<PAGE>
[TEXT]
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR QUARTER ENDED MARCH 31, 1994
COMMISSION FILE NUMBER 1-9371
ALLEGHANY CORPORATION
---------------------
EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER
DELAWARE
--------
STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION
51-0283071
----------
INTERNAL REVENUE SERVICE EMPLOYER IDENTIFICATION NUMBER
PARK AVENUE PLAZA, NEW YORK, NEW YORK 10055
--------------------------------------------
ADDRESS OF PRINCIPAL EXECUTIVE OFFICE, INCLUDING ZIP CODE
212/752-1356
------------
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE
NOT APPLICABLE
--------------
FORMER NAME, FORMER ADDRESS, AND FORMER FISCAL YEAR,
IF CHANGED SINCE LAST REPORT
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL
REPORTS REQUIRED TO BE FILED BY SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 DURING THE PRECEDING 12 MONTHS (OR
FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS REQUIRED TO FILE
SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING REQUIREMENTS
FOR THE PAST 90 DAYS:
YES X NO
-------- --------
INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE ISSUER'S
CLASS OF COMMON STOCK, AS OF THE CLOSE OF THE PERIOD COVERED BY
THIS REPORT:
6,759,472
---------
(AS OF MARCH 31, 1994)
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
ALLEGHANY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE THREE MONTHS ENDED
MARCH 31, 1994 AND 1993
(dollars in thousands, except share and per share amounts)
(unaudited)
<S> <C> <C>
1994 1993
========================
Revenues
Title premiums, escrow and trust fees $352,759 $289,850
Net reinsurance premiums earned 52,679 0
Interest on loans receivable 38,084 44,702
Interest, dividend and other income 49,357 37,477
Net mineral and filtration sales 35,964 35,991
Net gain on investment transactions 173 11,312
------------------------
Total revenues 529,016 419,332
------------------------
Costs and expenses
Salaries, commissions and other
employee benefits 274,492 219,849
Administrative, selling and
other operating expenses 92,994 85,628
Provisions for title losses and
other claims 23,421 25,645
Property and casualty losses and
loss adjustment expenses 44,160 0
Cost of mineral and filtration sales 25,480 26,325
Interest on deposits 27,941 28,770
Interest expense 7,280 7,960
Corporate administration 3,507 4,122
------------------------
Total costs and expenses 499,275 398,299
------------------------
Earnings before income taxes 29,741 21,033
Income taxes 9,803 (12,310)
------------------------
Net earnings $19,938 $33,343
========================
Earnings per share of common stock
- operations $2.95 $4.90
========================
Dividends per share of common stock * *
========================
Average number of outstanding shares
of common stock ** 6,759,225 6,800,921
========================
</TABLE>
* In March 1994 and 1993, Alleghany declared a dividend
consisting of one share of Alleghany common stock for every
fifty shares outstanding.
** Adjusted to reflect 2% stock dividends declared in March 1993
and 1994.
<PAGE>
<TABLE>
<CAPTION>
ALLEGHANY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1994 AND DECEMBER 31, 1993
(dollars in thousands, except share and per share amounts)
March 31,
1994 December 31,
(Unaudited) 1993
======================
<S> <C> <C> <C>
Assets
Investments
Fixed maturities:
Held for investment:
U.S. Government,
government agency
and municipal
obligations market $321,982 $332,391 $265,975
Certificates of
Deposit market $1,821 1,821 1,035
Available for sale:
U.S. Government,
government agency
and municipal amorti-
obligations zed cost $1,224,576 1,192,176 1,144,090
Certificates of
deposit and
commercial amorti-
paper zed cost $65,335 65,335 142,795
Securities pur-
chased under
agreement to amorti-
resell zed cost $2,538 2,538 75,091
Bonds, notes amorti-
and other zed cost $447,872 441,345 380,821
Equity securities cost $112,220 127,776 144,616
--------------------
2,163,382 2,154,423
</TABLE>
<TABLE>
<S> <C> <C>
Cash 90,315 163,748
Notes receivable 91,536 91,536
Loans receivable:
Residential real estate 1,647,499 1,650,660
Commercial real estate 321,107 323,746
--------------------
1,968,606 1,974,406
--------------------
Construction real estate 134,656 124,884
Less: Undisbursed portion of
loans in process (46,479) (36,838)
---------------------
88,177 88,046
---------------------
Other loans 39,444 40,647
---------------------
2,096,227 2,103,099
Less:
Allowance for estimated loan losses (21,429) (22,442)
Unamortized loan fees (8,283) (8,061)
---------------------
Total loans receivable 2,066,515 2,072,596
Accounts and other receivables,
less allowances 196,140 193,573
Title records and indexes 155,231 155,121
Real estate 97,172 96,808
Property and equipment -- at cost,
less accumulated depreciation
and amortization 260,001 257,753
Reinsurance receivable 366,877 353,903
Other assets 407,593 385,942
Assets pledged to secure trust
and escrow deposits 346,687 359,537
----------------------
$6,241,449 $6,284,940
======================
Liabilities and Common Stockholders' Equity
Deposits $2,813,030 $2,750,573
Title losses and other claims 535,543 533,190
Property and casualty losses
and loss adjustment expenses 874,419 861,204
Other liabilities 386,315 464,287
Long-term debt of parent company 59,600 59,600
Long-term debt of subsidiaries 341,562 347,338
Trust and escrow deposits secured
by pledged assets 340,181 353,014
----------------------
Total liabilities 5,350,650 5,369,206
Common stockholders' equity 890,799 915,734
----------------------
$6,241,449 $6,284,940
======================
Shares of common stock outstanding 6,759,472 6,759,142*
======================
Common stockholders' equity per share $131.79 $135.48*
======================
</TABLE>
* Adjusted to reflect the 2% stock dividend declared in March 1994.
<PAGE>
<TABLE>
<CAPTION>
ALLEGHANY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED
MARCH 31, 1994 AND 1993
(dollars in thousands)
(unaudited)
<S> <C> <C>
1994 1993
===================
Cash flows from operating activities
Net earnings $19,938 $33,343
Adjustments to reconcile net earnings
to cash used in operations:
Depreciation and amortization 12,625 10,817
Amortization and accretion of
discounts and premiums 1,325 (1,675)
Net gain on investment transactions (173) (11,312)
Other charges to operations, net (3,682) 2,260
Increase in accounts and other
receivables, less allowances (2,567) (9,320)
Increase in reinsurance receivable (12,974) 0
Increase (decrease) in title losses
and other claims 2,353 (1,738)
Increase in property and casualty
loss and loss adjustment expenses 13,215 0
Increase in other assets (925) (17,958)
Decrease in other liabilities (77,972) (30,932)
Decrease (increase) in net assets
pledged to secure trust and
escrow deposits 17 (5,650)
-------------------
Net adjustments (68,758) (65,508)
-------------------
Cash used in operations (48,820) (32,165)
-------------------
Cash flows from investing activities
Purchase of investments (419,974)(410,605)
Maturities of investments 235,922 160,967
Sales of investments 104,134 196,751
Net (increase) decrease in loans
receivable (9,806) 11,038
Sales of loans receivable 13,836 0
Purchase of real estate (1,134) (541)
Sales of real estate 3,913 3,530
Purchases of property and equipment (8,105) (17,008)
Disposition of property and equipment 40 550
Net purchases of title records and indexes (110) 1,253
-------------------
Net cash used in investing activities (81,284) (54,065)
-------------------
Cash flows from financing activities
Principal payments on long-term debt (5,832) (2,358)
Proceeds of long-term debt 0 2,015
Net increase in deposits 62,457 62,004
Common stock distributions 46 126
-------------------
Net cash provided by financing activities 56,671 61,787
Net decrease in cash (73,433) (24,443)
Cash at beginning of period 163,748 81,750
-------------------
Cash at end of period $90,315 $57,307
===================
Supplemental disclosures of
cash flow information
Cash paid during the period for:
Interest $33,974 $32,681
Income taxes $1,142 $1,038
Supplemental disclosures of noncash
investing activities
Transfer of loans to other
real estate owned $3,790 $11,084
Transfer of loans to facilitate
the sale of real estate $546 $1,030
</TABLE>
<PAGE>
Notes to Consolidated Financial Statements
This report should be read in conjunction with the
Annual Report on Form 10-K for the year ended December 31, 1993
(the "1993 Form 10-K Report") of Alleghany Corporation (the
"Company").
The information included in this report is unaudited
but reflects all adjustments which, in the opinion of management,
are necessary to a fair statement of the results of the interim
periods covered thereby. All adjustments are of a normal and
recurring nature except as described herein.
Contingencies
- - -------------
The Company's subsidiaries and division are parties to
pending claims and litigation in the ordinary course of their
businesses. Each such operating unit makes provisions on its
books in accordance with generally accepted accounting principles
for estimated losses to be incurred as a result of such claims
and litigation, including related legal costs. In the opinion of
management, such provisions are adequate as of March 31, 1994.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
-------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS.
-----------------------------------
The Company reported net earnings of $19.9 million on
revenues of $529.0 million in the 1994 first quarter, compared
with $33.3 million on revenues of $419.3 million in the 1993
first quarter. The Company's net earnings in the 1993 quarter
include a credit of $20.0 million in the provision for income
taxes, resulting from an adjustment of the Company's tax reserves
upon the favorable resolution of major tax issues raised by the
Internal Revenue Service relating to the Company's sale of
Investors Diversified Services, Inc. to American Express Company
in 1984. Net gains on investment transactions after taxes were
$7.4 million in the 1993 quarter, compared with only $0.2 million
in the more recent quarter. Exclusive of these gains and the
1993 credit, the Company's operating results were significantly
stronger in the first quarter of 1994 than in the comparable
period of 1993.
Chicago Title and Trust Company ("CT&T") contributed
pre-tax earnings of $23.2 million on revenues of $364.9 million
in the 1994 first quarter, compared with $11.0 million on
revenues of $308.1 million in the 1993 first quarter. The 1993
figure includes net pre-tax gains on investment transactions of
$4.7 million, whereas the 1994 figure reflects a net pre-tax loss
on such transactions of $0.2 million. Exclusive of these
amounts, CT&T's pre-tax earnings were $17.1 million higher in the
more recent quarter.
CT&T's title operations in the first three months of
1994 produced the best first-quarter results in CT&T's history.
The residential refinancing and resale markets were very active,
and there was continued momentum in the commercial sector. In
addition, CT&T benefited from the spillover of a record level of
refinancings in the last quarter of 1993. These results were
achieved in what is characteristically a slow period in the title
industry, and this year even less activity was expected due to
the record cold and snowfalls throughout much of the nation. The
recent upward movement in interest rates has dramatically slowed
residential refinancing orders, which will be reflected in 1994
second-quarter results, but conventional sales and resales
continue to be strong, reflecting a general concern of home
buyers that interest rates will continue to rise.
Sacramento Savings contributed pre-tax earnings of $5.1
million on revenues of $48.9 million in the first three months of
1994, compared with $7.2 million on revenues of $53.2 million in
the 1993 first quarter. Loan production, although beginning to
improve, is still below 1993 levels, resulting in lower net
interest margins in the more recent quarter. Deposits totalling
$190 million in one large deferred compensation plan for
government employees established many years ago, which until
expiration at 1994 year-end earn a fixed rate of interest of 10
percent, also had a depressing effect on 1994 first-quarter
results.
Sacramento Savings' non-performing assets (net of
specific reserves relating thereto) declined from $106.4 million,
or 3.71 percent of Sacramento Savings' assets, at March 31, 1993
to $102.0 million, or 3.36 percent of Sacramento Savings' assets,
at March 31, 1994. The aggregate net book value of non-earning
real estate investments was $37.8 million at the end of the first
quarter of 1994, down from $38.5 million a year earlier.
Continuing a trend, monthly additions to reserves for foreclosed
property and loans totalled only $1.3 million in the 1994
quarter, compared with $3.0 million in the 1993 quarter,
reflecting Sacramento Savings' belief that real estate values in
its market are stabilizing.
Giving effect to the indebtedness incurred in
connection with the acquisition of Sacramento Savings by its
immediate parent company and to the operations of that company's
three other subsidiaries, Sacramento Savings contributed pre-tax
earnings of $3.7 million in the 1994 first quarter, compared with
$5.5 million in the first quarter of 1993.
Acquired by the Company in October 1993, Underwriters
Reinsurance Company ("Underwriters") had a pre-tax loss of $2.6
million on revenues of $59.5 million in the first three months of
1994. This loss reflected a pre-tax charge of $5 million for
estimated losses associated with the earthquake in Los Angeles,
California in January 1994. In addition, in connection with the
restructuring of a portion of its portfolio, Underwriters
recorded net pre-tax losses of $3.2 million on sales of
fixed-maturity investments. However, Underwriters' premium
revenues were higher than expected and thus, exclusive of these
unusual items, operating results for the quarter were strong.
World Minerals Inc. ("World Minerals") contributed
pre-tax earnings of $3.1 million on revenues of $36.2 million in
the first quarter of 1994, compared with $1.1 million on revenues
of $36.0 million in the 1993 first quarter. The improved results
are primarily due to lower production and administrative costs
than last year, when World Minerals experienced high expenses
associated with manufacturing problems and actions taken to
strengthen its management.
The Company's results in the first quarter of 1994 are
not necessarily indicative of operating results in future
periods. The Company and its subsidiaries have adequate
internally generated funds, cash resources and unused credit
facilities to provide for the currently foreseeable needs of
its and their businesses.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
-----------------
On January 7, 1985, the Federal Trade Commission (the
"FTC") filed a complaint alleging that six of the nation's
largest title insurance companies, including the three principal
title insurance companies now owned by CT&T, violated Section 5
of the Federal Trade Commission Act in connection with their
participation in rating bureaus in thirteen states. The status
of such proceedings was last reported in Item 3 of Part I of the
Company's 1993 Form 10-K Report.
As previously reported, in June 1992 the United States
Supreme Court issued a decision in favor of the FTC with respect
to two states, holding that rating-bureau activity in Montana and
Wisconsin had not been sufficiently active to permit the title
insurers to invoke the state-action immunity doctrine. Upon
remand, the Third Circuit Court of Appeals issued a decision in
June 1993 in favor of the FTC with respect to two additional
states, Arizona and Connecticut, on the same grounds. After the
Third Circuit Court of Appeals dismissed the title insurers'
petition for a rehearing en banc in August 1993, the title
insurers filed a petition for a writ of certiorari to the United
States Supreme Court. The title insurers' petition was denied on
March 21, 1994. The FTC action was for injunctive relief only.
On April 22, 1994, the FTC issued a final cease and desist order
with respect to the title insurers' participation in rating
bureaus in the states of Montana, Wisconsin, Arizona and
Connecticut. CT&T anticipates no practical adverse consequences
from this order.
In April 1990, a class action seeking treble damages
was filed in the United States District Court for the District of
Arizona against the title insurers involved in the FTC action,
challenging rating-bureau activity in Arizona and Wisconsin. As
previously reported, the parties to the litigation entered into a
memorandum of understanding which outlined the terms of a
settlement of such litigation. The memorandum of understanding
provided for a definitive written agreement and application for
the necessary approval of the District Court. The parties also
submitted a request to the United States Supreme Court to defer
action, pending the District Court's consideration of the
settlement, on a petition for a writ of certiorari previously
filed by the title insurers to review an adverse decision of the
Ninth Circuit Court of Appeals. Despite such request, the United
States Supreme Court granted the title insurers' petition on
October 4, 1993. However, on April 4, 1994, after full argument
by the parties on the merits of the case, the Supreme Court
dismissed the writ as improvidently granted. Pursuant to the
memorandum of understanding, a definitive written agreement
embodying the terms of the settlement has been executed, and an
application is being prepared for submission to the District
Court seeking approval of the settlement.
On April 21, 1994, a class action seeking treble
damages was filed in the United States District Court for the
Eastern District of Wisconsin asserting federal antitrust claims
against several defendants, including the title insurance
subsidiaries of CT&T, arising from the Wisconsin rating-bureau
activity that was the subject of the FTC action. No procedural
steps have yet been taken in this case.
ITEM 5. OTHER INFORMATION.
-----------------
On April 29, 1994, the Company entered into an
Agreement and Plan of Merger with Montag & Caldwell Associates,
Inc. and its shareholders providing for the acquisition by the
Company of Montag & Caldwell Associates, Inc. The closing, which
is subject to customary legal conditions, is expected to take
place in mid-summer 1994. The acquisition will be effected
through an exchange of stock and will be accounted for by the
pooling-of-interests method of accounting.
Located in Atlanta, Georgia, Montag & Caldwell
Associates, Inc. provides money management services and
investment counseling to institutions, foundations and
individuals, and reported assets under management of
approximately $2.0 billion as of 1993 year-end.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
--------------------------------
<TABLE>
<CAPTION>
(a) Exhibits.
--------
<C> <S>
Exhibit
Number Description
- - ------- -----------
10.1(a) Agreement and Plan of Merger
dated as of April 29, 1994
among Montag & Caldwell
Associates, Inc., Alleghany
Acquisition Corporation, the
Company and the Shareholders
of Montag & Caldwell
Associates, Inc. (the "Montag
& Caldwell Acquisition
Agreement").
10.1(b) List of Contents of Exhibits
to the Montag & Caldwell
Acquisition Agreement which
are not being filed herewith.
The Company agrees to furnish
supplementally a copy of any
omitted Exhibit to the
Commission upon request.
</TABLE>
(b) Reports on Form 8-K.
-------------------
No reports on Form 8-K were filed during the first
quarter of 1994.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned
thereunto duly authorized.
ALLEGHANY CORPORATION
---------------------
Registrant
Date: May 13, 1994 /s/ David B. Cuming
---------------------
David B. Cuming
Senior Vice President
(and principal financial
officer)
<PAGE>
<TABLE>
<CAPTION>
Exhibit Index
-------------
<C> <S>
Exhibit
Number Description
- - ------- -----------
10.1(a) Agreement and Plan of Merger
dated as of April 29, 1994
among Montag & Caldwell
Associates, Inc., Alleghany
Acquisition Corporation, the
Company and the Shareholders
of Montag & Caldwell
Associates, Inc. (the "Montag
& Caldwell Acquisition
Agreement").
10.1(b) List of Contents of Exhibits
to the Montag & Caldwell
Acquisition Agreement which
are not being filed herewith.
The Company agrees to furnish
supplementally a copy of any
omitted Exhibit to the
Commission upon request.
</TABLE>
<PAGE>
Exhibit 10.1(a)
---------------
AGREEMENT AND PLAN OF MERGER
AMONG
MONTAG & CALDWELL ASSOCIATES, INC.,
ALLEGHANY ACQUISITION CORPORATION,
ALLEGHANY CORPORATION
AND
THE SHAREHOLDERS
OF
MONTAG & CALDWELL ASSOCIATES, INC.
DATED AS OF APRIL 29, 1994
<PAGE>
TABLE OF CONTENTS
-----------------
Page
-----
ARTICLE I The Merger . . . . . . . . . . . . . . . . . 1
1.1. The Merger . . . . . . . . . . . . . . . . . . . 1
1.2. Closing. . . . . . . . . . . . . . . . . . . . . 2
1.3. Effective Time . . . . . . . . . . . . . . . . . 2
1.4. Other Agreements . . . . . . . . . . . . . . . . 2
1.5. Transfer of Surviving Corporation. . . . . . . . 3
ARTICLE II The Surviving Corporation . . . . . . . . . 3
2.1. The Articles of Incorporation. . . . . . . . . . 3
2.2. The Bylaws . . . . . . . . . . . . . . . . . . . 3
2.3. Officers and Directors . . . . . . . . . . . . . 3
ARTICLE III Conversion of Shares in the Merger . . . . 4
3.1. Conversion of Shares . . . . . . . . . . . . . . 4
3.2. Payment for Shares . . . . . . . . . . . . . . . 6
ARTICLE IV Representations and Warranties
of the Company and the Shareholders . . . . 7
4.1. Corporate Organization and Qualification . . . . 7
4.2. Authorized Capital . . . . . . . . . . . . . . . 7
4.3. Corporate Authority. . . . . . . . . . . . . . . 8
4.4. Compliance . . . . . . . . . . . . . . . . . . . 9
4.5. Financial Statements . . . . . . . . . . . . . . 10
4.6. Undisclosed Liabilities. . . . . . . . . . . . . 11
4.7. No Material Adverse Change . . . . . . . . . . . 12
4.8. No Dividends, Sale of Assets, etc. . . . . . . . 12
4.9. Litigation . . . . . . . . . . . . . . . . . . . 12
4.10. Tax Matters. . . . . . . . . . . . . . . . . . . 13
4.11. Assets . . . . . . . . . . . . . . . . . . . . . 16
(a) Advisory Clients. . . . . . . . . . . . . . 16
(b) Other Agreements. . . . . . . . . . . . . . 16
(c) Real Property . . . . . . . . . . . . . . . 16
(d) Intangible Property . . . . . . . . . . . . 17
(e) Investment Securities . . . . . . . . . . . 17
(f) Other Assets. . . . . . . . . . . . . . . . 17
(g) Title . . . . . . . . . . . . . . . . . . . 17
4.12. Benefit Plans. . . . . . . . . . . . . . . . . . 18
4.13. Interests of Officers, Directors
and Shareholders . . . . . . . . . . . . . . . 20
4.14. Employees. . . . . . . . . . . . . . . . . . . . 20
4.15. Banks. . . . . . . . . . . . . . . . . . . . . . 20
4.16. Insurance. . . . . . . . . . . . . . . . . . . . 21
4.17. Absence of Bank or Savings
and Loan Status. . . . . . . . . . . . . . . . 21
4.18. Brokers and Finders. . . . . . . . . . . . . . . 22
4.19. Status of Shareholders . . . . . . . . . . . . . 22
4.20. Investment Representation. . . . . . . . . . . . 22
4.21. Shareholder Understandings . . . . . . . . . . . 23
4.22. Pooling. . . . . . . . . . . . . . . . . . . . . 23
4.23. Aggregate Materiality. . . . . . . . . . . . . . 23
4.24. Disclosure . . . . . . . . . . . . . . . . . . . 24
ARTICLE V Representations and Warranties
of Parent and Newco. . . . . . . . . . . . . 24
5.1. Corporate Organization and Qualification . . . . 24
5.2. Authorized Capital . . . . . . . . . . . . . . . 24
5.3. Corporate Authority. . . . . . . . . . . . . . . 25
5.4. Compliance . . . . . . . . . . . . . . . . . . . 26
5.5. Financial Statements . . . . . . . . . . . . . . 26
5.6. Undisclosed Liabilities. . . . . . . . . . . . . 26
5.7. No Material Adverse Change . . . . . . . . . . . 27
5.8. Litigation . . . . . . . . . . . . . . . . . . . 27
5.9. SEC Filings. . . . . . . . . . . . . . . . . . . 27
5.10. Tax Matters. . . . . . . . . . . . . . . . . . . 28
5.11. Benefit Plans. . . . . . . . . . . . . . . . . . 28
5.12. Directors' and Officers' Liability
Insurance. . . . . . . . . . . . . . . . . . . 28
5.13. Access of Parent . . . . . . . . . . . . . . . . 29
5.14. Parent Shares. . . . . . . . . . . . . . . . . . 29
5.15. Brokers and Finders. . . . . . . . . . . . . . . 29
5.16. Aggregate Materiality. . . . . . . . . . . . . . 29
5.17. Disclosure . . . . . . . . . . . . . . . . . . . 29
ARTICLE VI Conditions to the Obligations
of Parent and Newco . . . . . . . . . . . . 30
6.1. Compliance with Agreement. . . . . . . . . . . . 30
6.2. Representations and Warranties . . . . . . . . . 30
6.3. Opinion of Counsel for the Company and
the Shareholders . . . . . . . . . . . . . . . 30
6.4. Approvals. . . . . . . . . . . . . . . . . . . . 30
6.5. Value of Managed Assets. . . . . . . . . . . . . 30
6.6. Accounting Treatment . . . . . . . . . . . . . . 31
6.7. Net Worth. . . . . . . . . . . . . . . . . . . . 31
6.8. Key Man Insurance. . . . . . . . . . . . . . . . 31
6.9 Benefit Plans. . . . . . . . . . . . . . . . . . 31
ARTICLE VII Conditions to the Obligations of the
Company and the Shareholders . . . . . . . 32
7.1. Compliance with Agreement. . . . . . . . . . . . 32
7.2. Representations and Warranties . . . . . . . . . 32
7.3. Opinion of Counsel for Parent and Newco. . . . . 32
7.4. Approvals. . . . . . . . . . . . . . . . . . . . 32
ARTICLE VIII Covenants of the Company and
the Shareholders. . . . . . . . . . . . . 33
8.1. Covenants Pending the Closing. . . . . . . . . . 33
(a) Access to Properties, Books and Records . . 33
(b) Carry On in Regular Course. . . . . . . . . 33
(c) Preservation of Organization. . . . . . . . 34
8.2 Confidentiality. . . . . . . . . . . . . . . . . 34
8.3. Filings and Approvals. . . . . . . . . . . . . . 36
8.4. Best Efforts . . . . . . . . . . . . . . . . . . 36
8.5. Further Assurances . . . . . . . . . . . . . . . 36
8.6. Fund Approvals . . . . . . . . . . . . . . . . . 36
8.7. Employee Benefits. . . . . . . . . . . . . . . . 37
8.8. Closing Date Balance Sheet . . . . . . . . . . . 37
ARTICLE IX Covenants of Parent and Newco . . . . . . . 38
9.1. Access to Properties, Books and
Records Pending the Closing. . . . . . . . . . . 38
9.2 Confidentiality. . . . . . . . . . . . . . . . . 38
9.3. Filings and Approvals. . . . . . . . . . . . . . 40
9.4. Best Efforts . . . . . . . . . . . . . . . . . . 40
9.5. Further Assurances . . . . . . . . . . . . . . . 40
9.6. Employee Benefits. . . . . . . . . . . . . . . . 40
9.7. Registration Rights. . . . . . . . . . . . . . . 41
(a) Registration. . . . . . . . . . . . . . . . 41
(b) Effectiveness . . . . . . . . . . . . . . . 41
(c) Expenses. . . . . . . . . . . . . . . . . . 41
(d) Shareholder Agreements. . . . . . . . . . . 42
(e) Indemnification under this Section 9.7. . . 42
(f) Material Breach . . . . . . . . . . . . . . 43
ARTICLE X Covenants of the Shareholders and Parent
Relating to Certain Tax Matters. . . . . . . 44
10.1. Pre-Merger and Straddle Period Taxes.. . . . . . 44
10.2. Tax Allocation . . . . . . . . . . . . . . . . . 46
10.3. Access to Information and Retention
of Records . . . . . . . . . . . . . . . . . . . 47
10.4 Miscellaneous Covenants. . . . . . . . . . . . . 47
ARTICLE XI Indemnity . . . . . . . . . . . . . . . . . 48
11.1. By the Company and the Shareholders. . . . . . . 48
11.2. By Parent. . . . . . . . . . . . . . . . . . . . 48
11.3. Limits . . . . . . . . . . . . . . . . . . . . . 49
11.4. Procedure. . . . . . . . . . . . . . . . . . . . 49
11.5 Shareholders' Representative . . . . . . . . . . 51
ARTICLE XII Miscellaneous Provisions . . . . . . . . . 52
12.1. Termination. . . . . . . . . . . . . . . . . . . 52
12.2. Expenses . . . . . . . . . . . . . . . . . . . . 53
12.3. Notices. . . . . . . . . . . . . . . . . . . . . 53
12.4. Entire Agreement; Amendment. . . . . . . . . . . 54
12.5. Assignment . . . . . . . . . . . . . . . . . . . 55
12.6. Survival of Representations, Warranties,
Indemnity Obligations and Covenants. . . . . . 55
12.7. Governing Law. . . . . . . . . . . . . . . . . . 56
12.8. Counterparts . . . . . . . . . . . . . . . . . . 56
12.9. Headings . . . . . . . . . . . . . . . . . . . . 56
12.10. Severability . . . . . . . . . . . . . . . . . . 56
12.11. Public Announcement. . . . . . . . . . . . . . . 56
12.12 IRA Accounts . . . . . . . . . . . . . . . . . . 56
<PAGE>
AGREEMENT AND PLAN OF MERGER
----------------------------
AGREEMENT AND PLAN OF MERGER (hereinafter called
this "Agreement"), dated as of April 29, 1994, among Montag
& Caldwell Associates, Inc., a Georgia corporation (the
"Company"), Alleghany Acquisition Corporation, a Georgia
corporation ("Newco") (the Company and Newco being the
constituent corporations in the Merger, as defined below),
Alleghany Corporation, a Delaware corporation and the owner
of all of the issued and outstanding shares of capital stock
of Newco ("Parent"), and each of the shareholders of the
Company as listed in Exhibit 4.2 hereto (the "Shareholders")
(Parent and the Shareholders joining as additional parties).
W I T N E S S E T H :
- - - - - - - - - - -
WHEREAS, the Boards of Directors of Parent, Newco
and the Company have each determined that it is in the best
interests of their respective shareholders for Newco to
merge with and into the Company upon the terms and subject
to the conditions set forth herein; and
WHEREAS, the Company, Newco, Parent and the
Shareholders desire to make certain representations,
warranties, covenants and agreements in connection with this
Agreement;
NOW, THEREFORE, in consideration of the premises
and the mutual covenants and agreements hereinafter set
forth, the parties hereto hereby agree as follows:
ARTICLE I
The Merger
1.1. The Merger. Subject to the terms and condi-
tions of this Agreement, at the Effective Time (as defined
in Section 1.3 hereof), Newco shall be merged with and into
the Company and the separate corporate existence of Newco
shall thereupon cease (the "Merger"). The Company shall be
the surviving corporation in the Merger (sometimes herein-
after referred to as the "Surviving Corporation") and shall
continue to be governed by the laws of the State of Georgia,
and the separate corporate existence of the Company with all
of its rights, privileges, immunities, powers and franchises
shall continue unaffected by the Merger. The Merger shall
have the effects specified in the Georgia Business
Corporation Code (the "Georgia Code").
1.2. Closing. The closing of the Merger (the
"Closing") shall take place (i) at the offices of Smith,
Gambrell & Russell, Atlanta Financial Center, East Tower,
3343 Peachtree Road, N.E., Suite 1800, Atlanta, Georgia at
10:00 a.m. on the fifth business day after which the last to
be fulfilled or waived of the conditions set forth in
Articles VI and VII hereof shall be fulfilled or waived in
accordance with this Agreement, or (ii) at such other place,
time or date as the Company and Parent may agree. The date
of the Closing is hereinafter referred to as the "Closing
Date."
1.3. Effective Time. At the Closing, the Company
and Parent will cause a Certificate of Merger, in the form
set forth in Exhibit 1.3 hereto (the "Georgia Certificate of
Merger"), to be executed and filed with the Secretary of
State of the State of Georgia as provided in Section
14-2-1105(b) of the Georgia Code. The Merger shall become
effective on the date on which the Georgia Certificate of
Merger has been duly filed with the Secretary of State of
the State of Georgia, and such time is hereinafter referred
to as the "Effective Time."
1.4. Other Agreements. Simultaneously with the
execution and delivery of this Agreement, the following
agreements shall be executed and delivered: (a) employment
agreements in the form set forth in Exhibit 1.4(a) hereto
between the Montag & Caldwell, Inc., a wholly owned
subsidiary of the Company ("M&C"), and each of Solon P.
Patterson, Ronald E. Canakaris and David F. Seng; and (b)
non-compete agreements in the form set forth in Exhibit
1.4(b) hereto between M&C and each of Janet B. Bunch,
Elizabeth C. Chester, Jane R. Davenport, Charlotte F. Fox,
Richard W. Haining, Grover C. Maxwell III, Carolyn Sue
Tyson, William A. Vogel, and Homer W. Whitman, Jr. The
parties agree that at the Closing the Executive Incentive
Compensation Plan in the form attached as Exhibit 1 to the
foregoing employment agreements shall be implemented.
1.5. Transfer of Surviving Corporation. The
Shareholders hereby acknowledge that Parent shall have the
right to transfer, and intends to, exchange or contribute
the shares of the capital stock of the Surviving Corporation
to or with its wholly owned subsidiary Chicago Title and
Trust Company ("CT&T") or a wholly owned subsidiary thereof
(the "Transferee") after the Effective Time.
ARTICLE II
The Surviving Corporation
2.1. The Articles of Incorporation. The Articles
of Incorporation of the Company (the "Articles") in effect
immediately prior to the Effective Time shall be the
Articles of Incorporation of the Surviving Corporation,
except that such Articles shall be amended at and as of the
Effective Time as set forth in the Georgia Certificate of
Merger. As so amended, such Articles shall be the Articles
of Incorporation of the Surviving Corporation until duly
amended in accordance with the terms thereof and the Georgia
Code.
2.2. The Bylaws. Immediately prior to the
Effective Time, the Bylaws of the Company shall be restated
in their entirety as set forth in Exhibit 2.2(a) hereto, and
such Bylaws shall be the Bylaws of the Surviving
Corporation, until duly amended in accordance with the terms
thereof and the Georgia Code. Immediately prior to the
Effective Time, the Bylaws of M&C shall be restated in their
entirety as set forth in Exhibit 2.2(b) hereto, and such
Bylaws shall be the Bylaws of M&C until duly amended in
accordance with the terms thereof and the Georgia Code.
Each of the Shareholders shall at the Closing consent to the
termination of the stock repurchase obligations set forth in
the current Bylaws of the Company.
2.3. Officers and Directors. The directors of
Newco immediately prior to the Effective Time shall be Solon
P. Patterson, Ronald E. Canakaris, David F. Seng, Stuart D.
Bilton and either John J. Burns, Jr. or David B. Cuming, and
such directors, and the officers of the Company immediately
prior to the Effective Time, shall, from and after the
Effective Time, be the directors and officers, respectively,
of the Surviving Corporation and M&C until their successors
have been duly elected or appointed and qualified or until
their earlier death, resignation or removal in accordance
with the Articles of Incorporation and Bylaws of the
Surviving Corporation and M&C, respectively.
ARTICLE III
Conversion of Shares in the Merger
3.1. Conversion of Shares. The manner of
converting shares of the Company and Newco in the Merger
shall be as follows:
(a) At the Effective Time, each share of the
common stock, par value $1.00 per share, of the Company (the
"Shares") issued and outstanding immediately prior to the
Effective Time shall, by virtue of the Merger and without
any action on the part of the holder thereof, be converted
into the right to receive, without interest, 20.14829 shares
(the "Merger Consideration") of common stock, par value
$1.00 per share, of Parent (the "Parent Shares"). The
number of Parent Shares into which each Share shall be
converted was determined as follows: $30,000,000 was
divided by $141.00 (which amount reflects an adjustment made
in respect of the 2 percent dividend payable in Parent
Shares on April 26, 1994 to holders of record on April 1,
1994), and that result (212,766 Parent Shares) was then
divided by 10,560 Shares to be outstanding immediately prior
to the Effective Time. 212,766 Parent Shares shall be
issued at the Effective Time, and the foregoing Merger
Consideration shall be adjusted if, in accordance with
Section 4.2 hereof, less than 10,560 Shares are outstanding
at the Effective Time. Any fractional shares resulting from
such conversion to which the holder of Parent Shares
otherwise would be entitled shall not be issued but shall be
paid in cash. The Merger Consideration shall be subject to
adjustment as follows:
(i) If on or after the date hereof and before the
Effective Time Parent shall, on a pro rata basis,
(A) declare or pay a dividend or make a distribution to
holders of Parent Shares (other than the 2 percent
dividend payable in Parent Shares on April 26, 1994 to
holders of record on April 1, 1994), (B) subdivide the
outstanding Parent Shares into a greater number of
shares, (C) combine the outstanding Parent Shares into
a smaller number of shares, or (D) issue by
reclassification of the outstanding Parent Shares any
securities, the Merger Consideration shall be adjusted
so that each Shareholder shall be entitled to receive
the kind and number of shares of Parent Shares and/or
other securities which he or she would have owned or
been entitled to receive immediately following such
action had the Effective Time occurred immediately
prior thereto.
(ii) If on or after the date hereof and before
the Effective Time Parent shall distribute on a pro
rata basis to holders of Parent Shares either
(A) evidences of indebtedness or assets (excluding cash
dividends or distributions), or (B) any other
securities of Parent or any rights, warrants, or
options to subscribe for, purchase or otherwise acquire
securities of Parent in a transaction not covered by
subsection (i) above (any of which are referred to
herein as "Other Securities"), then Parent shall
reserve for the benefit of each Shareholder such amount
of Other Securities as he or she would have owned or
been entitled to receive immediately following such
action had the Effective Time occurred immediately
prior thereto. In addition, from the date hereof until
the Effective Time Parent shall reserve for the benefit
of each Shareholder any principal, interest, dividends
or other property payable with respect to Other
Securities as and when such interest, dividends or
other property is distributed to the holders of Parent
Shares. If such a reserve is made, at the Effective
Time each Shareholder shall be entitled to receive from
Parent his or her share of Other Securities, together
with the principal, interest, dividends or other
property payable with respect thereto. In the event
that any of the actions set forth in Section 3.1(a)(i)
hereof are taken with respect to the Other Securities
on or before the Effective Time, then each Shareholder
shall be entitled to receive the kind and number of
shares of Other Securities and/or other securities
which he or she would have owned or been entitled to
receive immediately following such action had the
Effective Time occurred immediately prior thereto.
All Shares, by virtue of the Merger and without any action
on the part of the holders thereof, shall no longer be
outstanding and shall be cancelled and retired and shall
cease to exist, and each holder of a certificate
representing any such Shares shall thereafter cease to have
any rights with respect to such Shares, except the right to
receive the Merger Consideration for such Shares upon the
surrender of such certificate in accordance with Section 3.2
hereof.
(b) At the Effective Time, each share of the
common stock, par value $1.00 per share, of Newco issued and
outstanding immediately prior to the Effective Time shall,
by virtue of the Merger and without any action on the part
of Newco or the holder of such shares, be converted into one
share of common stock, par value $1.00 per share, of the
Surviving Corporation, which shall thereafter constitute the
only shares of capital stock of the Surviving Corporation
issued and outstanding.
3.2. Payment for Shares.
(a) At the Effective Time, each registered holder
of a certificate or certificates representing Shares (a
"Holder") shall surrender to Parent such certificate or
certificates, and shall receive in exchange therefor a
certificate representing the number of full Parent Shares
into which the Shares represented by the surrendered
certificate or certificates shall have been converted, and
cash in lieu of any fractional shares to which the Holder
otherwise would be entitled.
(b) If any certificate or certificates which
immediately prior to the Effective Time represented Shares
are for any reason not surrendered at the Effective Time
pursuant to Section 3.2(a) hereof, such certificate or
certificates shall be deemed for all corporate purposes to
evidence ownership of the number of full Parent Shares into
which the Shares represented by such certificate or
certificates shall have been converted and cash in lieu of
any fractional Parent Shares. No dividends or distributions
will be paid to a Holder until he or she has surrendered his
or her certificate or certificates representing Shares, upon
which surrender there shall be paid to such Holder, but
without interest thereon, all dividends and distributions
payable on the Parent Shares subsequent to the Effective
Time. No transfers shall be made on the stock transfer
books of the Surviving Corporation at the Effective Time,
except to Parent as provided in Section 3.1(b) hereof.
(c) If a certificate for Parent Shares is to be
issued to a person other than the Holder of the certificate
surrendered, it shall be a condition of such issuance that
the certificate so surrendered shall be properly endorsed or
otherwise in proper form for transfer and that the person
requesting such issuance shall pay any transfer or other
taxes required by reason of the issuance to a person other
than the Holder of the certificate surrendered or establish
to the satisfaction of the Surviving Corporation that such
tax has been paid or is not applicable.
(d) None of Parent, Newco or the Company shall be
liable to any Holder for any Parent Shares transferred or
any amount paid to a public official pursuant to any
applicable abandoned property, escheat or similar law.
ARTICLE IV
Representations and Warranties
of the Company and the Shareholders
Each of the Company and the Shareholders severally
and not jointly represents and warrants to Parent and Newco
as follows:
4.1. Corporate Organization and Qualification.
Exhibit 4.1 hereto sets forth a true and complete list of
the jurisdictions of incorporation of the Company and M&C
and the jurisdictions in which each is qualified to do
business. The Company does not own any equity interest in
any entities except for M&C and except as set forth in
Exhibit 4.11(e). Each of the Company and M&C is a
corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation
and is in good standing as a foreign corporation in each
jurisdiction where the properties owned, leased or operated,
or the business conducted, by it require such qualification
and where the absence of which would have a material adverse
effect on the condition (financial or otherwise), earnings,
assets, liabilities or business of the Company and M&C taken
as a whole. Each of the Company and M&C has the requisite
corporate power and authority to carry on its business as it
is now being conducted. Since July 1, 1985, neither the
Company nor M&C has been engaged in any business other than
the business which is now being conducted by it. The
Company has delivered to Parent a true and complete copy of
the Articles and Bylaws of the Company and the Articles of
Incorporation and Bylaws of M&C, each as amended to date,
and each is in full force and effect.
4.2. Authorized Capital. The authorized capital
stock of the Company consists of 100,000 Shares, of which
10,180 Shares are issued and outstanding as of the date
hereof. Options to purchase an additional 380 Shares have
been granted and are outstanding as of the date hereof.
Such options will be exercised (or, if permitted without
causing the failure of the condition set forth in Section
6.6 hereof, terminated) immediately prior to the Closing
Date, and, if exercised, a total of no more than 10,560
Shares will be issued and outstanding as of the Closing
Date. All of the issued and outstanding Shares have been
duly authorized and are validly issued and outstanding,
fully paid and nonassessable, and are (or, in the case of
option holders, will be) owned by the persons listed in
Exhibit 4.2 hereto (in the amounts so listed) free and clear
of all liens, pledges, security interests, claims and other
encumbrances of any nature whatsoever except as set forth in
Exhibit 4.2 hereto, which exceptions shall not exist on the
Closing Date. Exhibit 4.2 also sets forth a list of the
positions of such persons with the Company and M&C. The
authorized capital stock of M&C consists of 500 shares, par
value $1.00 per share, all of which have been duly
authorized and are validly issued and outstanding, fully
paid and nonassessable, and are owned by the Company free
and clear of all liens, pledges, security interests, claims
or other encumbrances of any nature whatsoever. Except as
set forth above or in Exhibit 4.2 hereto (which sets forth
information regarding parties, dates of issuance or
exercise, and prices), there are no shares of capital stock
of the Company or M&C authorized, issued or outstanding, and
there are no preemptive rights or any outstanding
subscriptions, options, warrants, rights, convertible
securities or other agreements or commitments of any
character relating to the issued or unissued capital stock
or other securities of the Company or M&C. Exhibit 4.2
hereto sets forth a list of all transactions in the Shares
or in the shares of M&C since January 1, 1992. None of the
Company, M&C (in each case for its own account) or the
Shareholders own any Parent Shares.
4.3. Corporate Authority. Exhibit 4.3 hereto is
a true and complete list of all material permits, approvals,
qualifications, filings, consents or waiting periods of
third parties and regulatory authorities which are required
by the Company and M&C for the consummation of the
transactions contemplated by this Agreement (the "Company
Approvals"). The Company has full corporate power and
authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery
and performance of this Agreement by the Company have been
duly and validly authorized by all necessary corporate
action on the part of the Company, including, without
limitation, the written consent of all of the Shareholders
approving this Agreement pursuant to Section 14-2-1103 of
the Georgia Code. A true and complete copy of such consent
is set forth in Exhibit 4.3 hereto. This Agreement
constitutes a legal, valid and binding obligation of each of
the Company and the Shareholders, enforceable against it,
him or her in accordance with its terms, except as
enforceability may be limited by bankruptcy, fraudulent
conveyance, insolvency, reorganization, moratorium and other
similar laws relating to or affecting creditors' rights
generally or by general equitable principles (regardless of
whether such enforceability is considered in a proceeding in
equity or at law). Neither the execution and delivery of
this Agreement, nor the consummation of the transactions
contemplated hereby, will (a) conflict with or result in a
breach or violation of any of the provisions of the Articles
or Bylaws of the Company or of the Articles of Incorporation
or Bylaws of M&C; (b) subject to the granting of the Company
Approvals, conflict with, result in a breach or violation
of, result in a default or loss of a material benefit under,
or permit the acceleration of any obligation under any
provision of any agreement, indenture, mortgage, lien, lease
or other instrument or restriction of any kind to which the
Company or M&C is a party or by which any of their assets or
properties is otherwise bound; or (c) subject to the
granting of the Company Approvals, violate any order, writ,
injunction, decree, statute, rule or regulation applicable
to the Company or M&C or any of their assets or properties,
except, with respect to each of clauses (a), (b) and (c) of
this Section 4.3, where the effect of such conflict, breach,
violation, default, loss or acceleration, individually or in
the aggregate, would not have a material adverse effect on
the condition (financial or otherwise), earnings, assets,
liabilities or business of the Company and M&C taken as a
whole.
4.4 Compliance.
(a) Each of the Company and M&C is, and has been
since July 1, 1985, in compliance with all laws, regulations
and requirements applicable to the operation of its business
(including, without limitation, the Investment Advisers Act
of 1940, as amended (the "Advisers Act") and the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and
the rules and regulations promulgated thereunder, all
applicable state laws requiring registration, licensing or
qualification as an investment adviser or broker-dealer, the
Employee Retirement Income Security Act of 1974, as amended
("ERISA"), equal employment opportunity or other similar
laws), with which the failure to so comply would have a
material adverse effect on its condition (financial or
otherwise), earnings, assets, liabilities or business of the
Company and M&C taken as a whole.
(b) M&C is, and has been since July 1, 1985, duly
registered as an investment adviser under the Advisers Act
and is currently so registered under the applicable laws of
the states set forth in Exhibit 4.4(b) hereto, each such
registration is in full force and effect, and M&C is not
required to be registered as an investment adviser in any
other jurisdiction. The Company is not required to be so
registered. The Company heretofore has furnished to Parent
true and complete copies, as filed and amended to date, of
Form ADV, all state registration forms, and current reports
required to be filed by M&C pursuant to the Advisers Act or
applicable state laws.
(c) Neither the Company nor M&C is an "investment
company" within the meaning of the Investment Company Act of
1940, as amended, or is required to be registered or
licensed as a broker-dealer under the Exchange Act.
(d) Except as set forth in Exhibit 4.4(d) hereto,
none of the following has occurred since July 1, 1985:
(i) any investigative or disciplinary proceedings by the
Securities and Exchange Commission (the "SEC"), the National
Association of Securities Dealers (the "NASD"), the New York
Stock Exchange (the "NYSE") or any other federal, state or
self-regulatory authority against the Company, M&C or, to
the best knowledge of the Company and the Shareholders, any
of their directors, officers or employees; (ii) any loss of
clients who generated revenues, on an annualized basis, of
more than $50,000; or (iii) the issuance of any consent
judgments, decrees, cease and desist or other orders,
disqualifications, penalties or special restrictions against
the Company, M&C or, to the best knowledge of the Company
and the Shareholders, any of their directors, officers or
employees (including, without limitation, criminal
convictions) relating to or affecting the conduct of the
business of the Company or M&C.
4.5. Financial Statements.
(a) The audited consolidated balance sheets of
the Company as at December 31, 1993 and February 28, 1993
and the related audited consolidated statements of income
and retained earnings and cash flows for the ten months
ended December 31, 1993 and the twelve months ended February
28, 1993 (the "Annual Financial Statements"), which
heretofore have been delivered to Parent, present fairly in
all material respects the consolidated financial position
and results of operations of the Company and M&C as of the
dates and for the periods indicated therein in accordance
with generally accepted accounting principles applied on a
consistent basis throughout the periods indicated, except as
may otherwise be specifically indicated in such financial
statements.
(b) The audited balance sheets of M&C as at
December 31, 1993 and February 28, 1993, which heretofore
have been delivered to Parent, present fairly in all
material respects the financial position of M&C as of the
dates indicated therein in accordance with generally
accepted accounting principles applied on a basis consistent
with the Annual Financial Statements.
(c) The unaudited consolidated balance sheets as
at seven days before the Closing Date and as at the Closing
Date and the related unaudited consolidated statements of
income and retained earnings referred to in Sections 6.7 and
8.8 hereof will fairly present in all material respects
(subject to normal, recurring year-end adjustments) the
consolidated financial position and results of operations of
the Company and M&C as of the date and for the period
indicated therein in accordance with generally accepted
accounting principles applied on a basis consistent with the
Annual Financial Statements (except for footnote
presentation and except that such statements shall be
unaudited); provided, however, that notwithstanding the
foregoing the unaudited consolidated balance sheets shall
reflect the Tax Accrual and any accruals required under
Section 8.7(a) hereof. Without limiting the generality of
the foregoing, all accruals of revenues and expenses will be
properly reflected in accordance with generally accepted
accounting principles consistent with the past practices of
the Company. The net worth of the Company as at seven days
before the Closing Date and as at the Closing Date shall not
be less than $1.9 million after taking into account all
actions permitted pursuant to Exhibit 8.1(b) hereto (whether
or not such actions have been taken). For purposes of this
Agreement, the "net worth of the Company" shall mean the
excess of total assets of the Company over total liabilities
of the Company, all as shown on the unaudited consolidated
balance sheets prepared pursuant hereto.
4.6. Undisclosed Liabilities. As at December 31,
1993, neither the Company nor M&C had any obligations or
liabilities of any nature, whether absolute, accrued,
contingent or otherwise, which, individually or in the
aggregate, would have a material adverse effect on the
condition (financial or otherwise), earnings, assets,
liabilities or business of the Company and M&C taken as a
whole except and to the extent disclosed in the Annual
Financial Statements as at December 31, 1993. Since
December 31, 1993, neither the Company nor M&C has incurred
or become subject to any obligations or liabilities of any
nature, whether absolute, accrued, contingent or otherwise,
except in the ordinary course of business and except for the
actions permitted pursuant to Exhibit 8.1(b) hereto.
4.7. No Material Adverse Change. Except for the
options described in Exhibit 4.2 hereto and except as set
forth in Exhibit 8.1(b) hereto, since December 31, 1993,
there has not been any material adverse change in the
condition (financial or otherwise), earnings, assets, lia-
bilities or business of the Company and M&C taken as a whole
as reflected in the Annual Financial Statements as at
December 31, 1993, whether or not arising from transactions
in the ordinary course of business, and, except as set forth
in Exhibit 4.3 hereto, neither the Company nor any
Shareholder is aware of any fact or condition relating to
the business of the Company or M&C which any of them reason-
ably believes might result in such a material adverse change
after the Closing Date. A fluctuation in the market value
of Managed Assets, as defined in Section 4.11(a) hereof, due
to general market conditions shall not in and of itself be
deemed to be a material adverse change for purposes of this
Section 4.7.
4.8. No Dividends, Sale of Assets, etc. Except
as set forth in Exhibit 8.1(b) hereto, since December 31,
1993, there has not been any declaration, setting aside or
payment of any dividend or other distribution in respect of
the capital stock of the Company or any direct or indirect
redemption, purchase or other acquisition by the Company of
any such stock; any sale, assignment, transfer or other
disposition of any material tangible or intangible asset
other than in the ordinary course of business and other than
the sales of Shares described in Exhibit 4.2 hereto; or any
amendment, termination or waiver of any right of substantial
value belonging to or held by the Company.
4.9. Litigation. Except as set forth in Exhibit
4.9 hereto, there are no actions, suits, proceedings,
claims, investigations or examinations pending or, to the
best knowledge of the Company or any Shareholder, threatened
against the Company or M&C or their businesses, properties
or assets, at law or in equity, before or by any federal,
state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality,
domestic or foreign, or before any private arbitration
panel, which, if adversely determined, would result in a
judgment of more than $25,000 or which would otherwise have
a material adverse effect on the condition (financial or
otherwise), earnings, assets, liabilities or business of the
Company and M&C taken as a whole.
4.10. Tax Matters.
(a) Except for income tax returns for the taxable
year ended December 31, 1993, the Company and M&C have duly
and timely filed (either separately or on a consolidated or
combined basis) with the appropriate government agencies,
all returns, declarations, reports, information returns,
statements or extensions relating to Taxes (as hereinafter
defined), including any schedule or attachment thereto or
any amendment thereof (the "Tax Returns") required to be
filed by the Company and M&C on or before the Closing Date,
and such Tax Returns are true, correct and complete in all
material respects. The term "Taxes", as used in this
Agreement, shall mean any federal, state, local, or foreign
income, gross receipts, ad valorem, value added, license,
payroll, employment, excise, severance, stamp, stock
transfer, occupation, premium, windfall profits,
environmental, customs duties, capital stock, franchise,
profits, withholding, social security (or similar),
unemployment, disability, real property, personal property,
sales, use, transfer, real property transfer, registration,
value added, alternative or add-on minimum, estimated, or
other tax of any kind whatsoever, including any interest,
penalties, fines, assessments or additions to tax, whether
disputed or not, imposed in respect of the foregoing, or in
respect of any failure to comply with any requirements
regarding Tax Returns. Notwithstanding the foregoing, 1993
and 1994 Fulton County personal property taxes are in
dispute. The liability in respect thereof shall not exceed
$15,000 per year, and if not resolved by the Closing Date
shall be accrued on the unaudited consolidated balance
sheets of the Company referred to in Section 4.5(c) hereof.
(b) All Taxes attributable to the operations,
acts or omissions of the Company and M&C for any and all
periods through and including the Closing Date have been (i)
paid or deposited, (ii) accrued as liabilities, or (iii)
shown as deferred tax credits related to the Company's
change to the accrual method for income tax purposes in 1993
(the sum of (ii) and (iii) being defined as the "Tax
Accrual") as of the Closing Date on the balance sheets of
the Company referred to in Section 4.5(c) hereof. Neither
the Company nor M&C is delinquent in the payment of any
Taxes, there are no liens on any of the assets of the
Company or M&C that arose in connection with any failure (or
alleged failure) to pay any Taxes nor has either of them
requested any extension of time within which to pay any
Taxes or file any Tax Returns except to the extent that such
Taxes will have been paid or such Tax Returns will have been
filed by the Closing Date except for income tax returns for
the taxable year ended December 31, 1993. Neither the
Company nor M&C has waived any statute of limitation or
granted any waiver or consent providing for an extension of
time with respect to the assessment of any tax or deficiency
against the Company or M&C and no power of attorney granted
by the Company or M&C with respect to any tax matter is
currently in force, except a power of attorney in favor of
Charles N. D'Huyvetter and Ronald A. Swichkow dated August
24, 1993 relating to an application for approval of a change
in accounting method from cash to the accrual basis. There
is no claim or deficiency for any Taxes which has been
threatened or asserted against the Company or M&C. There is
no action, suit, proceeding, investigation, audit or claim
now pending against, or with respect to, the Company or M&C
with regard to any Taxes, nor is any claim for additional
Taxes or assessment of Taxes threatened or asserted by any
tax authority.
(c) To the best knowledge of the Company, M&C,
and the Shareholders, the Tax Returns of, or which include,
the Company and M&C have not been examined by the Internal
Revenue Service or any other similar taxing authority having
the responsibility for auditing Tax Returns for taxable
periods of the Company and M&C ending on or before December
31, 1993, or all material deficiencies asserted as a result
of such examinations have been paid or finally settled. No
issue has been raised by the Internal Revenue Service or
such other similar taxing authority having the
responsibility for auditing any Tax Returns for the
jurisdictions in which such Tax Returns are filed in any
such examination which, by application of the same or
similar principles, reasonably could be expected to result
in a material proposed deficiency for any other period not
so examined. The Company and M&C have provided Parent with
true and complete copies of all federal, state and local
income tax returns constituting part of the Tax Returns
which relate to the conduct of the businesses of the Company
and M&C, as well as any correspondence and agreements with
the Internal Revenue Service or such other similar taxing
authority having the responsibility for auditing any Tax
Returns for the jurisdictions in which such returns are
filed for all periods for which assessments are not barred
by operation of the relevant statute of limitations.
(d) (i) Neither the Company nor M&C has filed an
election, consent or agreement under Section 341(f) of the
Internal Revenue Code of 1986, as amended (the "Code");
(ii) no indebtedness of the Company or M&C consists of
"corporate acquisition indebtedness" within the meaning of
Section 279 of the Code other than the indebtedness payable
to Alexander & Alexander, Inc. reflected in the Annual
Financial Statements; (iii) neither the Company nor M&C has
sustained for any taxable year an "overall foreign loss"
within the meaning of Section 904(f)(2) of the Code; (iv)
neither the Company nor M&C could be liable for the Taxes of
any other person as a "transferee" within the meaning of
Section 6901 of the Code; (v) no property of the Company or
M&C is "tax-exempt use property" within the meaning of
Section 168(h) of the Code, nor property that is or will be
required to be treated as being owned by another person
pursuant to Section 168(f)(8) of the Internal Revenue Code
of 1954, as amended and in effect immediately prior to the
enactment of the Tax Reform Act of 1986; (vi) neither the
Company nor M&C is a "real property holding company" within
the meaning of Sections 897(c)(2) and 897(c)(1)(A)(ii) of
the Code; (vii) neither the Company nor M&C is a party to
any agreement which would require the Company or M&C to make
any payment which would constitute a "parachute payment" for
purposes of Sections 280G and 4999 of the Code; (viii)
neither the Company nor M&C has any liability for the Taxes
of any other person (other than the Company and M&C) under
Section 1.1502-6 of the Treasury Regulations, or any similar
provision of state, local or foreign law, as a transferee or
successor, by contract or otherwise; (ix) no deferred
intercompany transactions within the meaning of Section
1.1502-13 of the Treasury Regulations have occurred among
the Company and M&C; (x) neither the Company nor M&C has an
excess loss account as defined in Section 1.1502-19 of the
Treasury Regulations; (xi) neither the Company nor M&C has a
net basis increase as defined in Section 1.1502-32T of the
Treasury Regulations with respect to any shares of stock of
the Company or M&C which the other owns; (xii) neither the
Company nor M&C is a party to any tax sharing agreement or
tax indemnity agreement which would require the Company or
M&C to make any payment to any person (other than the
Company and M&C) by reason of any Taxes imposed upon such
person; and (xiii) the Shareholders as a group have no
present plan, intention or arrangement to dispose of any of
the Parent Shares received in the Merger if such disposition
would reduce the aggregate fair market value of the Parent
Shares (with such fair market value measured as of the
Closing Date) retained by the Shareholders to an amount less
than 50 percent of the aggregate fair market value of the
shares of the Company immediately before the Closing Date.
4.11. Assets.
(a) Advisory Clients. Exhibit 4.11(a) hereto
sets forth a true and complete list of the advisory clients
of the Company (the "Advisory Clients"), showing for each
client its name, fee arrangements and assets under the
Company's management (the "Managed Assets") valued as of
December 31, 1993 and as of March 31, 1994. Exhibit 4.11(a)
also shows an estimated annualized fee for each such client
and an estimated fee for the three months ended March 31,
1994. Each such client has an investment advisory contract
with the Company, each such contract is in full force and
effect, the Company is not in material breach, violation or
default thereunder, and none of the Company or the
Shareholders is aware of a breach, violation or default
thereunder by the Advisory Client. As of the date hereof,
no such client has terminated, or has advised the Company or
any Shareholder of its intention, orally or in writing, to
terminate, such contract, except as disclosed in Exhibit
4.11(a) hereto.
(b) Other Agreements. Exhibit 4.11(b) hereto
sets forth a true and complete list of all agreements (other
than the contracts referred to in Section 4.11(a) hereof) to
which the Company or M&C is a party or by which it is bound
and which are material to the business of the Company and
M&C taken as a whole. Each such agreement is in full force
and effect, neither the Company nor M&C is in breach,
violation or default thereunder in any material respect, and
none of the Company or the Shareholders is aware of a
breach, violation or default thereunder by any other parties
thereto.
(c) Real Property. Exhibit 4.11(c) hereto sets
forth a true and complete copy of the lease for the office
space occupied by the Company and M&C at 1100 Atlanta
Financial Center, 3343 Peachtree Road, N.E., Atlanta,
Georgia (the "Lease"). The Lease is in full force and
effect and there are no existing defaults thereunder nor
does there exist any event or condition which, with notice
or lapse of time or both, would constitute grounds for
termination or re-entry thereunder. Neither the Company nor
M&C owns or leases any other real property.
(d) Intangible Property. Exhibit 4.11(d) hereto
is a true and complete list of all copyrights, patents,
trademarks and trade names owned by the Company or M&C. All
such rights are valid, subsisting and in full force and
effect without interference by any other person. Neither
the Company nor M&C has received any notice with respect to
any alleged infringement or unlawful use of any intangible
property right owned or alleged to be owned by others.
(e) Investment Securities. Exhibit 4.11(e)
hereto sets forth a true and complete list of all securities
owned by each of the Company and M&C for its own account
(the "Investment Securities"), including the percentage of
the outstanding securities so owned. The acquisition and
ownership of the Investment Securities complied and complies
in all material respects with all applicable laws and
regulations. Except for the Shareholders Agreement entered
into as of May 29, 1992, by and between Ward and Associates,
Inc., the Company and Ward/M&C Asset Management, Inc., as
amended (the "Shareholders Agreement"), no obligations or
liabilities of any nature whatsoever have accrued or will
accrue to the Company or M&C in respect of such acquisition
and ownership except for obligations or liabilities that may
accrue to minority stockholders generally. Any obligations
of the Company or M&C arising under the Shareholders
Agreement shall be paid or discharged prior to the Closing,
or will be fully reflected on the unaudited consolidated
balance sheets referred to in Section 4.5(c) hereof. Any
service by any employees of the Company as officers or
directors of Ward/M&C Asset Management, Inc. may not be
inconsistent with such employees' agreements entered into
pursuant to Section 1.4 hereof, and shall be in such
employees' individual capacities and not on behalf or at the
request of the Company.
(f) Other Assets. Exhibit 4.11(f) hereto sets
forth a true and complete list of all other assets (or cate-
gories of assets) of the Company and M&C, including, without
limitation, client lists, books and records, insurance
policies, claims, memberships and licenses.
(g) Title. Each of the Company and M&C has good
and marketable title to all of its assets free and clear of
all liens, security interests, pledges, agreements, claims,
charges, options and encumbrances of any nature whatsoever.
All assets necessary for the conduct of the business of each
of the Company and M&C as currently conducted are owned by
or leased or licensed to it, and neither any Shareholder
nor, to the best knowledge of the Company and the
Shareholders, any other person owns, or has any rights
whatsoever in, any such assets. To the extent applicable,
such assets have been properly maintained and are in good
operating condition and repair, ordinary wear and tear
excepted.
4.12. Benefit Plans.
(a) Exhibit 4.12 hereto sets forth a true and
complete list describing all of the employee benefit plans,
agreements, commitments, practices or arrangements of any
type (including, but not limited to, plans described in
Section 3(3) of ERISA) maintained by the Company or M&C, or
with respect to which the Company or M&C has a liability,
whether direct or indirect, actual or contingent (including,
but not limited to, liabilities arising from affiliation
under Section 414(b), (c), (m) or (o) of the Code or Section
4001 of ERISA) (the "Benefit Plans"). There are no benefit
plans, agreements, commitments, practices or arrangements of
any type providing benefits to employees, directors or
consultants of the Company or M&C other than the Benefit
Plans.
(b) With respect to each Benefit Plan, the
Company has delivered to Parent true and complete copies of:
(i) any and all plan texts and agreements, (ii) any and all
material employee communications (including all summary plan
descriptions and material modifications thereto), (iii) the
most recent annual report, if applicable, (iv) the two most
recent annual and periodic accountings of plan assets, if
applicable, (v) the most recent determination letter
received from the Internal Revenue Service, if applicable,
and (vi) the most recent actuarial valuation, if applicable.
(c) Except as set forth in Exhibit 4.12 hereto,
with respect to each Benefit Plan: (i) if intended to
qualify under Section 401(a) or 403(a) of the Code, such
plan so qualifies, and its trust, if applicable, is exempt
from taxation under Section 501(a) of the Code; (ii) such
plan has been administered and enforced in accordance with
its terms and all applicable laws; (iii) no breach of
fiduciary duty has occurred with respect to which the
Company, M&C or any Benefit Plan may be liable or otherwise
damaged; (iv) no disputes are pending or threatened; (v) no
prohibited transaction has occurred with respect to which
the Company, M&C or any Benefit Plan may be liable or
otherwise damaged; (vi) no "reportable event" (within the
meaning of Section 4043(b) of ERISA) has occurred with
respect to which the Company, M&C or any Benefit Plan may be
liable or otherwise damaged; (vii) all contributions,
premiums, and other payment obligations have been accrued on
the consolidated financial statements of the Company in
accordance with generally accepted accounting principles,
and, to the extent due, have been made on a timely basis;
(viii) all contributions made or required to be made under
such plan meet the requirements for deductibility under the
Code; (ix) the Company has expressly reserved in itself the
right to amend, modify or terminate such plan, or any
portion of it, without liability to itself; (x) no such plan
requires the Company or M&C to continue to employ any
employee, director or consultant; (xi) with respect to each
such plan subject to either Section 412 of the Code or
Section 302 of ERISA (1) such plan uses a funding method
permissible under ERISA and the actuarial assumptions used
in connection therewith are reasonable, both individually
and in the aggregate, (2) no such plan has incurred an
accumulated funding deficiency, whether or not waived, and
(3) based on the plan's actuarial assumptions, such plan's
assets have and will have a fair market value at least equal
to the greater of (A) the plan's "benefit liabilities," as
defined in Section 4001(a)(16) of ERISA or (B) the plan's
"projected benefit obligation," as defined in Statement of
Financial Accounting Standards No. 87; and (xii) no such
plan has invested in (1) insurance or annuity contracts
issued by an insurance company with an A.M. Best Company,
Inc. rating of claims-paying ability below A++ or (2)
employer securities or employer real property.
(d) No Benefit Plan is a "multiemployer plan"
(within the meaning of Section 3(37) or Section 4001(a)(3)
of ERISA) or a "multiple employer plan" (within the meaning
of Section 4064 of ERISA or Section 413(c) of the Code).
Neither the Company nor M&C has a current or potential
liability or obligation, whether direct or indirect, with
respect to any multiemployer plan or multiple employer plan.
(e) With respect to each Benefit Plan which
provides welfare benefits of the type described in Section
3(1) of ERISA: (i) no such plan provides medical or death
benefits with respect to current or former employees,
directors or consultants of the Company beyond their
termination of employment, other than coverage mandated by
Sections 601-608 of ERISA and 4980B(f) of the Code; (ii)
each such plan has been administered in compliance with
Sections 601-608 of ERISA and 4980B(f) of the Code; and
(iii) no such plan has reserves, assets, surpluses or
prepaid premiums, except as disclosed in the Annual
Financial Statements or in the unaudited consolidated
balance sheets referred to in Section 4.5(c) hereof.
(f) The consummation of the transactions
contemplated by this Agreement will not (i) entitle any
individual to severance pay, (ii) accelerate the time of
payment or vesting, or increase the amount, of compensation
due to any individual. No payment made or contemplated
under any Benefit Plan constitutes an "excess parachute
payment" within the meaning of Section 280G of the Code.
4.13. Interests of Officers, Directors and
Shareholders. Except as set forth in Exhibit 4.13 and other
than in respect of salaries, incentive awards and bonuses or
amounts due in respect of ordinary travel and business
expenses and Benefit Plans, no present officer, director or
shareholder of the Company or M&C nor any immediate family
member thereof has any agreement, loan or other obligation
outstanding with, to or from the Company or M&C or for which
the Company or M&C may be liable, or has any material
interest in any firm, person or entity with which the
Company or M&C does business.
4.14. Employees. Exhibit 4.14 hereto is a true
and complete list of all employees of the Company and M&C,
and their employment dates and positions, and whether any
such employee has a written agreement with the Company or
M&C other than the employment agreements and non-compete
agreements referred to in Section 1.4 hereof. The Company
has heretofore delivered to Parent a true and complete list
of the current salary of each such employee, and the
salaries, incentive awards, bonuses and other compensation
paid to each such employee for the year ended December 31,
1993 (shown separately). Except as set forth in Exhibit
4.14 hereto, since December 31, 1993, neither the Company
nor M&C has terminated or experienced the resignation of any
employee. There are no collective bargaining agreements
relating to any employees of the Company or M&C. Within the
last two years neither the Company nor M&C has experienced
any material work stoppage or has been the subject of any
collective bargaining agreement.
4.15. Banks. Exhibit 4.15 hereto is a true and
complete list of all banks or other financial institutions
in which the Company or M&C has an account or a line of
credit, showing a description of each account or line of
credit, or in which the Company or M&C has a safe deposit
box.
4.16. Insurance. Exhibit 4.16 hereto sets forth
a true and complete list of all policies of insurance
maintained by the Company and M&C, showing the subject
matter, the beneficiary and the amount of coverage for each
policy. Other than life insurance policies, the insurance
coverage provided by the policies of insurance in force is
reasonably adequate for the conduct of the business
conducted by the Company and M&C in accordance with sound
business practices and, to the best knowledge of the Company
and the Shareholders, is not substantially different from
that which is customary in the industry.
4.17. Absence of Bank or Savings and Loan Status.
Neither the Company nor M&C (a) is an "insured bank" or is
eligible for federal deposit insurance within the meaning of
the Federal Deposit Insurance Act, as amended; (b) is a
"savings association" for purposes of the Regulations for
Savings and Loan Holding Companies, 12 CFR Sections 583-584
and the Regulations for the Acquisition of Control of
Savings Associations, 12 CFR Section 574; (c) accepts
deposits within the meaning of 12 U.S.C. Section 378; (d) is
a "bank" or a "bank holding company"; (e) owns or "controls"
5 percent or more of the voting securities of a "bank" or
"bank holding company," as such terms are defined in the
Bank Holding Company Act of 1956, as amended, and the
regulations promulgated thereunder; (f) is regulated as a
bank under the laws or regulations of its jurisdiction of
incorporation; (g) is a "savings and loan holding company";
(h) "controls" any "savings association," as such terms are
defined in 12 CFR Sections 574 and 583; (i) has acquired by
purchase or otherwise, or retains, more than 5 percent of
the voting stock or shares of a "savings association" or
"savings and loan holding company," as such terms are
defined in 12 CFR Section 583; or (j) is regulated as a
savings and loan institution under the laws or regulations
of its jurisdiction of incorporation. None of the
"management officials," as such term is defined in the
Depository Institution Management Interlocks Act and the
rules and regulations promulgated thereunder (the
"Interlocks Act"), of the Company or M&C holds any position
that, subsequent to the Effective Time, would be in
violation of the Interlocks Act due to Parent's status as a
savings and loan holding company.
4.18. Brokers and Finders. None of the Company,
M&C or any of their officers, directors or employees has
employed any broker or finder or incurred any liability for
any brokerage fees, commissions or finders fees in
connection with the transactions contemplated by this
Agreement, except that the Company has employed Berkshire
Capital Corporation as its financial adviser, the
arrangements with which have been disclosed in writing to
Parent prior to the date hereof.
4.19. Status of Shareholders. Each Shareholder
represents that: (a) such Shareholder has such knowledge
and experience in financial and business matters as to be
capable of evaluating the merits and risks of such
Shareholder's acquisition of Parent Shares hereunder; (b)
such Shareholder has the ability to bear the economic risks
of such Shareholder's acquisition hereunder, including a
complete loss of his or her investment in Parent Shares; (c)
such Shareholder has been furnished with and has had access
to such information as such Shareholder has considered
necessary to make a determination as to his or her
acquisition hereunder; (d) such Shareholder has had all
questions asked by such Shareholder concerning the
operations of Parent and Newco answered by Parent and Newco
in a satisfactory manner; (e) such Shareholder has not been
offered the Parent Shares by any form of general
solicitation or general advertising, including, without
limitation, any advertisement, article, notice or other
communication published in any newspaper, magazine or
similar media or broadcast over television or radio, or any
seminar or meeting whose attendees have been invited by any
general solicitation or general advertising; and (f) such
Shareholder has not relied on any representations and
warranties of Parent and Newco other than those contained in
this Agreement and in the exhibits and other documents
delivered pursuant hereto.
4.20. Investment Representation. The Parent
Shares to be acquired by each Shareholder will be acquired
by such Shareholder for his or her own account for purposes
of investment and not with a view to distribution in a
manner which would be in violation of the Securities Act or
the securities or "Blue Sky" laws of any state or
jurisdiction of the United States, provided that any
disposition of such Shareholder's property shall at all
times be within his or her control. Such Shareholder agrees
that he or she will comply with all federal and state
securities or "Blue Sky" laws with respect to the Parent
Shares.
4.21. Shareholder Understandings.
(a) Such Shareholder understands that the Parent
Shares have not been registered under the Securities Act and
may be transferred only if so registered or if an exemption
therefrom is available. Such Shareholder will not sell or
dispose of any of the Parent Shares without (i) the
registration, qualification, approval and listing of the
Parent Shares, or (ii) the delivery to Parent of an opinion
of counsel, in form and substance reasonably satisfactory to
counsel for Parent, that such proposed sale or disposition
is exempt from the provisions of Section 5 of the Securities
Act.
(b) Until such time as, and unless, the
registration, qualification, approval and listing of the
Parent Shares are effective, such Shareholder understands
that the certificate for the Parent Shares received by him
or her pursuant to the Merger shall bear a legend to the
effect that the Parent Shares represented by such
certificate have not been registered under the Securities
Act and may not be transferred in the absence of such
registration or an exemption therefrom.
(c) Notwithstanding the effectiveness of such
registration, qualification, approval and listing of the
Parent Shares, such Shareholder understands that, until the
publication of Parent's consolidated financial statements
which include at least thirty days of post-Merger
operations, if such Shareholder is deemed an affiliate of
the Company for purposes of the conditions for the
"pooling-of-interests" method of accounting referred to in
Section 6.6 hereof, the certificate for Parent Shares
received by him or her pursuant to the Merger shall continue
to bear a legend to the effect that the Parent Shares
represented by such certificate may not be transferred.
4.22. Pooling. Neither the Company nor any of
the Shareholders has taken any of the actions set forth in
Exhibit 4.22 hereto, provided, however, that none of the
actions disclosed in this Agreement or in the exhibits
hereto shall constitute a breach or violation of this
Section 4.22.
4.23. Aggregate Materiality. There are no
events, situations, obligations or liabilities of the types
described in this Article IV and excepted therefrom solely
because individually they do not have a material adverse
effect on the condition (financial or otherwise), earnings,
assets, liabilities or business of the Company and M&C taken
as a whole which, in the aggregate, would have a material
adverse effect on the condition (financial or otherwise),
earnings, assets, liabilities or business of the Company and
M&C taken as a whole.
4.24. Disclosure. The information provided by
the Company and the Shareholders in this Agreement and in
the exhibits and other documents delivered pursuant hereto
does not contain any untrue statement of a material fact or
omit to state herein a material fact necessary to make the
statements made herein, in light of the circumstances under
which they are made, not misleading.
ARTICLE V
Representations and Warranties of Parent and Newco
Each of Parent and Newco hereby represents and
warrants to the Company and the Shareholders as follows:
5.1. Corporate Organization and Qualification.
Each of Parent and Newco is a corporation duly organized,
validly existing and in good standing under the laws of its
jurisdiction of incorporation and is in good standing as a
foreign corporation in each jurisdiction where the
properties owned, leased or operated, or the business
conducted, by it require such qualification and where the
absence of which would have a material adverse effect on the
condition (financial or otherwise), earnings, assets,
liabilities or business of Parent and its subsidiaries taken
as a whole. Each of Parent and Newco has the requisite
corporate power and authority to carry on its business as it
is now being conducted. Parent has delivered to the Company
a true and complete copy of its Restated Certificate of
Incorporation and By-Laws, and of Newco's Articles of
Incorporation and Bylaws, each as amended to date, and each
is in full force and effect.
5.2. Authorized Capital. The authorized capital
stock of Parent consists of 22,000,000 Parent Shares, of
which 6,748,301 Parent Shares are issued and outstanding,
and 8,000,000 shares of preferred stock, par value $1.00 per
share, none of which are issued and outstanding. All of the
issued and outstanding Parent Shares have been duly
authorized and are validly issued, fully paid and
nonassessable. The authorized capital stock of Newco
consists of 1,000 shares of common stock, par value $1.00
per share, all of which are issued and outstanding. Such
shares have been duly authorized and are validly issued,
fully paid and nonassessable, and are owned by Parent free
and clear of all liens, pledges, security interests, claims
and other encumbrances of any nature whatsoever.
5.3. Corporate Authority. Exhibit 5.3 hereto is
a true and complete list of all material permits, approvals,
qualifications, filings, consents or waiting periods of
third parties and regulatory authorities which are required
by Parent or Newco for the consummation of the transactions
contemplated by this Agreement (the "Parent and Newco
Approvals"). Each of Parent and Newco has full corporate
power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby. The
execution, delivery and performance of this Agreement by
Parent and Newco have been duly and validly authorized by
all necessary corporate action on the part of Parent and
Newco, and this Agreement constitutes a legal, valid and
binding obligation of each of Parent and Newco, enforceable
against it in accordance with its terms, except as
enforceability may be limited by bankruptcy, fraudulent
conveyance, insolvency, reorganization, moratorium and other
similar laws relating to or affecting creditors' rights
generally or by general equitable principles (regardless of
whether such enforceability is considered in a proceeding in
equity or at law). Neither the execution and delivery of
this Agreement, nor the consummation of the transactions
contemplated hereby, will (a) conflict with or result in a
breach or violation of any of the provisions of Parent's
Restated Certificate of Incorporation or By-Laws or Newco's
Articles of Incorporation or Bylaws; (b) subject to the
granting of the Parent and Newco Approvals, conflict with,
result in a breach or violation of, result in a default or
loss of a material benefit under, or permit the acceleration
of any obligation under any provision of any agreement,
indenture, mortgage, lien, lease or other instrument or
restriction of any kind to which Parent or Newco is a party
or by which any of their respective assets or properties is
otherwise bound; or (c) subject to the granting of the
Parent and Newco Approvals, violate any order, writ,
injunction, decree, statute, rule or regulation applicable
to Parent or Newco or any of their respective assets or
properties, except, with respect to each of clauses (a), (b)
and (c) of this Section 5.3, where the effect of such
conflict, breach, violation, default, loss or acceleration,
individually or in the aggregate, would not have a material
adverse effect on the condition (financial or otherwise),
earnings, assets, liabilities or business of Parent and its
subsidiaries taken as a whole.
5.4. Compliance.
(a) Each of Parent and Newco is in compliance
with all laws, regulations and requirements applicable to
the operation of its business, with which the failure to so
comply would have a material adverse effect on the condition
(financial or otherwise), earnings, assets, liabilities or
business of Parent and its subsidiaries taken as a whole.
(b) Except as set forth in Exhibit 5.4(b) hereto,
none of the following has occurred since January 1, 1987:
(i) any investigative or disciplinary proceedings by the
SEC, the NASD, the NYSE or any other federal, state or
self-regulatory authority against Parent or CT&T or, to the
best knowledge of Parent, any of its or CT&T's directors,
officers or employees; or (ii) the issuance of any consent
judgments, decrees, cease and desist or other orders,
material disqualifications, material penalties or material
special restrictions against Parent or CT&T or, to the best
knowledge of Parent, any of its or CT&T's directors,
officers or employees (including, without limitation,
criminal convictions) relating to or affecting the conduct
of the business of Parent or CT&T.
5.5. Financial Statements. The audited
consolidated balance sheets of Parent and its subsidiaries
as at December 31, 1993 and 1992 and the related audited
consolidated statements of earnings, changes in common
stockholders' equity and cash flows for each of the years
then ended ("Parent's Annual Financial Statements"), which
heretofore have been delivered to the Company, present
fairly the consolidated financial position and results of
operations of Parent and its subsidiaries as of the dates
and for the periods indicated therein in accordance with
generally accepted accounting principles applied on a
consistent basis throughout the periods indicated, except as
may otherwise be specifically indicated therein.
5.6. Undisclosed Liabilities. As at December 31,
1993, Parent had no obligations or liabilities of any
nature, whether absolute, accrued, contingent or otherwise,
which, individually or in the aggregate, would have a
material adverse effect on the condition (financial or
otherwise), earnings, assets, liabilities or business of
Parent and its subsidiaries taken as a whole except and to
the extent disclosed in Parent's Annual Financial Statements
as at December 31, 1993. Since December 31, 1993, Parent
has not incurred or become subject to any obligations or
liabilities of any nature, whether absolute, accrued,
contingent or otherwise, which, individually or in the
aggregate, would have a material adverse effect on the
condition (financial or otherwise), earnings, assets,
liabilities or business of Parent and its subsidiaries taken
as a whole.
5.7. No Material Adverse Change. Since
December 31, 1993, there has not been any material adverse
change in the condition (financial or otherwise), earnings,
assets, liabilities or business of Parent and its
subsidiaries taken as a whole as reflected in Parent's
Annual Financial Statements as at December 31, 1993, whether
or not arising from transactions in the ordinary course of
business, and Parent is not aware of any fact or condition
relating to its business which it reasonably believes might
result in such a material adverse change after the Closing
Date. A fluctuation in the market value of Parent Shares
due to general market conditions shall not in and of itself
be deemed to be a material adverse change for purposes of
this Section 5.7.
5.8. Litigation. There are no actions, suits,
proceedings, claims, investigations or examinations pending
or, to the best knowledge of Parent, threatened against
Parent or its subsidiaries or their businesses, properties
or assets, at law or in equity, before or by any federal,
state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality,
domestic or foreign, which, if adversely determined, would
result in a judgment of more than $1,000,000 or which would
otherwise have a material adverse effect on the condition
(financial or otherwise), earnings, assets, liabilities or
business of Parent and its subsidiaries taken as a whole.
5.9. SEC Filings.
(a) Parent has delivered to the Company: (i) its
annual reports to stockholders for the fiscal years ended
December 31, 1993 and 1992; its annual reports on Form 10-K
for the fiscal years ended December 31, 1993 and 1992; (ii)
its proxy statements relating to the meetings the
stockholders of Parent held on April 23, 1993 and on April
22, 1994; and (iii) all of its other reports, statements,
schedules and registration statements filed with the SEC
since December 31, 1993.
(b) As of its filing date, no such report or
statement contained any untrue statement of a material fact
or omitted to state a material fact necessary in order to
make the statements made therein, in light of the
circumstances under which they were made, not misleading.
(c) Promptly upon the filing thereof with the
SEC, Parent will deliver to the Company any current reports
on Form 8-K and any other reports, statements, schedules or
registration statements filed with the SEC from the date
hereof until the Closing Date.
5.10. Tax Matters. Parent has duly and timely
filed with the appropriate governmental agencies all Tax
Returns required to be filed on or prior to the Closing
Date, and all Taxes shown to be due on such Tax Returns have
been fully paid or provided for on Parent's books.
5.11. Benefit Plans. Exhibit 5.11 hereto sets
forth a true and complete list of all material employee
benefit plans (within the meaning of Section 3(3) of ERISA)
maintained by CT&T for employees generally. Each such
benefit plan that is intended to qualify under Section
401(a) of the Code (including, without limitation, the
Chicago Title and Trust Company Savings and Profit Sharing
Plan and the Chicago Title and Trust Company Pension Plan):
(a) has received a determination letter from the Internal
Revenue Service expressing that it is so qualified and that
its trust, if applicable, is exempt from taxation under
Section 501(a) of the Code, as of the date of the letter;
(b) to the knowledge of CT&T, has not been amended in a
manner that would adversely affect the qualified-status of
such plan; and (c) has been administered and enforced
substantially in accordance with its terms, to the extent
that such terms have not been superceded by changes in
applicable law which are not required to be reflected in the
plan text as of the Effective Time, and all applicable laws.
The Chicago Title and Trust Company Savings and Profit
Sharing Plan contains, or, if appropriate, shall be amended
to contain, provisions that would, if appropriate, permit
the Montag & Caldwell, Inc. Savings and Retirement Plan to
be merged into the Chicago Title and Trust Company Savings
and Profit Sharing Plan; provided, however, CT&T shall in no
event be obligated to cause such an amendment or merger.
5.12. Directors' and Officers' Liability
Insurance. Parent has heretofore delivered (or shall
deliver within ten (10) days after the date hereof) to the
Company a copy of the Executive Liability and
Indemnification policy issued to Parent. As of the
Effective Time, the officers and directors of the Company
and M&C shall be included as insured persons under such
policy.
5.13. Access of Parent. Parent represents that:
(a) Parent has been furnished with and has had access to
such information as Parent has considered necessary to make
a determination as to its acquisition hereunder; (b) Parent
has had all questions asked by it concerning the operations
of the Company and M&C answered by the Company and M&C in a
satisfactory manner; and (c) Parent has not relied on any
representations and warranties of the Company, M&C or the
Shareholders other than those contained in this Agreement
and in the exhibits and other documents delivered pursuant
hereto.
5.14. Parent Shares. The Parent Shares that will
be issued to the Shareholders in accordance with this
Agreement have been duly authorized and, when issued as
contemplated hereby, will be validly issued, fully paid and
nonassessable.
5.15. Brokers and Finders. None of Parent, Newco
or any of their officers, directors or employees has
employed any broker or finder or incurred any liability for
any brokerage fees, commissions or finders fees in
connection with the transactions contemplated by this
Agreement.
5.16. Aggregate Materiality. There are no
events, situations, obligations or liabilities of the types
described in this Article V and excepted therefrom solely
because individually they do not have a material adverse
effect on the condition (financial or otherwise), earnings,
assets, liabilities or business of Parent and its
subsidiaries taken as a whole which, in the aggregate, would
have a material adverse effect on the condition (financial
or otherwise), earnings, assets, liabilities or business of
Parent and its subsidiaries taken as a whole.
5.17. Disclosure. The information provided by
Parent and Newco in this Agreement and in the exhibits and
other documents delivered pursuant hereto does not contain
any untrue statement of a material fact or omit to state
herein a material fact necessary to make the statements made
herein, in light of the circumstances under which they are
made, not misleading.
ARTICLE VI
Conditions to the Obligations of Parent and Newco
The obligations of each of Parent and Newco under
this Agreement are subject to the satisfaction, on or before
the Closing Date, of each of the following conditions:
6.1. Compliance with Agreement. The Company and
each Shareholder shall have performed and complied in all
material respects with all the terms, covenants and
conditions required by this Agreement to be performed or
complied with by it, him or her on or before the Closing
Date, and Parent and Newco shall have received from the
Company and each Shareholder at the Closing a certificate,
dated the Closing Date, to that effect. Attached to the
Company's certificate shall be a certified copy of the
resolutions of the Board of Directors of the Company, and a
certified copy of the written consent of the Shareholders,
in each case adopting or approving this Agreement and
authorizing the transactions contemplated hereby.
6.2. Representations and Warranties. The
representations and warranties made by the Company and each
Shareholder in this Agreement shall be true and correct in
all material respects (except that each of the
representations and warranties made by the Company and each
Shareholder which is qualified by materiality shall be true
and correct in all respects) as of the Closing Date except
for any changes permitted by the terms hereof or consented
to by Parent and Newco, and Parent and Newco shall have
received from the Company and each Shareholder at the
Closing a certificate, dated the Closing Date, to that
effect.
6.3. Opinion of Counsel for the Company and the
Shareholders. Parent and Newco shall have received an
opinion from Smith, Gambrell & Russell, counsel for the
Company and the Shareholders, dated the Closing Date,
substantially in the form set forth in Exhibit 6.3 hereto.
6.4. Approvals. All Company Approvals and all
Parent and Newco Approvals shall have been obtained and be
in effect on the Closing Date.
6.5. Value of Managed Assets. Advisory Clients
as of the date hereof (together with Advisory Clients who
become such after the date hereof and prior to the Closing
Date) owning Managed Assets on the Closing Date which, if
valued as of March 31, 1994, would have had a value of at
least 90 percent of the value of Managed Assets as at March
31, 1994 (or $1,801,872,701 in Managed Assets valued at
March 31, 1994), shall have consented in writing to the
change of control contemplated herein constituting an
assignment (as defined in the Investment Advisors Act of
1940, as amended) of their contracts with the Company or
M&C.
6.6. Accounting Treatment. The acquisition of
the Company by Parent pursuant to the Merger shall have met
all of the conditions for the "pooling-of-interests" method
of accounting for business transactions, in accordance with
Accounting Principles Board Opinion No. 16, Business
Combinations, and Parent shall have received such assurances
from its independent certified public accountants with
respect thereto as it shall reasonably require.
6.7. Net Worth. The Company shall have delivered
to Parent an unaudited consolidated balance sheet of the
Company as at seven business days before the Closing Date
and the related unaudited consolidated statement of income
and retained earnings, prepared as set forth in Section
4.5(c). The net worth of the Company as at seven days
before the Closing Date and as at the Closing Date shall not
be less than $1.9 million after taking into account all
actions permitted pursuant to Exhibit 8.1(b) hereto (whether
or not such actions have been taken), and Parent and Newco
shall have received from the Company at the Closing a
certificate, dated the Closing Date, to that effect.
6.8. Key Man Insurance. All actions reasonably
required to be taken by the Company, M&C, Solon P.
Patterson, Ronald E. Canakaris and David F. Seng to apply
for life insurance policies on such individuals, naming the
Company or M&C as beneficiaries, shall have been taken.
6.9. Benefit Plans. The Benefit Plans shall be
reasonably satisfactory to Parent in its sole discretion in
good faith.
ARTICLE VII
Conditions to the Obligations
of the Company and the Shareholders
The obligations of the Company and the
Shareholders under this Agreement are subject to the
satisfaction, on or before the Closing Date, of each of the
following conditions:
7.1. Compliance with Agreement. Each of Parent
and Newco shall have performed and complied in all material
respects with all the terms, covenants and conditions
required by this Agreement to be performed or complied with
by it on or before the Closing Date, and the Company and the
Shareholders shall have received from each of Parent and
Newco at the Closing a certificate, dated the Closing Date,
to that effect. Attached to Newco's certificate shall be a
certified copy of the resolutions of the Board of Directors
of Newco, and a certified copy of the written consent of
Parent as the sole stockholder of Newco, and attached to
Parent's certificate shall be a certified copy of the
resolutions of the Board of Directors of Parent, in each
case adopting or approving this Agreement and authorizing
the transactions contemplated hereby.
7.2. Representations and Warranties. The
representations and warranties made by Parent and Newco in
this Agreement shall be true and correct in all material
respects (except that each of the representations and
warranties made by Parent and Newco which is qualified by
materiality shall be true and correct in all respects) as of
the Closing Date except for any changes permitted by the
terms hereof or consented to by the Company and the
Shareholders, and the Company and the Shareholders shall
have received from each of Parent and Newco at the Closing a
certificate, dated the Closing Date, to that effect.
7.3. Opinion of Counsel for Parent and Newco.
The Company and the Shareholders shall have received an
opinion from Donovan Leisure Newton & Irvine, counsel for
Parent and Newco, dated the Closing Date, substantially in
the form set forth in Exhibit 7.3 hereto.
7.4. Approvals. All Company Approvals and all
Parent and Newco Approvals shall have been obtained and be
in effect on the Closing Date.
ARTICLE VIII
Covenants of the Company and the Shareholders
8.1. Covenants Pending the Closing. From and
after the date hereof and until the Closing Date:
(a) Access to Properties, Books and Records. The
Company and the Shareholders shall afford or cause to be
afforded to Parent and to the attorneys, accountants and
other authorized representatives (collectively,
"Representatives") of Parent reasonable access during normal
business hours and upon reasonable notice as often as they
reasonably desire to the Company, M&C and their employees,
properties, books and records in order to afford Parent the
opportunity to make such investigations of the affairs of
the Company and M&C as it deems desirable. The Company and
the Shareholders shall also furnish or cause to be furnished
to Parent such information relating to the businesses and
affairs of the Company and M&C as Parent shall from time to
time reasonably request. Parent also shall be afforded the
opportunity to confer with the Company's Advisory Clients if
Parent reasonably determines that to be necessary or
advisable; provided, however, that all arrangements relating
thereto shall be made by Solon P. Patterson (or other
officer of the Company appointed by him), who may attend any
such conferences.
(b) Carry On in Regular Course. Except as set
forth in Exhibit 8.1(b) hereto, (i) the Company and M&C
shall carry on their businesses diligently and substantially
in the same manner as presently being conducted and shall
not make or institute any material change in their methods
of operations or doing business; provided, however, that
each of the Advisory Clients shall be contacted to advise
it, him or her of the prospective change in control of the
Company, and shall be sent a letter to such effect
substantially in the form of Exhibit 8.1(b)(i) hereto; (ii)
without the prior written consent of Parent, none of the
Company, M&C or any of the Shareholders shall grant any
bonuses to any of the employees of the Company or M&C, alter
or increase the present compensation of such employees, or
amend the current terms of the Benefit Plans; provided,
however, that bonuses may be granted consistent with the
past practices of the Company and M&C with the prior
approval of Parent, which approval shall not be unreasonably
withheld; and (iii) no capital expenditures shall be
incurred or contracted for, by or on behalf of the Company
or M&C in excess of $10,000 in the aggregate without the
prior written consent of Parent.
(c) Preservation of Organization. Each of the
Company and M&C shall maintain its corporate existence and
powers and its qualification as a foreign corporation in the
states listed in Exhibit 4.1 hereto. The Company shall not
amend its Articles or Bylaws (except as required pursuant to
Section 2.2 hereof), M&C shall not amend its Articles of
Incorporation or Bylaws, and neither the Company nor M&C
shall make any change in its authorized or issued capital
stock. Each of the Company, M&C and the Shareholders shall
use its, his or her reasonable best efforts to (i) preserve
intact the business organization of the Company and M&C,
(ii) keep available to Parent the present key officers and
employees of the Company and M&C (except for Carolyn Tyson
who has announced that she intends to retire),
(iii) preserve for Parent the relationships of the Company
and M&C with their clients, suppliers and others having
business relations with them, (iv) maintain all of the
properties of the Company and M&C in customary repair, order
and condition, and (v) take all steps reasonably necessary
to maintain the intangible assets of the Company and M&C.
8.2. Confidentiality. As a condition to the
Company and the Shareholders furnishing to Parent, Newco or
their Representatives financial and other information that
has not heretofore been made generally available on a
nonconfidential basis pursuant to Section 8.1(a) hereof,
Parent and Newco agree to treat such information furnished
to them (both orally and in writing) by the Company, the
Shareholders or their Representatives, and all notes,
analyses, compilations, studies, interpretations and other
material prepared by Parent, Newco or their Representatives
containing or based in whole or in part on any such
information (collectively, the "Evaluation Material"), as
follows:
(a) Parent and Newco recognize and acknowledge
the competitive value and confidential nature of the
Evaluation Material and the damage that could result to the
Company and the Shareholders if information contained
therein is disclosed to any third party.
(b) Parent and Newco agree that the Evaluation
Material will be used solely for the purpose of evaluating
the transaction contemplated hereby. Parent and Newco agree
that neither of them will disclose any of the Evaluation
Material to any third party without the prior written
consent of the Company; provided, however, that any such
information may be disclosed to the Representatives of the
Parent and Newco who need to know such information for the
purpose of evaluating the transaction contemplated hereby
and who agree to keep such information confidential and to
be bound by the provisions of this Section 8.2 to the same
extent as if they were parties hereto.
(c) In the event that Parent, Newco or their
Representatives are requested in any proceeding to disclose
any Evaluation Material, they will give the Company prompt
notice of such request so that the Company may seek an
appropriate protective order. If, in the absence of a
protective order, Parent, Newco or their Representatives are
nonetheless compelled by law to disclose such Evaluation
Material, Parent, Newco or their Representatives, as the
case may be, may disclose such information in such
proceeding without liability hereunder; provided, however,
that Parent, Newco or their Representatives, as the case may
be, give the Company written notice of the information to be
disclosed as far in advance of its disclosure as is
practicable and, upon the request of the Company and at the
Company's expense, use their reasonable best efforts to
obtain assurances that confidential treatment will be
accorded to such information.
(d) In the event that the transaction
contemplated by this Agreement is not consummated, Parent,
Newco and their Representatives will promptly redeliver to
the Company all copies of all Evaluation Material furnished
by the Company, the Shareholders or their Representatives
and will destroy all analyses, compilations, studies and
other material based in whole or in part on such material
prepared by Parent, Newco or their Representatives.
(e) Parent, Newco and their Representatives shall
have no obligation hereunder with respect to any information
in the Evaluation Material furnished by the Company, the
Shareholders or their Representatives to the extent that
such information (y) has been made public other than by the
acts of Parent, Newco or their Representatives in violation
of this Agreement or (z) becomes available to the Parent,
Newco or their Representatives on a nonconfidential basis
from a source that is entitled to disclose it on a
nonconfidential basis.
(f) In the event that the transaction
contemplated by this Agreement is not consummated, for a
period of five years after the date of termination of this
Agreement neither Parent nor Newco shall solicit any of the
Advisory Clients with the objective of providing to such
clients the same or substantially similar services as those
provided by the Company.
(g) Parent and Newco agree that money damages
would not be a sufficient remedy for any breach of the
covenants set forth in this Section 8.2 by either of them or
their Representatives, and that, in addition to all other
remedies, the Company shall be entitled to specific
performance and injunctive or other equitable relief as a
remedy for any such breach, and Parent and Newco further
agree to waive, and to use their reasonable best efforts to
cause their Representatives to waive, any requirement for
the securing or posting of any bond in connection with such
remedy. Parent and Newco agree to be responsible for any
breach of the covenants set forth in this Section 8.2 by any
of their Representatives.
8.3. Filings and Approvals. Each of the Company
and M&C shall duly make all regulatory filings required to
be made by it prior to the Effective Time in respect of this
Agreement or the transactions contemplated hereby.
8.4. Best Efforts. Each of the Company and the
Shareholders agrees to use its, his or her reasonable best
efforts to consummate the transactions contemplated hereby,
including, without limitation, satisfaction of the
conditions set forth in Article VI hereof.
8.5. Further Assurances. Each of the
Shareholders agrees that he or she will, from time to time
at and subsequent to the Closing Date, at the request of
Parent and without further consideration, execute and
deliver such other instruments of conveyance, assignment and
transfer and take such other actions as Parent may
reasonably request in order more effectively to consummate
the transactions contemplated hereby. None of the
Shareholders will take any of the actions set forth in
Exhibit 8.5 hereto; provided, however, that none of the
actions disclosed in this Agreement or in the exhibits
hereto shall constitute a breach or violation of this
Section 8.5.
8.6. Fund Approvals. Each of the Company and the
Shareholders agrees to use its, his or her reasonable best
efforts to obtain the required approvals of the board of
directors and shareholders of The Enterprise Group of Funds,
Inc. for the renewal or continuation of the Portfolio
Manager's Agreement dated February 25, 1992 between M&C and
Enterprise Capital Management, Inc., including, without
limitation, the payment of the reasonable costs thereof.
8.7. Employee Benefits.
(a) Prior to the Effective Time, the Company
shall contribute to the Montag and Caldwell, Inc. Savings
and Retirement Plan, or shall accrue as a liability on the
balance sheets referred to in Section 4.5(c) of this
Agreement, an employer profit-sharing contribution and a
employer matching contribution, with such amounts to be
mutually determined by the Company and Parent, based on
historical contribution rates. In addition, prior to the
Effective Time, the Company shall accrue the following
amounts as a liability on the balance sheets referred to in
Section 4.5(c) of this Agreement: (i) the amount of any
penalty, tax or other liability that may result from the
items disclosed in part (B) of Exhibit 4.12 hereto, with
such amounts to be mutually determined by the Company and
Parent; (ii) any other penalty, tax, levy, charge or
liability relating to employee benefits as the Company
should reflect in accordance with generally accepted
accounting principles and consistent with the past practices
of the Company. To the extent the Company's liability for
the items listed in (i) and (ii) is less than the amount the
Company has accrued on the balance sheets referred to in
Section 4.5(c) of this Agreement, the Company shall pay such
deficit accrual to the Shareholders pro rata according to
the number of Shares owned by each Shareholder immediately
prior to the Closing. The Company shall pay such amounts
promptly after its liability for the items listed in (i) and
(ii) for periods preceding the Closing Date becomes final.
(b) Prior to the Effective Time, the Company
shall provide such information relating to the employee
benefit plans, programs and arrangements of the Company and
M&C as Parent may request in writing within five business
days after receipt of such request.
8.8. Closing Date Balance Sheet. Within 30 days
after the Closing Date, the Company will deliver to Parent
an unaudited consolidated balance sheet as at the Closing
Date and the related unaudited consolidated statement of
income and retained earnings, prepared as set forth in
Section 4.5(c) hereof.
ARTICLE IX
Covenants of Parent and Newco
9.1. Access to Properties, Books and Records
Pending the Closing. From and after the date hereof and
until the Closing Date, Parent and Newco shall afford or
cause to be afforded to Company, the Shareholders'
Representative (as defined in Section 11.5 hereof) and their
Representatives reasonable access during normal business
hours and upon reasonable notice as often as they reasonably
desire to the Parent and Newco and their employees,
properties, books and records in order to afford the Company
the opportunity to make such investigations of the affairs
of the Parent and Newco as it deems desirable consistent
with Parent's obligations under the federal securities laws
with respect to the sale of securities. Parent and Newco
shall also furnish or cause to be furnished to Company such
information relating to the businesses and affairs of Parent
and Newco as the Company shall from time to time reasonably
request consistent with Parent's obligations under the
federal securities laws with respect to the sale of
securities.
9.2. Confidentiality. As a condition to Parent
and Newco furnishing to the Company, the Shareholders'
Representative or their Representatives financial and other
information that has not heretofore been made generally
available on a nonconfidential basis pursuant to Section 9.1
hereof, the Company and the Shareholders agree to treat such
information furnished to them (both orally and in writing)
by Parent, Newco or their Representatives and all notes,
analyses, compilations, studies, interpretations and other
material prepared by the Company, the Shareholders or their
Representatives containing or based in whole or in part on
any such information (collectively the "Evaluation
Material"), as follows:
(a) The Company and the Shareholders recognize
and acknowledge the competitive value and confidential
nature of the Evaluation Material and the damage that could
result to the Parent and Newco if information contained
therein is disclosed to any third party.
(b) The Company and the Shareholders agree that
the Evaluation Material will be used solely for the purpose
of evaluating the transaction contemplated hereby. The
Company and the Shareholders agree that none of them will
disclose any of the Evaluation Material to any third party
without the prior written consent of Parent; provided,
however, that any such information may be disclosed to the
Representatives of the Company and the Shareholders who need
to know such information for the purpose of evaluating the
transaction contemplated hereby and who agree to keep such
information confidential and to be bound by the provisions
of this Section 9.2 to the same extent as if they were
parties hereto.
(c) In the event that the Company, the
Shareholders or their Representatives are requested in any
proceeding to disclose any Evaluation Material, they will
give Parent prompt notice of such request so that Parent may
seek an appropriate protective order. If, in the absence of
a protective order, the Company, the Shareholders or their
Representatives are nonetheless compelled by law to disclose
such Evaluation Material, the Company, the Shareholders or
their Representatives, as the case may be, may disclose such
information in such proceeding without liability hereunder;
provided, however, that the Company, the Shareholders or
their Representatives, as the case may be, give Parent
written notice of the information to be disclosed as far in
advance of its disclosure as is practicable and, upon the
request of Parent and at Parent's expense, use their
reasonable best efforts to obtain assurances that
confidential treatment will be accorded to such information.
(d) In the event that the transaction
contemplated by this Agreement is not consummated, the
Company, the Shareholders and their Representatives will
promptly redeliver to Parent all copies of all Evaluation
Material furnished by Parent, Newco or their Representatives
and will destroy all analyses, compilations, studies and
other material based in whole or in part on such material
prepared by the Company, the Shareholders or their
Representatives.
(e) The Company, the Shareholders and their
Representatives shall have no obligation hereunder with
respect to any information in the Evaluation Material
furnished by the Parent, Newco or their Representatives to
the extent that such information (y) has been made public
other than by the acts of the Company, the Shareholders or
their Representatives in violation of this Agreement or (z)
becomes available to the Company, the Shareholders or their
Representatives on a nonconfidential basis from a source
that is entitled to disclose it on a nonconfidential basis.
(f) The Company and the Shareholders agree that
money damages would not be a sufficient remedy for any
breach of the covenants set forth in this Section 9.2 by any
of them or their Representatives, and that, in addition to
all other remedies, Parent and Newco shall be entitled to
specific performance and injunctive or other equitable
relief as a remedy for any such breach, and the Company and
the Shareholders further agree to waive, and to use their
reasonable best efforts to cause their Representatives to
waive, any requirement for the securing or posting of any
bond in connection with such remedy. The Company and the
Shareholders agree to be responsible for any breach of the
covenants set forth in this Section 9.2 by any of their
Representatives.
9.3. Filings and Approvals. Each of Parent and
Newco shall duly make all regulatory filings required to be
made by it prior to the Effective Time in respect of this
Agreement or the transactions contemplated hereby.
9.4. Best Efforts. Each of Parent and Newco
agrees to use its reasonable best efforts to consummate the
transactions contemplated hereby, including, without
limitation, satisfaction of the conditions set forth in
Article VII hereof.
9.5. Further Assurances. Parent agrees that it
will, from time to time at and subsequent to the Closing
Date, at the request of the Shareholders and without further
consideration, execute and deliver such other instruments of
conveyance, assignment and transfer and take such other
actions as the Shareholders may reasonably request in order
more effectively to consummate the transactions contemplated
hereby.
9.6. Employee Benefits. Prior to the Effective
Time, the Company and Parent shall use their best efforts to
resolve in a mutually agreeable fashion all issues regarding
the provision of employee benefits to employees of the
Surviving Corporation and M&C subsequent to the Effective
Time, including, without limitation, the period, if any,
that the Benefit Plans listed in Exhibit 4.12 hereto shall
be continued in full force and effect and the extent to
which, if at all, the employees of the Surviving Corporation
and M&C shall be covered under the benefit plans listed in
Exhibit 5.11 hereto.
9.7. Registration Rights.
(a) Registration. Upon execution and delivery of
this Agreement, Parent shall use its reasonable best efforts
to effect as promptly as practicable, but no later than the
first day that the Shareholders are able to resell Parent
Shares without violating any of the conditions for the
pooling-of-interests method of accounting referred to in
Section 6.6 hereof, (i) the registration on Form S-3 and/or
qualification with, or the approval of, any governmental
authority under any federal or state securities laws of the
Parent Shares issued as Merger Consideration, and (ii) the
listing of such Parent Shares with any domestic securities
exchange on which Parent's common stock is then listed, in
each case as may be required to permit the sale or other
disposition of such Parent Shares by the Shareholders.
Parent may, upon written notice to the Shareholders, defer
such registration for a reasonable period but not in excess
of 90 days if it has made a good faith determination that
the filing of a registration statement at such time would
require the disclosure of material information which Parent
has a bona fide business purpose for preserving as
confidential or that Parent is unable to comply with SEC
requirements. Parent shall be under no obligation to effect
an underwritten offering of the Parent Shares but agrees to
cooperate in all reasonable respects should any of the
Shareholders desire to effect an underwritten offering of
their Parent Shares at no cost to Parent.
(b) Effectiveness. Parent shall use its
reasonable best efforts to keep effective and maintain any
registration, qualification, approval or listing of the
Parent Shares required pursuant to this Section 9.7, and
from time to time to amend or supplement the prospectus used
in connection therewith to the extent necessary in order to
comply with applicable federal and state securities laws,
until the earlier of the date on which all of the Parent
Shares covered by the registration statement have been sold
by the Shareholders or the second anniversary of the Closing
Date. Parent shall furnish to each Shareholder such number
of copies of such prospectus, as amended from time to time,
and supplements thereto, as such Shareholder may reasonably
request.
(c) Expenses. All expenses incident to the
obligations of Parent under Sections 9.7(a) and 9.7(b)
hereof (including, without limitation, registration fees,
printing or document reproduction expenses, and fees and
expenses of its counsel and accountants) shall be borne by
Parent, and all other expenses incident to the disposition
by each Shareholder of the Parent Shares held by him or her
(including, without limitation, fees and expenses of his or
her counsel and all underwriting discounts, if any,
brokerage commissions and similar fees) shall be borne by
such Shareholder.
(d) Shareholder Agreements. Each Shareholder
shall (i) furnish to Parent such information as Parent may
from time to time reasonably request in connection with the
registration statement and prospectus, any amendment or
supplement thereto or any other filings required by this
Section 9.7; (ii) from and after the Closing Date and for so
long as the registration, qualification, approval or listing
remains effective, promptly after the sale or any other
disposition by him or her of Parent Shares, give Parent
written notice of same; (iii) promptly notify Parent of any
event which comes to his or her attention which would
necessitate an amendment or supplement to the registration
statement, prospectus or any of the other filings required
by this Section 9.7; and (iv) suspend sales of Parent Shares
under such registration statement promptly upon receipt of
notice from Parent that such sales may not be made until
such registration statement and prospectus are amended or
supplemented as necessary.
(e) Indemnification under this Section 9.7.
(i) Parent agrees to indemnify, to the extent
permitted by law, the Shareholders and hold them
harmless at all times after the date of this Agreement
from and against and in respect of any and all
liabilities, losses, damages, settlements, claims,
costs or expenses, including, without limitation,
attorneys' fees (collectively, the "Liabilities"),
under the Securities Act, common law or otherwise,
arising out of or due to (i) any untrue statement or
alleged untrue statement of a material fact contained
in any registration statement or prospectus relating to
the registration or qualification of the Parent Shares,
or (ii) any omission or alleged omission to state in
such registration statement or prospectus a material
fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances
under which they were made, not misleading, except
insofar as such Liabilities arise out of or are due to
any untrue statement of a material fact contained in,
or omission of a material fact from, information
furnished in writing to Parent by the Shareholders
expressly for use in such registration statement or
prospectus. If the offering pursuant to this Section
9.7 is made through underwriters, Parent agrees to
enter into an underwriting agreement in customary form
with such underwriters and to indemnify such
underwriters to the same extent as provided above with
respect to the indemnification of the Shareholders.
(ii) The Shareholders severally (on a pro rata
basis according to the number of such Shareholders'
Parent Shares owned by each Shareholder registered or
to be registered pursuant hereto) and not jointly agree
to indemnify, to the extent permitted by law, Parent,
its directors and officers and each person, if any, who
controls Parent within the meaning of Section 15 of the
Securities Act and hold them harmless at all times
after the date of this Agreement from and against and
in respect of any and all Liabilities arising out of or
due to (i) any untrue statement or alleged untrue
statement of a material fact contained in any
registration statement or prospectus relating to the
registration or qualification of the Parent Shares, or
(ii) any omission or alleged omission to state in such
registration statement or prospectus a material fact
required to be stated therein or necessary to make the
statements therein, in light of the circumstances under
which they were made, not misleading, but only to the
extent that such Liabilities arise out of or are due to
any untrue statement of a material fact contained in,
or omission of a material fact from, information
furnished in writing to Parent by the Shareholders
expressly for use in such registration statement or
prospectus.
(iii) The limits on, and the procedures to be
followed in connection with, the rights of
indemnification provided in this Section 9.7(e) are set
forth in Sections 11.3 and 11.4 hereof, respectively.
(f) Material Breach. Any material breach by
Parent of its obligations under Sections 9.7(a) and (b)
hereof shall constitute a material breach of this
Agreement, in which event each Shareholder shall be
entitled to exercise all remedies at law or in equity
arising out of or relating to such breach including,
without limitation, a claim for damages. Any such
breach of Sections 9.7(a) and (b) hereof shall not be
subject to the indemnity provisions of Article XI
hereof.
ARTICLE X
Covenants of the Shareholders and Parent
Relating to Certain Tax Matters
10.1. Pre-Merger and Straddle Period Taxes.
(a) The Company, at its cost or expense, shall prepare
or cause to be prepared, and file or cause to be filed,
on a timely basis, all Tax Returns of the Company and
M&C (including any amendments thereto) required to be
filed on or before the Closing Date (the "Pre-Merger
Returns"), and shall pay, or cause to be paid, all
Taxes relating to periods covered by such Pre-Merger
Returns. Such Pre-Merger Returns shall be prepared in
a manner consistent with the past practices of the
Company and M&C and, in any event, as to which there
shall be "substantial authority" (within the meaning of
Section 6662(d)(2)(B)(i) of the Code) as to the
treatment of any item shown on such Pre-Merger Returns.
The Company shall furnish a copy of each such
Pre-Merger Return to Parent at least thirty days prior
to the due date for the filing thereof so that Parent
may satisfy itself that such Pre-Merger Return was
prepared in compliance with the foregoing sentence. In
the event that Parent determines that there is not
"substantial authority" for the treatment of any item
on any such Pre-Merger Return, such Pre-Merger Return
shall not be filed until the Company and Parent
mutually agree as to the treatment of any such item.
(b) At its own cost and expense, Parent
shall prepare or cause to be prepared, and file or
cause to be filed, Tax Returns covering taxable years
ending on or before the Closing Date but due thereafter
("Post-Closing Returns") and Tax Returns for any
Straddle Period (as defined in paragraph (d) below),
and shall pay, or cause to be paid, all Taxes shown to
be due on such returns. Parent shall provide the
Shareholders' Representative (as defined in Section
11.5 hereof) with copies of such completed Post-Closing
Returns and Straddle Period Tax Returns, together with
related work papers and such other documents as the
Shareholders shall reasonably request, and a statement
certifying the amount of Taxes shown on such returns
that are chargeable to the Shareholders pursuant to
Section 10.2 hereof (a "Tax Statement") no later than
30 days before the due date for the filing of such
Post-Closing Return or Straddle Period Return. The
Shareholders and their authorized representatives shall
have the right to review the Post-Closing Returns,
Straddle Period Tax Returns, and Tax Statements
received from Parent pursuant to the terms of this
Section 10.1(b). The Shareholders and Parent agree to
consult each other and to resolve in good faith any
issues arising as a result of the review of any such
Tax Returns or Tax Statements received from Parent.
(c) If a proposed adjustment is asserted in
writing with respect to a Straddle Period or a period
covered by a Post-Closing Return, Parent shall notify
the Shareholders' Representative of the proposed
assessment within 20 days after receipt thereof.
Within 20 days of receipt of such notice from Parent,
the Shareholders may elect to contest any such proposed
assessment jointly with Parent. If such joint control
is elected, neither party shall compromise or settle
such proposed adjustment without the written consent of
the other party, which consent shall not be
unreasonably withheld. If such joint control is
elected, each party shall bear its own costs and
expenses of the contest.
(d) Any taxable period of the Company or M&C
that begins before the Closing Date and ends after the
Closing Date shall constitute a "Straddle Period" for
purposes of this Agreement. For purposes of this
Agreement, the portion of any Tax that is attributable
to the operations of any entity for the portion of such
Straddle Period up to and including the Closing Date
shall be (i) in the case of a Tax that is not based on
net income, gross income, sales or gross receipts, the
total amount of such tax for the period in question
multiplied by a fraction, the numerator of which is the
number of days in the Straddle Period up to and
including the Effective Time, and the denominator of
which is the total number of days in such Straddle
Period, and (ii) in the case of a Tax that is based on
any of net income, gross income, sales or gross
receipts, the Tax that would be due with respect to the
portion of the Straddle Period through and including
the Closing Date, as if such portion of the Straddle
Period were a separate taxable period, except that
exemptions, allowances, deductions or credits that are
calculated on an annual basis (such as the deduction
for depreciation or capital allowances) shall be
apportioned on a per diem basis.
(e) All transfer, gains, stamp, recording or
other similar Taxes incurred in connection with the
transactions contemplated by this Agreement, including
any interest, penalties, fines, assessments or
additions to tax, whether disputed or not, imposed in
respect of the foregoing, will be borne by the
Shareholders. The Shareholders will, at their own
expense, file all necessary Tax Returns and other
documentation with respect to all such transfer Taxes
as required by applicable law, and assume all
responsibility for filing such Tax Returns and
documentation on an accurate, complete and timely
basis. Parent, as appropriate, will join in the
execution of any such Tax Return or other
documentation.
10.2. Tax Allocation.
(a) The parties hereto intend that, subject
to the limitations set forth below, the Shareholders
shall be responsible for Taxes attributable to periods
through the Closing Date to the extent they exceed the
Tax Accrual (as defined in Section 4.10(b) hereof).
Accordingly, to the extent the Company's liability for
Taxes for periods through the Closing Date exceeds the
Tax Accrual, the Shareholders severally (on a pro rata
basis according to the number of Shares owned by each
Shareholder immediately prior to the Closing), but not
jointly agree to indemnify the Company and Parent
against such excess Tax liabilities. The limits on,
and the procedures to be followed in connection with,
the rights of indemnification provided in this Section
10.2(a) are set forth in Sections 11.3 and 11.4 hereof,
respectively.
(b) To the extent the Company's liability
for Taxes attributable to periods through the Closing
Date is less than the Tax Accrual, the Company shall
pay such deficit amount to the Shareholders pro rata
according to the number of Shares owned by each
Shareholder immediately prior to the Closing. The
Company shall pay such amounts promptly after its
liability for Taxes for periods preceding the Closing
Date becomes final.
10.3. Access to Information and Retention of
Records.
(a) Each of the Shareholders and Parent will
provide the other, and Parent, after the Closing, shall
cause the Surviving Corporation and M&C to provide the
Shareholders, at reasonable times and upon reasonable
notice, access to, and a right to copy and use where
appropriate, any records or information and personnel
which may be relevant in connection with the
preparation of any Tax Returns, any audit or other
examination, the filing of any claim for a refund of
Tax or for the allowance of any Tax credit, or any
judicial or administrative proceedings relating to
liability for Taxes. The party requesting assistance
hereunder shall reimburse the other party for
reasonable out-of-pocket expenses incurred in providing
such assistance. Any information obtained pursuant to
this Section 10.3(a) shall be held in strict confidence
and shall be used solely in connection with the reason
for which it was requested.
(b) The Shareholders shall promptly forward
to Parent, and Parent shall promptly forward to the
Shareholders' Representative, all written notifications
and other written communications received by the
Shareholders or Parent, respectively, relating to any
liability for Taxes which may be the basis of an
indemnity claim under Article XI.
10.3. Miscellaneous Covenants.
(a) As of the Closing Date, any tax
allocation or sharing agreement between the Company and
M&C, or between the Company or M&C and any third party,
will be terminated.
(b) At the Closing, the Company will furnish
a certificate as described in Treas. Reg. Sections
1.897-2(h) and 1.1445-2(c)(3) to the effect that the
Shares are not U.S. real property interests within the
meaning of Section 897(c) of the Code.
ARTICLE XI
Indemnity
11.1. By the Company and the Shareholders. The
Company and the Shareholders severally (with respect to the
Shareholders, on a pro rata basis according to the number of
Shares owned by each Shareholder immediately prior to the
Closing), and not jointly agree to indemnify Parent, Newco
and Transferee and hold them harmless at all times after the
date of this Agreement from and against and in respect of
any and all Liabilities arising out of or due to the breach
of any representation, warranty or covenant of the Company
or the Shareholders set forth in this Agreement or in any of
the exhibits or other documents delivered pursuant hereto,
and any and all actions, suits, proceedings, demands,
assessments or judgments, and costs and expenses, incident
to any of the foregoing; provided, however, that this
Section 11.1 shall not apply to the representations,
warranties, indemnity obligations and covenants set forth in
Sections 4.10 and 9.7 and Article X hereof. Parent, Newco
and Transferee agree that indemnification pursuant to this
Section 11.1, subject to all limitations on such
indemnification set forth in this Agreement, shall be the
sole and exclusive remedy and means of recovery by Parent,
Newco and Transferee against the Company or the Shareholders
with respect to any claim or action to which this Section
11.1 applies, whether based upon common law breach of
contract, fraud, unfair trade, violation of statute or
otherwise.
11.2. By Parent. Parent agrees to indemnify the
Company and the Shareholders and hold them harmless at all
times after the date of this Agreement from and against and
in respect of any and all Liabilities arising out of or due
to the breach of any representation, warranty or covenant of
Parent or Newco set forth in this Agreement or in any of the
exhibits or other documents delivered pursuant hereto, and
any and all actions, suits, proceedings, demands,
assessments or judgments, and costs and expenses, incident
to any of the foregoing provided, however, that this Section
11.2 and the limits thereon set forth in Section 11.3 hereof
shall not apply to a material breach of Parent's obligations
under Sections 9.7(a) and (b) hereof (and remedies available
to the Company or the Shareholders by reason of a material
breach by Parent or Sections 9.7(a) and (b) hereof shall be
subject to and governed by the provisions of Section 9.7(f)
hereof); and provided, further, that this Section 11.2 shall
not apply to the representations, warranties, indemnity
obligations and covenants set forth in Section 9.7 and
Article X hereof. The Company and the Shareholders agree
that indemnification pursuant to this Section 11.2, subject
to all limitations on such indemnification set forth in this
Agreement, shall be the sole and exclusive remedy and means
of recovery by the Company and the Shareholders against
Parent with respect to any claim or action to which this
Section 11.2 applies, whether based upon common law breach
of contract, fraud, unfair trade, violation of statute or
otherwise.
11.3. Limits.
(a) The obligations of the Company and/or the
Shareholders to indemnify Parent, Newco and Transferee under
Sections 9.7(e)(ii), 10.2(a) or 11.1 hereof shall be limited
to aggregate payments of 14,184 Parent Shares, payable in
Parent Shares valued as of the Closing Date (unless, in the
case of a Shareholder, such Shareholder no longer holds a
sufficient number of Parent Shares issued as Merger
Consideration to make such payment entirely in Parent
Shares, in which case the amount payable by such Shareholder
may be paid in cash to the extent not paid in Parent
Shares); provided that the Company and the Shareholders
shall have no obligation to indemnify Parent, Newco and
Transferee under Section 9.7(e)(ii), 10.2(a) or Section 11.1
hereof until such time as the aggregate amount of the
Liabilities claimed by Parent, Newco and Transferee exceeds
Fifty Thousand Dollars ($50,000), but then in an amount
including such Fifty Thousand Dollars ($50,000).
(b) The obligations of Parent and Newco to indemnify
the Company and/or the Shareholders under Section 9.7(e)(i)
or Section 11.2 hereof shall be limited to aggregate
payments of 14,184 Parent Shares, payable in Parent Shares
valued as of the Closing Date; provided that Parent and
Newco shall have no obligation to indemnify the Company and
the Shareholders under Section 9.7(e)(i) or Section 11.2
hereof until such time as the aggregate amount of
Liabilities claimed by the Company and the Shareholders
exceeds Fifty Thousand Dollars ($50,000), but then in an
amount including such Fifty Thousand Dollars ($50,000).
11.4. Procedure.
(a) Parent, Newco and/or Transferee, on the one
hand, and the Company and/or the Shareholders, on the other
hand, each agree to promptly notify each other if any of
them becomes aware of any Liabilities with respect to which
indemnity may be asserted under Sections 9.7 or 10.2(a)
hereof or this Article XI (hereinafter referred to as a
"claim"), provided that failure to notify the indemnifying
party shall not relieve such party from liability except to
the extent such party is prejudiced thereby. The party
entitled to indemnity (the "Indemnitee") shall permit the
party responsible for such indemnity (the "Indemnitor") to
assume the defense of any such claim or any litigation
resulting from such claim at its own cost.
(b) If the Indemnitor assumes the defense of any
such claim or litigation resulting therefrom, the Indemnitee
may participate, at its expense, in the defense of such
claim or litigation provided that the Indemnitor shall
direct and control the defense of such claim or litigation.
The Indemnitee shall make available to the Indemnitor all
records and other materials in the possession or under
control of the Indemnitee and required by the Indemnitor in
defending any such claim, and shall in all respects give
reasonable cooperation in such defense. Except with the
written consent of Indemnitee, which consent shall not be
unreasonably withheld, the Indemnitor shall not, in the
defense of such claim or any litigation resulting therefrom,
consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term
thereof the giving by the claimant or the plaintiff to the
Indemnitee of a release from all liability in respect of
such claim or litigation.
(c) If the Indemnitor shall not assume the
defense of any such claim or litigation resulting therefrom,
the Indemnitee may defend against such claim or litigation
in such manner as it may deem appropriate. The Indemnitee
shall not enter into any settlement of such claim or
litigation without the written consent of the Indemnitor,
which consent shall not be unreasonably withheld. The
Indemnitor shall promptly reimburse the Indemnitee from time
to time for any and all amounts paid for or incurred by the
Indemnitee and for which the Indemnitor is obligated
pursuant to Sections 9.7 or 10.2(a) hereof or this Article
XI, upon submission by the Indemnitee of a statement
reflecting the basis upon which such indemnification is
sought and the computation of such amounts.
11.5. Shareholders' Representative.
(a) The parties agree that Solon P. Patterson
shall act as the representative of the Shareholders (the
"Shareholders' Representative") for the purpose of settling
on behalf of the Shareholders claims made by the
Shareholders under Sections 9.7(e)(i) or Section 11.2
hereof, and representing the Shareholders in any
indemnification proceedings by Newco, Parent or Transferee
under Section 9.7(e)(ii) and Section 11.1, in each case
pursuant to the procedures set forth in Section 11.4 hereof.
(b) The Shareholders shall be bound by any and
all actions taken by the Shareholders' Representative on
their behalf.
(c) Newco, Parent and Transferee shall be
entitled to rely upon any communication or writings given or
executed by the Shareholders' Representative. All notices
to be sent to the Shareholders pursuant to the
indemnification provisions hereof may be addressed to the
Shareholders' Representative and any notice so sent shall be
deemed notice to all of the Shareholders hereunder. The
Shareholders hereby consent and agree that the Shareholders'
Representative is authorized to accept notice on behalf of
the Shareholders pursuant hereto.
(d) If for any reason Solon P. Patterson shall
cease to act as the Shareholders' Representative hereunder,
the Shareholders shall promptly appoint a new
representative. Such appointment shall be deemed to have
been made when set forth in a written communication to
Parent, signed by holders of at least fifty-one percent
(51%) of the Shares immediately prior to the Effective Time.
(e) The Shareholders' Representative is hereby
appointed and constituted the true and lawful
attorney-in-fact of each Shareholder, with full power in his
or her name and on his or her behalf:
(i) To act on such Shareholders' behalf according
to the terms of this Agreement, including, without
limitation, the power to act on their behalf in
connection with any mater as to which the Shareholders
are an "Indemnitor" or "Indemnitee" under this Article
XI or under Section 9.7, all in the absolute discretion
of the Shareholders' Representative; and
(ii) In general to do all things and to perform
all acts including, without limitation, executing and
delivering all agreements, certificates, receipts,
instructions and other instruments contemplated by or
deemed advisable in connection with this Agreement.
This power of attorney and all authority
hereby conferred is granted subject to the interest of
the other Shareholders hereunder and in consideration
of the mutual covenants and agreements made herein, and
shall be irrevocable and shall not be terminated by any
act of any Shareholder, by operation of law, whether by
the death or incapacity of any Shareholder, or by the
occurrence of any other event. Each Shareholder shall
severally and not jointly hold the Shareholders'
Representative free and harmless from any and all loss,
damage or liability which he may sustain as a result of
any action taken in good faith hereunder.
(f) The Shareholders' Representative shall not be
liable for any action taken or omitted to be taken by him
except in the case of willful misconduct. Each Shareholder
agrees to pay his pro rata portion based upon his or her
percentage ownership in the Company prior to the Effective
Time) of all costs and expenses reasonably incurred by the
Shareholders' Representative arising out of or in connection
with the administration of his duties as Shareholders'
Representative, including but not limited to reasonable
legal fees and other costs and expenses of defending or
preparing to defend against any claim or liability
hereunder.
ARTICLE XII
Miscellaneous Provisions
12.1. Termination. At any time prior to the
Closing Date, this Agreement may be terminated:
(a) by mutual written consent of the Boards of
Directors of Parent and the Company;
(b) by Parent and Newco at any time after August
31, 1994 (or such later date as shall have been agreed to in
writing by Parent and the Company) if any of the conditions
set forth in Article VI hereof have not been met or waived
in writing by Parent and Newco; or
(c) by the Company and the Shareholders at any
time after August 31, 1994 (or such later date as shall have
been agreed to in writing by Parent and the Company) if any
of the conditions set forth in Article VII hereof have not
been met or waived in writing by the Company and the
Shareholders.
In the event of any termination pursuant to this Section
12.1, the parties hereto shall be released from all
liabilities and obligations arising under this Agreement
with respect to matters contemplated by this Agreement other
than for damages to the extent arising from a prior breach
of this Agreement.
12.2. Expenses. Whether or not the Closing takes
place and regardless of whether this Agreement is
terminated, each party hereto shall pay all of the costs and
expenses incurred by it in connection with this Agreement or
in consummating the transactions contemplated hereby
(including, without limitation, disbursements and expenses
of its attorneys, accountants and advisers).
12.3. Notices. All notices or other
communications required or permitted under this Agreement
shall be in writing and sufficient if delivered personally,
by private courier or fax, or sent by registered or
certified mail, postage prepaid, addressed as follows:
If to Parent or Newco, to
Alleghany Corporation
Park Avenue Plaza
55 East 52nd Street
33rd Floor
New York, New York 10055
Attention: Mr. David B. Cuming
with a copy to
Donovan Leisure Newton & Irvine
30 Rockefeller Plaza
New York, New York 10112
Attention: Linda E. Ransom, Esq.
If to the Company, to
Montag & Caldwell Associates, Inc.
1100 Atlanta Financial Center
3343 Peachtree Road, N.E.
Atlanta, Georgia 30326-1450
Attention: Mr. Solon P. Patterson
with a copy to
Smith, Gambrell & Russell
Atlanta Financial Center
East Tower
3343 Peachtree Road, N.E.
Suite 1800
Atlanta, Georgia 30326-1010
Attention: John D. Saunders, Esq.
If to any of the Shareholders, to such Shareholder
at the address listed for such Shareholder under
such Shareholder's signature on this Agreement or
as permitted pursuant to Section 11.5 hereof, with
a copy to
Smith, Gambrell & Russell
Atlanta Financial Center
East Tower
3343 Peachtree Road, N.E.
Suite 1800
Atlanta, Georgia 30326-1010
Attention: John D. Saunders, Esq.
Any party may change the person and address to
which notices or other communications are to be sent to it
by giving written notice of any such change in the manner
provided herein.
12.4. Entire Agreement; Amendment. This
Agreement, together with the exhibits and other documents
delivered pursuant hereto, sets forth the entire agreement
and understanding of the parties hereto in respect of the
transactions contemplated hereby, and supersedes all prior
agreements, arrangements and understandings relating to the
subject matter hereof. No party hereto has relied upon any
oral or written statement, representation, warranty,
covenant, condition, understanding or agreement made by any
other party or any representative, agent or employee
thereof, except for those expressly set forth in this
Agreement or in the exhibits delivered pursuant hereto.
This Agreement may be amended, modified, superseded or
supplemented only by an instrument in writing executed and
delivered by Parent and the Company.
12.5. Assignment. This Agreement shall inure to
the benefit of, and be binding upon, the respective
successors, heirs, executors, administrators, legal
representatives and permitted assigns of the parties hereto;
provided, however, that no assignment of any rights or
delegation of any obligations provided for herein shall be
made by any party hereto without the express prior written
consent of each other party, which consent shall not be
unreasonably withheld.
12.6. Survival of Representations, Warranties,
Indemnity Obligations and Covenants. All representations,
warranties, indemnity obligations and covenants of the
parties hereto which are contained in this Agreement,
together with the exhibits and other documents delivered
pursuant hereto, shall survive the Closing and remain
operative and in full force and effect, regardless of any
investigation heretofore or hereafter made by or on behalf
of any of the parties hereto; provided, however, that the
obligations of the parties for any breach of any
representation, warranty, indemnity obligation or covenant
made by them herein or therein shall survive the Closing
Date only until the first anniversary of the Closing Date,
and no claim thereon may be first asserted after such time,
except that (a) the indemnity obligations set forth in
Sections 11.1 and 11.2 shall survive the Closing only until
ten business days after the completion of the first audit of
the financial statements of Parent which includes the
operations of the Company (if the matter for which indemnity
is sought is resolvable by audit) or the first anniversary
of the Closing Date (if the matter is not so resolvable);
(b) the representations, warranties, indemnity obligations
and covenants set forth in Sections 4.10, 8.2, 9.2 and
Article X hereof shall survive the Closing forever; (c) the
representations, warranties, indemnity obligations and
covenants set forth in Section 9.6 hereof shall survive the
Closing only until the third anniversary of the Closing
Date; (d) the representations, warranties, indemnity
obligations and covenants set forth in Section 9.7 hereof
shall survive the Closing only until the second anniversary
of the Closing Date; and (e) the representations, warranties
and covenants set forth in Sections 4.22 and 8.5 hereof
shall not survive the Closing.
12.7. Governing Law. This Agreement shall be
governed by, and construed in accordance with, the laws of
the State of Georgia applicable to agreements made and to be
performed entirely within such State, except for matters
relating to the validity of corporate action, which shall be
governed by the laws of the jurisdiction of incorporation or
organization of the relevant corporation.
12.8. Counterparts. This Agreement may be
executed in any number of separate counterparts, each of
which shall be deemed to be an original, but which together
shall constitute one and the same instrument.
12.9. Headings. The section headings contained
in this Agreement are inserted for convenience of reference
only and shall not affect the meaning or interpretation of
this Agreement.
12.10. Severability. In the event that any
provision hereof is prohibited or unenforceable in any
jurisdiction, such provision shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining
provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.
12.11. Public Announcement. At a mutually
agreeable time after the execution of this Agreement, and as
soon as practicable after the Closing, joint press releases
in a form mutually agreed by the parties shall be issued by
Parent and the Company. No other publicity regarding the
transactions contemplated by this Agreement shall be made
without the prior written approval of each of the Company
and Parent, except as may be required by applicable law upon
the advice of counsel.
12.12. IRA Accounts. As reflected in Exhibit 4.2
hereof, a portion of the Shares of five (5) Shareholders are
held in their respective Individual Retirement Accounts
("IRAs"). Such Shareholders shall be responsible to cause,
and agree to cause, the custodian of the IRA to surrender
the Shares held in their respective IRAs to Parent in
accordance with Section 3.2(a) hereof. Further, in
computing the several liability of each of such Shareholders
for the purposes of this Agreement, the percentage ownership
of the Shares held by each of the Shareholders shall be
deemed to include any shares held in their respective IRAs.
IN WITNESS WHEREOF, each party hereto has duly
executed, or has caused this Agreement to be duly executed,
as of the date first above written.
<TABLE>
<S> <S>
MONTAG & CALDWELL ASSOCIATES, INC.
Attest:
/s/ Ronald E. Canakaris By /s/ Solon P. Patterson
- - ----------------------- -----------------------
Name: Ronald E. Canakaris Name: Solon P. Patterson
Title: President Title: Chairman
ALLEGHANY ACQUISITION CORPORATION
Attest:
/s/ John E. Conway By /s/ David B. Cuming
- - ----------------------- -----------------------
Name: John E. Conway Name: David B. Cuming
Title: Secretary Title: President
ALLEGHANY CORPORATION
Attest:
/s/ John E. Conway /s/ David B. Cuming
- - ----------------------- -----------------------------
Name: John E. Conway Name: David B. Cuming
Title: Vice President, Title: Senior Vice President
Secretary and
Treasurer
Witnesses: SHAREHOLDERS
/s/ Kari D.H. Scholar /s/ Solon P. Patterson
- - --------------------- ----------------------
SOLON P. PATTERSON
1360 Barron Court, N.W.
Atlanta, Georgia 30327
/s/ Kari D.H. Scholar /s/ Ronald E. Canakaris
- - --------------------- -----------------------
RONALD E. CANAKARIS
4582 Sudbury Road
Atlanta, Georgia 30360
/s/ Kari D.H. Scholar /s/ David F. Seng
- - --------------------- ----------------------
DAVID F. SENG
5652 Bend Creek Road
Dunwoody, Georgia 30338
/s/ Kari D.H. Scholar /s/ Janet B. Bunch
- - --------------------- ----------------------
JANET B. BUNCH
5241 Willow Ridge Drive
Woodstock, Georgia 31088
/s/ Kari D.H. Scholar /s/ Elizabeth C. Chester
- - --------------------- ------------------------
ELIZABETH C. CHESTER
185 West Court
Duluth, Georgia 30136
/s/ Kari D.H. Scholar /s/ Jane R. Davenport
- - --------------------- ----------------------
JANE R. DAVENPORT
2460 Peachtree Road, N.W.
# 601
Atlanta, Georgia 30305
/s/ Kari D.H. Scholar /s/ Charlotte F. Fox
- - --------------------- ----------------------
CHARLOTTE F. FOX
4411 Paces Battle, N.W.
Atlanta, Georgia 30327
/s/ Kari D.H. Scholar /s/ Richard W. Haining
- - --------------------- ----------------------
RICHARD W. HAINING
2756 Dover Road, N.W.
Atlanta, Georgia 30327
/s/ Kari D.H. Scholar /s/ Grover C. Maxwell III
- - --------------------- -------------------------
GROVER C. MAXWELL III
1199 Brookgate Way
Atlanta, Georgia 30319
/s/ Kari D.H. Scholar /s/ Carolyn Sue Tyson
- - --------------------- ----------------------
CAROLYN SUE TYSON
1570 Highway # 212
Conyers, Georgia 30208
/s/ Kari D.H. Scholar /s/ William A. Vogel
- - --------------------- ----------------------
WILLIAM A. VOGEL
5260 Redfield Court
Dunwoody, Georgia 30338
/s/ Kari D.H. Scholar /s/ Homer W. Whitman, Jr.
- - --------------------- -------------------------
HOMER W. WHITMAN, JR.
77 East Andrews Drive, N.W.
# 353
Atlanta, Georgia 30305
</TABLE>
<PAGE>
Exhibit 10.1(b)
--------------
<TABLE>
<CAPTION>
List of Exhibits
-----------------
<C> <S>
Exhibit Number Description
- - -------------- -----------
1.3 Form of Georgia Certificate of
Merger
1.4(a) Form of Employment Agreement
1.4(b) Form of Non-Compete Agreement
2.2(a) Restated Bylaws of the Company
2.2(b) Restated Bylaws of M&C
4.1 Corporate Organization
4.2 Share Ownership
4.3 Company Approvals
4.4(b) States in which M&C is
Registered
as an Investment Adviser
4.4(d) Certain Occurrences
4.9 Litigation
4.11(a) Advisory Clients
4.11(b) Other Agreements
4.11(c) Lease
4.11(d) Intangible Property
4.11(e) Investment Securities
4.11(f) Other Assets
4.12 Benefit Plans
4.13 Interests of Officers,
Directors
and Shareholders
4.14 Employees
4.15 Banks
4.16 Insurance Policies
4.22 Pooling Conditions
5.3 Parent and Newco Approvals
5.4(b) Certain Occurrences
5.11 Benefit Plans
6.3 Form of Opinion of Counsel for
the Company and the Shareholders
7.3 Form of Opinion of Counsel for
Parent and Newco
8.1(b) Exceptions to Carry On in
Regular Course
8.1(b)(i) Notice of Change in Control
8.5 Pooling Covenants
</TABLE>
