EXECUTION COPY
PURCHASE AGREEMENT
BY AND AMONG
FRANKLIN RESOURCES, INC.,
DARBY HOLDINGS, INC.
AND
THE DARBY PARTIES NAMED HEREIN
---------------
Dated as of August 1, 2003
TABLE OF CONTENTS
Article I DEFINITIONS......................................................1
1.1 Certain Definitions..............................................1
Article II SALE AND PURCHASE OF SHARES AND INTERESTS;
CONSIDERATION....................................................9
2.1 Sale and Purchase of Shares and Interests........................9
2.2 Consideration....................................................9
2.3 Payment of Purchase Price........................................9
Article III CLOSING.........................................................10
3.1 Closing Date....................................................10
Article IV TERMINATION.....................................................10
4.1 Termination of Agreement........................................10
4.2 Procedure Upon Termination......................................11
4.3 Effect of Termination...........................................11
Article V REPRESENTATIONS AND WARRANTIES OF DOIL AND DOP
REGARDING THE DARBY COMPANIES...................................11
5.1 Organization and Good Standing..................................11
5.2 Authorization of Agreement......................................12
5.3 Conflicts; Consents of Third Parties............................12
5.4 Capitalization..................................................13
5.5 Subsidiaries....................................................14
5.6 Records.........................................................14
5.7 Intentionally Omitted...........................................14
5.8 Financial Statements............................................15
5.9 No Undisclosed Liabilities......................................15
5.10 Absence of Certain Developments.................................15
5.11 Taxes...........................................................15
5.12 Real Property...................................................18
5.13 Tangible Personal Property......................................18
5.14 Intellectual Property...........................................18
5.15 Material Contracts..............................................19
5.16 Employee Matters................................................20
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5.17 Litigation......................................................22
5.18 Compliance with Laws; Permits...................................23
5.19 Insurance.......................................................23
5.20 Related Party Transactions......................................24
5.21 Financial Advisors..............................................24
5.22 Compliance......................................................24
5.23 Darby Funds.....................................................25
5.24 Termination of Relationships....................................28
5.25 Absence of Certain Payments.....................................28
5.26 Privacy Rules...................................................28
5.27 Patriot Act.....................................................28
Article VI REPRESENTATIONS AND WARRANTIES OF THE SELLERS...................29
6.1 Organization and Good Standing..................................29
6.2 Authorization of Agreement......................................29
6.3 Conflicts; Consents of Third Parties............................29
6.4 Ownership and Transfer of DOIL Shares and DOP Interests.........30
6.5 Litigation......................................................30
6.6 Financial Advisors..............................................30
6.7 Related Party Transactions......................................30
Article VII REPRESENTATIONS AND WARRANTIES OF FRI AND
PURCHASER.......................................................31
7.1 Organization and Good Standing..................................31
7.2 Authorization of Agreement......................................31
7.3 Conflicts; Consents of Third Parties............................31
7.4 Litigation......................................................32
7.5 Investment Intention............................................32
7.6 Financial Advisors..............................................32
Article VIII COVENANTS......................................................32
8.1 Access to Information...........................................32
8.2 Conduct of the Business Pending the Closing.....................33
8.3 Consents........................................................36
8.4 Regulatory Approvals............................................36
8.5 Further Assurances..............................................37
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8.6 Confidentiality.................................................37
8.7 Publicity.......................................................39
8.8 Use of Name.....................................................39
8.9 Employee Matters................................................39
8.10 Director and Officer Indemnification; Insurance.................40
8.11 Waivers, Consents and Agreements Related to Transfers;
Releases and Waivers............................................41
Article IX CONDITIONS TO CLOSING...........................................43
9.1 Conditions Precedent to Obligations of FRI and Purchaser........43
9.2 Conditions Precedent to Obligations of the Sellers..............46
Article X INDEMNIFICATION.................................................47
10.1 Survival of Representations and Warranties......................47
10.2 Indemnification.................................................47
10.3 Indemnification Procedures......................................48
10.4 Limitations on Indemnification..................................50
10.5 Tax Matters.....................................................52
10.6 Tax Treatment of Indemnity Payments.............................57
Article XI MISCELLANEOUS...................................................57
11.1 Payment of Sales, Use or Similar Taxes..........................57
11.2 Expenses........................................................57
11.3 Seller Representative...........................................57
11.4 Submission to Jurisdiction; Consent to Service of Process.......58
11.5 Entire Agreement; Amendments and Waivers........................59
11.6 Governing Law...................................................59
11.7 Notices.........................................................59
11.8 Severability....................................................60
11.9 Binding Effect; Assignment......................................60
11.10 Non-Recourse....................................................61
11.11 Counterparts....................................................61
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SCHEDULES
Schedule 5.3 Conflicts; Consents of Third Parties
Schedule 5.4 Capitalization
Schedule 5.5 Subsidiaries
Schedule 5.9 No Undisclosed Liabilities
Schedule 5.10 Absence of Certain Developments
Schedule 5.11 Taxes
Schedule 5.12 Real Property Leases
Schedule 5.13 Personal Property Leases
Schedule 5.14 Intellectual Property
Schedule 5.15 Material Contracts
Schedule 5.16 Employee Benefit Plans
Schedule 5.17 Litigation
Schedule 5.18 Permits
Schedule 5.19 Insurance
Schedule 5.20 Related Party Transactions
Schedule 5.23 The Darby Funds
Schedule 5.27 Patriot Act
Schedule 6.3 Conflicts; Consents of Third Parties
Schedule 6.6 Financial Advisors of Sellers
Schedule 6.7 Related Party Transactions
Schedule 7.3 No Conflicts
Schedule 7.6 Financial Advisors of FRI and Purchaser
Schedule 8.2 Conduct of the Business Pending the Closing
Schedule 8.8 Use of Name
Schedule 10.2 Materiality Qualifications Not to be Disregarded
EXHIBITS
Exhibit A Advised Darby Funds
Exhibit B Sponsored Darby Funds
Exhibit C Seller Information
Exhibit D Allocation of Purchase Price to Assets (Tax Basis)
Exhibit E Forms of Officer's Certificates
Exhibit F Terms of Offer Letters
Exhibit G Individuals to Deliver Offer Letters, Receive Restricted Stock,
Deliver Non-Compete Agreements and/or Deliver Carried Interest
Letters
Exhibit H Form of Instrument of Assignment and Transfer
Exhibit I Form of Waiver Agreement
Exhibit J Forms of Non-Compete Agreements
Exhibit K Terms of Carried Interest Letters
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EXECUTION COPY
PURCHASE AGREEMENT
PURCHASE AGREEMENT, dated as of August 1, 2003 (this "AGREEMENT"), by and
among Franklin Resources, Inc., a corporation existing under the laws of
Delaware ("FRI"), Darby Holdings, Inc., a corporation existing under the laws of
Delaware ("PURCHASER"), Darby Overseas Investments, Ltd., a corporation existing
under the laws of Delaware ("DOIL"), Darby Overseas Partners, L.P., a limited
partnership existing under the laws of Delaware ("DOP"), the stockholders of
DOIL listed on the signature pages hereto (collectively, the "DOIL SELLERS") and
the limited partners of DOP listed on the signature pages hereto (collectively,
the "DOP SELLERS", and together with the DOIL Sellers, the "SELLERS", and the
Sellers and DOIL and DOP being hereinafter referred to as the "DARBY PARTIES").
W I T N E S S E T H:
WHEREAS, the DOIL Sellers own an aggregate of 1,666.67 shares of the common
stock, $1.00 par value per share (the "DOIL SHARES"), of DOIL, which constitute
all of the issued and outstanding shares of capital stock of DOIL;
WHEREAS, DOIL is the sole general partner of DOP, and the DOP Sellers own
all of the limited partner interests in DOP (other than those owned by
Affiliates of Purchaser) (the "DOP INTERESTS");
WHEREAS, the DOIL Sellers desire to sell to Purchaser, and Purchaser
desires to purchase from the DOIL Sellers, the DOIL Shares for the purchase
price and upon the terms and conditions hereinafter set forth;
WHEREAS, the DOP Sellers desire to sell to Purchaser, and Purchaser desires
to purchase from the DOP Sellers, the DOP Interests for the purchase price and
upon the terms and conditions hereinafter set forth; and
WHEREAS, certain terms used in this Agreement are defined in SECTION 1.1;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements hereinafter contained, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 CERTAIN DEFINITIONS.
(a) For purposes of this Agreement, the following terms shall have the
meanings specified in this SECTION 1.1:
"ADVISERS ACT" means the Investment Advisers Act of 1940, as amended, and
the rules and regulations promulgated thereunder by the SEC.
"ADVISORY AGREEMENT" means, with respect to any Person, each contract,
agreement or arrangement relating to its rendering of investment management or
investment advisory services, including any sub-advisory or similar contract,
agreement or arrangement.
"ADVISED DARBY FUNDS" means the Funds listed on EXHIBIT A hereto.
"AFFILIATE" means, with respect to any Person, any other Person that,
directly or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, such Person, and the term
"control" (including the terms "controlled by" and "under common control with")
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of such Person, whether through
ownership of voting securities, by contract or otherwise.
"AFFILIATED GROUP" means any affiliated group within the meaning of Section
1504 of the Code or any comparable or analogous group under state, local or
foreign Law.
"AIMCMC" means Asian Infrastructure Mezzanine Capital Management Co., Ltd.,
a Cayman Islands corporation.
"BUSINESS DAY" means any day of the year on which national banking
institutions in New York are open to the public for conducting business and are
not required or authorized by Law to close.
"CARRIED INTEREST" means, with respect to a Fund, a Person's right to
share, directly or indirectly, in profits, income, gains or distributions of
such Fund, that is disproportionate to such Person's capital investment,
directly or indirectly, in such Fund.
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"CONTRACT" means any contract, agreement, indenture, note, bond, loan,
instrument, lease, commitment or other arrangement or agreement, whether written
or oral, under which any party thereto by the express terms thereof has an
on-going or continuing Liability or right or entitlement after the date hereof.
"DAI" means Darby Asia Investors, Ltd., a company incorporated in the
British Virgin Islands.
"DAI SHARES" means an aggregate of 800,000 shares, $.01 par value per
share, of DAI.
"DAI-HK" means Darby Asia Investors (HK), Ltd., a Hong Kong limited
liability company.
"DAI-HK SHARE" means that one share of the capital stock of DAI-HK owned by
DOP.
"DARBY COMPANIES" means DOIL and the Subsidiaries.
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"DARBY FUNDS" means the Sponsored Darby Funds and the Advised Darby Funds.
"DARBY INCOME FUNDS" means Darby Emerging Markets Income Fund, L.P., Darby
Emerging Markets Income Fund, Ltd. and Darby Emerging Markets Income Fund
(Master), L.P.
"DOIL SHAREHOLDERS AGREEMENT" means that certain Shareholders Agreement
dated as of February 4, 1994, by and among the DOIL Sellers and DOIL.
"DOP LP AGREEMENT" means that certain limited partnership agreement of DOP,
dated February 9, 1994.
"DOP PARTNER DOCUMENTS" means the DOP LP Agreement and the First Amended
and Restated Take-Along Agreement dated as of December 30, 1994 by and among
DOIL and certain DOP Sellers signatory thereto.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder by the SEC.
"FUND" means a vehicle or other arrangement for collective investment.
"GAAP" means generally accepted accounting principles in the United States
as in effect at the time any applicable financial statements were prepared or
any act requiring the application of GAAP was performed.
"GBA" means the Gramm-Leach-Bliley Act.
"GOVERNMENTAL BODY" means any government or governmental or regulatory body
thereof, or political subdivision thereof, whether federal, state, local or
foreign, or any agency, instrumentality or authority thereof, or any court or
arbitrator (public or private).
"INDEBTEDNESS" of any Person means the indebtedness of such Person,
including without limitation or duplication, (i) the principal of and premium
(if any) in respect of (A) indebtedness of such Person for money borrowed and
(B) indebtedness evidenced by notes, debentures, bonds or other similar
instruments for the payment of which such Person is responsible or liable; (ii)
all obligations of such Person under leases required to be capitalized in
accordance with GAAP; (iii) all obligations of such Person for the reimbursement
of any obligor on any letter of credit, banker's acceptance or similar credit
transaction; (iv) all obligations of the type referred to in clauses (i) through
(iii) of any Persons for the payment of which such Person is responsible or
liable, directly or indirectly, as obligor, guarantor, surety or otherwise,
including guarantees of such obligations; and (v) all obligations of the type
referred to in clauses (i) through (iv) of other Persons secured by any Lien on
any property or asset of such Person (whether or not such obligation is assumed
by such Person).
"INDIVIDUAL SELLERS" means the Sellers other than the Institutional
Sellers.
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"INSTITUTIONAL SELLERS" means Bechtel DOP Enterprises, Inc., Massachusetts
Mutual Life Insurance Company, Lubar Nominees, Wiegers & Co., Shultz 1989 Family
Trust and BEn Direct Investments, LLC.
"INTELLECTUAL PROPERTY" means all intellectual property rights used by the
Darby Companies and the Sponsored Darby Funds arising from or in respect of the
following, whether protected, created or arising under the laws of the United
States or any other jurisdiction: (i) all patents and applications therefor,
including continuations, divisionals, continuations-in-part, or reissues of
patent applications and patents issuing thereon (collectively, "PATENTS"), (ii)
all trademarks, service marks, trade names, service names, brand names, logos,
Internet domain names and corporate names and general intangibles of a like
nature, together with the goodwill associated with any of the foregoing, and all
applications, registrations and renewals thereof (collectively, "Marks"), (iii)
copyrights and registrations and applications therefor, and works of authorship
(collectively, "COPYRIGHTS"), (iv) proprietary or confidential discoveries,
concepts, ideas, research and development, know-how, formulae, inventions,
compositions, technical data, procedures, designs, drawings, databases, and
other proprietary and confidential information, including investor lists,
performance data, trading strategies and business and marketing plans and
proposals of the Darby Companies and the Sponsored Darby Funds, in each case
excluding any rights in respect of any of the foregoing that comprise or are
protected by Copyrights or Patents (collectively, "TRADE SECRETS"), and (v) all
Software of the Darby Companies and the Sponsored Darby Funds.
"INTELLECTUAL PROPERTY LICENSES" means (i) any grant to a third Person by
any Darby Company or Sponsored Darby Fund of any right to use any of the
Intellectual Property, and (ii) any grant to any Darby Company or Sponsored
Darby Fund of a right to use a third Person's intellectual property rights which
is necessary for the use of any Intellectual Property.
"INVESTMENT COMPANY" has the meaning set forth in the Investment Company
Act.
"INVESTMENT COMPANY ACT" means the Investment Company Act of 1940, as
amended, and the rules and regulations promulgated thereunder by the SEC.
"IRS" means the Internal Revenue Service.
"KNOWLEDGE" means, with respect to (i) the Darby Companies, the actual
knowledge after due inquiry of Nicholas F. Brady, Richard H. Frank, Scott
Beatty, Clark Nielsen, Nelson Oliveira, Meredith B. Oliver, Julio Lastres, Peter
Jones, Alejandro Schwedhelm, Robert Graffam, Pedro Batalla, Simon Sham or John
Yonemoto, (ii) any individual, the actual knowledge after due inquiry of such
individual or (iii) any other Person, the actual knowledge after due inquiry of
the officers and directors of such Person.
"LAW" means any foreign, federal, state or local law (including common
law), statute, code, ordinance, rule, regulation or other requirement of a
Governmental Body.
"LEGAL PROCEEDING" means any judicial, administrative or arbitral actions,
suits, proceedings (public or private) or claims or proceedings by or before a
Governmental Body.
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"LIABILITY" means any Indebtedness, loss, damage or liability (whether
direct or indirect, asserted or unasserted, absolute or contingent, accrued or
unaccrued, liquidated or unliquidated, or due or to become due, and whether in
contract, tort, strict liability or otherwise), including all costs and expenses
relating thereto.
"LIEN" means a ny lien, pledge, mortgage, deed of trust, security interest,
claim, lease, charge, option, right of first refusal, easement, servitude,
transfer restriction under any shareholder or similar agreement, or encumbrance
of any nature whatsoever.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (i) the
business, assets, properties, results of operations or financial condition of
the Darby Companies, taken as a whole, or (ii) the ability of any Darby Party to
consummate the transactions contemplated by this Agreement; PROVIDED, HOWEVER,
that a Material Adverse Effect shall not include any effect primarily resulting
from general economic conditions; exchange rate fluctuations; changes in
prevailing interest rates; political instability; acts of war or terrorism; any
adverse developments in the lending, mezzanine capital or private equity markets
in the Latin American or Asia/Pacific region generally; and the announcement or
implementation of any of the transactions contemplated by this Agreement (except
in each case for effects which have a disproportionate adverse effect on the
Darby Companies as compared to other privately-owned emerging markets private
investment fund managers operating primarily in the same markets as the Darby
Companies).
"NASD" means the National Association of Securities Dealers, Inc. or any
one or more of its subsidiaries, as the context may require, and any successor
to any of them.
"ORDER" means any order, injunction, judgment, decree, ruling, writ,
assessment or arbitration award.
"ORDINARY COURSE OF BUSINESS" means with respect to any Person the ordinary
and usual course of day-to-day operations of the business of such Person through
the date hereof.
"PERMITS" means any approvals, authorizations, consents, licenses, permits
or certificates.
"PERMITTED EXCEPTIONS" means (i) all defects, exceptions, restrictions,
easements, rights of way and encumbrances disclosed in policies of title
insurance which have been made available to Purchaser; (ii) statutory Liens for
current taxes, assessments or other governmental charges not yet delinquent or
the amount or validity of which is being contested in good faith by appropriate
proceedings, provided an appropriate reserve is established therefor; (iii)
mechanics', carriers', workers', repairers' and similar Liens arising or
incurred in the Ordinary Course of Business that are not material to the
business, operations or financial condition of the Darby Company owning the
property subject thereto; (iv) zoning, entitlement and other land use and
environmental regulations by any Governmental Body; (v) statutory landlords'
Liens; and (vi) such other imperfections in title, easements, restrictions and
encumbrances which do not materially detract from the value of the Darby Company
owning the property subject thereto or materially interfere with its business or
operations.
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"PERSON" means any individual, corporation, partnership, limited liability
company, limited duration company, firm, joint venture, association, joint-stock
company, trust, unincorporated organization, Governmental Body or other entity.
"PORTFOLIO COMPANY" means any Person of which any outstanding voting
securities or other voting equity interests are owned or controlled, directly or
indirectly, by a Darby Fund.
"SEC" means the Securities and Exchange Commission.
"SECURITIES LAWS" means the Securities Act, the Exchange Act, the
Investment Company Act, the Advisers Act, the CEA, the securities or "blue sky"
laws of any state or territory of the United States and the rules and
regulations of the NASD and the comparable laws, rules and regulations in effect
in any other country.
"SOFTWARE" means any and all (i) computer programs, including any and all
software implementations of algorithms, models and methodologies, whether in
source code or object code, (ii) databases and compilations, including any and
all data and collections of data, whether machine readable or otherwise, (iii)
descriptions, flow-charts and other work product used to design, plan, organize
and develop any of the foregoing, screens, user interfaces, report formats,
firmware, development tools, templates, menus, buttons and icons, and (iv) all
documentation including user manuals and other training documentation related to
any of the foregoing.
"SPONSORED DARBY FUNDS" means the Funds listed on EXHIBIT B hereto.
"SUBSIDIARY" means (i) any Person of which a majority of the outstanding
voting securities or other voting equity interests are owned or controlled,
directly or indirectly, by DOIL, including DOP, but not including the Darby
Funds or the Portfolio Companies, and (ii) Darby-BBVA Latin America Investors,
Ltd., a Cayman Islands corporation.
"TAX RETURN" means all returns, declarations, reports, estimates,
information returns and statements required to be filed in respect of any Taxes.
"TAXES" means (i) all federal, state, local or foreign taxes, charges,
fees, imposts, levies or other assessments, including, without limitation, all
net income, gross receipts, capital, sales, use, ad valorem, value added,
transfer, franchise, profits, inventory, capital stock, license, withholding,
payroll, employment, social security, unemployment, excise, severance, stamp,
occupation, property and estimated taxes, customs duties, fees, assessments and
charges of any kind whatsoever, (ii) all interest, penalties, fines, additions
to tax or additional amounts imposed by any taxing authority in connection with
any item described in clause (i), and (iii) any liability in respect of any
items described in clauses (i) and/or (ii) payable by reason of contract,
assumption, transferee liability, operation of Law, Treasury Regulation section
1.1502-6(a) (or any predecessor or successor thereof of any analogous or similar
provision under Law) or otherwise.
"TAXING AUTHORITY" means the IRS and any other Governmental Body
responsible for the administration of any Tax.
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(b) TERMS DEFINED ELSEWHERE IN THIS AGREEMENT. For purposes of this
Agreement, the following terms have meanings set forth in the sections
indicated:
TERM SECTION
- ---- -------
Agreement Preamble
Approval Items 10.5(b)(i)
Balance Sheet 5.8(a)
Balance Sheet Date 5.8(a)
Basket 10.4(c)
CEA 5.22(e)
CFTC 5.22(e)
Claim 10.3(a)
Closing 3.1
Closing Date 3.1
Confidential Information 8.6(a)
Copyrights 1.1(a) (in Intellectual Property definition)
Darby Employees 8.9
Darby Fund Agreements 5.23(b)
Darby Marks 8.8
Darby Parties Preamble
Disputes 11.4
DOIL Preamble
DOIL Balance Sheet 5.8(a)
DOIL Common Stock 5.4(a)
DOIL Documents 5.2(a)
DOIL Purchase Price 2.2(a)
DOIL Sellers Preamble
DOIL Shares Recitals
DOP Preamble
DOP Documents 5.2(b)
DOP Interests Recitals
DOP Purchase Price 2.2(b)
DOP Sellers Preamble
Employee Arrangements 5.16(a)
ERISA 5.16(a)
ERISA Affiliate 5.16(a)
ERISA Plans 8.9
Expenses 10.2(a)(iv)
Financial Statements 5.8(a)
FIRPTA Affidavit 9.1(h)
FRI Preamble
Losses 10.2(a)(i)
Marks 1.1(a) (in Intellectual Property definition)
Material Contracts 5.15(a)
New York Courts 11.4
NFA 5.22(e)
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Notified Party 10.5(d)(i)
Patents 1.1(a) (in Intellectual Property definition)
Patriot Act 5.27
Personal Property Leases 5.13
Privacy Rules 5.26
Pru Sellers 5.23(u)
Purchaser Preamble
Purchaser Documents 7.2
Purchaser Indemnified Parties 10.2(a)
Real Property Lease 5.12
Securities Act 7.5
Seller Documents 6.2
Seller Indemnified Parties 10.2(b)
Seller Representative 11.3
Sellers Preamble
Straddle Period 10.5(b)(v)
Survival Period 10.1
Take Along Agreement 8.11(b)(v)
Tax Claim 10.5(d)(i)
Trade Secrets 1.1(a) (in Intellectual Property definition)
(c) OTHER DEFINITIONAL AND INTERPRETIVE MATTERS. Unless otherwise expressly
provided, for purposes of this Agreement, the following rules of interpretation
shall apply:
CALCULATION OF TIME PERIOD. When calculating the period of time before
which, within which or following which any act is to be done or step taken
pursuant to this Agreement, the date that is the reference date in calculating
such period shall be excluded. If the last day of such period is a non-Business
Day, the period in question shall end on the next succeeding Business Day.
DOLLARS. Any reference in this Agreement to $ shall mean U.S. dollars.
EXHIBITS/SCHEDULES. The Exhibits and Schedules to this Agreement are hereby
incorporated and made a part hereof and are an integral part of this Agreement.
Any capitalized terms used in any Schedule or Exhibit but not otherwise defined
therein shall be defined as set forth in this Agreement.
GENDER AND NUMBER. Any reference in this Agreement to gender shall include
all genders, and words imparting the singular number only shall include the
plural and vice versa.
HEADINGS. The provision of a Table of Contents, the division of this
Agreement into Articles, Sections and other subdivisions and the insertion of
headings are for convenience of reference only and shall not affect or be
utilized in construing or interpreting this Agreement. All references in this
Agreement to any "Section" are to the corresponding Section of this Agreement
unless otherwise specified.
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HEREIN. The words such as "herein," "hereinafter," "hereof," and
"hereunder" refer to this Agreement as a whole and not merely to a subdivision
in which such words appear unless the context otherwise requires.
INCLUDING. The word "including" or any variation thereof means "including,
without limitation" and shall not be construed to limit any general statement
that it follows to the specific or similar items or matters immediately
following it.
(d) AGREEMENT DRAFTED JOINTLY. The parties hereto have participated jointly
in the negotiation and drafting of this Agreement and, in the event an ambiguity
or question of intent or interpretation arises, this Agreement shall be
construed as jointly drafted by the parties hereto and no presumption or burden
of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provision of this Agreement.
ARTICLE II
SALE AND PURCHASE OF SHARES AND INTERESTS; CONSIDERATION
2.1 SALE AND PURCHASE OF SHARES AND INTERESTS.
(a) Upon the terms and subject to the conditions contained herein, on the
Closing Date, each DOIL Seller agrees to sell to Purchaser, and Purchaser agrees
to purchase, and FRI shall cause Purchaser to purchase, from each DOIL Seller,
the DOIL Shares owned by such DOIL Seller set forth opposite such DOIL Seller's
name on EXHIBIT C hereto.
(b) Upon the terms and subject to the conditions contained herein, on the
Closing Date, each DOP Seller agrees to sell to Purchaser, and Purchaser agrees
to purchase, and FRI shall cause Purchaser to purchase, from each DOP Seller,
the DOP Interests owned by such DOP Seller set forth opposite such DOP Seller's
name on EXHIBIT C hereto.
2.2 CONSIDERATION.
(a) The aggregate consideration for the DOIL Shares shall be an amount in
cash equal to $762,751 (the "DOIL PURCHASE PRICE").
(b) The aggregate consideration for the DOP Interests shall be an amount in
cash equal to $75,115,821 (the "DOP PURCHASE PRICE").
2.3 PAYMENT OF PURCHASE PRICE.
(a) On the Closing Date, Purchaser shall pay, and FRI shall cause Purchaser
to pay, the DOIL Purchase Price to the DOIL Sellers, as set forth on EXHIBIT C.
(b) On the Closing Date, Purchaser shall pay, and FRI shall cause Purchaser
to pay, the DOP Purchase Price to the DOP Sellers, as set forth on EXHIBIT C.
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(c) Purchaser shall pay the DOIL Purchase Price and the DOP Purchase Price
by wire transfers of immediately available funds into such account or accounts
specified by DOIL in writing at least two Business Days prior to Closing.
ARTICLE III
CLOSING
3.1 CLOSING DATE. Subject to the satisfaction of the conditions set forth
in SECTIONS 9.1 and 9.2 hereof (or the waiver thereof by the party entitled to
waive that condition), the closing of the sale and purchase of the DOIL Shares
and the DOP Interests provided for in SECTION 2.1 hereof (the "CLOSING") shall
take place at the offices of Weil, Gotshal & Manges LLP located at 767 Fifth
Avenue, New York, New York 10153 (or at such other place as the parties may
designate in writing) at 10:00 a.m. (New York City time) on October 10, 2003,
provided that on or prior to such date all of the conditions set forth in
ARTICLE IX (other than conditions that by their nature are to be satisfied at
the Closing, but subject to the satisfaction or waiver of such conditions) shall
have been satisfied or waived. Notwithstanding the preceding sentence, FRI shall
have the right, upon at least three Business Days prior written notice to DOIL,
to establish a closing date prior to October 10, 2003, provided that on or prior
to such closing date all of the conditions set forth in ARTICLE IX (other than
conditions that by their nature are to be satisfied at the Closing, but subject
to the satisfaction or waiver of such conditions) shall have been satisfied or
waived. The date on which the Closing shall be held is referred to in this
Agreement as the "CLOSING DATE".
ARTICLE IV
TERMINATION
4.1 TERMINATION OF AGREEMENT. This Agreement may be terminated prior to the
Closing as follows:
(a) At the election of DOIL or Purchaser on or after October 10, 2003
(unless such date is extended by mutual agreement of DOIL and Purchaser), if the
Closing shall not have occurred by the close of business on such date, provided
that (i) DOIL may not so terminate this Agreement if any Darby Party is in
material default of any of its obligations hereunder and (ii) Purchaser may not
so terminate this Agreement if either Purchaser or FRI is in material default of
any of its obligations hereunder;
(b) by mutual written consent of DOIL and Purchaser;
(c) by DOIL or Purchaser if there shall be in effect a final nonappealable
Order of a Governmental Body of competent jurisdiction restraining, enjoining or
otherwise prohibiting the consummation of the transactions contemplated hereby;
it being agreed that the parties hereto shall promptly appeal any adverse
determination which is not nonappealable (and pursue such appeal with reasonable
diligence);
(d) by Purchaser if there shall have been a material breach of any
representation, warranty, covenant or agreement of any Darby Party set forth in
this Agreement,
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which breach would give rise to a failure of a condition set forth in SECTION
9.1(a), 9.1(b), 9.1(c) or 9.1(d) and is incapable of being cured or, if capable
of being cured, shall not have been cured within twenty (20) Business Days
following receipt by DOIL of written notice of such breach from Purchaser; or
(e) by DOIL if there shall have been a material breach of any
representation, warranty, covenant or agreement of Purchaser or FRI set forth in
this Agreement, which breach would give rise to a failure of a condition set
forth in SECTION 9.2(a) or 9.2(b) and is incapable of being cured or, if capable
of being cured, shall not have been cured within twenty (20) Business Days
following receipt by Purchaser of written notice of such breach from DOIL.
4.2 PROCEDURE UPON TERMINATION. In the event of a termination by Purchaser
or DOIL, or both, pursuant to SECTION 4.1 hereof, written notice thereof shall
forthwith be given to the other, and this Agreement shall terminate, and the
purchase of the DOIL Shares and the DOP Interests hereunder shall be abandoned,
without further action by Purchaser or FRI or any Darby Party.
4.3 EFFECT OF TERMINATION. If this Agreement is validly terminated as
provided herein, then each of the parties hereto shall be relieved of its duties
and obligations arising under this Agreement after the date of such termination
and such termination shall be without liability to any party hereto; PROVIDED,
HOWEVER, that the provisions of SECTIONS 8.6 and 8.7 and ARTICLE XI hereof shall
survive any such termination and shall be enforceable hereunder; PROVIDED,
FURTHER, that nothing in this SECTION 4.3 shall relieve any party hereto of any
liability for a breach of this Agreement prior to the effective date of
termination.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF DOIL AND DOP REGARDING THE
DARBY COMPANIES
Each of DOIL and DOP hereby represents and warrants jointly and severally
to Purchaser and FRI that:
5.1 ORGANIZATION AND GOOD STANDING.
(a) DOIL is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has all requisite corporate
power and authority to own, lease and operate its properties and to carry on its
business as now conducted. DOIL is duly qualified or authorized to do business
as a foreign corporation and is in good standing under the laws of each
jurisdiction in which the conduct of its business or the ownership of its
properties requires such qualification or authorization.
(b) DOP is a limited partnership duly formed, having a legal existence and
in good standing under the laws of the State of Delaware and has all requisite
limited partnership power and authority to own, lease and operate its properties
and to carry on its business as now conducted. DOP is duly qualified or
authorized to do business as a foreign limited partnership and is in good
standing under the laws of each jurisdiction in which the conduct of its
business or the ownership of its properties requires such qualification or
authorization.
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5.2 AUTHORIZATION OF AGREEMENT.
(a) DOIL has all requisite corporate power and authority to execute and
deliver this Agreement and each other agreement, document, instrument or
certificate, if any, contemplated by this Agreement to be executed by DOIL in
connection with the consummation of the transactions contemplated by this
Agreement (together with this Agreement, the "DOIL DOCUMENTS"), and to
consummate the transactions contemplated hereby and thereby to be consummated by
DOIL. The execution and delivery by DOIL of this Agreement and each of the other
DOIL Documents and the consummation of the transactions contemplated hereby and
thereby to be consummated by DOIL have been duly authorized by all required
corporate action on the part of DOIL. This Agreement has been, and each of the
other DOIL Documents will be at or prior to the Closing, duly and validly
executed and delivered by DOIL and (assuming the due authorization, execution
and delivery by the other parties hereto and thereto) this Agreement
constitutes, and each of the other DOIL Documents when so executed and delivered
will constitute, legal, valid and binding obligations of DOIL, enforceable
against DOIL in accordance with their respective terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally, and subject, as to enforceability, to
general principles of equity, including principles of commercial reasonableness,
good faith and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity).
(b) DOP has all requisite partnership power and authority to execute and
deliver this Agreement and each other agreement, document, instrument or
certificate, if any, contemplated by this Agreement to be executed by DOP in
connection with the consummation of the transactions contemplated by this
Agreement (together with this Agreement, the "DOP DOCUMENTS"), and to consummate
the transactions contemplated hereby and thereby to be consummated by DOP. The
execution and delivery by DOP of this Agreement and each of the other DOP
Documents and the consummation of the transactions contemplated hereby and
thereby to be consummated by DOP have been duly authorized by all required
partnership action on the part of DOP. This Agreement has been, and each of the
other DOP Documents will be at or prior to the Closing, duly and validly
executed and delivered by DOP and (assuming the due authorization, execution and
delivery by the other parties hereto and thereto) this Agreement constitutes,
and each of the other DOP Documents when so executed and delivered will
constitute, legal, valid and binding obligations of DOP, enforceable against DOP
in accordance with their respective terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally, and subject, as to enforceability, to general
principles of equity, including principles of commercial reasonableness, good
faith and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity).
5.3 CONFLICTS; CONSENTS OF THIRD PARTIES.
(a) None of the execution and delivery by DOIL of this Agreement and the
other DOIL Documents and by DOP of this Agreement and the other DOP Documents,
the consummation by DOIL or DOP of the transactions contemplated to be
consummated by either of them hereby or thereby or compliance by DOIL or DOP
with any of the provisions hereof or thereof applicable to either of them will
(i) violate the certificate of incorporation or by-laws or
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comparable organizational documents of any Darby Company or Sponsored Darby Fund
or (ii) except as set forth on SCHEDULE 5.3(a), and assuming that the consents,
waivers, approvals, authorizations, declarations, filings and notifications
referred to in SECTIONS 5.3(b) and 6.3(b) are duly obtained and made, conflict
with, or result in any violation of or default (with or without notice or lapse
of time, or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to loss of a material benefit under, or give
rise to any obligation of any Darby Company to make any payment under, or to the
increased, additional, accelerated or guaranteed rights or entitlements of any
Person under, or result in the creation of any Liens upon any of the properties
or assets of any Darby Company under, (w) any Contract or Darby Fund Agreement
to which any Darby Company or Sponsored Darby Fund is a party or by which any of
the properties or assets of any Darby Company or Sponsored Darby Fund are bound;
(x) any Permit of any Darby Company or Sponsored Darby Fund; (y) any Order of
any Governmental Body applicable to any Darby Company or Sponsored Darby Fund or
any of the properties or assets of any Darby Company or Sponsored Darby Fund as
of the date hereof; or (z) any Law applicable to any Darby Company or Sponsored
Darby Fund.
(b) Except as set forth on SCHEDULE 5.3(b), no consent, waiver, approval,
license, permit, ruling or authorization of, or declaration or filing with, or
notification to, any Person or Governmental Body is required on the part of any
Darby Company in connection with (i) the execution and delivery by DOIL and DOP
of this Agreement and the other DOIL Documents and DOP Documents, the compliance
by DOIL and DOP with any of the provisions hereof or thereof, or the
consummation of the transactions contemplated hereby or thereby, or (ii) the
continuing validity and effectiveness immediately following the Closing of any
Permit or Contract of any Darby Company, except for approval of the Cayman
Islands Monetary Authority.
5.4 CAPITALIZATION.
(a) The authorized capital stock of DOIL consists of 10,000 shares of
common stock, $1.00 par value per share (the "DOIL COMMON STOCK"). As of the
date hereof, there are 1,666.67 shares of DOIL Common Stock issued and
outstanding and no shares of DOIL Common Stock are held by DOIL as treasury
stock. All of the issued and outstanding shares of DOIL Common Stock were duly
authorized for issuance and are validly issued, fully paid and non-assessable.
Except for the DOP Interests, interests of Affiliates of Purchaser in DOP and
DOIL's interest in DOP as its sole general partner, and except as set forth on
SCHEDULE 5.4(a)(i), there are no equity interests in DOP, including without
limitation any rights to profits, income, gains, distributions, capital, equity
or similar rights or interests, or any rights to any payments measured in whole
or in part by any of the foregoing. All of the DOP Interests were duly
authorized for issuance and are validly issued.
(b) Except as set forth on SCHEDULE 5.4(b)(i), there is no existing option,
warrant, call, right or Contract of any character requiring, and there are no
securities of DOIL or DOP outstanding which upon conversion or exchange would
require, the issuance, sale or transfer of any additional shares of capital
stock or other equity securities of or interests in DOIL or DOP or other
securities convertible into, exchangeable for or evidencing the right to
subscribe for or purchase shares of capital stock or other equity securities of
or interests in DOIL or DOP. Except as set forth on SCHEDULE 5.4(b)(ii), none of
the Darby Companies is a party to any voting
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trust or other Contract with respect to the voting, redemption, sale, transfer
or other disposition of the capital stock of DOIL or the partner interests of
DOP.
5.5 SUBSIDIARIES. SCHEDULE 5.5(a) sets forth the name of each Subsidiary
(other than DOP), and, with respect to each such Subsidiary, the jurisdiction in
which it is incorporated or organized, the jurisdictions, if any, in which it is
qualified to do business, the number of shares of its authorized capital stock,
the names of all stockholders or other equity owners and the number of shares of
stock owned by each stockholder or the amount or percentage, if applicable, of
equity owned by each equity owner. Each such Subsidiary is a duly organized and
validly existing corporation or other entity in good standing under the laws of
the jurisdiction of its incorporation or organization and is duly qualified or
authorized to do business as a foreign corporation or entity and is in good
standing under the laws of each jurisdiction in which the conduct of its
business or the ownership of its properties requires such qualification or
authorization, except where the failure to be qualified or authorized to do
business as a foreign corporation would not constitute a Material Adverse
Effect. Each such Subsidiary has all requisite corporate or entity power and
authority to own its properties and carry on its business as presently
conducted. No shares of capital stock are held by any such Subsidiary as
treasury stock. The outstanding shares of capital stock or equity interests of
each such Subsidiary are validly issued, fully paid and non-assessable, and all
such shares or other equity interests represented as being owned by any Darby
Company are owned by it free and clear of any and all Liens, except as set forth
in SCHEDULE 5.5(b) and in the respective organizational documents of such
Subsidiaries and in the Darby Fund Agreements and subject to applicable
Securities Laws. There is no existing option, warrant, call, right or Contract
to which any such Subsidiary is a party requiring, and there are no convertible
securities of any such Subsidiary outstanding which upon conversion would
require, such Subsidiary to issue any additional shares of capital stock or
other equity interests of any such Subsidiary or other securities convertible
into shares of capital stock or other equity interests of any such Subsidiary.
5.6 RECORDS.
(a) DOP and DOIL have delivered or made available to Purchaser true,
correct and complete copies of the certificates of incorporation (each certified
by the Secretary of State or other appropriate official of the applicable
jurisdiction of organization) and by-laws or comparable organizational documents
of each Darby Company and each Sponsored Darby Fund.
(b) The minute books of each Darby Company previously made available to
Purchaser contain, in all material respects, true and correct records of all
meetings and accurately reflect all other corporate action of the stockholders
(or other equity holders) and boards of directors (or analogous bodies)
(including investment and other committees and advisory boards thereof) of the
Darby Companies. The stock certificate books and stock transfer ledgers (or
comparable record books) of the Darby Companies previously made available to
Purchaser are true, correct and complete. All stock transfer taxes levied or
payable with respect to all transfers of shares of the Darby Companies and the
Sponsored Darby Funds prior to the date hereof have been paid and appropriate
transfer tax stamps affixed.
5.7 INTENTIONALLY OMITTED.
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5.8 FINANCIAL STATEMENTS.
(a) DOP and DOIL have delivered to Purchaser copies of (i) the audited
consolidated balance sheets of DOP and the audited balance sheets of DOIL as at
December 31, 2002, 2001 and 2000 and the related audited consolidated statements
of income and of cash flows of DOP and the related audited statements of income
and cash flow of DOIL for the years then ended and (ii) the unaudited
consolidated balance sheet of DOP and the unaudited balance sheet of DOIL as at
June 30, 2003 and the related unaudited consolidated statements of income and
cash flows of DOP and DOIL for the six month period then ended (such audited and
unaudited statements, including the related notes and schedules thereto, are
referred to herein as the "FINANCIAL STATEMENTS"). Each of the Financial
Statements has been prepared in accordance with GAAP consistently applied by DOP
and DOIL throughout the periods presented and presents fairly in all material
respects the financial position, results of operations and cash flows of DOP on
a consolidated basis and DOIL as at the dates and for the periods indicated.
For the purposes hereof, the audited consolidated balance sheet of DOP as
at December 31, 2002 is referred to as the "BALANCE SHEET" and the audited
balance sheet of DOIL as of December 31, 2002, is referred to as the "DOIL
BALANCE SHEET" and December 31, 2002, is referred to as the "BALANCE SHEET
DATE".
(b) The Darby Companies make and keep books, records and accounts which, in
reasonable detail, accurately and fairly reflect the transactions and
dispositions of their respective assets. The Darby Companies maintain systems of
internal accounting controls sufficient to provide reasonable assurances that:
(i) transactions are executed in accordance with management's general or
specific authorization; and (ii) transactions are recorded as necessary to
permit the preparation of financial statements in conformity with GAAP.
5.9 NO UNDISCLOSED LIABILITIES. Except as set forth on SCHEDULE 5.9, no
Darby Company has any Liabilities of any kind other than those (i) fully
reflected in, reserved against or otherwise described in the Balance Sheet or
the DOIL Balance Sheet or the notes thereto or (ii) not material to the Darby
Companies or incurred in the Ordinary Course of Business.
5.10 ABSENCE OF CERTAIN DEVELOPMENTS. Except as expressly contemplated by
this Agreement or as set forth on SCHEDULE 5.10, since the Balance Sheet Date
(i) the Darby Companies have conducted their respective businesses only in the
Ordinary Course of Business and (ii) there has not been any event, change,
occurrence or circumstance that has had or could reasonably be expected to have
a Material Adverse Effect. Except as set forth in SCHEDULE 5.10, since the
Balance Sheet Date, none of the Darby Companies has taken any action, that if
taken after the date of this Agreement, would have constituted a breach of
SECTION 8.2.
5.11 TAXES.
(a) All material Tax Returns required to be filed by or on behalf of any
Darby Company or any Affiliated Group of which any Darby Company is or was a
member have been duly and timely filed with the appropriate Taxing Authority in
all jurisdictions in which such Tax Returns are required to be filed (after
giving effect to any valid extensions of time in which to make such filings),
and all such Tax Returns are true, complete and correct in all material
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respects. All material Taxes payable by or on behalf of any Darby Company or any
Affiliated Group of which any Darby Company is or was a member have been fully
and timely paid. With respect to any period for which material Tax Returns have
not yet been filed or for which Taxes are not yet due or owing, DOIL and/or DOP
has established adequate reserves for the payment of such Taxes in the Financial
Statements for the year ended December 31, 2002, and the six-month period ended
June 30, 2003. All material required estimated Tax payments have been fully and
timely made by or on behalf of each Darby Company.
(b) Each Darby Company has complied in all material respects with all
applicable Laws relating to the payment and withholding of material Taxes and
has duly and timely withheld and paid over to the appropriate Taxing Authority
all material amounts required to be so withheld and paid under all applicable
Laws.
(c) Except with respect to all Tax Returns of AIMCMC and DAI-HK for tax
periods ended on or before March 1, 2002, DOP and DOIL have made available to
Purchaser complete copies of (i) all federal, state, local and foreign income or
franchise Tax Returns of each Darby Company relating to all taxable periods
ended after December 31, 1999, and (ii) any audit report issued within the last
three years relating to any Taxes due from or with respect to any Darby Company.
Except as set forth on SCHEDULE 5.11(c), all income and franchise Tax Returns
filed by or on behalf of any Darby Company have been examined by the relevant
Taxing Authority or the statute of limitations with respect to such Tax Returns
has expired.
(d) No written or otherwise binding claim has been made by a Taxing
Authority in a jurisdiction where any Darby Company does not file Tax Returns
such that it is or may be subject to taxation by that jurisdiction.
(e) All deficiencies asserted or assessments made in writing as a result of
any examinations by any Taxing Authority of the Tax Returns of, or including,
any Darby Company have been fully paid, and there are no other audits or
investigations by any Taxing Authority for which any Darby Company has been
notified in writing, in progress, nor has any Seller or Darby Company received
any written notice from any Taxing Authority that it intends to conduct such an
audit or investigation. To the Knowledge of the Darby Companies, no issue has
been raised in writing by a Taxing Authority in any prior examination of any
Darby Company which, by application of the same or similar principles, could
reasonably be expected to result in a proposed deficiency for any subsequent
taxable period.
(f) Except as set forth on SCHEDULE 5.11(f), no Darby Company nor any other
Person on their behalf has (i) filed a consent pursuant to Section 341(f) of the
Code or agreed to have Section 341(f)(2) of the Code apply to any disposition of
a subsection (f) asset (as such term is defined in Section 341(f)(4) of the
Code) owned by any Darby Company, (ii) agreed to, nor are they required to, make
any adjustments pursuant to Section 481(a) of the Code or any similar provision
of Law or has any knowledge that any Taxing Authority has proposed any such
adjustment, or has any application pending with any Taxing Authority requesting
permission for any changes in accounting methods that relate to any Darby
Company, (iii) executed or entered into a closing agreement pursuant to Section
7121 of the Code or any similar provision of Law with respect to any Darby
Company, (iv) requested any extension of time within which to file any Tax
Return, which Tax Return has since not been filed, (v) granted any extension for
the
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assessment or collection of Taxes, which Taxes have not since been paid, or (vi)
granted to any Person any power of attorney that is currently in force with
respect to any Tax matter.
(g) Except with respect to property used outside the United States, no
property owned by any Darby Company is (i) property required to be treated as
being owned by another Person pursuant to the provisions of Section 168(f)(8) of
the Internal Revenue Code of 1954, as amended and in effect immediately prior to
the enactment of the Tax Reform Act of 1986, (ii) "tax-exempt use property"
within the meaning of Section 168(h)(1) of the Code, (iii) "tax-exempt bond
financed property" within the meaning of Section 168(g) of the Code, (iv)
"limited use property" within the meaning of Rev. Proc. 2001-28, 2001-1 C.B.
1156, (v) subject to Section 168(g)(1)(A) of the Code, or (vi) subject to any
provision of state, local or foreign Law comparable to any of the preceding
provisions.
(h) Except as set forth on SCHEDULE 5.11(h), no Seller is a foreign person
within the meaning of Section 1445 of the Code.
(i) No Darby Company is a party to any tax sharing, allocation, indemnity
or similar agreement or arrangement (whether or not written) pursuant to which
it will have any obligation to make any Tax payments after the Closing except
with respect to payments required under a partnership agreement (or limited
liability company operating agreement or other similar agreement) as a
distribution to a partner (or member) in respect of Taxes of such partner (or
member).
(j) There is no contract, agreement, plan or arrangement covering any
Person that, individually or collectively, could give rise to the payment of any
amount by reason of the transactions contemplated by this Agreement (whether
alone or in combination with any other event) that would not be deductible by
Purchaser or any Darby Company by reason of Section 280G of the Code.
(k) Except as set forth on SCHEDULE 5.11(k), no Darby Company is subject to
any private letter ruling of the IRS or comparable rulings of any Taxing
Authority.
(l) No Darby Company has constituted either a "distributing corporation" or
a "controlled corporation" (within the meaning of Section 355(a)(1)(A) of the
Code) in a distribution of stock qualifying for tax-free treatment under Section
355 of the Code (A) in the two (2) years prior to the date of this Agreement or
(B) in a distribution which could otherwise constitute part of a "plan" or
"series of related transactions" (within the meaning of Section 355(e) of the
Code) in conjunction with the transactions contemplated by this Agreement.
(m) No Darby Company has (i) engaged in any "intercompany transactions" in
respect of which gain was and continues to be deferred pursuant to Treasury
Regulations Section 1.1502-13 or any analogous or similar provision of Law, or
(ii) has any "excess loss accounts" in respect of the stock of any Subsidiary
pursuant to Treasury Regulations Section 1.1502-19, or any analogous or similar
provision of Law.
(n) To the Knowledge of the Darby Companies, there is no taxable income of
any Darby Company that will be required under applicable Tax Law to be reported
by Purchaser
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or any of its Affiliates for a taxable period beginning after the Closing Date
which taxable income was realized (and reflects economic income) arising prior
to the Closing Date.
(o) SCHEDULE 5.11(o) lists each jurisdiction in which, to the Knowledge of
the Darby Companies, any Darby Company has, or has ever had, a permanent
establishment (other than the United States), or has engaged in a trade or
business in any country (other than the United States) that subjected it to tax
in such country.
(p) SCHEDULE 5.11(p) lists each Subsidiary and each Sponsored Darby Fund
that is treated for federal income tax purposes as a partnership. DOP and each
other Subsidiary and each Sponsored Darby Fund that is treated as a partnership
for federal income tax purposes either have an election in effect under Section
754 of the Code or such election may be procured, and be effective, for the sale
of the DOP Interests pursuant hereto.
(q) Neither DOP nor any other Subsidiary that is treated as a partnership
for federal income tax purposes owns any property that is subject to Section
704(c) of the Code, excluding for this purpose property that has been revalued
pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(f).
(r) DAI-HK does not have any accumulated earnings and profits as determined
under Section 1248 of the Code.
(s) DAI-HK has not generated material amounts of foreign base company
income under Section 954 of the Code and has no investments in United States
property within the meaning of Section 956 of the Code.
5.12 REAL PROPERTY. The Darby Companies do not own any real property or
interests in real property in fee. SCHEDULE 5.12 sets forth a complete list of
all real property and interests in real property leased by the Darby Companies
(individually, a "REAL PROPERTY LEASE" and collectively, the "REAL PROPERTY
LEASES"). The Real Property Leases constitute all interests in real property
currently used or currently held for use in connection with the business of the
Darby Companies and which are necessary for the continued operation of the
business of the Darby Companies as the business is currently conducted.
5.13 TANGIBLE PERSONAL PROPERTY. SCHEDULE 5.13 sets forth all leases of
personal property ("PERSONAL PROPERTY LEASES") involving annual payments in
excess of $25,000 to which any Darby Company is a party or by which the
properties or assets of any Darby Company is bound. All of the items of personal
property under the Personal Property Leases are in good condition and repair
(ordinary wear and tear excepted) and are suitable for the purposes used, and
such property is in all material respects in the condition required of such
property by the terms of the lease applicable thereto during the term of the
lease.
5.14 INTELLECTUAL PROPERTY.
(a) SCHEDULE 5.14 sets forth an accurate and complete list of all Patents,
registered Marks, pending applications for registrations of any Marks,
registered Copyrights, and pending applications for registration of Copyrights,
owned or filed by any Darby Company. SCHEDULE 5.14 lists the jurisdictions in
which each such item of Intellectual Property has been
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issued or registered or in which any such application for such issuance and
registration has been filed.
(b) The Darby Companies have ownership or valid and legally enforceable
rights to use all Intellectual Property necessary for the conduct of the
business of the Darby Companies as currently conducted. No Darby Company has
received in the prior three years any written notice from any Person that any
use by any Darby Company of any such Intellectual Property infringes or
otherwise violates the rights of any such Person.
(c) No Darby Company or, to the Knowledge of the Darby Companies, any other
Person, is in default (or with notice or lapse of time or both would be in
default) in any material respect under any Intellectual Property Licenses. No
Intellectual Property owned by any Darby Company and necessary for the conduct
of the business of the Darby Companies as currently conducted, is subject to any
outstanding claim, Order, stipulation or settlement agreement restricting the
use thereof by any Darby Company or restricting the licensing thereof by any
Darby Company to any Person.
(d) To the Knowledge of the Darby Companies, no Person is infringing or
otherwise violating any Intellectual Property of any Darby Company.
5.15 MATERIAL CONTRACTS.
(a) SCHEDULE 5.15(a) sets forth all of the following Contracts to which
(except with respect to clause (xv) below) any Darby Company is a party or by
which any of them is bound (collectively, the "MATERIAL CONTRACTS"):
(i) Contracts with any Seller or any current or former officer,
director, stockholder or Affiliate (other than DOP, DOIL and the Sponsored
Darby Funds) of any Darby Company;
(ii) Contracts for the sale of any of the assets of any Darby Company
other than in the Ordinary Course of Business or for the grant to any
Person of any preferential rights to purchase any of its assets;
(iii) Contracts for joint ventures, strategic alliances or
partnerships;
(iv) Contracts containing covenants of any Darby Company not to
compete in any line of business or with any Person in any geographical area
or covenants of any other Person not to compete with any Darby Company in
any line of business or in any geographical area;
(v) Contracts relating to the acquisition by any Darby Company of any
operating business or the capital stock of any other Person other than a
Sponsored Fund;
(vi) Contracts relating to the incurrence, assumption or guarantee of
any Indebtedness by any Darby Company or imposing a Lien on any of its
assets;
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(vii) Contracts under which any Darby Company has made advances or
loans to any other Person;
(viii) Contracts under which any Darby Company is required to make
severance, retention, change in control or other similar payments to any
other Person;
(ix) Contracts for the employment of any individual on a full-time,
part-time or consulting or other basis except as contemplated by this
Agreement;
(x) outstanding agreements of guaranty, surety or indemnification,
direct or indirect, by any Darby Company;
(xi) Contracts (or group of related contracts) which involve the
expenditure by any Darby Company of more than $25,000 annually or $100,000
in the aggregate over the term of the Contract;
(xii) Advisory Agreements;
(xiii) Real Property Leases and Personal Property Leases;
(xiv) Contracts providing for finder's fees or fees for introducing
investments not otherwise included in the Darby Fund Agreements;
(xv) the Darby Fund Agreements (whether or not any Darby Company is a
party thereto); and
(xvi) Contracts (other than Contracts related to the direct or
indirect acquisition by the Darby Funds of any Portfolio Company) that are
otherwise material to the Darby Companies.
(b) Each of the Material Contracts is in full force and effect and is the
legal, valid and binding obligation of the applicable Darby Companies party
thereto or bound thereby, enforceable against them in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally and subject, as
to enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity). Except as set forth
on SCHEDULE 5.15(b), no Darby Company is in default (or with notice or the
passage of time or both would be in default) in any material respect under any
material provision of any Material Contract, and, to the Knowledge of the Darby
Companies, no other party to any Material Contract is in default thereunder (or
with notice or the passage of time or both would be in default thereunder). No
party to any of the Material Contracts has exercised any termination rights with
respect thereto. DOP and DOIL have delivered or otherwise made available to
Purchaser true, correct and complete copies of all of the Material Contracts,
together with all amendments, modifications or supplements thereto.
5.16 EMPLOYEE MATTERS.
(a) SCHEDULE 5.16 sets forth a complete and correct list of:
20
(i) all "employee benefit plans", as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and
all bonus or other incentive compensation, deferred compensation, employee
loan, salary continuation, severance, sick days, stock award, stock option,
stock purchase, tuition assistance, vacation pay, service award, company
car, club or other membership agreements, policies or arrangements
(collectively, "Benefit Plans") maintained or with respect to which
contributions or benefit payments would be made for the benefit of any
current or former employee or director of any Darby Company by DOIL or by
any other Person that, together with DOIL, would be treated as a single
employer for purposes of Section 414 of the Code (an "ERISA AFFILIATE");
and
(ii) all employment, consulting, individual compensation or
termination of service agreements ("EMPLOYEE ARRANGEMENTS") between DOIL or
any of its ERISA Affiliates on the one hand, and any of their respective
current or former employees, directors or other individuals, on the other
hand, as to which any Darby Company has any Liability.
(b) With respect to each Benefit Plan and Employee Arrangement, a complete
and correct copy of each of the following documents (if applicable) has been
provided or made available to Purchaser: (i) the most recent plan, agreement,
policy or other document constituting the Benefit Plan or Employee Arrangement,
and related trust documents, and all amendments thereto; (ii) the most recent
summary plan description, and all related summaries of material modifications;
(iii) the most recent Form 5500 (including schedules); (iv) the most recent IRS
determination letter; and (v) the most recent actuarial reports (including for
purposes of Financial Accounting Standards Board report no. 87, 106 and 112).
(c) No Benefit Plan constitutes a "multiemployer plan" (as defined in
Section 4001(a)(3) of ERISA) or is subject to Title IV of ERISA.
(d) The Benefit Plans intended to qualify under Section 401 of the Code are
so qualified, and the trusts maintained pursuant thereto are exempt from federal
income taxation under Section 501(a) of the Code. Nothing has occurred with
respect to the operation of the Benefit Plans which could cause the loss of such
qualification or exemption, or the imposition of any Liability, penalty or Tax
under ERISA or the Code.
(e) The Benefit Plans and Employee Arrangements comply and have complied in
all material respects with all applicable provisions of ERISA and other Laws.
There are no pending or, to the Knowledge of any Darby Company, threatened Legal
Proceedings relating to or in connection with the Benefit Plans or Employee
Arrangements, or the assets of any Benefit Plan (other than routine claims for
benefits), nor does any Darby Company have Knowledge of facts which could
reasonably be expected to form the basis for any such Legal Proceeding.
(f) No Benefit Plan provides retiree life or retiree health benefits
coverage beyond the last day of the month in which a participant's termination
of employment with a Darby Company occurs except as may be required under Part 6
of Title I of ERISA and at the sole expense of the participant or the
participant's beneficiary.
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(g) Except as otherwise expressly set forth in this Agreement, neither the
execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (i) result in any payment becoming due to
any employee of any Darby Company; (ii) increase any benefits otherwise payable
under any Benefit Plan or Employee Arrangement or (iii) result in the
acceleration of the time of payment or vesting of any such benefits.
(h) All contributions required by Law or the terms of the Benefit Plans
have been fully and timely made.
(i) No Darby Company is a party to any labor or collective bargaining
agreement and there are no labor or collective bargaining agreements which
pertain to employees of any Darby Company. No employees of the Darby Companies
are represented by any labor organization. No labor organization or group of
employees of any Darby Company has made a pending demand for recognition or
certification, and there are no representation or certification proceedings or
petitions seeking a representation proceeding presently pending or, to the
Knowledge of any Darby Company, threatened in writing to be brought or filed
with the National Labor Relations Board or any other labor relations tribunal or
authority. There are no organizing activities involving any Darby Company
pending with any labor organization or group of employees of any Darby Company.
(j) There are no material strikes, work stoppages, slowdowns, lockouts,
material arbitrations or material grievances or other material labor disputes
pending or, to the Knowledge of any Darby Company, threatened in writing against
or involving any Darby Company. There are no unfair labor practice charges,
grievances or complaints pending or, to the Knowledge of any Darby Company,
threatened in writing by or on behalf of any employee or group of employees of
any Darby Company.
(k) There are no complaints, charges or claims against any Darby Company
pending or, to the Knowledge of any Darby Company, threatened in writing to be
brought or filed, with any Governmental Body based on, arising out of, in
connection with, or otherwise relating to the employment or termination of
employment by any Darby Company, of any individual.
(l) Each Darby Company is in compliance with all Laws and Orders relating
to the employment of labor, including all such Laws and Orders relating to
wages, hours, collective bargaining, discrimination, civil rights, safety and
health workers' compensation and the collection and payment of withholding
and/or Social Security Taxes and similar Taxes.
5.17 LITIGATION. Except as set forth in SCHEDULE 5.17(A), there is no Legal
Proceeding pending or, to the Knowledge of the Darby Companies, threatened
against any Darby Company or Sponsored Darby Fund (or to the Knowledge of the
Darby Companies, pending or threatened, against any of the officers, directors
or employees of any Darby Company or Sponsored Darby Fund with respect to their
business activities on behalf of the Darby Companies or Darby Funds), or to
which any Darby Company or Sponsored Darby Fund is otherwise a party before any
Governmental Body; nor to the Knowledge of the Darby Companies is there any
reasonable basis for any such Legal Proceeding. Except as set forth in SCHEDULE
5.17(A), to the Knowledge of the Darby Companies, there is no Legal Proceeding
22
pending or threatened against any Advised Darby Fund that would reasonably be
expected to have an adverse effect on the compensation to be received by any
Darby Company from such Advised Darby Fund. Except as set forth on SCHEDULE
5.17(b), no Darby Company or Sponsored Darby Fund is subject to any Order.
Except as set forth on SCHEDULE 5.17(c), no Darby Company or Sponsored Darby
Fund is engaged in any legal action to recover monies due it or for damages
sustained by it.
5.18 COMPLIANCE WITH LAWS; PERMITS.
(a) Except as set forth on SCHEDULE 5.18(a)(i), each Darby Company and each
Sponsored Darby Fund is in compliance in all material respects with all Laws of
any Governmental Body applicable to its business, operations or assets. Except
as set forth on SCHEDULE 5.18(a)(ii), no Darby Company or Sponsored Darby Fund
has received any written notice of or been charged with the violation of any
Laws. To the Knowledge of the Darby Companies, no Darby Company or Sponsored
Darby Fund is under investigation with respect to the violation of any Laws.
(b) SCHEDULE 5.18(b) contains a list of all material Permits which are
required for the operation of the business of the Darby Companies and the
Sponsored Darby Funds as presently conducted and as presently intended to be
conducted. The Darby Companies and the Sponsored Darby Funds currently have all
material Permits which are required for the operation of their respective
businesses as presently conducted. No Darby Company or Sponsored Darby Fund is
in default or violation, and no event has occurred which, with notice or the
lapse of time or both, would constitute a default or violation, in any material
respect of any term, condition or provision of any material Permit to which it
is a party, to which its business is subject or by which its properties or
assets are bound. All such Permits are valid and in full force and effect and
are not subject to any suspension, modification or revocation proceedings
relating thereto.
5.19 INSURANCE. Set forth in SCHEDULE 5.19(a) is a list of all insurance
policies and all fidelity bonds held by or applicable to any Darby Company
setting forth, in respect of each such policy, the policy name, policy number,
carrier, term, type and annual premium. Except as set forth on SCHEDULE 5.19(b),
none of the Darby Companies has taken any action or failed to take any action
which could reasonably be expected to result in a retroactive upward adjustment
in premiums under any such insurance policies or which could reasonably be
expected to result in a prospective upward adjustment in such premiums.
Excluding insurance policies that have expired and been replaced in the Ordinary
Course of Business consistent with past practice and excluding insurance
policies under which DAI, DAI-HK and their officers, directors, employees and
Affiliates were insured that were terminated upon the acquisition of the DAI
Shares and the DAI-HK Share by DOP, no insurance policy applicable to any Darby
Company (other than DAI, DAI-HK and AIMCMC) has been cancelled within the last
two (2) years and, to the Knowledge of the Darby Companies, (i) no insurance
policy applicable to DAI, DAI-HK or AIMCMC has been cancelled since March 31,
2002 and (ii) no threat has been made to cancel any insurance policy of any
Darby Company during such period. Except as set forth on SCHEDULE 5.19(c), none
of such insurance policies will terminate, by its own terms, as a result of the
consummation of the transactions contemplated hereby. None of the Darby
Companies has taken any action or failed to take any action, including, without
limitation, the failure by any Darby Company to give any notice or information
or any Darby Company giving any inaccurate
23
or erroneous notice or information, which limits or impairs the rights of any
Darby Company under any such insurance policies.
5.20 RELATED PARTY TRANSACTIONS. SCHEDULE 5.20(a) is a true and correct
list of each Contract between any Darby Company, Sponsored Darby Fund or
Portfolio Company on the one hand, and any officer, director or employee of any
Darby Company (other than in his or her capacity as such) on the other hand,
and, except as set forth on SCHEDULE 5.20(b), each such Contract is on
commercially reasonable terms no more favorable to such officer, director or
employee than what a third party negotiating on an arms-length basis would
expect.
5.21 FINANCIAL ADVISORS. No Person has acted, directly or indirectly, as a
broker, finder or financial advisor for any Darby Company in connection with the
transactions contemplated by this Agreement and no Person is entitled to any fee
or commission or like payment in respect thereof.
5.22 COMPLIANCE.
(a) Except as set forth on SCHEDULE 5.18(a), since January 1, 2000, no
Darby Company has received any notice that any Governmental Body has initiated
any administrative proceeding or investigation into the business or operations
of any Darby Company or any principal employees of any of them. There is no
unresolved violation or exception by any Governmental Body with respect to any
report or statement by any Governmental Body relating to any examination of any
Darby Company.
(b) No Darby Company is ineligible pursuant to Section 203 of the Advisers
Act or Section 15(b) of the Exchange Act to serve as a registered investment
adviser or broker-dealer.
(c) No Darby Company is registered as, or is required to be registered as,
an Investment Company. None of the Funds to whom any Darby Company renders
investment management or investment advisory services is registered as an
Investment Company.
(d) No Darby Company is an "investment adviser" required to be registered,
licensed or qualified as an investment adviser under the Advisers Act or other
applicable Law or subject to any material Liability or disability by reason of
any failure to be so registered, licensed or qualified.
(e) No Darby Company is a "commodity pool operator" or "commodity trading
advisor" required to be registered, licensed or qualified as such under the
Commodity Exchange Act, as amended, and the rules and regulations promulgated
thereunder by the Commodity Futures Trading Commission (such act, the "CEA", and
such commission, the "CFTC"), or other applicable Law or to be a member of the
National Futures Association (the "NFA") or subject to any material Liability or
disability by reason of any failure to be so registered, licensed or qualified.
24
5.23 DARBY FUNDS.
(a) SCHEDULE 5.23(a) sets forth a true, correct and complete list of each
Darby Fund, including each Darby Fund's name, its jurisdiction of organization
and, with respect to the Sponsored Darby Funds, the jurisdictions in which each
of them is licensed or qualified or registered to do business.
(b) True, correct and complete copies of all subscription agreements,
advisory agreements, "side letters," administration agreements, distribution or
placement agency agreements, solicitation agreements, custody agreements,
agreements providing for finder's fees or fees for introducing investments or
any similar agreements, in each case pertaining to the Sponsored Darby Funds,
and any other agreements between any Sponsored Darby Fund and any investor
therein or advisor thereto, and all of the organizational or constituent
documents of the Sponsored Darby Funds, including limited partnership
agreements, operating agreements, shareholders agreements to which any Sponsored
Darby Fund or general partner thereof is a party (other than with Portfolio
Companies) and articles of association and memorandum of association, as
applicable (all of the foregoing, collectively, the "DARBY FUND AGREEMENTS"),
and all offering documents pertaining to the Sponsored Darby Funds, have been
made available to Purchaser. Such offering documents did not, at any time such
offering documents were made available to investors or prospective investors in
the Sponsored Darby Funds, contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
(c) True, correct and complete copies of the audited balance sheet and
other financial statements of each of the Sponsored Darby Funds for the fiscal
years completed on or after December 31, 1999 or its inception, whichever is
later, through its most recent fiscal year ended on or prior to the date hereof
have been made available to Purchaser. Each of such financial statements
presents fairly, in all material respects, the consolidated financial position
of such Sponsored Darby Fund in accordance with GAAP applied on a consistent
basis (except as otherwise noted therein) at the respective dates of such
financial statements (or in the case of the Asian Mezzanine Fund, in accordance
with International Accounting Standards). No Sponsored Darby Fund has any
Liabilities of any kind other than those (i) fully reflected in, reserved
against or otherwise described in their respective balance sheets for the period
ended December 31, 2002 (or the notes thereto) or (ii) immaterial to such
Sponsored Darby Fund or incurred in the ordinary course of business of such
Sponsored Darby Fund since the date of the foregoing balance sheet of such
Sponsored Darby Fund. Except as expressly contemplated by this Agreement or as
set forth on SCHEDULE 5.23(c), since December 31, 2002 (i) the Sponsored Darby
Funds have conducted their respective businesses only in the Ordinary Course of
Business and (ii) there has not been any event, change, occurrence or
circumstance that has had or could reasonably be expected to have a material
adverse effect on the assets, properties, or financial condition of any
Sponsored Darby Fund; provided, however, that a material adverse effect shall
not include any effect primarily resulting from general economic conditions;
exchange rate fluctuations; changes in prevailing interest rates; political
instability; acts of war or terrorism; any adverse developments in the lending,
mezzanine capital or private equity markets in the Latin American or
Asia/Pacific region generally; and the announcement or implementation of any of
the transactions contemplated by this Agreement (except in each case for effects
which have a
25
disproportionate adverse effect on such Sponsored Darby Fund as compared to
other private Funds with substantially similar investment strategies and of a
similar size).
(d) All securities of which any of the Sponsored Darby Funds is the issuer
were sold pursuant to a valid exemption from the registration requirements of
the Securities Act and other applicable Securities Laws and in compliance with
applicable Law.
(e) Except as set forth on SCHEDULE 5.23(e), since its inception, each
Sponsored Darby Fund has been operated and is currently operating in compliance
in all material respects with its respective investment objectives and policies
and its constituent documents (or waivers thereof) and applicable Law. Since its
inception, each of the Sponsored Darby Funds that has been (i) offered to United
States investors or (ii) organized in any jurisdiction within the United States,
has been excluded from the definition of an "investment company" under the
Investment Company Act by virtue of Section 3(c)(1) or Section 3(c)(7) thereof.
(f) None of the Darby Companies, nor, to the Knowledge of the Darby
Companies, any employee thereof has been enjoined, indicted, convicted or made
the subject of disciplinary proceedings, consent decrees or administrative
orders on account of any violation of the Securities Laws.
(g) With respect to each Darby Fund, each Darby Company otherwise entitled
to indemnification under the Darby Fund Agreements of such Darby Fund is not
excepted from coverage under the indemnification provisions thereof for failure
to satisfy the applicable standard of care required to be adhered to in order to
obtain indemnification under the relevant Darby Fund Agreement.
(h) Set forth on SCHEDULE 5.23(h) are the amounts of the undrawn
commitments with respect to each of the Sponsored Darby Funds and, to the
Knowledge of the Darby Companies, the amounts of undrawn commitments with
respect to each of the Advised Darby Funds.
(i) Set forth on SCHEDULE 5.23(i) is a list of each investment that any
Darby Company has in any Darby Fund.
(j) Except as set forth on SCHEDULE 5.23(j), no investor in any Darby Fund
is in default of, or, to the Knowledge of the Darby Companies, has threatened to
be in default of, any of its obligations to such Darby Fund, and, to the
Knowledge of the Darby Companies, no event has occurred that with the lapse of
time or the giving of notice or both would constitute such a default.
(k) Except as set forth on SCHEDULE 5.23(k), no Sponsored Darby Fund has
outstanding any guarantees of any obligation of any Portfolio Company.
(l) As of the date hereof, the Sponsored Darby Funds and Mass Mutual/Darby
CBO, LLC are the only Funds in which the Darby Companies have any ownership
interest. There is no Person to which any Darby Company provides investment
advice other than the Darby Funds.
26
(m) All investor reports prepared by the Sponsored Darby Funds or by any
Darby Company on their behalf and submitted to their investors were, when
submitted, to the Knowledge of the Darby Companies, accurate in all material
respects. All investor reports prepared by any Darby Company on behalf of any
Advised Darby Fund and submitted to the investors in such Advised Darby Fund
were, when submitted, to the Knowledge of the Darby Companies, accurate in all
material respects.
(n) Except pursuant to the Darby Fund Agreements and the Advisory
Agreements, no Person other than the Darby Companies has any right to any fees
relating to investment advice payable by any Sponsored Darby Fund, including
without limitation advisory, monitoring and management fees.
(o) Except as set forth on SCHEDULE 5.23(o) and other than the Darby Fund
Agreements, no investor in any Sponsored Darby Fund has any Contract with any
Sponsored Darby Fund.
(p) DOIL has delivered a letter to Purchaser setting forth a true and
complete list of (x) all Persons (other than the Darby Companies) that have a
Carried Interest in any Sponsored Darby Fund, (y) the amount of Carried
Interests that such Persons have, and (z) the percentage of such Persons'
Carried Interests that have vested as of the date hereof, and, other than the
Carried Interests reflected in such letter and the letters referred to in
SECTION 9.1(s), such Persons have no other Carried Interests in any Sponsored
Darby Fund.
(q) Set forth on SCHEDULE 5.23(q)(i) is a true and complete list of all
investors in the Sponsored Darby Funds other than the Darby Income Funds, and
their respective equity ownership interest therein (by percentage), and set
forth on SCHEDULE 5.23(q)(ii) is a true and complete list of all investors in
the Darby Income Funds, and their respective equity ownership interest therein
(by percentage) as of June 30, 2003.
(r) Except as set forth in Darby Fund Agreements, the Advisory Agreements
and on SCHEDULE 5.23(r), no Darby Company is restricted by Contract from
sponsoring, organizing, participating in or advising any Fund.
(s) Except as set forth on SCHEDULE 5.23(s), no Darby Company has any
direct or indirect investment in any Portfolio Company other than through a
Darby Fund and disclosed to Purchaser.
(t) The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby will not result in any increased,
additional or accelerated rights or entitlements to any investor in any
Sponsored Darby Fund.
(u) None of the Darby Companies has delivered to or received from Prumerica
Financial Asia Limited or Prudential Investment Management, Inc. (the "PRU
SELLERS") any assertion of a breach of the Stock Purchase Agreement, dated as of
February 19, 2002 among DOP and the Pru Sellers, pursuant to which DOP acquired
the DAI Shares and the DAI-HK Share and none of the Darby Companies has
Knowledge of any breach of a representation or warranty made by the Pru Sellers
in such Stock Purchase Agreement (or any occurrence that with notice or the
passage of time or both would constitute such a breach).
27
5.24 TERMINATION OF RELATIONSHIPS. As of the date hereof, no Darby Company
or Sponsored Darby Fund has received any notice that any Fund to whom any Darby
Company currently renders investment management or investment advisory services
is terminating or is planning to terminate its relationship with any Darby
Company or will reduce materially its use of the services of any Darby Company.
As of the date hereof, the Darby Companies have no Knowledge that any Darby Fund
plans to terminate its relationship with any Darby Company or plans to reduce
materially its use of the services of any Darby Company.
5.25 ABSENCE OF CERTAIN PAYMENTS. No Darby Company or any Person acting on
behalf of any Darby Company has made any payment to, or conferred any benefit,
directly or indirectly, on suppliers, clients, employees or agents of suppliers
or clients, or officials or employees of any Governmental Body or any political
parties or candidates for office, that was unlawful in the place where, and at
the time when, such payment or benefit was given or received, or, in the case of
payments to or benefits conferred upon representatives of a Governmental Body
referred to above, would have been unlawful under the laws of the United States
if such laws were applicable to such payment or benefit and to such officials or
employees.
5.26 PRIVACY RULES. The Darby Companies, to the extent each is a "financial
institution" (as defined in the GBA), have complied in all material respects, to
the extent required, with the GBA and the rules and regulations promulgated
pursuant thereto, including, without limitation, Regulation S-P issued by the
SEC and the privacy rules issued by the Federal Trade Commission (collectively,
the "PRIVACY RULES"), and each such financial institution has provided the
privacy notices, in the form and to the extent required by the GBA and the
Privacy Rules, and has taken such other actions as may be required thereunder.
5.27 PATRIOT ACT.
(a) Each of the Darby Companies and the Sponsored Darby Funds has complied
in all material respects with the Laws of any Governmental Body concerning
anti-money laundering, including the International Money Laundering Abatement
and Anti-Terrorist Financing Act of 2001, which comprises Title III of the
Uniting and Strengthening America by Providing Appropriate Tools Required to
Intercept and Obstruct Terrorism Act of 2001 (the "PATRIOT Act") and the
regulations promulgated thereunder, and the rules and regulations administered
by the U.S. Treasury Department's Office of Foreign Assets Control, to the
extent such Laws are applicable to them.
(b) Except as set forth on SCHEDULE 5.27(B), none of the Darby Companies
nor the Sponsored Darby Funds nor any of the equity owners of the Sponsored
Darby Funds is resident in, or organized or chartered under the laws of, (a) a
jurisdiction that has been designated by the U.S. Secretary of the Treasury
under Section 311 or 312 of the Patriot Act as warranting special measures due
to money laundering concerns or (b) any foreign country that has been designated
as non-cooperative with international anti-money laundering principles or
procedures by an intergovernmental group or organization, such as the Financial
Action Task Force on Money Laundering, of which the United States is a member
and with which designation the United States representative to the group or
organization continues to concur.
28
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
Each Seller, as to itself only and not as to the other Sellers, hereby
represents and warrants severally, and not jointly, to FRI and Purchaser that:
6.1 ORGANIZATION AND GOOD STANDING. In the case of Institutional Sellers
only, such Seller is duly organized, validly existing and in good standing (if
applicable) under the laws of its jurisdiction of organization and has all
requisite power and authority to own, lease and operate its properties and to
carry on its business as now conducted.
6.2 AUTHORIZATION OF AGREEMENT. Such Seller has all requisite corporate,
company, partnership or trust power and authority (in the case of Institutional
Sellers) or legal capacity (in the case of Individual Sellers) to execute and
deliver this Agreement and each other agreement, document, instrument or
certificate contemplated by this Agreement to be executed by such Seller in
connection with the consummation of the transactions contemplated by this
Agreement (together with this Agreement, as to such Seller, the "SELLER
DOCUMENTS"), and to consummate the transactions contemplated hereby and thereby
to be performed by it. In the case of Institutional Sellers only, the execution
and delivery of this Agreement and each of the other Seller Documents and the
consummation of the transactions contemplated hereby and thereby have been duly
authorized by all necessary corporate, company, partnership or trust action on
the part of such Seller. This Agreement has been, and each of the other Seller
Documents will be at or prior to the Closing, duly and validly executed and
delivered by such Seller and (assuming the due authorization, execution and
delivery by the other parties hereto and thereto) this Agreement constitutes,
and each of the other Seller Documents when so executed and delivered will
constitute, legal, valid and binding obligations of such Seller, enforceable
against such Seller in accordance with their respective terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally, and subject, as to
enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity).
6.3 CONFLICTS; CONSENTS OF THIRD PARTIES.
(a) None of the execution and delivery by such Seller of this Agreement or
the other Seller Documents, the consummation of the transactions contemplated
hereby or thereby, or compliance by such Seller with any of the provisions
hereof or thereof applicable to it will (i) violate in the case of Institutional
Sellers only, the certificate of incorporation and by-laws or comparable
organizational documents of such Seller; or (ii) conflict with, or result in any
violation of or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination or cancellation under any
provision of any Contract to which such Seller is a party or by which any of the
properties or assets of such Seller are bound, any Order of any Governmental
Body applicable to such Seller or any of its properties or assets or any
applicable Law.
29
(b) Except as set forth on SCHEDULE 6.3(b), no consent, waiver, approval,
license, permit, ruling or authorization of, or declaration or filing with, or
notification to, any Person or Governmental Body is required on the part of such
Seller in connection with the execution and delivery by such Seller of this
Agreement or the other Seller Documents, the compliance by such Seller with any
of the provisions hereof or thereof applicable to it, or the consummation by it
of the transactions contemplated hereby or thereby.
6.4 OWNERSHIP AND TRANSFER OF DOIL SHARES AND DOP INTERESTS.
(a) Such Seller is the record and beneficial owner of the DOIL Shares
indicated as being owned by such Seller on EXHIBIT C, free and clear of any and
all Liens (other than restrictions imposed by Securities Laws and by the DOIL
Shareholders Agreement). Such Seller has the power and authority to sell,
transfer, assign and deliver such DOIL Shares as provided in this Agreement, and
such delivery will convey to Purchaser good and marketable title to such DOIL
Shares, free and clear of any and all Liens (other than restrictions imposed by
Securities Laws).
(b) Such Seller is the record and beneficial owner of the DOP Interests
indicated as being owned by such Seller on EXHIBIT C, free and clear of any and
all Liens (other than restrictions imposed by Securities Laws and by the DOP
Partner Documents). Such Seller has the power and authority to sell, transfer,
assign and deliver such DOP Interests as provided in this Agreement, and such
delivery will convey to Purchaser good and marketable title to such DOP
Interests, free and clear of any and all Liens (other than restrictions imposed
by Securities Laws).
(c) Such Seller is not a party to any voting trust or other Contract with
respect to the voting, redemption, sale, transfer or other disposition of the
capital stock of DOIL or the partner interests of DOP other than the DOIL
Shareholder Agreement and/or the DOP Partner Documents, as applicable.
(d) Such Seller has no direct or indirect investment in any Portfolio
Company other than through a Darby Fund and disclosed to Purchaser.
6.5 LITIGATION. There are no Legal Proceedings pending or, to the Knowledge
of such Seller, threatened against such Seller that are reasonably likely to
prohibit or restrain the ability of such Seller to enter into this Agreement or
consummate the transactions contemplated hereby.
6.6 FINANCIAL ADVISORS. Except as set forth on SCHEDULE 6.6, no Person has
acted, directly or indirectly, as a broker, finder or financial advisor for such
Seller in connection with the transactions contemplated by this Agreement and no
Person is entitled to any fee or commission or like payment in respect thereof.
6.7 RELATED PARTY TRANSACTIONS. Other than with respect to the
Institutional Sellers, SCHEDULE 6.7 is a true and correct list of each Contract
(other than the Darby Fund Agreements) between any Darby Company, Sponsored
Darby Fund or Portfolio Company on the one hand, and such Seller on the other
hand, and each such Contract is on commercially
30
reasonable terms no more favorable to such Seller than what a third party
negotiating on an arms-length basis would expect.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF FRI AND PURCHASER
Each of FRI and Purchaser hereby jointly and severally represents and
warrants to each of the Darby Parties that:
7.1 ORGANIZATION AND GOOD STANDING. Each of FRI and Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware.
7.2 AUTHORIZATION OF AGREEMENT. Each of FRI and Purchaser has full
corporate power and authority to execute and deliver this Agreement and each
other agreement, document, instrument or certificate, if any, contemplated by
this Agreement to be executed by FRI or Purchaser in connection with the
consummation of the transactions contemplated by this Agreement (the "PURCHASER
DOCUMENTS"), and to consummate the transactions contemplated hereby and thereby.
The execution, delivery and performance by FRI and Purchaser of this Agreement
and each of the other Purchaser Documents and the consummation of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary corporate action on behalf of FRI and Purchaser. This Agreement has
been, and each of the other Purchaser Documents will be at or prior to the
Closing, duly and validly executed and delivered by FRI and Purchaser (as
applicable), and (assuming the due authorization, execution and delivery by the
other parties hereto and thereto) this Agreement constitutes, and each other
Purchaser Document when so executed and delivered will constitute, valid and
binding obligations of FRI and Purchaser (as applicable), enforceable against
FRI and Purchaser (as applicable) in accordance with their respective terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally, and subject, as
to enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity).
7.3 CONFLICTS; CONSENTS OF THIRD PARTIES.
(a) Except as set forth on SCHEDULE 7.3 hereto, none of the execution and
delivery by FRI and Purchaser of this Agreement and the other Purchaser
Documents, the consummation of the transactions contemplated hereby or thereby,
or compliance by FRI or Purchaser with any of the provisions hereof or thereof
applicable to such entity will, (i) violate the certificate of incorporation or
by-laws or comparable organizational documents of FRI or Purchaser or (ii)
assuming that the consents, waivers, approvals, authorizations, declarations,
filings and notifications referred to in SECTION 7.3(b) are duly obtained and
made, conflict with, or result in any violation of or default (with or without
notice or lapse of time, or both) under (x) any Contract or Permit to which FRI
or Purchaser is a party or by which any of the properties or assets of any FRI
or Purchaser are bound; (y) any Order of any Governmental Body applicable to FRI
or Purchaser or any of the properties or assets of FRI or Purchaser; or (z) any
Law
31
applicable to FRI or Purchaser, except, in the case of clauses (x), (y) and (z),
for such violations, breaches or defaults as would not, individually or in the
aggregate, have a material adverse effect on the ability of FRI or Purchaser to
consummate the transactions contemplated by this Agreement.
(b) No consent, waiver, approval, license, permit, ruling or authorization
of, or declaration or filing with, or notification to, any Person or
Governmental Body is required on the part of Purchaser or FRI in connection with
(i) the execution and delivery of this Agreement or the other Purchaser
Documents or the compliance by Purchaser or FRI with any of the provisions
hereof or thereof, or the consummation of the transactions contemplated hereby
or thereby or (ii) the ownership and operation of the Darby Companies following
the Closing, except for approval of the Cayman Islands Monetary Authority and
the Securities and Futures Commission of Hong Kong.
7.4 LITIGATION. There are no Legal Proceedings pending or, to the Knowledge
of Purchaser or FRI, threatened seeking to prohibit or restrain the ability of
Purchaser or FRI to enter into this Agreement or consummate the transactions
contemplated hereby.
7.5 INVESTMENT INTENTION. Purchaser is acquiring the DOIL Shares and the
DOP Interests for its own account, for investment purposes only and not with a
view to the distribution (as such term is used in Section 2(11) of the
Securities Act of 1933, as amended (the "SECURITIES ACT") thereof. Purchaser
understands that the DOIL Shares and the DOP Interests have not been registered
under the Securities Act and cannot be sold unless subsequently registered under
the Securities Act or an exemption from such registration is available.
7.6 FINANCIAL ADVISORS. Except as set forth on SCHEDULE 7.6, no Person has
acted, directly or indirectly, as a broker, finder or financial advisor for
Purchaser or FRI or any of their respective Affiliates in connection with the
transactions contemplated by this Agreement and no Person is entitled to any fee
or commission or like payment in respect thereof.
ARTICLE VIII
COVENANTS
8.1 ACCESS TO INFORMATION. DOIL and DOP agree that, prior to the Closing
Date, Purchaser shall be entitled, through its officers, employees and
representatives (including, without limitation, its legal advisors and
accountants), to make such investigation of the properties, businesses and
operations of the Darby Companies and such examination of the books, records and
financial condition of the Darby Companies as it reasonably requests and to make
extracts and copies of such books and records, subject to Purchaser's adhering
to any confidentiality provisions by which DOP, DOIL and the Darby Funds are
bound in respect of the Portfolio Companies and, in the case of information
pertaining to the Portfolio Companies, to the extent the Darby Companies or
Sponsored Darby Funds have such information. Any such investigation and
examination shall be conducted during regular business hours and under
reasonable circumstances so as not to interfere in any material respect with the
Darby Companies' normal operations, and DOP and DOIL shall cooperate, and shall
cause the other Darby Companies to cooperate, fully therein. No investigation by
Purchaser prior to or after the
32
date of this Agreement shall diminish or obviate any of the representations,
warranties, covenants or agreements of the Sellers contained in this Agreement
or the other Seller Documents. In order that Purchaser may have full opportunity
to make such physical, business, accounting and legal review, examination or
investigation as it may reasonably request of the affairs of the Darby
Companies, DOIL and DOP shall cause the officers, employees, consultants,
agents, accountants, attorneys and other representatives of the Darby Companies
to cooperate fully with such representatives in connection with such review and
examination.
8.2 CONDUCT OF THE BUSINESS PENDING THE CLOSING.
(a) Except as otherwise expressly provided in this Agreement, on SCHEDULE
8.2(A) or 8.2(b) or with the prior written consent of Purchaser, DOIL and DOP
shall, and shall cause the Darby Companies and (unless a provision below
explicitly applies only to the Darby Companies) the Sponsored Darby Funds to:
(i) conduct the respective businesses of the Darby Companies and the
Sponsored Darby Funds only in the Ordinary Course of Business;
(ii) use its best efforts to (A) preserve the present business
operations, organization (including, without limitation, management) and
goodwill of the Darby Companies and the Sponsored Darby Funds and (B)
preserve the present relationship with investors of the Sponsored Darby
Funds and other Persons having business dealings with the Darby Companies
or the Sponsored Darby Funds;
(iii) maintain all of the assets and properties of the Darby Companies
in their current condition, ordinary wear and tear excepted; and
(iv) (A) maintain the books, accounts and records of the Darby
Companies and the Sponsored Darby Funds in the Ordinary Course of Business
consistent with past practice, (B) continue to collect accounts receivable
and pay accounts payable of the Darby Companies utilizing normal procedures
and without discounting or accelerating payment of such accounts, and (C)
comply in all material respects with all Contracts applicable to the
operation of the Darby Companies or the Sponsored Darby Funds.
(b) Except as otherwise expressly provided in this Agreement, on SCHEDULE
8.2(A) or Schedule 8.2(B) or with the prior written consent of Purchaser, DOIL
and DOP shall not, and shall cause the other Darby Companies and (unless a
provision below explicitly applies only to the Darby Companies) the Sponsored
Darby Funds not to (and the Sellers agree, to the extent that they have the
right under the organizational documents of DOP or DOIL or by Law to vote on any
of the following matters, not to vote to approve the taking of any of the
following actions):
(i) declare, set aside, make or pay any dividend or other distribution
in respect of the capital stock of DOIL or the partnership interests in
DOP, or repurchase, redeem or otherwise acquire any outstanding shares of
the capital stock or other securities of, or other ownership interests in,
any Darby Company (except as required under the organizational documents of
the Darby Companies);
33
(ii) transfer, issue, sell or dispose of any shares of capital stock
or other securities of any Darby Company or grant options, warrants, calls
or other rights to purchase or otherwise acquire shares of the capital
stock or other securities of any Darby Company;
(iii) effect any recapitalization, reclassification, stock split or
like change in the capitalization of any Darby Company;
(iv) amend the certificate of incorporation or by-laws (or other
organizational documents) of any Darby Company or, except as requested by
Purchaser, any Sponsored Darby Fund (except to permit the distributions
contemplated by SECTION 2.1(A));
(v) (A) increase the annual level of compensation payable or to become
payable by any Darby Company to any of its employees or officers, (B) grant
any unusual or extraordinary bonus (including any Carried Interest in any
Darby Company or any Darby Fund, including any amounts measured in whole or
in part by any such Carried Interest), benefit or other direct or indirect
compensation to, or make any loan to, any employee, director or consultant,
(C) increase the coverage or benefits available under any (or create any
new) severance pay, termination pay, vacation pay, company awards, salary
continuation for disability, sick leave, deferred compensation, bonus or
other incentive compensation, insurance, pension or other employee benefit
plan or arrangement made to, for, or with any of the directors, officers,
employees, agents or representatives of any Darby Company or otherwise
modify or amend or terminate any such plan or arrangement or (D) enter into
any employment, deferred compensation, severance, consulting,
non-competition or similar agreement (or amend any such agreement) to which
any Darby Company is a party or involving a director, officer or employee
of any Darby Company in his or her capacity as a director, officer or
employee of any Darby Company;
(vi) issue, create, incur, assume or guarantee any Indebtedness
(other than expenses in the Ordinary Course of Business consistent with
past practice);
(vii) subject to any Lien or otherwise encumber or, except for
Permitted Exceptions, permit, allow or suffer to be encumbered, any of the
properties or assets (whether tangible or intangible) of any Darby Company,
other than as provided in the Darby Fund Agreements;
(viii) acquire any material properties or assets or sell, assign,
transfer, convey, lease or otherwise dispose of any of the material
properties or assets of the Darby Companies;
(ix) cancel or compromise any debt or claim or waive or release any
material right of any Darby Company or Sponsored Darby Fund except in the
Ordinary Course of Business and which, in the aggregate, would not be
material to the Darby Companies taken as a whole or any Sponsored Darby
Fund taken individually;
(x) make or enter into any commitment to make capital expenditures
of the Darby Companies;
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(xi) enter into, modify or terminate any labor or collective
bargaining agreement of any Darby Company or, through negotiation or
otherwise, make any commitment or incur any Liability to any labor
organization with respect to any Darby Company;
(xii) introduce any material change with respect to the operation of
any Darby Company or Sponsored Darby Fund, including any material change in
the types or nature of its services or its investment policy or strategy;
(xiii) permit any Darby Company or Sponsored Darby Fund to enter into
any transaction or to enter into, modify or renew any Contract which by
reason of its size, nature or otherwise is not in the Ordinary Course of
Business;
(xiv) permit any Darby Company to enter into or agree to enter into
any merger or consolidation with, any corporation or other entity, or
engage in any new business or invest in, make a loan, advance or capital
contribution to, or otherwise acquire the securities of any other Person
(other than in or to the Darby Funds pursuant to contractual obligations);
(xv) except for payments made in the Ordinary Course of Business
consistent with past practice or payments under an existing Contract,
permit any Darby Company to pay any fees or expenses to, or enter into or
modify any Contract with any Affiliate (other than any Darby Fund) of any
Darby Company, or any director, officer or employee of any Darby Company;
(xvi) make or rescind any election relating to Taxes (other than to
make an election under Section 754 of the Code pursuant hereto), settle or
compromise any claim, action, suit, litigation, proceeding, arbitration,
investigation, audit controversy relating to Taxes, or except as required
by applicable Law or GAAP (or International Accounting Standards in respect
of DAI, DAI-HK, the Asian Mezzanine Fund or their subsidiaries), make any
material change to any of its methods of accounting or methods of reporting
income or deductions for Tax or accounting practice or policy from those
employed in the preparation of its most recent Tax Return;
(xvii) enter into any contract or agreement or commitment which
restrains, restricts, limits or impedes the ability of any Darby Company or
Sponsored Darby Fund to compete with or conduct any business or line of
business in any geographic area;
(xviii) sponsor a new Fund or liquidate or dissolve a Sponsored Darby
Fund (other than as required by the terms of the agreements relating
thereto);
(xix) fail to pay and discharge current liabilities as and when due;
(xx) discharge or satisfy any Lien, or pay any Liability (fixed or
contingent), except in the Ordinary Course of Business;
35
(xxi) grant any license or sublicense of any rights under or with
respect to any Intellectual Property other than in the Ordinary Course of
Business consistent with past practice;
(xxii) institute or settle any material Legal Proceeding;
(xxiii) enter into any partnership, profit-sharing or royalty
agreement or other similar arrangement whereby any Darby Company's income
or profits are, or might be, shared with any other Person;
(xxiv) amend or grant any waiver in respect of any provision of any
Advisory Agreement to which DOP is a party except for such waivers that are
immaterial in nature or amount or, except in accordance with the terms
thereof, terminate any such agreement; or
(xxv) agree, commit, arrange or enter into any understanding to do
anything prohibited by this SECTION 8.2.
8.3 CONSENTS. The Darby Parties shall use their commercially reasonable
efforts, and FRI and Purchaser shall cooperate with the Darby Parties, to obtain
at the earliest practicable date all consents and approvals required to be
obtained by the Darby Parties and the Darby Companies to consummate the
transactions contemplated by this Agreement, including, without limitation, the
consents and approvals referred to in SECTIONS 5.3(b) and 6.3(c) hereof. FRI and
Purchaser shall use their commercially reasonable efforts, and the Darby Parties
shall cooperate with FRI and Purchaser, to obtain at the earliest practicable
date all consents and approvals required to be obtained by FRI and Purchaser to
consummate the transactions contemplated by this Agreement, including, without
limitation, the consents and approvals referred to in SECTION 7.3 hereof.
8.4 REGULATORY APPROVALS.
(a) FRI, Purchaser and the Darby Parties shall (i) make all filings
required of each of them or any of their respective subsidiaries or Affiliates
under applicable Law with respect to the transactions contemplated hereby as
promptly as practicable and, in any event, within ten (10) Business Days after
the date of this Agreement, (ii) comply at the earliest practicable date with
any request under applicable Law for additional information, documents, or other
materials received by each of them or any of their respective subsidiaries from
any Governmental Body in respect of such filings or such transactions, and (iii)
cooperate with each other in connection with any such filing (including, to the
extent permitted by applicable Law, providing copies of all such documents to
the non-filing parties prior to filing and considering all reasonable additions,
deletions or changes suggested in connection therewith) and in connection with
resolving any investigation or other inquiry of any Governmental Body under any
applicable Law with respect to any such filing or any such transaction. Each
such party shall use commercially reasonable efforts to furnish to each other
all information required for any application or other filing to be made pursuant
to any applicable Law in connection with the transactions contemplated by this
Agreement. Each such party shall promptly inform the other parties hereto of any
oral communication with, and provide copies of written communications
36
with, any Governmental Body regarding any such filings or any such transaction.
No party hereto shall independently participate in any formal meeting with any
Governmental Body in respect of any such filings, investigation, or other
inquiry without giving the other parties hereto prior notice of the meeting and,
to the extent permitted by such Governmental Body, the opportunity to attend
and/or participate. Subject to applicable Law, the parties hereto will consult
and cooperate with one another in connection with any analyses, appearances,
presentations, memoranda, briefs, arguments, opinions and proposals made or
submitted by or on behalf of any party hereto relating to proceedings under
applicable Law. The Darby Parties, on the one hand, and FRI and Purchaser, on
the other hand, may, as each deems advisable and necessary, reasonably designate
any competitively sensitive material provided to the other under this SECTION
8.4 as "outside counsel only." Such materials and the information contained
therein shall be given only to the outside legal counsel of the recipient and
will not be disclosed by such outside counsel to employees, officers, or
directors of the recipient, unless express written permission is obtained in
advance from the source of the materials (the Darby Parties or FRI and
Purchaser, as the case may be).
(b) Each of FRI, Purchaser and the Darby Parties shall use commercially
reasonable efforts to resolve such objections, if any, as may be asserted by any
Governmental Body with respect to the transactions contemplated by this
Agreement under applicable Law. In connection therewith, if any Legal Proceeding
is instituted (or threatened to be instituted) challenging any transaction
contemplated by this Agreement as in violation of any applicable Law, the
parties shall use commercially reasonable efforts and cooperate with one another
to contest and resist any such Legal Proceeding, and to have vacated, lifted,
reversed, or overturned any decree, judgment, injunction or other order whether
temporary, preliminary or permanent, that is in effect and that prohibits,
prevents or restricts consummation of the transactions contemplated by this
Agreement, including by pursuing all available avenues of administrative and
judicial appeal and all available legislative action, unless, by mutual
agreement, FRI, Purchaser and the Darby Parties decide that litigation is not in
their respective best interests.
(c) Notwithstanding anything to the contrary in this Agreement, neither
FRI, Purchaser nor any of their Affiliates shall be required (i) to hold
separate (including by trust or otherwise) or divest any of their respective
businesses or assets, (ii) to agree to any limitation on the operation or
conduct of their respective businesses or (iii) to waive any of the conditions
set forth in ARTICLE IX of this Agreement.
8.5 FURTHER ASSURANCES. Subject to SECTION 8.4, each of the Darby Parties,
FRI and Purchaser shall use its commercially reasonable efforts to (i) take all
actions necessary or appropriate to consummate the transactions contemplated by
this Agreement at the earliest practicable date after the date hereof and (ii)
cause the fulfillment at the earliest practicable date of all of the conditions
to the obligations of the other parties to consummate the transactions
contemplated by this Agreement.
8.6 CONFIDENTIALITY.
(a) From and after the date hereof until the Closing, FRI and Purchaser
shall not, and shall cause their Affiliates and their respective officers,
directors and employees not to, directly or indirectly, disclose, reveal,
divulge or communicate to any Person other than
37
authorized officers, directors and employees of FRI and Purchaser, and advisors
of FRI and Purchaser on a need-to-know basis, in connection with consummating
the transactions contemplated hereby, or use or otherwise exploit for its own
benefit or for the benefit of any other Person, any Confidential Information (as
defined below). FRI and Purchaser shall not have any obligation to keep
confidential (or cause their Affiliates, officers, directors, employees or
advisors to keep confidential) any Confidential Information if and to the extent
disclosure thereof is specifically required by Law; provided, however, that in
the event disclosure is required by applicable Law, FRI and Purchaser shall, to
the extent reasonably possible, provide DOIL with prompt notice of such
requirement prior to making any disclosure so that DOIL may seek an appropriate
protective order.
(b) From and after the Closing, each Seller agrees severally and not
jointly that it shall not, and it shall cause its Affiliates and its respective
officers, directors and employees not to, directly or indirectly, disclose,
reveal, divulge or communicate to any Person other than to authorized officers,
directors and employees of such Seller, and advisors of such Seller on a
need-to-know basis, or use or otherwise exploit for its own benefit or for the
benefit of any other Person, any Confidential Information (as defined below).
Each Seller shall not have any obligation to keep confidential (or cause its
Affiliates, officers, directors, employees or advisors to keep confidential) any
Confidential Information if and to the extent disclosure thereof is specifically
required by Law; provided, however, that in the event disclosure is required by
applicable Law, such Seller shall, to the extent reasonably possible, provide
DOIL with prompt notice of such requirement prior to making any disclosure so
that DOIL may seek an appropriate protective order.
(c) For purposes of this SECTION 8.6, "CONFIDENTIAL INFORMATION" shall mean
any confidential information with respect to any Darby Company or any Darby Fund
or their respective operations and business, including investors, investor
lists, products, prices, fees, costs, inventions, Trade Secrets, know-how,
Software, Contracts, marketing methods, plans, personnel, suppliers,
competitors, markets performance data, trading strategies, information relating
to Portfolio Companies or other specialized information or proprietary matters.
"CONFIDENTIAL INFORMATION" does not include, and there shall be no obligation
hereunder with respect to, information that (i) is generally available to the
public on the date of this Agreement or (ii) becomes generally available to the
public other than as a result of a disclosure not otherwise permissible
thereunder.
(d) The covenants and undertakings contained in this SECTION 8.6 relate to
matters which are of a special, unique and extraordinary character and a
violation of any of the terms of this SECTION 8.6 will cause irreparable injury,
the amount of which will be impossible to estimate or determine and which cannot
be adequately compensated. Therefore, the Darby Parties will be entitled to an
injunction, restraining order or other equitable relief from any court of
competent jurisdiction in the event of any breach of this SECTION 8.6. The
rights and remedies provided by this SECTION 8.6 are cumulative and in addition
to any other rights and remedies which the Darby Parties may have hereunder or
at law or in equity.
(e) Notwithstanding anything to the contrary set forth herein or in any
other agreement to which the parties hereto are parties or by which they are
bound, the obligations of confidentiality contained herein and therein, as they
relate to the transactions described in this
38
Agreement, shall not apply to the Tax structure or Tax treatment of the
transactions described in this Agreement, and each party hereto (and any
employee, representative, or agent of any party hereto) may disclose to any and
all Persons, without limitation of any kind, the Tax structure and Tax treatment
of the transactions described in this Agreement and all materials of any kind
(including opinions or other tax analysis) that are provided to such party
relating to such Tax treatment and Tax structure; PROVIDED, HOWEVER, that such
disclosure shall not include the name (or other identifying information not
relevant to the Tax structure or Tax treatment) of any Person and shall not
include information for which nondisclosure is reasonably necessary in order to
comply with applicable Securities Laws.
8.7 PUBLICITY.
(a) No Darby Party, on the one hand, nor FRI or Purchaser, on the other,
shall issue any press release or public announcement concerning this Agreement
or the transactions contemplated hereby without obtaining the prior written
approval of Purchaser or DOIL, prior to the Closing and the Seller
Representative, after the Closing (as applicable), which approval will not be
unreasonably withheld or delayed, unless, in the sole judgment of the Person
seeking to make such disclosure or public announcement, disclosure is otherwise
required by applicable Law or by the applicable rules of any stock exchange on
which such Person (or its Affiliates) lists securities, provided that, to the
extent required by applicable Law or by the applicable rules of any stock
exchange on which such Person (or its Affiliates) lists securities, the party
intending to make such release shall use its best efforts consistent with such
applicable Law to consult with Purchaser or DOIL, prior to the Closing and the
Seller Representative, after the Closing (as applicable) with respect to the
text thereof.
(b) The Darby Parties, FRI and Purchaser agree that the terms of this
Agreement shall not be disclosed or otherwise made available to the public and
that copies of this Agreement shall not be publicly filed or otherwise made
available to the public, except where such disclosure, availability or filing is
required by applicable Law and only to the extent required by such Law.
8.8 USE OF NAME. Except as provided on SCHEDULE 8.8, the Sellers hereby
agree that upon the consummation of the transactions contemplated hereby, the
Sellers shall not, and shall cause their respective Affiliates not to, use the
name "Darby" or any service marks, trademarks, trade names, identifying symbols,
logos, emblems, signs or insignia containing or comprising the foregoing,
including any name or mark confusingly similar thereto (collectively, the "DARBY
MARKS"), except for historical, descriptive use.
8.9 EMPLOYEE MATTERS.
(a) For a period of at least five years after the Closing Date, Purchaser
shall provide each person who is an employee of a Darby Company immediately
before the Closing Date (a "DARBY EMPLOYEE") with coverage under employee
benefit plans within the meaning of Section 3(3) of ERISA (and without regard to
the exclusions under Section 4 of ERISA) ("ERISA Plans") that either (i) is not
substantially less favorable in the aggregate than that provided to similarly
situated employees of FRI or (ii) is substantially similar to that provided
39
under those ERISA Plans applicable to such Darby Employee immediately before the
Closing Date.
(b) Purchaser and its Affiliates who employ any Darby Employee shall credit
such Darby Employee with service with DOIL or its ERISA Affiliates prior to the
Closing Date for purposes of eligibility, vesting, determination of the level of
benefit accrual and benefit accrual under any benefit plan, program or
arrangement maintained by Purchaser or any such Affiliate, except (i) with
respect to determination of the level of benefit accruals and benefit accruals
under any defined benefit pension plan, or (ii) to the extent that such
recognition of service would result in a duplication of benefits or cause any
Darby Employee to have a retroactive accrual of vacation.
(c) FRI shall cause any preexisting condition, restrictions or waiting
periods under the applicable ERISA Plans maintained by FRI or its ERISA
Affiliates and applicable to a Darby Employee ("PURCHASER ERISA PLANS") to be
waived to the extent necessary to provide no gap in medical or dental benefit
coverage on such basis for each Darby Employee who was covered as of the Closing
Date under a Benefit Plan that provides medical or dental benefits, as the case
may be. FRI shall cause any Purchaser ERISA Plan which is a welfare benefit plan
to apply any amounts paid under a Benefit Plan that is a welfare benefit plan by
a Darby Employee as deductibles and coinsurance during any plan year in which
the Darby Employee ceases to participate in the Benefit Plan toward deductible,
coinsurance and out-of-pocket limits under such Purchaser ERISA Plan for such
plan year (with appropriate adjustments for any differences in plan years).
(d) To the extent that FRI transfers coverage of any Darby Employee from
the Darby Companies' ERISA Plans to Purchaser's ERISA Plans and the Darby
Companies' ERISA Plans would have provided better benefits in the aggregate than
Purchaser's ERISA Plans applicable to such Darby Employee, FRI shall cause
Purchaser to make a one-time adjustment to the base salary of the affected Darby
Employee in an amount that FRI reasonably believes is appropriate and equitable.
8.10 DIRECTOR AND OFFICER INDEMNIFICATION; INSURANCE.
(a) Without limiting the rights that any indemnified person may have under
applicable Law, FRI and Purchaser agree that all rights of indemnification
existing as of the date hereof in favor of Persons who are or were prior to the
Closing Date officers, directors, employees, members of advisory committees or
investment committees of the Darby Companies or the Darby Funds or who is
serving or has served, at the request of a Darby Company or a Darby Fund, on the
board of directors, or similar governing body, advisory committee or investment
committee of another Person as provided in the respective charter, bylaws, other
organizational document or Contracts of the Darby Companies and the Sponsored
Darby Funds shall continue in full force and effect in accordance with their
terms and none of FRI or its Affiliates shall take any action to terminate or
reduce the rights of such Persons to indemnification under such documents and
Contracts.
(b) For a period of three years following the Closing Date, FRI shall make
payments to each of those Persons who are or at any time prior to the Closing
Date were
40
covered by the directors' and officers' liability insurance policies and errors
and omissions liability insurance policies of any of the Darby Companies or the
Sponsored Darby Funds in effect on the date hereof, to the extent such payments
otherwise would have been made under such insurance policies had such insurance
policies remained in effect following the Closing Date, with respect to claims
arising from facts or events that occurred on or prior to the Closing Date.
(c) This SECTION 8.10 is intended to be for the benefit of, and shall be
enforceable by, the Persons having rights to indemnification or to insurance
coverage as provided in SECTIONS 8.10(a) and (b), their heirs and personal
representatives, and shall be binding on FRI and the Darby Companies and their
respective successors and assigns. In the event that, after the Closing Date,
FRI or any of the Darby Companies or the Sponsored Darby Funds or any of their
respective successors or assigns (i) consolidates with or merges into any other
Person and shall not be the continuing or surviving corporation or entity in
such consolidation or merger or (ii) transfers all or substantially all its
properties and assets to any Person, then, and in each case, proper provision
shall be made so that the successors and assigns of FRI, the Darby Companies or
the Sponsored Darby Funds, as the case may be, honor the indemnification
obligations set forth in this SECTION 8.10.
8.11 WAIVERS, CONSENTS AND AGREEMENTS RELATED TO TRANSFERS; RELEASES AND
WAIVERS. The DOIL Sellers and the DOP Sellers hereby acknowledge that they have
entered into certain agreements in connection with the organization of and their
respective investments in DOIL and DOP, respectively, and that, in connection
with the consummation of the transactions contemplated hereby, such agreements
and the organizational documents of DOIL and DOP contain provisions that require
certain consents and waivers to be obtained and other actions to be taken in
order to comply therewith. Accordingly, the Darby Parties agree among themselves
as follows:
(a) with respect to DOIL:
(i) the execution of this Agreement by DOIL and each of the DOIL
Sellers constitutes delivery of the written notice required to be given by
the DOIL Sellers pursuant to Section 4.3 of the DOIL Shareholders Agreement
and a waiver of the right of first refusal to purchase DOIL Shares that any
of DOIL or the DOIL Sellers have or might have under Section 4.3 of the
DOIL Shareholders Agreement as a result of the purchase of the DOIL Shares
by Purchaser and the consummation of the transactions contemplated hereby;
(ii) the execution of this Agreement by each of the DOIL Sellers
constitutes such party's written consent, as required pursuant to Section
4.5 of the DOIL Shareholders Agreement, to the transfer by each of the
other DOIL Sellers of their respective DOIL Shares as contemplated hereby;
(iii) DOIL and the DOIL Sellers agree, that upon consummation of the
sale by the DOIL Sellers of their DOIL Shares, the DOIL Shareholders
Agreement shall automatically terminate and be null and void from and after
the Closing Date with no
41
further act or action required on the part of DOIL or the DOIL Sellers to
effect such termination; and
(iv) the DOIL Sellers hereby ratify all of the past actions of the
board of directors of DOIL.
(b) with respect to DOP:
(i) the execution of this Agreement by DOIL constitutes the written
consent of DOIL, as the general partner of DOP, pursuant to Section 7.01 of
the DOP LP Agreement, to the transfer by the DOP Sellers who are limited
partners of DOP of their respective limited partner interests in DOP
pursuant to and in accordance with the terms of this Agreement and to the
admission of Purchaser as a Substitute Limited Partner (as such term is
defined in the DOP LP Agreement) of DOP;
(ii) the execution of this Agreement by DOIL, DOP and each DOP Seller
constitutes delivery of the written notice required to be given by the DOP
Sellers pursuant to Section 7.6 of the DOP LP Agreement and each DOP Seller
who is designated as an "Option Partner" in the DOP LP Agreement hereby
waives any and all rights of first refusal under Section 7.6 of the DOP LP
Agreement that such Person has or might have as a result of the offer to
purchase the DOP Interests by Purchaser and the consummation of the
transactions contemplated hereby;
(iii) DOP, DOIL and the DOP Sellers acknowledge and agree, that upon
the occurrence of the Closing and effective as of the Closing, the power of
attorney given by each DOP Seller to DOIL, as general partner of DOP, shall
be cancelled and revoked and shall have no further force and effect without
any further act or action required on the part of any such Persons;
(iv) the execution of this Agreement by each DOP Seller constitutes
delivery of the written notice required pursuant to Section 2 of the First
Amended and Restated Take Along Agreement, dated as of December 30, 1994 by
and among DOIL and certain other DOP Sellers signatory thereto (the "TAKE
ALONG AGREEMENT") from the "Selling Group" members to the "Offer Group" (as
such terms are defined therein) and a waiver by each DOP Seller who is a
member of the Offer Group of any rights such Person has or might have under
the Take Along Agreement as a result of the purchase of the DOP Interests
by Purchaser and consummation of the transactions contemplated hereby;
(v) DOP and the DOP Sellers agree, that upon consummation of the sale
by the DOP Sellers of their DOP Interests, the DOP Take Along Agreement
shall automatically terminate and be null and void from and after the
Closing Date with no further act or action required on the part of the DOP
Sellers to effect such termination;
(vi) the execution of this Agreement by DOP and each DOP Seller
constitutes a waiver of the provision in each Employee Limited Partner
Agreement, as amended, executed by DOP and each of Messrs. Frank, Cutler,
Nielsen and Beatty and Ms. Oliver prohibiting a sale by such Persons of
their limited partner interests in DOP (and the related provision in the
DOP LP Agreement) as such may be necessary or required to
42
permit the sale of such DOP Interests to Purchaser and consummation of the
transactions contemplated hereby; and
(vii) DOP and Messrs. Frank, Cutler, Nielsen and Beatty and Ms. Oliver
agree, that upon consummation of the sale by such individuals of their DOP
Interests to Purchaser, the Employee Limited Partner Agreements shall
automatically terminate and be null and void from and after the Closing
Date with no further act or action required on the part of such Persons to
effect such termination.
(c) As of the Closing Date, each Seller hereby (i) other than as provided
in clause (ii) below, releases DOIL and DOP and their Affiliates, and their
respective officers, directors, employees, agents and representatives, from any
and all claims that such Seller had, has or may have against any of them, of any
nature whatsoever, whether known or unknown, in such Seller's capacity as a
limited partner of DOP, and (ii) waives all rights which such Seller may have
under the DOP LP Agreement (other than future rights to indemnification).
ARTICLE IX
CONDITIONS TO CLOSING
9.1 CONDITIONS PRECEDENT TO OBLIGATIONS OF FRI AND PURCHASER. The
obligations of FRI and Purchaser to consummate the transactions contemplated by
this Agreement are subject to the fulfillment, on or prior to the Closing Date,
of each of the following conditions (any or all of which may be waived by
Purchaser in whole or in part to the extent permitted by applicable Law):
(a) the representations and warranties of DOIL and DOP in ARTICLE V
qualified as to materiality shall be true and correct, and those not so
qualified shall be true and correct in all material respects, as of the date of
this Agreement and as of the Closing as though made at and as of the Closing,
except to the extent such representations and warranties expressly relate to an
earlier date (in which case such representations and warranties qualified as to
materiality shall be true and correct, and those not so qualified shall be true
and correct in all material respects, on and as of such earlier date);
(b) each of DOIL and DOP shall have performed and complied in all material
respects with all obligations and agreements required in this Agreement to be
performed or complied with by it prior to the Closing Date;
(c) the representations and warranties of the Sellers in ARTICLE VI
qualified as to materiality shall be true and correct, and those not so
qualified shall be true and correct in all material respects, as of the date of
this Agreement and as of the Closing as though made at and as of the Closing,
except to the extent such representations and warranties expressly relate to an
earlier date (in which case such representations and warranties qualified as to
materiality shall be true and correct, and those not so qualified shall be true
and correct in all material respects, on and as of such earlier date);
43
(d) each Seller shall have performed and complied in all material respects
with all obligations and agreements required in this Agreement to be performed
or complied with by it prior to the Closing Date;
(e) Purchaser shall have received (i) a certificate signed by each of the
Chief Executive Officer and Chief Financial Officer of each of DOIL and DOP, in
the form attached hereto as EXHIBIT E-1, dated the Closing Date, to the effect
that the conditions specified above in SECTIONS 9.1(a) AND (b) have been
satisfied in all respects and (ii) a certificate from each Seller signed by such
Seller, in the form attached hereto as EXHIBIT E-2 for the Individual Sellers or
EXHIBIT E-3 for the Institutional Sellers, dated the Closing Date, to the effect
that the conditions specified above in SECTIONS 9.1(c) AND (d) relating to such
Seller have been satisfied in all respects;
(f) no Legal Proceedings shall have been instituted or threatened or claim
or demand made against any Seller, any Darby Company, FRI or Purchaser seeking
to restrain or prohibit or to obtain substantial damages with respect to the
consummation of the transactions contemplated hereby (and in each case remains
pending or outstanding), and there shall not be in effect any Order by a
Governmental Body of competent jurisdiction restraining, enjoining or otherwise
prohibiting the consummation of the transactions contemplated hereby;
(g) the Sellers shall have obtained or made (i) each consent, approval,
order or authorization of, or registration, declaration or filing with, any
Governmental Body required to be obtained or made by any of such parties in
connection with the execution and delivery of this Agreement or the consummation
of the transactions contemplated hereby, and (ii) those consents, waivers,
approvals, filings and notices referred to in SECTION 5.3(b) or 6.3(c) hereof,
except to the extent any such consent, waiver, approval, filing or notice is not
required to consummate the transactions contemplated hereby;
(h) except for the Sellers listed on SCHEDULE 5.11(h), each of the Sellers
shall have provided Purchaser with an affidavit of non-foreign status that
complies with Section 1445 of the Code (a "FIRPTA AFFIDAVIT");
(i) DOIL shall have provided Purchaser with a certificate complying with
Treasury Regulations Section 1.897-2(g)(1)(ii) that states that DOIL is not a
U.S. real property holding company;
(j) DOP shall have provided a statement to Purchaser complying with
Temporary Treasury Regulation Section 1.1445-11T(d)(2)(i) that states that fifty
percent or more of the value of DOP's gross assets does not consist of U.S. real
property interests and/or that ninety percent or more of the value of DOP's
gross assets does not consist of U.S. real property interests plus cash or cash
equivalents;
(k) Purchaser shall have received the written resignations of each of the
directors of DOIL, except as otherwise requested by Purchaser;
(l) an offer letter containing the terms set forth on EXHIBIT F hereto and
otherwise mutually agreeable to Purchaser and DOIL shall have been executed and
delivered to Purchaser by each of the individuals designated to deliver such a
letter on EXHIBIT G hereto, with
44
an allocation of FRI restricted stock to such
individuals (where applicable) as set forth in a letter agreed to by DOIL and
Purchaser as of the date hereof;
(m) each of the DOIL Sellers shall have delivered, or caused to be
delivered, to Purchaser stock certificates representing the DOIL Shares owned by
such DOIL Seller, duly endorsed in blank or accompanied by stock transfer powers
and with all requisite stock transfer tax stamps attached;
(n) each of the DOP Sellers shall have delivered, or caused to be
delivered, to Purchaser an instrument of assignment and transfer with respect
the DOP Interests owned by such DOP Seller in the form of EXHIBIT H hereto;
(o) the Sellers shall have irrevocably appointed the Seller Representative,
in accordance with SECTION 11.3 of this Agreement, which such Person or
committee of Persons shall be reasonably acceptable to Purchaser;
(p) the Sellers shall have delivered, or caused to be delivered, to
Purchaser certificates of good standing as of a recent date with respect to DOIL
and DOP issued by the Secretary of State of the State of Delaware and for each
state in which DOIL or DOP is qualified to do business as a foreign corporation;
(q) a waiver shall have been executed and delivered by three-fourths in
interest of the limited partners of Darby-BBVA Latin American Private Equity
Fund, L.P. and Darby-BBVA Latin American Private Equity Fund (Ontario), L.P., of
Section 2.01(c) of the limited partnership agreements of such entities, and
Section 6 of the First Amended and Restated Investment Advisory Agreement dated
as of January 17, 2003, substantially in the form attached hereto as EXHIBIT I;
(r) each of the individuals designated on EXHIBIT G to deliver a
non-compete agreement shall have executed and delivered such an agreement
substantially in the form of EXHIBIT J-1, J-2, J-3 or J-4 (as indicated on
EXHIBIT G), containing the terms for each such individual set forth on EXHIBIT
G, with an allocation of FRI restricted stock to such individuals (where
applicable) as set forth in a letter agreed to by DOIL and Purchaser as of the
date hereof;
(s) each of the individuals designated on EXHIBIT G to deliver one or more
letters relating to such individual's Carried Interests in the Darby Funds shall
have executed and delivered such letters containing the general terms set forth
in EXHIBITS K-1 through K-4 hereto (or, for those Darby Funds not covered by
such Exhibits, in the standard Carried Interest documentation for such Darby
Funds) (as applicable), and containing the specific terms for each such
individual as set forth in the letter referred to in SECTION 5.23(p);
(t) the Sellers shall have delivered to Purchaser a waiver providing that
the restrictions set forth in Section 2.9 of the Amended and Restated
Shareholders' Agreement by and among Citicorp International Finance Corporation,
Latin America Capital Partners II L.P., AIG-GE Capital Latin American
Infrastructure Fund L.P., Darby Latin American Holdings, Ltd., Motorola Inc.,
Invercel (Delaware) LLC, Telcom-Invercel Investors, L.L.C., Tempora S.A., Casa
Editorial El Tiempo, S.A., Promision Celular S.A. - Promicel S.A. and Avantel
Holdings, Ltd., shall not apply to FRI and its Affiliates (other than Purchaser
and its subsidiaries); and
45
(u) each of the Sellers shall have delivered, or caused to be delivered, to
Purchaser such other documents as Purchaser shall reasonably request to more
effectively consummate the sale of its DOIL Shares or DOP Interests, as
applicable.
9.2 CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SELLERS. The obligations of
the Sellers to consummate the transactions contemplated by this Agreement are
subject to the fulfillment, prior to or on the Closing Date, of each of the
following conditions (any or all of which may be waived by DOIL in whole or in
part to the extent permitted by applicable Law):
(a) the representations and warranties of FRI and Purchaser set forth in
this Agreement qualified as to materiality shall be true and correct, and those
not so qualified shall be true and correct in all material respects, as of the
date of this Agreement and as of the Closing as though made at and as of the
Closing, except to the extent such representations and warranties expressly
relate to an earlier date (in which case such representations and warranties
qualified as to materially shall be true and correct, and those not so qualified
shall be true and correct in all material respects, on and as of such earlier
date);
(b) FRI and Purchaser shall have performed and complied in all material
respects with all obligations and agreements required by this Agreement to be
performed or complied with by each of them on or prior to the Closing Date;
(c) Sellers shall have received (i) a certificate signed by each of the
Chief Executive Officer and Chief Financial Officer of each of FRI and
Purchaser, in the form attached hereto as EXHIBIT E-1, dated the Closing Date,
to the effect that the conditions specified above in SECTIONS 9.2(A) and (B)
have been satisfied in all respects;
(d) no Legal Proceedings shall have been instituted by any Governmental
Body against any Seller, any Darby Company, FRI or Purchaser seeking to restrain
or prohibit the consummation of the transactions contemplated hereby (and in
each case remains pending or outstanding), and there shall not be in effect any
Order by a Governmental Body of competent jurisdiction restraining, enjoining or
otherwise prohibiting the consummation of the transactions contemplated hereby;
(e) FRI and Purchaser shall have obtained or made each consent, approval,
order or authorization of, or registration, declaration or filing with, any
Governmental Body or other Person required to be obtained or made by any of such
parties in connection with the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby;
(f) Purchaser shall have delivered, or caused to be delivered, to the
Sellers evidence of the wire transfers referred to in SECTION 2.3 hereof;
(g) an offer letter containing the terms set forth on EXHIBIT F hereto and
otherwise mutually agreeable to Purchaser and DOIL shall have been executed and
delivered to Purchaser by each of the individuals designated to deliver such a
letter on EXHIBIT G hereto, with an allocation of FRI restricted stock to such
individuals (where applicable) as set forth in a letter agreed to by DOIL and
Purchaser as of the date hereof;
46
(h) each of the individuals designated on EXHIBIT G to deliver one or more
letters relating to such individual's Carried Interests in the Darby Funds shall
have executed and delivered such letters containing the general terms set forth
in EXHIBITS K-1 through K-4 hereto (or, for those Darby Funds not covered by
such Exhibits, in the standard Carried Interest documentation for such Darby
Funds) (as applicable), and containing the specific terms for each such
individual as set forth in the letter referred to in SECTION 5.23(P);
(i) Purchaser shall have executed and delivered to Seller a counterpart of
the DOP LP Agreement; and
(j) each of FRI and Purchaser shall have delivered, or caused to be
delivered, to each Seller such other documents as such Seller shall reasonably
request to more effectively consummate the transactions contemplated hereby.
ARTICLE X
INDEMNIFICATION
10.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the parties contained in ARTICLES V, VI and VII of this Agreement
shall survive the Closing until December 31, 2004; provided, however, that the
representations and warranties set forth in SECTIONS 5.21, 6.6 and 7.6 shall
survive the Closing until the third (3rd) anniversary of the Closing Date; the
representations and warranties set forth in SECTIONS 5.4, 5.5 (but only the
final two sentences thereof) and 6.4 shall survive the Closing until thirty (30)
days following the expiration of the applicable statute of limitations with
respect to the particular matter that is the subject matter thereof; and the
representations and warranties set forth in SECTION 5.11 shall survive the
Closing as set forth in SECTION 10.5(h) hereof (in each case, the "SURVIVAL
PERIOD"); provided, however, that any obligations to indemnify and hold harmless
shall not terminate with respect to any Losses as to which the Person to be
indemnified shall have given notice (stating in reasonable detail the basis of
the claim for indemnification) to the indemnifying party in accordance with
SECTION 10.3(a) before the termination of the applicable Survival Period.
10.2 INDEMNIFICATION.
(a) Subject to SECTIONS 10.1, 10.4 and 10.5 hereof, each Seller hereby
agrees severally and not jointly to indemnify and hold FRI, Purchaser, DOIL, DOP
and their respective directors, officers, employees, Affiliates, agents,
attorneys, representatives, successors and assigns (collectively, the "PURCHASER
INDEMNIFIED PARTIES") harmless from and against:
(i) any and all losses, liabilities, obligations, damages (excluding
punitive damages), costs and expenses (individually, a "LOSS" and,
collectively, "LOSSES") based upon, attributable to or resulting from the
failure of any representation or warranty set forth in ARTICLE V of this
Agreement to be true and correct in all respects at the date hereof and at
the Closing Date (disregarding for this purpose any materiality
qualifications contained therein and the word "material" contained in the
definition of Material Adverse Effect, except as set forth on SCHEDULE
10.2);
47
(ii) any and all Losses based upon, attributable to or resulting from
the failure of any representation or warranty made by such Seller set forth
in ARTICLE VI of this Agreement to be true and correct in all respects at
the date hereof and at the Closing Date (disregarding for this purpose any
materiality qualifications contained therein and the word "material"
contained in the definition of Material Adverse Effect);
(iii) any and all Losses based upon, attributable to or resulting from
the breach of any covenant or other agreement on the part of any Darby
Party under this Agreement or any other Seller Document; and
(iv) any and all notices, actions, suits, proceedings, claims,
demands, assessments, judgments, costs, penalties and expenses, including
reasonable attorneys' and other professionals' fees and disbursements
(collectively, "EXPENSES") incident to any and all Losses with respect to
which indemnification is provided hereunder.
(b) Subject to SECTIONS 10.1 and 10.4, FRI and Purchaser hereby agree
jointly and severally to indemnify and hold the Sellers and their respective
directors, officers, employees, Affiliates, agents, attorneys, representatives,
successors and assigns (collectively, the "SELLER INDEMNIFIED PARTIES") harmless
from and against:
(i) any and all Losses based upon, attributable to or resulting from
the failure of any representation or warranty of FRI or Purchaser set forth
in this Agreement or any other Purchaser Document, to be true and correct
at the date hereof and at the Closing Date (disregarding for this purpose
any materiality qualifications contained therein and the word "material"
contained in the definition of Material Adverse Effect);
(ii) any and all Losses based upon, attributable to or resulting from
the breach of any covenant or other agreement on the part of FRI or
Purchaser under this Agreement or any other Purchaser Document; and
(iii) any and all Expenses incident to any and all Losses with respect
to which indemnification is provided hereunder.
10.3 INDEMNIFICATION PROCEDURES.
(a) In the event that any Legal Proceedings shall be instituted or that any
claim or demand shall be asserted by any third party in respect of which payment
may be sought under SECTION 10.2 hereof ("CLAIM") (regardless of the limitations
set forth in SECTION 10.4), the indemnified party shall promptly cause written
notice (the "CLAIM NOTICE") of the assertion of any Claim of which it has
Knowledge which is covered by this indemnity to be forwarded to the indemnifying
party, specifying in reasonable detail the nature of the Claim and, to the
extent practicable, the amount or the estimated amount thereof and the source of
the Loss under SECTION 10.2. The indemnifying party shall have the right, at its
sole expense, to be represented by counsel of its choice, which must be
reasonably satisfactory to the indemnified party, and to defend against,
negotiate, settle or otherwise deal with any Claim which relates to any Losses
indemnified against hereunder; provided that the indemnifying party shall have
acknowledged in writing to the indemnified party its unqualified obligation to
indemnify the indemnified party as provided hereunder. If the indemnifying party
elects to defend against, negotiate, settle or
48
otherwise deal with any Claim which relates to any Losses indemnified against
hereunder, it shall within fifteen (15) days (or sooner, if the nature of the
Claim so requires) from the date of personal delivery or mailing of the Claim
Notice notify the indemnified party of its intent to do so, whereupon it shall
have the sole power to direct and control such defense except as provided below.
If the indemnifying party elects not to defend against, negotiate, settle or
otherwise deal with any Claim which relates to any Losses indemnified against
hereunder, fails to notify the indemnified party of its election as herein
provided or contests its obligation to indemnify the indemnified party for such
Losses under this Agreement, the indemnified party may defend against,
negotiate, settle or otherwise deal with such Claim. If the indemnified party
defends any Claim, then the indemnifying party shall reimburse the indemnified
party for the Expenses of defending such Claim upon submission of periodic
bills. If the indemnifying party shall assume the defense of any Claim, the
indemnified party may participate, at his or its own expense, in the defense of
such Claim; PROVIDED, HOWEVER, that such indemnified party shall be entitled to
participate in any such defense with separate counsel at the expense of the
indemnifying party if (i) so requested by the indemnifying party to participate
or (ii) in the reasonable written opinion of counsel to the indemnified party, a
conflict or potential conflict exists between the indemnified party and the
indemnifying party in the conduct of the defense of such Claim; and PROVIDED,
FURTHER, that the indemnifying party shall not be required to pay for more than
one such counsel for all indemnified parties in connection with any Claim. The
parties hereto agree to cooperate fully with each other in connection with the
defense, negotiation or settlement of any such Claim. Notwithstanding anything
in this SECTION 10.3 to the contrary, neither the indemnifying party nor the
indemnified party shall, without the written consent of the other party, settle
or compromise any indemnifiable Claim or permit a default or consent to entry of
any judgment unless the claimant and such party provide to such other party an
unqualified release from all liability in respect of the indemnifiable Claim.
Notwithstanding the foregoing, if a settlement offer solely for money damages is
made by the applicable third party claimant, and the indemnifying party notifies
the indemnified party in writing of the indemnifying party's willingness to
accept the settlement offer and, subject to the applicable limitations of
SECTION 10.4, pay the amount called for by such offer, and the indemnified party
declines to accept such offer, the indemnified party may continue to contest
such indemnifiable Claim, free of any participation by the indemnifying party,
and the amount of any ultimate liability with respect to such indemnifiable
Claim that the indemnifying party has an obligation to pay hereunder shall be
limited to the lesser of (A) the amount of the settlement offer that the
indemnified party declined to accept plus the Expenses of the indemnified party
relating to such indemnifiable Claim through the date of its rejection of the
settlement offer or (B) the aggregate Losses of the indemnified party with
respect to such indemnifiable Claim. If the indemnifying party makes any payment
on any indemnifiable Claim, the indemnifying party shall be subrogated, to the
extent of such payment, to all rights and remedies of the indemnified party to
any Claims (other than insurance Claims, which are covered by SECTION 10.4(b))
of the indemnified party with respect to such indemnifiable Claim.
(b) After any final judgment or award shall have been rendered by a
Governmental Body of competent jurisdiction and the expiration of the time in
which to appeal therefrom, or a settlement shall have been consummated in
accordance with the requirements of this SECTION 10.3, or the indemnified party
and the indemnifying party shall have arrived at a mutually binding agreement
with respect to a Claim hereunder, the indemnified party shall forward to the
indemnifying party notice of any sums due and owing by the indemnifying party
49
pursuant to this Agreement with respect to such matter and the indemnifying
party shall be required to pay all of the sums so due and owing to the
indemnified party by wire transfer of immediately available funds within ten
(10) Business Days after the date of such notice.
(c) The failure of the indemnified party to give reasonably prompt notice
of any Claim shall not release, waive or otherwise affect the indemnifying
party's obligations with respect thereto except to the extent that the
indemnifying party actually incurs an incremental out-of-pocket expense or
otherwise has been materially damaged or prejudiced as a result of such delay.
(d) With respect to any Claim for which any Purchaser Indemnified Person seeks
indemnification hereunder, except with respect to breaches of the
representations and warranties set forth in ARTICLE VI, the Seller
Representative shall act on behalf of all of the indemnifying parties, the
Purchaser Indemnified Persons may deal exclusively with the Seller
Representative with respect thereto and any actions or decisions of the Seller
Representative shall be binding on all of the indemnifying parties.
10.4 LIMITATIONS ON INDEMNIFICATION.
(a) The amount of any Losses and Expenses shall be reduced by the net
amount of the tax benefits actually realized by the indemnified party by reason
of such Losses and Expenses, as certified by the Seller Representative or the
Chief Financial Officer of FRI, as applicable. No indemnifying party will have
the right to make any examination of or to obtain any indemnified party's Tax
Returns or supporting work papers or other documents in connection with any
indemnification claim hereunder, and no indemnified party shall be required to
take any position on a Tax Return in connection therewith.
(b) The amount which any indemnifying party is or may be required to pay
any indemnified party pursuant to SECTION 10.2(a), 10.2(b) or 10.5 hereof shall
be reduced (including without limitation, retroactively) by any insurance
proceeds actually recovered by or on behalf of such indemnified party in
reduction of the related Loss and Expenses. If an indemnified party shall have
received the payment required by this Agreement from an indemnifying party in
respect of a Loss and Expenses and shall subsequently actually receive insurance
proceeds in respect of such Loss and Expenses, then such indemnified party shall
pay to such indemnifying party a sum equal to the amount of such insurance
proceeds actually received (net of any expenses, other than the cost of carrying
such insurance, in obtaining the same). Nothing in this SECTION 10.4(b) shall
obligate an indemnified party to seek insurance recoveries in respect of a Loss.
(c) The Sellers shall not have any liability under SECTION 10.2(a)(i) or
SECTION 10.2(a)(ii) (or SECTION 10.2(a)(iv) in respect of Claims arising under
such Sections) unless the aggregate amount of Losses and Expenses finally
determined to be indemnifiable under SECTION 10.2(a)(i), SECTION 10.2(a)(ii)
and/or SECTION 10.2(a)(iv), other than in respect of the representations and
warranties set forth in SECTIONS 5.4, 5.5 (but only the final two sentences
thereof), 5.11, 5.21, 6.4 and 6.6 hereof, exceeds an amount equal to $758,786
(the "BASKET") and, in such event, the Sellers shall be required to pay the
entire amount of all such Losses and Expenses, subject to the other limitations
in this SECTION 10.4 and in SECTION 10.3. FRI and
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Purchaser shall not have any liability under SECTION 10.2(b)(i) (or SECTION
10.2(b)(iii) in respect of Claims arising under such Section) unless the
aggregate amount of Losses and Expenses finally determined to be indemnifiable
by such Persons under SECTION 10.2(b)(i) or SECTION 10.2(b)(iii) other than in
respect of the representations and warranties set forth in SECTION 7.6 hereof
exceeds the Basket and, in such event, FRI and Purchaser shall be required to
pay the entire amount of all such Losses and Expenses, subject to the other
limitations in this SECTION 10.4 and in SECTION 10.3.
(d) No Seller shall have any further obligation to indemnify any Person
under SECTION 10.2(a)(i) or SECTION 10.2(a)(ii) (or SECTION 10.2(a)(iv) in
respect of Claims arising under such Sections) once the aggregate amount of
Losses and Expenses for which such Seller has provided indemnification under any
Section of this ARTICLE X to any one or more Persons included within the
Purchaser Indemnified Parties equals the amount set forth opposite such Seller's
name on the applicable column of EXHIBIT C, other than for the breach of any
representation or warranty contained in SECTIONS 5.4, 5.5 (but only the final
two sentences thereof), 5.11, 5.21, 6.4 and 6.6 of this Agreement. No Seller
shall have any further obligation to indemnify any Person under SECTION 10.2 or
SECTION 10.5 once the aggregate amount of Losses and Expenses for which such
Seller has provided indemnification under any Section of this ARTICLE X to any
one or more Persons included within the Purchaser Indemnified Parties equals the
"Total Consideration Received" by such Seller as set forth on EXHIBIT C. Neither
FRI nor Purchaser shall have any further obligation to indemnify any Person
under SECTION 10.2(b)(i) or SECTION 10.2(b)(ii) once the aggregate amount of
Losses and Expenses for which FRI and/or Purchaser has provided indemnification
under any Section of this ARTICLE X to any one or more Persons included within
the Seller Indemnified Parties equals $50,000,000, other than for the breach of
any representation or warranty contained in SECTION 7.6 of this Agreement.
Neither FRI nor Purchaser shall have any further obligation to indemnify any
Person under SECTION 10.2 or SECTION 10.5 once the aggregate amount of Losses
and Expenses for which FRI and/or Purchaser has provided indemnification under
any Section of this ARTICLE X to any one or more Persons included within the
Seller Indemnified Parties equals the sum of the DOIL Purchase Price and the DOP
Purchase Price.
(e) Except with respect to breaches of the representations and warranties
set forth in ARTICLE VI and breaches of covenants by any Seller (as to which
each Seller shall only be liable for Losses to the Purchaser Indemnified Parties
arising out of its own breach of such representations or covenants) and subject
to the caps in SECTION 10.4(d) and the other limitations in this SECTION 10.4
and in SECTION 10.3, the liability of any Seller with respect to any Loss for
which indemnification is provided hereunder shall be equal to the product of
such Loss and the percentage set forth opposite such Seller's name on the
applicable column of EXHIBIT C hereto.
(f) The Sellers shall have no recourse against DOIL, DOP or the other
Subsidiaries or their respective directors, officers, employees, Affiliates
(other than FRI or Purchaser in respect of counterclaims related to or arising
out of any such Claim), agents, attorneys, representatives, assigns or
successors for any Claims asserted by Purchaser Indemnified Parties.
(g) A claim for indemnification for breach of representation or warranty
may not be sought under this ARTICLE X if the Losses in respect of such claim
(aggregated with all
51
other Losses relating to the same event or circumstances in respect of such
claim) are less than $15,000.
(h) For the avoidance of doubt, in no event shall any Seller have any
liability for indemnification under this Agreement in excess of the "Total
Consideration Received" by such Seller as set forth on EXHIBIT C.
10.5 TAX MATTERS.
(a) TAX INDEMNIFICATION.
(i) Each Seller agrees to be responsible for and to indemnify and hold
the Purchaser Indemnified Parties harmless from and against any and all
Losses and Expenses resulting from, arising out of or based on the
following:
(A) any and all Taxes imposed on DOIL or any Subsidiary (or any
predecessor thereof), or for which DOIL or any Subsidiary (or any
predecessor thereof) may otherwise be liable by reason of transferee
liability, assumption, contract, operation of law or otherwise:
(1) for any taxable year or period that ends on or before
the Closing Date; and
(2) for any Taxes allocated to the Sellers pursuant to
SECTION 10.5(b)(v);
(B) any breach or inaccuracy of any of the representations
contained in SECTION 5.11, determined for this purpose without regard
to any materiality qualifier, or the failure to perform the covenants
contained in SECTION 8.2(b)(xvi); and
(C) any failure by the Sellers to timely pay any and all Taxes
required to be borne by the Sellers pursuant to SECTION 11.1.
(ii) Purchaser agrees to indemnify and hold harmless the Seller
Indemnified Parties from and against any and all Losses and Expenses
resulting from, arising out of or based on Taxes imposed on DOIL or any
Subsidiary: (A) for any taxable year or period that begins after the
Closing Date, (B) for the period allocated to Purchaser pursuant to SECTION
10.5(b)(v), and (C) for any failure by Purchaser to timely pay any and all
Taxes required to be borne by Purchaser pursuant to SECTION 11.1.
For purposes of SECTION 10.5 as and to the extent it relates to a
particular indemnifiable Tax, the Sellers will be credited for any estimated Tax
payments made on or before the Closing Date towards the satisfaction of such
Tax.
(b) PREPARATION OF TAX RETURNS; PAYMENT OF TAXES.
(i) The Sellers shall cause PricewaterhouseCoopers LLP to prepare and
to file all the federal, state, local and foreign Tax Returns required to
be filed by the Darby Companies
52
with respect to tax periods (excluding any portions thereof) ended on or
prior to the Closing Date and shall pay or cause to be paid any and all
Taxes due with respect to such Returns. All Tax Returns described in this
SECTION 10.5(b)(i) shall be prepared in a manner consistent with prior
practice unless a past practice has been finally determined to be incorrect
by the applicable Taxing Authority or a contrary treatment is required by
applicable Tax Law (or judicial or administrative interpretations thereof).
The Sellers shall cause PricewaterhouseCoopers LLP to provide Purchaser
with copies of such completed Tax Returns at least 20 days prior to the
filing date, and Purchaser shall be provided an opportunity to review such
Tax Returns and supporting work papers and schedules prior to the filing of
such Tax Returns. Purchaser shall have the right to approve only those
portions of such Tax Returns that involve items that (i) recur in the Tax
Returns of DOIL or any Subsidiary for any period after the Closing Date or
(ii) otherwise could adversely affect Purchaser or such entities (such
issues referred to as "Approval Items"). The failure of Purchaser to
propose any changes to Approval Items on any such Tax Return within 10 days
shall be deemed to be an indication of its approval thereof. The Sellers
and Purchaser shall attempt in good faith mutually to resolve any
disagreements regarding such Approval Items on Tax Returns prior to the due
date for filing thereof. In the event that the Sellers and Purchaser are
unable to resolve any dispute with respect to such Approval Items on a Tax
Return at least 10 days prior to the due date for the filing of such Tax
Return, such dispute shall be resolved pursuant to SECTION 10.5(f).
(ii) Following the Closing, FRI shall cause Purchaser to prepare or
have prepared all federal, foreign, state and local Tax Returns required to
be filed by DOIL or any Subsidiary with respect to tax periods ending after
the Closing Date. Purchaser shall file or cause to be filed all such Tax
Returns and shall, subject to receiving the payments from the Sellers
referred to in Section 10.5(b)(iv), pay or cause to be paid the Taxes shown
due thereon.
(iii) To the extent any Taxes shown due on any Tax Return described in
Section 10.5(b)(ii) are indemnifiable by the Sellers, (A) such Tax Return
shall be prepared in a manner consistent with prior practice unless
otherwise required by applicable tax laws; (B) Purchaser shall provide the
Sellers with copies of such Tax Return or the portion thereof relating to
amounts indemnifiable by the Sellers, and supporting work papers and
schedules at least 20 days prior to the due date for filing such return;
and (C) the Sellers shall have the right to review and approve (which
approval shall not be unreasonably withheld) such Tax Returns or such
portion for 10 days following receipt thereof. The failure of the Sellers
to propose any changes to any such Tax Return or portion thereof within
such 10 days shall be deemed to be an indication of its approval thereof.
The Sellers and Purchaser shall attempt in good faith mutually to resolve
any disagreements regarding such Tax Returns or portion thereof prior to
the due date for filing thereof. In the event that the Sellers and
Purchaser are unable to resolve any dispute with respect to such Tax Return
or portion thereof at least 10 days prior to the due date for the filing of
such Tax Return, such dispute shall be resolved pursuant to SECTION
10.5(f).
(iv) Not later than 5 days before the due date for payment of Taxes
with respect to any Tax Returns which Purchaser has the responsibility to
file, the Sellers shall pay to
53
Purchaser an amount equal to that portion of the Taxes shown on such return
for which the Sellers have an obligation to indemnify the Purchaser
Indemnified Parties pursuant to the provisions of SECTION 10.5(a). No
payment pursuant to this SECTION 10.5(b)(iv) shall excuse the Sellers from
its indemnification obligations pursuant to SECTION 10.5(a) if the amount
of Taxes as ultimately determined (on audit or otherwise) for the periods
covered by such Tax Returns that are the responsibility of the Sellers
exceeds the amount of the Seller's payment under this Section 10.5(b)(iv).
If a dispute arises with respect to the underlying Tax Return or the amount
of Taxes for which the Sellers are responsible and is not resolved 5 days
prior to the due date of the underlying Tax Return, the Sellers shall pay
to Purchaser the amount that Purchaser deems to be due and owing; PROVIDED,
HOWEVER, that if the independent accounting firm shall determine that the
amount of Taxes as being the responsibility of the Sellers differs from the
amount paid to Purchaser, the Sellers shall pay to Purchaser, or Purchaser
shall pay to the Sellers, the amount necessary to reflect the independent
accounting firm's determination.
(v) With respect to all Taxes, the Sellers and Purchaser will, unless
prohibited by applicable law, close the taxable period of the Darby
Companies as of the close of the Closing Date. Neither the Sellers nor
Purchaser shall take any position inconsistent with the preceding sentence
on any Tax Return. In any case where applicable law does not permit any
Darby Company to close its taxable year on the Closing Date or in any case
in which a Tax is assessed with respect to a taxable period which includes
the Closing Date (but does not begin or end on that day) (a "STRADDLE
PERIOD"), then Taxes, if any, attributable to a Straddle Period shall be
allocated (i) to the Sellers for the period up to and including the Closing
Date, and (ii) to Purchaser for the period subsequent to the Closing Date.
Any allocation of income or deductions required to determine any Taxes
attributable to a Straddle Period shall be made by means of a closing of
the books and records of the Darby Companies as of the close of the Closing
Date, provided that exemptions, allowances or deductions that are
calculated on an annual basis (including, but not limited to, depreciation
and amortization deductions) shall be allocated between the period ending
on the Closing Date and the period after the Closing Date in proportion to
the number of days in each such period.
(vi) The Purchaser shall not, and shall not cause or direct any other
Person to, file an election under Section 338 of the Code (or any similar
provision under any other Law) with respect to any interest purchased under
this Agreement.
(vii) The Sellers shall cause Pricewaterhouse Coopers LLP to prepare
and file with the IRS on behalf of DOIL the notice described in Treasury
Regulations Section 1.897-2(h)(2) within 30 days of the Closing Date.
(c) COOPERATION WITH RESPECT TO TAX RETURNS. Purchaser and the Sellers
agree to furnish or cause to be furnished to each other, and each at their own
expense, as promptly as practicable, such information (including access to books
and records) and assistance, including making employees available on a mutually
convenient basis to provide additional information and explanations of any
material provided, relating to DOIL or any Subsidiary as is reasonably necessary
for the filing of any Tax Return, for the preparation for any audit, and for the
prosecution or defense of any claim, suit or proceeding relating to any
adjustment or proposed
54
adjustment with respect to Taxes. Purchaser shall (or shall cause DOIL or the
applicable Subsidiary to) retain, and shall provide the Sellers reasonable
access to (including the right to make copies of), such supporting books and
records and any other materials that the Sellers may specify with respect to Tax
matters relating to any taxable period ending on or prior to the Closing Date
until the relevant statute of limitations has expired. After such time, such
material may be disposed, provided that prior to such disposition Purchaser,
DOIL or the applicable Subsidiary shall give the Sellers a reasonable
opportunity to take possession of such materials.
(d) TAX AUDITS.
(i) If a notice of deficiency, proposed adjustment, assessment, audit,
examination or other administrative or court proceeding, suit, dispute or
other claim (a "TAX Claim") with respect to DOIL or any Subsidiary shall be
received by the Sellers, Purchaser, DOIL, or their respective Affiliates (a
"NOTIFIED PARTY") by any Taxing Authority with respect to Taxes for which
another party would be liable pursuant to SECTION 10.5(a), the Notified
Party shall notify such other party in writing of such Tax Claim; PROVIDED,
HOWEVER, that the failure of a party to give the other party prompt notice
as provided herein shall not relieve such failing party of its obligations
under this SECTION 10.5 except to the extent that the other party is
actually and materially prejudiced thereby.
(ii) The Sellers shall have the sole right and obligation to represent
the interests of DOIL or any Subsidiary in any Tax Claim relating
exclusively to taxable periods ending on or before the Closing Date and to
employ counsel of its choice at its expense; provided, however, that if the
results of such Tax Claim involve an issue that recurs in taxable periods
of DOIL or such Subsidiary ending after the Closing Date or otherwise could
adversely affect Purchaser, DOIL, or any of their respective Affiliates for
any taxable period ending after the Closing Date, then (A) Sellers and
Purchaser shall jointly control the defense and settlement of any such Tax
Claim at each party's own expense, and (B) there shall be no settlement
with respect thereto without the consent of the other party, which consent
shall not be unreasonably withheld or delayed.
(iii) The Sellers and Purchaser jointly shall represent the interests
of DOIL or any Subsidiary with respect to any Tax Claim relating to a
Straddle Period. Any disputes regarding the conduct or resolution of any
Tax Claim shall be resolved pursuant to SECTION 10.5(f). All costs, fees
and expenses paid to third parties in the course of such proceeding shall
be borne by the Sellers and Purchaser in the same ratio as the ratio in
which, pursuant to the terms of this Agreement, Sellers and Purchaser would
share the responsibility for payment of the Taxes subject to such Tax
Claim.
(iv) Purchaser shall have the sole right to represent the interests of
DOIL or any Subsidiary with respect to all other Tax Claims; PROVIDED,
HOWEVER, that if the results of any such other Tax Claim involves an issue
that occurs in taxable periods (or portions thereof) of DOIL or such
Subsidiary ending on or before the Closing Date or otherwise could
adversely affect the Sellers, or any of their respective Affiliates for any
taxable period (or portions thereof) ending on or before the Closing Date,
then (A) Seller Representative and Purchaser shall jointly control the
defense and settlement of any such Tax Claim solely as it relates to such
issue at each party's own expense, and (B) there
55
shall be no settlement with respect to such issue without the consent of
the other party, which consent shall not be unreasonably withheld or
delayed.
(e) REFUND CLAIMS. To the extent any determination of Tax liability of DOIL
or any Subsidiary, whether as the result of an audit or examination, a claim for
refund, the filing of an amended return or otherwise, results in any refund of
Taxes paid attributable to (i) any period which ends on or before the Closing
Date or (ii) any Straddle Period, any such refund shall belong to the Sellers,
provided that in the case of any Tax refund described in clause (ii) of this
SECTION 10.5(e), the portion of such Tax refund which shall belong to the
Sellers shall be that portion that is attributable to the portion of that period
which ends on the Closing Date (determined on the basis of an interim closing of
the books as of the Closing Date), and Purchaser shall promptly pay any such
refund, and the interest actually received thereon, to the Sellers upon receipt
thereof by Purchaser. Any and all other refunds shall belong to Purchaser. Any
payments made under this SECTION 10.5(e) shall be net of any Taxes payable with
respect to such refund or interest thereon (taking into account any actual
reduction in Tax liability realized upon the payment pursuant to this SECTION
10.5(e)).
(f) DISPUTES. Any dispute as to any matter covered hereby shall be resolved
by an independent accounting firm mutually acceptable to the Sellers and
Purchaser. The fees and expenses of such accounting firm shall be borne equally
by the Sellers and Purchaser. If any dispute with respect to a Tax Return is not
resolved prior to the due date of such Tax Return, such Tax Return shall be
filed in the manner which the party responsible for preparing such Tax Return
deems correct. Notwithstanding the filing of such Tax Return, the selected
accounting firm shall resolve the dispute, and such Tax Return shall be amended
if permitted under applicable Law.
(g) EXCLUSIVITY. The indemnification provided for in this SECTION 10.5
shall be the sole remedy for any claim in respect of Taxes and the provisions of
SECTIONS 10.2, 10.3 and 10.4 (except SECTIONS 10.4(a), (b) and (d)) hereof shall
not apply to such claims.
(h) TIME LIMITS. Any claim for indemnity under this SECTION 10.5 must be
made at any time prior to 60 days after the expiration of the applicable Tax
statute of limitations with respect to the relevant taxable period (including
all periods of extension, whether automatic of permissive).
(i) TAX BASIS. Purchaser's adjustment to its tax basis under Section 743(b)
of the Code shall be allocated as set forth in EXHIBIT D hereto (subject to
adjustments, mutually agreed upon by Purchaser and Sellers, for changes from
January 1, 2003 through the Closing Date, which adjustments would be made
consistent with the principles underlying Exhibit D), which has been arrived at
by arm's length negotiation, in compliance with Section 755 of the Code and the
regulations promulgated thereunder. Each of the Sellers and Purchaser shall,
unless otherwise required by Law, (i) timely file all forms and Tax Returns
required to be filed in connection with such allocation, (ii) be bound by such
allocation for purposes of determining Taxes, (iii) prepare and file, and cause
its Affiliates to prepare and file, its Tax Returns on a basis consistent with
such allocation and (iv) take no position, and cause its Affiliates to take no
position, inconsistent with such allocation on any applicable Tax Return, in any
audit or proceeding before any taxing authority, in any report made for Tax,
financial accounting or any
56
other purposes, or otherwise. In the event that the Allocation set forth on
EXHIBIT D hereto (as adjusted) is disputed by a Tax Authority, the party
receiving notice of such dispute shall promptly notify the other party hereto
concerning the existence and resolution of such dispute.
(j) LIMITATION OF LIABILITY. Subject to SECTIONS 10.4(a), (b) and (d), the
liability of any Seller with respect to any Loss for which indemnification is
provided under this SECTION 10.5 shall be equal to the product of such Loss and
the percentage set forth opposite such Seller's name on the applicable column of
EXHIBIT C hereto.
10.6 TAX TREATMENT OF INDEMNITY PAYMENTS. Sellers and Purchaser agree to
treat any indemnity payment made pursuant to this ARTICLE X as an adjustment to
the Purchase Price for federal, state, local and foreign income tax purposes.
ARTICLE XI
MISCELLANEOUS
11.1 PAYMENT OF SALES, USE OR SIMILAR TAXES. All sales, use, transfer,
intangible, recordation, documentary stamp or similar Taxes or charges, of any
nature whatsoever, applicable to, or resulting from, the transactions
contemplated by this Agreement shall be borne fifty percent by Purchaser and
fifty percent by the Sellers.
11.2 EXPENSES. Except as otherwise provided in this Agreement, FRI and the
Purchaser shall bear their own expenses incurred in connection with the
negotiation and execution of this Agreement and each other agreement, document
and instrument contemplated by this Agreement and the consummation of the
transactions contemplated hereby and thereby. The Sellers shall bear the
following expenses incurred in connection with the negotiation and execution of
this Agreement and each other agreement, document and instrument contemplated by
this Agreement and the consummation of the transactions contemplated hereby and
thereby, for which DOP is liable but which the Sellers have agreed to pay: (i)
the fees and expenses of Skadden, Arps, Slate, Meagher & Flom LLP (the "SKADDEN
EXPENSES"); and (ii) the expenses of PriceWaterhouseCoopers LLP (the "PWC
EXPENSES"), provided, however, that, Sellers shall only be obligated to bear
such PWC Expenses as follows: (x) in the event that the Skadden Expenses are
equal to or exceed $500,000, DOP and DOIL will bear all PWC Expenses incurred by
the Sellers, and (y) in the event that the Skadden Expenses are less than
$500,000, the Sellers will only bear that portion of the PWC Expenses, or all,
as the case may be, such that when the PWC Expenses borne by the Sellers and the
Skadden Expenses are aggregated, the combined expenses to the Sellers shall not
exceed $500,000, and DOP and DOIL shall pay any remaining portion of the PWC
Expenses.
11.3 SELLER REPRESENTATIVE. The Sellers shall, at or prior to Closing,
irrevocably appoint a Person or a committee of Persons acting by majority (the
"SELLER REPRESENTATIVE") as each such Seller's representative, attorney-in-fact
and agent, with full power of substitution to act in the name, place and stead
of such Seller with respect to the transfer of the DOIL Shares and the DOP
Interests, as applicable, in accordance with the terms and provisions of this
Agreement (including ARTICLE X) and to act on behalf of such Seller in any
amendment of or litigation or arbitration involving this Agreement (and FRI and
Purchaser may deal exclusively
57
with the Seller Representative in this regard) and to do or refrain from doing
all such further acts and things, and to execute all such documents, as such
Seller Representative shall deem necessary or appropriate in conjunction with
any of the transactions contemplated by this Agreement, including, without
limitation, the power:
(a) to take all action necessary or desirable in connection with the waiver
of any condition to the obligations of the Sellers to consummate the
transactions contemplated by this Agreement;
(b) to negotiate, execute and deliver all ancillary agreements, statements,
certificates, statements, notices, approvals, extensions, waivers, undertakings,
amendments and other documents required or permitted to given in connection with
the consummation of the transactions contemplated by this Agreement (it being
understood that such Seller shall execute and deliver any such documents which
the Seller Representative agrees to execute);
(c) to terminate this Agreement if the Sellers are entitled to do so;
(d) to give and receive all notices and communications to be given or
received under this Agreement and to receive service of process in connection
with the any claims under this Agreement, including service of process in
connection with arbitration; and
(e) to take all actions which under this Agreement may be taken by the
Sellers and to do or refrain from doing any further act or deed on behalf of the
Seller which the Seller Representative deems necessary or appropriate in his
sole discretion relating to the subject matter of this Agreement as fully and
completely as such Seller could do if personally present.
If a Person or committee of Persons serving as Seller Representative ceases
to serve as Seller Representative for any reason, such other Person or committee
of Persons as may be designated by a majority of the Sellers shall succeed as
the Seller Representative, and Purchaser shall be notified of the identity of
such successor Seller Representative promptly following the designation thereof.
11.4 SUBMISSION TO JURISDICTION; CONSENT TO SERVICE OF PROCESS.
(a) Except for disputes to be resolved in accordance with SECTION 10.5(f)
hereof, the parties hereto hereby irrevocably submit to the non-exclusive
jurisdiction of any federal or state court located within the State of New York
(the "NEW YORK COURTS") with regard to any dispute arising out of or relating to
this Agreement or any of the transactions contemplated hereby (a "DISPUTE"), and
not as a general submission to such jurisdiction or with respect to any other
dispute, matter or claim whatsoever, and each party hereby irrevocably agrees
that all claims in respect of such Dispute or any suit, action proceeding
related thereto may be heard and determined in such courts. The parties hereby
irrevocably waive, to the fullest extent permitted by applicable law, any
objection which they may now or hereafter have to the laying of venue of any
such Dispute brought in a New York Court or any defense of inconvenient forum
for the maintenance of such suit. Each of the parties hereto agrees that a
judgment in any such Dispute may be enforced in other jurisdictions by suit on
the judgment or in any other manner provided by law. With regard to disputes to
be resolved in accordance with Section 10.5(f) hereof, the
58
parties submit to the non-exclusive jurisdiction of the New York Courts with
regard to actions to compel arbitration, in aid of arbitration or for
enforcement of an arbitral award.
(b) Each of the parties hereto hereby consents to process being served by
any party to this Agreement in any suit, action or proceeding by delivery of a
copy thereof in accordance with the provisions of SECTION 11.7.
11.5 ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS. This Agreement (including
the schedules and exhibits hereto) represents the entire understanding and
agreement between the parties hereto with respect to the subject matter hereof
and can be amended, supplemented or changed, and any provision hereof can be
waived, only by written instrument making specific reference to this Agreement
signed by the party against whom enforcement of any such amendment, supplement,
modification or waiver is sought. No action taken pursuant to this Agreement,
including without limitation, any investigation by or on behalf of any party,
shall be deemed to constitute a waiver by the party taking such action of
compliance with any representation, warranty, covenant or agreement contained
herein. The waiver by any party hereto of a breach of any provision of this
Agreement shall not operate or be construed as a further or continuing waiver of
such breach or as a waiver of any other or subsequent breach. No failure on the
part of any party to exercise, and no delay in exercising, any right, power or
remedy hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of such right, power or remedy by such party preclude any other
or further exercise thereof or the exercise of any other right, power or remedy.
All remedies hereunder are cumulative and are not exclusive of any other
remedies provided by law.
11.6 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable to contracts made
and performed in such state, without regard to its conflicts of laws provisions
(other than New York General Obligations Law Section 5-1401).
11.7 NOTICES. All notices and other communications under this Agreement
shall be in writing and shall be deemed given (i) when delivered personally by
hand (with written confirmation of receipt), (ii) when sent by facsimile (with
written confirmation of transmission) or (iii) one business day following the
day sent by overnight courier (with written confirmation of receipt), in each
case at the following addresses and facsimile numbers (or to such other address
or facsimile number as a party may have specified by notice given to the other
party pursuant to this provision):
If to any Darby Party, to:
Darby Overseas Investors, Ltd.
1133 Connecticut Avenue, N.W.
4th Floor
Washington, D.C. 20036
Attention: Clark H. Nielsen
59
With a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
1440 New York Avenue, N.W.
Washington, D.C. 20005
Facsimile: (202) 393-5760
Attention: Marcia R. Nirenstein, Esq. and Jim Alpi, Esq.
If to FRI or Purchaser, to:
Franklin Resources, Inc.
One Franklin Parkway
San Mateo, California 94403-1906
Attention: Martin Flanagan
Facsimile: (650) 312-3528, and
Attention: Leslie M. Kratter
Facsimile: (650) 312-2804
With a copy to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, NY 10153
Facsimile: (212) 310-8007
Attention: Raymond O. Gietz, Esq. and Jeffrey E. Tabak, Esq.
11.8 SEVERABILITY. If any term or other provision of this Agreement is
invalid, illegal, or incapable of being enforced by any law or public policy,
all other terms or provisions of this Agreement shall nevertheless remain in
full force and effect so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal, or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner in order
that the transactions contemplated hereby are consummated as originally
contemplated to the greatest extent possible.
11.9 BINDING EFFECT; ASSIGNMENT. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and
permitted assigns. Nothing in this Agreement shall create or be deemed to create
any third party beneficiary rights in any person or entity not a party to this
Agreement except as provided below. No assignment of this Agreement or of any
rights or obligations hereunder may be made by either the Darby Parties or FRI
or Purchaser (by operation of law or otherwise) without the prior written
consent of the other parties hereto and any attempted assignment without the
required consents shall be void; PROVIDED, HOWEVER, that Purchaser may assign
this Agreement and any or all rights or obligations hereunder (including,
without limitation, Purchaser's rights to purchase the DOIL Shares and the DOP
Interests and Purchaser's rights to seek indemnification hereunder) to any
Affiliate of FRI.
60
Upon any such permitted assignment, the references in this Agreement to
Purchaser shall also apply to any such assignee unless the context otherwise
requires.
11.10 NON-RECOURSE. No past, present or future director, officer, employee,
incorporator, member, partner, stockholder, Affiliate, agent, attorney or
representative of Purchaser (other than FRI) shall have any liability for any
obligations or liabilities of Purchaser under this Agreement of or for any claim
based on, in respect of, or by reason of, the transactions contemplated hereby
and thereby.
11.11 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
** REMAINDER OF PAGE INTENTIONALLY LEFT BLANK**
61
IN WITNESS WHEREOF, the parties hereto have duly executed this Purchase
Agreement as of the date first written above.
FRANKLIN RESOURCES, INC.
By: /s/ Martin L. Flanagan
--------------------------------
Name: Martin L. Flanagan
Title: President
DARBY HOLDINGS, INC.
By: /s/ Leslie M. Kratter
--------------------------------
Name: LESLIE M. KRATTER
Title: SENIOR VICE PRESIDENT
DARBY OVERSEAS INVESTMENTS, LTD.
By: /s/ Richard H. Frank
--------------------------------
Name: Richard H. Frank
Title: Chief Executive Officer
DARBY OVERSEAS PARTNERS, L.P.
By: DARBY OVERSEAS INVESTMENTS,
LTD., its Sole General Partner
By: /s/ Richard H. Frank
----------------------------
Name: Richard H. Frank
Title: Chief Executive Officer
DOP SELLERS:
BECHTEL DOP ENTERPRISES, INC.
By: /s/ Timothy D. Statton
---------------------------------
Name: TIMOTHY D. STATTON
Title: PRESIDENT
MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY
By: David L. Babson & Company, Inc.
as investment advisor
By: /s/ Richard B. McGauley
---------------------------------
Name: Richard B. McGauley
Title: Managing Director
/s/ Nicholas F. Brady
--------------------------------
Nicholas F. Brady
LUBAR NOMINEES
By: /s/ Sheldon B. Lubar
------------------------------
Sheldon B. Lubar, General Partner
WIEGERS & CO.
By: /s/ George A. Wiegers
--------------------------------
George A. Wiegers, General Partner
/s/ John P. Birkelund
--------------------------------
John P. Birkelund
SHULTZ 1989 FAMILY TRUST
By: /s/ George Shultz, Trustee
-------------------------------
George Shultz
/s/ Richard H. Frank
-------------------------------
Richard H. Frank
/s/ Nicholas B. Cutler
-------------------------------
Nicholas B. Cutler
/s/ Clark H. Nielsen
-------------------------------
Clark H. Nielsen
/s/ Lloyd L. Beatty, Jr.
-------------------------------
Lloyd L. Beatty, Jr.
/s/ Meredith B. Oliver
-------------------------------
Meredith B. Oliver
/s/ Reuben F. Richards
-------------------------------
Reuben F. Richards
/s/ Cordell W. Hull
-------------------------------
Cordell W. Hull
/s/ Daniel S. Gregory
-------------------------------
Daniel S. Gregory
/s/ Robert M.. Teeter
-------------------------------
Robert M. Teeter
/s/ Charles H. Dallara
-------------------------------
Charles H. Dallara
/s/ Gerrit Tammes
-------------------------------
Gerrit Tammes
DOIL SELLERS:
BEn DIRECT INVESTMENTS, LLC
By: /s/ Timothy D. Statton
--------------------------------
Name: TIMOTHY D. STATTON
Title: PRESIDENT
/s/ Nicholas F. Brady
-------------------------------
Nicholas F. Brady
LUBAR NOMINEES
By: /s/ Sheldon B. Lubar
---------------------------------
Sheldon B. Lubar, General Partner
WIEGERS & CO.
By: /s/ George A. Wiegers
---------------------------------
George A. Wiegers, General Partner
/s/ John P. Birkelund
-------------------------------
John P. Birkelund
EXHIBIT A
ADVISED DARBY FUNDS
ProBa, L.P.
Mass Mutual - Darby CBO
Etra Emerging Income Fund
Moneda Latin American Debt Fund
EXHIBIT B
SPONSORED DARBY FUNDS
Darby Emerging Markets Fund, L.P.
Darby-BBVA Latin American Private Equity Fund, L.P.
Darby-BBVA Latin American Private Equity Fund (Ontario), L.P.
Darby Latin American Mezzanine Fund, L.P.
Darby Emerging Markets Income Funds
Asian Infrastructure Mezzanine Capital Fund
Darby Technology Ventures Group, LLC
EXHIBIT D
ALLOCATION OF PURCHASE PRICE TO ASSETS (TAX BASIS)
(In thousands)
- ---------------------------------------------------------------------------
1. DOIL PURCHASE PRICE: $ 763
- ---------------------------------------------------------------------------
2. ALLOCATION OF DOP PURCHASE PRICE
- ---------------------------------------------------------------------------
DOP's interest in securities/investments held by Darby
Funds $42,750
- ---------------------------------------------------------------------------
Goodwill of DOP 28,966
- ---------------------------------------------------------------------------
DOP and DOP's affiliate management contracts 3,400
-------
- ---------------------------------------------------------------------------
TOTAL DOP PURCHASE PRICE $75,116
-------
- ---------------------------------------------------------------------------
AGGREGATE DOP PURCHASE PRICE AND DOIL PURCHASE PRICE $75,879
- ---------------------------------------------------------------------------
EXHIBIT E-1
FORM OF
OFFICER'S CERTIFICATE
The undersigned, pursuant to Section ___ of the Purchase Agreement, dated
as of August 1, 2003 (the "Agreement"), by and among Franklin Resources, Inc., a
corporation existing under the laws of Delaware, Darby Holdings, Inc., a
corporation existing under the laws of Delaware ("Purchaser"), Darby Overseas
Investments, Ltd., a corporation existing under the laws of Delaware ("DOIL"),
Darby Overseas Partners, L.P., a limited partnership existing under the laws of
Delaware ("DOP"), the stockholders of DOIL listed on the signature pages thereto
and the limited partners of DOP listed on the signature pages thereto, do hereby
certify to __________ as follows:
1. I, ____________________, am the Chief Executive Officer of _________
and, as such, have the power and authority to execute and deliver this Officer's
Certificate.
2. I, ____________________, am the [Chief Financial Officer / Treasurer] of
__________ and, as such, have the power and authority to execute and deliver
this Officer's Certificate.
3. The representations and warranties of ___________ in Article ___ of the
Agreement qualified as to materiality are true and correct, and those not so
qualified are true and correct in all material respects, as of the date of the
Agreement and as of the Closing as though made at and as of the Closing, except
to the extent such representations and warranties expressly relate to an earlier
date (in which case such representations and warranties qualified as to
materiality are true and correct, and those not so qualified are true and
correct in all material respects, on and as of such earlier date).
4. _____________ has performed and complied in all material respects with
all obligations and agreements required in the Agreement to be performed or
complied with by it prior to the date hereof.
IN WITNESS WHEREOF, the undersigned have executed this certificate as of
___________, 2003.
---------------------------------
Name:
Title: Chief Executive Officer
---------------------------------
Name:
Title: [Chief Financial Officer /
Treasurer]
EXHIBIT E-2
FORM OF
SELLER'S CERTIFICATE
(INDIVIDUAL DARBY SELLERS)
The undersigned, pursuant to Section 9.1(e) of the Purchase Agreement,
dated as of August 1, 2003 (the "Agreement"), by and among Franklin Resources,
Inc., a corporation existing under the laws of Delaware, Darby Holdings, Inc., a
corporation existing under the laws of Delaware ("Purchaser"), Darby Overseas
Investments, Ltd., a corporation existing under the laws of Delaware ("DOIL"),
Darby Overseas Partners, L.P., a limited partnership existing under the laws of
Delaware ("DOP"), the stockholders of DOIL listed on the signature pages thereto
and the limited partners of DOP listed on the signature pages thereto, does
hereby certify to Purchaser as follows:
1. The representations and warranties made by the undersigned in Article VI
of the Agreement qualified as to materiality are true and correct, and those not
so qualified are true and correct in all material respects, as of the date of
the Agreement and as of the Closing as though made at and as of the Closing,
except to the extent such representations and warranties expressly relate to an
earlier date (in which case such representations and warranties qualified as to
materiality are true and correct, and those not so qualified are true and
correct in all material respects, on and as of such earlier date).
2. The undersigned has performed and complied in all material respects with
all obligations and agreements required in the Agreement to be performed or
complied with by the undersigned prior to the date hereof.
IN WITNESS WHEREOF, the undersigned has executed this certificate as of
___________, 2003.
---------------------------------
Name:
EXHIBIT E-3
FORM OF
SELLER'S CERTIFICATE
(INSTITUTIONAL DARBY SELLERS)
The undersigned, pursuant to Section 9.1(e) of the Purchase Agreement,
dated as of August 1, 2003 (the "Agreement"), by and among Franklin Resources,
Inc., a corporation existing under the laws of Delaware, Darby Holdings, Inc., a
corporation existing under the laws of Delaware ("Purchaser"), Darby Overseas
Investments, Ltd., a corporation existing under the laws of Delaware ("DOIL"),
Darby Overseas Partners, L.P., a limited partnership existing under the laws of
Delaware ("DOP"), the stockholders of DOIL listed on the signature pages thereto
and the limited partners of DOP listed on the signature pages thereto, do hereby
certify to Purchaser as follows:
1. I, ____________________, am the Chief Executive Officer of _________
and, as such, have the power and authority to execute and deliver this Officer's
Certificate.
2. I, ____________________, am the [Chief Financial Officer / Treasurer] of
__________ and, as such, have the power and authority to execute and deliver
this Officer's Certificate.
3. The representations and warranties of ___________ in Article VI of the
Agreement qualified as to materiality are true and correct, and those not so
qualified are true and correct in all material respects, as of the date of the
Agreement and as of the Closing as though made at and as of the Closing, except
to the extent such representations and warranties expressly relate to an earlier
date (in which case such representations and warranties qualified as to
materiality are true and correct, and those not so qualified are true and
correct in all material respects, on and as of such earlier date).
4. ___________ has performed and complied in all material respects with all
obligations and agreements required in the Agreement to be performed or complied
with by the undersigned prior to the date hereof.
IN WITNESS WHEREOF, the undersigned have executed this certificate as of
___________, 2003.
--------------------------------
Name:
Title: Chief Executive Officer
---------------------------------
Name:
Title: [Chief Financial Officer /
Treasurer]
EXHIBIT F
TERMS OF OFFER LETTER
1. Current position and current annual salary.
2. Annual salary will be subject to adjustment each September 30 at the
discretion of DOIL's board of directors.
3. Bonus at the discretion of DOIL's board of directors. Bonuses for the
period ending September 30, 2003 will be payable in cash. Thereafter, the
parties will work towards a goal of transitioning to the FRI bonus plan over a
period of time.
4. Initially, coverage to continue under the Darby employee benefit plans
or substantially similar plans. Over time, coverage transitioned to FRI's
employee benefit plans. If coverage is so transitioned, and is worse in the
aggregate than what employee originally had, then FRI will make a one-time
adjustment to base salary in an amount that FRI reasonably believes is
appropriate and equitable. Employee will generally be credited with service with
DOIL prior to the Closing Date for purposes of benefits, subject to the
exceptions identified in Section 8.9 of the Purchase Agreement.
5. Where applicable, letter will state that employee will receive a special
award of FRI restricted stock (valued as of the business day prior to the
Closing Date). The grant will be made pursuant to Franklin's standard
agreements, which will be attached to the letter, and the stock will vest in
approximately equal installments, 1/4 on September 30, 2004, 1/4 on September
30, 2005, 1/4 on September 29, 2006 and 1/4 on September 28, 2007.
6. For individuals still entitled to a guaranteed bonus - Three-quarters of
such guaranteed bonus will be payable on September 30, 2003 and the remaining
one-quarter of such bonus on September 30, 2004 (along with any other bonus to
which employee may be entitled for the period from January 1, 2004 to September
30, 2004). For individuals hired after January 1, 2003, the amount of such
guaranteed bonus will be prorated based on the amount of time they have been
employed.
7. Employee waives any and all rights that he or she may have under any
other agreement, arrangement or understanding in effect as of the Closing Date
relating to employment with DOIL and its affiliates.
8. Letter is not, and will not be construed to create, a contract of
employment, express or implied. Employee to be considered an at-will employee.
EXHIBIT H
FORM OF
ASSIGNMENT AND TRANSFER OF
DOP LIMITED PARTNER INTEREST
This Assignment and Transfer (this "ASSIGNMENT") is made as of the _______
day of _______, 2003, by and between __________ ("ASSIGNOR") and Darby Holdings,
Inc. ("ASSIGNEE").
WHEREAS, Assignor had previously executed an Agreement of Limited
Partnership of Darby Overseas Partners, L.P., dated as of February 9, 1994 (the
"Partnership Agreement"), pursuant to which it was admitted to Darby Overseas
Partners, L.P., a Delaware limited partnership ("DOP"), as a Limited Partner;
and
WHEREAS, Assignor and Assignee are parties to a Purchase Agreement, dated
as of August 1, 2003, by and among Assignor, Assignee, DOP and certain other
persons signatory thereto, pursuant to which Assignor agreed to sell and assign
a ____ percent limited partner interest (the "Partnership Interest") in DOP,
constituting its entire limited partner interest in DOP, to Assignee and
Assignee agreed to assume all liabilities of Assignor with respect to the
Partnership Interest.
NOW, THEREFORE, in consideration of the mutual agreements contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Assignor and Assignee hereby agree as follows:
1. Assignor hereby sells, transfers and assigns the Partnership Interest,
together with all and singular the rights and privileges in any wise
appertaining thereto, to Assignee.
2. Assignee hereby accepts the Partnership Interest, adopts the Partnership
Agreement and assumes all of the liabilities of Assignor in respect of the
Partnership Interest. From and after the date hereof, Assignor shall be removed
from DOP as a Limited Partner and Assignee shall be admitted in its stead as a
Substitute Limited Partner and shall have all rights and obligations of a
Limited Partner as set forth in the Partnership Agreement.
3. Assignor and Assignee each agree to execute, acknowledge and deliver to
the other all such additional instruments, notices, and other documents and to
do all such further acts and things as may be necessary or useful to more fully
and effectively effect the intent of this Assignment.
4. This Assignment shall be governed by and construed in accordance with
the laws of the State of Delaware without regard to its principles of conflicts
of law.
5. This Assignment shall bind and inure to the benefit of Assignor and
Assignee and their respective successors and assigns.
6. This Assignment may be executed in one or more counterparts, each of
which shall be deemed to be an original, but all of which shall constitute one
and the same instrument.
7. Unless otherwise defined herein, the terms used in the Assignment shall
have the meaning set forth in the Partnership Agreement.
IN WITNESS WHEREOF, this Assignment has been executed on the date written
above.
ASSIGNOR:
---------
By: ______________________________
Name:____________________________
Title:_____________________________
ASSIGNEE:
---------
DARBY HOLDINGS, INC.
By: ______________________________
Name:____________________________
Title:_____________________________
EXHIBIT I
[Darby Overseas Investments Logo Omitted]
July 21, 2003
Limited Partners
Darby-BBVA Latin American Private Equity Fund, L.P.
Darby-BBVA Latin American Private Equity Fund (Ontario), L.P.
RE: LIMITED PARTNERSHIP AGREEMENT SECTION 2.01(c)
Dear Fund Limited Partner:
We are writing to you in reference to the Second Amended and Restated
Limited Partnership Agreement of the Darby-BBVA Latin American Private Equity
Fund, L.P. and the Limited Partnership Agreement of the Darby-BBVA Latin
American Private Equity Fund (Ontario), L.P. (together, the "Partnership
Agreements"). The Darby-BBVA Latin American Private Equity Fund, L.P. and the
Darby-BBVA Latin American Private Equity Fund (Ontario), L.P. are referred to
collectively as the "Partnership".
As we have previously informed you, Darby proposes to enter into an
agreement with Franklin Resources, Inc. pursuant to which Franklin will acquire
all of the outstanding equity interests of Darby that is does not already own.
Consequently, Darby will become a wholly owned subsidiary of Franklin.
Franklin is a global investment management organization known as Franklin
Templeton Investments. Headquartered in San Mateo, California, Franklin offers
investment products under the Franklin, Templeton, Mutual Series, Bissett and
Fiduciary brand names. Franklin is one of the largest investment management
firms in the world, with over $287 billion in assets under management as of June
30, 2003.
Darby has enjoyed a long relationship with Franklin over the past ten
years, during which time Franklin has been a significant equity investor in
Darby as well as a substantial supporter of Darby's funds - including the
Partnership. We are very pleased about the proposed transaction. By becoming
part of Franklin Templeton Investments, we believe that the Partnership and
Darby's business overall will benefit from the Franklin Templeton organization's
outstanding reputation and expertise in global investing.
Franklin and its affiliated companies offer an array of investment products
to their clients, and we look forward to offering Darby products - including the
Partnership - through this distribution network. Consistent with the recent
limited partner approval to extend the Partnership's fundraising period, we
believe that this expanded distribution network will improve the prospects of
creating a larger and therefore more diversified fund. With this in mind, we are
writing to request that the
Darby Overseas Investments, Ltd.
Suite 400
1135 Connecticut Avenue, NW
Washington, DC 20036
T 202 872 0500 F 202 872 1816
Partnership investors waive the provision of Section 2.01(c) of the Partnership
Agreements (together with the related provisions of the investment advisory
agreements relating to the Partnership.)
Section 2.01(c) of each of the Partnership Agreements contains the
following restriction (with emphasis supplied):
Unless approved by three fourths in interest of Limited Partners, until the
earlier of (i) such time as the Partnership is Substantially Invested or
(ii) the Investment Expiration Date, the General Partner, the Advisor and
the Sponsor Advisor shall not, and each shall cause its officers, employees
AND AFFILIATES not to, establish (OR SOLICIT FUNDS FROM INVESTORS WITH
RESPECT TO) any entity similar to the Partnership ... that meets all of the
following criteria: (i) it is organized for the primary purpose of
investing in and holding a portfolio of Securities of more than one issuer
selected by its portfolio manager, and (ii) the primary purpose of such
entity is to make equity investments in Latin America of the nature and
type that would qualify as Permanent Investments under this Agreement.
As advisers to many high-net-worth individual investors and institutional
clients, affiliates of Franklin - which will become "Affiliates" of Darby and,
accordingly, off the General Partner and Advisor within the meaning of Section
2.01(c) of the Partnership agreements upon the closing of the proposed
transaction - have a fiduciary obligation to offer each client those investment
products that are most suitable for that client regardless of any interest that
Franklin may have in any particular investment product. In other words, in order
to offer any particular product to clients, Franklin and its investment advisory
affiliates must be free to offer competing products as well.
Accordingly, Franklin has requested that we seek - and we have agreed to
seek - a waiver of the provisions of Section 2.01(c) of the Partnership
Agreements in order to allow Franklin and its affiliates to solicit funds from
investors with respect to investment funds that may compete with the
Partnership. Franklin and Darby agree that this waiver is prudent and provides
transparency for Partnership investors.
If this waiver is acceptable to you, we ask that you please so indicate by
signing and returning to us one copy of attached Waiver. In view of our
scheduled closing of the Franklin - Darby transaction on July 30, 2003, we
respectfully request that you respond by no later than July 29, 2003.
If you have any questions, please call me at (202) 872-0500.
Sincerely,
Richard H. Frank
Chief Executive Officer
Attachments: 1
DARBY-BBVA LATIN AMERICAN PRIVATE EQUITY FUND, L.P.
DARBY-BBVA LATIN AMERICAN PRIVATE EQUITY FUND (ONTARIO), L.P.
WAIVER
Capitalized terms used herein shall have the same respective meanings
provided in the Darby-BBVA Latin American Private Equity Fund, L.P. Second
Amended and Restated Limited Partnership Agreement dated as of January 17, 2003
and the Darby-BBVA Latin American Private Equity Fund (Ontario), L.P. Limited
Partnership Agreement dated as of March 20, 2003 (together, the "Partnership
Agreements").
The undersigned Limited Partner hereby irrevocably and unconditionally
waives the provisions of Section 2.01(c) of the Partnership Agreements (together
with the provisions of Section 6(a) of the First Amended and Restated Investment
Advisory Agreement dated as of January 17, 2003 by and between Darby-BBVA Latin
American Private Equity Fund, L.P., the Darby-BBVA Latin American Investors,
Ltd. and Darby Overseas Partners, L.P. and the provisions of Section 6(a) of the
Investment Advisory Agreement dated as of March 20, 2003 by and between
Darby-BBVA Latin American Private Equity Fund (Ontario), L.P., Darby-BBVA Latin
American Investors, Ltd. and Darby Overseas Partners, L.P. (together, the
"Investment Advisory Agreements") to the extent necessary to permit, and for the
sole purpose of allowing, Franklin Resources, Inc. and its Affiliates (other
than Darby, the General Partner and their respective subsidiaries, which shall
remain subject to Section 2.01(c) of the Partnership Agreements and Section 6(a)
of the Investment Advisory Agreements) to solicit funds from investors with
respect to any entity similar to the Partnership and that meets all of the
following criteria: (i) it is organized for the primary purpose of investing in
and holding a portfolio of Securities of more than one issuer selected by its
portfolio manager, and (ii) the primary purpose of such entity is to make equity
investments in Latin America of the nature and type that would qualify as
Permanent Investments under this Agreement.
This Waiver shall be effective to waive the provisions of Section 2.01(c)
of the Partnership Agreements (and Section 6(a) of the Investment Advisory
Agreements) only to the extent specifically set forth herein, and shall be
construed neither to alter, amend or affect the rights and obligations of the
Darby-BBVA Latin American Private Equity Fund, L.P., the Darby-BBVA Latin
American Private Equity Fund (Ontario), L.P. or the Partners thereof under any
other provision of the Partnership Agreements (or the Investment Advisory
Agreements), nor as a waiver of any other provision of the Partnership
Agreements (or the Investment Advisory Agreements) or of any breach of default
thereunder.
IN WITNESS WHEREOF, the undersigned has executed this Waiver as of the date
set forth below.
Name of Limited Partner
- ------------------------------------
By:
------------------------------
Name:
Title:
Date:
PLEASE RETURN A COPY OF THIS WAIVER NO LATER THAN JULY 29, 2003 BY FAX TO THE
ATTENTION OF CLARK NIELSEN AT DARBY OVERSEAS INVESTMENTS, LTD. (202-872-1816),
AND RETURN THE ORIGINAL BY MAIL TO DARBY OVERSEAS INVESTMENTS, LTD., 1133
CONNECTICUT AVENUE, N.W., SUITE 400, WASHINGTON, D.C. 20036, ATTN: CLARK
NIELSEN.
EXHIBIT J-1
[NIELSEN & BEATTY]
_________________, 2003
Darby Overseas Investments, Ltd.
1133 Connecticut Avenue, NW
Suite 400
Washington, DC 20036
Gentlemen:
Reference is made to the Purchase Agreement, dated as of August 1, 2003
(the "PURCHASE AGREEMENT"), by and among Franklin Resources, Inc., a corporation
existing under the laws of Delaware ("FRI"), Darby Holdings, Inc., a corporation
existing under the laws of Delaware ("PURCHASER"), Darby Overseas Investments,
Ltd., a corporation existing under the laws of Delaware ("DOIL"), Darby Overseas
Partners, L.P., a limited partnership existing under the laws of Delaware
("DOP"), the stockholders of DOIL listed on the signature pages thereto
(collectively, the "DOIL SELLERS") and the limited partners of DOP listed on the
signature pages thereto (collectively, the "DOP SELLERS", and together with the
DOIL Sellers, the "SELLERS", and the Sellers, DOP and DOIL being hereinafter
referred to as the "DARBY PARTIES"). Capitalized terms used herein are used as
defined in the Purchase Agreement.
Pursuant to the Purchase Agreement, the undersigned is selling his limited
partner interests in DOP to the Purchaser in exchange for the purchase price to
be paid to the undersigned as set forth in the Purchase Agreement. In connection
with the transactions contemplated by the Purchase Agreement, and as further
consideration for the purchase price to be paid to the undersigned, the
undersigned has agreed to abide by the covenants set forth herein, as follows:
1. NON-COMPETITION. During the term of my employment with DOIL or any
Affiliate of DOIL and for a period of [_____] after the termination of such
employment for any reason, I shall not, directly or indirectly, manage, operate
or control, or participate in the management, operation or control of, or become
employed by or render advisory or other services to (other than in a capacity as
a lawyer, accountant or consultant working for a law, accounting or nationally
recognized consulting firm that has been retained by a Fund), any business,
whether in corporate, proprietorship or partnership form or otherwise, engaged
in sponsoring, managing or serving as the investment advisor to private Funds
that are excluded from the definition of "investment company" under the
Investment Company Act and whose primary investment objective is to make private
equity investments in or mezzanine loans to companies located in countries that
are generally recognized by the financial community to be emerging markets (a
"Competitive Fund").
Notwithstanding the foregoing, if my employment with both DOIL and all
entities Affiliated with DOIL is terminated by DOIL and the entities Affiliated
with DOIL for any reason other than for Cause, the restrictions set forth in
this Paragraph 1 shall cease and have no further force and effect, effective
with such termination. For purposes hereof, my employment shall be deemed to be
terminated for "cause" if my employment is terminated at any time under the
following circumstances: (a) I fail to perform any of my material obligations in
relation to my employment with DOIL or any Affiliate of DOIL (including, but not
limited to, compliance with the terms of this Agreement) and fail to cure such
failure within thirty (30) days after receiving written notice from DOIL or any
Affiliate of DOIL; (b) DOIL or any Affiliate of DOIL reasonably believes that I
have committed an act of fraud, theft or dishonesty against DOIL or any
Affiliate of DOIL, including, without limitation, misappropriation of assets of
DOIL and its Affiliates; or (c) I am convicted (or plead NOLO CONTENDERE to) any
felony or any misdemeanor involving moral turpitude or a violation of any
Securities Law or which might, in the reasonable opinion of DOIL or any
Affiliate of DOIL, cause financial, reputational or regulatory harm to DOIL or
any Affiliate of DOIL.
2. NON-SOLICITATION. During the term of my employment with DOIL and for a
period of [_____] thereafter, I shall not: (a) cause, solicit, induce or
encourage any employees of the Darby Companies to leave such employment or hire,
employ or otherwise engage any such individual, (b) cause, induce or encourage
any material existing or prospective investor, client, customer, supplier or
licensor of or any other Person who has a material business relationship with
any Darby Company at the time my employment with DOIL ceases, to terminate or
modify any such existing or prospective relationship, or (c) with respect to any
existing or prospective investor of a Darby Fund at the time my employment with
DOIL ceases, encourage such investor to make an investment in any Competitive
Fund other than a Darby Fund.
3. REMEDIES. If I commit a breach, or threaten to commit a breach of any of
the provisions of this Agreement, the Darby Companies and Purchaser shall have
the right and remedy to have the provisions of this Agreement specifically
enforced by any court of competent jurisdiction without the necessity of proving
actual damages or posting any bond whatsoever, it being acknowledged and agreed
that any such breach or threatened breach will cause irreparable injury to the
Darby Companies and Purchaser, that money damages will not provide an adequate
remedy to such persons and that Purchaser or a Darby Company shall be entitled
to appeal to any court of competent jurisdiction for an injunction restraining
me from committing or continuing a violation of paragraphs 1 or 2 hereof. Such
rights and remedies shall be in addition to, and not in lieu of, any other
rights and remedies available at law or in equity.
4. ACKNOWLEDGEMENT. I represent and acknowledge that, in light of the
payments to be made by the Purchaser to me under the Purchase Agreement and for
other good and valid reasons, the restrictions stated in Paragraphs 1 and 2 on
the activities in which I may engage are reasonable, and the period of time
designated above is reasonable.
5. GOVERNING LAW. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York applicable to contracts
executed in and to be performed in that State, without regard to its conflicts
of law provisions (other than New York General Obligations Law Section 5-1401).
All actions and proceedings arising out of relating to this Agreement shall be
heard and determined in any New York state or federal court.
6. AMENDMENT OR WAIVER. Neither this Agreement nor any terms hereof may be
changed, waived, discharged or terminated unless such change, waiver, discharge
or termination is in writing signed by the parties hereto.
7. BINDING EFFECT. This Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective legal representatives,
heirs, successors and assigns.
8. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute a single instrument.
9. SEVERABILITY. If any provision of this Agreement shall be held invalid
under the applicable law of any jurisdiction, the remainder of this Agreement
shall not be affected thereby. Also if any provision of this Agreement is
invalid or unenforceable under any applicable Law, then such provision shall be
deemed inoperative only to the extent that it may conflict therewith and shall
be deemed modified to conform with such law. Any provision hereof that may prove
invalid or unenforceable under any law shall not affect the validity or
enforceability of any other provision hereof.
If the foregoing correctly sets forth our understanding of the subject
matter hereof, please so indicate in the space provided below whereupon this
Agreement shall be a binding agreement among us.
Very truly yours,
------------------------------
[Individual]
Accepted and agreed to:
DARBY OVERSEAS INVESTMENTS, LTD.
By:___________________________________
EXHIBIT J-2
[BRADY, LUBAR, WIEGERS]
_____________, 2003
Darby Overseas Investments, Ltd.
1133 Connecticut Avenue, NW
Suite 400
Washington, DC 20036
Gentlemen:
Reference is made to the Purchase Agreement, dated as of August 1, 2003
(the "PURCHASE AGREEMENT"), by and among Franklin Resources, Inc., a corporation
existing under the laws of Delaware ("FRI"), Darby Holdings, Inc., a corporation
existing under the laws of Delaware ("PURCHASER"), Darby Overseas Investments,
Ltd., a corporation existing under the laws of Delaware ("DOIL"), Darby Overseas
Partners, L.P., a limited partnership existing under the laws of Delaware
("DOP"), the stockholders of DOIL listed on the signature pages thereto
(collectively, the "DOIL SELLERS") and the limited partners of DOP listed on the
signature pages thereto (collectively, the "DOP SELLERS", and together with the
DOIL Sellers, the "SELLERS", and the Sellers, DOP and DOIL being hereinafter
referred to as the "DARBY PARTIES"). Capitalized terms used herein are used as
defined in the Purchase Agreement.
Pursuant to the Purchase Agreement, the undersigned is selling his stock in
DOIL and limited partner interests in DOP to the Purchaser in exchange for the
purchase price to be paid to the undersigned as set forth in the Purchase
Agreement. In connection with the transactions contemplated by the Purchase
Agreement, and as further consideration for the purchase price to be paid to the
undersigned, the undersigned has agreed to abide by the covenants set forth
herein, as follows:
1. NON-COMPETITION. For a period from the Closing Date until the [__]
anniversary of the Closing Date, I shall not, directly or indirectly, manage,
operate or control, or participate in the management, operation or control of,
or become employed by or render advisory or other services to (other than in a
capacity as a lawyer, accountant or consultant working for a law, accounting or
nationally recognized consulting firm that has been retained by a Fund), any
business, whether in corporate, proprietorship or partnership form or otherwise,
engaged in sponsoring, managing or serving as the investment advisor to private
Funds that are excluded from the definition of "investment company" under the
Investment Company Act and whose primary investment objective is to make private
equity investments in or mezzanine loans to companies located in
countries that are generally recognized by the financial community to be
emerging markets (a "Competitive Fund"). /1/
2. NON-SOLICITATION. For a period from the Closing Date until the [__]
anniversary of the Closing Date, I shall not: (a) cause, solicit, induce or
encourage any employees of the Darby Companies who are or become employees of
Purchaser or its Affiliates to leave such employment or hire, employ or
otherwise engage any such individual, or (b) cause, solicit, induce or encourage
any material existing or prospective investor, client, customer, supplier,
licensor of or any other Person who has a material business relationship with
any Darby Company known to me to terminate or modify any such existing or
prospective relationship, or (c) with respect to any existing or prospective
investor of a Darby Fund known to me, encourage such investor to make an
investment in any Competitive Fund other than a Darby Fund.
3. REMEDIES. If I commit a breach, or threaten to commit a breach of any of
the provisions of this Agreement, the Darby Companies and Purchaser shall have
the right and remedy to have the provisions of this Agreement specifically
enforced by any court of competent jurisdiction without the necessity of proving
actual damages or posting any bond whatsoever, it being acknowledged and agreed
that any such breach or threatened breach will cause irreparable injury to the
Darby Companies and Purchaser, that money damages will not provide an adequate
remedy to such persons and that Purchaser or a Darby Company shall be entitled
to apply to any court of competent jurisdiction for an injunction restraining me
from committing or continuing a violation of paragraphs 1 or 2 hereof. Such
rights and remedies shall be in addition to, and not in lieu of, any other
rights and remedies available at law or in equity.
4. ACKNOWLEDGEMENT. I represent and acknowledge that, in light of the
payments to be made by the Purchaser to me under the Purchase Agreement and for
other good and valid reasons, the restrictions stated in paragraphs 1 and 2 on
the activities in which I may engage are reasonable, and the period of time
designated above is reasonable.
5. GOVERNING LAW. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York applicable to contracts
executed in and to be performed in that State, without regard to its conflicts
of law provisions (other than New York General Obligations Law Section 5-1401).
All actions and proceedings arising out of relating to this Agreement shall be
heard and determined in any New York state or federal court.
6. AMENDMENT OR WAIVER. Neither this Agreement nor any terms hereof may be
changed, waived, discharged or terminated unless such change, waiver, discharge
or termination is in writing signed by the parties hereto.
- --------
1 May include a mutually acceptable proviso that states "except as set forth
in Attachment A hereto."
7. BINDING EFFECT. This Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective legal representatives,
heirs, successors and assigns.
8. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute a single instrument.
9. SEVERABILITY. If any provision of this Agreement shall be held invalid
under the applicable law of any jurisdiction, the remainder of this Agreement
shall not be affected thereby. Also if, any provision of this Agreement is
invalid or unenforceable under any applicable law, then such provision shall be
deemed inoperative only to the extent that it may conflict therewith and shall
be deemed modified to conform with such law. Any provision hereof that may prove
invalid or unenforceable under any law shall not affect the validity or
enforceability of any other provision hereof.
If the foregoing correctly sets forth our understanding of the subject
matter hereof, please so indicate in the space provided below whereupon this
Agreement shall be a binding agreement among us.
Very truly yours,
------------------------------
[Individual]
Accepted and agreed to:
DARBY OVERSEAS INVESTMENTS, LTD.
By:___________________________________
EXHIBIT J-3
[GRAFFAM & LASTRES]
______________, 2003
Darby Overseas Investments, Ltd.
1133 Connecticut Avenue, NW
Suite 400
Washington, DC 20036
Gentlemen:
Reference is made to the Purchase Agreement, dated as of August 1, 2003
(the "PURCHASE AGREEMENT"), by and among Franklin Resources, Inc., a corporation
existing under the laws of Delaware ("FRI"), Darby Holdings, Inc., a corporation
existing under the laws of Delaware ("PURCHASER"), Darby Overseas Investments,
Ltd., a corporation existing under the laws of Delaware ("DOIL"), Darby Overseas
Partners, L.P., a limited partnership existing under the laws of Delaware
("DOP"), the stockholders of DOIL listed on the signature pages thereto
(collectively, the "DOIL SELLERS") and the limited partners of DOP listed on the
signature pages thereto (collectively, the "DOP SELLERS", and together with the
DOIL Sellers, the "SELLERS", and the Sellers, DOP and DOIL being hereinafter
referred to as the "DARBY PARTIES"). Capitalized terms used herein are used as
defined in the Purchase Agreement.
In connection with the transactions contemplated by the Purchase Agreement,
and in consideration of the grant of FRI restricted stock to the undersigned
contemplated by Paragraph 1 hereof, the undersigned agrees to abide by the
covenants set forth herein, as follows:
1. GRANT OF RESTRICTED STOCK. On the Closing Date, I will be granted
$______ in FRI restricted stock (valued as of the business day prior to the
Closing Date). The grant will be made pursuant to the agreement attached to this
letter and the stock will vest in approximately equal installments, 1/4 on
September 30, 2004, 1/4 September 30, 2005, 1/4 September 29, 2006 and 1/4 on
September 28, 2007.
2. NON-COMPETITION. During the term of my employment with DOIL or any
Affiliate of DOIL and for a period of [_____] after the termination of such
employment for any reason, I shall not, directly or indirectly, manage, operate
or control, or participate in the management, operation or control of, or become
employed by or render advisory or other services to (other than in a capacity as
a lawyer, accountant or consultant working for a law, accounting or nationally
recognized consulting firm that has been retained by a Fund), any business,
whether in corporate, proprietorship or partnership form or otherwise, engaged
in sponsoring, managing or serving as the investment advisor to private Funds
that are excluded from the definition of "investment company" under the
Investment Company Act and whose primary investment objective is to make private
equity investments in or mezzanine loans to companies located in countries that
are generally recognized by the financial community to be emerging markets (a
"Competitive Fund").
Notwithstanding the foregoing, if my employment with both DOIL and all
entities Affiliated with DOIL is terminated by DOIL and the entities Affiliated
with DOIL for any reason other than for Cause, the restrictions set forth in
this Paragraph 2 shall cease and have no further force and effect, effective
with such termination. For purposes hereof, my employment shall be deemed to be
terminated for "cause" if my employment is terminated at any time under the
following circumstances: (a) I fail to perform any of my material obligations in
relation to my employment with DOIL or any Affiliate of DOIL (including, but not
limited to, compliance with the terms of this Agreement) and fail to cure such
failure within thirty (30) days after receiving written notice from DOIL or any
Affiliate of DOIL; (b) DOIL or any Affiliate of DOIL reasonably believes that I
have committed an act of fraud, theft or dishonesty against DOIL or any
Affiliate of DOIL, including, without limitation, misappropriation of assets of
DOIL and its Affiliates; or (c) I am convicted (or plead NOLO CONTENDERE to) any
felony or any misdemeanor involving moral turpitude or a violation of any
Securities Law or which might, in the reasonable opinion of DOIL or any
Affiliate of DOIL, cause financial, reputational or regulatory harm to DOIL or
any Affiliate of DOIL.
3. NON-SOLICITATION. During the term of my employment with DOIL and for a
period of [_____] thereafter, I shall not: (a) cause, solicit, induce or
encourage any employees of the Darby Companies to leave such employment or hire,
employ or otherwise engage any such individual, (b) cause, induce or encourage
any material existing or prospective investor, client, customer, supplier or
licensor of or any other Person who has a material business relationship with
any Darby Company at the time my employment with DOIL ceases to terminate or
modify any such existing or prospective relationship, or (c) with respect to any
existing or prospective investor of a Darby Fund at the time my employment with
DOIL ceases, encourage such investor to make an investment in any Competitive
Fund other than a Darby Fund.
4. REMEDIES. If I commit a breach, or threaten to commit a breach of any of
the provisions of this Agreement, the Darby Companies and Purchaser shall have
the right and remedy to have the provisions of this Agreement specifically
enforced by any court of competent jurisdiction without the necessity of proving
actual damages or posting any bond whatsoever, it being acknowledged and agreed
that any such breach or threatened breach will cause irreparable injury to the
Darby Companies and Purchaser, that money damages will not provide an adequate
remedy to such persons and that Purchaser or a Darby Company shall be entitled
to appeal to any court of competent jurisdiction for an injunction restraining
me from committing or continuing a violation of Paragraphs 2 or 3 hereof. Such
rights and remedies shall be in addition to, and not in lieu of, any other
rights and remedies available at law or in equity.
5. ACKNOWLEDGEMENT. I represent and acknowledge that, in light of the grant
of restricted stock to be made to me pursuant to Paragraph 1 hereof and for
other good and valid reasons, the restrictions stated in Paragraphs 2 and 3
hereof on the activities in
which I may engage are reasonable, and the period of time designated above is
reasonable.
6. GOVERNING LAW. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York applicable to contracts
executed in and to be performed in that State, without regard to its conflicts
of law provisions (other than New York General Obligations Law Section 5-1401).
All actions and proceedings arising out of relating to this Agreement shall be
heard and determined in any New York state or federal court.
7. AMENDMENT OR WAIVER. Neither this Agreement nor any terms hereof may be
changed, waived, discharged or terminated unless such change, waiver, discharge
or termination is in writing signed by the parties hereto.
8. BINDING EFFECT. This Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective legal representatives,
heirs, successors and assigns.
9. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute a single instrument.
10. SEVERABILITY. If any provision of this Agreement shall be held invalid
under the applicable law of any jurisdiction, the remainder of this Agreement
shall not be affected thereby. Also if any provision of this Agreement is
invalid or unenforceable under any applicable Law, then such provision shall be
deemed inoperative only to the extent that it may conflict therewith and shall
be deemed modified to conform with such law. Any provision hereof that may prove
invalid or unenforceable under any law shall not affect the validity or
enforceability of any other provision hereof.
If the foregoing correctly sets forth our understanding of the subject
matter hereof, please so indicate in the space provided below whereupon this
Agreement shall be a binding agreement between us.
Very truly yours,
------------------------------
[Individual]
Accepted and agreed to:
DARBY OVERSEAS INVESTMENTS, LTD.
By:___________________________________
EXHIBIT J-4
[FRANK]
___________________, 2003
Darby Overseas Investments, Ltd.
1133 Connecticut Avenue, NW
Suite 400
Washington, DC 20036
Gentlemen:
Reference is made to the Purchase Agreement, dated as of August 1,2003 (the
"Purchase Agreement"), by and among Franklin Resources, Inc., a corporation
existing under the laws of Delaware ("FRI"), Darby Holdings, Inc., a corporation
existing under the laws of Delaware ("Purchaser"), Darby Overseas Investments,
Ltd., a corporation existing under the laws of Delaware ("DOIL"), Darby Overseas
Partners, LP., a limited partnership existing under the laws of Delaware
("DOP"), the stockholders of DOIL listed on the signature pages thereto
(collectively, the "DOIL Sellers") and the limited partners of DOP listed on the
signature pages thereto (collectively, the "DOP Sellers", and together with the
DOIL Sellers, the "Sellers", and the Sellers, DOP and DOIL being hereinafter
referred to as the "Darby Parties"). Capitalized terms used herein are used as
defined in the Purchase Agreement.
Pursuant to the Purchase Agreement, the undersigned is selling his limited
partner interests in DOP to the Purchaser in exchange for the purchase price to
be paid to the undersigned as set forth in the Purchase Agreement. In connection
with the transactions contemplated by the Purchase Agreement, and as further
consideration for the purchase price to be paid to the undersigned, the
undersigned has agreed to abide by the covenants set forth herein, as follows:
1. NON-COMPETITION. During the term of my employment with DOIL or any
Affiliate of DOIL and for a period of two (2) years after the termination of
such employment for any reason, I shall not, directly or indirectly, manage,
operate or control, or participate in the management, operation or control of,
or become employed by or render advisory or other services to (other than in a
capacity as a lawyer, accountant or consultant working for a law, accounting or
nationally recognized consulting firm that has been retained by a Fund), any
business, whether in corporate, proprietorship or partnership form or otherwise,
engaged in sponsoring, managing or serving as the investment advisor to private
Funds that are excluded from the definition of "investment company" under the
Investment Company Act and whose primary investment objective is to make private
equity investments in or mezzanine loans to companies located in countries that
are generally recognized by the financial community to be emerging markets (a
"Competitive Fund").
2. NON-SOLICITATION. During the term of my employment with DOIL or any
Affiliate of DOIL and for a period of three (3) years after the termination of
such employment for any reason, I shall not: (a) cause, solicit, induce or
encourage any employees of the Darby Companies to leave such employment or hire,
employ or otherwise engage any such individual, (b) cause, induce or encourage
any material existing or prospective investor, client, customer, supplier or
licensor of or any other Person who has a material business relationship with
any Darby Company at the time my employment with DOIL ceases, to terminate or
modify any such existing or prospective relationship, or (c) with respect to any
existing or prospective investor of a Darby Fund at the time my employment with
DOIL ceases, encourage such investor to make an investment in any Competitive
Fund other than a Darby Fund.
3. Notwithstanding the provisions of Paragraphs 1 and 2 above, if my
employment with both DOIL and all entities Affiliated with DOIL is terminated by
DOIL and the entities Affiliated with DOIL for any reason other than for Cause,
the restrictions set forth in Paragraphs 1 and 2 shall cease and have no further
force and effect, effective with such termination. For purposes hereof, my
employment shall be deemed to be terminated for "cause" if my employment is
terminated at any time under the following circumstances: (a) I fail to perform
any of my material obligations in relation to my employment with DOIL or any
Affiliate of DOIL (including, but not limited to, compliance with the terms of
this Agreement) and fail to cure such failure within thirty (30) days after
receiving written notice from DOIL or any Affiliate of DOIL; (b) DOIL or any
Affiliate of DOIL reasonably believes that I have committed an act of fraud,
theft or dishonesty against DOIL or any Affiliate of DOIL, including, without
limitation, misappropriation of assets of DOIL and its Affiliates; or ( c) I am
convicted (or plead NOLO CONTENDERE to) any felony or any misdemeanor involving
moral turpitude or a violation of any Securities Law or which might, in the
reasonable opinion of DOIL or any Affiliate of DOIL, cause financial,
reputational or regulatory harm to DOIL or any Affiliate of DOIL.
4. REMEDIES. In commit a breach, or threaten to commit a breach of any of
the provisions of this Agreement, the Darby Companies and Purchaser shall have
the right and remedy to have the provisions of this Agreement specifically
enforced by any court of competent jurisdiction without the necessity of proving
actual damages or posting any bond whatsoever, it being acknowledged and agreed
that any such breach or threatened breach will cause irreparable injury to the
Darby Companies and Purchaser, that money damages will not provide an adequate
remedy to such persons and that Purchaser or a Darby Company shall be entitled
to appeal to any court of competent jurisdiction for an injunction restraining
me from committing or continuing a violation of Paragraphs 1 or 2 hereof. Such
rights and remedies shall be in addition to, and not in lieu of, any other
rights and remedies available at law or in equity.
5. ACKNOWLEDGEMENT. I represent and acknowledge that, in light of the
payments to be made by the Purchaser to me under the Purchase Agreement and for
other good and valid reasons, the restrictions stated in Paragraphs 1 and 2 on
the activities in
which I may engage are reasonable, and the period of time designated above is
reasonable.
6. GOVERNING LAW. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York applicable to contracts
executed in and to be performed in that State, without regard to its conflicts
of law provisions (other than New York General Obligations Law Section 5-1401).
All actions and proceedings arising out of relating to this Agreement shall be
heard and determined in any New York state or federal court.
7. AMENDMENT OR WAIVER. Neither this Agreement nor any terms hereof may be
changed, waived, discharged or terminated unless such change, waiver, discharge
or termination is in writing signed by the parties hereto.
8. BINDING EFFECT. This Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective legal representatives,
heirs, successors and assigns.
9. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute a single instrument.
10. SEVERABILITY. If any provision of this Agreement shall be held invalid
under the applicable law of any jurisdiction, the remainder of this Agreement
shall not be affected thereby. Also if any provision of this Agreement is
invalid or unenforceable under any applicable Law, then such provision shall be
deemed inoperative only to the extent that it may conflict therewith and shall
be deemed modified to conform with such law. Any provision hereof that may prove
invalid or unenforceable under any law shall not affect the validity or
enforceability of any other provision hereof.
If the foregoing correctly sets forth our understanding of the subject
matter hereof, please so indicate in the space provided below whereupon this
Agreement shall be a binding agreement among us.
Very truly yours,
[Individual]
Accepted and agreed to:
DARBY OVERSEAS INVETMENTS, LTD.
By:
---------------------------------
EXHIBIT K-1
DARBY TECHNOLOGY VENTURES GROUP, LLC
The following are the principal terms and provisions which would be
included in an agreement (the "AGREEMENT") pursuant to which certain employees
of Darby Overseas Investments, Ltd. ("DOIL") and its affiliates will be issued a
Class B Common Interest (a "CLASS B INTEREST") in, and become admitted as a
member of, Darby Technology Ventures Group, LLC, a Delaware limited liability
company (the "COMPANY"). The Agreement would be in such form as is determined by
Darby Overseas Partners, L.P., a Delaware limited partnership ("DOP") and the
Board of Directors of the Company. The Agreement would contain the principal
terms set forth herein and such other terms and provisions as generally shall be
applicable to recipients of a Class B Interest who are employees of DOIL and its
affiliates (the "Recipients").
1. CLASS B INTEREST. Upon a resolution adopted by the Board of Directors of
the Company authorizing the issuance of a Class B Interest to a Recipient
pursuant to Section 3.5(a) of the Second Amended Operating Agreement of the
Company dated October 1, 2002 (the "OPERATING AGREEMENT"), and such Recipient's
execution of the Agreement and the Operating Agreement, such Recipient shall be
issued a Class B Interest to which is assigned a Percentage Interest as set
forth in the Agreement (which shall be reflected on Schedule A of the Operating
Agreement) and become a member of the Company, subject to the terms and
conditions of the Agreement and the Operating Agreement, including (without
limitation) a vesting schedule.
2. VESTING. Class B Interests shall vest 20% per year (on each anniversary
of the initial grant date) over a five year period with the initial grant date
as set forth in the letter referred to in Section 5.23(p) of the Purchase
Agreement, dated as of August 1, 2003, by and among Franklin Resources, Inc.,
Darby Holdings, Inc. and the Darby parties named therein. If a Recipient's
employment with DOIL and its affiliates is terminated for any reason by the
Recipient or by DOIL or any of its affiliates ( any such termination of
employment being referred to herein as a "TERMINATION"), the portion of such
Recipient's Class B Interest that has not vested as of the date of Termination
shall be forfeited and revert to the Company, such Recipient shall have no right
or interest therein, and Schedule A of the Operating Agreement shall be amended
accordingly; PROVIDED, HOWEVER, that if the Termination is as a result of death
or permanent disability, 100% of such Recipient's Class B Interest shall become
vested upon Termination. There shall be no partial vesting for periods of time
between annual vesting dates.
3. PAYMENTS IN RESPECT OF CARRIED INTEREST. The Agreement shall provide
that payments in respect of Class B Interests shall be made as follows:
a. UNVESTED PORTION. The entire amount of distributions that otherwise
would be paid to a Recipient in respect of the unvested portion of such
Recipient's Class B Interest shall be retained by the Company and credited
to an account (a "VESTING ACCOUNT") created for such purpose. An amount
credited to the Vesting Account shall be released from such account upon
the vesting of the portion of the Class B Interest in respect of which such
amount was credited. Any amount released from a Vesting
Account first shall be applied to repay any outstanding tax advance
previously made in respect of such amount and the balance shall be paid to
the Recipient.
b. VESTED PORTION. Any distribution made by the Company in respect of
the vested portion of a Recipient's Class B Interest shall be paid to such
Recipient.
Upon Termination, after application of the foregoing vesting and payment
provisions, Recipients shall forfeit any and all rights to receive the amount
then remaining in their respective Vesting Accounts and shall have no further
interest in such accounts.
5. TAX ADVANCES. To the extent that amounts are credited to a Recipient 's
Vesting Account, non-interest bearing tax advances shall be made to such
Recipient; PROVIDED, HOWEVER, that the outstanding amount of such tax advances
at no time shall exceed the amount in the Vesting Account. The amount of tax
advances shall be an estimate of the amount of income taxes payable by each
Recipient attributable to the taxable income allocated to such Recipient in
respect of the unvested portion of his or her Class B Interest. Such estimate
shall be made by the Company in its reasonable discretion in such manner as is
to be determined in the Agreement. Any tax advances outstanding upon Termination
shall be payable on demand. After Termination, the Company may apply any amounts
otherwise distributable to a Recipient to repay any outstanding tax advances.
6. TAX DISCLOSURE. Appropriate tax disclosure shall be made in the
Agreement.
7. LIABILITY FOR TAXES. Each Recipient shall acknowledge in the Agreement
that any tax liability relating to receipt of Class B Interests is his or her
responsibility and he or she shall indemnify and hold the Company harmless
therefrom.
8. TRANSFERABILITY. Class B Interests shall be nontransferable other than
as to be provided in the Agreement and the Operating Agreement.
9. EXCLUSIVE RIGHT TO CARRIED INTEREST. Except as provided under the
Agreement, Recipients shall acknowledge they have no other right to receive any
Class B Interests, or any other interests, in the Company.
10. STRUCTURE. The structure of the interest in the Company will be subject
to change by the Company; PROVIDED, HOWEVER, that any such change shall not
materially adversely affect the economic benefits (other than tax consequences)
provided thereunder without a Recipient's consent.
EXHIBIT K-2
PROBA BEHEER, N.V.
The following are the principal terms and provisions which would be
included in an agreement (the "AGREEMENT") pursuant to which the Carried
Interest (as defined below) earned by Proba Beheer, N.V., a Netherlands Antilles
limited liability company (the "GENERAL PARTNER") and received by Darby Overseas
Partners, L.P., a Delaware limited partnership ("DOP"), if any, would be
allocated. The Agreement would be in such form as is determined by DOP and the
Carried Interest would be subject to any restrictions, limitations or
obligations arising under the agreement, if any, between DOP and the General
Partner relating to the Carried Interest. The Agreement would contain the
principal terms set forth herein and such other terms and provisions as
generally shall be applicable to recipients of a share of the Carried Interest
who are employees of Darby Overseas Investments, Ltd. ("DOIL") and its
affiliates (the "RECIPIENTS").
1. CARRIED INTEREST POINTS. The General Partner has the right to receive
certain distributions from the Fund (such distributions being referred to herein
as the "CARRIED INTEREST") under clause 6.1(a)(3) and 6.1(a)(4) (but only to the
extent not made in respect of capital contributions made by the General Partner)
of the Limited Partnership Agreement dated January 6, 2000 (the "PARTNERSHIP
AGREEMENT") of Proba, L.P., a Cayman Islands limited partnership. (A
one-twentieth (1/20) share of the Carried Interest is referred to herein as a
"CARRIED INTEREST POINT".) If DOP is successful in negotiating to receive
Carried Interest Points from the General Partner, DOP will allocate Carried
Interest Points to Recipients pursuant to the terms and conditions of the
Agreement.
2. VESTING. Carried Interest Points shall vest 20% per year (on each
anniversary of the initial grant date) over a five year period with the initial
grant date as set forth in the letter referred to in Section 5.23(p) of the
Purchase Agreement, dated as of August 1, 2003, by and among Franklin Resources,
Inc., Darby Holdings, Inc. and the Darby parties named therein. If the
employment of a Recipient with DOIL and its Affiliates is terminated for any
reason by the Recipient or by DOIL or any of its Affiliates (any such
termination of employment being referred to herein as a "TERMINATION"), the
portion of such Recipient's Carried Interest Points that has not vested as of
the date of Termination shall be forfeited and such Recipient shall have no
right or interest therein; PROVIDED, HOWEVER, that if the Termination is as a
result of death or permanent disability, 100% of such Recipient's Carried
Interest Points shall become vested upon Termination. There shall be no partial
vesting for periods of time between annual vesting dates.
3. PAYMENTS IN RESPECT OF CARRIED INTEREST. The Agreement shall provide
that payments in respect of Carried Interest Points shall be made as follows:
a. UNVESTED PORTION. The entire amount of distributions that otherwise
would be paid to a Recipient in respect of unvested Carried Interest Points
shall be retained by DOP or its designee and credited to an account (a
"VESTING ACCOUNT") created for such purpose. An amount credited to a
Vesting Account shall be released from such account upon the vesting of the
portion of the Recipient's Carried Interest Points in
respect of which such amount was credited. Any amount released from a
Vesting Account first shall be applied to repay any outstanding tax advance
previously made to the Recipient in respect of such amount and the balance
shall be paid to such Recipient.
b. VESTED PORTION. Any distribution in respect of the vested portion
of a Recipient's Carried Interest Points (or released from such Recipient's
Vesting Account) shall be paid to such Recipient.
Upon Termination, after application of the foregoing vesting and payment
provisions, Recipients shall forfeit any and all rights to receive the amount
then remaining in their respective Vesting Accounts and shall have no further
interest in such accounts.
4. TAX ADVANCES. To the extent that amounts are retained in the Vesting
Account, tax advances shall be made to Recipients; PROVIDED, HOWEVER, that the
outstanding amount of such tax advances at no time shall exceed the amount in
the Vesting Account. The tax advances shall be an estimate of the amount income
taxes payable by each Recipient attributable to the taxable income allocated to
such Recipient in respect of the unvested portion of his or her Carried Interest
Points and shall be repaid on the basis determined in the Agreement.
5. TAX DISCLOSURE. Appropriate tax disclosure shall be made in the
Agreement.
6. LIABILITY FOR TAXES. Each Recipient shall acknowledge in the Agreement
that any tax liability relating to receipt of Carried Interest Points is his or
her responsibility and he or she shall indemnify and hold the Company harmless
therefrom.
7. TRANSFERABILITY. Carried Interest Points shall be nontransferable other
than as to be provided in the Agreement.
8. EXCLUSIVE RIGHT TO CARRIED INTEREST. Except for the rights provided
pursuant to the Agreement, Recipients shall acknowledge they have no other
rights to Carried Interest Points (or Carried Interest).
9. STRUCTURE. The structure of the share of Carried Interest, if any, will
be subject to change by the Company; PROVIDED, HOWEVER, that any such change
shall not materially adversely affect the economic benefits (other than tax
consequences) provided thereunder without the Recipient's consent.
EXHIBIT K-3
DARBY LATIN AMERICAN MEZZANINE FUND, L.P.
The following are the principal terms and provisions which would be
included in an agreement (the "AGREEMENT") pursuant to which the Carried
Interest (as defined below) received by Darby Latin American Mezzanine
Investments, a Cayman Islands company (the "COMPANY") from Darby Latin American
Mezzanine Fund, L.P., a Cayman Islands limited partnership (the "Fund"), a
private investment fund of which the Company serves as general partner pursuant
to the First Amended and Restated Limited Partnership Agreement of the Fund
dated as of June 1, 1999 (the "PARTNERSHIP AGREEMENT"), would be allocated. The
Agreement would be in such form as is determined by DOP and the Carried Interest
would be subject to the vesting schedule to be set forth therein and the
obligation to satisfy a portion of the Carried Interest Clawback Obligation (as
defined below). The Agreement would contain the principal terms set forth herein
and such other terms and provisions as generally shall be applicable to
recipients of a share of the Carried Interest who are employees of Darby
Overseas Investments, Ltd. ("DOIL") and its affiliates(the "RECIPIENTS").
1. DEFINED TERMS. The Company, in its capacity as general partner of the
Fund, has the right to receive certain distributions pursuant to Section
3.06(a)(ii)(D)(II) and (III) and Section 3.06(a)(iii)(E) and (F) of the
Partnership Agreement (such distributions being referred to herein as the
"CARRIED INTEREST"). (A one-twentieth (1/20) share of the Carried Interest is
referred to herein as a "CARRIED INTEREST POINT".) Under Section 3.01(c)(i) and
(ii) of the Partnership Agreement, under certain circumstances, the Company is
required to make capital contributions to the Fund relating to the Carried
Interest (such obligation being referred to herein as the "CARRIED INTEREST
CLAWBACK OBLIGATION").
2. VESTING. Carried Interest Points shall vest 20% per year (on each
anniversary of the initial grant date) over a five year period with the initial
grant date as set forth in the letter referred to in Section 5.23(p) of the
Purchase Agreement, dated as of August 1, 2003, by and among Franklin Resources,
Inc., Darby Holdings, Inc. and the Darby parties named therein. If the
employment of a Recipient with DOIL and its Affiliates is terminated for any
reason by the Recipient or by DOIL or any of its Affiliates (any such
termination of employment being referred to herein as a "TERMINATION"), the
portion of such Recipient 's Carried Interest Points that has not vested as of
the date of Termination shall be forfeited and revert to the Company and such
Recipient shall have no right or interest therein; PROVIDED, HOWEVER, that if
the Termination is as a result of death or permanent disability, 100% of such
Recipient's Carried Interest Points shall become vested upon Termination. There
shall be no partial vesting for periods of time between annual vesting dates.
3. PAYMENTS IN RESPECT OF CARRIED INTEREST. The Agreement shall provide
that payments in respect of a Recipient's Carried Interest Points shall be made
as follows:
a. UNVESTED PORTION. The entire amount of distributions that otherwise
would be paid to a Recipient in respect of unvested Carried Interest Points
shall be
retained by the Company and credited to an account (a "VESTING ACCOUNT")
created for such purpose. An amount credited to a Recipient's Vesting
Account shall be released from such account upon the vesting of the portion
of the Recipient's Carried Interest Points in respect of which such amount
was credited. Any amount released from a Vesting Account first shall be
applied to repay any outstanding tax advance previously made to the
Recipient in respect of such amount and the balance shall be treated as
would a distribution in respect of vested Carried Interest Points and shall
be applied in accordance with subparagraphs (b)(I) and (II) below.
b. VESTED PORTION.
I. CLAWBACK ACCOUNT Thirty percent (30%) of the amount of any
distribution made to the Company in respect of the then vested portion of a
Recipient's Carried Interest Points (or released from such Recipient's
Vesting Account) shall be retained by the Company in an account (the
"CARRIED INTEREST CLAWBACK ACCOUNT") as security for such Recipient's
obligation to satisfy his or her share of the Carried Interest Clawback
Obligation.
II.. CARRIED INTEREST PAYMENTS. The remaining seventy percent (70%) of
any distribution made by the Company in respect of the then vested portion
of such Recipient 's Carried Interest Points (or released from his or her
Vesting Account) shall be paid to such Recipient.
Upon Termination, after application of the foregoing vesting and payment
provisions, a Recipient shall forfeit any and all rights to receive the amount
then remaining in his or her Vesting Account and shall have no further interest
in such account.
4. CLAWBACK. A Recipient's share of the Carried Interest Clawback
Obligation shall be determined as provided in the Agreement and shall be based
on the relative amount of Carried Interest distributable to such Recipient. In
connection with the dissolution of the Fund, the amount in a Recipient's Carried
Interest Clawback Account shall be used to satisfy such Recipient's share of the
Carried Interest Clawback Obligation. The amount, if any, remaining in a
Recipient's Carried Interest Clawback Account after satisfaction of his or her
share of the Carried Interest Clawback Obligation shall be paid to such
Recipient. To the extent that the amount in a Recipient's Carried Interest
Clawback Account is insufficient to satisfy his or her share of the Carried
Interest Clawback Obligation, such Recipient shall be personally liable for the
deficiency.
5. TAX ADVANCES. To the extent that amounts are credited to a Recipient 's
Vesting Account, non-interest bearing tax advances will be made to such
Recipient; PROVIDED, HOWEVER, that the outstanding amount of such tax advances
at no time shall exceed the amount in the Vesting Account. The amount of tax
advances to be made to a Recipient shall be an estimate of the amount of income
taxes payable by such Recipient attributable to the taxable income allocated to
such Recipient in respect of the unvested portion of his or her Carried Interest
Points. Such estimate shall be made by the Company in its reasonable discretion
in such manner as is to be determined in the
Agreement. Any tax advances outstanding upon Termination shall be payable on
demand. After Termination, the Company may apply any amounts otherwise
distributable to repay any outstanding tax advances.
6. TAX DISCLOSURE. Appropriate tax disclosure shall be made in the
Agreement.
7. LIABILITY FOR TAXES. Each Recipient shall acknowledge in the Agreement
that any tax liability relating to receipt of Carried Interest Points is his or
her responsibility and he or she shall indemnify and hold the Company harmless
therefrom.
8. TRANSFERABILITY. Carried Interest Points shall be nontransferable other
than as provided in the Agreement.
9. EXCLUSIVE RIGHT TO CARRIED INTEREST. Except for the rights provided
pursuant to the Agreement, Recipients shall acknowledge they have no other
rights to Carried Interest Points (or Carried Interest).
10. STRUCTURE. The structure of the share of Carried Interest will be
subject to change by the Company; PROVIDED, HOWEVER, that any such change shall
not materially adversely affect the economic benefits (other than tax
consequences) provided thereunder without the Recipient's consent.
EXHIBIT K-4
DARBY-BBVA LATIN AMERICAN PRIVATE EQUITY FUND, L.P.
DARBY-BBVA LATIN AMERICAN PRIVATE EQUITY FUND (ONTARIO), L.P.
The following are the principal terms and provisions which would be
included in an agreement (the "AGREEMENT") pursuant to which certain employees
of Darby Overseas Investments, Ltd. ("DOIL") and its affiliates will be issued
Management Shares (the "MANAGEMENT SHARES") of Darby-BBVA Latin American
Investors, Ltd., a Cayman Islands company (the "COMPANY"). The Company serves as
the general partner of both Darby-BBVA Latin American Private Equity Fund, L.P.,
a Cayman Islands limited partnership (the "CAYMAN FUND"), and Darby-BBVA Latin
American Private Equity Fund (Ontario), L.P., an Ontario, Canada limited
partnership (the "CANADIAN FUND", and together with the Cayman Fund, the
"FUNDS"). The Agreement would be in such form as is determined by Darby Overseas
Partners, L.P., a Delaware limited partnership ("DOP") and the Management Shares
would be subject to any restrictions, limitations or obligations arising under
the Restated Articles of Association of the Company dated June 11, 2002. The
Agreement would contain the principal terms set forth herein and such other
terms and provisions as generally shall be applicable to recipients of
Management Shares who are employees of DOIL and its affiliates (the
"RECIPIENTS").
1. DEFINED TERMS. The Company, in its capacity as general partner of the
Cayman Fund, has the right to receive certain distributions pursuant to Section
4.09(a)(iii) and the final clause of Section 4.09(a)(iv) (providing for 20% of
the remaining amount) of the Second Amended and Restated Limited Partnership
Agreement of the Cayman Fund dated as of January 17, 2003 (the "CAYMAN
PARTNERSHIP AGREEMENT"), and in its capacity as general partner of the Canadian
Fund, has the right to receive certain distributions pursuant to Section
4.9(a)(iii) and the final clause of Section 4.9(a)(iv) (providing for 20% of the
remaining amount) of the Limited Partnership Agreement of the Canadian Fund
dated as of March 20, 2003 (the "CANADIAN PARTNERSHIP AGREEMENT" and together
with the Cayman Partnership Agreement, the "PARTNERSHIP AGREEMENTS") (the right
to such distributions being referred to herein, collectively, as the "CARRIED
INTEREST"). (A one-twentieth (1/20) share of the Carried Interest is referred to
herein as a "CARRIED INTEREST POINT".) Under Section 4.01(i) of the Cayman
Partnership Agreement and Section 4.1(i) of the Canadian Partnership Agreement,
under certain circumstances, the Company is required to make capital
contributions to each Fund relating to the Carried Interest (such obligation
being referred to herein as the "CARRIED INTEREST CLAWBACK OBLIGATION").
2. VESTING. Management Shares shall vest 20% per year (on each anniversary
of the initial grant date) over a five year period with the initial grant date
as set forth in the letter referred to in Section 5.23(p) of the Purchase
Agreement, dated as of August 1, 2003, by and among Franklin Resources, Inc.,
Darby Holdings, Inc. and the Darby parties named therein. If the employment of a
Recipient with DOIL and its affiliates is terminated for any reason by the
Recipient or by DOIL or any of its affiliates ( any such termination of
employment being referred to herein as a "TERMINATION"), the portion of such
Recipient's Management Shares that has not vested as of the date of Termination
shall be forfeited and revert to the Company and such Recipient shall have
no right or interest therein; PROVIDED, HOWEVER, that if the Termination is as a
result of death or permanent disability, 100% of such Recipient 's Management
Shares shall become vested upon Termination. There shall be no partial vesting
for periods of time between annual vesting dates.
3. PAYMENTS IN RESPECT OF CARRIED INTEREST. The Agreement shall provide
that payments in respect of Management Shares shall be made as follows:
a. UNVESTED PORTION. The entire amount of distributions that otherwise
would be paid to a Recipient in respect of unvested Management Shares shall
be retained by the Company and credited to an account (a "VESTING ACCOUNT")
created for such purpose. An amount credited to a Vesting Account shall be
released from such account upon the vesting of the Management Shares in
respect of which such amount was credited. Any amount released from a
Vesting Account first shall be applied to repay any outstanding tax advance
previously made in respect of such amount and the balance shall be treated
as would a distribution in respect of vested Carried Interest Points and
shall be applied in accordance with subparagraphs (b)(I) and (II) below.
b. VESTED PORTION.
Payments in respect of vested Management Shares shall be made as
follows:
I. CLAWBACK ACCOUNT Thirty percent (30%) of the amount otherwise
payable to a Recipient in respect of vested Management Shares (or released
from such Recipient's Vesting Account) shall be retained by the Company in
an account (the "CARRIED INTEREST CLAWBACK ACCOUNT") as security for such
Recipient's obligation to satisfy his or her share of the Carried Interest
Clawback Obligation.
II. CARRIED INTEREST PAYMENTS. The remaining seventy percent (70%) of
any distribution in respect of vested Management Shares (or released from a
Recipient's Vesting Account) shall be paid to such Recipient.
Upon Termination, after application of the foregoing vesting and payment
provisions, Recipients shall forfeit any and all rights to receive the amount
then remaining in their respective Vesting Accounts and shall have no further
interest in such accounts.
4. CLAWBACK. A Recipient's share of the Carried Interest Clawback
Obligation shall be determined as provided in the Agreement and shall be based
on the relative amount of Carried Interest distributable to such Recipient. In
connection with the dissolution of the Fund, the amount in a Recipient 's
Carried Interest Clawback Account shall be used to satisfy his or her share of
the Carried Interest Clawback Obligation. The amount, if any, remaining in a
Recipient's Carried Interest Clawback Account after satisfaction of his or her
share of the Carried Interest Clawback Obligation shall be paid to such
Recipient. To the extent that the amount in a Carried Interest Clawback Account
is insufficient to satisfy the Recipient's share of the Carried Interest
Clawback Obligation, such Recipient shall be personally liable for the
deficiency.
5. TAX ADVANCES. To the extent that amounts are credited to a Recipient 's
Vesting Account, the Company shall make non-interest bearing tax advances to
such Recipient; PROVIDED, HOWEVER, that the outstanding amount of such tax
advances at no time shall exceed the amount in the Vesting Account. The amount
of tax advances to be made shall be an estimate of the amount of income taxes
payable by a Recipient attributable to the taxable income allocated to such
Recipient in respect of unvested Management Shares. Such estimate shall be made
by the Company in its reasonable discretion in such manner as is to be
determined in the Agreement. Any tax advances outstanding upon Termination shall
be payable on demand. After Termination, the Company may apply any amounts
otherwise distributable to repay any outstanding tax advances.
6. TAX DISCLOSURE. Appropriate tax disclosure shall be made in the
Agreement.
7. LIABILITY FOR TAXES. Each Recipient shall acknowledge in the Agreement
that any tax liability relating to receipt of Management Shares is his or her
responsibility and he or she shall indemnify and hold the Company harmless
therefrom.
8. TRANSFERABILITY. Management Shares shall be nontransferable other than
as to be provided in the Management Share Agreement.
9. EXCLUSIVE RIGHT TO CARRIED INTEREST. Except for the rights provided
pursuant to the Agreement, Recipients shall acknowledge they have no other
rights in respect of Management Shares, Carried Interest Points or Carried
Interest.
10. STRUCTURE. The structure of the share of Carried Interest will be
subject to change by the Company; PROVIDED, HOWEVER, that any such change shall
not materially adversely affect the economic benefits (other than tax
consequences) provided thereunder without the Recipient's consent.