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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 7, 2001
PRELIMINARY COPY
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[X] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 14a-12
TREMONT ADVISERS, INC.
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(Name of Registrant as Specified in its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[_] No fee required.
[X] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies: (a)
Class A Common Stock, par value $0.01 per share, of Tremont
Advisers, Inc. and (b) Class B Common Stock, par value $0.01 per
share, of Tremont Advisers, Inc.
(2) Aggregate number of securities to which transaction applies: (a)
1,730,430 shares of Class A Common Stock, par value $0.01 per share,
of Tremont Advisers, Inc.; (b) 5,254,258 shares of Class B Common
Stock, par value $0.01 per share, of Tremont Advisers, Inc.; and (c)
1,047,944 shares underlying outstanding options to purchase shares
of the capital stock of Tremont Advisers, Inc.
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined): The
filing fee was determined based upon the sum of (a) the product
obtained by multiplying (x) 6,984,688 (the aggregate number of
shares of Class A and Class B Common Stock of Tremont Advisers, Inc.
to which this transaction applies) and (y) the merger consideration
of $19.00 per share in cash, and (b) the product obtained by
multiplying (x) 1,047,944 (the aggregate number of outstanding
options to purchase shares of common stock of Tremont Advisers,
Inc.) and (y) the difference between $19.00 per share and the
exercise price per share of each of the 1,047,944 options to
purchase shares of the common stock of Tremont Advisers, Inc. In
accordance with Rule 0-11 under the Securities Exchange Act of 1934,
as amended, the filing fee was determined by multiplying the amount
calculated pursuant to the preceding sentence by 1/50 of one
percent.
(4) Proposed maximum aggregate value of transaction: $145.3 million.
(5) Total fee paid: $29,060.00.
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
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PRELIMINARY COPY
[LOGO]
TREMONT ADVISERS, INC.
555 THEODORE FREMD AVENUE
RYE, NEW YORK 10580
SPECIAL MEETING OF STOCKHOLDERS
MERGER PROPOSED - YOUR VOTE IS VERY IMPORTANT
August __, 2001
Dear Tremont Stockholder:
On behalf of the board of directors of Tremont Advisers, Inc. ("Tremont"),
I cordially invite you to attend the special meeting of the stockholders of
Tremont to be held at 11:00 a.m. on September 25, 2001, at our offices at 555
Theodore Fremd Avenue, Rye, New York 10580.
At the special meeting, we will ask you to adopt the merger agreement that
was entered into on July 10, 2001 with Oppenheimer Acquisition Corp.
("Oppenheimer") pursuant to which Tremont will be merged with a wholly-owned
subsidiary of Oppenheimer. If we complete the merger, you will receive $19.00 in
cash (subject to a possible upward or downward adjustment) for each share of
Tremont common stock you own and Tremont will become a 100% wholly-owned
subsidiary of Oppenheimer. The $19.00 per share being paid in the merger
represents a significant premium over the market price for our shares prevailing
before there was public speculation that we were pursuing a potential
transaction.
We cannot complete the merger unless the conditions to closing are
satisfied or waived, including the adoption of the merger agreement by holders
of shares of Tremont common stock representing a majority of the voting power of
Tremont, the obtaining of consents from a certain percentage of investment
advisory clients of our subsidiaries, and the satisfaction of various regulatory
requirements and of certain other conditions that are described in the proxy
statement. We believe that the requisite conditions can be satisfied on or
before September 25, 2001 and, assuming the merger agreement is adopted by the
holders of shares of Tremont common stock representing a majority of the voting
power of Tremont, that the transaction will be consummated promptly thereafter,
although Oppenheimer has the ability to postpone consummation of the transaction
to October 1, 2001 in the event that we successfully satisfy these conditions
prior to October 1, 2001. Shares of Tremont common stock representing in excess
of approximately 37% of the voting power of Tremont have been committed to be
voted in favor of adopting the merger agreement. However, we cannot assure you
that the requisite regulatory requirements will be satisfied or, if satisfied,
when they will be satisfied.
The board of directors carefully reviewed and considered the terms and
conditions of the proposed merger. Based on its review, the board of directors
has determined that the terms of the merger agreement and the merger itself are
advisable and are fair to, and in the best interests of, Tremont and its
stockholders. In making this determination, the board of directors considered,
among other things, an opinion of our financial advisor, Putnam Lovell
Securities, Inc., to the effect that, as of the date of the merger agreement and
based upon and subject to the factors and assumptions explained to the board of
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directors and set forth in the opinion, the cash consideration to be received by
you in the merger is fair from a financial point of view.
THE BOARD OF DIRECTORS OF TREMONT, BASED ON ITS DETERMINATION THAT THE
MERGER AGREEMENT AND THE MERGER ITSELF ARE ADVISABLE AND ARE FAIR TO, AND IN THE
BEST INTERESTS OF, TREMONT AND ITS STOCKHOLDERS, HAS UNANIMOUSLY APPROVED THE
MERGER AGREEMENT AND THE MERGER. ACCORDINGLY, THE BOARD OF DIRECTORS RECOMMENDS
THAT YOU VOTE "FOR" THE ADOPTION OF THE MERGER AGREEMENT.
The attached notice of special meeting and proxy statement explain the
proposed merger and the merger agreement and provide specific information
concerning the special meeting. Please read these materials (including
appendices) carefully.
YOUR VOTE IS VERY IMPORTANT. Whether or not you plan to attend the special
meeting, please take the time to vote by completing, signing, dating and
promptly returning the enclosed proxy card to us at the address set forth in the
proxy statement. If you attend the special meeting and wish to vote in person,
you may withdraw your proxy and vote in person.
If you have any questions or need assistance with the voting procedures,
please call James McCormick, our proxy solicitor, or Stephen Clayton in our
investor relations department, at (914) 925-1140.
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Sandra L. Manzke
Chairman of the Board and
Co-Chief Executive Officer
This proxy statement is dated August __, 2001 and was first mailed to Tremont
stockholders on or about August __,2001.
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TREMONT ADVISERS, INC.
555 THEODORE FREMD AVENUE
RYE, NEW YORK 10580
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON SEPTEMBER 25, 2001
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To the Stockholders of Tremont Advisers, Inc.:
NOTICE IS HEREBY GIVEN that a special meeting of stockholders of Tremont
Advisers, Inc. will be held on September 25, 2001, at 11:00 a.m., local time, at
our offices at 555 Theodore Fremd Avenue, Rye, New York 10580, for the purpose
of considering and voting upon a proposal to adopt an Agreement and Plan of
Merger, dated as of July 10, 2001, among Oppenheimer Acquisition Corp., Joshua
Acquisition Corp., and Tremont Advisers, Inc., as described in the attached
proxy statement. No other matters, except upon appropriate motion of a
stockholder vote to adjourn the special meeting, may be brought before the
special meeting.
The merger agreement and the merger are described in the attached proxy
statement, and a proxy card for voting on the adoption of the merger agreement
is enclosed.
The Tremont Advisers, Inc. board of directors has fixed the close of
business on August 6, 2001 as the record date for determining stockholders
entitled to notice of, and to vote at, the special meeting and any adjournment
or postponement of the meeting. A list of stockholders entitled to vote at the
special meeting will be available for examination at Tremont Advisers, Inc.'s
principal offices, during ordinary business hours, from August __, 2001 until
the meeting.
If you do not vote to adopt the merger agreement and you follow the
procedural requirements of the Delaware General Corporation Law, you may receive
the fair cash value of your shares as appraised by the Delaware Court of
Chancery. See "Special Factors -- Appraisal Rights of Stockholders" in the
attached proxy statement.
You should not send any certificates representing Tremont Advisers, Inc.
shares with your proxy card.
Whether or not you plan to attend the special meeting, you should
complete, sign, date and promptly return the enclosed proxy card to ensure that
your shares will be represented at the meeting. If you attend the special
meeting and wish to vote in person, you may withdraw your proxy and vote in
person.
BY ORDER OF THE BOARD OF DIRECTORS,
Suzanne S. Hammond
Secretary
Dated: August __, 2001
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TABLE OF CONTENTS
QUESTIONS AND ANSWERS ABOUT THE MERGER...................................... 1
SUMMARY..................................................................... 4
The Parties........................................................... 4
The Special Meeting of Stockholders................................... 4
The Merger and the Merger Agreement................................... 6
Certain U.S. Federal Income Tax Consequences.......................... 8
Opinion of our Financial Advisor...................................... 8
Stockholders Agreement................................................ 9
Interests of Certain Persons in the Merger............................ 9
Additional Information................................................ 9
PARTIES TO THE MERGER....................................................... 10
SPECIAL MEETING OF STOCKHOLDERS............................................. 10
Date, Time and Place of the Special Meeting........................... 10
Purpose of the Special Meeting........................................ 10
Recommendation of our Board of Directors.............................. 11
Record Date; Quorum; Outstanding Common Stock Entitled to Vote........ 11
Voting Rights......................................................... 11
Voting and Revocation of Proxies...................................... 11
Solicitation of Proxies............................................... 12
Other Matters......................................................... 12
PAYMENT OF CASH MERGER CONSIDERATION........................................ 12
SPECIAL FACTORS............................................................. 13
Background of the Merger.............................................. 13
Purpose of the Merger; Certain Effects of the Merger.................. 17
Recommendation of our Board of Directors; Reasons for the Merger...... 18
Opinion of Our Financial Advisor...................................... 19
Interests of Certain Persons in the Merger............................ 25
Merger Financing; Source of Funds..................................... 30
Certain U.S. Federal Income Tax Consequences.......................... 30
Accounting Treatment.................................................. 31
Appraisal Rights of Stockholders...................................... 31
Stockholders Agreement................................................ 33
THE MERGER AGREEMENT........................................................ 35
The Merger............................................................ 35
Representations and Warranties........................................ 38
Covenants Relating to Conduct of Business............................. 40
Conditions Precedent to the Merger.................................... 47
Termination........................................................... 48
Termination Fee....................................................... 50
Amendment and Waiver.................................................. 50
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REGULATORY APPROVALS........................................................ 50
DIRECTORS AND MANAGEMENT.................................................... 51
PRICE RANGE OF STOCK AND DIVIDENDS.......................................... 52
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT...................................... 53
CAUTIONARY STATEMENT CONCERNING
FORWARD-LOOKING STATEMENTS............................................ 56
FUTURE STOCKHOLDER PROPOSALS................................................ 57
WHERE YOU CAN FIND MORE INFORMATION......................................... 57
APPENDIX A: AGREEMENT AND PLAN OF MERGER.................................. A-1
APPENDIX B: OPINION OF PUTNAM LOVELL SECURITIES, INC...................... B-1
APPENDIX C: SECTION 262 OF THE DELAWARE GENERAL CORPORATION LAW........... C-1
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QUESTIONS AND ANSWERS ABOUT THE MERGER
WHAT WILL I RECEIVE IN THE MERGER?
If the merger is consummated, you will receive $19.00 per share for each
share of common stock you own in Tremont, without inter est, subject to
possible upward or downward adjustment.
UNDER WHAT CIRCUMSTANCES COULD I RECEIVE MORE OR LESS THAN $19.00 PER SHARE?
You will receive more or less than $19.00 per share in the event that our
tangible net worth shown on our balance sheet as of the end of the most recent
month-end not less than fifteen business days prior to the consummation of the
merger is less than $13,170,290 or more than $15,170,290.
- - To the extent that our tangible net worth is less than $13,170,290, the
amount you receive per share will be reduced by an amount determined by
dividing the amount of the difference by the total number of shares and
options to buy shares currently outstanding.
- - To the extent that our tangible net worth is greater than $15,170,290, the
amount you receive per share will be increased by an amount determined by
dividing the amount of the difference by the total number of shares and
options to buy shares currently outstanding.
For this purpose, tangible net worth means the excess of stockholders'
equity over the sum of goodwill (net of amortization) and investments in joint
ventures, not counting our expenses incurred in connection with the merger.
WHAT ARE THE U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER TO ME?
In general, upon conversion of your Tremont shares into cash pursuant to
the merger, you will recognize gain or loss for U.S. federal income tax purposes
equal to the difference between the amount of cash received and your adjusted
tax basis in your Tremont shares. Provided you hold your Tremont common stock as
a capital asset, that gain or loss will generally be capital gain or loss.
WHAT VOTE OF STOCKHOLDERS IS REQUIRED TO CONSUMMATE THE MERGER?
A majority of the votes cast at the meeting of the holders of shares of
our Class A common stock and our Class B common stock outstanding on the record
date, voting together as a single class, must be cast FOR the adoption of the
merger agreement in order for the merger to be consummated. Each share of our
Class A common stock is entitled to four votes. Each share of our Class B common
stock is entitled to one vote.
Shares of Tremont common stock representing approximately 37% of the
voting power of Tremont have been committed to be voted in favor of adopting the
merger agreement.
WHAT IS THE RECOMMENDATION OF THE BOARD OF DIRECTORS?
Our board of directors has determined that the merger agreement, the
merger and the other transactions contemplated by the merger agreement are
advisable, fair to you, and in your best interests, and recommends that you vote
FOR the adoption of the merger agreement. In making these recommendations our
board of directors took into account the opinion of our financial advisor,
Putnam Lovell Securities, Inc., stating that, as of July 10, 2001, and based
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upon and subject to the factors and assumptions set forth in their opinion, the
cash consideration to be received by you is fair to you from a financial point
of view.
WHAT REGULATORY APPROVALS AND FILINGS AND THIRD-PARTY CONSENTS ARE NEEDED TO
COMPLETE THE MERGER?
Before we can complete the merger contemplated by the merger agreement,
the parties will be required to:
- - await the expiration of the waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976;
- - obtain the consent of NASD Regulation, Inc., a subsidiary of the National
Association of Securities Dealers, Inc., to the change in control of our
U.S. broker-dealer subsidiary;
- - obtain the consent of certain state regulators to the change in control
of our U.S. broker-dealer subsidiary;
- - notify certain state regulators of the change in control of our U.S.
broker-dealer subsidiary;
- - obtain the consent of the Ontario Securities Commission to the change in
control of our Canadian subsidiary;
- - obtain the consent of the U.K. Securities and Futures Authority to the
change in control of our U.K. subsidiary; and
- - obtain consents in accordance with the merger agreement from investment
advisory clients.
WHEN DO YOU EXPECT THE TRANSACTIONS TO BE COMPLETED?
We believe that the requisite regulatory and third-party consent and
notice requirements and closing conditions can be satisfied or obtained on or
before September 25, 2001 and, assuming the merger is approved by Tremont's
stockholders and the other closing conditions are satisfied or waived, that the
merger will be consummated promptly thereafter, although Oppenheimer has the
ability to postpone consummation of the transaction to October 1, 2001 in the
event that we satisfy these conditions prior to October 1, 2001. However, we
cannot assure you that such requirements will be satisfied (or waived where
permitted by applicable law) or, if satisfied or waived, the date by which they
will be satisfied or waived.
WHEN AND WHERE IS THE SPECIAL MEETING?
The special meeting will take place at our offices at 555 Theodore Fremd
Avenue, Rye, New York 10580, on September 25, 2001, at 11:00 a.m., local time.
WHAT DO I NEED TO DO NOW?
You should complete, date and sign your proxy card and mail it in the
enclosed return envelope as soon as possible so that your shares of Tremont
stock may be represented at the special meeting, even if you plan to attend the
special meeting in person. Unless contrary instructions are indicated on your
proxy, all of your Tremont shares represented by valid proxies will be voted
FOR the adoption of the merger agreement.
Please do not send us any of your stock certificates at this time. If the
merger is completed, we will send you written instructions for exchanging your
stock certificates for the merger consideration.
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WHO CAN HELP ANSWER MY QUESTIONS?
If you would like additional copies of this proxy statement or if you have
questions about the merger agreement, the merger or the other transactions
contemplated by the merger agreement, including how to complete and return your
proxy card, or you would like more information about Tremont, you should call
James McCormick, our proxy solicitor, or Stephen Clayton in our investor
relations department, at (914) 925-1140.
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SUMMARY
This summary, together with the preceding Questions and Answers About the
Merger section, highlights selected information in this proxy statement and does
not contain all of the information that is important to you. You should
carefully read the entire proxy statement to fully understand the merger
agreement. The merger agreement is attached as Appendix A to this proxy
statement. We encourage you to read the merger agreement, as it is the legal
document that governs the merger.
THE PARTIES
Oppenheimer Acquisition Corp.
- - Oppenheimer is incorporated under the laws of the State of Delaware. Its
executive offices are located at Two World Trade Center, New York, New
York 10048. Its telephone number is (212) 323-0200.
- - Oppenheimer is a holding company and an indirect majority-owned subsidiary
of Massachusetts Mutual Life Insurance Company, a Massachusetts domiciled
mutual life insurance company. Oppenheimer is the parent of
OppenheimerFunds, Inc., a leading mutual fund manager.
Tremont Advisers, Inc.
- - We are incorporated under the laws of the State of Delaware. Our executive
offices are located at 555 Theodore Fremd Avenue, Rye, New York 10580.
Our telephone number is (914) 925-1140.
- - Tremont is a holding company with three principal areas of business:
developing and managing proprietary investment funds, providing investment
advisory services and retrieving and selling information. All of
Tremont's activities are conducted by its subsidiaries.
- - Tremont's Class A common stock is quoted on the OTC Bulletin Board under
the symbol "TMAVA", and our Class B common stock has traded on the NASDAQ
SmallCap Market since February 2, 2000 under the symbol "TMAV."
Joshua Acquisition Corp.
- - Joshua Acquisition Corp. was formed as a Delaware corporation on June 28,
2001 by Oppenheimer for the purpose of entering into the merger agreement.
Joshua Acquisition Corp. has not engaged in any business activity other
than in connection with the merger and the related transactions.
THE SPECIAL MEETING OF STOCKHOLDERS
Date, Time and Place and Matters to be Considered (page 10)
The special meeting will be held on September 25, 2001, at 11:00 a.m.,
local time, at our offices at 555 Theodore Fremd Avenue, Rye, New York 10580. At
the special meeting, you will be asked to consider and vote upon a proposal to
adopt the merger agreement, a copy of which is attached hereto as Appendix A.
Record Date for Voting (page 11)
The close of business on August 6, 2001 is the record date for determining
holders of shares of our common stock entitled to vote at the special meeting.
Each share of Class A common stock will be entitled to four votes, and each
share of Class B common stock will be entitled to one vote. On the record date,
there were [xxx] shares of Class A common stock and [xxx] shares of Class B
common stock entitled to vote at the special meeting.
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Vote Required (page 11)
A majority of the votes cast at the meeting of the holders of shares of our
Class A common stock and our Class B common stock outstanding on the record
date, voting together as a single class, must be cast FOR the adoption of the
merger agreement in order for the merger to be consummated. Each share of our
Class A common stock is entitled to four votes. Each share of our Class B
common stock is entitled to one vote.
Shares of Tremont common stock representing approximately 37% of the
voting power of Tremont have been committed to be voted FOR the adoption of the
merger agreement.
The Procedures Relating to Your Vote at the Meeting; Appraisal Rights (pages
11-12)
- - You should complete, date and sign your proxy card and mail it in the
enclosed return envelope as soon as possible so that your shares may be
represented at the special meeting, even if you plan to attend the
meeting in person. Unless contrary instructions are indicated on your
proxy, all of your shares represented by valid proxies will be voted FOR
the adoption of the merger agreement.
- - For those participants who hold shares in the Tremont Advisers, Inc.
Savings Plan, the shares held in your account will be voted by the plan's
trustees in accordance with the terms of the plan.
- - If your shares are held in "street name" by your broker, your broker will
vote your shares only if you provide instructions on how to vote. You
should follow the procedures provided by your broker regarding the voting
of your shares.
- - You are entitled to exercise appraisal rights in connection with the
merger. If you elect to exercise appraisal rights, you must deliver to us,
before the stockholder vote to adopt the merger agreement is taken,
written notice of your intent to demand appraisal of your shares if the
merger is completed, and you must not vote to adopt the merger agreement.
Neither a failure to vote on the merger agreement, nor an abstention
from voting on the merger agreement, will be construed as a vote to adopt
the merger agreement. However, if you return your signed proxy left blank,
your vote will be counted in favor of the merger agreement, and you will
waive your appraisal rights.
- - A majority of the votes cast at the meeting of the holders of shares of
our Class A common stock and our Class B common stock outstanding on the
record date, voting together as a single class, must be cast FOR the
adoption of the merger agreement in order for the merger to be
consummated. Each share of our Class A common stock is entitled to four
votes. Each share of our Class B common stock is entitled to one vote. If
you do not send in your proxy or do not instruct your broker to vote your
shares or if you abstain from voting, it will have the same effect as a
vote against the adoption of merger agreement.
You can revoke your proxy and change your vote in any of the following ways:
- - Deliver to our Secretary at our executive offices, 555 Theodore Fremd
Avenue, Rye, New York, 10580, on or before the business day prior to the
special meeting, a later-dated, signed proxy card or a written
revocation.
- - Deliver a later-dated, signed proxy card or a written revocation to us at
the special meeting.
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- - Attend the special meeting and vote in person. Your attendance at the
meeting will not, by itself, revoke your proxy.
- - If you have instructed a broker to vote your shares, you must follow the
directions received from your broker to change those instructions.
Please do not send us any of your stock certificates at this time. If the
merger is completed, we will send you written instructions for exchanging your
stock certificates for the merger consideration.
THE MERGER AND THE MERGER AGREEMENT
What You Will Receive in the Merger
You will receive $19.00 per share in cash in exchange for each share of our
common stock that you own, subject to possible upward or downward adjustment.
The $19.00 per share represents a significant premium over the market price for
our shares prevailing before there was public speculation that we were pursuing
a potential transaction.
Background of the Merger (pages 13-17)
For a description of the events leading to the approval of the merger
agreement by the board of directors and the reasons for such approval, you
should refer to "Special Factors -- Background of the Merger" and "--
Recommendations of our Board of Directors; Reasons for the Merger".
Purpose of the Merger; Certain Effects of the Merger (pages 17-18)
- - The principal purpose of the merger is to enable Oppenheimer to own all of
the equity interests in Tremont and provide you the opportunity to
receive a cash price for your shares at a significant premium over the
market prices at which the common stock traded before there was public
speculation that we were pursuing a potential transaction.
- - The merger will terminate all equity interests in Tremont held by public
stockholders, and Oppenheimer will be the sole beneficiary of any
earnings and growth of our company following the merger, except inasmuch
as certain of our employees will participate in the bonus plan and the
retention plan described on pages 26 - 29.
- - Upon completion of the merger, our Class A common stock will be delisted
from the OTC Bulletin Board and our Class B common stock will be delisted
from the NASDAQ SmallCap Market. Both classes of common stock will no
longer be publicly traded.
Recommendations of the Board; Reasons for the Merger (pages 18-19)
Tremont's board of directors has determined that the merger agreement and
the merger are advisable and are fair to you and in your and our best interests
and recommends that you vote "FOR" the adoption of the merger agreement. In
making this determination, the board of directors took into account, among
other things, the opinion of our financial advisor, Putnam Lovell Securities,
Inc., to the effect that, as of the date of the merger agreement and based upon
and subject to the factors and assumptions explained to the board of directors
and set forth in the opinion, the cash consideration to be received by you in
the merger is fair from a financial point of view.
Merger Financing; Source of Funds (page 30)
Oppenheimer has informed us that the aggregate merger consideration of
approximately $145.3 million to be paid to our stock holders (assuming that no
stockholders perfect their appraisal rights under Delaware law) and
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holders of options to purchase our shares will be financed through cash on hand
and, if needed, capital contributions from its ultimate parent, Mass Mutual.
Conditions to the Merger (page 47 - 48)
The completion of the transactions contemplated by the merger agreement
(also referred to as the closing) depends on the satisfaction of a number of
customary conditions, including the accuracy of representations and warranties,
compliance with pre-closing covenants, the absence of injunctions or
similar legal impediments that prevent the closing, compliance with certain
regulatory requirements and receipt of necessary government and regulatory
approvals and consents. Particularly noteworthy conditions to the obligations
of all parties to complete the merger include:
- - the expiration or termination of the waiting period under the
Hart-Scott-Rodino Act;
- - approval by NASD Regulation, Inc., the Ontario Securities Commission and
the U.K. Securities and Futures Authority; and
- - approval by our stockholders.
In addition, the obligation of Oppenheimer to complete the merger is subject to
certain additional conditions, including the following:
- - Our annualized investment management fees (also referred to as the revenue
run- rate), calculated as of the most recent calendar month-end not less
than fifteen (15) business days prior to the closing, not having declined
to less than $16,667,627.05, which is 85% of our revenue run-rate as of
May 31, 2001; and
- - the employment agreements with OppenheimerFunds, Inc., a subsidiary of
Oppenheimer, entered into by Sandra Manzke and Robert Schulman, our Co-
CEO's, simultaneously with the merger agreement (but effective as of the
closing), being in full force and effect.
The obligation of Oppenheimer to complete the merger is not subject to a
financing condition or any additional corporate proceedings by Oppenheimer, such
as the approval of its stockholders.
Termination of the Merger Agreement (pages 48 - 49)
The merger agreement may be terminated, whether before or after receipt of
stockholder approvals, by consent of the parties and for certain failures of
representations, warranties or covenants. It may also be terminated:
- - by us or Oppenheimer if the transactions contemplated by the merger
agreement have not been consummated by December 31, 2001;
- - by us or Oppenheimer if any law or regulation is enacted or promulgated
that materially restricts the merger or makes the merger illegal or
otherwise prohibited or if any judgment, injunction, order or decree
permanently restraining or enjoining the merger becomes final and non-
appealable;
- - by Oppenheimer if our board of directors fails to recommend the merger or
the merger agreement, fails to reconfirm its recommendation of the merger
or the merger agreement within three business days after a written request
from Oppenheimer to do so, withdraws or modifies its approval of the
merger and the merger agreement or changes its approval of the merger and
the merger agreement in a manner adverse to Oppenheimer, fails to call a
meeting of our stockholders for the
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purpose of approving the merger and the merger agreement, recommends that
we enter into a competing transaction with someone else, or if our
stockholders do not approve the merger and the merger agreement before
December 31, 2001 or if a tender offer or exchange offer for 15% or more of
our common stock is commenced and our board of directors does not
recommend against acceptance of such a tender offer or exchange offer
within the time period required by the federal proxy rules;
- - by Oppenheimer if it has become impossible for Sandra Manzke or Robert
Schulman to be employed by Oppenheimer after the closing; or
- - by us, if we decide to enter an agreement involving a competing
acquisition transaction after our board of directors determines in good
faith that the competing acquisition transaction is better for our
stockholders than the merger.
Termination Fee Payable to Oppenheimer (page 49)
We will be required to pay Oppenheimer a termination fee of $5.8 million if
either:
- - the merger agreement is terminated by us in connection with a decision by
our board of directors to enter into an agreement involving a competing
acquisition proposal;
- - the merger agreement is terminated by Oppenheimer following the withdrawal
or adverse modification by our board of directors of its approval or
recommendation of the merger to our stockholders or the failure of our
stockholders to approve the merger and the merger agreement by December
31, 2001;
- - within 18 months after we terminate the merger agreement because the
merger has not taken place by December 31, 2001, we enter into a binding
agreement for a transaction implementing another acquisition proposal or
consummates an acquisition proposal; or
- - the merger agreement is terminated by Oppenheimer because the employment
agreements between Oppenheimer and Sandra Manzke and Robert Schulman are
not in full force and effect.
CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES (PAGES 30-31)
The exchange of Tremont common stock for cash in the merger will be a taxable
transaction for U.S. federal income tax purposes, and accordingly you will
recognize gain or loss equal to the difference between the cash received and
your tax basis in the Tremont common stock exchanged in the merger. You must
generally calculate gain or loss separately for each block of Tremont common
stock that is exchanged in the merger. Provided you hold your Tremont common
stock as a capital asset, this gain or loss will be capital gain or loss, which
will be long-term capital gain or loss if your Tremont common stock has been
held for more than one year at the time of the merger.
You are urged to consult with your tax advisor with respect to the particular
U.S. federal, state, local or foreign income tax or other tax consequences of
the merger to you.
OPINION OF OUR FINANCIAL ADVISOR (PAGES 19- 25)
Putnam Lovell Securities, Inc. delivered an opinion on July 10, 2001 to our
board of directors that, as of that date and based upon and subject to the
factors and assumptions set forth in the opinion and reviewed with our board of
directors, the consideration to be received by you
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in the transactions contemplated by the merger agreement is fair from a
financial point of view to you. The opinion of Putnam Lovell is dated July 10,
2001, and opines as to the fairness as of that date only. Putnam Lovell is not
obligated to update its opinion. Events could occur prior to the date of the
special meeting which could result in a different valuation or conclusion if the
opinion was reissued on that date. In the event that there are material changes
to the terms of the proposed transactions or other material changes or
conditions affecting Tremont or its business, our board of directors will
consider the advisability of requesting an updated fairness opinion at that
time. As of the date of this proxy statement, our board of directors does not
believe any such material changes have occurred.
Putnam Lovell will receive $1.9 million in exchange for its services if the
merger is completed. The full text of the written opinion of Putnam Lovell,
which sets forth a description of assumptions made, matters considered and
limitations on its review, is attached as Appendix B to this proxy statement.
You are urged to read this opinion carefully in its entirety.
STOCKHOLDERS AGREEMENT (PAGES 33-35)
Ten persons holding shares of our common stock have entered into a stockholders
agreement with Oppenheimer pursuant to which they have agreed to vote FOR the
adoption of the merger agreement. Nine of these persons are directors and/or
officers of Tremont and one is a significant stockholder that is represented on
our board of directors. The stockholders agreement also provides that if the
merger agreement is terminated under certain circumstances, Oppenheimer may
purchase shares of our Class A common stock and Class B common stock held by
these ten stockholders at a purchase price per share equal to the merger
consideration. These stockholders hold shares of our Class A common stock and
Class B common stock representing approximately 37% of the votes entitled to be
cast at the special meeting on the proposal to adopt the merger agreement.
INTERESTS OF CERTAIN PERSONS IN THE MERGER (PAGES 25-30)
In considering the recommendation of our board of directors with respect to the
merger, you should be aware that several of our executive officers and members
of the board of directors have interests in the transactions contemplated by the
merger agreement that are different from, or in addition to, the interests of
our stockholders generally.
Our board of directors was aware of these interests and considered them, among
other matters, in making its recommendation.
ADDITIONAL INFORMATION
If you have additional questions about the merger or would like additional
copies of the proxy statement, you should call James McCormick, our proxy
solicitor, or Stephen Clayton in our investor relations department, at (914)
925-1140.
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PARTIES TO THE MERGER
The transactions contemplated by the merger agreement are complex and
involve multiple parties. In order to facilitate your understanding of the
transactions, the following is a list of parties to the transaction.
Tremont Advisers, Inc. We were incorporated under the laws of the State of
Delaware. Our certificate of incorporation was filed with the Secretary of State
of the State of Delaware on September 28, 1987 under the name Lynch Asset
Management Corporation, and was amended to reflect a change in name to Tremont
Advisers, Inc., on October 8, 1991. Our executive offices are located at 555
Theodore Fremd Avenue, Rye, New York 10580. Our telephone number is (914)
925-1140.
Tremont is a holding company with three principal areas of business:
developing and managing proprietary investment funds, providing investment
advisory services and retrieving and selling information. All of Tremont's
activities are conducted by its subsidiaries.
Oppenheimer Acquisition Corp. Oppenheimer is incorporated under the laws
of the State of Delaware. Its executive offices are located at Two World Trade
Center, New York, New York 10048. Its telephone number is (212) 323-0200.
Oppenheimer is a holding company that directly owns OppenheimerFunds,
Inc., a leading mutual fund manager. Oppenheimer is also an indirect
majority-owned subsidiary of Massachusetts Mutual Life Insurance Company, a
Massachusetts domiciled mutual life insurance company, which with its
subsidiaries offers a broad portfolio of asset management and insurance products
and services, including life insurance, annuities, retirement services products,
long term care products and other investment products.
Joshua Acquisition Corp. Joshua Acquisition Corp. was formed as a Delaware
corporation on June 28, 2001 by Oppenheimer Acquisition Corp. for the purpose of
entering into the merger agreement. Joshua Acquisition Corp. has not engaged in
any business activity other than in connection with the merger and the related
transactions.
SPECIAL MEETING OF STOCKHOLDERS
DATE, TIME AND PLACE OF THE SPECIAL MEETING
This proxy statement is furnished to you in connection with the
solicitation of proxies by our board of directors for the meeting of
stockholders to be held at 11:00 a.m., local time, on September 25, 2001, at our
offices at 555 Theodore Fremd Avenue, Rye New York 10580 or any postponement or
adjournment of the meeting. This proxy statement, the Notice of Special Meeting
and the accompanying form of proxy card are first being mailed to stockholders
on or about August __, 2001.
PURPOSE OF THE SPECIAL MEETING
At the special meeting, you will be asked to consider and vote upon a
proposal to adopt the merger agreement.
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RECOMMENDATION OF OUR BOARD OF DIRECTORS
Our board of directors has unanimously approved the merger and the merger
agreement and recommends that you vote FOR the adoption of the merger agreement.
See "Special Factors -- Recommendation of our Board of Directors; Reasons for
the Merger".
RECORD DATE; QUORUM; OUTSTANDING COMMON STOCK ENTITLED TO VOTE
All record holders of shares of our common stock at the close of business
on August 6, 2001 are entitled to notice of, and to vote at, the special
meeting. The presence, in person or by proxy, of holders of shares of Tremont
common stock representing a majority of the voting power of Tremont is required
to constitute a quorum for the transaction of business. A list of record holders
will be available for examination at our principal executive offices from August
6, 2001 until the special meeting. At the close of business on August 6, 2001,
there were [xxx] shares of Class A common stock and [xxx] shares of Class B
common stock outstanding.
VOTING RIGHTS
You are entitled to four votes for each share of our Class A common stock
and one vote for each share of our Class B common stock that you hold as of the
close of business on the record date. A majority of the votes cast at the
meeting of the holders of shares of our Class A common stock and our Class B
common stock outstanding on the record date, voting together as a single class,
must be cast FOR the adoption of the merger agreement in order for the merger to
be consummated. In determining whether the adoption of the merger agreement has
received the requisite number of affirmative votes, abstentions and broker
non-votes will have the same effect as a vote AGAINST the adoption of the merger
agreement. "Broker non-votes" are votes entitled to be cast by the beneficial
owners of shares of our Class A common stock or Class B common stock that are
held in street name by brokers who do not receive instructions from the
beneficial owners of those shares as to how those shares are to be voted.
VOTING AND REVOCATION OF PROXIES
A form of proxy card for your use at the special meeting accompanies this
proxy statement. Subject to the following sentence, all properly executed
proxies that are received prior to or at the special meeting and not revoked
will be voted at the special meeting in the manner specified. If you execute and
return a proxy and do not specify otherwise, the shares represented by your
proxy will be voted FOR the adoption of the merger agreement in accordance with
the recommendation of the board of directors. In that event, you will not have
the right to dissent from the merger and seek an appraisal of the fair value of
your shares.
If you have given a proxy pursuant to this solicitation, you may
nonetheless revoke it by attending the special meeting and voting in person. In
addition, you may revoke any proxy you give at any time before the special
meeting by delivering to our Secretary at our executive offices, on or before
the business day prior to the special meeting, or at the special meeting
itself, a written statement revoking it or a duly executed proxy bearing a later
date. If you hold shares in the Tremont Advisers, Inc. Savings Plan, the shares
held in your account will be voted by the plan's trustees in accordance with the
terms of the plan. If you have executed and delivered a proxy to us, your
attendance at the special meeting will not in and of itself constitute a
revocation of your proxy. If you vote in favor of adopting the merger agree-
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ment, you will not have the right to dissent and seek appraisal of the fair
value of your shares. If you do not send in your proxy or do not instruct your
broker to vote your shares or if you abstain from voting, it will have the same
effect as a vote against adoption of the merger agreement.
SOLICITATION OF PROXIES
We will bear the cost of the solicitation of proxies. We will solicit
proxies initially by mail. Further solicitation may be made by our directors,
officers and employees personally, by telephone or otherwise, but they will not
be specifically compensated for these services. Upon request, we will reimburse
brokers, dealers, banks or similar entities acting as nominees for their
reasonable expenses incurred in forwarding copies of the proxy materials to the
beneficial owners of the shares of common stock they hold of record.
OTHER MATTERS
Except for the vote on the adoption of the merger agreement and upon
appropriate motion, an adjournment of the special meeting, no other matters may
come before the special meeting.
Your vote is important. Please vote by returning your marked proxy card so
your shares can be represented at the meeting, even if you plan to attend the
meeting in person.
You should not send any certificates representing common stock with your
proxy card. If we complete the merger, the procedure for the surrender of
certificates representing common stock will be as described below.
PAYMENT OF CASH MERGER CONSIDERATION
The merger will become effective at the time and on the date specified in
the certificate of merger to be filed with the Secretary of State of the State
of Delaware. We expect such filing and effective time of the merger to occur as
soon as practicable after the special meeting, subject to adoption of the merger
agreement and the satisfaction or waiver of the other conditions to completing
the transactions provided in the merger agreement, although Oppenheimer has the
ability to postpone such filing and effective time of the merger to October 1,
2001 in the event that we successfully satisfy these conditions prior to
October 1, 2001.
We currently expect to complete the merger, which is subject to obtaining
requisite approvals and to other conditions, during the fourth quarter of 2001,
although there can be no assurance of the date by which the merger will be
completed. See "The Merger Agreement--Conditions to the Merger". Detailed
instructions with respect to the surrender of your stock certificates, together
with a letter of transmittal, will be forwarded to you by the paying agent
appointed by Oppenheimer and approved by us, promptly following the effective
time of the merger. You should not submit your stock certificates to the paying
agent until you receive these materials. The paying agent will send payment of
the merger consideration to you as promptly as practicable following
determination of the merger consideration and receipt by the paying agent of
your certificates and other required documents. No interest will be paid on the
merger consideration.
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You should not send in your stock certificates until you receive a letter
of transmittal. You should send them only pursuant to instructions set forth in
the letter of transmittal.
We strongly recommend that stock certificates and letters of transmittal
be transmitted only by registered U.S. mail, return receipt requested,
appropriately insured for the risk of loss. Title to the certificates will pass
only upon delivery of the certificates to the paying agent. Stockholders whose
certificates are lost will be required to make an affidavit identifying such
certificate or certificates as lost, stolen or destroyed and, if required by us,
to post a bond in such amount as we may reasonably require to indemnify against
any claim that may be made against us with respect to such certificate.
SPECIAL FACTORS
BACKGROUND OF THE MERGER
In December of 2000, Tremont's senior management received an unsolicited
expression of interest from representatives of a European asset management
company regarding a possible strategic transaction and signed a confidentiality
agreement with that company on December 13, 2000. Ms. Manzke and Mr. Schulman
met with those representatives in New York in December 2000 and January 2001 and
discussed with them the compatibility of Tremont's growth strategy with a
European partner who could provide Tremont with increased access to the European
market and potential additional distribution capabilities in the United States.
As a result of these meetings, Ms. Manzke and Mr. Schulman concluded that this
European asset management company was a candidate for further discussions
regarding a strategic transaction and decided to maintain communications with
them.
After the January 2001 meetings, Mr. Schulman contacted Putnam Lovell
Securities, Inc. to discuss the possibility of engaging it as a financial
advisor to Tremont in evaluating its strategic alternatives. Putnam Lovell was
retained by Tremont on January 29, 2001, and the unsolicited indication of
interest received from the European asset management company was described to
representatives of Putnam Lovell.
During the first quarter of 2001, Mr. Schulman and Ms. Manzke had numerous
discussions with representatives of Putnam Lovell concerning the strategic
alternatives open to Tremont in pursuit of its growth strategy and objectives,
including the relative merits of remaining independent and of various types of
potential transactions with various counterparties. They discussed the
consolidation trends in the asset management industry generally, and in the
alternative asset management industry particularly. Based upon those discussions
with Tremont's senior management and on information provided by Tremont, Putnam
Lovell conducted a preliminary valuation of Tremont to provide management with a
reasonable fair value range which the market might assign Tremont. Tremont and
Putnam Lovell assembled a package of information on Tremont in early March
2001. The information compiled included, among other items, a description of
Tremont's various business lines, an overview of its investments and
distribution platform, its strategic relationships, its distribution needs and
its financial projections.
On March 9, 2001, Tremont senior management met with their counterparts at
the European asset management company. This meeting marked the beginning of the
due diligence investigation of Tremont's business by the European asset
management company. The previously compiled information
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on Tremont was presented to the European firm and management on both sides
presented an overview of their respective businesses.
At approximately the same time, in early March, Oppenheimer expressed to
Putnam Lovell an interest in exploring a strategic transaction with Tremont.
Oppenheimer had been actively evaluating the alternative asset management
industry and had discussed Tremont with representatives of Putnam Lovell in the
fourth quarter of 2000. Pursuant to senior executive-level telephonic
conversations between Oppenheimer and Tremont regarding the potential benefits
of a transaction, the two sides entered into a confidentiality agreement on
March 14, 2001. Subsequent to the signing of the confidentiality agreement, the
previously compiled information package on Tremont was made available to
Oppenheimer and an initial meeting between senior management on both sides was
arranged for later that week. Based on the degree of interest shown by both the
European asset management firm and Oppenheimer, the strong strategic benefit
that either would bring to expanding distribution of Tremont's investment
products, their experience in completing acquisitions of investment management
firms and the risk of business disruption that might result from a public
auction process, it was decided to continue discussions with the two interested
parties and not put Tremont "in play" with a public announcement.
Following these initial management presentation meetings with the European
asset management firm and Oppenheimer, several meetings and telephone calls were
arranged at various dates in March and April between senior Tremont personnel,
the two interested parties and Putnam Lovell. The principal objective of these
meetings and telephone calls was to clarify various aspects of Tremont's
business operations, the various assumptions underlying Tremont's financial
projections, the strategic fit between the businesses of Tremont and the
potential buyer and their vision for the management and growth of Tremont's
business should a strategic transaction be consummated between them. Also
discussed were possible terms of any proposal to acquire Tremont and the
appropriateness of various methods of valuing Tremont's business.
Representatives of Putnam Lovell were present for and participated in the
majority these meetings.
As part of the ongoing discussions with respect to a potential strategic
fit, on March 29 and 30, 2001, Mr. Schulman, Ms. Manzke and Nicola Meaden, who
is a director as well as the CEO of Tremont's European subsidiary, at the
invitation of the European asset management company, traveled to Europe and held
meetings with certain of their management personnel.
On April 9, 2001, a written non-binding preliminary indication of interest
in effecting a transaction with Tremont was received from the European asset
management company, proposing a value of $16 per share of Tremont common stock.
It also proposed an incentive plan for management and key employees to take
effect after closing, providing for a share of the profits in excess of certain
agreed upon hurdles with regard to return on invested capital.
During the weeks of April 23, 2001 and April 30, 2001 a series of meetings
was arranged between representatives of the European asset management company
and Tremont personnel from various business function areas such as sales and
marketing, accounting and administration and manager research. Simultaneously,
the European firm was provided access to a "data room" which housed an extensive
list of Tremont due diligence material including legal contracts, corporate
documents, regulatory filings, audited and unaudited financial statements, and
tax returns.
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During the same period, on April 27, 2001, Oppenheimer submitted to
Tremont, in writing, a non-binding preliminary indication of interest for the
purchase of all of the outstanding common stock of Tremont. Oppenheimer's
proposal indicated that it valued Tremont's business at between $100 million and
$140 million, which implied a per share price of $13.40 to $18.30. The other
material term of its initial proposal was the establishment of a retention pool
to be paid to senior management if certain financial targets were achieved
during the three to five year period after closing in an amount equal to up to
10% of the purchase price.
During the two weeks ended May 25, 2001, Oppenheimer also scheduled
various meetings with Tremont personnel and conducted due diligence in Tremont's
data room. As with the European asset management company, the meetings focused
on various business function areas, such as sales and marketing, accounting and
administration and manager research.
Following the formal due diligence meetings, through late May and
continuing into early June, Tremont's senior management and representatives of
Putnam Lovell continued to work with each of the prospective buyers in assisting
them with their due diligence investigation of Tremont's business.
In the same period, during the week of May 21, 2001, Putnam Lovell and
Skadden, Arps, Slate, Meagher & Flom LLP, Tremont's legal counsel, drafted and
issued a "protocol letter" and a draft merger agreement to the European asset
management company and Oppenheimer inviting them to submit their final bids for
the acquisition of Tremont and to also submit a mark-up of the merger agreement.
On June 4, 2001, the European asset management company submitted a revised
bid to acquire all of the outstanding common stock of Tremont for $17 per share.
The revised bid included a more detailed proposal of a near-term and a long-term
incentive plan for key employees. It also proposed that long-term employment
contracts be signed by certain key employees, including non-competition and
non-solicitation covenants, prior to the signing of definitive acquisition
agreement. The revised bid also proposed a number of closing conditions,
including a 90% revenue run-rate test, other customary conditions and certain
regulatory consents and approvals, including the approval of regulators in its
home jurisdiction.
The revised bid also contemplated an upward adjustment in the event
Tremont was able to sell certain of its business lines for a price in excess of
the value the asset management company attributed to it in calculating its
revised bid. It also contemplated a termination fee of $5 million if Tremont's
board of directors were to withdraw its recommendation of the transaction,
solicit or entertain offers for an alternative transaction or fail to call a
stockholders' meeting for the purpose of approving the transaction.
On June 8, 2001 Oppenheimer submitted a revised bid to acquire all of the
outstanding common stock of Tremont for $18.25 per share. The other material
terms of Oppenheimer's revised bid included a termination fee of 4% of the
aggregate acquisition consideration and an adjustment to the purchase price
based on Tremont's working capital at closing. It also proposed a bonus pool for
certain key employees based on a percentage of Tremont's operating income and
the aforementioned retention pool payable to senior management if financial
targets were met over the five year period following the closing, with a minimum
cumulative payment of $3 million in the first two years and a maximum over five
years of up to 10% of the aggregate acquisition consideration. The revised bid
contemplated the signing of a stockholders' agreement by certain stockholders
in support of the transaction and the execution of long-term
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employment contracts, containing non-competition and non-solicitation
provisions, by Ms. Manzke and Mr. Schulman as a condition to Oppenheimer's
willingness to proceed with the transaction.
On June 12, 2001, at a meeting of the board of directors, senior
management informed the board of directors of the status of the negotiations
involving the acquisition of Tremont's common stock. Representatives from Putnam
Lovell, who had been invited to the meeting to report to the board of directors
on the bids received from the European asset management company and Oppenheimer
and provide their assessment of the two proposals, then outlined a comparison of
the essential terms of each bid. They confirmed that the pricing proposals fell
within an appropriate range, and, in referring to the Oppenheimer, in
particular, said that, based upon recent comparable transactions in the asset
management industry, the price proposed by Oppenheimer for the Tremont common
stock was competitive. They further informed the board of directors that both
bidders had been asked to submit mark-ups of draft acquisition agreements
setting forth the basic terms and conditions of their respective offers in an
effort to allow Tremont to more fully assess the substance of each proposal.
Putnam Lovell also indicated that the European potential buyer had expressed
its unwillingness to do this unless and until it received a more definitive
indication of Tremont's desire to proceed with them on an exclusive basis. After
discussion, the board of directors concluded that neither proposal was yet fully
developed sufficiently for the board to determine which proposal was more
desirable or to conclude that either proposal should be accepted. The board
therefore directed Putnam Lovell to pursue possible improvement in the
proposals, and scheduled a further meeting on or about June 28, 2001.
On June 15 Oppenheimer's legal counsel presented an initial draft of a
merger agreement to assist Tremont in evaluating its revised bid. The draft
provided Tremont with an indication of the types of closing conditions
Oppenheimer would expect to obtain, the depth and extent of the representations,
warranties and covenants Oppenheimer would require and the termination rights it
would expect to have.
During the weeks of June 11 and June 18, senior management of Tremont and
representatives of Putnam Lovell had several telephone conversations with
representatives of the European asset management company to further discuss its
valuation of Tremont's business. The bidder was urged to present a draft
acquisition agreement to assist Tremont in evaluating the bid and to provide
more specificity as to the terms of the transaction it proposed to enter into,
but the bidder declined to do so.
During the weeks of June 11, June 18 and June 25, senior management of
Tremont and representatives of Putnam Lovell had several telephone
conversations with representatives of Oppenheimer to further discuss
Oppenheimer's valuation of Tremont's business. As a result of these
conversations, Oppenheimer revised its bid upwards to $19.00 per share.
Beginning in mid-June, numerous calls and meetings took place involving
senior management of Tremont and Oppenheimer, representatives of Putnam Lovell,
Skadden, Arps and legal counsel to Oppenheimer. During this period, Oppenheimer
completed its due diligence investigation of Tremont's business and during the
course of these negotiations, the specific terms of the merger agreement, the
employment agreements, the retention plan and bonus plan for employees and the
stockholders' agreement were discussed.
On June 27, the board of directors held a telephonic meeting, with Putnam
Lovell Securities and Skadden, Arps, to review the status of negotiations
regarding the Oppenheimer proposal. Putnam Lovell reviewed with the board of
directors a brief history of the process and negotiations leading up to the
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current proposal, and outlined the financial consideration proposed to be paid
by Oppenheimer. Putnam Lovell then proceeded to discuss in detail the process it
was undertaking in order to opine on the fairness of the merger consideration to
be paid by Oppenheimer. Among the analyses presented to the board of directors
were current trading values of a universe of comparable publicly traded firms,
valuations in precedent transactions and a discounted cash flow analysis. Putnam
Lovell gave its preliminary view that, based upon their review of several
factors, including but not restricted to the ones outlined above, they were of
the opinion that the merger consideration to be received by stockholders of
Tremont was fair to the Tremont's stockholders from a financial point of view.
Putnam Lovell indicated its intent to render a formal fairness opinion regarding
the transaction at the time the agreement was signed as to the terms of the
definitive merger agreement. The board of directors authorized senior management
and Tremont's counsel to attempt to conclude negotiations of the terms of the
transaction documents at which time it would consider approval of the
transaction presented.
On the morning of Monday, July 9, the board of directors of Tremont
convened a special telephonic meeting to consider the merger agreement, in
substantially final form, and the specific terms of the proposed transaction
with Oppenheimer. The directors reviewed materials that had been provided to
them earlier, including drafts of the merger agreement and the stockholders
agreement and other materials. After a discussion, the directors unanimously
approved the merger and the merger agreement and directed Tremont's management
to complete the transaction.
Early in the morning of July 10, 2001, Tremont and Oppenheimer finalized
the terms of the transaction and executed the merger agreement. At the same
time, Putnam Lovell delivered to Tremont its written opinion that the merger
consideration is fair to Tremont's stockholders from a financial point of view.
The parties issued press releases regarding the execution of the transaction
documents prior to the opening of business in New York on July 10, 2001.
PURPOSE OF THE MERGER; CERTAIN EFFECTS OF THE MERGER
The principal purpose of the merger is to enable Oppenheimer to own all of
the equity interest in Tremont and afford our public stockholders the
opportunity to receive a cash price for their shares that represents a
significant premium over the market price for our shares prevailing before there
was public speculation that we were pursuing a potential transaction, which
became evident following the publication of unauthorized press reports in
February 2001 that we were pursuing a potential transaction. This will be
accomplished by a merger of Joshua Acquisition Corp., a corporation formed and
wholly-owned by Oppenheimer, with and into Tremont, with Tremont as the
surviving corporation. In the merger, all of the shares of Joshua Acquisition
Corp. will be converted into shares of Tremont and all of the shares of Tremont
common stock held by our stockholders (other than Tremont, Oppenheimer and
Joshua Acquisition Corp. and other than dissenting stockholders who perfect
their appraisal rights) will be converted into the right to receive the cash
merger consideration of $19.00 per share, subject to possible upward or downward
adjustment.
The merger will terminate all equity interests in Tremont held by our
stockholders and Oppenheimer will be the sole beneficiary of any earnings and
growth of Tremont following the merger, except in as much as certain of our
employees will participate in the bonus plan and the retention plan described on
pages 26 through 29. Our common stock is currently registered under the
Securities Exchange Act of 1934 (the "Exchange Act"). Tremont's Class A common
stock is quoted on the OTC
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Bulletin Board under the symbol "TMAVA", and our Class B common stock has traded
on the NASDAQ SmallCap Market since February 2, 2000 under the symbol "TMAV."
RECOMMENDATION OF OUR BOARD OF DIRECTORS; REASONS FOR THE MERGER
Recommendation of our Board of Directors
Our board of directors believes that the merger and the terms of the
merger agreement are fair to and in the best interests of our stockholders.
Accordingly, our board of directors unanimously approved the merger agreement
and the merger and recommends adoption of the merger agreement.
Reasons for the Merger
In its determination to approve and recommend the adoption of the merger
agreement, and in reaching its determination that the merger agreement and the
merger are advisable and are fair to and in the best interest of our
stockholders, our board of directors considered the following factors:
- the fact that the merger consideration on a per share basis
represents a significant premium over market prices for our shares prevailing
before there was public speculation that we were pursuing a potential
transaction, including 58% premium over the thirty-day average closing price of
$12.02 per share preceding the unauthorized article appearing in MarHedge on
February 8, 2001 and a 27% premium over the thirty-day average closing price of
$14.93 per share preceding the unauthorized article appearing in Hedge Fund
Alert on April 25, 2001;
- our board of directors' view, based on its knowledge and beliefs of
the current and prospective environment in which we operate, regarding the
globalization of the securities markets, the increasing consolidation of
financial services companies resulting in large and well-capitalized
participants, and the advantages of becoming part of a large and
well-capitalized financial services company;
- the strategic options available to us and the assessment of our
board of directors that none of these options were reasonably likely to present
superior opportunities, or were reasonably likely to create greater value for
our stockholders, than the prospects presented by the merger with Oppenheimer;
- the written opinion of Putnam Lovell given to our board of directors
on July 10, 2001 that, as of that date and on the basis of and subject to the
matters reviewed with the board of directors, the merger consideration was fair
from a financial point of view to our stockholders;
- the terms of the merger and the merger agreement as negotiated,
including:
(1) the $19.00 per share cash merger consideration, subject to
possible adjustment;
(2) the absence of any run-rate adjustment;
(3) the ability to terminate the merger agreement under certain
circumstances (including, in the event that a superior
acquisition bid is proposed); and
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(4) the payment of a termination fee to Oppenheimer in the event
the transactions are not consummated under certain
circumstances.
- the likelihood of the merger being approved by requisite regulatory
authorities;
- the likelihood that other conditions contained in the merger
agreement would be satisfied; and
- the interests of certain directors and executive officers that are
different from, or in addition to, the interests of our stockholders generally
as described under "Special Factors-Interests of Certain Persons in the Merger".
The above discussion concerning the information and factors considered by
our board of directors is not intended to be exhaustive, but includes all of
the material factors considered by our board of directors in making its
determination. In view of the wide variety of factors considered in connection
with our evaluation of the merger and the merger agreement, our board of
directors did not find it practicable to, and did not, quantify or otherwise
attempt to assign relative weights to the foregoing factors. Rather, our board
of directors viewed its position and recommendation as being based on the
totality of the information presented to and considered by it.
OPINION OF OUR FINANCIAL ADVISOR
On January 29, 2001, Putnam Lovell was retained by Tremont to provide
financial advisory services in connection with a proposed merger transaction. In
connection with this engagement, Putnam Lovell was requested to evaluate the
fairness, from a financial point of view, of the merger consideration to be
received by the holders of shares of Tremont common stock pursuant to the merger
agreement. At a meeting of Tremont's board of directors held on July 9, 2001, to
consider the merger agreement, Putnam Lovell delivered to the board of directors
its oral opinion that, as of that date and based upon and subject to the matters
reviewed with the board of directors, the merger consideration to be received by
the holders of shares of Tremont common stock was fair from a financial point of
view to such holders.
Putnam Lovell reaffirmed this oral opinion through a written opinion
delivered on July 10, 2001, the date on which the merger agreement was signed.
The opinion opines as to the fairness as of that date only, and Putnam Lovell is
not obligated to update its opinion. Events could occur prior to the date of the
special meeting which could result in a different valuation or conclusion if the
opinion was reissued on that date. In the event that there are material changes
to the terms of the proposed transactions or other material changes or
conditions affecting Tremont or its business, our board of directors will
consider the advisability of requesting an updated fairness opinion at that
time. As of the date of this proxy statement, the board of directors does not
believe any such material changes have occurred.
THE FULL TEXT OF PUTNAM LOVELL'S WRITTEN OPINION DATED JULY 10, 2001,
WHICH SETS FORTH THE ASSUMPTIONS MADE, MATTERS CONSIDERED AND LIMITATIONS ON THE
REVIEW UNDERTAKEN, IS ATTACHED AS APPENDIX B TO THIS PROXY STATEMENT. YOU SHOULD
READ THE OPINION CAREFULLY IN ITS ENTIRETY. THE OPINION OF PUTNAM LOVELL IS
DIRECTED TO TREMONT'S BOARD OF DIRECTORS AND RELATES ONLY TO THE FAIRNESS OF
THE MERGER CONSIDERATION FROM A FINANCIAL POINT OF VIEW TO THE HOLDERS OF
TREMONT COMMON STOCK. THE OPINION DOES NOT ADDRESS ANY OTHER ASPECT OF THE
MERGER CONTEMPLATED BY THE MERGER AGREEMENT AND DOES NOT CONSTITUTE A
RECOMMENDATION TO ANY TREMONT STOCKHOLDER AS TO HOW SUCH
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STOCKHOLDER SHOULD VOTE WITH RESPECT TO THE TRANSACTION CONTEMPLATED BY THE
MERGER AGREEMENT. IN ADDITION, THE OPINION DOES NOT ADDRESS THE UNDERLYING
BUSINESS DECISION BY TREMONT'S BOARD OF DIRECTORS TO EFFECT THE MERGER
CONTEMPLATED BY THE MERGER AGREEMENT. THE SUMMARY OF THE OPINION OF PUTNAM
LOVELL SET FORTH IN THIS DOCUMENT IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
THE FULL TEXT OF THE OPINION.
In arriving at its opinion, Putnam Lovell, among other things:
- reviewed certain publicly available historical audited and unaudited
financial statements and other information regarding Tremont;
- reviewed the financial terms and conditions of the merger agreement;
\
- reviewed and discussed with management of Tremont certain
information of a business and financial nature furnished to Putnam
Lovell by Tremont including financial analyses and projections of
Tremont prepared by the management of Tremont;
- reviewed certain publicly available information concerning the
trading of, and the trading market for, Tremont common stock;
- compared the financial performance of Tremont with certain other
companies in the investment management industry that Putnam Lovell
deemed to be relevant;
- considered the financial terms of selected recent business
combinations of companies that Putnam Lovell deemed to be
comparable, in whole or in part, to the merger;
- made inquiries regarding and discussed the merger and the merger
agreement and other matters related thereto with Tremont's counsel;
and
- performed such other analyses and examinations as Putnam Lovell
deemed appropriate.
In preparing its opinion, Putnam Lovell assumed and relied, without
independent verification, upon the accuracy and completeness of the financial
and other information supplied or otherwise made available to it from public
sources or by Tremont and did not independently verify such information. Putnam
Lovell neither obtained nor performed any independent valuation or appraisal of
the assets or liabilities of Tremont. With respect to the financial projections
and forecasts of Tremont provided to Putnam Lovell by Tremont, Putnam Lovell
assumed that such financial projections and forecasts were reasonably prepared
and reflect the best currently available estimates and good faith judgments of
the senior management of Tremont as to the future competitive, operating and
regulatory environments and related financial performance of Tremont. Putnam
Lovell's opinion is necessarily based on economic, market and other conditions
as in effect on, and the information and agreements (or drafts thereof) made
available to it as of, July 10, 2001.
In connection with its opinion, Putnam Lovell performed various financial
analyses which it presented to and discussed with the board of directors of
Tremont at a meeting held on June 27, 2001. At the meeting of the board of
directors held on July 9, 2001, Putnam Lovell reviewed in summary form the
material presented to the board of directors on June 27 and re-affirmed its
conclusions in light of inter-
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vening market activity. The material analyses performed by Putnam Lovell in
connection with rendering it opinion are described below. These descriptions of
financial analyses include information presented in tabular format. In order to
fully understand the financial analyses performed by Putnam Lovell, the tables
must be read together with the text of each description. The tables alone do not
constitute a complete description of the financial analyses. Considering the
data in the tables without considering the full narrative description of the
financial analyses, including the methodologies and assumptions underlying the
analyses, could create a misleading or incomplete view of the financial analyses
performed by Putnam Lovell.
Among the analyses performed by Putnam Lovell were:
- the valuation of the Oppenheimer proposal, taking into account the
total purchase price, including the cost of retiring outstanding
stock options and enterprise value, accounting for the value of the
balance sheet and estimated working capital requirements, as
calculated by Putnam Lowell;
- An historical profile of Tremont revenue growth across various
business segments in 1999, 2000 and over the period from 1998 to
2000;
- An analysis of the significant contribution to Tremont's revenues
from a single relationship it has with an investment manager to its
proprietary investment products;
- Analysis of Tremont's weekly stock price and volume history for the
period beginning January 3, 1997 and ending July 6, 2001;
- Analysis of Tremont's daily stock price and volume history for the
period beginning July 10, 2000 and ending July 6, 2001;
- A relative volume analysis comparing Tremont's average daily volume
on an absolute basis and expressed as a percentage of primary shares
outstanding with figures for the four smallest asset managers by
market capitalization (Gabelli Asset Management, W.P. Stewart &
Company, Ltd, Affiliated Managers Group and John Nuveen Company);
- A comparative analysis of select Tremont financial data against a
group of publicly traded asset management firms;
- A discounted cash flow analysis of future after-tax operating cash
flows; and
- An analysis of comparable precedent transactions using publicly
available information and Putnam Lovell estimates.
Comparable Public Companies Analysis
Using publicly available information, Putnam Lovell analyzed selected
financial data for the Putnam Lovell Index of publicly-traded asset management
companies and compared the data with comparable data for Tremont. The Putnam
Lovell Index is a market cap weighted index comprised of the following
companies:
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- Federated Investors, Inc.
- Eaton Vance Corporation
- Neuberger Berman Inc.
- John Nuveen Company
- Gabelli Asset Management Inc.
- BlackRock, Inc.
- Affiliated Managers Group, Inc.
- AMVESCAP PLC
- Waddell & Reed Financial, Inc.
- Alliance Capital Management L.P.
- Franklin Resources, Inc.
- T. Rowe Price Associates, Inc.
- W. P. Stewart
- Stilwell Financial Inc.
- Tremont Advisers Inc.
Putnam Lovell compared the relative stock price performance of Tremont and
the Putnam Lovell Index for the period beginning January 3, 1997 and ending July
6, 2001, and for the period beginning July 10, 2000 and ending July 6, 2001.
Putnam Lovell also compared the price/earnings ratio of Tremont and the Putnam
Lovell Index for the period beginning January 3, 1997 and ending July 6, 2001.
In addition, using publicly available information, Putnam Lovell analyzed
selected financial data for each of five publicly traded asset managers that
Putnam Lovell considered comparable to Tremont (referred to here as the selected
companies), and compared the data with comparable data for Tremont. Given the
fact that Tremont's investment products are unique among the universe of
publicly traded firms, Putnam Lovell chose selected companies from those firms
in the Putnam Lovell Index of publicly-traded asset managers that service the
high net-worth market and that Putnam Lovell anticipates to grow the most
rapidly. In performing its analysis, Putnam Lovell reviewed selected financial
data for the following selected companies:
- Federated Investors, Inc.
- Eaton Vance Corporation
- Neuberger Berman Inc.
- John Nuveen Company
- Gabelli Asset Management Inc.
Historical Growth Comparison
For each of the selected companies and for Tremont, Putnam Lovell
calculated the historical three-year and one-year compound annual growth rates
as of December 31, 2000 for:
- Assets under management;
- Revenues;
- Earnings before income tax, depreciation and amortization (known as
EBITDA); and
- Net income.
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Putnam Lovell's analysis resulted in the following growth ranges:
SELECTED COMPANIES RANGE TREMONT
ASSETS UNDER MANAGEMENT
- 3 year compound annual growth rate 0% - 32% 54%
- 1 year compound annual growth rate 2% - 20% 39%
REVENUES
- 3 year compound annual growth rate 11% - 30% 47%
- 1 year compound annual growth rate 5% - 33% 40%
EBITDA
- 3 year compound annual growth rate 12% - 40% 68%
- 1 year compound annual growth rate 7% - 132% 79%
NET INCOME
- 3 year compound annual growth rate -3% - 45% 66%
- 1 year compound annual growth rate -5% - 635% 57%
Valuation Comparison
For each of the selected companies and for Tremont, Putnam Lovell
calculated multiples of fully diluted enterprise value to:
- Estimated revenues for fiscal year 2001;
- Estimated earnings before income tax, depreciation and amortization
("EBITDA") for fiscal year 2001; and
- Estimated net income for fiscal year 2001.
Estimated financial information for the selected companies and Tremont were
based upon estimates furnished by Putnam Lovell's research analysts. Putnam
Lovell's analysis resulted in the following range of multiples:
SELECTED COMPANIES RANGE TREMONT
2001 Estimated Revenues 3.9x - 5.3x 4.7x
2001 Estimated EBITDA 7.1x - 12.9x 15.2x
2001 Estimated Net Income 16.5x - 22.3x 25.4x
Discounted Cash Flow Analysis
Putnam Lovell also performed a discounted cash flow analysis to estimate
the value of Tremont common stock implied by the present value of projected
future after-tax operating cash flows. After-tax operating cash flow was defined
as operating earnings prior to depreciation, amortization, interest
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income, interest expense, equity in earnings of investments and losses from
joint venture operations but after taxes, capital expenditures, and changes in
working capital requirements.
This analysis examined the range of implied share prices of Tremont common
stock over a range of forecasted five-year growth rates of EBITDA and assuming a
range of discount rates. In each case the estimated future cash flows beyond the
five-year forecast period was estimated through applying a 9x multiple to the
estimated EBITDA in the fifth year of the forecast period. The range of growth
rates used was 10% to 30% linear growth over the five-year forecast period and
was based upon discussions with management as to their outlook for the business
through December 31, 2003 and Putnam Lovell's view of appropriate long-term
growth rates for Tremont, including the sustainability of its current rates of
growth. The range of discount rates used was 14% to 20% and reflected current
capital market conditions and risks associated with Tremont's business. The
starting point for the analysis was Tremont's $8.8 million of estimated EBITDA
for the 12 months ended September 30, 2001, the assumed closing date of the
merger transaction.
The value of Tremont common stock was calculated on a fully diluted basis
and equal to the sum of the range of values determined from the above-mentioned
analysis and the value of the estimated September 30, 2001 balance sheet. This
analysis produced values for Tremont that ranged from $11.10 to $26.49 per
share.
Precedent Transaction Analysis
Using publicly available information and Putnam Lovell estimates, Putnam
Lovell considered three transactions within the asset management industry that
involved the acquisition of firms that are comparable to Tremont, in that each
firm operated in the multi-strategy, multi-manager fund-of-hedge funds product
market.
Putnam Lovell compared multiples paid in the precedent transactions to the
proposed consideration to be paid for Tremont. Putnam Lovell's analysis
resulted in the following range of multiples:
High Median Low Tremont
---- ------ --- -------
CLOSING VALUATION
- multiple of run-rate EBITDA 10.0x 9.3x 7.5x 12.2x
- multiple of management fees 7.0x 5.2x 3.4x 5.5x
TOTAL VALUATION (Net Present Value)
- multiple of run-rate EBITDA 11.5x 11.5x 9.3x 12.2x
- multiple of management fees 8.0x 5.2x 5.2x 5.5x
Based upon the foregoing and in reliance thereon, it was Putnam Lovell's
opinion on July 10, 2001 that the merger consideration to be received by the
stockholders of Tremont pursuant to the merger is fair to the stockholders, from
a financial point of view, as of July 10, 2001.
While this summary describes the material analyses and factors that Putnam
Lovell Securities considered in rendering its opinion to the Tremont board, it
is not a complete description of all analyses and factors considered by Putnam
Lovell Securities. The preparation of a fairness opinion is a complex
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process that involves various determinations as to the most appropriate and
relevant methods of financial analysis and the application of these methods to
the particular circumstances. Therefore, such an opinion is not readily
susceptible to partial analysis or summary description. In arriving at its
opinion, Putnam Lovell Securities did not attribute any particular weight to any
analysis or factor considered by it, but rather made qualitative judgments as to
the significance and relevance of each analysis and factor. Accordingly, Putnam
Lovell Securities believes that its analyses must be considered as a whole and
that selecting portions of its analyses and any of the factors considered by it,
without considering all analyses and factors, could create a misleading or
incomplete view of the evaluation process underlying its opinion. Several
analytical methodologies were employed and no one method of analysis should be
regarded as critical to the overall conclusion reached by Putnam Lovell
Securities. Each analytical technique has inherent strengths and weaknesses, and
the nature of the available information may further affect the value of
particular techniques. The conclusion reached by Putnam Lovell Securities is
based on all analyses and factors taken as a whole and also on application of
Putnam Lovell Securities' own experience and judgment. This conclusion may
involve significant elements of subjective judgment and qualitative analysis.
Putnam Lovell Securities therefore gives no opinion as to the value or merit
standing alone of any one or more parts of the analysis it performed.
In performing its analyses, Putnam Lovell Securities made numerous
assumptions with respect to industry performance, general business and other
conditions and matters that are beyond the control of Tremont or Putnam Lovell
Securities. Any estimates contained in these analyses are not necessarily
indicative of actual values or predictive of future results or values, which may
be significantly more or less favorable than those suggested by these analyses.
Accordingly, analyses relating to the value of businesses do not purport to be
appraisals or to reflect the prices at which these businesses actually may be
sold in the future, and these estimates are inherently subject to uncertainty.
Putnam Lovell has acted as financial advisor to Tremont's board of
directors in connection with the merger and will receive a fee from Tremont for
its services, a significant portion of which is contingent upon the
consummation of the merger. Putnam Lovell provides a full range of financial
advisory and securities services and, in the normal course of trading
activities, may from time to time effect transactions in securities of Tremont
for the account of customers.
Putnam Lovell's opinion is directed to Tremont's board of directors in its
consideration of the merger and is not a recommendation to any stockholder as to
how such stockholder should vote with respect to the merger. Further, Putnam
Lovell's opinion does not address the relative merits of the merger to any
alternatives to the merger, Tremont's decision to proceed or effect the merger,
or any other aspect of the merger. In furnishing its opinion, Putnam Lovell does
not admit that it is an expert within the meaning of the term "experts" as used
in the Securities Act and the rules and regulations promulgated thereunder, nor
does it admit that its opinion constitutes a report or valuation within the
meaning of Section 11 of the Securities Act.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the recommendation of our board of directors with respect
to the merger, stock holders should be aware that the executive officers and
directors have some interests in the merger that may be different from, or in
addition to, the interests of stockholders generally. The board of directors was
aware of these interests and considered them, among other matters, in making its
recommendation.
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Employment Agreements
The merger agreement provides that, in connection with the merger,
employment agreements will be entered into by certain key executives of Tremont.
In addition, Tremont will continue to employ, immediately following the
effective time of the merger, each of its current employees on terms
substantially similar to the terms of their current employment, and will assume
all employment and other related agreements with respect to any current
employee.
Agreements with Ms. Manzke and Mr. Schulman
OppenheimerFunds, Inc. (referred to as OFI), an operating subsidiary of
Oppenheimer, has entered into an employment agreement with each of Sandra Manzke
and Robert I. Schulman, each a Co-Chief Executive Officer of Tremont. The terms
of these employment agreements are substantially the same and provide that Ms.
Manzke and Mr. Schulman will serve as the Co-Chief Executive Officers of Tremont
or in other positions to which they may be appointed from time to time by OFI.
The employment will become effective upon consummation of the merger and
continue until December 31, 2006, unless sooner terminated as provided therein.
Salary; Bonus; Other Benefits. During the term of the employment
agreements, Ms. Manzke and Mr. Schulman will each be paid an annual base salary
of $500,000 and will be eligible to receive an annual discretionary bonus of up
to 150% of the base salary (but in no event less than the lower of $500,000 or
20% of the Tremont bonus pool (described below)). Ms. Manzke and Mr. Schulman
will also be entitled to participate in the retention plan described below in
accordance with its terms. In addition, Ms. Manzke and Mr. Schulman will receive
employee benefits on the same basis as other similarly situated OFI executives.
Termination of Employment. Each executive may terminate his or her
employment and receive severance payments under certain circumstances (a
"Permitted Termination"). Such circumstances include, among other things,
termination of employment by the executive following (i) a material breach of
the terms and provisions of the employment agreement to which the executive is a
party, which breach is not cured within sixty (60) days after written notice,
(ii) a requirement that the executive render his or her regular duties on an
ongoing basis in New York City or more than twenty miles from the location at
which the executive currently performs regular business duties, or (iii) a
material diminution of the level of the executive's title and reporting position
to the board of directors of Tremont, OFI or Oppenheimer from those in effect
immediately following the consummation of the merger. In the event of a
Permitted Termination by the executive or a termination of the executive's
employment by OFI other than by reason of death or disability, for cause or due
to the executive's deficient performance, OFI will pay to the executive a
severance payment equal to (i) base salary through the end of the employment
term, plus (ii) the discretionary bonus, prorated through the termination date
(based upon the percentage of the discretionary bonus pool received by the
executive in respect of the year preceding termination). In addition, the
terminated executive shall continue to receive health and welfare benefits for
one year following his or her termination of employment.
Covenant Not to Compete. The agreements contain covenants not to compete,
not to solicit employees or clients, and not to interfere with the business of
Tremont, OFI or Oppenheimer or any of their subsidiaries, for a period of seven
years commencing upon consummation of the merger (and continuing throughout the
term of employment, if longer than seven years). However, in the event that
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the executive is terminated by OFI (other than for cause or due to the
executive's deficient performance), or the executive terminates employment by a
Permitted Termination, then the non-competition period will end two years
following the executive's termination.
Other Agreements with Messrs. Clayton and Colvin
Tremont will continue to employ Barry Colvin as Chief Operating Officer
and Stephen T. Clayton as Chief Financial and Administrative Officer.
Mr. Colvin is currently employed pursuant to an employment agreement dated
August 14, 2000 which will terminate on January 1, 2002. Mr. Colvin has agreed
to enter into a new employment agreement with Tremont that will become
effective on January 1, 2002, and will terminate on December 31, 2002. Under the
new employment agreement, Mr. Colvin will be paid a salary of $300,000 and an
annual bonus of at least $300,000, provided he meets certain performance
specifications. In addition, Mr. Colvin will be eligible to participate in a
similar manner as other Tremont employees in employee benefit plans and
programs. In the event that Mr. Colvin is terminated without cause, he will
receive a severance payment equal only to the balance of the base salary and
annual bonus due to him through December 31, 2002. Mr. Colvin covenants that (i)
for a period of one year following termination he will not, directly or
indirectly, solicit the employment of any other person employed by Tremont or
its affiliates, and (ii) in the event Mr. Colvin voluntarily terminates his
employment with Tremont, for a period of six months following such termination
(but, in no event beyond December 31, 2002), he will not compete with Tremont in
certain markets or solicit its customers.
Mr. Clayton is currently employed pursuant to an employment agreement
dated January 31, 2001, which will terminate on December 31, 2002. On January 1,
2002, Mr. Clayton's current employment agreement will be terminated. Mr.
Clayton has agreed to enter into a new employment agreement with Tremont that
will become effective on January 1, 2002 and will terminate on December 31,
2003. Under the new employment agreement Mr. Clayton will be paid an annual base
salary of at least $275,000 and a discretionary minimum bonus of at least
$200,000. In addition, Mr. Clayton will be eligible to participate in a similar
manner as other Tremont employees in employee benefit plans and programs. In the
event that Mr. Clayton terminates his employment for good reason (including (i)
a material and adverse change in Mr. Clayton's duties without his consent and
(ii) a reduction in Mr. Clayton's title, reporting relationship, salary or
benefits, except in connection with a general reduction of salaries and benefits
by Tremont) or is terminated by Tremont without cause, he will receive
compensation and benefit (including base salary and bonus based upon the bonus
paid to him in 2001) continuation through December 31, 2003, which compensation
will be offset and reduced by the amount of any compensation payment he receives
from other employment (including self-employment). Pursuant to the agreements,
Mr. Clayton covenants that (i) for a period of one year following termination he
will not, directly or indirectly, solicit the employment of any other person
employed by Tremont and its affiliates, and (ii) for a period of one year
following termination of his employment, he will not engage in a competitive
business in Tremont's market area or solicit or accept business from any of its
customers.
Retention Payments
In connection with the transaction contemplated by the merger agreement, a
retention plan will be adopted which provides for the payment of up to
$14,000,000 in two classes of awards (referred to as
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"Class A Awards" and "Class B Awards") to selected employees of Tremont,
including Ms. Manzke and Mr. Schulman.
Class A Awards. Tremont will make payments totaling in the aggregate
$3,000,000, in two equal installments, each totaling in the aggregate
$1,500,000, to selected employees (other than Ms. Manzke and Mr. Schulman) on
each of December 31, 2002 and December 31, 2003.
Class B Awards. The remainder of the retention payments will be
distributed as Class B Awards, which will vest in annual installments but not be
payable until after December 31, 2006. Within 60 days following December 31,
2006, Tremont will pay each holder of a Class B Award his proportionate vested
share of the "Remaining Pool", which will consist of an amount equal to the
excess, if any, of:
(i) 20% of the excess of (a) the total amount of Tremont's EBIT
for the calendar years ending 2002, 2003, 2004, 2005, and 2006
minus (b) $101,000,000, over
(ii) the "Indemnification Amount" based on the aggregate amount of
damages incurred or sustained by the Oppenheimer parties to
the merger agreement in connection with any inaccuracy in a
representation or warranty by Tremont contained in the merger
agreement if, before the execution of the merger agreement,
certain executives of the Tremont knew, avoided knowing or
were grossly negligent in not knowing, that the
representation or warranty was inaccurate, provided that if
the aggregate amount of such damages is less than $2,000,000,
the Indemnification Amount will be $0, and if the aggregate
amount of damages is $2,000,000 or greater, the
Indemnification Amount will be $2,000,000.
The Class B Awards shall be reduced to the extent necessary to cause the net
present value as of January 1, 2002 of the aggregate amount to be paid in Class
A and Class B Awards to be no more than the excess of $14,000,000 over the
Indemnification Amount.
Bonus Pool
A bonus pool of up to 22.5% of the annual EBIDTA of Tremont will be
established for calendar year 2002 and beyond for Tremont employees, consistent
with Oppenheimer's overall bonus arrangements.
Stock Options
Certain employees hold Tremont stock options under the 1998 Stock Plan
(referred to as the Stock Plan) or under freestanding option agreements. Under
the merger agreement, each outstanding option, whether or not then vested or
exercisable, will be cancelled (subject, in the case of employees who have
freestanding option agreements, to such employees' consent, which consent has
been received from almost all of such employees) on the consummation of the
merger in exchange for a cash payment equal to the excess of the merger
consideration over the exercise price of the option, multiplied by the number of
shares subject to such option. Based upon options outstanding as of June 30,
2001, the options relating to 791,638 shares of Tremont common stock held by
directors and executive officers of Tremont, would be accelerated and cashed out
upon the merger. Each of the directors and executive
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officers of Tremont listed below holds stock options which will be cashed out as
a result of the merger, as follows:
Directors and Named Executive Officers Number of Options Exercise Price
-------------------------------------- ----------------- --------------
Sandra L. Manzke, 54,687 $2.40
Co-Chief Executive Officer and
Chairman of the Board of Directors
13,750 $8.80
12,500 $11.55
Robert I. Schulman, President, 39,062 $2.40
Co-Chief Executive Officer and Director
12,500 $8.00
12,500 $10.50
Barry H. Colvin, Chief Operating Officer 31,250 $8.00
100,000 $10.50
Stephen T. Clayton, 15,625 $2.40
Chief Financial and Administrative Officer
3,906 $5.12
8,750 $8.00
35,000 $10.50
Bruce D. Ruehl, 7,812 $2.40
Chief Investment Strategist and Director
6,250 $5.12
6,250 $8.00
50,000 $10.50
Nicola Meaden, 230,385 $5.12
Chief Executive Officer of Tremont (TASS)
Europe Limited and Director
38,818 $9.60
6,250 $8.00
48,000 $10.50
John L. Keeley, Jr., Director 6,250 $8.00
7,812 $2.40
Alan A. Rhein, Director 19,531 $2.40
6,250 $8.00
Jimmy L. Thomas, Director 6,250 $8.00
Suzanne S. Hammond, Secretary and Treasurer 3,125 $5.12
3,125 $8.00
6,000 $10.50
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Indemnification and Insurance
Pursuant to the merger agreement, Tremont has agreed that for a period
of six years after the effective time of the merger it will indemnify and hold
harmless each present or former officer, director or employee of Tremont and its
subsidiaries against all costs and expenses incurred in connection with any
claim, action, proceeding or investigation arising out of or pertaining to (a)
the fact that the indemnified party is or was an officer, director or employee
of Tremont or any of its subsidiaries or (b) matters existing or occurring at or
prior to the consummation of the merger, to the fullest extent that Tremont
would have been permitted under applicable law and its certificate of
incorporation and by-laws.
The merger agreement also provides that Tremont will cause to be
maintained, for a period of six years after the effective time of the merger,
the current policies of directors' and officers' liability insurance and
fiduciary liability insurance maintained by Tremont (but Tremont may substitute
therefor similar policies). However, Tremont will not be required to expend more
than 200% of the annual premiums it currently pays for such insurance.
MERGER FINANCING; SOURCE OF FUNDS
Oppenheimer has informed us that the aggregate merger consideration of
approximately $145.3 million to be paid to our stockholders (assuming that no
stockholders perfect their appraisal rights under Delaware law) and holders of
options to purchase our shares will be financed through cash on hand and, if
needed, capital contributions from its ultimate parent, Mass Mutual. The merger
is not conditioned upon obtaining financing from any outside sources.
CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of certain U.S. federal income tax
consequences of the merger to stockholders. This discussion is based on
provisions of the Internal Revenue Code of 1986, as amended, (the "Code"),
applicable Treasury regulations promulgated under the Code, Internal Revenue
Service ("IRS") rulings and judicial interpretations thereof all in effect as of
the date of this proxy statement, and all of which are subject to change
occurring after such date, possibly with retroactive effect. There can be no
assurance that future legislative, judicial or administrative action will not
affect the accuracy of the statements or conclusions in this proxy statement.
This summary does not address all the U.S. federal income tax
considerations that may be relevant to stockholders, particularly stockholders
subject to special treatment under the Code, including without limitation
persons who are dealers in securities, who are subject to the alternative
minimum tax provisions of the Code, who are foreign persons, insurance
companies, tax-exempt organizations, financial institutions, or broker-dealers,
who hold their shares as part of a hedge, straddle, conversion or other
risk-reduction transaction, or who acquired their shares in connection with the
exercise of employee stock options or otherwise as compensation. It also does
not address the tax consequences of the merger under foreign, state or local tax
laws. Accordingly, stockholders are urged to consult with their tax advisors
with respect to the particular U.S. federal, state, local or foreign income tax
or other tax consequences of the merger to them.
The exchange of Tremont common stock for cash in the merger will be a
taxable transaction for U.S. federal income tax purposes, and accordingly a
stockholder will recognize gain or loss equal to the
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difference between the cash received and such stockholder's tax basis in the
Tremont common stock exchanged therefor. A stockholder must generally calculate
gain or loss separately for each block of Tremont common stock that is exchanged
in the merger. Provided a stockholder holds his Tremont common stock as a
capital asset, this gain or loss will be capital gain or loss, which will be
long-term capital gain or loss if the stockholder's Tremont common stock has
been held for more than one year at the time of the merger.
The exchange agent will be required to back-up withhold on any payment
to a stockholder unless such holder, or other payee, provides the appropriate
tax identification number and certifies that such number is correct, or an
exception from backup withholding applies. Amounts paid as backup withholding
do not constitute additional tax and will be allowed as a refund or credit
against the stockholder's U.S. federal income tax liability, provided the
required information is furnished to the IRS.
ACCOUNTING TREATMENT
The merger will be accounted for using the purchase method of
accounting. Under this method of accounting, the purchase price will be
allocated to the fair value of the net assets acquired. The excess purchase
price over the fair value of the assets acquired will be allocated to goodwill.
APPRAISAL RIGHTS OF STOCKHOLDERS
You have the right to dissent from the merger and to demand and obtain
cash payment of the appraised value of your shares of our common stock under the
circumstances described below. The appraised value that you obtain for your
shares by dissenting may be less than, equal to or greater than the cash
consideration provided for in the merger agreement. If you fail to comply with
the procedural requirements of Section 262 of the Delaware General Corporation
Law, you will lose your right to dissent and seek payment of the appraised value
of your shares. In accordance with Section 262, Tremont is obligated to mail to
each holder of shares as of the record date notice that such stockholder is
entitled to appraisal rights for their shares. THIS PROXY STATEMENT AND THE
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS THAT ACCOMPANIES THIS PROXY STATEMENT,
CONSTITUTE SUCH NOTICE.
The following is a summary of Section 262, which specifies the
procedures applicable to dissenting stockholders. This summary is not a
complete statement of the law regarding your right to dissent under Delaware
law, and if you are considering dissenting, we urge you to review the provisions
of Section 262 carefully. The text of Section 262 is attached to this proxy
statement as Appendix C, and we incorporate that text into this proxy statement
by reference. Among other matters, you should be aware of the following:
- to be entitled to dissent and seek appraisal, you must hold
shares of our common stock on the date you make the demand
required under Delaware law, you must continuously hold those
shares until the merger has been completed, you must not vote
in favor of the merger and you must otherwise comply with the
requirements of Section 262 (neither a failure to vote on the
merger agreement, nor an abstention from voting on the merger
agreement, will be construed as a vote in favor of the merger
agreement; however, if you return your signed proxy left
blank, your vote will be counted in favor of the merger
agreement, and you will waive your appraisal right);
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- before the special meeting, you must deliver a written notice
that states your identity and your intent to demand appraisal
to Tremont Advisers, Inc., 555 Theodore Fremd Avenue, Rye, New
York, 10580, Attention: General Counsel (you should be aware
that simply voting against the merger is not a demand for
appraisal rights);
- within ten days after the effective time of the merger, the
surviving corporation will notify all of the dissenting
stockholders who have complied with Section 262 and who have
not voted in favor of the merger;
- within 120 days after the effective time of the merger, the
surviving corporation or any stockholder who has complied with
the requirements of Section 262 may file a petition in the
Delaware Court of Chancery demanding a determination of the
value of the stock of the dissenting stockholders;
- the Delaware Court of Chancery will determine which dissenting
stockholders complied with the requirements of Section 262 and
are entitled to appraisal rights;
- the Delaware Court of Chancery may require the stockholders
who have demanded an appraisal for their shares (and who hold
stock represented by certificates) to submit their stock
certificates to the Register in Chancery for notation; and the
Delaware Court of Chancery may dismiss the proceedings as to
any stockholder that fails to comply with such direction;
- the Delaware Court of Chancery will then appraise the shares,
determining their fair value exclusive of any element of value
arising from the accomplishment or expectation of the merger,
together with a fair rate of interest, if any, to be paid on
the appraised fair value;
- the Delaware Court of Chancery will consider all relevant
factors in determining the fair value and the fair interest
rate (if any);
- the Delaware Court of Chancery will then direct the surviving
corporation to pay the fair value of the dissenting shares,
together with any interest, to the stockholders entitled to
payment; payment will be made when the stockholder surrenders
the certificates to the surviving corporation;
- the costs of the proceeding for appraising the fair value may
be determined by the court and the court may require the
parties to bear the costs in any manner that the court
believes to be equitable;
- if you dissent from the merger, you will not be entitled to
vote your shares of common stock for any purpose or to receive
dividends or other distributions (other than dividends or
other distributions payable to stockholders of record at a
date prior to the effective time of the merger) following the
merger;
- you may withdraw your demand for appraisal and accept the cash
consideration provided for in the merger agreement at any time
within 60 days after the effective date of the merger; and
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- the exchange of shares for cash pursuant to the exercise of
appraisal rights will be a taxable transaction for United
States federal income tax purposes and possibly state, local
and foreign income tax purposes as well. See "Special
Factors--Certain U.S. Federal Income Tax Consequences".
STOCKHOLDERS AGREEMENT
As an inducement and a condition to entering into the merger agreement,
Oppenheimer and Joshua Acquisition Corp. have required that ten of Tremont's
stockholders enter into a stockholders agreement. The following is a brief
description of the material terms of this agreement.
Under the stockholders agreement, stockholders, who together own
308,950 shares of Tremont's Class A common stock and 3,254,380 shares of
Tremont's Class B common stock, constituting approximately 37% of the voting
power of Tremont, have agreed that, as long as the merger agreement is in
effect, they will vote their shares in favor of the merger and the merger
agreement. In furtherance of the foregoing, as long as the merger agreement is
in effect, each of these stockholders has granted to Oppenheimer and certain of
its representatives its irrevocable proxy to vote their shares in accordance
with the stockholders agreement. In addition, these stockholders have agreed to
vote their shares:
- against any action or agreement that would result in the
breach in any respect of any covenant, representation,
warranty or other obligation of Tremont under the merger
agreement;
- except as expressly agreed to in writing by Oppenheimer,
against (a) any extraordinary corporate transaction involving
Tremont, any of its subsidiaries or any funds sponsored,
formed or controlled by Tremont or any of Tremont's
subsidiaries; (b) a sale, lease or transfer of a material
amount of Tremont's or any of its subsidiaries' assets, or a
reorganization, recapitalization, dissolution or liquidation
of Tremont or any of its subsidiaries; (c) any change in a
majority of the persons on the board of directors; (d) any
change in the present capitalization of Tremont or any
amendment to Tremont's charter or bylaws; (e) any other
material change in Tremont's corporate structure or business;
or (f) any other action involving Tremont or any of its
subsidiaries or any funds sponsored, formed or controlled by
Tremont or any of its subsidiaries, which is intended, or
could in any manner be expected to adversely affect the
merger, including any action to facilitate any acquisition
proposal.
None of the ten stockholders, prior to the termination of the merger agreement,
may elect to convert any Class A common shares that he may own into Class B
common shares. Each of the ten stockholders agrees it shall not, directly or
indirectly, initiate, solicit, encourage or knowingly facilitate any inquiries
or the making of any acquisition proposal, or, prior to the termination of the
merger agreement, agree to approve or endorse any acquisition proposal.
Each of the ten stockholders bound by the stockholders agreement has
also granted to Oppenheimer an irrevocable option to purchase all of such
stockholders' shares at a purchase price equal to the merger consideration.
These options will become exercisable in the case that the merger agreement is
terminated, except in the case of a preliminary or final injunction or other
court or governmental order. Oppenheimer covenants that in the event it
exercises this option, during the term of the agreement it will vote such shares
for or against any superior proposal or any action or matter relating to a
superior
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proposal that is submitted to a stockholder vote, pro rata in proportion to the
affirmative and negative votes cast by the other stockholders of Tremont voting
on the proposal or action or matter (excluding abstentions and broker
non-votes).
During the term of the stockholders agreement, none of the ten
stockholders may, directly or indirectly, sell, assign, or otherwise dispose of
any of its shares or any interest in these shares, provided that the
stockholders may tender their shares in response to a bona fide tender offer
that is supported by the board of directors upon giving five business days'
advance notice to Oppenheimer. Furthermore, during the term of the stockholders
agreement, none of the ten stockholders may grant any proxies or powers of
attorney, deposit any shares into a voting trust, enter or amend a voting
agreement with respect to such shares, exercise any right to require Tremont to
register any shares, or take any action that would make any representation or
warranty of such shareholder untrue or incorrect, or would have the effect of
preventing or disabling such stockholder from performing his obligations under
this agreement. Each of the ten stockholders also waived its appraisal rights.
The option granted in the stockholders agreement will terminate upon
the earlier of the effective time of the merger or
- if Tremont terminates the merger agreement after (a) the board
of directors determines that it must terminate the agreement
because of a superior acquisition proposal; (b) the board of
directors notifies Oppenheimer and Joshua Acquisition Corp. that
it intends to enter into another proposal and provides a copy of
such proposal; (c) during the five business days following
receipt of Tremont's notice, Tremont and Oppenheimer have
negotiated to adjust the merger agreement and the superior
proposal is still superior; (d) simultaneously with the
termination Tremont pays Oppenheimer the termination fee; and
(e) such termination is within two business days after the
termination of the five business day period described above and
the board of directors has made its determination to continue
with the superior proposal prior to the receipt of the required
company vote;
- if Oppenheimer terminates the merger agreement after Tremont's
board of directors has failed to call a meeting of Tremont's
stockholders for the purpose of obtaining the required company
vote;
- if Oppenheimer terminates the merger agreement any time after a
superior acquisition proposal has been made after (a) Tremont's
board of directors has failed to recommend or reconfirm or has
withdrawn, modified or changed its approval or recommendation of
the merger and or the merger agreement, or has recommended an
alternative acquisition proposal; (b) if the required company
vote has not been obtained on or prior to December 30, 2001; (c)
if a tender offer or exchange offer for 15% or more of the
outstanding common stock of Tremont is commenced, and the board
of directors fails to recommend against acceptance of such
tender offer or exchange offer by the Tremont stockholders
within the time period required by the SEC (or the board of
directors resolves or fails to resolve any of the above); or (d)
if there shall have been a breach by Tremont of any of its
representations, warranties, covenants or obligations in the
merger agreement, which results in its failure to satisfy a
condition and which is incurable or, if curable, shall not have
been cured within 30 days of receiving written notice; or
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- if the required company vote is not obtained and, at or prior to
the meeting of the stock holders called for the purpose of
approving the merger and the merger agreement, (a) one or more
of the ten stockholders has breached the stockholders agreement
or (b) an acquisition proposal has been made, 12 months after
any such termination.
If the merger agreement is terminated in accordance with any terms not mentioned
above, other than a termination at the effective time of the merger, the
stockholders agreement shall terminate contemporaneously with the merger
agreement.
None of the ten stockholders who is a party to the stockholders
agreement who is or becomes a director or officer of Tremont during the term of
the stockholders agreement makes any agreement or understanding in its capacity
as such director or officer.
THE MERGER AGREEMENT
The following is a brief summary of the material provisions of the
merger agreement. The following summary is qualified in its entirety by
reference to the merger agreement, which we have attached as Appendix A to this
proxy statement and which we incorporate by reference into this document. We
encourage you to read the merger agreement in its entirety.
THE MERGER
The merger agreement provides that, following the approval of the
adoption of the merger agreement by our stockholders and the satisfaction or
waiver of the other conditions to the merger, including receipt of the requisite
regulatory approvals, Joshua Acquisition Corp. will be merged with and into us.
Tremont will be the surviving corporation. We believe that efforts sufficient to
satisfy the regulatory requirements, and to receive the necessary regulatory
approvals can be concluded during the fourth quarter of 2001. The merger will
then become effective upon the filing of the certificate of merger with the
Secretary of State of the State of Delaware or at such later time agreed to by
the parties and specified in the certificate of merger, provided that
Oppenheimer may, at its option and upon written notice, delay the effectiveness
of the merger until October 1, 2001.
When the merger becomes effective, the certificate of incorporation of
Joshua Acquisition Corp. will be the certificate of incorporation of the
surviving corporation, until thereafter changed or amended as provided therein
or by applicable law; provided that the certificate of incorporation of the
surviving corporation shall be amended to change the name of the surviving
corporation to "Tremont Advisers, Inc." The by-laws of Joshua Acquisition Corp.
in effect immediately prior to the effective time of the merger will be the
by-laws of the surviving corporation until thereafter changed or amended as
provided therein or by applicable law.
Conversion of Capital Stock. At the effective time of the merger,
pursuant to the merger agreement and the Delaware General Corporation Law, each
issued and outstanding share of our Class A and Class B common stock, other than
any such shares (i) owned directly or indirectly by us or by Oppenheimer (all of
which will be canceled without consideration) or (ii) held by a dissenting
stockholder exercising and perfecting appraisal rights, will be converted into
the right to receive $19.00 in cash, without interest thereon; provided that:
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- - if our tangible net worth as shown on our pro forma balance sheet as of
the end of the most recent month-end not less than fifteen business
days prior to the consummation of the merger shall be less than
$13,170,290, then each such share (other than such shares held by
Oppenheimer, by us, or by dissenting stockholders perfecting appraisal
rights) shall be converted into the right to receive $19.00 minus the
quotient obtained by dividing (x) the amount by which $13,170,290
exceeds our tangible net worth as shown on such balance sheet by (y)
the total number of shares of common stock and options to buy shares of
common stock outstanding at the effective time of the merger;
- - if our tangible net worth as shown on our pro forma balance sheet as of
the end of the most recent month-end not less than fifteen business
days prior to the consummation of the merger shall be more than
$15,170,290, then each such share (other than such shares held by
Oppenheimer, by us, or by dissenting stockholders perfecting appraisal
rights) shall be converted into the right to receive $19.00 plus the
quotient obtained by dividing (x) the amount by which our tangible net
worth as shown on such balance sheet exceeds $15,170,290 by (y) the
total number of shares of common stock and options to buy shares of
common stock outstanding at the effective time of the merger.
For the purposes of the foregoing, "tangible net worth" means the
excess of stockholders' equity over the sum of goodwill (net of amortization)
and investments in joint ventures, not including our expenses incurred in
connection with the merger.
Exchange of Common Stock Certificates. At the effective time of the
merger, each certificate representing shares of our Class A and Class B common
stock then outstanding, other than any such shares owned by Oppenheimer, by us,
or by dissenting stockholders perfecting appraisal rights, will represent the
right to receive the cash into which such issued and outstanding shares of
common stock may be converted. At the effective time of the merger, all such
shares of our common stock will be canceled and cease to exist, and each holder
of a certificate representing any such shares will cease to have any voting or
other rights with respect to such shares, except the right to receive upon the
surrender of the certificate the cash consideration payable under the merger
agreement, without interest thereon.
Each share of common stock of Joshua Acquisition Corp. issued and
outstanding immediately prior to the effective time of the merger shall be
converted into a number of shares of common stock, par value $0.01, of the
surviving corporation equal to (i) the number of our shares of common stock and
options to buy shares of common stock then outstanding divided by the number of
shares of Joshua Acquisition Corp. then issued and outstanding, or (ii) such
lesser number of shares as Oppenheimer shall determine.
Prior to the effective time of the merger, Oppenheimer will designate a
bank or trust company reasonably acceptable to us to act as exchange agent for
the purpose of exchanging stock certificates for the merger consideration.
Oppenheimer shall deposit or cause to be deposited with the exchange agent in
trust for the benefit of holders of shares of our common stock the aggregate
amount of cash to be paid pursuant to the merger agreement in exchange for
outstanding shares of our common stock (other than any shares owned by
Oppenheimer, by us, or by dissenting stockholders perfecting appraisal rights).
The exchange agent shall invest the moneys so deposited in short-term,
investment grade securities and pay any interest or other income resulting from
such investments to the surviving corporation.
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As soon as reasonably practicable after the effective time of the
merger, the surviving corporation shall cause the exchange agent to mail a
letter of transmittal to holders of shares of common stock. The letter of
transmittal will contain instructions as to how to surrender common stock
certificates in exchange for the cash merger consideration. Upon surrender to
the exchange agent of a stock certificate together with the duly executed letter
of transmittal and any other documents as may be reasonably required by the
exchange agent, the holder of such certificate shall be entitled to receive in
exchange therefor a check (or, in the case of any holder that requests a wire
transfer and offers to pay any reason able costs associated therewith, a wire
transfer of immediately available funds) in the amount equal to the merger
consideration multiplied by the number of shares of our common stock formerly
represented by such certificate minus any taxes withheld as required by law and
as provided in the merger agreement.
Holders of common stock whose certificates are lost will be required to
make an affidavit identifying the certificate or certificates as lost, stolen
or destroyed and, if required by us, to post a bond in such amount as we may
reasonably require to indemnify us against any claim that may be made against us
with respect to such certificate.
Any cash deposited by Oppenheimer with the exchange agent that remains
undistributed to the holders of certificates of our common stock for six months
after the effective time of the merger shall, to the extent permitted by
applicable law, be delivered to the surviving corporation or otherwise on the
instruction of the surviving corporation, and any holders of certificates who
have not theretofore complied with the provisions of the merger agreement
relating to the exchange of their certificates for the merger consideration
shall thereafter look only to the surviving corporation for the merger
consideration with respect to such certificates. In addition, none of the
parties to the merger agreement or the surviving corporation will be liable to
any person in respect of any merger consideration delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law.
The surviving corporation, Oppenheimer and the exchange agent, as
applicable, shall be entitled to deduct and withhold from the payment otherwise
due holders of shares of our common stock pursuant to the merger agreement such
amounts as are required to be withheld with respect to the making of any such
payment under the Internal Revenue Code of 1986, as amended, any rules and
Treasury regulations promulgated thereunder, or any provision of state, local or
foreign tax law.
Shares of our common stock issued and outstanding immediately prior to
the effective time of the merger and held by a holder who has not voted in favor
of the merger and who demands appraisal for such shares in accordance with
Section 262 of the Delaware General Corporation Law shall not be converted into
the right to receive the merger consideration unless such holder fails to
perfect within the period prescribed by the DGCL, or withdraws or otherwise
loses, such appraisal right. If, after the effective time of the merger, such
holder fails to perfect or withdraws or otherwise loses the right to appraisal,
such shares shall be treated as if they had been converted as of the effective
time of the merger into the right to receive the merger consideration, without
interest thereon.
Stock Options. We have agreed to take all actions necessary so that, as
of the effective time of the merger, the Tremont 1998 Stock Plan shall
terminate. At such time, all outstanding options will be canceled and will be
converted into the right to receive a single lump sum cash payment from the
surviving corporation equal to the product of (x) the number of shares of our
common stock subject to such option and (y) the excess, if any, of the merger
consideration for a share of our common stock at the effective time of the
merger over the exercise price per share of such option. Such payment shall be
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made by the surviving corporation as soon as practicable following receipt from
the option holder of a release or other documentation reasonably satisfactory to
Oppenheimer and the surviving corporation.
Officers and Directors. Our officers as of the effective time of the
merger shall be the officers of the surviving corporation, until the earlier of
their resignation or removal or otherwise ceasing to be an officer or until
their respective successors are duly elected and qualified, as the case may be.
The directors of Joshua Acquisition Corp. as of the effective time of the
merger shall be the directors of the surviving corporation until the earlier of
their resignation or removal or otherwise ceasing to be a director or until
their respective successors are duly elected and qualified.
REPRESENTATIONS AND WARRANTIES
The merger agreement contains representations and warranties with
respect to us and our subsidiaries relating to, among other things:
- - organization, qualification, capitalization and similar corporate
matters;
- - authorization, execution, delivery, performance and enforceability of
the merger agreement and other documents relating thereto;
- - required regulatory filings, consents, approvals and authorizations;
- - the absence of violation of organizational documents, laws or contracts
as a result of entering into the merger agreement;
- - the accuracy of the information contained in the reports and financial
statements that we and our subsidiaries have filed with the Securities
and Exchange Commission and other governmental authorities;
- - the absence of material adverse changes since December 31, 2000;
- - the absence of material legal proceedings;
- - property owned, leased or operated;
- - contracts and the absence of any material default in these contracts;
- - compliance with applicable laws, permits and agreements;
- - absence of any administrative proceeding or investigation with respect
to us or our subsidiaries;
- - proper registration, qualification and/or certification in all relevant
jurisdictions of us and/or of our subsidiaries and affiliates, as
applicable, to serve in certain capacities under the Investment Company
Act of 1940, as amended, the Investment Advisers Act of 1940, as
amended, the Securities Exchange Act of 1934, as amended, and the
Commodity Exchange Act of 1936, as amended;
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- - absence of any requirement that we or any of our subsidiaries be
registered as an investment company under the Investment Company Act of
1940, as amended;
- - certain environmental, labor and employment, intellectual property,
employee welfare and benefit plans and tax matters;
- - approval by our board of directors of the merger, the merger agreement
and the transactions contemplated thereby for purposes of Section 203
of the Delaware General Corporation Law;
- - the stockholder vote required to adopt the merger agreement;
- - the absence of undisclosed broker's fees;
- - maintenance by us and our subsidiaries of insurance sufficient for the
operation of our business and that of our subsidiaries;
- - the receipt by us of a fairness opinion from Putnam Lovell Securities,
Inc.;
- - absence of direct or indirect ownership by us of shares of common stock
of Oppenheimer, or of other Oppenheimer capital stock, or of any
options, warrants or other rights to acquire Oppenheimer capital stock;
- - maintenance of relationships with material clients; and
- - the absence of any unlawful payments.
The merger agreement contains customary representations and warranties
by Oppenheimer and Joshua Acquisition Corp. relating to, among other things:
- - their organization, standing authority to carry on business and similar
corporate matters;
- - the absence of violation of organizational documents, laws or contracts
as a result of entering into the merger agreement;
- - authorization, execution, delivery, performance and enforceability of
the merger agreement and other documents relating thereto;
- - required regulatory filings, consents, approvals and authorizations;
- - the absence of material legal proceedings;
- - approval by the boards of directors of Oppenheimer and Joshua
Acquisition Corp. of the merger agreement, the merger and the
transactions contemplated thereby;
- - absence of broker, finder or agent fees or commissions or similar
compensation with respect to the merger;
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- - absence of direct or indirect ownership by Oppenheimer or Joshua
Acquisition Corp. of shares of our common stock or other capital stock,
or of any options, warrants or other rights to acquire our capital
stock other than pursuant to the merger agreement or the Stockholders
Agreement;
- - availability of funds sufficient to pay the merger consideration; and
- - the creation of Joshua Acquisition Corp. solely for the purpose of
engaging in the transactions contemplated by the merger agreement.
The foregoing representations and warranties are subject, in some
cases, to specified exceptions and qualifications. Except for purposes of
indemnification under the Retention Plan (described on pages 27-28), the
representations and warranties of each of the parties will expire upon
completion of the merger.
COVENANTS RELATING TO CONDUCT OF BUSINESS
Our covenants. Under the merger agreement, we have agreed that from the
date of the merger agreement until the effective time of the merger, we shall
take, and shall cause our controlled subsidiaries and investment funds to take,
except as otherwise contemplated by the merger agreement or to the extent that
Oppenheimer shall in its sole discretion otherwise consent in writing, the
following actions:
- - carry on our respective businesses in the usual, regular and ordinary
course in the same manner as heretofore conducted;
- - preserve intact present lines of business, business organizations and
reputations, maintain rights, franchises and permits, keep available
the services of key officers and key employees, maintain assets and
properties in good working order and condition, ordinary wear and tear
excepted, and preserve relationships and goodwill with clients,
suppliers and others to the end that the ongoing businesses shall not
be impaired in any material respect at the effective time of the
merger; and
- - not (i) enter into any new material line of business, (ii) commit to
any capital expenditures other than capital expenditures in the usual,
regular and ordinary course of business consistent with past practice
and not individually or in the aggregate in excess of $100,000, or
(iii) delay or postpone the payment of accounts payable and other
liabilities or accelerate the collection of accounts receivable, or
revalue in any material respect any assets, including, without
limitation, writing down the value of inventory or writing-off notes or
accounts receivable other than in each case in the usual, regular and
ordinary course of business consistent with past practice or as
required by GAAP.
We have further agreed to use commercially reasonably efforts to cause
our non-controlled subsidiaries to take the foregoing actions. In addition, we
have agreed not to do any of the following, and to cause our controlled
subsidiaries and investment funds not to do any of the following, except as
otherwise contemplated by the merger agreement or to the extent that Oppenheimer
shall in its sole discretion otherwise consent in writing:
- - declare, set aside or pay any dividends on, or make any other
distributions in respect of, capital stock, other than dividends by one
of our wholly-owned subsidiaries to its parent;
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- - adopt a plan of liquidation, merger, recapitalization or other
reorganization other than in the usual, regular and ordinary course of
business consistent with past practice;
- - purchase, redeem or otherwise acquire any shares of our capital stock
or of our subsidiaries' capital stock, other than in the usual, regular
and ordinary course of business consistent with past practice in
connection with funding the Tremont Advisers, Inc. Savings Plan;
- - split, combine, or reclassify any of our capital stock or issue or
authorize the issuance of any other securities in respect of, in lieu
of, or in substitution for our capital stock;
- - change the methods of accounting in effect at December 31, 2000, change
the fiscal year, settle any action relating to any material tax, make
or rescind any material tax election or, subject to certain exceptions,
make any changes to our tax accounting methods unless required by a
change in generally accepted accounting principles, SEC accounting
regulations or guidelines or applicable law;
- - enter into, modify, amend or terminate any material contract to which
we or one of our subsidiaries is a party, other than modifications,
amendments or terminations in the ordinary course consistent with past
practice or as expressly permitted in the merger agreement;
- - settle or compromise any pending or threatened claims or arbitrations,
other than settlements that involve solely the payment of money
(without admission of liability) that would not result in an uninsured
payment by us or liability in excess of $100,000 in the aggregate above
the reserves established therefor on our books as of the date of the
merger agreement; or
- - take any action that would, or fail to take any action which failure
would, or that could reasonably be expected to, result in, (i) any of
our representations and warranties set forth in the merger agreement
being or becoming untrue in any material respect, (ii) a material
breach of any provision of the merger agreement, (iii) any of the
conditions to the merger set forth in Article VI of the merger
agreement not being satisfied, or (iv) a material delay in the
consummation of the merger and the transactions contemplated by the
merger agreement.
We have further agreed not to do any of the following, to cause our
controlled subsidiaries and investment funds not to do any of the following, and
to use commercially reasonable efforts to cause each of our non-controlled
subsidiaries not to do any of the following, except as otherwise contemplated
by the merger agreement or to the extent that Oppenheimer shall in its sole
discretion otherwise consent in writing:
- - issue, deliver, sell, pledge or otherwise encumber any shares of our
capital stock, any other equity or voting interests or any securities
convertible into, or exchangeable for, or rights to acquire shares of
our capital stock, except for the issuance of shares as a result of the
exercise of stock options existing when we entered into the merger
agreement;
- - amend our respective certificates of incorporation or bylaws;
- - acquire or agree to acquire by merging or consolidating with, or by
purchasing a substantial equity interest in or a substantial portion of
the assets of, or by any other manner, any business or
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any corporation, partnership, association or other business
organization or division thereof or otherwise acquire or agree to
acquire any assets (other than the acquisition of assets used in the
operations of their respective businesses in the usual, regular and
ordinary course of business consistent with past practice);
- - subject to certain exceptions, lease, transfer, pledge, encumber or
otherwise dispose of any of our assets, or agree to do any of the
foregoing;
- - subject to certain exceptions, incur any new indebtedness of a
long-term or otherwise substantial nature;
- - make any increase in or commitment to increase the amount of wages,
bonus, severance or other compensation of any executive officer,
director or employee (other than in the ordinary course of business
consistent with past practice), make any increase in or commitment to
increase any profit sharing, retirement, deferred compensation,
insurance or other employee benefits, issue any additional stock
options, equity-based awards or shares of our common stock (other than
the issuance of common stock upon the exercise of stock options
outstanding on the date hereof or in connection with the Tremont
Advisers, Inc. Savings Plan in accordance with its present terms),
adopt or make any commitment to enter into, adopt, amend in any
material manner or terminate any employee benefit plan, or any other
agreement, arrangement, plan or policy between us or one of our
subsidiaries and one or more of our or our subsidiaries' directors,
officers or employees, or make any contribution, other than regularly
scheduled contributions, to any benefit plan; or
- - adopt, approve, ratify or enter into any collective bargaining
agreement, side letter, memorandum of understanding or similar
agreement with any labor union covering our or our subsidiaries'
employees.
Advisory Agreement Consents. We have agreed to obtain written consent
to the assignment or deemed assignment of any investment advisory agreement
between us or one of our subsidiaries and any investment fund client that is
controlled by us. We have agreed to use our reasonable best efforts to obtain
written consent to the assignment or deemed assignment of any investment
advisory agreement between us or one of our subsidiaries and any other
investment fund client, each client whose investment advisory agreement requires
written consent in the event of any assignment and each key client specified in
the merger agreement. We have agreed to seek written or implied consents to the
assignment or deemed assignment of the other investment advisory agreements
between us or one of our subsidiaries and any other client.
Acquisition Proposals. We have agreed that we will not (and will cause
our subsidiaries not to) directly or indirectly:
- - initiate, solicit, encourage or knowingly facilitate (including by way
of furnishing information or assistance) any inquiries or expressions
of interest or the making of any proposal or offer that constitutes, or
could reasonably be expected to lead to (x) a proposal or offer with
respect to a merger, reorganization, share exchange, recapitalization,
liquidation, dissolution, consolidation or similar transaction
involving, or any purchase or series of related purchases directly or
indirectly (including, by way of lease, exchange, sale, mortgage,
pledge, tender offer, exchange offer
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or otherwise, as may be applicable), of 5% or more of the assets (based
on fair market value) or any equity interests (in economic or voting
power) in, us or any of our subsidiaries, (y) a breach of the merger
agreement or the stockholders agreement or any interference with the
completion of the merger or (z) any public announcement of a proposal,
plan or intention to do any of the foregoing or any agreement to engage
in any of the foregoing (any of the foregoing inquiries, expressions of
interest, proposals, or offers being referred to as an acquisition
proposal);
- - 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, or otherwise facilitate the making
of, or any effort or attempt to make or implement, an acquisition
proposal;
- - agree to or recommend to our stockholders any acquisition proposal;
provided that nothing contained in the merger agreement shall prevent
the Company from:
- based on the advice of outside legal counsel, complying with
Rule 14e-2 promulgated under the Securities Exchange Act of
1934, with regard to an acquisition proposal or providing any
other legally required disclosure to our stockholders (provided
that, except as otherwise permitted in the merger agreement, we
do not withdraw or modify, or propose to withdraw or modify, our
position with respect to the merger or approve or recommend, or
propose to approve or recommend, an acquisition proposal);
- prior to receipt of the affirmative vote of the holders of a
majority of the voting power of our common stock to adopt the
merger agreement, and subject to our compliance with the
immediately following sentence regarding notice to Oppenheimer,
providing information to, or engaging in any negotiations or
discussions with, any person who has made an unsolicited bona
fide written acquisition proposal if, and only to the extent
that:
- our board of directors determines, in good faith after
consultation with, and based upon the advice of, outside
legal counsel, that providing such information and engaging
in such discussions or negotiations is required to comply
with our fiduciary duties to our stockholders under
applicable law;
- such acquisition proposal is not subject to any financing
contingencies;
- our board of directors determines in good faith that such
acquisition proposal, if accepted, is reasonably likely to
be consummated taking into account all legal, financial,
regulatory and other aspects of the proposal and the person
making the proposal, and believes in good faith, after
consultation with Putnam Lovell Securities, Inc., such
acquisition proposal would, if consummated, result in a
transaction more favorable to our stockholders from a
financial point of view than the merger (any such more favor
able acquisition proposal being referred to as a superior
proposal); and
- prior to taking such action and furnishing any information
to any such party, we (x) provide reasonable notice to
Oppenheimer to the effect that we are taking such action,
(y) provide such information to Oppenheimer (if and to the
extent we have not already done so), and (z) shall have
entered into a confidentiality/ standstill agreement on
customary terms as advised by outside legal counsel, and in
any event containing terms
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at least as stringent as those contained in the
confidentiality agreement by and between us and Oppenheimer,
dated as of March 14, 2001; or
- prior to receipt of the affirmative vote of the holders of a
majority of the voting power of our common stock to adopt the
merger agreement, recommending such a superior proposal to the
holders of our common stock and withdrawing the prior
recommendation of the merger agreement, if and only to the
extent that our board of directors determines, in good faith
after consultation with, and based upon the advice of, outside
legal counsel, that taking such action is required to comply
with our fiduciary duties to our stockholders under applicable
law; provided our board of directors may not approve or
recommend (and in connection therewith, withdraw or modify its
approval or recommendation of the merger agreement or the
merger) an acquisition proposal unless such an acquisition
proposal is a superior proposal (and we shall have first
terminated the merger agreement in accordance with such
agreement).
Prior to providing any information to or entering into discussions or
negotiations with any person in connection with an acquisition proposal by such
person, we shall notify Oppenheimer immediately (orally and in writing) if any
such inquiries, proposals or offers are received by, any such information is
requested from, or any such discussions or negotiations are sought to be
initiated or continued with, any of our representatives indicating, in
connection with such notice, the name of such person and the material terms and
conditions of any proposals or offers and thereafter shall keep Oppenheimer
reasonably and promptly informed on the status and terms of any such proposals
or offers and provide Oppenheimer with a copy of any written acquisition
proposal, and all amendments and supplements thereto and the status of any such
discussions or negotiations.
We have further agreed that neither our board of directors nor any
committee thereof, except in connection with a superior proposal and subject to
compliance with the relevant sections of the merger agreement, shall:
- - withdraw or modify, or propose publicly to withdraw or modify, in a
manner adverse to Oppenheimer, the approval or recommendation by such
board of directors or such committee of the merger or the merger
agreement;
- - approve or recommend, or propose publicly to approve or recommend, any
acquisition proposal; or
- - cause us to enter into any letter of intent, agreement in principle,
acquisition agreement or other similar agreement related to any
acquisition proposal.
Required Company Vote. We have agreed that we shall as promptly as
practicable following the execution of the merger agreement take all action
necessary in accordance with applicable law, our articles of incorporation and
our bylaws to duly call, give notice of, convene and hold as soon as
practicable after the date of the merger agreement a meeting of our
stockholders for the purpose of obtaining the affirmative vote of the holders
of a majority of the voting power of our common stock to adopt the merger
agreement and, except in connection with a superior proposal and subject to
compliance with the relevant provisions of the merger agreement, shall take
all lawful action to solicit the adoption of the merger agreement by such vote.
We have further agreed that our board of directors shall recommend
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adoption of the merger agreement by our stockholders. Notwithstanding the
foregoing and regardless of whether our board of directors has withdrawn,
amended or modified its recommendation that our stockholders approve and adopt
the merger agreement, unless the merger agreement shall have been terminated
pursuant to its termination provisions (see "-- Termination", below), we shall
be required to hold such a meeting of our stockholders for the purpose of
obtaining such a vote.
Access to Information. We have agreed to afford to Oppenheimer and its
representatives reasonable and prompt access to our information, assets and
personnel and to make available to Oppenheimer on a timely basis a copy of each
material document filed, furnished or received by us pursuant to the
requirements of domestic or foreign laws and all other information reasonably
requested by Oppenheimer concerning our business, properties and personnel,
subject to confidentiality or legal restrictions.
Covenants of Oppenheimer. Under the merger agreement, Oppenheimer has
agreed that from the date of the merger agreement until the effective time of
the merger, Oppenheimer and its subsidiaries shall, except as otherwise
contemplated by the merger agreement or to the extent that we shall in our sole
discretion otherwise consent in writing, not take any action that would, or fail
to take any action which failure would, or could reasonably be expected:
- - to impair Oppenheimer's ability to have available sufficient funds to
pay the merger consideration and satisfy its other obligations under
the merger agreement;
- - to impede or delay receipt of specified consents or otherwise impede or
delay consummation of the merger and the transactions contemplated
thereby;
- - to result in any of Oppenheimer's representations and warranties set
forth in the merger agreement being or becoming untrue in any material
respect;
- - to result in a material breach of any provision of the merger
agreement;
- - to result in any of the conditions to the merger as set forth in the
merger agreement not being satisfied; or
- - to result in a material delay in the consummation of the merger and the
transactions contemplated in the merger agreement.
Offers of Employment. Oppenheimer agrees that, except as provided in
certain employment agreements with specified employees, it shall immediately
following the effective time of the merger cause the surviving corporation to
continue the employment of each of the persons then employed by us on terms
substantially similar to the terms of their current employment.
Employee Benefits. Oppenheimer agrees that, except as provided in
certain employment agreements with specified employees, it shall assume all
employment and other related agreements with our current employees. Further, our
obligations under any employee or director benefit plan in effect as of the
signing of the merger agreement shall become obligations of the surviving
company as of the effective date of the merger; provided that as soon as
practicable Oppenheimer shall provide or cause the surviving corporation to
provide to such employees the same benefits which are provided to similarly
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situated employees of Oppenheimer immediately prior to the effective time of the
merger, subject to certain conditions and exceptions.
Directors' and Officers' Indemnification and Insurance. Oppenheimer has
agreed that through the sixth anniversary of the effective time of the merger
the surviving corporation shall indemnify and hold harmless each of our or our
subsidiaries' present or former officers, directors or employees (when acting in
such capacity) against all claims, losses, liabilities, damages, judgments,
fines and reasonable fees, costs and expenses incurred in connection with any
claim, action, proceeding or investigation, whether civil, criminal,
administrative or investigative, arising out of or pertaining to (A) the fact
that such person is or was an officer, director or employee of Tremont or of our
subsidiaries or (B) matters existing or occurring at or prior to the effective
time of the merger, in each case subject to certain exceptions and conditions.
Oppenheimer has further agreed that the surviving corporation shall cause to be
maintained through the sixth anniversary of the effective time of the merger the
current policies of directors' and officers' liability insurance and fiduciary
liability insurance maintained by us (or policies no less advantageous than the
current policies maintained by us) with respect to claims arising from facts or
events that occurred at or before the effective time of the merger, subject to
certain conditions and exceptions, provided that in no event shall the surviving
corporation be required to expend in any one year an amount in excess of 200% of
the annual premiums currently paid by us for such policies.
Preparation of Proxy Statement; Tremont Shareholders' Meeting. We have
agreed to prepare this proxy statement in cooperation with Oppenheimer, to use
all reasonable efforts to have this statement cleared by the SEC as promptly as
practicable after filing and to mail this proxy statement to our stockholders
at the earliest practicable date following such clearance. We have further
agreed to provide Oppenheimer with any comments, whether oral or written,
received from the SEC concerning the proxy statement and to review in good faith
all comments offered by Oppenheimer.
Reasonable Best Efforts. Each party to the merger agreement has agreed
to use its reasonable best efforts to take, or cause to be taken, all actions
necessary, proper or advisable under applicable law to cause the merger and the
other transactions contemplated by the merger agreement to be consummated, and
to cooperate with the other parties to the merger agreement in furtherance of
the foregoing.
Fees and Expenses. Each party to the merger agreement has agreed to
bear its own expenses incurred in connection with the merger agreement and the
transactions contemplated thereby, subject to, among other things, the following
exceptions: (i) if the merger is consummated, the surviving corporation shall
pay any and all property and transfer taxes imposed on us or our subsidiaries,
and (ii) we shall pay a termination fee to Oppenheimer under certain
circumstances (see "-- Termination Fees", below).
Confidentiality. Each of the parties to the merger agreement has agreed
that it shall hold in confidence any "Confidential Information" as defined in
the Confidentiality Agreement, dated March 14, 2001, as amended, by and between
us and OppenheimerFunds, Inc., to the extent required by and in accordance with
the provisions of the Confidentiality Agreement.
Public Announcements. The parties to the merger agreement have agreed
to consult with each other prior to issuing any press releases or making any
public announcements concerning the merger agreement or the transactions
contemplated thereby.
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Takeover Statutes. If any anti-takeover or similar statute or
regulation is or may become applicable to the merger or the other transactions
contemplated by the merger agreement, each of the parties to the merger
agreement shall grant such approvals and take all such actions as are legally
permissible so that such transactions may be consummated as promptly as
practicable on the terms contemplated under the merger agreement and otherwise
act to eliminate or minimize the effects of any such statute or regulation on
such transactions.
Revenue Run Rate; Tangible Net Worth. We have agreed to provide to
Oppenheimer on or before the fifteenth business day of each month prior to the
closing date a certificate setting forth our annualized investment management
fees (also referred to as the revenue run-rate) and our tangible net worth, in
each case as of such month-end. The parties have further agreed to work in good
faith to resolve any disagreement concerning the calculation of the revenue
run-rate or tangible net worth.
Employment Agreements. We have agreed to use our reasonable best
efforts to enter into amendments satisfactory to Oppenheimer to certain
employment agreements with specified employees prior to the effective date.
CONDITIONS PRECEDENT TO THE MERGER
Conditions to Each Parties Obligations to Effect the Merger. The
respective obligations of each of the parties to the merger agreement to effect
the merger and the transactions contemplated by the merger agreement are subject
to the satisfaction or waiver of several conditions, including:
- - the adoption of the merger agreement by our stockholders;
- - the absence of any statute, law, ordinance, rule, regulation, judgment,
decree, injunction or other order that prohibits consummation of the
transactions contemplated by the merger agreement; and
- - the expiration or termination of the waiting period under the
Hart-Scott-Rodino Act and the receipt of certain written consents as
specified in the merger agreement.
Additional Conditions to Our Obligations. Except as may be waived by
us, our obligations to effect the transactions contemplated in the merger
agreement are subject to the satisfaction or waiver of the following conditions:
- - subject to materiality standards set forth in the merger agreement, the
accuracy of the representations and warranties of each of Oppenheimer
and Joshua Acquisition Corp. in the merger agreement as of the date of
the merger agreement and the closing;
- - the performance in all material respects by Oppenheimer of all
obligations required to be performed by it prior to the closing; and
- - the taking of all necessary action by Oppenheimer to ensure that the
employee Retention Plan and Bonus Pool, as defined in the merger
agreement, shall be in full force and effect following the effective
time of the merger.
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Additional Conditions to the Obligations of Oppenheimer and Joshua
Acquisition Corp. Except as may be waived by Oppenheimer, the obligations of
Oppenheimer and Joshua Acquisition Corp. to effect the transactions contemplated
in the merger agreement are subject to the satisfaction or waiver of the
following conditions:
- - subject to materiality standards set forth in the merger agreement, the
accuracy of our representations and warranties in the merger agreement
as of the date of the merger agreement and the closing;
- - the performance in all material respects by us of all obligations
required to be performed by us prior to the closing;
- - the non-occurrence of any event that shall have caused, or be
reasonably likely to cause, a material adverse effect with respect to
our business;
- - the investment management revenue run-rate of us and our subsidiaries
(calculated to exclude the effects of market and currency fluctuations)
as of the calendar month-end prior to the closing, in respect of which
consents have been obtained, being not less than $16,667,627.05;
- - the employment agreements between OppenheimerFunds, Inc. and certain
employees specified in the merger agreement shall be in full force and
effect, Oppenheimer shall not be aware of any basis that would
reasonably be expected to cause any of such agreements to no longer be
in full force and effect, and none of the Key Employees (as defined in
the merger agreement) shall have died, become incapacitated or
otherwise not be in a position to perform his or her obligations
thereunder;
- - the number of shares of common stock held by holders who did not vote
to approve the merger agreement and who demand appraisal for such
shares in accordance with Section 262 of the DGCL shall constitute not
more than 10% of the shares of our common stock outstanding immediately
prior to the effective time of the merger; and
- - the adoption by us of the employee Retention Plan and Bonus Pool, as
defined in the merger agreement.
TERMINATION
The merger agreement provides that prior to the closing, the merger
agreement may be terminated at any time by mutual written consent of
Oppenheimer and Tremont, or by action of our respective boards of directors.
The merger agreement may be terminated at any time prior to the closing
by either us or Oppenheimer if:
- - the transactions contemplated by the merger agreement have not been
consummated by December 31, 2001, so long as the terminating party did
not prevent consummation by materially failing to fulfill any of its
obligations under the merger agreement;
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- - any court or other governmental authority has issued or promulgated any
statute, law, ordinance, rule, regulation, judgment, decree, injunction
or other order that has become final and non-appealable, permanently
restraining, enjoining or otherwise prohibiting the consummation of the
merger; or
- - there shall have been a breach by the other party of any of its
representations, warranties, covenants or obligations contained in the
merger agreement if such breach would result in the failure to satisfy
one or more of the conditions to the merger and such breach shall be
incapable of being cured, or, if capable of being cured, shall not have
been cured within 30 days after written notice thereof shall have been
received by the party alleged to be in breach; provided that the right
to terminate the merger agreement pursuant to this clause shall not be
available to either party, if such party, at such time, is in material
breach of any representation, warranty, covenant or agreement set
forth in the merger agreement.
The merger agreement may be terminated at any time prior to the closing
by Oppenheimer if:
- - our board of directors has failed to recommend, has withdrawn or has
adversely modified its approval or recommendation of the merger
agreement;
- - our board of directors has failed to reconfirm its recommendation of
the merger agreement or the merger within three business days after
being requested in writing by Oppenheimer to do so;
- - our board of directors has recommended a competing acquisition proposal
to our stockholders;
- - our board of directors has failed to call a meeting of our stockholders
for the purpose of obtaining the vote required to approve the merger
agreement and the transactions contemplated thereby;
- - a tender offer or exchange offer for 15% or more of the outstanding
shares of common stock is commenced and our board of directors has
failed to recommend against acceptance of such tender offer or exchange
within the time period required pursuant to Rule 14e-2 of the Exchange
Act of 1934; or
- - the condition to closing that the employment agreements between
OppenheimerFunds, Inc. and certain employees specified in the merger
agreement be in full force and effect shall not have been satisfied or
waived by Oppenheimer.
At any time prior to approval of the merger agreement by our
stockholders, we may terminate the merger agreement if after receipt of a
competing acquisition proposal, (i) our directors determine, in good faith,
after consultation with their advisors, that termination of the merger agreement
is required to comply with its fiduciary duties under applicable law; (ii) after
receiving requisite notice of that acquisition proposal from us, Oppenheimer
does not make, within five business days, an offer that is at least as favorable
as such acquisition proposal; and (iii) simultaneous with such termination we
pay the required termination fee described below.
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TERMINATION FEE
We have agreed to pay Oppenheimer a termination fee of $5,800,000 if
any of the following events occur:
- - the merger agreement is terminated by us following receipt of a
competing acquisition proposal;
- - the merger agreement is terminated by Oppenheimer because our board of
directors (i) failed to recommend, withdrew or adversely modified its
approval or recommendation of the merger agreement, (ii) failed to
reconfirm its recommendation of the merger agreement or the merger
within three business days of being requested by Oppenheimer to do so,
(iii) failed to recommend against acceptance of a tender offer for 15%
or more of the outstanding shares of our common stock or (iv) has
recommended a competing acquisition proposal to our stockholders;
- - the merger agreement is terminated by Oppenheimer because our
stockholders shall have failed to vote to approve the merger and the
merger agreement by December 30, 2001;
- - within 18 months of our termination of the merger agreement for the
merger not having taken place by December 30, 2001, we enter into a
binding agreement with a third party to implement an acquisition
proposal or consummate an acquisition proposal; or
- - the employment agreements between OppenheimerFunds, Inc. and certain
employees specified in the merger agreement shall not be in full force
and effect.
AMENDMENT AND WAIVER
The merger agreement may be amended by the parties thereto, by action
taken or authorized by their respective boards of directors, but, after approval
of the merger agreement and the transactions contemplated thereby by our
stockholders, no amendment shall be made which by applicable law or in
accordance with the rules of any relevant stock exchange requires further
approval by our stockholders without such further approval. The merger agreement
may not be amended except by an instrument in writing signed on behalf of each
of the parties thereto.
REGULATORY APPROVALS
The Hart-Scott-Rodino Act provides that transactions such as the merger
may not be completed until certain information has been submitted to the Federal
Trade Commission and the Antitrust Division of the U.S. Department of Justice
and specified waiting requirements have been satisfied. We and Oppenheimer made
the required filings under the Hart-Scott-Rodino Act on August ___, 2001, and
therefore expect the waiting period to expire on September ___, 2001 (assuming
that no additional information is requested by the Federal Trade Commission or
Antitrust Division of the U.S. Department of Justice).
Tremont Securities, Inc., one of our subsidiaries, is registered as a
broker-dealer with the Securities and Exchange Commission under the Securities
Exchange Act of 1934 and is a member of the National Association of Securities
Dealers, Inc. The National Association of Securities Dealers, Inc. is a
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self-regulatory organization which, through its subsidiary NASD Regulation,
Inc., regulates securities markets and the activities of broker-dealers. The
rules promulgated by NASD Regulation, Inc., provide that the merger may not be
completed until an application containing certain information has been submitted
to and approved by NASD Regulation, Inc. Tremont Securities, Inc. submitted the
required application on August 2, 2001. We do not expect that NASD Regulation,
Inc. will impose any interim restrictions on the business activities of Tremont
Securities, Inc. while the application is being reviewed and expect that our
application will be granted on or before September 1, 2001 (assuming that no
additional information or membership interview is requested by NASD Regulation,
Inc.).
Tremont Investment Management, Inc., one of our subsidiaries, is
subject to regulation by the Ontario Securities Commission under the Securities
Act (Ontario). The rules and regulations promulgated by the Ontario Securities
Commission provide that the merger may not be completed until certain
information has been submitted to the Ontario Securities Commission. Tremont
Investment Management, Inc. submitted the required application on August ___,
2001. We expect that the Ontario Securities Commission will grant our
application on or before September ___, 2001.
Tremont TASS (Europe) Limited, one of our subsidiaries, is subject to
regulation by the U.K. Securities Futures Authority under the English Financial
Services Act of 1986. The rules and regulations promulgated by the Securities
Futures Authority provide that the merger may not be completed until certain
information has been submitted to the Securities Futures Authority. Tremont TASS
(Europe) Limited submitted the required application on August ___, 2001. We
expect that the Securities Futures Authority will grant our application on or
before September ___, 2001.
DIRECTORS AND MANAGEMENT
Information with respect to the management of Tremont is set forth in
Part III of Tremont's Annual Report on Form 10-KSB for the year ended December
31, 2000. See "Where You Can Find More Information".
In addition, a description of other contracts, arrangements,
understandings or relationships relating Tremont and its common stock is set
forth and described in Tremont's Annual Report on Form 10-KSB for the year ended
December 31, 2000.
Our board of directors' reasons for approving the merger agreement, the
merger and the other transactions contemplated by the merger agreement are set
forth in the section entitled "Special Factors -- Reasons for the Merger". In
coming to its decision to approve the transactions contemplated by the merger
agreement, subject to approval by Tremont's stockholders, our board of directors
did not have a committee of independent directors or independent third party
review or approve the contemplated transactions.
Ten persons holding shares of our common stock have entered into a
stockholders' agreement with Oppenheimer pursuant to which they have agreed to
vote FOR the adoption of the merger agreement. Nine of these persons are
directors and/or officers of Tremont and one is a significant stockholder that
is represented on our board of directors. Pursuant to the stockholders'
agreement, approximately 308,950 shares of our Class A common stock and
3,184,070 shares of our Class B common stock, comprising approximately 37% of
the votes required to adopt the merger agreement, are already commit-
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ted to approve the adoption of the merger agreement. The stockholders' agreement
also provides that if the merger agreement is terminated under certain
circumstances, Oppenheimer may purchase shares of our Class A common stock and
Class B common stock held by these ten stockholders at a purchase price per
share equal to the merger consideration. To Tremont's knowledge, none of the
executive officers or directors of Tremont has made a recommendation in support
of or opposed to the transactions contemplated by the merger agreement, other
than the recommendation described in this proxy statement.
PRICE RANGE OF STOCK AND DIVIDENDS
For the period commencing on January 1, 1999 and ending on February 1,
2000, both the Class A common stock and the Class B common stock were quoted on
the OTC Bulletin Board. Since February 2, 2000, the Class B common stock has
traded on the NASDAQ SmallCap Market under the symbol "TMAV". The Class A common
stock continues to be quoted on the OTC Bulletin Board under the symbol "TMAVA".
The following table sets forth the range of high and low bid prices of the Class
A common stock and the range of high and low bid prices or trade prices of the
Class B common stock, as applicable. The quotations below are, up until February
2, 2000, dealer prices without retail mark-ups, mark-downs or commissions and
may not represent actual transactions. The bid prices and trade prices have been
restated to reflect the impact of a five-for-four stock split paid on August 8,
2000 to stockholders of record on July 31, 2000.
Price Range of Class A Common Stock
Bid Prices
---------------------------------------------
High Low
-------------------- -------------------
1999:
First Quarter $ 6.40 $ 3.84
Second Quarter 6.88 5.12
Third Quarter 8.40 6.20
Fourth Quarter 8.80 7.20
2000:
First Quarter $ 8.40 $ 8.00
Second Quarter 8.60 6.40
Third Quarter 14.00 7.00
Fourth Quarter 12.00 9.50
2001:
First Quarter 13.00 9.00
Second Quarter 17.00 10.75
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Price Range of Class B Common Stock
Bid Prices
---------------------------
High Low
---------- -----------
1999:
First Quarter $ 6.72 $ 4.00
Second Quarter 7.04 5.12
Third Quarter 8.80 6.40
Fourth Quarter 9.40 4.80
2000:
January 1, 2000 - February 1, 2000 8.00 7.60
Trade Prices
---------------------------
High Low
---------- -----------
2000:
February 2, 2000 - March 31, 2000 $ 8.80 $ 6.40
Second Quarter 9.00 7.20
Third Quarter 12.00 7.50
Fourth Quarter 15.00 10.00
2001:
First Quarter 15.50 9.50
Second Quarter 20.00 12.25
- ------------
Since its organization, Tremont has not paid any cash dividends on its
Class A common stock or its Class B common stock.
On July 9, 2001, the last full trading day prior to the public
announcement of the signing of the merger agreement, the closing sale price of
our Class A common stock was $22.00 and the high and low bid prices per share
were [xxx] and [xxx], respectively, and the closing sale price of our Class B
common stock was $19.75 per share and the high and low trading prices per share
were [xxx] and [xxx], respectively. On [date], the most recent practicable date
prior to the printing of this proxy statement, the closing price of our Class A
common stock was [xxx] and the closing price of our Class B common stock was
[xxx]. You are urged to obtain current market quotations for our common stock
prior to making any decision with respect to the proposed merger.
As of the record date, there were approximately xxx holders of record
of Tremont's Class A common stock and approximately xxx holders of Tremont's
Class B common stock.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following information pertains to common stock beneficially owned
(i) by all directors and executive officers of Tremont and (ii) any person known
to us from our records and from reports filed with the SEC on Schedules 13D
and/or 13G to be the beneficial owner of more than 5% of our common
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stock. Unless indicated otherwise by footnote, the owner exercises sole voting
and investment power over the securities (other than unissued securities, the
ownership of which has been imputed to such owner).
DIRECTOR NUMBER OF PERCENTAGE OF
NAME OR OFFICER SHARES OWNED CLASS OWNED
-------- ----------- -------------------------- ------------------------
CLASS A CLASS B CLASS A CLASS B
------------ ------------ ----------- ----------
Sandra L. Manzke (1) Yes 256,194 599,648 15% 11%
Robert I. Schulman (2) Yes 12,286 521,658 * 10%
Barry H. Colvin (3) No 105 43,324 * *
John L. Keeley, Jr. (4) Yes 107,379 557,223 6% 10%
Alan Rhein (5) Yes - 53,904 - 1%
Jimmy L. Thomas (6) Yes - 81,249 - 2%
Suzanne S. Hammond (7) No 20,131 43,637 1% *
Stephen T. Clayton (8) No 6,947 68,334 * 1%
Bruce D. Ruehl (9) Yes 6,097 187,075 * 4%
Nicola Meaden (10) Yes - 384,593 - 7%
Mario J. Gabelli (11) No 604,203 306,040 38% 5%
Brighton Communications Corporation (12) No - 155,063 - 3%
Legion Insurance Company (13) No - 1,351,536 - 26%
Oppenheimer Acquisition Corp. (14) No 308,950 3,254,380 18% 62%
Directors and officers as a group 409,139 2,540,645 24% 48%
- -----------------
* Less than 1%. Percentages are shown only where they exceed one percent of
the number of shares outstanding and are based on shares of common stock
outstanding on June 30, 2001.
(1) Ms. Manzke is the Chairman of the Board of Directors and Co-Chief
Executive Officer of Tremont. Her address is 555 Theodore Fremd Ave.,
Rye, New York. Includes 60,482 shares of Class A common stock and
67,851 shares of Class B common stock owned by the Tremont Advisers,
Inc. Savings Plan over which Ms. Manzke has investment discretion and
64,687 shares of Class B common stock subject to currently exercisable
stock options (together with such options held by other directors and
officers of Tremont, the "Currently Exercisable Options").
(2) Mr. Schulman is President, Co-Chief Executive Officer and a director of
Tremont. His address is 555 Theodore Fremd Ave., Rye, New York.
Includes 12,286 shares of Class A common stock and 13,208 shares of
Class B common stock owned by the Savings Plan over which Mr. Schulman
has investment discretion and 48,437 shares of Class B common stock
subject to Currently Exercisable Options.
(3) Mr. Colvin is the Chief Operating Officer of Tremont. His address is
555 Theodore Fremd Ave., Rye, New York. Includes 40,624 shares of Class
B common stock subject to Currently Exercisable Options.
(4) Mr. Keeley is a director of Tremont. His address is 401 South LaSalle
St., Chicago, Illinois. Includes 31,250 shares of Class B common stock
owned by Mr. Keeley's wife, 14,062 shares of Class B common stock owned
by the John L. Keeley Jr. Foundation, 54,687 shares of Class B common
stock owned by the KIC Profit Sharing Plan & Trust, 54,687 shares of
Class B common stock owned by the KIC Pension Plan & Trust, 102,675
shares of Class B common stock owned by Kamco Limited Partnership No. 1
and 30,802 shares of Class B common stock owned by JGJ
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Partnership. Mr. Keeley is deemed to have beneficial ownership of the
foregoing. Also includes 10,936 shares of Class B common stock subject
to Currently Exercisable Options.
(5) Mr. Rhein is a director of Tremont. His address is 405 Park Avenue, New
York, New York. Includes 22,655 shares of Class B common stock subject
to Currently Exercisable Options.
(6) Mr. Thomas is a director of Tremont. His address is 205 Fox Meadow
Drive, Orchard Park, New York. Includes 3,124 shares of Class B common
stock subject to Currently Exercisable Options.
(7) Ms. Hammond is Secretary and Treasurer of Tremont. Her address is 555
Theodore Fremd Ave., Rye, New York. Includes 14,272 shares of Class A
common stock owned by the Savings Plan and 2,557 shares of Class B
common stock owned by the Savings Plan over which Ms. Hammond has
investment discretion, and 6,187 shares of Class B of common stock
subject to Currently Exercisable Options.
(8) Mr. Clayton is Chief Financial and Administrative Officer of Tremont.
His address is 555 Theodore Fremd Ave., Rye, New York. Includes 6,947
shares of Class A common stock and 6,027 shares of Class B common stock
owned by the Savings Plan over which Mr. Clayton has investment
discretion and 32,656 shares of Class B common stock subject to
Currently Exercisable Options. Also includes 5,624 shares of Class B
common stock owned by his wife, as to which Mr. Clayton specifically
disclaims beneficial ownership, and 312 shares owned by his minor
children which Mr. Clayton is deemed to own beneficially.
(9) Mr. Ruehl is Chief Investment Strategist and a director of Tremont. His
address is 555 Theodore Fremd Ave., Rye, New York. Includes 6,097
shares of Class A common stock and 2,140 shares of Class B common stock
owned by the Savings Plan over which Mr. Ruehl has investment
discretion and 29,686 shares of Class B common stock subject to
Currently Exercisable Options.
(10) Ms Meaden is Chief Executive Officer of Tremont Tass (Europe) Limited
and is a director of Tremont. Her address is Charter House, 13-15
Carteret St., London, England. Includes 284,328 shares of Class B
common stock subject to Currently Exercisable Options.
(11) Mr. Gabelli's address is Gabelli Asset Management, 555 Theodore Fremd
Ave., Rye, New York. Includes 407,465 shares of Class A Common Stock
and 3,540 shares of Class B Common Stock owned by a family partnership
over which Mr. Gabelli has sole voting power and investment power.
Includes 22,800 shares of Class A Common Stock owned by a family
foundation over which Mr. Gabelli has voting and investment power, of
which Mr. Gabelli disclaims beneficial ownership. Does not include
shares listed elsewhere in this table which are held by Brighton
Communications Corporation ("Brighton"), of which Mr. Gabelli
specifically disclaims beneficial ownership. Mr. Gabelli is the
principal shareholder, as well as the Chairman of the Board and Chief
Executive Officer, of Gabelli Asset Management Inc. ("GAMI"), the
ultimate parent company for a variety of operating companies engaged in
various aspects of the securities business, including Gabelli
Securities, Inc. ("GSI"), a majority-owned subsidiary of GAMI; and
Gabelli & Company, Inc. ("Gabelli & Company"), a wholly-owned
subsidiary of GSI and a registered broker-dealer. Mr. Gabelli is also
Chairman of the Board and Chief Executive Officer of Gabelli Group
Capital Partners, Inc. ("GGCP"), which owns approximately 80% of the
common stock of GAMI. Acting in these capacities, Mr. Gabelli has the
authority for making voting
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and investment decisions on behalf of GGCP and GSI and, therefore, may
be deemed to be the beneficial owner of shares of the Company owned by
or held in accounts of GGCP and GSI. Of the remaining shares of Class A
common stock owned by Mr. Gabelli and his affiliates, of Gabelli,
52,390 shares are held by GSI and 282 shares are held by GGCP.
(12) Brighton's address is 401 Theodore Fremd Ave., Rye, New York. Mr.
Gabelli is Chairman of the Board and Chief Executive Officer of
Brighton, and he and his affiliates and their clients are principal
shareholders of Lynch Corporation ("Lynch"). Mr. Gabelli may be deemed
to be a beneficial owner of the shares of the Company owned by
Brighton, a subsidiary of Lynch, by virtue of his and certain
affiliated parties' significant beneficial ownership of the common
stock of Lynch. Mr. Gabelli, however, specifically disclaims beneficial
ownership of all of the shares of the Company's Common Stock held by
Brighton.
(13) Legion Insurance Company's address is One Logan Square, Philadelphia,
Pennsylvania. A wholly-owned subsidiary of Mutual Risk Management, Ltd
(known as MRM), MGL Investment, Ltd., purchased these shares during
1997 and 1999. These shares were transferred, effective December 31,
1999, to Legion Insurance Company, another of MRM's wholly-owned
subsidiaries.
(14) As of July 10, 2001, Oppenheimer Acquisition Corp. has, pursuant to the
stockholders' agreement, shared voting power and shared dispositive
power with respect to (and therefore beneficially owns) an aggregate
of (i) 308,950 Class A shares representing 17.9% of the outstanding
shares of Class A Common Stock and (ii) 3,254,380 Class B shares
representing 65.5% of the outstanding shares of Class B Common Stock.
By virtue of (i) MassMutual Holding Trust I's ("Trust") control of
Oppenheimer, (ii) MassMutual Holding Company's ("Holding") control of
Trust and (iii) Massachusetts Mutual Life Insurance Company's
("MassMutual") control of Holding, each of Trust, Holding and
MassMutual may be, for the purposes of this proxy statement, a
beneficial owner of all of the shares of which Oppenheimer is a
beneficial owner. Each of Trust, Holding and MassMutual disclaims
beneficial ownership of the 308,950 shares of Class A Common Stock and
the 3,254,380 shares of Class B Common Stock referred to above as to
which they may be deemed to have beneficial ownership. The address of
Oppenheimer is Two World Trade Center, New York, New York. The address
of Trust is 1295 State Street, Springfield, Massachusetts. The address
of Holding is 1295 State Street, Springfield, Massachusetts. The
address of MassMutual is 1295 State Street, Springfield, Massachusetts.
CAUTIONARY STATEMENT CONCERNING
FORWARD-LOOKING STATEMENTS
Tremont has made forward-looking statements in this document and the
documents referenced herein that are subject to risks and uncertainties. These
statements are based on management's beliefs and assumptions, based on
information currently available to management. Forward-looking statements
include the information concerning possible or assumed future results of
operations of Tremont set forth (i) under "Summary", "Special Factors" and "The
Merger Agreement" and (ii) in this document and the documents referenced
preceded by, followed by or that include the words "believes," "expects,"
"anticipates," "intends," "plans," "estimates," "should" or similar
expressions.
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63
Some statements contained in this proxy statement may constitute
"forward looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. These statements involve a number of risks,
uncertainties and other factors that could cause actual results to differ
materially, including the performance of financial markets, the investment
performance of Tremont's and its subsidiaries' sponsored investment products
and separately managed accounts, general economic conditions, future
acquisitions, competitive conditions and government regulations, including
changes in tax laws. Tremont cautions you to carefully consider such factors.
Further, such forward-looking statements speak only as of the date on which such
statements are made. Tremont undertakes no obligation to update any
forward-looking statements to reflect events or circumstances after the date of
such statement even if new information, future events or other circumstances
have made them incorrect or misleading. For those statements, Tremont claims the
protection of the safe harbor for forward-looking statements contained in the
Private Securities Litigation Reform Act of 1995.
Stockholders should understand that the following important factors, in
addition to those discussed elsewhere in the documents which are referenced in
this proxy statement, could affect the future results of Tremont and could cause
results to differ materially from those expressed in such forward- looking
statements: competitive pressures among financial services companies may
increase significantly; general economic conditions, either internationally or
nationally or in the states in which Tremont or its subsidiaries are doing
business, may be less favorable than expected; legislative or regulatory changes
may adversely affect the business in which Tremont is engaged; and technological
changes may be more difficult or expensive than anticipated.
FUTURE STOCKHOLDER PROPOSALS
If the merger if not consummated, Tremont will hold a 2002 annual
meeting of stockholders. If such meeting is held, for a stockholder proposal to
be considered for inclusion in Tremont's proxy statement for the 2002 annual
meeting, the proposal must have been received at Tremont's offices no later than
January 15, 2002.SEC Rule 14a-8 contains standards as to what stockholder
proposals are to be included in a proxy statement.
In the event the merger is not consummated and the Tremont 2002 annual
meeting is held, if a stockholder intends to present a proposal for
consideration at the 2002 annual meeting outside the process of SEC Rule 14a-8,
Tremont must receive the notice of such proposal on or before [date].
WHERE YOU CAN FIND MORE INFORMATION
Tremont files annual, quarterly and special reports, proxy statements
and other information with the Securities and Exchange Commission. You may read
and copy any reports, statements or other information we file at the Securities
and Exchange Commission's Public Reference Room, 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at the Securities and Exchange Commission's regional
offices located at 7 World Trade Center, Suite 1300, New York, New York 10048
and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Please call
the Securities and Exchange Commission at 1-800-SEC-0330 for further
information on the public reference rooms. Our Securities and Exchange
Commission filings are also available to the public from commercial document
retrieval services and at the website maintained by the Securities and Exchange
Commission at http://www.sec.gov. You may inspect infor-
57
64
mation that Tremont files with the NASDAQ at the offices of the National
Association of Securities Dealers at 1735 K Street NW, Washington DC 20006.
In addition to the information provided in this proxy statement, the
following documents contain important information about our company and its
finances.
TREMONT SEC FILINGS PERIOD OR DATE FILED
Annual Report on Form 10-KSB Year ended December 31, 2000
Quarterly Reports on Form 10-QSB Quarter ended March 31, 2001
and June 30, 2001.
Current Report on Form 8-K Filed on July 10, 2001.
Company stockholders may obtain the above-mentioned documents by
requesting them in writing or by telephone from the appropriate party at the
following addresses:
Tremont Advisers, Inc.
555 Theodore Fremd Avenue
Rye, New York 10580
Attention: Investor Relations
Telephone: (914) 925-1140
If you would like to request documents from us, please do so by
September 19, 2001 to receive them before the special meeting.
You should rely only on the information contained in this proxy
statement or other documents to which we refer to vote on the merger. We have
not authorized anyone to provide you with information that is different from
what is contained in this proxy statement. This proxy statement is dated August
___, 2001.You should not assume that the information contained in this proxy
statement is accurate as of any date other than the date hereof, and the mailing
of the proxy statement to stockholders shall not create any implication to the
contrary.
Your vote is important. To vote your shares, please complete, date,
sign and return the enclosed proxy card as soon as possible in the enclosed
postage-prepaid envelope or follow the instructions on your voting card to vote
by telephone. Please call our proxy solicitor, James McCormick, or Stephen
Clayton in our investor relations department, at (914) 925-1140 if you have
questions or need assistance with the voting procedures.
BY ORDER OF THE BOARD OF DIRECTORS,
-----------------------------------
Sandra L. Manzke
Chairman of the Board and
Co-Chief Executive Officer
Rye, New York
August ___, 2001
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[FORM OF PROXY CARD]
PRELIMINARY COPY
TREMONT ADVISERS, INC.
555 THEODORE FREMD AVENUE
RYE, NEW YORK 10580
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON SEPTEMBER 25, 2001
The undersigned hereby appoints Catherine G. Sweeney and Joseph A.
Soares, and each of them, proxies (each with power of substitution) of the
undersigned to attend the above special meeting of stockholders of Tremont
Advisers, Inc. at 11:00 a.m., local time, on September 25, 2001, and any
adjournment or postponement thereof (the "Special Meeting"), and thereat to vote
all shares of stock held by the undersigned, as specified on the reverse side,
and on any other matters that may properly come before said meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IN ADDITION, UPON APPROPRIATE
MOTION, THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN FAVOR OF ANY
ADJOURNMENT OF THE SPECIAL MEETING FOR THE PURPOSE OF SOLICITING ADDITIONAL
PROXIES IN ORDER TO APPROVE THE AGREEMENT AND PLAN OF MERGER, DATED AS OF JULY
10, 2001, AMONG OPPENHEIMER ACQUISITION CORP., TREMONT ADVISERS, INC. AND JOSHUA
ACQUISITION CORP. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR THE
ADOPTION OF THE AGREEMENT AND PLAN OF MERGER IN ACCORDANCE WITH THE
RECOMMENDATION OF THE BOARD OF DIRECTORS OF TREMONT ADVISERS, INC. THE PROXIES
CANNOT VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
(CONTINUED, AND TO BE SIGNED AND DATED, ON REVERSE SIDE)
66
THE BOARD OF DIRECTORS OF TREMONT RECOMMENDS A VOTE FOR PROPOSAL 1.
1. To adopt the Agreement and Plan of Merger, dated as of July 10, 2001,
among Oppenheimer Acquisition Corp., Tremont Advisers, Inc. and Joshua
Acquisition Corp., as described in the accompanying proxy statement.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Please sign and date this proxy and return it in the enclosed return
envelope, whether or not you expect to attend the Special Meeting. You may also
vote in person if you do attend.
Date
-----------------------------------
-----------------------------------
-----------------------------------
Signature(s)
Note: Please sign exactly as name appears hereon. If shares are held as joint
tenants, both joint tenants should sign. Attorneys-in-fact, executors,
administrators, trustees, guardians, corporate officers or others signing in a
representative capacity should indicate the capacity in which they are signing.
Votes MUST be indicated (x) in black or blue ink. [X]
(REVERSE OF PROXY CARD)
67
APPENDIX A
AGREEMENT AND PLAN OF MERGER
A-1
68
AGREEMENT AND PLAN OF MERGER
DATED AS OF JULY 10, 2001
among
OPPENHEIMER ACQUISITION CORP.,
JOSHUA ACQUISITION CORP.
and
TREMONT ADVISERS, INC.
69
TABLE OF CONTENTS
PAGE
----
Article I DEFINITIONS.......................................................................2
1.1 Definitions...........................................................................2
Article II THE MERGER.......................................................................11
2.1 The Merger...........................................................................11
2.2 Closing..............................................................................11
2.3 Effective Time.......................................................................11
2.4 Effects of the Merger................................................................11
2.5 Certificate of Incorporation.........................................................11
2.6 By-Laws..............................................................................12
2.7 Officers and Directors of Surviving Corporation......................................12
2.8 Effect on Capital Stock; Merger Consideration........................................12
2.9 Stock Options........................................................................13
2.10 Further Assurances...................................................................14
Article III EXCHANGE OF CERTIFICATES.........................................................14
3.1 Exchange Fund........................................................................14
3.2 Exchange Procedures..................................................................15
3.3 No Further Ownership Rights in Company Common Stock..................................15
3.4 Termination of Exchange Fund.........................................................15
3.5 No Liability.........................................................................15
3.6 Investment of the Exchange Fund......................................................16
3.7 Lost Certificates....................................................................16
3.8 Withholding Rights...................................................................16
3.9 Stock Transfer Books.................................................................16
Article IV REPRESENTATIONS AND WARRANTIES...................................................17
4.1 Representations and Warranties of the Company........................................17
4.2 Representations and Warranties of the Parent and the Merger Sub......................38
Article V COVENANTS RELATING TO CONDUCT OF BUSINESS........................................41
5.1 Covenants of the Company.............................................................41
5.2 Advisory Agreement Consents..........................................................45
5.3 Acquisition Proposals................................................................46
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TABLE OF CONTENTS
(CONTINUED)
PAGE
----
5.4 Obtaining Required Company Vote......................................................48
5.5 Access to Information................................................................48
5.6 Covenants of the Parent..............................................................49
5.7 Offers of Employment.................................................................49
5.8 Employee Benefits....................................................................50
5.9 Directors' and Officers' Indemnification and Insurance...............................50
5.10 Retention Plan and Bonus Pool........................................................52
5.11 Mutual Covenants of the Company and the Parent.......................................52
5.12 Revenue Run Rate.....................................................................55
5.13 Tangible Net Worth...................................................................56
5.14 Employment Agreements................................................................56
Article VI CONDITIONS PRECEDENT.............................................................56
6.1 Conditions to Each Party's Obligation to Effect the Merger...........................56
6.2 Additional Conditions to Obligations of Company......................................56
6.3 Additional Conditions to Obligations of the Parent and the Merger Sub................57
Article VII TERMINATION......................................................................58
7.1 Termination..........................................................................58
7.2 Effect of Termination................................................................60
7.3 Payment by the Company...............................................................60
Article VIII GENERAL PROVISIONS...............................................................61
8.1 Non-Survival of Representations, Warranties and Agreements...........................61
8.2 Amendment............................................................................61
8.3 Extension; Waiver....................................................................61
8.4 Notices..............................................................................61
8.5 Interpretation.......................................................................63
8.6 Counterparts.........................................................................63
8.7 Entire Agreement; Third Party Beneficiaries..........................................63
8.8 GOVERNING LAW........................................................................63
8.9 VENUE................................................................................63
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TABLE OF CONTENTS
(CONTINUED)
PAGE
----
8.10 WAIVER OF JURY TRIAL.................................................................64
8.11 Severability.........................................................................64
8.12 Assignment...........................................................................64
8.13 Enforcement..........................................................................65
8.14 Other Agreements.....................................................................65
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of July 10, 2001 (this
"Agreement"), among OPPENHEIMER ACQUISITION CORP., a Delaware corporation (the
"Parent"), JOSHUA ACQUISITION CORP., a Delaware corporation and a wholly owned
Subsidiary of the Parent (the "Merger Sub"), and TREMONT ADVISERS, INC., a
Delaware corporation (the "Company").
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of the Parent, the
Merger Sub and the Company have each determined that this Agreement and the
merger of the Merger Sub with and into the Company (the "Merger") in accordance
with the provisions of this Agreement are advisable and in the best interests of
their respective stockholders, and such Boards of Directors have approved such
Merger, upon the terms and subject to the conditions set forth in this
Agreement, pursuant to which each share of Company Common Stock (as defined in
Section 4.1(c)(i)(B)) issued and outstanding immediately prior to the Effective
Time (as defined in Section 2.3) (other than shares of Company Common Stock that
are owned or held directly or indirectly by the Parent or the Company which
shall be canceled as provided in Section 2.8(c), and Dissenting Shares (as
defined in Section 2.8(e)) will be converted into the right to receive the
Merger Consideration (as defined in Section 2.8(a)), and the Company will become
a wholly owned Subsidiary of the Parent; and
WHEREAS, as an inducement to the Parent and the Merger Sub to
enter into this Agreement and consummate the transactions contemplated hereby,
concurrently with the execution of this Agreement, the Parent and the Merger Sub
are entering into one or more stockholder agreements with certain stockholders
of the Company listed on Schedule I hereto (collectively, the "Company
Stockholders") pursuant to which, among other things, each Company Stockholder
has agreed to vote the Company Common Stock then owned by such Company
Stockholder in favor of the Merger; and
WHEREAS, certain employees of the Company have entered into
Employment Agreements with the Parent and the Company concurrently with the
execution of this Agreement which are attached hereto as Schedule 6.3(e) to the
Company Disclosure Schedule (the "Employment Agreements"); and
WHEREAS, the Parent, the Merger Sub and the Company desire to
make certain representations, warranties and covenants in connection with the
transactions contemplated hereby and also to prescribe various conditions to the
transactions contemplated hereby.
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth
herein, and intending to be legally bound hereby, the parties hereto agree as
follows:
73
ARTICLE I
DEFINITIONS
1.1 Definitions. For all purposes in this Agreement, the
following terms shall have the respective meanings set forth in this Section 1.1
(such definitions to be equally applicable to both the singular and plural forms
of the terms herein defined):
"Acquisition Proposal" shall have the meaning set forth in
Section 5.3(a).
"Advisers Act" means the Investment Advisers Act of 1940, as
amended, and the rules and regulations promulgated thereunder by the SEC.
"Advisory Agreement" means, with respect to any Person, each
contract or agreement relating to its rendering of investment management or
investment advisory services, including any sub-advisory or similar agreement
and including, in the case of the Funds that are organized in any jurisdiction
within the United States, the organizational documents of such Funds.
"Affiliate", with respect to any Person, means a Person that
directly or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, such Person.
"Agreement" shall have the meaning set forth in the Preamble.
"Annuity Policy" shall have the meaning set forth in Section
4.1(j)(xxi).
"Applicable Law" means any domestic or foreign federal, state
or local statute, law, ordinance, rule, administrative interpretation,
regulation, order, writ, injunction, directive, judgment, decree, policy,
guideline or other requirement (including those of any Governmental Authority
other than any law, regulation, administrative interpretation, order, directive
or judgment in relation to Taxes, whether United States or foreign), applicable
to any of the parties to this Agreement, any of each of their respective
Subsidiaries, or any of the Funds or any of the properties or assets of the
parties to this Agreement or any of their Subsidiaries or any of the Funds, as
the case may be.
"Base Date" means May 31, 2001.
"Base Revenue Run-Rate" means $19,608,973, which the Parent
and the Company have determined represents the Revenue Run-Rate as of the Base
Date, and has been calculated using the methodology set forth in Schedule II
hereto.
"Benefit Plans" means each employee or director benefit plan,
program, arrangement and contract (including any "employee benefit plan", as
defined in Section 3(3) of ERISA, and any bonus, deferred compensation, stock
bonus, stock purchase, restricted stock, stock option, employment, termination,
stay agreement or bonus, change in control and severance plan, program,
arrangement and contract) in effect on the date of
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this Agreement or disclosed on Schedule 4.1(l)(iii) of the Company Disclosure
Schedule, to which the Company or any of its ERISA Affiliates is a party, which
is maintained or contributed to by the Company or any of its ERISA Affiliates,
or with respect to which the Company or any of its ERISA Affiliates could incur
material liability under Section 4069, 4201 or 4212(c) of ERISA which covers
employees, directors or former employees or directors of the Company and its
Subsidiaries.
"Board of Directors" means the Board of Directors of any
specified Person and any committees thereof.
"Bonus Pool" shall have the meaning set forth in Section 5.10.
"Business Day" means any day on which banks are not required
or authorized to close in the City of New York.
"CEA" means the Commodity Exchange Act, as amended, and the
rules and regulations promulgated thereunder by the CFTC.
"Certificate" shall have the meaning set forth in Section
2.8(b).
"Certificate of Merger" shall have the meaning set forth in
Section 2.3.
"CFTC" means the Commodity Futures Trading Commission.
"Class A Common Stock" shall have the meaning set forth in
Section 4.1(c)(i)(A).
"Class B Common Stock" shall have the meaning set forth in
Section 4.1(c)(i)(B).
"Closing" shall have the meaning set forth in Section 2.2.
"Closing Date" shall have the meaning set forth in Section
2.2.
"Closing Revenue Run-Rate" means the Revenue Run-Rate as of
the most recent calendar month-end prior to the Effective Time in respect of
which a Monthly Run-Rate Schedule has been delivered pursuant to Section 5.12;
provided, that if the Parent exercises its right pursuant to Section 2.2 to
extend the date of the Closing to October 1, 2001, the Revenue Run-Rate as of
August 31, 2001 shall be utilized. The calculation of the Closing Revenue
Run-Rate shall be made using substantially the same methodology as used in the
calculation of the Base Revenue Run-Rate (as set forth on Schedule II hereto).
"Closing Tangible Net Worth" means the Tangible Net Worth
shown on the balance sheet of the Company as of the end of the most recent
calendar month-end prior to the Closing Date in respect of which a Monthly
Balance Sheet has been delivered pursuant to Section 5.13, calculated in a
manner consistent with the Target Tangible Net Worth.
"Code" means the Internal Revenue Code of 1986, as amended,
and any rules and Treasury regulations promulgated thereunder.
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"Company" shall have the meaning set forth in the Preamble.
"Company Capital Stock" shall have the meaning set forth in
Section 4.1(c)(i)(C).
"Company Common Stock" shall have the meaning set forth in
Section 4.1(c)(i)(B).
"Company Contract" means any contract, agreement, indenture,
mortgage, deed of trust, note, bond, franchise, lease, plan, license or other
instrument, arrangement or other obligation, whether written or oral, including
all amendments, modifications, and supplements thereto and all side letters
affecting the obligations of any party thereunder, relating to the ownership of
or use by the Company or any of its Subsidiaries or the Funds of any of their
respective properties or assets or relating to the conduct of their respective
businesses, binding upon the Company, any of its Subsidiaries or the Funds,
other than Advisory Agreements.
"Company Disclosure Schedule" shall have the meaning set forth
in Section 4.1.
"Company Financial Advisor" means Putnam Lovell Securities,
Inc.
"Company Preferred Stock" shall have the meaning set forth in
Section 4.1(c)(i)(C).
"Company Stock Option Plan" means the Tremont 1998 Stock Plan.
"Company Stock Options" shall have the meaning set forth in
Section 2.9.
"Company Stockholders" shall have the meaning set forth in the
recitals.
"Confidential Information" shall have the meaning set forth in
the Confidentiality Agreement.
"Confidentiality Agreement" shall have the meaning set forth
in Section 5.11(e).
"control" (including the terms "controlling", "controlled by"
and "under common control with") means the possession, direct or indirect, of
the power to direct or cause the direction of the management and policies of any
Person, whether through the ownership of voting securities, by contract, or
otherwise.
"DGCL" shall mean the Delaware General Corporation Law.
"Dissenting Shares" shall have the meaning set forth in
Section 2.8(e).
"DOJ" means the Department of Justice.
"Effective Time" shall have the meaning set forth in Section
2.3.
"Employee" shall have the meaning set forth in Section 4.1(l).
"Employment Agreements" shall have the meaning set forth in
the recitals.
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"Encumbrance" means any lien, claim, mortgage, encumbrance,
pledge, security interest, or any other restriction with respect to
transferability or assignability.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Affiliate" means any trade or business, whether or not
incorporated, that, together with the Company or any of its Subsidiaries which
is or has ever been treated as a "single employer" with any of them within the
meaning of section 4001(b) of ERISA or Sections 414(b), (c), (m) or (o) of the
Code.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder by the SEC.
"Exchange Agent" shall have the meaning set forth in Section
3.1.
"Exchange Fund" shall have the meaning set forth in Section
3.1.
"Expenses" shall have the meaning set forth in Section
5.11(d).
"FSA" means the Financial Services Act 1986, and the rules and
regulations promulgated thereunder.
"FITX" means FITX Group Limited, an exempted Bermuda company,
and its Subsidiaries.
"Foreign Plan" shall have the meaning set forth in Section
4.1(l).
"Fund" means a vehicle for collective investment sponsored,
formed or controlled by the Company or any Subsidiary of the Company.
"GAAP" means generally accepted accounting principles in the
United States.
"Governmental Approvals" means all approvals, permits,
qualifications, authorizations, rights, licenses, franchises, consents, orders,
registrations or other approvals of or granted by any Governmental Authority,
whether United States or foreign, which are necessary or required under
Applicable Law in order to permit the Company, any Subsidiary of the Company or
any of the Funds to carry on their respective businesses or for the performance
by the Company of this Agreement and any of the agreements and transactions
contemplated hereby.
"Governmental Authority" means any United States or foreign
government, nation, state, territory, province, county, city or other unit or
subdivision thereof or any entity, authority, agency, department, board,
commission, instrumentality, court or other judicial body authorized on behalf
of any of the foregoing to exercise legislative, judicial, regulatory or
administrative functions of or pertaining to government, including any
Self-Regulatory Organization or other authority of any state or foreign
jurisdiction, and any court, tribunal or arbitrator(s) of competent
jurisdiction,
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and any governmental organization, agency or authority, in each case whether
United States or foreign.
"GBA" means the Gramm-Leach-Bliley Act.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, and the rules and regulations promulgated thereunder.
"Immediate Family" means, with respect to any individual, (a)
such individual's spouse, parents, siblings and children, (b) any spouse,
parent, sibling or child of any Person specified in clause (a) above and (c) any
estate, trust, partnership or other entity or legal relationship of which a
majority of the equity interests at all times in question are, directly or
indirectly, held by or for the benefit of one or more of the Persons described
above and/or such individual.
"Indemnified Parties" shall have the meaning set forth in
Section 5.9(a).
"Index LLC" means Credit Suisse First Boston Tremont Index
LLC, a Delaware limited liability company.
"Insurance Policy" shall have the meaning set forth in Section
4.1(j)(xx).
"Intellectual Property" means all domestic and foreign
copyrights, patents, proprietary models, processes, formulas and databases,
client lists, service marks, Software, know-how, trade names, trademarks and
trade secrets, and all registrations or applications for registration of any of
the foregoing.
"Investment Company" has the meaning set forth in the
Investment Company Act.
"Investment Company Act" means the Investment Company Act of
1940, as amended, and the rules and regulations promulgated thereunder by the
SEC.
"IRS" means the Internal Revenue Service.
"Key Client" shall have the meaning set forth in the letter
agreement, dated as of the date hereof, among the Parent, the Merger Sub and the
Company, relating to certain Advisory Agreements.
"Knowledge" when used with respect to the Company means the
actual knowledge of any executive officer of the Company or any of its
Subsidiaries after due inquiry, except as provided in the definition of
Subsidiary.
"Material Adverse Effect" means, with respect to any Person,
any effect that is material and adverse to the business, assets, revenues,
financial condition, results of operations, or assets under management of such
Person and its Subsidiaries, taken as a whole, or to the ability of such Person
to complete the Merger, other than to the extent resulting from declines in U.S.
or global securities markets or economic conditions in
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general, if the effect on the Company and its Subsidiaries, taken as a whole
without giving effect to the Merger or the transactions contemplated by this
Agreement, is not either (A) particularized or unique to the Company and its
Subsidiaries, taken as a whole, or (B) disproportionate relative to the effect
on the competitors of the Company and its Subsidiaries (without taking into
account the Merger or the transactions contemplated by this Agreement); provided
that a reduction in the Revenue Run-Rate between the Base Date and the date as
of which the Closing Revenue Run-Rate is determined in and of itself shall not
constitute a Material Adverse Effect with respect to the Company.
"Material Contract" shall have the meaning set forth in
Section 4.1(o).
"Merger" shall have the meaning set forth in the Preamble.
"Merger Consideration" shall have the meaning set forth in
Section 2.8(a).
"Merger Sub" shall have the meaning set forth in the Preamble.
"Monthly Run-Rate Schedule" shall have the meaning set forth
in Section 5.12.
"Monthly Tangible Net Worth Schedule" shall have the meaning
set forth in Section 5.13.
"NASD" means the National Association of Securities Dealers,
Inc. or any one or more of its Subsidiaries, as the context may require, and any
successor to any of them.
"NFA" means the National Futures Association.
"Notice" shall have the meaning set forth in Section 5.2.
"Number of Shares and Options Outstanding" means the sum of
the number of shares of Company Common Stock issued and outstanding immediately
prior to the Effective Time (other than shares of Company Common Stock that are
100% owned or held directly or indirectly by the Parent or directly by the
Company and Dissenting Shares) plus the number of shares of Company Common Stock
issuable upon the exercise of all Company Stock Options outstanding immediately
prior to the Effective Time.
"Option Consideration" shall have the meaning set forth in
Section 2.9 (a).
"Parent" shall have the meaning set forth in the Preamble.
"Parent Disclosure Schedule" shall have the meaning set forth
in Section 4.2.
"Permitted Encumbrances" means all Encumbrances which are:
(1) Encumbrances set forth pursuant to Article IV on
the Company Disclosure Schedule or the Parent Disclosure
Schedule;
(2) statutory liens for Taxes or assessments that are
not yet due and payable or otherwise being contested in good
faith;
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(3) matters which would be shown on an accurate
survey and any other defect or exception which would be
disclosed by a search of title, which in each case does not
materially impair the use, operation, value or marketability
of the asset to which it relates;
(4) liens of landlords and liens of carriers,
warehousemen, mechanics and materialmen and other like liens
arising in the ordinary course of business for sums not yet
due and payable; or
(5) other liens or imperfections in title on assets
which individually or in the aggregate do not exceed $250,000
and do not materially detract from the value of or materially
impair the existing use of the assets affected by such liens
or imperfections.
"Person" means an individual, corporation, company, limited
liability company, partnership (limited or general), joint venture, association,
trust, unincorporated organization, other entity or group.
"Privacy Rules" shall have the meaning set forth in Section
4.1(w).
"Pro Forma Balance Sheet" means the projected pro forma
balance sheet of the Company as of August 31, 2001 attached hereto as Schedule
III.
"Proxy Statement" means the preliminary proxy materials
relating to the meeting of the Company stockholders, and any amendments or
supplements thereto.
"Regulatory Reports" shall have the meaning set forth in
Section 4.1(d).
"Representative" means any officer, director, employee,
representative, agent or Affiliate, including any investment banker, financial
advisor, attorney or accountant, which is employed or retained by the Parent or
the Company, as the case may be.
"Required Company Vote" shall have the meaning set forth in
Section 4.1(n).
"Retention Plan" shall have the meaning set forth in Section
5.10.
"Revenue Run-Rate" means, as of any date, the aggregate
annualized investment advisory, investment management and subadvisory fees for
all investment advisory clients who pay fees based on assets under management
(excluding, in each case, any portion thereof attributable to investment
advisory clients that have notified the Company prior to the effective time of
their intention to terminate the services of the Company or any Subsidiary, and,
excluding in the case of the Closing Revenue Run-Rate, any portion thereof
attributable to investment advisory clients that have not consented prior to the
Closing (either expressly or by implication in accordance with Section 5.2
hereof) to the assignment or deemed assignment of their respective Advisory
Agreements resulting from the transactions contemplated by this Agreement or
that have withdrawn such consents prior to the Closing) by the Company or any
Subsidiary of the Company and payable to the Company or such Subsidiary.
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"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder by the SEC.
"Securities Act (Ontario)" means the Securities Act, R.S.O.
1990, as amended, and the rules and regulations promulgated thereunder by the
Ontario Securities Commission.
"Securities Laws" means the Securities Act, the Exchange Act,
the Investment Company Act, the Advisers Act, the CEA, the securities or "blue
sky" laws of any state or territory of the United States and the rules and
regulations of the NASD and the comparable laws, rules and regulations in effect
in any other country.
"Self-Regulatory Organization" means the NASD, the NFA, the
SFA, each national securities or commodities or futures exchange in the United
States and each other commission, board, agency or body, whether United States
or foreign, that is charged with the supervision or regulation of brokers,
dealers, securities underwriting or trading, stock exchanges, commodities or
futures exchanges, insurance companies or agents, investment companies,
investment advisers, commodity pool operators or commodity trading advisors.
"SFA" means the Securities Futures Authority.
"Software" means all computer programs, software, databases,
firmware and related documentation utilized by the referenced Person or Persons
in their or its business.
"Stockholders Agreement" means the Stockholders Agreement
dated as of the date hereof among the Parent, the Merger Sub and the Company
Stockholders.
"Subsidiary" means, with respect to any Person, any controlled
Affiliate of such Person, provided that a Fund shall be deemed not to be a
Subsidiary of the Company, and provided further that solely for purposes of
Article IV, the term Subsidiary with respect to the Company shall also be deemed
to include Index LLC, TII, TMRM and FITX and each of their Subsidiaries;
provided, however, that any representation or warranty made with respect to
Index LLC, TII, TMRM or FITX or any of their Subsidiaries or the Funds
controlled by such Persons in Article IV shall be made, unless otherwise stated,
to the actual Knowledge of the Company (without any requirement of due inquiry).
"Superior Proposal" shall have the meaning set forth in
Section 5.3(a).
"Surviving Corporation" shall have the meaning set forth in
Section 2.1.
"Tangible Net Worth" means the excess of (i) "stockholders
equity" over (ii) the sum of "goodwill net of amortization" and "investments in
joint ventures," as reflected on the Pro Forma Balance Sheet or the Monthly
Tangible Net Worth Schedule,
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as the case may be (it being understood that Expenses, whether paid, accrued or
accruable, shall be excluded from both the Pro Forma Balance Sheet and the
Monthly Tangible Net Worth Schedule).
"Target Tangible Net Worth" means $14,170,290, which is the
Tangible Net Worth shown on the Pro Forma Balance Sheet.
"Taxes" means all federal, provincial, territorial, state,
municipal, local, foreign or other taxes (including, without limitation,
governmental imposts, levies and other assessments) including, without
limitation, all income, franchise, gains, capital, profits, gift, real property,
goods and services, transfer, value added, gross receipts, windfall profits,
severance, ad valorem, personal property, production, sales, use, license,
stamp, documentary stamp, mortgage recording, excise, employment, payroll,
social security, unemployment, disability, estimated or withholding taxes,
customs and import duties, fees, assessments, and charges of any kind whatsoever
imposed by a Governmental Authority which is not a Self-Regulatory Organization,
together with any interest, additions, fines or penalties with respect thereto
or in respect of any failure to comply with any requirement regarding Tax
Returns and any interest in respect of such additions, fines or penalties and
shall include any liability in respect of Taxes as a transferee or as
indemnitor, guarantor, surety or in a similar capacity under any contract,
arrangement, agreement, understanding or commitment (whether oral or written).
"Taxing Authority" means any Governmental Authority having
jurisdiction over the assessment, determination, collection or other imposition
of Taxes.
"Tax Return" means any return, report, information statement,
schedule or other document (including, without limitation, any such document
prepared on a consolidated, combined or unitary basis and also including any
supporting schedules or attachments thereto) filed or required to be filed with
respect to Taxes.
"Technology Systems" means the electronic data processing,
information, record-keeping, communications, telecommunications, portfolio
trading and computer systems (including Software) which are used by the Company,
its Subsidiaries and the Funds, as applicable, in their respective businesses.
"Termination Date" shall have the meaning set forth in Section
7.1(b).
"Termination Fee" shall have the meaning set forth in Section
7.3(a).
"TFI" shall have the meaning set forth in Section 4.1(i)(xi).
"TII" means Tremont International Insurance, Ltd., a Cayman
Islands exempted limited company, and its Subsidiaries.
"TMRM" means Tremont MRM Services Limited, an exempted Bermuda
company, and its Subsidiaries.
"TPI" shall have the meaning set forth in Section 4.1(i)(v).
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"TSI" shall have the meaning set forth in Section
4.1(i)(viii).
"TTEL" shall have the meaning set forth in Section 4.1(i)(xiv)
"WARN" shall have the meaning set forth in Section 4.1(l).
ARTICLE II
THE MERGER
2.1 The Merger. Upon the terms and subject to the conditions
set forth in this Agreement, and in accordance with DGCL, the Merger Sub shall
be merged with and into the Company on the Closing Date. Following the Merger,
the separate corporate existence of the Merger Sub shall cease and the Company
shall continue as the surviving corporation (the "Surviving Corporation").
2.2 Closing. The closing of the Merger (the "Closing") will
take place at the offices of Weil, Gotshal & Manges LLP, 767 Fifth Avenue, New
York, New York 10153, unless another place is agreed to in writing by the Parent
and the Company. The Closing will take place at 10:00 a.m., New York City time,
as soon as practicable, but in any event not later than the fifth Business Day,
after the satisfaction or waiver (subject to any Applicable Law) of the
conditions (excluding conditions that, by their terms, cannot be satisfied until
the Closing Date) set forth in Article VI (the "Closing Date") unless another
time or date is agreed to in writing by the Parent and the Company; provided,
however, that if in accordance with the foregoing the Closing would occur prior
to October 1, 2001, the Parent may extend the date of the Closing until October
1, 2001 by written notice given to the Company prior to the fifth Business Day
referred to above. The Closing will be deemed to have occurred at the opening of
business on the Closing Date.
2.3 Effective Time. On the Closing Date, the parties shall (a)
file a certificate of merger (the "Certificate of Merger") in such form as is
required by and executed in accordance with the relevant provisions of the DGCL
and (b) make all other filings or recordings required under the DGCL. The Merger
shall become effective at such time as the Certificate of Merger is duly filed
with the Office of the Secretary of State of the State of Delaware or at such
subsequent time as the Parent and the Company shall agree and be specified in
the Certificate of Merger (the date and time the Merger becomes effective being
the "Effective Time").
2.4 Effects of the Merger. At and after the Effective Time,
the Merger will have the effects set forth in the DGCL. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time all of
the property, rights, privileges, powers and franchises of the Company and the
Merger Sub shall be vested in the Surviving Corporation, and all debts,
liabilities and duties of the Company and the Merger Sub shall become the debts,
liabilities and duties of the Surviving Corporation.
2.5 Certificate of Incorporation. At the Effective Time, the
Certificate of Incorporation of the Merger Sub as in effect immediately prior to
the Effective Time
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shall be the Certificate of Incorporation of the Surviving Corporation;
provided, however, that Article FIRST of the Certificate of Incorporation of the
Surviving Corporation shall be amended to read in its entirety as follows:
"FIRST: The name of the corporation is "Tremont Advisers, Inc." and as so
amended shall be the Certificate of Incorporation of the Surviving Corporation
until thereafter amended as provided by the DGCL and such Certificate of
Incorporation.
2.6 By-Laws. At the Effective Time, the by-laws of the Merger
Sub as in effect immediately prior to the Effective Time shall be the by-laws of
the Surviving Corporation until thereafter changed or amended as provided by the
DGCL, the Certificate of Incorporation of the Surviving Corporation and such
by-laws.
2.7 Officers and Directors of Surviving Corporation. The
officers of the Company as of the Effective Time shall be the officers of the
Surviving Corporation, until the earlier of their resignation or removal or
otherwise ceasing to be an officer or until their respective successors are duly
elected and qualified, as the case may be. The directors of the Merger Sub as of
the Effective Time shall be the directors of the Surviving Corporation until the
earlier of their resignation or removal or otherwise ceasing to be a director or
until their respective successors are duly elected and qualified.
2.8 Effect on Capital Stock; Merger Consideration.
(a) At the Effective Time, by virtue of the Merger
and without any action on the part of the holder thereof, each share of Company
Common Stock issued and outstanding immediately prior to the Effective Time
(other than shares of Company Common Stock that are 100% owned or held directly
or indirectly by the Parent or the Company, which shall be canceled as provided
in Section 2.8(c), and Dissenting Shares) shall be converted into the right to
receive, subject to the provisions of Article II, without interest, an amount in
cash equal to $19.00 (such amount, as it may be adjusted in accordance with this
Section 2.8(a), the "Merger Consideration"); provided, however, that (i) if
Target Tangible Net Worth exceeds Closing Tangible Net Worth by an amount
greater than $1 million, the Merger Consideration shall be decreased by an
amount equal to the quotient obtained by dividing (A) the amount of such excess
above $1 million by (B) the Number of Shares and Options Outstanding and (ii) if
the Closing Tangible Net Worth exceeds Target Tangible Net Worth by an amount
greater than $1 million, the Merger Consideration shall be increased by an
amount equal to the quotient obtained by dividing (A) the amount of such excess
above $ 1 million by (B) the Number of Shares and Options Outstanding.
(b) As a result of the Merger and without any action
on the part of the holders thereof, at the Effective Time, all shares of Company
Common Stock shall cease to be outstanding and shall be canceled and shall cease
to exist, and each holder of a certificate which immediately prior to the
Effective Time represented any such shares of Company Common Stock (each, a
"Certificate") shall thereafter cease to have any rights with respect to such
shares of Company Common Stock, except the right to receive the applicable
Merger Consideration, other than with respect to Company Common Stock
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to be canceled in accordance with Section 2.8(c) and Dissenting Shares, in
accordance with Article II upon the surrender of such Certificate.
(c) Each share of Company Common Stock issued that is
100% owned or held directly or indirectly by the Parent or the Company at the
Effective Time shall, by virtue of the Merger, cease to be outstanding and shall
be canceled and no payment or other consideration shall be delivered in exchange
therefor.
(d) Each share of common stock, par value $0.01 per
share, of the Merger Sub issued and outstanding immediately prior to the
Effective Time, shall be converted into a number of shares of common stock, par
value $0.01 per share, of the Surviving Corporation equal to (i) the Number of
Shares and Options Outstanding divided by the number of shares of Merger Sub
common stock issued and outstanding immediately prior to the Effective Time, or
(ii) such lesser number of shares as the Parent shall determine prior to the
Effective Time.
(e) Notwithstanding any other provision of this
Agreement, shares of Company Common Stock issued and outstanding immediately
prior to the Effective Time and held by a holder who has not voted in favor of
the Merger and who demands appraisal for such shares in accordance with Section
262 of the DGCL ("Dissenting Shares") shall not be converted into a right to
receive the Merger Consideration unless such holder fails to perfect within the
period prescribed by the DGCL or withdraws or otherwise loses such holder's
right to appraisal under the DGCL. If, after the Effective Time, such holder
fails to perfect or withdraws or loses such holder's right to appraisal, such
Dissenting Shares shall be treated as if they had been converted as of the
Effective Time into the right to receive the Merger Consideration, without
interest or dividends thereon. The Company shall give the Parent (i) prompt
notice of any written demands received by the Company for appraisal of shares of
Company Common Stock, attempted withdrawals of such demands, and other
instruments served pursuant to the DGCL and received by the Company and relating
thereto and (ii) the opportunity to direct all negotiations and proceedings with
respect to such demands for appraisals. Prior to the Effective Time, the Company
shall not, except with the prior written consent of the Merger Sub, make any
payment with respect to, or settle or offer to settle, any such demands.
2.9 Stock Options.
(a) Each option held by any Person to acquire shares
of Company Capital Stock ("Company Stock Option") that is outstanding
immediately prior to the Effective Time, whether or not then vested or
exercisable, shall, effective as of the Effective Time, be cancelled in exchange
for a single lump sum cash payment, to be paid by the Surviving Corporation as
soon as practicable following the Closing upon its receipt of a release or other
documentation by such Person reasonably satisfactory to the Parent and the
Surviving Corporation, equal to the product of (i) the number of shares of
Company Common Stock subject to such Company Option and (ii) the excess, if any,
of the Merger Consideration for a share of Company Common Stock at the Effective
Time
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over the exercise price per share of such Company Stock Option (the aggregate
amount payable under this Section 2.9, the "Option Consideration").
(b) Prior to the Effective Time, the Company shall
(i) use its reasonable best efforts to obtain any consents from holders of
Company Stock Options and (ii) amend, in a manner reasonably acceptable to the
Parent, the terms of its equity incentive plans or arrangements or any other
agreements entered into thereunder, in each case as is necessary to give effect
to the provisions of paragraph (a) of this Section 2.9.
(c) Except as otherwise agreed to by the parties,
prior to the Effective Time, (i) the Company shall cause the Company Stock
Option Plan to be terminated as of the Effective Time and the provisions in any
other plan, program or arrangement providing for the issuance or grant of any
other interest in respect of Company Capital Stock or any equity securities in
any of the Subsidiaries to be deleted as of the Effective Time, and (ii) the
Company shall take all action necessary to ensure that the payments or
conversions into the right to receive cash set forth in Section 2.9(a)
extinguish all rights of participants under the Company Stock Option Plan and
such plans, programs and arrangements to receive equity securities of the
Company or any of its Subsidiaries and that following the Effective Time no such
participant shall have any right thereunder to acquire equity securities of the
Company, the Surviving Corporation, the Parent or any of their respective
Subsidiaries.
2.10 Further Assurances. At and after the Effective Time, the
officers and directors of the Surviving Corporation will be authorized to
execute and deliver, in the name and on behalf of the Company or the Merger Sub,
any deeds, bills of sale, assignments or assurances and to take and do, in the
name and on behalf of the Company or the Merger Sub, any other actions and
things to vest, perfect or confirm of record or otherwise in the Surviving
Corporation any and all right, title and interest in, to and under any of the
rights, properties or assets acquired or to be acquired by the Surviving
Corporation as a result of, or in connection with, the Merger.
ARTICLE III
EXCHANGE OF CERTIFICATES
3.1 Exchange Fund. Prior to the Effective Time, the Parent
shall designate a commercial bank or trust company selected by the Parent and
reasonably acceptable to the Company to act as exchange agent hereunder for the
purpose of exchanging Certificates for the Merger Consideration (the "Exchange
Agent"). At or prior to the Effective Time, the Parent shall deposit or cause to
be deposited with the Exchange Agent, in trust for the benefit of holders of
shares of Company Common Stock, the aggregate amount of cash to be paid pursuant
to Section 2.8 in exchange for outstanding shares of Company Common Stock (other
than shares of Company Common Stock that are 100% owned or held directly or
indirectly by the Parent or the Company which shall be canceled as provided in
Section 2.8(c) and Dissenting Shares). Any cash deposited with the Exchange
Agent shall hereinafter be referred to as the "Exchange Fund".
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3.2 Exchange Procedures. As soon as reasonably practicable
after the Effective Time, the Surviving Corporation shall cause the Exchange
Agent to mail (or, in the case of any holder that appears at the applicable
office of the Exchange Agent and so requests, to provide) to each holder of a
Certificate (a) a letter of transmittal which shall specify that delivery shall
be effected, and risk of loss and title to the Certificates shall pass, only
upon delivery of the Certificates to the Exchange Agent, and which letter shall
be in customary form and have such other provisions as the Parent may reasonably
specify and (b) instructions for effecting the surrender of such Certificates in
exchange for the Merger Consideration. Upon surrender of a Certificate to the
Exchange Agent together with such letter of transmittal, duly executed and
completed in accordance with the instructions thereto, and such other documents
as may reasonably be required by the Exchange Agent, the holder of such
Certificate shall be entitled to receive in exchange therefor a check (or, in
the case of any holder that so requests, provides wire transfer instructions and
offers to pay any reasonable cost of a wire transfer of immediately available
funds) in the aggregate amount equal to the Merger Consideration multiplied by
the number of shares of Company Common Stock formerly represented by such
Certificate less any required withholding of Taxes as provided in Section 3.8.
No interest will be paid or will accrue on any cash payable pursuant to the
preceding sentence. In the event of a transfer of ownership of Company Common
Stock which is not registered in the transfer records of the Company, a check in
the proper amount of cash for the appropriate Merger Consideration may be paid
with respect to such Company Common Stock to such a transferee if the
Certificate formerly representing such shares of Company Common Stock is
presented to the Exchange Agent, accompanied by all documents required to
evidence and effect such transfer and to evidence that any applicable stock
transfer Taxes have been paid or are not payable. The Exchange Fund shall not be
used for any purpose other than as set forth in this Article III.
3.3 No Further Ownership Rights in Company Common Stock. Cash
paid upon conversion of shares of Company Common Stock in accordance with the
terms of Article II and this Article III shall be deemed to have been paid in
full satisfaction of all rights pertaining to the shares of Company Common
Stock.
3.4 Termination of Exchange Fund. Any portion of the Exchange
Fund that remains undistributed to the holders of Certificates for six months
after the Effective Time shall be delivered to the Surviving Corporation or
otherwise on the instruction of the Surviving Corporation, and any holders of
the Certificates who have not theretofore complied with this Article III shall
thereafter look only to the Surviving Corporation for the Merger Consideration
with respect to the shares of Company Common Stock formerly represented thereby
to which such holders are entitled pursuant to Section 2.8 and Section 3.2.
3.5 No Liability. None of the Parent, the Merger Sub, the
Company, the Surviving Corporation or the Exchange Agent shall be liable to any
Person in respect of any Merger Consideration from the Exchange Fund delivered
to a public official pursuant to any applicable abandoned property, escheat or
similar Applicable Law.
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3.6 Investment of the Exchange Fund. The Exchange Agent shall
invest any cash included in the Exchange Fund only in one or more of the
following investments as directed by the Surviving Corporation from time to
time: (a) obligations of the United States government maturing not more than 180
days after the date of purchase; (b) certificates of deposit maturing not more
than 180 days after the date of purchase issued by a bank organized under the
Applicable Laws of the United States or any state thereof having a combined
capital and surplus of at least $500,000,000; (c) a money market mutual fund,
which may be managed by an Affiliate of the Parent, having assets of at least
$1,000,000,000; or (d) tax-exempt or corporate debt obligations maturing not
more than 180 days after the date of purchase given the highest investment grade
rating by Standard & Poor's and Moody's Investor Service. Any interest and other
income resulting from such investments shall promptly be paid to the Surviving
Corporation.
3.7 Lost Certificates. If any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
Person claiming such Certificate to be lost, stolen or destroyed and, if
required by the Surviving Corporation, the posting by such Person of a bond in
such form and amount as the Surviving Corporation may direct as indemnity
against any claim that may be made against it with respect to such Certificate,
the Exchange Agent will deliver in exchange for such lost, stolen or destroyed
Certificate the applicable Merger Consideration with respect to the shares of
Company Common Stock formerly represented thereby and unpaid dividends, if any,
on shares of Company Common Stock deliverable in respect thereof, pursuant to
this Agreement.
3.8 Withholding Rights. The Surviving Corporation and the
Parent or the Exchange Agent acting pursuant to this Section 3.8 shall be
entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any holder of shares of Company Common Stock or
Company Stock Options, as the case may be, such amounts as it is required to
deduct and withhold with respect to the making of such payment under the Code,
or any provision of state, local or foreign tax law. To the extent that amounts
are so withheld by the Surviving Corporation or the Parent, 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 shares of Company Common Stock or Company
Stock Options, as the case may be, in respect of which such deduction and
withholding was made by the Surviving Corporation or the Parent, as the case may
be.
3.9 Stock Transfer Books. At the close of business, New York
City time, on the day Effective Time occurs, the stock transfer books of the
Company shall be closed and there shall be no further registration of transfers
of shares of Company Common Stock thereafter on the records of the Company. From
and after the Effective Time, the holders of Certificates shall cease to have
any rights with respect to such shares of Company Common Stock formerly
represented thereby, except as otherwise provided herein or by Applicable Law.
At or after the Effective Time, any Certificates presented to the Exchange Agent
or the Parent for any reason shall be exchanged for the Merger Consideration
with respect to the shares of Company Common Stock formerly represented thereby.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties of the Company. Except as
set forth in writing in the disclosure schedule delivered by the Company to the
Parent prior to the execution of this Agreement (the "Company Disclosure
Schedule") (each section of which qualifies the correspondingly numbered
representation and warranty or covenant to the extent specified therein), the
Company represents and warrants to the Parent and Merger Sub as follows:
(a) Organization, Standing and Power. The Company,
each of its Subsidiaries and each of the Funds has been duly organized or formed
as a corporation, limited partnership, limited liability company, trust or other
entity, as the case may be, and is validly existing and, if applicable, in good
standing under the Applicable Laws of its jurisdiction of organization, has all
the corporate or other power and authority to own, lease and operate its
properties and assets and to carry on its business as now and currently planned
to be conducted, and is duly qualified and, if applicable, in good standing to
do business in each jurisdiction in which the nature of its business or the
ownership, leasing or operation of its properties makes such licensing,
qualification or, if applicable, good standing necessary other than in such
jurisdictions where the failure to be so licensed or qualified, if applicable,
or in good standing would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect with respect to the Company. Copies
of the charter and by-laws or comparable organizational documents and any
amendments thereto of the Company, each of its Subsidiaries and each of the
Funds were previously furnished to the Parent and are true, complete and correct
copies of such documents as in effect on the date of this Agreement. Schedule
4.1(a) of the Company Disclosure Schedule sets forth a complete and accurate
list of each direct and indirect Subsidiary of the Company including each
Subsidiary's name, jurisdiction of incorporation and authorized and outstanding
ownership interests, including the record and beneficial owners thereof, and the
jurisdictions in which each of them is licensed or qualified or, if applicable,
in good standing to do business.
(b) Authority of the Company; Execution and Delivery.
The Company has the corporate power and authority to enter into and carry out
its obligations under this Agreement, subject in the case of the consummation of
the Merger to the adoption of this Agreement by the Required Company Vote. The
execution and delivery by the Company of this Agreement and the performance by
the Company of the transactions contemplated hereby have been duly and validly
authorized and approved by all necessary corporate action on the part of the
Company, and no other corporate or stockholder proceedings on the part of the
Company are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby other than, in the case of the consummation of
the Merger, to the adoption of this Agreement by the Required Company Vote and
thereby. The Company has duly executed and delivered this Agreement. Assuming
the due authorization, execution and delivery of this Agreement by the Parent
and the Merger Sub, this Agreement constitutes and, assuming the due
authorization, execution and delivery thereof by each other party thereto, all
instruments
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of conveyance and other documents executed and delivered or to be executed and
delivered by the Company, as contemplated by this Agreement, constitute, or when
so executed and delivered will constitute, the legal, valid and binding
agreements, instruments and obligations of the Company, enforceable against the
Company in accordance with their respective terms except as such enforceability
may be limited by applicable bankruptcy, insolvency, fraudulent transfer,
moratorium, reorganization and similar Applicable Laws of general application
relating to or affecting the rights and remedies of creditors and by the
application of general principles of equity (regardless of whether such
enforcement is sought in a proceeding in equity or at law).
(c) Capital Structure.
(i) The authorized capital stock of the
Company consists of (A) 5,000,000 shares of Class A Common Stock, par
value $0.01 per share (the "Class A Common Stock"), (B) 20,000,000
shares of Class B Common Stock, par value $0.01 per share (the "Class B
Common Stock," and, together with the Class A Common Stock, the
"Company Common Stock") and (C) 1,000,000 shares of Preferred Stock,
par value $1.00 (the "Company Preferred Stock" and, together with the
Company Common Stock, the "Company Capital Stock"). As of the date of
this Agreement, (A) 1,730,430 shares of Class A Common Stock are issued
and outstanding, (B) 5,254,258 shares of Class B Common Stock are
issued and outstanding, (C) no shares of Company Preferred Stock are
issued and outstanding, (D) 250,000 shares of Class A Common Stock,
27,250 shares of Class B Common Stock and no shares of Company
Preferred Stock are issued and held in the treasury of the Company and
(E) no shares of Class A Common Stock, 1,050,194 shares of Class B
Common Stock and no shares of Company Preferred Stock are reserved for
issuance upon the exercise of Company Stock Options or otherwise. All
issued and outstanding shares of Company Capital Stock are, and all
shares of Company Capital Stock which may be issued pursuant to the
exercise of outstanding Company Stock Options, when issued in
accordance with the terms thereof will be, duly authorized, validly
issued, fully paid and nonassessable. None of the issued and
outstanding shares of Company Capital Stock is entitled to any
preemptive or anti-dilution rights, by agreement or otherwise. Schedule
4.1(c)(i) of the Company Disclosure Schedule sets forth a complete list
of each Company Stock Option outstanding as of the date of this
Agreement, including the name of the optionee, class of Company Capital
Stock, number of shares, exercise price, date of grant, vesting
schedule and whether the consent of the optionee is required to give
effect to the provisions of Section 2.9(a). Except as set forth on
Schedule 4.1(c)(i) of the Company Disclosure Schedule, there are
outstanding as of the date of this Agreement no options, warrants,
calls, rights, commitments, agreements, arrangements, undertakings of
any kind or other rights to acquire capital stock from the Company
(whether or not such options, warrants or other rights are
"in-the-money" and whether or not exercisable).
(ii) As of the date of this Agreement, no
bonds, debentures, notes or other indebtedness of the Company or any of
its Subsidiaries
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having the right to vote on any matters on which stockholders may vote
are issued or outstanding.
(iii) There are no securities, options,
warrants, calls, rights, commitments, agreements, arrangements or
undertakings of any kind obligating the Company or any of its
Subsidiaries to issue, deliver or sell, or cause to be issued,
delivered or sold, or reserve for issuance, delivery or sale,
additional shares of capital stock or other ownership interests of the
Company or any of its Subsidiaries or, securities convertible into or
exchangeable for shares of capital stock or other ownership interests
of the Company or any of its Subsidiaries, or obligating the Company or
any of its Subsidiaries to issue, grant, extend or enter into any such
security, option, warrant, call, right, commitment, agreement,
arrangement or undertaking. There are no outstanding obligations of the
Company or any of its Subsidiaries to repurchase, redeem or otherwise
acquire any ownership interests of the Company or any of its
Subsidiaries or to provide funds or contribute capital to, or make any
investment in, any other Person, other than a direct wholly owned
Subsidiary of the Company.
(iv) All of the outstanding equity interests
of each Subsidiary of the Company are duly authorized, validly issued,
fully paid and nonassessable and are owned, beneficially and of record,
by the Company or a Subsidiary which is wholly owned, directly or
indirectly, by the Company, free and clear of any Encumbrances. Other
than the Subsidiaries of the Company and the Funds, the Company does
not directly or indirectly beneficially own any securities or other
ownership interests in any other entity. Schedule 4.1(c)(iv) of the
Company Disclosure Schedule sets forth, with respect to each of Index
LLC, TII, TMRM and FITX, without qualification as to the Knowledge of
the Company, the ownership interests in such entities held by the
Company, its Subsidiaries and any of their respective officers,
directors and employees and, to the Knowledge of the Company, the other
equity owners thereof.
(v) There are no voting trusts or other
agreements or understandings to which the Company or any Subsidiary of
the Company is a party with respect to the voting, ownership or
transfer of the ownership interests of the Company or any Subsidiary of
the Company. None of the issued and outstanding ownership interests of
any Subsidiary is entitled to any preemptive or anti-dilution rights,
by agreement or otherwise.
(vi) No indebtedness of the Company or any
Subsidiary of the Company contains any restriction upon (A) the
prepayment of any indebtedness of the Company or any Subsidiary of the
Company, (B) the incurrence of indebtedness by the Company or any
Subsidiary of the Company or (C) the ability of the Company or any
Subsidiary of the Company to grant any Encumbrance on the properties or
assets of the Company or any Subsidiary of the Company.
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(d) Reports and Financial Statements. The Company,
each of its Subsidiaries and each of the Funds have timely filed (i) all
reports, schedules, forms, statements and other documents (other than Tax
Returns), together with any amendments made with respect thereof (collectively,
"Reports"), required to be filed by them with the SEC and (ii) all material
Reports required to be filed by them with any other Governmental Authority since
January 1, 1998 (the items described in clauses (i) and (ii), collectively,
including all exhibits thereto, the "Regulatory Reports") and have paid all fees
and assessments due and payable in connection therewith. No Subsidiary of the
Company is required to file any report, schedule, form, statement or other
document with the SEC. None of the reports, schedules, forms, statements and
other documents filed by the Company, any of its Subsidiaries or Funds with any
Governmental Authority since January 1, 1998, as of their respective dates (and,
if amended or superseded by a filing prior to the date of this Agreement, then
on the date of such filing), contained any untrue statement of a material fact
or omitted 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. Each of the audited consolidated financial statements
and unaudited interim financial statements (including the related notes)
included in the Regulatory Reports filed with any Self-Regulatory Organization
complied as to form, as of its respective date of filing with such
Self-Regulatory Organization, in all material respects with applicable
accounting requirements and the published rules and regulations of the Self
Regulatory Organization with respect thereto, have been prepared in accordance
with GAAP (except, in the case of unaudited statements, as permitted by Form
10-Q of the SEC) applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto) and present fairly, in all
material respects, the consolidated financial position and consolidated results
of operations and cash flows of the Company and each Subsidiary of the Company
as of the respective dates or for the respective periods set forth therein, all
in conformity with GAAP consistently applied during the periods involved except
as otherwise noted therein, and subject, in the case of the unaudited interim
financial statements, to normal and recurring year-end adjustments that are not
material. All of such Regulatory Reports, as of their respective dates (and as
of the date of any amendment to the respective Regulatory Report prior to the
date of this Agreement), complied in all material respects with the applicable
requirements of Applicable Law.
(e) Absence of Liabilities. Except for liabilities
or obligations which are accrued or reserved against in the Company's most
recent financial statements (or in the related notes thereto) included in the
Regulatory Reports publicly disclosed and filed with the SEC or which were
incurred in the usual, regular and ordinary course of business and consistent
with past practices since the date of the Company's most recent financial
statements included in the Regulatory Reports publicly disclosed and filed with
the SEC, the Company and each of its Subsidiaries do not have any material
liabilities or obligations (whether absolute, accrued, contingent or otherwise).
(f) Absence of Certain Changes or Events. Except as
publicly disclosed in the Regulatory Reports filed with the SEC prior to the
date hereof and copies of which have been provided or made available by the
Company to the Parent, since December 31, 2000 the businesses of the Company,
its Subsidiaries and Funds have been
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conducted in the ordinary course, consistent with past practices and there has
not been any event, occurrence, development or state of circumstances or facts
that has had, or would, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect with respect to the Company and there has not
been (i) any declaration, setting aside or payment of any dividend or other
distribution (whether in cash, ownership interests or property) with respect to
any of the Company's or its Subsidiaries' ownership interests, (ii) any split,
combination or reclassification of any of the Company's or any of its
Subsidiaries' ownership interests or any redemption or other acquisition by the
Company or any of its Subsidiaries of any shares of its ownership interests or
any issuance or the authorization of any issuance of any other securities in
respect of, in lieu of or in substitution for ownership interests of the Company
or any Subsidiary (iii) (A) any granting by the Company or any of its
Subsidiaries to any director, officer or employee of the Company of any increase
in compensation, bonus or other benefits, except for normal increases in the
usual, regular and ordinary course of business or in connection with the hiring
or promotion of any such person or increases required under any employment
agreements in effect as of the date of the most recent audited financial
statements included in the Regulatory Reports filed and publicly available prior
to the date of this Agreement, (B) any granting by the Company or any of its
Subsidiaries to any such director, officer or employee of any increase in
severance or termination pay, except in the usual, regular and ordinary course
of business or in connection with the hiring or promotion of any such person or
(C) any entry by the Company or any of its Subsidiaries into, or any amendment
of, any employment, deferred compensation, consulting, severance, termination or
indemnification agreement with any such director, officer or employee, other
than in the ordinary course of business or in connection with the hiring or
promotion of any such person, (iv) except insofar as may be required by a change
in GAAP, any change in accounting methods, principles or practices by the
Company, (v) any Tax election that individually or in the aggregate would
reasonably be expected to have a material effect on the Company or any of its
Tax attributes or any settlement or compromise of any material Tax liability,
(vi) any amendment to any term of any outstanding security of the Company or any
of its Subsidiaries, (vii) any entry into any agreement, commitment or
transaction by the Company or any of its Subsidiaries which is material to the
Company and its Subsidiaries taken as a whole, except for agreements,
commitments or transactions entered into in the usual, regular and ordinary
course of business or (vii) any agreement or approval to do any of the
foregoing.
(g) Consents; No Conflict.
(i) Other than filings and/or notices (A)
pursuant to Section 2.3, (B) under the HSR Act or the Securities Laws,
(C) required under a foreign antitrust or trade regulation law or (D)
required to be made with any applicable Self-Regulatory Organization,
neither the Company nor any Subsidiaries of the Company nor any Fund is
required to obtain the consent, authorization or approval of, or submit
any notice, report or any other filing with, any Governmental Authority
or any third party or to obtain any consent, permit, license or
franchise in connection with the execution, delivery and performance of
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this Agreement, except, in the case of any third party, as would not
reasonably be expected to have a Material Adverse Effect with respect
to the Company.
(ii) The execution, delivery and performance
of this Agreement by the Company and the consummation of the
transactions contemplated hereby will not constitute or result in any
change in the rights or obligations of any party under any Company
Contract, and will not conflict with, result in the termination of,
contravene or constitute a default under, or be an event which, with
the giving of notice or passage of time or both will become a default
under, or give to any other Person any right of termination, amendment,
cancellation, acceleration or receipt of payment pursuant to any of the
terms, conditions or provisions of or under (A) any Applicable Law
(provided, as to consummation of the transactions contemplated hereby
or thereby, the filings, reports and notices are made, and approvals
are obtained, as referred to in Section 4.1(g)(i)), (B) the charter and
by-laws or comparable organizational documents of the Company, any
Subsidiary of the Company or any of the Funds or (C) any Company
Contract, except in the case of clause (A) or (C) as, individually and
in the aggregate, would not reasonably be expected to have a Material
Adverse Effect with respect to the Company. Schedule 4.1(g) of the
Company Disclosure Schedule sets forth a correct and complete list of
all Company Contracts pursuant to which consents or waivers (whether as
result of a change of control, default, right of termination or
acceleration or other such comparable provision) are required prior to
or in connection with the consummation of the transactions contemplated
by this Agreement (whether or not subject to the exception set forth
with respect to clause (C) above).
(h) Assets.
(i) None of the Company, any Subsidiary of
the Company or any Fund owns or has owned any real property. Each
leasehold interest of the Company, any Subsidiary of the Company or any
Fund in any real property is described on Section 4.1(h)(i) of the
Company Disclosure Schedule.
(ii) The Company, each Subsidiary of the
Company and each Fund owns, or otherwise has sufficient and legally
enforceable rights to, free and clear of all Encumbrances other than
Permitted Encumbrances, all of the properties and assets (real,
personal or mixed, tangible or intangible) necessary to operate its
businesses as currently operated.
(i) Compliance.
(i) Except as set forth in the Regulatory
Reports publicly disclosed and filed with the SEC prior to the date
hereof, all material Governmental Approvals have been obtained and are
in full force and effect. There has been no violation, cancellation,
suspension, revocation of or default under any Governmental Approval or
receipt by the Company nor any Subsidiary of the Company nor any of the
Funds of any notice of any violation, cancellation, suspension,
revocation, non-renewal, default or dispute affecting any
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Governmental Approval, and no basis exists for any such action,
including, without limitation, as a result of the consummation of the
transactions contemplated by this Agreement other than violations,
cancellations, suspensions, revocations or defaults that individually
or in the aggregate would not reasonably be expected to have a Material
Adverse Effect with respect to the Company. The Company, each
Subsidiary of the Company and each of the Funds has complied, and is
currently in compliance, with Applicable Law applicable to their
respective businesses, except where the failure to comply individually
or in the aggregate would not reasonably be expected to have a Material
Adverse Effect with respect to the Company, and neither the Company nor
any Subsidiary of the Company nor any of the Funds has received any
notice alleging any failure to so comply.
(ii) Since January 1, 1998, the Company has
not received any notice that any Governmental Authority has initiated
any administrative proceeding or investigation into the business or
operations of the Company, any of its Subsidiaries or any of the Funds
or any principal employees of any of them. There is no unresolved
violation or exception by any Governmental Authority with respect to
any report or statement by any Governmental Authority relating to any
examination of the Company, any of its Subsidiaries or any of the
Funds.
(iii) None of the Company or any of its
Subsidiaries is ineligible pursuant to Section 203 of the Advisers Act
or Section 15(b) of the Exchange Act to serve as a registered
investment adviser or broker-dealer and no "Associated Person" (as
defined in the Advisers Act or the Exchange Act) of the Company, any of
its Subsidiaries or any of the Funds is ineligible pursuant to Section
203 of the Advisers Act or Section 15(b) of the Exchange Act to serve
as an Associated Person of a registered investment adviser or
broker-dealer.
(iv) None of the Company, any of its
Subsidiaries, any of the Funds is registered as, or is required to be
registered as, an Investment Company. No other Person to whom the
Company or any of its Subsidiaries renders investment management or
investment advisory services is registered as an Investment Company.
(v) Except for Tremont Partners, Inc.
("TPI"), neither the Company nor any Affiliate of the Company has been
during the past five years an "investment adviser" required to be
registered, licensed or qualified as an investment adviser under the
Advisers Act or other Applicable Law or subject to any material
liability or disability by reason of any failure to be so registered,
licensed or qualified, except for any such failure to be so registered,
licensed or qualified that would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect with respect
to the Company.
(vi) TPI is, and at all times required by
the Advisers Act during the past five years has been, duly registered
as an investment adviser under the Advisers Act. TPI is, and at all
times required by Applicable Law (other than
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the Advisers Act) during the past five years has been, duly registered,
licensed or qualified as an investment adviser in each state or any
other domestic or foreign jurisdiction where the conduct of its
business required such registration, licensing or qualification, except
for any such failure to be so registered, licensed or qualified that,
individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect with respect to the Company.
(vii) Each Form ADV filed (or deemed to be
filed) by TPI, including any amendments thereto filed (or deemed to be
filed) with the SEC, complied in all material respects with the
Advisers Act and was complete and correct in all material respects and
omitted no material facts required to be stated therein.
(viii) Except for Tremont Securities, Inc.
("TSI"), neither the Company nor any Affiliate of the Company has been
during the past five years a "broker-dealer" required to be registered,
licensed or qualified as a broker-dealer under the Exchange Act or
other Applicable Law or subject to any material liability or disability
by reason of any failure to be so registered, licensed or qualified,
except for any such failure to be so registered, licensed or qualified
that would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect with respect to the Company.
(ix) TSI is, and at all times required by
the Exchange Act during the past five years has been, duly registered
as a broker-dealer under the Exchange Act. TSI is, and at all times
required by Applicable Law (other than the Exchange Act) during the
past five years has been, duly registered, licensed or qualified as a
broker-dealer in each state or any other domestic or foreign
jurisdiction where the conduct of its business required such
registration, licensing or qualification, except for any such failure
to be so registered, licensed or qualified that, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse
Effect with respect to the Company.
(x) Each Form BD filed by TSI, including any
amendments thereto filed with the SEC or the NASD, complied in all
material respects with the Exchange Act and was complete and correct in
all material respects and omitted no material facts required to be
stated therein.
(xi) Except for Tremont Futures, Inc.
("TFI"), neither the Company nor any Affiliate of the Company has been
during the past five years a "commodity pool operator" or "commodity
trading advisor" required to be registered, licensed or qualified as
such under the CEA or other Applicable Law or to be a member of the NFA
or subject to any material liability or disability by reason of any
failure to be so registered, licensed or qualified, except for any such
failure to be so registered, licensed or qualified that would not,
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect with respect to the Company.
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(xii) TFI is, and at all times required by
the CEA during the past five years has been, duly registered as a
commodity pool operator and commodity trading advisor under the CEA and
is a member in good standing of the NFA, and has, to the extent
required by the NFA Bylaw 1101, ensured that: (A) the sponsors of,
advisors to, or other appropriate Persons with respect to, any
collective investment vehicle in which any of the Funds has invested
(or in which any Person with respect to which TFI has acted as a
commodity trading advisor under the CEA has invested) has been, to the
extent required under the CEA, duly registered as a commodity pool
operator or commodity trading adviser under the CEA and is a member in
good standing of the NFA; and (B) any futures commission merchants,
introducing brokers, floor brokers or floor traders with which TFI, any
of the Funds, or any Person with respect to which TFI has acted as a
commodity trading advisor under the CEA, has done business has been, to
the extent required under the CEA, duly registered in its appropriate
capacity under the CEA and is a member in good standing of the NFA.
(xiii) Each Form 7-R and, to the Knowledge
of the Company, each Form 8-R filed by TFI, or by any "principal" or
"Associated Person" (as such terms are defined in the CEA or the rules
of the NFA) thereof, including any amendments thereto filed with the
CFTC or NFA, complied in all material respects with the CEA and was
complete and correct in all material respects and omitted no material
facts required to be stated therein; and TFI and, to the Knowledge of
the Company, each such principal or Associated Person thereof has filed
any such forms 7-R or 8-R required to be filed under the CEA or rules
of the NFA. Except as set forth in Schedule 4.1(i) (xiii) of the
Company Disclosure Schedule, (A) no form 7-R or form 8-R to which the
immediately preceding sentence refers, including any amendments
thereto, has contained a "Yes" response by the applicable registrant,
or Person to be listed as a principal or Associated Person of a
registrant to any item under the "Disciplinary History" section of such
Form 7-R or Form 8-R. Each commodity pool operator or 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.
(xiv) Tremont TASS (Europe) Limited ("TTEL")
is regulated by the SFA. All investment business activities of TTEL
have been carried on in accordance with the provisions of the FSA, any
regulation made under the FSA and the rules of the SFA. All directors
and employees of TTEL required to be registered persons under the rules
of the SFA are so registered. TTEL has adopted, and in all respects
observed, procedures complying with all laws and regulations intended
to combat money-laundering and insider dealing which apply to TTEL, its
directors and employees. TTEL has not received any notice that SFA has
initiated any administrative proceeding or investigation into the
business or operations of TTEL or any of its principal employees. There
is no unresolved violation or exception by SFA with respect to any
report or statement
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by SFA relating to any examination of TTEL. TTEL has not, and none of
its directors or employees has, been the subject of any censure,
disciplinary hearings or fines by the SFA or any other Governmental
Authority. Since it became an authorized person, TTEL has not had cause
to notify the SFA of any material matter and there are no entries on
the Complaints and Breaches Register of TTEL kept in accordance with
the rules of the SFA.
(xv) Tremont Investment Management, Inc.
("TIMI") has timely filed, or caused the timely filing of, all material
forms, reports, registration applications, prospectuses (and other
similar offering documents) schedules and other documents, together
with any amendments required to be made with respect thereto, that were
required to be filed with any Governmental Authority, in connection
with The Tremont Masters Fund and has paid all fees and assessments due
and payable in connection therewith. TIMI is and has been duly
registered as an advisor in the categories of investment counsel and
portfolio manager and limited market dealer under the Securities Act
(Ontario). All directors, officers and employees of TIMI required to be
registered persons under the Securities Act (Ontario) are so
registered. Such registrations are in full force and effect and good
standing and TIMI is not in default or breach of any condition of its
registrations and no proceeding is pending or threatened to revoke or
limit such registrations.
(j) Taxes. Except insofar as disclosed in Schedule
4.1(j) to the Company Disclosure Schedule:
(i) (A) All federal, state and other
material Tax Returns with respect to the Company, any of its
Subsidiaries or any of the Funds or any affiliated, combined or unitary
group of which the Company or any Subsidiary of the Company is or has
been a member required to be filed on or prior to the Closing Date
(taking into account any extensions of time to file) have (or by the
Effective Time will have) been duly and timely filed and all such Tax
Returns are complete and accurate in all material respects and (B) the
Company, all Subsidiaries of the Company and the Funds have timely paid
(or there have been paid on their behalf) all Taxes shown as due and
payable on such Tax Returns (other than Taxes that are being contested
in good faith) or have been properly reserved for in the books and
records of the Company, such Subsidiary of the Company or such Fund in
accordance with GAAP;
(ii) The Company and each Subsidiary of the
Company, have complied with all material requirements in relation to
the payment and withholding of Taxes;
(iii) No agreement or other document waiving
or extending the statute of limitations or the period of assessment or
collection of any Taxes payable by the Company or any Subsidiary of the
Company has been filed or entered into with any Governmental Authority;
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98
(iv) The Company has not received any
written notice of any action, suit, proceeding, audit, deficiency or
claim now proposed or pending against or with respect to the Company or
any Subsidiary of the Company;
(v) Neither the Company nor any Subsidiary
of the Company is a party to or bound by or has any obligation under
any Tax allocation, sharing, indemnity or similar agreement or
arrangement; (including any advance pricing agreement, closing
agreement or other agreement relating to Taxes with any Taxing
Authority);
(vi) Neither the Company nor any Subsidiary
of the Company is, or has been, a United States real property holding
company within the meaning of Section 897(c)(2) of the Code;
(vii) Neither of the Company nor any
Subsidiary of the Company is a "bank" as defined in Section 581 of the
Code;
(viii) No power of attorney with respect to
any Taxes of the Company or any Subsidiary of the Company has been
executed or filed with any taxing authority;
(ix) No liens for Taxes exist with respect
to any assets or properties of the Company, or any Subsidiary of the
Company except for statutory liens for Taxes not yet due or contested
in good faith;
(x) No federal, state, local or non-U.S.
audits or other administrative proceedings or court proceedings are
presently pending with regard to any federal, state, local or non-U.S.
income or franchise Taxes or material other federal, state, local or
non-U.S. Taxes or Tax Returns of the Company or any Subsidiary of the
Company. The Company has not received any written notice of any
material issues relating to Taxes raised from the relevant Taxing
Authority during any presently pending audit or examination;
(xi) Neither the Company nor any Subsidiary
of the Company has agreed to or is required to make any material
adjustment under Section 481(a) of the Code or any similar provision of
non-U.S. law that would affect any taxable year beginning after the
date hereof;
(xii) Neither the Company nor any Subsidiary
of the Company has with regard to any assets or property held or
acquired by any of them, filed a consent to the application of Section
341(f) of the Code or agreed to have Section 341(f)(2) of the Code
apply to any disposition of a subsection (f) asset (as such term is
defined in Section 341(f)(4) of the Code) owned by the Company or any
Subsidiary of the Company;
(xiii) Each Fund which is qualified as a
"registered investment company" under subchapter M of the Code has been
managed in a manner consistent with its qualification as a "registered
investment company"
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under Subchapter M of the Code. No such Fund is subject to the payment
of Tax for any taxable year by reason of its failure to satisfy the
minimum distribution requirements of Section 852(a)(1) of the Code;
(xiv) Neither the Company nor any Subsidiary
of the Company has constituted either a "distributing corporation" or a
"controlled corporation" (within the meaning of Section 355(a)(1)(A) of
the Code) in a distribution of stock qualifying for tax-free treatment
under Section 355 of the Code (i) in the two (2) years prior to the
date of this Agreement or (ii) in a distribution which could otherwise
constitute part of a "plan" or "series of related transactions" (within
the meaning of Section 355(e) of the Code) in conjunction with the
Merger;
(xv) Parent has received complete copies of
(A) all material federal, state and other material income or franchise
Tax Returns of the Company and each Subsidiary of the Company relating
to the taxable periods ended since December 31, 1998 and (B) any audit
report issued within the last three years relating to any material
Taxes due from or with respect to the Company or any Subsidiary of the
Company;
(xvi) The Company has not received any
written notice of any claim by a Taxing Authority in a jurisdiction
where the Company or any Subsidiary of the Company does not file Tax
Returns stating that the Company, or such Subsidiary, is or may be
subject to taxation by that jurisdiction;
(xvii) No property owned by the Company or
any Subsidiary of the Company (i) is property required to be treated as
being owned by another Person pursuant to the provisions of Section
168(f)(8) of the Internal Revenue Code of 1954, as amended and in
effect immediately prior to the enactment of the Tax Reform Act of
1986, (ii) constitutes "tax-exempt use property" within the meaning of
Section 168(h)(1) of the Code or (iii) is "tax-exempt bond financed
property" within the meaning of Section 168(g) of the Code;
(xviii) There is no contract, agreement,
plan or arrangement covering any person that, individually or
collectively, could give rise to the payment of any amount that would
not be deductible by the Parent, the Company or any of their respective
Affiliates by reason of Section 280G of the Code, or would constitute
compensation in excess of the limitation set forth in Section 162(m) of
the Code; and
(xix) Neither the Company nor any Subsidiary
of the Company is subject to any private letter ruling of the IRS or
comparable rulings of other Taxing Authorities issued solely in respect
of the Company or any Subsidiary of the Company.
(xx) At the time of issuance of each of the
life insurance policies (each individually, an "Insurance Policy")
issued by TII and for the life of
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100
each Insurance Policy: (i) provided that each purchaser of such
Insurance Policy has an insurable interest in the life of the insured
under each Insurance Policy and in the amount of insurance applied for,
(A) each Insurance Policy qualifies as life insurance under applicable
insurance law, (B) each Insurance Policy qualifies as a life insurance
contract under the guideline premium test of Section 7702 of the Code
and will be treated as life insurance for current federal income Tax
purposes, (C) neither the Company nor any of its Subsidiaries has
caused any Insurance Policy to fail the guideline premium test of
Section 7702 of the Code or some other current Tax law provision
thereby causing the purchaser to be in receipt or accrual of the
account value of an Insurance Policy, including increments thereon, (D)
neither the Company nor any of its Subsidiaries has caused any
Insurance Policy to fail the guideline premium test of Section 7702 of
the Code or some other current Tax law provision thereby causing the
death benefits paid under the policies to be ineligible for the
exclusion from gross income under Section 101(a) of the Code, (ii) each
of the Insurance Policies are variable contracts as defined in Section
817(d) of the Code, (iii) the segregated asset account(s) underlying
the Insurance Policies comply with Section 817(h) of the Code, (iv) no
purchaser of an Insurance Policy will be treated as owner for Tax
purposes of the assets of any separate account to which Insurance
Policy account values have been allocated, and, (v) provided that, for
each Insurance Policy, premiums are paid, death benefits are reduced
and each policy owner exercises its rights under the Insurance Policy
only in accordance with the plan for such Insurance Policy as specified
by TII at issue and from time to time thereafter, no Insurance Policy
has become a modified endowment contract under Section 7702A of the
Code.
(xxi) At the time of issuance of each of the
annuity policies (each individually, an "Annuity Policy") issued by TII
and for the life of each Annuity Policy: (i) each of the Annuity
Policies are variable contracts as defined in Section 817(d) of the
Code, (ii) the segregated asset account(s) underlying the Annuity
Policies comply with Section 817(h) of the Code; and (iii) no purchaser
of an Annuity Policy will be treated as owner for Tax purposes of the
assets of any separate account to which Annuity Policy account values
have been allocated.
(k) Litigation. There is not, and since January 1,
1998, there has not been, any litigation, administrative, arbitral or other
proceeding, claims, actions, or governmental or regulatory investigations
pending or, to the Knowledge of the Company, threatened against the Company, any
Subsidiary of the Company or any of the Funds in connection with their
respective businesses or the transactions contemplated by this Agreement and
there is no injunction, judgment, decree or regulatory restriction imposed upon
either the Company or any Subsidiary of the Company. With respect to the pending
litigations, proceedings, claims, actions or investigations listed on Schedule
4.1(k) of the Company Disclosure Schedule, individually and in the aggregate, no
adverse determination would reasonably be expected to have a Material Adverse
Effect with respect to the Company. There is no lawsuit or claim by the Company
or any
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101
Subsidiary of the Company currently pending or which the Company or any
Subsidiary of the Company currently intends to initiate against any other
Person.
(l) Labor and Employment Matters; Benefit Plan
Obligations.
(i) Neither the Company nor any of its
Subsidiaries is delinquent in any respect in payments to any of its
current or former officers, directors, employees, consultants, or
agents for any wages, salaries, commissions, bonuses, benefits,
expenses or other compensation for any services performed by them or
amounts required to be reimbursed to them; and in the event of
termination of the employment of any employee of the Company, any of
its Subsidiaries or any of the Funds ("Employee"), none of the Company
or any of its Subsidiaries will be liable to any such Employee under
any agreement in effect at the Effective Time for so-called "severance
pay", incentive pay, liquidated damages or any other payments or
benefits, including, without limitation, post-employment health care,
pension or insurance benefits.
(ii) Since January 1, 1998, none of the
Company or any Subsidiary of the Company has had any claim made against
it by any Person before any Governmental Authority in respect of
employment with it for discrimination or harassment on account of sex,
race or other characteristic protected by Applicable Law and there are
no such proceedings pending or, to the Company's Knowledge, threatened.
(iii) Schedule 4.1(l)(iii) of the Company
Disclosure Schedule contains a true and complete list of each Benefit
Plan. With respect to each Benefit Plan, the Company has heretofore
delivered or made available to Parent true and complete copies of each
of the following documents: (A) a copy of the Benefit Plan and any
amendments thereto; (B) a copy of the most recent annual report on IRS
Form 5500; (C) a copy of the most recent summary plan description
(including supplements) required under ERISA with respect thereto; (D)
if the Benefit Plan is funded through a trust or any third party
funding vehicle, a copy of the trust or other funding agreement and the
latest financial statements thereof and all related agreements; and (E)
the most recent determination letter or pending determination letter
received from the IRS with respect to each Benefit Plan intended to
qualify under Section 401 of the Code.
(iv) None of the Company or any Subsidiary
of the Company or any ERISA Affiliate (A) has ever maintained any
Benefit Plan which has been subject to Title IV of ERISA or any similar
Applicable Law of any other jurisdiction or (B) has ever provided or
agreed to provide health care or any other welfare benefits (as
described in Section 3(1) of ERISA) to any Employees after their
employment is terminated (other than as required by part 6 of Subtitle
B of title I of ERISA or any similar Applicable Law of any other
jurisdiction).
(v) No Benefit Plan is a "multiemployer
pension plan", as defined in section 3(37) of ERISA.
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(vi) Each Benefit Plan has been operated in
all material respects in accordance with its terms and Applicable Law,
including but not limited to ERISA and the Code. Each Benefit Plan
which is intended to be "qualified" within the meaning of Code section
401(a) is so qualified and has received a favorable determination
letter to such effect.
(vii) To the Knowledge of the Company, there
is no matter pending with respect to any of the Benefit Plans before
any Governmental Authority. There are no pending or, to the Knowledge
of the Company, threatened or anticipated actions, suits, or claims by
or on behalf of any Benefit Plan, by any Employee or beneficiary
covered thereunder, or otherwise involving any such Benefit Plan (other
than routine claims for benefits).
(viii) No stock or other security issued by
the Company forms or has formed a material part of the assets of any
Benefit Plan.
(ix) To the Knowledge of the Company, any
individual who performs services for the Company, any of its
Subsidiaries or any of the Funds (other than through a contract with an
organization other than such individual) and who is not treated as an
Employee of the Company, any of its Subsidiaries or Funds for federal
income tax purposes by the Company, such Subsidiary or Fund is not an
Employee for such purposes.
(x) None of the Funds has or has had any
employees.
(xi) With respect to each Benefit Plan that
is maintained outside of the U.S. primarily for the benefit of persons
substantially all of whom are nonresident aliens (a "Foreign Plan"):
(1) all employer and Employee
contributions to each Foreign Benefit required by law
or by the terms of such Foreign Plan have been made,
or, if applicable, accrued in accordance with normal
accounting practices.
(2) the fair market value of the
assets of each funded Foreign Plan, the liability of
each insurer for any Foreign Plan funded through
insurance or the book reserve established for any
Foreign Plan, together with any accrued
contributions, is sufficient to procure or provide
for the accrued benefit obligations, as of the
Closing Date, with respect to all current or former
participants in such plan according to the actuarial
assumptions and valuations most recently used to
determine employer contributions to such Foreign Plan
and no transaction contemplated by this Agreement
shall cause such assets or insurance obligations to
be less than such benefit obligations; and
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(3) each Foreign Plan required to be
registered has been registered and has been
maintained in good standing with applicable
regulatory authorities.
(xii) None of the Employees is represented
in his or her capacity as an Employee by any labor organization;
Neither the Company nor any of its Subsidiaries has recognized any
labor organization nor has any labor organization been elected as the
collective bargaining agent of any of such Employees, nor has the
Company or any of its Subsidiaries entered into any collective
bargaining agreement or union contract recognizing any labor
organization as the bargaining agent of any Employees; there is no
union organization activity involving any of the Employees, pending or,
to the Knowledge of the Company or any of its Subsidiaries, threatened,
nor has there ever been union representation involving any of the
Employees; there is no picketing, pending or, to the Knowledge of the
Company or any of its Subsidiaries, threatened, and there are no
strikes, slowdowns, work stoppages, other job actions, lockouts,
arbitrations, grievances or other labor disputes involving any of the
Employees, pending or, to the Knowledge of the Company, threatened;
there are no complaints, charges or claims against the Company or any
of its Subsidiaries pending or, to the Knowledge of the Company,
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 or failure to employ by the Company or any of
its Subsidiaries, of any individual; 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, the Worker Adjustment
and Retraining Notification Act and any similar state or local "mass
layoff" or "plant closing" law ("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; and
there has been no "mass layoff" or "plant closing" as defined by WARN
with respect to the Company or any of its Subsidiaries within the six
(6) months prior to the Closing.
(m) Board Approval. The Board of Directors of the
Company, by resolutions duly adopted at a meeting duly called and held and not
subsequently rescinded or modified in any way, has duly (i) determined that this
Agreement and the Merger are advisable and in the best interests of the Company
and its stockholders, (ii) approved this Agreement and the Merger and (iii)
recommended that the stockholders of the Company adopt this Agreement. Assuming
the accuracy of the representations and warranties set forth in Section 4.2(i),
the Board of Directors of the Company has taken the necessary action to make
inapplicable to this Agreement, the Stockholders Agreement and the transactions
contemplated hereby and thereby the restrictions on business combinations set
forth in Section 203 of the DGCL and any other "fair price," "moratorium,"
"control share," "business combination," "affiliate transaction" or other
applicable antitakeover laws.
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(n) Vote Required. Assuming the accuracy of the
representations and warranties set forth in Section 4.2(i), the affirmative vote
of the holders of a majority of the voting power of the Company Common Stock to
adopt this Agreement (the "Required Company Vote") is the only vote of the
holders of any class or series of Company Capital Stock necessary to adopt this
Agreement and approve the transactions contemplated hereby.
(o) Contracts.
(i) Schedule 4.1(o) of the Company
Disclosure Schedule sets forth under separate headings, and the Company
has made available to the Parent true, correct and complete copies of:
(A) each Company Contract that is not cancelable without penalty by the
Company, any of its Subsidiaries or any Fund party thereto upon 90 days
or less notice or that involves the receipt or payment by the Company,
such Subsidiary or such Fund in the prior fiscal year (or is reasonably
likely to involve the receipt of payment by the Company, such
Subsidiary or such Fund in the current fiscal year) of an amount in
excess of $100,000, (B) each Company Contract with any one or more of
the directors or executive officers or members of their Immediate
Families or entities in which any of them has greater than a 5% equity
interest, (C) each Company Contract that is required to be described in
the Regulatory Reports publicly disclosed and filed with the SEC or to
be filed as an exhibit thereto (which Company Contract is described in
the Regulatory Reports publicly disclosed and filed with the SEC or
filed as an exhibit thereto), (D) each Advisory Agreement, (E) each
Company Contract with respect to or involving employment, severance,
product design or development, personal services, consulting,
non-competition or indemnification (including, without limitation, any
Company Contract involving employees of the Company, any of its
Subsidiaries or any of the Funds); (F) each Company Contract with
respect to or involving licensing, merchandising or distribution; (G)
each Company Contract granting a right of first refusal or first
negotiation; (H) each Company Contract that is a shareholders,
partnership, joint venture or similar agreement; (I) each Company
Contract for the acquisition, sale or lease of material properties or
assets of the Company, any of its Subsidiaries or any Fund (by merger,
purchase or sale of assets or stock or otherwise) entered into since
its inception; (J) each Company Contract with any Governmental
Authority; (K) each loan or credit agreement, mortgage, indenture,
instrument or other Company Contract evidencing indebtedness for
borrowed money by the Company, any of its Subsidiaries or Funds or any
such Company Contract pursuant to which indebtedness for borrowed money
may be incurred; (L) each Company Contract that purports to limit,
curtail or restrict the ability of the Company, any of its Subsidiaries
or any of the Funds to compete in any geographic area, line of business
or otherwise or with any Person, or to obtain products or services from
or engage in business transactions with, any other Person; (M) each
Company Contract with or with respect to Mutual Risk Management Ltd.;
(N) each Company Contract between the Company, any of its Subsidiaries
or any of the Funds and any other Person (other than a wholly owned
Subsidiary of the Company) in which the Company, any of its
Subsidiaries or any of the Funds
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105
owns an equity interest; (O) each other Company Contract material to
the business, governance, operations or financial condition of the
Company, any of its Subsidiaries or any of the Funds, and (P) each
commitment and agreement to enter into any of the foregoing. Each
Company Contract set forth or required to be set forth in Schedule
4.1(o) of the Company Disclosure Schedule is referred to herein as a
"Material Contract."
(ii) Each of the Company, each of its
Subsidiaries and each Fund which is a party to any Material Contract
has duly performed all its material obligations under such Material
Contract, in each case to the extent that such obligations have
accrued; each Material Contract is in full force and effect and
constitutes the valid and legally binding obligation of the Company,
such Subsidiaries and each Fund, as applicable, enforceable according
to its terms; and no breach or default, alleged breach or default, or
event which constitutes or would (with the passage of time, notice or
both) constitute a material breach or default thereunder on the part of
the Company, any of its Subsidiaries or any Fund, or, to the Knowledge
of the Company, any other party thereto, has occurred or, as a result
of this Agreement or the performance by the Company of any of its
covenants or obligations hereunder, will occur.
(iii) Except for those limits or
requirements in cases (A) or (B) immediately below as would not,
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect with respect to the Company, no Company
Contract to which the Company, any of its Subsidiaries or any of the
Funds is a party or subject to (A) limits the freedom of the Company,
or any of its Subsidiaries or any of the Funds to compete in any line
of business, any geographic area or otherwise or with any Person; or
(B) contains any requirement of exclusive dealing with any other Person
anywhere in the world or with respect to any product, and no such
Contract as described in such clauses (A) and (B) or any other Company
Contract would be or purports to be valid and legally binding on the
Parent or any of its Affiliates (other than the Company and its
Subsidiaries) upon, and at any time after, the Closing, regardless of
the scope of limits or requirements.
(iv) The Company has made or caused to be
made available to the Parent copies of all sales, marketing and account
solicitation agreements and marketing arrangements relating to its
investment advisory activities.
(p) Brokerage or Finder's Fees. Other than the
Company Financial Advisor, whose fees and expenses will be borne by the Company,
neither the Company nor any of its Subsidiaries has incurred any liability to
any broker, finder or agent for any fees or commissions or similar compensation
with respect to the transactions contemplated by this Agreement.
(q) Insurance. The Company, its Subsidiaries and the
Funds maintain with reputable insurers such worker's compensation, comprehensive
property and casualty, liability, errors and omissions, fidelity and other
insurance as is described
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106
on Schedule 4.1(q) of the Company Disclosure Schedule, which insurance is, in
the reasonable opinion of the Company, sufficient in all material respects for
the operation of the business of the Company and its Subsidiaries and Funds as
currently conducted.
(r) Opinion of the Company Financial Advisor. The
Company has received the opinion of the Company Financial Advisor, dated the
date of this Agreement, to the effect that, as of such date, the Merger
Consideration is fair, from a financial point of view, to the holders of Company
Common Stock, a copy of which opinion has been made available to the Parent.
(s) No Parent Capital Stock. The Company does not own
or hold directly or indirectly any shares of common stock of the Parent or any
other capital stock of the Parent, or any options, warrants or other rights to
acquire any capital stock of the Parent, or in each case, any interests therein.
(t) Sponsored Collective Investment Vehicles and
Commodities Advisory Matters.
(i) Schedule 4.1(t) of the Company
Disclosure Schedule sets forth a true, correct and complete list of
each Fund, including each Fund's name, its jurisdiction of organization
and authorized ownership interests (and the ownership interests of the
Company and its Subsidiaries in each Fund), and the jurisdictions in
which each of them is licensed or qualified or registered to do
business.
(ii) True, correct and complete copies of
the offering documents, subscription agreements, administrative
services agreements, distribution or placement agency agreements,
solicitation agreements and custody agreements, as applicable, or any
similar agreements, in any case pertaining to the Funds and used since
January 1, 1998 have been made available to the Parent. Such offering
documents did not, at any time such offering documents were made
available to investors or prospective investors in the Funds, contain
any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(iii) True, correct and complete copies of
the audited financial statements of each of the Funds for the fiscal
years completed on or after December 31, 1998 or its inception,
whichever is later, through its most recent fiscal year ended on or
prior to December 31, 2000 have been made available to the Parent. Each
of such financial statements presents fairly, in all material respects,
the consolidated financial position of such Fund in accordance with
GAAP applied on a consistent basis (except as otherwise noted therein)
at the respective date of such financial statements.
(iv) All securities of which any of the
Funds is the issuer were sold pursuant to a valid exemption from the
registration requirements of the
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107
Securities Act and other applicable Securities Laws and in compliance
with Applicable Law.
(v) Since its inception, each Fund has been
operated and is currently operating in compliance in all material
respects with its respective investment objectives and policies, its
constituent documents and Applicable Law. Since its inception, each of
the Funds that has been (i) offered to United States investors or (ii)
organized in any jurisdiction within the United States has been
excluded from the definition of an "investment company" under the
Investment Company Act by virtue of Section 3(c)(1) or Section 3(c)(7)
thereof. Since its inception, each of the Funds that is a commodity
pool within the meaning of the CEA is an "exempt pool" within the
meaning of Rule 4.7 promulgated by the CFTC under the CEA, each Person
with respect to which TFI acts as a commodity trading advisor is a
"Qualified Eligible Person" within the meaning of such Rule 4.7, and
TFI and the Fund have been in compliance with the disclosure reporting
and record keeping requirements of such Rule 4.7(b).
(vi) None of TFI, the Funds or any direct or
indirect "principal" or "Associated Person" (as such terms are defined
in the CEA or the rules of the NFA) thereof has been enjoined,
indicted, convicted or made the subject of disciplinary proceedings,
consent decrees or administrative orders on account of any violation of
the Securities Laws, the CEA or the rules or interpretations of any
Self-Regulatory Organization or, except as set forth in Schedule
4.1(t)(vi) of the Company Disclosure Schedule, has been criticized by
the CFTC or NFA in, as a result of or following any regulatory audit by
the NFA.
(u) Termination of Relationships. As of the date
hereof, neither the Company nor any of its Subsidiaries has received any notice
since June 30, 2000, and no other notice is pending, that any Fund or any other
Person to whom the Company or any of its Subsidiaries renders investment
management or investment advisory services that individually or in the aggregate
are material to the business of the Company is terminating or is planning to
terminate its relationship with the Company and/or any of its Subsidiaries or
will reduce materially its use of the services of the Company and any of its
Subsidiaries. As of the date hereof, the Company has no Knowledge that any Fund
or any other Person to whom the Company or any of its Subsidiaries renders
investment management or investment advisory services that individually or in
the aggregate are material to the business of the Company plans to terminate its
relationship with the Company and/or any of its Subsidiaries or plans to reduce
materially its use of the services of the Company and any of its Subsidiaries.
For the purposes of this Section 4.1(u), each of the Funds will be deemed to be
material to the business of the Company and its Subsidiaries.
(v) Absence of Certain Payments. To the Knowledge of
the Company, none of the Company, any of its Subsidiaries or any Person acting
on behalf of the Company and any of its Subsidiaries has made any payment to, or
conferred any benefit, directly or indirectly, on suppliers, clients, employees
or agents of suppliers or clients, or officials or employees of any Governmental
Authority or any political parties
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or candidates for office, that was unlawful in the place where, and at the time
when, such payment or benefit was given or received, or, in the case of payments
to or benefits conferred upon representatives of a Governmental Authority
referred to above, would have been unlawful under the laws of the United States
if such laws were applicable to such payment or benefit and to such officials or
employees.
(w) Privacy Rules. The Company and its Subsidiaries
and the Funds, to the extent each is a "financial institution" (as defined in
the GBA), have complied, to the extent required, with the GBA and the rules and
regulations promulgated pursuant thereto, including, without limitation,
Regulation S-P issued by the SEC and the privacy rules issued by the Federal
Trade Commission and expected to be issued by the CFTC (collectively, the
"Privacy Rules"), and each such Financial Institution has provided the privacy
notices, in the form and to the extent required by the GBA and the Privacy
Rules, and has taken such other actions as may be required thereunder.
(x) Technology and Intellectual Property.
(i) The Technology Systems are adequate in
all material respects for their intended use and for the operation of
the respective businesses of the Company and its Subsidiaries as are
currently operated and as necessary after the Closing Date in
substantially the same manner as such businesses have been operated
prior thereto. The Company or one or more of its wholly owned
Subsidiaries owns or has the right to use, free and clear of
Encumbrances, all components of the Technology Systems that are
reasonably necessary to the normal operations of such businesses. There
has not been any material malfunction with respect to any of the
Technology Systems since January 1, 1998 that has not been remedied or
replaced in all material respects. The completion of the transactions
contemplated by this Agreement will not materially alter or impair the
ownership or right of the Company or its Subsidiaries to use the
components of the Technology Systems. No trade secret, know-how, model,
process, formula, database or Software created by the Company or any of
its Subsidiaries included in the Intellectual Property of the Companies
has been disclosed or authorized to be disclosed to any third party
other than for use in connection with the businesses of the Company and
its Subsidiaries or pursuant to a confidentiality or non-disclosure
agreement that reasonably protects the interest of the Company and its
Subsidiaries and the Funds in and to such matters.
(ii) Schedule 4.1(x)(ii) of the Company
Disclosure Schedule sets forth, for the Intellectual Property owned by,
or licensed to, the Company or any of its Subsidiaries, including those
jointly with others (such schedule specifies any as such), a complete
and accurate list of all (whether registered or unregistered, any
applications therefor and whether owned or licensed) patents,
trademarks, copyrights, trade secrets and Software. The Company and its
wholly owned Subsidiaries own or possess adequate licenses or other
rights to use, free and clear of Encumbrances, orders and arbitration
awards, all of their Intellectual Property for the operation of the
respective businesses of the Company and the Subsidiaries as are
currently operated
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and as necessary after the Closing Date in substantially the same
manner as such businesses have been operated prior thereto. All
Intellectual Property registrations owned by the Company or any
Subsidiary of the Company are valid and subsisting, are held in the
name of the Company or one of its Subsidiaries and are validly
maintained. No Intellectual Property application or registration owned
by the Company or any Subsidiary of the Company is the subject of any
pending, existing or threatened opposition, interference, cancellation
proceeding or other legal or governmental proceeding before any
registration authority in any jurisdiction. The conduct of the
respective businesses of the Company and its Subsidiaries and the Funds
does not infringe in any material respect upon any Intellectual
Property right owned or controlled by any third party. There are no
material claims, proceedings or actions pending or, to the Company's
Knowledge, threatened, and none of the Company, any of its Subsidiaries
or any of the Funds has received any notice of any claim or suit (A)
alleging that the activities of the Company, any of its Subsidiaries or
any of the Funds infringe upon or constitute the unauthorized use of
the proprietary rights of any third party or (B) challenging the
ownership, use, validity or enforceability of any Intellectual Property
owned or controlled by the Company or any Subsidiary of the Company,
nor is there, to the Company's Knowledge, a valid basis for any such
claim or suit. To the Company's Knowledge, no third party is infringing
upon any Intellectual Property owned by the Company or any of its
Subsidiaries, and no such claims have been made by the Company.
4.2 Representations and Warranties of the Parent and the
Merger Sub. Except as set forth in writing in the disclosure schedule delivered
by the Parent to the Company prior to the execution of this agreement (the
"Parent Disclosure Schedule") (each section of which qualifies the
correspondingly numbered representation and warranty or covenant to the extent
specified therein) each of the Parent and the Merger Sub represents and warrants
to the Company as follows:
(a) Organization, Standing and Power. Each of the
Parent and the Merger Sub has been duly incorporated and is validly existing and
in good standing under the Applicable Laws of the State of Delaware, has all the
corporate power and authority to own, lease and operate its properties and
assets and to carry on its business as now being conducted, and is duly
qualified and in, if applicable, good standing to do business in each
jurisdiction in which the nature of its business or the ownership, leasing or
operation of its properties makes such licensing, qualification or, if
applicable, good standing necessary other than in such jurisdictions where the
failure to be so licensed or qualified or, if applicable, in good standing would
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect with respect to the Parent. The copies of the charter and by-laws
and any amendments thereto of the Parent and the Merger Sub that were previously
furnished to the Company are true, complete and correct copies of such documents
as in effect on the date of this Agreement. All of the outstanding shares of
capital stock of Merger Sub are duly authorized validly issued and nonassessable
and are owned beneficially and of record, by the Parent or a Subsidiary which is
wholly owned, directly or indirectly, by the Parent, free and clear of any
Encumbrances other than Permitted Encumbrances.
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(b) Authority of the Parent and the Merger Sub;
Execution and Delivery. Each of the Parent and the Merger Sub has the corporate
power and authority to enter into and carry out its obligations under this
Agreement. The execution and delivery by each of the Parent and the Merger Sub
of this Agreement and the performance by each of them of the transactions
contemplated hereby have been duly and validly authorized and approved by all
necessary corporate action on the part of each of them, and no other corporate
or stockholder proceedings on the part of either of them are necessary to
authorize this Agreement or to consummate the transactions contemplated hereby
and thereby. Each of the Parent and the Merger Sub has duly executed and
delivered this Agreement. Assuming the due authorization, execution and delivery
of this Agreement by the Company, this Agreement constitutes and assuming the
due authorization, execution and delivery thereof by each other party thereto,
all instruments of conveyance and other documents executed and delivered or to
be executed and delivered by them, as contemplated by this Agreement,
constitute, or when so executed and delivered will constitute, the legal, valid
and binding agreements, instruments and obligations of each of them, enforceable
against each of them in accordance with their respective terms except as such
enforceability may be limited by applicable bankruptcy, insolvency, fraudulent
transfer, moratorium, reorganization and similar Applicable Laws of general
application relating to or affecting the rights and remedies of creditors and by
the application of general principles of equity (regardless of whether such
enforcement is sought in a proceeding in equity or at law).
(c) Consents; No Conflict.
(i) Other than filings and/or notices (A)
pursuant to Section 2.3, (B) under the HSR Act or the Securities Laws,
(C) required under a foreign antitrust or trade regulation law, or (D)
required to be made with any applicable Self-Regulatory Organization,
neither the Parent nor the Merger Sub is required to obtain the
consent, authorization or approval of, or submit any notice, report or
any other filing with, any Governmental Authority or any third party or
to obtain any consent, permit, license or franchise in connection with
the execution, delivery and performance of this Agreement by the Parent
or the Merger Sub, respectively, except, in the case of any third
party, as would not reasonably be expected to have a Material Adverse
Effect with respect to the Parent.
(ii) The execution, delivery and performance
of this Agreement by each of the Parent and the Merger Sub and the
consummation of the transactions contemplated hereby will not conflict
with, result in the termination of, contravene or constitute a default
under, or be an event which, with the giving of notice or passage of
time or both will become a default under, or give to any other Person
any right of termination pursuant to any of the terms, conditions or
provisions of or under (A) any Applicable Law (provided, as to
consummation, the filings, reports and notices are made, and approvals
are obtained, as referred to in Section 4.2(c)(i)), (B) the charter and
by-laws of the Parent or the Merger Sub or (C) any contract, agreement,
indenture, mortgage, deed of trust, note, bond, franchise, lease, plan,
license or other instrument, arrangement or other obligation binding
upon the Parent or the Merger Sub, or to
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which the property of the Parent or the Merger Sub is subject, except
in the case of clause (A) or (C) as would not reasonably be expected to
have a Material Adverse Effect with respect to the Parent.
(d) Litigation. Except as set forth on Schedule
4.2(d) of the Parent Disclosure Schedule, as of the date hereof, there are no
claims, actions, suits, proceedings or investigations pending or, to the
Parent's Knowledge, threatened against the Parent or any Subsidiary of the
Parent, or any properties or rights of the Parent or any Subsidiaries of the
Parent, before any Governmental Authority that (i) seek to question, delay or
prevent the consummation of the Merger or the other transactions contemplated
hereby or (ii) would reasonably be expected to affect adversely the ability of
the Parent to fulfill its obligations hereunder, including the Parent's
obligations under Article II and Article III.
(e) Board Approval of the Parent. The Board of
Directors of the Parent, by resolutions duly adopted at a meeting duly called
and held and not subsequently rescinded or modified in any way, has duly (i)
determined that this Agreement and the Merger are in the best interests of the
Parent and its stockholders; and (ii) approved this Agreement and the Merger.
(f) Board Approval of the Merger Sub. The Board of
Directors of the Merger Sub, by resolutions duly adopted without a meeting by
unanimous consent thereto in writing and not subsequently rescinded or modified
in any way, has duly (i) determined that this Agreement and the Merger are
advisable and in the best interest of the Merger Sub and its stockholder, (ii)
approved this Agreement and the Merger and (iii) recommended that the
stockholder of the Merger Sub adopt this Agreement. Following the adoption of
such resolutions by the Board of Directors of the Merger Sub, the sole
stockholder of the Merger Sub, without a meeting by consent in writing, has duly
adopted this Agreement.
(g) No Other Vote Required. No vote of the holders of
any class or series of the capital stock of the Parent and, except as provided
in Section 4.2(f), any Subsidiary of the Parent is necessary to approve this
Agreement, the Merger or the other transactions contemplated hereby.
(h) Brokerage or Finder's Fees. The Parent has not
incurred any liability to any broker, finder or agent for any fees, commissions
or similar compensation with respect to the transactions contemplated by this
Agreement.
(i) No Company Capital Stock. Neither of the Parent
or the Merger Sub owns or holds directly or indirectly any shares of Company
Common Stock or any other capital stock of the Company, or any options, warrants
or other rights to acquire any shares of Company Common Stock or any other
capital stock of the Company, or in each case, any interests therein, other than
pursuant to the Merger as contemplated by this Agreement or pursuant to the
Stockholders Agreement.
(j) Financing. The Parent has and will have
available, prior to the Effective Time, sufficient funds to pay the Merger
Consideration and the Option Consideration pursuant to this Agreement.
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(k) No Business Activities. The Merger Sub has not
conducted any activities other than in connection with its organization, the
negotiation and execution of this Agreement and the consummation of the
transactions contemplated hereby. The Merger Sub has no Subsidiaries.
Article V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 Covenants of the Company. During the period from the date
of this Agreement and continuing until the Effective Time, the Company agrees as
to itself and its Subsidiaries that (except as expressly contemplated or
permitted by this Agreement or as otherwise indicated under separate headings in
Schedule 5.1 of the Company Disclosure Schedule or to the extent that the Parent
(in its sole discretion) shall otherwise consent in writing):
(a) Ordinary Course.
(i) The Company and each of its Subsidiaries
shall (and shall cause the Funds to), and the Company shall use its
commercially reasonable efforts to cause each of Index LLC, TII, TMRM
and FITX to, carry on their respective businesses in the usual, regular
and ordinary course in the same manner as heretofore conducted, and, to
the extent consistent therewith, shall (and shall cause the Funds to)
use all reasonable best efforts to, and the Company shall use its
commercially reasonable efforts to cause each of Index LLC, TII, TMRM
and FITX to, preserve intact their present lines of business, business
organizations and reputations, maintain their rights, franchises and
permits, keep available the services of their key officers and key
employees, maintain their assets and properties in good working order
and condition, ordinary wear and tear excepted, and preserve their
relationships and goodwill with clients, suppliers and others having
business dealings with them to the end that their ongoing businesses
shall not be impaired in any material respect at the Effective Time.
(ii) The Company shall not, and shall not
permit any of its Subsidiaries or the Funds to, and the Company shall
use its commercially reasonable efforts to cause each of Index LLC,
TII, TMRM and FITX not to, (A) enter into any new material line of
business, (B) commit to any capital expenditures other than capital
expenditures in the usual, regular and ordinary course of business
consistent with past practice and not individually or in the aggregate
in excess of $100,000, or (C) delay or postpone the payment of accounts
payable and other liabilities or accelerate the collection of accounts
receivable, or revalue in any material respect any of its assets,
including, without limitation, writing down the value of inventory or
writing-off notes or accounts receivable other than in each case in the
usual, regular and ordinary course of business consistent with past
practice or as required by GAAP;
(b) Dividends; Changes in Share Capital. The Company
shall not, and shall not permit any of its Subsidiaries to, and shall not
propose to, (i) declare,
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set aside or pay any dividends on or make other distributions in
respect of any of its ownership interests, (ii) split, combine,
subdivide or reclassify any of its ownership interests or issue or
authorize or propose the issuance of any other securities in respect
of, in lieu of or in substitution for, ownership interests, (iii) adopt
a plan of complete or partial liquidation or resolutions providing for
or authorizing such liquidation or a dissolution, merger,
consolidation, restructuring, recapitalization or other reorganization,
(iv) directly or indirectly repurchase, redeem or otherwise acquire any
ownership interests or any securities convertible into or exercisable
for any ownership interests except, subject to and in accordance with
Applicable Law, for the purchase from time to time by the Company of
Company Common Stock in the usual, regular and ordinary course of
business consistent with past practice in connection with funding the
Tremont Advisers, Inc. Savings Plan, or (v) make any other actual,
constructive or deemed distribution in respect of any shares of its
capital stock or other ownership interests or otherwise make any
payments to stockholders or equityholders in their capacity as such.
(c) Issuance of Securities. The Company shall not,
and shall not permit any of its Subsidiaries to, and shall use its commercially
reasonable efforts to cause each of Index LLC, TII, TMRM and FITX not to, issue,
deliver or sell, or authorize or propose the issuance, delivery or sale of, any
ownership interests of any class, or enter into any agreement with respect to
any ownership interests, other than the issuance of Company Common Stock upon
the exercise of Company Stock Options outstanding on the date hereof or in
connection with the Tremont Advisers, Inc. Savings Plan in accordance with its
present terms or the issuance of ownership interests by FITX in connection with
capital - raising activities consistent with past practice.
(d) Governing Documents. The Company shall not, and
shall not permit any of its Subsidiaries or the Funds to, and shall use its
commercially reasonable efforts to cause each of Index LLC, TII, TMRM and FITX
not to, amend or propose to amend their respective certificates of
incorporation, by-laws or other governing documents.
(e) No Acquisitions. The Company shall not, and shall
not permit any of its Subsidiaries to, and shall use its commercially reasonable
efforts to cause each of Index LLC, TII, TMRM and FITX not to, acquire or agree
to acquire by merging or consolidating with, or by purchasing a substantial
equity interest in or a substantial portion of the assets of, or by any other
manner, any business or any corporation, partnership, association or other
business organization or division thereof or otherwise acquire or agree to
acquire any assets (other than the acquisition of assets used in the operations
of their respective businesses in the usual, regular and ordinary course of
business consistent with past practice).
(f) No Dispositions. Other than dispositions made in
the usual, regular and ordinary course of business consistent with past practice
and not individually or in the aggregate in excess of $100,000, the Company
shall not, and shall not permit any Subsidiary of the Company to, and shall use
its commercially reasonable efforts to cause each of Index LLC, TII, TMRM and
FITX not to, sell, lease, transfer, pledge, encumber or otherwise dispose of, or
agree to sell, lease, transfer, encumber or
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otherwise dispose of, any of its assets (including ownership interests of
Subsidiaries of the Company).
(g) Investments; Indebtedness. The Company shall not,
and shall not permit any of its Subsidiaries to, and shall use its commercially
reasonable efforts to cause each of Index LLC, TII, TMRM and FITX not to, (i)
make any loans, advances or capital contributions to, or investments in, any
other Person, (ii) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, or otherwise), other
than payments, discharges or satisfactions incurred or committed to in the
usual, regular and ordinary course of business consistent with past practice or
reflected in the most recent consolidated financial statements (or the notes
thereto) of the Company included in the most recent Regulatory Reports filed
prior to the date of this Agreement, or (iii) create, incur, assume or suffer to
exist any indebtedness, guarantees, loans or advances not in existence as of the
date of this Agreement except for short-term indebtedness incurred under the
Company's current short-term facilities (and any replacements thereof) in the
usual, regular and ordinary course of business consistent with past practice,
and which is not individually or in the aggregate in excess of $500,000 and is
reasonably expected by the Company to be repaid by the Company from cash from
continuing operations within 12 months of the incurrence thereof in each case as
such facilities and other existing indebtedness may be amended, extended,
modified, refunded, renewed, refinanced or replaced after the date of this
Agreement, but only if the aggregate principal amount thereof is not increased
thereby, the term thereof is not extended thereby (or, in the case of
replacement indebtedness, the term of such indebtedness is not for a longer
period of time than the period of time applicable to the indebtedness so
replaced) and the other terms and conditions thereof, taken as a whole, are not
less advantageous to the Company and its Subsidiaries than those in existence as
of the date of this Agreement.
(h) Compensation. The Company shall not, and shall
not permit any of its Subsidiaries to, and shall use its commercially reasonable
efforts to cause each of Index LLC, TII, TMRM and FITX not to, (i) make any
increase in or commitment to increase the amount of wages, bonus, severance or
other compensation of any executive officer, director or employee (except with
respect to normal base wage and base salary increases that are granted in the
usual, regular and ordinary course of business consistent with past practice in
connection with normal periodic performance reviews and related compensation and
benefit increases (but not to officers and directors of the Company or its
Subsidiaries); provided that the Company shall notify the Parent in writing
prior to any such increases), (ii) make any increase in or commitment to
increase any profit sharing, retirement, deferred compensation, insurance or
other employee benefits, (iii) issue any additional Company Stock Options,
equity-based awards or shares of Company Common Stock (other than the issuance
of Company Common Stock upon the exercise of Company Stock Options outstanding
on the date hereof or in connection with the Tremont Advisers, Inc. Savings Plan
in accordance with its present terms), adopt or make any commitment to enter
into, adopt, amend in any material manner or terminate any Benefit Plan, or any
other agreement, arrangement, plan or policy between the Company or one of its
Subsidiaries and one or more of its directors, officers or employees, (iv) make
any contribution, other than regularly scheduled contributions, to
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any Benefit Plan or (v) adopt, approve, ratify or enter into any collective
bargaining agreement, side letter, memorandum of understanding or similar
agreement with any labor union covering the employees of the Company or any of
the Subsidiaries.
(i) Accounting Methods; Income Tax Matters. Except as
required by a Governmental Authority, the Company shall not, nor shall it permit
any of its Subsidiaries to, change its methods of accounting in effect at
December 31, 2000, except as required by changes in GAAP as concurred in by the
Company's independent auditors. The Company shall not, nor shall it permit any
of its Subsidiaries to, (i) change its fiscal year, (ii) make or rescind any
material Tax election, (iii) settle or compromise any material claim, action,
suit, litigation, proceeding, arbitration, investigation, audit, or controversy
in respect of Taxes or (iv) change in any material respect any of its methods of
reporting income, deductions or accounting for federal income Tax purposes from
those employed in the preparation of its federal income Tax Return for the
taxable year ending December 31, 2000.
(j) Contracts. The Company shall not, and shall not
permit any of its Subsidiaries to, (i) except as expressly contemplated or
expressly permitted in this Section 5.1, enter into any Company Contract, other
than in the usual, regular and ordinary course of business consistent with past
practice, enter into a contract that would constitute a Material Contract amend
in any material respect any of the Material Contracts, (ii) enter into any
Company Contract providing for, or amend any Company Contract to provide for,
the taking of any action that would be prohibited hereunder, (iii) enter into
any Company Contract that would be or would purport to be valid and legally
binding on the Parent or any of its Affiliates (other than the Company and its
Subsidiaries) upon, and at any time after, the Closing, including without
limitation any that limits or otherwise restricts the Company or any of its
Subsidiaries or any successor thereto or that could, after the Closing, limit or
restrict the Surviving Corporation and its Affiliates (including but not limited
to the Parent or its Affiliates) or any successor thereto, from engaging or
competing in any line of business, in any geographic area or otherwise or with
any Person, or (iv) terminate, amend, modify or waive any provision of any
confidentiality or standstill agreement to which it is a party. The Company
shall, and shall cause any Subsidiary to, take all steps necessary to enforce,
to the fullest extent permitted under Applicable Law, the provisions of any
Material Contract or any confidentiality or standstill agreements to which it is
a party.
(k) Compromise; Settlement. Neither the Company nor
any of its Subsidiaries shall settle or compromise any pending or threatened
claims or arbitrations, other than settlements that involve solely the payment
of money (without admission of liability) that would not result in an uninsured
payment by or liability of the Company in excess of $100,000 in the aggregate
above the reserves established therefor on the books of the Company as of the
date hereof.
(l) Other Actions. The Company shall not, and shall
not permit any of its Subsidiaries to, take any action that would, or fail to
take any action which failure would, or that could reasonably be expected to,
result in, (i) any of the Company's representations and warranties set forth in
this Agreement being or becoming
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untrue in any material respect, (ii) a material breach of any provision of this
Agreement, (iii) any of the conditions to the Merger set forth in Article VI not
being satisfied, or (iv) a material delay in the consummation of the Merger and
the transactions contemplated by this Agreement.
(m) The Company shall not, and shall not permit any
of its Subsidiaries to, authorize or enter into any agreement to do any of the
foregoing in this Section 5.1.
5.2 Advisory Agreement Consents.
(a) The Company shall obtain written consent to the
assignment or deemed assignment of each Advisory Agreement to which either:
(i) a Fund that is organized in any
jurisdiction within the United States; or
(ii) a Fund that is controlled, directly or
indirectly, by the Company and that is organized in any jurisdiction
outside of the United States is a party.
(b) The Company shall use its reasonable best efforts
to obtain written consent to the assignment or deemed assignment of each
Advisory Agreement to which a Fund, other than any Fund described in either
Section 5.2(a)(i) or 5.2(a)(ii), is a party.
(c) The Company shall use its reasonable best efforts
to obtain written consent to the assignment or deemed assignment of (i) each
Advisory Agreement with respect to which, as a result of the transactions
contemplated hereby, written consent to its assignment or deemed assignment is
expressly required by such Advisory Agreement and (ii) each Advisory Agreement
to which a Key Client is a party (in the case of each of clauses (i) and (ii) of
this Section 5.2(c), other than any Advisory Agreement described in Section
5.2(a) or (b)); provided, however, that the Company shall not be required to
take any actions in attempting to obtain the written consent of any client that
could, in the good faith judgment of the Company, adversely affect the client
relationship.
(d) As soon as reasonably practicable following the
date hereof, the Company shall send (or cause to be sent) a notice in form and
substance acceptable to the Parent (the "Notice") to any Person to whom the
Company or any of its Subsidiaries renders investment management or investment
advisory services requesting written consent to the assignment of each Advisory
Agreement and informing the party to such Advisory Agreement: (x) of the
intention to complete such transactions, which will result in a deemed
assignment of such Advisory Agreement; and (y) of the Company's intention to
continue to provide the advisory services pursuant to the existing Advisory
Agreement with such party after the Closing. The Parent shall be provided a
reasonable opportunity to review all such consent materials to be used by the
Company prior to distribution.
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(e) The Parent agrees that, in the case of each
Advisory Agreement other than any Advisory Agreement described in Section
5.2(a), 5.2(b) or 5.2(c), consent to the assignment or deemed assignment of such
Advisory Agreement resulting from the transactions contemplated by this
Agreement shall be deemed given for all purposes under this Agreement if the
party to such Advisory Agreement shall not have affirmatively stated prior to
the Effective Time to the Company or any Subsidiary thereof that it does not
consent to such assignment or deemed assignment or intends to terminate such
Advisory Agreement and at least forty-five (45) days have elapsed since the
mailing of Notice to such party pursuant to Section 5.2(d).
(f) Notwithstanding anything to the contrary
contained herein, the covenants of the parties contained in this Section 5.2 are
intended only for the benefit of the parties and for no other Person.
5.3 Acquisition Proposals.
(a) The Company shall not, and shall cause each of
its Subsidiaries, and its and any such Subsidiaries' respective Representatives
not to, directly or indirectly, (i) initiate, solicit, encourage or knowingly
facilitate (including by way of furnishing information or assistance) any
inquiries or expressions of interest or the making of any proposal or offer that
constitutes, or could reasonably be expected to lead to (x) a proposal or offer
with respect to a merger, reorganization, share exchange, recapitalization,
liquidation, dissolution, consolidation or similar transaction involving, or any
purchase or series of related purchases directly or indirectly (including, by
way of lease, exchange, sale, mortgage, pledge, tender offer, exchange offer or
otherwise, as may be applicable), of 5% or more of the assets (based on fair
market value) or any equity interests (in economic or voting power) in, the
Company or any of its Subsidiaries, (y) a breach of this Agreement or the
Stockholders Agreement or any interference with the completion of the Merger or
(z) any public announcement of a proposal, plan or intention to do any of the
foregoing or any agreement to engage in any of the foregoing (any of the
foregoing inquiries, expressions of interest, proposals, or offers being
referred to in this Agreement as an "Acquisition Proposal"), (ii) 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, or
otherwise facilitate the making of, or any effort or attempt to make or
implement, an Acquisition Proposal, or (iii) agree to or recommend to its
stockholders any Acquisition Proposal; provided, however, that nothing contained
in this Section 5.3 shall prevent the Company from (i), based on the advice of
outside legal counsel, complying with Rule 14e-2 promulgated under the Exchange
Act with regard to an Acquisition Proposal or providing any other legally
required disclosure to the stockholders of the Company (provided that, except as
otherwise permitted in this Section 5.3, the Company does not withdraw or
modify, or propose to withdraw or modify, its position with respect to the
Merger or approve or recommend, or propose to approve or recommend, an
Acquisition Proposal), (ii) prior to receipt of the Required Company Vote, and
subject to compliance by the Company with the immediately following sentence,
providing information to, or engaging in any negotiations or discussions with,
any Person who has made an unsolicited bona fide written Acquisition Proposal
if, and only to the extent that (A) the Board of Directors of the Company
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determines, in good faith after consultation with, and based upon the advice of,
outside legal counsel, that providing such information and engaging in such
discussions or negotiations is required to comply with its fiduciary duties to
the Company's stockholders under Applicable Law, (B) such Acquisition Proposal
is not subject to any financing contingencies, (C) the Board of Directors
determines in good faith that such Acquisition Proposal, if accepted, is
reasonably likely to be consummated taking into account all legal, financial,
regulatory and other aspects of the proposal and the Person making the proposal,
and believes in good faith, after consultation with the Company Financial
Advisor, would, if consummated, result in a transaction more favorable to the
Company's stockholders from a financial point of view than the Merger (any such
more favorable Acquisition Proposal, a "Superior Proposal") and (D) prior to
taking such action and furnishing any information to any such party, the Company
(x) provides reasonable notice to the Parent to the effect that it is taking
such action, (y) provides such information to the Parent (if and to the extent
it has not already done so), and (z) shall have entered into a
confidentiality/standstill agreement on customary terms as advised by outside
legal counsel, and in any event containing terms at least as stringent as those
contained in the Confidentiality Agreement, or (iii) prior to receipt of the
Required Company Vote, recommending such a Superior Proposal to the holders of
Company Common Stock and withdrawing the prior recommendation of this Agreement,
if and only to the extent that, in each case referred to in clause (ii) or (iii)
above, the Board of Directors of the Company determines, in good faith after
consultation with, and based upon the advice of, outside legal counsel, that
taking such action is required to comply with its fiduciary duties to the
Company's stockholders under Applicable Law; provided, however, the Board of
Directors of the Company may not approve or recommend (and in connection
therewith, withdraw or modify its approval or recommendation of this Agreement
or the Merger) an Acquisition Proposal unless such an Acquisition Proposal is a
Superior Proposal (and the Company shall have first terminated this Agreement in
accordance with, and complied with its obligations set forth in, Section 7.1(g)
and the time period referred to in Section 7.1(g) has expired). Prior to
providing any information to or entering into discussions or negotiations with
any Person in connection with an Acquisition Proposal by such Person, the
Company shall notify the Parent immediately (orally and in writing) if any such
inquiries, proposals or offers are received by, any such information is
requested from, or any such discussions or negotiations are sought to be
initiated or continued with, any of its Representatives indicating, in
connection with such notice, the name of such Person and the material terms and
conditions of any proposals or offers and thereafter shall keep the Parent
reasonably and promptly informed on the status and terms of any such proposals
or offers and provide the Parent with a copy of any written Acquisition Proposal
and all amendments and supplements thereto and the status of any such
discussions or negotiations. The Company shall, and shall cause each of its
Subsidiaries and each of the Company's and such Subsidiaries' Representatives
to, immediately cease and cause to be terminated any activities, discussions or
negotiations conducted prior to the date of this Agreement with any parties
other than the Parent and the Merger Sub with respect to any of the foregoing.
The Company agrees that it will immediately take the necessary steps to inform
promptly the individuals or entities referred to in the first sentence of this
Section 5.3(a) of the obligations undertaken in this Section 5.3(a).
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(b) Neither the Board of Directors of the Company nor
any committee thereof shall (i) withdraw or modify, or propose publicly to
withdraw or modify, in a manner adverse to the Parent, the approval or
recommendation by such Board of Directors or such committee of the Merger or
this Agreement, (ii) approve or recommend, or propose publicly to approve or
recommend, any Acquisition Proposal or (iii) cause the Company to enter into any
letter of intent, agreement in principle, acquisition agreement or other similar
agreement related to any Acquisition Proposal, except in each case, in
connection with a Superior Proposal and subject to compliance with Sections
5.3(a) and 7.1(g).
5.4 Obtaining Required Company Vote. The Company shall, as
promptly as practicable following the execution of this Agreement, take all
action necessary in accordance with Applicable Law and its certificate of
incorporation and by-laws to duly call, give notice of, convene and hold as soon
as practicable after the date of this Agreement a meeting of its stockholders
for the purpose of obtaining the Required Company Vote with respect to the
transactions contemplated by this Agreement and, except in connection with a
Superior Proposal and subject to compliance with Sections 5.3(a) and 7.1(g),
shall take all lawful action to solicit the adoption of this Agreement by the
Required Company Vote and the Board of Directors of the Company shall recommend
adoption of this Agreement by the stockholders of the Company. Without limiting
the generality of the foregoing, the Company agrees that its obligations
pursuant to the first sentence of this Section 5.4 shall not be affected by the
commencement, public proposal, public disclosure or communication to the Company
of an Acquisition Proposal. Notwithstanding the foregoing, regardless of whether
the Board of Directors of the Company has withdrawn, amended or modified its
recommendation that its stockholders approve and adopt this Agreement, unless
this Agreement has been terminated pursuant to the provisions of Article VII,
the Company shall be required to hold such a meeting of its stockholders for the
purpose of obtaining the Required Company Vote.
5.5 Access to Information. Upon reasonable notice, the Company
shall (and shall cause its Subsidiaries to) afford to the officers, employees,
accountants, counsel, financial advisors and other Representatives of the Parent
reasonable access during normal business hours, during the period prior to the
Effective Time, to all its facilities, operations, officers, employees, agents
and accountants and its properties, books, contracts, commitments and records
and, during such period, the Company shall (and shall cause its Subsidiaries to)
furnish promptly to the Parent (i) a copy of each report, schedule, form,
statement and other document filed or deemed to be filed, published, announced
or received by it during such period pursuant to the requirements of Federal or
state Securities Laws, as applicable; and (ii) each report, schedule, form,
statement and other document filed or deemed to be filed with any other
Governmental Authority (other than, in the case of clause (i) or (ii), documents
which such party is not permitted to disclose under Applicable Laws), and (iii)
consistent with its legal obligations, all other information concerning its
business, properties and personnel as the Parent may reasonably request;
provided, however, that the Company may restrict the foregoing access to the
extent that (x) a Governmental Authority requires the Company or any of its
Subsidiaries to restrict access to any properties or information reasonably
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related to any such contract on the basis of Applicable Laws with respect to
national security matters or (y) any Applicable Law requires the Company or its
Subsidiaries to restrict access to any properties or information.
5.6 Covenants of the Parent. During the period from the date
of this Agreement and continuing until the Effective Time, the Parent agrees as
to itself and its Subsidiaries that (except as expressly contemplated or
permitted by this Agreement or as otherwise indicated under separate headings in
Schedule 5.6 of the Parent Disclosure Schedule or to the extent that the Company
(in its sole discretion) shall otherwise consent in writing):
(a) Payment of the Merger Consideration. The Parent
shall not take any action that would, or fail to take any action which failure
would, or could reasonably be expected to, impair the Parent's ability to have
available sufficient funds to pay the Merger Consideration and the Option
Consideration pursuant to this Agreement and otherwise to satisfy its
obligations hereunder.
(b) Consents. The Parent shall use its reasonable
commercial efforts not take any action that would, or fail to take any action
which failure would, or could reasonably be expected to, impede or delay any
consent set forth on Schedule 4.2(c) of the Parent Disclosure Schedule or
Schedule 4.1(g) of the Company Disclosure Schedule or otherwise impede or delay
the consummation of the Merger and the other transactions contemplated by this
Agreement. Prior to the Closing, neither the Parent nor any of its Subsidiaries
shall knowingly contact, in writing or otherwise, any client of the Company or
its Subsidiaries or any other Person who acts as an adviser to or "gatekeeper"
for any client of the Company or its Subsidiaries with respect to matters
related to this Agreement without the prior written approval of the Company.
(c) Control of the Company's Business. Nothing
contained in this Agreement shall be deemed to give the Parent, directly or
indirectly, the right to control or direct the Company's operations prior to the
Effective Time. Prior to the Effective Time, the Company shall exercise,
consistent with the terms and conditions of this Agreement, complete control and
supervision over its operations.
(d) Other Actions. The Parent shall not take any
action that would, or fail to take any action which failure would, or that could
reasonably be expected to, result in, (i) any of the Parent's representations
and warranties set forth in this Agreement being or becoming untrue in any
material respect, (ii) a material breach of any provision of this Agreement,
(iii) any of the conditions to the Merger set forth in Article VI not being
satisfied, or (iv) a material delay in the consummation of the Merger and the
transactions contemplated by this Agreement.
(e) The Parent shall not, and shall not permit the
Merger Sub to, authorize or enter into any agreement to do any of the foregoing
in this Section 5.6.
5.7 Offers of Employment. Except as provided in the Employment
Agreements, the Parent agrees that, immediately following the Effective Time, it
will cause the Surviving Corporation to continue employment of each of the
persons then employed by the Company on terms substantially similar to the terms
of their current
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employment by the Company, including, without limitation, with respect to
salary, vacations and benefits (other than equity-based arrangements or benefit
plans).
5.8 Employee Benefits.
(a) Obligations of the Parent; Comparability of
Benefits. Except as provided in the Employment Agreements, the Parent shall
cause the Surviving Corporation to assume all employment and other related
agreements with respect to any current employee of Company, which shall be
performed in accordance with their terms. In addition, the obligations under
each Benefit Plan as to which Company or any of its Subsidiaries has any
obligation with respect to any current or former employee shall become the
obligations of the Surviving Corporation at the Effective Time; provided,
however, as soon as practicable, the Parent shall, or shall cause the Surviving
Corporation to, provide to the Employees the same benefits which are provided to
similarly situated employees of the Parent immediately prior to the Effective
Time. Notwithstanding the foregoing, nothing herein shall require (A) the
continuation of any particular Benefit Plan or prevent the amendment or
termination thereof or (B) the Parent or the Surviving Corporation to continue
or maintain any stock purchase or other equity plan related to the equity of
Company or the Surviving Corporation or the Parent.
(b) Pre-Existing Limitations; Deductibles; Service
Credit. With respect to any Benefit Plans of the Parent or any Subsidiary of the
Parent in which any current or former employees participate effective as of the
Effective Time, the Parent shall, or shall cause the Surviving Corporation to:
(A) not impose any limitations more onerous than those currently in effect as to
pre-existing conditions, exclusions (other than such exclusions which would
cause the Parent or the Surviving Corporation to self-insure such excluded
benefits) and waiting periods with respect to participation and coverage
requirements applicable to such current or former employees under any Benefit
Plan, (B) provide each such current or former Employee with credit for any years
of service with the Company or any of its Subsidiaries acknowledged by the
Benefit Plans with respect to employee benefit plans of the Parent or any of its
Affiliates with respect to eligibility, vesting and waiting periods (but not for
purposes of benefit accrual), co-payments and deductibles paid in accordance
with such Benefit Plans, and (C) provide each current or former Employee with
credit for any co-payments and deductibles paid in accordance with such Benefit
Plans.
5.9 Directors' and Officers' Indemnification and Insurance.
(a) After the Effective Time through the sixth
anniversary of the Effective Time, the Surviving Corporation shall indemnify and
hold harmless each present or former officer, director or employee of the
Company and its Subsidiaries (when acting in such capacity), determined as of
the Effective Time (the "Indemnified Parties"), against all claims, losses,
liabilities, damages, judgments, fines and reasonable fees, costs and expenses
(including the reasonable fees and expenses of only one law firm for the
Indemnified Parties as a group) incurred in connection with any claim, action,
proceeding or investigation, whether civil, criminal, administrative or
investigative, arising out of or pertaining to (A) the fact that the Indemnified
Party is or was an officer,
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director or employee of the Company or any of its Subsidiaries or (B) matters
existing or occurring at or prior to the Effective Time (including this
Agreement and the transactions and actions contemplated hereby; it being
understood that a reduction under the Retention Plan in the amount of the
Remaining Pool as a consequence of an Indemnification Amount (as such terms are
defined in the Retention Plan) shall not be subject to indemnification
hereunder), whether asserted or claimed prior to (and, in the case of claims,
actions, proceedings or known investigations, disclosed to the Parent in writing
before the Effective Time), at or after the Effective Time, to the fullest
extent that the Company would have been permitted under Applicable Law and its
certificate of incorporation and by-laws in effect with respect to the date
hereof to indemnify such Indemnified Party. Each Indemnified Party will be
entitled to the fullest extent permitted by Applicable Law and the Company's
certificate of incorporation and by-laws on the date hereof to advancement of
expenses incurred in the defense of any claim, action, proceeding or
investigation from the Surviving Corporation; provided that any Person to whom
expenses are advanced provides an undertaking, to the extent required by the
DGCL, to repay such advances if it is ultimately determined that such Person is
not entitled to indemnification.
(b) Any Indemnified Party wishing to claim
indemnification under paragraph (a) of this Section 5.9, upon learning of any
such claim, action, proceeding or investigation, shall promptly notify the
Surviving Corporation thereof, but the failure to so notify shall not relieve
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, proceeding or investigation (whether arising
before or after the Effective Time), (i) the Surviving Corporation shall have
the right to assume the defense thereof and neither the 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 the Surviving
Corporation elects not to assume such defense, the Indemnified Parties may
retain counsel satisfactory to the Surviving Corporation, and 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 the Surviving Corporation shall be obligated pursuant to this
paragraph (b) to pay for only one firm of counsel for all Indemnified Parties,
(ii) the Indemnified Parties will cooperate in the defense of any such matter,
and (iii) neither the Parent nor the Surviving Corporation shall be liable for
any settlement effected without the prior approval of the Surviving Corporation
(which approval shall not be unreasonably withheld or delayed); and that neither
the 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 cause to be
maintained in effect for a period of six years after the Effective Time, the
current policies of directors' and officers' liability insurance and fiduciary
liability insurance maintained by the Company (provided that the Surviving
Corporation may substitute therefor policies of at
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least the same coverage and amounts containing terms and conditions which are,
in the aggregate, no less advantageous to the insured and which policies may
include a "tail policy") with respect to claims arising from facts or events
that occurred at or before the Effective Time; provided, however, that in no
event shall the Surviving Corporation be required to expend in any one year an
amount in excess of 200% of the annual premiums currently paid by the Company
for such insurance (the most recent annual renewal of which, in the aggregate,
cost $318,338, as set forth in Schedule 4.1(q) to the Company Disclosure
Schedule); and, provided, further, that if the annual premiums of such insurance
coverage exceed such amount, the Surviving Corporation shall be obligated to
obtain a policy in its reasonable judgment with as much coverage as can be
obtained for a cost not exceeding such amount.
(d) In the event that the Surviving Corporation or
any of its successors or assigns (A) consolidates with or merges into any other
Person and shall not be the continuing or surviving corporation or entity of
such consolidation or merger or (B) transfers or conveys all or substantially
all of its properties and assets to any Person, then, and in each such case,
proper provision shall be made so that the successors or assigns of the
Surviving Corporation shall succeed to the obligations set forth in this Section
5.9.
5.10 Retention Plan and Bonus Pool. At or prior to the
Effective Time, the Company shall establish the Retention Plan for employees of
the Company in the form attached as Schedule 5.10-1 to the Company Disclosure
Schedule (the "Retention Plan") and the Bonus Pool for employees of the Company
(the "Bonus Pool"), as described in Schedule 5.10-2 to the Company Disclosure
Schedule.
5.11 Mutual Covenants of the Company and the Parent. During
the period from the date of this Agreement and continuing until the Effective
Time, each of the Company and the Parent agrees as to itself and its respective
Subsidiaries that (except as expressly contemplated or permitted by this
Agreement or as otherwise indicated in Schedule 5.11 of the Company Disclosure
Schedule or Section 5.11 of the Parent Disclosure Schedule or to the extent that
the other party shall otherwise consent in writing):
(a) Preparation of Proxy Statement; Company
Stockholders Meeting. As promptly as practicable following the date hereof, the
Company shall, in cooperation with the Parent, prepare and file with the SEC the
Proxy Statement. The Proxy Statement shall comply as to form in all material
respects with the applicable provisions of the Exchange Act and the rules and
regulations thereunder, and, subject to Section 5.3, shall include a statement
that the Board of Directors finds the Merger to be advisable, fair to and in the
best interests of the Company. The Company shall use all reasonable efforts with
the Parent's cooperation to have the Proxy Statement cleared by the SEC as
promptly as practicable after filing with the SEC. The Company shall, as
promptly as practicable after receipt thereof, provide copies of any written
comments received from the SEC with respect to the Proxy Statement to the Parent
and advise the Parent of any oral comments with respect to the Proxy Statement
received from the SEC. The Company shall cause the Proxy Statement to be mailed
to its stockholders at the earliest practicable date following clearance of the
Proxy Statement by the SEC and,
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subject to Section 5.3, shall include in the Proxy Statement the recommendation
of the Board of Directors of the Company that the stockholders of the Company
vote in favor of the adoption of this Agreement.
The Parent agrees that none of the information
supplied or to be supplied by the Parent for inclusion or incorporation by
reference in the Proxy Statement and each amendment or supplement thereto, at
the time of mailing thereof and at the time of meeting of the Company
stockholders, held for the purpose of obtaining the Required Company Vote with
respect to the transactions contemplated by this Agreement, will contain 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. The Company agrees
that none of the information supplied or to be supplied by the Company for
inclusion or incorporation by reference in the Proxy Statement and each
amendment or supplement thereto, at the time of mailing thereof and at the time
of the meeting of the Company stockholders, held for the purpose of obtaining
the Required Company Vote with respect to the transactions contemplated by this
Agreement, will contain 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. For purposes of the foregoing, it is understood and agreed that
information concerning or related to the Parent will be deemed to have been
supplied by the Parent and information concerning or related to the Company and
the meeting of the Company stockholders, held for the purpose of obtaining the
Required Company Vote with respect to the transactions contemplated by this
Agreement, shall be deemed to have been supplied by the Company. The Company
will provide the Parent and its counsel with a reasonable opportunity to review
and comment on the Proxy Statement and all responses to requests for additional
information by and replies to comments of the SEC prior to filing such with, or
sending such to, the SEC, and will provide the Parent and its counsel with a
copy of all such filings made with the SEC. The Company shall consider all
comments provided by the Parent in good faith and no amendment or supplement to
the information supplied by the Parent for inclusion in the Proxy Statement
shall be made without the approval of the Parent, which approval shall not be
unreasonably withheld or delayed.
(b) Reasonable Best Efforts.
(i) Subject to the terms and conditions of
this Agreement, each party will use its reasonable best efforts to
take, or cause to be taken, all actions and to do, or cause to be done,
and to assist and cooperate with the other parties in doing, all things
necessary, proper or advisable under Applicable Laws to consummate the
Merger and the other transactions contemplated by this Agreement as
soon as practicable after the date hereof. In furtherance and not in
limitation of the foregoing, each party hereto agrees to make an
appropriate filing of a Notification and Report Form pursuant to the
HSR Act with respect to the transactions contemplated hereby as
promptly as practicable after the date hereof and to supply as promptly
as practicable any additional information and documentary material that
may be requested pursuant to the HSR Act and to take all
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other actions necessary to cause the expiration or termination of the
applicable waiting periods under the HSR Act as soon as practicable.
(ii) Each of the Parent and the Company
shall, in connection with the efforts referenced in Section 5.11(b)(i)
to obtain all requisite approvals and authorizations for the
transactions contemplated by this Merger Agreement under the HSR Act or
any other Applicable Law, use its reasonable best efforts to (A) make
all appropriate filings and submissions with any Governmental Authority
that may be necessary, proper or advisable under Applicable Laws in
respect of any of the transactions contemplated by this Agreement, (B)
cooperate in all respects with each other in connection with any such
filing or submission and in connection with any investigation or other
inquiry, including any proceeding initiated by a private party, (C)
promptly inform the other party of any communication received by such
party from, or given by such party to, the Antitrust Division of the
DOJ or any other Governmental Authority and of any material
communication received or given in connection with any proceeding by a
private party, in each case regarding any of the transactions
contemplated hereby and (D) consult with each other in advance of any
meeting or conference with the DOJ or any such other Governmental
Authority or, in connection with any proceeding by a private party,
with any other Person.
(iii) In furtherance and not in limitation
of the covenants of the parties contained in Sections 5.11(b)(i) and
5.4(b)(ii), if any administrative or judicial action or proceeding,
including any proceeding by a private party, is instituted (or
threatened to be instituted) challenging any transaction contemplated
by this Agreement as violative of any Applicable Law, each of the
Parent and the Company shall cooperate in all respects with each other
and use its respective reasonable best efforts to contest and resist
any such action or proceeding and to have vacated, lifted, reversed or
overturned any decree, judgment, injunction or other order, whether
temporary, preliminary or permanent, that is in effect and that
prohibits, prevents or restricts consummation of the transactions
contemplated by this Agreement. Notwithstanding the foregoing or any
other provision of this Agreement, nothing in this Section 5.11(b)
shall limit a party's right to terminate this Agreement pursuant to
Section 7.1(b) or 7.1(c) so long as such party has up to then complied
in all respects with its obligations under this Section 5.4(c).
(c) Employee Benefits Matters. The Company and the
Parent agree that, for purposes of the Benefit Plans, the approval or
consummation of the transactions contemplated by this Agreement, as applicable,
shall constitute a "Change in Control", as applicable under such Benefit Plans.
(d) Fees and Expenses. Whether or not the Merger is
consummated, all Expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
Expenses, except (i) if the Merger is consummated, the Surviving Corporation
shall pay, or cause to be paid, any and all property or transfer taxes imposed
on the Company or its
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Subsidiaries and (ii) as provided in Section 7.3. As used in this Agreement,
"Expenses" includes all out-of-pocket expenses (including all fees and expenses
of counsel, accountants, investment bankers, experts and consultants to a party
hereto and its Affiliates) incurred by a party or on its behalf in connection
with or related to the authorization, preparation, negotiation, execution and
performance of this Agreement and the transactions contemplated hereby,
including the preparation, printing, filing and mailing of the Proxy Statement
and the solicitation of stockholder approvals and all other matters related to
the transactions contemplated hereby.
(e) Confidentiality. Each of the Company and the
Parent will hold any information constituting Confidential Information (as
defined in the Confidentiality Agreement, dated March 14, 2001, as amended,
between the Company and OppenheimerFunds, Inc. (the "Confidentiality
Agreement")) provided to the other, including the information under Section 5.5
that is Confidential Information, in confidence to the extent required by, and
in accordance with, the provisions of the Confidentiality Agreement.
(f) Public Announcements. The Company and the Parent
shall use all reasonable efforts to develop a joint communications plan and each
party shall use all reasonable efforts (i) to ensure that all press releases and
other public statements with respect to the transactions contemplated hereby
shall be consistent with such joint communications plan, and (ii) unless
otherwise required by Applicable Law or by obligations pursuant to any listing
agreement with or rules of any securities exchange, to consult with each other
before issuing any press release or otherwise making any public statement with
respect to this Agreement or the transactions contemplated hereby.
(g) Takeover Statutes. If any anti-takeover or
similar statute or regulation is or may become applicable to the transactions
contemplated hereby, each of the Parent and the Company and its Board of
Directors shall grant such approvals and take all such actions as are legally
permissible so that the transactions contemplated hereby may be consummated as
promptly as practicable on the terms contemplated hereby and otherwise act to
eliminate or minimize the effects of any such statute or regulation on the
transactions contemplated hereby.
5.12 Revenue Run Rate. On or prior to the 15th Business Day
following the end of each month prior to the Closing Date, the Company shall
provide to the Parent a certificate of the Company's chief financial officer
setting forth the Revenue Run-Rate as of such month-end (which shall include the
details of the Company's calculations and the Company's confirmation that such
Revenue Run-Rate has been calculated according to the methodology mutually
agreed upon prior to the date hereof by the Parent and the Company (as set forth
in Schedule II hereto) (each, a "Monthly Run-Rate Schedule"). No later than five
Business Days after receipt of such schedule, the Parent may notify the Company
of any disagreement it may have with the information set forth in such Monthly
Run-Rate Schedule and the reasons for such disagreement. The Parent and the
Company will work in good faith to resolve any such disagreement and mutually
agree on the amount of the Revenue Run-Rate as of such month-end within the
following period of five Business Days.
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5.13 Tangible Net Worth. On or prior to the 15th Business Day
following the end of each month (commencing with August 2001) prior to the
Closing Date, the Company shall provide to the Parent a certificate of the
Company's chief financial officer setting forth the Tangible Net Worth as of
such month-end (which shall include the details of the Company's calculations
and the Company's confirmation that such Tangible Net Worth has been calculated
according to the methodology mutually agreed upon prior to the date hereof by
the Parent and the Company (as set forth in Schedule III hereto) (each, a
"Monthly Tangible Net Worth Schedule"). No later than five Business Days after
receipt of such Monthly Tangible Net Worth Schedule, the 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. The Parent and the Company will
work in good faith to resolve any such disagreement and mutually agree on the
amount of the Tangible Net Worth as of such month-end within the following
period of five Business Days.
5.14 Employment Agreements. The Company shall use its
reasonable best efforts to enter into amendments, satisfactory to the Parent, to
the employment agreements prior to the Effective Date with the executives
specified on Schedule 5.14 to the Parent Disclosure Schedule.
Article VI
CONDITIONS PRECEDENT
6.1 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligations of the Company, the Parent and the Merger Sub
to effect the Merger are subject to the satisfaction or waiver at or prior to
the Closing of the following conditions:
(a) Stockholder Approval. The Company shall have
obtained the Required Company Vote for the adoption of this Agreement by the
stockholders of Company.
(b) No Injunctions or Restraints; Illegality. No
federal, state, local or foreign, if any, Applicable Law shall have been adopted
or promulgated, and no temporary restraining order, preliminary or permanent
injunction or other order issued by a court or other Governmental Authority of
competent jurisdiction shall be in effect, having the effect of making the
Merger illegal or otherwise prohibiting consummation of the Merger.
(c) HSR Act; Governmental and Self-Regulatory
Organization Approvals. The waiting period (and any extension thereof)
applicable to the Merger under the HSR Act shall have been terminated or shall
have expired, and the written consents set forth on Schedule 6.1(c) of the
Parent Disclosure Schedule shall have been received and shall be in full force
and effect.
6.2 Additional Conditions to Obligations of Company. The
obligations of the Company to effect the Merger are subject to the satisfaction
of, or waiver by the Company, at or prior to the Closing of the following
additional conditions:
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(a) Representations and Warranties. Each of the
representations and warranties of the Parent and the Merger Sub set forth in
this Agreement shall be true and correct in all material respects (other than
any representation or warranty, or any portion of a representation or warranty,
that is qualified as to materiality or Material Adverse Effect, which
representations and warranties (or such portions thereof) shall be true and
correct in all respects), as if such representations or warranties were made as
of the Effective Time, except (i) to the extent given as of a certain date and
(ii) for changes specifically permitted by this Agreement, and the Company shall
have received a certificate of the chief executive officer and the chief
financial officer of the Parent to such effect.
(b) Performance of Obligations of the Parent. The
Parent shall have performed or complied in all material respects with all
agreements and covenants required to be performed by it under this Agreement at
or prior to the Effective Time, and the Company shall have received a
certificate of the chief financial officer and one other executive officer of
the Parent to such effect.
(c) Retention Plan and Bonus Pool. The Parent shall
have taken all action necessary to ensure that the Retention Plan and the Bonus
Pool shall be in full force and effect following the Effective Time.
6.3 Additional Conditions to Obligations of the Parent and the
Merger Sub. The obligations of the Parent and the Merger Sub to effect the
Merger are subject to the satisfaction of, or waiver by the Parent, at or prior
to the Closing of the following additional conditions:
(a) Representations and Warranties. Each of the
representations and warranties of the Company set forth in this Agreement shall
be true and correct in all material respects (other than any representation or
warranty, or any portion of a representation or warranty, that is qualified as
to materiality or Material Adverse Effect, which representations and warranties
(or such portions thereof) shall be true and correct in all respects), as if
such representations or warranties were made as of the Effective Time, except
(i) to the extent given as of a certain date and (ii) for changes specifically
permitted by this Agreement, and the Parent shall have received a certificate of
the co-chief executive officers and the chief financial officer of the Company
to such effect.
(b) Performance of Obligations of Company. The
Company shall have performed or complied in all material respects with all
agreements and covenants required to be performed by it under this Agreement at
or prior to the Effective Time, and the Parent shall have received a certificate
of the chief executive officer and the chief financial officer of the Company to
such effect.
(c) No Material Adverse Effect. Since the date of
this Agreement, there shall not have occurred any event or circumstance that
shall have caused, or would be reasonably likely to cause, a Material Adverse
Effect with respect to the Company.
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(d) Revenue Run-Rate. The Closing Revenue Run-Rate
shall not be less than 85% of the Base Revenue Run-Rate.
(e) Employment Agreements. The Employment Agreements,
between OppenheimerFunds, Inc. and the individuals listed on Schedule 6.3(e) of
the Parent Disclosure Schedule (the "Key Employees") shall be in full force and
effect, the Parent shall not be aware of any basis that would reasonably be
expected to cause any of such agreements to no longer be in full force and
effect, and none of the Key Employees shall have died, become incapacitated or
otherwise not be in a position to perform his or her obligations thereunder.
(f) Dissenters. The Dissenting Shares shall
constitute not more than ten percent (10%) of the Company Common Stock
outstanding immediately prior to the Effective Time.
(g) Retention Plan and Bonus Pool. The Retention Plan
and the Bonus Pool shall have been adopted by the Company and shall be in full
force and effect.
Article VII
TERMINATION
7.1 Termination. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time (except as
provided below), notwithstanding any approval of this Agreement by the Required
Company Vote:
(a) By mutual written consent of the Parent and the
Company, by action of their respective Boards of Directors;
(b) By either the Company or the Parent, by written
notice to the other party if the Merger has not been consummated as of December
31, 2001 (the "Termination Date"); provided, however, that the right to
terminate this Agreement under this Section 7.1(b) shall not be available to any
party whose failure to fulfill in any material respect any obligation under this
Agreement has caused or resulted in the failure of the Effective Time to occur
on or before the Termination Date;
(c) By either the Company or the Parent, if there
shall be any law or regulation that materially restricts the consummation of the
Merger or makes consummation of the Merger illegal or otherwise prohibited or if
any judgment, injunction, order or decree enjoining the Parent or the Company
from consummating the Merger is entered and such judgment, injunction, order or
decree shall become final and nonappealable; provided that the terminating party
has fulfilled its obligations under Section 5.11(b);
(d) By the Parent, if (i) the Board of Directors of
the Company shall have (A) failed to recommend, (B) failed to reconfirm its
recommendation of this Agreement within three Business Days after a written
request by the Parent to do so, (C) withdrawn or modified or changed, in a
manner adverse to the Parent, its approval or
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recommendation of this Agreement or the Merger, whether or not permitted by the
terms hereof, (D) failed to call a meeting of the Company stockholders for the
purpose of obtaining the Required Company Vote with respect to the transactions
contemplated by this Agreement, or (E) recommended an Acquisition Proposal, (ii)
the Required Company Vote shall not have been obtained on or prior to December
30, 2001, or (iii) a tender offer or exchange offer for 15% or more of the
outstanding Company Common Stock is commenced, and the Board of Directors of the
Company fails to recommend against acceptance of such tender offer or exchange
offer by the stockholders of the Company within the time period required
pursuant to Rule 14e-2 of the Exchange Act (or the Board of Directors of the
Company shall resolve or fail to resolve, as applicable, to do any of the
foregoing);
(e) By the Parent, if the condition set forth in
Section 6.3(e) shall have become incapable of fulfillment, and shall not have
been waived by the Parent;
(f) By either the Company or the Parent, if there
shall have been a breach by the other party of any of its representations,
warranties, covenants or obligations contained in this Agreement, which breach
would result in the failure to satisfy one or more of the conditions set forth
in Article VI and in such case such breach shall be incapable of being cured,
or, if capable of being cured, shall not have been cured within 30 days after
written notice thereof shall have been received by the party alleged to be in
breach; provided, however, that the right to terminate this Agreement pursuant
to this Section 7.1(f) shall not be available to the Company or the Parent, if
such party, at such time, is in material breach of any representation, warranty,
covenant or agreement set forth in this Agreement; or
(g) By the Company, at any time that the Company is
not in material breach of Section 5.3 and prior to the time at which the
Required Company Vote shall have been obtained if (i) after receiving a bona
fide Superior Proposal, the Board of Directors of the Company determines, in
good faith and after consulting with, and based upon the advice of, outside
legal counsel, that taking such action is required to comply with its fiduciary
duties to the Company's stockholders under Applicable Law, (ii) the Board of
Directors of the Company notifies the Parent and Merger Sub in writing that it
intends to enter into such agreement, attaching the most current version of such
agreement to such notice, (iii) during the five Business Days following receipt
of the Company's written notification of its intention, (A) the Company shall
have negotiated with, and shall have caused its financial and legal advisors to
have negotiated with, the Parent to attempt to make such commercially reasonable
adjustments in the terms and conditions of this Agreement as would enable the
Company to proceed with the transactions contemplated herein, and (B) the Board
of Directors of the Company shall have determined, after considering the results
of such negotiations and any revised proposals made by the Parent, that any
Superior Proposal giving rise to the Company's notice continues to be a Superior
Proposal, (iv) simultaneously with such termination the Company pays to the
Parent in immediately available funds the Termination Fee and Expenses described
in Section 7.3, and (v) such termination (A) is within two Business Days after
the termination of the five-Business Day period referred to in clause (iii)
above and (B) takes place prior to receipt of the Required Company Vote. The
Company
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agrees that it will not enter into a binding agreement or consummate the
transaction constituting a Superior Proposal referred to in clause (iii) above
until at least the sixth Business Day after it has provided the notice to the
Parent required thereby.
The party desiring to terminate this Agreement pursuant to clause (b), (c), (d),
(e), (f) or (g) of this Section 7.1 shall give written notice of such
termination to the other party in accordance with Section 8.4, specifying the
provision hereof pursuant to which such termination is effected.
7.2 Effect of Termination. If this Agreement is terminated
pursuant to Section 7.1, this Agreement shall become void and of no effect with
no liability on the part of any party hereto, except (i) as set forth in Section
7.3, (ii) that the agreements contained in this Section 7.2, in Section 5.11(d),
and in the Confidentiality Agreement (other than the provisions of paragraphs 7
and 9 therein, which paragraphs, the parties thereto hereby agree, shall be of
no further force and effect upon termination of this Agreement) shall survive
the termination hereof and (iii) no such termination shall relieve any party of
any liability or damages resulting from any willful breach by that party of this
Agreement.
7.3 Payment by the Company.
(a) In the event that (i) this Agreement is
terminated by the Parent pursuant to Section 7.1(d) or Section 7.1(e) (other
than pursuant to Section 7.1(e), by reason of death of any of the individuals
referred to in Section 6.3(e) or by the Company pursuant to Section 7.1(g), or
(ii) if within 18 months of the termination of this Agreement by the Company
pursuant to Section 7.1(b) any Acquisition Proposal by a third party is entered
into, agreed to or consummated by the Company, then, in any such event, the
Company shall pay the Parent a fee of $5,800,000 (the "Termination Fee") (which
amount shall be payable by wire transfer in immediately available funds to an
account designated by the Parent) on the date of such termination, in the case
of clause (i), or the earlier of the date an agreement is entered into with
respect to an Acquisition Proposal or an Acquisition Proposal is consummated in
the case of clause (ii).
(b) In the event that the Parent terminates this
Agreement pursuant to Section 7.1(f), then the Company shall pay in same-day
funds to the Parent, within two-Business Days after demand is made by the
Parent, the Parent's Expenses. No such payment to the Parent will be deemed to
affect or limit any claims that the Parent may have under Applicable Law in
respect of such termination.
(c) The Company acknowledges that the agreements
contained in this Section 7.3 are critical provisions of the transactions
contemplated hereby and that without these agreements the Parent and Merger Sub
would not enter into this Agreement. Accordingly, if the Company fails to pay
promptly the Termination Fee due pursuant to this Section 7.3(a) and, in order
to obtain such payment, the Parent or Merger Sub commences litigation which
results in a judgement against the Company for the Termination Fee, the Company
shall pay to the Parent its costs and expenses (including attorneys' fees) in
connection with such litigation, together with interest on the amount of
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the Termination Fee at the prime rate of Citibank, N.A., in effect on the date
and from the date such amounts were originally required to have been paid.
Article VIII
GENERAL PROVISIONS
8.1 Non-Survival of Representations, Warranties and
Agreements. None of the representations, warranties, covenants and other
agreements in this Agreement or in any instrument delivered pursuant to this
Agreement, including any rights arising out of any breach of such
representations, warranties, covenants and other agreements, shall survive the
Effective Time, except as otherwise contemplated by the Retention Plan and for
those covenants and agreements contained herein and therein that by their terms
apply or are to be performed in whole or in part after the Effective Time.
Nothing in this Section 8.1 shall relieve any party for any breach of any
representation, warranty, covenant or other agreement in this Agreement
occurring prior to termination.
8.2 Amendment. This Agreement may be amended by the parties
hereto, by action taken or authorized by their respective Boards of Directors,
at any time before or after approval of the matters presented in connection with
the Merger by the stockholders of the Company and the Merger Sub, but, after any
such approval, no amendment shall be made which by Applicable Law or in
accordance with the rules of any relevant stock exchange requires further
approval by such stockholders without such further approval. This Agreement may
not be amended except by an instrument in writing signed on behalf of each of
the parties hereto.
8.3 Extension; Waiver. At any time prior to the Effective
Time, the parties hereto, by action taken or authorized by their respective
Boards of Directors, may, to the extent legally allowed, (a) extend the time for
the performance of any of the obligations or other acts of the other parties
hereto, (b) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto and (c) waive
compliance with any of the agreements or conditions contained herein. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid only if set forth in a written instrument signed on behalf of such party.
The failure of any party to this Agreement to assert any of its rights under
this Agreement or otherwise shall not constitute a waiver of those rights.
8.4 Notices. All notices and other communications hereunder
shall be in writing (including telecopy or other similar writing) and shall be
deemed duly given (a) on the date of delivery if delivered personally, or by
telecopy or telefacsimile, upon confirmation of receipt, (b) on the first
Business Day following the date of dispatch if delivered by a recognized
next-day courier service, (c) on the tenth Business Day following the date of
mailing if delivered by registered or certified mail, return receipt requested,
postage prepaid or (d) if given by any other means, when received at the address
specified in this Section 8.4, except, in each case, for a notice of a change of
address, which shall be effective only upon receipt thereof. All notices
hereunder shall
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be delivered as set forth below, or pursuant to such other instructions as may
be designated in writing by the party to receive such notice:
(a) If to the Parent or the Merger Sub, to
Oppenheimer Acquisition Corp.
Attn: President
Two World Trade Center
New York, New York 10048-0203
Facsimile: (212) 323-0280
Telephone: (212) 323-0200
with copies to
Oppenheimer Acquisition Corp.
Attn: General Counsel
Two World Trade Center
New York, New York 10048-0203
Facsimile: (212) 321-1159
Telephone: (212) 323-0200
Howard Chatzinoff, Esq.
Jeffrey E. Tabak, Esq.
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153-0119
Facsimile: (212) 310-8007
Telephone: (212) 310-8000
(b) If to the Company to
Tremont Advisers, Inc.
Attn: President
555 Theodore Fremd Avenue, Suite 206C
Rye, New York 10580
Facsimile: (914) 921-3499
Telephone: (914) 925-1140
with a copy to
Ralph Arditi, Esq.
Russell G. D'Oench, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, New York 10036-6522
Facsimile: (212) 735-2000
Telephone: (212) 735-3000
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8.5 Interpretation. When a reference is made in this Agreement
to Sections, Annexes or Schedules, such reference shall be to a Section of or
Annex or Schedule to this Agreement unless otherwise indicated. The table of
contents, glossary of defined terms and headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include", "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation". The inclusion of any matter in the Company
Disclosure Schedule or the Parent Disclosure Schedule in connection with any
representation, warranty, covenant or agreement that is qualified as to
materiality or "Material Adverse Effect" shall not be an admission by the party
delivering such disclosure schedule that such matter is material or would
reasonably be expected to have a Material Adverse Effect.
8.6 Counterparts. This Agreement may be executed in two or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when each party shall have received counterparts
hereof signed by all other parties hereto, it being understood that the parties
need not sign the same counterpart.
8.7 Entire Agreement; Third Party Beneficiaries.
(a) This Agreement together with the Company
Disclosure Schedule, the Parent Disclosure Schedule and Annexes hereto, the
Consent and Voting Agreement and the Confidentiality Agreement constitute the
entire agreement and supersede all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof.
(b) This Agreement shall be binding upon and inure
solely to the benefit of each party hereto, and nothing in this Agreement,
express or implied, is intended to or shall confer upon any other Person any
right, benefit or remedy of any nature whatsoever under or by reason of this
Agreement, other than Section 5.9 (which is intended to be for the benefit of
the Persons covered thereby and may be enforced by such Persons).
8.8 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF DELAWARE, WITHOUT
REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS THEREOF.
8.9 VENUE. EACH PARTY (a) CONSENTS TO SUBMIT ITSELF TO THE
PERSONAL JURISDICTION OF ANY FEDERAL COURT OR NEW YORK STATE COURT LOCATED IN
THE STATE AND CITY OF NEW YORK IN THE EVENT ANY DISPUTE ARISES UNDER OR RELATES
TO THIS AGREEMENT OR THE TRANSACTION CONTEMPLATED HEREIN, (b) AGREES IT WILL NOT
ATTEMPT TO DENY OR DEFEAT SUCH PERSONAL JURISDICTION BY MOTION OR OTHER REQUEST
FOR LEAVE FROM ANY SUCH COURT, INCLUDING, WITHOUT LIMITATION, A MOTION TO
DISMISS ON THE GROUNDS OF FORUM NON CONVENIENS AND (c) AGREES THAT IT WILL
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NOT BRING ANY ACTION ARISING UNDER OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREIN IN ANY COURT OTHER THAN A FEDERAL COURT OR NEW
YORK STATE COURT SITTING IN THE STATE AND CITY OF NEW YORK.
8.10 WAIVER OF JURY TRIAL. EACH PARTY ACKNOWLEDGES AND AGREES
THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE
COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY RIGHT IT 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 BREACH, TERMINATION OR VALIDITY OF THIS AGREEMENT, OR THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND
ACKNOWLEDGES THAT (a) 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, (b) IT UNDERSTANDS
AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (c) IT MAKES THIS WAIVER
VOLUNTARILY AND (d) IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 8.10.
8.11 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any Applicable
Law or public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner in
order that the transactions contemplated hereby are consummated as originally
contemplated to the greatest extent possible.
8.12 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto, in whole or in part (whether by operation of Applicable Law or
otherwise), without the prior written consent of the other parties, and any
attempt to make any such assignment without such consent shall be null and void,
except that Merger Sub may assign, in its sole discretion, any or all of its
rights, interests and obligations under this Agreement to any direct or indirect
wholly owned Subsidiary of the Parent without the consent of the Company, upon
which all references in this Agreement to Merger Sub shall thereafter be deemed
to be references to such assignee for all purposes under this Agreement. Subject
to the preceding sentence, this Agreement will be binding upon, inure to the
benefit of and be enforceable by the parties and their respective successors and
assigns.
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8.13 Enforcement. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms. It is accordingly agreed that
the parties shall be entitled to specific performance of the terms hereof, this
being in addition to any other remedy to which they are entitled at Applicable
Law or in equity.
8.14 Other Agreements. The parties hereto acknowledge and
agree that, except as otherwise expressly set forth in this Agreement, the
rights and obligations of the Company and the Parent under any other agreement
between the parties shall not be affected by any provision of this Agreement.
[SIGNATURES BEGIN ON THE NEXT PAGE]
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IN WITNESS WHEREOF, the Parent, the Merger Sub and the Company
have caused this Agreement to be signed by their respective officers thereunto
duly authorized, all as of the day and year first above written.
OPPENHEIMER ACQUISITION CORP.
By:
--------------------------------------
Name: Jeremy Griffiths
Title: Chief Financial Officer and
Treasurer
JOSHUA ACQUISITION CORP.
By:
--------------------------------------
Name: Jeremy Griffiths
Title: Vice President and Treasurer
TREMONT ADVISERS, INC.
By:
--------------------------------------
Name: Robert I. Schulman
Title: President and Co-Chief
Executive Officer
138
APPENDIX B
OPINION OF PUTNAM LOVELL SECURITIES INC.
[Putnam Lovell Securities Letterhead]
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139
Board of Directors July 10, 2001
Tremont Advisers, Inc.
555 Theodore Fremd Avenue
Rye, NY 10580 CONFIDENTIAL
Ladies and Gentlemen:
We understand that Tremont Advisers, Inc., a Delaware corporation (the
"Company"), and Oppenheimer Acquisition Corp. ("OAC"), a Delaware corporation,
have entered into an Agreement and Plan of Merger dated as of July 10, 2001 (the
"Merger Agreement"), pursuant to which, among other things, the Company will be
merged with and into a wholly-owned subsidiary of OAC (the "Merger") and each
issued and outstanding share of the Class A Common Stock of the Company, $.01
par value per share, and Class B Common Stock of the Company, $.01 par value per
share (together the "Company Common Stock") will be converted into the right to
receive cash in the amount of $19.00 (the "Merger Consideration"). In addition,
each option to acquire shares of Company Common Stock (a "Company Stock Option")
shall be cancelled in exchange for a single lump sum cash payment equal to the
excess, if any, of the Merger Consideration over the exercise price per share of
such Company Stock Option. In certain circumstances, the Merger Consideration is
subject to adjustment as provided in the Merger Agreement.
You have asked for our opinion as to whether the Merger Consideration to be paid
by OAC in the Merger is fair, from a financial point of view, to the
shareholders of the Company.
In connection with rendering our opinion, we have, among other things:
(i) reviewed certain publicly available historical audited and unaudited
financial statements and other information regarding the Company;
(ii) reviewed the financial terms and conditions of the Merger Agreement;
(iii) reviewed and discussed with management of the Company certain
information of a business and financial nature furnished to us by the
Company including financial
The Park Avenue Tower, 65 East 55th Street, New York, NY 10022
140
[PUTNAM LOVELL LOGO]
Board of Directors of Tremont Advisers, Inc. July 10, 2001
analyses and projections of the Company and its subsidiaries prepared
by the management of the Company;
(iv) reviewed certain publicly available information concerning the trading
of, and the trading market for, the Company Common Stock;
(v) compared the financial performance of the Company with certain other
companies in the investment management industry that we deemed to be
relevant;
(vi) considered the financial terms of selected recent business combinations
of companies that we deemed to be comparable, in whole or in part, to
the Merger;
(vii) made inquiries regarding and discussed the Merger and the Merger
Agreement and other matters related thereto with the Company's counsel;
and
(viii) performed such other analyses and examinations as we deemed
appropriate.
In preparing our opinion, we have assumed and relied, without independent
verification, upon the accuracy and completeness of the financial and other
information supplied or otherwise made available to us from public sources or by
the Company and have not independently verified such information. We have
neither obtained nor performed any independent valuation or appraisal of the
assets or liabilities of the Company. With respect to the financial projections
and forecasts of the Company provided to us by the Company, we have assumed that
such financial projections and forecasts have been reasonably prepared and
reflect the best currently available estimates and good faith judgments of the
senior management of the Company as to the future competitive, operating and
regulatory environments and related financial performance of the Company. Our
opinion is necessarily based on economic, market and other conditions as in
effect on, and the information and agreements (or drafts thereof) made available
to us as of, the date hereof.
We have acted as financial advisor to the Board of Directors of the Company in
connection with the Merger and will receive a fee from the Company for our
services, a significant portion of which is contingent upon the consummation of
the Merger. Putnam Lovell Securities Inc. provides a full range of financial
advisory and securities
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[PUTNAM LOVELL LOGO]
Board of Directors of Tremont Advisers, Inc. July 10, 2001
services and, in the normal course of trading activities, may from time to time
effect transactions in securities of the Company for the account of customers.
Based upon the foregoing and in reliance thereon, it is our opinion on the date
hereof that the Merger Consideration to be received by the shareholders of the
Company pursuant to the Merger is fair to such shareholders, from a financial
point of view, as of the date hereof.
This opinion is directed to the Board of Directors of the Company in its
consideration of the Merger and is not a recommendation to any shareholder as to
how such shareholder should vote with respect to the Merger. Further, this
opinion does not address the relative merits of the Merger to any alternatives
to the Merger, the Company's decision to proceed or effect the Merger, or any
other aspect of the Merger. This opinion may not be used or referred to by the
Company, or quoted or disclosed to any person in any manner, without our prior
written consent, which consent is hereby given to the inclusion of this opinion
in a proxy statement filed with the Securities and Exchange Commission in
connection with the Merger. In furnishing this opinion, we do not admit that we
are experts within the meaning of the term "experts" as used in the Securities
Act and the rules and regulations promulgated thereunder, nor do we admit that
this opinion constitutes a report or valuation within the meaning of Section 11
of the Securities Act.
Very truly yours,
PUTNAM LOVELL SECURITIES INC.
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APPENDIX C
SECTION 262 OF THE DELAWARE GENERAL CORPORATION LAW
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8 Del. C. Section 262. Appraisal rights.
(a) Any stockholder of a corporation of this State who holds shares of stock
on the date of the making of a demand pursuant to subsection (d) of this
section with respect to such shares, who continuously holds such shares
through the effective date of the merger or consolidation, who has otherwise
complied with subsection (d) of this section and who has neither voted in
favor of the merger or consolidation nor consented thereto in writing pursuant
to 8 Del. C. Section 228 of this title shall be entitled to an appraisal by
the Court of Chancery of the fair value of the stockholder's shares of stock
under the circumstances described in subsections (b) and (c) of this section.
As used in this section, the word "stockholder" means a holder of record of
stock in a stock corporation and also a member of record of a nonstock
corporation; the words "stock" and "share" mean and include what is ordinarily
meant by those words and also membership or membership interest of a member of
a nonstock corporation; and the words "depository receipt" mean a receipt or
other instrument issued by a depository representing an interest in one or
more shares, or fractions thereof, solely of stock of a corporation, which
stock is deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation
to be effected pursuant to 8 Del. C. Section 251 (other than a merger effected
pursuant to 8 Del. C. Section 251 (g) of this title), 8 Del. C. Section 252,
8 Del. C. Section 254, Section 8 Del. C. Section 257, 8 Del. C. Section 258,
8 Del. C. Section 263 or 8 Del. C. Section 264 of this title:
(1) Provided, however, that no appraisal rights under this section shall
be available for the shares of any class or series of stock, which stock, or
depository receipts in respect thereof, at the record date fixed to determine
the stockholders entitled to receive notice of and to vote at the meeting of
stockholders to act upon the agreement of merger or consolidation, were either
(i) listed on a national securities exchange or designated as a national
market system security on an interdealer quotation system by the National
Association of Securities Dealers, Inc. or (ii) held of record by more than
2,000 holders; and further provided that no appraisal rights shall be
available for any shares of stock of the constituent corporation surviving a
merger if the merger did not require for its approval the vote of the
stockholders of the surviving corporation as provided in subsection (f) of 8
Del. C. Section 251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights
under this section shall be available for the shares of any class or series of
stock of a constituent corporation if the holders thereof
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are required by the terms of an agreement of merger or consolidation pursuant
to 8 Del. C. Section 251, 252, 254, 257, 258, 263 and 264 of this title to
accept for such stock anything except:
a. Shares of stock of the corporation surviving or resulting from
such merger or consolidation, or depository receipts in respect thereof,
b. Shares of stock of any other corporation, or depository receipts in
respect thereof, which shares of stock (or depository receipts in respect
thereof) or depository receipts at the effective date of the merger or
consolidation will be either listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or held of
record by more than 2,000 holders;
c. Cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a. and b. of this
paragraph; or
d. Any combination of the shares of stock, depository receipts and
cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a., b. and c. of this paragraph.
(3) In the event all of the stock of a subsidiary Delaware corporation
party to a merger effected under Section 253 of this title is not owned by the
parent corporation immediately prior to the merger, appraisal rights shall be
available for the shares of the subsidiary Delaware corporation.
(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets
of the corporation. If the certificate of incorporation contains such a
provision, the procedures of this section, including those set forth in
subsections (d) and (e) of this section, shall apply as nearly as is
practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights are
provided under this section is to be submitted for approval at a meeting of
stockholders, the corporation, not less than 20 days prior to the meeting,
shall notify each of its stockholders who was such on the record date for such
meeting with respect to shares for which appraisal
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rights are available pursuant to subsection (b) or (c) hereof that appraisal
rights are available for any or all of the shares of the constituent
corporations, and shall include in such notice a copy of this section. Each
stockholder electing to demand the appraisal of such stockholder's shares
shall deliver to the corporation, before the taking of the vote on the merger
or consolidation, a written demand for appraisal of such stockholder's shares.
Such demand will be sufficient if it reasonably informs the corporation of the
identity of the stockholder and that the stockholder intends thereby to demand
the appraisal of such stockholder's shares. A proxy or vote against the merger
or consolidation shall not constitute such a demand. A stockholder electing to
take such action must do so by a separate written demand as herein provided.
Within 10 days after the effective date of such merger or consolidation, the
surviving or resulting corporation shall notify each stockholder of each
constituent corporation who has complied with this subsection and has not
voted in favor of or consented to the merger or consolidation of the date that
the merger or consolidation has become effective; or
(2) If the merger or consolidation was approved pursuant to 8 Del. C.
Section 228 or 8 Del. C. Section 253 of this title, each constituent
corporation, either before the effective date of the merger or consolidation
or within ten days thereafter, shall notify each of the holders of any class
or series of stock of such constituent corporation who are entitled to
appraisal rights of the approval of the merger or consolidation and that
appraisal rights are available for any or all shares of such class or series
of stock of such constituent corporation, and shall include in such notice a
copy of this section; provided that, if the notice is given on or after the
effective date of the merger or consolidation, such notice shall be given by
the surviving or resulting corporation to all such holders of any class or
series of stock of a constituent corporation that are entitled to appraisal
rights. Such notice may, and, if given on or after the effective date of the
merger or consolidation, shall, also notify such stockholders of the effective
date of the merger or consolidation. Any stockholder entitled to appraisal
rights may, within 20 days after the date of mailing of such notice, demand in
writing from the surviving or resulting corporation the appraisal of such
holder's shares. Such demand will be sufficient if it reasonably informs the
corporation of the identity of the stockholder and that the stockholder
intends thereby to demand the appraisal of such holder's shares. If such
notice did not notify stockholders of the effective date of the merger or
consolidation, either (i) each such constituent corporation shall send a
second notice before the effective date of the merger or consolidation
notifying each of the holders of any class or series of stock of such
constituent corporation that are entitled to appraisal rights of the effective
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date of the merger or consolidation or (ii) the surviving or resulting
corporation shall send such a second notice to all such holders on or within
10 days after such effective date; provided, however, that if such second
notice is sent more than 20 days following the sending of the first notice,
such second notice need only be sent to each stockholder who is entitled to
appraisal rights and who has demanded appraisal of such holder's shares in
accordance with this subsection. An affidavit of the secretary or assistant
secretary or of the transfer agent of the corporation that is required to give
either notice that such notice has been given shall, in the absence of fraud,
be prima facie evidence of the facts stated therein. For purposes of
determining the stockholders entitled to receive either notice, each
constituent corporation may fix, in advance, a record date that shall be
not more than 10 days prior to the date the notice is given, provided, that if
the notice is given on or after the effective date of the merger or
consolidation, the record date shall be such effective date. If no record date
is fixed and the notice is given prior to the effective date, the record date
shall be the close of business on the day next preceding the day on which the
notice is given.
(e) Within 120 days after the effective date of the merger or consolidation
the surviving or resulting corporation or any stockholder who has complied
with subsections (a) and (d) hereof and who is otherwise entitled to appraisal
rights, may file a petition in the Court of Chancery demanding a determination
of the value of the stock of all such stockholders. Notwithstanding the
foregoing, at any time within 60 days after the effective date of the merger
or consolidation, any stockholder shall have the right to withdraw such stock
holder's demand for appraisal and to accept the terms offered upon the merger
or consolidation. Within 120 days after the effective date of the merger or
consolidation, any stockholder who has complied with the requirements of
subsections (a) and (d) hereof, upon written request, shall be entitled to
receive from the corporation surviving the merger or resulting from the
consolidation a statement setting forth the aggregate number of shares not
voted in favor of the merger or consolidation and with respect to which
demands for appraisal have been received and the aggregate number of holders
of such shares. Such written statement shall be mailed to the stockholder
within 10 days after such stockholder's written request for such a statement
is received by the surviving or resulting corporation or within 10 days after
expiration of the period for delivery of demands for appraisal under
subsection (d) hereof, whichever is later.
(f) Upon the filing of any such petition by a stockholder, service of a copy
thereof shall be made upon the surviving or resulting corporation, which shall
within 20 days after such
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service file in the office of the Register in Chancery in which the petition
was filed a duly verified list containing the names and addresses of all
stockholders who have demanded payment for their shares and with whom
agreements as to the value of their shares have not been reached by the
surviving or resulting corporation. If the petition shall be filed by the
surviving or resulting corporation, the petition shall be accompanied by such
a duly verified list. The Register in Chancery, if so ordered by the Court,
shall give notice of the time and place fixed for the hearing of such petition
by registered or certified mail to the surviving or resulting corporation and
to the stockholders shown on the list at the addresses therein stated. Such
notice shall also be given by 1 or more publications at least 1 week before
the day of the hearing, in a newspaper of general circulation published in the
City of Wilmington, Delaware or such publication as the Court deems advisable.
The forms of the notices by mail and by publication shall be approved by the
Court, and the costs thereof shall be borne by the surviving or resulting
corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled
to appraisal rights. The Court may require the stockholders who have demanded
an appraisal for their shares and who hold stock represented by certificates
to submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as
to such stockholder.
(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any
element of value arising from the accomplishment or expectation of the merger
or consolidation, together with a fair rate of interest, if any, to be paid
upon the amount determined to be the fair value. In determining such fair
value, the Court shall take into account all relevant factors. In determining
the fair rate of interest, the Court may consider all relevant factors,
including the rate of interest which the surviving or resulting corporation
would have had to pay to borrow money during the pendency of the proceeding.
Upon application by the surviving or resulting corporation or by any
stockholder entitled to participate in the appraisal proceeding, the Court
may, in its discretion, permit discovery or other pretrial proceedings and may
proceed to trial upon the appraisal prior to the final determination of the
stockholder entitled to an appraisal. Any stockholder whose name appears on
the list filed by the surviving or resulting corporation pursuant to
subsection (f) of this section and who has submitted such stockholder's
certificates of stock to
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the Register in Chancery, if such is required, may participate fully in all
proceedings until it is finally determined that such stockholder is not
entitled to appraisal rights under this section.
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to
the stockholders entitled thereto. Interest may be simple or compound, as the
Court may direct. Payment shall be so made to each such stockholder, in the
case of holders of uncertificated stock forthwith, and the case of holders of
shares represented by certificates upon the surrender to the corporation of
the certificates representing such stock. The Court's decree may be enforced
as other decrees in the Court of Chancery may be enforced, whether such
surviving or resulting corporation be a corporation of this State or of any
state.
(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded appraisal rights as provided in subsection (d) of
this section shall be entitled to vote such stock for any purpose or to
receive payment of dividends or other distributions on the stock (except
dividends or other distributions payable to stockholders of record at a date
which is prior to the effective date of the merger or consolidation);
provided, however, that if no petition for an appraisal shall be filed within
the time provided in subsection (e) of this section, or if such stockholder
shall deliver to the surviving or resulting corporation a written withdrawal
of such stockholder's demand for an appraisal and an acceptance of the merger
or consolidation, either within 60 days after the effective date of the merger
or consolidation as provided in subsection (e) of this section or thereafter
with the written approval of the corporation, then the right of such
stockholder to an appraisal shall cease. Notwithstanding the foregoing, no
appraisal proceeding in the Court of Chancery shall be dismissed as to any
stockholder without the approval of the Court, and such approval may be
conditioned upon such terms as the Court deems just.
(l) The shares of the surviving or resulting corporation to which the shares
of such objecting stockholders would have been
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converted had they assented to the merger or consolidation shall have the
status of authorized and unissued shares of the surviving or resulting
corporation.
(68 Del. Laws, c. 337, Sections 3, 4; 69 Del. Laws, c. 61, Section
10; 69 Del. Laws, c. 262, Sections 1-9; 70 Del. Laws, c. 79,
Section 16; 70 Del. Laws, c. 186, Section 1; 70 Del. Laws, c.
299, Sections 2, 3; 70 Del. Laws, c. 349, Section 22; 71 Del.
Laws, c. 120, Section 15; 71 Del. Laws, c. 339, Sections 49-52.)
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