AGREEMENT AND PLAN OF MERGER
by and among
UNITED ASSET MANAGEMENT CORPORATION
OM ACQUISITION CORPORATION
and
OLD MUTUAL PLC
Dated as of June 16, 2000
TABLE OF CONTENTS
AGREEMENT AND PLAN OF MERGER
RECITALS .................................................................1
ARTICLE I
THE OFFER
Section 1.1. The Offer.......................................................2
Section 1.2. Actions by Parent and Purchaser.................................3
Section 1.3. Company Actions.................................................3
Section 1.4. Adjustment to Offer Price.......................................5
ARTICLE II
THE MERGER
Section 2.1. The Merger......................................................6
Section 2.2. Effective Time..................................................6
Section 2.3. Effects of the Merger...........................................6
Section 2.4. Certificate of Incorporation and By-Laws of the Surviving
Corporation.....................................................6
Section 2.5. Directors.......................................................7
Section 2.6. Officers........................................................7
Section 2.7. Conversion of Common Shares.....................................7
Section 2.8. Conversion of Purchaser Common Stock............................7
Section 2.9. Options; Stock Plans............................................7
Section 2.10. Stockholders' Meeting...........................................8
Section 2.11. Merger without Meeting of Stockholders..........................9
ARTICLE III
DISSENTING SHARES; PAYMENT FOR COMMON SHARES
Section 3.1. Dissenting Shares...............................................9
Section 3.2. Payment for Common Shares.......................................9
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.1. Representations and Warranties of the Company...................11
(a) Organization, Good Standing and Qualification.............11
(b) Capital Structure.........................................12
(c) Corporate Authority; Approval and Fairness................13
(d) Governmental Filings; No Violations.......................13
(e) Company Reports; Financial Statements; Undisclosed
Liabilities...............................................14
(f) Absence of Certain Changes................................15
(g) Proxy Statement; Offer Documents..........................15
(h) Litigation and Liabilities................................15
(i) Employee Benefits.........................................16
(j) Labor Matters Representation..............................17
(k) Compliance with Applicable Laws; Permits..................18
(l) Takeover Statutes.........................................20
(m) Taxes.....................................................20
(n) Intellectual Property.....................................21
(o) Brokers and Finders.......................................22
(p) Material Contracts........................................22
(q) Investment Contracts, Funds and Clients...................22
(r) Affiliate Transactions....................................26
(s) Insurance.................................................27
Section 4.2. Representations and Warranties of Parent and Purchaser..........27
(a) Organization, Good Standing and Qualification.............27
(b) Purchaser.................................................27
(c) Corporate Authority; Approval.............................27
(d) Financing.................................................28
(e) Governmental Filings; No Violations.......................28
(f) Proxy Statement; Schedule 14D-9...........................29
(g) Brokers and Finders.......................................29
ARTICLE V
COVENANTS
Section 5.1. Company Interim Operations......................................29
Section 5.2. Parent Interim Operations.......................................31
Section 5.3. Acquisition Proposals...........................................31
Section 5.4. Information Supplied............................................33
Section 5.5. Filings; Other Actions; Notification............................34
Section 5.6. Access..........................................................34
Section 5.7. Stock Exchange De-listing.......................................35
Section 5.8. Publicity.......................................................35
Section 5.9. Benefits........................................................35
(a) Options...................................................35
(b) Employee Benefits.........................................36
Section 5.10. Expenses........................................................37
Section 5.11. Indemnification; Directors' and Officers' Insurance.............37
Section 5.12. Takeover Statute................................................38
Section 5.13. Compliance with 1940 Act Section 15; Client Consents............38
Section 5.14. Qualification of the Fund Clients; Fund Client Boards...........40
Section 5.15. Exemption from Liability Under Section 16(b)....................40
Section 5.16. Transfer Taxes..................................................40
Section 5.17. Interim Directors...............................................40
Section 5.18. Aggregate Client Revenue as of May 31, 2000.....................41
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ARTICLE VI
CONDITIONS
Section 6.1. Conditions to Each Party's Obligation to Effect the Merger......41
(a) Stockholder Approval......................................41
(b) Antitrust.................................................41
(c) Injunction or Restraint...................................41
(d) Offer.....................................................41
Section 6.2 Frustration of Closing Conditions...............................41
ARTICLE VII
TERMINATION
Section 7.1. Termination by Mutual Consent...................................42
Section 7.2. Termination by Either Parent or the Company.....................42
Section 7.3. Effect of Termination and Abandonment...........................44
Section 7.4. Procedure for Termination, Amendment, Extension or Waiver.......45
ARTICLE VIII
MISCELLANEOUS
Section 8.1. Survival........................................................45
Section 8.2. Modification or Amendment.......................................45
Section 8.3. Waiver of Conditions............................................45
Section 8.4. Counterparts....................................................46
Section 8.5. GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL...................46
Section 8.6. Notices.........................................................47
Section 8.7. Entire Agreement; No Other Representations......................47
Section 8.8. No Third Party Beneficiaries....................................48
Section 8.9. Obligations of Parent and of the Company........................48
Section 8.10. Severability....................................................48
Section 8.11. Interpretation..................................................48
Section 8.12. Assignment......................................................48
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "AGREEMENT"), dated as of June 16,
2000, by and among United Asset Management Corp., a Delaware corporation (the
"COMPANY"), Old Mutual plc, a public limited company incorporated in England and
Wales ("PARENT"), and OM Acquisition Corp., a Delaware corporation and a wholly
owned subsidiary of Parent ("PURCHASER").
RECITALS
WHEREAS, it is proposed that Purchaser acquire all of the issued and
outstanding shares of Common Stock, par value $0.01 per share, of the Company
(the "COMMON SHARES"), other than Common Shares beneficially owned by Parent or
Purchaser (references to Parent shall, where the context so requires, be deemed
to refer to Purchaser as well);
WHEREAS, it is proposed that Purchaser will make a cash tender offer
(the "OFFER") in compliance with Section 14(d)(1) of the Securities Exchange Act
of 1934, as amended (together with the rules and regulations promulgated
thereunder, the "EXCHANGE ACT") to acquire all the issued and outstanding Common
Shares, other than Common Shares beneficially owned by Parent or Purchaser, for
$25 per Common Share (the "BASE OFFER PRICE", and, such amount, as it may be
adjusted in accordance with Section 1.4 hereof, or any greater amount per share
paid pursuant to the Offer, the "OFFER PRICE"), net to the seller in cash, upon
the terms and subject to the conditions of this Agreement and Annex I hereto;
and that the Offer will be followed by the merger (the "MERGER") of Purchaser
with and into the Company, with the Company being the surviving corporation, in
accordance with the Delaware General Corporation Law ("DGCL"), pursuant to which
each issued and outstanding Common Share not beneficially owned by Parent will
be converted into the right to receive the Offer Price upon the terms and
subject to the conditions provided herein and in Annex I hereto;
WHEREAS, the Company, Parent and Purchaser desire to make certain
representations, warranties, covenants and agreements in connection with this
Agreement;
WHEREAS, the Board of Directors of the Company (the "COMPANY BOARD")
has received the oral opinion of Goldman, Sachs & Co. (the "FINANCIAL ADVISOR"),
and which oral opinion will be promptly confirmed in writing, to the effect
that, based on, and subject to, the various assumptions and qualifications set
forth in such opinion, as of the date of such opinion, the Offer Price to be
received by the holders of the Common Shares in the Offer and the Merger is fair
from a financial point of view to such holders (the "FAIRNESS OPINION"); and
WHEREAS, the Company Board has unanimously approved this Agreement
and the Offer, determined that this Agreement, the Offer, the Merger and the
other transactions contemplated hereby are advisable and in the best interests
of the Company and its stockholders and adopted the plan of merger set forth
herein;
WHEREAS, the Boards of Directors of Parent and Purchaser have
approved this Agreement and the Offer, determined that this Agreement, the
Offer, the Merger and the other transactions contemplated hereby are advisable
and in the best interests of Parent and Purchaser and adopted the plan of merger
set forth herein;
NOW, THEREFORE, in consideration of the premises, and of the
representations, warranties, covenants and agreements contained herein, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, intending to be legally bound hereby, the parties hereto
agree as follows:
ARTICLE I
THE OFFER
Section 1.1. THE OFFER.
(a) Provided that this Agreement shall not have been terminated in
accordance with Article VII and subject to the conditions set forth in Annex I
hereto (the "TENDER OFFER CONDITIONS"),, not later than 30 calendar days
following the date hereof, Purchaser shall, and Parent shall cause Purchaser to,
commence (within the meaning of Rule 14d-2 under the Exchange Act) the Offer to
purchase all outstanding Common Shares at the Offer Price. The obligation of
Purchaser to accept for payment any Common Shares tendered pursuant to the Offer
will be subject only to the satisfaction of the Tender Offer Conditions. The
initial scheduled expiration date of the Offer shall be the 20th business day
following the date of commencement of the Offer (determined using Rule 14d-2
under the Exchange Act).
(b) Purchaser expressly reserves the right to waive any Tender Offer
Condition, to increase the Offer Price and to make any other changes in the
terms and conditions of the Offer. Notwithstanding the foregoing, without the
prior written consent of the Company, Purchaser shall not (i) impose conditions
to the Offer in addition to the Tender Offer Conditions, (ii) modify or amend
the Tender Offer Conditions or any other term of the Offer in a manner adverse
to the holders of Common Shares, (iii) reduce the number of Common Shares
subject to the Offer, (iv) reduce the Minimum Tender Condition (as defined in
Annex I), (v) reduce the Offer Price, (vi) except as provided in the following
sentence, extend the Offer if all of the Tender Offer Conditions are satisfied
or waived, or (vii) change the form of consideration payable in the Offer.
Notwithstanding the foregoing, Purchaser may, in accordance with Applicable Law,
and without the consent of the Company, extend the Offer at any time, and from
time to time, (i) beyond the initial scheduled expiration date or any subsequent
scheduled expiration of the Offer if, at such scheduled expiration of the Offer,
any of the Tender Offer Conditions shall not be satisfied or, to the extent
permitted by this Agreement, waived (and, so long as this Agreement is in
effect, the Offer has been commenced and the Tender Offer Conditions have not
been satisfied or waived, Purchaser shall, and Parent shall cause Purchaser to,
cause the Offer not to expire, and shall extend the Offer from time to time
until the Termination Date (as defined in Section 7.2(a)(i)), subject, however,
to Purchaser's and Parent's rights of termination under this Agreement) or (ii)
for any period required by any rule, regulation or interpretation of the
Securities and Exchange Commission (the "SEC") or the staff thereof applicable
to the Offer. Unless otherwise agreed by the Purchaser and the Company, any
extension of the Offer pursuant to the preceding sentence or clause (i) of the
second preceding sentence of this Section 1.1(b) shall not exceed the lesser of
five business days or such fewer number of days that Purchaser reasonably
believes are necessary to cause the Tender Offer Conditions to be satisfied.
Purchaser may in addition, provided that doing so shall not require any
extension of what would otherwise be the final expiration date of the Offer,
provide a "subsequent offering period" (as contemplated by Rule 14d-11
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under the Exchange Act) of not less than three business days and not more than
ten business days following its acceptance for payment of Common Shares in the
Offer. Parent and Purchaser shall comply with the obligations respecting prompt
payment and announcement under the Exchange Act, and, without limiting the
generality of the foregoing, Purchaser shall, and Parent shall cause Purchaser
to, pay for any and all Common Shares validly tendered and not withdrawn
pursuant to the Offer that Purchaser becomes obligated to purchase pursuant to
the Offer within two business days following acceptance for payment of any and
all such Common Shares pursuant to the Offer.
Section 1.2. ACTIONS BY PARENT AND PURCHASER.
(a) On the date of commencement of the Offer, Parent and Purchaser
shall file with the SEC a Tender Offer Statement on Schedule TO, including all
exhibits thereto (together with all amendments and supplements thereto, the
"SCHEDULE TO") with respect to the Offer, the Merger and the other transactions
contemplated hereby. The Schedule TO shall contain or incorporate by reference
an offer to purchase (the "OFFER TO PURCHASE") and forms of the related letter
of transmittal and any related documents (the Schedule TO, the Offer to Purchase
and such other documents, together with all supplements or amendments thereto,
collectively, the "OFFER DOCUMENTS").
(b) Parent and Purchaser represent that the Offer Documents shall
comply in all material respects with the requirements of applicable federal
securities laws, including the Exchange Act, on the date filed with the SEC and
on the date first published, sent or given to the Company's stockholders, shall
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading, except that no representation is made by Parent or Purchaser
with respect to information supplied by the Company in writing specifically for
inclusion in the Offer Documents. Each of Parent and Purchaser agrees to correct
promptly, and the Company agrees to notify Parent promptly as to, any
information provided by it for use in the Offer Documents, if and to the extent
such information shall have become false or misleading in any material respect,
and each of Parent and Purchaser further agrees to take all steps necessary to
cause the Offer Documents as so corrected to be filed with the SEC and to be
disseminated to all of the holders of Common Shares, in each case as and to the
extent required by applicable federal securities laws. Parent and Purchaser
agree to provide the Company and its counsel in writing any comments Parent,
Purchaser or their counsel may receive from the SEC or its staff with respect to
the Offer Documents promptly after receipt of such comments. Parent and
Purchaser shall use their respective reasonable best efforts to respond to such
comments promptly and shall provide the Company copies of any written responses
and telephonic notification of any oral responses by Parent, Purchaser or their
counsel.
Section 1.3. COMPANY ACTIONS.
(a) The Company shall file with the SEC and mail to the holders of
Common Shares, on the date of the filing by Parent and Purchaser of the Offer
Documents, a Solicitation/Recommendation Statement on Schedule 14D-9 (together
with any amendments or supplements thereto, the "SCHEDULE 14D-9") reflecting the
recommendation of the Company Board that holders of Common Shares tender their
Common Shares pursuant to the Offer, and shall dis-
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seminate the Schedule 14D-9 as required by Rule 14d-9 promulgated under the
Exchange Act. The Schedule 14D-9 will set forth, and the Company hereby
represents that the Company Board, at a meeting duly called and held, has (i)
determined by unanimous vote of its directors, that the Offer and the Merger are
fair to, advisable and in the best interests of the Company and its
stockholders, (ii) approved the Offer and this Agreement and the transactions
contemplated hereby in accordance with the DGCL, (iii) resolved to recommend
acceptance of the Offer and approval of this Agreement by the Company's
stockholders, and (iv) taken all action, if any, necessary to render Section 203
of the DGCL inapplicable to the Offer and the Merger; PROVIDED, HOWEVER, that
such recommendation and approval may be withdrawn, modified or amended to the
extent that the Company Board determines in good faith, after consultation with
outside counsel, that such action is required in the exercise of the Company
Board's fiduciary duties under Applicable Law. The Company further represents
that, prior to the execution hereof, the Financial Advisor has delivered to the
Company Board the Fairness Opinion. The Company further represents and warrants
that it has been authorized by the Financial Advisor to reproduce the written
Fairness Opinion in full (and only in full), and may also include references to
the Fairness Opinion and to the Financial Advisor and its relationship with the
Company (in each case in form and substance as the Financial Advisor shall
reasonably approve in advance), in any statement on Schedule 14D-9 or proxy
statement relating to the transactions contemplated hereby that the Company is
required to file or distribute to its stockholders under the Exchange Act or
other Applicable Law. The Company further represents that it will file such
other documentation and take such other actions as are required by Applicable
Law to effect the purposes of this Agreement. The Company hereby consents to the
inclusion in the Offer Documents of the recommendation of the Company Board
described in this Section 1.3(a).
(b) The Schedule 14D-9 will comply in all material respects with the
provisions of applicable federal securities laws, and, on the date filed with
the SEC and on the date first published, sent or given to the Company's
stockholders, shall not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements made therein, in light of the circumstances under which
they were made, not misleading, except that no representation is made by the
Company with respect to information supplied by Parent or Purchaser in writing
for inclusion in the Schedule 14D-9. Each of the Company, on the one hand, and
Parent and Purchaser, on the other hand, agrees promptly to correct any
information provided by either of them for use in the Schedule 14D-9 if and to
the extent that it shall have become false or misleading, and the Company
further agrees to take all steps necessary to cause the Schedule 14D-9 as so
corrected to be filed with the SEC and to be disseminated to the holders of
Common Shares, in each case, as and to the extent required by applicable federal
securities laws. The Company agrees to provide Parent and its counsel in writing
any comments the Company may receive from the SEC or its staff with respect to
the Schedule 14D-9 promptly after receipt of such comments. The Company shall
use its reasonable best efforts to respond to such comments promptly and shall
provide Parent copies of any written responses and telephonic notification of
any oral responses by the Company or its counsel.
(c) In connection with the Offer, the Company will promptly, or shall
cause its transfer agent to promptly, furnish Purchaser with mailing labels,
security position listings, any non-objecting beneficial owner lists and any
available listing containing the names and addresses of the record holders of
Common Shares as of the most recent practicable date and shall furnish Purchaser
with such additional information (including, but not limited to, updated lists
of
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holders of Common Shares and their addresses, mailing labels and lists of
security positions and non-objecting beneficial owner lists) and such other
assistance as Purchaser or its agents may reasonably request in communicating
the Offer to the Company's record and beneficial stockholders. Subject to the
requirements of Applicable Law, and except for such steps as are appropriate to
disseminate the Offer Documents and any other documents necessary to consummate
the Offer and the Merger, Parent, Purchaser and their affiliates, associates,
agents and advisors shall use the information contained in any such labels,
listings and files only in connection with the Offer and the Merger, and, if
this Agreement shall be terminated, will deliver to the Company all copies of
such information then in their possession.
Section 1.4. ADJUSTMENT TO OFFER PRICE.
(a) If Aggregate Client Revenue (as defined in Annex I hereto) as of
the most recent calendar month-end prior to the acceptance by Purchaser of
Common Shares for payment pursuant to the Offer (the "LAST MONTH-END") (such
amount of Aggregate Client Revenue as of the Last Month-End being hereinafter
referred to as the "LME AMOUNT") is less than the Requisite Revenue Percentage
and greater than 75% of Aggregate Client Revenue as of May 31, 2000, the Offer
Price shall be equal to (x) the Base Offer Price multiplied by (y) a quotient,
the numerator of which is the LME amount plus an amount equal to the product of
(A) a percentage equal to 100% less the Requisite Revenue Percentage multiplied
by (B) Aggregate Client Revenue as of May 31, 2000, and the denominator of which
is Aggregate Client Revenue as of May 31, 2000; provided that if (1) the LME
Amount is less than (2) an amount equal to the product of the Requisite Revenue
Percentage multiplied by Aggregate Client Revenue as of May 31, 2000 (the
"REQUISITE AMOUNT") by an amount that is more than 5% of Aggregate Client
Revenue as of May 31, 2000 (such shortfall in excess of Aggregate Client Revenue
as of May 31, 2000, expressed as a percentage of Aggregate Client Revenue as of
May 31, 2000, the "ADDITIONAL REVENUE SHORTFALL"), the Offer Price shall also be
reduced by an additional amount equal to (x) the Base Offer Price multiplied by
(y) the Additional Revenue Shortfall. For the avoidance of doubt, the effect of
the foregoing sentence shall be to reduce the Base Offer Price by 1% for every
1% (measured with respect to Aggregate Client Revenue as of May 31, 2000) by
which the LME Amount is less than the Requisite Amount for the first 5%
(measured with respect to Aggregate Client Revenue as of May 31, 2000) shortfall
of the LME Amount from the Requisite Amount, and 2% for every 1% (measured with
respect to Aggregate Client Revenue as of May 31, 2000) by which the LME Amount
is less than the Requisite Amount for any shortfall of the LME Amount from the
Requisite Amount in excess of the first 5% (measured with respect to Aggregate
Client Revenue as of May 31, 2000).) Notwithstanding the foregoing, if, as of
the Last Month-End, Fund Approval and Client Consent (each as defined below) are
obtained from Clients (as defined below) the Aggregate Client Revenue of which
accounts together represent the Requisite Amount, the Offer Price shall be equal
to the Base Offer Price. If the LME Amount is less than 75% of Aggregate Client
Revenue as of May 31, 2000 and Purchaser waives the conditions set forth in
paragraph (b) of Annex I, the Offer Price shall be adjusted as if the LME Amount
were equal to 75% of Aggregate Client Revenue as of May 31, 2000. For the
purposes of this Agreement, the "REQUISITE REVENUE PERCENTAGE" shall be equal to
(x) 90% less (y) the product of 1.5% times the number of calendar month-ends
between the date hereof and the Last Month-End, including the Last Month-End (so
that, for instance, if the Last Month-End shall be August 31, 2000, the
Requisite Revenue Percentage would be 85.5%).
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(b) In addition, the Offer Price shall also be subject to reduction
by an amount equal to a quotient equal to one-half of Special Costs (as defined
in Section 1.5 of the Company Disclosure Letter) divided by the total number of
outstanding Common Shares (determined on a fully diluted basis, after giving
effect to the exercise or conversion of all options, rights and securities
exercisable or convertible into Common Shares).
ARTICLE II
THE MERGER
Section 2.1. THE MERGER. Upon the terms and subject to the
satisfaction or waiver of the conditions hereof, and in accordance with the
applicable provisions of this Agreement and the DGCL, at the Effective Time (as
defined below) Purchaser shall be merged with and into the Company. Following
the Merger, the separate corporate existence of Purchaser shall cease, and the
Company shall continue as the surviving corporation (the "SURVIVING
CORPORATION").
Section 2.2. EFFECTIVE TIME. As soon as practicable after the
satisfaction or waiver of the conditions set forth in Article VI, the Company
and Purchaser shall cause a certificate of merger (the "CERTIFICATE OF MERGER")
to be executed, verified and filed with, and delivered to, in the manner
required by the DGCL, the Secretary of State of the State of Delaware, and the
parties shall take such other and further actions as may be required by
Applicable Law to make the Merger effective. The Merger shall become effective
at such time as the Certificate of Merger is duly filed with the Secretary of
State of the State of Delaware or at such later time as is agreed to by the
parties hereto and as specified in the Certificate of Merger (the "EFFECTIVE
TIME"). Prior to the filing referred to in this Section 2.2, the closing will be
held at the offices of Weil, Gotshal & Manges LLP, 767 Fifth Avenue, New York,
New York 10153 (or such other place as the parties may agree) for the purpose of
confirming all of the foregoing.
Section 2.3. EFFECTS OF THE MERGER. From and after the Effective Time,
the Merger shall have the effects set forth in the DGCL. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time, all the
properties, rights, privileges, powers and franchises of the Company and
Purchaser shall vest in the Surviving Corporation, and all debts, liabilities
and duties of the Company and Purchaser shall become the debts, liabilities and
duties of the Surviving Corporation.
Section 2.4. CERTIFICATE OF INCORPORATION AND BY-LAWS OF THE SURVIVING
CORPORATION. (a) The certificate of incorporation of Purchaser as in effect
immediately prior to the Effective Time shall be the articles of incorporation
of the Surviving Corporation until thereafter amended in accordance with the
provisions thereof and Applicable Law, except that Article I of the certificate
of incorporation of the Surviving Corporation shall read until thereafter
amended: "The name of the corporation (the "CORPORATION") is: United Asset
Management Corporation."
(b) The by-laws of Purchaser in effect at the Effective Time shall be
the by-laws of the Surviving Corporation until amended in accordance with the
provisions thereof, the articles of incorporation and Applicable Law.
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Section 2.5. DIRECTORS. The directors of Purchaser immediately prior to
the Effective Time shall be the initial directors of the Surviving Corporation
and shall hold office until their respective successors are duly elected or
appointed and qualified, or their earlier death, resignation or removal in
accordance with the articles of incorporation and the by-laws of the Surviving
Corporation.
Section 2.6. OFFICERS. The officers of Purchaser immediately prior to
the Effective Time shall be the initial officers of the Surviving Corporation
and shall hold office until their respective successors are duly elected or
appointed and qualified, or their earlier death, resignation or removal in
accordance with the articles of incorporation and the by-laws of the Surviving
Corporation.
Section 2.7. CONVERSION OF COMMON SHARES. At the Effective Time, by
virtue of the Merger and without any action on the part of the holders thereof,
each Common Share issued and outstanding immediately prior to the Effective Time
(other than (i) any Common Shares held by Parent, Purchaser, any direct or
indirect wholly owned Subsidiary of Parent or Purchaser (the "PARENT SHARES"),
or by any wholly owned Subsidiary of the Company, which Common Shares shall
remain outstanding, and (ii) Dissenting Shares (as defined herein)), shall by
virtue of the Merger be cancelled and retired and shall be converted into the
right to receive pursuant to Section 3.2 the Offer Price, payable to the holder
thereof, without interest thereon, upon surrender of the certificate formerly
representing such Common Share or any replacement certificates representing such
Common Shares as may be obtained from the transfer agent of the Company.
Section 2.8. CONVERSION OF PURCHASER COMMON STOCK. Purchaser has
outstanding 10 shares of common stock, par value $0.01 per share, all of which
shares are entitled to vote with respect to approval and adoption of this
Agreement. At the Effective Time, each share of common stock, par value $0.01
per share, of Purchaser issued and outstanding immediately prior to the
Effective Time shall, by virtue of the Merger and without any action on the part
of the holder thereof, be converted into and become one validly issued, fully
paid and non-assessable share of common stock, par value $0.01 per share, of the
Surviving Corporation.
Section 2.9. OPTIONS; STOCK PLANS.
(a) Prior to the acceptance for payment of Common Shares in the Offer,
the Company Board (or, if appropriate, any committee thereof) shall adopt
appropriate resolutions and take all other actions necessary to provide for the
cancellation, effective at the Effective Time, of all the outstanding Company
Options heretofore granted under any Stock Plan (as defined below) and
Stand-Alone Option Plans (as defined below). Such cancellation shall occur
without any payment therefor except as provided in Section 5.9.
(b) The Company shall take all actions necessary to provide that,
effective as of the Effective Time, (i) the Option Plan and the Stand-Alone
Option Plans shall be terminated, (ii) the provisions in the Deferral Plans and
any other plan, program or arrangement providing for the issuance or grant of
any other interest in respect of the capital stock of the Company shall be
deleted, and (iii) no holder of Company Options or Warrants (as defined below)
will have any
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right to receive any shares of capital stock of the Company or, if applicable,
the Surviving Corporation, upon exercise of any Company Option or Warrant.
Section 2.10. STOCKHOLDERS' MEETING.
(a) If required by Applicable Law in order to consummate the Merger,
the Company, acting through the Company Board, shall, in accordance with
Applicable Law, and provided that this Agreement shall not have been terminated:
(i) duly call, give notice of, convene and hold a special
meeting of its stockholders (the "SPECIAL MEETING") to be held as soon
as practicable following the acceptance for payment of Common Shares
by Purchaser pursuant to the Offer for the purpose of considering and
taking action upon this Agreement;
(ii) together with Parent, prepare and file with the SEC a
preliminary proxy statement soliciting Company stockholder approval of
the Merger and this Agreement, and use reasonable best efforts to
obtain and furnish the information required to be included by the SEC
in the Proxy Statement (as defined below) and, after consultation with
each other, to respond as soon as practicable to any comments made by
the SEC with respect to the preliminary proxy statement and cause a
definitive proxy statement (the "PROXY STATEMENT"), which the parties
agree shall comply as to form in all material respects with all
Applicable Law, to be mailed to its stockholders at the earliest
practicable date following expiration or termination of the Offer; and
(iii) include in the Proxy Statement (x) the recommendation of
the Company Board that stockholders of the Company vote in favor of
the approval of the Merger and of this Agreement (except as set forth
in the proviso to Section 1.3(a)) and (y) the Fairness Opinion in
accordance with the provisions of Section 1.3(a).
(b) Parent agrees that it will vote, or cause to be voted, all Common
Shares then owned by it, Purchaser or any of Parent's other Subsidiaries in
favor of the approval of the Merger and of this Agreement.
(c) Whenever any event occurs which is required to be set forth in an
amendment or supplement to the Proxy Statement, Parent or the Company, as the
case may be, shall promptly inform the other of each such occurrence and
cooperate in the filing with the SEC and/or mailing to the Company stockholders
of such amendment or supplement. Each of the parties agrees that the information
provided by it for inclusion in the Proxy Statement and each amendment or
supplement thereto, at the time of mailing thereof and at the time of the
Special Meeting, will not include an 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. If, at any time prior to the Effective Time, any information
pertaining to one of the parties or, to such party's knowledge, any of its
affiliates or its officers or directors, contained in or omitted from the Proxy
Statement makes statements contained therein materially false or misleading,
such party shall promptly so advise the other parties and provide such other
parties with the information necessary to make the statements contained therein
not false or misleading. In the event of such advice being given pursuant to the
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preceding sentence, the Company and Parent shall cooperate to file promptly with
the SEC (after reasonable opportunity for Parent and the Company to review and
comment thereon) any required amendments or supplements to the Proxy Statement
and, to the extent required by Applicable Law, disseminate such amendments or
supplements to the Company stockholders.
Section 2.11. MERGER WITHOUT MEETING OF STOCKHOLDERS. Notwithstanding
Section 2.10, in the event that Purchaser shall acquire pursuant to the Offer
such number of Common Shares which, when aggregated with the number of Common
Shares otherwise beneficially owned by Parent, represents 90% of the total
number of outstanding Common Shares on the date of, and after giving effect to,
such acquisition, the parties hereto agree to take all necessary and appropriate
action to cause the Merger to become effective as soon as practicable after the
acceptance for payment of Common Shares by Purchaser pursuant to the Offer
without a meeting of stockholders of the Company, in accordance with Section 253
of the DGCL.
ARTICLE III
DISSENTING SHARES; PAYMENT FOR COMMON SHARES
Section 3.1. DISSENTING SHARES. Notwithstanding anything in this
Agreement to the contrary, Common Shares outstanding immediately prior to the
Effective Time that are held by stockholders (i) who shall have neither voted
for approval and adoption of this Agreement and the Merger nor consented thereto
in writing and (ii) who shall be entitled to and who shall have demanded
properly in writing appraisal for such Common Shares in accordance with Section
262 of the DGCL ("DISSENTING SHARES"), shall not be converted into the right to
receive the Offer Price at or after the Effective Time unless and until the
holder of such Common Shares fails to perfect, withdraws or otherwise loses such
holder's right to appraisal. If a holder of Dissenting Shares shall withdraw (in
accordance with Section 262(k) of the DGCL) his or her demand for such appraisal
or shall become ineligible for such appraisal, then, as of the Effective Time or
the occurrence of such event, whichever last occurs, such holder's Common Shares
shall cease to be Dissenting Shares and shall be converted into and represent
the right to receive the Offer Price, without interest thereon. The Company
shall give Parent prompt notice of any written demands for appraisal received by
the Company and the opportunity to participate in all negotiations and
proceedings with respect to demands for appraisal. The Company shall not, except
with the prior written consent of Parent, make any payment with respect to, or
offer to settle or settle, or otherwise negotiate, any such demands.
Section 3.2. PAYMENT FOR COMMON SHARES.
(a) Prior to the Effective Time, Purchaser shall designate a bank or
trust company reasonably acceptable to the Company to act as paying agent (the
"PAYING AGENT") in effecting the payment of the Offer Price in respect of
certificates that, immediately prior to the Effective Time, represent Common
Shares (the "CERTIFICATES") entitled to payment of the Offer Price pursuant to
Section 2.7. At the Effective Time, Parent or Purchaser shall deposit, or cause
to be deposited, in trust, upon terms (including as to the release of such funds
to holders of Common Shares upon consummation of the Merger) reasonably
acceptable to the Company,
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with the Paying Agent the aggregate Offer Price to
which holders of Common Shares shall be entitled at the Effective Time pursuant
to Section 2.7.
(b) Promptly after the Effective Time, the Paying Agent shall mail to
each record holder of Certificates a form of letter of transmittal which shall
specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon proper delivery of the Certificates to the
Paying Agent and instructions for use in surrendering such Certificates and
receiving the Offer Price in respect thereof. Upon the surrender of each such
Certificate, together with a duly executed letter of transmittal and any other
required documents, the Paying Agent shall, as soon as practicable, pay the
holder of such Certificate an amount equal to the product of (x) the Offer Price
multiplied by (y) the number of Common Shares formerly represented by such
Certificate, in consideration therefor, and such Certificate shall forthwith be
cancelled. Until so surrendered, each such Certificate (other than Certificates
representing Common Shares held by Parent or Purchaser, any wholly owned
Subsidiary of Parent or Purchaser, in the treasury of the Company or by any
wholly owned Subsidiary of the Company or Dissenting Shares) shall represent
solely the right to receive the aggregate Offer Price relating thereto. No
interest or dividends shall be paid or accrued on the Offer Price. If the Offer
Price (or any portion thereof) is to be delivered to any individual,
corporation, trust, association, unincorporated association, estate,
partnership, joint venture, limited liability company, Governmental Entity (as
defined in Section 4.1) or other legal entity (each, a "PERSON"), other than the
Person in whose name the Certificate surrendered is registered, it shall be a
condition to such right to receive such Offer Price that the Certificate so
surrendered shall be properly endorsed or otherwise be in proper form for
transfer, that the signatures on the Certificate shall be properly guaranteed,
and that the Person surrendering such Common Shares shall pay to the Paying
Agent any transfer or other Taxes required by reason of the payment of the Offer
Price to a Person other than the registered holder of the Certificate
surrendered, or shall establish to the satisfaction of the Paying Agent that
such Taxes have been paid or are not applicable. In the event any Certificate
shall have been lost, stolen or destroyed, the Paying Agent shall be required to
pay the full Offer Price in respect of any Common Shares represented by such
Certificate; however, Parent may require the owner of such lost, stolen or
destroyed Certificate to execute and deliver to the Paying Agent a form of
affidavit claiming such Certificate to be lost, stolen or destroyed in form and
substance reasonably satisfactory to Parent, and the posting by such owner of a
bond in such amount as Parent may determine is reasonably necessary as indemnity
against any claim that may be made against Parent or the Paying Agent.
(c) Promptly following the date which is 120 days after the Effective
Time, the Paying Agent shall deliver to the Surviving Corporation all cash,
Certificates and other documents in its possession relating to the transactions
contemplated hereby, and the Paying Agent's duties shall terminate. Thereafter,
each holder of a Certificate may surrender such Certificate to the Surviving
Corporation and (subject to applicable abandoned property, escheat and similar
Applicable Law) receive in consideration therefor the aggregate Offer Price
relating thereto, without any interest or dividends thereon, except as required
under Applicable Law. Notwithstanding the foregoing, none of Parent, Purchaser,
the Company or the Paying Agent shall be liable to any Person in respect of any
cash delivered to a public official pursuant to any applicable abandoned
property, escheat or similar Applicable Law. If any Certificates shall not have
been surrendered immediately prior to such date on which any payment pursuant to
this Article III would otherwise escheat to or become the property of any
Governmental Entity, the
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cash payment in respect of such Certificate shall, to the extent permitted by
Applicable Law, become the property of the Surviving Corporation, free and clear
of all claims or interests of any Person previously entitled thereto.
(d) Immediately prior to the Effective Time, the stock transfer books
of the Company shall be closed, and, after the Effective Time, there shall be no
transfers on the stock transfer books of the Surviving Corporation of any Common
Shares which were outstanding immediately prior to the Effective Time. If, after
the Effective Time, Certificates are presented to the Surviving Corporation or
the Paying Agent, they shall be surrendered and cancelled in return for the
payment of the aggregate Offer Price relating thereto, as provided in this
Article III.
(e) From and after the Effective Time, the holders of Certificates
evidencing ownership of Common Shares outstanding immediately prior to the
Effective Time shall cease to have any rights with respect to such Common Shares
except as otherwise provided herein or by Applicable Law. Such holders shall
have no rights, after the Effective Time, with respect to such Common Shares
except to surrender such Certificates in exchange for the Offer Price pursuant
to this Agreement or to perfect any rights of appraisal as a holder of
Dissenting Shares that such holders may have pursuant to Section 262 of the
DGCL.
(f) Each of Parent, Purchaser, the Paying Agent and the Surviving
Corporation shall be entitled to deduct and withhold from the consideration
otherwise payable pursuant to this Agreement to any holder Common Shares such
amounts as it is required to deduct and withhold with respect to the making of
such payment under the Internal Revenue Code of 1986, as amended, and any
successor thereto (the "CODE") and the rules and regulations promulgated
thereunder, or any provision of state, local or foreign Tax Law. To the extent
that amounts are so withheld by Parent, Surviving Corporation, Purchaser or
Paying Agent, as the case may be, such withheld amounts shall be treated for all
purposes of this Agreement as having been paid to the holder of the Common
Shares in respect of which such deduction and withholding was made by Parent,
Surviving Corporation, Purchaser or Paying Agent, as the case may be.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Except as
set forth in the disclosure letter delivered to Parent by the Company on or
prior to entering into this Agreement (the "COMPANY DISCLOSURE LETTER"), the
Company hereby represents and warrants to Parent that (it being understood that
the words "to the Knowledge of the Company" or "the Company's Knowledge" and any
words of similar import shall mean the actual knowledge of the persons whose
names are set forth in Section 4.1(a) of the Company Disclosure Letter):
(a) ORGANIZATION, GOOD STANDING AND QUALIFICATION. Each of the Company
and its Subsidiaries (as defined below) is a corporation duly organized, validly
existing and in good standing under the laws of its respective jurisdiction of
organization and has all requisite corporate or similar power and authority to
own and operate its properties and assets and to carry on its business as
presently conducted and is qualified to do business and is in good standing as a
foreign corporation in each jurisdiction where the ownership or operation of its
properties or
-11-
conduct of its business requires such qualification, except where the failure to
be so qualified or in good standing, when taken together with all other such
failures, is not, individually or in the aggregate, reasonably likely to have a
Company Material Adverse Effect (as defined below). The Company has made
available to Parent complete and correct copies of the Company's and its
material Subsidiaries' (including all active, directly owned, domestic
Subsidiaries') charters and bylaws, each as amended to date. The Company's and
its material Subsidiaries' charters and bylaws made available are in full force
and effect. Section 4.1(a) of the Company Disclosure Letter contains, as
qualified therein, a correct and complete list of all Subsidiaries of the
Company.
As used in this Agreement, the term (x) "SUBSIDIARY" means, with
respect to the Company or Parent, as the case may be, any Person (other than
pooled investment vehicles that constitute Exempt Fund Clients), of which at
least a majority of the securities or ownership interests having by their terms
ordinary voting power to elect a majority of the Board of Directors or other
persons performing similar functions, or a general partner interest or managing
membership interest, is directly or indirectly owned or controlled by such party
or by one or more of its respective Subsidiaries and (y) "COMPANY MATERIAL
ADVERSE EFFECT" means a material adverse effect on the financial condition,
operations, properties, business or results of operations of the Company and its
Subsidiaries taken as a whole (other than any change or effect arising out of
(A) a decline or deterioration in the economy or the capital markets in general
or the markets in which the Company and its Subsidiaries operate, or (B) this
Agreement or the transactions contemplated hereby or the announcement thereof)
or an effect which is reasonably likely to prevent, materially delay or
materially impair the ability of the Company to consummate the transactions
contemplated by this Agreement or to carry on the business of the Company and
its Subsidiaries, taken as a whole, substantially in the same manner as
currently conducted.
(b) CAPITAL STRUCTURE. The authorized stock of the Company consists of
200,000,000 Common Shares, of which 56,525,502 Common Shares were outstanding as
of the close of business on June 15, 2000, and 5,000,000 shares of preferred
stock, par value $1.00 per share, of which none were outstanding as of the date
hereof. All of the outstanding Common Shares have been duly authorized and are
validly issued, fully paid and nonassessable. The Company has no commitments to
issue or deliver Common Shares except that, as of June 15, 2000, there were
16,924,597 Common Shares reserved for issuance pursuant to the United Asset
Management Corporation Second Amended and Restated 1994 Stock Option Plan (the
"OPTION PLAN)", the United Asset Management Corporation Stock Option Deferral
Plan and the United Asset Management Corporation Deferred Compensation Plan
(such two plans, the "DEFERRAL PLANS") and the Stand-Alone Option Plans (the
"STAND-ALONE OPTION PLANS") identified in Section 4.1(b) of the Company
Disclosure Letter (the Stand-Alone Option Plans, together with the Option Plan
and the Deferral Plans, the "STOCK PLANS"), and except for shares issuable
pursuant to outstanding warrants (the "WARRANTS"). Section 4.1(b) of the Company
Disclosure Letter contains a correct and complete list of the Warrants, each
outstanding option to purchase Common Shares under the Stock Plans (each a
"COMPANY OPTION"), including the holder, date of grant, exercise price and
number of Common Shares subject thereto. Each of the outstanding shares of
capital stock or other securities of each of the Company's Subsidiaries is duly
authorized, validly issued, fully paid and nonassessable and owned by the
Company or by a direct or indirect wholly owned subsidiary of the Company, free
and clear of any lien, pledge, security interest, claim or other encumbrance.
Except as set forth above, there are no Common Shares authorized, re-
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served, issued or outstanding and there are no preemptive or other outstanding
rights, subscriptions, options, warrants, stock appreciation rights, redemption
rights, repurchase rights, registration rights, convertible securities or other
agreements, arrangements or commitments of any character relating to the issued
or unissued share capital or other ownership interest of the Company or any of
its Subsidiaries or any other securities or obligations convertible or
exchangeable into or exercisable for, or giving any Person a right to subscribe
for or acquire, any securities of the Company or its Subsidiaries, and no
securities evidencing such rights are authorized, issued or outstanding. Neither
the Company nor any of its Subsidiaries has outstanding any bonds, debentures,
notes or other obligations the holders of which have the right to vote (or
convertible into or exercisable for securities having the right to vote) with
the stockholders of the Company or any of its Subsidiaries on any matter
("VOTING DEBT").
(c) CORPORATE AUTHORITY; APPROVAL AND FAIRNESS.
(i) The Company has all requisite corporate power and authority
and has taken all corporate action necessary in order to execute,
deliver and perform its obligations under this Agreement and to
consummate, subject only to approval of the Merger by the holders of a
majority of the outstanding Common Shares entitled to vote on the
matter (the "COMPANY REQUISITE VOTE"), the Merger. This Agreement is a
valid and binding agreement of the Company enforceable against the
Company in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles (the "BANKRUPTCY
AND EQUITY EXCEPTION").
(ii) The Board of Directors of the Company (A) has duly adopted the
plan of merger set forth herein and approved this Agreement and the
other transactions contemplated hereby, (B) has declared that the
Merger and this Agreement and the other transactions contemplated
hereby are advisable and in the best interests of the Company and its
stockholders, and (C) has received the Fairness Opinion.
(d) GOVERNMENTAL FILINGS; NO VIOLATIONS.
(i) Other than the filings and/or notices (A) pursuant to Section
2.2 or as set forth in Section 4.1(d) of the Company Disclosure Letter,
(B) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR ACT"), the Exchange Act, the Securities Act of 1933, as
amended (the "SECURITIES ACT"), the Investment Company Act of 1940 (the
"1940 ACT"), the Investment Advisers Act of 1940, as amended (the "ADVISERS
ACT") and the Change in Bank Control Act, as amended (the "BANK CONTROL
ACT"), (C) to comply with state banking or securities or "blue-sky" laws,
and (D) required to be made with the NYSE, the National Association of
Securities Dealers, Inc. ("NASD") and other applicable self-regulatory
organizations, no filings, reports or notices are required to be made by
the Company with, nor are any consents, registrations, approvals, permits
or authorizations required to be obtained by the Company from, any
governmental or regulatory authority, agency, commission, body or other
governmental entity ("GOVERNMENTAL ENTITY"), in connection with the
execution and delivery of this Agreement by the Company and the
consummation by the Company of the Merger and the other transactions
contemplated hereby.
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(ii) The execution, delivery and performance of this Agreement by
the Company do not, and the consummation by the Company of the Merger and
the other transactions contemplated hereby will not, constitute or result
in (A) a breach or violation of, or a default under, the charter or bylaws
of the Company or the comparable governing instruments of any of its
Subsidiaries, (B) a breach or violation of, or a default under, the
acceleration of any obligations or the creation of a lien, pledge, security
interest or other encumbrance on the assets of the Company or any of its
Subsidiaries (with or without notice, lapse of time or both) pursuant to,
any agreement, lease, contract, note, mortgage, indenture, arrangement or
other obligation, whether written or oral ("CONTRACTS" and individually, a
"CONTRACT"), binding upon the Company or any of its Subsidiaries (provided,
as to consummation, the filings, reports and notices are made, and
approvals are obtained, as referred to in Section 4.1(d)(i)) or any
Applicable Law or governmental or non-governmental permit, registration,
authorization or license to which the Company or any of its Subsidiaries is
subject, or (C) any change in the rights or obligations of any party under
any Contract, except, in the case of clause (B) or (C) above, for any
breach, violation, default, acceleration, creation or change that is not,
individually or in the aggregate, reasonably likely to have a Company
Material Adverse Effect. Section 4.1(d) of the Company Disclosure Letter
sets forth a correct and complete list of all Material Contracts (as
defined below) of the Company and its Subsidiaries pursuant to which
consents or waivers are or may be required prior to consummation of the
transactions contemplated by this Agreement (whether or not subject to the
exception set forth with respect to clauses (B) and (C) above).
(e) COMPANY REPORTS; FINANCIAL STATEMENTS; UNDISCLOSED LIABILITIES.
(i) The Company has delivered or made available to Parent each
registration statement, report, proxy statement or information statement
prepared by it since December 31, 1997, including the Company's Annual
Report on Form 10-K for the year ended December 31, 1999 (the "AUDIT DATE,"
and such report on Form 10-K, the "COMPANY 1999 10-K") in the form
(including exhibits, annexes and any amendments thereto) filed with the SEC
(collectively, including any such reports filed with the SEC subsequent to
the date hereof, the "COMPANY REPORTS"). As of their respective dates, the
Company Reports did not, and any Company Reports filed with the SEC
subsequent to the date hereof will not, contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements made therein, in light of the
circumstances in which they were made, not misleading. Each of the
consolidated balance sheets included in or incorporated by reference into
the Company Reports (including the related notes and schedules) fairly
presents, or will fairly present, the consolidated financial position of
the Company and its Subsidiaries as of its date and each of the
consolidated statements of income and of cash flows included in or
incorporated by reference into the Company Reports (including any related
notes and schedules) fairly presents, or will fairly present, the results
of operations, retained earnings and changes in financial position, as the
case may be, of the Company and its Subsidiaries for the periods set forth
therein (subject, in the case of unaudited statements, to notes and normal
year-end audit adjustments that will not be material in amount or effect),
in each case in accordance with accounting principles generally accepted in
the United States ("U.S.
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GAAP") consistently applied during the periods involved, except as may be
noted therein.
(ii) Except for those liabilities that are disclosed in the
Company Reports filed prior to the date hereof, neither the Company nor any
of its Subsidiaries has incurred any liability of any nature whatsoever
(whether absolute, accrued, contingent or otherwise and whether due or to
become due) that, individually or in the aggregate, has had or is
reasonably likely to have a Company Material Adverse Effect.
(f) ABSENCE OF CERTAIN CHANGES. Except as disclosed in the Company
Reports filed prior to the date hereof, since the Audit Date the Company and its
Subsidiaries have conducted their respective businesses only in, and have not
engaged in any material transaction other than according to, the ordinary and
usual course of such businesses consistent with past practice and there has not
been (i) any change in the financial condition, operations, properties, business
or results of operations of the Company and its Subsidiaries or any development
or combination of developments, that, individually or in the aggregate, has had
or is reasonably likely to have a Company Material Adverse Effect; (ii) any
damage, destruction or other casualty loss with respect to any material asset or
property owned, leased or otherwise used by the Company or any of its
Subsidiaries, whether or not covered by insurance, except for such damage,
destruction or other casualty loss which, individually or in the aggregate, has
not had and is not reasonably likely to have a Company Material Adverse Effect;
(iii) any change by the Company in Tax or accounting principles, practices or
methods other than as required by U.S. GAAP or Applicable Law or as disclosed in
the Company Reports filed prior to the date hereof; or (iv) any declaration,
setting aside or payment of any dividend or other distribution in respect of the
stock of the Company, other than regular quarterly cash dividends paid by the
Company not in excess of $0.20 per Common Share. Since the Audit Date, except as
provided for herein or as disclosed in the Company Reports filed prior to the
date hereof, there has not been any increase in the compensation payable or that
would become payable by the Company to officers or key employees of the Company
or any of its Subsidiaries or any amendment of any of the Compensation and
Benefit Plans (as defined in Section 4.1(i)) other than increases or amendments
in the ordinary course consistent with past practice.
(g) PROXY STATEMENT; OFFER DOCUMENTS. The Proxy Statement will comply
in all material respects with the Securities Act and the Exchange Act, except
that no representation is made by the Company with respect to information
supplied by Parent for inclusion in the Proxy Statement. None of the information
supplied by the Company in writing for inclusion in the Offer Documents or
provided by the Company in the Schedule 14D-9 will, at the respective times that
the Offer Documents and the Schedule 14D-9 are filed with the SEC and are first
published or sent or given to holders of Common Shares, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
(h) LITIGATION AND LIABILITIES. Except as disclosed in the Company
Reports filed prior to the date hereof, there are no (i) civil, criminal or
administrative actions, suits, claims, hearings, investigations, inquiries or
proceedings pending or, to the Knowledge of the Company, threatened against the
Company or any of its Subsidiaries, or (ii) obligations or li-
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abilities of any nature, whether or not accrued, contingent or otherwise and
whether or not required to be disclosed, or any other facts or circumstances of
which the Company has Knowledge that is reasonably likely to result in any
claims against, or obligations or liabilities of, the Company or any of its
Subsidiaries, except for those that are not, individually or in the aggregate,
reasonably likely to have a Company Material Adverse Effect.
(i) EMPLOYEE BENEFITS.
(i) A copy of each material bonus, incentive, deferred
compensation, pension, retirement, profit-sharing, thrift, savings,
employee stock ownership, stock bonus, stock purchase, restricted stock,
stock option, employment, termination, severance, compensation, medical,
health, welfare, fringe benefits or other plan, or agreement that covers
employees, directors, former employees or former directors of the Company
or any of its Subsidiaries with respect to service for the Company or any
of its Subsidiaries (the "COMPENSATION AND BENEFIT PLANS") and any trust
agreement or insurance contract forming a part of any such Compensation
and Benefit Plan has been made available to Parent prior to the date
hereof. The Compensation and Benefit Plans are listed in Section 4.1(i) of
the Company Disclosure Letter.
(ii) All Compensation and Benefit Plans are in substantial
compliance with all Applicable Law, including the Code and the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and any
regulations and rules promulgated thereunder and any applicable foreign
law. Each Compensation and Benefit Plan that is an "employee pension
benefit plan" within the meaning of Section 3(2) of ERISA (a "PENSION
PLAN") and that is intended to be qualified under Section 401(a) of the
Code has received a favorable determination letter from the Internal
Revenue Service (the "IRS"), and to the Knowledge of the Company, there are
no existing circumstances that are reasonably likely to result in
revocation of any such favorable determination letter. There is no pending
or, to the Knowledge of the Company, threatened legal action, suit, claim
or governmental investigation relating to any of the Compensation and
Benefit Plans, other than claims for benefits in the ordinary course.
Neither the Company nor any of its Subsidiaries has engaged in a
transaction with respect to any Compensation and Benefit Plan that,
assuming the taxable period of such transaction expired as of the date
hereof, would be reasonably likely to subject the Company or any of its
Subsidiaries to a material Tax or penalty imposed by either Section 4975 of
the Code or Section 502 of ERISA.
(iii) None of the Compensation and Benefit Plans is subject to
Title IV or Section 302 of ERISA or Section 412 or 4971 of the Code. None
of the Company and its Subsidiaries nor any of their respective ERISA
Affiliates (as defined below) has, at any time during the last six years,
contributed to or been obligated to contribute to any "multiemployer plan"
within the meaning of Section 4001(a)(3) of ERISA (a "MULTIEMPLOYER PLAN");
and (iii) none of the Company and its Subsidiaries nor any ERISA Affiliates
has incurred any liability to a Multiemployer Plan as a result of a
complete or partial withdrawal from such Multiemployer Plan, as those terms
are defined in Part I of Subtitle E of Title IV of ERISA, that has not been
satisfied in full. "ERISA AFFILIATE" means, with respect to the Company or
any of its Subsidiaries, any entity, trade or business, that is a member of
a group described in Section 414(b), (c), (m) or (o) of the Code or Section
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4001(b)(1) of ERISA that includes the Company or such Subsidiary, or that
is a member of the same "controlled group" as the Company or such
Subsidiary pursuant to Section 4001(a)(14) of ERISA.
(iv) All material contributions required to be made under the
terms of any Compensation and Benefit Plan as of the date hereof have been
made or have been reflected on the Company's or the appropriate
Subsidiary's most recent financial statements.
(v) Neither the Company nor any of its Subsidiaries have any
obligations for retiree health and life benefits under any Compensation and
Benefit Plan, other than benefits mandated under Section 4980B of the Code
or by other Applicable Law, or pursuant to individual agreements.
(vi) The consummation of the Merger and the other transactions
contemplated by this Agreement (including as a result of any termination of
employment in connection therewith) will not (A) entitle any employee,
consultant or director of the Company or any of its Subsidiaries to any
payment (including severance pay or similar compensation) or any increase
in compensation, (B) accelerate the time of payment or vesting or trigger
any payment of compensation or benefits under, increase the amount payable
or trigger any other material obligation pursuant to, any of the
Compensation and Benefit Plans, or (C) result in any payment becoming due
by Parent, Purchaser, the Company or any of its Subsidiaries that would be
subject to Sections 162(m), 280G or 4999 of the Code.
(vii) With respect to each Compensation and Benefit Plan, if
applicable, the Company has provided, made available, or will make
available upon request, to Parent, true and complete copies of existing:
(A) the most recent Form 5500 filed with the IRS; (B) the most recent
financial statement; (C) the most recent summary plan description; and (D)
the most recent determination letter issued by the IRS.
(j) LABOR MATTERS REPRESENTATION. Except, in each case, as is not,
individually or in the aggregate, reasonably likely to have a Company Material
Adverse Effect:
(i) Neither the Company nor any of its Subsidiaries is a party
to any labor or collective bargaining agreement and there are no labor or
collective bargaining agreements which pertain to employees of the Company
or any of its Subsidiaries nor are any such employees represented by any
labor organization. No labor organization or group of employees of the
Company or any of its Subsidiaries 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 Company's Knowledge, 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 the Company or any of its Subsidiaries pending with any labor
organization or group of employees of the Company or any of its
Subsidiaries.
(ii) There are no strikes, work stoppages, slowdowns, lockouts,
material arbitrations or material grievances or other material labor
disputes pending or, to the Com-
-17-
pany's Knowledge, threatened in writing against or involving the Company or
any of its Subsidiaries. There are no unfair labor practice charges,
grievances or complaints pending or, to the Company's Knowledge, threatened
in writing by or on behalf of any employee or group of employees of the
Company or any of its Subsidiaries.
(iii) There are no complaints, charges or claims against the
Company or any of its Subsidiaries pending or, to the Company's Knowledge,
threatened which could be brought or filed, with any public or governmental
authority, arbitrator or court based on, arising out of, in connection
with, or otherwise relating to the employment or termination of employment
by the Company or any of its Subsidiaries, of any individual.
(iv) The Company and each of its Subsidiaries is in compliance
with all laws, regulations and orders relating to the employment of labor,
including all such laws, regulations and orders relating to wages, hours,
WARN, collective bargaining, discrimination, civil rights, safety and
health, workers' compensation and the collection and payment of withholding
and/or social security taxes and any similar tax except for immaterial
non-compliance.
(v) There has been no "mass layoff" or "plant closing" as defined
by WARN with respect to the Company and each of its Subsidiaries within the
six (6) months prior to this Agreement.
(k) COMPLIANCE WITH APPLICABLE LAWS; PERMITS. Except in each case as
is not, individually or in the aggregate, likely to have a Company Material
Adverse Effect:
(i) the businesses of each of the Company and its Subsidiaries
have not been and are not being conducted in violation of any federal,
state, local or foreign law, statute or ordinance, rule, regulation,
judgment, order, injunction, decree, arbitration award, agency requirement,
license or permit of any Governmental Entity ("APPLICABLE LAWS");
(ii) (A) the businesses of each of the Company and its Subsidiaries
are in compliance with all requirements under Applicable Law for permits,
licenses, trademarks, patents, trade names, copyrights, service marks,
franchises, variances, exemptions, authorizations, orders, consents and
other authorizations and approvals of Governmental Entities that are
required to permit the Company and its Subsidiaries to own or lease its
properties and assets, and to conduct its business as presently conducted;
and (B) all of the material permits, licenses, certificates of authority,
orders and approvals of each of the Company and its Subsidiaries are in
full force and effect and are current and, to the Company's Knowledge, no
suspension or cancellation of any of them is threatened or is reasonably
likely;
(iii) (A) the businesses of each of the Company and its Subsidiaries
that are required to be licensed or registered as a broker/dealer, an
investment adviser, a registered representative, a commodity trading
advisor, commodity pool operator, futures commission merchant, trust
company, or transfer agent (or in a similar capacity) with any Governmental
Entity, are duly registered or licensed or, in the case of any officer or
employee, in the process of being duly licensed or registered as such, and
each such regis-
-18-
tration or license is in full force and effect; and (B) each of the
officers, employees and affiliates of each of Company and its Subsidiaries
that is required to be registered or licensed as a broker/dealer, an
investment adviser, a registered representative, an investment adviser
representative, a commodity trading advisor, a commodity pool operator, a
futures commission merchant, a trust company, a transfer agent or a sales
person (or in a similar capacity) with any Governmental Entity, is duly
registered or licensed or, in the case of any officer or employee, in the
process of being duly registered or licensed as such, and each such
registration or license is in full force and effect;
(iv) none of the Company and its Subsidiaries have received,
since January 1, 1998, any notification or communication in writing, from
any Governmental Entity (A) threatening to revoke or condition the
continuation of any material license, franchise, seat on any exchange,
permit, or governmental authorization or (B) restricting or disqualifying
their activities (except for restrictions generally imposed by rule,
regulation or administrative policy on similarly regulated persons and
entities generally);
(v) to the Company's Knowledge, there are no pending or
threatened investigations, examinations, audits, reviews or disciplinary
proceedings by any Governmental Entity, other than investigations,
examinations, audits and reviews conducted in the ordinary course of the
business of the Company, any of its Subsidiaries or any director, managing
director, officer or employee of the Company or any such Subsidiary;
(vi) to the Company's Knowledge, no material change is required
in the Company's or any of its Subsidiaries' processes, properties or
procedures in connection with any Applicable Laws, and the Company has not
received any written notice or communication of any material noncompliance
with any such Applicable Law that has not been cured as of the date hereof;
(vii) the Company and each of its Subsidiaries have adopted and
implemented and have in place as of the date hereof compliance procedures
designed to preclude it, its Subsidiaries, and the officers, directors, and
employees of Company and its Subsidiaries from engaging in any "prohibited
transaction" within the meaning of Section 406 of ERISA or Section 4975(c)
of the Code, which would subject Company to liability, penalty or Taxes
under Sections 409 or 502(i) of ERISA or Section 4975 of the Code in
connection with any Compensation and Benefit Plan with respect to which
Company or any of its Subsidiaries is a "party-in-interest" within the
meaning of Section 3(14) of ERISA;
(viii) each of the Company and its Subsidiaries have administered
all accounts for which such Person acts as fiduciary or agent, including
but not limited to accounts for which it serves as a trustee, agent,
custodian, personal representative, guardian or conservator, in substantial
compliance with the terms of the governing documents and Applicable Law;
(ix) except as set forth in the Company Disclosure Letter,
neither the Company nor any of its Subsidiaries nor any of their respective
directors, officers or employees is subject to any cease and desist,
censure or other disciplinary or similar order issued by, or is a party to
any written agreement, consent agreement, memorandum of understanding or
-19-
disciplinary agreement with, or is a party to any commitment letter or
similar undertaking to, or subject to any order or directive by, or a
recipient of any supervisory letter from, any Governmental Entity with
respect to the business of such person;
(x) neither the Company nor any of its Subsidiaries is
registered as, or is required to be registered as, an investment company
under the 1940 Act; and
(xi) each Form ADV filed by each of the Company and its
Subsidiaries that is a registered investment adviser under the Advisers Act
in its most recent form filed with the SEC, including any amendments
thereto filed with the SEC, is complete and correct in all material
respects and omits no material facts required to be stated therein.
(l) TAKEOVER STATUTES. No restrictive provision of any "fair price,"
"moratorium," "control share acquisition," "interested shareholder" or other
similar anti-takeover statute or regulation (each a "TAKEOVER STATUTE")
(including Section 203 of the DGCL) or any restrictive provision of any
applicable anti-takeover provision in the Company's charter and bylaws is, or at
the Effective Time will be, applicable to the Company, the Common Shares, the
Offer, the Merger, or the other transactions contemplated by this Agreement.
(m) TAXES. (i) The Company, each of its Subsidiaries, and any
affiliated, consolidated, combined or unitary group of which the Company or any
of its Subsidiaries is or was a member, (A) have or will have filed (taking into
account any extension of time within which to file) all material Tax Returns (as
defined below) required to be filed by any of them and all such filed Tax
Returns are or will be complete and accurate in all material respects; (B)
except for Taxes properly and adequately reserved for on its financial
statements in accordance with U.S. GAAP, have timely paid all Taxes due and
payable by any of them and (C) have withheld from amounts owing to any employee,
creditor or other person all Taxes required by Applicable Law to be withheld and
have paid over to the proper governmental authority all such withheld amounts to
the extent due and payable, except where the failure to file such Tax Returns or
pay or withhold such Taxes or the failure of such Tax Returns to be complete and
accurate in all material respects would not be reasonably likely to have a
Company Material Adverse Effect;
(ii) as of the date hereof, there are not pending or threatened in
writing any audits, examinations, investigations, litigation, or other
proceedings in respect of income Taxes of the Company or any Subsidiary;
(iii) as of the date hereof, no deficiencies for any income Taxes
have been proposed, asserted or assessed against the Company or any of the
Subsidiaries that have not been fully paid or adequately provided for in the
appropriate financial statements of the Company and its Subsidiaries;
(iv) as of the date hereof, no waivers or comparable consents of
the time to assess any income Taxes are outstanding, and no power of attorney
granted by the Company or any Subsidiary with respect to any income Taxes is
currently in force;
(v) as of the date hereof, none of the Company or its Subsidiaries
has agreed to or is required to make any adjustments under Section 481(a) of the
Code, or is a party to any
-20-
Tax allocation, Tax sharing agreement, any closing agreement or similar
agreement with any Taxing authority in respect of income Taxes;
(vi) except as would not be, individually or in the aggregate,
reasonably likely to have a Company Material Adverse Effect, and except for Fund
Clients (as defined below) as to which the Company or any of its Subsidiaries is
not the sponsor ("SUBADVISORY FUND CLIENTS"), to the best Knowledge of the
Company: (A) each Fund Client has elected to be treated as, and has qualified
as, a "regulated investment company" under Subchapter M of Chapter 1 of Subtitle
A of the Code; (B) each Fund Client has or will have timely filed all Tax
Returns that it is required to file and all such filed Tax Returns are or will
be complete and accurate in all material respects; (C) except for Taxes properly
and adequately reserved for on its financial statements in accordance with U.S.
GAAP, each Fund Client has timely paid all Taxes due and payable by it; (D) each
Fund Client has complied with all required Tax information reporting
requirements to which it is subject, (E) each Fund Client with variable
insurance trust portfolios has complied with the diversification requirements of
Section 817 of the Code; (F) no Fund Client has been or is subject to the excise
Tax imposed under Section 4982 of the Code; and (G) each Fund Client that is
intended to be a tax-exempt municipal bond fund has satisfied the requirements
of Section 852(b)(5) of the Code, and is qualified to pay exempt interest
dividends as defined therein.
(vii) As used in this Agreement, (i) the term "TAX" (including,
with correlative meaning, the terms "TAXES", and "TAXABLE") includes all
federal, state, local and foreign income, profits, premium, franchise, gross
receipts, environmental, customs duty, capital stock, severance, stamp, payroll,
sales, employment, unemployment, disability, use, property, withholding, excise,
production, value added, occupancy and other taxes, duties or governmental
levies of any nature whatsoever, together with all interest, penalties and
additions imposed with respect to such amounts and any interest in respect of
such penalties and additions, and (ii) the term "TAX RETURN" includes all
returns and reports (including elections, declarations, disclosures, schedules,
estimates and information returns) required to be supplied to a Tax authority
relating to Taxes.
(n) INTELLECTUAL PROPERTY.
(i) Except as disclosed in Company Reports filed prior to the
date hereof or as is not, individually or in the aggregate, reasonably
likely to have a Company Material Adverse Effect: to the Knowledge of the
Company, there are no valid grounds for any bona fide claims (A) to the
effect that the distribution, sale, licensing or use of any product as now
used, sold or licensed or proposed for use, sale or license by the Company
or any of its Subsidiaries, infringes on any copyright, patent, trademark,
trade name, service mark or trade secret; (B) against the use by the
Company or any of its Subsidiaries, of any Intellectual Property used in
the business of the Company or any of its Subsidiaries as currently
conducted or as proposed to be conducted; (C) challenging the ownership,
validity or enforceability of any of the Company Intellectual Property
Rights or other trade secret material to the Company or any of its
Subsidiaries; or (D) challenging the license or legally enforceable right
to use of the Third-Party Intellectual Rights by the Company or any of its
Subsidiaries.
(ii) As used in this Agreement, the term (x) "INTELLECTUAL
PROPERTY" means all patents, trademarks, trade names, service marks,
copyrights and any applications therefor,
-21-
technology, know-how, computer software programs or applications, and
tangible or intangible proprietary information or materials; (y)
"THIRD-PARTY INTELLECTUAL PROPERTY RIGHTS" means any third-party patents,
trademarks, trade names, service marks and copyrights; and (z) "COMPANY
INTELLECTUAL PROPERTY RIGHTS" means the patents, registered and material
unregistered trademarks, trade names and service marks, registered
copyrights, and any applications therefor owned by the Company or any of
its Subsidiaries.
(o) BROKERS AND FINDERS. Neither the Company nor any of its officers,
directors or employees has employed any broker or finder or incurred any
liability for any brokerage fees, commissions or finders' fees in connection
with the Merger or the other transactions contemplated in this Agreement except
that the Company has employed the Financial Advisor as its financial advisor,
the arrangements with which have been disclosed to Parent prior to the date
hereof.
(p) MATERIAL CONTRACTS. All of the Contracts of the Company and its
Subsidiaries that are required to be described in the Company Reports or to be
filed as exhibits thereto are described in the Company Reports or filed as
exhibits thereto, respectively, and are in full force and effect. The Company
has previously made available to Parent true and correct copies of all
agreements evidencing material indebtedness (other than intercompany
indebtedness) of the Company or any of its Subsidiaries, in each case including
all amendments thereto (together with the Contracts referred to in the first
sentence of this paragraph (p) and any other material Contracts of the Company
and its Subsidiaries, including all revenue sharing contracts, contracts of the
Company to finance or otherwise support the operations of its Subsidiaries or
compensate employees of its Subsidiaries, and all contracts for the acquisition
of Subsidiaries, the "MATERIAL CONTRACTS"). Neither the Company nor any of its
Subsidiaries nor, to the Knowledge of the Company, any other party is in breach
of or in default under any Material Contract except for such breaches and
defaults as are not, individually or in the aggregate, reasonably likely to have
a Company Material Adverse Effect.
(q) INVESTMENT CONTRACTS, FUNDS AND CLIENTS.
(i) Certain of the Company's Subsidiaries provide investment
management, investment advisory and sub-advisory and certain other related
services (each such Subsidiary, an "ADVISORY ENTITY"). Each Contract for
such services is referred to herein as an "INVESTMENT CONTRACT"; each other
party thereto or other Person with respect to which an Advisory Entity
provides investment advice thereunder is referred herein to as a "CLIENT";
each Client that is registered as an investment company under the 1940 Act
is referred to herein as a "FUND CLIENT"; and each Client that is an
investment company but is exempt from registration under the 1940 Act by
virtue of sections 3(c)(1) and 3(c)(7) of that Act is referred to herein as
an "EXEMPT FUND CLIENT."
(A) Except as is not, individually or in the aggregate,
reasonably likely to have a Company Material Adverse Effect, there
does not exist under any Investment Contract any event or condition
that, after notice or lapse of time or both, would constitute an event
of default thereunder on the part of the Company or such Subsidiary,
or, to the Knowledge of the Company, any other party thereto.
-22-
(B) Except as is not, individually or in the aggregate,
reasonably likely to have a Company Material Adverse Effect, each
commodity trading advisor disclosure document provided by the Company
or any of its Subsidiaries to any Client did not contain any untrue
statement of a material fact or omit to state a material fact
necessary in order to make the statements made therein, in light of
the circumstances under which they were made, not misleading.
(C) Except as is not, individually or in the aggregate,
reasonably likely to have a Company Material Adverse Effect, neither
the Company, any of its Subsidiaries or, to the Company's Knowledge,
any other person "associated" with the Company or any of its
Subsidiaries (as defined under the Advisers Act), has been convicted
of any crime or has been subject to any disqualification that would be
a basis for denial, suspension, or revocation of registration of an
investment adviser under Section 203(e) of the Advisers Act or Rule
206(4)-4(b) thereunder or of a broker-dealer under Section 15 of the
Exchange Act during the five-year period immediately preceding the
date hereof; and, to the Knowledge of Company, there is no basis for,
or proceeding or investigation that could reasonably be expected to
become the basis for, any such disqualification, denial, suspension or
revocation.
(ii) FUND CLIENTS.
(A) Except in the case of Subadvisory Fund Clients, each Fund
Client is, and at all times required under the securities laws has
been, duly registered with the SEC as an investment company under the
1940 Act; and each Fund Client, except for Subadvisory Fund Clients,
and except as would not, individually or in the aggregate, reasonably
be likely to have a Company Material Adverse Effect, is in compliance
with (1) the Applicable Laws, regulations, rules or orders of the SEC,
NASD, the IRS, and any other governmental agency or self-regulatory
body having jurisdiction over such Fund Client or its distributor or
investment adviser, (2) the Applicable Laws of any state in which such
Fund Client is registered, qualified, or sold, and (3) the terms and
conditions of its Prospectus and Statement of Additional Information.
(B)(1) Except as is not, individually or in the aggregate,
reasonably likely to have a Company Material Adverse Effect, each
Investment Contract in effect on the date hereof between the Company
or any of its Subsidiaries and a Fund Client or any other investment
company registered under the 1940 Act and any subsequent renewal has
been duly authorized, executed and delivered by the Company or such
Subsidiary, as the case may be, the Fund Client and, to the Knowledge
of the Company, each other party thereto, if any; and is a valid and
legally binding agreement, enforceable against the Company or such
Subsidiary, as the case may be, and, to the Knowledge of Company, each
other party thereto; and (2) each Investment Contract with a Fund
Client, except in the case of Subadvisory Fund Clients, and except as
is not, individually or in the aggregate, reasonably likely to have a
Company Material Adverse Effect, has been adopted in compliance with
Section 15 of the 1940 Act and, if applicable, Rule 12b-1 thereunder.
-23-
(C) Each current Prospectus (which term, as used in this
Agreement, shall include any related statement of additional
information), as amended or supplemented, relating to each Fund Client
(except Subadvisory Fund Clients), is in substantial compliance with
the requirements of the Securities Act and the 1940 Act, applicable
state laws and, where applicable, the rules of the NASD. None of such
prospectuses, amendments or supplements, as of their respective dates,
includes or included an untrue statement of a material fact or omits
or omitted to state a material fact necessary in order to make the
statements made therein, in the light of the circumstances under which
they were made, not misleading.
(D) Except in the case of Subadvisory Fund Clients, and except
as is not, individually or in the aggregate, reasonably likely to have
a Company Material Adverse Effect, none of the Investment Contracts
between a Fund Client and the Company or any Subsidiary of the Company
contains any undertaking by such entity to cap fees or to reimburse
any or all fees thereunder, except as of the date hereof, (i) as may
be disclosed in the applicable Fund Client Financial Statements or
(ii) as has been previously disclosed, and except, as of any other
date on or prior to the Effective Time as may be agreed from time to
time with the Board of any Fund Client on terms deemed to be in the
best interests of such Fund Client and its shareholders.
(E) Except in the case of Subadvisory Fund Clients, and except
as is not, individually or in the aggregate, reasonably likely to have
a Company Material Adverse Effect, each distribution plan adopted by
the Board of a Fund Client under Rule 12b-1 under the 1940 Act ("12B-1
PLAN") (or form of 12b-1 Plan adopted by similar series or classes of
shares offered by more than one investment company registered under
the 1940 Act) and all payments due since January 1, 1998 under each
distribution or principal underwriting agreement to which any Fund
Client is a party have been made in compliance with the related 12b-1
Plan; and the operation of each such 12b-1 Plan currently complies
with Rule 12b-1.
(F) Except in the case of Subadvisory Fund Clients, and
except as is not, individually or in the aggregate, reasonably likely
to have a Company Material Adverse Effect, (1) each of the Fund
Clients has issued its shares, units or other interests and operated
in substantial compliance with its investment objectives and policies
and with Applicable Law, including Section 17 of the 1940 Act; and (2)
each Board of a Fund Client has been established and operates in
conformity with the requirements and restrictions of Sections 10 and
16 of the 1940 Act.
(G) Each Subsidiary of the Company that acts as an investment
adviser or distributor to an investment company registered under the
1940 Act has adopted a formal code of ethics and a written policy
regarding insider trading, each of which substantially complies with
Applicable Law. The policies of the Company and each such Subsidiary
with respect to avoiding conflicts of interest are as set forth in the
most recent Forms ADV thereof, as amended; and to the Company's
Knowledge, there have been no material violations or allegations of
-24-
violations of such policies that have occurred or been made that have
not been addressed in accordance with these procedures.
(H) Neither the Company nor any of its Subsidiaries or any
officers, directors, or employees of the Company or its Subsidiaries
has any express or implied understanding or arrangement that would
impose an unfair burden on any of the Fund Clients or would in any way
violate Section 15(f) of the 1940 Act as a result of this transaction.
(I) Neither the Company, any of its Subsidiaries, the Fund
Clients or, to the best of the Company's Knowledge, any other person
"associated" (as defined under the Advisers Act) with Company, any of
its Subsidiaries or any of the Fund Clients, has for a period not less
than five (5) years prior to the date hereof been convicted of any
crime, or is or has been subject to any disqualification that would be
a basis for disqualification as an investment adviser to any
investment company pursuant to Section 9(a) of the 1940 Act, and, to
Company's Knowledge, there is no basis for, or proceeding or
investigation that could become the basis for, any such
disqualification.
(J) Except in the case of Subadvisory Fund Clients, and except
as is not, individually or in the aggregate, reasonably likely to have
a Company Material Adverse Effect, (1) each Fund Client that is a
juridical entity has been duly organized, and is validly existing and
in good standing under the laws of the jurisdiction of its
organization and has all requisite corporate partnership, limited
liability company, or similar power and authority, and possesses all
rights, licenses, authorizations and approvals necessary to entitle it
to use its name, to own, lease or otherwise hold its properties and
assets and to carry on its business as it is now conducted, and is
duly qualified, licensed or registered to do business in each
jurisdiction where it is required to do so under Applicable Law
(except where the failure to do so is not material to its business)
and (2) each Fund Client is in substantial compliance with the terms
and conditions of its constituent documents.
(iii) EXEMPT FUND CLIENTS.
(A) Except in the case of Subadvisory Fund Clients, and except
as is not, individually or in the aggregate, reasonably likely to have
a Company Material Adverse Effect, (1) each Exempt Fund Client that is
a juridical entity has been duly organized, and is validly existing
and in good standing under the laws of the jurisdiction of its
organization and has all requisite corporate partnership, limited
liability company, or similar power and authority, and possesses all
rights, licenses, authorizations and approvals necessary to entitle it
to use its name, to own, lease or otherwise hold its properties and
assets and to carry on its business as it is now conducted, and is
duly qualified, licensed or registered to do business in each
jurisdiction where it is required to do so under Applicable Law
(except where the failure to do so is not material to its business)
and (2) each Exempt Fund Client is in substantial compliance with the
terms and conditions of its constituent documents. Except in the case
of Subadvisory Fund Clients, and except
-25-
as is not, individually or in the aggregate, reasonably likely to have
a Company Material Adverse Effect, (1) all outstanding shares or units
of each Exempt Fund Client have been issued and sold in substantial
compliance with Applicable Law; and (2) each Exempt Fund Client, since
inception of operations, has been operated and is currently operating
in substantial compliance with its respective investment objectives
and policies and Applicable Law.
(B) Except in the case of Subadvisory Fund Clients, and except
as is not, individually or in the aggregate, reasonably likely to have
a Company Material Adverse Effect, (1) all outstanding shares or units
of each Exempt Fund Client have been issued and sold in substantial
compliance with Applicable Law; and (2) each Exempt Fund Client, since
inception of operations, has been operated and is currently operating
in substantial compliance with its respective investment objectives
and policies and Applicable Law.
(C) None of the Exempt Fund Clients has been enjoined,
indicted, convicted or made the subject of disciplinary proceedings,
consent decrees or administrative orders on account of any violation
of the rules or orders of the SEC, the NASD, the NASD, the IRS, or any
other governmental agency or self regulatory body having jurisdiction
over the Exempt Fund Client or investment adviser.
(iv) Notwithstanding anything to the contrary herein, any
exclusion from any representation or warranty in paragraph (m) or (q)
relating to any Subadvisory Fund Client shall apply only to the extent
that the Company or any Subsidiary of the Company does not have any
contractual or other legal responsibility in the event such
representation or warranty fails to be true or correct.
(r) AFFILIATE TRANSACTIONS. Except as disclosed in Section
4.1(r) of the Company Disclosure Letter or as described in the Company Reports
filed prior to the date of this Agreement, (i) there are no obligations or other
liabilities (whether absolute, accrued, contingent, fixed or otherwise, or
whether due or to become due) between the Company or any Subsidiary of the
Company, on the one hand, and any of its officers or directors or affiliates, on
the other, (ii) no such officer, director or affiliate provides or causes to be
provided any assets, services or facilities to the Company or any Subsidiary of
the Company, (iii) the Company neither provides nor causes to be provided any
assets, services or facilities to any officer, director or affiliate of the
Company or any of its Subsidiaries, and (iv) neither the Company nor any
Subsidiary of the Company, on the one hand, beneficially owns, directly or
indirectly, any Investment Assets issued by any officer, director or affiliate
of the Company (other than any Subsidiary of the Company), on the other. For the
purposes of this Section 4.1(r), "INVESTMENT ASSETS" means all debentures, notes
and other evidence of indebtedness, stocks, securities (including rights to
purchase and securities convertible into or exchangeable for other securities),
interests in joint ventures and general and limited partnerships, mortgage loans
and other investment or portfolio assets owned of record or beneficially by the
Company and issued by any person other than the Company or any of its
Subsidiaries. Except as disclosed in the Company Disclosure Letter, there are no
understandings, arrangements or agreements relating to the sale or other
disposition of any of the Subsidiaries.
-26-
(s) INSURANCE. (i) The Company Disclosure Letter sets forth a correct
and complete list of all of the insurance policies, binders or bonds maintained
by the Company or under which the Company pays the premiums ("INSURANCE
POLICIES"); (ii) the Company and its Subsidiaries are insured with reputable
insurers against such risks and in such amounts as management reasonably has
determined to be prudent in accordance with industry practices; and (iii) to the
Company's Knowledge, all Insurance Policies are in full force and effect.
Section 4.2. REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER.
Except as set forth in the disclosure letter delivered to the Company by Parent
on or prior to entering into this Agreement (the "PARENT DISCLOSURE LETTER"),
Parent hereby represents and warrants to the Company that (it being understood
that the words "to the Knowledge of Parent" or "Parent's Knowledge" and any
words of similar import shall mean the actual knowledge of the persons whose
names are set forth in Section 4.2(a) of the Parent Disclosure Letter):
(a) ORGANIZATION, GOOD STANDING AND QUALIFICATION. Each of Parent
and Purchaser is a corporation duly organized, validly existing and (in the case
of Purchaser) in good standing under the laws of its respective jurisdiction of
organization and has all requisite corporate or similar power and authority to
own and operate its properties and assets and to carry on its business as
presently conducted and is qualified to do business and is in good standing as a
foreign corporation in each jurisdiction where the ownership or operation of its
properties or conduct of its business requires such qualification, except where
the failure to be so qualified or in such good standing, when taken together
with all other such failures, is not, individually or in the aggregate,
reasonably likely to have a Parent Material Adverse Effect (as defined below).
As used in this Agreement, the term "PARENT MATERIAL ADVERSE EFFECT"
means a material adverse effect on the financial condition, operations,
properties, business or results of operations of Parent and its Subsidiaries
taken as a whole (other than any change or effect arising out of (A) a decline
or deterioration in the economy or the capital markets in general or the markets
in which Parent and its Subsidiaries operate, or (B) this Agreement or the
transactions contemplated hereby or the announcement thereof ) or an effect
which is reasonably likely to prevent, materially delay or materially impair the
ability of Parent to consummate the transactions contemplated by this Agreement.
(b) PURCHASER. Since the date of its incorporation, Purchaser has
not carried on any business or conducted any operations other than the execution
of this Agreement, the performance of its obligations hereunder and matters
ancillary thereto. Purchaser was incorporated solely for the purpose of
consummating the transactions contemplated hereby. The authorized capital stock
of Purchaser consists of 100 shares of common stock, par value $0.01 per share,
10 shares of which are validly issued and outstanding, fully paid and
nonassessable and are owned by Parent free and clear of all liens, claims and
encumbrances.
(c) CORPORATE AUTHORITY; APPROVAL.
(i) Each of Parent and Purchaser has all requisite corporate
power and authority and, subject, if required under Applicable Law (or
under any requirements of the London Stock Exchange), to approval by the
holders of a majority of Parent's outstanding ordinary shares, has taken
all corporate action necessary in order to execute, de-
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liver and perform its obligations under this Agreement and to consummate
the Merger. This Agreement is a valid and binding agreement of each of
Parent and Purchaser enforceable against each of Parent and Purchaser in
accordance with its terms, subject to the Bankruptcy and Equity Exception.
(ii) (A) The Board of Directors of each of Parent and Purchaser
has duly adopted the plan of merger set forth herein and approved this
Agreement and the other transactions contemplated hereby, and (B) the Board
of Directors of Purchaser has declared that the Merger and this Agreement
and the other transactions contemplated hereby are advisable and in the
best interests of Purchaser and its stockholders and adopted the plan of
merger set forth herein.
(d) FINANCING. Parent has available, and will have available as
of the time of acceptance for payment and purchase of the Common Shares pursuant
to the Offer, and will timely provide Purchaser with, all funds necessary to pay
for all Common Shares that the Purchaser becomes obligated to accept for payment
and pay for pursuant to the Offer and to consummate the Merger and the
transactions contemplated by this Agreement.
(e) GOVERNMENTAL FILINGS; NO VIOLATIONS.
(i) Other than the filings and/or notices (A) pursuant to
Section 2.2, (B) under the HSR Act, the Exchange Act, the Securities Act,
the 1940 Act, the Advisers Act, the Bank Control Act, or in connection with
the EGM the requirements of the Companies Act of the United Kingdom, (C)
required under a foreign antitrust or trade regulation law, (D) to comply
with state banking or securities or "blue sky" laws, and (E) required to be
made with the NYSE, the NASD, the London Stock Exchange and other
applicable self-regulatory organizations, no filings, reports or notices
are required to be made by Parent or Purchaser with, nor are any consents,
registrations, approvals, permits or authorizations required to be obtained
by Parent from, any Governmental Entity, in connection with the execution
and delivery of this Agreement by Parent or Purchaser and the consummation
by Parent or Purchaser of the Offer, the Merger and the other transactions
contemplated hereby, except those that the failure to make or obtain are
not, individually or in the aggregate, reasonably likely to have a Parent
Material Adverse Effect.
(ii) The execution, delivery and performance of this Agreement
by Parent and Purchaser do not, and the consummation by Parent and
Purchaser of the Offer, the Merger and the other transactions contemplated
hereby will not, constitute or result in (A) a breach or violation of, or a
default under, the charter or bylaws (or comparable governing instruments)
of Parent or Purchaser, (B) a breach or violation of, or a default under,
the acceleration of any obligations or the creation of a lien, pledge,
security interest or other encumbrance on the assets of Parent or any of
its Subsidiaries (with or without notice, lapse of time or both) pursuant
to, any Contract binding upon Parent or any of its Subsidiaries (provided,
as to consummation, the filings, reports and notices are made, and
approvals are obtained, as referred to in Section 4.2(e)(i)) or any
Applicable Law (or under any requirements of the London Stock Exchange) or
governmental or non-governmental permit, registration, authorization or
license to which Parent or any of its Subsidiaries is subject, or (C) any
change in the rights or obligations of any party under
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any Contract, except, in the case of clause (B) or (C) above, for breach,
violation, default, acceleration, creation or change that is not,
individually or in the aggregate, reasonably likely to have a Parent
Material Adverse Effect.
(f) PROXY STATEMENT; SCHEDULE 14D-9. None of the information
supplied or to be supplied by Parent or Purchaser in writing for inclusion in
the Proxy Statement, if any, the Schedule 14D-9 or other filings with the SEC
required to effectuate the transactions contemplated by this Agreement will, at
the respective times that the Proxy Statement, if any, the Schedule 14D-9 or
such other filings are filed with the SEC and are first published or sent or
given to holders of Common Shares, and in the case of the Proxy Statement, if
any, at the time that it or any amendment or supplement thereto is mailed to the
Company's stockholders, at the time of the Special Meeting or at the Effective
Time, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(g) BROKERS AND FINDERS. Neither Parent nor any of its officers,
directors or employees has employed any broker or finder or incurred any
liability for any brokerage fees, commissions or finders' fees in connection
with the Merger or the other transactions contemplated in this Agreement except
that Parent has employed Credit Suisse First Boston and Chase Securities, Inc.
as its financial advisors.
ARTICLE V
COVENANTS
Section 5.1. COMPANY INTERIM OPERATIONS. The Company covenants and
agrees that, after the date hereof and prior to the Effective Time (unless
Parent shall otherwise approve in writing and except as otherwise expressly
contemplated by this Agreement) or as disclosed in Section 5.1 of the Company
Disclosure Letter:
(a) its and its Subsidiaries' business shall be conducted in the
ordinary and usual course, consistent with past practice (it being understood
and agreed that nothing contained herein shall permit the Company to enter into
or engage in (through acquisition, product extension or otherwise) the business
of selling any products or services materially different from existing products
or services of the Company and its Subsidiaries or entering into or engaging in
new lines of business without Parent's prior written approval), and, to the
extent consistent therewith, it and its Subsidiaries shall use their respective
reasonable best efforts to preserve its business organization intact and
maintain its existing relations and goodwill with customers, clients, suppliers,
distributors, regulators, creditors and employees;
(b) it and its Subsidiaries shall not (i) issue, sell, pledge,
dispose of or encumber any capital stock owned by it in any of its Subsidiaries;
(ii) amend its charter or bylaws or comparable governing instruments; (iii)
split, combine or reclassify its outstanding shares of stock; (iv) authorize,
declare, set aside or pay any dividend payable in cash, stock or property in
respect of any capital stock other than dividends from its direct or indirect
Subsidiaries and other than regular quarterly cash dividends paid by the Company
not in excess of $0.20 per Common
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Share; or (v) repurchase, redeem or otherwise acquire, except in connection with
cashless exercise of Company Options, or permit any of its Subsidiaries to
purchase or otherwise acquire, any shares of its stock or any securities
convertible into or exchangeable or exercisable for any shares of its stock;
(c) neither it nor its Subsidiaries shall (i) issue, sell, pledge,
dispose of or encumber any shares of, or securities convertible into or
exchangeable or exercisable for, or options, warrants, calls, commitments or
rights or agreements of any kind to acquire, any shares of its capital stock of
any class or any Voting Debt or any other material property or assets (other
than Common Shares issuable pursuant to options outstanding on the date hereof
under the Stock Plans and as contemplated by Section 5.9); or (ii) other than in
the ordinary and usual course of business, transfer, lease, license, guarantee,
sell, mortgage, pledge, dispose of or encumber any property or assets (including
capital stock of any of its Subsidiaries) or incur or modify any material
indebtedness or other liability; or (iii) incur any long-term indebtedness
(other than replacement debt as it matures and other than borrowing for working
capital purposes under the Company's revolving credit agreement not in excess of
$5 million); or (iv) make or authorize or commit for any capital expenditures to
be paid out of the Company's revenue share other than in amounts less than $2
million in the aggregate or, by any means, make any acquisition of, or
investment in, assets or stock of any other Person or entity to be paid out of
the Company's revenue share (other than seed money not in excess of $2 million);
PROVIDED, HOWEVER, that no such acquisition shall be of a controlling interest
in any other Person;
(d) it shall not establish, adopt or enter into, Compensation and
Benefit Plans except as may be required by law, or contractual obligations in
effect as of the date of this Agreement, or as contemplated by this Agreement;
(e) it shall not terminate or make any new, or accelerate the vesting
or payment of any existing, grants or awards under, or amend or otherwise
modify, any Compensation and Benefit Plans except in the ordinary course of
business to persons other than officers and directors of the Company or its
Subsidiaries consistent with past practice or as may be required by law, or
contractual obligations in effect as of the date of this Agreement, or as
contemplated by this Agreement;
(f) it shall not increase the salary, wage, bonus or other
compensation of any employees other than normal base wage and base salary
increases (but not as to officers and directors of the Company) in the ordinary
and usual course of business or increases in connection with promotions in the
normal course of business;
(g) neither it nor any of its Subsidiaries shall (i) settle or
compromise any material claims or litigation; (ii) pay, discharge, settle or
satisfy any material claims, liabilities or obligations (absolute, accrued,
asserted or unasserted, contingent or otherwise), other than the payment,
discharge or satisfaction of claims, liabilities or obligations in the ordinary
and usual course of business; (iii) except in the ordinary and usual course of
business, modify, amend or terminate any of its Material Contracts or waive,
release or assign any non-competes in favor of the Company or any of its
Subsidiaries, or other material rights or claims; or (iv) make or change a Tax
or accounting principle, practice or method unless required by U.S. GAAP or
other Appli-
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cable Law, make or revoke any Tax election unless required by
Applicable Law, or resolve any Tax audit or other similar proceeding;
(h) neither it nor any of its Subsidiaries shall permit any insurance
policy naming it as a beneficiary or loss-payable payee to be canceled or
terminated except in the ordinary and usual course of business;
(i) neither it nor any of its Subsidiaries shall enter into any
agreement containing any provision or covenant limiting in any material respect
the ability of the Company or any Subsidiary or affiliate to (i) sell any
products or services of or to any other person, (ii) engage in any line of
business, or (iii) compete with any person;
(j) neither it nor any of its Subsidiaries shall take any action that
would cause any representation or warranty of the Company herein to become
untrue in any material respect;
(k) it shall not enter into any new agreements, or modify or amend
any existing agreements, with any of its Subsidiaries, including re-equitization
or marketing support agreements or other contracts of the Company to finance or
otherwise support the operations of its Subsidiaries or compensate employees of
its Subsidiaries, except as may not in the aggregate contemplate obligations of
the Company (including in respect of waiving any revenue-sharing) in excess of
$3.3 million per year;
(l) neither it nor any of its Subsidiaries shall authorize or enter
into an agreement to do any of the foregoing.
Section 5.2. PARENT INTERIM OPERATIONS.
(a) Parent covenants and agrees as to itself and each of its
Subsidiaries that, after the date hereof and prior to the Effective Time (unless
the Company shall otherwise approve in writing) neither it nor any of its
Subsidiaries shall take any action that would cause any representation or
warranty of Parent herein to become untrue in any material respect, and neither
it nor any of its Subsidiaries shall authorize or enter into an agreement that
would reasonably be expected to have such an effect.
(b) If required under Applicable Law (or under any requirements of
the London Stock Exchange), Parent shall duly call and give notice of within 30
calendar days of the date hereof and, as promptly as reasonably practicable
thereafter, convene and hold an extraordinary general meeting of its
shareholders (the "EGM") for the purpose of seeking prompt shareholder approval
of this Agreement and the transactions contemplated hereby. Subject to its
fiduciary duties under Applicable Law, the Board of Directors of Parent shall
recommend that Parent's shareholders approve this Agreement and the transactions
contemplated hereby, and shall not withdraw or adversely modify its
recommendation in any material respect.
Section 5.3. ACQUISITION PROPOSALS.
(a) The Company will not, and will not permit or cause any of its
Subsidiaries or any of its or its Subsidiaries' officers and directors to, and
shall direct its and its Subsidiaries' employees, agents and representatives
(including any advisor, investment banker, attorney or ac-
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countant retained by it or any of its Subsidiaries) ("REPRESENTATIVES") not to,
directly or indirectly, initiate, solicit, encourage (including by way of
furnishing non-public information or assistance) or take any other action to
facilitate any inquiries or the making of any proposal or offer with respect to
an Acquisition Proposal, or engage in any negotiations concerning, or provide
any confidential information or data to, or have any discussions with, any
Person relating to an Acquisition Proposal, whether made before or after the
date of this Agreement, or otherwise facilitate any effort or attempt to make or
implement an Acquisition Proposal; PROVIDED, HOWEVER, that prior to the
acceptance for payment of the Shares pursuant to the Offer, the Company may, and
may authorize and permit its employees, agents and Representatives to, furnish
or cause to be furnished confidential information and may participate in such
negotiations and discussions or take any other action otherwise prohibited by
this Section 5.3(a) with any Person (unless such other action is subject to the
restrictions of Section 5.3(b), in which case such other action shall only be
permitted in accordance with such restrictions) that, after the date hereof,
makes an unsolicited written Acquisition Proposal if and only to the extent that
(A) the Company Board determines in good faith (after having consulted with
outside legal counsel) that such action is necessary in order for its directors
to comply with their fiduciary duties under Applicable Law, (B) prior to taking
such action, the Company (x) provides notice to Parent to the effect that it
intends to take such action and (y) receives from such Person an executed
confidentiality agreement in reasonably customary form and in any event
containing terms at least as stringent as those contained in the Confidentiality
Agreement (as defined below), and (C) the Company promptly advises Parent of the
identity of such Person and the terms and conditions of any such Acquisition
Proposal. The Company will immediately cease and cause to be terminated any
existing activities, discussions or negotiations with any parties conducted
heretofore with respect to any of the foregoing. The Company also will promptly
request each Person that has heretofore executed a confidentiality agreement in
connection with its consideration of an Acquisition Proposal to return all
confidential information heretofore furnished to such Person by the Company or
on the Company's behalf. Neither the Company nor any of its Subsidiaries shall
terminate, amend, modify or waive any provision of any confidentiality or
standstill agreement to which it is a party and shall enforce, to the fullest
extent permitted under Applicable Law, the provisions of any such agreement,
including, but not limited to, by obtaining injunctions to prevent any breaches
of such agreements and to enforce specifically the terms and provisions thereof
in any court having jurisdiction. Notwithstanding the foregoing, nothing
contained herein shall prevent the Company from complying with Rule 14e-2
promulgated under the Exchange Act with regard to an Acquisition Proposal.
"ACQUISITION PROPOSAL" means any bona fide inquiry, offer or
proposal regarding any of the following (other than the transactions
contemplated by this Agreement): (1) any merger, consolidation, share exchange,
recapitalization, liquidation, dissolution, business combination or other
similar transaction involving the Company or any one or more of its Subsidiaries
having, individually or in the aggregate, assets under management in excess of
$10 billion; (ii) any sale, lease exchange, mortgage, pledge, transfer or other
disposition of the stock or assets of the Company or one or more Subsidiaries of
the Company having, individually or in the aggregate, assets under management in
excess of $10 billion; (iii) any tender offer (including a self tender offer) or
exchange offer that, if consummated, would result in any Person or group
beneficially owning more than 20% of the outstanding Common Shares or the filing
of a registration statement under the Securities Act of 1933 in connection with
any such proposed exchange offer; (iv) any acquisition of 20% or more of the
outstanding Common Shares; or (v) any public an-
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nouncement by the Company or any third party of a proposal, plan or intention to
do any of the foregoing or any agreement to engage in any of the foregoing.
(b) Except as expressly permitted by this Section 5.3(b), the Company
Board shall not approve any letter of intent, agreement in principle,
acquisition agreement or similar agreement relating to any Acquisition Proposal.
The Company may, however, terminate this Agreement pursuant to Section
7.2(a)(vi) if (i) the Company Board has received a Superior Acquisition
Proposal, (ii) in light of such Superior Acquisition Proposal the Company Board
has determined in good faith (after having consulted with outside legal counsel)
that it is necessary for the Company Board to terminate this Agreement in order
to comply with its fiduciary obligations under Applicable Law, (iii) the Company
has notified Parent in writing of the terms of the Superior Acquisition Proposal
and the determinations described in clause (ii) above, (iv) at least five
business days following receipt by Parent of the notice referred to in clause
(iii) above, and taking into account any revised proposal made by Parent since
receipt of the notice referred to in clause (iii) above, such Superior
Acquisition Proposal (as the same may have been modified or amended, but
provided that Parent shall have received the requisite notice of any such
modification or amendment) remains a Superior Acquisition Proposal and the
Company Board has again made the determinations referred to in clause (ii) above
(although no additional time period shall be required following such
determinations, unless Parent shall have, following notice of the determinations
referred to in clause (ii) above, proposed to increase the Offer Price, or
otherwise offered to amend the terms of the transaction contemplated hereby to
make them more favorable to the Company and its stockholders, in which case the
Company shall again notify Parent in writing of the determinations described in
clause (ii) above (but provided that the period specified in this clause (iv)
shall be two business days in the event of any subsequent notice with respect to
a Superior Acquisition Proposal)), (v) the Company is in compliance with Section
5.3(a) and 5.3(b), (vi) the Company Board concurrently approves, and the Company
concurrently enters into, a definitive agreement providing for the
implementation of such Superior Acquisition Proposal, and (vii) the Company
concurrently shall have paid the Termination Fee required by Section 7.3(c), in
the manner contemplated thereby. "SUPERIOR ACQUISITION PROPOSAL" means any bona
fide unsolicited written Acquisition Proposal to acquire all or substantially
all of the Common Shares or assets of the Company which the Company Board
determines in its good faith judgment (after consultation with the Company's
independent financial advisor) to be (x) on terms superior in value from a
financial point of view to the holders of Common Shares than the transactions
contemplated by this Agreement, taking into account all the terms and conditions
of such proposal and this Agreement (including any proposal by Parent to amend
the terms of the transactions contemplated by this Agreement) and (y) reasonably
capable of being completed, taking into account all financial, regulatory, legal
and other aspects of such proposal.
Section 5.4. INFORMATION SUPPLIED. The Company and Parent each agree,
as to itself and its Subsidiaries, that none of the information supplied or to
be supplied by it or its Subsidiaries for inclusion or incorporation by
reference in the Proxy Statement, the Schedule TO, the Schedule 14D-9, Parent's
shareholder circular (if required under Applicable Law) in connection with the
EGM and any amendment or supplement thereto will, at the date of mailing to
stockholders and at the time of any meeting of stockholders of the Company to be
held in connection with the Merger, in either such case contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
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Section 5.5. FILINGS; OTHER ACTIONS; NOTIFICATION.
(a) The Company and Parent shall cooperate with each other and use
(and shall cause their respective Subsidiaries to use) all reasonable best
efforts to, and propose to the Fund Clients that they, take or cause to be taken
all actions, and do or cause to be done all things, necessary, proper or
advisable on their part under this Agreement and Applicable Laws to consummate
and make effective the Merger and the other transactions contemplated by this
Agreement as soon as practicable, including preparing and filing as promptly as
practicable all documentation to effect all necessary notices, reports,
applications and other filings and to obtain as promptly as practicable all
consents, registrations, approvals, permits and authorizations necessary or
advisable to be obtained from any third party and/or any Governmental Entity in
order to consummate the Merger or any of the other transactions contemplated by
this Agreement, and including (i) contesting any legal proceeding challenging
the Merger; and (ii) the execution of any additional instruments necessary to
consummate the transactions contemplated hereby. Subject to Applicable Laws
relating to the exchange of information, Parent and the Company shall have the
right to review in advance, and to the extent practicable each will consult the
other with respect to all the information relating to Parent or the Company, as
the case may be, and any of their respective Subsidiaries, that appear in any
filing made with, or written materials submitted to, any third party and/or any
Governmental Entity in connection with the Merger and the other transactions
contemplated by this Agreement. In exercising the foregoing right, each of the
Company and Parent shall act reasonably and as promptly as practicable. In case
at any time after the Effective Time any further action is necessary to carry
out the purposes of this Agreement, the proper officers and directors of each
party hereto shall take all such necessary action. Parent shall take all such
action as may be necessary so that holders of the Warrants shall be lawfully and
adequately provided for in accordance with the provisions of any agreement or
instrument relating to the Warrants.
(b) The Company and Parent each shall, upon request by the other,
furnish the other with all information concerning itself, its Subsidiaries,
directors, officers and stockholders and such other matters as may be reasonably
necessary or advisable in connection with the Proxy Statement or any other
statement, filing, notice or application made by or on behalf of Parent, the
Company or any of their respective Subsidiaries to any third party and/or any
Governmental Entity in connection with the Merger and the transactions
contemplated by this Agreement.
(c) The Company and Parent each shall keep the other apprised of the
status of matters relating to completion of the transactions contemplated
hereby, including promptly furnishing the other with copies of notice or other
communications received by Parent or the Company, as the case may be, or any of
its Subsidiaries, from any third party and/or any Governmental Entity with
respect to the Merger and the other transactions contemplated by this Agreement.
The Company and Parent each shall give prompt notice to the other of any change
(i) that, individually or in the aggregate, is or is reasonably likely to result
in a Company Material Adverse Effect or Parent Material Adverse Effect,
respectively, or would constitute a breach of warranty under this Agreement.
Section 5.6. ACCESS. Upon reasonable notice, and except as may
otherwise be required by Applicable Law, the Company shall (and shall cause its
Subsidiaries to) afford Parent's officers, directors or Representatives access,
during normal business hours throughout the
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period prior to the Effective Time, to the Company's and its Subsidiaries'
personnel, properties, books, contracts and records (including any Tax Returns
and work papers of independent auditors) and, during such period, shall (and
shall cause its Subsidiaries to) furnish promptly to the other all information
concerning the Company's and its Subsidiaries' business, properties, personnel,
Fund Clients and Exempt Fund Clients and to such other information as may
reasonably be requested. During such period, it shall furnish promptly to Parent
and, at the request of Parent, to any of its Representatives (i) a copy of each
report, schedule and other document filed by it, its Subsidiaries or any such
Fund Client or Exempt Fund Client pursuant to the requirements of federal or
state securities laws, and (ii) all other financial and operating data and other
information concerning the business, properties, assets and personnel of it, its
Subsidiaries or any Fund Client or Exempt Fund Client as any of its
Representatives may reasonably request. No investigation pursuant to this
Section shall affect or be deemed to modify any representation or warranty made
by the Company and provided, further, that the foregoing shall not require the
Company to permit any inspection, or to disclose any information, that in the
reasonable judgment of the Company would result in the disclosure of any trade
secrets of third parties or violate any of its obligations with respect to
confidentiality if the Company shall have used all reasonable efforts to obtain
the consent of such third party to such inspection or disclosure. All requests
for information made pursuant to this Section shall be directed to an executive
officer of the Company or such Person as may be designated by either of the
Company's officers. All such information shall be governed by the terms of the
Confidentiality Agreement (as defined in Section 8.7).
Section 5.7. STOCK EXCHANGE DE-LISTING. The Surviving Corporation
shall use its best efforts to cause the Common Shares to be de-listed from the
NYSE and de-registered under the Exchange Act as soon as practicable following
the Effective Time.
Section 5.8. PUBLICITY. The initial press release shall be a joint
press release and thereafter the Company and Parent each shall consult with each
other prior to issuing any press releases or otherwise making public
announcements with respect to the Merger and the other transactions contemplated
by this Agreement and prior to making any filings with any third party and/or
any Governmental Entity (including any applicable securities exchange) with
respect thereto, except as may be required by Applicable Law or by obligations
pursuant to any listing agreement with or rules of any applicable securities
exchange.
Section 5.9. BENEFITS.
(a) OPTIONS. Prior to the consummation of the Offer, the Company
Board (or, if appropriate, any committee thereof) shall use its reasonable best
efforts (including by adopting appropriate resolutions and seeking all consents
from optionees) so that immediately prior to the Effective Time, except as may
be otherwise agreed by Parent and the holder of any Company Options, all Company
Options (whether vested or unvested) that are then outstanding shall be
cancelled in exchange for a payment by the Company to the holder thereof in
cash, as soon as practicable following the Effective Time, equal to the product
of (i) the total number of Common Shares subject to such Company Option and (ii)
the excess, if any, of the Offer Price over the exercise price per Common Share
subject to such Company Option (the "CASH PAYMENTS") (less any applicable
withholding Taxes). The Company Board shall use its reasonable best efforts to
terminate the Option Plan, the Stand-Alone Option Plans and any other plan,
program or arrangement providing for the issuance or grant of any other interest
in respect of the capital stock
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of the Company or any subsidiary in each case effective prior to the Effective
Time. The Company and Parent agree that the Cash Payments are the sole payments
that will be made with respect to or in relation to the Company Options.
(b) EMPLOYEE BENEFITS.
(i) Parent agrees that, during the period commencing at the
Effective Time and ending on the second anniversary thereof, the
individuals who are, as of the Effective Time, employees of the Company and
its Subsidiaries (the "COMPANY Employees") will continue to be provided
with benefits under employee benefit plans (other than plans involving the
issuance of Common Shares) that are no less favorable in the aggregate than
those currently provided by the Company and its Subsidiaries to such
Company Employees.
(ii) For all purposes under the employee benefit plans of Parent
and its affiliates providing benefits after the Effective Time, each
Company Employee shall be credited with his or her years of service with
the Company and its Subsidiaries before the Effective Time, to the same
extent as such Company Employee was entitled, before the Effective Time, to
credit for such service under any similar Compensation and Benefit Plans,
except to the extent such credit would result in a duplication of benefits.
In addition, and without limiting the generality of the foregoing: (i) each
Company Employee shall be immediately eligible to participate, without any
waiting time, in any and all employee benefit plans sponsored by Parent and
its affiliates for the benefit of Company Employees (such plans,
collectively, the "NEW PLANS") to the extent coverage under such New Plan
replaces coverage under a comparable Compensation and Benefit Plan in which
such Company Employee participated immediately before the Effective Time
(such plans, collectively, the "OLD PLANS"); and (ii) for purposes of each
New Plan providing medical, dental, pharmaceutical and/or vision benefits
to any Company Employee, Parent shall cause all pre-existing condition
exclusions and actively-at-work requirements of such New Plan to be waived
for such employee and his or her covered dependents, and Parent shall cause
any eligible expenses incurred by such employee and his or her covered
dependents during the portion of the plan year of the Old Plan ending on
the date such employee's participation in the corresponding New Plan begins
to be taken into account under such New Plan for purposes of satisfying all
deductible, coinsurance and maximum out-of-pocket requirements applicable
to such employee and his or her covered dependents for the applicable plan
year as if such amounts had been paid in accordance with such New Plan.
(iii) Parent shall, and shall cause the Surviving Corporation to,
honor the Compensation and Benefit Plans in accordance with their terms as
in effect immediately before the Effective Time; PROVIDED, that nothing
herein shall prevent Parent from amending or terminating any Compensation
and Benefit Plan in accordance with their terms and subject to Applicable
Law; and PROVIDED, FURTHER, that the Compensation and Benefit Plans listed
in Section 4.1(i) of the Company Disclosure Letter shall not be amended or
terminated in any manner adverse to the Company Employees before the first
anniversary of the Effective Time.
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(iv) Prior to the consummation of the Offer, the Company Board (or,
if appropriate, any committee thereof) shall cause all account balances of
participants in the United Asset Management Corporation Profit Sharing and
401(k) Plan (as amended) to be fully vested immediately prior to the
Effective Time.
Section 5.10. EXPENSES. Parent shall pay all charges and expenses,
including those of the Paying Agent, in connection with the transactions
contemplated in Article III. Except as otherwise provided in Section 7.3(b),
whether or not the Merger is consummated, all costs and expenses incurred in
connection with this Agreement and the Merger and the other transactions
contemplated by this Agreement shall be paid by the party incurring such
expense, except that expenses incurred in connection with the filing fee for and
the printing and mailing of the Schedule TO and the Proxy Statement shall be
shared equally by Parent and the Company.
Section 5.11. INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE.
(a) From and after the Effective Time, Parent agrees that it will,
and will cause the Surviving Corporation to indemnify and hold harmless each
present and former director and officer of the Company (when acting in such
capacity) determined as of the Effective Time (the "INDEMNIFIED PARTIES")
against any and all costs or expenses (including reasonable attorneys' fees),
judgments, fines, losses, claims, damages or liabilities (collectively, "COSTS")
incurred in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative, arising
out of matters existing or occurring at or prior to the Effective Time, whether
asserted or claimed prior to, at or after the Effective Time, to the fullest
extent that the Company would have been permitted under Delaware law and its
charter or bylaws in effect on the date hereof to indemnify such Person (and
Parent shall also advance expenses as incurred to the fullest extent permitted
under applicable law).
(b) Any Indemnified Party wishing to claim indemnification under
paragraph (a) of this Section 5.11, upon learning of any such claim, action,
suit, proceeding or investigation, shall promptly notify Parent thereof, but the
failure to so notify shall not relieve Parent or the Surviving Corporation of
any liability it may have to such Indemnified Party to the extent such failure
does not prejudice the indemnifying party. In the event of any such claim,
action, suit, proceeding or investigation (whether arising before or after the
Effective Time), (i) Parent or the Surviving Corporation shall have the right to
assume the defense thereof and neither Parent nor the Surviving Corporation
shall be liable to such Indemnified Parties for any legal expenses of other
counsel or any other expenses subsequently incurred by such Indemnified Parties
in connection with the defense thereof, except that if Parent or the Surviving
Corporation elects not to assume such defense or counsel for the Indemnified
Parties advises that there are issues which raise conflicts of interest between
Parent or the Surviving Corporation and the Indemnified Parties, the Indemnified
Parties may retain counsel reasonably satisfactory to Parent, and Parent or the
Surviving Corporation shall pay all reasonable fees and expenses of such counsel
for the Indemnified Parties promptly as statements therefor are received;
PROVIDED, HOWEVER, that Parent shall be obligated pursuant to this paragraph (b)
to pay for only one firm of counsel for all Indemnified Parties in any
jurisdiction unless, under applicable standards of professional conduct, the use
of one counsel for such Indemnified Parties would present such counsel with a
conflict of interest, (ii) the Indemnified Parties will reasonably cooperate in
the defense of any such matter, and (iii) neither Parent nor the Surviving
Corporation shall be liable for any settlement
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effected without Parent's prior written consent, which Parent will not
unreasonably withhold; and PROVIDED, FURTHER, that neither Parent nor the
Surviving Corporation shall have any obligation hereunder to any Indemnified
Party if and when a court of competent jurisdiction shall ultimately determine,
and such determination shall have become final, that the indemnification of such
Indemnified Party in the manner contemplated hereby is prohibited by Applicable
Law.
(c) The Surviving Corporation shall maintain a policy of officers'
and directors' liability insurance for acts and omissions occurring prior to the
Effective Time with coverage in amount and scope at least as favorable as the
Company's existing directors' and officers' liability insurance coverage ("D&O
INSURANCE") for a period of at least six years after the Effective Time so long
as the annual premium therefor is not in excess of 300% of the last annual
premium paid prior to the date hereof (the "CURRENT PREMIUM"); PROVIDED,
HOWEVER, if the existing D&O Insurance expires, is terminated or canceled during
such six-year period, the Surviving Corporation will use all reasonable efforts
to obtain D&O Insurance for the remainder of such period for a premium not in
excess (on an annualized basis) of 300% of the Current Premium.
(d) The provisions of this Section are intended to be for the benefit
of, and shall be enforceable by, each of the Indemnified Parties, their heirs
and their representatives.
Section 5.12. TAKEOVER STATUTE. If any Takeover Statute is or may
become applicable to the Merger or the other transactions contemplated by this
Agreement, each of Parent and the Company and its Board of Directors shall grant
such approvals and take such actions as are necessary so that such transactions
may be consummated as promptly as practicable on the terms contemplated by this
Agreement, and otherwise act to eliminate or minimize the effects of such
statute or regulation on such transactions.
Section 5.13. COMPLIANCE WITH 1940 ACT SECTION 15; CLIENT CONSENTS.
(a) Prior to the Effective Time, the Company shall use its reasonable
best efforts to ensure compliance with Section 15(f) of the 1940 Act, so that
the transactions contemplated by this Agreement will be in compliance at the
Effective Time with Section 15(f) of the 1940 Act, including, to assure that at
the time of the Effective Time at least 75% of the Board of Directors or
Trustees of each Fund Client are not "interested persons" (as such term is
defined in the 1940 Act) of the Surviving Corporation or the Company.
(b) Parent will use its reasonable best efforts to assure compliance
with the conditions of Section 15(f) of the 1940 Act as it applies to the
transactions contemplated by the Agreement. From and after the Effective Time,
Parent shall conduct the business of the Surviving Corporation so as to assure
that, insofar as within the control of Parent:
(i) for a period of three years after the Effective Time, at
least 75% of the members of the Board of Directors or Trustees of each Fund
Client which continues its existing or a replacement Investment Contract
with an Advisory Entity that constitutes an investment advisory agreement
are not (A) "interested persons" of the Surviving Corporation, or (B)
"interested persons" of the Company; and
(ii) there is not imposed on any Fund Client an "unfair burden"
(within the meaning of Section 15(f) of the 1940 Act) as a result of the
transactions contemplated by
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this Agreement, or any express or implied terms, conditions or
understandings applicable thereto.
(c) Each of Parent and the Company shall use its reasonable best
efforts to obtain, in accordance with the 1940 Act, (i) in the case of each Fund
Client other than Fund Clients for whom an Advisory Entity provides subadvisory
services, the due consideration and due approval by the board of directors of
such Fund Client, or (ii) in the case of each Fund Client for whom an Advisory
Entity provides subadvisory services, approval of the Fund Client's advisor and
the approval of the board of directors of such Fund Client to the extent
required by Applicable Law ("FUND APPROVAL") of a new advisory agreement to be
in effect with the applicable Advisory Entity immediately following acceptance
for payment of Common Shares in the Offer on the same terms as its Investment
Contract in effect on the date hereof (or as of the date of commencement of
operations of such Fund Client, if after the date hereof). To the extent that
due consideration and approval of any such new Investment Contract by such Fund
Client's securityholders is required under the 1940 Act, the Company shall use
its reasonable best efforts to cause such Fund Client to obtain such approval.
(d) As soon as reasonably practicable following the date hereof, the
Company shall cause the Advisory Entities to send notices (each, a "NOTICE"),
(A) informing their Clients of the transactions contemplated by this Agreement,
(B) requesting the consent or approval of the assignment or deemed assignment if
client consent to such assignment or deemed assignment is required by Applicable
Law or is required under the respective Investment Contract for such assignment
or deemed assignment resulting from the transactions contemplated hereby, (C)
affirming the Advisory Entity's intention to continue the advisory services
pursuant to the existing Investment Contract following the Effective Time if
such Client does not terminate such Investment Contract prior to the Effective
Time, and (D) stating that the consent of such Client will be deemed to have
been granted if such Client continues to accept such advisory services for at
least 45 days after such Notice without termination, provided that such Client
shall not have affirmatively stated to the Company or such Advisory Entity that
it does not consent or terminated its respective Investment Contract prior to
the acceptance for payment and purchase of the Common Shares pursuant to the
Offer. Before any Notice is sent hereunder, the form of such Notice shall be
provided to Parent for review and approval, which approval shall not be
unreasonably withheld or delayed. Parent agrees that consent for any Investment
Contract to the assignment or deemed assignment resulting from the transactions
contemplated hereby ("CLIENT CONSENT") shall be deemed given for all purposes
hereunder (i) if no consent is required under Applicable Law or the respective
Investment Contract, or (ii) if such consent is required under Applicable Law
(but not under the respective Investment Contract), if the written consent or
approval requested in any Notice is received, or, if the written consent or
approval requested in any Notice is not received within forty-five (45) days of
mailing Notice to a Client (provided that in the event a Client shall, prior to
the Last Month-End, have affirmatively stated in writing to the Company or such
Affiliate of the Company with which such Client has an advisory relationship
that it does not so consent or shall have terminated its respective Investment
Contract, Client Consent shall not be deemed given by such Client) (the
"NEGATIVE CONSENT PROCEDURE"). Parent shall use its reasonable best efforts to
cooperate with and assist the Company in obtaining Client Consents pursuant to
this Section 5.13(d).
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(e) Notwithstanding anything to the contrary contained herein, the
covenants of the parties contained in this Section 5.13 are intended only for
the benefit of the parties and for no other Person.
Section 5.14. QUALIFICATION OF THE FUND CLIENTS; FUND CLIENT BOARDS.
Subject to applicable fiduciary duties to the Fund Clients, the Company will use
and cause each of its Subsidiaries to use its reasonable best efforts to ensure
that the Fund Clients take no action (i) that would prevent any Fund Client from
qualifying as a "regulated investment company", within the meaning of Section
851 of the Code, (ii) that would be inconsistent with any Fund Client's
prospectus and other offering, advertising and marketing materials, or (iii)
with respect to the Exempt Fund Clients that are currently taxed as
partnerships, take no action that would cause such an Exempt Fund Client to be
subject to taxation on a net income basis under the Code.
Section 5.15. EXEMPTION FROM LIABILITY UNDER SECTION 16(B). Parent and
the Company shall take all such steps as may be required or reasonably requested
to cause the transactions contemplated by this Agreement and any other
dispositions of Company equity securities (including derivative securities) in
connection with this Agreement by each individual who is a director or officer
of the Company to be exempt under Rule 16b-3 promulgated under the Exchange Act
and the rules and regulations promulgated thereunder, such steps to be taken in
accordance with the No-Action Letter dated January 12, 1999, issued by the SEC
to Skadden, Arps, Slate, Meagher & Flom LLP, or as may otherwise be reasonably
requested by the Company.
Section 5.16. TRANSFER TAXES. All stock transfer, real estate
transfer, documentary, stamp, recording and other similar Taxes (including
interest, penalties and additions to any such Taxes) ("TRANSFER TAXES") incurred
in connection with the transactions contemplated hereby shall be paid by either
Purchaser or the Surviving Corporation, and the Company shall cooperate with
Purchaser and Parent in preparing, executing and filing any Tax Returns with
respect to, or qualifying for any exemptions from, such Transfer Taxes.
Section 5.17. INTERIM DIRECTORS. Promptly upon the acceptance for
payment of, and payment by Purchaser for, Common Shares pursuant to the Offer,
Purchaser shall be entitled to designate, for election by the Company Board,
such number of directors on the Company Board as will give Purchaser, subject to
compliance with Section 14(f) of the Exchange Act and the DGCL, majority
representation on the Company Board; PROVIDED, HOWEVER, that in the event that
Purchaser's designees are appointed or elected to the Company Board, until the
Effective Time the Company Board shall have at least three directors who are
directors on the date of this Agreement (the "CONTINUING DIRECTORS"); PROVIDED,
HOWEVER, that, in such event, if the number of Continuing Directors shall be
reduced below three for any reason whatsoever, any remaining Continuing
Directors (or Continuing Director, if there shall be only one remaining) shall
be entitled to designate persons to fill such vacancies who shall be deemed to
be Continuing Directors for purposes of this Agreement or, if no Continuing
Directors then remain, the other directors shall designate three persons to fill
such vacancies who are not officers, shareholders or affiliates of Parent or
Purchaser, and such persons shall be deemed to be Continuing Directors for
purposes of this Agreement. Subject to Applicable Law, the Company shall take
all action requested by Parent necessary to effect any such election, including
mailing to its shareholders the Information Statement containing the information
required by Section 14(f) of the Exchange Act
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and Rule 14f-1 promulgated thereunder, and the Company shall make such mailing
with the mailing of the Schedule 14D-9 (provided that Purchaser shall have
provided to the Company on a timely basis all information required to be
included in the Information Statement with respect to Purchaser's designees). In
connection with the foregoing, the Company shall promptly, at the option of
Purchaser, either increase the size of the Company Board or obtain the
resignation of such number of its current directors as is necessary to enable
Purchaser's designees to be elected or appointed to the Company Board as
provided above.
Section 5.18. AGGREGATE CLIENT REVENUE AS OF MAY 31, 2000. On or
prior to the date that is ten business days following the date hereof, the
Company shall provide to Parent a schedule setting forth Aggregate Client
Revenue as of May 31, 2000. No later than 30 business days before acceptance for
payment of Common Shares in the Offer, Parent may notify the Company of any
disagreement it may have with the information set forth in such schedule and the
reasons for such disagreement. Parent and the Company will work in good faith to
resolve any such disagreement and mutually agree on the amount of Aggregate
Client Revenue as of May 31, 2000 within the following period of ten business
days. If Parent and the Company are unable to so agree, the dispute shall be
submitted to a big five accounting firm, without a substantial relationship with
either Parent or the Company, to be mutually agreed by Parent and the Company,
and, within 15 business days such firm shall determine Aggregate Client Revenue
as of May 31, 2000, which amount as so determined shall be binding on the
parties for all purposes hereunder.
ARTICLE VI
CONDITIONS
Section 6.1. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The respective obligation of each party to effect the Merger is subject
to the satisfaction or waiver at or prior to the Effective Time of each of the
following conditions:
(a) STOCKHOLDER APPROVAL. This Agreement shall have been adopted and
the Merger shall have been duly approved by the holders of Common Shares
constituting the Company Requisite Vote.
(b) ANTITRUST. The waiting period applicable to the consummation of
the Merger under the HSR Act shall have expired or been terminated.
(c) INJUNCTION OR RESTRAINT. No court or Governmental Entity of
competent jurisdiction shall have enacted, issued, promulgated, enforced or
entered any law, statute, ordinance, rule, regulation, judgment, decree,
injunction or other order (whether temporary, preliminary or permanent) that is
in effect and restrains, enjoins or otherwise prohibits consummation of the
Merger (collectively, an "ORDER").
(d) OFFER. Purchaser shall have purchased Common Shares pursuant to
the Offer.
Section 6.2. FRUSTRATION OF CLOSING CONDITIONS. Neither Parent,
Purchaser nor the Company may rely on the failure of any Tender Offer Condition
nor any condition set forth
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in Section 6.1 to be satisfied if such failure was caused by such party's
failure to use reasonable best efforts to consummate the Merger and the
transactions contemplated hereby, as required by and subject to Section 2.10(a).
ARTICLE VII
TERMINATION
Section 7.1. TERMINATION BY MUTUAL CONSENT. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time, whether before or after the approval by stockholders of the Company
referred to in Section 6.1(a), by mutual written consent of the Company and
Parent by action of their respective Boards of Directors.
Section 7.2. TERMINATION BY EITHER PARENT OR THE COMPANY.
(a) This Agreement may be terminated and the Merger may be abandoned:
(i) by action of the Board of Directors of either Parent or the
Company if Common Shares have not been accepted for payment pursuant to the
Offer on or prior to March 4, 2001 (the "TERMINATION DATE"),
(ii) by action of the Board of Directors of either Parent or the
Company if any Order permanently restraining, enjoining or otherwise
prohibiting consummation of the Merger shall become final and
non-appealable,
(iii) by action of the Board of Directors of Parent if the Company
Board shall have withdrawn, changed or modified (including by amendment of
its Schedule 14D-9), in any such case in a manner adverse to Purchaser or
Parent, its approval or recommendation contemplated by Section 1.3(a);
PROVIDED, HOWEVER, that any public statement by the Company that (A) it has
received an Acquisition Proposal or otherwise taken any action permitted by
Section 5.3(a) or (B) otherwise describes the operation of the provisions
of this Agreement relating to an Acquisition Proposal, termination, the
Company Board's approval or recommendation of this Agreement or the
transactions contemplated hereby, shall not, in and of themselves, be
deemed to be a public proposal to withdraw, change or modify the Company
Board's approval or recommendation for the purposes of this clause (iii),
(iv) by action of the Board of Directors of Parent, if, due to an
occurrence or circumstance that would result in a failure to satisfy any of
the Tender Offer Conditions, Purchaser shall have (A) failed to commence
the Offer within the time period prescribed in Section 1.1(a), (B)
terminated the Offer without having accepted any Common Shares for payment
thereunder, or (C) failed to pay for Common Shares pursuant to the Offer by
the Termination Date, unless, in each case, such failure to satisfy any of
the Tender Offer Conditions shall have been caused by or resulted from a
material breach of any of Parent's or Purchaser's representations,
warranties or covenants contained in this Agreement,
(v) by action of the Company Board, (A) if, due to an occurrence
or circumstance that would result in a failure to satisfy any of the Tender
Offer Conditions, Pur-
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chaser shall have (x) failed to commence the Offer within the time period
prescribed in Section 1.1(a), (y) terminated the Offer without having
accepted any Common Shares for payment thereunder, or (z) failed to pay for
Common Shares pursuant to the Offer by the Termination Date, unless, in
each case, such failure to satisfy any of the Tender Offer conditions shall
have been caused by or resulted from a material breach of any of the
Company's representations, warranties or covenants contained in this
Agreement or (B) in the event of either (x) a breach by Parent or Purchaser
of any representation or warranty contained herein ((determined without
giving effect to any qualifications as to "Parent Material Adverse Effect,"
"material" or similar qualifications), and excluding those where the
failure of such representations and warranties to be so true and correct
(without giving effect to any qualifications as to "Parent Material Adverse
Effect," "material" or similar qualifications) would not, individually or
in the aggregate, be reasonably likely to have a Parent Material Adverse
Effect), which breach cannot be or has not been cured within 20 days after
the giving of written notice to Parent of such breach; or (y) a material
breach by Parent or Purchaser of any of its covenants or agreements
contained herein, which breach cannot be or has not been cured within 20
days after the giving of written notice to Parent, or
(vi) by action of the Company Board, in accordance with all the
requirements of Section 5.3(b);
PROVIDED, that the right to terminate this Agreement pursuant to clause
(i) above shall not be available to any party that has breached in any
material respect its obligations under this Agreement in any manner that
shall have proximately contributed to the occurrence of the failure of the
Offer to be consummated prior to the Termination Date, and PROVIDED,
FURTHER, that this Agreement may not in any event be terminated except
pursuant to clause (ii) above, at any time after Purchaser shall have
accepted Common Shares for payment pursuant to the Offer.
(b) This Agreement may also be terminated and the Merger may be
abandoned, by action of the Board of Directors of Parent taken and specific
notice of which is given to the Company on or prior to June 30, 2000, if the
Special Representations (as defined below) shall not be true and correct
(without giving effect to any qualifications as to "Special Company Material
Adverse Effect," "material" or similar qualifications) at any time on and after
the date hereof and prior to June 30, 2000 as though made on and as of such date
(except to the extent any such representation or warranty expressly speaks as of
an earlier or different date, and except for changes contemplated or permitted
by the terms hereof) except, in either case, where the failure of such
representations and warranties to be so true and correct (without giving effect
to any qualifications as to "Special Company Material Adverse Effect,"
"material" or similar qualifications) would not, in the aggregate, have a
Special Company Material Adverse Effect, and provided that such breach cannot be
or has not been cured within 20 days after the giving of written notice to the
Company of such breach or of an attempted termination pursuant to this Section
7.2(b) (and no such attempted termination shall be effective unless such cure
period shall have expired without the cure of the alleged basis for such
termination).
For the purposes of this Section 7.2(b), the Company hereby
represents and warrants to Parent that, except as set forth in the Company
Disclosure Letter, the representations and
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warranties set forth in Section 4.1(a), (b) (as to the final three sentences
only), (d)(ii), (e)(ii), (f), (h), (i), (j), (k), (m), (n), (p), (q) or (s)(ii)
or (iii), are true and correct, MUTATIS MUTANDIS and subject to the other rules
of interpretation set forth in this Section 7.2(b), as if each reference therein
to "the Company" or "the Company and its Subsidiaries" or any similar reference
were instead to "the Special Subsidiaries" (as defined below). For the purposes
of this Section 7.2(b), such representations and warranties shall be called the
"SPECIAL REPRESENTATIONS."
For the purposes of the Special Representations (x) all references
to Company Material Adverse Effect in the Company Representations shall be
considered to be references to Special Company Material Adverse Effect and (y)
all requirements that any matter be listed, set forth or enumerated on the
Company Disclosure Letter shall be disregarded, and no failure to provide any
otherwise required disclosure shall constitute a breach or violation of the
Special Representations (but all limitations and qualifications set forth in the
Company Disclosure Letter shall be given full effect).
For the purposes hereof, the following terms shall have the
following meanings:
"SPECIAL COMPANY MATERIAL ADVERSE EFFECT" means a material adverse
effect on the financial condition, operations, properties, business or results
of operations of the Special Subsidiaries taken as a whole (other than any
change or effect arising out of (A) a decline or deterioration in the economy or
the capital markets in general or the markets in which the Special Subsidiaries
operate, or (B) this Agreement or the transactions contemplated hereby or the
announcement thereof).
"SPECIAL SUBSIDIARIES" means those Subsidiaries identified as such
in Section 7.2(b) of the Company Disclosure Letter, and "LIMITED SPECIAL
SUBSIDIARIES" means those Subsidiaries identified as such in Section 7.2(b) of
the Company Disclosure Letter.
If this Agreement is not terminated and the Merger not abandoned in
accordance with this Section 7.2(b), the Special Representations shall cease to
be of any further force or effect, and shall be of no relevance for any purpose
hereunder.
Section 7.3. EFFECT OF TERMINATION AND ABANDONMENT.
(a) In the event of termination of this Agreement and the abandonment
of the Merger pursuant to this Article VII, this Agreement (other than as set
forth in Section 8.1) shall become void and of no effect with no liability on
the part of any party hereto (or of any of its directors, officers, employees,
agents, legal and financial advisors or other representatives); PROVIDED,
HOWEVER, except as otherwise provided herein, no such termination shall relieve
any party hereto of any liability or damages resulting from any breach of this
Agreement.
(b) In the event that this Agreement is terminated by Parent or the
Company pursuant to Section 7.2(a)(i) or by Parent pursuant to Section
7.2(a)(iii) or (iv), and, prior to the date of such termination, any Person
(other than Parent or any Affiliate of Parent) has made to the Company an
Acquisition Proposal or shall have publicly announced an intention (whether or
not conditional) to make a proposal or offer relating to an Acquisition
Proposal, then the Company shall pay to Parent, no later than two business days
after the earlier to occur of (i) the date of entrance by the Company into a
definitive agreement to consummate a transaction that con-
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stitutes that or any other Acquisition Proposal or (ii) the date any Person
(other than Parent or any Affiliate of Parent) purchases 50% or more of the
assets or voting securities of the Company and its Subsidiaries (provided that
any definitive agreement contemplated by clauses (i) and (ii) of this sentence
is entered into by the Company, or if there is no such agreement with respect to
a purchase contemplated by clause (ii), any tender, exchange or other offer or
arrangement for the Company's voting securities is first publicly disclosed,
within 18 months of such termination of this Agreement), an amount equal to $43
million (the "TERMINATION FEE").
(c) This Agreement shall not be terminated by the Company pursuant to
Section 7.2(a)(vi) unless the Company shall concurrently pay to Parent an amount
equal to the Termination Fee by wire transfer of immediately available funds.
Section 7.4. PROCEDURE FOR TERMINATION, AMENDMENT, EXTENSION OR
WAIVER. A termination of this Agreement pursuant to Section 7.1 or 7.2, an
amendment of this Agreement pursuant to Section 8.2 or an extension or waiver
pursuant to Section 8.3, or any action with similar import or effect shall, in
order to be effective, require in the case of the Company, in the event that
Purchaser's designees are appointed or elected to the Company Board as provided
in Section 5.17, after the acceptance for payment of Common Shares pursuant to
the Offer and prior to the Effective Time, the affirmative vote of the majority
of the Continuing Directors. In the event that Purchaser's designees are
appointed or elected to the Company Board as provided in Section 5.17, after the
acceptance for payment of Common Shares pursuant to the Offer and prior to the
Effective Time, the affirmative vote of the majority of the Continuing Directors
shall be required by the Company to (i) amend or terminate this Agreement, (ii)
exercise or waive any of the Company's rights or remedies under this Agreement,
or (iii) extend the time for performance of Parent's or Purchaser's respective
obligations under this Agreement.
ARTICLE VIII
MISCELLANEOUS
Section 8.1. SURVIVAL. This Article VIII and the agreements of the
Company and Parent contained in Sections 5.7 (Stock Exchange De-listing) and
5.11 (Indemnification; Directors' and Officers' Insurance) shall survive the
consummation of the Merger. This Article VIII, the agreements of the Company and
Parent contained in Section 5.10 (Expenses), Section 7.3 (Effect of Termination
and Abandonment) and the Confidentiality Agreement shall survive the termination
of this Agreement. All other representations, warranties, covenants and
agreements in this Agreement shall not survive the consummation of the Merger or
the termination of this Agreement.
Section 8.2. MODIFICATION OR AMENDMENT. Subject to Section 7.4 and
the provisions of Applicable Law, at any time prior to the Effective Time, the
parties hereto may modify or amend this Agreement, by written agreement executed
and delivered by duly authorized officers of the respective parties.
Section 8.3. WAIVER OF CONDITIONS. The conditions to each of the
parties' obligations to consummate the Merger are for the sole benefit of such
party and may be waived by such party in whole or in part to the extent
permitted by Applicable Law.
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Section 8.4. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each such counterpart being deemed to be an original
instrument, and all such counterparts shall together constitute the same
agreement.
Section 8.5. GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL.
(a) THIS AGREEMENT SHALL BE DEEMED TO BE MADE IN AND IN ALL RESPECTS SHALL BE
INTERPRETED, CONSTRUED AND GOVERNED BY AND IN ACCORDANCE WITH THE LAW OF THE
STATE OF DELAWARE WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES THEREOF. The
parties hereby irrevocably submit to the jurisdiction of the courts of the State
of Delaware and the Federal courts of the United States of America located in
the State of Delaware solely in respect of the interpretation and enforcement of
the provisions of this Agreement and of the documents referred to in this
Agreement, and in respect of the transactions contemplated hereby, and hereby
waive, and agree not to assert, as a defense in any action, suit or proceeding
for the interpretation or enforcement hereof or of any such document, that it is
not subject thereto or that such action, suit or proceeding may not be brought
or is not maintainable in said courts or that the venue thereof may not be
appropriate or that this Agreement or any such document may not be enforced in
or by such courts, and the parties hereto irrevocably agree that all claims with
respect to such action or proceeding shall be heard and determined in such a
Delaware State or Federal court. The parties hereby consent to and grant any
such court jurisdiction over the person of such parties and over the subject
matter of such dispute and agree that mailing of process or other papers in
connection with any such action or proceeding in the manner provided in Section
8.6 or in such other manner as may be permitted by law shall be valid and
sufficient service thereof.
(b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY
ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT
ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT,
OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND
ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH PARTY
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) EACH PARTY
MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH PARTY HAS BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 8.5.
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Section 8.6. NOTICES. Any notice, request, instruction or other
document to be given hereunder by any party to the others shall be in writing
and delivered personally or sent by registered or certified mail, postage
prepaid, or by facsimile:
if to Parent:
Old Mutual plc
Lansdowne House
57 Berkeley Square, 3rd Floor
London
W1X 5DH
United Kingdom
Facsimile: 011-44-207-569-0209
Attention: Martin C. Murray
with a copy to:
Ellen J. Odoner, Esq.
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Facsimile: (212) 310-8007
if to the Company:
United Asset Management Corporation
One International Place
Boston, Massachusetts 02110
Facsimile: (617) 330-1133
Attention: Joseph R. Ramrath, Esq.
with a copy to:
Adam O. Emmerich, Esq.
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Facsimile: (212) 403-2000
or to such other Persons or addresses as may be designated in writing by the
party to receive such notice as provided above.
Section 8.7. ENTIRE AGREEMENT; NO OTHER REPRESENTATIONS. This
Agreement (including any exhibits hereto), the Company Disclosure Letter, the
Parent Disclosure Letter and the Confidentiality Agreement, dated March 15,
2000, between Parent and the Company (the "CONFIDENTIALITY AGREEMENT")
constitute the entire agreement, and supersede all other prior
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agreements, understandings, representations and warranties both written and
oral, among the parties, with respect to the subject matter hereof.
Section 8.8. NO THIRD PARTY BENEFICIARIES. Except as provided in
Section 5.11 (Indemnification; Directors' and Officers' Insurance), this
Agreement is not intended to confer upon any Person other than the parties
hereto any rights or remedies hereunder.
Section 8.9. OBLIGATIONS OF PARENT AND OF THE COMPANY. Whenever this
Agreement requires a Subsidiary of Parent to take any action, such requirement
shall be deemed to include an undertaking on the part of Parent to cause such
Subsidiary to take such action. Whenever this Agreement requires a Subsidiary of
the Company to take any action, such requirement shall be deemed to include an
undertaking on the part of the Company to cause such Subsidiary to take such
action and, after the Effective Time, on the part of the Surviving Corporation
to cause such Subsidiary to take such action.
Section 8.10. SEVERABILITY. The provisions of this Agreement shall be
deemed severable and the invalidity or unenforceability of any provision shall
not affect the validity or enforceability or the other provisions hereof. If any
provision of this Agreement, or the application thereof to any Person or any
circumstance, is invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision, and (b) the remainder of this Agreement and the application of such
provision to other Persons or circumstances shall not be affected by such
invalidity or unenforceability, nor shall such invalidity or unenforceability
affect the validity or enforceability of such provision, or the application
thereof, in any other jurisdiction.
Section 8.11. INTERPRETATION. The table of contents and headings
herein are for convenience of reference only, do not constitute part of this
Agreement and shall not be deemed to limit or otherwise affect any of the
provisions hereof. Where a reference in this Agreement is made to a Section or
Exhibit, such reference shall be to a Section of or Exhibit to this Agreement
unless otherwise indicated. Whenever the words "include," "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation."
Section 8.12. ASSIGNMENT. This Agreement shall not be assignable by
operation of law or otherwise, PROVIDED, that Purchaser may assign this
Agreement to any wholly owned, direct or indirect subsidiary of Parent which
agrees in writing to be bound by all of the terms and conditions hereof and to
assume all of Purchaser's obligations hereunder, provided, FURTHER, that no such
permitted assignment shall relieve the assigning party of its obligations
hereunder, and PROVIDED, FURTHER, that no assignment shall be permissible if it
would adversely affect or cause any delay in the consummation of the
transactions contemplated hereby.
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IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officers of the parties hereto as of the date
first written above.
UNITED ASSET MANAGEMENT CORP.
By: /s/ James F. Orr III
-----------------------------------------
Name: James F. Orr III
Title: President and Chief Executive Officer
OLD MUTUAL PLC
By: /s/ John Kent
-----------------------------------------
Name: John Kent
Title: Head of Corporate Development and
Planning
OM ACQUISITION CORP.
By: /s/ John Kent
-----------------------------------------
Name: John Kent
Title: Head of Corporate Development and
Planning
ANNEX I
CONDITIONS TO THE OFFER
THE CAPITALIZED TERMS USED HEREIN HAVE THE MEANINGS SET FORTH IN THE
AGREEMENT AND PLAN OF MERGER (THE "MERGER AGREEMENT") TO WHICH THIS ANNEX I IS
ATTACHED.
Notwithstanding any other provisions of the Offer, Purchaser shall
not be required to accept for payment or (subject to any applicable rules and
regulations of the SEC) pay for, and may delay the acceptance for payment of,
any Common Shares and may terminate or, subject to the terms of the Merger
Agreement, amend the Offer, unless (i) there shall have been validly tendered
and not withdrawn prior to the expiration of the Offer such number of Common
Shares as would constitute, together with any Common Shares theretofore
beneficially owned by Parent, a majority of the outstanding Common Shares
(determined on a fully diluted basis, after giving effect to the exercise or
conversion of all options, rights and securities exercisable or convertible into
voting securities) (the "MINIMUM TENDER CONDITION"), and (ii) the waiting period
applicable to the acceptance for payment and purchase of Common Shares in the
Offer under the HSR Act shall have expired or been terminated, and all reports
or other filings and consents, registrations, approvals, permits or
authorizations in each case that has been specifically identified in the Parent
Disclosure Letter as a condition to Purchaser's obligation to accept for payment
and purchase Common Shares in the Offer (such specifically identified required
notices, reports or other filings and consents, registrations, approvals,
permits and authorizations, collectively, "GOVERNMENTAL CONSENTS"), shall have
been made or obtained (as the case may be), or if, at any time on or after the
date of the Merger Agreement and prior to Purchaser's acceptance for payment of
Common Shares, any of the following conditions exists or shall have occurred and
remain in effect:
(a) there shall be pending or overtly threatened any action by any
Governmental Entity, or any Applicable Law enacted, entered, enforced
or deemed applicable to the Offer, (i) that would reasonably be
expected to or which does prohibit or impose any material limitations
on Parent's or Purchaser's ownership or operation (or that of any of
their respective Subsidiaries or affiliates) of all or a material
portion of their or the Company's or any of its Subsidiaries'
businesses or assets, or to compel Parent or Purchaser or their
respective Subsidiaries and affiliates to dispose of or hold separate
any material portion of the business or assets of the Company or
Parent or Purchaser and their respective Subsidiaries, in each case
taken as a whole, (ii) that would reasonably be expected to or which
does make the acceptance for payment of, or the payment for, some or
all of the Common Shares illegal or otherwise prohibiting, restricting
or significantly delaying acceptance for payment of Common Shares in
the Offer or consummation of the Merger or the performance of any of
the other transactions contemplated by the Merger Agreement, or that
would reasonably be expected to obtain from the Company or Purchaser
any damages that are material in relation to the Company and its
Subsidiaries as taken as a whole, (iii) that would reasonably be
expected to or which does impose material limitations on the ability
of Purchaser, or render Purchaser unable, to acquire or hold or to
exercise effectively all material rights of ownership of the Common
Shares, including, the right to vote any Common Shares purchased by
Purchaser on all matters properly presented to the stockholders of the
Company, or effectively to control in any material respect the
business, assets or operations of the Company, its Subsidiaries or
Purchaser or any of their respective affiliates, (iv) that would
reasonably be expected to or which does impose circumstances under
which the purchase or payment for some or all of the Common Shares
pursuant to the Offer and Merger would reasonably be expected to have
a Parent Material Adverse Effect, or (v) which otherwise would
reasonably be expected to have a Company Material Adverse Effect; or
(b) as of the Last Month-End, there shall not have been (i) Fund
Approval obtained with respect to Fund Clients and (ii) Client Consent
obtained, in the manner contemplated by Section 5.13(d) of the Merger
Agreement, of Clients other than Fund Clients ("NON-FUND CLIENTS"),
the aggregate Fund Client Revenue and Non-Fund Client Revenue of which
accounts, as of such date, together represent 75% (the "REQUIRED
CONSENT PERCENTAGE") or more of the sum of aggregate Fund Client
Revenue and Non-Fund Client Revenue (such sum, as of any given date,
the "AGGREGATE CLIENT REVENUE") as of May 31, 2000. As used herein,
the "FUND CLIENT REVENUE" shall mean, as of any given date, the
aggregate annualized investment advisory and subadvisory fees for all
Fund Client accounts managed by the Company and its Subsidiaries,
determined by multiplying the Adjusted Assets Under Management for
each such account on such date, by the applicable annual fee rate for
such account at such date (excluding any performance-based fees and
net of any fee waivers, expense reimbursements or assumptions and
unreimbursed payments by the Company or such Subsidiaries to brokers,
dealers or other Persons with respect to the distribution of shares of
the Fund Clients or services provided to Fund Client shareholders
pursuant to any distribution or shareholder services agreements). As
used herein, "NON-FUND CLIENT REVENUE" shall mean, as of any given
date, the aggregate annualized investment advisory and subadvisory
fees for all Non-Fund Client accounts managed by the Company and its
Subsidiaries, determined by multiplying the Adjusted Assets Under
Management for each such account by the applicable annual fee rate for
such account at such date (excluding any performance-based fees and
net of any referral or servicing fees payable by the Company or such
Subsidiaries). As used herein, the "ADJUSTED ASSETS UNDER MANAGEMENT"
shall mean, for any account at a particular date, the amount of assets
under management by the Company or any of its Subsidiaries in that
account at May 31, 2000, as adjusted for net cash flows (additions,
withdrawals and reinvestments), new accounts and terminated accounts
from and after May 31, 2000; or
(c) as of the Last Month-End, there shall not have been (i) Fund
Approval obtained with respect to Fund Clients of the Limited Special
Subsidiaries and (ii) Client Consent obtained, in the manner
contemplated by Section 5.13(d) of the Merger Agreement, of Non-Fund
Clients of the Limited Special Subsidiaries, the aggregate Fund Client
Revenue and Non-Fund Client Revenue of which accounts, as of such
date, together represent 80% or more of the sum of aggregate Fund
Client Revenue and Non-Fund Cli-
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ent Revenue as of May 31, 2000 of the Limited Special Subsidiaries; or
(d) as of the Last Month-End, there shall not have been Fund Approval
obtained with respect to Fund Clients of Pilgrim, Baxter & Associates,
the aggregate Fund Client Revenue of which accounts, as of such date,
together represent 90% or more of the sum of aggregate Fund Client
Revenue as of May 31, 2000 of Pilgrim, Baxter & Associates; or
(e) there shall have occurred any changes, events, effects or
developments that, individually or in the aggregate, constituted, or
that would reasonably be expected to constitute a Company Material
Adverse Effect; or
(f) the Merger Agreement shall have been terminated in accordance with
its terms; or
(g) (i) the Company Board shall have withdrawn, changed or modified
(including by amendment of its Schedule 14D-9), in any such case in a
manner adverse to Purchaser or Parent, its approval or recommendation
of the Offer, the Merger Agreement or the Merger or shall have
recommended an Acquisition Proposal, or shall have adopted any
resolution to effect any of the foregoing, or (ii) the Company Board
shall have recommended any proposal other than the Merger Agreement in
respect of an Acquisition Proposal; PROVIDED, HOWEVER, that any public
statement by the Company that (A) it has received an Acquisition
Proposal or otherwise taken any action permitted by Section 5.3(a) of
the Merger Agreement or (B) otherwise describes the operation of the
provisions of the Merger Agreement relating to an Acquisition
Proposal, termination or the Company Board's approval or
recommendation of the Merger Agreement or the transactions
contemplated thereby, shall not, in and of themselves, be deemed to be
a public proposal to withdraw, change or modify the Company Board's
approval or recommendation for the purposes of this clause (g); or
(h) the representations and warranties of the Company set forth in the
Merger Agreement shall not be true and correct (without giving effect
to any qualifications as to "Company Material Adverse Effect,"
"material" or similar qualifications) on and as of the Expiration Date
as though made on and as of the Expiration Date (except to the extent
any such representation or warranty expressly speaks as of an earlier
or different date, and except for changes contemplated or permitted by
the terms hereof) except, in either case, where the failure of such
representations and warranties to be so true and correct (without
giving effect to any qualifications as to "Company Material Adverse
Effect," "material" or similar qualifications) would not, in the
aggregate, have a Company Material Adverse Effect; or
(i) the Company shall not have performed in all material respects all
obligations required to be performed by it under the Merger Agreement
at or prior to the Expiration Date; or
A-3
(j) provided such approval is required by Applicable Law (or by any
requirements of the London Stock Exchange), the Merger Agreement and
the transactions contemplated hereby shall not have been approved by
the holders of a majority of Parent's outstanding ordinary shares at
the EGM; or
(k) there shall have occurred and be continuing (i) any general
suspension of trading in, or limitation on prices for, securities on
the New York Stock Exchange or the London Stock Exchange (excluding
any coordinated trading halt triggered as a result of a specified
decrease in a market index) related to market conditions, (ii) a
declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States or the United Kingdom by any
Governmental Entity, (iii) any material mandatory limitation by any
Governmental Entity on the extension of credit by banks or other
lending institutions in the United Kingdom, or (iv) a commencement of
a war directly or indirectly involving the United States or the United
Kingdom.
The parties acknowledge that the Tender Offer Conditions set forth
above in this Annex I are for the sole benefit of Parent and Purchaser, that
Parent or Purchaser may assert the failure of any of the Tender Offer Conditions
regardless of the circumstances (other than any circumstance arising solely by
any action or inaction by Parent or Purchaser) giving rise to any such failure,
that the Company shall not assert the failure of, or waive, any such condition
without the prior written consent of Parent and Purchaser, and that if Parent or
Purchaser elects to waive any such condition to the Offer (which Parent or
Purchaser may do in whole or in part at any time and from time to time), the
Company shall cooperate and comply with such election. The failure by Parent or
Purchaser at any time to exercise any of the foregoing rights shall not be
deemed a waiver of any such right, and each such right shall be deemed an
ongoing right that may be asserted at any time and from time to time.
Should the Offer be terminated pursuant to any of the foregoing
provisions, all tendered Common Shares not theretofore accepted for payment
shall forthwith be returned to the tendering stockholders.
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