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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(MARK ONE)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1993 OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
FOR THE TRANSITION PERIOD FROM to
Commission File Number 1-9215
----------------------------------------------------
UNITED ASSET MANAGEMENT CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 04-2714625
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
ONE INTERNATIONAL PLACE
BOSTON, MASSACHUSETTS 02110
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (617) 330-8900
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
------------------- ---------------------
Common Stock
($.01 par value) New York Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: none
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. X Yes No
----- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value of the voting stock held by stockholders who are
not directors or executive officers of the registrant was approximately
$1.0 billion based on the last reported sale price of the registrant's common
stock on the New York Stock Exchange composite tape on March 15, 1994.
The number of shares of common stock, par value $.01, outstanding as of
March 15, 1994 was 28,201,931.
DOCUMENTS INCORPORATED BY REFERENCE
Certain of the information called for by Parts I through IV, respectively, of
this report on Form 10-K is incorporated by reference from certain portions of
(a) the Annual Report to Shareholders of the registrant for the year ended
December 31, 1993, and (b) the Proxy Statement of the registrant filed pursuant
to Regulation 14A and sent to shareholders in connection with the
Annual Meeting of Stockholders to be held on May 19, 1994. Such Report and
Proxy Statement, except for the parts therein which have been specifically
incorporated herein by reference, shall not be deemed "filed" as part of this
report on Form 10-K.
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PART I
ITEM 1. BUSINESS
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GENERAL
United Asset Management Corporation ("UAM" or the "Company") is a holding
company organized in December, 1980 to acquire and to own firms engaged
primarily in institutional investment management. Its 37 wholly-owned operating
subsidiaries (the "Affiliated Firms" or the "Firms") are managers of investment
portfolios for corporate, public and union pension funds and profit sharing
plans, mutual funds, endowments, foundations and, to a lesser extent,
individuals and other investors. UAM intends to continue expanding through the
internal growth of its present Affiliated Firms and through the acquisition or
organization of additional firms in the future (see "Affiliated Firms"). In
addition, UAM plans to continue to diversify, both domestically and
internationally, with respect to both the classes of assets managed for
institutional investors and the firm's client base.
While UAM's Affiliated Firms primarily specialize in the management of U.S.
equities, bonds and cash, other asset classes under management have grown
significantly over the past two years to include international equities, bonds
and cash, as well as real estate.
Management fees based on the assets of pension plans, profit sharing plans,
endowments and foundations provide substantially all of the Company's revenues.
Such clients are sometimes referred to as "institutional" clients, and they are
generally "tax-exempt" in that the income and any capital gains which result
from their portfolio investments are not taxable to them under present law.
Advisory fees are primarily based on the value of assets under management. Fee
rates typically decline as account size increases. The assets of institutional
clients have generally been growing, with the most rapid growth achieved by
pension and profit sharing plans (sometimes called employee benefit plans). For
the year ended December 31, 1993, no single client of any Affiliated Firm
provided more than 2% of the Company's consolidated revenues. Accordingly, the
loss of any single client would not have a material adverse effect on the
Company's total investment management business.
Each Affiliated Firm operates under its own name, with its own investment
philosophy and approach. Each conducts its own investment analysis, portfolio
selection, marketing, and client service. During any given period, investment
results may vary among Firms. Each Firm competes independently and sets its
client fees based on its own judgment concerning the market for the services it
renders. Each Firm is separately regulated under applicable federal, state or
foreign law.
UAM has established revenue sharing agreements with the Affiliated Firms
which are described more fully under "Revenue Sharing." These agreements
provide for UAM to derive increased or decreased income from each Affiliated
Firm, based on a percentage of the change in each Firm's revenues from year to
year, starting from a base amount agreed upon in the year of acquisition. These
arrangements allow each Firm to set its own operating expense budget and
compensation practices, limited by the share of the Firm's revenues available to
it.
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THE INDUSTRY
Revenues in the institutional investment management industry are determined
primarily by fees based on assets under management. Therefore, the principal
determinant of growth in the industry is the growth of institutional assets
under management. In management's judgment, the major factors which influence
changes in institutional assets under management are: (a) changes in the market
value of securities; (b) net cash flow into or out of existing accounts; (c)
gains of new or losses of existing accounts by specific firms or segments of the
industry; and (d) the introduction of new products by the industry or by
particular firms.
In general, assets under management in the institutional segments of the
industry have increased steadily. For example, Money Market Directories, Inc.
recorded in its 1994 Directory $3.2 trillion in assets under management in
accounts of employee benefit plans, foundations and endowments within the United
States as of mid-1993, which represents an increase at an average compound
five- year annual growth rate of 11.0% over the corresponding figure as of
mid-1988. The largest institutional segment of assets under management has been
employee benefit plan assets. The 1994 Directory reported $3.0 trillion of
employee benefit plan assets under management as of mid-1993, which represents
an increase at an average compound five-year annual growth rate of 10.8% over
the corresponding figure as of mid-1988.
The employee benefit plan market includes two principal sectors: defined
benefit and defined contribution plans. The majority of U.S. retirement plan
assets are in defined benefit plans, which assure workers of a particular level
of pension benefits when they retire. The Employee Retirement Income Security
Act of 1974 (ERISA) and the Internal Revenue Code of 1986 (the "Code") require
employers to fund their defined benefit plans sufficiently to generate the
benefits they have promised. However, the Code also prohibits overfunding of
defined benefit plans by employers. In management's opinion, high investment
returns through the 1980's resulted in many defined benefit retirement plans
approaching or even reaching their full funding limits by the end of the 1980's,
based on actuarial calculations, so corporations were not called upon to
contribute any more cash to the plans. However, if the value of plan assets
declines due to market factors, employers will generally be obligated to step
up payments into their defined benefit pension plans. This counter-cyclical
funding pattern for defined benefit plans helps to smooth out fluctuations in
the growth of plan assets under management by firms that provide investment
advisory services to sponsors of defined benefit plans, and therefore, it helps
to smooth out fluctuations in the revenues of these investment managers. Under
defined contribution plans, on the other hand, employers may contribute to
their employees' retirement funds on a tax-advantaged basis, but individual
employees often decide how their plan assets will be invested. Defined
contribution plans are the fastest growing sector of the employee benefit plan
market.
The number and size of investment management firms which UAM has been
acquiring have grown in the past five years. The 1989 Money Market Directory
showed 930 investment counseling firms (including branch offices) within the
United States managing $2.3 trillion as of mid-1988. The 1994 Directory showed
1,346 such firms (including branch offices) within the United States managing
approximately $4.5 trillion of assets as of mid-1993 which represents an
increase at an average compound five-year annual growth rate of 14.4% over the
corresponding assets of mid-1988.
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COMPETITION
The Affiliated Firms compete with a large number of investment management
firms, principally those engaged in the management of "institutional" accounts.
In addition, the Affiliated Firms compete with commercial banks and insurance
companies, many of which have substantially greater capital and other resources
and some of which offer a wider range of financial services. Furthermore, each
of the Affiliated Firms may compete with other Affiliated Firms for clients.
Management believes that the most important factors affecting competition
in the investment management industry are the abilities and reputations of
investment managers, differences in the investment performance of investment
management firms, and the development of new investment strategies and
information technologies, rather than differences in advisory fees.
Barriers to entry are low, and firms are relatively long-lived in the
investment management business. A new investment management firm has very low
capital requirements. Maintaining the firm requires only the continued
involvement of its professional personnel. A major portion of profits may be
regularly withdrawn because new capital commitments are limited and rarely
necessary.
UAM competes, with respect to the acquisition of investment management
firms, with many other potential purchasers of investment management firms,
including insurance companies, banks and foreign investment groups that wish to
be represented in the United States. For the most part, these acquirers have
sought a single firm rather than undertaking a program of acquisitions similar
to UAM's. As a result of its continuing acquisition activities, including
regular contacts with potential acquisition candidates, UAM has an extensive
knowledge of the candidate population both domestically and internationally.
UAM'S ACQUISITION PROGRAM AND METHOD OF OPERATION
Since its inception, UAM has sought to acquire or to organize institutional
investment management firms. Once it has acquired or organized such firms, UAM
seeks to preserve their autonomy by allowing their key employees to retain
control of investment decisions and day-to-day operations. Where the Affiliated
Firm is acquired from its employee-stockholders, the former stockholders receive
the added benefits of a more diversified company by virtue of their equity
ownership in UAM.
UAM conducts its own acquisition activities rather than relying primarily
upon outside agents to find and develop acquisition candidates for it. UAM's
activities include regular mailing and calling programs through which UAM seeks
to contact and visit potential acquisition candidates on a regular basis. UAM
is willing to use finders to locate suitable candidates and has paid finders'
fees on four occasions. Once acquisition negotiations begin, UAM utilizes its
own staff and outside legal counsel to negotiate price, terms and the wording of
specific documents required. Typically, a definitive purchase agreement is
signed, and then each of the clients of the firm to be acquired is contacted by
a principal of that firm in order to obtain the client's consent to the
transaction (which constitutes an assignment of its advisory contract) as
required by the Investment Advisers Act of 1940. Once sufficient consents have
been received, the acquisition is completed. Consent of all of a
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firm's clients has been obtained in connection with virtually all of UAM's
acquisitions to date.
After acquisition by UAM, Affiliated Firms continue to operate under their
own firm name, with their own leadership and individual investment philosophy
and approach. UAM seeks to achieve diversity by acquiring investment management
firms having different investment philosophies and strategies and specializing
in different asset classes. In addition, UAM has acquired or organized firms at
various stages of their development, from start-up to relatively mature firms
and has acquired both employee-stockholder firms and subsidiaries or divisions
of financial institutions.
UAM itself does not manage portfolio investments for clients and does not
provide any investment advisory services to Affiliated Firms and therefore is
not registered as an investment adviser under federal, state or foreign law.
UAM respects the individual character of each Affiliated Firm and seeks to
preserve an environment in which each Firm may continue to provide investment
management services which are intended to meet the particular needs of each
Firm's clients. UAM's name does not appear on the office doors of any
Affiliated Firm. UAM provides assistance to the Affiliated Firms in connection
with the preparation of consolidated financial statements, consolidated tax
matters, insurance and maintenance of a company-wide profit sharing retirement
plan.
UAM believes that the professional independence of the Affiliated Firms and
the continuing diversification of investment philosophies and approaches within
the company are necessary ingredients of UAM's success and that of the
Affiliated Firms. The key employees of each Affiliated Firm at the time of
acquisition by UAM have continued with their Firm in accordance with employment
agreements executed in connection with each acquisition, have remained on their
Firm's board of directors, and have continued to serve as its executive
officers. UAM intends to continue the method of operation described above as it
acquires or organizes additional firms.
Each Affiliated Firm's directors and officers are responsible for reviewing
their respective Firm's results, plans and budgets. The Company also has a
Management Council composed of senior executives from each of the Affiliated
Firms and from UAM which serves as a forum for sharing business information.
UAM seeks to assist the Affiliated Firms in their marketing activities by
providing resources and support for developing new products and reaching new
markets. As a part of these efforts, UAM has organized The Regis Fund, Inc., a
series mutual fund in which Affiliated Firms may open portfolios to pool client
accounts in an efficient, cost-effective manner and to provide additional
investment styles. As of December 31, 1993, nine of the Affiliated Firms had
opened in the aggregate 25 Regis Fund portfolios, and such portfolios held
assets totaling $1.7 billion.
UAM has responded to the growth in the defined contribution plan sector of
the market by establishing Regis Retirement Plan Services, Inc. in 1993 to offer
bundled products, including investment management through the offering of Regis
Fund portfolios, recordkeeping and trustee services to the sponsors of these
plans.
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<PAGE>
UAM has observed that the major reasons that employee-owned firms consider
selling to UAM include: (a) the high value of the firm relative to its
principals' total net worth; (b) the need for liquidity on the part of the
principals; and (c) their desire for diversification and a reduction in their
exposure to a single firm's results. Substantially all the key employees of
Affiliated Firms continue to be vigorously involved in their Firm long after its
acquisition by UAM.
In purchasing investment management firms, UAM has structured the
consideration of the transactions in order to create incentives for the key
personnel to remain with their firm after the expiration of their employment
agreements. The key employees have entered into employment and non-competition
agreements for terms ranging primarily from five to twelve years, which also
prohibit the employees from competing with their Firm for a substantial period
after termination of employment. Most of the key employees of the Affiliated
Firms were stockholders of such Firms prior to their acquisition by UAM. In
connection with the purchases, the former stockholders and/or key employees have
typically received consideration in the form of cash, subordinated notes and
warrants to purchase UAM Common Stock, or UAM Common Stock. The subordinated
notes, which may be used to exercise the warrants, generally have terms between
five and ten years. The key employees of each Affiliated Firm also participate
directly, through a revenue sharing arrangement, in revenues of their Firm and
meet the Firm's expenses from their share of these revenues, as described more
fully under "Revenue Sharing."
UAM has over the past several years identified a substantial number of
institutional investment management firms both domestically and internationally
which it believes may be candidates for future acquisition on the basis of an
evaluation of their personnel, investment approach, client base, revenues and
profitability.
Borrowings under UAM's $225,000,000 Reducing Revolving Credit Agreement (as
more fully described in Note 3 to the Consolidated Financial Statements, see
Items 8 and 14) are secured by the stock of the Company's subsidiaries.
REVENUE SHARING
UAM operates with the Affiliated Firms under "revenue sharing" agreements.
The agreements permit each Firm to retain a specified percentage of its revenues
(typically 50-70%) for use by its principals at their discretion in paying
expenses of operation, including salaries and bonuses. The purposes of the
plans are to provide significant ongoing incentives for the principals of the
Affiliated Firms to continue working as they did prior to the sale of their Firm
to UAM and to allow UAM to participate in the growth of revenues of each
Affiliated Firm. The plans are designed to allow each Firm's principals to
participate in that Firm's growth in a substantial manner and to make operating
decisions freely within the limits of that portion of the Firm's revenues which
is retained under the Firm's control. In effect, the portion of its revenues
retained by each Firm that is not used to pay salaries and other operating
expenses is available for payment to the principals of such Firm in the form of
bonuses. Thus, the portion of Affiliated Firm revenues retained by the Firms is
included in operating expenses in the UAM Consolidated Statement of Income.
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Under each plan, when an Affiliated Firm is acquired by UAM, the "base
revenues" of the Firm are established, and a share of such revenues is allocated
to UAM, with the balance being reserved as the acquired Firm's share of
revenues. In addition, agreement is reached on the Firm's and UAM's respective
percentage shares of changes in such Firm's revenues compared to its base
revenues. The Affiliated Firm is required to pay for all of its business
expenses out of its share of its revenues. Each year, the amount of the
Affiliated Firm's revenues that is paid to UAM and the amount that is retained
by the Firm are adjusted upwards in the case of growth in such Firm's revenues
over its base, or downwards in the case of decreases in such Firm's revenues
below its base, in amounts determined with respect to UAM and the Affiliated
Firm by applying the agreed-upon percentages to the total increase or decrease
in the Firm's revenues. Under most of the existing revenue sharing agreements,
UAM's share of increases above a Firm's base revenues is between 30% and 50%,
and UAM's share of decreases below a Firm's base revenues is between 50% and
70%. Thus, in any year in which the Affiliated Firm's revenues increase over
its base revenues, the Firm retains a portion of such additional amounts to use
as its principals may decide (such as to pay for employees' services). The
balance of the increase in the Affiliated Firm's revenues is paid to UAM, in
addition to UAM's share of such Firm's base revenues. In any year in which the
Affiliated Firm's revenues decrease to a level below its base revenues, the
Firm's share of its base revenues is reduced by the Firm's portion of the
decrease, and therefore, the Firm may need to reduce its expenses. Similarly,
the revenue sharing amount paid to UAM will be reduced by UAM's share of any
decline in the Affiliated Firm's revenues below its base.
AFFILIATED FIRMS
Each of the Affiliated Firms conducts its own marketing, client relations,
research, and portfolio management. Each Firm sets its own investment advisory
fees and manages its business independently on a day-to-day basis.
The investment philosophy, style and approach of each Affiliated Firm are
independently determined by it, and these philosophies, styles and approaches
may vary substantially from Firm to Firm. As a consequence, more than one
Affiliated Firm may be retained by a single client since many clients employ
multiple investment advisers. The strategies employed and securities selected
by Affiliated Firms are separately chosen by each of them, with the result that
any one UAM Firm may be bullish on the stock or bond market while another Firm
is bearish. Two of the Affiliated Firms are full-service institutional real
estate investment management firms with $7.9 billion of assets under management
at year end. These Firms invest in real estate properties in the U.S. and
overseas for their U.S. and foreign clients and provide a broad spectrum of real
estate services, including research and acquisition, financing and asset and
property management.
All of these differences, when combined with the separate names and
identities of the various Affiliated Firms may; (a) tend to insulate UAM from
the various cycles of under- or over-performance of individual Firms; (b) permit
more than one Affiliated Firm to serve any single client; and (c) mean that some
Affiliated Firms may attract substantial new business while other Firms may be
growing more slowly or losing business.
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On December 31, 1993, UAM's 37 Affiliated Firms had nearly 5,500 clients
with $100.1 billion of assets under management for an average account size of
$18.3 million. The 20 largest clients of the Firms represented 18% of total
assets under management and the 100 largest clients represented 38% of total
assets under management. The client list includes many of the nation's largest
corporate, public, charitable and union funds along with the funds of many
individuals, several mutual fund organizations and a number of professional
groups. As of December 31, 1993, UAM subsidiaries managed approximately $4.0
billion in wrap-fee programs through relationships with 22 brokerage firms.
Additional information regarding the number of clients and types and amounts of
assets under management is found as exhibit 13.1.1 of this filing, which table
is incorporated herein by reference.
The following table summarizes UAM's asset mix:
<TABLE>
<CAPTION>
Assets Under Management at December 31,
(in $ millions) 1991 1992 1993
------------ ------------- ------------
<S> <C> <C> <C>
U.S. Equities 66% $38,997 66% $49,562 57% $ 57,305
U.S. Bonds and Cash 33 19,498 28 20,816 23 23,116
International Equities - - 2 1,300 9 8,449
International Bonds and Cash - - 1 852 2 2,356
Real Estate 1 591 3 2,536 9 8,858
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100% $59,086 100% $75,066 100% $100,084
=== ======= === ======= === ========
</TABLE>
In January, 1994, UAM acquired Dwight Asset Management Company, a
Burlington, Vermont-based specialist in stable value assets with $5 billion in
assets under management, further diversifying the asset mix.
As previously described, each of the Affiliated Firms is responsible for
and provides its own marketing of its investment management services.
Typically, one or more of the employees at each Firm is responsible for making
an initial contact with prospective clients. Most Firms have brochures
describing the Firm, its principals and its investment approach. These
brochures are mailed to prospective clients. In addition, clients are solicited
by telephone and in person. Once an initial contact is made, several face-to-
face meetings between the principals of such Firm and the prospective client
take place at which investment philosophy, management fees and a variety of
other related matters are discussed.
REGULATION
UAM's domestic investment advisory subsidiaries are registered with
and subject to regulation by the Securities and Exchange Commission ("SEC")
under the Investment Advisers Act of 1940 and, where applicable, under state
advisory laws. The Company's U.K. investment advisory affiliates are members of
and subject to regulation by the Investment Management Regulatory Organization,
a self-regulatory body organized under the U.K. Financial Services Act. The
Company's brokerage subsidiaries are registered as broker-dealers with the SEC
under the Securities Exchange Act of 1934 (the "Exchange Act") and, where
applicable, under state securities laws, and are regulated by the SEC, state
securities administrators, and the National Association of Securities Dealers,
Inc. One Affiliated Firm is regulated by the Commodities Futures Trading
Commission, and two own trust companies which are subject to regulation by the
Office of Comptroller of the Currency or applicable state law.
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UAM's domestic investment advisory subsidiaries are subject to ERISA and to
regulations promulgated thereunder to the extent they are "fiduciaries" under
ERISA with respect to their clients.
Registrations, reporting, maintenance of books and records and
compliance procedures required by these laws and regulations promulgated
thereunder are maintained by each UAM subsidiary on an independent basis.
The officers, directors and employees of UAM's investment advisory
subsidiaries may from time to time own securities which are also owned by one or
more of their clients. Each such firm has internal guidelines and codes of
ethics with respect to individual investments, and requires reporting of
securities transactions and restricts certain transactions so as to minimize
possible conflicts of interest.
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UAM's Affiliated Firms as of December 31, 1993 are listed below in the
order in which they were acquired or organized.
<TABLE>
<CAPTION>
Acquired
Affiliated Firm Location or Organized
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<S> <C> <C>
Nelson, Benson & Zellmer, Inc. Denver, CO August, 1983
Chicago Asset Management Company Chicago, IL October, 1983
Hamilton, Allen & Associates, Inc. Atlanta, GA February, 1984
Hellman, Jordan Management Company, Inc. Boston, MA August, 1984
Thompson, Siegel & Walmsley, Inc. Richmond, VA December, 1984
Sterling Capital Management Company Charlotte, NC December, 1984
Analytic Investment Management, Inc. Irvine, CA May, 1985
Northern Capital Management, Inc. Madison, WI January, 1986
Cooke & Bieler, Inc. Philadelphia, PA February, 1986
Olympic Capital Management, Inc. Seattle, WA June, 1986
Fiduciary Management Associates, Inc. Chicago, IL June, 1986
Investment Counselors of Maryland, Inc. Baltimore, MD December, 1986
Hagler, Mastrovita & Hewitt, Inc. Boston, MA December, 1986
The Rothschild Company Baltimore, MD December, 1986
Rice, Hall, James & Associates San Diego, CA May, 1987
C.S. McKee & Company, Inc. Pittsburgh, PA August, 1987
Hanson Investment Management Company San Rafael, CA August, 1987
Barrow, Hanley, Mewhinney & Strauss, Inc. Dallas, TX January, 1988
Sirach Capital Management, Inc. Seattle, WA January, 1989
Dewey Square Investors Corporation Boston, MA May, 1989
HT Investors, Inc. Providence, RI May, 1989
The Campbell Group, Inc. Portland, OR May, 1989
Cambiar Investors, Inc. Englewood, CO August, 1990
Newbold's Asset Management, Inc. Bryn Mawr, PA September, 1990
First Pacific Advisors, Inc. Los Angeles, CA June, 1991
Spectrum Asset Management, Inc. Stamford, CT November, 1991
Acadian Asset Management, Inc. Boston, MA February, 1992
Alpha Global Fixed Income Managers London, England March, 1992
The L&B Group Dallas, TX June, 1992
NWQ Investment Management Company Los Angeles, CA October, 1992
Tom Johnson Investment Management, Inc. Oklahoma City, OK December, 1992
Regis Retirement Plan Services, Inc. New York, NY February, 1993
Pell, Rudman & Co., Inc. Boston, MA March, 1993
Ki Pacific Asset Management London, England June, 1993
Hong Kong
Heitman Financial Ltd. Chicago, IL August, 1993
Murray Johnstone Limited Glasgow, Scotland November, 1993
GSB Investment Management, Inc. Fort Worth, TX December, 1993
</TABLE>
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EMPLOYEES
The UAM holding company has thirty-two employees, five of whom are
executive officers of UAM (see Item 10, Directors and Executive Officers). Each
Affiliated Firm employs its own administrative and operations personnel as
needed to provide advisory services to its clients and to maintain necessary
records in accordance with the Investment Advisers Act of 1940 and applicable
state laws. See "Affiliated Firms." At December 31, 1993, the Company as a
whole employed 1,549 persons. These numbers exclude 1,075 individuals who are
employed by the property management subsidiaries of The L&B Group and Heitman
Financial Ltd. and whose total compensation is billed directly to clients of
these affiliates.
ITEM 2. PROPERTY
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UAM's only offices are its executive offices in Boston, Massachusetts,
which occupy approximately 15,000 square feet under a lease which expires in
1997. Affiliated Firms are likewise lessees of their respective offices under
leases which expire at various dates.
ITEM 3. LEGAL PROCEEDINGS
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Certain of the Company's subsidiaries are subject to legal proceedings
arising in the ordinary course of business. On the basis of information
presently available and advice received from counsel, it is the opinion of
management that the disposition or ultimate determination of such legal
proceedings will not have a material adverse effect on the financial position of
the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
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No matters were submitted to the vote of the security holders of the
Company during the fourth quarter of the fiscal year covered by this report.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
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As of December 31, 1993, there were 538 shareholders of record. As of
March 15, 1994, there were 540 shareholders of record. The balance of the
information required by this item is incorporated herein by reference to the
"Common Stock Information" appearing as exhibit 13.1.2 of this filing.
ITEM 6. SELECTED FINANCIAL DATA
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The information required by this item is incorporated herein by reference
to the "Nine Year Review" appearing as exhibit 13.1.3 of this filing.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
- ------- RESULTS OF OPERATIONS
The information required by this item is incorporated herein by reference
to the "Management's Discussion and Analysis" appearing as exhibit 13.1.4 of
this filing.
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
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The information required by this item is incorporated herein by reference
to the "Selected Quarterly Financial Data" appearing as exhibit 13.1.5 of this
filing, "Consolidated Financial Statements" of United Asset Management
Corporation and "Notes to Consolidated Financial Statements" appearing as
exhibits 13.1.6 through 13.1.10 and also the "Report of Independent Accountants"
appearing as exhibit 13.1.11 of this filing. (See also the "Financial Statement
Schedules" filed under Item 14 of this Form 10-K.)
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
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None
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
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The information required by this item is incorporated herein by reference
to the sections entitled "Nominees for Election as Directors," "Certain
Transactions" and "Executive Officers" included in the Company's Proxy Statement
for the Annual Meeting of Stockholders to be held on May 19, 1994 (the "Proxy
Statement").
ITEM 11. EXECUTIVE COMPENSATION
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The information required by this item is incorporated herein by reference
to the sections entitled "Executive Compensation-Summary Compensation Table,"
"Executive Compensation-Option Grants in 1993," "Executive Compensation-
Aggregated Option Exercises in 1993 and Option Values at December 31, 1993" and
"Directors' Fees" included in the Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
- --------
The information required by this item is incorporated herein by reference
to the section entitled "Voting Securities" included in the Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- --------
The information required by this item is incorporated herein by reference
to the section entitled "Certain Transactions" included in the Proxy Statement.
- 11 -
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
- -------- ON FORM 8-K
(a) 1. Financial Statements
The following consolidated financial statements of United Asset
Management Corporation and report of independent accountants, included as
exhibits 13.1.6 through 13.1.11, are incorporated herein by reference as a
part of this Form 10-K:
Title
- -----
Report of Independent Accountants 13.1.11
Consolidated Balance Sheet as of December 31, 1993 and 1992 13.1.6
Consolidated Statement of Income for the three years ended
December 31, 1993 13.1.7
Consolidated Statement of Cash Flows for the three years
ended December 31, 1993 13.1.8
Consolidated Statement of Changes in Stockholders' Equity
for the three years ended December 31, 1993 13.1.9
Notes to Consolidated Financial Statements 13.1.10
(a) 2. Financial Statement Schedules
The following consolidated financial statement schedules and report of
independent accountants are filed as a part of this Form 10-K and are located on
the following pages:
Page(s)
-------
Report of Independent Accountants on Financial
Statement Schedules F-1
For the three years ended December 31, 1993:
Schedule II Amounts Receivable from Related
Parties, Underwriters, Promoters,
and Employees Other than Related
Parties F-3
Schedule IV Indebtedness of and to Related
Parties - Not Current F-4
Schedule VIII Valuation and Qualifying Accounts F-5
All other schedules have been omitted since they are not required, not
applicable or the information is contained in the Financial Statements or
Notes thereto.
- 12 -
<PAGE>
(a) 3. EXHIBIT INDEX
Exhibit
Number Title
------ -----
(1) 3.1 Restated Certificate of Incorporation of the Registrant, as
amended.
3.2 By-Laws of the Registrant.
(2) 4.1 Specimen Certificate of Common Stock,
$.01 par value, of the Registrant.
(3) 4.2 Agreement to furnish copies of subordinated debt instruments to
the Commission.
9.0 Not Applicable
(4) 10.1 Acquisition Agreement by and among United Asset Management
Corporation, NWQ Investment Management Company, NIMC Newco, Inc.,
the partners of NWQ Investment Management Company and David A.
Polak dated as of October 21, 1992, including an Agreement to
Furnish Copies of Omitted Schedules and Exhibits to Acquisition
Agreement.
(5) 10.2 Credit Agreement dated as of May 18, 1992 among United Asset
Management Corporation, Morgan Guaranty Trust Company of New
York, The First National Bank of Boston, Credit Lyonnais New York
Branch, Credit Lyonnais Cayman Island Branch, Mellon Bank, N.A.,
Manufacturers Hanover Trust Company, Morgan Guaranty Trust
Company of New York, as Agent, and The First National Bank of
Boston, as Collateral Agent.
(5) 10.3 First Amendment dated October 8, 1992 to the Credit Agreement.
(5) 10.4 Second Amendment dated November 25, 1992 to the Credit Agreement.
(5) 10.5 Third Amendment dated December 1, 1992 to the Credit Agreement.
(5) 10.6 Fourth Amendment dated as of January 8, 1993 to the Credit
Agreement.
10.7 Fifth Amendment dated as of August 25, 1993 to the Credit
Agreement.
10.8 Sixth Amendment dated as of November 16, 1993 to the Credit
Agreement.
(1) 10.9 1987 Stock Option Plan.
- 13 -
<PAGE>
(6) 10.10 United Asset Management Corporation Profit Sharing and 401(k)
Plan dated as of May 11, 1989 and amended and restated as of
November 26, 1990.
10.11 Revised First Amendment to United Asset Management Corporation
Profit Sharing and 401(k) Plan effective as of January 1, 1992.
10.12 Second Amendment to United Asset Management Corporation Profit
Sharing and 401(k) Plan effective as of January 1, 1993.
(7) 10.13 1989 Stock Option Plan.
(5) 10.14 1992 Stock Option Plan.
(5) 10.15 Consulting Agreement between United Asset Management Corporation
and David I. Russell dated as of January 1, 1993.
11.1 Calculation of Earnings Per Share.
12.0 Not Applicable
13.1 Portions of the United Asset Management Corporation Annual Report
to shareholders for the year ended December 31, 1993 are
incorporated herein by reference:
13.1.1 "United Asset Management's Clients"
13.1.2 "Common Stock Information"
13.1.3 "Nine Year Review"
13.1.4 "Management's Discussion and Analysis"
13.1.5 "Selected Quarterly Financial Data"
13.1.6 "Consolidated Balance Sheet"
13.1.7 "Consolidated Statement of Income"
13.1.8 "Consolidated Statement of Cash Flows"
13.1.9 "Consolidated Statement of Changes in
Stockholders' Equity"
13.1.10 "Notes to Consolidated Financial
Statements"
13.1.11 "Report of Independent Accountants"
16.0 Not Applicable
18.0 Not Applicable
21.1 Subsidiaries of the Registrant.
22.0 Not Applicable
23.1 Consent of Independent Accountants.
24.0 Not Applicable
27.0 Not Applicable
28.0 Not Applicable
___________
- 14 -
<PAGE>
(1) Filed as an Exhibit to the Company's Form S-4 as filed with
the Commission and which became effective on July 7, 1987,
and incorporated herein by reference (Registration
No. 33-14565).
(2) Filed as an Exhibit to the Company's Form S-1 as filed with the
Commission and which became effective on August 22, 1986, and
incorporated herein by reference (Registration No. 33-6874).
(3) Filed as an Exhibit to the Company's Annual Report on
Form 10-K for the year ended December 31, 1988, and incorporated
herein by reference.
(4) Filed as an Exhibit to the Company's Current Report on
Form 8-K as filed with the Commission on November 5, 1992, and
incorporated herein by reference.
(5) Filed as an Exhibit to the Company's Annual Report on
Form 10-K for the year ended December 31, 1992, and incorporated
herein by reference.
(6) Filed as an Exhibit to the Company's Annual Report on
Form 10-K for the year ended December 31, 1990, and incorporated
herein by reference.
(7) Filed as an Exhibit to the Company's Annual Report on
Form 10-K for the year ended December 31, 1989, and incorporated
herein by reference.
Location of Documents Pertaining to Executive Compensation Plans and
Arrangements:
(1) 1987 Stock Option Plan - Form S-4 Registration Statement No. 33-14565,
Exhibit 10.9 to this Form 10-K.
(2) 1989 Stock Option Plan - Form 10-K for fiscal year ended
December 31, 1989, Exhibit 10.13 to this Form 10-K.
(3) 1992 Stock Option Plan - Form 10-K for fiscal year ended
December 31, 1992, Exhibit 10.14 to this Form 10-K.
(4) Consulting Agreement between United Asset Management Corporation and
David I. Russell dated as of January 1, 1993 - Form 10-K for fiscal
year ended December 31, 1992, Exhibit 10.15 to this Form 10-K.
(b) Reports on Form 8-K
A report on Form 8-K was filed on December 8, 1993. The items reported
and financial statements filed were as follows:
Item 5. Other Events.
------------
The report announced the acquisitions by UAM of Heitman
Financial Ltd. and Murray Johnstone Holdings Limited.
Item 7. Financial Etatements and Exhibits.
---------------------------------
(a) Restated financial statements reflecting acquisitions
of Heitman Financial Ltd. and Murray Johnstone Holdings Limited
through transactions accounted for as poolings of interests.
- 15 -
<PAGE>
(i) Consolidated Balance Sheet as of December 31,
1992 and 1991.
(ii) Consolidated Statement of Income for the three
years ended December 31, 1992.
(iii) Consolidated Statement of Cash Flows for the
three years ended December 31, 1992.
(iv) Consolidated Statement of Changes in
Stockholders' Equity for the three years ended
December 31, 1992.
(v) Notes to Consolidated Financial Statements.
- 16 -
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) 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.
UNITED ASSET MANAGEMENT CORPORATION
-----------------------------------
(Registrant)
Date: March 22, 1994 By /s/ Norton H. Reamer
--------------------------------
Norton H. Reamer
President
By /s/ William H. Park
--------------------------------
William H. Park
Senior Vice President and Treasurer
(Principal Financial and Accounting
Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant in
the capacities and on the dates indicated.
/s/ Norton H. Reamer
- -----------------------------------
(Norton H. Reamer) Director March 22, 1994
/s/ Robert J. Greenebaum
- -----------------------------------
(Robert J. Greenebaum) Director March 22, 1994
/s/ Jay O. Light
- -----------------------------------
(Jay O. Light) Director March 22, 1994
/s/ John F. McNamara
- -----------------------------------
(John F. McNamara) Director March 22, 1994
/s/ Michael C. Mewhinney
- -----------------------------------
(Michael C. Mewhinney) Director March 22, 1994
/s/ W. Olin Nisbet, III
- -----------------------------------
(W. Olin Nisbet, III) Director March 22, 1994
/s/ Norman Perlmutter
- -----------------------------------
(Norman Perlmutter) Director March 22, 1994
/s/ David A. Polak
- -----------------------------------
(David A. Polak) Director March 22, 1994
/s/ David I. Russell
- -----------------------------------
(David I. Russell) Director March 22, 1994
/s/ Philip Scaturro
- -----------------------------------
(Philip Scaturro) Director March 22, 1994
/s/ John A. Shane
- -----------------------------------
(John A. Shane) Director March 22, 1994
/s/ John T. Siegel
- -----------------------------------
(John T. Siegel) Director March 22, 1994
/s/ Barbara S. Thomas
- -----------------------------------
(Barbara S. Thomas) Director March 22, 1994
- 17 -
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS ON
------------------------------------
FINANCIAL STATEMENT SCHEDULES
-----------------------------
To the Board of Directors
of United Asset Management Corporation
Our audits of the consolidated financial statements referred to in our report
dated February 7, 1994 appearing on page 79 of the 1993 Annual Report to
Shareholders of United Asset Management Corporation (which report and
consolidated financial statements are incorporated by reference in this Annual
Report on Form 10-K) also included an audit of the Financial Statement Schedules
listed in Item 14(a) of this Form 10-K. In our opinion, these Financial
Statement Schedules present fairly, in all material respects, the information
set forth therein when read in conjunction with the related consolidated
financial statements.
/s/ Price Waterhouse
PRICE WATERHOUSE
Boston, Massachusetts
February 7, 1994
F-1
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
We hereby consent to the incorporation by reference in the Prospectuses
constituting part of the Registration Statements on Form S-3 (Nos. 33-36928,
33-44215, 33-46310, 33-63350, 33-69034, 33-51443 and 33-52517) and in the
Registration Statements on Form S-8 (Nos. 33-10621, 33-21756, 33-34288 and
33-48858) of United Asset Management Corporation of our report dated
February 7, 1994 appearing on page 79 of the Annual Report to Shareholders which
is incorporated in this Annual Report on Form 10-K. We also consent to the
incorporation by reference of our report on the Financial Statement Schedules,
which appears on page F-1 of this Form 10-K.
/s/ Price Waterhouse
PRICE WATERHOUSE
Boston, Massachusetts
March 22, 1994
F-2
<PAGE>
<TABLE>
<CAPTION>
Schedule II
UNITED ASSET MANAGEMENT CORPORATION
-----------------------------------
AMOUNTS RECEIVABLE FROM RELATED PARTIES, UNDERWRITERS, PROMOTERS, AND
----------------------------------------------------------------------
EMPLOYEES OTHER THAN RELATED PARTIES
------------------------------------
FOR THE PERIOD JANUARY 1, 1991 THROUGH DECEMBER 31, 1993
--------------------------------------------------------
Balance at
Balance Deductions End of Period
at ---------------------- ----------------------
Beginning Amounts Written Not
(in $ thousands) of Period Additions Collected Off Current Current
--------- --------- --------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
1991
- ----
Mayfair Joint Venture (1) $ - 3,017 - - $ - $3,017
1992
- -----
Mayfair Joint Venture (1) $3,017 548 1,132 - $ - $2,433
1993
- ----
Mayfair Joint Venture (1) $2,433 79 - - $ - $2,512
HFC Limited Liability $ - 5,220 - - $1,000 $4,220
Company (2)
_____________________
<FN>
(1) Norman Perlmutter (a Director) is an indirect beneficial owner of an equity interest in the Mayfair Joint Venture, a limited
partnership. The entire balance at December 31, 1993, except for $400,000, represents a promissory note receivable. The note is
due March 5, 1997. Interest on the outstanding principal balance is charged at a variable rate based on either the Prime interest
rate plus one-half of one percent or a LIBOR rate election. The balance of $400,000 is an unsecured advance to the Mayfair Joint
Venture to fund operating expenses. Both the note receivable and advance were made prior to UAM's acquisition of Heitman
Financial Ltd.
(2) This receivable represents a 6.00% promissory note in the principal amount of $5,220,000 due in annual installments of
$1,000,000 on each of August 15, 1994, 1995, 1996, and 1997 and $1,220,000 on August 15, 1998. Interest on the outstanding
principal balance is payable each calendar quarter in arrears beginning on September 30, 1993 until the principal is paid in full.
The promissory note is secured by a guaranty by HFL-A Partnership and HFL-B Partnership, two Illinois general partnerships of which
Norman Perlmutter (a Director) is managing partner. The note is payable solely out of the assets of HFL-A Partnership and HFL-B
Partnership without recourse to their respective partners, provided however, eight of the individual partners in such partnerships
have severally guaranteed $2,500,000, including Mr. Perlmutter as to $582,500. This note receivable was made prior to UAM's
acquisition of Heitman Fiancial Ltd.
</TABLE>
F-3
<PAGE>
<TABLE>
<CAPTION>
Schedule IV
UNITED ASSET MANAGEMENT CORPORATION
INDEBTEDNESS OF AND TO RELATED PARTIES - NOT CURRENT
----------------------------------------------------
Beginning Ending
Name of Person Balance Additions Deductions Current Balance
- -------------- ------- --------- ---------- ------- -------
<S> <C> <C> <C> <C> <C>
January 1, 1991 to December 31, 1991
Directors (1):
John L. Strauss $10,979,000 $1,932,000 (2,3) - - $12,911,000
All other Directors 4,020,000 - - 4,020,000
January 1, 1992 to December 31, 1992
Directors (1):
Michael C. Mewhinney $12,911,000 $ 22,000 (2) $2,290,000 - $10,643,000
John L. Strauss 12,911,000 22,000 (2) 2,290,000 - 10,643,000
All other Directors 7,542,000 - 1,737,000 - 5,805,000
January 1, 1993 to December 31, 1993
Directors (1):
Michael C. Mewhinney $10,643,000 $ 17,000 (2) $2,669,000 - $ 7,991,000
David A. Polak 33,643,000 - - - 33,643,000
All other Directors 4,889,000 - 385,000 - 4,504,000
________________________________
<FN>
(1) Information presented reflects indebtedness to individuals who (i) were directors during any part of the calendar year and (ii)
were owed amounts in excess of 2% of consolidated total assets at either the beginning or end of the year.
(2) Amortization of original issue discount.
(3) Issuance of subordinated notes in connection with contingent payment following acquisition of business.
F-4
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
UNITED ASSET MANAGEMENT CORPORATION Schedule VIII
VALUATION AND QUALIFYING ACCOUNTS
---------------------------------
(in $ thousands)
Cost Assigned
to Contracts Acquired(A) Accumulated Amortization(A)
------------------------------------ --------------------------------------------------
Range Weighted Ending
of Average Tax
Estimated Estimated Balance
Remaining Remaining Beginning Ending Beginning Charged to Ending in Excess
Lives Lives Balance Additions Balance Balance Operations Balance of Book (B)
----- ----- ------- --------- ------- --------- ---------- ------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1991
BHM&S 11-12 11 $106,088 - $106,088 $ 19,788 $ 7,284 $ 27,072 $ 8,509
All Others 1-23 12 316,623 $53,016 369,639 81,983 23,251 105,234 54,747
-------- ------- -------- -------- ------- -------- -------
$422,711 $53,016 $475,727 $101,771 $30,535 $132,306 $63,256
======== ======= ======== ======== ======= ======== =======
1992
BHM&S 10-11 10 $106,088 - $106,088 $27,072 $ 7,284 $ 34,356 $ 7,707
NWQ 4-13 12 - $ 96,011 96,011 - 1,597 1,597 627
All Others 1-22 10 369,639 58,370 428,009 105,234 28,398 133,632 56,425
-------- -------- -------- -------- ------- -------- -------
$475,727 $154,381 $630,108 $132,306 $37,279 $169,585 $64,759
======== ======== ======== ======== ======= ======== =======
1993
BHM&S 9-10 9 $106,088 - $106,088 $34,356 $ 7,284 $ 41,640 $ 7,979
NWQ 3-12 11 96,011 $ 65 96,076 1,597 8,078 9,675 12,869
All Others 1-21 10 428,009 49,610 477,619 133,632 33,131 166,763 56,679
-------- -------- -------- -------- ------- -------- -------
$630,108 $ 49,675 $679,783 $169,585 $48,493 $218,078 $77,527
======== ======== ======== ======== ======= ======== =======
<FN>
(A) Restated due to pooling of interests transactions completed in the third and fourth quarters of 1993.
</TABLE>
F-5
<PAGE>
N O T I C E OF R E V I S I O N
----------------------------------
BY-LAWS
OF
UNITED ASSET MANAGEMENT CORPORATION
- --------------------------------------------------------------------------------
Date of Amendment: October 26, 1993
Section Amended: Article III, Section 1
<PAGE>
UNITED ASSET MANAGEMENT CORPORATION
---ooOoo---
B Y - L A W S
---ooOoo---
ARTICLE I
OFFICES
Section 1. The registered office shall be in the City of Wilmington,
County of New Castle, State of Delaware.
Section 2. The corporation may also have offices at such other places
both within and without the State of Delaware as the board of directors may from
time to time determine or the business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. All meetings of the stockholders for the election of
directors shall be held in the City of Boston, State of Massachusetts, at such
place as may be fixed from time to time by the board of directors, or at such
other place either within or without the State of Delaware as shall be
designated from time to time by the board of directors and stated in the notice
of the meeting. Meetings of stockholders for any other purpose may be held at
such time and place, within or without the State of Delaware, as shall be stated
in the notice of the meeting or in a duly executed waiver of notice thereof.
<PAGE>
Section 2. Annual meetings of stockholders, commencing with the year
1981, shall be held on the second Wednesday of May if not a legal holiday, and
if a legal holiday, then on the next secular day following, at 10:00 A.M., or at
such other date and time as shall be designated from time to time by the board
of directors and stated in the notice of the meeting, at which they shall elect
by a plurality vote a board of directors, and transact such other business as
may properly be brought before the meeting.
Section 3. Written notice of the annual meeting stating the place,
date and hour of the meeting shall be given to each stockholder entitled to vote
at such meeting not less than ten nor more than sixty days before the date of
the meeting.
Section 4. The officer who has charge of the stock ledger of the
corporation shall prepare and make, at least ten days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced
-2-
<PAGE>
and kept at the time and place of the meeting during the whole time thereof, and
may be inspected by any stockholder who is present.
Section 5. Special meetings of the stockholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the certificate of
incorporation, may be called by the president and shall be called by the
president or secretary at the request in writing of a majority of the board of
directors, or at the request in writing of stockholders owning a majority in
amount of the entire capital stock of the corporation issued and outstanding and
entitled to vote. Such request shall state the purpose or purposes of the
proposed meeting.
Section 6. Written notice of a special meeting stating the place,date
and hour of the meeting and the purpose or purposes for which the meeting is
called, shall be given not less than ten nor more than sixty days before the
date of the meeting, to each stockholder entitled to vote at such meeting.
Section 7. Business transacted at any special meeting of stockholders
shall be limited to the purposes stated in the notice.
Section 8. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business except as otherwise provided by statute or by the
certificate of incorporation. If, however, such quorum shall not be present or
represented at any meeting of the stockholders, the stockholders entitled to
vote
-3-
<PAGE>
thereat, present in person or represented by proxy, shall have power to adjourn
the meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present or represented. At such adjourned
meeting at such a quorum shall be present or represented any business may be
transacted which might have been transacted at the meeting as originally
notified. If the adjournment is for more than thirty days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting.
Section 9. When a quorum is present at any meeting, the vote of the
holders of a majority of the stock having voting power present in person or
represented by proxy shall decide any question brought before such meeting,
unless the question is one upon which by express provision of the statutes or of
the certificate of incorporation, a different vote is required in which case
such express provision shall govern and control the decision of such question.
Section 10. Unless otherwise provided in the certificate of
incorporation each stockholder shall at every meeting of the stockholders be
entitled to one vote in person or by proxy for each share of the capital stock
having voting power held by such stockholder, but no proxy shall be voted on
after three years from its date, unless the proxy provides for a longer period.
-4-
<PAGE>
Section 11. Unless otherwise provided in the certificate of
incorporation, any action required to be taken at any annual or special meeting
of stockholders of the corporation, or any action which may be taken at any
annual or special meeting of such stockholders, may be taken without a meeting,
without prior notice and without a vote, if a consent in writing, setting forth
the action so taken, shall be signed by the holders of outstanding stock having
not less than the minimum number of votes that would be necessary to authorize
or take such action at a meeting at which all shares entitled to vote thereon
were present and voted. Prompt notice of the taking of the corporate action
without a meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing.
ARTICLE III
DIRECTORS
Section 1. The number of directors which shall constitute the whole
board shall not be less than one or more than thirteen. The first board shall
consist of one director. Thereafter, within the limits above specified, the
number of directors shall be determined by resolution of the board of directors
or by the stockholders at the annual meeting. The directors shall be elected at
the annual meeting of the stockholders, except as provided in Section 2 of this
Article, and each director shall hold office until his successor is elected and
qualified. Directors need not be stockholders.
-5-
<PAGE>
Section 2. Vacancies and newly created directorships resulting from
any increase in the authorized number of directors may be filled by a majority
of the directors then in office, though less than a quorum, or by a sole
remaining director, and the directors so chosen shall hold office until the next
annual election and until their successors are duly elected and shall qualify,
unless sooner displaced. If there are no directors in office, then an election
of directors may be held in the manner provided by statute. If, at the time of
filling any vacancy or any newly created directorship, the directors then in
office shall constitute less than a majority of the whole board (as constituted
immediately prior to any such increase), the Court of Chancery may, upon
application of any stockholder or stockholders holding at least ten percent of
the total number of shares at the time outstanding having the right to vote for
such directors, summarily order an election to be held to fill any such
vacancies or newly created directorships, or to replace the directors chosen by
the directors then in office.
Section 3. The business of the corporation shall be managed by or
under the direction of its board of directors which may exercise all such powers
of the corporation and do all such lawful acts and things as are not by statute
or by the certificate of incorporation or by these by-laws directed or required
to be exercised or done by the stockholders.
-6-
<PAGE>
MEETINGS OF THE BOARD OF DIRECTORS
Section 4. The board of directors of the corporation may hold
meetings, both regular and special, either within or without the State of
Delaware.
Section 5. The first meeting of each newly elected board of directors
shall be held at such time and place as shall be fixed by the vote of the
stockholders at the annual meeting and no notice of such meeting shall be
necessary to the newly elected directors in order legally to constitute the
meeting, provided a quorum shall be present. In the event of the failure of
stockholders to fix the time or place of such first meeting of the newly elected
board of directors, or in the event such meeting is not held at the time and
place so fixed by the stockholders, the meeting may be held at such time and
place as shall be specified in a notice given as hereinafter provided for
special meetings of the board of directors, or as shall be specified in a
written waiver signed by all of the directors.
Section 6. Regular meetings of the board of directors may be held
without notice at such time and at such place as shall from time to time as
determined by the board.
Section 7. Special meetings of the board may be called by the
president on two days' notice to each director, either personally or by mail or
by telegram; special meetings shall be called by the president or secretary in
like manner and on like notice on the written request of two directors unless
the board
-7-
<PAGE>
consists of only one director; in which case special meetings shall be called by
the president or secretary in like manner and on like notice on the written
request of the sole director.
Section 8. At all meetings of the board a majority of the board of
directors shall constitute a quorum for the transaction of business and the act
of a majority of the directors present at any meeting at which there is a quorum
shall be the act of the board of directors, except as may be otherwise
specifically provided by statute or by the certificate of incorporation. If a
quorum shall not be present at any meeting of the board of directors the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
Section 9. Unless otherwise restricted by the certificate of
incorporation or these by-laws, any action required or permitted to be taken at
any meeting of the board of directors or of any committee thereof may be taken
without a meeting, if all members of the board or committee, as the case may be,
consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the board or committee.
Section 10. Unless otherwise restricted by the certificate of
incorporation or these by-laws, members of the board of directors, or any
committee designated by the board of directors, may participate in a meeting of
the board of directors, or any committee, by means of conference telephone or
similar
-8-
<PAGE>
communications equipment by means of which all persons participating in the
meeting can hear each other, and such participation in a meeting shall
constitute presence in person at the meeting.
COMMITTEES OF DIRECTORS
Section 11. The board of directors may, by resolution passed by a
majority of the whole board, designate one or more committees, each committee to
consist of one or more of the directors of the corporation. The board may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee.
In the absence or disqualification of a member of a committee, the
member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the board of directors to act at the meeting in the place of
any such absent or disqualified member.
Any such committee, to the extent provided in the resolution of the
board of directors, shall have and may exercise all the powers and authority of
the board of directors in the management of the business and affairs of the
corporation, and may authorize the seal of the corporation to be affixed to all
papers which may require it; but no such committee shall have the power or
authority in reference to amending the certificate of incorporation, adopting an
agreement of merger or consolidation, recommending to the stockholders the sale,
lease or exchange of all or substantially
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all of the corporation's property and assets, recommending to the stockholders a
dissolution of the corporation or a revocation of a dissolution, or amending the
by-laws of the corporation; and, unless the resolution or the certificate of
incorporation expressly so provide, no such committee shall have the power or
authority to declare a dividend or to authorize the issuance of stock. Such
committee or committees shall have such name or names as may be determined from
time to time by resolution adopted by the board of directors.
Section 12. Each committee shall keep regular minutes of its meetings
and report the same to the board of directors when required.
COMPENSATION OF DIRECTORS\
Section 13. Unless otherwise restricted by the certificate of
incorporation or these by-laws, the board of directors shall have the authority
to fix the compensation of directors. The directors may be paid their expenses,
if any, of attendance at each meeting of the board of directors and may be paid
a fixed sum for attendance at each meeting of the board of directors or a stated
salary as director. No such payment shall preclude any director from serving
the corporation in any other capacity and receiving compensation therefor.
Members of special or standing committees may be allowed like compensation for
attending committee meetings.
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REMOVAL OF DIRECTORS
Section 14. Unless otherwise restricted by the certificate of
incorporation or by law, any director or the entire board of directors may be
removed, with or without cause, by the holders of a majority of shares entitled
to vote at an election of directors.
ARTICLE IV
NOTICES
Section 1. Whenever, under the provisions of the statutes or of the
certificate of incorporation or of these by-laws, notice is required to be given
to any director or stockholder, it shall not be construed to mean personal
notice, but such notice may be given in writing, by mail, addressed to such
director or stockholder, at his address as it appears on the records of the
corporation, with postage thereon prepaid, and such notice shall be deemed to be
given at the time when the same shall be deposited in the United States mail.
Notice to directors may also be given by telegram.
Section 2. Whenever any notice is required to be given under the
provisions of the statutes or of the certificate of incorporation or of these
by-laws, a waiver thereof in writing, signed by the person or persons entitled
to said notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
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ARTICLE V
OFFICERS
Section 1. The officers of the corporation shall be chosen by the
board of directors and shall be a president, a vice-president, a secretary and a
treasurer. The board of directors may also choose additional vice-presidents,
and one or more assistant secretaries and assistant treasurers. Any number of
offices may be held by the same person, unless the certificate of incorporation
or these by-laws otherwise provide.
Section 2. The board of directors at its first meeting after each
annual meeting of stockholders shall choose a president, one or more vice-
presidents, a secretary and a treasurer.
Section 3. The board of directors may appoint such other officers and
agents as it shall deem necessary who shall hold their offices for such terms
and shall exercise such powers and perform such duties as shall be determined
from time to time by the board.
Section 4. The salaries of all officers and agents of the corporation
shall be fixed by the board of directors.
Section 5. The officers of the corporation shall hold office until
their successors are chosen and qualify. Any officer elected or appointed by
the board of directors may be removed at any time by the affirmative vote of a
majority of the board of directors. Any vacancy occurring in any office of the
corporation shall be filled by the board of directors.
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THE PRESIDENT
Section 6. The president shall be the chief executive officer of the
corporation, shall preside at all meetings of the stockholders and the board of
directors, shall have general and active management of the business of the
corporation and shall see that all orders and resolutions of the board of
directors are carried into effect.
Section 7. He shall execute bonds, mortgages and other contracts
requiring a seal, under the seal of the corporation, except where required or
permitted by law to be otherwise signed and executed and except where the
signing and execution thereof shall be expressly delegated by the board of
directors to some other officer or agent of the corporation.
THE VICE-PRESIDENTS
Section 8. In the absence of the president or in the event of his
inability or refusal to act, the vice-president (or in the event there be more
than one vice-president, the vice-presidents in the order designated by the
directors, or in the absence of any designation, then in the order of their
election) shall perform the duties of the president, and when so acting, shall
have all the powers of and be subject to all the restrictions upon the
president. The vice-presidents shall perform such other duties and have such
other powers as the board of directors may from time to time prescribe.
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THE SECRETARY AND ASSISTANT SECRETARY
Section 9. The secretary shall attend all meetings of the board of
directors and all meetings of the stockholders and record all the proceedings of
the meetings of the corporation and of the board of directors in a book to be
kept for that purpose and shall perform like duties for the standing committees
when required. He shall give, or cause to be given, notice of all meetings of
the stockholders and special meetings of the board of directors, and shall
perform other duties as may be prescribed by the board of directors or
president, under whose supervision he shall be. He shall have custody of the
corporate seal of the corporation and he, or an assistant secretary, shall have
the authority to affix the same to any instrument requiring it and when so
affixed, it may be attested by his signature or by the signature of such
assistant secretary. The board of directors may give general authority to any
other officer to affix the seal of the corporation and to attest the affixing by
his signature.
Section 10. The assistant secretary, or if there be more than one,
the assistant secretaries in the order determined by the board of directors (or
if there be no such determination, then in the order of their election) shall,
in the absence of the secretary or in the event of his inability or refusal to
act, perform the duties and exercise the powers of the secretary and shall
perform such other duties and have such other powers as the board of directors
may from time to time prescribe.
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THE TREASURER AND ASSISTANT TREASURERS
Section 11. The treasurer shall have the custody of the corporate
funds and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation and shall deposit all moneys
and other valuable effects in the name and to the credit of the corporation in
such depositories as may be designated by the board of directors.
Section 12. He shall disburse the funds of the corporation as may be
ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render to the president and the board of directors, at
its regular meetings, or when the board of directors so requires, an account of
all his transactions as treasurer and of the financial condition of the
corporation.
Section 13. If required by the board of directors, he shall give the
corporation a bond (which shall be renewed every six years) in such sum and with
such surety or sureties as shall be satisfactory to the board of directors for
the faithful performance of the duties of his office and for the restoration to
the corporation, in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of whatever
kind in his possession or under his control belonging to the corporation.
Section 14. The assistant treasurer, or if there shall be more than
one, the assistant treasurers in the order determined by the board of directors
(or if there be no such determination, then
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in the order of their election), shall, in the absence of the treasurer or in
the event of his inability or refusal to act, perform the duties and exercise
the powers of the treasurer and shall perform such other duties and have such
other powers as the board of directors may from time to time prescribe.
ARTICLE VI
CERTIFICATE OF STOCK
Section 1. Every holder of stock in the corporation shall be entitled
to have a certificate, signed by, or in the name of the corporation by, the
chairman or vice-chairman of the board of directors, or the president or a vice-
president and the treasurer or an assistant treasurer, or the secretary or an
assistant secretary of the corporation, certifying the number of shares owned by
him in the corporation.
Certificates may be issued for partly paid shares and in such case
upon the face or back of the certificates issued to represent any such partly
paid shares, the total amount of the consideration to be paid therefor, and the
amount paid thereon shall be specified.
Section 2. Any of or all the signatures on the certificate may be
facsimile. In case any officer, transfer or registrar who has signed or whose
facsimile signature has been placed upon a certificate shall have ceased to be
such officer, transfer agent or registrar before such certificate is issued, it
may be issued by the
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corporation with the same effect as if he were such officer, transfer agent or
registrar at the date of issue.
LOST CERTIFICATES
Section 3. The board of directors may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issued by the corporation alleged to have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost, stolen or destroyed. When authorizing such
issue of a new certificate or certificates, the board of directors may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate or certificates, or his
legal representative, to advertise the same in such manner as it shall require
and/or to give the corporation a bond in such sum as it may direct as indemnity
against any claim that may be made against the corporation with respect to the
certificate alleged to have been lost, stolen or destroyed.
TRANSFER OF STOCK
Section 4. Upon surrender to the corporation or the transfer agent of
the corporation of a certificate for shares duly endorsed or accompanied by
proper evidence of succession, assignation or authority to transfer, it shall be
the duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
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FIXING RECORD DATE
Section 5. In order that the corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the board of directors may fix, in advance, a record date,
which shall not be more than sixty nor less than ten days before the date of
such meeting, nor more than sixty days prior to any other action. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting: provided,
however, that the board of directors may fix a new record date for the adjourned
meeting.
REGISTERED STOCKHOLDERS
Section 6. The corporation shall be entitled to recognize the
exclusive right of a person registered on its books as the owner of shares to
receive dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares
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on the part of any other person, whether or not it shall have express or other
notice thereof, except as otherwise provided by the laws of Delaware.
ARTICLE VII
GENERAL PROVISIONS
DIVIDENDS
Section 1. Dividends upon the capital stock of the corporation,
subject to the provisions of the certificate of incorporation, if any, may be
declared by the board of directors at any regular or special meeting, pursuant
to law. Dividends may be paid in cash, in property, or in shares of the capital
stock, subject to the provisions of the certificate or incorporation.
Section 2. Before payment of any dividend, there may be set aside out
of any funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
ANNUAL STATEMENT
Section 3. The board of directors shall present at each annual
meeting, and at any special meeting of the stockholders when
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called for by vote of the stockholders, a full and clear statement of the
business and condition of the corporation.
CHECKS
Section 4. All checks or demands for money and notes of the
corporation shall be signed by such officer or officers or such other person or
persons as the board of directors may from time to time designate.
FISCAL YEARS
Section 5. The fiscal year of the corporation shall be fixed by
resolution of the board of directors.
SEAL
Section 6. The corporate seal shall have inscribed thereon the name
of the corporation, the year of its organization and the words "Corporate Seal,
Delaware". The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
INDEMNIFICATION
Section 7. The corporation shall indemnify its officers, directors,
employees and agents to the extent permitted by the General Corporation Law of
Delaware.
ARTICLE VIII
AMENDMENTS
Section 1. These by-laws may be altered, amended or repealed or new
by-laws may be adopted by the stockholders or by the board of directors, when
such power is conferred upon the board of
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directors by the certificate or incorporation at any regular meeting of the
stockholders or of the board of directors or at any special meeting of the
stockholders or of the board of directors if notice of such alteration,
amendment, repeal or adoption of new by-laws be contained in the notice of such
special meeting. If the power to adopt, amend or repeal by-laws is conferred
upon the board of directors by the certificate of incorporation it shall not
divest or limit the power of the stockholders to adopt, amend or repeal by-laws.
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FIFTH AMENDMENT
---------------
FIFTH AMENDMENT (this "AMENDMENT"), dated as of August 25, 1993 by and
among UNITED ASSET MANAGEMENT CORPORATION (the "COMPANY"), UAM REALTY ADVISORS
INVESTMENT CORPORATION, DEWEY SQUARE INVESTORS CORPORATION, UNITED ASSET
MANAGEMENT HOLDINGS, INC., UNITED ASSET MANAGEMENT TRADEMARK, INC., UAM
INVESTMENT CORPORATION, MORGAN GUARANTY TRUST COMPANY OF NEW YORK ("Morgan"),
THE FIRST NATIONAL BANK OF BOSTON ("BKB"), CREDIT LYONNAIS NEW YORK BRANCH
("Credit Lyonnais New York"), CREDIT LYONNAIS CAYMAN ISLAND BRANCH ("Credit
Lyonnais New York"), CREDIT LYONNAIS CAYMAN ISLAND BRANCH ("Credit Lyonnais
Cayman Island"), MELLON BANK, N.A. ("Mellon"), CHEMICAL BANK ("Chemical"), THE
DAIWA BANK LIMITED ("Daiwa"), BANK HAPOALIM B.M. ("BANK HAPOALIM"), SHAWMUT
BANK, N.A. ("Shawmut"), MARYLAND NATIONAL BANK ("MNB"), BROWN BROTHERS HARRIMAN
& CO. ("BBH"), DEUTSCHE BANK A.G. NEW YORK BRANCH/CAYMAN ISLANDS BRANCH
("Deutsche Bank"; Morgan, BKB, Credit Lyonnais New York, Credit Lyonnais Cayman
Island, Chemical, Mellon, Daiwa, Bank Hapoalim, Shawmut, MNB, BBH and Deutsche
Bank, each, a "Bank", and collectively, the "Banks"), MORGAN, as Agent (the
"Agent"), and BKB, as Collateral Agent (the "Collateral Agent").
R E C I T A L S:
A. The Company, the Existing Banks, the Agent and the Collateral
Agent are parties to the Credit Agreement dated as of May 18, 1992, (as amended
by the First Amendment dated as of October 8, 1992, the Second Amendment dated
as of November 25, 1992, the Third Amendment dated as of December 1, 1992 and
the Fourth Amendment dated as of January 8, 1993, and as supplemented by (i) an
Addendum dated as of June 24, 1992 among Bank Hapoalim, the Company and the
Agent, (ii) an Addendum dated as of June 25, 1992 among Daiwa, the Company and
the Agent, (iii) an Addendum dated as of March 12, 1993 among Deutsche Bank, the
Company, the Agent and the Collateral Agent and (iv) a consent letter, dated
May 19, 1993 among the Company and the Banks, the "CREDIT AGREEMENT").
B. The Company proposes to acquire through its wholly-owned
subsidiary, HF Newco, Inc., an Illinois corporation ("Newco"), all of the issued
and outstanding capital stock of Heitman Financial Ltd., an Illinois corporation
("Heitman"), upon which acquisition Newco will be merged with and into Heitman,
with Heitman as the surviving corporation (all of the foregoing is hereinafter
referred to as the "Heitman Acquisition").
<PAGE>
C. Heitman currently has Indebtedness outstanding to LaSalle
National Bank, Continental Bank N.A. and General Electric Capital Corporation,
in the aggregate principal amount of $21,940,000, which Indebtedness will remain
outstanding following the Heitman Acquisition.
D. The Company has requested that the Credit Agreement be amended
(i) to permit such Indebtedness and certain encumbrances securing such
Indebtedness, (ii) to provide for the pledge by Heitman of the capital stock of
certain of its Subsidiaries to the Collateral Agent, (iii) to exempt certain
Subsidiaries of Heitman from the requirement that the capital stock of such
Subsidiaries be pledged to the Collateral Agent, and (iv) to effect certain
other amendments to the Credit Agreement, all as more particularly set forth
herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as
follows:
ARTICLE I.
AMENDMENTS
Section 1.1. DEFINITIONS INCORPORATED. Unless the context requires
otherwise, all capitalized terms used in this Amendment without definition shall
have the meanings provided therefor in the Credit Agreement as herein amended.
Section 1.2. AMENDMENTS.
(a) Section 1.1 of the Credit Agreement is hereby amended to add
the following definitions thereto in their proper alphabetical order:
"HEITMAN". Heitman Financial Ltd., an Illinois corporation and a
Subsidiary of the Company.
"HEITMAN PERMITTED INDEBTEDNESS". The Indebtedness of Heitman and its
Subsidiaries set forth on Exhibit V hereto.
"HEITMAN GUARANTY". The Heitman Guaranty, dated as of August 25,
1993, made by Heitman in favor of the Beneficiaries named therein, as
the same may be amended, supplemented or otherwise modified from time
to time.
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"HEITMAN PLEDGE AGREEMENT". The Heitman Pledge Agreement, dated as of
August 25, 1993, made by Heitman in favor of the Collateral Agent, for
the ratable benefit of the Banks, as the same may be amended,
supplemented or otherwise modified from time to time.
(b) The definition of "Collateral" contained in Section 1.1 of
the Credit Agreement is hereby amended to insert the phrase", the Heitman Pledge
Agreement" immediately following the phrase "the DSI Pledge Agreement".
(c) The definition of "Guaranty Subsidiaries" contained in
Section 1.1 of the Credit Agreement is hereby amended to insert the phrase",
Heitman" immediately following the term "DSI".
(d) The definition of "Loan Documents" contained in Section 1.1
of the Credit Agreement is hereby amended to insert the phrase", the Heitman
Guaranty" immediately following the phrase "the UAM Realty Advisors Guaranty".
(e) The definition of "Permitted Businesses" contained in
Section 1.1 of the Credit Agreement is hereby amended to read in its entirety as
follows:
"PERMITTED BUSINESSES. The businesses of managing securities, timber
or real estate portfolios and related activi- ties, PROVIDED, HOWEVER,
that the management of timber portfolios and real estate portfolios,
respectively, shall constitute Permitted Businesses only to the extent
that the aggregate of the Relevant Cash Flows for all Subsidiaries
engaged in whole or in part in the business of managing timber
portfolios ("Timber Subsidiaries") or for all Subsidiaries engaged in
whole or in part in the business of managing real estate portfolios
("Real Estate Subsidiaries"), as the case may be, as of the date (the
"Determination Date") of the acquisition of any Timber Subsidiary or
Real Estate Subsidiary, as the case may be, does not exceed six
percent (6%) or fifteen percent (15%), respectively, of the
Consolidated Cash Flow of the Company and its Subsidiaries for the
four complete consecutive fiscal quarters of
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the Company immediately preceding the Determination Date.
For any Timber Subsidiary or Real Estate Subsidiary, the
"Relevant Cash Flow" shall mean the greater of (i) the cash
flow of such Subsidiary for the four complete con- secutive
fiscal quarters of such Subsidiary immediately preceding the
acquisition (the "Acquisition") of such Subsidiary by the
Company or a Subsidi- ary of the Company, and (ii) the pro-
jected cash flow (calculated as the "Base UAM Distribution"
as defined in the Revenue Sharing Agreement relating to such
Subsidiary) of such Subsidiary for the four complete
consecutive fiscal quarters of the Company immediately
following the Acquisition, as determined by the Company at
the time of the Acquisition and set forth in projections
furnished to each Bank at lease ten (10) days prior to the
consummation of such Acquisition."
(f) The definition of the term "Pledged Stock" contained in
Section 1.1 of the Credit Agreement is hereby amended (i) to add the phrase ",
Heitman" immediately following the term "UAM Holdings" and (ii) to add the
phrase ", the Heitman Pledge Agreement" immediately following the phrase "the
Subsidiaries Pledge Agreement".
(g) The definition of the term "Security Documents" is hereby
amended to add the phrase ", the Heitman Pledge Agreement" immediately following
the phrase "the DSI Pledge Agreement".
(h) Subsection (a) of Section 3.16 of the Credit Agreement is
hereby amended to (i) add the phrase ", the Heitman Pledge Agreement"
immediately following the phase "the Subsidiaries Pledge Agreement" and (ii) to
add the phrase ", Heitman" immediately following the term "UAM Holdings".
(i) Section 5.7 of the Credit Agreement is hereby amended to add
the phrase "excluding the Heitman Permitted Indebtedness and" at the beginning
of the parenthetical contained in such Section.
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(j) Section 5.8 of the Credit Agreement is hereby amended (i) to
add the parenthetical "(excluding payments of principal and interest in respect
of the Heitman Permitted Indebtedness)" immediately following the term
"Consolidated Debt Service" and (ii) to add the parenthetical "(excluding
interest expense in respect of the Heitman Permitted Indebtedness)" immediately
following the term "Interest Expense".
(k) Section 5.10 of the Credit Agreement is hereby amended to
add the parenthetical "(excluding liabilities arising in respect of the Heitman
Permitted Indebtedness)" immediately following the term "Borrowed Money".
(l) Section 5.12 of the Credit Agreement is hereby amended (i)
to delete the word "and" appearing at the end of subsection (g) of such Section,
(ii) to redesignate subsection (h) of such Section as subsection (j), (iii) to
delete the reference to "(g)" in such redesignated subjection (j) and replace it
with a reference to "(i)", and (iv) to add the following as new subsections (h)
and (i) to such Section:
"(h) the Heitman Permitted Indebtedness;
(i) Indebtedness of the Company, in an amount not to exceed
$3,500,000, to certain guarantors of Indebtedness of Heitman to LaSalle
National Bank, pursuant to an agreement made by the Company in favor of
such guarantors to reimburse such guarantors in an amount not to exceed
$3,500,000 upon the occurrence of a payment default under the Indebtedness
of Heitman to LaSalle National Bank, the Company's obligation to make such
reimbursement being conditioned upon the prior payment in full of all
amounts owing by such guarantors of such Indebtedness; and"
(m) Section 5.13 of the Credit Agreement is hereby amended to
delete the amount "$8,000,000" contained therein and to replace it with the
amount "$14,000,000".
(n) Section 5.14 of the Credit Agreement is hereby amended (i)
to delete the word "and" appearing at the end of Subsection (h) of such Section,
(ii) to delete the period at the end of Subsection (i) of such Section and
replace it with a semicolon and the word "and", and (iii) to add the following
new Subsection (j) to such Section:
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<PAGE>
"(j) Encumbrances set forth on Exhibit V hereto securing the
Heitman Permitted Indebtedness."
(o) Subsection (c) of Section 5.22 of the Credit Agreement
is hereby amended to delete the first two sentences of such Subsection and to
replace such deleted sentences with the following:
"Notwithstanding anything to the contrary contained in Subsection
(b) above, provided no Default or Event of Default has occurred or
shall be continuing, (i) the Company shall not be obligated to cause
the pledge of the capital stock of any Subsidiary identified as a
"Heitman Exempted Subsidiary" on Exhibit P and (ii) subject to the
last sentence of this Subsection (c), the Company shall not be
obligated to cause the pledge of the capital stock of any Subsidiary
acquired by a Subsidiary of the Company if the consolidated revenues
(calculated in accordance with GAAP) of the acquired Subsidiary and
its Subsidiaries for the four (4) consecutive full fiscal quarters
immediately prior to the acquisition of such Subsidiaries shall not
have exceeded $500,000 in the aggregate. For purposes of this
Subsection (c), any such Subsidiary the capital stock of which has not
been pledged as allowed by this provision (including, without
limitation, the Subsidiaries identified on Exhibit P as "Exempted
Subsidiaries" but excluding the Subsidiaries identified on Exhibit P
as "Heitman Exempted Subsidiaries") shall be referred to as an
"Exempted Subsidiary"."
(p) Subsection (h) of Section 6.1 of the Credit Agreement is
hereby amended to add the phrase "(other than the Heitman Permitted
Indebtedness)" immediately following the word "Indebtedness" where it first
appears in such subsection.
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(q) Subsection (k) of Section 6.1 of the Credit Agreement is
hereby amended to read in its entirety as follows:
"(k) judgments or orders (other than judgements or orders against
Heitman or any of its Subsidiaries arising out of the Heitman
Permitted Indebtedness) for the payment of money shall be entered
against the Company or any of its Subsidiaries by any court, or a
warrant of attachment or execution or similar process (other than a
warrant of attachment or execution or similar process issued against
the property of Heitman or any of its Subsidiaries arising out of the
Heitman Permitted Indebtedness) shall be issued or levied against
property of the Company or such Subsidiary which in the aggregate
exceeds $300,000 in value, and any such judgment, order, warrant or
process shall continue undischarged, unbonded or unstayed for thirty
(30) consecutive days; or"
(r) Exhibit P to the Credit Agreement is hereby amended to read
in its entirety as set forth on Exhibit A hereto.
(s) A new Exhibit V is hereby added to the Credit Agreement in
the form of Exhibit B hereto.
Section 1.3. CONDITIONS TO EFFECTIVENESS.
The amendments set forth in this Amendment shall not be effective
until each of the following conditions precedent shall have been satisfied:
(a) the Agent shall have received counterparts of this
Amendment, duly executed on behalf of each of the parties hereto;
(b) the Agent shall have received counterparts of each of the
Heitman Guaranty and the Heitman Pledge Agreement, in substantially
the forms of Exhibit C and Exhibit D, respectively, hereto, duly
executed on behalf of Heitman;
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(c) the Agent shall have received certified copies of the
resolutions of the Board of Directors of Heitman approving the Heitman
Guaranty and the Heitman Pledge Agreement, and of all other documents,
if any, evidencing corporate action and/or governmental authorization
or approval with respect to the Heitman Guaranty or the Heitman Pledge
Agreement;
(d) the Agent shall have received a certificate of the Secretary
or an Assistant Secretary of Heitman certifying the name, title and
true signature of each officer of Heitman authorized to execute the
Heitman Guaranty and the Heitman Pledge Agreement;
(e) the Agent shall have received (i) a copy of the Certificate
of Incorporation of Heitman, as amended through the date hereof,
certified by the Secretary of State of the State of Illinois; (ii) a
long-form good standing certificate for Heitman from the Secretary of
State of the State of Illinois; (iii) long-form good standing
certificates from the Secretaries of State of the states, or other
comparable officers of each jurisdiction, in which Heitman is required
to qualify to do business; (iv) a tax status report for Heitman from
the Secretary of State or other comparable officer of the State of
Illinois (where obtainable); (v) tax status reports (where obtainable)
of the Secretary of State of the states, or other comparable officers
of each jurisdiction, in which Heitman is required to qualify to do
business; and (vi) such additional supporting documents as the Agent
or any Bank may reasonably request; PROVIDED, HOWEVER, that if any
such good standing certificates or tax status reports are not readily
available, then a telegram from the appropriate Secretary of State or
comparable officer may be substituted therefor;
(f) the Agent shall have received the opinion of Hill & Barlow,
counsel to the Company and its Subsidiaries, in the form and substance
satisfactory to the Agent;
-8-
<PAGE>
(g) the Agent shall have received a certificate dated as of
the date hereof of a senior officer of the Company to the effect
that (i) there exists no Default or Event of Default and (ii) all
of the representations and warranties of the Company contained in
this Amendment, the Credit Agreement, as herein amended, and the
agreements executed in connection with the Credit Agreement by
the Company are true and correct in all material respects as of
the date hereof with the same force and effect as if made on and
as of such date, except to the extent that such representations
and warranties expressly relate to an earlier date or as to
matters which have changed in accordance with or as permitted
under the Credit Agreement;
(h) All corporate and legal proceedings and all agreements
and instruments in connection with the transactions contemplated
by this Amendment shall be satisfactory in form, scope, and
substance to the Agent and its counsel, and the Banks and their
respective counsel shall have received all information and copies
of all proceedings which each may reasonably have requested in
connection therewith, such documents where appropriate to be
certified by proper government authorities;
(i) the Collateral Agent shall have received the
certificates evidencing all of the issued and outstanding capital
stock of Heitman and each of the Subsidiaries of Heitman listed
on Schedule A to the Heitman Pledge Agreement, duly endorsed in
blank or accompanied by undated stock powers duly executed in
blank; and
(j) the Agent shall have received such further agreements,
instruments, documents and certificates as the Agent shall have
reasonably requested.
-9-
<PAGE>
ARTICLE II.
MISCELLANEOUS
Section 2.1. FURTHER ASSURANCES. Each of the parties hereto hereby
agrees to do such further acts and things and to execute, deliver and
acknowledge such additional agreements, powers and instruments as any other
party hereto may reasonably require to carry into effect the purposes of this
Amendment.
Section 2.2. COSTS, EXPENSES AND TAXES. The provisions of
Section 8.2 of the Credit Agreement are hereby incorporated by reference as if
fully set forth herein, MUTATIS MUTANDIS, and shall apply to this Amendment.
Section 2.3. CERTAIN REPRESENTATIONS AND WARRANTIES BY THE COMPANY.
The Company and each of the Guaranty Subsidiaries (where applicable) represents
and warrants that (i) it has the right, power and capacity and has been duly
authorized and empowered by all required corporate and shareholder action to
enter into, execute, deliver and perform this Amendment; (ii) this Amendment
constitutes its legal, valid and binding obligation, enforceable against it in
accordance with its terms, except as enforcement thereof may be subject to the
effect of any applicable bankruptcy, insolvency, reorganization, moratorium or
similar law affecting creditors' rights generally and general principles of
equity (regardless of whether such enforcement is sought in a proceeding in
equity or at law); (iii) the consummation of the Heitman Acquisition and related
transactions, and its execution, delivery and performance of this Amendment, do
not and will not violate any provision of its certificate of incorporation or
by-laws or any contractual provision to which it is a party or to which it or
any of its property is subject; (iv) all representations and warranties
contained in the Credit Agreement and the other Loan Documents are true and
correct in all material respects with the same effect as though such
representations and warranties had been made on and as of the date hereof,
except to the extent that such representations and warranties expressly relate
to an earlier date or as to any matters which have changed in accordance with or
as permitted under the Credit Agreement; and (v) the Heitman Acquisition and the
transactions relating thereto shall not constitute an event of default or an
event or condition which with notice or lapse of time, or both, would constitute
an event of default under any agreement for the extension of credit to which
Heitman is a party.
-10-
<PAGE>
Section 2.4. REPRESENTATION BY ALL PARTIES HERETO. Each of the
parties hereto represents and warrants that its execution, delivery and
performance of this Amendment will not violate any provisions of its certificate
of incorporation or by-laws or any contractual provision to which it is a party
or to which or its property is subject.
Section 2.5. RATIFICATION, CONFIRMATION AND NO DEFAULT. The Company
and each Guaranty Subsidiary hereby ratifies and confirms the Credit Agreement
as herein amended and all agreements, instruments and documents related thereto
to which it is now a party and agrees that all liens, security interests,
guaranties and other rights granted thereby to the Banks or the Agents shall
apply to all indebtedness and other obligations outstanding under the Credit
Agreement (as amended by this Amendment) and the Company hereby represents and
warrants to the Agents and the Bans that no Default or Event of Default exists
as of the date hereof under the Credit Agreement (as amended by this Amendment)
or would exist after giving effect to the transactions contemplated by this
Amendment. It is understood and agreed that the amendments set forth in this
Amendment are limited to the matters expressly set forth herein and shall not be
deemed to (a) be a consent under, or a waiver or modification of, any other
terms, provisions or conditions of the Credit Agreement or any agreement,
instrument or document related thereto, (b) be a consent to any transaction
(except to the extent expressly set forth herein), or (c) prejudice any rights
which the Banks or the Agents, or any of them, may now or in the future have in
connection with the Credit Agreement as herein amended or any agreement,
instrument or document related thereto.
Section 2.6. COUNTERPARTS. This Amendment may be executed in one or
more counterparts, each of which, when so executed and delivered, shall be
deemed to be an original and all of which counterparts, taken together, shall
constitute but one and the same Amendment with the same force and effect as if
the signatures of all of the parties were on a single counterpart, and it shall
not be necessary in making proof of this Amendment to produce more than one such
counterpart.
Section 2.7. HEADINGS. Headings used in this Amendment are for
convenience of reference only and shall not affect the construction of this
Amendment.
Section 2.8. INTEGRATION. This Amendment constitutes the entire
agreement among the parties hereto with respect to the subject matters hereof.
-11-
<PAGE>
Section 2.9. GOVERNING LAW. This Amendment shall be governed by, and
construed and enforced in accordance with, the internal laws of the State of New
York (without reference to conflict of laws principles).
Section 2.10. BINDING EFFECT. This Amendment shall be binding upon
and inure to the benefit of and be enforceable by the parties hereto and their
respective successors and assigns; PROVIDED that neither the Company nor any
Guaranty Subsidiary may assign or transfer any of its rights, interests or
obligations hereunder without the prior written consent of the Banks.
Section 2.11. AMENDMENT; WAIVER. No delay on the part of the Banks
or the Agents in exercising any of their respective rights, remedies, powers and
privileges hereunder or partial or single exercise thereof, shall constitute a
waiver thereof. None of the terms and conditions of this Amendment may be
changed, waived, modified or varied in any manner whatsoever, except in
accordance with Section 8.6 of the Credit Agreement. Upon the effectiveness of
this Amendment, each reference in any Loan Document to the Credit Agreement
shall be a reference to the Credit Agreement as amended by this Amendment.
[BALANCE OF PAGE INTENTIONALLY LEFT BLANK]
-12-
<PAGE>
IN WITNESS WHEREOF, this Fifth Amendment has been duly executed
and delivered as of the date first above written.
UNITED ASSET MANAGEMENT CORPORATION
By: /s/ William H. Park
-----------------------------
Title: Senior Vice President
UAM REALTY ADVISORS INVESTMENT
CORPORATION
By: /s/ William H. Park
-----------------------------
Title: Treasurer
DEWEY SQUARE INVESTORS CORPORATION
By: /s/ Peter M. Whitman, Jr.
-----------------------------
Title: President
UNITED ASSET MANAGEMENT HOLDINGS,
INC.
By: /s/ William H. Park
-----------------------------
Title: President
UNITED ASSET MANAGEMENT TRADEMARK,
INC.
By: /s/ William H. Park
-----------------------------
Title: President
UAM INVESTMENT CORPORATION
By: /s/ William H. Park
-----------------------------
Title: President
-13-
<PAGE>
MORGAN GUARANTY TRUST COMPANY OF
NEW YORK, as a Bank and as Agent
By: /s/ Anne H. Kelly
-----------------------------
Title: Vice President
THE FIRST NATIONAL BANK OF BOSTON,
as a Bank
By: /s/ Mitchell B. Feldman
-----------------------------
Title: Director
THE FIRST NATIONAL BANK OF BOSTON,
as Collateral Agent
By: /s/ K. Caldwell
-----------------------------
Title: Senior Account
Administrator
CREDIT LYONNAIS NEW YORK BRANCH
By: /s/Alain Papiasse
-----------------------------
Title: Senior Vice President
Deputy General Manager
CREDIT LYONNAIS CAYMAN ISLAND
BRANCH
By: /s/Alain Papiasse
-----------------------------
Title: Authorized Signature
MELLON BANK, N.A.
By: /s/Susan Underwood
-----------------------------
Title: Officer
CHEMICAL BANK
By: /s/Richard H. Klein
-----------------------------
Title: Managing Director
-14-
<PAGE>
THE DAIWA BANK, LIMITED
By: /s/Daniel G. Eastman
-----------------------------
Title: Vice President and
Manager
By: /s/Stephen Sullivan
-----------------------------
Title: E.O.
BANK HAPOALIM B.M.
By: /s/Martin B. Goodstein
-----------------------------
Title: Vice President
By: /s/Mitchell Jones
-----------------------------
Title: A.V.P.
SHAWMUT BANK, N.A.
By: /s/Eileen P. Murphy
-----------------------------
Title: Vice President
MARYLAND NATIONAL BANK
By: /s/ Christopher A. Pope
-----------------------------
Title: Vice President
BROWN BROTHERS HARRIMAN & CO.
By: /s/Louise A. Coughlan
-----------------------------
Title: Deputy Manager
DEUTSCHE BANK A.G. NEW YORK BRANCH/
CAYMAN ISLANDS BRANCH
By: /s/Kunduck Moon
-----------------------------
Title: Director
By: /s/George-Ann Tobin-Drew
-----------------------------
Title: Managing Director
-15-
<PAGE>
EXHIBIT A to
FIFTH AMENDMENT
UNITED ASSET MANAGEMENT CORPORATION
SUBSIDIARIES
<TABLE>
<CAPTION>
TOTAL CAPITAL
STOCK PERCENTAGE
ISSUED AND OF CAPITAL
NAME OUTSTANDING STOCK OWNED OWNER
- -------------------------------------------------- ------------- ----------- --------------------------------
<S> <C> <C> <C>
Alpha Global Fixed Income Managers, Inc. (DE) 100 100% Company
Analytic Investment Management, Inc. (CA) 3,400 100% Company
Barrow, Hanley, Mewhinney & Strauss, Inc. (NV) 100 100% Company
Cambiar Investors, Inc. (CO) 100 100% Company
The Campbell Group, Inc. (DE) 100 100% Company
**/***Timber Pacific Properties, Inc. (OR) 100 100% The Campbell Group, Inc.
Chicago Asset Management Company (DE) 100 100% Company
Cooke & Bieler, Inc. (PA) 5,462 100% Company
**/***Baxter & Stewart, Inc. (PA) 100 100% Cooke & Bieler, Inc.
C. S. McKee & Company, Incorporated (PA) 21,100 Class A 100% Company
7,430 Class B
Fiduciary Management Associates, Inc. (DE) 900 100% Company
Hamilton, Allen & Associates, Inc. (DE) 100 100% Company
HIMCO, INC., d/b/a 400 100% Company
Hanson Investment Management Company (CA)
</TABLE>
<PAGE>
UNITED ASSET MANAGEMENT CORPORATION
SUBSIDIARIES
<TABLE>
<CAPTION>
TOTAL CAPITAL
STOCK PERCENTAGE
ISSUED AND OF CAPITAL
NAME OUTSTANDING STOCK OWNED OWNER
- -------------------------------------------------- ------------- ----------- --------------------------------
<S> <C> <C> <C>
Investment Counselors of Maryland, Inc. (MD) 7,500 100% Company
**Ki Pacific Asset Management, Inc. (DE) 100 100% Company
L&B Realty Advisors, Inc. (DE) 3,910 95% Company (3,710)
**/***L&B Institutional Property Managers, 1,000 100% L&B Realty Advisors, Inc.
Inc. (DE)
**/***L&B Institutional Property Managers 1,000 100% L&B Institutional Property
of Arizona, Inc. (AZ) Managers, Inc.
**L&B Institutional Property Managers 1,000 100% L&B Institutional Property
of California, Inc. (CA) Managers, Inc.
**/***L&B Institutional Property Managers 1,000 100% L&B Institutional Property
0f Missouri, Inc. (MO) Managers, Inc.
**/***L&B Institutional Property Managers 1,000 100% L&B Institutional Property
of North Carolina, Inc. (NC) Managers, Inc.
**/*** L&B Realty Acquisitions, Inc. (DE) 1,000 100% L&B Institutional Property
Managers, Inc.
Nelson, Benson & Zellmer, Inc. (CO) 100 100% Company
**Investment Trust Company (CO) 25,000 100% Nelson, Benson & Zellmer, Inc.
Newbold's Asset Management, Inc. (PA) 100 100% Company
**Newco Acquisition Corp. (DE) 100 100% Company
(formerly named Regis Retirement
Plan Services, Inc.)
Northern Capital Management Incorporated (WI) 100 100% Company
</TABLE>
<PAGE>
UNITED ASSET MANAGEMENT CORPORATION
SUBSIDIARIES
<TABLE>
<CAPTION>
TOTAL CAPITAL
STOCK PERCENTAGE
ISSUED AND OF CAPITAL
NAME OUTSTANDING STOCK OWNED OWNER
- -------------------------------------------------- ------------- ----------- --------------------------------
<S> <C> <C> <C>
NWQ Investment Management Company, Inc. (MA) 200,000 100% United Asset Management
Holdings, Inc.
Olympic Capital Management, Inc. (WA) 100 100% Company
***Fleckenstein Capital, Inc. (WA) 100 100% Olympic Capital Management, Inc.
*/**Regis Retirement Plan Services, Inc. (MA) 7,000 100% Company
(formerly named RFI Distributors, Inc.)
Rice, Hall, James & Associates (CA) 100 100% Company
The Rothschild Company (MD) 638.6316 100% Company
Sirach Capital Management, Inc. (WA) 100 100% Company
*Spectrum Asset Management, Inc. (CT) 100 100% Company
Sterling Capital Management Company (NC) 7,757 100% Company
*/**Sterling Capital Distributors, Inc. (NC) 5,000 100% Sterling Capital Management
Company
Thompson, Siegel & Walmsley, Inc. (VA) 2,898 100% Company
**UAM Investment Corporation (DE) 100 100% Company
**United Asset Management Holdings, Inc. (DE) 100 100% Company
Acadian Asset Management, Inc. (MA) 100 100% United Asset Managenent
Holdings, Inc.
Dewey Square Investors Corporation (DE) 100 100% United Asset Management
Holdings, Inc.
</TABLE>
<PAGE>
UNITED ASSET MANAGEMENT CORPORATION
SUBSIDIARIES
<TABLE>
<CAPTION>
TOTAL CAPITAL
STOCK PERCENTAGE
ISSUED AND OF CAPITAL
NAME OUTSTANDING STOCK OWNED OWNER
- -------------------------------------------------- ----------- ----------- --------------------------------
<S> <C> <C>
HT Investors, Inc. (DE) 100 100% Dewey Square Investors
Corporation
First Pacific Advisors, Inc. (MA) 200,000 100% United Asset Management
Holdings, Inc.
*/**FPA Fund Distributors, Inc. (CA) 100 100% First Pacific Advisors, Inc.
***
Hagler, Mastrovita & Hewitt, Inc. (DE) 50,000 100% United Asset Management
Holdings, Inc.
Hellman, Jordan Management Co., Inc. (DE) 449.5 100% United Asset Management
Holdings, Inc.
Pell, Rudman & Co., Inc. (DE) 100 100% United Asset Management
Holdings, Inc.
**/***Atlantic Trust Company,
National Association (DC) 3 100% Pell, Rudman & Co., Inc.
**Boston Harbor Trust Company,
National Association (MA) 4,670 100% Pell, Rudman & Co., Inc.
Tom Johnson Investment Management, Inc. (MA) 100 100% United Asset Management
Holdings, Inc.
**UAM Realty Advisors Investment Corporation 100 100% United Asset Management
(DE) Holdings, Inc.
**United Asset Management Trademark, Inc. (DE) 100 100% Company
</TABLE>
<PAGE>
UNITED ASSET MANAGEMENT CORPORATION
SUBSIDIARIES
<TABLE>
<CAPTION>
TOTAL CAPITAL
STOCK PERCENTAGE
ISSUED AND OF CAPITAL
NAME OUTSTANDING STOCK OWNED OWNER
- -------------------------------------------------- ----------- ----------- --------------------------------
<S> <C> <C> <C>
**Heitman Financial Ltd. (IL) 100 100% Company
**Heitman Financial Services Ltd. (IL) 1,000 100% Heitman Financial Ltd.
+/**Heitman Mortgage Corporation (HI) 10 100% Heitman Financial Services Ltd.
+/**HMI Management Company (IL) 9,400 100% Heitman Financial Services Ltd.
+/**Philadelphian Realty Corporation (DE) 1,000 100% Heitman Financial Services Ltd.
+/**Heitman Holdings, Ltd. (DE) 1,000 100% Heitman Financial Services Ltd.
+/**Heitman Equities Corporation (DE) 1,000 100% Heitman Financial Services Ltd.
+/*/**Heitman Securities Corporation (DE) 1,000 100% Heitman Financial Services Ltd.
+/**HRC, Inc. (NV) 1,000 100% Heitman Financial Services Ltd.
+/**Heitman Realty Corporation (IL) 1,000 100% Heitman Financial Services Ltd.
+/**Heitman Snowmass Corporation (IL) 100 100% Heitman Financial Services Ltd.
+/**HRC III, Inc. (NV) 100 100% Heitman Financial Services Ltd.
+/**H.E. One, Inc. (DE) 3,385 100% Heitman Financial Services Ltd.
+/**HRC IV, Inc. (NV) 100 100% Heitman Financial Services Ltd.
+/**HRC V, Inc. (NV) 1,000 100% Heitman Financial Services Ltd.
+/**HRC VI, Inc. (DE) 100 100% Heitman Financial Services Ltd.
</TABLE>
<PAGE>
UNITED ASSET MANAGEMENT CORPORATION
SUBSIDIARIES
<TABLE>
<CAPTION>
TOTAL CAPITAL
STOCK PERCENTAGE
ISSUED AND OF CAPITAL
NAME OUTSTANDING STOCK OWNED OWNER
- -------------------------------------------------- ----------- ----------- --------------------------------
<S> <C> <C> <C>
+/**Castle Loan Corporation (IL) 1,000 100% Heitman Financial Services Ltd.
+/**HRC - LLC, Inc. (WY) 100 100% Heitman Financial Services Ltd.
+/**Heitman Financial U.K. Ltd. (IL) 1,000 100% Heitman Financial Services Ltd.
Heitman Advisory Corporation (IL) 1,000 100% Heitman Financial Ltd.
+/**Lender Services of Iowa Ltd. (IA) 1,000 100% Heitman Advisory Corporation
**Heitman Properties Ltd. (IL) 39,763 100% Heitman Financial Ltd.
+/**Castle Management Inc. (RI) 1,000 100% Heitman Properties Ltd.
+/**Heitman Properties of Rhode Island Ltd.
(formerly named Castle Leasing Inc.) (RI) 1,000 100% Heitman Properties Ltd.
+/**Centre Properties Ltd. (IL) 1,000 100% Heitman Properties Ltd.
+/**Heitman Florida Management Inc. (DE) 1,000 100% Heitman Properties Ltd.
+/**Heitman Pennsylvania Management Inc. (DE) 1,000 100% Heitman Properties Ltd.
+/**HMC Insurance Agency, Inc. (IL) 1,000 100% Heitman Properties Ltd.
+/**Heitman Minnesota Management Inc. (DE) 1,000 100% Heitman Properties Ltd.
+/**Heitman Kentucky Management Inc. (DE) 1,000 100% Heitman Properties Ltd.
+/**Heitman Virginia Management Inc. (WI) 1,000 100% Heitman Properties Ltd.
</TABLE>
<PAGE>
UNITED ASSET MANAGEMENT CORPORATION
SUBSIDIARIES
<TABLE>
<CAPTION>
TOTAL CAPITAL
STOCK PERCENTAGE
ISSUED AND OF CAPITAL
NAME OUTSTANDING STOCK OWNED OWNER
- -------------------------------------------------- ----------- ----------- --------------------------------
<S> <C> <C> <C>
+/**Heitman Ohio Management Inc. (DE) 1,000 100% Heitman Properties Ltd.
+/**Heitman Nevada Management Inc. (DE) 1,000 100% Heitman Properties Ltd.
+/**Heitman Wisconsin Management, Inc. 1,000 100% Heitman Properties Ltd.
+/**Heitman Properties of Iowa Ltd. (DE) 1,000 100% Heitman Properties Ltd.
+/**Heitman D.C. Properties Ltd. (DE) 1,000 100% Heitman Properties Ltd.
+/**Heitman Properties of Louisiana Ltd. (DE) 1,000 100% Heitman Properties Ltd.
+/**Heitman Properties of Michigan Ltd. (MI) 100 100% Heitman Properties Ltd.
+/**Heitman Properties of Missouri Ltd. (MO) 1,000 100% Heitman Properties Ltd.
+/**Heitman Properties of Arizona Ltd. (AZ) 1,000 100% Heitman Properties Ltd.
+/**Heitman Properties of Indiana Ltd. (IN) 1,000 100% Heitman Properties Ltd.
+/**Heitman Corporate Plaza, Inc. (KY) 100 100% Heitman Properties Ltd.
+/**Heitman Mayfair Corporation (NV) 2,500 100% Heitman Properties Ltd.
+/**Heitman Properties of Georgia Ltd. (GA) 1,000 100% Heitman Properties Ltd.
+/**Heitman Properties of Mississippi Ltd. (MS) 1,000 100% Heitman Properties Ltd.
</TABLE>
<PAGE>
UNITED ASSET MANAGEMENT CORPORATION
SUBSIDIARIES
<TABLE>
<CAPTION>
TOTAL CAPITAL
STOCK PERCENTAGE
ISSUED AND OF CAPITAL
NAME OUTSTANDING STOCK OWNED OWNER
- -------------------------------------------------- ----------- ----------- --------------------------------
<S> <C> <C> <C>
+/**Heitman Properties of New Mexico Ltd. (NM) 1,000 100% Heitman Properties Ltd.
+/**Heitman Properties of New York Ltd. (NY) 1,000 100% Heitman Properties Ltd.
+/**Heitman Properties of North Carolina 1,000 100% Heitman Properties Ltd.
Ltd. (NC)
+/**Heitman Properties of South Carolina 1,000 100% Heitman Properties Ltd.
Ltd. (SC)
+/**Heitman Properties of Tennessee Ltd. (TN) 1,000 100% Heitman Properties Ltd.
+/**Heitman Properties of Texas Ltd. 1,000 100% Heitman Properties Ltd.
+/**Heitman Properties of Nebraska Ltd. (NE) 1,000 100% Heitman Properties Ltd.
+/**Property Security Services Ltd. (MI) 1,000 100% Heitman Properties Ltd.
+/**Heitman Properties of Alabama Ltd. (DE) 10,000 100% Heitman Properties Ltd.
<FN>
* = Registered as a broker-dealer under Section 15 of the Exchange Act
** = Not registered as an investment adviser under Section 203 of the
Investment Advisers Act
*** = Exempted Subsidiary
+ = Heitman Exempted Subsidiary
</TABLE>
<PAGE>
EXHIBIT B to
FIFTH AMENDMENT
EXHIBIT V
HEITMAN PERMITTED INDEBTEDNESS AND RELATED ENCUMBRANCES
(1) Indebtedness of Heitman Financial Ltd. to LaSalle National Bank in the
principal sum of $10,000,000 pursuant to the terms of a Loan Agreement
dated as of March 27, 1992, as amended (the "LaSalle Loan Agreement"), by
and between LaSalle National Bank and Heitman Financial Ltd. and a
Revolving Credit Note dated March 27, 1992 of Heitman Financial Ltd.
payable to the order of LaSalle National Bank in the principal sum of
$10,000,000.
(2) A Guaranty in favor of LaSalle National Bank of the obligations of Heitman
Financial Ltd. to LaSalle National Bank by the following: (a) Heitman
Advisory Corporation and all of its subsidiary corporations; (b) Heitman
Financial Services Ltd. and all of its subsidiary corporations; (c) Heitman
Properties Ltd. and all of its subsidiary corporations; (d) HFL-A
Partnership and HFL-B Partnership; and (e) each corporation identified on
any future amended Schedule 1.1 to the LaSalle Loan Agreement as a "New
Guarantor".
(3) Indebtedness of Heitman Properties Ltd. to Continental Bank N.A. in the
original principal sum of $5,000,000 pursuant to the terms of a Credit
Agreement dated as of March 5, 1992, as amended, by and between Heitman
Properties Ltd. and Continental Bank N.A. and a Note dated March 5, 1992,
as amended, of Heitman Properties Ltd. payable to the order of Continental
Bank, N.A. in the principal sum of $5,000,000.
(4) Indebtedness of Heitman Properties Ltd. to Continental Bank N.A. in the
principal sum of $3,600,000 pursuant to the terms of a First Amended and
Restated Credit Agreement dated as of April 6, 1992, as amended (the
"Continental Loan Agreement"), by and between Heitman Properties Ltd. and
Continental Bank N.A. and an Amended and Restated Note dated as of April 6,
1992 of Heitman Properties Ltd. payable to the order of Continental Bank
N.A. in the principal sum of $3,600,000.
(5) Guaranty of Payment dated March 5, 1992 of Heitman Financial Ltd. in favor
of Continental Bank N.A. of the obligations of Heitman Properties Ltd. to
Continental Bank N.A.
<PAGE>
(6) A Guaranty in favor of Continental Bank N.A. of the obligations of Heitman
Properties Ltd. to Continental Bank N.A. by each of the following
corporations: Heitman Corporate Plaza, Inc., Heitman Properties of Nebraska
Ltd., Property Security Services Ltd., Heitman Properties of Alabama Ltd.,
Heitman Properties of New York Ltd., Heitman Properties of Rhode Island
Ltd., Heitman Florida Management Inc., Heitman Pennsylvania Management
Inc., Heitman Minnesota Management Inc., Heitman Kentucky Management Inc.,
Heitman Virginia Management Inc., Heitman Wisconsin Management Inc.,
Heitman Ohio Management Inc., Heitman Nevada Management Inc., Heitman
Properties of Iowa Ltd., Heitman D.C. Properties Ltd., Heitman Properties
of Texas Ltd., Heitman Properties of Louisiana Ltd., Heitman Properties of
Michigan Ltd., Heitman Properties of Missouri Ltd., Heitman Properties of A
Arizona Ltd., Heitman Properties of Indiana Ltd., Heitman Properties of
Mississippi Ltd., Heitman Properties of North Carolina Ltd., Heitman
Properties of South Carolina Ltd., Heitman Properties of Tennessee Ltd.,
Heitman Mayfair Corporation, and all entities required to execute a
Subsidiary Guaranty under the terms of the Continental Loan Agreement.
(7) Indebtedness of Heitman Holdings Ltd. and Heitman Financial Services Ltd.
as co-makers of a Promissory Note dated October 25, 1991 payable to the
order of General Electric Capital Corporation in the principal sum of
$1,890,000.
(8) Indebtedness of Heitman Holdings Ltd. and Heitman Financial Services Ltd.
as co-makers of a Promissory Note dated October 25, 1991 payable to the
order of General Electric Capital Corporation in the principal sum of
$1,450,000.
(9) Corporate Guaranty dated October 25, 1991 of Heitman Financial Ltd. in
favor of General Electric Capital Corporation of the obligations of Heitman
Financial Services Ltd. to General Electric Capital Corporation.
(10) Corporate Guaranty dated October 25, 1991 of Heitman Financial Ltd. in
favor of General Electric Capital Corporation of the obligations of Heitman
Holdings Ltd. to General Electric Capital Corporation.
(11) Corporate Guaranty dated October 25, 1991 of Heitman Advisory Corporation
in favor of General Electric Capital Corporation of the obligations of
Heitman Financial Services Ltd. to General Electric Capital Corporation.
(12) Corporate Guaranty dated October 25, 1991 of Heitman Advisory Corporation
in favor of General Electric Capital Corporation of the obligations of
Heitman Holdings Ltd. to General Electric Capital Corporation.
<PAGE>
SCHEDULE OF LIENS
(1) Aircraft Chattel Mortgage dated October 25, 1991 by and between Heitman
Holdings Ltd., as mortgagor, and General Electric Capital Corporation, as
mortgagee, in which the mortgagor pledges and mortgages a 1983 Gates
Learjet to the mortgagee to secure a Promissory Note dated October 25, 1991
of Heitman Holdings Ltd. and Heitman Financial Services Ltd. payable to the
order of General Electric Capital Corporation in the principal sum of
$1,890,000.
(2) Aircraft Chattel Mortgage dated October 25, 1991 by and between Heitman
Holdings Ltd., as mortgagor, and General Electric Capital Corporation, as
mortgagee, in which the mortgagor pledges and mortgages a 1978 Gates
Learjet to the mortgagee to secure a Promissory Note dated October 25, 1991
of Heitman Holdings Ltd. and Heitman Financial Services, Ltd. payable to
the order of General Electric Capital Corporation in the principal sum of
$1,450,000.
(3) Collateral Assignment and Security Agreement (Assignment of Notes) dated as
of March 5, 1992 by Heitman Properties Ltd. in favor of Continental Bank
N.A. which collaterally assigns all of the right, title, and interest of
Heitman Properties Ltd. in, to, and under (i) a Note dated March 5, 1992 in
the original principal amount of $3,000,000 executed by Mayfair Joint
Venture, an Illinois general partnership, payable to the order of Heitman
Properties Ltd., and (ii) a Note dated March 5, 1992 in the original
principal amount of $2,500,000 executed by HC Partnership, an Illinois
general partnership, payable to the order of Heitman Properties Ltd.
<PAGE>
EXHIBIT C TO
FIFTH AMENDMENT
_______________
HEITMAN GUARANTY
________________
HEITMAN GUARANTY dated as of August 25, 1993 (as the same may be amended,
supplemented or otherwise modified from time to time, this "Guaranty"), made by
Heitman Financial Ltd., an Illinois corporation (the "Guarantor"), in favor of
the Beneficiaries (as hereinafter defined). Certain capitalized terms used
herein are defined in Section 1 of this Guaranty.
R E C I T A L S:
________________
________________
A. United Asset Management Corporation a Delaware corporation (the
"Company"), the banks and other financial institution parties thereto as "Banks"
from time to time (collectively, the "Banks"), Morgan Guaranty Trust Company of
New York, as Agent (the "Agent") and The First National Bank of Boston, as
Collateral Agent (the "Collateral Agent") have entered into a Credit Agreement,
dated as of May 18, 1992 (as heretofore amended and supplemented and as the same
may be further amended, supplemented or otherwise modified from time to time,
the "Credit Agreement"), pursuant to which the Banks have agreed to make a
certain credit facility available to the Company, subject to the terms and
conditions set forth in the Credit Agreement.
B. In connection with the acquisition by the Company, through its wholly-
owned subsidiary, H.F. Newco, Inc., an Illinois corporation, of all of the
issued and outstanding capital stock of the Guarantor, the Company has requested
that the Banks, the Agent and the Collateral Agent enter into a Fifth Amendment,
dated as of August 25, 1993 (the "Fifth Amendment"), to the Credit Agreement.
C. It is a condition precedent to the effectiveness of the Fifth
Amendment that the Guarantor guarantee the Guaranteed Obligations (as
hereinafter defined).
D. The Guarantor, as part of an affiliated group of corporations with the
Company, will receive substantial direct and indirect benefits by reason of such
credit facility.
<PAGE>
NOW, THEREFORE, in order to induce the Banks, the Agent and the Collateral
Agent to enter into the Fifth Amendment and in consideration thereof, and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the Guarantor hereby agrees as follows:
Section 1. DEFINITIONS. As used in this Guaranty, and unless the
context requires a different meaning, capitalized terms not otherwise defined
herein have the respective meanings provided for such terms in the Credit
Agreement and the following terms have the meanings indicated below, all such
definitions to be equally applicable to the singular and plural forms of the
terms defined.
"ADJUSTED NET WORTH" of the Guarantor shall mean, as of any date of
determination thereof, the excess of (i) the amount of the "present fair
saleable value" of the assets of the Guarantor as of the date of such determina-
tion, over (ii) the amount of all "liabilities of the Guarantor, contingent or
otherwise" (including, without limitation, all liabilities and obligations of
the Guarantor to LaSalle National Bank in connection with the $10,000,000
Revolving Loan Facility under and pursuant to that certain Loan Agreement, dated
as of March 27, 1992, as the same may be amended from time to time) as of the
date of such determination, as such quoted terms (or similar terms) are
determined in accordance with applicable federal and state laws governing
determinations of the insolvency of debtors. In determining the Adjusted Net
Worth of the Guarantor for purposes of calculating the Limit of Liability for
the Guarantor in respect of any of the Guaranteed Obligations, the liabilities
of the Guarantor to be used in such determination pursuant to clause (ii) of the
preceding sentence shall exclude the liabilities of the Guarantor hereunder in
respect of the Guaranteed Obligations.
"BENEFICIARIES" means the Agent, the Collateral Agent and the Banks.
"GUARANTEED OBLIGATIONS" has the meaning assigned to that term in
Section 2(a).
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"LIMIT OF LIABILITY" means, as of any date of determination thereof,
the sum of (i) with respect to any of the Guaranteed Obligations (or portion
thereof), the proceeds of which (or any portion thereof) are used to make a
Valuable Transfer to the Guarantor, the amount of such Guaranteed Obligations
(or such portion thereof) PLUS (ii) with respect to any of the Guaranteed
Obligations (or portion thereof), the proceeds of which are not used to make a
Valuable Transfer to the Guarantor, the lesser of (A) the outstanding amount of
such Guaranteed Obligations (or such portion thereof) as of such date and (B)
ninety-five percent (95%) of the Adjusted Net Worth of the Guarantor at the time
of the incurrence of such Guaranteed Obligations. Notwithstanding the
foregoing, that portion of the Limit of Liability of the Guarantor calculated
pursuant to clause (ii)(B) shall be increased (but not decreased) on the last
day of each fiscal year of the Guarantor, to an amount equal to ninety-five
percent (95%) of the Adjusted Net Worth of the Guarantor, as determined on such
date, if such amount is greater than that portion of the Limit of Liability
pursuant to clause (ii)(B) in effect immediately prior to such date.
"SUBORDINATE CLAIMS" has the meaning assigned to that term in Section
3.
"VALUABLE TRANSFER" means (i) all loans, advances or capital
contributions made to the Guarantor with proceeds of Guaranteed Obligations, or
any portion thereof, (ii) all debt securities or other obligations of the
Guarantor acquired from the Guarantor or retired by the Guarantor with proceeds
of Guaranteed Obligations, or any portion thereof, (iii) the fair market value
of all property acquired with proceeds of Guaranteed Obligations, or any portion
thereof, and transferred, absolutely and not as collateral, to the Guarantor and
(iv) the value of any quantifiable economic benefits not included in clauses (i)
through (iii) above, but included in accordance with applicable federal and
state laws governing determinations of the insolvency of debtors, accruing to
the Guarantor as a result of the incurrence of Guaranteed Obligations, PROVIDED
THAT for purposes of this definition, a "Valuable Transfer" shall not include
any repayment of monies by the Company to the Guarantor, which monies were
originally paid by the Guarantor to the Company pursuant to that certain Revenue
Sharing Agreement, dated as of August 25, 1993, by and among the Company, the
Guarantor and the individuals named therein (the "Revenue Sharing Agreement")
that are repaid pursuant to the determination of the Guarantor and the Company
that such original payments exceeded the amount of the Guarantor's obligations
under the Revenue Sharing Agreement, and PROVIDED FURTHER THAT any claim of the
Guarantor for any such repayment by the Company shall be included as an asset
for purposes of the definition of "Adjusted Net Worth".
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Section 2. GUARANTEE OF OBLIGATIONS.
(a) The Guarantor hereby unconditionally and irrevocably guarantees
to each of the Beneficiaries, as the primary obligation and debt of the
Guarantor and not as a surety, the due and punctual payment of, without
duplication, (i) all principal, interest, fees and other amounts required to be
paid, from time to time, by the Company under or in respect of the Credit
Agreement, when and as the same shall be or become due and payable, whether on
the due date therefor, upon stated maturity, by acceleration, upon demand or
otherwise, according to the terms of the Credit Agreement, (ii) the aggregate
unpaid principal amount of, and accrued interest on, all Money Market Loans and
(iii) all other present and future obligations and liabilities (whether
absolute, fixed or contingent, matured or unmatured, joint, several or
independent and howsoever acquired) of the Company to the Beneficiaries, or any
of them, arising out of or in any way relating to the Credit Agreement and any
and all Loan Documents and the transactions contemplated thereby (all of the
foregoing, collectively, the "Guaranteed Obligations"). In case of the failure
of the Company to duly, punctually and indefeasibly make any such payment in
full as and when due and payable, the Guarantor hereby agrees to duly,
punctually and indefeasibly make such payment as and when the same shall become
due and payable, whether on the due date therefor, upon stated maturity, by
acceleration, upon demand or otherwise, in accordance with the terms of this
Guaranty, the Credit Agreement and the other Loan Documents.
(b) The Guarantor hereby agrees that its obligations hereunder shall
be continuing, absolute and unconditional under any and all circumstances and
not subject to any reduction, limitation, impairment, termination, defense
(other than prior, final and indefeasible payment in full), set-off, abatement,
counterclaim or recoupment whatsoever (all of which are hereby expressly waived
by the Guarantor), whether by reason of any claim of any character whatsoever,
including, without limitation, any claim of waiver, release, surrender,
alteration or compromise, or by reason of any liability at any time to the
Company or any other Subsidiary of the Company or otherwise, whether based upon
any agreement, instrument or document evidencing or securing the Guaranteed
Obligations or any other agreement, instrument or document (including, without
limitation, this Guaranty) or otherwise, and howsoever arising, whether out of
action or inaction or otherwise and whether resulting from default, willful
misconduct, negligence or otherwise, and without limiting the foregoing,
irrespective of (i) any insolvency,
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<PAGE>
bankruptcy, reorganization or dissolution, or any proceeding in respect of any
thereof, of the Company, any other Subsidiary of the Company or any other
guarantor of all or any portion of the Guaranteed Obligations, (ii) the
genuineness, validity, regularity or enforceability of any agreement, instrument
or document evidencing or securing the Guaranteed Obligations or any other
agreement, instrument or document or the extension or renewal thereof, in whole
or in part, with or without notice to or assent from the Company,
any other Subsidiary of the Company or any other guarantor of all or any portion
of the Guaranteed Obligations, (iii) the validity, enforceability or priority of
any lien or security interest securing the payment of the Guaranteed Obligations
or any portion thereof, (iv) any rescission, compromise, alteration, amendment,
modification, extension, renewal, release, change, waiver, consent, grant of any
indulgence or other action in respect of any of the terms, provisions, covenants
or conditions contained in any agreement, instrument or document evidencing or
securing the Guaranteed Obligations or in any other agreement, instrument or
document, (v) the absence of notice or the absence of or any delay in any action
to enforce any obligation or to exercise any right or remedy against the
Company, any other Subsidiary of the Company or any other guarantor of all or
any portion of the Guaranteed Obligations, whether under any agreement,
instrument or document evidencing or securing the Guaranteed Obligations or
under any other agreement, instrument or document, or any indulgence or
extension or waiver granted to or compromise with the Company, any other
Subsidiary of the Company or any other guarantor of all or any portion of the
Guaranteed Obligations, or any action of proceeding taken or not taken with
respect to or by or on behalf of the Company, any other Subsidiary of the
Company or any other guarantor of all or any portion of the Guaranteed
Obligations, or the holder of any agreement, instrument or document evidencing
or security the Guaranteed Obligations, (vi) any default, failure or delay in
the performance of any obligation, covenant, duty, representation, warranty or
agreement contained in any agreement, instrument or document evidencing or
securing the Guaranteed Obligations or in any other agreement, instrument or
document, or arising pursuant to law, (vii) any act or thing or omission to do
or delay in doing any act or thing which might in any manner result in any lack
of proper authorization or any invalid execution of any agreement, instrument or
document evidencing or securing the Guaranteed Obligations or any other
agreement, instrument or document, (viii) any assumption by any Person of any
obligation under any agreement, instrument or document evidencing or securing
the Guaranteed Obligations or under any other agreement, instrument or document,
(ix) any event of FORCE MAJEURE,
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<PAGE>
(x) any release or substitution of any collateral for, or any obligor in respect
of, the payment of the Guaranteed Obligations or obligations under any other
agreement, instrument or document, in whole or in part, with or without notice
to or assent from the Company, any other Subsidiary of the Company or any other
guarantor of all or any portion of the Guaranteed Obligations, (xi) whether a
lien on any collateral shall have been perfected or shall continue to be
perfected, or whether any collateral shall be impaired in any manner, or whether
any steps shall have been taken to enforce rights against the Company, any other
Subsidiary of the Company or any other guarantor of all or any portion of the
Guaranteed Obligations or to sell, exchange, release, surrender, realize upon or
otherwise deal with, in any manner and in any order, any collateral and (xii)
any other circumstances which might constitute a legal or equitable discharge or
defense of a surety or guarantor.
(c) The Guarantor hereby (i) waives diligence, presentment,
demand (of payment or otherwise), protest, notice, filing of claims with a court
in the event of the merger or bankruptcy of the Company, any other Subsidiary of
the Company or any other guarantor of all or any portion of the Guaranteed
Obligations, any right to require a proceeding first against the Company, any
other Subsidiary of the Company or any other guarantor of all or any portion of
the Guaranteed Obligations or to marshall or realize on any collateral, with
respect to the Guaranteed Obligations, (ii) agrees that its obligations
hereunder constitute guarantees of payment and not of collection and are not in
any way conditional or contingent upon any attempt to collect from or enforce
any rights against the Company, any other Subsidiary of the Company or any other
guarantor of all or any portion of the Guaranteed Obligations or upon any other
condition or contingency, (iii) acknowledges that any agreement, instrument or
document evidencing and/or securing the Guaranteed Obligations may be
transferred (upon and subject to the terms and conditions thereof) and that the
benefit of the Guarantor's obligations hereunder shall extend to each holder of
any agreement, instrument or document evidencing and/or securing the Guaranteed
Obligations automatically and without notice to the Guarantor, (iv) covenants
that this Guaranty will not be discharged except by final, complete,
indefeasible and irrevocable payment and performance of the obligations
contained in the agreements, instruments and documents evidencing or securing
the Guaranteed Obligations and this Guaranty and (v) waives acceptance of this
Guaranty by the Beneficiaries or notice or proof of reliance.
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<PAGE>
(d) The Guarantor further agrees that if at any time all or any
part of any payment theretofore applied by any Beneficiary to any of the
Guaranteed Obligations is, or must be, rescinded or returned by such Beneficiary
for any reason whatsoever, including, without limitation, the insolvency,
bankruptcy or reorganization of the Company, any other Subsidiary of the Company
or any other guarantor of all or any portion of the Guaranteed Obligations, such
Guaranteed Obligations or applicable portion thereof, for purposes of this
Guaranty, to the extent that such payment is or must be rescinded or returned,
shall be deemed to have continued in existence notwithstanding such application,
and this Guaranty shall continue to be effective or be reinstated, as the case
may be, as to such Guaranteed Obligations or applicable portion thereof as
though such application had not been made, irrespective of whether any note or
other evidence of indebtedness has been surrendered or cancelled.
(e) NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS
GUARANTY, (i) THE OBLIGATIONS AND LIABILITIES OF THE GUARANTOR PURSUANT TO THIS
GUARANTY SHALL AT ALL TIMES BE SUBJECT TO THE GUARANTOR'S LIMIT OF LIABILITY,
AND (ii) RECOURSE SHALL BE HAD UNDER THIS GUARANTY ONLY TO THE "PLEDGED
SECURITIES" AND THE OTHER "COLLATERAL" (AS SUCH TERMS ARE DEFINED IN THE HEITMAN
PLEDGE AGREEMENT), AND NO RECOURSE SHALL BE HAD TO ANY OTHER ASSETS OF THE
GUARANTOR OTHER THAN SUCH PLEDGED SECURITIES AND OTHER COLLATERAL.
Section 3. SUBROGATION. So long as any of the Guaranteed Obligations
shall be outstanding or subject to any rescission or revocation of payment, all
claims of any kind or character of the Guarantor or any of its successors and
assigns against the Company or any Subsidiary of the Company or with respect to
any collateral for the Guaranteed Obligations, to the extent such claims
(whether by right of subrogation, contribution or otherwise) arise by reason of
the Guarantor's payment of any sum or sums to any Beneficiary under this
Guaranty (all such claims of any kind or character of the Guarantor or any of
its successors and assigns being hereinafter referred to as "Subordinate
Claims"), shall be subordinated in right of payment to the prior indefeasible
payment in full of such Guaranteed Obligations as follows:
(a) The Beneficiaries shall first be entitled to receive final
and indefeasible payment in full of principal of Guaranteed Obligations and
accrued and unpaid interest thereon (including, without limitation, interest
thereon accruing after the commencement of any bankruptcy, insolvency or
receivership proceedings at the
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<PAGE>
applicable rate or rates provided therefor in the Credit Agreement), and all
other amounts due under any agreement, instrument or document evidencing or
securing such Guaranteed Obligations before any direct or indirect payment or
distribution (whether in cash, property or securities, or by set-off,
counterclaim or otherwise) shall be made on, or received by the Guarantor in
respect of, Subordinate Claims.
(b) Any payment or distribution of assets of the Company or any
of the Company's Subsidiaries of any kind or character, whether in cash,
property or securities, which would be made on account of Subordinate Claims but
for the provisions of this Section, shall be paid by the Company or such other
Subsidiary, as the case may be (or the trustee or agent or other Person making
such payment or distribution), directly to the Agent, for the benefit of the
applicable Beneficiaries, to the extent necessary to make indefeasible payment
in full of all sums due upon the Guaranteed Obligations and remaining unpaid
after giving effect to any concurrent payment or distribution to or for the
benefit of such Beneficiaries in respect of the Guaranteed Obligations. In
furtherance of the foregoing, no holder of Subordinate Claims shall exercise any
right of set-off or counterclaim with respect to any Subordinate Claim held by
it, and any reduction of Subordinate Claims, by reason of exercise by the holder
thereof of a right of set-off or counterclaim or otherwise in violation of the
provisions of this subsection, in respect of any obligations of such holder to
the Company or such Subsidiary, as applicable, shall be deemed to be a payment
by the Company or such Subsidiary, as the case may be, in respect of such
Subordinate Claims to which this subsection shall apply.
(c) In the event that any payment or distribution of assets of
the Company or any of the Company's Subsidiaries of any kind or character,
whether in cash, property or securities, shall be received by the Guarantor or
on its behalf at any time when the making of such payment or distribution shall
have been in violation of the foregoing subsections (a) or (b), then such
payment, distribution or amount shall be held in trust for the benefit of, and
shall be paid over or delivered to, the Agent, for the benefit of the applicable
Beneficiaries, for application to the Guaranteed Obligations then remaining
unpaid to the extent necessary to pay in full all such Guaranteed Obligations in
accordance with their terms, after giving effect to any concurrent payment or
distribution to or for the benefit of the Beneficiaries in respect of the
Guaranteed Obligations.
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<PAGE>
(d) Nothing contained in this Section is intended to or shall impair,
as between the Company or any of its Subsidiaries, as the case may be, and their
respective creditors (other than the Beneficiaries), the obligations of the
Company and each such Subsidiary, as the case may be, to pay to the Guarantor
and its successors or assigns all sums due from it to any such holder of
Subordinate Claims as and when the same shall become due and payable in
accordance with their terms, subject to the terms hereof; PROVIDED that no such
holder of Subordinate Claims shall initiate any legal proceedings with respect
to any of the Subordinate Claims prior to the indefeasible payment in full of
the Guaranteed Obligations.
Section 4. REPRESENTATIONS, WARRANTIES AND COVENANTS. The Guarantor
hereby acknowledges and agrees that it has received a copy of the Credit
Agreement and all Loan Documents and hereby (i) reaffirms all representations
and warranties contained therein to the extent applicable to it and (ii) agrees
to comply with all covenants and agreements contained therein to the extent
applicable to it and as the same may be amended or modified from time to time in
accordance with the terms of the Credit Agreement and, in addition, hereby makes
the following representations, warranties and agreements:
(a) Except as expressly set forth in the Credit Agreement, neither
the Agent, the Collateral Agent nor any of the Banks is obligated to give or to
continue any financial accommodations to the Company, the Guarantor or any of
the Company's other Subsidiaries or to change or extend the time of payment of,
or renew or alter, any liability of the Company, the Guarantor or any of the
Company's other Subsidiaries, any security therefor or any liability incurred
directly or indirectly in respect thereof.
(b) None of the Beneficiaries of any other Person has made any
representations or promises to the Guarantor as to the making or continuance of
any extension of credit to the Company (except pursuant to, and in accordance
with, the terms of the Credit Agreement) or as to the financial condition of the
Company or any of the Company's Subsidiaries or any other Person or as to the
type or value of any security for the Guaranteed Obligations, or as to the
perfection thereof, and none of the Beneficiaries is obligated to notify the
Guarantor of any change in the financial condition of the Company or any of the
Company's Subsidiaries or any other Person or in the type, value, priority or
perfection of any collateral security for the Guaranteed Obligations.
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(c) The Guarantor agrees that it will not engage in any business or
activity other than the business and activity currently conducted by the
Guarantor as of the date hereof.
Section 5. BREACH OF COVENANTS.
(a) In the event that the Guarantor shall fail to comply with any of
its covenants or agreements contained in this Guaranty or in any of the other
Loan Documents to which it is a party, then in any such event and at any time
thereafter (so long as such failure shall not have been cured or waived in
accordance with Section 6(c)), the Agent may, and at the direction of the
Required Banks shall, declare the obligations of the Company under the Credit
Agreement (whether or not then due under the Credit Agreement) immediately due
and payable pursuant to this Guaranty as to the Guarantor, and the Agent shall
be entitled to enforce the obligations of the Guarantor hereunder.
(b) Subject to any applicable agreements in effect from time to time
relating to the sharing and priority of payment of proceeds of collateral, the
net proceeds of any collection, recovery, receipt, appropriation or realization,
after deducting all costs and expenses of every kind incurred in connection with
the foregoing, including reasonable attorneys' fees and legal expenses, shall be
applied to the payment in whole or in part of the Guaranteed Obligations, in
such order as the Agent, in its sole discretion, may elect.
Section 6. MISCELLANEOUS.
(a) THIS GUARANTY SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE
INTERNAL LAWS OF THE STATE OF NEW YORK, AND FOR ALL PURPOSES SHALL BE GOVERNED
BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH SUCH LAWS OF SAID STATE,
WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS.
(b) Any provision of this Guaranty that is prohibited or
unenforceable in any jurisdiction 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. Notwithstanding the foregoing, in lieu of
such prohibited or unenforceable provision, there shall automatically be deemed
incorporated herein (without further act or deed by any party hereto) a
provision as similar to such prohibited or unenforceable provision as possible
and as shall be enforceable and not prohibited pursuant to applicable law.
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If this Guaranty would be held or determined by a court of competent
jurisdiction in a judicial proceeding to be void, voidable, invalid or
unenforceable on account of the amount of the aggregate liability of the
Guarantor under this Guaranty or by reason of any inconsistent contractual
provision binding on the Guarantor and in effect on or prior to the date hereof,
then, notwithstanding any other provision of this Guaranty to the contrary, the
aggregate amount of the liability of the Guarantor under this Guaranty shall,
without any further action by the Guarantor, the Beneficiaries or any other
Person, be automatically limited and reduced to the maximum amount which is
valid and enforceable.
(c) No failure or delay on the part of any Beneficiary in exercising
any right, power or remedy under this Guaranty shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
remedy preclude any other or further exercise thereof or the exercise of any
other right, power or remedy. The remedies provided for in this Guaranty are
cumulative and are not exclusive of any remedies that may be available to any
Beneficiary at law or in equity or otherwise. No amendment, modification,
supplement, termination or waiver of or to any provision of this Guaranty, nor
consent to any departure by the Guarantor therefrom, shall be effective unless
the same shall be consented to in writing by all of the Banks or the Required
Banks, as the case may be, pursuant to Section 8.6 of the Credit Agreement, and
subject to the rights of the Agent and the Collateral Agent under said Section.
Any amendment, modification or supplement of or to any provision of this
Guaranty, any waiver of any provision of this Guaranty, and any consent to any
departure by the Guarantor from the terms of any provision of this Guaranty,
shall be effective only in the specific instance and for the specific purpose
for which made or given. Except where notice is specifically required by this
Guaranty, no notice to or demand on the Guarantor in any case shall entitle the
Guarantor to any other or further notice or demand in similar or other
circumstances.
(d) The Guarantor agrees that copies of the Credit Agreement and the
other Loan Documents received by it constitute adequate notice of all matters
contained therein, and consents to the execution and delivery of such agreements
and the performance of all transactions provided for or contemplated therein;
PROVIDED that none of the Beneficiaries shall be obligated to furnish to the
Guarantor any copies of any amendments, modifications or supplements or waivers
with respect to the Credit Agreement or any of the other Loan Documents.
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<PAGE>
(e) All notices, requests and other communications to the Guarantor
or any Beneficiary hereunder shall be in writing (including bank wire, telex,
telecopy or similar teletransmission or writing) and shall be given (i) if to a
Beneficiary, at its address or telex or telecopier number specified in Section
8.1 of the Credit Agreement or (ii) if to the Guarantor at its address or telex
or telecopier number specified on the signature page hereof or such other
address or telex or telecopier number as the Guarantor may hereafter specify by
written notice to the Agents and the Company. Each such notice, request or
other communication shall be effective (i) if given by telex, when such telex is
transmitted to the telex number specified in this Section and the appropriate
answerback is received, (ii) if given by mail, seventy-two (72) hours after such
communication is deposited in the mails with first class postage prepaid,
addressed as aforesaid or (iii) if given by any other means (including, without
limitation, by telecopy or air courier), when delivered at the address specified
in this Section; provided that if any day on which any notice, request or other
communication would otherwise be effective pursuant to the immediately preceding
clauses (i) through (iii) is not a Business Day, then such notice, request or
other communication shall be effective on the next succeeding Business Day; and
provided, further, that notices to the Agents, or either of them, shall not be
effective until received.
(f) This Guaranty shall be binding upon the Guarantor and its
successors and assigns and shall inure to the benefit of, and shall be
enforceable by, each of the Beneficiaries and their respective successors and
assigns PROVIDED that the Guarantor may not assign or transfer any of its
obligations under this Guaranty without the prior written consent of the
Required Banks.
(g) The Guarantor agrees to do such further acts and things and to
execute and deliver such additional agreements, powers and instruments, as the
Agent may require or deem advisable to carry into effect the purposes of this
Guaranty or to better assure and confirm unto the Beneficiaries their rights,
powers and remedies under this Guaranty, under the Credit Agreement or under any
of the other Loan Documents.
(h) The Guarantor hereby irrevocably and unconditionally consents and
submits to the nonexclusive jurisdiction of any United States Federal or New
York State court sitting in New York County in any action or proceeding arising
out of or relating to this Guaranty, and the Guarantor hereby irrevocably and
unconditionally agrees that all claims in respect of such action or proceeding
brought
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against any of the Beneficiaries in respect of this Guaranty shall be brought in
such United States Federal or New York State court. The Guarantor irrevocably
consents to the service of any and all process in any such action or proceeding
brought in any court in or of the State of New York by the delivery of copies of
such process to the Guarantor at its address specified in Section 6(e) or by
certified or registered mail directed to such address. The Guarantor hereby
irrevocably and unconditionally waives any objection, including, without
limitation, any objection to the laying of venue or based on the grounds of
FORUM NON CONVENIENS, or that it or its assets is exempt or immune from
attachment or execution, which it may now or hereafter have to the bringing or
maintaining of any such action or proceeding in such respective jurisdictions.
Nothing herein shall affect the right of any of the Beneficiaries to serve
process in any other manner permitted by law or to commence legal proceedings or
otherwise proceed against the Guarantor in any other jurisdiction.
(i) The Guarantor agrees to pay promptly, to the extent not
previously finally and indefeasibly paid in full by the Company, (i) all
reasonable costs and expenses of the Agent in connection with the negotiation,
preparation, execution, issuance, delivery, filing and recording of this
Guaranty and any other documents which may be delivered in connection with this
Guaranty, including, without limitation, the reasonable fees and expenses of
Moses & Singer, special counsel for Morgan Guaranty Trust Company of New York,
with respect thereto and with respect to advising the Agent from time to time as
to its rights and responsibilities under or in respect of this Guaranty and any
amendment or modification of, or waiver under, this Guaranty and (ii) from and
after the occurrence of any Event of Default or Default, all costs and expenses
(including reasonable counsel fees and expenses) in connection with (A) any and
all amounts which any Beneficiary has paid relative to the curing of any default
resulting from the acts or omissions of the Guarantor under this Guaranty, (B)
any amendment or modification of, or waiver under, this Guaranty and (C) the
enforcement of this Guaranty and the preservation of the Beneficiaries' rights
hereunder. The Guarantor shall pay, to the extent not previously finally and
indefeasibly paid in full by the Company, any and all stamp and other taxes and
fees payable or determined to be payable in connection with the execution,
delivery, filing and recording of this Guaranty, financing and continuation
statements and any other documents which may be delivered in connection with
this Guaranty, and agrees to save the Agent and the Beneficiaries harmless from
and against any and all liabilities with respect to or resulting from any delay
in paying or omission to pay such taxes and fees. The
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<PAGE>
obligations of the Guarantor under this subsection shall survive the payment of
the Guarantor's other obligations hereunder and the termination of this
Guaranty.
(j) The provisions of SectionVII of the Credit Agreement relating to
the Agents are incorporated herein by reference and shall apply for the benefit
and protection of the Agents under this Guaranty.
(k) This Guaranty may be executed in any number of counterparts and
by the different parties hereto on separate counterparts, each of which
counterparts, when so executed and delivered, shall be deemed to be an original
and all of which counterparts, taken together, shall constitute but one and the
same Guaranty.
(l) Section and other headings used in this Guaranty are for
convenience only and shall not affect the construction of this Guaranty.
(m) The obligations of the Guarantor under this Guaranty are secured
by, among other things, the collateral security provided for in the Heitman
Pledge Agreement.
(n) THE GUARANTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL
BY JURY IN CONNECTION WITH ANY ACTION OR PROCEEDING UNDER OR RELATING TO THIS
GUARANTY OR ANY LOAN DOCUMENT. EACH BENEFICIARY, BY THE ACCEPTANCE OF THE
BENEFITS OF THIS GUARANTY, SHALL BE DEEMED TO HAVE WAIVED ITS RIGHT TO TRIAL BY
JURY IN RESPECT OF ANY ACT OR PROCEEDING IN WHICH THE GUARANTOR HAS WAIVED ITS
RIGHT TO TRIAL BY JURY.
IN WITNESS WHEREOF, the Guarantor has caused this Heitman Guaranty to be
duly executed and delivered by its proper and duly authorized officer as of the
day and year first above written.
Address: HEITMAN FINANCIAL LTD.
180 North LaSalle Street
Chicago, Illinois 60601
Attn: Rodger E. Smith
Executive Vice President
Telecopier No.: (312) 629-5840 By:_______________________
Name:
Title:
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<PAGE>
EXHIBIT D TO
FIFTH AMENDMENT
---------------
HEITMAN PLEDGE AGREEMENT
________________________
HEITMAN PLEDGE AGREEMENT dated as of August 25, 1993 by and between
HEITMAN FINANCIAL LTD., an Illinois corporation (the "Pledgor"), having its
principal place of business and chief executive office at 180 North LaSalle
Street, Chicago, Illinois 60601, and THE FIRST NATIONAL BANK OF BOSTON, as
Collateral Agent (the "Collateral Agent") under the Credit Agreement, dated as
of May 18, 1992 (as heretofore amended and supplemented and as the same may be
further amended, supplemented or otherwise modified from time to time, the
"Credit Agreement") among United Asset Management Corporation (the "Company"),
the banks and other financial institutions parties thereto as "Banks" from time
to time (the "Banks"), Morgan Guaranty Trust Company of New York, as Agent (the
"Agent") and the Collateral Agent.
R E C I T A L S:
________________
________________
A. The Company, the Banks, the Agent and the Collateral Agent have
entered into the Credit Agreement, pursuant to which the Banks have agreed to
make a credit facility available to the Company, subject to the terms and
conditions set forth in the Credit Agreement.
B. In connection with the acquisition by the Company, through its wholly-
owned subsidiary, H.F. Newco, Inc. an Illinois corporation, of all of the issued
and outstanding capital stock of the Guarantor, the Company has requested that
the Banks, the Agent and the Collateral Agent enter into a Fifth Amendment,
dated as of August 25, 1993 (the "Fifth Amendment"), to the Credit Agreement.
C. The Company owns all of the issued and outstanding shares of the
capital stock of the Pledgor.
D. The Pledgor owns all of the issued and outstanding shares of the
capital stock of its Subsidiaries, more particularly described in Schedule A
annexed hereto (such shares together with any shares of stock hereafter included
in the Collateral, collectively, the "Pledged Securities").
<PAGE>
E. The Pledgor has executed and delivered the Heitman Guaranty of even
date herewith pursuant to which the Pledgor has guaranteed the payment when due
of obligations of the Company arising under or in connection with the Credit
Agreement.
F. It is a condition precedent to the effectiveness of the Fifth Amendment
that the Pledgor shall have executed and delivered to the Collateral Agent, for
the ratable benefit of the Banks and for the benefit of the Agents, this Heitman
Pledge Agreement and shall have granted to the Collateral Agent, for the ratable
benefit of the Banks and for the benefit of the Agents, security interests as
herein provided, and the Pledgor has agreed to do so.
G. The Pledgor, as part of an affiliated group of corporations with the
Company, will receive substantial direct and indirect benefits by reason of such
credit facility.
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Unless the context otherwise requires, capitalized terms used in this
Heitman Pledge Agreement without definition shall have the respective meanings
provided therefor in the Credit Agreement, and the following terms shall have
the following meanings:
"COLLATERAL" shall have the meaning provided therefor in Section 2.
"OBLIGATIONS" shall mean (a) all obligations of the Pledgor pursuant to the
Heitman Guaranty and (b) any and all other indebtedness, obligations and
liabilities of the Pledgor to the Collateral Agent, the Agent or any Banks,
whether now existing or hereafter incurred or created under, arising out of or
in connection with any Loan Document; in each case, whether direct or indirect,
absolute or contingent, joint, several or independent, due or to become due or
liquidated or unliquidated, and whether created directly or acquired by
assignment or otherwise.
"PLEDGED SECURITIES" shall have the meaning provided therefor in the
Recitals hereto.
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<PAGE>
2. (a) As collateral security for the full and punctual payment of the
Obligations (whether upon stated maturity, by acceleration or otherwise), the
Pledgor hereby pledges and grants and transfers and assigns to the Collateral
Agent, for the ratable benefit of the Banks and for the benefit of the Agents,
(i) a continuing first priority lien on and security interest in the Pledged
Securities described on Schedule A hereto, (ii) a continuing first priority lien
on and security interest in any other issued and outstanding capital stock of
any Subsidiary acquired by the Pledgor after the date hereof, and (iii) stock
books and records of the issuers of Pledged Securities; together with all
proceeds thereof, including without limitation, dividends and additional
securities and other property at any time and from time to time receivable or
which may be received by the Collateral Agent or otherwise distributed or paid
by the Subsidiaries upon or in respect of or in exchange for any or all of such
Pledged Securities and all stock books and records relating thereto (all of the
foregoing collectively, the "Collateral").
(b) The Pledgor has delivered to the Collateral Agent herewith the
certificates evidencing the Pledged Securities described on Schedule A hereto,
in good negotiable form, together with undated stock powers duly executed in
blank in respect thereof.
3. The Pledgor hereby covenants with, and represents and warrants to, the
Collateral Agent as follows:
(a) The Pledgor will defend the Collateral Agent's right, title and
interest in and to the Pledged Securities and in the Collateral against the
claims and demands of all other Persons, except for any claims or demands
arising directly from the willful misconduct of the Collateral Agent.
(b) The Pledgor has and will have when pledged, good title to all of
the Pledged Securities, free and clear of all claims, pledges, liens,
encumbrances and security interests of every nature whatsoever, except such as
are created pursuant to this Heitman Pledge Agreement, and the Pledgor has the
unqualified right to pledge the same as herein provided.
(c) The making and performance of this Heitman Pledge Agreement by
the Pledgor does not violate the terms or conditions of any agreement or
instrument to which the Pledgor or the Company is a party or by which the
Pledgor or the Company or any of their property or other assets is bound, or any
order or decree of any court of government instrumentality, or of any
arbitration award,
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<PAGE>
franchise, license or permit or constitute a default thereunder, or, except as
contemplated hereby, result in the creation or imposition of any lien upon the
Collateral of the Pledgor or any property or other assets, and no consent or
approval of any other Person is required to authorize or permit, or is otherwise
required in connection with, the execution, delivery and performance by the
Pledgor of this Heitman Pledge Agreement or in connection with the validity and
priority of the liens and security interests granted by the Pledgor hereunder
(including, without limitation, under the Investment Advisers Act and the
Exchange Act).
(d) The Pledged Securities are duly authorized and validly issued,
fully paid and non-assessable and duly and validly pledged hereunder in
accordance with law (including, without limitation, under the Investment
Advisers Act and the Exchange Act).
(e) The Pledged Securities constitute, and will at all times
hereafter continue to constitute, in the aggregate, all of the issued and
outstanding shares of each class of the capital stock and of the voting
securities of the Subsidiaries set forth on Schedule A hereto.
4. At any time after the occurrence of an Event of Default the Collateral
Agent may cause any or all of the Pledged Securities to be transferred into its
name or into the name of a nominee or nominees of the Collateral Agent.
5. Unless and until an Event of Default shall have occurred and be
continuing, the Pledgor shall be entitled to exercise (but only in a manner not
inconsistent with the terms hereof or of any other Loan Document) the voting
power with respect to the Pledged Securities; PROVIDED, THAT no vote shall be
cast or consent, waiver or ratification given or action taken which would impair
the Collateral or be inconsistent with or violate any provision of this Heitman
Pledge Agreement, the Credit Agreement or any of the other Loan Documents.
6. In the event that upon the dissolution or liquidation (in whole or in
any substantial part) of any Subsidiary, any sum or property shall be paid as a
liquidating dividend or otherwise upon or with respect to any of the Collateral,
such sum or property shall be paid over and transferred to the Collateral Agent
to be added to the Collateral hereunder. Anything in the Credit Agreement to
the contrary notwithstanding, in case any stock dividend shall be declared by
any Subsidiary on any of the Collateral, or any shares of stock or fractions
thereof shall be issued by any Subsidiary pursuant to any stock split involving
any of the Collateral, or any distribution
-4-
<PAGE>
of capital shall be made by any Subsidiary on any of the Collateral, or any
shares, cash, obligations or other property shall be distributed upon or with
respect to the Collateral pursuant to a recapitalization or reclassification
of the capital stock of any Subsidiary, or pursuant to the dissolution,
liquidation (in whole or in any substantial part), bankruptcy, arrangement or
reorganization or any Subsidiary or pursuant to the merger or consolidation of
any Subsidiary with or into another corporation, or otherwise, then the shares,
cash, obligations or other property so distributed shall be delivered to the
Collateral Agent, to be held by it as additional Collateral hereunder, and all
of the same shall be included in the Collateral for all purposes hereof. No
interest shall be payable on any cash held by the Collateral Agent as part of
the Collateral hereunder. Nothing in this Section 6 shall be deemed or
construed to permit any transaction in violation of any provision of any Loan
Document.
7. All proceeds of any Collateral now or at any time hereafter
received or retained by the Collateral Agent pursuant to the provisions of this
Heitman Pledge Agreement (including, without limitation, any proceeds from the
sale of the Pledged Securities, all dividends, liquidating and otherwise, and
other distributions received by the Collateral Agent in respect of the Pledged
Securities) may be applied by the Collateral Agent to the Obligations in such
order as the Collateral Agent may elect.
8. If any Event of Default shall occur and be continuing, then the
Collateral Agent, without obligation to resort to any other security, right or
remedy granted under any other agreement or instrument, shall have the right, at
any time and from time to time, to sell, resell, assign and deliver, in its sole
discretion, any or all of the Collateral (in one or more parcels and at the same
or different times) and all right, title and interest, claim and demand therein
and right of redemption thereof, on any securities exchange on which the
Collateral or any of it may be listed, or at public or private sale, for cash,
upon credit or for future delivery, and in connection therewith the Collateral
Agent may grant options and may impose reasonable conditions such as requiring
any purchaser to represent that any securities constituting any part of the
Collateral are being purchased for investment only, the Pledgor hereby waiving
and releasing any and all equity or right of redemption. If any of the
Collateral is sold by the Collateral Agent upon credit or for future delivery,
the Collateral Agent shall not be liable for the failure of the purchaser to
purchase or pay for the same and, in the event of any such failure, the
Collateral Agent may resell such Collateral, and in no event shall the Pledgor
be credited
-5-
<PAGE>
with any part of the proceeds of sale of any Collateral until cash payment
thereof has actually been received by the Collateral Agent.
9. No demand, advertisement or notice, all of which are hereby
expressly waived by the Pledgor, shall be required in connection with any sale
or other disposition of any part of the Collateral, except that the Collateral
Agent shall give the Pledgor at least fifteen (15) days prior notice of the
time and place of any public sale or of the time after which any private sale or
other disposition is to be made, which notice the Pledgor hereby agrees is
reasonable, all other demands, advertisements and notices being hereby waived.
The Collateral Agent shall not be obligated to make any sale of the Collateral
if it shall determine not to do so, regardless of the fact that notice of sale
may have been given. The Collateral Agent may without notice or publication
adjourn any public or private time and place fixed for sale, and such sale may,
without further notice, be made at the time and place to which the same was so
adjourned. Upon each private sale of Collateral of a type customarily sold in a
recognized market and upon each public sale, unless prohibited by any applicable
statute which cannot be waived, the Collateral Agent may purchase any or all of
the Collateral being sold, free and discharged from any trusts, claims, equity
or right of redemption of the Pledgor, all of which are hereby waived and
released, and may make payment therefor by credit against any of the Obligations
in lieu of cash or any other obligations. In the case of all sales of the
Collateral, public or private, the Pledgor will be responsible for all
reasonable costs and expenses of every kind for sale or delivery, including
brokers' and attorneys' fees and disbursements, which shall be collected by the
Collateral Agent first from the proceeds of sale of Collateral and, after
deducting such costs and expenses from the proceeds of sale, the Collateral
Agent shall apply any residue to the payment of the Obligations in such order as
the Collateral Agent may select. The balance, if any, of proceeds remaining
after payment in full, with interest, of all of the Obligations shall be paid to
whomsoever may be lawfully entitled to receive the same.
10. The Pledgor recognizes that the Collateral Agent may be unable to
effect a public sale of all or any part of the Collateral by reason of certain
prohibitions contained in the Securities Act of 1933, as amended, as now or
hereafter in effect, or in applicable Blue Sky or other state securities laws,
as now or hereafter in effect, but may be compelled to resort to one or more
private sales to a restricted group of purchasers who will be obligated to
agree, among other things, to acquire such Collateral for
-6-
<PAGE>
their own account, for investment and not with a view to the distribution or
resale thereof. If, at the time of any sale of Collateral, the same or any part
thereof to be sold shall not, for any reason whatsoever, be effectively
registered under the Securities Act of 1933, as then in effect, the Collateral
Agent, in its sole and absolute discretion, is hereby authorized to sell such
Collateral or such part thereof by private sale in such manner and under such
circumstances as the Collateral Agent may deem necessary or advisable in order
that such sale may legally be effected without registration. The Pledgor
acknowledges that private sales so made may be at prices and on other terms less
favorable to the seller than if such Collateral were sold at public sales, and
agrees that the Collateral Agent has no obligation to delay the sale of any such
Collateral for the period of time necessary to permit the issuer of such
Collateral, even if such issuer would agree, to register such Collateral for
public sale under such applicable securities laws. The Pledgor agrees that
private sales made under the foregoing circumstances shall not, because so made,
be deemed to have been made in a commercially unreasonable manner.
11. The rights and remedies provided herein in favor of the
Collateral Agent shall not be deemed exclusive, but shall be cumulative, and
shall be in addition to all other rights and remedies in favor of the Collateral
Agent, as a secured party, existing at law or in equity or otherwise.
12. The Collateral Agent shall not have any duty as to the collection
or protection of the Collateral or any income thereon or payments with respect
thereto, or as to the preservation of any rights pertaining thereto beyond the
safe custody of any thereof actually in its possession. The Pledgor hereby
waives notice of acceptance hereof, and except as otherwise specifically
provided herein or required by provision of law which may not be waived, hereby
waives any and all notices or demands with respect to any exercise by the
Collateral Agent of any rights or powers which it may have or to which it may be
entitled with respect to the Collateral. The Pledgor releases the Collateral
Agent from any claims, causes of action or demands at any time arising out of or
with respect to this Heitman Pledge Agreement and the Collateral and/or any
actions taken or omitted to be taken by it with respect thereto, and the Pledgor
agrees to hold the Collateral Agent harmless from and against any and all such
claims, causes of action and demands, except as to any willful misconduct by the
Collateral Agent and as to any breach by the Collateral Agent of any provision
of this Heitman Pledge Agreement on the Collateral Agent's part to be performed
as herein expressly set forth.
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<PAGE>
13. (a) The Pledgor does hereby constitute and appoint the
Collateral Agent, or its nominee, as its proxy to attend any and all meetings of
the stockholders of any Subsidiary or any continuation or adjournment thereof,
and to consent in writing to the taking of any and all actions, with full power
to vote and act for it and in its name, place and stead, in the same manner, to
the same extent and with the same force and effect that it might, were it
personally present thereat, and/or acting, giving to the Collateral Agent, or
its nominee, full power of substitution; PROVIDED, THAT the proxy provided for
in this sentence may not be exercised by the Collateral Agent prior to (i) the
occurrence of an Event of Default AND (ii) the giving by the Collateral Agent to
the Pledgor of written notice of its intent to vote and act under this proxy.
This proxy is irrevocable and coupled with an interest, and any proxy or proxies
heretofore given by the Pledgor to any other Person are hereby revoked. The
Pledgor also hereby appoints the Collateral Agent as its attorney-in-fact for
the purposes of carrying out the provisions of this Heitman Pledge Agreement and
taking any action and exercising and executing any instrument which it may deem
necessary or advisable to accomplish the purposes hereof.
(b) At any time after the occurrence and during the continuance
of an Event of Default, the Collateral Agent shall have the right and power to
receive, endorse and collect all checks and other orders for the payment of
money made payable to the Pledgor representing any interest, payment of
principal or dividend or other distribution payable in respect of the Collateral
or any part thereof, and for and in the name, place and stead of the Pledgor, to
execute proxies, stock powers, endorsements, assignments or other instruments of
conveyance or transfer in respect of any of the Pledged Securities or any other
property which is or may become a part of the Collateral hereunder.
(c) The Pledgor agrees to sign and deliver to the Collateral
Agent financing statements, in form acceptable to the Collateral Agent, as the
Collateral Agent may from time to time reasonably request or as are necessary,
in the opinion of the Collateral Agent, to establish and maintain a valid and
perfected security interest in the Collateral and to pay any filing fees
relative thereto. The Pledgor also authorizes the Collateral Agent to file such
financing statements with respect to the Collateral without its signature and
further authorizes the Collateral Agent, to the extent permitted by law, to file
a photographic or other reproduction of this Heitman Pledge Agreement or other
document in lieu of a financing statement.
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<PAGE>
14. No delay on the part of the Collateral Agent in exercising any of
its options, powers or rights, or partial or single exercise thereof, shall
constitute a waiver thereof. None of the terms and conditions of this Heitman
Pledge Agreement may be discharged, changed, waived, modified or varied in any
manner unless in a writing duly signed by the Collateral Agent and the Pledgor.
15. All notices, requests and other communications to any party
hereunder shall be in writing (including bank wire, telex, telecopy or similar
teletransmission or writing) and shall be given to such party at its address or
telex or telecopier number specified (i) in the case of the Collateral Agent, in
Section 8.1 of the Credit Agreement and (ii) in the case of the Pledgor, in
Section 6(e) of the Heitman Guaranty. Each such notice, request or other
communication shall be effective (i) if given by telex, when such telex is
transmitted to the telex number specified in this Section and the appropriate
answerback is received, (ii) if given by mail, seventy-two (72) hours after such
communication is deposited in the mails with first class postage prepaid,
addressed as aforesaid or (iii) if given by any other means (including, without
limitation, by telecopy or air courier), when delivered at the address specified
in this Section; provided that if any day on which any notice, request or other
communication would otherwise be effective pursuant to the immediately preceding
clauses (i) through (iii) is not a Business Day, then such notice, request or
other communication shall be effective on the next succeeding Business Day; and
provided, further, that notices to the Collateral Agent shall not be effective
until received.
16. The Pledgor hereby irrevocably and unconditionally consents and
submits to the nonexclusive jurisdiction of any United States Federal or New
York State court sitting in New York County in any action or proceeding arising
out of or relating to this Heitman Pledge Agreement. The Pledgor irrevocably
consents to the service of any and all process in any such action or proceeding
brought in any court in or of the State of New York by the delivery of copies of
such process to such at its address specified in Section 15 or by certified or
registered mail directed to such address. The Pledgor hereby irrevocably and
unconditionally waives (i) any objection, including, without limitation, any
objection to the laying of venue or based on the grounds of FORUM NON
CONVENIENS, or that it or its assets is exempt or immune from attachment or
execution, which it may now or hereafter have to the bringing or maintaining of
any such action or proceeding in such respective jurisdictions, and (ii) except
in those cases involving the Collateral Agent's willful misconduct, any
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<PAGE>
claim against the Collateral Agent for consequential, special or punitive
damages. Nothing herein shall affect the right of the Collateral Agent to serve
process in any other manner permitted by law or to commence legal proceedings or
otherwise proceed against the Pledgor in any other jurisdiction.
17. All agreements, representations and warranties of the Pledgor
made herein shall be binding upon the Pledgor and its successors and assigns.
All provisions hereof shall inure to the benefit of the Collateral Agent for the
ratable benefit of the Banks and for the benefit of the Agents and their
respective successors and assigns.
18. Neither the Collateral Agent nor any of its officers, directors,
employees or agents shall be liable for any action taken or omitted to be taken
by it or them under this Heitman Pledge Agreement or for the consequences of any
oversight or error of judgment on its or their part, unless caused by its or
their own gross negligence as willful misconduct. The Collateral Agent shall be
entitled to rely in good faith upon any writing or other document, telegram or
telephone conversation believed by it to be genuine and correct and to have been
signed, sent or made by the proper person or persons, and, with respect to any
legal matter, the Collateral Agent shall be fully protected in acting or in
refraining from acting pursuant to or upon the advice of counsel selected by it
concerning all matters hereunder. The Pledgor agrees to indemnify the
Collateral Agent against all costs and expenses (including, without limitation,
reasonable attorneys' fees and disbursements) relating to the enforcement of
this Heitman Pledge Agreement against the Pledgor or its Collateral. The
provisions of Section VII of the Credit Agreement relating to the Collateral
Agent are incorporated herein by reference and shall apply for the benefit and
protection of the Collateral Agent under this Heitman Pledge Agreement.
19. The Collateral Agent, the Agent and any Bank may at any time and
from time to time, without the consent of or notice (except as shall be required
by applicable statute and cannot be waived) to, the Pledgor, without incurring
responsibility to the Pledgor and without impairing or releasing the pledge and
security interests provided for herein, upon or without any terms or conditions
and in whole or in part:
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<PAGE>
(a) Change the manner, place or terms of payment, and/or change
or extend the time of payment of, renew or alter, any of the Obligations, any
security therefor, or any liability incurred directly or indirectly in respect
thereof, and/or change, terminate or waive any of the provisions of any of the
Loan Documents, and the pledge and security interests provided for herein shall
apply to the Obligations as so changed, extended, renewed or altered;
(b) Sell, exchange, release, surrender, realize upon or
otherwise deal with in any manner and in any order any property by any Person
other than the Pledgor owning such property at any time pledged or mortgaged to
secure, or howsoever securing, the Obligations, and/or any offset thereagainst;
(c) Fail to perfect any security interest or exercise or refrain
from exercising any rights against the Pledgor or others or otherwise act or
refrain from acting;
(d) Settle or compromise any of the Obligations, any security
therefor or any liability incurred directly or indirectly in respect thereof or
hereof, and may subordinate the payment of all or any part thereof to the
payment of any liability (whether due or not) of the Pledgor to its creditors;
and
(e) Apply any sums by whomsoever paid or howsoever realized to
any of the Obligations, regardless of what liability or liabilities of the
Pledgor remain unpaid.
20. THIS HEITMAN PLEDGE AGREEMENT SHALL BE DEEMED TO BE A CONTRACT
MADE UNDER THE INTERNAL LAWS OF THE STATE OF NEW YORK, AND FOR ALL PURPOSES
SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH SUCH LAWS OF
SAID STATE, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS, EXCEPT TO THE
EXTENT THAT THE LAWS OF ANOTHER JURISDICTION GOVERN THE VALIDITY AND PERFECTION
OF THE SECURITY INTEREST HEREBY CREATED AND THE ENFORCEMENT OF THE REMEDIES
CONTAINED HEREIN.
21. This Heitman Pledge Agreement shall continue to be effective or
shall be reinstated, as the case may be, if at any time payment of all or any
part of the Obligations is rescinded or must otherwise be restored or returned
by the Agent, the Collateral Agent or any Bank for any reason whatsoever
including, without limitation, the insolvency, bankruptcy or reorganization of
the Pledgor, the Company, any Subsidiary of the Company or any guarantor of all
or any portion of the Obligations as though such payment had not been made,
irrespective of whether any note or other evidence of indebtedness has been
surrendered or cancelled.
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<PAGE>
22. IN ANY ACTION OR PROCEEDING RELATING TO THIS HEITMAN PLEDGE
AGREEMENT, THE PARTIES HERETO MUTUALLY WAIVE TRIAL BY JURY.
IN WITNESS WHEREOF, the parties have duly executed and delivered this
Heitman Pledge Agreement as of the day and year first above written.
HEITMAN FINANCIAL LTD.
By:___________________________
Name:
Title:
THE FIRST NATIONAL BANK OF BOSTON,
AS COLLATERAL AGENT
By:___________________________
Name:
Title:
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<PAGE>
SCHEDULE A TO
HEITMAN PLEDGE AGREEMENT
BY AND BETWEEN HEITMAN FINANCIAL LTD.
AND THE FIRST NATIONAL
BANK OF BOSTON, AS COLLATERAL AGENT
The Collateral covered by the Heitman Pledge Agreement to
which this Schedule A is annexed includes, without limitation,
the following shares of stock, certificates representing which
are hereby delivered to the Collateral Agent in good transferable
form, endorsed by the Pledgor in blank (and all proceeds
thereof):
<TABLE>
<CAPTION>
NUMBER PERCENTAGE
OF OF SHARES CERTIFICATE
ISSUER SHARES OUTSTANDING NUMBER
----------------- ------ ----------- -----------
----------------- ------ ----------- -----------
<S> <C> <C> <C>
Heitman Financial 1,000 100% 2
Services Ltd.
Heitman Advisory 1,000 100% 2
Corporation
Heitman Properties 39,763 100% 24
Ltd.
</TABLE>
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<PAGE>
SIXTH AMENDMENT
SIXTH AMENDMENT (this "AMENDMENT"), dated as of November 16,
1993 by and among UNITED ASSET MANAGEMENT CORPORATION (the "COMPANY"), UAM
REALTY ADVISORS INVESTMENT CORPORATION, DEWEY SQUARE INVESTORS CORPORATION,
UNITED ASSET MANAGEMENT HOLDINGS, INC., UNITED ASSET MANAGEMENT TRADEMARK, INC.,
UAM INVESTMENT CORPORATION, HEITMAN FINANCIAL LTD., MORGAN GUARANTY TRUST
COMPANY OF NEW YORK ("Morgan"), THE FIRST NATIONAL BANK OF BOSTON ("BKB"),
CREDIT LYONNAIS NEW YORK BRANCH ("Credit Lyonnais New York"), CREDIT LYONNAIS
CAYMAN ISLAND BRANCH ("Credit Lyonnais Cayman Island"), MELLON BANK, N.A.
("Mellon"), CHEMICAL BANK ("Chemical"), THE DAIWA BANK, LIMITED ("Daiwa"), BANK
HAPOALIM B.M. ("Bank Hapoalim"), SHAWMUT BANK, N.A. ("Shawmut"), MARYLAND
NATIONAL BANK ("MNB"), BROWN BROTHERS HARRIMAN & CO. ("BBH"), DEUTSCHE BANK A.G.
NEW YORK BRANCH/CAYMAN ISLANDS BRANCH ("Deutsche Bank"); Morgan, BKB, Credit
Lyonnais New York, Credit Lyonnais Cayman Island, Chemical, Mellon, Daiwa, Bank
Hapoalim, Shawmut, MNB, BBH and Deutsche Bank, each, a "Bank", and collectively,
the "Banks"), MORGAN, as Agent (the "Agent"), and BKB, as Collateral Agent (the
"Collateral Agent").
<PAGE>
RECITALS:
A. The Company, the Banks, the Agent and the Collateral Agent are parties to
the Credit Agreement dated as of May 18, 1992 (as amended by the First Amendment
dated as of October 8, 1992, the Second Amendment dated as of November 25, 1992,
the Third Amendment dated as of December 1, 1992, the Fourth Amendment dated as
of January 8, 1993 and the Fifth Amendment dated as of August 25, 1993, and as
supplemented by (i) an Addendum dated as of June 24, 1992 among Bank Hapoalim,
the Company and the Agent, (ii) an Addendum dated as of June 25, 1992 among
Daiwa, the Company and the Agent, (iii) an Addendum dated as of March 12, 1993
among Deutsche Bank, the Company, the Agent and the Collateral Agent and (iv) a
consent letter, dated May 19, 1993 among the Company and the Banks, the "CREDIT
AGREEMENT").
B. The Company proposes to make an offer to acquire all of the capital stock
of Murray Johnstone Holdings Limited, a company incorporated in Scotland
("Murray Johnstone"), which capital stock, when acquired, will be contributed by
the Company to its wholly-owned subsidiary, United Asset Management U.K.
Holdings, Inc., a Delaware corporation ("UAM U.K. Holdings") (all of the
foregoing is hereinafter referred to as the "Murray Johnstone Acquisition").
C. Murray Johnstone and its Subsidiaries currently have investments which
will remain outstanding and in existence following the Murray Johnstone
Acquisition.
-2-
<PAGE>
D. The Company has requested that the Credit Agreement be amended (i) to
permit such investments of Murray Johnstone and its Subsidiaries, (ii) to
provide for the pledge by UAM U.K. Holdings of up to sixty-five percent (65%) of
the outstanding capital stock of Murray Johnstone to the Collateral Agent, (iii)
to exempt the Subsidiaries of Murray Johnstone from the requirement that the
capital stock of such Subsidiaries be pledged to the Collateral Agent, and (iv)
to effect certain other amendments to the Credit Agreement, all as more
particularly set forth herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as
follows:
ARTICLE I.
AMENDMENTS
Section 1.1. DEFINITIONS INCORPORATED. Unless the context requires
otherwise, all capitalized terms used in this Amendment without definition shall
have the meanings provided therefor in the Credit Agreement as herein amended.
Section 1.2. AMENDMENTS.
(a) Section 1.1 of the Credit Agreement is hereby amended to add the
following definitions thereto in their proper alphabetical order:
"UAM U.K. HOLDINGS". United Asset Management U.K. Holdings, Inc., a
Delaware corporation and a Subsidiary of the Company.
"MURRAY JOHNSTONE". Murray Johnstone Holdings Limited, a company
incorporated in Scotland and a Subsidiary of the Company
-3-
<PAGE>
"UAM U.K. HOLDINGS GUARANTY". The UAM U.K. Holdings Guaranty, dated as
of November 16, 1993, made by UAM U.K. Holdings in favor of the
Beneficiaries named therein, as the same may be amended, supplemented or
otherwise modified from time to time.
"UAM U.K. HOLDINGS PLEDGE AGREEMENT". The UAM U.K. Holdings Pledge
Agreement, dated as of November 17, 1993, made by UAM U.K. Holdings in
favor of the Collateral Agent, for the ratable benefit of the Banks, as
the same may be amended, supplemented or otherwise modified from time to
time.
(b) The definition of "Collateral" contained in Section 1.1 of the
Credit Agreement is hereby amended to insert the phrase ", the UAM U.K. Holdings
Pledge Agreement" immediately following the phrase "the Heitman Pledge
Agreement".
(c) The definition of "Guaranty Subsidiaries" contained in Section 1.1
of the Credit Agreement is hereby amended to insert the phrase ", UAM U.K.
Holdings" immediately following the term "Heitman".
(d) The definition of "Loan Documents" contained in Section 1.1 of the
Credit Agreement is hereby amended to insert the phrase ", the UAM U.K. Holdings
Guaranty" immediately following the phrase "the Heitman Guaranty".
(e) The definition of the term "Pledged Stock" contained in Section 1.1
of the Credit Agreement is hereby amended (i) to add the phrase ", UAM U.K.
Holdings" immediately following the term "Heitman" and (ii) to add the phrase ",
the UAM U.K. Holdings Pledge Agreement" immediately following the phrase "the
Heitman Pledge Agreement".
-4-
<PAGE>
(f) The definition of the term "Security Documents" contained in
Section 1.1 of the Credit Agreement is hereby amended to add the phrase ", the
UAM U.K. Holdings Pledge Agreement" immediately following the phrase "the
Heitman Pledge Agreement".
(g) Clause (ii) of the definition of "Subordinated Indebtedness" is
hereby amended to read in its entirety as follows:
"(ii) all future Indebtedness incurred by the Company which Indebtedness
is specifically subordinated to the payment in full of all Obligations
to the Banks pursuant to documentation substantially in the form of
Exhibit W hereto or otherwise on terms and conditions satisfactory to
the Required Banks."
(h) Subsection (a) of Section 3.16 of the Credit Agreement is hereby
amended to (i) add the phrase ", the UAM U.K. Holdings Pledge Agreement"
immediately following the phrase "the Heitman Pledge Agreement" and (ii) to add
the phrase ", UAM U.K. Holdings" immediately following the term "Heitman".
(i) Section 5.1 of the Credit Agreement is hereby amended to (i) delete
the word "and" appearing at the end of clause (h) of such Section, (ii) to
delete the period at the end of clause (i) of such Section and replace it with a
comma and the word "and", and (iii) to add the following new clause (j) to such
Section:
"(j) without limiting clauses (a) through (i) of this Section 5.1, as
soon as available, but in any event within ninety (90) days after the
end of each fiscal year of the Company, audited consolidated accounts
for Murray Johnstone and its Subsidiaries prepared in accordance with
generally accepted accounting principles in the U.K. in effect from time
to time as at the end of such fiscal year."
-5-
<PAGE>
(j) Section 5.13 of the Credit Agreement is hereby amended to delete
the amount of "$14,000,000" contained therein and to replace it with the amount
"$20,000,000".
(k) Section 5.17 of the Credit Agreement is hereby amended (i) to
delete the word "and" appearing at the end of clause (vi) of such Section, (ii)
to delete the period at the end of clause (vii) of such Section and replace it
with a comma and the word "and", and (iii) to add the following new clause
(viii) to such Section:
"(viii) such investments (in addition to those permitted
investments set forth herein) as shall be made by
Murray Johnstone and its Subsidiaries which investments
do not at any time have an aggregate value in
accordance with generally accepted accounting
principles in the U.K. in effect from time to time in
excess of 15,000,000 english pounds sterling."
(l) Subsection (c) of Section 5.22 of the Credit Agreement is hereby
amended to delete the first two sentences of such Subsection and to replace such
deleted sentences with the following:
"Notwithstanding anything to the contrary contained in
Subsection (b) above, provided no Default or Event of Default
has occurred or shall be continuing, (i) the Company shall not
be obligated to cause the pledge of the capital stock of any
Subsidiary identified as a "Heitman Exempted Subsidiary" on
Exhibit P, (ii) the Company shall not be obligated to cause the
pledge of the capital stock of any Subsidiary identified as a
"Murray Johnstone Exempted Subsidiary" on Exhibit P, (iii) UAM
U.K. Holdings shall not be obligated to pledge more than
sixty-five percent (65%) of the issued and outstanding capital
stock of Murray Johnstone, and (iv) subject to the last
sentence of this Subsection (c), the Company shall not be
obligated
-6-
<PAGE>
to cause the pledge of the capital stock of any Subsidiary
acquired by a Subsidiary of the Company if the consolidated
revenues (calculated in accordance with GAAP) of the acquired
Subsidiary and its Subsidiaries for the four (4) consecutive
full fiscal quarters immediately prior to the acquisition of
such Subsidiaries shall not have exceeded $500,000 in the
aggregate. For purposes of this Subsection (c), any such
Subsidiary the capital stock of which has not been pledged as
allowed by this provision (including, without limitation, the
Subsidiaries identified on Exhibit P as "Exempted Subsidiaries"
but excluding the Subsidiaries identified on Exhibit P as
"Heitman Exempted Subsidiaries" and "Murray Johnstone Exempted
Subsidiaries") shall be referred to as an "Exempted
Subsidiary"."
(m) Exhibit P to the Credit Agreement is hereby amended to read in its
entirety as set forth on Exhibit A hereto.
(n) The Credit Agreement is hereby amended to add a new Exhibit W
thereto in the form attached hereto as Exhibit B.
(o) Schedule A to the Pledge Agreement is hereby amended to read in its
entirety as set forth on Exhibit C hereto.
(p) Schedule A to the Subsidiaries Pledge Agreement is hereby amended
to read in its entirety as set forth on Exhibit D hereto.
Section 1.3. CONDITIONS TO EFFECTIVENESS. The amendments set forth in this
Amendment shall not be effective until each of the following conditions
precedent shall have been satisfied:
(a) The Agent shall have received counterparts of this Amendment, duly
executed on behalf of each of the parties hereto;
(b) The Agent shall have received counterparts of each of the UAM U.K.
Holdings Guaranty and the UAM U.K. Holdings Pledge Agreement, in
substantially the forms of Exhibit E and Exhibit F, respectively, hereto,
duly executed on behalf of UAM U.K. Holdings;
-7-
<PAGE>
(c) The Agent shall have received certified copies of the resolutions
of the Board of Directors of UAM U.K. Holdings approving the UAM U.K.
Holdings Guaranty and the UAM U.K. Holdings Pledge Agreement, and of all
other documents, if any, evidencing corporate action and/or governmental
authorization or approval with respect to the UAM U.K. Holdings Guaranty or
the UAM U.K. Holdings Pledge Agreement;
(d) The Agent shall have received a certificate of the Secretary or an
Assistant Secretary of UAM U.K. Holdings certifying the name, title and true
signature of each officer of UAM U.K. Holdings authorized to execute the UAM
U.K. Holdings Guaranty and the UAM U.K. Holdings Pledge Agreement;
(e) The Agent shall have received (i) a copy of the Certificate of
Incorporation of UAM U.K. Holdings, as amended through the date hereof,
certified by the Secretary of State of Delaware; (ii) a long-form good
standing certificate for UAM U.K. Holdings from the Secretary of State of
Delaware; (iii) long-form good standing certificates from the Secretaries of
State of the states, or other comparable officers of each jurisdiction, in
which UAM U.K. Holdings is required to qualify to do business; (iv) a tax
status report for UAM U.K. Holdings from the Secretary of State or other
comparable officer of the State of Delaware (where obtainable); (v) tax
status reports (where obtainable) of the Secretary of State of the states, or
other comparable officers of each jurisdiction, in which UAM U.K. Holdings is
required to qualify to do business; and (vi) such additional supporting
documents as the Agent or any Bank may reasonably request; PROVIDED, HOWEVER,
that if any such good standing certificates or tax status reports are not
readily available, then a telegram from the appropriate Secretary of State or
comparable officer may be substituted therefor;
(f) The Agent shall have received the opinion of Hill & Barlow, counsel
to the Company and its Subsidiaries, in form and substance satisfactory to
the Agent;
(g) The Agent shall have received the opinion of Dundas & Wilson, UK
counsel to the Company, in form and substance satisfactory to the Agent;
-8-
<PAGE>
(h) The Agent shall have received a certificate dated as of the date
hereof of a senior officer of the Company to the effect that (i) there exists
no Default or Event of Default and (ii) all of the representations and
warranties of the Company contained in this Amendment, the Credit Agreement,
as herein amended, and the agreements executed in connection with the Credit
Agreement by the Company are true and correct in all material respects as of
the date hereof with the same force and effect as if made on and as of such
date, except to the extent that such representations and warranties expressly
relate to an earlier date or as to matters which have changed in accordance
with or as permitted under the Credit Agreement;
(i) All corporate and legal proceedings and all agreements and
instruments in connection with the transactions contemplated by this
Amendment shall be satisfactory in form, scope, and substance to the Agent
and its counsel, and the Banks and their respective counsel shall have
received all information and copies of all proceedings which each may
reasonably have requested in connection therewith, such documents where
appropriate to be certified by proper government authorities;
(j) The Collateral Agent shall have received the certificates
evidencing all of the issued and outstanding capital stock of UAM U.K.
Holdings and at least sixty-five percent (65%) of the issued and outstanding
capital stock of Murray Johnstone, issued in the name of The First National
Bank of Boston, as Collateral Agent; and
(k) The Agent shall have received such further agreements, instruments,
documents and certificates as the Agent shall have reasonably requested.
ARTICLE II.
MISCELLANEOUS
Section 2.1. FURTHER ASSURANCES. Each of the parties hereto hereby agrees
to do such further acts and things and to execute, deliver and acknowledge such
additional agreements, powers and instruments as any other party hereto may
reasonably require to carry into effect the purposes of this Amendment.
-9-
<PAGE>
Section 2.2. COSTS, EXPENSES AND TAXES. The provisions of Section 8.2 of
the Credit Agreement are hereby incorporated by reference as if fully set forth
herein, MUTATIS MUTANDIS, and shall apply to this Amendment.
Section 2.3. CERTAIN REPRESENTATIONS AND WARRANTIES BY THE COMPANY. The
Company and each of the Guaranty Subsidiaries (where applicable) represents and
warrants that (i) it has the right, power and capacity and has been duly
authorized and empowered by all required corporate and shareholder action to
enter into, execute, deliver and perform this Amendment; (ii) this Amendment
constitutes its legal, valid and binding obligation, enforceable against it in
accordance with its terms, except as enforcement thereof may be subject to the
effect of any applicable bankruptcy, insolvency, reorganization, moratorium or
similar law affecting creditors' rights generally and general principles of
equity (regardless of whether such enforcement is sought in a proceeding in
equity or at law); (iii) the consummation of the Murray Johnstone Acquisition
and related transactions, and its execution, delivery and performance of this
Amendment, do not and will not violate any provision of its certificate of
incorporation or By-Laws or any contractual provision to which it is a party or
to which it or any of its property is subject; and (iv) all representations and
warranties contained in the Credit Agreement and the other Loan Documents are
true and correct in all material respects with the same effect as though such
representations and warranties had been
-10-
<PAGE>
made on and as of the date hereof, except to the extent that such
representations and warranties expressly relate to an earlier date or as to any
matters which have changed in accordance with or as permitted under the Credit
Agreement.
Section 2.4. REPRESENTATION BY ALL PARTIES HERETO. Each of the parties
hereto represents and warrants that its execution, delivery and performance of
this Amendment will not violate any provisions of its certificate of
incorporation or By-Laws or any contractual provision to which it is a party or
to which it or its property is subject.
Section 2.5. RATIFICATION, CONFIRMATION AND NO DEFAULT. The Company and
each Guaranty Subsidiary hereby ratifies and confirms the Credit Agreement as
herein amended and all agreements, instruments and documents related thereto to
which it is a party and agrees that all liens, security interests, guaranties
and other rights granted thereby to the Banks or the Agents shall apply to all
indebtedness and other obligations outstanding under the Credit Agreement (as
amended by this Amendment), and the Company hereby represents and warrants to
the Agents and the Banks that no Default or Event of Default exists as of the
date hereof under the Credit Agreement (as amended by this Amendment) or would
exist after giving effect to the transactions contemplated by this Amendment.
It is understood and agreed that the amendments set forth in this Amendment are
limited to the matters expressly set forth herein and shall not be deemed to (a)
be a consent under, or a waiver or modification of, any other
-11-
<PAGE>
terms, provisions or conditions of the Credit Agreement or any agreement,
instrument or document related thereto, (b) be a consent to any transaction
(except to the extent expressly set forth herein), or (c) prejudice any rights
which the Banks or the Agents, or any of them, may now or in the future have in
connection with the Credit Agreement as herein amended or any agreement,
instrument or document related thereto.
Section 2.6. COUNTERPARTS. This Amendment may be executed in one or more
counterparts, each of which, when so executed and delivered, shall be deemed to
be an original and all of which counterparts, taken together, shall constitute
but one and the same Amendment with the same force and effect as if the
signatures of all of the parties were on a single counterpart, and it shall not
be necessary in making proof of this Amendment to produce more than one such
counterpart.
Section 2.7. HEADINGS. Headings used in this Amendment are for convenience
of reference only and shall not affect the construction of this Amendment.
Section 2.8. INTEGRATION. This Amendment constitutes the entire agreement
among the parties hereto with respect to the subject matter hereof.
Section 2.9. GOVERNING LAW. This Amendment shall be governed by, and
construed and enforced in accordance with, the internal laws of the State of New
York (without reference to conflict of laws principles).
-12-
<PAGE>
Section 2.10. BINDING EFFECT. This Amendment shall be binding upon and
inure to the benefit of and be enforceable by the parties hereto and their
respective successors and assigns; PROVIDED that neither the Company nor any
Guaranty Subsidiary may assign, transfer or delegate any of its rights,
interests or obligations hereunder without the prior written consent of the
Banks.
Section 2.11. AMENDMENT; WAIVER. No delay on the part of the Banks or the
Agents in exercising any of their respective rights, remedies, powers and
privileges hereunder or partial or single exercise thereof, shall constitute a
waiver thereof. None of the terms and conditions of this Amendment may be
changed, waived, modified or varied in any manner whatsoever, except in
accordance with Section 8.6 of the Credit Agreement. Upon the effectiveness of
this Amendment, each reference in any Loan Document to the Credit Agreement
shall be a reference to the Credit Agreement as amended by this Amendment.
[BALANCE OF PAGE INTENTIONALLY LEFT BLANK]
-13-
<PAGE>
IN WITNESS WHEREOF, this Sixth Amendment has been duly executed and delivered
as of the date first above written.
UNITED ASSET MANAGEMENT CORPORATION
By:/s/ William H. Park
--------------------------
Title: Senior Vice President
UAM REALTY ADVISORS INVESTMENT
CORPORATION
By:/s/ William H. Park
-----------------------------
Title: Treasurer
DEWEY SQUARE INVESTORS CORPORATION
By:/s/ Peter M. Whitman, Jr.
--------------------------
Title: President
UNITED ASSET MANAGEMENT HOLDINGS,
INC.
By:/s/ William H. Park
--------------------------
Title: President
UNITED ASSET MANAGEMENT TRADEMARK,
INC.
By:/s/ William H. Park
--------------------------
Title: President
UAM INVESTMENT CORPORATION
By:/s/ William H. Park
--------------------------
Title: President
-14-
<PAGE>
HEITMAN FINANCIAL LTD.
By:/s/Roger Smith
--------------------------
Title: Executive Vice President
MORGAN GUARANTY TRUST COMPANY OF
NEW YORK, as a Bank and as Agent
By:/s/
---------------------------
Title: Vice President
THE FIRST NATIONAL BANK OF BOSTON,
as a Bank
By:/s/
---------------------------
Title: Director
THE FIRST NATIONAL BANK OF BOSTON,
as Collateral Agent
By:/s/ K. Caldwell
---------------------------
Title: Senior Account
Administrator
CREDIT LYONNAIS NEW YORK BRANCH
By:/s/Robert Ivosevich
---------------------------
Title: Senior Vice President
CREDIT LYONNAIS CAYMAN ISLAND
BRANCH
By:/s/Robert Ivosevich
---------------------------
Title: Authorized Signature
-15-
<PAGE>
MELLON BANK, N.A.
By:/s/Susan Underwood
---------------------------
Title: Officer
CHEMICAL BANK
By:/s/Richard H. Klein
---------------------------
Title: Managing Director
THE DAIWA BANK, LIMITED
By:/s/Daniel J. Eastman
---------------------------
Title: Vice President and
Manager
By:/s/Stephen Sullivan
---------------------------
Title: E.O.
BANK HAPOALIM B.M.
By:/s/Martin B. Goodstein
---------------------------
Title: Vice President
By:/s/Mitchell Jones
---------------------------
Title: A.V.P.
SHAWMUT BANK, N.A.
By:/s/Eileen P. Murphy
---------------------------
Title: Vice President
MARYLAND NATIONAL BANK
By:/s/
---------------------------
Title: Vice President
-16-
<PAGE>
BROWN BROTHERS HARRIMAN & CO.
By:/s/
---------------------------
Title: Deputy Manager
DEUTSCHE BANK A.G. NEW YORK BRANCH/
CAYMAN ISLANDS BRANCH
By:/s/Christopher C. Sharp
---------------------------
Title: Assistant Vice President
By:/s/Kunduck Moon
---------------------------
Title: Director
-17-
<PAGE>
EXHIBIT A TO
SIXTH AMENDMENT
UNITED ASSET MANAGEMENT CORPORATION
SUBSIDIARIES
<TABLE>
<CAPTION>
TOTAL CAPITAL
STOCK PERCENTAGE
ISSUED AND OF CAPITAL
NAME OUTSTANDING STOCK OWNED OWNER
- ----------------------------------------------- ----------- ----------- -----------------------------
<S> <C> <C> <C>
Alpha Global Fixed Income Managers, Inc. (DE) 100 100% Company
Analytic Investment Management, Inc. (CA) 3,400 100% Company
Barrow, Hanley, Mewhinney & Strauss, Inc. (NV) 100 100% Company
Cambiar Investors, Inc. (CO) 100 100% Company
The Campbell Group, Inc. (DE) 100 100% Company
**/***Timber Pacific Properties, Inc. (OR) 100 100% The Campbell Group, Inc.
Chicago Asset Management Company (DE) 100 100% Company
Cooke & Bieler, Inc. (PA) 5,462 100% Company
**/***Baxter & Stewart, Inc. (PA) 100 100% Cooke & Bieler, Inc.
C. S. McKee & Company, Incorporated (PA) 21,100 Class A 100% Company
7,430 Class B
</TABLE>
<PAGE>
UNITED ASSET MANAGEMENT CORPORATION
SUBSIDIARIES
<TABLE>
<CAPTION>
TOTAL CAPITAL
STOCK PERCENTAGE
ISSUED AND OF CAPITAL
NAME OUTSTANDING STOCK OWNED OWNER
- ----------------------------------------------- ----------- ----------- -----------------------------
<S> <C> <C> <C>
Fiduciary Management Associates, Inc. (DE) 900 100% Company
GSB Investment Management, Inc. 100 100% Company
Hamilton, Allen & Associates, Inc. (DE) 100 100% Company
HIMCO, INC., d/b/a 400 100% Company
Hanson Investment Management Company (CA)
Investment Counselors of Maryland, Inc. (MD) 7,500 100% Company
Investment Research Company (IL) 100 100% Company
John K. Dwight Asset Management Company,
Inc. (DE) 100 100% Company
**Ki Pacific Asset Management, Inc. (DE) 100 100% Company
L&B Realty Advisors, Inc. (DE) 3,910 95% Company (3,710)
</TABLE>
<PAGE>
UNITED ASSET MANAGEMENT CORPORATION
SUBSIDIARIES
<TABLE>
<CAPTION>
TOTAL CAPITAL
STOCK PERCENTAGE
ISSUED AND OF CAPITAL
NAME OUTSTANDING STOCK OWNED OWNER
- ----------------------------------------------- ----------- ----------- -----------------------------
<S> <C> <C> <C>
**/***L&B Institutional Property Managers, 1,000 100% L&B Realty Advisors, Inc.
Inc. (DE)
**/***L&B Institutional Property Managers 1,000 100% L&B Institutional Property
of Arizona, Inc. (AZ) Managers, Inc.
**L&B Institutional Property Managers 1,000 100% L&B Institutional Property
of California, Inc. (CA) Managers, Inc.
**/***L&B Institutional Property Managers 1,000 100% L&B Institutional Property
0f Missouri, Inc. (MO) Managers, Inc.
**/***L&B Institutional Property Managers 1,000 100% L&B Institutional Property
of North Carolina, Inc. (NC) Managers, Inc.
**/*** L&B Realty Acquisitions, Inc. (DE) 1,000 100% L&B Institutional Property
Managers, Inc.
Nelson, Benson & Zellmer, Inc. (CO) 100 100% Company
</TABLE>
<PAGE>
UNITED ASSET MANAGEMENT CORPORATION
SUBSIDIARIES
<TABLE>
<CAPTION>
TOTAL CAPITAL
STOCK PERCENTAGE
ISSUED AND OF CAPITAL
NAME OUTSTANDING STOCK OWNED OWNER
- ----------------------------------------------- ----------- ----------- -----------------------------
<S> <C> <C> <C>
**Investment Trust Company (CO) 25,000 100% Nelson, Benson & Zellmer, Inc.
Newbold's Asset Management, Inc. (PA) 100 100% Company
**Newco Acquisition Corp. (DE) 100 100% Company
(formerly named Regis Retirement
Plan Services, Inc.)
Northern Capital Management Incorporated (WI) 100 100% Company
NWQ Investment Management Company, Inc. (MA) 200,000 100% United Asset Management
Holdings, Inc.
Olympic Capital Management, Inc. (WA) 100 100% Company
***Fleckenstein Capital, Inc. (WA) 100 100% Olympic Capital Management, Inc.
*/**Regis Retirement Plan Services, Inc. (MA) 7,000 100% Company
(formerly named RFI Distributors, Inc.)
</TABLE>
<PAGE>
UNITED ASSET MANAGEMENT CORPORATION
SUBSIDIARIES
<TABLE>
<CAPTION>
TOTAL CAPITAL
STOCK PERCENTAGE
ISSUED AND OF CAPITAL
NAME OUTSTANDING STOCK OWNED OWNER
- ----------------------------------------------- ----------- ----------- -----------------------------
<S> <C> <C> <C>
Rice, Hall, James & Associates (CA) 100 100% Company
The Rothschild Company (MD) 638.6316 100% Company
Sirach Capital Management, Inc. (WA) 100 100% Company
*Spectrum Asset Management, Inc. (CT) 100 100% Company
Sterling Capital Management Company (NC) 7,757 100% Company
*/**Sterling Capital Distributors, Inc. (NC) 5,000 100% Sterling Capital Management
Company
Thompson, Siegel & Walmsley, Inc. (VA) 2,898 100% Company
**UAM Investment Corporation (DE) 100 100% Company
</TABLE>
<PAGE>
UNITED ASSET MANAGEMENT CORPORATION
SUBSIDIARIES
<TABLE>
<CAPTION>
TOTAL CAPITAL
STOCK PERCENTAGE
ISSUED AND OF CAPITAL
NAME OUTSTANDING STOCK OWNED OWNER
- ----------------------------------------------- ----------- ----------- -----------------------------
<S> <C> <C> <C>
**United Asset Management Holdings, Inc. (DE) 100 100% Company
Acadian Asset Management, Inc. (MA) 100 100% United Asset Management
Holdings, Inc.
Dewey Square Investors Corporation (DE) 100 100% United Asset Management
Holdings, Inc.
HT Investors, Inc. (DE) 100 100% Dewey Square Investors
Corporation
First Pacific Advisors, Inc. (MA) 200,000 100% United Asset Management
Holdings, Inc.
*/**FPA Fund Distributors, Inc. (CA) 100 100% First Pacific Advisors, Inc.
***
Hagler, Mastrovita & Hewitt, Inc. (DE) 50,000 100% United Asset Management
Holdings, Inc.
Hellman, Jordan Management Co., Inc. (DE) 449.5 100% United Asset Management
Holdings, Inc.
</TABLE>
<PAGE>
UNITED ASSET MANAGEMENT CORPORATION
SUBSIDIARIES
<TABLE>
<CAPTION>
TOTAL CAPITAL
STOCK PERCENTAGE
ISSUED AND OF CAPITAL
NAME OUTSTANDING STOCK OWNED OWNER
- ----------------------------------------------- ----------- ----------- -----------------------------
<S> <C> <C> <C>
Pell, Rudman & Co., Inc. (DE) 100 100% United Asset Management
Holdings, Inc.
**/***Atlantic Trust Company,
National Association (DC) 3 100% Pell, Rudman & Co., Inc.
**Boston Harbor Trust Company,
National Association (MA) 4,670 100% Pell, Rudman & Co., Inc.
Tom Johnson Investment Management, Inc. (MA) 100 100% United Asset Management
Holdings, Inc.
**UAM Realty Advisors Investment Corporation 100 100% United Asset Management
(DE) Holdings, Inc.
**United Asset Management Trademark, Inc. (DE) 100 100% Company
</TABLE>
<PAGE>
UNITED ASSET MANAGEMENT CORPORATION
SUBSIDIARIES
<TABLE>
<CAPTION>
TOTAL CAPITAL
STOCK PERCENTAGE
ISSUED AND OF CAPITAL
NAME OUTSTANDING STOCK OWNED OWNER
- ----------------------------------------------- ----------- ----------- -----------------------------
<S> <C> <C> <C>
**Heitman Financial Ltd. (IL) 100 100% Company
**Heitman Financial Services Ltd. (IL) 1,000 100% Heitman Financial Ltd.
+/**Heitman Mortgage Corporation (HI) 10 100% Heitman Financial Services Ltd.
+/**HMI Management Company (IL) 9,400 100% Heitman Financial Services Ltd.
+/**Philadelphian Realty Corporation (DE) 1,000 100% Heitman Financial Services Ltd.
+/**Heitman Holdings, Ltd. (DE) 1,000 100% Heitman Financial Services Ltd.
+/**Heitman Equities Corporation (DE) 1,000 100% Heitman Financial Services Ltd.
+/*/**Heitman Securities Corporation (DE) 1,000 100% Heitman Financial Services Ltd.
+/**HRC, Inc. (NV) 1,000 100% Heitman Financial Services Ltd.
+/**Heitman Realty Corporation (IL) 1,000 100% Heitman Financial Services Ltd.
</TABLE>
<PAGE>
UNITED ASSET MANAGEMENT CORPORATION
SUBSIDIARIES
<TABLE>
<CAPTION>
TOTAL CAPITAL
STOCK PERCENTAGE
ISSUED AND OF CAPITAL
NAME OUTSTANDING STOCK OWNED OWNER
- ----------------------------------------------- ----------- ----------- -----------------------------
<S> <C> <C> <C>
+/**Heitman Snowmass Corporation (IL) 100 100% Heitman Financial Services Ltd.
+/**HRC III, Inc. (NV) 100 100% Heitman Financial Services Ltd.
+/**H.E. One, Inc. (DE) 3,385 100% Heitman Financial Services Ltd.
+/**HRC IV, Inc. (NV) 100 100% Heitman Financial Services Ltd.
+/**HRC V, Inc. (NV) 1,000 100% Heitman Financial Services Ltd.
+/**HRC VI, Inc. (DE) 100 100% Heitman Financial Services Ltd.
+/**Castle Loan Corporation (IL) 1,000 100% Heitman Financial Services Ltd.
+/**HRC - LLC, Inc. (WY) 100 100% Heitman Financial Services Ltd.
+/**Heitman Financial U.K. Ltd. (IL) 1,000 100% Heitman Financial Services Ltd.
Heitman Advisory Corporation (IL) 1,000 100% Heitman Financial Ltd.
</TABLE>
<PAGE>
UNITED ASSET MANAGEMENT CORPORATION
SUBSIDIARIES
<TABLE>
<CAPTION>
TOTAL CAPITAL
STOCK PERCENTAGE
ISSUED AND OF CAPITAL
NAME OUTSTANDING STOCK OWNED OWNER
- ----------------------------------------------- ----------- ----------- -----------------------------
<S> <C> <C> <C>
+/**Lender Services of Iowa Ltd. (IA) 1,000 100% Heitman Advisory Corporation
**Heitman Properties Ltd. (IL) 39,763 100% Heitman Financial Ltd.
+/**Castle Management Inc. (RI) 1,000 100% Heitman Properties Ltd.
+/**Heitman Properties of Rhode Island Ltd.
(formerly named Castle Leasing Inc.) (RI) 1,000 100% Heitman Properties Ltd.
+/**Centre Properties Ltd. (IL) 1,000 100% Heitman Properties Ltd.
+/**Heitman Florida Management Inc. (DE) 1,000 100% Heitman Properties Ltd.
+/**Heitman Pennsylvania Management Inc. (DE) 1,000 100% Heitman Properties Ltd.
+/**HMC Insurance Agency, Inc. (IL) 1,000 100% Heitman Properties Ltd.
+/**Heitman Minnesota Management Inc. (DE) 1,000 100% Heitman Properties Ltd.
</TABLE>
<PAGE>
UNITED ASSET MANAGEMENT CORPORATION
SUBSIDIARIES
<TABLE>
<CAPTION>
TOTAL CAPITAL
STOCK PERCENTAGE
ISSUED AND OF CAPITAL
NAME OUTSTANDING STOCK OWNED OWNER
- ----------------------------------------------- ----------- ----------- -----------------------------
<S> <C> <C> <C>
+/**Heitman Kentucky Management Inc. (DE) 1,000 100% Heitman Properties Ltd.
+/**Heitman Virginia Management Inc. (WI) 1,000 100% Heitman Properties Ltd.
+/**Heitman Ohio Management Inc. (DE) 1,000 100% Heitman Properties Ltd.
+/**Heitman Nevada Management Inc. (DE) 1,000 100% Heitman Properties Ltd.
+/**Heitman Wisconsin Management, Inc. 1,000 100% Heitman Properties Ltd.
+/**Heitman Properties of Iowa Ltd. (DE) 1,000 100% Heitman Properties Ltd.
+/**Heitman D.C. Properties Ltd. (DE) 1,000 100% Heitman Properties Ltd.
+/**Heitman Properties of Louisiana Ltd. (DE) 1,000 100% Heitman Properties Ltd.
+/**Heitman Properties of Michigan Ltd. (MI) 100 100% Heitman Properties Ltd.
+/**Heitman Properties of Missouri Ltd. (MO) 1,000 100% Heitman Properties Ltd.
</TABLE>
<PAGE>
UNITED ASSET MANAGEMENT CORPORATION
SUBSIDIARIES
<TABLE>
<CAPTION>
TOTAL CAPITAL
STOCK PERCENTAGE
ISSUED AND OF CAPITAL
NAME OUTSTANDING STOCK OWNED OWNER
- ----------------------------------------------- ----------- ----------- -----------------------------
<S> <C> <C> <C>
+/**Heitman Properties of Arizona Ltd. (AZ) 1,000 100% Heitman Properties Ltd.
+/**Heitman Properties of Indiana Ltd. (IN) 1,000 100% Heitman Properties Ltd.
+/**Heitman Corporate Plaza, Inc. (KY) 100 100% Heitman Properties Ltd.
+/**Heitman Mayfair Corporation (NV) 2,500 100% Heitman Properties Ltd.
+/**Heitman Properties of Georgia Ltd. (GA) 1,000 100% Heitman Properties Ltd.
+/**Heitman Properties of Mississippi Ltd. (MS) 1,000 100% Heitman Properties Ltd.
+/**Heitman Properties of New Mexico Ltd. (NM) 1,000 100% Heitman Properties Ltd.
+/**Heitman Properties of New York Ltd. (NY) 1,000 100% Heitman Properties Ltd.
+/**Heitman Properties of North Carolina 1,000 100% Heitman Properties Ltd.
Ltd. (NC)
</TABLE>
<PAGE>
UNITED ASSET MANAGEMENT CORPORATION
SUBSIDIARIES
<TABLE>
<CAPTION>
TOTAL CAPITAL
STOCK PERCENTAGE
ISSUED AND OF CAPITAL
NAME OUTSTANDING STOCK OWNED OWNER
- ----------------------------------------------- ----------- ----------- -----------------------------
<S> <C> <C> <C>
+/**Heitman Properties of South Carolina 1,000 100% Heitman Properties Ltd.
Ltd. (SC)
+/**Heitman Properties of Tennessee Ltd. (TN) 1,000 100% Heitman Properties Ltd.
+/**Heitman Properties of Texas Ltd. 1,000 100% Heitman Properties Ltd.
+/**Heitman Properties of Nebraska Ltd. (NE) 1,000 100% Heitman Properties Ltd.
+/**Property Security Services Ltd. (MI) 1,000 100% Heitman Properties Ltd.
+/**Heitman Properties of Alabama Ltd. (DE) 10,000 100% Heitman Properties Ltd.
</TABLE>
<PAGE>
UNITED ASSET MANAGEMENT CORPORATION
SUBSIDIARIES
<TABLE>
<CAPTION>
TOTAL CAPITAL
STOCK PERCENTAGE
ISSUED AND OF CAPITAL
NAME OUTSTANDING STOCK OWNED OWNER
- ----------------------------------------------- ----------- ----------- -----------------------------
<S> <C> <C> <C>
**United Asset Management U.K. Holdings, Inc. 1 100% Company
**Murray Johnstone Holdings Limited 7,195,429 99.72% United Asset Management U.K.
Holdings, Inc.
1/**Murray Johnstone International Limited 1,000,000 100% Murray Johnstone Holdings
(ordinary) Limited
400,000 100%
(preferred)
1/**Murray Johnstone Limited 1,001,000 100% Murray Johnstone Holdings Limited
1/**Murray Johnstone Investment Trust 2 100% Murray Johnstone Limited
Management Limited
1/**Murray Johnstone Developments Limited 2 100% Murray Johnstone Limited
1/**Murray Johnstone Europe Limited 2 100% Murray Johnstone Limited
1/**Murray Johnstone Asset Management Limited 500 100% Murray Johnstone Limited
</TABLE>
<PAGE>
UNITED ASSET MANAGEMENT CORPORATION
SUBSIDIARIES
<TABLE>
<CAPTION>
TOTAL CAPITAL
STOCK PERCENTAGE
ISSUED AND OF CAPITAL
NAME OUTSTANDING STOCK OWNED OWNER
- ----------------------------------------------- ----------- ----------- -----------------------------
<S> <C> <C> <C>
1/**Murray Johnstone Personal Asset 100,000 60% Murray Johnstone Limited
Management Limited (ordinary)
350,000 100%
(preferred)
1/**Murray Johnstone (General Partner) 5,000 100% Murray Johnstone Limited
Limited
1/**BIG (General Partner) Limited 5,000 100% Murray Johnstone Limited
1/**Murray Johnstone Unit Trust 50,000 100% Murray Johnstone Limited
Management Limited
1/**Embankment Properties (Management) 25,000 67% Murray Johnstone Limited
Limited
1/**Murray Johnstone (Jersey) Limited 25,000 100% Murray Johnstone Limited
1/**Murray Johnstone Buy-out Management 27,824 100% Murray Johnstone Limited
(Jersey) Limited
<FN>
* = Registered as a broker-dealer under Section 15 of the Exchange Act
** = Not registered as an investment adviser under Section 203 of the
Investment Advisers Act
*** = Exempted Subsidiary
+ = Heitman Exempted Subsidiary
1 = Murray Johnstone Exempted Subsidiary
</TABLE>
<PAGE>
EXHIBIT B TO
SIXTH AMENDMENT
SUBORDINATION AGREEMENT
AGREEMENT made as of the [____] day of [______________, 199_] by and between
United Asset Management Corporation, a Delaware corporation ("UAM"), and ABC
Associates, Inc., a [______________] corporation ("ABC" or, together with any
person to whom the Note referred to herein is assigned or endorsed, the
"Holder").
BACKGROUND
(a) The Holder has entered into an Acquisition Agreement with UAM dated as of
[____________ __, 199_], relating to the acquisition by UAM of the assets and
business of ABC, which assets and business have been transferred to UAM's
wholly-owned subsidiary, ABC Newco, Inc. ("Newco")(such agreement being
hereinafter referred to as the "Acquisition Agreement"). Terms defined and used
in the Acquisition Agreement and the Note, as defined below, shall have the same
meaning when used in this Subordination Agreement.
(b) On this date, UAM has issued and delivered to the Holder UAM's
[________%] Non-Negotiable Subordinated Note in the principal amount of
$[___________________] (the "Note") in partial payment for such assets and
business.
(c) Section 1.2 of the Acquisition Agreement and Section 4 of the Note
provide that the Note will be subordinated in accordance with this Subordination
Agreement.
AGREEMENTS
The parties hereto hereby agree as follows:
Section 1. SUBORDINATION. The indebtedness evidenced by the Note shall be
subordinated and junior to the extent set forth in the following subsections (a)
to (d), inclusive, to all Senior Debt (as defined in subsection (e) hereof) of
UAM:
(a) No payment on account of principal of, premium or interest on the Note
shall be made or accepted, including by right of set-off, and no purchase
of the Note directly or indirectly by UAM shall be made, and the Holder
of the Note shall not be entitled to enforce any such payment, if, at the
time thereof or immediately after giving effect thereto, (i) there shall
exist a default in the payment of principal of, premium or interest on
any Senior Debt, and such default shall not have been cured or waived or
shall not have ceased to exist or
<PAGE>
(ii) there shall exist a default or an event of default (other than a
default in the payment of amounts due thereon) with respect to any
Senior Debt, as defined therein or in the instrument under which the
same is outstanding, permitting the holders thereof, or any of them,
to accelerate the maturity thereof, and such default or event of
default shall not have been cured or waived or shall not have ceased
to exist; provided, however, that after 180 days of the occurrence of
a default or event of default described in (ii) hereof, if the holders
of Senior Debt have not caused the maturity of the Senior Debt to be
accelerated, the Holder of the Note shall thereafter be entitled to
receive each installment of interest and each installment of principal
on the Note as such installments become due and payable, subject to
the application of the restrictions of this paragraph again upon the
occurrence of each further default or event of default.
(b) Upon the maturity of any Senior Debt by lapse of time, acceleration or
otherwise, then all such matured Senior Debt shall first be paid in full,
before any payment on account of principal, premium or interest is made
upon the Note.
(c) In the event of any insolvency, bankruptcy, liquidation (whether
voluntary or involuntary), reorganization or other similar proceedings,
or any receivership proceedings in connection therewith, relative to UAM
or its property, and in the event of any proceedings for voluntary
liquidation, dissolution or other winding up of UAM, whether voluntary or
involuntary, or any assignment for the benefit of creditors or other
marshalling of assets or liabilities of UAM, whether or not involving
insolvency or bankruptcy proceedings, then all Senior Debt shall first be
paid in full or provision for such payment satisfactory to the holders of
the majority in principal amount of the Senior Debt shall be made, before
any payment on account of principal, premium or interest is made upon the
Note.
(d) In any of the proceedings referred to in subsection (c) above, any
payment or distribution of any kind or character, whether in cash,
property, stock or obligations, which may be payable or deliverable in
respect of the Note, or the indebtedness represented thereby, shall be
paid or delivered directly to the holders of Senior Debt or their
authorized representative designated to UAM in writing, for application
in payment thereof, unless and until the Senior Debt shall have been paid
in full, and the Holder of the Note does hereby authorize holders of
Senior Debt
-2-
<PAGE>
to prove and enforce claims comprising the Note, vote claims comprising
the Note to accept or reject any plan for liquidation, reorganization,
composition or extension and accept and receipt for any payment or
distribution to such extent and apply such payment or distribution to the
then unpaid Senior Debt and do all things and to execute all such
documents as may be necessary to effectuate the foregoing; PROVIDED,
HOWEVER, that notwithstanding the foregoing, should any payment or
distribution in any such proceeding be received by the Holder of the Note
before all Senior Debt is paid in full, such payment or distribution
shall be received in trust and promptly delivered in the form received
(duly endorsed, if appropriate) to the holders of Senior Debt or their
representative for application to the payment of Senior Debt then
remaining unpaid; and PROVIDED, FURTHER, that no such delivery shall be
made to holders of Senior Debt of stock or obligations which are issued
pursuant to reorganization proceedings or dissolution or liquidation
proceedings, or upon any merger, consolidation, sale, lease, transfer or
other disposal not prohibited by the provisions of this Subordination
Agreement, by UAM, as reorganized, or by the corporation which is the
successor to UAM or which acquires its properties and assets, if such
stock or obligations are subordinate and junior at least to the extent
provided in this Section 1 to the prior payment in full of all Senior
Debt and to the prior payment in full of any stock or obligations which
are issued in exchange or substitution for any Senior Debt.
(e) "Senior Debt," as used herein, shall mean the principal of, premium on,
and unpaid interest (including any interest accrued after commencement of
any proceeding referred to in subsection (c) above at the rate provided
in any document or instrument creating or evidencing any indebtedness
referred to in this definition) on (i) all indebtedness, whether
outstanding on the date hereof or hereafter created or arising and
including all fees and other amounts related to such indebtedness, to
banks, insurance companies, pension funds or other institutions regularly
engaged in the business of lending money, for money borrowed or other
financial accommodations extended from such institutions by UAM for
working capital purposes, acquisitions, general corporate purposes or
otherwise, and all such indebtedness with respect to which UAM is a
guarantor; (ii) any modifications, deferrals, renewals, extensions or
increase in the amount of any such indebtedness or any indebtedness
issued in exchange, replacement, refunding or refinancing of or for
Senior Debt by banks, insurance companies, pension funds or other
institutions regularly
-3-
<PAGE>
engaged in the business of lending money; and (iii) any costs, fees and
expenses incurred in connection with the enforcement or collection of
Senior Debt (including, without limitation, reasonable attorneys' fees).
Subject to the prior payment in full of all Senior Debt as aforesaid, the
Holder of the Note shall be subrogated pro rata to the rights of the holders of
Senior Debt to receive payments or distributions of any kind or character,
whether in cash, property, stock or obligations, which may be payable or
deliverable to the holders of Senior Debt, until the principal of, and interest
on, the Note shall be paid in full and no such payments or distributions to the
holders of Senior Debt shall, as between UAM, its creditors other than the
holders of Senior Debt, and the Holder of the Note be deemed to be a payment by
UAM to the Holder of or on account of the Note.
The provisions of this Subordination Agreement are for the purposes of
defining the relative rights of the holders of Senior Debt on the one hand, and
the Holder of the Note on the other hand, against UAM and its property. Subject
to the rights under this Subordination Agreement of holders of Senior Debt to
receive cash, property, stock or obligations otherwise payable or deliverable to
the Holder of the Note, nothing herein shall either impair, as between UAM and
the Holder of the Note, the obligation of UAM, which is unconditional and
absolute, to pay to the Holder of the Note the principal and interest thereon in
accordance with the terms and the provisions of the Note or prevent the Holder
of the Note from exercising all remedies otherwise permitted by applicable law
or hereunder upon default hereunder or under the Note.
No right of any holder of Senior Debt to enforce the subordination of the
indebtedness evidenced by the Note shall be impaired by any act or failure to
act by UAM or by the failure of UAM to comply with the Note or this
Subordination Agreement.
* [The Holder of the Note shall give prompt written notice to each Holder of
Senior Debt of any default by UAM under the Note.]
Without limiting the effect of the immediately preceding paragraph, no holder
of Senior Debt need obtain the consent of, or give notice to, any Holder of the
Note prior to taking any of the following actions, upon or without any terms or
conditions and in whole or in part, none of which shall impair or release any of
the rights of any such holder of Senior Debt under this Subordination Agreement:
-4-
<PAGE>
(a) change the manner, place or terms of payment, and/or change or extend the
time of payment of, renew or alter, any Senior Debt or any other
liability of UAM to such holder of Senior Debt, any security therefor, or
any liability incurred directly or indirectly in respect thereof, and the
provisions of this Subordination Agreement shall apply to the Senior Debt
of UAM as so changed, extended, renewed or altered.
* optional
-5-
<PAGE>
(b) sell, exchange, release, surrender, realize upon or otherwise deal with
in any manner and in any order any property by whomsoever at any time
pledged or mortgaged to secure, or howsoever securing, any Senior Debt or
any other liability of UAM to such holder of Senior Debt or any other
liabilities incurred directly or indirectly in respect thereof or hereof
and/or any offset there against;
(c) exercise or refrain from exercising any rights and/or remedies against
UAM or others or otherwise act or refrain from acting or, for any reason,
fail to file, record or otherwise perfect any security interest in or
lien on any property of UAM or any other person;
(d) settle or compromise any Senior Debt or any other liability of UAM to
such holder of Senior Debt or any security therefor, or any liability
incurred directly or indirectly in respect thereof or hereof, and may
subordinate the payment of all or any part thereof to the payment of any
liability (whether due or not) of UAM to creditors of UAM other than such
holder of Senior Debt; and
(e) apply any sums by whomsoever paid and howsoever realized to any liability
or liabilities of UAM to such holder of Senior Debt regardless of what
liability or liabilities of UAM to such holder of Senior Debt remain
unpaid.
Section 2. RELIANCE BY SENIOR DEBTHOLDERS. UAM agrees, and each Holder of
the Note by accepting the Note agrees, that the subordination effected hereby is
for the benefit of the holders of Senior Debt from time to time, and that each
holder of Senior Debt, whether now outstanding or hereafter created, incurred,
assumed or guaranteed shall be deemed to have acquired Senior Debt in reliance
upon the covenants and provisions contained herein. The subordination effected
hereby shall be enforceable by each holder of Senior Debt from time to time.
Section 3. FURTHER ASSURANCES. The parties hereto agree to execute and
deliver any and all papers and documents which may be reasonably necessary to
carry out the terms of this Subordination Agreement.
Section 4. ENTIRE AGREEMENT. This Subordination Agreement contains the
entire agreement among the parties with respect to the subject matter hereof.
-6-
<PAGE>
Section 5. BINDING EFFECT. This Subordination Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective heirs,
executors, legal representatives, successors and assigns; provided, however,
that this Subordination Agreement and all rights hereunder may not be assigned
by the Holder, except with the prior written consent of UAM, or by UAM except
with the prior written consent of the Holder. No amendment of this
Subordination Agreement or waiver of any of its provisions shall be effective
without the written consent of each holder of Senior Debt if such amendment
adversely affects any rights of the holders of Senior Debt.
Section 6. SEPARATE COUNTERPARTS. This Subordination Agreement may be
executed in several identical counterparts, all of which when taken together
(whether the signatures of all the parties appear on one or several
counterparts) shall constitute but one and the same instrument, and it shall not
be necessary in any court of law to introduce more than one fully executed
counterpart, or several counterparts together containing the signatures of all
the parties, in proving this Subordination Agreement.
Section 7. NOTICES. All notices hereunder shall be given in accordance with
the notice provisions of the Acquisition Agreement.
Section 8. GOVERNING LAW. The execution, interpretation and performance of
this Subordination Agreement shall be governed by the laws of the Commonwealth
of Massachusetts which apply to contracts executed and to be performed solely in
Massachusetts. UAM and the Holder hereby consent to the jurisdiction of any
state or federal court located within Suffolk County, Massachusetts, waive
personal service of process and assent that service of process may be made by
registered mail to the parties' respective addresses as provided in Section 12.6
of the Acquisition Agreement and shall be effective in the same manner as
notices are effective under such Section 12.6.
IN WITNESS WHEREOF, the parties hereto have duly executed this Subordination
Agreement as of the date first above written.
UNITED ASSET MANAGEMENT CORPORATION
By: ___________________________
Norton H. Reamer, President
ABC ASSOCIATES, INC.
By: __________________________
Title:
-7-
<PAGE>
NON-NEGOTIABLE
[_____%] SUBORDINATED NOTE
DUE [_________ __, 19__]
[_________ __, 19__]
FOR VALUE RECEIVED, UNITED ASSET MANAGEMENT CORPORATION, a Delaware
corporation, (the "Company", which term shall include any corporation which
shall succeed to or assume the obligations of the Company hereunder), promises
to pay to ABC Associates, Inc., a [____________________] corporation (the
"Holder" or "ABC") (except as otherwise provided) the principal sum of
[________________________________________ ($ ____________)] in lawful money of
the United States of America, on [________ __, 19__], together with interest on
the outstanding principal balance payable in like money at the rate of
[_________________] percent [(______%)] per annum commencing the date hereof and
payable semi-annually in arrears on July 1 and January 2 in each year, beginning
on [____________________], until paid in full.
To the extent permitted by law, overdue interest shall bear interest at
[________________] percent [(____%)] per annum. Interest shall be computed on a
360-day year, 30-day month basis.
1. This Note is delivered by the Company to the Holder in accordance with
the terms of an Acquisition Agreement dated as of [_________ __, 19__] (the
"Acquisition Agreement"), relating to the acquisition by the Company of the
assets and business of ABC, which assets and business the Company has
transferred to its subsidiary ABC Newco, Inc. ("Newco"). The Company and the
Holder are parties to the Acquisition Agreement, and terms defined and used in
the Acquisition Agreement shall have the same meanings in this Note. THIS NOTE
IS NON-NEGOTIABLE. In accordance with the provisions of Section 4.4 of the
Acquisition Agreement, the Company may set off against amounts due the Holder
any amounts due from the Holder to UAM or Newco under Article IV of the
Acquisition Agreement.
2. The principal sum of this Note may be prepaid by the Company in whole or
in part at any time and from time to time without penalty or premium, with
interest prorated up to the date of any such prepayment.
3. All payments of principal and interest shall be payable in cash or by the
Company's check at the Holder's address indicated in the Acquisition Agreement,
or at such other place as the Holder may from time to time in writing designate
to the Company (by notice given in accordance with the Acquisition Agreement) at
least ten (10) days before a payment is due.
<PAGE>
4. This Note is subordinated to all Senior Debt as defined in the
accompanying Subordination Agreement of even date herewith. Reference is made
to such Subordination Agreement for the terms of such subordination.
5. If, (i) the Company shall fail to pay any principal of or interest on
this Note when due and payable whether at maturity or at any date fixed for
redemption or prepayment or otherwise, (except principal of or interest on this
Note as to which the Company has exercised its right of set-off in accordance
with Section 1 above) and such amount shall remain unpaid for thirty (30)
business days after the due date thereof; or (ii) the Company shall admit in
writing its inability to pay its debts; or suffer a receiver or custodian (or
other person performing a similar function) for it or substantially all of its
property to be appointed and, if appointed without its consent, not to be
discharged within sixty (60) days; or make a general assignment for the benefit
of its creditors, or suffer proceedings under any law relating to bankruptcy,
insolvency, reorganization or relief of debtors to be instituted by or against
it and if contested by it not to be dismissed or stayed within sixty (60) days;
or suffer any judgment, writ of attachment, or execution of any similar process
to be issued or levied against a substantial part of its property which is not
released, stayed, bonded, or vacated within thirty (30) days after its issue or
levy, then, and in every such event (which are herein referred to as Events of
Default), the Holder hereof may declare the Note to be in default and to be due
and payable, and it shall, at the Holder's election, thereupon forthwith become
due and payable in full, without presentment, demand, protest, or any notice of
any kind, (other than notice of such election) all of which are hereby expressly
waived.
6. The Company will pay to the Holder on demand all reasonable legal and
other costs actually incurred in connection with any action to collect and/or
enforce this Note in which the Holder prevails.
7. In any case where the date of payment of any prepayment or redemption of
the principal of or interest on this Note shall be at any place of payment a
Sunday, a legal holiday, or a day on which banking institutions are authorized
or obliged by law or regulation to close, then payment of principal or interest
need not be made on such date at such place but may be made on the next
succeeding day that is not at such place of payment a Sunday, a legal holiday or
a day on which banking institutions are authorized or obligated by law or
regulation to close, with the same force and effect as if made on the date of
maturity or the date fixed for payment and no interest shall accrue for the
period after such date.
-2-
<PAGE>
8. The Holder shall not be deemed to have waived or amended any of the
Holder's rights hereunder unless such waiver or amendment is in writing and
signed by the Holder. No delay or omission on the part of the Holder in
exercising any such right shall operate as a waiver of such right or any other
right. A waiver on any one occasion shall not be construed as a bar to or
waiver of any right or remedy on any future occasion.
9. This Note shall bear the legend attached hereto, the provisions of which
are incorporated herein by reference.
This Note shall be governed by and construed and enforced in accordance with
the laws of The Commonwealth of Massachusetts which apply to contracts executed
and performed solely in Massachusetts. UAM and the Holder hereby consent to the
jurisdiction of any state or federal court located within Suffolk County,
Massachusetts, waive personal service of process, and assent that service of
process may be made by registered mail to the parties' respective addresses as
provided in Section 12.6 of the Acquisition Agreement and shall be effective in
the same manner as notices are effective under such Section 12.6.
This Note has been executed by the Company under seal as of the day, month
and year first above written.
UNITED ASSET MANAGEMENT
CORPORATION
[SEAL]
Attest: _____________________ By: ___________________________
Secretary Norton H. Reamer, President
-3-
<PAGE>
LEGEND
This Note has not been registered under the Securities Act of 1933 or
qualified under any state securities laws. This Note may not be sold, assigned
or transferred, except with respect to distributions by the Holder to the
Holder's stockholders and transfers by devise to immediate members of the
respective families of such stockholders, in the absence of an effective
registration statement under such Act and qualification under such laws, or an
opinion of counsel satisfactory to the Company that such registration and
qualification are not in the circumstances required.
-4-
<PAGE>
EXHIBIT C TO
SIXTH AMENDMENT
SCHEDULE A TO PLEDGE AGREEMENT BY AND BETWEEN
UNITED ASSET MANAGEMENT CORPORATION AND THE
FIRST NATIONAL BANK OF BOSTON, AS COLLATERAL AGENT
The Collateral covered by the Pledge Agreement to which this Schedule A
is annexed includes, without limitation, the following (and all proceeds
thereof):
A. The following shares of stock (the "First Priority Pledged
Securities"), certificates representing which are hereby delivered to the
Collateral Agent in good transferable form, endorsed by the Pledgor in blank:
<TABLE>
<CAPTION>
Percentage
Number of Outstanding Certificate
Issuer of Shares Shares Number
- ------ --------- -------------- -----------
<S> <C> <C> <C>
Chicago Asset 100 100% 1
Management Company
Nelson, Benson 100 100% 1
& Zellmer, Inc.
Hamilton, Allen & 100 100% 2
Associates, Inc.
Thompson, Siegel 2,898 100% 18, 19
& Walmsley, Inc.
Analytic Investment 3,400 100% 20
Management, Inc.
Northern Capital 100 100% 1
Management Incorporated
(certificate in name of
NCM Newco, Inc.)
Cooke & Bieler, Inc. 5,462 100% 208, 209
Olympic Capital 100 100% 76
Management, Inc.
Fiduciary Management 900 100% 11, 12
Associates, Inc.
Investment Counselors 7,500 100% 52
of Maryland, Inc.
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
The Rothschild 638.6316 100% 11
Company
Sterling Capital 7,757 100% 7, 8
Management Company
Rice, Hall, James 100 100% 2
& Associates
C.S. McKee & Company, 21,000 100% 55, 127
Incorporated Class A
7,430
Class B
HIMCO, Inc. 400 100% 6
(d/b/a Hanson
Investment Management
Company)
Barrow, Hanley, 100 100% 2
Mewhinney & Strauss,
Inc.
Sirach Capital Management, 100 100% 3
Inc.
United Asset Management 100 100% 1
Holdings, Inc.
United Asset Management 100 100% 1
Trademark, Inc.
The Campbell Group, Inc. 100 100% 2
Newbold's Asset 100 100% 10
Management, Inc.
UAM Investment 100 100% 1
Corporation
Cambiar Investors, Inc. 100 100% 16
Spectrum Asset 100 100% 3
Management, Inc.
Regis Retirement Plan 7,000 100% 3
Services, Inc.
(formerly named RFI
Distributors, Inc.)
Alpha Global Fixed 100 100% 1
Income Managers, Inc.
</TABLE>
-2-
<PAGE>
<TABLE>
<S> <C> <C> <C>
Ki Pacific Asset 100 100% 2
Management, Inc.
L&B Realty Advisors, Inc. 3,710 95% 4
United Asset Management 1 100% 2
U.K. Holdings, Inc.
Newco Acquisition Corp. 100 100% 3
(formerly named Regis
Retirement Plan
Services, Inc.)
Heitman Financial Ltd. 100 100% 3
</TABLE>
B. The following shares of stock (the "Second Priority Pledged
Securities"), certificates representing which are held pursuant to
Stockholder Pledge Agreements, by which selling stockholders have been
granted first priority liens in such shares, as follows:
<TABLE>
<CAPTION>
Percentage Stockholder
Number of Outstanding Certificate Certificate Pledge
Issuer of Shares Shares Number Holder Agreement
- ------ --------- -------------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
NONE
</TABLE>
-3-
<PAGE>
EXHIBIT D TO
SIXTH AMENDMENT
SCHEDULE A TO
SUBSIDIARIES PLEDGE AGREEMENT
BY AND BETWEEN UNITED ASSET MANAGEMENT
HOLDINGS, INC. AND THE FIRST NATIONAL
BANK OF BOSTON, AS COLLATERAL AGENT
The Collateral covered by the Subsidiaries Pledge
Agreement to which this Schedule A is annexed includes, without
limitation, the following shares of stock, certificates representing
which are hereby delivered to the Collateral Agent in good
transferable form, endorsed by the Pledgor in blank (and all proceeds
thereof):
<TABLE>
<CAPTION>
Percentage
Number of Outstanding Certificate
Issuer of Shares Shares Number
- ------ --------- -------------- -----------
<S> <C> <C> <C>
Hellman, Jordan 449.5 100% 30
Management Company, Inc.
Hagler, Mastrovita & 50,000 100% 11
Hewitt, Inc.
Dewey Square Investors 100 100% 1
Corporation
UAM Realty Advisors 100 100% 1
Investment Corporation
First Pacific 200,000 100% 2
Advisors, Inc.
Acadian Asset 100 100% 7
Management, Inc.
NWQ Investment Management 200,000 100% 2
Company, Inc.
Pell, Rudman & Co., Inc. 100 100% 2
Tom Johnson Investment 100 100% 2
Management, Inc.
</TABLE>
<PAGE>
EXHIBIT E TO
SIXTH AMENDMENT
UAM U.K. HOLDINGS GUARANTY
UAM U.K. HOLDINGS GUARANTY dated as of November 16, 1993 as the same
may be amended, supplemented or otherwise modified from time to time, this
"Guaranty"), made by United Asset Management U.K. Holdings, Inc., a Delaware
corporation (the "Guarantor"), in favor of the Beneficiaries (as hereinafter
defined). Certain capitalized terms used herein are defined in Section 1 of
this Guaranty.
RECITALS:
A. United Asset Management Corporation, a Delaware corporation (the
"Company"), the banks and other financial institutions parties thereto as
"Banks" from time to time (collectively, the "Banks"), Morgan Guaranty Trust
Company of New York, as Agent (the "Agent") and The First National Bank of
Boston, as Collateral Agent (the "Collateral Agent") have entered into a Credit
Agreement, dated as of May 18, 1992 (as heretofore amended and supplemented and
as the same may be further amended, supplemented or otherwise modified from time
to time, the "Credit Agreement"), pursuant to which the Banks have agreed to
make a certain credit facility available to the Company, subject to the terms
and conditions set forth in the Credit Agreement.
B. In connection with the acquisition by the Company of all of the
capital stock of Murray Johnstone Holdings Limited, a company incorporation in
Scotland ("Murray Johnstone"), and the contribution by the Company to the
Guarantor of such capital stock, the Company has requested that the Banks, the
Agent and the Collateral Agent enter into a Sixth Amendment, dated as of
November 16, 1993 (the "Sixth Amendment") to the Credit Agreement.
C. It is a condition precedent to the effectiveness of the Sixth
Amendment that the Guarantor guarantee the Guaranteed Obligations (as
hereinafter defined).
D. The Guarantor, as part of an affiliated group of corporations with
the Company, will receive substantial direct and indirect benefits by reason of
such credit facility.
<PAGE>
NOW, THEREFORE, in order to induce the Banks, the Agent and the Collateral
Agent to enter into the Sixth Amendment and in consideration thereof, and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the Guarantor hereby agrees as follows:
Section 1. DEFINITIONS. As used in this Guaranty, and unless the
context requires a different meaning, capitalized terms not otherwise defined
herein have the respective meanings provided for such terms in the Credit
Agreement and the following terms have the meanings indicated below, all such
definitions to be equally applicable to the singular and plural forms of the
terms defined:
"ADJUSTED NET WORTH" of the Guarantor shall mean, as of any date of
determination thereof, the excess of (i) the amount of the "present fair
saleable value" of the assets of the Guarantor as of the date of such
determination, over (ii) the amount of all "liabilities of the Guarantor,
contingent or otherwise" as of the date of such determination, as such quoted
terms (or similar terms) are determined in accordance with applicable federal
and state laws governing determinations of the insolvency of debtors. In
determining the Adjusted Net Worth of the Guarantor for purposes of calculating
the Limit of Liability for the Guarantor in respect of any of the Guaranteed
Obligations, the liabilities of the Guarantor to be used in such determination
pursuant to clause (ii) of the preceding sentence shall exclude the liabilities
of the Guarantor hereunder in respect of the Guaranteed Obligations.
"BENEFICIARIES" means the Agent, the Collateral Agent and the Banks.
"GUARANTEED OBLIGATIONS" has the meaning assigned to that term in
Section 2(a).
"LIMIT OF LIABILITY" means, as of any date of determination thereof,
the sum of (i) with respect to any of the Guaranteed Obligations (or portion
thereof), the proceeds of which (or any portion thereof) are used to make a
Valuable Transfer to the Guarantor, the amount of such Guaranteed Obligations
(or such portion thereof) PLUS (ii) with respect to any of the Guaranteed
Obligations (or portion thereof), the proceeds of which are not used to make a
Valuable Transfer to the Guarantor, the lesser of (A) the outstanding amount of
such Guaranteed Obligations (or such portion thereof) as of such date and (B)
ninety-five percent (95%) of the Adjusted Net Worth of the Guarantor at the time
of the incurrence of such Guaranteed Obligations.
-2-
<PAGE>
Notwithstanding the foregoing, that portion of the Limit of Liability of the
Guarantor calculated pursuant to clause (ii)(B) shall be increased (but not
decreased) on the last day of each fiscal year of the Guarantor, to an amount
equal to ninety-five percent (95%) of the Adjusted Net Worth of the Guarantor,
as determined on such date, if such amount is greater than that portion of the
Limit of Liability pursuant to clause (ii)(B) in effect immediately prior to
such date.
"SUBORDINATE CLAIMS" has the meaning assigned to that term in
Section 3.
"VALUABLE TRANSFER" means (i) all loans, advances or capital
contributions made to the Guarantor with proceeds of Guaranteed Obligations, or
any portion thereof, (ii) all debt securities or other obligations of the
Guarantor acquired from the Guarantor or retired by the Guarantor with proceeds
of Guaranteed Obligations, or any portion thereof, (iii) the fair market value
of all property acquired with proceeds of Guaranteed Obligations, or any portion
thereof, and transferred, absolutely and not as collateral, to the Guarantor and
(iv) the value of any quantifiable economic benefits not included in clauses (i)
through (iii) above, but included in accordance with applicable federal and
state laws governing determinations of the insolvency of debtors, accruing to
the Guarantor as a result of the incurrence of Guaranteed Obligations.
Section 2. GUARANTEE OF OBLIGATIONS.
(a) The Guarantor hereby unconditionally and irrevocably
guarantees to each of the Beneficiaries, as the primary obligation and debt of
the Guarantor and not as a surety, the due and punctual payment of, without
duplication, (i) all principal, interest, fees and other amounts required to be
paid, from time to time, by the Company under or in respect to the Credit
Agreement, when and as the same shall be or become due and payable, whether on
the due date therefor, upon stated maturity, by acceleration, upon demand or
otherwise, according to the terms of the Credit Agreement, (ii) the aggregate
unpaid principal amount of, and accrued interest on, all Money Market Loans and
(iii) all other present and future obligations and liabilities (whether
absolute, fixed or contingent, matured or unmatured, joint, several or
independent and howsoever acquired) of the Company to the Beneficiaries, or any
of them, arising out of or in any way relating to the Credit Agreement and any
and all Loan Documents and the transactions contemplated thereby (all of the
foregoing, collectively, the "Guaranteed Obligations").
-3-
<PAGE>
In case of the failure of the Company to duly, punctually and indefeasibly make
any such payment in full as and when due and payable, the Guarantor hereby
agrees to duly, punctually and indefeasibly make any such payment as and when
the same shall become due and payable, whether on the due date therefor, upon
stated maturity, by acceleration, upon demand or otherwise, in accordance with
the terms of this Guaranty, the Credit Agreement and the other Loan Documents.
(b) The Guarantor hereby agrees that its obligations hereunder
shall be continuing, absolute and unconditional under any and all circumstances
and not subject to any reduction, limitation, impairment, termination, defense
(other than prior, final and indefeasible payment in full), set-off, abatement,
counterclaim or recoupment whatsoever (all of which are hereby expressly waived
by the Guarantor), whether by reason of any claim of any character whatsoever,
including, without limitation, any claim of waiver, release, surrender,
alteration or compromise, or by reason of any liability at any time to the
Company or any other Subsidiary of the Company or otherwise, whether based upon
any agreement, instrument or document evidencing or securing the Guaranteed
Obligations or any other agreement, instrument or document (including, without
limitation, this Guaranty) or otherwise, and howsoever arising, whether out of
action or inaction or otherwise and whether resulting from default, willful
misconduct, negligence or otherwise, and without limiting the foregoing,
irrespective of (i) any insolvency, bankruptcy, reorganization or dissolution,
or any proceeding in respect of any thereof, of the Company, any other
Subsidiary of the Company or any other guarantor of all or any portion of the
Guaranteed Obligations, (ii) the genuineness, validity, regularity or
enforceability of any agreement, instrument or document evidencing or securing
the Guaranteed Obligations or any other agreement, instrument or document or the
extension or renewal thereof, in whole or in part, with or without notice to or
assent from the Company, any other Subsidiary of the Company or any other
guarantor of all or any portion of the Guaranteed Obligations, (iii) the
validity, enforceability or priority of any lien or security interest securing
the payment of the Guaranteed Obligations or any portion thereof, (iv) any
rescission, compromise, alteration, amendment, modification, extension, renewal,
release, change, waiver, consent, grant of any indulgence or other action in
respect of any of the terms, provisions, covenants or conditions contained in
any agreement, instrument or document evidencing or securing the Guaranteed
Obligations or in any other agreement, instrument or document, (v) the absence
of notice or the absence of or any delay in any action to enforce any obligation
or to exercise any right or remedy against the Company, any other Subsidiary of
the Company or any other guarantor of all or any portion of the Guaranteed
Obligations,
-4-
<PAGE>
whether under any agreement, instrument or document evidencing or securing the
Guaranteed Obligations or under any other agreement, instrument or document, or
any indulgence or extension or waiver granted to or compromise with the Company,
any other Subsidiary of the Company or any other guarantor of all or any portion
of the Guaranteed Obligations, or any action or proceeding taken or not taken
with respect to or by or on behalf of the Company, any other Subsidiary of the
Company or any other guarantor of all or any portion of the Guaranteed
Obligations, or the holder of any agreement, instrument or document evidencing
or securing the Guaranteed Obligations, (vi) any default, failure or delay in
the performance of any obligation, covenant, duty, representation, warranty or
agreement contained in any agreement, instrument or document evidencing or
securing the Guaranteed Obligations or in any other agreement, instrument or
document, or arising pursuant to law, (vii) any act or thing or omission to do
or delay in doing any act or thing which might in any manner result in any lack
of proper authorization or any invalid execution of any agreement, instrument or
document evidencing or securing the Guaranteed Obligations or any other
agreement, instrument or document, (viii) any assumption by any Person of any
obligation under any agreement, instrument or document evidencing or securing
the Guaranteed Obligations or under any other agreement, instrument or document,
(ix) any event of FORCE MAJEURE, (x) any release or substitution of any
collateral for, or any obligor in respect of, the payment of the Guaranteed
Obligations or obligations under any other agreement, instrument or document, in
whole or in part, with or without notice to or assent from the Company, any
other Subsidiary of the Company or any other guarantor of all or any portion of
the Guaranteed Obligations, (xi) whether a lien on any collateral shall have
been perfected or shall continue to be perfected, or whether any collateral
shall be impaired in any manner, or whether any steps shall have been taken to
enforce rights against the Company, any other Subsidiary of the company or any
other guarantor of all or any portion of the Guaranteed Obligations or to sell,
exchange, release, surrender, realize upon or otherwise deal with, in any manner
and in any order, any collateral and (xii) any other circumstances which might
constitute a legal or equitable discharge or defense of a surety or guarantor.
(c) The Guarantor hereby (i) waives diligence, presentment,
demand (of payment or otherwise), protest, notice, filing of claims with a court
in the event of the merger or bankruptcy of the Company, any other Subsidiary of
the Company or any other guarantor of all or any portion of the Guaranteed
Obligations, any right to require a proceeding first against the Company, any
other Subsidiary of the Company
-5-
<PAGE>
or any other guarantor of all or any portion of the Guaranteed Obligations or to
marshall or realize on any collateral, with respect to the Guaranteed
Obligations, (ii) agrees that its obligations hereunder constitute guarantees of
payment and not of collection and are not in any way conditional or contingent
upon any attempt to collect from or enforce any rights against the Company, any
other Subsidiary of the Company or any other guarantor of all or any portion of
the Guaranteed Obligations or upon any other condition or contingency,
(iii) acknowledges that any agreement, instrument or document evidencing and/or
securing the Guaranteed Obligations may be transferred (upon and subject to the
terms and conditions thereof) and that the benefit of the Guarantor's
obligations hereunder shall extend to each holder of any agreement, instrument
or document evidencing and/or securing the Guaranteed Obligations automatically
and without notice to the Guarantor, (iv) covenants that this Guaranty will not
be discharged except by final, complete, indefeasible and irrevocable payment
and performance of the obligations contained in the agreements, instruments and
documents evidencing or securing the Guaranteed Obligations and this Guaranty
and (v) waives acceptance of this Guaranty by the Beneficiaries or notice or
proof of reliance.
(d) The Guarantor further agrees that if at any time all or any
part of any payment theretofore applied by any Beneficiary to any of the
Guaranteed Obligations is, or must be, rescinded or returned by such Beneficiary
for any reason whatsoever, including, without limitation, the insolvency,
bankruptcy or reorganization of the Company, any other Subsidiary of the Company
or any other guarantor of all or any portion of the Guaranteed Obligations, such
Guaranteed Obligations or applicable portion thereof, for purposes of this
Guaranty, to the extent that such payment is or must be rescinded or returned,
shall be deemed to have continued in existence notwithstanding such application,
and this Guaranty shall continue to be effective or be reinstated, as the case
may be, as to such Guaranteed Obligations or applicable portion thereof as
though such application had not been made, irrespective of whether any note or
other evidence of indebtedness has been surrendered or cancelled.
(e) Notwithstanding anything to the contrary contained in this
Guaranty, the obligations and liabilities of the Guarantor pursuant to this
Guaranty shall at all times be subject to the Guarantor's Limit of Liability.
-6-
<PAGE>
Section 3. SUBROGATION. So long as any of the Guaranteed Obligations
shall be outstanding or subject to any rescission or revocation of payment, all
claims of any kind or character of the Guarantor or any of its successors and
assigns against the Company or any Subsidiary of the Company or with respect to
any collateral for the Guaranteed Obligations, to the extent such claims
(whether by right of subrogation, contribution or otherwise) arise by reason of
the Guarantor's payment of any sum or sums to any Beneficiary under this
Guaranty (all such claims of any kind or character of the Guarantor or any of
its successors and assigns being hereinafter referred to as "Subordinate
Claims"), shall be subordinated in right of payment to the prior indefeasible
payment in full of such Guaranteed Obligations as follows:
(a) The Beneficiaries shall first be entitled to receive final
and indefeasible payment in full of principal of Guaranteed Obligations and
accrued and unpaid interest thereon (including, without limitation, interest
thereon accruing after the commencement of any bankruptcy, insolvency or
receivership proceedings at the applicable rate or rates provided therefor in
the Credit Agreement), and all other amounts due under any agreement, instrument
or document evidencing or securing such Guaranteed Obligations before any direct
or indirect payment or distribution (whether in cash, property or securities, or
by set-off, counterclaim or otherwise) shall be made on, or received by the
Guarantor in respect of, Subordinate Claims.
(b) Any payment or distribution of assets of the Company or any
of the Company's Subsidiaries of any kind or character, whether in cash,
property or securities, which would be made on account of Subordinate Claims but
for the provisions of this Section, shall be paid by the Company or such other
Subsidiary, as the case may be (or the trustee or agent or other Person making
such payment or distribution), directly to the Agent, for the benefit of the
applicable Beneficiaries, to the extent necessary to make indefeasible payment
in full of all sums due upon the Guaranteed Obligations and remaining unpaid
after giving effect to any concurrent payment or distribution to or for the
benefit of such Beneficiaries in respect of the Guaranteed Obligations. In
furtherance of the foregoing, no holder of Subordinate Claims shall exercise any
right of set-off or counterclaim with respect to any Subordinate Claim held by
it, and any reduction of Subordinate Claims, by reason of exercise by the holder
thereof of a right of set-off or counterclaim or otherwise in violation of the
provisions of this subsection, in respect of any obligations of such holder to
the Company or such Subsidiary, as applicable, shall be deemed to be a payment
by the Company or such Subsidiary, as the case may be, in respect of such
Subordinate Claims to which this subsection shall apply.
-7-
<PAGE>
(c) In the event that any payment or distribution of assets of
the Company or any of the Company's Subsidiaries of any kind or character,
whether in cash, property or securities, shall be received by the Guarantor or
on its behalf at any time when the making of such payment or distribution shall
have been in violation of the foregoing subsections (a) or (b), then such
payment, distribution or amount shall be held in trust for the benefit of, and
shall be paid over or delivered to, the Agent, for the benefit of the applicable
Beneficiaries, for application to the Guaranteed Obligations then remaining
unpaid to the extent necessary to pay in full all such Guaranteed Obligations in
accordance with their terms, after giving effect to any concurrent payment or
distribution to or for the benefit of the Beneficiaries in respect of the
Guaranteed Obligations.
(d) Nothing contained in this Section is intended to or shall
impair, as between the Company or any of its Subsidiaries, as the case may be,
and their respective creditors (other than the Beneficiaries), the obligations
of the Company and each such Subsidiary, as the case may be, to pay to the
Guarantor and its successors or assigns all sums due from it to any such holder
of Subordinate Claims as and when the same shall become due and payable in
accordance with their terms, subject to the terms hereof; PROVIDED that no such
holder of Subordinate Claims shall initiate any legal proceedings with respect
to any of the Subordinate Claims prior to the indefeasible payment in full of
the Guaranteed Obligations.
Section 4. REPRESENTATIONS, WARRANTIES AND COVENANTS. The Guarantor
hereby acknowledges and agrees that it has received a copy of the Credit
Agreement and all Loan Documents and hereby (i) reaffirms all representations
and warranties contained therein to the extent applicable to it and (ii) agrees
to comply with all covenants and agreements contained therein to the extent
applicable to it and as the same may be amended or modified from time to time in
accordance with the terms of the Credit Agreement and, in addition, hereby makes
the following representations, warranties and agreements:
(a) Except as expressly set forth in the Credit Agreement,
neither the Agent, the Collateral Agent nor any of the Banks is obligated to
give or to continue any financial accommodations to the Company, the Guarantor
or any of the Company's other Subsidiaries or to change or extend the time of
payment of, or renew or alter, any liability of the Company, the Guarantor or
any of the Company's other Subsidiaries, any security therefor or any liability
incurred directly or indirectly in respect thereof.
-8-
<PAGE>
(b) None of the Beneficiaries or any other Person has made any
representations or promises to the Guarantor as to the making or continuance of
any extension of credit to the Company (except pursuant to, and in accordance
with, the terms of the Credit Agreement) or as to the financial condition of the
Company or any of the Company's Subsidiaries or any other Person or as to the
type or value of any security for the Guaranteed Obligations, or as to the
perfection thereof, and none of the Beneficiaries is obligated to notify the
Guarantor of any change in the financial condition of the Company or any of the
Company's Subsidiaries or any other Person or in the type, value, priority or
perfection of any collateral security for the Guaranteed Obligations.
(c) The Guarantor agrees that it will not engage in any
business or activity other than holding the capital stock of Murray Johnstone.
The Guarantor further agrees that any dividends or other distributions received
by it and arising out of its ownership of the capital stock of Murray Johnstone
shall promptly be distributed (as a dividend or otherwise) in the form received
(endorsed as appropriate) to the Company.
Section 5. BREACH OF COVENANTS.
(a) In the event that the Guarantor shall fail to comply with
any of its covenants or agreements contained in this Guaranty or in any of the
other Loan Documents to which it is a party, then in any such event and at any
time thereafter (so long as such failure shall not have been cured or waived in
accordance with Section 6(c)), the Agent may, and at the direction of the
Required Banks shall, declare the obligations of the Company under the Credit
Agreement (whether or not then due under the Credit Agreement) immediately due
and payable pursuant to this Guaranty as to the Guarantor, and the Agent shall
be entitled to enforce the obligations of the Guarantor hereunder.
(b) Subject to any applicable agreements in effect from time to
time relating to the sharing and priority of payment of proceeds of collateral,
the net proceeds of any collection, recovery, receipt, appropriation or
realization, after deducting all costs and expenses of every kind incurred in
connection with the foregoing, including reasonable attorneys' fees and legal
expenses, shall be applied to the payment in whole or in part of the Guaranteed
Obligations, in such order as the Agent, in its sole discretion, may elect.
-9-
<PAGE>
Section 6. MISCELLANEOUS.
(a) THIS GUARANTY SHALL BE DEEMED TO BE A CONTRACT MADE UNDER
THE INTERNAL LAWS OF THE STATE OF NEW YORK, AND FOR ALL PURPOSES SHALL BE
GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH SUCH LAWS OF SAID
STATE, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS.
(b) Any provision of this Guaranty that is prohibited or
unenforceable in any jurisdiction 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. Notwithstanding the foregoing, in lieu of
such prohibited or unenforceable provision, there shall automatically be deemed
incorporated herein (without further act or deed by any party hereto) a
provision as similar to such prohibited or unenforceable provision as possible
and as shall be enforceable and not prohibited pursuant to applicable law. If
this Guaranty would be held or determined by a court of competent jurisdiction
in a judicial proceeding to be void, voidable, invalid or unenforceable on
account of the amount of the aggregate liability of the Guarantor under this
Guaranty or by reason of any inconsistent contractual provision binding on the
Guarantor and in effect on or prior to the date hereof, then, notwithstanding
any other provision of this Guaranty to the contrary, the aggregate amount of
the liability of the Guarantor under this Guaranty shall, without any further
action by the Guarantor, the Beneficiaries or any other Person, be automatically
limited and reduced to the maximum amount which is valid and enforceable.
(c) No failure or delay on the part of any Beneficiary in
exercising any right, power or remedy under this Guaranty shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right,
power or remedy preclude any other or further exercise thereof or the exercise
of any other right, power or remedy, The remedies provided for in this Guaranty
are cumulative and are not exclusive of any remedies that may be available to
any Beneficiary at law or in equity or otherwise. No amendment, modification,
supplement, termination or waiver of or to any provision of this Guaranty, nor
consent to any departure by the Guarantor therefrom, shall be effective unless
the same shall be consented to in writing by all of the Banks or the Required
Banks, as the case may be, pursuant to Section 8.6 of the Credit Agreement, and
subject to the rights of the Agent and the Collateral Agent under said Section.
Any amendment, modification or supplement of or to any provision of this
Guaranty, any waiver of any provision of this Guaranty, and any consent to any
departure by the Guarantor from the terms
-10-
<PAGE>
of any provision of this Guaranty, shall be effective only in the specific
instance and for the specific purpose for which made or given. Except where
notice is specifically required by this Guaranty, no notice to or demand on the
Guarantor in any case shall entitle the Guarantor to any other or further notice
or demand in similar or other circumstances.
(d) The Guarantor agrees that copies of the Credit Agreement
and the other Loan Documents received by it constitute adequate notice of all
matters contained therein, and consents to the execution and delivery of such
agreements and the performance of all transactions provided for or contemplated
therein; PROVIDED that none of the Beneficiaries shall be obligated to furnish
to the Guarantor any copies of any amendments, modifications or supplements or
waivers with respect to the Credit Agreement or any of the other Loan Documents.
(e) All notices, requests and other communications to the
Guarantor or any Beneficiary hereunder shall be in writing (including bank wire,
telex, telecopy or similar teletransmission or writing) and shall be given
(i) if to a Beneficiary, at its address or telex or telecopier number specified
in Section 8.1 of the Credit Agreement or (ii) if to the Guarantor at its
address or telex or telecopier number specified on the signature page hereof or
such other address or telex or telecopier number as the Guarantor may hereafter
specify by written notice to the Agents and the Company. Each such notice,
request or other communication shall be effective (i) if given by telex, when
such telex is transmitted to the telex number specified in this Section and the
appropriate answerback is received, (ii) if given by mail, seventy-two (72)
hours after such communication is deposited in the mails with first class
postage prepaid, addressed as aforesaid or (iii) if given by any other means
(including, without limitation, by telecopy or air courier), when delivered at
the address specified in this Section; provided that if any day on which any
notice, request or other communication would otherwise be effective pursuant to
the immediately preceding clauses (i) through (iii) is not a Business Day, then
such notice, request or other communication shall be effective on the next
succeeding Business Day; and provided, further, that notices to the Agents, or
either of them, shall not be effective until received.
(f) This Guaranty shall be binding upon the Guarantor and its
successors and assigns and shall inure to the benefit of, and shall be
enforceable by, each of the Beneficiaries and their respective successors and
assigns PROVIDED that the Guarantor may not assign or transfer any of its
obligations under this Guaranty without the prior written consent of the
Required Banks.
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<PAGE>
(g) The Guarantor agrees to do such further acts and things and
to execute and deliver such additional agreements, powers and instruments, as
the Agent may require or deem advisable to carry into effect the purposes of
this Guaranty or to better assure and confirm unto the Beneficiaries their
rights, powers and remedies under this Guaranty, under the Credit Agreement or
under any of the other Loan Documents.
(h) The Guarantor hereby irrevocably and unconditionally
consents and submits to the nonexclusive jurisdiction of any United States
Federal or New York State court sitting in New York County in any action or
proceeding arising out of or relating to this Guaranty, and the Guarantor hereby
irrevocably and unconditionally agrees that all claims in respect of such action
or proceeding brought against any of the Beneficiaries in respect of this
Guaranty shall be brought in such United States Federal or New York State court.
The Guarantor irrevocably consents to the service of any and all process in any
such action or proceeding brought in any court in or of the State of New York by
the delivery of copies of such process to the Guarantor at its address specified
in Section 6(e) or by certified or registered mail directed to such address.
The Guarantor hereby irrevocably and unconditionally waives any objection,
including, without limitation, any objection to the laying of venue or based on
the grounds of FORUM NON CONVENIENS, or that it or its assets is exempt or
immune from attachment or execution, which it may now or hereafter have to the
bringing or maintaining of any such action or proceeding in such respective
jurisdictions. Nothing herein shall affect the right of any of the
Beneficiaries to serve process in any other manner permitted by law or to
commence legal proceedings or otherwise proceed against the Guarantor in any
other jurisdiction.
(i) The Guarantor agrees to pay promptly, to the extent not
previously finally and indefeasibly paid in full by the Company, (i) all
reasonable costs and expenses of the Agent in connection with the negotiation,
preparation, execution, issuance, delivery, filing and recording of this
Guaranty and any other documents which may be delivered in connection with this
Guaranty, including, without limitation, the reasonable fees and expenses of
Moses & Singer, special counsel for Morgan Guaranty Trust Company of New York,
with respect thereto and with respect to advising the Agent from time to time as
to its rights and responsibilities under or in respect of this Guaranty and any
amendment or modification of, or waiver under, this Guaranty and (ii) from and
after the occurrence of any Event of Default or Default, all costs and expenses
(including reasonable counsel fees and expenses) in connection with (A) any and
all amounts which any Beneficiary has paid relative to the curing of any default
resulting from
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<PAGE>
the acts or omissions of the Guarantor under this Guaranty, (B) any amendment or
modification of, or waiver under, this Guaranty and (C) the enforcement of this
Guaranty and the preservation of the Beneficiaries' rights hereunder. The
Guarantor shall pay, to the extent not previously finally and indefeasibly paid
in full by the Company, any and all stamp and other taxes and fees payable or
determined to be payable in connection with the execution, delivery, filing and
recording of this Guaranty, financing and continuation statements and any other
documents which may be delivered in connection with this Guaranty, and agrees to
save the Agent and the Beneficiaries harmless from and against any and all
liabilities with respect to or resulting from any delay in paying or omission to
pay such taxes and fees. The obligations of the Guarantor under this subsection
shall survive the payment of the Guarantor's other obligations hereunder and the
termination of this Guaranty.
(j) The provisions of Section VII of the Credit Agreement
relating to the Agents are incorporated herein by reference and shall apply for
the benefit and protection of the Agents under this Guaranty.
(k) This Guaranty may be executed in any number of counterparts
and by the different parties hereto on separate counterparts, each of which
counterparts, when so executed and delivered, shall be deemed to be an original
and all of which counterparts, taken together, shall constitute but one and the
same Guaranty.
(l) Section and other headings used in this Guaranty are for
convenience only and shall not affect the construction of this Guaranty.
(m) The obligations of the Guarantor under this Guaranty are
secured by, among other things, the collateral security provided for in the UAM
U.K. Holdings Pledge Agreement.
[Balance of Page Intentionally Left Blank.]
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<PAGE>
(n) THE GUARANTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES
TRIAL BY JURY IN CONNECTION WITH ANY ACTION OR PROCEEDING UNDER OR RELATING TO
THIS GUARANTY OR ANY LOAN DOCUMENT. EACH BENEFICIARY, BY THE ACCEPTANCE OF THE
BENEFITS OF THIS GUARANTY, SHALL BE DEEMED TO HAVE WAIVED ITS RIGHT TO TRIAL BY
JURY IN RESPECT OF ANY ACT OR PROCEEDING IN WHICH THE GUARANTOR HAS WAIVED ITS
RIGHT TO TRIAL BY JURY.
IN WITNESS WHEREOF, the Guarantor has caused this UAM U.K. Holdings
Guaranty to be duly executed and delivered by its proper and duly authorized
officer as of the day and year first above written.
Address: UNITED ASSET MANAGEMENT
________________________ U.K. HOLDINGS, INC.
________________________
_____________________________
Attn:________________________
Telex No.:___________________
Answerback:__________________ By:____________________
Telecopier No.:______________ Name:
Title:
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<PAGE>
EXHIBIT F TO
SIXTH AMENDMENT
UNITED ASSET MANAGEMENT U.K. HOLDINGS, INC.
and
THE FIRST NATIONAL BANK OF BOSTON
as Collateral Agent
__________________________
SHARES PLEDGE
__________________________
DUNDAS
&
WILSON
CS
SOLICITORS
Saltire Court
20 Castle Terrace, Edinburgh
EHI 2EN
Telephone 031-228-8000
<PAGE>
UAM U.K. HOLDINGS PLEDGE
AGREEMENT between
UNITED ASSET MANAGEMENT U.K.
HOLDINGS, INC., a Delaware
corporation having its
principal place of business
and chief executive office at
103 Springer Building, 3411
Silverside Road, Wilmington,
Delaware 19810 (hereinafter
referred to as "the Company");
and
THE FIRST NATIONAL BANK OF
BOSTON, as Collateral Agent
under the Agreement (as
hereinafter defined) ("the
Collateral Agent")
_________________________
CONSIDERING THAT
(A) The Collateral Agent, the Banks (as hereinafter defined) party thereto as
of the date hereof and Morgan Guaranty Trust Company of New York as agent
(the "Agent") are parties to a Credit Agreement dated 18th May 1992 ("the
Agreement") with United Asset Management Corporation, a Delaware
Corporation having its chief executive office at One International Place,
100 Oliver Street, Boston, Massachusetts, 02110, as borrower ("UAM"); and
(B) The Company is a wholly owned subsidiary corporation of UAM and has
received, or is about to receive, from UAM fully paid ordinary shares of
ten pence each in the capital of Murray Johnstone Holdings Limited; and
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(C) The Collateral Agent has required the transfer to it or its nominees of
the Pledged Securities (as hereinafter defined) and the execution by the
parties hereto of this Deed, in security of the obligations of the Company
to the Collateral Agent, the Agent and the Banks under the UAM U.K.
Holdings Guaranty dated as of 16th November 1993 (the "Guaranty") by the
Company in favour of the Collateral Agent, the Agent and the Banks.
NOW IT IS HEREBY PROVIDED AND DECLARED THAT:-
1. INTERPRETATION
(1) In this Deed:-
"BANKS" means the banks and other financial institutions party to the
Agreement as "Banks" from time to time;
"PLEDGED SECURITIES" means the securities described in paragraph (A) of the
Schedule hereto which are to be transferred, or which have been transferred,
to the Collateral Agent or its nominees, and the securities, moneys, assets,
rights and powers described in paragraphs (B) and (C) of the Schedule hereto;
and
"SECURED LIABILITIES" means all indebtedness, obligations and liabilities of
the Company to the Collateral Agent, the Agent and the Banks (or any of
them), whether now existing or hereafter incurred or created under, arising
out of or in connection with any Loan Documents, whether direct or indirect,
absolute or contingent, joint, several or independent, due or to become due
or liquidated or
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<PAGE>
unliquidated, and whether created directly or acquired by assignment or
otherwise, and including, without limitation, all indebtedness,
obligations and liabilities of the Company hereunder and under the
Guaranty and/or any deed or document supplemental thereto.
(2) Unless otherwise stated, terms and expressions defined in the Agreement
shall have the same meaning herein.
(3) The expressions "UAM", "the Company", "the Collateral Agent", "the Agent"
and "the Banks" shall include the successors, assignees and transferees of
UAM, the Company, the Collateral Agent, the Agent and the Banks,
respectively; and, in the case of the Collateral Agent, shall include any
person for the time being the Collateral Agent under the Agreement.
(4) Unless any provision of this Deed or the context otherwise requires, any
reference herein to any statute or any section of any statute shall be
deemed to include a reference to any statutory modification or
re-enactment thereof for the time being in force.
(5) In this Deed the singular includes the plural and vice versa. Clause
headings are for convenience of reference only.
(6) Any reference in this Deed to a document of any kind whatsoever (including
this Deed) is to that document as amended or varied or supplemented or
novated or substituted from time to time.
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<PAGE>
2. SECURITY
(1) Subject as hereinafter provided, and in particular subject to Clause 5(2),
in security of the Secured Liabilities the Company hereby assigns to the
Collateral Agent for itself and as custodian and agent for the Banks its
whole right, title, interest and benefit in and to the Pledged Securities.
(2) The Collateral Agent hereby acknowledges that, notwithstanding any
transfer or delivery to it EX FACIE absolutely of Pledged Securities and
any registration of Pledged Securities in the name of the Collateral Agent
or any person holding to the order of the Collateral Agent, or the custody
thereof by the Collateral Agent or any such person, Pledged Securities are
and shall truly be held by it as security for the payment of the Secured
Liabilities on the terms and conditions of this Deed. The Collateral
Agent shall not by reason of this Deed or the pledge and assignment
contemplated hereby be in any way liable as a shareholder of Murray
Johnstone Holdings Limited.
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<PAGE>
3. UNDERTAKINGS
(1) The Company undertakes forthwith to transfer to the Collateral Agent or
its nominees, by duly stamped transfer, such of the Pledged Securities as
at the date hereof have not been so transferred and to procure the issue
by Murray Johnstone Holdings Limited of certificates representing the
Pledged Securities in the name of the Collateral Agent or such nominee of
the Collateral Agent as may be specified by the Collateral Agent.
(2) The Company shall for so long as this security is in force pay duly and
promptly all calls which may from time to time be made in respect of any
unpaid monies under any Pledged Securities and/or any other monies which
it may lawfully be required to pay in respect of any Pledged Securities,
and in case of default the Collateral Agent may, if it thinks fit, but
shall not be obligated to, make such payments on behalf of the Company.
(3) Any monies expended by the Collateral Agent under this provision shall be
deemed to be properly paid by the Collateral Agent, and the Company shall
reimburse the Collateral Agent on demand, and such monies (plus interest
at the rate specified in Section 2.5(d) of the Agreement) shall pending
reimbursement constitute a part of the Secured Liabilities.
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<PAGE>
(4) The Company shall provide the Collateral Agent with evidence reasonably
acceptable to it that all necessary filings and registrations have been
made and all stamp and other taxes paid in the United Kingdom in respect
of transfer by the Company to the Collateral Agent of the Pledged
Securities, such evidence to be delivered to the Collateral Agent by 30th
November 1993 (or such later date as the Collateral Agent may agree in
writing).
4. WARRANTIES
The Company hereby warrants, represents and undertakes that subject to this
Deed (a) it is and will remain the sole owner of the Pledged Securities,
(b) in accordance with the terms of the Agreement and subject to the
exceptions contained therein it has not transferred, assigned, pledged or in
any way encumbered and hereby covenants that it will not transfer, assign,
pledge or otherwise encumber the Pledged Securities or any interest therein
to anyone other than the Collateral Agent, (c) as at the date of the
Company's execution of this Deed the Pledged Securities represent 65% of the
Company's holding of the issued share capital of Murray Johnstone Holdings
Limited, (d) no rights to subscribe to additional shares in Murray Johnstone
Holdings Limited have been granted, and no options, warrants, conversion
rights or similar rights to acquire any shares of Murray Johnstone Holdings
Limited are outstanding,
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<PAGE>
other than under the Murray Johnstone 1986 Share Option Scheme ("Options")
being options to acquire an amount less than ten per cent of the present
issued share capital of Murray Johnstone Holdings Limited, (e) the Company is
not, and will not by reason of the execution of, or the transaction
contemplated by, this Deed or any document referred to herein, be in breach
of any of its obligations under any licence, authorization, consent,
agreement or document and (f) there are no contractual restrictions attached
to the Pledged Securities or rights of pre-emption on the transfer thereof
other than pre-emption rights in the Articles of Association of Murray
Johnstone Holdings Limited which the Company shall remove as soon as possible
and which the directors of Murray Johnstone Holdings Limited have waived.
The Company agrees that the Pledged Securities assigned to the Collateral
Agent hereunder and such further securities given by the Company from time to
time on the exercise of Options and the acquisition by the Company of such
securities shall at all times continue to represent at least 65% of the
Company's holding of the issued share capital of Murray Johnstone Holdings
Limited.
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<PAGE>
5. VOTING RIGHTS, DIVIDENDS, ETC.
(1) Subject to Clause 5(2) and 7(2) the Company shall be entitled to exercise
any and all voting rights pertaining to the Pledged Securities or any part
thereof and to receive and retain any and all cash dividends (other than
in a partial or whole liquidation of Murray Johnstone Holdings Limited)
paid in respect of the Pledged Securities in accordance with the
provisions of the Agreement and the Guaranty. If the Collateral Agent
receives due notice not less than 7 days before the proposed exercise of
any such voting rights by the Company (or such lesser period as the
Collateral Agent may agree), and if the Company is entitled hereunder to
exercise such rights, the Collateral Agent shall procure its nominee to
execute and deliver such documents as the Company may reasonably require
in order to enable such rights to be so exercised.
(2) This Deed shall take effect so that:-
(a) prior to any enforcement of this security all rights attached to the
Pledged Securities shall be exercisable only in the interests of the
Company in accordance with the Company's instructions, apart from
the exercise of any such right for the purpose of preserving this
security in accordance with the provisions hereof; and
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<PAGE>
(b) upon any enforcement of this security all rights attached to the
Pledged Securities shall be exercisable solely by the Collateral
Agent for the purpose of enforcing this security and otherwise in
accordance with Clause 7(2)(a), to the intent that nothing contained
herein or in any other relevant document shall give or is intended
to have the effect of giving control of Murray Johnstone Holdings
Limited or of transferring or otherwise disposing of the beneficial
ownership of, or any beneficial ownership interest in, any of the
Pledged Securities, to the Collateral Agent, the Agent or the Banks
otherwise than on enforcement of this security.
(3) The Collateral Agent may after notifying the Company of its intention to
do so, but shall not be obliged to, pay any calls or other sums that may
be or become due in respect of the Pledged Securities and the Company
undertakes to pay to the Collateral Agent on written demand to the Company
such sums so paid by the Collateral Agent. Such sums plus interest
thereon at the rate specified in Section 2.5(d) of the Agreement shall be
secured by this Deed.
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<PAGE>
6. LIABILITY TO PERFORM
It is expressly agreed that, notwithstanding anything to the contrary herein
contained, the Company shall remain liable to observe and perform all of the
conditions and obligations assumed by it in respect of the Pledged Securities
and the Collateral Agent shall be under no obligation or liability therefor
by reason of or arising out of this Deed. The Collateral Agent shall not be
required in any manner to perform or fulfill any obligations of the Company
in respect of the Pledged Securities, and the Collateral Agent shall be
indemnified by the Company against any such liability.
7. ENFORCEMENT
(1) At any time after the occurrence of an Event of Default, if and for so
long as the Collateral Agent is, or is entitled to be, registered as the
holder of the Pledged Securities in the register of members of Murray
Johnstone Holdings Limited this security may be enforced in the following
manner:-
(a) the Collateral Agent shall become entitled to sell, call in, collect
or convert into money any Pledged Securities with full power on
giving at least fourteen days' notice to the Company to such effect
to sell any of the same either together or in parcels and either by
public auction or private contract and for such consideration
(whether in cash, securities or other
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<PAGE>
assets and whether deferred or not) as the Collateral Agent may
think fit and with full power to buy in or rescind or vary any
contract of sale of Pledged Securities or any part thereof and to
resell the same without being responsible for any loss which may be
occasioned thereby and with full power to compromise and effect
compositions and for the purposes aforesaid or any of them to
execute and do all such assurances and things as it shall think fit;
(b) the Collateral Agent shall become entitled to apply all or any
monies received or held by it in respect of the Pledged Securities
in respect of the exercise of any of its rights in relation thereto
in accordance with Clause 8; and
(c) the Company shall on demand execute and do all such transfers,
assurances and things which the Collateral Agent may require for
perfecting its title to any Pledged Securities or for vesting the
same in the Collateral Agent or its nominees or any purchaser.
(2) After this security has become enforceable:-
(a) all rights of the Company to exercise the voting rights which it
would otherwise be entitled to exercise and to receive the dividends
and other payments which it would otherwise be authorized to receive
and retain pursuant to Clause 5(1) shall cease, and, if and so long
as the Collateral Agent is,
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<PAGE>
or is entitled to be, registered as the holder of the Pledged
Securities in the register of members of Murray Johnstone Holdings
Limited all such rights shall thereupon become vested in the
Collateral Agent which shall have the sole right to exercise such
voting rights and to receive and hold as Pledged Securities such
dividends and interest payments; and
(b) all dividends and other payments which are received by the Company
contrary to the provisions of Clause 7(2)(a) shall, if and for so
long as the Collateral AGent is entitled to be registered as the
holder of the Pledged Securities in the register of members of
Murray Johnstone Holdings Limited, be received in, and be declared
by the Company to be subject to a trust for the benefit of the
Collateral Agent, and shall be segregated from other funds of the
Company and forthwith be paid over to the Collateral Agent in kind,
duly endorsed if required, to the intent that the Collateral Agent
shall be entitled to exercise such rights and receive such payments
only for the purpose of protecting or enforcing the security
constituted hereby.
(3) The Collateral Agent shall incur no liability to the Company in the event
of an over realization of Pledged Securities or any of them or from any
error or omission in the administration thereof, but the Company shall be
liable for any deficiency.
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<PAGE>
8. APPLICATION OF ENFORCEMENT MONIES
(1) All monies received by the Collateral Agent under or by virtue of this
Deed following enforcement of the security hereby granted shall be applied
in the following order:-
(a) in or towards payment of all costs, charges and expenses of or
incidental to the enforcement of the security hereby granted;
(b) in or towards satisfaction of the Secured Liabilities in such order
as the Collateral Agent may from time to time require; and
(c) any surplus shall be paid to the Company or any other person
entitled thereto.
(2) Nothing contained in this Deed shall limit the right of the Collateral
Agent (and the Company acknowledges that the Collateral Agent is so
entitled) if and for so long as the Collateral Agent, in its discretion,
shall consider it appropriate, to place all or any monies arising from the
enforcement of the security hereby granted into a suspense account,
without any obligation to apply the same or any part thereof in or towards
the discharge of any Secured Liability.
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<PAGE>
9. RECONVEYANCE
Upon the Company irrevocably ceasing to be under any liability to the
Collateral Agent, the Agent and the Banks in respect of the Secured
Liabilities and the termination of the Commitments the Collateral Agent shall
transfer to the Company at the Company's expense, without recourse or any
warranty or representation, express or implied, other than to the effect that
the Collateral Agent has not otherwise transferred or created any further
Encumbrance over the Pledged Securities and the Company shall accept the
transfer of, all Pledged Securities then held by or to the order of the
Collateral Agent and the Collateral Agent shall co-operate in procuring the
registration of such Pledged Securities in the name of the Company or as the
Company shall direct.
10. PROTECTION OF SECURITY
(1) The security created by this Deed shall be a continuing first priority
security notwithstanding any settlement of account or other matter or
thing whatsoever, and in particular (but without prejudice to the
generality of the foregoing) shall not be considered satisfied by an
intermediate repayment or satisfaction of part only of the Secured
Liabilities, and shall continue in full force and effect until total and
irrevocable satisfaction of all the Secured Liabilities and the
termination of the Commitments.
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<PAGE>
The Collateral Agent may at any time and from time to time, without the
consent of or notice (except as shall be required by applicable statute
and cannot be waived) to, the Company, without incurring responsibility to
the Company and without impairing or releasing the pledge and assignment
provided for herein, upon or without any terms or conditions and in whole
or in part:
(a) change the manner, place or terms of payment, and/or change or
extend the time of payment of, renew or alter, any of the Secured
Liabilities, any security therefor, or any liability incurred
directly or indirectly in respect thereof, and/or change, terminate
or waive any of the provisions of the Agreement or any of the other
Loan Documents, and the pledge and assignment provided for herein
shall apply to the Secured Liabilities as so changed, extended,
renewed or altered;
(b) sell, exchange, release, surrender, realize upon or otherwise deal
with in any manner and in any order any property by any Person other
than the Company owning such property at any time pledged or
mortgaged to secure, or howsoever securing, the Secured Liabilities
and/or any offset thereagainst;
(c) fail to perfect any security interest or exercise or refrain from
exercising any rights against the Company or others or otherwise act
or refrain from acting;
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<PAGE>
(d) settle or compromise any of the Secured Liabilities, any security
therefor or any liability incurred directly or indirectly in respect
thereof of hereof, and may subordinate the payment of all or any
part thereof to the payment of any liability (whether due or not) of
the Company to its creditors; and
(e) apply any sums by whomsoever paid or howsoever realized to any of
the Secured Liabilities, regardless of what liability or liabilities
of the Company remain unpaid.
(2) The security created by this Deed shall be in addition to and shall not in
any way prejudice or be prejudiced by any collateral or other security,
right or remedy which the Collateral Agent may now or at any time
hereafter hold for all or any part of the Secured Liabilities.
(3) No failure on the part of the Collateral Agent, the Agent or any Bank to
exercise and no delay on its part in exercising any right, remedy, power
or privilege under or pursuant to this Deed or any other document
relating to or securing all or any part of the Secured Liabilities will
operate as a waiver thereof, nor will any single or partial exercise of
any right or remedy preclude any other or further exercise thereof or the
exercise of any other right or remedy. The rights and remedies provided
in this Deed and any such other document are cumulative and not exclusive
of any right or remedies provided by law.
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<PAGE>
(4) Each of the provisions in this Deed shall be severable and distinct from
one another and if at any time any one or more of such provisions is or
becomes or is declared null and void, invalid, illegal or unenforceable in
any respect under any law or otherwise howsoever the validity, legality
and enforceability of the remaining provisions hereof shall not in any way
be affected or impaired thereby.
11. FURTHER ASSURANCE
The Company shall execute and do all such assurances, acts and things as
the Collateral Agent may require for perfecting or protecting the security
created by or pursuant to this Deed over the Pledged Securities or for
facilitating the realization of such rights and the exercise of all
powers, authorities and discretions vested in the Collateral Agent, and
shall, in particular, on demand forthwith sign, seal, execute, deliver
and complete all transfers, assignments, renunciations, mandates,
instructions, deeds and documents of every kind and do or cause to be
done, all acts and things of every kind which the Collateral Agent may
specify by written notice to the Company to perfect the interest of the
Collateral Agent or to enable the Collateral Agent or the nominees of the
Collateral Agent to exercise any rights or powers attaching to the
Pledged Securities or to vest the Pledged Securities in the Collateral
Agent or the nominees of the Collateral Agent, or to enable the
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<PAGE>
Collateral Agent to sell or dispose of the Pledged Securities or
otherwise to enforce or exercise any rights or powers under or in
connection with its security.
12. MANDATE AND ATTORNEY
(1) The Company, subject to Clause 12(2), hereby irrevocably appoints the
Collateral Agent to be its mandatory and attorney for it and on its behalf
and in its name or otherwise and as its act or deed to create or
constitute, or to make any alteration or addition or deletion in or to,
any documents which the Collateral Agent may require for perfecting or
protecting the title of the Collateral Agent to the Pledged Securities or
for vesting any of the Pledged Securities in the Collateral Agent or its
nominees or any purchaser and to re-deliver the same thereafter and
otherwise generally to sign, seal and deliver and otherwise perfect any
fixed security, floating charge, transfer, disposition, assignation,
security and/or assurance or any writing, assurance, document or act which
may be required or may be deemed proper by the Collateral Agent on or in
connection with any sale, lease, disposition, realization, getting in or
other enforcement by the Collateral Agent of all or any of the Pledged
Securities.
(2) Such appointments shall take effect immediately, but the powers conferred
thereby shall only become exercisable upon notice being given to the
Company by the Collateral Agent of the occurrence of an Event of Default.
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<PAGE>
(3) The Company hereby ratifies and confirms and agrees to ratify and confirm
whatever any such mandatory or attorney shall do in the exercise or
purported exercise of all or any of the powers, authorities and
discretions referred to in this Clause 12.
13. EXPENSES
(1) The Company binds and obliges itself for the whole expenses of completing
and enforcing the security hereby granted and the expenses of any
retrocession of discharge hereof.
(2) All costs, charges and expenses incurred and all payments made by the
Collateral Agent hereunder in the lawful exercise of the powers hereby
conferred shall be payable, together with interest thereon at the rate
specified in Section 2.5(d) of the Agreement by the Company on demand and
shall be a Secured Liability. All such costs, charges, expenses and
payments shall be paid and charged as between the Collateral Agent and the
Company on the basis of a full and unqualified indemnity.
14. NOTICES
All notices, requests, demands and other communications to be given under
this Deed shall be given and/or be deemed to be given in the same manner
as notices to be given under the Agreement, and the terms of Section 8.1
of the Agreement shall apply MUTATIS MUTANDIS to this Deed as though that
Section were set out in full herein. Notices to the Company shall be
given at the Company's address specified in the Guaranty.
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15. GOVERNING LAW
(1) This Deed shall be construed and governed in all respects in accordance
with the law of Scotland.
16. CONSENT TO REGISTRATION
A Certificate signed by an authorized officer of the Collateral Agent
shall, in the absence of manifest error, conclusively determine the
Secured Liabilities at any relevant time and shall constitute a balance
and charge against the Company, and no suspension of a charge or of a
threatened charge for payment of the balance so constituted shall pass
nor any writ of execution thereon be granted except on consignation.
The Company consents to the registration of this Deed and of any such
certificate for preservation and execution: IN WITNESS WHEREOF this Deed
has been duly executed as of 17th November 1993.
UNITED ASSET MANAGEMENT U.K. HOLDINGS, INC.
By: _____________________________________
Title:
THE FIRST NATIONAL BANK OF BOSTON,
as Collateral Agent
By: _____________________________________
Title:
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<PAGE>
THE SCHEDULE
PLEDGED SECURITIES
(A) fully paid ordinary shares of ten pence each in the capital of Murray
Johnstone Holdings Limited, a Scottish corporation;
(B) all other securities of every kind which may at any time, whether directly
or indirectly, be derived from any kind of the said shares, whether by way
of dividend, stock split, bonus, rights, exchange, option, preference,
capital re-organization or otherwise howsoever; and
(C) where the context so admits, all moneys and assets whatsoever at any time
accruing on, or payable or receivable in respect of, any of the said
shares or securities and all voting and other rights and powers of any
kind at any time attaching to, or exercisable in respect of, any of the
said shares or securities.
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<PAGE>
UNITED ASSET MANAGEMENT CORPORATION
PROFIT SHARING AND 401(k) PLAN
REVISED FIRST AMENDMENT
WHEREAS, United Asset Management Corporation (hereinafter referred to as
the "Company") adopted the United Asset Management Corporation Profit Sharing
and 401(k) Plan (hereinafter referred to as the "Plan") effective as of
January 1, 1989 and restated effective January 1, 1990, to provide retirement
benefits for certain employees of the Company and its subsidiaries; and
WHEREAS, in accordance with Article 11, the Company wishes to amend the
Plan;
NOW, THEREFORE, the Plan is hereby amended effective as of January 1, 1992,
unless otherwise indicated, as follows:
1. Effective January 1, 1993, the final sentence of Section 3.4(a) is hereby
deleted and replaced with the following:
***All Rollover Contributions must be made either by check (in U.S.
funds drawn on a bank located in the United States) or by a direct
transfer (either from a former employer's qualified retirement plan or
from an Individual Retirement Account which holds only assets
attributable to a previous rollover from a former employer's qualified
retirement plan) which meets all applicable requirements of Section
402 of the Code, as amended by the Unemployment Compensation
Amendments Act of 1992 and any subsequent legislation, and all
applicable requirements of Internal Revenue Service guidance
thereunder, for a direct transfer to this Plan of an "eligible
rollover distribution," as described in Sections 401(a)(31)(G) and
402(f)(2)(A) of the Code.
<PAGE>
2. A new sentence is hereby added at the end of the First Paragraph of Section
4.1 as follows:
***Nothing in this Section shall require a Company to contribute any
amount which because of the limitations of Sections 4.4 or 4.5 may not
be allocated on account of the Plan Year for which the contribution is
made to the Participant to whom the amount would have been allocated
if the limitations of Sections 4.4 and 4.5 did not apply.
3. Section 4.7 is hereby deleted and replaced with the following:
4.7 EXCESS ANNUAL ADDITIONS
If the annual addition set forth in Section 4.4 exceeds the limitations set
forth above, the excess will be eliminated in accordance with Section 415
of the Code and regulations promulgated thereunder as follows, in any order
or in any combination elected by the Participant:
(a) Any After-Tax Contributions made by the Participant, with or without
gains attributable to such contributions, may be returned to the
Participant to the extent that they would reduce the excess amount;
(b) Any Before-Tax Contributions made by the Participant, with or without
gains attributable to such contributions, may be returned to the
Participant to the extent that they would reduce the excess amount;
(c) If the Participant is covered by the Plan at the end of the Limitation
Year, the excess amount in the Participant's Total Account may be used
to reduce Company contributions (including any allocation of
forfeitures) for such Participant in the next Limitation Year, and
each succeeding limitation Year if necessary;
(d) If the Participant is not covered by the Plan at the end of the
Limitation Year and the excess amount has not been fully eliminated
under Paragraphs (a),(b) and/or (c) above, the excess amount will be
held unallocated in a suspense account. The suspense account will be
applied to reduce future Company contributions (including allocation
of any forfeitures) for all remaining Participants in the next
Limitation Year, and each succeeding Limitation Year if necessary;
- 2 -
<PAGE>
(e) If a suspense account is in existence at any time during the
Limitation Year pursuant to this Section 4.7, such suspense account
shall participate in the allocation of the Trust Fund's investment
gains and losses.
If a Participant who is eligible to elect a method for disposition of
Excess Annual Additions under Paragraphs (a) through (c) of this Section
4.7 has not made his or her election within a reasonable deadline set by
the Administrative Committee, then such Participant's Excess Annual
Addition shall be disposed of in the sequence set out in Paragraphs (a)
through (d) of this Section 4.7. When applying Paragraphs (a) and/or (b)
in the absence of direction from the Participant, all gains attributable to
any After-Tax Contributions and/or Before-Tax Contributions that are
returned to the Participant shall be returned with such contributions.
4. Section 5.6 is hereby amended by deleting Paragraphs (c) and (d) and
replacing them with the following:
(c) The forfeitable interest of any Participant who has ceased to be
employed by the Company or an Affiliated Company since the preceding
Valuation Date shall be debited against the Participant's Total
Account attributable to Company Contributions made pursuant to
Section 4.1.
(d) Transfers of all or part of each account among the investment funds
shall be made to accomplish any changes in the Participant's
investment election under Section 5.8 and transfers to and from the
Loan Fund shall be made to reflect either the disbursement of new
loans or payments received on outstanding loans, as applicable.
(e) The Trustee shall determine the market value of each of the funds set
forth in Section 5.1 as of the Valuation Date and the net earnings or
losses (realized and unrealized) of the funds since the preceding
Valuation Date. Each of the Participants' accounts shall then be
adjusted for its proportionate share of the investment return based on
the Total Account balance as of the preceding Valuation Date, but
after adjustment in accordance with the previous Paragraphs of this
Section 5.6.
- 3 -
<PAGE>
5. The first full Paragraph after the Vesting Schedule of Section 6.3 of
Article 6 is hereby amended by deleting the final clause of the first Sentence
and replacing it with the following Sentence:
6.3 *** Any forfeiture made pursuant to this Section 6.3 shall be subject
to the restoration provisions of Section 6.4.
6. Section 6.3 of Article VI is hereby further amended by deleting in its
entirety the second Paragraph after the Vesting Schedule.
7. Effective January 1, 1993, Article 7 is hereby amended by adding the
following new Section 7.9 at the end thereof:
7.9 TRANSFERS TO OTHER PLANS.
(a) IN GENERAL. Notwithstanding any provision of the plan to the
contrary that would otherwise limit a distributee's election under this Section,
a distributee may elect, at the time and in the manner prescribed by the Plan
Administrator, to have any portion of an eligible rollover distribution paid
directly to an eligible retirement plan specified by the distributee in a direct
rollover.
(b) DEFINITIONS. For purposes of this Paragraph, the following
definitions shall apply:
(i) DIRECT ROLLOVER: A direct rollover is a payment
by the plan to the eligible retirement plan
specified by the distributee.
(ii) DISTRIBUTEE: A distributee includes an employee
or former employee. In addition, the employee's
or former employee's surviving spouse and the
employee's or former employee's spouse or former
spouse who is alternate payee under a qualified
domestic relations order, as defined in Section
414(p) of the Code, are distributees with regard
to the interest of the spouse or former spouse.
(iii) ELIGIBLE RETIREMENT PLAN: An eligible retirement plan is an
individual retirement account described in Section 408(a) of the
Code, an individual retirement annuity described in Section
408(b) of
- 4 -
<PAGE>
the Code, anannuity plan described in Section 403(a) of the Code,
or a qualified trust described in Section 401(a) of the Code,
that accepts the distributee's eligible rollover distribution.
However, in the case of an eligible rollover distribution to the
surviving spouse, an eligible retirement plan is an individual
retirement account or individual retirement annuity.
(iv) ELIGIBLE ROLLOVER DISTRIBUTION: An eligible rollover
distribution is any distribution of all or any portion of the
balance to the credit of the distributee, except that an eligible
rollover distribution does not include: any distribution that is
one of a series of substantially equal periodic payments (not
less frequently than annually) made for the life (or life
expectancy) of the distributee or the joint lives (or joint life
expectancies) of the distributee and the distributee's designated
beneficiary, or for a specified period of ten years or more; any
distribution to the extent such distribution is required under
Section 401(a)(9) of the Code; and the portion of any
distribution that is not includable in gross income (determined
without regard to the exclusion for net unrealized appreciation
with respect to employer securities).
8. Effective January 1, 1989, Section 8.1 of Article 8 is hereby amended by
inserting the following clause at the beginning of the first Sentence thereof:
Subject to the spousal consent requirements of Section 8.4, to the
extent applicable, ***
9. Effective January 1, 1989, Section 8.2 of Article 8 is hereby amended by
inserting the following clause at the beginning of the first Sentence thereof:
Subject to the spousal consent requirements of Section 8.4, to the
extent applicable, ***
10. Paragraph (b) of Section 8.2 of Article 8 is hereby amended
- 5 -
<PAGE>
by deleting Subparagraphs (i) and (iii) in their entirety and substituting
therefor the following Subparagraphs:
(i) the payment of medical expenses previously incurred or necessary
to obtain medical care described in Code Section 213(d) for the
Participant or the Participant's Spouse or dependents;
***
(iii) the payment of tuition and related educational fees for the next
twelve (12) months of post-secondary education for the
Participant or the Participant's Spouse, children or dependents;
or
***
11. Effective January 1, 1989, Section 8.4 of Article 8 is hereby amended by
deleting the Section in its entirety and inserting the following:
8.4 SPOUSAL CONSENT/ELECTION TO WITHDRAW
Any discretionary or hardship withdrawal that will be made from any
portion of a borrower's Account Balance that is subject to the payment
provisions of Section 7.8 (and therefore, subject to the Qualified
Joint and Survivor Annuity requirements of Code Section 417), shall
not be made to a Participant who is married on the date the withdrawal
is to be made unless the Participant's spouse has consented in writing
to such withdrawal no more than ninety (90) days prior to such date,
and such consent has been witnessed by a notary public, a member of
the Committee, or a designate of the Committee.
All withdrawals shall be made as soon as practicable after the
Valuation Date designated by the Participant's election. The
Committee in its discretion may authorize an advance payment in an
amount equal to all or a portion of the amount of the requested
withdrawal, with the balance, if any, to be paid as soon as
practicable after such Valuation Date.
- 6 -
<PAGE>
12. Effective January 1, 1990, Section 8.5 of Article 8 is hereby amended by
adding the following new Paragraph as the first Paragraph of the Section:
*** The Administrative Committee is hereby authorized to establish a
program for loans to Participants or Beneficiaries of deceased
Participants from their Vested Benefits. Upon the Committee's
direction and subject to the requirements and limitations of this
Section 8.5 and Sections 8.6 and 8.7, the Trustees shall make such
loans.
13. Effective January 1, 1990, Paragraph (j) of Section 8.6 of Article 8 is
hereby amended by inserting the following phrase at the beginning of the First
Sentence
thereof:
Fifty percent (50%) of ***
14. Effective January 1, 1990, Section 8.6 of Article 8 is hereby further
amended by adding the following new Paragraphs after Paragraph (m):
(n) Any loan to a Participant or Beneficiary shall be a directed
investment of the borrower's own account into the Loan Fund, pursuant
to Sections 5.7 and 5.8.
(o) Any loan that will be secured at least in part by any portion of a
borrower's Account Balance that is subject to the payment provisions
of Section 7.8 (and therefore to the Qualified Joint and Survivor
Annuity requirements of Code Section 417), shall not be made to a
Participant who is married on the date the loan is to be made unless
the Participant's spouse has consented in writing to such loan no more
than ninety (90) days prior to such date, and such consent has been
witnessed by a notary public, a member of the Committee, or a
designate of the Committee.
- 7 -
<PAGE>
In the event that the Committee establishes a loan program for Participants
and Beneficiaries of deceased Participants, the following terms, procedures, and
documents shall be set forth by the Committee in a written loan policy statement
and made available to all such Participants and Beneficiaries:
(i) A loan application procedure, together with a Specimen
Application, Promissory Note and Security Agreement;
(ii) the basis for approval of loans;
(iii) the minimum and maximum loans permitted;
(iv) the procedure for setting the loan interest rate;
(v) the events that constitute default and the consequences of
default; and
(vi) any other information or procedures pertinent to administration
of the loan program.
The terms, procedures, and documents of any such written loan policy statement,
as from time to time revised by the Committee, are hereby incorporated by
reference and made part of this Plan.
15. Effective January 1, 1989, for clarification of the Plan, Paragraph (b) of
Section 12.5 is hereby deleted and replaced with the following:
(b) In accordance with the non-discrimination requirements of Section
401(m) of the Code and applicable regulations (including authority
pursuant to Regulations Section 1.401(m)-1(b)(5) to take into account
"qualified non-elective contributions" and "elective contributions,"
if any, within the meaning of Regulations Section 1.401(m)-1(f)(15)
and (3)), the Committee shall establish a Contribution Percentage
Limit with respect to After-Tax Contributions credited to a Highly-
Paid Employee's Total Account during a Plan Year and may adjust such
percentage limit from time to time during the year in order to satisfy
one of the following tests:
****
- 8 -
<PAGE>
16. Effective January 1, 1989, Section 12.5 is hereby further amended by adding
the following new Paragraph after Paragraph (e):
(f) COORDINATION WITH COMBINED SECTION 401(K)/401(M) LIMIT.
Notwithstanding the general rule in paragraph (b)(i) above, the
Average Contribution Percentage for Highly-Paid Employees for each
Plan Year shall not exceed the combined Code Section 401(k)/401(m)
limit as set forth in this paragraph (f). If the limit would be
exceeded for a Plan Year, the excess amount shall be corrected as
provided in paragraphs (d) and (e) above. For purposes of this
Section, the combined Code Section 401(k)/401(m) limit for any Plan
Year is the greater of:
I The sum of:
(A) 125% of the greater of (1) the Average Deferral Percentage of the
group of non-Highly-Paid Employees eligible under the Plan for the
Plan Year, or (2) the Average Contribution Percentage of the group of
non-Highly-Paid Employees eligible under the Plan for the Plan Year,
plus
(B) Two percentage points plus the lesser of I(A)(1) or I(A)(2) above.
In no event, however, shall this amount in (B) exceed 200% of the
lesser of I(A)(1) or I(A)(2) above; or
II The sum of:
(A) 125% of the lesser of (1) the Average Deferral Percentage of
the group of non-Highly-Paid Employees eligible under the Plan for the
Plan Year, or (2) the Average Contribution Percentage of the group of
non-Highly-Paid Employees eligible under the Plan for the Plan Year,
plus
(B) Two percentage points plus the greater of II(A)(1) or
II(A)(2) above. In no event, however, shall this amount in (B) exceed
200% of the greater of II(A)(1) or II(A)(2) above.
- 9 -
<PAGE>
Except as specifically amended hereby, the Plan is hereby reaffirmed in all
respects.
Signed as a sealed Massachusetts Instrument effective as of the date stated
above
.
UNITED ASSET MANAGEMENT CORPORATION
By:________________________________
John F. McNamara
Executive Vice President
Date: 3/18/94
_______________________________
- 10 -
<PAGE>
UNITED ASSET MANAGEMENT CORPORATION
PROFIT SHARING AND 401(k) PLAN
SECOND AMENDMENT
WHEREAS, United Asset Management Corporation (hereinafter referred to as
"Company") adopted the United Asset Management Corporation Profit Sharing and
401(k) Plan (hereinafter referred to as the "Plan") effective as of January 1,
1989 and restated effective January 1, 1990, to provide retirement benefits for
certain employees of the Company and its subsidiaries; and
WHEREAS, in accordance with Article 11, the Company wishes to amend the
Plan;
NOW, THEREFORE, the Plan is hereby amended effective as of January 1, 1993,
unless otherwise indicated, as follows:
1. Section 4.1 is hereby amended by adding the following new Paragraph at the
end of the Section:
Employer contributions made for a Plan Year before December 31 of that
Year shall not share in gains or losses incurred prior to allocation
as of December 31. Such gains and losses shall be allocated pursuant
to paragraph (e) of Section 5.6 as net earnings or losses of the fund
or funds in which the contributions have been invested pending
allocation.
2. Section 5.6 is hereby corrected by deleting the words "but after adjustment
in accordance with the previous paragraphs of this Section 5.6" from the final
Sentence of Paragraph (e) of Section 5.6. Such correction shall be effective as
of the date that said Paragraph (e) was first included in Section 5.6.
<PAGE>
3. Section 5.7 is hereby amended by adding after the first Sentence of the
Section the following:
Notwithstanding the preceding, a Participant shall be permitted to
have all or any portion of the Participant's interest in an investment
fund (except the Loan Fund) transferred to any other investment fund
offered under the Plan (except the Loan Fund) on any business day that
the New York Stock Exchange is open for trading, provided that the
managers of both the transferor and transferee investment funds have
notified the Committee in writing that they will make and accept such
a transfer on behalf of the Participant, and both the transferor and
transferee investment funds are valued daily. Any such transfer
election by a Participant may be transmitted directly to the managers
of the transferor and transferee funds by the Participant in
accordance with rules and procedures established by the managers and
approved by the Committee.
4. Section 7.5 is hereby amended by inserting in the sixth line of Paragraph
Two, after the phrase "as witnessed by a notary public . . ." the following:
* * * or by a member or designee of the Committee * * *
5. Section 9.3 of the plan is hereby corrected by inserting a period after the
word "final" as appearing in the sixth line of Paragraph One, and by
capitalizing the word "specifically" as appearing in the sixth line of Paragraph
One, so that the corrected language appears as follows:
***final. Specifically, ***
Except as specifically amended hereby, the Plan is hereby reaffirmed in all
respects.
-2-
<PAGE>
Signed as a sealed Massachusetts Instrument effective as of the date stated
above.
UNITED ASSET MANAGEMENT CORPORATION
By:
-------------------------------
William H. Park,
Senior Vice President
Date:
-----------------------------
<PAGE>
Exhibit 11.1
UNITED ASSET MANAGEMENT CORPORATION
CALCULATION OF EARNINGS PER SHARE
---------------------------------
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------
1993 1992 (1) 1991 (1)
---- ---- ----
<S> <C> <C> <C>
Common and common equivalent
shares:
Net income................... $53,287 $39,072 $30,208
Adjustments thereto (2)...... - 331 2,305
------- ------- -------
Adjusted net income.......... $53,287 $39,403 $32,513
======= ======= =======
Average shares outstanding... 25,968 23,157 21,053
Adjustments thereto (3)...... 2,913 3,176 4,587
------- ------- -------
Shares used in computation............. 28,881 26,333 25,640
======= ======= =======
Per share......................... $ 1.85 $ 1.50 $ 1.27
======= ======= =======
Common shares-assuming full
dilution:
Net income................... $53,287 $39,072 $30,208
Adjustments thereto (2)...... - - 377
------- ------- -------
Adjusted net income.......... $53,287 $39,072 $30,585
======= ======= =======
Average shares outstanding... 25,968 23,157 21,053
Adjustments thereto (3)...... 3,127 3,487 4,623
------- ------- -------
Shares used in computation........ 29,095 26,644 25,676
======= ======= =======
Per share......................... $ 1.83 $ 1.47 $ 1.19
======= ======= =======
<FN>
______________
(1) The calculations of earnings per share for 1992 and 1991 have been
restated to reflect the effect of the 1993 acquisitions of Heitman
Financial Ltd. and Murray Johnstone Limited which have been accounted
for as pooling of interests transactions.
(2) The proceeds from the exercise of stock options and warrants in
accordance with the modified treasury stock method are first used to
buy back up to 20% of the Company's common stock at the average price
for the period in the primary calculation and at the higher of the
average or closing price in the fully diluted calculation. The
remainder of the proceeds are used to retire debt, and this adjusts
income for interest assumed to be saved net of tax from the use of
such proceeds.
(3) Adjusts shares for stock options and warrants under the modified
treasury stock method and contingently issuable shares based on the
probability of issuance, after adjusting for the stock assumed
repurchased in accordance with (2) above.
</TABLE>
<PAGE>
United Asset Management's Clients
The following is an analysis of the clients of UAM's firms. All data are as
of December 31, 1993, except as otherwise indicated.
On December 31, 1993, UAM's firms had nearly 5,500 clients with approximately
$100.1 billion under management for an average account size of $18.3 million.
The twenty largest clients represented 18% of total assets under management,
and the one hundred largest clients represented 38%. As of January 4, 1994,
reflecting the acquisition of Dwight Asset Management, the mix of assets
under management for clients of UAM's firms was 54% U.S. equities, 22% U.S.
bonds and cash, 8% international equities, 2% international bonds and cash,
9% real estate and 5% stable value assets. The client list includes many of
the largest corporate, public, charitable and union funds in the U.S. and
abroad along with the funds of many individuals, several mutual fund
organizations and a number of professional groups.
Each UAM firm is dedicated to providing superior, focused and individualized
service to its clients. A sound and consistent investment philosophy, regular
communications and a keen awareness of individual needs are all critical
elements in providing high-quality client service. Because each affiliate
keeps its own identity, together with its investment and operating
independence, UAM's unique structure enhances each operating firm's ability
to meet and even exceed client expectations, and thereby to retain existing
clients and attract new prospects.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
Assets Under Number Average
Management of Account Size
(in millions) Percent Clients (in millions)
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Corporate Employee Benefit Plans $ 38,492 38.5% 1,619 $ 23.8
Government Employee Benefit Plans 19,598 19.6 271 72.3
Mutual Funds 12,571 12.6 76 165.4
Endowments and Foundations 10,399 10.4 642 16.2
Individuals 9,277 9.2 2,315* 4.0
Union Member Benefit Plans 7,138 7.1 207 34.5
Professional Groups 1,531 1.5 276 5.5
Corporate Cash Reserves 1,078 1.1 72 15.0
- -------------------------------------------------------------------------------------------
$100,084 100.0% 5,478 $ 18.3
===========================================================================================
<FN>
* These clients include 22 wrap-fee relationships with brokerage firms which
represent over 18,000 individual accounts with $4.0 billion under management.
</TABLE>
<PAGE>
COMMON STOCK INFORMATION
The Company's common stock is listed on the New York Stock Exchange.
Presented below are the high, low and closing quarterly stock prices for 1992
and 1993, as reported on the New York Stock Exchange composite tape, together
with quarterly dividends declared.
<TABLE>
<CAPTION>
Ticker Symbol: UAM
- -----------------------------------------------------------------------------------
Dividend
High Low Close Declared
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
First Quarter, 1992 $32-5/8 $27 $28-1/8 $0.16
Second Quarter, 1992 $28-1/2 $22 $25-1/8 $0.16
Third Quarter, 1992 $28-3/4 $23-5/8 $26-1/4 $0.18
Fourth Quarter, 1992 $30-1/2 $25 $30-1/8 $0.18
- -----------------------------------------------------------------------------------
First Quarter, 1993 $35-3/8 $28-3/8 $34 $0.20
Second Quarter, 1993 $42 $30-3/8 $41 $0.20
Third Quarter, 1993 $47-3/4 $38-5/8 $45-1/4 $0.22
Fourth Quarter, 1993 $46-1/2 $38-1/8 $40-1/2 $0.22
</TABLE>
<PAGE>
NINE YEAR REVIEW
United Asset Management Corporation
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------
(In thousands, unless otherwise
indicated, except per share amounts) 1993 1992* 1991*
- -----------------------------------------------------------------------
<S> <C> <C> <C>
Income Statement Data
Revenues $449,858 $376,160 $307,114
- -----------------------------------------------------------------------
Operating Expenses:
Compensation and Related Expenses 218,617 188,997 153,654
Amortization of Cost Assigned to
Contracts Acquired 48,493 37,279 30,535
Other Operating Expenses 73,043 65,016 53,944
- -----------------------------------------------------------------------
340,153 291,292 238,133
- -----------------------------------------------------------------------
Operating Income 109,705 84,868 68,981
- -----------------------------------------------------------------------
Interest Expense, Net and Other
Amortization 15,235 16,116 16,904
- -----------------------------------------------------------------------
Income before Income Tax Expense 94,470 68,752 52,077
Income Tax Expense 41,183 29,680 21,869
- -----------------------------------------------------------------------
Income before Extraordinary Credit 53,287 39,072 30,208
Extraordinary Credit--Utilization of
Loss Carryforward -- -- --
- -----------------------------------------------------------------------
Net Income $ 53,287 $ 39,072 $ 30,208
=======================================================================
Earnings per Share
Primary:
Income before Extraordinary Credit $1.85 $1.50 $1.27
Extraordinary Credit -- -- --
- -----------------------------------------------------------------------
Net Income $1.85 $1.50 $1.27
======================================================================
Fully Diluted:
Income before Extraordinary Credit $1.83 $1.47 $1.19
Extraordinary Credit -- -- --
- -----------------------------------------------------------------------
Net Income $1.83 $1.47 $1.19
=======================================================================
Dividends Declared per Common Share
(as originally reported) $0.84 $0.68 $0.55
Operating Data
Operating Cash Flow (Cash Flow Provided
by Operations before Working Capital
Changes) $112,148 $ 82,534 $ 67,644
Assets Under Management at End of Year
(in millions) $100,084 $ 86,244 $ 72,456
Balance Sheet Data
Total Assets $675,800 $650,238 $521,408
Cost Assigned to Contracts Acquired, Net $461,705 $460,523 $343,421
Long-term Debt (including current
portion) $212,179 $272,860 $204,719
Total Stockholders' Equity $353,011 $284,652 $223,584
</TABLE>
- 1 -
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
(In thousands, unless otherwise
indicated, except per share amounts) 1990* 1989* 1988* 1987* 1986* 1985*
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Income Statement Data
Revenues $254,938 $217,867 $184,208 $164,214 $120,364 $ 64,848
- -----------------------------------------------------------------------------------------------------
Operating Expenses:
Compensation and Related Expenses 125,068 105,148 84,151 78,037 60,864 33,535
Amortization of Cost Assigned to
Contracts Acquired 27,157 23,808 21,387 14,398 8,527 4,372
Other Operating Expenses 53,015 40,545 37,678 34,456 23,694 14,677
- -----------------------------------------------------------------------------------------------------
205,240 169,501 143,216 126,891 93,085 52,584
- -----------------------------------------------------------------------------------------------------
Operating Income 49,698 48,366 40,992 37,323 27,279 12,264
- -----------------------------------------------------------------------------------------------------
Interest Expense, Net and Other
Amortization 12,917 12,811 12,794 6,933 6,180 4,584
- -----------------------------------------------------------------------------------------------------
Income before Income Tax Expense 36,781 35,555 28,198 30,390 21,099 7,680
Income Tax Expense 14,858 13,654 11,160 13,167 9,823 3,473
- -----------------------------------------------------------------------------------------------------
Income before Extraordinary Credit 21,923 21,901 17,038 17,223 11,276 4,207
Extraordinary Credit--Utilization of
Loss Carryforward -- -- -- -- -- 700
- -----------------------------------------------------------------------------------------------------
Net Income $ 21,923 $ 21,901 $ 17,038 $ 17,223 $ 11,276 $ 4,907
=====================================================================================================
Earnings per Share
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Primary:
Income before Extraordinary Credit $ 1.01 $ 1.02 $ 0.87 $ 0.83 $ 0.61 $ 0.33
Extraordinary Credit -- -- -- -- -- 0.05
- -----------------------------------------------------------------------------------------------------
Net Income $ 1.01 $ 1.02 $ 0.87 $ 0.83 $ 0.61 $ 0.38
=====================================================================================================
Fully Diluted:
Income before Extraordinary Credit $ 1.01 $ 1.01 $ 0.86 $ 0.83 $ 0.59 $ 0.31
Extraordinary Credit -- -- -- -- -- 0.05
- -----------------------------------------------------------------------------------------------------
Net Income $ 1.01 $ 1.01 $ 0.86 $ 0.83 $ 0.59 $ 0.36
=====================================================================================================
Dividends Declared per Common Share
(as originally reported) $ 0.43 $ 0.34 $ 0.26 $ 0.18 $ 0.06 --
Operating Data
Operating Cash Flow (Cash Flow Provided
by Operations before Working Capital
Changes) $ 57,613 $ 54,167 $ 45,911 $ 39,608 $ 26,146 $ 11,820
Assets Under Management at End of Year
(in millions) $ 55,608 $ 51,642 $ 39,663 $ 35,020 $ 26,845 $ 12,205
Balance Sheet Data
Total Assets $452,840 $399,604 $341,548 $295,575 $265,204 $101,473
Cost Assigned to Contracts Acquired, Net $320,940 $292,199 $258,804 $187,507 $187,843 $ 53,622
Long-term Debt (including current
portion) $189,234 $154,340 $129,432 $ 71,128 $ 77,850 $ 41,164
Total Stockholders' Equity $188,527 $175,365 $161,971 $164,124 $142,747 $ 40,244
<FN>
*Restated due to pooling of interests transactions completed in the third and
fourth quarters of 1993, unless otherwise indicated.
</TABLE>
- 2 -
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
The revenues of UAM's affiliated firms are principally derived from fees for
investment advisory services provided to institutional and other clients.
Investment advisory fees are generally a function of the overall fee rate
charged to each account and the level of assets under management by the
affiliated firms. Assets under management can be affected by client
contributions to new or existing accounts, withdrawals of assets from or
terminations of client accounts and investment performance, which may depend
on general market conditions.
Amortization of Cost Assigned to Contracts Acquired and Operating Cash Flow
(Cash Flow Provided by Operations before Working Capital Changes)
Cost assigned to contracts acquired, net of accumulated amortization,
represented approximately 68% of the Company's total assets as of
December 31, 1993. Amortization of cost assigned to contracts acquired, which is
a non-cash charge, represented 14% of the Company's operating expenses.
Recording the cost assigned to contracts acquired as an asset, with the
resulting amortization as an operating expense, reflects the application of
generally accepted accounting principles to acquisitions by UAM of investment
management firms in transactions accounted for as purchases, where the principal
assets acquired are the contracts which evidence the firms' ongoing
relationships with their clients.
Although the contracts acquired are typically terminable on 30 days notice,
analyses conducted by independent consultants retained by UAM to assist the
Company in allocating the purchase price among the assets acquired and the
experience of UAM's firms to date have indicated that: (1) contracts are
usually relatively long-lived; (2) the duration of contracts can be
reasonably estimated; and (3) the value of the cost assigned to contracts
acquired can be estimated based on the present value of its projected income
stream.
The cost assigned to contracts acquired is amortized on a straight-line basis
over the estimated weighted average useful life of the contracts of
individual firms acquired. These lives are estimated through statistical
analysis of historical patterns of terminations for each firm and the size
and age of the contracts acquired as of the acquisition date.
Since actual terminations can differ from the statistical patterns developed,
the Company updates the lifing analyses discussed above based on terminations
subsequent to the acquisition. If the subsequent termination experience
indicates that any of the estimates of the average remaining lives should be
shortened, the remaining cost assigned to contracts acquired will be
amortized over the shorter life commencing in the year in which the new
estimate is determined. The results of the most recent reevaluations of
estimated remaining lives had no material effect on the Company's financial
position or results of operations.
Cost assigned to contracts acquired is amortized as an operating expense. It
does not, however, require the use of cash and therefore, management believes
that it is important to distinguish this expense from other operating
expenses in order to evaluate the performance of the Company. Amortization of
cost assigned to contracts acquired per share referred to below has been
calculated by dividing total amortization by the same number of shares used
in the fully diluted earnings per share calculation.
For purposes of this discussion, "Operating Cash Flow" is defined as Cash
flow provided by operations before working capital changes, as reflected in
the Company's Consolidated Statement of Cash Flows. Management uses Operating
Cash Flow not to the exclusion of net income, but rather as an additional
important measure of the Company's performance.
Results of Operations
The 1992 and 1991 results of operations have been restated to reflect the
August 1993 and November 1993 acquisitions of Heitman Financial Ltd. and
Murray Johnstone Limited, respectively, which have been accounted for as
poolings of interests.
- 1 -
<PAGE>
1993 COMPARED TO 1992
Revenues increased 20% to $449,858,000 in 1993 from $376,160,000 in 1992. The
increase in revenues is attributable to acquisitions that occurred during both
1993 and 1992 as well as favorable portfolio performance achieved by UAM's
affiliated firms and positive client cash flow. The revenues of Pell, Rudman &
Co., Inc. were included since their acquisition date of March 29, 1993. The
revenues from the acquisitions of Alpha Global Fixed Income Managers, The L&B
Group, NWQ Investment Management Company and Tom Johnson Investment Management,
Inc. were included for a full year in 1993 while only being included after their
dates of acquisition in 1992 which were March 16, 1992, June 25, 1992,
October 21, 1992 and December 11, 1992, respectively.
Compensation and related expenses increased 16% to $218,617,000 from
$188,997,000 and other operating expenses increased 12% to $73,043,000 from
$65,016,000 reflecting the acquisitions described above and higher
compensation earned by employees of existing affiliated firms in accordance
with revenue sharing agreements. Amortization of cost assigned to contracts
acquired rose 30% to $48,493,000 from $37,279,000 primarily due to the
acquisition of Pell, Rudman & Co., Inc. and a full year of amortization of
contracts acquired in conjunction with the acquisitions of The L&B Group,
NWQ Investment Management Company and Tom Johnson Investment Management, Inc.
Income before income taxes increased 37% to $94,470,000 from $68,752,000 in
1992 as a result of the events discussed above. Net income for 1993 increased
36% to $53,287,000 from $39,072,000 in 1992.
Fully diluted earnings per share for 1993 rose 24% to $1.83 compared to $1.47
in 1992. This increase reflects higher net income partially offset by the
effect on the computation of earnings per share of a higher weighted average
number of common shares outstanding in 1993 resulting from the Company's
shares trading at higher prices in 1993 than in 1992, the issuance of
warrants in connection with the acquisitions discussed above and stock option
and warrant exercises during the year. Amortization of cost assigned to
contracts acquired on a per share basis increased to $1.67 in 1993 from $1.40
in 1992, primarily as a result of the acquisitions discussed above.
Operating Cash Flow increased 36% to $112,148,000 from $82,534,000 in 1992,
as a result of the circumstances discussed above.
1992 COMPARED TO 1991
Revenues increased 22% to $376,160,000 in 1992 from $307,114,000 in 1991. The
favorable portfolio performance achieved by UAM's affiliated firms as well as
positive client cash flow resulted in an increase in assets under management
and is the primary reason for the higher fee revenues. In addition, the
revenues from the acquisitions of Alpha Global Fixed Income Managers,
The L&B Group, NWQ Investment Management Company and Tom Johnson Investment
Management, Inc. were included from March 16, 1992, June 25, 1992, October 21,
1992 and December 11, 1992, their respective dates of acquisition. The revenues
of First Pacific Advisors, Inc., acquired June 27, 1991 and Trinity Capital
Advisors, acquired August 26, 1991 were included for a full year in 1992, while
only being included after their dates of acquisition in 1991.
Compensation and related expenses increased 23% to $188,997,000 from
$153,654,000 and other operating expenses increased 21% to $65,016,000 from
$53,944,000 reflecting the acquisitions described above and higher
compensation earned by employees of existing affiliated firms in accordance
with revenue sharing agreements. Amortization of cost assigned to contracts
acquired rose 22% to $37,279,000 from $30,535,000 primarily due to the
acquisitions of The L&B Group, NWQ Investment Management Company, Tom Johnson
Investment Management, Inc. and a full year of amortization of First Pacific
Advisors, Inc. and Trinity Capital Advisors.
- 2 -
<PAGE>
Income before income taxes increased 32% to $68,752,000 from $52,077,000 in
1991 as a result of the events discussed above. Net income for 1992 increased
29% to $39,072,000 from $30,208,000 in 1991.
Fully diluted earnings per share for 1992 rose 24% to $1.47 compared to $1.19
in 1991. This increase reflects higher net income partially offset by the
effect on the computation of earnings per share of a higher weighted average
number of common shares outstanding in 1992 resulting from the issuance of
warrants in connection with the acquisitions discussed above and stock option
and warrant exercises during the year. Amortization of cost assigned to
contracts acquired on a per share basis increased to $1.40 in 1992 from $1.19
in 1991, primarily as a result of the acquisitions discussed above.
Operating Cash Flow increased 22% to $82,534,000 from $67,644,000 in 1991, as
a result of the circumstances discussed above.
Financial Condition and Liquidity
The Company generated $112,148,000 of Operating Cash Flow in 1993. This
Operating Cash Flow was primarily used for the following: to pay down
$44,000,000 of borrowings under the Company's line of credit, to finance the
$32,693,000 cash portion of the acquisitions completed in 1993, including the
contingent payment made in 1993 for a prior year acquisition, to pay
dividends to shareholders totaling $20,304,000 and to repurchase shares of
the Company's common stock for $4,166,000. As of December 31, 1993, the
Company had working capital of $64,921,000 and had $145,000,000 available
under its $225,000,000 line of credit. (See Note 3 to the Consolidated
Financial Statements included in this Annual Report).
Management believes that the Company's existing capital, together with
Operating Cash Flow and borrowings available under its revolving line of
credit, will provide the Company with sufficient resources to meet its
present and reasonably foreseeable future cash needs. Management expects that
the principal need for capital will be to fund additional acquisitions, which
will require cash, the issuance of additional UAM securities, or some
combination thereof.
Income Taxes
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 109, Accounting for Income Taxes, which requires an
asset and liability approach for accounting for income taxes, whereby tax
consequences of an event are measured by the provisions of enacted tax laws.
This is in place of the deferral approach which is income statement oriented.
In January 1993, the Company adopted the provisions of the new pronouncement
on a prospective basis. Such adoption did not have a material effect on the
Company's consolidated financial statements.
Effects of Inflation
The Company's business is not capital intensive. Management believes that
financial results as reported would not be significantly affected had such
results been adjusted to reflect the effects of inflation and price changes.
Increases or decreases in interest rates affect UAM's costs of operations
chiefly through increasing or decreasing the interest expense related to bank
borrowings and to subordinated debt which may be issued in connection with
future acquisitions. Rates of interest on existing subordinated debt are
fixed. Increases and decreases in interest rates may also affect market
prices for equity and debt securities held by the Company's affiliated firms
as assets under management for clients. Changes in such prices may affect the
affiliated firm's revenues, and therefore UAM's consolidated revenues.
- 3 -
<PAGE>
SELECTED QUARTERLY FINANCIAL DATA
Unaudited (In thousands, except per share data)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
1992 1993
- ------------------------------------------------------------------------------------------------------
First Second Third Fourth First Second Third Fourth
Quarter* Quarter* Quarter* Quarter* Quarter* Quarter* Quarter* Quarter
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
Revenues $86,631 $87,403 $93,784 $108,342 $110,024 $109,661 $111,402 $118,771
Operating Income $20,176 $19,317 $20,566 $ 24,809 $ 25,418 $ 26,779 $ 28,087 $ 29,421
Income before Income
Tax Expense $16,367 $15,635 $16,661 $ 20,089 $ 21,150 $ 22,791 $ 24,512 $ 26,017
Net Income $ 9,312 $ 8,887 $ 9,399 $ 11,474 $ 12,028 $ 13,047 $ 13,461 $ 14,751
======================================================================================================
Primary Earnings
per Share** $ 0.35 $ 0.35 $ 0.36 $ 0.44 $ 0.44 $ 0.45 $ 0.46 $ 0.50
Fully Diluted
Earnings per
Share** $ 0.35 $ 0.35 $ 0.36 $ 0.43 $ 0.43 $ 0.45 $ 0.45 $ 0.50
======================================================================================================
Operating Cash
Flow*** $18,994 $18,656 $20,123 $ 24,761 $ 26,010 $ 27,600 $ 28,327 $ 30,211
======================================================================================================
<FN>
*Restated due to pooling of interests transactions completed during 1993.
**Under generally accepted accounting principles, when earnings per share are
computed under the modified treasury stock method and when the market price
of a company's common stock changes, the total of four quarters' earnings per
share may not equal the earnings per share for the year.
***Cash flow provided by operations before working capital changes.
</TABLE>
<PAGE>
CONSOLIDATED BALANCE SHEET
United Asset Management Corporation
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
December 31, 1993 1992*
- --------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Current Assets:
Cash and cash equivalents $ 62,807,000 $ 48,068,000
Investment management fees receivable 75,003,000 67,141,000
Other current assets 5,611,000 5,519,000
- --------------------------------------------------------------------------------------------
Total current assets 143,421,000 120,728,000
Fixed assets, net 14,994,000 14,744,000
Cost assigned to contracts acquired, net of accumulated
amortization of $218,078,000 in 1993 and $169,585,000
in 1992 461,705,000 460,523,000
Other assets, including net goodwill of $19,802,000 in 1993
and $19,324,000 in 1992 55,680,000 54,243,000
- --------------------------------------------------------------------------------------------
Total assets $675,800,000 $650,238,000
============================================================================================
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued expenses $ 54,861,000 $ 44,557,000
Accrued compensation 20,331,000 18,169,000
Current portion of notes payable 1,628,000 7,604,000
Deferred revenue 1,680,000 1,013,000
- --------------------------------------------------------------------------------------------
Total current liabilities 78,500,000 71,343,000
Senior notes payable 80,000,000 124,000,000
Subordinated notes payable 130,551,000 141,256,000
Deferred income taxes 33,738,000 28,987,000
- --------------------------------------------------------------------------------------------
Total liabilities 322,789,000 365,586,000
- --------------------------------------------------------------------------------------------
Commitments and contingencies
Stockholders' equity:
Common stock, par value $.01 per share:
Authorized--50,000,000 shares
Issued--26,972,398 shares in 1993 and 24,719,566 in 1992 270,000 247,000
Capital in excess of par value 233,759,000 196,107,000
Retained earnings 118,982,000 88,848,000
- --------------------------------------------------------------------------------------------
353,011,000 285,202,000
Less treasury shares at cost--18,900 shares in 1992 -- (550,000)
- --------------------------------------------------------------------------------------------
Total stockholders' equity 353,011,000 284,652,000
- --------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $675,800,000 $650,238,000
============================================================================================
<FN>
*Restated due to pooling of interests transactions completed in the third and
fourth quarters of 1993.
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
CONSOLIDATED STATEMENT OF INCOME
United Asset Management Corporation
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
Year Ended December 31, 1993 1992* 1991*
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues $449,858,000 $376,160,000 $307,114,000
- -----------------------------------------------------------------------------
Operating expenses:
Compensation and related expenses 218,617,000 188,997,000 153,654,000
Amortization of cost assigned
to contracts acquired 48,493,000 37,279,000 30,535,000
Other operating expenses 73,043,000 65,016,000 53,944,000
- -----------------------------------------------------------------------------
340,153,000 291,292,000 238,133,000
- -----------------------------------------------------------------------------
Operating income 109,705,000 84,868,000 68,981,000
- -----------------------------------------------------------------------------
Non-operating expenses:
Interest expense, net 13,790,000 14,755,000 15,838,000
Other amortization 1,445,000 1,361,000 1,066,000
- -----------------------------------------------------------------------------
15,235,000 16,116,000 16,904,000
- -----------------------------------------------------------------------------
Income before income tax expense 94,470,000 68,752,000 52,077,000
Income tax expense 41,183,000 29,680,000 21,869,000
- -----------------------------------------------------------------------------
Net income $ 53,287,000 $ 39,072,000 $ 30,208,000
Earnings per common and common
equivalent share $1.85 $1.50 $1.27
=============================================================================
Earnings per common share
assuming full dilution $1.83 $1.47 $1.19
=============================================================================
<FN>
*Restated due to pooling of interests transactions completed in the third and
fourth quarters of 1993.
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
CONSOLIDATED STATEMENT OF CASH FLOWS
United Asset Management Corporation
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
Year Ended December 31, 1993 1992* 1991*
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flow from operations:
Net income $ 53,287,000 $ 39,072,000 $ 30,208,000
Items not requiring cash that are included
in net income:
Amortization of cost assigned to
contracts acquired 48,493,000 37,279,000 30,535,000
Other amortization 1,445,000 1,361,000 1,066,000
Depreciation 4,172,000 3,733,000 3,221,000
Increase in deferred income taxes 4,751,000 1,089,000 2,614,000
- ---------------------------------------------------------------------------------------
Cash flow provided by operations before
working capital changes 112,148,000 82,534,000 67,644,000
Working capital changes affecting cash
flow provided by operations:
Increase in investment management
fees receivable (8,038,000) (6,675,000) (17,991,000)
(Increase) decrease in other current
assets (103,000) (667,000) 162,000
Increase in accounts payable and
accrued expenses 10,610,000 14,226,000 12,100,000
Increase (decrease) in accrued
compensation 2,172,000 (8,929,000) 3,657,000
Increase (decrease) in deferred revenue 680,000 (27,000) (31,000)
- ---------------------------------------------------------------------------------------
Net cash flow from operations 117,469,000 80,462,000 65,541,000
- ---------------------------------------------------------------------------------------
Cash flow from (used in) investing activities:
Purchase of fixed assets (4,508,000) (5,825,000) (3,190,000)
Cash additions to cost assigned to
contracts acquired (30,499,000) (94,294,000) (52,553,000)
Change in other assets (2,045,000) 1,709,000 (31,049,000)
- ---------------------------------------------------------------------------------------
Net cash flow used in investing activities (37,052,000) (98,410,000) (86,792,000)
- ---------------------------------------------------------------------------------------
Cash flow from (used in) financing activities:
Purchase of treasury shares (4,166,000) (3,023,000) (2,445,000)
Reductions in long-term debt (114,736,000) (110,517,000) (81,040,000)
Additions to long-term debt 64,500,000 150,471,000 115,993,000
Issuance or reissuance of equity
securities 9,590,000 8,408,000 5,171,000
Dividends declared (20,304,000) (17,284,000) (11,615,000)
- ---------------------------------------------------------------------------------------
Net cash flow from (used in) financing
activities (65,116,000) 28,055,000 26,064,000
- ---------------------------------------------------------------------------------------
Effect of foreign exchange rate changes on
cash flow (562,000) (5,092,000) (506,000)
- ---------------------------------------------------------------------------------------
Net increase in cash and cash equivalents 14,739,000 5,015,000 4,307,000
Cash and cash equivalents at beginning
of year 48,068,000 43,053,000 38,746,000
- ---------------------------------------------------------------------------------------
Cash and cash equivalents at end of year $ 62,807,000 $ 48,068,000 $ 43,053,000
=======================================================================================
<FN>
*Restated due to pooling of interests transactions completed in the third and
fourth quarters of 1993.
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
United Asset Management Corporation
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Common
Stock at Capital in Treasury
Shares Par Excess of Retained Treasury Shares
Issued Value Par Value Earnings Shares at Cost
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
December 31, 1990* 21,176,529 $212,000 $146,283,000 $ 57,451,000 (976,186) $(15,419,000)
Issuance of stock 399,234 4,000 450,000 (9,000) -- --
Exercise of stock
options and warrants 94,696 1,000 3,545,000 (2,386,000) 1,133,886 17,864,000
Issuance of warrants -- -- 75,000 -- -- --
Purchase of treasury
shares -- -- -- -- (157,700) (2,445,000)
Net income -- -- -- 30,208,000 -- --
Dividends declared
($0.55 per share) -- -- -- (9,029,000) -- --
Dividends declared by
pooled companies -- -- -- (2,586,000) -- --
Foreign currency
translation adjustment -- -- -- (635,000) -- --
- -------------------------------------------------------------------------------------------------------
December 31, 1991* 21,670,459 217,000 150,353,000 73,014,000 -- --
Issuance of stock 235,158 2,000 7,959,000 -- -- --
Exercise of stock
options and warrants 2,813,949 28,000 35,503,000 (128,000) 103,800 2,473,000
Issuance of warrants -- -- 2,292,000 -- -- --
Purchase of treasury
shares -- -- -- -- (122,700) (3,023,000)
Net income -- -- -- 39,072,000 -- --
Dividends declared
($0.68 per share) -- -- -- (13,506,000) -- --
Dividends declared by
pooled companies -- -- -- (3,778,000) -- --
Foreign currency
translation adjustment -- -- -- (5,826,000) -- --
- -------------------------------------------------------------------------------------------------------
December 31, 1992* 24,719,566 247,000 196,107,000 88,848,000 (18,900) (550,000)
Issuance of stock 319 -- 11,000 -- -- --
Exercise of stock
options and warrants 2,252,513 23,000 36,491,000 (2,195,000) 158,300 4,716,000
Issuance of warrants -- -- 1,150,000 -- -- --
Purchase of treasury
shares -- -- -- -- (139,400) (4,166,000)
Net income -- -- -- 53,287,000 -- --
Dividends declared
($0.84 per share) -- -- -- (20,304,000) -- --
Foreign currency
translation adjustment -- -- -- (654,000) -- --
- -------------------------------------------------------------------------------------------------------
December 31, 1993 26,972,398 $270,000 $233,759,000 $118,982,000 -- $ --
=======================================================================================================
<FN>
*Restated due to pooling of interests transactions completed in the third and
fourth quarters of 1993.
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
United Asset Management Corporation
Note 1 - Summary of Significant Accounting Policies
THE COMPANY
The principal business activities of United Asset Management Corporation (the
Company) are investment management, primarily for institutional clients, and
the acquisition of institutional investment management firms. The
wholly-owned subsidiaries operate in one business segment, that is, as
investment advisers.
CONSOLIDATION, INCENTIVE COMPENSATION AND REVENUE SHARING
These consolidated financial statements include the accounts of the Company
and all of its subsidiaries. All intercompany balances and transactions have
been eliminated. The 1992 and 1991 consolidated financial statements have
been restated to reflect the 1993 acquisitions of Heitman Financial Ltd. and
Murray Johnstone Limited which have been accounted for as poolings of
interests (See Notes 4 and 7).
The Company has arrangements with its subsidiaries and certain of their
principal officers (revenue sharing plans) under which the subsidiaries are
entitled to use a portion (determined by formula) of their revenues to meet
their operating expenses, including compensation, at the discretion of the
subsidiaries' management. All operating expenses incurred by the subsidiaries
and covered under the terms of the revenue sharing plans are charged to
operations and reported as compensation and related expenses or as other
operating expenses in these consolidated financial statements. Revenues in
excess of those used to meet operating expenses of a subsidiary are
transferred to the Company.
REVENUE RECOGNITION
Investment management fee revenues are accrued over the period in which
services are performed. Any fees collected in advance are deferred and
recognized as income over the period earned. All investment management fees
receivable are expected to be collected.
FIXED ASSETS AND DEPRECIATION
Equipment and other fixed assets are recorded at cost and depreciated using
the straight-line method over their estimated useful lives. Leasehold
improvements are amortized over the shorter of their estimated useful lives
or the term of the lease.
COST ASSIGNED TO CONTRACTS ACQUIRED AND GOODWILL
The purchase price for the acquisition of companies acquired in business
combinations accounted for as a purchase is allocated based on the fair value
of the net assets acquired, primarily investment management contracts.
The cost assigned to contracts acquired is amortized using the straight-line
method over periods ranging from 5 to 20 years. These lives represent the
estimated weighted average lives of the contracts acquired and are based
generally on historical experience of the individual companies acquired. The
estimated remaining weighted average lives of contracts acquired are
periodically reevaluated. If experience subsequent to the acquisition
indicates that the estimate of the average remaining lives should be
shortened, the cost assigned to contracts acquired will be amortized over the
shorter life commencing in the year in which the new estimate is determined.
The results of the most recent reevaluations of estimated remaining lives had
no material effect on the Company's financial position or results of
operations.
Amounts paid to certain key employees for entering into long-term employment
contracts and noncompetition agreements at the time of acquisitions are
included in cost assigned to contracts acquired and are amortized on a
straight-line basis over the lives of such contracts.
Purchase price in excess of the fair value of the net assets acquired is
recorded as goodwill and amortized on a straight-line method over 40 years.
- 1 -
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
United Asset Management Corporation
INCOME TAXES
Effective January 1993, the Company adopted on a prospective basis Statement
of Financial Accounting Standards No. 109, Accounting for Income Taxes
(FAS 109). The adoption of FAS 109 changes the Company's method of accounting
for income taxes from the deferred method under APB 11, which is income
statement oriented, to an asset and liability approach. Previously, the Company
deferred the tax effects of differences in the timing of deductions for
financial and tax reporting, which principally resulted from the amortization of
the cost assigned to contracts acquired through purchase acquisitions. The asset
and liability approach requires the recognition of deferred tax liabilities and
assets for the expected future tax consequences of temporary differences between
the carrying amounts and tax basis of the Company's assets and liabilities,
primarily the cost of contracts acquired. The adoption of FAS 109 did not have a
material effect on the Company's consolidated financial statements.
RETIREMENT AND PENSION PLANS
The Company has certain retirement and pension plans which cover eligible
employees of the Company and its subsidiaries. All plans are defined
contribution retirement plans, with the exception of a defined benefit
pension plan maintained by a non-U.S. subsidiary. The expense related to all
plans was $7,050,000, $6,048,000 and $6,053,000 in 1993, 1992 and 1991,
respectively.
The defined benefit pension plan has an excess of plan assets over plan
obligations. Excess plan assets and pension expense relating to the defined
benefit pension plan are not significant in relation to the Company's
consolidated financial statements.
EARNINGS PER SHARE
Earnings per common and common equivalent share are determined on the basis
of the weighted average number of shares outstanding after giving effect to
(1) potentially dilutive stock options and warrants under the modified
treasury stock method; and (2) contingently issuable stock and warrants based
on the probability of issuance.
Earnings per common share assuming full dilution are determined based on
(l) the weighted average number of common and common equivalent shares assumed
outstanding under the modified treasury stock method during the period; and
(2) the issuance of contingently issuable stock and warrants at the most
dilutive level.
STATEMENT OF CASH FLOWS
Cash equivalents represent highly-liquid investments with an original
maturity of three months or less.
FOREIGN CURRENCY TRANSLATION
In accordance with Statement of Financial Accounting Standards No. 52,
Foreign Currency Translation, the financial statements of all non-U.S.
subsidiaries are translated to U.S. dollars as follows: assets and
liabilities at year-end exchange rates; income, expenses and cash flows at
average exchange rates; and stockholders' equity at historical exchange
rates. The resulting translation adjustment is recorded as a component of
stockholders' equity.
Note 2 - Fixed Assets and Lease Obligations
Fixed assets, which have estimated useful lives up to 10 years, consist of
the following:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
December 31, 1993 1992
- ------------------------------------------------------------------------------------
<S> <C> <C>
Equipment, leasehold improvements and other fixed
assets $ 40,724,000 $ 36,780,000
Accumulated depreciation and amortization (25,730,000) (22,036,000)
- ------------------------------------------------------------------------------------
$ 14,994,000 $ 14,744,000
====================================================================================
</TABLE>
- 2 -
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
United Asset Management Corporation
At December 31, 1993, future minimum rentals for operating leases that have
initial or non-cancelable lease terms in excess of one year are payable as
follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------
Required
Minimum
Year Ended December 31, Payment
- ------------------------------------------------------------
<S> <C>
1994 $10,524,000
1995 9,413,000
1996 8,235,000
1997 7,113,000
1998 4,910,000
Thereafter 12,127,000
</TABLE>
Rent expense for 1993, 1992 and 1991 approximated $11,776,000, $9,059,000 and
$7,512,000, respectively.
Note 3 - Notes Payable
The Company has a Reducing Revolving Credit Agreement (the Credit Agreement)
with a group of banks whereby the Company may borrow, prepay and reborrow up
to $225,000,000 through January 8, 1995. The principal amount of senior notes
outstanding at that date will be payable in twelve equal quarterly
installments through January 8, 1998. A commitment fee of 1/2 of 1% is
payable on the daily average unused portion of the $225,000,000 commitment.
Interest rates available for amounts outstanding under the Credit Agreement
are: prime, 1-1/4% over LIBOR, 1-3/8% over certain certificate of deposit
rates or a money market bid option. Under the money market bid option, the
Company can borrow up to $50,000,000 from members of the banking group at
prevailing money market rates; any such borrowings reduce the $225,000,000
commitment under the Credit Agreement.
The Company is required to meet certain financial covenants, including
covenants restricting dividends and repurchase of the Company's stock, and
requiring the Company to maintain a minimum net worth, as defined. The
Company must also continue to maintain certain minimum working capital, cash
flow, and debt to equity ratios. Under the terms of the most restrictive
covenant, $70,000,000 is available for the payment of cash dividends and
repurchase of the Company's stock during 1994.
At December 31, 1993, $80,000,000 was outstanding under the Credit Agreement.
Borrowings under the Credit Agreement are secured by the stock of the
Company's subsidiaries.
At December 31, 1993 and 1992, the Company also had $124,942,000 and
$134,058,000 of subordinated notes outstanding, respectively, which primarily
represent a portion of the consideration paid to selling shareholders of
businesses acquired. The notes which mature at various dates in 1994 to 2001
have interest rates ranging from 5.5% to 10%. The majority of these selling
shareholders remain employed by the Company's subsidiaries subsequent to the
date of acquisition.
One of the Company's subsidiaries also had subordinated notes outstanding of
$7,237,000 and $14,802,000 at December 31, 1993 and 1992, respectively, which
are secured by certain assets of the subsidiary.
Due to the unique nature of each of the subordinated debt instruments issued
to the sellers of firms, the assessment of current fair value is not
practicable.
Accrued interest at December 31, 1993 and 1992 was $3,717,000 and $3,701,000,
respectively. Interest expense and interest paid for each of the three years
ended December 31 were as follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------
1993 1992 1991
- -----------------------------------------------------------
<S> <C> <C> <C>
Interest expense $15,111,000 $16,135,000 $17,277,000
Interest paid $15,095,000 $16,197,000 $17,167,000
</TABLE>
- 3 -
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
United Asset Management Corporation
The aggregate cash repayments of the outstanding borrowings during each of
the five years subsequent to December 31, 1993 total the following amounts:
<TABLE>
<CAPTION>
- ------------------------------------------------------------
Required
Minimum
Year ended December 31, Payment
- ------------------------------------------------------------
<S> <C>
1994 $11,968,000
1995 39,675,000
1996 33,186,000
1997 38,243,000
1998 2,572,000
</TABLE>
Through February 7, 1994, $9,420,000 of the subordinated notes included on
the December 31, 1993 balance sheet were tendered in payment for the exercise
of warrants. To the extent not so tendered by the holders, the Company
intends to refinance any subordinated notes which mature in 1994 using its
available line of credit.
Note 4 - Stockholders' Equity
During 1993, 1992 and 1991, the Company issued 3,694,398, 843,050 and 399,234
shares of common stock, respectively, to effect acquisitions accounted for as
poolings of interests. The Company issued 393,806, 1,617,316 and 401,831
warrants during 1993, 1992 and 1991, respectively, to effect acquisitions
accounted for as purchases.
In connection with the exercise of warrants through the tender of
subordinated notes, subordinated debt of $29,488,000, $29,788,000 and
$14,597,000 was extinguished in 1993, 1992 and 1991, respectively.
The Company has a program to repurchase shares of its common stock to meet
the requirements for future issuance of shares upon the exercise of stock
options and warrants. Through December 31, 1993, 2,878,117 shares of common
stock out of the total of 4,000,000 shares which have been authorized, had
been repurchased at a cost of $43,343,000 and all such shares had been
reissued from treasury upon the exercise of stock options and warrants.
Included in accounts payable and accrued expenses at December 31, 1993 and
1992 are dividends payable of $5,907,000 and $3,782,000, respectively.
At December 31, 1993, the following warrants were outstanding at an average
exercise price of $28.44 per share:
<TABLE>
<CAPTION>
- --------------------------------------------------------------
Shares Issuable Exercise Price Year of Expiration
- --------------------------------------------------------------
<S> <C> <C>
688,563 $ 5.56-24.00 1994
530,438 $23.00 1995
291,223 $16.22-23.00 1996
595,424 $16.50-23.00 1997
81,116 $23.00-29.00 1998
1,617,316 $33.00-35.00 1999
150,421 $29.00-33.00 2000
243,385 $57.00 2001
- -----------------
4,197,886
=================
</TABLE>
The Company is authorized to issue 5,000,000 shares of $1.00 par value
preferred stock, none of which has been issued through December 31, 1993.
Note 5 - Stock Option Plans
Under the Company's Stock Option Plans, the Board of Directors is authorized
to grant options to officers and other key employees of the Company and its
subsidiaries. The exercise price of the options is not less than the fair
market value at the date of the grant. The options expire five years from the
date of the grant and may not be exercised for one year from the date of the
grant. Thereafter, they may be exercised at dates stipulated in each grant.
- 4 -
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
United Asset Management Corporation
The following is a summary of stock option transactions under these plans
during 1991, 1992 and 1993:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
Number of Stock Option
Shares Price Range
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Balance, December 31, 1990 2,074,752 $ 0.02-20.00
Options granted 461,910 $14.21-27.25
Options exercised (360,088) $ 9.75-19.50
Options cancelled (62,518) $ 9.75-19.88
----------
Balance, December 31, 1991 2,114,056 $ 0.02-27.25
Options granted 886,152 $22.63-32.00
Options exercised (671,608) $ 0.02-24.50
Options cancelled (29,270) $14.25-31.25
----------
Balance, December 31, 1992 2,299,330 $ 0.02-32.00
Options granted 802,179 $29.00-46.38
Options exercised (509,602) $ 0.02-31.25
Options cancelled (51,767) $14.88-41.00
----------
Balance, December 31, 1993 2,540,140 $ 0.02-46.38
==========
Options exercisable at the end of the year 863,800
Options available for future grants 1,062,370
Shares reserved, but unissued at the beginning of the year 4,112,903
Shares reserved, but unissued at the end of the year 3,602,510
</TABLE>
The options outstanding at December 31, 1993 expire at various times in 1994
through 1998. Options exercisable at December 31, 1993 had an average price
of $13.03. The average exercise price of all options outstanding at
December 31, 1993 was $23.36.
Note 6 - Income Taxes
Income before income tax expense was taxed under the following jurisdictions:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
Year Ended December 31, 1993 1992 1991
- --------------------------------------------------------------------------
<S> <C> <C> <C>
Domestic $85,358,000 $62,716,000 $43,484,000
Foreign 9,112,000 6,036,000 8,593,000
- --------------------------------------------------------------------------
Income before income tax expense $94,470,000 $68,752,000 $52,077,000
==========================================================================
</TABLE>
Income tax expense consists of the following:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------
Year Ended December 31, 1993 1992 1991
- ------------------------------------------------------------------
<S> <C> <C> <C>
Current:
Federal $27,414,000 $22,508,000 $13,420,000
State 5,734,000 4,012,000 2,707,000
Non-U.S. 3,284,000 2,071,000 3,128,000
Deferred:
Federal 3,909,000 880,000 2,454,000
State 842,000 209,000 160,000
- ------------------------------------------------------------------
Income tax expense $41,183,000 $29,680,000 $21,869,000
==================================================================
</TABLE>
- 5 -
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
United Asset Management Corporation
<TABLE>
<CAPTION>
Deferred tax liabilities determined under FAS 109 are comprised of the following:
- ------------------------------------------------------------------------------------------------
December 31, 1993 January 1, 1993
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Excess contract amortization for tax purposes $31,222,000 $26,605,000
Installment sale for tax purposes on real estate
partnerships sold prior to acquisition of subsidiary 1,919,000 2,110,000
Other 597,000 272,000
- ------------------------------------------------------------------------------------------------
$33,738,000 $28,987,000
================================================================================================
</TABLE>
For purchase acquisitions which occurred prior to The Revenue Reconciliation
Act of 1993, the excess contract amortization for income tax purposes results
from the application of a method under which the deductions for income tax
purposes are determined by (1) amortizing the cost assigned to contracts
acquired on a straight-line basis over the same estimated useful lives as
those used for financial reporting purposes; and (2) deducting the
unamortized balance of such cost which is allocated to the individual
contracts when any such contract is terminated. For acquisitions subsequent
to The Revenue Reconciliaton Act of 1993, the deduction for income tax
purposes is determined by amortizing the costs assigned to contracts acquired
on a straight-line basis over a 15 year period, with no deduction for the
unamortized balance of individual contract terminations in the year of
termination. This change in tax treatment is pursuant to Section 197 of the
Federal Tax Code which was added by The Revenue Reconciliation Act of 1993.
The effective income tax rate differs from the statutory Federal income tax
rate as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------
1993 1992 1991
- --------------------------------------------------------------
<S> <C> <C> <C>
Federal income tax statutory rate 35% 34% 34%
State income taxes, net of
federal benefit 6 6 6
Nondeductible items 3 3 2
- --------------------------------------------------------------
44% 43% 42%
==============================================================
</TABLE>
The deferred tax expense under APB 11 for the years ended December 31, 1992
and December 31, 1991 was $1,089,000 and $2,614,000, respectively, and was
primarily due to the excess contract amortization for tax purposes. Income
taxes of $31,264,000, $28,047,000 and $13,611,000 were paid in 1993, 1992 and
1991, respectively. Amounts related to income taxes payable were $10,189,000,
at December 31, 1993, $7,939,000 at December 31, 1992 and $4,807,000 at
December 31, 1991.
The Company's federal income tax returns for the years ending December 31,
1984 through 1992 have been under audit by the Internal Revenue Service. On
January 30, 1992, the Company received a Revenue Agent's Report proposing
certain adjustments to the Company's federal income tax returns for the years
ending December 31, 1984, 1985 and 1986. In April 1992, the Company filed its
protest with the Internal Revenue Service. The principal issue involved is
the deductibility of the amortization of costs assigned to investment
advisory contracts acquired. Management and its advisors believe that the
Company's practice of deducting the amortization of costs assigned to
contracts acquired is correct and that the Company's position for the years
under audit, and current year if the issue is raised, will ultimately be
sustained on appeal within the Internal Revenue Service, or, if necessary, in
court. In management's opinion, the appropriateness of the Company's practice
was further supported in 1993 by the Supreme Court's favorable decision on
similar practices for treating intangible assets. Should the adjustments
proposed in the Revenue Agent's Report be upheld in their entirety, the
Company's additional liability for federal income tax for the years covered
by the report would approximate $13,124,000, plus statutory interest thereon.
The Company believes that the amount, if any, which may become payable as a
result of the audit will not have a material effect on the Company's
consolidated financial position.
- 6 -
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
United Asset Management Corporation
Note 7 - Acquisitions and Commitments
During 1993, the Company issued shares of its common stock to acquire Heitman
Financial Ltd. and Murray Johnstone Limited through transactions accounted
for as poolings of interests. The Company also acquired Pell, Rudman & Co.,
Inc. and GSB Investment Management, Inc. during 1993 through purchase
transactions.
During 1992, the Company issued shares of its common stock to acquire Acadian
Asset Management, Inc. through a transaction accounted for as a pooling of
interests. The Company also acquired Alpha Global Fixed Income Managers,
The L&B Group, NWQ Investment Management Company and Tom Johnson Investment
Management, Inc. during 1992 through purchase transactions.
During 1991, the Company issued shares of its common stock to acquire
Spectrum Asset Management, Inc. through a transaction accounted for as a
pooling of interests. The Company also acquired Trinity Capital Advisors,
which merged with Sterling Capital Management Company, and First Pacific
Advisors, Inc. during 1991 through purchase transactions. In addition, the
Company acquired a minority interest in the real estate investment management
firm, Aldrich Eastman Waltch.
The purchase price, including contingent payments and direct costs, paid for
the acquisitions accounted for as purchases and the allocations thereof are
summarized as follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
Year Ended December 31, 1993 1992 1991
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Consideration:
Cash $32,693,000 $ 98,225,000 $ 58,012,000
Subordinated notes 18,737,000 57,795,000 8,960,000
Common stock and warrants 1,161,000 2,292,000 335,000
Contingent payments accrued (paid) 319,000 (2,000,000) (12,660,000)
- ------------------------------------------------------------------------------
$52,910,000 $156,312,000 $ 54,647,000
==============================================================================
Allocation of purchase price:
Net tangible assets $ 2,112,000 $ 4,321,000 $ 538,000
Cost assigned to contracts acquired 49,675,000 151,760,000 52,264,000
Other assets 1,123,000 231,000 1,845,000
- ------------------------------------------------------------------------------
$52,910,000 $156,312,000 $ 54,647,000
==============================================================================
</TABLE>
The results of operations of Pell, Rudman and GSB are included in the
consolidated results of operations of the Company from their respective dates
of acquisition, March 29, 1993 and December 29, 1993. On August 25, 1993 and
November 16, 1993, the Company issued 2,024,398 shares and 1,670,000 shares
of its common stock, respectively, to the former shareholders of Heitman and
Murray Johnstone, respectively, to effect the poolings of interests with
these firms. Accordingly, the consolidated financial statements of the
Company have been restated to include Heitman and Murray Johnstone.
A reconciliation of revenues, net income and earnings per share as previously
reported and as restated follows below:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------
1992 1991
- -------------------------------------------------------------------
<S> <C> <C>
Revenues:
As previously reported $295,022,000 $234,666,000
Pooled firms 81,138,000 72,448,000
- -------------------------------------------------------------------
As restated $376,160,000 $307,114,000
===================================================================
Net Income:
As previously reported $ 35,005,000 $ 24,375,000
Pooled firms 4,067,000 5,833,000
- -------------------------------------------------------------------
As restated $ 39,072,000 $ 30,208,000
===================================================================
</TABLE>
- 7 -
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
United Asset Management Corporation
<TABLE>
<CAPTION>
- -------------------------------------------------------------------
1992 1991
- -------------------------------------------------------------------
<S> <C> <C>
Earnings per share:
Primary, as previously reported $1.56 $1.22
Primary, as restated $1.50 $1.27
Fully diluted, as previously reported $1.53 $1.15
Fully diluted, as restated $1.47 $1.19
===================================================================
</TABLE>
The revenues and net income of the 1993 pooled firms for the nine months
ended September 30, 1993, the interim period nearest to the dates the
poolings were consummated, were $61,037,000 and $4,682,000, respectively.
Cash and subordinated notes of $2,896,000 and 24,966 warrants valued at
$214,000 were paid in 1993 in connection with a contingent payment due in
1993 to the former owners of an affiliate.
Cash totaling up to $5,000,000 and subordinated notes totaling up to
$7,000,000 with warrants to purchase up to 212,121 shares of the Company's
common stock at $33 per share are contingently payable in 1996 and 1997,
respectively, to the former owners of two affiliates.
Unaudited pro forma data for the years ended December 31, 1993, 1992 and 1991
is set forth below, assuming all 1993, 1992 and 1991 acquisitions had been
consummated on January 1, 1991, revenue sharing plans (see Note 1) had been
in effect since that time and after certain other pro forma adjustments have
been made.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
Year Ended December 31, 1993 1992 1991
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues $461,892,000 $426,550,000 $370,475,000
Net income $ 56,796,000 $ 46,511,000 $ 37,112,000
Primary earnings per share $1.97 $1.78 $1.54
Fully diluted earnings per share $1.95 $1.75 $1.46
</TABLE>
- 8 -
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of
United Asset Management Corporation
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of income, of cash flows and of changes in
stockholders' equity present fairly, in all material respects, the financial
position of United Asset Management Corporation and its subsidiaries at
December 31, 1993 and 1992, and the results of their operations and their
cash flows for each of the three years in the period ended December 31, 1993,
in conformity with generally accepted accounting principles. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
/s/ Price Waterhouse
Boston, Massachusetts
February 7, 1994
<PAGE>
UNITED ASSET MANAGEMENT CORPORATION Exhibit 21.1
SUBSIDIARIES OF REGISTRANT
--------------------------
<TABLE>
<CAPTION>
Jurisdiction of Financial
Affiliated Firm Incorporation Statements
- --------------- ------------- ----------
<S> <C> <C>
Acadian Asset Management, Inc. Massachusetts Consolidated
Alpha Global Fixed Income Managers Delaware Consolidated
Analytic Investment Management, Inc. California Consolidated
Barrow, Hanley, Mewhinney & Strauss, Inc. Nevada Consolidated
Cambiar Investors, Inc. Colorado Consolidated
The Campbell Group, Inc. Delaware Consolidated
Chicago Asset Management Company Delaware Consolidated
Cooke & Bieler, Inc. Pennsylvania Consolidated
Dewey Square Investors Corporation Delaware Consolidated
Fiduciary Management Associates, Inc. Delaware Consolidated
First Pacific Advisors, Inc. Massachusetts Consolidated
GSB Investment Management, Inc. Delaware Consolidated
Hagler, Mastrovita & Hewitt, Inc. Delaware Consolidated
Hamilton, Allen & Associates, Inc. Delaware Consolidated
Hanson Investment Management Company California Consolidated
Heitman Financial Ltd. Delaware Consolidated
Heitman Properties Ltd.(1) Illinois Consolidated
Hellman, Jordan Management Company, Inc. Delaware Consolidated
HT Investors, Inc. Delaware Consolidated
Investment Counselors of Maryland, Inc. Maryland Consolidated
Tom Johnson Investment Management, Inc. Massachusetts Consolidated
Ki Pacific Asset Management, Inc. Delaware Consolidated
L&B Realty Advisors, Inc. (The L&B Group) Delaware Consolidated
C.S. McKee & Company, Inc. Pennsylvania Consolidated
Murray Johnstone Holdings Limited Scotland Consolidated
Nelson, Benson & Zellmer, Inc. Colorado Consolidated
Newbold's Asset Management, Inc. Pennsylvania Consolidated
Northern Capital Management, Inc. Wisconsin Consolidated
NWQ Investment Management Company Massachusetts Consolidated
Olympic Capital Management, Inc. Washington Consolidated
Pell, Rudman & Co., Inc. Delaware Consolidated
Regis Retirement Plan Services, Inc. Massachusetts Consolidated
Rice, Hall, James & Associates California Consolidated
The Rothschild Company Maryland Consolidated
Sirach Capital Management, Inc. Washington Consolidated
Spectrum Asset Management, Inc. Connecticut Consolidated
Sterling Capital Management Company North Carolina Consolidated
Thompson, Siegel & Walmsley, Inc. Virginia Consolidated
</TABLE>
All of the Registrant's subsidiaries do business under the respective names
indicated above and are wholly-owned.
(1) Heitman Properties, Ltd. has 30 wholly-owned property management
subsidiaries operating in the U.S.
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
We hereby consent to the incorporation by reference in the Prospectuses
constituting part of the Registration Statements on Form S-3 (Nos. 33-36928,
33-44215, 33-46310, 33-63350, 33-69034, 33-51443 and 33-52517) and in the
Registration Statements on Form S-8 (Nos. 33-10621, 33-21756, 33-34288 and
33-48858) of United Asset Management Corporation of our report dated
February 7, 1994 appearing on page 79 of the Annual Report to Shareholders which
is incorporated in this Annual Report on Form 10-K. We also consent to the
incorporation by reference of our report on the Financial Statement Schedules,
which appears on page F-1 of this Form 10-K.
PRICE WATERHOUSE
Boston, Massachusetts
March 22, 1994
