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EXHIBIT 10(a)
ACQUISITION AGREEMENT
ACQUISITION AGREEMENT (this "Agreement"), dated as of December 17, 1998,
by and among USTRUST, a Massachusetts trust company ("Buyer"), XXXXXX & LORD
LLP, a Massachusetts limited liability partnership ("Seller"), and each of the
individuals listed on Schedule 1 hereto, each in their capacity as a partner of
Seller (each a "Partner", and collectively, the "Partners");
WHEREAS, the Board of Directors of Buyer and the Partners of Seller deem
it advisable and in the best interests of their stockholders or Partners, as the
case may be, and their respective customers, employees and other constituencies,
as well as the communities they serve, to consummate, and have approved, the
business combination transactions provided for herein in which Buyer will,
subject to the terms and conditions set forth herein, acquire Seller;
WHEREAS, as a condition to, and after the execution of, this Agreement,
Buyer, Seller and the Partners are entering into employment agreements (the
"Employment Agreements"), pursuant to which, subject to consummation of the
transactions contemplated hereby, each of the Partners will be employed by the
Surviving Entity (as defined herein) after the Effective Time (as defined
herein);
NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and agreements contained herein, the parties agree as follows:
ARTICLE I
DEFINITIONS
Except as otherwise provided herein or as otherwise clearly required by
the context, the following terms shall have the respective meanings indicated
when used in this Agreement:
"Acquisition Subsidiary" shall mean that certain limited liability company
that has been or shall be organized as a direct wholly-owned subsidiary of Buyer
under the laws of the State of Delaware for the purpose of merging with Seller
pursuant to the terms of the Plan of Merger.
"Acquisition Transaction" shall have the meaning ascribed thereto in
Section 5.03 hereof.
"Affiliate" shall mean, with respect to any Person, any other Person
controlling, controlled by or under common control with such Person. As used in
this definition, "control" (including, with its correlative meanings,
"controlled by" and "under common control with") means the possession, directly
or indirectly, of power to direct or cause the direction of the management and
policies of a Person whether through the ownership of voting securities, voting
rights, by contract or otherwise. As used with respect to Seller, "Affiliate"
includes the Partners and the Retired Partners, but does not include any other
individual unless such individual controls Seller.
"Agreement" shall mean this Acquisition Agreement by and among Buyer,
Seller and the Partners.
"Associate" shall have the meaning ascribed thereto in Section 4.01(a)
hereof.
"BHCA" shall mean the Bank Holding Company Act of 1956, as amended.
"Buyer" shall have the meaning ascribed to such term in the preamble to
this Agreement.
"Buyer Balance Sheet" shall have the meaning ascribed thereto in Section
3.05 hereof.
"Buyer Common Stock" shall have the meaning ascribed thereto in Section
3.02(a) hereof.
"Buyer Parent Corp." shall mean UST Corp., the parent bank holding company
of Buyer.
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"Cap" shall have the meaning ascribed thereto in Section 9.05(a) hereof.
"Closing" shall mean the consummation of the Merger.
"Closing Date" shall mean the date on which the Closing occurs.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Companies" shall have the meaning ascribed thereto in Section 4.10(a)
hereof.
"Confidential Information" shall have the meaning ascribed thereto in
Section 5.02(b) hereof.
"Confidentiality Agreement" shall mean that certain letter agreement
pertaining to the disclosure of certain Confidential Information by Seller to
Buyer dated June 10, 1998.
"Damages" shall have the meaning ascribed thereto in Section 9.04
hereof.
"Deferred Services Assets" shall have the meaning ascribed thereto in
Section 5.16 hereof.
"DLLCA" shall mean the Delaware Limited Liability Company Act.
"Effective Time" shall mean the date and time at which the Merger has
become effective pursuant to the applicable laws of the State of Delaware and
The Commonwealth of Massachusetts.
"Employees" shall have the meaning ascribed thereto in Section 4.11(a)
hereof.
"Employment Agreements" shall have the meaning ascribed thereto in the
recitals hereto.
"Equity Investment" shall have the meaning set forth for such term as of
the date hereof in the FDIC's rules and regulations regarding activities and
investments of insured state banks.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" shall have the meaning ascribed thereto in Section 3.05
hereof.
"Expirations" shall mean the knowledge of the respective expiration dates
of insurance policies currently in force and purchased through Seller.
"FDIA" shall mean the Federal Deposit Insurance Act, as amended.
"FDIC" shall mean the Federal Deposit Insurance Corporation.
"Federal Reserve Board" shall mean the Board of Governors of the
Federal Reserve System or the Federal Reserve Bank of Boston, as applicable.
"Filed Tax Returns" shall mean, with respect to the Companies, all Tax
Returns that have been or will required to be filed by either of the Companies
on or prior to the date hereof.
"GAAP" shall mean generally accepted accounting principles and practices
in effect from time to time within the United States applied consistently
throughout the period involved.
"Income" shall have the meaning ascribed thereto in Section 5.01(e)
hereof.
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"INfinity System" shall have the meaning ascribed thereto in Section 4.25
hereof.
"Injunction" shall have the meaning ascribed thereto in Section 6.01(b)
hereof.
"Insurance Companies" shall mean those insurance companies, with whom
Seller places insurance risks as of September 30, 1998.
"Insurance Company Contracts" shall mean those contracts between Seller
and Insurance Companies, pursuant to which Seller places insurance risks.
"IRS" shall mean the United States Internal Revenue Service.
"Known Intellectual Property" shall have the meaning ascribed thereto in
Section 4.20 hereof.
"MLPA" shall mean the Massachusetts Limited Partnership Act.
"Material Adverse Effect" shall mean, (a) with respect to Buyer, a
material adverse effect on the assets, properties, liabilities, business,
operations, results of operations, financial condition or prospects of Buyer and
its subsidiaries, taken as a whole, and (b) with respect to Seller, a material
adverse effect on the assets, properties, liabilities, business, operations,
results of operations, financial condition or prospects of Seller and its
subsidiaries taken as a whole; provided, further, that, without in any way
limiting the foregoing, a Material Adverse Effect with respect to Seller shall
be deemed to occur if, after the date hereof, (i) Insurance Companies from whom
Seller derives a material amount of commissions shall terminate or deliver a
notice of termination to Seller with respect to the applicable Insurance Company
Contracts between such Insurance Companies and Seller and (ii) Seller shall not
have placed or obtained commitments to place all of the risks formerly placed
with such terminating Insurance Companies with other comparably-rated insurance
companies on terms with respect to commissions comparable to the commissions
payable under such terminated Insurance Company Contracts.
"Merger" shall mean the merger of Seller with and into Acquisition
Subsidiary, the result of which shall be the direct acquisition by Buyer of
Seller at the Effective Time.
"Nasdaq" shall mean the National Association of Securities Dealers
Automated Quotation system.
"Non-Mission Critical Systems" shall have the meaning ascribed thereto in
Section 4.25 hereof.
"Partners" shall have the meaning ascribed to such term in the preamble to
this Agreement.
"Partnership Agreement" shall have the meaning ascribed to such term in
Section 4.02(a) hereof.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"Person" shall mean any individual, general partnership, limited
partnership, corporation, joint stock company, joint venture, trust, estate,
business trust, limited liability company, limited liability partnership,
unincorporated association, cooperative or association and, where the context so
permits, the heirs, executors, administrators, legal representatives, successors
and assigns of such Person.
"Plan of Merger" shall mean that certain Agreement and Plan of Merger to
be entered into by and between Seller and Acquisition Subsidiary at or prior to
the Effective Time, substantially in the form attached hereto as Exhibit A.
"Promotions" shall have the meaning ascribed thereto in Section 4.23
hereof.
"Purchase Price" shall have the meaning ascribed thereto in Article II
hereof.
"Records" shall mean all records and original documents in Seller's
possession which pertain to and are utilized by Seller or the Seller Subsidiary
to administer, reflect, monitor, evidence or record information respecting their
businesses and operations, including but not limited to all records and
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documents relating to (i) corporate, regulatory, supervisory and litigation
matters, (ii) tax planning and payment of taxes, (iii) personnel and employment
matters, and (iv) the business or conduct of the business of Seller or the
Seller Subsidiary.
"Representatives" shall have the meaning ascribed thereto in Section
5.02(b) hereof.
"Requisite Regulatory Approvals" shall have the meaning ascribed thereto
in Section 6.01(a) hereof.
"Retired Partners" shall have the meaning ascribed thereto in Section
4.02(a) hereof.
"SEC" shall mean the United States Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Seller" shall have the meaning ascribed to such term in the preamble to
this Agreement.
"Seller Balance Sheet" shall have the meaning ascribed thereto in Section
4.05 hereof.
"Seller Benefit Plans" shall have the meaning ascribed thereto in Section
4.11(a) hereof.
"Seller Disclosure Schedule" shall have the meaning ascribed thereto in
Section 4.01(a) hereof.
"Seller Other Plans" shall have the meaning ascribed thereto in Section
4.11(a) hereof.
"Seller Pension Plans" shall have the meaning ascribed thereto in Section
4.11(a) hereof.
"Seller Reports" shall have the meaning ascribed thereto in Section 4.15
hereof.
"Seller Subsidiary" shall mean Seller Insurance Advisers, Inc., a
Massachusetts corporation and wholly-owned subsidiary of Seller.
"September Financial Statements" shall have the meaning ascribed thereto
in Section 4.05 hereof.
"subsidiaries" shall mean, when used with reference to a party, any
corporation or other organization, whether incorporated or unincorporated, of
which such party or any other subsidiary of such party is a general partner
(excluding partnerships the general partnership interests of which held by such
party or any subsidiary of such party do not have a majority of the voting
interests in such partnership) or, with respect to such corporation or other
organization, at least a majority of the securities or other interests having by
their terms ordinary voting power to elect a majority of the board of directors
or others performing similar functions is directly or indirectly owned or
controlled by such party or by any one or more of its subsidiaries, or by such
party and one or more of its subsidiaries.
"Surviving Entity" shall have the meaning ascribed thereto in the Plan
of Merger.
"Tax" means any federal, state, local or foreign income, gross receipts,
franchise, estimated, alternative minimum, add-on minimum, sales, use, transfer,
registration, value added, excise, natural resources, severance, stamp,
occupation, premium, windfall profit, environmental, customs, duties, real
property, personal property, capital stock, intangibles, social security,
unemployment, disability, payroll, license, employee or other tax or levy, of
any kind whatsoever, including any interest, penalties or additions to tax in
respect of the foregoing.
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"Tax Return" means any return, declaration, report, claim for refund,
information return or other document (including any related or supporting
estimates, elections, schedules, statements or information) filed or required to
be filed in connection with the determination, assessment or collection of any
Tax or the administration of any laws, regulations or administrative
requirements relating to any Tax.
"Transaction Documents" shall mean this Agreement, Plan of Merger, the
Employment Agreements and the Confidentiality Agreement and each other
agreement, document or instrument executed in connection herewith or therewith.
"Transferred Employee" shall have the meaning ascribed thereto in Section
5.10 hereof.
"Year 2000 Problem" shall have the meaning ascribed thereto in Section
4.25 hereof.
ARTICLE II
THE MERGER
Subject to the terms and conditions of this Agreement and the Plan of
Merger, Seller will merge with and into Acquisition Subsidiary, with Acquisition
Subsidiary being the surviving entity, pursuant to the provisions of, and with
the effect provided in the DLLCA and the MLPA. The Plan of Merger provides for
the terms and conditions of the Merger, including but not limited to the payment
by Buyer to the Partners and the Retired Partners of the aggregate purchase
price of $[*] million in cash (the "Purchase Price") in exchange for all
partnership interests in Seller of such Partners and Retired Partners, all of
which are incorporated herein and made a part of this Agreement by this
reference whether or not the Plan of Merger is executed on or subsequent to the
date hereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller as follows:
3.01 Corporate Organization.
(a) Buyer is a trust company duly organized and validly existing under the
laws of The Commonwealth of Massachusetts. Buyer has all requisite power and
authority to own, lease or operate all of its properties and assets and to carry
on its business as it is now being conducted, and 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 licensing or qualification necessary, except
where the failure to be so licensed or qualified would not result in a Material
Adverse Effect.
(b) Acquisition Subsidiary is or will be a limited liability company, duly
organized, validly existing and in good standing under the laws of the State of
Delaware. From the date of its formation to the Closing Date, Acquisition
Subsidiary will not engage in any material activities other than in connection
with or as contemplated by this Agreement. Acquisition Subsidiary has been or
will be formed solely for the purpose of effectuating the Merger.
3.02 Capitalization.
(a) The authorized capital stock of Buyer consists of 200,000 shares of
common stock, par value $47.50 per share ("Buyer Common Stock"). As of the close
of business on December 15, 1998,
*confidential treatment requested
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there were 181,446 shares of Buyer Common Stock issued and outstanding. All of
the shares of Buyer Common Stock are owned directly and indirectly by Buyer
Parent Corp.
(b) Buyer is an "insured depository institution" as defined in the FDIA
and applicable regulations thereunder, and the deposits of Buyer are insured by
the Bank Insurance Fund and the Savings Association Insurance Fund of the FDIC
in accordance with the FDIA, and Buyer has paid all assessments and filed all
reports required by the FDIA. As of the date hereof, no proceedings for the
revocation or termination of such deposit insurance are pending or, to the
knowledge of the Buyer, threatened.
(c) As of the Effective Time, Buyer will be the only member of the
Acquisition Subsidiary.
3.03 Authority; No Violation.
(a) Buyer has full power and authority to execute and deliver the
Transaction Documents to which it is a party and to consummate the transactions
contemplated thereby. Acquisition Subsidiary has or will have full corporate
power and authority to execute and deliver the Plan of Merger and to consummate
the transactions contemplated thereby. The execution and delivery of this
Agreement and the other Transaction Documents to which it is a party and the
consummation of the transactions contemplated hereby and thereby have been duly
and validly approved by the Board of Directors of Buyer. The execution and
delivery of the Plan of Merger and the consummation of the transactions
contemplated thereby have been or will be duly and validly approved by Buyer, as
the sole member of Acquisition Subsidiary, and by the Board of Directors of
Acquisition Subsidiary. No other corporate proceedings on the part of Buyer or
Acquisition Subsidiary are necessary to consummate the transactions contemplated
by any of the Transaction Documents to which each is a party. This Agreement has
been, and the Plan of Merger and the other Transaction Documents to be executed
by Buyer will be, duly and validly executed and delivered by Buyer and (assuming
due authorization, execution and delivery by Seller) constitute (or, in the case
of the Plan of Merger or such other Transaction Documents, will constitute at
Closing) the valid and binding obligation of Buyer, enforceable against Buyer in
accordance with their respective terms, except that enforcement thereof may be
limited by the receivership, conservatorship and supervisory powers of bank
regulatory agencies generally as well as bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting enforcement of creditors' rights
generally and except that enforcement thereof may be subject to general
principles of equity (regardless of whether enforcement is considered in a
proceeding in equity or at law) and the availability of equitable remedies. The
Plan of Merger will be duly and validly executed and delivered by Acquisition
Subsidiary and (assuming due authorization, execution and delivery by Seller)
will constitute at closing the valid and binding obligation of Acquisition
Subsidiary, enforceable against Acquisition Subsidiary in accordance with its
terms, except that enforcement thereof may be limited by the receivership,
conservatorship and supervisory powers of bank regulatory agencies generally as
well as bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting enforcement of creditors' rights generally and except that enforcement
thereof may be subject to general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law) and the
availability of equitable remedies.
(b) Neither the execution and delivery by Buyer and Acquisition Subsidiary
of any of the Transaction Documents to which either is a party, respectively,
nor the consummation by Buyer and Acquisition Subsidiary of the transactions
contemplated hereby and thereby, nor compliance by Buyer and Acquisition
Subsidiary with any of the terms or provisions hereof or thereof, will, assuming
that the consents and approvals referred to in Section 3.04 hereof are duly
obtained, (i) violate any statute, code, ordinance, rule, regulation, judgment,
order, writ, decree or injunction applicable to Buyer or any of its properties
or assets, or, (ii) violate, conflict with, result in a breach of any provisions
of, constitute a default (or an event which, with notice or lapse of time, or
both, would constitute a default) under, result in the termination of,
accelerate the performance required by, or result in a right of termination or
acceleration or the creation of any lien, security interest, charge or other
encumbrance upon any of the properties or assets of Buyer under, any of the
terms, conditions or provisions of (x) the Articles of Association, or other
charter document of like nature or By-laws of Buyer, or (y) any note, bond,
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mortgage, indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which Buyer is a party thereto as issuer, guarantor
or obligor, or by which Buyer or any of its properties or assets may be bound or
affected.
3.04 Consents and Approvals. Except for consents, waivers or approvals of,
notices to or filings or registrations with, the Federal Reserve Board, the
FDIC, the Commissioner of Banks of The Commonwealth of Massachusetts, the
Commissioner of Insurance of The Commonwealth of Massachusetts, certain other
state insurance commissioners and regulatory agencies, the Secretary of State of
the State of Delaware under the DLLCA and the Secretary of the Commonwealth of
the Commonwealth of Massachusetts, no consents, waivers or approvals of, notices
to or filings with any public body or authority are necessary, and no consents
or approvals of any third parties (which term does not include the Board of
Directors of Buyer or Acquisition Subsidiary) are necessary, in connection with
(i) the execution and delivery by Buyer of the Transaction Documents, (ii) the
execution and delivery by Acquisition Subsidiary of the Plan of Merger, or (iii)
the consummation by Buyer and Acquisition Subsidiary, as the case may be, of the
transactions contemplated by such Transaction Documents, including the Merger.
Buyer has no knowledge of any fact or circumstance relating to Buyer or its
Affiliates that is reasonably likely to materially impede or delay receipt of
any consents of regulatory or governmental authorities or result in the
imposition of a restriction or condition of the type referenced in Section
6.02(e) herein.
3.05 Financial Statements. Buyer has made available to Seller copies of
(a) the consolidated balance sheets of Buyer Parent Corp. and its subsidiaries
as of December 31 for the fiscal years 1995 through 1997, inclusive, and the
related consolidated statements of income, changes in stockholders' equity and
cash flows for the fiscal years 1995 through 1997, inclusive, as reported in
Buyer Parent Corp. Annual Reports on Form 10-K for each of the three fiscal
years ended December 31, 1995 through December 31, 1997 filed with the SEC under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), in each
case accompanied by the audit report of Xxxxxx Xxxxxxxx LLP, independent
accountants for Buyer Parent Corp., and (b) the unaudited consolidated balance
sheet of Buyer Parent Corp. and its subsidiaries as of September 30, 1998, the
related unaudited consolidated statements of income and changes in stockholders'
equity for the nine (9) months ended September 30, 1997 and September 30, 1998
and the related unaudited consolidated statements of cash flows for the nine (9)
months ended September 30, 1997 and September 30, 1998, all as reported in Buyer
Parent Corp.'s Quarterly Report on Form 10-Q for the quarter ended September 30,
1998 filed with the SEC under the Exchange Act. The December 31, 1997
consolidated balance sheet of Buyer Parent Corp. (including the related notes,
where applicable) (the "Buyer Balance Sheet") and the other financial statements
referred to herein (including the related notes, where applicable) fairly
present in all material respects, and the financial statements to be included in
any reports or statements (including reports on Forms 10-Q and 10-K) to be filed
by Buyer Parent Corp. with the SEC after the date hereof will fairly present in
all material respects, the consolidated financial position and results of the
consolidated operations and cash flows and changes in stockholders' equity of
Buyer Parent Corp. and its subsidiaries for the respective fiscal periods or as
of the respective dates therein set forth; and each of such statements
(including the related notes, where applicable) has been and will be prepared in
accordance with GAAP consistently applied during the periods involved, except as
otherwise set forth in the notes thereto (subject, in the case of unaudited
interim statements, to normal year-end adjustments).
3.06 Absence of Certain Changes or Events. Except as disclosed in Buyer
Parent Corp.'s Quarterly Report on Form 10-Q for the quarter ended September 30,
1998 or in any Current Reports of Buyer Parent Corp. on Form 8-K filed prior to
the date of this Agreement, since December 31, 1997, there has not been any
change in the assets, properties, liabilities, business, operations, results of
operations or financial condition of Buyer Parent Corp. or any of its
subsidiaries which has had, or is reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on Buyer Parent Corp. or Buyer.
3.07 Legal Proceedings. There is no suit, action or proceeding pending or,
to the best knowledge of Buyer, threatened, against Buyer or any Affiliate or
subsidiary of Buyer or challenging the
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validity or propriety of the transactions contemplated by this Agreement, as to
which there is a reasonable possibility of an adverse determination and which,
if adversely determined, would, individually or in the aggregate, have a
Material Adverse Effect on Buyer or otherwise materially adversely affect
Buyer's ability to perform its obligations under this Agreement, nor is there
any judgment, decree, injunction, rule or order of any legal or administrative
body or arbitrator outstanding against Buyer or any Affiliate or subsidiary of
Buyer having, or which insofar as reasonably can be foreseen, in the future
could have, any such effect.
3.08 Broker's Fees. Neither Buyer nor any of its officers, directors,
employees or agents has employed any broker, finder or financial advisor or
incurred any liability for any fees or commissions in connection with any of the
transactions contemplated by this Agreement, except for the fees incurred in
connection with the engagement of Xxx-Xxxx, Xxxxxx Inc. and for legal,
accounting and other professional fees payable in connection with the Merger.
Buyer will be responsible for the payment of such fees.
3.09 Financing. Buyer has available to it sources of capital and financing
sufficient to fulfill its obligations under this Agreement and to consummate all
of the transactions contemplated hereby and Buyer's ability to pay the Purchase
Price hereunder is not contingent on raising any equity capital, obtaining
specific financing therefor or the consent of any party.
3.10 Compliance With Applicable Laws. Buyer holds all licenses,
franchises, permits and authorizations necessary for the lawful conduct of its
business, and after giving effect to the transactions contemplated hereby
(including obtaining all Requisite Regulatory Approvals), will be, in compliance
with and not in violation of or default in any respect under any, applicable
law, statute, order, rule, regulation or policy of, or agreement with, any
federal, state or local governmental agency or authority relating to Buyer other
than where such default or noncompliance will not result in or create the
possibility of resulting in (i) any Material Adverse Effect on Buyer, or (ii)
any material limitation on the conduct of business of the Surviving Entity in
addition to those limitations generally applicable to Massachusetts banks
conducting an insurance agency business through a subsidiary, and Buyer has not
received any notice of any violation of any such law, statute, order, rule,
regulation, policy or agreement, or the commencement of any proceeding in
connection with any such violation, and does not know of any violation of, any
such law, statute, order, rule, regulation, policy or agreement which would have
such a result.
3.11 Buyer Information. The information relating to Buyer and its
subsidiaries to be contained in any documents filed with any governmental agency
or authority in connection herewith, to the extent such information is provided
in writing by Buyer, will not contain any untrue statement of a material fact or
omit to state a material fact necessary to make such information not misleading.
3.12 Disclosure. No representation or warranty contained in this
Agreement, and no statement contained in any certificate, list or other writing
furnished to Seller pursuant to the provisions hereof, to the best knowledge of
Buyer, contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements herein or therein not
misleading. To the best knowledge of Buyer, all information material to Seller's
interest in the Merger or which is necessary to make Buyer's representations and
warranties herein contained not misleading, has been disclosed to Seller.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER AND PARTNERS
Seller and the Partners hereby represent and warrant to Buyer as follows:
4.01 Organization of Seller.
(a) Seller is a limited liability partnership duly organized, validly
existing and in good standing under the laws of The Commonwealth of
Massachusetts. Seller has all requisite power and authority to own, lease or
operate all of its properties and assets and to carry on its business as it is
now being conducted, and 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 licensing or qualification necessary, except where the failure to
be so licensed or qualified would not result in, with respect to Seller, any
Material Adverse Effect. Section 4.01(a)(i) of the disclosure schedule delivered
to Buyer together herewith (the "Seller Disclosure Schedule") lists each of the
jurisdictions in which Seller or the Seller Subsidiary possesses such foreign
qualification or license. Seller and the Seller Subsidiary are duly licensed to
act as an insurance agent, broker, or adviser, as the case may be, in each state
as set forth after its respective name in Section 4.01(a)(i) of the Seller
Disclosure Schedule. The Partners and all other employees of Seller and the
Seller Subsidiary responsible for selling or placing insurance for Seller (each
such employee, an "Associate," and together, the "Associates"), are each duly
licensed to act as an insurance agent or broker by the appropriate insurance
authorities in each state set forth after such person's name in Section
4.01(a)(iii) of the Seller Disclosure Schedule. All licenses set forth in
Section 4.01(a) of the Seller Disclosure Schedule are in good standing. (b)
Except for the Seller Subsidiary, Seller has no subsidiaries and no Equity
Investments (other than its investments in the Seller Subsidiary). Section
4.01(b) of the Seller Disclosure Schedule lists for the Seller Subsidiary, the
percentage of Seller's ownership in the Seller Subsidiary, the activities of the
Seller Subsidiary, including but not limited to, whether or not the Seller
Subsidiary is engaged principally or otherwise, directly or indirectly through a
joint venture, partnership or other entity, in the sale of mutual funds or the
development of real estate. Neither Seller nor Seller Subsidiary engage in any
activity, principally or otherwise, that is not permitted for a national bank or
otherwise authorized under applicable FDIC regulations. The Seller Subsidiary is
duly organized, validly existing and in corporate good standing under the laws
of the jurisdiction of its incorporation. The Seller Subsidiary has all
requisite corporate power and authority to own, lease or operate all of its
properties and assets and to carry on its business as it is now being conducted.
At the Effective Time, the Seller Subsidiary will be the only subsidiary or
Equity Investment of Seller.
(c) The partnership records of Seller contain complete and accurate
records of all partnership actions authorized at all meetings held, and all
actions taken by written consent, since the date of Seller's formation by its
partners and Executive Committee. The minute books of the Seller Subsidiary
contain complete and accurate records of all corporate actions authorized at all
meetings held, and all actions taken by written consent, since the date of the
Seller Subsidiary's formation by its stockholders and Board of Directors.
4.02 Partnership Interests; Capitalization.
(a) Schedule 1 attached hereto sets forth a list of the Partners, and
Schedule 2 attached hereto sets forth a list of all formerly active partners,
Retired Partners, Disabled Partners and Estate Partners (as such terms are
defined in the Partnership Agreement) (collectively, the "Retired Partners"), in
each case indicating the type of Partner or Retired Partner and percentage
partnership interest in Seller. The persons listed as Partners or Retired
Partners are the only partners of Seller as of the date hereof. The rights and
liabilities of the Partners and the Retired Partners are as set forth in (i) the
Partnership Agreement of Seller, as amended to date, a copy of which has been
provided to Buyer (the "Partnership
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Agreement"), (ii) the partnership actions referred to in Section 4.01(c), and
(iii) M.G.L. chapter 108A. Except as set forth in Section 4.02(a)(i) of the
Seller Disclosure Schedule, no other Person, other than the Partners or the
Retired Partners, has any ownership interest in, or right to receive at any time
a portion of, the Net Income (as defined in the Partnership Agreement) of Seller
or a "terminal payout" or any other payment from Seller under the Partnership
Agreement. Except as described in Section 4.02(a)(ii) of the Seller Disclosure
Schedule, Seller does not have and is not bound by any outstanding
subscriptions, options, warrants, calls, commitments or agreements of any
character calling for Seller to issue, deliver or sell, or cause to be issued,
delivered or sold any partnership interest in Seller or any securities
convertible into, exchangeable for or representing the right to subscribe for,
purchase or otherwise receive any partnership interest in Seller or obligating
Seller to grant, extend or enter into any such subscriptions, options, warrants,
calls, commitments or agreements. Except as described in Section 4.02(a)(ii) of
the Seller Disclosure Schedule, as of the date hereof, there are no outstanding
contractual obligations of Seller to repurchase, redeem or otherwise acquire any
partnership interest of Seller.
(b) The Seller Subsidiary does not have and is not bound by any
outstanding subscriptions, options, warrants, calls, commitments or agreements
of any character calling for the Seller Subsidiary to issue deliver or sell, or
cause to be issued, delivered or sold any equity security of the Seller or of
the Seller Subsidiary or any securities convertible into, exchangeable for or
representing the right to subscribe for, purchase or otherwise receive any such
equity security or obligating the Seller Subsidiary to grant, extend or enter
into any such subscriptions, options, warrants, calls, commitments or
agreements. As of the date hereof, there are no outstanding contractual
obligations of the Seller Subsidiary to repurchase, redeem or otherwise acquire
any shares of capital stock of the Seller or the Seller Subsidiary. All of the
shares of capital stock of the Seller Subsidiary held by the Seller are fully
paid and nonassessable and, except for directors' qualifying shares, are owned
by the Seller free and clear of any claim, lien, encumbrance or agreement with
respect thereto.
4.03 Authority; No Violation.
(a) Each of Seller and the Seller Subsidiary has obtained all necessary
authorities and approvals from the Partners in their capacities as such required
for the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby. Seller has full right, power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby to be consummated by it. No other partnership proceedings on
the part of Seller are necessary to consummate any of the transactions
contemplated by the Transaction Documents to be consummated by it. This
Agreement has been, and the Plan of Merger and the other Transaction Documents
to be executed by Seller will be, prior to the Closing Date duly and validly
executed and delivered by Seller and (assuming due authorization, execution and
delivery by Buyer and, with respect to the Plan of Merger, Acquisition
Subsidiary) constitute (or, in the case of the Plan of Merger or such other
Transaction Documents, will constitute at Closing) the valid and binding
obligations of Seller, enforceable against Seller in accordance with their
respective terms, except that enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
enforcement of creditors' rights generally and except that enforcement thereof
may be subject to general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law) and the
availability of equitable remedies.
(b) Neither the execution and delivery of any Transaction Document by
Seller, nor the consummation by Seller of the transactions contemplated thereby,
nor compliance by Seller with any of the terms or provisions hereof or thereof,
will, assuming that the consents and approvals referred to in Section 4.04 are
duly obtained, (i) violate any statute, code, ordinance, rule, regulation,
license, judgment, order, writ, decree or injunction applicable to Seller or the
Seller Subsidiary or any of their respective properties or assets, or (ii)
violate, conflict with, result in a breach of any provisions of, constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, result in the termination of, accelerate the
performance required by, or result in a right of termination or acceleration or
the creation of any lien, security interest, charge or other encumbrance upon
any of the respective properties or assets of Seller or the Seller Subsidiary
under, any of the terms, conditions or provisions of (x) the Partnership
Agreement, certificate of partnership, articles or organization or other
11
charter document of like nature or By-laws of Seller or the Seller Subsidiary,
as the case may be, or (y) any note, bond, mortgage, indenture, deed of trust,
license, lease, agreement or other instrument or obligation to which Seller or
the Seller Subsidiary is a party thereto as issuer, guarantor or obligor, or by
which they or any of their respective properties or assets may be bound or
affected.
4.04 Consents and Approvals. Except as set forth in Section 4.04 of the
Seller Disclosure Schedule, no consents, waivers or approvals of, notices to or
filings with any public body or authority are necessary, and no consents or
approvals of any third parties (which term does not include the Partners of
Seller) are necessary, in connection with (i) the execution and delivery by
Seller of the Transaction Documents or (ii) the consummation by Seller of the
transactions contemplated by such agreements, including the Merger. The
affirmative vote of holders of one hundred percent (100%) of the outstanding
partnership interests of Seller held by the Partners is the only vote of the
holders of any class or series of partnership interests of Seller necessary to
approve the Transaction Documents and the transactions contemplated thereby.
Seller has no knowledge of any fact or circumstance relating to Seller that is
reasonably likely to materially impede or delay receipt of any consent of
regulatory or governmental authorities or result in the imposition of a
restriction or condition of the type referenced in Section 6.02(f) herein.
4.05 Financial Statements. Seller has delivered to Buyer copies of (a) the
balance sheets of Seller as of December 31 for the fiscal years 1995 through
1997, inclusive, and the related statements of income and cash flows for the
fiscal years 1995 through 1997, inclusive, in each case accompanied by the audit
report of Deloitte & Touche LLP, independent accountants for Seller, (b) the
unaudited balance sheets of the Seller Subsidiary as of December 31 for the
fiscal years 1995 through 1997, inclusive, and the related income statements for
the fiscal years 1995 through 1997, inclusive, and (c) the unaudited balance
sheets of each of Seller and the Seller Subsidiary as of September 30, 1998 and
September 30, 1997, the related unaudited consolidated statements of income for
the nine (9) months ended September 30, 1998 and September 30, 1997
(collectively, the "September Financial Statements"). The December 31, 1997
balance sheet of Seller (including the related notes, where applicable) (the
"Seller Balance Sheet") and the other financial statements referred to herein
(including the related notes, where applicable) fairly present, in all material
respects, and the financial statements to be included in any reports or
statements to be filed by Seller with any state or federal governmental agency
or authority or otherwise prepared by Seller after the date hereof will fairly
present, in all material respects, the assets, liabilities, and partners'
accounts of Seller and its revenue and expenses, changes in partners' accounts,
and cash flows for the respective fiscal periods or as of the respective dates
therein set forth, on the basis of accounting described in Note 1 thereto. Each
of such statements (including the related notes, where applicable) has been and
will be prepared in accordance with the accrual method of accounting used for
federal income tax purposes (as described in more detail in Note 1 to the
December 31, 1997 financial statements), consistently applied during the periods
involved, except as otherwise set forth in the notes thereto (subject, in the
case of unaudited interim statements, to the absence of footnotes and to normal
year-end adjustments). The books and records of Seller and the Seller Subsidiary
have been, and are being, maintained on an income-tax basis and in accordance
with applicable legal and regulatory requirements.
4.06 Absence of Undisclosed Liabilities. Neither Seller nor the Seller
Subsidiary has any obligation or liability (contingent or otherwise) that is
material on a consolidated basis to Seller, or that when combined with all
similar obligations or liabilities would be material on a consolidated basis to
Seller, except as disclosed or reflected in the Seller Balance Sheet, any of the
other financial statements described in Section 4.05 above or Section 4.06 or
the other sections of the Seller Disclosure Schedule, or incurred hereafter in
the ordinary course of business consistent with past practice and with Section
5.01 hereof.
4.07 Broker's Fees. Neither Seller nor any of its Partners, officers,
employees or agents has employed any broker, finder or financial advisor or
incurred any liability for any fees or commissions in connection with any of the
transactions contemplated by this Agreement, except for the fees incurred in
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connection with the engagement of Xxxxxx & Associates and except for legal,
accounting and other professional fees payable in connection with the Merger.
The Seller and the Partners will be responsible for the payment of such fees.
4.08 Absence of Certain Changes or Events. Except as disclosed in, or
reflected on, the September Financial Statements or as set forth in Section 4.08
of the Seller Disclosure Schedule, or incurred hereinafter in the ordinary
course of business consistent with past practice and with Section 5.01 hereof,
since December 31, 1997, (i) the business of Seller and the Seller Subsidiary
have been conducted only in the ordinary course consistent with past practices,
(ii) there has not been any change in the business, assets, financial condition
or results of operations of the Seller or the Seller Subsidiary, (iii) there has
not been any material change in any policy or practice followed by the Seller or
the Seller Subsidiary in the ordinary course of business, (iv) neither the
Seller nor the Seller Subsidiary has incurred any material liability, except in
the ordinary course of its business consistent with prudent business practices,
(v) there has not been any agreement, contract or commitment entered into, or
agreed to be entered into, except for those in the ordinary course of business;
(vi) there has not been any increase in or establishment of any bonus,
insurance, severance (including severance after a change in control), deferred
compensation, pension, retirement, profit sharing, life insurance or split
dollar life insurance, retiree medical or life insurance, or other employee
benefit plan, or any other increase in the compensation payable or to become
payable to any officers or key employees of the Seller or the Seller Subsidiary,
except with respect to cash compensation, in the ordinary course of business
consistent with past practice; and (vii) there has not been any change in any of
the accounting methods or practices of the Seller or the Seller Subsidiary other
than changes required by applicable law or applicable accounting policies.
4.09 Legal Proceedings. Seller has furnished to the Buyer copies of (i)
all attorney responses to the request of the independent auditors for the Seller
and the Seller Subsidiary with respect to loss contingencies as of December 31,
1997, and (ii) a written list of all legal and regulatory proceedings filed
against Seller or the Seller Subsidiary since that date. Neither Seller nor the
Seller Subsidiary is a party to any pending or, to the knowledge of the Seller,
threatened claim, action, suit, proceeding or to the knowledge of the Seller,
investigation against Seller, or is subject to any order, judgment or decree,
except for matters shown in Section 4.09 of the Seller Disclosure Schedule.
Seller has provided Buyer with copies of all consumer or customer complaints,
whether formal or informal, brought since 1993 against Seller, any of the
Partners or the Associates regarding the conduct of Seller's business or the
activities of Seller, the Partners or the Associates, which complaints involved
either an attorney for the complainant or a notice to a regulatory agency or
insurance carrier, and there have been no other material complaints brought
during such period. Except as set forth in Section 4.09 of the Seller Disclosure
Schedule, there is no suit, action or proceeding pending or, to the best
knowledge of Seller, threatened, against Seller or the Seller Subsidiary or
challenging the validity or propriety of the transactions contemplated by this
Agreement or the Plan of Merger, as to which there is a reasonable probability
of an adverse determination and which, if adversely determined, would,
individually or in the aggregate, have a Material Adverse Effect on Seller or
otherwise materially adversely affect Seller's ability to perform its
obligations under this Agreement, nor is there any judgment, decree, injunction,
rule or order of any legal or administrative body or arbitrator outstanding
against Seller having, or which insofar as reasonably can be foreseen, in the
future could have, any such effect.
4.10 Taxes and Tax Returns.
(a) Seller and the Seller Subsidiary (referred to for purposes of this
Section 4.10, collectively, as the "Companies") have timely filed in correct
form all Filed Tax Returns, each Filed Tax Return has been prepared in
compliance with all applicable laws and regulations, and all Filed Tax Returns
are true and accurate in all respects. Seller has delivered to the Buyer correct
and complete copies of all federal income Tax Returns filed with respect to the
Companies for taxable periods ended on or after December 31, 1993, and all
examination reports, and statements of deficiencies assessed against or agreed
to by the Companies with respect to such taxable periods.
(b) Each of the Companies has paid all Taxes required to be paid by it.
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(c) No assessment that has not been settled or otherwise resolved has been
made with respect to Taxes payable by either Company not shown on the Filed Tax
Returns. No deficiency in Taxes or other proposed adjustment that has not been
settled or otherwise resolved has been asserted in writing by any taxing
authority against either of the Companies nor have either of the Companies
consented to any extension of the period for assessment or collection with
respect to any Tax. No Filed Tax Return of either of the Companies is now under
examination by any applicable taxing authority. There are no liens for Taxes
(other than current Taxes not yet due and payable) on any of the assets of
either of the Companies. Neither of the Companies has requested or been granted
an extension of the time for filing any Tax Return to a date later than the
Effective Time. No claim has ever been made by a taxing authority in a
jurisdiction where neither of the Companies pays Tax or file Tax Returns that
either of the Companies is or may be subject to Taxes assessed by that
jurisdiction.
(d) Adequate provision has been made on the most recent balance sheet of
each of Seller and the Seller Subsidiary for all Taxes of such Company in
respect of all periods through the date of such balance sheet.
(e) Neither of the Companies is a party to or bound by any Tax
indemnification, Tax allocation or Tax sharing agreement with any person or
entity or has any contractual obligation to indemnify any other person or entity
with respect to Taxes.
(f) Neither of the Companies has filed or been included in a combined,
consolidated or unitary income Tax Return (including any consolidated federal
income Tax Return) other than one of which Seller was the parent.
(g) Neither of the Companies has made any payments, is not obligated to
make any payments, or is not a party to any agreement that could obligate it to
make any payments that will not be deductible under Code Section 280G.
(h) Neither of the Companies has made or is affected by any elections
under Code Sections 108(b)(5), 338(g), or 565, or Treasury Regulation
Sections 1.1502-20(g) or 1.1502-32(f)(2).
(i) The Companies have withheld and paid all Taxes required to have been
withheld and paid in connection with amounts paid or owing to any Partner,
Retired Partner, employee, creditor, independent contractor or other third
party.
4.11 Employees.
(a) Seller has delivered to Buyer a list of all employees of Seller and
the Seller Subsidiary (the "Employees"), showing for each the position held as
of the date hereof, the date of hire, the regular work schedule and current
salary. None of the Employees is covered by any collective bargaining or similar
agreement. There is no strike or other labor dispute pending or, to the
knowledge of Seller, threatened, against Seller or the Seller Subsidiary which
would have a Material Adverse Effect on Seller or Buyer. Except as set forth in
Section 4.11(a) of the Seller Disclosure Schedule, neither Seller nor the Seller
Subsidiary maintains or contributes to any "employee pension benefit plan" (the
"Seller Pension Plans"), as such term is defined in Section 3 of ERISA,
"employee welfare benefit plan" (the "Seller Benefit Plans"), as such term is
defined in Section 3 of ERISA, stock option plan, stock purchase plan, deferred
compensation plan, other employee benefit plan for Employees or former employees
of Seller or the Seller Subsidiary, or any other plan, program or arrangement of
the same or similar nature that provides benefits to nonemployee directors of
Seller or the Seller Subsidiary (collectively, the "Seller Other Plans").
(b) Seller has delivered to Buyer a complete and accurate copy of each of
the following with respect to each of the Seller Pension Plans, Seller Benefit
Plans and Seller Other Plans: (i) plan
14
document; (ii) trust agreement or insurance contract, if any; (iii) most recent
IRS determination letter, if any; (iv) most recent actuarial report, if any; and
(v) most recent annual report on Form 5500.
(c) The current value of the assets of each of the Seller Pension Plans
subject to Title IV of ERISA is less than that plan's "benefit liabilities" as
that term is defined in Section 4001(a)(16) of ERISA, when determined under
actuarial factors that would apply if that plan terminated in accordance with
all applicable legal requirements.
(d) Each of the Seller Pension Plans and each of the Seller Benefit Plans
has been administered in compliance with its terms in all material respects and
is in compliance in all material respects with the applicable provisions of
ERISA (including, but not limited to, the funding and prohibited transactions
provisions thereof), the Code and other applicable laws.
(e) There has been no reportable event within the meaning of Section
4043(b) of ERISA or any waived funding deficiency within the meaning of Section
412(d)(3) of the Code with respect to any Seller Pension Plan.
(f) Seller has caused all of its financial statements, including the
Seller Balance Sheet, to reflect appropriate expenses, accruals and reserves for
all Seller Pension Plans, Seller Benefit Plans and Seller Other Plans and have
made or provided for all contributions to the Seller Pension Plans required
thereunder.
(g) Seller has not contributed to any "multiemployer plan," as such term
is defined in Section 3(37) of ERISA.
(h) Each of the Seller Pension Plans which is intended to be a qualified
plan within the meaning of Section 401(a) of the Code is so qualified, and
Seller is not aware of any fact or circumstance which would adversely affect the
qualified status of any such plan.
(i) Neither Seller nor the Seller Subsidiary is a party to or maintains
any contract or other arrangement with any employee or group of employees,
providing severance payments, stock or stock-equivalent payments or
post-employment benefits of any kind or providing that any otherwise disclosed
plan, program or arrangement will irrevocably continue, with respect to any or
all of its participants, for any period of time.
4.12 Agreements with Governmental Authorities. None of Seller, the Seller
Subsidiary, or any of the Partners or Associates is a party to any commitment,
letter, written agreement, memorandum of understanding or order to cease and
desist with any federal or state governmental agency or authority charged with
the supervision or regulation of insurance agencies which restricts the conduct
of its business, or in any manner relates to its capital adequacy, credit
policies or practices, management or overall safety and soundness or such
entity's ability to perform its obligations hereunder.
4.13 Material Agreements. Section 4.13 of the Seller Disclosure Schedule
lists the following contracts and other agreements (whether written or oral) to
which either of Seller or the Seller Subsidiary is currently a party:
(i) any agreement (or group of related agreements) for the lease of
personal property to or from any Person providing for lease payments in
excess of $25,000 per annum;
(ii) any agreement (or group of related agreements) for the purchase
of supplies, products or other personal property, or for the furnishing or
receipt of services that involves consideration in excess of $25,000 per
annum other than contracts for insurance;
(iii) any agreement constituting a partnership or joint venture;
(iv) any agreement (or group of related agreements) under which the
Seller has created, incurred, assumed or guaranteed any indebtedness for
borrowed money in excess of $25,000 or under which it has imposed a
security interest on any of its assets, tangible or intangible;
(v) any agreement concerning confidentiality or noncompetition;
15
(vi) any agreement with any Partner or any Affiliate;
(vii) any profit sharing, option, partnership or stock purchase,
deferred compensation, severance or other plan or arrangement for the
benefit of its current or former Partners, officers and employees;
(viii) any agreement for the employment of any individual on a
full-time, part-time, consulting or other basis or providing severance
benefits;
(ix) any agreement under which it has advanced or loaned any amount
to any of its Partners, directors, officers and employees outside the
ordinary course of business;
(x) any agreement under which the consequences of a default or
termination could have a Material Adverse Effect on Seller, indicating any
such agreement which is subject to renewal within sixty (60) days of the
date of this Agreement; or
(xi) any other agreement (or group of related agreements), other
than contracts for insurance, the performance of which involves the
payment by Seller of consideration in excess of $25,000.
Seller has delivered to the Buyer a correct and complete copy of each
written agreement listed in Section 4.13 of the Seller Disclosure Schedule and a
written summary setting forth the terms and conditions of each oral agreement,
if any, referred to in Section 4.13 of the Seller Disclosure Schedule. Each such
written agreement constitutes the legal, valid and binding obligation of the
parties thereto, enforceable against such obligor in accordance with the terms
thereof (except as enforcement may be limited by general principles of equity
whether applied in a court of law or equity and by bankruptcy, insolvency and
similar laws affecting creditors' rights and remedies generally). Seller is not
in default under, or with the giving of notice or the lapse of time, or both,
would be in default under, any of the terms or conditions of any contract,
agreement or commitment listed in Section 4.13 of the Seller Disclosure
Schedule. To the knowledge of any of the Partners and Seller's officers, there
has occurred no default or event which, with the giving of notice or the lapse
of time, or both, would constitute a default by any other party to any such
contract, agreement or commitment.
4.14 Ownership of Real Property and Assets; Leases. Neither Seller nor the
Seller Subsidiary owns any real property. Section 4.14(a) of the Seller
Disclosure Schedule sets forth a true and complete list of all real property
leased or operated by the Seller or the Seller Subsidiary as of the date hereof.
Seller or the Seller Subsidiary, as the case may be, has good and marketable
title to all assets and properties used in its respective business, whether real
or personal, tangible or intangible, including, without limitation, the assets
and properties reflected in its respective balance sheet as of September 30,
1998, or acquired subsequent thereto, subject to no encumbrances, liens,
mortgages, security interests or pledges, except (a) those items that secure
liabilities that are reflected in said balance sheet or the notes thereto or
incurred in the ordinary course of business after the date of such balance sheet
or (b) statutory liens for amounts not yet delinquent or which are being
contested in good faith. Seller or the Seller Subsidiary, as the case may be, as
lessee has the right under valid and existing leases to occupy, use, possess and
control all property leased by the Seller or the Seller Subsidiary as presently
occupied, used, possessed and controlled by the Seller or the Seller Subsidiary.
Neither Seller nor the Seller Subsidiary is in default, and there has not
occurred any event that with the lapse of time or giving of notice or both would
constitute a default, under any leases pursuant to which the Seller or the
Seller Subsidiary leases any real property, except for such defaults which,
individually or in the aggregate, would not result in the forfeiture of the use
or occupancy of the property covered by any such lease or would not result in a
material liability to the Seller or the Seller Subsidiary which is not reflected
on the consolidated balance sheet of the Seller dated as of September 30, 1998.
All such leases constitute legal, valid and binding obligations of the Seller or
the Seller Subsidiary and, to the knowledge of the Seller, the other party
thereto, enforceable by the Seller or the Seller Subsidiary in accordance with
their respective terms, except that enforcement thereof may be limited by the
receivership, conservatorship and supervisory powers of bank regulatory agencies
generally as well as bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting enforcement of creditors' rights generally and except
that enforcement thereof may be subject to general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity or at
law) and the availability of equitable remedies. Section 4.14(a) of the Seller
Disclosure Schedule sets forth the expiration date and renewal terms of each
such lease. Neither Seller nor the Seller Subsidiary has received notice of, or
made a claim with respect to, any breach or default under any leases pursuant to
which the Seller or the Seller Subsidiary leases any real property. None of the
leases to which
16
the Seller or the Seller Subsidiary is a party, will terminate by reason of the
Seller (a) entering into this Agreement or any of the other Transaction
Documents or (b) consummating the transactions contemplated hereby or thereby.
4.15 Reports. Since January 1, 1994, Seller and the Seller Subsidiary have
filed, and subsequent to the date hereof will file, all reports, registrations
and statements, together with any amendments required to be made with respect
thereto, that were and are required to be filed with any state or federal
governmental agencies or authorities (all such reports and statements are
collectively referred to herein as the "Seller Reports"). As of their respective
dates, the Seller Reports complied and, with respect to filings made after the
date of this Agreement, will at the date of filing comply, in all material
respects with all of the statutes, rules and regulations enforced or promulgated
by the regulatory authority with which they were filed and did not contain and,
with respect to filings made after the date of this Agreement, will not at the
date of filing 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.
4.16 Compliance with Applicable Laws. Each of Seller, the Seller
Subsidiary, the Partners and the Associates holds all material licenses,
franchises, permits and authorizations necessary for the lawful conduct of its
and their respective business and activities, and each of Seller, the Seller
Subsidiary, the Partners and the Associates has complied with and is not in
default in any respect under any applicable law, statute, order, rule,
regulation or policy of, or agreement with, any federal, state or local
governmental agency or authority relating to Seller, the Seller Subsidiary, the
Partners and the Associates, other than where such default or noncompliance will
not result in, or create any reasonable probability of resulting in, a material
limitation on the conduct of the business of Seller or the Seller Subsidiary,
will not cause, or create any reasonable probability of causing, Seller, the
Seller Subsidiary, the Partners or the Associates to incur any material
financial penalty and will not otherwise result, or create any reasonable
probability of resulting, with respect to Seller, in any Material Adverse
Effect, and, except with respect to those matters for which Seller has provided
Buyer information pursuant to Section 4.09 hereof, Seller has not received any
notice of violation of, or commencement of any proceeding in connection with any
such violation, and does not know of any violation of, any such law, statute,
order, rule, regulation, policy or agreement which would have such a result.
4.17 Insurance. Seller and the Seller Subsidiary are presently insured,
and since December 31, 1993 have been insured, for reasonable amounts against
such risks as companies engaged in a similar business in a similar location
would, in accordance with good business practice, customarily be insured. Seller
has delivered to the Buyer copies of policies relating to insurance maintained
by the Seller or the Seller Subsidiary with respect to their properties and the
conduct of their businesses.
4.18 Labor. No work stoppage involving Seller or the Seller Subsidiary is
pending or, to the best knowledge of Seller, threatened. Neither Seller nor the
Seller Subsidiary is involved in, or, to the best knowledge of Seller,
threatened with or affected by, any dispute, arbitration, lawsuit or
administrative proceeding relating to labor or employment matters which, if
adversely decided, could result in a Material Adverse Effect with respect to
Seller.
4.19 Material Interests of Certain Persons. No officer, director,
employee, or Partner of Seller or the Seller Subsidiary, as the case may be, or
any "associate" (as such term is defined in Rule 14a-1 under the Exchange Act)
of any such officer, director, employee or Partner, has any material interest in
any material contract or property (real or personal), tangible or intangible,
used in or pertaining to the business of Seller or the Seller Subsidiary.
4.20 Trademarks, Patents, Etc. Neither Seller nor the Seller Subsidiary
has or uses any patents, trade names, service marks, trademarks or copyrights
registered in its name. Seller does not have or use any common law trade names
or trademarks or copyrights or any proprietary trade secrets, processes or
know-how except for (i) the use by it of the names listed in Section 4.20 of the
Seller
17
Disclosure Schedule, (ii) copyrights arising by operation of law in connection
with brochures and other written material created by Seller and (iii) any
customer lists of Seller or the Seller Subsidiary (the "Known Intellectual
Property"). Except for off-the-shelf office systems programs or as described in
Section 4.20 of the Seller Disclosure Schedule, neither Seller nor the Seller
Subsidiary is a party to any license agreement as licensor or licensee of any
intellectual property. Seller has not granted to any other Person a license of
any of the names listed in Section 4.20 of the Seller Disclosure Schedule or any
derivation thereof. No claims have been asserted against Seller or the Seller
Subsidiary, and to the Seller's knowledge no claims are pending, by any Person
regarding the use or infringement by Seller or the Seller Subsidiary of any
trademarks, patents, service marks, trade names, copyrights, trade secrets,
know-how or processes or other intellectual property of any kind whatsoever, or
challenging or questioning the validity or effectiveness of any license or
agreement, and to the Seller's knowledge there is no basis for such claim. To
the Seller's knowledge, the use by Seller or the Seller Subsidiary of the Known
Intellectual Property does not infringe on the rights of any Person.
4.21 Accounts Receivable. Except as specifically set forth in Section 4.21
of the Seller Disclosure Schedule, hereto, all accounts and notes receivable
reflected on the Seller Balance Sheet, and all accounts and notes receivable
arising subsequent to the date of the Seller Balance Sheet, have arisen in the
ordinary course of business, represent valid obligations to Seller or the Seller
Subsidiary and, subject only to an amount of bad debts reasonable in the
industry and not materially different than Seller's past experience, have been
collected or are collectible in the aggregate recorded amounts thereof in
accordance with their terms.
4.22 Substantial Customers, Brokers and Suppliers; Expirations.
(a) Section 4.22(a) of the Seller Disclosure Schedule lists the 25
customers of Seller with the highest amounts of premiums paid to Seller or paid
directly to the applicable insurer during the period from January 1, 1998 until
December 9, 1998, and the amount for which each such customer was invoiced
during such period.
(b) Section 4.22(b) of the Seller Disclosure Schedule lists the 25
insurance markets of Seller with the highest premium volume during the period
from January 1, 1998 until December 9, 1998, and the amount which Seller paid to
each insurance market during such period.
(c) Section 4.22(c) of the Seller Disclosure Schedule lists the producing
brokers for Seller during 1997 and the 9 month period ended September 30, 1998,
and the production for such broker during each such period.
(d) No customer, insurance market or broker listed in Sections 4.22(a),
(b), or (c) of the Seller Disclosure Schedule has ceased, or indicated to Seller
an intention to cease, dealing with or through Seller, (ii) reduced, or
indicated an intention to reduce, substantially its dealings with or through
Seller, or (iii) changed, or indicated an intention to change, substantially the
terms on which it is prepared to deal with or through Seller. To Seller's
knowledge, all of the customers, insurance markets or brokers listed in Sections
4.22(a), (b), or (c) of the Seller Disclosure Schedule will continue to be
customers, insurance markets or brokers of Seller after the Closing.
(e) Except in the ordinary course of business, to Seller's knowledge, no
policies of insurance in force for which the Seller receives commissions or
other remuneration will be terminated before the stated expiration date or will
not be renewed upon expiration.
(f) Expirations on insurance policies on which Seller earns commissions
are the sole property of Seller and not of any Partner, Associate, or other
Employee, except for, (i) Expirations on insurance policies produced by
sub-brokers, which policies, in 1997, accounted for 5.1% of Seller's gross
commissions, and, for the nine months ended September 30, 1998, accounted for
6.1% of Seller's gross commissions and (ii) as of the date hereof, Expirations
on policies produced by one Employee before he
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became employed by Seller, which policies account for less than 1% of Seller's
gross commissions in 1998 to date, and which Expirations are retained by such
Employee under an agreement consistent with Seller's customary policies for
Employees who bring such business when they become employed by Seller, a copy of
which agreement has been provided to Buyer.
4.23 Discount Programs. Section 4.23 of the Seller Disclosure Schedule
sets forth a description of each commission sharing arrangement, sub-brokerage
arrangement or other promotion program (collectively, "Promotions") instituted
by Seller and in effect prior to the Closing Date. The description of each
Promotion includes a summary of all major terms thereof, including, without
limitation, the amounts of the commissions shared or sub-brokerage fees, the
period for which it is in effect and the services subject thereto. True and
complete copies of each written contract relating to Promotions described in
Section 4.23 of the Seller Disclosure Schedule have been delivered to the Buyer
prior to execution of this Agreement.
4.24 Insurance Brokerage Activities.
(a) No person other than the Partners, Associates or Employees is or has
been authorized or permitted to place business on Seller's behalf.
(b) No binder of insurance or other intimation of coverage has been issued
or sent to any person by Seller or on its behalf unless and until the relevant
risk has been properly bound and all binders of insurance and intimations of
coverage on the part of Seller are complete and accurate in all material
respects.
(c) Section 4.24 of the Seller Disclosure Schedule sets out fully and
accurately the policy of the Seller with respect to the commissions booked in
its book of accounts and:
(i) no commissions have been booked except in accordance with that
policy;
(ii) to Seller's knowledge, there are no facts or circumstances
which might require reversal of commissions booked or return of
commissions already collected, except in the normal course of business.
(d) Seller has not paid insurance premiums, premium adjustments or other
items on behalf of a client (whether or not funded by the client) except with
the authority (express or implied) of the clients on whose behalf such payments
purport to have been made.
(e) To Seller's knowledge, Seller has not been party to the placement,
directly or indirectly, of insurance which is:
(i) unlawful; or
(ii) a fictitious or sham transaction.
(f) To Seller's knowledge, in the placement of insurance, Seller has not
breached any duty owed to its clients including but not limited to the duty to
make full disclosure of material facts to underwriters.
(g) Except as set out in Section 4.24 of the Seller Disclosure Schedule,
there are no arrangements whereby any part of any brokerage or commission
payable to Seller by any insured is shared with the insured or any other third
party.
(h) To Seller's knowledge, except as set out in Section 4.24 of the Seller
Disclosure Schedule, all insurance companies with which business has been placed
by Seller are paying claims in the normal course and without undue delay.
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4.25 Year 2000. The only "mission-critical" computer system (as such term
is commonly used in regulations and trade organization guidelines with respect
to the Year 2000 Problem (as defined below)) owned or utilized by Seller in its
business is the "INfinity System". Seller has scheduled an update to the
INfinity System in January 1999. Seller has received written assurances from
Delphi Product Development, the applicable third-party service provider with
respect to the INfinity System, that upon adoption of the update referred to in
the preceding sentence, the INfinity System will contain no deficiencies
relating generally to formatting for entering dates (commonly referred to and
referred herein as the "Year 2000 Problem") and that the INfinity System is in
compliance with all regulations and trade organization guidelines concerning the
Year 2000 Problem. To the best of Seller's knowledge, all of its other computer
systems ("Non-Mission Critical Systems") are in compliance with all regulations
and trade organization guidelines concerning the Year 2000 Problem, except where
the failure to be compliant would not result in, with respect to Seller, any
Material Adverse Effect. Seller is in the process of requesting written
assurances from all applicable third-party service or equipment providers that
its Non-Mission Critical Systems are in compliance with all regulations and
trade organization guidelines concerning the Year 2000 Problem. Seller has
delivered to Buyer copies of all correspondence between Seller and third-party
service or equipment providers or licensors concerning Year 2000 Problem
compliance. Except as set forth in Section 4.25 of the Seller Disclosure
Schedule, and except for off-the-shelf office systems programs, Seller has no
other contracts with, or commitments to, any third-party with respect to its
computer systems. Seller is not aware of any inability on the part of any
customer, insurance company or service provider with which Seller transacts
business to timely remedy any deficiencies of its own in respect of the Year
2000 Problem.
4.26 Prior Acquisitions. Except as set forth in the Seller Balance Sheet,
the September 30, 1998 balance sheet or in Section 4.26 of the Seller Disclosure
Schedule, no claims, amounts owed, liabilities (contingent or otherwise),
encumbrances, legal proceedings or any other obligations of any kind are due or
were incurred or outstanding in connection with any acquisitions made by Seller
prior to the date of this Agreement.
4.27 Seller Information. The information relating to the Seller and the
Seller Subsidiary to be contained in any documents filed with any governmental
agency in connection herewith, to the extent such information is provided in
writing by Seller, will not contain any untrue statement of a material fact or
omit to state a material fact necessary to make such information not misleading.
4.28 Disclosure. No representation or warranty contained in this
Agreement, and no statement contained in any certificate, list or other writing,
including but not necessarily limited to the Seller Disclosure Schedule,
furnished to Buyer pursuant to the provisions hereof, to the best knowledge of
Seller, contains or will contain any untrue statement of a material fact or
omits to state a material fact necessary in order to make the statements herein
or therein not misleading or, in the case of Seller's and the Seller
Subsidiary's financial statements, to present fairly the assets, liabilities and
partners' accounts of Seller and its business and expenses, changes in partners'
accounts and cash flows. To the best knowledge of Seller, all information
material to Buyer's interest in the Merger, or which is necessary to make
Seller's representations and warranties herein contained not misleading, has
been disclosed to Buyer.
4.29 Financing. Section 4.29 of the Seller Disclosure Schedule lists each
of the financing arrangements, including subordinated loans and promissory notes
to or investments in Seller to which Seller is currently a party, including
maturity date, original principal amount, interest rate and amount outstanding.
Seller is not a party to any financing arrangement that will accelerate or
terminate by reason of Seller (i) entering into this Agreement or any of the
Transaction Documents or (ii) consummating the transactions contemplated hereby
and thereby, including the Merger.
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ARTICLE V
COVENANTS OF THE PARTIES
5.01 Conduct of the Business of Seller. During the period from the date of
this Agreement to the earlier of the Effective Time or the date of termination
of this Agreement, and except as provided in Section 5.13 hereof or as may be
required or specifically permitted pursuant to this Agreement, Seller:
(a) shall, and shall cause the Seller Subsidiary to, conduct its business
and engage in transactions only in the ordinary and usual course of business
consistent with past practices, which shall include without limitation (i)
refraining from any of the activities described in Section 5.01(b) below and
(ii) not entering into any material transactions except in the ordinary and
usual course of business consistent with past practices, and (iii) complying
with the following covenants:
(A) maintaining its partnership or corporate existence, as the case
may be, and good standing, except where any failure to maintain such good
standing does not or would not have a Material Adverse Effect on the
Seller;
(B) using all reasonable efforts to maintain in full force and
effect insurance generally comparable in amount and in scope of coverage
to that now maintained by it;
(C) complying with and performing in all material respects its
obligations and duties (y) under contracts, leases and documents relating
to or affecting its assets, properties and business and (z) imposed upon
it by all federal, state and local laws and all rules, regulations and
orders imposed by federal, state or local governmental authorities,
judicial orders, judgments, decrees and similar determinations; and
(D) using all reasonable efforts and cause the Seller Subsidiary to
use all reasonable efforts to (x) preserve intact its business
organization and the goodwill of those having business relationships with
the Seller or the Seller Subsidiary, (y) keep available the services of
its officers and employees as a group and (z) maintain satisfactory
relationships with customers, insurance markets and brokers and others
having business relationships with it;
(b) shall not and shall not permit the Seller Subsidiary to, without the
prior written consent of Buyer:
(i) engage or participate in any material transaction or incur or
sustain any material obligation or liability except in the ordinary,
regular and usual course of its business consistent with past practices;
(ii) except in the ordinary, regular and usual course of business
consistent with past practices, sell, lease, transfer, assign, encumber or
otherwise dispose of or enter into any contract, agreement or
understanding to lease, transfer, assign, encumber or dispose of, any of
its assets;
(iii) relocate, or file any necessary application to open, close,
relocate, any office;
(iv) terminate, or give any notice (written or verbal) to customers
or governmental authorities or agencies to terminate, the operations of
any office or insurance brokerage or agency contract;
(v) waive any material right, whether in equity or at law, that it
has with respect to any asset except in the ordinary, regular and usual
course of business consistent with past practice; or
(vi) terminate, or give any notice (written or verbal) to
governmental authorities or agencies to terminate, fail to renew, or allow
to expire, any license.
(c) shall, at Buyer's request and expense, use its best efforts to
cooperate with Buyer with respect to preparation for the acquisition of Seller
by Buyer, and Seller shall confer on a regular and frequent basis with one or
more representatives of Buyer to report on operational and related matters;
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(d) shall promptly notify Buyer of any emergency or other change in the
normal course of its or the Seller Subsidiary's businesses or in the operation
of its or the Seller Subsidiary's properties and of any governmental complaints,
investigations or hearings (or communications indicating that the same may be
contemplated) if such emergency, change, complaint, investigation or hearing
would be material to the assets, properties, liabilities, business, operations,
results of operations, financial condition or prospects of Seller;
(e) shall not make any distributions in respect of the partnership
interests of Seller except (i) distributions of 1998 Income (A) at the beginning
of January 1999, equal to one-twelfth of eighty-five percent (85%) of Seller's
estimated 1998 Income and (B) when the amount is finally determined, of the
remaining undistributed amount of Seller's actual 1998 Income; and (ii)
distributions of 1999 Income at the beginning of each month before the Closing,
in an amount equal to a pro rata portion (estimated based on the number of
months before the then-anticipated Closing Date) of Seller's then-estimated 1999
Income (for which purpose, "Income" shall mean Seller's income from operations
plus profit-sharing commissions received, as determined in accordance with
Seller's normal accounting methods consistent with past practice);
(f) except as expressly provided for in this Agreement, shall not adopt or
amend (other than amendments required by applicable law or amendments that
reduce amounts payable by it) in any material respect any Seller Pension Plan,
any Seller Benefit Plan or any Seller Other Plan or enter into any employment
(other than at-will employment in the ordinary course), severance or similar
contract with any person (including, without limitation, contracts with
management which might require that payments be made upon the consummation of
the transactions contemplated hereby) or amend any such existing agreements,
plans or contracts to grant any raise or bonus or otherwise increase any amounts
payable thereunder or benefits provided thereunder, or grant or permit any
increase in compensation to its employees as a class except as disclosed in
Section 5.01 of the Seller Disclosure Schedule;
(g) shall not authorize, recommend, propose or announce an intention to
authorize, recommend or propose, or enter into an agreement with respect to, any
merger, consolidation, purchase and assumption transaction or business
combination (other than the Merger), any acquisition of a material amount of
assets or securities or assumption of liabilities, any disposition of a material
amount of assets or securities, or any release or relinquishment of any material
contract rights not in the ordinary and usual course of business and consistent
with past practices;
(h) shall not propose or adopt amendments to its limited liability
partnership registration or Partnership Agreement or the Seller Subsidiary's
articles of organization or by-laws;
(i) (A) shall not admit any new partner, and (B) shall not permit the
Seller Subsidiary to, issue, deliver or sell any shares (whether original
issuance or from treasury shares) of its capital stock, or securities
convertible into or exercisable for shares of its capital stock, or effect any
stock split, reverse stock split, recapitalization, reclassification or similar
transaction or otherwise change its equity capitalization as it exists on the
date hereof;
(j) shall not, and shall not permit the Seller Subsidiary to, grant,
confer or award any options, warrants, conversion rights or other rights not
existing on the date hereof to acquire any partnership interest or shares of its
capital stock, respectively;
(k) shall not purchase, redeem or otherwise acquire any partnership
interest other than pursuant to the arrangements described in Section 4.02(a) of
the Seller Disclosure Schedule, and shall not permit the Seller Subsidiary to,
purchase, redeem or otherwise acquire any shares of its capital stock or any
securities convertible into or exercisable for any shares of its capital stock;
22
(l) shall not, and shall not permit the Seller Subsidiary to, impose, or
suffer the imposition, on any partnership interest or share of capital stock
held by it of any material lien, charge, or encumbrance, or permit any such
lien, charge, or encumbrance to exist;
(m) shall not, and shall not permit the Seller Subsidiary to, incur any
additional debt obligation or other obligation for borrowed money, or to
guaranty any additional debt obligation or other obligation for borrowed money,
except in the ordinary, regular and usual course of business consistent with
past practices;
(n) shall not, and shall not permit the Seller Subsidiary to, incur or
commit to any capital expenditures or any obligations or liabilities in
connection therewith, other than capital expenditures and such related
obligations or liabilities incurred or committed to in the ordinary, regular and
usual course of business consistent with past practices, and, in all cases,
Seller agrees to obtain Buyer's prior consent with respect to capital
expenditures that individually exceed $50,000 or cumulatively exceed $100,000;
(o) shall not change its methods of accounting in effect at December 31,
1997, except as may be required by changes in applicable accounting policies as
concurred in by Seller's independent auditors, and Seller shall not change its
fiscal year;
(p) shall file all reports, applications and other documents required to
be filed by it with any governmental agency or authority between the date of
this Agreement and the Effective Time and shall furnish to Buyer copies of all
such reports promptly after the same are filed;
(q) shall not, except as expressly contemplated hereby, enter into any
contract with any Affiliate;
(r) shall not, and shall not permit the Seller Subsidiary to, except for
transactions in the ordinary course of business consistent with past practice,
enter into or terminate any material contract or agreement, or make any changes
in any of its material contracts, other than renewals of contracts for less than
a two (2) year period and, subject to the provisions of Section 5.13 hereof,
changes to leases not constituting a material adverse change of terms;
(s) shall not agree, in writing or otherwise, to take any of the actions
that are described above in this Section 5.01 as prohibited hereunder or any
action which would make any of its representations or warranties contained in
this Agreement untrue or incorrect or would otherwise violate any of its other
agreements or commitments contained in this Agreement in any material respect;
(t) shall use its best efforts to adopt the update of the INfinity System
referred to in Section 4.25 hereof and to continue to seek assurances from all
third-party service providers, customers and Insurance Companies with whom
Seller places insurance that Seller's and such third party's computer systems
are Year 2000 compliant, as applicable. Seller shall promptly deliver to Buyer
copies of all correspondence between Seller and such third-parties regarding the
Year 2000 Problem.
5.02 Access to Properties and Records; Confidentiality.
(a) Except as provided below, once a public announcement of this Agreement
has been made, Seller shall permit Buyer access to its and the Seller
Subsidiary's properties during normal business hours upon reasonable prior
notice, and shall disclose and make available to Buyer all Records, including
all books, papers and records relating to the assets, partnership interests,
stock ownership, properties, operations, obligations and liabilities of Seller
and the Seller Subsidiary, including, but not limited to, all books of account
(including the general ledger), tax records, minute books of Partners',
directors' and stockholders' meetings, organizational documents, by-laws,
material contracts and agreements, filings with any regulatory authority,
accountants' work papers, litigation files, plans affecting employees, and any
other business activities or prospects in which Buyer may reasonably have an
interest in light of the
23
transactions contemplated hereby. Seller shall use best efforts to make
arrangements with each third party provider of services to Seller or the Seller
Subsidiary to permit Buyer reasonable access to all of Seller's and the Seller
Subsidiary's Records held by each such third party. Buyer shall permit Seller
reasonable access during normal business hours upon reasonable prior notice to
such properties and records of Buyer in which Seller may reasonably have an
interest in light of the transactions contemplated hereby. Neither Buyer nor
Seller shall be required to provide access to or to disclose information where
such access or disclosure would violate or prejudice the rights of any customer,
would jeopardize the attorney-client privilege of the institution in possession
or control of such information, or would contravene any law, rule, regulation,
order, judgment, decree or binding agreement or, in the event of any litigation
or threatened litigation between the parties over the terms of this Agreement
where access to information may be adverse to the interests of such party. The
parties will use all reasonable efforts to make appropriate substitute
disclosure arrangements under circumstances in which the restrictions of the
preceding sentence apply.
(b) All Confidential Information, as such term is defined further below,
furnished by each party hereto to the other or to any of its affiliates or to
any of its or any of its affiliates' directors, officers, employees, or
representatives or agents (such persons being referred to herein as
"Representatives"), shall be treated as the sole property of the party
furnishing the information until consummation of the transactions contemplated
hereby, and, if such transactions shall not occur, the party receiving the
information or any of its affiliates or Representatives, as the case may be,
shall return to the party which furnished such information all documents or
other materials containing, reflecting or referring to such information, shall
keep confidential all such information for the period hereinafter referred to,
and shall not directly or indirectly at any time use such information for any
competitive or other commercial purpose; provided, however, that Buyer and its
affiliates shall be permitted to retain and share with their regulators,
examiners and auditors (only to the extent Buyer is required to disclose such
information, and, provided, that such parties are informed of the confidential
nature thereof and if appropriate directed to treat such information
confidentially) such materials, files and information relating to or
constituting Buyer's or any of its affiliates' or Representatives' work product,
presentations or evaluation materials as any such party deems reasonably
necessary or advisable in connection with auditing or examination purposes. The
obligation to keep such information confidential shall continue for two years
from the date this Agreement is terminated. In the event that either party or
any of its affiliates or Representatives is requested or required in the context
of a litigation, governmental, judicial or regulatory investigation or other
similar proceeding (by oral questions, interrogatories, requests for information
or documents, subpoenas, civil investigative demands or similar process) to
disclose any Confidential Information, the party or its affiliate or its
Representative so requested or required will directly or through the party or
such affiliate or Representative, if practicable and legally permitted, prior to
providing such information, provide the other party with notice of each such
request or requirement so that the other party may seek an appropriate
protective order or other remedy or, if appropriate, waive compliance with the
provisions of this Agreement. If, in the absence of a protective order or the
receipt of a waiver hereunder, the party or affiliate or Representative so
requested or required is, in the written opinion of its counsel, legally
required to disclose Confidential Information to any tribunal, governmental or
regulatory authority, or similar body, the party or affiliate or Representative
so required may disclose that portion of the Confidential Information which it
is advised in writing by such counsel it is legally required to so disclose to
such tribunal or authority or similar body without liability to the other party
hereto for such disclosure. The parties and their affiliates and Representatives
will exercise reasonable efforts, at the expense of the party who disclosed such
Confidential Information to the other party, to obtain assurance that
confidential treatment will be accorded the information so disclosed.
As used in this Section 5.02(b), "Confidential Information" means all
data, reports, interpretations, forecasts and records (whether in written form,
electronically stored or otherwise) containing or otherwise reflecting
information concerning the disclosing party or its affiliates which is not
available to the general public and which the disclosing party or any affiliate
or any of their respective Representatives provides or has previously provided
to the receiving party or to the receiving party's affiliates or Representatives
at any time in connection with the transactions contemplated by this
24
Agreement, including but not limited to any information obtained by meeting with
Representatives of the disclosing party or its affiliates, together with
summaries, analyses, extracts, compilations, studies, personal notes or other
documents or records, whether prepared by the receiving party or others, which
contain or otherwise reflect such information. Notwithstanding the foregoing,
the following information will not constitute "Confidential Information": (i)
information that is or becomes generally available to the public other than as a
result of a disclosure by the receiving party or any affiliate or Representative
of the receiving party, (ii) information that the receiving party can
demonstrate was previously known to it or its affiliates or Representatives on a
nonconfidential basis prior to its disclosure by the disclosing party, its
affiliates or Representatives, (iii) information that became or becomes
available to the receiving party or any affiliate or Representative thereof on a
nonconfidential basis from a source other than the disclosing party or any
affiliate or Representatives of the disclosing party, provided that such source
is not known by the disclosing party or its affiliates or Representatives to be
subject to any confidentiality agreement or other legal restriction on
disclosing such information or (iv) information that the receiving party can
demonstrate has been independently acquired or developed by it or its affiliates
or Representatives without violating the obligations of this Section 5.02(b).
5.03 No Solicitation. Unless and until this Agreement shall have been
properly terminated by either party pursuant to Section 8.01 hereof, neither
Seller nor the Seller Subsidiary shall (and Seller shall use its best efforts to
cause the Partners and Seller's officers, employees, representatives and agents,
including, but not limited to, investment bankers, attorneys and accountants,
not to), directly or indirectly, encourage, solicit, initiate or participate in
any discussions or negotiations with, or provide any information to, any
corporation, partnership, person or other entity or group (other than Buyer and
its affiliates or representatives) concerning any merger, tender offer, sale of
assets, sale of shares of partnership interests, capital stock or debt
securities or similar transaction involving Seller or the Seller Subsidiary (an
"Acquisition Transaction"). Seller will immediately communicate to Buyer the
terms of any proposal, discussion, negotiation or inquiry relating to an
Acquisition Transaction and the identity of the party making such proposal or
inquiry which it may receive in respect of any such transaction (which shall
mean that any such communication shall be delivered no less promptly than by
telephone within twenty-four (24) hours of Seller's receipt of any such proposal
or inquiry) or its receipt of any request for information from any governmental
agency or authority with respect to a proposed Acquisition Transaction.
5.04 Consents. Each of Seller and Buyer will cooperate with the other and
use all reasonable efforts to, as promptly as practicable, prepare all
documentation, to effect all filings and to obtain all permits, consents,
approvals and authorizations of governmental agencies and authorities and
nongovernmental third parties, including but not limited to, consents of
Insurance Companies, which are necessary or appropriate to consummate the
transactions contemplated by this Agreement.
5.05 Further Assurances. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use all reasonable efforts to, as
promptly as practicable, take, or cause to be taken, all action and to do, or
cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the transactions
contemplated by this Agreement. In case at any time after the Effective Time any
further action is necessary or desirable to carry out the purposes of this
Agreement, the proper officers and directors of Buyer and Seller shall use
reasonable efforts to take all such necessary action.
5.06 Seller Disclosure Supplements. From time to time prior to the
Effective Time, and in any event on the date which is three (3) days prior to
the Closing Date, Seller will promptly supplement or amend the Seller Disclosure
Schedule with respect to any matter hereafter arising which, if existing,
occurring or known at the date of this Agreement, would have been required to be
set forth or described in the Seller Disclosure Schedule or which is necessary
to correct any information in the Seller Disclosure Schedule which has become
inaccurate. No supplement or amendment to the Seller Disclosure Schedules
pursuant to this Section 5.07 shall have any effect for the purpose of
determining Seller's satisfaction of any of the conditions set forth in Section
6.02 hereof.
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5.07 Public Announcements. Except as otherwise required by law or the
rules of Nasdaq, Seller and Buyer will cooperate with each other in the
development and distribution of all news releases and other public information
disclosures with respect to this Agreement or any of the transactions
contemplated hereby.
5.08 Post-Closing Governance. From the Effective Time and for a period of
at least two years thereafter, the Board of Directors of the Surviving Entity
shall consist of six (6) members, including, in addition to three (3)
individuals designated by Buyer (initially the three (3) persons who are serving
as directors of the Acquisition Subsidiary immediately prior to the Effective
Time), three (3) individuals designated by the Partners, who are either (a)
Partners or (b) other persons designated by the Partners and approved by Buyer
in its reasonable judgment prior to the Effective Time, each to hold office in
accordance with the certificate of formation and operating agreement of
Acquisition Subsidiary as then in effect.
5.09 Acquisition Subsidiary. On or prior to the Closing Date, Buyer and
the Acquisition Subsidiary shall adopt an operating agreement which, in general,
shall provide for a Board of Directors which shall have the same power and
authority with respect to the Acquisition Subsidiary as may be exercised
pursuant to the Delaware Corporation Law by a board of directors of a
corporation incorporated in Delaware in the absence of any restriction on such
power and authority in the certificate of incorporation or bylaws of such
corporation. The operating agreement of the Acquisition Subsidiary shall also
contain standard indemnification and exculpation provisions for directors and
officers of the Acquisition Subsidiary, subject to applicable federal or state
laws and regulations governing Buyer or any of its Affiliates.
5.10 Employment and Benefit Matters.
(a) From and after the Effective Time, Buyer shall either continue in
effect the Seller Pension Plans, Seller Benefit Plans, and Seller Other Plans or
shall permit each Partner and Employee who remains employed by the Surviving
Entity to participate in substitute plans maintained by Buyer for its employees
provided that, (i) with respect to the pension plan maintained by Buyer for its
employees, such pension plan has benefits no less favorable in the aggregate
than the Seller Pension Plan, and (ii) with respect to such other plans of Buyer
other than Buyer's pension plan, such plans in the aggregate have benefits no
less favorable than the benefits currently provided under the Seller Benefit
Plans and Seller Other Plans. In the event that any Partner or Employee becomes
a participant in an employee benefit plan, program or arrangement maintained by
or contributed to by the Buyer or its affiliates (a "Transferred Employee"),
Buyer shall cause such plan, program or arrangement to treat the prior service
of such Transferred Employee with Seller or the Seller Subsidiary as service
rendered to Buyer or its affiliate, as the case may be, for purposes of
eligibility to participate, vesting and eligibility for special benefits under
such plan, program or arrangement of Buyer, but not for purposes of benefit
accrual (including minimum pension amount) or benefit payment, early retirement
subsidies, minimum pension benefits or post-retirement welfare benefits under
any pension benefit plan or welfare plan of Buyer extended to Employees or
Transferred Employees, and all preexisting conditions to which any such
Employees or Transferred Employees are subject shall be waived under the welfare
plans of the Buyer and its subsidiaries. Buyer agrees to provide Employees and
Transferred Employees with the types and levels of employee benefits maintained
by Buyer for similarly situated employees of the Buyer.
(b) After the Effective Time, the Surviving Entity shall assume the
indemnification obligations to Partners currently set forth in the last
paragraph of Section 17 of the Partnership Agreement with respect to acts and
omissions taken prior to the Effective Time by such Partners, but only to the
extent permitted by federal and state law and regulations and excepting any
matter as to which Buyer is entitled to indemnification under Article IX hereof,
regardless of any limitation on indemnification set forth in Article IX hereof.
26
(c) All existing Non-Piracy Agreements executed and delivered by Seller
and Associates, Employees or other Persons, other than Partners, prior to the
Closing Date shall remain in full force and effect unchanged after the Closing
Date.
5.11 Maintenance of Records. Through the Effective Time, Seller will
maintain the Records in the same manner and with the same care that the Records
have been maintained prior to the execution of this Agreement. Buyer may, at its
own expense, make such copies of and excerpts from the Records as it may deem
desirable. All Records, whether held by Buyer or Seller, shall be maintained for
such periods as are required by law, unless the parties shall, applicable law
permitting, agree in writing to a different period. From and after the Effective
Time, Buyer shall be solely responsible for continuing maintenance of such
Records.
5.12 Leases. Seller shall consult with Buyer before renewing or extending
any material lease of an office or other material lease of Seller or the Seller
Subsidiary for real property or relating to furniture, fixtures or equipment
that is currently in effect but that would otherwise expire on or prior to the
Effective Time. Neither Seller nor the Seller Subsidiary shall cancel, terminate
or take other action that is likely to result in any cancellation or termination
of any such material lease without first consulting with Buyer.
5.13 Retired Partners. On or prior to the Closing Date, Seller shall
satisfy all obligations of Seller to Retired Partners and any other Person
described in Section 4.02(a)(i) of the Seller Disclosure Schedule under the
Partnership Agreement; provided, that Seller shall be permitted to satisfy all
obligations of Seller to Retired Partners or any other Person described in
Section 4.02(a)(i) of the Seller Disclosure Schedule under the Partnership
Agreement by directing Buyer to pay an applicable portion of the Purchase Price
to such Retired Partner or such other Person described in Section 4.02(a)(i) of
the Seller Disclosure Schedule on the Closing Date. Seller and the Partners
represent and warrant to Buyer that the payment of that portion of the Purchase
Price which Seller shall direct Buyer to pay to the Retired Partners and any
other Person described in Section 4.02(a)(i) of the Seller Disclosure Schedule
under the foregoing sentence, together with any other payments to be made as of
the Closing Date, shall satisfy all obligations of Seller and the Partners to
the Retired Partners and such other Persons described in Section 4.02(a)(i) of
the Seller Disclosure Schedule under the Partnership Agreement. On or prior to
the Closing Date, Seller and the Partners shall use their best efforts to obtain
a release from all Retired Partners and any other Person described in Section
4.02(a)(i) of the Seller Disclosure Schedule, in a form reasonably acceptable to
Buyer, pursuant to which each such Retired Partner or Person shall release
Seller and Buyer from any and all claims which such Retired Partner or Person
may have under the Partnership Agreement.
5.14 Obligations of Partners. On or prior to the Closing Date, all
obligations and indebtedness of the Partners to Seller under the Partnership
Agreement or otherwise, including without limitation, all obligations to make
capital contributions, shall have been repaid and satisfied in full, for which
purpose such Partners may direct Buyer to pay an applicable portion of the
Purchase Price to Seller, and no Partner shall thereafter have any remaining
obligation or liability to Seller outstanding as of the Closing Date.
5.15 Deferred Service Revenue. At the Closing, immediately prior to the
Effective Time, Seller shall assign and transfer to the Acquisition Subsidiary,
cash, accounts receivables and/ or other assets of Seller having an aggregate
value equal to the amount of deferred service revenue (as described below) as of
such date (the "Deferred Service Assets"), in consideration for the agreement of
Acquisition Subsidiary to assume Seller's obligation to perform all of the
services with respect to which Seller has, in the ordinary course of business,
recorded "deferred service revenue" on its "Statements of Assets and Liabilities
and Partners' Accounts" as in effect on the Closing Date. Such assignment and
assumption shall be effective by the delivery (a) by Seller of a xxxx of sale
and such other instruments of assignment as Buyer shall reasonably request and
(b) by Acquisition Subsidiary of such instruments of assumption as Seller shall
reasonably request.
5.16 Distribution of 1999 Partnership Income. Promptly after the Closing
Date, the Board of Directors of the Surviving Entity shall cause an accounting
to be made of Seller's partnership Income (as that term is defined in Section
5.01(e) hereof) for the period from January 1, 1999 through the Closing Date,
and shall provide prompt written notice to the Partners of such determination,
together with all
27
back-up materials used by the Surviving Entity in preparing the determination.
For purposes of this determination, "deferred service revenue" reflected in
Seller's Statements of Assets and Liabilities and Partners' Accounts shall be
included in income and the amount of cash and other assets assigned and
transferred to Acquisition Subsidiary pursuant to Section 5.15 shall be deducted
as an expense. The Partners shall have ten (10) days from delivery of the
written notice of determination pursuant to this Section 5.16 to object to such
determination; provided, that such objection shall be set forth in a written
notice signed by 70% in interest of the Partners (determined pursuant to
Schedule 1 hereto). In the event of such objection, the Partners and Seller
shall use reasonable efforts to resolve in good faith all of the Partners'
objections to the determination. In the event that, after the expiration of the
twenty (20) day period following delivery by the Partners of the written notice
of objection to Seller, the parties shall not have resolved the objection, such
objection shall be submitted to binding arbitration in Boston, Massachusetts
with each party sharing equally the costs of the arbitration. When the
determination becomes final (either because it is not so challenged or as a
result of the arbitrator's decision), the Surviving Entity shall distribute to
the Partners and the Retired Partners in accordance with instructions given by
the Partners hereunder, each Partner's and Retired Partner's proportionate share
of the difference between (i) the determination of partnership Income for the
period from January 1, 1999 until the Closing Date, minus (ii) distributions of
1999 Income prior to the Closing Date pursuant to Section 5.01(e)(ii) hereof.
ARTICLE VI
CLOSING CONDITIONS
6.01 Conditions to Each Party's Obligations. The respective obligations of
each party under this Agreement shall be subject to the fulfillment at or prior
to the Effective Time of the following conditions, none of which may be waived,
except as provided for below:
(a) Governmental Consents. All authorizations, consents, orders or
approvals of, declarations or filings with or notices to, and all expirations of
waiting periods imposed by, any governmental or regulatory authority or agency,
which are necessary for the consummation of the Merger, shall have been filed,
occurred or been obtained (all such authorizations, orders, declarations,
approvals, filings, notices and consents and the lapse of all such waiting
periods being referred to as the "Requisite Regulatory Approvals"), and all such
Requisite Regulatory Approvals shall be in full force and effect, except any
Requisite Regulatory Approval the failure of which to obtain will not have a
Material Adverse Effect on Buyer, the Surviving Entity or the transactions
contemplated hereby.
(b) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition (an "Injunction")
preventing the consummation of the Merger shall be in effect.
6.02 Conditions to the Obligations of Buyer. The obligations of Buyer
under this Agreement shall be further subject to the satisfaction or waiver by
Buyer, at or prior to the Effective Time, of the following conditions:
(a) Absence of Material Adverse Changes. There shall not have occurred any
change in the assets, properties, liabilities, business, operations, results of
operations, financial condition or prospects of Seller or the Seller Subsidiary
which constitutes, individually or in the aggregate, a Material Adverse Effect
on Seller.
(b) Representations and Warranties; Performance of Obligations. The
obligations of Seller required to be performed by it at or prior to the Closing
pursuant to the terms of this Agreement shall have been duly performed and
complied with in all material respects and the representations and warranties of
Seller contained in this Agreement shall be true and correct in all material
respects as of the date of this Agreement and as of the Effective Time as though
made at and as of the Effective Time (except as
28
otherwise specifically contemplated by this Agreement and except as to any
representation or warranty which specifically relates to an earlier date) and
Buyer shall have received a certificate to that effect signed on behalf of
Seller by two members of the Executive Committee of Seller.
(c) Third-Party Approvals. Any and all permits, consents, waivers,
clearances, approvals and authorizations of or notices to all nongovernmental
and nonregulatory third parties which are necessary in connection with the
consummation of the Merger and are required to be received, obtained or made by
Seller, including without limitation all such permits, consents, waivers,
clearances, approvals, authorizations and notices disclosed in Section 4.04 of
the Seller Disclosure Schedule, shall have been so received, obtained or made
and shall be in full force and effect.
(d) Employment Agreements. The Employment Agreements shall be in full
force and effect.
(e) Obligations to Retired Partners. Except as otherwise provided in
Section 5.13 hereof, all obligations of Seller to Retired Partners and any other
Person whether or not described in Section 4.02(a)(i) of the Seller Disclosure
Schedule under the Partnership Agreement shall be satisfied.
(f) Burdensome Condition. There shall not be any action taken, or any
statute, rule, regulation or order enacted, entered, enforced or deemed
applicable to the Merger or Buyer, by any federal or state governmental agency
or authority which, in connection with the granting of any Requisite Regulatory
Approval, imposes any condition or restriction upon Buyer, any Buyer subsidiary
or Seller after the Merger, which would so materially adversely impact the
economic or business benefits of the transactions contemplated by this Agreement
as to render inadvisable in the reasonable judgment of Buyer the consummation of
the Merger.
(g) Legal Opinion. Buyer shall have received a legal opinion, dated the
Closing Date, of Xxxxxx & Dodge LLP, counsel for Seller, containing the opinions
set forth in Exhibit B attached hereto, together with customary qualifications
and exceptions in a form reasonably acceptable to Buyer.
(h) [*]
In addition to the foregoing, Seller will furnish Buyer with such
additional certificates, instruments or other documents in the name or on behalf
of Seller, executed by appropriate officers or
*confidential treatment requested
29
others, including without limitation certificates or correspondence of
governmental agencies or authorities or nongovernmental third parties, to
evidence fulfillment of the conditions set forth in this Section 6.02 as Buyer
may reasonably request.
6.03 Conditions to the Obligations of Seller. The obligations of Seller
under this Agreement shall be further subject to the satisfaction or waiver by
Seller, at or prior to the Effective Time, of the following conditions:
(a) Absence of Material Adverse Changes. There shall not have occurred any
change in the assets, properties, liabilities, business, operations, results of
operations, financial condition or prospects of Buyer or any of its subsidiaries
which has had, or is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Buyer.
(b) Representations and Warranties; Performance of Obligations. The
obligations of Buyer required to be performed by it at or prior to the Closing
pursuant to the terms of this Agreement shall have been duly performed and
complied with in all material respects and the representations and warranties of
Buyer contained in this Agreement shall be true and correct in all material
respects as of the date of this Agreement and as of the Effective Time as though
made at and as of the Effective Time (except as otherwise specifically
contemplated by this Agreement and except as to any representation or warranty
which specifically relates to an earlier date) and Seller shall have received a
certificate to that effect signed by the vice chairman and chief financial
officer of Buyer or such other appropriate officer(s) of Buyer.
(c) Third-Party Approvals. Any and all permits, consents, waivers,
clearances, approvals and authorizations of or notices to all nongovernmental
and nonregulatory third parties which are necessary in connection with the
consummation of the Merger and are required to be received, obtained or made by
Buyer shall have been so received, obtained or made and shall be in full force
and effect.
(d) Legal Opinion. Seller shall have received a legal opinion dated the
Closing Date, of Xxxx X. Xxxxxxx, Executive Vice President, General Counsel and
Clerk to Buyer, and Xxxxxxx Xxxx LLP, counsel for Buyer and the Acquisition
Subsidiary, containing the opinions set forth in Exhibit C attached hereto,
together such customary qualifications and exceptions in forms reasonably
acceptable to Seller.
(e) Employment Agreements. The Employment Agreements shall be in full
force and effect.
(f) Transfer of Deferred Service Revenue. The transfer of the deferred
service revenue described in Section 5.15 hereof shall have been consummated, or
Buyer and Seller shall have made alternative arrangements which in the
reasonable opinion of the Partners will achieve the economic and tax results
contemplated by the transfer of the deferred services revenue pursuant to
Section 5.15 hereof.
In addition to the foregoing, Buyer will furnish Seller with such
additional certificates, instruments or other documents in the name or on behalf
of Buyer, executed by appropriate officers or others, including without
limitation certificates or correspondence of governmental agencies or
authorities or nongovernmental third parties, to evidence fulfillment of the
conditions set forth in this Section 6.03 as Seller may reasonably request.
ARTICLE VII
CLOSING
7.01 Time and Place. Subject to the provisions of Articles VI and VIII
hereof, the Closing of the transactions contemplated hereby shall take place at
the Boston, Massachusetts offices of Xxxxxxx Xxxx LLP at 10:00 A.M., local time,
on the first business day after the date on which all of the conditions
30
contained in Article VI are satisfied or waived; or at such other place, at such
other time, or on such other date as Seller and Buyer may mutually agree upon
for the Closing to take place.
7.02 Deliveries at the Closing. Subject to the provisions of Articles VI
and VIII hereof, at the Closing there shall be delivered to Seller and Buyer,
the opinions, certificates, and other documents and instruments required to be
delivered under Article VI hereof.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.01 Termination. This Agreement may be terminated at any time prior to
the Effective Time in accordance with the following provisions:
(a) by mutual written consent of Seller and Buyer authorized by their
Partners or Boards of Directors as the case may be;
(b) by Seller or Buyer if the Effective Time shall not have occurred on or
prior to June 30, 1999 (the "Termination Date"); provided, however, that in the
event the delay is caused by Seller or due to Seller's failure to promptly
produce information required for any regulatory or governmental approval, as
required by Section 5.04 hereof, or Seller's failure to otherwise fulfill its
obligations to consummate the transactions, including the Merger, contemplated
hereby, the Termination Date shall be extended until September 30, 1999 or such
later date as shall have been agreed to in writing by Buyer and Seller;
(c) by Buyer or Seller if any governmental or regulatory authority or
agency, or court of competent jurisdiction, shall have issued a final permanent
order or Injunction enjoining, denying approval of, or otherwise prohibiting the
consummation of the Merger and the time for appeal or petition for
reconsideration of such order or Injunction shall have expired without such
appeal or petition being granted; or
(d) by the Buyer or the Seller (provided that the terminating party is not
then in material breach of any representation, warranty, covenant or other
agreement contained herein), in the event of a material breach by the other
party of any representation, warranty, covenant or other agreement contained
herein which breach is not cured after thirty (30) days written notice thereof
is given to the party committing such breach;
(e) By the Board of Directors of Buyer or the Representatives of Seller
(provided that the terminating party is not then in breach of any representation
or warranty, covenant or other agreement contained in this Agreement) in the
event that any of the conditions precedent to the obligations of such party to
consummate the Merger cannot be satisfied or fulfilled by the date specified in
Section 8.01(b) of this Agreement.
8.02 Effect of Termination. In the event of termination of this Agreement
by either Seller or Buyer as provided above, this Agreement shall forthwith
become null and void (other than Sections 5.02(b) and 10.02 hereof, which shall
remain in full force and effect) and there shall be no further liability on the
part of Seller or Buyer or their respective officers or directors to the other,
except (i) any liability of Seller or Buyer under said Sections 5.02(b) and
10.02, provided that, nothing contained herein shall relieve a party from
liability for any and all damages, costs and expenses, including all reasonable
attorneys' fees, sustained or incurred by the nonbreaching party caused by a
willful breach or default hereunder occurring prior to such termination.
8.03 Amendment, Extension and Waiver. Subject to applicable law and as may
be authorized by the Boards of Directors of the Buyer and the Partners of
Seller, at any time prior to the consummation of the transactions contemplated
by this Agreement or termination of this Agreement in accordance with
31
the provisions of Section 8.01 hereof, Buyer and Seller may, (a) amend this
Agreement, (b) extend the time for the performance of any of the obligations or
other acts of any other party hereto, (c) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto, or (d) waive compliance with any of the agreements or
conditions contained in Articles V and VI (other than Section 6.01) hereof. This
Agreement may not be amended except by an instrument in writing signed on behalf
of each of Buyer and Seller hereto. Any agreement on the part of Buyer or Seller
hereto to any extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party, but such waiver or failure
to insist on strict compliance with such obligation, covenant, agreement or
condition shall not operate as a waiver of, or estoppel with respect to, any
subsequent or other failure.
ARTICLE IX
INDEMNIFICATION
9.01 Claim Period; Survival. Any claim for a breach of any representation,
warranty, covenant or other agreement contained in or incorporated into this
Agreement referred to below must be made within the following periods:
(a) with respect to the matters addressed in Sections 4.02(a) and
Section 5.13 hereof, [*];
(b) with respect to the matters addressed in Section 4.10 hereof,
[*]; and
(c) with respect to all other representations, warranties, covenants
and agreements made by the Seller or the Partners contained in or incorporated
into this Agreement or in any certificate delivered pursuant hereto, [*] after
the later of (i) the Closing Date or (ii) with respect to any breach of
covenant, the date such covenant was required to be performed. The
representations, warranties, covenants and agreements of the Seller and the
Partners contained in or referred to in this Agreement or in any certificate
delivered pursuant hereto shall survive the Closing Date and continue for the
periods during which claims may be made as set forth above; provided, however,
that covenants of the Seller or Partners referred to in the proviso of Section
10.10 shall survive as stated therein.
9.02 Terms of Indemnification. Subject to Section 9.05 below, the Partners
agree to indemnify, jointly and severally, Buyer (and its directors, officers,
agents and employees) against, and each of them agrees to protect, to defend and
to hold harmless the Buyer (and its directors, officers, agents and employees)
from all Damages (as such term is defined in Section 9.04 below) arising out of
or resulting from any inaccuracy in, or breach of, any of the representations,
warranties, covenants or other agreements of the Seller or the Partners
contained in or incorporated into this Agreement or in any certificate or
instrument delivered in connection herewith (with any representations,
warranties, covenants and other agreements of Seller being deemed to be of the
Partners for purposes of this indemnification), which inaccuracy or breach is
asserted and a claim for indemnification with respect thereto is made within the
applicable survival period set forth in Section 9.01 above. In addition, the
Partners agree that they will indemnify and hold Buyer and its Affiliates,
officers, directors and employees harmless from all Damages incurred by Buyer
resulting from, arising out of, or in connection with, any claim of a Retired
Partner or any other Person whether or not described in Section 4.02(a)(i) of
the Seller Disclosure Schedule with respect to unsatisfied obligations of Seller
to such Persons under the Partnership Agreement.
9.03 Procedures. In any case under this Agreement where the Partners have
indemnified the Buyer against any claim or legal action, indemnification shall
be provided in accordance with the procedure outlined below:
(a) Provided that prompt notice is given by the Buyer of a claim or suit
for which indemnification might be claimed, unless the failure to provide such
notice does not prejudice the interests
*confidential treatment requested
32
of the Partners, the Partners promptly will defend, contest, or otherwise
protect against any such claim or suit at their own cost and expense.
(b) The Buyer may, but will not be obligated to, participate at its own
expense in a defense thereof by counsel of its own choosing, but the Partners
shall be entitled to control the defense unless the Buyer has relieved the
Partners from liability with respect to the particular matter, provided that the
Partners may only settle or compromise the matter subject to indemnification
without the consent of the Buyer if such settlement includes a complete release
of the Buyer as to the matters in dispute and provided further that Buyer will
not unreasonably withhold consent to any settlement or compromise that requires
its consent.
(c) In the event the Partners fail to timely defend, contest, or otherwise
protect against any such claim or suit, the Buyer may, but will not be obligated
to, defend, contest, or otherwise protect against the same, and make any
compromise or settlement thereof and recover the entire costs thereof from the
Partners, jointly and severally, including reasonable attorneys' fees,
disbursements and all amounts paid as a result of such claim or suit or the
compromise or settlement thereof; provided, however, that if the Partners
undertake the defense of such matter, the Buyer shall not be entitled to recover
from the Partners for its costs incurred in the defense thereof other than the
reasonable costs of investigation undertaken by the Buyer and reasonable costs
of providing assistance.
(d) The Buyer shall cooperate and provide such assistance as the Partners
may reasonably request in connection with the defense of the matter subject to
indemnification and in connection with recovering from any third parties amounts
that the Partners may pay or be required to pay by way of indemnification
hereunder. The Buyer shall be required to file a claim with its insurers as to
any matter subject to indemnification that is covered by insurance; provided,
however, that neither the filing of any such claim nor the insurer's rejection
thereof in whole or in part shall be a condition to the Partners' obligations
under this Article IX. The Buyer shall protect its position with respect to any
matter that may be the subject of indemnification hereunder in the same manner
as it would any similar matter where no indemnification is available.
9.04 Damages. As used in this Article IX, the term "Damages" means any and
all losses, claims, damages, liabilities, obligations, judgments, settlements,
awards, demands, offsets, defenses, counterclaims, actions or proceedings,
reasonable out-of-pocket costs, expenses and attorneys' fees (including any such
reasonable costs, expenses and attorneys' fees incurred in enforcing a party's
right of indemnification against any indemnitor or with respect to any appeal)
and penalties and interest, if any, but shall not include any such amounts for
which the Buyer or Surviving Entity receives payment from a third party
(including insurers). Any insurance proceeds received by the Buyer with respect
to any matter that has been the subject of any prior indemnification payment(s)
by the Partners shall be promptly remitted to the Partners up to the aggregate
amount of such prior indemnification payment(s).
9.05 Maximum Indemnification; Threshold; Caps; Exception.
(a) The maximum liability of the Partners to Buyer under this Article IX
(except for claims with respect to the representations, warranties, covenants
and agreements set forth in Section 5.13 hereof, for which there shall be no
maximum liability) shall be [*] (the "Cap"); provided, however, that the maximum
liability of any individual Partner to Buyer under this Article IX (except for
claims with respect to the representations, warranties, covenants and agreements
set forth in Section 5.13 hereof for which there shall be no maximum liability)
shall be [*];
(b) Buyer shall not be entitled to any indemnification with respect to
representations, warranties, covenants and agreements referred to in Section
9.01(c) of this Article IX (except for claims with respect to the
representations, warranties, covenants and agreements set forth in Section 5.13
hereof, for which there shall be no deductible) unless and only to the extent
that the aggregate Damages to the Buyer and its affiliates (without duplication)
exceed [*] (the "Aggregate Deductible") and provided further (i) for claims
and actions (except for claims and actions with respect to the representations,
warranties, covenants and agreements set forth in Section 5.13 hereof, for which
there shall be no limitation) arising within one year of the Closing Date, the
Partners shall be liable for the full amount by
*confidential treatment requested
33
which such Damages exceed the Aggregate Deductible up to the amount of the Cap,
(ii) for claims and actions (except for claims and actions with respect to the
representations, warranties, covenants and agreements set forth in Section 5.13
hereof, for which there shall be no limitation) [*] of the Closing Date, the
Partners shall be liable for the full amount by which such Damages exceed the
Aggregate Deductible but only up to the aggregate amount of [*] of the Cap, and
(iii) for claims and actions (except for claims and actions with respect to the
representations, warranties, covenants and agreements set forth in Section 5.13
hereof, for which there shall be no limitation) arising after [*] but within [*]
of the Closing Date, the Partners shall be liable for the full amount by which
such Damages exceed the Aggregate Deductible but only up to the aggregate amount
of [*] of the Cap, and
(c) Notwithstanding any other provision of this Agreement, if the Damages
for which indemnification is sought arise out of an inaccuracy or breach which
was known to be inaccurate at the time made or deemed to be made or, with
respect to a breach of a covenant, was willful at the time performed or to be
performed, then there shall be no limitation on the amount of Damages that may
be recovered from the Partners hereunder.
ARTICLE X
MISCELLANEOUS
10.01 Expenses. Except as may otherwise be agreed to hereunder or in other
writing by the parties, all legal and other costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such costs and expenses.
10.02 Notices. All notices or other communications hereunder shall be in
writing and shall be deemed given if delivered personally or mailed by prepaid
registered or certified mail (return receipt requested) or by telecopy, cable,
telegram or telex addressed as follows:
(a) If to Seller, to:
Xxxxxx & Lord LLP
000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxxxxx
Attention: Xxxxxxx X. Xxxxxxx
Copy to:
Xxxxxx & Dodge LLP
Xxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
(b) If to Buyer, to:
USTrust
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxx X. Xxxxxxxx
Chairman and Chief Executive Officer
and to:
USTrust
*confidential treatment requested
34
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxx X. Xxxxxxx, Esq.
Executive Vice President, General Counsel and Secretary
Copy to:
Xxxxxxx Xxxx LLP
000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxx X. Xxxxxx, Esq.
and Xxxxxxx X. Xxxxxxxx, Esq.
and if to any of the Partner, to the address listed under such Partner's name on
the signature pages hereto, with a copy to Xxxxxx & Dodge LLP as provided above,
or such other address as shall be furnished in writing by any party, and any
such notice or communication shall be deemed to have been given as of the date
so mailed.
10.03 Parties in Interest. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors,
assigns and personal representatives; provided, however, that neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any party hereto without the prior written consent of the other
parties, and that nothing in this Agreement is intended to confer, expressly or
by implication, upon any other person any rights or remedies under or by reason
of this Agreement.
10.04 Complete Agreement. This Agreement, including the documents and
other writings referred to herein or delivered pursuant hereto, including the
Plan of Merger, contains the entire agreement and understanding of the parties
with respect to its subject matter. Except as set forth in the Plan of Merger or
in the Seller Disclosure Schedule, there are no restrictions, agreements,
promises, warranties, covenants or undertakings between the parties other than
those expressly set forth herein or therein. This Agreement supersedes all prior
agreements and understandings between the parties, both written and oral,
including without limitation the Confidentiality Agreement, with respect to its
subject matter.
10.05 Counterparts. This Agreement may be executed in counterparts, all of
which shall be considered one and the same agreement and each of which shall be
deemed to be an original and shall become effective when a counterpart has been
signed by each of the parties and delivered to each of the other parties.
10.06 Governing Law. This Agreement shall be governed by the laws of The
Commonwealth of Massachusetts, without giving effect to the principles of
conflicts of laws thereof.
10.07 Captions. The Article and Section headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
10.08 Effect of Investigations. No investigation by the parties hereto
made heretofore or hereafter, whether pursuant to this Agreement or otherwise
shall affect the representations and warranties of the parties which are
contained herein and each such representation and warranty shall survive such
investigation, subject, however, to Article IX and Section 10.10 hereof.
10.9 Severability. In the event that any one or more provisions of this
Agreement shall for any reason be held invalid, illegal or unenforceable in any
respect, by any court of competent jurisdiction, such invalidity, illegality or
unenforceability shall not affect any other provisions of this Agreement and
35
the parties shall use their best efforts to substitute a valid, legal and
enforceable provision which, insofar as practicable, implements the purposes and
intents of this Agreement.
10.10 Survival of Representations, Warranties and Covenants. Except as
otherwise specifically provided in this Agreement or in such other agreements,
all representations, warranties, covenants and other agreements contained in or
referred to in this Agreement or in any certificate delivered pursuant hereto
shall not survive the Closing; provided, however, the covenants contained or
referred to in Sections 5.08, 5.09, 5.10, and 5.11 shall survive for 18 months
after the last date on which such covenant or agreement was required to be
performed and the covenants contained or referred to in Section 5.13 and 5.14
shall survive the Closing Date indefinitely.
10.11 Specific Enforceability. The parties recognize and hereby
acknowledge that it is impossible to measure in money the damages that would
result to a party by reason of the failure of either of the parties to perform
any of the obligations imposed on it by this Agreement. Accordingly, if any
party should institute an action or proceeding seeking specific enforcement of
the provisions hereof, each party against which such action or proceeding is
brought hereby waives the claim or defense that the party instituting such
action or proceeding has an adequate remedy at law and hereby agrees not to
assert in any such action or proceeding the claim or defense that such a remedy
at law exists.
10.12 Partners' Representative. Each of the Partners hereby designates
Xxxxxxx X. Xxxxxxx, Xxxxx X. Xxxxxx and Xxxxxxx X. Xxxxxx as the representatives
(as such, the "Representatives") of each of the Partners to perform all such
acts as are required, authorized or contemplated by this Agreement to be
performed by the Partners, including but not limited to, executing and
delivering any notices, agreements, instruments and other documents on behalf of
the Partners, giving instructions and taking such actions which the
Representatives, in their sole discretion, deems appropriate to carry out the
provisions of this Agreement and the agreements contemplated hereby. Buyer shall
be entitled to rely upon any action taken by any two (2) of the Representatives
as representative of the Partners, the taking of such action being conclusive
evidence that such Representatives were duly authorized to take such action.
36
IN WITNESS WHEREOF, Seller, Partners and Buyer have caused this Agreement
to be executed as a sealed instrument by their duly authorized officers and each
Partner has executed and delivered this Agreement in his individual capacity,
all as of the day and year first above written.
USTRUST
By: /s/ Xxxx X. Xxxxxxxx
--------------------------
Name: Xxxx X. Xxxxxxxx
Title: President and Chief Executive Officer
XXXXXX & LORD LLP
By: /s/ X.X. Xxxxxxx
--------------------------
Name: X.X. Xxxxxxx
Title: Partner
THE PARTNERS
/S/ Xxxxxxx X. Xxxxxxx
-----------------------------
Xxxxxxx X. Xxxxxxx, Individually and on behalf of Xxxxxx & Lord LLP
Address: 00 Xxxxx Xxxx
-----------------
Xxxxxxxxx Xxxxx XX 00000
--------------------------
/s/ Xxxxxxxxx Xxxxxx Xx.
----------------------------
Xxxxxxxxx Xxxxxx Xx., Individually
Address: 00 Xxxxxxxx Xx.
-----------------
Xxxxxxx XX 00000
------------------
/s/ Xxxxx X. Xxxxxx
-----------------------------
Xxxxx X. Xxxxxx, Individually
Address: 000 Xxxxxxx Xx.
-----------------
Xxxxxx XX 00000
-----------------
/s/ X. Xxxxxxxx Xxxxxx III
-----------------------------
X. Xxxxxxxx Xxxxxx III, Individually
Address: Box 752
-----------------
Xxxxxxxxxx XX 00000
------------------
/s/ Xxxxxxx X. Xxxxxxx
-----------------------------
Xxxxxxx X. Xxxxxxx, Individually
Address: 00 Xxxxxxxx Xxx
-----------------
Xxxxxxxxx XX 00000
-------------------
/s/ Xxxxxxxxx X. Xxxxxx III
-----------------------------
Xxxxxxxxx X. Xxxxxx III, Individually
Address: 0 Xxxxxxx Xx.
-----------------
Xxxxxxx XX 00000
-----------------
/s/ Xxxx X. Xxxxxxxxxx
-----------------------------
Xxxx X. Xxxxxxxxxx
Address: 0 Xxxx Xxx
-----------------
Xxxxxxx XX 00000
-----------------
/s/ Xxxxxxx X. Xxxxxx III
-----------------------------
Xxxxxxx X. Xxxxxx III, Individually
Address: 00 Xxxxxxxxx Xxxx
------------------
Xxxxxxxxxx, XX 00000
---------------------
/s/ Xxxx X. Xxxxxx
---------------------------------
Xxxx X. Xxxxxx, Individually
Address: 00 Xxxxxxxx Xx
---------------------
Xxxxxx XX 00000
---------------------
/s/ Xxxxxxxx Xxxxxx
-----------------------------
Xxxxxxxx Xxxxxx, Individually
Address: 00 Xxxxxxx Xxxx Xx
-------------------
Xxxxxxxx XX 00000
-------------------
/s/ Xxxxxxx X. XxXxxx
-------------------------------
Xxxxxxx X. XxXxxx, Individually
Address: 00 Xxxxxxxxxx Xxxxx
--------------------
Xxxxxxx, XX 00000
--------------------
