EXHIBIT 2.1
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ACQUISITION AGREEMENT
by and among
BARRA, INC.,
SYMPHONY ASSET MANAGEMENT, INC.,
MAESTRO, LLC,
THE COMPANY PRINCIPALS,
SYMPHONY ASSET MANAGEMENT LLC,
and
THE ▇▇▇▇ NUVEEN COMPANY
dated as of June 15, 2001
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TABLE OF CONTENTS
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Page
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ARTICLE I
THE TRANSACTION
Section 1.1 General..........................................................17
Section 1.2 Closing..........................................................17
Section 1.3 Instruments of Transfer; Payment of Purchase Consideration.......17
Section 1.4 Post-Closing Working Capital Adjustment..........................18
Section 1.5 Contingent Purchase Consideration................................21
Section 1.6 Fund Adjustment..................................................21
Section 1.7 EAP Obligations of the Members...................................23
Section 1.8 Valuation and Run-Rate Escrow Release............................23
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SYMPHONY PARTIES
Section 2.1. Organization and Related Matters.................................25
Section 2.2 Subsidiaries.....................................................26
Section 2.3 Authority; No Violation..........................................26
Section 2.4 Consents and Approvals...........................................27
Section 2.5 Authorized Capitalization; Ownership of Membership Interests.....27
Section 2.6 Regulatory Documents.............................................28
Section 2.7 Financial Statements.............................................28
Section 2.8 Ineligible Persons...............................................29
Section 2.9 Contracts........................................................30
Section 2.10 Funds and Clients................................................30
Section 2.11.Investment Company Advisory Agreements; Non-Investment Company
Advisory Agreements..............................................32
Section 2.12 No Other Broker..................................................32
Section 2.13 Legal Proceedings................................................33
Section 2.14 Compliance with Applicable Law...................................33
Section 2.15 Insurance........................................................34
Section 2.16 Employee Benefit Plans; ERISA....................................35
Section 2.17 Technology and Intellectual Property.............................36
Section 2.18 Properties.......................................................37
Section 2.19 Filing Documents.................................................37
Section 2.20 Transactions with Affiliates.....................................38
Section 2.21 No Broker/Dealer Operations......................................38
Section 2.22 Absence of Certain Changes.......................................38
Section 2.23 No Company Assets at Parent......................................38
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT, THE MEMBERS AND THE COMPANY
PRINCIPALS
Section 3.1 Ownership of Membership Interests................................39
Section 3.2 Corporate Existence and Power....................................39
Section 3.3 Authority; No Violation..........................................39
Section 3.4 No Other Broker..................................................40
Section 3.5 Ownership of Interests in Maestro................................41
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Section 4.1 Organization and Related Matters.................................41
Section 4.2 Authority; No Violation..........................................41
Section 4.3 Consents and Approvals...........................................42
Section 4.4 Legal Proceedings................................................42
Section 4.5 No Other Broker..................................................42
Section 4.6 Section 15 of the Investment Company Act.........................42
Section 4.7 Investment Purpose...............................................42
Section 4.8 Experience.......................................................43
Section 4.9 Access to Data...................................................43
Section 4.10 Accredited Investor..............................................43
Section 4.11 Cash Consideration...............................................43
ARTICLE V
COVENANTS
Section 5.1 Conduct of Business by the Company...............................43
Section 5.2 Section 15 of the Investment Company Act: Company Covenants.....46
Section 5.3 Non-Investment Company Advisory Agreement Consents...............46
Section 5.4 Insurance........................................................47
Section 5.5 Section 15 of the Investment Company Act: Buyer's Covenants.....47
Section 5.6 Employees, Employee Benefits.....................................48
Section 5.7 Further Assurances...............................................50
Section 5.8 Efforts of Parties to Close......................................50
Section 5.9 Confidentiality and Announcements................................51
Section 5.10 Access; Certain Communications...................................52
Section 5.11 Regulatory Matters; Third-Party Consents.........................52
Section 5.12 Notification of Certain Matters..................................52
Section 5.13 Expenses.........................................................53
Section 5.14 Third-Party Proposals............................................53
Section 5.15 Officers' and Directors' Indemnification and Insurance...........54
Section 5.16 State Takeover Statutes..........................................55
Section 5.17 Investment of Transaction Proceeds...............................55
Section 5.18 Employee Incentive Plan..........................................55
Section 5.19 Information in Proxy Materials of the Funds; Filing Documents....55
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Section 5.20 Non-Competition/Non-Solicitation.................................56
Section 5.21 Use of Symphony Name.............................................58
Section 5.22 Delivery of Closing Client Revenue Run-Rate Schedule.............58
Section 5.23 Permitted Distributions..........................................58
Section 5.24 Lease Matters....................................................58
ARTICLE VI
CONDITIONS TO THE CONSUMMATION OF THE TRANSACTION
Section 6.1 Mutual Conditions................................................59
Section 6.2 Conditions to Buyer's Obligations................................59
Section 6.3 Conditions to the Obligations of the Symphony Parties............60
ARTICLE VII
TERMINATION
Section 7.1 Termination......................................................61
Section 7.2 Survival after Termination.......................................62
ARTICLE VIII
TAX MATTERS
Section 8.1 Tax Representations..............................................62
Section 8.2 Tax Treatment....................................................64
Section 8.3 Tax Covenants....................................................64
Section 8.4 Tax Refunds; Amendment of Returns................................65
Section 8.5 Tax Indemnification..............................................65
Section 8.6 Assistance and Cooperation.......................................67
Section 8.7 Contests and Payment Procedures..................................67
Section 8.8 FIRPTA Certificate...............................................68
Section 8.9 Allocation of Purchase Consideration.............................68
ARTICLE IX
INDEMNIFICATION
Section 9.1 Indemnification by Parent, the Members and the Company
Principals.......................................................68
Section 9.2.Additional Indemnification by Parent, the Members and the
Company Principals...............................................69
Section 9.3 Indemnification by Buyer.........................................69
Section 9.4 Calculation and Payment of Losses................................70
Section 9.5 Termination of Indemnification...................................71
Section 9.6 Procedures.......................................................71
Section 9.7 Exclusive Remedy.................................................72
Section 9.8 Binding Arbitration..............................................72
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ARTICLE X
MISCELLANEOUS
Section 10.1 Amendments; Waiver..............................................74
Section 10.2 Entire Agreement................................................74
Section 10.3 Survival of Representations, Warranties and Covenants...........75
Section 10.4 Interpretation..................................................75
Section 10.5 Severability....................................................75
Section 10.6 Notices.........................................................75
Section 10.7 Binding Effect; Persons Benefiting; No Assignment...............77
Section 10.8 Release of Claims...............................................77
Section 10.9 Counterparts....................................................77
Section 10.10 Waiver of Jury Trial............................................77
Section 10.11 Governing Law...................................................78
Section 10.12 Consent to Jurisdiction.........................................78
Exhibits
Exhibit A-1 Employees who have entered into Employment Agreements
Exhibit A-2 Form of Employment Agreement
Exhibit B Persons whose knowledge constitutes "Knowledge of the Symphony
Parties"
Exhibit C Persons whose knowledge constitutes "Knowledge of Buyer"
Exhibit D Membership Interests in Symphony
Exhibit E Membership Interests in Maestro
Exhibit F Opinion of Stroock & Stroock & ▇▇▇▇▇ LLP and Opinion of Shartsis,
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
Exhibit G Members' Allocation of Initial Purchase Consideration
Exhibit H Form of Parent Interim Services Agreement
Exhibit I Schedule of Allocable Share of Indemnification Obligations
Exhibit J Employee Incentive Plan Administration
Exhibit K Form of Parent Source Materials Agreement
Exhibit L Form of Amended and Restated EAP
Exhibit M Schedule of Minimum Investments
Exhibit N Form of Pledge Agreement
Exhibit O Asset Purchase Agreement
Exhibit P Form of Closing Release
Exhibit Q Lease Matters
Exhibit R Contingent Purchase Consideration
Exhibit S Additional Definitions
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ACQUISITION AGREEMENT
ACQUISITION AGREEMENT, dated as of June 15, 2001 (this "Agreement"),
by and among BARRA, INC., a Delaware corporation ("Parent"), SYMPHONY ASSET
MANAGEMENT, INC., a California corporation ("SAMI"), MAESTRO, LLC, a California
limited liability company ("Maestro" and, together with SAMI, the "Members" and
each a "Member"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (collectively, the "Company Principals"), SYMPHONY ASSET
MANAGEMENT LLC, a California limited liability company (the "Company" and,
together with Parent, the Members and the Company Principals, the "Symphony
Parties" and each a "Symphony Party") and THE ▇▇▇▇ NUVEEN COMPANY, a Delaware
corporation ("Buyer").
WHEREAS, pursuant to the terms and subject to the conditions of this
Agreement, Buyer wishes to acquire all of the Membership Interests (as
hereinafter defined) of the Company;
WHEREAS, pursuant to the terms and subject to the conditions of this
Agreement, the Members, being the members of the Company holding all of the
Membership Interests in the Company, wish to sell their Membership Interests to
Buyer;
WHEREAS, the agreements in the forms set forth on Exhibits H and K
hereto have been entered into on or prior to the date hereof in the forms so
attached;
WHEREAS, Parent and the Company have entered into the Asset Purchase
Agreement in the form attached as Exhibit O hereto;
WHEREAS, the Persons listed on Exhibit A-1 hereto each have entered
into an employment agreement with Buyer dated as of the date hereof in the form
attached as Exhibit A-2 hereto (the "Employment Agreements");
WHEREAS, Parent has obtained the consent (the "Consent") of ▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ LLC, a Delaware limited liability company, to the assignment,
transfer and conveyance of the lease (the "Lease") for the Company's offices
located at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, to the Company on
the current terms of such lease;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, and
intending to be legally bound hereby, subject to the conditions and other terms
herein set forth the parties hereto hereby agree as follows:
Definitions: For all purposes of this Agreement, the following terms
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shall have the respective meanings set forth as follows (such definitions to be
equally applicable to both the singular and plural forms of the terms herein
defined):
"Accounts Receivable Differential" shall mean the Total Accounts
Receivable Amount less the Excess Working Capital Amount, which may be a
positive or negative number.
"Acquisition Proposal" shall have the meaning set forth in Section
5.14.
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"Additional Payment Amount" shall mean an amount (not less than $0)
equal to $10.25 million less an amount equal to the product of (a) $210 million
less any Fund Holdback and (b) the Shortfall Ratio; provided that amounts
payable to Parent and to Maestro shall be reduced by the amount of the
applicable Parent Transaction Fees and the applicable Maestro Transaction Fees,
respectively.
"Additional Payment Closing" shall have the meaning set forth in
Section 1.8(e).
"Additional Payment Date" shall have the meaning set forth in Section
1.8(e).
"Additional Performance Fee Payment" shall have the meaning set forth
in Exhibit R.
"Adjusted Assets Under Management" shall mean, for any account of any
Client or Fund of the Company or SAMI (provided that, except in the case of the
Base Date, accounts of SAMI shall be included herein only if the applicable
account consents to the assignment of the applicable Investment Company Advisory
Agreement or Non-Investment Company Advisory Agreement in accordance with
Section 5.2 or 5.3, respectively), as of a particular date, the amount of assets
under management, as adjusted, in the case of the Closing Client Revenue
Run-Rate, the Revised Closing Client Revenue Run-Rate and the Adjusted Fund
Revenue Run-Rate, (a) to reflect net cash flows (additions, withdrawals, written
notices of addition or written notices of withdrawal or subscription agreements,
in each case of the type contemplated by the underlying agreement, and
reinvestments), new accounts and terminated accounts from and after the Base
Date and (b)(i) in the case of any Client (other than any long-only strategy
account of any Client), to reflect any increase or decrease in assets under
management due to market appreciation or depreciation (including gains and
losses, whether realized or unrealized, any interest, dividend or other income
on the securities held in the account of such Client and any currency
fluctuations) from and after the Base Date, and (ii) in the case of any Fund or
any long-only strategy account of any Client, to exclude any increase or
decrease in assets under management due to market appreciation or depreciation
(including gains and losses, whether realized or unrealized, any interest,
dividend or other income on the securities held in the account of such Client
and any currency fluctuations) from and after the Base Date. Notwithstanding the
foregoing, for purposes of calculating Adjusted Assets Under Management for
Leverage-Based Fee Clients only, Adjusted Assets Under Management shall include
leveraged amounts as of the applicable date. Notwithstanding the foregoing, for
purposes of calculating Adjusted Assets Under Management, Adjusted Assets Under
Management shall not include any funds set aside to cover margin payments
relating to any futures overlay, other than any such funds relating to the Opus
E Fund, L.P. or the Investment Advisory Account of Stichting TPG KPN Pensioen
World Equity Fonds.
"Adjusted Fund Revenue Run-Rate" shall mean the sum of the Fund
Revenue Run-Rates for each of the Funds (other than the Accessor Small to Midcap
Portfolio) for which consents have been obtained as described in Section 1.6(b),
calculated for each Fund as of the AUM Determination Date applicable to the date
on which the consent for such Fund was obtained.
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"Adjustment Amount Balance Sheet" shall mean the consolidated
unaudited balance sheet of the Company and its Subsidiaries as of the Closing
Date prepared in accordance with GAAP.
"Adjustment Amount Documents" shall have the meaning set forth in
Section 1.4(a).
"Advisers Act" shall mean the Investment Advisers Act of 1940, as
amended, and the rules and regulations of the SEC thereunder.
"Affiliate" shall mean any individual, partnership, corporation,
entity or other Person that directly, or indirectly through one or more
intermediaries, controls, is controlled by or is under common control with the
Person specified. For purposes of this Agreement, (i) each of Parent, SAMI,
Maestro and the Company Principals shall be deemed Affiliates of the Company,
and vice versa, prior to the Closing, (ii) Buyer shall be deemed an Affiliate of
the Company, and vice versa, after the Closing and (iii) none of the Funds or
the Non-Registered Funds or any Person in which a Fund or a Non-Registered Fund
holds an ownership interest shall be deemed an Affiliate of the Company, Buyer,
Parent, SAMI, Maestro or the Company Principals.
"Agreement" shall have the meaning set forth in the preamble.
"Allocable Share" shall have the meaning set forth in Section 9.1(a).
"Allocation Schedule" shall have the meaning set forth in Section
1.4(e).
"Amended and Restated EAP" shall mean the several Amended and Restated
Equity Appreciation Plans among Parent, SAMI, Maestro, the Company, the Company
Principals and each of the participants in the EAP, each in the form attached as
Exhibit L.
"Annual Financial Statement" shall have the meaning set forth in
Exhibit R.
"Applicable Law" shall mean any domestic or foreign federal, state or
local statute, law (whether statutory or common law), ordinance, rule,
administrative interpretation, regulation, order, writ, injunction, directive,
judgment, decree, policy, guideline or other requirement (including those of the
NASD, NYSE or any other self-regulatory organization) applicable to the Symphony
Parties, the Non-Registered Funds, the Funds, the Clients, Buyer or any of their
respective Affiliates, properties, assets, officers, directors, employees or
agents, as the case may be.
"Arbitration Panel" shall have the meaning set forth in Section
9.8(c).
"Asset-Based Bonus Amount" shall have the meaning set forth in Exhibit
J.
"Asset-Based Fees" shall mean all fees, other than Performance Fees,
earned for financial reporting purposes by the Company or SAMI (provided that,
except in the case of the Base Date, accounts of SAMI shall be included herein
only if the applicable account consents to the assignment of the applicable
Investment Company Advisory Agreement or Non-Investment
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Company Advisory Agreement in accordance with Section 5.2 or 5.3, respectively)
from Clients and Funds (in each case, net of any applicable fee waivers,
reimbursements or distribution or servicing fees payable by the Company or SAMI
to third parties) in respect of the applicable period based on the amount of
assets under management by the Company or SAMI.
"Asset Purchase Agreement" shall mean the asset purchase agreement
relating to the Symphony Signals Modifications attached hereto as Exhibit O.
"Audited Company Balance Sheet" shall have the meaning set forth in
Section 2.7.
"Audited Company Financial Statements" shall have the meaning set
forth in Section 2.7.
"AUM Determination Date" shall mean (i) with respect to the Closing
Client Revenue Run-Rate, (x) if the Closing occurs on or before the 10th
Business Day of the month in which the Closing occurs, the last Business Day of
the month that is two months prior to the month in which the Closing occurs and
(y) if the Closing occurs after the 10th Business Day of the month in which the
Closing occurs, the last Business Day of the month immediately preceding the
month in which the Closing occurs, (ii) with respect to the Revised Closing
Client Revenue Run-Rate, the Closing Date and (iii) with respect to the Adjusted
Fund Revenue Run-Rate, the Business Day prior to the date of receipt of the
applicable consent.
"Base Client Revenue Run-Rate" shall have the meaning set forth on
Exhibit S.
"Base Date" shall mean March 31, 2001.
"Base Fund Revenue Run-Rate" shall have the meaning set forth on
Exhibit S.
"Business Day" shall mean any day that the NYSE is normally open for
trading and that is not a Saturday, a Sunday or a day on which banks in the City
of San Francisco or the City of New York are authorized or required to close for
regular banking business.
"Buyer" shall have the meaning set forth in the preamble.
"Buyer Disclosure Schedule" shall have the meaning set forth in the
introduction to Article IV.
"Buyer Indemnitee" shall have the meaning set forth in Section 9.1(a).
"Buyer Indemnitee Limitation Exception" shall have the meaning set
forth in Section 9.4(c).
"Buyer Indemnity Cap" shall equal $50 million.
"Buyer Indemnity Threshold" shall equal $7.5 million.
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"Buyer Material Adverse Effect" shall mean a material adverse effect
on the ability of Buyer to complete the Closing pursuant to the terms hereof
and/or comply with its obligations hereunder, other than any change, event,
effect or occurrence to the extent arising from any breach by any of the
Symphony Parties of any of their respective representations, warranties,
covenants or agreements hereunder.
"Buyer Plans" shall have the meaning set forth in Section 5.6(a).
"Claims" shall have the meaning set forth in Section 9.8(a).
"Client Revenue Run-Rate" shall mean, as of any date, the aggregate
annualized investment advisory, investment management and subadvisory fees for
all Clients of the Company and SAMI (other than, with respect to the Closing
Client Revenue Run-Rate and the Revised Closing Client Revenue Run-Rate only,
Clients that have not consented in accordance with Section 5.3 to the assignment
or deemed assignment of their respective Non-Investment Company Advisory
Agreement resulting from the Transaction prior to the Closing Date or the
Consent Expiration Date, as the case may be, or Clients that have withdrawn such
consents prior to the Closing Date or the Consent Expiration Date, as the case
may be) payable to the Company, determined by multiplying the Adjusted Assets
Under Management for each such account as of the AUM Determination Date or the
Base Date, as applicable, by the applicable fee rate (which shall, except as
specifically noted in Section 2.10(a) of the Company Disclosure Schedule, be net
of any then applicable fee waivers, reimbursements or distribution or servicing
fees payable by the Company or SAMI to third parties) for such account at the
AUM Determination Date or the Base Date, as applicable (excluding any
Performance Fees). For purposes of the IMF Large Cap and IMF Large Cap Equitized
accounts, the applicable fee rate for each such account shall be deemed to be
0.25%, and for purposes of the Melody 4500 Fund, L.P. the applicable fee rate
shall be deemed to be 1.00%. The applicable fee rate for any account with a
fulcrum fee structure shall be the fee rate in effect on the applicable AUM
Determination Date or the Base Date, as applicable. Solely for purposes of
calculating the Revised Closing Client Revenue Run-Rate, the Client Revenue
Run-Rate shall be deemed to (i) include the aggregate annualized investment
advisory, investment management and subadvisory fees for any Client that has
consented in accordance with Section 5.3 to the assignment or deemed assignment
of their respective Non-Investment Company Advisory Act Agreement resulting from
the Transaction on or prior to the Consent Expiration Date and which Client has
not withdrawn such consent prior to the Consent Expiration Date and (ii) exclude
any fees relating to new accounts opened after the Closing Date.
"Clients" shall mean all Persons that have Investment Advisory
Accounts with the Company or SAMI.
"Closing" shall have the meaning set forth in Section 1.2.
"Closing Accounts Receivable List" shall have the meaning set forth in
Section 1.4(a).
"Closing Client Revenue Run-Rate" shall mean the Client Revenue
Run-Rate as of the applicable AUM Determination Date.
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"Closing Consideration Exhibit" shall have the meaning set forth in
Section 1.3(c)(i).
"Closing Date" shall have the meaning set forth in Section 1.2.
"Closing Release" shall have the meaning set forth in Section 10.8.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Company" shall have the meaning set forth in the preamble.
"Company Disclosure Schedule" shall have the meaning set forth in the
introduction to Article II.
"Company Employees" shall have the meaning set forth in Section
5.6(a).
"Company Insurance Policies" shall have the meaning set forth in
Section 2.15.
"Company Material Adverse Effect" shall mean a material adverse effect
on the business, assets, liabilities, financial condition or results of
operations of the Company and its Subsidiaries, taken as a whole, or on the
ability of any of the Symphony Parties to complete the Closing pursuant to the
terms hereof and/or comply with their respective obligations hereunder, other
than any change, effect, event or occurrence to the extent resulting from (i)
the United States economy or United States or global Securities markets in
general; (ii) changes in legal or regulatory conditions to the extent generally
affecting the investment advisory and asset management industry, in each case
not affecting the Company and its Subsidiaries to a materially greater extent
than it affects other Persons in the industry in which the Company and its
Subsidiaries compete; (iii) the announcement or pendency of the execution of
this Agreement or the pendency of the Transaction or the other transactions
contemplated hereby, including the Company's loss of employees or Clients to the
extent resulting therefrom; (iv) the declaration and payment of any dividend or
distribution by the Company not made in violation of the terms of this Agreement
or (v) any breach by Buyer of any of its representations, warranties, covenants
and agreements hereunder; provided, however, that a reduction in the Client
Revenue Run-Rate or the Fund Revenue Run-Rate between the Base Date and the
Closing Date in and of itself shall not constitute a Company Material Adverse
Effect.
"Company Operating Agreement" shall mean that certain Operating
Agreement of Symphony Asset Management LLC, dated as of July 1, 1996, amended as
of April 1, 1997, as of September 22, 2000, and as of June 14, 2001, by and
between SAMI and Maestro, governing the organization and operation of the
Company, as it may be further amended as permitted by this Agreement.
"Company Plan" shall have the meaning set forth in Section 2.16(a).
"Company Principals" shall have the meaning set forth in the preamble.
"Company Products" shall have the meaning set forth in Section 5.17.
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"Competing Products" shall have the meaning set forth in Section
5.20(a).
"Computer Software" shall have the meaning set forth in Section 2.17.
"Confidentiality Agreements" shall mean those certain letter
agreements, dated November 21, 2000 and May 7, 2001, among the Symphony Parties
and Buyer.
"Consent" shall have the meaning set forth in the preamble.
"Consent Expiration Date" shall mean the earlier of (i) the 30th
calendar day after the Closing Date, (ii) the later of the 60th calendar day
after the date of this Agreement and the Closing Date and (iii) such other date
as Buyer, Parent and Maestro may agree in writing.
"Contingent Purchase Consideration" shall have the meaning set forth
in Exhibit R.
"Continuation Period" shall have the meaning set forth in Section
5.6(f).
"Contracts" shall have the meaning set forth in Section 2.9.
"Cumulative Performance Fees" shall have the meaning set forth in
Exhibit R.
"Cumulative Satisfied Accounts Receivable Amount" shall mean the
aggregate amount of cash received by the Company following the Closing and on or
prior to the close of business on the second Business Day prior to the
applicable Supplemental Closing Date in satisfaction of the accounts and amounts
reflected on the Closing Accounts Receivable List.
"Demand" shall have the meaning set forth in Section 9.8(b).
"Determination Document" shall have the meaning set forth in Exhibit
R.
"Disagreement" shall have the meaning set forth in Section 1.4(b).
"Dispute" shall have the meaning set forth in Exhibit R.
"Dispute Notice" shall have the meaning set forth in Exhibit R.
"EAP" shall have the meaning set forth in Section 1.7.
"EBITDA" shall mean income allocable to Members plus depreciation and
amortization, but less interest income (net of interest expense) for the
applicable period as reflected in the financial statements prepared in
accordance with GAAP of the Company for such applicable period; provided that,
until such time as Parent is no longer entitled to receive any portion of the
Contingent Purchase Consideration hereunder, EBITDA, to the extent decreased by
any of the following, shall be deemed increased for purposes of calculating the
Five-Year Contingent Consideration Payment for any applicable period to the
extent of (i) any increases in the aggregate compensation of the Company
Principals paid by the Company or its Subsidiaries in such period in excess of
the compensation contemplated by the Company Principals' Employment Agreements
in the form attached hereto as Exhibit A-2 and the aggregate amounts
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calculated in accordance with the formula set forth in Section 1 of Exhibit J
attached hereto, but only to the extent that such increases would result in the
Company Principals receiving compensation in excess of the amounts contemplated
under their compensation arrangements existing on the date hereof, including
pursuant to the Company's incentive or bonus compensation plan in effect on the
date hereof, (ii) any welfare or other employee benefits provided to the Company
Principals after the Closing that are paid by the Company or its Subsidiaries
materially in excess of those benefits provided to similarly situated employees
of Buyer and (iii) cash, benefits or other items of value provided to the
Company Principals pursuant to any agreements, arrangements or transactions
between Buyer, the Company or their Subsidiaries or Affiliates, on the one hand,
and any of the Company Principals, on the other hand, after the Closing that are
paid by the Company or its Subsidiaries and that are not on arms-length terms,
and in such case, only to the extent that they are not on arms-length terms.
"EBITDA Accounting" shall have the meaning set forth in Exhibit R.
"EBITDA CAGR" for each EBITDA Measurement Date is equal to:
(( EBITDAn ) 1/n )
(( ------------------------- ) -1) * 100
(( Initial EBITDA Amount ) )
where EBITDAn is the EBITDA for the twelve months ending on the applicable
EBITDA Measurement Date and n equals (a) 1, if the applicable EBITDA Measurement
Date falls in 2002; (b) 2, if the applicable EBITDA Measurement Date falls in
2003; (c) 3, if the applicable EBITDA Measurement Date falls in 2004; (d) 4, if
the applicable EBITDA Measurement Date falls in 2005; and (e) 5, if the
applicable EBITDA Measurement Date falls in 2006.
"EBITDA Measurement Date" means, with respect to each of the five
years immediately following the year in which the Closing occurs, the last
Business Day in the quarter in which an anniversary of the Closing falls.
"Employment Agreements" shall have the meaning set forth in the
recitals.
"Encumbrance" shall mean any lien, pledge, mortgage, security
interest, claim, charge, easement, limitation, commitment, encroachment,
restriction (other than a restriction on transferability imposed by federal or
state securities laws) or other encumbrance of any kind or nature whatsoever
(whether absolute or contingent).
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended, and the rules, regulations and class exemptions of the
Department of Labor thereunder.
"ERISA Client" shall have the meaning set forth in Section
2.10(d)(iii).
"Escrow Account" shall mean the account established pursuant to the
Escrow Agreement.
"Escrow Agent" shall mean the commercial bank organized under the laws
of the United States or any state thereof that has a combined capital and
surplus of at least $1 billion
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that the parties hereto reasonably agree, acting in good faith, to have serve
as the escrow agent under the Escrow Agreement. The fees and expenses of the
Escrow Agent under the Escrow Agreement shall be borne 50% by Buyer, 25% by
Parent and 25% by Maestro.
"Escrow Agreement" shall mean the escrow agreement to be entered into
prior to the Closing by and among the parties hereto and the Escrow Agent on
terms reasonably agreed to by the parties acting in good faith.
"Escrow Dispute" shall have the meaning set forth in Section 1.8(b).
"Escrow Dispute Notice" shall have the meaning set forth in Section
1.8(b).
"Escrow Rate" shall mean the blended interest rate on the escrow
accounts in which compensation earned under the Investment Company Advisory
Agreements with respect to the Funds is held pursuant to Rule 15a-4 under the
Investment Company Act.
"Escrow Release Accounting" shall have the meaning set forth in
Section 1.8(a).
"Excess Working Capital Amount" shall have the meaning set forth in
Section 1.4(e).
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the SEC thereunder.
"Fee Accounting" shall have the meaning set forth in Exhibit R.
"Five-Year Contingent Consideration" shall have the meaning set forth
in Exhibit R.
"Five-Year Contingent Consideration Payment" shall have the meaning
set forth in Exhibit R.
"Fund" shall mean an investment company (or series thereof) registered
under the Investment Company Act for which the Company or SAMI provides advisory
or subadvisory services pursuant to an Investment Company Advisory Agreement.
"Fund Accounting" shall have the meaning set forth in Section
1.6(b).
"Fund Boards" shall mean the boards of directors or trustees of the
Funds.
"Fund Consent Ratio" shall mean the quotient obtained by dividing (i)
the Adjusted Fund Revenue Run-Rate by (ii) the Base Fund Revenue Run-Rate.
"Fund Dispute" shall have the meaning set forth in Section 1.6(c).
"Fund Dispute Notice" shall have the meaning set forth in Section
1.6(c).
"Fund Holdback" shall equal $5 million.
-9-
"Fund Payment" shall mean an amount equal to the Fund Holdback;
provided, however, that if the Fund Consent Ratio shall be less than 90%, the
Fund Payment shall equal the product of the Fund Holdback multiplied by the Fund
Consent Ratio; and provided, further, that amounts payable to SAMI and Maestro
shall be reduced by the amount of the applicable Parent Transaction Fees and
Maestro Transaction Fees, respectively.
"Fund Payment Closing" shall have the meaning set forth in Section
1.6(f).
"Fund Payment Date" shall have the meaning set forth in Section
1.6(f).
"Fund Revenue Run-Rate" shall mean, with respect to a Fund, as of any
date, the aggregate annualized investment advisory, investment management and
subadvisory fees payable thereunder, determined by multiplying the Adjusted
Assets Under Management for such Fund as of the AUM Determination Date or the
Base Date (as applicable) by the applicable fee rate for such Fund at the AUM
Determination Date or the Base Date (as applicable) (net of any applicable fee
waivers, reimbursements or distribution or servicing fees payable by the Company
or SAMI to third parties, and excluding any Performance Fees). The applicable
fee rate for any Fund with a fulcrum fee structure shall be the fee rate in
effect on the applicable AUM Determination Date or the Base Date (as
applicable). The calculation of the Adjusted Fund Revenue Run-Rate shall be made
using the same methodology as used for the calculation of the Base Fund Revenue
Run-Rate.
"GAAP" shall mean generally accepted accounting principles as used in
the United States of America as in effect at the time any applicable financial
statements were or are prepared or any act requiring the application of GAAP was
or is performed.
"Governmental Authority" shall mean any United States or foreign
government, any state or other political subdivision thereof, any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, including the SEC or any other United
States or foreign government authority, agency, department, board, commission or
instrumentality of the United States, any state of the United States or any
political subdivision thereof or any foreign jurisdiction, and any court,
tribunal or arbitrator(s) of competent jurisdiction, and any United States or
foreign governmental or non-governmental self-regulatory organization, agency or
authority (including the NYSE and the NASD).
"HSR Act" shall mean the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act
of 1976, as amended, and the rules and regulations promulgated thereunder.
"Income Tax" shall mean any Tax imposed upon or measured by net
income.
"Indemnified Party" shall have the meaning set forth in Section
9.6(a).
"Independent Accounting Firm" shall mean such nationally recognized
independent public accounting firm reasonably agreed to by the parties hereto
acting in good faith.
"Initial EBITDA Amount" shall have the meaning set forth on Exhibit S.
-10-
"Initial Purchase Consideration" shall mean $210 million reduced by:
(i) the Run-Rate Escrow Amount, and (ii) any Fund Holdback required under
Section 1.6(a); provided that amounts payable to SAMI and to Maestro shall be
reduced by the amount of the applicable Parent Transaction Fees and Maestro
Transaction Fees, respectively.
"Initial Supplemental Closing" shall have the meaning set forth in
Section 1.4(e).
"Initial Supplemental Closing Date" shall have the meaning set forth
in Section 1.4(e).
"Insurance Amount" shall have the meaning set forth in Section
5.15(b).
"Intellectual Property" means all trademarks, service marks, trademark
applications, trademark registrations, service ▇▇▇▇ applications, trade names,
copyrights, copyright registrations, designs, design registrations, patents
(including all reissues, divisions, continuations and extensions thereof),
patent applications, proprietary rights, logos, names and other intellectual
property rights.
"Investment Advisory Account" shall mean an account (other than an
account of a registered investment company), including broker-sponsored,
institutional and private client accounts and Non-Registered Funds for which the
Company or SAMI provides discretionary or non-discretionary advisory or
subadvisory services pursuant to a Non-Investment Company Advisory Agreement.
"Investment Company Act" shall mean the Investment Company Act of
1940, as amended, and the rules and regulations of the SEC thereunder.
"Investment Company Advisory Agreement" shall mean an investment
advisory agreement entered into by the Company, any of its Subsidiaries or SAMI
for the purpose of providing investment advisory or subadvisory services to an
investment company registered under the Investment Company Act or series
thereof.
"IRS" shall mean the Internal Revenue Service.
"Knowledge" of (a) the Symphony Parties means (i) with respect to the
Funds, the actual knowledge of any of the Persons specified on Exhibit B,
without the obligation to perform any inquiry, and (ii) with respect to all
other matters, actual knowledge after reasonable inquiry by any of the Persons
specified on Exhibit B (it being agreed that the Symphony Parties are entitled
to rely in respect of information relating to the Company, its Subsidiaries,
Investment Advisory Accounts and the Funds, in the absence of actual knowledge
to the contrary, on the representations of the senior management and auditors of
the Company with respect to such inquiry), and (b) Buyer means actual knowledge
after reasonable inquiry by any of the Persons specified on Exhibit C.
"Lease" shall have the meaning set forth in the preamble.
-11-
"Leverage-Based Fee Clients" shall mean (i) Worldwide Transactions,
Ltd., (ii) Gryphon Domestic IV--Large Cap, (iii) Gryphon Domestic IV--Small Cap
and (iv) Weyerhauser Company (Gryphon III) UK/EU4.
"Loss" shall mean any and all claims, losses, liabilities, costs,
penalties, fines and amounts paid or expenses incurred (including reasonable
fees for attorneys, accountants, consultants and experts), damages, obligations
to third parties, expenditures, judgments, awards or settlements that are
imposed upon or otherwise incurred by the relevant party.
"Maestro" shall have the meaning set forth in the preamble.
"Maestro Indemnity Cap" shall equal $45 million.
"Maestro Transaction Fees" shall mean, with respect to any payment
obligation by Buyer to Maestro, the fees and expenses of ▇▇▇▇▇▇ ▇▇▇▇▇▇
Securities Inc. and Stroock & Stroock & ▇▇▇▇▇ LLP incurred by Maestro in
connection with the Transaction that are payable with respect to such payment
obligation and with respect to which Maestro has informed Buyer at least two
Business Days prior to the applicable payment date of the amount to be paid at
such date (which shall in no event exceed the amount otherwise payable at such
time by Buyer to Maestro).
"Member" and "Members" shall have the meaning set forth in the
preamble.
"Members Indemnity Threshold" shall equal $7.5 million.
"Membership Interests" shall mean the membership interests, preferred
interests and any other ownership interests in the Company, including any rights
to acquire any such ownership interests in the Company.
"Minimum Investment" shall have the meaning set forth in Section 5.17.
"NASD" means the National Association of Securities Dealers, Inc.,
NASD Regulation, Inc. and their respective Subsidiaries.
"Negative Consent Notice" shall have the meaning set forth in Section
5.3.
"Negative Consent Procedure" shall have the meaning set forth in
Section 5.3(c)(iii).
"NetNet Ventures" shall have the meaning set forth in Section 5.17.
"Non-Investment Company Advisory Agreement" shall mean any written or
oral investment advisory agreement entered into by the Company or SAMI for the
purpose of providing investment advisory services to a Person other than a
registered investment company or series thereof.
"Non-Registered Fund" shall mean any Client that, but for the
provisions of Section 3(c) of the Investment Company Act, would be an
"investment company" within the
-12-
meaning of the Investment Company Act, and shall include without limitation
those entities identified in Section 2.10(a) of the Company Disclosure Schedule
as Non-Registered Funds.
"Notice" shall have the meaning set forth in Section 5.3.
"Notice of Disagreement" shall have the meaning set forth in Section
1.4(b).
"NYSE" shall mean the New York Stock Exchange, Inc.
"Parent" shall have the meaning set forth in the preamble.
"Parent Agreements" shall mean the Parent Interim Services Agreement,
the Parent License Agreement, the Parent Source Materials Agreement and the
Asset Purchase Agreement.
"Parent Asset Omissions" shall have the meaning set forth in Section
2.23.
"Parent Indemnity Cap" shall equal $55 million.
"Parent Insurance Policies" shall have the meaning set forth in
Section 2.15.
"Parent Interim Services Agreement" shall mean the agreement between
Parent and the Company in the form attached as Exhibit H hereto pursuant to
which Parent shall provide data processing and other services to the Company on
the terms set forth therein.
"Parent License Agreement" shall mean the license agreement between
Parent and the Company, dated March 1, 2000, pursuant to which Parent licenses
certain software and provides certain data to the Company on the terms set forth
therein, together with the related order form, dated as of the date hereof.
"Parent Plan" shall have the meaning set forth in Section 2.16(a)(ii).
"Parent Source Materials Agreement" shall mean the agreement between
Parent and the Company in the form attached as Exhibit K hereto pursuant to
which Parent shall license certain programs, source materials and other software
programs to the Company on the terms set forth therein.
"Parent Transaction Fees" shall mean, with respect to any payment
obligation of Buyer to SAMI, the fees and expenses of ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. and
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ incurred by Parent in connection with the Transaction that are
payable with respect to such payment obligation and with respect to which Parent
has informed Buyer at least two Business Days prior to the applicable payment
date of the amount to be paid at such date (which shall in no event exceed the
amount otherwise payable at such time by Buyer to Parent or SAMI).
"Performance Fee Payment" shall have the meaning set forth in Exhibit
R.
"Performance Fees" shall mean all performance-based fees (net of any
applicable fee waivers, reimbursements or distribution or servicing fees payable
by the Company or SAMI
-13-
to third parties), excluding any fulcrum fees or other management fees that vary
based on historical performance, earned for financial reporting purposes by the
Company from Clients and Funds in respect of the applicable period and not
refunded by the Company to the applicable Client or Fund, respectively.
"Permits" has the meaning set forth in Section 2.14(a).
"Person" shall mean any individual, corporation, company, partnership
(limited or general), limited liability company, joint venture, association,
trust or other business entity.
"Plans" has the meaning set forth in Section 2.16(a).
"Post-Closing Period" shall mean any taxable year or period that
begins after the Closing Date and, with respect to any taxable year or period
beginning before and ending after the Closing Date, the portion of such taxable
year or period beginning after the Closing Date.
"Pre-Closing Period" shall mean any taxable year or period that ends
on or before the Closing Date and, with respect to any taxable year or period
beginning before and ending after the Closing Date, the portion of such taxable
year or period ending on and including the Closing Date.
"Proceedings" shall have the meaning set forth in Section 2.13.
"Qualified Plans" shall have the meaning set forth in Section 2.16(c).
"Registered IP" shall have the meaning set forth in Section 2.17.
"Regulatory Documents" shall mean, with respect to a Person, all
forms, reports, registration statements, schedules and other documents filed, or
required to be filed, by such Person pursuant to the Securities Laws.
"Required Working Capital Amount" shall equal $2.75 million.
"Revised Closing Client Revenue Run-Rate" shall mean the Client
Revenue Run-Rate as of the applicable AUM Determination Date.
"Revised Closing Client Revenue Run-Rate Determination Date" shall
have the meaning set forth in Section 1.8(a).
"Rules" shall have the meaning set forth in Section 9.8(b).
"Run-Rate Escrow Amount" shall equal $10.25 million.
"SAMI" shall have the meaning set forth in the preamble.
"SAMI Asset Omissions" shall have the meaning set forth in Section
2.23.
"Satisfied Accounts Receivable Amount" shall mean, with respect to the
Initial Supplemental Closing Date and each Supplemental Closing Date, (i) the
aggregate amount of
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cash received by the Company following the Closing and on or prior to the close
of business on the second Business Day prior to the Initial Supplemental Closing
Date or such Supplemental Closing Date, as applicable, in satisfaction of the
accounts and amounts reflected on the Closing Accounts Receivable List, less
(ii) in the case of Supplemental Closing Dates, the sum of the Satisfied
Accounts Receivable Amounts with respect to the Initial Supplemental Closing
Date and any prior Supplemental Closing Dates.
"SEC" shall mean the Securities and Exchange Commission, and any
successor thereto.
"Securities" shall mean any securities as defined in the Securities
Act.
"Securities Act" shall mean the Securities Act of 1933, as amended,
and the rules and regulations of the SEC thereunder.
"Securities Laws" shall mean the Securities Act, the Exchange Act, the
Investment Company Act, the Advisers Act, all applicable state "blue sky" laws,
all applicable foreign securities laws, and the rules and regulations
promulgated thereunder.
"Shortfall Ratio" shall be equal to the excess of (a) 90% over (b) a
fraction (expressed as a percentage) the numerator of which is the Revised
Closing Client Revenue Run-Rate and the denominator of which is the Base Client
Revenue Run-Rate.
"Straddle Period" shall have the meaning set forth in Section 8.5(c).
"Subsidiary" of a Person shall mean any other Person more than 50% of
the voting stock (or of any other form of other voting or controlling equity
interest in the case of a Person that is not a corporation) of which is
beneficially owned by the Person directly or indirectly through one or more
other Persons; provided, that "Subsidiary" shall not include, with respect to
the Company, Buyer, Parent, SAMI, Maestro or the Company Principals (i) any Fund
or any Person in which a Fund owns, directly or indirectly, any ownership
interest, (ii) any Non-Registered Fund or any Person in which a Non-Registered
Fund, directly or indirectly, holds an ownership interest and (iii) any
investment account advised or managed by a Person on behalf of another Person.
"Supplemental Closing" shall have the meaning set forth in Section
1.4(f).
"Supplemental Closing Date" shall have the meaning set forth in
Section 1.4(f).
"Symphony Indemnitees" shall have the meaning set forth in Section
9.3(a).
"Symphony Party" and "Symphony Parties" shall have the meaning set
forth in the preamble.
"Symphony Party Indemnitee Limitation Exception" shall have the
meaning set forth in Section 9.4(d).
"Tax Benefit" shall mean a Tax deduction, Tax credit or other Tax
benefit.
-15-
"Tax Return" shall mean any return, report, information statement,
schedule or other document (including any related or supporting information and
including any Form 1099 or other document or report required to be provided by
the Company or any of its Subsidiaries to third parties) with respect to Taxes,
including any document required to be retained or provided to any Governmental
Authority pursuant to 31 U.S.C. Sections 5311-5328 and regulations promulgated
thereunder, relating to the Company or any of its Subsidiaries or any
consolidated group of which any such entity was a member at the applicable time,
and any amended Tax Returns.
"Taxes" shall mean all federal, provincial, territorial, state,
municipal, local, foreign or other taxes, imposts, rates, levies, assessments
and other similar charges (and all interest and penalties thereon and additions
thereto imposed by any Governmental Authority), including, without limitation,
all income, excise, franchise, gains, capital, real property, goods and
services, transfer, value added, gross receipts, windfall profits, severance, ad
valorem, personal property, production, sales, use, license, stamp, documentary
stamp, mortgage recording, employment, payroll, social security, unemployment,
disability, estimated or withholding taxes, and all customs and import duties.
"Technology" shall mean all trade secrets, confidential information,
data, databases, inventions, know-how, formulae, processes, procedures, research
records, records of inventions, test information, market surveys and marketing
know-how owned or used by the Company, any of its Subsidiaries and the
Non-Registered Funds.
"Termination Date" shall have the meaning set forth in Section
7.1(a)(vii).
"Third Party Claim" shall have the meaning set forth in Section
9.6(a).
"Total Accounts Receivable Amount" shall mean the total accounts
receivable balance reflected on the Closing Accounts Receivable List.
"Transaction" shall have the meaning set forth in Section 1.1.
"Treasury Regulations" shall mean regulations promulgated under the
Code.
"Two-Year Contingent Consideration" shall have the meaning set forth
in Exhibit R.
"Two-Year Contingent Consideration Determination Date" shall have the
meaning set forth in Exhibit S.
"Two-Year Contingent Consideration Payment" shall have the meaning set
forth in Exhibit R.
"Unaudited Company Financial Statements" shall have the meaning set
forth in Section 2.7.
"Voting Debt" shall have the meaning set forth in Section 2.5.
-16-
"Wire Transfer" shall mean a payment in immediately available funds by
wire transfer in lawful money of the United States of America to such account or
to a number of accounts as shall have been designated by written notice from the
receiving party to the paying party.
"Working Capital Amount" shall mean (i) cash, cash equivalents,
accounts receivable (other than accounts receivable of the sort reflected on the
Audited Company Balance Sheet as "Accounts Receivable - Maestro") and prepaid
expenses of the Company calculated consistent with past practice and in
accordance with GAAP less (ii) all liabilities (other than liabilities relating
to obligations arising under the EAP or the Amended and Restated EAP) of the
Company calculated consistent with past practice and in accordance with GAAP,
all as reflected on the Adjustment Amount Balance Sheet; provided, however, that
liabilities of the Company shall be deemed to include any amounts relating to
any financial advisor, legal, accounting and all other transaction fees incurred
(but not paid) by the Company or any of its Subsidiaries in connection with this
Agreement and the transactions contemplated herein; and provided further, that
liabilities of the Company shall not be deemed to include any Parent Transaction
Fees or Maestro Transaction Fees or the costs and expenses referred to in
Section 5.13(a).
ARTICLE I
THE TRANSACTION
Section 1.1. General. Upon the terms and subject to the conditions
-------
hereof,each of the Members severally, for itself, agrees to sell, transfer,
assign, convey and deliver, free and clear of any Encumbrances, to Buyer, and
Buyer agrees to purchase and accept from the Members, all but not less than all
of the Membership Interests for the Initial Purchase Consideration and the
Contingent Purchase Consideration (the "Transaction"). Buyer may, at its
election, assign its right to purchase the Membership Interests held by SAMI or
Maestro to a wholly owned Subsidiary, provided that no such assignment shall
relieve Buyer from its obligations hereunder.
Section 1.2. Closing. The consummation of the Transaction (the
-------
"Closing")shall, subject to the satisfaction or waiver (by the parties entitled
to the benefits thereto) of the conditions set forth in Article VI hereof (other
than the conditions which relate to actions to be taken at the Closing), take
place at the offices of Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇, ▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, at the close of business on June 29, 2001 or, if the
conditions to Closing set forth in Article VI have not been satisfied or waived
by the parties entitled to the benefits thereof as of such date, on the fifth
Business Day after all of the conditions set forth in Article VI hereof have
been satisfied or waived by the parties entitled to the benefits thereof or at
such other date, time and place as Buyer, Parent and Maestro shall mutually
agree in writing (the date on which the Closing takes place the "Closing Date").
Section 1.3. Instruments of Transfer; Payment of Purchase
--------------------------------------------
Consideration.
-------------
(a) Not less than two Business Days prior to the Closing Date, the
Members shall deliver to Buyer Wire Transfer instructions designating the
accounts and amounts to which the Initial Purchase Consideration and the
applicable Parent Transaction Fees and Maestro Transaction Fees shall be paid by
Buyer at the Closing.
-17-
(b) At the Closing:
(i) each of the Members shall deliver, or shall cause to be delivered,
to Buyer a ▇▇▇▇ of sale, representing all Membership Interests and duly
executed by all Members, transferring all right, title and interest in, to
and under the Membership Interests to Buyer;
(ii) each of the Members shall deliver, or shall cause to be
delivered, to Buyer, the documents required to be delivered pursuant to
Section 6.2;
(iii) each of the Members shall deliver, or shall cause to be
delivered, to Buyer, such additional instruments, documents or certificates
as may be reasonably requested by Buyer; and
(iv) each of Parent, the Company Principals and the Members, subject
to the proviso in Section 10.8, shall deliver, or shall cause to be
delivered, to Buyer a Closing Release.
(c) At the Closing, Buyer shall deliver, or shall cause to be
delivered, the following:
(i) to each Member, an amount equal to such Member's allocation of the
Initial Purchase Consideration (net of such Member's applicable Parent
Transaction Fees and Maestro Transaction Fees, as the case may be) as
described on Exhibit G attached hereto (the "Closing Consideration
Exhibit"), delivered by Wire Transfer as instructed by each Member;
(ii) an amount equal to the applicable Maestro Transaction Fees and
Parent Transaction Fees, delivered by Wire Transfer as instructed by
Maestro and Parent, respectively;
(iii) to the Escrow Account, the Run-Rate Escrow Amount, delivered by
Wire Transfer as instructed by the Escrow Agent;
(iv) the documents required to be delivered pursuant to Section 6.3;
and
(v) such additional instruments, documents or certificates as may be
reasonably requested by Parent or Maestro.
Section 1.4. Post-Closing Working Capital Adjustment.
----------------------------------------
(a) As soon as reasonably practicable following the Closing Date, and
in no event more than 30 Business Days thereafter, Buyer shall cause the Company
to prepare and deliver to Buyer, Parent and Maestro the Adjustment Amount
Balance Sheet, together with schedules calculating the Working Capital Amount,
including a separate listing, by account, of the total accounts receivable of
the Company outstanding as of the Closing (the "Closing Accounts Receivable
List") and any payments required under Section 1.4(e), and setting forth such
calculations in reasonable detail (collectively, the "Adjustment Amount
Documents"). The
-18-
parties shall consult with one another and cooperate with each other in the
preparation of the Adjustment Amount Documents in accordance with this
Section 1.4, and Buyer shall cause the Company to provide access to such
working papers and information relating to the preparation thereof as
reasonably requested by the parties.
(b) Within 15 Business Days after delivery to Buyer, Parent and
Maestro of the Adjustment Amount Documents, each of Buyer, Parent or Maestro may
dispute all or a portion of such Adjustment Amount Documents by giving written
notice (a "Notice of Disagreement") to the other parties setting forth in
reasonable detail the basis for any such dispute (any such dispute a
"Disagreement"). The parties shall promptly commence good faith negotiations
with a view to resolving all such Disagreements. If none of Buyer, Parent nor
Maestro provides a Notice of a Disagreement within the 15-Business Day period
set forth in this Section 1.4, the parties shall be deemed to have accepted such
Adjustment Amount Documents in the form delivered to them by the Company.
(c) If only one of Buyer, Parent or Maestro shall deliver a Notice of
Disagreement and none of the other parties disputes all or any portion of such
Notice of Disagreement by giving written notice to the party that delivered such
Notice of Disagreement, setting forth in reasonable detail the basis for such
dispute within 15 Business Days following the delivery of such Notice of
Disagreement, such parties who fail to dispute all or any portion of such Notice
of Disagreement shall be deemed to have irrevocably accepted the Adjustment
Amount Documents as modified in the manner described in such Notice of
Disagreement.
(d) If (i) Buyer, Parent or Maestro delivers a Notice of Disagreement
within the 15-Business Day period set forth in Section 1.4(b) or (ii) Buyer,
Parent or Maestro shall dispute a Notice of Disagreement delivered by one of the
other parties within the 15-Business Day period set forth in Section 1.4(c), and
within 15 Business Days following the delivery to Buyer, Parent or Maestro, as
the case may be, of the notice of such dispute, the parties do not resolve the
Disagreement (as evidenced by a written agreement between them), in each case
such Disagreement shall thereafter be referred to the Independent Accounting
Firm for a resolution of such Disagreement in accordance with the terms of this
Agreement. The determinations of such firm with respect to any Disagreement
shall be rendered within 15 Business Days after referral of the Disagreement to
such firm or as soon thereafter as reasonably practicable, shall be final and
binding upon the parties, the amount so determined shall be used to complete the
final Adjustment Amount Documents and the parties agree that the procedures set
forth in this Section 1.4 shall be the sole and exclusive remedy with respect to
the determination of the Adjustment Amount Documents and the amount of any
payment under this Section 1.4. Each of Buyer, Parent and Maestro shall use
their commercially reasonable efforts to cause the Independent Accounting Firm
to render its determination within the 15-Business Day period described in the
previous sentence, and each shall cooperate with such firm and provide such firm
with access to the books, records, personnel and representatives of it and such
other information as such firm may require in order to render its determination.
All of the fees and expenses of the Independent Accounting Firm retained
pursuant to this Section 1.4(d) shall be paid 50% by Buyer, 25% by Parent and
25% by Maestro (except that, in the event that Parent or Maestro is not a party
to such Disagreement, Maestro or Parent, respectively, shall pay 50%).
-19-
(e) Promptly after the Adjustment Amount Documents have been finally
determined in accordance with this Section 1.4 (including by means of a deemed
acceptance of such documents by Buyer, Parent or Maestro as provided in Section
1.4(b) and (c), respectively), but in no event later than five Business Days
following such final determination (the "Initial Supplemental Closing Date"),
the parties hereto shall hold a supplemental closing (the "Initial Supplemental
Closing"), either by telephone or in person at a mutually convenient location.
If the Working Capital Amount is less than the Required Working Capital Amount,
each Member shall deliver to Buyer on the Initial Supplemental Closing Date an
amount in cash equal to such Member's portion (as set forth in a schedule (the
"Allocation Schedule") to be delivered by the Members to Buyer at least two
Business Days prior to the Initial Supplemental Closing Date) of such difference
by Wire Transfer as set forth in instructions from Buyer. If the Working Capital
Amount is greater than the Required Working Capital Amount (the difference, the
"Excess Working Capital Amount"), Buyer shall deliver, or shall cause to be
delivered, to each Member cash as determined pursuant to Section 1.4(f).
(f) The provisions of this Section 1.4(f) shall be applicable only in
the event that the Excess Working Capital Amount is positive. On the Initial
Supplemental Closing Date:
(i) if the Accounts Receivable Differential is negative or zero, Buyer
shall deliver, or shall cause to be delivered, to the Members an amount in
cash equal to the sum of (x) the absolute value of the Accounts Receivable
Differential and (y) the Satisfied Accounts Receivable Amount; or
(ii) if the Accounts Receivable Differential is positive, Buyer shall
deliver, or shall cause to be delivered, to the Members an amount in cash
equal to the excess, if any, of the Satisfied Accounts Receivable Amount
over the Accounts Receivable Differential.
On the last Business Day of each of the six full calendar months following the
Initial Supplemental Closing Date and thereafter two Business Days following
receipt from time to time of any Satisfied Accounts Receivable Amounts (each, a
"Supplemental Closing Date"), if any amounts are required to be paid pursuant to
this Section 1.4(f), the parties hereto shall hold a supplemental closing (each,
a "Supplemental Closing"), either by telephone or in person at a mutually
convenient location.
On the applicable Supplemental Closing Date:
(i) if clause (i) above applies, Buyer shall deliver, or shall cause to be
delivered, to the Members on the applicable Supplemental Closing Date, the
Satisfied Accounts Receivable Amount, if any; or
(ii) if clause (ii) above applies, Buyer shall deliver, or shall cause to
be delivered, to the Members on the applicable Supplemental Closing Date,
an amount in cash equal to the excess, if any, of (A) the Cumulative
Satisfied Accounts Receivable Amount over the sum of (B) the Accounts
Receivable Differential and any amounts previously paid by Buyer pursuant
to this Section 1.4(f).
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On each Supplemental Closing Date, if any, Buyer shall also deliver to each
Member a supporting statement that shows the applicable calculations with
respect to such Supplemental Closing. Any disputes with respect to such
calculations shall be governed by and resolved in accordance with the provisions
set forth in Section 1.4(b), (c) and (d) and shall be reflected in the
Supplemental Closing following resolution of the dispute, provided, however,
that if any disputes pursuant to this Section 1.4(f) are resolved following the
occurrence of the last Supplemental Closing, any amounts due by Buyer to the
Members or vice versa shall be paid in cash within two Business Days of final
resolution of all outstanding disputes under this Section 1.4(f). Any amounts
due to the Members from Buyer or due to Buyer from the Members pursuant to this
Section 1.4(f) shall be paid to or by the Members in accordance with the
Allocation Schedule by Wire Transfer as set forth in instructions from Buyer or
the Members, as applicable. Notwithstanding anything to the contrary herein, the
aggregate payments by Buyer to the Members pursuant to this Section 1.4(f) shall
not exceed the Excess Working Capital Amount.
Section 1.5. Contingent Purchase Consideration. The parties hereto
----------------------------------
hereby incorporate by reference the terms and agreements set forth in Exhibit
R hereto as if set forth herein.
Section 1.6. Fund Adjustment.
---------------
(a) If the Closing occurs prior to the receipt of the necessary
approvals contemplated by Section 5.2(a), an amount equal to the Fund Holdback
shall be deducted from the Initial Purchase Consideration and no payment shall
be made with respect thereto under this Article I except as set forth in Section
1.6(b).
(b) If any or all of the necessary approvals contemplated by Section
5.2 are obtained pursuant to and in accordance with Rule 15a-4 under the
Investment Company Act following the Closing and on or prior to the 150th day
after the Closing Date, on the 30th day following the earlier of (x) the first
date on which the Fund Consent Ratio equals or exceeds 90% or (b) the 150th day
after the Closing Date, the Company shall deliver to Buyer, Parent and Maestro a
statement (the "Fund Accounting") setting forth the calculation of the Fund
Consent Ratio and any applicable Fund Payment, which shall set forth in
reasonable detail the calculation of such numbers, which calculation shall be
made in a manner consistent in all respects with the provisions of this
Agreement. The Company, Buyer, Parent and Maestro shall consult and cooperate
with respect to the Company's preparation of such documents. Following receipt
of the Fund Accounting, solely for the purpose of reviewing such Fund Accounting
as it relates to any Fund Payment, Buyer shall cause the Company to provide
Maestro and Parent reasonable access to the books and records of the Company and
its Subsidiaries and to their personnel and accountants during normal business
hours at the request of Parent or Maestro, as applicable; provided, however,
that such access shall be conducted in a manner that does not unreasonably
interfere with the operation of the business of the Company and its
Subsidiaries.
(c) Within 15 Business Days after delivery to Buyer, Parent and
Maestro of the Fund Accounting, any of such Persons may dispute all or a portion
of such Fund Accounting by giving written notice (a "Fund Dispute Notice") to
the Company of the Fund Accounting, setting forth in reasonable detail the basis
for any such dispute (any such dispute being hereinafter called a "Fund
Dispute"). The parties shall promptly commence good faith
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negotiations with a view to resolving all such Fund Disputes. If none of Buyer,
Parent nor Maestro provides a Fund Dispute Notice within the 15-Business Day
period set forth in this Section 1.6(c), the parties shall be deemed to have
accepted such Fund Accounting in the form delivered to them by the Company.
(d) If any party shall deliver a Fund Dispute Notice and none of the
other parties disputes all or any portion of such Fund Dispute Notice by giving
written notice to the party that delivered such Fund Dispute Notice, setting
forth in reasonable detail the basis for such dispute within 15 Business Days
following the delivery of such Fund Dispute Notice, such parties who fail to
dispute all or any portion of such Fund Dispute Notice shall be deemed to have
irrevocably accepted the Fund Accounting as modified in the manner described in
such Fund Dispute Notice.
(e) If (i) any of Buyer, Parent or Maestro delivers a Fund Dispute
Notice within the 15-Business Day period set forth in Section 1.6(c) or (ii) any
of Buyer, Parent or Maestro shall dispute a Fund Dispute Notice delivered by one
of the other parties within the 15-Business Day period set forth in Section
1.6(d), and within 15 Business Days following the delivery to Buyer, Maestro or
Parent, as the case may be, of the notice of such dispute, the parties do not
resolve the Fund Dispute (as evidenced by a written agreement between them), in
each case such Fund Dispute shall thereafter be referred to an Independent
Accounting Firm for a resolution of such Fund Dispute in accordance with the
terms of this Agreement; provided, that any Fund Dispute relating to
interpretation of this Agreement that is not resolved by the parties after good
faith negotiations (as evidenced by a written agreement between them) shall be
resolved pursuant to the arbitration process described in Section 9.8. The
determinations of the Independent Accounting Firm with respect to any Fund
Dispute shall be rendered within 15 Business Days after referral of the Fund
Dispute to such firm or as soon thereafter as reasonably practicable, shall be
final and binding upon the parties, the amount so determined shall be used to
complete the final Fund Accounting to the extent in dispute and the parties
agree that the procedures set forth in this Section 1.6 shall be the sole and
exclusive remedy with respect to the determination of the amount of any Fund
Payment. Buyer, Parent and Maestro shall use their commercially reasonable
efforts to cause the Independent Accounting Firm to render its determination
within the 15-Business Day period described in the previous sentence, and each
shall cooperate with such firm and provide such firm with access to the books,
records, personnel and representatives of it and such other information as such
firm may require in order to render its determination. All of the fees and
expenses of the Independent Accounting Firm retained pursuant to this Section
1.6(e) shall be paid 50% by Buyer, 25% by Parent and 25% by Maestro; provided,
however, that if Parent or Maestro is not a party to the Dispute referred to the
Independent Accounting Firm, Maestro or Parent, respectively, shall pay 50% of
such fees and expenses.
(f) Promptly after the Fund Accounting has been finally determined in
accordance with this Section 1.6 (including by means of a deemed acceptance of
the Fund Accounting by Buyer, Parent or Maestro as provided in Section 1.6(c)
and (d)), but in no event later than five Business Days following such final
determination (the "Fund Payment Date"), the parties hereto shall hold a
supplemental closing (the "Fund Payment Closing"), either by telephone or in
person at a mutually convenient location. At the Fund Payment Closing, Buyer
shall (i) make the Fund Payment, in cash, with interest accrued from the Closing
Date at the
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Escrow Rate, to the Members (net of the applicable Parent Transaction Fees
and the applicable Maestro Transaction Fees), with each Member's portion of such
payment determined in accordance with the Closing Consideration Exhibit, in
accordance with Wire Transfer instructions provided to Buyer designating the
accounts to which the Fund Payment shall be paid, and (ii) pay the applicable
Maestro Transaction Fees and the applicable Parent Transaction Fees with respect
to which Maestro or Parent, respectively, has informed Buyer at least two
Business Days prior to the date on which payment is to be made of the Wire
Transfer instructions designating the accounts to which such amounts are to be
paid.
Section 1.7. EAP Obligations of the Members. Prior to the execution
------------------------------
hereof,the Company, Parent, SAMI, Maestro and each of the Company Principals
executed an Amended and Restated EAP with each of the participants in the
Company's Equity Appreciation Plan (the "EAP") in the form attached hereto as
Exhibit L. Effective immediately prior to the Closing, all liabilities and
obligations under the EAP and the Amended and Restated EAP shall have been
assumed, and shall be borne solely, by the Members in accordance with the
Amended and Restated EAP and none of Buyer, the Company or any of their
Affiliates (other than the Company Principals, Parent, Maestro or SAMI) shall
have any liability or obligation thereunder. Each of Parent and the Members
hereby agrees to satisfy all of their respective obligations and liabilities set
forth in the Amended and Restated EAP in accordance with the terms thereof,
which constitute all of the obligations and liabilities set forth therein or
arising thereunder.
Section 1.8. Valuation and Run-Rate Escrow Release.
-------------------------------------
(a) The Company shall deliver to Buyer and the Members not later than
30 days following the Consent Expiration Date (the "Revised Closing Client
Revenue Run-Rate Determination Date") a true, complete and correct schedule
setting forth in reasonable detail the calculation of the Revised Closing Client
Revenue Run-Rate (the "Escrow Release Accounting"). The Company, Buyer, Parent
and Maestro shall consult and cooperate with respect to the Company's
preparation of the Escrow Release Accounting. Following receipt of the Escrow
Release Accounting, solely for the purpose of reviewing such Escrow Release
Accounting as it relates to any amounts payable under this Section 1.8, Buyer
shall cause the Company to provide Maestro and Parent reasonable access to the
books and records of the Company and its Subsidiaries and to their personnel and
accountants during normal business hours at the request of Parent or Maestro, as
applicable; provided, however, that such access shall be conducted in a manner
that does not unreasonably interfere with the operation of the business of the
Company and its Subsidiaries.
(b) Within 15 Business Days after delivery to Buyer, Parent and
Maestro of the Escrow Release Accounting, any of such Persons may dispute all or
a portion of such Escrow Release Accounting by giving written notice (an "Escrow
Dispute Notice") to the Company of the Escrow Release Accounting, setting forth
in reasonable detail the basis for any such dispute (any such dispute, an
"Escrow Dispute"). The parties shall promptly commence good faith negotiations
with a view to resolving all such Escrow Disputes. If none of Buyer, Parent nor
Maestro provides an Escrow Dispute Notice within the 15-Business Day period set
forth in this Section 1.8(b), the parties shall be deemed to have accepted such
Escrow Release Accounting in the form delivered to them by the Company.
-23-
(c) If any party shall deliver an Escrow Dispute Notice and none of
the other parties disputes all or any portion of such Escrow Dispute Notice by
giving written notice to the party that delivered such Escrow Dispute Notice,
setting forth in reasonable detail the basis for such dispute within 15 Business
Days following the delivery of such Escrow Dispute Notice, such parties who fail
to dispute all or any portion of such Escrow Dispute Notice shall be deemed to
have irrevocably accepted the Escrow Release Accounting as modified in the
manner described in such Escrow Dispute Notice.
(d) If (i) any of Buyer, Parent or Maestro delivers an Escrow Dispute
Notice within the 15-Business Day period set forth in Section 1.8(b) or (ii) any
of Buyer, Parent or Maestro shall dispute an Escrow Dispute Notice delivered by
one of the other parties within the 15-Business Day period set forth in Section
1.8(c), and within 15 Business Days following the delivery to Buyer, Maestro or
Parent, as the case may be, of the notice of such dispute, the parties do not
resolve the Escrow Dispute (as evidenced by a written agreement between them),
in each case such Escrow Dispute shall thereafter be referred to an Independent
Accounting Firm for a resolution of such Escrow Dispute in accordance with the
terms of this Agreement; provided, that any Escrow Dispute relating to
interpretation of this Agreement that is not resolved by the parties after good
faith negotiations (as evidenced by a written agreement between them) shall be
resolved pursuant to the arbitration process described in Section 9.8. The
determinations of the Independent Accounting Firm with respect to any Escrow
Dispute shall be rendered within 15 Business Days after referral of the Escrow
Dispute to such firm or as soon thereafter as reasonably practicable, shall be
final and binding upon the parties, the amount so determined shall be used to
complete the final Escrow Release Accounting to the extent in dispute and the
parties agree that the procedures set forth in this Section 1.8 shall be the
sole and exclusive remedy with respect to the determination of the amount of any
payment under this Section 1.8. Buyer, Parent and Maestro shall use their
commercially reasonable efforts to cause the Independent Accounting Firm to
render its determination within the 15-Business Day period described in the
previous sentence, and each shall cooperate with such firm and provide such firm
with access to the books, records, personnel and representatives of it and such
other information as such firm may require in order to render its determination.
All of the fees and expenses of any Independent Accounting Firm retained
pursuant to this Section 1.8(h) shall be paid 50% by Buyer, 25% by Parent and
25% by Maestro; provided, however, that if Parent or Maestro is not a party to
the Dispute referred to the Independent Accounting Firm, Maestro or Parent,
respectively, shall pay 50% of such fees and expenses.
(e) Promptly after the Escrow Release Accounting has been finally
determined in accordance with this Section 1.8 (including by means of a deemed
acceptance of such documents by Buyer, Parent or Maestro as provided in
paragraphs (b) and (c) of this Section 1.8), but in no event later than five
Business Days following such final determination (the "Additional Payment
Date"), the parties hereto shall hold a supplemental closing (the "Additional
Payment Closing"), either by telephone or in person at a mutually convenient
location. At the Additional Payment Closing, if (i) the Revised Closing Client
Revenue Run-Rate is equal to or greater than 90% of the Base Client Revenue
Run-Rate, (a) the Run-Rate Escrow Amount (net of applicable Parent Transaction
Fees and Maestro Transaction Fees), with interest accrued from the Closing Date
up to, but not including, the Additional Payment Date at the rate to be set
forth in the Escrow Agreement, shall be released to each Member in an amount
equal to its allocation of such amount as described on the Closing Consideration
Exhibit,
-24-
delivered by Wire Transfer as instructed by each Member and (b) the
applicable Parent Transaction Fees and Maestro Transaction Fees with respect to
which Maestro or Parent, respectively, has informed Buyer at least two Business
Days prior to the date on which payment is to be made of the Wire Transfer
instructions designating the accounts to which such amounts are to be paid,
shall be delivered by Wire Transfer as instructed by Parent and Maestro,
respectively or (ii) the Revised Closing Client Revenue Run-Rate is less than
90% of the Base Client Revenue Run-Rate, (a) an amount equal to the Additional
Payment Amount (net of applicable Parent Transaction Fees and Maestro
Transaction Fees) shall be released to each Member in an amount equal to its
allocation of such amount as described on the Closing Consideration Exhibit,
with interest accrued from the Closing Date up to, but not including, the
Additional Payment Date at the rate to be set forth in the Escrow Agreement,
delivered by Wire Transfer as instructed by each Member, (b) the applicable
Parent Transaction Fees and Maestro Transaction Fees with respect to which
Maestro or Parent, respectively, has informed Buyer at least two Business Days
prior to the date on which payment is to be made of the Wire Transfer
instructions designating the accounts to which such amounts are to be paid shall
be delivered by Wire Transfer as instructed by Parent and Maestro, respectively,
and (c) an amount equal to the Run-Rate Escrow Amount, with interest accrued
from the Closing Date up to, but not including, the Additional Payment Date at
the rate to be set forth in the Escrow Agreement, less the Additional Payment
Amount and any interest earned thereon as set forth in this Section 1.8(e),
shall be released to Buyer, delivered by Wire Transfer as instructed by Buyer.
The payment to the Members to be made pursuant to this Section 1.8(e) (net of
the applicable Parent Transaction Fees and Maestro Transaction Fees) shall be
defined as the "Run-Rate Payment" for purposes of the Amended and Restated EAP.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SYMPHONY PARTIES
Except as set forth in the appropriate section of the written
disclosure schedule previously delivered to Buyer by the Symphony Parties (the
"Company Disclosure Schedule"), the Symphony Parties, jointly and severally,
hereby represent and warrant to Buyer as follows:
Section 2.1. Organization and Related Matters. The Company is a
----------------------------------
limitedliability company, duly formed, validly existing and in good standing
under the laws of the State of California, and each of its Subsidiaries is a
corporation or other business entity duly organized, validly existing and in
good standing under the laws of its jurisdiction of organization. The Company
has the limited liability company power and authority and each of its
Subsidiaries has the corporate or other applicable power and authority and each
possesses all material governmental franchises, licenses, permits and
authorizations and approvals necessary to carry on their respective businesses
substantially in the manner as they are now being conducted and to own, lease
and operate all of their respective properties and assets. Each of the Company
and each of its Subsidiaries is duly licensed or qualified to do business in
each jurisdiction in which the nature of the business conducted by it or the
character or location of the properties and assets owned, leased or operated by
it makes such qualification or licensing necessary except in jurisdictions where
the failure of such license or qualification would not have a Company Material
Adverse Effect. The copy of the Company Operating Agreement delivered to Buyer
prior to the execution of this Agreement is a complete and correct copy of such
instrument as in effect on the date hereof.
-25-
Section 2.2. Subsidiaries. Section 2.2 of the Company Disclosure
------------
Schedule lists each Subsidiary of the Company and its jurisdiction of
incorporation or organization. All the outstanding shares of capital stock of,
or other equity interests in, each such Subsidiary have been validly issued and
are fully paid and nonassessable and such shares or interests owned directly or
indirectly by the Company are free and clear of all Encumbrances and free of any
restriction on the right to vote, sell or otherwise dispose of such capital
stock or other ownership interests. Each of the Subsidiaries of the Company is
wholly owned by the Company or a wholly owned Subsidiary of the Company. Except
for the capital stock or other ownership interests of its Subsidiaries, the
Company does not beneficially own directly or indirectly any capital stock,
membership interest, partnership interest, joint venture interest or other
equity interest in any Person.
Section 2.3. Authority; No Violation.
-----------------------
(a) The Company has full limited liability company power and authority
to execute and deliver this Agreement and the Parent Agreements, to perform its
obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this Agreement
and the Parent Agreements and the consummation of the transactions contemplated
hereby and thereby have been duly and validly approved by all requisite limited
liability company action on the part of the Company, and no other limited
liability company proceedings on the part of the Company are necessary to
approve this Agreement or the Parent Agreements or to authorize or consummate
the transactions contemplated hereby or thereby. This Agreement and the Parent
Agreements have been duly and validly executed and delivered by the Company and
(assuming the due authorization, execution and delivery of this Agreement and
the Parent Agreements by the other parties hereto and thereto) constitute valid
and binding obligations of the Company enforceable against the Company in
accordance with their 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 and the
availability of equitable relief (whether in proceedings at law or in equity).
(b) Neither the execution and delivery of this Agreement or the Parent
Agreements by the Symphony Parties who are parties thereto nor the consummation
by the Company or its Subsidiaries of any of the transactions contemplated
hereby or thereby to be performed by them, nor compliance by the Company or its
Subsidiaries with any of the terms or provisions hereof or thereof, will (i)
violate any provision of the Company Operating Agreement or the articles of
incorporation, charter or bylaws or comparable organizational documents of the
Company's Subsidiaries or (ii) assuming that the consents and approvals referred
to in Section 2.4 are duly obtained, (x) violate, conflict with or require any
notice, filing, consent, waiver or approval under any Applicable Law to which
the Company or the Company's Subsidiaries or any of their respective properties,
contracts or assets are subject, or (y) violate, conflict with, result in a
breach of any provision of or the loss of any benefit under, constitute a
default (or an event which, with or without notice or lapse of time, or both,
would constitute a default) under, result in the termination of or a right of
termination or cancellation under, accelerate or result in a right of
acceleration of the performance required by, result in the creation of any
Encumbrance upon the Membership Interests or any Encumbrance upon the
properties, contracts or assets of the Company or its Subsidiaries under, or
require any notice, approval, waiver or consent under,
-26-
any note, bond, mortgage, indenture, deed of trust, license, lease,
agreement or other instrument or obligation to which the Company or its
Subsidiaries is a party, or by which the Company or its Subsidiaries or any of
their properties or assets, may be bound or affected, other than, in the case of
clauses (x) and (y) and other than with respect to Encumbrances upon Membership
Interests, any such items that would not be reasonably likely, individually or
in the aggregate, to have a Company Material Adverse Effect.
Section 2.4. Consents and Approvals. Except for (v) consents,
------------------------
approvals and notices as are set forth in Sections 5.2 and 5.3 hereof, (w)
compliance with and filings under the Securities Laws as may be required in
connection with this Agreement and the transactions contemplated hereby, (x)
those consents, approvals and notices that may be required solely by reason of
the participation of Buyer (as opposed to any other third party) in the
Transaction and the other transactions contemplated hereby, (y) the applicable
filings under the HSR Act, and (z) those consents, approvals, notices, filings
or registrations the failure of which to be obtained or made would not violate
Applicable Law or which would not be reasonably likely, individually or in the
aggregate, to have a Company Material Adverse Effect, no consents or approvals
of or filings, declarations or registrations with any Governmental Authority or
any third party are necessary in connection with (i) the execution and delivery
by the Company of this Agreement and (ii) the consummation by the Company of the
Transaction and/or the other transactions contemplated hereby so as to permit
the Company, its Subsidiaries and the Non-Registered Funds to continue their
respective businesses and operations after the Closing Date in substantially the
same manner as conducted on the date hereof.
Section 2.5. Authorized Capitalization; Ownership of Membership
--------------------------------------------------
Interests.
---------
Exhibit D hereto sets forth all record interests of each Member in
the Company. There are no Membership Interests or other membership (or other
ownership) interests in the Company issued, reserved for issuance or outstanding
other than those listed on Exhibit D hereto. All of the Membership Interests are
duly authorized, validly issued, fully paid, nonassessable and free of any
preemptive rights and are not subject to any voting trust agreement (or similar
agreement) or other contract restricting or otherwise relating to the voting,
dividend rights or disposition of the Membership Interests. There is no
outstanding option, warrant, convertible or exchangeable security, right,
subscription, call, right of first refusal, legally binding commitment,
preemptive right or other agreement or right of any kind to purchase or
otherwise acquire (including by exchange or conversion) from the Company, any of
the Members or any other Person any Membership Interest. There are no
outstanding obligations of the Company or its Subsidiaries to redeem, repurchase
or otherwise acquire any of the Membership Interests or any shares of capital
stock (or other ownership interests) of any of the Company's Subsidiaries. There
are no bonds, debentures, notes or other indebtedness generally having the right
to vote (or convertible into, or exchangeable for, Securities or limited
liability company or partnership interests having the right to vote) on any
matters that holders of Membership Interests may consent or vote ("Voting
Debt"). Other than pursuant to the EAP and the Amended and Restated EAP, the
obligations of which shall have been assumed by the Members immediately prior to
the Closing, there are no options, warrants, rights, convertible or exchangeable
Securities, "phantom" limited liability company or partnership interests (or
similar "phantom" Securities), partnership or limited liability company (or
other ownership) interest appreciation rights, partnership or limited liability
company (or other ownership) interest performance units, commitments, contracts,
arrangements or undertakings of any kind to which any of the Symphony Parties or
the Company's
-27-
Subsidiaries is a party or by which any of them is bound (i)
obligating the Company or any of its Subsidiaries to issue, deliver or sell, or
cause to be issued, delivered or sold, existing or additional membership
interests of the Company or capital stock (or other ownership interests) of its
Subsidiaries, or any security convertible into or exercisable or exchangeable
for any of the foregoing or for Voting Debt, (ii) obligating the Company or any
of its Subsidiaries to issue, grant, extend or enter into any such option,
warrant, call, right, security commitment, contract, arrangement or undertaking,
(iii) that give any Person the right to receive any economic benefit or right
similar to or derived from the economic benefits and rights accruing to holders
of the Membership Interests or capital stock (or other ownership interests) of
the Company's Subsidiaries or (iv) that give rise to a right to receive any
payment upon the execution of this Agreement or the consummation of the
Transaction or any of the other transactions contemplated hereby.
Section 2.6. Regulatory Documents.
--------------------
(a) Since January 1, 1998, the Company, its Subsidiaries, the
Non-Registered Funds and, to the Knowledge of the Symphony Parties, the Funds,
have timely filed all forms, reports, registration statements, schedules and
other documents, together with any amendments required to be made with respect
thereto, that were required to be filed with any Governmental Authority,
including the SEC and the NASD, and have timely paid in full all fees and
assessments due and payable in connection therewith other than such failures to
timely file or pay that would not reasonably be expected to result in a Company
Material Adverse Effect. Each of the Company and its Subsidiaries is, and has
been since the later of its inception and January 1, 1995, duly registered as an
investment adviser under the Advisers Act and under all applicable state
statutes (if required to be so registered under Applicable Law) and duly
registered and licensed under all Applicable Laws or exempt therefrom, except as
would not reasonably be expected to have a Company Material Adverse Effect.
Section 2.6 of the Company Disclosure Schedule lists the jurisdictions in which
the Company and its Subsidiaries are registered as investment advisers or are
required to give notice that they are acting as investment advisers and in which
they are required to be registered or licensed in any other capacity pursuant to
any of the Securities Laws. Each such registration or license is, and when
required by Applicable Law has been, in full force and effect.
(b) As of their respective dates, the Regulatory Documents of the
Company, its Subsidiaries, the Non-Registered Funds and, to the Knowledge of the
Symphony Parties, the Funds, complied in all material respects with Applicable
Laws, and none of such Regulatory Documents (other than those relating to the
Funds), as of their respective dates or as of such other dates as so required
under Applicable Law, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. The Company has previously delivered to Buyer a
true, correct and complete copy of each such Regulatory Document filed with the
SEC by the Company, its Subsidiaries and the Non-Registered Funds after January
1, 1998 and prior to the date hereof.
Section 2.7. Financial Statements. Section 2.7 of the Company
---------------------
Disclosure Schedule sets forth true and correct copies of (i) the unaudited
consolidated balance sheet of the Company and its Subsidiaries as of March 31,
2000 and the related consolidated statements of
-28-
income, changes in owners' equity and cash flows for the fiscal year ended
March 31, 2000 (the statements referred to in this sentence, the
"Unaudited Company Financial Statements") and (ii) the audited consolidated
balance sheet of the Company and its Subsidiaries as of March 31, 2001 and the
related consolidated statements of income, changes in owners' equity and cash
flows for the fiscal year ended March 31, 2001, accompanied by the audit report
of Deloitte & Touche LLP, independent public accountants with respect to the
Company (the statements referred to in this sentence (including the balance
sheets), the "Audited Company Financial Statements" and the balance sheet as of
March 31, 2001, the "Audited Company Balance Sheet"). The Audited Company
Balance Sheet (including the related notes thereto, where applicable) presents
fairly in all material respects the consolidated financial position of the
Company and its Subsidiaries as of the date thereof, and the other financial
statements referred to in this Section 2.7 (including the related notes thereto,
where applicable) present fairly in all material respects the results of the
Company's consolidated operations and cash flows for the fiscal periods therein
set forth; each of the Audited Company Financial Statements (including the
related notes thereto) and the Unaudited Company Financial Statements comply in
all material respects with GAAP with respect thereto (except, in the case of the
Audited Financial Statements, as indicated in the related notes thereto, and
except, in the case of the Unaudited Financial Statements, that there are no
notes thereto); and each of the Audited Financial Statements and the Unaudited
Company Financial Statements has been prepared in all material respects in
accordance with GAAP consistently applied during the periods involved and
consistent with the books and records of the Company and its Subsidiaries
(except, in the case of the Audited Financial Statements, as indicated in the
related notes thereto, and except, in the case of the Unaudited Financial
Statements, that there are no notes thereto). Except for (i) those liabilities
that are fully reflected or reserved against on the Audited Company Balance
Sheet or disclosed in the notes related thereto or (ii) those liabilities
incurred in the ordinary course of business consistent with past practice since
the date of the Audited Company Balance Sheet and which are not material,
individually or in the aggregate, the Company does not have any material
liabilities or obligations of any nature, whether absolute, accrued, contingent
or other and whether due or to become due, which are of a type that would be
required to be shown on an audited balance sheet (or described in the notes
thereto) prepared in accordance with GAAP. Notwithstanding anything to the
contrary in this Agreement, no representation is made as to the amount of the
accrual for liabilities under the EAP or the Amended and Restated EAP (which
obligations shall have been assumed by the Members immediately prior to the
Closing) on any of the financial statements of the Company, including any
financial statements delivered pursuant to Section 5.22.
Section 2.8. Ineligible Persons. None of the Company or any of its
-------------------
Subsidiaries, nor any "affiliated person" (as defined in the Investment Company
Act) thereof (other than any Affiliate of Parent excluding (i) Parent, (ii)
Parent's Subsidiaries, (iii) Parent's, the Company's and their Subsidiaries
directors, officers and employees and (iv) Symphony and its Subsidiaries), as
applicable, is ineligible pursuant to Section 9(a) or 9(b) of the Investment
Company Act to serve as an investment adviser (or in any other capacity
contemplated by the Investment Company Act) to a registered investment company,
nor is there any action, proceeding or investigation pending or, to the
Knowledge of the Symphony Parties, threatened by any Governmental Authority,
which would result in the ineligibility of the Company, its Subsidiaries or any
of their "affiliated persons" (as defined in the Investment Company Act) to
serve in any such capacities. None of the Company, its Subsidiaries or any
"associated person"
-29-
(as defined in the Advisers Act) thereof, as applicable, is ineligible
pursuant to Section 203 of the Advisers Act to serve as an investment adviser or
as an associated person of a registered investment adviser, nor is there any
action, proceeding or investigation pending or, to the Knowledge of the Symphony
Parties, threatened by any Governmental Authority, that would reasonably be
expected to result in the ineligibility of the Company, its Subsidiaries or any
of their associated persons or, to the Knowledge of the Symphony Parties, that
would reasonably be expected to provide a basis for a proceeding that would
result in such ineligibility.
Section 2.9. Contracts. Schedule 2.9 of the Company Disclosure
---------
Schedule sets forth a complete and accurate list or description as of the close
of business on the day preceding the date hereof of all written or oral
contracts, agreements, guarantees, leases and executory commitments in effect as
of the date hereof to which the Company, its Subsidiaries or the Non-Registered
Funds is a party or by which any of its properties or assets are bound which:
(v) contain obligations of the Company in excess of $250,000; (w) involve
payments based on profits or revenues of the Company; (x) are employment,
management, consulting or severance agreements; (y) include any noncompetition
or nonsolicitation covenant or any exclusive dealing or similar arrangement that
limits the ability of the Company or any of its Subsidiaries to compete
(geographically or otherwise) in any line of business; or (z) are otherwise
material to the businesses, properties or assets of the Company, its
Subsidiaries and the Non-Registered Funds, including any Investment Company
Advisory Agreements, distribution agreements and Non-Investment Company Advisory
Agreements (all such contracts, agreements, guarantees, leases and commitments
hereinafter referred to collectively as the "Contracts"). As of the date hereof,
each of the Contracts is a legal, valid and binding obligation of the Company or
its Subsidiaries (assuming the due authorization, execution and delivery by the
other parties thereto) and to the Knowledge of the Symphony Parties is in full
force and effect and enforceable in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and similar laws relating to or affecting creditors generally and by
the availability of equitable remedies (whether in proceedings at law or in
equity). As of the date hereof, neither the Company nor any of its Subsidiaries
nor any of the Non-Registered Funds has received written notice of cancellation
of or material default under or intent to cancel or call a default under any of
the Contracts specified in clauses (v) and (z) above. The Company, each of its
Subsidiaries and each of the Non-Registered Funds has performed all material
obligations required to be performed by it to date under the Contracts, and
assuming receipt of the consents and approvals set forth in Sections 2.3, 2.4,
5.2 and 5.3, to the Knowledge of the Symphony Parties, there exists no event or
condition which with or without notice or lapse of time or both would be a
breach or a default on the part of the Company, any of its Subsidiaries or any
of the Non-Registered Funds or on the part of the other party to such Contracts,
other than such breaches and defaults that are not, individually or in the
aggregate, reasonably expected to have a Company Material Adverse Effect.
Section 2.10. Funds and Clients.
-----------------
(a) Schedule 2.10 of the Company Disclosure Schedule sets forth: (i) a
true, complete and correct list, as of March 31, 2001, of each Fund and of all
of the Clients, identifying (A) the Funds and Clients for which SAMI is the
investment advisor, subadvisor or distributor, and (B) the Clients that are
Non-Registered Funds; (ii)(A) the total net assets (as defined for purposes of
the Investment Company Act) of each of the Funds and the total net
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assets under management for each Client, each calculated in accordance with
the Investment Company Act, indicating any part of total net assets set
aside to cover margin payments on futures positions, (B) the amount of leverage
(if any) in the account of each Client, each as of 4:00 p.m. New York time on
March 31, 2001; (iii) the stated fees expressed as a percentage, listing
separately Asset-Based Fees and Performance Fees, payable to the Company or SAMI
(specifying if SAMI is the payee) by each Fund and Client under the applicable
Investment Company Advisory Agreement or Non-Investment Company Advisory
Agreement as of March 31, 2001; (iv) as to each Fund, and as of the date hereof,
the terms of any fee waivers, expense reimbursement (or assumption)
arrangements, unreimbursed payments being made by the Company or SAMI
(specifying which apply to SAMI) to brokers, dealers or other Persons with
respect to the distribution of shares of a Fund or services provided to Fund
shareholders; (v) as to each Fund and Non-Registered Fund, as of the date
hereof, the rate and method of computation of any subadvisory fees payable to
any Person by the Company or SAMI (specifying if SAMI is the payor) with respect
to such Fund or Non-Registered Fund (if any); (vi) as to each Client, and as of
the date hereof, the terms and methods of computation of any referral or
servicing fees payable by the Company or SAMI (specifying if SAMI is the payor)
to any Person (if any); and (vii) a true, complete and correct schedule setting
forth in reasonable detail the calculation of the Base Client Revenue Run-Rate
and the Base Fund Revenue Run-Rate.
(b) To the Knowledge of the Symphony Parties, each Fund is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization and has the requisite corporate, trust or
partnership power and authority, and possesses all rights, licenses,
authorizations and approvals, governmental or otherwise, necessary to entitle it
to use its name, to own, lease or otherwise hold its properties and assets and
to carry on its business substantially in the manner as it is now conducted, and
is duly qualified, licensed or registered to do business in each jurisdiction
where it is required to do so under Applicable Law. To the Knowledge of the
Symphony Parties, each Fund is, and at all times required under the Securities
Laws has been, duly registered with the SEC as an investment company under the
Investment Company Act or is a series thereof and is otherwise in compliance in
all material respects, and operates in all material respects in accordance with
all Applicable Laws. To the Knowledge of the Symphony Parties, none of the Funds
has been enjoined, indicted, convicted or made the subject of material
disciplinary proceedings, consent decrees or administrative orders on account of
any violation of the Securities Laws. To the Knowledge of the Symphony Parties,
each Fund Board of any Fund having such a board operates in substantial
conformity with all requirements and restrictions applicable to such board under
all Applicable Laws.
(c) Each Non-Registered Fund has been duly organized, and is validly
existing and in good standing under the laws of the jurisdiction of its
organization and has all requisite corporate, partnership, limited liability
company, or similar power and authority, and possesses all rights, licenses,
authorizations and approvals necessary to entitle it to use its name, to own,
lease or otherwise hold its properties and assets and to carry on its business
as it is now conducted, and is duly qualified, licensed or registered to do
business in each jurisdiction where it is required to do so under Applicable Law
(except where the failure to do so is not material to its business). All
outstanding partnership or other ownership units of each Non-Registered Fund
have been issued and sold by or on behalf of the Company or any of its
Subsidiaries in substantial compliance with Applicable Law; and each
Non-Registered Fund, since inception of operations, has been operated and is
currently operating in substantial compliance with its
-31-
respective investment objectives and policies and Applicable Law. None of
the Non-Registered Funds has been enjoined, indicted, convicted or made the
subject of disciplinary proceedings, consent decrees or administrative orders on
account of any violation of the Securities Laws. Each board of directors or
trustees of any Non-Registered Fund having such a board operates in substantial
conformity with all requirements and restrictions applicable to such board under
all Applicable Laws. All outstanding partnership or other ownership units of
each Non-Registered Fund have been duly and validly issued and, except as set
forth in the subscription or constituent documents of such Non-Registered Funds,
are fully paid and nonassessable.
(d) Each Client to which the Company, any of its Subsidiaries or SAMI
provides investment management, advisory or subadvisory services that is (i) an
employee benefit plan, as defined in Section 3(3) of ERISA that is subject to
Title I of ERISA; (ii) a Person acting on behalf of such a plan; or (iii) any
entity whose assets include the assets of such a plan, within the meaning of
ERISA and applicable regulations (an "ERISA Client") have been managed by the
Company or its applicable Subsidiary such that (x) the exercise of such
management or provision of any services is in compliance in all material
respects with the applicable requirements of ERISA and (y) none of the Company,
any of its Subsidiaries or SAMI has engaged in a "Prohibited Transaction" within
the meaning of Section 406 of ERISA or Section 4975(c) of the Code that would
subject it to liability or Taxes under Section 5409 or 502(i) of ERISA or
Section 4975(a) of the Code, other than liabilities or Taxes that are not,
individually or in the aggregate, reasonably expected to have a Company Material
Adverse Effect.
Section 2.11. Investment Company Advisory Agreements; Non-Investment
------------------------------------------------------
Company Advisory Agreements.
---------------------------
(a) To the Knowledge of the Symphony Parties, each Investment Company
Advisory Agreement subject to Section 15 of the Investment Company Act to which
the Company, any of its Subsidiaries or SAMI is a party have been duly approved,
continued and at all times in compliance in all respects with the Investment
Company Act, except for any failures to be so approved, continued or in
compliance as have not had and are not reasonably likely to have a Company
Material Adverse Effect. Each such Investment Company Advisory Agreement has
been performed by the Company, the applicable Subsidiary or SAMI in accordance
with its terms and with the Investment Company Act and all other Applicable
Laws, in each case, in all respects, except as has not had and is not reasonably
likely to have a Company Material Adverse Effect.
(b) Each Non-Investment Company Advisory Agreement has been performed
by the Company or the applicable Subsidiary in accordance with its terms and
with the Advisers Act and all other Applicable Laws in all respects except as
has not had and is not reasonably likely to have a Company Material Adverse
Effect.
Section 2.12. No Other Broker. Other than ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. and
----------------
▇▇▇▇▇▇ ▇▇▇▇▇▇ Securities Inc., the fees and expenses of both of which will be
paid by Buyer on behalf of Parent and Maestro, respectively, no broker,
finder or similar intermediary has acted for or on behalf of, or is entitled
to any broker's, finder's or similar fee or other commission from, the
Company or any of its Affiliates in connection with this Agreement or the
transactions
-32-
contemplated hereby; provided, however, that Buyer shall only be
obligated to make those payments that are specified as Parent Transaction Fees
or Maestro Transaction Fees and are required to be made pursuant to Sections
1.3, 1.5, 1.6 and 1.8.
Section 2.13. Legal Proceedings. There are no legal, administrative,
-----------------
arbitral or other proceedings (including disciplinary proceedings), claims,
suits, actions or governmental or regulatory investigations of any nature
(collectively, "Proceedings") that are pending (or, to the Knowledge of the
Symphony Parties, threatened) against the Company or any of its Subsidiaries,
the Non-Registered Funds or, to the Knowledge of the Symphony Parties, the
Funds, or any of their respective properties, assets or businesses (it being
understood and agreed that while the ownership interests in the companies and
other entities in which the Non-Registered Funds and the Funds have ownership
interests are properties and assets of the Non-Registered Funds and the Funds,
as the case may be, such companies and other entities shall not be considered
properties or assets of the Non-Registered Funds or the Funds) or that challenge
the validity or propriety of the transactions contemplated by this Agreement,
and there is no injunction, order, judgment, decree or regulatory restriction
imposed upon the Company, any of its Subsidiaries, the Non-Registered Funds or,
to the Knowledge of the Symphony Parties, the Funds, or any of their respective
properties, assets or businesses (it being understood and agreed that while the
ownership interests in the companies and other entities in which the
Non-Registered Funds and the Funds have ownership interests are properties and
assets of the Non-Registered Funds and the Funds, as the case may be, such
companies and other entities shall not be considered properties or assets of the
Non-Registered Funds or the Funds), other than such Proceedings which, if
determined adversely to the Company, any of its Subsidiaries, the Non-Registered
Funds, the Funds or any of their respective properties, assets or businesses,
would not reasonably be expected, individually or in the aggregate, to have a
Company Material Adverse Effect.
Section 2.14. Compliance with Applicable Law.
------------------------------
(a) The Company, each of its Subsidiaries, each of the Non-Registered
Funds and, to the Knowledge of the Symphony Parties, each of the Funds, holds,
and at all times has held, and at Closing will hold, all licenses, franchises,
directed exemptive orders, directed "no-action" positions, decrees, permits and
authorizations required under Applicable Law (collectively, "Permits") for the
lawful ownership, operation and use of its properties and assets (it being
understood and agreed that while the ownership interests in the companies and
other entities in which the Non-Registered Funds and the Funds have ownership
interests are properties and assets of the Non-Registered Funds and the Funds,
as the case may be, such companies and other entities shall not be considered
properties or assets of the Non-Registered Funds or the Funds) and the conduct
of its businesses under and pursuant to, and has complied with each, and none of
the Company, any of its Subsidiaries, any of the Non-Registered Funds nor, to
the Knowledge of the Symphony Parties, any of the Funds is in default under any
Applicable Law relating to the Company, any of its Subsidiaries, any of the
Non-Registered Funds or any of the Funds or any of their respective assets,
properties (it being understood and agreed that while the ownership interests in
the companies and other entities in which the Non-Registered Funds and the Funds
have ownership interests are properties and assets of the Non-Registered Funds
and the Funds, as the case may be, such companies and other entities shall not
be considered properties or assets of the Non-Registered Funds or the Funds) or
operations, and there are no outstanding violations of any of the above, and
none of the Company, any of its
-33-
Subsidiaries, any of the Non-Registered Funds nor, to the Knowledge of the
Symphony Parties, any of the Funds, has received notice asserting any such
violation, except for such Permits the failure of which to hold or to have held,
or any such violations that would not reasonably be expected, individually or in
the aggregate, to have a Company Material Adverse Effect. The Company, its
Subsidiaries, the Non-Registered Funds and, to the Knowledge of the Symphony
Parties, the Funds, have been and are in compliance with all Permits, except
where the failure to be in compliance, individually or in the aggregate, would
not reasonably be expected, individually or in the aggregate, to have a Company
Material Adverse Effect.
(b) Except for normal examinations conducted by any Governmental
Authority in the regular course of the business of the Company and its
Subsidiaries, since December 31, 1998 no Governmental Authority has, to the
Knowledge of the Symphony Parties, initiated, and no Governmental Authority has
provided written, or, to the Knowledge of the Symphony Parties, oral notice to
any of the Symphony Parties, the Non-Registered Funds or, to the Knowledge of
the Symphony Parties, the Funds, of any threatened proceeding or investigation
into the business or operations of the Company or any of its Subsidiaries or any
of the Non-Registered Funds or, to the Knowledge of the Symphony Parties, the
Funds or any of their members, officers, directors or employees in their
capacity as such with the Company, its Subsidiaries, the Non-Registered Funds or
the Funds and, to the Knowledge of the Symphony Parties, no such proceedings or
investigations are contemplated. There is no unresolved deficiency, violation or
exception claimed or asserted by any Governmental Authority with respect to any
examination of any of the Company, the Company's Subsidiaries, the
Non-Registered Funds or, to the Knowledge of the Symphony Parties, the Funds
that has had or is reasonably likely to have a Company Material Adverse Effect.
(c) Each of the Company and each of its Subsidiaries has at all times
since December 31, 1998, rendered investment advisory services to Clients and
Funds, with whom the Company or such Subsidiary of the Company is or was a party
to an Investment Company Advisory Agreement or a Non-Investment Company Advisory
Agreement, in compliance with all applicable requirements as to portfolio
composition and portfolio management including the terms of such Investment
Company Advisory Agreement or Non-Investment Company Advisory Agreement, as the
case may be, written instructions from such Clients and Funds, the
organizational documents of such Clients and Funds, prospectuses, board of
director or trustee directives and Applicable Law, except for such failures of
performance which, individually or in the aggregate, are not reasonably expected
to have a Company Material Adverse Effect.
Section 2.15. Insurance. Section 2.15 of the Company Disclosure
---------
Schedule includes a list of all insurance policies maintained by Parent with
respect to which the Company, Maestro or any of the Company Principals is either
an insured or a beneficiary, which insurance policies shall cease to cover or
benefit the Company, Maestro or any of the Company Principals as of and after
the Closing Date (the "Parent Insurance Policies") and a list of all material
insurance policies maintained by the Company (the "Company Insurance Policies").
Each Company Insurance Policy and bond of the Company and its Subsidiaries is in
full force and effect, all premiums due and payable thereon have been paid and
neither the Company nor any of its Subsidiaries has received written notice from
any insurer or agent of any intent to cancel any such insurance policy or bond.
-34-
Section 2.16. Employee Benefit Plans; ERISA.
-----------------------------
(a) Schedule 2.16 of the Company Disclosure Schedule includes a list
of all compensation, incentive, deferred compensation, capital appreciation,
pension, profit sharing and retirement plans, and all life or other welfare or
employee benefit insurance, incentive compensation, option, employment,
severance or termination pay, hospitalization or other medical plans,
arrangements or agreements, bonus and other employee benefit, welfare or fringe
benefit plans in each case in effect as of the date hereof with respect to which
contributions, premiums or other payments are made or required to be made by the
Company or its Subsidiaries with respect to their current or former employees
(the "Plans"). Section 2.16 of the Company Disclosure Schedule identifies each
Plan as either (i) a Plan maintained by the Company or any of its Subsidiaries
(a "Company Plan") or (ii) a Plan maintained by Parent (a "Parent Plan"), but
under which the Company or any of its Subsidiaries is a participating employer,
each of which Parent Plan shall cease to apply to the Company or any Subsidiary
as of and after the Closing Date.
(b) With respect to each Company Plan, the Company has delivered to
Buyer a true, correct and complete copy of each writing constituting a part of
such Company Plan, including without limitation all plan documents and
amendments thereto, benefit schedules, trust agreements, insurance contracts and
other funding vehicles, the most recent Form 5500 and accompanying schedules, if
any, the current summary plan description and any material modifications
thereto, if any, the most recent financial and actuarial reports, if any, and
the most recent determination letter from the IRS.
(c) The IRS has issued a favorable determination letter with respect
to each Company Plan that is intended to be a "qualified plan" within the
meaning of Section 401(a) of the Code ("Qualified Plans") that has not been
revoked. Each trust created under any such Company Plan is exempt under Section
501(a) of the Code. To the Knowledge of the Symphony Parties, there are no
existing circumstances nor any events that have occurred nor any amendments to a
Qualified Plan that have been adopted that could affect adversely the qualified
status of any Qualified Plan or the related trust. No Company Plan that is an
employee pension benefit plan, as defined in Section 3(2) of ERISA and subject
to Title IV of ERISA, has as of its last valuation date any amount of unfunded
benefit liabilities, as defined in Section 4001(a)(18), calculated using
actuarial assumptions and methods that have been furnished to Buyer.
(d) Each Company Plan is in compliance in all material respects with
all Applicable Laws, including ERISA and the Code, and each Company Plan has
been administered in all material respects in accordance with its terms. To the
Knowledge of the Symphony Parties, there is not now, nor do any circumstances
exist, that could give rise to, any requirement for the posting of security with
respect to a Company Plan or the imposition of any lien on the assets of the
Company or any of its Subsidiaries under ERISA or the Code. No Company Plan is
subject to Title IV of ERISA or Section 302 of ERISA or Section 412 or 4971 of
the Code. No Company Plan is a multiemployer plan (as defined in Section 3(37)
of ERISA). Each Company Plan that is a "group health plan" (as defined in
Section 607(l) of ERISA and Section 5000(b)(1) of the Code) has complied in all
material respects with the requirements of Part 6 of Subtitle B of Title I of
ERISA and of Section 4980B of the Code. No Company Plan provides
post-termination welfare benefits other than as required by law.
-35-
(e) All contributions required to be made to any Company Plan by
Applicable Law or by any plan document or other contractual undertaking, and all
premiums due or payable with respect to insurance policies funding any Company
Plan, for any period through the date hereof have been timely made or paid in
full to the extent required to be made or paid on or before the date hereof or,
to the extent not required to be made or paid on or before the date hereof, have
been fully reflected on the Audited Company Financial Statements.
(f) Other than under the Amended and Restated EAP, neither the
execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will result in, cause the accelerated vesting
or delivery of, or increase the amount or value of, any payment or benefit to
any employee of the Company or the funding of any such benefit in a trust or
other funding vehicle under a Company Plan. No amount payable or economic
benefit provided by the Company or its Subsidiaries would be an "excess
parachute payment" under Section 280G of the Code.
(g) There are no pending claims (other than claims for benefits in the
ordinary course), lawsuits, investigations by any Governmental Authority with
respect to which notice has been given to any of the Symphony Parties,
termination proceedings or arbitrations which have been asserted or instituted,
or to the Knowledge of the Symphony Parties threatened or anticipated, against
the Company Plans which could reasonably be expected to result in any material
liability of the Company to the Pension Benefit Guaranty Corporation, the
Department of Treasury, the Department of Labor or any Company Plan participant
or beneficiary.
(h) Since March 31, 2001 neither the Company nor any of its
Subsidiaries have increased the compensation or benefits provided pursuant to a
Company Plan in any material respect.
(i) None of the Company and its Subsidiaries nor, to the Knowledge of
the Symphony Parties, any other Person, including any fiduciary, has engaged in
any "prohibited transaction" (as defined in Section 4975 of the Code or Section
406 of ERISA), which could subject any Company Plan or their related trusts, the
Company, any of its Subsidiaries or any Person that the Company or any of its
Subsidiaries has an obligation to indemnify with respect to such transaction, to
any material Tax or penalty imposed under Section 4975 of the Code or Section
502 of ERISA.
Section 2.17. Technology and Intellectual Property. All Intellectual
------------------------------------
Property that is registered with any Governmental Authority by the Company, any
of its Subsidiaries or any of the Non-Registered Funds or subject to an
application for registration with any Governmental Authority submitted by or on
behalf of the Company, any of its Subsidiaries or any of the Non-Registered
Funds is listed in Section 2.17 of the Company Disclosure Schedule (the
"Registered IP"), which also sets forth a list of all jurisdictions in which
such Registered IP is registered or registrations have been applied for and all
related registration and application numbers. All Registered IP owned by the
Company, any of its Subsidiaries or any of the Non-Registered Funds has been
duly registered in, filed in or issued by the appropriate Governmental
Authority. Other than as expressly indicated otherwise in the Parent Interim
Services Agreement, each of the Company, its Subsidiaries and the Non-Registered
Funds has (and upon consummation of the transactions contemplated hereby will
have) ownership of, or such other
-36-
rights by license, lease or other agreement in and to, all
Intellectual Property necessary to conduct the business of the Company, its
Subsidiaries and the Non-Registered Funds substantially in the manner presently
conducted, and the consummation of the transactions contemplated hereby does not
and will not materially conflict with, materially alter or materially impair any
such ownership or rights. None of the Company nor any of its Subsidiaries has
granted any option or license of any kind to any third party relating to any
Registered IP or Symphony Signals (as defined in the Asset Purchase Agreement)
used by the Company or its Subsidiaries or the marketing or distribution thereof
and none of the Company nor any of its Affiliates has granted any option or
license of any kind to any third party relating to any Registered IP or Symphony
Signals owned or used solely by the Company or its Subsidiaries or the marketing
or distribution thereof. All material Technology of the Company, its
Subsidiaries and the Non-Registered Funds has been maintained in confidence in
accordance with protection procedures customarily used in the industry to
protect rights of like importance. None of the Symphony Parties has received any
written notice that any of the Technology owned by the Company is invalid or
unenforceable. To the Knowledge of the Symphony Parties, none of the Company,
its Subsidiaries or the Non-Registered Funds has infringed or violated any
trademark, trade name, copyright, patent, trade secret right or other
proprietary right of others, nor, to the Knowledge of the Symphony Parties, has
any other Person infringed on a continuing basis any rights that the Company or
any of its Subsidiaries has in the Registered IP, other than as would not,
individually or in the aggregate, have a Company Material Adverse Effect.
Following the execution of the Parent Agreements, each of the Company, each of
its Subsidiaries and each of the Non-Registered Funds will own or license all
computer software developed or currently used by it which is material to the
conduct of its business as currently conducted ("Computer Software") and will
have the right to use such software in accordance with the terms of any
applicable license without infringing upon the intellectual property rights
(including trade secrets rights) of any third party, in each case other than any
Terminated Services (as defined in the Parent Interim Services Agreement) or
other than as would not, individually or in the aggregate, have a Company
Material Adverse Effect. None of the Company, its Subsidiaries or the
Non-Registered Funds has received written notice of any claim respecting any
violation or infringement of the Computer Software by the Company, its
Subsidiaries or the Non-Registered Funds.
Section 2.18. Properties. None of the Company or its Subsidiaries own
----------
in fee any real property. Section 2.18 of the Company Disclosure Schedule sets
forth a true and complete list of all real property and interests in real
property leased or subleased by the Company and its Subsidiaries. All buildings
and all fixtures, equipment and other real or tangible property and assets which
are held under leases or subleases by the Company and its Subsidiaries are held
under valid leases or subleases, free and clear of all material Encumbrances.
Section 2.19. Filing Documents. None of the information regarding any
----------------
of the Company, any of its Subsidiaries or any of the Non-Registered Funds
supplied or to be supplied by the Company or its Subsidiaries on or prior to the
Closing Date for inclusion in any documents to be filed with any Governmental
Authority in connection with the transactions contemplated hereby will, at the
respective times such documents are filed with any Governmental Authority,
contain any untrue statement of a material fact or omit to state a
-37-
material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they
were made, not misleading.
Section 2.20. Transactions with Affiliates. Except for this Agreement
----------------------------
and the other agreements contemplated to be entered into in connection with the
transactions contemplated hereby, no material contract, agreement, understanding
or arrangement between the Company, any of its Subsidiaries or any of the
Non-Registered Funds on the one hand, and Parent, Maestro, any of the Company
Principals or any of their respective Subsidiaries (other than the Company and
its Subsidiaries) on the other hand, will continue in effect subsequent to the
Closing Date, other than any contract, agreement, understanding or arrangement
on an arms-length basis. After the Closing, none of Parent, Maestro, any of the
Company Principals or any of their respective Subsidiaries will have any
interest in any property (real or personal, tangible or intangible) or contract,
agreement, understanding or arrangement of the Company or any of its
Subsidiaries used in or pertaining to the business of the Company and its
Subsidiaries, other than (i) any contract, agreement, understanding or
arrangement on an arms-length basis or (ii) pursuant to any agreements relating
to services described in the Parent Interim Services Agreement (including any
Terminated Services (as defined in such agreement)), the Parent License
Agreement or the Parent Source Materials Agreement or relating to Parent's
ownership rights in the Enhanced Barra IP (as defined in the Asset Purchase
Agreement). None of Parent, Maestro, any of the Company Principals or any of
their Subsidiaries (other than the Company or its Subsidiaries) provides any
material services to the Company, its Subsidiaries or the Non-Registered Funds,
other than pursuant to any agreements relating to services described in the
Parent Interim Services Agreement (including any Terminated Services (as defined
in such agreement)), the Parent License Agreement or the Parent Source Materials
Agreement.
Section 2.21. No Broker/Dealer Operations. The Company does not
-----------------------------
conduct, and none of the Company's Subsidiaries or the Non-Registered Funds
conducts, any broker/dealer operations or any operations that would require such
Person to be registered as a broker-dealer with any Governmental Authority.
Section 2.22. Absence of Certain Changes. Since the date of the
------------------------------
Audited Company Balance Sheet, (x) the Company and its Subsidiaries have
conducted their respective businesses only in the ordinary course, consistent
with past practice, and (y) there has not been (i) any material change by the
Company in accounting principles, practices or methods other than as required by
GAAP or Applicable Law or (ii) any combination, recapitalization, redenomination
of ownership interests in the Company or other similar transaction or issuance
or authorization of any issuance of any other ownership interests in the
Company.
Section 2.23. No Company Assets at Parent. Except for the Investment
----------------------------
Company Advisory Agreement between SAMI and Schwab Analytics Fund, which
Investment Company Advisory Agreement will be transferred to the Company as
contemplated by Section 5.2, there are no Investment Company Advisory
Agreements, Non-Investment Company Advisory Agreements, other revenue-producing
contracts or any other assets used solely in the business or operations of the
Company, its Subsidiaries or their respective businesses that are owned by SAMI
("SAMI Asset Omissions"). There are no Investment Company Advisory Agreements,
Non-Investment Company Advisory Agreements, other revenue-producing contracts or
any other assets used solely in the business or operations of the Company, its
-38-
Subsidiaries or their respective businesses that are owned by Parent or its
Subsidiaries (other than the Company and its Subsidiaries) ("Parent Asset
Omissions"). SAMI Asset Omissions and Parent Asset Omissions shall not include
any rights, contracts or assets set forth in the Parent Source Materials
Agreement, the Parent Interim Services Agreement or the Parent License Agreement
or any rights or assets expressly reserved by Parent or its Subsidiaries in the
Enhanced Barra IP (as defined in the Asset Purchase Agreement).
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT, THE MEMBERS AND THE
COMPANY PRINCIPALS
Except as set forth in the appropriate section of the Company
Disclosure Schedule:
Section 3.1. Ownership of Membership Interests. Parent, each of the
----------------------------------
Members and each of the Company Principals, severally, for itself or himself,
represents and warrants to Buyer and each other party hereto that such party (or
in the case of Parent, SAMI and in the case of the Company Principals, Maestro)
owns beneficially and of record, and has good and valid title to, all of the
Membership Interests listed as owned by such party on Exhibit D hereto, free and
clear of any Encumbrances; and upon delivery of the ▇▇▇▇ of sale of such party's
(or in the case of Parent, SAMI's and in the case of the Company Principals,
Maestro's) Membership Interests provided for in Section 1.3(b)(i) to Buyer at
the Closing and delivery in full of the Initial Purchase Consideration in
accordance with Section 1.3(c)(i) hereof, good and valid title to the Membership
Interests held by such party (or in the case of Parent, SAMI and in the case of
the Company Principals, Maestro) will pass to Buyer, free and clear of any
Encumbrances. Parent, each of the Members and each of the Company Principals,
severally, for itself or himself, represents and warrants to Buyer and each
other party hereto that no transfer taxes are due as a result of the purchase
and sale of the Membership Interests pursuant to this Agreement other than those
that will be paid by the Members.
Section 3.2. Corporate Existence and Power. Parent and each of the
-------------------------------
Members, severally, for itself, represents and warrants to Buyer and each other
party hereto that it is duly organized, validly existing and in good standing
under the laws of the state of its organization, and has all corporate or other
powers required to carry out its responsibilities under this Agreement.
Section 3.3. Authority; No Violation.
-----------------------
(a) Parent and each of the Members, severally, for itself, represents
and warrants to Buyer and each other party hereto that it has full corporate,
limited liability company or partnership power and authority to execute and
deliver this Agreement and each of the Parent Agreements to which it is a party,
to perform its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby, and that the execution and
delivery of this Agreement and each of Parent Agreements to which it is a party
and the consummation of the transactions contemplated hereby and thereby have
been duly and validly approved by all requisite corporate, limited liability
company or partnership action on the part of such party, and no other corporate,
limited liability company or partnership proceedings on the
-39-
part of any of such party is necessary to approve this Agreement or the Parent
Agreements to which it is a party or to authorize or consummate the transactions
contemplated hereby or thereby. Parent, each of the Members and each of the
Company Principals, severally, for itself or himself, represents and warrants to
Buyer and each other party hereto that this Agreement and each Parent Agreement
to which it is a party have been duly and validly executed and delivered by such
party and (assuming the due authorization, execution and delivery of this
Agreement and the Parent Agreements by the other parties hereto and thereto)
constitute valid and binding obligations of such party enforceable against such
party in accordance with their terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium and similar laws
relating to or affecting creditors generally and by the availability of
equitable remedies (whether in proceedings at law or in equity).
(b) Parent, each of the Members and each of the Company Principals,
severally, for itself or himself, represents and warrants to Buyer and each
other party hereto that neither the execution and delivery by such party of this
Agreement or any of the Parent Agreements to which it is a party nor the
consummation by such party of any of the transactions contemplated hereby or
thereby to be performed by them, nor compliance by such party with any of the
terms or provisions hereof or thereof, will (i) violate any provision of the
articles of incorporation, charter or bylaws or comparable organizational
documents, as applicable, of such party (if any) or (ii) assuming that the
consents and approvals referred to in Section 2.4 are duly obtained, (x)
violate, conflict with or require any notice, filing, consent, waiver or
approval under any Applicable Law to which such party or any of its properties,
contracts or assets are subject, (y) violate, conflict with, result in a breach
of any provision of or the loss of any benefit under, constitute a default (or
an event which, with or without notice or lapse of time, or both, would
constitute a default) under, result in the termination of or a right of
termination or cancellation under, accelerate or result in a right of
acceleration of the performance required by, result in the creation of any
Encumbrance upon such party's (or in the case of Parent, SAMI's and in the case
of the Company Principals, Maestro's) Membership Interests or the properties,
contracts or assets of such party under, or require any notice, approval, waiver
or consent under, any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other instrument or obligation to which such party is a
party, or by which such party or any of its properties or assets, may be bound
or affected, other than, in the case of clauses (x) and (y) and other than with
respect to Encumbrances upon Membership Interests, any such items that would not
be reasonably likely, individually or in the aggregate, to have a Company
Material Adverse Effect.
Section 3.4. No Other Broker. Parent, each of the Members and each
---------------
of the Company Principals, severally, for itself or himself, represents and
warrants to Buyer that other than ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. (in the case of Parent
and SAMI) and ▇▇▇▇▇▇ ▇▇▇▇▇▇ Securities Inc. (in the case of Maestro and the
Company Principals), the fees and expenses of each of which will be payable by
Buyer on behalf of Parent and Maestro, respectively, no broker, finder or
similar intermediary has acted for or on behalf of, or is entitled to any
broker's, finder's or similar fee or other commission from, such party or any of
its Affiliates in connection with this Agreement or the transactions
contemplated hereby; provided, however, that Buyer shall only be obligated to
make those payments that are specified as Parent Transaction Fees or Maestro
Transaction Fees and are required to be made pursuant to Sections 1.3, 1.5, 1.6
and 1.8.
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Section 3.5. Ownership of Interests in Maestro. Each of the Company
---------------------------------
Principals, severally, for himself, represents and warrants to Buyer and Parent
that such party owns beneficially and of record, and has good and valid title
to, all of the membership interests of Maestro listed as owned by such party on
Exhibit E hereto, free and clear of any Encumbrances. Each of the Company
Principals, jointly and severally, represents and warrants to Buyer and Parent
that there are no membership interests or other ownership interests in Maestro
issued, reserved for issuance or outstanding other than those listed on Exhibit
E hereto.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Except as set forth in the written disclosure schedule previously
delivered to Parent, Maestro and the Company Principals by Buyer (the "Buyer
Disclosure Schedule"), Buyer represents and warrants to Parent, each of the
Members and each of the Company Principals as follows:
Section 4.1. Organization and Related Matters. Buyer is a
---------------------------------
corporation, duly organized, validly existing and in good standing under the
laws of the State of Delaware. Buyer has the corporate power and authority to
carry on its business as it is now being conducted and to own, lease and operate
all of its properties and assets.
Section 4.2. Authority; No Violation.
------------------------
(a) Buyer has full corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Buyer, and no other corporate action on the part
of the Buyer is necessary to approve this Agreement or authorize or consummate
the transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by Buyer and (assuming the due authorization, execution
and delivery of this Agreement by each of the Symphony Parties) constitutes a
valid and binding obligation of Buyer, enforceable against Buyer in accordance
with its terms.
(b) Neither the execution and delivery of this Agreement by Buyer
nor the consummation by Buyer of the transactions contemplated hereby to be
performed by it, nor compliance by Buyer with any of the terms or provisions
hereof, will (i) violate any provision of the certificate of incorporation or
bylaws of Buyer, (ii) assuming that the consents and approvals referred to in
Sections 2.2 and 2.4 hereof are duly obtained, (x) violate, conflict with or
require any notice, filing, consent or approval under any Applicable Law to
which Buyer or any of its Subsidiaries or any of its properties, contracts or
assets are subject, or (y) violate, conflict with, result in a breach of any
provision of or the loss of any benefit under, constitute a default (or an event
which, with or without notice or lapse of time, or both, would constitute a
default) under, result in the termination of or a right of termination or
cancellation under, accelerate or result in a right of acceleration of the
performance required by, result in the creation of any Encumbrance upon the
properties, contracts or assets of Buyer under, or require any notice, approval
or consent under, any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other instrument or obligation to which Buyer or any of its
Subsidiaries is a party, or by which Buyer
-41-
or any of its Subsidiaries, or any of its or their properties or assets, may be
bound or affected, other than, in the case of clauses (x) and (y), any such
items that would not be reasonably likely, individually or in the aggregate, to
have a Buyer Material Adverse Effect.
Section 4.3. Consents and Approvals. Except for (v) consents,
-----------------------
approvals and notices as are set forth in Section 5.2 or 5.3 hereof, (w) the
applicable filings under the HSR Act, (x) compliance with and filings under the
Securities Laws as may be required in connection with this Agreement and the
transactions contemplated hereby, (y) those consents, approvals and notes that
may be required solely by reason of the participation of any of the Symphony
Parties (as opposed to any other third party) in the Transaction and the other
transactions contemplated hereby and (z) those consents, approvals, notices,
filings or registrations the failure of which to be obtained or made would not
be reasonably likely, individually or in the aggregate, to have a Buyer Material
Adverse Effect, no consents or approvals of or filings or registrations with any
Governmental Authority or any third party are necessary in connection with (i)
the execution and delivery by Buyer of this Agreement and (ii) the consummation
by Buyer of the transactions as contemplated hereby.
Section 4.4. Legal Proceedings. There are no legal, administrative,
------------------
arbitral or other proceedings, claims, actions, suits or governmental or
regulatory investigations of any nature that are pending or, to the Knowledge of
Buyer, threatened against or relating to Buyer or any of its Subsidiaries that
would prohibit or materially impair Buyer's ability to fulfill its obligations
pursuant to this Agreement or that challenge the validity or propriety of the
transactions contemplated by this Agreement, and there is no injunction, order,
judgment, decree, or regulatory restriction imposed upon Buyer or any of its
Subsidiaries that would prohibit or materially impair Buyer's ability to fulfill
its obligations pursuant to this Agreement.
Section 4.5. No Other Broker. No broker, finder or similar
----------------
intermediary has acted for or on behalf of, or is entitled to any broker's,
finder's or similar fee or other commission from, Buyer or any of its
Subsidiaries in connection with this Agreement or the transactions contemplated
hereby.
Section 4.6. Section 15 of the Investment Company Act. Neither Buyer
-----------------------------------------
nor any of its Subsidiaries has any express or implied understanding or
arrangement which would impose an "unfair burden" (as such term is used in
Section 15(f) of the Investment Company Act) on any of the Funds or would in any
way violate Section 15(f) of the Investment Company Act, as a result of the
transactions contemplated hereby.
Section 4.7. Investment Purpose. Buyer is acquiring the Membership
-------------------
Interests in the Company for the purpose of investment and not with a view to,
or for offer or sale in connection with, any public distribution thereof in
violation of the registration requirements of the Securities Act. Buyer
understands that the Membership Interests have not been, and will not be,
registered under the Securities Act by reason of a specific exemption therefrom,
and that any such exemption will depend, among other things, upon the bona fide
nature of the investment intent and the accuracy of Buyer's representations as
expressed in this Agreement, and that the Membership Interests cannot be resold
by Buyer unless they are registered under the Securities Act or unless an
exemption from registration is available.
-42-
Section 4.8. Experience. Buyer has substantial experience in
-----------
evaluating and investing in private placement transactions so that Buyer is
capable of evaluating the merits and risks of Buyer's investment in the Company.
Buyer, by reason of its business or financial experience or the business or
financial experience of its professional advisors who are unaffiliated with and
who are not compensated by the Company or any Affiliate or selling agent of the
Company, directly or indirectly, is aware of the risks and has the capacity to
protect its own interests in connection with the purchase of the Membership
Interests under this Agreement.
Section 4.9. Access to Data. Buyer and its representatives have met
---------------
with representatives of the Company and the Symphony Parties and thereby have
had the opportunity to ask questions of, and receive answers from, said
representatives concerning the Company, its Subsidiaries, the Non-Registered
Funds and the Funds and the terms and conditions of the transactions
contemplated by this Agreement as well as to obtain any information requested by
Buyer. Any questions raised by Buyer or its representatives concerning the
transactions contemplated by this Agreement have been answered to the
satisfaction of Buyer and its representatives. Buyer's decision to purchase the
Membership Interests is based in part on the answers to such questions as Buyer
and its representatives have raised concerning the transactions contemplated by
this Agreement and on its own evaluation of the risks and merits of the purchase
and the Company's proposed business activities. Notwithstanding the foregoing,
no investigation made by or on behalf of Buyer shall in any way affect any
representations, warranties, covenants or agreements made by any of the Symphony
Parties pursuant to this Agreement.
Section 4.10. Accredited Investor. Buyer is an "accredited investor"
--------------------
as such term is defined in Rule 501(a) of Regulation D promulgated under the
Securities Act.
Section 4.11. Cash Consideration. Buyer will have sufficient cash
-------------------
available to it to pay the Initial Purchase Consideration in cash as of the
Closing.
ARTICLE V
COVENANTS
Section 5.1. Conduct of Business by the Company. During the period
-----------------------------------
from the date of this Agreement and continuing through the Closing Date, except
as expressly contemplated, permitted or required by this Agreement or with the
prior written consent of Buyer, the Company shall, and shall cause each of its
Subsidiaries to (a) carry on its business in the ordinary course consistent with
past practice and (b) use commercially reasonable efforts to preserve its
present business organization and relationships (including keeping available the
present services of its employees and preserving its rights, franchises,
goodwill and relations with its customers and others with whom it conducts
business). Without limiting the generality of the foregoing, except as expressly
contemplated, permitted or required by this Agreement or consented to in writing
by Buyer, the Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly:
(i) amend or agree to amend the Company Operating Agreement, its
articles of incorporation or bylaws (or comparable organizational
documents), or merge with or into or consolidate with, or agree to merge
with or into or consolidate with, any
-43-
other Person, subdivide or in any way reclassify any of its Membership
Interests, or change or agree to change in any manner the rights of its
Membership Interests or liquidate or dissolve;
(ii) (x) issue, sell, redeem or acquire any Membership Interest or
any other ownership interest in the Company or any of its Subsidiaries; (y)
issue, sell or grant any option, warrant, convertible or exchangeable
security, right, "phantom" partnership (or other ownership) interest (or
similar "phantom" security), restricted partnership (or other ownership)
interest, subscription, call, unsatisfied preemptive right or other
agreement or right of any kind to purchase or otherwise acquire (including
by exchange or conversion) any of its Membership Interests or any other
ownership interests; or (z) enter into any contracts, agreements or
arrangements to issue, redeem, acquire or sell any of its Membership
Interests or any other ownership interests;
(iii) incur any long-term indebtedness;
(iv) incur any indebtedness for borrowed money or guarantee the
indebtedness of other Persons other than in the ordinary course of business
consistent with past practice in amounts not to exceed $250,000 in the
aggregate (which maximum permissible amount shall be reduced by the dollar
amount of indebtedness incurred, if any, pursuant to clause (viii) of this
Section 5.1); provided, however, that the Company shall not, and shall not
permit its Subsidiaries to, incur any Voting Debt;
(v) make any change in its accounting methods or practices for Tax
or accounting purposes or make any change in depreciation or amortization
policies or rates adopted by it for Tax or accounting purposes or make any
material Tax election or settle or compromise any Tax liability, except in
the case of any such liability to the extent reserved for on the Audited
Company Balance Sheet;
(vi) make any loan or advance to any of its Affiliates, officers,
directors, employees, consultants, agents or other representatives (other
than reasonable and customary travel advances made in the ordinary course of
business consistent with past practice);
(vii) sell, transfer, lease, offer to sell, abandon or make any
other disposition of any of its assets in excess of $250,000 in the
aggregate or grant or suffer, or agree to grant or suffer, any material
Encumbrance on any of its material assets;
(viii)incur, assume or guarantee or agree to incur, assume or
guarantee, any liability or obligation (whether or not currently due and
payable) relating to its business or any of its assets except in the
ordinary course of business consistent with past practice or in amounts not
in excess of $250,000 in the aggregate (which maximum permissible amount
shall be reduced by the dollar amount of indebtedness incurred, if any,
pursuant to clause (iii) of this Section 5.1);
(ix) settle any claim, action or proceeding involving any
liability for money damages in excess of $250,000 in the aggregate or any
material restrictions upon any of its operations;
-44-
(x) create, renew, amend, terminate or cancel, any Contract other
than in the ordinary course of business consistent with past practice;
provided, that the Company and its Subsidiaries may not enter into any
contracts or agreements that include any noncompetition or nonsolicitation
covenant or any exclusive dealing or similar arrangement that limits the
ability of the Company or any of its Subsidiaries to compete (geographically
or otherwise) in any line of business;
(xi) enter into, or agree to enter into, any contract, agreement
or arrangement or any financial transaction with any of its officers,
directors, consultants, agents or representatives, Affiliates or the Funds
or the Non-Registered Funds, except, in the case of Funds and Non-Registered
Funds pursuant to Investment Company Advisory Agreements and Non-Investment
Company Advisory Agreements, respectively, existing and in effect on the
date hereof;
(xii) declare or make any dividends or declare or make any other
distributions of any kind payable to the Members other than distributions
made in accordance with Section 5.23;
(xiii)acquire or agree to acquire in any manner, including by way
of merger, consolidation, or purchase of an equity interest or assets, any
business of any Person or other business organization or division thereof;
(xiv) enter into, amend, modify or renew any Company Plan,
collective bargaining agreement or other contract with any labor
organization, or other written employment, consulting, severance or similar
agreements or arrangements with any officers or employees of the Company, or
grant any salary or wage increase or increase in severance or termination
pay or increase any employee benefit or hire any new employee for a senior
management position, except (i) reasonable and customary individual
increases in compensation to non-officer employees in the ordinary course of
business consistent with past practice, (ii) changes that are required by
Applicable Law, and (iii) to satisfy commitments existing as of the date
hereof and disclosed in the Company Disclosure Schedule;
(xv) take any action to accelerate any material rights or
benefits, or make any material determinations not in the ordinary course of
business consistent with past practice, under any collective bargaining
agreement, Company Plan or employment, indemnification, severance or
termination agreement;
(xvi) voluntarily divest itself of management of any Fund, Client,
or other assets under management;
(xvii)accelerate the billing or other realizations of Asset-Based
Fees or Performance Fees payable by Funds or Clients to the Company or any
of its Subsidiaries or delay the payment of liabilities;
(xviii) make or incur any capital expenditure in excess of
$250,000 other than those that have been approved in writing or budgeted as
of the date hereof or as have been disclosed in writing to Buyer prior to
the execution of this Agreement;
-45-
(xix) cancel any indebtedness or waive any claims or rights in
amounts, in each case, in excess of $250,000;
(xx) enter into any lease of real property, except any renewals of
existing leases in the ordinary course of business and consistent with past
practice, with respect to which Buyer shall have the right to participate;
or
(xxi) authorize or agree (by contract or otherwise) to do any of
the foregoing.
Section 5.2. Section 15 of the Investment Company Act: Company
-------------------------------------------------
Covenants.
----------
(a) The Symphony Parties and Buyer will use their commercially
reasonable efforts to obtain, and to cause the Funds to obtain, as promptly as
practicable, the necessary approval of the Fund Boards and the shareholders of
each Fund, pursuant to the provisions of Section 15 of the Investment Company
Act applicable thereto, of a new Investment Company Advisory Agreement for such
Fund with such agreement (i) having the same advisory fees in effect as of the
date hereof, (ii) becoming effective upon the Closing, and (iii) otherwise
having substantially the same terms as currently in effect, except that, in the
case of the Schwab Analytics Fund, the party to the applicable Investment
Company Advisory Agreement shall be the Company instead of SAMI.
(b) Without limiting the foregoing, the Symphony Parties and Buyer
shall (i) use their commercially reasonable efforts to obtain all consents and
approvals necessary to be obtained by the Company, any of its Affiliates or the
Funds, in order for the parties to consummate the transactions contemplated in
this Agreement, (ii) use their commercially reasonable efforts to cause each
Fund and the shareholders of each such Fund to give or obtain any such consents
or approvals relating to the Funds and to use their commercially reasonable
efforts to cause each Fund to prepare, file with and cause to be cleared by the
SEC and all other Governmental Authorities having jurisdiction thereover, as
promptly as practicable after the date hereof, all proxy solicitation materials
required to be distributed to the shareholders of the Funds with respect to the
actions to be approved by the shareholders of the Funds in connection with this
Agreement, and (iii) use their commercially reasonable efforts to cause such
Funds to mail such proxy solicitation materials to the shareholders of the Fund
promptly after clearance thereof by the SEC and to convene a meeting of the
shareholders of each Fund as soon as reasonably practicable after the mailing of
the proposal as described in Section 5.2(b)(ii), all such consents and proxy
solicitation materials to be in a form reasonably satisfactory to Buyer, Parent
and Maestro.
Section 5.3. Non-Investment Company Advisory Agreement Consents. As
---------------------------------------------------
soon as reasonably practicable following the date hereof, the Company and its
Subsidiaries shall send notices (each, a "Notice"), informing their Clients of
the transactions contemplated by this Agreement and requesting the written
consent or approval of the assignment or deemed assignment if Client consent to
such assignment or deemed assignment is required by Applicable Law or is
required under the respective Non-Investment Company Advisory Agreement for such
assignment or deemed assignment resulting from the Transaction. Buyer agrees
that consent for any Non-Investment Company Advisory Agreement to the assignment
or deemed assignment
-46-
resulting from the Transaction shall be deemed given for all purposes hereunder
(i) if no consent is required under Applicable Law or the respective
Non-Investment Company Advisory Agreement, (ii) upon receipt of the written
consent requested in the Notice or (iii) if such consent is required under
Applicable Law or the respective Non-Investment Company Advisory Agreement,
then, to the extent permissible under the applicable Non-Investment Company
Advisory Agreement, upon sending written notice ("Negative Consent Notice") to
any such Client (which Negative Consent Notice may be included in the Notice)
requesting written consent as aforesaid and informing such Client: (a) of the
intention to complete the Transaction, which will result in a deemed assignment
of such Non-Investment Company Advisory Agreement; (b) of the Company's or its
Subsidiaries' intention to continue to provide the advisory services pursuant to
the existing Non-Investment Company Advisory Agreement with such Client after
the Closing if such Client does not terminate such agreement prior to the
Closing; and (c) that the consent of such Client will be deemed to have been
granted if such Client continues to accept such advisory services for a period
of at least 30 days after the sending of the Negative Consent Notice without
termination (provided, that such Client shall not have affirmatively stated to
Parent or an Affiliate of Parent or the Company that it does not so consent or
terminated its respective Non-Investment Company Advisory Agreement prior to the
Closing; provided further that consents to the assignment of any Non-Investment
Company Advisory Agreement with SAMI shall be deemed to have been given for
purposes hereunder only if such consent also includes the consent to the
assignment of such agreement from SAMI to the Company) (the "Negative Consent
Procedure"). Buyer shall be provided a reasonable opportunity to review all such
consent materials to be used by the Company prior to distribution, and such
materials shall be in form and substance reasonably satisfactory to Buyer,
Maestro and Parent. The Symphony Parties shall provide to Buyer copies of any
and all substantive correspondence between them and Clients or representatives
or counsel of such Clients relating to the consent solicitation.
Section 5.4. Insurance. The Company and its Subsidiaries will use
----------
their commercially reasonable efforts to maintain in effect and to pay all
premiums due thereon for the period ending on the Closing Date, until the
Closing Date with respect to Company Insurance Policies and fidelity bonds
maintained by them on the date hereof or to procure, comparable replacement
policies and bonds (or such replacement coverage as is obtainable on a
commercially reasonable basis) and maintain such policies and bonds in effect
until the Closing Date.
Section 5.5. Section 15 of the Investment Company Act: Buyer's
-------------------------------------------------
Covenants. Buyer agrees to use its commercially reasonable efforts to assure
----------
compliance with the conditions of Section 15(f) of the Investment Company Act
with respect to the Funds. Without limiting the foregoing, Buyer agrees that:
(a) for a period of not less than three years after the Closing Date, Buyer
shall use its commercially reasonable efforts to assure that no more than 25% of
the members of any Fund Board shall be "interested persons" (as such term is
defined for purposes of Section 15(f)(1)(A) of the Investment Company Act) of
Buyer (or such other entity which is an Affiliate of Buyer which acts as adviser
or subadviser to the Funds); and (b) neither Buyer nor any of its Affiliates,
for a period of not less than two years after the Closing Date, shall have any
express or implied understanding, arrangement or intention to impose an "unfair
burden" (as such term is used in Section 15(f) of the Investment Company Act) on
any of the Funds as a result of the transactions contemplated herein.
Notwithstanding anything to the contrary
-47-
contained herein, the covenants of Buyer contained in this Section 5.5 are
intended only for the benefit of the parties hereto.
Section 5.6. Employees, Employee Benefits.
-----------------------------
(a) General. From and after the Closing Date, unless otherwise
-------
specifically set forth in this Section 5.6, the employees who are actively
employed by the Company (and who are not receiving short-term or long-term
disability benefits under a Plan) on the Closing Date (the "Company Employees")
shall participate in the employee benefit plans, programs and arrangements
provided to similarly situated employees of Buyer (collectively, the "Buyer
Plans"). Buyer shall provide the Company Employees with service credit under any
such Buyer Plans for purposes of eligibility, vesting, waiting periods or other
qualification or eligibility for any benefit or privilege, but not for benefit
accrual purposes under any Buyer pension plan that Company Employees may, in the
future, be eligible to participate in. Effective as of the Closing, Parent and
the Company shall take all such actions as may be necessary to cause (i) all
Company Employees to cease active participation in all Plans (including, but not
limited to, all employee benefit plans, programs or arrangements which such
Company Employees participated in, or which were maintained for the benefit of
Company Employees prior to the Closing by either the Company or Parent), and
(ii) the Company to cease to be a participating and contributing employer in the
Plans, such that the Company has no obligation, responsibility or liability
under such Plans, or to the Company Employees or any other individuals (whether
or not former employees of the Company) with respect to such Plans. Parent shall
cause all Company Employees to be fully vested in their account balances and
accrued benefits under the Plans effective as of the Closing, whether or not
such cessation of participation results in a partial termination of any such
Plan. Buyer shall neither adopt, become a sponsoring employer of, nor have any
obligations, responsibility or liabilities under, the Plans, or to the Company
Employees or other individuals with respect to the Plans. Nothing herein express
or implied shall be construed to prevent Buyer, after the Closing, from
terminating or modifying to any extent or in any respect at any time or from
time to time (i) Buyer's employment relationship with any employee, including
any Company Employee, (ii) the terms and conditions of the employment of any
employee, including the Company Employees, including, but not limited to, wages
and/or salaries, hours and employee benefits, or (iii) any of the Buyer's
"employee benefit plans" as defined under ERISA or similar or other plans,
programs or arrangements, and nothing in this Section 5.6 shall be construed to
provide a contract of employment, or to provide any other promise of future
employment, to the Company Employees.
(b) Medical, Dental and Healthcare Reimbursement Benefits. For the
-----------------------------------------------------
period commencing on the Closing Date and ending on the last calendar day of the
month in which the Closing occurs, Parent shall continue the coverage for the
Company Employees under Parent's medical, dental and healthcare reimbursement
plans existing on the Closing Date. No later than the last calendar day of the
month in which the Closing occurs, the Company Employees and their eligible
dependents shall be eligible to participate in medical, dental and healthcare
reimbursement plans either maintained by Buyer or which Buyer causes the Company
to maintain on or after the Closing to the same extent as similarly situated
employees of Buyer. Buyer shall cause such plans to waive any pre-existing
condition exclusions thereunder with respect to the Company Employees and their
eligible dependents and shall provide Company Employees and their eligible
dependents with credit for any co-payments, deductibles, offsets (or
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similar payments) prior to their participation in such plans for purposes of
satisfying any applicable deductible, out-of-pocket, or similar requirements
under any Buyer or Company plans in which Company Employees or their eligible
dependents are eligible to participate after the Closing. All liabilities
relating to, arising out of, or resulting from medical, dental and healthcare
claims incurred by or on behalf of any employee, independent contractor or
consultant of the Company or any of their covered dependents prior to the
Closing Date under any medical, dental or healthcare Parent Plan maintained by
Parent shall remain liabilities of such Parent Plan following the Closing Date.
A claim for medical, dental and healthcare benefits shall be deemed to be
"incurred" upon the rendering of such medical, dental or healthcare services
giving rise to the obligation to pay such benefits regardless of when such claim
is in fact submitted for payment.
(c) Short-Term and Long-Term Disability. From and after the Closing
-----------------------------------
Date, the Company Employees shall be eligible to participate in Buyer's
Short-Term and Long-Term disability plans applicable to similarly situated
employees of Buyer. Any person who is (i) an employee of the Company as of the
Closing Date and who is, at such time, receiving short-term or long-term
disability benefits under a Plan, or (ii) a former employee or other individual
receiving short-term or long-term disability benefits under a Plan on the
Closing Date, shall continue to be covered by such Plan from and after the
Closing Date and Parent and Maestro shall retain all liabilities with respect to
such Persons. In the event that an individual described in clause (i) above
returns to active service with the Company after the Closing Date, such
individual shall be deemed to be a "Company Employee" for purposes of this
Section 5.6 from and after the date such individual returns to the active
employment with the Company.
(d) Life Insurance. The Company Employees shall be eligible to
--------------
participate in Buyer's life insurance policies applicable to similarly situated
employees of Buyer from and after the Closing Date. Parent shall require that
the individuals described in Section 5.6(c)(i) are approved for the "waiver of
premium" provisions applicable to such individuals prior to such person's return
to active service with the Company.
(e) Pension Plan and 401(k) Plan Distributions. The Company
------------------------------------------
Employees shall not be eligible to participate in Buyer's defined benefit
pension plan. The Company Employees shall be eligible to participate in Buyer's
401(k) plan from and after the Closing Date. In the event that the Company
Employees are provided with the opportunity to elect eligible rollover
distributions from their account balances under Parent's 401(k) Plan (i.e., the
Plan in which they participate as of the date of this Agreement), Buyer's 401(k)
plan shall accept such rollovers from such electing Company Employees into their
accounts under the Buyer's 401(k) plan.
(f) Tuition Reimbursement. During the period commencing on the
---------------------
Closing Date and ending on December 31, 2001 (the "Continuation Period"), Buyer
shall provide the Company Employees with participation in a tuition
reimbursement plan substantially identical to the tuition reimbursement plan
applicable to such Company Employees as of the date of this Agreement and the
Company Employees shall not be eligible to participate in any alternative
tuition reimbursement plan that may be provided by Buyer to its employees during
such period.
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(g) Other Benefits. During the Continuation Period, Buyer shall
--------------
provide the Company Employees with benefits under a (x) public transportation
policy, (y) gym membership policy and (z) employee referral policy substantially
identical to the public transportation, gym membership and employee referral
policies applicable to such employees as of the date of this Agreement, and the
Company Employees shall not be eligible to receive benefits under similar
policies (if any) that may be provided by Buyer to its employees during such
period.
Section 5.7. Further Assurances.
-------------------
(a) Each party to this Agreement shall execute such documents and
other papers and perform such further acts as may be reasonably required to
carry out the provisions hereof and the transactions contemplated hereby. Upon
the request of Buyer, the Symphony Parties and their respective controlled
Affiliates shall promptly execute and deliver such further instruments of
assignment, transfer, conveyance, endorsement, direction or authorization and
other documents as Buyer may reasonably request to effectuate the purposes of
this Agreement.
(b) In the event that at any time or from time to time after the
Closing Parent or any of its Subsidiaries shall receive or otherwise possess any
SAMI Asset Omission or Parent Asset Omission, Parent shall promptly transfer, or
cause to be transferred, such SAMI Asset Omission or Parent Asset Omission, as
the case may be, to the Company. Prior to any such transfer, Parent (or its
Subsidiaries) possessing such SAMI Asset Omission or Parent Asset Omission, as
the case may be, shall hold such SAMI Asset Omission or Parent Asset Omission,
as the case may be, (and all earnings generated by such asset from and after the
Closing) in trust for the Company. Notwithstanding anything to the contrary
herein, if a SAMI Asset Omission or Parent Asset Omission covered by this
Section 5.7(b) is discovered following the Closing, the Symphony Parties shall
be deemed not to be in breach of Section 2.23, provided that the terms of the
first sentence of this Section 5.7(b) are complied with as promptly as
reasonably practicable.
Section 5.8. Efforts of Parties to Close. Subject to the provisions
----------------------------
of Section 5.11, during the period from the date of this Agreement through the
Closing Date, each party hereto shall use its commercially reasonable efforts to
fulfill or obtain the fulfillment of the conditions precedent to the
consummation of the transactions contemplated hereby, including the execution
and delivery of any documents, certificates, instruments or other papers that
are reasonably required for the consummation of the transactions contemplated
hereby. During the period from the date of this Agreement and continuing through
the Closing, except as required by Applicable Law or with the prior written
consent of Buyer, in the case of any of the Symphony Parties, or Parent and
Maestro, in the case of Buyer, no party to this Agreement shall knowingly take
any action which, or knowingly fail to take any action the failure of which to
be taken, would, or could reasonably be expected to: (a) result in any of the
representations and warranties set forth in this Agreement on the part of the
party taking or failing to take such action being or becoming untrue in any
material respect; (b) result in any conditions to the Closing set forth in
Article VI not being satisfied; or (c) result in a material violation of any
provision of this Agreement.
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Section 5.9. Confidentiality and Announcements.
------------------------------------
(a) The parties agree to be bound by and comply with the provisions
set forth in the Confidentiality Agreements, the provisions of which
Confidentiality Agreements are hereby incorporated herein by reference.
Effective upon, and only upon, the Closing, Buyer's obligations under the
Confidentiality Agreements shall terminate with respect to information to the
extent relating solely to the Company, its Subsidiaries, the Non-Registered
Funds and the Funds and the parties' obligations under the Confidentiality
Agreements shall terminate with respect to disclosure relating to the
transactions contemplated hereby; provided, however, that Buyer's obligations
under the Confidentiality Agreements with respect to information obtained from
and/or regarding Parent shall survive the Closing.
(b) From and after the Closing, each of Parent, the Members and the
Company Principals shall, and shall cause each of their Affiliates and its and
their officers, directors, employees and advisors to, keep confidential and not
use for its benefit or for the benefit of any other Person, any and all
non-public information relating to the Company, its Subsidiaries, its Clients,
the Non-Registered Funds and the Funds; provided, however, that Parent, the
Members and/or the Company Principals, as the case may be, shall not be liable
hereunder with respect to any disclosure to the extent such disclosure is (i)
compelled by legal process (by interrogatories, subpoena, civil investigative
demand or similar process) or (ii) required, based upon the written advice of
counsel, pursuant to the requirements of any Applicable Law (including without
limitation the Securities Act of 1933, as amended, the Securities Exchange Act
of 1934, as amended, or any rule or regulation promulgated under either Act or
any national stock exchange). Notwithstanding the foregoing, such non-public
information shall not include information that (i) is or becomes part of the
public domain through no fault of Parent, the Members or the Company Principals
(provided that information shall not be deemed to be within such exclusion
merely because it is embraced by general disclosures in the public domain); (ii)
is lawfully disclosed to Parent, the Members or the Company Principals by a
third party not bound by an obligation of confidentiality; or (iii) is
independently developed by Parent, the Members or the Company Principals without
reference to or the use of such non-public information.
(c) Subject to Section 5.11(a) and (b), the parties to this
Agreement shall consult with each other as to the form, substance and timing of
any press release or other public disclosure related to this Agreement or the
transactions contemplated hereby and no such press release or other public
disclosure shall be made without the consent of the other parties, which consent
shall not be unreasonably withheld or delayed; provided, however, that the
parties may make such disclosure to the extent (i) such disclosure is compelled
by legal process (by interrogatories, subpoena, civil investigative demand or
similar process) or (ii) such disclosure is required, based upon the written
advice of counsel, pursuant to the requirements of any Applicable Law (including
without limitation the Securities Act, the Exchange Act, or any rule or
regulation promulgated by any national stock exchange); provided, however, that
following the execution of this Agreement, it is understood and agreed that
Parent and Buyer each shall be permitted to file with the SEC a Current Report
on Form 8-K under the Exchange Act in order to disclose the execution of this
Agreement, which Form may include a copy of this Agreement (other than the
Company Disclosure Schedule, the Buyer Disclosure Schedule and the Exhibits
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to this Agreement) as an exhibit to such Form 8-K, without the prior consent of
any of the other parties hereto.
Section 5.10. Access; Certain Communications. Between the date of
------------------------------
this Agreement and the Closing Date, subject to Applicable Laws relating to the
exchange of information, the Company shall afford to Buyer and its authorized
agents and representatives access, upon reasonable notice and during normal
business hours, to all properties of, and all contracts, documents and
information of or relating to the assets, liabilities, business, customers,
Funds, Clients, employees, operations, personnel and other aspects of the
business of, the Company and its Subsidiaries; provided, however, that such
access shall be coordinated by the Company and shall be conducted in a manner
which does not unreasonably interfere with the Company's or its Subsidiaries'
normal operations, customers, and employee relations.
Section 5.11. Regulatory Matters; Third-Party Consents.
-------------------------------------------
(a) The parties to this Agreement shall cooperate with each other
and use their commercially reasonable efforts promptly to prepare and file (on a
confidential basis if reasonably requested by the other parties) all necessary
documentation, to effect (on a confidential basis if reasonably requested by the
other parties) all applications, notices, petitions and filings, and to obtain
as promptly as practicable all permits, consents, approvals, waivers and
authorizations of all third parties and Governmental Authorities which are
necessary or advisable to consummate the transactions contemplated by this
Agreement, including any filing to be made under the HSR Act, which filings
shall be made as promptly as reasonably practicable, and requests for required
consents under the Contracts. Buyer and the Symphony Parties agree to take all
reasonable steps necessary to satisfy any conditions or requirements imposed by
any Governmental Authority in connection with the consummation of the
transactions contemplated by this Agreement, other than those conditions or
requirements, in the aggregate, the satisfaction of which are reasonably likely
to result in either a Company Material Adverse Effect or a Buyer Material
Adverse Effect or a material adverse effect on Buyer and its Subsidiaries, taken
as a whole. Each party to this Agreement will have the right to review in
advance, and will consult with the other parties with respect to, all the
information relating to Buyer or the Company, its Subsidiaries or the
Non-Registered Funds, as the case may be, which appear in any filing made with,
or written materials submitted to, any third party or any Governmental Authority
in connection with the transactions contemplated by this Agreement; provided,
however, that the foregoing shall not apply to any confidential filing of the
Symphony Parties, the Company, the Company's Subsidiaries, the Non-Registered
Funds or Buyer or any of Buyer's Subsidiaries made in the ordinary course of
business. The parties to this Agreement agree that they will consult with each
other with respect to the obtaining of all permits, consents, approvals and
authorizations of all third parties and Governmental Authorities necessary or
advisable to consummate the transactions contemplated by this Agreement and each
party will keep the other parties hereto apprised of the status of matters
relating to completion of the transactions contemplated herein.
(b) The parties to this Agreement shall promptly advise each other
party hereto upon receiving any communication from any Governmental Authority
whose consent or approval is required for consummation of the transactions
contemplated by this Agreement.
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(c) The Company will deliver or make available to Buyer promptly
after the filing thereof a true, correct and complete copy of each Regulatory
Document filed by the Company, its Subsidiaries and the Non-Registered Funds
after the date hereof and prior to the Closing Date.
Section 5.12. Notification of Certain Matters. Each party to this
--------------------------------
Agreement shall give prompt notice to the other parties, to the extent known by
such party, of (i) the occurrence, or failure to occur, of any event or
existence of any condition that has caused or could reasonably be expected to
cause any of its representations or warranties contained in this Agreement to be
untrue or inaccurate in any material respect at any time after the date of this
Agreement, up to and including the Closing Date, (ii) the occurrence of any
matter or event that is materially adverse to the business, assets, financial
condition or results of operations of the Company and its Subsidiaries taken as
a whole, and (iii) any failure on its part to comply with or satisfy, in any
material respect, any covenant, condition or agreement to be complied with or
satisfied by it under this Agreement.
Section 5.13. Expenses. Except as expressly provided otherwise in
---------
this Agreement, the parties shall each bear their respective direct and indirect
expenses incurred in connection with the negotiation and preparation of this
Agreement and the consummation of the transactions contemplated hereby.
Notwithstanding the foregoing, (i) the Maestro Transaction Fees and the Parent
Transaction Fees shall be paid by Buyer (provided that Buyer shall only be
obligated to pay the Parent Transaction Fees and Maestro Transaction Fees
specified under Sections 1.3, 1.5, 1.6 and 1.8), and (ii) all of the costs, fees
and expenses of (x) preparing, printing and mailing the proxy statements and
related solicitation and other expenses relating to obtaining the approvals
contemplated by Sections 5.2 and 5.3, (y) Deloitte & Touche LLP in connection
with the preparation of the Audited Company Financial Statements and (z) such
nationally recognized independent public accounting firm selected by the parties
hereto acting in good faith in connection with the valuation relating to the
allocation specified in Section 8.9 and the corresponding allocation for
accounting purposes, each shall be paid 50% by Buyer, 25% by Maestro and 25% by
Parent.
Section 5.14. Third-Party Proposals. None of the Symphony Parties
----------------------
shall, nor shall they permit any of their respective Subsidiaries, officers,
directors, employees, representatives or agents, including any investment
banker, attorney or accountant engaged by any of them to, directly or indirectly
solicit, encourage or facilitate inquiries or proposals, or enter into any
agreement, with respect to, or initiate or participate in any negotiations or
discussions with any Person concerning, any acquisition or purchase of all or a
substantial portion of the assets of, or of any equity interest in, the Company
or any of its Subsidiaries, or any merger or business combination with any of
the Company or any of its Subsidiaries, or any voluntary assignment of any
investment advisory, subadvisory, administrative or distribution agreements of
the Company or its Subsidiaries, in each case other than as contemplated by this
Agreement (each, an "Acquisition Proposal"), or furnish any information to any
such Person provided, however, that it is expressly understood and agreed that
the term "Acquisition Proposal" shall not include matters relating to any
acquisition or purchase of all or substantially all of the assets of, or equity
interests in, Parent, or any merger or business combination involving a merger
of or business combination between Parent and any third party. The Symphony
Parties shall notify Buyer within 48 hours (but not less than one Business Day)
if any
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Acquisition Proposal (including the terms thereof) is received by, any
such information is requested from, or any such negotiations or discussions are
sought to be initiated with, any of the Symphony Parties, any of their
respective Subsidiaries, officers, directors, employees, representatives or
agents, including any investment banker, attorney or accountant engaged by any
of them. The Symphony Parties shall notify Buyer within 48 hours (but not less
than one Business Day) of being notified or learning that any proposal has been
made by any third party to any Fund Board to become the investment adviser or
subadviser of such Fund. It is understood that any breach of the restrictions
set forth in this Section 5.14 by any executive officer of any of the Symphony
Parties or any investment banker, attorney or other advisor or representative of
the Symphony Parties, shall be deemed to be a breach of this Section 5.14 by the
Symphony Parties. The Symphony Parties shall, and shall cause their respective
Subsidiaries, officers, directors, employees, representatives and advisors to,
immediately cease or cause to be terminated any existing activities, including
discussions or negotiations with any parties, conducted prior to the date hereof
with respect to any Acquisition Proposal and shall seek to have all materials
distributed to Persons in connection therewith by the Symphony Parties or any of
their respective Subsidiaries or advisors returned to the Company promptly or
destroyed. None of the Symphony Parties or any of their respective Subsidiaries,
officers, directors, employees, representatives or agents, including any
investment banker, attorney or accountant engaged by any of them, shall amend,
modify, waive or terminate, or otherwise release any Person from, any
standstill, confidentiality or similar agreement or arrangement currently in
effect relating to this Agreement or the transactions contemplated hereby. The
Symphony Parties shall cause their respective officers, directors, agents,
advisors and Subsidiaries to comply with the provisions of this Section 5.14.
Section 5.15. Officers' and Directors' Indemnification and
--------------------------------------------
Insurance.
----------
(a) Buyer agrees that, for a period of six years following the
Closing Date, it will not cause the Company to amend the Company Operating
Agreement in a manner which would alter the rights of indemnification existing
in favor of the directors and officers of the Company as provided in the Company
Operating Agreement in effect on the date hereof with respect to matters
occurring prior to the Closing Date; provided, however, that no indemnity shall
be available in respect of any Losses as to which any Buyer Indemnitee is
entitled to indemnity pursuant to the provisions of Article VIII or Article IX
or would be so entitled but for the limitations and restrictions set forth in
Sections 9.1(b) and 9.4(c).
(b) For a period of three years from the Closing, Buyer shall use
its commercially reasonable efforts to provide, or cause the Company to provide,
that portion of director's and officer's liability insurance that serves to
reimburse the present and former officers and directors of the Company set forth
in Section 5.15 of the Company Disclosure Schedule with respect to claims for
which such director or officer would be entitled to indemnification pursuant to
Section 5.15(a), which insurance shall, subject to the provisos to this Section
5.15(b), contain at least the same coverage amounts as, and shall contain terms
and conditions no less advantageous than, insurance coverage currently provided
by the Company; provided that Buyer or the Company, as the case may be, shall
not be obligated to make a premium payment per year in respect of such policy
(or replacement policy) which exceeds, for the Company's officers and directors,
150% of the annual premium payment under the Company's current policy in effect
on the date of this Agreement, which annual premium payment the Company
represents and
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warrants to be $263,250 (such maximum amount, the "Insurance Amount"); and
provided, further, that if Buyer is unable to maintain or obtain the insurance
called for in this Section 5.15, Buyer shall use commercially reasonable efforts
to obtain as much comparable insurance as may be available for the Insurance
Amount.
(c) The provisions of this Section 5.15 are intended to be for the
benefit of, and shall be enforceable by, each party covered by such provisions
and his or her heirs and representatives.
Section 5.16. State Takeover Statutes. Each of the Symphony Parties
------------------------
shall take all steps necessary to exempt (or continue the exemption of) the
transactions contemplated hereby from, and challenge the validity of, any
applicable state takeover law, as now or hereafter in effect.
Section 5.17. Investment of Transaction Proceeds. For a period
-----------------------------------
beginning on the Closing Date and ending on the fifth anniversary of the Closing
Date, each of the Company Principals shall have an amount equal to the amounts
set forth opposite their respective names on Exhibit N hereto (with respect to
each Company Principal, such party's "Minimum Investment") invested in (i)
Company products managed using the Company's five market-neutral strategies
("Company Products") or (ii) in NetNet Ventures Fund I, L.P. ("NetNet
Ventures"); provided that (a) only 51% of amounts invested by any Company
Principal in NetNet Ventures shall be deemed invested for purposes of this
Section 5.17 and (b) amounts in excess of $750,000 deemed invested by any
Company Principal in NetNet Ventures shall not be deemed invested for purposes
of this Section 5.17; provided, however, that each of the Company Principals
shall have the right to withdraw any amounts invested in Company Products or
NetNet Ventures representing, at the time of withdrawal, in excess of 120% of
the original Minimum Investment and shall be obligated to invest additional
amounts in Company Products and NetNet Ventures to maintain at least 80% of the
original amount of the Minimum Investment invested in Company Products at all
times during such period.
Section 5.18. Employee Incentive Plan. As soon as reasonably
------------------------
practicable following the Closing Date, Buyer shall cause the Company to
establish an employee incentive plan having terms set forth on Exhibit J.
Section 5.19. Information in Proxy Materials of the Funds; Filing
---------------------------------------------------
Documents.
----------
(a) Buyer and each of the Symphony Parties agree that the
information or data relating to such party and its Subsidiaries that was
provided by or on behalf of such party specifically for inclusion in the proxy
materials to be furnished to shareholders of the Funds for the purpose of
approving new Investment Company Advisory Agreements with the Company to take
effect immediately after the Closing will not contain, at the time the proxy
materials are first mailed to the shareholders of the Funds or at the times of
the meetings thereof, any untrue statement of a material fact, or omit to state
any material fact required to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(b) Buyer and each of the Symphony Parties agree that none of the
information regarding such party or any of its Affiliates supplied or to be
supplied by or on
-55-
behalf of such party specifically for inclusion in any documents to be filed
with any Governmental Authority in connection with the transactions contemplated
hereby will, at the respective times such documents are filed with any
Governmental Authority, contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading.
Section 5.20. Non-Competition/Non-Solicitation.
---------------------------------
(a) Parent understands that, in connection with the purchase of the
Membership Interests by Buyer, Buyer shall be entitled to protect and preserve
the going concern value of the business of the Company and its Subsidiaries to
the extent provided herein and that Buyer would not have entered into this
Agreement absent the provisions of this Section 5.20 and, therefore, agrees as
follows:
(i) from and after the Closing Date until the earlier of (i) 18
months from the Closing Date and (ii) the date on which SAMI is no longer
entitled to any Contingent Purchase Consideration with respect to periods
following such date, Parent shall not, and Parent shall not permit any of
its Subsidiaries, directly or indirectly, to offer or provide in the United
States of America or in any foreign jurisdiction in which the Company or its
Subsidiaries transacts business as of the Closing Date any long-only
strategy or market neutral strategy asset management products or services
that are substantially similar to those long-only strategy and market
neutral strategy products and services provided as of the Closing by the
Company or its Subsidiaries in the United States of America or such foreign
jurisdictions (the "Competing Products"); provided, however, that the terms
of this Section 5.20(a)(i) shall not apply to (A) any business engaged in or
operated by Parent or any of its Subsidiaries (other than SAMI, the Company
and its Subsidiaries) as of the date hereof to the extent operated
substantially consistent with past practice; (B) any business or assets that
are part of a larger acquisition of assets by Parent or its Subsidiaries,
provided that Competing Products give rise to less than 25% of the revenues
of such business or assets for the 12-month period immediately preceding the
closing of such acquisition; and (C) any business or assets that are part of
a larger acquisition of assets by Parent or its Subsidiaries pursuant to an
agreement entered into at least six months following the Closing Date even
if Competing Products give rise to 25% or more, but in no event greater than
50%, of the revenues of such business or assets for the 12-month period
immediately preceding the closing of such acquisition, provided, however,
that Parent shall elect by delivery of written notice to Buyer on or prior
to the closing date of such acquisition to either (i) divest itself of such
business or assets as promptly as practicable following such closing (and in
any event within nine months thereafter), in which case the obligations of
Buyer to make payments to SAMI pursuant to Exhibit R shall be suspended upon
the closing of such acquisition and no additional payments shall be made
thereunder (other than with respect to any payments owing in respect of
periods ending prior thereto), but all suspended amounts shall be paid to
SAMI by Buyer upon completion of such divestiture if such divestiture is
completed within such nine-month period but shall not otherwise be paid to
SAMI or (ii) agree that the obligations of Buyer to make payments to SAMI
pursuant to Exhibit R hereof shall be extinguished upon such acquisition
other than with respect to any payments owing in respect of periods ending
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prior to the closing of such acquisition, and in the case of subclauses (i)
and (ii) above, in no event shall there be any corresponding increase in
amounts due to Maestro under Exhibit R hereof; and
(ii) until the second anniversary of the Closing Date, Parent
shall not, and Parent shall not permit any of its Subsidiaries, directly or
indirectly, to solicit, encourage or induce any person employed as of the
date hereof or as of the Closing Date by the Company or any of its
Subsidiaries to leave the employment of the Company or any of its
Subsidiaries; provided that it shall not be a violation of this Section
5.2(a)(ii) to engage in general employment solicitation activities, such as
newspaper advertisements, that are not directed specifically at employees of
the Company or its Subsidiaries.
(b) Maestro and the Company Principals understand that in connection
with the purchase of the Membership Interests by Buyer, Buyer shall be entitled
to protect and preserve the going concern value of the business of the Company
and its Subsidiaries to the extent provided in Section 5 of the Employment
Agreements and that Buyer would not have entered into this Agreement absent
entering into such Employment Agreements containing such provisions.
(c) Notwithstanding any other provision of this Agreement, it is
understood and agreed that remedies at law would be inadequate in the case of
any breach of the covenants contained in this Section 5.20, and Buyer shall be
entitled to equitable relief in respect thereof, including the remedy of
specific performance, with respect to any breach of such covenants, without the
need to show any proof of damages.
(d) Notwithstanding any other provision of this Agreement to the
contrary, the terms of this Section 5.20 shall cease to apply to Parent and to
each of its Subsidiaries upon the sale of all or substantially all of the assets
of or equity interests in Parent to a Person that is not an Affiliate of Parent
or a merger or other business combination between Parent and a Person that is
not an Affiliate of Parent where the shareholders of Parent immediately prior to
the merger or business combination beneficially own less than 50% of the
surviving corporation immediately following such transaction if Parent so elects
and gives written notice to Buyer prior to consummation of such transaction of
such election; provided, however, that if such election is made, the obligations
of Buyer to make payments to SAMI pursuant to Exhibit R hereof shall be
extinguished upon such sale, merger or other business combination other than
with respect to any payments owing in respect of periods ending prior to the
consummation of such sale without any corresponding increase in amounts due to
Maestro. In the event of a sale of all or substantially all of the assets of or
equity interests in any Subsidiary of Parent to a Person that is not an
Affiliate of Parent, the terms of this Section 5.20 shall cease to apply to such
Subsidiary if Parent so elects and gives written notice to Buyer prior to
consummation of such transaction of such election; provided, however, that if
such election is made, any sale of all or substantially all of the assets or
equity interests of a Subsidiary of Parent that requires the prior approval of
Parent's shareholders shall be deemed to be a sale of all or substantially all
of the assets of or equity interests in Parent and the proviso to the first
sentence of this Section 5.20(d) shall apply to terminate the obligations of
Buyer to make payments pursuant to Exhibit R as set forth in this Section
5.20(d).
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Section 5.21. Use of Symphony Name. Parent, each of the Members and
---------------------
each of the Company Principals agree that from and after the Closing they shall
have no rights to the use of the "Symphony" name or ▇▇▇▇ or any formatives
thereof, and Parent, each of the Members and each of the Company Principals
shall take all actions as may be necessary to terminate within two Business Days
of the Closing the use of the "Symphony" name or ▇▇▇▇ or any formatives thereof
by Parent and its controlled Affiliates and each of the Members and their
controlled Affiliates, respectively.
Section 5.22. Delivery of Closing Client Revenue Run-Rate Schedule.
-----------------------------------------------------
(a) The Company will deliver to Buyer and the Members not later than
the third Business Day prior to the Closing Date, a true, complete and correct
schedule setting forth in reasonable detail the calculation of the Closing
Client Revenue Run-Rate. The Company and Buyer shall consult and cooperate with
respect to the Company's preparation of such schedule.
(b) If the Closing has not occurred prior to July 15, 2001, the
Members shall cause the Company to deliver to Buyer as promptly as practicable
(and in no event later than two Business Days prior to the Closing Date) the
unaudited consolidated balance sheet of the Company as of June 30, 2001 and the
related unaudited consolidated statements of income and cash flows for the three
months ended June 30, 2001.
Section 5.23. Permitted Distributions.
------------------------
(a) The Company may declare and make any cash distributions and, to
the extent set forth in Section 5.23 of the Company Disclosure Schedule, other
distributions payable to the Members provided that such distributions (i) are
paid prior to the date of the Adjustment Amount Balance Sheet, (ii) will not, in
the reasonable opinion of the Members in consultation with Buyer, result in the
total cash of the Company as of the Closing being less than the sum of (x)
$1,250,000 and (y) the aggregate amount of the intercompany payables owed by the
Company to Parent as of the Closing and (iii) will not, in the reasonable
opinion of the Members in consultation with Buyer, result in the Working Capital
Amount being less than the Required Working Capital Amount.
(b) Within five Business Days after the Closing, the Company shall
pay all outstanding intercompany payables owed by the Company to Parent or SAMI;
provided, however, that to the extent that the total cash of the Company as of
the Closing is less than the sum of (x) $1,250,000 and (y) the aggregate amount
of the intercompany payables owed by the Company to Parent or SAMI, the portion
of the outstanding intercompany payables equal to the difference between the
total cash of the Company as of the Closing and the sum of (x) $1,250,000 and
(y) the aggregate amount of the intercompany payables owed by the Company to
Parent or SAMI need not be paid within five Business Days after the Closing but
must instead be paid not later than the 60th day following the Closing.
Section 5.24. Lease Matters. The parties hereto hereby incorporate
--------------
by reference the terms and agreements set forth in Exhibit Q hereto as if set
forth herein.
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ARTICLE VI
CONDITIONS TO THE CONSUMMATION OF THE TRANSACTION
Section 6.1. Mutual Conditions. The obligations of each party to
------------------
this Agreement to consummate the Transaction shall be subject to the
satisfaction of each of the following conditions:
(i) No order, injunction or decree issued by any Governmental
Authority of competent jurisdiction or other legal restraint or prohibition
preventing the consummation of the Transaction shall be in effect. No
proceeding initiated by any Governmental Authority seeking an injunction to
restrain or prohibit the consummation of the Transaction shall be pending.
No statute, rule, regulation, order, injunction or decree shall have been
enacted, entered, promulgated or enforced by any Governmental Authority
which prohibits, restricts in any material manner or makes illegal
consummation of the Transaction;
(ii) All consents, waivers, authorizations and approvals required
from all Governmental Authorities to consummate the Transaction, without the
imposition of conditions or requirements, in the aggregate, the satisfaction
of which by Buyer or its Subsidiaries or the Company or its Subsidiaries are
reasonably likely to result in either a Buyer Material Adverse Effect or a
Company Material Adverse Effect shall have been obtained and shall remain in
full force and effect as of the Closing Date;
(iii) In respect of the notifications of the parties hereto
pursuant to the HSR Act, the applicable waiting period and any extensions
thereof shall have expired or terminated; and
(iv) The Closing Client Revenue Run-Rate shall not be less than
90% of the Base Client Revenue Run-Rate.
Section 6.2. Conditions to Buyer's Obligations. The obligations of
----------------------------------
Buyer to consummate the Transaction shall be subject to the satisfaction of each
of the following conditions, any of which may be waived in writing by Buyer:
(i) For purposes of this Section 6.2(i), the accuracy of the
representations and warranties of the Symphony Parties set forth in this
Agreement shall be assessed as of the date of this Agreement and shall be
assessed as of the Closing Date with the same effect as though all such
representations and warranties had been made again on and as of the Closing
Date (provided that the representations and warranties that speak as of a
specific date shall speak only as of such date). The representations and
warranties set forth in Sections 2.3(a), 2.5, 2.7, 3.1 and 3.3(a) shall be
true and correct. The representations and warranties of the Symphony Parties
(including the representations and warranties set forth in Sections 2.3(a),
2.5, 2.7, 3.1 and 3.3(a)) shall be true and correct except for such
inaccuracies which do not, and are not reasonably likely to, individually or
in the aggregate, result in a Company Material Adverse Effect; provided,
that for purposes of this
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sentence, those representations and warranties that are qualified by
references to "material," "Company Material Adverse Effect" or variations
thereof shall be deemed not to include such qualifications;
(ii) Each of the Symphony Parties, as applicable, shall have
performed and complied in all material respects with all agreements,
covenants, obligations and conditions required by this Agreement to be
performed or complied with by them at or prior to the Closing Date;
(iii) The Symphony Parties shall have delivered to Buyer a
certificate, dated as of the Closing Date, signed on behalf of the Company
by its Chief Executive Officer and Chief Operating Officer, signed on behalf
of Parent and each of the Members by an appropriate officer and signed by
each of the Company Principals confirming the satisfaction of the conditions
contained in Section 6.2(i) and (ii);
(iv) Each of the Parent Agreements and each of the Employment
Agreements shall be in full force and effect immediately upon the Closing
and Buyer shall not be aware of any basis that would reasonably be expected
to cause any of such agreements to cease to be in full force and effect;
(v) Buyer shall have received opinions dated the Closing Date of
Stroock & Stroock & ▇▇▇▇▇ LLP and Shartsis, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, counsel
to the Company, in the form attached hereto as Exhibit F;
(vi) Since March 31, 2001, there shall not have been any Company
Material Adverse Effect or any development or combination of developments,
that, individually or in the aggregate, has had or is reasonably likely to
have a Company Material Adverse Effect; and
(vii) Buyer shall have received Closing Releases from each of
Parent, the Company Principals and the Members.
Section 6.3. Conditions to the Obligations of the Symphony Parties.
------------------------------------------------------
The obligation of the Symphony Parties to consummate the Transaction shall be
subject to satisfaction of each of the following conditions, which may be waived
in writing by Parent and Maestro:
(i) For purposes of this Section 6.3(i), the accuracy of the
representations and warranties of Buyer set forth in this Agreement shall be
assessed as of the date of this Agreement and shall be assessed as of the
Closing Date with the same effect as though all such representations and
warranties had been made again on and as of the Closing Date (provided that
the representations and warranties that speak as of a specific date shall
speak only as of such date). The representations and warranties set forth in
Sections 4.2(a) and 4.8 shall be true and correct. The representations and
warranties of Buyer (including the representations and warranties set forth
in Sections 4.2(a) and 4.8) shall be true and correct except for such
inaccuracies which do not, and are not reasonably likely to, individually or
in the aggregate, result in a Buyer Material Adverse Effect; provided that
for
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purposes of this sentence, those representations and warranties that are
qualified by references to "material," "Buyer Material Adverse Effect" or
variations thereof shall be deemed not to include such qualifications;
(ii) Buyer shall have performed and complied in all material
respects with all agreements, covenants, obligations and conditions required
by this Agreement to be performed or complied with by it at or prior to the
Closing Date;
(iii) Buyer shall have delivered to the Symphony Parties a
certificate, dated as of the Closing Date, signed on behalf of Buyer by an
appropriate officer confirming the satisfaction of the conditions contained
in Section 6.3(i) and (ii); and
(iv) Since March 31, 2001, no event has occurred or circumstances
arisen that, individually or in the aggregate, has had or is reasonably
likely to have a Buyer Material Adverse Effect.
ARTICLE VII
TERMINATION
Section 7.1. Termination. (a) This Agreement may be terminated prior
-----------
to the Closing as follows:
(i) by written consent of Parent, Maestro and Buyer;
(ii) by Parent, Maestro or Buyer, if any order of any Governmental
Authority permanently restraining, enjoining or otherwise prohibiting the
consummation of the Transaction shall have become final and non-appealable;
provided that the party seeking to terminate this Agreement pursuant to this
Section 7.1(a)(ii) shall have used commercially reasonable efforts to
prevent the entry of and to remove such order;
(iii) by Buyer if any condition to the obligations of Buyer
hereunder becomes incapable of fulfillment through no fault of Buyer and is
not waived by Buyer;
(iv) by Parent or Maestro, if any condition to the obligations of
such party hereunder becomes incapable of fulfillment through no fault of
such party and is not waived by such party;
(v) by Parent or Maestro, if there shall be a breach by Buyer of
any representation or warranty, or any other covenant or agreement contained
in this Agreement which would result in a failure of a condition set forth
in Section 6.3 and which breach cannot be cured or has not been cured by the
earlier of (x) 20 Business Days after the giving of written notice to Buyer
of such breach and (y) the Termination Date;
(vi) by Buyer, if there shall be a breach by the any of the
Symphony Parties of any representation or warranty, or any other covenant or
agreement contained in
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this Agreement which would result in a failure of a condition set forth in
Section 6.2 and which breach cannot be cured or has not been cured by the
earlier of (x) 20 Business Days after the giving of written notice to the
applicable Symphony Party of such breach and (y) the Termination Date; or
(vii) by Parent, Maestro or Buyer, if the Closing does not occur
by the close of business on or prior to August 31, 2001 (the "Termination
Date"); provided that the Termination Date may be extended not more than 60
days by Buyer, Parent or Maestro by written notice to the other parties if
the Closing shall not have been consummated as a direct result of the
condition set forth in Section 6.1(ii) and (iii) failing to have been
satisfied and the extending party reasonably believes that the relevant
approvals will be obtained during such extension period; notwithstanding the
foregoing, a party who is or whose Affiliate is in material breach of any of
its obligations or representations, warranties, covenants or agreements
contained in this Agreement shall not have the right to terminate this
Agreement pursuant to this Section 7.1(a)(vii).
(b) The termination of this Agreement shall be effectuated by the
delivery by the party terminating this Agreement to each other party of a
written notice of such termination. If this Agreement so terminates, it shall
become null and void and have no further force or effect, except as provided in
Section 7.2.
Section 7.2. Survival after Termination. If this Agreement is
---------------------------
terminated in accordance with Section 7.1 hereof and the transactions
contemplated hereby are not consummated, this Agreement shall become void and of
no further force and effect, without any liability on the part of any party
hereto, except for the provisions of Sections 2.12, 3.4, 4.5, the first sentence
of Section 5.9(a) and Section 5.13 and this Article VII. Notwithstanding the
foregoing, nothing in this Section 7.2 shall relieve any party to this Agreement
of liability for a breach of any provision of this Agreement or any agreement
made as of the date hereof or subsequent thereto pursuant to this Agreement;
provided, however, that in the event this Agreement is terminated pursuant to
Section 7.1, the liability of a party for any non-willful breach of any of the
representations and warranties herein shall be limited to recovery of the
actual, documented out-of-pocket expenses incurred in connection herewith by the
party asserting such breach.
ARTICLE VIII
TAX MATTERS
Section 8.1. Tax Representations. Each of the Symphony Parties,
--------------------
jointly and severally, hereby represents and warrants to Buyer as of the date of
this Agreement and as of the Closing Date as set forth in the balance of this
Section 8.1: The Company, each of its Subsidiaries and each of the
Non-Registered Funds has, or an Affiliate or other representative of the Company
on its behalf has, (i) duly filed with the appropriate federal, state, local and
foreign taxing authorities all material Tax Returns required to be filed on or
before the Closing Date (taking into account any extension of time within which
to file) by or with respect to the Company, its Subsidiaries and the
Non-Registered Funds, and such Tax Returns are complete and accurate in all
material respects, and (ii) paid or made provision for all material Taxes due
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and required to be paid on or before the date of this Agreement or the Closing
Date, as the case may be, by the Company, its Subsidiaries or the Non-Registered
Funds regardless of whether shown as due on such filed Tax Returns. Except as
set forth in Schedule 8.1 of the Company Disclosure Schedule, (i) neither the
Company nor any of its Subsidiaries nor any of the Non-Registered Funds has
received any written notice of deficiency or assessment from any federal, state,
local or foreign taxing authority with respect to liabilities for Taxes of the
Company, any Subsidiary thereof or the Non-Registered Funds which have not been
paid or finally settled, except for any such deficiency or assessment disclosed
in Section 8.1 of the Company Disclosure Schedule and which is being contested
in good faith through appropriate proceedings; (ii) no audit of any Tax Return
concerning the Company, any of its Subsidiaries or the Non-Registered Funds is
pending, being conducted, or, to the Knowledge of the Symphony Parties,
threatened in writing to be instituted by a Tax authority; (iii) no extension of
the statute of limitations for the assessment of any Taxes has been granted by
the Company, any of its Subsidiaries or the Non-Registered Funds and is
currently in effect; (iv) neither the Company nor any of its Subsidiaries nor
any of the Non-Registered Funds is a party to any written or unwritten tax
sharing agreement or tax indemnity agreement (or other arrangement or practice
for the sharing of Taxes); (v) neither the Company nor any of its Subsidiaries
nor any of the Non-Registered Funds has any material liability for the Taxes of
any Person other than the Company, its Subsidiaries or the Non-Registered Funds;
(vi) for all taxable periods since its inception, the Company and each of its
Subsidiaries has been properly classified for Federal Income Tax purposes as a
partnership and not as an association or a publicly traded partnership within
the meaning of Section 7704(b) of the Code and the Treasury Regulations
thereunder, and each of the Non-Registered Funds has been properly classified as
a partnership and not as an association or publicly traded partnership treated
as a corporation under Section 7704(a) of the Code; (vii) there are no
outstanding powers of attorney enabling any party to represent the Company or
any Subsidiary or any Non-Registered Fund with respect to Tax matters; (viii)
the Company, its Subsidiaries and the Non-Registered Funds have duly withheld
and collected and paid over to the proper Governmental Authority (or are
properly holding for payment) with respect to all employees, all employee
income, social security and unemployment Taxes required to be withheld,
collected or held for payment for all taxable periods ending, and will duly
withhold, collect and pay to the proper Governmental Authority all such Taxes
that become due, on or before the Closing Date and (ix) neither the Company nor
any of its Subsidiaries nor any Non-Registered Fund has any tax basis in any
intangible asset with respect to which it is not entitled to amortization
deductions for federal, state or local Income Tax purposes. To the Knowledge of
the Symphony Parties, (i) each of the Funds has elected to be treated as a
regulated investment company under Subchapter M of the Code, and has qualified
as such for each taxable year (or portion thereof) since its inception until and
including the Closing Date; (ii) each of the Funds has timely filed all material
Tax Returns required to be filed by it and paid all material Taxes due and
required to be paid by such Fund (other than amounts being contested in good
faith by appropriate proceedings and reserved against on the applicable fund
financial statement as required by GAAP); (iii) adequate provision has been made
in the audited, published financial statements of each Fund for all Taxes in
respect of all periods ending on or before the date of such financial
statements; (iv) no deficiencies for any Taxes have been proposed, assessed or
asserted in writing by any Tax authority against any Fund; (v) no Tax Return of
any Fund is currently being audited by any Federal, state, local or foreign Tax
authority and there has been no waivers of statutes of limitations by any Fund;
(vi) each Fund has (A) met the requirements of Section 852(a) of the
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Code for each complete taxable year since its inception, (B) incurred a
deduction for dividends paid, as defined by Section 561 of the Code, sufficient
to reduce investment company taxable income, as defined by Section 852(b)(2) of
the Code, to a level sufficient to avoid Federal or state Income Tax liability
at the Fund level for each complete taxable year since its inception, and (C)
met the distribution requirements of Section 4982(b) of the Code to avoid the
imposition of tax provided for in Section 4982(a), with respect to each calendar
year ended since its formation; (vii) to the extent that any Fund earned a net
capital gain, as defined by Section 1222(11) of the Code, an equal or exceeding
amount of capital gain dividend, as defined by Section 852(b)(3)(C) of the Code,
was distributed, or in the alternative, undistributed capital gains were treated
by the Fund in accordance with Section 852(b)(3)(D), for the appropriate
complete taxable year since the Fund's inception; (viii) to the extent that any
Fund earned interest excludable from gross income under Section 103(a) of the
Code over amounts disallowed as deductions under Sections 265 and 171(a)(2) of
the Code, and intended to distribute such interest as tax-exempt income to its
shareholders, an equal amount of exempt-interest dividend, as defined by Section
852(b)(5) of the Code, was distributed for each appropriate complete taxable
year since its formation; and (ix) each Fund which is invested in by a separate
account of an insurance company is and has been managed in a way to ensure
compliance with the diversification rules of Section 817(h) of the Code, with
respect to each calendar year since its formation.
Section 8.2. Tax Treatment. The parties hereto shall treat the
--------------
transactions contemplated hereby in accordance with Revenue Ruling 99-6, 1999-1
C.B. 432 (Situation 2), unless Buyer assigns a portion of its rights and
obligations hereunder to a corporate Subsidiary of Buyer, in which case the
parties hereto shall treat the Transaction as a purchase and sale of partnership
interests for United States federal, state and local income Tax purposes. The
parties hereto acknowledge that the consummation of the transactions
contemplated hereby will cause a termination for federal Income Tax purposes
under Section 708(b) of the Code of the Company and each of its Subsidiaries and
a corresponding closing of the taxable year of each such entity on the date of
such termination.
Section 8.3. Tax Covenants.
--------------
(a) Except as otherwise provided in Section 8.2 or 8.3(b), Buyer
shall prepare (or cause to be prepared) and file in accordance with all
Applicable Laws all Tax Returns of the Company, its Subsidiaries and the
Non-Registered Funds which are required to be filed after the Closing Date and
which are for a Straddle Period or a Post-Closing Period. As of the time of
filing, such Tax Returns will correctly reflect in all material respects the
facts regarding the income, business, assets, operations, activities and status
of the Company and any other information required to be shown therein. At least
30 days (taking into account any available validly obtained extension) prior to
the due date for filing each of such Tax Returns with respect to any Straddle
Period, Buyer shall furnish the Members with a copy of such draft Tax Return. If
the parties cannot reach an agreement with respect to any such furnished Tax
Return within 20 days of the due date for filing such Tax Return, the
disagreement shall be referred (within a reasonable time, taking into account
the deadline for filing such Tax Return) to the Independent Accounting Firm for
the resolution. The resolution of the Independent Accounting Firm shall be final
and binding on both parties without any further adjustment. The draft Tax Return
shall be revised to reflect the resolution of the Independent Accounting Firm,
and, once revised, shall be
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final and binding on both parties without any further adjustment, unless
subsequently adjusted by the appropriate taxing authority. The costs, expenses
and fees of the Independent Accounting Firm shall be borne equally by the
Members and Buyer. Once such Straddle Period Tax Return is final, Buyer shall
(or shall cause the Company to) timely file such Tax Returns with the
appropriate taxing authority. Buyer shall pay or cause to be paid to the
appropriate Tax authority any Taxes due in accordance with any Tax Return if
filed pursuant to this Section 8.3(a), and the Members shall pay to Buyer their
share of such Taxes (determined pursuant to Section 8.5) at least five Business
Days prior to the filing of such Tax Return. If Buyer files an IRS Form 1065 for
the Company or any of its Subsidiaries for the taxable year beginning the day
after the Closing Date, Buyer shall cause an election under Section 754 of the
Code to be filed with each such IRS Form 1065.
(b) The Symphony Parties shall prepare, or cause to be prepared, in
consultation with the Buyer, all Tax Returns of the Company and its Subsidiaries
which are required or permitted to be filed with respect to the short taxable
years ended on the Closing Date and all other Tax Returns of the Company, its
Subsidiaries and the Non-Registered Funds which are required to be filed with
respect to any taxable year ended prior to the Closing Date in a manner
consistent with past practices of the Company. Prior to the Closing, the Members
and Buyer shall jointly prepare, and the Members shall sign, an election under
Section 754 of the Code with respect to the Company and each of its Subsidiaries
for the taxable year of the Company and each of its Subsidiaries that includes
the Closing Date. The Members shall cause such elections to be filed with the
IRS Forms 1065 for the Company and its Subsidiaries for the short taxable year
ending on the Closing Date and shall not seek to revoke such election.
(c) Buyer and the Symphony Parties agree to cause the Company, its
Subsidiaries and the Non-Registered Funds to file all Tax Returns for the period
including the Closing Date on the basis that the relevant taxable period ended
as of the close of business on the Closing Date, unless the relevant taxing
authority will not accept a Tax Return filed on that basis.
Section 8.4. Tax Refunds; Amendment of Returns. Any refund or credit
----------------------------------
received by Buyer, the Company or any of its Subsidiaries with respect to Taxes
of the Company, any of its Subsidiaries or any of the Non-Registered Funds for a
Pre-Closing Period not taken into account in the Adjustment Amount shall be
allocated to the Members, and shall promptly be paid to the Members. Neither
Buyer nor the Company nor any of its Subsidiaries nor any of the Non-Registered
Funds shall (i) amend or cause the amendment of any Tax Return of the Company,
any of its Subsidiaries or any of the Non-Registered Funds with respect to any
Pre-Closing Period or (ii) agree to an extension of the statute of limitations
applicable to such Tax Return, in either case without prior written consent of
the Members, which consent shall not be unreasonably withheld.
Section 8.5. Tax Indemnification.
--------------------
(a) Subject to Section 9.4(c), Parent, the Members and the Company
Principals shall be jointly and severally liable for, and shall indemnify Buyer
and its Affiliates (including after the Closing the Company, its Subsidiaries
and the Non-Registered Funds) and each of their respective officers, directors,
employees, stockholders, agents and representatives and hold them harmless from,
their respective Allocable Share of (i) all liability for Taxes of the
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Company, its Subsidiaries and the Non-Registered Funds for the Pre-Closing
Period (including all liability for Taxes of other Persons as a result of
Treasury Regulation ss.1.1502-6(a) or comparable provisions under state, local
or foreign law) which are not taken into account in the Adjustment Amount (other
than Taxes resulting from an action taken by Buyer, the Company, any Subsidiary
of Buyer or any Non-Registered Fund on the Closing Date but after the Closing
that is outside of the ordinary course of business), (ii) any Losses resulting
from any breach of any representation or warranty of the Symphony Parties in
Section 8.1 (without giving effect to any qualifications relating to
materiality), (iii) any Losses resulting from any breach of any covenant of the
Symphony Parties relating to Taxes contained in this Agreement and (iv) all
liability for reasonable legal fees and expenses attributable to any item in
clause (i), (ii) or (iii) above. Notwithstanding anything to the contrary
contained herein, it is understood and agreed that in no event shall Parent and
SAMI, on the one hand, or Maestro and the Company Principals, on the other hand,
be liable for the other's Allocable Share of any such Losses.
(b) Buyer shall, and shall cause the Company and its Subsidiaries
to, indemnify Parent, the Members, their respective Subsidiaries and each of
their respective officers, directors, employees, stockholders, agents and
representatives and hold them harmless from (i) all liability for Taxes of the
Company, its Subsidiaries and the Non-Registered Funds for any Post-Closing
Period (and for Taxes resulting from an action taken by Buyer, the Company, any
of their Subsidiaries or any Non-Registered Fund on the Closing Date but after
the Closing that is outside of the ordinary course of business), (ii) any Losses
resulting from any breach of any covenant of Buyer relating to Taxes contained
in this Agreement and (iii) all liability for reasonable legal fees and expenses
attributable to any item in clause (i) or (ii) above.
(c) In the case of any taxable period that includes (but does not
end on) the Closing Date (a "Straddle Period"):
(i) real, personal and intangible property Taxes of the Company,
its Subsidiaries and the Non-Registered Funds for the Pre-Closing Period
included in the Straddle Period shall be equal to the amount of such
property Taxes for the entire Straddle Period multiplied by a fraction, the
numerator of which is the number of days during the Straddle Period that are
in a Pre-Closing Period and the denominator of which is the number of days
in the Straddle Period; and
(ii) the Taxes of the Company, its Subsidiaries and the
Non-Registered Funds (other than real, personal and intangible property
Taxes) for the Pre-Closing Period included in the Straddle Period shall be
computed as if such taxable period (and the taxable period of any entity
taxable as a partnership in which the Company, any of its Subsidiaries or
any of the Non-Registered Funds directly or indirectly owns an ownership
interest) ended as of the close of business on the Closing Date.
(d) The obligation to indemnify and hold harmless a party pursuant
to this Section 8.5 shall terminate at the time the applicable statute of
limitations with respect to the Tax liabilities in question expires (giving
effect to any extensions thereof); provided, however, that such obligation shall
not terminate with respect to any item as to which the Person to be indemnified
or the related party thereto shall have, before the expiration of the applicable
period, previously made a claim by delivering a notice of such claim to the
indemnifying party.
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(e) The principles of Section 9.4(a) shall apply to any indemnity payment under
this Section 8.5.
Section 8.6. Assistance and Cooperation. From and after the Closing
--------------------------
Date, the Symphony Parties and Buyer shall:
(i) assist in all reasonable respects (and use commercially
reasonably efforts to cause their respective Subsidiaries to assist) the
other party in preparing any Tax Returns of the Company which such other
party is responsible for preparing and filing;
(ii) cooperate in all reasonable respects in preparing for any
audits of, or disputes with Tax authorities regarding, any Tax Returns of
the Company, any of its Subsidiaries, any of the Non-Registered Funds or any
Affiliate of the Company;
(iii) make available to the other parties and to any Tax
authority, in each case as reasonably requested by such other parties, all
information, records, and documents relating to Taxes of the Company and/or
any of its Subsidiaries and/or any of the Non-Registered Funds;
(iv) provide timely notice to the other parties in writing of any
pending or threatened tax audits or assessments of the Company and/or any of
its Subsidiaries and/or any of the Non-Registered Funds for taxable periods
for which those other parties may have a liability under Article VIII; and
(v) furnish the other parties with copies of all correspondence
received from any Taxing authority in connection with any tax audit or
information request with respect to the Company and/or any of its
Subsidiaries and/or any of the Non-Registered Funds with respect to any
taxable period described in Section 8.6(d)(iv).
Section 8.7. Contests and Payment Procedures.
--------------------------------
(a) Notwithstanding anything to the contrary in the Agreement, the
Members shall, in consultation with Buyer, control, manage and be responsible
for any audit, contest, claim, proceeding or inquiry with respect to Taxes for
any taxable period ending on or before the Closing Date and shall have the
right, in consultation with Buyer, to settle or contest any such audit, contest,
claim, proceeding or inquiry; provided, however, that if any such settlement
would materially and adversely impact a Tax Return or Tax position of any of the
Company, Buyer or their Affiliates with respect to a Post-Closing Period, the
Buyer and the Members shall mutually agree on the terms of such settlement.
(b) Buyer shall, in consultation with the Members, control, manage
and be responsible for any audit, contest, claim, proceeding or inquiry with
respect to Taxes for any Straddle Period and shall have the right, in
consultation with the Members, to settle or contest any such audit, contest,
claim, proceeding or inquiry; provided, however, that the Buyer and the Members
shall mutually agree on the terms of any such settlement.
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(c) Buyer shall control, manage and solely be responsible for any
audit, contest, claim, proceeding or inquiry with respect to any item relating
to Taxes not covered by Section 8.7(a) or 8.7(b).
Section 8.8. FIRPTA Certificate. Each Member shall deliver to Buyer
-------------------
at the Closing a certification of non-foreign status meeting the requirements of
Treasury Regulation 1.1445-2(b)(2), duly executed and acknowledged,
substantially in the form of the sample certificate set forth in Treasury
Regulation Section 1.1445-2(b)(2)(iii)(B).
Section 8.9. Allocation of Purchase Consideration. Parent, the
-------------------------------------
Members and Buyer shall agree prior to the Closing Date to an allocation of the
Initial Purchase Consideration and the Contingent Purchase Consideration among
the assets of the Company. For purposes of the allocation to be agreed upon
pursuant to this Section 8.9, other than amounts allocable to assets reflected
on the Adjustment Amount Balance Sheet, the Initial Purchase Consideration and
the Contingent Purchase Consideration will be allocated entirely to goodwill,
except to the extent of any value allocated to contracts and other arrangements
under which the Asset-Based Fees, Performance Fees and any other management or
advisory fees or allocations or similar amounts are earned (it being
acknowledged and agreed by the parties hereto that, due to the terminable nature
of such contracts and other arrangements, no more than a minimal portion of the
Initial Purchase Consideration (which for purposes of this Section 8.9 shall
include the payments contemplated by clauses (i) and (ii) of the definition of
Initial Purchase Consideration to the extent payable under this Agreement) and
the Contingent Purchase Consideration shall be allocated to such contracts and
arrangements for Federal, state and local Income Tax purposes). None of the
Symphony Parties nor Buyer (nor any of their respective Affiliates) shall take
any position on any Tax Return or with any taxing authority that is inconsistent
with the allocation as agreed upon pursuant to this Section 8.9.
ARTICLE IX
INDEMNIFICATION
Section 9.1. Indemnification by Parent, the Members and the Company
------------------------------------------------------
Principals.
-----------
(a) From and after the Closing, Parent, the Members and the Company
Principals shall be jointly and severally liable for, and shall indemnify Buyer
and its Subsidiaries and each of their respective officers, directors,
employees, stockholders, agents and representatives (the "Buyer Indemnitees"),
against and hold them harmless from, their respective Allocable Share of, any
Losses suffered or incurred by any such Buyer Indemnitee (other than any Loss
relating to Taxes, for which the indemnification provisions set forth in Section
8.5 shall govern) arising from, relating to or otherwise in respect of (i) any
inaccuracy or breach of any representation or warranty made by any of the
Symphony Parties in or pursuant to Article II of this Agreement (it being agreed
that solely for purposes of establishing whether any matter is indemnifiable
pursuant to this clause (i), the accuracy of the representations and warranties
made by the Symphony Parties shall be determined without giving effect to any
qualifications relating to materiality (including Company Material Adverse
Effect)), (ii) any breach, noncompliance or nonfulfillment by the Company or any
of its Subsidiaries of any covenant, agreement or undertaking to be complied
with or performed by them pursuant to this Agreement on or prior to
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the Closing Date, and (iii) any claims by any person other than the parties
hereto to any portion of the consideration provided for hereunder or to any
other amounts based thereon, including under the EAP or otherwise.
Notwithstanding anything to the contrary contained herein, it is understood and
agreed that in no event shall Parent and SAMI, on the one hand, or Maestro and
the Company Principals, on the other hand, be liable for the other's Allocable
Share of any Losses. "Allocable Share" shall mean, as to each of the Parent, the
Members and the Company Principals, the percentage set forth opposite their
respective names on Exhibit I hereto.
(b) Parent, the Members and the Company Principals shall not be
required to indemnify any Buyer Indemnitee, and shall not have any liability
under Section 9.1(a)(i), unless the aggregate of all Losses for which Parent,
the Members and the Company Principals would, but for this Section 9.1(b), be
liable thereunder exceeds on a cumulative basis an amount equal to the Members
Indemnity Threshold and then only to the extent of any such excess.
Section 9.2. Additional Indemnification by Parent, the Members and
-----------------------------------------------------
the Company Principals. From and after the Closing, each of Parent, the Members
-----------------------
and the Company Principals shall be severally, and not jointly, liable for, and
shall indemnify the Buyer Indemnitees against and hold them harmless from, any
Losses suffered or incurred by any such Buyer Indemnitee (other than any Loss
relating to Taxes, for which the indemnification provisions set forth in Section
8.5 shall govern) arising from, relating to or otherwise in respect of any
inaccuracy or breach of any representation or warranty made by such party in or
pursuant to Article III of this Agreement (it being agreed that solely for
purposes of establishing whether any matter is indemnifiable pursuant to this
Section 9.2, the accuracy of the representations and warranties made by the
Symphony Parties shall be determined without giving effect to any qualifications
relating to materiality (including Company Material Adverse Effect)) or any
covenant, agreement or undertaking to be complied with or performed by such
party pursuant to this Agreement.
Section 9.3. Indemnification by Buyer.
-------------------------
(a) From and after the Closing, Buyer shall indemnify Parent, the
Members, their respective Subsidiaries and each of their respective officers,
directors, employees, stockholders, agents and representatives (the "Symphony
Indemnitees"), against and hold them harmless from any Losses suffered or
incurred by such Symphony Indemnitee (other than any Loss relating to Taxes, for
which the indemnification provisions set forth in Section 8.5 shall govern) to
the extent arising from, relating to or otherwise in respect of (i) any
inaccuracy or breach of any representation or warranty made by Buyer pursuant to
this Agreement (it being agreed that solely for purposes of establishing whether
any matter is indemnifiable pursuant to this clause (i), the accuracy of the
representations and warranties made by Buyer shall be determined without giving
effect to any qualifications relating to materiality (including Company Material
Adverse Effect)) or (ii) any breach, noncompliance or nonfulfillment by Buyer of
any covenant, agreement or undertaking to be complied with or performed by it
pursuant to this Agreement.
(b) Buyer shall not be required to indemnify any Symphony
Indemnitee, and shall not have any liability under Section 9.3(a)(i), unless the
aggregate of all Losses for which
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Buyer would, but for this Section 9.3(b), be liable thereunder exceeds on a
cumulative basis an amount equal to the Buyer Indemnity Threshold and then only
to the extent of any such excess.
Section 9.4. Calculation and Payment of Losses.
------------------------------------
(a) The amount of any Loss for which indemnification is provided
under this Article IX or Section 8.5 shall be net of any amounts actually
recovered by the Indemnified Party under insurance policies with respect to such
Loss and shall be (i) increased to take account of any net Tax cost (other than
a reduction in Tax basis) incurred by the Indemnified Party arising from the
receipt of indemnity payments hereunder (grossed up for such increase) and (ii)
reduced to take account of any net Tax Benefit realized by the Indemnified Party
arising from the incurrence or payment of any such Loss, in each case when and
as such Tax cost or Tax Benefit is actually realized through an increase or
reduction of Taxes otherwise due. Any indemnity payment under this Agreement
shall be treated first as an adjustment to the Initial Purchase Consideration
and then as an adjustment to the Contingent Purchase Consideration for United
States federal income Tax purposes, unless a final determination (which shall
include the execution of an IRS Form 870-AD or successor form) with respect to
either the Indemnified Party or any of its Affiliates causes any such payment
not to be treated as an adjustment to the Initial Purchase Consideration or the
Contingent Purchase Consideration for United States Federal income Tax purposes.
(b) Buyer shall be entitled to deduct from any amounts otherwise
payable to any Member pursuant to this Agreement the amount with respect to
which any Buyer Indemnitee is entitled to indemnity under this Article IX or
under Article VIII from such Member, and such deducted amounts shall be deemed
paid to such Member for all purposes hereunder; provided, however, that Buyer
shall be permitted to make such deduction only to the extent that (i) the
parties have agreed in writing, (ii) an award was rendered pursuant to Section
9.8 or (iii) a final and non-appealable judgment was entered by a court of
competent jurisdiction.
(c) The aggregate indemnification obligations of Parent and SAMI
pursuant to this Article IX and Section 8.5, collectively, shall not exceed the
Parent Indemnity Cap, and the aggregate indemnification obligations of Maestro
and the Company Principals pursuant to this Article IX and Section 8.5,
collectively, shall not exceed the Maestro Indemnity Cap; provided, that such
limitation shall not apply to the extent that a Loss results directly from (i)
common law fraud, (ii) any Income Tax liability of any of the Symphony Parties
relating to the Pre-Closing Period or (iii) a claim described in Section
9.1(a)(iii) (each of (i), (ii) and (iii), a "Buyer Indemnitee Limitation
Exception").
(d) The indemnification obligations of Buyer pursuant to Section 9.3
shall not exceed the Buyer Indemnity Cap; provided that such limitation shall
not apply to the extent that a Loss results directly from (i) common law fraud,
(ii) any Income Tax liability of any of the Company, its Subsidiaries and the
Non-Registered Funds for the Post-Closing Period or (iii) a breach of Buyer's
payment obligations under Sections 1.3 through 1.8 of this Agreement (each of
(i), (ii) and (iii), a "Symphony Party Indemnitee Limitation Exception").
(e) On or prior to the Closing, Buyer, the Company and each of the
Company Principals shall execute and deliver a pledge agreement in the form
attached as Exhibit N and
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each of the Company Principals shall take all other actions reasonably requested
by Buyer to pledge as of the Closing their respective Minimum Investments as
security for their respective obligations under Article VIII and this Article
IX.
Section 9.5. Termination of Indemnification. The obligations to
-------------------------------
indemnify and hold harmless any Person pursuant to Sections 9.1(a), 9.2 and
9.3(a) shall terminate when the applicable representation or warranty or
covenant terminates pursuant to Section 10.3; provided that such obligations to
indemnify and hold harmless shall not terminate with respect to any item as to
which the Person to be indemnified shall have, before the expiration of the
applicable period, previously made a bona fide claim by delivering a notice of
such claim pursuant to Section 9.6 to the indemnifying party; provided, further,
that in the event of a Buyer Indemnitee Limitation Exception or a Symphony Party
Indemnitee Limitation Exception, the obligation to indemnify shall continue
until the expiration of the applicable statute of limitations.
Section 9.6. Procedures.
-----------
(a) Third Party Claims. In order for a Person (the "Indemnified
------------------
Party") to be entitled to any indemnification provided for under Section 9.1,
9.2 or 9.3 in respect of, arising out of or involving a claim made by any Person
against the Indemnified Party (a "Third Party Claim"), such Indemnified Party
must notify the indemnifying party in writing of the Third Party Claim promptly
following receipt by such Indemnified Party of written notice of the Third Party
Claim; provided, however, that failure to give such notification shall not
affect the indemnification provided hereunder except to the extent the
indemnifying party shall have been actually prejudiced as a result of such
failure. Thereafter, the Indemnified Party shall deliver to the indemnifying
party, as promptly as practicable following the Indemnified Party's receipt
thereof, copies of all notices and documents (including court papers) received
by the Indemnified Party relating to the Third Party Claim that are not
separately addressed to the indemnifying party.
(b) Assumption. If a Third Party Claim is made against an
----------
Indemnified Party, the indemnifying party shall be entitled to participate in
the defense thereof and, if it so chooses, to assume the defense thereof with
counsel selected by the indemnifying party; provided, however, that such counsel
is not reasonably objected to by the Indemnified Party. Should the indemnifying
party so elect to assume the defense of a Third Party Claim, the indemnifying
party shall not be liable to the Indemnified Party for any reasonable legal
expenses subsequently incurred by the Indemnified Party in connection with the
defense thereof. If the indemnifying party assumes such defense, the Indemnified
Party shall have the right to participate in the defense thereof and to employ
counsel, at its own expense, separate from the counsel employed by the
indemnifying party, it being understood that the indemnifying party shall
control such defense; provided that the indemnifying party shall bear the
reasonable fees and expenses of such separate counsel (i) if the parties to any
such action or proceeding (including impleaded parties) include any of the
Symphony Parties (other than the Company) and representation of both parties
would, in the reasonable opinion of counsel for the Indemnified Party, be
inappropriate due to a conflict of interest or (ii) if the indemnifying party
shall not have employed counsel (other than counsel that is reasonably objected
to by the Indemnified Party) within a reasonable time after the Indemnified
Party has given notice of the institution of a Third Party Claim in compliance
with Section 9.6(a). The indemnifying party shall be liable for the reasonable
fees and expenses
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of counsel employed by the Indemnified Party for any period during which the
indemnifying party has not assumed the defense thereof, provided that such
counsel is not reasonably objected to by the indemnifying party. If the
indemnifying party chooses to defend or prosecute a Third Party Claim, all the
Indemnified Parties shall cooperate in the defense or prosecution thereof. Such
cooperation shall include the retention and (upon the indemnifying party's
request) the provision to the indemnifying party of records and information that
are reasonably relevant to such Third Party Claim, and making employees
available on a mutually convenient basis to provide additional information and
explanation of any material provided hereunder. If the indemnifying party
assumes the defense of a Third Party Claim, the Indemnified Party shall not
admit any liability with respect to, or settle, compromise or discharge, such
Third Party Claim without the indemnifying party's prior written consent (which
consent shall not be unreasonably withheld). If the indemnifying party assumes
the defense of a Third Party Claim, the Indemnified Party shall agree to any
settlement, compromise or discharge of a Third Party Claim that the indemnifying
party may recommend and that by its terms obligates the indemnifying party to
pay the full amount of the liability in connection with such Third Party Claim,
which releases the Indemnified Party completely in connection with such Third
Party Claim and that would not otherwise materially adversely affect the
Indemnified Party.
(c) Other Claims. In the event any Indemnified Party should have a
------------
claim against any indemnifying party under Section 9.1, 9.2 or 9.3 that does not
involve a Third Party Claim being asserted against or sought to be collected
from such Indemnified Party, the Indemnified Party shall deliver notice of such
claim with reasonable promptness to the indemnifying party. Subject to Sections
9.5 and 10.3, the failure by any Indemnified Party so to notify the indemnifying
party shall not relieve the indemnifying party from any liability that it may
have to such Indemnified Party under Section 9.1, 9.2 or 9.3, except to the
extent that the indemnifying party shall have been actually prejudiced by such
failure.
Section 9.7. Exclusive Remedy. The parties hereto hereby acknowledge
-----------------
and agree that, from and after the Closing except in the case of common law
fraud or with respect to matters for which the remedy of specific performance,
injunctive relief or other non-monetary equitable remedies (other than
declaratory judgment actions) are available, the sole and exclusive remedy of
the parties hereto with respect to any and all monetary claims arising from any
breach of any representation or warranty set forth herein (other than in Section
8.1) shall be pursuant to the indemnification provisions set forth in this
Article IX, and the sole and exclusive remedy of the parties hereto with respect
to any and all monetary claims with respect to any breach of any representation
or warranty set forth in Section 8.1, any breach of any covenant relating to
Taxes contained in this Agreement, or any Taxes shall be pursuant to the
indemnification provisions of Section 8.5.
Section 9.8. Binding Arbitration.
--------------------
(a) Buyer and each of the Symphony Parties hereby waives its right
to resolve any and all claims, disputes, controversies or disagreements arising
under this Article IX or Section 8.5 hereof with respect to Losses ("Claims")
through any court proceeding or litigation (subject only to the right of the
Person seeking indemnification under this Article IX or Section 8.5 hereof to
elect to bring Claims in any court of competent jurisdiction, including Claims
for incidental, special or consequential damages and Claims for specific
performance or injunctive
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relief or for common law fraud, other than any Claims the underlying subject
matter of which previously or at such time are the subject of arbitration
hereunder) and acknowledge that all Claims shall be resolved pursuant to the
provisions of this Section 9.8. Each of the parties hereto represents to the
others that this waiver is required to be made, is made knowingly and
voluntarily after consultation with and upon the advice of counsel and is a
material part of this Agreement.
(b) Buyer or any of the Symphony Parties may demand in writing (a
"Demand") that the parties meet to resolve any Claim, and such meeting shall
take place at such time and such place as the parties shall agree, but in no
event later than 30 days after receipt of a Demand. If any Claim is not resolved
within 45 days of the receipt of a Demand, the party making such Demand may
initiate arbitration pursuant to this Section 9.8. Such arbitration shall be
mandatory and binding. Except as otherwise provided in this Section 9.8, the
arbitration shall be pursuant to the Commercial Arbitration Rules of the
American Arbitration Association then in effect, as modified herein (the
"Rules").
(c) All Claims shall be resolved by a panel of three arbitrators
(the "Arbitration Panel") of whom Buyers shall appoint one and the Symphony
Parties (other than the Company) shall appoint one within 15 days of the receipt
by the respondent(s) of the demand for arbitration. The two arbitrators so
appointed shall select the chair of the arbitral tribunal within 15 days of the
appointment of the second arbitrator. If any arbitrator is not appointed within
the time limits provided herein, such arbitrator shall be appointed by the
American Arbitration Association by using a list striking and ranking procedure
in accordance with the Rules. Any arbitrator appointed by the American
Arbitration Association shall be a retired judge or a practicing attorney with
no less than 15 years of experience and an experienced arbitrator.
(d) The arbitration hearing shall be held and the award shall be
rendered in New York City or such other location as the parties may mutually
agree. Unless otherwise agreed by the parties, partial or full summary judgment
shall not be available. In the event summary judgment or partial summary
judgment is available as provided herein and is granted, the non-prevailing
party may not raise as a basis for a motion to vacate an award that the
Arbitration Panel failed or refused to consider evidence bearing on the
dismissed claim(s) or issue(s). The party bringing a particular claim or
asserting an affirmative defense will have the burden of proof with respect
thereto. The arbitration proceedings and all testimony, filings, documents and
information relating to or presented during the arbitration proceedings shall be
deemed to be information subject to the confidentiality provisions of this
Agreement and the Confidentiality Agreements. The arbitrators shall follow the
law designated by the parties hereto. The Arbitration Panel will have no power
or authority, under the Rules or otherwise, to relieve the parties from their
agreement hereunder to arbitrate or otherwise to amend or disregard any
provision of this Agreement, including, without limitation, the provisions of
this Section 9.8. The arbitral tribunal is not empowered to award incidental,
special or consequential damages. Notwithstanding anything to the contrary in
this Agreement, nothing in this Agreement shall create an inference that
incidental, special or consequential damages are or are not appropriate with
respect to any Claim that is brought in any forum other than the arbitral
tribunal provided for by this Section 9.8.
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(e) Should an arbitrator refuse or be unable to proceed with
arbitration proceedings as called for by this Section 9.8, the arbitrator shall
be replaced pursuant to the Rules. If an arbitrator is replaced after the
arbitration hearing has commenced, then a rehearing shall take place in
accordance with this Section 9.8 and the Rules.
(f) At the time of granting or denying a motion of summary judgment
as provided for in Section 9.8(d) and within 30 days after the closing of the
arbitration hearing, the Arbitration Panel will prepare and distribute to the
parties a writing setting forth the Arbitration Panel's finding of facts and
conclusions of law relating to the Claim, including the reasons for the giving
or denial of any award. The findings of fact and conclusions of law and the
award, if any, shall be deemed to be information subject to the confidentiality
provisions of this Agreement and the Confidentiality Agreements.
(g) The Arbitration Panel is instructed to schedule promptly all
discovery and other procedural steps and otherwise to assume case management
initiative and control to effect an efficient and expeditious resolution of the
Claim. The Arbitration Panel is authorized to issue monetary sanctions against
either party if, upon an evidentiary showing such party is found to be
unreasonably delaying the proceeding.
(h) Any award rendered by the Arbitration Panel will be final,
conclusive and binding upon the parties and any judgment thereon may be entered
and enforced in any court of competent jurisdiction.
(i) The prevailing party in any proceeding hereunder shall be
entitled, in addition to any other relief to which it may be entitled, to
recover from the other party or parties reasonable fees, costs and expenses of
such prevailing party's attorneys, experts and witnesses incurred in connection
with such proceedings and the other party or parties shall bear the costs and
expenses of the Arbitration Panel.
ARTICLE X
MISCELLANEOUS
Section 10.1. Amendments; Waiver. This Agreement may not be amended,
-------------------
altered or modified except by written instrument executed by Buyer, Parent, SAMI
and Maestro. Any agreement on the part of Buyer, Parent, SAMI and Maestro to
waive (i) any inaccuracies in the representations and warranties contained
herein by any of the Symphony Parties, on the one hand, or Buyer, on the other
hand, or in any document, certificate or writing delivered pursuant hereto by
any of the Symphony Parties, on the one hand, or Buyer, on the other hand, or
(ii) compliance with any of the agreements, covenants or conditions contained
herein, shall be valid only if set forth in an instrument in writing signed on
behalf of the party against whom the waiver is to be effective. No such waiver
shall constitute a waiver of, or estoppel with respect to, any subsequent or
other inaccuracy, breach or failure to strictly comply with the provisions of
this Agreement.
Section 10.2. Entire Agreement. This Agreement (including the
-----------------
Company Disclosure Schedule, the Buyer Disclosure Schedule, any other schedules,
certificates, lists and documents referred to herein, and any documents executed
by the parties simultaneously
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herewith or pursuant thereto) and the Confidentiality Agreements constitute the
entire agreement of the parties hereto, except as provided herein, and
supersedes all prior agreements and understandings, written and oral, among the
parties with respect to the subject matter hereof.
Section 10.3. Survival of Representations, Warranties and Covenants.
------------------------------------------------------
All representations and warranties in this Agreement, including any covenants
made a part of this Agreement, or in any instrument executed and delivered in
fulfillment of the requirements of this Agreement and any covenants or other
agreements the performance of which is specified to occur on or prior to the
Closing Date or the Closing shall survive the Closing for 18 months following
the Closing Date; except that the representations and warranties in Sections
2.5, 3.1, 3.5 and 8.1 shall not terminate, but shall continue until the
expiration of the statute of limitations relating thereto. All covenants or
other agreements which by their terms are required to be performed after the
Closing, and the releases set forth in the Closing Releases, shall survive the
Closing indefinitely or for such lesser period of time as may be specified
herein.
Section 10.4. Interpretation.
---------------
(a) When a reference is made in this Agreement to Sections or
Schedules, such reference shall be to a Section of or Schedule to this Agreement
unless otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation." The phrases "the date of this
Agreement," "the date hereof" and terms of similar import, unless the context
otherwise requires, shall be deemed to refer to the date set forth in the first
paragraph of this Agreement.
(b) Each of the Company Disclosure Schedule and the Buyer Disclosure
Schedule shall set forth items the disclosure of which is necessary or
appropriate either in response to an express disclosure requirement contained in
a provision hereof or as an exception to one or more of such party's
representations or warranties or one or more of its covenants contained in
Article V, in each case making reference to the particular section of this
Agreement requiring such disclosure or to which such exception is being taken.
The inclusion of any information in any section of the Company Disclosure
Schedule and the Buyer Disclosure Schedule or other document delivered by any of
the parties hereto pursuant to this Agreement shall not be deemed to be an
admission or evidence of the materiality of such item, nor shall it establish a
standard of materiality for any purpose whatsoever.
Section 10.5. Severability. Any term or provision of this Agreement
-------------
which is invalid or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or affecting the validity or enforceability of
any of the terms or provisions of this Agreement in any other jurisdiction. If
any provision of this Agreement is so broad as to be unenforceable, the
provision shall be interpreted to be only so broad as is enforceable.
Section 10.6. Notices. Unless otherwise provided herein, all notices
--------
and other communications hereunder shall be in writing and shall be deemed given
if (a) delivered in
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person, (b) transmitted by telecopy (with written confirmation), (c) mailed by
certified or registered mail (return receipt requested) (in which case such
notice shall be deemed given on the third day after such mailing) or (d)
delivered by an express courier (with written confirmation) to the parties at
the following addresses (or at such other address for a party as shall be
specified by like notice):
If to Parent or SAMI, or to the Company prior to the Closing Date:
BARRA, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Chief Executive Officer
With copies to:
BARRA, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
and:
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
If to Maestro or the Company Principals, or to the Company prior to
the Closing Date:
Maestro, LLC
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
With a copy to:
Stroock & Stroock & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
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If to Buyer or to the Company after the Closing Date:
The ▇▇▇▇ Nuveen Company
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: President
With a copy to:
Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Section 10.7. Binding Effect; Persons Benefiting; No Assignment.
--------------------------------------------------
This Agreement shall inure to the benefit of and be binding upon the parties
hereto and their respective successors and assigns. Except for the provisions of
Sections 5.15 and 5.6(b) hereof, no provision of this Agreement is intended or
shall be construed to confer upon any entity or Person other than the parties
hereto and their respective successors and permitted assigns any right, remedy
or claim under or by reason of this Agreement or any part hereof. This Agreement
may not be assigned by any of the parties hereto without the prior written
consent of Buyer, in the case of any assignment by a Symphony Party, or Parent,
SAMI and Maestro, in the case of any assignment by Buyer; provided, however,
that SAMI may assign its rights and obligations under this Agreement to Parent
without the prior written consent of Buyer.
Section 10.8. Release of Claims. On the Closing Date, each of
------------------
Parent, the Company Principals and the Members shall execute and deliver to
Buyer a release, dated as of the Closing Date, in the form attached hereto as
Exhibit P (each such release, a "Closing Release"); provided, however, that none
of such Persons shall be required to execute such release if such Person
reasonably believes it has a bona fide cause of action against the Company or
its Subsidiaries or any of their respective directors, officers, employees,
predecessors, successors or assigns, in such capacity, arising out of or
relating to any act or omission of any of the Company or its Subsidiaries or any
of their respective directors, officers, employees, predecessors, successors or
assigns, in such capacity, taken or omitted to be taken from the date hereof to
the Closing Date, with respect to which it is reasonably likely that such Person
will incur Losses of not less than $5,000,000.
Section 10.9. Counterparts. This Agreement may be executed in two or
-------------
more counterparts, each of which shall be deemed an original, but all of which
taken together shall constitute one and the same agreement, it being understood
that all of the parties need not sign the same counterpart.
Section 10.10. Waiver of Jury Trial. EACH OF THE PARTIES HERETO
---------------------
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
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PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
Section 10.11. Governing Law. THIS AGREEMENT, THE LEGAL RELATIONS
--------------
BETWEEN THE PARTIES AND THE ADJUDICATION AND THE ENFORCEMENT THEREOF, SHALL BE
GOVERNED BY AND INTERPRETED AND CONSTRUED IN ACCORDANCE WITH THE SUBSTANTIVE
LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO APPLICABLE CHOICE OF LAW
PROVISIONS THEREOF.
Section 10.12. Consent to Jurisdiction. Each of the parties hereto
------------------------
hereby irrevocably and unconditionally submits to the jurisdiction of any state
court of the State of New York and any federal court sitting in New York, New
York and irrevocably agrees that all actions or proceedings arising out of or
relating to this agreement or the transactions contemplated hereby or in aid or
arbitration or for enforcement of an arbitral award shall be litigated
exclusively in such courts. Each of the parties hereto agrees not to commence
any legal proceedings related hereto except in such courts. Each of the parties
hereto irrevocable waives any objection which he or it may now or hereafter have
to the laying of the venue of any such proceeding in any such court and hereby
further irrevocably and unconditionally waives and agrees not to plead or claim
in any such court that any such action, suit or proceeding brought in any such
court has been brought in an inconvenient forum.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date first above written.
BARRA, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: CEO
SYMPHONY ASSET MANAGEMENT, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: CEO
MAESTRO, LLC
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Member
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
SYMPHONY ASSET MANAGEMENT LLC
By: Symphony Asset Management, Inc., its
Member
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: CEO
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By: Maestro, LLC, its Member
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Member
THE ▇▇▇▇ NUVEEN COMPANY
By: /s/ ▇▇▇▇ ▇. Berkshire
-------------------------------------
Name: ▇▇▇▇ ▇. Berkshire
Title: Senior Vice President
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