized shares of Freedom preferred stock from 1,000,000 to 150,000,000 shares, of which it is expected that 58,923,874 shares will be designated by the board of directors as a new series of Freedom preferred stock titled Series A voting preferred stock, which will be entitled to one vote per share and to vote as a single class with the common stock on all matters, but which will not be entitled to dividends or certain other distributions; |
• | increase from the affirmative vote of a majority of the quorum present at the meeting or a majority of the outstanding shares of Freedom common stock, as the case may be, to the affirmative vote of at least 662/3% of the combined voting power of all outstanding shares of Freedom capital stock entitled to vote generally, voting together as a single class, the vote required for Freedom’s stockholders to (1) adopt, alter, amend or repeal the by-laws, (2) remove a director (other than directors elected by a series of preferred stock of Freedom, if any, entitled to elect a class of directors) from office, with or without cause, and (3) amend, alter or repeal certain provisions of the certificate of incorporation which require a stockholder vote higher than a majority vote, including the amendment provision itself, or to adopt any provision inconsistent with those provisions; and | |
• | amend certain other provisions of the certificate of incorporation relating to, among other things, Freedom’s registered agent, the ability to call special meetings of stockholders, the scope of the indemnification of officers and directors and certain other ministerial amendments; |
• | approve a proposal to amend the certificate of incorporation to remove, effective after the consummation of the acquisition, (1) certain provisions of Article Third and Article Fourth, paragraph B and (2) the entirety of Article Fifth of the certificate of incorporation, all of which relate to the operation of Freedom as a blank check company prior to the consummation of a business combination, and to add provisions regarding dividends and distributions; |
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• | approve the adoption of the LTIP; and | |
• | authorize the adjournment of the special meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies in the event there are insufficient votes at the time of the special meeting to adopt the acquisition proposal, the pre-closing certificate amendment proposals, the post-closing certificate amendment proposal or the incentive plan proposal. |
• | has unanimously determined that the proposed acquisition, amendments to our certificate of incorporation, adoption of the LTIP and adjournment proposal are fair to, and in the best interests of, Freedom and its stockholders; | |
• | has determined that the fair market value of GLG is equal to or greater than 80% of the value of the net assets of Freedom plus the proceeds of the co-investment by our sponsors (excluding underwriting discounts and commissions of approximately $18.0 million); | |
• | has unanimously approved and declared advisable the acquisition, the amendments to our certificate of incorporation, the adoption of the LTIP and the adjournment proposal; and | |
• | unanimously recommends that the holders of Freedom common stock vote “FOR” the acquisition proposal, the pre-closing certificate amendment proposals, the post-closing certificate amendment proposal, the incentive plan proposal and, if necessary, the adjournment proposal. |
• | You can vote by signing and returning the enclosed proxy card. If you vote by proxy card, your “proxy,” whose name is listed on the proxy card, will vote your shares as you instruct on the proxy card. If you sign and return the proxy card, but do not give instructions on how to vote your shares, your shares will be voted, as recommended by the Freedom board, “FOR” the approval of the |
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acquisition proposal, each of the pre-closing certificate amendment proposals, the post-closing certificate amendment proposal, the incentive plan proposal and, if necessary, the adjournment proposal. |
• | You can attend the special meeting and vote in person. Freedom will give you a ballot when you arrive. However, if your shares are held in the name of your broker, bank or another nominee, you must get a proxy from the broker, bank or other nominee. That is the only way Freedom can be sure that the broker, bank or nominee has not already voted your shares. |
• | You may send another proxy card with a later date; | |
• | You may notify , addressed to Freedom, in writing before the special meeting that you have revoked your proxy; and | |
• | You may attend the special meeting, revoke your proxy and vote in person. |
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• | if the acquisition is not approved and Freedom fails to consummate an alternative transaction within the time allotted pursuant to its certificate of incorporation and Freedom is therefore required to liquidate, the shares of common stock and warrants held by Freedom’s founders will be worthless because Freedom’s founders are not entitled to receive any of the net proceeds of Freedom’s initial public offering that may be distributed upon liquidation of Freedom. Freedom’s founders beneficially own a total of 12,000,003 shares of Freedom common stock that have a market value of $ based on Freedom’s share price of $ as of , 2007. Freedom’s sponsors also beneficially own warrants to purchase 16,500,003 shares of Freedom common stock that have a market value of $ based on Freedom’s warrant price of $ as of , 2007. However, as Freedom’s founders are contractually prohibited from selling their shares of Freedom common stock prior to June 28, 2008, during which time the value of the shares may increase or decrease, it is impossible to determine what the financial impact of the acquisition will be on Freedom’s founders; and | |
• | it is currently anticipated that Nicolas Berggruen, Martin E. Franklin, James N. Hauslein and William P. Lauder, each of whom is a current director of Freedom, will continue as directors of Freedom. |
Units(a) | Warrants(b) | |||||||||||||||||||||||||||||||
Beneficially | Amount | Unrealized | Beneficially | Amount | Unrealized | |||||||||||||||||||||||||||
Owned | Paid | Value | Profit | Owned | Paid | Value | Profit | |||||||||||||||||||||||||
Nicolas Berggruen | 7,423,200 | $ | 2,512,340 | $ | $ | 2,250,000 | $ | 2,250,000 | $ | $ | ||||||||||||||||||||||
Martin E. Franklin | 7,423,200 | 2,512,340 | 2,250,000 | 2,250,000 | ||||||||||||||||||||||||||||
James N. Hauslein | 51,201 | 106 | — | — | ||||||||||||||||||||||||||||
William P. Lauder | 51,201 | 106 | — | — | ||||||||||||||||||||||||||||
Herbert A. Morey | 51,201 | 106 | — | — | ||||||||||||||||||||||||||||
Jared Bluestein | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Total | 15,000,003 | $ | 5,024,998 | $ | $ | 4,500,000 | $ | 4,500,000 | $ | $ | ||||||||||||||||||||||
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(a) | The purchase price per unit for the founders’ units was $0.00208 per unit and for the co-investment units is $10.00 per unit. Each of these stockholders has agreed, subject to exceptions, not to transfer, assign or sell these shares until one year after we consummate a business combination. | |
(b) | Excludes warrants included in the units. |
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• | Cash: Up to $1.0 billion of the purchase price will be paid in cash. The actual amount will depend on the extent to which two of the GLG Shareowners elect to have a portion of the purchase price paid in Notes (as described below). The amount of cash paid will be reduced, dollar-for-dollar, by the principal amount of any Notes issued to pay the purchase price. The cash portion of the purchase price will be funded by a combination of borrowing by FA Sub 3 Limited under a bank credit facility (up to $570.0 million) and existing cash proceeds from the initial public offering of Freedom (up to $553.5 million). The available cash will be reduced by amounts necessary to pay for any redemption rights exercised by Freedom stockholders. See “Agreements Related to Acquisition — Credit Facility”. | |
• | Notes: A portion of the purchase price may be paid (at the option of two of the GLG Shareowners) by issuing Notes of FA Sub 1 Limited. | |
• | Capital Stock: The balance of the purchase price will be paid by issuing capital stock of Freedom and securities of Freedom subsidiaries that are exchangeable for, or subject to put or call rights payable in, shares of Freedom common stock. For a description of the principal terms of the securities that will be issued in connection with the acquisition of GLG, see “The Authorized Share Proposal — Description of Capital Stock”. This combination of securities will give GLG Shareowners and employees and key personnel of GLG voting and economic rights approximately equal to 230,000,000 shares of Freedom common stock, as described below. Of this number, the approximate equivalent of 220,000,000 shares of Freedom common stock will be issued to GLG Shareowners in consideration for the Purchased Shares and 10,000,000 shares of Freedom common stock (in the aggregate) will be issued at closing to one or more trusts or subsidiaries of Freedom that will hold the shares for the benefit of GLG’s employees, key personnel and certain other individuals or use the shares to acquire certain limited partnership interests issued to Lavender Heights LLP and Laurel Heights LLP. See “The Purchase Agreement — Structure of the Acquisition”. |
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![(FLOW CHART)](https://capedge.com/proxy/PREM14A/0000950123-07-009829/y36387pmy3638701.gif)
Albacrest: | Albacrest Corporation | |
Betapoint: | Betapoint Corporation | |
GHL: | GLG Holdings Limited | |
GLGPL: | GLG Partners Limited | |
Gottesman Trust: | Gottesman GLG Trust | |
GPAM: | GLG Partners Asset Management Limited | |
GPCL: | GLG Partners (Cayman) Limited | |
GPLP: | GLG Partners LP | |
GPS: | GLG Partners Services Limited | |
GPS LP: | GLG Partners Services LP | |
Knox Pines: | Knox Pines Ltd. | |
Laurel Heights: | Laurel Heights LLP | |
Lavender Heights: | Lavender Heights LLP | |
Liberty Peak: | Liberty Peak Ltd. | |
Mount Garnet: | Mount Garnet Limited | |
Mount Granite: | Mount Granite Limited |
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• | 32,940,056 ordinary shares of FA Sub 1 Limited; and | |
• | $149,727,525 paid in cashand/or Notes. |
• | holders of those ordinary shares the right to require Freedom to buy the ordinary shares at any time, solely in exchange for Freedom common stock, with one share of Freedom common stock paid to buy each ordinary share; and | |
• | Freedom the right at any time to buy any of those ordinary shares that remain outstanding after the closing date for the acquisition, solely in exchange for Freedom common stock, with one share of Freedom common stock issued to buy each ordinary share. |
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• | 80,441,730 shares of Freedom common stock; | |
• | 35,402,503 shares of Freedom Series A preferred stock; | |
• | 35,402,503 Exchangeable Shares issued by FA Sub 2 Limited; and | |
• | $526,564,696 in cash. |
• | 47,694,340 shares of Freedom common stock; | |
• | 23,521,371 shares of Freedom Series A preferred stock; | |
• | 23,521,371 Exchangeable Shares issued by FA Sub 2 Limited; and | |
• | $323,707,779 in cash. |
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• | $1.0 billion, to be allocated between cash and Notes (if certain GLG Shareowners elect to receive Notes); and | |
• | 230,000,000 shares of Freedom common stock and common stock equivalents, as described above. See “— Structure of the Acquisition.” |
• | increase if the average closing price of Freedom common stock during the ten day trading period prior to the closing of the acquisition is less than $9.50 per share. | |
• | increase or decrease proportionately to give effect to any stock split, reverse stock split, stock combination, reclassification of stock, recapitalization, stock dividend or similar events, none of which is currently expected to occur. |
• | be issued by FA Sub 1 Limited; | |
• | bear interest at a fixed rate equal to LIBOR on the date of issue; | |
• | rank pari passu among themselves; | |
• | be non-recourse obligations of FA Sub 1 Limited (and its affiliates, including Freedom); | |
• | be secured by funds deposited in a collateral account (equal to the aggregate original principal amount of the Notes issued) maintained with a financial institution to hold and invest the deposit and pay principal of and interest on the Notes as and when due (at the stated maturity date, prior repayment date, on acceleration or otherwise); and | |
• | have a stated maturity that is two years from the date of issue, but (1) holders of Notes may demand that FA Sub 1 Limited repay the Notes, in whole or in part, at any time and from time to time after the date six months from the date of issue, (2) FA Sub 1 Limited may repurchase the Notes at any time after the date six months from the date of issue, and (3) the Notes may be declared immediately due and payable by the holders if any of the following “events of default” occurs and is continuing: |
• | FA Sub 1 Limited fails to pay any principal payable on any of the Notes within 10 business days of the due date for payment; | |
• | FA Sub 1 Limited begins awinding-up, dissolution or re-organization (other than for reorganization or amalgamation) or appoints a receiver, administrator, administrative receiver, trustee or similar officer of it or of all or any material part of its assets; |
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• | FA Sub 1 Limited is insolvent or unable to pay its debts or commences negotiations with its creditors for readjustment of its debts or makes a general assignment for the benefit of its creditors; | |
• | FA Sub 1 Limited does anything analogous to the previously mentioned items; or | |
• | FA Sub 1 Limited is or will be unable to comply with any of its obligations under the Notes because such obligations become unlawful. |
• | organization and qualification; | |
• | capacity or authority to execute, deliver, and perform their obligations under the agreements related to the acquisition and the enforceability of these transaction documents; | |
• | absence of any conflicts or violations under organizational documents, material agreements and applicable laws, licenses or permits as a result of the consummation of the acquisition or the execution, delivery or performance of the transaction documents; | |
• | required consents and approvals; | |
• | ownership of their respective Purchased Shares; | |
• | accredited investor matters and investment intention with respect to the Freedom capital stock issued in connection with the acquisition; and | |
• | payment of fees to investment banks, brokers, finders or other intermediary in connection with the transaction documents. |
• | organization, qualification and subsidiaries; | |
• | authority to execute, deliver and perform its obligations under the transaction documents and the enforceability of those transaction documents; | |
• | absence of any conflicts or violations under organizational documents, material agreements and applicable laws, licenses or permits as a result of the consummation of the acquisition or the execution, delivery or performance of the transaction documents; | |
• | payment of fees to investment banks, brokers, finders or other intermediary in connection with the transaction documents; |
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• | required governmental approvals; | |
• | capital structure; | |
• | financial statements and liabilities; | |
• | absence of certain changes or events since March 31, 2007; | |
• | tax matters; | |
• | title to assets and properties and absence of material liens; | |
• | material contracts and change of control agreements; | |
• | litigation matters; | |
• | environmental matters; | |
• | compliance with applicable laws; | |
• | permits and licenses; | |
• | employment and employee benefits matters; and | |
• | insurance. |
• | information supplied for use in this proxy statement; | |
• | transactions with affiliates; | |
• | material clients; | |
• | the GLG Funds; | |
• | business intellectual property; and | |
• | competition laws. |
• | Freedom’s filings with the SEC; | |
• | Freedom’s investment intention with respect to the equity interests in the GLG; and | |
• | financial commitment letter. |
• | economic, financial or political conditions or changes therein, |
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• | conditions in the financial markets, and any changes therein, | |
• | the announcement or pendency of the purchase agreement and the acquisition, | |
• | changes in the applicable laws, or | |
• | compliance with the express terms or failure to take action prohibited by the purchase agreement. |
• | conduct, their respective businesses in the ordinary course consistent with past practices; | |
• | pay their respective debts and taxes when due; | |
• | perform all material contracts; | |
• | use reasonable effort to preserve intact their respective present businesses; and | |
• | keep available services of their respective present officers and employees and preserve their respective relationships with customers, suppliers and others with which they have significant business dealings. |
• | amend or propose to amend any of its organizational documents; | |
• | authorize for issuance, issue, sell or deliver any of its securities or any securities of any of its subsidiaries; | |
• | acquire, redeem or amend any of its securities or any securities of any of its subsidiaries; | |
• | split, combine or reclassify any shares of capital stock or other equity securities; | |
• | propose or adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of it or any of its subsidiaries; | |
• | incur or assume any indebtedness or issue any debt securities, guarantee any material obligations, make any material loans or mortgage or pledge any of its or its subsidiaries’ assets; | |
• | make any changes to any employee benefits plan, increase compensation or pay any bonuses or benefit to any consultant, director, officer or employee not required by any employee benefits plan; | |
• | forgive any loans to any of its or its subsidiaries’ or affiliates’ employees, officers or directors; | |
• | make any deposits or contributions or take any action to fund or secure the payment of compensation or benefits under any employee benefits plan, except as required by the terms of such employee benefits plan or any contract subject to such plan in effect on the date of the purchase agreement or as required by law; | |
• | enter into, amend, or extend any collective bargaining agreement; | |
• | acquire, sell, lease, license or dispose of any material property or assets, except for transactions (1) pursuant to the existing contracts, (2) in the ordinary course of business, or (3) not in excess of $1.0 million individually, or $10.0 million in the aggregate; |
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• | except as may be required to remain in compliance with the applicable laws or GAAP, (1) make any change in any of the accounting principles or practices used by it, or (2) revalue in any material respect any of its properties or assets, including writing-off notes or accounts receivable other than in the ordinary course of business; | |
• | change any material tax election or accounting method, settle or compromise any material tax liability, or consent to the extension or waiver of the limitations period applicable to a material tax claim or assessment; | |
• | enter into or amend any material contract or grant any release or relinquishment of any material rights under any material contract, except as permitted in the purchase agreement; | |
• | acquire (by merger, consolidation or acquisition of stock or assets) any other person or any equity or ownership interest therein; | |
• | settle or compromise any pending or threatened action or pay, discharge or satisfy or agree to pay, discharge or satisfy any liability, except as permitted in the purchase agreement; | |
• | enter into a contract to do any of the foregoing; | |
• | knowingly take any action which is reasonably expected to result in any of the conditions to the consummation of the acquisition or related transactions not being satisfied; or | |
• | knowingly take any action which would materially impair its ability to consummate the acquisition or related transactions in accordance with the terms of the purchase agreement or materially delay such consummation. |
• | Noam Gottesman | |
• | Emmanuel Roman | |
• | Nicolas Berggruen | |
• | Martin Franklin | |
• | Ian Ashken | |
• | James Hauslein | |
• | William Lauder |
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• | Paul Myners | |
• | Peter Weinberg |
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• | the representations and warranties of the other party that are qualified by materiality must be true and correct in all respects and the representations and warranties of the other party that are not so qualified must be true in all material respects on the date of the purchase agreement and as of the closing date as if they were made on that date; | |
• | the other party’s performance or compliance with its covenants and agreements contained in the purchase agreement or the transaction documents; | |
• | No litigation or action being threatened in writing, instituted or pending which is reasonably likely to make illegal, delay, restrain, prohibit or otherwise adversely affect consummation of the acquisition or which would otherwise have a material adverse effect on GLG or the Freedom Group, as applicable; | |
• | the absence of any law or action by any court or other government entity which may inhibit or have a material adverse effect on the acquisition; | |
• | the receipt of all required approvals and consents and their submission to the other party; | |
• | the termination or expiration of all antitrust-related waiting periods, the receipt of all antitrust approvals and consents and the filing of all antitrust notices or filings required to have been made; | |
• | the approval by Freedom’s stockholders of the acquisition and the other proposals contained in this proxy statement; | |
• | the execution and delivery by each of the other parties of each of the transaction documents; and | |
• | the availability for funding on the closing date of the entire amount that may be borrowed under the credit agreement by FA Sub 3 Limited and the satisfaction of all conditions precedent to the borrowing of $550.0 million. |
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• | by mutual written agreement of Freedom and GLG Shareowners’ representative; | |
• | by either party, if the closing has not occurred before the termination date of December 31, 2007, or December 31, 2008 if any portion of the financing described above under “— Covenants — Financing at Closing” becomes unavailable; | |
• | by either party, if there is any law or court or governmental order, which is not subject to appeal or has become final, that makes consummation of the acquisition illegal or otherwise prohibited; | |
• | by either party, if there has been a breach of any representation, warranty, covenant or agreement by the other party such that the condition set forth above with respect to representations and warranties under “— Conditions to the Completion of the Acquisition” would not be satisfied as of such time, unless such breach is curable and the breaching party continues to exercises reasonable best efforts to cure it; or | |
• | by either party, if the required approvals of Freedom’s stockholders related to the acquisition are not obtained. |
• | in the case of certain designated representations of Freedom and GLG Shareowners, 30 days after the expiration of the longest applicable statute of limitations; | |
• | in the case of any breach of the representations and warranties relating to the U.S. federal tax status of GLG or the GLG indemnity for certain income tax claims defined below, the period of the applicable statute of limitations for tax claims made by tax authorities in the relevant jurisdiction; and | |
• | in any other case, one year after the closing date. |
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Type of Indemnity Claim | Type of Indemnitor | Maximum Liability | ||
Breach of Designated Representations | GLG Shareowners Designated Sellers Freedom Group | Aggregate purchase price paid to such person Aggregate purchase price paid to such person Aggregate purchase price | ||
Breach by GLG Shareowners of individual representations and warranties in Article III of the purchase agreement (other than Designated Representations) | GLG Shareowners Designated Seller Freedom Group | One tenth of the aggregate purchase price paid to such person One tenth of the aggregate purchase price paid to such person Not applicable | ||
Breach of representations and warranties concerning GLG in Article IV of the purchase agreement (other than Designated Representations) | GLG Shareowners Designated Sellers | $300.0 million, in the aggregate for all GLG Shareowners The lesser of (x) the product of (i) $300.0 million and (ii) the amount specified in the purchase agreement for each Designated Seller as its “Indemnity Sharing Percentage” and (y) the product of (i) the aggregate indemnity amount paid by all GLG Shareowners and (ii) the Indemnity Sharing Percentage of the Designated Seller. | ||
Freedom Group | Not applicable | |||
Breach of representations and warranties concerning the Freedom Group in Article V of the purchase agreement (other than Designated Representations) | GLG Shareowners Designated Sellers Freedom Group | Not applicable Not applicable $300.0 million | ||
Indemnity claims under Section 8.2(c) of the purchase agreement relating to the AMF investigation of GLG with respect to transactions in Vivendi shares summarized in item (3) above | GLG Shareowners Designated Sellers Freedom Group | The aggregate purchase price paid to such person. The lesser of (i) the aggregate purchase price paid to that Designated Seller and (ii) the product of (x) the aggregate indemnity amounts payable by all GLG Shareowners and (y) the Indemnity Sharing Percentage of that Designated Seller. Not applicable | ||
Indemnity claims under Section 8.2(d) of the purchase agreement relating to certain income tax matters summarized in item (4) above | GLG Shareowners Designated Sellers Freedom Group | The aggregate purchase price paid to such person. The lesser of (i) the aggregate purchase price paid to that Designated Seller and (ii) the product of (x) the aggregate indemnity amounts payable by all GLG Shareowners and (y) the Indemnity Sharing Percentage of that Designated Seller. Not applicable | ||
Indemnity claims under Section 8.2(e) and 8.2(f) of the purchase agreement summarized in items (5) through (7) above | GLG Shareowners Designated Sellers Freedom Group | Aggregate purchase price to such person Aggregate purchase price to such person Not applicable |
• | any breach of representations and warranties made with respect to the information supplied by GLG for use in this proxy statement; |
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• | any amount in excess of the product of the indemnity amounts payable by all GLG Shareowners for any claim or claims multiplied by the Indemnity Sharing Percentage of any Designated Seller; and | |
• | any claim, other than for breach of any representation and warranty made by such Designated Seller, unless such claim is asserted against other GLG Shareowners that may be liable for the claim. |
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• | to issue that number of shares of Freedom common stock as may be required to comply with any such exchange notice; | |
• | to deliver those shares upon receipt by Freedom of (1) certificates representing the Exchangeable Shares tendered for exchange and (2) such other documents or instruments as may be reasonably requested by Freedom; and | |
• | to record successive transfers of any shares of Freedom common stock issued pursuant to any exchange notice first as a transfer by Freedom to FA Sub 1 Limited (which will be treated as between Freedom and FA Sub 1 Limited as a contribution to the capital of FA Sub 1 Limited) and second as a transfer by FA Sub 1 Limited to FA Sub 2 Limited (which will be treated as between FA Sub 1 Limited and FA Sub 2 Limited as a contribution to the capital of FA Sub 2 Limited) and third as a transfer by FA Sub 2 Limited to the person(s) named in the exchange notice. |
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• | any amendment of Freedom’s certificate of incorporation or by-laws other than as specifically contemplated by the purchase agreement, and any other proposal, action or transaction involving Freedom or any of its subsidiaries, which amendment or other proposal, action or transaction would reasonably be expected to in any manner impede, frustrate, prevent or nullify the acquisition or change in any manner the voting rights of any class of Freedom’s capital stock other than as specifically contemplated by the purchase agreement; | |
• | any change in the persons who constitute the board of directors of Freedom that is not approved in advance by at least a majority of the persons who were directors of Freedom as of the date of the founders agreement (or their successors who were so approved); | |
• | any material change in the present capitalization or dividend policy of Freedom; or | |
• | any other material change in Freedom’s corporate structure or business that would reasonably be expected to adversely affect or delay the acquisition in any respect. |
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• | The nomination, designation or election of the members of the board of directors of Freedom (or the board of any subsidiary) or their respective successors (or their replacements); | |
• | The removal, with or without cause, from the board of directors (or the board of any subsidiary) of any director; and | |
• | Any change in control of Freedom. |
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• | any incurrence of indebtedness, in one transaction or a series of related transactions, by Freedom or any of its subsidiaries in excess of $570.0 million or, if a greater amount has been previously approved by the controlling stockholders and their respective permitted transferees, such greater amount; | |
• | any issuance by Freedom of equity or equity-related securities that would represent, after such issuance, or upon conversion, exchange or exercise, as the case may be, at least 20% of the total voting power of Freedom, other than (1) pursuant to transactions solely among Freedom and its wholly owned subsidiaries, and (2) upon conversion of convertible securities or upon exercise of warrants or options; | |
• | any commitment to invest or investment or series of related commitments to invest or investments in a person or group of related persons in an amount greater than $250.0 million; | |
• | the adoption of a shareholder rights plan; | |
• | any appointment of a Chief Executive Officer or Co-Chief Executive Officer of Freedom; or | |
• | the termination of the employment of a Principal with Freedom or any of its material subsidiaries without cause. |
• | more than 50% of the total voting power of Freedom, Freedom will nominate individuals designated by the voting block such that the controlling stockholders will have six designees on the board of directors if the number of directors is ten or eleven, or five designees on the board if the number of directors is nine or less and, in each case, assuming such nominees are elected; | |
• | between 40% and 50% of the total voting power of Freedom, Freedom will nominate individuals designated by the voting block such that the controlling stockholders will have five designees on the board of directors if the number of directors is ten or eleven, or four designees on the board if the number of directors is nine or less and, in each case, assuming such nominees are elected; | |
• | between 25% and 40% of the total voting power of Freedom, Freedom will nominate individuals designated by the voting block such that the controlling stockholders will have four designees on the board of directors if the number of directors is ten or eleven, or three designees on the board if the number of directors is nine or less and, in each case, assuming such nominees are elected; | |
• | between 10% and 25% of the total voting power of Freedom, Freedom will nominate individuals designated by the voting block such that the controlling stockholders will have two designees on the board of directors, assuming such nominees are elected; | |
• | less than 10% of the total voting power of Freedom, Freedom will have no obligation to nominate any individual that is designated by the controlling stockholders; and |
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• | in the event the termination occurs prior to the first anniversary of the consummation of the acquisition, 82.5%; | |
• | in the event the termination occurs on or after the first but prior to the second anniversary of the consummation of the acquisition, 66%; | |
• | in the event the termination occurs on or after the second but prior to the third anniversary of the consummation of the acquisition, 49.5%; |
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• | in the event the termination occurs on or after the third but prior to the fourth anniversary of the consummation of the acquisition, 33%; and | |
• | in the event the termination occurs on or after the fourth but prior to the fifth anniversary of the consummation of the acquisition, 16.5%. |
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• | a voluntary liquidation or acts or failure to act that are designed to result in a liquidation; | |
• | any amendment of the support agreement; | |
• | any amendment of the memorandum or articles of association adverse to the holders of Exchangeable Shares; and | |
• | a reincorporation, merger, consolidation or sale of all or substantially all the assets of FA Sub 2 Limited or similar action (other than where the successor remains an affiliate of Freedom, the holder of Exchangeable Shares are not adversely affected and receive shares in the successor substantially identical in their rights as the Exchangeable Shares). |
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• | in whole but not in part; | |
• | at a price of $0.01 per warrant; | |
• | upon not less than 30 days’ prior written notice of redemption to each warrant holder; and | |
• | if, and only if, the reported last sale price of our common stock equals or exceeds $14.25 per share for any 20 trading days within a 30-trading day period ending on the third business day prior to the notice of redemption to warrant holders. |
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• | will become exercisable after our consummation of the acquisition if and when the last sales price of our common stock exceeds $14.25 per share for any 20 trading days within a 30-trading day period beginning 90 days after such acquisition; and | |
• | are non-redeemable so long as they are held by the founders or their permitted transferees. |
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• | attracting, motivating and retaining employees, service providers, including certain individuals who are participants in the limited partner profit share arrangement, and non-employee directors; and | |
• | aligning the interests of our employees, service providers and non-employee directors who participate in the LTIP with the interests of our stockholders. |
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• | The exercise price of an option will not be less than the fair market value of our common stock on the date the option is granted; | |
• | No option may be exercisable more than ten years after the date the option is granted; | |
• | The exercise price of an option will be paid in cash or, at the discretion of the Committee, in shares of our common stock or in a combination of cash and our common stock; and | |
• | No fractional shares of our common stock will be issued or accepted. |
• | The aggregate fair market value (determined at the time of grant) of the shares of our common stock subject to incentive stock options that are exercisable by one person for the first time during a particular calendar year may not exceed the maximum amount permitted under the Code (currently $100,000); provided, however, that if the limitation is exceeded, the incentive stock options in excess of such limitation will be treated as non-qualified stock options; | |
• | No incentive stock option may be granted under the LTIP more than ten years after the effective date of the LTIP; and | |
• | No incentive stock option may be granted to any participant who on the date of grant is not our employee or an employee of one of our subsidiaries within the meaning of Code Section 424(f). |
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• | to exercise all of the powers granted to it under the LTIP; | |
• | to construe, interpret and implement the LTIP and any related document; | |
• | to prescribe, amend and rescind rules relating to the LTIP; | |
• | to make all determinations necessary or advisable in administering the LTIP; and | |
• | to correct any defect, supply any omission and reconcile any inconsistency in the LTIP. |
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• | provisions for the time at which the award becomes exercisable or otherwise vests; | |
• | provisions for the treatment of the award in the event of the termination of a participant’s status as an employee, service provider or non-employee director; and | |
• | any special provisions applicable in the event of an occurrence of a change of control of our company, as determined by the Committee consistent with the provisions of the LTIP. |
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• | the acquisition by any individual, entity or group of beneficial ownership of % or more of the combined voting power of the then outstanding voting securities of Freedom entitled to vote generally in the election of directors; | |
• | a change in the composition of a majority of the Freedom board of directors which is not supported by the current board of directors; |
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• | a major corporate transaction, such as a reorganization, merger or consolidation or sale or other disposition of all or substantially all of Freedom’s assets, which results (1) in a change in the majority of the board of directors or of more than % of Freedom’s shareowners or (2) in the acquisition by any person of beneficial ownership of % of more of the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors; or | |
• | approval by Freedom’s stockholders of the complete liquidation or dissolution of Freedom. |
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Three Months | ||||||||||||||||||||||||||||
Years Ended December 31, | Ended March 31, | |||||||||||||||||||||||||||
2002 | 2003 | 2004 | 2005 | 2006 | 2006 | 2007 | ||||||||||||||||||||||
(US dollars in thousands) | ||||||||||||||||||||||||||||
Combined Statement of Operations Data: | ||||||||||||||||||||||||||||
Net revenues and other income: | ||||||||||||||||||||||||||||
Management fees | $ | 30,108 | $ | 65,259 | $ | 138,988 | $ | 137,958 | $ | 186,273 | $ | 37,292 | $ | 57,343 | ||||||||||||||
Performance fees | 31,288 | 206,685 | 178,024 | 279,405 | 394,740 | 3,251 | 2,521 | |||||||||||||||||||||
Administration fees | — | — | — | 311 | 34,814 | 7,422 | 12,645 | |||||||||||||||||||||
Transaction charges | 80,613 | 115,945 | 191,585 | 184,252 | — | — | — | |||||||||||||||||||||
Other | 626 | 6,497 | 6,110 | 1,476 | 5,039 | 2,293 | 498 | |||||||||||||||||||||
Total net revenues and other income | 142,635 | 394,386 | 514,707 | 603,402 | 620,866 | 50,258 | 73,007 | |||||||||||||||||||||
Expenses: | ||||||||||||||||||||||||||||
Employee compensation and benefits | (88,994 | ) | (158,789 | ) | (196,784 | ) | (345,918 | ) | (168,386 | ) | (26,054 | ) | (25,048 | ) | ||||||||||||||
General, administrative and other | (22,052 | ) | (23,005 | ) | (42,002 | ) | (64,032 | ) | (68,404 | ) | (11,588 | ) | (25,764 | ) | ||||||||||||||
Total expenses | (111,046 | ) | (181,794 | ) | (238,786 | ) | (409,950 | ) | (236,790 | ) | (37,642 | ) | (50,812 | ) | ||||||||||||||
Income from operations | 31,589 | 212,592 | 275,921 | 193,452 | 384,076 | 12,616 | 22,195 | |||||||||||||||||||||
Interest income, net | 882 | 709 | 519 | 2,795 | 4,657 | 1,635 | 1,475 | |||||||||||||||||||||
Income before income taxes | 32,471 | 213,301 | 276,440 | 196,247 | 388,733 | 14,251 | 23,670 | |||||||||||||||||||||
Income taxes | (8,456 | ) | (49,966 | ) | (48,372 | ) | (25,345 | ) | (29,225 | ) | (1,501 | ) | (3,255 | ) | ||||||||||||||
Net income | $ | 24,015 | $ | 163,335 | $ | 228,068 | $ | 170,902 | $ | 359,508 | $ | 12,750 | $ | 20,415 | ||||||||||||||
As of December 31, | As of March 31, | |||||||||||||||||||||||||||
2002 | 2003 | 2004 | 2005 | 2006 | 2006 | 2007 | ||||||||||||||||||||||
(US dollars in thousands) | ||||||||||||||||||||||||||||
Combined Balance Sheet Data: | ||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 28,450 | $ | 65,655 | $ | 136,378 | $ | 236,261 | $ | 273,148 | $ | 87,805 | $ | 149,193 | ||||||||||||||
Fees receivable | 34,826 | 139,103 | 163,235 | 246,179 | 251,963 | 19,016 | 32,077 | |||||||||||||||||||||
Working capital | 15,579 | 25,940 | 20,395 | 42,387 | 370,094 | 55,164 | 58,110 | |||||||||||||||||||||
Property and equipment, net | 4,102 | 3,801 | 4,342 | 3,290 | 6,121 | 3,319 | 7,601 | |||||||||||||||||||||
Total assets | 75,359 | 220,829 | 310,592 | 495,340 | 557,377 | 120,277 | 207,747 | |||||||||||||||||||||
Accrued compensation and benefits | 21,654 | 25,038 | 125,850 | 247,745 | 102,507 | 24,517 | 26,334 | |||||||||||||||||||||
Other liabilities | — | — | — | — | 5,100 | — | 7,100 | |||||||||||||||||||||
Loans payable | 13,000 | 13,000 | 13,000 | 13,000 | 13,000 | 13,000 | 13,000 | |||||||||||||||||||||
Total members’ equity | 19,400 | 112,722 | 117,980 | 180,229 | 361,952 | 44,235 | 52,131 |
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OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
• | Assets under management. GLG’s revenues from management and administration fees are directly linked to AUM. As a result, GLG’s future performance will depend on, among other things, its ability both to retain AUM and to grow AUM from existing and new products. | |
• | Fund performance. GLG’s revenues from performance fees are linked to the performance of the funds and accounts it manages. Performance also affects AUM because it influences investors’ decisions to invest assets in, or withdraw assets from, the GLG Funds and accounts managed by GLG. | |
• | Personnel, systems, controls and infrastructure. GLG depends on its ability to attract, retain and motivate leading investment and other professionals. GLG’s business requires significant investment in its fund management platform, including infrastructure and back-office personnel. GLG has in the past paid and expects to continue in the future to pay these professionals significant compensation and a share of GLG’s profits. | |
• | Fee rates. GLG’s management and administration fee revenues are linked to the fee rates it charges the GLG Funds and accounts it manages as a percentage of their AUM. GLG’s performance fees are linked to the rates it charges the GLG Funds and accounts it manages as a percentage of their performance-driven asset growth, subject to “high water marks”, whereby performance fees are earned by GLG only to the extent that the net asset value of a GLG Fund at the end of a measurement period exceeds the highest net asset value on a preceding measurement period end for which GLG earned performance fees, and in some cases to performance hurdles. |
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Product | Typical Range of Gross Fee Rates (% of AUM) | |||
Single-manager alternative strategy funds | 1.50% — 2.50% | |||
Long-only funds | 0.75% — 2.25% | |||
Internal FoHF | 0.25% — 1.50% (at the investing fund level) | |||
External FoHF | 1.50% — 1.95% |
Product | Typical Range of Gross Fee Rates (% of Investment Gains) | |||
Single-manager alternative strategy funds | 20% — 30% | |||
Long-only funds | 20% — 25% | |||
Internal FoHF | 0% — 20% (at the investing fund level)* | |||
External FoHF | 5% — 10% |
* | When one of the internal FoHFs managed by GLG invests in an underlying single-manager alternative strategy fund managed by GLG, fees are charged at the investee fund level. In addition, performance fees are charged on the following GLG Funds at the investing fund level: (1) Prime GLG Diversified Fund; and (2) GLG Global Aggressive Fund, to the extent, if any, that the performance fee at the investing fund level is greater than the performance fee at the investee fund level. |
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• | If one of the single-manager alternative strategy GLG Funds cross-invests in other GLG Funds, fees are charged at the investee fund level except for administration fees which are charged at both levels. | |
• | When one of the internal FoHFs managed by GLG invests in an underlying single-manager alternative strategy fund managed by GLG, fees are charged at the investee fund level, except for administration fees which are charged at both levels. In addition, the following managementand/or performance fees are charged at the investing fund level: (1) GLG Multi Strategy Fund, a management fee; (2) Prime GLG Diversified Fund, a management and performance fee; (3) GLG Global Aggressive Fund, a performance fee to the extent, if any, that the performance fee at the investing fund level is greater than the performance fee at the investee fund level. |
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• | For employees: |
• | Salary, which consists of the following: |
• | Base salary, which is fixed; and | |
• | Variable salary, which is contractually linked to management fees and performance fees attributable to the individuals concerned. |
• | Discretionary bonus, which is determined by management in its sole discretion. |
• | For key personnel that are participants in the limited partner profit share arrangement: |
• | Priority drawings, which consist of the following: |
• | Base limited partner profit share, which is fixed and paid as a partnership draw; and | |
• | Variable limited partner profit share, which is contractually linked to management fees and performance fees attributable to the individuals concerned and paid as a partnership draw. |
• | Discretionary limited partner profit share, which is determined by management in its sole discretion. |
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As of March 31, | As of December 31, | |||||||||||||||||||
2007 | 2006 | 2006 | 2005 | 2004 | ||||||||||||||||
(US dollars in millions) | ||||||||||||||||||||
Alternative strategy | $ | 11,200 | $ | 7,883 | $ | 10,410 | $ | 7,030 | $ | 9,171 | ||||||||||
Long-only | 3,882 | 3,667 | 3,815 | 3,253 | 2,666 | |||||||||||||||
Internal FoHF | 1,404 | 937 | 1,261 | 790 | 870 | |||||||||||||||
External FoHF | 575 | 447 | 568 | 410 | 338 | |||||||||||||||
Gross fund-based AUM | 17,060 | 12,934 | 16,053 | 11,484 | 13,045 | |||||||||||||||
Managed accounts | 1,398 | 505 | 1,233 | 335 | 5 | |||||||||||||||
Cash and other holdings | 197 | 395 | 310 | 229 | 215 | |||||||||||||||
Total gross AUM | 18,655 | 13,834 | 17,596 | 12,047 | 13,265 | |||||||||||||||
Less: internal FoHF investments in GLG Funds | (1,372 | ) | (940 | ) | (1,268 | ) | (805 | ) | (867 | ) | ||||||||||
Less: external FoHF investments in GLG Funds | (53 | ) | — | (49 | ) | — | — | |||||||||||||
Less: alternativesfund-in-fund investments | (1,145 | ) | (1,082 | ) | (1,125 | ) | (942 | ) | (726 | ) | ||||||||||
Net AUM | $ | 16,085 | $ | 11,811 | $ | 15,154 | $ | 10,300 | $ | 11,671 |
Three Months Ended March 31, | Years Ended December 31, | |||||||||||||||||||
2007 | 2006 | 2006 | 2005 | 2004 | ||||||||||||||||
(US dollars in millions) | ||||||||||||||||||||
Quarterly average gross AUM | $ | 18,126 | $ | 12,941 | $ | 15,007 | $ | 12,166 | $ | 11,890 | ||||||||||
Quarterly average net AUM | 15,620 | 11,056 | 12,890 | 10,549 | 10,427 |
Three Months Ended March 31, | Years Ended December 31, | |||||||||||||||||||
2007 | 2006 | 2006 | 2005 | 2004 | ||||||||||||||||
(US dollars in millions) | ||||||||||||||||||||
Opening gross fund-based AUM | $ | 16,053 | $ | 11,484 | $ | 11,484 | $ | 13,045 | $ | 9,425 | ||||||||||
Gross fund-based inflows (net of redemptions) | 160 | 206 | 1,986 | (1,704 | ) | 2,353 | ||||||||||||||
Gross fund-based net performance | 848 | 1,244 | 2,584 | 143 | 1,267 | |||||||||||||||
Closing gross fund-based AUM | $ | 17,060 | $ | 12,934 | $ | 16,053 | $ | 11,484 | $ | 13,045 | ||||||||||
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As of March 31, | As of December 31, | |||||||||||
2007 | 2006 | Change | ||||||||||
(US dollars in millions) | ||||||||||||
Alternative strategy | $ | 11,200 | $ | 10,410 | $ | 790 | ||||||
Long-only | 3,882 | 3,815 | 67 | |||||||||
Internal FoHF | 1,404 | 1,261 | 143 | |||||||||
External FoHF | 575 | 568 | 7 | |||||||||
Gross fund-based AUM | 17,060 | 16,053 | 1,008 | |||||||||
Managed accounts | 1,398 | 1,233 | 165 | |||||||||
Cash and other holdings | 197 | 310 | (113 | ) | ||||||||
Gross AUM | 18,655 | 17,596 | 1,060 | |||||||||
Less: internal FoHF investments in GLG Funds | (1,372 | ) | (1,268 | ) | (104 | ) | ||||||
Less: external FoHF investments in GLG Funds | (53 | ) | (49 | ) | (4 | ) | ||||||
Less: alternativesfund-in-fund investments | (1,145 | ) | (1,125 | ) | (20 | ) | ||||||
Net AUM | $ | 16,085 | $ | 15,154 | $ | 931 | ||||||
Three Months Ended | ||||
March 31, 2007 | ||||
(US dollars in millions) | ||||
Opening gross fund-based AUM | $ | 16,053 | ||
Gross fund-based inflows (net of redemptions) | 160 | |||
Gross fund-based performance (gains net of losses) | 848 | |||
Closing gross fund-based AUM | $ | 17,060 | ||
• | Positive fund performance during the three months ended March 31, 2007, resulting in performance gains (net of losses) of $0.8 billion, which was responsible for 84.1% of gross fund-based AUM growth in the three months ended March 31, 2007; and | |
• | A general increase in demand for GLG’s fund products, which resulted in inflows (net of redemptions) of $0.2 billion, which were responsible for 15.9% of gross fund-based AUM growth in the three months ended March 31, 2007. |
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As of December 31, | ||||||||||||
2006 | 2005 | Change | ||||||||||
(US dollars in millions) | ||||||||||||
Alternative strategy | $ | 10,410 | $ | 7,030 | $ | 3,380 | ||||||
Long-only | 3,815 | 3,253 | 561 | |||||||||
Internal FoHF | 1,261 | 790 | 470 | |||||||||
External FoHF | 568 | 410 | 158 | |||||||||
Gross fund-based AUM | 16,053 | 11,484 | 4,569 | |||||||||
Managed accounts | 1,233 | 335 | 898 | |||||||||
Cash and other holdings | 310 | 229 | 81 | |||||||||
Gross AUM | 17,596 | 12,047 | 5,548 | |||||||||
Less: internal FoHF investments in GLG Funds | (1,268 | ) | (805 | ) | (462 | ) | ||||||
Less: external FoHF investments in GLG Funds | (49 | ) | — | (49 | ) | |||||||
Less: alternativesfund-in-fund investments | (1,125 | ) | (942 | ) | (183 | ) | ||||||
Net AUM | $ | 15,154 | $ | 10,300 | $ | 4,854 | ||||||
Year Ended | ||||
December 31, 2006 | ||||
(US dollars in millions) | ||||
Opening gross fund-based AUM | $ | 11,484 | ||
Gross fund-based inflows (net of redemptions) | 1,986 | |||
Gross fund-based performance (gains net of losses) | 2,584 | |||
Closing gross fund-based AUM | $ | 16,053 | ||
• | Positive fund performance during 2006, resulting in performance gains (net of losses) of $2.6 billion, which was responsible for 56.5% of gross fund-based AUM growth in 2006; and | |
• | A general increase in demand for GLG’s fund products, which resulted in inflows (net of redemptions) of $2.0 billion, which were responsible for 43.5% of gross fund-based AUM growth in 2006. This growth was primarily attributable to: |
• | Continued interest in GLG’s established investment fund products; and | |
• | Investor demand for GLG’s new investment funds launched during 2006. |
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As of December 31, | ||||||||||||
2005 | 2004 | Change | ||||||||||
(US dollars in millions) | ||||||||||||
Alternative strategy | $ | 7,030 | $ | 9,171 | $ | (2,141 | ) | |||||
Long-only | 3,253 | 2,666 | 587 | |||||||||
Internal FoHF | 790 | 870 | (79 | ) | ||||||||
External FoHF | 410 | 338 | 72 | |||||||||
Gross fund-based AUM | 11,484 | 13,045 | (1,561 | ) | ||||||||
Managed accounts | 335 | 5 | 329 | |||||||||
Cash and other holdings | 229 | 215 | 14 | |||||||||
Gross AUM | 12,047 | 13,265 | (1,217 | ) | ||||||||
Less: internal FoHF investments in GLG funds | (805 | ) | (867 | ) | 62 | |||||||
Less: external FoHF investments in GLG funds | — | — | — | |||||||||
Less: alternativesfund-in-fund investments | (942 | ) | (726 | ) | (216 | ) | ||||||
Net AUM | $ | 10,300 | $ | 11,671 | $ | (1,371 | ) | |||||
Year Ended | ||||
December 31, 2005 | ||||
(US dollars in millions) | ||||
Opening gross fund-based AUM | $ | 13,045 | ||
Gross fund-based inflows (net of redemptions) | (1,704 | ) | ||
Gross fund-based performance (gains net of losses) | 143 | |||
Closing gross fund-based AUM | $ | 11,484 | ||
• | While still delivering performance gains (net of losses) of $0.1 billion, fund performance in 2005 was depressed by particularly significant underperformance in two of the GLG Funds, the GLG Credit Fund and the GLG Market Neutral Fund; and | |
• | Fund underperformance gave rise to significant redemptions of AUM, primarily from the two underperforming funds. Redemptions for this period (net of inflows) from fund-based products were $1.7 billion. |
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Three Months Ended March 31, | Years Ended December 31, | |||||||||||||||||||
2007 | 2006 | 2006 | 2005 | 2004 | ||||||||||||||||
(US dollars in thousands) | ||||||||||||||||||||
Net revenues and other income | ||||||||||||||||||||
Management fees | $ | 57,343 | $ | 37,292 | $ | 186,273 | $ | 137,958 | $ | 138,988 | ||||||||||
Performance fees | 2,521 | 3,251 | 394,740 | 279,405 | 178,024 | |||||||||||||||
Administration fees | 12,645 | 7,422 | 34,814 | 311 | — | |||||||||||||||
Transaction charges | — | — | — | 184,252 | 191,585 | |||||||||||||||
Other | 498 | 2,293 | 5,039 | 1,476 | 6,110 | |||||||||||||||
Total net revenues and other income | 73,007 | 50,258 | 620,866 | 603,402 | 514,707 | |||||||||||||||
Expenses | ||||||||||||||||||||
Employee compensation and benefits | (25,048 | ) | (26,054 | ) | (168,386 | ) | (345,918 | ) | (196,784 | ) | ||||||||||
General, administrative and other | (25,764 | ) | (11,588 | ) | (68,404 | ) | (64,032 | ) | (42,002 | ) | ||||||||||
Total expenses | (50,812 | ) | (37,642 | ) | (236,790 | ) | (409,950 | ) | (238,786 | ) | ||||||||||
Income from operations | 22,195 | 12,616 | 384,076 | 193,452 | 275,921 | |||||||||||||||
Interest income, net | 1,475 | 1,635 | 4,657 | 2,795 | 519 | |||||||||||||||
Income before income taxes | 23,670 | 14,251 | 388,733 | 196,247 | 276,440 | |||||||||||||||
Income taxes | (3,255 | ) | (1,501 | ) | (29,225 | ) | (25,345 | ) | (48,372 | ) | ||||||||||
Net income | $ | 20,415 | $ | 12,750 | $ | 359,508 | $ | 170,902 | $ | 228,068 | ||||||||||
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March 31, 2007 and March 31, 2006
Three Months Ended March 31, | ||||||||||||
2007 | 2006 | Change | ||||||||||
(US dollars in thousands) | ||||||||||||
Net revenues and other income | ||||||||||||
Management fees | $ | 57,343 | $ | 37,292 | $ | 20,051 | ||||||
Performance fees | 2,521 | 3,251 | (730 | ) | ||||||||
Administration fees | 12,645 | 7,422 | 5,223 | |||||||||
Transaction charges | — | — | — | |||||||||
Other | 498 | 2,293 | (1,795 | ) | ||||||||
Total net revenues and other income | $ | 73,007 | $ | 50,258 | $ | 22,749 | ||||||
Key ratios | ||||||||||||
Total annualized net revenues and other income / quarterly average net AUM | 1.87 | % | 1.82 | % | 0.05 | % | ||||||
Annualized management fees / quarterly average net AUM | 1.47 | % | 1.35 | % | 0.12 | % |
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December 31, 2006 and December 31, 2005
Years Ended December 31, | ||||||||||||
2006 | 2005 | Change | ||||||||||
(US dollars in thousands) | ||||||||||||
Net revenues and other income | ||||||||||||
Management fees | $ | 186,273 | $ | 137,958 | $ | 48,315 | ||||||
Performance fees | 394,740 | 279,405 | 115,335 | |||||||||
Administration fees | 34,814 | 311 | 34,503 | |||||||||
Transaction charges | — | 184,252 | (184,252 | ) | ||||||||
Other | 5,039 | 1,476 | 3,563 | |||||||||
Total net revenues and other income | $ | 620,866 | $ | 603,402 | $ | 17,464 | ||||||
Key ratios | ||||||||||||
Total annualized net revenues and other income / quarterly average net AUM | 4.82 | % | 5.72 | % | (0.90 | )% | ||||||
Management fees / quarterly average net AUM | 1.45 | % | 1.31 | % | 0.14 | % |
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December 31, 2005 and December 31, 2004
Years Ended December 31, | ||||||||||||
2005 | 2004 | Change | ||||||||||
(US dollars in thousands) | ||||||||||||
Net revenues and other income | ||||||||||||
Management fees | $ | 137,958 | $ | 138,988 | $ | (1,030 | ) | |||||
Performance fees | 279,405 | 178,024 | 101,381 | |||||||||
Administration fees | 311 | — | 311 | |||||||||
Transaction charges | 184,252 | 191,585 | (7,333 | ) | ||||||||
Other | 1,476 | 6,110 | (4,634 | ) | ||||||||
Total net revenues and other income | $ | 603,402 | $ | 514,707 | $ | 88,695 | ||||||
Key ratios | ||||||||||||
Total annualized net revenues and other income / quarterly average net AUM | 5.72 | % | 4.94 | % | 0.78 | % | ||||||
Management fees / quarterly average net AUM | 1.31 | % | 1.33 | % | (0.03 | )% |
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Three Months Ended March 31, | ||||||||||||
2007 | 2006 | Change | ||||||||||
(US dollars in thousands) | ||||||||||||
Expenses | ||||||||||||
Employee compensation and benefits | $ | (25,048 | ) | $ | (26,054 | ) | $ | 1,006 | ||||
General, administrative and other | (25,764 | ) | (11,588 | ) | (14,176 | ) | ||||||
Total expenses | $ | (50,812 | ) | $ | (37,642 | ) | $ | (13,170 | ) | |||
Key ratios | ||||||||||||
Employee compensation and benefits / total GAAP net revenues and other income | 34.31 | % | 51.84 | % | (17.53 | )% | ||||||
General, administrative and other / total GAAP net revenues and other income | 35.29 | % | 23.06 | % | 12.23 | % | ||||||
Total expenses / total GAAP net revenues and other income | 69.60 | % | 74.90 | % | (5.30 | )% | ||||||
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Three Months Ended March 31, | ||||||||||||
2007 | 2006 | Change | ||||||||||
(US dollars in thousands) | ||||||||||||
Non-GAAP expenses | ||||||||||||
GAAP employee compensation and benefits | $ | (25,048 | ) | $ | (26,054 | ) | $ | 1,006 | ||||
Limited partner profit share | (6,453 | ) | — | (6,453 | ) | |||||||
Non-GAAP comprehensive limited partner profit share, compensation and benefits | (31,501 | ) | (26,054 | ) | (5,447 | ) | ||||||
GAAP general, administrative and other | (25,764 | ) | (11,588 | ) | (14,176 | ) | ||||||
Non-GAAP total expenses | $ | (57,265 | ) | $ | (37,642 | ) | $ | (19,623 | ) | |||
Key ratios (based on non-GAAP measures) | ||||||||||||
Non-GAAP comprehensive limited partner profit share, compensation and benefits / total GAAP net revenues and other income | 43.15 | % | 51.84 | % | (8.69 | )% | ||||||
General, administrative and other / total GAAP net revenues and other income | 35.29 | % | 23.06 | % | 12.23 | % | ||||||
Non-GAAP total expenses / total GAAP net revenues and other income | 78.44 | % | 74.90 | % | 3.54 | % | ||||||
Years Ended December 31, | ||||||||||||
2006 | 2005 | Change | ||||||||||
(US dollars in thousands) | ||||||||||||
Expenses | ||||||||||||
Employee compensation and benefits | $ | (168,386 | ) | $ | (345,918 | ) | $ | 177,532 | ||||
General, administrative and other | (68,404 | ) | (64,032 | ) | (4,372 | ) | ||||||
Total expenses | $ | (236,790 | ) | $ | (409,950 | ) | $ | 173,160 | ||||
Key ratios | ||||||||||||
Employee compensation and benefits / total GAAP net revenues and other income | 27.12 | % | 57.33 | % | (30.21 | )% | ||||||
General, administrative and other / total GAAP net revenues and other income | 11.02 | % | 10.61 | % | 0.41 | % | ||||||
Total expenses / total GAAP net revenues and other income | 38.14 | % | 67.94 | % | (29.80 | )% | ||||||
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• | Certain GLG key personnel ceasing to be employees at or after the end of the second quarter of 2006. These key personnel became holders of direct or indirect limited partnership interests in the entities which had previously employed them, resulting in comparable amounts which had been paid as compensation being paid as limited partner profit share; and | |
• | The non-recurrence in 2006 of certain one-time costs incurred in 2005, primarily the approximately $41.6 million expense recorded in 2005 related to an employment tax settlement covering the period from GLG’s separation from Lehman Brothers International (Europe), or Lehman International, in 2000 to April 5, 2006. |
• | An increase in compensation attributable to the growth in GLG’s headcount as its operations grew; and | |
• | An increase in the proportion of performance-based compensation. GLG Funds are managed either by principals or by non-principals. Non-principals receive performance-based compensation related to their performance, either as bonus (for employees who do not participate in the limited partner profit share arrangement) or as variable or discretionary limited partner profit share (for key personnel who participate in the limited partner profit share arrangement). In 2005 a number of funds managed by a former principal of GLG started to be managed by employee non-principal managers. This increased the performance-based bonuses included in employee compensation and benefits. |
Years Ended December 31, | ||||||||||||
2006 | 2005 | Change | ||||||||||
(US dollars in thousands) | ||||||||||||
Non-GAAP expenses | ||||||||||||
GAAP employee compensation and benefits | $ | (168,386 | ) | $ | (345,918 | ) | $ | 177,532 | ||||
Limited partner profit share | (201,450 | ) | — | (201,450 | ) | |||||||
Non-GAAP comprehensive limited partner profit share, compensation and benefits | (369,836 | ) | (345,918 | ) | (23,918 | ) | ||||||
GAAP general, administrative and other | (68,404 | ) | (64,032 | ) | (4,372 | ) | ||||||
Non-GAAP total expenses | $ | (438,240 | ) | $ | (409,950 | ) | $ | (28,290 | ) | |||
Key ratios (based on non-GAAP measures) | ||||||||||||
Non-GAAP comprehensive limited partner profit share, compensation and benefits / total GAAP net revenues and other income | 59.57 | % | 57.33 | % | 2.24 | % | ||||||
General, administrative and other / total GAAP net revenues and other income | 11.02 | % | 10.61 | % | 0.41 | % | ||||||
Non-GAAP total expenses / total GAAP net revenues and other income | 70.59 | % | 67.94 | % | 2.65 | % | ||||||
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• | an increase in net revenues; | |
• | an increase in compensation attributable to the growth in GLG’s headcount as it operations grew; | |
• | GLG’s transition from a transaction charge to an administration fee model, which resulted in an increase in the performance fee revenues as a proportion of total net revenues and therefore an increase in the proportion of total net revenues giving rise to performance-based non-GAAP comprehensive limited partner profit share, compensation and benefits expense; and | |
• | an increase in the proportion of performance-based compensation attributable to funds managed by non-principals as described above in the discussion of GAAP expenses. In 2005, this increased the performance-based bonuses included in employee compensation and benefits. And, beginning inmid-2006, as a result of certain of the non-principal investment managers ceasing to be employees and becoming participants in the limited partner profit share arrangement, this increased performance-based limited partner profit share. |
Years Ended December 31, | ||||||||||||
2005 | 2004 | Change | ||||||||||
(US dollars in thousands) | ||||||||||||
Expenses | ||||||||||||
Employee compensation and benefits | $ | (345,918 | ) | $ | (196,784 | ) | $ | (149,134 | ) | |||
General, administrative and other | (64,032 | ) | (42,002 | ) | (22,030 | ) | ||||||
Total expenses | $ | (409,950 | ) | $ | (238,786 | ) | $ | (171,164 | ) | |||
Key ratios | ||||||||||||
Employee compensation and benefits / total GAAP net revenues and other income | 57.33 | % | 38.23 | % | 19.10 | % | ||||||
General, administrative and other / total GAAP net revenues and other income | 10.61 | % | 8.16 | % | 2.45 | % | ||||||
Total expenses / total GAAP net revenues and other income | 67.94 | % | 46.39 | % | 21.55 | % | ||||||
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Three Months Ended March 31, | ||||||||||||
2007 | 2006 | Change | ||||||||||
(US dollars in thousands) | ||||||||||||
Income taxes | $ | (3,255 | ) | $ | (1,501 | ) | $ | (1,754 | ) | |||
Reconciliation of income taxes computed at standard U.K. corporation tax rate to income tax charge | ||||||||||||
Income before income taxes | $ | 23,670 | $ | 14,251 | $ | 9,419 | ||||||
Tax charge at U.K. corporation tax rate (30%) | (7,101 | ) | (4,275 | ) | (2,826 | ) | ||||||
Factors affecting charge: | ||||||||||||
Overseas tax rate differences | 3,182 | 2,879 | 303 | |||||||||
Disallowed and non-taxable items | (825 | ) | (105 | ) | (720 | ) | ||||||
Pass through to non-controlling interest holders | 1,489 | — | 1,489 | |||||||||
Tax on profit on ordinary activities | $ | (3,255 | ) | $ | (1,501 | ) | $ | (1,754 | ) | |||
Effective income tax rate | 13.75 | % | 10.53 | % | 3.22 | % | ||||||
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Years Ended December 31, | ||||||||||||
2006 | 2005 | Change | ||||||||||
(Dollars in thousands) | ||||||||||||
Income taxes | $ | (29,225 | ) | $ | (25,345 | ) | $ | (3,880 | ) | |||
Reconciliation of income taxes computed at standard U.K. corporation tax rate to income tax charge | ||||||||||||
Income before income taxes | $ | 388,733 | $ | 196,247 | $ | 192,486 | ||||||
Tax charge at U.K. corporation tax rate (30%) | (116,620 | ) | (58,874 | ) | (57,746 | ) | ||||||
Factors affecting charge: | ||||||||||||
Overseas tax rate differences | 27,557 | 35,185 | (7,628 | ) | ||||||||
Disallowed and non-taxable items | (841 | ) | (1,656 | ) | 815 | |||||||
Pass through to non-controlling interest holders | 60,679 | — | 60,679 | |||||||||
Tax on profit on ordinary activities | $ | (29,225 | ) | $ | (25,345 | ) | $ | (3,880 | ) | |||
Effective income tax rate | 7.52 | % | 12.91 | % | (5.40 | %) | ||||||
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Years Ended December 31, | ||||||||||||
2005 | 2004 | Change | ||||||||||
(Dollars in thousands) | ||||||||||||
Income taxes | $ | (25,345 | ) | $ | (48,372 | ) | $ | 23,027 | ||||
Reconciliation of income taxes computed at standard U.K. corporation tax rate to income tax charge | ||||||||||||
Income before income taxes | $ | 196,247 | $ | 276,440 | $ | (80,193 | ) | |||||
Tax charge at U.K. corporation tax rate (30%) | (58,874 | ) | (82,932 | ) | 24,058 | |||||||
Factors affecting charge: | ||||||||||||
Overseas tax rate differences | 35,185 | 36,118 | (933 | ) | ||||||||
Disallowed and non-taxable items | (1,656 | ) | (1,558 | ) | (98 | ) | ||||||
Pass through to non-controlling interest holders | — | — | — | |||||||||
Tax on profit on ordinary activities | $ | (25,345 | ) | $ | (48,372 | ) | $ | 23,027 | ||||
Effective income tax rate | 12.91 | % | 17.49 | % | (4.58 | %) | ||||||
March 31, 2007 and March 31, 2006
Three Months Ended March 31, | ||||||||||||
2007 | 2006 | Change | ||||||||||
(Dollars in thousands) | ||||||||||||
Derivation of non-GAAP adjusted net income | ||||||||||||
GAAP net income | $ | 20,415 | $ | 12,750 | $ | 7,665 | ||||||
Deduct: limited partner profit share | (6,453 | ) | — | (6,453 | ) | |||||||
Non-GAAP adjusted net income | $ | 13,962 | $ | 12,750 | $ | 1,212 | ||||||
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December 31, 2006 and December 31, 2005
Years Ended December 31, | ||||||||||||
2006 | 2005 | Change | ||||||||||
(Dollars in thousands) | ||||||||||||
Derivation of non-GAAP adjusted net income | ||||||||||||
GAAP net income | 359,508 | 170,902 | 188,606 | |||||||||
Deduct: limited partner profit share | (201,450 | ) | — | (201,450 | ) | |||||||
Non-GAAP adjusted net income | $ | 158,058 | $ | 170,902 | $ | (12,844 | ) | |||||
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Years Ended December 31, | ||||||||||||||||||||||||||
2007 | 2008 | 2009 | 2010 | 2011 | Thereafter | Total | ||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||||
$ | 4,287 | $ | 4,287 | $ | 4,339 | $ | 4,339 | $ | 4,339 | $ | 27,877 | $ | 49,468 | |||||||||||||
Years Ended December 31, | ||||||||||||||||||||||||||
2007 | 2008 | 2009 | 2010 | 2011 | Thereafter | Total | ||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||||
$ | — | $ | — | $ | — | $ | — | $ | — | $ | 13,000 | $ | 13,000 | |||||||||||||
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as of March 31, 2007
(In thousands, except share amounts)
GLG | Freedom | Pro Forma | Pro Forma | |||||||||||||||||
Historical | Historical | Adjustments | Combined | |||||||||||||||||
ASSETS | ||||||||||||||||||||
Cash and cash equivalents | $ | 149,193 | $ | 143 | $ | (1,035,000 | ) | (1 | ),(7) | $ | 119,005 | |||||||||
518,676 | (2 | ) | ||||||||||||||||||
50,000 | (3 | ) | ||||||||||||||||||
(17,952 | ) | (4 | ) | |||||||||||||||||
557,000 | (5 | ) | ||||||||||||||||||
(103,055 | ) | (6 | ) | |||||||||||||||||
Deferred compensation, current | — | — | 74,864 | (1 | ) | 37,432 | ||||||||||||||
(37,432 | ) | (8 | ) | |||||||||||||||||
Investments | 152 | — | — | 152 | ||||||||||||||||
Fees receivable | 32,077 | — | — | 32,077 | ||||||||||||||||
Prepaid and other current assets | 18,724 | 69 | — | 18,793 | ||||||||||||||||
Cash held in trust account (restricted cash) | — | 518,676 | (518,676 | ) | (2 | ) | 13,975 | |||||||||||||
13,975 | (7 | ) | ||||||||||||||||||
Deferred compensation, noncurrent | — | — | 74,864 | (1 | ) | 74,864 | ||||||||||||||
Property, plant and equipment, net | 7,601 | — | — | 7,601 | ||||||||||||||||
Total assets | $ | 207,747 | $ | 518,888 | $ | (422,736 | ) | $ | 303,899 | |||||||||||
LIABILITIES AND MEMBERS’ EQUITY | ||||||||||||||||||||
Current liabilities: | ||||||||||||||||||||
Rebates and sub-administration fees payable | $ | 15,980 | $ | — | $ | — | $ | 15,980 | ||||||||||||
Accrued compensation and benefits | 26,334 | — | — | 26,334 | ||||||||||||||||
Income taxes payable | 15,376 | 2,780 | — | 18,156 | ||||||||||||||||
Distributions payable | 60,835 | — | — | 60,835 | ||||||||||||||||
Accounts payable and accruals | 15,229 | 62 | 36,000 | (9 | ) | 51,291 | ||||||||||||||
Other current liabilities | 7,100 | — | — | 7,100 | ||||||||||||||||
Loan notes | — | — | 13,975 | (7 | ) | 13,975 | ||||||||||||||
Total current liabilities | 140,854 | 2,842 | 49,975 | 193,671 | ||||||||||||||||
Loan payable | 13,000 | — | 557,000 | (5 | ) | 570,000 | ||||||||||||||
Deferred underwriters’ fee | — | 17,952 | (17,952 | ) | (4 | ) | — | |||||||||||||
Redeemable common stock and interest | — | 103,055 | (103,055 | ) | (6 | ) | — | |||||||||||||
Minority interest | 1,762 | — | — | 1,762 | ||||||||||||||||
Members’ equity: | ||||||||||||||||||||
Members’ equity | 48,382 | — | (48,382 | ) | (10 | ) | — | |||||||||||||
Common stock, $.0001 par value | — | 6 | 17 | (11 | ) | 23 | ||||||||||||||
Series A voting preferred stock, $.0001 par value | — | — | 6 | (11 | ) | 6 | ||||||||||||||
Additional paid-in capital | — | 392,127 | (768,817 | ) | (1 | ),(7) | — | |||||||||||||
50,000 | (3 | ) | ||||||||||||||||||
(36,000 | ) | (9 | ) | |||||||||||||||||
9,239 | (10 | ) | ||||||||||||||||||
353,451 | (8 | ) | ||||||||||||||||||
Income accumulated during the development stage | — | 2,906 | (2,906 | ) | (10 | ) | — | |||||||||||||
Accumulated deficit | — | — | (116,455 | ) | (1 | ) | ||||||||||||||
(390,883 | ) | (8 | ) | |||||||||||||||||
42,026 | (10 | ) | (465,312 | ) | ||||||||||||||||
Accumulated other comprehensive income | 3,749 | — | — | 3,749 | ||||||||||||||||
Total members’ equity | 52,131 | 395,039 | (908,704 | ) | (461,534 | ) | ||||||||||||||
Total liabilities and members’ equity | $ | 207,747 | $ | 518,888 | $ | (422,736 | ) | $ | 303,899 | |||||||||||
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as of March 31, 2007
(In thousands, except share amounts)
GLG | Freedom | Pro Forma | Pro Forma | |||||||||||||||||
Historical | Historical | Adjustments | Combined | |||||||||||||||||
ASSETS | ||||||||||||||||||||
Cash and cash equivalents | $ | 149,193 | $ | 143 | $ | (1,035,000 | ) | (1 | ),(7) | $ | 119,005 | |||||||||
518,676 | (2 | ) | ||||||||||||||||||
50,000 | (3 | ) | ||||||||||||||||||
(17,952 | ) | (4 | ) | |||||||||||||||||
453,945 | (5 | ) | ||||||||||||||||||
Deferred compensation, current | — | — | 74,864 | (1 | ) | 37,432 | ||||||||||||||
(37,432 | ) | (8 | ) | |||||||||||||||||
Investments | 152 | — | — | 152 | ||||||||||||||||
Fees receivable | 32,077 | — | — | 32,077 | ||||||||||||||||
Prepaid and other current assets | 18,724 | 69 | — | 18,793 | ||||||||||||||||
Cash held in trust account (restricted cash) | — | 518,676 | (518,676 | ) | (2 | ) | 13,975 | |||||||||||||
13,975 | (7 | ) | ||||||||||||||||||
Deferred compensation, non current | — | — | 74,864 | (1 | ) | 74,864 | ||||||||||||||
Property, plant and equipment, net | 7,601 | — | — | 7,601 | ||||||||||||||||
Total assets | $ | 207,747 | $ | 518,888 | $ | (422,736 | ) | $ | 303,899 | |||||||||||
LIABILITIES AND MEMBERS’ EQUITY | ||||||||||||||||||||
Current liabilities: | ||||||||||||||||||||
Rebates and sub-administration fees payable | $ | 15,980 | $ | — | $ | — | $ | 15,980 | ||||||||||||
Accrued compensation and benefits | 26,334 | — | — | 26,334 | ||||||||||||||||
Income taxes payable | 15,376 | 2,780 | — | 18,156 | ||||||||||||||||
Distributions payable | 60,835 | — | — | 60,835 | ||||||||||||||||
Accounts payable and accruals | 15,229 | 62 | 36,000 | (9 | ) | 51,291 | ||||||||||||||
Other liabilities | 7,100 | — | — | 7,100 | ||||||||||||||||
Loan notes | — | — | 13,975 | (7 | ) | 13,975 | ||||||||||||||
Total current liabilities | 140,854 | 2,842 | 49,975 | 193,671 | ||||||||||||||||
Loan payable | 13,000 | — | 453,945 | (5 | ) | 466,945 | ||||||||||||||
Deferred underwriters’ fee | — | 17,952 | (17,952 | ) | (4 | ) | — | |||||||||||||
Redeemable common stock and interest | — | 103,055 | (103,055 | ) | (6 | ) | — | |||||||||||||
Minority interest | 1,762 | — | — | 1,762 | ||||||||||||||||
Members’ equity: | ||||||||||||||||||||
Members’ equity | 48,382 | — | (48,382 | ) | (10 | ) | — | |||||||||||||
Common stock, $.0001 par value | — | 6 | 17 | (11 | ) | 23 | ||||||||||||||
Series A voting preferred stock, $.0001 par value | — | — | 6 | (11 | ) | 6 | ||||||||||||||
Additional paid-in capital | — | 392,127 | (871,872 | ) | (1 | ),(7) | — | |||||||||||||
50,000 | (3 | ) | ||||||||||||||||||
103,055 | (6 | ) | ||||||||||||||||||
(36,000 | ) | (9 | ) | |||||||||||||||||
9,239 | (10 | ) | ||||||||||||||||||
353,451 | (8 | ) | ||||||||||||||||||
Income accumulated during the development stage | — | 2,906 | (2,906 | ) | (10 | ) | — | |||||||||||||
Accumulated deficit | — | — | (13,400 | ) | (1 | ) | ||||||||||||||
42,026 | (10 | ) | (362,257 | ) | ||||||||||||||||
(390,883 | ) | (8 | ) | |||||||||||||||||
Accumulated other comprehensive income | 3,749 | — | — | 3,749 | ||||||||||||||||
Total members’ equity | 52,131 | 395,039 | (805,649 | ) | (358,479 | ) | ||||||||||||||
Total liabilities and members’ equity | $ | 207,747 | $ | 518,888 | $ | (422,736 | ) | $ | 303,899 | |||||||||||
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Three months ended March 31, 2007
(In thousands, except per share amounts)
GLG | Freedom | Pro Forma | Pro Forma | |||||||||||||||||
Historical | Historical | Adjustments | Combined | |||||||||||||||||
Net revenues and other income: | ||||||||||||||||||||
Management fees | $ | 57,343 | $ | — | $ | — | $ | 57,343 | ||||||||||||
Performance fees | 2,521 | — | — | 2,521 | ||||||||||||||||
Administration fees | 12,645 | — | — | 12,645 | ||||||||||||||||
Other | 498 | — | — | 498 | ||||||||||||||||
73,007 | — | — | 73,007 | |||||||||||||||||
Expenses: | ||||||||||||||||||||
Employee compensation and other benefits | (25,048 | ) | — | (98,091 | ) | (8 | ) | (119,385 | ) | |||||||||||
3,304 | (12 | ) | ||||||||||||||||||
General, administrative and other | (25,764 | ) | (154 | ) | — | (25,918 | ) | |||||||||||||
(50,812 | ) | (154 | ) | (94,787 | ) | (145,753 | ) | |||||||||||||
Income (loss) from operations | 22,195 | (154 | ) | (94,787 | ) | (72,746 | ) | |||||||||||||
Other income (expense): | ||||||||||||||||||||
Interest income (expense), net | 1,475 | 6,212 | (7,618 | ) | (5 | ) | (6,143 | ) | ||||||||||||
(6,212 | ) | (13 | ) | |||||||||||||||||
Income (loss) before income taxes | 23,670 | 6,058 | (108,617 | ) | (78,889 | ) | ||||||||||||||
Income taxes | (3,255 | ) | (2,839 | ) | 2,839 | (13 | ) | (1,696 | ) | |||||||||||
2,285 | (14 | ) | ||||||||||||||||||
(726 | ) | (12 | ) | |||||||||||||||||
Net income (loss) | 20,415 | 3,219 | (104,219 | ) | (80,585 | ) | ||||||||||||||
Less cumulative dividends | — | — | (15 | ) | ||||||||||||||||
Less minority interest | (210 | ) | — | — | (210 | ) | ||||||||||||||
Net income (loss) applicable to equity interest holders | $ | 20,205 | $ | 3,219 | $ | (104,219 | ) | $ | (80,795 | ) | ||||||||||
Assuming Maximum Approval | ||||||||||||||||||||
Net income (loss) per common share, basic | $ | 0.05 | $ | (0.27 | ) | |||||||||||||||
Weighted average shares outstanding, basic | 63,573 | 235,000 | (16 | ) | 298,573 | |||||||||||||||
Net income (loss) per common share, diluted | $ | 0.04 | ||||||||||||||||||
Weighted average shares outstanding, diluted | 72,932 | 235,000 | $ | 307,932 | ||||||||||||||||
Assuming Minimum Approval | ||||||||||||||||||||
Net income (loss) per common share, basic | $ | 0.05 | $ | (0.28 | ) | |||||||||||||||
Weighted average shares outstanding, basic | 63,573 | 224,445 | (16 | ) | 288,018 | |||||||||||||||
Net income (loss) per common share, diluted | $ | 0.04 | ||||||||||||||||||
Weighted average shares outstanding, diluted | 72,932 | 224,445 | $ | 288,018 |
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GLG | Freedom | Pro Forma | Pro Forma | |||||||||||||||
Historical | Historical | Adjustments | Combined | |||||||||||||||
Net revenues and other income: | ||||||||||||||||||
Management fees | $ | 186,273 | $ | — | $ | — | $ | 186,273 | ||||||||||
Performance fees | 394,740 | — | — | 394,740 | ||||||||||||||
Administration fees | 34,814 | — | — | 34,814 | ||||||||||||||
Other | 5,039 | — | — | 5,039 | ||||||||||||||
620,866 | — | — | 620,866 | |||||||||||||||
Expenses: | ||||||||||||||||||
Employee compensation and other benefits | (168,386 | ) | — | (392,362 | ) | (8) | (548,112 | ) | ||||||||||
12,636 | (12) | |||||||||||||||||
General, administrative and other | (68,404 | ) | (94 | ) | — | (68,498 | ) | |||||||||||
(236,790 | ) | (94 | ) | (379,726 | ) | (616,610 | ) | |||||||||||
Income (loss) from operations | 384,076 | (94 | ) | (379,726 | ) | (4,256 | ) | |||||||||||
Other income (expense): | ||||||||||||||||||
Interest income (expense), net | 4,657 | 390 | (31,678 | ) | (5) | (27,021 | ) | |||||||||||
(390 | ) | (13) | ||||||||||||||||
Income (loss) before income taxes | 388,733 | 296 | (411,794 | ) | (22,765 | ) | ||||||||||||
Income taxes | (29,225 | ) | (127 | ) | 127 | (13) | (22,501 | ) | ||||||||||
9,503 | (14) | |||||||||||||||||
(2,779 | ) | (12) | ||||||||||||||||
Net income (loss) | 359,508 | 169 | (404,943 | ) | (45,266 | ) | ||||||||||||
Less cumulative dividends | — | — | (15) | |||||||||||||||
Less minority interest | (182 | ) | — | — | (182 | ) | ||||||||||||
Net income (loss) applicable to equity interest holders | $ | 359,326 | $ | 169 | $ | (404,943 | ) | $ | (45,448 | ) | ||||||||
Assuming Maximum Approval | ||||||||||||||||||
Net income (loss) per common share, basic and diluted | $ | 0.01 | $ | (0.18 | ) | |||||||||||||
Weighted average shares outstanding, basic and diluted | 13,012 | 235,000 | (16) | 248,012 | ||||||||||||||
Assuming Minimum Approval | ||||||||||||||||||
Net income (loss) per common share, basic and diluted | $ | 0.01 | $ | (0.21 | ) | |||||||||||||
Weighted average shares outstanding, basic and diluted | 13,012 | 224,445 | (16) | 237,457 |
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Note A. | Basis of Presentation |
Cash | $ | 518,819 | ||
Deferred underwriters’ fee | (17,952 | ) | ||
Other net current liabilities | (2,773 | ) | ||
Assuming Maximum Approval | $ | 498,094 | ||
Redeemable stock | (103,055 | ) | ||
Assuming Minimum Approval | $ | 395,039 | ||
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Note B. | Pro Forma Adjustments |
(1) | Reflects cash paid to GLG Shareowners upon consummation of the acquisition, which comprises the $1.0 billion purchase consideration and $35.0 million “net cash”, as defined in the purchase agreement, less the Notes (see Note 7). | |
(2) | Reflects reclassification of Freedom’s pre-acquisition cash from being held as a receivable (restricted cash) to cash since upon consummation of the acquisition the restrictions will lapse. | |
(3) | Reflects cash proceeds from the co-investment by Freedom’s sponsors immediately prior to consummation of the acquisition. | |
(4) | Reflects payment of the deferred underwriters’ fee from Freedom’s initial public offering in December 2006 to be made upon consummation of the acquisition. | |
(5) | Reflects credit facility to be entered into upon consummation of the acquisition, repayment of existing borrowing and related interest payable. The pro forma statements of operations assume maximum approval; if minimum approval is obtained the interest payable would be $9,344 per quarter and $38,838 per year based on an assumed LIBOR rate of 5.448% as of July 6, 2007 plus 1.25%. | |
(6) | Reflects the redemption of 10,554,720 shares of Freedom common stock upon consummation of the acquisition if holders of 19.99% of Freedom common stock issued in Freedom’s initial public offering elect to exercise their redemption rights (minimum approval) or reclassification of redeemable common stock as permanent equity if none of the Freedom stockholders exercise their redemption rights (maximum approval). | |
(7) | Reflects Notes issued, upon request, to certain GLG Shareowners upon consummation of the acquisition and the transfer of cash to an escrow account to be held for the repayment of the Notes. The amount reflects the likely maximum amount of Notes that may requested by those key personnel that may find it advantageous to exercise their right to request Notes. | |
(8) | Upon consummation of the acquisition, certain key personnel who participate in GLG’s equity participation plan are entitled through their limited partnership interests in Sage Summit LP and Lavender Heights Capital LP to receive collectively approximately 15% of the total consideration of cash and Freedom capital stock payable to the GLG Shareowners in the acquisition. This cash and Freedom capital stock will be subject to vesting requirements. These vesting requirements have not been finally determined; however, these pro forma condensed combined financial statements assume that these equity participation plan participants will receive a pro rata portion of 25% of such amounts on consummation of the acquisition, with the remaining 75% vesting in equal instalments over a three-year period on the first, second and third anniversaries of the consummation of the acquisition. | |
Of the purchase price for the acquisition, up to 10,000,000 shares of Freedom common stock will be allocated to the employees, key personnel and certain other individuals. These shares will be subject to vesting terms. These vesting requirements have not been finally determined; however, these pro forma condensed combined financial statements assume that 30%, 30% and 40% vest over a three- |
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year period on the second, third and fourth anniversaries of the consummation of the acquisition, respectively. |
In addition, in connection with the acquisition, the Principals and the Trustees will enter into an agreement among principals and trustees which will provide that, in the event a Principal voluntarily terminates his employment with Freedom for any reason prior to the fifth anniversary of the acquisition, a portion of the equity interests held by that Principal and his related Trustee as of the closing of the acquisition will be forfeited to the Principals who are still employed by Freedom and their related Trustees. The pro forma assumes no forfeiture of shares by any Principal or Trustee. | ||
As a result, net income during these periods will be reduced as a result of the non-cash equity-based compensation charges recognized in these periods, on account of the equity participation plan, the allocation and vesting of the 10,000,000 shares described above, and the vesting of the shares subject to the agreement among the principals and the trustees described above. Share-based compensation charges have been calculated on an assumed market price of Freedom common stock of $11.00 (as per closing July 6, 2007 prices). | ||
(9) | Reflects GLG’s and Freedom’s estimated transaction costs of $36,000 consisting primarily of investment banking, legal and accounting fees. | |
(10) | Reflects reclassification of GLG’s equity accounts to conform to Freedom’s equity structure. | |
(11) | Reflects the issuance of 230,000,000 shares of Freedom common stock and 58,923,874 shares of Freedom Series A voting preferred stock, which carry only voting rights and nominal economic rights. The 230,000,000 shares of Freedom common stock includes: |
• | 138,136,070 shares of Freedom common stock; | |
• | 58,923,874 exchangeable Class B ordinary shares of FA Sub 2 Limited, which are exchangeable for 58,923,874 shares of Freedom common stock; and | |
• | 32,940,056 ordinary shares of FA Sub 1 Limited, which are subject to certain put rights to Freedom and call rights by Freedom, payable upon exercise by delivery of 32,940,056 shares of Freedom common stock |
The aggregate number of shares above will be subject to adjustment as provided in the purchase agreement. Among other things, the aggregate number of shares will be increased if the price of Freedom common stock is less than $9.50 per share on the closing date such that the total value of the shares issued based on the average of the closing price of the Freedom common stock for the ten consecutive trading days for the period ending one business day prior to the closing date will be at least $2,185,000. | ||
(12) | Reflects reduction in Principals’ base compensation and related payroll and corporate taxes post-acquisition. | |
(13) | Freedom’s historical interest income and related taxation expense has been eliminated since the cash held in Freedom will be paid out to the GLG Shareowners upon consummation of the transaction. No pro forma adjustments relating to reporting, compliance and investor relations costs that GLG will incur as a public company have been made. | |
(14) | Reflects tax effect of interest payable on borrowings at the standard U.K. corporate tax rate. | |
(15) | Reflects cumulative dividends payable to holders of Exchangeable Shares of FA Sub 2 Limited. The amounts reflect only tax distributions on the Exchangeable Shares attributable to taxable income of FA Sub 2 Limited for the periods indicated. |
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Distributions to non-controlling interests of certain GLG entities relating to the limited partner profit share arrangement have not been deducted from the numerator for the purposes of calculating pro forma basic and diluted earnings per share. | ||
(16) | The pro forma combined basic and diluted net income per share is based on the weighted average shares of Freedom common stock outstanding plus the following (in thousands): |
Maximum Approval | Minimum Approval | |||||||
Number | Number | |||||||
Shares issued in the sponsors’ co-investment | 5,000 | 5,000 | ||||||
Shares of common stock issued in connection with the acquisition | 138,136 | 138,136 | ||||||
Shares of common stock issued in exchange for ordinary shares of FA Sub 1 Limited | 32,940 | 32,940 | ||||||
Shares of common stock issuable in exchange for FA Sub 2 Limited Exchangeable Shares | 58,924 | 58,924 | ||||||
Shares redeemed | — | (10,555 | ) | |||||
Pro forma adjustment to basic EPS denominator | 235,000 | 224,445 | ||||||
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• | GLG Holdings Limited, a British Virgin Islands company. This is a holding company owned by Lehman, and the trustees of the Gottesman GLG Trust, Lagrange GLG Trust and Green GLG Trust. | |
• | Albacrest Corporation, a British Virgin Islands company, which is wholly owned by the Roman GLG Trust. | |
• | Laurel Heights LLP, an English limited liability partnership. The membership interests of Laurel Heights LLP are primarily held, directly or indirectly, by key personnel of GLG. These key personnel hold direct profits interests in Laurel Heights LLP* and some also hold capital interests and limited liability partnership profit shares through Sage Summit LP, an English limited partnership.* |
• | Steven Roth, a GLG investment professional.** | |
• | Saffron Woods Corporation, a British Virgin Islands company, which is wholly owned by a trust for the benefit of Greg Coffey, a GLG investment professional, and his family.** | |
• | Betapoint Corporation, a British Virgin Islands company, which is wholly owned by the Roman GLG Trust. | |
• | Lavender Heights LLP, a Delaware limited liability partnership. The membership interests of Lavender Heights LLP are primarily held, directly or indirectly, by key personnel of GLG. These key personnel hold direct profits interests in Lavender Heights LLP** and some also hold capital interests and limited liability partnership profit shares through Lavender Heights Capital LP, a Delaware limited partnership.** |
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• | GLG Inc., an independently owned Delaware corporation that provides research, marketing and other services to GLG and which GLG plans to acquire after the Freedom acquisition. | |
• | GLG Partners International (Cayman) Limited, a wholly owned subsidiary of GLG Partners (Cayman) Limited which manages unit trusts offered in Japan. | |
• | GLG Partners Corporation, a wholly owned subsidiary of GLG Partners (Cayman) Limited which engages in preliminary activities preparatory to client management in the United States. |
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• | traditional or long-only investment strategies; and | |
• | alternative investment strategies. |
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Alternatives | Long-Only* | |||||||||||||||||||||||||||
North | Global | |||||||||||||||||||||||||||
European | Emerging | Market | American | Convertible | Capital | European | ||||||||||||||||||||||
Long-Short | Markets | Neutral | Opportunity | UCITS | Appreciation | Equity | ||||||||||||||||||||||
($2.4bn | ($2.4bn | ($2.3bn | ($1.0bn | ($1.4bn | ($1.0bn | ($1.0bn | ||||||||||||||||||||||
Gross AUM) | Gross AUM) | Gross AUM) | Gross AUM) | Gross AUM) | Gross AUM) | Gross AUM) | ||||||||||||||||||||||
European Long-Short | 1.00 | 0.58 | 0.52 | 0.61 | 0.16 | 0.29 | 0.22 | |||||||||||||||||||||
Emerging Markets | 0.58 | 1.00 | 0.50 | 0.38 | 0.48 | 0.61 | 0.53 | |||||||||||||||||||||
Market Neutral | 0.52 | 0.50 | 1.00 | 0.53 | 0.52 | 0.54 | 0.27 | |||||||||||||||||||||
North American Opportunity | 0.61 | 0.38 | 0.53 | 1.00 | 0.50 | 0.59 | 0.37 | |||||||||||||||||||||
Global Convertible UCITS | 0.16 | 0.48 | 0.52 | 0.50 | 1.00 | 0.85 | 0.75 | |||||||||||||||||||||
Capital Appreciation | 0.29 | 0.61 | 0.54 | 0.59 | 0.85 | 1.00 | 0.76 | |||||||||||||||||||||
European Equity | 0.22 | 0.53 | 0.27 | 0.37 | 0.75 | 0.76 | 1.00 | |||||||||||||||||||||
S&P 500 Index | (0.03 | ) | 0.29 | 0.16 | 0.30 | 0.65 | 0.65 | 0.75 | ||||||||||||||||||||
MSCI World Index | 0.05 | 0.37 | 0.26 | 0.35 | 0.72 | 0.75 | 0.85 |
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• | Single-manager alternative strategy funds: These funds represent GLG’s core investment product and are the primary means by which investors gain exposure to GLG’s core alternative investment strategies. This category comprises 19 individual funds, each being managed according to distinct investment strategies, including equity long-short funds, mixed-asset long-short funds, multi-strategy arbitrage funds, convertible bond funds, credit long-short funds and a commodities trading fund and may be characterized by the use of leverage, short positionsand/or derivatives. These single-manager alternative strategy funds have gross AUM of $11.6 billion representing 59% of total gross AUM and net AUM (net of alternative fund-in-fund investments) of $10.4 billion. The largest funds in this |
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category are: the GLG European Long-Short Fund, the GLG Emerging Markets Fund, the GLG Market Neutral Fund, the GLG North American Opportunity Fund and the GLG Global Convertible Fund. These funds may also make use offund-in-fund investment whereby one single manager alternative strategy fund may hold exposure to another single-manager alternative strategy fund. In order to accurately represent this sub-investment, management tracks AUM on both a gross and a net basis. In a gross presentation, sub-invested funds will be counted at both the investing and investee fund level. Net presentation removes the assets at the investing fund level, indicating the total external investment from clients. |
• | Long-only funds: The long-only funds facilitate access to GLG’s leading market insight and performance for those clients who are seeking full (non-hedged) exposure to the equity markets across geographic and sector-based strategies, while benefiting from GLG’s investment expertise. GLG currently operates 15 long-only funds, which have gross AUM of $4.1 billion representing 21% of total gross AUM. The largest funds in this category are: the GLG Global Convertible UCITS Fund, the GLG Capital Appreciation Fund and the GLG European Equity Fund. | |
• | Funds of GLG funds (“internal FoHF”): These funds are structured to provide broad investment exposure across GLG’s range of single-manager alternative strategy funds, as well as being a means by which investors may gain exposure to funds that are currently not being marketed. GLG currently has four internal FoHF funds, representing 8% of total gross AUM. The largest funds in this category are: the GLG Multi-Strategy Fund SICAV and the GLG Global Opportunity Fund. |
• | Multi-manager funds (“external FoHF”): The multi-manager funds represent GLG’s external FoHF offering, currently comprising five funds and 3% of total gross AUM. These funds are invested into funds managed by external asset management businesses (and, in one case, a GLG Fund). The largest funds in this category are: the Prescient Alpha Fund and the GLG MMI Enhanced Fund. |
• | Managed accounts: GLG offers managed account solutions to larger institutional clients who want exposure to GLG’s investment strategies, but are seeking a more customized approach. Managed accounts currently represent 8% of total gross AUM through 20 separate accounts. |
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Gross | Inception | Net Performance | Annualized | |||||||||||||
AUM | Date | Since Inception* | Net Return* | |||||||||||||
Alternative Strategies | ||||||||||||||||
GLG European Long-Short Fund | $ | 2.4bn | 1-Oct-00 | 143.9 | % | 14.5 | % | |||||||||
MSCI Europe Index | (6.0 | %) | (0.9 | %) | ||||||||||||
GLG Emerging Markets Fund | $ | 2.4bn | 1-Nov-05 | 125.4 | % | 72.3 | % | |||||||||
(No comparable index) | n/a | n/a | ||||||||||||||
GLG Market Neutral Fund | $ | 2.3bn | 15-Jan-98 | 495.9 | % | 21.2 | % | |||||||||
MSCI World Index | 58.0 | % | 5.0 | % | ||||||||||||
GLG North American Opportunity Fund | $ | 1.0bn | 2-Jan-02 | 73.5 | % | 10.9 | % | |||||||||
S&P 500 Index | 29.1 | % | 4.5 | % | ||||||||||||
GLG Global Convertible Fund | $ | 0.5bn | 1-Aug-97 | 178.1 | % | 11.1 | % | |||||||||
Merrill Lynch Global 300 Convertible Index | 79.4 | % | 6.2 | % | ||||||||||||
MSCI World Index | 51.2 | % | 4.3 | % | ||||||||||||
GLG Credit Fund | $ | 0.3bn | 2-Sep-02 | 100.7 | % | 16.1 | % | |||||||||
USD 3 month LIBOR | 14.7 | % | 3.0 | % | ||||||||||||
GLG Technology Fund | $ | 0.3bn | 3-Jun-02 | 60.6 | % | 10.1 | % | |||||||||
NASDAQ Index | 54.6 | % | 9.3 | % | ||||||||||||
GLG Global Utilities Fund | $ | 0.3bn | 1-Dec-05 | 30.4 | % | 20.7 | % | |||||||||
S&P 500 Index | 33.0 | % | 22.4 | % | ||||||||||||
GLG Consumer Fund | $ | 0.1bn | 1-Nov-05 | 33.1 | % | 21.1 | % | |||||||||
S&P 500 Index | 28.2 | % | 18.1 | % | ||||||||||||
Long-Only Strategies | ||||||||||||||||
GLG Global Convertible UCITS Fund(1) | $ | 1.4bn | 12-Mar-99 | 105.5 | % | 9.3 | % | |||||||||
Merrill Lynch Global 300 Convertible Index | 60.9 | % | 6.0 | % | ||||||||||||
MSCI World Index | 23.3 | % | 2.6 | % | ||||||||||||
GLG Capital Appreciation Fund(2) | $ | 1.0bn | 4-Mar-97 | 239.0 | % | 12.8 | % | |||||||||
Index(3) | 77.6 | % | 5.8 | % | ||||||||||||
GLG European Equity Fund(4) | $ | 1.0bn | 11-Feb-99 | 163.7 | % | 12.5 | % | |||||||||
MSCI Europe Index | 33.7 | % | 3.6 | % | ||||||||||||
GLG Performance Fund(5) | $ | 0.4bn | 14-Jan-97 | 248.8 | % | 12.9 | % | |||||||||
MSCI World Index | 84.4 | % | 6.1 | % | ||||||||||||
GLG North American Equity Fund | $ | 0.2bn | 31-Dec-03 | 47.7 | % | 12.4 | % | |||||||||
S&P 500 Index | 33.3 | % | 9.0 | % | ||||||||||||
Internal FoHF | ||||||||||||||||
GLG Multi Strategy Fund SICAV | $ | 1.0bn | 7-Jan-03 | 55.6 | % | 10.8 | % | |||||||||
CS/Tremont Investable Index | 38.1 | % | 7.73 | % | ||||||||||||
GLG Global Opportunity Fund plc | $ | 0.5bn | 4-Feb-97 | 411.3 | % | 17.3 | % | |||||||||
CS/Tremont Investable Index | 75.73 | % | 7.99 | % | ||||||||||||
External FoHF | ||||||||||||||||
Prescient Alpha Fund | $ | 0.2bn | 1-Oct-01 | 42.2 | % | 6.5 | % | |||||||||
CS/Tremont Investable Index | 48.72 | % | 7.37 | % | ||||||||||||
GLG MMI Enhanced Fund | $ | 0.2bn | 1-Dec-03 | 60.4 | % | 14.8 | % | |||||||||
CS/Tremont Investable Index | 25.70 | % | 6.92 | % |
* | Performance measured by core class in each fund | |
(1) | AUM includes GLG Global Convertible UCITS (Distributing) Fund | |
(2) | AUM includes GLG Capital Appreciation (Distributing) Fund | |
(3) | 65% MSCI World Index, 35% JP Morgan Government Bond Index | |
(4) | AUM includes GLG European Equity (Distributing) Fund | |
(5) | AUM includes GLG Performance (Distributing) Fund |
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• | Marketing to high and ultra-high net worth individuals and families through a combination of existing client referrals, marketer-led relationships and banks; and | |
• | Marketing to institutional investors, including funds of funds, alternative asset management divisions of banks, pension funds, insurance companies and investment platforms, through a combination of the capital introduction groups of leading prime brokers, financial intermediaries, marketer-led relationships and banks. |
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• | conduct its business with integrity; | |
• | conduct its business with due skill, care and diligence; | |
• | take reasonable care to organize and control its affairs responsibly and effectively, with adequate risk management systems; | |
• | maintain adequate financial resources; | |
• | observe proper standards of market conduct; | |
• | pay due regard to the interests of customers and treat them fairly; | |
• | pay due regard to the information needs of its clients and communicate information to them in a way which is clear, fair and not misleading; | |
• | manage conflicts of interest fairly, both between itself and its customers and between a customer and another client; | |
• | take reasonable care to ensure the suitability of its advice and discretionary decisions for any customer who is entitled to rely upon its judgment; | |
• | arrange adequate protection for clients’ assets when it is responsible for them; and | |
• | deal with its regulators in an open and co-operative way, and disclose to the FSA in an appropriate manner anything relating to the firm of which the FSA would reasonably expect notice. |
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• | GPAM must maintain a minimum capital requirement as prescribed by the IFSRA; | |
• | GPAM may not be replaced as manager of a fund without the approval of the IFSRA; | |
• | Appointments of directors to GPAM require the prior approval of the IFSRA and the IFSRA must be notified immediately of resignations; | |
• | A minimum of two directors of GPAM must be Irish residents; | |
• | Approval of the IFSRA is required for any change in ownership or in significant shareholdings of GPAM. A significant shareholding is defined as a shareholding of 10%; | |
• | Half-yearly financial and annual audited accounts of GPAM must be filed with the IFSRA. Annual audited accounts of the corporate shareholder(s) of GPAM must also be submitted; | |
• | The firm is obliged to satisfy the IFSRA on a continuing basis that it has sufficient management resources to effectively conduct its business; and | |
• | GPAM is required to consult with the IFSRA prior to engaging in significant new activities. |
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• | any change in control of GPCL; | |
• | the acquisition by any person or group of persons of shares representing more than 10% of the issued share capital or total voting rights of GPCL; or |
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• | the acquisition by any person or group of persons of shares representing more than 10% of the issued share capital or total voting rights of Freedom, as the ultimate parent of GPCL. |
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OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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Units | Common Stock | Warrants | ||||||||||||||||||||||
Period | High | Low | High | Low | High | Low | ||||||||||||||||||
Fourth Quarter of year ended December 31, 2006 (from December 21, 2006) | $ | 10.20 | $ | 10.00 | — | — | — | — | ||||||||||||||||
First Quarter of year ending December 31, 2007 | $ | 11.15 | $ | 10.01 | $ | 10.00 | $ | 8.90 | $ | 1.40 | $ | 1.10 | ||||||||||||
Second Quarter of year ending December 31, 2007 | $ | 16.68 | $ | 10.55 | $ | 12.40 | $ | 9.31 | $ | 4.60 | $ | 1.27 | ||||||||||||
Third Quarter of year ending December 31, 2007 (to July 10, 2007) | $ | 14.75 | $ | 14.00 | $ | 11.25 | $ | 10.75 | $ | 3.60 | $ | 3.14 |
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Name | Age | Position | ||||
Noam Gottesman | 46 | Chairman of the Board and Co-Chief Executive Officer | ||||
Emmanuel Roman | 43 | Co-Chief Executive Officer and Director | ||||
Simon White | 48 | Chief Financial Officer | ||||
Alejandro San Miguel | 39 | General Counsel and Corporate Secretary | ||||
Ian G.H. Ashken | 47 | Director | ||||
Nicolas Berggruen | 45 | Director | ||||
Martin E. Franklin | 42 | Director | ||||
James N. Hauslein | 48 | Director | ||||
William P. Lauder | 47 | Director | ||||
Paul Myners | 59 | Director | ||||
Peter A. Weinberg | 49 | Director |
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• | meeting with our management periodically to consider the adequacy of our internal control over financial reporting and the objectivity of our financial reporting; | |
• | appointing the independent registered public accounting firm, determining the compensation of the independent registered public accounting firm and pre-approving the engagement of the independent registered public accounting firm for audit and non-audit services; | |
• | overseeing the independent registered public accounting firm, including reviewing independence and quality control procedures and experience and qualifications of audit personnel that are providing us audit services; | |
• | meeting with the independent registered public accounting firm and reviewing the scope and significant findings of the audits performed by them, and meeting with management and internal financial personnel regarding these matters; | |
• | reviewing our financing plans, the adequacy and sufficiency of our financial and accounting controls, practices and procedures, the activities and recommendations of the auditors and our reporting policies and practices, and reporting recommendations to our full board of directors for approval; | |
• | establishing procedures for the receipt, retention and treatment of complaints regarding internal accounting controls or auditing matters and, if applicable, the confidential, anonymous submissions by employees of concerns regarding questionable accounting or auditing matters; and | |
• | preparing the report required by the rules of the SEC to be included in our annual proxy statement. |
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• | establishing overall compensation policies and recommending to our board of directors major compensation programs; | |
• | subsequent to our consummation of a business combination, reviewing and approving the compensation of our executive officers and directors, including salary and bonus awards; | |
• | administering any employee benefit, pension and equity incentive programs in which executive officers and directors participate; | |
• | reviewing officer and director indemnification and insurance matters; and | |
• | preparing an annual report on executive compensation for inclusion in our proxy statement. |
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Change in | ||||||||||||||||||||||||
Pension Value | ||||||||||||||||||||||||
and | ||||||||||||||||||||||||
Nonqualified | ||||||||||||||||||||||||
Deferred | ||||||||||||||||||||||||
Compensation | All Other | |||||||||||||||||||||||
Salary | Bonus | Earnings | Compensation | Total | ||||||||||||||||||||
Name and Principal Position | Year | ($) | ($) | ($) | ($) | ($) | ||||||||||||||||||
Noam Gottesman | 2006 | 4,664,130 | — | — | 81,200 | (1) | 4,745,330 | |||||||||||||||||
Co-Chief Executive Officer and Managing Director | ||||||||||||||||||||||||
Emmanuel Roman | 2006 | 4,659,420 | — | — | 81,200 | (1) | 4,740,620 | |||||||||||||||||
Co-Chief Executive Officer and Managing Director | ||||||||||||||||||||||||
Pierre Lagrange | 2006 | 4,700,090 | — | — | 81,200 | (1) | 4,781,290 | |||||||||||||||||
Managing Director | ||||||||||||||||||||||||
Simon White | 2006 | 294,000 | — | — | 5,700 | (2) | 299,700 | |||||||||||||||||
Chief Operating Officer |
(1) | Maximum allowance for health, medical and other fringe benefits. | |
(2) | Medical, dental and health benefits. |
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• | each of our founders has agreed to vote its founders’ common stock in the same manner as a majority of the public stockholders who vote at the special meeting called for the purpose of approving our initial business combination. As a result, they will not be able to exercise redemption rights with respect to the founders’ common stock if our initial business combination is approved by a majority of our public stockholders; | |
• | the warrants underlying such units become exercisable after our consummation of a business combination if and when the last sales price of our common stock exceeds $14.25 per share for any 20 trading days within a 30-trading day period beginning 90 days after such business combination; and | |
• | the warrants underlying such units are non-redeemable for so long as they are held by our founders or their permitted transferees. |
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• | each person who will beneficially own more than 5% of the outstanding shares of our capital stock immediately after consummation of the acquisition; | |
• | the individuals who will be our Co-Chief Executive Officers, the Chief Financial Officer and two other most highly compensated executive officers; | |
• | the individuals who will be our directors; and | |
• | the individuals who will be our directors and executive officers as a group. |
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Approximate | Number of | Approximate | ||||||||||||||
Percentage | Shares | Percentage | ||||||||||||||
Number of Shares | of Outstanding | of Common | of Outstanding | |||||||||||||
of Common Stock | Common Stock | Stock | Common Stock | |||||||||||||
Beneficially Owned | Beneficially | Beneficially | Beneficially | |||||||||||||
Name of Beneficial Owner | Before the | Owned Before | Owned After the | Owned After | ||||||||||||
and Management | Acquisition | the Acquisition | Acquisition | the Acquisition | ||||||||||||
Berggruen Holdings North America Ltd.(1)(2) | 5,923,200 | 9.1 | (8) | 8,423,200 | 2.8 | |||||||||||
Marlin Equities(1)(3) | 5,923,200 | 9.1 | (8) | 8,423,200 | 2.8 | |||||||||||
Glenhill Advisors, LLC(4) | 9,000,000 | 13.9 | 9,000,000 | 3.0 | ||||||||||||
Sage Summit LP | — | — | 19,764,033 | 6.6 | ||||||||||||
Noam Gottesman(5) | 407,615 | * | 60,331,489 | (9)(10) | 30.8 | |||||||||||
Emmanuel Roman(5) | 407,615 | * | 52,053,658 | (9)(11) | 17.4 | |||||||||||
Pierre Lagrange(5) | 407,615 | * | 60,331,489 | (9)(12) | 30.8 | |||||||||||
Simon White | — | — | ||||||||||||||
Alejandro San Miguel | — | — | ||||||||||||||
Ian G.H. Ashken(3) | 5,923,200 | 9.1 | (8) | 8,423,200 | 2.8 | |||||||||||
Nicolas Berggruen(6) | 5,923,200 | 9.1 | (8) | 8,423,200 | 2.8 | |||||||||||
Martin E. Franklin(3) | 5,923,200 | 9.1 | (8) | 8,423,200 | 2.8 | |||||||||||
James N. Hauslein | 51,201 | * | 51,201 | * | ||||||||||||
William P. Lauder | 51,201 | * | 51,201 | * | ||||||||||||
Herbert Morey(7) | 51,201 | * | 51,201 | * | ||||||||||||
Paul Myners | — | — | ||||||||||||||
Peter A. Weinberg | — | — | ||||||||||||||
All directors and executive officers as a group (5 individuals before the acquisition and 13 individuals after the acquisition) | 12,000,003 | 18.5 |
* | Less than 1% | |
(1) | Berggruen Holdings and Marlin Equities have agreed to act together for the purpose of acquiring, holding, voting or disposing of our shares and are deemed to be a “group” for reporting purposes under the Exchange Act. Includes 2,250,000 shares of Freedom common stock issuable to each of Berggruen Holdings and Marlin Equities upon the exercise of sponsors’ warrants. The sponsors’ warrants become exercisable upon the later of the consummation of the acquisition or December 28, 2007. | |
(2) | Represents shares held by Berggruen Holdings North America Ltd. through Berggruen Freedom Holdings, Ltd. (“BFH”). BFH is a subsidiary of Berggruen Holdings North America Ltd. Berggruen Holdings North America Ltd. is the managing and majority shareholder of BFH. | |
(3) | Based on a Schedule 13G filed on February 14, 2007, Mr. Franklin is the majority owner and managing member of Marlin Equities and Mr. Ashken is the other principal member of Marlin Equities. Each of Mr. Franklin and Mr. Ashken may be considered to have beneficial ownership of Marlin Equities’ interests in us. The business address of Marlin Equities, Mr. Ashken and Mr. Franklin is 555 Theodore Fremd Avenue,Suite B-302, Rye, New York 10580. Our sponsors have agreed to act together for the purpose of acquiring, holding, voting or disposing of our shares and are deemed to be a “group” for reporting purposes under the Exchange Act. | |
(4) | Based on a Schedule 13G filed on January 3, 2007 with the SEC jointly by Glenhill Advisors, LLC (“Glenhill Advisors”), Glenn J. Krevlin (“Mr. Krevlin”) and Glenhill Capital Overseas GP, Ltd. (“Glenhill Capital Overseas”, and collectively with Glenhill Advisors and Mr. Krevlin, “Glenhill”). The Schedule 13G indicates that Mr. Krevlin is the managing member and control person of Glenhill Advisors, Glenhill Advisors is the managing member of Glenhill Capital Management, LLC. Glenhill |
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Capital Management, LLC is the general partner and investment adviser of Glenhill Capital LP, the sole shareholder of Glenhill Capital Overseas. Glenhill Capital Overseas is general partner of Glenhill Capital Overseas Master Fund, LP. The Schedule 13G further indicates that 9,000,000 shares of our common stock were beneficially owned by Glenhill, as to which (i) Glenhill Advisors has sole voting and dispositive power with respect to 3,000,000 shares, (ii) Mr. Krevlin has sole voting and dispositive power with respect to 3,000,000 shares and (iii) Glenhill Capital Overseas has sole voting and dispositive power with respect to 3,000,000 shares. The business address of each of Glenhill Advisors, Mr. Krevlin and Glenhill Capital Overseas is 598 Madison Avenue, 12th Floor, New York, NY 10022. |
(5) | Each of the Principals, Messrs. Gottesman, Roman and Lagrange, serves as a Managing Director of GLG Partners Limited, the general partner of GLG Partners LP. GLG Partners LP serves as the investment manager of certain GLG Funds that have invested in 407,615 of our units. GLG Partners LP, as investment manager of these GLG Funds, may be deemed the beneficial owner of all of our securities owned by these GLG Funds. GLG Partners Limited, as general partner of GLG Partners LP, may be deemed the beneficial owner of all of our securities owned by these GLG Funds. Each of the Principals, as a Managing Director of GLG Partners Limited with power to exercise investment discretion, may be deemed the beneficial owner of all of our securities owned by these GLG Funds. Each of GLG Partners LP, GLG Partners Limited and the Principals disclaims beneficial ownership of any of these securities, except for their pecuniary interest therein. | |
(6) | Mr. Berggruen is a director of Berggruen Holdings and BFH and may be considered to have beneficial ownership of Berggruen Holdings’ interests in us. | |
(7) | Mr. Morey will resign effective upon consummation of the acquisition. | |
(8) | Upon consummation of the co-investment and the acquisition, each of Berggruen Holdings and Marlin Equities and Messrs. Ashken, Berggruen and Franklin will beneficially own % of our outstanding shares. All of the shares of Freedom common stock that Messrs. Ashken, Berggruen and Franklin will be deemed to beneficially own and control will be owned indirectly through their respective affiliates. Neither Messrs. Ashken, Berggruen nor Franklin directly owns or controls any shares of Freedom common stock. | |
(9) | Includes 19,764,033 and 13,176,022 shares of Freedom common stock expected to be beneficially owned by Sage Summit LP and Lavender Heights Capital LP, respectively. The Trustees are the directors of the general partner of each of these limited partnerships. | |
(10) | Includes 58,923,874 Exchangeable Shares of FA Sub 2 Limited and 58,923,874 associated shares of Freedom Series A preferred stock expected to be beneficially owned by the Gottesman GLG Trust, which will be exchangeable by the holder at any time and from time to time following the consummation of the acquisition into 58,923,874 shares of our common stock. Each share of Series A preferred stock will be automatically redeemed upon the exchange of an Exchangeable Share. | |
(11) | Includes 18,705,988 shares of Freedom common stock expected to be beneficially owned by the Roman GLG Trust. | |
(12) | Includes 58,923,874 shares of Freedom common stock expected to be beneficially owned by the Lagrange GLG Trust. |
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Freedom Acquisition Holdings, Inc. | ||||
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As of | ||||||||||||
March 31, | As of December 31, | |||||||||||
2007 | 2006 | 2005 | ||||||||||
(Unaudited) | ||||||||||||
Assets | ||||||||||||
Cash and cash equivalents | $ | 149,193 | $ | 273,148 | $ | 236,261 | ||||||
Investments | 152 | 201 | 225 | |||||||||
Fees receivable | 32,077 | 251,963 | 246,179 | |||||||||
Prepaid expenses and other assets | 18,724 | 25,944 | 9,385 | |||||||||
Property and equipment (net of accumulated depreciation and amortization of $10,634, $10,117 and $8,243 respectively) | 7,601 | 6,121 | 3,290 | |||||||||
Total Assets | $ | 207,747 | $ | 557,377 | $ | 495,340 | ||||||
Liabilities and Members’ Equity | ||||||||||||
Current Liabilities | ||||||||||||
Rebates and sub-administration fees payable | $ | 15,980 | $ | 19,146 | $ | 15,436 | ||||||
Accrued compensation and benefits | 26,334 | 102,507 | 247,745 | |||||||||
Income taxes payable | 15,376 | 25,094 | 21,712 | |||||||||
Distributions payable | 60,835 | 9,310 | 1,125 | |||||||||
Accounts payable and other accruals | 15,229 | 19,716 | 14,723 | |||||||||
Other liabilities | 7,100 | 5,100 | — | |||||||||
Total Current Liabilities | 140,854 | 180,873 | 300,741 | |||||||||
Non-Current Liabilities | ||||||||||||
Loan payable | 13,000 | 13,000 | 13,000 | |||||||||
Minority Interest | 1,762 | 1,552 | 1,370 | |||||||||
Total Non-Current Liabilities | 14,762 | 14,552 | 14,370 | |||||||||
Commitments and Contingencies | ||||||||||||
Total Liabilities | 155,616 | 195,425 | 315,111 | |||||||||
Members’ Equity | ||||||||||||
Members’ equity | 48,382 | 359,046 | 179,167 | |||||||||
Accumulated other comprehensive income | 3,749 | 2,906 | 1,062 | |||||||||
Total Members’ Equity | 52,131 | 361,952 | 180,229 | |||||||||
Total Liabilities and Members’ Equity | $ | 207,747 | $ | 557,377 | $ | 495,340 | ||||||
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Three Months Ended | ||||||||||||||||||||
March 31, | Years Ended December 31, | |||||||||||||||||||
2007 | 2006 | 2006 | 2005 | 2004 | ||||||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||||||||
Net revenues and other income | ||||||||||||||||||||
Management fees | $ | 57,343 | $ | 37,292 | $ | 186,273 | $ | 137,958 | $ | 138,988 | ||||||||||
Performance fees | 2,521 | 3,251 | 394,740 | 279,405 | 178,024 | |||||||||||||||
Administration fees | 12,645 | 7,422 | 34,814 | 311 | — | |||||||||||||||
Transaction charges | — | — | — | 184,252 | 191,585 | |||||||||||||||
Other | 498 | 2,293 | 5,039 | 1,476 | 6,110 | |||||||||||||||
Total net revenues and other income | 73,007 | 50,258 | 620,866 | 603,402 | 514,707 | |||||||||||||||
Expenses | ||||||||||||||||||||
Employee compensation and benefits | (25,048 | ) | (26,054 | ) | (168,386 | ) | (345,918 | ) | (196,784 | ) | ||||||||||
General, administrative and other | (25,764 | ) | (11,588 | ) | (68,404 | ) | (64,032 | ) | (42,002 | ) | ||||||||||
(50,812 | ) | (37,642 | ) | (236,790 | ) | (409,950 | ) | (238,786 | ) | |||||||||||
Income from operations | 22,195 | 12,616 | 384,076 | 193,452 | 275,921 | |||||||||||||||
Interest income, net | 1,475 | 1,635 | 4,657 | 2,795 | 519 | |||||||||||||||
Income before income taxes | 23,670 | 14,251 | 388,733 | 196,247 | 276,440 | |||||||||||||||
Income taxes | (3,255 | ) | (1,501 | ) | (29,225 | ) | (25,345 | ) | (48,372 | ) | ||||||||||
Net income | $ | 20,415 | $ | 12,750 | $ | 359,508 | $ | 170,902 | $ | 228,068 | ||||||||||
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Total | ||||||||||||
Members’ | Accumulated Other | Members’ | ||||||||||
Equity | Comprehensive Income | Equity | ||||||||||
Balance as of January 1, 2004 | $ | 110,903 | $ | 1,819 | $ | 112,722 | ||||||
Comprehensive income | ||||||||||||
Net income attributable to Members | 227,739 | — | 227,739 | |||||||||
Foreign currency translation | — | 718 | 718 | |||||||||
Total comprehensive income | 227,739 | 718 | 228,457 | |||||||||
Distributions to Principals and Trustees | (223,199 | ) | — | (223,199 | ) | |||||||
Distributions to Non-Controlling Interest Holders | — | — | — | |||||||||
Balance as of December 31, 2004 | 115,443 | 2,537 | 117,980 | |||||||||
Comprehensive income | ||||||||||||
Net income attributable to Members | 170,250 | — | 170,250 | |||||||||
Foreign currency translation | — | (1,475 | ) | (1,475 | ) | |||||||
Total comprehensive income | 170,250 | (1,475 | ) | 168,775 | ||||||||
Capital contributions | 5 | — | 5 | |||||||||
Distributions to Principals and Trustees | (106,531 | ) | — | (106,531 | ) | |||||||
Distributions to Non-Controlling Interest Holders | — | — | — | |||||||||
Balance as of December 31, 2005 | 179,167 | 1,062 | 180,229 | |||||||||
Comprehensive income | ||||||||||||
Net income attributable to Members | 359,326 | — | 359,326 | |||||||||
Foreign currency translation | — | 1,844 | 1,844 | |||||||||
Total comprehensive income | 359,326 | 1,844 | 361,170 | |||||||||
Capital contributions | 914 | — | 914 | |||||||||
Distributions to Principals and Trustees | (165,705 | ) | — | (165,705 | ) | |||||||
Distributions to Non-Controlling Interest Holders | (14,656 | ) | — | (14,656 | ) | |||||||
Balance as of December 31, 2006 | 359,046 | 2,906 | 361,952 | |||||||||
(unaudited) | ||||||||||||
Comprehensive income | ||||||||||||
Net income attributable to Members | 20,205 | — | 20,205 | |||||||||
Foreign currency translation | — | 843 | 843 | |||||||||
Total comprehensive income | 20,205 | 843 | 21,048 | |||||||||
Distributions to Principals and Trustees | (137,623 | ) | — | (137,623 | ) | |||||||
Distributions to Non-Controlling Interest Holders | (193,246 | ) | — | (193,246 | ) | |||||||
Balance as of March 31, 2007 | $ | 48,382 | $ | 3,749 | $ | 52,131 | ||||||
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Three Months Ended | ||||||||||||||||||||
March 31, | Years Ended December 31, | |||||||||||||||||||
2007 | 2006 | 2006 | 2005 | 2004 | ||||||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||||||||
Cash Flows From Operating Activities | ||||||||||||||||||||
Net income | $ | 20,415 | $ | 12,750 | $ | 359,508 | $ | 170,902 | $ | 228,068 | ||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||||||||
Depreciation and amortization | 517 | 255 | 1,874 | 1,685 | 2,347 | |||||||||||||||
Cash flows due to changes in | ||||||||||||||||||||
Fees receivable | 219,885 | 227,163 | (5,784 | ) | (82,944 | ) | (24,132 | ) | ||||||||||||
Investments | 49 | 40 | 24 | 34 | (25 | ) | ||||||||||||||
Prepaid expenses and other assets | 7,220 | (567 | ) | (16,559 | ) | (3,006 | ) | 5,657 | ||||||||||||
Rebates and sub-administration fees payable | (3,165 | ) | (6,761 | ) | 3,710 | 6,201 | (1,358 | ) | ||||||||||||
Accrued compensation and benefits | (76,172 | ) | (223,228 | ) | (145,238 | ) | 121,894 | 100,812 | ||||||||||||
Income taxes payable | (9,719 | ) | (8,570 | ) | 3,382 | (9,901 | ) | (3,025 | ) | |||||||||||
Distributions payable | 51,525 | — | 8,185 | — | 1,125 | |||||||||||||||
Accounts payable and other accruals | (4,486 | ) | (819 | ) | 4,993 | 3,654 | (13,378 | ) | ||||||||||||
Other liabilities | 2,000 | — | 5,100 | — | — | |||||||||||||||
Net cash provided by operating activities | 208,069 | 263 | 219,195 | 208,519 | 296,091 | |||||||||||||||
Cash Flows From Investing Activities | ||||||||||||||||||||
Purchase of property and equipment | (1,998 | ) | (283 | ) | (4,704 | ) | (634 | ) | (2,887 | ) | ||||||||||
Net cash used in investing activities | (1,998 | ) | (283 | ) | (4,704 | ) | (634 | ) | (2,887 | ) | ||||||||||
Cash Flows From Financing Activities | ||||||||||||||||||||
Capital contributions | — | — | 914 | 5 | — | |||||||||||||||
Distributions to Principals and Trustees | (137,623 | ) | (148,533 | ) | (165,706 | ) | (106,531 | ) | (222,074 | ) | ||||||||||
Distributions to Non-Controlling Interest Holders | (193,246 | ) | — | (14,656 | ) | — | — | |||||||||||||
Net cash used in financing activities | (330,869 | ) | (148,533 | ) | (179,448 | ) | (106,526 | ) | (222,074 | ) | ||||||||||
Net (decrease) increase in cash and cash equivalents | (124,798 | ) | (148,553 | ) | 35,043 | 101,359 | 71,130 | |||||||||||||
Effect of foreign currency translation on cash | 843 | 97 | 1,844 | (1,476 | ) | (407 | ) | |||||||||||||
Cash and cash equivalents at beginning of period | 273,148 | 236,261 | 236,261 | 136,378 | 65,655 | |||||||||||||||
Cash and cash equivalents at end of period | $ | 149,193 | $ | 87,805 | $ | 273,148 | $ | 236,261 | $ | 136,378 | ||||||||||
Supplementary cash flow disclosure | ||||||||||||||||||||
Interest paid | $ | (200 | ) | $ | (169 | ) | $ | (766 | ) | $ | (534 | ) | $ | (291 | ) | |||||
Income taxes paid | (14,167 | ) | (10,070 | ) | (22,754 | ) | (35,245 | ) | (51,397 | ) |
F-6
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Notes to the Combined Financial Statements
(US Dollars in thousands)
1. | Organization and Basis of Presentation |
F-7
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Notes to the Combined Financial Statements (continued)
(US Dollars in thousands)
2. | Summary of Significant Accounting Policies |
F-8
Table of Contents
Notes to the Combined Financial Statements (continued)
(US Dollars in thousands)
Useful Lives | ||
Furniture | 5 years | |
Equipment | 5 years | |
Leasehold Improvements | 10 years or remaining lease term, whichever is shorter |
F-9
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Notes to the Combined Financial Statements (continued)
(US Dollars in thousands)
F-10
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Notes to the Combined Financial Statements (continued)
(US Dollars in thousands)
3. | Investments |
4. | Property and Equipment, net |
March 31, | December 31, | |||||||||||
2007 | 2006 | 2005 | ||||||||||
(Unaudited) | ||||||||||||
Furniture and Fixtures, net | $ | 1,077 | $ | 1,732 | $ | 949 | ||||||
Computer and Equipment, net | 3,194 | 2,455 | 621 | |||||||||
Leasehold Improvements, net | 2,275 | 1,096 | 916 | |||||||||
Other Assets, net | 1,055 | 838 | 804 | |||||||||
$ | 7,601 | $ | 6,121 | $ | 3,290 | |||||||
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Notes to the Combined Financial Statements (continued)
(US Dollars in thousands)
5. | Loan Payable |
Three Months Ended | Years Ended | |||||||||||
March 31, | December 31, | |||||||||||
2007 | 2006 | 2005 | ||||||||||
(Unaudited) | ||||||||||||
Average interest rates for the period | 6.10% | 5.89% | 4.11% | |||||||||
Scheduled principal payments for long-term borrowings at December 31, 2006 are as follows: | ||||||||||||
2007 | $ | — | ||||||||||
2008 | — | |||||||||||
2009 | — | |||||||||||
2010 | — | |||||||||||
2011 | — | |||||||||||
Thereafter | 13,000 | |||||||||||
$ | 13,000 | |||||||||||
6. | Income Taxes |
Three Months Ended March 31, | Year Ended December 31, | |||||||||||||||||||
2007 | 2006 | 2006 | 2005 | 2004 | ||||||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||||||||
UK Income Taxes | $ | 3,014 | $ | 1,583 | $ | 28,767 | $ | 24,551 | $ | 47,952 | ||||||||||
Irish Income Taxes | 67 | 50 | 313 | 203 | 149 | |||||||||||||||
US Income Taxes | 174 | (132 | ) | 145 | 591 | 271 | ||||||||||||||
Total Income Taxes | $ | 3,255 | $ | 1,501 | $ | 29,225 | $ | 25,345 | $ | 48,372 | ||||||||||
F-12
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Notes to the Combined Financial Statements (continued)
(US Dollars in thousands)
Three Months Ended March 31, | Year Ended December 31, | |||||||||||||||||||
2007 | 2006 | 2006 | 2005 | 2004 | ||||||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||||||||
Profit before tax | $ | 23,670 | $ | 14,251 | $ | 388,733 | $ | 196,247 | $ | 276,440 | ||||||||||
Tax charge at UK corporation tax rate (30)% | 7,101 | 4,275 | 116,620 | 58,874 | 82,932 | |||||||||||||||
Factors affecting charge: | ||||||||||||||||||||
Overseas tax rate differences | (3,182 | ) | (2,879 | ) | (27,557 | ) | (35,185 | ) | (36,118 | ) | ||||||||||
Disallowed and non-taxable items | 825 | 105 | 841 | 1,656 | 1,558 | |||||||||||||||
Pass through to Non-Controlling Interest Holders | (1,489 | ) | — | (60,679 | ) | — | — | |||||||||||||
Tax on profit on ordinary activities | $ | 3,255 | $ | 1,501 | $ | 29,225 | $ | 25,345 | $ | 48,372 | ||||||||||
Effective Income Tax Rate | 13.75 | % | 10.53 | % | 7.52 | % | 12.91 | % | 17.49 | % |
7. | Commitments and Contingencies |
F-13
Table of Contents
Notes to the Combined Financial Statements (continued)
(US Dollars in thousands)
Year Ended December 31, | ||||
2007 | $ | 4,287 | ||
2008 | 4,287 | |||
2009 | 4,339 | |||
2010 | 4,339 | |||
2011 | 4,339 | |||
Thereafter | 27,877 | |||
$ | 49,468 | |||
8. | Regulated Entities |
9. | Employee Benefit Plans |
10. | Related Parties |
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Notes to the Combined Financial Statements (continued)
(US Dollars in thousands)
11. | Subsequent Events |
F-15
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F-16
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(a corporation in the development stage)
December 31, | ||||||||
2006 | ||||||||
Assets | ||||||||
Current asset, Cash | $ | 599,369 | ||||||
Other asset, Cash held in trust account | 466,707,382 | |||||||
$ | 467,306,751 | |||||||
Liabilities and Stockholders’ Equity | ||||||||
Current liabilities | ||||||||
Accrued expenses | $ | 250 | ||||||
Accrued offering costs | 250,483 | |||||||
Income taxes payable | 127,355 | |||||||
Franchise tax payable | 93,575 | |||||||
Notes payable, founding stockholders | 250,000 | |||||||
Total current liabilities | 721,663 | |||||||
Long-term liabilities, deferred underwriters’ fee | 16,320,000 | |||||||
Common stock, subject to possible redemption, 9,595,200 shares at redemption value | 93,247,353 | |||||||
Stockholders’ equity | ||||||||
Preferred stock, $.0001 par value; 1,000,000 shares authorized; none issued Common stock, $.0001 par value, 200,000,000 shares authorized; 60,000,003 shares issued and outstanding (including 9,595,200 shares subject to possible redemption) | 6,000 | |||||||
Additional paid-in capital | 356,842,491 | |||||||
Income accumulated during the development stage | 169,244 | |||||||
Total stockholders’ equity | 357,017,735 | |||||||
$ | 467,306,751 | |||||||
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(a corporation in the development stage)
Interest income | $ | 390,574 | ||
Formation and operating costs | 93,975 | |||
Income before provision for income taxes | 296,599 | |||
Provision for income taxes | 127,355 | |||
Net income | $ | 169,244 | ||
Approximate weighted average number of common shares outstanding, basic and diluted | 13,012,000 | |||
Net income per common share, basic and diluted | $ | .01 | ||
F-18
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(a corporation in the development stage)
Income | ||||||||||||||||||||
Accumulated | ||||||||||||||||||||
Common | Additional | During the | Total | |||||||||||||||||
Stock | Paid-in | Development | Stockholders’ | |||||||||||||||||
Shares | Amount | Capital | Stage | Equity | ||||||||||||||||
Common shares and warrants issued to founders | 12,000,003 | $ | 1,200 | $ | 23,800 | $ | — | $ | 25,000 | |||||||||||
Issue of warrants in private placement | — | — | 4,500,000 | — | 4,500,000 | |||||||||||||||
Sale of 48,000,000 units on December 28, 2006 at a price of $10 per unit, net of underwriter’s discount and offering costs (including 9,595,200 shares subject to possible redemption) | 48,000,000 | 4,800 | 445,566,044 | — | 445,570,844 | |||||||||||||||
Proceeds subject to possible redemption, 9,595,200 shares | — | — | (93,247,353 | ) | — | (93,247,353 | ) | |||||||||||||
Net income | — | — | — | 169,244 | 169,244 | |||||||||||||||
Balances at December 31, 2006 | 60,000,003 | $ | 6,000 | $ | 356,842,491 | $ | 169,244 | $ | 357,017,735 | |||||||||||
F-19
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(a corporation in the development stage)
Cash flows from operating activities | ||||
Net income | $ | 169,244 | ||
Adjustment to reconcile net income to net cash provided by operating activities: | ||||
Changes in operating assets and liabilities: | ||||
Accrued expenses | 250 | |||
Income taxes payable | 127,355 | |||
Franchise tax payable | 93,575 | |||
Net cash provided by operating activities | 390,424 | |||
Net cash used in investing activities | ||||
Cash held in trust account | (466,707,382 | ) | ||
Cash flows from financing activities | ||||
Proceeds from notes payable, stockholders | 250,000 | |||
Proceeds from issuance of founders’ units | 25,000 | |||
Gross proceeds of public offering | 480,000,000 | |||
Proceeds from issuance of sponsors’ warrants in private placement | 4,500,000 | |||
Payments for underwriter’s discount and offering costs | (17,858,673 | ) | ||
Net cash provided by financing activities | 466,916,327 | |||
Net increase in cash | 599,369 | |||
Cash, beginning of period | — | |||
Cash, end of period | $ | 599,369 | ||
Supplemental schedule of non-cash financing activities: | ||||
Accrual of offering costs | $ | 250,483 | ||
Deferred underwriters’ fees | $ | 16,320,000 | ||
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Current | ||||
Federal | $ | 80,817 | ||
State | 20,282 | |||
City | 26,256 | |||
Total current | $ | 127,355 | ||
F-24
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F-25
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March 31, | December 31, | |||||||
2007 | 2006 | |||||||
Assets | ||||||||
Current assets | ||||||||
Cash | $ | 142,717 | $ | 599,369 | ||||
Prepaid expenses | 68,785 | — | ||||||
Total current assets | 211,502 | 599,369 | ||||||
Other asset | ||||||||
Cash held in trust account | 518,676,027 | 466,707,382 | ||||||
$ | 518,887,529 | $ | 467,306,751 | |||||
Liabilities and Stockholders’ Equity | ||||||||
Current liabilities | ||||||||
Accrued expenses | $ | 20,750 | $ | 250 | ||||
Accrued offering costs | — | 250,483 | ||||||
Income taxes payable | 2,779,750 | 127,355 | ||||||
Franchise tax payable | 41,250 | 93,575 | ||||||
Notes payable, founding stockholders | — | 250,000 | ||||||
Total current liabilities | 2,841,750 | 721,663 | ||||||
Long-term liabilities | ||||||||
Deferred underwriters’ fee | 17,952,000 | 16,320,000 | ||||||
Common stock, subject to possible redemption, 10,554,720 and 9,595,200 shares at March 31, 2007 and December 31, 2006, respectively, at redemption value | 102,572,088 | 93,247,353 | ||||||
Deferred interest income related to common stock subject to possible redemption | 483,050 | — | ||||||
Stockholders’ equity | ||||||||
Preferred stock, $.0001 par value; 1,000,000 shares authorized; none issued Common stock, $.0001 par value, 200,000,000 shares authorized; 64,800,003 shares issued and outstanding (including 10,554,720 shares subject to possible redemption) at March 31, 2007 and 60,000,003 shares issued and outstanding (including 9,595,200 shares subject to possible redemption) at December 31, 2006 | 6,480 | 6,000 | ||||||
Additional paid-in capital | 392,126,827 | 356,842,491 | ||||||
Income accumulated during the development stage | 2,905,334 | 169,244 | ||||||
Total stockholders’ equity | 395,038,641 | 357,017,735 | ||||||
$ | 518,887,529 | $ | 467,306,751 | |||||
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Period from | ||||||||
For the Three | June 8, 2006 | |||||||
Months Ended | (inception) to | |||||||
March 31, 2007 | March 31, 2007 | |||||||
Interest income | $ | 6,212,197 | $ | 6,602,771 | ||||
Formation and operating costs | 154,412 | 248,387 | ||||||
Income before provision for income taxes | 6,057,785 | 6,354,384 | ||||||
Provision for income taxes | 2,838,645 | 2,966,000 | ||||||
Net income | 3,219,140 | 3,388,384 | ||||||
Interest income related to common stock subject to possible redemption | 483,050 | 483,050 | ||||||
Net income allocable to common stockholders not subject to possible redemption | $ | 2,736,090 | $ | 2,905,334 | ||||
Weighted average shares outstanding, basic | 63,573,336 | 28,167,571 | ||||||
Net income per common share, basic | $ | .05 | $ | .12 | ||||
Weighted average shares outstanding, diluted | 72,931,670 | 31,131,929 | ||||||
Net income per common share, diluted | $ | .04 | $ | .11 | ||||
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Period from | ||||||||
For the Three | June 8, 2006 | |||||||
Months Ended | (inception) to | |||||||
March 31, 2007 | March 31, 2007 | |||||||
Cash Flows from Operating Activities | ||||||||
Net income | $ | 3,219,140 | $ | 3,388,384 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Increase in prepaid expenses | (68,785 | ) | (68,785 | ) | ||||
Increase in income taxes payable | 2,652,395 | 2,779,750 | ||||||
Increase (decrease) in franchise tax payable | (52,325 | ) | 41,250 | |||||
Increase in accrued expenses | 20,500 | 20,750 | ||||||
Net cash provided by operating activities | 5,770,925 | 6,161,349 | ||||||
Net Cash Flows used in Investing Activities, | ||||||||
Cash held in trust account | (51,968,645 | ) | (518,676,027 | ) | ||||
Cash Flows from Financing Activities | ||||||||
Proceeds from notes payable, stockholders | — | 250,000 | ||||||
Proceeds from issuance of founders’ units | — | 25,000 | ||||||
Gross proceeds of public offering | 48,000,000 | 528,000,000 | ||||||
Proceeds from issuance of sponsors’ warrants in private placement | — | 4,500,000 | ||||||
Principal payments made on notes payable, stockholders | (250,000 | ) | (250,000 | ) | ||||
Payments for underwriter’s discount and offering costs | (2,008,932 | ) | (19,867,605 | ) | ||||
Net cash provided by financing activities | 45,741,068 | 512,657,395 | ||||||
Net increase (decrease) in cash | (456,652 | ) | 142,717 | |||||
Cash at beginning of the period | 599,369 | — | ||||||
Cash at end of the period | $ | 142,717 | $ | 142,717 | ||||
Supplemental disclosure of cash flow information: | ||||||||
Cash paid for income taxes | $ | 186,250 | $ | 186,250 | ||||
Supplemental schedule of non-cash financing activities: | ||||||||
Deferred underwriters’ fees | $ | 1,632,000 | $ | 17,952,000 | ||||
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Page | ||||||||
ARTICLE I DEFINITIONS | A-1 | |||||||
Section 1.1 | Defined Terms | A-1 | ||||||
Section 1.2 | Rules of Construction | A-1 | ||||||
ARTICLE II PURCHASE AND SALE OF PURCHASED SHARES | A-1 | |||||||
Section 2.1 | Purchase and Sale of Purchased Shares | A-1 | ||||||
Section 2.2 | Post Closing Adjustments | A-4 | ||||||
Section 2.3 | Closing Net Cash Statement | A-6 | ||||||
Section 2.4 | Conditions to Obligations of Buyer Group | A-8 | ||||||
Section 2.5 | Conditions to Obligations of Sellers | A-9 | ||||||
Section 2.6 | Closing | A-10 | ||||||
Section 2.7 | Transfer Taxes | A-11 | ||||||
ARTICLE III BASIC REPRESENTATIONS AND WARRANTIES OF SELLERS | A-11 | |||||||
Section 3.1 | Binding Obligation | A-11 | ||||||
Section 3.2 | No Breach | A-11 | ||||||
Section 3.3 | Title | A-12 | ||||||
Section 3.4 | No Brokers | A-12 | ||||||
Section 3.5 | Governmental Approvals | A-12 | ||||||
Section 3.6 | Investment Representations | A-12 | ||||||
ARTICLE IV REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANIES | A-13 | |||||||
Section 4.1 | Organization | A-13 | ||||||
Section 4.2 | Authority | A-13 | ||||||
Section 4.3 | No Breach | A-13 | ||||||
Section 4.4 | No Brokers | A-13 | ||||||
Section 4.5 | Governmental Approvals | A-14 | ||||||
Section 4.6 | Capitalization | A-14 | ||||||
Section 4.7 | Financial Information | A-14 | ||||||
Section 4.8 | Absence of Material Adverse Effect and Certain Events | A-15 | ||||||
Section 4.9 | Taxes | A-15 | ||||||
Section 4.10 | Freedom Proxy Statement | A-16 | ||||||
Section 4.11 | Assets and Properties | A-16 | ||||||
Section 4.12 | Contracts | A-17 | ||||||
Section 4.13 | Litigation | A-17 | ||||||
Section 4.14 | Environmental Matters | A-17 | ||||||
Section 4.15 | Compliance with Applicable Law | A-17 | ||||||
Section 4.16 | Permits and Licenses | A-18 | ||||||
Section 4.17 | Employee Matters | A-18 | ||||||
Section 4.18 | Insurance | A-19 | ||||||
Section 4.19 | Transactions with Affiliates | A-20 | ||||||
Section 4.20 | Material Clients | A-20 | ||||||
Section 4.21 | GLG Funds | A-20 | ||||||
Section 4.22 | Business Intellectual Property | A-21 | ||||||
Section 4.23 | Competition Law | A-21 |
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ARTICLE V REPRESENTATIONS AND WARRANTIES OF BUYER GROUP | A-22 | |||||||
Section 5.1 | Organization | A-22 | ||||||
Section 5.2 | Authority | A-22 | ||||||
Section 5.3 | Binding Obligation | A-22 | ||||||
Section 5.4 | No Breach | A-22 | ||||||
Section 5.5 | No Brokers | A-23 | ||||||
Section 5.6 | Governmental Approvals | A-23 | ||||||
Section 5.7 | Capitalization | A-23 | ||||||
Section 5.8 | Financial Information | A-24 | ||||||
Section 5.9 | Absence of Material Adverse Effect and Certain Events | A-25 | ||||||
Section 5.10 | Taxes | A-25 | ||||||
Section 5.11 | Assets and Properties | A-26 | ||||||
Section 5.12 | Contracts | A-26 | ||||||
Section 5.13 | Litigation | A-27 | ||||||
Section 5.14 | Environmental Matters | A-27 | ||||||
Section 5.15 | Compliance with Applicable Law | A-27 | ||||||
Section 5.16 | Permits and Licenses | A-27 | ||||||
Section 5.17 | Employee Matters | A-28 | ||||||
Section 5.18 | Insurance | A-28 | ||||||
Section 5.19 | Freedom SEC Reports | A-28 | ||||||
Section 5.20 | Investment Representations | A-29 | ||||||
Section 5.21 | Financial Resources | A-29 | ||||||
ARTICLE VI COVENANTS | A-30 | |||||||
Section 6.1 | Conduct of Business | A-30 | ||||||
Section 6.2 | Proxy Statement; Freedom Stockholders’ Meeting | A-32 | ||||||
Section 6.3 | Directors and Officers of Freedom After Closing | A-34 | ||||||
Section 6.4 | HSR Act | A-34 | ||||||
Section 6.5 | Required Information | A-34 | ||||||
Section 6.6 | Confidentiality | A-34 | ||||||
Section 6.7 | Public Disclosure | A-34 | ||||||
Section 6.8 | Reasonable Efforts | A-35 | ||||||
Section 6.9 | Notices of Certain Events | A-35 | ||||||
Section 6.10 | Directors’ and Officers’ Insurance | A-36 | ||||||
Section 6.11 | Advice of Changes | A-36 | ||||||
Section 6.12 | Consents | A-36 | ||||||
Section 6.13 | Financing at Closing | A-36 | ||||||
Section 6.14 | Acquisition Sub 1 Exchangeable Shares | A-36 | ||||||
Section 6.15 | Acquisition Sub 2 Exchangeable Securities | A-37 | ||||||
Section 6.16 | Amended and Restated Freedom Organizational Documents | A-37 | ||||||
Section 6.17 | Non-Voting Shares | A-37 | ||||||
ARTICLE VII TERMINATION | A-37 | |||||||
Section 7.1 | Termination | A-37 | ||||||
Section 7.2 | Effect of Termination | A-38 |
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ARTICLE VIII SURVIVAL AND INDEMNIFICATION | A-38 | |||||||
Section 8.1 | Survival | A-38 | ||||||
Section 8.2 | Indemnification by Sellers | A-38 | ||||||
Section 8.3 | Indemnification by Freedom | A-39 | ||||||
Section 8.4 | Limitations on Liability | A-39 | ||||||
Section 8.5 | Procedure for Third-Party Claims | A-42 | ||||||
Section 8.6 | Indemnification Procedures | A-43 | ||||||
Section 8.7 | Right to Indemnification Not Affected by Knowledge or Waiver | A-45 | ||||||
Section 8.8 | No Other Representations or Warranties | A-45 | ||||||
Section 8.9 | Contribution | A-45 | ||||||
ARTICLE IX GENERAL PROVISIONS | A-45 | |||||||
Section 9.1 | Assignment | A-45 | ||||||
Section 9.2 | Parties in Interest | A-45 | ||||||
Section 9.3 | Amendment | A-46 | ||||||
Section 9.4 | Waiver; Remedies | A-46 | ||||||
Section 9.5 | Fees and Expenses | A-46 | ||||||
Section 9.6 | Notices | A-46 | ||||||
Section 9.7 | Entire Agreement | A-48 | ||||||
Section 9.8 | Severability | A-48 | ||||||
Section 9.9 | Consent to Jurisdiction | A-48 | ||||||
Section 9.10 | Exhibits and Schedules; Disclosure | A-48 | ||||||
Section 9.11 | Governing Law | A-49 | ||||||
Section 9.12 | Counterparts | A-49 | ||||||
Section 9.13 | Specific Performance | A-49 | ||||||
Section 9.14 | Sellers’ Representative | A-49 | ||||||
Section 9.15 | Buyers’ Representative | A-50 | ||||||
Section 9.16 | Trustee Liability | A-51 | ||||||
Section 9.17 | Certain Sellers’ Agreements | A-52 | ||||||
Section 9.18 | Designated Seller | A-52 | ||||||
Section 9.19 | Interim Sales of Purchased Shares | A-53 | ||||||
Section 9.20 | Ogier | A-53 | ||||||
Section 9.21 | Certain Transaction Documents | A-53 |
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1114 Avenue of the Americas
41st Floor
New York, New York
10036
Telecopy: (212) 382 0120
E-mail: nb@berggruenholdings.com
A-46
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401 East Las Olas Blvd.
Suite 2000
Fort Lauderdale
FL 33301
Telecopy: (954) 759 5527
E-mail: marchb@gtlaw.com
c/o GLG Partners LP
One Curzon Street
London
W1J 5HB
England
Telecopy: +44 (0) 20 7408 4201
E-mail: noam.gottesman@glgpartners.com
30 Rockefeller Center
New York, New York
10112
Telecopy: (212) 541 5369
E-Mail: lschreyer@chadbourne.com
c/o Berggruen Holdings
1114 Avenue of the Americas
41st Floor
New York, New York
10036
Telecopy: (212) 382 0120
E-mail: jb@berggruenholdings.com
c/o Berggruen Holdings
1114 Avenue of the Americas
41st Floor
New York, New York
10036
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Telecopy: (212) 382 0120
E-mail: jb@berggruenholdings.com
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By: | /s/ Jared Bluestein |
By: | /s/ Jared Bluestein |
By: | /s/ Jared Bluestein |
By: | /s/ Ashley Victor Silverton |
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By: | /s/ Barrett Di Paolo |
By: | /s/ Nigel Bentley |
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By: | /s/ Phil Le Vesconte |
By: | /s/ Leslie J. Schreyer |
By: | /s/ Anne-Marie Adlam |
By: | /s/ Leslie J. Schreyer |
By: | /s/ Anne-Marie Adlam |
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Page | ||||||||
ARTICLE I DEFINITIONS | B-1 | |||||||
Section 1.1 | Defined Terms | B-1 | ||||||
ARTICLE II SUPPORT | B-2 | |||||||
Section 2.1 | Irrevocable Agreement to Issue Shares | B-2 | ||||||
Section 2.2 | Replacement Exchangeable Securities | B-2 | ||||||
Section 2.3 | Taxes | B-2 | ||||||
Section 2.4 | No Effect on Agreement | B-3 | ||||||
Section 2.5 | Continuing Agreement | B-3 | ||||||
Section 2.6 | Reinstatement of Agreement | B-3 | ||||||
Section 2.7 | Reservation of Shares | B-3 | ||||||
ARTICLE III MISCELLANEOUS | B-3 | |||||||
Section 3.1 | Freedom’s Waivers | B-3 | ||||||
Section 3.2 | Election of Remedies | B-4 | ||||||
Section 3.3 | Effect of Delay or Omission to Pursue Remedy | B-4 | ||||||
Section 3.4 | Amendment | B-4 | ||||||
Section 3.5 | Notices | B-4 | ||||||
Section 3.6 | Successors and Assigns | B-4 | ||||||
Section 3.7 | GOVERNING LAW | B-4 | ||||||
Section 3.8 | SUBMISSION TO JURISDICTION | B-4 | ||||||
Section 3.9 | WAIVER OF JURY TRIAL | B-5 | ||||||
Section 3.10 | Severability | B-5 | ||||||
Section 3.11 | Expenses | B-5 | ||||||
Section 3.12 | Third-Party Beneficiaries | B-5 | ||||||
Section 3.13 | Counterparts | B-5 |
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ARTICLE I DEFINITIONS | C-1 | |||
Section 1.1 Defined Terms | C-1 | |||
ARTICLE II HOLDERS PUT RIGHT | C-2 | |||
Section 2.1 Put Right | C-2 | |||
Section 2.2 Put Right Procedures | C-2 | |||
ARTICLE III FREEDOM CALL RIGHT | C-2 | |||
Section 3.1 Call Right | C-2 | |||
Section 3.2 Exchange Procedures | C-2 | |||
ARTICLE IV EXCHANGE RATIO | C-3 | |||
Section 4.1 Exchange Ratio; Adjustment of Exchange Ratio | C-3 | |||
ARTICLE V OTHER PROVISIONS RE: EXCHANGE AND CALL RIGHTS | C-3 | |||
Section 5.1 Effect on Exchangeable Shares | C-3 | |||
Section 5.2 Issuance of Freedom Common Stock | C-3 | |||
Section 5.3 Taxes | C-3 | |||
ARTICLE VI MISCELLANEOUS | C-4 | |||
Section 6.1 Election of Remedies | C-4 | |||
Section 6.2 Effect of Delay or Omission to Pursue Remedy | C-4 | |||
Section 6.3 Amendment | C-4 | |||
Section 6.4 Successors and Assigns | C-4 | |||
Section 6.5 GOVERNING LAW | C-4 | |||
Section 6.6 SUBMISSION TO JURISDICTION | C-4 | |||
Section 6.7 WAIVER OF JURY TRIAL | C-5 | |||
Section 6.8 Severability | C-5 | |||
Section 6.9 Expenses | C-5 | |||
Section 6.10 Counterparts | C-5 | |||
Exhibit A Form of Letter of Transmittal |
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among
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individually and as Sellers’ Representative
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of the Gottesman GLG Trust
of the Roman GLG Trust
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By: | /s/ Nigel Bentley |
By: | /s/ Jared Bluestein |
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By: | /s/ Ian Ashken |
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in his capacity as trustee of the Gottesman GLG Trust
in its capacity as trustee of the Lagrange GLG Trust
in his capacity as trustee of the Roman GLG Trust
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To: | Noam Gottesman 6 Palace Green London W8 4QA, England Telephone:44-20-7201-8888 Telecopier:44-20-7201-8880 | To: | Pierre Lagrange 16 Kensington Palace Gardens London W8 4QH, England Telephone: 44-20-7370-0006 Telecopier: 44-20-7370-0099 | |||
with a copy to: | with a copy to: | |||||
Leslie J. Schreyer Chadbourne & Parke LLP 30 Rockefeller Plaza New York, New York 10112 Telephone:212-408-5100 Telecopier:212-541-5369 | Leslie J. Schreyer Chadbourne & Parke LLP 30 Rockefeller Plaza New York, New York 10112 Telephone: 212-408-5100 Telecopier: 212-541-5369 | |||||
To: | Emmanuel Roman 144 Hamilton Terrace London NW8 9UX, England Telephone:44-20-7016-7016 | To: | Leslie J. Schreyer, as trustee of the Gottesman GLG Trust c/o Chadbourne & Parke LLP 30 Rockefeller Plaza New York, New York 10112 Telephone:212-408-5100 Telecopier:212-541-5369 | |||
with a copy to: | ||||||
Leslie J. Schreyer Chadbourne & Parke LLP 30 Rockefeller Plaza New York, New York 10112 Telephone: 212-408-5100 Telecopier: 212-541-5369 | ||||||
To: | G&S Trustees Limited, as trustee of the Lagrange GLG Trust c/o Nigel Bentley or Peter Milner P.O. Box 145 Hawksford House Caledonia Place St. Helier, Jersey JE4 8QP Channel Islands Telephone: 44-1534-836-800 Telecopier: 44-1534-836-999 | To: | Jeffrey A. Robins, as trustee of the Roman GLG Trust c/o Chadbourne & Parke LLP 30 Rockefeller Plaza New York, New York 10112 Telephone: 212-408-5100 Telecopier: 212-541-5369 |
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with a copy to: | with a copy to: | |||||
Leslie J. Schreyer Chadbourne & Parke LLP LLP 30 Rockefeller Plaza New York, New York 10112 Telephone:212-408-5100 Telecopier:212-541-5369 | Leslie J. Schreyer Chadbourne & Parke LLP LLP 30 Rockefeller Plaza New York, New York 10112 Telephone:212-408-5100 Telecopier:212-541-5369 | |||||
To: | Freedom Acquisition Holdings Inc. c/o Berggruen Holdings Limited 1114 Avenue of the AmericasE 41st Floor New York, NY 10036 Telephone:212-380-2235 Telecopier:212-380-0121 Attn: Jared Bluestein | |||||
with a copy to: | ||||||
Alan I. Annex Greenberg Traurig LLP 200 Park Avenue New York, NY 10166 |
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Noam Gottesman
Emmanuel Roman
Pierre Lagrange
Leslie J. Schreyer, in his capacity as trustee of the Gottesman GLG Trust
Jeffrey A. Robins, in his capacity as trustee of the Roman GLG Trust
By: | /s/ Nigel Bentley |
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By: | /s/ Leslie J. Schreyer |
By: | /s/ Leslie J. Schreyer |
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By: | /s/ Jared Bluestein |
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ARTICLE I DEFINITIONS | G-1 | |||||||
Defined Terms | G-1 | |||||||
ARTICLE II FORFEITURE | G-2 | |||||||
Section 2.1 | Forfeiture | G-2 | ||||||
Section 2.2 | Permitted Transferees | G-4 | ||||||
ARTICLE III MISCELLANEOUS | G-5 | |||||||
Section 3.1 | Notices | G-5 | ||||||
Section 3.2 | Severability | G-5 | ||||||
Section 3.3 | Counterparts | G-5 | ||||||
Section 3.4 | Entire Agreement; No Third Party Beneficiaries | G-5 | ||||||
Section 3.5 | Further Assurances | G-5 | ||||||
Section 3.6 | Governing Law; Consent to Jurisdiction | G-5 | ||||||
Section 3.7 | Amendments; Waivers | G-6 | ||||||
Section 3.8 | Assignment | G-6 | ||||||
Section 3.9 | Status | G-6 | ||||||
Section 3.10 | G-6 | |||||||
Section 3.11 | Effective Date | G-6 | ||||||
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SIGNED as a deed byNOAM GOTTESMAN | ) | /s/ Noam Gottesman | ||
in the presence of: Alejandro San Miguel | ) | |||
Witness’s Signature:/s/ Alejandro San Miguel | ||||
Name: Alejandro San Miguel | ||||
Address: 159 Woodland Road Madison, NJ 07940 | ||||
SIGNED as a deed byEMMANUEL ROMAN | ) | /s/ Emmanuel Roman | ||
in the presence of: Alejandro San Miguel | ) | |||
Witness’s Signature:/s/ Alejandro San Miguel | ||||
Name: Alejandro San Miguel | ||||
Address: 159 Woodland Road Madison, NJ 07940 |
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SIGNED as a deed byPIERRE LAGRANGE | ) | /s/ Pierre Lagrange | ||
in the presence of: Alejandro San Miguel | ) | |||
Witness’s Signature: /s/ Alejandro San Miguel | ||||
Name: Alejandro San Miguel | ||||
Address: 159 Woodland Road Madison, NJ 07940 | ||||
SIGNED as a deed byLESLIE J. SCHREYER, | ) | /s/ Leslie J. Schreyer | ||
in his capacity as trustee of the | ) | |||
Gottesman GLG Trust | ) | |||
in the presence of: Alejandro San Miguel | ) | |||
Witness’s Signature: /s/ Alejandro San Miguel | ||||
Name: Alejandro San Miguel | ||||
Address: 159 Woodland Road Madison, NJ 07940 |
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SIGNED as a deed byJEFFREY A. ROBINS, | ) | /s/ Jeffrey A. Robins | ||
in his capacity as trustee of the | ) | |||
Roman GLG Trust | ) | |||
in the presence of: Alejandro San Miguel | ) | |||
Witness’s Signature:/s/ Alejandro San Miguel | ||||
Name: Alejandro San Miguel | ||||
Address: 159 Woodland Road Madison, NJ 07940 | ||||
EXECUTED as a deed by | ) | |||
G&S TRUSTEES LIMITED, | ) | |||
in its capacity as trustee of the Lagrange GLG Trust | ) | |||
acting by Michael Powell | ) | /s/ Michael Powell | ||
) | Director | |||
and Julian Hayden | ) | /s/ Julian Hayden | ||
) | Director/Secretary |
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If the Permitted Transferee is an individual: |
SIGNED as a deed by [ ] | ) | |||
in the presence of: | ) | |||
Witness’s Signature | ||||
Name: | ||||
Address: | ||||
OR | ||||
If the permitted Transferee is a Company: | ||||
EXECUTED as a deed by [ ] | ) | |||
acting by [NAME OF DIRECTOR] | ) | |||
Director | ||||
and [NAME OF DIRECTOR/SECRETARY] | ) | |||
Director/Secretary | ||||
Notice details per section 1.2 above: | ||||
Name: | ||||
Facsimile: | ||||
Address: |
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CERTIFICATE OF INCORPORATION
GLG PARTNERS, INC.
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Its:
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