PARTNERSHIP ADMISSION AGREEMENT
dated as of
October 15, 1996
TABLE OF CONTENTS
RECITALS .....................................................................................1
DEFINITIONS...................................................................................2
ARTICLE I
PARTNERSHIP CONTRIBUTION; CONSIDERATION; CONTINGENT
PAYMENTS
...................................................................................19
1.1 CONTRIBUTION OF ASSETS AND ASSUMPTION OF LIABILITIES
..........................................................................19
1.2 CONSIDERATION FOR PARTNERSHIP CONTRIBUTIONS.......................20
1.3 CONTINGENT PAYMENT................................................21
ARTICLE II
CLOSING
...................................................................................23
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF SELLING ENTITIES AND PRINCIPALS
...................................................................................25
3.1 ORGANIZATION; GENERAL PARTNER AND LIMITED
PARTNERSHIP AUTHORITY...........................................25
3.2 CHARTER, BY-LAWS, AGREEMENTS OF LIMITED
PARTNERSHIP AND MINUTES.........................................25
3.3 AUTHORITY.........................................................26
3.4 NO VIOLATION......................................................26
3.5 APPROVALS.........................................................27
3.6 FINANCIAL STATEMENTS..............................................28
3.7 NO ADVERSE CHANGE.................................................29
3.8 SUBSIDIARIES......................................................29
3.9 TAXES.............................................................30
3.10 INTERESTED PARTIES................................................35
3.11 TITLE TO ASSETS; PROPERTY.........................................36
3.12 INSURANCE.........................................................37
3.13 OTHER MATERIAL CONTRACTS..........................................38
3.14 BANK ACCOUNTS AND MONEY MARKET FUNDS..............................39
-i-
3131867.30
3.15 LITIGATION; NO PRACTICES IN VIOLATION OF LAW......................39
3.16 BROKERS AND FINDERS...............................................40
3.17 EMPLOYEE BENEFIT PLANS............................................40
3.18 FILINGS, ETC......................................................42
3.19 REPRESENTATIONS AND WARRANTIES REGARDING THE
INVESTMENT ADVISORY BUSINESS....................................43
3.20 DISCLOSURE........................................................51
3.21 REGISTRATION AS A BROKER-DEALER...................................51
3.22 REGISTRATION UNDER THE COMMODITY EXCHANGE ACT
..........................................................................52
3.23 REGISTRATION AS AN INSURANCE AGENT................................52
3.24 REGISTRATION AS A TRANSFER AGENT..................................53
3.25 INVESTMENT REPRESENTATIONS........................................53
3.26 ENVIRONMENTAL MATTERS.............................................54
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
...................................................................................54
4.1 ORGANIZATION AND LIMITED PARTNERSHIP AUTHORITY
..........................................................................54
4.2 BUYER CHARTER DOCUMENTS...........................................55
4.3 AUTHORITY.........................................................55
4.4 NO VIOLATION......................................................55
4.5 APPROVALS AND CONSENTS............................................55
4.6 NO ACTIONS; SUITS OR PROCEEDINGS..................................56
4.7 NO OTHER BROKER...................................................56
4.8 BUYER FINANCIAL STATEMENTS........................................56
4.9 NO ADVERSE CHANGE.................................................56
4.10 LP UNITS..........................................................57
4.11 EXCHANGE ACT FILINGS..............................................57
4.12 TAXES.............................................................57
4.13 INELIGIBLE PERSONS................................................57
4.14 DISCLOSURE........................................................57
ARTICLE IVA
REPRESENTATIONS AND WARRANTIES OF BUYER
REGARDING ▇▇▇▇▇▇ AND ▇▇▇▇▇▇ SUBSIDIARIES............................................58
4A.1. ORGANIZATION AND LIMITED PARTNERSHIP AUTHORITY
..........................................................................58
4A.2. ▇▇▇▇▇▇ CHARTER DOCUMENTS............................................58
4A.3. SUBSIDIARIES........................................................59
-ii-
3131867.30
4A.4. NO VIOLATION........................................................60
4A.5. ▇▇▇▇▇▇ FINANCIAL INFORMATION........................................60
4A.6. NO ADVERSE CHANGE...................................................61
4A.7. TAXES...............................................................61
4A.8. INTERESTED PARTIES..................................................65
4A.9. TITLE TO ASSETS; PROPERTY...........................................66
4A.10. INSURANCE...........................................................67
4A.11. OTHER MATERIAL CONTRACTS............................................68
4A.12. BANK ACCOUNTS AND MONEY MARKET FUNDS................................68
4A.13. LITIGATION; NO PRACTICES IN VIOLATION OF LAW........................69
4A.14. EMPLOYEE BENEFIT PLANS..............................................70
4A.15. FILINGS, ETC........................................................72
4A.16. REPRESENTATIONS AND WARRANTIES REGARDING THE
INVESTMENT ADVISORY BUSINESS......................................73
4A.17 ▇▇▇▇▇▇ FUND FINANCIAL STATEMENTS....................................77
4A.18. REGISTRATION UNDER THE COMMODITY EXCHANGE ACT
..........................................................................78
4A.19. REGISTRATION AS AN INSURANCE AGENT OR REAL ESTATE
OR MORTGAGE BROKER................................................78
4A.20. REGISTRATION AS A TRANSFER AGENT....................................78
4A.21. ENVIRONMENTAL MATTERS...............................................78
ARTICLE V
CONDUCT OF BUSINESS PRIOR TO THE CLOSING
...................................................................................79
5.1 SELLER CONDUCT PRIOR TO CLOSING....................................79
5.2 ▇▇▇▇▇▇ CONDUCT PRIOR TO CLOSING....................................81
5.3 SCHEDULES..........................................................83
ARTICLE VI
ADDITIONAL AGREEMENTS...............................................................83
6.1 CONSENTS AND APPROVALS.............................................83
6.2 SECTION 15(f)......................................................85
6.3 COMPLIANCE WITH SECURITIES LAWS....................................85
6.4 CURRENT INFORMATION................................................86
6.5 ACCESS; INFORMATION................................................86
6.6 NON-SOLICITATION...................................................87
6.7 QUALIFICATION OF THE FUNDS.........................................88
6.8 PRESS RELEASES, ETC................................................88
6.9 CORPORATE AND PARTNERSHIP MINUTES..................................88
6.10 POST-CLOSING OPERATIONS............................................88
-iii-
3131867.30
6.11 UPDATED FINANCIAL STATEMENTS......................................93
6.12 NEW ENGLAND INVESTMENT ASSOCIATES.................................93
6.13 EXCLUDED ACCOUNTS RECEIVABLE......................................93
6.14 RESTRUCTURING.....................................................94
ARTICLE VII
CONDITIONS
...................................................................................94
7.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS TO
CONSUMMATE......................................................94
7.2 CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS.......................98
7.3 CONDITIONS PRECEDENT TO THE SELLING ENTITIES' AND
THE PRINCIPALS' OBLIGATIONS.....................................99
ARTICLE VIII
TERMINATION
..................................................................................100
8.1 TERMINATION......................................................101
8.2 EFFECT OF TERMINATION AND ABANDONMENT............................101
ARTICLE IX
INDEMNIFICATION
..................................................................................102
9.1 INDEMNIFICATION BY SELLING ENTITIES AND PRINCIPALS
.........................................................................102
9.2 INDEMNIFICATION BY BUYER.........................................102
9.3 CERTAIN LIMITATIONS ON INDEMNIFICATION...........................103
9.4 RIGHT OF SET-OFF.................................................104
9.5 TERMINATION OF RIGHTS HEREUNDER..................................104
9.6 INDEMNIFICATION RELATED TO ▇▇▇▇▇▇. ..............................104
9.7 EXCLUSIVE REMEDY.................................................105
ARTICLE X
POST-CLOSING COVENANTS
..................................................................................105
10.1 FILING OF FORMS ADV-W............................................105
10.2 EMPLOYEE BENEFITS AND OTHER MATTERS..............................105
10.3 CERTAIN TAX MATTERS..............................................106
10.4 CONFIDENTIALITY AND NONCOMPETITION...............................107
-iv-
3131867.30
10.5 TRANSFERS OF LP UNITS FOLLOWING A RESTRUCTURING
.........................................................................110
10.6 NOTICE TO EXCHANGE...............................................110
10.7 DISTRIBUTION OF LP UNITS.........................................110
10.8 AEW, INC.........................................................110
10.9 POST-CLOSING ACCESS..............................................110
ARTICLE XI
GENERAL PROVISIONS
..................................................................................111
11.1 SURVIVAL.........................................................111
11.2 NOTICES..........................................................111
11.3 COUNTERPARTS.....................................................112
11.4 GOVERNING LAW....................................................112
11.5 EXPENSES.........................................................112
11.6 WAIVER; AMENDMENT................................................113
11.7 ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES; ETC.
.........................................................................113
11.8 ASSIGNMENT.......................................................113
11.9 INTERPRETATION...................................................113
11.10 FURTHER ASSURANCES...............................................114
11.11 CONSISTENT ACCOUNTING............................................114
11.12 SEVERABILITY.....................................................114
-v-
3131867.30
Exhibits
1.2(a) Form of Promissory Note
3(e) Form of Registration Rights Agreement
6.10(e) Calculation of Margin Share Payment
6.10(g) International Term Sheet
7.1(j) Form of Partnership Agreement
Schedules
0.1A-1 AEW Pro Forma Closing Balance Sheet
0.1A-2 ▇▇▇▇▇▇ Pro Forma Closing Balance Sheet
0.1B Capital Stock and Equity Interests in Subsidiaries
0.1C Excluded Assets
0.1D Assumed Liabilities
0.1E AEW Clients
0.1F ▇▇▇▇▇▇ Clients
0.1G-1 AEW Client Entities
0.1G-2 ▇▇▇▇▇▇ Client Entities
0.1H ▇▇▇▇▇▇ Excluded Liabilities
0.1I Funds (Registered Investment Companies)
0.1J Investment Pools
0.1K Non-Recurring Revenues
0.1L Terminable Contracts
0.1M-1 Knowledge of Buyer
0.1M-2 Knowledge of Seller
0.10 Excluded Liabilities
0.1P Limits on Interest Income
1.2(a) Allocation of Purchase Price Among Seller and Stockholders
1.2(e) Allocation of Purchase Price Among Assets
1.3(a) Minimum and Maximum Revenue Targets
1.3(b) Contingent Payment Recipients
3.6(a) Audited Financials
3.6(b) Unaudited Financials
3.6(c) AEW Subsidiary Financials
3.7(b) Distributions
3.7(c) Interests Sold
3.8 Securities Held for Investment
3.9(a) Tax Matters
3.9(d) Deferred Taxes not in Accordance with GAAP
3.9(l) Section 704(c)(1)(A) Assets
3.9(m) Tax Basis of Assets
-vi-
3131867.30
3.9(n) Partnership Terminations
3.9(o) Foreign Tax Returns or Foreign Income
3.10 Interested Parties
3.10(a) Real Estate Interests
3.11(a) Liens
3.11(b) Real Estate Assets
3.11(c) Intellectual Property
3.11(e) Securities GP Assets
3.12 Insurance/Claims
3.13 Material Contracts
3.14 Bank Accounts and Money Market Funds
3.15 Pending or Threatened Litigation
3.17 Employee Benefit Plans
3.19(a)(i)(1) Investment Contracts
3.19(a)(i)(2) AEW Oral Modifications to Investment Contracts
3.19(a)(i)(3) Limitations on Fees under Investment Contracts
3.19(a)(i)(4) Client Notifications of Withdrawal Requests or Investment
Contract Modifications
3.19(c)(i) Qualifications of Seller's Adviser Representatives
3.19(c)(ii) Inspection Reports
3.19(c)(v) Investor Complaints and Redemption Requests (Investment
Pools/Client Entities)
3.21(a) Restriction Agreements with NASD
3.21(b) Principal and Registered Representatives of AEW Securities
4.8 Buyer Financial Statements
4A Exceptions to Representations and Warranties
4A.2 Amendments to Charter Documents
4A.3(a) ▇▇▇▇▇▇ Stock and Equity Interests in Subsidiaries
4A.3(b) ▇▇▇▇▇▇ Securities Held For Investment
4A.4 Defaults
4A.5 ▇▇▇▇▇▇ Financial Information
4A.6 Changes Since December 31, 1995
4A.7(a) Tax Matters
4A.7(e) Tax Matters Relating to ▇▇▇▇▇▇ Subsidiary or Client Entity
4A.7(k) ▇▇▇▇▇▇ Partnership Terminations
4A.7(l) ▇▇▇▇▇▇ Foreign Tax Returns
4A.8 Interested Parties
4A.8(a) Real Estate Interests
4A.9(a) Liens
4A.9(b) Real Estate Assets
4A.9(c) Intellectual Property
4A.10 Insurance and Claims Made Under Insurance Policies
4A.11 Material Contracts
4A.11(d) Powers of Attorney
-vii-
3131867.30
4A.12 Bank Accounts and Money Market Funds
4A.13 Litigation
4A.14 Employee Benefit Plans
4A.16(a)(i)(1) Investment Contracts
4A.16(a)(i)(2) ▇▇▇▇▇▇ Oral Modifications to Investment Contracts
4A.16(a)(i)(3) ▇▇▇▇▇▇ Investment Contracts Requiring Consent
4A.16(a)(i)(4) Limitation on Fees Under Investment Contracts
4A.16(a)(i)(5) Client Notifications of Withdrawal Requests or Investment
Contract Modifications
4A.16(b)(i) Examination and Certification Qualifications
4A.16(b)(ii) Inspection Reports
4A.16(b)(iv) Investor Complaints and Outstanding Investor Withdrawal Requests
5.1(a) AEW Sales of Equity Interests and Securities
5.1(e) AEW Bonuses
5.1(f) AEW Employment Arrangements
5.2(a) ▇▇▇▇▇▇ Sales of Equity Interests and Securities
5.2(d) ▇▇▇▇▇▇ Bonuses
5.2(e) ▇▇▇▇▇▇ Employment Arrangements
6.10(e) Calculation of Margin Share Payment
6.14 Restructuring Plan
7.2(c) Employees to Enter Into Employment Agreements
7.2(i) Required Clients
-viii-
3131867.30
This PARTNERSHIP ADMISSION AGREEMENT is dated as of the 15th day of
October, 1996 (the "Agreement"), by and among New England Investment Companies,
L.P., a Delaware limited partnership ("Buyer"), ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & Waltch, L.P.,
a Delaware limited partnership ("Seller"), Seller's general partner, AEW
Holdings, L.P., a Delaware limited partnership ("Seller Holdings"), Seller
Holdings' general partner, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & Waltch, Inc., a Massachusetts
corporation ("Seller Inc."), AEW Investment Company, Inc., a Delaware
corporation ("Securities GP") and the Principals.
RECITALS
WHEREAS, Seller or one or more of its subsidiaries or affiliates serve
(i) as investment adviser to trusts, pension funds and other institutional
accounts, as well as to open and closed end investment funds, (ii) as the
general partner or general member and investment manager for various investment
vehicles, (iii) through Seller's employees as officers and directors of
corporations and trustees of trusts holding title to investments for its
clients, and (iv) as a registered broker-dealer;
WHEREAS, Buyer is a publicly traded limited partnership with limited
partnership interests represented by LP Units ("LP Units") listed on the
Exchange;
WHEREAS, Buyer desires to acquire at the Closing the Assets
attributable to the Selling Entities' current businesses and to assume certain
of the liabilities of the Selling Entities related to such businesses in the
manner, for the consideration and upon the terms and conditions set forth in
this Agreement;
WHEREAS, Buyer, as the limited partner, and New ▇▇▇▇▇▇▇, Inc., a
Massachusetts corporation (to be renamed "AEW Capital Management, Inc." prior to
the Closing) ("NCGP"), as the general partner, have caused to be formed a
Delaware limited partnership named "New ▇▇▇▇▇▇▇, ▇.▇.," which shall be treated
for federal income tax purposes as a partnership (to be renamed "AEW Capital
Management, L.P." prior to the Closing) ("NCLP");
WHEREAS, at the Closing, Buyer will issue an agreed upon number of LP
Units and pay an agreed upon cash consideration and note to Seller and will
assume certain liabilities of the Selling Entities; Seller will contribute to
Buyer the Assets attributable to Seller's current business; the Principals will
transfer to Buyer all of the issued and outstanding capital stock (the "AEW II
Stock") of AEW II Corporation, a Delaware corporation ("AEW II") and all of the
issued and outstanding capital stock (the "Hotel Stock") of AEW Hotel Investment
Corporation, a Delaware corporation ("AEW Hotel"); Securities GP will transfer
to Buyer all of its general partnership interest (the "GP Interest") in AEW
Securities; and Seller Inc. will
3131867.30
contribute to Buyer all of Seller Inc.'s Investment Contracts, in each case for
the consideration and upon the terms and conditions set forth in this Agreement;
and
WHEREAS, Buyer will contribute to NCLP directly or indirectly through
one or more subsidiaries, subject to the liabilities of the Selling Entities
assumed by Buyer, (i) the Assets of Seller, (ii) Seller Inc.'s Investment
Contracts, (iii) the GP Interest, (iv) the AEW II Stock and the Hotel Stock, (v)
all of the issued and outstanding capital stock of ▇▇▇▇▇▇ Investment Group, Inc.
("▇▇▇▇▇▇"), and (vi) all of the limited partnership interests, (collectively,
the "▇▇▇▇▇▇ Partnership Interests") held by it in each of CREA Limited
Partnership, ▇▇▇▇▇▇ Public Partners Holding, L.P. and ▇▇▇▇▇▇ Management
Advisers, L.P.;
NOW, THEREFORE, in consideration of and premised upon the various
representations, warranties, covenants and other agreements and undertakings of
Buyer, the Selling Entities and the Principals contained in this Agreement and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Buyer, the Selling Entities and the Principals agree as
follows:
DEFINITIONS
For the purposes of this Agreement, the following terms shall have the
meanings set forth below:
"Advisory Board" has the meaning set forth in Section 6.10(h).
"AEW Client Entities" means any corporation, limited or general
partnership, limited liability company, trust or other entity (other than the
Funds) established to facilitate the provision of services by Seller to clients
in which entity such clients hold an equity interest and as to which any Selling
Entity or Seller Designated Affiliate (i) manages the investments of its assets,
(ii) prepares tax returns and maintains legal existence or is responsible for
preparing tax returns and maintaining legal existence on an ongoing basis and
(iii) provides employees to serve as officers or directors or in comparable
capacities, all of which AEW Client Entities are listed on Schedule 0.1G-1.
"AEW Fund" means AEW Commercial Mortgage Securities Fund, Inc.
"AEW Hotel" has the meaning set forth in the Recitals.
"AEW Mezzanine Funds" means, collectively, AEW Mezzanine Investment
Trust, AEW Mezzanine Investment Fund I, AEW Mezzanine Investment Fund II and AEW
Mezzanine Investment Fund III.
-2-
3131867.30
"AEW Pro Forma Closing Balance Sheet" means the balance sheet of Seller
as of the Closing Date reflecting Seller's Assets to be transferred to Buyer and
those Assumed Liabilities to be assumed by Buyer from Seller. The AEW Pro Forma
Closing Balance Sheet shall be prepared on a basis consistent with the balance
sheet as of July 31, 1996 contained in Schedule 3.6(b) and with Schedule 0.1A-1.
At least five business days prior to the Closing, Seller shall have delivered a
preliminary draft, in a form reasonably satisfactory to Buyer, of the AEW Pro
Forma Closing Balance Sheet. A final AEW Pro Forma Closing Balance Sheet shall
be delivered within 10 business days following the Closing Date and shall be
prepared consistently with the preliminary draft. Buyer and Seller shall resolve
any objections with respect to the AEW Pro Forma Closing Balance Sheet within 20
days following delivery of the AEW Pro Forma Closing Balance Sheet. Should Buyer
and Seller fail to resolve all objections to the AEW Pro Forma Closing Balance
Sheet, then the parties hereto shall submit the disputed matters to Arbitration.
The final AEW Pro Forma Closing Balance Sheet after resolution of all disputed
matters shall be the AEW Pro Forma Closing Balance Sheet. The AEW Pro Forma
Closing Balance Sheet shall be a Seller Financial Statement for purposes of
Section 3.6.
"AEW Securities" means AEW Securities Limited Partnership.
"AEW Subsidiary Financials" has the meaning set forth in Section
3.6(c).
"AEW II" has the meaning set forth in the Recitals.
"AEW II Stock" has the meaning set forth in the Recitals.
"AEW Working Capital Requirement" means an aggregate of $4.05 million
of working capital (excluding working capital (i) to fund Seller's Restructuring
Costs and Seller's share of the funding of the Restructuring Reserve and (ii)
received as prepayment for obligations to be performed by NCLP as successor to
Seller on or after the Closing Date), including $1.25 million in the form of
cash and an additional $2.8 million in the form of either cash, current
receivables and/or prepaid expenses, all shown or provided for on the AEW Pro
Forma Closing Balance Sheet on a basis consistent with Schedule 0.1A-1.
"Agreement" has the meaning set forth in the Preamble.
"Arbitration" means with respect to a matter of disagreement between
the parties hereto relating solely to (i) the AEW Pro Forma Closing Balance
Sheet, (ii) the ▇▇▇▇▇▇ Pro Forma Closing Balance Sheet or (iii) whether an
expense of NCLP or loss of revenue at NCLP "proximately results" from an event
or condition giving rise to a breach of a representation or warranty of Buyer as
described in Section 9.6(a), the referral of such matter for final determination
to an independent accounting firm that is considered to be one of the "big six"
and is not otherwise then providing material services to Buyer, the Selling
Entities, ▇▇▇▇▇▇, NCLP or their affiliates (except as otherwise agreed to by
Buyer and Seller), which
-3-
3131867.30
determination of the matter of disagreement submitted to it, including the
allocation among the parties of the costs of such determination, shall be final
and binding on the parties hereto.
"Asset Contribution" has the meaning set forth in Section 1.1(a).
"Assets" of any Person means all of such Person's business, assets,
security deposits and prepaid items, goodwill and rights of every kind and
description, real and personal, tangible and intangible, wherever located,
including all of such Person's right, title and interest in, to and under the
following properties and assets:
(a) machinery, parts, tools, equipment, supplies,
vehicles, furniture, furnishings, fixtures and other tangible
properties (including artwork);
(b) cash, cash equivalents, accounts receivable
and notes receivable;
(c) ownership interests and leasehold interests and
leasehold improvements arising under or relating to all
leases, contracts, agreements and commitments, and all claims
and rights of the Person arising under or relating to all such
leases, contracts, agreements and commitments;
(d) trade secrets and processes and proprietary
properties;
(e) trade names, trademarks, service marks,
trademark applications and service ▇▇▇▇ applications;
(f) customer lists, customer records, supplier
lists, mailing lists and other customer or marketing
information;
(g) the Person's rights to the use of its name and
any variations thereof;
(h) the Person's interest in all other proprietary
names, formulations, copyrights and slogans;
(i) the originals or, if not available, copies
thereof, of contracts, leases, files, records, operating
manuals and written guidelines, plans, notebooks, production
data, research data, books and other data;
(j) computer software, computer hardware and
information systems, including copies of all existing
documentation and existing source codes with respect to such
software;
(k) sales and promotional materials, catalogues and
advertising literature;
-4-
3131867.30
(l) license agreements, distribution agreements,
sales representative agreements and other agency agreements,
service agreements, supplier agreements, franchise agreements
and technical service agreements, software support agreements,
permits, licenses, registrations and operating rights;
(m) in the case of any Person that is an investment
adviser, such Person's rights and interests in or under
Investment Contracts and other contracts between such Person
and its clients and customers;
(n) other leases (including any equipment leases or
any subleases in which such Person is sublessor), contracts,
purchase orders, purchase contracts, agreements and
commitments;
(o) books and records, and information
electronically stored or otherwise recorded;
(p) payments made to such Person prior to the Closing
Date in respect of obligations to be performed by such Person
on or after the Closing Date;
(q) prepaid expenses as of the Closing Date;
(r) any securities owned by such Person and issued by
any other Person, which securities with respect to the Seller
shall include the capital stock and equity interests held by
Seller, directly or indirectly, in its subsidiaries as set
forth on Schedule 01.B;
(s) in the case of Seller, its general partnership
interest in Partners II Employee Holdings, L.P.; and
(t) any and all employee benefit plan assets
reflected in the Seller Financial Statements or the ▇▇▇▇▇▇
Financial Information, as the case may be, to the extent
transferred to NCLP;
provided, however, that, with respect to the Selling Entities, the term
Assets shall exclude (i) the consideration received by Seller under the
terms of this Agreement as set forth in Section 1.2 and their other
rights under this Agreement, (ii) all cash, cash equivalents and
accounts receivable in excess of (A) the AEW Working Capital
Requirement and (B) Seller's share of the funding of the Restructuring
Reserve, (iii) original corporate organizational documents and other
records which will be retained by the Selling Entities, (iv) AEW,
Inc.'s right to use its name as permitted by Section 10.8, (v) those
assets identified on Schedule 0.1C and (vi) rights against third
parties with respect to Excluded Liabilities; provided, however, that
Buyer shall also be
-5-
3131867.30
entitled to pursue such rights against third parties to the extent
Seller shall have failed to fulfill its obligations under Section 9.1
with respect thereto.
"Assumed Liabilities" means the Selling Entities' obligations and
liabilities, including without limitation all contractual obligations arising
from Investment Contracts and employment contracts and obligations arising
under all employee benefit plans, that are reflected as liabilities in the AEW
Pro Forma Closing Balance Sheet or set forth on Schedule 0.1D and any other
obligations approved in writing by Buyer prior to the Closing but in no event
shall include any liabilities described in clauses (i) through (xii) of the
definition of "Excluded Liabilities" except as stated in the proviso to such
definition.
"Audited Financials" has the meaning set forth in Section 3.6(a).
"BD" has the meaning set forth in Section 3.21(b).
"Bonus Plan" has the meaning set forth in Section 6.10(d).
"Bonus Pool" has the meaning set forth in Section 6.10(d).
"Buyer" has the meaning set forth in the Preamble.
"Buyer Financial Statements" has the meaning set forth in Section 4.8.
"Buyer Indemnified Parties" has the meaning set forth in Section 9.1.
"Buyer Restructuring Costs" has the meaning set forth in Schedule 6.14.
"Cash Consideration" has the meaning set forth in Section 1.2(a).
"CFTC" means the Commodity Futures Trading Commission.
"Client" means with respect to a Person any client to which such Person
provides investment management, investment advisory, administration or
consulting services on the date hereof, with all of the Clients of the Selling
Entities listed on Schedule 0.1E and all of the Clients of ▇▇▇▇▇▇ and the ▇▇▇▇▇▇
Subsidiaries listed on Schedule 0.1F.
"Client Consent(s)" has the meaning set forth in Section 6.1(b)(i).
"Closing" has the meaning set forth in Section 2.1.
"Closing Date" has the meaning set forth in Section 2.1.
"Code" means the Internal Revenue Code of 1986, as amended.
-6-
3131867.30
"Coinvestment Capital" means capital invested by ▇▇▇▇▇▇ or Seller prior
to the Closing or NCLP after the Closing, in each case for its own account, in
any entity in which any Client of any of them invests.
"Commodity Exchange Act" means the Commodity Exchange Act of 1974,
as amended.
"Commonwealth" means Commonwealth Property Investors, L.L.C.
"Compensation Committee" has the meaning set forth in Section 6.10(b).
"Compensation Expense" means all base salary and benefits expense,
including employer 401(k) plan matching contributions and any deferred
compensation plan expense, for employees of NCLP or former employees of NCLP or
Seller.
"Confidential Information" has the meaning set forth in Section
10.4(a)(iii).
"Contingent Payment" has the meaning set forth in Section 1.3(a).
"Continued Employees" has the meaning set forth in Section 10.2(a).
"▇▇▇▇▇▇" has the meaning set forth in the Recitals.
"▇▇▇▇▇▇ Client Entities" means any corporation, limited or general
partnership, limited liability company, trust or other entity established to
facilitate the provision of services by ▇▇▇▇▇▇ or any ▇▇▇▇▇▇ Subsidiary to
clients in which entity such clients hold an equity interest and as to which
▇▇▇▇▇▇ or any ▇▇▇▇▇▇ Subsidiary (i) manages the investments of its assets, (ii)
prepares tax returns and maintains legal existence or is responsible for
preparing tax returns and maintaining legal existence on an ongoing basis or
(iii) provides employees to serve as officers or directors or in comparable
capacities, all of which ▇▇▇▇▇▇ Client Entities are listed on Schedule 0.1G-2.
"▇▇▇▇▇▇ Excluded Liabilities" means those expenses, liabilities, costs
or obligations that are described on Schedule 0.1H.
"▇▇▇▇▇▇ Financial Information" has the meaning set forth in
Section 4A.5(a).
"▇▇▇▇▇▇ Partnership Interests" has the meaning set forth in the
Recitals.
"▇▇▇▇▇▇ Pro Forma Closing Balance Sheet" means the balance sheet of
▇▇▇▇▇▇ as of the Closing Date. The ▇▇▇▇▇▇ Pro Forma Closing Balance Sheet shall
be prepared on a basis consistent with the balance sheet of Seller as of June
30, 1996 contained in Schedule 0.1A-1. At least five business days prior to the
Closing, Buyer shall have delivered a preliminary draft in a form reasonably
satisfactory to Seller of the ▇▇▇▇▇▇ Pro Forma Closing Balance Sheet. A
-7-
3131867.30
final ▇▇▇▇▇▇ Pro Forma Closing Balance Sheet shall be delivered within 10
business days following the Closing Date and shall be prepared consistently with
the preliminary draft. Buyer and Seller shall resolve any objections with
respect to the ▇▇▇▇▇▇ Pro Forma Closing Balance Sheet within 20 days following
delivery of the ▇▇▇▇▇▇ Pro Forma Closing Balance Sheet. Should Buyer and Seller
fail to resolve all objections to the ▇▇▇▇▇▇ Pro Forma Closing Balance Sheet,
then the parties hereto shall submit the disputed matters to Arbitration. The
final ▇▇▇▇▇▇ Pro Forma Closing Balance Sheet after resolution of all disputed
matters shall be the ▇▇▇▇▇▇ Pro Forma Closing Balance Sheet. The ▇▇▇▇▇▇ Pro
Forma Closing Balance Sheet shall be ▇▇▇▇▇▇ Financial Information for purposes
of Section 4A.5.
"▇▇▇▇▇▇ Registered Entities" has the meaning set forth in Section
4A.16(b)(i).
"▇▇▇▇▇▇ Stock" has the meaning set forth in Section 1.1(b).
"▇▇▇▇▇▇ Subsidiaries" means CREA, ▇▇▇▇▇▇ Advisors, Inc., CREA Limited
Partnership, ▇▇▇▇▇▇ Public Partners Holding, L.P., ▇▇▇▇▇▇ Management Advisors,
L.P., BBC Investment Advisors, L.P. and BBC Investment Advisors, Inc.
"▇▇▇▇▇▇ Working Capital Requirement" means an aggregate of $1.5 million
of working capital (excluding working capital (i) to fund Buyer's Restructuring
Costs and Buyer's share of the funding of the Restructuring Reserve and (ii)
received as prepayment for obligations to be performed by ▇▇▇▇▇▇ and the ▇▇▇▇▇▇
Subsidiaries on or after the Closing Date) in the form of either cash and/or
current receivables, all shown or provided for on the ▇▇▇▇▇▇ Pro Forma Closing
Balance Sheet on a basis consistent with Schedule 0.1A-2.
"CPO" has the meaning set forth in Section 3.22.
"CREA" means ▇▇▇▇▇▇ Real Estate Advisors, Inc., a Massachusetts
corporation.
"CTA" has the meaning set forth in Section 3.22.
"Documents" has the meaning set forth in Section 10.4(a)(ii).
"Employee Benefit Plan" with respect to any Person means each:
(a) pension, retirement, supplemental, excess retirement or
other deferred compensation, savings or other similar plans or
arrangements (including any "employee pension benefit plan" within the
meaning of Section 3(2) of ERISA) of such Person, each as in effect on
the date hereof; or
(b) severance (including changes of control or golden
parachute agreements or arrangements), bonus, profit-sharing,
incentive, life insurance, health, vacation, tuition assistance or
reimbursement, legal services, salary continuation, travel or accident
-8-
3131867.30
insurance or benefits, disability insurance or benefits or unemployment
benefits or other plans, policies, contracts or arrangements (including
any "employee welfare benefit plan" within the meaning of Section 3(l)
of ERISA) of such Person, each as in effect on the date hereof;
which provides, or is intended to provide, benefits or perquisites to or in
respect of any of the present or former employees, officers, directors or
stockholders of such Person on account of performance of services for such
Person or the dependents, spouses or other beneficiaries of any of the
foregoing.
"Employment Agreements" has the meaning set forth in Section 7.2(c).
"Environmental Laws" shall mean any and all foreign and domestic
federal, state and local laws, regulations or ordinances, as amended, relating
to the protection of the environment or to emissions, discharges or releases of
pollutants, contaminants, Hazardous Substances or wastes into the environment or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of pollutants, contaminants, hazardous
substances or wastes or the cleanup or other remediation thereof, including the
Comprehensive Environmental Response, Compensation and Liability Act, as
amended, the Resource Conservation and Recovery Act, as amended, the Clean Air
Act, as amended and the Clean Water Act, as amended, all as now or hereinafter
in effect.
"Environmental Liabilities" shall mean all liabilities, whether
contingent or fixed, which (i) arise under or relate to Environmental Laws and
(ii) relate to actions occurring or conditions existing on or prior to the
Closing Date.
"Equityholders" means, collectively, holders of capital stock of Seller
Inc. and Securities GP, holders of stock appreciation rights with respect to
Seller Inc. and holders of units in the Selling Entities' deferred compensation
plans. The term "Equityholder" shall also mean and include (i) any liquidating
or redemption trust, partnership, limited liability company or other legal
entity established by Seller Inc. the beneficial interests, partnership
interests, capital stock or other equity interests in which are issued
exclusively to Equityholders, Seller and/or Seller Inc. and (ii) any holder of
beneficial interests, partnership interests, capital stock or other equity
interests in such a trust, partnership, limited liability company or other legal
entity.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
"ERISA QPAM Exemption" has the meaning set forth in Section
3.19(c)(vi).
"Exchange" means the New York Stock Exchange.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
-9-
3131867.30
"Exchange Price" means the average of the closing prices of the LP
Units on the Exchange during the 20 Trading Days immediately prior to the fifth
Trading Day prior to the Closing Date.
"Excluded Accounts Receivable" has the meaning set forth in
Section 6.14.
"Excluded Liabilities" means all liabilities, contingent or otherwise,
of Seller and the Selling Entities related to (i) loans to Seller or any Selling
Entities from partners, stockholders, employees, directors, officers or
affiliates of Seller or any Selling Entities; (ii) fees, indemnities or other
liabilities or obligations in connection with the arrangements described in
Section 3.16; (iii) any liabilities for any costs to be borne by Seller pursuant
to Section 11.5; (iv) any liabilities of Seller, any Selling Entities or any
direct or indirect partner or stockholder thereof in respect of Taxes; (v) any
liabilities not reflected on the AEW Pro Forma Closing Balance Sheet other than
Assumed Liabilities; (vi) any liabilities of or relating to former partners,
shareholders or employees of any Selling Entities (in their capacities as such
partners, shareholders or employees), including but not limited to (A)
liabilities or obligations in connection with the purchase or redemption of
UAM's minority interest in Seller and (B) liabilities of the type described in
(i), (iv) and (v) hereof; (vii) liabilities of Seller relating to its general
partnership interest in Partners II Employee Holdings, L.P.; (viii) liabilities
of Seller Holdings relating to its general partnership interest in Seller; (ix)
liabilities of Seller Inc. relating to its general partnership interest in
Seller Holdings; (x) liabilities of Securities GP, AEW II and AEW Hotel relating
to their general partnership interests in AEW Securities, Partners II Holdings,
L.P. and AEW Hotel Investment Limited Partnership, respectively; (xi)
liabilities of the Equityholders, the Stockholders, the Selling Entities and
their direct or indirect partners or stockholders as a result of this Agreement,
the Related Agreements or the transactions contemplated hereby and thereby;
(xii) liabilities of employees or officers of any Selling Entity arising from
service to any AEW Client Entity; and (xiii) those further liabilities,
contingent or otherwise, of any Person which are not Assumed Liabilities,
including those liabilities set forth on Schedule 0.1O; provided, however, that
in the case of liabilities described in clauses (v), (vii) through (x), (xii)
and (xiii) of this definition, such liabilities (other than liabilities in
respect of Taxes attributable to income earned or transactions which have taken
place on or prior to the Closing Date (whether or not the relevant taxable
period closed on or prior to the Closing Date)) shall constitute Assumed
Liabilities, and shall not be Excluded Liabilities, to the extent the same arise
on or after the Closing Date and are not the proximate result of an act or
omission that occurred prior to the Closing Date.
"FDIC" means the Federal Deposit Insurance Corporation.
"FDIC Agreement" means the Servicing Task Order Agreement Contract
Number 96- 907-86-C-XX between Seller and the FDIC (formerly Servicing Task
Order Agreement Contract Number 0700-92-0016-003/700-003 between Seller and
Resolution Trust Corporation ("RTC") effective as of September 28, 1992, as
modified by the documents listed in Schedule 3.19(a)(i)(1)
-10-
3131867.30
"First Quarter-End Date" means the last day of Buyer's fiscal quarter
in which the Closing occurs.
"Form ADV" means the filing on Form ADV required to be made under the
Investment Advisers Act with the SEC in connection with the registration of the
filing party as an investment adviser under the Investment Advisers Act.
"Form ADV-W" means the filing on Form ADV-W required to be made under
the Investment Advisers Act with the SEC in connection with the withdrawal from
registration as an investment adviser under the Investment Advisers Act.
"Form 10-K" has the meaning set forth in Section 4.11.
"Forms 10-Q" has the meaning set forth in Section 4.11.
"Fund" shall mean each registered investment company under the
Investment Company Act for which Seller acts as investment adviser (including as
subadviser) or in the case of such investment company that has multiple series
of shares, Fund shall mean either such investment company or each such series,
as the context may require. Each Fund is identified in Schedule 0.1I.
"GAAP" means United States Generally Accepted Accounting Principles
applied on a consistent basis.
"GP Interest" has the meaning set forth in the Recitals.
"Harbor Hospitality" means Harbor Hospitality Limited Partnership, a
Delaware limited partnership.
"Hazardous Substances" shall mean any toxic, radioactive, caustic or
otherwise hazardous substance, including asbestos, regulated by any
Environmental Law.
"Holdings Note" means the $910,000 promissory note issued by Seller to
Partners II Employee Holdings, L.P.
"Hotel Stock" has the meaning set forth in the Recitals.
"HSR Act" has the meaning set forth in Section 3.4(a).
"Information" has the meaning set forth in Section 6.5(b).
"Inside Directors" has the meaning set forth in Section 6.10(b).
-11-
3131867.30
"Interim Financials" has the meaning set forth in Section 6.12(a).
"Investment Advisers Act" means the Investment Advisers Act of 1940,
as amended.
"Investment Company Act" means the Investment Company Act of 1940,
as amended.
"Investment Contracts" means, with respect to any Person that is an
investment adviser (regardless of whether registered under the Investment
Advisers Act), the respective contracts between such Person and the clients of
that Person relating to the provision by that Person of investment advisory,
asset management, consulting or administrative services, including in each case
with respect to real estate.
"Investment Pool" means, those entities listed on Schedule 0.1J.
"International Co." has the meaning set forth in Section 6.10(g).
"Knowledge of Seller," "Buyer's Knowledge" and any similar phrases
shall mean (i) as of the date hereof, best knowledge of those executive officers
of Buyer and those officers and employees of ▇▇▇▇▇▇ listed on Schedule 0.1M-1,
in the case of Buyer, and of the Principals and those officers and employees of
the Selling Entities listed on Schedule 0.1M-2, in the case of Seller and (ii)
as of the Closing Date, best knowledge (after due inquiry of persons who, by
virtue of their positions, could reasonably be expected to have such knowledge
of the subject matter and after due investigation of reasonably available
corporate records) of the executive officers of Buyer and ▇▇▇▇▇▇, in the case of
Buyer, and of the Principals and the executive officers of the Selling Entities,
in the case of Seller.
"Lease" means Seller's current lease of the premises at ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇.
"Lease Refund" has the meaning set forth in Section 6.10(j).
"Lien" means any pledge, lien, security interest, mortgage, claim,
charge or other encumbrance of any kind whatsoever.
"LP Units" has the meaning set forth in the Recitals.
"Margin Share Payment" has the meaning set forth in Section 6.10(e).
"Material Adverse Effect" means (i) with respect to Seller or its
affiliates, a material adverse effect on the business, assets, financial
condition, results of operations or prospects (not taking into account general
economic or real estate or securities market conditions or general industry
developments or the effects thereof) of the Selling Entities and Seller
Designated Affiliates taken as a whole; (ii) with respect to Buyer, a material
adverse effect on
-12-
3131867.30
the business, assets, financial condition, results of operations or prospects
(not taking into account general economic and securities market conditions or
general industry developments or the effects thereof) of Buyer; and (iii) with
respect to ▇▇▇▇▇▇ or its affiliates, a material adverse effect on the business,
assets, financial condition, results of operations or prospects (not taking into
account general economic or real estate or securities market conditions or
general industry developments or the effects thereof) of ▇▇▇▇▇▇ and the ▇▇▇▇▇▇
Subsidiaries taken as a whole.
"Maximum Revenue Target" has the meaning set forth in Schedule 1.3(a).
"MetLife" means Metropolitan Life Insurance Company, sole owner of
Buyer's general partner and owner of a majority of Buyer's LP Units, in each
case through its wholly owned subsidiary, MetLife New England Holdings, Inc..
"Minimum Revenue Target" has the meaning set forth in Schedule 1.3(a)
"NASD" means the National Association of Securities Dealers, Inc.
"NCGP" has the meaning set forth in the Recitals.
"NCLP" has the meaning set forth in the Recitals.
"NCLP Partnership Agreement" has the meaning set forth in
Section 7.1(j).
"NCLP Qualifying Revenue" means (A) for a fiscal year NCLP's gross
revenue for such fiscal year, based on the audited financial statements for NCLP
for such fiscal year and (B) for the Stub Period, NCLP's gross revenue for such
Stub Period, based on the unaudited financial statements for NCLP for such Stub
Period, in each case determined on a consolidated basis in accordance with GAAP;
provided, however, that the following shall be excluded from NCLP Qualifying
Revenue: (i) interest income, (ii) Non-Recurring Revenue, (iii) revenues
associated with minority interests (other than to the extent of NCLP's interest
therein, which interest shall be included in NCLP Qualifying Revenue for the
fiscal period in which and to the extent that NCLP receives cash in respect
thereof) and (iv) deferred fees until paid (at which time they shall be included
in NCLP Qualifying Revenue).
"NEIA" means New England Investment Associates, Inc., a Massachusetts
corporation wholly owned by ▇▇▇▇▇▇ Real Estate Advisors, Inc.
"New Fund Agreement" has the meaning set forth in Section 6.1(b)(ii).
"Non-Competition Period" has the meaning set forth in Section
10.4(b)(i).
-13-
3131867.30
"Non-Recurring Revenue" means (i) all advisory fees and other
advisory-related revenues that are nonrecurring in character, including without
duplication (A) fees contingent on exceeding pre-established performance
targets, such as incentive fees earned if the client's projected rate of return
is exceeded, (B) "blow-up" fees for terminated Investment Contracts, and (C)
proceeds from the sale or other disposition of Investment Contracts or any
assets owned directly by NCLP and (ii) all nonadvisory revenues (other than
consulting fees, brokerage fees and commissions and, insofar as they are
recurring in character, revenues from partnership or other equity interests)
including equity earnings on Coinvestment Capital; provided, however, that if a
non-contingent fee or other revenue arising from an arrangement in effect on the
date hereof is recharacterized or restructured as a fee or other revenue that is
in whole or in part contingent, then, to the extent the contingent fee or other
revenue is recognized by NCLP (up to the amount of the non-contingent fee as
originally characterized or structured) such contingent fee shall not be treated
as Non-Recurring Revenue and shall be NCLP Qualifying Revenue. For illustrative
purposes, Schedule O.1K lists certain of the Investment Contracts listed on
Schedules 3.19 and 4A.16 on the date hereof that generate NonRecurring Revenues
and sets forth the extent to which revenues from each such Investment Contract
are or are not Non-Recurring Revenues.
"Note" has the meaning set forth in Section 1.2(a).
"NSGP" shall have the meaning set forth in Section 1.1(c).
"NSLP" shall have the meaning set forth in Section 1.1(c).
"Operating Expenses" means all expenses, including Compensation Expense
and the Lease Refund, if any, of NCLP and any subsidiaries determined on a
consolidated basis in accordance with GAAP for the operation of NCLP, exclusive
of (i) federal income taxes incurred at ▇▇▇▇▇▇, the ▇▇▇▇▇▇ Subsidiaries, AEW II,
AEW Hotel and any entity formed to hold the GP Interest which result from
revenues generated from contracts existing at or prior to the Closing or any
extension, renewal or replacement thereof, (ii) federal income taxes which are
incurred by NCLP or any subsidiaries of NCLP that result from a decision by
Buyer, (iii) amortization of intangibles created by or resulting from the
transactions contemplated by this Agreement, (iv) Margin Share Payments and
payments under the Bonus Plan, (v) Contingent Payments, (vi) expenses associated
with minority interests (other than to the extent of NCLP's interest therein,
which interest shall be included in Operating Expenses for the fiscal period in
which and to the extent that NCLP pays cash in respect thereof) and (vii)
expenses that are Buyer Restructuring Costs or that are designated pursuant to
Schedule 6.14 to be paid from the Restructuring Reserve; provided, however, that
(a) Operating Expenses shall not include any tax on goodwill resulting from the
transactions contemplated by this Agreement, (b) Operating Expenses shall
include taxes incurred at Buyer or Buyer subsidiaries which result from a
decision, action or omission by NCLP's management (not directed by the Buyer),
(c) solely for purposes of calculating Margin Share payments, interest expense
on co-investment capital, and any other interest expense to the extent offset by
interest income, shall be excluded from
-14-
3131867.30
Operating Expenses and (d) costs relating to NCLP's leasehold interest at ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ shall be adjusted as provided in the
following sentence. For purposes of the calculation of Operating Expenses,
NCLP's costs in respect of base rent for the leased premises at ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ for any period shall be deemed to consist of (i)
the amount payable in cash during such period by NCLP as base rental pursuant to
the terms of the lease covering such premises, minus (ii) the amount of base
rent payable for such premises (or any portion thereof) by any sub-tenant during
such period, minus (iii) the amount of amortization during such period on a
straight-line basis through July 31, 2000 of the $2.8 million deferred rent
liability reflected on the AEW Pro Forma Closing Balance Sheet, plus (iv) the
amount of amortization on a straight-line basis during such period of tenant
improvements (such period deemed to end no later than July 31, 2000), lease
commissions, free rent accorded to sub-tenants (to the extent not already taken
into account in the calculation of base rental payable by sub-tenants) and
moving and similar allowances accorded to sub-tenants in respect of such
premises.
"Partners I" has the meaning set forth in Section 7.2(k).
"Partners II" has the meaning set forth in Section 7.2(l).
"Partners II Incentive Fees" means incentive fees, carry distributions
or income in respect of a carried interest, all in respect of Partners II.
"Partnership Revenues" means, for a fiscal period, NCLP's gross revenue
for such fiscal period, determined on a consolidated basis in accordance with
GAAP; provided, however, that the following shall be excluded from Partnership
Revenues: (i) incentive fees allocated directly to individuals from and after
the time they have been allocated, such as Partners II Incentive Fees and
incentive fees or carry distributions designated to be allocated in respect of
Partners I to employees of NCLP, (ii) the amount of the interest income shown on
Schedule 0.1P for the applicable fiscal period, (iii) deferred fees until paid
(at which time they shall be included in Partnership Revenues), (iv) revenues
associated with minority interests (other than to the extent of NCLP's interest
therein, which interest shall be included in Partnership Revenues for the fiscal
period in which and to the extent that NCLP receives cash in respect thereof)
and (v) noncash equity earnings or gains, which earnings and gains shall be
included in Partnership Revenues for the fiscal period in which cash payment is
received.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Permitted Transferee" means any Person to whom LP Units issued
hereunder are transferred and who either (A) is Seller Inc., Seller Holdings or
a Principal, (B) is an Equityholder who is receiving LP Units directly or
indirectly from a Selling Entity and who has made written representations
substantially identical to those contained in Section 3.25 (other than, in the
case of a person who is not a Stockholder, subsection (e) thereof) and, to the
extent that LP Units are to be transferred to such Equityholder prior to the
First Quarter-
-15-
End Date, a waiver substantially identical to Section 1.2(b)(ii),
(C) has delivered to Buyer a certificate containing representations by such
Person substantially identical to those representations contained in Sections
3.25(a) and (c) and such other documentation to demonstrate to Buyer's
reasonable satisfaction that the transfer is exempt from registration under the
Securities Act or (D) has purchased such LP Units pursuant to a sale in
compliance with Rule 144 under the Securities Act or pursuant to a registered
offering. Buyer acknowledges that if Permitted Transferees satisfy the
requirements of Securities Act Release No. 33-6099 as interpreted by the SEC
staff, they may "tack" their required holding period under Rule 144 of the
Securities Act.
"Person" means any individual, partnership, corporation, limited
liability company, association, trust, joint venture, unincorporated
organization, and any government, governmental department or agency or political
subdivision thereof.
"Post-Bonus Operating Margin" means for a fiscal year that percentage
determined by dividing (A) (i) NCLP Qualifying Revenue for such fiscal year
minus (ii) Operating Expenses for such fiscal year minus (iii) the Bonus Pool
for such fiscal year plus (iv) 30% of Nonrecurring Revenues for such fiscal year
by (B) NCLP Qualifying Revenue for such fiscal year, all determined on a
consolidated basis in accordance with GAAP; provided, however, that such
percentage may not be less than 0%.
"Pre-Closing Restructuring Costs" means, with respect to Buyer, such
portion of Buyer Restructuring Costs that relates to severance payments made
prior to the Closing Date to terminated employees of ▇▇▇▇▇▇, it being understood
that such employees shall be included in the list agreed to by Buyer and Seller
of employees to be terminated prior to Closing.
"Principals" means, collectively, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, with each referred to herein as a "Principal."
"Products and Services" has the meaning set forth in Section
10.4(a)(iv).
"Public Partner" has the meaning set forth in Buyer's agreement of
limited partnership.
"Purchase Price" has the meaning set forth in Section 1.2(a).
"Purchase Price LP Units" has the meaning set forth in Section 1.2(a).
"▇▇▇▇▇ & Tang L.P." means ▇▇▇▇▇ & ▇▇▇▇ Asset Management L.P.
"REIT" has the meaning set forth in Section 3.9(h).
"Registration Rights Agreement" has the meaning set forth in
Section 7.3(e).
-16-
3131867.30
"Related Agreements" means any agreement, instrument or certificate
executed by Buyer, any Selling Entities or any Stockholder in connection with
this Agreement, including: (i) the Note, (ii) the Employment Agreements, (iii)
the Registration Rights Agreement and (iv) the Partnership Agreement.
"Report" has the meaning set forth in Section 3.21(b).
"Required Clients" has the meaning set forth in Section 7.2(k).
"The Research Group" has the meaning set forth in Section 6.10(f).
"Reserved Claims" has the meaning set forth in Section 9.5(b).
"Restructuring" has the meaning set forth in Buyer's agreement of
limited partnership.
"Restructuring Reserve" has the meaning set forth in Schedule 6.14.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities GP" has the meaning set forth in the Preamble.
"Seller" has the meaning set forth in the Preamble.
"Seller Designated Affiliates" means Partners II Employee Holdings,
L.P., AEW II, Partners II Holdings, L.P., AEW II, L.P., AEW Securities, AEW
Mexico Corporation, L.L.C., AEW Hotel Investment Limited Partnership and AEW
Hotel Investment Corporation.
"Seller Financial Statements" has the meaning set forth in
Section 3.6(c).
"Seller Fund Reports" has the meaning set forth in Section
3.19(b)(iii).
"Seller Holdings" has the meaning set forth in the Preamble.
"Seller Inc." has the meaning set forth in the Preamble.
"Seller Indemnified Parties" has the meaning set forth in Section 9.2.
"Seller Restructuring Costs" has the meaning set forth in
Schedule 6.14.
"Selling Entities" means Seller, Seller Holdings, Seller Inc. and
Securities GP, it being understood that Seller Holdings is not selling or
transferring any Assets hereunder.
-17-
3131867.30
"State Laws" has the meaning set forth in Section 3.21(a).
"Stockholders" means, collectively, all of the holders of capital stock
of Seller Inc., with each such individual referred to herein as a "Stockholder."
"Stub Period" means the period commencing on the Closing Date and
ending on December 31, 1996.
"Stub Ratio" has the meaning set forth in Schedule 1.3(a).
"Taxes" means all federal, state, county, local, foreign and other
taxes (including, without limitation, income, gross income, profits, premium,
estimated, excise, sales, services, use, occupancy, gross receipts, franchise,
license, ad valorem, severance, capital levy, production, stamp, transfer,
withholding, employment, unemployment, social security, payroll and property
taxes, customs duties and other governmental charges and assessments), together
with any interest, additions to tax or penalties.
"Tax Returns" means all returns, amended returns, declarations,
reports, estimates, information returns and statements required or permitted to
be filed in respect of Taxes.
"Terminable Contracts" means those contracts material to any of the
Selling Entities or Seller Designated Affiliates (other than Investment
Contracts) which, by their terms or under applicable law, would, or would be
required to, terminate as a result of the consummation of the transactions
contemplated by this Agreement unless the parties' consent to the transfer of
such contract is obtained, such Terminable Contracts as of the date hereof being
listed on Schedule 0.1L.
"Total Maximum Revenue Targets" has the meaning set forth on
Schedule 1.3(a).
"Total Minimum Revenue Targets" has the meaning set forth on
Schedule 1.3(a).
"Trading Days" means those days on which the Exchange is open for
trading.
"U-4" has the meaning set forth in Section 3.21(b).
"UAM" means UAM Realty Advisors Investment Corp.
"Unaudited Financials" has the meaning set forth in Section 3.6(b).
-18-
3131867.30
ARTICLE I
PARTNERSHIP CONTRIBUTION; CONSIDERATION; CONTINGENT PAYMENTS
1.1 CONTRIBUTION OF ASSETS AND ASSUMPTION OF LIABILITIES.
At the Closing and upon the terms and conditions set forth herein, the
following actions shall occur:
(a) Seller shall contribute all of its Assets to
Buyer, Seller Inc. shall contribute all of its Investment
Contracts to Buyer, the Principals shall contribute the AEW II
Stock and the Hotel Stock to Buyer, and Securities GP shall
contribute the GP Interest to Buyer, in each case free and
clear of any Lien other than those identified in Section
3.11(a), and Buyer will assume and become responsible for the
Assumed Liabilities, but in no event including the Excluded
Liabilities. The contribution of the Assets of Seller, the
contribution of the Investment Contracts by Seller Inc., the
transfer of the AEW II Stock and the Hotel Stock, the transfer
of the GP Interest and the assumption of the Assumed
Liabilities contemplated by this Section 1.1(a) (together with
the contribution of certain Assets of Seller and the
assumption of certain Assumed Liabilities pursuant to Section
1.1(c)) are referred to in this Agreement as the "Asset
Contribution." Seller, the Selling Entities or the Principals,
as applicable, shall continue to be responsible for the
Excluded Liabilities.
(b) Immediately upon completion of the events
described in Section 1.1(a), Buyer shall contribute to NCLP
(i) subject to the Assumed Liabilities but not the Excluded
Liabilities, the Assets of Seller, Seller Inc.'s Investment
Contracts, the AEW II Stock, the Hotel Stock and the GP
Interest, (ii) all of the issued and outstanding shares of
capital stock of ▇▇▇▇▇▇ (the "▇▇▇▇▇▇ Stock") and (iii) the
▇▇▇▇▇▇ Partnership Interests, and NCLP shall assume and become
responsible for the Assumed Liabilities. Buyer's contribution
to NCLP described in the preceding sentence shall occur in
such a way that appropriate percentages of each of Seller's
Assets, Seller Inc.'s Investment Contracts, the GP Interest,
the AEW II Stock, the Hotel Stock, the ▇▇▇▇▇▇ Stock and the
▇▇▇▇▇▇ Partnership Interests (such percentages to be
determined in the sole discretion of Buyer and its affiliates)
are first contributed directly or indirectly through one or
more subsidiaries to NCGP and are then contributed by NCGP to
NCLP in exchange for a general partnership interest in NCLP.
The remainder of Seller's Assets, Seller Inc.'s Investment
Contracts, the GP Interest, the AEW II Stock, the Hotel Stock,
the ▇▇▇▇▇▇ Stock and the ▇▇▇▇▇▇ Partnership Interests shall be
contributed directly by Buyer to NCLP in exchange for a
limited partnership interest in NCLP. NCLP may contribute
directly or indirectly through one or more subsidiaries the GP
Interest, the
-19-
3131867.30
AEW II Stock, the Hotel Stock, the ▇▇▇▇▇▇ Stock and the ▇▇▇▇▇▇
Partnership Interests to one or more wholly owned (directly or
indirectly) subsidiaries of NCLP.
(c) NATIONAL SERVICER GROUP. Anything in this
Agreement to the contrary notwithstanding, if Seller so
requests of Buyer in writing, the Assets of Seller
attributable to its National Servicer Group, including without
limitation the FDIC Agreement, shall not be contributed to
NCLP, nor shall the Assumed Liabilities attributable to such
National Servicer Group be assumed by NCLP; but Buyer shall
instead contribute such Assets to a separate Delaware limited
partnership ("NSLP") the limited partnership interests in
which shall be held directly or indirectly through one or more
subsidiaries (which subsidiaries are not NCLP, NCGP or
subsidiaries of either of them) by the Buyer and the general
partnership interest in which shall be held by a newly
organized Massachusetts corporation ("NSGP") all of the
outstanding capital stock of which shall be held directly by
the Buyer, and the Buyer shall cause NSLP to assume such
Assumed Liabilities; and, following the Closing, the
operations previously conducted by Seller's National Servicer
Group shall be carried on by NSLP. The agreement of limited
partnership of NSLP shall be in substantially the same form as
the NCLP Partnership Agreement. Buyer's contribution to NSLP
described in this Section 1.1(c) shall occur in such a way
that an appropriate percentage of Seller's Assets attributable
to its National Servicer Group (such percentage to be
determined in the sole discretion of Buyer) is first
contributed directly or indirectly through one or more
subsidiaries to NSGP and is then contributed by NSGP to NSLP
in exchange for a general partnership interest in NSLP. The
remainder of Seller's Assets attributable to its National
Servicer Group shall be contributed directly by Buyer to NSLP
in exchange for a limited partnership interest in NSLP. The
current intention of the parties hereto, without prejudice to
Buyer's rights under Massachusetts law as sole stockholder of
NSGP, is that the board of directors of NSGP will consist of
two members who shall initially be one representative
designated by the Buyer and one representative from among the
senior management of NSLP.
1.2 CONSIDERATION FOR PARTNERSHIP CONTRIBUTIONS.
(a) PURCHASE PRICE. In consideration for the Asset
Contribution, the aggregate purchase price (the "Purchase
Price") shall be $67.5 million, payable at the Closing as
follows: (A) $52.5 million in cash (the "Cash Consideration"),
(B) $10.0 million in LP Units (the "Purchase Price LP Units")
valued at the Exchange Price and (C) $5.0 million by
promissory note (the "Note") in substantially the form of
Exhibit 1.2(a). The Purchase Price shall be allocated among
the Selling Entities as set forth on Schedule 1.2(a).
-20-
3131867.30
(b) LP UNITS.
(i) Except as otherwise described in this
Section 1.2(b) and except as to restrictions on
transferability set forth in Sections 3.25(a) and
3.25(c), the rights of a holder with respect to each
LP Unit issued hereunder as to distributions from
Buyer will (subject to the proviso which follows) be
identical to the rights of holders of LP Units listed
on the Exchange; provided, however, that
distributions in respect of the calendar quarter in
which the Closing Date occurs made to holders of any
of the Purchase Price LP Units that are holders of
record on the First Quarter-End Date shall equal on a
per LP Unit basis the distributions made for such
quarter in respect of each LP Unit listed on the
Exchange multiplied by a fraction, the numerator of
which is equal to the number of days between the
Closing Date and the First Quarter-End Date and the
denominator of which is equal to the number of days
in the calendar quarter in which the Closing Date
falls. Except as provided above in this Section
1.2(b), Buyer will treat the LP Units issued
hereunder as possessing the same book capital
accounts (on a per LP Unit basis) and as entitled to
the same distributions (including distributions in
complete liquidation of Buyer) as LP Units traded on
the Exchange and will, to the extent permitted by
applicable law, treat each LP Unit issued hereunder
as fungible with LP Units listed on the Exchange
following the sale of such LP Unit in a public
market. Buyer may adopt such conventions as are
necessary or desirable to obtain the foregoing
results.
(ii) Each of the Selling Entities and the
Principals waives any right to receive any quarterly
distribution for LP Units in respect of the quarter
ending on the First Quarter-End Date except as set
forth in this Section 1.2(b).
(c) CALCULATION OF LP UNITS. In calculating the
number of LP Units to be issued to the Selling Entities, any
remaining amount not issuable in a whole number of LP Units,
shall be paid in cash.
1.3 CONTINGENT PAYMENT. In addition to the Purchase Price,
Buyer will pay up to $35.0 million (plus accruals as and to the extent
provided below) as follows:
(a) Within 90 days following the Buyer's receipt of
audited financial statements of NCLP for each of fiscal 1997,
1998 and 1999, Buyer shall pay in cash (as described below) an
amount (a "Contingent Payment", such term not to include any
additional accruals as described below) equal to (i) the
product of (i) $11.667 million and (ii) a fraction, the
numerator of which equals the excess of
-21-
3131867.30
NCLP Qualifying Revenue for such year over the Minimum Revenue
Target for such year set forth on Schedule 1.3(a) and the
denominator of which equals the difference between the Minimum
Revenue Target and Maximum Revenue Target for such year set
forth on Schedule 1.3(a); provided, however, that the fraction
described by the foregoing clause (ii) shall not be greater
than 1.0 nor less than zero. In addition, in the event that
the aggregate amount of Contingent Payments for fiscal 1997,
1998 and 1999 (prior to any increase pursuant to this
sentence) is less than $35.0 million, the payment in respect
of fiscal 1999 shall be increased by an amount equal to (i)
(A) the excess of the aggregate NCLP Qualifying Revenue for
fiscal 1997, 1998 and 1999 over the Total Minimum Revenue
Targets for such years divided by (B) the difference between
the Total Maximum Revenue Targets for such years and the Total
Minimum Revenue Targets for such years and multiplied by (C)
$35.0 million minus (ii) the aggregate Contingent Payments for
the three years (prior to any increase pursuant to this
sentence); provided, however, that the number described by the
foregoing clause (i) shall not exceed $35.0 million (excluding
additional accruals described below). Minimum Revenue Targets
and Maximum Revenue Targets are determined and are subject to
adjustments as provided in Schedule 1.3(a).
(b) Of the Contingent Payments described above, if
any, the first $10.0 million shall be paid as follows: (i) 15%
shall be paid to Seller and (ii) the remaining 85% shall be
allocated by NCLP's President and Chief Executive Officer pro
rata as follows: 20% to each of the Principals and 40% among
certain employees of NCLP, in each case in consideration for
their execution of employment and noncompetition agreements
with NCLP, which Principals and employees are listed on
Schedule 1.3(b). Accruals on the first $10.0 million of
Contingent Payments to be paid hereunder shall be effected
from the Closing Date through December 31, 1997 at the rate of
6.16% per annum compounded annually at each calendar year-end.
Accruals shall continue to be effected on the unpaid portion
of the $10.0 million at the rate of 6.54% per annum compounded
annually at each calendar year-end from and after January 1,
1998 and until all such $10.0 million has been paid. All such
accruals shall be paid at the time of payment of, and to the
recipient of, the Contingent Payment in respect of which such
accruals have been effected (with no such accruals to be
payable in respect of any Contingent Payment or portion
thereof which does not become payable). Payments of accruals,
if any, shall be in addition to and not included in the $10.0
million of Contingent Payments described in this Section
1.3(b).
(c) Following payment of an aggregate of $10.0
million in Contingent Payments, the next $5.0 million of such
payments shall be paid as follows: (i) 15% shall be paid to
Seller and (ii) the remaining 85% shall be allocated by
-22-
3131867.30
NCLP's President and Chief Executive Officer among those
Principals and employees listed on Schedule 1.3(b) in the
manner described in Section 1.3(b) above, in consideration for
their execution of employment and noncompetition agreements
with NCLP, but no accruals shall be effected on any unpaid
portions of such $5.0 million.
(d) Following payment of an aggregate of $15.0
million in Contingent Payments, the remaining such payments,
if any, shall be allocated by NCLP's President and Chief
Executive Officer among employees of NCLP listed on Schedule
1.3(b) in consideration for their execution of employment and
noncompetition agreements with NCLP, but no accruals shall be
effected on any such payments.
(e) In the event of forfeiture (pursuant to
arrangements made by NCLP's President and Chief Executive
Officer) by any employee of NCLP of any Contingent Payment
allocated to him or her pursuant to this Section 1.3, such
Contingent Payment shall be reallocated by NCLP's President
and Chief Executive Officer among NCLP employees.
(f) Reference is made to Buyer's right to set-off
against Contingent Payments any claims made by any Buyer
Indemnified Party as described in Section 9.4. Any such
set-off to a Contingent Payment shall be included in the
amount of the Contingent Payment such that the amount of the
Contingent Payment made pursuant to Section 1.3 is not deemed
reduced by any set-off.
(g) In calculating the Contingent Payment in respect
of 1997 and any additional payment for 1999, NCLP Qualifying
Revenue for 1997 shall be deemed to include NCLP Qualifying
Revenue for the Stub Period.
ARTICLE II
CLOSING
2.1 The closing of the initial transactions contemplated by this
Agreement (the "Closing") will take place at 10:00 a.m. on December 9, 1996 at
the offices of Ropes & ▇▇▇▇, One International Place, Boston, Massachusetts, or
at such other time and place as the parties hereto may mutually agree upon (the
"Closing Date"). At the Closing, the following shall occur (and shall be deemed
to occur simultaneously):
(a) Securities GP shall deliver to Buyer instruments
reflecting the transfer to Buyer of the GP Interest as
provided in Section 1.1(a);
-23-
3131867.30
(b) The Principals shall deliver to Buyer
certificates representing the AEW II Stock and the Hotel Stock
accompanied by duly executed stock powers reflecting the
transfer of such stock to Buyer as provided in Section 1.1(a);
(c) Seller shall deliver to Buyer any contribution,
assignment and other instruments relating to the Asset
Contribution as Buyer and its counsel reasonably request to
effect the contribution and transfer of the Assets of Seller
to Buyer as provided in Sections 1.1(a) and 1.1(c);
(d) Seller Inc. shall deliver to Buyer instruments
reflecting the transfer to Buyer of its Investment Contracts
as provided in Section 1.1(a) and 1.1(c);
(e) Buyer shall deliver to Seller such instruments as
Seller and its counsel reasonably request to effect the
assumption by Buyer of the Assumed Liabilities as provided in
Section 1.1(a) and 1.1(c);
(f) Buyer shall deliver to the Selling Entities and
Principals designated on Schedule 1.2(a) as receiving LP Units
certificates representing the Purchase Price LP Units as
provided in Section 1.2(a) and such Selling Entities and
Principals shall be duly admitted to Buyer as limited partners
holding, in the aggregate, the Purchase Price LP Units;
(g) Buyer shall deliver to the Selling Entities and
Principals, in accordance with Schedule 1.2(a), (i) the Cash
Consideration by wire transfer of immediately available funds
pursuant to instructions provided by Seller to Buyer not later
than two days prior to Closing and (ii) the Note, all as
provided in Section 1.2(a);
(h) Buyer shall deliver any contribution, assignment
and other instruments as Seller and its counsel reasonably
request to evidence the contribution of Seller's Assets,
Seller Inc.'s Investment Contracts, the GP Interest, the AEW
II Stock, the Hotel Stock, the ▇▇▇▇▇▇ Stock and the ▇▇▇▇▇▇
Partnership Interests from Buyer to NCLP and the assumption of
the Assumed Liabilities by NCLP, all as described in Section
1.1(b) of this Agreement; and
(i) The Selling Entities and the Principals shall
deliver to Buyer, and Buyer shall deliver to the Selling
Entities and the Principals, the various certificates,
instruments and documents referred to in Article VII.
-24-
3131867.30
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF SELLING ENTITIES AND PRINCIPALS
The Selling Entities and the Principals hereby make the representations
and warranties set forth below in this Article III, jointly and severally, to
Buyer. Notwithstanding the foregoing, the liability of each Principal in respect
of the representations and warranties set forth in this Article shall be limited
to the lesser of 331/3% of the Principals' collective liability or $10.0
million.
3.1 ORGANIZATION; GENERAL PARTNER AND LIMITED PARTNERSHIP
AUTHORITY.
(a) Each of Seller and Seller Holdings is a Delaware
limited partnership duly formed, validly existing and in good
standing. Each of AEW II, AEW Hotel and Securities GP is a
Delaware corporation, duly organized, validly existing and in
good standing. Seller Inc. is a Massachusetts corporation,
duly organized, validly existing and in good standing. Each of
the Selling Entities has full power and authority to own or
lease and use its properties and assets, to carry on its
business as such business is now conducted, to execute and
deliver this Agreement, and to consummate the transactions
contemplated hereby.
(b) Each of the Selling Entities, Seller Designated
Affiliates and AEW Client Entities possesses all licenses,
franchises, permits and other rights necessary to conduct its
business as such business is now or proposed to be conducted,
except where failure to possess such licenses, franchises,
permits and other rights would not, individually or in the
aggregate, have a Material Adverse Effect. Each of the Selling
Entities, Seller Designated Affiliates and AEW Client Entities
is duly authorized to conduct business, validly existing and
in good standing under the laws of each jurisdiction in which
the nature of its business or the ownership of or leasing of
its properties requires such qualification except where the
failure to be so authorized, validly existing and in good
standing would not, individually or in the aggregate, have a
Material Adverse Effect.
3.2 CHARTER, BY-LAWS, AGREEMENTS OF LIMITED PARTNERSHIP AND MINUTES.
True, correct and complete copies of the respective certificates of
incorporation, certificates of limited partnership, limited partnership
agreements, limited liability company agreements, and by-laws of each of the
Selling Entities and the Seller Designated Affiliates and the minutes of
meetings of the board of directors and of the partners (or consents in lieu
thereof) for meetings through September 13, 1996 (excluding any portion thereof
which reflects deliberations as to the transactions contemplated hereby and
other than minutes of
-25-
3131867.30
meetings held after September 13, 1996, which shall have been provided to Buyer
prior to the Closing, and other than an amendment to Seller Inc.'s Articles of
Organization in substantially the form provided to Buyer and its counsel) of
each of the Selling Entities and the Seller Designated Affiliates have been
furnished to Buyer before the date hereof. There will have been no subsequent
amendments or other modifications (other than amendments and modifications
contemplated by this Agreement or to which Buyer has consented in writing or
which are not relevant to the transactions contemplated hereby) of such
documents or minutes before the Closing Date.
3.3 AUTHORITY.
(a) Each of the Selling Entities and the Principals
has full right, power and authority to execute, deliver and
perform this Agreement and the Related Agreements to which it
is a party, all proper actions of the partners and the board
of directors, and, as of the Closing Date, the Stockholders,
as the case may be, of the Selling Entities authorizing the
execution, delivery and performance hereof and thereof having
been taken. This Agreement has been duly executed and
delivered by the Selling Entities and the Principals and,
subject to Stockholder approval, constitutes, and the other
Related Agreements to which they will be a party when executed
and delivered, will be duly executed and delivered and,
subject to Stockholder approval, will constitute, valid and
legally binding obligations of the Selling Entities and
Principals enforceable in accordance with their respective
terms, except as the enforceability thereof may be subject to
or limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to or affecting the rights
of creditors generally, equitable principles and judicial
limitations upon the enforcement of certain types of
obligations. There are no proceedings or actions pending or,
except as contemplated in this Agreement or the Related
Agreements, contemplated to dissolve the Selling Entities.
(b) Each of the Employment Agreements has been
executed and delivered by each employee to be party thereto
pursuant to Section 7.2(d) as of the date hereof, will be in
full force and effect as of the Closing, and will constitute
valid and legally binding obligations of each such employee,
enforceable in accordance with its terms, except as the
enforceability thereof may be subject to or limited by
bankruptcy, insolvency, reorganization, moratorium or similar
laws relating to or affecting the rights of creditors
generally, equitable principles and judicial limitations upon
the enforcement of certain types of obligations.
-26-
3131867.30
3.4 NO VIOLATION.
(a) Neither the execution and delivery by the Selling
Entities and the Principals of this Agreement or of any
Related Agreement to which the Selling Entities and the
Principals may be a party, nor consummation of the
transactions herein or therein contemplated, nor compliance
with the terms, conditions and provisions hereof or thereof
will conflict with or violate any provision of law or the
certificate of limited partnership, certificate of
incorporation, certificate of formation, limited partnership
agreement, limited liability company agreement or by-laws of
the Selling Entities, Seller Designated Affiliates or AEW
Client Entities, or result in a violation or default in any
provision of any regulation, order, writ, injunction or decree
of any court or governmental agency or authority, agreement or
instrument (including Investment Contracts) to which any of
the Selling Entities, Principals, Seller Designated Affiliates
or AEW Client Entities is a party or by which any of them is
bound or to which any of them is subject, or constitute a
default thereunder or result in the creation or imposition of
any Lien upon the Assets of Seller, Seller Inc.'s Investment
Contracts, the AEW II Stock, the Hotel Stock or the GP
Interest pursuant to the terms of any such agreement or
instrument (except as contemplated by this Agreement or where
such violation or default would not have, individually or in
the aggregate, a Material Adverse Effect), assuming that all
of the consents contemplated by Sections 6.1 and 6.2 have been
received and provided that the actions contemplated by Article
VII are taken and the provisions of 15 U.S.C. Section 18(a)
and (b) (the "HSR Act") shall have been complied with pursuant
to Section 7.1(b). The parties recognize that consummation of
the transaction contemplated herein will result in the
automatic termination of Seller's investment advisory
agreements relating to its individual accounts and to the
Funds and that new agreements may only be entered into by NCLP
in accordance with the procedures established by the
Investment Company Act, the Investment Advisers Act and the
regulations promulgated thereunder.
(b) Neither the execution and delivery by any
Stockholder of any Related Agreement, nor the consummation of
the transactions therein contemplated, nor compliance with the
terms, conditions and provisions thereof will conflict with or
violate any provision of law or of the statutes of
incorporation, certificate of incorporation or articles of
organization and by-laws of such party, or result in a
violation or default in any provision of any regulation,
order, writ, injunction or decree of any court or governmental
agency or authority or of any agreement or to which any such
party is subject, or constitute a default thereunder or result
in the creation or imposition of any Lien upon the Assets of
such party pursuant to the terms of any such agreement or
instrument (except as contemplated by this Agreement) assuming
that all of the consents contemplated by Sections 6.1 and 6.2
have been received and provided that the actions contemplated
by
-27-
3131867.30
Article VII are taken and the provisions of the HSR Act shall
have been complied with pursuant to Section 7.1(b).
3.5 APPROVALS. No approval, authorization, order, license or consent of
or registration, qualification or filing with any governmental authority and no
approval or consent by any other person or entity is required in connection with
the execution, delivery or performance by the Selling Entities, or any Principal
as the case may be, of this Agreement and the Related Agreements, other than as
contemplated by Article VII.
3.6 FINANCIAL STATEMENTS.
(a) Seller has delivered to Buyer audited
consolidated balance sheets of each of Seller, Seller Inc. and
Securities GP as at the close of its fiscal years ended
October 31, 1993 through October 31, 1995, together with the
related consolidated statements of operations, changes in
stockholders' equity and cash flows for the fiscal years then
ended, certified by Coopers & ▇▇▇▇▇▇▇ L.L.P., all of which
financial statements (including the notes thereto) for such
periods are collectively called the "Audited Financials" and
are attached as Schedule 3.6(a).
(b) Seller has delivered to Buyer (i) for each of
Seller, Seller Inc. and Securities GP, an unaudited
consolidated balance sheet as of July 31, 1996 and the related
consolidated statements of operations for the nine months then
ended and (ii) for AEW II, an unaudited consolidated balance
sheet as of June 30, 1996 and the related consolidated
statements of operations, changes in stockholders' equity and
cash flows for the period ended June 30, 1996 since inception
on May 8, 1996, and Seller will deliver to Buyer prior to the
Closing for each such entity an unaudited consolidated balance
sheet as of the last day of each month and each quarter after
the date hereof and before the Closing Date, together with
unaudited consolidated statements of operations for the post-
October 31, 1995 period (or post June 30, 1996 period in the
case of AEW II) ending on each such date and, in the case of
the financial statements for the month immediately preceding
the month in which the Closing occurs, for the corresponding
period for the prior year, to the extent available, certified
by the principal financial and accounting officer of the
respective Selling Entity, which balance sheet, financial
statements (including the notes thereto) and unaudited
financial statements of Seller, Seller Inc., Securities GP and
AEW II are referred to collectively as the"Unaudited
Financials" and are or prior to the Closing will be attached
as Schedule 3.6(b).
(c) Seller has delivered to Buyer unaudited balance
sheets of each of AEW Securities, Commonwealth, AEW Hotel
Investment Limited Partnership and AEW Hotel Investment
Corporation as at the close of its fiscal years ended
-28-
3131867.30
October 31, 1993 through October 31, 1995, together with the
related statements of operations, changes in stockholders'
equity (or partners' capital, as applicable) and cash flows
for the fiscal years then ended, to the extent available,
certified by Seller's principal financial and accounting
officer, all of which financial statements (including the
notes thereto) for such periods are collectively called the
"AEW Subsidiary Financials" and are attached as Schedule
3.6(c). The Audited Financials, the Unaudited Financials and
the AEW Subsidiary Financials are hereinafter sometimes
collectively referred to as the "Seller Financial Statements."
(d) The Seller Financial Statements, when delivered
in accordance with this Agreement, will fairly present the
financial position, results of operations, changes in
stockholders' equity (or partners' capital, as applicable) and
cash flows of Seller, Seller Inc., AEW II, Securities GP, AEW
Securities, Commonwealth, AEW Hotel Investment Limited
Partnership and AEW Hotel Investment Corporation, as the case
may be, on the dates thereof and for the fiscal periods then
ended, in accordance with GAAP (except for normal recurring
year-end accruals, which are not individually or in the
aggregate material, omitted from the AEW Subsidiary Financials
and the Unaudited Financials) which shall have been applied on
a basis consistent with prior periods. The Seller Financial
Statements reflect or provide for claims against and debts and
liabilities of Seller, Seller Inc., AEW II, Securities GP, AEW
Securities, Commonwealth, AEW Hotel Investment Limited
Partnership and AEW Hotel Investment Corporation, as the case
may be, absolute, accrued, contingent or otherwise, as at the
dates thereof to the extent so required to be reflected or
provided in accordance with GAAP.
3.7 NO ADVERSE CHANGE. Since October 31, 1995, (a) there has been no
Material Adverse Effect; (b) there have been no distributions paid or declared
to the partners or stockholders of any Selling Entity except as reflected in the
Seller Financial Statements or disclosed to Buyer in Schedule 3.7(b); (c) none
of the Selling Entities or Seller Designated Affiliates has issued or sold any
interest, option, note or other security of any Selling Entities or Seller
Designated Affiliate, except as indicated on Schedule 3.7(c); and (d) the
physical properties owned or leased by any Selling Entities or Seller Designated
Affiliates have not suffered any destruction or damage, regardless of whether or
not the loss suffered was insured, that could have, individually or in the
aggregate, a Material Adverse Effect.
3.8 SUBSIDIARIES.
(a) Seller owns a 33% membership interest in AEW
Mexico Corporation, L.L.C.; a 50% membership interest in
Commonwealth; a 99% limited partnership interest in AEW Hotel
Investment Limited Partnership, which in turn owns a 1%
general partnership interest in Harbor Hospitality; and
-29-
3131867.30
1,000 general partner units in Partners II Employee Holdings,
L.P., which in turn owns a 99% limited partnership interest in
Partners II Holdings, L.P. Seller Inc. owns a 99.97% general
partnership interest in Seller Holdings. Seller Holdings owns
an 87% general partnership interest in Seller as of the date
hereof and a 99% general partnership interest in Seller as of
the Closing Date. The Principals collectively own 2,176,127
shares of capital stock of Seller Inc., which shares represent
80% of the issued and outstanding shares of capital stock of
such corporation; a .03% limited partnership interest in
Seller Holdings; 300 shares of capital stock of Securities GP,
which shares represent all of the issued and outstanding
shares of capital stock of such corporation, which corporation
in turn owns a 1% general partnership interest in AEW
Securities; 300 shares of capital stock of AEW Hotel
Investment Corporation, which shares represent all of the
issued and outstanding shares of capital stock of such
corporation, which corporation in turn owns a 1% general
partnership interest in AEW Hotel Investment Limited
Partnership; and 3,000 shares of capital stock of AEW II,
which shares represent all of the issued and outstanding
shares of capital stock of such corporation, which corporation
in turn owns a 1% general partnership interest in Partners II
Holdings, L.P., which in turn owns a 10.714% general
partnership interest in AEW II, L.P., which in turn owns a
9.722% general partnership interest in AEW Partners II, L.P.
(b) Except for those ownership interests by the
Selling Entities listed above in Section 3.8(a), neither the
Selling Entities nor the Seller Designated Affiliates own,
directly or indirectly, any of the capital stock of or any
other equity interest in any corporation, association, trust
or similar entity, any interest in the equity of any
partnership, or similar entity, any share in any joint
venture, or any other equity or proprietary interest in any
entity or enterprise, however organized and however such
interest may be denominated or evidenced, except for capital
stock and other equity interests listed on Schedule 3.8, all
of which are held solely for investment purposes. Furthermore,
neither the Selling Entities nor the Seller Designated
Affiliates have any rights, options, subscriptions, warrants
or other agreements of any kind to purchase or otherwise to
receive or be issued any shares of such capital stock, or
securities or obligations of any kind convertible into shares
of such capital stock, existing in favor of any Person.
3.9 TAXES.
(a) All federal Tax Returns required by applicable
law to be filed by Seller, Seller Inc. and the Seller
Designated Affiliates through the date hereof have been timely
filed, or requests for extensions have been timely filed,
granted, and have not yet expired. Except as would not,
individually or in the
-30-
3131867.30
aggregate, have a Material Adverse Effect, (i) all non-federal
Tax Returns required by applicable law to be filed by Seller,
Seller Inc. and the Seller Designated Affiliates and (ii) all
Tax Returns required by applicable law to be filed by each AEW
Client Entity through the date hereof have been timely filed,
or requests for extensions have been timely filed, granted and
have not yet expired. Each of the federal Tax Returns filed by
either Seller, Seller Inc. or any Seller Designated Affiliate
in cases where any such person is required to pay a Tax
liability directly, correctly and accurately reflects the
amount of its Tax liability and any other material information
required to be set forth on such Tax Return, and, in all other
cases, correctly and accurately reflects such person's income,
gains, losses, deductions and credits for the relevant fiscal
year (or other period) and any other material information
required to be set forth on such Tax Return. Except as would
not have, individually or in the aggregate, a Material Adverse
Effect, (i) each of the non-federal Tax Returns filed by
either Seller, Seller Inc. or any Seller Designated Affiliate
and (ii) each of the Tax Returns filed by any AEW Client
Entity, in cases where any such person is required to pay a
Tax liability, directly, correctly and accurately reflects the
amount of its Tax liability and any other material information
required to be set forth on such Tax Return, and, in all other
cases, correctly and accurately reflects such person's income,
gains, losses, deductions and credits for the relevant fiscal
year (or other period) and any other material information
required to be set forth on such Tax Return. All Taxes shown
on filed Tax Returns, or to be shown on Tax Returns that have
been extended but not yet filed, have been paid. In the case
of Taxes required to be paid directly by Seller, Seller Inc.,
any Seller Designated Affiliate or any AEW Client Entity for
any period ending on or prior to the date hereof for which no
Tax Return is yet due, all such Taxes have been adequately
reserved for on the books of Seller, Seller Inc. or the
respective Seller Designated Affiliate or AEW Client Entity.
Except with respect to those matters set forth on Schedule
3.9(a), no audit examination of any Tax Return of Seller,
Seller Inc., any Seller Designated Affiliate or any AEW Client
Entity is in progress and neither Seller, Seller Inc. nor any
Seller Designated Affiliate nor any AEW Client Entity nor any
partner or stockholder of any of them has been notified by any
Tax authority that any such audit examination is contemplated.
Except with respect to those matters set forth on Schedule
3.9(a), there is no Tax deficiency or claim for additional
federal Taxes or interest thereon or penalties in connection
therewith asserted against Seller, Seller Inc. or any Seller
Designated Affiliate which claim would have a Material Adverse
Effect. Except with respect to those matters set forth on
Schedule 3.9(a) or as would not, individually or in the
aggregate, have a Material Adverse Effect, there is no Tax
deficiency or claim for additional non-federal Taxes or
interest thereon or penalties in connection therewith asserted
against Seller, Seller Inc. or any Seller Designated
Affiliate. Except with respect to those matters set forth on
Schedule 3.9(a) or as would not, individually or in the
aggregate, have a Material
-31-
3131867.30
Adverse Effect, there is no Tax deficiency or claim for
additional Taxes or interest thereon or penalties in
connection therewith asserted against any AEW Client Entity.
The Tax Returns filed by Seller, Seller Inc., each Seller
Designated Affiliate or any AEW Client Entity to date have not
been audited. No claim has ever been made by an authority in a
jurisdiction where Seller, Seller Inc., any Seller Designated
Affiliate or any AEW Client Entity does not file reports or
returns that any such person not filing reports or returns in
that jurisdiction is or may be, or its partners are or may be,
subject to taxation by that jurisdiction which has not yet
been resolved, or if resolved and any amount was determined to
be payable, in respect of which such amount has not yet been
paid. There are no Liens on the GP Interest, the AEW II Stock,
the Hotel Stock or any of the Assets of Seller, Seller Inc.,
any Seller Designated Affiliate or any AEW Client Entity that
arose in connection with any failure to pay Taxes. Neither
Seller, Seller Inc. nor any Seller Designated Affiliate nor
any AEW Client Entity nor any partner or shareholder of any of
them on behalf of such entity has ever, in the case of Seller,
Seller Inc., any Seller Designated Affiliate or any AEW Client
Entity, entered into a closing agreement or, in the case of a
partner of any such Selling Entity or Seller Designated
Affiliate that is a partnership, entered into a closing
agreement in respect of a deficiency or other matter arising
in connection with ownership of a partnership interest in any
such entity pursuant to Section 7121 of the Code or any
similar provision of state law. Except as set forth on
Schedule 3.9(a), neither Seller, Seller Inc. nor any Seller
Designated Affiliate nor any AEW Client Entity nor any partner
or shareholder of any of them on behalf of such entity is a
party to any tax allocation or tax sharing agreements. Except
as set forth on Schedule 3.9(a), neither Seller, Seller Inc.
nor any Seller Designated Affiliate nor any AEW Client Entity
nor any partner or shareholder of any of them on behalf of
such entity has agreed to, or is required to, make any
adjustments under Section 481(a) of the Code by reason of a
change in accounting method or otherwise.
(b) Neither Seller, Seller Inc. nor any Seller
Designated Affiliate, nor any AEW Client Entity nor any
partner or shareholder of Seller, Seller Inc., or any such
Seller Designated Affiliate or any AEW Client Entity (in the
case of any such partner or shareholder, acting on behalf of
Seller, Seller Inc., such Seller Designated Affiliate or such
AEW Client Entity) has executed an extension or waiver, that
is currently in effect, of any statute of limitations in
respect of the assessment or collection of any Tax due or in
respect of any adjustment to any Tax Return.
(c) Adequate provision for any Taxes of Seller,
Seller Inc., each Seller Designated Affiliate and each AEW
Client Entity due or to become due, in respect of its assets,
properties, businesses and operations (i) for any period or
periods through and including October 31, 1995, has been made
and is reflected
-32-
3131867.30
in the October 31, 1995 financial statements, and (ii) for any
subsequent periods ending on or prior to the date hereof, has
been made and is reflected on the books of the relevant
entity.
(d) Except as set forth on Schedule 3.9(d), deferred
Taxes of Seller, Seller Inc., each Seller Designated Affiliate
and each AEW Client Entity have been provided for in
accordance with GAAP, except for such failures to so provide
that would not, individually or in the aggregate, have a
Material Adverse Effect.
(e) Each Seller Designated Affiliate or AEW Client
Entity that purports to be a corporation for federal and state
income tax purposes:
(i) has not filed a consent under Code
section 341(f) concerning collapsible corporations;
(ii) has not made any payments, incurred an
obligation to make any payments or become party to
any agreement that under certain circumstances could
obligate it to make any payments that will not be
deductible under Code section 280G;
(iii) has not (A) been a member of an
affiliated group filing a consolidated Tax Return or
(B) incurred any liability for the Taxes of any
Person under Treasury regulation ss.1.1502-6 (or any
similar provision of state, local or foreign law) as
a transferee or successor, by contract or otherwise;
and
(iv) if intended to be an S Corporation, has
properly elected to be taxed as an S Corporation
under Subchapter S of the Code, has properly been
taxed as an S Corporation since its filing of an
election to be treated as such and has no net
unrealized built-in gains, as defined in Section
1374(d)(1) of the Code or under any similar
provisions of state or local law.
(f) Seller Inc. has properly elected to be taxed as
an S Corporation under Subchapter S of the Code and has
properly been taxed as an S Corporation since its filing of
an election to be treated as such.
(g) Seller, each Seller Designated Affiliate and each
AEW Client Entity that purports to be a partnership for
federal income tax purposes is, and at all times since its
formation has been, and immediately after the Closing will be,
properly classified for federal and state income tax purposes
as a partnership
-33-
3131867.30
that is not publicly traded (within the meaning of Section
7704 of the Code) (and not as a publicly traded partnership,
association or corporation).
(h) No Seller Designated Affiliate or AEW Client
Entity has elected or has represented to be classified as a
real estate investment trust (a "REIT") for federal or state
income tax purposes within the meaning of Code Section 856 or
similar provision of state law.
(i) Each other Seller Designated Affiliate or AEW
Client Entity that purports to be a pass-through entity for
federal and state income tax purposes is, and at all times
since its formation has been, and immediately after the
Closing will be, properly classified for federal and state
income tax purposes as a pass-through entity.
(j) Except as would not have a Material Adverse
Effect or except as arises from an action of NCLP after
Closing (other than the carrying out of allocation provisions
in place prior to Closing), (i) no Client has a valid claim
against any Selling Entity or Seller Designated Affiliate
arising from the failure of any Seller Designated Affiliate or
AEW Client Entity that is intended to satisfy the requirements
of Code Section 514(c)(9) to satisfy such requirements at any
time since its inception, nor (ii) will any Client have any
such claim against Buyer, NCLP or any Selling Entity
immediately after Closing.
(k) To Seller's Knowledge and except as would not
have a Material Adverse Effect, no Client has a valid claim
against any Selling Entity or any Seller Designated Affiliate
as a result of the failure of any Tax Return provided by
Seller, Seller Inc., any Seller Designated Affiliate or any
AEW Client Entity to a tax-exempt partner or to a pass-through
partner with tax-exempt partners to correctly identify those
items of income that constitute "unrelated business taxable
income" as defined in Section 512 of the Code in the hands of
such partner.
(l) Schedule 3.9(l) correctly identifies as of the
close of the most recent fiscal year ended prior to the date
hereof, with respect to Seller, Seller Inc., each Seller
Designated Affiliate, Partners I and Partners II, each asset
that has, or at the time of contribution to Seller, Seller
Inc., or any Seller Designated Affiliate had, built-in gain or
loss, the identity of the partner who contributed such asset,
and the amount of income, gain, loss or deduction remaining
that would be recognized by such partner if the asset were
sold at their carrying values at Closing.
-34-
3131867.30
(m) Schedule 3.9(m) correctly identifies, with
respect to Seller, Seller Inc., each Seller Designated
Affiliate, Partners I and Partners II, the tax basis of each
asset owned respectively by such entities.
(n) Except as identified on Schedule 3.9(n), there
will be no partnership terminations under Section 708(b)(1)(B)
as a result of the transactions contemplated by this
Agreement.
(o) Except as set forth on Schedule 3.9(o), neither
Seller, Seller Inc., nor any Seller Designated Affiliate nor
any AEW Client Entity (i) files or is required to file foreign
Tax Returns or (ii) has any income from sources outside the
United States.
(p) The aggregate basis of Seller on the Closing Date
in AEW Hotel Investment Limited Partnership will be
approximately $328,000.
(q) To the actual knowledge of the executive officers
of Seller and Seller, Inc., the transactions contemplated by
this Agreement will not cause the business of Seller or of any
Seller Designated Affiliates to be subject to any additional
Tax on operations (other than increased income taxes, if any,
resulting from increased revenue, taxes resulting from
treatment of AEW II, AEW Hotel or any entity formed to hold
the GP Interest as a C Corporation from and after the Closing
or tax on goodwill resulting from the transactions
contemplated by this Agreement).
3.10 INTERESTED PARTIES. Except for business expenses incurred in the
ordinary course of business, no current or former officer, employee, director,
stockholder or partner of any of the Selling Entities, except as set forth on
Schedule 3.10, has any loan (except participant loans under Seller Employee
Benefit Plans as permitted by applicable law) or other obligation outstanding to
or from any of the Selling Entities, or for which any of the Selling Entities is
or may be liable under a guaranty or otherwise. Except for such interests set
forth on Schedule 3.10 that would not, individually or in the aggregate, have a
Material Adverse Effect, no Principal or to the Knowledge of Seller no officer
or director of any Selling Entity has any interest in any firm, person or entity
(other than as an officer, director, stockholder or partner) with which Seller
has entered into any contract or lease, or with which Seller does business and
which would influence that person in doing business with Seller. Except as set
forth on Schedule 3.10, no officer or director of any Selling Entity or any
Principal has any interest, directly or indirectly, in any firm, person or
entity established for the benefit of any client or clients of Seller or any
Seller Designated Affiliates. On or before the Closing Date, Seller shall have
delivered to Buyer Schedule 3.10(a) setting forth for each director and officer
of each Selling Entity who is a party to an employment agreement with NCLP and
for each Principal, any interest, other than an interest of less than 5% in a
publicly traded company, held by such person, directly or indirectly, in real
estate properties
-35-
3131867.30
(excluding any personal residences), projects or ventures held or managed,
directly or indirectly, by any Selling Entity or Seller Designated Affiliate or
by any firm, person or entity competitive therewith, whether owned or held by
him alone or with others.
3.11 TITLE TO ASSETS; PROPERTY.
(a) At the Closing, each of Seller and Seller Inc.
shall have good and sufficient title to, or valid and
subsisting leasehold interests in, all of its Assets, except
such assets as have been disposed of in the ordinary course of
the business consistent with past practice, free and clear of
any Liens, except for (i) such minor imperfections of title,
or insignificant Liens, as do not, individually or in the
aggregate, have a Material Adverse Effect, or materially
interfere with the present uses of such Assets, (ii) such
Liens arising by operation of law which do not, individually
or in the aggregate, have a Material Adverse Effect, and (iii)
the Liens listed on Schedule 3.11(a). Assets of Seller shall
include sufficient cash, cash equivalents, accounts receivable
and prepaid expenses (x) to satisfy the AEW Working Capital
Requirement and (y) to satisfy Seller's share of the funding
of the Restructuring Reserve. At the Closing, the Principals
shall collectively have good and sufficient title to the AEW
II Stock and the Hotel Stock and Seller GP shall have good and
sufficient title to the GP Interest, in each case free and
clear of any Liens. Without regard to any representation as to
the title or transferability of the following assets, the
Assets of Seller, Seller Inc.'s Investment Contracts, the AEW
II Stock, the Hotel Stock and the GP Interest are all the
assets necessary to conduct Seller's business, except as
contemplated by Section 6.10(g).
(b) All of Seller's personal property is in good
working order and repair, except where failure to maintain
Seller's personal property in good working order and repair
would not, individually or in the aggregate, have a Material
Adverse Effect. Those Assets of Seller or of any pass-through
entity in which Seller holds a direct or indirect interest
which are real estate or leasehold interests in or options on
real estate are listed on Schedule 3.11(b). Seller holds its
leased real and personal properties that are material to the
operation of its business under valid and binding leases, each
such lease is effective in accordance with its respective
terms, and there is not under any such lease any existing
default or any event which with notice or lapse of time or
both would become a default with respect to Seller or, to the
Knowledge of Seller, with respect to any other party thereto,
except where such default or such event would not,
individually or in the aggregate, have a Material Adverse
Effect.
(c) Schedule 3.11(c) sets forth all trademarks, trade
names, service marks and copyrights (whether or not such
trademarks, trade names, service marks and copyrights are
registered), and all pending applications therefor,
-36-
3131867.30
owned by Seller or in which Seller has any interest, which are
material to its business. Except as would not, individually or
in the aggregate, have a Material Adverse Effect, each of
Seller and the Seller Designated Affiliates has, or has the
right to use, and after consummation of the transactions
contemplated hereby, NCLP and its subsidiaries will have, or
have the right to use, free and clear of any claims of others,
all franchises, permits, licenses, trademarks, service marks
(whether registered or unregistered), trademark applications,
service ▇▇▇▇ applications, trade names, copyrights, trade
secrets, designs, ideas and other proprietary rights necessary
to own and operate their respective properties and to carry on
their respective business as currently conducted. Seller owns,
and after consummation of the transaction contemplated hereby
NCLP will continue to own, the right to the "▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
& Waltch" name. To the Knowledge of Seller and except as would
not, individually or in the aggregate, have a Material Adverse
Effect, no Selling Entity nor any Seller Designated Affiliate
has infringed, misappropriated or violated any valid
trademark, trade name, copyright, trade secret or other
intellectual property rights or contractual relationships of
others or received any notice, claim or protest respecting any
such infringements or violations. Neither Seller nor any
Seller Designated Affiliate has made any payment to indemnify
any Person for any such infringements, misappropriations or
violations. There is no pending or threatened claim asserted
in writing by any Selling Entities or any Seller Designated
Affiliate against others for infringement or misappropriation
of any patent, trademark, trade name, service ▇▇▇▇ or
copyright owned by any Selling Entities or any Seller
Designated Affiliate.
(d) To the Knowledge of Seller and except as would
not, individually or in the aggregate, have a Material Adverse
Effect, each of the Selling Entities and the Seller Designated
Affiliates owns or licenses all computer software developed or
currently used by it that is material to the conduct of its
business and has the right to use such software, subject to
compliance with applicable licenses, without infringing upon
the intellectual property rights (including trade secrets
rights) of the third party which has licensed the same to the
applicable Selling Entity or Seller Designated Affiliate.
(e) Seller Inc. holds no assets, other than its
Investment Contracts and a 99.97% general partnership interest
in Seller Holdings, necessary to conduct the business of
Seller as currently conducted. Seller Holdings holds no
assets, other than its 87% general partnership interest in
Seller, necessary to conduct the business of Seller as
currently conducted. Except as set forth on Schedule 3.11(e),
Securities GP holds no assets, other than its general
partnership interest in AEW Securities, necessary to conduct
the business of Seller as currently conducted.
-37-
3131867.30
3.12 INSURANCE. Each insurance policy that is maintained by Seller or
any Seller Designated Affiliate or for the benefit of Seller or any Seller
Designated Affiliate, with respect to their businesses or properties or upon the
life of any person employed by Seller (including with respect to officers and
employees of the Selling Entities who serve as general partners, trustees or
officers or directors of corporations holding title to Clients' investments) is
set forth on Schedule 3.12 showing the amount of coverage under each such
policy. Schedule 3.12 also sets forth claims made during the five years prior to
the date hereof under each errors and omissions policy listed on such schedule
and, to the extent such claims exceed $500,000, under each other policy listed
on such schedule. Seller is not required by virtue of any Investment Contract or
otherwise to maintain any insurance coverage other than those listed on Schedule
3.12 or any coverage amount in excess of that listed.
3.13 OTHER MATERIAL CONTRACTS.
(a) All contracts (other than the Investment
Contracts subject to the representations and warranties set
forth in Section 3.19(a)) to which any of the Selling Entities
are a party or by which any of the Selling Entities or Seller
Designated Affiliates is bound and that are material to the
business of Seller or any Selling Entities or Seller
Designated Affiliates are listed on Schedule 3.13, and all of
such contracts are valid and effective in accordance with
their respective terms, except as would not, individually or
in the aggregate, have a Material Adverse Effect.
(b) Except as listed on Schedule 3.13, no Selling
Entities or Seller Designated Affiliates are a party to any
loan agreement or bank credit agreement in respect of
indebtedness for borrowed money.
(c) Neither any Selling Entity nor any Seller
Designated Affiliate is in default under (nor are any of the
Selling Entities aware of any fact or event which with the
lapse of time or the giving of notice or both would constitute
a default under) any contract made or obligation owed by it
except for defaults which would not, individually or in the
aggregate, have a Material Adverse Effect.
(d) Neither any Selling Entity nor any Seller
Designated Affiliate has given a power of attorney to any
person which is presently outstanding or in force for any
purpose whatsoever.
(e) Except for the Terminable Contracts for which the
parties' consents are to be obtained pursuant to Article VII
and for the Investment Contracts for which Client Consents are
to be obtained pursuant to Sections 6.1 and 6.2, no contract
to which any of the Seller Designated Affiliates is a party
requires
-38-
3131867.30
consent to assignment, the failure of which to receive would
have, individually or in the aggregate, a Material Adverse
Effect.
3.14 BANK ACCOUNTS AND MONEY MARKET FUNDS. Set forth on Schedule 3.14
is the name and location of each bank and money market fund in which Seller or
any of the Seller Designated Affiliates has an account or accounts or safe
deposit boxes holding funds or assets of any of the Selling Entities or Seller
Designated Affiliates, the name and number of each account or box, the names of
persons authorized to draw thereon or having access thereto, and the balance of
each account and the contents of each box as of the date indicated thereon.
3.15 LITIGATION; NO PRACTICES IN VIOLATION OF LAW. Except as set
forth on Schedule 3.15,
(a) There are no legal, administrative or arbitration
actions, suits, proceedings or investigations of any kind
pending, or, to Seller's Knowledge, threatened before any
court, commission, agency or other administrative authority by
or against any Selling Entity or Seller Designated Affiliate
affecting Seller's or any Seller Designated Affiliate's
businesses or properties, the Assets of Seller, Seller Inc.'s
Investment Contracts, the AEW II Stock, the Hotel Stock or the
GP Interest. Neither Seller, any Seller Designated Affiliate
or any Principal, nor, to Seller's Knowledge, any officer,
director, partner or employee of Seller or any Seller
Designated Affiliate, is a party to or the subject of any
order, judgment or decree (other than exemptive orders)
relating to its business with or by any federal, state, local
or foreign regulatory authority.
There are no actions, suits or proceedings pending
or, to Seller's Knowledge, threatened before any court,
commission, agency or other administrative authority by or
against any Selling Entities, any Seller Designated Affiliate
or any partner or stockholder of any of them which, if
adversely determined, would adversely affect the acquisition
of assets contemplated hereby by Buyer or which would restrain
or enjoin the consummation of the transactions contemplated by
this Agreement or the Related Agreements or declare unlawful
the transactions or events contemplated by this Agreement or
cause such transactions to be rescinded. There are no
judgments, injunctions, orders or other judicial or
administrative mandates outstanding against or affecting any
Selling Entities or any Seller Designated Affiliate which
restrain or enjoin the consummation of the transactions
contemplated by this Agreement.
To Seller's Knowledge, there are no actions, suits or
proceedings pending or threatened before any court,
commission, agency or other
-39-
3131867.30
administrative authority by or against, and there are no
judgments, injunctions, orders or other judicial or
administrative mandates outstanding against, any employee of
any Selling Entity arising from such employee's service to any
AEW Client Entity.
(b) None of the Selling Entities or Seller Designated
Affiliates or Principals has engaged in or is now engaging in
any act, conspiracy or course of conduct in violation of any
applicable federal or state law governing business practice
which would result in a Material Adverse Effect, individually
or in the aggregate, nor has any Selling Entity, Seller
Designated Affiliate or Principal nor, to Seller's Knowledge,
any officer, director or employee of Seller or any Seller
Designated Affiliate, received any notice, claim or protest
that such person is now or has heretofore been so engaged.
3.16 BROKERS AND FINDERS. Except for Berkshire Capital Corporation, no
Selling Entity has employed any broker or finder or incurred any liability for
any financial advisory fees, brokerage fees, commissions or finder's fees, and
no broker or finder has acted, directly or indirectly, for any Selling Entity,
in connection with this Agreement or the transactions contemplated hereby. Such
fees as Seller may owe to Berkshire Capital Corporation shall be the sole
obligation of Seller.
3.17 EMPLOYEE BENEFIT PLANS.
(a) Schedule 3.17 lists all material Seller Employee
Benefit Plans. With respect to each such Seller Employee
Benefit Plan, Seller has delivered or made available to Buyer
true and correct copies of, where applicable, (i) any plans,
related trust documents, insurance contracts and any
amendments thereto; (ii) the most recent summary plan
descriptions and the two most recently filed annual reports;
(iii) the most recent actuarial valuation, summaries and
reports; and (iv) the most recent determination letter
received from the Internal Revenue Service and/or the most
recent Form 5300, with attachments, requesting a determination
letter. To the Knowledge of Seller, no event has occurred for
which, and there exists no condition or circumstances under
which, any Selling Entity or Seller Designated Affiliate, in
respect of any Seller Employee Benefit Plan, or any Seller
Employee Benefit Plan could be subject to any liability under
Section 502(a) of ERISA or Section 4975 of the Code except
where such liability would not, individually or in the
aggregate, have a Material Adverse Effect.
(b) Except as disclosed on Schedule 3.17, with
respect to each Seller Employee Benefit Plan, (i) except where
noncompliance would not, individually or in the aggregate,
have a Material Adverse Effect, Seller is and has been in
compliance in all respects with the terms of each Seller
Employee Benefit Plan
-40-
3131867.30
and with the requirements prescribed by all applicable
statutes, orders or governmental rules or regulations,
including ERISA and the Code and there exists no liability for
prior noncompliance; (ii) each Seller Employee Benefit Plan
intended to be qualified under Section 401(a) of the Code has
received a favorable determination letter from the Internal
Revenue Service with respect to such qualification; any
related trust has been determined to be exempt from taxation
under Section 501(a) of the Code; and, to the Knowledge of
Seller, nothing has occurred since the date of such letter
that would adversely affect such qualification or exemption;
and (iii) except as would not, individually or in the
aggregate, have a Material Adverse Effect, there are no
actions, examinations or proceedings (other than routine
claims for benefits) pending or, to the Knowledge of Seller,
threatened, with respect to any such Seller Employee Benefit
Plan or against the assets of any such Seller Employee Benefit
Plan.
(c) Except as would not, individually or in the
aggregate, have a Material Adverse Effect, Seller has paid, or
in the case of any employee contribution, collected and
remitted all contributions, premiums and other payments
required to be paid or collected and remitted during the 1995
plan year for each Seller Employee Benefit Plan, and by the
Closing Date will have paid or collected and remitted all
contributions, premiums and other payments required to be made
or collected and remitted on or prior to the Closing Date to
any Seller Employee Benefit Plan during or for the 1996 plan
year. For purposes of this Section 3.17, "contributions,
premiums and other payments required to be made on or prior to
the Closing Date" shall include all employee contributions and
all employer matching contributions required to be made with
respect to such employee contributions made under any defined
contribution Seller Employee Benefit Plan during the 1996 plan
year and on or prior to the Closing Date, and all premium
payments under insured plans that are due and required to be
paid as of the Closing Date and all other amounts payable on
or prior to the Closing Date under any self-funded Seller
Employee Benefit Plan that provides that group health,
medical, life or disability benefits shall, except to the
extent reflected on the AEW Pro Forma Closing Balance Sheet,
be the sole responsibility of Seller.
(d) No Selling Entity or Seller Designated Affiliate
has any liability (contingent or otherwise) under Title IV of
ERISA.
(e) No Seller Employee Benefit Plan has ever been or
currently is a "multiemployer plan" (as defined in Section
4001(a)(3) of ERISA).
(f) Except as disclosed on Schedule 3.17 or as would
not, individually or in the aggregate, have a Material Adverse
Effect, (i) there are no unfunded
-41-
3131867.30
obligations under any Seller Employee Benefit Plan providing
benefits after termination of employment with respect to any
employee of Seller other than continuation of health coverage
as required by Section 4980B of the Code and Part 6 of
Subtitle B of Title I of ERISA or any applicable state laws,
and (ii) no Selling Entity or Seller Designated Affiliate has
made any other commitments to its employees or former
employees or their beneficiaries under which it is or would be
obligated to provide any retirement, death, change in control,
severance, health, or other welfare benefit or payment which,
as of the Closing Date, is not adequately funded through a
trust or other funding arrangement.
(g) Except as would not, individually or in the
aggregate, have a Material Adverse Effect, no Selling Entity
or Seller Designated Affiliate has taken any action with
respect to any Seller Employee Benefit Plan which would impair
the funded status of such Seller Employee Benefit Plan.
(h) Except as disclosed on Schedule 3.17, the
consummation of the transactions contemplated by this
Agreement will not obligate Seller to provide any current or
former officer, director, stockholder, partner or employee of
Seller, including, but not limited to, Continued Employees,
with severance pay, supplemental unemployment compensation or
any similar payment.
(i) With respect to Seller Employee Benefit Plans,
the transactions contemplated by this Agreement shall not
result in any action or the establishment of any relationship
prohibited by Sections 406 and 407 of ERISA (determined after
taking into account any applicable exemptions).
(j) Attached to Schedule 3.17 is a true, correct and
complete listing, as of the date hereof, of (i) all
participants in Seller's Deferred Compensation, Incentive
Compensation and Stock Appreciation Rights Plan together with
the number of units or rights held by each such participant in
such plans, (ii) all currently effective employment contracts
(other than agreements with NCLP) to which any of the Selling
Entities or Seller Designated Affiliates is a party, and (iii)
all currently effective severance arrangements or arrangements
for payments to employees based on a change of control to
which any of the Selling Entities or Seller Designated
Affiliates is a party.
3.18 FILINGS, ETC.
(a) Except as would not, individually or in the
aggregate, have a Material Adverse Effect, (i) since December
31, 1991, the Selling Entities and the Seller Designated
Affiliates have had and now have all permits, licenses,
certificates of authority, orders and approvals of, and have
made all filings, applications and registrations with,
federal, state or local governmental or
-42-
3131867.30
regulatory bodies, and self-regulatory bodies that are
required (including by the rules of any self-regulatory body)
in order to permit each of them to carry on its respective
business as presently conducted, and (ii) such permits,
licenses, certificates of authority, registrations, orders and
approvals are in full force and effect. Seller's conduct of
its business and Seller's acts or omissions in the course of
its activities on behalf of AEW Fund have not, since December
31, 1991, and currently do not, violate or infringe any
applicable federal, state or local law, statute, ordinance,
license, rule or regulation including those of the
self-regulatory bodies, except where such violation or
infringement would not, individually or in the aggregate, have
a Material Adverse Effect.
(b) Without limiting the foregoing, the Selling
Entities, the Seller Designated Affiliates and each of their
officers and employees that is or who are required to be
registered as an investment adviser, a broker-dealer, a
registered representative or a sales person with the SEC,
CFTC, the securities commission or any other commission of any
state or any self-regulatory body is duly registered as such
and such registration is in full force and effect, except
where the failure to be so registered or to have such
registration in full force and effect would not, individually
or in the aggregate, have a Material Adverse Effect.
(c) There are no proceedings pending or, to Seller's
Knowledge, threatened, against any of the Selling Entities or
Seller Designated Affiliates that are reasonably likely to
result in the revocation, cancellation or suspension, or any
adverse modification, of any material permit, license,
certificate of authority, order or approval referred to in
Section 3.18(a) and the execution and delivery of this
Agreement and the consummation of any transactions
contemplated hereby will not result in any such revocation,
cancellation, suspension, or any adverse modification, of any
material permit, license, certificate of authority, order or
approval referred to in Section 3.18(a) other than in
connection with the various filings required hereby.
3.19 REPRESENTATIONS AND WARRANTIES REGARDING THE
INVESTMENT ADVISORY BUSINESS.
(a) INVESTMENT CONTRACTS, FUNDS AND CLIENTS.
(i) Schedule 3.19(a)(i)(1) lists all
Investment Contracts of Seller and Seller Inc.,
indicating for each the name of the Client and
whether such Investment Contract is in writing. Each
written Investment Contract has been delivered by
Seller to Buyer and accurately embodies the terms and
conditions on which services are rendered to the
Client party thereto except for oral modifications
described on Schedule 3.19(a)(i)(2) or oral
modifications which do not materially modify the
-43-
3131867.30
terms thereof. A description of all of the nonwritten
Investment Contracts and true, correct and complete
copies of all of the written Investment Contracts,
including any fee schedules and investment
guidelines, have been provided by Seller to Buyer.
(x) Each Investment Contract and any subsequent
renewal thereof has been duly authorized, executed
and delivered by the Selling Entity party thereto
and, to the extent applicable, has been adopted in
compliance with Section 15 of the Investment Company
Act and is a valid and binding agreement of each such
party, enforceable in accordance with its terms
(subject to ERISA or to bankruptcy, insolvency,
moratorium, fraudulent transfer and similar laws
affecting creditors' rights generally and to general
equity principles) and (y) (I) in the case of
Investment Contracts with Investment Companies and
Clients, each of Seller, Seller Inc. and to Seller's
Knowledge, the Funds is in compliance in all respects
with the terms of each Investment Contract to which
it is a party, except where such noncompliance would
not, individually or in the aggregate, have a
Material Adverse Effect, and (II) no event has
occurred or condition exists that constitutes or with
notice or the passage of time would constitute a
default of the applicable Selling Entity thereunder.
To the Knowledge of Seller and except as do not,
individually, or in the aggregate have a Material
Adverse Effect, (x) each Investment Contract and any
subsequent renewal thereof has been duly authorized,
executed and delivered by each party thereto (other
than the applicable Selling Entity) thereunder and,
to the extent applicable, has been adopted in
compliance with Section 15 of the Investment Company
Act and is a valid and binding agreement of each such
party (other than the applicable Selling Entity) and
(y) in the case of Investment Contracts of Seller or
any Seller Designated Affiliate with Investment
Companies and Clients, each Client party in
compliance in all respects with the terms of each
Investment Contract to which it is a party. Except as
set forth on Schedule 3.19(a)(i)(3), none of the
Investment Contracts, or any other arrangements or
understandings relating to rendering of investment
advisory or management services, including without
limitation all subadvisory services or administration
services to any Fund, Client or other person,
contains any undertaking by Seller to cap fees or to
reimburse any or all fees thereunder, except as
required by the applicable law of any jurisdiction in
which the shares of any Fund party thereto are
qualified for distribution, which exceptions are not
likely, individually or in the aggregate, to have a
Material Adverse Effect. Except as set forth on
Schedule 3.19(a)(i)(4), none of the Funds nor any of
the Clients has notified the Selling Entities or
their directors or
-44-
3131867.30
officers or the Principals that it intends to
discontinue or substantially modify its relationship
with the Selling Entities or Seller Designated
Affiliates.
(ii) Each Fund has been and is being
operated (to the extent operated by Seller or Seller
Inc.) in compliance in all respects with its
respective objectives, policies and restrictions,
including without limitation any limitation set forth
in the applicable Prospectus or governing instruments
for such Fund, except where such noncompliance would
not, individually or in the aggregate, have a
Material Adverse Effect.
(iii) The accounts of each Client that is
subject to ERISA have been managed by Seller such
that Seller in the exercise of such management is in
compliance in all respects with the applicable
requirements of ERISA, except where such
noncompliance would not, individually or in the
aggregate, have a Material Adverse Effect, and
consummation of the transactions contemplated hereby
will not result in a violation of such ERISA
requirements.
(iv) Neither Seller, any Seller Designated
Affiliate nor any Fund is a party or subject to any
plan adopted in accordance with Rule 12b-1 under the
Investment Company Act. No Fund has offered shares
subject to a contingent deferred sales charge.
(b) AEW FUND AND INVESTMENT POOL FINANCIAL
STATEMENTS.
(i) (A) The audited balance sheets of each
Investment Pool (other than Partners II, Lincoln
Pacific Industrial Fund and Residential Fund-II) as
of December 31, 1995 and 1994 and the related
financial statements for the years ended December 31,
1995 and 1994, as reported on by Ernst & Young,
L.L.P. in the case of Partners I and by Coopers &
▇▇▇▇▇▇▇, L.L.P. in the case of State Street Funds I,
II, III, IV, V and VI, (B) the unaudited balance
sheets of Lincoln Pacific Industrial Fund and
Residential Fund-II as of December 31, 1995 and 1994,
and the related financial statements for the years
ended December 31, 1995 and 1994, and (C), to the
extent available, the unaudited balance sheet of each
Investment Pool as of June 30, 1996 and the related
unaudited financial statements for the period then
ended, and, to the extent available, the unaudited
balance sheets of each Investment Pool and the
related unaudited financial statements as of the last
day of each quarter after the date hereof and prior
to the Closing Date, have been or (in the
-45-
3131867.30
case of such statements as of dates after the date
hereof) will as of the Closing Date be prepared in
accordance with GAAP (except that the unaudited
financial statements (i) are unaudited, (ii) may omit
normal recurring year-end accruals which are not
individually or in the aggregate material and (iii)
may not include notes), except as otherwise disclosed
therein, and, except as would not, individually or in
the aggregate, have a Material Adverse Effect,
present or will present fairly the financial position
and other financial results of each Investment Pool
at the dates, and for the periods, stated therein.
Except as disclosed in its most recent balance sheet
and related financial statements and liabilities
incurred in the ordinary course of business
consistent with past practice and, except as would
not, individually or in the aggregate have a Material
Adverse Effect, since the date of the most recent
balance sheet, each Investment Pool has no other
liabilities, whether accrued, contingent or
determinable that are required to be reflected in
such financial statements (including the notes
thereto) pursuant to the requirements of GAAP.
(ii) The audited statements of assets and
liabilities of AEW Fund as of October 31, 1995, and
the related financial statements for the year ended
October 31, 1995, as reported on by Price Waterhouse
L.L.P. and the unaudited statements of assets and
liabilities of AEW Fund as of June 30, 1996 and the
last day of each quarter after the date hereof and
prior to the Closing Date and the related unaudited
financial statements for the periods then ended have
been or will be prepared in accordance with GAAP,
except as otherwise disclosed therein, and, except as
would not, individually or in the aggregate, have a
Material Adverse Effect, present or will present
fairly the financial position and other financial
results of AEW Fund at the dates, and for the
periods, stated therein. Except as disclosed in its
most recent statements of assets and liabilities and
related financial statements and liabilities incurred
in the ordinary course of business consistent with
past practice, since the date of the most recent
statements of assets and liabilities, AEW Fund has no
other liabilities, whether accrued, contingent or
determinable that are required to be reflected in
such financial statements (including the notes
thereto) pursuant to the requirements of GAAP.
(iii) Seller has delivered to Buyer the
report filed pursuant to Rule 30d-l under the
Investment Company Act by AEW Fund with respect to
its most recent fiscal year, and any reports filed
pursuant to such Rule 30d-l by it with respect to any
half year ended since the end of such most recent
fiscal year (collectively, the "Seller Fund
Reports").
-46-
3131867.30
(c) REGULATORY COMPLIANCE OF SELLER, AEW SECURITIES
AND THE INVESTMENT POOLS.
(i) Each of Seller and Seller Inc. is and
has been at least since 1991, duly registered as an
investment adviser under the Investment Advisers Act.
Each of Seller and Seller Inc. is registered as an
investment adviser in the states referenced in item
7, Part I of its respective current Form ADV (such
states constituting all jurisdictions where such
registration is required in order to conduct its
business except for states in which the failure to
register would not have a Material Adverse Effect),
and is in compliance with all federal and, except as
would not have a Material Adverse Effect, state laws
requiring registration, licensing or qualification as
an investment adviser. Each such federal and state
registration is in full force and effect. Each of
Seller and Seller Inc. has made available to Buyer a
true and complete copy of its Form ADV, each as
amended to date, filed with the SEC; copies of all
state registration forms, likewise as amended to
date; and copies of all current reports required to
be kept by Seller and Seller Inc. pursuant to the
Investment Advisers Act and rules promulgated
thereunder, and required pursuant to applicable state
statutes. Except as would not, individually or in the
aggregate, have a Material Adverse Effect, the
information contained in such forms and reports was
true and complete at the time of filing. Each of
Seller and Seller Inc. has filed all amendments
required to be filed to its Form ADV and, except as
would not have a Material Adverse Effect, state
registration forms under federal and state law.
Schedule 3.19(c)(i) identifies the examination and/or
certification qualifications and other licenses held
by employees of Seller and Seller Inc. (listed by
employee) that are used or required in the conduct of
Seller's and Seller Inc.'s businesses.
(ii) Neither Seller nor any Seller
Designated Affiliate nor any Investment Pool nor any
AEW Client Entity is, nor immediately following the
consummation of the transactions contemplated hereby,
will any of them be, an "investment company," within
the meaning of the Investment Company Act, which is
required to be registered under that Act in order to
engage in the transactions described in Section 7 of
that Act. Neither Seller nor any of the Seller
Designated Affiliates (other than AEW Securities) is
a "broker" or "dealer" within the meaning of the
Exchange Act. Copies of all inspection reports or
similar documents furnished to Seller by the SEC or
state regulatory authorities or any self-regulatory
organization since January 1, 1990 are listed on
Schedule 3.19(c)(ii) and have been provided to Buyer.
To the Knowledge of Seller, there is not pending or
underway any investigation
-47-
3131867.30
of Seller, or any of the Seller Designated Affiliates
or any of their records by the SEC or any state
regulatory authority or any self-regulatory
organization, and since December 31, 1991, neither
Seller nor any of the Seller Designated Affiliates
has been notified in writing or otherwise expressly
by the SEC or any state regulatory authority or any
self-regulatory organization that any past inspection
has revealed any deficiency in any such entity's
recordkeeping or compliance with the Investment
Advisers Act, the Exchange Act, the Securities Act,
the Investment Company Act or applicable state
statutes, except for deficiencies listed on Schedule
3.19(c)(ii), which deficiencies will not,
individually or in the aggregate, have a Material
Adverse Effect. Neither Seller nor any of the Seller
Designated Affiliates is required to disclose any
information to clients under SEC Rule 206(4)-4
promulgated under the Investment Advisers Act. Except
as listed on Schedule 3.19(c)(ii), the assets of each
Investment Pool do not constitute "plan assets" for
purposes of ERISA.
(iii) Except with respect to the Funds,
neither Seller nor any of the Seller Designated
Affiliates acts as investment adviser or subadviser
to any investment company, as defined in the
Investment Company Act, which is required to be
registered under such Act. Seller has a written
investment advisory agreement with each Fund pursuant
to which Seller serves as investment adviser to each
Fund, and has delivered to Buyer true and complete
copies of such agreements. As of the date hereof each
of such agreements is, and with respect to AEW Fund
and those Funds included in the 75% of Clients whose
Client Consents will have been obtained in
satisfaction of Section 7.2(k)(ii), as of the Closing
Date, each of such agreements (or a new agreement on
terms at least as favorable to NCLP as the terms of
the agreement replaced) will be in full force and
effect, Seller is not in default thereunder and, to
Seller's Knowledge, no Fund that is a party thereto
is in default thereunder. The investment advisory
agreement relating to each Fund will terminate upon
the consummation of the transaction contemplated by
this Agreement, and new agreements may only be
entered into by NCLP in accordance with the
procedures established by the Investment Company Act
and the regulations promulgated thereunder.
(iv) Neither Seller nor any Seller
Designated Affiliate nor any Principal nor any other
"affiliated person" of Seller, as such term is
defined in the Investment Company Act, receives or is
entitled to receive any compensation directly or
indirectly (i) from any person in connection with the
purchase or sale of securities or other property to,
from or on behalf of any of the Funds, or (ii) from
the Funds or its
-48-
3131867.30
security holders for other than bona fide investment
advisory services, or other services.
(v) Except as set forth on Schedule
3.19(c)(v), neither Seller nor any of the Seller
Designated Affiliates has received, nor does any
executive officer of any Selling Entity or any Seller
Designated Subsidiary have actual knowledge of, any
written investor complaints that have not been
resolved, nor has any of the Investment Pools or AEW
Client Entities received any withdrawal or redemption
requests which continue to be outstanding or are
sufficient to trigger any liquidation or dissolution
of any Seller Designated Affiliate, any AEW Client
Entity or AEW Fund or any Investment Pool managed by
Seller or any Seller Designated Affiliate.
(vi) Other than with respect to AEW
Securities or as required to satisfy the condition of
PTE ▇▇-▇▇ (▇▇▇ "▇▇▇▇▇ ▇▇▇▇ Exemption"), neither
Seller nor any Seller Designated Affiliate is nor,
following the Closing will NCLP (by reason of
operations previously conducted by the Selling
Entities) be, subject to any regulatory capital
requirements. All regulatory capital requirements
that will be applicable to NCLP on the Closing Date
as a result solely of its conduct of Seller's or any
Seller Designated Affiliate's business will be
satisfied by eligible assets included on the AEW Pro
Forma Closing Balance Sheet.
(vii) The offering, issuance, sale and
delivery of interests to investors in each Investment
Pool organized by Seller or Seller Inc. complied with
the requirements of the federal securities laws,
applicable state securities laws and, where
applicable, the rules of the NASD. None of the
offering materials (including offering memoranda,
private placement memoranda, statements of additional
information, supplemental advertising or marketing
material, or amendments or supplements to any of
them) in connection with such offerings and sales, as
of their respective dates, included any untrue
statement of a material fact or omitted to state a
material fact necessary in order to make the
statements made therein, in the light of the
circumstances under which they were made, not
misleading. No current offering materials (including
offering memoranda, private placement memoranda,
statements of additional information, supplemental
advertising or marketing material, or amendments or
supplements to any of them) for the Investment Pools
organized by Seller or Seller Inc. includes or will
as of the Closing Date include an untrue statement of
a material fact or omits or will as of the Closing
Date omit to state a material fact necessary in order
to make the
-49-
3131867.30
statements made therein, in the light of the
circumstances under which they were made, not
misleading.
(d) REGULATORY COMPLIANCE OF AEW FUND. Except where
the violation of any of the representations and warranties
contained in this Section 3.19(d) would not, individually or
in the aggregate, have a Material Adverse Effect:
(i) (A) AEW Fund is duly registered as an
investment company under the Investment Company Act;
(B) the shares of AEW Fund are duly and validly
issued, fully paid and nonassessable; (C) none of the
outstanding shares of AEW Fund are required to be
registered under the Securities Act; (D) to Seller's
Knowledge, the registration statement of AEW Fund
filed under the Investment Company Act did not
contain as of its effective date any untrue statement
of material fact or omitted to state a material fact
required to be stated in order to make the statements
therein not misleading and is not subject to any stop
order or similar order; and (E) Seller's acts and
omissions in its activities on behalf of AEW Fund
have been and are currently in compliance in all
material respects with all laws, rules, regulations
and orders applicable to it or to its or AEW Fund's
business, including but not limited to the Investment
Company Act, and consummation of the transactions
contemplated hereby will not result in a violation of
any such laws, rules, regulations or orders.
(ii) AEW Fund is duly organized, validly
existing and in good standing under the laws of the
jurisdiction of its organization and has full power,
right and authority to own its properties and to
carry on its business as it is now conducted.
(iii) AEW Fund has duly adopted procedures
pursuant to Rule 17e-1 under the Investment Company
Act, to the extent applicable; and AEW Fund has
complied, since its inception, and currently complies
with the requirements of Section 17(e) of the
Investment Company Act and Rule 17e-1 thereunder, to
the extent applicable.
(iv) Each of AEW Fund and Seller has adopted
a formal code of ethics and a written policy
regarding ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇. Such codes and policies
comply with Section 17(j) of the Investment Company
Act, Rule 17j-1 thereunder and Section 204A of the
Investment Advisers Act, respectively. The policies
of Seller with respect to avoiding conflicts of
interest have been made available to Buyer. To the
Knowledge of
-50-
3131867.30
Seller, there have been no violations or allegations
of violations of such policies that have occurred or
been made.
(v) AEW Fund is eligible to elect to be
treated as a "regulated investment company" under
Subchapter M of Chapter 1 of Subtitle A of the Code,
has so elected, has qualified for taxation as a
regulated investment company in each of its taxable
years and has complied with all applicable provisions
of law necessary to preserve and retain such Fund's
election and ability to be taxed as a regulated
investment company. AEW Fund has timely filed all
federal, state, local and foreign income and other
Tax Returns and reports that such Fund is required to
file and each such return correctly and accurately
reflects the amount of its Tax liability, if any, and
any other material information required to be set
forth in such return. AEW Fund has timely paid, or
reserved for, Taxes that such Fund is required to pay
and AEW Fund has not been the subject of an audit
examination.
(vi) Neither Seller nor, to the Knowledge of
Seller or any Selling Entities, any person
"associated" (as defined under the Investment
Advisers Act) with Seller, has for the period
beginning not less than five years prior to the date
hereof and ending on the date hereof been convicted
of any crime or is or has been subject to any
disqualification that would be a basis for denial,
suspension or revocation of registration of an
investment adviser under Section 203(e) of the
Investment Advisers Act or Rule 206 (4)-4(b)
thereunder or of a broker-dealer under Section 15 of
the Exchange Act, or for disqualification as an
investment adviser for any investment company
pursuant to Section 9(a) of the Investment Company
Act, and to Seller's Knowledge there is no basis for,
or proceeding or investigation that is reasonably
likely to become the basis for, any such
disqualification, denial, suspension or revocation.
3.20 DISCLOSURE. The representations and warranties made by the Selling
Entities and the Principals in this Agreement and the statements made in any of
the Related Agreements, Exhibits or Schedules, taken as a whole, do not contain
any untrue statement of material fact or omit to state a material fact necessary
in order to make any such representation, warranty or statement, in the light of
the circumstances under which it was made, not misleading.
-51-
3131867.30
3.21 REGISTRATION AS A BROKER-DEALER.
(a) AEW Securities is duly registered under the
Exchange Act as a broker-dealer with the SEC and except where
such noncompliance would not, individually or in the
aggregate, have a Material Adverse Effect, is in compliance in
all respects with the applicable provisions of the Exchange
Act and the applicable rules and regulations thereunder. AEW
Securities is a member in good standing of the NASD and,
except where such noncompliance would not, individually or in
the aggregate, have a Material Adverse Effect, is in
compliance in all respects with all applicable rules and
regulations of the NASD, including without limitation the
NASD's rules of fair practice. Except as set forth on Schedule
3.21(a), AEW Securities is not party to, or bound by, the
terms of any restriction agreement with the NASD. AEW
Securities is duly registered as a broker-dealer under, and is
in compliance in all respects with, the applicable laws of all
jurisdictions in which it is required to be so registered, and
the rules and regulations thereunder (collectively, the "State
Laws"), except where the failure to be so registered or such
noncompliance would not, individually or in the aggregate,
have a Material Adverse Effect.
(b) Seller has delivered to Buyer a true, correct and
complete copy of AEW Securities's Uniform Application for
Broker-Dealer Registration on Form BD, reflecting all
amendments thereto filed with the SEC to the date hereof (the
"BD"), true, correct and complete copies of the Uniform
Application for Securities Industry Registration or Transfer
on Form U-4, as filed by each current principal and registered
representative of AEW Securities (each, a "U-4"), and true,
correct and complete copies of each report filed since January
1, 1992 with the SEC, the NASD or any state securities agency,
including without limitation quarterly focus reports and
annual statements of financial condition (each, a "Report").
Schedule 3.21(b) sets forth a complete list of the identities
of each principal and registered representative of AEW
Securities, their series licenses and each Report. Except as
would not have a Material Adverse Effect, the BD and each U-4
and other Report (i) are in compliance in all respects with
the applicable requirements of the Exchange Act and the rules
and regulations thereunder, the applicable requirements of the
by-laws of the NASD and any schedule thereto and rules
thereunder and the State Laws and the rules and regulations
thereunder and do not contain any untrue statement of a
material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not
misleading, and (ii) except as set forth in Schedule 3.21(b)
each registered representative and principal has at least the
minimum series license for the activities which such
registered representative or principal performs for AEW
Securities.
-52-
3131867.30
(c) The net capital, as such term is defined in Rule
15c3-1 under the Exchange Act, of AEW Securities is now and
since its inception has been and immediately following the
transactions contemplated hereby will be in excess of the
minimum net capital requirements of the Exchange Act and of
the laws of any jurisdiction in which AEW Securities conducts
business.
3.22 REGISTRATION UNDER THE COMMODITY EXCHANGE ACT. No
Selling Entity nor any Seller Designated Affiliate is required to register under
the Commodity Exchange Act as a commodity pool operator ("CPO") or as a
commodity trading advisor ("CTA").
3.23 REGISTRATION AS AN INSURANCE AGENT OR REAL ESTATE OR MORTGAGE
BROKER. No Selling Entity nor any Seller Designated Affiliate is required to
register as an insurance agent, broker, consultant or advisor under the laws of
any state. No Selling Entity nor any Seller Designated Affiliate is required to
register under the laws of any state as a Real Estate or Mortgage Broker.
3.24 REGISTRATION AS A TRANSFER AGENT. Neither Seller nor any
Seller Designated Affiliate (i) is registered as a transfer agent under the
Exchange Act or (ii) is engaged in any conduct or activity that would require it
to be so registered.
3.25 INVESTMENT REPRESENTATIONS.
(a) Each of the Selling Entities and the Principals
acknowledges that the LP Units to be received by Seller
hereunder are not registered under the Securities Act and that
such LP Units may not be sold or otherwise transferred in the
absence of registration under the Securities Act or an
exemption therefrom under such Act.
(b) Each of the Selling Entities and the Principals
is acquiring the LP Units to be received by it for its own
account and not with a view to, or for sale in connection
with, any distribution thereof, nor with any present intention
of distributing or selling the same in violation of the
Securities Act.
(c) Each of the Selling Entities and Principals
acknowledge, understand and agree that any LP Units received
as a result of the transactions contemplated hereby are
subject to the following restrictions on transferability in
addition to those described in Section 3.25(a):
(i) LP Units may be sold or otherwise
transferred only to Permitted Transferees.
-53-
3131867.30
(ii) In the event of a Restructuring, LP
Units that continue to be outstanding following the
Restructuring may not be transferred without
permission from Buyer's general partner.
Each Principal and each Selling Entity acknowledges that
certificates representing the LP Units to be received by
Seller and any Principals will bear a legend reflecting the
restrictions on transferability referenced in this Section
3.25(c).
(d) For purposes of evaluating an investment in the
LP Units, (i) each of the Selling Entities and the Principals
has had the opportunity to make a detailed inquiry concerning
NCLP, ▇▇▇▇▇▇ and Buyer and their businesses and personnel and
(ii) the officers of Buyer have made available to the Selling
Entities and Principals any and all written information which
they have requested and have answered to the Selling Entities'
and the Principals' satisfaction all inquiries made by the
Selling Entities and the Principals.
(e) Each of the Selling Entities that receives LP
Units hereunder and each of the Principals (i) is an
"accredited investor" as defined in Regulation D under the
Securities Act or, alternatively, (ii) is experienced in
evaluating and investing in securities and acknowledges that
it is able to fend for itself, can bear the economic risk of
its investment, and has such knowledge and experience in
financial and business matters that it is capable of
evaluating the merits and risks of an investment in LP Units.
3.26 ENVIRONMENTAL MATTERS. Except as has been previously
disclosed by Seller to Buyer:
(a) No Selling Entity, Seller Designated Affiliate or AEW Client Entity
has within the three years preceding the date hereof received any written
notice, demand, citation, summons, complaint or order or any notice of any
penalty, lien or assessment, and, to Seller's Knowledge, no investigation or
review is pending by any governmental entity, with respect to any (i) alleged
violation by any Selling Entity, any Seller Designated Affiliate or any AEW
Client Entity of any Environmental Law, (ii) alleged failure by any Selling
Entity, any Designated Affiliate or any AEW Client Entity to have any applicable
environmental permit, certificate, license, approval, registration or
authorization required by law in connection with the conduct of its business or
any activity with respect to any Hazardous Substances, except for any such
notice or investigation relating to or involving matters which would not,
individually or in the aggregate, have a Material Adverse Effect.
(b) To Seller's Knowledge, no Selling Entity, Seller Designated
Affiliate or AEW Client Entity has any Environmental Liabilities, except to the
extent that any such liability would not, individually or in the aggregate, have
a Material Adverse Effect.
-54-
3131867.30
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to the Selling Entities and the
Principals that:
4.1 ORGANIZATION AND LIMITED PARTNERSHIP AUTHORITY. Each of Buyer and
NCLP is a limited partnership duly formed, validly existing and in good
standing, and NCGP is a corporation, duly organized, validly existing and in
good standing, each under the laws of the state of Delaware. Each of Buyer and
NCLP has all requisite power and authority to enter into this Agreement, the
Note and the other Related Agreements to which it is a party and to perform its
obligations hereunder and thereunder.
4.2 BUYER CHARTER DOCUMENTS. The copies of the respective certificates
of incorporation, articles of organization, certificates of limited partnership,
limited partnership agreements and by-laws, as the case may be, of Buyer, NCGP
and NCLP and the respective minutes of all meetings of the boards of directors
or the partners, as the case may be, of NCGP and NCLP (or consents in lieu
thereof) have been furnished to Seller by Buyer and are true, correct and
complete copies thereof.
4.3 AUTHORITY. Each of Buyer and NCLP has full right, power and
authority to execute, deliver and perform this Agreement and the Related
Agreements to which it is a party, all proper actions of the partners and the
board of directors, as the case may be, of Buyer authorizing the execution,
delivery and performance hereof and thereof having been taken. This Agreement
has been duly executed and delivered by Buyer and NCLP and constitutes, and the
other Related Agreements to which they will be a party when executed and
delivered, will be duly executed and delivered and will constitute, valid and
legally binding obligations of Buyer enforceable in accordance with their
respective terms, except as the enforceability thereof may be subject to or
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
relating to or affecting the rights of creditors generally, equitable principles
and judicial limitations upon the enforcement of certain types of obligations.
There are no proceedings or actions pending or, except as contemplated in this
Agreement or the Related Agreements, contemplated to dissolve Buyer.
4.4 NO VIOLATION. Neither the execution and delivery by Buyer and NCLP
of this Agreement or of any Related Agreement to which Buyer and NCLP may be a
party, nor consummation of the transactions herein or therein contemplated, nor
compliance with the terms, conditions and provisions hereof or thereof will
conflict with or violate any provision of law or the certificate of limited
partnership, certificate of incorporation, limited partnership agreement or
by-laws of Buyer or NCLP, or result in a violation or default in any provision
of any regulation, order, writ, injunction or decree of any court or
governmental agency or authority, agreement or instrument to which Buyer or NCLP
is a party or by which either of them is bound or to which either of them is
subject, or constitute a default thereunder or result
-55-
3131867.30
in the creation or imposition of any Lien upon the Assets of Buyer or NCLP
pursuant to the terms of any such agreement or instrument (except as
contemplated by this Agreement or where such violation or default would not
have, individually or in the aggregate, a Material Adverse Effect), assuming
that all of the actions contemplated by Article VII are taken and the provisions
of the HSR Act shall have been complied with pursuant to Section 7.1(b).
4.5 APPROVALS AND CONSENTS. Except as contemplated by Article VII, no
authorization or approval or other action by, and no notice to or filing with,
any governmental authority or the Exchange will be required to be obtained or
made by Buyer or NCLP in connection with the due execution and delivery by Buyer
or NCLP of this Agreement or any Related Agreement to which Buyer or NCLP may be
a party and the consummation by each of Buyer and NCLP of the transactions
contemplated hereby and thereby.
4.6 NO ACTIONS; SUITS OR PROCEEDINGS. There is no pending action, suit
or proceeding, nor to Buyer's Knowledge, has any litigation been overtly
threatened in writing or, if probable of assertion, orally, against Buyer, NCGP
or NCLP before any governmental authority which questions the validity or
legality of this Agreement or of the transactions contemplated hereby, or which
seeks to prevent the consummation of the transactions contemplated hereby.
4.7 NO OTHER BROKER. Other than Lazard Freres & Co. LLC, no broker,
finder or similar intermediary has acted for or on behalf of Buyer in connection
with this Agreement or the transactions contemplated hereby, and no broker,
finder, agent or similar intermediary is entitled to any broker's, finder's or
similar fee or other commission in connection therewith based on any agreement,
arrangement or understanding with Buyer or any action taken by Buyer. Such fees
as Buyer may owe to Lazard Freres & Co. LLC shall be the sole obligation of
Buyer.
4.8 BUYER FINANCIAL STATEMENTS. Buyer has delivered to Seller the
audited consolidated balance sheets of Buyer as of the close of its fiscal year
ended December 31, 1995 and statements of income, changes in partners' capital
and cash flows for the fiscal year then ended, certified by Price Waterhouse,
LLP, and Buyer's unaudited consolidated balance sheet at June 30, 1996 and
statements of income, changes in partners' capital and cash flows for the
six-month period then ended, all of which financial statements (including the
notes thereto) are collectively referred to as "Buyer Financial Statements" and
are attached as Schedule 4.8.
The Buyer Financial Statements fairly present the financial position
and results of operations of Buyer on the dates and for the fiscal periods then
ended, in accordance with GAAP (except for normal year-end accruals omitted from
those of the Buyer's unaudited financial statements which are not individually
or in the aggregate material) which shall have been applied on a basis
consistent with prior periods. The Buyer Financial Statements reflect or provide
for claims against and debts and liabilities of Buyer and its consolidated
group,
-56-
3131867.30
absolute, accrued, contingent or otherwise, as at the dates thereof in
accordance with GAAP, to the extent so required to be reflected or provided.
4.9 NO ADVERSE CHANGE. Since December 31, 1995, (a) there has been no
Material Adverse Effect; (b) there have been no dividends or other distributions
declared (other than regular quarterly partnership distributions) to the
partners of Buyer; (c) other than pursuant to (i) Buyer's 1993 Equity Incentive
Plan or (ii) any partnership admission agreement pursuant to which Buyer has
acquired a new business, Buyer has not issued or sold any interest, option, note
or other security; and (d) the physical properties owned or leased by Buyer have
not suffered any destruction or damage, regardless of whether or not the loss
suffered was insured, that could have, individually or in the aggregate, a
Material Adverse Effect.
4.10 LP UNITS. Any LP Units issued by Buyer to Seller hereunder, when
issued by Buyer to Seller, will be valid and, subject to the qualifications set
forth herein, fully paid and nonassessable limited partnership units in Buyer,
as to which the limited partners of Buyer will have no liability in excess of
their share of Buyer's assets and undistributed profits (subject to the
obligations of limited partners under Buyer's agreement of limited partnership
and Delaware law).
4.11 EXCHANGE ACT FILINGS. Buyer's Annual Report on Form 10-K for its
fiscal year ended December 31, 1995 (and the information incorporated by
reference therein) (the "Form 10-K") and Buyer's Quarterly Reports on Form 10-Q
for the fiscal quarters ended March 31, 1996 and June 30, 1996 (the "Forms
10-Q") each contained all information required to be contained therein and
otherwise complied in all respects with the Exchange Act and the rules and
regulations thereunder, except where such noncompliance would not, individually
or in the aggregate, have a Material Adverse Effect. Neither the Form 10-K nor
the Forms 10-Q contained any untrue statement of material fact or omitted to
state a material fact necessary in order to make the statements contained
therein not misleading in the light of the circumstances under which they were
made.
4.12 TAXES. Each of Buyer and NCLP is properly classified for federal
and state tax purposes as a partnership (and not as an association taxable as a
corporation) and has never been treated as a corporation pursuant to Section
7704 of the Code.
4.13 INELIGIBLE PERSONS. Neither Buyer nor, to Buyer's Knowledge, any
person "associated" (as defined under the Investment Advisers Act and the
Exchange Act) with Buyer has been, and to Buyer's Knowledge has no basis for
being, subject to any disqualification that would be a basis for censure of,
placement of limitations on the activities, functions or operations of, or
denial, suspension or revocation of registration of Buyer or any of its direct
or indirect subsidiaries as an investment adviser under Sections 203(e) or
203(f) of the Advisers Act or of a broker-dealer under Section 15 of the
Exchange Act. Moreover, since the date which is ten years prior to the date
hereof, neither Buyer nor, to Buyer's
-57-
3131867.30
Knowledge, any "affiliated person" (as defined under the Investment Company Act)
of Buyer has been subject to any disqualification regarding service as an
investment adviser for any investment company pursuant to Section 9(a) of the
Investment Company Act or any disqualification which may serve as the basis for
an action by the SEC prohibiting, conditionally or unconditionally, permanently
or for any period of time, Buyer or any of its direct or indirect subsidiaries
from acting as an adviser for any investment company pursuant to Section 9(b) of
the Investment Company Act, and to Buyer's Knowledge there is no proceeding or
investigation pending that is reasonably likely to become the basis for any such
disqualification or prohibition.
4.14 DISCLOSURE. The representations and warranties made by Buyer in
this Agreement and the statements made in any of the Related Agreements,
Exhibits or Schedules, taken as a whole, do not contain any untrue statement of
material fact or omit to state a material fact necessary in order to make any
such representation, warranty or statement, in light of the circumstances under
which it was made, not misleading.
ARTICLE IVA
REPRESENTATIONS AND WARRANTIES OF BUYER
REGARDING ▇▇▇▇▇▇ AND ▇▇▇▇▇▇ SUBSIDIARIES
Buyer represents and warrants to the Selling Entities and the
Principals that, except as set forth in Schedule 4A:
4A.1. ORGANIZATION AND LIMITED PARTNERSHIP AUTHORITY.
(a) ▇▇▇▇▇▇ is a Massachusetts corporation, duly
organized, validly existing and in good standing under the
laws of the Commonwealth of Massachusetts. CREA Limited
Partnership is a partnership duly formed, validly existing and
in good standing under the law of the Commonwealth of
Massachusetts. Each ▇▇▇▇▇▇ Subsidiary (other than CREA Limited
Partnership) which purports to be a partnership is a
partnership duly formed, validly existing and in good
standing, each under the law of the State of Delaware and each
▇▇▇▇▇▇ Subsidiary which purports to be a corporation is a
corporation, duly organized, validly existing and in good
standing, each under the laws of the Commonwealth of
Massachusetts. Each of ▇▇▇▇▇▇ and the ▇▇▇▇▇▇ Subsidiaries has
full power and authority to own or lease and use its
properties and assets and to carry on its business as such
business is now conducted.
(b) Each of ▇▇▇▇▇▇, the ▇▇▇▇▇▇ Subsidiaries and the
▇▇▇▇▇▇ Client Entities possesses all licenses, franchises,
permits and other rights necessary to conduct its business as
such business is now or proposed to be conducted, except where
failure to possess such licenses, franchises, permits and
other
-58-
3131867.30
rights would not, individually or in the aggregate, have a
Material Adverse Effect. Each of ▇▇▇▇▇▇, the ▇▇▇▇▇▇
Subsidiaries and the ▇▇▇▇▇▇ Client Entities is duly authorized
to conduct business, validly existing and in good standing
under the laws of each jurisdiction in which the nature of its
business or the ownership of or leasing of its properties
requires such qualification except where the failure to be so
authorized, validly existing and in good standing would not,
individually or in the aggregate, have a Material Adverse
Effect.
4A.2. ▇▇▇▇▇▇ CHARTER DOCUMENTS. The copies of the respective
certificates of incorporation, articles of organization, certificates of limited
partnership, limited partnership agreements, limited liability company
agreements and by-laws, as the case may be, of ▇▇▇▇▇▇ and each of the ▇▇▇▇▇▇
Subsidiaries and the respective minutes of all meetings of the boards of
directors or the partners, as the case may be, of ▇▇▇▇▇▇ and each of the ▇▇▇▇▇▇
Subsidiaries (or consents in lieu thereof) that have been furnished to Seller by
Buyer and are true, correct and complete and conform to the originals thereof,
and there will have been no subsequent amendments or other modifications (other
than amendments and modifications set forth on Schedule 4A.2 contemplated by
this Agreement or to which Seller has consented in writing) of such documents
before the Closing Date (except for minutes of meetings (or consents held in
lieu thereof) of the partners, board of directors, or stockholders of ▇▇▇▇▇▇ or
the ▇▇▇▇▇▇ Subsidiaries held after the date hereof and on or before the Closing
Date), true, correct and complete copies of which shall have been furnished to
Seller before the Closing Date.
4A.3. SUBSIDIARIES.
(a) Buyer owns (i) a 75% limited partnership interest
in CREA Limited Partnership, (ii) a 75% limited partnership
interest in ▇▇▇▇▇▇ Public Partners Holding, L.P., (iii) a 75%
limited partnership interest in ▇▇▇▇▇▇ Management Advisors,
L.P., and (iv) 1,000 shares of capital stock in ▇▇▇▇▇▇
Investment Group, Inc., which shares represent 100% of the
issued and outstanding capital stock of such corporation.
▇▇▇▇▇▇ Investment Group, Inc. owns (i) 1,000,000 shares of
capital stock of ▇▇▇▇▇▇ Real Estate Advisors, Inc., which
shares represent 100% of all the issued and outstanding
capital stock of such corporation, (ii) a 25% general
partnership interest in ▇▇▇▇▇▇ Public Partners Holding, L.P.,
(iii) a 25% general partnership interest in ▇▇▇▇▇▇ Management
Advisors, L.P. and (iv) 600 shares of capital stock of BBC
Investment Advisors, Inc., which shares represent 60% of the
issued and outstanding stock of such corporation. ▇▇▇▇▇▇ Real
Estate Advisors, Inc. owns (i) a 25% general partnership
interest in CREA Limited Partnership and (ii) 5,000 shares of
capital stock in ▇▇▇▇▇▇ Advisors, Inc., which shares represent
100% of the issued and outstanding capital stock of such
corporation. ▇▇▇▇▇▇ Management Advisors, L.P. own a 59.4%
limited partnership interest and a 1% general partnership
interest in BBC Investment Advisors, L.P. Schedule 4A.3(a)
lists
-59-
3131867.30
all capital stock and equity interests held by ▇▇▇▇▇▇,
directly or indirectly, in its subsidiaries.
(b) Except for those ownership interests by ▇▇▇▇▇▇
and the ▇▇▇▇▇▇ Subsidiaries listed above in Section 4A.3(a),
neither ▇▇▇▇▇▇ nor the ▇▇▇▇▇▇ Subsidiaries own, directly or
indirectly, any of the capital stock of or any other equity
interest in any corporation, association, trust or similar
entity, any interest in the equity of any partnership, or
similar entity, any share in any joint venture, or any other
equity or proprietary interest in any entity or enterprise,
however organized and however such interest may be denominated
or evidenced, except for capital stock and other equity
interests listed on Schedule 4A.3(b) which are held solely for
investment purposes. Furthermore, neither ▇▇▇▇▇▇ nor the
▇▇▇▇▇▇ Subsidiaries have any rights, options, subscriptions,
warrants or other agreements of any kind to purchase or
otherwise to receive or be issued any shares of such capital
stock, or securities or obligations of any kind convertible
into shares of such capital stock, existing in favor of any
Person.
4A.4. NO VIOLATION. Except as set forth on Schedule 4A.4, neither the
execution and delivery by Buyer of this Agreement or of any Related Agreement to
which Buyer may be a party, nor consummation of the transactions herein or
therein contemplated, nor compliance with the terms, conditions and provisions
hereof or thereof will conflict with or violate any provision of law or the
certificate of limited partnership, certificate of incorporation, articles of
organization, certificate of formation, limited partnership agreement, limited
liability company agreement or by-laws of ▇▇▇▇▇▇, the ▇▇▇▇▇▇ Subsidiaries or the
▇▇▇▇▇▇ Client Entities, or result in a violation or default in any provision of
any regulation, order, writ, injunction or decree of any court or governmental
agency or authority, agreement or instrument (including Investment Contracts) to
which ▇▇▇▇▇▇ or any of the ▇▇▇▇▇▇ Subsidiaries is a party or by which any of
them is bound or to which any of them is subject, or constitute a default
thereunder or result in the creation or imposition of any Lien upon the Assets
of ▇▇▇▇▇▇ or any ▇▇▇▇▇▇ Subsidiary or any of the ▇▇▇▇▇▇ Client Entities pursuant
to the terms of any such agreement or instrument (except as contemplated by this
Agreement or where such violation or default would not, individually or in the
aggregate, have a Material Adverse Effect), provided that the actions
contemplated by Article VII are taken and the provisions of the HSR Act shall
have been complied with pursuant to Section 7.1(b).
4A.5. ▇▇▇▇▇▇ FINANCIAL INFORMATION.
(a) (i) Buyer has delivered to Seller, (A) unaudited
consolidated balance sheets of ▇▇▇▇▇▇ and each of the ▇▇▇▇▇▇
Subsidiaries as of the close of its fiscal years ended
December 31, 1993 through December 31, 1995 and statements of
operations and cash flows for the fiscal year then ended,
certified by ▇▇▇▇▇▇'▇ principal financial and accounting
officer and (B) ▇▇▇▇▇▇ and each of the
-60-
3131867.30
▇▇▇▇▇▇ Subsidiaries, an unaudited consolidated balance sheet
at June 30, 1996 and statements of operations and cash flows
for the six-month period then ended, certified by ▇▇▇▇▇▇'▇
principal financial and accounting officer, certified by
▇▇▇▇▇▇'▇ principal financial and accounting officer, and (ii)
Buyer will deliver to Seller prior to the Closing for ▇▇▇▇▇▇
and each ▇▇▇▇▇▇ Subsidiary an unaudited consolidated balance
sheet as of the last day of each month and each quarter after
the date hereof and before the Closing Date, together with
unaudited consolidated statements of operations and cash flows
for the post- December 31, 1995 period ending on each such
date, certified by ▇▇▇▇▇▇'▇ principal financial and accounting
officer, all of which financial statements are collectively
referred to as "▇▇▇▇▇▇ Financial Information" and are attached
as Schedule 4A.5.
(b) The ▇▇▇▇▇▇ Financial Information, when delivered
in accordance with this Agreement, will fairly present the
financial position, results of operations and cash flows of
▇▇▇▇▇▇ or the respective ▇▇▇▇▇▇ Subsidiary, as the case may
be, on the dates and for the fiscal periods then ended, in
accordance with GAAP (except for normal recurring year-end
accruals which are not individually or in the aggregate
material omitted from the ▇▇▇▇▇▇ Financial Information and
except for accounting of minority interests of CREA Limited
Partnership and ▇▇▇▇▇▇ Public Partners Holding, L.P.) which
shall have been applied on a basis consistent with prior
periods. The ▇▇▇▇▇▇ Financial Information reflects or
adequately provides for claims against and debts and
liabilities of ▇▇▇▇▇▇ or the respective ▇▇▇▇▇▇ Subsidiary, as
the case may be, absolute, accrued, contingent or otherwise,
as at the dates thereof to the extent so required to be
reflected or provided in accordance with GAAP.
4A.6. NO ADVERSE CHANGE. Except as set forth on Schedule 4A.6, since
December 31, 1995, (a) there has been no Material Adverse Effect; (b) there have
been no distributions paid or declared to the partners or stockholders of ▇▇▇▇▇▇
or any ▇▇▇▇▇▇ Subsidiary except as reflected in the ▇▇▇▇▇▇ Financial
Information; (c) neither ▇▇▇▇▇▇ nor any ▇▇▇▇▇▇ Subsidiary has issued or sold any
interest, option, note or other security of ▇▇▇▇▇▇ or any ▇▇▇▇▇▇ Subsidiary; and
(d) the physical properties owned or leased by ▇▇▇▇▇▇ or any ▇▇▇▇▇▇ Subsidiary
have not suffered any destruction or damage, regardless of whether or not the
loss suffered was insured, that could have, individually or in the aggregate, a
Material Adverse Effect.
4A.7. TAXES.
(a) All federal Tax Returns required by applicable
law to be filed on behalf of ▇▇▇▇▇▇ and the ▇▇▇▇▇▇
Subsidiaries through the date hereof have been timely filed,
or requests for extensions have been timely filed, granted,
and have not yet expired. Except as would not, individually or
in the aggregate,
-61-
3131867.30
have a Material Adverse Effect, all non-federal Tax Returns
required by applicable law to be filed by (i) ▇▇▇▇▇▇ and the
▇▇▇▇▇▇ Subsidiaries and (ii) all Tax Returns required by
applicable law to be filed by each ▇▇▇▇▇▇ Client Entity
through the date hereof have been timely filed, or requests
for extensions have been timely filed, granted and have not
yet expired. Each of the federal Tax Returns filed on behalf
of ▇▇▇▇▇▇ or any ▇▇▇▇▇▇ Subsidiary in cases where any such
person is required to pay a Tax liability directly, correctly
and accurately reflects the amount of its Tax liability and
any other material information required to be set forth on
such Tax Return, and, in all other cases, correctly and
accurately reflects such person's income, gains, losses,
deductions and credits for the relevant fiscal year (or other
period) and any other material information required to be set
forth on such Tax Return. Except as would not, individually or
in the aggregate, have a Material Adverse Effect, (i) each of
the non-federal Tax Returns filed by either ▇▇▇▇▇▇ or any
▇▇▇▇▇▇ Subsidiary and (ii) each of the Tax Returns filed by
any ▇▇▇▇▇▇ Client Entity, in cases where any such person is
required to pay a Tax liability, directly, correctly and
accurately reflects the amount of its Tax liability and any
other material information required to be set forth on such
Tax Return, and, in all other cases, correctly and accurately
reflects such person's income, gains, losses, deductions and
credits for the relevant fiscal year (or other period) and any
other material information required to be set forth on such
Tax Return. All Taxes shown on filed Tax Returns, or to be
shown on Tax Returns that have been extended but not yet
filed, have been paid. In the case of Taxes required to be
paid directly by ▇▇▇▇▇▇, any ▇▇▇▇▇▇ Subsidiary or any ▇▇▇▇▇▇
Client Entity for any period ending on or prior to the date
hereof for which no Tax Return is yet due, all such Taxes have
been adequately reserved for on the books of ▇▇▇▇▇▇ or the
respective ▇▇▇▇▇▇ Subsidiary or ▇▇▇▇▇▇ Client Entity. Except
with respect to those matters set forth on Schedule 4A.7(a),
no audit examination of any Tax Return of ▇▇▇▇▇▇, any ▇▇▇▇▇▇
Subsidiary or any ▇▇▇▇▇▇ Client Entity is in progress and
neither ▇▇▇▇▇▇ nor any ▇▇▇▇▇▇ Subsidiary nor any ▇▇▇▇▇▇ Client
Entity nor any partner or stockholder of any of them has been
notified by any Tax authority that any such audit examination
is contemplated. Except with respect to those matters set
forth on Schedule 4A.7(a), there is no Tax deficiency or claim
for additional federal Taxes or interest thereon or penalties
in connection therewith asserted against ▇▇▇▇▇▇ or any ▇▇▇▇▇▇
Subsidiary which claim would have a Material Adverse Effect.
Except with respect to those matters set forth on Schedule
4A.7(a) or as would not, individually or in the aggregate,
have a Material Adverse Effect, there is no Tax deficiency or
claim for additional Taxes or interest thereon or penalties in
connection therewith asserted against ▇▇▇▇▇▇ or any ▇▇▇▇▇▇
Subsidiary or any ▇▇▇▇▇▇ Client Entity. Except with respect to
those matters set forth on Schedule 4A.7(a) or as would not,
individually or in the aggregate, have a Material Adverse
Effect, there is no Tax deficiency or claim for additional
Taxes or interest thereon or penalties in connection therewith
asserted
-62-
3131867.30
against any ▇▇▇▇▇▇ Client Entity. Except as set forth on
Schedule 4A.7(a), the Tax Returns filed by ▇▇▇▇▇▇, each ▇▇▇▇▇▇
Subsidiary and each ▇▇▇▇▇▇ Client Entity to date have not been
audited. No claim has ever been made by an authority in a
jurisdiction where ▇▇▇▇▇▇, any ▇▇▇▇▇▇ Subsidiary or any ▇▇▇▇▇▇
Client Entity does not file reports or returns that any such
person not filing reports or returns in that jurisdiction is
or may be, or its partners are or may be, subject to taxation
by that jurisdiction which has not yet been resolved, or if
resolved and any amount was determined to be payable, in
respect of which such amount has not yet been paid. There are
no Liens on any of the Assets of ▇▇▇▇▇▇, any ▇▇▇▇▇▇ Subsidiary
or any ▇▇▇▇▇▇ Client Entity that arose in connection with any
failure to pay Taxes. Neither ▇▇▇▇▇▇ nor any ▇▇▇▇▇▇ Subsidiary
nor any ▇▇▇▇▇▇ Client Entity nor any partner nor shareholder
of any of them on behalf of such entity has ever, in the case
of ▇▇▇▇▇▇, any ▇▇▇▇▇▇ Subsidiary or any ▇▇▇▇▇▇ Client Entity,
entered into a closing agreement, or, in the case of a partner
of any such ▇▇▇▇▇▇ Subsidiary that is a partnership, entered
into a closing agreement in respect of a deficiency or other
matter arising in connection with ownership of a partnership
interest in any such entity pursuant to Section 7121 of the
Code or any similar provision of state law. Except as set
forth on Schedule 4.A7(a), neither ▇▇▇▇▇▇ nor any ▇▇▇▇▇▇
Subsidiary nor any ▇▇▇▇▇▇ Client Entity nor any partner nor
shareholder of any of them on behalf of such entity is a party
to any tax allocation or tax sharing agreements. Neither
▇▇▇▇▇▇ nor any ▇▇▇▇▇▇ Subsidiary nor any ▇▇▇▇▇▇ Client Entity
nor any partner nor shareholder of any of them on behalf of
such entity has agreed to, or is required to, make any
adjustments under Section 481(a) of the Code by reason of a
change in accounting method or otherwise.
(b) Neither ▇▇▇▇▇▇, nor any ▇▇▇▇▇▇ Subsidiary nor any
▇▇▇▇▇▇ Client Entity nor any partner or shareholder of ▇▇▇▇▇▇
or any such ▇▇▇▇▇▇ Subsidiary or any ▇▇▇▇▇▇ Client Entity (in
the case of such partner or shareholder acting on behalf of
▇▇▇▇▇▇ or such ▇▇▇▇▇▇ Subsidiary or such ▇▇▇▇▇▇ Client Entity)
has executed an extension or waiver, that is currently in
effect, of any statute of limitations in respect of the
assessment or collection of any Tax due or in respect of any
adjustment to any Tax Return.
(c) Adequate provision for any Taxes of ▇▇▇▇▇▇ and
each ▇▇▇▇▇▇ Subsidiary and each ▇▇▇▇▇▇ Client Entity due or to
become due, in respect of its assets, properties, businesses
and operations (i) for any period or periods through and
including December 31, 1995, has been made and is reflected in
the December 31, 1995 financial statements, and (ii) for any
subsequent periods ending on or prior to the date hereof, has
been made and is reflected on the books of the relevant
entity.
-63-
3131867.30
(d) Deferred Taxes of ▇▇▇▇▇▇ and each ▇▇▇▇▇▇
Subsidiary and each ▇▇▇▇▇▇ Client Entity have been provided
for in accordance with GAAP, except for such failures to so
provide that would not, individually or in the aggregate, have
a Material Adverse Effect.
(e) Except as set forth on Schedule 4A.7(e), ▇▇▇▇▇▇
and each ▇▇▇▇▇▇ Subsidiary or ▇▇▇▇▇▇ Client Entity that
purports to be a corporation for federal and state income tax
purposes:
(i) has not filed a consent under Code
section 341(f) concerning collapsible corporations;
(ii) has not made any payments, incurred an
obligation to make any payments or become party to
any agreement that under certain circumstances could
obligate it to make any payments that will not be
deductible under Code section 280G; and
(iii) has not (A) been a member of an
affiliated group filing a consolidated Tax Return or
(B) incurred any liability for the Taxes of any
Person under Treasury regulation ss.1.1502-6 (or any
similar provision of state, local or foreign law) as
a transferee or successor, by contract or otherwise.
(f) Each ▇▇▇▇▇▇ Subsidiary and each ▇▇▇▇▇▇ Client
Entity that purports to be a partnership for federal and state
tax purposes is, and at all times since its formation has
been, and immediately after Closing will be, properly
classified for federal and state income tax purposes as a
partnership that is not publicly traded (and not as an
association taxable as a corporation) and has never been
treated as a corporation pursuant to Section 7704 of the Code.
(g) Each other ▇▇▇▇▇▇ Subsidiary or ▇▇▇▇▇▇ Client
Entity that purports to be a pass-through entity for federal
and state income tax purposes is, and at all times since its
formation has been, and immediately after the Closing will be,
properly classified for federal and state income tax purposes
as a pass-through entity.
(h) Except for CIIF Business Trust and CIIF II
Business Trust, no ▇▇▇▇▇▇ Subsidiary or ▇▇▇▇▇▇ Client Entity
has elected or has represented to be classified as a REIT for
federal and state income tax purposes within the meaning of
Code Section 856 or similar provision of state law. Each of
CIIF Business Trust and CIIF II Business Trust is, and at all
times since its formation has been, properly classified for
federal and state income taxes as a REIT within the meaning of
Code Section 856 or similar provision of state law, has
properly
-64-
3131867.30
elected such classification, and has in each taxable year
since its formation, including the current taxable year,
satisfied the requirements of Code Section 857. None of
▇▇▇▇▇▇, the ▇▇▇▇▇▇ Subsidiaries and ▇▇▇▇▇▇ Client Entities has
any net unrealized built-in gains as described in Internal
Revenue Service Notice 88-19.
(i) Except as would not have a Material Adverse
Effect or except as arises from an action of NCLP after
Closing (other than the carrying out of allocation provisions
in place prior to Closing), (i) no Client has or will have a
valid claim against ▇▇▇▇▇▇ or any ▇▇▇▇▇▇ Subsidiary arising
from the failure of any ▇▇▇▇▇▇ Subsidiary or ▇▇▇▇▇▇ Client
Entity that is intended to satisfy the requirements of Code
Section 514(c)(9) to satisfy such requirements at any time
since its inception, nor (ii) will any Client have any such
claim against Buyer, NCLP, ▇▇▇▇▇▇ or any ▇▇▇▇▇▇ Subsidiary
immediately after Closing.
(j) To Buyer's Knowledge and except as would not have
a Material Adverse Effect, no Client has a valid claim against
▇▇▇▇▇▇ or any ▇▇▇▇▇▇ Subsidiary as a result of the failure of
any Tax Return provided by ▇▇▇▇▇▇, any ▇▇▇▇▇▇ Subsidiary or
any ▇▇▇▇▇▇ Client Entity to a tax-exempt partner or to a
pass-through partner with tax-exempt partners to correctly
identify those items of income that constitute "unrelated
business taxable income" as defined in Section 512 of the Code
in the hands of such partner.
(k) Except as identified on Schedule 4A.7(k), there
will be no partnership termination of any partnership that is
controlled by Buyer under Section 708(b)(1)(B) as a result of
the transactions contemplated by this Agreement.
(l) Except as identified on Schedule 4A.7(l), neither
Buyer, nor any ▇▇▇▇▇▇ Subsidiary nor any ▇▇▇▇▇▇ Client Entity
(i) files or is required to file foreign Tax Returns or (ii)
has any income from sources outside the United States.
4A.8. INTERESTED PARTIES. Except for business expenses incurred in the
ordinary course of business, and except as set forth on Schedule 4A.8 no current
or former officer, employee, director, stockholder or partner of ▇▇▇▇▇▇ or any
▇▇▇▇▇▇ Subsidiary has any loan (except participant loans under ▇▇▇▇▇▇ Employee
Benefit Plans as permitted by applicable law) or other obligation outstanding to
or from ▇▇▇▇▇▇ or any of the ▇▇▇▇▇▇ Subsidiaries, or for which ▇▇▇▇▇▇ or any of
the ▇▇▇▇▇▇ Subsidiaries is or may be liable under a guaranty or otherwise.
Except for such interests set forth on Schedule 4A.8 that would not,
individually or in the aggregate, have a Material Adverse Effect, to the
Knowledge of Buyer no officer or director of ▇▇▇▇▇▇ or any ▇▇▇▇▇▇ Subsidiary has
any interest in any firm, person or entity (other than as an officer, director,
stockholder or partner) with which ▇▇▇▇▇▇ or any
-65-
3131867.30
of the ▇▇▇▇▇▇ Subsidiaries has entered into any contract or lease, or with which
▇▇▇▇▇▇ or any of the ▇▇▇▇▇▇ Subsidiaries does business and which would influence
that person in doing business with ▇▇▇▇▇▇ or any of the ▇▇▇▇▇▇ Subsidiaries.
Except as set forth on Schedule 4A.8, no officer or director of ▇▇▇▇▇▇ or any of
the ▇▇▇▇▇▇ Subsidiaries has any interest, directly or indirectly, in any firm,
person or entity established for the benefit of any client or clients of ▇▇▇▇▇▇
or any of the ▇▇▇▇▇▇ Subsidiaries. Schedule 4A.8(a) sets forth for each director
and officer of ▇▇▇▇▇▇ and of each ▇▇▇▇▇▇ Subsidiary who is a party to an
employment agreement with NCLP, any interest, other than an interest of less
than 5% in a publicly traded company, held by such person, directly or
indirectly, in real estate properties (excluding any personal residences),
projects or ventures held or managed, directly or indirectly, by ▇▇▇▇▇▇ or any
▇▇▇▇▇▇ Subsidiary or by any firm, person or entity competitive therewith,
whether owned or held by him alone or with others.
4A.9. TITLE TO ASSETS; PROPERTY.
(a) At the Closing, each of ▇▇▇▇▇▇ and each ▇▇▇▇▇▇
Subsidiary shall have good and sufficient title to, or valid
and subsisting leasehold interests in, all of its Assets,
except such assets as have been disposed of in the ordinary
course of the business consistent with past practice, free and
clear of any Liens, except for (i) such minor imperfections of
title, or insignificant Liens, as do not, individually or in
the aggregate, have a Material Adverse Effect, or materially
interfere with the present uses of such Assets, (ii) such
Liens arising by operation of law which do not, individually
or in the aggregate, have a Material Adverse Effect, and (iii)
the Liens listed on Schedule 4A.9(a). Assets of ▇▇▇▇▇▇ and the
▇▇▇▇▇▇ Subsidiaries reflected on the ▇▇▇▇▇▇ Pro Forma Balance
Sheet shall include sufficient cash, cash equivalents,
accounts receivable and prepaid expenses (x) to satisfy the
▇▇▇▇▇▇ Working Capital Requirement, (y) to pay the Buyer
Restructuring Costs in excess of Buyer's Pre-Closing
Restructuring Costs and (z) to satisfy Buyer's share of the
funding of the Restructuring Reserve. Without regard to any
representation as to the title or transferability of the
following assets, the Assets of ▇▇▇▇▇▇ and the ▇▇▇▇▇▇
Subsidiaries reflected on the Closing Balance Sheet are all
the assets necessary to conduct ▇▇▇▇▇▇'▇ and the ▇▇▇▇▇▇
Subsidiary's business, except as contemplated by Section 6.13.
(b) All of ▇▇▇▇▇▇'▇ and each ▇▇▇▇▇▇ Subsidiary's
personal property is in good working order and repair, except
where failure to maintain ▇▇▇▇▇▇ or each ▇▇▇▇▇▇ Subsidiary's
personal property in good working order and repair would not,
individually or in the aggregate, have a Material Adverse
Effect. Those Assets of ▇▇▇▇▇▇ and each ▇▇▇▇▇▇ Subsidiary and
of any pass-through entity in which ▇▇▇▇▇▇ or a ▇▇▇▇▇▇
Subsidiary holds a direct or indirect interest which are real
estate or leasehold interests in or options on real estate are
listed on Schedule 4A.9(b). ▇▇▇▇▇▇ and each ▇▇▇▇▇▇ Subsidiary
holds its leased real and
-66-
3131867.30
personal properties that are material to the operation of its
business under valid and binding leases, each such lease is
effective in accordance with its respective terms, and there
is not under any such lease any existing default or any event
which with notice or lapse of time or both would become a
default with respect to ▇▇▇▇▇▇ or any ▇▇▇▇▇▇ Subsidiary or, to
the Knowledge of Buyer, with respect to any other party
thereto, except where such a default or such event would not,
individually or in the aggregate, have a Material Adverse
Effect.
(c) Schedule 4A.9(c) sets forth all trademarks, trade
names, service marks and copyrights (whether or not such
trademarks, trade names, service marks and copyrights are
registered), and all pending applications therefor, owned by
▇▇▇▇▇▇ or any ▇▇▇▇▇▇ Subsidiary or in which ▇▇▇▇▇▇ or any
▇▇▇▇▇▇ Subsidiary has any interest, which are material to its
business. Except as would not, individually or in the
aggregate, have a Material Adverse Effect, each of ▇▇▇▇▇▇ and
the ▇▇▇▇▇▇ Subsidiaries has, or has the right to use, and
after consummation of the transactions contemplated hereby,
NCLP and its subsidiaries will have, or have the right to use,
free and clear of any claims of others, all franchises,
permits, licenses, trademarks, service marks (whether
registered or unregistered), trademark applications, service
▇▇▇▇ applications, trade names, copyrights, trade secrets,
designs, ideas and other proprietary rights necessary to own
and operate their respective properties and to carry on their
respective business as currently conducted. ▇▇▇▇▇▇ owns, and
after consummation of the transactions contemplated hereby
▇▇▇▇▇▇ will continue to own, the right to the ▇▇▇▇▇▇ names in
connection with the rendering of investment advisory services.
To the Knowledge of Buyer and except as would not,
individually or in the aggregate, have a Material Adverse
Effect, neither ▇▇▇▇▇▇ nor any ▇▇▇▇▇▇ Subsidiary has
infringed, misappropriated or violated any valid trademark,
trade name, copyright, trade secret or other intellectual
property rights or contractual relationships of others, or
received any notice, claim or protest respecting any such
infringements or violations. Neither ▇▇▇▇▇▇ nor any ▇▇▇▇▇▇
Subsidiary has made any payment to indemnify any Person for
any such infringements, misappropriations or violations. There
is no pending or threatened claim asserted in writing by
▇▇▇▇▇▇ or any ▇▇▇▇▇▇ Subsidiary against others for
infringement or misappropriation of any patent, trademark,
trade name, service ▇▇▇▇ or copyright owned by ▇▇▇▇▇▇ or any
▇▇▇▇▇▇ Subsidiary.
(d) To the Knowledge of Buyer and except as would
not, individually or in the aggregate, have a Material Adverse
Effect, each of ▇▇▇▇▇▇ and the ▇▇▇▇▇▇ Subsidiaries owns or
licenses all computer software developed or currently used by
it that is material to the conduct of its business and has the
right to use such software, subject to compliance with
applicable licenses, without infringing upon the intellectual
property rights (including trade secrets
-67-
3131867.30
rights) of a third party which has licensed the same to the
applicable ▇▇▇▇▇▇ or any ▇▇▇▇▇▇ Subsidiary.
4A.10. INSURANCE. Each insurance policy that is maintained by ▇▇▇▇▇▇ or
any ▇▇▇▇▇▇ Subsidiary or for the benefit of ▇▇▇▇▇▇ or any ▇▇▇▇▇▇ Subsidiary with
respect to their businesses or properties or upon the life of any person
employed by ▇▇▇▇▇▇ or any ▇▇▇▇▇▇ Subsidiary (including with respect to officers
and employees of ▇▇▇▇▇▇ or the ▇▇▇▇▇▇ Subsidiaries who serve as general
partners, trustees or officers or directors of corporations holding title to
Clients' investments) is set forth on Schedule 4A.10 showing the amount of
coverage under each such policy. Schedule 4A.10 also sets forth claims made
during the five years prior to the date hereof under each errors and omissions
policy listed on such schedule and, to the extent such claims exceed $500,000,
under each other policy listed on such schedule. Neither ▇▇▇▇▇▇ nor any ▇▇▇▇▇▇
Subsidiary is required by virtue of any Investment Contract or otherwise to
maintain any insurance coverage other than those listed on Schedule 4A.10 or any
coverage amount in excess of that listed.
4A.11. OTHER MATERIAL CONTRACTS.
(a) All contracts (other than the Investment
Contracts subject to the representations and warranties set
forth in Section 4A.16(a)) to which ▇▇▇▇▇▇ or any ▇▇▇▇▇▇
Subsidiary is a party or by which ▇▇▇▇▇▇ or any ▇▇▇▇▇▇
Subsidiary is bound and that are material to the business of
▇▇▇▇▇▇ or any ▇▇▇▇▇▇ Subsidiary are listed on Schedule 4A.11,
and all of such contracts are valid and effective in
accordance with their respective terms except as would not,
individually or in the aggregate, have a Material Adverse
Effect.
(b) Except as listed on Schedule 4A.11, neither
▇▇▇▇▇▇ nor any ▇▇▇▇▇▇ Subsidiary is a party to any loan
agreement or bank credit agreement in respect of indebtedness
for borrowed money.
(c) Neither ▇▇▇▇▇▇ nor any ▇▇▇▇▇▇ Subsidiary is in
default under (nor is ▇▇▇▇▇▇ aware of any fact or event which
with the lapse of time or the giving of notice or both would
constitute a default under) any contract made or obligation
owed by it except for defaults which would not, individually
or in the aggregate, have a Material Adverse Effect.
(d) Except as set forth on Schedule 4A.11(d), neither
▇▇▇▇▇▇ nor any ▇▇▇▇▇▇ Subsidiary has given a power of attorney
to any person which is presently outstanding or in force for
any purpose whatsoever.
(e) No contract to which ▇▇▇▇▇▇ or any ▇▇▇▇▇▇
Subsidiary is a party requires consent to assignment, the
failure of which to receive would have, individually or in the
aggregate, a Material Adverse Effect.
-68-
3131867.30
4A.12. BANK ACCOUNTS AND MONEY MARKET FUNDS. Set forth on Schedule
4A.12 is the name and location of each bank and money market fund in which
▇▇▇▇▇▇ or any of the ▇▇▇▇▇▇ Subsidiaries has an account or accounts or safe
deposit boxes holding funds or assets of ▇▇▇▇▇▇ or any ▇▇▇▇▇▇ Subsidiary, the
name and number of each account or box, the names of persons authorized to draw
thereon or having access thereto, and the balance of each account and the
contents of each box as of the date indicated thereon.
4A.13. LITIGATION; NO PRACTICES IN VIOLATION OF LAW. Except as set
forth on Schedule 4A.13,
(a) There are no legal, administrative or arbitration
actions, suits, proceedings or investigations of any kind
pending, or, to Buyer's Knowledge, threatened before any
court, commission, agency or other administrative authority by
or against ▇▇▇▇▇▇ or any ▇▇▇▇▇▇ Subsidiary affecting ▇▇▇▇▇▇'▇
or any ▇▇▇▇▇▇ Subsidiary's businesses or properties, the
Assets of ▇▇▇▇▇▇ or any ▇▇▇▇▇▇ Subsidiary. Neither ▇▇▇▇▇▇ nor
any ▇▇▇▇▇▇ Subsidiary nor, to Buyer's Knowledge, any officer,
director, partner or employee thereof, is a party to or the
subject of any order, judgement or decree (other than
exemptive orders) relating to ▇▇▇▇▇▇'▇ or any ▇▇▇▇▇▇
Subsidiary's business with or by any federal, state, local or
foreign regulatory authority.
There are no actions, suits or proceedings pending
or, to Buyer's Knowledge, threatened before any court,
commission, agency or other administrative authority by or
against ▇▇▇▇▇▇ or any ▇▇▇▇▇▇ Subsidiary or any partner or
stockholder of any of them which, if adversely determined,
would adversely affect the acquisition of assets contemplated
hereby by Buyer or which would restrain or enjoin the
consummation of the transactions contemplated by this
Agreement or the Related Agreements or declare unlawful the
transactions or events contemplated by this Agreement or cause
such transactions to be rescinded. There are no judgments,
injunctions, orders or other judicial or administrative
mandates outstanding against or affecting ▇▇▇▇▇▇ or any ▇▇▇▇▇▇
Subsidiary which restrain or enjoin the consummation of the
transactions contemplated by this Agreement.
To Buyer's Knowledge, there are no actions, suits or
proceedings pending or threatened before any court,
commission, agency or other administrative authority by or
against, and there are no judgments, injunctions, orders or
other judicial or administrative mandates outstanding against,
any employee of ▇▇▇▇▇▇ or any ▇▇▇▇▇▇ Subsidiary arising from
such employee's service to any ▇▇▇▇▇▇ Client Entity.
-69-
3131867.30
(b) Neither ▇▇▇▇▇▇ nor any ▇▇▇▇▇▇ Subsidiary has
engaged in or is now engaging in any act, conspiracy or course
of conduct in violation of any applicable federal or state law
governing business practice which would result in a Material
Adverse Effect, individually or in the aggregate, nor has
▇▇▇▇▇▇ or any ▇▇▇▇▇▇ Subsidiary nor, to Buyer's Knowledge, any
officer, director or employee of ▇▇▇▇▇▇ or any ▇▇▇▇▇▇
Subsidiary, received any notice, claim or protest that such
person is now or has heretofore been so engaged.
4A.14. EMPLOYEE BENEFIT PLANS.
(a) Schedule 4A.14 lists all material ▇▇▇▇▇▇ Employee
Benefit Plans. With respect to each such ▇▇▇▇▇▇ Employee
Benefit Plan, Buyer has delivered or made available to Seller
true and correct copies of, where applicable, (i) any plans,
related trust documents, insurance contracts and any
amendments thereto; (ii) the most recent summary plan
descriptions and the two most recently filed annual reports;
(iii) the most recent actuarial valuation, summaries and
reports; and (iv) the most recent determination letter
received from the Internal Revenue Service and/or the most
recent Form 5300, with attachments, requesting a determination
letter. To the Knowledge of Buyer, no event has occurred for
which, and there exists no condition or circumstances under
which, ▇▇▇▇▇▇ or any ▇▇▇▇▇▇ Subsidiary, in respect of any
▇▇▇▇▇▇ Employee Benefit Plan, or any ▇▇▇▇▇▇ Employee Benefit
Plan could be subject to any liability under Section 502(a) of
ERISA or Section 4975 of the Code except where such liability
would not, individually or in the aggregate, have a Material
Adverse Effect.
(b) Except as disclosed on Schedule 4A.14, with
respect to each ▇▇▇▇▇▇ Employee Benefit Plan, (i) except where
noncompliance would not, individually or in the aggregate,
have a Material Adverse Effect, ▇▇▇▇▇▇ is and has been in
compliance in all respects with the terms of each ▇▇▇▇▇▇
Employee Benefit Plan and with the requirements prescribed by
all applicable statutes, orders or governmental rules or
regulations, including ERISA and the Code and there exists no
liability for prior noncompliance; (ii) each ▇▇▇▇▇▇ Employee
Benefit Plan intended to be qualified under Section 401(a) of
the Code will have applied before the Closing for a favorable
determination letter from the Internal Revenue Service with
respect to such qualification which application shall not have
been withdrawn; any related trust has been determined to be
exempt from taxation under Section 501(a) of the Code; and, to
the Knowledge of Buyer, nothing has occurred since the date of
such letter that would adversely affect such qualification or
exemption; and (iii) except as would not, individually or in
the aggregate, have a Material Adverse Effect, there are no
actions, examinations or proceedings (other than routine
claims for benefits) pending or, to the Knowledge of Buyer,
threatened, with respect to any such ▇▇▇▇▇▇
-70-
3131867.30
Employee Benefit Plan or against the assets of any such ▇▇▇▇▇▇
Employee Benefit Plan.
(c) Except as would not, individually or in the
aggregate, have a Material Adverse Effect, ▇▇▇▇▇▇ has paid, or
in the case of any employee contribution, collected and
remitted all contributions, premiums and other payments
required to be paid or collected and remitted during the 1995
plan year for each ▇▇▇▇▇▇ Employee Benefit Plan, and by the
Closing Date will have paid or collected or remitted all
contributions, premiums and other payments required to be made
or collected and remitted on or prior to the Closing Date to
any ▇▇▇▇▇▇ Employee Benefit Plan during or for the 1996 plan
year. For purposes of this Section 4A.14, "contributions,
premiums and other payments required to be made on or prior to
the Closing Date" shall include all employee contributions and
all employer matching contributions required to be made with
respect to such employee contributions made under any defined
contribution ▇▇▇▇▇▇ Employee Benefit Plan during the 1996 plan
year and on or prior to the Closing Date, and all premium
payments under insured plans that are due and required to be
paid as of the Closing Date and all other amounts payable on
or prior to the Closing Date under any self-funded ▇▇▇▇▇▇
Employee Benefit Plan that provides that group health,
medical, life or disability benefits shall be the sole
responsibility of Buyer and or ▇▇▇▇▇▇.
(d) Neither ▇▇▇▇▇▇ nor any ▇▇▇▇▇▇ Subsidiary has any
liability (contingent or otherwise) under Title IV of ERISA.
(e) No ▇▇▇▇▇▇ Employee Benefit Plan has ever been or
currently is a "multiemployer plan" (as defined in Section
4001(a)(3) of ERISA).
(f) Except as disclosed on Schedule 4A.14 or as would
not, individually or in the aggregate, have a Material Adverse
Effect, (i) there are no unfunded obligations under any ▇▇▇▇▇▇
Employee Benefit Plan providing benefits after termination of
employment with respect to any employee of ▇▇▇▇▇▇ other than
continuation of health coverage as required by Section 4980B
of the Code and Part 6 of Subtitle B of Title I of ERISA or
any applicable state laws, and (ii) neither ▇▇▇▇▇▇ nor any
▇▇▇▇▇▇ Subsidiary has made any other commitments to its
employees or former employees or their beneficiaries under
which it is or would be obligated to provide any retirement,
death, change in control, severance, health, or other welfare
benefit or payment which, as of the Closing Date, is not
adequately funded through a trust or other funding
arrangement.
(g) Except as would not, individually or in the
aggregate, have a Material Adverse Effect, neither ▇▇▇▇▇▇ nor
any ▇▇▇▇▇▇ Subsidiary has taken
-71-
3131867.30
any action with respect to any ▇▇▇▇▇▇ Employee Benefit Plan
which would impair the funded status of such ▇▇▇▇▇▇ Employee
Benefit Plan.
(h) Except as disclosed on Schedule 4A.14, the
consummation of the transactions contemplated by this
Agreement will not obligate NCLP to provide any current or
former officer, director, stockholder, partner or employee of
▇▇▇▇▇▇, including, but not limited to, employees of ▇▇▇▇▇▇ who
continue their employment with NCLP with severance pay,
supplemental unemployment compensation or any similar payment.
(i) With respect to ▇▇▇▇▇▇ Employee Benefit Plans,
the transactions contemplated by this Agreement shall not
result in any action or the establishment of any relationship
prohibited by Sections 406 and 407 of ERISA (determined after
taking into account any applicable exemptions).
(j) Attached to Schedule 4A.14 is a true, correct and
complete listing, as of the date hereof, of (i) all
participants, if any, in ▇▇▇▇▇▇'▇ Deferred Compensation and
Incentive Compensation Plans, together with the interest of
each such participant in such plan, (ii) all currently
effective employment contracts (other than agreements with
NCLP) to which ▇▇▇▇▇▇ or any ▇▇▇▇▇▇ Subsidiary is a party, and
(iii) all currently effective severance arrangements or
arrangements for payments to employees based on change of
control to which ▇▇▇▇▇▇ or any ▇▇▇▇▇▇ Subsidiary is a party.
Neither ▇▇▇▇▇▇ nor any ▇▇▇▇▇▇ Subsidiary maintains a stock
appreciation rights plan.
4A.15. FILINGS, ETC.
(a) Except as would not, individually or in the
aggregate, have a Material Adverse Effect, (i) since December
31, 1991, ▇▇▇▇▇▇ and the ▇▇▇▇▇▇ Subsidiaries have had and now
have all permits, licenses, certificates of authority, orders
and approvals of, and have made all filings, applications and
registrations with, federal, state or local governmental or
regulatory bodies, and self-regulatory bodies that are
required (including by the rules of any self-regulatory body)
in order to permit each of them to carry on its respective
business as presently conducted, and (ii) such permits,
licenses, certificates of authority, registrations, orders and
approvals are in full force and effect. The conduct of its
respective business by ▇▇▇▇▇▇ and each ▇▇▇▇▇▇ Subsidiary has
not, since December 31, 1991, and currently does not, violate
or infringe any applicable federal, state or local law,
statute, ordinance, license, rule or regulation including
those of the self-regulatory bodies, except where such
violation or infringement would not, individually or in the
aggregate, have a Material Adverse Effect.
-72-
3131867.30
(b) Without limiting the foregoing, ▇▇▇▇▇▇, the
▇▇▇▇▇▇ Subsidiaries and each of their officers and employees
that is or who are required to be registered as an investment
adviser, a broker-dealer, a registered representative or a
sales person with the SEC, CFTC, the securities commission or
any other commission of any state or any self-regulatory body
is duly registered as such and such registration is in full
force and effect, except where the failure to be so registered
or to have such registration in full force and effect would
not, individually or in the aggregate, have a Material Adverse
Effect.
(c) There are no proceedings pending or, to Buyer's
Knowledge, threatened against any of ▇▇▇▇▇▇ or the ▇▇▇▇▇▇
Subsidiaries, that are reasonably likely to result in the
revocation, cancellation or suspension, or any adverse
modification, of any material permit, license, certificate of
authority, order or approval referred to in Section 4A.15(a)
and the execution and delivery of this Agreement and the
consummation of any transactions contemplated hereby will not
result in any such revocation, cancellation, suspension, or
any adverse modification, of any material permit, license,
certificate of authority, order or approval referred to in
Section 4A.15(a) other than in connection with the various
filings required hereby.
4A.16. REPRESENTATIONS AND WARRANTIES REGARDING THE
INVESTMENT ADVISORY BUSINESS.
(a) INVESTMENT CONTRACTS AND CLIENTS.
(i) Schedule 4A.16(a)(i)(1) lists all
Investment Contracts of ▇▇▇▇▇▇ and the ▇▇▇▇▇▇
Subsidiaries, indicating for each the name of the
Client and whether such Investment Contract is in
writing. Each written Investment Contract has been
delivered by Buyer to Seller and accurately embodies
the terms and conditions on which services are
rendered to the Client party thereto except for oral
modifications described on Schedule 4A.16(a)(i)(2) or
oral modifications which do not materially modify the
terms thereof. Except as indicated on such Schedule
4A.16(a)(i)(3), none of such Investment Contracts by
their terms or under applicable law would, or would
be required to, terminate as a result of the
consummation of the transactions contemplated by this
Agreement unless the consent of the Client or Clients
party thereto is obtained. A description of all of
the nonwritten Investment Contracts and true, correct
and complete copies of all of the written Investment
Contracts, including any fee schedules and investment
guidelines, have been provided by Buyer to Seller.
(x) Each Investment Contract of ▇▇▇▇▇▇ or any ▇▇▇▇▇▇
Subsidiary and any subsequent renewal thereof has
been duly authorized, executed and delivered by the
▇▇▇▇▇▇
-73-
3131867.30
Subsidiary party thereto and, to the extent
applicable, has been adopted in compliance with
Section 15 of the Investment Company Act and is a
valid and binding agreement of each such party,
enforceable in accordance with its terms (subject to
ERISA or to bankruptcy, insolvency, moratorium,
fraudulent transfer and similar laws affecting
creditors' rights generally and to general equity
principles) and (y) (I) in the case of Investment
Contracts with Investment Companies and Clients, each
of ▇▇▇▇▇▇ and any ▇▇▇▇▇▇ Subsidiary is in compliance
in all respects with the terms of each Investment
Contract to which it is a party, except where such
noncompliance would not, individually or in the
aggregate, have a Material Adverse Effect and (II) no
event has occurred or condition exists that
constitutes or with notice or the passage of time
would constitute a default of ▇▇▇▇▇▇ or the ▇▇▇▇▇▇
Subsidiary, as applicable, thereunder. To the
Knowledge of Buyer and except as do not,
individually, or in the aggregate have a Material
Adverse Effect, (x) each Investment Contract of
▇▇▇▇▇▇ or any ▇▇▇▇▇▇ Subsidiary and any subsequent
renewal thereof has been duly authorized, executed
and delivered by each party thereto (other than
▇▇▇▇▇▇ or any ▇▇▇▇▇▇ Subsidiary) and, to the extent
applicable, has been adopted in compliance with
Section 15 of the Investment Company Act and is a
valid and binding agreement of each such party (other
than ▇▇▇▇▇▇ or any ▇▇▇▇▇▇ Subsidiary) and (y) in the
case of Investment Contracts of any ▇▇▇▇▇▇ Subsidiary
with Clients, each Client party is in compliance in
all respects with the terms of each Investment
Contract to which it is a party. Except as set forth
on Schedule 4A.16(a)(i)(4), none of the Investment
Contracts, or any other arrangements or
understandings relating to rendering of investment
advisory or management services, including without
limitation all subadvisory services or administration
services to any Client or other person, contains any
undertaking by ▇▇▇▇▇▇ or any ▇▇▇▇▇▇ Subsidiary to cap
fees or to reimburse any or all fees thereunder. None
of the ▇▇▇▇▇▇ Clients are registered or are required
to be registered as investment companies under the
Investment Company Act. Except as set forth on
Schedule 4A.16(a)(i)(5), no Client has notified
▇▇▇▇▇▇ or the ▇▇▇▇▇▇ Subsidiaries or their directors
or officers that it intends to discontinue or
substantially modify its relationship with ▇▇▇▇▇▇ or
the ▇▇▇▇▇▇ Subsidiaries.
(ii) The accounts of each Client that is
subject to ERISA have been managed by ▇▇▇▇▇▇ or any
▇▇▇▇▇▇ Subsidiary such that ▇▇▇▇▇▇ or any ▇▇▇▇▇▇
Subsidiary in the exercise of such management is in
compliance in all respects with the applicable
requirements of ERISA, except where such
noncompliance would not, individually or in the
aggregate, have a Material Adverse Effect, and
consummation of the
-74-
3131867.30
transactions contemplated hereby will not result in
a violation of such ERISA requirements.
(iii) Neither ▇▇▇▇▇▇ nor any ▇▇▇▇▇▇
Subsidiary is a party or subject to any plan adopted
in accordance with Rule 12b-1 under the Investment
Company Act.
(b) REGULATORY COMPLIANCE OF ▇▇▇▇▇▇ AND ▇▇▇▇▇▇
SUBSIDIARIES.
(i) Since 1981, 1991 and 1995, respectively,
▇▇▇▇▇▇ Advisors, Inc., ▇▇▇▇▇▇ Management and
Advisors, L.P., and BBC Investment Advisors, L.P.
(collectively, the "▇▇▇▇▇▇ Registered Entities") have
been duly registered as investment advisers under the
Investment Advisers Act and each Registered Entity is
registered as an investment adviser in the states
referenced in item 7, Part I of its respective
current Form ADV (such states constituting all
jurisdictions where such registration is required in
order to conduct its business except for states in
which the failure to register would not have a
Material Adverse Effect), and is in compliance with
all federal and, except as would not have a Material
Adverse Effect, state laws requiring registration,
licensing or qualification as an investment adviser.
Each such federal and state registration is in full
force and effect. Buyer has made available to Seller
a true and complete copy of each Registered Entity's
Form ADV, each as amended to date, filed with the
SEC; copies of all state registration forms, likewise
as amended to date; and copies of all current reports
required to be kept by each Registered Entity
pursuant to the Investment Advisers Act and rules
promulgated thereunder, and required pursuant to
applicable state statutes. Except as would not,
individually or in the aggregate, have a Material
Adverse Effect, the information contained in such
forms and reports was true and complete at the time
of filing. Each Registered Entity has filed all
amendments required to be filed to its Form ADV and,
except as would not have a Material Adverse Effect,
state registration forms under federal and state law.
Schedule 4A.16(b)(i) identifies the examination
and/or certification qualifications and other
licenses held by employees of ▇▇▇▇▇▇ and the ▇▇▇▇▇▇
Subsidiaries (listed by employee) that are used or
required in the conduct of ▇▇▇▇▇▇'▇ and the ▇▇▇▇▇▇
Subsidiaries's businesses.
(ii) Neither ▇▇▇▇▇▇ nor any ▇▇▇▇▇▇
Subsidiary nor any ▇▇▇▇▇▇ Client Entity is, nor
immediately following the consummation of the
transactions contemplated hereby, will any of them
be, an "investment company," within the meaning of
the Investment Company Act, which is
-75-
3131867.30
required to be registered under that Act in order to
engage in the transactions described in Section 7 of
that Act. Neither ▇▇▇▇▇▇ nor any of the ▇▇▇▇▇▇
Subsidiaries is a "broker" or "dealer" within the
meaning of the Exchange Act. Copies of all inspection
reports or similar documents furnished to Buyer by
the SEC or state regulatory authorities or any
self-regulatory organization since January 1, 1990
are listed on Schedule 4A.16(b)(ii) and have been
provided to Seller. To the Knowledge of Buyers, there
is not pending or underway any investigation of
▇▇▇▇▇▇, or any of the ▇▇▇▇▇▇ Subsidiaries or any of
their records by the SEC or any state regulatory
authority or any self-regulatory organization, and
since December 31, 1991, neither ▇▇▇▇▇▇ nor any of
the ▇▇▇▇▇▇ Subsidiaries has been notified in writing
or otherwise expressly by the SEC or any state
regulatory authority or any self-regulatory
organization that any past inspection has revealed
any deficiency in any such entity's recordkeeping or
compliance with the Investment Advisers Act, the
Exchange Act, the Securities Act, the Investment
Company Act or applicable state statutes, except for
deficiencies listed on Schedule 4A.16(b)(ii), which
deficiencies will not, individually or in the
aggregate, have a Material Adverse Effect. Neither
▇▇▇▇▇▇ nor any of the ▇▇▇▇▇▇ Subsidiaries is required
to disclose any information to clients under SEC Rule
206(4)-4 promulgated under the Investment Advisers
Act. Except as listed on Schedule 4A.16(b)(ii), the
assets of the ▇▇▇▇▇▇ funds listed in Section 4A.17 do
not constitute "plan assets" for purposes of ERISA.
(iii) Neither ▇▇▇▇▇▇ nor any of the ▇▇▇▇▇▇
Subsidiaries acts as investment adviser or subadviser
to any investment company, as defined in the
Investment Company Act, which is registered under
such Act.
(iv) Except as set forth on Schedule
4A.16(b)(iv), neither ▇▇▇▇▇▇ nor any of the ▇▇▇▇▇▇
Subsidiaries nor ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, MetLife's Senior
Vice President-Investment and Administration/Real
Estate Investments (who is the officer of MetLife
responsible for such matters), has received, nor does
such MetLife Vice President or any executive officer
of ▇▇▇▇▇▇ or any of the ▇▇▇▇▇▇ Subsidiaries have
actual knowledge of, any written complaints from any
▇▇▇▇▇▇ Client that have not been resolved, nor has
any ▇▇▇▇▇▇ Client Entity received any withdrawal or
redemption requests which continue to be outstanding
or are sufficient to trigger any liquidation or
dissolution of any ▇▇▇▇▇▇ Subsidiary or ▇▇▇▇▇▇ Client
Entity managed by ▇▇▇▇▇▇ or any ▇▇▇▇▇▇ Subsidiary.
-76-
3131867.30
(v) Other than as required to satisfy the
condition of the ERISA QPAM Exemption, neither ▇▇▇▇▇▇
nor any ▇▇▇▇▇▇ Subsidiary is, nor following the
Closing will NCLP (by reason of operations previously
conducted by ▇▇▇▇▇▇ or the ▇▇▇▇▇▇ Subsidiaries) be,
subject to any regulatory capital requirements. All
regulatory capital requirements that will be
applicable to NCLP on the Closing Date solely as a
result of its conduct of ▇▇▇▇▇▇'▇ or any ▇▇▇▇▇▇
Subsidiary's business will be satisfied by eligible
assets included on the ▇▇▇▇▇▇ Pro Forma Closing
Balance Sheet.
(vi) The offering, issuance, sale and
delivery of interests to investors in each ▇▇▇▇▇▇
Client Entity complied with the requirements of the
federal securities laws, applicable state securities
laws and, where applicable, the rules of the NASD.
None of the offering materials (including offering
memoranda, private placement memoranda, statements of
additional information, supplemental advertising or
marketing material, or amendments or supplements to
any of them) in connection with such offerings and
sales, as of their respective dates, included any
untrue statement of a material fact or omitted to
state a material fact necessary in order to make the
statements made therein, in the light of the
circumstances under which they were made, not
misleading. No current offering materials (including
offering memoranda, private placement memoranda,
statements of additional information, supplemental
advertising or marketing material, or amendments or
supplements to any of them) for the ▇▇▇▇▇▇ Client
Entities includes or will as of the Closing Date
include an untrue statement of material fact or omits
or will as of the Closing Date omit to state a
material fact necessary in order to make the
statements made therein, in the light of the
circumstances under which they were made, not
misleading.
(vii) Each pooled or commingled investment
vehicle managed by ▇▇▇▇▇▇ or any ▇▇▇▇▇▇ Subsidiary
which purports to have been organized or established
as a separate account of any insurance company has
been duly organized or established as such in
accordance with applicable insurance laws and
regulations, and except for Pooled Real Estate
Investment Fund, as to which Buyer makes the
representations contained in this clause only from
and after the time such fund commenced to be managed
by ▇▇▇▇▇▇, has been at all times managed by ▇▇▇▇▇▇ or
the applicable ▇▇▇▇▇▇ Subsidiary in accordance with
applicable insurance laws and regulations and, except
where noncompliance would not have a Material Adverse
Effect, applicable annuity contracts and investment
guidelines.
-77-
3131867.30
4A.17 ▇▇▇▇▇▇ FUND FINANCIAL STATEMENTS. The audited financial
statements of each of New England Life Pension Properties, A Real Estate Limited
Partnership; New England Life Pension Properties II, A Real Estate Limited
Partnership; New England Life Pension Properties III, A Real Estate Limited
Partnership; New England Life Pension Properties IV, A Real Estate Limited
Partnership; New England Pension Properties V, A Real Estate Limited
Partnership; ▇▇▇▇▇▇ Pension Properties VI, A Real Estate Limited Partnership;
▇▇▇▇▇▇ Pension Properties VII, A Real Estate Limited Partnership; ▇▇▇▇▇▇ Realty
Income Partners I, A Limited Partnership; ▇▇▇▇▇▇ Realty Income Partners 2, A
Limited Partnership; ▇▇▇▇▇▇ Realty Income Partners 3, A Limited Partnership;
▇▇▇▇▇▇ Realty Income Partners 4, A Limited Partnership; Pooled Real Estate
Investment Fund; Developmental Properties Account; ▇▇▇▇▇▇ Investors Limited
Partnership; CIIF Associates Limited Partnership; and CIIF Associates II Limited
Partnership and the unaudited financial statements of each of ▇▇▇▇▇▇ Commerce
Park Associates, L.P., ▇▇▇▇▇▇ Regional Center Associates, L.P. and ▇▇▇▇▇▇
Business Parks Associates, L.P. as of and for the years ended December 31, 1995
and 1994, as reported on by Price Waterhouse L.L.P. and the unaudited financial
statements of each such fund as of and for the six months ended June 30, 1996
and, to the extent available, the unaudited financial statements as of the last
day of each quarter after the date hereof and prior to the Closing Date, have
been or (in the case of such statements as of dates after the date hereof) will
as of the Closing Date be prepared in accordance with GAAP (except that certain
of the unaudited financial statements (i) are unaudited, (ii) do not include a
statement of cash flows, (iii) the balance sheet presents assets net of related
liabilities (i.e., mortgage debt), (iv) may omit normal recurring year-end
accruals which are not individually or in the aggregate material and (v) may not
include notes), except as otherwise disclosed therein, and, except as would not,
individually or in the aggregate, have a Material Adverse Effect, present or
will present fairly the financial position and other financial results of the
respective fund at the dates, and for the periods, stated therein. Except as
disclosed in its most recent financial statements, each fund listed in the
preceding sentence has no liabilities which would, individually or in the
aggregate, have a Material Adverse Effect, whether accrued, contingent or
determinable, that are required to be reflected in such financial statements
(including the notes thereto) pursuant to the requirements of GAAP.
4A.18. REGISTRATION UNDER THE COMMODITY EXCHANGE ACT. Neither
▇▇▇▇▇▇ nor any ▇▇▇▇▇▇ Subsidiary is required to register under the Commodity
Exchange Act as a CPO or as a CTA.
4A.19. REGISTRATION AS AN INSURANCE AGENT OR REAL ESTATE OR MORTGAGE
BROKER. Neither ▇▇▇▇▇▇ nor any ▇▇▇▇▇▇ Subsidiary is required to register as an
insurance agent, broker, consultant or advisor under the laws of any state.
Neither ▇▇▇▇▇▇ nor any ▇▇▇▇▇▇ Subsidiary is required to register under the laws
of any state as a Real Estate or Mortgage Broker.
-78-
3131867.30
4A.20. REGISTRATION AS A TRANSFER AGENT. Neither ▇▇▇▇▇▇ nor any
▇▇▇▇▇▇ Subsidiary (i) is registered as a transfer agent under the Exchange
Act or (ii) is engaged in any conduct or activity that would require it to be so
registered.
4A.21. ENVIRONMENTAL MATTERS. Except as has been previously been
disclosed by Buyer (directly or through ▇▇▇▇▇▇) to Seller:
(a) Neither ▇▇▇▇▇▇ nor ▇▇▇▇▇▇ Subsidiary nor any ▇▇▇▇▇▇ Client Entity
has within the three years preceding the date hereof received any written
notice, demand, citation, summons, complaint or order or any notice of any
penalty, lien or assessment, and, to Buyer's Knowledge, no investigation or
review is pending by any governmental entity, with respect to any (i) alleged
violation by ▇▇▇▇▇▇, any ▇▇▇▇▇▇ Subsidiary or any ▇▇▇▇▇▇ Client Entity of any
Environmental Law, (ii) alleged failure by ▇▇▇▇▇▇ or any ▇▇▇▇▇▇ Subsidiary or
any ▇▇▇▇▇▇ Client Entity to have any applicable environmental permit,
certificate, license, approval, registration or authorization required by law in
connection with the conduct of its business or any activity with respect to any
Hazardous Substances, except for any such notice or investigation relating to or
involving matters which would not, individually or in the aggregate, have a
Material Adverse Effect.
(b) To Buyer's Knowledge, neither ▇▇▇▇▇▇ nor any ▇▇▇▇▇▇ Subsidiary nor
any ▇▇▇▇▇▇ Client Entity has any Environmental Liabilities, except to the extent
that any such liability would not, individually or in the aggregate, have a
Material Adverse Effect.
ARTICLE V
CONDUCT OF BUSINESS PRIOR TO THE CLOSING
5.1 SELLER CONDUCT PRIOR TO CLOSING. The Selling Entities and the
Principals hereby covenant and agree with Buyer that each of the Selling
Entities and the Seller Designated Affiliates shall, prior to the Closing Date,
operate its business only in the usual, regular and ordinary course in light of
Seller's current strategic plan except as otherwise contemplated hereby. Each of
the Selling Entities and Seller Designated Affiliates shall meet all of its
obligations as they become due, shall pay all valid accounts payable in due
course in accordance with its practice heretofore, shall incur no additional
long-term indebtedness (except as otherwise contemplated hereby or any
indebtedness in connection with Seller's redemption of UAM's minority interest
in Seller; provided that such indebtedness shall be repaid in full at or before
the time of Closing) and shall use its best efforts to continue to solicit new
clients and to offer investment advisory and related services (as applicable) in
the ordinary course of business, to maintain its corporate and partnership
records, to keep its accounts receivable current, to preserve its business
organization and assets and maintain its rights, franchises and business and
customer relations necessary to run the business as
-79-
3131867.30
currently run in all material respects, to keep available the services of its
employees (except as otherwise contemplated hereby), and to preserve the
goodwill of its clients, suppliers, and others with whom business relationships
exist. Without in any way limiting the foregoing, the Selling Entities and the
Principals agree that (except as contemplated by this Agreement or in connection
with Seller's redemption of UAM's minority interest in Seller and the incurrence
of indebtedness and Liens by Seller in connection therewith; provided that at or
before the time of Closing such indebtedness shall be repaid in full and such
Liens shall be extinguished), neither the Selling Entities nor any of the Seller
Designated Affiliates (other than the Funds) will do any of the following prior
to the Closing without the prior written consent of Buyer:
(a) issue or sell any interest, option, note or other
securities of the Selling Entities or Seller Designated
Affiliates except as set forth on Schedule 5.1(a);
(b) incur any indebtedness for borrowed money,
except in the ordinary course of business consistent with
past practice;
(c) except in the ordinary course of business,
mortgage, pledge or otherwise subject to any material Lien,
any of its properties or assets, tangible or intangible;
(d) except as required to accomplish the purposes of
this Agreement or where required in the exercise of its
fiduciary obligations, in the case of any Fund, request that
any action be taken by the board of trustees of any Fund,
other than the authorization and registration of new Funds and
routine actions that would not be reasonably expected to have,
individually or in the aggregate, a Material Adverse Effect;
(e) except for those items listed on Schedule 5.1(e)
and bonuses to be paid by Seller as a result of the
transactions contemplated hereby, pay any bonus to any
officer, employee, sales representative, agent or consultant,
or grant to any officer, director, employee, sales
representative, agent or consultant any other increase in
compensation in any form except in accordance with past
practice and in the ordinary course of business, or hire any
additional directors, officers, employees or agents except in
the ordinary course of business;
(f) except to the extent that Buyer has otherwise
expressly agreed in writing as of the date hereof, or as may
be required by law, or as otherwise specifically provided
herein or as contemplated on Schedule 5.1(f), adopt, or amend
in any material respect, any employment (including without
limitation any amendment of the Employment Agreements),
collective bargaining, bonus, profit-sharing, compensation,
pension, health insurance, welfare, retirement,
-80-
3131867.30
deferred compensation or other plan, agreement, trust, fund or
arrangement for the benefit of officers, directors, partners,
stockholders, employees, sales representatives, agents or
others except in the ordinary course of business;
(g) amend its certificate of limited partnership,
agreement of limited partnership, certificate of incorporation
or by-laws, as the case may be, except as required by law or
to reflect the redemption of UAM's minority interest in Seller
and the admission of Seller Inc. as a limited partner of
Seller;
(h) change in any material respect its accounting
practices or principles, except as required by law or GAAP;
(i) other than through the AEW Mezzanine Funds as
described in their private placement memorandum, enter into or
recommend that any Fund enter into any type of business
materially different from that conducted by the Selling
Entities or Seller Designated Affiliates as of the date of
this Agreement or, other than through Partners II or on behalf
of a Client, enter into or participate in any joint venture or
partnership;
(j) acquire direct or indirect control over any
corporation or other organization or make any acquisition of
all or a substantial part of a business or operations except
on behalf of a Client as an investment made in accordance with
an Investment Contract;
(k) except in accordance with past practice and the
actions required to achieve the AEW Pro Forma Closing Balance
Sheet, pay or declare any dividend or distribution in cash or
property in respect of any of the Selling Entities' or Seller
Designated Affiliates' partnership interests or make any other
payment to its affiliates that in either case would preclude
Seller from complying with the AEW Working Capital Requirement
or funding at Closing of Seller's share of the funding of the
Restructuring Reserve;
(l) except by operation of law or as would not
adversely affect revenues of NCLP after the Closing, terminate
or materially amend any Investment Contract or related fee
schedule;
(m) other than by operation of law or for estate
planning purposes, allow any partnership interest or capital
stock of any of the Selling Entities to be transferred; and
(n) agree or commit to do any of the foregoing.
-81-
3131867.30
5.2 ▇▇▇▇▇▇ CONDUCT PRIOR TO CLOSING. Buyer hereby covenants and agrees
with the Selling Entities and the Principals that ▇▇▇▇▇▇ and each of the ▇▇▇▇▇▇
Subsidiaries shall, prior to the Closing Date, each operate its business only in
the usual, regular and ordinary course except as otherwise contemplated hereby.
Buyer agrees that each of ▇▇▇▇▇▇ and the ▇▇▇▇▇▇ Subsidiaries shall meet all of
its obligations as they become due, shall pay all valid accounts payable in due
course in accordance with its practice heretofore, shall incur no additional
long-term indebtedness and shall use its best efforts to continue to solicit new
clients and to offer investment advisory and related services (as applicable) in
the ordinary course of business, to maintain its corporate and partnership
records, to keep its accounts receivable current, to preserve its business
organization and assets and maintain its rights, franchises and business and
customer relations necessary to run the business as currently run in all
material respects, to keep available the services of its employees (except as
otherwise contemplated hereby), and to preserve the goodwill of its clients,
suppliers, and others with whom business relationships exist. Without in any way
limiting the foregoing, Buyer agrees that, except as contemplated by this
Agreement, neither ▇▇▇▇▇▇ nor any of the ▇▇▇▇▇▇ Subsidiaries will do any of the
following prior to the Closing without the prior written consent of Seller:
(a) except as set forth on Schedule 5.2(a), issue or
sell any interest, option, note or other securities of ▇▇▇▇▇▇
or the ▇▇▇▇▇▇ Subsidiaries;
(b) incur any indebtedness for borrowed money,
except in the ordinary course of business consistent with
past practice;
(c) except in the ordinary course of business,
mortgage, pledge or otherwise subject to any material Lien,
any of its properties or assets, tangible or intangible;
(d) except for those items listed on Schedule 5.2(d)
and bonuses to be paid by ▇▇▇▇▇▇ as a result of the
transactions contemplated hereby, pay any bonus to any
officer, employee, sales representative, agent or consultant,
or grant to any officer, director, employee, sales
representative, agent or consultant any other increase in
compensation in any form except in accordance with past
practice and in the ordinary course of business, or hire any
additional directors, officers, employees or agents except in
the ordinary course of business;
(e) except to the extent that Seller has otherwise
expressly agreed in writing as of the date hereof, or as
listed on Schedule 5.2(e), or as may be required by law, or as
otherwise specifically provided herein, adopt, or amend in any
material respect, any employment, collective bargaining,
bonus, profit-sharing, compensation, pension, health
insurance, welfare, retirement, deferred
-82-
3131867.30
compensation or other plan, agreement, trust, fund or
arrangement for the benefit of officers, directors, partners,
stockholders, employees, sales representatives, agents or
others except in the ordinary course of business;
(f) amend its certificate of limited partnership,
agreement of limited partnership, certificate of incorporation
or by-laws, as the case may be, except as required by law;
(g) change in any material respect its accounting
practices or principles, except as required by law or GAAP;
(h) enter into any type of business materially
different from that conducted by ▇▇▇▇▇▇ or the ▇▇▇▇▇▇
Subsidiaries as of the date of this Agreement or enter into or
participate in any joint venture or partnership;
(i) acquire direct or indirect control over any
corporation or other organization or make any acquisition of
all or a substantial part of a business or operations;
(j) except in accordance with past practice and the
actions required to achieve the ▇▇▇▇▇▇ Pro Forma Closing
Balance Sheet, pay or declare any dividend or distribution in
cash or property in respect of any of ▇▇▇▇▇▇'▇ or the ▇▇▇▇▇▇
Subsidiaries' partnership interests or make any other payment
to its affiliates that in either case would preclude complying
with the ▇▇▇▇▇▇ Working Capital Requirement or funding at
Closing of both (i) the Buyer Restructuring Costs in excess of
Buyer's Pre-Closing Restructuring Costs and (ii) Buyer's share
of the funding of the Restructuring Reserve;
(k) allow any general partnership interest or
capital stock of any of ▇▇▇▇▇▇ or the ▇▇▇▇▇▇ Subsidiaries
to be transferred;
(l) except (i) by operation of law, (ii) with respect
to the current Investment Contract between MetLife and CREA
Limited Partnership, which Investment Contract MetLife has
notified ▇▇▇▇▇▇ it intends to amend or replace, provided that
such amendment or replacement shall be consistent with Section
7.3(g) or (iii) as would not adversely affect revenues of
NCLP, terminate or materially amend any Investment Contract or
any related fee schedule; and
(m) agree or commit to do any of the foregoing.
5.3 SCHEDULES. Seller and Buyer shall each from time to time prior to
the Closing Date promptly supplement and update the Schedules as necessary. No
such supplement or update shall constitute an amendment to the Schedules.
-83-
3131867.30
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 CONSENTS AND APPROVALS.
(a) Subject to the terms and conditions herein
provided, each of the parties hereto agrees to cooperate with
the other and use all reasonable efforts (except for those
actions with respect to which this Agreement requires the use
of best efforts) to take, or cause to be taken, all action,
and to do, or cause to be done, all things necessary, proper
or advisable to consummate the transactions contemplated by
this Agreement as promptly as practicable, including, without
limitation, under the HSR Act and all other applicable laws
and regulations.
(b) To the extent that the rights of the Selling
Entities under any agreement, including any Investment
Contract or any material Terminable Contract, may not be
assigned without the consent or approval of another party
thereto, Seller shall use all reasonable efforts to obtain any
such consent. Without limiting the foregoing, Seller as
promptly as practicable, will use all reasonable efforts to
obtain, or cause to be obtained, all consents necessary to be
obtained in order to consummate the transactions contemplated
hereby. In addition, and notwithstanding the foregoing:
(i) As soon as reasonably practicable,
Seller shall cause all of the Clients under
Investment Contracts of Seller and any Seller
Designated Affiliate to be informed of the
transactions contemplated by this Agreement and
shall, in compliance with the Investment Advisers
Act, give each such Client an opportunity to
terminate its Investment Contract. Seller shall use
its best efforts to obtain each such Client's actual
written consent to assignment of its Investment
Contract on terms at least as favorable to NCLP as
the terms of such Investment Contract on the date
hereof (each a "Client Consent").
(ii) Seller agrees to use its best efforts
to cause to be prepared and filed with the SEC proxy
materials for a meeting of the shareholders of AEW
Fund and to use its best efforts to cause proxy
solicitations to be undertaken in order that such
meetings be held prior to the Closing, at which the
approval of the shareholders of AEW Fund will be
sought (i) for a new investment advisory agreement
with NCLP having terms substantially similar to and
at least as favorable as the current investment
advisory agreement with Seller (the "New Fund
Agreement") to be
-84-
3131867.30
effective on or as promptly as practicable after the
Closing Date, (ii) for the election as trustees of
those individuals who serve as trustees of certain
funds managed by ▇▇▇▇▇ & Tang, L.P., as agreed by
Buyer and Seller, and (iii) for such other matters as
may be required by the Investment Company Act. Seller
shall deliver drafts of such proxy materials to Buyer
a reasonable time prior to filing such documents with
the SEC and prior to mailing such documents to
shareholders of AEW Fund in order to afford Buyer an
opportunity to review and comment on such documents.
Seller agrees to seek the approval of the New Fund
Agreement by AEW Fund's board of trustees acting in
accordance with Section 15(c) of the Investment
Company Act. Arrangements reasonably satisfactory to
Seller and Buyer shall be made for the provision of
administration, custody, fund accounting and other
non-advisory services to the AEW Fund following the
Closing Date on terms and conditions not materially
less favorable to the AEW Fund or to NCLP than the
arrangements currently in effect.
6.2 SECTION 15(f). The parties each agree to use all reasonable efforts
to assure compliance with the conditions of Section 15(f) of the Investment
Company Act as it applies to the transactions contemplated by this Agreement.
Buyer and NCLP jointly and severally agree as follows:
(a) For a period of not less than three years after
the Closing Date, Buyer and NCLP jointly and severally shall
use all reasonable efforts to assure that no more than 25% of
the members of the board of directors or trustees of any Fund
shall be "interested persons" (as defined in the Investment
Company Act) of Seller or Buyer, or any entity that succeeds
Seller or Buyer as investment advisor to a Fund or any person
that before or after the Closing Date was or is an affiliated
person of any of the foregoing within the meaning of the
Investment Company Act. Without limiting the generality of the
foregoing, Buyer and NCLP will not take or recommend any
action that would cause more than 25% of the number of any
such board to be "interested persons."
(b) Buyer and NCLP each represent and warrant that
there is no express or implied understanding, arrangement or
intention to impose an "unfair burden" within the meaning of
Section 15(f) of the Investment Company Act on any of the
Funds as a result of the transactions contemplated hereby, and
that for a period of not less than two years after the Closing
Date neither of them will take or recommend any act that would
constitute an "unfair burden" on any Fund.
-85-
3131867.30
6.3 COMPLIANCE WITH SECURITIES LAWS.
(a) Prior to or on the Closing Date, Seller, with the
full cooperation of Buyer (through ▇▇▇▇▇▇), shall prepare a
Form ADV for NCLP and Buyer shall cause NCLP to file such Form
ADV with the SEC, and such Form ADV shall have become
effective under the Investment Advisers Act.
(b) In addition, Seller, with the full cooperation of
Buyer (through ▇▇▇▇▇▇), shall prepare, and Buyer shall cause
NCLP to file, all such other forms and amendments to forms and
other documents required to be filed or delivered by NCLP
under applicable federal and state laws, and regulations
promulgated thereunder, including without limitation the
Investment Advisers Act, the Exchange Act, the Securities Act
and applicable state laws relating to or regulating the
activities of investment advisers and broker-dealers, as a
result of the consummation of the transaction contemplated by
this Agreement.
(c) Without waiving any conditions or covenants
contained herein regarding obtaining consents and approvals
necessary for NCLP's continuation of the business of Seller
and Seller Inc., (i) Buyer, Seller and NCLP each agrees to use
all reasonable efforts to obtain promptly after the Closing
any such consents and approvals that have not been obtained
prior to Closing and (ii) each of Seller and NCLP agrees to
use its best efforts to obtain any Client Consents not
obtained prior to the Closing.
6.4 CURRENT INFORMATION. During the period from the date of this
Agreement to the Closing, each party will cause one or more of their
representatives, and Buyer shall cause one or more representatives of ▇▇▇▇▇▇, to
▇▇▇▇▇▇ on a regular and frequent basis with representatives of the other party
with respect to the status of its ongoing operations to the extent they
reasonably relate to the transactions contemplated or businesses affected hereby
(and, in the case of Seller, the Funds). Each party (including, in the case of
Buyer, with respect to ▇▇▇▇▇▇) will promptly notify the other party of any
complaints from an investor or client or a governmental or regulatory authority
or a self-regulatory body, investigations or hearings (or communications
indicating that the same may be contemplated), or the institution or the threat
of any litigation that comes to their attention which would, in any manner,
challenge, prevent, alter or materially delay any of the transactions
contemplated hereby and each party will keep the other party informed with
respect to such events. Seller and Buyer will notify each other of the status of
regulatory applications and third party consents related to the transactions
contemplated hereby. Each party (including, in the case of Buyer, with respect
to ▇▇▇▇▇▇) shall, promptly upon acquiring Knowledge thereof, give notice to the
other parties of: (i) any breach by such party of a representation and warranty
contained herein and (ii) any inability by such party to fulfill a condition or
agreement contained herein or in any Related Agreement.
-86-
3131867.30
6.5 ACCESS; INFORMATION.
(a) Each party shall afford to the other parties and
their representatives such access during normal business hours
and without material business interruption to its books,
records (including, without limitation, tax returns and
appropriate work papers of independent auditors under normal
professional courtesy), properties, Investment Contracts,
titles and leases to properties, loan and other agreements and
to such other information as such party may reasonably
request. Each party shall also have been afforded a reasonable
opportunity to confer, in consultation with the other party,
with such other party's advisory clients. For purposes of this
subsection 6.5(a), Buyer agrees that ▇▇▇▇▇▇ shall be deemed a
"party."
(b) All nonpublic records, books, contracts,
instruments, computer data and other data and information
(collectively, the "Information") concerning the other parties
or the Funds furnished pursuant to this Agreement shall be
subject to the confidentiality agreements between the parties
previously entered into and Section 10.4. In the event of the
termination of this Agreement, each party shall return or
destroy all Information furnished to such party and its
representatives hereunder and all analyses, compilations,
data, studies, other documents prepared by such party or its
representatives containing or based in whole or in part on any
such Information.
6.6 NON-SOLICITATION.
(a) The Selling Entities and the Principals agree
that none of them, nor any of their officers, employees,
agents or representatives (including, without limitation, any
investment banker, attorney or accountant retained by any of
them) shall initiate, solicit, encourage or entertain,
directly or indirectly, any inquiries or the making of any
proposal or offer with respect to a merger, consolidation or
similar transaction involving, or any purchase of any
substantial portion of the assets or any substantial portion
of the equity securities of the Selling Entities or the Seller
Designated Affiliates or the assignment of any substantial
portion of any investment advisory, subadvisory,
administrative or distribution agreement by the Selling
Entities or the Seller Designated Affiliates, or the transfer
of the Selling Entities or Seller Designated Affiliates'
general partnership interest in any limited partnership, or
the entering into by AEW Fund of an investment advisory,
subadvisory, administrative or distribution agreement with any
company other than Seller. Seller shall promptly send to Buyer
copies of any written communications received by it or AEW
Fund from any person or entity with respect to any transaction
or proposed transaction of the type referred to in the
preceding sentence, and shall
-87-
3131867.30
promptly notify Buyer of any oral or other unwritten
communication of such nature received by it or AEW Fund.
(b) Buyer agrees that neither it nor any of its
officers, employees, agents or representatives (including,
without limitation, any investment banker, attorney or
accountant retained by any of them) shall initiate, solicit,
encourage or entertain, directly or indirectly, any inquiries
or the making of any proposal or offer with respect to a
merger, consolidation or similar transaction involving, or any
purchase of any substantial portion of the assets or any
substantial portion of the equity securities of ▇▇▇▇▇▇ or any
▇▇▇▇▇▇ Subsidiary or the assignment of any substantial portion
of any investment advisory, subadvisory, administrative or
distribution agreement by ▇▇▇▇▇▇ or the ▇▇▇▇▇▇ Subsidiaries,
or the transfer of ▇▇▇▇▇▇'▇ or any ▇▇▇▇▇▇ Subsidiary's general
partnership interest in any limited partnership. Buyer shall
promptly send to Seller copies of any written communications
received by it from any person or entity with respect to any
transaction or proposed transaction of the type referred to in
the preceding sentence, and shall promptly notify Seller of
any oral or other unwritten communication of such nature
received by it.
6.7 QUALIFICATION OF THE FUNDS. Subject to applicable fiduciary duties
to AEW Fund, Seller will take no action (i) that would prevent AEW Fund from
qualifying for taxation as a "regulated investment company" under subchapter M
of the Code or prevent any REIT from qualifying as a "real estate investment
trust" under subchapter M of the Code or cause AEW Fund or REIT to suffer
materially adverse tax consequences, or (ii) that would be inconsistent in any
material respect with AEW Fund's Prospectus and other offering, advertising and
marketing materials.
6.8 PRESS RELEASES, ETC. None of the Selling Entities, Principals or
Buyer, without the consent of Seller and Buyer, shall, or shall permit their
respective affiliates, including ▇▇▇▇▇▇ and the ▇▇▇▇▇▇ Subsidiaries, to, make
any public announcement, issue any press release or make disclosure to any third
party except to their respective counsel, investment bankers, accountants and
other experts, concerning this Agreement or the transactions contemplated
hereby, except as may be required by law or the rules of the Exchange after
making reasonable efforts in the circumstances to consult in advance with the
other parties. Seller and Buyer will consult with each other as to the form,
substance and timing of any press release or other disclosure to employees,
clients, holders of LP Units and the public of the existence of this Agreement,
matters related to this Agreement or any of the transactions contemplated
hereby.
6.9 CORPORATE AND PARTNERSHIP MINUTES. Buyer and Seller shall
provide to one another on or before the Closing the minutes of meetings (or
consents in lieu thereof) of the partners, board of directors, or stockholders
of the Selling Entities (in the case
-88-
3131867.30
of Seller) or ▇▇▇▇▇▇ and the ▇▇▇▇▇▇ Subsidiaries (in the case of Buyer) after
the date hereof and on or before the Closing Date.
6.10 POST-CLOSING OPERATIONS. From and after the Closing Date, Buyer
and NCLP shall take or cause to be taken, or not take and not cause to be taken,
as the case may be, the following actions:
(a) AUDIT. Following the Closing Date, NCLP shall
promptly and in any event within 90 days following the end of
each fiscal year prepare audited financial statements for such
year.
(b) BOARD OF DIRECTORS. The current intention of the
parties hereto, without prejudice to Buyer's rights under
Massachusetts law as sole stockholder of NCGP (through a
wholly owned subsidiary of Buyer), is that following the
Closing the Board of Directors of NCGP will consist of three
members who shall be initially ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇.
▇'▇▇▇▇▇▇ (Messrs. Azrack and ▇'▇▇▇▇▇▇, together with any other
members of such Board designated by NCLP's President and Chief
Executive Officer from NCLP's senior management, and as may be
replaced from time to time by their successors designated by
NCLP's President and Chief Executive Officer from NCLP's
senior management, the "Inside Directors") and ▇▇▇▇▇ ▇. ▇▇▇▇.
From and after the Closing, the parties' expectation, without
prejudice to Buyer's rights under Massachusetts law, is that
if the board of directors of NCGP consists of four or fewer
members, one such member will be a representative of Buyer,
and if the board of directors consists of five or more
members, two of such members will be representatives of Buyer,
and in either case the balance of such members will be Inside
Directors. The NCGP board of directors shall establish a
compensation committee (the "Compensation Committee")
consisting of two members, one of whom shall be the senior
Buyer representative to the board and the other of whom shall
be NCLP's President and Chief Executive Officer for so long as
such officer is a member of NCGP's board of directors.
Following the Closing, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇▇ shall serve NCLP in
positions and with titles as indicated on Schedule 7.2(d),
each pursuant to the terms and conditions of his respective
Employment Agreement.
(c) AMENDMENT OF EMPLOYMENT AGREEMENTS. Without the
prior approval of Buyer, the Employment Agreements shall not
be amended.
(d) BONUS PLAN. NCGP's board of directors shall
unanimously adopt and, subject to modification by the
Compensation Committee, maintain in effect for five years a
bonus plan (the "Bonus Plan") pursuant to which 30% of the
excess of Partnership Revenues over Operating Expenses for
each of such fiscal
-89-
3131867.30
years (the "Bonus Pool") shall be allocated and paid to NCLP
employees (including employees of ▇▇▇▇▇▇). In calculating the
Bonus Pool for 1997, Partnership Revenue and Operating
Expenses for 1997 shall be deemed to include Partnership
Revenue and Operating Expenses for the Stub Period.
Allocations under the Bonus Plan shall be determined by the
President and Chief Executive Officer of NCLP, subject to
review by the Compensation Committee.
(e) MARGIN SHARE PAYMENT.
(i) For each of the five years commencing
January 1, 1997, NCLP shall pay to employees of NCLP
an amount equal to a portion of NCLP Qualifying
Revenues, the amount of such payment (each a "Margin
Share Payment") to be determined each year based upon
NCLP's Post-Bonus Operating Margin as set forth in
Schedule 6.10(e).
(ii) Allocation of each Margin Share Payment
among NCLP employees shall be determined by the
President and Chief Executive Officer of NCLP,
subject to review by the Compensation Committee. Half
of each Margin Share Payment shall be made within
ninety (90) days of receipt of unaudited financial
statements for the year in respect of which such
payment is made, with the remainder (plus accrued
interest at the rate of LIBOR plus 35 basis points
per year from the date of the first half of payment)
to be paid not later than one year thereafter;
provided, however, that no payment owing as of any
date shall be made to employees whose employment has
ceased to continue prior to such date other than for
involuntary termination without cause, death or
disability. Any portion of Margin Share Payment
forfeited by any employee will be reallocated among
the remaining employees as determined by NCLP's
President and Chief Executive Officer.
(f) THE RESEARCH GROUP. Following the Closing Date,
NCLP shall establish a research group ("The Research Group")
as set forth in Exhibit 6.10(g). The role, function and
funding of The Research Group will be reviewed and approved by
the NCGP board of directors on an annual basis.
(g) INTERNATIONAL. NCLP shall on the Closing Date
enter into an agreement of limited partnership or a limited
liability company agreement, together with any related
agreements, on substantially the terms set forth in Exhibit
6.10(g), pursuant to which agreement NCLP will hold a limited
liability interest in the entity governed thereby (such entity
referred to herein as "International Co.").
-90-
3131867.30
(h) ADVISORY BOARD. NCLP shall establish an
advisory board (the "Advisory Board") whose members shall
initially consist of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇ and at
least three nonaffiliates who shall be selected by NCGP's
board of directors. The role and function of the Advisory
Board and compensation for service thereon will be reviewed
and approved by NCGP's board of directors on an annual basis.
(i) BUYER SERVICES. NCLP (i) shall utilize internal
audit services provided by Buyer and (ii) if it decides in its
discretion to use benefit plans sponsored by Buyer, it shall
also utilize benefit plan administration services provided by
Buyer with respect to such plans; provided, however, that in
each instance NCLP shall reimburse Buyer for such services on
a cost basis. Should NCLP, in its discretion, desire any other
services of Buyer, such services shall be provided at a cost
negotiated by NCLP and Buyer. Buyer shall from time to time
provide short-term financing to NCLP at Buyer's then current
short-term borrowing rate.
(j) OBLIGATION ON EXPIRATION OF LEASE. The aggregate
amount of base lease payments commencing on January 1, 1997
for NCLP through the date of expiration of the Lease is
$16,000,000. In the event that the actual cumulative amount of
"lease-related payments" (as identified below) for NCLP from
January 1, 1997 through the date of expiration of the Lease is
less than $16,000,000, then upon expiration of the Lease, NCLP
shall pay to Seller or its designee an aggregate of the amount
by which the cumulative lease-related payments are less than
$16,000,000 with a maximum payment of $500,000 (the "Lease
Refund"). Lease-related payments following the Closing will
consist exclusively of (i) base rent on the Lease plus base
rent calculated in accordance with GAAP on any new lease in
Boston, Massachusetts premises (excluding any lease on
premises which are leased to accommodate future expansion of
NCLP), minus (ii) any base rentals paid by any sub-tenants
(including the current subtenant) in respect of such premises,
plus (iii) costs associated with sub-letting such premises to
sub-tenants, including but not limited to costs of sub-tenant
improvements, lease commissions, moving and similar allowances
and costs associated with preparing or renovating the space
NCLP occupies after the Closing, plus (iv) the amount of
amortization recognized through the expiration of the Lease
(which expires on July 31, 2000) of tenant improvements on any
newly leased space occupied by NCLP in Boston, Massachusetts
(excluding any premises which are leased to accommodate future
expansion), which tenant improvements are to be amortized on a
straight-line basis through the expiration of the new lease.
-91-
3131867.30
(k) HARBOR HOSPITALITY; INTERNATIONAL. Upon the
realization of any portion of its investment in each of Harbor
Hospitality and International Co., NCLP shall pay to Seller or
its designee any amounts received by NCLP; provided, however,
that in the case of Harbor Hospitality, such amounts shall not
exceed Seller's original capital investment of approximately
$328,000 and provided further that in the case of
International Co., such amounts shall not exceed Seller's
preferred interest of approximately $1,000,000 and earnings
thereon.
(l) FUTURE INCENTIVE FEES. Following the Closing and
through December 31, 2001, 50% of all incentive fees or
carried interests (other than with respect to Partners I and
Partners II, arrangements with respect to which are set forth
in Section 7.1(k) and (l)) shall be allocated by NCLP's
President and Chief Executive Officer among the employees of
NCLP subject to review and change by the Compensation
Committee. Such allocation from and after January 1, 2001
shall be at the discretion of NCGP's board of directors.
(m) AMENDMENTS TO PARTNERSHIP AGREEMENT. For a
period of five years from Closing, Buyer shall not amend the
NCLP Partnership Agreement in a manner that would affect the
economics of such agreement without the prior written consent
of a majority of those members of the NCGP board of directors
who are not Buyer representatives.
(n) INSURANCE. From and after the Closing, NCLP shall
establish and maintain in effect, at its own expense, errors
and omissions, property, fidelity, general liability and
workers' compensation insurance and any other policies
required to reasonably protect the business and properties
from risks that are normal for the industry (but in no event
less than currently maintained by Seller and ▇▇▇▇▇▇) to cover
claims made with respect to actions or occurrences on or
following the Closing Date in accordance with guidelines
established by Buyer. For a period through and including
December 31, 1999, such insurance shall name as insureds the
Selling Entities and each other Person insured pursuant to the
Selling Entities' existing fidelity insurance and errors and
omissions insurance and shall cover claims made on or after
the Closing Date with respect to actions or occurrences at or
prior to the Closing Date. In the event that any claim is made
pursuant to any coverage maintained pursuant to the foregoing
sentence in respect of an Excluded Liability, the Seller shall
(i) indemnify and hold harmless NCLP as to any deductible
amount paid by NCLP with respect to such Excluded Liability
and (ii) to the extent that the amount of NCLP's coverage
under such policy is reduced by reason of such claim, the
Seller shall, promptly upon request by NCLP, furnish at the
Seller's expense additional coverage so that the aggregate
amount of coverage shall equal the
-92-
3131867.30
lesser of (A) the amount of coverage in effect prior to such
reduction or (B) $10 million.
(o) ENTERPRISE COMPLIANCE. After the Closing, NCLP
shall participate in Buyer's Enterprise Compliance Program.
(p) COURSE OF DEALING WITH CLIENTS. From and after
the Closing, NCLP will use all reasonable efforts to resolve
any disputes or disagreements with its then-continuing Clients
in the ordinary course of its business even if such disputes
or disagreements relate to matters arising in connection with
the Selling Entities' businesses prior to the Closing;
provided, however, that this paragraph shall not limit Buyer's
or Seller's indemnification rights hereunder or the
obligations of Buyer under Section 9.6.
(q) HOLDINGS NOTE. From and after the Closing, each
individual to whom Partners II Incentive Fees are to be
allocated shall, as a condition to such allocation, execute
and deliver a promissory note in favor of Partners II Employee
Holdings, L.P. on substantially the same terms as the Holdings
Note (in respect of the limited partnership interest in
Partners II Employee Holdings, L.P.) in an amount equal to
$910,000 multiplied by a fraction the numerator of which
equals the percentage of Partners II Incentive Fees to be
allocated to such individual and the denominator of which
equals 301/3% and, simultaneously therewith, the amount of the
Holdings Note shall be reduced by the same amount of such new
note.
(r) FOREIGN TAXES. Buyer, Seller and the Principals
shall cooperate in structuring the business of NCLP,
International and their affiliates so that the partners of
Buyer (i) will not be subject to any foreign tax on such
business payable by such partners and (ii) will not be subject
to a requirement to file foreign tax returns.
6.11 UPDATED FINANCIAL STATEMENTS.
(a) Prior to the Closing Date and as soon as possible
following the completion of Seller's last fiscal quarter
ending prior to the Closing Date, Seller will deliver to Buyer
(i) a balance sheet as at the last date of such fiscal quarter
together with the related financial statements for the period
November 1, 1995 through such date and (ii) a balance sheet
and related financial statements for the corresponding periods
of the prior year, certified by the principal financial and
accounting officer of Seller, all as required to be included
in Buyer's Form 8-K under the Exchange Act and all of which
balance sheets and financial statements (including the notes
thereto) are collectively called the "Interim Financials."
-93-
3131867.30
(b) The Interim Financials shall be Seller Financial
Statements for purposes of Section 3.6 and shall comport with
the requirements of the Exchange Act and Regulation S-X under
the Exchange Act.
6.12 NEW ENGLAND INVESTMENT ASSOCIATES. Buyer shall before Closing
cause the business of NEIA to be transferred out of ▇▇▇▇▇▇ to any other entity
controlled by Buyer, by transfer of assets, stock, distribution, sale or
otherwise as determined with the sole discretion of Buyer. Buyer shall indemnify
and hold harmless NCLP against any and all claims for any liability of CREA or
▇▇▇▇▇▇ arising from CREA's ownership of or otherwise relating to NEIA.
6.13 EXCLUDED ACCOUNTS RECEIVABLE. Accompanying the AEW Pro Forma
Closing Balance Sheet (and each draft thereof required to be delivered
hereunder), and consistent therewith, shall be a list of all accounts receivable
as of the Closing Date not reflected on the AEW Pro Forma Closing Balance Sheet
and that therefore constitute Assets not transferred hereby (the "Excluded
Accounts Receivable"). NCLP agrees to use its normal business efforts as
collection agent for Seller to diligently collect the Excluded Accounts
Receivable following the Closing Date in the ordinary course of business in
accordance with NCLP's standard collection practice, provided, however, that
NCLP shall not be required to institute a legal proceeding or utilize any
collection agency. NCLP shall provide to Seller and Seller's representative full
access to NCLP's books and records to the extent required to confirm compliance
by NCLP with this Section 6.14. Any funds received by NCLP payable in respect of
Excluded Accounts Receivable in accordance with the terms of this Section 6.14,
shall be held for the account of Seller in a segregated bank account and all
funds accumulated shall be transferred to Seller within five (5) days of each
month end. Seller shall promptly advise NCLP in the event a customer directly
pays Seller in respect of any of the Excluded Accounts Receivable. Nothing
herein shall preclude Seller from taking any action to collect the Excluded
Accounts Receivable.
6.14 RESTRUCTURING. Seller and Buyer agree to the restructuring
plan set forth in Schedule 6.14.
ARTICLE VII
CONDITIONS
7.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS TO CONSUMMATE.
The respective obligations of each party to consummate the transactions
contemplated by this Agreement shall be subject to the fulfillment or waiver at
or prior to the Closing of the following conditions:
-94-
3131867.30
(a) NO TERMINATION. This Agreement shall not have
been terminated pursuant to Section 8.1.
(b) REGULATORY REQUIREMENTS. The transactions
contemplated by this Agreement shall have been approved by any
federal, state, foreign or local governmental or regulatory
authority or self-regulatory body the approval of which is
required to permit consummation thereof, without the
imposition of any condition, requirement or commitment which
is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on either the Selling
Entities, the Seller Designated Affiliates, ▇▇▇▇▇▇, the ▇▇▇▇▇▇
Subsidiaries or Buyer; and all waiting periods arising under
the HSR Act or any other applicable law shall have duly lapsed
or been terminated.
(c) ABSENCE OF LITIGATION; NO ORDERS. No action or
proceeding shall have been instituted or threatened on or
before the Closing Date before any court or governmental body
or authority pertaining to the transactions contemplated by
this Agreement, the result of which could prevent or make
illegal the consummation of such transactions or which could
have, individually or in the aggregate, a Material Adverse
Effect on the Selling Entities, the Seller Designated
Affiliates, ▇▇▇▇▇▇, the ▇▇▇▇▇▇ Subsidiaries or Buyer. None of
Buyer, the Selling Entities, the Seller Designated Affiliates,
▇▇▇▇▇▇, the ▇▇▇▇▇▇ Subsidiaries or the AEW Fund shall be
subject to any order, decree or injunction of a court or
agency of competent jurisdiction which either enjoins or
prohibits the consummation of any of the transactions
contemplated by this Agreement.
(d) REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Buyer (in the case of the
Selling Entities' and Principals' condition) or the Selling
Entities and the Principals (in the case of Buyer's condition)
set forth or referred to in this Agreement and in any Schedule
or Exhibit shall be true and correct in all material respects
as of the date of this Agreement and as of the Closing Date
with the same effect as though all such representations and
warranties had been made on and as of the Closing Date, except
(i) for any such representations and warranties made as of a
specified date, which shall be true and correct in all
material respects as of such date, or (ii) as expressly
contemplated or permitted by this Agreement.
(e) PERFORMANCE OF AGREEMENTS AND COVENANTS. Each and
all of the agreements and covenants of Buyer (in the case of
the Selling Entities' and Principals' condition) or the
Selling Entities and the Principals (in the case of Buyer's
condition) to be performed and complied with pursuant to this
Agreement and the other agreements contemplated hereby prior
to the
-95-
3131867.30
Closing Date shall have been duly performed and complied with
by it in all material respects.
(f) CERTIFICATES. Buyer on the one hand and the
Selling Entities and the Principals on the other hand shall
have delivered to the other party or parties a certificate,
dated as of the Closing Date and signed on such party's or
parties' behalf by Buyer's chief executive officer and chief
financial officer in the case of Buyer and by the Principals
and the chief executive officer and chief financial officer of
Seller in the case of the Principals and the Selling Entities,
to the effect that the conditions set forth in Sections 7.1(d)
and (e) of this Agreement with respect to it or them have been
satisfied.
(g) INVESTMENT ADVISERS ACT REGISTRATION.
Registration of NCLP as an investment adviser under the
Investment Advisers Act and under applicable state investment
advisory statutes shall have been filed and become effective
prior to Closing.
(h) APPROVAL OF DOCUMENTATION. The form and
substance of all opinions, certificates and other documents
delivered hereunder shall be reasonably satisfactory in all
respects to Buyer, Seller and their respective counsel.
(i) SELLER INC. SHAREHOLDER APPROVAL. The
shareholders of Seller Inc., including a majority in interest
of the shareholders other than the Principals, shall have on
or before the date hereof approved this Agreement and the
transactions contemplated hereby.
(j) PARTNERSHIP AGREEMENT. NCGP and Buyer shall have
entered into an agreement of limited partnership (the "NCLP
Partnership Agreement") in substantially the form of Exhibit
7.1(j), with such changes therein as the parties hereto and
thereto may agree.
(k) PARTNERS I.
(i) Arrangements reasonably satisfactory to
Buyer (in the case of Seller's condition) or Seller
(in the case of Buyer's condition) shall have been
made with respect to AEW Partners, L.P. ("Partners
I") so that:
(A) From and after the Closing, the
incentive fees and the asset management fees
provided in Section 5(g) of the Amended and
Restated AEW Partners, L.P. Management
Agreement dated as of 11/7/94 payable with
respect to Partners I
-96-
3131867.30
shall be restructured in a manner which will
cause 12.5% of such incentive fees to be
included in NCLP's revenues for GAAP
accounting purposes and income for income
tax purposes, 10.3125% of such incentive
fees to be paid to Seller and the remaining
percentage of such incentive fees to be paid
to employees of NCLP as determined over time
by NCLP's President and Chief Executive
Officer. To the extent that less than
77.1875% of incentive fees have been
allocated to individual employees of NCLP,
such unallocated portion shall be paid to
NCLP and included in Partnership Revenues
with no obligation to be paid to individual
employees.
(B) From and after the Closing, the
incentive fees in respect of Partners I
(other than NCLP's interest therein as
described in Section 7.1(k)(i)(A)) will not
be included in the revenues of NCLP and the
financial statements of Partners I will not
be required to be consolidated with those of
NCLP, for GAAP accounting purposes.
(ii) The Principals shall have entered into
a voting agreement pursuant to which (i) for so long
as ▇▇▇▇▇▇ ▇▇▇▇▇▇ is President and Chief Executive
Officer of NCLP, ▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
agree to vote their shares of stock in AEW, Inc. as
directed by ▇▇▇▇▇▇ ▇▇▇▇▇▇ and (ii) from and after
such time as ▇▇▇▇▇▇ ▇▇▇▇▇▇ is no longer President and
Chief Executive Officer of NCLP, the Principals agree
to cause AEW, Inc. to continue to keep its Investment
Contract with NCLP unless advised by ▇▇▇▇▇▇▇, ▇▇▇▇ &
▇▇▇▇▇ LLP or other counsel reasonably acceptable to
Buyer that to do so would breach AEW, Inc.'s
fiduciary duties.
(l) PARTNERS II.
(i) The direct and/or indirect ownership of
AEW Partners II, L.P. ("Partners II") shall have been
transferred or other appropriate arrangement made, in
a manner reasonably satisfactory to Buyer (in the
case of Seller's condition) or Seller (in the case of
Buyer's condition), so that,
(A) From and after the Closing and
at least through December 31, 2001, NCLP's
revenues for GAAP accounting purposes and
income for income tax purposes shall be
deemed to include only 50% of Partners II
Incentive Fees, with the remainder allocated
to individuals; provided, however, that to
the
-97-
3131867.30
extent that less than 50% of Partners II
Incentive Fees have been allocated to
individual employees of NCLP, such
unallocated portion shall be included in
Partnership Revenues with no obligation to
be paid to individual employees. Any change
in the allocation of Partners II Incentive
Fees between NCLP, on the one hand, and
current or former employees of NCLP or
Seller, on the other hand, shall be subject
to review by the Compensation Committee.
(B) From and after the Closing, the
financial statements of Partners II will not
be required to be consolidated with those of
NCLP for GAAP accounting purposes.
(ii) The agreement of limited partnership of
Partners II shall have been amended so that from and
after the Closing, for purposes of Section 3.7
thereof, neither MetLife nor any of its affiliates
(other than Buyer, Buyer's general partner and
Buyer's direct and indirect subsidiaries) shall be a
Related Party (as defined therein).
(m) UAM MINORITY INTEREST. Seller shall have
redeemed UAM's entire minority interest in Seller.
7.2 CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS. The obligation
of Buyer to consummate the transactions contemplated hereby shall be subject to
the fulfillment or waiver at or prior to the Closing of the following
conditions:
(a) DELIVERY OF ASSETS. Seller and the Principals
shall have delivered to Buyer any contribution, assignment or
other instruments relating to the Asset Contribution as Buyer
and its counsel reasonably request to effect the contribution
and transfer of Assets of Seller, Seller Inc.'s Investment
Contracts, the AEW II Stock, the Hotel Stock and the GP
Interest.
(b) CONDUCT OF SELLER'S BUSINESS PRIOR TO CLOSING.
Seller's business shall have been conducted in accordance with
the provisions of Section 5.1.
(c) EMPLOYMENT AGREEMENTS. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ shall
have entered into an employment agreement, in substantially
the form indicated on Schedule 7.2(c), pursuant to which he
shall serve as NCLP's President and Chief Executive Officer.
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇▇
shall each have entered into an employment agreement in
substantially the form indicated opposite his name on
Schedule 7.2(c). In addition, certain other employees,
listed on Schedule 7.2(c), shall have entered
-98-
3131867.30
into employment agreements (together with ▇▇. ▇▇▇▇▇▇▇'▇, ▇▇.
▇▇▇▇▇▇'▇, ▇▇. ▇▇▇▇▇▇▇'▇ and ▇▇. ▇'▇▇▇▇▇▇'▇ employment
agreements, the "Employment Agreements") in substantially the
form indicated opposite each employee's name on such
Schedule. The Employment Agreements shall have been entered
into on or prior to the date hereof and delivered to NCLP on
the date hereof, with copies as so executed delivered to
Buyer. Each Employment Agreement shall be in full force and
effect as of the Closing.
(d) OPINION OF COUNSEL. Buyer shall have received
from ▇▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇ LLP, counsel to Seller, an opinion
in form and substance reasonably satisfactory to Buyer,
addressed to Buyer and dated as of the Closing Date.
(e) CONSENTS AND AEW FUND APPROVAL.
(i) Seller shall have complied with the
consent procedures referred to in Section 6.1.
(ii) In accordance with Section 15 of the
Investment Company Act, the board of trustees of AEW
Fund, including a majority of trustees who are not
parties to the Investment Contracts of such Fund or
"interested persons" (as such term is defined in the
Investment Company Act) of any such party, and
holders of a majority of the outstanding voting
securities (as such term is defined in the Investment
Company Act) of such Fund, shall have approved the
New Fund Agreement with NCLP acting as investment
adviser of such Fund.
(f) SECRETARY'S CERTIFICATE. The Selling Entities
shall have delivered a certificate in form and substance
reasonably satisfactory to Buyer, dated as of the Closing Date
signed on behalf of Seller and Seller Holdings by the
Secretary of their respective general partners and by the
Secretary of Seller Inc., with respect to charter documents,
good standing, incumbency, minutes and such other matters as
to which Buyer and Seller may agree.
(g) CERTIFIED FINANCIAL STATEMENTS. Seller shall
have delivered to Buyer the Interim Financials, all as
required by Section 6.12.
(h) NAME CHANGE. Immediately prior to Closing, Seller
shall have ceased to be named "▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & Waltch,
L.P.;" Seller Inc. shall have ceased to be named "▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ & Waltch, Inc.;" Seller Holdings shall have ceased to
be named "AEW Holdings, L.P.;" and the Selling Entities shall
cooperate with Buyer to the extent necessary for NCLP to be
named "AEW
-99-
3131867.30
Capital Management, L.P." and NCGP to be named "AEW Capital
Management, Inc."
(i) CLIENT CONSENTS.
(i) Seller shall have obtained a Client
Consent for each of the Clients set forth on Schedule
7.2(i) (collectively, the "Required Clients").
(ii) Seller shall have obtained a Client
Consent for 75% of those Clients of the Selling
Entities other than the Required Clients.
7.3 CONDITIONS PRECEDENT TO THE SELLING ENTITIES' AND THE PRINCIPALS'
OBLIGATIONS. The obligation of the Selling Entities and the Principals to
consummate the transactions contemplated hereby shall be subject to fulfillment
at or prior to the Closing of the following conditions:
(a) DELIVERY OF PURCHASE PRICE. Buyer shall have
delivered to the Selling Entities, as set forth on Schedule
1.2(a), the Cash Consideration, the Note and certificates
representing the Purchase Price LP Units.
(b) LISTING OF LP UNITS. Buyer shall have filed with
the Exchange an application for listing of all LP Units to be
issued and outstanding under the Agreement immediately
following the Closing, which application shall provide for
effectiveness upon notice of issuance of such LP Units.
(c) OPINION OF COUNSEL. The Selling Entities and the
Principals shall have received from Ropes & ▇▇▇▇, counsel to
Buyer, an opinion in form and substance reasonably
satisfactory to the Selling Entities and the Principals,
addressed to the Selling Entities and the Principals and dated
as of the Closing Date.
(d) GENERAL PARTNER CERTIFICATE. Buyer shall have
delivered a certificate, dated as of the Closing Date and
signed on its behalf by the secretary of Buyer's general
partner, certifying that since the date hereof, there have
been no amendments or other modifications to Buyer's agreement
of limited partnership, and that the officers of Buyer are
those persons named in the certificate.
(e) REGISTRATION RIGHTS AGREEMENT. Buyer, Seller
and those Principals designated on Schedule 1.2(a) as
receiving LP Units hereunder shall have entered into a
registration rights agreement (the "Registration Rights
-100-
3131867.30
Agreement") in substantially the form of Exhibit 7.3(e) on or
prior to the date hereto, which agreement shall be in full
force and effect as of the Closing.
(f) EMPLOYMENT AGREEMENT. ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇▇ shall
have on or before the date hereof entered into his Employment
Agreement and such Employment Agreement shall be in full force
and effect as of the Closing.
(g) METLIFE AGREEMENT. The current Investment
Contract between MetLife and CREA Limited Partnership will
have been renegotiated and the terms of such renegotiated
Investment Contract will, to the reasonable satisfaction of
Seller, not be materially less advantageous to CREA Limited
Partnership, from the standpoint of expected receipt of NCLP
Qualifying Revenue in 1997, or in 1998 and 1999 (to the extent
addressed in such Investment Contract), than the current
Investment Contract with CREA Limited Partnership. For
purposes of this Section 7.3(g), revenues associated with
activities carried out for MetLife solely on a cost
reimbursement basis will be disregarded.
(h) CONDUCT OF ▇▇▇▇▇▇'▇ BUSINESS PRIOR TO CLOSING.
▇▇▇▇▇▇'▇ business shall have been conducted in accordance
with the provisions of Section 5.2.
ARTICLE VIII
TERMINATION
8.1 TERMINATION. This Agreement may, by written notice, be
terminated at any time prior to the Closing:
(a) by the mutual written consent of Seller and
Buyer; or
(b) by either Seller or Buyer, at any time after
January 31, 1997 if the Closing shall not theretofore have
occurred; provided, however, that if the Closing does not
occur prior to December 31, 1996, appropriate amendments to
this Agreement, and adjustments to calculations under this
Agreement, acceptable to both parties, will be made; or
(c) by either Seller or Buyer, if any permanent
injunction or action by any court or other governmental agency
or body of competent jurisdiction enjoining, denying approval
of, or otherwise prohibiting the consummation of the
transactions contemplated hereby shall have become final and
nonappealable; or
-101-
3131867.30
(d) by either Seller or Buyer if the waiting period
(and any extensions thereof) under the HSR Act shall not have
expired or been terminated prior to the Closing Date; or
(e) by either Seller or Buyer in the event of the
breach by the other party of representations, warranties or
agreements contained herein that would have, individually or
in the aggregate, a Material Adverse Effect on the party
committing such breach, and which cannot be or has not been
cured within 30 days after written notice to the party
committing such breach.
Notwithstanding the foregoing, a party in willful breach in any
material respect of any provision of this Agreement may not terminate this
Agreement pursuant to Section 8.1(b) or (c).
8.2 EFFECT OF TERMINATION AND ABANDONMENT. In the event of termination
of this Agreement and abandonment of the transactions contemplated hereby
pursuant to this Article VIII, except as otherwise specifically provided herein,
no party hereto (or any of its partners, shareholders, directors, officers,
employees, agents, consultants or representatives) shall have any liability or
further obligation to any other party to this Agreement, except obligations set
forth in Section 10.4(a) and for any obligations to reimburse costs and expenses
as set forth in Section 11.5 and except that nothing herein will relieve any
party from liability for any breach of this Agreement.
ARTICLE IX
INDEMNIFICATION
9.1 INDEMNIFICATION BY SELLING ENTITIES AND PRINCIPALS. From
and after the Closing Date, each of the Selling Entities and Principals, jointly
and severally, will indemnify and hold harmless the Buyer Indemnified Parties
(as defined below) against any and all expenses, losses, claims, damages and
liabilities at any time imposed upon or reasonably incurred by any one or more
of the Buyer and its directors, partners, officers and controlling persons
within the meaning of the Exchange Act (the "Buyer Indemnified Parties") in
connection with, arising out of or resulting from any claim, action, suit or
proceeding in which any one or more of the Buyer Indemnified Parties may be
involved or with which any one or more of the Buyer Indemnified Parties may be
threatened by, arising from or relating to (i) the Excluded Liabilities or (ii)
any breach of any representation, warranty or covenant made by the Selling
Entities or Principals, hereunder or under any Exhibit, Schedule or Related
Agreement or certificate furnished pursuant hereto, including without limitation
any amounts paid by any one or more of the Buyer Indemnified Parties in a
reasonable compromise or settlement of any such claim, action, suit or
proceeding, or threatened claim, action, suit or proceeding, made with the
consent of the Selling Entities or the Principals,
-102-
3131867.30
which consent shall not be unreasonably withheld or delayed. The indemnification
obligations of each of the Selling Entities and the Principals hereunder shall
be joint and several. Notwithstanding the foregoing, the liability of each
Principal in respect of the indemnification obligations set forth in this
Section 9.1 shall be limited to the lesser of 331/3% of the Principals'
collective liability or $10.0 million. The Buyer Indemnified Parties will notify
the Selling Entities and Principals, as applicable, in writing promptly after
the receipt by any one or more of the Buyer Indemnified Parties of any notice of
legal process of any suit brought against or claim made against such Buyer
Indemnified Party as to any matters covered by this Section 9.1. Any of the
Selling Entities and Principals, as applicable, shall be entitled to participate
at its own expense in the defense of any claim, action, suit or proceeding
covered by this paragraph, or, if it so elects, to assume at its expense by
counsel satisfactory to the Buyer Indemnified Parties the defense of any such
claim, action, suit or proceeding, and if Seller elects to assume such defense,
the Buyer Indemnified Parties shall be entitled to participate in the defense of
any such claim, action, suit or proceeding at their expense. The Selling
Entities' and Principals' obligation under this paragraph to indemnify and hold
harmless the Buyer Indemnified Parties shall constitute a guarantee of payment
so that they will pay in the first instance any expenses, losses, claims,
damages and liabilities required to be paid by it under this paragraph without
the necessity of the Buyer Indemnified Parties first paying the same.
9.2 INDEMNIFICATION BY BUYER. From and after the Closing Date, Buyer
will indemnify and hold harmless the Selling Entities and Principals, as
applicable, and the Selling Entities' directors, partners, officers and
controlling persons within the meaning of the Exchange Act (the "Seller
Indemnified Parties") against any and all expenses, losses, claims, damages and
liabilities at any time imposed upon or reasonably incurred by any one or more
of the Seller Indemnified Parties in connection with, arising out of or
resulting from any claim, action, suit or proceeding in which any one or more of
the Seller Indemnified Parties may be involved or with which any one or more of
the Seller Indemnified Parties may be threatened by, arising from or relating to
any breach of any representation, warranty or covenant made by Buyer hereunder
or under any Exhibit, Schedule or Related Agreement or certificate furnished
pursuant hereto (other than representations and warranties made in Article IVA
and Section 4.13 (to the extent such Section incorporates representations and
warranties made in Article IVA) and the Exhibits and Schedules referred to in
Article IVA), including without limitation any amounts paid by any one or more
of the Seller Indemnified Parties in a reasonable compromise or settlement of
any such claim, action, suit or proceeding, or threatened claim, action, suit or
proceeding, made with the consent of Buyer, which consent shall not be
unreasonably withheld or delayed. The Seller Indemnified Parties will notify
Buyer in writing promptly after the receipt by any one or more of the Seller
Indemnified Parties of any notice of legal process of any suit brought against
or claim made against such Seller Indemnified Party as to any matters covered by
this Section 9.2. Buyer shall be entitled to participate at its own expense in
the defense of any claim, action, suit or proceeding covered by this paragraph,
or, if it so elects, to assume at its expense by counsel satisfactory to the
Seller Indemnified Parties the defense of any such claim, action, suit or
proceeding, and
-103-
3131867.30
if Buyer elects to assume such defense, the Seller Indemnified Parties shall be
entitled to participate in the defense of any such claim, action, suit or
proceeding at their expense. Buyer's obligation under this paragraph to
indemnify and hold harmless the Seller Indemnified Parties shall constitute a
guarantee of payment so that it will pay in the first instance any expenses,
losses, claims, damages and liabilities required to be paid by it under this
paragraph without the necessity of the Seller Indemnified Parties first paying
the same.
9.3 CERTAIN LIMITATIONS ON INDEMNIFICATION.
(a) Neither the Selling Entities and the Principals,
on the one hand, nor Buyer, on the other hand, shall be liable
for indemnification obligations under this Article IX in
respect of any breach of representation or warranty under
Section 9.1 or 9.2 until the aggregate cumulative amount of
such obligations of such parties hereunder exceeds $500,000,
whereupon such parties shall be liable for the full amount of
such obligations. Buyer shall not be liable for
indemnification obligations in respect of any breach of
representation or warranty under Section 9.6(a) until the
aggregate cumulative amount of such obligations of Buyer
hereunder exceeds $250,000, whereupon Buyer shall be liable
for the full amount of such obligations. For purposes of
determining whether $500,000 or $250,000, as the case may be,
of obligations have been incurred hereunder, the
representations and warranties contained herein shall be read
as though they contained no materiality or Knowledge
qualifiers. Obligations in respect of any Excluded Liability
pursuant to Section 9.1 or ▇▇▇▇▇▇ Excluded Liability pursuant
to Section 9.6(b) shall not be subject to the limitation of
this Section 9.3(a).
(b) Neither the Selling Entities' and the Principals'
liability for indemnification obligations (other than
obligations in respect of the Excluded Liabilities, which as
to the Selling Entities shall have no limit) under Section 9.1
nor Buyer's liability for indemnification obligations under
Sections 9.2 or 9.6(a) shall exceed $67,500,000.
9.4 RIGHT OF SET-OFF. To the extent that Seller has not satisfied such
claims in cash, Buyer may set-off claims made by any Buyer Indemnified Party as
follows: first, against the Note; second, against the Purchase Price LP Units,
valued at their market price when issued by Buyer, to the extent such LP Units
have not been distributed to the Equityholders; third, against any previously
distributed Purchase Price LP Units contributed back to the Selling Entities and
delivered to Buyer by the Selling Entities, valued at their market price when
issued by Buyer, free and clear of all Liens; and fourth, against any and all
then unpaid Contingent Payments. Prior to or at the time of such set-off, Buyer
shall give Seller written notice of any such claim stating the nature and basis
of such claim.
9.5 TERMINATION OF RIGHTS HEREUNDER.
-104-
3131867.30
(a) No claim may be made under the provisions of
Sections 9.1, 9.2 or 9.6 (except for Reserved Claims) after
December 31, 1999.
(b) "Reserved Claims" means any claims as to which
any Buyer Indemnified Party has given Selling Entities or
Principals notice or any Seller Indemnified Party has given
Buyer notice with reasonable specificity on or prior to
December 31, 1999.
9.6 INDEMNIFICATION RELATED TO ▇▇▇▇▇▇.
(a) If a breach of any representation or warranty made by Buyer in
Article IVA or any Exhibit or Schedule referred to in Article IVA occurs, and
(i) NCLP's revenues are negatively impacted as a proximate result of the event
or condition giving rise to such breach or (ii) NCLP incurs an expense that
proximately results from the event or condition giving rise to such breach, in
either case so that any Contingent Payment or Margin Share Payment in respect of
the Stub Period, 1997, 1998 or 1999 is negatively impacted thereby, then the
Contingent Payment or Margin Share Payment, as the case may be, shall be
increased in an amount necessary to reflect what such payment would have been
had NCLP's revenues or expenses not been impacted by the event or condition
giving rise to the breach of representation or warranty. Should Buyer and any of
the Principals disagree on whether an expense or revenue loss proximately
results from an event or condition giving rise to a breach of a representation
or warranty, the matter shall be submitted to Arbitration.
(b) In the event that NCLP's Operating Expenses are increased by any
▇▇▇▇▇▇ Excluded Liability, and any Margin Share Payment or Bonus Pool in respect
of the Stub Period, 1997, 1998 or 1999 is negatively impacted thereby, then the
Margin Share Payment or Bonus Pool, as applicable, shall be increased by an
amount that would be necessary to reflect what such payment would have been had
the Operating Expenses been increased by only 20% of the amount of the ▇▇▇▇▇▇
Excluded Liability; provided, however, that the aggregate amount of such
increases in Margin Share Payment and Bonus Pool paid pursuant to this Section
9.6(b) shall not exceed $2.9 million.
(c) NCLP will notify Buyer in writing promptly after the receipt by
NCLP of any notice of legal process of any suit brought against or claim made
against NCLP as to any matters covered by this Section 9.6. Buyer shall be
entitled to participate at its own expense in the defense of any claim, action,
suit or proceeding covered by this Section 9.6, or, if it so elects, to assume
at its expense by counsel satisfactory to a majority of the Principals the
defense of any such claim, action, suit or proceeding, and if Buyer elects to
assume such defense, the Principals shall be entitled to participate in the
defense of any such claim, action, suit or proceeding at their expense.
-105-
3131867.30
(d) Each of the Principals shall have the right to bring a claim to
enforce this Section 9.6.
9.7 EXCLUSIVE REMEDY. The provisions of this Article IX shall be the
sole and exclusive remedy with respect to any Excluded Liability, any ▇▇▇▇▇▇
Excluded Liability or the inaccuracy of any representation or breach of any
warranty made by Buyer or the Selling Entities and the Principals hereunder.
ARTICLE X
POST-CLOSING COVENANTS
10.1 FILING OF FORMS ADV-W. Within 30 days after the Closing
Date, each of Seller and Seller Inc. shall file Form ADV-W with the SEC.
10.2 EMPLOYEE BENEFITS AND OTHER MATTERS.
(a) Incident to the combination of Seller's business
with that of ▇▇▇▇▇▇, from and after the Closing Date, certain
positions existing at each organization prior to the
combination will be eliminated upon mutual agreement by
Seller, Buyer and ▇▇▇▇▇▇ prior to the Closing. Continued
employment will be offered to those common law employees of
Seller whose jobs have not been so eliminated (the "Continued
Employees"). Notwithstanding anything in this subsection (a)
to the contrary, any such offer shall not be construed to
limit the ability of NCLP to terminate Continued Employees for
cause or for other valid business purposes.
(b) Where feasible prior to, and in all events as
soon as practicable following, the Closing Date, Buyer and
NCLP shall take such steps as are necessary or appropriate to
adopt at NCLP for the benefit of the Continued Employees
employee benefit plans and programs as may be agreed to by
Seller and ▇▇▇▇▇▇. These are expected to provide such benefits
as agreed to by Buyer and Seller. Other than allocations of
incentive fees to individual employees to the extent permitted
hereby, bonus and incentive plans at NCLP shall consist solely
of the NCLP Bonus Plan and Margin Share Payments. Buyer agrees
to make available to NCLP all of the employee benefit plans
and programs it sponsors which are made available to its
subsidiaries. Each Continued Employee shall participate in any
employee benefit plans and programs for which such Continued
Employee is eligible on the basis of the aggregate number of
years of such Continued Employee's service to Seller and NCLP.
Pre-existing conditions of Continued Employees shall not be
excluded from medical plan coverage. Continued Employees and
former employees of Seller who currently maintain loans under
Seller's 401(k) plan shall be permitted to
-106-
3131867.30
maintain loans under the 401(k) plan for the benefit of NCLP
employees in amounts at least equal to the amounts of such
loans maintained by such Continued Employees or former
employees under the Seller's 401(k) plan. Except for Section
5.1, nothing in this Agreement shall be deemed to preclude or
restrict the modification or termination of any of the Seller
Employee Benefit Plans in accordance with its terms, whether
before or after the Closing.
10.3 CERTAIN TAX MATTERS
(a) For federal and state income tax purposes, the parties hereto agree
to report the transaction described in this Agreement for Tax purposes
consistent with the form of the transaction as described herein, and the parties
further agree to report in a manner consistent with, and make reasonable efforts
to sustain, the position that: (i) the Asset Contribution and transfers of the
AEW II Stock, the Hotel Stock and the GP Interest shall be treated as the sale
or exchange of assets, (ii) Margin Share Payments and payments pursuant to the
Bonus Plan shall be treated as compensation and (iii) Contingent Payments (other
than those that are payable to Seller) shall be treated as payments in respect
of a covenant not to compete or in respect of employment or a combination
thereof, in the discretion of Buyer.
(b) Transfer and sales taxes arising from the Asset Contribution shall
be the responsibility of Seller (and indirectly the Selling Entities), and shall
not be borne by Buyer or any of its affiliates.
(c) Each of the Seller, Principals, Securities GP and Seller, Inc.
shall deliver to Buyer at Closing a certificate substantially in the appropriate
form specified in Treasury regulation ss.1.1445-2(b)(2)(iii) to the effect that
the person or entity delivering the certificate is not a foreign person for
purposes of sections 897 and 1445 of the Code.
10.4 CONFIDENTIALITY AND NONCOMPETITION.
(a) CONFIDENTIAL INFORMATION.
(i) Each of the Selling Entities
acknowledges that Seller and Buyer continually
developed Confidential Information and the Selling
Entities may have learned or may learn Confidential
Information. Each of the Selling Entities will comply
with the policies and procedures of Buyer and its
subsidiaries and affiliates for protecting
Confidential Information and shall never disclose to
any Person (except as required by applicable law or
to Buyer and its subsidiaries and affiliates), or use
for its own benefit or gain, any Confidential
Information without the prior written consent of a
specifically authorized representative of Buyer. Each
of the Selling Entities understands that this
restriction shall continue to apply after the
Closing.
-107-
3131867.30
(ii) Each of the Selling Entities shall
protect the integrity of Confidential Information and
shall keep confidential all documents, records, tapes
and other media of every kind and description
relating to the business, present or otherwise, of
Seller, Buyer or their subsidiaries and affiliates
and any copies, in whole or in part, thereof (the
"Documents") containing Confidential Information. All
Documents, whether or not containing Confidential
Information and whether or not prepared by Seller,
shall be the sole and exclusive property of Buyer and
its subsidiaries and affiliates. Each of the Selling
Entities shall safeguard all Documents, and all
Confidential Information they contain, and shall
surrender to Buyer at Closing all Documents then in
its possession or control.
(iii) "Confidential Information" means any
and all information of Seller, NCLP, Buyer and the
subsidiaries and affiliates of each of them that is
not generally known by others with whom they did or
do compete or do business, or with whom they plan to
compete or do business and any and all information
(other than information that is publicly known other
than as a result of disclosure by any Selling Entity
or its directors or officers), that, if disclosed
would assist in competition against Buyer or its
subsidiaries and affiliates. Confidential Information
includes without limitation such information relating
to (i) the development, research, testing, marketing
and financial activities of Buyer and its
subsidiaries and affiliates, (ii) the Products and
Services, (iii) the financial performance and
strategic plans of Buyer and its subsidiaries and
affiliates, (iv) the identity and special needs of
the clients of Buyer and its subsidiaries and
affiliates and (v) the people and organizations with
whom Buyer and its subsidiaries and affiliates have
business relationships and those relationships.
Confidential Information also includes comparable
information that Buyer or any of its subsidiaries and
affiliates receive, or have received, belonging to
clients or others who do business with Buyer or any
of its subsidiaries and affiliates or any other
information that is, or has been, received by Buyer
or any of its subsidiaries and affiliates with any
understanding, express or implied, that it will not
be disclosed.
(iv) "Products and Services" mean all
products and services offered, planned, researched,
developed, tested, sold, licensed, marketed or
otherwise provided by Seller or Buyer or any of their
subsidiaries and affiliates.
-108-
3131867.30
(v) Notwithstanding anything to the contrary
contained in this Section 10.4(a), nothing contained
in this Section 10.4(a) shall be construed to prevent
the Selling Entities from using for their own benefit
or gain their own Confidential Information prior to
the Closing.
(b) RESTRICTED ACTIVITIES. The Selling Entities agree
that some restrictions on the Selling Entities' activities
from and after the Closing are necessary to protect the
goodwill, Confidential Information and other legitimate
interests of Buyer and its subsidiaries and affiliates:
(i) Until the earlier of fifteen (15) years
after the Closing Date or the time such Selling
Entity is dissolved (the "Non-Competition Period"),
no Selling Entity shall directly or indirectly,
whether as owner, partner, principal, investor,
consultant, agent, employee, co-venturer or
otherwise, compete with Buyer or any of its
subsidiaries or affiliates within the United States
or Canada or undertake any planning for any business
competitive with Buyer or any of its subsidiaries or
affiliates. Specifically, but without limiting the
foregoing, each Selling Entity agrees not to engage
in any manner in any activity that is directly or
indirectly competitive with the business of Buyer or
any of its subsidiaries or affiliates as conducted or
under consideration at any time. Restricted activity
includes without limitation accepting an advisory or
consulting position with any Person who is, or at any
time prior to the Closing has been, a client of
Seller, Buyer or any of their subsidiaries and
affiliates. For the purposes of this Section, the
business of Buyer and its subsidiaries and affiliates
shall include all Products and Services offered by
Seller, Buyer or any of their subsidiaries and
affiliates or under development and each Selling
Entity's undertaking shall encompass all products and
services that may be used in substitution for
Products and Services.
(ii) Each Selling Entity agrees that during
the Non-Competition Period it will not hire or
attempt to hire any employee of Buyer or any of its
subsidiaries and affiliates, assist in such hiring by
any Person or encourage any such employee to
terminate his or her relationship with Buyer or any
of its subsidiaries and affiliates. Each Selling
Entity further agrees that during the Non-Competition
Period, it will not solicit or encourage any clients
or others who do business with Buyer or any of its
subsidiaries and affiliates to terminate or diminish
its relationship with any of them or to violate any
agreement with any of them, or to conduct with any
Person any business or activity that such client or
other person conducts or could conduct with Buyer or
any of its subsidiaries and affiliates.
-109-
3131867.30
(c) ENFORCEMENT OF COVENANTS. The parties intend that
the noncompetition provisions contained in this Section 10.4
shall be deemed to be a series of separate covenants, one for
each and every county of each and every state of the United
States of America and each and every political subdivision of
each and every country outside the United States of America
where this provision is intended to be effective. Each Selling
Entity acknowledges that it has carefully read and considered
all the terms and conditions of this Section 10.4, including
the restraints imposed upon it pursuant to Sections 10.4(a)
and (b). Each Selling Entity agrees that said restraints are
necessary for the reasonable and proper protection of NCLP and
its subsidiaries and affiliates and that each and every one of
the restraints is reasonable in respect to subject matter,
length of time and geographic area, in view of the receipt of
the Purchase Price received and the Contingent Payments to be
received pursuant to this Agreement, the geographic scope and
nature of the business in which the Selling Entities are and
NCLP and Buyer will be engaged, Seller's Knowledge of NCLP's
and Buyer's business, and Seller's relationships with NCLP's
and Buyer's investment advisory clients. Each Selling Entity
further acknowledges that, were it to breach any of the
covenants contained in Sections 10.4(a) and (b), the damage to
Buyer would be irreparable. Each Selling Entity therefore
agrees that Buyer, in addition to any other remedies available
to it, shall be entitled to preliminary and permanent
injunctive relief against any breach or threatened breach by
any Selling Entity of any of said covenants, without having to
post bond. The parties further agree that, in the event that
any provision of Section 10.4(a) or (b) shall be determined by
any court of competent jurisdiction to be unenforceable by
reason of its being extended over too great a time, too large
a geographic area or too great a range of activities, such
provision shall be deemed to be modified to permit its
enforcement to the maximum extent permitted by law.
10.5 TRANSFERS OF LP UNITS FOLLOWING A RESTRUCTURING. In the
event of a Restructuring, Buyer agrees that Seller, or any Permitted Transferee
(including each Equityholder) who holds a portion of the Purchase Price LP Units
having a market value in excess of $50,000 on the date of the Restructuring,
shall be given the option, to be exercised prior to the Restructuring, to be
treated as either a non-Public Partner or a Public Partner effective as of the
Restructuring.
10.6 NOTICE TO EXCHANGE. Buyer shall promptly following the
Closing Date notify the Exchange of the issuance of the Purchase Price LP Units
in accordance with the listing application referred to in Section 7.3(b).
10.7 DISTRIBUTION OF LP UNITS.
-110-
3131867.30
(a) The Selling Entities shall not distribute any of
the Purchase Price LP Units to any Equityholder (who is not
otherwise a Permitted Transferee within the meaning of clause
(A) of the definition thereof) who has not made written
representations substantially identical to those contained in
Section 3.25 (other than, in the case of a person who is not a
Stockholder, subsection (e) thereof) and, to the extent that
LP Units are to be distributed to such Equityholder prior to
the First Quarter-End Date, a waiver substantially identical
to Section 1.2(b)(ii).
(b) Buyer agrees to provide to Seller, the Principals
and the Equityholders to whom LP Units issued hereunder are to
be distributed the information required to be furnished under
Rule 502(b) of Regulation D under the Securities Act and
applicable State securities laws, and to take such other
actions as may be appropriate, in order to exempt the issuance
and sale of LP Units hereunder from the registration
requirements of the Securities Act and from registration or
qualification under applicable State securities laws.
10.8 AEW, INC. NCLP shall permit AEW, Inc. to continue to use the name
"AEW, Inc." solely for the purpose of serving as the ultimate general partner of
Partners I and unless and until such time as Partners I is party to an
Investment Contract with any Person other than NCLP.
10.9 POST-CLOSING ACCESS. Following the Closing, NCLP shall give the
Selling Entities and the Principals reasonable access to its books, records and
personnel for tax purposes and for purposes of defending (i) indemnification
claims hereunder and (ii) claims in respect of Excluded Liabilities.
ARTICLE XI
GENERAL PROVISIONS
11.1 SURVIVAL. If the Closing occurs, the representations and
warranties contained in this Agreement shall survive the Closing until December
31, 1999. If this Agreement is terminated prior to the Closing Date, the
agreements of the parties in Sections 8.2 and 11.5 shall survive.
11.2 NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed to have been duly received (i) on the date given
if delivered personally or by telecopy or (ii) on the date received if mailed by
registered or certified mail (return receipt requested), to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
-111-
3131867.30
(a) if to Buyer: New England Investment Companies, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇,
General Counsel
Copies to: Ropes & ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇
and
(b) if to Seller or
any Selling
Entity: ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & Waltch, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: J. ▇▇▇▇▇ ▇▇▇▇▇▇▇, General Counsel
Copies to: ▇▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ and
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
and
(c) if to any
Principal: ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & Waltch, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: J. ▇▇▇▇▇ ▇▇▇▇▇▇▇, General Counsel
-112-
3131867.30
Copies to: ▇▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ and
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
11.3 COUNTERPARTS. This Agreement may be executed in counterparts
(including executed counterparts delivered and exchanged by facsimile
transmission) each of which shall be deemed to constitute an original, but all
of which together shall constitute one and the same instrument.
11.4 GOVERNING LAW. THE VALIDITY, INTERPRETATION AND EFFECT
OF THIS AGREEMENT SHALL BE GOVERNED EXCLUSIVELY BY THE LAWS OF
THE STATE OF DELAWARE, EXCLUDING THE "CONFLICT OF LAWS" RULES OF
THAT STATE.
11.5 EXPENSES.
(a) Except as provided in paragraph (b) of this
Section 11.5, each party hereto will bear its own expenses in
connection with this Agreement and the transactions
contemplated hereby.
(b) If this Agreement is terminated pursuant to
Section 8.1 hereof (other than clauses (a) or (e) thereof), by
reason of the willful failure of a party to fulfill a
condition to the performance of the other party's obligations
or to perform a covenant of this Agreement or by reason of a
willful breach by any party to this Agreement, such party
shall be fully liable for any and all costs and expenses
(including, but not limited to, reasonable attorneys' fees and
expenses) in connection with this Agreement and the
transactions contemplated hereby incurred by the other party
or parties.
11.6 WAIVER; AMENDMENT. Any provision of this Agreement may be (i)
amended or modified at any time (including the structure of the transactions
contemplated hereby, or any part thereof), only by an agreement in writing among
the parties hereto and executed in the same manner as this Agreement or (ii)
waived by the party benefitted by the provision.
-113-
3131867.30
11.7 ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES; ETC. All Exhibits
and Schedules shall be deemed to be incorporated into and made part of this
Agreement. This Agreement, together with the Related Agreements and the exhibits
and schedules thereto, represents the entire understanding of the parties hereto
with reference to the transactions contemplated hereby and supersedes any and
all other oral or written agreements heretofore made. All terms and provisions
of the Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective personal representatives, heirs, successors
and permitted assigns. Except for Article X and Sections 1.3, 6.10(d) and (e)
and 9.6, which are intended to benefit employees of NCLP (including employees of
▇▇▇▇▇▇) collectively and except as otherwise explicitly stated herein, nothing
in this Agreement is intended to confer upon any other person or group of
persons any rights or remedies of any nature whatsoever under or by reason of
this Agreement. In particular, and not by way of limitation of the preceding
sentence, no representations, warranties or indemnification covenants made
herein create any rights of Clients of any Selling Entity, any Seller Designated
Affiliate, ▇▇▇▇▇▇ or any ▇▇▇▇▇▇ Subsidiary.
11.8 ASSIGNMENT. This Agreement may not be assigned by any party hereto
without the written consent of the other parties and any purported assignment in
violation hereof shall be null and void.
11.9 INTERPRETATION. Unless otherwise expressly provided or unless the
context requires otherwise, (a) all references in this Agreement to Articles,
Sections, Schedules and Exhibits shall mean and refer to Articles, Sections,
Schedules and Exhibits of this Agreement, (b) all references to statutes and
related regulations shall include all amendments of the same and any successor
or replacement statutes and regulations, (c) words of any gender shall be deemed
to include each other gender, (d) words used using the singular or plural number
also shall include the plural and singular number, respectively, (e) references
to "hereof," "herein," "hereby" and similar terms shall refer to this entire
Agreement (including the Schedules and Exhibits hereto), (f) the word
"including" shall be construed as "including without limitation" and (g)
references to any Person shall be deemed to mean and include the successors and
permitted assigns of such Person (or in the case of a governmental authority,
Persons succeeding to the relevant functions of such Person).
11.10 FURTHER ASSURANCES. The parties hereto agree to execute and
deliver any and all papers and documents which may be reasonably necessary
to carry out the terms of this Agreement.
11.11 CONSISTENT ACCOUNTING. The parties to this Agreement shall
consult with each other for the purpose of arriving at consistent accounting,
tax and reporting treatment, whether public or private, of the transactions
contemplated hereby.
-114-
3131867.30
11.12 SEVERABILITY. The provisions of this Agreement are severable
and the invalidity of any provision shall not affect the validity of any
other provision.
11.13 ACCOUNTING MATTERS WITH RESPECT TO NSLP. Notwithstanding the
provisions of Section 1.1(c), to the extent Seller elects to have the assets of
the National Servicer Group transferred to NSLP, for all purposes of this
Agreement all assets, liabilities, revenues, costs and expenses of NSLP shall be
treated as if the same belonged to NCLP (with intercompany items being
eliminated), including for purposes of calculating the Bonus Pool, Compensation
Expense, the Contingent Payments, NCLP Qualifying Revenue, Non-Recurring
Revenue, Operating Expenses, Partnership Revenues, Post-Bonus Operating Margins
and the Margin Share Payment, whether or not the same would otherwise be
consolidated with those of NCLP in accordance with GAAP.
-115-
3131867.30
IN WITNESS WHEREOF, the parties have duly executed this Agreement, all
as of the date first written above.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & WALTCH, L.P.
By: AEW HOLDINGS, L.P.,
its general partner
By: ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & WALTCH, INC.,
its general partner
By: /S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------
Title: President
AEW HOLDINGS, L.P.,
By: ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & WALTCH, INC.,
its general partner
By: /S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------
Title: President
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & WALTCH, INC.
By: /S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------
Title: President
AEW INVESTMENT COMPANY, INC.
By: /S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------
Title: President
-116-
3131867.30
PRINCIPALS
/S/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
NEW ENGLAND INVESTMENT COMPANIES, L.P.
By: NEW ENGLAND INVESTMENT COMPANIES,
INC., its general partner
By: /S/ ▇▇▇▇▇ ▇. ▇▇▇▇
----------------------------------------
Title: President and Chief Executive Officer
Acknowledged and agreed to as to
Sections 6.2, 6.3(c), 6.10, 6.14
and 10.9
NEW ▇▇▇▇▇▇▇, ▇.▇.
By: New ▇▇▇▇▇▇▇, Inc.,
its general partner
By: /S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------------
Title: President
-117-
3131867.30
